Politics: New family tax credit can go in mothers' purses

The Government will launch a national advertising campaign to boost the take-up of its planned working families tax credit when it replaces family credit next year.

The new tax credit will also include a childcare credit on a much more generous scale than the childcare element of the current benefit for families on low earnings.

The move will coincide with the introduction of the national minimum wage and the reform of national insurance in a package of measures, to be announced in next month's Budget, designed to make work pay for those on low earnings.

The package will be on the same scale as the Government's New Deal - for which it raised more than pounds 5bn from the windfall tax on privatised utilities - although the Government also expects the measures to reduce the bill for income support.

Dawn Primarolo, Financial Secretary to the Treasury, made it clear yesterday that the Government had backed away from a radical early version of the new tax credit. This is believed to follow the advice of Martin Taylor, head of the task force on tax and benefit reform, whose report will be published around the same time as the Budget.

Gordon Brown, Chancellor of the Exchequer, said in the House of Commons yesterday: "We plan to build on our pounds 4bn Welfare to Work programme by unveiling in the Budget the second phase of our plan to modernise the welfare state."

The initial proposals were criticised because they would have posed a threat to the independent taxation of husbands and wives, and could have taken money away from many low-paid women, putting it in their husbands' pay packets instead.

Ms Primarolo said, in a speech to the Women's Budget Group: "There is no threat to independent taxation from the working families tax credit. Nor would there be a compulsory transfer of resources from women to men." Couples could elect who would receive the credit, she said.

The new working families tax credit is designed to make it plain that work pays. Unlike the existing credit it will not be a benefit payment. It will be administered by the Inland Revenue rather than the Benefits Agency.

The Treasury has indicated that there will be an option for women to receive the new tax credit through their local post office, in which case it would be deducted from their husband's pay packet. In addition, although couples would have to make a joint claim to the Inland Revenue, just as they jointly apply for family credit, there will be no question of abolishing independent taxation. Critics had feared that the need for an Inland Revenue assessment of the household's income would make joint taxation inevitable.

Chris Giles, an expert at the independent Institute for Fiscal Studies, said: "It looks like the Government is rebadging family credit, and paying it through the pay packet. They have ended up with something reasonably sensible."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Customer Service Executive

£18000 - £22000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Retail Buyer / Ecommerce Buyer

£30000 - £35000 per annum: Recruitment Genius: Working closely with the market...

Recruitment Genius: Sales Executive - CAD Software Solutions Sales

£20000 - £50000 per annum: Recruitment Genius: A reputable company, famed for ...

Ashdown Group: Client Accountant Team Manager - Reading

Negotiable: Ashdown Group: The Ashdown Group has been engaged by a highly resp...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece