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Column 723source of income is earnings. Clearly maintenance benefits must be capable of moving automatically in line with changes in the cost of living. The child benefit is in a different category."--[ Official Report, 7 July 1975 ; Vol. 895, c. 238.]
She went on precisely to describe what her statutory duty was, which is the duty that I seek to carry out.
That is the background to the history of the introduction. What did it replace? My hon. Friend the Member for Broxstowe (Mr. Lester), the hon. and learned Member for Fife, North-East (Mr. Campbell), my right hon. Friend the Member for Aylesbury and my hon. Friend the Member for Lewes (Mr. Rathbone) said that, if it were a tax allowance, it would be inconceivable that it would not be annually increased. That is not what happened in practice. During the longest clear period straddling major parties from 1946 to 1970, child tax allowances went up, not 25 times in 25 years, but five times. Family allowance rose four times. There was no increase between 1963 and 1968. My right hon. and hon. Friends should take more pride in the fact that in eight out of 10 years since 1979 we have increased child benefit. However, no Governments have ever sought to suggest that child benefit reflects the cost of a child.
I hope that the hon. Member for Livingston will state the Opposition's view on this clearly. The hon. Member for Birkenhead has a consistent and coherent view and he has argued genuinely that child benefit should be much higher than it is now. He repeated his arguments tonight. There is a consistency in his arguments and their inter-relationship with the rest of the relief system. However, I have great difficulty understanding what the hon. Member for Livingston believes.
I want to refer to an excellent interview in "Poverty" magazine which appeared in autumn 1987. In that article the hon. Member for Livingston was asked about the taxation of child benefit. He said : "At some future date, it may or may not be appropriate to tax child benefit there is no case for taxing it until you get to a level which actually matches the cost of a child and we are a long way from that."
On 18 January, the hon. Member for Livingston said that "At a time when it reflects one third of that cost"--
the cost, he said, of looking after a child--
"it appears utterly ludicrous to suggest that we lower its value by another quarter."--[ Official Report , 18 January 1989 ; Vol. 145, c. 352.]
Later in that debate, he changed that from one third to a quarter. We cannot debate different levels in that way. What is the official Opposition's position? If the hon. Member for Birkenhead is voicing the Labour party view or if that view is truly expressed by the hon. Member for Livingston, there will be an additional current expenditure cost of £9 billion to raise child benefit by tripling it and of £13.5 billion to raise it by quadrupling it. [Interruption.] The hon. Member for Livingston is interjecting now gently and in an amusing way. I want to remind him that earlier today he said : "Child benefit should be a stable constant support for the expense of children."
The Opposition cannot have it both ways. It is either a supplement based on the history of child benefit which we all recognise or, as the hon. Member for Birkenhead has said, if it is more than a supplement what extra expenditure
Column 724--substantive expenditure as opposed to making indexation permanent--would the hon. Member for Livingston desire?
My hon. Friends the Members for Lewisham, West (Mr. Maples) and for Norfolk, South-West (Mrs. Shephard), in their excellent speeches, both questioned my statutory duty. I do not have the choice of looking at child benefit in isolation. I must rightly consider the relationship between child benefit and the economic and social patterns in our country. I want to remind the House of what has happened to the average male wage earner. I accept the limitations of considering him, but we have income support systems and family credit for people below the average wage level. The take home pay of the average male wage earner in 1987-88 rose per week by £18.86. To January 1989, the latest clear figures that I have to show the latest comparisons, the average male wage earner's increment has gone up by £20 per week. That is the pattern against which I must judge child benefit among other forms of help and assistance for families with children. I will not belabour the House with the pattern of change over the past 10 years which is equally relevant and would be equally successful.
Mr. Lester : When my right hon. Friend quotes those increases in net income, should he not also put against that the increase in net mortgage payments? We are really talking about the net disposable income after paying for accommodation rather than net take-home pay.
Mr. Moore : My hon. Friend the Member for Lewisham, West made those points clearly. I am not suggesting that other features have not occurred. When I try to make judgments, I must take into account the relevant factors as I am statutorily bound to do, as the hon. Member for Birkenhead constantly reminds me.
