Clause 43
Finance Bill
6:15 pm
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
As the hon. Gentleman said, clause 43 exempts in-work credit, return-to-work credit, the in-work emergency fund and the in-work emergency discretion fund from income tax. Such schemes are designed to encourage lone parents and incapacity benefit claimants to take up, and stay in, employment. The income tax exemption will apply to payments made on or after 6 April. In-work credit and return-to-work credit are weekly in-work payments for up to a year, to help the transition into work for lone parents and people with a disability or health condition. Lone parents in work can also receive discretionary payments from the in-work emergency discretion fund in Great Britain, and the in-work emergency fund in Northern Ireland, to help overcome unexpected financial barriers to work. The income tax exemption will ensure that payments under the scheme provide a clear, simple and transparent boost to income, ensuring the greatest possible impact on work incentives.
The hon. Gentleman asked about the effects of the pilots. The scheme was piloted as part of the pathways to work programme, which was piloted in 21 Jobcentre Plus districts. We announced in January 2006 in the welfare reform Green Paper that pathways to work would be rolled out nationally by April this year and we believe it will lift around 9,500 children out of poverty each year.