Unemployment Benefit

Part of Opposition Day – in the House of Commons at 7:24 pm on 22 November 1982.

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Photo of Mr Brynmor John Mr Brynmor John , Pontypridd 7:24, 22 November 1982

I shall deal with that point during my speech. If the hon. Gentleman obtains as precise an answer as he seems to expect, he will be doing well. According to the great caution shown in the Financial Times today, when it refers to what the Secretary of State will be saying,. there appears to have been a retreat from the "coming shortly" trailers of last week.

I wish to deal with the unfairness of the 5 per cent. abatement. Because there is no threshold and no personal allowances, many hundreds of thousands of unemployed who would not otherwise fall into the tax net have to pay the 5 per cent. abatement of their unemployment benefit. The absence of any threshold also means that they suffer the abatement from the first £1 of their income. There is not even the marginal help of the national insurance fund minimum wage. In all ways, it is therefore a more regressive tax than even the national insurance contribution has proved under the Government.

With the 5 per cent. abatement added to the liability for tax it becomes double taxation. Those who fall into tax have their income abated by 5 per cent. for unemployment benefit and find that their effective rate of taxation is higher than the standard rate when they come to pay because of the 5 per cent. abatement from the first £1 of their unemployment benefit.

Despite the evasions and the faltering uncertainties of contributions to the debate on the Queen's Speech, a great deal of information has appeared in the newspapers to suggest that the Government will concede rather than risk losing the Division tonight. There is some persuasive evidence for that belief if one pays careful attention to those on the Government Front Bench. The Chris Tavare of the ministerial team, the man who can occupy the Dispatch Box for 40 minutes without creating a single scoring fact, has been relegated from a speaking role. The Secretary of State, whom one imagines would be eager to make formidable and favourable announcements, is likely to speak instead. Is it therefore a good sign? I believe that it is not. I shall give my reasons in a moment.

According to the newspapers, the right hon. Gentleman will be saying nothing definite. The matter is to be handled on a "nudge, nudge" basis or by an approach in which it is hinted "You stick with us, boys, and it will be all right come the Budget, the next uprating, the revolution, or whatever you like." Nudge, nudge Norman will do his job on the Tory rebels tonight and all will go away happily convinced that the Government are firmer in their resolve than ever before.

However, if the Government give a commitment that they will uprate the benefit on an unspecified date, what will that mean? It will mean no more than what we were told in March and July by the Minister of State, Treasury, that when the time was right the cut would be restored. The time will never be right unless the Government face a revolt in the House that makes their defeat imminent.

I make this point in all seriousness to Conservative Members. A vote deferred tonight on restoring the benefit immediately is a vote won by the Government and a vote lost by the unemployed. All the problems and uncertainties about timing by the Chancellor will still remain if all that the Government say is "Yes, we are wholly committed, at a time of our choosing, to restoring that benefit."