FAMILY ALLOWANCES AND NATIONAL INSURANCE BILL

HC Deb 08 November 1967 vol 753 cc1036-133

Order for Second Reading read.

3.52 p.m.

The Minister of Social Security (Mrs. Judith Hart)

I beg to move, That the Bill be now read a Second time.

In moving the Second Reading of this Bill to increase family allowances, I think I should begin by reminding the House of the principle on which our system of family allowances is based.

It is, of course, a Beveridge principle, and one which, 25 years on from Beveridge, has stood the test of time and is continually reinforced by experience. Beveridge asserted—and no one in the House would today disagree with him—that there should be "the abolition of want". He noted that the wages paid to a man represented a payment for work done and that they take no account of the family commitments and responsibilities of the wage-earner.

Beveridge recognised that, as a result, a combination of low wages and children in the family could result in poverty. He concluded that the way for the State to prevent poverty among wage-earners was to accompany the system of benefits he proposed for those whose capacity to earn was interrupted or lost by a system of universal family allowances for the children of those in work.

Beveridge's premise, his analysis, his argument, and his conclusion, are as relevant and as correct today as they were in 1942, and in 1946, when family allowances were first introduced, and in 1952 and 1956, when the Conservative Party increased them. Just what happened to the thinking of the Conservative Party from 1956 to 1964 I do not know. I suspect that the eight-year pause is to be explained by the political principles of the right hon. Member for Wolverhampton, South-West (Mr. Powell) and the political practice of his colleagues in Government at that time. It is certainly not to be explained by the disappearance of poverty during these years or by lack of evidence of it. There was, for example, the Royston Lambert Report, on which members of the Conservative Government were questioned during this period.

Indeed. when, in 1965, in the first year of Labour Government, my right hon. Friend the Member for Lanarkshire North (Miss Herbison) decided that an investigation into the circumstances of families was urgently needed—and it was carried out in the summer of 1966—it was because of sharp awareness that the problem and tragedy of poverty did indeed exist, but had not been fully measured on any national scale.

The Report of my Ministry's Inquiry into the Circumstances of Families was published, as the House knows, last July. I will briefly summarise its findings, because the Bill is highly relevant to them.

In the summer of 1966 there were almost 500,000 families, probably containing up to 1 ¼million children, whose incomes were at or below supplementary benefit standard. About 145,000 of these families were fatherless; 160,000 were those of men who were sick or unemployed; and 140,000 of men in full-time work. The rest were a miscellaneous group of families including, for example, families where there was no mother or where the father worked away from home.

The group which causes particular concern is about 500,000 children in about 160,000 families with resources which in June/July, 1966, were below the supplementary benefit level. They could not be brought up to that level, either because the father was in full-time work, and, therefore, not eligible for what was then National Assistance, or because he was already receiving assistance, but, because of the level of his normal earnings, could not be paid an allowance enough to bridge the gap between the family's resources and its needs. In the vast majority of these families, the father was in full-time work; the number with the father subject to the wage-stop was about 20,000—that is, only about one-eighth of these families.

I emphasise this figure because, while I well understand concern about the wage-stop—and I will say something more about it in a moment—we must remember that seven-eighths of the family poverty revealed in the Survey was not due to the wage-stop. One-eighth was. For every one of these families below supplementary benefit level, there were others whose standard of living was equal to that guaranteed by supplementary benefit or only a little above it, again where the father was in work. Families with more than three children accounted for 30 per cent. of the 160,000 families below supplementary benefit level, and for over 50 per cent. of the children themselves.

The Bill, in increasing family allowances for the first time for 11 years, and increasing them by 7s. a week per child, as set out in Clause 1, establishes new rates of 15s. for the second child of the family and 17s. each for the third and subsequent children in the family. In doing so, it gives a higher real value to family allowances than they have ever had before.

Let me explain and emphasise this point. To restore the value of the family allowances to their level 15 years ago would demand an increase of 4s. 7d. for the second child in the family, and 2s. 7d. for later children. Instead, we are making an increase of 7s. in each case.

What does all this mean to one or two typical families? It means, for example, that where a man is earning a low wage—£12 a week—and must at present try to provide a decent life for his wife and four children, his family income will go up from £13 8s. to £14 9s.—an increase in his total family income of around 8 per cent. It means that, where a man is earning £12 a week and has three children, his family income will go up from £12 18s. to £13 2s.—an increase of 5½ per cent.

And, of course, for the larger families part of the increase has already been put into payment—to the extent of 5s. a week for fourth and subsequent children—under temporary powers conferred by Section 5 of the National Insurance Act, 1967. These powers lapse on 8th April next year, and the new rates under the Bill will begin on 9th April.

We are, in fact, discussing today a powerful attack on child poverty. It does not, of course, totally solve the problem. But before I amplify that, let me briefly indicate what else is in the Bill.

Clause 1, as I have said, fixes the new rates. It also, in subsections (2) and (3) and in Schedule 1, deals with the necessary adjustments of National Insurance dependency benefits for children, providing an increase of 3s. for the first child, who does not qualify for family allowances, a reduction of 4s. for the second child, and a reduction of 4s. in some cases and 6s. in others for third and subsequent children.

Taken together with the family allowances increase, the net effect of these changes is to raise the total payment for each child by 3s. a week, except in certain cases for third and subsequent children, in respect of whom the total payment is already 2s. higher than for first and second children.

In these cases the increase will be 1s., so that the total of dependency benefit plus family allowances where payable will be the same regardless of the child's position in the family. The new rates, including family allowances where payable, will, therefore, be 45s. 6d. per child for widowed mother's allowance, guardian's allowance and child's special allowance, and 28s. per child for all other benefits.

It may be asked why there should be this overall increase in the provision for the children of beneficiaries when the payments for them have, over the years since the last family allowances increase, been substantially raised in successive upratings, the latest as recently as last month when dependency benefits for children were in general increased by 2s. 6d. a week.

The object of a family allowances increase, after all, is to help families who cannot be helped through the National Insurance and supplementary benefits scheme, and to restore to some extent the balance between family allowances and the benefits under those schemes; and a 3s. increase in the overall benefit to be paid in respect of children will to some extent alter the accepted relativities between the benefits for children and those for adults.

But we think it right on this occasion that the family allowances increase should not be offset in full against National Insurance dependency benefits, first, because of the higher charges for school meals, due to start next April, which may affect beneficiaries if they have other income besides their basic national insurance benefit; second, because to get family allowances, which are taxable, in exchange for sickness and unemployment benefit which are not, could actually reduce the living standards of any people receiving benefits who have enough other income to bring them into the taxation field. The general increase of 3s. in the overall payment is designed to compensate for these effects.

Clause 2 is, as it were, an extra one. It seemed sensible to take this opportunity to meet a situation which may arise if there is any general move towards the staggering of school summer holidays. The present method of paying family allowances by annual order books means that the date on which a child will cease to qualify—usually the date on which he leaves school—has to be known over a year in advance.

At present, this works without much difficulty because there is a considerable degree of uniformity between schools as far as end-of-term dates are concerned. But any general spreading of these dates could produce serious difficulties for us in the administration of family allowances. So I want to have in reserve a power to prescribe by regulations "notional" dates which would apply for family allowances purposes. The power in the Clause is wide enough to meet Scottish variations in the timing of school holidays.

The gross cost of the family allowances increase will be about £124 million in the first year, increasing thereafter with the increase in the number of qualifying children which can be expected. There are, of course, the various consequent offsets which reduce this by £8 million.

As I have said, this Bill does not, and cannot, offer a total solution to child poverty. Any assessment of the precise degree to which it helps would have to be qualified by a good many points of doubt, and would inevitably be out of date. Let me explain why. The number of families living below the supplementary benefit level is always changing. Increases in wages reduce the figure. Increases in rents increase it. Increases in the number of families receiving rate rebates will reduce it. A higher level of unemployment may increase it. For example, it may become more difficult for the wife to earn. And the level of supplementary benefit itself is crucial.

Paradoxically, any increase in benefit which is designed to relieve the distress caused by too low an income automatically enlarges the number of people whose incomes are judged to be too low. So the introduction of higher rates of supplementary benefit when the National Assistance scheme was superseded in November, 1966, at once apparently increased the number of families whose incomes were below their needs, even though nothing had occurred at that particular point of time to reduce their actual standard of living and even though the incomes of virtually all those receiving allowances were increased.

Frankly, this is one of my acute problems, as it was for my right hon. Friend the Member for Lanarkshire, North. There is no absolute standard at present by which poverty can be measured. The standards used are relative, and the standard taken by social researchers is that of the supplementary benefit level. Above it, you are not in poverty; below it, you are. This, therefore, means that whatever efforts we make to raise the actual standard of living of those who must depend upon supplementary benefit, we cannot arithmetically reduce the numbers; and, indeed, we increase the numbers of the families defined, according to the criterion of supplementary benefit standards, as living in poverty where the father is in work, but getting low wages.

Since the inquiry was carried out in June last year, there have been a number of relevant changes in the factors affecting the extent of child poverty. There have been important pay increases for major groups of lower-paid workers—for example, in the distributive trades, farm workers, and various others—to be set against the 1½ per cent. increases in prices since June, 1966; the rate rebate scheme, designed to help those on low incomes, which was only just under way then, and is now fully in operation; rent rebate schemes, which are spreading, along the lines proposed in the circular to local authorities issued by my right hon. Friend the Minister of Housing and Local Government; but, on the other hand, there have been increases in rents.

All of these have their effect on the extent of child poverty. I leave out of account, because they are not factors relevant to the man in work, all the measures the Government have introduced to help other groups—redundancy payments, earnings-related short-term sickness and unemployment benefits, and increases in National Insurance benefits themselves.

What these measures have done—and let no one underrate their importance, and the credit which is due to this Government for introducing them, at considerable cost, in a period of acute economic strain—is to give a higher standard of living to those who cannot work. To be sick or to be out of work does not today automatically spell poverty, as it used to.

But we are concerned today mainly with the children of men who are in work. I do not know what comments the noble Lord the Member for Hertford (Lord Balniel) will be making on the Bill. I do not know whether he shares the views of some of his hon. Friends—the right hon. Member for Altrincham and Sale (Mr. Barber) and the hon. Lady the Member for Melton (Miss Pike)—who, in the last debate in the House touching on this subject, argued strongly for means-tested family allowances.

I am sorry to see that the hon. Lady will no longer be speaking from her Front Bench on these matters, though I welcome her successor. On other interests—if I do not damn him by saying so—I have always found him intelligent and sensitive. We shall be interested in his views today; although, to judge by his speech at Brighton, he also will be arguing, with a lack of any precise definition and without any regard to the real issues involved, for—as he put it at Brighton—"selective help", "preferential help" for those who are in our minds today.

The hon. Lady in April said, "Let us call a spade a shovel", because, as she said, she was a direct North Country woman. So am I, and I find "means-testing" a more honest and direct term than the hybrid and evasive terms "selectivity" or "selective help" or "preferential help" because those terms embrace, at the same time, a number of different concepts, the concepts of defining categories of people to whom universal benefits—non-means-tested benefits—are paid; of redistributing income from richer to poorer by a combination of progressive taxation and universal benefits; and—the third concept of these terms—tests of individual means for the payment of conditional benefits.

The first two of these—that is the redistribution of income from richer to poorer, and extending further the definition of those to whom universal benefits come to be paid—are wholly acceptable to me. Indeed, it is further progress along these lines which must, I believe, be the aim of a Socialist Government. Any extension of the third—the extension of tests of individual means for the payment of conditional benefits—such as is advocated by many Conservatives, is not. We have some individual means-testing at present—in the whole field of supplementary benefits, for example. But the more successful we can be in "floating people off" supplementary benefit and into the insurance system—long-term and gradual though the process may have to be—the more pleased I shall be.

I will tell the noble Lord, just in case he is tempted to argue the case for means-tested family allowances, just why he would be wrong to do so. I do it in summary form because it would take a great deal of time to expound each of my arguments in detail.

First, means-tested family allowances would be an explicit subsidy from public funds to low wages, and an implicit endorsement of low wages.

Second, they would be a disincentive to individual drive and ambition and, therefore, to greater efficiency.

Third, they would be ineffective in meeting the problem they were intended to meet, because it is an inescapable fact that no amount of persuasion or publicity can wholly overcome a clearly deep-rooted reluctance to apply for means-tested benefits, with the result that however hard one works at the problem, there is never anything approaching a 100 per cent. take-up.

Fourth, they would represent a tacit acceptance of those evils and inequalities in our society which produce the "haves" and the "have nots", and this I am not prepared ever to endorse.

Fifth, however human and sympathetic our approach—far removed, certainly, from the hard cruelty of the 'thirties—means-tested family allowances would be to some degree an affront to the human dignity of those to whom they are offered, harshly underlining the failure of a father to meet his children's needs.

Sixth, any fair scheme based on up-to-date needs would mean vast bureaucratic questioning of employers.

Seventh, means-tested family allowances would do nothing at all for families just above the level fixed for means-testing, who are only narrowly escaping poverty themselves.

As the House will appreciate, I have summarised the arguments here. But, before any hon. Members opposite speak of means-tested family allowances today, let them be sure that they have found an answer to these objections which the House will find convincing. I, for one, —I say this frankly—am not prepared to listen very hard to their arguments unless they direct them to these crucial points. Redistribution of income is a very different matter. I doubt if we shall hear hon. Members opposite addressing themselves to this theme today, though I expect to find several of my hon. Friends doing so.

Many people have argued, and argued very powerfully, that the right course is to raise family benefits across the board, as the Bill does, and simultaneously to adjust tax allowances for children so as to leave the net income of the better off no greater than before. This would be technically feasible, at least in a somewhat rough and ready way. One cannot, of course, consider the level of tax allowance for children in isolation from the level of other tax allowances or from the whole complex of direct taxation.

It certainly seems to me—and, I think, to most people—that any extra help which is given to assist poorer families should not be found wholly from the better-off families with children. It does not seem to me to be fair to leave out of account altogether the better off with no children or with grown-up children. To do so would be to imply that the nation as a whole was to be encouraged to abdicate some part of its responsibility for the wellbeing of the nation's children. This concept would certainly challenge our basic approach to a socially just system of taxation.

Any question of tax adjustment must be left to my right hon. Friend the Chancellor to consider in the context of his Budget proposals in general. This means that, no matter what the right course may later be judged to be, this Bill is necessarily silent about the taxation aspects of the proposals. But this silence does not mean that my right hon. Friend will not think about child tax allowances or, indeed, other allowances before next April. What the results of his thoughts will be must turn on the whole combination of circumstances with which he is faced; but I can say that he will be concerned to look at the question within the context of a genuinely progressive structure of direct taxation which achieves social justice.

Lord Balniel (Hertford)

I gather that the right hon. Lady is now leaving that point. Are we to be told how the Bill is to be financed? On the three other occasions when family allowances were introduced or were raised, we were always informed at the time how the Bill was to be financed. Do I take it that we are not to be told on this occasion?

Mrs. Hart

I have given the noble Lord the total cost involved under the Bill. He cannot expect me, in November, any more than he would expect my right hon. Friend the Chanceller, to say what will go into the next Budget. The allowances for public expenditure contain the expenditure which this Bill will involve. That is the only point about which the noble Lord need be concerned.

I want to indicate, and the House will expect me to indicate, what approach I am taking to those "pockets of poverty" which the Bill before us cannot completely remove. I have discussed the families where the father is in work. I have not yet touched on the wage-stop case. Almost all of them will be helped by the Bill.

As to the wage-stop itself, I have already told the House that the Supplementary Benefits Commission is reviewing the administration of the wage-stop, with my full support. I hope to be able to make its conclusions known very soon. They will not satisfy those of my hon. Friends who believe that the principle of the wage-stop should disappear completely from the scene. Nor—and I must give this word of caution—will they, or can they, dramatically transform the wage-stop. But they will be a real help in a number of ways to those living on wage-stopped benefit.

On the principle, may I say this to my hon. Friends? The wage-stop was originally founded on the belief that, if a man were better off out of work than in work, there would be a deterrent to working. Looking back to the discussions many years ago—in the Holman-Gregory Report on Unemployment Insurance in 1931—I have seen with interest that one of the strongest believers in the wage-stop, on these grounds, was Beatrice Webb. But our knowledge of human motivations is a good deal greater now than it was then.

I am convinced, and have said, that, where a man freely chooses to stay at home with nothing to do rather than to do a day's work, there are usually indications of maladjustment to the society he lives in. That is a problem for social case work and for the mental health services. But "workshy"—I put the word in inverted commas—is a term of moral judgment, not a psychological judgment and not a social judgment; and it is not, in my view, particularly appropriate or helpful in considering this problem. I recognise that there is a small minority of men living in, and adjusted to, deviant sub-cultures of their own, as it were, who try to make use of State benefits as a basis for a life of petty crime and the like. We have our methods for dealing with those people.

What must be understood is that there is another element in the argument. It cannot be dismissed, and it is the major element today, more important than the deterrent-to-work argument of the past. It is that it is manifestly unfair to the man in work that he should have a lower income than the man who used to do exactly the same job who is now out of work. This is why the T.U.C. would be concerned if the wage-stop were ended. This is why one cannot lightly sweep way the wage-stop or suspend it.

But what this points to is that we should all be gravely concerned that low earnings exist. If there were not low earnings, the wage-stop would be irrelevant to the problem of child poverty. To put it another way, it was not the wage-stop which brought these families into poverty. They were already in poverty when the father was in work; and their poverty was due, and is still due, to his low wages.

My hon. Friends are already concentrating more public attention on this heart of the problem. My hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) has indicated that he intends to introduce it for discussion shortly in the House. The whole question leads straight into a discussion of the concept of a minimum wage, the difficulties involved in it, and where we should go from here on this question. A good starting point for that discussion is Frances Stewart's article in The Times today, which was an excellent one and which makes that point.

In any such discussion, one ought not to forget that the whole group of low wage-earners contains within it various more specific problems. There are, I suggest, the following elements. There are fit and intelligent men who work in occupations in which wage rates are low. There are the disabled who can rarely find well paid jobs. There are the partly disabled, and I have a very limited but, I hope, useful survey in three selected areas taking place at the moment which may throw more light on their problems. There are the frankly problem cases, whether maladjusted, or, in a very small number of cases, perhaps unwilling to work.

These are the families with which social workers are accustomed to deal, the ones which present the problems to professional case workers. We can, I believe, best make our approach to the whole problem by trying to work out the answer which is right for each element; in other words, breaking down the problem into its component elements, seeing what is right for each, and in this context considering the best answer to low wages.

The sick and unemployed constitute roughly another 30 per cent. of the group who were studied in 1966. Not all were in poverty. Many have already been given real help by the two increases in supplementary benefit rates in November last year and last month, and by redundancy payments and short-term earnings-related benefits. That is not, of course, the end of the story. But it is an important part.

Of the rest, about 10 per cent. are a miscellaneous group—mother ill, father away from home and no money. For them, poverty is often temporary, sometimes more long-lasting. But the remaining group are children in fatherless families. This is a very special problem, in which wrong social attitudes, unfortunately, all too often condition the community's response. If the mother is not in work—probably because she is looking after her child—she reaches the supplementary benefit standard we have now established, and, by the definition used at the moment to measure poverty, she is not in poverty. But what if she is at work? She is helped by the Bill if she has more than one child.

