I beg to move amendment (a) to the Lords amendment, in line 2, leave out from "benefit" to end of Clause and insert
'in each tax year in order to determine whether the sums specified by virtue of section 5(1) of the Child Benefit Act 1975 have retained their value in relation to the general level of prices obtaining in Great Britain estimated in such manner as he thinks fit and, where it appears to him that the general level of prices is greater at the end of the period under review
than it was at the beginning of the period, he shall lay before Parliament in the same tax year the draft of an order which increases each of those sums, with effect from the week beginning with the first Monday in the next tax year or such earlier date in April as may be specified in the draft order, by a percentage not less than the percentage by which the general level of prices is greater at the end of the period than it was at the beginning; and if the draft order is approved by a resolution of each House he shall make the order in the form of the draft.'.
I want to begin by quoting, from the Green Paper published by the Government in June 1985, paragraph 4.37 on the study of the role of child benefit. The Government's conclusion from that study was
that it had underlined the fact that there were two clear and distinct aims in helping families with the cost of bringing up children. The first is to provide help for families generally while the second is to provide extra help for low-income families. It would be a serious mistake to confuse these quite distinct purposes or to seek to restructure a benefit designed to meet one aim in order to meet the other aim. Child benefit is designed to meet the needs of families generally. As such it is … simple, straightforward, well understood and preferred as it is. The case for changing it has not been made out. The Government do not therefore propose to alter its basis or structure.
It seems wise, to put it no higher, to open a debate on the review of child benefits by quoting those words from the Government in June 1985, if only because so many, particularly, of the new Members on the Government Benches seem not to have read them.
What the paragraph makes very clear is that the policy and philosophy of the Government were that there should be no question of the help that comes generally to families, in recognition of the role that they perform—the help by means of child benefit—being in any sense confused with other help needed, particularly by the poor. The Government said that it should not be offset against the help that is given to the poor.
Since those wise words were written, the Government have strayed a trifle from the straight and narrow. They have failed twice to increase child benefit in line with inflation. On the first occasion they saved some £175 million a year and on the second, some £120 million, a total now of about £295 million a year. I hope that that will be particularly noted by Government Members, including the hon. Member for Lancashire, West (Mr. Hind), who spoke in our earlier debate about the vast amount of money that the Government were pouring in to help families. I hope, therefore, that he has noted that most of that money is coming directly from families. The amount of money that a family has lost on average is about £30 a year. It has been pointed out in our previous debates on this matter that £30 is enough to buy a coat or a couple of pairs of shoes, items which many families find it difficult to budget for—although that is particularly true of poorer families.
As well as the action of the Government in not actually uprating child benefit in line with inflation, the tone and words of the debate have both changed. The Government have talked about not being able to afford to increase child benefit in line with inflation. We understand, of course, that all Governments have priorities. Part of the purpose of these debates is to examine what the priorities of different Governments may be. Nevertheless, the Government have argued that, against those priorities, they have been unable to afford to increase child benefit.
In the context of saying that they are unable to afford it, the Government have also begun to talk of child benefit as not being a well-targeted benefit and finally to say that the Government have better means of helping those with the greatest needs.
Let us look first at that part of the Government's case that says that they cannot afford this increase in child benefit, particularly against the background of some of the recent studies of what is happening with regard to families with children, as opposed to the childless. I would like to draw the attention of the House to a very small booklet that any hon. Member would be able to find time to read. It is called "Family Fortunes" and it was produced by the Family Policy Studies Centre fairly recently. In it, the author examines, from official Government data, family expenditure surveys and so on, the trend of incomes in families. It focuses particularly on the way in which the pattern of income has developed among families with children as opposed to that among families generally.
The study shows that, in a household of two adults with children, after the effect of taxes and of all benefits, the income of the bottom fifth of families fell, and that the top fifth, with the pattern of benefits and tax changes as they have been under this Government, benefited from the largest rise in income. So it is the case, if we look at the overall pattern of tax and benefit changes, that it is still the better off who have done better under this Government. The fact that tax allowances have been increased far more than child benefit is a main contributor to that.
The incomes of all families with children showed a decline compared with the incomes of those who are childless, which I suppose one might accept, but it is nonetheless not insignificant when one considers that child benefit has not increased in line with inflation. In single-parent households where there is one adult with children, even after all the tax and benefit changes, and all the things to which hon. Members have drawn attention, implying that Government have compensated people in this position for other changes which have taken place, the average income of such families fell by 11 per cent. over the period studied.
There is little doubt, as many Opposition Members have observed, and as the study shows, that increased difficulties are being faced by families with children, although, sadly, they have not found their place among the Government priorities. During recent years, the value of personal tax allowances has been increased by 15 per cent., whereas in the same period the value of child benefit has fallen by 3 per cent. Tax allowances and other benefits have been increased at least in line with inflation, although the failure once in nine years to increase them by a ha'penny more than the legal formula has meant that the standard of living of those in receipt of pensions and benefits has been eroded compared with that of those in work.
During a period in which the Government said that they could not afford to increase child benefit, as we saw in the Joint Committee on Statutory Instruments last week, the Government have managed to build up a margin, room for manoeuvre, of some £8,000 million through income and expenditure from the national insurance fund. I do not mean to imply that that money is readily available to the Government. Indeed, lest the Minister feels that I have misrepresented what the Government have done, it is clear that that amount is only some £4,000 million above what the Government concede would be prudent to have as a notional balance an the fund. Nevertheless, that £4,000 million represents the margin — the room for manoeuvre — that the Government have given themselves in their manipulation of the national insurance fund on a cumulative basis in recent years.
Tomorrow, we shall be debating the Budget, and we are all expecting— and some are eagerly anticipating — substantial tax cuts.
This year the Government are making a straight profit of £2,000 million on the national insurance fund. That £2,000 million has been raised through the contributions this year that are not being paid through national insurance benefit. Does the hon. Member for Mid-Worcestershire (Mr. Forth) still wish to say, "Hear, hear"?
I am interested to hear that, and I am sure that the pensioners in the hon. Gentleman's constituency and others, such as the invalids who draw national insurance benefits will be interested to know that the hon. Gentleman is in favour of the Government making a profit of £2,000 million at their expense.
As the hon. Lady said, tomorrow the Chancellor is about to hand back to the public some of the public money that he has already stuffed in his pockets because the economy is in such a positive and exceptionally buoyant situation. Will the hon. Lady congratulate the Government on their economic stewardship over our affairs in the past 10 years?
I should like to congratulate the Government on their extraordinary good fortune in being in receipt of thousands of millions of pounds from North sea oil. I doubt whether it is often his bedtime reading, but if the hon. Gentleman would look at the figures for the national insurance fund he would see the way in which national insurance contributions and benefits have been manipulated. I do not understand how any hon. Member, even the hon. Member for Mid-Worcestershire can congratulate the Government on so manipulating the national insurance fund that they made thousands of millions in profit at the expense of the people who should be drawing pensions and benefits. Is that what the hon. Member for Northampton, North (Mr. Marlow) considers to be a matter for congratulation? I can tell him that Opposition Members do not agree.
Therefore, as the hon. Member for Northampton, North said, there is money in the Government's coffers, much of it raised at the expense of pensioners and benefit, yet the Government still claim that they are forced to cut child benefit.
I was trying to finish my point. Does the hon. Lady concede that there are large falls in the number of people claiming benefit because they have jobs, which, as my hon. Friend the Member for Northampton, North has shown, is a sign of the success of the Government's policy? Surely the number of people claiming, and being eligible to claim, single payments under the social fund means that there is less need for such a large fund?
Mr. Deputy Speaker:
Order. We shall be debating later in our proceedings amendments relating to the social fund. I hope that for the moment, hon. Members will stick to the amendments dealing with child benefit.
I was referring to the money raised through the national insurance fund and not to the social fund, which, as you, Mr. Deputy Speaker, pointed out, is not the subject of these amendments.
The Government have claimed that they have not been able to afford an increase in child benefit. They have also claimed that, in any case, child benefit is not well targeted. That is a peculiar argument. As child benefit is paid on account of having children, it is a particularly well-targeted benefit. It is almost 100 per cent. well-targeted since it is paid only to families with children.
That peculiar argument to some extent has been explained by Conservative Members by reference to what my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) described as the Duchess of Westminster syndrome — that, to excuse their wish to abolish the universal child benefit, Conservative Members have suggested that there is no need for someone in the position of the Duchess of Westminster to draw child benefit.
It is always noticeable that Conservative Members raise the argument that if child benefit were abolished, and instead the money were used in tax cuts, people with high incomes, and even the Duchess of Westminster, would benefit substantially more from tax cuts than from receiving child benefit. What appears to be an argument in favour of giving more to those in more need is actually in favour once again of giving money to those in less need under the guise of seeking to help the poor.
Does the hon. Lady accept that we never hear from the Government arguments in favour of doing away with personal allowances, which are broadly set to give greater advantage to those on high incomes than to those on low incomes?
The hon. Gentleman is quite right. Some months ago, when the announcement about child benefit was in the pipeline, there was a most interesting letter in The Guardian. The person who wrote the letter quoted the way in which married man's allowance is paid and asked
why it is all right for the state to give between £7·11 and £15·80 per week to a man to support his wife"ߞ
the differential amount that it might be worth to people in different circumstancesäº¬
but objectionable for the state to give £7·25 per week to a woman to support her child?
