§ Order for Second Reading read.
§ 7.27 p.m.
§ The Secretary of State for Social Services (Mrs. Barbara Castle)
I beg to move. That the Bill be now read a Second time.
I had intended to open my remarks by saying that I was sure that the Bill would be generally welcomed on both sides of the House, but I had not expected to begin with the Opposition Front Bench totally denuded of talent. I am glad to see that hon. Members have hurried into the Chamber in order to endorse what I am about to say.
It gives me the greatest pleasure to introduce the Bill, which I am sure will be accepted on all sides of the House. It achieves a long overdue merger between child tax allowances and family allowances into a new universal, non-means tested, tax-free cash benefit for all children, including the first, payable to the mother. In this way it ensures that the nation's provision for family support is concentrated first and foremost where it is needed most—on the poorest families; and that it goes to the person responsible for caring for the children and managing the budget for their food, clothing and other necessities.
It is appropriate that this measure should be put before Parliament in International Women's Year because it supplements the other measures that the Government have been taking to help women play their vital rôle in society. International Women's Year has always been just as much concerned with the woman struggling at home to bring up a family as with the aspirations of her career sister.
It may be premature to talk of giving the wife and mother her own wage, but she certainly needs control of her own budget if the family is to be fed and clothed. We all know how vitally important the family allowance has been—we have had examples of it brought to our attention in our constituencies—to many a hard-pressed mother, coming, as it does, into her hands in the middle of 331 the week just as her shopping money, probably inadequate in the first place, is ring low.
The increase in family allowance last month for the first time since 1968 has been a blessed reinforcement for her in her hour of need. This Bill, transferring, as it does, the child tax relief from her husband's pay packet to her purse in the form of a cash allowance covering the first child is a further recognition of the importance of the job she is doing for society.
The need for a merger of child tax relief and the family allowance has been recognised for a long time. The Labour Party in its 1969 document "Labour's Social Strategy" first set out its proposals for what later became its child endowment scheme. The Conservative Party took up this theme in its 1972 Green Paper which embodied a child credit in its overall tax credit scheme. As the House knows, I was a member of the Select Committee which examined our predecessors' proposals. As any member of that Committee would agree, one point soon emerged clearly from the Committee's examination—namely, that the women of this country would not tolerate the transformation of their cash family allowance into a tax credit which, by definition under a tax credit scheme, should be set against the husband's tax liability and therefore be swallowed up in his pay packet. Indeed, I presented a petition of over 300,000 signatures to Parliament at that time demanding that any support for children should be in the form not of a tax credit to the father but of a cash allowance payable to the mother through the Post Office. The Select Committee unanimously recommended that this should be done. This Bill is based on that formula.
It is right that I should at this point pay a tribute to the trade union movement, which has always supported that formula and which pressed it on the Select Committee through the evidence given by the TUC, although the unions frankly recognised that this formula would affect their members' take-home pay. Undeterred, Vic Feather—now Lord Feather—gave us some robust evidence to the effect that the mother's rights must be safeguarded.
332 No doubt the hon. Member for Sutton Coldfield (Mr. Fowler)—or whichever Front Bench Member leads for the Opposition—will claim that what we are doing is too little and too late. I see other hon. Members no doubt poised to make the same claim. That will be unnecessary because the policy is so universally accepted and recognised as meeting my party's requirements. There is therefore no need for there to be any critics behind me. There is, in fact, none behind me. However, if that is to be the claim we shall hear this afternoon, it will be typical of the Conservative Party. The Conservatives gave a promise in the 1970 Election that they would increase family allowances but still had not done so when they fell from office in 1974. Instead, we were given a Green Paper—a hopeful postponement was represented by the colour green—on an elaborate new tax credit scheme.
I hope that we shall not hear the pretence this afternoon that if hon. Gentlemen opposite were now in office they would be in the middle of introducing a scheme. They know perfectly well that their scheme was immensely costly because inevitably, under the structure of the tax credit scheme, the value of the credits had to be given to everyone regardless of need. Indeed, under the 1972 Conservative proposals, £745 million of the estimated cost of £1,300 million—that is, over half the cost—would have gone to those earning above average national earnings at that time, that is, those earning £1,600 per annum or more. Even those at the top of the income range would have received a bonus under the tax credit scheme running into a cost to the Exchequer of millions of pounds.
The Opposition know that the cost would be much greater today than the figure outlined in the Green Paper of 1972. Indeed, to achieve the social aims of that Green Paper would today cost £3,000 million. No wonder therefore that the Conservative Party was so careful not to commit itself in its election manifestos in the two elections of last year to introducing a tax credit scheme.
We were told in the manifesto last October that the Conservative Government would bring the scheme into effect in stages as economic circumstances permitted—a very cunning bit of hedging. 333 We were told that stage 1 would be the introduction of child credits, but there was no firm timing in the election manifesto even on that. Even stage 1 would be implemented, we were warned, only when economic circumstances allowed. Since the economic circumstances which the Conservatives bequeathed to this Government were hardly propitious, and since the main complaint that they have launched against us ever since we were returned to office is that we have increased public expenditure too much, it is hardly likely that we would have had a child benefit scheme from them, let alone a full tax credit scheme.
With the Shadow Chancellor, the right hon. and learned Member for Surrey, East (Sir G. Howe), accusing the Government, as he did in the House the other day, of gross overspending and demanding more and tougher cuts in public expenditure, does anyone imagine that he would, if he were Chancellor, be authorising at this moment the expenditure of £3,000 million on a tax credit scheme? I hope that we shall have no fictitious claims from the Opposition this afternoon.
§ Mr. Kenneth Clarke (Rushcliffe)
As the Secretary of State will not say what the cost of her programme under the Bill will be, and as it was said in answer to Questions that we should have to wait to see what resources would be available in 1976–77, does she accept that she is not putting forward the best answer to the argument that this is too little and too late? If the Secretary of State wishes to address herself to that argument, will she accept the background that the actions of the Chancellor in refusing to raise tax allowances, as the Child Poverty Action Group has clearly shown, have had the effect of depressing the real living standards of low wage earners with families, who represent the target area? If the Secretary of State will not accept that as the background to what the Government have done so far, does she realise that those interested in this subject might regard what she has said as sanctimonious clap trap?
§ Mrs. Castle
One of the actions of my Government was to raise the family allowance without delay for the first time since 1968. The Opposition promised in the election of 1970 to raise the family allowances, 334 and received the support of the Child Poverty Action Group for their promise, which they have deliberately broken since then. As my speech evolves, let us wait and see where the argument lies at the end of the day. I start at that point. Last month we increased the family allowance to £1.50, the first increase since 1968. I shall have something to say about the attitude of the Child Poverty Action Group before I am through.
Our alternative policy has been to tackle poverty in two main ways—first, by our promised increase in pensions and other long-term benefits, an increase of 72 per cent. since we came into office, and secondly, by the increase in family support which I have outlined. We did that as quickly as possible. We did it despite the economic difficulties we faced because we believed that these groups needed help more, not less, when the going was tough. Hence this Bill.
What will the child benefit scheme achieve? First, and most important, the poorer families who have not been able to take advantage of child tax allowance in full, if at all, because of their low incomes, will in future do so, as the new benefit extends the cash advantage of the allowance to all these families. Those who are dependent on means-tested benefits will receive a larger part of their income from benefits as of right. Secondly, child benefit will be paid for every single child in the family, thus extending the benefit of a payment to the first child in 4 million families drawing family allowance as well as to the 3 million single-child families, thus doubling the number of children receiving benefit. Thirdly, once the scheme is operating, we shall have for the first time a single universal system of family support.
This brings me to the point which was raised by the hon. Member for Rushcliffe (Mr. Clarke), which I have no desire to evade—why we have not put any figures of the cost of the scheme in the Bill or in the covering Financial and Explanatory Memorandum. The reason is that neither the extra expenditure involved, nor the net cost to the Exchequer after taking into account the effect on tax revenue, can be quantified now because they will depend mainly on the rate of child benefit, which 335 will not be decided until next year, appropriately to the circumstances that obtain next year. The scheme is, of course, potentially expensive, and the rate and thus the extent of the improvement—I emphasise "improvement"—will have to be settled in the light of the economic prospect at the time. As the Chancellor said in his Budget Statement, we shall need to accommodate the cost of the new scheme within the total which, in the light of future reviews, we conclude that we can devote to public expenditure at large in the years beyond 1976–77.
Some indication can, however, be given of how the costing of illustrative rates of child benefit would be approached on the hypothetical basis that the scheme would be introduced this year. For illustration, let us assume that, of the present three rates of child tax allowances, it would be the rate applicable to children under 11, currently £240 a year, which would be replaced by child benefits, and that the extra amounts for children over 11 would be retained as residual tax allowances.
On these hypothetical assumptions, and taking into account savings on other social security benefits, the child benefit rate, which would involve no extra net cost to the Exchequer, would be about £1.94 a week. Under this nil cost formula, of course, the poorest families below the tax threshold and not already on social security benefit would gain the full £1.94 for the first child and 44p for each other child. Every extra 1p on this rate of £1.94 would involve a net cost to the Exchequer of about £61½ million per year net of savings on other social security benefits. I must repeat, however, that this approach is based on illustrative assumptions and on current rates of tax, clawback, family allowances and child tax allowances and cannot be taken as anything but a very rough guide. The House pressed for illustrative figures and I have tried to give them. I hope that no unwarranted deductions will be drawn from the figures which I have given for purely illustrative purposes.
On the assumptions I have taken, the gross cost of a hypothetical child benefit rate of £1.94 a week would be about £1,450 million a year, or, after taking into account savings on other social security 336 benefits, about £1,330 million a year, which is what we are now spending on family allowances and child tax allowances at £240 per child. There would be no additional cost to the Exchequer, but public expenditure would show an increase of about £800 million a year to reflect the conversion into public expenditure of the present cost of child tax allowances.
I now turn to the starting date. As the House knows, it has proved physically impossible to launch the scheme until 1977, and this has been a great disappointment to me personally. It was certainly our original intention that the benefit would start in April next. The facts are these.
We need 2,200 staff centrally for this task and we need to house them in the Newcastle or Washington New Town area because FAM work is centralised at Newcastle where the relevant computer facilities are. It became clear early last year that the purpose-built accommodation we had on order would not be available for an April 1976 start. Arrangements were therefore made for us to have the temporary use of a large building being erected in the centre of Washington by Property Services Agency. All seemed well, but then, last autumn we learned that the completion of this building would be seriously delayed because high alumina cement had been used in the manufacture of pre-cast concrete units which formed an integral part of the construction of the building. These had to be tested comprehensively before construction could continue.
So that building could not be ready for a 1976 start either; and there was nowhere else available in the Newcastle-Washington area big enough to house so many staff and be ready for a start in April 1976. An April 1976 start meant, of course, getting into the building well before then, in the summer of this year. So we were forced back to April 1977. The scheme has to start in April because that is the beginning of the tax year and the benefit is in part a replacement for a tax allowance.
It was at this point that I determined that, given a 1977 start for the general child benefit scheme, something must be done in 1976 to help the one group of readily identifiable people whom, it is generally accepted, are particularly 337 disadvantaged amongst family groups, namely the one-parent family. So there is to be an interim benefit of £1.50 a week for the one-parent family for a year from April 1976 until the child benefit scheme comes into effect. This will bring immediate help at that point in time to over 250,000 such families who are not in receipt of supplementary benefit or of a social security benefit which, in the dependency allowance for the first child, already compensates for the absence of family allowance for that child.
It is necessary for me to refer only briefly to the contents of the Bill because it is mercifully straightforward compared with some of the complicated pensions legislation with which we have all had to deal. Therefore, I shall be brief because it is a short debate and I want to give hon. Members a chance to participate.
The first five clauses contain the meat of the Bill. Clause 1 provides for child benefits to be paid to a person for any child for whom he is responsible, out of moneys provided by Parliament. It also provides for the payment of family allowances to cease. Clause 2 defines a child as a person under 16 or a person between 16 and 19 who is undergoing full-time education, with provision in Clause 4(1) for such groups to be excluded from this definition as may be appropriate.
Clause 3 together with Clause 4(2) defines who is the person who is to be treated as responsible for a child. Unlike family allowances where priority is given to the parent, priority of title to child benefit will belong to the person with whom the child is living, and where a child is living with both his parents the mother will have priority.
Clause 5 provides that child benefit shall be payable at such weekly rate as may be prescribed. It is our intention to introduce child benefit, in the simplest form, at a flat rate, but Clause 5 allows for different rates to be prescribed in relation to different cases—for instance, by reference to the age of a child. We shall have the operational capacity to do such variations if desired when our new computer equipment becomes available a couple of years after the start of the scheme.
The next batch of Clauses — Clauses 6 to 12—provides the administrative framework 338 for child benefit, much of which is common form to social security benefits in general. The national insurance adjudication system is to be applied with insurance officers, local tribunals and national insurance commissioners. The clauses deal with arrangements for recovery of over-payments, provision of information, details of offences under the Act and provision whereby benefit is made inalienable.
One provision to which I should draw the attention of the House is Clause 10, which permits the Revenue to disclose information necessary to the running of the scheme to officials of my Department, subject, of course, to proper safeguards. As the House will appreciate, the close liaison between the two Departments needed for the child benefit scheme makes such disclosure essential.
Clauses 13 to 15 cover the residence requirement and reciprocal agreements with Northern Ireland and other countries. The effect of the residence conditions will be that child benefit will be paid not later than six months after a person enters this country. This is a more generous rule in many respects than that for family allowances. Whilst the Bill does not extend to Northern Ireland, it is intended that a similar measure will be introduced in respect of Northern Ireland by Order in Council under the Northern Ireland Act 1974.
Part II of the Bill in Clauses 16 to 18 deals with three important items. I think I should draw the attention of the House first to Clause 16, which provides for the interim benefit and its administration. It will have the same effect for most one-parent families as if a family allowance were payable for the only, elder or eldest child in such a family. The benefit is to be taken fully into account for supplementary benefit purposes and is to be paid at the same rate as that running for family allowance at the time it is introduced, which, as I have said, will be April 1976. It will also be subject to income tax and to clawback on 50p of the total sum in the same way as family allowance now is. This will be provided for in the Finance Bill.
§ Sir George Young (Ealing, Acton)
I apologise for interrupting the right hon. Lady. Do I understand that the first interim benefit will be taxable whereas 339 the child benefit scheme as a whole, when it is introduced, will be tax free?
§ Mrs. Castle
Yes, the interim benefit is an extension of the family allowance to the first child. Therefore, it is being treated as the family allowance is being treated for tax purposes.