Mr. Robin Cook : It is perfectly proper for the Secretary of State to take account of those matters in reaching his decision on whether to uprate child benefit. However, he will be aware that the same figures about growth and take-home pay will be before the Chancellor of the Exchequer when he makes his decision about the married man's tax allowance. Why, over the past two years when he was confronted with those figures, did the Chancellor of the Exchequer think it appropriate to increase the married man's tax allowance, but the Secretary of State for Social Security thought it inappropriate to raise child benefit? Why should it be right to recognise the increased costs of sustaining a wife, but wrong to recognise the increased costs of sustaining a child?
Mr. Moore : The hon. Gentleman seems not to have listened to what I have been saying for the past five minutes. I have tried to show that it is impossible to compare the nature of child benefit with the whole of the tax and benefits system which is regarded as a fundamental feature of the way in which families should be supported. We must consider the way in which a family has seen its net benefits increase. For example, with a reduction in real terms in the overall tax level, the married man's allowance changes have not had quite the significance that the surface figures might suggest. Beyond that, we must take account of the relevant position of the family-- its actual net disposable income. In that respect, I will not just consider average male earnings.
Column 725If we consider those on half average income, it is clear that over the past decade their net take home pay has risen by 25 per cent. That is not a bad comparison with the 4.2 per cent. it rose under Labour. We must compare those huge increases in net disposable income with this debate about a potential 45p increase for those who would benefit from entitlement.
My next point relates to the character of this debate. Some Opposition Members have sought to focus on an attempt to pervert the truth of the Government's astonishingly successful record in trying to improve the overall position of families with children. My hon. Friend the Member for Chelmsford (Mr. Burns) made a valid point about that. He reminded the House --which should not need reminding--of the relevant records over the past decade in comparison with the Labour Government's period of office. We must remember that family support is not simply child benefit.
The hon. Member for Renfrew, West and Inverclyde (Mr. Graham) made an emotional speech and I do not deny that emotion exists in these areas. However, he is trapped in the belief that child benefit is the only support structure for families with children.
Mr. Moore : With respect to my hon. Friend, it is not the only benefit which goes to women. The same applies, by statute, to family credit. There is similarly an option with income support. We must consider the support structure provided by this Government over the past decade for families with children. There has been a staggering 27.3 per cent. increase in real terms in that respect in comparison with a reduction during the Labour Government's period of office of 7 per cent. The challenge by the hon. Member for Derby, South (Mrs. Beckett) was wrong. I draw her attention to the precise figures which have already appeared in Hansard. Unfortunately, I do not have the references for them at the moment.
Mr. Marlow : I am afraid that my right hon. Friend seems to be answering the questions that were put to him by producing a series of statistics which relate to a question which has not been put to him. Perhaps my right hon. Friend can strengthen his position by telling the House how much more generous we are in this country with our support for children than our European partners?
Mr. Moore : I could, but I was trying to make progress. Perhaps I can correct the misapprehension created by the incorrect figures quoted by my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour). I am sure that he did not mean to create that impression. He quite rightly congratulated us on our help for one-parent families. For a two-parent family with one child aged under two, the United Kingdom stands ahead of every other member state in its child benefit payments. For a two-parent family with two children aged under six, the United Kingdom ranks third behind Belgium and Luxembourg. That is not a bad comparison. Perhaps the hon. Member for Derby, South would like me to pursue that point. The relevant figures that I read out in regard to support for families with children are not due to increased unemployment. Neither unemployment benefit, supplementary benefit nor income support for the
Column 726unemployed is included. This is entirely consistent with the definition of "family", in the breakdown of expenditure by client group, that has appeared regularly in public expenditure White Papers over the past eight or nine years. For the benefit of the House, I repeat that that means one-parent benefit, family income supplement, family credit, child benefit or its equivalent, maternity grant and allowance, statutory maternity pay, supplementary benefit and housing benefit for lone parents, and additional personal tax allowance for lone parents. This touches in a very minor way on the elderly, because the figure includes benefits paid to lone parents and to people looking after elderly parents. In the data the two cannot be disaggregated, but the difference is likely to be very small indeed. It does not in any way deny the astonishing contrast in records of support for families with children.