The residual problem, however, is that of the mother with one child—whether she is unmarried or her marriage has broken up, whether she is separated or whatever her condition may be—who is working to support her child, but cannot earn enough. Her problems are a complex of low wages, housing difficulties, and the care of her child during the day. They demand all our compassion and understanding. I am intensely aware of them and am trying to take a hard look at them. I cannot say more than that this afternoon. It will take some time to have such a look at that kind of residual problem.

In the context of the Bill, I have tried this afternoon to analyse the nature of the problems facing us if we are to end child poverty. There can be no one in the House who is not deeply distressed and angry to know that the families we have talked about are struggling desperately, often in despair, to keep warm, to find a blanket for their child's bed and to pick up a coat in a jumble sale. My mother used to tell me of the day when she was a child, 60 years ago, at the turn of the century, when for her family an orange shared among five children was a highlight. But at the turn of the century all the hardships and deprivations of poverty were part of the normal life of the working class in this country.

We have advanced. My hon. Friends, in particular, know why and how we have advanced. But we cannot claim to be a totally civilised society until we have ended—not helped, but endedߞpoverty. The Bill is a substantial and important contribution to ending it, but the Government will not be content until we have found ways of so mobilising the compassion and concern of which I am convinced there is an abundance in our society that we can see the way ahead to ending poverty completely.

4.24 p.m.

Lord Balniel (Hertford)

On behalf of the whole House I express our appreciation to the right hon. Lady the Minister of Social Security for a lucid and thoughtful speech in introducing the Bill. I also thank her for her kind personal remarks, and join her in telling my hon. Friend the Member for Melton (Miss Pike) how sad it is that because of her ill-health it has fallen to me to speak first for the Opposition in this debate.

We are grateful to the right hon. Lady for her lucid explanation of the Bill, because the subject is of immense complexity and difficulty, although the Bill may seem relatively simple. It is also a subject in which vast sums of public money are involved, and in which there is a whole multitude of inter-related problems, inter-related causes of poverty and inter-related methods, be they care or cash, by which poverty can be relieved. Like the right hon. Lady, I take the opportunity of a Second Reading debate to discuss the principles behind the Bill. I should like to concentrate on them now, and perhaps we could leave the detailed aspects of the Bill to the Committee stage.

Social care is an immensely complicated subject. The reasons for poverty and the means of helping to eliminate or diminish it vary from family to family and from person to person. But the objective all hon. Members share is absolutely straightforward and simple. It is to eliminate child poverty from our society. The elimination of child and family poverty must be our supreme social objective. The quality of the Government's legislation and their intellectual thinking on the matter will be judged by that criterion—by their success in achieving that objective.

It is a simple but appalling fact that there are today 160,000 families, containing half a million children, living not at what is usually described as the poverty line, as defined by the supplementary benefit level, but below that level, which is still usually called by most people the assistance scale level. The Ministry believes that the figure of 160,000 families is probably an overestimate. For reasons which I shall explain later, I believe that it is probably an under-estimate. It is equally a simple and appalling fact that once the Bill is passed half of those children will still be living in families which are below the supplementary benefit level, below what the great mass of the population regards as the absolute minimum standard of life acceptable in a society which has achieved the degree of well-being which we have reached.

At a time of severe restraint on the wages of the low income groups and of rising short-time working we welcome the fact that benefits for families with children are to be increased. But there is a very deep and serious obligation on us to study and examine the means by which the Government are undertaking this responsibility. As the Minister said, £120 million will be spent right across the board, going to rich and poor alike—and as a father of four children I am glad that I shall be one of the beneficiaries of the right hon. Lady's actions. That sum will rise each year. The cost of family allowances will rise from £146 million to £270 million. After Income Tax adjustments, the net increased cost will be £83 million.

Because of the thinking behind the Bill there are one or two salient points which we should call to the attention of the House. First of all, there is this fact which I have already mentioned, that 250,000 children will be left below what it generally regarded as being the minimum poverty line accepted in society. These are, as the right hon. Lady explained, very largely children in families where the breadwinner is in employment on a very low income scale. As he is in employment he cannot apply for supplementary benefit. Also, to a much smaller extent, these are children living in families where the breadwinner is unemployed and, because of his previous low earnings, is "wage-stopped". One-eighth of these 250,000 children are living in wage-stopped families.

Like the right hon. Lady, I very much hope that it will not be so very long before she can come before the House and announce new arrangements for diminishing the harsh effect of the wage-stop. I hope, for instance, that it may be possible to find ways whereby those people who are out of employment and are being wage-stopped and are disabled or only capable of light work may be relieved of the impact of the wage-stop.

That is the first of the points which emerge from the Bill. The second is that the Bill will not give any extra help to the 120,000 families with 333,000 children who are at the moment living on the supplementary benefit level. Their family allowance is increased, but immediately the supplementary benefit which they receive is reduced. So these families living on the supplementary benefit level receive no benefit from the Bill.

There are also the sick, the unemployed, and the widowed mothers. The sick, the unemployed, and the mothers with children to look after will not get the full 7s. increase in family allowance, because, of course, their child dependency allowance under the State insurance scheme will be reduced. These figures, I admit, are a little bit complicated, but if the House will bear with me for a moment I will try to explain why this is so.

A man who is sick or is unemployed, with two children, for instance, at the moment receives a cash family allowance of 8s. He receives the insurance dependency allowance of 17s. In fact, his family receives £1 5s. Under the Bill they will not be receiving an increase of 7s. Under the Bill the cash family allowance will go up to 15s., the insurance dependency allowance will go down to 13s., and so the total which they will receive is, in fact, an increase of 3s.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin)

I am sorry to interrupt the hon. Gentleman. I may not have followed his total figures, but under the dependency scheme there will be an increase for the first child of 3s. There will be an increase under the Bill of 3s. for the first child, an increase of 3s. for the second child, so that the two-child family will get an increase of 6s. as against the 7s. which is proposed.

Lord Balniel

These are immensely complex figures to work out. I think that perhaps, if I may suggest it to the hon. Gentleman, what we should do is to put down some Parliamentary Questions to ascertain exactly what the impact of this particular proposal is, but he, I think, will be the first to agree that the sick, the unemployed, and the widowed mothers will not, in fact, be receiving the 7s. increase which it is generally expected is to be given to them.

Mrs. Hart

I think that the hon. Gentleman will find, when he has an opportunity of reading my speech—and this is an immensely complicated subject, I agree, and I gave a lot of figures in a fairly short time—that most of the figures that he wants are, in fact, there.

Lord Balniel

I am glad to hear that. If one of these worries which I have is diminished I am very pleased indeed, but it does not alter what seems to be the very great worries which I have already expressed about the children who are at the moment below the supplementary benefit level.

Mr. Loughlin

rose

Lord Balniel

I cannot have continuous interventions.

Mr. Loughlin

I was only saying the hon. Gentleman was right.

Lord Balniel

I was right. I am glad to hear that.

Mr. Loughlin

May I elaborate? What I meant was that the hon. Gentleman was right in the principle. I do not want him to assume that he was totally wrong. The only thing on which I corrected him was the precise figure he was using in relation to the two-child family.

Lord Balniel

I am most grateful to the hon. Gentleman.

I have mentioned the children living in families below the supplementary level. I have also mentioned the children living in families at the supplementary level, the sick, the unemployed, the widowed mothers, not receiving the full increase of 7s. which is generally assumed they will be getting as the result of this Bill. But, of course, all other families in receipt of family allowances will get an extra 7s. per week per allowance, although this increase is to be reduced, if they are paying Income Tax at the standard rate, to something like 4s. 9d.

There is one other feature which emerges more, I think, from the right hon. Lady's speech than from the Bill. It is that so far we have not been told how this is to be paid for. This surely is an absolutely extraordinary omission from the speech, for this will involve the taxpayers in additional expenditure of £120 million. It will involve an immediate net increase of £83 million. Moreover, the omission is contrary to what happened on the three previous occasions, when always we knew how the money was to be raised.

I think that the right hon. Lady's speech was also designed to hide something much more fundamental. This is something which is apparent to us on these benches, but, I believe, is becoming increasingly apparent to the country as a whole, and is slowly but steadily percolating into the understanding of hon. Gentlemen behind her. It is that there has now been an almost total breakdown in the development of a coherent social strategy designed to help those in the greatest need.

The panaceas of the election have been abandoned—the minimum guaranteed income scheme, the half pay on retirement, the graduated increase in family allowance according to age, the steep rise in family allowances for children staying on at school, the reconstruction of the family allowance system, the abolition of the wage-stop. In their place, we have a social services review, which has been undertaken by three successive senior Ministers without any staff, and which has already taken longer than the whole of the Beveridge Report, and which is not yet published.

Also, we have something which is, I think, apparent to the country as a whole, that these overlords of social service strategy have completely lost strategic control of the Ministries concerned, because this Bill goes clean 100 per cent. contrary to the views of at least two of the Ministers concerned. I do not want to embarrass the right hon. Lady, but I am willing to prove that point absolutely to the hilt.

Of course, every person in this country wants to avoid any avoidable poverty, and one of the great achievements of the past 15 to 20 years has been that with full employment, with economic growth, with higher wages, with reduced taxation, more and more families have been able to stand on their own feet and provide for themselves.

I admit that an enormous amount still has to be done, but the very fact that society as a whole is better off makes it the more unacceptable and inexcusable that there should be any avoidable concentration of poverty, and sometimes grinding poverty, for some of its members. We all want to diminish it. But our belief is that the philosophy which lies behind the Bill and is exemplified by it, far from ending family poverty, is likely to perpetuate it beyond the time when it could have been ended.

It is not only the mismanagement of the economy, although probably that is the most harmful of all features. Genuine social progress can only be achieved by economic growth. In 1963, the economy grew by 4.1 per cent.; in 1964, by 5.9 per cent.; in 1965, with the new Government, it grew by 2.5 per cent.; last year, it grew by 1.5 per cent. The general economic position of the country is crucial to the elimination of family poverty. A stagnant economy and the pushing up of unemployment, which we understand from the Chancellor's speech yesterday to be deliberate policy, frustrates all our efforts.

The reason I believe that the number of families living below the supplementary benefit level is more than 160,000, with their half million children, is that since the figures quoted by the right hon. Lady were published in the survey of July, 1966, there have been the continuation of the wage freeze and the period of severe restraint, there have been rising prices, particularly those of fuel, there has been a cutting down of overtime, and there has been the impact of the utterly grotesque Selective Employment Tax, which has hit hardest at the least able employees, such as the disabled—the tax which was described by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) as "economically illiterate".

We have seen a whole picture develop of the way in which the hardest hit by our economic difficulties have been the lowest income families. As it is quite clear that those figures are out of date, can the Minister say whether she has any more recent ones showing the number of families and the number of children living below the supplementary benefit level?

However, it is not only the economic factors which are crucial. It is the way in which the Labour Government respond to a social need. Their response is meant generously, of course, and it seems generous. Unfortunately, it has the effect almost invariably of achieving the exact opposite of what is intended. If there is a need, the response is that it must be met by indiscriminate relief paid for by the tax payer. If there are some children in need, then all family allowances must be increased. If there are some families who cannot pay their rent, then all council house tenants must be subsidised. The result is that the more the money is spent on those not in need, the less money there is available to spend on those who are desperately in need.

The right hon. Lady described the Bill as a great social contribution towards the elimination of family poverty. However, it is an indiscriminate measure, and it is for that reason that, at the end of the day, with the passing of the Bill, there will be still a quarter of a million children living below the supplementary benefit level. What do the Government propose to do to bring them up to supplementary benefit level?

In his speech to the Labour Party conference, the Leader of the House seemed to abandon all hope of helping these children by means of social security. He said: We think that a national minimum wage has much more to do with this question than social security. We cannot deal with the fundamental problem of low wages by social security regulations.

Hon. Members

Hear, hear.

Lord Balniel

Hon. Members opposite say "Hear, hear", and they are right. In the long term, one wants to see minimum wages raise all people above the level of supplementary benefit. But every day in which the present Government remain in office sees that day receding.

How very odd, though, it was for the Leader of the House to have made that statement. After all, he is a Minister responsible for imposing the wage freeze on the country. How very odd it is that he should have made it only two days after his right hon. Friend the Chancellor of the Exchequer poured an absolute Niagara of cold water on the very concept of a national minimum wage when he said that to impose a national minimum wage of £15 a week would cost something like £750 million. If the Government are proposing to do that, let them get up and say so, because that would answer my questions.

Mrs. Hart

The noble Lord would have done well to attend the Scarborough conference as well as Brighton. If he had, he would know that my right hon. Friend was putting certain highly relevant points to trade unionists on this whole matter of how, when and why.

Lord Balniel

If that is the right hon. Lady's answer to my question about how to tackle the problem of a quarter of a million children below supplementary benefit level, it is not something which will satisfy the House. Nor, I suspect, will it carry conviction to the benches behind her, because her hon. Friends have given up hope of a national minimum wage at that level being established in the lifetime of the present Parliament, at least.

I have spoken of the Government's approach. Our approach can best be described as an interlocking theme of concentrating help on where it is most needed and giving encouragement to all who are able to stand on their own feet and provide for themselves. Although the right hon. Lady may not believe in it, we believe in concentrating help on those groups of families or people amongst whom there is the greater concentration of poverty. There are various methods by which it could be done. Here I am not talking about the system of national insurance where there is a big insurance component. I am not talking about national insurance for retirement, for unemployment, for widowhood and for sickness. I am talking about family allowances.

Such people in the greatest need could be helped, admittedly in a rough and ready fashion, by a special child allowance being made for the largest families, where it is known that there is a concentration of poverty. The fact that the Government have advanced increases in family allowances for the largest families is an indication that they realise that a concentration of poverty exists there.

There could also be a concentration of help on families where the children are rather older. Every mother knows that the cost of maintaining a child aged 12, for instance, is larger than the cost of maintaining a smaller child. Those are two rough and ready ways.

I ask hon. Gentlemen opposite why they have not done it? Do they disagree with it? It is worth reminding them of the promise on which they won the election. They read as follows— Labour will replace inadequate maintenance grants with reorganised family allowances, graduated according to the age of the child, with a particularly steep rise for those remaining at school after the statutory leaving age. There are three promises in that one sentence. They promised to replace inadequate maintenance grants. They remain in fact exactly as they were in 1957. They promised to graduate the family allowances according to the age of the child. They have not done it. They promised a particularly steep rise for those remaining at school after the statutory leaving age. They have not done it. One sentence—three promises broken.

These are various ways in which perhaps rough and ready justice could be done to families in the great poverty. But probably a more interesting line to study deeply is the Danish system. I would be interested to hear if the Parliamentary Secretary could say what studies have been made of the Danish system. Putting it into its English equivalent, what it roughly involves is linking the structure of family allowances to P.A.Y.E. and so automatically taking into account earnings and responsibilities. Just as there are tax tables under the P.A.Y.E. system for the taxes which have to be paid, so it is surely feasible to devise family benefit tables so that family benefits will be paid out weekly, taking into account the earnings and the responsibilities of the families concerned.

I ask the Government to study such a scheme very deeply, more particularly because the man who has given the most constructive thought to the matter on the Government side is the former Minister attending this debate. He felt that a scheme along these lines would contain some considerable merit.

The Labour Party epitomises its belief in indiscriminate assistance by this Bill, which, because it is so vastly expensive, means that only a thin, inadequate smear of help can be given to those who are in the greatest need. Not only is their philosophy very odd, but their conduct is incredible.

When the announcement of the increased family allowances was made, the then Minister of Social Security resigned, and we have not yet had one word of explanation for her resignation.

In the debate on family poverty the Minister responsible for social security said: Another method of helping is by a general increase in family allowances, but would this be the best way of using scarce resources when so much needs to be done over the whole field of social services, not only cash payments as the hon. Lady said, but in health, in housing and in education? We all know that much needs to be done here, and we as a Government have decided that this method would not be the best way of helping. An increase of 10s. would cost about £160 million net. A 5s. increase would raise only a small proportion of the families up to or above the supplementary benefit level, and the cost would be about £80 million net."—[OFFICIAL REPORT, 20th April, 1967; Vol. 745, c. 849–50.] That was on the 20th April, and yet, exactly three months later, that is precisely what the Government have done, except that they have not increased it by 10s., they have increased it by 7s., and they have left 51 per cent. of the children below supplementary benefit level still below supplementary benefit level.

What happened? What blew hon. Gentlemen off course? Was it a communist plot? Was it panic? Was it the humiliation of the debate, or was it some by-elections? What is even more extraordinary—the right hon. Lady, for whom I have the greatest respect, was not in the Cabinet, and she was not in charge of the social service review, and she resigned, so the Government can easily say that her views are not the views of the Government.

More extraordinarily though is that on the same day, the 20th April, 1967, the Minister without Portfolio, the unfortunate right hon. Gentleman the Member for Leyton (Mr. Gordon Walker), in charge in the social service review, said—

Mr. Loughlin

Why unfortunate?

Lord Balniel

Because he keeps losing constituencies.

Mr. Quintin Hogg (St. Marylebone)

And losing cases, too.

Lord Balniel

And losing cases, as my right hon. Friend mentions.

On that same day, the right hon. Member for Leyton, the Minister in charge of the social service review, said, One way which attracts very little support is to raise"—[Interruption.] Perhaps the hon. Gentleman would listen to what the Cabinet Minister said. One way which attracts very little support is to raise family allowances all round and pay for that out of general taxation. The cost would be £160 million. Even with family allowances being taxable, it would give all sorts of odd sums to all sorts of people, according to their income, which they did not really need, and it would be very expensive. It is not likely to be supported very widely."—[OFFICIAL REPORT, 20th April, 1967; Vol. 745, c. 932.] Yet three months later the same Minister comes down and introduces the Bill which we are discussing today. We have had no explanation whatsoever from the Government as to this 100 per cent. reversal of their policy. It is for this reason that I tell the House that there has been in the Government a total breakdown of a coherent social strategy, and this is widely appreciated throughout the country. I do not think that there is only an anger in the country. There is just a deep sadness that all which was promised is in fact abandoned.

I apologise for taking up the time of the House, but I must refer to the question as to how this is to be paid for. The Minister in charge of the social service review has hinted that one of the means of financing these indiscriminate family allowances is that tax relief given for children of income tax payers should be abolished or reduced. He said, when he announced the increase in family allowances, that this would be "logical". To me it is illogical and unwise.

The whole House owes an exceedingly great debt of gratitude to the hard working body of people who form the Child Poverty Action Group. They, and other academic groups and sociologists, have done much to highlight the problem of child poverty. However, I do think that, in their advocacy of a system of increased flat rate family allowances and the abolition or the reduction of tax allowances, they are following policies which could well be counter productive.

Our tax system—quite rightly, I believe—takes account of the fact that a married man with children has greater commitments than a married man without them. It seems to me that it rightly fits the text of "To each according to his needs. From each according to his means" If the Government finance the Bill by reducing the tax relief for children, or by abolishing it, as has been suggested, they will in fact increase direct personal taxation. This will be completely contrary to the promise given by the Prime Minister one day before voting, but that is so utterly unimportant now that it hardly enters into the argument.

To me, as a matter of principle, there is a vast difference between the State giving a family allowance paid for out of taxation, and the children's allowance which allows the breadwinner of a family with children to keep a higher proportion of his earnings because he has greater commitments and heavier expenses than the breadwinner who does not have children.

