The
Committee consisted of the following
Members:
Chairman:
Mrs.
Janet
Dean
Brennan,
Kevin
(Lord Commissioner of Her Majesty's
Treasury)
Cable,
Dr. Vincent
(Twickenham)
(LD)
Clwyd,
Ann
(Cynon Valley)
(Lab)
Dodds,
Mr. Nigel
(Belfast, North)
(DUP)
Evennett,
Mr. David
(Bexleyheath and Crayford)
(Con)
Goodman,
Mr. Paul
(Wycombe)
(Con)
Grogan,
Mr. John
(Selby)
(Lab)
Gummer,
Mr. John
(Suffolk, Coastal)
(Con)
Iddon,
Dr. Brian
(Bolton, South-East)
(Lab)
Jenkins,
Mr. Brian
(Tamworth)
(Lab)
Lilley,
Mr. Peter
(Hitchin and Harpenden)
(Con)
Murphy,
Mr. Denis
(Wansbeck)
(Lab)
Newmark,
Mr. Brooks
(Braintree)
(Con)
Primarolo,
Dawn
(Paymaster
General)
Reed,
Mr. Andy
(Loughborough)
(Lab/Co-op)
Ruddock,
Joan
(Lewisham, Deptford)
(Lab)
Wills,
Mr. Michael
(North Swindon)
(Lab)
Wyatt,
Derek
(Sittingbourne and Sheppey)
(Lab)
Ms G
McBride, Committee
Clerk
attended the Committee
Second
Delegated Legislation
Committee
Monday 19
March
2007
[Mrs.
Janet Dean in the
Chair]
Draft Child Benefit Up-rating Order 2007
4.30
pm
The
Paymaster General (Dawn Primarolo): I beg to
move,
That the
Committee has considered the Draft Child Benefit Up-rating Order
2007.
The
Chairman: With this it will be
convenientto discuss the draft Guardians Allowance
Up-rating Order 2007 and the draft Guardians Allowance
Up-rating (Northern Ireland) Order
2007.
Dawn
Primarolo: It is a pleasure, Mrs. Dean, to see
you in the Chair.
In
my view, the orders are compatible with the European convention on
human rights.
Child
benefit is payable to 6.7 million families for about 13 million
children and young people. It delivers financial support to the vast
majority of families in the United Kingdom. It provides almost all
families with a worthwhile contribution towards the cost of bringing up
their children and it is a vital element in our commitment to tackle
child poverty.
The
Government are committed to increasing child benefit in line with
prices. The orders increase the rates in line with inflation. From 9
April, child benefit will be worth £18.10 per week for the first
child and £12.10 a week for each subsequent child. As a result
of the increases, the rate payable for the eldest child qualifying for
child benefit remains more than 25 per cent. greater in real terms than
in 1997. The guardians allowance will increase to £12.95
a week. With those increases, and the increases in child tax credits,
we will be delivering even more support to families next
year.
We remain
committed to our long-term aim of eliminating child poverty within a
generation, and halving it by 2010, and child benefit will remain a key
part of that move. I commend the orders to the
Committee.
4.32
pm
Mr.
Paul Goodman (Wycombe) (Con): It is a pleasure,
Mrs. Dean, to serve under your chairmanship for the first
time.
The Opposition
have no objection to the orders, but I ask the Paymaster General to
enlighten us about the thinking behind the uprating. She said that
child benefit is a vital element in the Governments total
benefit and tax credit system. She said that it is the
Governments view that it should rise in line with prices. It is
that statement that I wish briefly to explore.
Benefits,
tax credits and other payments have a way of going in and out of
fashion. As the Paymaster General will know, the tendency in recent
years has
been for child benefit to come back into fashion. The make child
benefit count campaign is being run by the Child Poverty Action
Group and a plethora of voluntary organisations. They argue for the
Government to increase child benefit for younger children to the same
rate that is paid for the eldest child.
The pre-Budget
report had remarkably little to say about child benefit when compared
to the tax credit system. Page 104one of the main pages dealing
with tax, tax credits and benefitsincluded a significant
section on tax credits but nothing about child benefit. On page 101,
however, it made a significant announcement about child benefit,
stating that every mother-to-be would become
eligible for Child Benefit from
week 29 of their pregnancy, so that women will be up to £200
better off.
I have had
some difficulty in finding the costings for that announcement page 226
of the Red Book. Will the Minister enlighten meI may have been
looking at the wrong pageas to where I might find the precise
cost?
We
know that some Ministers have been sympatheticin one case
before the person concerned was a Ministertowards the future of
child benefit. The person I have in mind was no less significant a
person than the Economic Secretary, who in The
Guardianso it must be trueon 7 August last year was
reported as showing sympathy for the idea of raising child benefit for
subsequent children through backing a report by the Fabian Society
commission on child poverty. In summary, if the Minister could divulge
more information about the strategic place of child benefit in relation
to the Governments thinking on child tax credit, I am sure that
the Committee would be grateful.
