(INCREASE OF FAMILY ALLOWANCES AND RELATED AMENDMENTS.)

HC Deb 29 November 1967 vol 755 cc466-542

Sir S. Summers

I beg to move Amendment No. 1, in page 1, line 7, leave out from 'words' to end of line 8.

Mr. Deputy Speaker

It would be for the convenience of the Committee if we also discussed Amendment No. 2, in page 1, line 10, leave out from '1' to end of line 2 on page 2.

Sir S. Summers

These Amendments are part and parcel of the same proposition. The effect of this Amendment is to confine the increase in family allowances to the third, fourth and fifth and subsequent children of families, instead of the second, third, fourth and fifth. In other words, it is to leave the position of the second child, or the first qualifying child, unchanged by the increases foreshadowed in the Bill.

I have always felt that we were not justified in giving special help to the second child of the family. I have not forgotten the original debates when family allowances first began. The justification for family allowances as a principle, advanced as a basis upon which the Beveridge Report was built, was, among other things, that only if the larger families were specially taken care of would it be possible for the two sides of industry to negotiate the rate for the job. The question arose as to where the line should be drawn to enable the rate for the job to be negotiated, knowing full well that larger families were being taken care of separately. The line was drawn at families larger than one.

I have always contended that there was no justification for drawing that line there. I have always thought that it was a perfectly fair proposition to say to parents that they ought to be capable, through their own exertions, and the normal arrangements in the Welfare State, to take care of two children, and that only for the third and subsequent children should special help be called for, in part to enable the rate for the job to be negotiated without the complications of claims for large families.

I have had it in mind on a number of occasions to eliminate the help already provided for the first qualifying child. I studied the Bill with some care to see whether this opportunity should be taken to fulfil that ambition. When I reflect upon the increases in the cost of living—no doubt considerably greater than the figures quoted today—which will fall on every family in the land, it seems to be a very inappropriate time to attempt to justify taking from a family the help for the first qualifying child which they already receive. I therefore abandoned the idea of eliminating help for that child. Today I found my case not on the proposition of eliminating existing help, but leaving the position of the first qualifying child unchanged and confining the help to the third and subsequent children of the family.

When I ventilated this topic I found few people who appreciated the enormous expense of dealing with that child out of the money that we are talking about. Approximately 60 per cent. of the total expenditure on family allowances goes to those with one qualifying child. I am told that out of the £124 million, which is the additional cost of the improved benefits inherent in this Bill, over £70 million is involved in providing the increase from the present 8s. to the proposed 15s. for the first qualifying child.

4.45 p.m.

I accept that there is a case for helping families with a number of children. I have not sought to diminish in any way the help that the Government are proposing to give to families of three, four, five or six, on the grounds of national economy or anything else. We have tilted the scale insufficiently favourably towards the large family, and spent too much of the money on the second child. When we are told by many qualified people that Government expenditure must be cut if we are to derive benefits from devaluation it is quite unjustifiable to spend £70 million in those circumstances to improve the position of the second child of every family. The addition of £124 million forecast in the Bill to bring up the total for family allowances to £280 million a year or thereabouts is a staggering item in the total budget under social security.

If we can give help to the large and deserving families without touching the position of the second child and at the same time save something like £70 million annually of taxpayers' money this must be in the interests of the nation. It would prevent devaluation from producing a worse state of affairs than we had previously.

Sir J. Eden

I do not know whether I am required to declare an interest, being the parent of what might be described as a larger family, having more than two children. In any case I am speaking against my interests, if I had to declare them, because I want to support my hon. Friend the Member for Aylesbury (Sir S. Summers). He made out on extremely strong case for withholding this proposed increase from the first qualifying child. The figures he gave to the Committee about the weight of total expenditure which will be occasioned by the increase for the first qualifying child are particularly significant at this time.

In the light of our economic situation we should limit total expenditure as much as we can and ensure that such expenditure as we do incur goes to those families which appear to be most in need. As the right hon. Lady has said, it is the large families, admittedly large families with a low income—I took down her words on this point—which will be qualifying most for the special action which she promised to the Committee, and for which vie have to wait until it is decided that a due and appropriate time has arrived.

This Amendment gives the Committee an opportunity to move in that direction. This is the chance that we now have to point such help as we believe right in the direction of those most in need. I do not know what information the right hon. Lady has had coming into her Department. It will certainly be much more comprehensive than the results of my own experiences. Therefore, she will be able to give full information about the evidence of need among families in which there are only two children. But I should have thought that it was self-evident that those who had more than two children were likely to be in greater need than those families with just two children.

Surely we are considering primarily those in need and those in the low income groups. Surely we have not in mind every family with two children or more regardless of income. I do not need the family allowance, I am glad to say, and a number of other hon. Members are in exactly the same position. The counter-argument to the argument that one should not draw it in those circumstances is, "You lose it anyway in taxation". If that is so, this is a totally unnecessary exercise. If the Minister lends herself to that argument, she is supporting the con- cept that what she has most in mind is the poorer family in the low income group.

We must strive to find a way of giving most help to those in most need. The larger poorer family must certainly be in more need of assistance and benefit than the smaller poorer family. Therefore, in these times of economic stringency, we are right to limit the amount which we propose to spend on this category.

My hon. Friend the Member for Aylesbury fairly said that he thought that this was not the right time to do away with it altogether. He may be right. But to support the proposition which he made would certainly be taking a step in the right direction, for there can be no justification for the Committee at this time to endorse a proposition to increase from 8s. to 15s. the allowance payable in respect of the first qualifying child. Surely all parents with two children in the family and no more will do whatever they can to look after their own affairs and not so to conduct their home life as to make it necessary for them to depend on the additional 7s. a week.

If there are families to which the extra 7s. a week is critical—and undoubtedly they exist—there are already facilities in the Welfare State to which they can turn for special help. They can turn to some form of supplementary allowance.

Mrs. Hart

A man in full-time work—and this applies to many of the poorest families—has nowhere else to turn.

Sir J. Eden

The man in full-time work certainly has nowhere else to turn, but if he has two children surely he should be able to earn sufficient to make it unnecessary for him to depend on an additional 7s. a week. That is my argument.

This is a difficult point to explain. What one is saying is that if a family cannot get beyond the second child without having to rely on this additional element of 7s. a week, one hopes that the family will not get any larger. I put it quite bluntly—and I believe this very strongly—and say that we must inculcate some sense of responsibility in these matters. Surely this is the time, when grave economic and financial difficulties are facing the country, to make a start in that direction.

Therefore, I support what my hon. Friend the Member for Aylesbury said. While leaving the 8s. element in for the first qualifying child, we should take this opportunity of not endorsing the increase.

Mr. Will Griffiths (Manchester, Exchange)

I did not intend to intervene at this stage, and I do so only because I wish to be clear about what the hon. Member for Aylesbury (Sir S. Summers) and those who support him are trying to do.

The hon. Member for Bournemouth, West (Sir J. Eden) said that anybody with two children should be capable of looking after them. If that is a representative view of the Opposition—and I suspect that it cannot be—

Sir S. Summers

The hon. Gentleman has misquoted my hon. Friend. My hon. Friend thought that in today's circumstances the family with two children only should be capable of looking after them without an increase of 7s. for the first qualifying child.

Mr. Griffiths

I do not know whether the hon. Member for Bournemouth, West is like me, but I do not like other people to interpret my speeches. If I misunderstood him, I should have thought that the hon. Member for Bournemouth, West was capable of explaining what he said without the aid of the hon. Member for Aylesbury.

Sir J. Eden

Since the hon. Gentleman invites me to do so, may I endorse what my hon. Friend the Member for Aylesbury (Sir S. Summers) said? I emphasised throughout the element of the increase before us—the 7s. I endorse what my hon. Friend the Member for Aylesbury said about retaining the 8s. element already in existence.

Mr. Griffiths

The position is that hon. Members opposite do not object to a family allowance on the existing scale being paid for the first qualifying child.

Sir J. Eden

The matter can be summed up by asking: when will we take some account of the fact that in the present circumstances, in which we have had to have devaluation, we must bring to an end some element of self-indulgence?

Mr. Griffiths

If it is the Opposition's view, which I do not think it is, taking them in toto, that as a principle a family with two children should be able to provide for itself, clearly that has not been the view during the years in which both hon. Members have been in the House. During the years of Conservative Government, family allowances were raised. I remember Lord Butler, when he was Chancellor of the Exchequer, raising the family allowance in 1952. We must be generous to the Opposition in assuming that they do not want to end a principle which has obtained since the first Family Allowances Act was introduced, namely, that the first qualifying child should receive some kind of benefit—and we can argue about how much it should be.

I wish to understand what the Amendment seeks to do. We talk about selectivity or universality in social benefits. Many of my hon. Friends believe that the amount of money available for welfare services should be concentrated on the worst off groups. That is the view which we have heard from the hon. Members for Aylesbury and Bournemouth, West. Am I not right in assuming that the Amendment does not suggest that, by leaving out the second child, the whole of the saving so effected should be concentrated on the third and fourth child? The plain fact is that what the hon. Member for Aylesbury and his colleagues are trying to do is to save money at the expense of a certain number of people entitled to family allowances under the existing law.

The Amendment seeks to reduce the total amount of money that the Government propose to spend on family allowances. That may not be the intention, but it is what the Amendment would do. On a future occasion I should like to join in the argument with my hon. Friends and hon. Members opposite about where the incidence of support for poor families and people in distress should alight. I emphasise to my hon. Friends and hon. Members opposite, if they are so concerned about poverty in the economic circumstances of the moment, that this would be the worst time of all to cut down on family allowances as suggested by the hon. Member for Aylesbury.

5.0 p.m.

Mr. Pardoe

I cannot support this Amendment. Some strange attitudes have been expressed in this debate which I have not heard even from the Opposition recently. I thought those suggestions were dead and buried.

There has been talk about indulgence. I suppose sexual indulgence was meant. There is absolutely no connection at all between the size of the family allowance and the size of the family which anyone is prepared to have. This has been shown by research all over the world. I remind the hon. Member for Bournemouth, West (Sir J. Eden) that the value to him and to me—because I imagine we both pay tax at standard rate—of the incentive of tax allowance to have more children is infinitely more than it is to anyone in my constituency who is trying to make do on £9 10s. a week take-home pay.

Sir J. Eden

I do not take the point made by the hon. Member too seriously, but, lest anyone should do so, I should explain that the use by me of the word "indulgence" was not in the terms that the hon. Member would have us believe. I am concerned, as everyone must be, with the position in which the country finds itself. When we are increasing expenditure of any nature we should examine it more critically than ever now. My use of the term "indulgence" was meant to embrace the total of expenditure, because this is watched critically by people outside the country.

Mr. Pardoe

The hon. Member has explained that to his own satisfaction, but not to mine. A phrase which I am certain occurred in his speech was that people ought to be able to look after a family of two children in present economic circumstances. That is not the case in the kind of family I am talking about.

In the Bill we are not concerned primarily to relieve poverty. I hope that the Government and the Opposition are with me on this. The principle enshrined in family allowances when Beveridge brought them in was that it is far more expensive for a married man with children to bring up a family and maintain the same standard of living as a single man or a married man without children. All the surveys done on expenditure by the Ministry of Agriculture, Fisheries and Food and the Ministry of Labour show that it takes a married man with two children two-and-a-half or three times as much expenditure to maintain the same standard of living as a single man. This principle is partly what we are talking about. It is not just the relief of poverty.

We enshrine the principle in our tax system. I would be more convinced by the Amendment if any suggestion had been made by those supporting it that they were prepared to give up the tax allowance in respect of the second child or, indeed, of the first. For my first child, I receive £47 10s. from the State through tax allowance. Someone who does not pay standard rate of Income Tax receives for the second child—

Lord Balniel

Would not the hon. Member agree that there is a very substantial difference between a family allowance and a tax allowance? A family allowance is something given by the State to an individual; a tax allowance allows an individual who has earned money by his own work to keep a greater proportion of those earnings if he has a family because he has greater commitments than a bachelor or a married person without children. Surely the hon. Member sees this very elementary difference between the two types of allowance?

Mr. Pardoe

The noble Lord's memory should be long enough to know that since he asked that question two weeks ago there is no point in my giving the answer to it again and saying that I disagree. I cannot see the fine distinction he seeks to make between the money passed over the Post Office counter and money one gets because the State thinks it necessary for one to have it to bring up a family. The proposal is to do away with the £39 at present paid to people in respect of a second child, but to allow the likes of us to keep not only the £39, but the £47 10s. we get in respect of the first child and the allowance in respect of the second child.

Apart from me, no one seems to be proposing that we should do away with both and reallocate the money. I would have found the Amendment more acceptable and more honest if any suggestion had been made from the Opposition that they were prepared in the interests of the nation, during this terrible catastrophe, to do away with their tax allowances as well. For these reasons we should undoubtedly oppose this Amendment. There is very good reason to suppose that there are many families with only two children who are suffering poverty. There are many families with only one child who suffer poverty although the Family Circumstances Survey does not show this up. It would be wrong in any circumstances to give away that which we have been given by the Government in the Bill.

Sir D. Glover

The hon. Member for Cornwall, North (Mr. Pardoe) has put forward a most extraordinary argument. Unless one believes that everyone in the country should draw the same income, his argument is untenable. What one gets in tax allowance for children is an amount of money one is allowed to keep as a result of efforts made for the benefit of one's family. It is not something given by the State, but something which the State does not take away.

That is totally different from the same person paying tax to allow an allowance to be paid from the State to someone in poorer circumstances to relieve his poverty. I cannot believe that a society such as we have in Britain could begin to accept that. One of the things we have been arguing about for a long time is the incentive for people to work. If we take away the family tax allowance, we would take away another incentive to work. Why should a person try to earn more if we take away the benefit he wants to create for his family by his effort?

I turn to a different argument. The Committee might think that I am a little muddled, because I disagree with a great deal of what my hon. Friend the Member for Bournemouth, West (Sir J. Eden) said. I would, however, recommend the right hon. Lady to accept this Amendment, for a reason which I will now try to put to her, but which has very little to do with the arguments so far put about it.

There is a great deal of sense, in a time of stringency, not to increase benefits to people who manage to jolly along—I will not put it any higher than that—on the present arrangements. As my hon. Friend the Member for Aylesbury (Sir S. Summers) said, payment of this to the second child will cost more than half the amount that this Committee will disburse; in other words, it is going to cost about £70 million.

This is the point I should like to put to the right hon. Lady, in the conditions in which the country finds itself. In other conditions, if the Clause had been produced at some other time, I would be inclined to accept it, but the right hon. Lady has already said this afternoon that she is proposing to carry out the pledge of the Prime Minister that those in the bottom income categories will be protected against devaluation. She will, I have no doubt, remember the Chancellor's speech winding up the debate on Wednesday of last week, when he said that we were going to face a tough time because of devaluation, and a lowering of the standards of living, and that it meant that increases of pay had got to be fought ruthlessly—I think that was his word. I should like to say to the right hon. Lady that here she has got £70 million which could be put into the kitty for the relief of a lot of other cases of suffering, and she could do it by accepting the Amendment moved by my hon. Friend the Member for Aylesbury.

When she begins to produce her proposals for alleviating suffering and poverty—after all, it is not just children who were the categories the Prime Minister was referring to—she is going to come up against an enormously tough battle with the Treasury and the Chancellor of the time. By this Amendment she would not be taking anything away from anybody, but would be leaving the allowance for the second child, and she would be saving £70 million. She would then be in a very much stronger position, in arguing with the Chancellor about other measures which she will want to carry out, if she could say, "On the Family Allowances Bill, because of the problems confronting the country, I accepted an Amendment which saved you and the Treasury £70 million". Then the Chancellor and the Treasury would be in a very much more difficult position in refusing the proposals that she will probably want to bring before us.

Mr. Will Griffiths

I wonder whether the hon. Member appreciates, as I am sure he does, that the Bill was published before devaluation, and that it was, therefore, the appreciation by the Government, and presumably the appreciation by the House, at that time, that the vast majority of the families involved—as, indeed, we have heard during the debate today—were then in need of this increase. In consequence of devaluation it is generally accepted that the cost of living will increase. Therefore, if we withdraw he family allowance from the first qualifying child we must worsen the conditions of the family which has a first qualifying child. Surely that must be the case?

Sir D. Glover

I think the hon. Member has slightly misunderstood the Amendment. The Amendment is not withdrawing anything from anybody. It is leaving the payment of 8s. for the second child and not increasing it to 15s.

However, I was just going to finish. I do not want to delay the Committee much longer. This Bill was produced before devaluation, and, as I have already said, I do not go along with a great many of the arguments put for this Amendment. I am putting this case to the right hon. Lady in the special context in which we are now debating the Bill. Now, after devaluation, when the right hon. Lady, as Minister of Social Security, is going to have to produce benefits which will cost money, she is going to have to come up against a lot of opposition, particularly from the Treasury and the Chancellor of the time, in getting that money voted, and in these circumstances I believe there is a great deal to be said for accepting this Amendment, which would save her £70 million.

Mr. Will Griffiths

rose—

Sir D. Glover

I will not give way again. After all, this is Committee stage, and the hon. Member can speak again if he catches your eye, Mr. Mallalieu.

I have said what I wanted to say. I do not suppose the right hon. Lady will accept the Amendment, but I think that three or four months from now, when she is battling with the Treasury, she will remember the words I have put to her today and will wish she had listened to the hon. Member for Ormskirk.

5.15 p.m.

Mr. Marcus Worsley (Chelsea)

Before commenting briefly on the content of the debate, I should like to remark on the comments of the hon. Member for Cornwall, North (Mr. Pardoe). That a Liberal Member of Parliament cannot under- stand the difference between social benefits paid under the insurance scheme and a tax allowance, which is a measure of ability to pay tax out of one's own income, astonishes me. We are familiar, of course, with this argument from hon. Gentlemen opposite. Clearly, many Socialists believe that there is no difference, but the fact that an hon. Member speaking from the Liberal bench, apparently as an official spokesman for his party on this matter, should seriously argue that there is no difference is itself a reason why so many people cannot understand the difference between the Liberal and the Socialist parties.

My main purpose, however, is to comment on the main substance of the debate. My hon. Friend the Member for Aylesbury (Sir S. Summers) has done the Committee a service in introducing it. There is some difference of opinion in the Committee about where the existence of need lies in different sizes of family. My hon. Friend the Member for Bournemouth, West (Sir J. Eden) thought the main need fell in the larger families; the hon. Member for Cornwall, North thought the main need fell in the families with two children. I would not like to give an answer to the question, and I hope that the right hon. Lady, when she replies to the debate, will take the opportunity to speak at greater length about where the hardship lies in relation to the size of family.

I attempted to put to her a Written Question on this subject last week. I must say that she was not very informative in her Answer. She referred me to an Answer which she had previously given to one of her hon. Friends. I looked that up, and I found that that Answer referred us to the Report on the circumstances of families. So we were not very much wiser, particularly because my Question related not to the situation as it was at the time of that review, but the situation as it would be if these increases were made. In other words, I was not referring to the 500,000 children but to the 250,000 children who would be left, as a result of the Government's measures, below the poverty line. Therefore, I hope the right hon. Lady will take this opportunity to give us this information.

We need to be persuaded that the ratio she proposes for paying the allowances is right. We need to be persuaded that it is not just the number first thought of. She has added a figure of 7s. to each qualifying child. This, to begin with, alters the present ratio. The relationship between Os. for the first child, 15s. for the second, and 17s. for the third is not the same ratio as Os., 8s., 10s., which is the present ratio. Is this change of ratio something thought out? Or is it, as I strongly suspect it to be, simply a figure thought up and added without proper research? We have criticised the Government over and over again for a lack of consistent research in these matters, and we would like to know exactly what has been the research behind these figures.

My sympathies are with my hon. Friend the Member for Bournemouth, West. I cannot believe that the ratio which the right hon. Lady is suggesting is based on a scientific assessment of need. I feel certain that it is not, but I willingly and with pleasure give way to her, and hope that she can convice me that it is.

Mrs. Hart

Let me deal with some of the points raised, but, first, I want to endorse exactly what my hon. Friend the Member for Manchester, Exchange (Mr. Will Griffiths) said, because what we have heard today from some hon. Members opposite has been a classic example of the Conservative approach to the social services, using the slogan of giving help where it is most needed to justify a reduction in total expenditure on the social services.

That is exactly what the hon. Member for Aylesbury (Sir S Summers) has tried to do, and some of his hon. Friends admit it. He is proposing to take away the increase from the smaller poor family, and at the same time he is proposing to give nothing more to the larger family—

Sir S. Summers

And the smaller rich family as well.

Mrs. Hart

The hon. Gentleman is concerning himself with something which strikes me as particularly noteworthy, and I refer to what might be called crocodile tears about poverty in general. I remember that we had a debate last Friday on poverty, initiated by my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts). We had 13 speakers from this side of the House, and only one speech from the other side. That was from the hon. Member for Paddington, South (Mr. Scott). The only other person present on the other side of the House was a poor, lonely hon. Member who was waiting for his own Motion to be called. Let us not have the kind of crocodile tears which we have had today, and I will not have any spurious pretence from hon. Members opposite that they are more concerned about poverty among families than the Government are.

Mrs. Knight

It is nonsense for the right hon. Lady to suggest that hon. Members on this side of the Committee are not concerned about poverty. She knows quite well that many of us have engagements in our constituencies on Fridays with, about and among the very people for whom she now accuses us of caring nothing. Had a debate on the subject occurred on a recognised Parliamentary day, great interest would have been shown from this side of the Committee.

Sir D. Glover

Where are all the hon. Members opposite today?

Mrs. Hart

My hon. Friends are not here because they know that we are discussing an Amendment which makes no sense.

It is true that many Ministers and back bench hon. Members have constituency and other duties on Fridays, but the hon. Member for Birmingham, Edgbaston (Mrs. Knight) knows as well as I do that the degree of general interest in a subject by any of the parties in the House is fairly represented by the number of hon. Members who attend a debate on a Friday.

Hon. Members

No.

Mrs. Hart

Judging by that, it was extraordinary that there were 13 times the number of hon. Members on this side of the Committee who found their constituency engagements allowed them to attend the debate to which I have referred.

Sir D. Glover

On a point of order, Mr. Mallalieu. Would you rule on what the attendance during a debate last Friday has to do with an Amendment during the Committee stage of this Bill?

The Temporary Chairman (Mr. E. L. Mallalieu)

I do not think that that is a point of order.

Mrs. Hart

If interventions are permitted by the Chair then it is in order for me to reply to them. May I point out to the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) that when she was sufficiently interested in one Bill passing through the House, the Medical Termination of Pregnancy Bill, her constituency engagements did not keep her away.

Lord Balniel

In studying the Amendment moved by my hon. Friend the Member for Aylesbury (Sir S. Summers), who for many years has had a great interest in these matters, it is open to all of us to have reservations about certain aspects of it. However, probably quite unwittingly, the right hon. Lady has distorted his argument by saying that he is proposing to reduce the expenditure on family allowances by £70 million—

Mrs. Hart

I never mentioned that figure.

Lord Balniel

She might not have mentioned the figure, but that is what it is. What my hon. Friend is doing is releasing a figure of £70 million. He cannot suggest that it be concentrated in particular directions, because the Financial Resolution is drawn so tightly that it is impossible to achieve what we believe should be achieved, which is a concentration of family allowances to those in the greatest need.

Mrs. Hart

The noble Lord might do well to maintain a little patience, even when provoked. I had only just begun to deal with the arguments advanced by the hon. Member for Aylesbury, and, in a moment, I shall come to the other relevant considerations bearing upon the Amendment.

I began by saying, and I repeat, that this is a classic illustration of the Conservative approach to the social services in that they advance the somewhat spurious argument under which the concentration of effort on those who most need help is used as a justification for cutting down the amount to be spent on the services as a whole. I start off with that observation.

The hon. Gentleman makes an assertion in Amendment which is a highly relevant and debatable one. If we leave out of account the fact that he would be seeking to save money on the deal as a whole, he asserts that poverty is to be found more frequently amongst larger families than amongst smaller families. He asked if I had any figures to illustrate our approach to this, and I can help him.

I have to refer to the Family Circumstances Survey. This has to be the case, as was the case in my reply to the hon. Member for Chelsea when he asked me a Question last week. To that extent, I cannot give up-to-date figures because, so far, we have not instituted a regular running survey which would keep our figures up to date all the time. Perhaps we should consider doing that, as well as considering what priorities we should give to research in my Ministry. It is a matter to which I am giving attention at the moment. The only reliable figures which we have are those of last year's Survey, and the figures revealed have to be qualified by a number of factors none of which it is possible to measure accurately.

As I explained on Second Reading, there are a number of factors which can change the incidence of family poverty, such as pay increases, rent rebates and rate rebates, which tend to reduce family poverty, and rent increases and price increases, which can increase it. It is impossible to quantify precisely the extent to which, in different and opposing ways, each factor affects the figures in the Survey. Therefore, I can only quote those figures with reservations.

What the Survey showed was that, of the families with two or more children where the fathers were in full-time work and whose incomes were below the supplementary benefit level as it applied in 1966, 45 per cent. had only two children. In other words, just a shade less than half of the families whose fathers were in full-time work and who were defined as living in poverty were families of only two children. If one takes fatherless families, excluding the one child family which tends to be fairly frequent, 55 per cent. of fatherless families identified as living in poverty were families with only two children.

The moment that we introduce the kind of Amendment proposed by the hon. Gentleman to restrict the increase in family allowances proposed in the Bill to families where there are more than two children and do not apply the increase to families with only two children, we automatically cut out from the benefits of the Bill a very high proportion—just less than half—of the families with whom we are primarily concerned. I do not believe that hon. Gentlemen opposite would wish to do this, taking it on the merits of the case, unless they were deliberately seeking to cut down the total cost of the Bill and to save expenditure on the social services, because there could be no logic in a desire to do it for any other reason.

5.30 p.m.

There are many different views about whether the increase should be distributed according to the number of children in the family. I think that the House knows as well as I do the varying public reactions to the Bill, and to the proposed increase. There are at least four reactions which hon. Members must have met.

There is, first, the reaction which bears closely on what the hon. Member for Cornwall, North (Mr. Pardoe) said about the relationship between taxation and tax allowances, family allowances, and cash benefits. The argument here is, "Do not give family allowances, or any increase in family allowances, to the better off". Hon. Gentlemen opposite have said this. The answer is that one must closely relate taxation, and what happens within a progressive system of taxation, to what is paid out in family allowances.

We could do it by the strict "give and take" method, which the hon. Member for Cornwall, North, and some others would like, and in which I see many advantages—and I am looking at all the possibilities—or we could use other methods; but, whichever way we do it, if we have a system of progressive taxation, the net result will be that the better off will pay, in taxation, to subsidise the cash benefits paid out to those who most need them, the less well off. The two cannot be divorced, and this is the answer to those who say, "Do not give family allowances to the better off; confine them to those who are less well off".

Some argue that higher family allowances should he paid in respect of older children, and this is a tenable argument. It can be argued that as a child gets older the cost to the family increases, because it eats more, it needs more expensive clothes, and more expensive equipment, but this argument is full of difficulties. We do not at the moment have any easy method by which this can be done, and there is the counter argument that, in many families, by the time the children are older the father is perhaps earning rather more, and is therefore less in need of the help which he would get from family allowances. This is an argument on which there are two aspects to be considered.

There is, then, the third argument, and I am glad that it has not been raised by anyone today, and I think that on Second Reading we all rejected it. It is strongly felt by some members of the public, but I have no sympathy with what they say. They ask, "Why should we who have smaller families subsidies the larger families?". It is a prevalent argument in which I hope all hon. Members will refrain from joining. I hope they will actively counter it among their constituents who may raise it with them, because it is a dangerous argument, and one which we must wholeheartedly reject.

The fourth public reaction is the opposite of that of the hon. Gentleman. It is, "Why do you not concentrate more of the money available for family allowances on the first child, because it is the first child who is the greatest expense to the family. It may be the first child who necessitates the family moving into a larger house, buying a cot, buying equipment, and so on."

There are a number of different points of view in relation to the strict merits of the hon. Gentleman's case. Some are tenable and debatable, while others are not. Bearing in mind the figures which I have given, which show that just under half the families defined as living in poverty are families who would not benefit from the Bill if the Amendment were accepted. I say that the Committee should not agree to it. I hope very much that, having explored the issues, and promoted a stimulating debate, the hon. Member for Aylesbury will feel able to withdraw the Amendment.

Sir S. Summers

I do not propose to delay the Committee for many minutes, but there are a number of points which the right hon. Lady has mentioned which cannot go unchallenged.

I very much regret that in the first debate in Committee on social security in which the right hon. Lady has participated since she took over this office she hay brought into it what can only be described as a kind of auction of compassion and concern between the two sides of the Committee. If we are to be treated to a lecture about who is more concerned with poverty—and I hope that it will not happen again—we shall consider comparing the degree of compassion shown by her and her predecessor, who felt unwilling to continue in the job with the amount of money put at her disposal.

We have been told that the effect of the Amendment, which is to save £70 million, is a classic example of the Conservative approach to these matters. There was a classic example of the Socialist approach to these matters in the last thing said by the right hon. Lady, namely, that because some families on the poverty line have two children, therefore all families with two children should necessarily be helped to the extent of an extra 7s. a week. This universality of approach is one reason why far more money than is necessary or appropriate is being spent on the social services.

When it comes to the question of £70 million, if a case can be made—

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

I am grateful to the hon. Gentleman for giving way, and I am not trying to be awkward, but the figure of £70 million has been used repeatedly in connection with the Amendment, and I am in some difficulty in finding out where it comes from. As I see it, the net cost of the total upgrading of family allowances under the Bill would be £83 million, and I am assuming that the £70 million relates to the saving in consequence of the non-application of the 7s. to the second child. Perhaps the hon. Gentleman will clarify this for me.

