I make no excuse for the poor attendance of Labour Members. Even if they are in Committees, it does not excuse their constant poor attendance on social security issues which are of such vital importance. The more we say that, the more chance there is that the powers that be will take note and persuade Labour Members to attend debates, even though they do not wish to speak.
Will my hon. Friend accept that he is being a little unfair? My hon. Friend knows that there are Committees meeting in the House today and, indeed, every day, which hon. Members must attend. It is not that these debates are any less or more important than those in Committee. Hon. Members cannot be in two places at once. My hon. Friend only aggravates the problem further.
When the Government set up their reviews of the social security system they were going to invite me to give evidence. But when the Minister of State realised that not much attention would be paid to the evidence, that invitation never materialised. Had I given evidence to the committee, I would have put forward the option of taxing child benefit. Although I wish to see a massive increase in child benefit, as my hon. Friend the Member for Oldham, West (Mr. Meacher) wishes, taxation on child benefit is an option that we should consider without such an increase. Although there are difficulties with such a policy, it would fulfil many of the Government's objectives vis-à-vis family policy. The Government say that they wish to target benefit on the poorest. If we tax child benefit, we shall have an effective targeting policy without any of the take-up problems. Most families with children have a tax threshold above the supplementary benefit level, so we would not be clawing back off the poorest in work. We would be taking from those paying the higher rate of tax. Those on the standard rate of tax would not be worse off, and the gain from that policy would be concentrated on the poorest. That would be an effective targeting policy.
I shall not follow up that remark because this is a short debate and I should like to see a complete change of tax allowance policy. I believe that we should be moving towards phasing out tax allowances so as to reduce tax rates, but this is not the time to develop that argument.
There are two difficulties with the policy that I have suggested. One is that we should be transferring income within the household. The increased tax would be paid largely by males in work and the money would go to women. Some would see that as a disadvantage and if one were in government one might say that it is a disadvantage. Those of us who wish to see the position of women in our society strengthened would no doubt see it as an advantage.
Another disadvantage is that under the rules for taxing income, that change would mean that the child benefit of those on supplementary benefit would be liable to tax. I suggest that if the Government made such a proposal, they should exempt from tax the child benefit of those on supplementary benefit. At one stroke that would give the Government one of their other objectives—the creation of a family premium within the supplementary benefit system—without creating new administration.
I am most interested in what the hon. Gentleman is saying. He has gone a long way towards dealing with the point that I raised with him earlier. The only problem with his suggestion is that taxing child benefit would lead to people being taxed twice. They would be taxed once to provide the money and then taxed on the benefit in the hands of the wife. Could he deal with that problem?
I cannot deal with it, because I do not fully understand the hon. Gentleman's point, and if I give way again it will delay the debate.
The Secretary of State raised a further objection to that proposal—that the policy would lead to a lowering of the tax threshold. It would be useful if we could make some changes in the language that we use in approaching these debates. While the policy would lead to a change in the tax threshold, it would not lead to a change in the effective tax-free income. Both sides of the House must stop playing the game that when they are in opposition they score points by saying that tax thresholds have been lowered when the tax-free income has been increased and, vice versa, when they are in office. Equally, we need new ways of approaching our categories of public expenditure. If we pay the money as child benefit it appears as public expenditure, but if it is paid as a child tax allowance it does not. The same resources are being used, yet the amount appears differently in the public expenditure accounts. It is marked as a plus or a minus depending upon where one
This is an important debate. Its importance is not completely matched by the number of hon. Members present, but it is matched by the interests of those hon. Members who are in the Chamber. We have reached a watershed in the child benefit debate especially in view of the reaction from the Conservative Benches. That must be taken on board. If there is so little support for increasing the universal benefit in line with tax allowances those whose interests have been to see the furtherance of the benefits must regroup and rethink their position. I am suggesting one avenue of advance which would lead to a considerable increase in the cash payment going to women. It would achieve some of the Government's other objectives on targeting and a family premium within the supplementary benefit system and, above all, it would concentrate resources on the poorest — those in our society who earn poverty wages.
Like the hon. Member for Birkenhead (Mr. Field), I acknowledge and welcome the uprating of benefits announced by my right hon. Friend last week. I do not claim even a fraction of the hon. Member's knowledge of social security, but I share his anxiety about child benefit. I hope that my right hon. Friend will forgive me if I say that I am a little perplexed. He reiterated several times this afternoon that child benefit is important, but it seems to me that we are working ourselves into a position in which we believe and say one thing and do another.
We have already been reminded this afternoon of how my right hon. Friend's predecessor said that the Government were committed to the child benefit system and that, subject to economic and other circumstances, child benefit would be uprated each year to maintain its value. The Government constantly remind us of the improvements in our economic circumstances, yet they are now cutting child benefit.
My right hon. Friend the Prime Minister has more than once emphasised the value and importance of child benefit. Many times before today, my right hon. Friend the Secretary of State has done likewise, yet the Government are increasing child benefit by only 2 per cent., in the face of an inflation rate of 7 per cent. Furthermore, they are doing that not just in the face of their former statements but in the face of a great deal of support from elsewhere for the maintenance of the level of child benefit.
The Child Poverty Action Group brief has been referred to. I find it extremely helpful. Among other things, it referred to the view of the Policy Studies Institute which, I think, is accepted to be a reasonably objective organisation. The institute has concluded that the most efficient mechanism for directing more help to poorer families is an increase in child benefit.
Again, we have been told that apparently no fewer than 38 voluntary organisations have written to my right hon. Friend the Prime Minister complaining about a cut in child benefit. We have also been told about the recent MORI poll which showed that 75 per cent. of mothers said that child benefit was "essential" or "important" for providing for the needs of their children, and that 77 per cent. of mothers said that it was "essential" or "important" as a regular payment paid directly to them.
I received a letter today from the chairman of a committee in my constituency which represents numerous organisations. The lady wrote:
The Committee are shocked at the proposed minimal rise in Child Benefit when compared with the rate of inflation and the increases to other similar benefits.
The lady expressed disgust in support of those whose families are struggling to survive on low incomes or unemployment benefit.
The views of the Conservative women's national committee have already been described, but it is important that my right hon. Friend the Secretary of State should remember them. That committee stated:
We recommend that, as economic circumstances permit, child benefit is increased in line with increases in tax allowances or at least protected against rising prices.
The Government are doing neither. I know that my right hon. Friend has said that one-parent benefit will be increased by the full 7 per cent., that family income supplement will be increased by more than 7 per cent. to provide extra help—that is welcome—and that some other family benefits will be similarly improved. However, we have been informed that only 16 per cent. of the £175 million saved by not adjusting child benefit fully in line with inflation is being used to improve benefits for low-income families.
Thus, I hope that my right hon. Friend will forgive me for saying that I am a little perplexed. The Government position seems perverse in the face of their earlier commitments and in the face of public opinion. Their position even seems perverse in the face of the Government amendment which praises child benefit. Indeed, after my right hon. Friend's speech today the Government's position appears perverse in the light of his own remarks.
The amendment seems to suggest that the cause of the Government's proposals for uprating child benefit so inadequately is the Government's recent review of social security. That review has a great deal to commend it and it has a commitment to the continuation of child benefit, but it is only at the Green Paper stage. The Government should not anticipate the ultimate results of that until a new system is agreed by the House. The Government should maintain the best of what exists in our present social security system, and that includes a properly uprated child benefit.
Like the hon. Member for Devizes (Mr. Morrison), I am perplexed, and I think that the Government have taken a slightly perverse step in making this cut in the increase in child benefit.
I listened carefully to the Secretary of State. I agree with the hon. Member for Birkenhead (Mr. Field) that the £2 billion increase in the budget, which is not an inconsiderable sum, was virtually a statutory duty, so the Secretary does not get many brownie points from me for making great play of that. The more I listened to the Secretary of State, the more I concluded that the reason why the child benefit increase was being cut was that the uprating forced upon the Government actually cost more than they had budgeted for.
There is a world of difference between saying that the cut was a policy change due to retargeting and redirection, and saying that the budget increase of £500 million—I believe that that was the Secretary of State's figure—had not been expected. I suspect that the real cause is the unexpected increase in the uprating figure over the budgeted figure.
Hon. Members should know what really happened. It is a curious coincidence that yesterday, a short time after the cuts in the increase in child benefit were announced, the Chancellor of the Exchequer reaffirmed his determination to get extra room for tax cuts. I do not follow the hon. Member for Oldham, West (Mr. Meacher) any further down that road, but there is enough evidence to make me suspicious of the Government's motives in failing fully to index the child benefit increase. I hope that right hon. and hon. Members will follow my lead when we vote tonight.
How does the Minister intend to redeploy the resources saved? Is the figure provided by the Child Poverty Action Group correct, as quoted by the hon. Member for Oldham, West, that only 16 per cent. of the £175 million saving from child benefit is to be used to improve benefits for low-income families?
I welcome these changes. They are a step in the right direction. The Secretary of State will know that in the last Budget we took the very hard decision that where there were scarce resources there might be a case for increasing family income supplement so long as one could ensure that the take-up rate was increased. However, with reference to the figures provided by the CPAG, will only £17 million go to family income supplement and £12 million to housing benefit? What is the Government's reaction to that?
This move was not presaged in the newspapers. On the Sunday before the uprating some newspapers stated categorically that child benefit was safe. Something happened between Sunday and Tuesday, and I should very much like to know what that was. I agree with the hon. Member for Birkenhead that the significance of this debate is that it marks the divide in the House on the issue of child benefit, and I join him in deeply regretting that. The commitment that the Government are now giving is only to the universality of the benefit. Before this announcement everyone had assumed that the benefit would be price protected. If the Government's commitment is only to universality, that is a new situation which we shall all have to face.
The decision taken in 1980 by the then Secretary of State to reduce the real value of child benefit, which was put right just before the 1983 general election, enabled the Government to say that they were in favour of price protection and were committed to protect child benefit. That has now changed. There are forces within the Conservative party—not just the Conservative women's national committee — which have expressed strong opinions in the House on this issue.
We have not changed our view about the argument of child benefit versus tax allowances. The hon. Member for Devizes mentioned the Policy Studies Institute opinion. We believe that child benefit, as opposed to tax allowances, is a more discriminating and cost-effective way of helping families and a more effective way of concentrating on low-paid families in need. I do not want to consider tax allowances as an alternative to child benefit. Tax allowances give money to the higher paid as well as to the low-paid. We must remember that half a million working families with children will gain nothing from any increase in tax allowance because their income is below the tax threshold. DHSS figures show that 82 per cent. of those living below supplementary benefit level where the family has a full-time worker are families with children. There is also the important fact that child benefit is paid to the mother.
