Withdrawal of Child Tax Allowances: Consequential Provisions

Clause 11 – in the House of Commons at 12:00 am on 9th July 1979.

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Question proposed. That the clause stand part of the Bill.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Before we pass the clause I want to raise the question of the withdrawal of child tax allowances and the consequential provisions, the issue of child benefits, and that of poverty, already raised by some of my hon. Friends this evening.

There is no doubt that in this Budget all sorts of tax concessions have been proposed, but the one question not dealt with is that of child support. If we had still had child tax allowances, as we have had over recent years, there would have been automatic relief for the family with children. As it is, child benefit has remained at the £4 to which the previous Government increased it, with the proposed increase of 50p that will come for one-parent families. It is within the knowledge of hon. Members that the previous Administration proposed to increase child benefit by 50p per child, to £4.50, in November. Arrangements had been made by the previous Government for this to be met out of the Contingency Reserve Fund. That would have ensured that the family, in a period of rapidly increasing inflation under this Government, would be taken care of.

The Tory Party paid lip service to child benefit and shed crocodile tears in the House when the Labour Government were phasing in those benefits. My right hon. Friend the then Secretary of State for Social Services came under constant attack because we were phasing in child benefits—not immediately implementing them—and so we feel justified in raising this issue.

The present Secretary of State for Social Services said, at the Conservative Party conference in 1977, Our tax system must be more family orientated. We must concentrate relief where there are dependent children. I give you this pledge: the next Conservative Government will retrieve the child benefit scheme from Mr. Healey's waste paper basket and give it top priority. I make the point that it never went into the waste paper basket. It was fully implemented.

Where now is the commitment from the Conservative Government to child benefit to which Tory Members, including members of the present Cabinet, continually pressed the then Labour Government? There is the question of the amendment to a Labour Party Early-Day motion, which stated: The amendments are very significant since they spell out the Conseravtive Party's commitment to treat increases in Child Benefit in the same way as reductions in taxation. In this context the next Conservative Government, which is pledged to major reductions in direct taxation, would regard improvements in Child Benefits which are replacing Child Tax Allowances as part of this process. Where are the reliefs in the Budget and in the Bill? That amendment was signed by two Cabinet Ministers and a junior Minister in the present Administration.

11.30 p.m.

The Government must tell the Committee why they have failed to take such action. If child benefit is not indexed and increased its value declines, and that means that families will be worse off. In November, faced with 17½ per cent. inflation, millions of families with children will be worse off.

The Government must tonight answer the charge that they have neglected the family by failing to uprate the child benefit in their tax proposals.

Earlier in the debate much was made of child poverty and the poverty trap. There was discussion about the tiny minority who might be better off on benefit than working. Child benefit did more to close that gap and help the families on low wages than any other benefit yet introduced. The Government's action, therefore, is a direct incentive not to work to those who are working and are struggling, with perhaps two or three small children, where the wife cannot work and where the husband is on a relatively low wage.

We cannot agree to the clause unless the Government give a satisfactory explanation, and in the absence of that explanation I shall ask my right hon. and hon. Friends to divide against the clause.

Photo of Frank Field Frank Field , Birkenhead

Most of our discussion has been about the redistribution of resources from poor to rich. My right hon. Friend the Member for Salford, West (Mr. Orme) has been dealing with the other important redistribution in the budget—that is, from those with children to the childless.

Therefore, as the campaign on that issue must develop in the rest of this year, I shall draw attention to three important consequences of the Government's failure to live up to much of their loud talk before the election about the importance of increasing child benefit.

Because child benefits have not been increased in the Budget, which has cut taxation by £4 billion, the burden of taxation has been shifted back on to those —rich and poor—with children. Much of the division in the House has been along class lines, but this issue of child benefit ought not to divide hon. Members on that traditional basis. The division should be between those who support families with children and those who support the childless.

There has been much talk about the effect on those who may find themselves better off out of work than following their normal occupations. In the Budget the Government rightly increased all the dependency allowances for children where the parents could not work, but failed to increase allowances for the children of those in work. So the very horror that the Conservatives profess to foresee—of people choosing not to work—has been made more real by their own actions.

The Government have also failed to deal with the real problem of the working poor. The fastest growing group in poverty in this country are not those on benefits but those who do a full week's work but whose earnings are below the supplementary benefit poverty line—in other words, those who earn their poverty.

The only effective way of dealing immediately with that poverty is to increase child benefit. The message that some of us have failed to put across to enough hon. Members is that child benefit now has a twofold function. The only way to maintain equity of income between those with children and the childless is, when personal allowances are changed, to increase the tax-free income of those with children. The only way to do that is to increase child benefit.

