There will be by next January, because they will not qualify for it.
The broader issue is that there is a risk that the proposal is potentially a penalty on aspiration for those who earn roughly between £50,000 and £60,000 a year. It is a disincentive for families with one parent who stays at home to look after children. What of the broader tax
incentives? One of the reasons I am so keen on reducing the higher rate of tax to 45% is that I think there is a mass incentive in having lower rates of tax, yet the concern for those earning between £50,000 and £60,000 who have three children is that they will be paying a marginal rate, often of over 60%, which does not seem to be a sensible way forward. Those are the theoretical issues.
There are a number of major practical issues that the Minister will have to look at. This system will be incredibly difficult to implement. The reality is that many people now earn consulting income and do not know nine months into a year, let alone at the beginning, whether they will earn between £50,000 and £60,000. We will see some strange disincentives that will encourage people to arrange for invoices to go out just after the financial year, so that one year they earn £49,000 and the next they earn £80,000 or £90,000. It strikes me that much of this will rely on IT systems, which have been a reputational nightmare for both HMRC and the Treasury. I think that this system will be very tough to administer. As has been mentioned, the implementation will be in January, rather than, as normal, at the beginning of the tax year, which will make for additional difficulty.
I want this to work. I think that all of us who want to see the deficit reduced want to see Budget measures working well for the Treasury and HMRC. My biggest concern is that we will end up returning to the House, perhaps in January or slightly later next year, at the beginning of the next tax year, recognising a system that is going to be discredited, not least because huge amounts of money will be uncollected and, if the schemes goes ahead, because large amounts will have to be repaid.
11 pm
We know—we can see—that there are huge practical difficulties, and, although I fully support the idea of getting the deficit down, I wonder why we cannot look at a simpler system that, for example, limits child benefit only to two or, perhaps, to three children. I am the father of two children, and I know the Minister is the father of three, but there is no particular self-interest here. We need a more straightforward and simple system; one that is easy to calculate and to understand.