The Government have to find a gross sum of £120 million, or a net sum of £83 million. I find it a constitutional impropriety that the Bill—

Mrs. Hart

Rubbish.

Lord Balniel

The right hon. Lady can say "rubbish", but she will perhaps remember that when in 1945 the Government first introduced family allowances they announced them and the method of financing them in one statement, and that has been the constitutional practice ever since. To come to the House and say that we have to finance something costing £120 million, and to give no indication of how that money is to be found, except perhaps the hint that it will be found by the abolition, or reduction, of children's allowances, is a constitutional impropriety.

The Bill is confined to cash benefits, but the reasons for child poverty and family poverty cannot be eliminated purely by cash benefits. A whole range of different problems is involved. Poverty tends to be concentrated in certain areas. Neither personal poverty nor area poverty can be eliminated purely by cash benefits. Poverty is a vicious circle made up of a shortage of cash, bad housing conditions, below-average educational facilities, below average health facilities, poor nutrition, in fact, the whole bleak environment of the most poverty stricken areas which disfigure some of our cities.

In many ways—and this is the depressing thing—this poverty is self-perpetuating. It is being passed on from our generation to our children, and from them to their children. These areas should be given positive concentration of help, and the theme which I have adopted throughout my speech is that the best way of eliminating poverty, whether in a family or in an area, is to bring concentrated help to them. For this reason I welcome the Government's action in accepting the Plowden Committee's recommendation that a positive concentration of help should be given with regard to education.

Many of our social services are very line indeed. Those who voluntarily or professionally devote their lives to these services are fine and wonderful people to whom I pay tribute. But when I look at the social services available in this country I am left with the overwhelming impression of a lack of coherent strategic planning. When we are dealing with problems of family breakdown, whether it is a shortage of cash, or delinquency, or ill-health, or bad housing, or mental handicap, or physical stress, all too often we see some families inundated with a whole variety of different social workers. Yet we all know of other families with equally desperate problems but who are left unattended, lonely and bewildered.

What is required is a major reconstruction of the health and welfare services focused on the family rather than on the symptoms, but this improvement in these services must be combined with a concentration of cash benefits to help those families. I believe that this will come about only by a far grater integration of care and cash than has been achieved so far. The demarcation disputes between the various Ministries must cease.

Mrs. Hart

What about the Seebohm Committee?

Lord Balniel

I know that it has been set up. The only letter which I have ever written to The Times recommended the setting up of this kind of committee several years ago. Indeed. I can tell the right hon. Lady what ought to be some part of the Committee's decision. There ought to be generic training for social workers, and there ought to be a good career structure for them, but I fear that this is taking us beyond the debate.

Mrs. Hart

The hon. Gentleman knows that I agree with him on many points. I was only trying to say that I was glad that he was urging this on his side of the House, because the Conservatives had plenty of time to set up such a Committee.

Lord Balniel

The right hon. Lady has been very rash in interrupting me, because the Seebohm Committee will, I hope, establish the need for the integration of the health and welfare services at local level. However, it is my opinion that this integration of care and cash should be carried out not merely at local level, but at the centre. It is the failure to achieve this integration—and this is not being covered by the Seebohm Committee—of the services of the Ministry of Health, the cash of the Ministry of Social Security, and perhaps the children's department of the Home Office, which is one of the basic reasons why there has been a complete lack of a coherent strategic policy from hon. Gentlemen opposite.

5.8 p.m

Mr. Michael Barnes (Brentford and Chiswick)

In view of the large number of families who are still living in poverty, the Bill is obviously welcome for the help which it will give them, but after the many references by Government spokesmen since the end of last year to the plans which they are making, when the increase in family allowances was made known last July I felt that it was disappointing. I remembered that at one time the Government referred to their plans as "their new plans for family endowment", a very impressive title indeed.

We are told that social security spending is up by about 50 per cent. compared with 1964. We are also told that there has been a dramatic deployment of resources in favour of those people in greatest need. We are very grateful for the many major social reforms that the Government have carried through, but it is impossible to accept these two statements completely uncritically.

Many of the statistics which the Government are putting out at the moment are in terms of the increased amount of money which is being spent this year as compared with 1964. It is a mistake of the Government too often to measure achievements in terms of the amount of money they can or are spending on a project. There are other criteria, especially in social security, in respect of which it is a question of how the money is spent which is important, rather than how much is spent.

As for the statement about a dramatic deployment of resources in favour of those in greatest need, I can only say that several of the most eminent social scientists in this country would not accept it. They would say that the middle income groups have benefited considerably. There is also the problem of making sure that those who are able to claim various benefits know how to claim them and do claim them.

The Minister has referred to the survey of the circumstances of families. This gave us an insight into the size of the problem, and we learned that it is a much larger one than we realised. My right hon. Friend told us that the survey had shown that there were half a million families, with one-and-a-quarter million children, living in poverty, as judged by the supplementary benefits standards. I did not agree with what she was saying when she made the point about relative poverty as compared with absolute poverty.

My right hon. Friend was saying that we must remember that as we raise the supplementary benefit level more people will be in poverty, but it is only relative poverty. I should have thought that poverty, certainly in advanced nations, is largely a relative question. What is poor in one country is not poor in another, and we must expect that as our society goes forward we should constantly raise our definition of poverty—but it is still poverty, at any given time.

We are now approaching the beginning of winter, which is a time of year when poverty is felt most acutely and when people have to spend a lot of money on keeping warm. There is no doubt that many poor families keep warm by electricity—and electricity is one of the least efficient and most expensive ways of keeping warm. In winter, clothes must be bought, and children must have good hot meals inside them. Even if the Government cannot go further at the moment than the solutions envisaged in the Bill I ask them to consider three additional things that could and should be done this winter.

First, the Government should pay the full increase of 7s. for all families where there are two or more children. That should be paid now, instead of merely 5s. out of the 7s. for a fourth and subsequent children. I find it difficult to understand why the Government decided to make the split in this way when they had the results of the survey. The Minister quoted one statistic to try to support the splitting of the allowance in this way but I did not think that it was a good statistic to quote. A much more relevant one was that which showed that two-thirds of the very poor families, where the father is a full-time worker, are families where there are no more than three children. These families need help for this winter.

Secondly, the Government should abolish the wage-stop. The Minister has estimated that only about 20,000 families will be affected, comprising about 150,000 children. The wage-stop may make sense when we have a booming economy and are in a period of full employment, but in many cases it is acting very harshly at present.

Thirdly—and this is most important—the Government should institute an all-out campaign to make sure that people are aware of the other benefits to which they are entitled. These range from rate rebates and rent rebates, where they are in operation, through school meals, help with clothes for school children, and welfare milk. An astonishing and serious figure that was mentioned in the survey was that two-thirds of the children whose fathers are in full-time work and who were entitled to free school meals were paying for them.

Not least in the matter of benefits that people can claim there is the protection which the 1965 Rent Act gave to families who feel that they are paying an unfair rent. The survey showed that 80,000 families who were tenants of private landlords felt that they were paying unfair rents but that of those 80,000 only 5 per cent. had applied to the rent officer or the rent tribunal.

On 24th July my right hon. Friend the Member for Leyton (Mr. Gordon Walker)—when Minister without Portfolio—announcing the increases, said: We shall arrange publicity campaigns to see that families are quite clear what they can get and how to get it. The arrangements are being reviewed so as to make it easy for them to exercise their rights without embarrassment."—[OFFICIAL REPORT, 24th July, 1967; Vol. 750, c. 57.] This is something which should be speeded up and put into effect for this winter. I am not aware of any advance in this matter so far.

The Government should also coordinate the efforts of local authorities in this matter. The Guardian threw out the astonishing fact, in a little survey that it did on 3rd October, that a man said that he was entitled to help with school clothes for one of his children who was just going to school but that he could not get this until the child had been at school for three months. That is clearly absurd.

I ask my right hon. Friend to consider the three suggestions that I have made—the paying of the increase for second and subsequent children; the abolition of the wage-stop, and an all-out campaign to make sure that people know what they should he getting and how they can get it, and to consider whether they ought not to be implemented in time for this winter.

My right hon. Friend is right to draw attention to the fact that the long-term problem of poverty is basically the problem of low wages. She says that low wages represent seven-eighths of the problem. It is a problem of the many people who have been left behind in our society. Inevitably this will happen when changes are taking place and there is a shake-out in industry and redeployment, but we must find a solution to help those who are affected by it.

My right hon. Friend was also right to point out that when the Tories refer to selectivity they refer to a means test solution to the problem. This solution is not acceptable to most hon. Members on this side of the House. I do not believe that it is acceptable to those who would benefit from it. The extent to which the selective services that we have are under-used is a very good argument in support of the fact that the means test is not acceptable to those who would benefit.

But provided we have as a base in our society what Professor Titmuss describes as an infrastructure of social welfare utilised and approved by the non-poor as well as the poor I feel that there is room for selectivity on top of that, if an acceptable way of introducing it can be found. Such a way is the negative Income Tax solution put forward, whereby we use the Income Tax system as a test of family means so that not only are those who pay Income Tax means-tested by the tax system but those who do not pay Income Tax are tested to see for what allowances they qualify. Such a system, used properly, could be a genuine Socialist instrument to redistribute wealth. It should, of course, cover all the individual factors which cause poverty.

This relates, for example, to rents. The survey showed that a very high percentage—about 20 per cent—of really poor families were living in private rented accommodation. In some of our big cities, where I would expect this proportion to be concentrated, high rents are a major cause of family poverty. If some of my hon. Friends asked whether I suggest subsidising the private landlord who is perhaps getting too much in rent anyway, I would deny that. We should make sure that the rent legislation which we have introduced really works, so that we do not subsidise high rents but help people who cannot pay fair rents.

We are told that such a system must be some years off, because it would have to be computerised and it would be difficult for the Inland Revenue to cope with it, so in the meantime we must ensure that these individual pockets of poverty are not passed by. The Government are right to talk about extending the insurance principle. The Minister said at Scarborough: I accept means testing at the paying-in end", as distinct from the receiving end. But there will always be minority groups whose needs are difficult to meet on a group basis. I ask the Government to be aware of their predicament, so that they are not penalised simply because they cannot be conveniently categorised.

As the Minister suggested, in the long run a decent minimum wage is the basic answer to the problem, plus, perhaps, higher family allowances on the pattern of the Common Market countries as we bring our tax and social structure more into line with theirs, but that is another question, involving other Ministries. I congratulate the Government on the Bill, although I wish that it went much further. I wish the Minister luck in her new appointment. She has a very difficult task in dealing with the complicated situation of poverty in our affluent society, but I am sure that she has the energy and the determination to carry this through, and the good wishes of everyone on this side. I hope that she can find the right solution.

5.23 p.m.

Mr. John Astor (Newbury)

I am glad to follow the hon. Member for Brentford and Chiswick (Mr. Barnes), who gave a half-hearted reception to the Bill, pointing out that many pockets of poverty are still uncatered for and looking forward, apparently, to the distant future, when solutions will be found. My noble Friend the Member for Hertford (Lord Balniel) referred to the quotation from the right hon. Gentleman who was then Minister without Portfolio, when he poured cold water on this system of trying to solve poverty among families with children. He said that it would give all sorts of odd sums to all sorts of people, according to their income.

The Bill provides £124 million, some of which will benefit children in real need, which everyone will welcome, but many of us wonder whether much of this money could not have been better spent by concentrating on areas with even greater poverty, urgency and need, and fear that the more that Government resources are committed overall in this way, the smaller are the chances of some of these individual pockets having their needs met.

If anyone doubts that there are real pockets of need, I would refer to the disabled and the chronically sick. The right hon. Lady will already know that someone with, for instance, multiple sclerosis receives a much smaller benefit than someone who is industrially injured or has a wartime disability pension. No one doubts that those subject to special risk, either because of the industry in which they work or because of war, should be provided with a disability pension if necessary, but the problem for the ordinary "civilian" disabled is not how they contracted the disability but the degree of disability which they suffer. The Government have been looking at this problem now for three years and I hope that the final answer will emerge and that they will seriously consider bringing into line these "civilian" disablement benefits.

An even worse and more anomalous case is that of the disabled housewife who is entitled to no benefit at all. An article in one of the papers yesterday stated: To be a disabled housewife is to be, as far as the Welfare State is concerned, invisible. Apart from direct medical help, you do not exist. The family budget is presumed not to be upset by your inability to work in the home … This is a glaring example. Many disabled housewives prefer to live at home to keep the family together, but they know that, without financial help—to which they should be entitled—they can impose a further burden on their family, which already has the worries and anxieties of relying on the mechanical equipment to keep the invalids alive. If anything goes wrong, their lives may not last long.

Society should be able to relieve them of at least some of their financial worries. Not much money is involved. Even a few pounds a week would enable the invalids to employ home help or a constant attendant who could look after them and relieve them and their families of a great deal of worry. Government spokesmen have said that they are considering these questions urgently in the general view. I hope that the urgency will be emphasised, because the lives of these people are more liable to be curtailed than those of healthy people.

They have been extremely patient. It is not as if they have done nothing to help themselves. Many hon. Members will know of outstanding examples of courage and determination to overcome physical handicaps among their constituents. I hope that something will be done soon, as many of these people who would like to continue living at home simply will not be able to do so for financial reasons. They will reluctantly resign themselves to entering a hospital or even a geriatric ward. As a matter of economics, this is much more expensive for the State, because a hospital bed can cost anything up to £80 a week, and if it is used by an invalid who could equally well be at home this deprives another patient of a hospital's benefits and facilities. Many hon. Members realise the urgency of the problem.

In a letter I received recently, a gentleman who signed himself "An ex-Labour Party Supporter" wrote: I have been a Labour supporter all my life, even a well-known member of the local Labour Party, and a strong trade unionist The next phrase is underlined: But never again. To allow more money to the children (which they won't get) and totally to ignore the totally disabled is nothing but a glaring anomaly. They (the Labour Party) have given money to everyone but the blind, the totally disabled from strokes, the heart cases and the paralysed. When, where and how does she expect these people to live? He is referring to the former Minister of Social Security. He adds, For obvious reasons I cannot give my name and address but please, if you can, read this letter in Parliament and see whether you can't get this woman to do something". I do not wish to associate myself in any discourtesy to the right hon. Lady the previous Minister of Social Security, but I sympathise with the sentiments which that gentleman expressed and I hope that even if the Government will not be stirred in in this direction by hon. Members on these benches, they will take note of what one of their ex-supporters thinks of their lack of activity in this direction.

Mr. Loughlin

If the hon. Member is in sympthy with that letter, will he vote against the Bill? The Bill deals with giving money for the children.

Mr. Astor

I said earlier that everybody appreciates that the Bill will help some children where help is needed. But it is a pity, as one right hon. Gentleman and one right hon. Lady opposite have said, that the Government have adopted this method, which is not the best way of doing it.

5.33 p.m.

Mr. William Price (Rugby)

I do not like Ministers and I am coming to the view that they do not like me. Indeed, I have long held the belief that we shall not solve the problems of this country until we sweep away the Front Benches on both sides of the House. But there is always an exception, and in my case the exception is the Ministry of Social Security, which has the advantage of a splendid Minister, two capable and humane Parliamentary Secretaries, and a former Minister who holds a unique posi- tion in the Labour movement. In my view, and whatever is said by the noble Lord the Member for Hertford (Lord Balniel), they have been doing a grand job on behalf of the under-privileged people of the country.

It gives me no pleasure, therefore, to say that I think that they are wrong tonight and that they have presented a Bill which is based upon dogma rather than upon the facts of a difficult and often tragic situation. What have they done? They have tried to solve child poverty, for which we must all share the blame, in a way which will clear them of the indictment of having introduced a means test. The Minister was faced with a straightforward choice. Was she prepared to tolerate a means test so that adequate money could be given to the people who needed it so desperately, or would she take the easy course and pay increases to all families regardless of need? I am sorry to say that she, or the Government, decided upon the latter course, because we all know that the increase of 7s. is so small that it will make no difference to the wealthier families, while the poorer families will be denied the financial assistance which we ought to to be providing.

I make this clear to my colleagues—and I am glad that few of them are here, because I shall not be popular in expressing this view. I shall not rely on all this academic nonsense of selectivity. That conception means no more to a destitute child than redeployment means to a man who has to tell his wife that he has lost his job. I am prepared, and indeed happy, to admit that the issue here is whether we have a means test or whether we do not. This was one occasion, I suggest, on which we had no choice if we were to tackle our problems in a sane and sensible manner. I know what the Labour Party feel about the means test, and with every justification. I was brought up in a coal mining family, and it is hardly surprising that my people suffered the ignominy of a Tory means test for many years. It was impressed upon me from a very early age that the means test and those who inflicted it upon us were evil. I soon learned that the object of the means test as we then knew it, or as my people then knew it, was to keep away from those who needed help the maximum possible assistance, to allow them to linger on but nothing more.

But times have changed. I am prepared to argue for a means test on family allowances because I believe it to be the only way in which we can get adequate assistance to the people who need it. We do not wish to deny help, as happened in the 1920s and 1930s. We on this side of the House wish to provide it. With the money which the Bill makes available, we could have gone a long way to ending the sad plight of hundreds of thousands of children.

There is a danger that anyone on this side of the House who argues in this way will be lumped with the backwoodsmen of the Conservative Party, and that would be the ultimate indignity, but it is a chance which I have to take. Their case was argued very fluently and very fully by my hon. Friend the Member for Pembroke (Mr. Donnelly) at the weekend. In case any hon. Member opposite does not understand it, we have an unwritten law in the Parliamentary Labour Party that we do not attack each other, and I do not propose to attack him, other than to say that I enjoy my newspapers every Sunday because it is always interesting to read my hon. Friend's script, which I suspect comes from the Tory Central Office. We know what he means and what he is after in relation to the Health Service, and I want no part of that.

But family allowances are different. The whole basis of social security in relation to retired people is that we ask them some questions and allocate help according to the answers. I believe that we could have extended that system to include family allowances, but principle prevented us from doing so. What we have done, instead, is to introduce an increase which is welcome enough but which is totally divorced from the problems facing the country.

This weekend in my constituency I had to deal with a man whose take-home pay in the prosperous West Midlands was £12 a week. His council house rent is nearly £4 a week. He cannot get a rent rebate because my Tory council in this respect are so mean that they would take a dead fly off a blind spider. He is left with the problem of keeping himself, his wife and two children on £8 a week.

I sometimes feel that we in the House do not understand what sort of prob- lems confront a man in that situation. Why do we always assume that the financial burden begins with the second child? I know of many families with one or two children where assistance is just as badly needed—in some cases more badly needed—than in families of four or five children, and I hope that the day will come when we shall begin to pay the allowance on the first child.

I do not want to be abusive either of my own Front Bench or of the Opposition—that is the last thing that I have in mind—but I suggest that the attitude of the Tories today has been both interesting and predictable. They found their conscience. After thirteen years in which they did practically nothing in this respect, they have suddenly blossomed forth as the saviours of the poor. In my 18 months' membership of this House, I have never before heard such barefaced hypocrisy.

