During a House of Commons debate on Tax Credits, Charles Walker calls for assistance for hard-working families who receive claims for large sums that they have no means of paying.

Mr. Charles Walker (Broxbourne) (Con): Undoubtedly the tax credit system has helped many people, but there are many families that suffer huge distress when they receive claims for large sums that they have no means of paying. How is the Minister proposing to reduce this distress on hard-working families who do not deserve to be treated in that way?

Mr. Timms: I shall set out the progress that we are making on that, because I think that it will be acknowledged that it has led to considerable improvements. Before I do so, I am grateful for acknowledgement of the benefits of the system, which I shall set out. First, tax credits have significantly improved incentives to work. In the past, far too many people found that they were better off on benefits than in a job. Tax credits have put that right. That is one of the reasons why so many more people are now in work and why the historic high rate of employment that we have achieved has been maintained for so long. Secondly, the tax credit system has reduced the tax burden on low to middle-income families. An OECD study, published in March, showed that, thanks to tax credits, net tax paid by a couple with one child living on the average manufacturing wage has fallen from more than 17 per cent. in 1997 to less than 10 per cent. now. That is a dramatic reduction in the tax burdenfor people who are benefiting greatly from the improvements that have been introduced.

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