Child benefit has the other important function of making a major attack on family poverty, particularly among those at work. Therefore, it is to be deplored, in the terms stated by my right hon. Friend, that in a Budget that has cut taxation by £4 billion not one penny has gone specifically for children, whether those children be in families of rich or poor parents.

Photo of Mr Nigel Lawson Mr Nigel Lawson The Financial Secretary to the Treasury

You have been extremely generous, Sir Stephen, in allowing a debate on child benefit on a clause that has nothing whatever to do with child benefit—[Interruption.]

The Temporary Chairman:

Order. I have listened to all those who have spoken, and now I should like to listen to the reply.

Photo of Mr Nigel Lawson Mr Nigel Lawson The Financial Secretary to the Treasury

—but is concerned with certain consequential provisions arising out of the ending of child tax allowances. The right hon. Member for Salford. West (Mr. Orme) was so carried away that he announced that if we were not careful he would advise his right hon. and hon. Friends to vote against the clause.

I do not know whether the right hon. Gentleman has taken the trouble to read the clause, but the substance of the matter is contained in schedule 1, and the clause merely relates to the schedule. One of the main purposes of the schedule is to ensure the exemption from tax of the dependency allowances for children received by widows and others in receipt of taxable social security benefits. I should be surprised if the right hon. Gentleman wished to vote against that.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

We shall vote against the clause because that is the only way in which we can express our opposition. The lion. Gentleman can deal with this matter in other ways, but we have only one opportunity of expressing our views and we shall take it and vote this evining.

Photo of Mr Nigel Lawson Mr Nigel Lawson The Financial Secretary to the Treasury

If the right hon. Gentleman wishes to do that it is his right to do so, but he will be voting against the exemption from tax of the dependency allowances for children received by widows and others in receipt of taxable social security benefits. That is what he will be doing, because that is what the clause and the schedule are about. He will not be voting for anything to do with child benefit.

As for the right hon. Gentleman's points about child benefit, it is an impertinence, after the biggest tax-cutting Budget that there has ever been, with 75 per cent. of the tax cuts going to those on the basic rate of tax or below, for him to ask, in effect, why we have not made more tax cuts. The families of married couples get a substantial increase in allowances.

It is a further impertinence for the right hon. Gentleman to ask why we are not increasing public expenditure, bearing in mind that he and his Administration left the incoming Government with an economy in which public expenditure was roaring out of control and the borrowing requirement was yawning wider and wider in a most inflationary way. No Government have had a harder task than we have to try to bring public

expenditure back into control. That is what we have to bear in mind when we are talking about public expenditure, and I think that a little humility is called for on the part of the right hon. Gentleman.

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr

Before the hon. Gentleman sits down—

The Temporary Chairman:

Order. In my opinion the hon. Gentleman has sat down.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 277, Noes 233.