In my arguments about child benefit versus means-tested benefit I must agree with the hon. Member for Oldham, West that the child benefit system is simple and relatively popular, which is in contrast to family income supplement. It is the budgeted take-up that is the problem. Some of the people who qualify for family income supplement qualify for levels of only 18p to 20p. That is also a real problem. Family income supplement has many problems which affect those earning just above supplementary benefit levels. Mothers are hardest hit because they do not get the money that they require to look after their children.
If family credit is paid through the pay packet, it will result in take-up problems and affect children. We need to be told whether the cut in the child benefit increase is to happen only once. The Secretary of State for Social Services said in answer to my intervention during his ststement on the uprating that judgments would have to be made in the light of circumstances. I understand that circumstances can change, but there is a world of difference between that and saying that child benefit will be the target of social security savings in future upratings.
Like the hon. Member for Birkenhead (Mr. Field), I am concerned that many benefits are not well targeted. Although unprecedented levels of taxation are being levied, those who are poor and in need are not being reached. However, I am not convinced that child benefit is the best way to redress the balance. It is a universal benefit. We have a gigantic merry-go-round, with money being collected by the Inland Revenue and transferred via the Treasury to the Department of Health and Social Security. The Department forwards the money to the Post Office, which distributes it, and about 70 per cent. of it goes back to the people from whom it was collected in the first place. The result is that insufficient money reaches those who are most in need. The administrative cost of this merry-go-round is £102 million a year. If one thinks of the total that is collected, that may not seem to be a large amount, but it is substantial. The blind would be glad to receive £102 million in the form of a blindness allowance.
Does the hon. Gentleman realise where this argument may lead him? Would he care to apply it to mortgage interest relief, where one finds the same recycling? Is there not a case for saying that that benefit ought to be phased out so that the rates of tax can be lowered and people may choose how to spend their money?
We cannot debate that subject tonight, but I take the hon. Gentleman's point. Those who are most in need, people on supplementary benefits, are unaffected by what is called a cut in child benefit, and those who qualify for family income supplement will do very well out of the new proposals.
If we strip away the rhetoric of the hon. Member for Oldham, West (Mr. Meacher) we find that he is concerned not about the poor but about the pin money of middle-class housewives. It would be better to abolish child benefit, except for those who qualify for supplementary benefit or family income supplement. There should be tapered, child tax allowances for those who do not receive supplementary benefit or family income supplement. The level of benefit paid to the poor would be improved and the administrative savings would be substantial. That money could be used to greater affect elswhere. I urge my right hon. Friend the Secretary of State for Social Services to consider that alternative.
No original ideas have been advanced from the Opposition Front Bench. I was disappointed that the hon. Member for Oldham, West did little more than quote verbatim from the compassionate but muddled brief that was circulated to hon. Members by the Child Poverty Action Group. His speech contrasted starkly with the thoughtful contribution of the hon. Member for Birkenhead and with the creative and compassionate approach of my right hon. Friend the Secretary of State, both in the Green Paper and in his speech.
I wonder whether the arguments of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) also apply to the old age pension. Does he think that old age pensions should be provided only for those with below-average incomes? Individuals should be looked at in terms of their life cycle. Before reaching working age we are provided for and cared for, at least in part, by the State, whether through the taxation system or the welfare system. After retirement, once again we receive the benefit of State support and encouragement. I remind hon. Members that, under the child tax allowance system, the more children people had the better off they were. As a Conservative, I do not support a system of that kind; nor do I support the undermining of child benefit.
The uprated allowance for an adult dependant is between £18 and £23 a week. The costs of a child, particularly a teenager, can be argued to be well above the costs of an adult dependant. Their nutritional needs, clothing needs and frequently their social needs are greater. Those needs must be fully recognised. I welcome the fact that family credit will take into account the age of children.
The key point about child benefit is its simplicity, reliability and regularity. When we look at the Green Paper and the uprating figures we see that endless categories of people are considered to be static groups: the disabled, the one-parent families, the unemployed. But the reality is that the lives of people are constantly changing. There are more one-parent families, but more people are getting remarried. Seven million people change their jobs every year, but 4 million people go from the unemployment register into work every year. The joy of child benefit is that a reliable, regular income is paid through thick and thin.
Hon. Members have no excuse for not appreciating the complexity of people's lives and the difficulties they get into over form filling, because our constituents attend our surgeries and ask us to try to make sense of the complexity of welfare benefits. As we have the greatest difficulty in understanding the benefits, it is hardly surprising that the most vulnerable members of our society do not understand what they are entitled to and how the system works. The joy of child benefit is that everybody, from the richest to the poorest in the land, knows that it is available and knows how to get it. Women frequently say that child benefit has helped them to keep going. It would be very sad if we ended the United Nations decade for women by undermining what has become their right and their expectation.
The debate on child benefit took place in International Women's Year. My right hon. Friend asked then whether the amount paid in child benefit could be entered on a man's pay slip. That does not happen, although my right hon. Friend is now the Secretary of State, so there may be greater difficulties about my suggestion than I appreciate. I recognise the difficulty created if a woman is obtaining a substantial amount of benefit but her husband feels that he is being heavily taxed — not realising where the money is going.
Another key advantage of child benefit is the maintenance of unit labour costs. We were reminded this week by the Chancellor of the Exchequer of the importance of maintaining competitive labour costs. The sting comes from the man with several children who is probably better off out of work. The maintenance of child benefit is one way in which to help those people.
I am pleased that so many references have been made to the longstanding work of the Conservative women's national committee. I wish to refer to a different part of its proposals:
We argue strongly that Child Benefit should have a high priority in our welfare system. Of all our social provisions it is remarkable, in that it has an almost universal take-up, is comparatively easy and cheap to administer and is paid directly in response to the need of children.
Like other hon. Members, I have received letters from constituents. One movingly states:
It has been believed in good faith that this benefit would keep pace with inflation, but sadly this does not seem to be so any
more. I realise that there are moves afoot to try to ease the plight of the low paid and unemployed, but there are those of us, who are just out of the supplementary benefit bracket, who find it very hard to make ends meet".
There are many other such women across the country.
I shall be supporting the Government tonight, but the child benefit lobby may have been lulled by the fact that child benefits were at record levels at the last general election. It may have been lulled in the short term, but when we look to the future I hope that the Government will realise that many of us are alive to and aware of child benefits and that we shall continue to fight for them.
Child benefit is a right. We were reminded today of when the Prime Minister said that it was evidence of the Government's commitment to the family. The Foreign Secretary has said that child benefit offers the greatest help to many of our poorest families. The Secretary of State for Social Services is on record as saying that child benefit was one of the most cost-effective ways of helping families with children and easing family poverty. Two years ago, just before the election, the Prime Minister said that there were no plans to change the basis on which child benefit is calculated. Indeed, before the 1979 election the then Conservative social services spokesman was prepared to say that he wanted child benefit to rise in line with tax allowances. That would have put child benefit up to £8 at this uprating. Before the last election, social services Ministers were prepared to say that they wanted to see child benefit consistently rise in line with inflation.
Given all that, it should be of serious concern to the House that the majority of Conservative Members—who have been prepared to lead a rebellion over student grants and to threaten a revolt over the situation affecting commercial ratepayers—are, with only a few notable exceptions, virtually silent over the Government's proposed cut in the value of child benefit, which comes on top of ending the automatic right to maternity benefit, a reduction in the value of widows' allowances and an end to the right to free school meals for a substantial section of the population.
What is worse, 500,000 children are living below the supplementary benefit payments level, and 3·75 million children are living on the fringes of poverty. Poverty among children, even on the Government's official figures, has doubled since 1979. Either one child in every four goes to school ill-clad and hungry, or parents must choose between heating and eating. It is therefore remarkable that the majority of Conservative Members have been silent as the Government have moved not from a period of consultation without information — the situation two weeks ago—but to implementation of the review proposals without consultation or information.
Conservative Members remain silent as 2 million people stand to lose housing benefit from November as a result of changes in the rates tapers. They are silent despite the fact that 500,000 people will lose housing benefit altogether, most of them pensioners. Although £29 million will go towards higher child additions for people on family income supplement and housing benefits, £175 million has been taken out of the child benefit budget without any assurance that child benefit will rise in line with inflation, or even at all, next year, the year after or in any year to come.
As a new Member of Parliament, I have come to suspect three things. The first is a debtor who tells me that a cheque is in the post. The second is a Conservative who invites me to a debate on philosophy. The third is a Conservative Back Bencher who tells me that he is about to lead a revolt or rebellion. Whether it be the Tory wets, those who support the concept of one nation, or the Centre Forward group, which seems to have disappeared as the football season ended, Conservative Members by their silence are saying that they are prepared to tolerate a divided nation in preference to living with a divided Conservative party over the social security review proposals.
They are prepared to support a reduction in taxation in preference to a reduction in deprivation. The Chancellor yesterday made a commitment that he would reduce taxes no matter what happens. A 1p in the pound reduction in taxation will cost around £1 billion. Before Conservative Members support that commitment, they should remember that it will mean that 7 million households, most of them pensioner households, will lose some housing benefit; 7 million mothers and 12 million children will lose the increase in child benefit that they should receive; and the 7 million people who depend on supplementary benefit will cumulatively get less money as a result of the social security changes.
To save £1 billion to secure a 1p in the pound reduction in income tax, the Secretary of State for Social Services has had to abandon any claim that this is a nil-cost review. It is a cost-cutting review in housing and child benefits, and it will be a cost-cutting review in terms of supplementary benefit.
We know that the cost of raising a child is far greater than the child benefit payment and the supplementary benefit addition for children. All the recent evidence in the paper produced by the Child Poverty Action Group—other organisations have drawn attention to it as well—shows that at present child benefit can cover barely one fifth of the cost of bringing up a teenage child.
On this and previous occasions Conservative Members have asked, "Why should rich mothers get child benefit?" They ignore the fact that child benefit was originally designed as a benefit to be paid to the mother rather than the husband. If we move from the universal concept of child benefit by reducing its value and introduce further means tests, the big money savings will come not from debarring the claims of the rich but from deterring the claims of the poor. Conservative Members are saying that they are prepared to allow child benefit to be frozen, as the Government probably intend to do from next year. They are really saying—
I am not giving way.
Conservative Members are saying that it is too expensive to run a welfare state, particularly a family policy for children, without the stigma and shame attached to claiming means-tested benefits. They also tell us that family credit will do more for low-income families than child benefit. But how can we accept vague assurances about uncosted proposals for family credit, undisclosed benefit rates, an unknown number of beneficiaries and an unknowable impact on poverty when in their uprating statement last week the Government took away £175 million from child benefit and are to return only about £30 million to low-paid families? How can we accept any vague assurances from the Government about family credit when during the reviews they betrayed their promises on the state earnings-related pension scheme and widows' allowances? They have certainly betrayed the promise made by the Secretary of State at the outset, that these would be nil-cost reviews and that there would be no savings as a result.
