§ Mr. Nick Gibb (Bognor Regis and Littlehampton)
I beg to move amendment No. 7, in page 3, line 35, at end insert'except that an employee shall be entitled to make an election to receive payment of the tax credit to which he is entitled directly from the Board.'.
Mr. Deputy Speaker
With this, it will be convenient to discuss amendment No. 6, in page 4, line 10, at end insert—'(2A) Regulations under this section shall allow any person who is entitled to a tax credit to elect to receive payment of that tax credit directly from the Board.'.
§ Mr. Gibb
The purpose of amendment No. 7 is to enable those who are entitled to the working families tax credit to have the choice of whether the payments should be made to them through the payroll or directly to their home by cheque. The Government's proposals mean that a lone parent in work or a couple, both of whom work, have no choice. If they claim and are entitled to working families tax credit, the benefit will be paid through the payroll, whether they like it or not. The only recipients who will have a choice are couples of whom one is in work while the other remains at home to look after the children. The view of Conservative Members is that if that choice is available in those circumstances, it should be available in all other circumstances.
The Government's view is that if all potential claimants of working families tax credit were given the choice of direct payment, too many of them would take that choice, thus undermining the concept of having the benefit paid through the pay packet. Why are the Government so intent on having the payment made through the payroll? According to the Paymaster General on Second Reading, the whole point of the Bill wasto remove the stigma associated with the current system".—[Official Report, 26 January 1999; Vol. 324, c. 153.]That is odd, because what the Paymaster General means by "the current system" is the family credit benefit, which has a 72 per cent. take-up rate; it has an 85 per cent. take-up rate by expenditure and in the case of lone parents there is a 91 per cent. take-up rate. It is hard to believe that any stigma whatever is attached to a benefit with such a high take-up rate. That is why the Joseph Rowntree Foundation in York said:UK research has shown only limited reluctance to claim family credit on the grounds of stigma. Take-up of family credit among eligible families is high and continues to rise.The main difference between family credit and the new working families tax credit is the delivery mechanism. The calculation of WFTC is almost identical to that of 1173 family credit, but with a slightly shallower taper. The real difference is that WFTC is paid through the payroll. The Government's reason for that change, and the explanation for their resolve not to allow couples and lone parents the choice of direct payment, are that the Government genuinely believe that the measure will reduce stigma. By reducing stigma, they no doubt expect that there will be a higher take-up rate, but to date no Minister has said what that take-up rate will be, or whether it will be higher than the very high take-up rates for family credit. If the Government have no confidence that take-up rates will increase, they clearly have no confidence that the working families tax credit will reduce stigma.
What evidence do the Government have for their contention that paying that benefit through the payroll will reduce stigma? Martin Taylor, the architect of the working families tax credit, was asked by the Select Committee on Social Security what evidence there was that paying that benefit through the payroll would reduce stigma. He replied:As far as I am concerned, it does not matter whether the body which determines whether or not you are entitled to the WFTC is situated in the DSS or the Inland Revenue. As far as stigma goes, the hard and fast evidence in all these non-financial and psychological matters is difficult to come by.
§ Mr. Webb
As I said in Committee, we must not traduce Martin Taylor and blame him for being the architect of the scheme. He was told that there would be a tax credit and therefore devoted most of his energies to national insurance reforms, many of which were sensible and welcome. I hope that the hon. Gentleman will agree that the fingerprints of the Treasury are all over that tax credit and that when it goes wrong, we shall know where the blame lies.
§ Mr. Gibb
The hon. Gentleman is absolutely right. The Government had the advantage of seeing the transcript of the Social Security Committee report in which Martin Taylor makes the point that there is no academic evidence that there is less stigma when benefits are paid through the payroll. Despite that, the Government went ahead and produced the Bill.
It is not merely that there is no evidence that stigma would be reduced; it is even worse, because there is evidence that stigma will be increased by paying the benefit through the payroll. That is because, for the first time, there is a real risk that fellow workers will find out that an employee is in receipt of a state benefit. The payroll clerk will know and the finance director will know; in a small firm that is a special risk. That risk has been heightened by the fact that the working families tax credit will not—because it cannot—be paid through adjustments to the pay-as-you-earn code. Martin Taylor originally envisaged that that was how the credit would be paid, but when the Inland Revenue tried to implement that system, it failed and produced distorted results. As the hon. Member for Northavon (Mr. Webb) says, the Government knew that when they designed the scheme, yet they went ahead with the Bill.
§ Mr. Webb
The problem of delivering the tax credit through the pay packet, which is the subject of the amendment, will presumably be further compounded 1174 when the child credit is added. When I asked the Treasury whether the child credit would be delivered through the PAYE code, I was told that the Treasury would let me know when it had worked out the answer. Does that worry the hon. Gentleman?
§ Mr. Gibb
Of course, it concerns me enormously. The hon. Gentleman makes a good point. If there are difficulties in putting the working families tax credit through the PAYE code without the child care tax credit, I am certain that there is no chance of the child care tax credit being put through the tax code as well. The new child care credit referred to in the Budget will almost certainly face the same problems.
As the payment cannot go through the PAYE code, it must be separately identified as a tax credit on the pay slip. It is now clear that paying working families tax credit through the payroll will increase stigma. That was the view of Bill Knox, of the Federation of Small Businesses, in his evidence to the Social Security Committee—[Interruption.] Labour Members should listen. Bill Knox said thatthere could be the added stigma of being an employee who receives, and knowingly receives, benefit within the workplace".
§ Mr. Gibb
The hon. Gentleman should not worry; there is more.
The increased stigma that will inevitably arise is Conservative Members' most pressing concern about the Bill and the reason we have tabled amendment No. 7. If the amendment is not passed, it will be our principal reason for opposing the Bill. The Government believe that the working families tax credit will reduce stigma; we believe that it will increase stigma. The National Council for One Parent Families believes that the working families tax credit will increase stigma:Some lone parents may worry that their personal finances are becoming more visible to colleagues and employers causing a disincentive to take up benefit.
§ Mr. Gibb
There is more. The Confederation of British Industry believes that working families tax credit will increase stigma and I shall quote its words for the benefit of the hon. Member for Hull, West and Hessle (Mr. Johnson). The CBI states:Many single parents will wish to have the option of direct payment in order to maintain confidentiality and avoid perceptions of stigma.The Institute for Fiscal Studies, too, believes the WFTC will increase stigma:As employers and, potentially, work colleagues will observe the working families tax credit, it might increase the stigma associated with receiving transfer payments and so decrease take-up".However, the Government believe—so too, it seems, does the hon. Member for Hull, West and Hessle—that all those groups are wrong. The Government contend that the IFS, the CBI and the National Council for One Parent Families are wrong because employers already know which of their employees receives family credit. The Government claim that the DSS must contact the employer before an employee can qualify for family 1175 credit. That is not true. In many cases, an employee can provide sufficient documentary evidence of pay and hours worked without approaching the employer. In any case, a "once and for all" approach is different from a week in, week out—or month in, month out—notification from the Inland Revenue that an employee is receiving working families tax credit. That is what will happen under the new payment system.
If the Government insist upon claiming that employers must be contacted, I simply refer them to the CBI's brief for this debate:At present a significant number of employers may never know that their employees are receiving Family Credit. Up to a third of employees claiming credit do so without their employer's knowledge—either because they provide enough information and their employer does not need to be contacted or because employers provide information without realising that their employees are claiming Family Credit.This amendment gives the recipient the option of having the benefit paid directly. It is thus for him or her to decide whether having it paid through the payroll will increase the stigma. After all, it is recipients, not Ministers, who will suffer the embarrassment if the Government are wrong and the benefit increases stigma.
That view is shared by the TUC:The TUC … strongly recommends that choice of payment system should apply to all households, including those headed by lone parents.The TUC has other concerns that could be alleviated by the amendment. In its Budget representations, the TUC says that family credit hasby and large, enhanced job security for many people in low paid jobs by delivering financial assistance to them in a direct and timely fashion.It continues:There is a real danger that the working families tax credit will fail to replicate this if the wage packet is to be the primary means of delivering the tax credit.The concern is that payment may be interrupted if the benefit is paid through the payroll. That is the view of the Low Pay Unit, which says:The low paid are least able to afford interruptions or delays in payment of benefits.When an employee envisages the possibility that his employer may interrupt benefit payment, he should be given the option of having the payments made to him directly by the Inland Revenue. That is a key concern of the TUC, which believes that working families tax credit ismuch more liable to disruption.It is also the main concern of the National Council for One Parent Families:a default option is needed so lone parents can be paid direct rather than through the wage packet if there is a short-term contract, more than one employer, very low wages or the firm is too small to deal with the claim.The problem of interrupted payments is particularly acute if there is a trade dispute. The glossy document from the Inland Revenue that explains the way the working families tax credit operates explains that if a trade dispute lasts for longer than one pay period, the employer will not be expected to continue to pay the working families tax credit. Instead, the employer should issue a certificate of payment to the employee who must then take it to the Inland Revenue, which will pay the working families tax credit directly.
1176 That is the theory; the reality will be delays. There will be delays when the employer issues the certificate—assuming that he gets round to doing that, as he is in the middle of a trade dispute—delays at the Inland Revenue when the employee hands in the certificate, and delays in payment. Those on very low incomes cannot sustain such delays. That is another reason why we believe people should be given the option of having the working families tax credit paid directly.
The amendment will also partially—but not fully—solve the problem raised in Committee with which the Government failed to deal. If there is a dispute between a couple, who should receive the benefit? In Committee, the Financial Secretary said that the presumption was that, in the case of a dispute, the money would go to the spouse or the partner with care. The Government also said that the benefit could be claimed with just one signature on the form and that payment would go to the signatory. So whoever grabs the form first will be the winner—and that will not necessarily be the spouse or partner with care.
It would be helpful if the Minister at last clarified the position. If there is a dispute between a couple, who should receive the working families tax credit? If the working spouse completes and signs the form and the non-earning partner does not sign, will the payment go to the working spouse or to the partner at home who takes care of the children?
§ Dawn Primarolo
I can assist the hon. Gentleman now. When there is a dispute and the form is not completed, the Inland Revenue will establish contact and ask why. That does not happen at present with family credit: if the form is not completed, no payment is made. The Inland Revenue would have to be satisfied that it was not a claim of the type the hon. Gentleman describes—one partner who does not have a caring responsibility is trying to secure payment of the tax credit. A situation in which someone—the man, I presume the hon. Gentleman means—grabs the form, fills it in and receives the tax credit without the mother's knowledge would not arise.
