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Welfare Tax Credits

Volume 474: debated on Thursday 24 April 2008

The latest published figures show that in 2005-06, 91 per cent. of the money for child tax credit and 82 per cent. of the money for working tax credit has been claimed.

I thank my right hon. Friend for her answer. Will she confirm that since 2005 the Government have made changes to these tax credits which mean that there are far fewer reclaims of overpayment of child tax credit and far more childless workers eligible to receive working tax credit? Why cannot the Treasury and the Revenue make it automatic that people receive the tax credit to which they are entitled, and if that is not possible, will they engage with Members of Parliament, trade unions, employers, local government and third sector organisations such as Citizens Advice in raising awareness of the availability of these tax credits and campaigning for their take-up?

I am grateful to my hon. Friend for the first suggestion in his question, although I think he will find that legislation requires people to claim—to make an application for—their tax credits. I recognise that more needs to be done to boost take-up of working tax credit by those without children. That is a particularly hard group to reach. I hope I can reassure my hon. Friend by telling him that Her Majesty’s Revenue and Customs has been conducting a campaign aimed at this group. It plans to repeat it in the autumn, increasing its intensity so that it reaches more than 7.5 million households within the priority areas where it believes many people in these groups live, and about 3 million households will receive door-drop leaflets. In addition, HMRC is targeting employers in sectors where it expects there will be high eligibility, and we are also working with the trade unions. Promoting the take-up of tax credit is not a new interest of mine; we have been working hard on it. I am grateful to him for his interest, and I would be happy to discuss what further measures we might be able to take.

The Government have prayed in aid the use of tax credits in dealing with the removal of the 10p tax rate. Notwithstanding what the right hon. Lady has just said by way of an answer and the statements of the Chancellor and the Prime Minister yesterday, will she tell the House how many million people will still be losers by virtue of the removal of the 10p tax rate who will not be able to be helped by virtue of tax credits?

The right hon. Gentleman will have heard the comments yesterday and through this week of my right hon. Friends the Chancellor and the Prime Minister, and he will know that I have had a long-standing interest in improving the take-up of working tax credits—as, indeed, has my predecessor. More work remains to be done in this area and we are redoubling our efforts. I do not at present have the details to respond to the specifics of the right hon. Gentleman’s question, but that will be part of the work we will do going forward.

Does the Minister accept that some people on low incomes have in the past had difficulty in coping with tax credit overpayments and that that is acting as a disincentive to some for claiming tax credits? We need a strategy to deal with this matter, to make sure they claim what they are entitled to.

Absolutely, and I am grateful to my hon. Friend for raising that point. HMRC has developed a series of initiatives through the tax credits transformation programme, including increased support for those renewing their claims—particularly people who have had difficulty in renewing in the past—and enhanced assistance for those making new claims, which involves longer conversations with tax credit office support staff and better training and support for staff in tax credit call centres, to make sure that the customer experiences in renewing their claims and making new claims mean that customers get the tax credits they are entitled to as quickly as possible.

As well as aiming to reduce poverty, do the Government aim to reduce the number of people who rely on benefits to escape it?

Yes, we have said for many years that we believe the best route out of poverty is through work. The support that we have in place is designed to assist people not only to find jobs through our active labour market policies, which the hon. Gentleman will have noted have had considerable success, but to ensure that work pays and provides the benefits that one would expect once people are in work.

Is my right hon. Friend aware that a Library paper prepared for me shows that families who earn up to £520 a week where one adult works for 30 hours and there are two children gain £10 a week through the changes to the tax and tax credits system? There has been a lot of debate about this Budget, but what will she do to ensure that a large number of families who might not have thought about claiming tax credits know that they will benefit a great deal from it?

I am grateful for my hon. Friend’s question. She and I have discussed this subject, and I am interested in the further evidence that she has brought to the attention of the House. I hope that she will be pleased to learn that I am encouraging Her Majesty’s Revenue and Customs to do further work through the transformation programme, including work on new guidance for families, work on more accessible information and work with the national network of children’s centres that is now in place. I am grateful to the staff at the tax credits offices, who are so enthusiastically taking up these improvements in how they work in order to benefit the customers whom they serve.

In March 2007, the Prime Minister told the Select Committee on Treasury that take-up of working tax credits by households without children had increased by 100,000 since 2004-05 and that, partly as a consequence of that, it was incorrect to say that 5.3 million households would lose out as a result of the doubling of the 10p rate. Will the Financial Secretary confirm that the Prime Minister was wrong to say that working tax credit take-up had increased by 100,000 and wrong to deny that 5.3 million households were losing out from the scrapping of the 10p rate? Will she confirm that the problem in trying to use working tax credits for households without children to cobble together a compensation package for the 5.3 million households who are losing out is that the take-up rate is only 22 per cent?

No, the hon. Gentleman knows that the rate of take-up of tax credits is higher than that of any previous system of income-related financial support for working families. The take-up rate was 50 per cent. in the early years of family income support and only 57 per cent. for family credit, but it is 62 per cent. for working families tax credit. This system is successful, although I accept, as I have said repeatedly this morning, that there is further work to do in respect of households without children. HMRC and I are working hard to improve take-up—[Interruption.] He says 22 per cent. from a sedentary position. That fact is in the public domain and I do not quarrel with it, which is why I have said repeatedly to him, his colleagues and Labour Members that there is work to do and we are committed to taking it forward.