Sir S. Summers

I have here the figures for 1965, which show that out of 6,423,000 children receiving family allowances, 3,869,000 payments were for the second child only, and since then the population has increased. Perhaps the right hon. Lady understands this, and therefore need not listen. The £70 million to which I am referring is part of the £124 million referred to in the Explanatory Memorandum, the gross payment which the Bill provides. This is, in effect, the payment to the first qualifying child. The right hon. Gentleman is right to say, as was mentioned during the Second Reading debate, that the net cost is about £85 million. The net effect of the Amendment would he about £50 million, rather than £70 million. The hon. Gentleman shakes his head. Approximately two-thirds of the cost of the Bill is in respect of the first qualifying child. Whether one takes the gross figure, or the net figure, it is about two-thirds of the cost of the Bill, and this is a fact which cannot be disputed.

Mr. Peter Archer (Rowley Regis and Tipton)

rose—

Sir S. Summers

I cannot give way. We have spent a long time on this, and I was interrupted on a number of occasions during my previous speech. The Minister seems completely to have lost sight of the fact that this is a question of priorities. I do not consider that the claim to public money, to the tune of £70 gross or £50 net, in respect of families with a first qualifying child is anything like as good as the claim by many other sections of the community to public money, in terms of social security.

The Minister will soon ask us to approve a new Bill for tens of millions of £s to help families particularly in need, if the Treasury will agree. Perhaps the Treasury will not allow the Prime Minister's promise to be honoured, but if such a Bill does come forward my case is that the priority for that Bill will be far greater than the priority for spending money on the first qualifying child.

It is not up to us to suggest how this money should be spent or whether it should be a saving to the taxpayers' money in total. We are not able to suggest alternative methods of dealing with this £70 million gross or £50 million net. But I am convinced that this is not the best way for public money to be spent at present, and I am sorry that the Government have seen fit to attempt to do so at this juncture.

Amendment negatived.

The Deputy Chairman (Mr. Sydney Irving)

I think that we can take, with Amendment No. 3, in Clause 1, page 2, line 12, leave out "4s." and insert "3s.", Amendment No. 13, in Schedule 1, page 6, line 21, column 4, leave out "13 0" and insert "14 0"; Amendment No. 15, in line 32, column 4, leave out "13 0" and insert "14 0"; Amendment No. 17, in line 52, column 4, leave out "13 0" and insert "14 0 "; Amendment No. 19, in line 54, column 4, leave out "13 0" and insert "14 0"; Amendment No. 21, in page 7, line 31, column 4, leave out "13 0" and insert "14 0"; Amendment No. 7, in line 39, column 4, leave out "13 0" and insert "14 0"; Amendment No. 23, in line 44, column 4, leave out "13 0" and insert "14 0"; Amendment No. 25, in line 45, column 4, leave out "13 0 and insert "14 0"; Amendment No. 27, in line 46, column 4, leave out "1 10 6" and insert "1 11 6"; Amendment No. 9, in line 48, column 4, leave out "1 10 6" and insert "1 11 6"; Amendment No. 29, in line 56, column 4, leave out "13 0" and insert "14 0"; Amendment No. 31, in line 57, column 4, leave out "13 0" and insert "14 0"; and Amendment No. 11, in line 58, column 4, leave out "1 10 6" and insert "1 11 6".

Mr. Loughlin

On a point of order. As I understand it, Mr. Irving, it is sought to have two debates on this series of Amendments dealing with dependency benefits—a debate on the second child Amendments and a debate on subsequent child Amendments. It would be for the convenience of the Committee and certainly for those moving Amendments to have one overall debate on all the Amendments relating to the proposed changes in dependency benefits, because they are all inter-related.

Mr. Worsley

The Minister has anticipated me. I entirely agree with him. In moving the Amendments that I wish to move I shall find myself, of necessity, indulging in repetition, which I hope would be not too tedious, but which might be.

The Deputy Chairman

If that is the wish of the Committee it will be satisfactory from the point of view of the Chair. If we are to take Amendment No. 4, in page 2, line 13, leave out paragraph (c), with Amendment No. 3 it will bring into the debate all the other Amendments to the Schedule, namely, Amendment No. 14, in page 6, line 21, column 5, leave out "11 0" and insert "17 0", Amendment No. 16, in line 32, column 5, leave out "11 0" and insert "17 0", Amendment No. 18, in line 52, column 5, leave out "11 0" and insert "17 0", Amendment No. 20, in line 54, column 5, leave out "11 0" and insert "17 0", Amendment No. 22, in page 7, line 31, column 5, leave out "11 0" and insert "17 0". Amendment No. 8, in line 39, column 5, leave out "11 0" and insert "17 0", Amendment No. 24, in line 44, column 5, leave out "11 0" and insert "17 0", Amendment No. 26, in line 45, column 5, leave out "11 0" and insert "17 0", Amendment No. 28, in line 46, column 5, leave out "1 8 6" and insert "1 12 6". Amendment No. 10, in line 48, column 5, leave out "1 8 6" and insert "1 12 6", Amendment No. 30, in line 56, column 5, leave out "11 0" and insert "17 0", Amendment No. 32, in line 57, colunm 5. leave out "11 0" and insert "17 0", and Amendment No. 12, in line 58, column 5, leave out "1 8 6" and insert "1 12 6".

Mr. Worsley

I beg to move Amendment No. 3, in page 2, line 12, leave out "4s." and insert "3s.".

I am grateful to you, Mr. Irving, for allowing us to take all the Amendments together. It will not have escaped your notice, or that of the House, that we have been in great difficulty, in framing Amendments, in expressing them in the terms that we would wish. It has been difficult for us to keep within the rules of order. This fact, and the extremely close wording of both the Long Title and the Money Resolution, make us regret even more the fact that the Government have not put down any Amendments. They have the ability to alter these things, and we do not. I must leave the matter there.

The terms of the Amendments are not necessarily those which we would have preferred, and I hope that this will be understood. The Order Paper is littered with our good intentions, but, very properly, the Chairman has not selected them all. In particular, we realise that in discussing this wide group of Amendments there is nothing whatever to help solve the problem of low-earning families or families subject to the wage-stop. matters in respect of which we sought to put down Amendments but which we will not have the opportunity of discussing

5.45 p.m.

The effect of the Amendments would be to provide that those who are on National Insurance benefit of any kind should receive the full benefit of the increase proposed in family allowances, instead of only part of it as proposed by the Bill. I know that the Minister and my noble Friend the Member for Hertford (Lord Balniel) had a passage of arms on this subject during the Second Reading debate. I appreciate that these matters are difficult to follow, but I trust that what I am going to say is correct.

Clause 1(2) increases the benefit for the first child by 3s. The first child is not subject to family allowance. The subsection goes on to decrease the benefit for the second child by 4s. Thus, a family with two children drawing benefit and family allowances would receive a 6s. increase. In other words, a family with two children would draw 1s. less than a family not drawing benefit. I want to know why the Government have chosen this figure.

Under the Amendments we are maintaining the increase of 3s. for the first child and reducing the decrease in respect of the second child from 4s. to 3s., so that the family with two children will receive an additional 7s. benefit.

Under the Bill family allowance in respect of the third and subsequent children is increased by 7s. Benefit is reduced in most cases by 6s, and for widows and other analogous cases by 4s. Thus, most families entitled to benefit would, under the Bill, be only 1s. better off in respect of children after the second and, in the case of widows, 3s. better off for children after the second. Thus, a family of three children with sickness benefit would he, in total, 6s. better off and a family with four children 8s. better off. Our Amendments would give the full benefit of 7s. for each child.

Our first purpose in putting down the Amendments was to discover what thinking lay behind the Government's selection of these figures. Why give a net increase of 3s. for a sick or unemployed family with one child, 6s. for a sick or unemployed family with two children, and 7s., and so on, for a family with three children? It is an odd sort of selectivity. It concentrates the additional help strictly on the first two children of the family.

I do not want to run over the whole course of our last debate. We then sought some information from the Minister but we got precious little. Is the sort of information that she was able to give the House all that the Government are using for a basis of their choice of figures in this matter? The right hon. Lady, who I am sorry is not present, listed the public prejudices in this matter and the different opinions of the bigger or smaller family. But we should base our social policy not on public prejudice but on knowledge. I regret that, some months after we pressed in the debates on the Ministry of Social Security Bill for a social research unit in the Department, the Minister should still be thinking about it. It is high time that we had knowledge instead of prejudice to go on—

Mr. Pardoe

What sort of knowledge is the hon. Gentleman asking for the research unit to do? Does he want to establish where poverty exists or needs to be eradicated in these families, or does he want to determine some relationship between the size of the family and the expenditure necessary to keep up a certain standard of living?

Mr. Worsley

With respect, I see no great distinction between those two kinds of research—

Mr. Pardoe

indicated dissent.

Mr. Worsley

Perhaps we could debate this more fully some other time.

I want very wide research. I want the questions which the Minister herself put answered to discover where poverty lies and I hope that the Parliamentary Secretary will give more solid information tonight. This is not just a matter of giving a figure of 45 per cent. or 55 per cent. for different categories. Taking all the families in the country, we want, to know whether there is relatively greater poverty in big or small families.

The second objective of the Amendments is to argue our general case that help should be given where needed and not across the board. My hon. Friends intend to discuss particular categories and problems, and I am putting the general case. Most of the families categorised in Schedule I, that is, those entitled to benefit under the National Insurance Scheme are in need. This applies not to all, but to most. Most of those helped under Clause 1(1) are in need. Neither of these facts is controvertible. Surely we should concentrate all our help on families in need.

We wish to help every category beyond those covered by these Amendments. The more one looks at the figures in the Government's proposals the more remarkable they become. The anomaly is that they propose to give, for example, a man earning £100 a week—to take an extreme example—with four children an increase of 21s. a week. But a man on the same income with four children who is unemployed or sick would have an increase of 8s. a week. Is this Labour Government selectivity? The larger the family, the more absurd the difference. If such a man had six children, he would receive, under the Bill, an increase of 35s. a week, but if unemployed or sick 10s. a week—

Mr. Loughlin

Does not the hon. Gentleman understand what the Bill does? Does not he know that this is a family allowance Bill and not an up-rating Bill for National Insurance? If he does not understand the Bill, he should not speak on it.

Mr. Worsley

I am grateful to the hon. Gentleman for his courteous manner of expressing himself. What matters to a family is not whether the money comes from the National Insurance Fund or by way of family allowances, but the total amount which will be received. The hon. Gentleman should not cast remarks like this across the Floor, since they show his total ignorance of how families behave. My point is simple and he is not seeking to dispute it. It is that a man with a high income and six children would get an extra 35s. a week under the Bill, while a family with sickness or unemployment benefit would get 10s. It would make no difference to any of those families where the money came from.

Of course, I am aware that any hon. Gentlemen opposite who speak—there are remarkably few present—may argue that the solution is by way of taxation. We have debated this already, but I hope that the Committee will draw a distinction, now more than ever, between the disincentive effect of taking away a tax allowance and a social benefit, because, unless we do, we will never achieve the sort of incentives for the family man who can increase the wealth of the country and therefore our ability to help the weak.

Therefore, the Government's selectivity is stupid; we should identify need and then help it. If the Minister cannot come with us all the way in this, it would be possible, indeed, relatively easy, to select certain categories which we have mentioned. The right hon. Lady has borrowed in the Bill a good Tory precedent for giving special benefit to widows, widowed mothers and the like. We respond to this, as far as it goes, but she should go much further. Within the categories listed in the Schedule there is a number of sub-categories which should be specially helped.

I end with a special plea for the chronic sick. Surely it should be possible to give special help to those families in which sickness is of long duration. It is illogical and hard-hearted to give exactly the same treatment for short-term and long-term sickness. Surely the impact upon the family of long-term sickness is different from and far more deadly than that of short-term sickness. Among these categories, could we not select the chronic sick?

To give another example—I must not, unfortunately, refer to the Amendment of my hon. Friend the Member for Newbury (Mr. Astor), which is not selected—we could make a sub-category of those requiring constant attendance. But, instead of any particular categorisation, the Government intend to give an overall increase, not selecting areas of need. It is because we feel that the Government should turn from this universal approach, which leaves large numbers of people still in poverty, to a more selective one that we support these Amendments.

6.0 p.m.

Mr. Tapsell

I support the Amendment so ably moved by my hon. Friend the Member for Chelsea (Mr. Worsley) and I wish to deal with one of the special categories of need to which he referred and to which we seek to draw attention in Amendments Nos. 9 and 10, in the names of two of my hon. Friends and myself, dealing particularly with the child dependants' allowances of widowed mothers. The purpose of Amendments Nos. 9 and 10 is to ensure that the widowed mother should receive under the Bill increases equivalent to the full 7s. increase in family allowances for each of her qualifying children. In these Amendments we have taken account of the fact that there is under the Bill an increase of 3s. in the dependents' allowance for the first child.

Perhaps I should briefly give specific examples of the effects that these two Amendments would have. Let me give, first, the example of the widowed mother with two dependent children. At present she receives a family allowance of 8s. a week for her second child, dependants' benefit of £2 2s. 6d. a week for her first child and £1 14s. 6d. a week for her second child, making a total from family allowances and dependants' benefit of £4 5s. 0d. a week.

Under the Bill it is proposed to increase the family allowance for her second child by 7s. from 8s. to 15s. a week, to put up the dependants' benefit for the first child and £1 14s. 6d. a week for her by 4s. a week the dependants' benefit that she receives for her second child.

Therefore, the difference between the position of the widow with two children, before and after the Bill, is that her income is increased by 6s. a week. If she were getting the benefit of the full family allowances increase, the difference ought to be 7s. Our Amendment, therefore, increases the dependants' benefit for the second child by 1s. which would ensure that the widowed mother would get her 7s. increase, in just the same way that a man at work and earning £100 a week gets the full 7s. increase for his second child.

The next example is that of the widow with three children. Her family allowances at present are 8s. for the first qualifying child and 10s. for the second qualifying child, and her dependants' benefit amounts to £2 2s. 6d. for the first child, £1 14s. 6d. for the second and £1 12s. 6d. for the third, making a total of £6 7s. 6d. a week.

The effect of the Bill would be to increase the family allowance for the second child by 7s. to 15s. a week, and by 7s. to 17s. a week for the third child, and to increase the dependants' benefit by 3s. for the first child to £2 5s. 6d. a week, but it would cut by 4s. a week the dependants' benefit that she at present receives for both the second and third child. Her total income, therefore, under the new proposals would be £6 16s. 6d. a week, an increase of 9s. However, if she were getting the benefit of the full 7s. increase in family allowance for each of her two qualifying children, the difference would be not 9s, but 14s. a week.

Our first Amendment increases the dependants' allowances for the second child by 1s., and our second Amendment increases the dependants' allowance for the third child by 4s. to make up the remainder of the difference. The effect of both the Amendments is to ensure that the widowed mother with dependent children gets the whole of the proposed 7s. increase in family allowances and does not have any of it taken away as a result of the reduction in child dependants' allowances.

