Clause 1
Finance Bill
11:45 am
Jane Kennedy (Financial Secretary, HM Treasury; Liverpool, Wavertree, Labour)
The hon. Gentleman is right. That figure is in the public domain. However, the shifting overall has been to the benefit of those on the lowest incomes, which was the point that I wished to make, coming back to the sweeping criticism he made about marginal tax rates.
The hon. Gentleman talked about our stress on the use of tax credits as a way of assisting low-income families, and I know that there are criticisms of a complex system. One of my priorities when I assumed my role was to examine the tax credit system, to see what could be done to reduce complexity and bureaucracy and to ensure that as many people as possible who were entitled to tax credits received them. We are examining a full range of options on what to do and how to help low-paid workers, particularly those without children, as well as pensioners who, we acknowledge will pay more tax as a result of the removal of the 10p tax rate. Tax credits, however, are successful and benefit nearly 6 million families, with a higher rate of tax take-up for families with children than any previous system of support. They are not a benefit in the sense of a welfare benefit, but an entitlement. The overpayments to which the hon. Gentleman referred are an outcome of the system we adopted: it is flexible, and can respond to changes in income, particularly drops in family income, during the year. The system allows a quick response.