As I was saying, the tax arrangements will be provided for in the Finance Bill. I realise that there may be a number of points of detail which hon. Members might like to raise on the interim benefit. I will leave those matters to be answered by my hon. Friend the Under-Secretary of State.
There are only two points that I emphasise now. First, the benefit is purely a temporary one. We have been bound to go for a simple scheme as the price of doing something quickly. I say that to the hon. Member for Ealing, Acton (Sir G. Young). To get anything into payment so quickly meant that we could not go in for any kind of elaborations. We had to extend the family allowance in the simplest form possible to the first child of one-parent families. That was the price of doing something quickly for a particular group of one-parent families rather than letting them wait until 1977.
The second point I must make is that the adjudication arrangements for the interim benefit, although different from those of the child benefit for reasons we can no doubt discuss in Committee, have been approved by the Council on Tribunals.
Clause 17 makes provision whereby benefits and increases of benefits in respect of children under the Social Security Act 1975 may be reduced to take account of the introduction of child benefit and of any subsequent increases in the rate of child benefit. This continues the long-standing practice whereby dependency benefits paid, for instance, with sickness, unemployment and invalidity benefit are set at a rate which takes account of family allowance, so that together the payments provide a uniform level of income for each child.
Finally, I come to Clause 18, which, by repealing paragraph 2 of Schedule 2 to the Supplementary Benefit Act 1966, abolishes the wage-stop. Unemployed claimants and others who are temporarily 340 out of employment will no longer have their benefit restricted to the level of their net weekly earnings when working full-time in their normal occupation.
Financially this is a modest step, affecting only a small number of families, but it removes an injustice which currently deprives these hard-hit families of an average of £2 a week of their income and, incidentally, causes an inordinate amount of irritatingly complex work to those of my staff who have to administer it. Since the peak of November 1970 the number of wage-stopped claimants has dropped from 35,000 to about 5,000 at present, and it seems to us intolerable to continue it. It is, of course, the substantial improvements we have made in the FIS prescribed amounts and in the needs allowances for rent and rates rebates, which have unlocked the door to this reform. Here I pay a special tribute to the Child Poverty Action Group, which has campaigned for the abolition of wage-stop for the best part of a decade. Certainly the staff in my local offices welcome this step as much as CPAG.
The remainder of the Bill covers the transitional and financial provisions. On the latter, of course, until a rate of child benefit is settled, it is not possible for us to give any figure of benefit costs. The administrative costs, once the scheme is under way, will be £10.5 million more than the present family allowance scheme, largely because of higher Post Office charges. As for the two minor items, interim benefit is expected to cost about £21 million, together with a £1.5 million administrative charge. We are extending the hand of help to one-parent families, which is not to be despised. The cost of abolishing the wage-stop is unlikely to exceed £100,000 in a full year. That is the Bill that I commend to the House.
I can best sum up its significance in the terms used by the Child Poverty Action Group in a statement circulated by the group to Members for this debate. The group says:The Child Poverty Action Group welcomes the introduction of the Child Benefit Bill. This Bill, when fully in force, will be the most important change since 1946 in provisions within the social security system for the main tenance of children. The group has for a long time argued that adequate benefits for all children paid without means tests are a crucial first step towards the abolition of family 341 poverty and the Bill provides the machinery for this.Of course, the group has a number of details which it would like to see altered in the Bill. That is to be expected, and we can argue them out in Committee. I think that. I can explain away a number of misunderstandings that the CPAG seems to be harbouring about certain items. For instance, I repeat that it is impossible to introduce the scheme by April 1976 as the CPAG demands.
The German experience it quotes is not relevant to the procedures and practices of this country. I can say that with authority because I made a special trip to West Germany to examine for myself at first hand their machinery for introducing a family allowance scheme for the first child and to compare it with what was possible in this country. I found that the practices were entirely different. The main point is that we have established in the Bill new principles of social provision and the machinery to operate them as quickly as possible. As the CPAG says:It is the most important change since 1946 in our system of family support.Once again, it is a Labour Government who are introducing it.
§ 7.59 p.m.
§ Mr. Norman Fowler (Sutton Coldfield)
Although the right hon. Lady makes it somewhat difficult by adopting her party political approach to the earlier part of her speech, let me say first that we welcome the Bill.
I think that Members in all parties will agree that the House has a special responsibility when dealing with the interests of children. That is a point which was made some years ago in the House by a speaker who said:Let us make relief in cases where there are a number of children a matter of right and a matter of honour.Those were the words of William Pitt in 1796. They were wise words, although it is fair to say that the country had to wait for a further 150 years and the Beveridge Report before children's allowances, now called family allowances, were introduced. It has taken a further 30 years to see that allowance extended to the first child. The reforms in the Bill are valuable. I only hope that the right hon. Lady will concede that there has been considerable all-party pressure about 342 this and will not claim too much for herself.
I shall give just one example. I may be wrong, but the interim benefit proposed in the Bill—£1.50 for the head of a one-parent family in the case of the first child—seems to bear a remarkable resemblance to a new clause proposed by my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who has done outstanding service in this area, on the Social Security Benefits Bill. In January my hon. Friend proposed the same amount and that the same new group should be given that entitlement. I think that there was one slight difference. On that occasion virtually the whole of the Labour Party—275 Members in all—obediently trotted through the Lobby led by none other than the right hon. Member for Blackburn (Mrs. Castle), and voted it down. Yet it is that clause that the Government are now introducing in the Bill. It is possible to make snide remarks about Old Testament prophets without beards, but someone, it seems, has done a remarkable conversion job on the Government.
§ Mrs. Castle
I would point out that the hon. Gentleman's hon. Friend has benefited enormously from the unfortunate practice of Press leaks.
§ Mr. Fowler
I do not know whether my hon. Friend understands that intervention. I certainly do not.
It is also right to recall, Mr. Speaker, that the Conservative Government's Green Paper on the tax credit scheme included a proposal for child credits. After discussion, it was agreed that the child credit should be paid in cash to mothers in the same way as the child benefits in this Bill. Therefore, we obviously welcome the fact that the Government have accepted at least this part of the tax credit scheme. We sincerely hope that they will accept the rest of the scheme. I shall come back to that point later.
Perhaps we should also take into account one other benefit at this stage. In this debate we are basically talking about family poverty and how best we can bring help and support. In 1970 the Conservative Government introduced the Family Income Supplement Scheme as a first step to tackling the problem 343 of family poverty. It was intended as a first step and would eventually have been replaced by the tax credit scheme. It was an honest attempt to help those most in need. I hope that in replying to the debate the Minister will take the opportunity of at least confirming its value. I think that the right hon. Lady would concede that in opposition her supporters were less than kind about the scheme. In government, however, they have not only retained the scheme but they have increased it once and on Thursday they will seek to increase it again.
But there is still one curious aspect about the Government's policy. Although they retain the scheme, they seem to spend less and less on advertising it and letting the public know of the help which is available. Yet, as Margaret Bramall said on BBC radio this morning and as Frank Field has pointed out on a number of occasions, many people do not know of its existence. If the Government's aim is to use the Family Income Supplement Scheme, they should seek new ways of making it known.
The context of the Bill, Mr. Speaker—I am sorry; Mr. Deputy Speaker—is family poverty. I do not think that any one of the few hon. Members in the House at the moment would question that the position of the poor in Britain is fast becoming critical. We are used to talking about inflation eroding people's standard of living. With the very low paid, there is not much to erode before the situation within the family becomes acute. Unemployment looms as a real threat, and the Chancellor now threatens to cut back further the social services. But let him not think for a moment that his policies, or lack of policies, are not already having an effect on the very people whom the social services are intended to help.
If the Chancellor does not believe me, let him look at the memorandum prepared by the Child Poverty Action Group, which the right hon. Lady has quoted in some respects, entitled "Reducing the Poor's Living Standards at a Stroke". I think that that phrase will be familiar to the right hon. Lady. The point made by the Child Poverty Action Group is that the Labour Government are reducing the standard of living of the poor in Britain.
344 On Second Reading of the Social Security Pensions Bill I said that unless this Government controlled inflation, Bills like the Child Benefit Bill would be worth very little indeed. Inflation affects everyone in this country, but it perhaps strikes hardest at those who are already living in poverty, in slum housing and in need.
We make that point from this side of the House because we do not want to see the Bill defeated by inflation and we recognise that if the economic situation deteriorates further it will be the children who suffer most, just as at present it is the children who are put at risk by poverty. Mr. Speaker, the problem of poverty and how it affects children—
§ Mr. Deputy Speaker (Sir Myer Galpern)
Order. I am sorry for intervening. I appreciate the hon. Member's elevation of my status, but, as he will see, I am not wearing a wig. The hon. Member once corrected himself, but it is rather embarrassing to be referred to as somebody whom one is not. In case the hon. Member does not understand, may I say that he has several times referred to me as Mr. Speaker.
§ Mr. Fowler
I am sorry, Mr. Deputy Speaker. I full understood the point you were making.
The problem itself is well known and I should like to draw attention to two aspects of it. First, I draw attention to a valuable work carried out, with the help of the right hon. Lady's Department, by Dr. Harriet Wilson called "Parenting in Poverty". In that work she examined the experience of a sample of children in a Midlands city, and at every stage she found difficulties for the poor parent and the children.
With the four-year-olds the task of mothering had been delegated in many large families. An older sister was made responsible for one of the younger children, and as the four-year-olds shared bedrooms and beds with elder sisters the delegation became fairly complete. As regards the elder children, the survey showed that two-thirds of the families never took their children out. Family holidays were virtually unknown, and there were very few shared activities between parents and children.
345 Many of the mothers had histories of mental trouble, including suicide attempts. Dr. Wilson observes:In the milieu of poverty all the families suffer from bad diet, lack of sleep, polluted air and untreated conditions of ill-health".Extra financial help will not cure all these problems overnight, but it will help, as it will help also in the case of the one-parent family. The Finer Report has comprehensively set out the problems in this respect, and again it is financial problems which are acute.
We have the evidence of a survey carried out by the Office of Population Censuses and Surveys—Families in Need. The study consisted of separate surveys of five different local authority areas. In each area one finding was consistent—that the income of fatherless families was less than half the income of two-parent families. If we believe in channelling help to those who need it, here without doubt is a group who actually need it.
Having welcomed the Bill in general terms, I should like to turn to six areas on which we have questions to which I should like the Minister, in summing up, to turn his attention. Some of these questions have already been touched on by the right hon. Lady in her opening remarks.
First, there is the question of the timing of the child benefit. The right hon. Lady will know—she has made it clear—the concern outside this House on this question. The Labour Party committed itself to child benefits in the election of February 1974 and again in the election of October 1974. The assumption was that this benefit would become payable in April 1976. Indeed that was the message which the right hon. Lady, certainly by implication, gave to my hon. Friend the Member for Kensington when she wrote to him last August. She said then that the scheme could not start before April 1976. She added for good measurethat few laymen seem able to comprehend the scale and complexity of the operations involved.I shall give her the credit and take it that those words were drafted for her by civil servants, because they certainly bear the hallmark of the slightly patronising view of bureaucracy.
What laymen and, indeed, laywomen are able to comprehend is that the Department 346 of Health and Social Security has quite a habit of making administrative excuses for delay in implementing policy. They can also comprehend—we shall want to go into this a little more closely than the right hon. Lady did in the final seconds of her speech—when they look across the Channel to other countries that other countries seem to be able to manage their administrative problems a little more successfully.
The Secretary of State mentioned Germany. It is true that Germany managed to introduce this sort of scheme in six months. Laymen are also able to comprehend that Britain is the last major European country to introduce this sort of scheme for the first child. Indeed, our position as compared with that of Europe was never put better than by the adviser to the right hon. Lady, Professor Brian Abel Smith, when he addressed a recent conference. He observed:Basic flat rate pensions are higher in the Netherlands than in Britain … most European countries have better provision for invalidity … and France has better provision for mothers and children.Those are wise words.
Given that the right hon. Lady has certain hang-ups about her Government's policy on the Common Market, I should have thought that her aim should be to catch up as soon as possible. We find, however, that the right hon. Lady is caught with her feet stuck firmly in high alumina cement. That is, after all, the Department's latest explanation, which we shall want to examine and probe more deeply in Committee.
The second question on which I should like to touch—in fairness to the right hon. Lady, I must say that she has answered most of the points about this—concerns the financial details of the scheme. The right hon. Lady will appreciate that there is little in the Bill which helps us to understand how big the benefit will be or how much it will cost. She has given illustrative material regarding the cost in terms of public expenditure, and we are grateful for that. On the benefit itself, I think I understood her correctly in saying and confirming that it will be tax-free and, therefore, that the child benefit, as opposed to the interim benefit, will avoid the poverty trap. That being the case, it is something we shall welcome.
347 The third point is how the new benefit or the interim benefit helps the very poorest who are dependent on supplementary benefit. Will not the effect be that although they will get the new benefit they will also lose their entitlement to supplementary benefit by the same amount? In other words, they will certainly get the benefit as of right, but financially they will not be better off. If that is the case, and if the Government confirm it, have they contemplated some extra arrangement on disregards?
Fourthly, there is a matter on which the right hon. Lady did not touch, namely, the position of widowed mothers. The Chancellor has made it clear that the widowed mother will not get the interim benefit. That is because the widowed mother's allowance already includes an allowance for herself and her children. Are we to assume from that that the widowed mother also will not gain from the child benefit itself?
My fifth point is more in the nature of a suggestion than a question. One obvious effect of the introduction of this scheme is that the take-home pay of the father will reduce, because it is implicit in the scheme that as the mother receives the new benefit so the father loses his child tax allowance. Clearly there is a danger here that the reduction in the take-home pay could—I put it no higher—trigger off a new round of wage demands.
Therefore, will the Government at least consider examining the feasibility of showing on the father's pay slip the amount that is being paid to the mother, the aim obviously being to give him a picture of family income and to show that the family is better rather than worse off?
My sixth and last point concerns research into the workings of the scheme. When Beveridge reported he came out against the payment of any allowances for the first child because he took the view that everyone should be able to support one child without help. Later experience has shown that it is the first children who are more expensive and for whom the need often shows most acutely. I mentioned that to make this point. It has always seemed to me quite extraordinary how much money we are 348 prepared as a nation to spend not only with an imperfect idea of what we are doing but with only the haziest idea at times of what effect the money that we are spending so freely is having. That comment applies not only to the DHSS but to many other Government Departments concerned in the home and social spheres.
If we are to use resources most effectively, the Bill should be accompanied by continuous research into, for example, its effect on one-parent families.
There are other points in the Bill—for example, the question of the wage-stop. My hon. Friend the Member for Rushcliffe (Mr. Clarke) will deal with this more fully when he speaks. Doubtless we shall want to examine it in Committee, although I certainly take the point made by the right hon. Lady about the few people it affects and the small expenditure involved.
