Clause 9 - Maximum rate
Tax Credits Bill
2:30 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
Good afternoon, Mr. Beard, and welcome to our proceedings. You have probably noticed that, unusually in a Standing Committee, thus far we have scrutinised the Bill in a civilised way, even to the extent that the hon. Member for Arundel and South Downs (Mr. Flight) referred to the hon. Member for Northavon (Mr. Webb), who is a member of a different political party, as his hon. Friend. I am in greatly in favour of the Tax Credits Bill and claim that it achieves a great deal, but I had no idea that I can now add the proper functioning of a Standing Committee in a friendly and civilised way. However,
perhaps that is more a reflection of the members of the Committee. The Government Whip is as delightful as ever; I am pleased to see him in his place and perhaps he could stay there.
There is a fundamental misunderstanding about what exactly the child tax credit will provide as opposed to the working families tax credit, income support and the jobseeker's allowance. That misunderstanding revolves around recognition of the second adult. Hon. Members' comments referred to the cost of the adult to the household budget. The child tax credit is and should be independent of the status of the adults in the family. We are trying to ensure that the calculation is based on the children in that household. The child tax credit focuses on the children regardless of the status of the parents or the number of parents in or out of work. The right place to look at the level of support available to the adults in the household is the working tax credit or the benefit system as a whole and it may be more appropriate to discuss the matter when we come to clause 11.
Currently, there is no support system for children that provides an additional element for a second adult in the family, and no such provision has been offered since about 1988. In looking at ways to design and develop rules for the child tax credit, we used child benefit as our starting point—I should point out that we excluded the principle of universality—because it is very popular and well understood and there is high take-up. The elements of child benefit apply to children, and adults are disregarded.
Income support and jobseeker's allowance currently consist of an adult element and child elements. We are removing the child elements and including them in the child tax credit, but the adult elements will remain. The adult elements contain an additional element where there is, and will remain, a second adult in the family. Working families tax credit and disabled person's tax credit provide support for working families with children. They have fulfilled more than one purpose, in that they contain a mix of child elements and adult elements, and we are taking steps to pull out the child elements. The clause deals with the child tax credit only.
On the adult additional payment, I should point out that the child tax credit is directed solely at the needs of children and does not relate to the circumstances of adults until the tapers—the basic qualification—start. It contains elements for each child, and for any associated responsibilities—I shall avoid using the word ''burden'', as I do not consider children a burden—that families must shoulder in caring for children.
The working tax credit, with which subsequent clauses deal, will support families in work, and is counterbalanced by the support provided to families not in paid work. The support recognises that element and will be directed at adults at the relevant point in the process. I should point out to the hon. Member for Northavon that the child tax credit does not need to take adults into account. It is clean, direct and for children, and it is very important that there be no
confusion about the way in which we expect families to spend that money. Adult support should be considered in the context of the working tax credit, income support and JSA.
I hope that that answers the question that the hon. Gentleman and the hon. Member for Teignbridge (Richard Younger-Ross) have asked through the amendment. Given that I have worked on the Bill for a long time, such matters seem straightforward to me, but for many they are not and I understand why they asked that question. I hope that they accept my clarification, and that the provision constitutes a better way of designing policy. As I have said, support for adults and families is dealt with through the working tax credit, income support and JSA. Although the hon. Member for Northavon might want to return to the matter another time, I hope that he is willing to withdraw the amendment in the light of my comments. If he is not, I must ask my hon. Friends to vote against it.