§ Mr. Gibb
That may be the case during the transition from family credit to working families tax credit, but what about new claimants for working families tax credit? How will the Inland Revenue contact someone who has not returned a form? How will it know that there is a claim to be made? I do not understand how it will work.
§ Dawn Primarolo
The hon. Gentleman saw the forms in Committee. He will remember that they must be filled in by both parents—except in the case of a single parent—and the details must be included on the form. If the details do not appear, an inquiry will be triggered under the new and the transitional rules.
§ Mr. Gibb
We shall see how the hon. Lady's explanation works in practice. We were told in Committee that the claim could be processed with just one signature and that payment would go to the person who signed the form—that is, whoever filled in the applicant box. The form states that the payment will be made to the person who completes the left-hand, not the right-hand, column on the form.
§ Dawn Primarolo
I am grateful to the hon. Gentleman for giving way again, because this is an important point. 1177 One signature will be accepted only in extremely exceptional circumstances, such as in the case of a violent relationship. For example, if the man refused to complete the form—that is, sign it—but his partner was able to supply the details of his earnings, that information could be cross-referenced in the Inland Revenue to confirm that the details were correct. The partner would be the only one to sign the form, but in those circumstances, the claim would be categorised as low risk. We would rule that the claim was correct and the benefit would be paid to the partner. That is what would occur if there was only one signature on the form but two parents in the family.
§ Mr. Gibb
I am grateful to the hon. Lady for clarifying the situation.
The amendment will help the new benefit to be administered in a way that is responsive to the concerns of low income families. It will deal with the Bill's fundamental flaw: increased stigma. The hon. Lady did not address that issue in her comments. Increased stigma is a real concern, and I urge the House to support the amendment in an effort to remove the stigma that many low income families and lone parents, who are struggling to make ends meet and to bring up families while working, will face if the Bill reaches the statute book unamended.
§ Mr. Webb
Grouped with amendment No. 7, which the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) has just moved—I agreed with many of his comments—is amendment No. 6. As far as I can tell, it would have identical effects, but mysteriously, it relates to a few lines later. Both amendments are concerned with election to receive tax credits directly from the Inland Revenue.
The present proposal is that the Government will force lone parents to receive their benefit in a particular way—through the pay packet. Governments should force measures on people, possibly against their will—a lone parent might prefer to receive the money another way—only with very good reason, and we have been given no compelling evidence that lone parents should be forced to receive the money through the pay packet.
Paragraph 21 of the draft regulatory impact assessment states:The Government believes that employer payment of the tax credits is of crucial importance in helping to reinforce—and demonstrate—the link between receipt of the tax credits and the rewards of work.One might paraphrase that as saying that the Government believe that lone parents are so stupid that they cannot grasp the fact that they receive family credit when they work, but not when they do not; and they must receive the credit through the pay packet so that they understand that it is something to do with them working. That is absurd, patronising and insulting.
There is no reason to demonstrate to lone parents the merits of work because, I assume, they are capable of adding up two numbers and, in any case, both payments—salary and tax credit—might come through giro credits, so that would demonstrate that both were coming from work. What, then, would be another argument for the proposal?
1178 The hon. Member for Bognor Regis and Littlehampton has mentioned that there is apparently a need to reduce stigma. Yet as we have heard, the take-up rate on expenditure for lone parents was 91 per cent. in 1995–96. One can scarcely imagine a system with 100 per cent. take-up because there will always be people who have just fallen into the relevant circumstances for eligibility, but have not yet made a claim, so 91 per cent. is as near 100 per cent. as we are ever likely to get. That implies that there is virtually no stigma for lone parents who are the subject of the amendments. Almost all of them claim family credit, so why must they be forced to take the working families tax credit through the pay packet?
Another way of considering the issue is to ask whether there is any problem in forcing the payment through the pay packet. There are three main problems. The first is the administrative burden on business. That is the subject of the next group of amendments, so I shall not dwell on it. If half of all family credit recipients are lone parents, half of all tax credit recipients will be credited through the pay packet, and that is a large number of people whose employers will have to administer the scheme. If the amendments are made, and many lone parents opt for direct payment, there will be a greatly reduced burden on business.
§ Dr. Nick Palmer (Broxtowe)
Does the hon. Gentleman agree that if the employer has to set up any procedure at all for coping with payment, he will do most of the work anyway?
§ Mr. Webb
I am not sure that I understand the hon. Gentleman's question. Under the proposed regime, someone who employs a lone parent will be obliged by the Government to implement the scheme and deliver the credit. There will be a fixed charge for doing that for the first person and a variable charge for additional or subsequent employees. I certainly accept that there will be a fixed start-up cost, which is why there is no reason for employers to have to bear that cost in the first place, but there will also be a variable cost, as the regulatory impact assessment points out.
The second problem is that the palaver created by people who change jobs will be extraordinary. A lone parent who moves from welfare into work—he or she is the apple of the Government's eye—will start a job and notify the Inland Revenue, or their employer will do so. Initially, the money will be paid by the Inland Revenue to the employee, to give the employer time to make arrangements. The employer will then begin to pay the credit directly through the pay packet.
If the lone parent then changes jobs, the original employer must tell the Inland Revenue that the employee has stopped working for him. The Inland Revenue will tell the employer to stop paying the credit and begin to pay the lone parent directly until the new job starts. If the lone parent has been claiming for almost six months, the payment might go direct to the claimant or through the new employer—I am not sure which.
All that is unnecessary. At the moment, lone parents receive family credit monthly through an order book or direct into their bank account. That is not a problem. If they change jobs, the credit continues. Given that we are dealing with a section of the labour market where job turnover is common, why are the Government introducing all that complexity?
1179 The final problem is the loss of privacy. There are two important aspects to that. If anything will stigmatise people, it is loss of privacy. The hon. Member for Bognor Regis and Littlehampton quoted the CBI's comment about employers' present lack of awareness about family credit. As the hon. Gentleman is no doubt aware, that is not only a CBI point but a Government point.
The Department of Social Security commissioned research into the effects of employer attitudes to family credit. DSS research report No. 32, "Employers and Family Credit", says:Only about two thirds of employers who employ Family Credit recipients know that they do so".The employers of one third—hundreds of thousands—of family credit recipients do not know that they receive that benefit. When the Government force employers to deliver the credit through the pay packet, every employer will know. That may be damaging to the employee because employers might take such people on a short-term contract, but if they pose a serious administrative burden because of all the extra paperwork, they might think twice about renewing the contract. That would clearly be detrimental to the people whom the Government supposedly want to help.
There is a loss of privacy also because the employer will know how much credit the employee is receiving. Given that about one third of recipients will get the maximum credit, the number and age of their children will be fairly obvious. It is also apparent that when someone's circumstances change, the employer will know because he will be told to vary the amount of family credit and will know that the salary has not changed. It must follow that the domestic circumstances of the lone parent must have changed; for example, someone has moved into the home.
§ Mr. Gibb
Is there not also an additional point—that when an employer knows that an employee receives family credit, he does not often receive information? A renewal claim for family credit, which lasts for six months before it changes, requires no contact with the employer, so employers will be contacted probably no more than once a year. There is a difference between that and the employer having monthly or weekly information from the Inland Revenue with the daily rates included.
§ Mr. Webb
The hon. Gentleman is right. The proposal is to force employers of lone parents to be intimately involved in their personal circumstances and changes to those circumstances. That is wholly unnecessary.
The measure tries to solve a problem that does not exist. It will force lone parents, against their will, to receive their benefits in a particular way. If the measure is not against their will, why do not the Government let them choose? If the Government are happy to let them choose and think that lone parents want that measure, the outcome will be the same. If lone parents do not want the measure, the Government are imposing it on them to teach them, as far as I can tell from the Government's rhetoric, that work pays and that they receive something when they are in work that they do not receive when they are out of work. They are doing so by delivering the credit through their pay packet instead of by a credit to their bank account.
1180 That is patently absurd, unnecessary, bureaucratic for employers, patronising to lone parents and intrusive on their privacy. I therefore encourage the House to back amendments No. 7 or No. 6.
§ Mrs. Lait
We get the same pleasure in the House as we do in Committee when we find ourselves agreeing with the Liberal Democrats. It is an unusual circumstance, but we are as one on the amendments.
We all find it difficult to understand the Government's insistence on the proposal. The Financial Secretary's mantra is thatit reinforces the connection with work."—[Official Report, Standing Committee D, 9 February 1999; c. 111.]I should have thought that anybody in work would know and appreciate the fact that they are in work, and would realise the benefits of that at the end of the week or the month. People who are out of work tend by and large not to have to deal with the Inland Revenue and fill in PAYE forms and other communications. It comes as a bit of a shock to some people when they have to fill in those forms. People know when they are in work, earning money and dealing with the Inland Revenue.
If people receive their tax credits from the Inland Revenue rather than through a pay packet, they will realise that it is an acknowledgement of the fact that they are in work. They do not need to have that fact acknowledged by the payment of tax credits through their pay packet. The more we have examined the proposal, in Committee and again today, the more we have realised that, although the Government think they have taken a simple line, the practical difficulties outweigh the pay packet argument and bring into play the role of the Inland Revenue.
Several hon. Members have outlined the issues clearly. I shall not repeat the arguments about stigma, with which I thoroughly agree. Nor shall I take up the arguments about privacy and confidentiality, which relate particularly to small businesses but are equally valid as they apply to larger businesses. With the best will in the world, and however many strictures are directed to employees in payroll departments to the effect that they should not talk or gossip, they are aware of other employees' circumstances. It is amazing how little bits of information can percolate, so that by the time the information has emerged, it is often too late to deal with the problem of confidentiality and privacy having been breached.
I strongly support the argument about potential delay in payments of working families tax credits in certain circumstances. I accept that the efficiency of the Inland Revenue has improved over recent years, but various circumstances will have an impact on payments. Bankruptcy is the most extreme example, but there others, such as strikes, and circumstances where people work part-time for a number of different employers. Such people are not necessarily employed in agriculture; more and more people work in a number of part-time jobs, even during the course of a week.