I am not saying that the method envisaged by our Amendments is necessarily the ideal method which I would use if I were bringing forward legislation, but, of course, within the rules of order one has to debate these subjects as best one can. Nor, let make it clear, am I advocating any general increase in the overall level of expenditure on social services. Of course, this is not an appropriate occasion to indicate where savings should be made to pay for the increased expenditure from the National Insurance Fund which these Amendments would involve, but I hope that on another occasion I shall have an opportunity to show where I would make those savings.

The Prime Minister's pledge, which has been reiterated in a very vague and general form this afternoon by the Minister of Social Security, is to protect particularly vulnerable groups from the serious price rises which are bound to result from devaluation. This must be an aim which we all share, however, much we may deplore the policies which have inevitably produced this catastrophe. There must be general agreement, too, that the widowed mother with dependent children is particularly in need of our compassion and our help at this time.

I was sorry that the right hon. Lady, who is not with us at the moment, saw fit earlier this afternoon to suggest that we on these benches are, in her words, "shedding crocodile tears" when we indicate our anxiety and sympathy for the underprivileged groups in our community. If I may say so with respect to the right hon. Lady, whose qualities I admire, I think that at this early stage in her career as Minister of Social Security this is an unfortunate approach. We shall, no doubt, have many debates on these matters. I fully accept the compassion and sincerity with which she and her colleagues approach suffering and poverty in our midst, and I would have thought it was childish nonsense to suggest that this was not a feeling that is shared by Members in all parts of the Committee. I hope that in future we shall be able to conduct our debates without these rather out-dated and disagreeable charges being bandied about.

There can be few people in our community more vulnerable to a rise in prices of the basic necessities of life than the widowed mother. I naturally welcome the recent increases in dependent child allowances for widows, but I am unable to understand the reasoning behind the decision taken in this Bill, and which I seek to challenge in these two Amendments to which I am speaking. I put down these Amendments not in any hostile or partisan spirit but to enable the Joint Parliamentary Secretary to explain the reasons behind the thinking in this Bill, and in particular to give answers to the two following questions.

First of all, why in this Bill, as in the legislation introduced in 1964 by the present Government, has the Minister abandoned the policy of Conservative Governments, anyhow from 1956 onwards, of singling out the widowed mother with dependent children for especially favourable treatment when funds are made available for an increase in welfare benefits? When I say "especially favourable treatment" I am comparing her, for instance, with the sick and unemployed. I hope that no one will suggest that I do not fully accept the case for giving them special help, too, but I am now arguing the narrow point of whether, in various categories of special need, there is not a continuing case, as was accepted by Conservative Governments, for giving especially favourable treatment to the widowed mother with dependent children.

After all, in the great majority of cases the need for sickness or unemployment benefit is of relatively short duration. It tends to arise in families where the breadwinner is still alive and where, because he has recently become unemployed or sick, one may usually expect there to be some economic buffer, as a result of savings when he was at work, against real hardship. With the widowed mother with dependent children—except during the first few weeks after the death of her husband, the family's breadwinner—this is not the case. Widowhood and motherhood are generally of much longer duration than sickness and unemployment. This was presumably the reason which led Conservative predecessors of the right hon. Lady in her office to give greater increases in various forms to widowed mothers than to other categories of special need. While all were helped, the widowed mother got slightly more help than the others. Against this background, I ask the Minister what has led the Government to abandon this policy of especially favourable treatment for the widowed mother with dependent children.

My second question is this. The Beveridge Report treated family allowances—which had already been announced in principle by the war-time National Government before the Report was published—as separate from, although essentially complementary to, the insurance-based welfare benefits which were recommended in that Report.

This approach, of keeping family allowances separate from National Insurance benefits, has been followed by all Governments ever since. When family allowances were increased under Conservative Governments, National Insurance benefits were not reduced to take account of this. Yet, in the Bill, it is proposed to reduce some child dependent allowances to take account of the increase in family allowances.

It is important for the Committee to realise, whatever the arguments for or against doing this, that the proposal to do so introduces an entirely new principle in to the administration of the social services. Never before when family allowances have been increased have National Insurance benefits for dependent children been reduced. There may be a good reason for this but we have not been told what it is and I hope that the Parliamentary Secretary will state the reason that has led the Government to introduce this new principle.

I ask the Government to bear in mind the psychological impact of this. realise that all Governments, from time to time, when they have adjusted National Insurance benefits in an upward direction, have adjusted National Assistance benefits downwards to take account of that. I hope the Minister will accept that that has always led to a widespread sense of injustice. I readily accept that Conservative Governments did it. More than 10 years ago, when I was responsible in the Conservative Research Department for social security matters, I sought to persuade Conservative Ministers that some administrative method should be found so that when National Insurance benefits went up, they should see that at the same time or shortly afterwards National Assistance scales did not go down.

Although it is true that what really matters is the overall income of a family, people who are very near the poverty line and who read in their papers that they will get a certain number of shillings more—hon. Members know from experience of receiving letters precisely what happens—they are upset to find that a lot of the increase is taken away with the other hand.

6.15 p.m.

It has always seemed to me—and I have argued this at party committee meetings upstairs and elsewhere—that when National Insurance benefits are increased, then a new and higher level of what used to be called National Assistance scales should be brought in at the same time to ensure that the beneficiary gets the new and full increase. The right hon. Lady's proposals seem to be extending this bad old tradition from the past of which both Conservative and Labour Governments have been guilty—into a new sphere. For the first time, she is going to adopt exactly the same approach when increasing family allow- ances. She will take away some of the increase with the other hand by reducing the widow's child dependent allowances.

I urge her not to approach this problem with a closed mind and to realise that it is not merely material help that is important to these people but also that they should feel that we in the House of Commons and the people in Whitehall who administer their affairs regard them as individuals and understand their problems.

Why has the Minister introduced this entirely new principle of reducing National Insurance child dependents benefits when increasing family allowances? If, as I hope, the Minister feels that there may be some force in my arguments, I trust that she will indicate her readiness to accept the spirit of Amendments 9 and 10 and, in due course, introduce her own Amendments to give widowed mothers with dependent children the full benefit of the proposed 7s. increase in family allowances.

Mr. Fortescue

I am glad to speak following my hon. Friend the Member for Horncastle (Mr. Tapsell) because I had intended to make much the same point, but in a different way. The preamble to the Bill announces that the Measure is designed to: …increase family allowances … and make related adjustments of certain benefits under the National Insurance Act, 1965… and other enactments. My first question is similar to that asked by my hon. Friend the Member for Horncastle. Why should such benefits under the National Insurance Acts be in any way related to family allowances? They never have been before. Why are they being so related this time?

On Second Reading the Minister pointed out forcibly and convincingly that the chief problem of poverty related to the families of wage-earners whose wages were not high enough to properly support their children. There are, of course, many other problems, but hon. Members were made to realise that this is a real problem which we should ' be considering. Other problems can be dealt with by other means, but the children of a large family of a man who is not earning enough to keep them properly, who are, therefore, suffering and who are unable to obtain any benefit from anywhere else must today receive our careful attention. The Bill falls far short of bringing the right kind of help to these children. It in some measure helps the other children who are in poverty, but the main burden of child poverty is not properly tackled by the Measure.

It has already been pointed out that the relation of family allowances to payments to children under the National Insurance Acts results in the production of figures and calculations of great complexity. On Second Reading and today there have been friendly arguments about exactly how much is involved for how many children and whether certain allowances should be increased or decreased. A large mass of figures appears in the Schedules to the Bill and today we are considering many Amendments to those Schedules.

These matters are now so complex that it takes a considerable expert to understand them. Most of those affected by the changes do not understand them, and very much resent the docking of an increase to which they think they are entitled. I am sure that the Joint Parliamentary Secretary hears about this from his constituents, just as we do. The point should not be overlooked. It is important that in our social security legislation justice should be seen to be done, and at the moment it is becoming too difficult for many people to understand.

During the Second Reading debate I suggested that it would be far simpler to deal with this complex question by introducing negative Income Tax and completely abolishing family allowances as such. The Parliamentary Secretary replied to that point at considerable length, and I see from the OFFICIAL REPORT that last Friday he replied to it at even greater length when the question was raised by some hon. Members opposite. I very much regret that I was not here on Friday. The right hon. Lady's criticism also applies to me, but I believe that it was possibly more important to try to give advice to the people of Liverpool who are affected by the Government's policies than to have been here arguing about them.

Last Friday the Parliamentary Secretary said that negative Income tax should not be disregarded completely, and he went much further than he did during the Second Reading debate. He even commended the system in some ways, but he again raised innumerable objections about the practicability of introducing it because of administrative difficulties. But there would be great simplification if the principle of negative Income Tax were applied only to those in employment and the present system of benefits, exemplified in the Schedules to the Bill, were retained for those worse-off members of the community in whose families the breadwinner is not in employment. The family allowance could still disappear completely, and the system of negative Income Tax could be introduced simply for those in employment.

I could quote many of the objections the hon. Gentleman raised and refute them, but I do not think that this is the occasion. If the system of negative Income Tax were restricted to those in employment, the objections would not hold much water. The Parliamentary Secretary asked on Friday how Income Tax in reverse would be paid if a man left his wife. I do not think that that was a very relevant argument, because many people leave their wives, I regret to say. I do not seek to encourage the practice, but there is no great difficulty in dealing with their Income Tax affairs by a system of negative Income Tax after they have done that regrettable thing.

I do not want to pursue that point much further, because I believe that I am entirely out of order. But I suggest to the Parliamentary Secretary that if the principle we argued about last week could be re-examined, with a view to applying it only to those in employment and not to the other categories of the worse-off people, it might seem suddenly to be much more practical than it did in the past.

Mr. Loughlin

May I make an oblique reference in passing to this issue, which is completely out of order?

The Chairman

Only if it is very short.

Mr. Loughlin

The hon. Member for Liverpool, Garston (Mr. Fortescue) did me the courtesy of reading the speech I made on Friday. But I can only assume that he did not read it very carefully, because I said that I would not rule out a system of negative Income Tax but that we should have to be absolutely sure that we got it right before we would dream of introducing it.

I should now like to turn for a moment to what was a rather silly outburst by me against the hon. Member for Chelsea (Mr. Worsley). I am afraid that I was a bit rude to him. I consider that that was silly, and I hope that he will accept my apologies and let me withdraw the remark. I became a bit exasperated because, having been associated with the fill over a long period, I have reached the point where I make clear divisions in examining its real purpose and intent.

The Bill does not pretend to be a general up-rating of National Insurance benefits for children. Those benefits were increased by 2s. 6d. a week as recently as last month. The Bill's main aim is to increase family allowances. My right hon. Friend the Minister said on Second Reading: 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 …"—[OFFICIAL REPORT. 8th November, 1967 Vol. 753, c. 1039.] Unlike insurance benefits, family allowances are payable whether or not the recipient is in work. Several hon. Members have referred to Beveridge, who advocated a system of universal children's allowances. When he did that, Beveridge recognised that earnings do not normally take account of the differences in the size of families. However, a working person with children is relatively worse off than a childless person with the same earnings. Family allowances, which are taxable and therefore decline in value with increased earnings, are one way of recognising the difference in responsibilities.

Similarly, on personal benefit alone, beneficiaries with children would be worse off than the childless beneficiaries. But that is already recognised in the provision for the children of beneficiaries by dependency benefits, which supplement family allowances and bring the amount payable for each child of a beneficiary up to the appropriate total.

In the Bill, we are fixing this total at 28s. per week for the child in regard to most National Insurance benefits, and £2 5s. 6d. for widows. Contrary to what some hon. Members opposite have said, the rates of benefits have always reflected the existence of family allowances. This is seen clearly in the provision of lower rates for second and subsequent children than for the first child. But because family allowances have previously been allowed to fall behind the improvements in benefits, it has been necessary for benefits to form a larger and larger part of the total provision.

6.30 p.m.

The hon. Member for Horncastle (Mr. Tapsell) said in his very clear speech that the offsetting of dependency benefits on this occasion was contrary to the policy pursued by the Tories in the past. He said that when the Tories increased family allowances they did not decrease widows' child allowances. The Tory Administration in 1952 increased the family allowance from 5s. to 8s., and at that time the widows' child allowance was half-a-crown. It would have been extremely difficult for the Tory Government to reduce that half-a-crown.

Mr. Tapsell

On the occasion to which the hon. Gentleman is referring the Conservatives had just come to power after six and a half years of Labour rule and were facing the very serious situation that they inherited from the Labour Government.

Mr. Loughlin

The hon. Gentleman gets over-sensitive and distorts history. I do not want to have a discussion on this Bill that is loaded politically. Hon. Members know my attitude to political debate and discussion. I do not think that I have ever had a reputation here for being kindly to my political opponents, but I believe that there are occasions when one can do it and occasions when one need not.

Let me take the hon. Gentleman back to 1952, without going into whether there was an economic crisis or not. I am not arguing that the Tories were wrong in merely increasing the family allowance from 5s. to 8s. That is not under discussion. The point is that it would have been very difficult for them to reduce the widows' allowance when it was half-a-crown.

The second increase in the family allowance by the Tory Administration was in October, 1956, when the increase was 2s. per week. That was tied to only the third and subsequent children. If anyone had talked about making adjustments in any other benefits in relation to increases of that kind, it would have been almost impossible to sustain.

Mr. Tapsell

I apologise for interrupting the hon. Gentleman a second time. I also am very reluctant to get involved in anything in the nature of partisan discussion on this matter. But the hon. Gentleman must admit that he is slightly trailing his coat. Having dealt with two family allowance increases, he will be going on to emphasise the very substantial increases which Conservative Ministers made in child dependency allowances to widowed mothers which they inherited at the absurdly low level of 2s. 6d. a week from the Socialists.

Mr. Loughlin

The hon. Gentleman is getting excited for no reason. I am merely dealing with the point that he made. I am not seeking to score any political advantage. All I am saying is that in the light of the increases granted during that period, it would have been virtually impossible for the Tory Administration to make corresponding decreases in the dependency benefits. It is as simple as that, and I am not seeking to score a point. I am not arguing that the Tory Party did not increase the dependency benefits, for that would be flying in the face of history. I hope that the hon. Gentleman will believe me when I say that all I want to do is to explain what the position is.

I should have thought that the complementary nature of the benefits did not need explaining. Any examination of the existing dependency benefits, or even the proposals in the Bill, would have demonstrated that in one case the dependency benefit is a pure dependency benefit—because no family allowance is paid in respect of the first child—and that in all other cases the sum total, which at present is 25s., is made up of the existing rate of family allowance with an element of dependency benefit bringing it up to the 25s. We are not doing anything in practice to which exception can be taken.

If it is not accepted that the dependency benefits and the family allowances have a complementary nature, I can understand why there is some argument about the concept that we are giving substantial sums of money to people earning £100 a week and taking from people when they are sick and unemployed. But we must get clear in our minds that what we are dealing with here is only one facet of the social security structure to which both sides of the Committee have subscribed so far. The £100 per week man is a bit of a red herring. Whatever we do in this field, unless we accept the situation of complete selectivity it will always be possible for someone to say that we are giving a lot of money to someone who does not need it and could give more money to someone who does.

