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Mr. Portillo: The Chancellor does himself no favours by promoting those distortions. He is not enhancing his credibility and does no credit to politics. He knows perfectly well that the Conservative party proposes to allow retired people to have a much higher weekly income. Single pensioners under the age of 75 would receive an extra £9.50 a week, and the payment for a couple over the age of 75 would increase to £16.10 a week. That would all be exempted from tax. [Interruption.] Yes, it would. We would adjust the tax rates and the minimum income guarantee so that pensioners lose nothing. Why is the Chancellor of the Exchequer afraid of honest debate? Why must he distort everything?

I do not wish to test your patience, Madam Deputy Speaker, but I want to make it clear that we do not propose to abolish the working families tax credit. We propose to pay it to the parent who has care. That is a much more socially responsible policy, which should commend itself to the Labour party. By the way, in the process, we shall also save business £100 million a year in administration costs.

Mr. Brown: That is the abolition of the working families tax credit. The right hon. Gentleman proposes to replace it with the old family credit, with its high marginal tax rates, its low take-up and all the work incentive problems that arose from it. The working families tax credit takes an additional 1 million people out of poverty, which in turn removes 1.2 million children from poverty. I would welcome the right hon. Gentleman saying that he would keep the working families tax credit, but he is actually saying--he should make this clear to the House--that he would abolish it and replace it with family credit, which is the old system that was paid direct to the mother and not through the employer.

Mr. Portillo: Our proposal is that the working families tax credit should be paid to the parent who has care. It is a sensible policy.

Mr. Brown: The working families tax credit is what it is because it is paid through the pay packet. That is

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exactly what it was designed to do and we have made it possible for many people to return to work. If the right hon. Gentleman says that he would keep the working families tax credit, that is one thing and, as I said, I would welcome it, but he is actually saying that he would replace it by returning to the old family credit system.

Many people are £50 a week better off under the working families tax credit because we have devised a system that has a minimum income guarantee, which at the moment is £214 a week. People do not have to pay tax until they receive £260. If the right hon. Gentleman is prepared to guarantee that the working families tax credit will remain in existence and be paid through the wage packet at the rates that we are outlining, that is one thing, but he seems to be describing its abolition and replacement by family credit.

Mr. Portillo rose--

Mr. Brown: The right hon. Gentleman must answer a straight question. Would he keep the working families tax credit in the same form in which it was designed: that is, paid through the wage packet? Will he also answer a question about pensions? If he is to guarantee that people would not have to pay tax on the addition that he proposes on the basic pension, how much would that cost?

Mr. Portillo: The working families tax credit has been badly designed by the Chancellor. Many children do not get the money because it goes to the parent in work, who is not necessarily the parent with care. I believe that that is a bad system, and we will reform it. Furthermore, it is a bad system because it costs business £100 million, and business should not be the provider of benefits on the Government's behalf.

Mr. Brown: The right hon. Gentleman is wrong on the factual point, and I hope that when he gets the information he will withdraw his allegation about what has happened as a result of the creation of the working families tax credit. As for burdens on business, perhaps he will explain his proposal to privatise the industrial injuries benefit without proper compensation having been announced for businesses. He says that he wants to take a burden off business, but then he wants to put one on through the privatisation of the industrial injuries benefit.

The right hon. Gentleman has still not answered my question. If his pensions proposal is serious, and he guarantees that no pensioner would have to pay any tax on the additional money that he proposes to give, the Inland Revenue would have to make complex arrangements and that would cost a substantial sum. He should tell us what that sum is likely to be.

As we go through the Conservative party's proposals, the amount of money available is eroded from the £16 billion. The right hon. Gentleman cannot even find the £5 billion that he is talking about. We know that that money is not available for single parents. We have calculated that he would have to put every single parent with a child over 11 back to work, otherwise he could not secure the savings that he talks about.

The Conservative party will have to go back to the drawing board one day. Its proposals are vindictive towards single parents, and assume that a newly widowed mother would have to go back to work, and that mothers

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with sick children would be forced into work. The only way in which the Conservatives could get that level of benefit savings would be by putting every mother with a child over 11 back to work. They know perfectly well what mood they want to create in the country on that issue, and they have not calculated their figures.

Mr. Portillo rose--

Mr. Brown: I shall give way only if the shadow Chancellor is prepared to answer some questions. He should tell us, as I have asked him to do, the tax cost of exempting pensioners. He says that he would exempt pensioners from taxation on the additional pension rights that he proposes to give presumably to both the richest and the poorest pensioners--any pensioner who pays tax. He must have a costing for that, so perhaps he will give it to the House now, because the longer this goes on, the clearer it is that the shadow Treasury Front-Bench team has not thought out its ideas or its detailed proposals.

