MPs warn of purse-to-wallet pitfall in new tax credit

MPS WARNED the Government that it must ensure plans to replace Family Credit with a new tax credit in next week's Budget do not switch cash from women to men in low-income households.

In its report on tax and benefit reform, the Commons select committee on social security said the planned working families tax credit could cost women up to pounds 40 a week, leaving them with an unfair share of the family income and harming the interests of their children.

It rejected Treasury evidence that there was little risk of a "purse to wallet" transfer resulting from the abolition of Family Credit, saying it would scrutinise carefully the practical implementation of the Government's proposals.

The report concluded that families must be given the choice between receiving the new tax credit in the pay packet - which goes to the man in nine out of 10 eligible couples - or having it paid directly to the principal carer, which is the situation now.

The MPs on the influential committee accepted evidence from experts that income was not shared fairly within households. Research showed that women were more likely to spend income on children.

According to the committee: "Whatever the other merits of paying through the wage packet, any transfer of income from women to men implicit in payment through the wage packet would not be in the best interests of children."

It noted that Martin Taylor, chairman of the Government's taskforce on tax and benefit reform, had recognised this and regarded protecting the interests of children as essential. Gordon Brown will announce the details of the Working Families Tax Credit, a key element in the his policies to improve the rewards from work for those on low pay, in Tuesday's Budget.

Yesterday's report emphasised the importance of help with childcare, saying: "We recommend that a very high priority be given to assisting low-income households with the cost of childcare."

This is something the Chancellor has signalled he will address in the Budget, although the likely scale of any new childcare credit is unclear.

While welcoming the broad thrust of the Government's approach to tax and benefit reform, the select committee's report expressed other doubts about the Working Families Tax Credit.

One concern was whether encouraging people to work was the right priority for all families, especially those with very young children.

In addition, it said that the administration of the existing Family Credit by the Benefits Agency was very efficient. The Government must set targets to ensure the new system is run just as effectively by the Inland Revenue, and that recipients are guaranteed a fixed level of payment for six months at a time to provide stability.

The new system must also address the needs of the self-employed, the MPs said.

They can receive Family Credit, but, as they have no pay packet, it is not clear how they will be paid the Working Families Tax Credit.

The select committee stressed that although the new credit would require the Inland Revenue to assess the tax of claimant couples jointly, there should be no question of ending individual and independent taxation for the majority of couples.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Barnardo's: Corporate Audit and Inspection – Retail Intern (Leeds)

Unpaid - £4 lunch allowance plus travel to and from work: Barnardo's: Purpose ...

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Customer Service / Receptionist

£15000 - £24000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future