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(a) make provision with respect to the meaning of "regular employment" for the purposes of this section ; and
(b) prescribe circumstances in which, and periods for which, a person is or is not to be regarded for those purposes as having given up, or returned to, such employment.
(8) Regulations under subsection (7) above may, in particular-- (
(a) provide for a person to be regarded--
(i) as having given up, or as not having returned to, regular employment, notwithstanding that he is or intends to be an earner ; or
(ii) as having returned to, or as not having given up, regular employment, notwithstanding that he has or may have one or more days of interruption of employment ; and
(b) prescribe circumstances in which a person is or is not to be regarded as having given up, or returned to, regular employment by reference to--
(i) the level of frequency of his earnings during a prescribed period ; or
(ii) the number of hours for which he works during a prescribed period calculated in a prescribed manner."
(7) In section 2 of the Social Security Act 1988, for subsection (8) (which provides that no retired person over pensionable age shall be entitled to reduced earnings allowance except under subsection (4) of that section) there shall be substituted--
"(8) Subsection (4) above shall, in prescribed circumstances, cease to apply in the case of a person who is engaged in regular employment ; and, subject to regulations, any subsequent entitlement of his to reduced earnings allowance or retirement allowance shall be determined as if that subsection had never been enacted.
Column 682(8A) In subsection (8) above, "regular employment" has the same meaning as it has in section 59B of the Social Security Act 1975 (retirement allowance) and regulations may prescribe circumstances in which a person is or is not to be regarded as engaged in such employment."
(8) Subsection (9) of that section (definitions relating to retirement) shall cease to have effect.
Category B retirement pension for widower 9.--(1) In section 8 of the Pensions Act, in subsection (1) (conditions of entitlement for widower's Category B pension) the words "who has retired from regular employment" shall cease to have effect.
(2) For subsection (3) of that section (period of entitlement) there shall be substituted--
"(3) Subject to the provisions of the principal Act, a man shall become entitled to a Category B retirement pension on the day on which the conditions of entitlement become satisfied in his case and his entitlement shall continue throughout his life."
Invalidity pensions for widows and widowers 10.--(1) In section 15 of that Act, in subsection (5) (disentitlement to widow's invalidity pension)--
(a) for the words "and has retired from regular employment" there shall be substituted the words "and is entitled to a Category A or Category B retirement pension" ; and
(b) for the words "she retires from regular employment, having attained" there shall be substituted the words "she has attained". (2) In section 16 of that Act, in subsection (5) (disentitlement to widower's invalidity pension)--
(a) for the words "and has retired from regular employment" there shall be substituted the words "and is entitled to a Category A or Category B retirement pension" ; and
(b) for the words "he retires from regular employment, having attained" there shall be substituted the words "he has attained". Occupational and personal pensions 11. In section 29 of that Act (contracted-out rates of benefit) in subsection (2) (circumstances in which a person is treated as entitled to a guaranteed minimum pension) before the word "if" in each of the places where it occurs there shall be inserted respectively "(a)", "(b)" and "(c)" ; and at the end of that subsection there shall be inserted the words "or (d) if its commencement had not been postponed, as mentioned in section 33(3) below.".'.-- [Mr. Moore.]
Brought up, read the First and Second time, and added to the Bill.
In section 63(3) of the 1986 Act, at the end there shall be added the following paragraph--
(c) mentioned in subsection (1)(f) above.'.-- [Mrs. Beckett.] Brought up, and read the First time.
In section 63(3) of the Social Security Act 1986 for "(c) or (d) above" there shall be substituted "(c), (d) or, in any Order having effect on or after 1st April 1990, (f), (child benefit), above".'
I was paying tribute to the memory of Sir Brandon Rhys Williams, whose absence from these debates is much regretted by Opposition and Conservative Members, not simply by Conservative Members. There would be no more fitting tribute to the memory of the late Sir Brandon Rhys Williams than for the House to pass new clause 1 or new clause 2. Sir Brandon was indefatigable in his defence of child benefit and in his campaigns to secure regular and honest upratings of that benefit. This is not the first occasion on which the House has had the opportunity to debate the freezing of child benefit. We did so most recently in January, on a Supply day motion tabled by the Opposition. On that occasion, a number of Conservative Members were good enough to say that they agreed with us on the issue, but could not vote for the motion because it was a Labour motion. I must confess that I am not entirely persuaded that that in itself is a good enough reason for not supporting a motion with which one agrees. However, that difficulty is now removed because those hon. Members have tabled their own new clause. It may be helpful to them--and make the evening more interesting for the Whips--if the vote at the end of the debate is on new clause 2 rather than on new clause 1. It may be for the convenience of the House for me to say now that we do not propose to press new clause 1 to a vote. I hope that that will also assist in keeping those on the Treasury Bench rather more on the edge of their seats than they might otherwise have been.
