FAMILY INCOME SUPPLEMENTS BILL

HC Deb 10 November 1970 vol 806 cc217-339

Order for Second Reading read.

4.0 p.m.

The Secretary of State for Social Services (Sir Keith Joseph)

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

The subject with which the Bill is designed to deal is one of the greatest interest to both sides of the House. Family poverty is not a subject as easy to penetrate as many people would tend to think, and we shall this afternoon, I hope, try to understand some of the difficult interrelations and interactions which make the subject one of absorbing difficulty as well as of commanding interest.

During the election campaign, this Government pledged themselves to tackle family poverty over the lifetime of this Parliament. The Bill now before us is the first step in our policy. We are, naturally, starting with that part of family poverty with which it is most urgent to deal, namely, the poorest of the poor who are in work. The fact that relatively small numbers will come within the benefit of the Bill is not a reflection of a lack of interest or lack of proportion on the Government's part but, rather, a reflection of a series of steps taken by previous Governments which have together brought about an improvement in the standard of living of the people, coupled, alas, with a fierce inflation from time to time which has sharply reduced the value of money.

The number coming within the benefit of the Bill, so far as we can estimate—we are erecting estimates on the basis of outdated surveys and on the basis of very small samples—will be about 134,000 couples with children, including 24,000 unemployed on wage-stop, and about 54,000 single persons with children, a total of nearly 190,000 households containing, probably, about 500,000 children. All these people, except the 24,000 households whose wage-earner is unemployed and wage-stopped, are in full-time work and are, therefore, disqualified from the supplementary benefit which is available as a long-stop for all who, when unemployed, sick or elderly fall below a certain standard.

In opposition, we who are now on this side thought that the right way to bring benefit to those in family poverty would be by a continuation of the device invented by right hon. Gentlemen opposite, an increase in family allowance coupled with claw-back. As soon as I came into my present office, I at once requested an examination of the possibilities of moving along that path. I asked not only for an examination of an increase in family allowance with claw-back but also for an examination of all the variants of that possibility. Rapidly, I came to realise that, for a number of reasons, this was by no means as effective a first step as we had in opposition assumed.

First, I realised when I came closer to the figures that family poverty is not afflicting only families with large numbers of children. About one-third of families whose breadwinner is in work who are living below the supplementary benefit level are families with only one child, and these households could receive no help from an increase in family allowances as they are at the moment. Hon. Members may say that one could easily change family allowances in order to pay a benefit in respect of the first child. It could be done, but it could not be done quickly. There are probably about 3 million households in which there is one child, and their names are not automatically known to the social security machine. It would take far more than even the time we shall take to bring the family income supplement into being to bring benefit to them, quite apart from the question of cost and the fact that 90 per cent., or even more, are not in urgent need.

Second, an increase in family allowance at any level which has been discussed, whether taxed or tax free, could not provide the scale of help which the very poorest of wage-earning households desperately need, that is, not without going into astronomic figures, because the family allowance would be payable to all households with children, even with a claw-back provision were it available.

Third, we found that the scope for claw-back was much smaller than we or, I think, the whole House on both sides had realised. Claw-back, as the House will recall, is the device by which the entire extra payment of an increase in family allowance is recovered from all who pay tax at the standard rate. What I do not think either side of the House has appreciated is that the last Labour Budgets, by their progressive lowering of the standard rate tax threshold, have together sharply lowered the remaining scope for an increase in family allowance coupled with claw-back. The figures are startling. A married couple with three children came into the standard rate of tax in 1967 when the household income was £23. By 1970, after those three Labour Budgets, a married couple with three children began to pay tax at the standard rate when earnings reached not £23 but £16 ls. Moreover, this figure cannot be judged just as £7 below the 1967 level because inflation had debased the value of the £ in the intervening years. Thus, people who are in the category of family poverty are now bearing tax at the standard rate level.

This is a problem which the Labour Party would have faced had it returned to Government. It is a problem which we faced on inheriting office. It presents us with a grave problem for those who are not very poor but poor, far we all realise that the problem of poverty cannot be neatly identified. It is a problem at the extreme, at the levels we are trying to deal with today, and it gradually tapers off into a hard-pressed multitude who are now substantially above the standard rate threshold. Because of the construction of the claw-back operation, anyone who is paying tax at the standard rate gains nothing from an increase in family allowance coupled with claw-back. I find that this point was precisely taken by Professor Abel-Smith in this week's New Statesman, page 590, where, talking of the present day, he says: Thus many poor families would gain nothing from a further dose of 1968-type claw-back". That is the position, therefore, as we inherited it.

I can put the problem to the House in even more dramatic form. When, in 1968, the Labour Government first used the device of an increase in family allowances coupled with claw-back, they were able to provide an extra £47 million for the poor, that is, left in the pockets of the poor, at a gross cost of £180 million. Thus, it was 25 per cent. effective. There are all sorts of ways in which one can use the word "effective". I use it in a highly technical sense here. That is to say, for every £4 spent gross, £1 net stayed in the pockets of the poor.

It is a sad commentary on the facts that since then, the Labour Government took back most of the benefits that they had provided for the poor by lowering the rate of tax and by inflation. Because of what has happened since 1968, if we were to use the same technique now, we would be not 25 per cent. effective but 3 per cent. effective, because we would leave £1 net in the pockets of the poor for every £30 gross we spent. To leave £6 million net in the hands of the poor would, by using an increase in family allowances plus claw-back, now cost £180 million gross.

Hon. Members may say, "But it is only £6 million net", but I hope the House will recognise that this not only increases public expenditure—which is more or less important, according to one's point of view—but lowers the tax threshold sharply, which has unknown implications for incentives. It also shifts £180 million from the pockets of the men to the handbags of the women. That is the point of view that may be underestimated or overestimated, but at least it has implications of which no Government can be absolutely certain.

Mr. Neil Kinnock (Bedwellty)

The Secretary of State says that the men are being emasculated financially by the removal of money from one point of the family purse to another. Would the right hon. Gentleman explain to the House what he sees so manly about a man on a low income having to apply for a family income supplement?

Sir K. Joseph

I will try to deal with all those points. I am afraid, for such a short Bill, it needs a fair amount of complicated presentation and argument.

Facing all these changes in circumstances, the Child Poverty Action Group, which has done much to educate the country—

Mr. Michael Foot (Ebbw Vale)

Everybody but the Government.

Sir K. Joseph

—which has done much to educate the politicians on both sides of the House on the problems we face, has varied its original strategy, understandably, and has proposed a tax-free element in the family allowance. This would certainly reduce the gap between the net and gross cost of what was done, but only, of course, at the cost of giving a tax-free bonus at all levels of income, while being very expensive. The Child Poverty Action Group proposed that we should withdraw all child tax allowances. Those are very large proposals.

The Government are embarked on a study of how to tackle family poverty comprehensively and effectively, and I undertake that the Child Poverty Action Group schemes will certainly be considered by the Government with the others which we are assessing. But it is not for immediate use, because, as I have said, it would lead to a sharp lowering in the tax threshold, with disincentive implications, which would mean a big shift of income from men to women. Perhaps the most important point of all is that, even if we were to adopt the increase of 10s. in family allowances, or even a bigger figure, coupled with claw-back, we would not be able to put into the very poorest working households as much as the Bill intends and proposes to put.

The need at the poorest end is extremely urgent. The one thing about which I am thoroughly apologetic in presenting the Bill is that even when the House has passed it, we shall not be able to get the money into payment until 1st August, for reasons which are resistant to all the administrative drive that my hon. Friends and I and the Department wish to put into this subject.

Mr. Brian O'Malley (Rotherham)

The right hon. Gentleman says that this money cannot be put into the hands of these very poor people before 1st August. Will he confirm that, if he had chosen one of the other alternatives, he would have been able to do it at least six months earlier?

Sir K. Joseph

The hon. Gentleman knows better than that. We would have been able to provide more for the second and subsequent children. But at least a third of the children in the households we are trying to help are single children, and we would not have been able to help those households perhaps even by August, 1972, let alone August, 1971.

The Bill proposes to spend, after administrative expenses, something like £8 million in helping the larger part of the very poorest of the working population, coupled with most of those not working but wage-stopped. I hope that hon. Members opposite will accept with some satisfaction that the Bill provides help for the households on wage-stop and will take many thousands off the wage-stop altogether.

The case I must meet, among others, is that the late kin Macleod, during the last Budget debate, proposed as a priority for his party when in government an increase in family allowances, which he said would be of the order of £30 million to succour the working poor. What I have to explain to the House is that the figure of £30 million which kin Macleod used was one of three relevant figures.

I am afraid that I have to go into considerable figures to explain much of the Bill. I will give the House the figures concerned. Except on one occasion, and that was the second increase after devaluation by the Labour Government in 1968, every increase in family allowances since they were conceived at the end of the last war has been accompanied by an offset in reduction in the dependency scales for children of families in unemployment, sickness and on supplementary benefit.

We thus have one gross and two net figures for increased family allowances. The gross figure that would have been associated with the £30 million proposal of Iain Macleod would now be £187 million, out of which now, if we were to adopt his proposal of an increase in family allowances of 10s. for second and subsequent children, £49 million would go in taxation on the increase of family allowances. Because the vast bulk of the population now pay tax at standard rate, £109 million would have vanished in claw-back. Of the remaining £29 million—that is first cousin to the figure of £30 million which Iain Macleod used—£23 million would go in offsetting the dependency scale of sickness, unemployment and supplementary benefits. By that offset, we would be following every single precedent in increasing family allowances except the second post-devaluation increase in 1968.

Mr. Tam Dalyell (West Lothian)

Would the Secretary of State explain what he means by £109 million having vanished?

Sir K. Joseph

As I explained, the claw-back device invented by right hon. Gentlemen opposite recovers the total increase in family allowances from all those paying the standard rate of tax. That combination of tax on the family allowance increase, claw-back, and the offset on social security benefits, would have left only £6 million out of the whole £187 million in the pockets of the poor, compared with the £8 million which this Bill, subject to a number of points I am coming to, proposes to leave.

If hon. Members say, as they are entitled to, "Oh, but at least the family allowance increase would be automatic", then I have to tell them that against that a family allowance increase would not be given to the first child or to the households with only one child. That is why we have chosen for the first step to use the family income supplement procedure.

I will go quickly through the Bill and then deal with the cases against it. Clause 1 provides family income supplement to be payable to certain families whose weekly resources fall below a prescribed make-up level. For this Bill, a family is a couple with a child or children or a single woman with a child or children even, in the latter case, if the single woman is not a householder. The Bill will help households where a single woman with a child or children is living with her parents or relatives.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

Before the right hon. Gentleman leaves this complicated point, Clause 1(1)(b) refers to a man living in a household which includes a woman. Would it also mean a woman living in a household which includes a man? I have in mind a woman with a disabled husband where the woman is the wage earner and is in fact head of the household.

Sir K. Joseph

My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) raised this point with me last week. The answer is no, because, in that household, the man would be unemployed and on supplementary benefit. His wife would be able to earn a relatively small amount within the disregarded category and therefore the household would not be within the scope of the Bill. However, though important, that is very much a Committee point.

Mrs. Shirley Williams (Hitchin)

May I pursue this point a little further? The Bill is not at all clearly drafted. I would also raise the point about a mother living with her son who himself has children. Would she be brought within the meaning of "family"? I have in mind a woman living with her son who himself is raising children on his own. Clause 1(1)(b) suggests that only a wife would be included as "a woman" in that household.

Sir K. Joseph

A household is one with children. A grandmother living with a son who himself has children would not be within the scope of the Bill. The son with children might be. I think that that is the position, but I would like to reserve judgment on it. We shall have to define carefully in Committee and in subsequent regulations exactly who is included.

Clause 2 provides for the prescribed amount—the make-up level—to depend on the number of children in the household. Clause 3 provides that family income supplement shall be half the difference between the family income and the make-up level, subject to a maximum of £3 a week. Clause 4 defines the method of calculating income; this we intend to be a simple test of parental income—not a means test involving an assessment of capital; very rarely will this involve a visit to the home. It will be as simple an income test as we can devise. Clause 5 lays down that claims shall be made by a couple jointly in order that we shall be sure that we know the household income, but received by either. Clause 6 enacts that the determination of whether anything and how much shall be paid as supplement will be for the Supplementary Benefits Commission, and that the supplement shall be payable for 26 weeks unaffected by any change in circumstances since the supplement was awarded. Clause 7 provides for appeals. Clauses 8 and 9 make precautionary provision against serious abuse. Clause 10 ensures that the supplement is inalienable, and Clause 11 provides us with powers to make regulations, two of which—varying the make-up level and the amount of the supplement—would be subject to the affirmative procedure. We shall also have to make regulations to define what is full-time remunerative work.

The intention here is to provide the exact complement to the requirement which makes a household eligible for supplementary benefit. Anyone not in full-time work is eligible for supplementary benefit. If anyone is in full-time work, we intend that he shall be eligible for family income supplement. We must make sure that we get the frontier right, but that is the intention. We shall also have to define in regulations who is responsible for a child and what, for this purpose, a child is.

Clauses 12 and 13 cover the issues of false statements and legal proceedings.

I had better go into Clause 14 in a little more detail. It eases the supplementary benefit wage stop provision by providing that in calculating what a person's net weekly earnings would be if he were engaged in full-time work, the weekly amount of the family income supplement which would be payable should be included as income. This will ensure that the majority of wage stop cases benefit by the introduction of this scheme.

There have been a number of criticisms of the Bill. I want to try to meet or at least discuss them. First there is the argument that we are reverting to Speenhamland. A number of my hon. Friends who are apt to use this criticism are among those in this House with the greatest familiarity with our social history. They will know that Speenhamland came to affect the majority of rural workers at a time when there was no organised trade union movement. The contrast with this Bill is startling. It will bring help to well under 1 per cent. of working households at a time when the trade union movement is strong. It is highly unlikely that the small extra payment which we are providing will in total enter into wage negotiations or calculations. This will not be the first time that a household with a wage earner in work will have had a benefit. There are rent and rate rebates, introduced by right hon. and hon. Gentlemen opposite. There are free meals for those in poor circumstances. There is remission from charges and family allowance increases plus claw-back. These are all methods of bringing help to the working poor. If none of these have damaged the earnings structure of our workers, why should this marginal addition in gross terms be so dangerous?

Secondly there comes a criticism from the Opposition. Their Amendment says that the Bill will not encourage employers to raise low wages. As a general proposition, I suppose that that is true, but nor would an increase in family allowance plus claw-back in itself encourage employers to raise wages. None of these, in as much as they help the poor, actively encourages employers to raise wages. It could be said that making school meals free to the poor, free milk, rent and rate rebates, remissions of charges and so on, all make it more possible for employers to neglect the interests of the very poor. But this adds only one other strand to what is already a widespread effort to bring help to the working poor. There is a 50 per cent. taper built into the Bill. Those who benefit from it will lose only half of any increase in earnings so they will still be interested in increasing earnings.

The next criticism is again from the Opposition, who say that the Bill will benefit a tiny minority. I am not clear what they mean. If it is a tiny minority of the people, that is correct. Under 1 per cent. of the working population will benefit. But we are distinguishing those who most need help and, while not forgetting those who need help but cannot be helped in this way, they represent a tiny minority.

It may be that the Opposition are shifting their ground. When in office, they took the supplementary benefit level as the poverty line. If they are saying that we are helping only a tiny minority of those below the poverty line, they are wrong. We shall help over half the households below the poverty line as defined by the supplementary benefit level. However, I hope that the hon. Lady will explain to what "the tiny minority" refers.

I must confirm that there are large numbers of working households which are very hard pressed although their incomes are often substantially above the supplementary benefit level. There is one principal reason for this. It is that many of the poorest pay large rents. The people who pay large rents are not helped by the Bill, and that is why the Measure brings help to only between one-half and one-third of working households below the supplementary benefit level.

However, what my right hon. Friend the Secretary of State for Environment announced last week—namely, the proposal to provide a national standard rent allowance for all tenants of public and private housing except in the furnished sector—will provide real help to those this Bill cannot help, as well as to those whom the Bill does help. Of course, the House will have to wait to see my right hon. Friend's proposal. [Interruption.]

The next group of criticisms is that the Bill involves another means test and, moreover, that the help in it will not reach those who need it. It is true that there is another test, but it is an income test and not a means test. I hope that we will make use of the Bill to reduce the number of tests that exist.

Already we have arranged that payment of a family income supplement will automatically entitle the adults in that family to free prescriptions. I hope to arrange—I cannot yet commit the Government to this—that the adults in families helped by the Bill will automatically be exempt from dental and optical charges as well.

We must make use of this procedure to, if possible, provide a passport for the very poorest families to all the remissions that there are—and the Bill will give us contact with the very poorest working households. Far too little is known about them. This knowledge will enable us to ensure, so far as we can, that these households apply for rent and rate rebates and any other benefits that are available.

Then there is the criticism that the Bill will not reach everybody. I agree, and I have already admitted that. However, the alternative—namely, an increase in family allowances—would not have reached the first or only child. We will do our very best, by the most elaborate take-up campaign, on which we will embark early next year, to reach all the households we possibly can; all the two-parent and one-parent and wage-stopped families which come within reach of the Measure. The finances presume that we shall have an 85 per cent. take-up. I will do my best to do that, and better.

Then there is the criticism of the hon. Member for Oldham, West (Mr. Meacher) in The Times this morning that even if the Bill is successful it will not carry to families just above the poverty line. It will not, I agree, but unless we forget the disincentive danger—and there is a small one—and fill 100 per cent. of the gap between a household's income and the make-up level, then automatically we shall be failing to reach the so-called poverty line.

I do not believe that the Government should be ashamed of that. After all, the Bill will provide up to £150 for the very poorest working households, and if that does not bring them up to the supplementary benefit level, it will be of substantial help and, for some of these households, it will mean the transformation of their lives.

This is only a first step. We will bring help to over one-half of households below the supplementary benefit level. The House is aware of the next step, which is to help those who are excluded from the help given by the Bill because their gross incomes are above the supplementary benefit level but, owing to high rents, their net incomes are below that level. That next step is the rent allowance, and it is in sight.

I must also point out to the hon. Member for Oldham, West, who is enriching our debates by the deep knowledge which he brings to this difficult subject, that his analysis in The Times this morning gives a distortion in this case. He calculates the effect of the assumed Government food policy and rent changes and ascribes to them an increase in the cost of living in 1974–75. He assumes, in comparing the cost of living with the incomes of households, that both earnings and family income supplements have remained unaltered at their present levels.

Mr. Michael Meacher (Oldham, West)

Would the right hon. Gentleman give a commitment at this stage to increase the supplement in line with average earnings?

Sir K. Joseph

I was coming to that. I hope, however, that the hon. Gentleman will agree, first, that, as things are, earnings are definitely rising even for most of the very poor. Already the earnings on which we have based our figures in the Bill are sharply out of date.

The answer to his question is that I think it highly likely that the make-up level will have to be looked at again before the Bill comes into effect. We will have power, which we propose to take under the regulations, to, if necessary, vary the make-up level.

Several Hon. Members

rose—

Sir K. Joseph

I must continue. I have already expressed regret at the amount of time I have taken. I do not want to prevent hon. Members from contributing to the debate.

Once the Bill, assuming it is accepted, is passed, we will embark on making regulations; and I shall try to give as much information as I can to the House about the content of those regulations, perhaps by way of Question and Answer, before the Committee stage. We must make the regulations and then, on the basis of them, we must write the manual of instructions, recruit and train staff and advertise to find the people who will benefit.

We must carry out the necessary procedures to get the benefits into payment, and I very much regret that it looks as if we will not be able to start until 1st August, and even that will mean an enormous effort on the part of the Department and its offices throughout the country.

The Bill adds a third, though much smaller, brother to the weapons with which, in one form or another, the tax arrangements in the economic system take account of those who have children. As we know, earnings take no account of a man's or woman's responsibilities. They are the same for a single or married man, a childless couple or a couple with several children. Thus we have the child tax allowances, which attempt to do justice at the same level of income as between those with and those without children, and the family allowance system, now modified by the claw-back operation. To these two we are adding the family income supplement.

I think it probable that these three brethren will not co-exist in precisely their present form for ever. As I have told the House, we are studying very hard indeed how to tackle effectively the problem of family poverty. This Bill is a first step. Rents—a rent allowance for all but those in furnished dwellings—will be the second step. We are looking at alternative ways forward including, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) mentioned, further use of the family allowance system with claw-back.

For a first step, and because of the very complicated interactions, which I have tried to explain, the Bill, assuming we are successful in our take-up campaign, which we intensely desire to be, will bring much larger help to the very poorest working households than would have been brought by a 10s. increase in family allowances coupled with claw-back.

The Bill will give help to those who are most in need. It will provide for the very poorest working households sums of up to £150 per year each. It will improve life sharply for something like 180,000, or well over half, of our very poorest working households, and I hope that the House will find the Measure acceptable.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

I have to acquaint the House that Mr. Speaker has ruled that the Opposition Amendment in the name of the right hon. Gentleman the Member for Huyton (Mr. Harold Wilson) and some of his right hon. and hon. Friends is selected.

I should also like to acquaint the House with the fact that a great many hon. Members desire to speak in the debate. I earnestly hope that hon. Members will feel able to keep their speeches as short as possible.

4.40 p.m.

Mrs. Shirley Williams (Hitchin)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, while welcoming measures to help families in poverty, believes the Government's Family Income Supplements Scheme will assist only a tiny minority, further extend the complex system of a means-tested society which is an essential element in the policy of Her Majesty's Government, and will do nothing to encourage employers to improve very low wages in certain occupations. The Secretary of State for Social Services produced my speech for me so convincingly that I came to the conclusion that he would perhaps argue his own Bill out of the ring and that it was hardly necessary for me to speak, but although I thought that the right hon. Gentleman put in a very sympathetic and informed way all the objections to the Bill, I felt that his reply to the objections was singularly less powerful.

I want to refer to something which the right hon. Gentleman dealt with in some detail, and that is the original pledge that was made by his party and by the Leader of that party, the Prime Minister, and I then want to come to the Bill itself.

Before doing that, I must say that the right hon. Gentleman, whose respect for Parliament I accept and respect, has put the Opposition in some difficulty, because he has asked for the Committee stage to be taken next week on the Floor of the House. Any of my hon. and right hon. Friends, and hon. Members everywhere, will agree that the Bill as it stands is by no means clear. The right hon. Gentleman himself could not fully explain one Clause. In addition, a very great deal depends on the regulations that are made. When he and his party were in opposition they frequently raised very powerful objections to Bills which conducted a great deal of their scope and meaning in the form of regulations that were not laid before the House prior the Committee stage. As the right hon. Gentleman has pointed out, they could not be laid before the House before the Committee stage was taken. His Bill is a very good example of this. Until we, the Opposition, know what is meant by such things as "remunerative full-time work"—and I accept that he has tried to give us some indication—what happens to the child over 16 in full-time education, the method by which the S.B.C. will deal with claims put to it, and what manner and form the application itself will take, it is extremely difficult for us to judge even the right hon. Gentleman's good faith in putting the Bill forward I shall be grateful if he can give the fullest information in Committee.

It would also be very helpful if, through the Under-Secretary of State when he replies, he would be kind enough to undertake to lay before the House not merely the regulations, and give the Opposition full notice of the regulations but, in addition—and I believe this to be crucial—to lay before the House the actual application form, so that we can judge whether what I must call the right hon. Gentleman's extreme optimism about uptake is likely to be justified in the event.

I turn now to the point raised by the right hon. Gentleman himself about the commitment his right hon. Friend originally made. Replying to the debate on public expenditure on 5th November, the right hon. Gentleman said: … we expressed our preference for an increase in family allowances with claw-back as our first step in tackling family poverty."—[OFFICIAL REPORT, 5th November, 1970; Vol. 805, c. 1388.] I do not make a great deal of this except to say that I accept that when right hon. Gentlemen come to office they may discover facts of which they were not aware before coming to office, but it is valid for us in opposition, to say that right hon. Gentlemen should think very carefully about making sweeping pledges if those pledges may be likely to be refuted by the facts right hon. Gentlemen later discover.

There is no doubt that the Prime Minister made an absolutely clear pledge in reply to a direct question from the Child Poverty Action Group which dealt with the ambiguity of a manifesto put before the electorate. In response to that direct question about the meaning of the pledge which the late Chancellor of the Exchequer had given, the Prime Minister replied: We accept that the only way of tackling family poverty in the short term is to increase family allowances and operate the claw-back there. That statement was not qualified. It was not modified. It did not say, "according to the facts we discover when in office". It was a pledge that the Child Poverty Action Group—and, I must say, the electorate—was urged and encouraged to accept as it stood, and it is a pledge that the right hon. Gentleman has today as good as said it was impossible for his party to carry out when it came to office.

But there is even more to it than this—though I shall not go on with quotations to and fro. The pledge was accepted by the Child Poverty Action Group and by the electorate not so much, necessarily, as a pledge to a particular method of payment of help to families in poverty as to a particular sum. When the right hon. Gentleman says that had he put through family allowances with claw-back this would have cost £6 million as against the £8.6 million in the Bill, I must say that I would not have thought it beyond the wit of his right hon. colleague the Chancellor of the Exchequer to have found other ways of assisting the poor that would have accounted for the £22 million difference between what the Government are doing and what they were quite precisely pledged to do before the election.