4.35
pm
Dr.
Vincent Cable (Twickenham) (LD): May I
also express my pleasure on serving under your chairmanship,
Mrs. Dean? I have little to say about the orders. We have
regular discussions about uprating and the points that we all make are
the same. There are two main points. The first simply reflects what the
Conservative spokesman has said about the vexed issue of the
differential between younger and older children. There are economies of
scale in familiesit is hard not to get personal when talking
about families, but I guess that there are such things. Does the
differential reflect some objective measure of the relative costs of
older and younger children, or are we simply perpetuating an historical
benchmark that has arisen for entirely arbitrary reasons? Does the
differential have any basis in social surveys of families or does it
just happen to be there? My instincts tell me that we should try to
narrow the differential between older and younger children, but,
clearly, from the Treasurys point of view that needs to be done
in an expenditure-neutral way. It could be done over time or in
conjunction with child tax credit reforms, but I would be grateful for
a stronger justification than we currently have for maintaining a
differential between the oldest and younger
children.
Secondly,
we must realise that it is logical that if some benefits are indexed to
inflation and others to earnings, the latter will gradually grow in
importance. We know that the Government intend to use tax credits more
and child benefit less as part of their anti-poverty strategy and we do
not need to discuss the philosophical arguments
of that, but the inevitable consequence is that more help for children
will be targeted or mean-tested, which has benefits in terms of
targeting and disadvantages in terms of creating disincentives through
withdrawal rates. In conjunction with what the Minster says, we should
simply note for the record that uprating in line with prices rather
than earnings causes the benefit to become progressively less important
over time relative to child tax
credit.
4.38
pm
Dawn
Primarolo: The facts do not bear out the propositions that
have been made. I said in my opening remarks that child benefit for the
first child is now25 per cent. higher in real terms than in
1997. The hon. Member for Wycombe is quite right that there was a
tendency under the Conservative Government for child benefit to go out
of fashion. In fact, that would be an understatement; they froze it and
were prepared to allow it to wither on the vine. It was this Government
who, after being elected in 1997, took an active role in bringing child
benefit and its real value back to its current position of
importance.
I also
said that the Governments strategy is to halve child poverty by
2010 and eradicate it in a generation. However much the Opposition may
like to implicitly criticise that objective, people must receive more
money otherwise the gap cannot be closed and people and children cannot
be lifted out of poverty. Although recognising the importance of child
benefit and its continued contribution to families, the Government
recognise that they need to do much more and the tax credit system is
part of that.
Let me explain
the rationale for the higher rate of child benefit for the first child.
Those of us who are slightly older should perhaps cast our minds back
even further to the time when no such payment was made for the first
child under the old family allowance, which preceded child benefit. In
1991, it was recognised that increased costs are inevitably associated
with the first child in a family because they are the first child, and
the higher rate was introduced at that time in recognition of the fact
that the birth of the first child has a much greater impact. That is
not to say that a second, third or fourth child does not also have a
financial impact on a family, but the first child has the greatest
impact. That is the reason for the higher rate, which has been
maintained.
There
has been and is a campaign, to which the hon. Member for Wycombe
referred, to raise child benefit rates for all children to the higher
level. The key question that we will examine in considering the
proposals that
have been put to the Government is whether, in committing public finance
to that extentit would be a very expensive increasethe
policy impact would be sufficient. Could more children be lifted out of
poverty in that way than by using other
levers?
As my right
hon. Friend the Chancellor of the Exchequer made clear when he
announced the policy intention to introduce child benefit at the same
point as maternity benefits come inat 29 weekswe want
to address other causes of poverty and failure to thrive among
children. The reason is often lack of finance on the part of the
expectant mother. We have declared that measure a sensible mechanism
for child benefit, thus enshrining it even further as an important
principle to follow. On the question of extending it to those mothers,
an initial figure has been given. I shall find the exact reference for
the hon. Member for Wycombe. I think that we are talking about some
£120 millionin 2009-10. We are costing that on the
basis and understanding that we are trying to use further levers, but
child benefit is an appropriate lever to help to achieve the complex
target of dealing with child
poverty.
Those are the
Governments reasons and rationale for our approach to the
issue. It is a matter for great celebration that the present Government
have been committed to enhancing and developing child benefit, given
that the previous Government were determined to destroy it. On that
basis, I commend the orders to the
Committee.
Question
put and agreed
to.
Resolved,
That
the Committee has considered the draft Child Benefit Up-rating Order
2007.
Resolved,
That
the Committee has considered the draft Guardians Allowance
Up-rating Order 2007.[Dawn
Primarolo.]
Resolved,
That
the Committee has considered the draft Guardians Allowance
Up-rating (Northern Ireland) Order 2007.[Dawn
Primarolo.]
Committee
rose at sixteen minutes to Five
oclock.