That is a most worthy point and clearly emphasised the fact that tax allowances, as all hon. Members are perfectly aware, give more to those who already have more, whereas child benefit is a straight cash benefit paid to the mother.
The argument that has been put forward by Conservative Members about targeting is in all ways a spurious argument. I must admit that I have always suspected that those who put that argument were perfectly aware that cutting out child benefit would be of substantially more assistance to those on high income and that they are quite content that that should be the case. Certainly it is hard to see how they can refute any criticisms of that.
Apart from arguing that an increase in child benefit cannot be afforded, or that child benefit is not well-targeted, the third case that has been put of late is that it does not matter that the Government are not increasing child benefit in line with inflation because, through targeting help on those in the greatest need, they are doing more for the poorest families. I find that a rather strange argument. The Government are saying that they prefer to cut a benefit which reaches 100 per cent. of its recipients to put money into a benefit which, on the Government's most optimistic figures, will reach only 60 to 70 per cent. of its recipients. Indeed, there is no justification for the optimism that the Government expressed, unless one considers that a parliamentary answer saying that more people will receive family credit because more people will claim it is a justification. I do not believe that it is justified.
The Government claim that they are targeting help through family credit or income support. They have explicitly said that, since they cannot afford to increase child benefit and pay generous rates of family credit, the money cut from child benefit would fund, for example, the money going into family credit. Again, it is unfortunate that one has only to examine the way in which the family credit scheme works in practice to see that to claim that the scheme gives the greatest help to those in greatest need is wide of the mark.
A family with two children paying average rent and rates will be worse off on its combination of benefits from family credit and housing benefit until its earnings rise above £140 a week. A family with three children will he worse off, even with earnings as high as £170 a week. A single parent with children will he worse off on earnings up to about £120 a week. So it is simply not true to say that it does not matter that the Government are not inflation-proofing child benefit because money will go to those in the greatest need. Even on family credit, money is going to those whose earnings are already at the higher end of the scale.
7.30 pm The hon. Member for Lancashire, West referred to the compensation that the Government are putting into income support. I am sorry, although I suppose it is understandable, that he has read only the briefings from Conservative Central Office and, perhaps, the Government, and that he has not followed any other arguments. It has obviously passed him by that the 20 per cent. bill for rates which everyone will face, for example, is not compensated for, as the Government claimed it might be, in the income support rates. The Government have failed to increase support on the illustrative figures announced in line with inflation and to add an average figure as compensation for the rates. So the cash sum being paid appears to be higher, but it does not meet even the average increase in rates, and in many areas the figure will be inadequate.
A great deal of emphasis has been laid on the fact that the family premium, or the availability of money through the social fund, in some way compensates for the loss of single payments or additional requirements. I refer hon. Gentlemen who think that this is compensation for not uprating child benefit properly, to the Social Security Advisory Committee — the Government's independent advisory group—or to the Select Committee, both of which made it plain that the proposed figure of £575—the illustrative figure as it was—and the actual figure of £615, which has broadly increased in line with inflation, are inadequate to compensate a family for what it will lose in single payments or additional requirements or, indeed, from the Government's general failure to make income support premiums payable and basic incomes payable at an adequate level.
The final argument we have heard from Conservative Members has been that tax cuts are as good for a family as child benefit, if not better. I remind the House that 2,250,000 families now receive more in child benefit than they pay in tax. There is no way that they could benefit from some switch back to tax allowances. The Library has calculated that for a typical family on earnings of about £130 a week, to he even 10 per cent. better off in work, it would need to increase its earnings by a further £60 a week to make up for the loss of child benefit. The case for child benefit is clear, simple, understandable and well targeted, like the benefit. The case for not increasing child benefit in line with inflation is weak.
Earlier this evening we were accused of wanting to impede the passage of Government business, as if it were shocking for an Opposition to want to do that. If what the Government are doing is beneficial, we are happy to facilitate the passage of their business. The Government have made it clear that they may he prepared to accept an amendment carried in the other place and to bow to the wishes clearly expressed in the amendment that child benefit should be uprated in line with inflation year by year, as so many other benefits are.
We understood from what was said in the other place that the amendment was defective, particularly in that it asked the Government to consider these matters but not to do anything about them. In line with the spirit of co-operation, for which many Tory Members were pleading earlier, we are happy to offer the Government amendment (a), which we feel confident they will accept, to replace the amendment moved in the other place.
We can see from the length of the Amendment Paper and the number of technical amendments that the Government have proposed, that they have had difficulty, although this is their third attempt in legislation, in getting the Bill right. Therefore, we understand that they did not have time to draft the sort of technical amendment that might he appropriate to increase child benefit every year, so we hope that our amendment will be of assistance to them.
We are a responsible Opposition, and nothing could be more responsible than to help the Government carry into operation what is clearly their intent. I commend this amendment to the House and I am sure that it will he welcomed by Conservative Members.
Anybody who thinks about how the costs of social security have soared must recognise that the Government were bound to think again about the range of the provision. As many of my hon. Friends made clear on 12 January, there is considerable anxiety on this side about the decision not to uprate child benefit. There is no need to rehearse all those arguments again, because they were put eloquently in that debate, but four factors are particularly significant.
First, child benefit provides support for families with children and, perhaps increasingly, that is where poverty is likely to be found. Family credit is a generous measure and I praise my right hon. and hon. Friends for that, but it is difficult to avoid the fact that today we are likely to find poverty in families with children, and child benefit has always been a valuable safeguard against that.
Secondly, when child benefit was introduced, it replaced the tax allowances available to those with children. Perhaps, as the Opposition have pointed out, that is particularly relevant and remains important today.
Thirdly, child benefit is paid to the mother. That is an important feature and it was fought for in the debates on this subject in 1944 and 1945. We must remember that the Government of the day made a concession on that. Fourthly, child benefit diminishes the extent of the poverty trap.
If, as the hon. Member for Derby, South (Mrs. Beckett) suggested, my hon. Friend the Minister is about to rise and say that the Lords amendment is acceptable, we shall welcome that. It would represent progress. I hope that that is what my hon. Friend will tell us. Obviously, it is important, because in doing so the Government would be accepting the maintenance of the principle of child benefit. I know that that was stated in the election manifesto last year, but acceptance of the amendment would be a further reiteration of the Government's position. It may be argued that that is to accept that we shall continue to have child benefit rather than to uprate it automatically, as many of us would like, but it would be a reaffirmation by the Government of their intention to keep child benefit throughout this Parliament.
It is important that the amendment should require an annual review of child benefit. That would be a real gain. Can my hon. Friend be more forthcoming? He may argue, as he did previously, that the Government must have power not to uprate if circumstances justify it and he may be right, but that is a matter for argument. We should like to hear that the Government do not intend as a matter of regular policy not to uprate child benefit. That is particularly important. Can my hon. Friend reassure us today that the Government do not intend to end the uprating of child benefit in future?
I very much agree with the remarks of the right hon. Member for Aylesbury (Mr. Raison). The case for child benefit has been made on both sides of the House. Its great advantage is that it is directed to the mother and that it helps to overcome the poverty trap. It also exists whether or not people are in work, so it is an incentive for them to get work. It is also relevant because of the high rate for the large number of single-parent families.
Only this morning, in a constituency surgery, that point was brought home to me by a mother who had lost child benefit because her child had reached working age and was expected to contribute £10 a week for his keep, which was difficult to get from him, whereas child benefit had been coming through to the mother automatically — so she was feeling the difference.
The Lords amendment does not give us the categorical assurance that hon. Members on both sides should seek. It refers to the retail price index and other external factors. It is all very well taking those into account and sitting down once a year to think about child benefit, but that is not the same as ensuring that it is indexed and changed each year so that it does not fall behind. Once something begins to fall behind, it is that much more difficult for it to catch up. That was the reason behind the indexing of allowances.
As the right hon. Member for Aylesbury said, the background to child benefit was the child allowance. We are now, to all intents and purposes, at least indexing, and sometimes doing more for, personal allowances. Surely, at a time when the Government have a reasonable amount of resources at their disposal and profess that that is likely to be so for the next few years, we should think of those who are most vulnerable in our society—people on low incomes who are bringing up children, for whom child benefit is of such a great importance.
Even if the amendment does not go all the way, the Minister should give a categorical, bankable assurance, or I shall be inclined to support the Opposition amendment. I hope that we shall hear better news from the Government about their intentions.
My right hon. Friend the Member for Aylesbury (Mr. Raison) spoke about the fact that we used to have child tax allowances and that, to a large extent, child benefit has taken over from those. Child benefit this year is static; it is not being increased. After inflation, that means that in real terms it is being reduced — even though only slightly.
We all know that because of the successful way in which the Government have managed the economy, it is no secret — there are usually Budget secrets — that there will be reductions in taxes tomorrow: reductions in the standard rate of tax. I am concerned here not with those in relative poverty or those who are relatively wealthly, but with those who are standard rate taxpayers — the vast majority of the working people about whom the hon. Member for Coventry, South-East (Mr. Nellist) speaks so often.
A household with a husband and wife will get the full benefit of the tax cuts that will come tomorrow, and good luck to them. However, another household with a husband and wife and children will have the benefit of the tax cuts, but also the reduction in the child benefit. So the first household will be better off by more than the second. The second might even, in its particular circumstances, be relatively worse off. So, by combining these two measures, we are taking money from those with children and giving it to those without. That cannot make sense, particularly in that middle band of people.