The right hon. Gentleman himself mentioned that scope for claw-back had been considerably limited by the benefits made in my right hon. Friend's 1970 Budget. I accept that this is true in one respect, but I must point out that in another respect it is not true, because as he will himself recognise—and I certainly trust his fairness in this matter—my right hon. Friend's Budget very considerably increased the number of families which would receive full benefit with claw-back before paying any taxation on it. Before the 1970 Budget, the two-child family would lose part of the increase in family allowances if its earnings were more than £12 3s. Following the increase in tax thresholds by my right hon. Friend, that figure was increased to £14 8s. before any part of the increase in family allowances was lost. This, as the right hon. Gentleman will appreciate, followed from the removal of reduced rates of taxation on those at the very lowest end of the tax liability column.

I must make another point about the £30 million. It would have been possible for the Chancellor of the Exchequer, had he been less devoted to the concept of reducing the standard rate of income tax, to have satisfied the pledge that the Government made. When the right hon. Gentleman was quoting the article in the New Statesman written by Professor Brian Abel-Smith he might have gone on to the sentence following that which he quoted, which pointed out that a partial claw-back or a partially tax-free increase in family allowances could have met this pledge to the extent that the pledge was made.

Turning from that, though I think it crucial to make it clear that the Government are not obliged to go back on the pledge they made to the poor, I must point out that the £8.6 million involved in the Bill must be compared—and this is the point of our reasoned Amendment—with the £82 million that is being recovered from families under the statement on public expenditure in the shape of extra increases in the charges for school meals, welfare milk, primary school milk, and so on. I shall later point out the extent to which this means that families only a little above the supplementary benefit level will be losing very much more than they gain and will not come within the scope of the Bill. The point of the Opposition's argument is that only a very small number of people are being helped. We might add to that that a very large number of families far from affluent are being reduced to greater hardship by the effect of the Government measures.

Dealing now directly with the Bill, I at once welcome the right hon. Gentleman's extension to single child families of the help he is trying to give. I accept that this is an advance, and it is one which we in the Opposition welcome. But, having said that, I want to turn to the scope of the Bill. The Bill, on the Secretary of State's own submission, could benefit—and I stress the word "could"—some 190,000 families. That is less than two families in a hundred, and it demonstrates the extreme thinness of the Bill that it amounts to no more than 1 per cent. of the total cost of supplementary benefit which goes to some 3 million people. It is, I am afraid, a very, very small triumph for the right hon. Gentleman in his war against poverty. We know from the Family Earnings Survey of 1968 that at that time there were no fewer than 3.4 million men over 21 earning less than £20 a week. This means that the area of poverty and hardship goes far beyond the 190,000 families whom the Bill may affect.

But another feature here is the amount of help that the right hon. Gentleman is giving. I do not in any sense hold him responsible for this, but I think that he will not disagree that some of the more enthusiastic newspapers which support his side of the House have given the impression to anyone reading them that the great bulk of families in poverty will benefit to the extent of £3 a week, or something very close to that figure. For instance, on 20th October, 1970, the Daily Sketch gave two examples—carefully chosen examples—of families that would benefit by £3 a week. But the right hon. Gentleman knows that even if the provision in his Bill is fully taken up, the average benefit of the family in poverty will be of the order of no more than 14s. a week—a very small sum indeed.

Not only that, but the scope of the Bill is bound to be reduced by the uptake under the means test. I want to make it clear that we on this side do not for one moment believe that the estimate made by the hon. Member for Somerset, North (Mr. Dean) that seven-eighths of the families entitled to it will take up the benefit is likely to be anywhere near the truth. All the experience of means-tested benefits up to this time shows that those means tests that are directed towards the poorest families in the land lead to an uptake which very rarely reaches even 50 per cent.

As the right hon. Gentleman knows, the Circumstances of Families Survey shows that two families in five which were entitled to various sorts of assistance were not getting it. We know that in boroughs like Tower Hamlets and Southwark only a tiny minority of poor families receive the rate rebate, although that is a relatively simple means-tested benefit. We know that in 1967 two-thirds of families entitled, and whose fathers were in work, were not drawing free school meals.

We must therefore ask the right hon. Gentleman, as a test of his own sincerity in the Bill: is he willing to commit himself and his Government to undertaking a major family survey which will demonstrate one year after the Bill has run exactly what proportion of families who are entitled will be gaining benefit from the Bill? We believe that a Bill so complex as this—and it must be freely admitted that most hon. and right hon. Members cannot follow it—will lead to yet a further jungle of complexity, of bureaucracy, of officialdom from the point of view of those who already find society a desperately complicated place.

I turn now to a point which the right hon. Gentleman himself fairly made. It may be, Mr. Deputy Speaker, that if my hon. Friend the Member for Oldham, West (Mr. Meacher) catches your eye he will be able to talk in rather more detail about it. We, the Opposition, are fearful that one of the consequences of the Bill may well be the establishment of a new poverty line. The prescribed income laid down is in some respects, as the right hon. Gentleman himself admitted, below the supplementary benefit level which has always been accepted as the poverty line. He will not, for example, disagree that there are different rates for children of different ages under supplementary benefit. A child over 11 or under 14 is entitled to a larger sum because the additional commitments involved for the family create extra expenditure, but there is no differential rate in the Bill. Consequently, families with teenage children are likely to find themselves with a prescribed income considerably below supplementary benefit level in the Bill.

The right hon. Gentleman also mentioned rents, and said that his right hon. Friend's statement would eventually lead to a scheme that would deal with this problem. I must admit that I read the statement of the Secretary of State for the Environment and found it very obscure. What is clear is that a scheme cannot come into operation for at least 18 months—probably two years. I am sure the right hon. Gentleman will not disagree that this means that for at least the first year, and possibly the first two years, of the operation of the Family Income Supplements Bill there will be no allowance for rents. I therefore ask him—and we shall press this in Committee—to write into the Bill at least the rent allowance given by supplementary benefit, until such time as his right hon. Friend's scheme comes into operation. Without that, some of the most hard-pressed families in the land will be faced with rents that make a mockery of the family income supplements scheme.

The right hon. Gentleman dealt as fairly as he could with the Opposition's fear about the introduction of a possible Speenhamland system, but he did not meet our worries. He said that other means-tested benefits do nothing to encourage employers to pay decent wages. Our point about the Bill is that it may possibly discourage employers from doing so. By producing a cash benefit on a new poverty line, below supplementary benefit in many cases, and massive disincentive, it may mean that at least some employers may decide on collusive low wages and persuade their employees to go along with them.

The right hon. Gentleman said that it was a fair point that, over the two centuries since Speenhamland, trade unions have greatly grown in strength but, alas, trade unions have grown least in strength in the very occupations of the lowest paid workers. The trade unions are not powerful in industries where women are the main employees, such as cleaning, catering and certain parts of the distribution trade. The trade unions are strong but find it difficult to bring their weapons to bear in the agricultural industry and to help male nurses in the National Health Service and the public employees about whom the Government have taken such a strong line in recent weeks.

We are profoundly sincere in our concern about this matter. If the Government had coupled with the Bill a statement of intention about low-wage earners; if they had coupled with the Bill a statement of their sense of urgency about equal pay; our response to this aspect of the Bill might have been rather less uncertain than it is. Standing on its own, the Family Income Supplements Bill could create an excuse which many people might take and which we on this side of the House fear could lead to a still further depression in the condition of an already depressed group of low-paid workers.

I come now to the problem of disincentives. I believe that the Government have a deep schizophrenia on this question. One saw it in what one might call their Dr. Jekyll phase in the speech of the Chief Secretary to the Treasury in the debate on public expenditure when he used this phrase about incentives: … we would seek to reduce the marginal rate of tax whether on managerial salaries or shop floor overtime."—[OFFICIAL REPORT, 5th November, 1970; Vol. 805, c. 1303.] But not, apparently, on the lowest-paid workers.

The right hon. Gentleman must recognise the disincentive which his scheme creates for a low-paid worker seeking a better job, seeking more overtime, seeking better pay. At the absolute minimum, it will be a disincentive of 50 per cent., and in most cases will be considerably more than that. Thus, at one end, we have the view that a disincentive of about 34 per cent. is too high, while at the other end there is the view that a disincentive of 50 per cent. will not stop people from seeking better-paid jobs. It does not stand up. What is sauce for the goose is sauce for the gander. What is good for the rich holds also for the poor.

I come now to a few direct questions to the right hon. Gentleman. I apologise for putting them at this stage, but he will realise that time is short, and he will, I hope, be able to answer them in Committee. First, will he look again at the timing of the scheme? As I have already said, the right hon. Gentleman has in the past been impatient at administrative delays. I cannot believe that it is beyond his power to bring in the Bill at an earlier stage, namely, when the charges are introduced in April, 1971.

Sir K. Joseph

The hon. Lady is aware, is she not, that the charges will not affect these families? All their children are exempt anyway, and, because of their income, they are entitled to complete exemption. So the Bill is meant to improve their situation, not just to make up for the charges.

Mrs. Williams

I apologise to the right hon. Gentleman; I should not have used the word "charges" in that sense. I should have spoken of the consequences of the action which the Chancellor is taking on the cost of such things as food, fuel and council rents.

Will the right hon. Gentleman look again at the possibility of a rent allowance within the scheme? Will he look again at the question of disregards for the earnings of a wife? He will recognise that supplementary benefit permits a disregard of the earnings of a wife whereas this scheme does not, and in that respect it is a direct incentive to working women to cease work altogether. As the Council for the Unmarried Mother and Her Child has pointed out, it will also drive unmarried mothers cut of part-time work and into either full-time work or total reliance on supplementary benefit. This is a strange part of the philosophy of the Government.

Will the right hon. Gentleman look again at ratings—he said he would do this—to see if they can be brought more closely in line with supplementary benefit measures?

Having asked the right hon. Gentleman all those questions, I conclude by saying that they are asked in an attempt to make a bad Bill better, and in recognition of the fact that this is likely to be the best we can hope for in respect of poverty from this Government. The Opposition believe that such a massive extension of complex means testing, in which the burden rests not on the better-off as it does under claw-back but on the worse-off, that is to say, on those least able to cope with this extension of bureaucracy, is an extremely unfortunate start for the right hon. Gentleman and his colleagues in what they believe and declare to be their war on poverty.

5.4 p.m.

Mr. J. R. Kinsey (Birmingham, Perry Barr)

I am grateful to have caught your eye, Mr. Speaker, but it is with the greatest trepidation that I rise to speak to the House for the first time. I recognise the great traditions of the House as a debating Chamber; it is the finest in the world. We are following in the steps of many famous men of the past and also of many great men of today. I look at them sometimes and I tremble.

I am sure the House will be pleased to know that I do not view myself as a giant colossus striding the world, but rather as a lesser man who goes between the steps. Nevertheless, I hope that the House will allow me some modest pride in that I have at least managed to reach the ranks of the House, where I hope to give a good account of myself on behalf of the electors of Birmingham, Perry Barr.

Perry Barr is a swinging division. It is one of the few that has changed hands four times in the last four elections. In 1959 it was Socialist; in 1964 it was one of the few Conservative gains; in 1966 it went back again and now in 1970 it has advanced with the Conservatives once more. I hope that in future we shall not be quite so swinging—a little more Conservative I hope. It would give me great pleasure if the division could settle down with its true partner, a man who has represented the Birmingham City Council for 16 years and has a real affection for his home division.

My predecessor, Mr. Christopher Price, was young, personable and very likeable. He was well liked in his constituency, and he was a good constituency man who did a lot for the people in the area. He had a special interest in and knowledge of education. He was consistent in his pursuit of that interest and made many useful contributions to the House. I believe that Parliament will see him again but not, I hope, representing Perry Barr.

Perry Barr was built between the wars. It has good quality housing and forms a dormitory area to the City of Birmingham, although its people are wide awake. Perhaps surprisingly, there is little industry within Perry Barr, Birmingham being the great industrial city it is. We have no slums, and no acres of modern little boxes dot our countryside. It is an area that has houses of character, with people to match. No rolling beauty am I able to claim for it, as many hon. Members can claim for their divisions. More important, especially in a welfare debate, we are concerned with housing. The majority of people in my division are happily and well housed.

We should be proud of the Conservative record in Birmingham. Birmingham has been the leading authority in bringing in measures to help the poorer elements in our society. I was pleased to heard my right hon. Friend speak of the rent rebates to be introduced. Birmingham has already introduced rent rebates in the private sector. Once again Birmingham has led the country. Birmingham has also been the leading producer of houses for the people, and built 9,034 in 1967.

I was a little cross to hear the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) say, "You should see a Birmingham Tory to believe." Believe me, Birmingham Tories mean happier families.

In an interjection recently an hon. Member referred to this side of the House as full of directors and chairmen, "a subsidised minority." I think there was more heat than sense in that interjection. When I recall how my wife and I have struggled to build a family busines, working 16 hours a day seven days a week to achieve a modest success, I resent being labelled as "a subsidised minority". There are many like us on these benches. One ought not to generalise in the House to that extent.

I claim to speak on this Bill with some knowledge. My father died when I was 11, I was the eldest of three children, and there was no pension for the family at all. We were fortunate in having a small business—I emphasise that it was small—but, as all hon. Members know, a steelworks and coal mining area in the 1930s was not one of the most prosperous. Quite often, the outgoings of that busines were more than the income, and we had to sell many personal things to make ends meet and to meet our commitments.

But it taught me a lesson, not a lesson of bitterness but a lesson of understanding. In welfare debates, we need understanding. We need to appreciate that no section of our community is prosperous unless we all are prosperous. There should not be the divisive words which we often hear from this side or that on these matters.

I welcome the Bill as a progressive step forward. It embodies an entirely new approach, and it recognises the struggle of the less able to help themselves in the first instance, which is what we all want to encourage.

I must tell hon. Members, if they do not realise it already, that the family allowance is generally disliked, particularly by those who do not receive it, for instance, the elderly who brought up a family without help and who cannot now understand why we subsidise so generously those who they think are able to look after themselves. That is their opinion, and we should take it into consideration. The family allowance is disliked by those who receive it and have it clawed back from them, in a sort of "Now you see it, now you don't" process. That does not commend itself to them, and the dislike would be aggravated if we took the course of increasing family allowances overall, with an extension of the claw-back principle.

Incidentally, those who cry "Means test" should recognise that the claw-back system carries implications of the means test in any case. This should be clearly understood. It is cleverly disguised, but it is based on an income tax assessment. I feel that there is a pointer here in relation to the new allowances, and I hope that the Minister will look at it in this context. Why should we rely on a proliferation of forms for people to fill in when one ticket, as it were, could do a common job for all Departments? It might overcome many of the objections.

We all know from practical experience and from welfare work in our constituencies where the Bill will help. The hon. Lady the Member for Hitchen (Mrs. Shirley Williams) agreed that one real advantage of the Bill is that for the first time it includes the first child of a family. We must all welcome that, having seen the disadvantage of the other arrangement in the past. There are many families with just one child who are certainly in need of such help as we can give.

Moreover, the Bill will, in my opinion, restore the level of incentive which is missing in the present system for helping the family. The social security benefit system is very good, but, when a man has social security benefits, he may not be inclined to take a job with earnings lower than or only as good as the social security benefit itself. The new proposals are not perfect, but they represent a genuine attempt to overcome a problem.

I am certain that those who will feel the benefit of the new scheme more than anyone else are the widows, single women and deserted wives, those who are striving for independence and who, when they take part-time jobs at a small wage, find that they lose all benefit from social security. This is not right, and we should alter it.

The Bill will be a help to the married couple with a job problem due to illness or other incapacity, incapacity, perhaps, not known to many or even private only to themselves. I hope also that it will help grandparents who have a child or children to look after from a broken family or from a family in which one or both of the parents have died. I hope that my right hon. Friend will look into this possibility. I have tried to read into Clause 1 provision to cover that circumstance, and I hope that it does. If I am wrong, I ask my right hon. Friend to see that something goes in to help grandparents in that way.

In every way, the Bill offers a better deal. It offers a better deal for the country, and it offers to a section of our community the opportunity for greater independence, though not fully, for I am certain that, by and large, there are those who, for some medical or physical reason, cannot take advantage of full-time work. Nevertheless, the Bill will be a help to them. It is not a means-test depressive Measure. It is designed to raise family status. All people receiving benefit under it will be able to say, "At least I am trying, and a Government who care are trying to help".

5.18 p.m.

Mr. John Smith (Lanarkshire, North)

The hon. Gentleman the Member for Birmingham, Perry Barr (Mr. Kinsey) spoke of the trepidation which he felt in making his maiden speech. I share that trepidation and can only hope that my contribution will be as assured and as confident as his was.

It is customary for a new Member to refer to his predecessor, and I feel a special obligation to do so because my predecessor was a person uniquely respected both in the House and outside. For 25 years, Miss Margaret Herbison served the constituency of Lanarkshire, North with dignity and found great acceptance both as Member and as Minister among her constituents. She referred to them throughout her long period as a Member of Parliament as her "own people", and this they certainly were. She served the nation, first, as a junior Minister at the Scottish Office in the post-war Labour Government, and in the last Labour Administration as Minister of Pensions and National Insurance, or Minister of Social Security, as her Department later became. Finally, having resigned from Ministerial office, she served the House as Chairman of the Select Committee on Overseas Aid.

Miss Herbison's career, which covered interests stretching from her native Lanarkshire to the furthest corners of the world, was motivated by the compassion which she felt for her fellow citizens. She recently completed a distinguished period of office as Lord High Commissioner of the General Assembly of the Church of Scotland. Hon. Members will understand the diffidence which I feel in attempting to follow in the footsteps of so fine a predecessor.

I am aware, particularly in this debate, that when Miss Herbison was Minister of Social Security she provided for one of the largest extensions of our welfare services in Britain's history. It is appro- priate when considering the proposals in the Bill now before us to remember the massive extensions which were made by her and by the then Labour Government, as compared with the proposals which we are now debating.

The first and most serious criticism which, I feel, must be made of the Government's proposal is directed to the amount involved, a mere £7 million to be distributed to the working poor. That sum should be regarded as insufficient in itself, but in addition one has to bear in mind how unfavourably it compares with the £30 million promised by the Conservative Party before the election.

If a convincing demonstration were required that it is a very small sum, recourse might be had to the Speenhamland system referred to by the Secretary of State and my hon. Friend the Member for Hitchin (Mrs. Shirley Williams). The "Pelican History of England in the 19th Century" notes on page 15 that in 1818, the peak year for poor relief under the Speenhamland system, the sum spent amounted to £8 million. So in 1818 the system of relieving the working poor cost £1 million more than a Conservative Administration propose to spend in 1970. That is a statistic that the Secretary of State should bear in mind when he considers how generous he is to the present-day poor.

Another argument used by hon. Members opposite to justify the means-testing approach of the Bill is that they believe in selectivity in seeking out areas of need and bringing help to them. We on this side of the House find it difficult to accept that they are genuine in that desire. If in the public expenditure package, all the charges for school meals, health services and dental services and the like had been given to other areas of need, we might be impressed by the selectivity approach. But what happened was that the sum collected from the relatively poor was included in the £350 million dispensed to the relatively well-off. It seems to us that the Conservative Party is committed to selectivity upwards in giving money to the income tax payer, and is not committed to selectivity downwards in seeking out need throughout the community.

The Secretary of State referred with approval to an article in last week's New Statesman by Professor Brian Abel-Smith. He should also remember another part of that article, where the author pointed out that the Conservative Party was likely to redeem its election pledge to allow children's income to be aggregated with that of the parents, which would mean that £25 million was likely to be given back to the children of wealthy parents. I fancy that when the Conservative Party redeems that election pledge there will be very few administrative difficulties in the way of its fulfilment. It is worth bearing in mind that we are proposing to dispense £7 million to the whole of the working poor of this country and at the same time the Government will probably dispense £25 million to the children of the wealthy and the much better-off.

Those points reinforce the feeling on this side of the House that the Bill is a niggardly attempt to solve a gigantic problem. We are not impressed by the sincerity of the Government's desire to help the poor, in view of the small amount they are prepared to allocate, especially when we compare it with the large sums the Government have seen fit to dispense to other, much better-off sections of the population.

Basically, for those reasons, we regard the Bill more as a piece of window-dressing on the part of the Conservative Government than a real and lasting attempt to solve the problems of poverty.

I thank the House for according me the courtesy of listening to my maiden speech.

5.24 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

I have the privilege of following two exceptionally able maiden speeches, and therefore have the first opportunity of expressing on behalf of the House as a whole our appreciation of the way in which my hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey) and the hon. Member for Lanarkshire, North (Mr. John Smith) both came through what we all recall to have been a considerable ordeal when we did it ourselves.

My hon. Friend said that his division was a swinging one. His speech made it clear that he is a swinging Member, incarnating the robust spirit of the great city of Birmingham. I hope and believe that we shall hear my hon. Friend on many occasions again.

The hon. Member for Lanarkshire, North struck a chord with us all when he referred in very appropriate terms to his predecessor. Miss Herbison was a Member of the House for whom I had a very special admiration, not unconnected with the fact that she filled with sensitivity and administrative skill an office for which at one time I was responsible before her. I always immensely appreciated the way in which she was prepared to discuss, on a wholly non-partisan basis, some of the problems that arise in a Department of that sort. I am certain that in the hon Gentleman she has a worthy successor. In saying that, I think that I pay him a considerable compliment, because he has a very real standard to live up to.

The Measure which the Bill is designed to put into law was described somewhat frivolously during last week's debate by its initials as "F.I.S.", which I suppose goes along with "F.A.M." An hon. Member opposite somewhat inappropriately described my right hon. Friend the Secretary of State as a "FIS-kid." Adopting for a moment that somewhat sophisticated approach, I would say that to me the Bill seems highly acceptable as an hors d'oeuvre. It is not, and my right hon. Friend did not pretend that it was, the pièce de résistance of the social menu which, in what I hope will be a tenure of many years in his great office, he will bring before the House. I share very much his regret about the time needed to bring it into effect, but as an immediate measure it seems to have two or three considerable advantages.

First, as my hon. Friend the Member for Perry Barr pointed out, it does something for the one-child family. Second, it is a very precise social instrument for helping in an area of very real, highly-concentrated poverty. Every penny spent in benefit will be well spent. There really is, from the point of view of social economics, no wastage at all in it. As an initial measure, it seems to me to amount to a considerable improvement, and I am very glad that my right hon. Friend has brought it forward.

But I still retain a considerable regard for the use of family allowances as an instrument of social policy. I know that they do not command universal assent. I thought that my hon. Friend the Member for Perry Barr had no undue enthusiasm for them, though of course the restraint appropriate to a maiden speech no doubt caused him to restrain that enthusiasm to a greater extent than might be the case when he addresses us again. I believe that some hon. Members opposite concerned with the trade unions are not always as enthusiastic for family allowances as some of us are.

But family allowances have three great merits. They apply whether or not one is in work, and at all levels of income they do something to shift the balance towards the family with children and away from the single person or the childless couple. It is the experience of the House that at all levels of earnings there is today a very conspicuous difference in standards of life, particularly among young people, between the single person or the childless couple, both of whom are perhaps working, and those with a family. The great advantage of family allowances is that they deliberately, as a matter of social policy, shift that balance. That is consonant with fairness and is much in the public interest, as it is obviously in the public interest that there should be proper provision for children to be brought up properly, fed, clothed and looked after. I was therefore very glad when my right hon. Friend at Question Time, in reply to a supplementary question of mine, indicated that in his future social thinking use of this instrument was certainly not excluded.

I have less enthusiasm for the claw-back, which is not a saving in public expenditure but is in substance an increase in taxation. At the higher levels of incomes, and levels reached very soon, it mitigates against that shift of resources towards the family and away from single people which seems to me to be one of the merits of family allowance. So when I urge my right hon. Friend to give close consideration to the possibility of progress with the family allowance scheme, as I am sure he will, I do not include in those urgings any reference to claw-back.

I should like to refer briefly to one major and two minor points on the Bill. I am a little concerned about the £3 maximum laid down in Clause 3(1). My right hon. Friend did not give the arguments for it. The principle of the Measure, as he outlined it, is that, taking a standard £15 a week for the one-child family, and £2 a week more per child, the allowance, the supplement, will amount to half the difference between the family earnings and those standard figures. But the limit of £3 seems considerably to weaken in some cases the effect of that principle.

A very good example was given in The Times last week. It took three families, each of which has two children and in respect of which, therefore, the standard is £17. The first two-child family, which has a family income of £13 a week, will get a supplement of £2, half the difference between £13 and £17, bringing it to £15. The second family has an income of £11 a week. It will receive £3, half the difference between £11 and £17, bringing the income to £14. The third family, the poorest of the lot, has an income of £9 a week. The difference under the formula would be £8, but the family does not got half that. It still gets only £3, and its income is brought to only £12 a week—12 less than the family with the £11-a-week earnings.

Some of these families are, in the nature of things, the hardest cases of all. I hope that my hon. Friend the Under-Secretary of State will tell us a little more about the reasons for the introduction of a limitation which on the face of it—there may be explanations—seems to go against the carefully worked-out principle of the whole Bill and to limit the benefits which the Bill gives to the poorest of all.

We have only to take the five- or six- child family to see this. We know that some of the large families are examples of the grossest poverty we can find. The £3 limit must very much inhibit the help given by the Bill in those cases.