Mr. Portillo: The cost of paying the benefit to single parents whose children are over 11 would be £725 million, and we have said that after three years we would be able to save £500 million. So the proposal is not based on everyone going to work, as the Chancellor says. It is based on a realistic assessment of what can be achieved after three years. It is a proper policy, because social research shows that children above the age of 11 and teenagers are much more likely to look for and find work if they come from a household in which the parent has looked for work and has hopefully found it.

We shall set out all our tax proposals in the new year, and we shall give the Government a good run for their money. Those tax proposals will be highly attractive to groups in society who have been vindictively punished by the Chancellor of the Exchequer.

Mr. Brown: The right hon. Gentleman is revealing more and more as we go on. He says that he could save £500 million from single parents, and that the cost of benefits for single parents would be £725 million. He referred to his proposal on the working families tax credit. Either that tax credit will not exist under the Conservatives, or that money will have to be paid to single parents who are in work. His failure to include any costing for the working families tax credit shows that either he intends to abolish it completely--I do not think he would abolish it completely, because he proposes to replace it with family credit, which also has a cost--or he refuses to count it as a cost. The truth is that the average benefit saving from getting a single parent back to work is about £60 a week--just over £3,000 a year. If that is divided by £500 million, it would need more than 150,000 single parents with children over 11 to recoup that money in the year about which the right hon. Gentleman is talking. In other words, he is assuming, through his own mistakes, that every single parent will be forced back into work. He is assuming that mothers with sick children and even the 4,000 widows will be forced back to work, perhaps within only a few weeks of their husband's death.

At some time, the Conservatives will have to face up to the fact that, if they take single parents off benefit and get them into work and if they keep a form of family

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credit, which they say they would, they will have to pay out some money for that. Therefore, the saving would not come just by writing off the benefit cost. They would have to provide the tax credits or the family credit. The right hon. Gentleman is now giving us the impression that he has not even bothered to cost that in his figures.

Several hon. Members rose--

Mr. Brown: I am afraid that I cannot give way any more.

The Conservatives have revealed today that they cannot tell us their fiscal rule. They cannot tell us--it was quite a simple question for previous Conservative Administrations--whether they believe in a balanced budget. I have put that straightforward and simple question to the shadow Chancellor. It was answered by previous Administrations, but he has refused to answer. In my view, the right hon. Gentleman has confirmed that he intends to abolish the working families tax credit and replace it with family credit. He has not properly costed the single parents savings and he has not costed the new deal savings, which were announced a few days ago. He has not costed properly the savings from privatising industrial injuries benefit, and, as Lord Skidelsky said in the other place, he has made huge assumptions about savings that can come from cutting bureaucracy here and there and from cutting fraud, which we are already doing far more successfully than he ever did when he was Secretary of State for Employment.

Our agenda is to entrench stability in the economy by pursuing a policy of low inflation and working with strong and disciplined fiscal rules. Our policy is to move this country towards full employment by building on the 28 million people who are now in jobs--the highest figure the country has ever achieved. We aim to build on the working families tax credit with the children's tax credit and to provide far more generous child benefit than we ever saw under the previous Government. We aim to build family prosperity, not just for some, but for all. Our policy is to build the investment that is necessary for our public services. We have had no answer today from the Conservative party about whether it would fund the necessary investment for transport and other services.

The shadow Chancellor has said that he wants a mixed economy in health care. Let us fight out this issue. We do not know about the charges. He says that he is not talking about general practitioners, but whether it is hospitals or tax relief for private medical insurance--money that could go to the health service--or whether it is the shadow Chief Secretary's plan, with the right hon. Member for Wokingham, for credits to be paid to people who use private care, let the Conservatives tell us the truth about their privatisation plans.

The Conservatives must face up to the central fact that they brought this country boom and bust in the late 1980s and early 1990s. That happened because they did not work to disciplined fiscal rules, and they have none. The Tory Government refused to invest in the supply side of the economy--education and infrastructure--which is essential to sustain growth. They did not have monetary discipline and they are now reluctant and unclear converts to the independence of the Bank of England. On the basis of one year's surplus they promised tax cuts for every year, which they knew they could not afford.

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All those mistakes are being made again. The Conservative party has a black hole in its public spending figures. However, it has an even bigger problem because it was the party of boom and bust and it still is. It has no fiscal rules, no investment in the supply side of the economy and no monetary discipline. It will make the mistake of promising tax cuts every year on the basis of a surplus in one year. The Conservatives are making the same mistakes from which they should have learned. The shadow Chancellor was Chief Secretary to the Treasury when many of those mistakes were being made and he is now the shadow Chancellor presiding over a Treasury team that is repeating them. He has not been able to answer any of my questions. The Conservative party is not fit for government and it has not even begun to learn how to be an Opposition. The country will pass its verdict in due course.

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