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other hon. Members have dealt with how that principle is cast into doubt by the low take-up of family credit and the fact that that means that many who are losing from the child benefit freeze are not gaining from family credit.

But even families who claim family credit are in many cases not, as the Government seek to imply, better off than they were before the April 1988 changes or before child benefit was frozen. Figures recently released to me in reply to a parliamentary question show that families in the lowest paid work--those who stand to lose on the swings of housing benefit cuts what they gain on the roundabout of family credit--are still, after all the Secretary of State's boasts of increased money, worse off in cash terms, never mind in real terms, than they were before the social security changes in April last year.

The answer to which I refer shows that a family, with two children aged four and six, paying average housing costs is worse off in cash terms at earnings up to £100 a week than it was before April 1988. So, too, is a family with three children, and a single-parent family whether that parent is in full-time or part-time work.

The Minister for Social Security and, in particular, the Secretary of State have said on many occasions how much they dislike people being trapped into dependency. It has been pointed out to him by more than one hon. Member today that freezing child benefit draws thousands more families into dependency on means-tested benefit. The scale of that dependency is shown by the figures that I have just given and by the way that benefit is withdrawn from such families as their income rises.

In the lower category of the cases I have quoted--those whose earnings are between £60 and £100 a week--the net increase in their income will be less than 50p and in some cases as low as 25p a week from a gross increase of £10. Were anybody to be successful--no doubt they would have to change their job--in obtaining the full increase of £40 a week, the net benefit at the end would be the princely sum of £1.37. I shall repeat that for hon. Members who cannot believe their ears. They will be £1.37 better off net as a result of a £40 increase in gross earnings. That is what a tight withdrawal of means-tested benefit means when the Government claim that they want to help only the people in the greatest need.

I repeat that families on incomes of up to £100 a week are worse off in cash terms than they were in April 1988, and that is without taking into account the losses that have resulted from, for example, the withdrawal of free school meals which will make them £5 to £6 a week worse off.

There is one other aspect of those figures to which I want to draw the attention of the House. A number of hon. Members who have spoken in support of the Government--I accept that there have not been many, even, I hasten to add, on the Conservative Benches--have said that they think that the direction of Government policy is right. I am fairly confident that many of those hon. Members do not appreciate how tightly their Government are drawing the net of means-testing. Let me give one example. Many hon. Members will recall the many occasions on which Ministers at the Dispatch Box have spoken of housing benefit going too far up the income scale. The same figures to which I am referring show that a two-child family in low- paid work loses all entitlement to help with rent or rates when its gross income reaches £90 a week. A family with £90 a week is considered by the Government, in how their income scales work, to be sufficiently well off to need no support

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with housing costs. I caution hon. Members who think that it is all right to make theoretical speeches about how there is no harm in concentrating help on those in greatest need to take a much more careful look at precisely what their Government mean by those terms. I shall save the Minister time and trouble by accepting that the figures that I have given are not necessarily representative because there are variations in housing costs, and so on. But I mention in passing that they at least reflect the position of families who are paying average levels of rent and rates which is more than can be said of the leaflet "Better off in work" published by the Government which uses below average levels of rent and rates, no doubt because they make the figures look rather better. At least the Government figures that I am quoting have the merit of reflecting the position in average circumstances. Again, the figure for average rates is the one that the Government use in setting levels of income support, so presumably they do not consider it inadequate for those purposes. All in all, there is little doubt that a careful look at the figure shows that, whatever the Government claim, families in the lowest-paid work are not better off because the Government have frozen child benefit. The net effect of the Government's policy means that they are still substantially worse off.

The right hon. Member for Chesham and Amersham (Sir I. Gilmour) said that by freezing child benefit for the second year running the Government have forfeited their claim to be the party of the family, and I agree wholeheartedly. But I have no doubt that the Government will argue that they have merely rewritten the terms of that claim. I hope that I have been able to show that even in the terms of that rewritten claim the Government still cannot claim to be the party of the family, unless one takes the view of the former Under-Secretary, now the Chief Secretary, who said during the last but one debate on this subject that it did not matter that the Government were not increasing child benefit because they gave the family ,moral support. He was not able to quantify that sum on a weekly basis.

If child benefit is frozen to release money for tax cuts, as many hon. Members have said, it is the better-off, not the worse-off, who will get the best of the bargain. Everything in the Government's record suggests that that may be the Government's idea. Many families in low-paid work pay no tax. Many more pay far less in tax than they receive in child benefit. So the balance of advantage so far, in that respect at least, is still with them. That is where the Government claim they want it to remain.