The Conservatives failed to face up to this problem because they know that increasing family allowances is electorally unpopular, that a great many people are violently opposed—and we have just heard of one from the hon. Member for Newbury (Mr. Astor). It has caused me more trouble—and I am glad that it has—than any other issue apart from the increase in our own salaries. The amount of ignorance, prejudice and misunderstanding over the question of family allowances is alarming, and, of course, the fire is fanned by the worthy women in Tory associations all over the country who fill the correspondence columns of newspapers. To listen to them one would think that the Bill is aimed at the creation of a feckless, idle society in which the working classes would behave like over-sexed rabbits and the State would be forced to keep the children that they could not afford. The theory apparently is that an extra 7s. a week will enable and, indeed, encourage parents to try to keep a child and make a profit. I wish someone would explain the principle involved in that theory to my wife.

The hon. Member for Hertford talked of another principle—"to each according to his need". We thought of it a long time ago, but we nevertheless welcome his conversion. I am glad to welcome him. He will be sitting on this side of the House soon. But it is a little late in the day for this conversion, and there are those who, and I suspect that he is one of them, seize upon this principle of to each according to his need to argue that one cannot establish the need without asking a few simple questions. It may well be that he has a point there.

Captain Walter Elliot (Carshalton)

Does not the hon. Gentleman agree that that is nevertheless not the principle of the Bill? I hope that he still holds to what he said earlier—that he is really with this side of the House in his thinking and not with that side.

Mr. Price

I am prepared to admit that tonight I am on that side of the House, if such an admission will ease the hon. and gallant Gentleman's mind. I shall come to the point he has mentioned. I have never regarded the principle as justification for a means test. My interpretation of it is that society has a duty to pay a man a wage which will enable him to live in prosperity and without the indignity of seeking additional aid from any source. But we have to face facts.

There are hundreds of thousands of people in the country who are not getting an adequate wage and, whatever Government we have, it will be many years before we arrive at that situation. My right hon. Friend said that to have a means test on family allowances would be virtually to accept low wages. I agree that it would. But we have no alternative but to accept the fact of low wages, and there is no sign that the Government are going to move on the issue. Low wages will be with us for years and when my right hon. Friend convinces the Cabinet of the need for a guaranteed minimum income then her argument will hold good. At the moment it does not.

I am arguing, therefore, that we have to adapt principles to meet the circumstances of the day. It gives me no joy to argue the case for a means test for family allowances or anything else but, at the present, if we are to solve the problem, I see no alternative. In my view, family allowances based upon income would be acceptable to the vast majority of taxpayers and would be the salvation of many of our poor families. If there is a division tonight—and it will be interesting to see what the Opposition do—I ,shall follow my right hon. Friend into the Lobby with relish. I shall do so because, while I think she is wrong, I hold the view that she is wrong for the best possible reason.

5.45 p.m.

Mr. John Pardoe (Cornwall, North)

I judge the Bill by how far the measures contained in it overcome child poverty and how they equate with the Government's promises at the last two elections. It does not overcome child poverty and not even its most ardent supporters would claim that it does. After all, even when these allowances have been paid, only one half of the poorest families in the country will have been brought up to the basic supplementary benefit level, and while I do not presume to say that poverty can only be measured according to that level, it is a convenient guide for the time being until we have something better.

But the Government's proposals on this matter could not even save them from the resignation of the right hon. Lady the Member for Lanarkshire, North (Miss Herbison), let alone save a very large number of kids from a very hard winter. How far does the Bill measure up to the Government's promises? The Secretary of State for Education and Science, when he held responsibility for home social policy, said at Lincoln in July: By the end of the year we shall have dealt with family poverty. I took that as a firm commitment, which I welcomed. I believed that, coming from a man in his position, it was a commitment that the Government would honour. But in fact, as I have shown and as various others have shown before me, the Bill cannot be said to meet that commitment.

Ever since I entered this House I have heard the Government use two excuses for failing to get on with solving the poverty problem. The first was that they were engaged in a survey of family circumstances. Now we have that survey, so it can no longer be an excuse. We know better than ever before where poverty exists and therefore should know exactly how to deal with it. The second excuse has been that they are involved in a comprehensive, purposive review of the social services and therefore cannot make pronouncements on this or that issue before the complete report.

Various piecemeal measures have been brought in over the last three years which have been alleged to be part of the review of the social services, but I still believe, looking at the totality of the measures, that the review of the social services has been the great non-event of the Government's social policy.

Mrs. Hart

Does not the hon. Gentleman appreciate how many steps have already been taken—indeed, legislation introduced—as a result of the review, which is a continuing process?

Mr. Pardoe

Yes. The right hon. Lady will recall that, shortly before she interrupted, I paid some tribute to these piecemeal measures. The hon. Member for Hertford (Lord Balniel) has already said that these do not add up to any overall strategy and it is the lack of any comprehensive principle of reform of the welfare state or social policy that I am deprecating.

What is required? I do not think that we can deal with poverty merely through family allowances. We cannot separate social policy from taxation policy but that is what the Government have done in failing to tell us how they propose to pay for this Bill. I hope that they will pay for it in the way that the hon. Member for Hertford suspects and is not too happy about. The Labour Party's 1966 manifesto promised to seek ways of integrating more fully the two quite different social payments—tax allowances and cash benefits. Yet there is still far too great a separation between the two.

Lord Balniel

The representative of the Liberal Party, the hon. Member for Cornwall, North (Mr. Pardoe), is advocating that the cost of this Bill should be met by the abolition or reduction of the tax allowances. I am sure that he will agree that this represents an increase in direct personal taxation. Does he not feel that what is necessary in our economy is not an increase, but a decrease in direct personal taxation?

Mr. Pardoe

I entirely support that view. I believe that there is a whole mass of things in our policies which move in that way. But we can reduce direct personal taxation in other ways than in relation to family allowances.

It has for several years been my party's policy to advocate child endowment scheme; to propose that we should reallocate the money allocated in various forms by the State for the upbringing of families. We want to reallocate it to ensure that more goes to those really needing it, and rather less to those who, like the noble Lord and myself, perhaps do not need it quite so much for our children. I want to see a much larger flat-rate payment across the board, and I want it to be financed very largely from the tax allowances.

The right hon. Lady objected that it was wrong to ask the better-off families to pay to outlaw the poverty of the poorer families—

Mrs. Hart

I did not.

Mr. Pardoe

I am sorry, but I fully understood the Minister to say that. If that was not the implication, I immediately withdraw what I said. We want the reallocation of this money. The State says that children cost money to bring up and enshrines that principle in its taxation policies.

In 1967–68, tax allowances will cost the Exchequer £630 million, and family allowances will cost £160 million. We are therefore allocating a total of £790 million to the upbringing of families. Tax allowances have increased much faster than family allowances, and that answers the noble Lord's objection that it would be wrong—he agrees with the right hon. Lady here—because there is some innate distinction between money handed across the post office counter and money not handed away in taxation. I am unable to appreciate this distinction in quite the clear terms the noble Lord propounds. In the last ten years, tax allowances have risen from £230 million to £630 million while family allowances have risen from £128 million to £160 million. In ten years, therefore, we have had an increase in tax allowances of £400 million and an increase in family allowances, up to the present time, of only some £32 million.

I want a flat-rate State payment. I do not agree with the idea—and here I am with the Minister—that we should make this selective payment in the way proposed by certain hon. Members on this side. We want substantial payments for all children, including the first, and we have already suggested that an appropriate average payment would be about £2. I should like to see a lower payment for younger children and a higher payment for older children who remain in full-time education. It is not necessary to pay for this entirely by abolishing tax allowances. It would be possible to make some reduction in them, and I accept that it might be unfair to charge the whole of the cost to better-off families. I have no doubt that it would be possible to find some of the money from other sources, but the major part must come from reallocating the £790 million that we now spend—

Mrs. Hart

The hon. Gentleman will see when he reads my speech tomorrow that the distinction I made was between the better-off with children and the better-off without children. I said that I did not see why the whole burden should necessarily fall on the better-off with children. That is where the hon. Member has not quite taken what I said.

Mr. Pardoe

I accept that. There should however be some form of graduated allowances in the final stage. What I do not want is for this to be done by the Stale, and here I part company very considerably with the noble Lord and his friends.

There is a great difference between our proposals for a partnership between State provision and private occupational provision. There is a great difference between our proposals and those for some sort of State monopoly, which, if I am right, the Conservative Party proposes. In his evidence to the Royal Commission on Population, Sir Roy Harrod suggested that there should be a graduated family allowance. At that time, he wanted it done through the Inland Revenue but that might be rather difficult in the immediate future.

I want this provision to be done through occupational family endowment schemes. I accept the right hon. Lady's warning about the difficulty of a minimum wage policy being a subsidy for lower wage payers—this could be a very real difficulty—but I do not want the minimum wage policy to be brought about by more Government money. It should be brought about by legislation enforcing employers to do the right thing.

If it is right, as the noble Lord said, that it should be and already is, enshrined in taxation policy that the commitments of a married man with children are greater than those of a single man or of a married man without children, there is no reason why the same principle should not be enshrined in our wages policy, too. We could and should legislate to enforce occupational schemes of this sort.

We cannot, however, attack poverty merely in this way. The hon. Member for Brentford and Chiswick (Mr. Barnes) said that he would like to see a negative Income Tax, but that that could not yet be introduced because of lack of sufficiently sophisticated computerisation. I do not believe it. In certain directions we could introduce a form of negative taxation, of social payments related to Income Tax forms, without all this complicated computerisation.

I have already suggested to the Secretary of State for Education and Science that this should be done in relation to the cost of school meals. For instance, it would be perfectly simple to issue vouchers for school meals of such value that when taxed at the standard rate there would accrue to the Exchequer the actual cost of school meals. For instance, if we had a voucher valued at 4s. the yield to the Exchequer at the standard rate of taxation would be 1s. 8d. A 5s. voucher would yield 2s. 1d. The vouchers would be issued to the children at the beginning of the term. Children would each take a voucher to school each day. If a child was ill, the parents would have a voucher over. This would be returned at the end of the year with the Income Tax form, and the nominal value would be added to total earnings on which Income Tax was assessed. This is a perfectly simple method. It does not require a great deal of administration or vast numbers of gigantic computers. It is only one specific way in which we could relate social payments of this sort to Income Tax.

The reason why I am against selectivity and means tests in the way in which so many people talk about them is that I am against the proliferation of means tests with masses of officials coming to one's door to ask whether one earns this or that. Instead, we could institute a scheme of negative Income Tax, with one means test—which we now accept with Income Tax—and we do not need to wait for a great bank of computers. We could make a movement towards this already in certain directions.

I have great expectations of the Government in dealing with poverty. I apply double standards in this matter. I expect a Labour Government to do a great deal better than their Conservative opponents in dealing with poverty. It is, therefore, useless for any right hon. or hon. Member opposite to say to me, "They did not do it in 13 years. We have done rather better." Of course, the Government have done better. They jolly well should have done better, and I look to them to do a great deal better in the future.

I fail, however, to see an overall strategy. We have had piecemeal proposals. There has been no attempt to set out the principles on which the Government's attitude to the Welfare State is based. We need a major attack on poverty and social injustice, housing, education.—I welcome the proposals of the Plowden Report and, as far as they go, the Government's plans to back them and on family endowments.

The Government need to leave a solution to the problem of poverty behind them when they go. It may be later than they think. They may not have much time to deal with this problem. I would not expect that if the Government do not deal with it, the Conservatives, if they succeed them, ever will.

6.2 p.m.

Mr. Hugh D. Brown (Glasgow, Provan)

The speech of the hon. Member for Cornwall, North (Mr. Pardoe) was one of the most tempting speeches to follow which I have heard for a long time. It was a mass of contradictions. The hon. Member suggested that some of us need to read our speeches. He will certainly need to read his to understand the contradictions which he has made.

I like to think that I have an open mind in examining any proposition, but if the hon. Member puts forward the idea of a parent having something like 200 vouchers a year to play around with and at the end of the year, when some of them have not been used, submitting a return to the Income Tax authorities, he does not know what he is talking about. Many people cannot keep trace even of one form P60 on which they claim their earnings-related benefit. That, however, is typical of woolly Liberal thinking; but I do not want to pursue that.

I am delighted to welcome my right hon. Friend the Minister in making her first contribution as Minister of Social Security. Those of us who have followed social service matters have enjoyed the exchange between the two feminists who formerly occupied positions opposite each other. I am tempted to suggest that on today's performance my right hon. Friend was way ahead of her opposite number, for a variety of reasons.

We are all a bit confused or have difficulty in being dogmatic in the argument about selectivity versus universality. I do not think that anybody can afford to be dogmatic on one side or other of the argument. I get the feeling, however, that behind the argument from hon. Members opposite, what they are genuinely concerned about is relieving the burden of individual taxation. The Liberals agree with that, but no one has suggested how we are to deal with the situation which confronts us if we want urgent action on family poverty. All the other arguments become rather academic from the long-term standpoint unless we get clear indications from hon. Members opposite about how they would find the money which, they suggest, is required to deal with the urgent problem which they have discovered since we took office.

My right hon. Friend spoke about the Beveridge Report. There is still a disturbing attitude—I am not being critical; this is something which we must all face—in the sense that one of the arguments for the introduction of family allowances has been that we should always maintain a substantial gap between the wage earner and a person in receipt of benefit and that poverty was an incentive to get back to work—in other words, the kind of poor law or charitable approach which still survives even in the middle of the twentieth century.

I plead with my right hon. Friend that we should have a bit of courage and abolish the wage stop altogether. I know that this is a difficult matter, but I would like to give my reasons for saying that. In Scotland, as my right hon. Friend will know—whether it is a blessing, I am not willing to say—we certainly have the smallest percentage of two-children families and the largest percentage of families with three, four, five, six or more children. My hon. Friend the Member for Rugby (Mr. William Price) said something about the sexual appetite of the working class. I am not commenting on that. It might have something to do with the colder climate—I am not sure. There are a lot of things to which we do not know the answers. Certainly, it is a problem.

Mr. William Price

I was suggesting that there were some good ladies in the Conservative associations who have the idea that increased family allowances would encourage the working class to act like over-sexed rabbits. I am told, however, that the increase in electricity charges is likely to have the same effect.

Mr. Brown

There are variations in the application of the wage stop which are well known to hon. Members. I mention the size of families because the Bill is, I imagine, of relatively greater help to the parents and people of Scotland because of the figures which I have mentioned. But it is not simply a matter of the size of families and the problem of disabled people. It seems to me to expose the need for regional economic policies which would do more to equalise the opportunity for work and, therefore, reduce the need for wage-stop cases.

At last, I am a little hopeful that this has got through to Government circles. It is not simply an argument on grounds of economic policy, although that might be the priority. So many of the social problems with which we are confronted, of which the wage stop is only one, arise from the inequality of opportunity and earning capacity between one area and other.

I am delighted to see that my hon. Friend the new Member for Manchester, Gorton (Mr. Marks) is present. I thought that when we were discussing this first piece of legislation arising from the Gracious Speech, the hon. Member for Hamilton (Mrs. Ewing) might have been in her place. Certainly, we are dealing with a matter which affects parents and children in a working-class constituency like Hamilton.

Mr. Pardoe

Is not the hon. Member aware that Scotland is much further from London and that that is one of the reasons for the result at Hamilton and one of the reasons why it has taken the hon. Lady longer to get here?

Mr. Brown

I believe that that was meant as a serious interjection. That is the tragedy of it.

Mr. Gregor Mackenzie (Rutherglen)

It should not take her a fortnight to get here.

Mr. Brown

I am disappointed that the hon. Member for Hamilton is not present and did not take this opportunity of indicating how the Scottish National Party, for example, view this welcome Measure.

Most of us admire my right hon. Friend's energy and ability. There is a danger that the academics will win the somewhat academic argument that is now being pursued. It would do many academics good to go into a Glasgow office of the Ministry of Social Security on a Friday and see exactly what happens when supplementary benefits are being paid. I am concerned about the amount of work which is entailed. There have been three attempts today to explain what it will mean to a husband and wife with two children next April. Somebody is bound to be right. We do not know who is right, because the complications brought about by the fact that the fourth and subsequent children will get an extra increase and by the fact that there will be no change in the supplementary benefit rates in April increase in geometrical progression. All this will impose an enormous burden on the staff in local offices.

Unless a better understanding can be brought about of the attitudes which are breeding in these offices, the best-laid schemes will not operate. There is a hardened attitude on the part of many staff, because they do not have enough time to do the social work which is a necessary concomitant of paying these benefits. I ask my right hon. Friend to carry out an early examination or to make a visit to some of the offices where unemployment is greatest.

The Government deserve credit for many things. It is a healthy sign that we are even discussing the need for a minimum wage, the need for an incomes policy which will do something to lift people out of the poverty level, and that we are trying to find ways of implementing our social policies. I am tired of listening to the niggling contributions of hon. Members opposite. In thirteen years the Conservatives did not introduce even the smallest of the reforms which they now suggest. The battle for increased standards in society will have to be continued on this side of the House. We do not expect any help from the Conservatives.

The Government are showing courage. Family allowance is an unpopular benefit. Old age pensioners always resent any money being spent on family allowances, not just any increase. The typical attitude amongst the old is, "I never got money such as this to bring up my bairns". I am not saying that I agree with the attitude, but it is an understandable attitude on the part of old age pensioners that society owes them more than they are getting, even though we have done more for them than any other Government have.

We should be cautious about the argument concerning the incentives which the executive class needs if it is to produce the goods. Recently an executive complained to me that he was paying Income Tax running into four figures. He complained also that we were not encouraging private health service schemes. If the Tory Party encourages people who are presumably earning £10,000 and more, otherwise they would not be paying so much tax, to take this attitude, whilst we have this great number of families living in poverty, it has got its priorities wholly out of perspective.

We are now faced with a challenge. I believe in the need to distribute the available wealth. We hear many esoteric arguments about the rate of growth at present, what is possible by way of growth for the future, and what necessary social improvements can be paid for out of increased growth. Even if we do not succeed in greatly increasing growth, I would still argue that we should still impose individual tax burdens on the wealthier members of the community. Presumably, we would be included in this class. Are hon. Members opposite willing to support that concept, in the absence of growth or in the absence of sufficient growth?

I come, finally, to the need for some disciplines. Of course there are malingerers. A malingerer is someone who makes no useful contribution to the community by the sweat of his brow or by his brains. Hon. Members opposite should know more about such persons than I do. I represent a typical working class constituency. I admit that there are malingerers and "fly" people. There are some who are not necessarily bad but who are inadequate. There are others who are just bad. We should seek to correct this regrettable failing in society with a little understanding. We must not always hold back the decent person, he who genuinely appreciates what we are doing for him, merely because a small section of the community will take advantage of everything that is going. Such persons are not confined to those in receipt of supplementary benefits.

I would like to see a coming together of the Departments that pay the money and the Departments that do the social work. I recognise that in the Bill the Government are making some contribution, however small some may allege that it is, and however disappointing it may be to some of us, to solving the terrible problems facing poor families.

6.19 p.m.

Dame Joan Vickers (Plymouth, Devonport)

This is a very curious place in many ways. Last night I stayed here till a late hour trying to speak. Today I have had other engagements and had not much hope of speaking, because I have not been present for the whole debate so far. I apologise to those hon. Members whose speeches I have not heard.