However, I should like to make one major point. There is general agreement in this House that it should be our aim to provide more help for poorer families. There is general agreement that we want this help to go as of right and without all of the problems of take-up. There is also general agreement, I assume that the Bill deals with only one part of the problem of poorer families. It is an important part. It is a vital part but it still leaves, for example, the 2 million pensioners at present living in retirement who are dependent upon supplementary benefit.
There is general agreement on all sides of the House on this matter. Can we not agree, therefore, on a path forward? In particular, can we not now agree that the tax credit scheme, of which the Child Benefit Bill is only a part, provides such a path? Clearly the Conservative Party is committed to the tax credit scheme. In saying that, I do not seek to establish that it is the idea of only one party or that it has the support of only my party. It has the support of the Liberal Party. It has the support of some in the right hon. Lady's party. It had the blessing of the late Richard Crossman and the support of the former Douglas Houghton, then Chairman of the Parliamentary Labour Party. What is perhaps most telling of all for the right hon. Lady, is that it has the support of 349 her own special adviser, Professor Brian Abel Smith, who has called itThe largest single step forward in nearly universal provision for the poor and for social dependants since the post-war developments stemming from the Beveridge Report.The reason for that support is clear. It provides benefit as of right and directs it to those who need it. It does something further which is urgently required: it brings into the system a simplicity which is so urgently needed at this stage. At present there are about 44 different means-tested benefits in operation, plus other benefits which are not means-tested. The system is becoming a jungle of regulations requiring a detailed map for the claimant. Some master the jungle and get the help they need, but others do not. That cannot be a satisfactory situation in the view of any hon. Member.
§ Mrs. Castle
This is a serious point. One of the reasons why some of us who were members of the Select Committee came out against the tax credit scheme was that even in the expensive form in which it was proposed at that time it did not begin to get rid of those 44 means tests. Effectively it got rid of only one of them.
§ Mr. Fowler
The right hon. Lady is being less than frank about what the effects of the tax credit scheme would be. What I am really saying to her is this. We are not urging her to implement the whole tax credit scheme immediately. She is right on that matter. That has not been our position. In present circumstances it would be absurd. We say, however, that it would be a tremendous advance if she announced her agreement in principle with a scheme which would make a substantial contribution to eliminating poverty, because that surely is what the tax credit plan is. It is a comprehensive anti-poverty programme.
A few weeks ago the right hon. Lady came to the House with the Social Security Pensions Bill. Many of my hon. Friends who are present today were present on that occasion. We made it clear that we did not want pensions to become a party political football. We had amendments to the Bill to make, and they are being made in Committee. But we wanted to reach an agreed basis upon which to build.
350 I suggest to the right hon. Lady that here is a similar test for herself. She may not accept the tax credit system in all its details. She may want to change it. Very well—no one pretends that it is the last word. But let her at least announce her agreement in principle to it, so that we can all work, men and women in all parties, to eliminate poverty in this country.
§ 8.22 p.m.
§ Mrs. Helene Hayman (Welwyn and Hatfield)
It is a great pleasure to be able to support in the House a new non-means-tested social security benefit. It is a long time since the House has seen the introduction of such a benefit. Credit should be paid to the work that has been done in its introduction.
I was delighted to hear the stream of invective against the bureaucracy, the uncertainty and the inefficiency of means-tested benefits that came from the Opposition Front Bench. I hope that in future the House will be united on this issue and that we shall no longer see the introduction of benefits of that very unuseful kind.
I was very taken with the idea of the hon. Member for Sutton Coldfield (Mr. Fowler) that husbands should be informed of what their wives were getting in family allowances. That is absolutely right in these days of equality, and I completely agree with him. But I hoped that he would make it clear that he supports the corollary—that when any wife picks up her family allowances she should be told what her husband is earning. It is, after all, slightly more than the family allowances.
Coming to the Bill, I welcome heartily the precision that has been slipped into Clause 18—if I may put it thus—dealing with the abolition of the wage-stop. Many of us have felt very strongly about this for a long time. It has caused great and unnecessary hardship to many poor families. We are very glad to see the end of it. I can only say to my right hon. Friend the Secretary of State that I wish that she had slipped in two abolitions in the Bill and that we could have seen the abolition of the cohabitation rule at the same time. Had those two rules gone we could all have been happier with the resultant workings of the Supplementary Benefits Commission.
351 The Bill's main provisions—the introduction of family allowance for the first child and the phasing out of tax allowances—are a very significant departure from a philosophy that has dogged us for years in fighting for increases in family allowances and for allowances for the first child. These provisions are a recognition that economic circumstances have changed drastically since the days of Beveridge, and that the assumption on which the whole family allowances scheme was built, that a husband's earnings would support himself, a wife and one child, is absolutely a part of the history books. It is no longer a part of the economic reality for families in Britain.
As has been pointed out, very often it is the birth of the first child that is the crisis point in economic terms for many young families. Until the birth of that child the pattern in most families is for there to be two wage earners, two wages coming in and two mouths to feed. It is with the birth of the first child that suddenly there is only one wage coming into the family and three mouths to feed, and no help coming from the social security system. Therefore, the introduction of a benefit for the first child is an enormous step forward.
I should not have thought, however, that it was such an enormous step forward, because it seems a very logical thing to do. However, knowing of the fight that people in this House have had about introducing it, I see it as an enormous step.
Of course, I am disappointed at the timing of the introduction. My right hon. Friend will not think that she has a critic on the benches behind her if I voice that disappointment. It is only right that when a measure of this sort is introduced, those of us who care and who welcome it should also say where we think it is deficient and where it should go further, and we should be prepared to fight for it to go further. We must be disappointed at the date of the introduction.
I recognise the serious and very practical difficulties that face the Department in this respect. However, one looks at the experience of other countries. Furthermore, what always comes to my mind is the speed and efficiency of identification that we managed when petrol rationing 352 was in everyone's mind and the speed with which the different coupons for all the cars were distributed. Cars were identified and their owners were identified, and the coupons were issued through post offices. It is not only a matter of resources, not only a matter of staff, not only a matter of buildings; it is also a matter of political will, and it is the political will nationally, it is the political will of this House, apart from the handful of hon. Members who are here tonight, that it is necessary to mobilise if we are to see the benefit brought in earlier, as I hope we shall.
Turning to Clause 5, may I say how glad I was to hear the Secretary of State refer to the possibility of grading the new child benefit according to age. It could be a most significant step, when we are introducing a new benefit, when we are completely revamping the scheme of family support, to look at the problems that relate to different ages of children. Of course it is enormously difficult to do, and with the present administrative machine I would think almost impossible, but there is no reason why, when we have the proper computer facilities, we should not be able to grade allowances according to age. Everyone who has ever thought about it for a minute knows that it is much cheaper to feed and clothe an 18-month-old baby than it is to feed and clothe a 15-year-old teenager. It is necessary that we make this sort of distinction and that we recognise that arbitrary lines will have to be drawn here and age distinctions made, but it will be invaluable and make a much more sensitive benefit if we are able to age-grade it.
The interim benefit for one-parent families must be welcomed by all of us who have worked for this group and in this field—welcomed not only for the practical help that it will give to the one-parent families involved but also for the recognition that it gives to the special needs of that group. I often feel that lone parents and their children suffer not only the practical problems—and God knows they suffer those—of poverty, bad housing and lack of day care and resources, but also from being ignored or brushed under the carpet or not being seen as a group that deserve support for the job they are doing in bringing up their children single-handed. That is 353 why, although I have argued before about the specific measures which the Chancellor introduced, I think it was a tremendous boost for lone parents and their children when he singled them out as the group most in need.
But I am concerned at the lack of help that this interim benefit will bring for the 250,000 lone parents and their children who are depending on supplementary benefit. Although they will pick up their child benefit at the post office, they will lose it when they go round to the DHSS; it will be knocked off their supplementary benefit. I think that we must look again at whether this particular benefit—and it is an interim benefit, it is an emergency aid, it is only a one-year scheme—could be discounted for the purpose of assessing supplementary benefit.
I know all the problems which are entailed when one starts doing this with a non-means-tested benefit and when one starts bringing more people into eligibility for supplementary benefit. But there are two arguments. One is that we are dealing with a unique situation, an interim, a stop-gap measure. The other, of course, is that many of us would like to see the real solution to the financial problems of one-parent families in a non-means-tested benefit as of right for them quite separate from supplementary benefit. We know that supplementary benefit is inadequate. It is a wrongly-devised system to cope with the long-term needs of families in poverty. It is designed to give emergency, short-term help. It should not be the system whereby we support parents and children over years—and that is the reality for many one-parent families in this country.
Finally, we shall have to fight both on the size of this benefit and on its timing. We shall have to fight very hard. I should like to see written into the Bill regular upgradings of family allowances or benefits. That is the voice of not long but bitter experience of having to fight each time round when we wanted a rise in family allowances, against the fears that are always expressed from all quarters that it will be unpopular, that it will not be on, that it will have to be argued out with the Treasury. Rightly, we do not have this sort of argument over pensions. We should not have such arguments over child benefit either. It 354 should be written into the statute that this benefit will be regularly reviewed and regularly upgraded, and with the current situation I do not think once a year is sufficiently regular.
Ultimately this House, the Government and we as a society will be judged on our treatment of children and on the attack we make on family poverty. We shall be judged not on the number of tears shed when the occasional terrible tragedy occurs but on the action we take in the less glamorous, less dramatic field: the unpopular, unfashionable worlds of prevention. We shall be judged not on the tears shed after the event, tragic and terrible, but on the money that is spent on support—not only direct financial support but social work and nursery support and support in terms of good housing and adequate facilities.
We shall be judged after the event not by how many of us gather to shed our tears and beat our breasts but on the amount of money that even at a time of national crisis, when we are doing all we can to cut down public expenditure, we are willing to give to protect those most vulnerable in our society.
§ 8.37 p.m.
§ Sir George Young (Ealing, Acton)
It is a pleasure to follow the hon. Member for Welwyn and Hatfield (Mrs. Hayman) who I believe was absent from the Division Lobby at 6.25 p.m. on 29th January when the House divided on a new clause which my hon. Friend the Member for Kensington (Sir B. Rhys Williams) sought to introduce into the Social Security Benefits Bill. It was hard to believe, listening to the Secretary of State, who I am sorry to see is leaving the Chamber, that she is a leading member of a party that marched shoulder to shoulder through the Division Lobby that evening to obstruct something which has been welcomed so warmly by her this evening.
On that occasion in January my hon. Friend the Member for Kensington moved new Clause 2, which would have given an allowance of £1.50 to the eldest child of one-parent families. Only a few weeks ago the Under-Secretary told us that the Government could not entertain such a measure. That was, he said, because ofmajor computing programme difficulties, major printing programmes, housing difficulties 355 and staffing problems."—[Official Report, 29th Jan., 1975; Vol. 885, c. 457.]All of those problems have miraculously been erased in a few weeks. I wonder whether the reason for delaying the announcement on this proposal is simply that the new clause introduced in January was introduced by a Conservative Member.
We must contrast the 275 Members who trooped through the Lobby against the new clause that evening with the three or perhaps five Labour Members present tonight. The right hon. Lady was pushing her luck a little when she criticised the previous Conservative administration for their delay in dealing with family allowances. It is true that in three years and eight months the previous Conservative Government did not review family allowances. But it will be three years and two months before the Labour Government honour the commitment which they gave in last February's election. There is not a lot of difference between those intervals.
The amount of the new benefit has tantalisingly been omitted from the Bill, which makes it impossible to assess its impact on family poverty and other related problems. The right hon. Lady said in her Departmental Press release issued on 28th April:The Government aim in the Child Benefit Bill is to improve and simplify the system of family benefits by combining existing family allowances with income tax child allowances.I assume that by the word "improve" the right hon. Lady means that she hopes to increase the amount of support going to families.
An examination of Command 5879 "Public Expenditure to 1978–79" shows that the money is not there. Page 112 says:The figures in Table 2:12 and elsewhere in this White Paper do not allow for the cost of a child benefit scheme for all children, including the first in each family, to which the Government is committed … Additional expenditure on this scheme would be a charge on the contingency reserve.The contingency reserve has been overspent many times by the Government since then. Also, it has become quite clear from the statements which the Chancellor has made in his Budget and 356 subsequently that many of the schemes in the White Paper cannot now be implemented because of the need to cut back on public expenditure.
I suspect that this Bill will not increase the amount of Government assistance going to families with children. It will redistribute it from the husband to the wife. This will be a continuation of the practice that the Chancellor has currently adopted, because he has paid for the increase in family allowance this year by reducing the real value of the child tax allowance.
The failure to increase child tax allowances nullifies the benefit of the family allowance increase for families both above and below the tax threshold, as shown quite clearly in an article in New Society on 24th April 1975, so that, far from being a new deal for families, it will take money out of the husband's pocket on the Friday and put it into the wife's purse on the following Tuesday. Far from being a child benefit scheme, it looks like being a father dis-benefit scheme. It is up to ladies to educate their husbands to be more generous with the housekeeping, rather than to rely on the Government forcibly to take the money away from their husbands on the Friday in order to give it back to them on the Tuesday. There should be a more enlightened way of achieving these aims in International Womens' Year.
It is because the financial restriction placed by the Treasury on the DHSS are so strict that there is a total absence of any inflation-proofing in this Bill. The right hon. Lady quite clearly attaches great importance to the concept of inflation-proofing in the fight against poverty, because in the Second Reading of the Social Security Pensions Bill on 18th March this year she said:I need hardly stress the importance to pensioners of having these firm guarantees of full protection against inflation. In the original White Paper I described that protection as 'one of the most precious assets of the new scheme.'"—[Official Report, 18th March 1975; Vol. 888, c. 1491.]She went on to criticise the then provisions for the graduated pension scheme, which were not inflation proofed, by saying that they would be left to shrink in value year by year until effectively they disappeared.
357 If that is her view on inflation-proofing, why is there no clause in the Bill obliging the Government to review the level of benefits regularly? It is a clause which we have in the Social Security Benefits Bill and in the Social Security Pensions Bill, which is in Committee at the moment, but which is totally absent from this Bill.
I see some major problems arising from merging the present tax reliefs with the present family allowances into the new child benefit. I do not think that the Government appreciate that the criteria for eligibility for family allowances are quite different from the criteria for eligibility for tax relief. In general, eligibility for tax relief is much more broadly drawn than eligibility for family allowances, and I am very disturbed to see the much tighter rules for family allowances being reproduced in the Child Benefit Bill, and in some cases made more restrictive, whereas many of us would rather see the much broader rules that guide the tax requirements. This effectively means that many of the benefits currently accruing to families through the tax allowances will be lost.