However, it is astonishing, in detail, that the Opposition, as opposed to my right hon. and hon. Friends, can in any way question the specific in regard to child tax allowances, family allowances and family credit. I remind the House that the real value of child benefit has been higher throughout this Government's period of office than it was at any time during the Labour Administration, except when they increased it in their last month in office. I will not go into too much detail, because it might be quite painful to Opposition Members-- [Interruption.] If the hon. Gentleman wants me to go into precise detail, I shall be only too delighted to do so.
I do not know how many Opposition Members who have not been here throughout the debate would like to be reminded of the situation. Clearly, some of them would. Well, I have plenty of time to do so. I might remind them, for example-- [Interruption.] I can tell hon. Members who keep interrupting that I have lots more details of their appalling handling of government. For example, during the period 1976-77 to 1977-78, the equivalent of child benefit--family allowance--and in fact the whole of child tax allowances saw not just a reduction, in real terms, of £1.4 billion, but a cash reduction of nearly £300 million. That is the miserable record with which the Labour party thinks that it can challenge the Government. Finally, I want to touch on areas that genuinely worry some of my right hon. and hon. Friends, who are concerned that the present mix of child benefit, the new income support system and family credit may be less effective in targeting help than simply increasing child benefit would be. First, I must remind my right hon. and hon. Friends that, as my hon. Friend the Member for Lewisham, West said, we have an entirely new structure. The hon. Member for Livingston, quite understandably, keeps trying to compare child benefit with family credit. In truth, it must be compared with the whole structure of income support and family credit. There, of course, we are talking about 1.4 million families in all, including only those currently in receipt of family credit, with nearly 3 million children. As my hon. Friend the Member for Broxbourne (Mrs. Rowe) said, none of those families benefit, in effect, from any increment in child benefit. My right hon. Friend the Member for Aylesbury rightly asked why we did not use the new structure. That is precisely what has been done, last year and this year. The structure of new child premiums has enabled me, as Secretary of State, to give an additional £270 million to those specific families who have an entitlement but who would not see a direct benefit if I were simply to increase child benefit.
Column 727There was a great deal of debate about targeting. Our experience of targeting is not quite as difficult as right hon. and hon. Members seem to think. They seem to have forgotten the history--and I can give them only the data of the past pattern as opposed to the present position in regard to family credit. The hon. Member for Moray (Mrs. Ewing) seemed to think that targeting had failed. Our experience is that £9 of every £10 of means-tested benefit reaches those for whom it is intended. As my hon. Friend the Member for Lewisham, West said, the lone parents do not see it as demeaning. Indeed, they take up 97 per cent. of expenditure on their means-tested benefits.
As I said earlier, family credit goes to the mother. Contrary to what one or two hon. Members have said, all the research suggests that inhibition is caused not by the demeaning nature of means-testing, but by lack of knowledge of the character of family credit. As several right hon. and hon. Members have indicated, we are seeking to improve that knowledge.
The House will be delighted to know that in the first week of the new take- up campaign the number of new claims--not repeat claims--has tripled to over 20,000. That is before we have gone into the major street campaign. I remind the House that in the first year of family credit--unlike the 17 or so years of family income
supplement--expenditure take-up is going at 65 per cent. There has been a very sizeable increase, to £422 million, in the amount of money actually being spent on families with children.
Those who argue that targeting child benefit is an effective way of reaching people must be reminded that, as one or two of my hon. Friends have said, £1 billion of actual child benefit money goes to families earning more than £20,000 a year. We are discussing the current child benefit situation, a situation that continues. Bearing in mind the 25 per cent. of families, with 3 million children, on income support and family credit that will benefit in no way at all from an increase in child benefit, one wonders why it is such an excellent illustration of targeting. That does not, of course, take into account the 2.25 million children in families earning £20, 000 a year.