Thirdly, Conservative Members tell us that they are prepared to support child benefit because it is simple, popular and easy to understand. They seem to forget that the main reason that we support rises in child benefit is that it is the most cost-effective, efficient and economical way of easing family poverty.
In addition to asking the Minister, as did the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), whether he can give an assurance that child benefit will not be frozen this year, may I ask him to confirm that, if one were to put the £1·5 billion which would ease the burden of family poverty into reducing taxation, that would help very few families substantially and none who are below the income tax level? It would help only those on one third average earnings by 60p a week, whereas child benefit could be doubled or at least raised by £6 which would help those on between half and one and a half times average earnings to the extent of £1·88 per week. An increase in child benefit of £6 per week would be a much more cost-effective way of expending the same amount of money to ease family poverty.
If the Government were serious about using the tax and benefits system to reduce family poverty and were not merely intending to cut taxes for the sake of it, without any consideration of the impact on poverty, they would propose to the House that, in preference to reducing the standard rate of income tax or raising tax thresholds the rate of child benefit should rise substantially.
I am not particularly concerned that the facts and figures which we have been expecting got lost on the way to the Cabinet or the printers. What worries me most is that the vision that inspired the Beveridge report and the commitment that has inspired previous Governments to act on family poverty is totally missing from any of the proposals and rhetoric contained in the reviews.
I urge Conservative Members to reconsider their decision on child benefit as well as on other benefits which have been attacked by the reviews. I urge the Government to use the period of consultation to listen not only to the Conservative women's national committee but to a whole series of non-political representative organisations. Not only are these organisations asking that child benefit be raised; they are pressing the Government with the claim that that is the most effective way of reducing family poverty.
Like my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley), I am one of the few Members who actually claim child benefit; I have my book in my handbag and am grateful for the £54·80 which we receive every month. It is a very valuable and useful addition to the Currie family budget. As in most of the other 7 million families in the country with their 12 million children, it is spent mostly on the children.
All the advantages of the child benefit system have been rehearsed tonight. It is payable to everyone, it is cheap to administer, and it costs 25p per payment, which is one tenth what a supplementary benefit payment costs to administer. There is a feeling of equity, that we are all the same and that we are all in the same boat.
But I think that those of us in the position of my hon. Friend and myself should have an uneasy feeling about it. If we are to criticise, as Opposition Members have, tax cuts to families which do not need them, we ought equally to criticise benefit payments to families which do not need them. I do not need the money. Seventy-five per cent. of all families are over the supplementary benefit line before they receive child benefit. Those families which are in need and in receipt of family income supplement and supplementary benefit do not get any benefit from the child benefit payment; it is simply taken into account when their needs are calculated, so they do not see it.
We should also be aware of how much money we are talking about. If we were to abolish child benefit—we are talking about £4·4 billion this year—we would need about £800 million to make up to the families receiving family income supplement and supplementary benefit the element accounted for by child benefit. That would leave about £3,500 million to play with for all the other families of the nation. What we could do with that is raise all tax thresholds by 18 per cent. or reduce the standard rate of income tax to 27 per cent., and that would benefit all those families as well.
It would do the exact opposite. What the hon. Lady proposes is to take money away from families and spread it throughout the nation, including that half of the nation which do not have children.
There are all sorts of ways of doing this. I merely quote the figures to show hon. Members exactly how much money we are talking about, and what a big dent in the tax system child benefit makes.
The Government have decided to raise child benefit for lone parents by the rate of inflation, child benefit for family income supplement receivers by more than inflation and my child benefit by less. I happen to think that that is right. Seven pounds per week per child will still be very nice. I do not feel the agony of the Labour motion at not getting an additional 33p per week on top of my £7.
Quite honestly, I would rather see inflation fall, because a drop in inflation would be of more value not only to the receivers of child benefit but to everyone else in the nation; more than almost anything else that we could propose.
The Labour motion talks about breach of promise. I always thought that breach of promise was one of those very difficult things to prove in court and that the evidence that would be produced by the defendant would often point to the rather sleazy background of the plaintiff. If I may have the permission of the House, that is exactly what I propose to do.
I asked the Library to produce for us the figures on the real value of the combined child benefit and child tax relief that we used to have before 1978, and it produced figures that go back to 1946. The support for a one-child family in August 1946 amounted, in November 1984 prices, to £5·28. In April 1951, the figure, as the hon. Member for Oldham, West (Mr. Meacher) quoted it, was £6·56. In 1956, it was £6·46, and so on. Then we get to the last Labour Government. In 1976, it was £4·72, quite a drop. Now we come to our Government. Last year, it was £6·82 and this year it is £6·85. The only years—and I am quoting—in which the child support in real terms was higher than November 1984 were in April 1952 under a Tory Government and in April 1955 under a Tory Government.
If it comes to having a go at a particular Government's policy on child benefit, the Labour party does not have a leg to stand on. If it comes to breach of promise, the Labour party bride is rolling up to the altar in the emperor's clothes, and it is a rather embarrassing sight.
As for Labour's own policy, that has already been dealt with to some extent very ably by my right hon. and hon. Friends. I think that it is worth pointing out two small points in the time available to me. The hon. Member for Oldham, West for about three days in April, managed to propose, before his other right hon. and hon. Friends got to him, that Labour should double the child benefit for most of us and treble the child benefit to children of single-parent families. To pay for all this, the married man's tax allowance would be abolished and the additional single person's tax allowance would disappear. On top of that, fewer people would be eligible for family income supplement, fewer people would be eligible for free prescriptions and fewer children would get free school meals. That was in all those proposals. That is quite an exciting suggestion—it is a good job that it was thrown out.
On top of that, the hon. Gentleman clearly said—I quote from his document on page 17—that he would have
an amalgamated National Insurance and Incomes Acts levied on a progressive basis on all personal income at rates of 15 per cent., 30 per cent., 45 per cent. and 60 per cent.
As I understand it, that would be a tax on child benefit, and it also means that he would tax the lower income groups at 15 per cent. In the Standing Committee on the Social Security Bill, on which I served, we cut the rate of national insurance contribution for the lowest-paid workers to 5 per cent., so the Labour party proposals would tax the lowest paid workers three times as much as we would in order to do that.
The hon. Member for Oldham, West is quoted in The Guardian of 16 April this year as saying that
his main aim was to abolish the degrading supplementary benefit system which he described as 'a fraud'.
Up in Derbyshire, we say that it takes one to know one, but it would be both unparliamentary and very unkind of me to direct a remark of that nature to the hon. Gentleman, who is not even listening.
My other main criticism of the motion refers to the question of mothers being the recipients. I have no desire to change the system, because I think that changing at would simply be change for change's sake, but I should like to challenge some of the underlying attitudes and at the same time to say that I find these attitudes on both sides of the House.
Sixty per cent. of all women of working age work. We make up to 41 per cent. of the workforce, and the percentage is growing. The household with the man as the sole earner and the woman at home with two children is very rare. Such households make up only 5 per cent. of all households. Most mothers now work. Many mothers are now taxpayers. It is patronising, wrong and out of date to suggest that we are not interested in tax cuts. Of course we are interested in them. Many working mothers will benefit more than their husbands from raising tax thresholds, because it is a common practice for many mothers to work up to the rate at which they start paying tax, and no further. If we raise that rate, they will be able to earn more money. That point should be put across firmly.
As to the notion that the cash handout should go to the mother because she looks after the children, I have to say that I think that parents look after the children. We should not perpetuate the idea that children need only their mother and that only the mother is capable of taking that responsibility. That is nonsense. That sort of philosophy, borne of feminism, has created far too many single-parent families and deprived far too many men of their children.
The child benefit system has none of the special qualities attributed to it by hon. Members. It is merely the redistribution of £4·4 billion a year. It comes from taxpaying pensioners. It comes from my constituents who pay VAT on their fish and chips or on the porch to go on their houses. The child benefit system competes with the other services that we would like—for example, the National Health Service, pensions, good roads and education. Child benefit goes to the mother of every child—not where there is a need but where there is a child, whether living in a castle or a hovel. We keep it because the British people want it. The Government's sensitive and generous approach deserves our support.
In this debate we must first re-emphasise that child benefit must be considered not in isolation but in conjunction with family income supplement and benefits paid to the poorer families in general. It is appropriate and sensible that we are going forward in the proposed upratings with a system that substantially increases family income supplement and thus directs more money to those in need.
I accept the worries that have been expressed about the poor take-up of family income supplement. Because of this poor take-up, I supported the changes in the Green Paper with respect to family credit. This is a much better approach towards providing special assistance for the poor and general support for children.
I very much respect the remarks made on many occasions in debates such as this by the hon. Member for Birkenhead (Mr. Field), but I was slightly surprised today by some of his comments. If I understood him correctly, he said that it would be possible to tax child benefit and that this would have a significant impact on families with a number of children which were caught in the poverty trap. I do not believe that that is true. Having looked at the figures in detail, I believe that the introduction of a tax on child benefit would effectively reduce the level of pay at which low-wage families would be subjected to tax. That would have an adverse effect.
The only way to cope satisfactorily with the problem would be to introduce a child allowance system or low tax threshold system for families with children. If that were done, one might be able to pursue the type of idea that is put forward by the hon. Member for Birkenhead and a number of my colleagues. If that were not done, the measure would have a damaging effect on low-income families with several children in terms of the poverty trap and the level of their take-home pay after wage increases. I have great reservations about that change.
It is important that we do not consider any one benefit in isolation and that we welcome the substantial increase in family income supplement and the help that it will give to those most in need.
The debate has revealed a wide range of views, but it has singularly failed to throw the slightest additional light of any kind on the policies that the Labour party is urging on the House. One aspect about the Labour party that has become clearer during the debate is—
It is all right. The hon. Member for Houghton and Washington (Mr. Boyes) is not a bad bloke. I do not mind dealing with him. I am treating the Labour party with at least the respect that one would give those who presumably wish to become the Government. The only way in which the Labour party will have the slightest chance of becoming the Government—it is a very slight chance—is for it to have some type of policy. I want to know when we will be given the slightest sign of that policy. We learnt just one thing during the past two and a half hours about the Labour party—the Labour party's interest in child benefit is three deep. That is the number of Labour Members who were here to hear the hon. Member for Oldham, West (Mr. Meacher) when he started his speech. Three Labour party Members were here to hear this great assault on the Government's social security policy, and one them left during the first paragraph! Frankly, he did not miss a thing.