I can best illustrate this by reference to the family allowance book. I have managed to borrow it from my wife with great difficulty for the purpose of this debate. May I say to the Under-Secretary that these booklets for a family of four children will shortly be worth £300 each. Perhaps there ought to be second thoughts about security.
Reading through the conditions at the back of this very valuable booklet, one sees that each order must be cashed within six months, and that failure to do so may result in the loss of rights to the money. There is no such restriction on the tax allowances. On the death of the child, the family allowance book must be returned at once. Tax relief, however, extends for a full year even if the child dies on 6th April.
There is also reference to the difference in the treatment of children over 16. With family allowances, the moment a child stops attending school, college or university, the book must be returned. Tax relief, on the other hand, extends for the full year, even if a child over 16 ceases attending school during the year. Family allowances are not payable 358 if a child goes to live with someone else with a view to adoption, whereas tax allowances are payable until the child is legally adopted by another family. Family allowances are not payable if a child leaves home, apart from prescribed conditions, but the tax allowances continue to be paid even when a child makes prolonged visits to friends or relatives.
Finally, tax allowances are available for a step child or a child legally adopted who goes into hospital. But where a child is not a natural child, all the family allowances cease after four weeks.
I suspect that there are other discrepancies which can be dealt with best in Committee. But the criteria are different. The Government have adopted tighter criteria with regard to family allowances in their Bill.
Turning to the Bill, we see that some of the conditions are even tighter. It appears, for example, from Clause 2 and Schedule 1 that apprentices in full-time training are to be excluded, although currently they are eligible both for family allowances and for tax allowances.
In Clause 3, the person responsible for a child is defined. It appears that this responsibility has been drawn more tightly than for family allowances. In paragraph 4, it also appears that provision is being made for disqualifying natural children in hospital, although no such provision exists for family allowances. It appears from Clause 7 that child benefits will cease if a child is removed from one's own control by a local authority or otherwise, whereas in some conditions I believe that tax allowances would continue. It is also clear from the Bill that a new child will generate child benefit only from the date from when he is born, whereas tax allowance is available for the whole year.
There are one or two matters in the Bill which do not seem to me to be clear. If a child over 16 years of age earns more than a prescribed amount, the parent forfeits family allowance. The same is true of the tax allowance. If a child earns or has income above a certain amount, there is a £1 for £1 deduction from the parent's benefit. I cannot find anything in the Bill dealing with the earnings of children and how they are treated in assessing the 359 entitlement of parents. Nor is it clear whether the tax allowances which are to be phased out are simply the child allowance, or whether it is also proposed to phase out the additional personal allowance for children which is available to parents living on their own or to married men with totally incapacitated wives.
On a more positive note, I welcome the provision to graduate benefit according to age. The expenses which parents incur in connection with their children vary as the children grow up. The present system of family allowances does not reflect the increase in expenditure. Looking at the present tax allowances, there are three rates—one for children under 11, one for the 11 to 16 year-olds and one for the over-16s. That graduation is rather coarse and does not reflect the increase in expenditure incurred when children, for example, start attending school at the age of five, bearing in mind that they grow rapidly between the ages of five and 11. I hope that the Government will be able to do some research on this subject before introducing the change. I shall be happy to supply any information of my own to assist this.
The abolition of the wage-stop has already been referred to by other hon. Members. If the salaries of Members of Parliament remain frozen and the level of benefits goes on increasing, it may be that hon. Members who lose their seats will benefit from the abolition of the wage-stop.
I want now to refer to what I believe to be an anomaly in Schedule 1(3). It is a small point, but it is one which causes annoyance. It relates to married children, and it says:Except where regulations otherwise provide, no person shall be entitled to child benefit in respect of a child who is married.If a daughter gets married, her father is no longer entitled to family allowance for her. On the other hand, if she marries a student and is attending university, her father is expected to maintain her even though she is married. There is a difference of approach between the DHSS and the DES on how parents are meant to look after children after they have married.
As for the position of the disregards, if this new interim benefit is to be taxable and to be disregarded for supplementary 360 benefit purposes, the number of one-parent families who will benefit will be very small.
I hope that the Minister can give us some information on one-parent families for which we have been pressing him for some time—namely, when the new disregard limits will be introduced which were passed by the House some months ago. The actual date of implementation is left to his Department, which has been silent on the subject for a number of months.
We have a long way to go. This booklet, "Social Security in the European Community", published by Chatham House and PEP, makes it clear that this country lags far behind other European countries. On page 23, it says:The only continental country with a record of parsimony towards the family to rival that of Britain has been Germany, but this has now changed.Some very telling tables in that publication show how stingy we are.
The Bill may indeed be a milestone, but it is a milestone on which the distance has not yet been inscribed. Until the figures are added, the traveller on this important journey is not much the wiser for seeing it.
§ 8.51 p.m.
§ Sir Brandon Rhys Williams (Kensington)
This Bill is an attempt by the Secretary of State to fill the vacuum left behind after her hasty and partisan decision to halt work on the previous Government's tax credit scheme. It is to be welcomed, because at last we have a measure to implement the suggestion made certainly as long ago as 1940 by Lord Keynes in a pamphlet on "How to Pay for the War". For all I know it may have been made many times before that. It seems rather a pity that it should have taken the responsible authorities 35 years to bring forward such an obvious administrative reform.
There are many questions that one has to ask as to the Secretary of State's policy. After listening to what she said about the tax credit scheme, and recognising that she served on the Select Committee, I do not think that she can ever have understood it. She certainly never understood its possibilities or the attractions that it could have for her party, with its dedication to social reform, or, 361 indeed, to anyone interested in administrative reform. One has to ask why the Government are concentrating on the child benefit and forgetting, for instance, the reform of the systems for assistance to the blind and for dependent relatives, who surely also have a claim.
If we are to discuss the Bill intelligently, we need to know the rate of benefit that the Government have in mind. We know that in comparable democracies, in Belgium, France and Germany for instance, the rates are infinitely more generous and we have a lot of catching up to do. But from a hint within the Bill—namely, that when the benefit is introduced it will not be sufficient to justify ending the tax allowances in their higher ranges, that is to say for the older children—it seems unlikely to constitute a lavish social wage. At a time when we are contemplating increases of £5, £8 or £10 a week for industrial workers already earning far above the national average wage, to discuss whether a child's benefit should be £1:50 or £2 a week shows a total lack of compassion and comprehension.
This inevitably brings one to the question of the cost. I have some points to raise which I might not be able to elaborate in Committee for fear of being called to order. The first is the question of whether redistribution of income is the same as other branches of Government expenditure. I have in my time tried to get the Treasury to analyse its owns figures so that one could separate the Government's activities in raising and spending money on their own projects, such as defence, and their activities as an impeller of purchasing power from one part of society to another. The money that is drawn through income tax and national insurance contributions goes back again, for the most part, as money, or as spending power, probably to the very same people in many cases who are making the contributions. Therefore, that element in what appears in official figures as Government expenditure is really only personal expenditure assisted by Government intervention.
There is also another kind of redistribution, which is part of the policy of the Bill, and that is redistribution from husband to wife. I wish we had the data on which to judge the overall effects of 362 what we are doing by our schemes for social benefit, in particular by family allowances.
If the Government chose to introduce family allowance at a generous rate, comparable with that in France, Germany or Belgium, what would the overall effect be on the national picture? Certainly it would bring about a change in the character of expenditure, but it might not change the total level of expenditure. If the books were balanced the income which the Government would draw through one means or another would obviously match the additional income that would go to the families. But the character of national expenditure would certainly change. There would be less spending by men on such things as men are inclined to spend their money on. I would single out the example of gambling—but perhaps that shows my old-fashioned prejudice. However, there would be an increase in spending on the things that mothers long to spend more money on, such as better food, better clothing for their children and other aspects of family comfort and necessary expenditure. I would welcome such a shift, as I am sure would the vast majority of hon. Members. There would also be a change in the level of take-home pay.
We are dealing with a system which draws money from men, either by cancelling their tax allowances or by changing their overall rate of tax, and hands it to their wives, whose resources are likely to be much smaller. The change in the level of take-home pay may be thought to have side effects in the form of pressure for higher wages and so on. But where incentives are concerned, we need to study the effect on the marginal rate of tax. If family allowances were increased by total cancellation of the child tax allowances, the marginal rate of tax for the average wage earner would probably remain the same. The effect on incentives would be hard to assess.
I would like to deal briefly with the cost of living, compensation for changes in the cost of living brought about through wages, and the threshold systems of one kind or another. There is no doubt that the concept of the social wage features largely in the Government's thinking in the whole context of the changing cost of living, and that family allowances are part of the social wage.
363 I have often tried to draw attention to the deficiencies of the retail price index. No one can be sure what sort of family is referred to in the index, whether it is a family of a husband, wife and two children or some other combination. This makes it difficult to assess the effects of particular changes in the cost of living on families of different sizes.
However, there is one matter on which we should clarify our minds. The cost of living does not rise by a percentage. We express it in percentage terms, but we should express it in money terms. If a person's expenditure on bread rises because there has been an increase in the price of a loaf, it is unlikely that his increased expenditure will vary substantially whether he is rich or poor. Yet, by expressing the cost of living as a percentage, the suggestion is that the higher-paid are put to the same proportionate additional expense, by a change such as a rise in the price of a loaf, as the lower paid. This is untrue. We should express changes in cost of living as a weekly money sum rather than a percentage. Because we carry on with this obvious sloppy thinking in raising wages to meet rises in the cost of living, in effect we are doing two things. Firstly, we accentuate the differentials between the better-paid and the low-paid, which are probably partly corrected in the tax system but in a blind and random way.
Secondly, we have the effect of transferring spending power from families to single people. More particularly we transfer resources to the two-earner family without dependants. They are the people who gain most from rises in the cost of living which are compensated by across-the-board wage changes.
By pursuing these policies over a period of years, we have produced a situation in which it is urgent to raise family allowances to get families back to a reasonable standard of living and self-respect. As the cost of living increases, we should hasten to raise family allowances as a selective weapon to protect living standards.
Unfortunately, although the right hon. Lady is making the most of the fact that the Government have increased family allowances—and all credit to them 364 for that—they did not raise them, even at the time of the announcement, by enough to compensate for the changes in the cost of living since the last increase. Since the announcement, the cost of living has been roaring ahead.
That brings me to the next question, which is the administration of the reform. It is disheartening to read in the preface to the Bill that apparently there will be no savings to the Inland Revenue. That presumably means that there will be no savings to employers either, who are carrying the burden of pay-as-you-earn without compensation from the State. Pay-as-you-earn, that ridiculously archaic system, is to go on.
Other hon. Members have asked when the scheme will begin. It is hard to believe that the Government, having, we hope, passed the Bill through Parliament without too much difficulty in the next few weeks, propose then to leave mothers without their benefit until 1977. The ridiculous and unworthy administrative excuses advanced by the right hon. Lady will have to be examined in Committee, where I am sure they will be seen to be inadequate. I do not like to make partisan accusations against honourable colleagues in the House, but the right hon. Lady invites it by her manner. One must ask whether at the back of her mind is the thought that 1977 may be an election year.
Then the question arises, from the administrative point of view, why not introduce the family allowance on a graduated scale right away? If we are waiting for a computer to handle this scheme, why cannot we programme the computer to introduce graduated family allowances from the start? Then we would be able to sweep away the child tax allowances at once and achieve a worthwhile administrative saving. If the right hon. Lady does not seriously plan to do that, it tells us something very disturbing about the state of the Department's computer programme and possibly about her Department's morale. It also suggests to me that the right hon. Lady has an utter lack of real will to help families in the present emergency.
I should like to comment on one or two other points of significance in the Bill. I am naturally glad that the Government have recanted and changed their attitude 365 to the one-parent families. I read in New Society a suggestion that this was one of the ways in which we could advance. I thought that it would be useful on the Report stage of the Social Security Benefits Bill to have an opportunity to discuss the matter. I hoped that the Government might make a favourable statement which would enable me to withdraw my new clause; but they made it plain that they did not intend then to implement the suggestion. No doubt pressure and remorse have worked on them and have made them decide that possibly the administrative difficulties are not so great after all. Let us hope that they will decide the same about the date of implementation of the increase for the first child in all families, as they now have for the one-parent families.
One notices the rather chilling reference in the clause dealing with allowances for the one-parent family to the cohabitation rule. I hope that we may have a useful discussion on that in Committee. I hope I may have the honour to be selected to serve on it. I believe that ultimately we shall solve this problem only by introducing householder credits. That will take us a stage further towards the original tax-credit scheme of which the Secretary of State's child endowment is but a pale imitation.
I welcome Clause 10, which refers to the disclosure of information by the Inland Revenue. I do not know how important this provision may prove in the context of the Bill, but it is most important for the one-parent family that information which the Government machine has should be made available to assist mothers who are unable to claim their due allowances when they have been abandoned by their husbands and left without proper resources in charge of families. The Bill proposes a breach in the long-standing principle. I understood long ago the reasons for the principle; but the time has come to set it aside. I welcome the fact that the Bill makes a beginning.
I welcome, too, the abolition of the wage-stop. At least this bugbear is being taken out of our social security system. I was amazed when the Secretary of State said that the cost would be only about £100,000, if I understood her correctly. That figure means that the application 366 of the wage-stop has already gone out of use, and quite rightly so. Now Parliament will put an end to it once and for all.
I have often drawn attention to the fact that we do not clarify our minds as to the root of entitlement of social security benefit. Do we give money to people because of their need, because of their record of contributions or because of their citizenship? We still have this hopeless muddle in the administration of social security. I can see that I shall have to follow my rule on this matter of making the same speech 100 times—not stopping at 92 or 98—if I am to get anywhere with the point. The fact that I have mentioned it again tonight takes me a little nearer to the 100 mark.
The Bill constitutes a positive step forward to a system of citizenship benefits which will eventually serve of itself—I hope—to eliminate need. Therefore, I know that the House will want to give it a warm welcome.
§ 9.3 p.m.
§ Mr. Andrew F. Bennett (Stockport, North)
I should like warmly to welcome the Bill but I am a little surprised, judging from the attendance in the Chamber, that there is so little enthusiasm for it. I hope that that situation will lead to the Bill quickly reaching the statute book.
The test of how useful the legislation will be is in the level of benefit which will eventually be paid. In many ways this debate is an artificial one because we do not know the level of benefit. I hope that this Bill will not be another example of the way in which the hopes of families living in poverty are raised with the announcement of a benefit by the Government only to be dashed when the actual scale of benefit is revealed. I would hope that when it comes in 1977 the level of benefit will be sufficient to remove the problem of child poverty completely.
