Previous SectionIndexHome Page

Mr. Nigel Beard (Bexleyheath and Crayford): While I recognise my right hon. Friend's distinguished record in fighting child poverty and family poverty, as well as the truth of much of what he is saying, what alternative measures would he suggest to tackle such poverty?

Mr. Field: I shall deal with that matter in a moment. I suggested that forgoing a 3p or 5p cut in the standard rate of tax on every pound that our poorer-paid constituents pay is an opportunity cost that we are taking on ourselves, but an opportunity that they do not have. When we discuss anti-poverty measures, we need to think especially about the tax burden for people on low pay. It is fine for us to discuss whether we should take money out of the pockets and purses of some of our constituents and give it to other constituents, but we should also be aware that income tax is a cause of poverty, as well as of a reduction in living standards, especially for those below the bottom level. One should not lightly forgo substantial income tax cuts merely because one is in favour of paying benefits or awarding tax credits. That is one of the proposals that we need to have in our armoury if we are to counter child poverty effectively and reinforce the natural instinct of families to try to improve their lot by their own efforts.

The real worry that the Bill presents was revealed on the BBC's six o'clock news after the Chancellor's pre-Budget statement. A low-paid worker with children was wheeled out. The spinners must have been delighted with his initial comments because his gratitude to the Government for increasing his family's income to the extent provided by the tax credits knew no bounds. However, instead of putting a full stop there, he used a comma, which must have given the spinners nightmares. He continued, "I now know that I will never be able to improve my family's living standards by my own efforts. It's up to politicians and bureaucrats to decide my take-home pay."

I do not believe that we can run a free society through politicians determining people's living standards and thus negating their natural impulses to want their efforts,

10 Dec 2001 : Column 618

length of working week, extra pay, skills and pride in looking after their household and families to count. We should not take over that role and keep it to ourselves.

It is important that we do not simply concentrate on the Government's success with the minimum wage. The Opposition said that there would be mass unemployment even at the level that the Government were setting it. It has been an effective floor for many of my constituents, and I pay tribute to the Government for keeping their nerve and introducing it. I compliment them on increasing child benefit and on the contrast between our record and the poverty of the Opposition's approach when they were in government.

Gareth Thomas (Clwyd, West): I defer to my right hon. Friend's great experience, but does he accept that his trumpeting of the national minimum wage makes the position that he outlined earlier contradictory? Is not the minimum wage an example of the Government intervening to improve people's conditions?

Mr. Field: Of course it is. We intervene if we increase or decrease taxes. I do not argue that we can wash our hands of and have nothing to do with such matters. The minimum wage is an example of intervention and the Government used their judgment in setting it. They now realise that unemployment did not result from it and that we should be confident about progressively increasing it. I hope that the Paymaster General will take back the message that no credit approval should be given if it is clear that the wage entered on the form is below the minimum wage. There is no point in our passing measures if we do not implement them.

There is a worry that stems from national insurance benefits and child benefits. Today's debate could give the impression that all our tax credit proposals erect a wonderful buttress against existing forms of welfare provision. Alternatively, they may prove to be cuckoos in the nest. I want us to think five years ahead. We shall be told how well the tax credits are working and the argument will change subtly. Is there a need for two welfare states operating next to each other? Given that the tax credit concentrates help on the poorest, should we place the same emphasis on the other welfare state, which comprises national insurance benefits and child benefits?

The Government rightly claim credit for establishing a child tax credit. When it works well, what are the long-term consequences for child benefit? The debate will subtly change; we shall hear talk of the wastefulness of the other benefits and of what the revenue could be spent on. It may then be too late for some people to object to the plan that is unfolding. I believe—as my hon. Friend said in his intervention—that there is a case for placing floors under people and allowing them to grow by their own efforts, and for praising and rewarding them and letting them take pride in their efforts.