I shall be ruled out of order it I tall, about selectivity in this debate, and I do not want that. I merely tell the hon. Gentleman that I think that he was less than fair—I put it no higher than that—when he began to talk in terms of the £100 per week man and the person who is unemployed and sick. My right hon. Friend and I are as concerned about the unemployed, the sick and all who are dependent upon National Insurance benefits as any hon. Member. But if it is accepted that there is a complementary nature between dependency benefits and family allowances, what we are doing is reasonable.

It could be argued on this basis that there is no need to increase dependency benefits. Family allowances, on the one hand, are designed to assist parents with large families and with family commitments. I accept the point made by the hon. Member for Cornwall, North (Mr. Pardoe) that there is an additional factor, but in the main the purpose of family allowances is to deal with the situation where a man is in work. The purpose of dependency benefits, on the other hand, is to deal with the situation where a man is not in work but is in receipt of National Insurance of one kind or another.

I said that it could be argued that in a family allowance uprating Bill of this kind it would not be wrong if there were no increases in dependency benefit rates. But we are increasing those rates on this occasion. The figures given by the hon. Member for Chelsea (Mr. Worsley) were correct. We are increasing the first child allowance by 3s., making the total 28s instead of 25s. We are increasing the total allowance for the second child by 3s. Then there is the increase of Is. for subsequent children.

The hon. Gentleman asked me on what basis we arrived at these figures. The purpose of partial offsets, as distinct from total offsets, is that this constitutes part of a package deal. There will shortly be increases in charges for school meals and for welfare milk for children below the age of five. The hon. Gentleman confessed that he was a little confused about the figures. He was not half as confused as I became when I attempted to calculate the effect of this, with all the permutations that arise from some children being at school and some not being of school age.

We have calculated, as far as it is possible to calculate, that we can offset, by the amounts by which we are increasing dependency benefits, the possible increases for families which may arise consequent upon the increased charges for school meals and welfare milk. In the package deal we are ensuring that the fourth and subsequent children of families will receive free school meals as of right.

Mr. Worsley

Is the hon. Gentleman saying that the whole of the net increase of benefits and family allowances, taken together, will go, as part of this package deal, in the increased cost on school meals and welfare milk?

Mr. Loughlin

No, the whole of the net increase will not go in that way. We have tended to err on the generous side. It must not be assumed that the whole of it will be expended in this way. There is an added benefit in our calculations by virtue of the fourth and subsequent children in large families receiving free school meals. It works out at 3s. 4d. a week over the year for each child having free school meals.

6.45 p.m.

Mr. Tapsell

As the child dependency allowance for third and subsequent children is being reduced by 4s., the larger family is losing as a result of the reduction in the child dependency allowance.

Mr. Loughlin

I would not be dogmatic about this. It does not neces- sarily follow in this context that a family with more children, taking the balance between the household's expenditure and its income, needs a greater amount of money because the offsets are part of a package. Some work has been done on this. Frankly, it is not very clear. I appreciate that we are reducing the benefit for the fourth and fifth child by a greater amount than we are for the second and third child. The three-child family gets the additional benefit for the first child of 3s. We have tried to deal with this situation on the basis of the complementary nature of the benefits. We have done it with a degree of equity. I hope that in the light of this explanation the Amendment will be withdrawn.

Dame Irene Ward (Tynemouth)

I must apologise to the Committee for not being here when the debate began. I was attending the Select Committee dealing with the Parliamentary Commissioner. I am therefore at a disadvantage in that I have not heard the whole debate. I also apologise to the Chair for not having risen quickly enough to catch the eye of the Chair before the Joint Parliamentary Secretary began his reply. In the beginning I regretted my tardiness, but now I am rather pleased about it, because I have had the benefit of hearing the whole of his case.

The hon. Gentleman merely said that the Government could not do anything for the widowed mother. He gave no satisfactory explanation why there was this particularly unfortunate attack, because I regard it as such, on the widowed mother. The country does not understand the complexities of this scheme. However much study is devoted to this subject, it is difficult to understand the reasoning behind the Government's decision. I have had a great deal of correspondence on the subject. I have written to the appropriate Ministers asking for a reply. We all appreciate the fact that we get full explanations from the Ministry, an establishment which was laid down a long time ago. Whether we agree with the explanations is another matter.

We all have every reason to thank Ministers from this Ministry for the way in which they try to explain their decisions, and I am always grateful on behalf of those who write to me and to whom I send on the correspondence. Whether they are any wiser when they have read the answers is a moot point, and I sometimes do not understand them myself.

I want to quote one paragraph from a letter about a constituent of mine. It took the Parliamentary Secretary three full pages to reply to me about a very simple case of a widowed mother. I will not weary hon. Members by reading it all, but suffice it to say that the explanation is much wider than that which the Parliamentary Secretary has just given us, although equally unsatisfactory. It is about one of my constituents and it explains the reduction in the allowance for one of her children. It says: First of all, I should confirm that the family allowances increase which"— my constituent— is now receiving for her fourth child has led to a reduction in the amount of the increase of widowed mother's allowance payable for that child. As a result of the recent changes, she receives for the child 5s. a week extra in family allowances and 2s. 6d. less in widowed mother's allowances, leaving her with an advantage from the changes of 2s. 6d. a week for the child. I can see why"— my constituent— should feel that she is unfavourably treated in comparison with an ordinary working person who appears to get the full advantage of the 5s. increase in family allowances for a fourth (or subsequent) child. The Minister is able to see why she should feel aggrieved. I am delighted that we should have had this debate today, because, whatever the reason for family allowances—and I accept all that the Parliamentary Secretary said about them—the fact remains that the widowed mother is to be in a disadvantageous position, and that is intolerable.

The Parliamentary Secretary suddenly shot off at a tangent to speak about school meals. They have nothing to do with the subject. The way in which free meals are allocated has been part of our policy for many years and does not affect the fact that the widowed mother is at a disadvantage compared with other working people in the matter of allowances for certain children.

I feel strongly about this subject because I was the daughter of a widow and certainly my widowed mother never had a large income. I can speak without prejudice. The fact remains that the child of a widow does not have the opportunities which would be provided by a father who by his own skill, whatever it might be, could rise up the salary scale and thus automatically raise his family's standard of life. The children of a widowed mother, unless she marries again, are always at a disadvantage, because her salary or social security, the income which accrues to the family, remains at roughly what it was when the father died. In normal circumstances, as the breadwinner gets older and gets more skilled and adds more years in the Civil Service or in his profession, the standard of life of the family automatically goes up. The family of a widow hardly ever moves from the static position it took up when the mother became a widow.

It is therefore tremendously important that Parliament should always accept, as we have always tried to accept—I do not make any political points—that we have to do something special to protect the family of the widow. Having listened to so many promises and pledges, and attacks when my party was in office, I am bitterly disappointed that the Ministry of Social Security should have decided that it is right to refuse to widows the dependants' allowance in respect of some of their dependent children.

The Parliamentary Secretary said that family allowances were introduced for something quite different a very long time ago. I remember Eleanor Rathbone, our late colleague, the individual who brought about the acceptance of family allowances in our legislation. It took a long time for her to get them accepted as a matter of policy, but I am certain that Eleanor Rathbone would not agree that family allowances should now be operated to the disadvantage of a widowed mother.

I do not think that I need argue further, because the problems and difficulties and figures have already been explained. The explanation given by the Ministry in this long letter is quite unsatisfactory. It is very sad that widowed mothers should feel that they are being unfairly treated. Widows have enough sadness in life without having to feel that they are badly treated compared with families in work and with the opportunity of an ever-increasing standard of life. Psychologically, it is bad for them that they should do so.

I therefore very much regret this decision. I do not accept the Parliamentary Secretary's explanation. However, hon. Members opposite are in a majority, although it is extraordinary how few of them have contributed to these discussions on a very important Bill. That augurs badly for the Prime Minister's pledge when we consider the other problems which will be raised. I will say no more than that. I very much regret the decision not to accept the Amendments to give widowed mothers a better deal.

7.0 p.m.

Lord Balniel

I apologise for missing the first few moments or two of the Joint Parliamentary Secretary's speech but, having apologised to him, I am bound to say that, as I listened to him, I grew more and more disheartened, not because he had taken little trouble in replying—because he tried to reply to the satisfaction of the Committee—but because it was sad to hear him turning down a series of Amendments which we think are very reasonable and rather important. The whole Committee is indebted for the way in which these Amendments have been submitted by my hon. Friends the Members for Chelsea (Mr. Worsley) and the Member for Horncastle (Mr. Tapsell).

We recognise that we are discussing, in these Amendments, probably the most complicated aspects of social welfare schemes, and the way in which my hon. Friends spoke has been of value to the Committee. May I say how much I also appreciated the speech of my hon. Friend the Member for Tynemouth (Dame Irene Ward), because she touched on something of great importance in human relations at the Ministry of Social Security.

We all pay tribute to the way in which the Ministry answers letters, probably more carefully than any other Department of Government. But there must be many a Member of Parliament who looks at the length of the letters, gives a sigh of exhaustion, and passes it straight to the constituent. I suspect, and it is no more than a suspicion, that the complexity of the replies received from the Ministry is not only bewildering to Members, who on the whole are fairly conversant with the structure of social security, but extremely complicated for the great majority of constituents. I am making the point because it was said very effectively that a simplification of replies from the Ministry would be widely appreciated by constituents who raised matters.

Mr. Loughlin

The hon. Gentleman can rest assured that we have given very careful consideration to the nature of our replies, the degree of detail we think ought to go into them, and how we can make them convey the picture in its entirety. He may be interested to know that I have had more thanks given to me personally and in letters from Members opposite than I have from my hon. Friends. They have said that the letters we send out are fully detailed and couched in reasonably nice terms. We have looked at this. I am convinced that it is impossible for us to give the information required in complicated cases of this kind in any other way.

Lord Balniel

Clearly the Parliamentary Secretary has looked into this matter, and it does not surprise me that he has received more "thank you letters" from this side of the Committee, which is noted for its courtesy, than from the other side. These Amendments are designed to help various groups of people in the community so as to ensure that, following the passing of this Bill, they receive the full benefit of allowances. The purpose of the Amendments, and they are multitudinous, is to ensure that certain groups of people should have the full benefit of the 7s. increase in the cash family allowances after taking account of the fact that under the Bill the National Insurance child dependants' allowance for the first child has been increased by 3s.

The problem to which my hon. Friends have called attention arises for the second and subsequent children, because the National Insurance dependants' allowance has been reduced for the second and subsequent children. These Amendments are designed to bring additional help to three broad groups of people, whom we believe should be given a high priority in our social policies and who should get the full benefit of the 7s. increase. It is true that there are other groups of the community whom we feel should receive the full 7s. increase. The Amendments are on the Notice Paper and, as my hon. Friend the Member for Chelsea has said, they show our intentions although, alas, they are out of order under the Financial Resolution.

The groups that we are discussing fall into three separate categories. First, there are widows with children. Secondly, women drawing a child's special allowance. This is an allowance introduced in 1957. and is payable to a woman whose marriage has been dissolved or annulled. It is paid on the death of her former husband if she has a child towards whose support the former husband has been contributing. The third group for whom we are trying to obtain the full 7s. increase are the sick and the unemployed with children.

During the Second Reading debate the Parliamentary Secretary and I had a certain dispute about various figures. I appreciate now that he was trying to be helpful, and that there was a misunderstanding between us as to what exactly we were discussing. I appreciate his helpful attitude, but it does not alter the fact that the principle which I was enunciating was absolutely sound. I concede that in detail the Parliamentary Secretary, with the full resources of the Civil Service behind him, as well as his great knowledge of the Bill, was correct, hut the principle that we are discussing in these Amendments is an important one and it is right that we should be debating it.

I do not want to burden the Committee with more than a minimum of figures because they have already been given by my hon. Friends, but I would like to give an example of what happens under the Bill. First, the sick and the unemployed with children. Under this Bill the married man who is unemployed or ill, with two children, will benefit only to the extent of 6s. a week instead of a full 7s. increase in family allowances. This is because of the reduction in the National Insurance child dependants' allowance for the second and subsequent children. The same failure to give the full benefit of 7s. arises for the widowed mother and for the woman drawing a child's special allowance. The only other example I will give concerns the widowed mother for whom my hon. Friend the Member for Tynemouth made such an eloquent plea.

This is an example of a widowed mother with three children. Under the Bill she gets, I believe, a total of £6 16 6s. This represents an increase of 9s. If she benefited to the full extent of the 7s. family allowance increase she would be receiving, not an increase of 9s., but an increase of 14s. I welcome what the Government have done in this Bill in giving additional help to the first child.

Mr. Loughlin

The hon. Gentleman has fallen into the same error about which I warned him before. He is using a lot of figures, but I want to ask him one simple question. Does he accept the complementary nature of dependency benefits and family allowances? Does he accept that at present the first qualifying child in a family gets a dependency benefit of 25s., and that that is a straight-through benefit? The second qualifying child gets National Insurance benefit of 17s. and then gets the 8s. for family allowances making a 25s. actual allowance. With the third and qualifying child, there are the two elements in the total allowance of 17s. in National Insurance plus the 10s. family allowance. If the hon. Gentleman does not accept this, why has he not been fighting it all along the line instead of trying to confuse the issue when we are simply accepting the same complementary principle as we have had in the past?

Mr. Tapsell

May I make a point which is directly relevant to the question which I asked the Parliamentary Secretary to answer but which I do not think he answered, although he gave some explanations? We on this side accept that every social welfare benefit is, to some extent, complementary to every other one. The question which I asked him was: does he realise that he is introducing an entirely new principle by reducing National Insurance benefits when he increases family allowances?

Lord Balniel

I was perfectly clear in my mind about this matter before the Parliamentary Secretary's intervention. His very prolonged intervention must have caused confusion, not only in my mind, but in the mind of all hon. Members. The answer, as given by my hon. Friend, is that we accept the complementary relationship between family allowances and the insurance dependency. All that I am saying is that there are certain groups of people—widowed mothers, the sick, the unemployed with children and the women drawing child dependency allowance—who are priority groups in the social welfare structure. But we are very sorry that the Government have so arranged the structure of the Bill that these groups do not receive the full 7s. increase for their second and subsequent child. The whole point of these Amendments is that we believe that that group of people should receive the 7s. increase rather than the lesser amounts included in the Bill.

It is clear that, regrettably, the Government do not accept these Amendments. All that I ask them is this: will they consider again, not just the sick, but the chronically sick, those who have been sick for longer than six months, because among this section of the community there is a concentration of financial hardship? Will they also look again sympathetically to the problems facing widowed mothers which have been advanced by my hon. Friends?

Amendment negatived.

The Temporary Chairman (Sir Harry Legge-Bourke)

Does the hon. Member wish to move Amendment No. 4 separately?

Mr. Worsley

No.

Question proposed, That the Clause stand part of the Bill.