It seems sad that it is 10 years since the extent of this problem was first identified, yet before a worthwhile benefit is brought in many of the children who were first identified as being in need will have grown to adults and may well be back into the cycle of deprivation themselves. It is sad that we have had to wait so long. It is unsatisfactory that administrative problems mean that we must wait 367 until 1976–77 for the introduction of the scheme.
I hope that in sorting out these problems we make certain that the new benefit can be quickly uprated. Nothing upsets people more than to be told that there will be an uprating in, say, six months' time but by the time the increased payment reaches them inflation has eroded a great deal of it. I hope that upratings can be introduced simultaneously with the announcement of increase as happens with VAT increases, for example. I hope, too, that it will be possible for variations according to age to be brought in much more quickly than the couple of years that I understand was the period originally suggested.
I turn to the section dealing with the interim benefit. This is the excuse for delaying the scheme. Interim benefit will be given to one-parent families. The rate will be £1.50, which I believe is one-sixth of the amount suggested in the Finer Report, which was produced over two years ago. As the Government are taking the trouble to identify one-parent families—everyone is aware of the problems involved—it seems to me that the level of benefit for them could be higher than £1.50. Since we suggest that the families in most need should be helped, the rate could be a little more generous.
My hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) referred to her pleasure at the disappearance of the wage-stop clause, but was concerned because the cohabitation rule remained. Not only does it remain but it is to be used again in assessing the interim benefit. After all the evidence as to the way in which this rule acts unfairly, it is a shame that a further piece of legislation should rely on that rule to distribute the interim benefit. I hope that the Government will look again at that provision.
A small part deals with children in the care of the local authorities. It is reasonable that no benefit should be paid to parents of children being looked after by a local authority. However, I wonder whether the Department has looked at the question whether that benefit should be paid to foster parents where children have been boarded out by local authorities. Fostering allowances vary widely. 368 Some authorities are extremely mean. If the child benefit could be paid to the foster parents it would greatly help many foster parents.
Stress has been laid on the problem of the fragmentation of existing benefits. A great deal was heard from the Opposition Front Bench about that matter. The only way to abolish fragmented benefits is to place the level of child benefits high enough. Some fragmented benefits cost a great deal to administer and have extremely low take-up rates. I suggest that the level should be fixed sufficiently high so that many of those benefits can be phased out.
I welcome the Bill. I hope that when it is implemented the level of benefit will be generous so as to remove child poverty once and for all from this country.
§ 9.13 p.m.
§ Mr. Robert Boscawen (Wells)
I can understand why the Chamber has been empty throughout the debate. There have been only two Government back-bench speakers. The Bill is a non-event. It does nothing to help poverty now. It offers jam tomorrow.
In an aura of self-justification, the Secretary of State, when she introduced the Bill, endeavoured to show up the Conservative tax credit scheme as expensive and ill-designed to suit the needs of today. Her remarks were the most hypocritical that I have heard for a long time. She has in fact introduced a pinchbeck idea of part of our tax credit scheme.
§ The Under-Secretary of State for Health and Social Security (Mr. Alec Jones)
Will the hon. Gentleman say how he is in a position to criticise the scheme, since the level of benefit has not yet been fixed?
§ Mr. Boscawen
That is just the point which we complain about. We know nothing about what the benefit will be. We do not know what it is. Will it be a neutral benefit? Will it mean no more than is being given out at present in family allowances and tax relief? We have had very little explanation.
The Secretary of State said that our tax credit scheme was impossibly expensive, and that was why she objected to it. She later said that her scheme would be potentially expensive. She hedged 369 around with "ifs" and "buts" as to exactly how it would be paid for. She did herself less than justice and was not on her best form.
Of course we are pleased that the Government are doing, albeit in two years' time, what Parliament has long wanted to do, namely, giving a benefit to the first child. But this is about the most unpropitious moment the right hon. Lady could have chosen to introduce the Bill, in the present disastrous economic climate. I give the Government one crumb of comfort. At the time of the Second Reading debate of the original Family Allowances Bill there was also a grim crisis. The debate took place early in 1945 when some of us thought we were almost with our backs to the wall. Those family allowances have lasted and served the country well for 30 years, although there have been recognised gaps in the system. The major gap was, of course, the absence of a family allowance for the first child.
I have always wondered whether the reason for not giving the family allowance for the first child was Beveridge's philosophy that a man's wages should be enough to support himself, his wife and one child. I have read the original report of the debate carefully and I do not think that was the reason. The reason was that which exists today—that the Treasury was not prepared to find sufficient money.
The Solicitor-General who wound up the debate in March 1945 said that there were 3 million one-child families and 2.6 million families with two children or more. Therefore, there were 5.6 million first children within the 10 million children in the country. He said that, by simple arithmetic, it was clear that it would cost £73 million to pay 5s. a week to the children who were not first children but would cost £130 million to pay it to the first child as well as to the others. That shows the old hand of the Treasury at work. The Government thought that if they cut out the allowance for the first child the cost would be halved.
That allowance for the first child should have been introduced a long time ago, and the reasons for it are even more pressing today. Married couples nearly always both go out to work today before their first child arrives, so that when 370 the first child comes along the family income drops considerably. That is when the need is greatest.
I turn to the implementation of part of the Finer Report's recommendations, that of introducing family allowances for one-parent families next year. Why did not the Government accept the new clause tabled by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) in Committee on the Social Security Benefits Bill on 29th January? Had they done so, it might have been possible for the allowance to be brought in at the beginning of this month. I do not accept the palaver about the difficulties of identifying the single-parent families.
As the hon. Lady the Member for Welwyn and Hatfield (Mrs. Hayman) said, where there is a political will the problem can be solved. For example, when petrol rationing is introduced the coupons are issued to everybody in a remarkably short time. I believe that if the political will had existed to bring family allowance to lone-parent families at the beginning of April, it could have been done. Indeed, it should have been done.
I am disappointed that we are still lagging very far behind in implementing the main proposal in the Finer Report. I accept that the major proposal for a guaranteed maintenance allowance for those families was means-tested and, therefore, out of tune with the thinking of everyone on both sides of the House, but it was not beyond the ability of the Government to think out a different way of helping single-parent families. Theirs is the greatest need. Theirs is the largest single body of easily identifiable families who are in poverty. That is where the shoe pinches most. By pre-empting the nation's resources in so many other ways, the Government are putting off the day when they can help the lone-parent families.
When the family allowance for the children of lone-parent families comes in next year, it will be seven years since the public fuss and row took place which caused Richard Crossman to take action and to initiate the Finer Report. Of course, the production of the report took too long. The best is often the enemy of the good. In this case the result is such that far too long a time will have 371 passed before anything has emerged to help these very needy people. Of course, by no means the whole body of the report can be implemented at once.
But this situation shows up clearly the inefficiency of Parliament. I hope that the Government take this to heart and consider again what they can do to replace the guaranteed maintenance allowance that was proposed in the Finer Report. I hope that they will introduce some provision as early as possible.
Lastly, I return to the main theme of the Bill—namely, the benefit for the first child. It does not seem from what the right hon. Lady said that the benefit will do much to help overcome wage-push inflation. Will it help those who are demanding higher wages in order to keep up with inflation to find that their income is being transferred from the husband to the wife, as appeared to be the case from what the right hon. Lady said this evening? Will the families themselves in total be better off? Is it only a transfer of resources in that what is now paid in tax relief to the father will be paid in child benefit direct to the mother?
Will there be any new money coming into the scheme, or is it based on what the Treasury call revenue neutrality or some such bureaucratic expression? Is it to be on that basis that the scheme is being introduced? Let us have some more information about that. There would have been more interest on the Government benches and on the Opposition benches if we had thought that the scheme would do something to bring more cash into the hands of the very needy families on low wages, and particularly those who are on supplementary benefit.
§ 9.25 p.m.
§ Mr. David Penhaligon (Truro)
I sometimes think that we could save this establishment a great deal of money if we held debates on social services in one of the Committee rooms. It would reduce the amount of light and heat required. Indeed, we would look rather cosier if we sat somewhat nearer to each other than is the situation here with the few hon. Members who seem to be interested in this general subject.
In my short political career I have noted a great deal of opposition to the 372 whole idea of family allowances. I think that most hon. Members must have experienced that feeling at one time or another. There is without doubt a substantial body of public opinion against large families. Indeed, I should have to give that sentiment substantial support. But the suggestion that people increase the size of their families to rake in the benefits of the family allowance is one of the funniest arguments that I have heard advanced at any meeting I have attended.
We do not know what the benefits will be, but, as they are now, the rest of Europe has substantially greater benefits than we have. There is little sign that in European countries the increased family allowance greatly increases the size of families.
The real point about the Bill, as has been mentioned several times, is that for the first time for a very long time we have an attempt at tackling poverty within the family. The Liberal Party has long argued that this is the easiest and most effective way to do something about the problem.
We are delighted that in future the first child will have an allowance. I suppose that I should declare an interest, being the father of a two-year-old son. But I know from my friends and my own experience that the first child, when the wife stops working, is probably the biggest shift in a family's financial position that is experienced for many years. It is probably the biggest shift in one's financial position until the great day one retires when instead of bringing home the normal wage, one is on pension. Therefore, the first child allowance will do something to help in that area.
The Liberal Party is more than disappointed to hear that it is impossible to bring this allowance in before 1977. I think that alumina cement has become one of the most useful excuses that Governments of this country have ever had. I have heard it blamed for three things that we have not done in recent months. I understand now that alumina cement has stopped us paying out the allowance for the first child before 1977.
Some of the criticism that has come from this side of the House about the Government not bringing in this allowance until 1977 has raised a wry smile on my 373 face. The hon. Member for Ealing, Acton (Sir G. Young), who has left the Chamber, said that the Government will have taken three years and four months to implement this idea, and therefore, the fact that the Conservatives took three years and eight months not to implement it made the Conservative Government's record as good as the Labour Government's record. The difference is that at least in the three years and four months than this Government have taken they will have brought it in. Therefore, some credit is due to them, at least from the Liberal Party if from nowhere else in this Chamber.
I suggest that there should be a regular review of the benefit. We went from 1970 to 1974 without any change being made in the family allowance provision.
The Child Poverty Action Group has circulated a memorandum—no doubt most hon. Members have received it—asking that the family allowance should be reviewed at six-monthly intervals. I suppose it is a tragic sign of the times that people talk about reviewing benefits at six-monthly intervals. I should prefer the Government of the day to take effective action to stop the inflation which is rotting our society than to review the child benefit at six-monthly intervals. But if the Government will not take action to curb inflation, the Liberal Party must support the idea, sad though it is, of regular reviews to keep the benefit up to date.
It is difficult to make specific comments about the Bill because no figures are attached, but it recognises that as a child gets older he gets somewhat more expensive to keep. As I said, it is difficult to make any comment one way or the other until the figures are before us, but it is at least recognised that as a child gets older the benefit will increase. That is appreciated.
The great thing that the Bill has done is to reduce one of the anomalies that has long annoyed me because I represent one of the poor areas of this country. Sometimes when a Budget is presented the Minister of the day raises the tax allowance. The headline in the newspapers the next day is, "£60 a year for all families in Britain". I know that in my part of the country only too often the people who most need this extra money 374 pay no income tax and, therefore, the allowance does not go to them at all. Obviously, this piece of legislation will stop that.
What disappoints me is that it will produce another anomaly. The idea of making the benefit tax free sounds seductive, but it means that in real terms and in terms of extra income to a family it will benefit the richer, higher taxpayer much more than the lower taxpayer. If this benefit were taxed, could the Government say by how much they increase the benefit? It would be interesting to know by how much the benefit would increase the income of people who at present do not pay any tax if it were taxed and therefore the money recouped to the Government were redistributed back through the same scheme. The Government say that they want to attack poverty. I should like to know the answer to this question because these are the people about whom I am disturbed and, from what other hon. Members have said, they, too, are concerned about them.
§ Mr. Kenneth Clarke
The hon. Gentleman has said that the case would be stronger at the moment if the Government could do something about the level of tax thresholds. At present families with very modest incomes indeed are paying tax. Therefore, what he is proposing would hit the extra 1 million poor people who are paying tax this year even harder, compared with last year, as a result of the Chancellor's Budget.
§ Mr. Penhaligon
What I am proposing could not possibly hit anyone harder. The hon. Gentleman is right when he says that it certainly would not help as many people as it might have helped a few years ago when the income tax thresholds were rather more realistic. To that extent we could say that inflation has removed the problem, but it has certainly removed it in a very cruel way and not a way about which my party is very enthusiastic.
The fact that the abolition of the wage-stop has been slipped into the Bill is to be welcomed. I should like to put on record the Liberal Party's great excitement—perhaps that is too strong a word—our great delight that this ludicrous little rule has at long last been deposited in the right wastepaper bin.
375 It has been said that apparently this special allowance will be given to the first child of single-parent families and will be counted against supplementary benefits. It is my experience in my constituency—and I rather suspect that all hon. Members have met people in this category—that if this is so and if the clawback is 100 per cent., the people whom I thought we would be helping most will now be missed out. I hope that the Minister will have an opportunity to explain in more detail what the percentage clawback will be or, if it is 100 per cent., perhaps he will rethink it and do something to help those in this category.
This is a good day for this House. It is a day when a reform has been put before us which is much needed and much welcomed. I am pleased to say that basically the Liberal Party supports the Government in what they are doing.
§ 9.33 p.m.
§ Mrs. Margaret Bain (Dunbartonshire, East)
Most right hon. and hon. Members who have spoken in this debate—I am disappointed that few people have been present—have spoken in terms of the Bill against the background of eradication of poverty.
The Scottish National Party welcomes any move that will eradicate poverty. Only last year we launched a very imaginative policy called "The War on Poverty in Scotland". We drew attention to the fact that 1 million people in Scotland lived on or near the poverty line. Our political opponents pooh-poohed this idea and dismissed it as sensationalism. Yet only recently we have had every statistic that we produced on poverty in Scotland vindicated in reports from sociologists and, indeed, from Government Departments. Most recently the Department of the Environment, in its census "Indicators of Urban Poverty", showed that 115 of the 120 worst areas in the United Kingdom in terms of multiple deprivation were in Clydeside, Scotland.
It is against that background that we welcome the principle of the Bill as it has been put before us today. We agree wholeheartedly with the principle of the benefit on the birth of a first child. This has been part of our election manifestos 376 throughout the past years. Therefore, we can do nothing but welcome it. I do not need to remind the House of the problems of expense when the first child is born. However, I want to remind hon. Members that it is not merely that the wife stops employment but that the whole tax allowance available to a woman is lost in that situation.
