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Tax Credits

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 16th March 2010.

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Photo of Jessica Morden Jessica Morden Labour, Newport East 2:30 pm, 16th March 2010

What recent assessment he has made of the effect on the economy of the operation of tax credits.

Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party

What recent assessment he has made of the effect on the economy of the operation of tax credits.

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

Tax credits have supported the economy in the downturn, responding quickly when household income falls. Last October, 400,000 households whose income had fallen since the start of the year were receiving, on average, £37 a week more in tax credits.

Photo of Jessica Morden Jessica Morden Labour, Newport East

Tax credits have helped more than 9,000 families in my constituency by supporting them through difficult times and helping to reduce child poverty. Will the Minister reaffirm his commitment to that policy, in contrast to the two main Opposition parties, which are looking to cut tax credits for those on very modest incomes?

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

My hon. Friend is absolutely right. I can reaffirm our commitment to the policy. Under the last Government, child poverty more than doubled, to the highest rate in Europe. We have been able to reverse that rise, and indeed reduce the number of children below the poverty line by 500,000 on the most recent data. I can confirm to my hon. Friend that we will maintain that policy.

Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party

My right hon. Friend makes an important point about the impact of tax credits on family poverty. Can he give any guarantees that if there were to be a change in political fortunes, those tax credits would still go into the pockets of families in need?

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

Yes. Our view is that the tax credit system has played a very important role in supporting the economy, particularly in the past year, when a lot of people have seen their income fall-for example, because their hours have been reduced-and it has been possible for their tax credits to increase very quickly in response. I noticed that in my hon. Friend's constituency more than 500 families have benefited, by an average of just over £41.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I wonder whether the Minister can tell the House how many people have been in his constituency surgery in tears because of the way in which the tax credit system operates.

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

I do not think that I have had people in tears over that in my constituency surgery. The hon. Gentleman might be pleased to note that in April to December 2009 the number of complaints about the operation of the tax credit system was 40 per cent. down on the year before, so we are making good progress.