Downing Street Says

Asked why it was decided to limit the protection against loss of those aged between 60-64, and not extended to people who retired early, the PMS replied that that was the decision taken by the Treasury and it was best to check with them on the specifics. From recollection it was related to parallel announcement that was made in relation to personal allowances for pensioners that we also made in 2007, but best to check with the Treasury for the definitive answer.

Asked if the Government was prepared to listen to the opponents of 42 days, the PMS replied that as the Prime Minister made clear yesterday afternoon, it was right for security reasons to go ahead with our proposals on 42 days.

Put that the Prime Minister told Frank Field on Tuesday that the entire package to alleviate the impact of the 10p change would be backdated to April, and Geoff Hoon had said the same thing to Greg Pope, and asked had they both not been double crossed, the PMS replied that there were a number of assumptions in the question, not all of which he agreed with, but the key thing was that as the Chancellor’s letter made clear yesterday, for pensioners aged 60-64 whose incomes tend to be more stable, the Chancellor’s letter was very clear that we will examine whether those households that had lost out through the removal of the 10p rate could be helped through the mechanism that already exists to pay the winter fuel allowance. And it was clear that these changes would be back dated to the start of the financial year. So there was a mechanism already in place for pensioners aged 60-64 – for other low paid families, the situation was more complex because the group was more diverse, and their incomes less stable. But we were fully committed to helping these groups as we set out yesterday. So in advance of the PBR the Treasury, as the Chancellor’s letter made clear yesterday, was focusing on the most practical way of offsetting the average losses from the removal of the 10p rate. And the Chancellor and the Prime Minister were clear that this meant offsetting average losses for this year as well as future years.

Asked if the Government had a figure yet for average losses, the PMS replied that it was difficult to come up with an exact figure for that because obviously in depended on many factors that were changing all the time.

Asked if the Government’s intention was to compensate as many of the people as possible for the losses which were occurring this year as a result of the tax change, the PMS replied that it was the Government’s intention, as the Chancellor said in his letter yesterday to offset the average losses from the removal of the 10p rate.

Asked what the significance was of using the average, the PMS replied that the significance of the average was that everybody’s circumstances were different and it was very difficult to make specific commitments in relation to specific individuals. That was why the Government said yesterday that we would offset the average losses.

Put that some people might get more than they had lost and some people might get less than they lost, the PMS replied that everybody’s circumstances were different, so it was very difficult to design a tax system which was specific for every individual in the country, and that was why what we said yesterday was that we would offset the average losses.

Put that the tax credit was particularly targeted at an individual and their individual incomes, the PMS replied that one of the main advantages of the tax credit system, as the Prime Minister made clear yesterday, was that we were able to target more directly, resources on the people that we want to give support to. That was why tax credits were a much more precise instrument for channelling support than tax allowances were. That was the reason why, with the tax credit system more developed, the decision was taken to abolish the 10p rate. But obviously the tax credit system could not be so precise for it to be tailored to the needs of every individual person in the country.

Put that some people did not receive tax credits due to their age, and how would they be compensated, the PMS replied that he would refer people back to what the Chancellor said yesterday. This was one of the practical issues that would need to be considered in advance of the PBR.

Asked if it was not feasible to do it through employers paying a higher minimum wage, the PMS replied that there were a number of practical issues that needed to be addressed in advance of the PBR in order to ensure that the average losses in the removal of the 10p rate could be offset.

Asked about the Treasury review on the long term poverty issues, and was this now a two stage process with a short term measure to offset losses people had suffered this year, and then more structural change from then on, the PMS replied that there were two separate but related issues. One was the more longer term programme of work that the Chancellor announced in the Budget in order to look at the next stages of providing support of low income families with children, but as the Chief Secretary said on Monday the remit of that work had been extended to look at what more specifically we could do in relation to all low income households. As we had been making clear in recent days that work would run on a shorter timetable.

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» Thursday, April 24, 2008

Tax

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