Perhaps my hon. Friend could tell me what would be the cost to the Exchequer of abandoning the limit of £3 in Clause 3(1). I am sure that the calculation has been made. It is dangerous, when one does not have the advantage of official advice, to speculate on these matters, but I do not believe that it would involve great extra cost if it were abandoned. I hope that my right hon. and hon. Friends will be prepared to reconsider whether the limit is necessary.

My other points are much smaller. Will the supplement be liable to income tax. It is true that in the majority of cases the families concerned are probably just below the income tax level. The House will recall that the Bill as drafted is based on a 26-week period of income at certain levels. As income is assessed annually it is possible, to take the case of a seasonal worker, that a family may be well within the income tax level over the year as a whole although in receipt of this supplement. Is it contemplated in those circumstances that this supplement should be subject to income tax? I very much hope that it is not. I do not think, when we are using these instruments of precision to help real poverty, that we ought to allow the use of them to be distorted by the intervention of taxation.

Can the hon. Gentleman say whether a war pension will be taken into account as the income of a family in determining the difference between family income and the standard figure? The House knows that war pension is disregarded by the Inland Revenue in respect of the pensioner. It is entirely tax-free If I may say, in parenthesis, it is regrettable that for purposes of rate rebate it is taken into account and I very much hope that that can soon be changed. Dealing with this allowance, I hope my hon. Friend will be able to say that the power under the Regulations will be used to disregard entirely any war pension. It would seem unreasonable that in any generously conceived and well-intended social measure of this sort, the Department of Health and Social Security should treat war pensioners less generously even than the traditionally hard-faced Board of Inland Revenue.

Mr. O'Malley

I agree entirely with the right hon. Gentleman that war pensions should be disregarded. Does he take the view that other items of income should be disregarded in exactly the same way as they are disregarded in assessing an individual's entitlement to supplementary benefit?

Mr. Boyd-Carpenter

I should not like to plunge into the complexities of the supplementary benefit disregards in this context. I should guess that, social effects apart, the complications involved here would be very harmful in the case of this allowance. I refer to war pensions because these are disregarded specifically by the Inland Revenue for taxation purposes even though they are not for other purposes.

I would rather not commit myself to a whole list of complicated disregards now, although I should be happy in Committee to consider with the hon. Gentleman any others which come into the same category as war pensions.

Although I thought that the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) was a little ungenerous in her response to the Bill, she had a fair point when she said that it was a Bill much of whose effect will turn on the Regulations which my right hon. Friend makes. She was right to say that the House, when in Committee, is at some disadvantage in discussing a Bill of this character. She will know that when she was in office her Department was responsible for similar Bills. She may have sometimes had this point taken against it.

I wonder whether, to meet this point, my right hon. Friend could do what has been done on occasions, and that is produce a White Paper or otherwise give the Regulations in draft so that in considering the very important aspects of Clause 1 we will know exactly with what we are dealing.

This is an interesting Bill and an example, if I may say so, of my right hon. Friend's rapid dealing with specific and definite social problems which has already marked his tenure of office as exemplified by the constant attendance allowance and other proposals. It is an excellent instalment, and I hope the House will be with me in suggesting that he should not weary of well-doing.

5.40 p.m.

Mr. Richard Crossman (Coventry, East)

I follow the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in congratulating the hon. Members for Birmingham, Perry Barr (Mr. Kinsey) and Lanarkshire, North (Mr. John Smith) upon their excellent maiden speeches. I was grateful to my hon. Friend for referring to Professor Abel-Smith's article in our paper. By doing so he brought the debate into perspective. We are, after all, discussing a Bill which is an attempt to reduce a solemn election obligation to pay £30 million a year in increased family allowances to the smaller figure of £7 million or £8 million. The Government remain bound, and will undoubtedly carry out in their next Budget, their pledge to the children of the rich. This was to the children of the rich who were deprived by my right hon. Friend the then Chancellor of the very considerable family advantages of having the income from their trusts hived off and for income tax purposes assessed in such a way that their school fees could be paid without undue tax. That wicked man the Labour Chancellor said, "The family must work together on a family tax basis and their income must be accumulated with the parents' income before tax is levied."

That pledge will cost £25 million a year. We will distribute in the next Budget £25 million exclusively to children of very well-off families—because no one else will have a trust of this kind. It will be only the children whose parents are wealthy enough to give them capital without which they can afford to live. At the same time, the right hon. Gentleman comes to us and says, "We made a little mistake. Iain Macleod and the Prime Minister, when they made their solemn pledges on family allowances, did not know the facts." We all know that. This is not the only issue when they spoke without the facts.

This Government seem to be discovering fact after fact, having won the election. Of course, if they had known them before the election they could not have made the promises. There was the promise about acting "at a stroke" on prices, the promise about early taxation—all these eager promises they made with such confidence and integrity. Poor things, they are now in Government. They promised £30 million to the children of the poor and now we hear that they must make do with £7 million. They say, "It is not our fault, we have looked at the figures and frankly, it is a better buy for the poor to take £7 million rather than £30 million." We are assured that they will be better off with the £7 million because it will be really concentrated.

True, of the group upon whom it will be concentrated, the 190,000–200,000 families, half will not get a penny. It is admitted by the right hon. Gentleman that it covers only half of these desperately poor families. Still, they must hope to be in that half. The other half I am sure will be grateful to him for thinking of them, and then excluding them, saying "Sorry our scheme does not reach you. You, lady, are in part-time work, you have got a family and you are looking after the family; you will not go out full time, sorry, you will not get it. You may be much worse off than the lady in full-time work who has a husband and other children working, but still we want a nice complicated scheme which will show how fair and meticulous we are with the taxpayers' money. True, we could have fulfilled the pledge and done what we said, raised family allowances. We could have done that but when we looked at the problem we saw one or two unexpected difficulties."

The first difficulty was that it cost £30 million and any scheme which costs £8 million is obviously better in the Chancellor's eyes.

Sir K. Joseph

The right hon. Gentleman is having his little joke, but it would not have cost £30 million. I was laboriously trying to explain, maybe I did not get it through to the right hon. Gentleman, that £23 million would have been offset by reducing the dependency scales. So it would still have cost only £6 million.

Mr. Crossman

The right hon. Gentleman seems to be saying now that his Chancellor is more generous about this. I was told it would cost £30 million. It all depends how the Chancellor keeps his books and what sort of friendship one has with him. I congratulate the right hon. Gentleman on having the kind of Chancellor who is friendly to him about what he calculated was public expenditure and what was not. Mine was not nearly so kind to me and my Department. I had to fight for my part.

Still, he says he has a nicer, tighter little scheme and he says that it will get over certain difficulties. The other difficulty, apart from cost, is that he says claw-back will not work. He is quite right about Professor Abel-Smith. He and I worked very closely together when we were in Government and he is now in the London School, working closely with us once again, so we are in cahoots. It is true that the professor wrote, and I approved it before he published it: … the full standard rate of tax starts to be paid on incomes which are now well below the supplementary benefit poverty line. Thus many poor families would gain nothing from a further dose of 1968-type claw-back. but he did not read on to see that the professor said: An alternative which Sir Keith has rejected is a straight increase in family allowances with a new allowance to cover the first child and an adjustment of child tax allowances. It would have been perfectly simple to have a claw-back scheme which did not operate on this group of people if, instead of giving away a flat rate 6d. off the standard rate, he had concentrated the benefits on the childrens' allowances which went to the poor.

Then the level of tax would have been raised in such a way that he could operate the claw-back effectively without hurting the poor. This was written by the professor, but I dare say the Department did not give the Minister that bit, it gave him only a short cutting which would benefit him in his speech. It did not want to embarrass him by telling him what the professor was really saying, which was that he could perfectly well, if the Chancellor had not given away the 6d. in income tax, have given that amount in other forms of income tax concessions. Then the £30 million on family allowances could have been paid and the only justification for this inordinately complicated scheme would have been removed at a stroke, by the Chancellor and the right hon. Gentleman.

It is no secret that this scheme is an old friend of ours. Many a person has put it up to us and said: why not do it? I always felt that the difficulty was that, if it was done in a form acceptable to the Chancellor, it had to be well below the supplementary benefit level. If everyone was brought on to the supplementary benefit level and it had to taper off beyond that, the Chancellor would not give approval. It had to be mean enough to satisfy the Chancellor to work. I costed this both ways and said, "It is no good even putting this up, because the Chancellor will not dream of letting it go. He would not let me bring everyone on to the supplementary benefit level."

That is what ought to be done, no one should be below that level. It should be a national minimum. We should make the minimum there and say that everyone below that must have his wages brought up by a State payment to the level of supplementary benefit he would get if there were no wages stop. That would be wonderful, because it would mean that there would not be a person at work whose children would not be getting the same amount as they would be entitled to if he were unemployed. However, this could not be afforded. The disadvantage of this scheme is that it will introduce a new standard of poverty. This Bill says "We cannot afford to bring these poor people to the level we regard as the minimum when people are our responsibility, when they are ill or unemployed." When it says this is what they and their children must get, this creates a new minimum they must live on.

These unfortunate people who work for these miserable and scandalous wages are not to be brought up to the minimum we would give them when they are out of work, if we did not have a wage stop; they must be kept somewhere below that level. That introduces a new standard of poverty. I am alarmed when I hear that this is the first phase of the Tory operation. No doubt the second phase will be to build on top of the first and to start making this the standard of poverty. That is why we do not like the scheme.

I do not deny that there is one group of people—and the Minister did not put it as narrowly as this because he was making the best of his case—who will genuinely benefit. Broadly, they are unmarried mothers or deserted wives. They form a neglected group. I admit absolutely freely that under the scheme this group is covered—provided the people in it are in full employment. Does the right hon. Gentleman know the numbers in full employment? He says that half the people will not be covered. He is covering in this group only people who are, or are prepared to be, in full employment. There will be a great incentive to be driven into full employment or to have no employment at all. The temptation will be to choose between supplementary benefit and full-time employment. People trying to look after their families and to see something of their families by taking up part-time employment will have a disincentive to be loyal to their family. They will take up full-time employment. This is one of the grave disadvantages of the scheme.

Much will depend on how "full employment" is defined. In a trade in which there is a lot of casual labour and tips, I am horrified at the potential judicial cases which we are creating. The Supplementary Benefits Commission, which I gather is to judge these matters, will have to adjudicate on thousands of extremely difficult definitions of "full employment", however the Regulations are drafted.

My first point, therefore, is that this inordinately complicated scheme has grave disadvantages. Half the people the Government say it will help, in fact, it will not help. It will produce an enormous number of anomalies and difficulties of definition apart from creating a new State definition of poverty by saying, "This is the level at which we permit people to live".

When the right hon. Member for Kingston-upon-Thames spoke about the top limit, he was being, not innocent, but wicked and subversive. He was being oppositional. He asked, "Why a £3 limit?" He knows the answer very well. He knew that if the limit were £4 or £5 it would be above the supplementary benefit level. Therefore, the limit must be kept down and a gap must be maintained.

Mr. Boyd-Carpenter

If I were being subversive, may I point out that I learnt subversion at the right hon. Gentleman's knee? He is wrong about the necessity to keep the level below the supplementary benefit level. What he says is simply not correct in the case which I quoted of earnings of £9 a week.

Mr. Crossman

What the right hon. Gentleman rightly pointed out was that there are cases in which people receive less than they should even though they are miles below the supplementary benefit level. I said that if there were a general allowance at the top where there was no limit or, say, a £5 limit, it would make the scheme inordinately costly and the Chancellor of the Exchequer would say "No" to it.

Sir K. Joseph

The situation is not as sinister as the right hon. Gentleman is making out. We are attempting to meet the disincentive charge by leaving a substantial incentive to the individual to earn more.

Mr. Crossman

The question of the incentive is my next point. This scheme imposes a 50 per cent. tax on the very poor. Each extra £1 that a person earns will be taxed 50 per cent. This is one of the worst aspects of the scheme. It introduces an extra disincentive of 50 per cent. on earnings. If a man does overtime, on every £1 extra which he earns he will suffer, not as a result of income tax, but as a result of the scheme. Every earnings means-tested scheme must be a disincentive.

I give the Minister credit: this is an extremely ingenious scheme. The right hon. Gentleman has taken tremendous trouble to try to reduce the disincentive. He has left a margin for people to earn 50 per cent. extra. But the man at the bottom will be heavily taxed, despite the right hon. Gentleman's ingenuity. The scheme has built into it a formidable 50 per cent. disincentive, which is not disputed by the Minister.

I wish to mention another disadvantage about which I know something, namely, the administrative disadvantage. I listened with great interest to the Chancellor of the Exchequer's statement. He and the Prime Minister say, "Our aim is to cut back the areas of government". Yet this is a brand new and very complicated extra piece of bureaucracy. If the Minister were running a charity—and he is interested in charities—and found that he was paying in overheads 10 per cent. of all the money that he collected he would think twice about the efficiency of the charity. On his calculation, £1 in every £10 for these people will be spent on administration. Our calculation is that it will cost a great deal more in view of the endless judicial disputes which will arise before the Supplementary Benefits Commission.

The Minister has calculated that only 200 civil servants will be involved. My impression from people I know in the Supplementary Benefits Commission is that the Minister has grossly under-estimated the cost in thinking that it will be 10 per cent. The Minister calculates that only 200 people in Whitehall will be involved. That is quite a considerable force.

The right hon. Member for Kingston-upon-Thames said that every penny of this scheme will go to people who deserve it. I hope that he is right. But a scheme like this, with these kinds of definition, is a scrounger's paradise. What a paradise it will be for the man or woman who can competently argue his or her case, who can suppress the facts, who can pervert the meaning of "part-time employment". There will have to be very complicated regulations and a very large number of investigators to check how many claims are genuine. Then, at the end of every six months, the situation will be reviewed. People will have to fill in another form and state their income again.

I do not like to say this, but we were harried by the Government, when they were in opposition, about scroungers on social security. We did not increase means-tested social security benefits thereby creating new fields of operation for scroungers. That is what this scheme is. The Government do not have to implement it. They could have dealt with the matter through family allowances if they had not given the money away by reducing the standard rate of income tax by 6d.

By introducing this inordinately expensive and totally unnecessary scheme, the Minister has had to delay paying anything until next August. He says that he would love to pay the benefit before then, but he cannot because he has created a lovely Procrustean bed on which he has lain himself. He is nailing himself on it, saying, "Until all the nails are in and until we have all the investigators and trained staff required, this pittance cannot be paid". He could have paid it straight away if he had kept his election promises.

Sir K. Joseph

Not for the first child.

Mr. Crossman

There is the difficulty of the family allowances pledge. The right hon. Gentleman did not promise in the election to pay anything for the first child. He promised to pay on the basis of existing family allowances. He therefore has the problem of the first child, which is a genuine problem. I hoped that he would tell us that the first child would be dealt with by family allowances. That would have cost him £80 million, which is only a small proportion of the sum which the Government are giving away by reducing the standard rate of income tax by 6d. He could have done it, but he will not do that. He invents another scheme. He was congratulated by the right hon. Member for Kingston upon Thames on his early action for the over-80s.

That early action has produced an inordinately complicated scheme to pay out £3 a week to about 80,000 old people, at least 40,000 of whom will have it as a pure book-keeping transaction. He has had to advertise this and has spent about £30,000 on advertisements to collect the people. I guarantee that, of the people he has collected, at most 20,000 will get the £3, and that the rest will be getting this already and will merely receive a form saying, "Sorry, if you thought that you were going to get this £3, you were mistaken". He did all that straight away. Like a lion, he rushed in and roared, "This is an injustice: I will remedy it". He will get the kick-back when these people discover how many of them are being defrauded in this way.

In addition to this inordinately expensive scheme for the over-80s., he backs another scheme to complicate the issue of paying the very poor, which will produce appalling administrative tangles and enormous delays, but which has the advantage of being cheaper. I take his point: one has to keep on good terms with Chancellors, as I know very well.

He rightly mentioned one advantage of the scheme—that exemptions will apply automatically. I have one word of warning here. For instance, he intends to put up the prescription charges. What always surprised me as Minister was the miraculous honesty of the British people. We had a spot check, and it was staggering that, although the scheme is wide open to corruption—one has only to sign one's name on a bit of paper—the people have remained honest.

The main reason is that the amount at issue is very small. Honesty is something that one always goes in for up to a certain level and then, like income tax payers, one begins to feel the necessity to practise evasion. This applies up to a certain level, but over, say, £3,000 a year, as we know, the calculation of the money involved enters into it.

If the right hon. Gentleman thinks that he can sharply increase prescription charges and link them to the cost of the medicine, let me tell him now that there will be widespread corruption and that he will not be able to check it without the most inordinate complication of procedure. I know what I am talking about. So let him be careful and not boast too much about prescription charges, because there will be trouble if he plays with them. The best thing is to get rid of them: if one cannot do so, then keep them, but at a level at which people do not think that it is worth while to defraud the Government. That is just by the way.

Coming back to "the first phase", we now know what he means. One cuts a thing back, one has an extraordinarily intricate means-tested scheme applied to wage earners which has a maximum disincentive in it. That is the first phase of the great counter-revolution in the social security sector. Could the right hon. Gentleman give us a hint of what the other phases will be? What terrible complications can he invent for not spending money in some other sectors? Will there be some complicated formula for hospital beds, or can he find other intricate devices for using more and more civil servants and spending less and less money through them? That is the declared policy, I gather. That is the Government's policy, and it will be difficult for him.

Someone sent me the other day a letter which the Prime Minister's Secretary was sending to old-age pensioners who were asking for more money. It is a nice letter, because it says, in effect, "You have had a good increase given you in the last year by the Labour Government and you should be grateful for this increase, which has not all been eaten away by increased costs." Up to a point, of course, it has. We all know that, in this week, when the old-age pensioners get their 8s. and 13s. they will be getting plus 3d.: everything else is just bringing them up to the value of the pension a year ago, and that 3d. will easily go in gas and electricity charges.

We are told that there is nothing else in future for them—no prospects of anything. I listened with care to the Chancellor and I know that he has not budgeted for an earnings-related increase in the pension. My calculation is that he has budgeted only for a cost-of-living-related pension increase. If the right hon. Gentleman is to be as good as he says, he must get very "eager beaver" with that Chancellor, because next year at the latest, in the Budget, there must be a full earnings-related increase.

Here is a man who proudly attacked me time after time, saying, "We Tories have always kept pensions moving up faster than wages." I would not ask him to do that at the moment, but I would like them to go nearly as fast. They have two years to catch up and if the right hon. Gentleman does not catch up, he will have cut back and introduced major poverty for the old.

We want to know something about these "phases" if we are to judge this Bill as the new approach which is changing our comprehensive and universal policies. It is a dirty little Bill, by itself a complicated little Bill. It is a typical civil servants' Bill and I am sorry that the Secretary of State borrowed it. However, since he has borrowed it, let us tidy it up as much as we can and see that it does as little harm as possible.

6.7 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

It is an unusual privilege to be able to follow the two right hon. Members who perhaps have most authority of any in the House in the area of this debate. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has an experience and a knowledge of the administration and the principles which no one else can come anywhere near rivalling. The right hon. Member for Coventry, East (Mr. Crossman) has applied his vivid and sharp intellect to these matters over at least 20 years with constant verve and excitement, though with constantly changing results. In his speech, the right hon. Member for Coventry, East dilated principally upon the intricacies which he apprehended in the scheme in the Bill, but I want to refer to considerations more fundamental.

I have no doubt that this Bill, despite the reasoned Amendment of the Opposition, will receive a Second Reading tonight; but it represents a momentous, if not a fateful, step, which it is well should be recognised before we give it that Second Reading. It is the custom with momentous and fateful steps in politics that they can so easily be represented as only an extension of what has already been in existence for a long time, that they can be so easily represented as very small and minor in themselves; but they are momentous and fateful nevertheless, and this is the case with this Bill.

We cannot fully appreciate what this Bill does without seeing it in the context of my right hon. Friends' policies for housing—of which, of course, we do not yet have the details—and for exemptions from the new or increased charges in the National Health Service. So although those subjects do not fall within the scope of this debate, it is necessary, as has already been said, to bring them into account in order to get the full picture.

What will happen in regard to housing is that, for all rented accommodation, there will apply a system of rebates or subsidies on a sliding scale according to earnings and according to size of family: this will be general over the whole field of rented accommodation. We are going to do the same in regard to exemptions from charges under the National Health Service: they will be applied according to a scale related to earnings and related to size of family. And now in this Bill we are introducing cash supplements to the income of those in full employment, again upon a scale related to size of earnings and size of family.

I recognise that it is possible to argue that we have already had supplementation of wages of those in full employment in the form of housing subsidies and otherwise. As council housing came to cover an ever-increasing area of the total stock of houses, it was possible to say that here was an element of the cost of living of those in full employment which was not covered by wages but was covered by a system of redistribution amongst the ratepayers and the taxpayers. In fact, I remember that some 16 or 17 years ago I gave to an article attacking the then system of housing subsidies the title "Speenhamland in Modern Dress." We have indeed, under the last Administration, come quite close to what is happening in this Bill by their new device of family allowances with claw-back.

But after allowing for all such implications of the institutions which we have already, the institutions of the welfare state, and for their relationship with wage levels as they stand at present, still I do not think it can be denied that we are taking a decisive new step now by the overt and direct payment—if I may use old-fashioned but significant and appropriate language—of "relief in supplementation of wages". That is the essence of what is new about the Bill.

We are reminded that there is no new thing under the sun". It was on 6th May, 1795, that the Berkshire Magistrates met at the Pelican Inn in Speenhamland, in the constituency of my hon. Friend the Member for Newbury (Mr. Astor). I do not hold him to blame for this in any way. They were facing a critical situation not unlike that which we are facing today, though they had the excuse, which we have not, of some of the consequences of the Revolutionary War with France. They were facing a rapid inflation and its impact upon the standard of living, and the relations between the classes and the institutions of the country. They met to consider what to do. They took that day a fateful decision: to pay relief in supplementation of wages to able-bodied men who were in full-time employment.

I took the opportunity today to refresh my memory of the description which Trevelyan gives in his English Social History of the consequences of that step. I will not trouble the House with any long quotation, though, if I may respectfully say so, it would be no bad thing for hon. Members forming a judgment upon the Bill to remind themselves of the story of that generation from 1795 to 1835. But I will ask the indulgence of the House to read two sentences from Trevelyan.

First, what the justices did: They drew up and published a scale by which every 'poor and industrious person' should receive from the parish a certain sum per week in addition to his wages, so much for himself and so much for other members of the family, when the loaf cost a shilling. As the loaf rose, the dole was to rise with it. And the consequences: This payment of rates in aid of wages relieved the large employing farmer from the necessity of giving a living wage to his work-people … while at the same time it compelled the labourer to become a pauper even when he was in full work. I would like to quote one further description—a single sentence from an authoritative history of local government in this country—of those consequences in other words: There was a fall in the value of labour in consequence, and in more than one parish the authorities decided that the rate of wages should be nothing and that the pauperised labourer was to be paid from the poor rate. There seems to be a mysterious law which governs our affairs, whereby, at a cycle of unhappily indeterminate length, we are fated to repeat the errors of our forefathers, often being prevented from recognising clearly what we are doing by the difference in external and, if I may say so, accidental circumstances.

Of course, as my right hon. Friend said in his opening speech, there is hardly any comparison between the supply and demand wage of a labourer in 1795—the real value—and its value today. But that does not affect the principle of what is involved and that does not affect what will flow from the consequences of that principle being altered and subverted. Those consequences concern every section of the community and every class of society. But there is no section which they concern so much as organised labour, particularly the organisations representing lower-paid labour. The whole purpose of the organisation of labour—I do not raise the question how far that purpose has been attained or, indeed, could be attained by combination—and much of the impulse through which the party opposite came into existence, has been the determination to secure for the worker, in terms of cash, the full competitive market value of his services. It is that which is called in question, and deeply called in question, by what we are doing in the Bill.

The hon. Member for Oldham, West (Mr. Meacher) put a very subtle but pertinent Written Question to my hon. Friend the Minister of State, Department of Employment two or three days ago. The hon. Gentleman asked: … what is his estimate of the approximate cost to the national wage bill, respectively, of restoring the differentials between skilled workers and low-paid workers consequent on the effect of a family income supplement scheme? My hon. Friend the Minister of State, replied: I would not expect the family income supplement scheme to have any effect on the national wages bill."—[OFFICIAL REPORT, 6th November, 1970; Vol. 805, c. 466.] I think that my hon. Friend is a bold man to make the assertion that the payment—even initially—to scores of thousands of persons in full-time employment of a supplement to their wages, upon the principle that they cannot be expected, on the wages of full-time employment, to maintain, with minimum decency of shelter and other requirements, even the minimum family unit of man, wife and one child, let alone to take responsibility for rearing a larger family, will have no effect upon the size, not to mention the shape, of the national wages bill. Of course, my right hon. Friend pointed out this afternoon that the wood is still green, that this is just a beginning, only a small percentage. He contrasted the percentage of those in employment who would be affected by the Bill with the percentage of workers in the 1830s—or was it 1818?—who were in receipt of relief under the Speenhamland system. But if this is the beginning, I shall be surprised if it is the end.

Section 2(2) is, I think, perhaps the shortest subsection in the Bill but, as can happen, it is one of the most important subsections: Regulations may substitute different amounts for those mentioned in this section. That is what used to be called a "sliding scale" in the days of Speenhamland system. Which way will it slide? In which direction will the pressure take it? Will it go downwards, so that we find that we can eliminate altogether the payment of cash supplements to persons in full-time employment, or will all the pressure of inflation, of politics, of all the temptations and stresses which we in this House know so well, work the other way?

