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Tax Credits Up-rating Regulations 2008

rose to move, That the draft regulations laid before the House on 6 February be approved. The noble Lord said: My Lords, I shall speak to the three orders this afternoon as well. Tax credits, together with child benefit, deliver financial support to the vast majority of families with children in the UK and are vital in our commitment to tackling child poverty. I am pleased to introduce these regulations and orders, which increase certain elements and thresholds of tax credits, and raise the rates of child benefit and the guardian’s allowance. In my view, the regulations and orders are compatible with the European Convention on Human Rights. First, I turn to the Tax Credits Up-rating Regulations 2008. Tax credits play a major role in ensuring that work pays and in tackling child poverty. Overall, nearly 6 million families, containing nearly 10 million children, benefit from tax credits. These regulations increase the child element of child tax credit by £175 above the earnings index to £2,085 a year from 6 April 2008. This element will have increased by £640 since its introduction in April 2003, benefiting 6.9 million children. These regulations also increase the disabled element of child tax credit in line with prices. In the 2007 Budget, the Government announced the next stage in modernising the tax and benefit system. This included increasing the thresholds for working tax credit by £1,200 to £6,420 in April 2008, and raising the withdrawal rate to 39 per cent for those who have income above the threshold. These regulations bring this into effect and further strengthen the incentives to work while retaining the current focus of tax credits. They also increase most of the other working tax credit elements in line with prices. I turn to the Child Benefit Up-rating Order 2008 and the guardian’s allowance orders. Child benefit is payable to over 7 million families for around 13 million children and young people. Almost all families in the UK who have to bring up children receive a worthwhile contribution towards that cost. These instruments increase rates in line with prices. From 7 April 2008, child benefit will be worth £18.80 per week for the first child and £12.55 for each subsequent child. The Government continue to meet their commitment to increasing child benefit in line with prices. As a result of these increases, the rate payable for the oldest qualifying child remains over 25 per cent greater in real terms than the rate payable in 1997. A family with two children now receives more than £31 per week. The guardian’s allowance will increase to £13.45 per week. With the increases introduced by these instruments, we will deliver even more support next year. We remain committed to our long-term aim of eliminating child poverty within a generation and halving it by 2010, and tax credits and child benefit will remain a key part of this strategy. As a result of all changes to the personal tax and benefits system since 1997, by April 2009 families with children in the poorest fifth of the population will be £4,000 a year better off. I commend these regulations and orders to the House, and beg to move. Moved, That the draft regulations laid before the House on 6 February be approved. 10th Report from the Joint Committee on Statutory Instruments.—(Lord Davies of Oldham.)