The regularity with which this issue has been debated must have at least the one essential function of convincing those on the Treasury Bench that the issue will not go away, but will return to harass them repeatedly until they accept the logic of the case or dispose more satisfactorily of it than they have in our previous debates on child benefit. Every year, the Secretary of State reviews whether child benefit should be uprated. We are assured that it is mere coincidence that in both years in which the present Secretary of State has carried out the review he has decided that it is appropriate to freeze child benefit. He dare not state that child benefit should be frozen as a general principle because he would be in breach of the law that obliges him to review annually the level of child benefit. That leaves him in a rather uncomfortable position. He is unable to attack the benefit openly and to state that he would wish it to wither away. But, because he cannot openly attack the benefit, he has some difficulty in justifying why he never thinks it right to uprate child benefit. His difficulty tonight is compounded because new clause 2 in particular clearly focuses not on what should happen this year, but on what should happen next year. If the Secretary of State invites us to reject new clause 2, he is inviting the House to leave open the possibility that next year he may choose again to freeze child benefit for the third successive year.
In so far as the Secretary of State has come near to justifying such a freeze in our previous debates, he has
Column 684done so on the basis that it is cheaper to control access to child support through the means test, hence the stress placed on family credit as a substitute for child benefit. With every successive debate, it is possible to evaluate more clearly whether family credit can be portrayed as a satisfactory and credible alternative to child benefit. We have continuing evidence that the number receiving family credit is far smaller than promised. The Government's initial estimate of those likely to claim family credit was 470,000. The Secretary of State will be aware that the number has never exceeded 255,000, and at the end of February the number was slightly lower than the November peak. The number of people on family credit has flattened out at half the level initially promised by Ministers when family credit was introduced in the House.
The Department of Social Security has made two responses to the rather meagre take-up. The first response--which is welcome--was the relaunch of family credit a fortnight ago, on which the Secretary of State is spending £7 million. We wish the relaunch well and hope that it will be successful. However, I hope that he will forgive us for pointing out that family credit is becoming one of the most advertised benefits. Even if the right hon. Gentleman's wildest hopes are fulfilled and the relaunch succeeds by driving up take-up by, for example, one third, it will mean that the Department is spending £100 for every new claimant for family credit. That is a large administrative overhead and I am bound to say that it contrasts badly with the administrative overheads for child benefit.
Nobody suggests that child benefit needs a relaunch. No one is proposing a £7 million recruitment campaign to recruit claimants for child benefit. On the contrary, for minimal effort, child benefit obtains a 98 per cent. take-up. That figure turns not on packaging and advertising but on the nature of the benefit. Child benefit scores high because it is well known, easily understood and simple to claim and because it is universal so there is no sense of social stigma attached to claiming it. For all those reasons, the take-up of child benefit will always be far higher than anything that can be achieved by any means-tested benefit.
The other response from Ministers to the low take-up of family credit was less elevated. Confronted with a problem, the Government changed the figures, as they so frequently do. The new figures produced by the Secretary of State a month ago knock a quarter of a million off the estimate of those eligible for family credit. That has the convenient consequence that it has increased the percentage take-up of family credit without its being necessary for one extra person to claim it. Overnight, the take-up figure has soared from 35 to 50 per cent.
The Secretary of State will recall that he announced those figures on 17 March. On 6 April, I asked whether he would deposit in the Library the working papers on which the revised figures were based. Last Monday, he told the House that the figures had been deposited in the Library. When I checked, I found that the papers had not yet been deposited. I pursued the matter and asked the right hon. Gentleman's office whether we could have the papers. I was told that arrangements would be made for a package to be sent to my office. When I opened the package, I discovered that it contained the market research carried out for the relaunch. It is singularly apt that, when we ask for the Government's statistical data, we are sent market research. On Friday, I again asked where the working papers were. I was told that they had not been deposited in the
Column 685Library because they were not yet ready. These are the working papers on which a conclusion was apparently reached by the Secretary of State a month ago.
