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The Government have exaggerated their achievements on the employment front—perhaps they have started to believe their rhetoric. Yes, this country has a high
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employment rate compared with several others, but we also have an enormously unequal employment situation. Many double-earning couples are doing quite well, but a huge proportion of people have been out of the work force completely for a long time. That is why, although this country has a high employment rate, it manages, bizarrely, to be the EU country with the largest number of children in workless households.

When we look at employment over the past few decades, we see that the Government’s record on the employment rate has been flattered by the fact that female employment has been increasing over the past 10 or 15 years. Male employment is now 10 per cent. lower than it was in the era of Harold Wilson. An enormous cohort of people—many of whom lost their jobs in the 1980s and 1990s and some of whom went on to incapacity benefit—are still out of the labour market. The fact that almost the same number of people are on incapacity benefit 10 years on from 1997 should worry a Government who came in with a pledge on welfare reform.

The breakdown of family life is yet to be reversed—hopefully there are signs that the situation is not getting worse, but it is certainly not getting much better—and there is a much greater concentration of deprivation in deprived neighbourhoods. As John Hills recently reported, while the employment rate in social housing estates was almost two thirds a few decades ago, it has plummeted to something like a third. People in deprivation are now more likely to be living with people in those same difficult circumstances. Their children are attending the same schools as other children in such circumstances, which reinforces disadvantage. As the UNICEF report indicated, when young people have little hope and few skills, they are far more likely to take the option of having children at an early age and staying out of the labour market, thus resulting in cycles of deprivation. The situation out in the country is slightly gloomier than the Minister allowed for. When he defends an extremely impressive record of commitment, he should not underestimate in any way the problems that exist.

Let me turn briefly to several of the proposals in the report by the right hon. Member for Chingford and Woodford Green. It was inevitable that a few of them would dominate the media coverage. When I scanned the report as rapidly as I could today, I noted that some of the most interesting proposals were those that would attract the press rather less, owing to their very nature. We all know that that happens when we try to get coverage on policy matters. I have no doubt that we—and the Government—will go through the report carefully to see what we agree with, what we can pinch, and what is a good idea. I have no doubt that we will find a great many good ideas in it.

My concern about the drift of Conservative social justice policy is that it seems to rely on two things, and the Minister for the Cabinet Office touched on one of them in his comments about public expenditure. He mentioned that the Conservative party has got hooked up to a rule that involves reducing the public expenditure growth rate even further than the Government already have to. Investment in public services, whether through the public sector or the
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private and voluntary sectors, will be that much more difficult for a Conservative Government who stick to that rule. That means that some of the big gains and savings that the right hon. Member for Chingford and Woodford Green has mentioned a couple of times in his interventions will be that much more difficult to achieve.

As I have seen in my constituency, voluntary and private sector groups can play a big role, either as an add-on to state services, or working completely separately from them, but there may still be many cases, including in relation to employment services, in which the state will have to fund the voluntary and private sector provider. If there are rigorous controls over public expenditure growth, it will be very difficult to square the circle, and to fund the proposals properly while still investing in education and health. That is one concern.

The second concern is that many of the right hon. Gentleman’s proposals rely on the hope that the Government can, by pulling various levers, encourage families to stay together. I do not underestimate the possibility of people, particularly those on low incomes, responding to economic incentives. Indeed, that idea is the basis of some of the Government’s tax credits; the idea is that people will go to work because there is a working tax credit.

There is a problem with tax credits, and if the Minister looks again at the report on fraud and error in tax credits that was issued this time last year—there will be another one tomorrow—he will see that the Government reported that almost £400 million-worth of fraud and error in tax credits was simply due to the discrete problem of people who lived together misrepresenting their position, and pretending to live apart. There is no question but that there are problems to do with whether people have incentives to misreport their position. It is more difficult to know whether people are deciding not to couple on the basis of tax credits. As I know from my advice centre, the economic incentives are significant, and should not be underestimated for people on low incomes; the right hon. Member for West Dorset cited that point earlier. We should consider that issue carefully, and although the Minister danced around the boxing ring a bit on that one, I am pleased that he did not completely rule out action; perhaps we will see measures on that issue in the future.