I want to pay a very sincere tribute to the right hon. Lady the Member for Lanarkshire, North (Miss Herbison). I have a tremendous respect for her integrity, for her principles, and for the work she has done, not only in the time that she was Minister, but in past years. The right hon. Lady and I have had the pleasure of knowing each other for a considerable time. I am very sorry to see her sitting on the back benches, but I know that she will do good work from there.

I welcome the new Minister to her post. We have had a couple of battles together. I do not necessarily mean battles against each other. In one battle we defeated a Bill. I hope that she is as successful as her predecessor was.

The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) made many practical points in his speech. I am glad to learn that families in Scotland are so small. I could produce families—or perhaps I should say that I could tell the hon. Member of families consisting of 15 and 18 people. I am probably the first Member to speak in this debate who will not benefit from this Bill, and perhaps that corrects my slip just now. I agree that one of the greatest difficulties are the low wages, and Government Departments are in many cases to blame.

I think the subject of malingerers has been greatly exaggerated. I hold very large "surgeries" in my constituency and the difficulty very often is to find a job for people who come to see me. Last week one person who came to see me was an epileptic and another one was lame. I hope that we shall take these factors ino consideration when we are thinking of this Bill.

I am not willing to see the distribution of wealth by taxation as a means of levelling up the standard of living. I want to see the standard of living levelled up all round and not just one section. This is not impossible. We talk of a minimum wage, which we all hope will eventually come, but I do not want this to be achieved by means of taxation to the detriment of people who have worked very hard indeed to get their present positions and who are trying to raise standards for their own children.

I should like to ask a question about the wage stop. This is permissive for those who are sick. I do not know how often it is likely to be used, and I should like to be told. I understand that the individual concerned will have to appeal. When a person is sick, I think he should have the benefits to which he is entitled and that there should be no wage stop and no need to appeal.

I was interested to read in the Evening Standard that six out of 10 voters would not object to a means test. We have to declare what we mean by a "means test". Personally, I am not in favour of a means test as it applied in the days when I was on the London County Council. Neither am I happy about the word "selectivity". The individual family should get what it needs, and I think this can be brought about by taxation methods.

I presume that this Bill is only what I would call a tiding-over process and that we are waiting for a longer-term policy. As such, I welcome the Bill as being a step forward. However, I hope that we shall find some method of introducing an individual minimum wage standard, because it is much better for people to have their own money rather than to rely on supplementary benefits.

My views about taxation coincide with an article that I read in New Society by a man who has studied this subject very carefully, Mr. C. N. Aydon, a lecturer at Dundee College of Technology. He objects to the abolition of Income Tax child allowances on the following grounds: The entire cost of substantially increased allowances for poorer families would be financed, at a time of high taxation, entirely by sacrifices of better-off families with children. This brings me back to my original point. Many people paying these taxes work extremely hard to get to their present positions. The author of that article suggested that we should choose family tax allowances or child allowances, but not both, for although the better-off would lose their tax family allowances, they would retain the benefit of their full tax reliefs. Any rise in the income per head would cause families to contract out of family allowances, so reducing the net expenditure on this service.

A further plan that Mr. Aydon has submitted is the following: A supplementary family allowance of 10s. a week could be made available to every child at present qualifying for family allowances, on condition that they produced a certificate from the Inland Revenue that they will not claim child allowance. This is estimated to cost about £25 million, and it would help the large proportion of the poorest children.

The Bow Group worked out a scheme on these lines and said that cash family allowances should be treated as a credit against the tax liability of all P.A.Y.E. and Schedule D Income Tax payers. There was a very interesting article in the Financial Times of 7th January this year by Samuel Brittan, pointing out that a man with three children who has a tax bill of £47 per annum and is entitled to collect the same amount in family allowances is, on balance, neither worse nor better off before his encounter with the Inland Revenue, but he has to pay and collect in two separate operations, and the marginal rate of Income Tax is made higher than it need be because of these transactions.

I hope the Minister will consider this point. Cash family allowances, so far as they have had to be paid out after being offset against net tax liability along the lines that I have just mentioned, could be paid by the employers as a supplement to wages. On many occasions we have talked about going into the Common Market, and all family allowances in the Common Market countries are paid by the employers. This must be considered, as Common Market countries have much higher child allowances than we have, France having the highest. Therefore, we would have to change our system of collecting this money for the payment of family allowances. This may be one of the matters that the Minister is considering at the moment, which may be one reason why we have not been told how the Bill is to be financed. But we still do not touch 80,000 of the poorest families who are below the poverty line, and we must concentrate on this.

The right hon. Member for Leyton (Mr. Gordon Walker) said on 24th July, 1967, that a means test would have a great effect on incentives. He said that there is a disincentive if things are so arranged that people who are not working actually get more than if they are at work. But we must ensure that people who do not work are not hit because they cannot get work. There are a good many people who cannot get work at the moment. I agree that we should work for the minimum wage which would provide a much better basis for giving these supplementary pensions.

In the previous debate I said that until we get a minimum wage there should be a housekeeping allowance. By this I mean that a wife should be able to apply when her husband suffered a wage stop. Without the wage stop he might have received £3 or £4 more. This allowance should be paid directly to the wife. If we cannot get the minimum wage, I suggest that we might consider this suggestion as a means of augmenting the lower income groups.

One or two speakers in this debate have mentioned the question of material assets, and I should like to see the Greater County Council Care Committee's scheme extended to the schools in provincial towns. We are thinking here of the large families. The Royston Lambert Report emphasised that there was still need for free school milk and for a good school dinner. From my own knowledge, I can tell the House that quite a number of children still go to school without breakfast. The school milk and a meal is a great advantage. Over 280,000 children had free meals in 1964.

I did not altogether agree with what I understood to be the suggestion for a coupon system made by the hon. Member for Cornwall, North (Mr. Pardoe). I have another proposal in this connection which I am certain would be much better. It is important to make no distinction between the children who can pay and those who cannot. I suggest that mothers who can pay could buy from the headmaster or headmistress a book of coupons for meals, while the ones who could not pay would have it free. Then the children could come along to school dinner with their identical coupons,handing them in instead of money, so that no one would ever know whether they paid or not. I hope that some such arrangement will be considered. It is essential that our wonderful school meals scheme is maintained.

I have a question on Clause 2, which deals with the meaning of "child". Clause 2(1,b) opens with the words: … for the purpose of determining whether a person is to be treated as a child as undergoing full-time instruction in a school … I assume that, when the school-leaving age is raised, the older school children will remain eligible, but what exactly is covered by the word "school"? Some children go to a technical school, for example. In other words, when does a child stop being a child and become a student? Perhaps the Minister will give a definition so that we may know who is eligible and who is not.

As I said at the outset, I regard the Bill as a step in the right direction, and I hope that we shall have further schemes in the future to eliminate the other sectors of poverty to which so many hon. Members have referred.

6.32 p.m.

Mr. Alec Jones (Rhondda, West)

I congratulate my right hon. Friend the Minister on her fine performance at the Box this afternoon. If she continues as she did today, she will soon be held in the same high esteem on this side of the House as the previous Minister has been.

I welcome the concern which has been shown by all hon. Members in the problem of poverty, a concern shared by front benchers and back benchers on both sides. If concern and words were a solution to the problem, it would have been solved long ago. If all the words spoken on the subject since I was elected last March had been matched by action, the problem would have been solved by now. But we need more than words. There must be the will to act and action taken. The problem of poverty will not be solved until the nation as a whole accepts its full responsibility in the matter. It is a national responsibility, and the problem can be solved only in that way.

As a school teacher for about 17 years, I saw much evidence of poverty and child poverty, not only in Wales where I have been for the past 13 years but here also in London itself. The evil consequences of child poverty for physical, educational and social development are manifest. It is a blot on the social conscience of the nation that poverty in any form, and particularly child poverty, can exist in 1967.

The Bill will go some way towards ameliorating the problems of poverty, but it will not solve them. However, on the principle that half a loaf is better than none, I shall support it tonight. I support the Bill for all the good that it does, while recognising that there are sins of omission which must be corrected, and corrected soon.

The continuance of the wage-stop as we know it is one outstanding deficiency. In her speech this afternoon, my right hon. Friend said that the principle behind the wage-stop was to prevent anyone being better off out of work than when in work. All this does is to emphasise the extremely low wage levels which persist in large areas of our country. It is a matter of shame for the whole population. My right hon. Friend said, further, that it was necessary to deal with the work-shy. If that was all there was to it, it might be reasonable, but it does not really deal with the work-shy. It is an academic argument to refer to the work-shy. There might be point in it if work were available, but in areas such as my constituency, where there is no work or very little opportunity for work, to talk of the wage-stop as dealing with the work-shy is academic.

We see the harsh effects of the wage-stop in areas of high unemployment. I do not say that they are harsh because those who administer the scheme are harsh. In my experience, I have found the staff of the Ministry of Social Security to be kind, warm-hearted people who do their level best within the regulations to see that those in need have assistance. These are human problems. They are not problems of statistics. It is people, not percentages, who are affected by the wage-stop. The figures are more than just a political embarrassment. They represent human beings in need and suffering hardship.

To illustrate what I mean, here is an example. I have already referred it to the Ministry. In June this year, I had brought to me the case of a constituent of mine, Mr. M—obviously, I do not use his name—a man with a wife and three children, a girl of 10 and two boys of 13 and 14. Because of the wage-stop, that family was existing on £8 18s. a week. I know that the figures have been improved, but the effect of the wage-stop in his case was almost £5 a week. I urge the Minister to do something about it. I was very pleased to hear her say that we could expect certain conclusions in this connection very soon, and I beg her to hasten the day.

Here is another sin of omission. About a fortnight ago, when I was coming here from the Rhondda, I saw a newspaper headline,

No hardship for unemployed', says Minister. It depends on one's point of view. For Ministers, perhaps, there may be no hardship in unemployment, but I can assure them that, if they were among the unemployed, they would appreciate that real hardship exists.

We are told in the Long Title that one of the objects of the Bill is to make related adjustments of certain benefits. In this connection, I draw attention to the regulation which lays down that, after drawing unemployment benefit for 312 days, a person loses entitlement to that benefit. Again, this might be reasonable in areas of low unemployment. In areas of high and long-lasting unemployment, on the other hand, that restriction has a severe impact.

On Monday this week, there was a massive demonstration in London of miners from coalfields throughout the country. I brought five or six miners from my constituency to meet my right hon. Friend and to talk about this problem. The restriction of unemployment benefit to 312 days is very serious in areas like mine, and theirs is the sort of human problem behind it.

One of those men, who shares the same name as mine, is 62 and has worked underground in a colliery for 47 years. He was declared redundant, which is only a nice way of saying that one is out of work and on the dole, about 12 months ago and has now exceeded his entitlement to unemployment benefit. It may be said that he can now claim from the Ministry of Social Security, but his wife happens to have a part-time job teaching in a youth club, which brings their combined income above the level of the supplementary benefit scheme. She enjoys doing the work, and is of some help to the youth service of our community. The family receives no financial benefit from the wife's working because after 47 years' work the husband is not entitled to any benefit in his own right, and for the first time in his life he is completely dependent on his wife's income.

The indignity this places on any man is something which I beg the Minister to examine. My right hon. Friend the Member for Llanelly (Mr. James Griffiths) has had much experience of these questions. He tells me that under Section 62 of the National Insurance Act, 1946, local tribunals were to be set up which could recommend the continuance of benefits at the standard rate in such cases. They would be paid as long as the men were available for work, and without any means test. In other words, there was put on the Ministry of Labour the responsibility for finding work and on the man the onus of accepting work if it was available. As long as he was out of work through no fault of his own he would be entitled to draw unemployment benefit as of right.

I hope that my right hon. Friend the Minister will look at the wage-stop and the question of the 312 days' entitlement to unemployment benefit, because in areas which have endured unemployment for a very long time at a very high level we are suffering unduly from those two matters.

6.43 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown), who is no longer in his place, suggested that nothing original had been said in the debate. I hope that I shall do something to remove that idea from his mind, because I believe that the best answer to the admittedly highly complicated problem of family allowances would be to abolish them altogether. I am strengthened in his belief by the obvious determination of the Minister not to apply any form of means test to family allowances, but to introduce flat rates right across the board for rich and poor alike, as my noble Friend the Member for Hertford (Lord Balniel) said. In this connection I am sure that other hon. Members have had the same experience as I have had. When addressing meetings in my constituency I always make a point of asking if there is any woman in the audience who will stand up and honestly say that she has always spent her family allowance for the benefit of her children. I have never yet had an application for that distinction.

The Minister gave eight arguments why a means test is undesirable. She gave them very quickly and I regret that I could not hear them all and certainly cannot remember them all. But they were conclusive to her and therefore we can clearly expect that as long as she is in her present position—and I congratulate her on her accession to it—we shall not have any selectivity in family allowances.

The best way to deal with the problem, therefore, is to abolish them altogether. I do not of course suggest this without having something to propose in their place. The purpose of all hon. Members, from the Minister downwards, is to take action that will ensure that poor families, especially those with large numbers of children. shall somehow be made better off than they are now. There is no dispute between the two sides of the House on that.

Several hon. Members have hinted at a process of "negative" Income Tax which is, I believe, in force in Denmark to an extent, and has been much mooted in this House and elsewhere. I draw the attention of the House to a cogently written article by Professor Dennis Lees, of University College, Swansea, in the Lloyds Bank Review for October. He not only sets out in detail the principles of negative Income Tax and gives very illuminating examples of how it might work, but also does something which I believe has never been done before—he makes an attempt to cost the system of negative income tax which he believes might well replace family allowances.

His main argument is as follows: At present, anyone with an income in excess of income tax allowances and exemptions pays tax at some specified rate. To this would be added a system whereby anyone with allowances and exemptions in excess of income would receive benefit payments at some specified rate. He goes, on to give examples, taking the proposed rate of negative Income Tax as 50 per cent. for the convenience of calculation. That is not far from the standard rate of Income Tax. A family with three children aged under 11 years, with an income of £400 a year, would draw allowances of £47 a year under the present system of family allowances. Under Professor Lees's scheme, with a 50 per cent. negative income tax, their Income Tax allowances would be £773, and there would then be an income deficiency of £373 and a benefit payment of £187 a year.

The benefit payments would diminish up to the "break-even point" at £881 a year, where the benefits paid to a family with three children under 11 would be the same as their taxes. Therefore, with an income up to £881, each family would have a bigger allowance than under the family allowance system. A family of two children with a basic income of £500 a year would receive £90 from the system, compared with £21 family allowances. The most striking example is that of a family with six children. If their basic income was £500 a year they would receive £625 with family allowances and £820 under negative Income Tax. But the same sized family with a basic income of £1,000 a year would receive exactly the same under my proposed system as under the family allowance system.

Those examples can be worked out by anybody with a pencil and paper. The most interesting thing Professor Lees has done is to cost the system. He discovered at the back of the Report of the Commissioners of Inland Revenue for the year ended 31st March, 1966, four tables—from 85 to 88—which show the relationship between income and family size. I think that this is the first time such tables have appeared in the Report, and they make fascinating reading. Professor Lees has extracted from them that the cost would be of a negative Income Tax system on the lines I have suggested, provided family allowances were eliminated. He finds that as against the present cost of family allowances of £160 million a year—I think that is the correct figure—the negative Income Tax would cost at the most £118 million and at the least £75 million. These extremes are given because certain assumptions have had to be made in order to do the calculations.

It would, therefore, seem, at first sight anyway, that by abolishing family allowances, by introducing a system of negative Income Tax, we would not only concentrate money where it is most needed but would also save the taxpayer large sums. There would be no means test. There would be nothing invidious about this. It would be done through the P.A.Y.E. system. Every working man would tell his employer how many children he had, and the benefits would be paid by the employer under the P.A.Y.E. system, calculated through the system of coding, in exactly the same way as Income Tax rates are calculated.

There would seem to me to be nothing in this which would go against any of the right hon. Lady's objections to the means test. I think that if she would be kind enough to look through these proposals she would find that not one of her principles is wronged by this suggestion. It is not invidious. It is at the initiative of the Government rather than the beneficiary, and I do not think it offends any one of her eight points. I would urge her to look at this to see if it would be a possibility, and if it would not, to tell the House why not.

6.51 p.m.

Mr. Peter Archer (Rowley Regis and Tipton)

When the hon. Gentleman the Member for Liverpool, Garston (Mr. Fortescue) began his speech I thought there would be much with which I would disagree but by the end I found very much with which to agree, and if I do not follow him I hope it will appear that it is not because it was not most persuasive or one with which I would wish to quarrel.

It may be said that he did not, as some hon. and right hon. Members opposite have done, indulge in party polemics. There has been a happy atmosphere in a great deal of this debate, showing a very wide measure of agreement, but I could not help reflecting that there must be wild joy in heaven if anyone is thumbing a celestial HANSARD, and comparing what hon. Members opposite have said tonight with what they said when their party was in Government. May I hasten to exempt from that stricture, among others, the hon. Member for Cornwall, North (Mr. Pardoe), who is not in his place now, because the pronouncements of his party when it was last in Government are really a little too outdated for fair comparison.

I cannot help reflecting that it does not lie in the mouths of hon, and right hon. Members opposite to complain of the inadequacy of these provisions at a time when the Government are spending £144 on the social services for every £100 spent in the last year of Conservative Government.

At the same time I must confess to a feeling of deep disappointment about this Bill, and I feel sure that the Government, too, must feel deeply disappointed that they were not in the circumstances able to produce a more adequate Measure. This is a Measure which will indeed bring out of the range of poverty 51 per cent. of the children whom it was intended to help, leaving a quarter of a million still there.

Of course, I take the point of my right hon. Friend that the criterion of poverty depends upon rates of supplementary benefit, so that whenever the Government increase those rates they make a statistical rod for their own back. I understand that, and I have sympathy with her in that she was confronted by quite a number of persuasive but contradictory arguments, like the very well presented argument by the hon. Gentleman the Member for Hertford (Lord Balniel), that it might have been better if the Government had redistributed the benefits to assist the larger families, and another persuasive argument by my hon. Friend the Member for Brentford and Chiswick (Mr. Barnes) that perhaps she should have redistributed the help to the first child and help the smaller families. No doubt she will quickly realise in her new office that this is a case where one cannot win.

I wonder if she will permit me tonight very briefly, and I hope simply, to present again two arguments which in her speech she rejected. I appreciate the difficulties with which she is confronted. If she intended to assist even the major proportion of the children whom this Measure is intended to help, it would have been an impossible burden through any kind of benefits across the board. To take even 90 per cent. of those children out of poverty my right hon. Friend would have required an increase of £1 a week, and if my arithmetic is correct that would have entailed a cost of something like £320 million a year. I accept that. [An HON. MEMBER: "Even more."] And even more, and I accept that, too.

So that, clearly, one must reject any solution to the problem which rests upon an across the board increase, although I would not personally accept that family allowances are at present anything like exorbitant to this country. I think it was the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) who, said earlier that in this country at the moment we are spending, I think, 0.5 per cent. of our national income on family allowances as against 3 per cent. in most Common Market countries.

The alternative propounded, certainly by the noble Lord, is not the only alternative. It is here I join issue with him. I do not question for a moment his good faith. I am quite sure that he. is as anxious as any of us to see a solution to this problem, but he could not have advanced that argument tonight if he had any conception of what a means test entails for those to whom it applies. My right hon. Friend produced a large number of arguments against the means test, and I would like only to reduce them to four.