In urging the House to reject the new clause, I ask hon. Members to remember the flexibility that has contributed to the Government's outstanding record of support for families. That is a record that, between 1979 and 1985, has raised the living standards of lone parents by 10 per cent. ; of couples with children by 9 per cent. ; and, in contrast, of couples without children, and single people without children, by 6 per cent.
The record is clear. Our economic success allows me to help with a judicious mixture of universal child benefit and targeted help through income support and family credit. Our record suggests that it is in the interests of families that we retain the flexibility in the present statute, and I urge the House to reject the new clauses.
When child benefit was introduced, it was generally agreed that it was the most fair and effective way not only of giving support to families with children, but of giving
Column 728support particularly to the poorest families with children because it tended to reduce the poverty trap. Indeed, this is the view that prevailed as recently as two years ago and lay behind the assurance given in the Conservative manifesto at the last election. That assurance was given against the background of the existence of family credit, for example, which was already on the statute book, and today child benefit remains what it has always been--one of the most popular benefits, with the highest take-up and the most efficient administration.
It is far from clear what all its opponents are really saying. Some seem to imply that there should be no form of child support at all, that those who choose to have children should simply maintain them to the full, without any support from society as a whole. Other hon. Members appeared to suggest that that support, where it is paid, should go only to the poorest families.
The hon. Member for Lewisham, West (Mr. Maples) asked why a constituent of his, a single taxpayer, should pay tax to help to fund child benefit. I will give him two reasons. The first is that, because of injustice, the chances are extremely high that that young person benefited from the payment of child benefit, and it is only fair that he should return to the pool what he himself received. The second reason, which may have rather more appeal to the hon. Gentleman than justice, is self interest. If we do not encourage people to have children and give them a reasonable degree of financial and other support, there will be no one to pay for that young woman's pension when she retires, because that is how our social security system works.
If the Government believe that there should be no form of child support, with due deference to my hon. Friend the Member for Birkenhead (Mr. Field) and remarks about the present duty on the Secretary of State, they have a duty to tell us that as soon as possible so that the parents of 12 million children know precisely where they stand. It is only right to put on record our belief that that signal would be as profound as it would be depressing. Moreover, it would be a signal not just of indifference but almost of hostility towards families.
The general approach has been that support should come, but only to the poorest. I remind Conservative Members who advocated that view what that might mean. As usual, they talked only of wealthy families who now receive child benefit and as if a means-tested system would be a reasonably generous one. Under the means-tested system of family credit, all help with rent or rate rebate is withdrawn at a gross income of £90 a week. If that model were to be followed for child benefit, no child support would be paid to any family with an income of more than £5,000 a year. That would be targeting all right. That would be means testing, but it would be means testing in the mould of that already followed by the Government.
The hon. Member for Lewisham, West said that benefit should be withdrawn at £9,000 or perhaps £10,000. If that is the policy of his party, let it be known, published and publicised as soon as possible. Let every family with an income of over £9,000 a year know that it will cease to receive any form of child support.
If child benefit were abolished and the money saved were put to fund a cut in the rate of tax, no two-child family with an income of less than £28,000 would be better off. That is the scale of the assistance which hon. Members seek to withdraw from families.
Column 729Hon. Gentlemen who argue for a means-tested benefit should look not only at those examples, but more widely at their Government's approach to the social security system. They should consider how the child addition to unemployment benefit was first frozen and then, when it declined in value, abolished ; and how the number of those allowed free meals has declined--not those who need them but those who are permitted to take them.
There has never been an answer, not even in this debate, to the question, put over and over again, why the Government put into action policies which recognise the increase in the cost of maintaining a wife, yet apparently see a decrease in the cost of maintaining a child.