The reformers in the 1830s were hard, harsh and, it seems to us, unimaginative men, who were called upon to end the system which had grown from its first beginnings in 1795. But at least they re-established a principle, a principle from which the Bill decisively departs. It is the principle that it is an act of fateful consequence to pay relief—cash supplementation of income—to persons in full-time employment; that it is something which is bound profoundly to distort the wage system and to frustrate the ambition—which seems to me to be almost indissociable from the idea of a free society—that a man should receive as near as may be the full value of his work in cash. Sooner or later, and I fear it may be later, we shall have to return to that principle.

Candour obliges one to state what is the corollary to that principle. It is not a corollary in which there are any politics; it is a corollary of logic. It is that benefit to those of working age and working capacity who are not in full-time employment is necessarily related to the market level of wages attainable by those at the lower, indeed the lowest, levels of full-time employment; for the "wage stop" is not some diabolical invention that can be got rid of by any kind of dodge—the wage stop expresses a fundamental fact. This does not affect what we do for the disabled, for the long-term sick and for the retired. Between what we do for them and this principle there is only a remote and indirect connection which gives us, happily, a great latitude, of which I believe this party and this Government will continue to avail itself. But in the end we shall ill serve our fellow countrymen by beginning to depart, and I fear thereafter departing ever more, from that fundamental principle—the evil of relief in supplementation of wages.

We shall no doubt give the Bill a Second Reading tonight, but many of those who vote for it or let it go through will live to regret what we have done.

6.25 p.m.

Mr. Frederick Mulley (Sheffield, Park)

I am sure that the House has been interested to hear from the right hon. Member for Wolverhampton, South-West (Mr. Powell) yet another lecture to his hon. Friends on the Government benches. We can all see that the principle of giving relief to people able to work is a fundamental step. The right hon. Gentleman reminded us of the history of the Speenhamland system. When the magistrates deliberated in May, 1795, they were concerned only to deal with the small problem of that parish in Berkshire, and only over a period of time was this system adopted nationally.

I am disappointed that the right hon. Gentleman did not say what he would do about the problem which concerns us all, namely, the real poor and the people who will be made poorer as time goes on by the deliberate policies of the party which he supports. It is not good enough for him to attack his right hon. Friends without accepting some responsibility for the policies, or promises, which they put to the electorate in June, and on the strength of which they became the Government, without saying what he would do, as a man concerned about poverty, to relieve the situation.

We are today in the unusual situation of debating a tiny Bill, as my right hon. Friend the Member for Coventry, East (Mr. Crossman) referred to it, while being concerned with a great principle. Something must be done to meet the problem of poverty, but I am not satisfied that this is the best method, whether it is judged by the standards of the right hon. Member for Wolverhampton, South-West or by the standards of the people who are in real need. All hon. Members must try to change the attitude of people to the whole question of family provision. Many people, particularly those who are past middle age and have brought up their children without assistance with school meals, and so on, will not like this new system. I am sure that many votes were won for the Conservatives by a whispering campaign on the doorsteps about the Labour Party being soft on scroungers. We must find a way to eliminate the dodges, without being unreasonably inquisitorial. But, as my right hon. Friend the Member for Coventry, East illustrated so well, the Bill will make it easier rather than more difficult to scrounge.

We must recognise that there is a need to do something about family provision. I feel strongly that the most effective way would be to increase family allowances, probably by instituting an allowance for the first child. This would be costly, although claw-back comes into this and the point in the income tax scale when the family pays the standard rate of tax. There can be adjustments in child allowances.

I was disappointed that the Secretary of State talked as though the rules of the Board of Inland Revenue were like the laws of the Medes and Persians and completely immutable. Equally, he grossly exaggerated the difficulty of paying an allowance for the first child. There may well be some three million families which would come within the scheme and which are not in the scheme now. I would have thought it was much easier to get a response from people to fill up forms to claim a child's allowance than to get over the very complicated provisions of this Bill. What is much more germane is that it is fairly easy to check whether someone has a child, and it is a very much easier scheme for people to understand and to administer. We hear of a few families being prosecuted for claiming more family allowance than their entitlement, but broadly it is a pretty simple administrative process and one which I think would go much further to meeting the needs of poverty, with which we are concerned.

Another reason why we should all rethink our attitude to family provision is that this House, in its last Session, enacted the Equal Pay Act. I believe that it was completely right. My own trade union, incidentally, has been campaigning for it for many years. But it will change people's attitudes to wages and family provision. Although there was unanimity, in the House and outside, on the principle of equal pay, there is still to be found among many people, of both sexes, a feeling that men's wages ought to be higher than women's because the man has to provide for a family in the way that a single person, usually a single woman, does not. It will not be easy to get agreement. I understand the average differential between men's and women's wages is about 25 per cent., and that, as equal pay for work of equal value is implemented over the next five years, there will be increases to women of about 30 per cent. above whatever increases are paid to the men. It will be extremely difficult to get agreement in an atmosphere of difficult industrial relations, again not made easier by actions of right hon. Gentlemen opposite.

If we are to move, as I think we must, to the concept of the rate for the job being paid to a man or a woman, a single person or married person, clearly we have to make greater provision for the large family, for the particularly difficult circumstances to which the Bill is addressed but which, to my mind, it fails utterly to meet.

I cannot predict how the negotiations for our entry into the European Economic Community will go. My views are sufficiently well known. I hope that conditions are such that we may become a member of that Community. But, over the whole range of social services and certainly in the context of family provision, most European countries do very much more than we do. Of course, they are doing it with varying degrees of efficiency. In Beleium and France, for example, there are legislative requirements for equal pay for equal work and some form of family provision, either from the State or through an employer's payment, looms quite large in the remuneration of the family unit.

If the Government are insistent on going through with the Bill, I hope that it will be only a first step. After all, it deals with only half of the really needy and with less than 1 per cent. of families without children. The Government ought to get down to the fundamentals which they were urged to consider by the right hon. Member for Wolverhampton, South-West and deal with the particular points which my right hon. Friends and hon. Friends have made. I hope that a study will be made by the Department of Health and Social Security, the Department of Employment and the Treasury with a view to making real provision for the family and at the same time dealing with the problem of poverty and easing the important but troublesome transition from the present structure of differences of payment between the sexes to the proper implementation of equal pay.

I urge the Government to make a study in depth of this matter. I suggest that that could well be one of the early studies of the new unit in the Cabinet Office because this is a fundamental problem.

6.36 p.m.

Mrs. Jill Knight (Birmingham, Edgbaston)

This Bill is perhaps best described as the third of a trilogy from the new Westminster authors. As such, it is not a great tome. It is only a little pamphlet, but in some ways a helpful one, and it is worthy of support. The new principle which underlies the Chancellor's measures, those of my right hon. Friend the Minister for the Environment, and those contained in the Bill, is that benefits can no longer be paid to practically everybody but must be confined only to the really needy.

It seems to me that the reverse of this is ridiculous. It is ridiculous not only at a time of financial stringency but at any time that the State should pay out benefits in one form to people who could well afford to stand on their own feet.

It is also a right principle because, to pay out such universal benefits, taxation has to be very high. I am strongly against the principle of high taxation on many grounds. One is that it is such a strong disincentive to hard work, and as such cannot possibly fail to harm the country. Another is that, when we have high taxation, prices go up too and we get into great difficulties when we endeavour to sell our goods overseas. For that reason also, the adoption of a principle which must call for high taxation will harm the country.

Obviously, of course, under the old principle of benefits for all, the really needy people must receive less, and this is perhaps the strongest reason of all for rejecting it. Some people say the Bill will not help enough needy families. Certainly it will not help all needy families. No one has for one moment pretended that it will. But 110,000 two-parent families will benefit, and 54,000 fatherless families will benefit, and this is much more help than has been available hitherto. The cost, we are told, is £8.6 million per annum.

The hon. Member for Hitchin (Mrs. Shirley Williams) made what I thought was a very unwise move when she attempted to suggest that one of the main things wrong with the Bill was that a promise had been given in the Conservative Party manifesto that family allowances would be increased and that this would be the way in which we should help the poorer families. She would be better advised not to enter into any sort of argument about election pledges not being fulfilled. I could spend the rest of the evening on that point.

Perhaps I might, instead, remind the hon. Lady of one example which springs to mind instantly. It concerns the promise made in the Labour Party's 1964 manifesto which said clearly that an incomes guarantee would be produced for those already retired and for widows. There was no question that it would not be brought into being. However, that pledge was broken blatantly, as were many others. The hon. Lady would have been wise not to adopt that tack when arguing against this side of the House.

Mr. John Pardoe (Cornwall, North)

Will the hon. Lady give way?

Mrs. Knight

No, I will not give way—[HON. MEMBERS: "Oh."]

The hon. Lady was also wrong in the content of what she said when she instanced the promise made by my right hon. Friend the Prime Minister that poorer families would be helped. At the time, it looked as if the best way of helping them would be by increasing family allowances. My right hon. Friend the Secretary of State told us that, if the necessary family allowance increase were brought in and the claw-back procedure were used, for every £1 paid out to a poorer family, the gross cost would be £30. Can the hon. Lady seriously suggest that, when my right hon. Friend the Prime Minister came into possession of those facts, he could continue to believe that increasing family allowances was the best way of helping poorer families?

Mrs. Shirley Williams

I was not referring to any statement in the manifesto but to a specific statement by the Prime Minister in answer to a letter in which he said that this was the only way to help families in need. The hon. Lady's point underlines that it is extremely unwise to make pledges about which one cannot know all the facts.

Mrs. Knight

The hon. Lady emphasises my point. When she talks about a promise made in a letter or in our manifesto, she should remember that to this side of the House a promise is a promise—[Interruption.]—not a lightly-given pledge. The underlying promise made by my right hon. Friend the Prime Minister was that our first care would be to help the poorer families.

Mrs. Shirley Williams

That is not what he said.

Mrs. Knight

My right hon. Friend said that he would increase family allowances. When he came into office, he discovered that, for every £1 paid out in family allowances, the gross cost would be £30. That is a strong disincentive for following the principle of family allowances.

What my right hon. Friend said was that the first care of the incoming Conservative Government would be to alleviate the problems facing our poorer families. That is precisely what the Bill tries to do. Clearly the hon. Lady cannot be in her customary top form if she follows that line of argument. In this Bill, we are giving much more help to poorer families than was available hitherto.

I am sorry to see that the right hon. Member for Coventry, East (Mr. Cross-man) has left the Chamber. He made a much more cheerful and light-hearted speech than we used to hear from him when he was in office. In view of his obvious happiness today, we wish him many years on the back benches opposite.

The right hon. Gentleman said that the Bill would encourage scroungers. At the same time, the Opposition say that under the Bill there must be a means test or some other proof of need. If proof of need has to be offered, how can this proposal more readily encourage scroungers? It is extraordinary to suggest that the introduction of a means test will encourage scroungers and that getting rid of a means test will get rid of scroungers. The two do not add up. If people scrounge under a means test, clearly they will do so more readily under a scheme in which they do not have to prove need.

Mr. Kinnock

The hon. Lady is probably aware that anyone referring to scroungers under this scheme is not referring directly to the scheme but to the fact that it is so inadequate as to encourage people not to go to work. That is the point.

Mrs. Knight

Apparently I have more faith in people than has the hon. Member for Bedwellty (Mr. Kinnock). The fact remains that a means test will not automatically result in a large number of scroungers, but it is quite wrong to suggest that the removal of a means test will result, as if by magic, in no more scroungers.

It is also clear that we cannot have a system whereby anyone who asks for help is given it automatically. It has been suggested that the Bill obliges poor families to parade their poverty. What other kind of help do those critics suggest whereby no questions are asked with a view to ascertaining the existence of need? As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey) pointed out in an excellent maiden speech, the claw-back system also embodies a means test. That should be understood more clearly than it is, apparently, by hon. Gentlemen opposite.

I turn now to those who will have their incomes made up under the Bill. My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has already indicated the real cause for concern that there is, and I agree with him. Nevertheless, one has also to bear in mind the point of view of the employee. If a man were to be told that he would earn only £X per week and that he would get the rest in the form of a family income supplement, I imagine that he might have considerable doubts about accepting the job. I appreciate my right hon. Friend's point that it rather depends on whether we have full employment. If a man is told that he is to be paid only a small wage but that he will not be affected because it will be made up, he will not necessarily go away happily and apply for a family income supplement and nor would any trade union let an employer get away with it.

Clause 5 describes the way in which the family income supplement is to be paid. However, I hope that we shall have more information about it. As I read subsection (2), the payment may be received by the man or woman included in the family. At present, family allowances almost invariably are drawn by the mothers. I think that that is right. Unless they are drawn by the mothers, quite often they do not get into the housekeeping purse. I would rather that cash payments of this kind were not paid to fathers, and I hope that this important point will be cleared up tonight.

A family income supplement may possibly not be the best answer to the problems that face poor families, but it seems a better answer than to increase family allowances. I have more faith than hon. Gentlemen opposite in my right hon. Friend and I have no doubt that if he discovers that the Bill and this method of assisting needy families is not working, he will alter it. Meanwhile this is a simple, economical Bill which appears to make the best use of available resources.

All sorts of figures are being bandied about as to the sums that will be received by families with one, two, three or four children. These calculations are being made in newspaper articles and by hon. Members. Far more important than the figures are the effects that the Bill will have on solving the problems facing poor families. The conflicting evidence that we have only makes everything more confusing. We shall have to wait and see how this works out in practice and I hope that it will work in the way in which my right hon. Friend explained that it would work.

The intentions of the Bill are good. It is a little first step forward and I hope that before long we shall see some bigger strides made to solve this problem. Some of the accusations made by hon. Gentlemen opposite in this matter are like accusing a person who is attempting to give warm clothes and shelter to a person who is cold of not going far enough because a full wardrobe and house is not being supplied. The Bill is not a full wardrobe but it is a good first step. It will provide help and it should be supported.

6.52 p.m.

Mr. Hugh D. Brown (Glasgow, Provan)

I am tempted to tell the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) that I have heard her make better speeches. Perhaps she responds better when she is in opposition. I had better not follow that line, because this is the first speech that I have made in opposition and it presents me with some difficulty. I do not think I am built for opposition, mainly because I prefer to think constructively.

The electors of Provan are lucky to have a nice, simple, uncomplicated fellow like me as their representative. After listening to the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell), I sympathise with the torment that he must go through when called upon to make a decision on this revolutionary Bill. The doom he sees for the country at large is quite frightening. I am surprised that such a mouse of a Measure should have produced those thoughts from someone with the undoubted ability and imagination of the right hon. Gentleman.

I am always delighted to listen to another instalment in the Cabinet confessions of my right hon. Friend the Member for Coventry, East (Mr. Crossman), who I regret is not in his place. I thought that he was having a hard job trying to build a case against the Bill. I like to think that I can test a Measure of this kind by conducting a simple exercise on behalf of my constituents. Excluding all the wider implications of the Bill—such as its being linked with a package of other provisions, and the consequences that may flow from that, although I agree that they must be examined—it should be reasonably easy to ask, "Does this Bill help anybody? If so, it should be supported. Does it harm anybody? If so, it should be rejected." Perhaps I take too simple a view of testing a Measure of this kind. Certainly I do not take the lofty intellectual approach which some adopt simply to make an appraisal of this, what seems to me, simple piece of legislation.

Yet the Government have not helped us to take a simple view of the matter. I have the impression that the Bill is likely to have its Committee stage on the Floor of the House. If, through the usual channels, this turns out to be the case, I trust that we shall be supplied with all the necessary information to give the Measure a thorough examination. I say that because although it is a small and apparently straightforward Bill, some of its provisions are quite frightening. I would, therefore, object to its being taken on the Floor of the House without being given the very fullest information about the regulations.

I assure the right hon. Member for Wolverhampton, South-West that I have no objection in principle to legislation simply because it has an income test built into it. However, he was right to draw attention to some of the complications that may arise from that test.

In Glasgow we have a rent rebate scheme—I am not making a party point; it was introduced when Labour was in control, though it has been amended several times—and one in seven council tenants claims rent rebate, and we have 150,000 council tenants. However, one in seven of those are refused a rebate, which presupposes that it is a complicated system for people to understand.

The Under-Secretary of State for Health and Social Security (Mr. Michael Alison)

So that I am able correctly to pass on to my right hon. Friend the point being made by the hon. Gentleman, may I ask him to say whether he is referring to one in seven Glasgow council tenants applying for rebates, of whom one in seven is refused, or have I misunderstood his statistics?

Mr. Brown

One in seven applies and of that one in seven, one in seven is refused. In other words, about 20,000 people apply, about 3,000 are refused. This means that it is a complicated scheme, although obviously people are entitled to claim and leave it to the authorities to decide whether they are entitled to benefit.

In connection with a rent rebate scheme, a model has just been produced by a sub-committee of the Scottish Housing Advisory Committee. The model has not yet been discussed, but after two years of study by a competent group of people, this model scheme will obviously receive much attention. It seems from reading it, however, that if one adds A, B and C and subtracts the amount allocated to D, and then goes on to do the other necessary calculation, first having read the buts, ifs and ands, one is hard put to it to know whether one should qualify for rebate. I do not say this in a modest sense because it was part of my job some time ago to understand something about benefits and allowances. This gives some idea how complicated life is becoming for the ordinary citizen in sorting out the benefits to which he is entitled.

For example, why is the family allowance included for the purposes of family income under this Bill? The family allowance seems to be excluded as part of the family income in certain of the other tests which I understand the Minister is aiming at synchronising. How does it fit in with the Government's philosophy of trying to standardise or synchronise these various means tests of benefits and allowances, and exemption from various charges? Will the Government compel local authorities to introduce a standard formula of rent rebate? They will obviously compel local authorities to operate a standard rent rebate for the private tenant.

This is not so far removed from the Bill as the House might be tempted to think, because I am relating it to the need to try to bring in a common level of income below which people will qualify for the various benefits and concessions and family income supplement that might be available. This is the kind of thing that should be looked at in great detail, but in the absence of any Clause of this kind it is difficult to think in constructive terms in relation to what I believe to be one of the major areas of the Bill that requires examination.

Therefore we need to look at what the Secretary of State promised in the debate on 5th November, reported in c. 438 of HANSARD, when he outlined the various income levels below which people will not pay prescription charges, and will get free school meals, milk, and so on. The House is entitled to much more information than it has had, or than it looks like getting if we have the Committee stage on the Floor of the House.

The right hon. Member for Wolverhampton, South-West is right to draw attention to the need to appreciate the repercussions of anything we do. It is odd that the Government should at this time be dismantling the Prices and Incomes Board, although I do not say that that is the right organisation or that it has the right title. Instead, the Government are setting up the high-sounding Office of Manpower Economics.

The Secretary of State for Employment said on 2nd November: The Government also intend to use the new Office of Manpower Economics to service any ad hoc inquiries which are necessary from time to time to examine in depth particular pay structures and related problems."—[OFFICIAL REPORT, 2nd November, 1970; Vol 805, c. 668.] One of the most urgent examinations was started by my right hon. Friend the Secretary of State for Employment.

The Government are setting up this body to look at doctors' salaries, and the salaries of top civil servants, and the chairmen of the nationalised industries, and the pay and allowances of the Armed Forces, but if they want the country to believe that they are genuinely concerned about the low-wage earner why cannot they guarantee that any information from the operation of the family income supplement identifying low-wage earners will be made one of the first specific remits to the Office of Manpower Economics? That would go a long way to convincing me that the Government were really genuine in trying to do something for these people.

One should not be unduly alarmed about disincentives, but if we are concerned about the lower-paid workers—and I do not care whether we are dealing with the unmarried mother or the fatherless family or any of the other peculiar and tragic problems we meet—I see no difficulty in the Government being asked to give an assurance that they will make good use of the information they get about those in full-time employment who are grossly underpaid, so that we can expose the employers. This is not a party point, because I rather suspect that some of the employers who will be exposed will in some cases be the Government and in others the local authorities. So what I say is not necessarily an attack on the vicious or niggardly employers, although these do exist in some areas. If we can identify some areas in which action could be taken some good may come from the Bill.

I take up one point made by my right hon. Friend the Member for Coventry, East. I do not see people in part-time employment rushing to take on full-time work in order to get this supplement. It will be the other way round in genuine circumstances. I add my tribute to the tributes paid by many hon. Members to the Supplementary Benefits Commission. I know of one woman, separated from her husband—tragic circumstances, and all the rest—with two children and not receiving any maintenance from her husband. Because she was working full-time the Supplementary Benefits Commission could do nothing for her, but with a little help and understanding she was enabled to do part-time work which, with supplementary benefit, brought in about as much.

The Government must be careful in defining full-time and part-time work. The woman I have mentioned was encouraged by all of us who knew the circumstances to go on part-time work, which enabled the S.B.C. to make a payment and, at the same time, disregard the first £2 of her earnings. Disregards are not mentioned in this miserable Bill. We do not know what will or what will not be disregarded. If this is not instant Government I do not know what is. One hon. Member opposite had to apologise in this respect for his right hon. Friends, so this angle has obviously not been thought out properly.

Whilst I am not against the Bill in principle, I hope that we will get much more detailed information. For instance, what facilities will be available in supplementary benefits offices to satisfy the legitimate queries of full-time workers? Will these offices be open at night? If so, have the necessary additional staff been included in the total of 200? Considerable thought must be given to these practical considerations.

Although I may not have reached the lofty heights achieved by the right hon. Gentleman the Member for Wolverhampton, South-West, I hope that I have been able to indicate to the Government that if and when we deal with the Bill in Committee they can expect serious criticism and comment.

7.10 p.m.

Sir Brandon Rhys Williams (Kensington, South)

I am beginning to be quite sorry for my right hon. Friend the Secretary of State: he has been shot at from all parts of the House, by the journalists, by the experts, by the Blue Meanies, who think that the Bill goes too far, and by the bleeding hearts. He has been shot at by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). He is about to be shot at from Kensington.

Before I launch into my remarks, I want to congratulate our maiden speakers and, in particular, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey) who spoke with moving knowledge of the problems of child poverty and with a largeness of spirit and sincerity which I am sure will commend him to the whole House.

The problem we are now dealing with is nothing new. It is certainly a couple of hundred years old. It arises from the fact that employers cannot be expected to pay more than the market rate for labour to their employees, regardless of their employees' commitments. The House has recently endorsed that principle by adopting the idea of equal pay for men and for women. Formerly, it was thought that employers should pay more to men than to women for work of approximately equal value because there was a social conscience at work which suggested that a man would be likely to have commitments that a woman would not have. By rejecting that thought we have consolidated the principle that the employer pays only the market rate.

There will, thus inevitably be cases where the market rate is sufficient for single men and women to live in reasonable dignity, but is not sufficient for a married couple to do so even when they have only one child, let alone more. This situation is not new. It is one in which society has felt again and again compelled to intervene.

I listened, as I always do, with rapt attention to the remarks of my right hon. Friend the Member for Wolverhampton, South-West. He perhaps knows that on social policies I stand at exactly the opposite end of the spectrum from him. I want the Conservative Party to advance on the lines laid down by Wilberforce, Shaftesbury and Disraeli—and perhaps, in this context, one could also mention Stanley Baldwin. My right hon. Friend, as I understand him, wants us rather to abandon Conservatism altogether, and not to advance at all, but rather to go back to the liberalism of John Stuart Mill and Samuel Smiles which, in the nineteenth century, the Conservative Party devoted itself to defeating. But he made a very interesting case when he mentioned the Speenhamland plan, and there is an unfortunate parallel between this Bill and the attempts of those magistrates in 1795. He argued with passion against all cash supplements to wages, but I felt that his passion outran his logic here because he did not deal with family allowances, and what are family allowances if they are not cash supplements paid to people in regular work?

Mr. Powell

I am obliged to my hon. Friend for giving way. Leaving aside, for the moment, family allowances with claw-back, the essence of family allowances is that they are not related to the income of the recipient except via the tax system, which is a quite different matter.

Sir B. Rhys Williams

I entirely accept that family allowances are paid regardless of test of means, which is their glory in my eyes, but it cannot be denied that they are cash supplements paid to people in full time work. My right hon. Friend did not allude, either, to child allowances in the tax system. Everyone can calculate for himself that if we require a married man with children to pay less tax than a married man without children, the man with children will have more spending power as a result, through the operation of the tax system. This is a negative supplement to the spending power of men in full-time work.

My right hon. Friend deployed arguments which, I suppose, if accepted, would be thought to demolish the arguments in favour of negative income tax and all the systems that are grouped together under that generic term. I do not know whether that is what he intended to do, but that is where his argument would lead, and I would be most deeply disappointed if hon. Members on either side were to follow him in that attack. His arguments also led in favour of the wage-stop, which must be the most unpopular of all the aspects of our social service legislation; and in favour, as I understood his remarks, of the national minimum wage. Surely the national minimum wage, in that it places a social obligation on employers to defy the market mechanism, is strictly at variance with all the other teaching which my right hon. Friend has brought to us from the nineteenth century economists of the Manchester school.

Let us look at some of the solutions which have been adopted over the generations to the problem set by the fact that wages paid by employers will not always be sufficient to maintain a man with a family in dignity. I think that it was in 1798, in the very dawn of the income tax, that William Pitt introduced the child allowances. These wretched negative allowances have been there from the very start. His reason for doing that was that it was necessary to recognise the fact, even if only in this negative way, that a man with children is less able to pay tax than a man without children. However, there is a limit to the amount to which one can differentiate between the spending power of a married man without children and a married man with children through the negative operation of the income tax.