The Government's faith in the speed with which the Inland Revenue can react is, to say the least, touching. Most of us who deal with the Inland Revenue—I imagine that most of us in the Chamber have had to come into 1181 contact with it at some stage—know that, however hard and efficiently the staff of the Revenue work these days, they cannot deliver money within a week, which is what many claimants of working families tax credit will need. I do not want to stray out of order, Mr. Deputy Speaker, but on a previous amendment we talked about child care tax credit—
§ Mr. Pickles
My hon. Friend is talking about delays in payment, and people working in different jobs. Does she agree that privacy is an equally important point? Many people who have part-time jobs do not want their main employer to know. Employers will be interfering in every aspect of family life. They will know how many children their employees have and all their sources of income.
§ Mrs. Lait
I can only agree with my hon. Friend. In certain circumstances it may be difficult for an employer to accept that his employee has a part-time job—even though that may be necessary to the employee given his or her family circumstances. If an employee's work requires a high level of concentration, for example, an employer may feel that when he is not working he should be taking time off rather than working elsewhere.
If the high-quality child care from which we all agree children will benefit is to be provided, child care tax credit will often have to be paid week by week. Child minders do not tend to have large incomes and will not have the savings or resources to allow them to cope with delayed payments through the Inland Revenue where an employee or parent suddenly experiences a break in the payment of working families tax credit.
We are talking about nurseries and after-school kids' clubs. Do I surmise that the Government are prepared to subsidise nurseries and all the various clubs so that they have a cash cushion and can sustain a parent who has fallen into cash-flow difficulties caused by an employer's difficulties?
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. Perhaps it is me, but I am at a loss to understand what the hon. Lady's remarks have to do with the amendments.
§ Mrs. Lait
The Bill indicates that the Revenue should pay into the pay packet except in exceptional circumstances. I am saying that, however efficient we believe the Inland Revenue to be, it cannot guarantee to get the money into an employee's pay packet. We believe that an employee should be able to opt for the Inland Revenue paying him week by week or month by month so that he can maintain his cash flow. There is a difficulty with the interaction between employment and the Inland Revenue when it comes to the payment of working families tax credit.
The payment of the tax credit is a burden on employers. The compliance cost assessment is about £37 for a company employing up to four people. By definition, large employers will probably pay a smaller sum proportionally. However, those figures indicate the drain on the national economy overall. If the Revenue were able to pay more people, it would probably reduce the cost to the overall economy. Given that, within the Budget, the Government have offered the new Small Business Service 1182 specifically to help small employers with compliance with regulations, it would seem that the cost could be cheaper if the Revenue were to make the payments.
I ask the Government to accept the amendment, which would allow employees more readily to elect for the Inland Revenue to pay working families tax credit. It would make life easier for them and their employers and would reduce stigma and problems of privacy and confidentiality. That is extremely important when people are trying to regain their self-esteem after it has been battered because they have been out of the work market for so long.
§ Mr. Edward Leigh (Gainsborough)
In a way, it is a pity that there is a convention in the House that Back-Bench Members have to speak before the Minister intervenes. Such a devastating case has been made in favour of the amendments—not least by the hon. Member for Northavon (Mr. Webb), who always speaks very well on these matters, and by my hon. Friends the Members for Bognor Regis and Littlehampton (Mr. Gibb) and for Beckenham (Mrs. Lait)—that it is difficult to know what possible argument the Minister can advance against them. Anyone would think that we were trying to drive a coach and horses through the concept of working families tax credit.
§ Mr. Leigh
That is an interesting admission. The Minister says that we are doing that. Why does she take that view? Surely we are only saying that people should be given a choice. If the Government are saying that the family credit system does not work; that it entails enormous stigma; and that they want to move on to a much more modern system, so be it. If I am in receipt of family credit, I can agree with the Minister and choose, if I am a lone parent, to receive the money through my pay packet. But why should I be forced to do so?
Why do we legislate in this place? Do we legislate as part of the Government's programme to make the Government look good in the national press, to tell the country that they are taking people off social security, reducing the social security bill and getting people back into work? Is that why we are legislating in the Chamber? Or are we trying to legislate to help ordinary people in low-paid jobs, who, for their own reasons—for reasons of privacy or convenience or for any other reason, such as the fact that they are changing their job or have several jobs, or because they do not trust the people in the accounts department not to talk—want to choose to receive payments at home as they have always done? Some of those reasons may seem trivial, but they are important to the people involved.
I serve on the Select Committee on Social Security, which has taken a considerable amount of evidence on these matters. We have taken evidence, as we heard, from Martin Taylor, the Federation of Small Businesses and others; written evidence from the Trades Union Congress; and evidence from the National Council for One Parent Families. If the Committee had had an overwhelming sense from the evidence that family credit did not work—that people did not want to make use of it, or felt ashamed, or felt that they were living off the state if they drew it—our all-party Committee, which generally tries to 1183 approach such matters in a non-partisan spirit, would have included that in our report. Our report would have made it clear that family credit had failed.
We studied working families tax credit in other countries, including the United States. I went up to Preston. In the DSS office I stood behind the assessment officer as she was going through the simple forms to work out whether family credit should be paid in a particular case. She was a conscientious civil servant, going through the mechanics and working out the figures quickly and easily, ensuring that for someone who had a family and was in a low-paid job, it was made worth his while to work.
I can speak only from my practical experience. We have heard many statistics cited tonight, but speaking to people on the ground is equally important. Practical experience could be wrong, however. If I am wrong, why is the take-up rate of family credit so high? A figure of 91 per cent. was bandied across the Chamber. If there is such a stigma attached to family credit, why is the take-up rate so high—and why not give people the choice?
What is the hidden agenda? Are the Government genuinely concerned about ordinary people, or is there another agenda? I believe that there is. If people could choose to receive working families tax credit at home, what would be the effective difference between working families tax credit and family credit? Virtually none. A great part of the Government's propaganda machine would be demolished at a stroke. People would say that the only difference was the change of name. That is what this debate is about.
The Government are trying to convince the country that, by a series of schemes, they have reduced the welfare bill, got people off benefit and back into work, and got the economy moving. The truth is that if people are getting back into work, they are doing so because the economy is growing, not because of the working families tax credit, the minimum income guarantee or anything else. Of course, if the Government made that admission, and if people were allowed to receive benefit at home, the Government's great fabric would fall apart.
That is why I support the amendments. I support them also because of the burdens on business, especially on small companies, about which we have heard. I hope that the Minister can convince us that all our arguments are wrong.
§ Dawn Primarolo
The hon. Member for Gainsborough (Mr. Leigh) complimented the staff at the family credit unit in Preston. He commented that they were excellent civil servants, as indeed they are. He should be confident of the work that will be undertaken to introduce the working families tax credit, because it will be done by the same diligent, hard-working, precise civil servants as the family credit unit transfers to the Inland Revenue. The hon. Gentleman spoke on the same themes as other Opposition Members—stigma and privacy.
I should say at the outset that I shall disappoint the Opposition again by asking the House to reject the amendment—although, as the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) gained a concession in Committee when the position of the apostrophe in the word "families" was corrected, we will be even stevens after this.
1184 Although I shall deal with the issues relating to stigma, I should remind hon. Members that the benefit is intended to reinforce work incentives and to reward work. The hon. Member for Gainsborough said that there was no evidence of stigma, but he went on to say that he had evidence. That consisted of what various organisations believed might happen.
§ Dawn Primarolo
I want to quote some research findings, because the hon. Member for Gainsborough asked about that. I refer him to a paper by Jeffrey Liebman for the Rowntree Trust, who quotes a study undertaken by McKay and Marsh entitled "Why didn't they claim?," carried out on behalf of the Department of Social Security. Liebman states:McKay and Marsh's interview study of family credit claimants reports that few families were entirely comfortable with the idea of claiming income-related in-work benefits.The hon. Gentleman conflates take-up and stigma. Take-up is determined by need. Stigma is a feeling imposed on people when they make their applications.
In a paper entitled "Lessons about tax-benefit integration from the US earned income tax credit experience", which was also published by Rowntree, Liebman states in relation to credit administered through the tax system:The advantages of such a reform … are that workers would be freed from the stigma of the welfare system".He goes on to say thatremoving stigma could be an important advantage of integrating in-work benefits into the tax system—in particular, workers who see themselves as self-sufficient and free of Government handouts may be less likely to go back on welfare in the future.That deals with the Opposition's comments about stigma.
§ Dawn Primarolo
I must make progress. The hon. Gentleman had a note passed to him about sitting down, so he will understand that progress needs to be made this evening.
We also heard about privacy and the fears that people's private concerns would be disclosed. The hon. Member for Northavon (Mr. Webb) said that two thirds of employers verify the earnings of family credit claimants.
Employers are already under a common law duty to maintain the trust and confidentiality of their employees. That is potentially a wide duty, and the Data Protection Act 1998 will extend the protection of personal information. Itemised pay statements are already prepared by some employers, and they are treated as confidential matters between the employer and the employee. There is no reason, and none was advanced, why that tried and trusted system would fall apart as a result of the working families tax credit.
Opposition Members have a perverse view of the world. They believe that employers will do their utmost to frustrate the payment of benefit, to undermine their employees, to disregard instructions from the Inland Revenue and to make the lives of lone parents a misery and their workers' lives impossible. I do not dispute that there are some employers who may behave in that way, but the overwhelming majority do not. There is no reason 1185 to believe that they will do so in future, because that would be bad for their relationships with their employees, on which their firms depend.
Under the working families tax credit provisions—this goes to the heart of the amendments—the major payment will be made through the pay packet. The application forms are straightforward. I know that Conservative Members have seen those forms and I have to tell them that anyone who thinks that a family credit form is easy to fill in has clearly never attempted to complete one—they are complex and very long. To the credit of Inland Revenue officials, the new forms are more straightforward and open.
A lone parent in paid employment will receive the payment through the wage packet. If both parents are working, one will receive the payment through the wage packet, and they will be able to choose which. When one parent is working and one is not, they will be able to choose which receives the payment. The form makes it clear that there is no pressure about who should receive the payment; it will be up to the couple to decide. I have every confidence in the maturity of couples; they will be able to take that decision about managing their household finances.
It is nonsense to use strong language about lone parents being forced into doing something when the working families tax credit will give them such enormous benefit. Conservative Members describe the system as impossible to operate, but they have failed to read and understand the Bill and they have failed to understand the powers that will protect the employee and ensure that the employer delivers the tax credit.
I ask the House to reject the amendment and support the Government in introducing the Bill.
§ Mr. Gibb
The Minister forgets that the overwhelming majority of employers in this country are small employers. More than half the employees in this country are employed by people who employ fewer than 50 people. In small companies information spreads by word of mouth. Conservative Members have tried to explain that problem to the Government, but it seems that what we have said has landed on deaf ears.
