HC Deb 24 July 1967 vol 751 cc56-66

3.34 p.m.

The Minister without Portfolio (Mr. Patrick Gordon Walker)

With permission, Mr. Speaker, I would like to make a statement.

The problem of family poverty is complex and there is no simple or single solution to it; nor can poverty be removed overnight. Our attack on it must therefore have many aspects and include long-term as well as short-term plans. Our immediate intentions are as follows:

In April, 1968, we shall increase the existing family allowance by 7s. for second and subsequent children. But we intend to give help before the winter to the large families, who are those most in need. Therefore, from the end of October next 5s. of this 7s. will be paid for fourth and subsequent children. There are about 1 million such children in 609,000 families.

The cost of the increase in family allowances, net of tax and other adjustments, will be about £83 million in a full year. Such a sum could be raised in a number of ways. Since the purpose of the increase in family allowances is to improve the incomes of families in need, it would be logical, in considering how it should be paid for, to consider, among other things, some adjustment of the Income Tax allowances which affect families. It must be left to my right hon. Friend the Chancellor of the Exchequer to propose, at the right time and in the light of all the relevant circumstances, the method or methods by which the necessary revenue could be raised.

We are much concerned that those entitled to school meals and welfare milk free often do not take up their entitlement. We shall arrange publicity campaigns to see that families are quite clear what they can get and how to get it. The arrangements are now being reviewed so as to make it easy for them to exercise their rights without embarrassment.

We shall be raising the income limits below which families can get free school meals and welfare milk in line with the recently announced increases in supplementary benefits. We shall improve our provision for large families by extending free school meals to the fourth and subsequent children in a family and by extending free welfare milk to the third and subsequent children under five—including expectant mothers with two or more children under 5. This will be in both cases regardless of income and will take effect next April.

We feel bound to increase the charge for school meals and welfare milk for those who do not qualify for them tree. The present charges were fixed in 1957 and the cost has since greatly increased. Continuation of the present level of charge involves a claim on our resources that can no longer be justified. We intend next April, therefore, to increase the charges for school meals by 6d. and for welfare milk by 2d. a pint. There will still be a substantial element of subsidy in these charges. The subsidy will be 1s. 1d. per meal at a net annual running cost of about £64 million. At the present retail price of milk, the subsidy for welfare milk will cost about £35 million a year.

The net saving resulting from the increased charges for school meals and welfare milk, after taking account of the wider free provision for large families, will be about £25 million. Thus, the total net cost of the increases in family allowances and the charges in regard to meals and milk will be about £58 million a year.

We recognise that these measures cannot alone solve the complex problem of family poverty. Rent and rates can bear heavily on families of low income. Our rate rebate scheme, which, like rent rebate schemes, applies to the person as distinct from the house, is of great help to the needy. We have also introduced generous new housing subsidies and we are encouraging local authorities to extend local rent rebate schemes so as to ensure that subsidies are used to give help to those who need it most.

The relief of poverty is not, however, solely a matter of cash benefits to individuals. It is also a matter of social capital, and it is necessary to tackle the poverty of the physical environment in which many children grow up. It was this which the Plowden Report had in mind when it spoke of educational priority areas. The Government propose to make a start on tackling this problem by allocating an extra £16 million over the next two years for schools in such areas on top of existing programmes. Additional funds will similarly be made available for Scotland.

Miss Pike

Does the right hon. Gentleman realise that this long overdue announcement and these miserably inadequate stopgaps will be received with dismay by all those who seriously care for the plight of the low-income families? Does he not admit that 70 per cent. of the low-income families have three children and fewer and that, in his own words in speeches in this House and outside, a large number of these families have only two children and fewer and that they will get no relief at all until April, 1948—[Laughter.] I mean April, 1968, of course. This might be very funny to hon. Members, but it will not be very funny for the families who are waiting.

Would not the right hon. Gentleman also admit that a 7s. across-the-board increase will leave something like 40 per cent. of these low-income families still below the supplementary benefit level? Does this represent Government policy —of putting aside for good selectivity and accepting universality; in other words, more help for those who need it least and not enough for those who need is most?

Does he recognise that, when it comes to school meals, the rich family with four children or more will get free meals while the poor family will be at severe disadvantage? Is this the best the Government are able to do after three years of serious consideration?

Mr. Gordon Walker

There is a very sharp difference between the note that is taken today of this matter by Conservative spokesmen and the note they took during their 13 years of office. I can understand the hon. Lady being upset at our not having introduced a means test to go with family allowances. I know her feelings in this matter.

There is always a balance of argument on a subject of this sort, but I think that the balance is overwhelmingly in favour of our decision. If one paid the increases on the basis of a means test, that would have a grave effect on incentives. And incentives are not only a matter for Surtax payers. They affect many other people. If one paid a person more for not working than for working, which would be the effect in some cases, that would have a grave effect on incentives. In this case, we had to consider the particular problem of the take-up of what is offered. We had to consider the fact that a great many people would be just above the level chosen and would not benefit, although many of them are almost in as great need as those who are below the supplementary benefit level.