This same problem of family incomes was behind the repeal of the Corn Laws and the development of the whole policy in Britain of importing cheap food. The cheap food policy and the availability of very cheap textiles made possible at the end of the nineteenth century the very large Victorian family which was found at all levels of society. Now, with our gradual withdrawal from the cheap food era, we are beginning to see a growth of interest in some of the other possible solutions.

It is worth noting in passing that on the Continent, where the whole concept of cheap food was rejected, there is not this psychological objection to family allowances which still persists in North America and in Britain.

Let us consider the effect of public education, because this obviously is a supplement to the wages of the married man with children which has very little, if any, effect on a single man or on a married man with no children. It is a nineteenth century innnovation. There is no doubt that the advent of public education was of great benefit to a family man who could not otherwise have met the commitment to educate his children.

We see too the gradual rise of the concepts of National Insurance, which specifically singles out for higher scales of benefit the man, where he is unemployed or sick, who has children to support. And the council housing experiment was another way indirectly of subsidising the family man more than the single man. Finally, in 1945 the House introduced family allowances.

Mr. T. L. Iremonger (Ilford, North)

I am trying to follow my hon. Friend's argument. He will correct me if I am wrong. Is it not a mistake to regard family allowances as being a supplement to wages in their concept? The reason for family allowances, as I always understood them and as Lord Beveridge explained, was that, if there is to be a compulsory national insurance scheme covering unemployment, family allowances must be paid to people in employment, because otherwise the minimum acceptable level of unemployment benefit will be too attractive for the bachelor.

Sir B. Rhys Williams

There are numerous arguments in favour of family allowances. One of them is that the disincentive effect, which men feel when out of work, is whittled away if, when they return to work, they do not lose the whole of the child allowance which they get when sick or unemployed. Professor Townsend has argued this point lately, I think convincingly, when he said that it is by raising family allowances that we can diminish the disincentive to return to work that a certain number of people in Britain undoubtedly feel.

In spite of all these efforts to equalise the standard of living of single men and women on the one hand, and married people with children on the other hand, it is obvious, not just from the campaign by the Child Poverty Action Group but from many other signs, that the British public is not satisfied.

At the time of the Budget I tabled an Early Day Motion entitled "Children of the Lower Paid", which read as follows: That this House notes with concern the rise in the cost of living; and calls on the Government to concentrate help on those with the greatest need by increasing the value of allowances for the children of the lower paid. In the last Parliament that Early Day Motion attracted more than 70 signatures from Conservative Members. After the election I again tabled it and on this occasion many newly elected Members signed it and again it attracted more than 70 signatures. I do not think that on either occasion any member of either of the radical parties signed it, which was a great disappointment to me.

The hon. Member for Oldham, West (Mr. Meacher), who I know will make a very appreciable contribution to all our thinking on the social services, though I did not entirely accept his argument in The Times today, drew up a somewhat similar Motion and obtained more than 50 signatures to it from among his colleagues. That shows that there is deep concern in the House on the question of child poverty and that it is not confined, as has been suggested, to Opposition Members.

Faced with this problem, my right hon. Friend the Secretary of State has produced an oxymoron—something which is partly agreeable and partly extremely sour. He is immune from the attacks of people who say that he has broken faith. He is too well known in the House and in the country for attacks of bad faith to stick. But I cannot pretend that I think that the Bill is the final solution to the problem or is even well on the way to it. I think that it was Sir Max Beerbohm who said that if a thing is worth doing at all it is worth doing badly. That seems to be the spirit in which my right hon. Friend is pluckily advancing down the road to Speenhamland.

There are a number of points I should like to make, but which I think are Committee points. I sincerely echo the comment of the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) to the effect that he hoped that the Bill would be taken in Standing Committee, partly because I shall not be here next week. But perhaps that will be the green light to my right hon. Friend to insist on the Committee stage being taken on the Floor of the House next week.

Besides the points which are purely Committee ones and which I would want to raise later, there are four or five things which must be said about the Bill on Second Reading. I object to it firstly because it is a major extension of the area of the means test or, being more specific, the income test. I think that it was a bad thing that there were 2.7 million people dependent on supplementary benefits when the Conservative Government went out of office in 1964. It was appalling that at the end of the Labour Government's term of office there were more than 4 million people dependent on supplementary benefits. It seems to be a movement wholly in the wrong direction.

Mr. O'Malley

The hon. Gentleman, who takes a close interest in these matters, knows full well one of the major reasons for the increase in the number, and that was that the Labour Government increased the poverty scale and increased the real value of supplementary benefits substantially.

Sir B. Rhys Williams

There are all sorts of reasons why this has happened, but the fact is that there are now 4 million people who have to forfeit their self-respect by accepting supplementary benefits, which is wrong. With the best will in the world, the effect of this Bill will be to rush that figure up I suppose to some 5 million people, who will be dependent on supplementary benefits.

This is a step decisively in the wrong direction. What has become of the talk of "one nation" if in the course of their lives at least half the population have to submit to the means test—or the income test—and accept help from "the office"? What has become of the ideal of a property-owning democracy? We cannot come to rest on a Bill which at one stroke adds 800,000, or perhaps a million people, to the number that is obliged to go down to the office for help.

Another thing I do not like about the Bill is that it will not come into effect until next August. A person who, having asked his friends to a party, pours out a glass of fizz for them all does not leave it standing on the side until every one of them has come. The drink might tend to go a little flat if he did. Considering the rate at which the prices of essential foods and other items are rising, if we leave this first payment to anybody under the Bill until next August, in the words made famous by Hermione Gingold the Cliquot will have lost some of its Veuve.

I do not like the disincentive effects of the Bill. The Secretary of State does not deny that this is putting people in poverty straight on to surtax rates. Here is poverty surtax embodied in a new Bill at a rate of at least 10s. in the pound. The well known fact brought out in his admirable pamphlet by Professor Prest, which was published earlier in the year by the Institute of Economic Affairs, is that in some cases deductions from marginal earnings can go over 20s. in the pound. That cluster of means tests is probably for the most part above the level which will hit the people that will be affected by the Pill, unless the rates of benefit have to rise before the introduction of the first payment of benefit. But I think I am right in saying that the loss of rate rebates at 5s. in the pound would affect many of those covered by the Bill. Therefore, we are immediately putting many of them on to a marginal rate of tax—or on to a marginal loss of benefit—of about 15s. in the pound.

One of the difficulties about the whole problem of disincentives is that there has been no accurate large scale field work, so it is hard to know exactly what the true disincentive effect is. I entirely reject the American line of thought that where such small numbers of people are involved and their contribution is by definition so small in any event, we need not bother about whether loss of benefits has a disincentive effect or not. It does no good to discourage people from working by the insinuation that it does not matter much whether they work or not.

We must think much more clearly about the disincentive effect of the withdrawal of marginal benefit or marginal income. Our hearts are stirred at the thought of the average taxpayer who has a marginal rate of 6s. 5d., and the Chancellor of the Exchequer, I think rightly, promised to reduce the income tax rate by 6d. in the £. Few people can argue themselves into a position where they can actually find that that was a step in the wrong direction, though some hon. Members opposite have almost done so.

However, the average rate of tax paid by the average taxpayer is not 6s. 5d. It certainly is not 8s. 3d. It is under 4s. If income tax is crushing initiative at an average rate of under 4s. or at a marginal rate of 6s. 5d., how much more will poverty surtax crush initiative at 10s. in the pound or higher.

I also do not like the Bill because it is only half enough. This is the corollary of the fact that this 50 per cent. marginal tax rate has been brought in, so that it takes people only half-way up to supplementary benefit level. It does not take them the whole way. It cannot. It can go only half-way; and this is why I suppose it will cost £7 million instead of the figure of perhaps £30 million, which was what we had in our minds before.

I do not like the Bill because it will mean a monumental increase in the amount of case work undertaken by officers of the Supplementary Benefits Commission. The man from the Ministry wants to know this and will want to know that. Indeed, it is not possible to tell from the Bill exactly what the man from the Ministry will want to know, but it will be a whole load of detail. I cannot help wondering whether my right hon. Friend is not showing his delightful optimism rather too markedly when he says that only another 200 staff will be required. At the end of the Explanatory Memorandum we are told: About 200 staff will be needed to administer the supplement". I think that there are about 1,030 offices through which the public can conduct their social security business. The suggestion is that in at least 800 of these offices the staff have time on their hands and will be able to take on the additional work involved in this Bill, work which, as has been said, will for a large part have to be done after normal working hours, without needing any increase in their number. I find that incompatible with what I read in the 1969 Report of the Department of Health and Social Security, an admirable and most informative document on which I warmly congratulate my right hon. Friend. We are told on page 91: The administrative load of supplementary benefits work continued at very heavy levels; there were some 6.7 million claims resulting in some 1,620,000 continuing awards and 4.2 million immediate payments, over 6 million people were visited in their homes, and there were over 10 million callers at local offices. My arithmetic has always been faulty, but it seems to me that that means that the average office on every working day has about 40 callers and organises about 25 visits. If another 800,000 people are to be brought into the system, with all the inevitable fine detail which will be required if the Bill is not to become a scrounger's charter, I can only think that the estimate of a mere 200 more staff in Supplementary Benefits Commission offices is very optimistic.

Finally, I dislike the Bill because it is imprecise. It is true that in our earlier 28 skirmishes in Standing Committee and on many other occasions, my hon. Friends have complained that it was the habit of the right hon. Gentleman the Member for Coventry, East (Mr. Crossman)—I am sorry that he is not here now—to cut corners and to miss out all the exciting parts of his legislation simply by saying that, when he came to a problem, it would be dealt with by a subsequent issue of regulations. The present Bill has the whiff of instant legislation about it, because it is imprecise on almost every one of the most interesting points.

The House may be wondering whether I might wish to make specific recommendations regarding what I should have done instead, and I shall be so audacious as to do so. It may have come to the notice of my right hon. Friend and of my hon. Friends, as well as of hon. Members opposite, that I am bent on drawing attention to what I conceive to be the overwhelming advantages of integrating the social services with the income tax, advantages which I believe are overwhelming in terms of administration and also in terms of the political gains.

We have seen a number of advances in this direction in the last few years. I can point to the family allowances and claw-back, and to the decision that earnings-related contributions to national insurance should be collected through Pay-As-You-Earn. Surely, after we have that, it will be difficult not to integrate income tax and contributions to national insurance altogether. This year, we have seen pensions introduced without any reference to contribution records; we have seen allowances for the disabled without any reference to need and free of tax; and we have seen the ending of the reduced rates of income tax in this year's Budget, something which I regard as a good move. We have seen a policy adopted by my right hon. Friend the Secretary of State for the Environment of subsidising families, not houses. I should like to pay tribute here to the encouragement which he gave me when I was writing a pamphlet on this subject some three or four years ago. We have also had a buzz of interest in the whole subject of negative income tax.

All those developments I welcome, but I am certain that they are not happening because the guru of South Kensington has some mesmeric power which obliges people, against their will, to adopt his recommendations. It is simply compassion and common sense at work.

However, one has had two setbacks in the last week or two. One is the suggestion that housing allowances to be paid to families should be governed by means tests conducted by local authorities, not by the Inland Revenue, which seems to me to be a departure from common sense. The other setback is the introduction of the Family Income Supplements Bill.

Specifically, in this situation, I should like the House to consider the possibility of adopting a course which I have, in fact, laid before my right hon. Friend, namely, of withdrawing the child allowances in the income tax system altogether and, instead, paying family allowances on a scale which would make good all that was lost by people who were paying the 6s. 5d. rate of income tax but which would also concentrate benefit on people below the tax horizon. In order to do that, I calculate, one would have to pay a family allowance for the first child of 18s. a week free of tax, a family allowance for the second child of 24s. free of tax, and family allowances for the third and all subsequent children of 25s. free of tax.

I calculate that, if we adopted that basis and withdrew the child allowances from the income tax system altogether and cancelled the existing family allowances, too, we should bring virtually the entire population to within a pound or so a year of where they are now; but, at the same time, we should concentrate the whole of the extra benefit on the people at the bottom.

I do not want to trespass on the time of the House much further but I have been told, through the office of the Financial Secretary to the Treasury in a letter of 19th August, 1970, that the cost of abolishing child tax allowances for children under 11 and replacing them by tax-free family allowances of 18s. a week for the first child, 24s. for the second and 25s. for the third and subsequent children would be about £10 million in a full year. I suggest that my right hon. Friend ought to look again at suggestions of this kind which have the colour of a negative income tax.

I do not want it to be thought, in spite of all I have said, that I do not welcome the spirit with which my right hon. Friend has introduced his Bill. I recognise his seriousness and generosity of purpose. I hope that there will be very few to vote against a Bill the effect of which is to give £14 or £15 a year to half a million very poor children. Of course, one must accept it; but it is only a first step towards something, I hope, much larger.

I cannot be altogether happy about the way in which the further studies are being carried out into the whole question of negative income tax. I think that, with one or two shining exceptions, the men engaged upon the study are men who have not convinced themselves that they have the political will to solve the problem. I think, therefore, that, although they may be unconscious of it, they are working on the problem in only a halfhearted way. Also, I feel that it is undesirable that the study of negative income tax and related systems should be conducted in secret. It may be that hon. Members could make little serious contribution here, that we are here to vote and not to think, but I feel that it would be helpful, and public opinion would be more reassured, if it were known exactly what is being studied and how the studies are progressing.

What is required is a man of outstanding business efficiency, a man with the qualities of a managing director ten times over, with problem-solving ability of the first order, and, moreover, a man of political vision or, perhaps one should say, the statesmanship which can look ahead into the computer age, into the social needs of the late 1970s and 1980s in a civilised community such as ours. My right hon. Friend could well be that man, and I hope that he proves to be so. He must dare the ultimate. He must not be content with catch-penny devices which do not really advance us in the direction in which we ought to travel.

We in this House also have a job to do in educating ourselves on this whole subject.

We are still far from certain precisely what is the way in which we shall have to tackle the problem of income support in the long run. I have my set of ideas, and other hon. Members have theirs. I believe that one of the tasks on which we must all engage is to prepare public opinion for a totally new concept of the social contract. Until we have done that we shall not succeed in eliminating the problem of child poverty.

Mr. Deputy Speaker (Miss Harvie Anderson)

Order. Before I call the next speaker, may I draw the attention of the House to those who have sat all day hoping to catch the eye of the Chair? Long speeches will not help to make that possible.

7.40 p.m.

Mr. John Pardoe (Cornwall, North)

I am very glad to follow the hon. Member for Kensington, South (Sir B. Rhys Williams), because I, too, learned much of my social security at his mother's knee. However, I should like to defend one of my greater 19th century heroes, John Stuart Mill, from any link with the right hon. Member for Wolverhampton, South-West (Mr. Powell) that the hon. Gentleman may have had in mind, by reminding him that there is as great a difference between the early and the late Mill as there is between the early and the late Beethoven, and while it may be true that the right hon. Gentleman has a connection with the early Mill, I think that I have a connection with the late Mill.

Poverty policy in Britain is undoubtedly in a shambles. Those of us who have been involved in creating it, those who have been involved in discussing it, must be accused of unbelievable incompetence by any future generation which looks back at the way in which we have conducted matters over the past 25 years or more. We have an extraordinary patchwork, but a very expensive patchwork. There is a feeling in the country that if we are spending so much on solving the problem of poverty, we must already have solved it, and that therefore it cannot exist. But it does exist.

One illustration of the shambles which is our poverty legislation is that most of us, those that make up the great portion of the population paying three-quarters of the total revenue received by the Exchequer, pay on average one-third of our income in taxes, both direct and indirect, and get half of it back. It is a kind of parlour game called "transfer payments", and it is undoubtedly a madness.

We assume that the tax system is progressive, but it is not. If we take the regressive nature of indirect taxes and their regressive effect on the poor in particular, we find the poorer section of the community, those who, for instance, in 1964 were receiving below £12 a week, contributing 15 per cent. of the total Exchequer revenue. They were paying considerably more than one-third of their income in tax.

The whole system was so bad that Professor Merrett of Sheffield University in the August 1966 bulletin of the Oxford Institute of Economics calculated that we could replace all our taxes, except corporation tax, surtax and death duties, by a straight, across-the-board 30 per cent. sales tax, and that the poor would still be better off than they are now because they would pay a lower rate of their income in taxation than today.

That is the chaos which any Secretary of State inherits, and the present Secretary of State as much as any. The Bill is an attempt to answer one very small part of the problem, but even its strongest supporters would probably not call it much more than a mouse, although I agree with the right hon. Member for Wolverhampton, South-West that it may be a mouse with a very long tail which we have yet to see.

I want briefly to take us back to first principles, to see how we shall judge the Bill and improve the situation for the future. First, in the Bill we are not discussing primary poverty. We have not been discussing primary poverty, the kind that takes place throughout the lifetime of an individual or family, in any of our debates in the past two or three years or more. We are discussing secondary poverty through the decline of income or the increase of necessary expenditure at a certain time in a family's life. In other words, we are discussing income maintenance. Here we are dealing with family poverty, that kind of poverty which comes as a result of increased expenditure through having children and bringing up a family.

Secondly, we should be quite clear what we mean by the word "poverty". It would take a long time to define it in great detail, and I have no intention of doing so. In some ways it is a metaphysical concept. We all know what we regard as socially acceptable at any one time and in any society. We should not allow anyone or any family to fall below half the national average standard of living.

Thirdly, we are dealing with family poverty and particularly with the cost of children. The hon. Member for Kensington, South mentioned right at the outset of his speech the basic factor which I think his right hon. Friend the Member for Wolverhampton, South-West is forgetting, that if we paid everyone enough to bring up a family we should be paying single men a great deal of money, and the whole situation would be exceedingly inflationary. That is one of the problems in our present wage structure.

What is the cost of a child? I should like the Secretary of State to ask his Department for the calculations on which the supplementary benefit scales which have just been announced were calculated. For instance, if we look at the new scales we find that a married couple will receive £8 10s. a week, and for one child between the ages of five and 11 they will get an additional £1 16s. I should like him to ask his Department how it calculated that £1 16s. I shall tell him how it was done. It was done simply by referring to the ratio that has been with us for ever and anon, or at any rate almost since 1948. The allowance for the child is 21 per cent. of that for the married couple. Why? How was that ratio calculated? I shall tell him again. It is simply because it was there. There are no calculations, even confidential, within his Department that have ever worked on this figure to justify the ratio. I should like him to ask his Department for the confidential evidence within the Department as to how the calculation was made, and then let him compare it with the published material which is available on the West German system, for example. He will find that there is all the difference in the world.

How do we calculate the ratio and the cost of a child? There are two ways of doing this. Neither has been adopted either in the formulation of the Bill or in the formulation of any recent allowances of this sort. First, we can make a study of family budgets and find out how much is actually spent on a child or on so many children. Second, we can estimate a nutritionally adequate diet, if anyone can define such a thing, and make other estimates of necessary requirement for a child. Has either of these methods been employed? I would bet that neither has been employed.

I am indebted to Christopher Bagley of the Institute of Psychiatry for his report entitled "The Cost of a Child" which gives some extremely interesting comparisons which fill in some of the points which the hon. Member for Kensington, South made. If we take the income of a married couple as 100, we can compare the provision for children as a percentage income. Beveridge recommended in 1942 that for one child aged seven the allowance should be 31 per cent. of that for the married couple. In fact, in 1948 the National Assistance scheme provided only 22.5 per cent., and we now have only 21 per cent., in the latest, 2nd November, scales. That is the main reason why we still have family poverty with us. If we now had the Beveridge ratio, family poverty would largely be a thing of the past in this country.

What is the ratio overseas? In New York in 1966 the allowance for the average single child was 41.7 per cent. of that for a married couple, more than double ours. In Japan in 1965 it was 40.8 per cent., and in West Germany in 1966 it was 40.4 per cent. This is partly because they pay family allowance for the first child, while we do not.

But let us look at the allowances for larger families and add the whole lot up. Let us take the large end of the scale, the family with six children. Beveridge recommended that a family with six children required an income 285 per cent. of that for a married couple. In 1948 the National Assistance scheme produced a ratio of 235 per cent. We now have about 232 per cent. In New York it is 325 per cent., in Japan it is 342 per cent., and in West Germany it is 308 per cent.

It is quite clear that our provision for children is ludicrously low, and it has bedevilled all the wage negotiations in this country. That is one of the major factors in wage-push inflation and the major cause of family poverty, which we are debating and trying to solve with the Bill.

Taken altogether, it seems that a man with three children needs three times as much as a single man to maintain the same standard of living. This has an immense effect on wage-push. If we consider two men on the same work bench or in the same office, one of them single and the other a married man with three children, but both earning the same wage, we see that the single man has a standard of living three times as high as that of his colleague. That is clearly ridiculous. That is the gap which we should be trying to bridge in the Bill. I am not suggesting for a moment that we can hope to bridge the whole gap. There will inevitably be some financial disincentives to having children, but we cannot leave the gap as wide as it is now, particularly as it is very much wider than in most of our major industrial competitors.

The question we must answer is, how do we bridge the gap? First, can we do it through the wages system, through a minimum income? That would help, but it still would not solve the problem of differentials between the married and unmarried. Can we do it through a marriage allowance, as was once done with universities and particularly in the Armed Services, but which has now been thrown out for both? It would be a piece of splendid disengagement for the Government, landing the whole thing in industry's lap. But it is not practicable or possible.

Can we do it through family allowances? I have argued often enough in the House that family allowances are the answer, that we should increase them substantially and pay them for the first child, paying for them by dispensing with the, I think, £700 million we now hand out to the middle-income groups in tax allowances. But family allowances have massive disadvantages. First, there is the political disadvantage. A large number of people simply do not like others being paid family allowances. Therefore, Governments have an inbuilt brake on the size of the family allowance which they feel they can politically award.

So, about 18 months to two years ago, the Liberal Party decided to discard any advocacy of increased family allowances and to go for the concept of the negative income tax. The principle has already been accepted in child allowances, which have been written into the income tax scales for so long. All we need to do is to apply that principle to those whose income is below the level at which they can benefit, the level at which they pay income tax. What we want to do with a negative income tax is first to co-ordinate the income tax and social security systems. That must be done.

Second, we want to eliminate the whole proliferation of means tests which we have seen grow up over the years and to simplify the system. We must add up the allowances now given in the tax codes and then for a family who, say, fall by £300 a year below the value of those allowances, whether the marriage or child allowances, tax that difference of £300 at, say, 40 per cent. and hand the 40 per cent.—£120—to that family as a tax credit or cash family grant.

Why not the negative income tax? The Secretary of State did not give any indication that he was committed on its principle. I had hoped that he would give us that indication this afternoon and say that he had instructed his Department to investigate it because he was politically and emotionally committed.

I hope that the Secretary of State is politically committed to a negative income tax for I am sure that it is the answer to a large part of the problem. If he is fed with a plethora of objections from his Department, and more particularly from the Treasury, perhaps he would look up another document. Let him ask for the arguments put up by the Treasury in 1944 against the Pay-As-You-Earn scheme. They will be every bit as obtuse, complex and ridiculous as the arguments he is receiving now from the Treasury. This is the only way to solve this basic problem.

The Bill palpably will not solve the problem. It will not help half the poor and it will only half help the other half. It will certainly mean a loss of incentive, and here I take the point made by the right hon. Member for Wolverhampton, South-West. It takes no account, for instance, of work costs, particularly travel to work. In certain parts of the country, particularly in my constituency, one of the greatest incentives one could give to get people back into work who are now out of work would be to give them a substantial contribution towards the cost of getting to work. Often they have to buy a car as there is no public transport and they might have to travel 20 miles or more to work. That would be a major incentive and would help meet a good deal of poverty. A short-term solution to the problem is the increase in family allowances and their payment for the first child.

I make the point which many hon. Members have made that this was a promise. Its easy and somewhat slick burial this afternoon does nothing to raise the reputation of this House. I came to the debate with an open mind about supporting the Bill because it seemed that it would give a certain amount of money, if too little, to some very poor people. But the arguments put forward this afternoon lead me to the conclusion that any fair-minded and reasonable being would have to vote against the Bill.

8.0 p.m.

Mr. Peter Fry (Wellingborough)

I should like to comment on two speeches made earlier by two right hon. Gentlemen. The first is the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell) who attempted to equate the provisions in the Bill for a cash payment with a major step backwards. It is impossible to distinguish, as he chose to distinguish, between benefits in kind or reduced payments and payments in cash. It is part of our modern social contract that we have to accept that certain classes of society are unfortunate. They may be unfortunate because they are disabled in body or because they cannot command enough money at their place of work. As such they deserve the support of the community at large.

The point made by the right hon. Member for Coventry, East (Mr. Cross-man) about the giving back of the taxation on children's income was typical of attitudes adopted by hon. Members opposite. At least those children who will have the income given back did have it in the first place. The people about whom we are talking today have had little income and we are giving them something extra. We should draw the distinction between what a person has in the first place and that with which he is supplied.

Apart from those speeches, I have not been impressed, by and large, with most of the criticisms put forward. The first is that the benefits given in the Bill are not sufficient. With the present level of inflationary wage settlements, begun by the previous Government, it is not likely that any figure brought forward today would be completely adequate. But it is an important start. The most significant feature of the Bill is that the wage-stop is varied for the first time. This will be a tremendous help to many of my constituents, among whom there are many lower-paid workers.