The Minister asked what evidence we have that the working families tax credit will increase stigma. I cited in evidence a number of organizations—the National Council for One Parent Families, which represents lone parents; the CBI, which represents employers; and the TUC, which represents a large number of employees. If they do not know whether people will be stigmatised under the Minister's scheme, who does? I believe that the views of those organisations provide ample evidence to show that stigma will increase.
The Minister talked about take-up being a measure not of stigma but of need, but what measure would she use to determine whether stigma had increased or decreased under the new working families tax credit system? A 91 per cent. take-up rate is, to anyone with any common sense, a clear indication that people do not mind claiming family credit. If she has a better measure for judging whether the working families tax credit will increase or 1186 decrease stigma, let us have it. Let us have target rates for take-up and other objectives that the Government could set out to determine whether stigma has increased.
The Minister's response will disappoint not only me. It will disappoint many thousands of lone parents and working people on low incomes who have to work hard and struggle to make ends meet as they bring up a family. The hon. Lady will inflict on them embarrassment and stigma because she misunderstands the real world of work.
§ Question put, That the amendment be made —
§ The House divided: Ayes 164, Noes 296.1189
|Division No. 114]||[7.24 pm|
|Ancram, Rt Hon Michael||Goodlad, Rt Hon Sir Alastair|
|Arbuthnot, Rt Hon James||Gorman, Mrs Teresa|
|Ashdown, Rt Hon Paddy||Gorrie, Donald|
|Atkinson, David (Bour'mth E)||Gray, James|
|Baker, Norman||Greenway, John|
|Ballard, Jackie||Grieve, Dominic|
|Bercow, John||Hamilton, Rt Hon Sir Archie|
|Beresford, Sir Paul||Hammond, Philip|
|Body, Sir Richard||Harris, Dr Evan|
|Boswell, Tim||Harvey, Nick|
|Bottomley, Rt Hon Mrs Virginia||Hayes, John|
|Brake, Tom||Heald, Oliver|
|Breed, Colin||Heathcoat—Amory, Rt Hon David|
|Brooke, Rt Hon Peter||Horam, John|
|Browning, Mrs Angela||Howard, Rt Hon Michael|
|Bruce, Ian (S Dorset)||Howarth, Gerald (Aldershot)|
|Burnett, John||Hughes, Simon (Southwark N)|
|Burns, Simon||Hunter, Andrew|
|Burstow, Paul||Jack, Rt Hon Michael|
|Butterfill, John||Jackson, Robert (Wantage)|
|Cash, William||Jenkin, Bernard|
|Chapman, Sir Sydney (Chipping Barnet)||Johnson Smith,|
|Rt Hon Sir Geoffrey|
|Chidgey, David||Keetch, Paul|
|Chope, Christopher||Kennedy, Charles (Ross Skye)|
|Clark, Dr Michael (Rayleigh)||Key, Robert|
|Clarke, Rt Hon Kenneth (Rushcliffe)||Kirkbride, Miss Julie|
|Clifton—Brown, Geoffrey||Laing, Mrs Eleanor|
|Collins, Tim||Lait, Mrs Jacqui|
|Colvin, Michael||Lansley, Andrew|
|Cormack, Sir Patrick||Leigh, Edward|
|Cotter, Brian||Letwin, Oliver|
|Cran, James||Lewis, Dr Julian (New Forest E)|
|Curry, Rt Hon David||Lidington, David|
|Davis, Rt Hon David (Haltemprice & Howden)||Lilley, Rt Hon Peter|
|Lloyd, Rt Hon Sir Peter (Fareham)|
|Day, Stephen||Loughton, Tim|
|Donaldson, Jeffrey||Luff, Peter|
|Dorrell, Rt Hon Stephen||Lyell, Rt Hon Sir Nicholas|
|Duncan, Alan||MacGregor, Rt Hon John|
|Duncan Smith, Iain||McIntosh, Miss Anne|
|Evans, Nigel||Maclean, Rt Hon David|
|Ewing, Mrs Margaret||McLoughlin, Patrick|
|Faber, David||Maginnis, Ken|
|Fabricant, Michael||Major, Rt Hon John|
|Fallon, Michael||Malins, Humfrey|
|Feam, Ronnie||Maples, John|
|Forsythe, Clifford||Maude, Rt Hon Francis|
|Forth, Rt Hon Eric||Mawhinney, Rt Hon Sir Brian|
|Foster, Don (Bath)||May, Mrs Theresa|
|Fowler, Rt Hon Sir Norman||Michie, Mrs Ray (Argyll & Bute)|
|Fraser, Christopher||Moore, Michael|
|Garnier, Edward||Morgan, Alasdair (Galloway)|
|George, Andrew (St Ives)||Moss, Malcolm|
|Gibb, Nick||Nicholls, Patrick|
|Gill, Christopher||Norman, Archie|
|Oaten, Mark||Taylor, Ian (Esher & Walton)|
|Öpik, Lembit||Taylor, Rt Hon John D (Strangford)|
|Page, Richard||Taylor, John M (Solihull)|
|Paice, James||Taylor, Matthew (Truro)|
|Paterson, Owen||Taylor, Sir Teddy|
|Pickles, Eric||Thompson, William|
|Prior, David||Tonge, Dr Jenny|
|Randall, John||Tredinnick, David|
|Redwood, Rt Hon John||Trend, Michael|
|Rendel, David||Tyler, Paul|
|Robathan, Andrew||Tyrie, Andrew|
|Robertson, Laurence (Tewk'b'ry)||Wallace, James|
|Roe, Mrs Marion (Broxbourne)||Wardle, Charles|
|Rowe, Andrew (Faversham)||Waterson, Nigel|
|Ruffley, David||Webb, Steve|
|Russell, Bob (Colchester)||Whitney, Sir Raymond|
|St Aubyn, Nick||Whittingdale, John|
|Sanders, Adrian||Wilkinson, John|
|Sayeed, Jonathan||Willetts, David|
|Shephard, Rt Hon Mrs Gillian||Willis, Phil|
|Smith, Sir Robert (W Ab'd'ns)||Winterton, Mrs Ann (Congleton)|
|Smyth, Rev Martin (Belfast S)||Winterton, Nicholas (Macclesfield)|
|Soames, Nicholas||Woodward, Shaun|
|Spicer, Sir Michael||Yeo, Tim|
|Steen, Anthony||Young, Rt Hon Sir George|
|Swayne, Desmond||Tellers for the Ayes:|
|Syms, Robert||Sir David Madel and Mrs. Caroline Spelman.|
|Tapsell, Sir Peter|
|Abbott, Ms Diane||Campbell, Mrs Anne (C'bridge)|
|Adams, Mrs Irene (Paisley N)||Campbell, Ronnie (Blyth V)|
|Ainger, Nick||Canavan, Dennis|
|Ainsworth, Robert (Cov'try NE)||Caplin, Ivor|
|Allen, Graham||Casale, Roger|
|Armstrong, Ms Hilary||Caton, Martin|
|Ashton, Joe||Chapman, Ben (Wirral S)|
|Atherton, Ms Candy||Chaytor, David|
|Atkins, Charlotte||Chisholm, Malcolm|
|Austin, John||Clapham, Michael|
|Banks, Tony||Clark, Rt Hon Dr David (S Shields)|
|Barnes, Harry||Clark, Dr Lynda (Edinburgh Pentlands)|
|Battle, John||Clark, Paul (Gillingham)|
|Bayley, Hugh||Clarke, Charles (Norwich S)|
|Beard, Nigel||Clarke, Rt Hon Tom (Coatbridge)|
|Beckett, Rt Hon Mrs Margaret||Clarke, Tony (Northampton S)|
|Begg, Miss Anne||Clelland, David|
|Bell, Stuart (Middlesbrough)||Clwyd, Ann|
|Benn, Rt Hon Tony||Coaker, Vernon|
|Bennett, Andrew F||Coffey, Ms Ann|
|Benton, Joe||Coleman, Iain|
|Bermingham, Gerald||Connarty, Michael|
|Berry, Roger||Cook, Frank (Stockton N)|
|Best, Harold||Cooper, Yvette|
|Betts, Clive||Corbett, Robin|
|Blackman, Liz||Corston, Ms Jean|
|Blears, Ms Hazel||Cousins, Jim|
|Blizzard, Bob||Cox, Tom|
|Blunkett, Rt Hon David||Cranston, Ross|
|Borrow, David||Crausby, David|
|Bradley, Keith (Withington)||Cryer, Mrs Ann (Keighley)|
|Bradley, Peter (The Wrekin)||Cummings, John|
|Bradshaw, Ben||Cunliffe, Lawrence|
|Brinton, Mrs Helen||Cunningham, Jim (Cov'try S)|
|Brown, Rt Hon Gordon (Dunfermline E)||Dalyell, Tam|
|Darling, Rt Hon Alistair|
|Brown, Rt Hon Nick (Newcastle E)||Darvill, Keith|
|Brown, Russell (Dumfries)||Davidson, Ian|
|Browne, Desmond||Davies, Rt Hon Denzil (Llanelli)|
|Buck, Ms Karen||Davis, Terry (B'ham Hodge H)|
|Burgon, Colin||Dawson, Hilton|
|Butler, Mrs Christine||Dean, Mrs Janet|
|Caborn, Richard||Denham, John|
|Campbell, Alan (Tynemouth)||Dismore, Andrew|
|Dobbin, Jim||Lewis, Terry (Worsley)|
|Donohoe, Brian H||Linton, Martin|
|Doran, Frank||Livingstone, Ken|
|Eagle, Angela (Wallasey)||Lloyd, Tony (Manchester C)|
|Edwards, Huw||Lock, David|
|Efford, Clive||Love, Andrew|
|Ellman, Mrs Louise||McAllion, John|
|Ennis, Jeff||McAvoy, Thomas|
|Etherington, Bill||McCabe, Steve|
|Fisher, Mark||McCafferty, Ms Chris|
|Fitzpatrick, Jim||McDonagh, Siobhain|
|Fitzsimons, Lorna||Macdonald, Calum|
|Flint, Caroline||McDonnell, John|
|Flynn, Paul||McFall, John|
|Follett, Barbara||McGuire, Mrs Anne|
|Foster, Rt Hon Derek||McIsaac, Shona|
|Foster, Michael Jabez (Hastings)||McKenna, Mrs Rosemary|
|Foster, Michael J (Worcester)||McNamara, Kevin|
|Fyfe, Maria||McNulty, Tony|
|Galloway, George||MacShane, Denis|
|Gerrard, Neil||Mactaggart, Fiona|
|Gibson, Dr Ian||McWalter, Tony|
|Gilroy, Mrs Linda||Mahon, Mrs Alice|
|Goggins, Paul||Mallaber, Judy|
|Golding, Mrs Llin||Mandelson, Rt Hon Peter|
|Griffiths, Jane (Reading E)||Marsden, Gordon (Blackpool S)|
|Griffiths, Nigel (Edinburgh S)||Marsden, Paul (Shrewsbury)|
|Griffiths, Win (Bridgend)||Marshall, David (Shettleston)|
|Grocott, Bruce||Marshall, Jim (Leicester S)|
|Grogan, John||Martlew, Eric|
|Hall, Patrick (Bedford)||Maxton, John|
|Hanson, David||Meacher, Rt Hon Michael|
|Healey, John||Meale, Alan|
|Henderson, Ivan (Harwich)||Merron, Gillian|
|Hepburn, Stephen||Michie, Bill (Shef'ld Heeley)|
|Heppell, John||Moonie, Dr Lewis|
|Hewitt, Ms Patricia||Moran, Ms Margaret|
|Hill, Keith||Morgan, Ms Julie (Cardiff N)|
|Hoey, Kate||Morgan, Rhodri (Cardiff W)|
|Home Robertson, John||Morley, Elliot|
|Hoon, Geoffrey||Morris, Ms Estelle (B'ham Yardley)|
|Hope, Phil||Mountford, Kali|
|Hopkins, Kelvin||Mullin, Chris|
|Howarth, George (Knowsley N)||Murphy, Denis (Wansbeck)|
|Hoyle, Lindsay||Murphy, Jim (Eastwood)|