Therefore, I am delighted that the Government have seen fit to accept the amendment from another place. I reiterate the point made eloquently by my right hon. Friend the Member for Aylesbury: we hope that my hon. Friend the Minister, when he replies—we know him to be sincere, sensitive, generous, thoughtful, decent and warm-hearted — will give the assurance for which my right hon. Friend asked.
Child benefit is a special benefit. It is some recognition by the state and society of the considerable cost of having and bringing up children. It is a welcome and good benefit because it is universal, it is not subjected to the hateful system of means testing and it has a 100 per cent. take-up. My hon. Friend the Member for Derby, South (Mrs. Beckett) was right to say that it is an excellently targeted benefit, and people appreciate it as such.
Conservative Members have complained about the cost of child benefit, but it is chickenfeed compared with the tax handouts that the Government have given to the better off. It is chickenfeed compared with the tax avoidance that goes on in this country each year. The Government use the argument that they are freezing child benefit to provide funds for the poorest families, but that is unjust and unfair. It is unfair that the poorest and those who carry the burden of poverty should have to tighten their belts even more, while the Government brag about how well their economic policies are working.
The latest DHSS figures show that 16 per cent. of all children are being brought up in families who are either on the margin of poverty or below it. That is a disgraceful record. I am aware that Conservative Members do not understand what poverty means. I draw their attention to Professor Townsend's definition of poverty. He is perhaps the greatest social scientist practising today. He said:
Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and amenities which are customary or at least widely encouraged or approved in the societies to which they belong. Their resources are so seriously below those commanded by the average individual or family that they are in effect excluded from ordinary living patterns, customs and activities.
I agree with that definition of poverty. It is a sad reflection on the Conservative party that there has been a massive increase in poverty because of its policies over the last eight or nine years. Child benefit is one obstacle in the way of that growing poverty.
It has been estimated, on Government figures, that the refusal to uprate will mean that this year 15,000 parents and 30,000 children will be pushed into dependency and means testing, which means more and deepening poverty. How can the Government justify that? I plead with the Minister to rethink this refusal to upgrade child benefit. How can the Government claim to be the Government of the family when they are deliberately reneging on their election pledge? The Chief Secretary to the Treasury is quoted as having clearly said:
Child benefit will continue as a non-means tested universal payment paid to the mother and tax-free. There ought to be no doubt about this."—[Official Report, House of Lords, 3 March 1988; Vol. 494, c. 313.]
The spirit of that comment was thought by hon. Members on both sides of the House to mean that the benefit would be index-linked and not frozen.
The refusal to uprate is also a direct attack on women, who take the prime responsibility for caring. They lose out in almost every other area. Women's incomes are generally lower than their average male counterparts. Two out of three low-paid workers are women, and more women rely on state benefits than men— [Interruption.] Those are the facts. I am sorry that Conservative Members find them amusing. As one who has been in that position, I can tell hon. Members that it is not funny.
Nine out of 10 one-parent families are headed by women, and child benefit is often the only money that many married and cohabiting women have the absolute right to claim to spend on their children. That is for many reasons, but quite often it is because of the meanness of the partner or because his priorities are not for the children that the women needs access to that money as of right. We have heard much from the Government in previous debates about targeting, and no doubt we will hear much more about it in this debate. Child benefit is perhaps the most popular benefit and it has a 100 per cent take-up. I fail to see how anybody can argue that that is not targeting. It is stigma-free, easy to administer and easily understood.
An analysis by the social policy research unit at York university recently concluded:
Child benefit clearly plays an important role in income maintenance for poor families. Low-income families not in receipt of supplementary benefit receive about a fifth of their net disposable income from child benefit.
The Government are attacking low-income families. If they do not change their mind about uprating, more children will go without a basic diet and more families will be forced to live in unsuitable housing, with all the health problems that go with those things. [Interruption.] There is no point in Conservative Members groaning and looking bored. That is a fact of life. Millions more have been pushed into poverty, and child benefit is a lifeline to many families. Conservative Members may not like the truth, but they will have to listen to it a little more often from the Opposition.
It is a damning indictment of the Government, and it will be indelibly stamped on them in history, that they wiped out the consensus to update and improve child benefit, and that, for the first time in our history, they were a Government led by a woman and mother. That is a disgrace and blot upon the Government.
We have had so many debates on the uprating of child benefit in recent years that it is difficult to find anything fresh to say. I think that my position is well known to the House. I regret that the Government have not seen fit to uprate child benefit this year. I hope, however, if it is true that they intend to accept Lords amendment No. 4, that it will be an earnest of their intention to uprate child benefit in line with the cost of living in future years. I certainly hope so, and, I look forward to what my hon. Friend the Under-Secretary has to say about that.
It is high time that the House worked its way towards a consensus on child benefit. We have such a consensus in regard to the Lawson-Rooker-Wise amendments in the tax system, and in regard to pensions and other national insurance benefits. We no longer have disputes on those subjects; but on child benefit there is always this uncertainty about the Government's intentions on uprating, and I think that that does the Government harm.
I am ashamed to say that I think there is an element in the Treasury that has a strong desire to end the advantage that has long been enjoyed by families with children, that at the end of their transactions over the payment of income tax and receipt of their statutory allowances their burden would be less than those of single people and of couples with no children to raise. My hon. Friend the Member for Northampton, North (Mr. Marlow) mentioned this point.
It was William Pitt's intention on the very inception of income tax at the end of the 18th century that there should be a child allowance, so that families with children had a lower tax burden than families without children. It is a pity that the Treasury seems to have a malignant desire to erode that advantage. Now that child benefit has taken the place of child allowance, there is this constant onslaught on it, because the Treasury insists on regarding it as expenditure instead of relief of tax, which is how it originated.
Unfortunately, Lord Skelmersdale in his speech in the other place opposing the amendment which is now before the House as Lords amendment No. 4, and which I understand the Government are now willing to accept, appeared to lean towards this Treasury view that there would be a good case for ending the differential between the tax burden on families with children and those without. That approach, if I understand Lord Skelmersdale correctly, is quite wrong. I hope that he will not continue to think along those lines.
It is a very long-established principle that taxation should be related to ability to pay. The burden of raising a family ought to be taken into account for families at all levels of income and not only for families at the bottom of the scale. The principle should apply throughout the scale; but of course it is particularly important for the millions who are entitled to means-tested benefits and who, for one reason or another, do not claim them but rely instead on the real value of the child benefit.
It is also very important for all those people who are just above the level of entitlement and who seem likely in the coming weeks, I am sorry to say, to be forced to consider extremely carefully whether they will be able to continue outside dependency on means-tested benefit or whether they will have to go through the humiliation of applying to the DHSS or to their local authority for means-tested benefits. It is particularly unfortunate when we are taking so much away in the form of the cuts in housing allowances that, at the same time, we should not be uprating the child benefit. We shall see how matters turn out.
The reluctance that is generally felt by some people, though I think not by very many, about receiving child benefit as a positive credit rather than in the form of a tax deduction, arises from the suspicion that it is money from nowhere. They are ashamed to draw it because they do not understand how they have become entitled to it. They do not see how they or their wives have qualified to receive a positive payment in cash. They would be quite happy to have an exactly comparable increase in spending power if they could understand how they had become entitled to it or, of course, if it appeared to come to them as a reduction in their tax burden.
I have long felt and I am now quite convinced that we shall not find our way out of this sterile controversy about child benefit while it appears to be a universal benefit that has not been paid for, but just falls as money from nowhere. We need a full-scale review of the national insurance system. Very many reasons are convincing me that that is urgently required in this Parliament, not only because of the difficulties of the social security system, but because of the difficulties that we are encountering in the administration of housing benefit and the further difficulties that we shall certainly encounter in the administration of the community charge.
It is very rare to meet anyone who is reluctant to draw his basic national insurance entitlements, such as the pension that he is paid towards the end of his life. That is because people feel that this flows to them because of a contract into which they have entered as citizens and to which they make their contribution, and that they draw their entitlements in exchange.
Child benefit should be incorporated in a revised and reconstructed national insurance system which should be put on a business footing with comprehensible accounts and a clear range of basic entitlements before, as well as during and after, working life. Child benefit ought to belong to the range of national insurance benefits. Then it would be seen as part of a comprehensible relationship between the citizen and the community, which at present it is not.
I referred to the association with the national insurance fund in the Bill that I introduced before Christmas and which, I am happy to say, was passed on an all-party basis with a substantial majority. I should now like to go further in regard to my recommendations for the revival of national insurance, but this would not be the appropriate time under the guillotine. I have undertaken to write to my right hon. Friend the Secretary of State with specific recommendations and I shall shortly do so.
The hon. Member for Derby, South (Mrs. Beckett) referred to the national insurance fund, but she has not followed it up in the Opposition amendment. The official Opposition amendment, therefore, does not seem to be a very well drafted or satisfactory counter to what the Lords have suggested in amendment No. 4. I shall not vote against the Labour amendment, because its intention of protecting the real value of child benefit is quite proper and entirely in line with my own thinking which I have expressed very often in the House. But I do not think that I shall find it in my heart to vote in favour of it because it does not appear to offer a satisfactory solution to the arguments. I feel that the time has now come when the House has to get out of these sterile debates and to find a solution that is acceptable on both sides of the House.
