MEANING OF "CHILD"

HC Deb 07 July 1975 vol 895 cc201-8

Mr. Kenneth Clarke

I beg to move Amendment No. 2, in page 2, line 11, at end insert: 'or (c) he is over the age of nineteen years and no child tax allowance is being allowed in respect of him and he is receiving full-time education by attendance at a recognised educational establishment'.

Mr. Deputy Speaker (Mr. George Thomas)

With this we may take Amendment No. 3, in page 2, line 22 at end insert: if a child tax allowance is being allowed in respect of him'.

Mr. Clarke

These amendments concern the position of the parents of students and others in full-time higher education because, as the Bill stands, there is the possibility of a weakening in their financial position when the child benefit schemes comes in unless we have understood the Government's assurance in Committee, and presumably if we have they are prepared to allow it to be written into the Bill in the way that the amendments suggest.

The situation with which we are concerned is that of parents who have children going on to full-time higher education. At the moment we have a system whereby a parental contribution is payable on a means-tested basis towards maintenance grants for students. In Committee we were reassured that Clause 4(1) is designed to give powers to a future Government to deal with the ending of the parental contribution system. Those of us who do not speak for our party on education affairs were pleased to give that a welcome. Meanwhile we are waiting for the report of the inter-departmental committee in which the Government are considering the possibilities of a fresh look at this question of the parental contribution.

While we wait it is extremely expensive for some parents, particularly those with more than one child receiving full-time higher education. We all know the hardship caused to students if the parental contribution is not forthcoming when the parent is assessed as liable. Every year there is a fresh crop of problems. The current one affects fathers who find that the Government's recent change in the position of married women students is creating an annoying problem. These fathers are liable to contribute for a married woman who may be of mature years.

At the moment parents who make this contribution get some relief through child tax allowances. These allowances are maintained throughout the period during which the dependent child is receiving higher education. It was always proposed that our tax credit scheme, when it was introduced, would have had the same rule and that the child credit would have been clearly payable to parents throughout the time that the child received higher education. With this structure in the Bill, child tax allowances will ultimately be phased out. They will be replaced entirely by the child benefit, payable for all children. The Government have never been clear about the phasing-out of child tax allowances and for how long we shall have a system of residual child tax allowances for some children.

The hint we received on Second Reading was that the Government proposed that child benefit would replace child tax allowances and family allowances immediately in the case of children under the age of 11 but that there would be residual child tax allowances for children aged 11 and over. When we look at the Bill, we see that that is not explicitly set out. It is said that child benefit is not payable to a child over the age of 19 even if he is receiving higher education. Under the Bill a child up to the age of 19 will receive the benefit. It seems that when children leave school and begin higher education, many will find that their parents will receive child benefit but in some cases it will stop half-way through courses. That seems a curious situation.

The situation that most concerns us is the possibility that parents might lose the small assistance of the child tax allowances they receive towards their contribution without any compensatory child benefit. If the parental contribution is abolished we do not object to child benefit being stopped. The Government have paved the way for that in Clause 4 (1) and we hope that that will come into effect. We are worried about the interim for those people with children aged over 19 in full-time education. Our amendment arose out of the Minister's statement in Committee on 17th June. I intervened after he touched on this matter and said: The Minister said that the child tax allowances will continue for students over 19 which at first is undoubtedly so, but he cannot get over the fact that the intention is steadily to remove and replace them. Is he giving an assurance that child tax allowances will not be removed in the case of students until there is some change in the grant provision for them? Is that what he intended to imply? Is he really assuring us that the child tax allowances for children over 19 in full-time higher education will not be eroded unless and until there is some change in the arrangements? The Minister's reply was: Yes—I can answer that in one word."— [Official Report, Standing Committee A, 17th June, 1975, c. 24.] 11.45 p.m.

We took that as a firm commitment that the child tax allowances payable to parents would be preserved and would not be removed or modified unless there were a change in the grant provision, everybody clearly understanding a change in the grant provision as meaning the ending of the parental contribution for maintenance grants. Although I accept the Minister of State's assurance, and have never had cause to doubt for a moment any assurance he has given, in order to guard against any successor forgetting the assurance we seek by our amendments to write into the Bill the Government's clearly expressed intention because we agree with it and think that the legislation should enshrine it.

The amendment would make the child benefit payable to a student over 19 years of age receiving full-time education if no child tax allowance was being allowed for him. It is important to write the provision into the Bill and not to rely on the right hon. Gentleman's assurance. In the present difficult circumstances of public expenditure, we cannot help fearing that residual child tax allowances for children over 19, particularly for students will be a temptation to the Treasury when it is looking for possible cuts in public expenditure. We already fear that one consequence of the Bill, depending how the Government set about matters in 1977, will be that child benefit for some families will be paid for by other taxpayers with families—in other words, that cuts will be made in the tax relief given to taxpayers with families to pay for the benefit for families below tax-paying level. This is a group which we want to protect from that possibility.

No Government should discourage any student from continuing full-time education. The problems of the parental contribution to maintenance grants are a serious discouragement. The child tax allowance is a valuable relief to parents and encourages them to make proper contributions.