|Hughes, Kevin (Doncaster N)||Murphy, Rt Hon Paul (Torfaen)|
|Humble, Mrs Joan||Naysmith, Dr Doug|
|Hurst, Alan||Norris, Dan|
|Hutton, John||O'Brien, Mike (N Warks)|
|Iddon, Dr Brian||O'Hara, Eddie|
|Jackson, Ms Glenda (Hampstead)||Olner, Bill|
|Jackson, Helen (Hillsborough)||O'Neill, Martin|
|Jamieson, David||Organ, Mrs Diana|
|Jenkins, Brian||Osborne, Ms Sandra|
|Johnson, Alan (Hull W & Hessle)||Palmer, Dr Nick|
|Johnson, Miss Melanie (Welwyn Hatfield)||Pearson, Ian|
|Jones, Helen (Warrington N)||Pike, Peter L|
|Jones, Jon Owen (Cardiff C)||Plaskitt, James|
|Jones, Dr Lynne (Selly Oak)||Pollard, Kerry|
|Jones, Martyn (Clwyd S)||Pope, Greg|
|Kaufman, Rt Hon Gerald||Powell, Sir Raymond|
|Keeble, Ms Sally||Prentice, Ms Bridget (Lewisham E)|
|Keen, Alan (Feltham & Heston)||Prentice, Gordon (Pendle)|
|Keen, Ann (Brentford & Isleworth)||Prescott, Rt Hon John|
|Kemp, Fraser||Primarolo, Dawn|
|Kidney, David||Prosser, Gwyn|
|Kilfoyle, Peter||Purchase, Ken|
|King, Andy (Rugby & Kenilworth)||Quin, Rt Hon Ms Joyce|
|King, Ms Oona (Bethnal Green)||Rapson, Syd|
|Kingham, Ms Tess||Reid, Rt Hon Dr John (Hamilton N)|
|Ladyman, Dr Stephen||Roche, Mrs Barbara|
|Lawrence, Ms Jackie||Rooker, Jeff|
|Laxton, Bob||Rooney, Terry|
|Leslie, Christopher||Ross, Ernie (Dundee W)|
|Levitt, Tom||Roy, Frank (Dewsbury)|
|Ruddock, Joan||Temple-Morris, Peter|
|Russell, Ms Christine (Chester)||Thomas, Gareth (Clwyd W)|
|Ryan, Ms Joan||Thomas, Gareth R (Harrow W)|
|Savidge, Malcolm||Todd, Mark|
|Sawford, Phil||Touhig, Don|
|Sedgemore, Brian||Trickett, Jon|
|Sheerman, Barry||Turner, Dennis (Wolverh'ton SE)|
|Sheldon, Rt Hon Robert||Turner, Dr Desmond (Kemptown)|
|Simpson, Alan (Nottingham S)||Turner, Dr George (NW Norfolk)|
|Singh, Marsha||Twigg, Derek (Halton)|
|Skinner, Dennis||Twigg, Stephen (Enfield)|
|Smith, Rt Hon Andrew (Oxford E)||Vaz, Keith|
|Smith, Angela (Basildon)||Vis, Dr Rudi|
|Smith, Miss Geraldine (Morecambe & Lunesdale)||Walley, Ms Joan|
|Ward, Ms Claire|
|Smith, Jacqui (Redditch)||Wareing, Robert N|
|Smith, Llew (Blaenau Gwent)||Watts, David|
|Soley, Clive||White, Brian|
|Southworth, Ms Helen||Wicks, Malcolm|
|Squire, Ms Rachel||Williams, Alan W (E Carmarthen)|
|Starkey, Dr Phyllis||Winnick, David|
|Steinberg, Gerry||Winterton, Ms Rosie (Doncaster C)|
|Stevenson, George||Wood, Mike|
|Stewart, David (Inverness E)||Worthington, Tony|
|Stewart, Ian (Eccles)||Wright, Anthony D (Gt Yarmouth)|
|Stinchcombe, Paul||Wright, Dr Tony (Cannock)|
|Stoate, Dr Howard||Wyatt, Derek|
|Stuart, Ms Gisela||Tellers for the Noes:|
|Sutcliffe, Gerry||Mr. Jim Dowd and Jane Kennedy.|
|Taylor, Rt Hon Mrs Ann|
§ Question accordingly negatived.
§ Mr. Deputy Speaker
With this, it will be convenient to discuss the following amendments: No. 1, in page 3, line 37, after 'employers', insert'who employ at least 21 workers'.No. 5, in clause 17, page 8, line 30, after 'employer', insert'shall be construed in accordance with section 6 above but excluding employers with fewer than ten employees'.
§ Mr. Gibb
The amendment would exempt employers who employ fewer than 10 people from having to administer the working families tax credit. Thus, employees in such businesses could have their tax credit paid directly to them at home.
Businesses in this country have accumulated a huge regulatory burden. Although any regulation on its own tends to add just a small burden—20 minutes a week, an hour, a month, or a few minutes here and there—when it is added to the hundreds of regulations already on the statute book, it soon becomes clear that regulation is stifling business and strangling small businesses.
The administrative burdens that the Bill imposes on business, and the raft of regulations that are spawned by it, are an unwelcome exception to that principle because the regulations, by themselves, impose a significant burden on business. The regulatory impact assessment estimates that £103 million a year of recurrent administrative costs will be imposed on business. That is in addition to £43 million in one-off set-up costs arising from the Bill.
1190 It is clear from the draft regulations on tax credits payment by employers how burdensome the rules are. First, employers must calculate the amount of working families tax credit or disabled persons tax credit to be paid by multiplying the daily rate, which is notified to them by the Inland Revenue, by the number of days in the period. That must then be added to the employee's net pay, after deducting PAYE and national insurance contributions. Next, the employer must enter that figure on the employee's pay slip and record it separately as an item entitled "tax credit". That must then be totalled, and a separate tax credit figure recorded on yet another form. Total tax credits paid to each employee must be entered on Inland Revenue forms P14 and P60. At the end of the tax year, another form—a P35—must be filled for all employees, including the total amount of any Inland Revenue funding for the year. Finally, the employer must produce certificates of payments for leavers.
All that places a huge extra burden on small businesses. Most of the work is carried out by the boss at the kitchen table, using up time and energy—[HON. MEMBERS: "On-message."] Absolutely on-message: kitchen-table conservatism. That uses up time and energy which should have been devoted to running and developing the business.
The amendment specifically excludes employers with fewer than 10 employees. The regulatory impact assessment says that there are 835,000 such businesses in Britain out of about 1.2 million. However, they employ only about 100,000 individuals, out of a total of 730,000 people who will eligible for working families tax credit which will be paid through the payroll. Therefore, the amendment would take out of the system just 14 per cent. of the total number of people who are eligible for working families tax credit.
The regulatory impact assessment says that employers of fewer than 10 employees will incur costs of £35 million a year, out of total costs of £103 million. That is equivalent to some 35 per cent., so exempting all businesses with fewer than 10 employees would lift a huge administrative burden from 60 per cent. of employers. Such an exemption would save 35 per cent. of the estimated costs by removing all relevant costs from the employers, yet it would mean just 14 per cent. of employees who were likely to receive working families tax credit through the payroll, would not do so.
Despite the exemption, the Government would still be able to pursue their policy—however misguided—to pay through the payroll the majority of the recipients of the working families tax credit—86 per cent. would still be eligible under our amendment—but a huge burden would be lifted from 835,000 employers, who represent some 60 per cent of all employers.
§ Mr. Robert Syms (Poole)
In my experience, many small businesses, particularly those trying to get started, are husband-and-wife teams. In many instances, one or other partner works for nothing to get the business going. Will not all those regulations add another burden to that business?
§ Mr. Gibb
My hon. Friend makes? a valid point. Many Ministers do not realise that running a new business is a dangerous, difficult and risky operation. The difference between success and failure is very fine. One extra 1191 regulation, particularly the burdensome regulation of paying tax credits to employees, could be the final straw that prevents the business from getting off the ground, or sinks it into bankruptcy.
The Government seek to change the behaviour of employees and potential employees, not employers. Therefore, the fact that the amendment takes 60 per cent. of employers out of the ambit of the Bill should be a good thing, and should not be a reason for Government opposition to the amendment.
The amendment has the support to the Confederation of British Industry, which has said in a briefing that was prepared specifically for the debate:Payment of WFTC via the wage packet will entail additional costs for all employers but particularly for small firms who are particularly adversely affected by compliance costs. The CBI therefore supports those amendments that propose an exemption for very small firms from administering the credit.Mr. Brian Prime of the Federation of Small Businesses has said that the working families tax creditwould mean another administrative burden placed upon small business owners, who are already the unpaid tax collectors on behalf of Government for income tax, NICs and VAT, and who also fund such benefits as Statutory Sick Pay, Maternity Pay and redundancy pay.That is why the federation opposes the whole Bill.