Mrs. Knight

During the speech of the Parliamentary Secretary, there were one or two occasions when I thought that he was, tantalisingly, on the edge of a break-through to a great truth. In a sort of verbal minuet, he approached it and then retreated. While I was left gasping and wondering whether he would ever let the true light of it break upon him, he left the matter and went on to another subject altogether. It is essential to boil down the debate to the great truth which we face in this Clause, namely, that at this time there is extreme anger and acute irritation among the public that blanket increases are being granted to all families regardless of need.

7.15 p.m.

We are left in no doubt by speeches from right hon. Members opposite and from other quarters that Britain is in rags, ruin and penury and that we are deflated, devalued and in the hands of the money lenders. Therefore, surely this is a time when excess expenditure of the kind envisaged in the Clause should he considered with very great care. If it were going merely to people who needed it, there would he no question about it and we could all support the Clause with great enthusiasm. But that is not the case.

I do not know whether it is an underestimated truth that the people of this country are very ready to countenance extra expenditure if they feel that it is needed. Similarly, they are well able to bear suffering in the cause of getting Britain out of her difficulties. There is no question about that. What is occasioning extreme irritation is the fact that people feel that a large proportion of the money envisaged in the Bill will go to people who do not need it.

We have heard various estimates of the precise amount about which we are speaking. It is estimated in the Explanatory and Financial Memorandum that the gross amount in the first full year will he about £124 million. The net amount was quoted earlier. But then are added the words—and they are rather sinister—"increasing steadily thereafter". Let us be in no doubt, therefore, that a large amount of extra expenditure is envisaged.

Whenever we set our hand to Measures of this kind, it is important to recognise that we act, not in secret, but with the eyes of the world on us. When a man goes to his bank manager and asks for money to spend on a project which he cannot afford without assistance, the bank manager casts a very jaundiced eye afterwards if he sees that the man has spent a large amount of money on fitting out his children with new clothes. I would not argue, about fitting out children with new clothes if they needed them and if their existing raiment was in holes. I wish to voice what I believe is a very strong feeling of anger in this country that so much of this money is going to people who do not need it.

There is talk about the famous fur-coated lady who goes to draw her family allowance. Just because a lady is fortunate enough to have a fur coat, I would not suggest that she is of necessity in the higher income group. But some people believe that people of this kind who draw the family allowance should not draw it. My hon. Friend the Member for Bournemouth, West (Sir J. Eden) touched on this point. He said something which I think was a little misleading. The fact is that even if a person does not draw the family allowance, he is taxed on it as if he had drawn it.

I had a letter from a constituent, from which I will read an excerpt. It says: I am ready to do my share to help our country get back on its feet, but I must heartily condemn any increases in pensions, family allowances, sick pay etc. unless these terns are selective. There have been so many increases in the National Insurance over the past few years that it now becomes a major item from one's pay. When people are living alone, like I am, dependent upon my own efforts, through no fault of my own…constant rising of outgoings are drastically reducing my own standard of living. At 55 I pay single person's rates and do not get any other than the initial Income Tax relief, and whilst I would not grudge help to those truly needing it, I feel that many families getting large sums are not in need. This brings me straight to the point made by the hon. Member for Manchester, Exchange (Mr. Will Griffiths) and the Minister. Both seemed to imply that there was something morally wrong in seeking to curb expenditure on social services. The Committee should be absolutely clear on this there are social services and social services. The point about the lack of need is worrying many people. Many poor families are desperately in need, but it seems that they will not be much helped by the Bill.

We have discussed Amendments covering widowed mothers, but other persons are in great need, divorced mothers and persons who look after elderly dependants. There are old persons who receive no pension. My hon. Friends have put forward suggestions for help to them. The Minister blew the trumpet of hope for people of this kind in a singularly muted fashion. There is no doubt that the expenditure here envisaged—such a large proportion of which will go to people who do not need it—could be restrained without any moral wrong, indeed with a great deal of moral right. This is something which the hon. Member for Manchester, Exchange and the Minister seemed to misunderstand.

No one minds increases in expenditure of this sort, but we must recognise that this expenditure, which is very large, will puzzle some overseas friends very much. This is a matter on which we should dwell when we are able to do so. Does the Committee think that the proposal for this vast extra expenditure is right? I do not think so.

Mr. Fergus Montgomery (Brierley Hill)

The Minister told us on Second Reading that this was a powerful attack on child poverty. The Clause deals with the amount of increase to be paid in family allowances. We have been told that the gross cost of this Measure will be about £124 million for the first year. Under the Clause as it stands the poor will be helped at exactly the same rate as the rich. Only slight help will be given to families in real need.

I wonder whether the Minister is completely satisfied with the Clause as it stands and is satisfied that the amount of money to be distributed is being distributed in the best possible way. She said on Second Reading that there were about half a million children in families with resources below the supplementary benefit level, families affected by the wage stop. Their plight has been worsened by recent events, by devaluation, by which there will be a rise in the cost of living. Many of those families have a very difficult time.

I have in mind a hard-working, decent family in my constituency. The father is not in the best of health. He has had to accept a job with a very small wage. There are three children at school, one in the sixth form of a grammar school. According to this Clause, that family will be helped by about 14s. a week. I am sure that they will be grateful, but I would have been much happier if there had been more for that type of family and less for those who can afford to provide for their children.

There are the families of the unemployed, of widowed mothers, and the sick. Those families, living on the supplementary benefit level, will not get the full value from the 7s. per child. That is given with one hand and taken away by the other. I am sorry to labour the point and I know that the Parliamentary Secretary spent a great deal of time explaining it, but it is very difficult to explain it to constituents.

I understand that the larger the family when on supplementary benefit, the less they will get of the 7s. per child. They get 3s. extra for the first child and the 3s. increase on present rates for the second and 1s. for each subsequent child. This means that a family on supplementary benefit level with two children of school age will get 6s. instead of 7s. With three children of school age they will get 7s. instead of 14s. and with four children of school age they will get 8s. instead of 21s.

The Parliamentary Secretary spent a great deal of time explaining this but it is still difficult to put it over to the families concerned. They read in the newspapers that family allowances are to be increased by 7s. per child after the first child, but when they do the arithmetic and get the actual amount they find it is a great deal less than they had expected.

I am certain that the hon. Lady is as anxious to alleviate the poverty which exists as we are, but this Clause only skirts the question. Perhaps it is a holding operation. If so, how long is it to be a holding operation? There were peculiar circumstances earlier this afternoon when we were told that at some time in the future there is to be further legislation to try to eradicate some of the ill-effects among poor families of devaluation.

It would have been much better if the whole thing had been embodied in this Bill so that we could give help to those people as quickly as possible. Under this Clause those families will not be helped until April next year. If we have to wait for further legislation, how soon will the benefits of that legislation be felt by families which really need them?

I wonder whether hon. Members opposite remember that their Election Manifesto in 1964 said: 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. It is rather significant that that pledge did not appear in the 1966 manifesto. It would be interesting to find from hon. Members opposite whether it is still part of their party policy. That pledge would be a great deal of help to a lot of people today, but this Clause does not go anything like as far as that pledge.

7.30 p.m.

I would ask the Minister, in thinking about this whole system, to bear in mind the great increase which we shall have in our population over the next few years and the fact that our working population will not increase by anything like the same amount. In other words, we shall have a smaller percentage of people working to support a larger percentage of people having social benefits of one sort or another. Therefore, I wonder whether the right hon. Lady is satisfied that this money is being spent in the right way, and whether she will give thought in the future to trying to channel it where real poverty exists, and do something about it.

I cannot vote against this Clause, because it is giving some assistance to some of the people, but I am afraid that it does not give nearly as much help as I would like given to the people I personally would like to help.

Mr. J. T. Price (Westhoughton)

I think it would be very unfortunate if my right hon. Friend were left, as a result of this debate, with any impression that some of the views expressed from the opposite side of the Committee are peculiar to that side of the Committee. Lest any such view should be taken, I should like to make it quite clear, speaking entirely for myself, and not for any group or cabal of hon. Members, that I, too, am critical about the way in which this benefit is being put forward.

I had the pleasure and advantage of listening to my right hon. Friend explaining the Bill on Second Reading. I listened most attentively to the arguments in support of this proposal to extend this benefit to improve these family allowances right across the board, to an extent estimated at £124 million in the first year, rising thereafter to some unspecified figure. Anyone who cares to look up the Minister's speech would scarcely find sufficient argument or evidence in that speech to support such a comprehensive method of dealing with this problem.

I think it is common ground between all Members in this Committee that we have sufficient good will to extend generosity to the utmost limits of our resources to the 150,000 or so deprived families, the large families, with sickness, with unemployment, the kind of families who are living very much below the poverty line, and about whom a Committee has recently reported to the Minister. But, so far as the generality of the public are concerned, this country is living in very parlous times. We know there are many anxieties which beset the minds of our constituents. Nevertheless, no one can say that a very large section of the 26 million or so insured contributors who pay to the social insurance fund are under present conditions having the sort of time which justifies this Measure. I am aware, of course, that many people are unemployed; I am aware that many people have large families and have not sufficient income to sustain them. This Bill is directed to raising their standard substantially beyond what it is at the moment.

However, when I was a young man—which was some time ago now—and was taking my first maiden flights into social activities connected with the Labour Party, we early Socialists of those days—and I am not as ancient as all that, let me say, so that we do not get the context wrong—the people of my generation, had inscribed upon our banners, in putting forward the reforms we thought necessary, a slogan, as many parties bear slogans, and our slogan was: "From each according to his ability. To each according to his need." I think that was a fine ethical motto to put on any banner.

Mrs. Knight

Es it still there?

Mr. Price

I hope I may put this case in the way I wish to. I am putting it moderately and temperately and, I hope, logically.

We have now, apparently, arrived at another situation, because of our industrial and social history. Anybody who lived during the early part of the century and through two world wars, saw what was, heaven knows, the horrible poverty which used to beset our people, mainly in the great cities, with which, I suppose, the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) was not familiar. As a Lancastrian living in the industrial north, I saw this kind of poverty on such a scale that I doubt whether the present generation, even my right hon. Friend the Minister, could possibly conceive it, because she has not seen it.

Mrs. Hart

Will my hon. Friend allow me?

Mr. Price

Certainly.

Mrs. Hart

During the black years of the 'thirties I saw plenty of it.

Mr. Price

I am glad to have that assurance. I am only making the point to come to the next point, because I think one needs a little historical perspective to get this argument right.

During those black years we had a means test, which was dreaded by most working-class families suffering poverty, deprivation and unemployment. It was so severe, and so punitive in its effect upon the people who were seeking the very modest and tiny social benefits which at that time were available. In those days the family which had only one effective breadwinner and which sought public assistance from the old boards of guardians, as they were called in those days, had to put the whole income of the family into a pool and the family's income was taken as a whole before any member of the family was entitled to draw any assistance at all. That was the means test in its crudest form. It led, as my right hon. Friend knows, to the break up of families because a family's breadwinner, on whom the family mainly relied for a few shillings a week, would go to live somewhere else so that the public assistance authorities could not include his earnings in the family's income.

We look back on those days with a good deal of nostalgia. A good many of my hon. Friends who remember those days still bear the brands of the damage done psychologically to our generation by the crude and coercive conditions of the means test under the Conservative Governments of those days—if I may make a small party point. I am glad to see that in this modern Parliament we have newer people coming along, who may be better educated, who may not have had to suffer such personal hardship. I am glad to see liberal instincts. of which we regarded ourselves in those days as the guardians, permeate this Committee, so that the Committee has become more liberal in its attitude to social problems. A generation ago it would have been impossible for anybody sitting on the Opposition side to make the sort of speech which was made by the hon. Lady the Member for Edgbaston tonight. I am all in favour of these benefits for those people who are in need. It would have been impossible a generation ago to give such benefits, but, thanks to the propagandists and pioneers of social reform, the spirit of those reformers has permeated our modern society and we need no longer labour in vain in trying to get a more humane attitude to social problems.

But, frankly, when I look at the scale of our commitment to expenditure of public money on all kinds of desirable social projects in our social services, on social insurance, on public health, on education, and all the other desirable things, I have got to be selective in what I regard as the priority charge on the rational Exchequer. I hope that that's not an unfair way of putting it. There fore, during this Committee stage of the Bill, which may be too late to make any impact upon the present policy, I say earnestly to my right hon. Friend that she would be mistaken if she assumed that the kind of criticism being ventilated from the other side of the Committee 's peculiar to that side. Many of my colleagues share my views, and I should not like it to go out from this Parliament that the Labour Party is so tooted to the old, traditional attitude towards the means test that some of its members do not realise that, if we are to help the worst hit members of our society who are below the poverty line, the argument cannot be sustained any longer that benefits should be extended right across the board to every family, regardless of social position or income. I hope that I shall not have spoken in vain tonight and that any hon. Member who shares my views will be generous enough to support what I have said.

I represent a constituency in Lancashire, and Lancashire is probably one of the most earthy areas in the country, where people are more concerned with a common sense attitude towards problems than with sophisticated arguments put forward by polemical speakers. My constituents tell me that it would be folly to extend these benefits indefinitely, because they have an impact upon National Insurance contributions which are becoming increasingly oppressive on the wage envelopes of the lower-paid workers. That is a valid Socialist argument, and it is also a valid trade union argument.

I do rot wish to detain the Committee any longer in listening to my rather discursive little speech. However, I felt strongly impelled to say that, when we propose to spend such a large sum of money as £124 million on one single improvement in a social benefit which is so desirable to a large number of people, the Minister should be asked to give a more convicing reason for doing it than she has. I was christened Thomas. I hope that I have justified my name, because I am still a sceptic.

Mr. Pardoe

I want to take up one or two of the points which have been made in the debate. First, I accept that there is a strong feeling in the country that we should not be giving blanket increases across the board. This is always the case. I have had the same sort of protests as the hon. Member for Birmingham, Edgbaston (Mrs. Knight) has had, and one does the best that one can to refute them.

I have some sympathy with parts of the case made out against giving blanket increases, because I believe that we should try to redistribute the total sum of money which we allocate to the improvement of family conditions, and that is one of the reasons why the noble Lord the Member for Hertford (Lord Balniel) and I have had some altercation. I do not argue that we should take away all the money which we pay to middle and upper income group families. What I am saying is that we should not give the extra to those who do not need it, and that we can avoid giving it to them by rearranging our present tax allowances.

To take my own case as an illustration, I have three children under 11 years of age. For the first child, I get a tax allowance of £47 10s. For the second child, I get a similar allowance and, under the provisions of the Bill, I shall get £39 from the Post Office, making a total of £86 10s. For the third child, I get the same tax allowance of £47 10s., and a further £44 4s. under the Bill, making a total of £91 14s. It means that, in one form or another, I shall get a total of £225 14s. from the State, which is an increase of £39 on what I get at present.

7.45 p.m.