Therefore, it would protect present and future Ministers if we were to write into the Bill a statutory obligation making the child benefit payable to parents if at any time the child tax allowance is taken away for students over 19 years of age receiving full-time higher education. The amendment plainly would cost nothing compared with the Government's present intentions. It has no public expenditure implications, and, as it is an expression of the Government's good intention which we applaud, we trust that the Government will accept it and will write their commitment into the Bill.

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley)

I am grateful to the hon. Member for Rushcliffe (Mr. Clarke and to the official Opposition for tabling the amendments because they give me the opportunity to repeat in categorical and clear terms the assurance which I gave in Committee, namely, that there is no intention to withdraw child tax allowances for students over the age of 19 unless and until there is a change in the general arrangements for student support. I therefore hope that the House will take the amendment as a repetition of the assurance which I gave in Committee.

However, I cannot advise the House to accept the amendment. The hon. Gentleman pointed out, quite properly, the unsatisfactory situations which can exist for students—for example, students whose parents are receiving the benefits of child tax allowances and they perhaps get nothing out of it. The child tax allowances are of assistance to parents whose sons or daughters are students aged over 19 and therefore are not receiving the family allowance. For that reason, it would be wrong to get rid of the child tax allowances in respect of students over 19, or indeed of the residual tax allowances in respect of students under 19, until we had moved from a purely flat rate system of child benefits, which implies the possibility of residual child tax allowances remaining until they are subsumed by a further development of the child benefit scheme.

This is the question which we must answer. Is the proper way to deal with the problems of students over the age of 19 by means of a child benefit payable through the parents? We must bear in mind that the age of majority was recently reduced from 21 to 18. Students moving away from home—many of them for the first time—have always broken away from close family ties and lead independent lives. That has been increasingly the trend of modern life in the 1960s and 1970s.

It is clear that we should establish a more satisfactory system of student support than that which we now have, with the disadvantages inherent in a system of family allowances payable up to the age of 19 and a child's tax allowance over the age of 19. However, I do not think that we should perpetuate those arrangements. When young men and women reach the age of 19 and over we are no longer dealing with children.

There is no difference between the aims of hon. Members on both sides of the House. However, it would be wrong to write into a Bill dealing with child benefits financial provisions for people over the age of majority, who would not wish to be regarded as children or as dependants of their parents. The object of the Government survey is to examine the question of student support and to look for a better structure of support.

I give the assurance that it is not our intention to withdraw the CTAs for students over the age of 19 until there is a change in the general arrangements. I hope that the hon. Gentleman will feel that that assurance is satisfactory, and that it is not desirable to put young men and women over the age of 19—many of whom are grown up and are living away from their parents' homes—in a child benefit structure. A separate set of arrangements is necessary to meet their requirements and perhaps to meet their dignity in view of the circumstances and attitudes of the 1970s.

I hope that the hon. Gentleman will withdraw his amendment—which has nevertheless served a useful purpose in allowing this brief discussion.

Mr. Kenneth Clarke

I am satisfied with the Minister's assurances—I am somewhat disarmed that he should repeat them categorically—that there is no intention that anyone within this category will be worse off.

I am surprised at the Minister's reasons for not writing the benefit into the Bill. The right hon. Gentleman referred to the age of majority and to the fact that as these people were adults it was inappropriate to pay child benefit for them to their parents. Why are 18-year-olds included for child benefit in the Bill? They are above the age of majority. They are adult. If the residual child tax allowances are to be retained in the case of a young person of 18 in full-time education, the parent will be better off for a year as he will receive the child benefit and the tax allowance. Therefore, parents whose children start courses when they are young will to that extent be better off. On the child's nineteenth birthday the parents will lose the child benefit but continue to have the tax allowance.

Mr. O'Malley

Once we have developed a system of child benefits which entirely subsumes the child tax allowance there will be no question of a student under the age of 19 being better off or worse off. A standard child benefit will be payable.

The hon. Gentleman will bear in mind that the age in the current legislation on family allowances is 19. It is sensible to have a similar provision in the Bill at this stage. I say entirely without commitment that it would clearly be a proper matter for consideration in the longer-term future whether the age of 19 is appropriate. The Government take the view at this stage that it is. It is inherited from the family allowance system. I fully accept that the matter needs to be taken into consideration at some stage.

Mr. Clarke

I accept in the long term that it will be eliminated, but in the short term an anomaly is being created of extra benefits for students who start studying in their eighteenth year.

That leaves one other query. The Minister gave a categorical assurance that tax allowances would continue in the foreseeable future for students over 19 in full-time education. The Government have never spelt out what will be the residual child tax allowances when the scheme comes into force. I am not criticising here but simply asking for information.

In the Second Reading debate the Government hinted that the first step might be the ending of the child tax allowance for children under 11, with some residual tax allowances for children over 11. It might be relevant in later debates on the differentials of benefit according to age. I hope that at some stage in our discussion one or other Minister will enlighten us on that and make clear what these residual child tax allowances will consist of in the first steps towards bringing in the full child benefit scheme which will ultimately lead to the total elimination of all child tax allowances. I look forward to further information.

What is already in the Bill gives rise to anomalies. I am not entirely sure that it would do great harm to write the amendments in the Bill, but, in view of the assurance which the Minister gave in such categorical terms that we can rest assured that no parents will be worse off, I am satisfied. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.