Similar concerns have been raised by Taxaid, a charity which helps individuals who cannot afford an accountant to guide them through the minefield that has become our tax legislation. It is concerned that theimplementation of an untested and unfamiliar scheme will impose considerable stresses on employers and we have serious concerns about the ability and willingness of smaller firms to deliver the new tax credits, because of the additional compliance burdens that will be imposed upon them.The Institute of Taxation has said:We are concerned that overall the extra burden on employers may end up as disproportionate to the benefits gained.Conservative Members fear how small businesses will cope with a regulation that is particularly difficult and cumbersome, and so important to their employees. As my hon. Friend the Member for Bromsgrove (Miss Kirkbride) said in Committee, most small businesses, like the small jeweller's shop in Bromsgrove, are simply unaware of the impending additional burden. When it hits them, they will be angry and for many small businesses, it will simply be the final straw.
I draw to the House's attention the deceptive way in which part of the draft regulatory impact assessment has been worded. I am grateful to Roger Cockfield, a reader in taxation at De Montfort university, for drawing that to the attention of hon. Members.
Paragraph 56 of that assessment refers to the fact that the administrative cost to employers with fewer than five employees will be £24 million. A total of 70,000 employers of that size of work force are likely to administer working families tax credit and about 70,000 employees will receive the benefit. That would work out at an average administrative cost of about £342 per year per employer. Paragraph 56, however, has averaged the 1192 £24 million over all 670,000 employers with fewer than five employees, giving an administrative cost of just £35 per employer per year.
That is just not on. Government-funded documents must not be used deliberately to mislead. I urge Ministers to amend the draft regulatory impact assessment before it is finalised. If the Government are confident that their policy on working families tax credit is right, they should not need to manipulate the evidence.
The amendment will save some 835,000 small businesses from a huge and intolerable administrative burden. It will not have an impact on the thrust of the Government's policy plans because 86 per cent. of those employees who the Government estimate will be paid working families tax credit through the payroll will continue to be so paid. Therefore, I urge the House to support the amendment.
§ Mr. Webb
Amendment No. 1 would exempt firms that employ fewer than 20 people from the requirement to pay the tax credit. Many of the arguments that have been eloquently expressed in favour of amendments Nos. 8 and 5, which would limit the measure to firms employing 10 or more, apply to firms with 20 or more employees. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) made a convincing case for the modesty of his proposal. The Government could still force payroll payment on most of the employers at whom the measure is directed, with minimal impact on small firms, so I have much sympathy with his point.
How might one seek to alleviate the burdens on small businesses? There are alternative models to those proposed in the amendments. One is the statutory maternity pay route, where employers are asked to deliver cash from the state to the employee. In return, small firms are given reimbursement and a contribution towards costs.
One would have welcomed the Government's saying that the working families tax credit was exactly analogous to statutory maternity pay. The measure is a request by the state for employers to deliver cash to their employees. Therefore, employers should be compensated for doing so. We would have welcomed such a measure, but regrettably the Government have not gone down that route. I would be interested to hear from the Minister why they have rejected that approach. Because they have rejected it, we have had to look at exempting small firms.
As the hon. Member for Bognor Regis and Littlehampton has pointed out, the total administrative burden of delivering the tax credit will be £100 million. That is a £100 million bet on a hunch. The Government have a hunch that payment through the pay packet will be more effective than payment direct to recipients, but it is not just a Government bet of £100 million; it is a Government bet of £100 million of other people's money. It might almost be described as a £100 million bet on a non-runner. The Government are saying that businesses will have to find the money to back the Government's hypothesis—their social experiment, of whose success, depressingly, we have seen no evidence. Indeed, the hallmark of our debates on the Bill has been the lack of evidence to support the Government's case.
Inevitably, small firms—the subject of the amendment—will be hardest hit. Larger firms may be able to absorb the costs, but, as the regulatory impact assessment points out, firms that employ one or two 1193 people and have manual payroll systems will suffer. The Inland Revenue itself says that smaller firms are more likely to pay low wages, and are therefore disproportionately likely to be affected.
Things could get worse for small firms. If they do not pay much employer or employee national insurance or income tax in the first place, they could end up having to give their employees more in the form of working families tax credit than they take from them in tax and pay to the Government. They could be out of pocket. Moreover, it seems to me that the Chancellor's announcement in the Budget last Tuesday of a child tax credit will make matters even worse: presumably employers will have to deliver that as well, and will therefore be even more out of pocket.
Either small firms will have to sub the Government if they do not spot this coming, or they will have to plan a month early, work out that they will have to pay their employees more than they have to pay the Government and apply for a sub from the Government—which, of course, will mean extra bureaucracy. Whatever happens, they will lose the benefit that they currently gain from the PAYE income tax and national insurance that sits in their bank accounts until they have to hand it over. If they have to hand it over at the point in the month when they pay employees' salaries, they will lose interest. All that is part of the £100 million cost to which the Inland Revenue has admitted.
Clause 6 will impose costs on businesses, and will impose particularly acute costs on small businesses. The Government have not chosen the statutory maternity pay route of refunding employers for their costs, which would have been perfectly reasonable. That is why we need amendments to exempt small firms with 10 or 20 employees. I would prefer 20, but I am more than happy with 10. The Government have produced no justification for imposing such a burden on employers.
§ Mr. Syms
My speech will be short, but I hope Ministers will accept that it is heartfelt. I have been a small business man for nearly 25 years, and some Governments—even those whom I have supported—have not been sufficiently aware of the burdens that law-making places on small businesses.
Inevitably, the administration and employment costs of running a small business will be high. I am not talking about large businesses with personnel departments and, perhaps, professional managers; I am talking about small firms dealing with a small number of people, while also dealing with a range of problems, trying to acquire customers, trying to get the money in and trying to keep going. The most difficult bit, I think, is getting the money in. Some of the administrative burdens placed on small businesses cause a real problem, distracting those who run such businesses from the important process of doing the work, getting the money in and ensuring that they stay in business.
I have always believed that the future of this country lies in nurturing and supporting small business. If every business employing five, 10 or 15 workers could take on one or two more, our chances of lower unemployment would be immeasurably greater, and we would have a dynamic impetus in the economy. As a matter of policy, 1194 we as a country ought to do what we can to support, sustain and encourage small business. If anything, however, the Bill will increase the number of burdens that we already have in the form of the working time directive and many other European regulations. It will make it far more difficult for small businesses to remain a profitable entity, continuing to employ people, to grow and to provide services for the community.
My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) made a convincing case for the amendment, to which I listened carefully. I also listened carefully to the hon. Member for Northavon (Mr. Webb), who expressed a preference for 20 employees. I would like the figure to be even higher. I am not sure that it is fair to shift the burden from the state to private companies, and to allow those companies to cover the cost. No doubt the private companies could do it a little more efficiently, but it would involve a tremendous burden of work.
I made an important point in an intervention on my hon. Friend the Member for Bognor Regis and Littlehampton. Many people who set up small businesses are husband-and-wife teams, or partners. The business may be run by a husband or wife who may, while doing another job, have to come in and deal with the books and the administration. That imposes an extra burden—a burden, perhaps, on the marriage.
This measure will cost £103 million, which is a huge amount. It will impose a terrific burden on small businesses. It is unacceptable for a Government who are currently enjoying surpluses because of what is happening in the economy to shift the burden of state regulation on to small businesses.
The Federation of Small Businesses says that the Billwould mean another administrative burden placed upon small business owners".The federation would know. Here is another view:The result of any new burden, combined with the impact of the minimum wage, could be to discourage companies from taking on low-skilled or semi-skilled employees … It is not the job of employers to administer the benefits system".That is what was said by Tim Melville-Ross, director general of the Institute of Directors, and reported in the Financial Times on 14 January 1998.I wonder whether government advisers have any real concept of what it is like to run a small business. It's a recipe for disaster".That was said by Michael Snyder of Kingston Smith management consultants, and quoted in The Sunday Telegraph on 25 January. 1998.
Those people run businesses. They know business. A Government who are supposed to be business friendly ought to take their advice. I hope that the Government will consider the amendment very carefully.From a purely business standpoint there are major administrative concerns about the complexity of the administration, especially if, in order to pay the credit, employers have to inquire into employees' family circumstances in much more detail than is needed today. This will be especially burdensome for small firms".That was said by the CBI, and reported in the Financial Times on 14 January 1998.
I have run a small business, and I know that those who run such businesses have a close relationship with those who work with them. They are employees, but many are also friends. Inquiring into their personal background is 1195 difficult: it changes the relationship. I do not want employers whose businesses have five, seven or 10 employees to have to sit outside people's homes to see who they are sleeping with, but the Bill may well mean that. I do not think that such matters are the legitimate concern of employers. They might be a legitimate concern if they conferred a benefit, but small business men should not have to take on that task when they should be going out to find custom, ensuring that the money comes in, keeping the business going and creating wealth.
§ Mr. Webb
I sympathise with what the hon. Gentleman is saying. A moment ago, we discussed privacy. Does that not apply in spades to small businesses? The Minister has said that privacy is not a problem, because employers are under a common-law duty of secrecy which prevents them from telling everyone else in the firm certain facts, but, in small firms, the employer is everyone else in the firm, and the employer will know. Is that not undesirable?
§ Mr. Syms
It is a slippery slope. There must be a proper relationship between employer and employee. Some years ago, if an employer had started asking whom his employees were sleeping with, he would have been told to mind his own business. I thought that we had left behind the old days when landowners lorded it over the people and told them how to live their lives. I do not want employers to be peeking into their employees' bedrooms. Ministers may laugh, but this is a serious point. I think that the amendments would improve the relationship between small businesses and the dynamics that are so important to our economy.
§ 8 pm
§ Mrs. Roche
At the end of his speech, the hon. Member for Poole (Mr. Syms) had the good grace to laugh himself—because his comments were plainly ridiculous. It would be a different matter if the previous Government, whom I am sure he would have supported, had not landed regulation upon regulation on small businesses. Opposition Members failed also—because of a fundamental misunderstanding of the advantages of employer payment of tax credits—to recognise the provision's positive aspects for small business.