Recently a young man came to see me. He was the father of two children and his wife was in hospital and had been there for some three months before the birth of their third child. He had the choice of either staying at home and looking after his two children, going on to social security benefits, or trying to stay at work and paying for those two children to go to a local nursery. He could not afford the payments for the nursery. Very commendably, although his income was low, he decided that he wanted to work, and the wage-stop prevented supplementary benefits being paid while he was in full-time employment. It was only when he went on to part-time work that he could be given financial assistance. What pleases me about the Bill is that families such as his will receive some assistance regularly until their wages reach a reasonable level.

Important, too, is the assistance given to the one-child family. I have never been a great believer in the family allowance system although I believe that the principle of the claw-back as exercised in recent years is very unsatisfactory. Benefits collected by the wife at the Post Office which are mainly paid for by her husband in income tax are likely to lead to family friction. It has always struck me that the present system is a rather clumsy and expensive way of giving help. Although many mothers will doubtless disagree with me, I should like to see an end to family allowances in their present form.

I should like to see an extension of principles of the kind put forward in the Bill. Many mothers have said to me, "Don't take away our family allowances; it is the only little bit we can call our own." I am afraid that I do not agree that it is the rôle of the Government to see that there is a proper division of family incomes between husband and wife. Perhaps hon. Members will agree that marital disputes often arise on this point. If husbands see more and more of their wages going in taxation while their wives are drawing larger family allowances, then it will need all the ingenuity at the command of hon. Members to convince many housewives that their housekeeping should be cut to adjust the difference. In this respect the Bill is of great importance.

Hon. Members have complained because they feel that this system entails a means test. This is one of those emotive phrases which is posed to conjure up a picture of a hard-hearted Tory. Have not previous Labour Administrations administered means tests through prescription charges and particularly in the assessment of parents' incomes in connection with student grants? I remember only too well how harshly these were administered in the days of the first postwar Labour Administration. What of the rent and rate rebate schemes encouraged by the last Administration? Are not these means tests?

I am confident that all thinking hon. Members opposite will know that this phrase no longer has the emotional overtones that some of them and their supporters use. What is a means test today? It is making sure that before other people's money—that is, the money of the taxpayers and ratepayers—is used in supporting an individual family, that family is truly in need. No matter what hon. Members opposite may think, the great majority of people would accept that definition. I suggest that echoing the battle cries of the 1920's and 1930's and the class war that existed then will bring them little support now among the electorate.

The criticism that is most important is that there will be a disincentive to the lower paid to earn more. It could be argued, as it has been argued that the Bill to some extent runs counter to the Government's policy of cutting taxes to encourage higher real earnings. We have to accept, if there are considerable numbers of the lower-paid who need help, that this is a risk we have to take. Whatever limit of gross income or whatever limit of supplement we fix, some people will always be deterred from earning more, some will always be marginally affected by rates of taxation. It is up to the Government of the day to decide which factor is the most important. I am delighted that the Government have decided to take the more humane viewpoint and to give help, risking the effect on possible earnings.

I am perturbed that the Bill will introduce yet another factor into what is already a jungle of rebates, benefits and allowances. Recent surveys have shown that a family, with three children, earning approximately £16 a week, entitled to a whole range of social benefits, rate rebates etc., is liable to find that it has a rate of marginal taxation of 165 per cent. on the first extra £1 that the husband earns. For the extra 20s. the family is likely to lose 32s. 6d. in various benefits. Most of these families have not added this up but they have a pretty good idea that if the husband earns more they will be worse off.

When this Bill becomes an Act we shall be adding another factor to a complex situation. When we come to add the new housng subsidies, as we shall later in this Parliament, I cannot help but feel that the whole framework of social security and taxation will become too intertwined and complicated. I hope that we can see in this Bill a first step towards clearer thinking on the subject, on the principle of seeking to distinguish need and to relieve it. I hope that it is a step towards a much less cumbersome system.

Like the hon. Member for Cornwall, North (Mr. Pardoe) I, too, prefer a system of negative income tax and I hope that we shall move gradually towards this—when all social security payments and taxation are brought together. I appreciate that there are tremendous difficulties in introducing such a scheme and that we shall have to be patient. At least today all those who will benefit from this Bill, no matter how many there are, should be thankful that we have an Administration which has decided to give them a high priority. In view of some of the comments about hard-hearted Tories, the hard-faced Selsdon man, it is very comforting to be able to support this Bill.

The Bill is all very well as far as it goes. It defines a family to be considered in need as one with a child and earning less than £15 a week. A sum of £2 a week is allowed on top of this for each additional child. From these figures it is clear that any couple which has to subsist on less than £15 a week could be considered to be in need. There are thousands of such couples. A family has been defined in the Bill as including at least one child, but to many people a childless couple is still a family. They have to meet the current price increases in food, heating, clothing and all the expenses of running a home. For such people tax reductions are of little help.

I end by making a plea to my right hon. Friend not to forget these people. It is not just pensioners who are in this category. Only this week I had a letter from a constituent who said that it always seemed that when benefits were being given out it was the family with children which benefited while the childless couples were left at the back of the queue. We could be in danger of adding insult to the injury of a childless marriage. This is a category of need still not provided for in our modern welfare state. I sincerely welcome the Bill and I hope that my right hon. Friend will remember this category, which can be termed a family.

8.10 p.m.

Mr. George Wallace (Norwich, North)

The hon. Member for Cornwall, North (Mr. Pardoe) brought back memories to me when he talked about relief on fares for travelling to work. I can remember many years ago having to walk from Mitcham Fair Green to the city to save the tram fare. Those were supposed to be the good old days. The hon. Gentleman made a valid and important point.

In the London commuter belt there is a great deal of hidden poverty due to the fact that people must pay exceedingly high fares to get to work at a certain time. For many years I have advocated that we should give workers an allowance or, better still, an allowance through income tax. That is not impossible; it can be done. It would bring a considerable amount of benefit to people dealt with by the Bill.

To some extent, the Bill recognises the principle of a family being given an allowance for the first child. The first child is the most important, because it is the most costly. Therefore, he or she should be the subject of a family allowance. The expenses begin with the arrival of the first child. The perambulator, cot, "potty" and many other things can be used for the second and third children. Some families buy a new pram for each child, but many people I know cannot afford to do so.

The hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) said that this was a simple, little Bill. It is a little Bill, but, my goodness, it is not simple. The more one looks at it, the more involved it becomes. The administration of the Bill will be extremely complicated. The hon. Member for Kensington, South (Sir B. Rhys Williams) referred to the number of people in the areas who will be involved in implementing the Bill. The Government's estimate of £600,000 as the cost of administering the Bill is, I believe, a gross underestimate. A large number of staff will be required than appears at first sight.

Certainly the Bill will involve considerable case work. We as Members of Parliament know that we shall have a considerable amount of case work. But that is incidental; it is part of our job and, from the Government's point of view, we shall not be involved in additional expense. My main objection to the Bill in principle is that it is a State subsidy for low wages and an easement of the conscience of employers of workers who are not subject to trade union negotiation.

I have some experience of dealing with workers not subject to trade union negotiation. As an office manager I have known occasions when towards the end of the financial year a list of suggested pay rises has had to be submitted. Anyone involved in this exercise understands the anxiety and tension which it causes. In many instances it is a question, not of whether a person has earned an increase in pay, but whether his face fits with the governor or the manager. This is a soul-destroying situation which trade union activity has not yet touched. A considerable number of workers are in this position and the Bill will help employers who will be able to use it as an excuse for not increasing the salaries of underpaid workers, particularly if those workers are not subject to trade union organisation. The Bill will merely serve to perpetuate an impossible and intolerable situation.

The Bill will accentuate social divisions. I agree with hon. Members who say that the Bill will act as a disincentive, especially for the betterment of the individual. But it will also lead to differences in married life. Hon. Members may be a little astonished that I should say that, but I ask them to bear in mind what is happening. The wives of many men whose wages are not too great are going out to work part time. In the area in which I live the bus which runs at a certain time in the evening is called "the budgie bus", because all the women on it are chatting at the same time.

I wonder what the position will be when husbands find that they will be better off if their wives stay at home instead of working part time during the evening shift. I have an idea that women enjoy getting away from the family and of talking with other women at factories. I believe that the Bill will lead to family friction and I am worried about it. This is, not a major, but a human point which must be borne in mind.

There is a division in public opinion about family allowances. The wives of many workers do not agree with them, but the dislike is particularly strong among old-age pensioners. The House does not need to be told why old-age pensioners are against family allowances. They feel that young couples in work are receiving benefits when their pensions should be increased. That is the main human reason why old-age pensioners object to family allowances. But, unfortunately, a social stigma attaches to people who receive supplementary allowances. I know that this attitude is wrong, but we must face the fact that it exists. The social divisions will be worsened and extended by the Bill. The legal establishment of a minimum wage which ensures the absence of poverty while in work would be far better for human dignity and, in the long run, cheaper.

My wife and I were discussing the Bill quite early this morning. She said, "You politicians are very involved. You make all sorts of provisions and introduce legislation. Why do you not provide that when a man is qualified for a job he should get a livable wage. It is very simple. Why do you not do it?" I promised her faithfully that if I had the opportunity I would tell the House what she told me this morning—because we must follow our wives' advice, which often is good for us.

I ask the House to think about creating a better society, through co-operation with the trade unions, employers, parties and politicians, by laying down a livable wage and getting away from the complicated business of allowances for this and that, complicated legislation and the filling in of forms, which is driving many people round the bend. Let us think again about the Bill. Above all, I ask the Minister to give us some information about it. All that we are doing is guessing very hard and probably coming to the wrong conclusions.

8.20 p.m.

Mrs. Sally Oppenheim (Gloucester)

As an extremely recent Parliamentary maiden in this House I am filled with diffidence at following in this debate so many illustrious speakers, and I am grateful to you, Mr. Speaker, for allowing me to catch your eye. We are debating a Bill containing proposals that most of us on this side of the House welcome most warmly, although one might not have thought so from the latter part of the debate. It is a Bill to deal with family poverty, it is long overdue and its implementation will mean that help will be brought to the most widespread sector of chronic poverty. Naturally, we are all concerned with the welfare of those people.

I have been more than a little disturbed that so much attention has been given on the Labour benches to whether the Bill provides the last three-halfpence worth of an election pledge, or whether it provides real help for these people. I have been entirely unconvinced by the specious arguments put forward against the Bill. No sooner was it announced, than we heard the parrot cries of "Speenhamland" and "subsidising the employers", mostly from hon. Members on the Opposition benches.

A great many families who will be receiving the family income supplement are families who cannot seek or obtain higher-paid employment because of the nature of the work they are able to do and the number of hours they are able to work. A large number of those people would become unemployable if the onus were placed upon the employer to raise their wages. For instance, is it subsidising the employer to make a family income supplement to the mother of a fatherless family when the rates of pay for a woman and the number of hours a woman with a young family can work automatically dictate low earnings? We are told that about 54,000 such families will benefit from the family income supplement.

Is it subsidising the employer to make a family income supplement payment to a family where the presence of a chronic invalid means that the wage earner has to take a certain type of work and is limited in his hours of work so that he can be available in the home if he is needed? There are many families in this category who will not be eligible for a constant attendance allowance because the disability of the invalid is not severe enough, but who will be eligible for and helped by the family income supplement.

A propos of both these cases, I am grateful to my right hon. Friend for saying that he will let us know in Committee the exact definition of "full-time employment" in the context of the Bill. Is it, for instance, to be more than 21 hours a week as defined for the purpose of S.E.T., or is it to be 40 hours a week, as defined by the Department of Trade and Industry?

The most important thing is that the Bill will bring maximum help to the most necessitous group of all, the large low-wage-earning family and, contrary to what has been said, it adds an incentive to the wage earner in such a family to remain in employment. As things are today he would often be better off unemployed.

On the other hand, cogent arguments have been put forward that all marginal rates of social security benefits are as much a disincentive to effort as marginal rates of taxation, and it is possible that this is true, but what really matters is the motive in providing such benefits, that the benefits are urgently needed by the majority of recipients and that the possible disincentive to effort is a calculated risk that must be taken to help those in need.

The two arguments that I advance against the Speenhamland theory—incidentally, my source is also Trevelyan—is that family income supplement is quite different in that it provides a centralised subsidy. It does not rely on a parish or local authority initiative as in the 19th century. Secondly, the provision of family income supplement is less inflationary than would be the provision of higher wages by employers to the 190,000 households who will be eligible for it, even if the employers agreed to do so. If all the lower-paid workers who will be affected by the Bill were given a higher rate of pay, would the craftsmen and the semi-skilled workers accept a lower differential, or would this be one more springboard for wage claims throughout the scales?

Mr. O'Malley

Is not the hon. Lady bringing herself to the remarkable conclusion implicit in her speech that, because it is less inflationary, she would prefer these families to receive this form of State subsidy wages rather than getting a just wage increase?

Mrs. Oppenheim

No one has any objection to a just wage increase. The point I am making, which hon. Gentlemen opposite always appear to be conveniently oblivious to, is with regard to the wage cost element in the very inflation they are always complaining about.

It has been repeatedly asked why we did not increase family allowances with claw-back, and this question was adequately answered by my right hon. Friend the Secretary of State. He certainly satisfied me. There is the problem of take-up and I intend to see that the family income supplement is fully and frequently advertised in my constituency. I put it to my right hon. Friend that it might be administratively possible for employers to put a slip in the wages packet of those who are earning below the income tax level advising them that they may be entitled to family income supplement. This would further the case of those who are already describing the provision of a family income supplement as the first step in the direction of negative income tax.

It is difficult to see from their reasoned Amendment what the Opposition object to most in this necessary and compassionate piece of legislation. Sophisticated arguments have been put forward, and elaborate hair-splitting has taken place, but there is only one argument for us to consider. Do these people need help and will they get it? Is it, as the right hon. Member for Cardiff, South-East (Mr. Callaghan) suggested last week, that it is not sufficient? This may be so, but, if this is their objection, how was it that when the Labour Government were in office for five and a half years they did nothing of significance for the families who will be helped by the Bill?

We are told by the Opposition that they are contemptuous of the Bill and are considering voting against it. Many hon. Gentlemen may vote against it, but if they decide to do so they will have to go back to their constituencies throughout the country and face 180,000 families and 500,000 children who will benefit by the Bill and openly admit to them that they have allowed political expediency to overcome their social consciences, whereupon the last vestiges of their credibility as the party of the poor, already worn threadbare by the ravages of five-and-a-half years of Labour Government, will have disintegrated completely. So they have decided to salve these consciences, worn so ostentatiously on their sleeves, with a reasoned Amendment that is no more than a meaningless political form for obstructing a Bill that will provide help which cannot be provided in most cases as effectively in any other way.

8.30 p.m.

Mr. Michael Meacher (Oldham, West)

The Secretary of State in his speech to the House last week made it quite clear that the Bill was not intended to counter the increased health and welfare charges but was designed explicitly to improve the standard of living of the poor—[Interruption.]—of some of the poor, at least. Therefore, I intend to concentrate today on the impact of this Measure on family poverty.

Overall, the cost of the scheme in take-up has been estimated by the Government to be £7 million. Whilst there are strong reasons, to which I will come, for suggesting that this is gross optimism, nevertheless, even if it proved correct, the effect on 190,000 families with half-a-million children would be to raise their standard of living by an average of 3s. 6d. per person per week. That is hardly a scheme even to begin to make the difference between poverty and adequacy.

No doubt it will be said—I am sure that the Secretary of State has this in mind—that the extra moneys will be concentrated on those in greatest need. Concentrated they will be, but to such a degree as to be almost invisible.

A family falling behind at three-quarters of the national average wage—I am sure the right hon. Gentleman will agree that that is a low wage—will not get a penny from the new scheme unless it has at least five children. Even at the very low wage of £12 gross a week before stoppages—there cannot be family poverty more concentrated than that in one household—a family will need at least four children to get the maximum entitlement of £3 a week. Hardly any family with one child and a male breadwinner as the head of the household in full-time work will be able to pick up £3 a week, and such benefits will be almost entirely confined to the fatherless family with one child.

In view of these exiguous benefits, even at these nightmare levels of poverty, it can surprise no one, though it must shock us all, that scarcely any family whose total income is below the supplementary benefit line, despite the man being in full-time work, will have its earnings raised above this line by the income supplement.

Sir K. Joseph

Does the hon. Gentleman agree that a 10s. increase in family allowances would provide far less help to the families that he is mentioning than the proposals in the Bill and, to the family comprising one parent or two parents with one child, no help whatsoever?

Mr. Meacher

The point about family allowances, as the right hon. Gentleman made clear in his speech earlier today, is that it would be possible, through this mechanism, to provide more help to the two-child family, and to families with more children, through several other expedients: by providing tax-free allowances up to a certain level, by an extension of the child tax allowances in order that there should be more to claw-back, or by alternative expedients; for example, by the raising of other personal allowances for the purposes of claw-back. I am not recommending any of these, but they would be more efficient as a technique for concentrating relief of poverty automatically without a means test on those who need it.

Families with a gross income at the low level of £12 a week will still fall short of the supplementary benefit scale rates plus average rent by amounts ranging between 25s. and £5 a week, depending on the number of children, while households at three-quarters of the national average wage—we must remember that we are talking about the current earnings of a quarter of all manual workers at this level—will still be 26s. a week short at the point at which the family income supplement begins to bite.

Indeed, so paltry are the benefits under the Bill, especially when taken in conjunction with the increased public expenditure charges of various kinds, that the Government must stand convicted either of excessive meanness or, as I suspect more, of tacitly manufacturing a new poverty line several points below the existing supplementary benefit line with the deliberate hope of sharply reducing the amount of public expenditure for the relief of poverty in future. Indeed, there are several ominous signs that that is precisely the intention of the Government, underlying both this Bill and other aspects of the public expenditure package. I would therefore ask the Under-Secretary categorically to deny, if he can, that there is any justification for these suspicions.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

Would the hon. Gentleman give the House the figures which would apply if he took into account the wage-stop. I do not think that he is taking it into account on these figures which are directly relevant to those families. Equally, he piles on all the likely increases in food costs and all charges in later years, but he takes no account of movements in earnings and other measures which may be taken to deal with poverty. Would he complete the picture, in view of the trouble he took in the article published in The Tunes, today?

Mr. Meacher

I entirely accept that further measures may be taken. I questioned the Secretary of State about proposals of this kind. But if conclusions of this kind are drawn, the Government have only themselves to blame for not making it clear at this stage that they intend in a certain manner to raise other family allowances or family income supplements. In the absence of a definite commitment we can only go by what the Government themselves tell us.

In comparison with the Prime Minister's original definite and written commitment to the Child Poverty Action Group to increase family allowances with simultaneous adjustments as "the only way"—these were his words, not mine—of tackling family poverty in the short term. F.I.S. suffers from several heavy disadvantages. Apart from the all-important limitation of the means test, F.I.S will mean a big disincentive for the low paid to seek either overtime or a higher-paid job, because of the large additional earnings which will be lost in terms of benefits forgone.

It will also, of course, be much dearer to administer, with the large increase in civil servants to run both this and the proposed rent rebate scheme, but, above all, it will disastrously underwrite the philopsophy of one law for the poor, a new means-tested benefit, at exactly the same time that another law for the wealthy, a cut in income tax, is being promulgated.

The Chancellor of the Exchequer has attempted, I know, to defend the value of F.I.S. in preference to family allowances, on the ground that the former gives slightly more assistance to those families most in need. My immediate response to this is that, given the preference—which we on this side do not share—for means-tested selectivity, if the former Conservative shadow Chancellor felt that £30 million should be devoted to the relief of poverty out of a rather smaller reflationary public expenditure package at that time, why, now, is a maximum of only £7 million made available?

Leaving that point aside, the Chancellor has also chosen to ignore the fact that it entails several other draw-backs, and not only the much reduced take-up as a result of the means test. For example, in comparison with supplementary benefits, the value of F.I.S. is severely limited when full account is taken, as it will be with F.I.S., of work costs such as National Insurance contributions and travel and clothing costs, and when it is remembered that valuable extra sources of income which are normally disregarded in assessing entitlement to supplementary benefit scale rates will under F.I.S. not be overlooked.

These conclusions are unpalatable enough, but they are, of course, only part of the picture, and the more positive side at that. It is dispiriting to realise that, even at lowish wage levels, F.I.S. will not be nearly sufficient to offset the impact of charges simultaneously increased by the Government, which arises especially, as the Secretary of State said, from the shift towards an import levy system for food and towards higher rents, even taking into account the rent rebate scheme, which we have yet to see.

Making what I believe are moderate and reasonable assumptions from the rather vague premises of much of the White Paper, one can calculate the net balance effect of F.I.S., the income tax remissions and increased charges at the time by which the last will have fully worked through, not taking into account the effects of inflation in the meantime. By that time a family with the very low gross wage of £12 a week will have seen its potential aid of £156 a year reduced to anything between £30 and £99 depending on the number of its children, while at three-quarters of the national average wage F.I.S. will be unable to prevent a net loss of about £75 a year to a family with three children, and of about £65 a year to a family with four children. Yet I am afraid that even this sad catalogue is too optimistic because I have been indulging in my stock feeling of being over-generous.

All the figures quoted so far have not taken into account the devastating impact of an income test on the number of applications by families eligible to benefit. There is already extensive public antipathy to men at work drawing supplementary benefits, abetted, one is bound to say, by certain hon. Gentlemen opposite. I entirely exclude the Secretary of State from that remark. Against this background I can only conclude that the take-up of the proposed benefit will be almost certainly less than 50 per cent. I suspect that it will be a great deal less.

Bearing in mind the Chancellor's oral reply a fortnight ago that he had not yet finally excluded the option of an increased family allowance, I ask the Government to state explicitly what percentage take-up they regard as the minimum criterion for the satisfactory operation of the scheme. I ask the Government to monitor the progress of the Bill, supposing that it is passed, by publishing each year the changes in the number of families in family poverty as a result of these measures, paying especial attention to the numbers of low-paid who are eligible for benefits but who, for one reason or another, do not apply, relating as fully as possible the circumstances of those families. Only such an undertaking can fully restore faith in the Government's commitment to tackle seriously the scandal of growing family poverty.

I seek two further brief clarifications from the Government. One concerns the increase in the national wages bill. I am grateful to the right hon. Member for Wolverhampton, South-West (Mr. Powell) for the attention which he drew to this matter. I am convinced that there will be an increase in the national wages bill arising from the restoration, totally or substantially, of the former existing differentials between the wages of the low paid and of the skilled as a result of these measures, since the family income supplements will largely assist the low paid whilst the increased charges will substantially hurt the skilled.

If such increased costs occur on any scale, as I am convinced will be the case, will the Government accept this evidence as grounds for the abandonment of F.I.S. in favour of the original promise to increase family allowances, so avoiding these consequences? Second, if a widening gap emerges between the wages of the low paid and those of the skilled, since under F.I.S. employers will escape any pressure to push up very low wages, will the Government accept an open-ended commitment to raise F.I.S. almost indefinitely to reduce the gap? If not, what alternative plan have the Government to deal with the problem?

There are several matters of procedure under the Bill which urgently require clarification before the House can reasonably be expected to pass it. Such matters include the definition of full-time work, to which attention has been drawn, the application of the rule regarding cohabitation, financial support for one-parent families, and the precise procedures under which claims will be considered.

More significant, however, is the whole ethos underlying the Bill as drafted at present as regards the balance of rights and obligations as between the applicant and the authority. It is significant that details are given in Clause 8(4) of the procedure for the recovery of overpayment; yet no Clause supplies the converse procedure for clients obtaining back payments where under-payments have been discovered. Again as an illustration of the disturbing philosophy underlying the Bill, one wonders whether the threats of prosecution in Clause 12 will not lead inadvertently to unwitting official pressure on a client to refrain from pressing a claim or an appeal. Altogether, it is difficult to avoid the conclusion that the Bill will lead to a deterioration in relations between the poor and officials of the Supplementary Benefits Commission who are recognised already to be grossly overworked. In this sense, the damage to the improvement of the social and legal rights of the poor may turn out to be the most serious casualty of all under this Measure.

Even given the Government's determination to make changes in the pattern of public expenditure, fundamentally and primarily designed to finance the sixpenny cut in income tax, the Government have yet to devise—at least to let us know—a policy which merits the name. Until that is done, the Government should withdraw their Bill for the mean and pusillanimous bauble that it is, and think again.

8.46 p.m.

Mr. John Nott (St. Ives)

This has been one of the very best debates in this House that I have ever attended. I will not follow the hon. Member for Oldham, West (Mr. Meacher) in his remarks. He is a far greater expert on this subject than I. I prefer to devote myself to the more general principles underlying the Bill, as did my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and, in doing so, naturally I shall do my best to help my right hon. Friend the Secretary of State for Social Services. However, I may not be as helpful as I should like to be.

I shall return to the speech of my right hon. Friend the Member for Wolverhampton several times in the course of my remarks. He spoke with great impact of the dramatic step that we are taking in this Bill. I agree with his judgment. But, with some diffidence, I differ from his main conclusions, for reasons which I shall outline.