I know that the Government are less than keen to uprate child benefit in line with inflation, and we have heard the Minister argue only recently that child benefit should be frozen and that the money saved should be targeted at poorer families. The problem with that argument, as the Minister well knows, is that the take-up of means-tested benefits such as family credit cannot hope to compete with the near 100 per cent. take-up of child benefit, which has been mentioned and which we see every day. I shall not go into all the arguments in favour of child benefit because we have heard them. However, the Government should acknowledge that their defeat on this issue in the other place gives a strong indication of the feelings of the nation on this matter.
It is fundamental that extra support should be provided for children, especially needy children, and child benefit is the most effective way at our disposal of making sure that money reaches those for whom it is intended. That argument is well understood by hon. Members on both sides of the House, and I urge the Government to take note of it.
The danger of Lords amendment No. 4 is that it requires the Secretary of State only to "take account of" any increase in the retail price index. The Government do not have an excellent record on taking action when they are not required to do so. However, I hope that the Secretary of State appreciates the true intention of the amendment and that in future he will uprate child benefit in line with the retail prices index.
I welcome and support the amendment in the name of the hon. Member for Livingston (Mr. Cook), which I believe greatly strengthens Lords amendment No. 4.
The hon. Member for Southport (Mr. Fearn) has got his facts about the Government completely wrong. The Government are only too ready to take action at any time. Some of those actions are extremely innovative, as we shall be discussing next week and in the weeks to come.
I endorse the speech of my right hon. Friend the Member for Aylesbury (Mr. Raison). He reminded the House of what the debate is all about. It is about the advantages of child benefit as a method of getting moneys to a family with children, directly to the mother, for the benefit of the children. That was one of the principles brought about, in the way that he described, by challenge to the Government in 1945. I am proud to say that it was a relative of mine, Eleanor Rathbone, who fought for that at that time. It is a great point of pride in our family that the principles of family allowance have seeped through the various stages that have now brought us to child benefit.
There was some concern when family allowances were amalgamated in the 1970s. The argument most strongly in favour of that amalgamation was that it would make administration much easier. I believe that that is a good principle to apply to the administration of benefits. Indeed, it is a good principle to apply to the taking of taxation. The only occasion on which I can foresee that it may be worth while even considering dropping child benefit is if we move into a full tax credit scheme. The House will remember that that was mooted by the Conservative Government in the 1970s and that, sadly, the idea ran into the sand when the Labour party came into office in 1974.
The great advantage of child benefit is that it has virtually a 100 per cent. take-up by the very people it seeks to help—mothers with children. It is not an instrument for the alleviation of poverty, as was suggested by the hon. Member for Halifax (Mrs. Mahon). It is not designed for that. It is designed to help families in their starting years, in the same way as the Government take it upon themselves to help families in their later years. I believe that that is an admirable principle to apply.
Future reviews must keep the value of the benefit clearly in mind. I hope that my hon. Friend the Minister will reiterate his and the Government's determination to do that. I look forward to the day when child benefit is uprated, not according to the Opposition's amendment, but in excess of the price increases year by year.
Several hon. Members have made the point that nothing new can be said in this debate. The logic of holding that position is to make a brief contribution. I shall attempt to do that by addressing myself to two points that have emerged.
The first point is addressed to the hon. Member for Kensington (Sir B. Rhys Williams), whom I shall call my hon. Friend during this debate. I make a plea to him that, although he thinks that our amendment is defective, that should not be a reason for not voting for it. Given his logical mind, he ought to see that most issues can be taken in stages. The Opposition amendment says that there should be a regular review and that the Government should act on that review. It is quite possible, as a second stage, for my hon. Friend or us to come back to the House with ideas on how that review should be funded. Therefore, I hope that speeches made by Opposition Members will convince my hon. Friend the Member for Kensington that his impressive voting record on child benefit should be kept intact.
The next point I wish to make is addressed to the hon. Member for Northampton, North (Mr. Marlow) who is not in the Chamber now. With his usual delicacy, he attacked the Government and opened a wound. Therefore, it seems proper that, as an Opposition Member who is committed to consensus politics, I should bring a bucket of salt to apply gently to the Government's wound.
The hon. Member for Northampton, North made the valid point that so much of the Government's rhetoric and, indeed, their real beliefs, is that they are the party of the family. He asked the House to look at the Government's record towards the financial support of families. We see that over the past 10, 15, 20 or 30 years —this is not a party point—Governments of all parties have been more likely to push the tax system in favour of single people and married couples without children rather than married couples with children.
I hope that we will not look at the record of past Labour Governments on that issue, because it is not nearly as impressive as I should like. The Labour party has been guilty of pushing the tax system towards those without children, whether they be single people or married couples. Therefore, the hon. Member for Northampton, North was right in saying that, given that the Government believe that it is important that the cornerstone of our society is the family and that families should be able to manage their own affairs without state interference, it is crucial that we ensure that all families have sufficient income. The only way in which we can do that is to increase child benefit. If we increase tax allowances ahead of child benefit, we are making it more advantageous not to have children and making it more difficult for those who have children by reducing the relative living standards of families.
I want to end on a somewhat controversial note. The hon. Member for Caernarfon (Mr. Wigley) spoke about his surgery this morning and about a single parent and the importance of child benefit to her. I remind the House that we introduced the single-parent families benefit only because the then Labour Government ratted on their commitment to introduce child benefit and were scratching around to find some way of presenting to the House a face-saving formula. We often see that happen with the Conservative Government; it is not a new phenomenon. The then Labour Government came up with the cheap proposal of paying a benefit to single families with children.
As we move towards a day that I hope we shall see, when child benefit reflects adequately the cost of children, we shall be able to discuss phasing out the benefit for single-parent families. Its effect at present is to give an incentive to those who are not married, against those who are. Many of our constituents need that money; there is no dispute about that. But there is an expanding group of yuppies in the electorate who manage their tax and benefit affairs in such a way as to ensure that they receive every penny that they can.
I know of "stable relationships" in which one partner takes the other to court for maintenance payments, and claims single-parent benefit as well. That cannot be policed; such people cannot be chased, and to exhort them to behave better seems to have little effect. What is possible is to increase child benefit to a level generous enough to cover the major costs of children. When that has been done, it will be possible to begin to phase out the single-parent family allowance, which was introduced only because, when in government, we were not prepared to bring in child benefit on the date when Labour Back Benchers thought that it was to be introduced. In Committee, Labour Members asked whether they were right in assuming that child benefit was to start on such and such a date, and Labour Ministers replied, "Of course you are right, but we do not wish to tie our hands." As a consequence, child benefit was not introduced when it was said that it would be.
The House of Lords, in a slightly bumbling way, has passed this helpful amendment. But, without the key element of what happens after the review— and given that we know from press reports that the Government are fighting a battle to keep child benefit—I hope that the Government will act not only on the Lords amendment but on the Opposition amendment, which strengthens their hand against the Treasury. For once, I hope that the Secretary of State and the Minister will learn from Labour's mistakes, and will not trust the Treasury on the day when we want the payout.
It is always a pleasure to follow the hon. Member for Birkenhead (Mr. Field), who, even in short speeches, says more of substance than many of us manage in our longer efforts.
I should like to make three points. First, perhaps predictably, I wish to remind my hon. Friend the Minister that I am one of a number of fully paid-up members of "Brandon's Irregulars", who have in the past supported the uprating in full of child benefit. While we welcome the Lords' amendment as far as it goes, I know that my hon. Friend accepts, in the spirit that I put it to him, that it is the least that we would expect and that it will not stop us from pressing next year for the matter to be formalised.
Secondly, I should like briefly to tackle the question of tax cuts in the context of child benefit. I have no crystal ball, but I hope that tomorrow my right hon. Friend the Chancellor will indeed announce tax cuts. I hope that not so much for personal reasons — although it would be nice—but because many of my constituents earn about the average wage and quite a few earn less, and they will benefit.
The point that I wish to make is very simple. Tax cuts will give many people more spending power. They may spend the money on an enormously wide variety of things, both inside and outside the home, and no hon. Member —at least on the Conservative Benches—questions such spending. Once the subject of child benefit is raised, however, it is suggested that this strange benefit should be done away with. Hon. Members suddenly turn a funny colour and start to remonstrate, suggesting that the benefit should be abolished because it is going to people who do not need it.
I find that very strange. The one undeniable fact about child benefit is that it goes to meet a known expenditure, whether the parent is very wealthy or among the poorest in the country. That argument that it should be done away with because some people do not need it, unlike tax cuts —which, as I have said, I would welcome—surely has no real substance.
Thirdly, I ask whether, under our existing system, we can simply decide to phase out this non-selective benefit and uprate various selective benefits. I see the instant attraction of that approach, and I understand why a number of my hon. Friends see it as a way forward, but I have a counsel of care to offer. It relates to the take-up rate.
We must be clear about what we mean by take-up rate and about its impact. At the best estimate that the Government are currently prepared to offer, take-up of the new family credit will be 60 per cent., so more than half the families whom we wish to receive assistance will indeed receive it. The other side of the coin, however, is that two out of every five families measured as being in need, and entitled to the assistance, will not receive it. If we are asked to weigh in the balance whether assistance should be limited to those on low incomes, while take-up is nowhere near 100 per cent., I must say that I am happy — on balance— for the money to go to the better-off in the assurance that the worse-off still get that necessary assistance.
Two necessary tasks must be performed. One is to help children in general; the other is to help children in poverty.