I am less optimistic about some of the other proposals in the report produced by the right hon. Member for Chingford and Woodford Green; I do not think that they will strengthen the position of married couples in the way that he thinks they will. Earlier today, I spoke to the Institute for Fiscal Studies about transferable allowances, which have been mentioned briefly, and one of the hard facts that it pointed out to me immediately was that most of the cost of the transferable allowance will be spent on people who have no children. The right hon. Gentleman’s proposal would cost £3.2 billion, and £1.7 billion of that would go to families with no children, whereas his concern, obviously, is to get the money to children.

Mr. Duncan Smith: If the hon. Gentleman looks at the report again, he will see that there are sectioned-off processes; the scheme can be broken up, so that we can
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offer the allowance to those with children below a certain age, to all couples, or to couples with caring responsibilities. It depends on what we wish to do. All the figures that the hon. Gentleman gave are not exactly correct. I actually set out the IFS figures in the report.

Mr. Laws: The right hon. Gentleman is right that the allowance can be salami-sliced, but there are other problems. Today, I looked at the figures relating to the individuals who might be entitled to the transferable marriage allowance. About 25 million people in the United Kingdom are in married couples, and of those individuals, about 5 million are retired, so the allowance is of limited relevance to them, on the whole. There are 18.7 million people of working age in couples, and 11.6 million of them are part of a couple in which both people work. As I am sure that the right hon. Gentleman would acknowledge, they would get no benefit at all from the proposal, because they are already using their allowances to the full. There are 2 million households where nobody is working at all. So only 20 per cent. of the 25 million married couples in the United Kingdom would gain anything, and 80 per cent. of people would be totally unaffected.

Other groups would be affected in ambiguous ways. I was interested to read that there are 1.1 million married couples living apart in separate households. That raises the challenging question of whether we would give, and how we would administer, transferable allowance based on marriage to two people who had split up, especially where the person who gained from the transferable allowance could well be the man, who had left his wife and the children. Such situations would present great policy challenges.

As the right hon. Member for Chingford and Woodford Green is aware, the issue was considered in the 1980s by Lord Lawson who, I believe, was quite sympathetic, but when it went out to consultation at the time, there were other big objections. One of them was cost. We have to consider what the other priorities are if we are to spend £3 billion. Administratively, it would be immensely difficult because we would have to track two incomes for two individuals at the same time throughout the tax year. The proposal would be a disincentive for the second individual in a married couple to work, for reasons that are obvious, although the right hon. Gentleman may be less worried about that if he is happy for one of the individuals in a couple to stay at home looking after the children.

One must also question whether a £20 incentive for only 20 per cent. of married couples will cause people to change their behaviour. I know of no economic evidence that suggests that. The right hon. Member for West Dorset, who is a thoughtful, fair-minded and intelligent man, was suitably cautious and circumspect when he responded to me earlier, probably because he knows that there is no evidence. I acknowledge his point about the proposal being a signal, but signals are important only if people ultimately respond to them. We do not know whether they would.

Chris Bryant: Is there not an ethical point which pulls against the main strand of the report—in one sense, one is undermining the concept of marriage by suggesting that the problem of family breakdown
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would be radically rectified if there were financial incentives to encourage people to marry? I probably married more people than any other Member of the House when I used to be a vicar. I do not remember ever saying anything other than “For richer, for poorer”—never “For £20 extra”.

Mr. Laws: That sounds like an echo of the right hon. and learned Member for Rushcliffe (Mr. Clarke) who, when he was beginning to phase out the married couples allowance in the 1990s, said that he knew of many reasons why people got married, but the existence of the married couples allowance had never been one of them.