I shall deal with some of the criticisms of the proposals in last week's uprating statement by my right hon. Friend the Secretary of State. It is right that I should repeat what he said. These proposals are in the context of an uprating which spent an additional £2 billion on social security benefits, taking it to a total of £42 billion, which represents one pound in every three of the money that is raised from taxpayers and contributors in taxation and contributions. It is worth my saying again that the uprating included an increase of £4 a week for married pensioner couples. This means that the pension of a married couple and, indeed, of all retirement pensioners will have risen by 96 per cent. between the time when the Conservative party took office and November 1985, compared with a rise of 86 per cent — 10 per cent. more than the expected increase — in prices during the same period. Last week's uprating statement included a range of measures to help less well-off families, especially those with children in work.
The hon. Member for Oldham, West make some play of the figures relating to the complicated inter-relationship between family income supplement, supplementary benefit and child's needs allowances in housing benefit. I have no hesitation in accepting, first, that that relationship is complicated and, secondly, that it makes it difficult for Governments—whatever their colour—to achieve rational results with their policies. In the social security review we have put forward the first coherent structure in 50 years for income-related benefits to enable us to target resources more effectively.
Even with those problems and the kinks that inevitably occur within the present complicated and incoherent system, a married couple with two children aged 4 and 6, and whose gross earnings are £60 will get an increase in the family income supplement of £1, an increase in housing benefit of 53p and, even allowing for the fact that they will not be receiving the 70p of child benefit represented by the 35p — the difference between its uprating and the full prices figure—they will be better off by 83p net a week. The same would be true for the same family on £80 a week, and it would be 1p less for that family on £100 a week. For a married couple, with two children aged 12 and 14, on exactly the same basis, allowing for the fact that child benefit has gone up by 15p, and not 50p, there will still be, for the £60 a week couple, a net increase of £1·50 over and above what they would otherwise have received; for those on £80 a week an increase of £1·50; and for those on £100 a week an increase of £1·40.
Of course I accept that this is subject to problems of take-up, just as it is subject to problems of complication, but that is why the Government are seeking in the social security review to achieve a simpler, fairer, more understandable and more readily receivable social security system. The fact that we have problems at the moment which the Government are trying to tackle strategically does not give cause for accusation, because we are trying at least to do what we can to help less well-off families within the existing benefits structure.
I make no apologies whatever for that or for the fact that only a few months ago, in my right hon. and learned Friend's Budget, changes in national insurance contributions were announced which will benefit most of those self-same families by a significant additional £1 or £2 a week. In the last three months we have probably seen the announcement of the most significant extra package of help to low-paid families with children that any Government have introduced for several years.
The Minister has talked about the Government making strategic decisions. Until the announcement last week, the Government had increased child benefit in line with rising prices. They did not do so this year. Is that the policy from now on, or was this a one-off decision just for this year?
The hon. Gentleman asked that question in the course of his speech, and I would have answered it later. The Government's position on the uprating of child benefit is, as it has always been, and as it was stated by my right hon. Friend some time ago, that inescapably this is a matter, like many others in social security, on which we have to make judgments when the decisions are taken in the light of all the circumstances prevailing and of particular social priorities—in this case our desire to steer additional help to less well-off families with children.
Will the Minister give the Government's strategic response to the universality of child benefit? Can he go as far as to say that he would interfere with that, if he cannot give the assurance for which the hon. Member for Birkenhead (Mr. Field) is asking?
The Green Paper makes it clear, as we have made it clear on a number of occasions, that the Government adhere to the concept of a universal child benefit payable through the mother. I hope that that will be some reassurance to my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley) as well. There is no question of departing from that principle, and that is made very clear in the Green Paper.
Will the Minister confirm that the Government have now abandoned any pretence that child benefit will continue to rise in line with inflation in future years? Secondly, will he tell us whether, if that decision is made, the £175 million saved this year and the perhaps £500 million saved by the time of the next general election will go to the family credit scheme, or will only a small fraction of it go, as happened last week, to improving family income supplement?
I do not know what the hon. Gentleman means by using the word "pretence" in this context. I have made the position absolutely clear — that the Government will make judgments about the proper level of child benefit in the light of the circumstances prevailing at the time when those decisions have to be made, taking account of other social priorities, including our particular wish to direct more help more effectively to families with children.
I do not think that it is a major change, with the significance with which the hon. Gentleman has sought to invest it. My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), my right hon. Friend's predecessor, made it clear in the statement that has been quoted several times today that the Government's decision in this matter would necessarily be related to economic and other circumstances. Those other circumstances necessarily include judgments about the overall priorities of the social security budget and are particularly concerned with low-paid families in work, on which I placed a good deal of emphasis.
I have said that I think that the hon. Member for Oldham, West did rather less than justice to the Government's proposals represented in the uprating statement. Perhaps that was understandable, since he did even less justice to his own proposals and to the thoughts that he has put, not just before the House, but before the country as a whole.
Perhaps I might have the attention of the hon. Member for Oldham, West for a moment or two, because I am anxious to regale the House with his words on "Newsnight" on 18 June. Indeed, as he said earlier in the debate, I was taking part in the programme with him. He said:
We do need a better integration between income tax and the social security system, but based on an income tax system which is graded in its structure so that the lowest paid are either out of tax altogether or they pay a low rate of 15 per cent. and above that 30, 45 or 60 per cent.
If you had that you could pay universal benefit like child benefit to everyone but then concentrate it on those in greatest
need without a means test by taxing it, and that would be a far better way of ensuring that we retain universality but at the same time concentrate it on those who really need it.
When he was challenged by my right hon. Friend about this notion of taxing child benefit—which I must say the Child Poverty Action Group considers to be just as much an attack on child benefit as anything that the present Government have done—the hon. Gentleman said that what he had in mind was a different structure of taxation. Now, however, as we have learnt from his green—or whatever colour it was—paper, which has disappeared into some pigeon-hole somewhere, the hon. Gentleman's idea of a new structure of taxation appears to be one in which everybody right down to the bottom of the income range pays at least 15 per cent. income tax—[HON. MEMBERS: "No."] Well, what else does it mean? It says that the lowest payers are either out of tax altogether or pay a low rate of 15 per cent. Let the hon. Gentleman tell me what he means.
The hon. Gentleman does not know what it means. The one thing that has encouraged me in the debates on this issue over the past few weeks is that there is at least one thing in common between the Opposition Front Bench spokesman on social security and the Leader of the Opposition, who is unhappily absent, and that is that neither of them understands half the things that he says in the House. The hon. Gentleman has clearly signalled that it is his intention, in some way or another, to tax child benefit, whether at 15 per cent. or 30 per cent., in the hands of very large numbers of people. There is no way that that structure will work without substantial numbers of the families whom the hon. Gentleman is claiming to protect having effectively a 30 per cent. or 15 per cent. cut in their child benefit in the form of a major raising of the tax threshold for the person earning the salary.
I hope that the hon. Member for Birkenhead (Mr. Field) will reflect that any such variants of taxing child benefit lead instantly and automatically to a substantial reduction in take-home pay for every family man who is a wage or salary earner. It is not, therefore, a sensible proposal.
Whether that is recognised through the tax or benefits system, or in what combination and at what level, are matters for debate about child benefit. In our system, it is recognised by universal child benefit paid to the mother, and we believe that that should continue, although it does not follow that its relationship with other benefits is immutable or that the Government can escape the need to make judgments from time to time.
Our judgment this year is that it is reasonable to make an increase of 15p for everyone and to give extra help to less well-off families through FIS and housing benefit. That is a judgment for which we do not apologise and which, I believe, the House as a whole will back.