First, those who have to apply think they label themselves poor and unsuccessful. Anyone who has spoken with someone who has applied for supplementary benefits or previously for National. Assistance will tell us that the experience of making that application for the first time was one of the most frightening experience of their lives.

The second reason is that it is the greatest of all possible disincentives. I still never cease to wonder that hon. Members opposite are terribly worried about disincentives when they apply to the higher income groups, but seem to be relatively untroubled about disincentives applied to the lower income groups.

The third reason—and this has been said several times in the debate already—is that the difficulty with a means test is that so often the benefits are never applied for at all. There may be a number of reasons for that. It may be a sense of shame, a sense of inadequacy. It may be they are badly advised, but the truth is that these people do not pick up a telephone and ring up their accountants, and they cannot talk about it to knowledgeable friends at a cocktail party.

At the beginning of any means test which is envisaged as a solution to the problem, we would begin it knowing that many of the families for whom the benefits are intended would simply not receive them. We know already from the report on the circumstances of families that only 70 per cent. of the families who are at the moment below the poverty level and whose breadwinners are in full-time employment are in receipt of school meals, and the figures for other benefits of a similar kind are of a very similar kind of percentage.

Finally, there is a very strong feeling, not entirely without justification, that a means test is not so much a method of redistributing benefits where needed as an excuse for reducing them.

I agree that if the Government were faced with a stark alternative of an increase across the board or a means test, then they have chosen the lesser of two evils, but I do not accept that these are the only alternatives, and I return to a proposal which my right hon. Friend rejected, the proposal, if I may borrow the word of my right hon. Friend the Lord President of the Council, when speaking at Scarborough, to apply a means test to the upper limits of income rather than the lower, and adjusting family reliefs from Income Tax.

I appreciate that there are very real difficulties about this proposal, and one, obviously, is that it is a way of transferring money from the pocket of the husband to the pocket of the wife. In a male world, it is sometimes difficult to make that appear persuasive.

But I have a feeling that the two objections advanced by my right hon. Friend were based on misconceptions. I do not think that she has quite understood the proposal.

Her first objection was that it was wrong that only families with children should subsidise the increases which are going to families in the lower income bracket. As I understand it, no one is proposing that anyone should subsidise anything. What is proposed is that the family relief should be so adjusted that people paying the standard rate of Income Tax should break even. They would not be worse off, and so would not be subsidising; it means that they would not be better off. So the increases granted would be directed where they were most needed, and those who do not need them would be neither better nor worse off. That does not solve the problem of how to pay for them, but it does ensure that the burden is not higher than necessary.

Her second objection was the curious one, which we have heard before, that it would be wrong to anticipate what my right hon. Friend the Chancellor will have to say about it in his Budget speech next April. I hope we shall not be told again that there is something inherently wrong in anticipating, at a time when it is needed, something which must be reserved for the prerogative of the Chancellor in his Budget speech. There is no excuse for dividing our social and financial policies into watertight compartments in this way. Even if the Chancellor were minded to make some kind of Income Tax adjustments in his Budget, in the eyes of the people to whom they applied they would bear no relationship to this Measure. It seems a pity that, for procedural reasons, we should be told that no one is in a position to take a clear decision about this, relating one Measure to another.

My second argument again goes fundamentally to the centre of the whole question, and it is about the wage stop.

Mrs. Hart

Before my hon. Friend leaves the first part of his speech, may I point out to him that, in what I said today in relation to what is commonly called the "give and take" scheme, I was not arguing against it, but saying that the scheme does not quite meet the problem. There are families without children, and the contribution which they might make would be considered as well. In other words, I was trying to assess both sides of the problem, without taking sides.

Mr. Archer

I am obliged to my right hon. Friend for that intervention. It means that she has not made up her mind and certainly is not precluding my suggestion from reconsideration in the future. The truth is that families without children would not be worse off than families with children under the "give and take" scheme.

I wish to make two brief points about the wage stop. I cannot resist making the comment that the views of right hon. and hon. Gentlemen opposite appear to have changed considerably since 29th June, 1964, when the hon. Member for Finchley (Mrs. Thatcher), answering on behalf of the Government, had this to say about the wage stop: The principle is absolutely defensible that a man should not receive more when he is out of work than he can get by returning to work."—[OFFICIAL REPORT, 29th June, 1964; Vol. 697, c. 924.] She repeated that, under pressure, on a number of occasions. Perhaps one should not complain that hon. Members opposite have come over to the side of the angels, but it might have been a little easier to debate tonight if they had arrived at that conclusion earlier.

I would not attempt to persuade the Minister that we should return to the Speenhamland fallacy of providing employers of' people in full-time employment with labour on a subsidised basis. I have always argued that the long-term answer is a national minimum wage, but I take the point made by the noble Lord the Member for Hertford, who said that, in the meantime, we require some kind of short-term alleviation. Clearly, it is not something to which we can look forward within the next few months. In the meantime, there is very real hardship among people who are not affected by the reasons which led to the wage stop.

The principle of the wage-stop is that a person capable of being in employment should not be better off when he is out of work than he would be when in work. That does not apply to people who are too sick to work, to the disabled and to people in prison. At the moment, the wage-stop is all too frequently applied to those categories.

I want to take the matter a stage further. There are a large number of people who, through no fault of their own, are not in employment because no employment is available. I represent a constituency which is regarded by the Board of Trade as being in an area of full employment. Unhappily, that does not coincide with the facts at the moment. Could the Minister consider looking, first, at the three categories of people I have mentioned to whom the wage stop ought not to apply, and, secondly, consider whether it might be possible, as a temporary measure during this winter, to ensure that it does not apply to those who are redundant? There are many people in my constituency who otherwise will have occasion to look back on Christmas, 1967, as one of their unhappier times.

I am addressing these arguments not to a Minister who has made up her mind already or to one who is unsympathetic. They are addressed to a Minister who, like her predecessors, has come to her office desperately concerned with the fate of those about whom we are talking and anxious to look with an open mind at any new ideas which may be put forward. It is for that reason that I beg her, in the name of compassion, to look again at these two arguments.

7.7 p.m.

Captain Walter Elliot (Carshalton)

The hon. Member for Rowley Regis and Tipton (Mr. Archer) said that hon. Members on this side of the House had complained about the inadequacy of the Bill's provisions. I do not think that my noble Friend the Member for Hertford (Lord Balniel) did that, and I do not, although we all want more, I suppose. We complain of the way in which the aid is directed, and the hon. Gentleman himself high-lighted that when he said that the Bill lifted above the poverty line only 51 per cent. of the children at present below it, leaving 49 per cent. below.

One of the most interesting points which emerge as time goes on and we debate Bills bringing benefit to our citizens is that more and more hon. Members opposite begin to take the view that aid should be directed to where it is needed. The hon. Member for Rugby (Mr. William Price) did, although he tried to disguise it to a certain extent. The hon. Member for Rowley Regis and Tipton did, but he could not quite bring himself to admit it. I should very much like to hear the views of the right hon. Member for Lanarkshire, North (Miss Herbison). One read that this was one of the reasons why she resigned, though whether it is true I do not know. In addition, it would be interesting to hear the views of the right hon. Member for Sowerby (Mr. Houghton).

The process is continuing on the opposite side, and it will continue. We know that our resources are limited. My noble Friend set out the arguments clearly in his speech, and I will not repeat them. 1 appreciate the difficulty about what is called the means test, but I do not see how poverty can be got rid of among a class of people unless it is identified.

The right hon. Lady gave seven points as to why she was against it. I cannot remember them exactly, but the general tenor of those points had a large emotional connotation, in my view. The words "means test" have an emotional connotation which in these modern days we should try to erase. Whether we do or not, the fact remains that this poses an acute dilemma for hon. Members opposite. As I say, more and more they are coming round to our view, but they cannot get over this emotional connotation, and that leads them to giving these benefits right across the board and not where they are needed.

The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) asked how we would pay for these benefits. I ask the right hon. Lady the same point. There must be some reason why we have not been told. We have always been told before. We know that some of the benefit will be lost by the increase in the charge for school meals. Will the means by which the money is to be raised further reduce this sum? It would be interesting to know.

I will come straight to my main point. I was interested when the right hon. Lady mentioned the studies of the T.U.C. on minimum wages and to what extent this could cure the problem. She did not press it very far, and I would be surprised if the Labour Party as a whole pressed it very far. On this side of the House there are some hon. Members who argue strongly against social benefits being included in wages and salaries of industry. I do not take that view, but I have the feeling that many hon. Members opposite do.

A minimum wage and relief of poverty are not the only factors. There are all kinds of fringe benefits taking care of social needs. I think that it might repay us to make a further close study of what goes on in negotiations in America on those matters. We here are often doing the job which both sides of industry—the trade unions and employers—should do. I will give one example of what I mean. We have recently passed legislation for redundancy payments. I think that was a benefit which should have been negotiated by industry itself without being put on to this House. That is something which can be extended over many fields. Industry so often spends its time arguing over the basic wages and salaries of its employees when it ought to be looking at these other things. It should take over a wide range of these problems. If it did we would gradually begin to get aid where it was needed.

For example, the coal industry is looking after many of these problems today, although I do not think it deals specifically with child allowances. This is the only industry which is doing it, as far as I know, but perhaps other smaller industries are also doing something along these lines.

As I said, I do not think that the Socialist Party or the right hon. Lady pressed this very far. At the 1964 election I argued for social payments to be borne more by industry and less by the State, but my Socialist opponent argued against it. Conservative policy is to encourage occupational pension schemes in industry, whereas the party opposite are inclined to discourage such things. I believe that we should go much further. The firms have far greater knowledge of the individuals who work for them, and when they negotiate wage settlements they should cover a far wider range of benefits than wages only.

If these sorts of things were negotiated at local level—when I say "local level" I mean at industrial level, but it may cover the whole country—I think that we would get rid of these vast bureaucratic machines and get rid of the need for the individual, very reluctantly, to state his financial position, his dependants, and everything else which is so distasteful to him. I am sure that with the passage of time industry would find a solution to this problem which on both sides of the House, we know that this Bill does not to the tune of a quarter of a million children. We will never solve this problem by means of Bills from the centre, because, when all is said and done, this poverty line is relative. As the general standard increases, so the standard below the poverty line increases, and always has done. It will always be with us. I believe the time will come when both sides of industry, in negotiating their wage settlements, will take into account the needs of the family of the man concerned. When that is done many of our problems will be solved.

7.19 p.m.

Dr. David Owen (Plymouth, Sutton)

I rise to make a short contribution to the debate, and I speak with somewhat mixed feelings. I remember the discussion on child poverty during an Adjournment debate before Christmas, 1966, and the long Parliamentary struggle that many of us on this side have had to try to get action in the field of family allowances. We have had sympathetic noises from all the Ministers, and I am sure that in their individual capacities they have meant them; but it has been a long struggle and we are ending up with a compromise which does not tackle the complete problem.

It may be that there is a danger in not recognising a victory, or partial victory, but I remember with some horror that we very nearly got a solution which I would have found impossible to support. It seemed at one stage that we very nearly got round to having a means tested family allowance. This would have been a retrograde step, for reasons which I have already argued and do not intend to repeat. We have obtained a substantial increase. It is not enough, and it does not include the first child, but it gives to the family allowance system more than its original purchasing power. For this we must be grateful.

Those who have taken up this subject know how unpopular it is in some quarters, and, let us face it, it is often unpopular with members who support our political party. We know that it is not tremendous political pressure, but compassion and concern which are the main driving forces for the Government taking action.

I agree with the hon. Member for Cornwall, North (Mr. Pardoe) that we have the right to apply double standards to this Government, and I do so. I will not take from any Front Bench spokesman on this side of the House as justification for not doing anything the fact that it was not done by hon. Gentleman opposite. That is not why I am in this House, and it is not why they are the Government. They were elected because people believed that they would take revolutionary steps in this matter. That is what we are committed to, and what I intend to go on pressing for. I therefore do not apologise for remaining dissatisfied with some aspects of this issue, although I accept that this is in many ways a substantial advance.

One remains extremely unhappy, of course, about the fact that 250,000 children are going to remain below the supplementary benefit level. This is a serious problem to us all, but perhaps one can take some consolation from the fact that the very presence of this continued poverty will make us look at the problem globally, because this is essential. We cannot look at it just in terms of a benefit, of an allowance. This has come from all the speeches today, and none more so than from that of my right hon. Friend.

It seems clear to us that we have to embrace all aspects of the problem—education, housing, and particularly urban renewal, health, adult education of parents, and feeding habits, to try to overcome the still severe problem of malnutrition which should have left us decades ago. I think that we all accept this, but what we now want from the Government—and realism tells me that we will not see another increase in family allowances for some years—is a development of this coherent strategy. I have often advocated a poverty programme, and I do not take "No" for an answer because of some of the difficulties with which the American one had had to contend.

I think it is vitally necessary to have a Minister in the Cabinet with Departmental responsibility to answer for all those factors, and I have long argued—and the fact that it is also argued by bon. Gentlemen opposite does not put me off arguing it—that there is a real need to integrate the Ministry of Health, the Ministry of Social Security, and the Children's Department of the Home Office. Until we get this degree of integration from the top, we cannot get it at the bottom as well.

The announcement which has given me more cause for gratitude than any other is the statement by my right hon. Friend the Minister of Health that he is going to look into the whole system of the Health Service and its administrative structure to try to arrange a system whereby the tripartite system is done away with. If we do this, we can look again at integrating health and welfare. It is also necessary to consider the benefits which are paid not just as social security but as part of the taxation system. These two cannot go on being divorced, and if we do this we will have some chance of getting at the root cause of so much of the poverty in this country.

Many hon. Members have stressed the importance of doing something about the wholly inadequate wage structure. Coming as I do from the City of Plymouth, this is something about which I feel deeply. We have there an industry which, in effect, is employed by the Government. Industrial Government workers are paid a wholly inadequate wage. Some of their take home pay is less than they would normally expect to get from the Ministry of Social Security. This is a major problem which the Government must face.

I know that the problem of introducing minimum wage legislation is very complex. Questions have been asked about it. It requires a take home pay of a satisfactory standard, but with it must go immense self-discipline from the unions if the minimum wage is not to be the signal for escalating wage claims, and as a basis for increasing the differential.

The trade union movement must accept this severe responsibility of restraining its members. I believe that it would do so willingly, because throughout the country there has been a remarkable degree of acceptance of the prices and incomes policy. The acceptance came from a belief that it would introduce some element of social justice into the wages system. It is this element which I think has so far to a great extent been lacking in the practical working of the prices and incomes policy, and I believe that in the life of this Parliament the Government must introduce a commitment to a minimum wage.

I say to my hon. Friends that we have to be realistic about this. It is no good expecting the Government to introduce a minimum wage of £15 a week. We know that this will cost £750 million a year, and to add that to unit costs when we are desperately striving to be competitive would be hopelessly unrealistic. We have to aim at pressing the Government to introduce a minimum wage of £12 10s., because this, with the other allowances, benefits, and family allowances, would mean that most people would be above the minimum thought necessary by the Ministry of Social Security.

I know that no one likes to talk about a minimum wage of £12 10s., but there are many people in this country who get less than that. Many people are on a wage of £10 or £11. Let us make the first hurdle a realistic one, and then have a commitment each year gradually to increase it to £15 a week which most of us would consider is the minimum for which we can settle.

The hon. and gallant Member for Carshalton (Captain W. Elliot) talked about putting the cost of a lot of this on to industry. This is very interesting, and I am glad to hear it, but we must remember that this would increase industrial costs, and it is difficult to do this at the moment. I have argued that I would like to take away some commitment from the Insurance Fund. I would like to see short-term sickness payments taken away from the Fund and made the responsibility of employers. I think that we can ensure adequate safeguards for the disabled. This would be necessary because they might be the first to suffer.

Short-term sickness payments will increasingly be borne by the employer as more and more people are given the status of salaried workers, who receive it automatically. We ought to extend this to all industrial workers, and none more so than Government industrial workers. This affects men in the Devonport dockyard, and has been recommended by the Prices and Incomes Board.

Captain W. Elliot

The hon. Gentleman is right in saying that if there was a so-called social element in the minimum wage unit costs would go up, but would he not agree that it would have to be recognised that the social benefit was included in the wage and people could not expect it from the State as well, and industry could perhaps make it up by a reduction in taxation?

Dr. Owen

I take that point. It involves a "give and take" system, and it is an interesting thought that hon. Gentlemen opposite are prepared to see industry accepting some of the burdens. I would not dissent from that, although one has to be careful about the areas which are taken over. I have an open mind on this issue. In the sphere which I mentioned I would be prepared to see it happen now.

We realise that the country is facing a severe economic crisis—I sometimes wonder whether some of my hon. Friends realise just how severe it is—and it is therefore hard to argue for any more money, for I would argue very strongly against any measures for general reflation at the moment because this would bring a balance of payments crisis crashing down on us. There are, however, a few measures for which humanity cries out now.

The first of these is that we can no longer defend a system under which people who are sick and disabled are affected by the wage-stop. The Minister should instruct her officers to lift the wage-stop where there is doubt about whether someone is affected by it because he is sick or disabled. Secondly, we must extend the constant attendance allowance to the civilian disabled. These two measures would not cost a lot of money, but they are badly needed before winter sets in.

A more general point which lies at the root of any problem affecting poverty is the difference between the two sides of the House in their attitude to public expenditure.

Hon. Members opposite cannot get away from this problem. As long as they go on talking about public expenditure as being dishonest and in some way disgraceful, and the first thing to be cut in time of economic difficulties, so we shall continue to have a lack of social investment. Just as industrial investment is vital to this country so is social investment. There is nothing wasteful about this. Every time we cut back a new hospital programme or the programme of education—particularly in deprived areas—we hold back the advance of the people's standards of living and of our economy. Social investment has an economic return. But hon. Members opposite always come up with their great belief that public expenditure must be cut back.

Lord Balniel

The hon. Member has made one of the most interesting speeches in the debate and I apologise for interrupting him, but I would point out that during the time of office of Tory Governments the expenditure on social services increased from £2,000 million to £4,500 million, which is an increase of over 50 per cent. in real terms. The hon. Member's accusation that we always cut back on social expenditure is a misapprehension of the position.

Dr. Owen

I am grateful to the noble Lord for that intervention. I was not saying that the party opposite cuts back in a period of boom and growth. Some of their programmes in the period 1963–64 largely precipitated the balance of payments crisis. But when they have a period of deflation, as they had on three separate occasions, they cut back on vital social programmes, including such things as hospitals and schools. The record is there to be seen.

This Government, to a great extent, have not done this, and that is a great tribute to them. But I now detect a danger that the public expenditure programme is likely to be cut back. Let us get some sanity into the argument about public expenditure. It increases every year, but so does personal consumption. I would not argue that we can increase public expenditure and cut back personal consumption so that it does not increase. That would be electoral disaster, apart from anything else, and no one would advocate that.

But there is a real argument between the relative growth rates in public expenditure and personal consumption. I argue that if a Socialist Government face a situation where it is necessary to deflate the economy they must preserve public expenditure at the expense of private consumption. The balance must be shifted in favour of public expenditure. For a relatively small cut in personal consumption we get a large increase in public expenditure. It is necessary to keep up our rate of investment in social expenditure, and if it means cutting back slightly on personal consumption that cannot be helped.