If child benefit were abolished and the money was given to fund a cut in the rate of income tax, every two-child family with an income below £28,000 a year--that leaves out of account any allowance that it may have to offset against a mortgage--would be worse off. I remind Conservative Members that that would include Members of Parliament. My hon. Friend the Member for Livingston challenged the Secretary of State to justify increasing the universal tax allowance paid to married men by 22 per cent. and cutting child benefit in the same period by 13 per cent. The Secretary of State was so engrossed in his history lesson that he overlooked the reply that I am sure he had to hand.

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We now challenge the Minister for Social Security to justify the difference between the treatment of the universal married man's allowance and the universal child benefit.

I was sorry to hear the right hon. Member for Chesham and Amersham say that he and some of his hon. Friends might not vote with us, but I was pleased to hear that they might do so on another occasion. Nevertheless, I appeal to the right hon. Gentleman and his hon. Friends, not only to consider carefully whether that is the right decision, but to take the argument into the enemy camp--if I may so describe his Government--and to seek between now and the next debate on these matters to win over more of their hon. Friends to our side and to their side of the argument. After all, 12 million children are waiting on their answer.

6.48 pm

The Minister for Social Security (Mr. Nicholas Scott) : At the beginning of his speech, my right hon. Friend the Secretary of State examined with some care the Labour party's record on child support. It appeared to be an experience not greatly enjoyed by Opposition Members. I can understand their embarrassment, which seems to be reflected in the attendance at this debate on an Opposition day. The bulk of the Labour party seems to have little stomach for an exchange of views and records on this subject.

In a sense, I agree with the hon. Member for Derby, South (Mrs. Beckett) that this has been a strange debate, not just because of the attendance, but because there seems to have been an emphasis in the discussions across the Floor of the House and between Conservative Members that we are being asked to decide whether to index or to destroy child benefit. I utterly refute the idea that that is the question we are considering.

I want first to deal with a number of points raised in the debate. My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) overstated his case. I hope that on reflection he will decide that some of the words he used--although in the gentlest of tones--to describe the Government's policy in this area were inappropriate. It is not true that, by not uprating child benefit, we shall hit the least well-off. As my right hon. Friend knows, if we uprated it, other benefits would be adjusted accordingly, so no benefit would flow to the least well-off families. I expect exaggeration from Opposition Members, but at least within our own party we should define the Government's policy accurately. So I hope that my right hon. Friend and others who may be inclined to support him will examine the overall record of the Government over the past few years in respect of low-income families.

Government expenditure on family income supplement, family credit, supplementary benefit and income support and housing benefit for lone parents shows their commitment to supporting such people. At 1988-89 prices, that expenditure in 1986-87 was £2.69 billion ; it was £2.917 billion in the following year and £3.159 billion the year after that--increases of 8.4 per cent. and 8.3 per cent. year by year in real terms, and a real increase of 17 per cent. between 1986-87 and 1988- 89. Those are large increases, ahead of the rate of inflation, and they show our commitment to supporting low-income families. My right hon. Friend the Member for Chesham and Amersham raised two other points. He said that the forms that we were using were long and complicated. I

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acknowledge some truth in that ; we are looking at them carefully to determine whether they can be shortened and simplified. Against this criticism, it must be said that 500,000 claim forms have been completed and sent in for family credit, of which 70 per cent. have been successful. Nevertheless, we shall see whether the forms represent a disincentive to claiming.

My right hon. Friend appeared to accept the point I had made in earlier debates--that it is not a matter of all or nothing in terms of income- related or universal benefits. I have used the phrase "judicious mixture", and my right hon. Friend seemed to accept that as a sensible target. Hon. Members who accept it as such should examine overall levels of child support for 1988-89, which show that we shall spend rather more than £8.5 billion across the board, of which rather more than £4.6 billion will be spent on child benefit. That seems a fair reflection of a judicious balance between the use of income-related and universal benefits.

The hon. Member for Birkenhead (Mr. Field) suggested that I sum up the debate in gentle terms. He cooed like a dove towards some of my right hon. and hon. Friends, but I was glad to hear that they intend to resist the temptation to join him in the Lobby. He mentioned comparative rises, questioning, rather than asserting, information about the living standards of families with and without children. He should compare such information with the reduction in real standards of living under the last Labour Government, and listen to this information about the Government's record.

From 1979 to 1985, average living standards of couples with children improved by 8.6 per cent. Living standards of couples without children rose by 5.9 per cent., and those of single people without children by 5.5 per cent. So living standards of families with children undoubtedly rose faster than those of families without them, and faster than those of single people. I hope the hon. Member for Birkenhead will take that information away and, wearing his other hat, find supporting evidence for these figures, by which I am content to stand.