I should give a little credit to the hon. Member for Brentwood and Ongar (Mr. Pickles). Just a few weeks ago, in our debates on the Bill in Committee, he came up with the phrase "the kitchen table". Clearly, the Leader of the Opposition listened to him and developed a new policy. It was all due to the hon. Gentleman, and my hon. Friends and I were there when it happened.
The Government firmly believe that payment of tax credits by employers—which, from April 2000, will be the predominant method of delivering tax credits—will unambiguously demonstrate to employees that tax credits are a reward for work. Businesses themselves—small, large and medium-sized businesses—will have the advantage not only of reinforcing that fact, but of adding to the loyalty that employees feel towards a firm, thereby aiding productivity.
Showing credits on the pay slip, as an increase in net take-home pay, will emphasise the place of tax credits in the tax system, thereby helping to break any perceived link with benefits and to reduce the stigma of claiming in-work support. My hon. Friend the Paymaster General quite rightly referred to the academic work on the subject.
1196 For those reasons, we should not be looking for ways of excluding large numbers of employers from the scheme—as this group of amendments would do—and thereby depriving many thousands of employees of their right to receive their tax credits through the payroll.
About 925,000 employers—more than 80 per cent. of all employers—employ fewer than 21 people. Excluding them would be wholly inconsistent with our objectives. Excluding employers with fewer than 10 employees would not be much better, as 825,000 employers—about 70 per cent. of the total—would be outside the scheme.
§ Mr. Webb
I mention the precedent of statutory maternity pay. A previous Government said, "We shall ask employers to handle the administrative burden of paying money from the state to the employee. However, as it is a cost on them, we shall reimburse them for that cost and for the statutory maternity pay itself." Why do the Government reject reimbursement in the one case but not in the other?
§ Mrs. Roche
I understand the hon. Gentleman's point. Although I do not blame him for making it, it is exactly the same one that he made in Committee. The difference is that maternity pay is a benefit, and this is a tax credit, which is being made using a different system. I think that his question exposes the fundamental political and philosophical differences between the attitude of the Liberal Democrats and that of Labour Members.
§ Mr. Iain Duncan Smith (Chingford and Woodford Green)
Will the Minister, having read the Committee proceedings, again confirm that the Government recognise that, with the Bill's passage, they will be placing another burden on small businesses?
§ Mrs. Roche
If one considers everything that the Government are doing to help small businesses—in the Budget, by establishing the Small Business Service and setting the lowest-ever corporation tax levels, with our better regulation task force and unit, and in the positive help that will be provided in the Bill's provisions—one cannot accept the hon. Gentleman's comment.
I wonder whether Opposition Members have thought through the practical difficulties of implementing their amendment No. 8 or any other provision that would exempt employers by reference to their number of employees.
In making assessments for tax credits and deciding whether payment through the payroll is appropriate in a specific case, the Inland Revenue will have to rely on information given on the application form. The only other possible source of information is the annual returns provided by employers who operate the PAYE scheme. It would not be a simple matter to identify from an employee's application form the total number of employees working for the same employer, and trying to do so would cause real difficulty—possibly causing delay for applicants and requiring further involvement by employers. Therefore, all the burdens described 1197 by Opposition Members would increase if their amendment were passed. In all doubtful cases, the Revenue would have to check the facts with employers.
As we have repeatedly stressed in debates on the Bill, we are committed to keeping to an absolute minimum any additional burdens on employers. With that mind, we have given careful thought to the position of employers who do not deduct PAYE or national insurance contributions from the wages they pay because none of their employees earns above the threshold for national insurance contribution. Those employers currently have no dealings with the Inland Revenue in their role as employers. Without an exemption, they would be brought into the Revenue's employer database, simply because they have an employee who receives tax credit. As they have no PAYE tax or national insurance contributions out of which to pay tax credits, they will always have to be funded by the Inland Revenue—in many cases, on a weekly basis.
For all those reasons, we have decided that employers who do not deduct PAYE tax or national insurance contributions from the pay of any of their employees will be exempt from paying tax credit through the payroll. The exemption will remove from the scheme about 80,000 employers. That is absolutely targeted action. I hope that that answers the question of the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—or is he right hon.?
§ Mrs. Roche
I am always anxious to assist the promotion prospects of Opposition Members—[Interruption.] No, I should not go as far as that; just wait and see.
The provision is clear, targeted and makes absolutely good sense. The exemption is also clearly stated in published regulations.
I am sure that the hon. Members who tabled this group of amendments are genuinely concerned about the matter. However, they have not mentioned all the steps that the Government are taking to design a scheme that is as employer friendly as possible—which is why we have been consulting, and continue to consult, representatives of employers and payroll software suppliers, many of whom have provided valuable contributions to designing the scheme. I am very grateful to all those employers organisations who have assisted us in the matter.
We have also started an education programme for all employers that will operate both before and after April 2000. We shall pay very close attention to providing information. The plan is that employers' information packs will be issued next January and will include detailed tax credit examples, showing employers exactly what they have to do.
I am glad to see that Opposition Members are paying attention to the important information that I am giving them. [HoN. MEMBERS: "We are."] I just wanted to ensure that they were still with us.
The Revenue is planning, from July 1999, to hold seminars for employers, which will be backed up by trade press advertisements and feature link promotions in the regional press. I would have thought that Conservative 1198 Members would be interested in measures for business. They claim to support business, but their conduct this evening shows why they lost the small business vote at the general election.
The amendments clearly do not make sense and I urge my hon. Friends to reject them.
§ Mr. Gibb
The hon. Lady has just accepted that 70,000 employers with employees who are paid less than the national insurance threshold can easily be taken out of the system. She accepts that the system will be a burden for them. Why will she not extend the exemption to all employers who employ fewer than 10 employees? If she can do it for one group, why not for the other?
§ Mrs. Roche
The hon. Gentleman clearly has not read all the material properly. If he had, he would understand. How could the tax credits system be implemented without a PAYE system through which it could operate?
§ Mr. Gibb
The hon. Lady is right to exempt those 70,000 employers from the system, because it would be an intolerable burden on them. It will also be an intolerable burden on the 630,000 employers who employ fewer than 10 employees. She has just admitted that. She has talked about the proportion of businesses that would be taken out of the working families tax credit system if our amendment was accepted—70 per cent. if the threshold was 10 employees. That is a plus point, because the purpose of the Bill is not to change the behaviour of employers, but, in her words, to change the behaviour of employees. The amendment would take only 14 per cent. of eligible employees out of the system, leaving 86 per cent.
In view of the hon. Lady's inadequate answer, I shall press the amendment to a vote.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 150, Noes 291.1201
|Division No. 115]||[8.12 pm|
|Allan, Richard||Clark, Dr Michael (Rayleigh)|
|Ancram, Rt Hon Michael||Clifton—Brown, Geoffrey|
|Arbuthnot, Rt Hon James||Colvin, Michael|
|Ashdown, Rt Hon Paddy||Cormack, Sir Patrick|