I regret very much that the Government, who boast that they seek to help poor families with children, are paying for that to the tune of 40 per cent. at the expense of children in general. The last time that we discussed the matter, the Minister said that families would receive £100 million more through family income support, and £200 million more through family credit. That, of course, assumes that take-up is as the Government anticipate, which can only be a guess. On the Government's figures, it means an extra expenditure of £300 million on children in poverty, of which £120 million—40 per cent. —comes from children in general.
As has been said so often—especially by Opposition Members—we are likely to hear tomorrow of vast sums being dispersed among people who may have no children at all, let alone children in poverty. This is a peculiar approach from a responsible Government who say that they are the Government of the family. In fact, it disproves their assertion utterly.
I have been present at the debates both here and in Committee, and I have read carefully the report of the debates in the other place. Some of the arguments are quite remarkable. For example, Lord Skelmersdale, the Government spokesman in the other place, said that benefits and tax allowances had different roles, but he did not explain to his noble Friends what the different roles were. He simply said that tax allowances help all taxpayers, but that is not exactly news. Tax allowances help all taxpayers. Some of them may have children, but they do not receive additional help because they have children. They are helped because they are taxpayers, and tax benefits, such as those that we may see tomorrow, help those with larger incomes rather than those with small incomes.
The Government have never explained, in this or the other place, why they give such priority to tax allowances and tax cuts but not to helping children. The Minister was reminded during the previous debate that this is not simply a matter of families. It is not the parents about whom we are concerned; it is the children. I am sorry that all the arguments have not produced a change of heart by the Government.
I regret that, even if the Government accept the amendment that was passed in the other place, they will undoubtedly do so in the spirit of the Government's spokesman in the other place, who said that, if the amendment is passed, it will not mean uprating of benefits. Their Lordships said that the implication of passing their amendment would be that the nation would expect uprating. The Government spokesman said that uprating was not a consequence of the amendment passed in the other place. If the Government say that they now accept the amendment, they are doing so in the spirit of the contribution made by their spokesman in the other place.
That simply is not good enough. We are not asking for child benefit to be looked at annually and then for nothing to be done; we are asking for it to be looked at and raised in line with inflation. Someone said that that was not enough, and I agree; but at least a modest attempt to tie it to inflation should be beyond controversy.
One of their Lordships said that, if it is right to raise benefit one year, surely it is right the next year. That simple assertion is beyond doubt, unless the Government think that child benefit has up until now been paid at too high a rate. They have not made that assertion, but they are acting as though that is what they believe, which is regrettable.
This is not a matter in which the Government can say, "We are diverting resources to families and children in poverty," if some of the resources that they are diverting are not from the better-off, from people in general or from people without children, but are from children themselves. I have grown weary of asking Ministers to think better of proposals, to think again and to act in line with their oft-repeated assertions, but there is no alternative. In doing so, we should express the fact that people are looking for child benefit to be raised.
I believe that this is a party matter, but it goes beyond parties, because women who support the Conservative party have asked for the protection of child benefit. If the Minister does not listen to us, why on earth does he not listen to them? It would be better for his future fortunes if he were to do so. It is not for me to try to make him popular, but if that were an unwelcome consequence of the Government accepting our amendment, I would swallow it for the benefit of the children concerned.
If one asks the average person in the street which is the least well-off section of our society, I would bet a pound to a penny that he will say it is the pensioners. However, that has never been so throughout history. Going back to when the question was first asked during Rowntree's study of poverty, it has always been families with children who are the worst off. That has been the case right through since the tax credit Select Committee in the early 1970s to the present day.
My hon. Friend the Minister was right to say that child benefit was not simply designed to alleviate poverty. The fact is that it covers the entire scale of people and preserves a fair balance between couples with children and couples without children. If couples without children are casting an envious eye on this benefit, they should remember that it is our children who will pay their pensions.
I very much hope that the Government will accept the Lords amendment and jolly well put it into practice.
I anticipate that I shall prefer what came from Kensington to what is likely to come from Chelsea, which is the other part of a bifurcated borough. I suspect that, if the Minister accepts the Lords amendment, he will do so with certain reservations. It is always too easy to take matters into account, but it is more difficult to ensure that there is a commitment to action.
This is a very timely matter. Like the hon. Member for Caernarfon (Mr. Wigley), I have a constituency interest, because on Saturday I received a petition from the West Glamorgan child poverty action group signed by over 5,000 people — mostly mothers — in West Glamorgan expressing their concern about the future of child benefit.
The petition is brief, so I shall read it. It says:
We the undersigned believe that Child Benefit is crucial to the health and well being of children and a vital lifeline for many mothers. We are concerned that Child Benefit has been cut and that further reviews are threatened in the future. We call on the Government (i) to give a commitment that at a minimum, there will be no further cuts in the value of Child Benefit and (ii) to give priority to raising Child Benefit to a more realistic level.
That petition was signed by over 5,000 people in west Glamorgan. I helped to launch it, and I was very moved by the reception to it, even from one person who was completely disabled and who signed it by putting the pen between the toes of her feet.
The mothers of the child poverty action group have been collecting signatures for the petition in the country over the past months. That shows a commitment, and I should have liked the procedures of the House to allow me to carry the petition over to hand if personally to the Minister. However, I shall have to do so in spirit.
I shall quote to the Minister some of the comments that have been made by mothers who were asked to sign the petition. One said: "Child Benefit is a life-saver for many families."
Another said: "It's the one benefit that you don't have to beg for."
Another said: "It's in my name, I cash it so I control how it's spent."
Another said: "For the sake of everyone's future, the needs of children must come first."
It makes my blood boil to hear some individuals talk of the selective nature of child benefit and the fact that it may go to some who do not need it. Yet those same individuals may accept, without demur, mortgage arid other tax relief that go to the fat cats of this world without any proof of need for them.
I recall Barbara Castle introducing this measure and saying—it may be rather sexist to say this now—that it was a measure that moved money from the wallet to the purse. We know that there is an almost universal take-tip of child benefit.
The debate is timely for my constituency and its child poverty action group, which has made valiant efforts to collect evidence of public opinion. The debate is timely also in respect of a Budget in which the Chancellor, unusually, will have choice. The right hon. Gentleman will be able to show his priorities, and we shall be able to see by the response tonight and by tomorrow's Budget the Government's priorities and whether they take seriously the issue of child poverty—meaning family poverty—in our society.
I welcome the Government's acceptance of this Lords amendment, as I am sure do my hon. Friends. It underpins one important factor—however we look at our system, there should be recognition of the fact that children need to be provided for and suitable allowances made within the tax system. We must not forget—I urge the Opposition to think carefully about this — that tomorrow, if tax relief is given to the better off, the Opposition will criticise the Budget on the basis that tax reductions are given to rich people who do not need them. The Opposition could make the same criticism of the way in which child allowance is structured. The same criticism might be made of allowances to the Duchess of Westminster and of mortgage tax relief.
I do not want to disappoint the hon. Member for Caernarfon (Mr. Wigley), who is not in his place, but it is important to note that a review is in place. In an atmosphere in which taxation is falling, we cannot help but look at the tax breaks paid to the community as a whole. We must have those matters in the forefront of our minds. What are tax breaks? They are allowances given to meet the special needs of particular sections of the community. There will always be children and there will always be a need for allowances or tax breaks for children, but we must have an open mind.
The hon. Member for Halifax (Mrs. Mahon) mentioned targeting, which is important. The hon. Member for Preston (Mrs. Wise) put her finger on it when she described the benefits paid for children on two levels —helping children and helping to alleviate poverty. My right hon. Friend the Secretary of State announced previously that he would not uprate child benefit. We must not lose sight of the fact that it was argued then that for every 10p by which child benefit was increased, those who were receiving income-related benefit would lose 10p while those who were not receiving any kind of income-related benefit would benefit totally from the increase.
Members of Parliament have the good fortune to earn £22,000 a year. I have two children, and I do not think that I need that benefit of £15 a week. I should much prefer to give away my £15 a week to those families who need the benefit. For that reason, targeting is important.
The only way to deal with that problem is to abandon the concept of a universal, across-the-board benefit. We must look at it in terms of the tax credit system, which was considered between 1970 and 1974. Our present system is probably the best of a group of bad systems. In future, as tax rates decrease, we should look at the two levels—meeting the basic needs of children and, as the hon. Member for Halifax said, providing more for those families in poverty.
Efforts have been made — the hon. Member for Halifax criticised me earlier on this point — through family credit, income support and the social fund to balance the needs of families with children who are worse off. I know that we shall not agree on that point. We have disagreed all evening, but we must consider those factors.
The other place has provided an opportunity for those hon. Members who want an uprating in child benefit which is inflation-linked to bring pressure to bear on the Government. From that point of view, I support the Lords amendment. In the long term, we must look carefully at the structure of the whole system and ensure that we get the benefits to those who are most in need.
Speeches such as the one that we have heard from the hon. Member for Lancashire, West (Mr. Hind) again raise fears about the future of child benefit, and especially its universality. There is a difference of view about whether child benefit should be universal or means-tested.
It has become increasingly known that the Government are conducting a review of child benefit. For all we know, the Government may be considering ways of limiting child benefit to low-income families, by taxing or means-testing it. That would remove universality, which is what the hon. Member for Lancashire, West advocates. The problem is that, in effect, we would return to some form of child tax allowance and be right back to square one. We should know whether that is the Government's long-term objective. The Minister might like to give the answer to the hon. Member for Lancashire, West so that he can be assured of the future direction of child benefit.