There is a great educational point here for Labour supporters. We must convince people that the quality of life and even their standard of life is improved by social investment. It is all very well for a person to say, "Hospital treatment, benefits, and redundancy payments do not affect me". They may affect him. He may suddenly become ill, and then he will want the best hospital. He may want a kidney dialysis unit. One of his children may be ill, and then he will want it to have the best treatment. Persons who have just got married and have no children might not care about family allowances, but they may have children later. There may be some resentment among older people, but many of them are grateful for the way in which we look after children, and do not resent the fact that families, and sometimes their own children, do not have as difficult a time in bringing up their children as was formerly the case.

This is the central argument, and until the party opposite tackles the question of its underlying attitude to public expenditure and social expenditure, and can be honest on this issue, I will not take seriously any of its plans for the alleviation of poverty. The facts are that during a period of immense affluence in the postwar years the gap between the rich and the poor widened. In 1959 the indictment on the party opposite was expressed by Professor Titmuss in "The Irresponsible Society".

We must make sure that when the record of this Government is read we shall be able to say that they redressed the balance, kept faith with the people, increased social expenditure and tried to alleviate the hardships of the poor. Many steps have been taken, and the idea of geographical discrimination as envisaged in the Plowden Report must be expanded.

I now turn to the controversial point of private rents. I realise that this question affects only a small proportion of the people who are in poverty, but it is a major element in tipping some families into severe poverty. It is no good saying that they must have council houses. Many of them live in areas where they have to wait for five, six or seven years for a council house. The Labour Government introduced the new Rent Act. We have accepted the fact that private landlords will be with us for another decade, or perhaps two decades, so we must make the Rent Act work. We must accept the fact that the private landlord provides the roofs over the heads of some people who are extremely poor and who cannot get any other accommodation.

As we have introduced the rate rebate scheme and as rent rebates are introduced in more and more of our council houses, so in my opinion we must introduce a rent rebate scheme for private tenants. I know that such a proposal would be extremely difficult to implement, and I know all the arguments against it, but rent is a major element in the poverty of some people, especially in some of our city areas, and it must be tackled. It is no good saying that we should build more council houses; this Government have done more than any other in that respect. We shall have the problem of high private rents for the next 10 years.

We should bring in a scheme whereby a private rent should be paid only when it has been assessed as fair by a tribunal. We must use the existing machinery. We cannot subsidise private tenants, and we do not wish to bolster them. A rent rebate would be contingent on the rent having been assessed by a rent tribunal. I should like to see us developing imaginative policies in this way.

I welcome the Bill. It will mean that many families will find this winter a much easier one than would otherwise have been the case, and when the full amount of the increase comes in the spring it will represent a significant advance in our attempt to alleviate the burden on poor people.

7.38 p.m.

Mr. Marcus Worsley (Chelsea)

This has been a stimulating debate. It started with one of the fastest speeches I have ever heard from a Minister of the Crown. The right hon. Lady addressed us in a very interesting and well thought-out speech. She has a computer-speed mind. I hope that she will forgive me if I ask her, on other occasions, to move at slightly nearer my speed of thinking when she is putting forward her arguments.

We had a remarkable maiden speech by my noble Friend the Member for Hertford (Lord Balniel). It may interest the hon. Member for Plymouth, Sutton (Dr. David Owen) to know that my noble Friend was formerly a joint author of a publication called "The Responsible Society".

I wish that we had had two further speeches. I wish that we had heard from the right hon. Member for Lanarkshire, North (Miss Herbison) and the right hon. Member for Sowerby (Mr. Houghton). Those two have played an important part in Government thinking on this question for some time, and we sincerely hope that they will join in our debates on these matters in the future.

It will not have escaped the attention of the right hon. Lady that practically none of the speeches gave her Bill an unqualified welcome. This was certainly true of speeches from her side and, perhaps not so surprisingly, from ours. It is perhaps anomalous that it will receive an unopposed Second Reading.

There was one major difference in the right hon. Lady's presentation from that to which we have been used from her predecessor, for she always used to preface her introduction of new Measures with a reference to the general review of the social services. She used to give us to understand that a higher wisdom was operating in the Government and that all that was produced was part of a master plan. From time to time we were told that the veil would be lifted and a little more revealed. The present Minister has dropped this pretence and has admitted, by her failure even to refer to this great review, that it has run its course.

Of course, this was not the great, comprehensive review which we had been led to expect anyway. Instead, we have had a series of Ministers of ascending seniority in the Cabinet and increasing involvement in other matters. These gentlemen—I am delighted to see the right hon. Member for Sowerby in his place—appear to have had no staff to help them in this review and no authority. I have a shrewd suspicion that the right hon. Lady, like her predecessor, is too formidable a person to be moved around like a pawn in such a review.

We believe that the time is over-ripe for such a review. Social conditions have changed conspicuously since our present social structure was created—devised during the war and executed thereafter—and our social problems have changed immensely as the result of the increasing affluence which resulted from Conservative rule and the priority given by Conservative Government to social welfare—

Mr. Sydney Silverman (Nelson and Colne)

indicated dissent—

Mr. Worsley

It is no good the hon. Member looking disapproving, because these are the facts. Hon. Members opposite have executed a war dance which has become familiar. The hon. Member for Rowley Regis and Tipton (Mr. Archer) welcomed the fact that a previous speech had had no party political content. This was a danger sign, for he went on to say that we did nothing in thirteen years.

My hon. Friend the Member for Hertford has already given the gross figure in response to the hon. Member for Sutton, but do the party opposite realise that the National Assistance levels, the very marker of poverty to which the right hon. Lady referred, rose in real terms during these years by 50 per cent., at a time when taxation rates were reduced from 9s. 6d. to 7s. 9d. in the £? This was a remarkable achievement—a massive increase in social benefits and a real reduction in taxation, with, therefore, an increase in affluence and, correspondingly, in wealth.

The hon. Member for Rowley Regis and Tipton, without attribution but certainly not off the record, quoted from the Prime Minister, maintaining that for every £100 spent in 1963–64 the present Government were spending £145. But if he had studied the last four years of Conservative Government he would have found a similar rise in expenditure.

He might perhaps have noticed The Times' remarks on this: The growth in social investment has not, in spite of the figures that poured out of Mr. Wilson's speech, exceeded the rate established under the Conservatives. So can we not conduct our debates on those matters in future without talk of what was not achieved under the Conservative Government? Of course we did not succeed in doing everything. There is much more to be done—that is what we are all here for—but for heaven's sake let us give credit where credit is due.

The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) remarked on the complexity of our present arrangements, and I agree with him. On grounds of complexity alone, there is a need for this general review, but it should not be carried out in a hole-and-corner way, in some cubbyhole off the corridors of power, as it is at the moment. At present, there is a mass of new thought on the social services, a great deal of which has been reflected in the debate. There is a tremendous growth of voluntary societies, indicating particular areas of particular need.

Not least of these—I am glad that it was referred to—is the Child Poverty Action Group. It is a fair assumption that the debate would not have taken this course were it not for that body's work. Of course, there are others. My hon. Friend the Member for Newbury (Mr. Astor) spoke about the disabled, and his work with the Disablement Income Group is well known. There has been an enormous increase in academic work in recent years over the social ser- vices, and in the number of academic posts studying this matter. We have heard quotations from quite a few during the debate.

These people—voluntary bodies, academics and others—should have a chance to be heard in the general review. What is the point of reviewing the social services in a quiet way, hiding one's light under a bushel? Why do the Government not set up a Royal Commission, or a Select Committee? I like the latter idea, which is something that we could use rather more and before which everyone could bring his ideas to the Government and have them discussed so that we may go forward from there—

The First Secretary of State (Mr. Michael Stewart)

It seems to have escaped the hon. Gentleman's notice that, when speaking in the debate on the Queen's Speech, I mentioned that I am having a conference for this very purpose. In view of his interest in these matters, I am a little surprised that he did not notice that.

Mr. Worsley

I am grateful for the right hon. Gentleman's intervention. The next line of my notes says, "Conference on December 2nd no substitute for that." With all respect to the right hon. Gentleman, there is a world of difference between a systematic review by a responsible body, with the evidence and conclusions published, and what will apparently be a one-day conference—one knows how effective one-day conferences are—after three years of Labour rule. This is not a substitute, but at least the right hon. Gentleman is moving timidly in the right direction.

The impression given by the debate and by the course of affairs during this extraordinary hole in the corner review—an impression which the Government have convincingly given to the people and to academics interested in the matter—is that they are not really interested in new ideas in this respect. They are content, as has been shown by their provisions for retirement and disability, to jog along in the same old way, and that is not good enough—

Mr. Loughlin

Will the hon. Gentleman tell the House what Select Committee his Government or any Government of those thirteen years set up to discuss these problems?

Mr. Worsley

We are back on the same old rigmarole—

Mr. Loughlin

Ah.

Mr. Worsley

We are talking about 1967. I fully agree that after thirteen years of improvement under Conservative Government there was a need for such an inquiry, and I do not believe that I was alone among Conservative Members in pressing for it, but, instead of an inquiry of this sort, as we would have set up, all we have been given is this hole-in-the-corner business, and then the grand finale of the right hon. Gentleman's conference—

Mr. M. Stewart

It is not a finale.

Mr. Worsley

Well, I am glad about that.

I agree, too, with the reference of the hon. Member for Sutton to the necessity for a single, dynamic Ministry planning all our social affairs. This has been Conservative policy—I am sorry that this pains the hon. Member, but he must get used to it: we are sometimes right in these matters—for a long time. Surely it would be a better system if the right hon. Gentleman or the right hon. Lady—I draw no invidious distinctions: one of them at least—were in charge in the Cabinet of our whole social policy and nothing else. Surely this is absolutely essential for a coherent social policy, as things have changed. All this year we had heard through the usual leaks and briefings that the Government intended to do something about family poverty. As the months went by it became clearer and clearer that the Government did not know what they wanted to do. All the reports seemed to indicate that whatever happened would be new and original. I remember reading in The Times of 25th April an article by the right hon. Member for Sowerby in which he said: Of the several possible ways of meeting the needs of the poorer families, an all-round increase in family allowances for everybody has been rightly ruled out. That would be both expensive and unpopular. I do not know whether the right hon. Gentleman has changed his mind since then.

Mr. Douglas Houghton (Sowerby)

I have not changed my mind at all. Had I not been absent from the debate for so long that it would have been almost an impertinence to speak in it, I should have explained my disappointment that we have before the House at the present time only, from my point of view, half the plan. I was in favour, and the whole House knows it, of a scheme of interlocking fiscal allowances and social benefits. We have one half of that now. But in her opening speech my right hon. Friend said that it would be a matter for the Chancellor of the Exchequer to consider the other side of the matter in the context of Income Tax allowances generally at the time of his Budget speech. I have not changed my mind.

Mr. Worsley

If I have done nothing else, I have at least stimulated the right hon. Gentleman to contribute to the debate—and to contribute, I think, very usefully. I shall refer further to the ideas which he has expressed before I conclude.

I have quoted from the right hon. Gentleman's article, and I remind the House that when nothing had happened, long after that article had been written, and long after the reports had been coming out from Whitehall, my right hon. Friends in June put down a Motion of censure in this matter. We felt it to be intolerable that the Government were still taking so long to make up their minds. In that debate we had a lot of abuse—we expected that—but the children in the poorer families received nothing. It was not until the House was about to rise for the three-month Recess that the then Minister without Portfolio came to the House to prescribe a dose of the medicine as before—and then was promptly sent off to reorganise secondary education.

I want first to ask the Parliamentary Secretary to clarify the exact cost of these proposals. I am aware that the Minister quoted a figure of £124 million. I should like the Parliamentary Secretary to clarify the relationship between that figure and the figure of £83 million given by the right hon. Gentleman when he spoke in the House on 24th July. The right hon. Gentleman spoke of this figure of £83 million as being net of tax and other adjustments. Precisely what are these other adjustments? I may be wrong, but I cannot believe that this enormous difference of £41 million is simply the tax payable on family allowances. What are the other adjustments? We should know how much of that £41 million is tax.

Whatever the figure is—and I hope that he will be able to clarify it now or later—this is a very large difference.

Every child in every family is helped, wholly irrespective of need. I suppose that, like my noble Friend, I should declare an interest as the father of four children. Yet in spite of this enormous expenditure, about half of the half-million children now below supplementary benefit scale will still be below that scale after next April. The hon. Member for Rhondda, West (Mr. Alec Jones) quoted a case of a constituent in respect of whom the changes in the Bill had made a relatively small improvement. I would ask the Parliamentary Secretary, to what level would it have been necessary to raise family allowances to bring all these children to the supplementary benefit level? What would have been the figure required, and what would have been the total cost?

The crux of the debate is reflected in those figures. If we could—I know that it is a big "if"—find some acceptable means to help only those who need help, in this case the half-million children, we could help them all to the full extent needed at a fraction of the cost proposed by the Bill—and yet the Bill meets the needs of only half of them. For instance, £1 a week for each of those children, including first children, would cost £25 million, which is the cost of the proposed changes in respect of school milk and school meals.

I am not suggesting that we on these benches claim to have solved all these problems. We make no such claim. Nor is it wholly reasonable for a Government to expect an Opposition to do all their work for them. What my hon. and right hon. Friends have done in the debate, as well as hon. Members opposite, is to put forward ideas. We should like to be sure that the Government will take these ideas seriously, and that the Government will not be be-devilled by the phrases of the 1930s. In a very courageous speech, the hon. Member for Rugby (Mr. William Price) attacked the suggestion that because in the 1930s a particular means test caused a great deal of ill-feeling, then in the late 1960s and moving into the 1970s we can never have any form of selec- tivity—and how right he was. It seems to me that so much of the debate has been basically an exercise in semantics. We are arguing about means tests and selectivity when what we must do is to get down to describing what we are talking about and stop using catch phrases. I agree with the right hon. Lady's comment about a need for definition. We must stop using catch phrases—means test, selectivity, or anything else. Let us say what we mean.

Many suggestions have been put forward which could produce the germ of an agreed policy of selectivity, means test or whatever phrase we use. Perhaps I may again quote the right hon. Member for Sowerby, if I still need to do so after his intervention. He put this point so clearly in his article that I need not apologise for quoting it. He wrote: The big question here is whether the 'fiscal benefits' of the income tax system shall be interlocked with the social security benefits to provide a means test with no more indignity than the filling up of a tax return. That theme has run through the debate continually. The hon. Member for Brentford and Chiswick (Mr. Barnes) mentioned it, as did my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue), and the hon. Member for Rowley Regis and Tipton, to his surprise, found himself in agreement. If the right hon. Member for Sowerby had spoken the subject would have been mentioned once more. The theme has run through the debate. There is an underlying wish which the right hon. Lady has not expressed—but to which I hope she will become more sympathetic when she has been longer in the Ministry—to find a system on these lines or one like the Danish system, which my noble Friend mentioned, which will give the benefit of a diversion of resources where need exists and not generally.

My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) mentioned another proposition which I should like to support. She suggested that it would be an excellent thing if some form of option scheme were provided giving a choice between the child tax allowance and the family allowance. This was carefully argued in New Society in January. I do not wish to analyse the whole of the article. Nor do I agree with everything it said. But if the sort of scheme that the right hon. Member for Sowerby and others have advocated is not something that can be achieved, there might be a case at least in an atmosphere of lowering direct taxation—and I hope that even this Government are bound to get round to that—for some sort of option as between the child tax allowance and the family allowance. The article by Mr. A. C. Aydon, was very well argued and is worth serious consideration.

Then there is a great deal to be said for some mitigation of the extreme harshness of the rule about there being no supplementary benefit to people in work and, secondly, the wage stop. Here I would like to put the idea that there could be some somt sort of gearing in this matter rather similar to the gearing which already exists in the earnings rule for retirement pensioners. Would it not be possible, if not to bring wages up to the full figure, at least to go half way with a 6d. in the 1s. formula?

Finally, would it not be possible to consider some form of cash voucher for families entitled to free school meals instead of the present system, which causes great difficulty? If every child, whatever the source of the money, came along on Monday morning with 5s. in his pocket, this might help the problem. I ask the right hon. Lady to consider this point seriously. It was mentioned by the hon. Member for Cornwall, North (Mr. Pardoe) and by the hon. Member for Brentford and Chiswick.

Unless we can find between us in this House some means whereby we can concentrate help and not spread it right across the board, two things will follow as night follows day. First, as in this case, the worst cases will never get as much help as they need, for that will always be too expensive. The hon. Member for Brentford and Chiswick spoke of the rising standard by which we judge poverty in this country. I hope that we shall go on raising our standard of what we regard as intolerable for people to fall below. If we do not find some means of channelling help where it is needed, the aspirations of society will always chase its means and never catch them up.

Secondly, and equally important, we shall commit ourselves to a level of taxa- tion on the vigorous and active which will destroy incentive and put an effective brake on the creation of wealth, and therefore, in the long run, the needy will be worse off. This is not just a chimera. It follows from the age structure of our society. In The Times on 31st May, Mr. Peter Jay made the point clearly that, between 1966 and 1980, the population of Great Britain is officially forecast to increase by 6,100,000 whereas the working population is only expected to increase by 800,000.

These figures should give anyone who says that all social benefits must be universal cause to think. Are we really going to be able to have an adequate social security system and yet have an incentive society if we do not channel the means to where the need is? My answer is clear. I do not pretend I know precisely how we are to do it but I do know that we have to do it.

Finally, I hope that the hon. Gentleman will say something more about the costing of these things and will not, like his right hon. Friend, be content with mumblings about the Budget. I do not want to know now what the Chancellor is going to say about the rate of Income Tax or to pry into Budget secrets. It would be useless for me to do so. But is this Measure to be financed out of general taxation? In other words, will it be like all the other new charges on the Exchequer or will it be financed, as the Secretary of State for Education and Science hinted in July, out of selective tax charges against the family man? This much we are entitled to know.

The right hon. Lady gave a rather different gloss on this. It should be possible for the Government to say now that they have finally dropped, as I hope they have, the idea of selecting the family man among taxpayers to bear the whole of the burden. There has been a fashionable view—and the hon. Member for Plymouth, Sutton (Dr. David Owen), with much of whose speech I agreed, seemed under the illusion that there is really no difference between a child allowance under the taxation system and the payment of a family allowance. There is nothing in common between the two. The tax allowance is not a social benefit; it is an allowance to an individual to keep more of his own money. It is an assessment of his ability to pay.

Dr. Owen

It seems a paradox to argue, on the one hand, that the taxation and social benefits systems should be linked, as has been constantly advocated from the benches opposite, through P.A.Y.E. or some taxes in reverse, and trying to draw this incredible distinction on the other. The scheme I suggested would have an option system of family allowances. It does not add up.

Mr. Worsley

I do not agree. If the child allowance were to be abolished in the next Budget, it would simply mean that the whole cost of an additional payment of family allowances would fall upon the family man and no one else, that the person whose children were grown up or the bachelor would escape. Why should the Government propose such an enormous advantage to bachelors in this respect? But that is what it would mean.

Mr. Archer

Does the hon. Gentleman appreciate that the idea is that the child tax allowance should be reduced only to the extent which enables the family man paying the standard rate to break even? It is not suggested that he should be worse off.