I am sceptical about whether a financial incentive would have an impact, but I would consider it if I believed that it would help to deal with some of the problems that we face as a country. I am not sure that I have an ideological objection to it. I am just not sure that it would work. There are also some serious issues—Ministers have sought to raise them—about the effect of sending out that signal on the children whom we are indirectly trying to affect.

When thinking about the proposal yesterday I wondered what the House’s attitude would be if, instead of a married couples’ tax allowance, we were proposing a married couples’ enhancement to child benefit. That is, in some ways, what we are saying. We are willing to penalise some families and children and reward others on the basis of those choices. It is a difficult issue. This country has a massive problem with the breakdown of marriage and stable relationships, and I understand why the right hon. Gentleman has given the proposal priority.

There is no school that I visit in my constituency where the head teacher does not comment on the fact that their job has become so much more difficult over the past 10 or 20 years because of the breakdown of stable families and the consequence of that for their intakes. I am not sure whether the proposal would make the difference.

John Bercow: Surely the juxtaposition of married units against unmarried units is all wrong. There can be a very compelling case for giving targeted assistance to households where there are children, whether the household is based on a married couple, an unmarried couple or a single parent, but for the life of me I cannot see is why one should give a prize to people with no children, simply because they happen to be married. Does the hon. Gentleman agree that it is bizarre?

Mr. Laws: I certainly agree that if it is not even going to work, it is not a particularly strong runner for £3 billion of public expenditure.

Mr. Duncan Smith: Anyone can make a case that others are being excluded, which is nonsense as regards this proposal, which offers a very focused sort of support. It is about people on marginal incomes—those who would particularly benefit—who are having to make a choice about whether they go to work or try to stay at home for three or four years to look after their children. If it were to go wider, it could also help those who may choose to look after their mothers when they get older. As the hon. Gentleman may or may not
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know, some of the greatest problems for couples arise when they are having to make such choices balanced against the amount of money that they can have. This would not generate an immediate desire for people to get married, but it recognises something that came up endlessly when we produced the report—that many people out there, beyond our own world, have jobs, not careers. If someone is eviscerating chickens on an assembly line in Bradford, that is not a career—they make that choice because they have to, because they cannot afford to bring their family up otherwise. This would be one way of allowing them to make a choice; there may be others.

Mr. Laws: I understand why the right hon. Gentleman feels so strongly. My main argument against this specific proposal is that I do not think that it would work. I do not underestimate the significant penalties for couples, particularly in relation to tax credits and for people on very low incomes, and it is worth considering a couples premium. Many other elements in his report, for example on good parenting practices and encouraging strong families, should also be looked at closely. I recognise that on the basis of not only the national picture but my constituency experience.

I should like to raise several other points about the major proposals in the report, but I fear that I will try the patience of the House if I do so in too much detail. Let me just say, in general terms, that although I am delighted that the right hon. Gentleman and his party have produced a report of such quality—and there may be some very good ideas in it—they have to deal with two further challenges in this area: first, the public expenditure challenge and the question of priorities that the Minister raised; and, secondly, whether the proposed policies, particularly on taxation in relation to marriage, would make the difference that they envisage.

I shall finish by highlighting a few of the challenges that Liberal Democrat Members think that the Government and those in other parties should be addressing. One of the risks with the Government’s policy, if one were to stereotype it, is that there is too much emphasis, in public expenditure terms, on getting people above an arbitrary poverty line instead of getting them permanently out of poverty and giving them the opportunities that they need.

I want briefly to touch on four areas. The first is education, which is obviously vital. In its report, UNICEF, which is not a body that would be inclined to vilify lone parents, stressed that, as a general rule, children growing up in stable families, usually with two parents, do far better. It was concerned that, in the United Kingdom and elsewhere, many youngsters take a decision to get pregnant, or do so very early on. That is partly linked to aspirations and skills, as it offers a far more plausible, and even attractive, option to people with no skills and no prospects than to people who expect to have a career. We should focus on dealing with the very significant problems of educational underachievement. Instead of setting broad and unachievable targets to deliver private school levels of funding on some unspecified time scale, we should
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concentrate on delivering those levels of funding to pupils in real need—for example, through a pupil premium such as that in other countries, which targets additional money directly at the pupils in greatest need. That would mean that schools in certain parts of the country that often have much greater problems in terms of their catchment areas but similar funding to schools in other regions would have greater funding in future.