|Atkinson, David (Bour'mth E)||Cotter, Brian|
|Baker, Norman||Cran, James|
|Ballard, Jackie||Curry, Rt Hon David|
|Beggs, Roy||Davis, Rt Hon David (Haltemprice & Howden)|
|Beresford, Sir Paul||Day, Stephen|
|Body, Sir Richard||Donaldson, Jeffrey|
|Boswell, Tim||Dorrell, Rt Hon Stephen|
|Bottomley, Rt Hon Mrs Virginia||Duncan Smith, Iain|
|Brake, Tom||Evans, Nigel|
|Breed, Colin||Faber, David|
|Brooke, Rt Hon Peter||Fabricant, Michael|
|Browning, Mrs Angela||Fallon, Michael|
|Bruce, Ian (S Dorset)||Fearn, Ronnie|
|Burnett, John||Forth, Rt Hon Eric|
|Burns, Simon||Foster, Don (Bath)|
|Burstow, Paul||Fowler, Rt Hon Sir Norman|
|Butterfill, John||Fox, Dr Liam|
|Cash, William||Fraser, Christopher|
|Chapman, Sir Sydney (Chipping Barnet)||Garnier, Edward|
|George, Andrew (St Ives)|
|Chidgey, David||Gibb, Nick|
|Chope, Christopher||Gill, Christopher|
|Gorman, Mrs Teresa||Öpik, Lembit|
|Gorrie, Donald||Page, Richard|
|Gray, James||Paice, James|
|Greenway, John||Paterson, Owen|
|Grieve, Dominic||Pickles, Eric|
|Hamilton, Rt Hon Sir Archie||Randall, John|
|Hammond, Philip||Redwood, Rt Hon John|
|Harris, Dr Evan||Rendel, David|
|Hayes, John||Robathan, Andrew|
|Heald, Oliver||Robertson, Laurence (Tewk'b'ry)|
|Heathcoat—Amory, Rt Hon David||Roe, Mrs Marion (Broxbourne)|
|Horam, John||Rowe, Andrew (Faversham)|
|Howard, Rt Hon Michael||Ruffley, David|
|Howarth, Gerald (Aldershot)||Russell, Bob (Colchester)|
|Hughes, Simon (Southwark N)||St Aubyn, Nick|
|Hunter, Andrew||Sanders, Adrian|
|Jack, Rt Hon Michael||Sayeed, Jonathan|
|Jackson, Robert (Wantage)||Shephard, Rt Hon Mrs Gillian|
|Jenkin, Bernard||Smith, Sir Robert (W Ab'd'ns)|
|Johnson Smith, Rt Hon Sir Geoffrey||Smyth, Rev Martin (Belfast S)|
|Spelman, Mrs Caroline|
|Keetch, Paul||Spicer, Sir Michael|
|Key, Robert||Steen, Anthony|
|Kirkbride, Miss Julie||Streeter, Gary|
|Kirkwood, Archy||Swayne, Desmond|
|Lait, Mrs Jacqui||Syms, Robert|
|Lansley, Andrew||Tapsell, Sir Peter|
|Leigh, Edward||Taylor, Ian (Esher & Walton)|
|Letwin, Oliver||Taylor, Rt Hon John D (Strangford)|
|Lewis, Dr Julian (New Forest E)||Taylor, John M (Solihull)|
|Lidington, David||Taylor, Sir Teddy|
|Lilley, Rt Hon Peter||Tonge, Dr Jenny|
|Lloyd, Rt Hon Sir Peter (Fareham)||Trend, Michael|
|Loughton, Tim||Tyler, Paul|
|Luff, Peter||Tyrie, Andrew|
|Lyell, Rt Hon Sir Nicholas||Wallace, James|
|MacGregor, Rt Hon John||Wardle, Charles|
|McIntosh, Miss Anne||Waterson, Nigel|
|McLoughlin, Patrick||Webb, Steve|
|Madel, Sir David||Whitney, Sir Raymond|
|Maginnis, Ken||Whittingdale, John|
|Malins, Humfrey||Wilkinson, John|
|Maples, John||Willetts, David|
|Maude, Rt Hon Francis||Willis, Phil|
|Mawhinney, Rt Hon Sir Brian||Winterton, Mrs Ann (Congleton)|
|May, Mrs Theresa||Woodward, Shaun|
|Michie, Mrs Ray (Argyll & Bute)||Young, Rt Hon Sir George|
|Moss, Malcolm||Tellers for the Ayes:|
|Norman, Archie||Mrs. Eleanor Laing and Mr. Tim Collins.|
|Abbott, Ms Diane||Berry, Roger|
|Adams, Mrs Irene (Paisley N)||Best, Harold|
|Ainger, Nick||Betts, Clive|
|Ainsworth, Robert (Cov'try NE)||Blackman, Liz|
|Allen, Graham||Blears, Ms Hazel|
|Armstrong, Ms Hilary||Blizzard, Bob|
|Ashton, Joe||Borrow, David|
|Atherton, Ms Candy||Bradley, Keith (Withington)|
|Atkins, Charlotte||Bradley, Peter (The Wrekin)|
|Austin, John||Bradshaw, Ben|
|Barnes, Harry||Brinton, Mrs Helen|
|Barron, Kevin||Brown, Rt Hon Nick (Newcastle E)|
|Battle, John||Brown, Russell (Dumfries)|
|Bayley, Hugh||Browne, Desmond|
|Beard, Nigel||Buck, Ms Karen|
|Beckett, Rt Hon Mrs Margaret||Burgon, Colin|
|Begg, Miss Anne||Butler, Mrs Christine|
|Bell, Stuart (Middlesbrough)||Caborn, Richard|
|Benn, Rt Hon Tony||Campbell, Alan (Tynemouth)|
|Bennett, Andrew F||Campbell, Mrs Anne (C'bridge)|
|Benton, Joe||Campbell, Ronnie (Blyth V)|
|Bermingham, Gerald||Canavan, Dennis|
|Caplin, Ivor||Henderson, Ivan (Harwich)|
|Casale, Roger||Hepburn, Stephen|
|Caton, Martin||Heppell, John|
|Chapman, Ben (Wirral S)||Hewitt, Ms Patricia|
|Chaytor, David||Hill, Keith|
|Chisholm, Malcolm||Hoey, Kate|
|Clapham, Michael||Home Robertson, John|
|Clark, Rt Hon Dr David (S Shields)||Hoon, Geoffrey|
|Clark, Dr Lynda (Edinburgh Pentlands)||Hope, Phil|
|Clark, Paul (Gillingham)||Hoyle, Lindsay|
|Clarke, Charles (Norwich S)||Hughes, Kevin (Doncaster N)|
|Clarke, Rt Hon Tom (Coatbridge)||Humble, Mrs Joan|
|Clarke, Tony (Northampton S)||Hurst, Alan|
|Clelland, David||Hutton, John|
|Clwyd, Ann||Iddon, Dr Brian|
|Coaker, Vernon||Jackson, Ms Glenda (Hampstead)|
|Coffey, Ms Ann||Jackson, Helen (Hillsborough)|
|Coleman, Iain||Jamieson, David|
|Connarty, Michael||Jenkins, Brian|
|Cook, Frank (Stockton N)||Johnson, Alan (Hull W & Hessle)|
|Cooper, Yvette||Johnson, Miss Melanie(Welwyn Hatfield)|
|Corston, Ms Jean||Jones, Helen (Warrington N)|
|Cousins, Jim||Jones, Jon Owen (Cardiff C)|
|Cox, Tom||Jones, Dr Lynne (Selly Oak)|
|Cranston, Ross||Jones, Martyn (Clwyd S)|
|Crausby, David||Keeble, Ms Sally|
|Cryer, Mrs Ann (Keighley)||Keen, Alan (Feltham & Heston)|
|Cummings, John||Keen, Ann (Brentford & Isleworth)|
|Cunliffe, Lawrence||Kemp, Fraser|
|Cunningham, Jim (Cov'try S)||Kidney, David|
|Dalyell, Tam||Kilfoyle, Peter|
|Darling, Rt Hon Alistair||King, Andy (Rugby & Kenilworth)|
|Darvill, Keith||King, Ms Oona (Bethnal Green)|
|Davies, Rt Hon Denzil (Llanelli)||Kingham, Ms Tess|
|Davis, Terry (B'ham Hodge H)||Ladyman, Dr Stephen|
|Dawson, Hilton||Lawrence, Ms Jackie|
|Dean, Mrs Janet||Laxton, Bob|
|Denham, John||Leslie, Christopher|
|Dismore, Andrew||Levitt, Tom|
|Dobbin, Jim||Lewis, Terry (Worsley)|
|Donohoe, Brian H||Linton, Martin|
|Doran, Frank||Lloyd, Tony (Manchester C)|
|Eagle, Angela (Wallasey)||Lock, David|
|Edwards, Huw||Love, Andrew|
|Efford, Clive||McAllion, John|
|Ellman, Mrs Louise||McAvoy, Thomas|
|Ennis, Jeff||McCabe, Steve|
|Etherington, Bill||McCafferty, Ms Chris|
|Ewing, Mrs Margaret||McDonagh, Siobhain|
|Fisher, Mark||Macdonald, Calum|
|Fitzpatrick, Jim||McDonnell, John|
|Fitzsimons, Lorna||McFall, John|
|Flint, Caroline||McGuire, Mrs Anne|
|Flynn, Paul||McIsaac, Shona|
|Follett, Barbara||McKenna, Mrs Rosemary|
|Foster, Rt Hon Derek||McNamara, Kevin|
|Foster, Michael Jabez (Hastings)||McNulty, Tony|
|Foster, Michael J (Worcester)||MacShane, Denis|
|Foulkes, George||Mactaggart, Fiona|
|Fyfe, Maria||McWalter, Tony|
|Galloway, George||Mahon, Mrs Alice|
|Gerrard, Neil||Mallaber, Judy|
|Gibson, Dr Ian||Marsden, Gordon (Blackpool S)|
|Gilroy, Mrs Linda||Marsden, Paul (Shrewsbury)|
|Goggins, Paul||Marshall, David (Shettleston)|
|Golding, Mrs Llin||Marshall, Jim (Leicester S)|
|Griffiths, Jane (Reading E)||Martlew, Eric|
|Griffiths, Nigel (Edinburgh S)||Maxton, John|
|Griffiths, Win (Bridgend)||Merron, Gillian|
|Grocott, Bruce||Michie, Bill (Shef'ld Heeley)|
|Grogan, John||Moonie, Dr Lewis|
|Hall, Patrick (Bedford)||Moran, Ms Margaret|
|Hanson, David||Morgan, Alasdair (Galloway)|
|Healey, John||Morgan, Ms Julie (Cardiff N)|
|Morgan, Rhodri (Cardiff W)||Smith, Angela (Basildon)|
|Morley, Elliot||Smith, Miss Geraldine(Morecambe & Lunesdale)|
|Morris, Ms Estelle (B'ham Yardley)|
|Mountford, Kali||Smith, Jacqui (Redditch)|
|Mullin, Chris||Smith, Llew (Blaenau Gwent)|
|Murphy, Denis (Wansbeck)||Soley, Clive|
|Murphy, Jim (Eastwood)||Southworth, Ms Helen|
|Murphy, Rt Hon Paul (Torfaen)||Squire, Ms Rachel|
|Norris, Dan||Starkey, Dr Phyllis|
|O'Brien, Bill (Normanton)||Steinberg, Gerry|
|O'Brien, Mike (N Warks)||Stevenson, George|
|O'Hara, Eddie||Stewart, David (Inverness E)|
|Olner, Bill||Stewart, Ian (Eccles)|
|O'Neill, Martin||Stinchcombe, Paul|
|Organ, Mrs Diana||Stoate, Dr Howard|
|Osborne, Ms Sandra||Stott, Roger|
|Palmer, Dr Nick||Stringer, Graham|
|Pearson, Ian||Stuart, Ms Gisela|
|Pickthall, Colin||Sutcliffe, Gerry|
|Pike, Peter L||Taylor, Rt Hon Mrs Ann(Dewsbury)|
|Pollard, Kerry||Temple—Morris, Peter|
|Pond, Chris||Thomas, Gareth (Clwyd W)|
|Pope, Greg||Thomas, Gareth R (Harrow W)|
|Powell, Sir Raymond||Todd, Mark|
|Prentice, Ms Bridget (Lewisham E)||Touhig, Don|
|Prentice, Gordon (Pendle)||Trickett, Jon|
|Prescott, Rt Hon John||Turner, Dennis (Wolverh'ton SE)|
|Primarolo, Dawn||Turner, Dr Desmond (Kemptown)|
|Prosser, Gwyn||Turner, Dr George NW Norfolk|
|Purchase, Ken||Twigg, Derek Halton|
|Quin, Rt Hon Ms Joyce||Vaz, Keith|
|Rapson, Syd||Vis, Dr Rudi|
|Raynsford, Nick||Walley, Ms Joan|
|Reid, Rt Hon Dr John (Hamilton N)||Ward, Ms Clarie|
|Roche, Mrs Barbara||Wareing, Robert N|
|Rooney, Terry||Watts, David|
|Ross, Ernie (Dundee W)||White Brian|
|Roy Frank||Wicks, Malcolm|
|Ruane, Chris||Williams, Alan W (E Carmarthen)|
|Ruddock, Joan||Winnick, David|
|Russell, Ms Christine (Chester)||Winterton, Ms Rosie (Doncaster C)|
|Ryan, Ms Joan||Wood Mike|
|Savidge, Malcolm||Worthington, Tony|
|Sawford, Phil||Wright, Anthony D (Gt Yormouth)|
|Sheerman, Barry||Wright, Dr Tony (Cannock)|
|Sheldon, Rt Hon Robert||Wyatt, Derek|
|Simpson, Alan (Nottingham S)|
|Singh, Marsha||Tellers for the Noes:|
|Skinner, Dennis||Jane Kennedy and Mr. Jim Dowd.|
|Smith, Rt Hon Andrew (Oxford E)|
§ Question accordingly negatived.