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Programme highlights Monday, 5 February, 2001, 15:44 GMT
Labour unveils child tax credit
baby
The Child Tax Credit aims to help the less well-off
All three main political parties set out to win some new friends this morning.

Labour had its sights on five million households which may benefit from a new child tax credit.

The Tories hoped to appeal to savers on moderate incomes.

While the Liberal Democrats tried to attract all those in long-term care - and the families who have to look after them.

It's called targeted electioneering.

Child tax credit

The Labour tax credit was unveiled by the Chancellor, Gordon Brown, and the Social Security secretary, Alistair Darling, in Downing Street.


The problem is this makes the system just so complicated

Steve Webb

Mr Brown described his approach as 'rising Child Benefit for all, the family tax cut for millions, helping parents to balance work and family responsibilities, and ensuring all parents take responsibility for their children.'

They made use of visual aids - a series of advertisements to persuade all those eligible to apply for a credit which should be worth 8.50 a week.

But the ads gave a clue to one of the problems of the scheme, which some say is far too complicated.

They have been produced specifically because an estimated million people have not yet signed the claim-form.

The Child Poverty Action Group's director Martin Barnes gave the proposals a guarded welcome.

Critics point out complications

Critics point out that the Inland Revenue has no information about which families have children.

Yet the information is readily available through the Department of Social Security, which is responsible for paying the universally-available Child Benefit.

Liberal Democrat Social Security Spokesman, Steve Webb
Steve Webb: Child tax credit is unworkable

Some doubts were expressed, too, about whether this measure was a sensible staging-post on the way to a more substantial reform of the system, which is due to take place in 2003.

And even the chancellor conceded that there was a problem with the eligibility rules.

The upper limit for eligibility is an individual income of 40,000.

But because of the rules governing independent taxation for husband and wife, two partners each earning 30,000 will get the benefit.

Despite these question-marks, the Social Security Secretary Alistair Darling told the World at One that he'd noticed a significant fact.

None of the critics had challenged the underlying principle of providing more help for families with children.

Tory 'savings culture'

The Tory proposals, meanwhile are aimed at encouraging a 'savings culture', according to William Hague, who said that 'millions of people' would be better off.


Nobody argues against giving more money to families

Alistair Darling

Mr Hague said: 'We want to build a Britain where it is common sense to offer tax reductions which encourage people to save. He pointed out that under Labour, the savings ratio - the share of household income that is saved - had fallen from 10.6% to just 3%.

So a future Conservative Government would remove the starting and lower rate tax on savings, and abolish the ordinary rate of Income Tax on dividends.

The party's social security spokesman, David Willetts, told the World at One that the tax relief on pensioners' savings alone would cost 1bn, but it was affordable.

Labour were scathing about Tory plans on pensions.

Alistair Darling condemned a proposal for young people to opt out of the state system - with the help of a 500 grant - as the start of a privatisation process.

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 ON THIS STORY
Martin Barnes
"The message is relatively straightforward"
Steve Webb
"The problem is this makes the system just so complicated"
Alistair Darling
"Nobody argues against giving more money to families"
Links to more Programme highlights stories are at the foot of the page.


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