Mrs. Lena Jeger

While congratulating my right hon. Friend on maintaining the principle of universality in this direction, can he say to what extent these increases merely take care of the price increases that have occurred since the last increase in family allowances? Is it not a fact that if we tried to keep family allowances in the same proportion to average earn- ings as when they were introduced in 1946, it would mean each family receiving 17s. 6d. per child on average to achieve the same purchasing power?

Mr. Gordon Walker

The increases are considerably more than necessary to make up for the increase in the cost of living since the present rates of family allowances were granted. My hon. Friend is right in saying that the increases do not altogether make up for the earnings increases that have occurred in the interval. However, we must here simply consider this in relation to other claims on the Budget and the money that is available for the social services. One must ensure that one keeps a balance in this matter. To have made the rates up completely would have been very expensive indeed, and we think that we have come to a compromise decision.

Mr. Dean

Does the right hon. Gentleman realise that this announcement will be recognised outside the House as a shabby compromise to try to get agreement among his colleagues in the Cabinet? Can he say how many families will still be below the national supplementary benefit level after these increases? Can he also say how many additional families will be paying Income Tax who are not now paying it, if it is decided to devalue the Income Tax child allowances?

Mr. Gordon Walker

The hon. Gentleman must await the proposals of my right hon. Friend the Chancellor of the Exchequer. The figures for which he asks were given by the hon. Lady the Member for Melton (Miss Pike) in her question. I do not agree that this announcement will be regarded as a shabby compromise; rather will it be seen as an important first step in continuing our attack on the problem of poverty.

Mr. James Griffiths

Does my right hon. Friend realise that many of us—indeed, I would say all of us—warmly welcome his announcement? As one who had the privilege of bringing the first family allowances Act into operation, may I tell him how glad I am that he has decided not to introduce a means test in this matter?

Will my right hon. Friend consult the Secretary of State for Education and Science to see, in respect of school meals, that every effort is made, so far as this can be done by administration, to prevent there being a division of children into those who get free meals and the others, realising that the last thing we want to apply is indignity to our schools? Will he resist all temptations, despite the use of high falutin' terms like "selectivity" and the rest—since their use only covers what some hon. Members want to see—to reintroduce the means test?

Mr. Gordon Walker

I always do my best to resist improper temptations. I wish to inform my right hon. Friend how much we who are now responsible for these matters are conscious of the fact that we are building on the foundations which were so soundly laid by him. We are indeed aware of the problem resulting from children in our schools being entitled to free meals and the danger that some sort of stigma might be thrown upon them.

My right hon. Friend the Secretary of State for Education and Science has already set up a working party, which will also discuss the matter with local authorities to obtain a uniform practice designed to make it impossible for this sort of thing to happen in future.

Mr. Pardoe

Is the right hon. Gentleman aware that we on the Liberal bench regard these measures as totally inadequate? Will he confirm that these allowances would have had to have gone up by 2s. 6d. to cover the increase in the cost of living and that a further 2s. 6d. is being called for to pay for school meals, meaning that families will be getting 5s. more but will be no better off at all? Will he tell the House why, after all this time, he cannot bother to say how all this will be paid for?

Mr. Gordon Walker

It is always easy for Liberals to say all sorts of things—to say that something should have been done long ago, or that it should have been done on a bigger scale. They never have to do these things. This N always an easy line for them to take. I assure the hon. Gentleman that families will not suffer as a result of this package payment as a whole. It would, of course, be idiotic for me or the Chancellor of the Exchequer to say at this moment what the Chancellor's plans will be in future, in relation to the whole problem.

Mr. Barnes

Does not my right hon. Friend agree that the survey published recently by the Ministry of Social Security showed that this problem was by no means confined to only the larger families? Can he say how many children will still be below the supplementary benefit subsistence level this winter? If we are to solve this problem, and raise all these children above this level, must not we to some extent be selective?

Mr. Gordon Walker

About 51 per cent. of the children in question will continue to be below the supplementary benefit level. [HON. MEMBERS: "Oh."] However, they will all be greatly helped and many of them will be only just below it. It is possible to have a false picture of the situation. As for the survey to which my hon. Friend refers, because wage rates have gone up since that survey was made it is inevitably considerably out of date. In other words, one cannot rely wholly on those figures any more. Such figures are relevant only at the time they are collected.

Sir E. Boyle

Further to the right hon. Gentleman's comments about the alterations in charges for school meals and milk—both the increases and the remissions for those most affected—would it not have been more sensible to have made these changes two years ago, when my hon. Friends were calling for them to be made, rather than inflicting severe cuts on the university building programme? In regard to the £16 million for the priority areas—something for which we pressed as long ago as last March—how is this to be done? Is this to be brought about by means of an increase in the major school building programme and if so, for which years? Is there also to be an increase in the minor works programme?

Mr. Gordon Walker

It is true that hon. Gentlemen opposite started pressing rather harder once they were in opposition, compared with when they were in office. The right hon. Gentleman, probably because I made my statement rather quickly, is wrong on one point. School milk is not affected at all. That will continue as at present and will cost £14 million a year. We are concerned with school meals and welfare milk. Whether one should have done this two two years ago or at some other time is a difficult question to answer.