Mr. Bill Tynan (Hamilton, South): I am reluctant to challenge my right hon. Friend, because of his record on welfare benefits, but some employment is very poorly paid, and the employers concerned will not improve wages. What would he say to people working in those conditions, who are in poverty and cannot get out of the mire? Would he tell them that they should not have

10 Dec 2001 : Column 619

working families tax credit, or children's tax credit? The crucial issue is how we direct this support and get it to the people who most need it.

Mr. Field: My plea would be that we should not get into that position in the first place. What do my hon. Friends have to say about housing benefit? Not one of our local authorities has a proper report on how we administer it. Every report produced shows the extent of fraud involved.

Siobhain McDonagh (Mitcham and Morden): Given my right hon. Friend's great knowledge, it is difficult to challenge him, but does he agree that the problem with housing benefit stems not solely from its introduction but also from the deregulation of rents at the same time, which led to the increased housing benefit bill?

Mr. Field: All that I was suggesting was that we are arguing now that we should have these tax credits, but in five years' time, we shall face the same arguments about them that we, as constituency Members, have to face now over housing benefit. Many of our constituents cannot afford to pay their rent, but what are the Government to do with the escalating housing benefit bill? How do we get off that helter-skelter? We are now in the early stages of tax credits; I am merely pointing out the direction in which we are moving, and sounding a note of caution.

Ms Karen Buck (Regent's Park and Kensington, North): I am sure that the situation in my right hon. Friend's constituency is very different from that in mine. The reason that we have a benefit and rent crisis in London and the south-east is that the shortage of housing supply has pushed rents up. The availability of property to households on housing benefit in London has halved since 1996. The relationship that my right hon. Friend mentioned might well apply in the north of England, but it does not apply in London, and that must call into question the validity of his argument.

Mr. Field: As someone born in London but who does not represent a London constituency, I would say that London is an island unlike other parts of the country. In many areas of Birkenhead, for example, there is a surplus of housing. That does not mean to say that landlords do not try to push rents up or to bleed taxpayers. I hope to introduce a Bill shortly that will allow local authorities not to pay housing benefit to bad landlords who do not look after their properties and care nothing for their tenants or for the hell that can be inflicted on neighbours and the rest of the street. I am sure, from the nodding that I see around me, that I shall gain widespread support for that measure.

On Second Reading of the Bill that introduced housing benefit, I was challenged by other hon. Members. I was asked how foolish I could be, and told that I was trying to prevent their constituents from obtaining help with their rent. No attention was paid to where the benefit would lead us. I merely wish to suggest, by power of analogy, that we need cautiously to attend to the way in which we introduce tax credits.

Kali Mountford: My right hon. Friend's analogy with housing benefit seems flawed. I am sure that many hon. Members want some changes to the housing benefit

10 Dec 2001 : Column 620

system, but surely a more relevant analogy would be with the system that the credits will replace—in particular, family credit. His argument is about the effect on the workplace. What does the working families tax credit do worse than family credit did?

Mr. Field: My problem is that, when I sat on the other side of the House, I put those arguments against family credit. The whole Opposition also put those arguments. Thankfully, I now sit on this side of the House, although I continue to apply to tax credits the arguments that I applied to family credit. The measure is more generous, but it does not change the substance of the matter one iota.

In what was intended to be a brief contribution, I have tried to show the extent of the red water, or the third way water, that divides this side of the House from the other. Even though I have criticised the measure, I do not want to conclude without drawing attention to this most fundamental difference: there is no question but that the Government and the Members who support them are as keen to tackle child poverty and other forms of poverty as I sensed, when I sat on the other side of the House, that the previous Government were not.

I wish to underscore that major difference with all the energy in my body, but I am fearful of where the measure will lead us. Although it is about increasing the income of low-income people, that does not mean that it will be satisfactory. To tackle poverty successfully, we must increase the income of the poor and widen their freedom. The measure successfully increases their income, but it limits their freedom.

Next Section

IndexHome Page