|Division No. 251]||[7 pm|
|Archer, Rt Hon Peter||Banks, Tony (Newham NW)|
|Ashley, Rt Hon Jack||Barnett, Guy|
|Ashton, Joe||Beckett, Mrs Margaret|
|Atkinson, N. (Tottenham)||Beggs, Roy|
|Beith, A. J.||Janner, Hon Greville|
|Bell, Stuart||Kilfedder, James A.|
|Benn, Tony||Kilroy-Silk, Robert|
|Bennett, A. (Dent'n & Red'sh)||Kirkwood, Archy|
|Bermingham, Gerald||Lamond, James|
|Blair, Anthony||Leadbitter, Ted|
|Boothroyd, Miss Betty||Leighton, Ronald|
|Boyes, Roland||Lewis, Ron (Carlisle)|
|Bray, Dr Jeremy||Lewis, Terence (Worsley)|
|Brown, Gordon (D'f'mline E)||Litherland, Robert|
|Brown, Ron (E'burgh, Leith)||Lofthouse, Geoffrey|
|Buchan, Norman||McCartney, Hugh|
|Caborn, Richard||McCrea, Rev William|
|Callaghan, Jim (Heyw'd & M)||McDonald, Dr Oonagh|
|Campbell-Savours, Dale||McKay, Allen (Penistone)|
|Carlile, Alexander (Montg'y)||MacKenzie, Rt Hon Gregor|
|Carter-Jones, Lewis||McNamara, Kevin|
|Cartwright, John||Madden, Max|
|Clark, Dr David (S Shields)||Maginnis, Ken|
|Clay, Robert||Martin, Michael|
|Cocks, Rt Hon M. (Bristol S.)||Mason, Rt Hon Roy|
|Cohen, Harry||Maxton, John|
|Concannon, Rt Hon J. D.||Meacher, Michael|
|Conlan, Bernard||Mikardo, Ian|
|Cook, Frank (Stockton North)||Millan, Rt Hon Bruce|
|Corbyn, Jeremy||Miller, Dr M. S. (E Kilbride)|
|Cowans, Harry||Mitchell, Austin (G't Grimsby)|
|Cox, Thomas (Tooting)||Molyneaux, Rt Hon James|
|Craigen, J. M.||Oakes, Rt Hon Gordon|
|Crowther, Stan||O'Brien, William|
|Cunningham, Dr John||Park, George|
|Davis, Terry (B'ham, H'ge H'l)||Parry, Robert|
|Deakins, Eric||Patchett, Terry|
|Dewar, Donald||Pavitt, Laurie|
|Dixon, Donald||Pendry, Tom|
|Dobson, Frank||Pike, Peter|
|Dormand, Jack||Powell, Rt Hon J. E. (S Down)|
|Dubs, Alfred||Powell, Raymond (Ogmore)|
|Eastham, Ken||Prescott, John|
|Edwards, Bob (W'h'mpt'n SE)||Redmond, M.|
|Ellis, Raymond||Richardson, Ms Jo|
|Evans, John (St. Helens N)||Roberts, Ernest (Hackney N)|
|Faulds, Andrew||Rowlands, Ted|
|Field, Frank (Birkenhead)||Ryman, John|
|Fisher, Mark||Sedgemore, Brian|
|Flannery, Martin||Sheldon, Rt Hon R.|
|Foot, Rt Hon Michael||Shore, Rt Hon Peter|
|Forrester, John||Short, Mrs R.(W'hampt'n NE)|
|Foster, Derek||Silkin, Rt Hon J.|
|Fraser, J. (Norwood)||Skinner, Dennis|
|Freeson, Rt Hon Reginald||Smith, Rt Hon J. (M'kl'ds E)|
|Freud, Clement||Smyth, Rev W. M. (Belfast S)|
|George, Bruce||Snape, Peter|
|Godman, Dr Norman||Soley, Clive|
|Gould, Bryan||Stewart, Rt Hon D. (W Isles)|
|Hamilton, James (M'well N)||Stott, Roger|
|Hamilton, W. W. (Central Fife)||Strang, Gavin|
|Harman, Ms Harriet||Torney, Tom|
|Harrison, Rt Hon Walter||Wainwright, R.|
|Hart, Rt Hon Dame Judith||Walker, Cecil (Belfast N)|
|Hattersley, Rt Hon Roy||Wareing, Robert|
|Haynes, Frank||Weetch, Ken|
|Healey, Rt Hon Denis||Welsh, Michael|
|Heffer, Eric S.||Winnick, David|
|Hogg, N. (C'nauld & Kilsyth)||Woodall, Alec|
|Holland, Stuart (Vauxhall)||Young, David (Bolton SE)|
|Howell, Rt Hon D. (S'heath)|
|Hoyle, Douglas||Tellers for the Ayes:|
|Hughes, Robert (Aberdeen N)||Mr. John McWilliam and|
|Hume, John||Mr. Lawrence Cunliffe.|
|Adley, Robert||Aspinwall, Jack|
|Aitken, Jonathan||Atkinson, David (B'm'th E)|
|Alexander, Richard||Baker, Nicholas (N Dorset)|
|Alison, Rt Hon Michael||Baldry, Tony|
|Amess, David||Banks, Robert (Harrogate)|
|Ancram, Michael||Batiste, Spencer|
|Arnold, Tom||Bellingham, Henry|
|Ashby, David||Bendall, Vivian|
|Bennett, Rt Hon Sir Frederic||Grant, Sir Anthony|
|Benyon, William||Greenway, Harry|
|Best, Keith||Griffiths, Sir Eldon|
|Biffen, Rt Hon John||Gummer, John Selwyn|
|Biggs-Davison, Sir John||Hamilton, Neil (Tatton)|
|Blackburn, John||Hargreaves, Kenneth|
|Blaker, Rt Hon Sir Peter||Haselhurst, Alan|
|Bonsor, Sir Nicholas||Hayes, J.|
|Boscawen, Hon Robert||Hayward, Robert|
|Bottomley, Peter||Heddle, John|
|Bottomley, Mrs Virginia||Hickmet, Richard|
|Bowden, A. (Brighton K'to'n)||Higgins, Rt Hon Terence L.|
|Bowden, Gerald (Dulwich)||Holland, Sir Philip (Gedling)|
|Brandon-Bravo, Martin||Holt, Richard|
|Bright, Graham||Jenkin, Rt Hon Patrick|
|Brinton, Tim||Johnson Smith, Sir Geoffrey|
|Brooke, Hon Peter||Knight, Greg (Derby N)|
|Brown, M. (Brigg & Cl'thpes)||Knight, Dame Jill (Edgbaston)|
|Bruinvels, Peter||Knox, David|
|Bryan, Sir Paul||Lang, Ian|
|Burt, Alistair||Latham, Michael|
|Butler, Hon Adam||Lawrence, Ivan|
|Butterfill, John||Lawson, Rt Hon Nigel|
|Carlisle, John (N Luton)||Leigh, Edward (Gainsbor'gh)|
|Carlisle, Kenneth (Lincoln)||Lennox-Boyd, Hon Mark|
|Carlisle, Rt Hon M. (W'ton S)||Lewis, Sir Kenneth (Stamf'd)|
|Carttiss, Michael||Lightbown, David|
|Cash, William||Lilley, Peter|
|Chalker, Mrs Lynda||Lloyd, Peter, (Fareham)|
|Chapman, Sydney||Lord, Michael|
|Chope, Christopher||Luce, Richard|
|Clark, Hon A. (Plym'th S'n)||Lyell, Nicholas|
|Clark, Sir W. (Croydon S)||McCrindle, Robert|
|Clarke, Rt Hon K. (Rushcliffe)||McCurley, Mrs Anna|
|Clegg, Sir Walter||MacGregor, John|
|Colvin, Michael||MacKay, Andrew (Berkshire)|
|Conway, Derek||MacKay, John (Argyll & Bute)|
|Coombs, Simon||Maclean, David John|
|Cope, John||McNair-Wilson, P. (New F'st)|
|Couchman, James||McQuarrie, Albert|
|Cranborne, Viscount||Major, John|
|Critchley, Julian||Malins, Humfrey|
|Crouch, David||Malone, Gerald|
|Currie, Mrs Edwina||Maples, John|
|Dickens, Geoffrey||Marland, Paul|
|Dicks, Terry||Marlow, Antony|
|Dorrell, Stephen||Marshall, Michael (Arundel)|
|Dunn, Robert||Mates, Michael|
|Durant, Tony||Mather, Carol|
|Eggar, Tim||Mawhinney, Dr Brian|
|Emery, Sir Peter||Maxwell-Hyslop, Robin|
|Evennett, David||Mayhew, Sir Patrick|
|Eyre, Sir Reginald||Mellor, David|
|Fairbairn, Nicholas||Merchant, Piers|
|Fallon, Michael||Meyer, Sir Anthony|
|Farr, Sir John||Mills, Iain (Meriden)|
|Favell, Anthony||Miscampbell, Norman|
|Finsberg, Sir Geoffrey||Mitchell, David (NW Hants)|
|Fletcher, Alexander||Moate, Roger|
|Fookes, Miss Janet||Montgomery, Sir Fergus|
|Fowler, Rt Hon Norman||Morris, M. (N'hampton, S)|
|Fox, Marcus||Morrison, Hon C. (Devizes)|
|Gale, Roger||Moynihan, Hon C.|
|Gardner, Sir Edward (Fylde)||Murphy, Christopher|
|Garel-Jones, Tristan||Needham, Richard|
|Glyn, Dr Alan||Nelson, Anthony|
|Gorst, John||Newton, Tony|
|Nicholls, Patrick||Squire, Robin|
|Normanton, Tom||Stanbrook, Ivor|
|Norris, Steven||Stanley, John|
|Onslow, Cranley||Steen, Anthony|
|Oppenheim, Phillip||Stern, Michael|
|Oppenheim, Rt Hon Mrs S.||Stevens, Lewis (Nuneaton)|
|Osborn, Sir John||Stewart, Allan (Eastwood)|
|Ottaway, Richard||Stewart, Andrew (Sherwood)|
|Page, Sir John (Harrow W)||Stewart, Ian (N Hertf'dshire)|
|Page, Richard (Herts SW)||Stokes, John|
|Parkinson, Rt Hon Cecil||Stradling Thomas, J.|
|Patten, J. (Oxf W & Abdgn)||Sumberg, David|
|Pawsey, James||Taylor, Teddy (S'end E)|
|Peacock, Mrs Elizabeth||Temple-Morris, Peter|
|Porter, Barry||Thomas, Rt Hon Peter|
|Portillo, Michael||Thompson, Donald (Calder V)|
|Powell, William (Corby)||Thompson, Patrick (N'ich N)|
|Powley, John||Thorne, Neil (Ilford S)|
|Prentice, Rt Hon Reg||Thurnham, Peter|
|Price, Sir David||Townsend, Cyril D. (B'heath)|
|Proctor, K. Harvey||Tracey, Richard|
|Raison, Rt Hon Timothy||Twinn, Dr Ian|
|Rees, Rt Hon Peter (Dover)||van Straubenzee, Sir W.|
|Rhodes James, Robert||Vaughan, Sir Gerard|
|Ridsdale, Sir Julian||Waddington, David|
|Roberts, Wyn (Conwy)||Wakeham, Rt Hon John|
|Robinson, Mark (N'port W)||Walden, George|
|Roe, Mrs Marion||Walker, Bill (T'side N)|
|Rossi, Sir Hugh||Walker, Rt Hon P.(W'cester)|
|Rost, Peter||Wall, Sir Patrick|
|Rowe, Andrew||Waller, Gary|
|Sackville, Hon Thomas||Ward, John|
|Sainsbury, Hon Timothy||Wardle, C. (Bexhill)|
|Sayeed, Jonathan||Warren, Kenneth|
|Shaw, Sir Michael (Scarb')||Watts, John|
|Shelton, William (Streatham)||Wells, Sir John (Maidstone)|
|Shepherd, Richard (Aldridge)||Wheeler, John|
|Shersby, Michael||Whitney, Raymond|
|Sims, Roger||Wiggin, Jerry|
|Skeet, T. H. H.||Wolfson, Mark|
|Smith, Sir Dudley (Warwick)||Wood, Timothy|
|Smith, Tim (Beaconsfield)||Yeo, Tim|
|Soames, Hon Nicholas||Young, Sir George (Acton)|
|Speller, Tony||Tellers for the Noes:|
|Spence, John||Mr. Archie Hamilton and|
|Spencer, Derek||Mr. MIchael Neubert.|
|Spicer, Jim (W Dorset)|
That this House endorses the Government's commitment to maintain Child Benefit as a universal benefit paid to all mothers as a contribution to the cost of bringing up children; notes that an additional £2 billion will be spent on benefits as a result of the uprating in November; welcomes the additional help that will be provided for low income families with children and welcomes the proposals for a simpler and more effective benefit structure which will result from the Government's recent review.
I beg to move,
That this House strongly condemns the Government's breach of their own repeated promises to increase Child Benefit in line with inflation which will result in mothers and children being deprived of £175 million in the current year as the first of the Green Paper cuts; notes that Child Benefit is uniquely effective in countering family poverty, reducing the poverty trap and ensuring that mothers are the recipients of monies needed for child care; and therefore calls upon the Government to restore the real value of Child Benefit both now and for the future.
Our case in this debate is very simple and very clear. It is that child benefit is uniquely effective in countering family poverty, in reducing the poverty trap and in ensuring that the person who receives the money necessary for caring for the children is the mother. It was a Labour Government who brought in child benefit and, for the reasons that I have just given, we believe strongly that it is a key benefit, central to our social security system, which should be built up and not cut back. It is a benefit which has attracted widespread endorsement.
I offer at the outset one or two quotations. My first is this:
We would all, I suspect, like to see an increase in child benefit; I think that it is one of the most effective ways in which you can deal with the problem of poverty and the problem of bringing help to children.
I am sure that we would all say "Heat, hear" to that. Those were the words not of a Labour Minister, but of the present Secretary of State for Social Services when speaking to the Treasury and Civil Service Sub-Committee on 28 July 1982. That was when he still believed in child benefit, just as, when he set up the pensions inquiry, he.still believed in the state earnings-related pension scheme.