On my way to the Chamber today, I checked in the Library and discovered that three sheets dealing with the take-up of family credit had been deposited by the Department of Social Security this very afternoon. The Secretary of State will appreciate that I have not yet had time to go through the complex formulae. Of the three sheets, two deal with methodology and none provides the raw data. If the Secretary of State had those sheets in front of him when he announced the revised figures, he will know that the foundations for those revised figures look very shaky indeed.
Mr. Cook : We are most certainly not in favour of abolishing family credit. We are most anxious that all the 470,000 who we were promised would get family credit should get it, for the good and simple reason that, as the hon. Gentleman would recall if he had attended the debates in 1985 and 1986, Ministers repeatedly promised that family credit would compensate families with children for cuts in housing benefit and the loss of entitlement to free school meals. Those families have suffered the cuts but a quarter of a million of them are not receiving the family credit which we were promised would provide the compensation. We very much hope that the campaign launched by the Secretary of State will succeed and that he will find the remaining quarter of a million, but in the meantime, given the Government's pathetic failure to match even their own target for the take- up of family credit, they cannot seriously argue that family credit is an adequate substitute for child benefit. After all, the increase in take-up was achieved without a single extra person claiming.
The net result of all this is that, in the past 18 months during which we have been debating the uprating of child benefit, the only thing that has happened to alter the debate one way or the other is that it has become absolutely clear, beyond argument, that family credit cannot possibly be paraded as a substitute for child benefit. Family credit goes to only one quarter of families--one twentieth of those who receive child benefit. Not only does child benefit go to many more families with children ; it goes to many more families living in poverty. For a start, it goes to the 250,000 families who, even on the revised figures, are poor enough to qualify for family credit, but do not receive it. Each of those families gets child benefit and it is the only support that they have for their children.
Dame Elaine Kellett-Bowman : The hon. Gentleman referred to those in poverty. Does he have any recent data suggesting that, as we discovered some time ago, there is a remarkable number of women from quite wealthy families whose only income is child benefit? Their husbands pay the bills, the rates, and the butcher but they do not give them any money in their hands. Those women at least get child benefit.
Column 686debate I read to the House a moving letter from the wife of a man whose earnings were well above average who said that she depended on child benefit because it was the only income on which her husband could not get his hands. The hon. Lady has led us to the reasons why child benefit is so superior to family credit and why it is so important.
First, child benefit puts money in the hands of the mother. It redistributes purchasing power in favour of children because it goes to the parent who is most likely to be responsible for feeding and clothing the children. Secondly, it puts money in the hands of just about every mother. It has a take-up rate as close to 100 per cent. as one could hope to achieve.
Thirdly, child benefit does not fall as income increases. The Government persist in representing that feature of child benefit as its major weakness. In fact, it is its great strength. Child benefit represents an important ladder out of the poverty trap. It will be impossible for child benefit to fulfil its role as a ladder out of the poverty trap if the Government substitute for it a means-tested benefit confined to those who are already in the poverty trap. There is a fourth reason why child benefit remains a correct and appropriate way--the best way--of combating poverty among children : it is reliable and consistent. It does not fluctuate with all the other exigencies that can affect families in our society.
The Secretary of State has referred to child benefit as a benefit of the past. That is an odd way to talk about a benefit that was introduced only a decade ago especially as, in one critical respect, child benefit is more relevant than ever. Child benefit provides a guaranteed income. It provides stability in mothers' budgets, in sharp contrast to the dramatic changes in their circumstances that have become commonplace in modern society.
The Government have created what they like to call a flexible labour market. By that they mean that many on the labour market are stuck in a revolving door--bouts of work alternating with bouts of unemployment. Child benefit provides a stable constant support in meeting the expenses connected with children and smooths the transitions that affect those 4 million households who move in and out of employment and part-time employment each year. The expenses incurred in feeding and clothing children do not vary according to whether the head of the household is in or out of work, receiving overtime or in reduced short-time work. That flexible labour market requires an inflexible, constant, reliable child benefit that matches the constant nature of expenses on children.