We also approve of the principle that this payment should replace tax relief, because this means that more people will escape the poverty trap and that people with the lowest incomes should benefit from this situation We would welcome frequent reviews of the situation and, perhaps, an index related to the cost of living. However, we realise the problems involved in this matter. We hope that the Committee will examine it in greet detail.
We congratulate the Government on finally recognising the needs of one-parent families. I can only repeat, however, our disappointment as expressed in a motion on the Order Paper that this payment will not be made at an earlier date and will not be a larger sum. Given the decline in the purchasing power of the pound, £1.50 will be virtually meaningless in early 1977.
On the general question of the amount of the child benefit, I hope that when we get round to discussing the amount the Government will produce something much more realistic and perhaps something that will bring us into line with the rest of Europe. Unlike the hon. Member for Sutton Coldfield (Mr. Fowler), I do not believe that we need to remain in Europe to come into line in this respect, but that is a matter for another debate.
My hon. Friend the Member for Moray and Nairn (Mrs. Ewing) has consistently questioned the Department responsible and asked whether it can produce monetary comparisons of family allowances paid in the United Kingdom with those paid in other EEC countries. Consistently the reply has been that it is impossible to produce such statistics. This interest on the part of my hon. Friend was noticed by certain groups, which sent us their individual calculations. In every comparison the United Kingdom showed up very badly.
377 Taking this on an annual basis, for two children under the age of five the United Kingdom paid out £46.80 in family allowances, Belgium paid £418.04, Holland paid £271.33 and Eire, which is the closest comparison managed, paid £67.20. I should like the Department to comment on those figures. I am very willing to send a copy of the statistics to the Department for its comments and for other comparisons.
Will the Minister indicate whether the Government intend to abolish the earnings rule as applicable to one-parent families? I realise that there has been the promise that the amount that a one-parent family may earn before the supplementary benefit is deducted is to be doubled at some point in the future. Will the Minister indicate when this will be and whether the supplementary benefit will be deductible against the child benefit allowance to one-parent families?
In general, the Scottish National Party welcomes all these attempts to eradicate poverty among children, or at least to make progress towards that end. Scotland has had more than her share of socially disadvantaged children. I should like to draw the attention of the House yet again to the report "Born to Fail" published in 1973 by the National Children's Bureau. I make no apology for mentioning it again because all those who claim to be interested in the welfare of our children should have the words of this report carved on their hearts.
The report stated:One child in 16 was the proportion of disadvantaged among all children in Britain"—that statistic, in itself, is appalling—but in individual regions the prevalence varied. In Southern England there was only one in 47 children. In Wales and Northern England, on the other hand, there was one in every 12. But the most disturbing proportion was found in Scotland where one in every 10 children was disadvantaged. Eleven per cent. of the 11-year-old British children lived in Scotland, but 19 per cent. of disadvantaged children were found there.It is against this background that we welcome the Government's moves, and it is this particular aspect of the Bill that I am particularly interested in.
The SNP also welcomes the abolition of the wage-stop. The Child Poverty Action Group stated in 1972, following some extensive 378 research on the operation of the wage-stop thatThere was evidence of considerable financial hardship and in most cases very real deprivation. This is only to be expected, since the families were having to manage on a sum of money officially defined as inadequate to meet their basic needs.I accept that the numbers of people coming into the wage-stop category have fallen quite substantially owing to the administration of the family income supplement and rent rebate and allowance schemes. However, it is true to say that we all welcome and approve the abolition of this most detested part of the whole supplementary benefit scheme, but I am very disappointed that it has not been extended to the cohabitation rule, which is undoubtedly unjustifiable in the circumstances.
On the whole, however, we welcome the principle of this Bill and hope that when the Committee meets it will get down to the administrative details of the matters involved and make this a very meaningful law on the statute book.
§ 9.42 p.m.
§ Mr. Ted Leadbitter (Hartlepool)
It must be understood by the Front Bench that any criticism at this stage of this proposal in the Bill is intended to be constructive. If it appears to be a little heavy because of the lack of information in the Bill, that is only in order to use the time which is now available between the processing of the Bill through Parliament and the dates when the orders in council are issued to take heed of certain warnings.
At the end of the day it will not be very useful to those who are in receipt of family allowances or of social security benefits for their families now, or indeed for one-parent families who come within the interim period, if the statutory instruments brought before the House produce nothing different in terms of financial improvement compared with the situation today as far as the purchasing power of the money they get is concerned.
If that should happen, two things would become obvious to the recipients of these benefits. First, they would see that we are just using another name for the same thing. Secondly, they would draw the conclusion that the operation of Clause 17—and this does not appear generally in 379 publicity and will not appear in future, because it is past experience—will mean that the gains they have had in terms of social security benefits will be reduced by the amount of benefit they receive for the first child.
We have to accept in the House that the people who are receiving benefits are not lawyers and are not necessarily professional people, who, as a matter of fact, can live without the benefits at all. The people receiving them are ordinary people with problems which are proportionately higher, in terms of income to meet their cost of living, than those of the affluent sections of the community. If they are getting money now, or between now and 1976, which is the interim period, or between 1976 and 1977, which is the period for putting into effect the whole of the scheme, and they are still no better off, they will inevitably draw the conclusion that Parliament once again has used another name for the same sort of thing.
It is no use getting rid of family allowances and introducing child benefits if in terms of what people receive the situation is no different.
Why has the Bill been introduced at this point when the country is anxious hear about another subject, namely the economic crisis? Why bring in a Bill like this now when it will not get news coverage, so that those who are directly concerned will not feel the full impact of the Government's good intentions? I do not prejudge those intentions. I merely warn. The Bill need not have been introduced now. There is no one in the House or in the Department who knows what the benefits will be. There is no possibility of evaluating the Bill. We cannot say with certainty, once the Bill leaves us, what validity the benefits will have by the time we come to deal with the statutory instruments. Major changes may be required because of changing circumstances.
§ Mr. Alec Jones
Surely one-parent families will know, as a matter of fact, that from next April they will receive £1.50 a week which they are not receiving now. That has nothing to do with any long-term plan.
§ Mr. Leadbitter
I would remind my hon. Friend that that is not the position. 380 Such families may well know that in 1976 they will get the interim award of £1.50. I would call it a derisory award. I do not think that that would get me by taxi to King's Cross and back. We ought not to shout too loud about £1.50. If my hon. Friend says that these people will know what they will receive in 1976, there are three consequences flowing from that. The first is that the purchasing power of that money will not be the same next year as it is today. Second, the value of the money will have been eroded before they get it. Third, if such people are receiving supplementary allowances, Clause 17 says that what they are to get will be reduced accordingly so that they will in fact get little more.
We could tell the country that the Government intend to pay the one-parent families by April 1976 or thereabouts—because the date is not specified—simply by making a public statement to that effect. That is quite different from producing a Bill which might have to be altered. This is perhaps why the House is so empty. May be this is one of the reasons why hon. Members with some experience can see that this measure may well have to be re-examined in the context of the economic conditions of 1976. If £1.50 is simply the amount of money that will take me to King's Cross and back by taxi, it will not bring great wealth to one-parent families.
I see in the Explanatory Memorandum that this will cost only £21 million. Is Great Britain so poor that she cannot pay that now? That is a pertinent question. That is exactly the amount of money we spent on food subsidies to keep Hovis and other companies happy to hold down their prices for a very short period. We gave to the shareholders of the bread producers £21 million for a very short-term holding of prices. So are we saying that we cannot afford to give one-parent families the £1.50 now at a similar total cost?
If we want to have our priorities right at a time of economic crisis when we have not yet got control of inflation, I should have thought that my party above all parties would have said that the major priority here is to protect the families in the most vulnerable section of the community, the poverty area. It is a priority now. I should not have thought 381 that it needed a Bill. It could have been done.
This is a pertinent criticism which the Department may well not like, but I recall a great Secretary of State for the Department of Health and Social Security, who was then responsible for pensions, trying to urge upon the House and upon the Labour Party not so many years ago the need to pay a pension in a short period of time because the urgency was there. It was real, and everybody recognised it. But the Department advised the Minister that it could not be done. Subsequently the pressure of public opinion, to which the House of Commons responded, made it possible to implement the payment of the pension in double-quick time, when the will was known to be there. Similarly here, if there is an urgent need to deal with this very special area of one-parent families—and my party has made some play on it—do we have to take 12 months? Do we need a Minister to come here with a Bill which says quite clearly and distinctly that the soonest it is expected that this can be paid is April 1976? What sort of expectation is that? What am I to say to my constituents during the coming months, with the pressures of inflation putting up prices to a greater extent than the £1.50? Am I to say, "Wait until next April for it"? Am I to say that it is "expected" to happen in April but that it is not a firm promise? Am I to say that they may get the £1.50 then, remembering that it is being eroded all the time, even while I am talking to them? That is not the kind of situation that brings credit to my party. I say this in the House of Commons deliberately.
Coming to the matter of family benefits, again to be expected a year after that for the one-parent child, it is to be observed that we cannot find out in any way from any official, what is to happen. The fact is that they do not appear to know the value of these benefits. If they know and are not telling us, that is wrong. They cannot have it both ways.
We know one thing for certain. We know that the cost of implementing the scheme is to be £10.5 million a year and that there will be an additional sum of £6 million involved in its immediate 382 implementation. We also know that we shall have to employ 3,500 additional civil servants on the scheme. We know that part, but we do not know the amounts involved. We know exactly the number of civil servants needed to implement a scheme about which we know nothing.
My colleagues on the Treasury Bench may say that their hon. Friend the Member for Hartlepool is making a much more critical examination of the Bill than some more kindly members of the Opposition. But it is right that that should be so. It is my party which is introducing it. This is what the Labour Party manifesto said. We gave our word that it would be done. As a Member of Parliament, however, I do not like to be told about implementing a scheme the cost of which has not been evaluated. I cannot go to my constituents to tell them exactly what they are to get. What is more, I cannot say exactly what they are not to get.
For more than a decade, we have been talking in this House about simplifying our taxation system. Here we have a situation where we are to pay out a disgraceful pittance and the people who will be paid far more for administering the scheme will be tearing out their hair wondering how to cope with the complications of tax regulating and how they are to measure out the clawback.
It is a fanciful notion in a modern society to say that we intend to give this so-called child benefit but that we intend to claw back some of it, bearing in mind that we have no conception of the criticism which will be made of us when we receive irate people who have had great expectations from our manifesto promises.
I have dealt with Clause 17. If no one else is prepared to say it, I must repeat that the clause says clearly that the people who will be getting £1.50 will also be subject to a provision in the Bill which says that it will be given with one hand and taken away with the other. That is what will happen. It happens all the time. It is not just a Labour Government who are doing it. All Governments have done it. However, in practice, Members of Parliament have to try to explain this anomaly to their constituents, because it has never made sense to ordinary people.
383 I wish to make only one final point. I want to leave my colleagues on the Treasury Bench with some feeling that all their work has been worth while. My comment relates to Clause 18. The Government have decided to abolish the wage-stop, which is a welcome move. But again I ask why it cannot be done now. Why cannot the Government say to the Social Security Commission, "We want this abolished immediately"? It is based on a man's normal work, but the great shake-out in industry means that a man's normal work will cease to be his normal work. While he is awaiting his retraining—
§ It being Ten o'clock, the debate stood adjourned.384
§ Question again proposed, That the Bill be now read a Second time.
§ Mr. Leadbitter
The Bill is welcome, but it falls short because it does not deal urgently with an urgent problem. It ends the wage-stop, a step which is welcome and overdue. The Department has done a first-class job in making its intentions known, but I hope that during the coming year, as we approach the interim payment for one-parent families, followed in a subsequent year by the implementation of the scheme, the dates will be reviewed. I hope that the Government will take account of the criticism that this benefit should not be just a new name for an old idea. It must transform poverty and bring a sense of justice to the needy in a fast-moving society, who depend 100 per cent. on the common sense of this House bringing the reality of our manifesto to bear on the Government's good intentions.
§ 10.3 p.m.
§ Mr. Kenneth Clarke (Rushcliffe)
Like almost every other speaker, I express a welcome for the Bill, but after the scathing attack upon it by the hon. Member for Hartlepool (Mr. Leadbitter), I cannot be accused of unfairness if I say that our welcome is particularly qualified.
What is being welcomed is the structure in the Bill which will give future Governments the opportunity to begin to develop the kind of child benefit and family endowment scheme that we all want. As many hon. Members have said, the structure at the moment is an empty shell. We do not know whether the Government will put their money—or rather, our money—where their intentions are professed to be in the Bill. We do not know the level of benefits or what the reality will be when the Scheme is introduced.
The hon. Member for Hartlepool asked a pertinent question—why is the Bill being introduced now? I can offer one explanation—that this Government are rapidly acquiring a deplorable record over family poverty, which is getting steadily worse day by day in the middle of the present crisis, so they have produced a Bill full of good intentions for the future. Those good intentions should not be allowed to be a fig leaf for the fact that they are presiding over a great increase in family poverty.
The structure proposed by the Bill is one on which we are all agreed, because it has an impeccable all-party parentage. It is taken almost completely from the Tory tax credits scheme debated in the last Parliament. It is a desirable feature of that scheme. As my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) said, we regret that the Secretary of State's opposition—presumably her personal opposition, since she was alone in her attitude on the Select Committee which considered the scheme—prevents us from going further.
There is no reason why similar enabling legislation should not be brought in to put into effect the outline of a tax credits scheme. We accept that in such legislation the actual figures would have to be worked out later as in this Bill, as one discovered what the resources would 386 allow the Government to do in a time of crisis.
Meanwhile, the structure is this desirable amalgamation of family allowances and tax allowances. It has the desirable effect of extending the payments made direct to mothers to cover the eldest child. We have always been committed to this. When we were in Government we were committed to introducing this payment for the eldest child and paying it direct to the mother.
The Labour Party has been committed to it as well, and has made it part of the social contract, which might well have doomed it to oblivion along with most other parts of that illusory document. Fortunately, it is the one part which seems to have survived.
We are producing a worthwhile structure which will enable us to fill an important gap in the system. The worst gap in our system of family provision has always been that the eldest child was not covered. Almost half of all children are the eldest child or the only child. As the hon. Member for Dunbartonshire, East (Mrs. Bain) reminded the House, in nearly everyone's experience the most expensive child for any household is the first child. There is no need to emphasise that point.
Having welcomed the structure and said how glad we shall be to see it get on the statute book, we must turn to the questions posed by the Bill which have been referred to by all hon. Members who have taken part in the debate. Those questions are the amounts we shall see in the end, the timing and meanwhile the delay that we are experiencing before the scheme is brought into operation.