If child benefit was, in the Secretary of State's own words,
one of the most effective ways
of dealing with the problem of poverty, does the downgrading now of child benefit mean that the Government are repudiating that objective? The Secretary of State does not appear to want to reply now. No doubt he will do so later.
On 28 June 1983 the Prime Minister said that the Government's real increase in child benefit then was
evidence of our commitment to the family."—[Official Report, 28 June 1983; Vol. 44, c. 49.]
Quite so, but does this latest princely increase of 15p—which is less than one third of the rate of inflation—now indicate that the Government's commitment to the family is somewhat wilting? That is another question to which we would like an answer today.
I offer a third quotation:
It plays a major part in easing the unemployment trap, and so in our strategy of improving incentives for everyone. It is important for families, and particularly for the low paid. Indeed,
it is the benefit which provides the greatest help to many of the poorest families in the country. I refer, of course, to child benefit."—[Official Report, 15 March 1983; Vol. 39, c. 143.]
Again that is not some Child Poverty Action Group enthusiast, as one might think, but the right hon. and learned Member for Surrey, East (Sir G. Howe), the then Chancellor of the Exchequer, in 1983.
If child benefit is so effective in all these roles, according to Ministers, why is it being sidelined now? If all those unsolicited panegyrics applied in 1982 and 1983, why do they not apply now?
The Secretary of State's justification for his backtracking on child benefit was stated by him in his answer to me a week ago, when he said:
The first priority must be to give help to families in greatest need."—[Official Report, 18 June 1985; Vol. 81, c. 177.]
It would indeed be a seductive argument if it were true, but it is not. It simply does not reflect what the Secretary of State has done, for three good reasons.
First, only a fraction—about 16 per cent.—of the £175 million saved from the child benefit cut is being used to improve benefits for low-income families. The improvement in family income supplement will cost just £17 million, and the housing benefit child's needs allowance £12 million — which had in any case originally been promised for April this year. So the Government are not transferring resources at all; they are cutting benefit to mothers by £150 million.
Secondly, cutting child benefit and spending more on FIS, which is the Government's strategy, does not concentrate resources on the poorest families. It has the opposite effect. It cannot be stated too often that take-up of child benefit is virtually 100 per cent., while FIS, because it is means-tested, reaches only about half of all the low-paid families which are eligible. Housing benefit is little better—the take-up there is about two thirds. So the losers from the right hon. Gentleman's package are clear. They are those entitled to FIS but not claiming it, and that is about 200,000 of the poorest families, those with incomes just above the FIS eligibility levels, and mothers and children in families with reasonable incomes, but where the income is not shared fairly. Far from being helped by what the Government have done, those families will be the hardest hit.
There is a third important reason, if one follows through the logic of the right hon. Gentleman's package, why the outcome contradicts his own claims. It is that even those families which get the family income supplement will find that the so-called extra help that the Government are providing by increasing the FIS prescribed amount by more than 7 per cent. will be swallowed up by the loss of child benefit and the consequential changes in housing benefit.
I shall give an example which effectively demolishes the Government's case. In March of this year the average FIS payment for a two-child family was £12, which implied an average wage of around £76 a week. Assuming that their earnings increase in line with inflation, this family's FIS award will increase by £1 in real terms as a result of the higher FIS levels announced by the Government a week ago. However, at the same time, no less than 70p of this £1 increase will be snatched back by the cut in child benefit.
Indeed, the result will be even worse because of the infernal logic of the interconnection between means tested benefits. Because increases in FIS are taken into account for calculating housing benefit, many parents will find that the gain in housing benefit due to the increased child's needs allowance will be outweighed by the downward adjustment to housing benefit resulting from the higher FIS levels. The Secretary of State looks puzzled, but I hope he realises the logic of his own proposals. That is exactly what will happen even to those who get the fullest benefit of his increases.
The result of all that was the boast by the Secretary of State a week ago:
The first aim is to direct help to the poorest … That is precisely what we are doing".—[Official Report, 18 June 1985; Vol. 81, c. 177.]
That is not borne out by the facts. Indeed, the truth is the reverse. Downgrading child benefit and upgrading the odds and ends of means tested benefits at the margin does not bring the greatest help to the poorest families, but traps them even more deeply in their own poverty.
We know the Government's real motive behind this child benefit cut. It has next to nothing to do with targeting the needy, which is Fowlerspeak for more meanstesting. It has everything to do with cutting expenditure on benefits to safeguard future tax cuts, which, as usual, will go mainly to the better off and the rich.
If the hon. Gentleman was in his place at the start and heard my argument, he knows how compelling it is. If it has a fault, I should like to know what it is. It contains the compelling fact that even those who will benefit most by the increase in FIS levels will probably lose in net terms, leaving aside those who, because they do not claim FIS, do not get the benefit.
Far from concentrating resources on poorer families, which will not happen as a result of this package the proposal paves the way for concentrating resources on the richer sections of society — a redistribution which has become the characteristic hallmark of Thatcherite Toryism. That connection was made absolutely explicit yesterday by the Chancellor of the Exchequer when he made a ringing call to bankers and business men at the Carlton Club in favour of further tax cuts at the expense of further public expenditure cuts, and child benefit is the first victim of that renewed Treasury drive.
How can the hon. Gentleman say, hand on heart, looking at the figures, that the Government's proposals are not designed to help families most in need, when he has not mentioned that one-parent benefit has increased by 7 per cent., that the child's needs allowance has gone up to £15.40 a week, and that there is a new higher prescribed amount for families with older children?
I am not surprised that the hon. Gentleman ran away after a single day when he was setting up a new organisation in the Tory party, if those were the sorts of arguments that he had in mind. He obviously has not listened to my remarks. I mentioned the increases in housing benefit, in the child's needs allowance and in the FIS prescribed amounts. I agree that for one-parent families the FIS increase is an improvement, but would the hon. Gentleman care to give the details of the increases and the number of families who will receive them? They are minuscule compared with the 12 million children who are losing 35p every week this year as a result of the cut in child benefit.
This switch from public expenditure to taxation cuts has precious little justification. The Financial Times—scarcely a Left-wing publication—commented on 20 June, just after the Secretary of State announced his package:
By looking for economies in the benefits but not in the tax allowances which form part of the welfare system, the Government is open to the charge of unfairness. The real value of child benefit, in reality a substitute for child tax allowances, is to be cut by nearly 5 per cent., yet the Chancellor recently raised the married man's tax allowance, enjoyed by couples without children, by twice the rate of inflation.
In truth, the married man's tax allowance has been increased by about 17 per cent. — that is, if it was increased by the statutory price-linked formula which the Government use—whereas child benefit is 3 per cent. lower in real terms — that is, if it was pitched in accordance with that formula. That demonstrates how, long-term, the fiscal trend under Tory policies has worked against families.
I am pleased to hear that. I hope that many Conservative Members, including the Secretary of State, will read it, because it represents a devastating indictment of the Government's social policies. If the Secretary of State read more documents such as that at bedtime, rather than the briefs from his Department, we might get better policies from him.
I quote again from the document, this time from the Conservative Women's National Committee, the publications of which I do not normally read. In a passionate plea on behalf of child benefit, that organisation said:
We recommend that as economic circumstances permit, child benefit is increased in line with increases in tax allowances, or at least protected against rising prices.
Poor old Emma Nicholson. She really did her best among the upper echelons of Conservative women. Just her luck that the present Government are led by a women who happens to be more like a man. [HON. MEMBERS: "Sexist."] I am sure that the Prime Minister will be delighted by that reaction from the Government Benches.
There is a further important reason why this attack on child benefit cannot be justified on the grounds of public expenditure costs, which is what I suspect the argument is really all about. Even if child benefit had been indexed fully in line with inflation—as we believe it should have been—expenditure on it would still be falling in real terms. That is because the number of children qualifying for it has been, and still is, falling. It fell by 1 million in the six years up to 1984, and that reduction saved about £300 million at present benefit rates. Moreover, the number will continue to decline in the immediate future because of the relatively low birth rates of the late 1960s.
All of that is in addition to the fact that the Conservatives have cut spending on child support since 1979 by allowing child benefit to fall below its 1979 level during the period up to the November 1983 uprating, and by the steady and continuing reduction in the real value of child support for national insurance beneficiaries. For those reasons, there is absolutely no excuse today, in expenditure terms, for chopping back child benefit even further.
The hon. Gentleman referred to the position in 1979 and then carefully spoke of the November 1983 uprating. Is he aware that in that uprating, and in the November 1984 uprating, the resulting real value of child benefit was higher than in any year under any Labour Government back to 1951?
Quite, and we are approaching November 1985. It is true that at November 1984 prices the value of child benefit rose to £6·85, the level from which it is now being increased. That is marginally, by 15p, above the level in April 1979. However, at November 1984 prices, in the same real terms, it is now to be lowered to £6·57. That is precisely our objection. Child benefit is not being increased steadily in line with rising prosperity and increasing growth, as we are always being told, but is being lowered.
There is even less excuse for any cut in child benefit. The Government are mortgaged to the hilt in terms of promises about child benefit. The previous Secretary of State for Social Services, the right hon, Member for Wanstead and Woodford (Mr. Jenkin) said in 1980:
We are committed to the child benefit system and it is our intention, subject to economic and other circumstances, to uprate child benefit each year to maintain its value." — [Official Report, 28 July 1980. Vol. 989, c. 1063.]
Perhaps we should now ask: are the Government saying that the economy is in a worse shape than in 1980, so that the promise of the then Secretary of State no longer holds good? Otherwise, we should like to know how their actions are justified.
Equally important, I quote from the letter from the 38 organisations, including the National Federation of Women of Great Britain, to the Prime Minister in March this year. The letter reminded the Prime Minister of her pre-election assurance:
there are no plans to make any changes to the basis on which child benefit is paid or calculated.
Nothing could be more unequivocal than that. Moreover, the letter went on to say:
In our view, the retention of child benefit, paid at a reduced level in real terms, alongside a restructured system of meanstested child support would mean a 'change in the basis of that benefit'. The Government would be seen, we believe, to be paying lipservice only to the principle of a benefit for all children, and would be widely suspected of intending to allow the reduced universal benefit to decline in value until it withered away and was replaced entirely by meanstested provision.
In a nutshell, that is exactly what is happening, despite all the Government's solemn pledges which are churned out like confetti before an election and then disappear like snowflakes on a boiler after it.
What is most worrying is that this attack on child benefit is not a "blip"—to use a word which I believe is beloved of the Chancellor of the Exchequer—but part of a calculated long-term strategy on the part of the Government to run down child benefit. I quote from paragraph 4.49 of the Green Paper, which is a very important statement by the Government:
The Government believe that it will be right to give greater priority to assistance for families in the income range covered by family credit than to the assistance given to families as a whole through child benefit. We will therefore have regard to the need to concentrate resources in this area … in determining the overall level of child benefit.