Let me come to the clearest reason why child benefit should be uprated. Child benefit, logically, might be better regarded not as a cash benefit but as a tax allowance. After all, it replaced a tax allowance. It is the only recognition in the benefits and tax system of the additional cost to the taxpayer who has children. The hon. Member for Lancaster referred to those apparently wealthy and comfortable households in which the father may fail to turn adequate income over to the mother.
There is another matter in relation to wealthy and comfortable households. Since the Government came to office, they have made it a point of pride annually to uprate tax allowances, frequently well in excess of the rate of inflation. When they do so, no Minister or Conservative Back Bencher complains about increases in such tax allowances on the basis that they apply indiscriminately to wealthy and comfortably off families--indeed, they
Column 687provide a marginal advantage which is even greater to wealthier families. I again ask the question that Opposition Members have put on the past three occasions on which the House debated child benefit and to which I have not yet received a reply : how can the Government come to a judgment which, in its order of priorities, decides that the married man's tax allowance should go up by 22 per cent. in real terms--that is what has happened over the past decade--while the value of child benefit has gone down by more than 12 per cent. over the same decade? By what extraordinary feat of mental gymnastics can Ministers persuade themselves that the cost of maintaining a wife has gone up by one fifth and that the cost of maintaining a child has gone down by one eighth? Where are the data to support such an extraordinary double standard? If they exist, could they also be deposited in the Library?
For all those reasons, Ministers are wrong to resist the uprating of child benefit. For all those reasons, I hope that Conservative Members will vote with us tonight, to press on the Government the case for uprating child benefit next April. I appreciate that the difficulty in their joining us in the Lobby is that they are not supposed to do so. They are supposed to support and stand by the party with which they were elected.
There is one obvious reason why Conservative Members should not feel that compunction on this issue. That reason is to be found in the manifesto on which all Conservative Members stood at the last general election. That manifesto contained a pledge that child benefit will continue to be paid as at present. There was no rider in that manifesto that it would continue to be paid as at present at a frozen level. [Interruption.] I heard an hon. Gentleman say that it has continued to be paid as at present. I should be interested to know whether, in his election address to his constituents at the last election, the hon. Gentleman spelt out that the manifesto meant that it would be a frozen child benefit at a single figure of £7.25. If the hon. Gentleman did state such a clear footnote in his election address, I assure him that I shall exculpate him from any need to vote with the Opposition tonight for the uprating of child benefit. For all other Conservative Members who may not have put any such saving clause into their election addresses, any honest, simple and candid reading of their manifesto means that they should vote with us tonight and, next year, provide for an honest uprating of the benefit that goes to 7 million mothers and 12 million children.
Mr. Raison : The hon. Member for Livingston (Mr. Cook) spoke trenchantly about new clause 1. I wish to speak about new clause 2, which would automatically index-link child benefit in the same way in which retirement and other benefits are automatically uprated each year. It will not apply in the current financial year. We accept that we are now too far into the new financial year for that to be possible. Nor does it make up for past failures to uprate child benefit--for the fact that child benefit has lost 12 per cent. of its value since it was introduced in 1979. As the hon. Gentleman said, that is in sharp contrast with income tax allowances which went up during that period.
We simply ask that, in future, the money that is already in the public expenditure projections for the uprating of
Column 688child benefit should be used for that purpose. This year, the cost of uprating is estimated to be about £200 million. I repeat that it was allowed for in the present public expenditure projections, and it is allowed for in the public expenditure projections for next year. We do not even ask for new, additional money from the Government. My right hon. and hon. Friends and I have tried to put new clause 2 in terms which are as easy as possible for the Government. As I said, we are not insisting on anything this year. We are trying to establish the principle which was inherent in our manifesto commitment that there should be a regular uprating of child benefit, and that we will achieve the statutory status for it. I hope that my right hon. Friend the Secretary of State will accept our new clause. My right hon. and hon. Friends and I intend to vote for it. Why do we feel so strongly about this matter? The hon. Member for Livingston was right to say that we should regard child benefit as a tax allowance rather than a benefit. My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) has often made that point. There is no doubt that child benefit has descended from the historical tradition of tax relief for those with children. That tradition dates back to the late 18th century. There was a period during the 19th century when it was dropped, but it has had long standing in our history, and it would be wrong to forget that. In racehorse terms, the origin of child benefit is "by family allowance, out of child tax allowance."