My point is that the tax allowances for children could be rearranged to ensure that I do not get the extra £39. Let me say at once that I am not arguing that I do not want it. However, it is wrong that the money should be paid to those in the middle and upper income groups where it is not so badly needed. After all, we are trying to deal with poverty in the Bill. It is for that reason that I say that we should rearrange our tax allowances, and I hope that the noble Lord and I will not fight about that.

The hon. Member for Edgbaston rather implied that we are spending too much on social services, and she mentioned the reaction of other countries. She said that, in our present economic situation, some countries will be puzzled by these provisions—

Mrs. Knight

At no stage did I say or suggest that there was anything wrong about expenditure on social measures. My whole speech was devoted to developing the point that the money should be spent where it is most needed, and that there was nothing wrong in avoiding spending it on the kind of people with whom the hon. Gentleman has just ranged himself. There is no case at all for giving more money to people who already are in receipt of sufficient to enable them to manage satisfactorily without an increase, and the money thereby saved should go to those who need it.

Mr. Pardoe

I am glad that the hon. Lady has denied the allegation that she thought that we were spending too much on social services. Unfortunately, her view is not entirely shared by everyone, and hon. Members on both sides of the Committee have been subjected to complaints that we spend more than foreign countries on these matters, and that it is one of the reasons for the decline of the Empire, and the rest of it.

However, it is interesting to point out to such people that we are lagging behind in our expenditure on social services compared with other countries in Europe. If one looks at the proposed family allowances under the Bill and compares them with those of other countries, one finds, for instance, that family allowances in France amount to about £5 a month for the first child, rising to £7s. 10s. for the third and subsequent children. That is rather higher than the figure we are discussing. In Germany, there is no allowance for the first child, but the allowance for the second child is £2 5s. a month, rising to £6 5s. for the sixth child and subsequent children. These are substantial sums—

Mr. J. T. Price

I agree that those are fair comparisons, but, on the other side of the coin, has the hon. Gentleman got the figures of the contributions paid in these countries?

Mr. Pardoe

Unfortunately, I have not, but I was coming on to the point made by the hon. Member for Westhoughton (Mr. J. T. Price) when he said that undoubtedly there are people in the country who resent the contributions which they have to pay. Family allowances, of course, do not come out of National Insurance contributions, but other increases given in the past few months do. I am opposed to the contributory principle for pensions. Instead, I should prefer to see a social security tax introduced which could not be allocated to Suez follies or even to building motorways, and with contributions related to incomes, so that a person paid according to his ability. I hope that that answers the hon. Gentleman, and assures him that I am on the side of his angels.

I think that a large number of us in this committee, whatever our political views, are in favour of the broad principle of giving more to those who need it, and less to those who do not, but what we are concerned about, even those who cannot go all the way on this, is just how, we do it. The administrative costs are sometimes very considerable, indeed. We know that in 1964, under the old National Assistance Board, administrative costs amounted to about 8 per cent. of the total benefits and this was twice or three times the amount under the National Insurance administration.

Then there is the problem that if we practise selectivity and the means test, it is a disincentive to effort, just as much as progressive Income Tax is. If one believes that progressive Income Tax is a disincentive, one must also believe that selectivity, in the way in which many hon. Members discuss it in the House, is also a disincentive. I think that what we have to do is to come to a united front on what kind of selectivity we are arguing for, and I believe our social services should be linked to the Income Tax form. The disadvantage of this is that the Income Tax form is always out-of-date, and one is often dealing with poverty which arises week by week.

The answer is that in such things as family allowances, and in many other kinds of social service, we should pay a flat rate which is sufficient to bring everybody up to a decent level. We should then add a sufficient amount of the total taxable income to ensure that those who pay the standard rate of Income Tax pay the whole lot back to the Exchequer. This would be simple administratively.

At the moment we have to include in our Income Tax returns the amount which we receive for family allowances. l am suggesting that this amount should De grossed up to such a figure that, when taxed at 8s. 3d. in the £, brings back o the Exchequer the amount that was originally paid out. Administratively this would be simpler than any of the other suggestions that have been put forward, and it would ensure that those in the middle and upper income brackets would have to pay back to the Exchequer what they really did not need in social services.

I propose, finally, to talk about the future. I believe that a much greater part of this problem should be dealt with through occupational schemes. It is already true that the Armed Forces pay a marriage allowance. This is partly to compel-Bate for the additional cost of a wife and family, although it is not paid per child. I think that we might well look to solving our teacher pay problem—though I shall not get thanked for this—by going over to this kind of occupational scheme. A great Liberal, Beveridge, when he was at the London School of Economics, concocted a family endowment scheme which was an occupational scheme, but unfortunately it has not been extended through all the universities.

I believe that the final answer to our problem is that the State should pay a sufficient basic level of family allowance so that nobody can fall below that net, and for the rest, income related to need, to be paid by occupational schemes established in the wages structure of this country.

Mr. Hugh D. Brown

I want for a few minutes to add to the general confusion that exists in the Committee. I confess that I have not heard any brilliant ideas today, but I am modest enough to say in advance that nothing new will come from me either.

We are discussing an extremely complicated subject, and, with due respect to my hon. Friend the Joint Parliamentary Secretary, I must say that he did not help. I am not blaming him for that, but this subject is incredibly complicated, and there is a tendency for us all to indulge in a little propaganda.

I am sorry that the hon. Member for Bournemouth, West (Sir J. Eden) is not here. I wish that I had more constituents whose only concern was whether they should draw their family allowance, or lose it by way of Income Tax.

We have listened to some sickening hypocrisy from hon. Gentlemen opposite, who have asked why we have not introduced pensions for people who do not have them. I cannot personalise, but it was quite sickening to hear the hon. Member for Birmingham, Edgbaston (Mrs. Knight) talking about a subject which we are not even discussing tonight. Hon. Gentlemen opposite were in power for 13 years—and there is no harm it repeating this again and again—and they had plenty of time to do something for the very section of the community about whom this smokescreen is being raised. The idea of world financiers who are speculating in sterling trembling at the thought of our discussion tonight is quite amusing.

I have made this plea before, and I make it again. I have a great admiration for my right hon. Friend's drive and ability. I am not trying to get anything out of her, I am merely saying what is true. This is an incredibly complicated issue. Why is it so complicated? Let us consider some of the things which have to be taken into account when deciding how to hand out money. We have earnings-related benefits, supplementary benefits, unemployment benefits, sickness benefits, with the amount paid being governed by whether it is paid for long-term sickness or not, the additional complication of school meals and welfare foods, should the increases be related to cost of living increases, should they be related to the increase in earnings among the rest of the community, and so on.

Not enough attention has been paid to the point made by the hon. Member for Cornwall, North (Mr. Pardoe). We hear a lot about the lack of incentives for executives. What I am worried about is the lack of examination into the level at which a disincentive might arise if we introduced some kind of selectivity. I do not think that anyone can afford to be dogmatic in his approach to this problem. I realise that we have to do something in the short term to make up for the effects of devaluation, but we ought to take a long, cool look at just where we are going.

It is becoming impossible to convince the public that they are getting their rights. We are not even getting any political advantage out of many of the things that we are doing. This is because it is all so complicated. I am not blaming anybody. I think that we are all caught up in it. I support the Clause and the Bill, but I am pleading for a serious attempt to be made to simplify the method of making payments. We must make a serious attempt to enable the staff in local offices to try to attend to the public. We must try to give them more time to explain to people what is behind the increases, and in this way perhaps get across to the public that we are doing a good job.

I wonder whether my hon. Friend can tell me something more about the person earning £100 a week, to whom one hon. Member opposite referred. I presume that the hon. Member is quite concerned about this individual. To what extent will he benefit under the proposed increase if he has two, three, or four children? It is obviously a good debating point, but we have been subjected to a curious argument by hon. Gentlemen opposite. They have taken one section of the community and tried to give the impression that they are getting more than the poor widow receives. I wish that I could find the widow about whom hon. Gentlemen opposite have been talking. I do not know where she is, but she is certainly not a very average widow.

It is not fair of hon. Gentlemen opposite to say that we are giving less to the widow than we are to the man who earns £100 a week. There are many things to be taken into account. Is she a working widow? What does she earn? Does she receive supplementation? It is dishonest of hon. Gentlemen opposite to give the impression that we on this side of the Committee are concerned only about the millionaire.

Having made those points, and having made my plea for simplicity, I hope that we shall get some information from my hon. Friend.

8.0 p.m.

Mrs. Hart

The Committee will appreciate that we have ranged rather widely in our discussion, but probably quite usefully. I regard it as a pity that we keep having these nibbles at debates on selectivity without ever the chance fully to explore the matter and to go into all the arguments. I would welcome it very much if my hon. Friends or hon. Members opposite cared to find some way of giving us time to explore the issue. My hon. Friend read what I said on Second Reading, when I summarised the situation and made it clear that I did not have time to do more than that. I listed several strong reasons against developing the idea of selectivity further, certainly in family allowances.

We are always limited to the fact that we almost stray out of order when we even refer to this matter, and we therefore cannot explore it in detail. I would welcome the chance to do so. I shall have to speak in a summary form again tonight, but I shall try to explain the situation more fully than I did on Second Reading. It is clearly the desire of the Committee that I should devote my remarks to the question of directing help to where it is most needed. That is the strand of the argument with which the Committee is most concerned.

The last thing in the world that anyone on the Government side wishes to do in this Bill, or in any other Bill concerned with social expenditure, is to make the rich richer. When people talk about help going where it is most needed I ask them to consider the problem of cash benefits in the context of taxation, because the two cannot properly be divorced.

The hon. Member for Cornwall, North (Mr. Pardoe) said that these increases would occur in April under the Bill. I would draw his attention and that of the Committee to two points which are related to the extent to which the Bill will give help to those who most need it. First, the Finance Bill also comes in April. Secondly, as I made clear on Second Reading, 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.

It would be totally absurd and quite unrealistic to concentrate arguments upon this Bill or any other Bill that purported to further the idea of making sure that help went where it was most needed without setting those arguments right in the centre of the taxation system.

I can put various possibilities that would be open to the Committee. One possibility—mentioned on Second Reading and today, and also in the debate last Friday—is a possible negative Income Tax, or Income Tax in reverse, at some time in the future. This proposition is full of the difficulties and complications that my hon. Friend outlined last Friday. It is equally exposed to the difficulty that, in so far as we are talking about negative Income Tax systems, of whatever kind, we are talking about a point which is necessarily pretty far in the future, because in order to carry out any of the systems we need pretty complete computerisation in the Inland Revenue and on the social security side, and however Cast we move on both fronts—and we are moving very fast—we cannot envisage that this would be a real issue for several years.

Therefore, it people want to discuss the question not in realistic terms but in terms of what we should do nine or ten years hence, by all means let them discuss Income Tax in reverse, but it cannot be regarded as a way out, at this moment, in this Bill.

Mr. Pardoe

I am sure that the right hon. Lady will agree that at present on our Income Tax return form we have a figure which states the amount that we receive, and that is included in the taxable income. I merely ask that that figure should be doubled or trebled, notionally. We do not need computers to do that. It is a simple mathematical calculation.

Mrs. Hart

If the hon. Member had waited he would have seen that I was corning to that point. I was dealing first with possible machinery concerned with a system of Income Tax in reverse as a possible method of avoiding means-tested benefits and yet providing that the money went from the rich to the poor. I am explaining why that is not on, in practical terms, for a good while ahead. It is not with us in terms of reality at the moment.

A second possibility is the idea that the hon. Member for Cornwall, North has put forward, with which it is probably appropriate to take the various permutations of give and take, because most are based on the idea that as one gives out so one takes in, and this is in one operation, not related to income or benefit but solely to tax allowances on the one hand and family allowances and cash benefits on the other.

This is an extremely attractive proposition and it deserves the most serious thought, it would solve many of our problems. I merely say that there are a number of ways in which tax adjustments can he made in order to achieve the net result that one does not give more to the rich but one does give more to the poor, and that the strict "give and take" solution is not the only one. These solutions follow the general slogan, "from each according to his ability, to each according to his need". I am delighted to know that so many Conservatives are adopting this as their new slogan for the 1970s. This would he a possible way through the dilemma.

An individual means test of family allowances would create a great number of difficulties, and would not achieve the objects of those who put it forward. In the first place, there are the administrative implications. The burden it would place on an enlarged bureaucracy would he such that I am afraid that the hon. Member for Birmingham, Edgbaston (Mrs. Knight) would be the first to say. "How dare the Government increase the number of civil servants in local offices?"

Mrs. Knight

Does not the right hon. Lady agree that all the way through we are facing means tests of one kind and another. Certainly in terms of children carrying on to further education or any kind of education it is means test, mean test, all the way. It is nonsense to suggest that there are no means tests at the moment. We are hedged around with them constantly. They are with us, and with us to stay.

Mrs. Hart

I take it from what the hon. Lady has said that she would not have any objection if she found that the number of civil servants employed in her local Ministry offices had been doubled overnight in order to deal with the means testing of family allowances. I take it, also, that she is still not clear about the fact that if we related a test of means, at the end where a person pays in through taxation, to universal benefits paid out, we could achieve the same result—that is, of getting money to where it is most need—as if we had a less progressive system of taxation with means tests for the benefits being paid out. She must understand that point. We are talking essentially about a redistribution of purchasing power and wealth. The hon. Lady and other hon. Members, including my hon. Friend, are talking about it so as to restrict themselves to considering only the cash benefit as it is paid out and are depriving themselves of the opportunity of relating that to the taxation end and to how taxation is raised—

Mr. J. T. Price

My right hon. Friend is pursuing a very illusive argument, although valiantly. She is trying to defend using a steam-hammer to crack a nut. I can put it simply with a simple question. How much—if her Department has made any estimate—will be clawed back from the benefit's global cost of £124 million in the first year by the taxation machine? In other words, what do we finish up with?

Mrs. Hart

I am glad to see my hon. Friend allying himself with those hon. Members opposite who have pressed me to say more than I can in anticipation of the Chancellor's Budget in April. I cannot at this stage, any more than the Chancellor himself can. I ask my hon. Friend to accept from me that taxation adjustments must be in the context of the general Budget proposals, and that, as my right hon. Friend the former Chancellor said last week, a redistribution of purchasing power will have to be related to the methods which we use to carry through these Measures. My hon. Friend has been long enough in the House to know that he cannot get more than that from me in advance of April—

Mr. Price

Since my right hon. Friend has been good enough to put it so nicely, perhaps I may say that I am still sceptical about her proposal and that she has not justified her case.

Mrs. Hart

In that case, I invite my hon. Friend to put down a Motion at the next opportunity for a Friday debate on this point when we can have a whole afternoon and I can deal with every point he has raised and make a speech long enough to explain to him what I have in mind.

We are making a considerable contribution by this Clause to the relief of the poverty which concerns us. Under the Clause, some money will go to better-off people who are not in poverty, but this must be seen in relation to whatever taxation adjustments are made in the Budget. Only in that context can it be understood that cash benefits, when they are universal and across the board—even though, when taken by themselves, they can be seen as giving money sometimes to people who need it and sometimes to those who do not—nevertheless cannot be divorced from the tax structure and the kind of progressive taxation system in which we on this side believe.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Schedules agreed to.

