H.M. TREASURY NEWS RELEASE

HM Treasury News Release

140/99
7 September 1999

GORDON BROWN LAUNCHES A BETTER DEAL FOR WORKING PARENTS

The biggest shake-up of the tax and benefits system since Beveridge began today, as a major £12m advertising campaign was launched by Prime Minister Tony Blair and Chancellor Gordon Brown to promote the Working Families' Tax Credit (WFTC) - a better deal for working parents.

WFTC, which replaces Family Credit and comes into effect on 5 October, will help 1.5 million families, including 3 million children, by providing a decent, living wage along with generous help with childcare costs. The advertising campaign encourages people to ring a freephone response line - 0800 597 5976 - to see how they'll benefit.

WFTC will ensure that, from now on, a life in work will mean more than a life on benefits.

Gordon Brown said:

"The launch of the Working Families Tax Credit means the Government is not only integrating tax and benefits for the first time to tackle the causes of poverty but fulfilling an essential commitment of welfare reform - to make work pay. Our aim is that work will pay more that benefits. Working families will no longer need to apply to the social security office to take home a living income. And everyone benefits. The more people in work the less is paid out in social security, the better are the tax revenues and our ability to finance public services.

"On average the 1.5 million families receiving WFTC will get £24 a week more than they would have received under the old system. Around 3 million children will benefit.

"Our aim is to abolish family poverty for every family on WFTC, and ensure that every child has the best start in life.

"The WFTC marks a major landmark, not just in the reform of the tax system, linking tax and benefits but in welfare reform."

The advertising campaign, which begins tomorrow, features a series of television and press adverts alerting people to eligibility for WFTC, providing information on how much they might be eligible for, and encouraging them to ring a freephone response line to get more information. The number is 0800 597 5976, and is open from 7am until 11pm.

The campaign, produced by St Lukes advertising agency, uses the concept of advocates - people we come into contact with everyday, such as lollypop ladies and ice cream sellers - to encourage information about WFTC to be passed on to the public.

A factsheet providing useful questions and answers about WFTC is attached.

NOTES TO EDITORS

Reproduction of the cartoon figures used in the press advertisements requires permission from the copyright owners. Please call Clare Merrils, Revenue Press Office, on 0171 438 6071, for further information.

The advertising campaign will be boosted by a serious of regional Ministerial conferences, starting on October 5 in London.

Posters, leaflets and further information about WFTC will be available in job centres, post offices and benefits offices. Material has also been distributed to advisors such as Citizens Advice Bureaux and GP's surgeries.

WORKING FAMILIES' TAX CREDIT - QUESTIONS AND ANSWERS

What is Working Families Tax Credit?

A new Government initiative to give working families - either single parents or couples - a better deal. It replaces Family Credit, giving families a 'top-up' to their pay which will provide them with a decent living wage.

Why is the Government bringing WFTC in?

Parents can face many problems when moving into work or when trying to stay in work. Some parents feel they can't afford to work because of the costs of childcare. Others feel that benefits are worth more than taking a job. WFTC will change all that - it actually makes work pay. It will be an incentive to people to get into work and onto the jobs ladder.

What makes it so different from Family Credit?

It is far more generous, and is paid as a 'tax credit' - so people don't need to go to a benefits office to apply for it. The Inland Revenue, and not the DSS, will be administering the tax credit. One other major difference is that WFTC is far more generous with help for childcare costs.

Why is the Inland Revenue involved? They normally take money away, not hand it out.

The new system is a tax credit - not a benefit - and so it makes sense for the Inland Revenue to be responsible for it. As it's paid through the wage packet, mor people are likely to claim it, and will be less likely to feel like they're getting a benefit hand-out.

When does it come into force?

From October 5 this year. The advertising campaign launched today gives information about the new system, with a freephone telephone number for people to ring for further information. The number is 0800 597 5976.

How do I know if I'm eligible?

You're eligible for WFTC if:

- you or your partner works 16 hours or more a week;

- you have one or more dependent children under 16 (or 19 if in full time education) living with you;

- you have savings of £8000 or less; and

- you are resident in the UK.

How much money will I get?

The amount of WFTC that you will get depends on your circumstances eg. your income, the number of hours you work each week, the number and ages of your children, and how much you pay in childcare. The Inland Revenue will work it out for you.

Can you give me any examples?

Any family with a full-time worker will be guaranteed a take-home pay of at least £200 a week - that's £10,000 a year. No family with an income of less than £235 will pay income tax.

How can I find out if I'm eligible?

You can ring the freephone number - 0800 597 5976 - to find out if your eligible and to be sent application forms. The Inland Revenue will do the rest. For more general information and advice, phone the Tax Credit Helpline on 0845 609 5000.

I already get Family Credit - can I still apply for WFTC?

About a month before your current Family Credit award ends, you will be automatically sent an application for WFTC.

If I apply, will my husband automatically get the money?

No. Couples entitled to WFTC will have a choice about which partner should receive the tax credit, regardless of whether one or both partners work.

I get maintenance payments. Will these be taken into account?

No. Neither Child Benefit nor maintenance payments are counted as income when WFTC is calculated.

What about the cost of childcare?

You'll get help with this, too. If you pay for registered childcare, the childcare tax credit within WFTC will provide up to £70 a week for one child and £105 a week for two or more children.

The childcare tax credit is available to help with the cost of paid childcare provided by registered child minders, nurseries, play schemes or out-of-school clubs.

I'm separated from my partner but we share care of the kids - will the money for childcare be split between us?

No. Only the parent claiming WFTC will be able to claim the childcare tax credit.

Are there age limits on childcare?

Children will qualify up to the September after the child's 15^th birthday. Disabled children will qualify up to the September after their 16^th birthday.

How will WFTC be paid to me?

Initially, it will be paid into your bank or building society, or by Order Book which you can cash weekly at the Post Office. From April next year, WFTC can be paid along with your wages.

Does this mean my employer will know all my private details?

No. They will only get the relevant information from the Inland Revenue on how much money you are eligible for.

I'm self-employed. Can I claim WFTC?

Yes. The Inland Revenue will give you any information and help you need when applying.