That says it all. Today we are debating the beginning of the end of child benefit. All that I would add is that to embark on this strategy—
As the hon. Gentleman is about to conclude, are we to understand that we shall have this debate without him informing us of his own policy in this area? Does the hon. Gentleman still stand by the pledge that he made only two months ago to abolish the married man's tax allowance?
I shall certainly outline not only our future policies but what we have done in the past. In April 1974 the Labour Government inherited child benefit at £5·14, at November 1984 prices. We increased that to £6·70. We shall not cut child benefit. We shall seek to increase it, not in line with prices as we did previously, but to do better than that. We stand on our record. If only the right hon. Gentleman could do the same. He inherited the level of £6·70, and it will fall this November to about £6·57.
The hon. Gentleman said in a statement only two months ago that he would double child benefit and abolish the married man's tax allowance. Are we to understand from what he has just said that that part of his policy has been abandoned?
I think that the right hon. Gentleman is used to the terminology of Green Papers. I hope he believes that Green Papers are the subject of consultation. I made it clear that the document I released was not party policy, but a consultative paper. There should be serious consultation about whether we spend £4·5 billion on the married man's tax allowance, which is in no way concentrated on those who need the money, instead of increasing child benefit, which is far and away the most cost-effective and direct way of assisting those in need. That is a serious question, and if the right hon. Gentleman seeks to make a mockery of it I think that his view will be taken into account by the people of this country.
It is a travesty of consultation that the Secretary of State, having issued a Green Paper, which we presume is for consultation, embarks on carrying out the policy with his first statement no less than two weeks after he issued the Green Paper. Is that his idea of a Green Paper and consultation? That is also a pointer to the shape of things to come from the Green Paper. So far we have been given no figures from the right hon. Gentleman's policy document, after the most important review of the welfare state for 40 years, except for two. One is a £500 million cut in housing benefit, and now we have a £175 million cut in child benefit. It does not exactly fill us with a great deal of confidence as we await the rest.
It is our contention in this debate that the Government's family policy—if I can dignify it with that title£is fundamentally flawed and misconceived. In seeking to justify the cut, the Prime Minister argued on 20 June that the alternative to raising tax thresholds is
of particular benefit to families".£[Official Report, 20 June 1985; Vol. 81, c. 433.]
It cannot be said too often and too strongly that that is absolutely wrong. An increase in tax thresholds gives most money to the highest paid and least to the low-paid lifted out of tax, while the half a million working families with children below the tax threshold gain absolutely nothing. An increase in child benefit, on the other hand, is pound for pound a far more discriminating way of assisting families and concentrating help on low-paid families in need.
Even the Government's Green Paper accepts, at paragraph 4.44, that
Child benefit is simple, well understood and popular.
Yet, perversely, the Government now want to give higher priority to family income supplement, which is complicated, poorly understood and unpopular, and moreover, worsens the poverty trap. Not only that, but the problems associated with FIS will be compounded by the shift to the proposed family credit scheme. In particular, not only will payment through the pay packet be used. I suspect, to subsidise low-pay employers, but the benefit is less likely to be spent on the children, and the take-up could be reduced still further.
Last November the Government clawed back £1 a week from pensioners on supplementary benefit who were getting heating allowances. This June they are clawing back £1 a week from families with three children. That cut further threatens the diet and health of children, especially since the Government have already withdrawn school milk and run down school meals, when one third of all children in our society are in families living either at or only just above the Government's own poverty line. It is not a policy for families; it is a policy for cutbacks at the expense of families. Because 7 million mothers and 12 million children will lose, I earnestly and unhesitatingly request every Member of the House who cares about families to vote for our motion.
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
endorses the Government's commitment to maintain Child Benefit as a universal benefit paid to all mothers as a contribution to the cost of bringing up children; notes that an additional £2 billion will be spent on benefits as a result of the uprating in November; welcomes the additional help that will be provided for low income families with children and welcomes the proposals for a simpler and more effective benefit structure which will result from the Government's recent review.
I am considerably underwhelmed by the speech of the hon. Member for Oldham, West (Mr. Meacher). When he started, three Labour Members were present on the Back Benches. The numbers have increased a little, but even now are not into double figures—Ascot has ended and Wimbledon has begun.
Everyone knows that the hon. Gentleman's attack is a sham. The trouble with him is that he now speaks in such perpetual hyperbole that he is losing all contact with the real world. He complains of the uprating statement last week as being another attack on the welfare state. But what did the statement say?
The statement set out an increase in spending of over £2 billion a year, taking total social security spending to over £42 billion a year — one third of all public spending. That is a real increase in spending of over 30 per cent. since 1979. The statement set out an increase of £4 a week in the pension for a married couple and £2·50 for the single pensioner—increases which benefit over 9 million pensioners. The statement set out a 7 per cent. increase in unemployment benefit and a 12 per cent. increase for those on invalidity pension.
That is the real context of this debate — and the debate that is to follow on housing benefit. The uprating represents not a cut in spending on social security but the payment of over £500 million more than was originally planned for social security spending. Those resources have been directed at some of the families most in need. That is right, and I make no apology for our priority.
There is one fundamental point to make, which I sought to raise with the hon. Gentleman towards the end of his speech. We are now past the stage when the Opposition can get by simply by letting loose the hon. Member for Oldham, West to set out a shopping list of aspirations—and then repudiate those of his policies that lack instant consumer appeal. We are now at the stage where serious debate has to be joined about our objectives in social security policy and about the best methods to achieve them. For the Opposition, that means moving from generalised aims to particular policies. The trouble is, to judge from the hon. Gentleman's speech, all that that means is a move from the incoherent to the incredible.
Over the past few weeks, we have heard one call after another for more spending. According to the hon. Gentleman, virtually every part of the social security budget will be increased by billions of pounds. On child benefit alone, two months ago the hon. Gentleman proposed to spend an extra £4·5 billion a year and to pay for that simply by abolishing the married man's tax allowance. We should be clear what the effect of this would be. For 10 million couples, it would mean an increase of about £7 a week in their tax bill. For the 5 million without children it would mean a £7 a week cut in their income.
What I find even more than usually extraordinary about the hon. Gentleman's speech is that he utters vague generalisations about tax and social security but has not bothered to put any of his comments on the Government's record into that context. In particular, he has not looked at the effect of total policies in the lower income sector which is, of course, crucial in the whole rationale of child benefit. In other words, one cannot look at child benefit in isolation. One also needs to take into account what else has happened in terms of the tax system. Several things have happened. Tax thresholds are now 20 per cent. higher in real terms than they were in 1978–79. In other words, married taxpayers paying at the standard rate are £3·30 a week better off because of what we have achieved in raising the real level of thresholds. Those with working wives are £5·40 a week better off. In the context of this debate, it is right to point to that achievement.
I accept that one should look at matters in the round. Therefore, will the right hon. Gentleman look at the position of taxpayers to see how much indirect taxation they have to pay as a result of switches of Government policy from direct to indirect taxation? Will he look at the increase in rents that the Government have forced upon people and take into account the increasing rate burden imposed by the Government, and then tell us whether people are individually better off or worse off in their net tax burden since the Tories came into office?
I would gladly do all those things, but it is sensible, when talking about child benefit in particular — we all remember the history and rationale of child benefit, which was to bring help particularly to those in the low income sector—to look at the tax position as well. At the same time we should examine the national insurance position.
The changes in the structure of national insurance contributions announced in the last Budget will also give extra help to those on low incomes. For the lowest paid, they almost halve national insurance rates, and for people earning under £90 a week they will mean increases in net income ranging from £1·10 to £2·18 a week. That is effective and immediate help directed at those on low incomes.
Therefore, the context of this debate is a £2 billion uprating of social security, a raising of tax thresholds with the effect that 1·25 million people have been taken out of tax altogether and a reduction in national insurance in this year's Budget of 3·5 million low wage earners.
I am sorry to interrupt my right hon. Friend so early, and I am grateful to him for giving way. Before he altogether leaves the married man's tax allowance, can he answer this point? In today's society, is it really sensible if, when two individuals, both working, get married, they have an increase in their tax allowance? As Secretary of State for Social Services, would not my right hon. Friend rather that the money that is lost in that tax allowance could be spent somehow on families?
I see that the hon. Member for Oldham, West now wants child tax allowances to be considered as well. There appears to be no end to his flexibility on what his policy will be. I accept that there are issues that have to be examined; that is why the Green Paper on personal taxation that my right hon. Friend the Chancellor of the Exchequer is bringing forward later this year will look at this sector. That is the right context.
The right hon. Gentleman has just made two very important points, one about raising the tax threshold and one about changes in national insurance contributions, and those changes need to be recognised. Will he take the argument a stage further and admit that neither the raising of the threshold nor the national insurance changes distinguish whether the taxpayers have children and that, over the past 30 years, we have shifted the burden of taxation onto those with children? Before the last election and up until recently, both sides thought that the only way to shift the burden back was to raise child benefit in line with tax thresholds. Is not that an important point, and is not the failure to raise child benefit in line with thresholds a defeat for the Government's policy, which they say is about protecting the family?
It is not remotely a defeat, but I agree with what the hon. Gentleman has said, in a typically sensible intervention. I do not wish the hon. Gentleman any permanent harm by that comment. Clearly, what he says is entirely right. The tax system, and only the tax system, can direct help at low-income families without distinguishing between low-income families with children and those without. The same is true for national insurance. The context of this debate, unlike the picture painted by the hon. Member for Oldham, West is the £2 billion uprating announced last week, and the fact that we have raised the tax threshold and reduced national insurance.
It is against that background that the Government had to decide their priorities on child benefit. We have already made it clear that child benefit should continue as a benefit payable to all families irrespective of their incomes. The greatest priority must be the support of families on low incomes, not the general level of support. It is here that we find some of the most difficult problems—as the review of social security showed—and it is right that this should be our first priority.
That is why we decided to take other measures to get extra help to low-income families. The result is that we have made two important changes to the family income supplement scheme. Two hundred thousand families stand to gain from these changes—those with older children will gain most. We have increased the allowances in the scheme by at least £1 more than the 7 per cent. increase in prices would have justified. That will mean that the benefit payable at a given level of income could be £3·75 per week higher for a one-child family and £4·50 per week higher for a two-child family.
Wherever we divide on this, I think that the hon. Member for Oldham, West will agree at least with this step—that we have, for the first time, introduced some age relation into the family income supplement system. At present, the allowances for children are the same whatever the age of the child. That is in marked contrast to the supplementary benefit rates, which rightly give more help to those with older children. This gives rise to some of the more extreme effects of the unemployment trap—the help available for a child through family income supplement is well below the help provided for a teenage child through supplementary benefit. By increasing the prescribed amounts for a child aged 11 to 15 by £1 per week, and for a child aged 16 or over by £2 a week, we will be taking the first step to reducing that problem. It is of course a first step to reduce a problem which many people previously recognised.
