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Mr. Rendel: The hon. Gentleman implied that increasing capital allowances in line with inflation would be expensive. I should have thought that in real terms it would make no difference.
Mr. Davies: In his speech, the hon. Gentleman did not--or at least I did not hear him--make the important provision "in line with inflation". Clearly, that would mean that the additional costs would not be great, but equally there would be no real increase in incentives to work and save because, by definition, the hon. Gentleman would not change the real value of the capital threshold, so his proposal would make no contribution to reducing the problems of means-testing.
The hon. Member for Birmingham, Edgbaston (Ms Stuart), who was a member of the Select Committee, and who always speaks with considerable knowledge on the subject, gave us an interesting comparison with the German system of social security. It is common ground in the House that we all recognise a debt to the German system. After all, Bismarck first invented a system of social insurance and--I hope that Liberal Democrat Members will appreciate this reference--a visit to Germany by Lloyd George and his adviser, the young William Beveridge, in the early years of this century lay at the root of the Asquith Government's proposals for social insurance, unemployment insurance and old-age pensions.
The German system was also the inspiration behind many of Beveridge's proposals in his White Papers published during the second world war. We have therefore been drawing lessons from Germany during the past 100 years, and many features of its system may be relevant to us now.
The Chairman of the Select Committee, the hon. Member for Roxburgh and Berwickshire, to whom I have already referred, also followed the Liberal tradition of throwing money at every problem. He suggested that we should increase income support markedly. I hope that I have at least the rough magnitude of the figures correct in my mind. He said that the appropriate level of support for a two-parent, two-children family should be in the order of £160, rather than £120, or so, a week--a considerable increase. He was good enough--of course, he is an expert in the matter, so the point would not have escaped him--to appreciate that that might have a rather devastating effect on work incentives for people whose prospects in the job market might lead to earnings not dissimilar from such an amount. Nevertheless, he made his points with his usual authority.
My hon. Friend the Member for Gainsborough (Mr. Leigh), who has apologised to me for his absence--his family commitment involving one of his children is the best possible excuse--dealt with the major quandary before the House: what the Prime Minister really meant when he said that he would bring down social security spending. My hon. Friend said that the Prime Minister obviously never meant for one moment what he said, because such a statement is manifestly stupid and unrealisable, and so, in fact, he was basically having the British public on. That seemed a very plausible analysis of this rather strange situation. I shall be returning to that matter because it is of essential importance to the way in which Parliament evaluates the new Government's policy in this area.
My hon. Friend the Member for Gainsborough said that it was impossible to abolish means-testing altogether, and very much endorsed the idea that the essential question, which was raised in an intervention by the right hon. Member for Birkenhead (Mr. Field), is whether one is in favour of increasing means-testing or reducing it. The question is in which direction one goes; it is not one of absolute means-testing or complete abolition. My hon. Friend endorsed the right hon. Gentleman's statement of that important issue, to which I shall also return.
My hon. Friend the Member for Gainsborough very importantly drew the attention of the House and the public to the threat that the Government are about to tax child benefit, and to all the damage that that would do. He cited an example of a family living in London on £31,000 a year, whose major breadwinner would pay income tax at a higher rate than someone with no children as a result of such a measure.
The hon. Member for Doncaster, Central (Ms Winterton) legitimately used her opportunity to take part in the debate to raise a constituency case--that of Mr. Smith--about which we all now know. After all, we are sent to this House by those who elect us, who expect us to stand up for them, especially when a crisis in their lives is exacerbated by their treatment at the hands of the Government. That is precisely Mr. Smith's circumstance. The hon. Lady set out very eloquently, for the benefit of the House, yet one more example--I have a little black book, incidentally, which is gradually filling up with many other examples--of injustice and perversity in the benefits and welfare system.
Ms Rosie Winterton:
Does the hon. Gentleman appreciate that the injustice suffered by Mr. Smith has
Mr. Davies:
They were not my Government; they did not belong to me, they belonged to the Queen. If the hon. Lady means that I was a member of that Government, she is also mistaken. She is perfectly right that such anomalies, perversities and absurdities, which corrupt our benefits system--I use that strong word advisedly--have been present for a long time. The extraordinary thing about that intervention is the hon. Lady's attitude.
One might have supposed that, if the Labour party took its own rhetoric half seriously, Labour Members would be proud to come to the House, after Labour's great victory at the general election, and say, "Now we are going to put all these evils right." We have not heard that. We have not had a breath of such a suggestion in today's debate or in any other social security debate. All we hear is, "I am afraid that we have been unable to do any better than you lot did." If that is not a pretty pathetic abdication by the new Labour Government, I do not know what is.
My hon. Friend the Member for Mid-Dorset and North Poole (Mr. Fraser) rightly put the spotlight on the Government's broken promises. He characterised such promises as the hallmark of the present Government, and he gave us several examples of matters--such as personal equity plans and the state earnings-related pension scheme, which I hope that we shall debate next week--on which the reality of the Government's action has been the exact reverse of Labour's absolutely unambiguous manifesto commitment. Ministers should be very ashamed of that record because, effectively, it amounts to the bamboozling of the British public, and I hope that they are not proud of that achievement.
I apologise to the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) because I made my only absence from the Chamber during his speech, but I did hear him speak with genuine feeling for the disabled. His plea--which I hope will be heard--to the Government was that the replacement for the benefit integrity project, which is to run from April this year, should be humane in its treatment of the great majority of applicants, who will be genuine applicants: fellow citizens who find themselves in difficult circumstances which most of us do not suffer from, and who therefore deserve our respect and sympathy.
I understand that, when I was momentarily out of the Chamber, the hon. Gentleman said something extremely interesting, which has been reported to me and which, no doubt, will be in Hansard. He referred to the Government's minimum income guarantee for pensioners as a rebranding of income support. I was delighted to hear from my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), who reported that comment to me, that the hon. Gentleman had used that phrase. I cannot accuse him of plagiarism, because the phrase that I have always used in this context is "a reclassification of income support", but "rebranding" is a much better word to sum up the essential dishonesty of the proposal, which, as presented by the clever PR gurus that the Labour party is so good at employing, apparently is unambiguously good
news for all state retirement pensioners. In practice, however, it does not mean a penny more for those who do not already qualify for income support.
Mr. Goggins:
Will the hon. Gentleman give way?
Mr. Davies:
I give way to the hon. Gentleman; I hope that he has been quoted to me accurately.
Mr. Goggins:
I am grateful to the hon. Gentleman for giving way; it is a pity that he was not present when I spoke, but I ask him to accept that my arguments were as follows. First, I argued that the minimum income guarantee was, importantly, a real increase, in excess of inflation, for the poorest pensioners. Secondly, I said that the supplementary pension and income support have, unfortunately, been seen by many pensioners as a barrier to claiming, because they regard them as stigmatising--as handouts. The fact that we shall now have something called the minimum income guarantee will encourage them to make the claim, and break that barrier. It will mean that they can make the claim without feeling any stigma.
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