The Bill has to be seen against the background of mounting family poverty. It is all very well for the Secretary of State to take great credit for the good intentions contained in the Bill. I could almost accuse her of speaking in sanctimonious terms, in heart on sleeve fashion, about her great concern for family poverty and how glad she is to bring forward this legislation.
When one looks at what the Government are doing rather than what they are saying, it is apparent that the failure of the social contract and Government policy on inflation are hitting the poor 387 in particular. The social services are not protecting the poor. The Chancellor in his speeches is now beginning to talk about the threat to the social wage, which is obviously worrying members of his own party and indeed those interested in public life everywhere.
In many ways the social wage, in real terms, is already being hit by Government measures. The Government recently increased the family allowance. I give the right hon. Lady credit for that, although it does not take it back to the real value it had in 1968. Before she bounces up to say that we did not raise it at all, I must point out that we introduced the family incomes supplement, which is the most important provision one-parent families have. It is used most by them. One-parent families in work find that it is probably their best safeguard at the moment against real poverty.
Unfortunately, alongside the increase in the family allowances one has to look at the Chancellor's failure to raise tax thresholds, which has hit many families—not only those of modest means but those who are poor. In this Budget, at a time of raging inflation, no increase has been made in the child tax allowances. I trust that that has not been done to keep down the cost of introducing this measure when we get to 1977.
As a result of the Chancellor's activities, a million more people are now paying tax than when the Labour Government came into office. The people most badly affected are large families with low earnings. The Child Poverty Action Group, which many hon. Members have quoted, has done extremely valuable work. I trust that it would do as good a hatchet job on a Conservative Government's record if we blundered into the same mistakes. It has done valuable work in relating the increased earnings which people have had to have in the terms of the social contract, or in order to keep pace with prices and earnings over the past year, as well as the increased family allowances, to the increased level of tax which all poor families are paying. It has shown clearly that the real living standards of low-earning, large families, have dropped and are still dropping.
388 I quote one table from Mr. Frank Field's Child Poverty Action Group memorandum showing the net income changes of a two-parent family earning £25 a week in April 1974. If such a low-income family's average income had risen in line with average earnings it should now be £33 a week. But the effect of the increase in family allowance and the increased tax that such a family is paying is that if it has one child it is £228 a week worse off; with two children it is £1.83 worse off; and with three children it is 93p worse off. That is the valid background against which to judge the Government's lack of figures in the Bill and the fact that we are to wait until 1977 before the Bill will mean anything.
Let us look at what the Bill does, and how it will affect poverty and whom it will help. First, I welcome the abolition of the wage-stop, which my hon. Friend the Member for Kensington (Sir B. Rhys Williams) also warmly welcomed. The time has arrived to abolish this rule. When we were in office, as a result of our family income supplement scheme and the rent rebate and allowances resulting from the Housing Finance Act, the number of people affected by the wage-stop dropped dramatically. I am glad to hear that only 5,000 people are now affected and that the wage-stop will soon be removed.
There are those who fear that the abolition of the wage-stop will take away a precaution which prevents people being better off in benefit than they would be in work. But it is an extremely ineffective and unfair precaution. It has dwindled to a point where it is not worth pursuing for the 5,000 largely low-wage-earning families with numerous children badly affected by it.
For the rest, we must start looking at the amounts, which cannot be specified in the Bill, because the Secretary of State is waiting until she sees what resources she has in 1977. In view of the Chancellor of the Exchequer's warning words, that is very wise. One cannot help saying that her difficulty is that so much was done for pensioners in the uprating last year, and so much is proposed for them in the future, that the Government no doubt have restricted 389 financial resources for other worthwhile social services improvements.
Family allowances, at £1.50, have not gone to the 1968 level in real terms. The Secretary of State estimates that if the Bill is to have neutral cost in 1977, £1.94 is the break-even point. I hope that the Under-Secretary will confirm that nobody will be worse off in 1977 than he is now, and a benefit of that level implies a child benefit of more than £2 a week. Perhaps the Under-Secretary has some idea what figure it is.
If the hon. Gentleman says that we are being too suspicious about the amounts, that we are suspicious that the Government are professing noble intentions to get over their lack of action now, I remind him of what my hon. Friend the Member for Ealing, Acton (Sir G. Young) said, that the White Paper on Government expenditure makes no provision for increased expenditure in this area. My hon. Friend the Member for Wells (Mr. Boscawen) also pointed this out.
Therefore, we need an assurance that no one will be worse off. We also need as soon as possible an indication of where the Government think that they will get public money from if the payment is to be anything other than a purely neutral transfer from the husband to the wife, from tax allowances to family allowances.
Meanwhile, whatever the amounts, one point that will have to be considered in Committee is why the child credit system should not be made subject to the annual review. Neither party has ever been able to accede to the pressure in Committees to include family allowances in the annual review. Years and years have gone by, including years when a Conservative Government were in power, in which the family allowance has been steadily eroded. We still have not returned to the real level of seven years ago. Now that we are amalgamating tax allowances with family allowances, it is difficult to justify a situation in which these new child benefits will be kept out of the annual review procedure. I should be interested to hear what arguments the Government will produce at an appropriate stage to try to resist inclusion in the annual review procedure so that whatever figure is chosen at least keeps in line with inflation thereafter.
390 But in the light of what I have said, particularly about what is happening now in respect of family poverty, the acceptance by the Government of April 1977 as a suitable time for introducing the new scheme is almost disgraceful. My hon. Friend the Member for Sutton Coldfield explained, and it was not denied, that April 1976 was implied and accepted by the Secretary of State only a few months ago. Every hon. Member who has spoken in the debate, including the hon. Members for Welwyn and Hatfield (Mrs. Hayman), and Stockport, North (Mr. Bennett)—and I do not take party advantage of their reasoned speeches—has expressed disappointment at the April 1977 date.
We find ourselves bogged down in almost ludicrous argument about high alumina cement, in Washington New Town, County Durham. In all the arguments we have had in pressing the Secretary of State for statements about the timing of the new scheme, it is remarkable how in deus ex machina fashion, high alumina cement has suddenly arrived to provide the Government with, much to their expressed regret, a quite practicable excuse for not being able to introduce the new benefit before 1977.
I am sorry that the Secretary of State repeated several times that it is impossible to introduce it before that date without mentioning the other problems that were authoritatively reported in New Society and The Guardian, amongst other journals, only a few months ago. In Cabinet Committee, in particular in the so-called anti-poverty group that the Government have apparently established, there have been great battles between the Secretary of State and her colleagues, particularly her Treasury colleages. The result was, and we believe that this lies behind the delay and the Government's marked lack of enthusiasm in searching for office accommodation, that the Secretary of State was refused the resources by her Treasury colleagues to implement the scheme before 1977.
I suspect that there is very little agreement between her and the Treasury about what this scheme may mean and that this is the principal reason why no benefit level is stated for 1977—[Interruption.] The Secretary of State laughs, but I will hear what the Under-Secretary says about the position within the Government. I 391 cannot believe that if resources were available, if the party were prepared to honour its election commitment, and if the Treasury and the Secretary of State were agreed, they would still have been unable to include figures in the Bill and that we would be told that high alumina cement at Washington New Town has prevented the scheme from going ahead.
The Under-Secretary of State for the Environment has not been very forthcoming in reply to parliamentary Questions about this great office block at Washington. He will not produce any architects' reports for the House to examine, although he told me on 12th May in a Written Answer that the delay caused to completion of the block was likely to be "about 12 months". To be told that it might be "about 12 months" implies that it might be more. If the delay is longer, will the scheme be pushed back beyond April 1977? Are the Government trying to tell us that there are no other office blocks within reasonable range of the highly skilled people in County Durham who, it seems, are so indispensable to the Government? Are they saying that with the best will in the world the Government and the House of Commons united cannot find an answer before April 1977?
The example of Germany has been quoted in respect of getting new benefits quickly into effect. The Secretary of State explained how she found on her visit that the German experience was quite unsuitable for this country, and she has tried to explain that to the House before. However, her defence and explanation of that view seems to many of us to show how utterly wedded the Secretary of State is to the old-fashioned features of our social security scheme, so that when she sees a modern scheme being applied in an up-to-date industrial country she believes that it cannot be done in the dear old United Kingdom.
She has made particular reference to how in Germany payment is made monthly or even quarterly, and how utterly unacceptable this is in the United Kingdom with our once-a-week payments. In my opinion the day will come, if we are ever to modernise our social security system, when we shall have to start thinking about abandoning the payment of the once-a-week benefit, with the little lady 392 going to the post office on a Tuesday to collect her money as an indispensable feature of the system. If we are to begin to approach the level of administrative efficiency and, hence, effectiveness in social terms, of the much better Western European systems of social provision, these are the terms in which we must begin to think.
§ Mrs. Castle
Desirable as these long-term objectives may be, is not the hon. Gentleman contradicting his own earlier demands for urgency? Secondly, does he think that it would be possible in this country in the near future to introduce payment by cheque, as in Germany?
§ Mr. Clarke
As regards urgency, the Germans were able to pay family allowances for the first child within six months. On the second point, of course benefit cannot be paid by cheque now. The Secretary of State implies that that is and ought to be the situation and that there should be no attempt at progress or to try to explain to the public that the fact that we have not accepted the use of the banking system of cheque payments is a serious limitation. That applies to many areas as well as to social services provision.
The Government mention delay, which we find inexcusable. I do not say that the Opposition disbelieve their comments. There is a problem at the Washington office block in County Durham. We believe that with the political will and some real urgency in the matter, payments under the scheme could be made by 1977.
I shall deal with the interim benefit for one-parent families. I shall not tease the Government—that was done effectively by my hon. Friend the Member for Sutton Coldfield and my hon. Friend the Member for Kensington (Sir B. Rhys Williams)—with the fact that they voted against this recommendation on 29th January 1975 yet have now brought it forward for adoption. The Government have adopted this measure as a sop because of their failure to introduce the main scheme for everyone by April 1976 as they originally intended. The interim scheme is open to serious disadvantages. Although we shall not oppose its introduction in 1976, we are relieved that the proposal will stand as an interim measure for one year only.
393 The hon. Member for Welwyn and Hatfield pointed out that the fact that supplementary benefit would not be disregarded meant that the scheme would be of no assistance to the poorest families, those one-parent families, about whom we are most concerned and who are the cause of the urgency. Anyone who receives more than £1.50 in supplementary benefit now will not be one penny better off. It is only the one-parent families not receiving that level of supplementary benefit who will enjoy an advantaged position.
I accept the point that there is some difficulty in disregarding every new benefit for supplementary benefit, but for one year there can be no great objection in principle to disregarding at least part of the new benefit so that those poorest one-parent families will receive help in the fairly near future.
The hon. Member for Stockport, North made the point that if we make special provision for one-parent families in advance of the other families we shall introduce another application of the cohabitation rule into the social security system. That will presumably be one of the major administrative problems of the new interim benefit system. I do not think that we can abolish the cohabitation rule so long as there are benefits which are not payable to married couples or married women. There must be lone-parent or single-parent benefits paid to people who are genuine lone parents and genuinely single parents. We cannot pay a level of benefit to unmarried people which is not given to those who are married. In practice that would be unpopular and difficult to apply. However applications of the rule should be kept to the minimum. It is unfortunate that the effect of the interim sop of a new benefit payable to one-parent families will be to introduce another cohabitation rule into the system.
Let me look ahead beyond the interim measures to when the scheme is operating and deal finally with one problem that will arise for all future Governments when the child benefit scheme is implemented. We have all accepted that one effect of amalgamating the tax allowance system with the family allowance system is that the take-home pay of men will be reduced so as to increase the independent family income of their wives. It 394 may well be that that is just about all the Bill will achieve. As my hon. Friend the Member for Kensington said, what will result if no funds are forthcoming is a mere transfer. The House should brace itself for that and try to accept it. We have all accepted it in principle. We must accept that in many ways it is a good thing and get on with phasing in that change as rapidly as possible. I do not relish a long period of phasing out tax allowances because no one can bring himself to accept the short-term unpopularity which might result if the change is not explained properly to wage-earners.
It was not too far-fetched of my hon. Friend the Member for Wells to suggest that the Government might think of playing about with the scheme as a consequence of the timing of an election. It is not altogether unlikely that 1977 will be a pre-election year. I trust that there will be no delay in beginning the phasing out of the tax allowance scheme because in a pre-election period the Government cannot contemplate reducing men's take-home pay.
We are used to putting on the pay slip what a person is actually getting and not what he is not getting, other than the tax deduction. It would be helpful to give a weekly notification to the husband of the amount of child benefit that he is earning. Something should be done to show him that his family income is not falling. Most women welcome the family allowance because of the degree of independence is gives them over one part of their housekeeping money and because they are assured of direct access to it on a particular day of the week. This independent income for the wife may help to overcome the wider problem that many men who receive considerable wage and salary increases do not adjust quickly enough to giving their wives an increased housekeeping allowance. That is a matter which we can contemplate in the future. It is a pity that the future is so far off and that we do not know how much money we shall be talking about.
At least that ultimate objective is shared by both sides. We are talking about means and timing and not about the ends. The main end that unites the House is the desire to eliminate the embarrassing and ugly level of family 395 poverty that still exists in this comparatively prosperous country. That common desire enables us to reach complete agreement on the broad principle of the Bill and to give it an unopposed Second Reading.
§ 10.28 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Alec Jones)
During the whole debate and in almost every speech the Government have been pressed either to do more or to implement the proposals more quickly, and sometimes to do both. My right hon. Friend and I welcome such pressures from inside the House and from bodies outside. When properly applied, those pressures act as a catalyst and help to speed up improvements in our social security provisions. Jointly, we can do as much as possible as quickly as we can and that, in the words of the hon. Member for Rushcliffe (Mr. Clarke), is the common aim.
The Bill is another important improvement in our social security provisions. It is in line with our manifesto commitments and it is in line with the promise we made to the people. It is another of the promises which we have kept. The manifesto said that we would introduce a new system of child cash allowances for every child, including the first, payable to the mother. I was glad, therefore, that almost without exception the Bill received a general welcome and the approval of the House. At least, I hope that it will receive the approval of the House. Now that the Opposition have decided that they will not officially vote against it there is a reasonable chance that it might receive a Second Reading.
The whole purpose of the Bill is to provide help for children. As such we have chosen to sustain families as units. It seems to me that the family as a unit is an important part of our social structure. It is necessary that when we examine the Bill—and having listened to all the speeches and heard the various suggestions put forward, it seems that we shall have an active time in Committee, although I hope a short time—we do so against a certain background. I would not like to say that I would welcome with enthusiasm on the Committee all the hon. Members who have spoken to 396 night, but fortunately the choice is not in my hands. I believe that we should examine the Bill against the background of the considerable programme of social security legislation which we have already carried through. Even now certain proposals are entertaining the hon. Member for Rushcliffe and myself and a number of other hon. Members in Committee.