My right hon. Friend was correct in his major point. This is no little Measure. Inexorably, it must lead to a national minimum income along the lines attempted by the right hon. Member for Coventry, East (Mr. Crossman) and as proposed, I believe, in the Labour Party's 1964 manifesto—

Mrs. Shirley Williams

Not quite.

Mr. Nott

Not quite, but very nearly—giving the right hon. Gentleman no real cause for claiming that we have broken faith by introducing this Measure.

If the Bill does not lead by inexorable steps to a national minimum income, it will be necessary to repeal it and replace it with a new and radical approach involving the complete recasting of our supplementary benefits system, certainly for the able-bodied unemployed. As I see it, there is no middle way between the course recommended by my right hon. Friend the Member for Wolverhampton, South-West and that recommended by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams).

Whatever views we may hold on this subject, we recognise my hon. Friend the Member for Kensington, South as the Marharishi of the cult of negative income tax. My hon. Friend has pursued this concent with geat persistence and I admire him for it, remembering that he has inherited a missionary zeal from his talented mother—the scourge of the Royal Commission on Taxation—and has pursued his faith like the first hot gospellers in darkest Africa among the ignorant natives who fail to comprehend the truth.

The ignorant natives in this case are the so-called experts. I have never met one, whether he came from the Tory Central Office or that other, though lesser, seat of true bureaucracy, the British Civil Service, who does not find reverse income tax an absolute bonanza for the exercise of his most intellectually developed trait—that of supercilious superiority towards any concept he did not invent himself; and when something is proposed by Lobby fodder from the back benches he regards that as coming from anthropological specimens beneath contempt.

I remember how a little group was set up by the late Mr. Iain Macleod when we were in opposition. In referring to this group I am beaking the official secrets act of the Conservative Party, but that will cause me few sleepless nights. With that enormous perspicacity and that great flair for which he was so well renowned, Mr. Macleod set up the group within the Conservative Party to consider reverse income tax, and I was a member of it.

The group was so neatly balanced with the opponents and proponents of the scheme that it was a absolute miracle that we managed to agree on the place and time of a meeting let alone on any of the philosophical implications of its effect upon incentives and its cost. I need not add that I believe that Mr. Macleod, for whom I had enormous admiration, was an opponent of the scheme of negative income tax.

However these philosophical implications are absorbing for they require first a judgment of incentive—of what it is and what it means—and in turn that raises the problem of the motivation of the individual.

My right hon. Friend the Member for Wolverhampton, South-West I suppose argues that curates preach harder and more devotedly if the Church Commissioners keep them in abject poverty yet hold out the incentive of a car and gaiters if they are more pious in their faith.

Mr. Powell

My hon. Friend's speech is so good that I do not want to lose any of it by interrupting. I rise only to assure him that the question of incentive did not in any way enter into the argument which I put before the House earlier.

Mr. Nott

I naturally accept my right hon. Friend's comment. I must say that for myself I believe that with some minimum security my curates could be more balanced, even harder working individuals, and I have always believed that some savings enhance the motivation of the individual and do not drive him into idleness.

I speak this afternoon because in many of the speeches which I have made in the House I have consistently remarked that the income tax and contribution system to the State must be considered as one, just as benefits and similar matters must be treated as one as well. I come to see the whole concept of regional development and benefits as being more and more interwoven, to the detriment of both, as the years go by and alas if things progress as proposed in this Measure, the area which I represent will become a depressed area not just materially but psychologically, as well.

This Bill just adds another complication to our tax and benefits system. It has been agreed that it embraces a jump of 50 per cent. in marginal rates. I see it creating difficult problems for the seasonal, casual and part-time working population in my area, which is primarily the main type of employment involved. Because of the wage-stop, and the hon. Member for Oldham, West might sort out my confusion on this point on supplementary benefits and its lack of application to this supplement; I think, and I say this without any great certainty, that it will now for the first time be better in my constituency to be unemployed than employed, for reasons I shall try to explain.

Every hon. Member claims that his constituency is poor. The only uniqueness of my claim is that I am right. The take-home wage in my constituency is about £12 or £13 a week. I believe that a large number of the 134,000 working families to whom the Bill applies will be in West Cornwall. As inflation increases and the poor become poorer so the Government will try, as my right hon. Friend said, to relieve their real distress by State assistance, and regulations will be presented to increase the benefits under the Bill. But with inflation the poorer areas of the nation, like the poor, become much poorer, too, and wage rates continue to decline relatively to the national wage. In this way the working wage becomes less than State assistance. So what I believe we are saying is that we have to make a national judgment that the poor in my area need less than do the poor in Wolverhampton. After all, this is what the wage-stop is all about.

I do not claim that these matters are subject to solution in a mere five months. I am glad that the Government have brought in this intermediate Measure and I fully accept my right hon. Friend's undertaking that further Measures will follow from it. But I do not believe that there is any middle way any longer: either we have to support the beliefs of my right hon. Friend the Member for Wolverhampton, South-West—and he is absolutely logical in all he says; we must grant him that—or we have to go the other way and opt for a national minimum income. I think that at the present time the whole jungle of benefits and taxes is breaking down.

I am a pessimist, not because I doubt the effervescence of my right hon. Friend—I know that if anyone will really try with all his energy to tackle the problem of poverty it will be he, and I have absolute confidence in his determination—but because I believe that the Bill—and I have to welcome it because of the extreme poverty and the average take-home income in my constituency—is not the answer to the problem. I accept it as an intermediate Measure, but I repeat that we either have to go to a national minimum income or a reverse income tax—and, broadly, they are the same—or we have to revise our whole supplementary benefits system and adopt a more rigorous open market attitude such as that propounded by my right hon. Friend the Member for Wolverhampton, South-West.

8.59 p.m.

Mr. Brian O'Malley (Rotherham)

I am sure that hon. Members on all sides will agree that this debate has been conducted at a very high level, and I know that they will also agree that our two maiden speakers, one from each side, in no way fell from that high level. We had a maiden speech from the hon. Member from Birmingham, Perry Barr (Mr. Kinsey), who began modestly and with humour. I might say that modesty is net a predominant characteristic of this House, but, in any case, as the hon. Member went on, so he became more assertive. The longer he spoke, the less modest he became—perhaps he got something of the atmosphere of the House. As he would expect, I disagreed with much of what he said, but I congratulate him on a very successful maiden speech and look forward to contributions from him in future, when we may have an opportunity of interrupting him and of questioning him on some of the views he expressed today.

The second maiden speech came from my hon. Friend the Member for Lanarkshire, North (Mr. John Smith), the successor to Miss Margaret Herbison. It was appropriate, I think, that the tribute paid to Margaret Herbison should have been paid in a debate on the subject of poverty, to which she devoted a great part of her life. Listening to my hon. Friend—and, for that matter, to a number of other hon. Members—I thought that the concept of non-controversiality seems to have become modified a great deal with our present new intake, although it is perhaps a process that has been going on for some years. My hon. Friend, in his non-controversial way, scored a number of telling points and made a vigorous and knowledgeable speech. I congratulate him on it and, again, look forward to his making further contributions on this subject and on other subjects.

As I listened to the Secretary of State it occurred to me that never had I heard a Minister speak so defensively of his Bill. The reason for his defensiveness has become more and more apparent as the debate has proceeded. Deep apprehension of the principle on which the Bill is based has been expressed not only by all who have spoken from this side but also by hon. Members opposite, including the hon. Member for Kensington, South (Sir B. Rhys Williams), who gives a great deal of thought to and puts a great deal of work into this subject, the hon. Member for St. Ives (Mr. Nott), and notably the right hon. Member for Wolverhampton, South-West (Mr. Powell). I cannot remember any occasion before today when I have felt myself in any way in agreement with the right hon. Gentleman. The right hon. Gentleman made a speech which was full of foreboding. It was a speech with a strong sense of history. Perhaps it was an historic speech. The right hon. Gentleman may be right in his conclusion, if not in his reasons for it, and in the warning he gave of the possible fateful consequences in giving relief in supplementation of wages. The House ignores at its peril the lessons and verdicts of history.

It is relevant to consider briefly what happened one-and-a-half centuries ago. Hon. Members need go no further than the reports which are to be found in the corridors of the House of the eighteenth century Poor Law Commission Inquiry and the seventeen volumes of appendices which show in detail, and from specific districts, the consequences which flowed from the Spenhamland system which, in spite of the passage of time, still has relevance in the consideration of this Measure.

It is relevant to quote the views of the authority on the Speenhamland system—Karl de Schweinitz—who, in his "England's Road to Social Security", page 76, said this: The system was so vicious in its results and met with such cumulative and ultimately almost universal contemporary condemnation that throughout the succeeding century it was cited as the classic of ill-advised planning and administration of public assistance. The effect of the pogrom was to lower the standard of wages and living for the labourer, to destroy the initiative and hope with which he approached his work, and, if anything, to increase the number of those who were either forced or resigned to an acceptance of a measure of outdoor relief. My hon. Friend might also reflect on the thought that some things may happen in cycles. The Speenhamland system began in 1795 and not long after its introduction a Tory Government introduced the combination Acts to deal with the trade unions. Perhaps we shall find a similar situation under the present Government in the near future.

The Bill has been received with hostility, not only by a large number of hon. Members but also by a vast body of experts outside the House. The Government have introduced the Bill without seeking the advice of the Supplementary Benefits Commission, which will administer the scheme, and which might have been thought to have been an expert body on questions of poverty.

The Bill is a substitute—an inadequate and undesirable one—for a formal promise. In spite of everything that has been said by the Secretary of State with the complex figures with which the Department no doubt supplied him, the Tory Government have broken their promise. This is the view of the Child Poverty Action Group, to which the promise was given by the late Iain Macleod and by the Prime Minister.

It was not confined to the Conservative Front Bench. We are told by the New Statesman of 10th July, 1970—we all have a high regard for this publication, with my right hon. Friend the Member for Coventry, East (Mr. Crossman) as its editor—that shortly before the Election the Child Poverty Action Group was being deluged with several pledges an hour from Conservative candiates. An undertaking was given that the Conservative Party if in government was willing to spend £30 million on relieving poverty in this sphere. At a stroke the Government have reduced the money available to £8.6 million. The Secretary of State says, after a formal promise has been made in writing by the Prime Minister, that the possibility of a later increase in family allowances is not ruled out. He says that there is a possibility that they might even keep their promise!

The Government's estimate is that this scheme will run at £8.6 million. There is a great deal of doubt about how much of that will be taken up. A body of expert opinion outside the House believe that the Government are being highly optimistic in their estimate and their hopes that there will be a take-up of seven out of every eight people. I do not comment on Professor Townsend's assertion, but he thinks that the cost might well be less than £3 million for the supplement, notwithstanding the £7 million mentioned in the Explanatory and Financial Memorandum. It is clear from all the evidence we have of means-tested schemes that substantial numbers fail to apply for the benefits to which they are entitled. Sometimes more than half of those who are entitled do not apply.

The same situation will not apply here as applied with the Bill dealing with pensions for the over-80s. There is no one to write to in this case. This is not a simple scheme. It is apparent from the debate that this is a complex scheme and one which is being added to a multiplicity of means-tested schemes which the Chancellor has now extended. [Interruption.] Of course, he has extended them. The Chancellor has been telling us about how many more people would be receiving benefits of one kind and another.

Even if the take-up is as high as the Government hope, only a small number of people are involved. We recognise that one side-effect, one inherent feature of the Bill, is that a number of families who are at present wage-stopped will be assisted. Also, fatherless families and families with one child will be assisted.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

Some of them.

Mr. O'Malley

Precisely—some of them. The Secretary of State is reported to have said before the election that there were seven million to ten million people in this country living on or below the poverty level. Thus, on the best estimates, on the high estimates made by the Government, we see another interpretation of the doctrine of selectivity: the Bill will help one in seven or one in ten of those who, in the right hon. Gentleman's own words, are living at or below the poverty level.

My hon. Friend the Member for Oldham, West (Mr. Meacher), who made an extremely valuable contribution, showed both in his speech and in his first-class article in The Times today how limited is the aid to be given. Here are some examples. A married man with two children on earnings of £16 a week receives nothing under the Bill. A married man with three children on earnings of £17 a week receives nothing under the Bill. A married man with four children on £18 a week receives nothing, though in fairness one should add that, as a result of the 6d. cut in the standard rate of income tax, he will benefit by 3d. a week, though that will be before taking into account any of the increased charges coming as a result of the changed policy for agriculture and the policy for housing subsidies with the cuts which the Government intend to introduce. A man with five children on £19 a week receives nothing, and a man with six children on £20 a week receives nothing.

Thus, men with wages slightly below the average will receive nothing under the Bill while at the same time facing increased charges, and they will lose even before the change in agriculture and housing policies comes into effect to redistribute wealth to the better-off.

As regards the limited number of people who will receive benefit under the Bill, several of my hon. Friends have pointed out already that the effect will be to establish a new level of poverty below the level established on the supplementary benefit scales. One sensed that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who has a deep knowledge of these matters and whose views are widely respected in the Chamber, put his finger on precisely that point. This was the nub of it. For those at work who will receive benefit under the Bill we have a new official level of poverty established lower than that for men who are not working.

For example, a man with a gross wage of £12 a week and with two children—this is without taking into account housing costs—will now, after the Government have introduced a Measure to deal with the problem, be £1 4s. 8d. a week worse off than if he were on supplementary benefit. A man on £12 gross wage with four children will be £2 10s. 8d. below the supplementary benefit level. A man with six children will be £5 2s. 8d. below the supplementary benefit level. That is the way in which it is proposed to deal with child poverty in this country.

Apparently, what we are seeing with the introduction of the Bill is a new version of the Benthamite principle of least eligibility, that the man at work will be less eligible for benefit than those who are not at work. This will have serious consequences for the social climate and for attitudes in this country on the whole subject of poverty and the receipt of benefits, means-tested and otherwise.

Even when the small number of families who are to receive benefits do receive them at the level proposed, there will remain the problem of the bad employer. My hon. Friend the Member for Hitchen (Mrs. Shirley Williams) pointed out that many of those, including many women, on the lowest wages are in precisely those occupations and industries where the trade union movement is not organised. The House must examine a situation where an employer will be able to say, "There is no point in my giving you an increase because if I do there is a 50 per cent. disincentive to start with, and on top of that you can be thrown out of entitlement for F.I.S. completely." It will certainly be more difficult for the lowest-paid workers to get rises when higher wage earners are moving up. It always has been, but the introduction of the FIS principle will make it more difficult.

On 27th October the hon. Member for Boston with Holland (Mr. Body) told the Chancellor that F.I.S. would … fulfil an urgent need in areas like East Anglia, where wages have been abysmally low …"—[OFFICIAL REPORT, 27th October, 1970; Vol. 805, c. 67.] Shades of Speenhamland! If wages are abysmally low in East Anglia the solution is not to revert to a situation which proved disastrous in 1795 and the years after that.

It seems to us on this side of the House that in the Bill the Government are pushing the principle of selectivity beyond reasonable limits. Under successive Governments, to deal with specific aspects of poverty a plethora of means-tested benefits and exemptions have become available. Now the Chancellor is extending the number of people who will be entitled to those benefits. He pointed out proudly that nearly 250,000 more children will be entitled to free school meals and that nearly 200,000 more mothers and children will get free welfare milk. We have a situation in which we are told that men on under £20 a week will be entitled to remission of ophthalmic charges, dental charges and prescription charges. It is becoming a full-time job to be poor.

Let us just look at the kind of situation with which people without a very good education often have to try to cope. We have the family income supplement, which we are discussing. We can be means-tested so that we can get free school meals. The milk goes, but we can have a means test for welfare milk. If a man on a low wage comes off work through sickness or unemployment he does not get the first three days' benefit any more, under the Government's proposals, but he can go for another means test for those three days' benefit if he is suffering hardship. He can fill in a form to apply for a rent rebate and a rate rebate. He can claim exemption from prescription charges, ophthalmic charges and dental charges, and can obtain school clothing grants, and, in some local authority areas, school maintenance grants. It is a full-time job to be poor.

The Government are making the situation worse. Many of us in the House have a respect for the humanity of the Secretary of State. Certainly I have. But while we talk about poor people who are entitled to claim such benefits, there are some who will have it that those people are the lame ducks, living in the soft, sodden morass of subsidised incompetence. That is what the Secretary of State's Cabinet colleague, the Secretary of State for Trade and Industry and President of the Board of Trade, said. I hope the Secretary of State will dissociate himself from that kind of vulgar, unfeeling philosophy.

Sir K. Joseph

Is not the hon. Gentleman aware that my right hon. Friend was talking largely of indiscriminate benefits going to all, whether or not they need them, and also to a large extent of industry rather than individuals?

Mr. O'Malley

The right hon. Gentleman certainly was not speaking about industry in the paragraph of his speech to which I referred. The House and the country will have noted that the Secretary of State is unwilling to dissociate himself from the objectionable remarks which his Cabinet colleague made.

At this stage in the history of methods of dealing with poverty in this country, particularly family poverty, any Government, instead of extending a system of complex and inefficient means-tested benefits, should be looking at how to reduce the number of people on such benefits. I know that the hon. Member for Kensington, South agrees with me on that. We have a hotch-potch system which is difficult for politicians and the professionals concerned with it to understand, let alone the poor people who must apply for the benefits, and it is difficult and costly to administer.

When the Government introduced the Bill other alternatives were open to them, alternatives which could have been brought into operation before August of next year. One of the major advantages of family allowances is that they are almost universally claimed. It is true that there is a limited scope for further F.A.M. with claw-back, as the present tax-benefit structure stands. But the Government had a range of options. They could have considered raising the tax threshold, which would have raised the rate of earnings at which the full F.A.M. increase would be received without being taxed. They could have replaced taxed F.A.M., child tax allowance, claw-back with untaxed F.A.M., or introduced increased family allowances with less than 100 per cent. claw-back. There is already an example of this, because claw-back does not apply to widowed mothers, who get both family allowance and child tax allowance in full.

If right hon. and hon. Gentlemen opposite had wanted a version giving individuals the choice of having family allowance or child tax allowance, it would have been possible to devise a scheme giving the heads of families such an option. Family allowances are an effective and humane way of dealing with the problem of the work-shy and preventing disincentive. Instead of that we have this alternative, which my right hon. Friend the Member for Coventry, East described as a "scrounger's charter" and which the hon. Member for Kensington, South described in identical terms. We have a Bill which contains formidable disincentives for the lowest-paid members of our community at a time when the Government are talking about incentives for the higher-paid members of the community.

It is interesting that the Economist said, as long ago as 31st May 1969, in discussing a scheme of this kind—and it is the understatement of the year: There would be lots of stories—some of them justified—about the disincentive effect on layabouts. What kind of result can the right hon. Gentleman expect from a system of help of this kind which provides a 50 per cent. disincentive?

It is also very a very crude measure. The right hon. Member for Kingston-upon-Thames noticed that it apparently disregards war pensions. It apparently disregards everything else that is considered for supplementary benefit.

Mr. Boyd-Carpenter

I asked my right hon. Friend whether war pensions were, as I hope they will be, disregarded in the computation of income for this purpose. I am still waiting for a reply.

Mr. O'Malley

I, too, hope that they are disregarded, but my impression is that they are not. I am sure that the Under-Secretary will deal with this point. Certainly there is no indication that the disregards available in the supplementary area will be available in the generality of cases in the payment of this scheme. It is a system where an assessment is made and then payments are made for 26 weeks, despite any change in circumstances. I can imagine the kind of reaction that there would have been from the Conservative Party if we had introduced such a Bill with this sort of assessment, ignoring changes in circumstances during the period of 26 weeks. There would have been such a cry of "scroungers" in every right-wing newspaper that we should have had a very difficult task in getting it through.

It is crude because it is unrelated to housing costs; there are no differentials for children of different ages. It excludes mothers doing part-time work who would be better off on supplementary benefits. It apparently excludes the case—and I shall be corrected if I am wrong—of a man whose grandmother is living with him and looking after the children while he is at work. It poses enormously difficult problems of assessment and administration.

My right hon. Friend the Member for Coventry, East, who has some experience in this matter, pointed out that we shall have a brand-new scheme and will have to start training a new range of civil servants to carry out the job. The administrative costs are high and when the Bill says that 200 extra civil servants will be required, I hope that the Under-Secretary will give some estimates about the number of hours overtime that he thinks local officals will be required to work to implement the Bill.

These are criticisms of the technical aspects of the Bill. What is most important about the Bill, in the view of my hon. and right hon. Friends, is that it diminishes the status of the poor. There is no doubt that however humanely a means-tested system is carried out, it nevertheless remains a means-tested system. There are still substantial numbers of people who resent the fact that they should be subjected to such means testing. Therefore, wherever possible the emphasis from government should be on universal rather than selective measures, operating a redistribution through the tax system rather than means testing. What is at stake is the quality of society.

We on this side of the House reject the concept of second-class citizens, of "lame duck" citizens. Other options were open to the Government and yet they chose the £8 million option for the poor kids and the £25 million option, which I have no doubt they will implement, for the rich kids, to pay their school fees. The record of the Government in the four months that they have been in power is not one of which they can be proud. They have broken their promise and have brought in this sordid, mean little Bill which they say will cost £8 million.

I would point out that when we came into office, family allowances had not been raised since 1956. The cost of family allowances for alleviating precisely this kind of poverty stood at £143 million in 1964–65 and had jumped to £346 million in 1970–71. The best that the Government have been able to do in the four months is to introduce a system of claw-back whereby, by 1974–75, £82 million will be taken from the less well-off in terms of higher school milk, welfare charges and milk for the over-sevens.

This Bill is being introduced in a background of inflationary, repressive and irrelevant proposals. We on this side of the House reject the philosophy underlying it; we reject the division of the means-tested State and the polarisation of our society which such a philosophy will inevitably bring about. For these reasons I advise my hon. and right hon. Friends to vote for the reasoned Amendment which appears on the Order Paper.

9.30 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

The House has had the pleasure of hearing two maiden speakers today—my hon. Friend the Member for Birmingham, Perry Barr (Mr. Kinsey), who spoke with humour and as a member of the hard school of experience and knowledge in these matters, and the hon. Member for Lanarkshire, North (Mr. John Smith), who paid a well-deserved tribute, which I am sure was echoed on both sides of the House, to his predecessor, Miss Margaret Herbison. We listened to my hon. Friend and the hon. Gentleman with great pleasure and we look forward to future contributions from them on this subject and on other subjects.

I will do my best to deal with as many as possible of the points that have been raised, because I appreciate the view of the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) and many of my hon. Friends that this is not an easy Bill to comprehend and that it leaves quite a lot to regulations. I will do my best to give as much information as I can in the time available.

May I first summarise the main points of the scheme, the main things that we are trying to achieve through it. As my right hon. Friend the Secretary of State said, it is the quickest and most effective way which we could devise in present circumstances of getting more help to the poorest families. My right hon. Friend went on to emphasise that it is a first step in an unfolding policy of dealing with family poverty. It will undoubtedly concentrate help on families whose earnings from full-time work are below the supplementary benefit level.

All the money will go to where it is most needed. In that sense, it is a highly selective scheme. It will help the one-child families among whom there is poverty which the family allowance system will not help. It will help the one-parent families in which earnings are often very low, particularly among women—divorced women, separated women, deserted wives, single women. It cannot be denied that the scheme will bring very effective help to these people.

It will help nearly all wage-stop families. It can be fairly claimed that this is the first time that a scheme has been introduced which effectively tackles this form of poverty. The wage-stop deduction will be removed entirely in some cases and reduced by the amount of the family income supplement in nearly all others.

Whatever criticisms the House may have on detail, it cannot be denied that those are solid advantages and that this is an important, albeit the first, step in dealing with the serious problem of family poverty. It will mean that 190,000 households with over 500,000 children in them will receive help which they are not receiving under present arrangements.

The hon. Lady the Member for Hitchin and a number of her hon. Friends claimed that the Bill sets a new level of family poverty below the supplementary benefit level. But surely she will admit that what we are doing is raising the level of families who at present are receiving less in earnings than the supplementary benefit level but, none the less, clearly have high motivation because they are in full-time work. We can therefore fairly claim that far from creating a new level of poverty we are raising the present level of these people.

I should like to give the House more information, particularly on the question of definitions. I deal first with the definition of a family. I accept that this is a very important aspect of the scheme. We propose that a "two-parent" family should consist of a man and woman, whether married or not, and any children belonging to the household for whose requirements they are responsible. As for supplementary benefit, children who are temporarily away from home may still count if the connection is close enough to regard them as in the household. Children present in the home will count even if they are not related or adopted if the adults are acting as parents. Where one parent is not in the household, for example where a married couple has separated, the absent parent does not count. Other adults who happen to be present in a two-parent household will not count.

Similarly, in a one-parent family any adult present in the home does not count unless he or she is living with the parent as husband or wife. This will mean that a woman with a child will qualify as a family even though for supplementary benefit purposes she would be regarded as a non-householder because she is living with her parents. It is proposed that children under 16 will count whether or not they are at school. Over this age it is intended to provide in the regulations that they should count if they are still at secondary school. I realise that this is a little complicated, but I hope that it will look less complicated when it appears in HANSARD.

My hon. Friend the Member for Perry Barr asked what would be the position of households with grandparents and young children where there are no parents. The answer is that this type of household will qualify for a supplement assuming that the other conditions are satisfied.

Another important question was asked by the hon. Member for Hitchin and my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim), namely, the definition of full-time work. Here it is proposed that the regulations will broadly follow the same principle as the normal supplementary benefit test, which is, does the person concerned work the normal number of hours for the normal week in his trade? This is clearly a difficult definition, but that is the principle on which we propose it should be based.

