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Finance Bill

As the right hon. Gentleman knows, the Treasury Committee comprises members of all parties—his own, the Liberals and Labour. We have concluded that the fiscal position of the UK is strong in comparison to other EU countries. I want to focus on the measures to reduce poverty and on the 10p tax rate. The Treasury Committee considered the problems of marginal deduction rates and the impact of the abolition of the starting rate of income tax in the context of measures to reduce poverty. We welcome the increases in child benefit and child tax credit that are designed to achieve further progress on the Government's child poverty targets, and we specifically welcome the £1 billion that the Government found to fulfil those targets. As those on the Front Bench know, we were cautious about that because, in a previous report, we questioned whether the Government were resiling from their commitment. We were pleased to see that the £1 billion was included in the Budget proposals. We note the significant one-off increases to the winter fuel allowance, which should make all pensioner households better off in the tax year 2008-09, and which need to be built on by further measures in future years; those increases will help 9 million pensioner households. We also welcomed the maintenance of the 10 per cent. starting rate for savings for pensioners. Our concern about the abolition of the 10p income tax rate, however, is concentrated on households that do not stand to benefit from measures targeted on families with children, those seeking to return to work or pensioner households. We specifically said that those who do not gain from the measures on child poverty, fuel poverty and incentives to work will lose out, and we are talking largely about those on incomes of about £18,500 a year and less. We are talking about those who are under 60, who will not qualify for the winter fuel allowance; those with no under-18s in their households, who will not qualify for child poverty payments; early retirees; and those not claiming working tax credit, where take-up is low. The Minister will know that the tax credit take-up rate is about 19 or 20 per cent., which is scandalously low. I believe that £1.28 billion is available, and it is important that there is a campaign to increase the take-up rate. We cannot allow such a scandalously low figure to be maintained.