Mr. Worsley

Perhaps the hon. Gentleman has more information. It is difficult to find out what the Government intend. Perhaps we may hear more about it tonight. I want to make clear that any increase in direct taxation, and particularly a selective increase against the family man, will be bitterly opposed by us. I can imagine nothing that would encourage the brain drain more. If the Government are seriously worried about that, this is something they will not do.

We shall not divide against the Bill because, despite the hamfistedness, this provision helps the family. The hon. Member for Rhondda, West (Mr. Alec Jones) called it half a loaf—I do not think he went so far as to call it half baked. We believe that the job could be better done. We urge the Government to take their responsibilities in this respect more seriously, to look more carefully at the possibilities, and to present a real reform of the social services before too long.

8.10 p.m.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin)

The hon. Member for Chelsea (Mr. Worsley) began by referring to my right. hon. Friend the Member for Lanarkshire, North (Miss Herbison), the previous Minister, and to the way in which she prefaced each of her speeches on family poverty and the social services with a description of what the Labour Government had done since 1964.

He said that we on this side kept referring to what the Tory Government had not done in 13 years, and finished on that part of his speech by saying "Don't, for heaven's sake, let us talk about what the Tories failed to do in 13 years." He then proceeded to talk about what Labour had not done in three years. He may have done it very well, but he cannot have it both ways. If he does not want us to speak about the tragic failures of the Tory period of office, he cannot very well accuse us of having failed to achieve all those things that ought to have been achieved when we have so far had rather less than a quarter of the time in which to do it.

The hon. Member for Hertford (Lord Balniel) made a very long speech of which perhaps the most significant feature was a demonstration once or twice of his lack of understanding of the whole scheme of social security benefits and, at the same time, a display of a peculiar indecision. He never once said precisely what Tory Party thinking was on any single aspect of social security. I do not expect an Opposition to outline in detail any plans they may have for solving any of the problems with which a Government are faced. When I sat on the opposite side of the Chamber I often said, "You are the Government." I do not expect the Opposition to give us detailed proposals for the solution of any of our problems, but at least they could tell us roughly what they would do to deal with the situation the Government face. This is the responsibility of an Opposition.

The hon. Gentleman coined a new phrase to cover selectivity, but it was so long that I did not take it down. My right hon. Friend had already referred to the various descriptions given to schemes which are, in fact, means tests. The hon. Gentleman tried to say that he would concentrate the greatest amount of help where the greatest need existed. That was the new phrase to describe his means test. He should be perfectly honest and say that what he wants for the solution of poverty is the application of a means test of a direct kind.

Lord Balniel

I am grateful to the Parliamentary Secretary for giving way. He interrupted my speech and queried my figures. I am glad to be able to tell him that I have now checked my figures. It is my figures that are right and his that are wrong.

He asked me about selectivity. It is quite true that I referred to a concentration of help on those in the greatest of need. I ask him whether he agrees that the following is the right selection of priorities. The total result under the Bill is that a widow with two children will receive an increase of 3s. a week. A married couple earning £150 a week, with two children, will receive an increase, with tax adjusted, of 3s. 9d. a week. Is this the correct selection of priorities?

Mr. Loughlin

The hon. Member has exploited the situation for his own ends. He indicated his wish to intervene, presumably to answer the point I was making. He then proceeded further to demonstrate his ignorance of the Bill, as I will show quite clearly in a minute or two.

He made two specific points, one of which related to the Government's financing of the increases. He said that it was the first time in history that a Government had made social security proposals to the House without saying specifically how they were to be financed. I have checked on previous increases of family allowances, and find that there is a good reason for this procedure, and one that I should have thought would have been obvious to the hon. Gentleman.

In practice, we are providing for benefits to begin in the next tax year, whereas on previous occasions the benefits have been allowed for in the preceding Budget. If it were a constitutional axiom that no Government could incur any expenditure unless they first came to the House, a lot of expenditure could never possibly be incurred. For instance, if we wanted to increase aid to foreign countries, we could not make any payments until we had first explained to the House where the money was to come from. Quite frankly, the real reason why there has not been a clear explanation of where the money is to be found—although it is paid from the general Exchequer fund—is the time factor more than anything else.

The hon. Member for Chelsea said that no hon. Member had given wholehearted support of the Bill and that it had received only qualified support. Of course, everyone gives qualified support. During the time that I have been a Member of the House, I do not remember any Measure which has been put forward and which was in some degree controversial, even in the methods by which it was to be put into effect, which did not receive qualified support. The danger is that because the Measure is critised—I do not object to criticism, because that is the only way to arrive at the desired end—there is a chance of obscuring the nature of the Bill.

It might be as well if I reiterate some of its features before I answer the points which have been made. The proposed 7s. increase represents the Government's judgment of how much of our scarce resources can justifiably be devoted to family allowances at this point of time. The House will agree that priorities have to be carefully judged and expenditure made where the Government feel that a call for it must be satisfied.

Various points can be made concerning the increases. First, they are substantial. A family with four children will get an extra 21s. a week and a family with six children an extra 35s. a week. By any standards, those are substantial supplements for those families.

I want briefly to make a comparison with the present value of the previous family allowance rates when they were introduced. The 5s. rate introduced in 1946 is today worth 10s. 7d. The 8s. rate introduced in September, 1952, is worth 12s. 7d. The 10s. rate introduced for third and subsequent children is today worth 13s. 7d.

Therefore, in viewing the increases which we are giving, it will be seen that the Government are not merely restoring those values, but are giving a substantial increase in real terms. The rate will be 15s. for the second child and 17s. for the third child. Family allowances will thus have a higher real value than ever before. An addition of 4s. 7d. would be sufficient to restore the value of the 8s. allowance introduced in 1952. Instead. we are giving 7s.

Thirdly, there is the question of the number of families below the supplementary benefit level. The family circumstances inquiry showed that in June and July, 1966, 160,000 families with 500,000 children had resources below their requirements as measured by supplementary benefit standards. It is, however, unreal to assume that those figures still apply. The survey was carried out in the summer of 1966 and the results were measured against the supplementary benefit rates which did not apply until November, 1966. Since January this year, there have been pay awards for the lower paid which will tend to reduce the figures considerably.

Most of us, particularly those who before coming to the House of Commons were trade union officials and had the task of negotiating on behalf of a large section of lower-paid workers, realise the real effect that the Government's prices and incomes policy has had on lower-paid wage earners. Under the wages council for distributive workers there have been wage increases for no fewer than 1,300,000 workers, while another 270,000 distributive workers outside the scope of wages councils have also benefited, in addition to 400,000 agricultural workers. Throughout the whole range of lower-paid workers, the supplementary benefit figures have consequently changed.

The Government's proposals for rate rebates, welfare milk and school meals will also be of particular help to poorer families. Any allegation that the Government are deliberately leaving a quarter of a million children in poverty must be firmly rejected.

One hon. Member advocated the abolition of family allowances. He did not, however, mean that there should be no such allowances. He simply wanted a different type of allowance. One of the things which should be made clear is that supplementary benefits, dependency benefits and family allowances are in many respects, and always have been, complementary benefits. When there are increases in family allowances, it is almost inevitable that there will be offsets in the complementary benefits.

The noble Lord the Member for Hertford said that I had interrupted him and that I was wrong in my figures. He will, I think, accept that when I interrupted him in the first instance, I did so in the kindest possible way. I did not quite make myself clear and I had to intervene again to explain what I meant.

The noble Lord argued that in the dependency benefit sector—sickness, unemployment and other dependency benefits—a two-child family would receive 3s. What the noble Lord overlooked was that we are increasing the first-child dependency allowance from 25s. to 28s., which represents a 3s. increase, and that there is then a 4s. offset for the second child, making a 3s. increase on that child. In practice, therefore, the two-child family will get 6s. and not 3s. as the noble Lord suggests.

Mr. Fortescue

Is there anything objectionable or impracticable in the system of negative Income Tax which I proposed, at far less cost to the nation than the present system?

Mr. Loughlin

The chief objection is that we estimate that it would be nine years before we could put it into effect, because of the administrative technicalities. This is a substantial objection.

The question of the offsets is strictly a Committee point. I assure the noble Lord that I am correct in stating that it is 6s. and not 3s. for a two-child family.

The increases we are giving in family allowances are part of the package deal. I have referred to the weekly increases. There will be additional benefits for larger families, because it is the Government's intention to ensure that fourth and subsequent children will get free school meals, a benefit worth 3s. 8d. a week spread over the whole year, although I would not suggest that every family of four will get the straight 3s. 8d., because there will be offsets in that some of the other children will pay increases. When it is worked out, there is an additional benefit in the package deal for fourth and subsequent children.

I come to the vexed question of selectivity. In the last debate on family poverty the hon. Lady the Member for Melton (Miss Pike) spoke from the Opposition Front Bench. I echo my right hon. Friend's expression of regret that the hon. Lady no longer speaks in these matters from that position, although this does not in any way detract from the welcome I have extended to the noble Lord. In that debate the hon. Lady referred to Professor Titmuss. Others—she could have referred also to the noble Lord, had the speech he made today been made prior to that debate—have tried to confuse the whole issue of means tests. The hon. Lady said that she was a North Country woman and called a spade a shovel.

I wish members of the Opposition would accept that advice, because the country has a right to know precisely how far the Tory Party is prepared to extend means testing of a direct kind. If the Tory Party suggests extending means testing to social security monetary payments, as the noble Lord rightly pointed out it is equally important to consider social services which are in kind. The means test cannot possibly be applied to social security monetary payments unless it is accepted, equally, that means testing will be applied to services supplied by the State.

The whole concept of means testing as now advanced by the Opposition is based upon the principle that in the affluent society the individual ought to make greater provision for his and his dependants' needs. I am surprised that the Tories have bothered to produce various odd terms to cover their intentions, because I well remember the publication which came from the Conservative Political Centre in February, 1961, which was a classic examination of the whole question of means testing, particularly the article by Godfrey Hodgson.

This is the dangerous situation in which hon. Members opposite will find themselves if they adhere to their present argument based upon the individual provision in a period of affluence. This is the logical conclusion that one reaches. Now that the hon. Gentleman is speaking under this umbrella term of means testing, it would be interesting if he could tell us whether in his examination of this problem he has reached the point to which Godfrey Hodgson was driven in logic, namely that there should be means testing and there should be an individual contribution for children in primary schools whereby parents would pay £5 a term in senior schools and £3 a term in primary schools. It would be interesting if hon. Members opposite would let the people know precisely what they intend to do. I know that the Tory Party want to apply means testing to the Health Service, to housing and social security. There is only one other social service left—education—and we ought to know whether they are prepared to extend means testing to that service.

Captain W. Elliot

Without going into these abstruse problems, could the hon. Gentleman answer me this question? Members of the Government recently had a fairly large salary increase. Does he feel that this child allowance which is proposed in the Bill should go equally to them as to the lower-paid workers whom he is talking about?

Mr. Loughlin

I will tell the hon. and gallant Gentleman why this means testing is not possible in a minute or two.

Captain W. Elliot

Answer my question.

Mr. Loughlin

I will tell the hon. and gallant Gentleman why in in minute or two. The arguments for and against means testing in this sphere of social security were exhaustively canvassed in the debate on child poverty on 20th April this year, and the Government, after careful consideration of all the issues, decided that the arguments against are conclusive. Any means testing scheme must involve a reduced financial incentive to beneficiaries to increase or even maintain their earnings. There would be accusations of deliberate slacking, whether well-founded or not, and there would be considerable feeling between the responsible man who worked hard enough to be independent and the man who, for example, refused overtime because he preferred to rely on means test benefits. As to whether means testing for family allowances would be a disincentive or not, I believe it would. Indeed, when we discussed this with the T.U.C., the T.U.C. was unanimously of the opinion that with means testing on family allowances, a supplementation of this kind would be a disincentive.

What I would be much more concerned about is this. One of the most important contributions to productivity, particularly in a unit where there is a small group system in operation, is the minimising of tensions between the persons within the group. A man might be quite genuine. He might be feeling under the weather—this applies to many of us; it certainly applies to me and, no doubt to many other hon. Members—and he might decide that he did not wish to do overtime. Although overtime is voluntary, we have always accepted in industry that there should be a reasonable measure of overtime.

There might be a situation where a man could not work hard enough and where the group earnings were dependent upon the individual contribution. If it were known that that man was subject to supplementation, the mere fact that he was in those circumstances would create great tensions within the group and affect productivity. As one who has participated in schemes for increased productivity in industry, my first reaction to selectivity of that kind would be to reject it because of its effect on productivity, quite apart from the personal disincentive effect on the man concerned.

I reject it for another reason. It is accepted that there has always been a reluctance on the part of people to claim a benefit if it involved submission to a direct means test. This is a difficult attitude to break down, though we have broken it down to a certain extent. My right hon. Friend the Member for Lanarkshire, North, when she was Minister, instituted a massive publicity campaign and managed to induce a good many people to come forward for supplementation. Nevertheless, although it is possible to run a great campaign like that, the problem remains a difficult one, particularly in respect of retired persons, and it would, inevitably, be more difficult to induce men who are working full time to come forward and apply for supplementation of this kind.

There is no point in our accepting the need for augmentation of men's wages—which is what the Bill is about—in the form of family allowances to make provision for the children, and then put it on a means test basis when we know that the people concerned, or the great bulk of them, will not even apply for it.

I turn now to the administrative difficulty of means testing, even in the modern context of computerisation. To some extent, this applies just as much to the Danish scheme, and it applies to some extent—though I do not rule out negative Income Tax altogether—to a negative Income Tax arrangement. What one must always bear in mind when talking of supplementation is that we are trying to meet the needs of a family or a person at a time when assistance is really needed. I have heard it said that we could introduce a scheme based upon the P.A.Y.E. system and the present P.60 form. I do not understand this. Those who know anything about the P.60 know that it relates to 12 months ago, or even more than that because, very often, employers do not send the forms out until three or four months after the end of the year. It is not the slightest good trying to help people who are in poverty by taking as one's basis an ascertained period 12 months out of date.

What amazes me is that people are so attracted to means testing of this kind. A large number of factors changes the circumstances of a family. I do not want to give a full list, but they include births, school leaving, marriage, remarriage, divorce, separation, desertion, deaths, adoptions, illness, changes of employment, unemployment, changes in wages and earnings, overtime, work study projects, and self-employment. A person in industry can be involved in one or a combination of such factors over a period, and in consequence means-testing would not relieve his poverty in any way.

It would mean in practice that if we wanted to introduce schemes comprehensive enough to deal with the immediate poverty problems of people in industry, we should have to impose on the employer the task of paying supplementation.

The only alternative would be to have a very fast interchange of information on all the changes of circumstances, not just of one employee but of them all. It would have to be transmitted on a weekly or monthly basis to the local Inland Revenue authorities, or otherwise the situation could not be dealt with. Let us imagine the cost to industry of a burden of that kind. That is one of the things we should do when considering selectivity, at least as it concerns supplementing the income of employed people. I accept that selectivity can work when people are unemployed or sick, but when so many different factors are likely to interplay in the life of the individual when he is working we should get down to trying to obtain a complete picture of every factor likely to influence the situation.

Mr. Fortescue

Does the hon. Gentleman agree that practically all, if not all, the factors he has listed as affecting wage earners also apply to Income Tax payers? If my income changes slightly the coding is changed by the Inland Revenue authorities remarkably quickly—usually far too quickly for my liking. The whole P.A.Y.E. system was launched in far less than the nine years the hon. Gentleman has spoken about. We now have computers, which we did not have then, and I do not accept that the system is an impossibility.

Mr. Loughlin

When my coding has to change it takes a month, or possibly two or three. In such a period the fellow concerned may have changed his job and his earning may have been reduced by, say, £3. We cannot have a man waiting three months before we give him assistance, for otherwise we are not meeting the need. If we waited three months and then gave the assistance he might have gone to another job where he no longer needed it. It would pay some hon. Members to examine closely how it would be possible to apply any form of selectivity or use Income Tax returns.

Many hon. Members referred to the wage-stop. My right hon. Friend, my hon. Friend the Joint Parliamentary Secretary and I are as conscious as anyone of the effect of the wage-stop in different circumstances. I do not know whether it is possible to get rid of the wage-stop completely. It is not because we want the wage-stop principle to be a deterrent, which was the old principle, but, as hon. Members know, it is very difficult if there is a situation in which those who are in work are receiving less than those who are out of work. One can imagine what is likely to happen—say, in a pit village—where a surface worker is living next door to another surface worker and one goes out of work and, so soon as he goes on supplementation, gets more than the man who is still working. It is a very difficult problem.

We are conscious of the difficulties in the application of the rules, and we have at the present time the Supplementary Benefits Commission, which is examining the whole question of the wage-stop. If, possibly, we change it, it would need legislation; but I can assure the House that we will do what we can to meet the basic objections which have been advanced in this debate.

My hon. Friend the Member for Rhondda, West (Mr. Alec Jones) referred to the duration of the unemployment pay. Here again, also, we are equally conscious of the difficulty, and we are examining whether it is likely to be possible to extend the duration, either wholly, or in certain circumstances.

There were one or two other questions which I really ought to try to answer. The hon. Member for Newbury (Mr. Astor) read out to the House a letter. It was the type of thing which is being peddled both in the Press and now, apparently, in the House of Commons. The letter which he read was an anonymous letter. I know what I do with anonymous letters, irrespective of their contents. I put them in the wastepaper basket. However, since he read out that anonymous letter which, for all I know, may have been written by his brother, and because it was suggested that it was written by a man who all his life has been a member of the Labour Party and has decided, in the light of the policies we have pursued, to withdraw from the Labour Party, I should like to get my commercial in as well. I was handed this letter while I was on this bench—and it is signed, and it has an address. I do not propose to disclose to the world the name of the writer or the address, but I will to the hon. Member afterwards, if he likes. It says: My wife and I have been members of the Labour Party all our lives, first in North St. Pancras, and 35 years in East Harrow. We are honorary members. We have helped in every election. We think the Government are doing a marvellous job in spite of the anti Press, and to show our appreciation we are sending you our first week's increase in pension. Yours sincerely. The hon. Member for Chelsea asked me a question about the actual make up of the £124 million, and asked about the difference between the £124 million and the £83 million net of tax. I think he answered himself, that the greater proportion of it was tax savings. He wanted to know the savings in what he called "other ways". The difference is that there are savings of £8 million in the dependency and supplementary benefits. That is the short answer.

Mr. Worsley

The whole of the rest is savings of Income Tax and Surtax.

Mr. Loughlin

Yes. I think that I have answered most of the points which have been raised. The Bill may not resolve all the family poverty which exists at present—

Dame Joan Vickers

I did ask the hon. Gentleman to give the House a definition of "child", and to tell us when a child is eligible for allowance.

Mr. Loughlin

I apologise to the hon. Lady. It was not my intention to overlook the point. The Family Allowance Act, 1965, provides that a person shall be treated as a child when under the upper limit of the compulsory school leaving age, when under 19 and undergoing full-time instruction in school or being an apprentice, and when under 16 and incapacitated for regular employment.

Irrespective of the arguments which we have heard today about the failure of the Government to produce some sort of grand strategy, as though such a strategy could be produced and released a piece at a time, and while admitting that the Bill will not solve all the poverty which exists in families at the moment, in the light of the contributions which we have made in our three short years in office, I think I can commend this Measure to the House. It will make a contribution to the happiness of a lot of families.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committtee of the whole House.—[Mr. Howie.]

Committee Tomorrow.