Another part of the background is the massive increase in the workload for our Department. I know that there is a considerable temptation to refer constantly to bureaucratic inefficiency or difficulty, but I must say, having spent a considerable time in the past six months visiting our local offices and regional offices throughout the country, that it would be extremely unwise for any Government not to take fully into account the work which, in the main, is carried out loyally and faithfully by our staffs in local offices. When the House passes legislation, that does not make even one benefit payable. The benefit is paid only when our local office staffs have done their work.
I invite the House to consider what we have done and the extent of the burden which our staffs have accepted in the past 12 months or so. We had the uprating in July. It was the fastest up-rating of all time. That was followed about seven months later by a further uprating in April. We had the first family allowance increase since 1968 paid out in April of this year. We have seen the first change in supplementary benefit disregards since 1966. We have had minor improvements and changes to deal with such as beef tokens, the extended £10 Christmas box and changes in the heating allowances, apart from the new benefits for which we have already legislated and which are now in the pipeline waiting to be implemented.
Bearing in mind that background, when my right hon. Friend was confronted with the physical impossibility of implementing the child benefit scheme any earlier than 1977 and the size of the programme which she had in hand, I think it would have been fairly easy for her to take the easy way out. She might well have been forgiven if she had decided to let the matter drop in its entirety. However, my right hon. Friend decided that was not to be her course of action. 397 She immediately said "Who are the hardest hit families?" The answer came clearly from all quarters of the House, and certainly from organisations outside—namely, the single-parent families. My right hon. Friend sought to find some way of giving some help to those hardest hit families, and she came up with the idea of giving them the equivalent of family allowances for the first child? That is why the child interim benefit was devised. I accept that the child interim benefit is a modest scheme. It is inevitably so. Nevertheless, it means an extra £20 million in the pockets of one-parent families. That is not what we would have liked to do, but it was certainly not to be ignored.
§ Mr. Kenneth Clarke
If the Under-Secretary wants a direct answer to his question—who are the hardest hit families in this country?—does he accept that they are probably the one-parent families who are totally dependent on supplementary benefit for their income and that they are not being helped one jot by the Government's proposals?
§ Mr. Jones
The hon. Gentleman has forgotten the extent of the supplementary benefit increases which we have brought about. Indeed, he was a Member of the Committee when we discussed these matters. The hon. Gentleman knows full well the arguments used by hon. Members to the effect that the doubling of the disregards would bring about this sort of help to one-parent families. To suggest that nothing has been done is nonsense, and the hon. Gentleman is fully aware of it.
§ Mr. Jones
I am sorry that the hon. Gentleman does not agree. It is a question of trying to fit these things into a programme which makes sense to administer and carry out. It is all very well for the hon. Gentleman to shake his head, but it cannot be done merely by 398 decisions in this House. It has to be physically implemented by our staff.
My right hon. Friend in opening the debate said that I would give some further details of the interim benefit.
Who will qualify for this interim benefit? The answer is all one-parent families, except those already receiving a social security payment which allows for the fact that family allowance is not payable for the first child—for example, the widow receiving the widowed mother's allowance which already has a specially enhanced benefit rate for the first child. Such a widow's allowance is already £5.65 for the first child and £4.15 for additional children, thus allowing for the £1.50 difference for the non-entitlement to FAM for the first child. It is estimated that about 500,000 people will be within the scope of this interim benefit, of whom 100,000 are men who are the heads of one-parent families.
Within the overall total of 500,000, over 200,000 families are in receipt of supplementary benefit. I understand why a number of hon. Members have therefore made the plea that the interim benefit should be disregarded for supplementary benefit purposes so that these families should gain a financial advantage. But that ignores the fact, as I mentioned earlier, that we have made considerable increases in supplementary benefit to one-parent families in last autumn's increase, in the April uprating, and in the treatment of disregards.
I sympathise with that approach, but I must tell the House that to introduce such a disregard would be alien to the Government's overall policy of trying to reduce dependency on means-tested benefits. We want to see fewer families dependent on means testing. In the eight years that I have been a Member of this House I have seen successive Governments try to face this dilemma. If, every time we introduce a new benefit as of right, part or all of it is to be disregarded for the purposes of supplementary benefit, no progress will ever be made towards reducing the supplementary benefit scheme to its original purpose—namely, to provide a safety net for the family in exceptional or crisis situations.
Moreover, it therefore follows that since the interim benefit in effect extends the advantage of family allowances to the 399 eldest child in one-parent families, there would be at least as strong an argument to disregard part of the family allowance itself as to disregard the interim benefit.
Finally, there is the point that the benefit is an interim benefit until 1977, when it is subsumed within the larger child benefit scheme. I do not believe there is any suggestion—at least, I have not heard such a suggestion from the Opposition—that part of the child benefit in its final form should be disregarded for supplementary benefit purposes. But even with no disregard for supplementary benefit purposes, there remain over 250,000 people who will gain from the new interim payments. These are mainly single-parent families where the head of the household is in work. Here, of course, the largest benefit will go to the 45,000 families not in receipt either of family income supplement or of supplementary benefit but whose incomes are below the tax threshold.
§ Mr. Leadbitter
I have listened to my hon. Friend's arithmetic. Is he saying now that instead of the 500,000 people he mentioned who are to benefit from the interim payment in 1976, only 250,000 will actually benefit? Does he mean that the remaining 250,000 will be no better off because of the lack of disregards?
§ Mr. Jones
I thought that I had explained—I do not know whether my hon. Friend was present—that the numbers who will benefit from this particular interim payment will be about 250,000 people. But those receiving supplementary benefit will not benefit directly from this payment. However, we have already increased the supplementary benefit, as recently as April this year, and there is a further increase in supplementary benefits to come. That further increase will be in payment to those supplementary benefit cases even before this interim payment is made.
Several hon. Members, including the hon. Member for Sutton Coldfield (Mr. Fowler), my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) and the hon. Member for Ealing, Acton (Sir G. Young), stressed the need for some provision for uprating the child benefit.
§ Mr. Norman Fowler
Before the hon. Gentleman comes to that matter, I assume that he will be dealing with a point that has been made by the Opposition on a fair number of occasions? He has waxed eloquent about the advantages of this interim benefit, but precisely why did 275 hon. Members of his party vote against it two months ago?
§ Mr. Jones
If the hon. Gentleman wants an answer to that question, he may find it desirable to refer to the parentage of the amendment that was tabled on that occasion.
I want to comment on the fact that the Bill does not incorporate provisions for regular review of the child benefit rate. Some hon. Members have read into the absence of such provision sinister implications for the future of the scheme. There are no such implications. The reason for there being no review is quite simple. There is provision in Clause 5 for the child benefit rate to be fixed by regulations subject to affirmative resolution. It would be under this affirmative resolution provision that the benefit would be up-rated as necessary.
This provision goes beyond the present family allowances legislation, in which there is no provision at all for changing the rates and main legislation is needed for every uprating. In fact, it puts the child benefit on an equal footing with supplementary benefit and family income supplement, which can be uprated by regulations but have no provision for formal regular reviews. In our upratings of supplementary benefits and FIS we have quite clearly shown that we are prepared to use those regulations without any formal legislative review procedure.
The Social Security Act 1975 lays down formal provisions for annual review of benefits paid under that Act and requires uprating of those benefits in line with earnings or prices as appropriate. We do not propose that there should be anything similar for child benefit because it is a totally different kind of benefit, fulfilling a different purpose.
In the first place it is a new kind of benefit—a hybrid, which amalgamates a social security benefit with a tax allowance. In the second place, most of the people receiving it will be people at work, 401 and the benefit will simply form a tax-free addition to their earned income. In this it is totally unlike benefits such as pensions which form the main source of income of those who receive them. For these reasons it would not be appropriate to apply to child benefit the same sort of review provisions as run for straightforward social security benefits.
This does not of course mean that we shall leave the child benefit rate unchanged any more than they have been left unaltered in recent years. It will be raised from time to time in the light of inflation and other developments. But just as neither family allowances nor child tax allowances are subject to the rigid pattern of upratings that has been evolved for social security benefits nor will their successor benefit be.
I can understand rather more easily the criticism coming from my hon. Friends about the need for some legislative reform for uprating than I can when it comes from Conservative Members. I invite them to look at the record of family allowances since they were introduced in 1946. Tory Members may or may not be surprised to know that despite all the years when they were in power, family allowances were increased only twice. There was a time lag of eight years from 1956 to 1964 during which period there was no uprating and a further period from 1970 to 1974 when again there was no uprating. It ill becomes Conservative Members to suggest that we are somewhat laggard.
I wish to refer to the cohabitation rule as it applies to the child interim benefit. This is a subject which has been touched on by many hon. Members. I mention the subject and how the benefit will be administered particularly because there was an article in the Sun on Wednesday 30th April headed:Big New Sex-Swoop Warning".which suggested that what the paper called "sex snoopers" would be sent to check that lone parents were not cohabiting. That sort of wild exaggeration does not help anyone. It may sell a few more papers but it cannot do any good for those having to face the problem.
I am glad to provide an explanation which I trust will be a reassurance. Explanatory leaflets and claim forms for 402 the interim benefit will be in post offices from the beginning of January next. That might help my hon. Friend the Member for Hartlepool (Mr. Leadbitter)—I am sorry he has left the Chamber—about the date of implementation. All the information that will normally be required to decide an entitlement will be on the claim form.
The initial books will be issued by our network of local offices to run from 6th April 1976, and responsibility for the continued running of the scheme during the year 1976 to 1977 will then pass to a special unit at our Blackpool Central Office which will handle through the post all subsequent claims, and notified changes of circumstances. Of course, cohabitation will be a disqualifying circumstance since it would be both counter to the purpose of the benefit and grossly unfair to pay it where a man and woman are living together in the same circumstances as a husband and wife. Obviously if one of a couple—whether married or not—attempted to claim as if they were a one-parent family, we would have to react in a responsible way to such a fraudulent claim. But home visiting will not be part of the system, as I have already explained, and there will not therefore be the type of inquiries on the sort of scale envisaged by the newspaper report and possibly feared by my hon. Friend.
Account has to be taken of the fact that the interim benefit is designed for one-parent families. If there are couples living together, either inside or outside marriage, obviously such a pair cannot at the same time be living together as a couple and as a single-parent family.
§ Mr. Penhaligon
I asked about two single-parent families living together as man and wife who did not get the family allowance because each had one child. Will they still be excluded from this benefit?
§ Mr. Jones
I think I should want notice of that before being able to give an authoritative answer as to the kind of treatment that would be appropriate in such a case.
When we talk of this problem of cohabitation, I know, as do most hon. Members, of the difficulties which are bound to arise in operating this provision. 403 That is why I wanted to remind the House that the Supplementary Benefits Commission is currently reviewing the operation of the cohabitation rule, and the Secretary of State has asked the Commission to consider the desirability of any changes in the relevant provisions of the Supplementary Benefit Act.
I was also very pleased to hear the general support given for the decision to abolish the wage-stop. I was sorry that my hon. Friend the Member for Hartlepool seemed to think that we did not need an Act of Parliament, and that I needed only to wave a magic wand to deal with this matter. We did need this Act.
I am glad that it excited the Liberal Party. I have never seen the Liberal Party excited on anything before. It was quite an amazing sight.
I think that the major justification for the abolition of the wage-stop is that whereas in 1970 there were some 35,000 claimants, now with the family income supplement increases, also announced at the same time, that number will be down to under 500 people. This is the figure I have been given, and I am quite staggered. It is 5,000 at this present moment, but with the implementation, so I understand, of the family income supplement increases, that will be even further reduced. It therefore seems a nonsense to keep this sort of provision on the Statute Book when it only causes distress to many families desperately in need. I assure the hon. Gentleman that it causes more distress to members of the staff who have to operate it.
The hon. Member for Sutton Coldfield made some references to the tax credit scheme and claimed some parentage for it, as others have done from time to time. I will not argue about that, except to say that the idea of amalgamating family allowances and child tax allowances was contained in a Labour Party document in 1969. Be that as it may, if the tax credit were introduced at the level necessary to fulfil the sort of social aims behind the original Green Paper, that would be sufficient to float some 800,000 old-age pensioners off supplementary benefit. To introduce a tax credit scheme now which would do that would cost £3,000 million.
404 The hon. Gentleman was doubtful about my right hon. Friend's claim that the tax credit scheme would remove only one of the means-tested schemes. I have checked this, and I understand that family income supplement is the only means-tested benefit which would be replaced by the tax credit and that 44 means-tested schemes would still apply. I say that to confirm what my right hon. Friend said.
The hon. Gentleman also raised the question of the advertising of family income supplement. Obviously we shall continue that.
§ Mr. Norman Fowler
I shall not take up the further matter which is referred to in the Select Committee's Report. We are not seeking to persuade the Government to initiate the scheme straight away. We understand that it will cost a great deal of money. But we want them to declare in principle their agreement to the tax credit scheme, for the reasons that I have given. If it has also a Labour parentage, is not that another reason why they should do it?
§ Mr. Jones
The part that we are proud to claim is that contained in this Bill. However, I shall not pursue that further, because I have still a number of matters with which to deal.
One of the major criticisms made by a number of hon. Members concerned the timing. It was practically impossible for my right hon Friend to introduce the child benefit scheme, as she wanted to, any earlier than 1977. The building problem itself prevented it. If the hon. Member for Sutton Coldfield believes that these physical difficulties did not exist, I suggest that he visits the site and carries out an inspection of the high alumina blocks for himself. It is time that this ghost was laid to rest. Of course, there are all kinds of other difficulties involved in trying to implement a scheme of this kind, but the accommodation problem turned out to be insuperable.
The hon. Gentleman asked specifically about widowed mothers. The widowed mother will get child benefit for all her children, but it will not affect her total benefit income because of the adjustments between child benefit and social security child dependency benefits.
405 The hon. Member for Rushcliffe and others asked what was the level of benefit. Obviously it is not possible and not desirable to announce today the level of a benefit which is to be paid in 1977.
I conclude by repeating some words of a countryman of mine, James Griffiths, who said when he introduced the family allowance:… in the future all of us who take part in the passing of this Bill, who vote for it and help to improve it, will have reason to be proud of the fact that we have done something for the child life of this nation which will redound to the credit of the nation."—[Official Report, 8th March 1945; Vol. 408, c. 2290.]That may be considered a piece of Welsh exaggeration. If so, perhaps I may make another piece of Welsh exaggeration and say that this is a measure which is part of our development of a coherent policy in family support, and one which, as a Government, we are proud to have the opportunity to introduce.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).