HC Deb 16 December 1976 vol 922 cc1719-20
20. Mr. MacGregor

asked the Chancellor of the Exchequer whether he will take fiscal measures to help to deal with the problem of the poverty trap.

Mr. Joel Barnett

My right hon. Friend is well aware of the problems caused by the poverty trap and will bear them in mind in preparing next year's Budget.

Mr. MacGregor

Is the Chief Secretary aware that many of us on the Conservative side welcome the Chancellor of the Exchequer's recent recognition of something that we have been pointing out for a very long time—that for many income groups it pays not to work but rather to seek not to work? Is the right hon. Gentleman aware also that to a large extent this has been caused by the Chancellor's own action in not increasing tax thresholds sufficiently to keep pace with inflation, and that we shall not believe his words until he takes real action to deal with the problem?

Mr. Barnett

The hon. Gentleman should be careful about overstating the position. There is a serious problem, which we have recognised, but the poverty trap as such is not as fierce as is sometimes suggested. Items such as family income supplement, free school meals and free welfare milk are awarded for a year, regardless of subsequent income changes. Therefore, the poverty trap does not always work to the same degree. It is a serious problem and we intend to deal with it in due course.

Mr. Skinner

Does my right hon. Friend accept that the poverty trap which he wants to abolish will be widened and deepened as a result of constant public expenditure cuts, which affect house building for the homeless and schools for working-class children? Will he appreciate that when he throws out clever little phrases in relation to TUC policy referring to there being no alternative, what the TUC really meant was that once the decision was made to borrow there was no alternative? Does he not appreciate that the TUC has an alternative strategy which includes import controls and some of the ideas that we have proposed from these Benches?

Mr. Barnett

I do not agree with my hon. Friend. The TUC has never advocated the kind of generalised import controls that my hon. Friend and others have suggested. We have looked at these propositions seriously, but he must take it from me that if we were to carry out the alternative strategy which he recommends it would not make it easier for the people he and I want to help because there would still be a need to restrain the growth of public expenditure.