House of Commons
Wednesday 12 June 1996
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
Child Benefit
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Coe.]
Mr. Nigel Evans (Ribble Valley):
It is always good to follow my hon. Friend the Member for Falmouth and Camborne (Mr. Coe), who has just delivered his maiden speech as a Whip. I congratulate him on that. I hope that many of his subsequent speeches will be equally short.
We have a great opportunity this morning to discuss an issue that is important not only to me, but to many other hon. Members. There has been much discussion--a lot of heat rather than light--about child benefit. The question whether child benefit for 16 to 18-year-olds should continue has been turned into a token of political virility by Labour Members as they try to demonstrate, within their current internal battle, where the soul and heart of the Labour party lie.
Many of us have in our constituencies youngsters of 16 to 18 who are in further education and whose families receive child benefit. I have estimated that more than 8,000 young people in my constituency would be affected by any plans to stop child benefit for families who have youngsters at sixth-form colleges and schools. They study in Ribble Valley and beyond, in places such as Preston college, Clitheroe royal grammar school, Queen Elizabeth grammar school, which is just outside my constituency, and Stoneyhurst, which is at the heart of it.
About 7 million families receive child benefit for about 13 million children. It was phased in between April 1977 and April 1979, replacing the redundant child tax allowance and the family allowance. I requested this debate to show why child benefit is so effective and why it is that Labour Members should speak out in support of this vital benefit which helps so many families. It has become clear that the issue is more than just a row over spending; it has become an issue of social justice. Child benefit gives money to families effectively by providing for the children at whom it is targeted at a time when they most need it.
No one can argue that limited resources should not be spent carefully and effectively, but to raid the child benefit kitty in order to appear responsible is as damaging as making an assault on the old-age pensioners' Christmas bonus, as was done in 1975 and 1976. It is the Conservatives who have proved their ability to control Government spending while targeting benefits more effectively. The Secretary of State for Social Security has won almost universal praise for the way in which he has trimmed welfare spending. He will save £5 billion by
2000 and £14 billion into the next century, while maintaining essential public spending such as universal child benefit.
It is safe to assume that we are all agreed on the benefits of education, not just to the individual, but to the economy as a whole. Surely, then, we should look at ways in which to ensure that young people get the best opportunity to further their education. There should be no dogmatic obstacles in the shape of a new tax to hinder young people in getting a good education. Perhaps this is just a softening-up exercise, the beginning of a tax continuum, with a new tax at 16, a graduate tax penalising higher education later, and finally, a good kicking in the world of work with penal rates of taxation after full-time education.
The Government have proved time and time again that they back education, with Government funding for further education and training at more than £3.5 billion for 16 to 18-year-olds. The number of young people staying on at school after 16 has now reached 72 per cent.--up from 59 per cent. in 1979. Even among the children of unskilled parents, the staying-on rate has reached 56 per cent., compared with 20 per cent. under the last Labour Government. That is due at least in part to the opportunities delivered by child benefit.
Dame Elaine Kellett-Bowman (Lancaster):
Does my hon. Friend agree that child benefit is of particular importance to Lancashire, where the wage rate is lower than in many parts of the country? We also have exceptionally good secondary schools in my constituency, including two grant-maintained grammar schools and a specialist language school. Therefore, people go to endless lengths to try to keep their children at school. If we kick them in the teeth with a tax of £550 for every child who stays on at school, that will be an enormous deterrent and will send fewer students to the excellent university of Lancaster.
Mr. Evans:
My hon. Friend makes a strong case. I know that she feels deeply for the young people who benefit from education in Lancaster, who, we hope, will go on to university having left full-time education at 18.
In 1979, one in eight children went to university; now, the figure is one in three. The last thing we want to do is reverse that trend. We want to give young people the opportunity to realise their full potential. That is what I fear is at the heart of the matter. If families are denied child benefit, some young people will have to decide whether they can remain in full-time education. Many young people in Lancaster and elsewhere may be forced out of full-time education because of this dreadful punitive tax.
Mr. Michael Fabricant (Mid-Staffordshire):
Does my hon. Friend agree that Labour's proposed tax--he is quite right to say that it is a tax--is the most regressive of all taxes? Is it not typical of Labour to propose a tax that would attack the very people they profess to support--those most unable to help themselves? Is it not typical that the Labour party always goes not for the highest common factor, but for the lowest common denominator? Labour would tax to drive people down, and in this case it would drive down their education.
Mr. Evans:
My hon. Friend, in an intervention on his birthday--we all wish him well--is absolutely right.