I hope also that future Governments will be able to do a lot more about the employment challenge. Unquestionably, as the right hon. Member for West Dorset indicated, we still have much too high a level of worklessness in this country. We have made totally inadequate progress on getting people on incapacity benefit back into work. The lone parent figures are still disappointing, as is the number of young people out of the labour market. We ought to be looking at how we can use the voluntary and private sectors to get many more people back into the labour market.

We must also deal with housing, which the Prime Minister touched on today, at the same time as finding the resources to reduce the proportion of people in poverty. Those are things that the Government can reasonably do, which will not only strengthen families, but give people the opportunities to get themselves out of poverty, rather than simply trapping them in dependency.

Several hon. Members rose

Madam Deputy Speaker (Sylvia Heal): Order. I remind all right hon. and hon. Members that Mr. Speaker has imposed a 10-minute limit on Back-Bench speeches. However, in view of the very limited time now left for Back-Bench contributions, perhaps hon. Members may want to reconsider the length of their speeches.

6 pm

Sir Gerald Kaufman (Manchester, Gorton) (Lab): The title originally given to this debate by the Opposition was “Mending the Broken Society”, which I thought a bit rich from a party whose leader said that there was no such thing as society. Until this Government came to power, society was at breaking point in my constituency. We were 29th in unemployment for the whole of Great Britain and we were No. 1 in youth unemployment in the whole of England. As a result of this Government’s policies, youth unemployment in my constituency has fallen by 45 per cent., overall unemployment has fallen by 47 per cent. and long-term unemployment has fallen by 80 per cent. People now have a choice—a choice of jobs and a choice because of the national minimum wage, which the Tories said would produce mass unemployment. Because of the minimum wage, my constituents now have a choice, and if I have time I shall give one example of that.

The Tories and the Liberal Democrats voted against the windfall tax that financed the new deal. My constituents have benefited enormously from the new deal. It is the same with education. When the Government came to office, the rain was coming through the roof at schools in my constituency such as Old Hall Drive and Wilbraham primary, while the teachers tried to teach and the pupils tried to learn, and we had oversized classes. Yet the financing was going not to the 14,000 children in the 39 state schools in my
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constituency but predominantly to the children in the three independent fee-paying schools, who were paid to have assisted places.

I have three such schools in my constituency, although I compliment the Government on the fact that one of them—William Hulme’s grammar school—will enter the state system as a city academy in September. That is a remarkable achievement for the head, the teachers, the governors and everybody else. However, 95 kids in my constituency were on assisted places in those schools and £13 million went on those assisted places, whereas £24 million went to the 39 state schools in my constituency during the same seven-year period. In Stanley Grove primary school, the teachers were teaching music on the stairs, while in Manchester high school for girls, there were sound-proofed rooms for teaching the violin. That was the difference; that was the society that was broken by the Tory party.

Owing to the reduction in class sizes brought about by the reallocation of funding, I have had the privilege of opening new classrooms all over my constituency. We have smaller classes, we have computer suites in schools where the kids used to learn with the rain coming in through the roof, and we have free fruit and vegetables in pretty well every primary school in my constituency—where before that previous Tory leader who said that there was no such thing as society had even taken away their milk. Abbey Hey primary school has a fruit stall every Friday afternoon, which sells fruit and vegetables to the children and to the neighbourhood. In Gorton, we have an educational village. Mellands school and Cedar Mount school are part of an educational village in what used to be one of the most deprived areas of my constituency. St. Kentigern’s school—a faith school of the kind that the Tories and the Liberal Democrats tried to destroy through their destructive amendment on quotas—has some of the highest Ofsted ratings in the entire country.

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