Division No. 48]AYES [11.39 p.m.
Adley, RobertCranborne, ViscountHolland, Philip (Carlton)
Aitken, JonathanCritchey, JulianHooson, Tom
Alexander, RichardCrouch, DavidHordern, Peter
Amery, Rt Hon JulianDean, Paul (North Somerset)Howe, Rt Hon Sir Geoffrey
Ancram, MichaelDodsworth, GeoffreyHowell, Rt Hon David (Guildford)
Arnold, TomDorrell, StephenHowell, Ralph (North Norfolk)
Aspinwall, JackDouglas-Hamilton, Lord JamesHunt, David (Wirral)
Atkins, Robert (Preston North)Dover, DenshoreHunt, John (Ravensbourne)
Atkinson, David (B'mouth, East)Dunn, Robert (Dartford)Hurd, Hon Douglas
Baker, Kenneth (St. Marylebone)Durant, TonyJessel, Toby
Baker, Nicholas (North Dorset)Dykes, HughJohnson Smith, Geoffrey
Beaumont-Dark, AnthonyEden, Rt Hon Sir JohnJopling, Rt Hon Michael
Bell, RonaldEdwards, Rt Hon N. (Pembroke)Joseph, Rt Hon Sir Keith
Bendall, VivianEggar, TimothyKaberry, Sir Donald
Benyon, Thomas (Abingdon)Emery, PeterKimball, Marcus
Benyon, W. (Buckingham)Eyre, ReginaldKing, Rt Hon Tom
Best KeithFairbairn, NicholasKitson, Sir Timothy
Bevan, David GilroyFairgrieve, RussellKnight, Mrs Jill
Biffen, Rt Hon JohnFaith, Mrs SheilaKnox, David
Biggs-Davison, JohnFell, AnthonyLamont, Norman
Blackburn, JohnFenner, Mrs PeggyLang, Ian
Body, RichardFinsberg, GeoffreyLangford-Holt, Sir John
Bonsor, Sir NicholasFletcher, Alexander (Edinburgh N)Latham, Michael
Boscawen, Hon RobertFletcher-Cooke, CharlesLawrence, Ivan
Bottomley, Peter (Woolwich West)Fookes, Miss JanetLawson, Nigel
Bowden, AndrewForman, NigelLee, John
Boyson, Dr RhodesFowler, Rt Hon NormanLe Marchant, Spencer
Braine Sir BernardFox, MarcusLennox-Boyd, Hon Mark
Briaht GrahamFraser, Rt Hon H. (Stafford & St)Lewis, Kenneth (Rutland)
Brinton, TimFraser, Peter (South Angus)Lloyd, Ian (Havant & Waterloo)
Brittan, LeonFry, PeterLloyd, Peter (Fareham)
Brocklebank-Fowler, ChristopherGardiner, George (Reigate)Loveridge, John
Brooke, Hon PeterGarel-Jones, TristanLyell, Nicholas
Brotherton, MichaelGlyn, Or AlanMacfarlane, Neil
Brown, Michael (Brigg & Sc'thorpe)Goodhart, PhilipMacGregor, John
Browne, John (Winchester)Goodlad, AlastairMacKay, John (Argyll)
Bruce-Gardyne, JohnGorst, JohnMacmillan, Rt Hon M. (Farnham)
Buck, AntonyGow, IanMcNair-Wilson, Michael (Newbury)
Budgen, NickGower, Sir RaymondMcNair-Wilson, Patrick (New Forest)
Bulmer, EsmondGray, HamishMcQuarrie, Albert
Butcher, JohnGrieve, PercyMadel, David
Butler, Hon AdamGriffiths, Eldon (Bury St Edmunds)Major, John
Cadbury, JocelynGriffiths, Peter (Portsmouth N)Marland, Paul
Carlisle, John (Luton West)Grist, IanMarlow, Tony
Carlisle, Kenneth (Lincoln)Grylls, MichaelMarshall, Michael (Arundel)
Carlisle, Rt Hon Mark (Runcorn)Gummer, John SelwynMarten, Neil (Banbury)
Chalker, Mrs. LyndaHamilton, Hon Archie (Eps'm&Ew'll)Mates, Michael
Channon, PaulHampson, Dr KeithMaude, Rt Hon Angus
Chapman, SydneyHannam, JohnMawby, Ray
Churchill, W. S.Haselhurst, AlanMawhinney, Dr Brian
Clark, Hon Alan (Plymouth, Sutton)Hastings, StephenMaxwell-Hyslop, Robin
Clark, Dr William (Croydon South)Havers, Rt Hon Sir MichaelMayhew, Patrick
Clarke, Kenneth (Rushcliffe)Hawkins, PaulMellor, David
Clegg, WalterHawksley, WarrenMeyer, Sir Anthony
Cockeram, EricHenderson, BarryMiller, Hal (Bromsgrove & Redditch)
Colvin, MichaelHeseltine, Rt Hon MichaelMills, Iain (Meriden)
Cormack, PatrickHiggins, Rt Hon Terence L.Mills, Peter (West Devon)
Corrie, JohnHill, JamesMiscampbell, Norman
Costain, A. P.Hogg, Hon Douglas (Grantham)Mitchell, David (Basingstoke)
Moate, RogerRidley, Hon NicholasThompson, Donald