Would the Minister care to tell the House the terms of reference of the review? What is its likely timetable? How will any action proposed in the review be introduced in the Budget? I invite the Minister to open up the review and to turn it into a public exercise of real consultation rather than simply an internal examination by the Government behind closed doors of the options, which are then brought late to the House as amendments that we cannot properly discuss in or outside the House.
On 25 January this year, The Times reported that a Cabinet rift over the child benefit freeze had arisen between the Minister for Social Security and the Disabled and the Treasury. It has become more apparent during the past few days that rifts are all too familiar and at the centre of Government policy. It may be worth the Minister informing the House whether there is a rift. Can he assure the House that there is not a rift about the future of child benefit? On 12 January, the Minister assured the House that the benefit would be paid
as a universal benefit, tax-free and to the mother … I believe that that obligation was right." —[Official Report, 12 January 1988; Vol. 125, c. 208.]
Given the rumours of the behind-the-scenes review, the Minister could take this opportunity to reaffirm his attitude to child benefit. Tomorrow's Budget, which ironically will be delivered within only 24 hours of this debate, could be used to increase child benefit at least in line with prices. As many hon. Members have pointed out, that would be exactly the same way in which tax allowances will be changed. The Government could use the Budget to restore the cut in the real value of child benefit which was imposed in November 1985. They could make good the effective cut which has resulted from the freezing of child benefit from April this year.
The hon. Member for Kensington (Sir B. Rhys Williams) referred to William Pitt, who introduced income
tax to pay for the Napoleonic wars. He was the Prime Minister who said that children should also be taken into account when assessing the ability to pay. He said:
Let us make relief in cases where there are a number of children as a matter of right and a matter of honour.
I remind the House that that remark was cited by the right hon. Member for Sutton Coldfield (Mr. Fowler), the present Secretary of State for Employment, who was in the Chamber earlier, during a debate on the Bill which introduced child benefit in the 1970s.
Child benefit has emerged as the only means by which the ability to pay families can be recognised. It is therefore similar to tax allowances and should be reviewed, assessed and restored at the same time as they are. I urge the House to support the Opposition amendment and to use tomorrow's Budget debate as a means of beginning to put that amendment into practical effect.
As I rise to reply to the debate, I cannot but be aware of the unanimity which has developed across the Floor of the House in the course of the discussions. A Minister should he conscious of the unanimity which has appeared on the Benches behind him, as he comes to respond to the debate.
I should like to make it clear at the outset that the Government will advise the House to accept the Lords amendment, but it will not be any great surprise to the hon. Member for Derby, South (Mrs. Beckett), if I advise the House to reject the amendment that she and her Friends have tabled. I should like to make clear why that advice will be given to the House this evening on each of the two issues.
Perhaps I should start by making it clear why the Government are prepared to accept the Lords amendment. It is particularly important that the House should have no doubt about the effect of the clause. When it was debated in the other place, I suspect that many of those who spoke in favour of it were trying to secure the annual uprating of child benefit, but, during the debate, it was acknowledged that that would not be the effect of the amendment.
In its discussions today, the House has recognised that the amendment does not achieve that end. Indeed, if it did, for reasons that I shall explain later, we would not be able to commend it to the House. The Lords amendment confirms duties laid upon the Secretary of State, which already exist in legislation, although, in practice, the Lords amendment does not go as far as the existing legislation. The relevant current law is the Social Security Act 1986, specifically section 63. That section provides for the annual review and, in certain circumstances, the uprating of various benefits. As the House will know, that section also refers to child benefit.
If the Minister is saying that the effect of the Lords amendment is to do no more than confirm the duties of the Government, is he accepting the amendment only because it has no meaning in fact and gives total discretion to the Government to accept or, as happened last year to reject, an increase in child benefit?
Section 63 already requires the Secretary of State to review child benefit in each tax year to determine whether it has retained its value in relation to the general value of prices and goes on to provide for the benefit to be uprated, if the Secretary of State considers it appropriate, having regard to the national economic situation and any other matters which he considers relevant.
The Secretary of State already has a statutory duty to review child benefit annually and, in some circumstances, he is empowered to increase it. The new clause does not add anything of substance to that. It requires the Secretary of State to review the level of child benefit in April of each year, taking account of increases in the retail prices index and other relevant external factors.
Whereas section 63 provides for child benefit to be uprated if the Secretary of State considers it appropriate, the new clause refers just to an annual review. It neither requires nor empowers anything beyond a review, so the duty that it places on the Secretary of State sits squarely within the duties that he already has under the Social Security Act 1986.
In reality, therefore, the Lords amendment is very close indeed to existing law and, for that reason, the Government are prepared to accept that it should remain in the Bill. However, I must make it absolutely clear that we are not prepared to accept the Opposition amendment.
Will the Minister confirm that, when the amendment refers to other external factors, he interprets that to mean the national economic situation to which he has just referred? If that is the case, in view of what the Treasury tells us about the present national economic situation, we should be able to look for positive uprating.
There are a number of issues which my right hon. Friend the Secretary of State for Social Services could take into account in deciding whether it is appropriate to uprate child benefit in all circumstances. I am sure that that does not come as any surprise to the hon. Lady. Of course, the use to which any resources which may be available in any particular financial year are put will be the responsibility of the collective decision of the Government year by year. I can assure the hon. Member for Leeds, West (Mr. Battle) that the Government are a totally seamless garment. We do not have divisions on such matters.
I am conscious of the strong arguments in favour of child benefit as it exists at present. I must also be conscious of the many disadvantages associated with it, and I wish to say something about each of those points. The hon. Member for Derby, South said that the Government could perfectly well afford to uprate child benefit this year; the resources are available in plenty, so the benefit could be uprated next month. That was the essence of her point.
However, the Opposition amendment proposes riot that benefit should be uprated this year, but that there should be an absolute statutory obligation on the Government each and every year in the future, giving that commitment in advance, whatever the prevailing circumstances at the time. I do not believe that it is right to pre-empt the Government's decision on that for all future years, as the amendment would.
The hon. Member for Derby, South mentioned particularly the two aims that have been spelt out about help for families—first, help for families as families and, secondly, help for low-income Families. She went on to say that the Government had said that those two aims should not be confused, but I do not believe that means that we should necessarily pre-empt for ever the balance between those two sorts of help and that we should not be able to make a yearly judgment about where the balance between those two sorts of help lies.
I listened with particular care to the arguments of my right hon. Friend the Member for Aylesbury (Mr. Raison), but, for that fundamental reason, I am unable to give him the assurance that he sought. The matter must be kept for a year-by-year decision, bearing in mind the resources available and the balance between those two sorts of help.
Will my hon. Friend assure me that no decision has been taken that there will not be any further upratings of child benefit? Will he assure me also that the pledge in our election manifesto that child benefit will continue to be paid will not be diluted within this Parliament by any attempt to introduce any kind of means-testing or tax on child benefit?
I cannot give that assurance to my right hon. Friend. The future of child benefit will be reviewed each year as annual upratings are considered. On the fundamentals of child benefit, I can go no further than my right hon. Friend did. A benefit of that sort and scale must be under constant review. Certainly we have no present plans to change the status of child benefit. That is as much as I can say to my right hon. Friend at the moment.
The hon. Member for Derby, South made certain assertions based upon the document entitled "Cutting the Lifeline", published by the Labour party, which is full of inaccuracies. She asserted that most couples will lose on earnings of between £60 and £140 a week and that most lone parents in full-time work will lose on earnings between £60 and £100 a week. That is simply not true, and it is not borne out by the fact that—
I shall not give way; I shall continue my remarks.
The hon. Lady gave certain hypothetical examples. About 200,000 working families with gross earnings below £150 a week will have higher, not lower, disposable incomes after the reforms, and 25,000 lone working parents with gross incomes below £100 a week will also gain. Those are the facts, not the information that is included in the document.
I suggest that the Minister has a word either with himself or with whomsoever of his hon. Friends gave the parliamentary reply from which the figures were taken.
It is important that we look carefully at what people's cash position will be after the reforms. I do not know from which answer or from which debate the hon. Lady plucked her question. Having checked, I can say that her figures are totally inaccurate and do not reflect the real position that will exist after the reforms come in.
The hon. Gentleman is raising a serious point. If the figures that were given in the answer are inaccurate, I hope that he will correct the record. The figures were given in an answer to the hon. Member for Kensington (Sir B. Rhys Williams). They provide a fairly full tabulation of the effect upon families of four and single parents with two children, on the assumption that they are paying average rent. The figures show absolutely precisely that any family of four on an income of between £60 and £140 will lose, and the worst hit family will be a family of four on £80 a week. They will be £12 a week worse off. Those were the hon. Gentleman's own figures.
The families we are talking about would be paying rent in any case. The question that was asked by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) made certain assumptions about the situations of those families paying average rent and rates. That is not the situation that exists in the real world, nor will it be.
The Labour party goes on to state that the assumptions included in my hon. Friend's question reflect the real world. They do not. They are hypothetical questions. The answers were clearly given. Half the families we are talking about would not pay rent in any case. Their situation is not reflected in the question. [Interruption] Perhaps, when the debate on the Opposition Front Bench is completed, I shall ask Opposition Members to look at the questions in Hansard. They examine the differing situations of a range of people on income support after April and the real rather than the hypothetical situations that were outlined.