People object that child benefit is not targeted. That is the principal objection that we are likely to hear from hon. Members who support the Government in this matter. However, tax relief on pensions, mortgages, and on married couples' and personal allowances is not targeted. The Government are proposing to introduce tax relief for health insurance for the over- 60s. Again, there is no intention of targeting it. My right hon. Friend should state why we should treat child benefit selectively--that is clearly the direction in which we are moving--when many other major sources of support for large sections of our community are not selective or targeted.
Mr. Frank Field : Is not the right hon. Gentleman being unusually generous to the Minister? Those tax allowances are targeted. They are targeted in inverse proportion to people's needs. The richer one is, the higher one's rate of tax, and the more valuable are one's tax allowances.
Mr. Raison : Not all. Somebody receiving help with his pension in the form of tax relief gets more if he has a large pension. It seems to fly in the face of all reason that we should restrict child benefit on the basis of income. As I have already elicited from my right hon. Friend, his new and welcome measure on the abolition of the earnings rule is in no sense targeted. It will apply to everybody. Why should the Government pick out this form of help to a significant group in the population--the help which, through child benefit, goes to those with children?
Bearing in mind the lives of our constituents and what is going on in our country today, there is no doubt that the bringing up of children can entail significant costs. Of course, for most people it brings great pleasure and happiness--I do not want to play that down for one
Column 689minute--but it also brings great financial burdens. Those burdens fall on those who are just above the level of selective benefits--the not-quite-poor, as some hon. Members have called them. Conservative Members must remember that there are many people in this country whose incomes are just above the level of means-tested benefits, and they do not find life particularly easy financially. It would be a great error to think that such burdens do not hit them. The hon. Member for Livingston forcefully made the point that, to a great extent, the burden of bringing up children--not only the actual work but the financial cost--is borne by mothers and that child benefit is paid to mothers.
Those with a taste for history will recall the battles fought at the end of the war to establish family allowance, in which the great aunt of my hon. Friend the Member for Lewes (Mr. Rathbone) played such a heroic part. Other Conservative ladies such as Mrs. Cazalet Keir were also involved in those battles. They fought to establish the principle that the benefit should go to the person who really needed it--the mother. To forget that would be to fly in the face of a tradition long held within the Conservative party and widely shared by many important women's bodies outside the Conservative party. I understand that the majority of the Women's National Commission has come down in favour of uprating child benefit. The Save the Children Fund, the National Children's Bureau, Barnardo's, the Children's Society, the National Children's Home, family service units, family welfare associations and many others have joined us in the conviction that it is absolutely essential to uprate child benefit.
We must accept that we are living in what in some ways is a radically changing social climate. There are things in that climate which make bringing up children more difficult than it has been. We are all aware from our constituency surgeries that there has been a rather tragic increase in the proportion of cases where a family breakdown is at the heart of the problem. We are all aware that there has been a substantial growth in the number of one-parent families in this country. Those people particularly need the certainty of child benefit. Today there is more pressure and more need for women to go out to work. That incurs certain costs, and an enlarged child benefit would provide a better way of helping those people than any other form of benefit. The certainty of child benefit is one of its most valuable features. People know that family benefit will come to them. It does not involve the delay that occurs when establishing a claim to selective benefit.
We must ask ourselves a profound question : do we want to see more and more people pushed into some kind of means-tested support? The community charge will be accompanied by a massive system of rebates. I believe that something like 10 million people will receive rebates under the community charge. The policies for rented housing will have the same kind of effect, and the number of people claiming housing benefit will clearly rise.
Obviously no one is against income support or family credit. It is absolutely right that we should recognise that child benefit cannot do the whole job. One would very much hope that if we can allow child benefit to grow in the way that the late Sir Brandon Rhys Williams advocated in his posthumously published pamphlet "Stepping-stones to
Column 690Independence", and as the basis for a tax credit scheme, we can get to grips with a very difficult social problem in a way which has not been possible so far.
An advantage of child benefit is that it offers one of the biggest "Stepping-stones to Independence" to which Sir Brandon referred. My right hon. Friend the Secretary of State has often said that he wants to get us away from the dependency culture. I do not believe that scrubbing child benefit will do that. The dependency culture is expressed by the reliance on the means-tested benefits to which I have just referred. We are all aware of the great problems with the take-up of family credit and many of us will have seen the advertisements on television intended to encourage people to collect their family credit.