Monro, HectorRidsdale, JulianThorne, Neil (llford South)
Montgomery, FergusRifkind, MalcolmThornton, Malcolm
Moore JohnRoberts, Michael (Cardiff NW)Townend, John (Bridlington)
Morris, Michael (Northampton, Sth)Roberts, Wyn (Conway)Townsend, Cyril D. (Sexleyheath)
Morrison, Hon Charles (Devizes)Rost, PeterTrippler, David
Morrison, Hon Peter (City of Chester)Sainsbury, Hon TimothyTrotter, Neville
Mudd, DavidScott, Nicholasvan Straubenzee, W. R.
Murphy, ChristopherShaw, Giles (Pudsey)Vaughan, Dr Gerard
Myles, DavidShaw, Michael (Scarborough)Viggers, Peter
Neale, GerrardShelton, William (Streatham)Waddington, David
Neubert, MichaelShepherd, Colin (Hereford)Wakeham, John
Newton, TonyShepherd, Richard (Aldridge-Br'hills)Waldegrave, Hon William
Nott, Rt Hon JohnShersby, MichaelWalker, Rt Hon Peter (Worcester)
Onslow, CranleySilvester, FredWall, Patrick
Oppenheim, Rt Hon Mrs SallySkeet, T. H. H.Waller, Gary
Page, Rt Hon R. Graham (Crosby)Smith, Dudley (War, and Leam'ton)Ward, John
Parris, MatthewSpeed, KeithWatson, John
Patten, Christopher (Bath)Speller, TonyWells, John (Maidstone)
Patten, John (Oxford)Spence, JohnWells, Bowen (Hert'rd & Stev'nage)
Pattie, GeoffreySpicer, Michael (S Worcestershire)Wheeler, John
Pawsey, JamesSproat, IainWhitney, Raymond
Percival, Sir IanSquire, RobinWickenden, Keith
Pollock, AlexanderStainton, KeithWiggin, Jerry
Porter, GeorgeStanbrook, IvorWilkinson, John
Price, David (Eastleigh)Stanley, JohnWilliams, Delwyn (Montgomery)
Prior, Rt Hon JamesSteen, AnthonyWinterton, Nicholas
Proctor, K. HarveyStevens, MartinWolfson, Mark
Pym, Rt Hon FrancisStewart, Ian (Hitchin)Young, Sir George (Acton)
Raison, TimothyStewart, John (East Renfrewshire)Younger, Rt Hon George
Rathbone, TimStokes, John
Rees, Peter (Dover and Deal)Stradling Thomas, J.[...]ELLERS FOR THE AYES
Rees-Davies, W. R.Taylor, Robert (Croydon NW)Mr. Anthony Berry an
Renton, TimTebbit, NormanMr. Carol Mather.
Rhodes James, RobertTemple-Morris, Peter
Adams, AllenCunningham, Dr John (Whitehaven)Hattersley, Rt Hon Roy
Allaun, FrankDalyell, TarnHealey, Rt Hon Denis
Alton, DavidDavidson, ArthurHeffer, Eric S.
Anderson, DonaldDavies, Rt Hon Denzil (Llaneill)Hogg, Norman (E Dunbartonshire)
Archer, Rt Hon PeterDavies, E. Hudson (Caerphilly)Holland, Stuart (L'beth, Vauxhall)
Armstrong, Rt Hon ErnestDavies, Ifor (Gower)Home Robertson, John
Ashton, JoeDavis, Clinton (Hackney Central)Homewood, William
Atkinson. Norman (H'gey, Tott'ham)Davis, Terry (B'rm'ham, Stechford)Hooley, Frank
Bagier, Gordon A. T.Deakins, EricHoram, John
Barnett, Guy (Greenwich)Dean, Joseph (Leeds West)Howells, Geraint
Barnett, Rt Hon Joel (Heywood)Dempsey, JamesHuckfield, Les
Beith, A. J.Dewar, DonaldHughes, Mark (Durham)
Benn, Rt Hon Anthony WedgwoodDixon, DonaldHughes, Robert (Aberdeen North)
Bennett, Andrew (Stockport N)Dobson, FrankHughes, Roy (Newport)
Bidwell, SydneyDormand, JackJanner, Hon Greville
Booth, Rt Hon AlbertDouglas, DickJohnson, James (Hull West)
Boothroyd, Miss BettyDouglas-Mann, BruceJohnston, Russell (Inverness)
Bradley, TomDubs, AlfredJones, Rt Hon Alec (Rhondda)
Bray, Dr JeremyDuffy, A. E. P.Jones, Barry (East Flint)
Brown, Hugh D. (Provan)Dunnett, JackJones, Dan (Burnley)
Brown, Robert C. (Newcastle W)Dunwoody, Mrs GwynethKaufman, Rt Hon Gerald
Brown, Ronald W. (Hackney S)Eadie, AlexKerr, Russell
Brown, Ron (Edinburgh, Leith)Eastham, KenKilroy-Silk, Robert
Buchan, NormanEllis, Raymond (NE Derbyshire)Kinnock, Neil
Callaghan, Rt Hon J. (Cardiff SE)Ellis, Tom (Wrexham)Lambie, David