Most of all, hon. Gentlemen who argue that child benefit should be means tested should have learnt from the examples of this year. The money saved by freezing child benefit did not, even on the most generous interpretation --the Government's own--go to families in greatest need. A third of it went to families who were least well off and the rest went into the Treasury's coffers, despite the fact that those on the lowest incomes, whether on income support or family credit, are still worse off from the Government's net changes to the social security system. The call for a means-tested child benefit is a call for a mean child benefit indeed.
One other possibility that has been mentioned is the return of the child tax allowance. I pay deference to my hon. Friend the Member for Birkenhead and to the hon. Member for Northampton, North (Mr. Marlow), who appeared reluctantly drawn in this direction because of Government policy on child benefit. I cannot support a proposal which means that those who pay no tax get no benefit and help with the costs of raising a child or a proposal that, instead of giving the same to the Duchess of Westminster as every other mother, gives her substantially more. That proposition should not commend itself to the House.
Many in this House and outside it fear that the true source of the hostility to child benefit is the wish to see a cut in public expenditure. That may be unfair to Tory Members who support the Government on this matter and genuinely believe, however mistakenly, that they are supporting a policy to give help to those in most need. Even if that is hope triumphing over experience, hon. Gentlemen for whom that is genuinely the cause of their approach should look at the weight of the argument and the experience which goes against their belief. If they cannot vote with us tonight, they should at least abstain. If they are honest in their concern for children, particularly for children in the poorest families, and if they do not vote with us tonight, they will live to regret it ; but the children will regret it most of all.
I believe that it would be for the convenience of the House if I were to withdraw new clause 1 so that we might vote on new clause 2. I shall ask leave to withdraw new clause 1.
Mr. Raison : With the leave of the House, may I say that my right hon. Friend the Secretary of State for Social Services has spoken with his usual courtesy. I do not believe that he has convinced those who have listened carefully that it can possibly make sense for the Government to allow child benefit and support for children to fade away at the same time as they continue with tax relief for earning pensioners, on mortgages and various forms of income tax, and now tax relief for those
Column 730over 60 who take out private health insurance--all on a completely universal, indiscriminate, non-targeted basis. Therefore, I urge the House to support new clause 2.
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".'-- [Mr. Raison.]
Brought up, and read the First time .
Question put , That the clause be read a Second time :
The House divided : Ayes 194, Noes 294.
Division No. 171] [7.56 pm
Abbott, Ms Diane
Adams, Allen (Paisley N)
Archer, Rt Hon Peter
Ashley, Rt Hon Jack
Banks, Tony (Newham NW)
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Beith, A. J.
Benn, Rt Hon Tony
Bennett, A. F. (D'nt'n & R'dish)
Bray, Dr Jeremy
Brown, Gordon (D'mline E)
Brown, Ron (Edinburgh Leith)
Buckley, George J.
Campbell, Menzies (Fife NE)
Campbell, Ron (Blyth Valley)
Campbell-Savours, D. N.
Carlile, Alex (Mont'g)
Clark, Dr David (S Shields)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Cook, Robin (Livingston)
Cunningham, Dr John
Davies, Rt Hon Denzil (Llanelli)
Davis, Terry (B'ham Hodge H'l)
Duffy, A. E. P.
Dunwoody, Hon Mrs Gwyneth
Evans, John (St Helens N)
Ewing, Mrs Margaret (Moray)
Field, Frank (Birkenhead)
Fields, Terry (L'pool B G'n)
Foot, Rt Hon Michael
Garrett, John (Norwich South)
Garrett, Ted (Wallsend)
Gilmour, Rt Hon Sir Ian
Griffiths, Nigel (Edinburgh S)
Hattersley, Rt Hon Roy
Healey, Rt Hon Denis
Hicks, Robert (Cornwall SE)
Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John
Howell, Rt Hon D. (S'heath)
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport E)
Hughes, Sean (Knowsley S)
Hughes, Simon (Southwark)
Johnston, Sir Russell
Kaufman, Rt Hon Gerald
Kellett-Bowman, Dame Elaine
Kinnock, Rt Hon Neil
Lester, Jim (Broxtowe)
Lestor, Joan (Eccles)