Without being tendentious, I mention to the hon. Lady, who quoted so freely from "Family Fortunes", that the methods used in the study are subject to substantial reservations on behalf of the Central Statistical Office. Far from falling by 11 per cent. in real terms, as the study suggested, the real incomes of lone parents rose on average by at least 10 to 12 per cent. Similar reservations must be and have been expressed by the Central Statistical Office about the falls of real incomes of two-parent families. I commend to the hon. Lady a careful study rather than simply reading out what is in "Family Fortunes".
Before the hon. Gentleman leaves the rejection of the report that my hon. Friend quoted, will he confirm that the body that published it accepts that, given the information that the Government have now given, it changes the position for single-parent families, but that for other families the information holds? It carried out the analysis on published data. It was only when the Government came up with other data that the calculations changed. That might be a case for the Government publishing more information. Is it not a bit much for the Government to reprimand my hon. Friend about the use of the retail prices index, when the Government made such a mess that all state and public pensions have had to be changed?
The hon. Gentleman's remark does not bear much attention. We have severe doubts about the data and methodology that were used in coming to the conclusions in "Family Fortunes". There is a discussion between the Central Statistical Office, my Department and the organisation that produced it. No doubt, at the end of the day, there will be an agreed outcome. In the meantime, I urge caution on anyone who simply picks up "Family Fortunes" and quotes too easily from the findings that were produced.
The hon. Member for Halifax (Mrs. Mahon) and other hon. Members spoke as though we were talking about the position of children in the poorest families and that child benefit is of particular help and importance to them. I thought that we had cleared that matter away on previous occasions when we discussed it. Those in greatest need —those receiving income-related benefits—get nothing from any increase in child benefit. It benefits only those who are above that level. Again, it is easy to be misled by the points that were made by those such as the hon. Member for Halifax. People who receive income-related benefits would simply see their incomes fall pound for pound were child benefit to be increased.
That is why, in the reformed structure of income-related benefit, we have emphasised family credit. We have put substantial extra resources into family credit. Once again, child benefit would be offset against family credit, in the same way as any income-related benefit are offset.
I realise that, in a sense, I am repeating arguments that I have put to the House on previous occasions, but we need a balanced decision out of all of this. We need to achieve a balance and to recognise the advantages and disadvantages of child benefit. Of course I recognise that it provides help to all families with children. I am well aware of the genesis of the benefit. It is simple to claim and straightforward to administer. It is stigma-free—that phrase has been used more than once today—to those who receive it.
But it is also an expensive benefit. It costs £4·6 billion a year. We must admit that much of that is paid to families, although they no doubt welcome it, in which it cannot be said to be needed. If we were to accept the Opposition amendment, resources would then be tied up, rather than being available to help others—many in the most needy families—as we decide what the priorities are year by year.
This year we are seeking to focus additional help on the neediest families with children. I do not believe that many people would quarrel with that judgment. As my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) said, that is where a great deal of poverty exists in our society today, and perhaps it has for a long time. However, we are now able to recognise that in our reformed structure of benefits. Uprating child benefit by 30p a week would have cost about £120 million net in a full year. We are putting more than that into extra benefit for low-income families through income support, if they are out of work, and family credit, if they are in work.
I believe that that is the right balance for us to strike this year and that that judgment should be made on its merits year by year. Therefore, I cannot commend the Opposition amendment to the House.
|Division No. 213]||[8.59 pm|
|Abbott, Ms Diane||Barnes, Harry (Derbyshire NE)|
|Adams, Allen (Paisley N)||Barron, Kevin|
|Allen, Graham||Battle, John|
|Anderson, Donald||Beckett, Margaret|
|Archer, Rt Hon Peter||Bell, Stuart|
|Armstrong, Hilary||Benn, Rt Hon Tony|
|Ashton, Joe||Bennett, A. F. (D'nt'n & R'dish)|
|Banks, Tony (Newham NW)||Bermingham, Gerald|
|Bidwell, Sydney||Hoyle, Doug|
|Blair, Tony||Hughes, Robert (Aberdeen N)|
|Boateng, Paul||Hughes, Roy (Newport E)|
|Boyes, Roland||Hughes, Sean (Knowsley S)|
|Bradley, Keith||Illsley, Eric|
|Braine, Rt Hon Sir Bernard||Ingram, Adam|
|Bray, Dr Jeremy||John, Brynmor|
|Brown, Gordon (D'mline E)||Johnston, Sir Russell|
|Brown, Nicholas (Newcastle E)||Jones, Barry (Alyn & Deeside)|
|Brown, Ron (Edinburgh Leith)||Jones, Ieuan (Ynys Môn)|
|Buchan, Norman||Kaufman, Rt Hon Gerald|
|Buckley, George J.||Kennedy, Charles|
|Caborn, Richard||Kinnock, Rt Hon Neil|
|Campbell, Menzies (Fife NE)||Kirkwood, Archy|
|Campbell, Ron (Blyth Valley)||Lamond, James|
|Campbell-Savours, D. N.||Leighton, Ron|
|Canavan, Dennis||Lestor, Joan (Eccles)|
|Carlile, Alex (Mont'g)||Lewis, Terry|
|Clark, Dr David (S Shields)||Litherland, Robert|
|Clay, Bob||Livingstone, Ken|
|Clwyd, Mrs Ann||Lloyd, Tony (Stretford)|
|Cohen, Harry||Loyden, Eddie|
|Cook, Robin (Livingston)||McAllion, John|
|Corbett, Robin||McAvoy, Thomas|
|Cousins, Jim||McCartney, Ian|
|Cryer, Bob||Macdonald, Calum A.|
|Cummings, John||McFall, John|
|Cunliffe, Lawrence||McKay, Allen (Barnsley West)|
|Cunningham, Dr John||McKelvey, William|
|Dalyell, Tam||McLeish, Henry|
|Darling, Alistair||McTaggart, Bob|
|Davies, Ron (Caerphilly)||Madden, Max|
|Davis, Terry (B'ham Hodge H'l)||Mahon, Mrs Alice|
|Dewar, Donald||Meacher, Michael|
|Dixon, Don||Meale, Alan|
|Dobson, Frank||Michael, Alun|
|Doran, Frank||Michie, Bill (Sheffield Heeley)|
|Duffy, A. E. P.||Michie, Mrs Ray (Arg'l & Bute)|
|Dunnachie, Jimmy||Millan, Rt Hon Bruce|
|Eadie, Alexander||Mitchell, Austin (G't Grimsby)|
|Eastham, Ken||Moonie, Dr Lewis|
|Evans, John (St Helens N)||Morgan, Rhodri|
|Ewing, Mrs Margaret (Moray)||Mowlam, Marjorie|
|Fatchett, Derek||Mullin, Chris|
|Faulds, Andrew||Murphy, Paul|
|Fearn, Ronald||Nellist, Dave|
|Field, Frank (Birkenhead)||Oakes, Rt Hon Gordon|
|Fields, Terry (L'pool B G'n)||O'Brien, William|
|Fisher, Mark||O'Neill, Martin|
|Flannery, Martin||Orme, Rt Hon Stanley|
|Flynn, Paul||Parry, Robert|
|Foot, Rt Hon Michael||Patchett, Terry|
|Foulkes, George||Pendry, Tom|
|Fraser, John||Pike, Peter L.|
|Fyfe, Maria||Powell, Ray (Ogmore)|
|Galbraith, Sam||Primarolo, Dawn|
|Galloway, George||Radice, Giles|
|Garrett, John (Norwich South)||Randall, Stuart|
|Garrett, Ted (Wallsend)||Rees, Rt Hon Merlyn|