Callaghan, Jim (Middleton & P)Ennals, Rt Hon DavidLamborn, Harry
Campbell, IanEvans, John (Newton)Lamond, James
Campbell-Savours, DaleEwing, HarryLeadbitter, Ted
Canavan, DennisField, FrankLeighton, Ronald
Cant, R. B.Flannery, MartinLewis, Ron (Carlisle)
Carmichael, NeilFletcher, Ted (Darlington)Lofthouse, Geoffrey
Carter-Jones, LewisFoot, Rt Hon MichaelLyon, Alexander (York)
Cartwright, JohnForrester, JohnLyons, Edward (Bradford West)
Clark, David (South Shields)Foster, DerekMcDonald, Dr Oonagh
Cocks, Rt Hon Michael (Bristol S)Foulkes, GeorgeMcElhone, Frank
Cohen, StanleyFraser, John (Lambeth, Norwood)McGuire, Michael (Ince)
Coleman, DonaldFreeson, Rt Hon ReginaldMcKay, Allen (Penistone)
Concannon, Rt Hon J. D.Garrett, John (Norwich S)MacKenzie, Rt Hon Gregor
Conlan, BernardGeorge, BruceMaclennan, Robert
Cook, Robin F.Gilbert, Rt Hon Dr JohnMcMahon, Andrew
Cowans, HarryGinsburg, DavidMcMillan, Tom (Glasgow, Central)
Cox, Tom (Wandsworth, Tooting)Golding, JohnMcNally, Thomas
Craigen, J. M. (Glasgow, Maryhill)Graham, TedMcWilliam, John
Crowther, J. S.Grant, George (Morpeth)Magee, Bryan
Cryer, BobGrant, John (Islington C)Marshall, David (Gl'sgow.Shettles'n)
Cunliffe, LawrenceHamilton, James (Bothwell)Marshall, Dr Edmund (Goole)
Cunningham, George (Islington S)Harrison, Rt Hon WalterMarshall, Jim (Leicester South)
Martin, Michael (Gl'gow, Springb'rn)Rees, Rt Hon Merlyn (Leeds South)Thomas, Jeffrey (Abertillery)
Mason, Rt Han RoyRichardson, Miss JoThomas, Mike (Newcastle East)
Maynard, Miss JoanRoberts, Albert (Normanton)Thomas, Dr Roger (Carmarthen)
Meacher, MichaelRoberts, Allan (Bootle)Thorne, Stan (Preston South)
Mellish, Rt Hon RobertRoberts, Ernest (Hackney North)Tilley, John
Mikardo, IanRobertson, GeorgeTorney, Tom
Millan, Rt Hon BruceRobinson, Geoffrey (Coventry NW)Urwin, Rt Hon Tom
Miller, Dr M. S. (East Kilbride)Rodgers, Rt Hon WilliamVarley, Rt Hon Eric G.
Mitchell, Austin (Grimsby)Rooker, J. W.Wainwright, Edwin (Dearne Valley)
Mitchell, R. C. (Soton, Itchen)Ross, Stephen (Isle of Wight)Wainwright, Richard (Colne Valley)
Morris, Rt Hon Alfred (Wythenshawe)Rowlands, TedWalker, Rt Hon Harold (Doncaster)
Morris, Rt Hon Charles (Openshaw)Ryman, JohnWatkins, David
Morris, Rt Hon John (Aberavon)Sandelson, NevilleWeetch, Ken
Morton, GeorgeSever, JohnWelsh, Michael
Moyle, Rt Hon RolandSheerman, BarryWhite, Frank R. (Bury & Radcliffe)
Newens, StanleySheldon, Rt Hon Robert (A'ton-u-L)White, James (Glasgow, Pollok)
Oakes, Rt Hon GordonShort, Mrs RenéeWhitlock, William
Ogden EricSilkin, Rt Hon John (Deptford)Willey, Rt Hon Frederick
O'Neill, MartinSilkin, Rt Hon S. C. (Dulwich)Williams, Rt Hon Alan (Swansea W)
Orme, Rt Hon StanleySilverman, JuliusWilson, Rt Hon Sir Harold (Huyton)
Owen, Rt Hon Dr DavidSkinner, DennisWilson, William (Coventry SE)
Palmer, ArthurSnape, PeterWinnick, David
Park, GeorgeSoley, CliveWoodall, Alec
Parker, JohnSprlggs, LeslieWoolmer, Kenneth
Parry, RobertSteel, Rt Hon DavidWrigglesworth, Ian
Pendry, TomStoddart, DavidWright, Sheila
Penhallgon, DavidStott, RogerYoung, David (Bolton East)
Powell, Raymond (Ogmore)Strang, Gavin
Prescott, JohnStraw, JackTELLERS FOR THE NOES
Price, Christopher (Lewisham West)Summerskill, Hon Dr ShirleyMr. James Tinn and
Race, RegTaylor, Mrs Ann (Bolton West)Mr. Hugh McCartney.
Radice, GilesThomas, Dafydd (Merioneth)

Question accordingly agreed to.

Clause 11 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 12 ordered to stand part of the Bill.

Schedule 2 agreed to.

Clause 13 ordered to stand part of the Bill.