Another argument that the Government have often put forward is that child benefit does not help the really poor--those on family credit and income support. Perhaps it is true as things stand that if there is an increase in child benefit they will not receive its direct effect. However, as I understand it, there is nothing in the Social Security Act 1986 to prevent those on other benefits from receiving the full increase from child benefit. The fact that they do not receive the full increase is simply a reflection of the orders and regulations with which the Government implement the Social Security Act 1986. They could perfectly well say that we should put up child benefit to allow everyone to gain from it. Meanwhile we have to face the fact that the decision not to uprate child benefit this year has moved some 30,000 families with 60,000 children on to income- related benefits. Is that really the tendency that the Conservative party wants to support?
Some people say that child benefit should be taxed and, of course, that has attractions. Family allowances were taxed in days gone by. However, there is a technical problem today. The absolutely justified separation of a husband and wife's taxes, which will be introduced next year, will make it virtually impossible to tax child benefit. Who would we tax? Would we tax the husband who does not receive the benefit or the wife who receives it but whose income will normally be much lower? The latter policy would not be well received, although in many cases the wife might not reach the level to be liable to pay tax. Similarly, husbands would not be very enthusiastic about being taxed on a benefit which they do not receive. That would certainly be novel.
Another argument is that those paying the higher rate--40 per cent.--should perhaps not receive child benefit. I can see a case for that, but there are practical problems. I cannot help but think back to our debates on the community charge and the amendment in favour of a banded system and the vigour with which the Government claimed that it was completely impractical to have a system by which those on the 40 per cent. rate should pay a higher community charge because very often over 18 months or two years it was difficult to know exactly what level people were on. If that criticism applied for a banded community charge, it would apply with child benefit.
The practical and moral arguments point strongly in favour of continuing child benefit. We are talking about the possibility that the Government may decide between now and the next election to drop child benefit as part of our social security apparatus. That would be a disastrous policy.
We know that child benefit cannot be ended during this Parliament. I remind my right hon. Friend the Secretary of State that in 1985 a very comprehensive review of social
Column 691security came down firmly in favour of child benefit. I have a battery of quotes from my right hon. and hon. Friends in favour of child benefit and I will not embarrass them by quoting from them today. All sorts of groups firmly believe that child benefit is right and must be uprated. Those are not loony groups, but include bodies such as the women's institutes.
We know that child benefit can help to restrain inflationary wage pressure. After all, the existence of a large number of children is likely to cause working people to demand higher pay. If some of the burden of higher costs can be borne by child benefit, the pressure will be lessened.
As the hon. Member for Livingston has reminded us, child benefit helps to offset the poverty or employment trap. Above all, child benefit embodies the positive symbol of that active family policy to which the Conservative party is committed. That is a commitment to the job of raising children decently in a world where it is not always very easy to do that. However, that is only part of the job, and many other factors come into play. If we abandon child benefit we will turn our backs on a great tradition. If we keep child benefit but do not uprate it and simply allow it to wither on the vine, that will be almost as bad as abandoning it.
I urge my right hon. Friend the Secretary of State to accept new clause 2. If he cannot do that, I urge right hon. and hon. Members to support it in the Lobby.
Mr. Menzies Campbell (Fife, North-East) : I begin by apologising for the absence of my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood). He set out to be here for the proper time, but unhappily has not been able to enlist the co-operation of British Rail. He will join us as soon as he possibly can. Unfortunately, he is delayed on a train somewhere between London and the north.
I am a poor substitute for my hon. Friend the Member for Roxburgh and Berwickshire in that I do not possess his detailed knowledge of the labyrinthine complexities of social security legislation. However, I feel that that may not be such an obstacle this evening. We are concerned more with a matter of principle than of complexity. The arguments for and against have been well rehearsed, but, if I may respectfully say so, it seems to me that those marshalled by the hon. Member for Livingston (Mr. Cook), who opened the debate, were overwhelming in their quality.
