Social Security

Part of Clause 21 – in the House of Commons at 12:00 am on 24th March 1977.

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Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow 12:00 am, 24th March 1977

I take the point. If we can confine the circulation of the document to the major organisations which we know have queries, I think that that will be helpful.

These draft computation regulations specify the prescribed amounts and maximum payments that will apply from 5th April. Regulation 2 specifies that the basic prescribed amount will be £39, the same as it is now, and that the step will be reduced by £1, from £4·50 to £3·50. I shall explain later why we are proposing this reduction, but suffice it to say now that it is bound up with the disregard of child benefit as income for FIS, which is effected by Regulation 2(1) of the Family Income Supplements (General) Amendment Regulations 1977. Regulation 3 of the computation regulations provides for the maximum payment for a family with one child to continue to be £8·50, with an addition of 50p for each child after the first.

Hon. Members will have noted that Regulation 4 of these regulations also provides for an increase of £2·50 in the basic prescribed amount from 19th July; I shall come to the July proposals in a moment. But first let me deal with the changes we propose to make in April.

The first change is that, as explained in paragraph 10 of the note, child benefit and child benefit increase will not count as part of the family's gross income. The second change is that the step in the prescribed amount will be reduced by £1—from £4·50 to £3·50. Examples of the two calculations, one as it is now, the other as it will be from April, are given in the note—examples A and B, respectively. The effect of these changes on FIS awards current in April is set out in tables 1, 2 and 3 of the note. Hon. Members will see that there will be some small increases in the levels of these awards.

The overall effect of the FIS, child benefit and child tax allowances changes in April for tax-paying families is set out in tables 4, 5, and 6. I hope that these tables in particular will have demonstrated to the right hon. Member for Wanstead and Woodford how the figures that he mentioned in the child benefit debate on 9th February are derived.

Ideally, families on means-tested benefits should break even when child benefits are introduced, since we do not wish to reduce the overall level of support that these selective benefits give to the poorest families. But, in reviewing FIS—and this applies throughout the whole complex of means-tested benefits—our aim has been to ensure as far as practicable that the improvement in universal benefit does not leave those already dependent on means-tested benefits actually worse off at the changeover point.

I know that this aim is fully shared by Opposition Members—certainly they have made much of it at various times. For example, in the debate on child benefit regulations on 30th July 1976 the right hon. Member for Wanstead and Woodford was very concerned about the position of people who might be worse off, and in the same debate the hon. Member for Rushcliffe (Mr. Clarke) said: There will have to be amendments to the regulations and a change in the basis upon which FIS, rate rebates and rent allowances are assessed. I hope, therefore, that the Minister of State will confirm that the Secretary of State is not just saying that he will look at these things, but that action will actually be taken by the Government to make sure that no one is worse off next year. If we cannot have that, and if the Minister of State is unable to tell the House that no one will be worse off next year if he is in the FIS bracket, the Government scheme is a disgrace, remains a disgrace and will be a disgrace when it is introduced."—[Official Report, 30th July 1976; Vol. 916, c. 1145.] But the right hon. Gentleman has also pressed upon us the importance of preserving the principle that improvements in universal benefit should reduce dependence on means testing.

The Government share this view—indeed it is embodied in the very concept of the child benefit scheme. But the right hon. Gentleman appears to think that the two aims can be achieved simultaneously and in full. Given the complex structure of the various means-tested benefits that we have inherited, this cannot be done, but our proposals do secure this result as far as is practicable.

FIS is at the heart of this complex, partly because it is a passport to certain other means-tested benefits, such as free school meals, free milk and vitamins. The solution that we have adopted here is to disregard child benefit and make the necessary offset by reducing the step in the prescribed amount. That deals with the core of the problem—