|George, Bruce||Reid, Dr John|
|Godman, Dr Norman A.||Richardson, Jo|
|Golding, Mrs Llin||Roberts, Allan (Bootle)|
|Gordon, Mildred||Robertson, George|
|Gould, Bryan||Robinson, Geoffrey|
|Graham, Thomas||Rogers, Allan|
|Griffiths, Nigel (Edinburgh S)||Rooker, Jeff|
|Griffiths, Win (Bridgend)||Ross, Ernie (Dundee W)|
|Grocott, Bruce||Rowlands, Ted|
|Hardy, Peter||Ruddock, Joan|
|Harman, Ms Harriet||Sedgemore, Brian|
|Heffer, Eric S.||Sheerman, Barry|
|Henderson, Doug||Sheldon, Rt Hon Robert|
|Hicks, Robert (Cornwall SE)||Shore, Rt Hon Peter|
|Hinchliffe, David||Short, Clare|
|Hogg, N. (C'nauld & Kilsyth)||Skinner, Dennis|
|Holland, Stuart||Smith, Andrew (Oxford E)|
|Home Robertson, John||Smith, C. (Isl'ton & F'bury)|
|Hood, Jimmy||Smith, Rt Hon J. (Monk'ds E)|
|Howarth, George (Knowsley N)||Snape, Peter|
|Howells, Geraint||Soley, Clive|
|Steinberg, Gerry||Welsh, Andrew (Angus E)|
|Stott, Roger||Welsh, Michael (Doncaster N)|
|Strang, Gavin||Wigley, Dafydd|
|Straw, Jack||Williams, Rt Hon Alan|
|Taylor, Mrs Ann (Dewsbury)||Williams, Alan W. (Carm'then)|
|Taylor, Matthew (Truro)||Winnick, David|
|Turner, Dennis||Wise, Mrs Audrey|
|Wall, Pat||Young, David (Bolton SE)|
|Walley, Joan||Tellers for the Ayes:|
|Wardell, Gareth (Gower)||Mr. Frank Haynes and|
|Wareing, Robert N.||Mr. Frank Cook.|
|Aitken, Jonathan||Dorrell, Stephen|
|Alexander, Richard||Douglas-Hamilton, Lord James|
|Alison, Rt Hon Michael||Dover, Den|
|Amess, David||Dunn, Bob|
|Amos, Alan||Durant, Tony|
|Arbuthnot, James||Dykes, Hugh|
|Arnold, Jacques (Gravesham)||Eggar, Tim|
|Arnold, Tom (Hazel Grove)||Evans, David (Welwyn Hatf'd)|
|Ashby, David||Evennett, David|
|Aspinwall, Jack||Fairbairn, Nicholas|
|Atkins, Robert||Fallon, Michael|
|Atkinson, David||Farr, Sir John|
|Baker, Rt Hon K. (Mole Valley)||Favell, Tony|
|Baker, Nicholas (Dorset N)||Field, Barry (Isle of Wight)|
|Baldry, Tony||Forman, Nigel|
|Banks, Robert (Harrogate)||Forsyth, Michael (Stirling)|
|Batiste, Spencer||Forth, Eric|
|Beaumont-Dark, Anthony||Fowler, Rt Hon Norman|
|Bellingham, Henry||Fox, Sir Marcus|
|Bendall, Vivian||Franks, Cecil|
|Bennett, Nicholas (Pembroke)||Freeman, Roger|
|Biggs-Davison, Sir John||French, Douglas|
|Blackburn, Dr John G.||Gardiner, George|
|Blaker, Rt Hon Sir Peter||Gill, Christopher|
|Bonsor, Sir Nicholas||Glyn, Dr Alan|
|Bottomley, Peter||Goodhart, Sir Philip|
|Bottomley, Mrs Virginia||Goodlad, Alastair|
|Bowden, A (Brighton K'pto'n)||Goodson-Wickes, Dr Charles|
|Bowden, Gerald (Dulwich)||Gorst, John|
|Bowis, John||Gow, Ian|
|Boyson, Rt Hon Dr Sir Rhodes||Gower, Sir Raymond|
|Brandon-Bravo, Martin||Grant, Sir Anthony (CambsSW)|
|Brazier, Julian||Greenway, Harry (Ealing N)|
|Bright, Graham||Gregory, Conal|
|Brittan, Rt Hon Leon||Griffiths, Sir Eldon (Bury St E')|
|Brooke, Rt Hon Peter||Griffiths, Peter (Portsmouth N)|
|Brown, Michael (Brigg & Cl't's)||Grist, Ian|
|Browne, John (Winchester)||Ground, Patrick|
|Bruce, Ian (Dorset South)||Grylls, Michael|
|Budgen, Nicholas||Gummer, Rt Hon John Selwyn|
|Burns, Simon||Hamilton, Hon Archie (Epsom)|
|Burt, Alistair||Hamilton, Neil (Tatton)|
|Butcher, John||Hanley, Jeremy|
|Butler, Chris||Hannam, John|
|Butterfill, John||Hargreaves, A. (B'ham H'll Gr')|
|Carlisle, John, (Luton N)||Hargreaves, Ken (Hyndburn)|
|Carlisle, Kenneth (Lincoln)||Harris, David|
|Carrington, Matthew||Hawkins, Christopher|
|Cash, William||Hayes, Jerry|
|Chapman, Sydney||Hayward, Robert|
|Chope, Christopher||Heathcoat-Amory, David|
|Clark, Dr Michael (Rochford)||Heddle, John|
|Clark, Sir W. (Croydon S)||Heseltine, Rt Hon Michael|
|Colvin, Michael||Hicks, Mrs Maureen (Wolv' NE)|
|Coombs, Anthony (Wyre F'rest)||Higgins, Rt Hon Terence L.|
|Coombs, Simon (Swindon)||Hill, James|
|Cormack, Patrick||Hind, Kenneth|
|Couchman, James||Hogg, Hon Douglas (Gr'th'm)|
|Cran, James||Holt, Richard|
|Critchley, Julian||Hordern, Sir Peter|
|Currie, Mrs Edwina||Howard, Michael|
|Davies, Q. (Stamf'd & Spald'g)||Howarth, Alan (Strat'd-on-A)|
|Davis, David (Boothferry)||Howell, Ralph (North Norfolk)|
|Day, Stephen||Hughes, Robert G. (Harrow W)|
|Devlin, Tim||Hunt, David (Wirral W)|
|Dickens, Geoffrey||Hunt, John (Ravensbourne)|
|Hunter, Andrew||Riddick, Graham|
|Irvine, Michael||Ridsdale, Sir Julian|
|Jack, Michael||Roberts, Wyn (Conwy)|
|Jackson, Robert||Rossi, Sir Hugh|
|Janman, Tim||Rumbold, Mrs Angela|
|Jones, Robert B (Herts W)||Ryder, Richard|
|Jopling, Rt Hon Michael||Sackville, Hon Tom|
|Key, Robert||Sainsbury, Hon Tim|
|King, Roger (B'ham N'thfield)||Scott, Nicholas|
|Knapman, Roger||Shaw, David (Dover)|
|Knight, Greg (Derby North)||Shaw, Sir Giles (Pudsey)|
|Knowles, Michael||Shaw, Sir Michael (Scarb')|
|Knox, David||Shephard, Mrs G. (Norfolk SW)|
|Lang, Ian||Shepherd, Colin (Hereford)|
|Latham, Michael||Shepherd, Richard (Aldridge)|
|Lawrence, Ivan||Sims, Roger|
|Lee, John (Pendle)||Skeet, Sir Trevor|
|Leigh, Edward (Gainsbor'gh)||Smith, Tim (Beaconsfield)|
|Lennox-Boyd, Hon Mark||Soames, Hon Nicholas|
|Lester, Jim (Broxtowe)||Speed, Keith|
|Lightbown, David||Speller, Tony|
|Lilley, Peter||Spicer, Sir Jim (Dorset W)|
|Lloyd, Sir Ian (Havant)||Spicer, Michael (S Worcs)|
|Lloyd, Peter (Fareham)||Squire, Robin|
|Lord, Michael||Stanbrook, Ivor|
|Lyell, Sir Nicholas||Steen, Anthony|
|Macfarlane, Sir Neil||Stern, Michael|
|MacKay, Andrew (E Berkshire)||Stevens, Lewis|
|Maclean, David||Stewart, Allan (Eastwood)|
|McLoughlin, Patrick||Stewart, Andy (Sherwood)|
|McNair-Wilson, M. (Newbury)||Stewart, Ian (Hertfordshire N)|
|McNair-Wilson, P. (New Forest)||Stokes, John|
|Madel, David||Stradling Thomas, Sir John|
|Major, Rt Hon John||Sumberg, David|
|Malins, Humfrey||Summerson, Hugo|
|Mans, Keith||Taylor, Ian (Esher)|
|Maples, John||Taylor, John M (Solihull)|
|Marland, Paul||Tebbit, Rt Hon Norman|
|Marlow, Tony||Temple-Morris, Peter|
|Marshall, John (Hendon S)||Thatcher, Rt Hon Margaret|
|Martin, David (Portsmouth S)||Thompson, D. (Calder Valley)|
|Maude, Hon Francis||Thompson, Patrick (Norwich N)|
|Maxwell-Hyslop, Robin||Thornton, Malcolm|
|Mayhew, Rt Hon Sir Patrick||Thurnham, Peter|
|Meyer, Sir Anthony||Townend, John (Bridlington)|
|Miller, Hal||Townsend, Cyril D. (B'heath)|
|Mills, Iain||Tracey, Richard|
|Mitchell, Andrew (Gedling)||Tredinnick, David|
|Mitchell, David (Hants NW)||Trippier, David|
|Moate, Roger||Twinn, Dr Ian|
|Monro, Sir Hector||Vaughan, Sir Gerard|
|Montgomery, Sir Fergus||Viggers, Peter|
|Moore, Rt Hon John||Waddington, Rt Hon David|
|Morrison, Hon Sir Charles||Wakeham, Rt Hon John|
|Neale, Gerrard||Waldegrave, Hon William|
|Nelson, Anthony||Walden, George|
|Neubert, Michael||Walker, Bill (T'side North)|
|Newton, Rt Hon Tony||Waller, Gary|
|Nicholls, Patrick||Walters, Dennis|
|Nicholson, David (Taunton)||Ward, John|
|Nicholson, Emma (Devon West)||Wardle, Charles (Bexhill)|
|Onslow, Rt Hon Cranley||Watts, John|
|Oppenheim, Phillip||Wells, Bowen|
|Page, Richard||Whitney, Ray|
|Paice, James||Widdecombe, Ann|
|Patnick, Irvine||Wilshire, David|
|Pattie, Rt Hon Sir Geoffrey||Winterton, Nicholas|
|Pawsey, James||Wolfson, Mark|
|Peacock, Mrs Elizabeth||Wood, Timothy|
|Porter, David (Waveney)||Yeo, Tim|
|Portillo, Michael||Young, Sir George (Acton)|
|Powell, William (Corby)||Younger, Rt Hon George|
|Price, Sir David|
|Raffan, Keith||Tellers for the Noes:|
|Redwood, John||Mr. Robert Boscawen and|
|Renton, Tim||Mr. Tristan Garel-Jones.|