It may help if I indicate briefly some of the reasons why I and my hon. Friends will be supporting whichever of the two new clauses is pushed to a vote. In the first place, as has been pointed out, child benefit was introduced to take the place of the old child tax allowances. Secondly, the combination of tax cuts in recent Budgets and the freezing of child benefit has resulted in money being taken from those with children and given to those without children. As has been pointed out, the level of child benefit has fallen by 12 per cent. in real terms since 1979, during which period the married man's tax allowance has increased by 22 per cent., and the single person's by 19 per cent., after taking account of statutory indexing. Of course, the great majority of families affected by the level of child benefit fall neither into the category of the rich nor into the category of the poor. Indeed, many of those families will find the effect of a freeze to be very
Column 692considerable--indeed, disproportionate. In these circumstances, it seems that the arguments in favour of uprating child benefit are overwhelming, not least because the permanence of the benefit, and the ease of access to it, undoubtedly help poorer families, many of whom have great problems, in the management of their finances. These people may be subject to great fluctuation in income and in circumstances, week by week.
It is easy to argue that one of the most significant features of child benefit is that it is paid direct to wives. There is a feeling among some of us that we may be intruding on private grief when we hear the debate among Tory Members as to what their manifesto actually said. I suspect that the capacity of the textual analyst really ought not to concern this debate. This is a debate about principle, and not about what was said, or is understood to have been said, in the Government's manifesto. There is little doubt that the vast majority of people in this country understood that the Government's proposals necessarily involved the uprating of child benefit year on year. It is for that reason, and because of the merits of the case for uprating, that my hon. Friends and I will certainly support whichever of the two new clauses is put to the vote.
Mr. John Maples (Lewisham, West) : The debate on this subject has become something of an annual event, and some Members seem to make very much the same speech year after year. I am afraid that my speech will be no exception.
As the debate goes on, in its wider context, it is clear that my side of the argument is winning. While that may not be apparent in the present attendance in the House--I do not think that I have ever felt quite so outnumbered on my own Benches--outside the House, in the wider debate in the country among people who think about tax and social security policy, the Government are winning. Essentially, it boils down to an argument about means-tested benefit versus universal benefit.
Opening the debate, the hon. Member for Livingston (Mr. Cook) made an eloquent plea for universal benefits. One knows that that is part of Socialist policy, and has been for a very long time. Of course, the other side of that case, about which the hon. Gentleman did not tell us, is that universal benefits mean higher rates of taxation. On the whole, I am in favour of lower taxation and means-tested benefits, and of paying the price of the kind of poverty trap that one ends up with, rather than of having high rates of taxation and universal benefits. I do not believe that it is the business of the Government to try to help people who are in a position to help themselves, but I do believe that it is the Government's job to help those who are not in a position to help themselves.
Mr. Tony Marlow (Northampton, North) : In which case, could my hon. Friend tell the House whether he is or is not in favour of the old system of child tax allowance, because that allowed people to keep more of their own income?
Mr. Maples : My hon. Friend has intervened very early in my speech. I was going to come to the question of tax allowances, but, as he has raised it, I shall deal with it now. Paradoxically, if we had kept the system of child tax allowances, of which my hon. Friend is apparently in favour, their value would have fallen by one third since 1979. The reason is that taxes have been reduced from 35 to 25 per cent. The attraction of child tax allowances under
Column 693the last Labour Government was based on the fact that the rates of income tax then were so high. If we had perpetuated that system, the value of those tax allowances would have fallen by about £90 in today's money.
Mr. Jim Lester (Broxtowe) : Adopting the logic of my hon. Friend's argument against universal benefits and in favour of targeted, means- tested, benefits, how does he explain tax benefits for pensions, tax benefits in respect of married women's earned income, and the various untargeted global benefits that are paid freely to people with mortgages? By the logic of my hon. Friend's argument, those should also be withdrawn. According to what he says, we should means test those people directly and, thereby, reduce tax a great deal more.
Mr. Maples : There is a good deal in what my hon. Friend says. It is an attractive argument. Indeed, in the past, I have argued that we should try to reduce rates and remove allowances and deductions. But there is a fundamental difference between not paying tax and receiving social security benefits, and anybody who does not realise that is missing a terribly important point in the debate. I do not believe that it is the job of the state to take money from people in tax and give it back to them in social security benefits.
I was surprised that my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) should intervene to suggest that it was part of Conservative policy to regulate financial affairs between husbands and wives. That has certainly never been part of my notion of Conservative policy. In fact, I do not think that it is any business of the state either. I do not think that it is the business of the state to take money from working husbands and give it back to their wives.