I also announced last week a further real increase in the child need allowance in housing benefit. That is the amount of extra income which is assumed to be needed for each child in assessing entitlement to benefit. At its new level of £14.50 — a £1 a week real increase — the allowance, although not age-related, will be much closer to the scale rate for older children in supplementary benefit. The change will also benefit more than 500,000 families with children in receipt of standard housing benefit and increase entitlement by up to 40p per child per week.
The hon. Member for Oldham, West failed to mention the increase of one-parent benefit from £4·25 per week to £4·55, the fully uprated child scale rates in supplementary benefit and the child dependency additions payable with national insurance benefits.
Will the Secretary of State nevertheless confirm that the point I was making — that those 200,000 families who do not receive family income supplement will not get any of those extra benefits? Secondly, even if they are getting family income supplement, the fact that there is a connection between housing benefit and family income supplement, and that family income is taken into account in assessing for housing benefits, means that the increase in the housing benefit child need allowance will be outweighed by the downgrading of housing benefit because of the relationship with housing benefit. The net result will not be a gain, even for those very few families who are most favoured by the right hon. Gentleman's changes.
The hon. Member has not got it quite right. With regard to housing benefit, children on supplementary benefit will not lose at all. As for the housing benefit rates taper and the changes to which the hon. Gentleman referred, those below the needs allowance will not lose either.
Perhaps I might give the hon. Gentleman an example of what will happen. A family earning £80 a week and with two teenage children gets £10 of benefit a week. Under the new system that I am introducing as a result of the uprating, the benefit for that family will increase to £15·50. I accept that family income supplement is not conceivably an end to the matter — we should not be making our family credit proposals in the Green Paper if it were. We have already said that we intend to do more to improve the circumstances of low-income working families with children.
I shall not give way again as I should like to get on. The new family credit scheme would aim to eliminate families with children finding themselves worse off in work than on supplementary benefit, to prevent any family facing a marginal tax rate of more than 100 per cent. — which completely undermines incentives for people in lower-paid jobs — and to give extra help through the pay packet so that people in lower-paid jobs have their tax and national insurance liability effectively reduced or eliminated.
Those are important social objectives and real improvements in how our social security system works. The Government have made it clear that we regard a universal child benefit as important.
It is the only recognition in our tax or benefit system of the extra responsibilities borne by all of those who are bringing up children. They are recognised in almost all western European countries that I have visited and whose social security systems I have seen. We must keep that general support in proportion, however. I see no reason why we should provide help to all families with children at the level appropriate to those families most in need of help. The Government are proposing a general level of help and additional help for families most in need.
I find no great attraction in the option, which the hon. Member for Oldham, West trailed, of increasing child benefit in order to tax it, as the hon. Gentleman appeared to suggest on the BBC "Newsnight" programme last week. Doubling and then taxing child benefit would increase public expenditure by about £4·5 billion. Even allowing for the extra tax revenue, the cost would rise by £1·5 billion to about £6 billion a year. The result would be a savage cut in effective tax thresholds—for all families with children, the point at which earnings would be subject to tax would be reduced by about £725 per child. That would mean an increase in tax, at standard rate, of almost £220 a year.
The right hon. Gentleman totally misunderstands what I said. I did not say that child benefit would be increased and taxed with the current income tax structure. As the Minister of State, who was present, ought to know, I argued that it could seriously and valuably be done only in the context of a different type of income tax structure.
If the hon. Gentleman does not mind my saying so, the House is in some difficulty about what he means, because he keeps changing his story. [Interruption.] The hon. Member for Holborn and St. Pancras (Mr. Dobson) doubtless wants to give the hon. Gentleman his support, but I am sure that the hon. Gentleman can look after himself. Two months ago the hon. Gentleman set out in a Green Paper, which he described as a document which would pre-empt the Government's proposals—
The fact is that on "Newsnight" the hon. Gentleman said that we can pay universal benefit such as child benefit to everyone and then concentrate it on those in the greatest need without a means test by taxing the benefit.
I hear what the hon. Gentleman said, but that is not in the quotation. I am delighted to know that he has ambitions to change not only the social security system, but the tax system. He now wishes to change the structure of income tax. Has the hon. Gentleman got those proposals past the Shadow Cabinet yet? Would he like to intervene and tell me what those proposals are for the change of the income tax structure? His silence speaks volumes.
The Government want to see child benefit at a reasonable level, payable to all families irrespective of means.
I shall not give way.
The Government want to see full provision for those with children on supplementary benefit, a more effective system for working families with lower incomes to help with the greater pressures they face, and a continuing reduction in the burden of tax on the lower paid. Our policies and plans are clear, both in the short term and in the proposals that we have put forward for the long term. Our policies are based on a clear view of priorities—in particular, our aim to direct more help towards low-income working families. Our policies also recognise the need to find a balance between benefit levels capable of meeting those objectives and what the taxpayer can afford.
In contrast, we have the approach of the hon. Member for Oldham, West. I do not see what the point is of his coming to the Dispatch Box time after time with promises of spending increases, if he can never provide an adequate answer about how the money will be raised. I do not see the point of his promising money for benefits, if the consequence is to bring down tax thresholds, to drag more people into tax, and to take the benefit money away in higher taxation.
As a result of the uprating system, the Government will spend more than £42 billion a year on the social security budget. Even by the hon. Gentleman's definition, that is not a cut in social security. It is an increase in spending of more than £2 billion a year.
The hon. Gentleman is wholly wrong. It shows his complete ignorance of social security, which goes hand in hand with his complete ignorance of health policy. Our policies represent the Government's practical commitment to help people, such as the retired, the unemployed—
The 30 per cent. real increase in spending from 1979 to today has partly been because of the increase in unemployment, but also because of a real increase in benefits and because there are more beneficiaries, such as the 850,000 extra pensioners.
The hon. Gentleman does not understand what I am saying, which is that the Government certainly face their commitments and fulfil them.
We have retained child benefit as a universal benefit paid to the mother, but in addition, the Government are tackling the real problem of bringing extra help to low-income families with children. In the uprating, we are achieving that notably with the help of the family income supplement system. In future, thanks to the review of social security, we shall be able to use the new family credit scheme.
The Government's record is one of giving help and support to families with children, both through the benefit and the tax systems. It is a record that we shall maintain in the future.
The Secretary of State made much of the size of the increase in the social security budget, and he was undoubtedly wise to do so. However, he did not tell the House about the £2 billion increase in social security benefits most of which he had to bring about because of the social security laws. He did not mention that in areas where the Government have discretion, and where there is no legal commitment to keep benefits in line with rises in prices or tax thresholds, such as with child benefit, there have been cuts. Had past commitments to these benefits been fulfilled he would have announced not a £2 billion increase, but a £2·25 billion increase in social security payments. Yet again there has been a cut in the rate of increase in benefits.
If the hon. Gentleman were as diligent in his attendance in the House at these debates as he is in the Select Committee, he would know that I have never claimed that there have been cuts, in the old-fashioned sense, but that we have been talking about cuts in the rate of increase in benefits.
Today we face a major change in the Government's stance. For the first time the Secretary of State has not made the Government's traditional defence on child benefit. Historically, both Front Benches have advanced powerful arguments why child benefit should be increased, not just in line with prices, which has not occurred this time, but, more important, in line with increases in tax thresholds. I thought that there had been agreement on that, but it appears from the debate that that agreement no longer exists.
During the past 30 years there has been a shift in the tax burden, and that has happened irrespective of which party make up the Government. While the tax burden has risen for all taxpayers, it has risen fastest for those with children. Until today's debate Ministers stood at the Dispatch Box and said that the only effective way of maintaining tax equity between those with responsibility for children and those without was to increase child benefit in line with tax thresholds. We have now reached an important divide, and the Government no longer believe that that is the most effective way. Yet they have not said what from now on their policy will be on redressing the tax burden, so that we reduce it faster for those with children than for those without.
I have listened to the hon. Gentleman with interest. Does he accept that many better-off people with children—my family included—would willingly forgo a greater rate of increase in child benefit to help those who are less fortunate?
I shall come to that point. The hon. Gentleman is not as well off as he would be if he did not have children. That is crucial and we must keep it in mind. Just as the hon. Member for Derbyshire, South (Mrs. Currie) was right to talk about the real increase and the real value of child benefit under the Government, we need to look at what that level would have been, had child benefit been increased in line with the rise in tax thresholds for single people and married couples.
The second argument that the Government have always used in these debates, although not today, is that child benefit is the most effective way of tackling family poverty. It is a major change that the Government will now rely on the family income supplement and on the new family credit scheme.
The Government were silent today on the third reason usually put forward by both sides of the House on the importance of child benefit—to maintain and increase incentives to work. There was no mention in the Secretary of State's speech that this is now an important objective of Government policy. He was wise not to say so, because he knows that the more the Government rely on means-tested benefits the more difficult it will be to maintain, let alone increase, the incentive to work. Yet this is a problem that many poor families face.
The fourth reason that binds or used to bind both sides of the House is that child benefit is one way to ensure that the money goes not to the man but to the woman.
The Opposition do not say that, since 1979, the Government have reduced child benefit below what it was under a previous Government. However, had the Government maintained their pledge to keep child benefit in line with rising tax thresholds—the threshold for a single person has risen by almost 90 per cent. —child benefit should have risen by an equal amount, but it has not. It has risen by only 75 per cent., which is a cut and a shift in the burden of taxation from those without children to those with children.
Not only have the Government changed their argument about the defence of child benefit, but it is significant that when the Secretary of State announced the increase in child benefit, small though it was, there was no pro-child benefit lobby among Conservative Members. No Conservative Member criticised the Secretary of State for failing to increase child benefit in line with tax threshold increases. Far from it. The only Conservatives to speak were those asked the Secretary of State to rein back and cut child benefit still further. The organisations that are in business to protect and promote child benefit must now realise from recent debates that, for the first time in 15 or 20 years, there is no Conservative lobby in favour of the benefit. This damaging position must be quickly repaired.
From the uprating statement and from today's statement, we do not know whether the Government have made a once-for-all change in policy or whether the cuts in child benefit will recur in future years. The saving in child benefit is £175 million. My guess is that the Secretary of State has fought his corner in Cabinet to get those funds for his new family credit. We should like to know whether the Secretary of State envisages future cuts in child benefit to pay for even larger resources for the family credit scheme, or whether he was forced to agree to a cut just for this year in order to initiate the scheme. This is an important point, because the anger that we are expressing in this debate about the cut in child benefit mitigated if it is a once-for-all cut. But it is a different matter if the Secretary of State envisages further cuts in the future to finance the new scheme. I shall happily give way to the Minister to respond to this point.