Clause 23 - Payments
Tax Credits Bill
10:45 am
Mr Hugo Swire (East Devon, Conservative)
I have not spoken to date in this Committee, but today I wanted to speak about the burden on small business. We agree with much in the Bill and it is a laudable aim to try to eradicate poverty. The question is how to achieve that.
I am not convinced that the Bill goes far enough to incentivise people who seek work or, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, that it goes far enough to encourage people to improve their skills and remove them from dependency on welfare. My worry, which is shared by my hon. Friends, is the burden that the clause imposes on particularly small businesses. In my constituency, businesses tend to be small—the average business employs two or three people in residential homes or tourist-related business. As the hon. Member for Teignbridge (Richard Younger-Ross) said last week, much of the employment is seasonal, which has its own implications.
We cannot assume that everything read in the press is accurate—far from it—but it is worth hon. Members bearing in mind the comments made by the right hon. Member for Birkenhead (Mr. Field) in The Mail on Sunday, the Sunday before last:
''Tax credits are an open invitation to fraud. In effect the Government hands over its own chequebook to individual employers and invites them to fill in the cheques on behalf of any workers who claim they are eligible.''
We already know that £350 million is being swindled out of the tax credit system. Does the Paymaster General think that that amount will be eradicated, or even reduced, by any of the measures in the Bill? I suspect not.
Unlike some members of the Committee, I am neither an accountant nor a distinguished professor in this subject. In other words, in many senses I am the ideal guinea-pig to consider the Bill. However, I confess that I am somebody who even struggles with self-assessment, although, with the ever-increasing burden of personal taxation, there is very little to assess at the end of most years. If I find the system complicated, where does that leave the applicants? The applicants who ideally will benefit in most of these cases are the same group of people who regularly come to see us in our surgeries. Most of them struggle to understand the benefits to which they are currently entitled: they are confused over housing benefits and
other entitlements. I believe that in many cases—I do not say this in a condescending manner—some of these provisions will be beyond their comprehension.
I want to return to the burden on small businesses. We have heard this morning from various groups that have taken an interest in the Bill. Donald Martin, the United Kingdom policy chairman of the Federation of Small Businesses, said:
''Businesses should not be treated as a social welfare arm of government. It is an invasion of employee privacy and a major distraction from business wealth creating activity.''
I worry that there is increasing evidence that, as businesses look forward to the months ahead, they are increasingly lacking confidence. It is a sensitive time of the financial cycle for many businesses, as they look ahead. At a time when we should be reducing the burden on small businesses to allow them to do what they are there to do, we seem to be asking them to do more rather than less.
Any business man, and I am sure that there are people with business backgrounds in this room—or, indeed, in our part of the world, any farmer or small business man—will say that their chief enemy is the ever-present red tape. It is worth reflecting that during Labour's first term of office red tape costs increased by a staggering £15 billion, according to the British Chamber of Commerce. That staggering sum does not even include the financial cost of the national minimum wage.