To answer the right hon. Gentleman's question about whether this will affect minor or major works, the answer is that it will affect partly one and partly the other. Questions of detail in this respect should be put to my right hon. Friend the Secretary of State for Education and Science.

Mrs. Renée Short

Can my right hon. Friend say when he expects to announce the new income limits for free school meals? Can he also say what methods he intends to use to identify those children in need of free school meals—apart from teachers' choice, which is often rather inadequate? Can he say how much of the £16 million for schools in the educationally deprived areas is likely to be for nursery accommodation on the lines of the Plowden recommendation?

Mr. Gordon Walker

The income limits will be raised at the same time as supplementary benefit levels are raised, in October. The detailed question of how the £16 million is to be spent over two years must be directed to my right hon. Friend the Secretary of State for Education and Science, who is wholly responsible for details of the application of policy.

Mr. Doughty

Will the Minister explain to his right hon. Friend the Chancellor of the Exchequer that any effort to cut down children's allowances for the purpose of paying something towards these inadequate increases will be most unpopular and grossly unfair?

Mr. Gordon Walker

My right hon. Friend undoubtedly heard the hon. and learned Gentleman and will make up his own mind, weighing one thing with another.

Mr. Heath

Is the right hon. Gentleman aware that he has now confirmed that more than 50 per cent. of the children will be receiving less help than they need because the Government are now pursuing a policy, once again, of universal increase in family allowances whether or not they are wanted, and doing this at a cost of nearly £60 million? At a time of universal anxiety about Government expenditure and the weakness of sterling, the pursuit of this aspect of policy is completely unjustified.

Mr. Gordon Walker

What the right hon. Gentleman overlooks is that if we had adopted his policy of means testing it would have meant that all those who are just above or some way above the supplementary benefit level, who will benefit under our proposals, would have been entirely left alone, and these are some of the families who are in need. One cannot draw the line simply at the supplementary benefit level.

Mr. Heath

The right hon. Gentleman must realise that this depends on where one draws the line. One cannot argue that one cannot possibly not have a line of any kind. It is his job to draw the line in the right place to help those who need it, and not those who do not need it.

Mr. Gordon Walker

If the line which we now understand is the Opposition's policy were drawn well above the supplementary benefit line, the disincentive effect of that policy would become extremely marked indeed.

Mr. Heath rose

Hon. Members


Mr. Speaker

Order. The House must conducts itself properly.

Mr. Leadbitter

On a point of order, Mr. Speaker. This is the second occasion on which an hon. Member has had to ask whether the Leader of the Opposition has some right to ask three supplementary questions. Is not the position such that back benchers must take part in important questions of this kind?

Mr. Speaker

Order. I answered that question the last time it was raised. I am not aware that back benchers have no rights in this place. I have been trying to protect them. Mr. Heath.

Mr. Heath

Is the Minister now seriously arguing that men and women will refuse to work, if they are poor, so as to get these family allowances? Is that the philosophy of the party opposite? What about the disincentives to all those who will have to pay more to the Chancellor of the Exchequer by giving up children's allowances?

Mr. Gordon Walker

Part of the family allowances, of course, is taxed according to the taxable income. To this extent, there is selectivity—[HON. MEMBERS: "And disincentive."] We hear a great deal of the disincentive to the very rich man if some part of his income is taken by tax. There is also a disincentive, not that everyone would fall for it, if one so arranges allowances that people who are not working actually get more than if they are at work. It is a disincentive to take overtime, if to do so just brings them above the limit. I know that these disincentives are at rather lower levels than hon. and right hon. Members opposite often think about, but they are none the less real.

Mr. William Hamilton

Is my right hon. Friend aware that we on this side are now getting used to the hypocrisy and humbug and belated development of social conscience on the other side? Nevertheless, will he not agree that it is rather unfortunate that we should deal with these very important social problems in the piecemeal way in which we now seem to be dealing with them? Would my right hon. Friend consider setting up a new Beveridge-type committee to look at the whole problem comprehensively?

Mr. Gordon Walker

The difficulty is that if one waits until one is ready to do everything, one puts off for a very long time doing anything at all. This must be regarded as a continuing attack on the problem. From time to time we will announce various decisions to help us as a country to solve this problem.

I do not think, on the whole, that it would be wise to set up with all the delay that would be involved, another Beveridge-type committee. There is really a very deep and serious review going on in the Government. We will announce from time to time, as I have announced today, the continuing development of our policy. I think that, on the whole, this course is best, particularly when one considers the needs of the people one is trying to help.

Mr. Bellenger

Does my right hon. Friend's announcement today mean that the Chancellor of the Exchequer will be introducing a new financial statement in this fiscal year, and not wait until next year, in view of the heavy charges that are now being imposed on the Exchequer?

Mr. Gordon Walker

If my right hon. Friend looks carefully at what I said in the statement, I think that he will find that that is a false inference.

Several Hon. Members rose

Mr. Speaker

Order. This is an important statement, but we have important business ahead.