My hon. Friend the Member for Broxbourne (Mrs. Roe) spoke a great deal about the--as she called it--indiscriminate nature of child benefit and about how it is important to look at social policy in the round, in the context of economic policies. It is correct that we have provided a massive increase in overall social security provision, which has been possible only because of the economic success that we have managed to achieve.

I come now to the remarks of the hon. Member for Livingston (Mr. Cook). The first, mentioned by others in the debate, must be rebutted immediately. It is that our provision for and recognition of the costs of bringing up children do not compare favourably with those of other countries. The record within the European Community shows that, for two-parent families with one child under the age of two, the United Kingdom ranks second only to the Republic of Ireland in its child benefits payments. For two-child families, both children being under the age of six, we rank fifth in the EEC, behind Ireland, Belgium, Luxembourg and Italy. But it is worth reminding ourselves, in the context of child benefit payments, that Germany, Greece and Italy all means-test for child benefit, and Italy and Portugal link eligibility for this benefit to insurance status. We have no need to be ashamed of our record of recognising the extra costs of providing for children.

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Next, the hon. Member for Livingston mentioned the impact of the poverty trap under our present system of social security benefits. Of course, I understand that there continues to be an element of this trap in the system. There always will be, with a mixture of universal and income-related benefits. Only if we converted to a wholly universal system would the problems of the trap be removed. But under the Government whom the hon. Gentleman supported, people whose gross incomes rose received only a small percentage of that increase, and could lose more than 100 per cent. of it and people could double their gross income with no resultant net increase in income. Family credit is designed to be generous to working families with children on the lowest incomes. Child benefit could not possibly be the sole provision in this area unless it were fixed at a level of such generosity that the taxpayer could not bear the cost. I acknowledge the advantages of child benefit. It is, and will continue this year to be, an important part of the recognition of the extra costs of bringing up children. As has been said, it goes to between 98 per cent. and 100 per cent. of those entitled to it. It goes to the mother, and I acknowledge the importance of the mother having that extra resource. It is also important, therefore, that Opposition Members encourage the maximum take-up of family credit, which also goes to the mother.

But child benefit, important though it is, also goes to a considerable number of people who do not need the help. It is right to deal with that problem and to decide, when determining our system of support and what extra resources will be devoted to child support, what percentage of them will go to a universal benefit and what percentage will be targeted on those who need help most. As the Government have not uprated child benefit in the past two years, we have sought to ensure that we devote extra resources to helping families with the lowest incomes, with the results that I have already outlined. We have no reason to be ashamed of our record. The failure of Labour Members to support their Front Bench is a mark of their realisation of how weak their party's arguments are. Question put, That the original words stand part of the Question :--

The House divided : Ayes 231, Noes 297.

Division No. 38] [7.00 pm

AYES

Abbott, Ms Diane

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Battle, John

Beckett, Margaret

Beith, A. J.

Bell, Stuart

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Bruce, Malcolm (Gordon)

Buchan, Norman

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Cartwright, John

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

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Column 387

Coleman, Donald

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Douglas, Dick

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Fatchett, Derek

Fearn, Ronald

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

George, Bruce

Godman, Dr Norman A.

Gordon, Mildred

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Healey, Rt Hon Denis

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart

Home Robertson, John

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Sean (Knowsley S)

Hughes, Simon (Southwark)

Illsley, Eric

Ingram, Adam

Janner, Greville

Johnston, Sir Russell

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kaufman, Rt Hon Gerald

Kennedy, Charles

Kilfedder, James

Kinnock, Rt Hon Neil

Kirkwood, Archy

Lambie, David

Lamond, James

Leadbitter, Ted

Leighton, Ron

Lestor, Joan (Eccles)

Lewis, Terry

Litherland, Robert

Livingstone, Ken

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

Loyden, Eddie

McAllion, John

McAvoy, Thomas

McCartney, Ian

McCrea, Rev William

Macdonald, Calum A.

McFall, John

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McTaggart, Bob

McWilliam, John

Madden, Max

Mahon, Mrs Alice

Mallon, Seamus

Marek, Dr John

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Mitchell, Austin (G't Grimsby)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliott

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mowlam, Marjorie

Mullin, Chris

Nellist, Dave

Oakes, Rt Hon Gordon

O'Brien, William

O'Neill, Martin

Orme, Rt Hon Stanley

Owen, Rt Hon Dr David

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Richardson, Jo

Roberts, Allan (Bootle)

Robertson, George

Robinson, Geoffrey

Rogers, Allan

Rooker, Jeff

Ross, Ernie (Dundee W)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Shore, Rt Hon Peter

Short, Clare

Sillars, Jim

Skinner, Dennis

Smith, C. (Isl'ton & F'bury)

Snape, Peter

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