Lady Olga Maitland (Sutton and Cheam):
Does my hon. Friend agree that Labour is proposing essentially a dog in the manger tax? The Labour party is deeply resentful of hard-working middle classes scrimping and saving to keep their children at school. Penalising those people by £1,000 to keep one child in school for those precious two years to give them the opportunity of going from further education into university is frankly mean-spirited and unworthy, and I am delighted that my party opposes that policy with great vigour. Does my hon. Friend agree that we have to do away with that cheap attitude?
Mr. Evans:
My hon. Friend is absolutely right. It is a tax of more than £1,000 over a two-year period, at a time when families would need the money most. I imagine that keeping 16 to 18-year-olds is most expensive, with all the designer clothes they demand.
Lady Olga Maitland:
Trainers cost more than £100.
Mr. Evans:
As my hon. Friend says, trainers cost more than £100.
A tax of £1,000 would be extremely damaging to many families. Child benefit is £10.80 a week, or about £560 a year per child. That would make a difference to a youngster either staying at school or being forced to get a job, especially as 90 per cent. of expenditure on child benefit goes to families on middle and low incomes. Opposition Members may concentrate on the minute percentage of families with very high incomes and ask why they should receive child benefit, but the vast majority of families are on middle or low incomes.
That is the reason for the existence of child benefit. Its success lies in its simplicity, as demonstrated by the fact that almost 100 per cent. of mothers who are entitled to claim it do so. As my hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) said, the poorer the parents are, the more important it is as a percentage of their income.
The bogey that is thrown up time and again by the Labour party is that a small number of families with children at fee-paying schools are able to claim it. Let us look at the figures. Some 75,000 of the 1.1 million youngsters whose families receive child benefit are at fee-paying schools--about 10 per cent. of 17-year-olds in full-time education. That is a small price to pay to ensure that the bulk of the money goes to those at whom it is targeted.
Many children who attend independent schools are on grants bursaries or scholarships. The fact that they attend independent or private schools is no clear indicator of the wealth of the family. They may have been fortunate enough to be able to gain a bursary, a grant or an assisted
place. The removal of child benefit would not only be a tax on fortune, but a tax on the good fortune of the families of children who gain places at those schools, if that is the education they want for them. Again we see Labour returning to its familiar pattern of the politics of envy.
To take the benefit away from those people and target it on those who earn considerably less would be almost impossible without creating additional costs, and thus balancing out any perceived gains. There would have to be massive bureaucracy to put in place the social engineering of the Opposition.
According to the Coalition for Child Benefit:
Although child benefit was introduced by the Opposition during their last Administration--I emphasise the word "last"--it was supported in principle by all parties, and has been supported in the past even by the hon. Member for Dunfermline, East, the Labour party now wants to remove it.
In the Conservative consultation paper "Reform of Social Security", published in 1985, the Government committed themselves to keeping child benefit, and reaffirmed that commitment in the 1992 manifesto, even though they had made a detailed study of the alternatives. The document explained:
Originally, child benefit was seen as having three main advantages over the provisions it replaced--the child tax allowance and the family allowances. First, it helped those families that did not benefit from child tax allowance because they did not earn enough money to pay tax; secondly, it was payable for the first child and was tax-free; thirdly, it put the money for the care of the child directly into the hands of the mother. For some mothers, it may be the only reliable source of income, if they do not have access to their husbands' earnings, for whatever reason. Those advantages remain true today, and affect only the children they were meant for. The proposals of the hon. Member for Dunfermline, East would inevitably take those advantages away.
I know that not every member of the people's party believes that parents should be clobbered in this way. Indeed, such a betrayal of families will come very hard to some Opposition Members. It will be interesting to see whether they, too, sacrifice their principles in the pursuit of power. For example, the hon. Members for Brent, East
(Mr. Livingstone) and for Hackney, North and Stoke Newington (Ms Abbott)--who would have thought that I would ever utilise those characters as part of my defence?--would support my arguments. In a letter to The Guardian of 23 April this year, they wrote:
"Child benefit is cheap to administer with such costs taking only 2 per cent. of its overall budget".
Any other way of administering child benefit would cost much more, and that would surely defeat the desired object of the exercise for the hon. Member for Dunfermline, East (Mr. Brown).
"The first aim in helping families is to provide help 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 benefit design to meet one aim at the expense of another aim."
That is especially true today, and the hon. Member for Dunfermline, East was in favour of increasing the benefit at the time of the consultation document. He said in an Opposition Day debate on 27 June 1985:
"Child benefit could be doubled or at least raised by £6 . . . An increase in child benefit . . . would be a . . . cost-effective way . . . to ease family poverty".--[Official Report, 27 June 1985; Vol. 81, c. 1122.]
If it was right then, what has changed now?
"the party leadership needs to stand by its past pledges to retain Child Benefit in full".
They are right.
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