A question which has occupied a great deal of the debate is why this method of helping the poorest has been selected by the Government rather than the method of family allowances with claw-back. It is clear from what my right hon. Friend said and from my introductory remarks that it became evident on study that this is the most effective way in which help can be brought to these needy families. It is perfectly true that in opposition we stated a preference for the family allowance and claw-back arrangement. Equally, we were committed to deal with family poverty, and that is precisely what we are doing.

Mrs. Shirley Williams

rose—

Mr. Dean

I think I am about to answer the hon. Lady's point. If not, I will willingly give way to her in a few moments. As my right hon. Friend said in opening the debate, the comparison is not simply with the £30 million to which reference has been made. The £30 million for poor families amounted only to £6 million when the various offsets were taken into account. So here is a choice between £6 million and £8 million, and I cannot believe that the hon. Lady is trying to suggest to the House that a sum of £6 million for these poorer families is preferable to the £8 million which the Bill provides.

Mrs. Shirley Williams

Being fond of the English language, I ask the hon. Gentleman whether preferences are normally described by the phrase "the only way"?

Mr. Dean

As I explained, this was the only way that we knew at the time. But it has now become clear that, far from bringing the most effective help to these families by that method, we can do it in the way which is being proposed. I cannot believe that the House will take seriously an argument that because certain words were written at one time—[Interruption.]—we should accept a scheme which will bring less help than that which we propose.

Mr. O'Malley

Is it or is it not the case that the Conservative Party in opposition stated that they were prepared to spend £30 million on family poverty and now are spending only £8 million?

Mr. Dean

I have explained that that is not the case. What matters is that we are committed to deal with family poverty, and that we are doing.

Let us look at the history a little more carefully. When these changes were introduced by the party opposite in 1968, the intention for family allowance with claw-back arrangement was that people on the standard rate would get virtually no benefit from the arrangement, that people on the reduced rate would get some benefit, and that the non-taxpayer would get the full benefit. That, broadly speaking, was the intention and that was the effect. But it meant, inevitably, a lowering of the tax threshold and, therefore, the earnings at which people begin to pay tax. It brought many additional families into tax with the disincentive effect which that involved.

The combined effect of the 1969 and 1970 Budgets was to lower the threshold still further, particularly the 1970 Budget, by putting all taxpayers on the standard rate. So what, in effect, happened was that if tax on family allowances plus additional tax paid because of claw-back together outbalance the child tax allowance, the man would pay more tax when his wife had another child. This was very nearly the point which had been reached and which has been reached now. In other words, the previous Administration, by 1970, had succeeded in undermining the system which they introduced in 1968 either by accident or by design.

We are now in the situation where a 10s. increase in family allowances with claw-back would mean that a man with two children would start paying tax on an income as low as £13 4s. and, with four children, on £12 4s. In other words, for every additional child he would be taxed on lower and lower earnings.

We are entitled to ask whether the previous Administration knew that this was the position or did not realise the precise significance of the Budget figures at that time. It certainly was not stated in the Budget debate. That question certainly was not answered at that time.

It may be that the arguments that were then put forward were thought by the Government to be the proper ones; but they certainly never put to the House the virtual impossibility of proceeding further through the family allowance claw-back arrangements. Indeed, the arguments which were given from this Box at that time were, first, that the time was not opportune for a further family allowance claw-back and, secondly, that it would be better to wait for an enlarged family expenditure survey and for the Finer Report on one-parent families. There was no indication, therefore, that the then Government realised that the scope for family allowance plus claw-back had virtually disappeared. We are bound to ask: was this voluntary ignorance on their part, or was it deliberate silence?

The benefit effect of the comparison, therefore, between family allowance and claw-back and the family income supplement is absolutely clear, and the latter wins hands down. As my right hon. Friend said, a 10s. increase in family allowance with claw-back would mean paying out an extra £180 million, of which only £6 million would be a real addition to family income at the lower level. The rest would come back in tax or savings on other benefits. It would mean then a big increase in expenditure with a very small impact on family poverty and apart from the problem of taking out of the man's pay packet to put into the wife's family allowance.

Equally, of course, there is the question of timing. If the family allowance arrangements were to be extended to include a one-child family, it would take a very long time to introduce that and a great deal longer than it would take to bring aid—[HON. MEMBERS: "Why?"]—because of the great administrative cost which would be involved and identifying the 3 million singleton children who exist in the country at present.

Mrs. Lena Jeger

Surely mothers know whether they have children or not, and it will be no more difficult to find these families than it is to find the families on this sophisticated and difficult criterion?

Mr. Dean

There are a great many more involved—something like three million. That is the answer to the hon. Lady.

Now, may I deal with the question of the take-up? We entirely accept that the take-up campaign for this new benefit is absolutely vital to its success. There will be a publicity campaign starting early next year, probably in May, which will be directed first to individuals, to identify the people eligible, so that a claim form can be sent to them and a leaflet explaining the claim. We have certain information available already in local offices—for instance, people on supplementary benefit returning to work, the register of families in full-time work who qualify for welfare foods, refund of national health charges and the like.

We also intend to send leaflets with all family allowance books, and we shall have leaflets in post offices, local authority offices and the like. We shall try to enlist the aid of the people in the local authorities dealing with the personal social services and rent and rate rebates. We shall also try to enlist the aid of the voluntary organisations. We intend in addition to have a publicity campaign through newspapers and posters. My right hon. Friend attaches the greatest possible importance not only to getting the maximum take-up for this new benefit but also to making this a passport for other benefits to which these people may also be entitled—

Mr. Charles Loughlin (Gloucestershire, West)

rose—

Mr. Dean

No. I will not give way: the hon. Gentleman has not been here—

Several Hon. Members

rose—

Mr. Speaker

Order. The hon. Gentleman is asked to give way to three hon. Gentlemen. He decides whether to give way to one of the three or to none.

Mr. Loughlin

rose—

Mr. Kevin McNamara (Kingston upon Hull, North)

rose—

Mr. Speaker

Order. Mere insistence does not mean that an hon. Gentleman gives way.

Mr. Loughlin

On a point of order—

Sir K. Joseph

Spurious.

Mr. Loughlin

The right hon. Gentleman says that it is spurious, but he has not heard it. I am merely submitting to you, Sir, that when a Minister who is winding up and purporting to give information to the House is questioned on procedures or there is a request not on a political issue but to determine the procedures to be adopted in carrying through the information that he has given—[Interruption.]

Mr. Speaker

Order. I must know whether this is a point of order.

Mr. Loughlin

I have been here a lot longer than some.

Mr. Speaker

Order. The hon. Gentleman will come to his point of order.

Mr. Loughlin

I am asking, Mr. Speaker, for your guidance as to whether the Minister winding up a debate and purporting to give information to the House, ought to be subjected to some questioning about the procedures to be adopted on the basis of the information that he has given.

Mr. Speaker

Order. I am grateful to the hon. Gentleman. That is a point of pure idealism and not a point of order.

Mr. Dean

The hon. Member for Gloucestershire, West (Mr. Loughlin) has not been here during the debate, and, in fairness to hon. Gentlemen who have and hon. Gentlemen who have asked me particular questions, I ought to deal with their questions. The hon. Member for Hitchin, and a number of my hon. Friends asked about monitoring and information generally. We have, of course, worked on the very limited information which was available to us when we came into office, but it is the intention of my right hon. Friend that the estimates should be revised year by year, and he will consider the possibility of publishing them along with current figures of the numbers of family income supplements in payment.

I turn to the point made by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) with regard to the dangers, as he saw it, of Speenhamland. I should like to emphasise, as my right hon. Friend did at the beginning, that this is a modest scheme.

Mr. Loughlin

Very modest.

Mr. Dean

It is a scheme which is nothing like as extensive, in the numbers of people who are involved, as the original Speenhamland scheme—[Interruption.] My right hon. Friend made the point that there is a distinction. None the less—Interruption.]

Mr. Speaker

Order. We have had a placid debate today. I do not know why it should be altered.

Mr. Dean

Speenhamland started, as my right hon. Friend said, in a very small way. We intend to keep this small. But, equally, there are many examples now of people in full-time work who are getting assistance of various kinds—family allowances, school meals, rate and rent rebates, and student grants. All come into a somewhat similar category, so one cannot fairly claim that we are starting something completely new.

My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) asked who would receive the payment of the new allowance. The intention is that the claims are to be made jointly by the man and by the woman in the household. Joint signature to claims seems desirable to ensure that full information about income is given. It is envisaged that the regulations will enable the joint signature to be dispensed with where it is impractical for both to sign, for example, where the wife is disabled. The regulations will deal with the question of payees. It is proposed that the order book will normally be addressed to the mother, but the orders will be encashable by either parent, as for family allowances.

Mr. Loughlin

rose—

Mr. Speaker

Order. The hon. Gentleman the Member for Gloucestershire, West (Mr. Loughlin) must contain his enthusiasm.

Mr. Loughlin

He must contain himself, not I.

Mr. Speaker

Order.

Mr. Dean

I turn now—

Mr. Loughlin

Will the hon. Gentleman give way?

Mr. Dean

No, I will not give way.

Mr. Loughlin

rose—

Mr. Speaker

Order. When the hon. Member for Gloucestershire, West (Mr. Loughlin) speaks, he expects to be listened to.

Mr. Dean

I turn now to the questions put to me by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), especially that concerning the £3 maximum proposed. The main reason is the incentive that it provides. Equally, we are anxious to make the full time work test as simple as possible and to treat one-parent families as generously as we can. Equally, it is necessary to have some maximum, otherwise anyone who can show that he or she is working full-time will be able to claim.

I am glad to give my right hon. Friend the assurance for which he asked about tax. It is not intended that the family income supplement should be subject to tax.

Mr. Loughlin

It is a swindle.

Mr. Dean

My right hon. Friend also mentioned war pensions and war pension disregards. As the responsible Minister, I am sorry to tell my right hon. Friend, but I hope that he will appreciate, that if we are to keep the scheme simple, as we must, it is very difficult to introduce any form of disregard.

Mr. Loughlin

The hon. Gentleman ought to stop reading his brief.

Mr. Dean

Finally, I turn to the Opposition Amendment—

Mr. Loughlin

On a point of order. Is it in order for the hon. Gentleman to read completely from a Ministerial brief about which he knows nothing?

Mr. Speaker

Order. The hon. Gentleman is not reading from a Ministerial brief, and I assume that he knows something.

Mr. Loughlin

Further to that—

Mr. Speaker

Order. In a free Parliament, the hon. Member for Gloucestershire, West must allow other hon. Members to speak.

Mr. Dean

rose—

Mr. Loughlin

Further to that point of order. The hon. Gentleman is reading his brief. I accept, as all hon. Members do, that a Minister has the right to resort to copious notes. However, the hon. Gentleman is reading his brief word for word, and the reason why he will not give way to me is that he does not understand it.

Mr. Speaker

Order. The hon. Member for Gloucestershire, West has expressed an opinion. It is not a point of order.

Mr. Dean

The Opposition Amendment speaks of a further extension to the complex system of a means-tested society …

Mr. Loughlin

The hon. Gentleman missed a comma.

Mr. Dean

When I read that, I asked myself whether it means that means tests are all right under a Labour Government but not all right under a Tory Government. Let us, for a moment, look at the means tests which right hon. and hon. Gentlemen opposite introduce or extended: supplementary benefit instead of national assistance, with bigger and better means tests, and they were proud to ask people to submit to them; the rate rebate scheme, with a new means test; the rent rebate extension, with means tests; prescription charges, reintroduced with means tests. Nearly all of them are covered by the family income supplement and are already subject to means tests introduced or extended by the previous Administration. That shows the humbug of their Amendment.

My right hon. Friend has not claimed that this scheme is perfect. However, it is a first step in dealing with family poverty in our country. As such, I ask the House to support it.

Question put, That the Amendment be made:—

The House divided: Ayes 188, Noes 221.

Division No. 21.]	AYES	[10.0 p.m.
Albu, Austen	Cocks, Michael (Bristol, S.)	Fisher, Mrs. Doris (B'ham, Ladywood)
Allaun, Frank (Salford, E.)	Cohen, Stanley	Fitch, Alan (Wigan)
Allen, Scholefield	Coleman, Donald	Fletcher, Raymond (Ilkeston)
Archer, Peter (Rowley Regis)	Concannon, J. D.	Fletcher, Ted (Darlington)
Armstrong, Ernest	Cox, Thomas (Wandsworth, Central)	Ford, Ben
Ashton, Joe	Crossman, Rt. Hn. Richard	Fraser, John (Norwood)
Barnes, Michael	Cunningham, G. (Islington, S. W.)	Freeson, Reginald
Barnett, Joel	Cunningham, Dr. J. A. (Whitehaven)	Galpern, Sir Myer
Baxter, William	Dalyell, Tam	Gilbert, Dr. John
Beaney, Alan	Davies, Denzil (Llanelly)	Golding, John
Benn, Rt. Hn. Anthony Wedgwood	Davies, Ifor (Gower)	Gordon Walker, Rt. Hn. P. C.
Bennett, James (Glasgow, Bridgeton)	Davis, Clinton (Hackney, Central)	Gourlay, Harry
Bidwell, Sydney	Deakins, Eric	Grant, George (Morpeth)
Blenkinsop, Arthur	Dell, Rt. Hn. Edmund	Grant, John D. (Islington, East)
Boardman, H. (Leigh)	Dempsey, James	Griffiths, Will (Exchange)
Booth, Albert	Doig, Peter	Gunter, Rt. Hn. R. J.
Boyden, James (Bishop Auckland)	Dormand, J. D.	Hamilton, William (Fife, W.)
Brown, Hugh D. (G'gow, Provan)	Douglas, Dick (Stirlingshire, E.)	Hamling, William
Brown, Bob (N'c'tle-upon-Tyne, W.)	Douglas-Mann, Bruce	Hannan, William (G'gow, Maryhill)
Buchan, Norman	Duffy, A. E. P.	Hardy, Peter
Buchanan, Richard (G'gow, Sp'burn)	Eadie, Alex	Harrison, Walter (Wakefield)
Butler, Mrs. Joyce (Wood Green)	Edelman, Maurice	Heffer, Eric S.
Callaghan, Rt. Hn. James	Edwards, Robert (Bilston)	Houghton, Rt. Hn. Douglas
Campbell, I. (Dunbartonshire, West)	Edwards, William (Merioneth)	Huckfield, Leslie
Carter, Ray (Birmingh'm, Northfield)	Ellis, Tom	Hughes, Dr. Mark (Durham)
Carter-Jones, Lewis (Eccles)	Faulds, Andrew	Hughes, Robert (Aberdeen, North)
Clark, David (Colne Valley)	Fernyhough, E.	Hughes, Roy (Newport)
Hunter, Adam	Mallalieu, E. L. (Brigg)	Silkin, Hn. S. C. (Dulwich)
Janner, Greville	Marks, Kenneth	Sillars, James
Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)	Mason, Rt. Hn. Roy	Silverman, Julius
Jenkins, Rt. Hn. Roy (Stechford)	Meacher, Michael	Small, William
Johnson, James (K'ston-on-Hull, W.)	Mellish, Rt. Hn. Robert	Smith, John (Lanarkshire, North)
Johnson, Walter (Derby, South)	Milne, Edward (Blyth)	Spearing, Nigel
Johnston, Russell (Inverness)	Molloy, William	Spriggs, Leslie
Jones, Dan (Burnley)	Morgan, Elystan (Cardiganshire)	Stallard, A. W.
Jones, Gwynoro (Carmarthen)	Morris, Charles R. (Openshaw)	Steel, David
Jones, Barry (Flint, East)	Mulley, Rt. Hn. Frederick	Stewart, Donald (Western Isles)
Jones, T. Alec (Rhondda, West)	Murray, Hn. Ronald King	Stonehouse, Rt. Hn. John
Kaufman, Gerald	Ogden, Eric	Strang, Gavin
Kelley, Richard	O'Halloran, Michael	Summerskill, Hn. Dr. Shirley
Kerr, Russell	O'Malley, Brian	Swain, Thomas
Kinnock, Neil	Orme, Stanley	Taverne, Dick
Lambie, David	Oswald, Thomas	Thomas, Jeffrey (Abertillery)
Lamond, James	Padley, Walter	Thomson, Rt. Hn. G. (Dundee, E.)
Latham, Arthur	Pannell, Rt. Hn. Charles	Torney, Tom
Lawson, George	Pardoe, John	Tuck, Raphael
Leadbitter, Ted	Parker, John (Dagenham)	Urwin, T. W.
Lee, Rt. Hn. Frederick	Pentland, Norman	Wainwright, Edwin
Leonard, Dick	Prescott, John	Walker, Harold (Doncaster)
Lewis, Ron (Carlisle)	Price, J. T. (Westhoughton)	Wallace, George
Lipton, Marcus	Price, William (Rugby)	Watkins, David
Loughlin, Charles	Probert, Arthur	Weitzman, David
Lyons, Edward (Bradford, East)	Rankin, John	Wellbeloved, James
Mabon, Dr. J. Dickson	Reed, D. (Sedgefield)	White, James (Glasgow, Pollok)
McBride, Neil	Rhodes, Geoffrey	Whitehead, Phillip
McCartney, Hugh	Roberts, Rt. Hn. Goronwy (Caernarvon)	Whitlock, William
MacColl, James	Robertson, John (Paisley)	Williams, Mrs. Shirley (Hitchin)
McElhone, Frank	Roderick, Caerwyn E. (Br'c'n & R'dnor)	Williams, W. T. (Warrington)
Mackenzie, Gregor	Rodgers, William (Stockton-on-Tees)	Wilson, Alexander (Hamilton)
Mackie, John	Roper, John	Wilson, William (Coventry, S.)
Maclennan, Robert	Rose, Paul B.
	Ross, Rt. Hn. William (Kilmarnock)	TELLERS FOR THE AYES:
McMillan, Tom (Glasgow, C.)	Sheldon, Robert (Ashton-under-Lyne)	Mr. Joseph Harper and
McNamara, J. Kevin	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Mr. James Hamilton.
MacPherson, Malcolm
NOES
Adley, Robert	Cormack, Patrick	Hall, John (Wycombe)
Alison, Michael (Barkston Ash)	Costain, A. P.	Hall-Davis, A. G. F.
Allason, James (Hemel Hempstead)	Critchley, Julian	Hannam, John (Exeter)
Astor, John	Crouch, David	Harrison, Col. Sir Harwood (Eye)
Atkins, Humphrey	Crowder, F. P.	Haselhurst, Alan
Awdry, Daniel	Dalkeith, Earl of	Hayhoe, Barney
Baker, Kenneth (St. Marylebone)	d'Avigdor-Goldsmid, Maj.-Gen. Jack	Hicks, Robert
Baker, W. H. K. (Banff)	Dean, Paul	Hiley, Joseph
Bell, Ronald	Deedes, Rt. Hn. W. F.	Hill, John E. B. (Norfolk, S.)
Bennett, Sir Frederi (Torquay)	Digby, Simon Wingfield	Hill, James (Southampton, Test)
Benyon, W.	Dykes, Hugh	Holland, Philip
Berry, Hon. Anthony	Eden, Sir John	Hornsby-Smith. Rt. Hn. Dame Patricia
Biffen, John	Edwards, Nicholas (Pembroke)	Howe, Hn. Sir Geoffrey (Reigate)
Biggs-Davison, John	Elliot, Capt. Walter (Carshalton)	Howell, Ralph (Norfolk, North)
Boardman, Tom (Leicester, S. W.)
Body, Richard	Eyre, Reginald	Hutchison, Michael Clark
Boscawen, R. T.	Farr, John	Iremonger, T. L.
Bowden, Andrew	Fell, Anthony	Irvine, Bryant Godman (Rye)
Boyd-Carpenter, Rt. Hn. John	Fenner, Mrs. Peggy	James, David
Bray, Ronald	Fidler, Michael	Jenkin, Patrick (Woodford)
Brewis, John	Finsberg, Geoffrey (Hampstead)	Jessel, Toby
Brocklebank-Fowler, Christopher	Fisher, Nigel (Surbiton)	Johnson Smith, G. (E. Grinstead)
Bruce-Gardyne, J.	Fletcher-Cooke, Charles	Jones, Arthur (Northants, South)
Buchanan-Smith, Alick (Angus, N & M)	Fookes, Miss Janet	Joseph, Rt. Hn. Sir Keith
Bullus, Sir Eric	Fortescue Tim	Kellett, Mrs. Elaine
Butler, Adam (Bosworth)	Fowler, Norman	Kerby, Capt. Henry
Campbell, Rt. Hn. G. (Moray & Nairn)	Fox, Marcus	Kershaw, Anthony
Carlisle, Mark	Fraser, Rt. Hn. Hugh (St'fford & Stone)	Kilfedder, James
Carr, Rt. Hn. Robert	Fry, Peter	Kimball, Marcus
Channon, Paul	Gardner, Edward	King, Evelyn (Dorset, South)
Chapman, Sydney	Gibson-Watt, David	King, Tom (Bridgwater)
Chataway, Rt. Hn. Christopher	Gilmour, Sir John (Fife, E.)	Kinsey, J. R.
Churchill, W. S.	Glyn, Dr. Alan	Kitson, Timothy
Clark, William (Surrey, East)	Goodhew, Victor	Knight, Mrs. Jill
Clarke, Kenneth (Rushcliffe)	Gower, Raymond	Knox, David
Clegg, Walter	Grant, Anthony (Harrow, C.)	Legge-Bourke, Sir Harry
Cockeram, Eric	Gray, Hamish	Le Marchant, Spencer
Cooke, Robert	Green, Alan	Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)
Coombs, Derek	Grieve, Percy	Lloyd, Ian (P'tsm'th, Langstone)
Cooper, A. E.	Grylls, Michael	Longden, Gilbert
Cordle, John	Gummer, Selwyn	Loveridge, John
Corfield, F. V.	Hall, Miss Joan (Keighley)	MacArthur, Ian

McCrindle, R. A.	Pike, Miss Mervyn	Tapsell, Peter
McLaren, Martin	Pink, R. Bonner	Taylor, Edward M. (G'gow, Cathcart)
McMaster, Stanley	Pounder, Rafton	Taylor, Frank (Moss Side)
McNair-Wilson, Michael	Powell, Rt. Hn. J. Enoch	Taylor, Robert (Croydon, N. W.)
McNair-Wilson, Patrick (New Forest)	Pym, Rt. Hn. Francis	Tebbit, Norman
Madel, David	Raison, Timothy	Temple, John M.
Marten, Neil	Redmond, Robert	Thatcher, Rt. Hn. Mrs. Margaret
Maude, Angus	Reed, Laurence (Bolton, East)	Thomas, John Stradling (Monmouth)
Maxwell-Hyslop, R. J.	Rees, Hn. Peter (Dover)	Thompson, Sir Richard (Croydon, S.)
Meyer, Sir Anthony	Rees-Davies W. R.	Tilney, John
Mills, Peter (Torrington)	Renton, Rt. Hn. Sir David	Trafford, Dr. Anthony
Mitchell, David (Basingstoke)	Rhys Williams, Sir Brandon	Trew, Peter
Mitchell, Lt.-Col. C. (Aberdeenshire, W)	Ridley, Hn. Nicholas	Turton, Rt. Hn. R. H.
Moate, Roger	Roberts, Michael (Cardiff, North)	Vaughan, Dr. Gerard
Molyneaux, James	Roberts, Wyn (Conway)	Waddington, David
Money, Ernle D.	Rossi, Hugh (Hornsey)	Walder, David (Clitheroe)
Monks, Mrs. Connie	Rost, Peter	Walker, Rt. Hn. Peter (Worcester)
Monro, Hector	Scott, Nicholas	Walker-Smith, Rt. Hn. Sir Derek
Montgomery, Fergus	Scott-Hopkins, James	Warren, Kenneth
More, Jasper	Sharples, Richard	Weatherill, Bernard
Morgan, Geraint (Denbigh)	Shaw, Michael (Sc'b'gh & Whitby)	Wells, John (Maidstone)
Morgan-Giles, Rear-Adm.	Shelton, William (Clapham)	White, Roger (Gravesend)
Morrison, Charles (Devizes)	Simeons, Charles	Wiggin, Jerry
Mudd, David	Sinclair, Sir George	Wilkinson, John
Murton, Oscar	Smith, Dudley (W'wick & L'mington)	Wolrige-Gordon, Patrick
Nabarro, Sir Gerald	Soref, Harold	Woodhouse, Hn. Christopher
Neave, Airey	Spence, John	Worsley, Marcus
Normanton, Tom	Sproat, Iain	Wylie, Rt. Hn. N. R.
Nott, John	Stanbrook, Ivor	Younger, Hon. George
Onslow, Cranley	Stewart-Smith, D. G. (Belper)
Oppenheim, Mrs. Sally	Stodart, Anthony (Edinburgh, W.)	TELLERS FOR THE NOES:
Owen, Idris (Stockport, North)	Stoddart-Scott, Col. Sir M.	Mr. Keith Speed and
Page, Graham (Crosby)	Stokes, John	Mr. Paul Hawkins.
Percival, Ian	Stuttaford, Dr. Tom

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on second or third reading), and agreed to.

Bill accordingly read a Second time, and committed to a Committee of the whole House.—[Mr. Humphrey Atkins.]

Committee Tomorrow.