Bill reported, without Amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.

8.16 p.m.

Lord Balniel

The Third Reading of this Bill achieves a small niche in Parliamentary history, because this is the first time in the history of the House of Commons that the Third Reading is not an automatic process of law making. It has been demanded by the Opposition that we should have the opportunity to debate this important Bill on Third Reading.

While it achieves a small niche in Parliamentary history, however, I doubt whether the Government can look on it as achieving any mark at all in the history of their thinking on social policies. It is as if they had put the needle back on a record which played in 1947, to give us the old, old tune. It is true that we have a new and energetic Minister, but the tune is old and out of date. The thinking behind the Bill is fossilised. The Bill itself is rigid and inadequate, as has been clearly shown by the inability to amend it to take into account the very serious economic situation which has developed since Second Reading.

I should like to say this to the Minister with all friendship but with great firmness, and, I hope, without presumption. She earlier undertook what my hon. Friend the Member for Aylesbury (Sir S. Summers) referred to as an auction in compassion and she complained that the Conservative Party were shedding crocodile tears about the problems of those in poverty. As my hon. Friend said, she herself is in a vulnerable position. She has taken over a Ministry from which the previous Minister resigned because she was not satisfied that the Government were taking adequate steps to help those in the poorest section of the community.

She complained that few Conservative Members last week attended the debate on the minimum wage, which is nothing to do, incidentally, with her Department, but comes under the Ministry of Labour—

Mr. Loughlin

The hon. Member is wrong.

Mrs. Hart

rose—

Lord Balniel

Let me go on.

It is fair for me to point out that only two hon. Members, I think, of her party have taken part in the Committee debates this afternoon and that every Amendment and new Clause—there are several pages of them—has been put down by Liberal and Conservative Members. Not one is in the name of an hon. Member opposite.

I accept the right hon. Lady's compassion and sincerity, although not the political thinking behind the Bill. I have no doubt that we will have many arguments on political matters, but I ask her, if we accept her sincerity and compassion, as we must, to do the same for us. This is the very minimum of dignity with which we can conduct our debates in trying to help those who are less fortunate than most of us.

Now, on Third Reading, the Bill stands exactly as it did when it was introduced. It is an indiscriminate Measure designed, through increased taxation, to pay increased family allowances for rich and poor families alike. It involves a substantial increase in taxation, about £124 million. As my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) said, not only will there be an annual bill of £124 million but, as the financial memorandum makes clear, there will be an increasing burden on the taxpayer in following years.

The Bill remains, as on Second Reading, one which, because it is indiscriminate and vastly expensive, can only give inadequate help to those in the greatest need. None of the arguments which we advanced on Second Reading have been heeded. No Amendments which we have put forward today have been accepted and, in spite of what we were led to believe the Government would do, no Amendments have been put down by the Government. However, one major change has taken place since the Second Reading. The £ has been devalued. The Prime Minister told the people of the country that the £ in their pockets has not been devalued. He strained credulity much too far. That was a most misleading statement. Every family with children, every family affected by this Bill, will find that as the weeks go by the £ in their pockets or in their purses has been devalued. It will buy less. For every £1 which they earn and for every £1 which they receive in family allowances—

Mr. Loughlin

This is not in the Bill.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order.

Lord Balniel

I have no doubt, Mr. Deputy Speaker—

Mr. Loughlin

On a point of order, Mr. Deputy Speaker. Would you give me your guidance? Does the Bill include any reference to devaluation and to the Prime Minister's statement? Is it not true to say that we can debate only what is in the Bill and not other matters?

Mr. Deputy Speaker

In my opinion, everything that the noble Lord has said so far is perfectly in order. If it had not been, I would have stopped him.

Lord Balniel

Thank you, Mr. Deputy Speaker.

As I said, every which people earn and every £ which they will receive under this Bill in family allowances will buy less food, less clothing and less warmth. By so much has the Bill been devalued even while it was passing through the House of Commons.

I was astonished by the statement of the Ministry of Social Security earlier in our proceedings today when we were informed of the steps that the Government were taking to implement the Prime Minister's pledge to protect the weakest sections of the community. There was the refusal to amend this Bill. There was no indication of how or when help would be given. All we know is that this Bill is to be implemented in April of next year. Even before devaluation, this Bill, because of its indiscriminate, rigid and in some respects wasteful methods, left 250,000 children living in families below the poverty line. Now, with rising prices which will follow devaluation, these families will fall deeper into poverty. The struggle which they will have to face in everyday life will be that much harder.

Most of these children will not be helped by any increase in supplementary benefit, because most of these children are in families where their fathers are in work and are, therefore, not eligible for supplementary benefits. I think the theme which has run through almost every speech, be they from these benches or from the benches opposite, at every stage of this Bill has been one of criticism that no effort has been made by the Government to concentrate help where it is most needed. It is right on Third Reading—I am sure that I am in order to do this—to re-emphasise the failure of this Bill to concentrate resources and to point out what it actually means in terms of people. The Report of the Minister of Social Security on the circumstances of families showed that something like 500,000 children—

Mr. Loughlin

On a point of order, Mr. Deputy Speaker. Would you give me some guidance? Could you tell me when there was a change in the rules of this House which enabled hon. Members to speak on matters that are not actually in the Bill when the Bill is debated on Third Reading?

Mr. Deputy Speaker

In answer to that point of order, there has been no change of ruling. It is perfectly in order on Third Reading, even under the new Standing Orders, to discuss the merits of the Bill and the contents of the Bill—

Mr. Loughlin

The contents of the Bill, yes.

Mr. Deputy Speaker

—and any matters relating to the contents of the Bill. It is in order to give reasons why the Third Reading should either be supported or opposed. Every argument that is relevant to the merits and the contents of the Bill is in order. What is out of order is anything that is extraneous to the Bill. It is out of order to argue that things ought to be in the Bill which are not in the Bill.

Lord Balniel

I am grateful to you Mr. Deputy Speaker, for explaining to the Parliamentary Secretary the proceedures of the House. I am quite sure that you will call me to order when I stray from the procedures of the House. I am being very careful not to refer to matters which are outside this Bill.

What I am explaining to the House, although it seems to cause a great deal of mirth to the Parliamentary Secretary. is that there are sections of the community who are affected by this Bill in such a way that they will be left below the poverty line as defined by the Supplementary Benefit Commission. This seems to me to be serious and completely relevant to the Third Reading of this Bill.

As I was explaining, the Report of the Ministry of Social Security on the circumstances of families showed that something like 500,000 children in 160,000 families are living below the poverty line as defined by the Supplementary Benefit Commission—that which used to be called the National Assistance Board. I quite accept that this marker of poverty is not something which is static. It is not an absolute standard of poverty. For instance, the National Assistance levels rose by 50 per cent. during the period in which we were in office. So, using this definition of poverty, I accept that we are using a different definition of poverty from that which was used several years ago.

Nonetheless I think the Minister will agree that the supplementary benefit level k a fairly rough marker as to where poverty lies. As the Minister herself said oh Second Reading, social researchers take it as their yardstick. She said that if one is above the supplementary benefit level one is out of poverty if one s below it one is in poverty. think everyone will agree that any family today living at supplementary benefit levels is living an extremely uncomfortable life, but any family living below these levels is living in really extremely unhappy circumstances. I think every lion. Member will agree that this is the case.

What the Bill does for families living below the supplementary benefit line is twofold. I quite accept that it helps to a certain degree. Firstly, after increasing taxation by£120 million, the Bill will leave a quarter of a million children living in families below the supplementary benefit level. This is because the help in the Bill is being given indiscriminately and wastefully. A thin layer of help is being given to everybody, whether or not they need it. As my right hon. Friend the Member for Enfield, West (Mr. lain Macleod) graphically pointed out, we cannot give extra help to girls like Cathy because equal help must he given to every Tom, Dick and Harry, whether or not he needs it.

This sums up the argument against the method which the Government have chosen. The condemnation of the method is that a quarter of a million children are being left—even when the Bill is enacted—below the poverty line. The second aspect is that many of these children are living in families in which the breadwinner is unemployed and so is receiving supplementary benefit. However, because of his previously low earnings, his supplementary benefit is wage stopped. One-eighth of these quarter of a million children are living in wage stopped families.

The whole House is disturbed at the way in -which the number of children living in wage stopped families is increasing rapidly. Earlier this week the Minister for Social Security said that the number of such children in September, 1966, was 52,000, whereas the number in September, 1967, had increased to 80,000. I regret that the Minister has not found it possible to amend the Bill—I appreciate that now I am straying out of order for a fraction of a second—to take into account all the recommendations of the Supplementary Benefits Commission in this connection. I hope that at a later stage, perhaps in another place, she will make the necessary Amendments.

We naturally welcome additional help being given to those in need. However, we fear that this tremendous increase of taxation under the Bill, £120 million, is directly contrary to what this country needs, which is not an increase but a decrease in direct taxation. We also regret that this opportunity has not been taken to concentrate our resources to where they are most needed but that, instead, they are being wastefully and indiscriminately distributed under an old-fashioned and worn out system.

8.33 p.m.

Mr. Frank Hooky (Sheffield, Heeley)

I regret that hon. Gentlemen opposite have not taken advantage of the changes in our rules of procedure to permit a formal Third Reading. I cannot understand why the Opposition chose to oppose this technique since nothing said by the noble Lord the Member for Hertford (Lord Balniel) was particularly new or had not emerged in our debates on Second Reading and in Committee. The Opposition did not even take the trouble to take up the full amount of time available on Second Reading to exploit their arguments, such as they were. I therefore cannot see why they have obstructed what I regard as a useful improvement in our procedure.

It is simply not true to say that this is an across-the-board increase. As the Minister pointed out earlier, taking into account the taxation that is payable, there is a sharp distinction between the amounts which the poorest and richest people will receive. Having made a rough calculation, I reckon that people who pay no tax at all will receive an increase per qualifying child of £18 4s. a year; that those who pay at the reduced rate of tax will receive an increase per qualifying child of £14 12s. a year and that those who pay tax at the standard rate will get an increase per qualifying child of £10 15s. 6d. a year. For families with four children that is the difference between an annual increase in income of £54, £43 and £32, which is scarcely an across-the-board increase for everybody.

Although I suppose I should not be, I am staggered by the hypocrisy of the argument of hon. Members opposite. For eight years from 1956 to 1964 they did not increase the allowances and thereby bring help to the poor families. Instead, they deliberately arranged the tax system to bring extra benefits to the wealthiest families, by stepping up the tax allowances for children in such a way that the wealthiest families received the greatest benefit. Yet they now accuse us of not helping the poor families. They also gave an extra premium for children over 16. That is not unreasonable in itself, but they did it in the full knowledge that it was in the richer income group that children over 16 stayed on at school, and therefore got the benefit of the allowances.

There are arguments for such tax arrangements, but there is no justification for hon. Members opposite waxing self-righteous about our not helping the poorest families when they not only failed to do that but deliberately handed out substantial sums to—as they thought—their own supporters in the richest echelons of society. If that is not hypocrisy I should like to know what it is.

Finally, there is the question of the wage-stop. Although I recognise that possibly the Bill was not the place to deal with it, I am genuinely concerned about it. I know that my right hon. Friend is also very much concerned about its principle. I hope that her concern will continue, and that in the not too distant future we shall have substantial and positive action to deal with what I regard as a blot on our social security system.

8.37 p.m.

Mrs. Hart

I agree with my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) that we have had ample discussion on Second Reading and in Committee, and most of the speech of the noble Lord the Member for Hertford (Lord Balniel) was singularly repetitious. However, there are one or two points to which I wish to reply.

The first concerns the wage-stop. I am not sure what the noble Lord was implying. It seemed that he wished legislation to be introduced to end the wage-stop. I do not know whether that is what he wants, because the Supplementary Benefit Commission has been looking at the operation of the wage-stop, and there is no need for legislation to carry out its conclusions. I take it, therefore, that he, like my hon. Friend and many others, would like to abolish it completely.

Lord Balniel

No. The right hon. Lady is mistaken. The Supplementary Benefit Commission's report on the wage-stop was in her hands nine days ago. We asked that a copy should be placed in the Library to facilitate today's debate, but the right hon. Lady has found that impossible, for reasons which I do not understand. If the Amendments to the Bill which I suggested on Second Reading can instead be done by administrative means, I am only too delighted. My point was that if legislation was required I hoped that she would introduce it later in another place.

Mrs. Hart

I am grateful to the noble Lord. I did not misunderstand him. As he knows, because I said so on Monday, the Commission's Report is being published extremely quickly, and it will be in the hands of hon. Members very soon.

My hon. Friend has dealt very effectively with the noble Lord's basic argument about concentrating help where it is most needed. On Second Reading the noble Lord made his generalised demand for concentrating help where it was most needed and his generalised criticism of what he described as indiscriminate relief. He put forward suggestions about how this might be achieved—suggestions about bigger family allowances for the largest families, bigger family allowances for the older childen, and Income Tax in reverse—and said that the whole thing could be solved by major reconstruction of the whole system of Government as it affects the social services.

What is interesting is that, despite the temptation presented to him by his hon. Friends, the noble Lord has at no point during the proceedings on the Bill committed the Opposition Front Bench into a belief in means-tested family allowances. Some of his hon. Friends would have done so, but he has been wise enough—I congratulate him—to refrain from totally committing his party to a concept of this kind. I believe that this is because he knows it to be totally unrealistic and incapable of giving any assistance to our main objective of ensuring the right kind of redistribution of purchasing power and wealth. I congratulate the noble Lord on refraining from succumbing to the temptations with which he had been presented on all sides—by one or two of my hon. Friends and many of his hon. Friends.

The Bill, as I said on Second Reading, makes a real contribution to helping those who are in the greatest need, the families defined in the Ministry's survey as living in poverty. It cannot go the whole way. It cannot pretend to be anything more than a serious and helpful contribution to the ending of poverty. I wish that I would not be out of order if I were to follow the noble Lord along the avenues that he opened up. I should like very much to know what the Conservative Party thinks about the way to end the low wage structure which is the underlying root cause of the poverty about which we are talking. Would the Conservative Party, as I rather suspect from one or two of the things the noble Lord has said this evening, favour a direct State subsidy to low wages?

Lord Balniel

No.

Mrs. Hart

Then, would the Conservative Party favour deliberate action to create a minimum wage? Perhaps that is what they would favour. On the other hand, perhaps they have no policy at all for dealing with the problem of low wages. To the extent that they offer us no constructive thoughts on the basic problem of low wages that was being explored by my hon. Friends in the social security debate on Friday, no solution beyond vague suggestions of means testing, hon. and right hon. Members opposite cannot claim that they are taking the thinking of the country any further forward in the attack that we are seeking to make on the remaining poverty.

The Bill raises issues on which there are many divisions of opinion. However, the one thing about which we are in agreement is, I think, that in what it does for the people who need the help that it offers them it is an extremely useful Bill. I hope that it will speedily pass through its remaining stages.

Question put and agreed to.

Bill accordingly read the Third time and passed.