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James Purnell (Stalybridge and Hyde): Will the hon. Gentleman give way?
Mr. Willetts: I should be happy to give way. I hope that the hon. Gentleman, who was a policy adviser before he became an MP, will say whether he thinks the Government should give the assurance that there will be no further increases in national insurance contributions.
James Purnell: As someone once said, we ask the questions in this matter.
The hon. Member for Havant (Mr. Willetts) wants to go back 10 years, but he advised the previous, Conservative Government between 1979 and 1992. In that period, the income of people in the lowest 10 per cent. fell in absolute terms by 17 per cent. He has said that he does not recognise those figures, as the Hansard record shows. However, the same figures were accepted by Nicholas Timmins, who I believe is a great friend of the hon. Gentleman's. The source of the figures is the Office for National Statistics, so they are official Government statistics. The hon. Gentleman claims to be on the side of the poor. Will he apologise—
Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman must not begin to make a speech.
Mr. Willetts: I hope to turn to the Government's record on poverty later in my speech. I still do not recognise the figure to which the hon. Gentleman referred.
I want to know where the extra revenues indicated by the extraordinary figures for the increase in the tax take are being spent. The Chancellor's Budget statement focused on the national health service. This morning, I asked the House of Commons Library to supply the figures for spending on health and benefits in 1996–97, the final year in office of the previous Conservative Government. The Red Book shows that health spending will amount to £72.1 billion next year. I also asked the Library what the total of spending on benefits and tax credits will be next year. Many of those credits ought to be counted as benefits expenditure. A lot of them used to be so counted, but they have been miraculously redefined by this Government.
I see that the hon. Member for Stalybridge and Hyde (James Purnell), who asked about poverty, has left the Chamber. It is regrettable that he has not stayed to hear my answer.
Adding together the tax credits and the social security budget, one discovers that the total increase in spending on social security and tax credits between 1996–97 and 2003–04 is bigger than the increase in health spending.
The Secretary of State for Work and Pensions (Mr. Alistair Darling): In cash terms.
Mr. Willetts: I am comparing cash spent on health in 1996–97 with that to be spent in 2003–04, and cash spent on benefits in 1996–97 with cash to be spent on benefits and tax credits in 2003–04. It is an entirely consistent comparison. What it shows is that the extra money—the biggest single increase—is not for health or education but for the Chancellor's personal preoccupation—tax credits—added back in to the social security budget. All those promises that we were going to save money on welfare to put the extra money into health and education have been broken, too. A big increase in welfare expenditure has been redefined and redescribed as tax credits.
Mr. Darling: I shall happily plead guilty to spending more on pensioners and more on children. Will the hon. Gentleman not accept that, as a result of getting more people into work, we are spending about £5 billion a year less on the dole than was spent when he was advising the Conservative Government?
Mr. Willetts: I am considering the total budget for social security and credits. I have observed that it is striking how, under this Government, the big increases in expenditure, for example, are in other areas of benefits. We welcome the fact that unemployment has fallen, but I am considering the total budget for expenditure on social security and credits. That is what has gone up—it has gone up by more than health and by more than education.
Mr. Darling: If the hon. Gentleman looks at the figures—I know that, in these debates, he cannot wait to bury his head in the figures, a fact about which I am happy in many ways—will he not accept that expenditure has gone up because we have deliberately increased expenditure on pensions and on support for families with children? If we had not done that, the rate of spending on social security would be falling compared with that under his Government. We are spending more because we have chosen to do so on children and pensions—spending which he and the Conservative party have vehemently opposed.
Mr. Willetts: All I can say is that the Government's original claim was that they would save money on social security to put more into health and education. We are now being told, "It's all right. Yes, we are spending a lot more on social security and credits but we've chosen to do it."
I now want to consider whether the extra increase in expenditure on social security and credits has been effective in terms of the objective that the Chancellor and the Secretary of State set themselves—the attack on child poverty. The Chancellor will recall not just the commitment that he gave to tackling child poverty—an entirely admirable objective—but his claim during the election campaign, repeated in the Labour manifesto, that the Government had reduced the number of children who
were in poverty by 1 million. Let me quote the manifesto on which the Government were elected, which masqueraded as an accurate historical statement:
- "over 1 million children have been taken out of poverty."
- "By 2000–01 the number of children in households below 60 per cent. of contemporary median income"—
- "had fallen by 0.3 million compared with 1998–99 and by 0.5 million compared with 1996–97".
Mr. Michael Connarty (Falkirk, East): Will the hon. Gentleman first accept that, as we have raised the level of incomes, the median income has also gone up? We have therefore set ourselves a higher target to jump over than was ever in existence under his Government. Will he return to the question that he did not answer previously: is it not true that, during the time he was giving advice to the Conservative Government, the bottom 10 per cent. of the population's incomes fell, in real terms, by 17 per cent.? Will he therefore apologise for the advice that he gave?
Mr. Willetts: As I said, I do not recognise the figure of 17 per cent. When I look at the Government's figures for households on below-average incomes, I see a pattern of the number of children in poverty, on various measures, rising in some periods and falling in others. In fact, if one compares the Government's record on child poverty not with 1996–97 but with a few years earlier, one finds that the Government have carefully chosen their base year—they chose a point when child poverty had gone up; child poverty was lower two years earlier. For all the huffing and puffing and extra expenditure, all they have done is to take the rate of child poverty back to what it was in 1994–95.
I therefore question whether the policy decisions that have been taken, supposedly with the justification of reducing child poverty, have achieved the results that were claimed for them on the Government's preferred indicator. The consultation document on poverty that the Government have just released—I have not yet had the opportunity to study it, and I am sure that the Secretary of State will want to discuss it further—is an attempt to redefine the target. When they fail to achieve the target, they redefine it. I want an assurance from the Secretary of State and the Chancellor that they will continue to be judged by the measure of child poverty that they used when they first set the target. That was 60 per cent. of median income, which was clearly the measure that they
first used when they said that they were going to take 1 million children out of poverty during their first term, and that they were eventually going to eliminate child poverty. If, after four years, they have failed to achieve that target, it is not acceptable simply to announce that they are going to change the target. That is not good enough. I look forward to hearing an assurance from the Secretary of State that that is not the case.
Lynne Jones (Birmingham, Selly Oak): The hon. Gentleman says that he does not recognise the figures for the increase in child poverty under his Government. What figures does he recognise?
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