§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
§ 4.30 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
It is over six months since the House last debated the Child Benefit Scheme. The House will remember the events following the Government's dramatic, and now universally deplored, decision to abandon the full scheme. Since then there has been a second change of direction. The evidence is now amassing that after those erratic changes the child benefit is now heading for the rocks. It therefore seems right that we should debate it. It gives me no pleasure at all to express these anxieties.
The tax credit principle on which a proper child benefit is based is seen by millions right across the political spectrum as being the most hopeful way out of the tangle of our tax and social security systems. It is the way to provide help for families in the greatest need without means-testing. It is a way to ease the frustrations of the poverty trap. It is the way to restore the incentive to work and to put paid to the nonsense of people being better off out of work. It is the way to put cash into the hands of mothers and to give a measure of independence to mothers. It is the way to lift millions of households out of dependence on supplementary and other means-tested benefits. If child benefit turns out to be a shambles, and if that undermines the credibility of the whole tax credit principle, the present Labour Government will bear a very heavy responsibility indeed.
I do not need to rehearse the whole history of the matter. It has been a classic tale of order, counter-order and disorder. The scheme has been radically changed not just once but twice in the space of a few months. We first had the Child Benefit Act, which envisaged a substantial tax-free cash benefit to 1461 mothers combined with a corresponding reduction in the child tax allowance. In May the Cabinet abandoned that scheme and we had the proposal for a £1 family allowance for the first child subject to tax and clawback, bringing precisely 30p a week to each family with children.
In September the Government accepted—in the event it appeared unwisely—the joint TUC and Labour Party's curious hybrid proposal of a tax-free child benefit coupled with partial and differential reductions in child tax allowances. There was confusion after the first change in direction, but after the September decision the fat really was in the fire. It appeared that the publicity scheme went all awry. Originally we were to have one amending leaflet because 30 million copies of the original basic leaflet had already been printed before May. After the September change, however, we were to have a second correcting leaflet. As was made clear in reply to a Question from the hon. Member for Welwyn and Hatfield (Mrs. Hayman), the first leaflet would have to be withdrawn.
In November we had a long, detailed statement from the Chief Secretary—we are pleased to see the right hon. Gentleman with us today—spelling out some of the tax consequences of the September decision. In December we had the Inland Revenue leaflet P3(CB), which also showed evidence of the change in direction. Paragraph 7, concerning the notice of coding, stated:The reference to 'Child benefit deductions' and 'Child benefit' on your notice of coding should be ignored.In December we had another statement from the Chief Secretary giving the tax consequences for families with children overseas. It became apparent that they would be different from those for children resident here.
On 28th January we had another long and involved statement from the Minister for Social Security giving the details about the consequences for FIS and other means-tested benefits. It is now 9th February. The Child Benefit Scheme is starting in just eight weeks' time, and I believe it is true to say that hardly anyone really understands what is going to happen.
§ Mr. Jenkin
The right hon. Gentleman says "Nonsense". Let us perhaps try to find out. It is not for the want of leaflets. We have had some 32 million of the three main leaflets distributed. The trouble is they have all been saying something different.
The basic leaflet CH1(T) contained the original scheme and stated:If you or your husband are getting an income tax allowance for a child under 11 it will end at the same time, and any tax allowance for a child aged 11 or over will be reduced.Of course, that scheme was abandoned in May. We then had the May scheme, as a result of which CH1(T)A had to be produced. That said:income tax child allowances will not be reduced or withdrawn in April 1977.We then had the change of direction in September requiring another leaflet, CH1(T)B, which was printed in red. That leaflet stated:Child tax allowances for children under 11 will not end in April 1977. Instead it is proposed to reduce child tax allowances by £104 for the first child and £130 for each other child. These reductions will be made whether or not you claim child benefit.After September the intention was that the basic leaflet CH1(T) and the second correction slip CH1(T)B should be available to the public and that all 13 million copies of CH1(T)A should be withdrawn. It is hardly surprising that the Post Office was not able to cope.
My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and I sent to the Secretary of State and to the Chancellor of the Exchequer the results of a survey that we had carried out early in December. Taking 10 post offices entirely at random, only two out of the 10 had the correct combination of leaflets. One post office had no leaflets, one had the basic leaflet but no correction slips, one had the wrong correction slips, three had the leaflet with both correction slips and three had both correction slips and no leaflet.
The Secretary of State gave all sorts of excuses, such as that the second correction slip had only just been issued. He said that the Christmas rush was on and that all stocks of the first correction 1463 slip had been destroyed but they had not been taken out of the display dispensers. The right hon. Gentleman also said in his letter of 28th January:the Post Office are satisfied that by far the majority of the 24,000 Post Offices had replaced the obsolete leaflet CH1T(A) with CH1T(B) as instructed.We carried out another survey last week, when there was no Christmas rush and no recent issue of slips. We spread the net wider to include 24 post offices. The results were that four post offices had no leaflets at all, nine still had only the basic leaflet but no correction slips, one had only the latest amendment slip but no basic leaflet, and one post office still had all three. What the unfortunate people of Andover made of that I do not know. Five post offices had the right combination, but only if one asked for them over the counter, and only three out of the 24 post offices had the right combination on display. It is a shambles.
But the consequences are far more serious. [Interruption.] The right hon. Gentleman asks whether I had nothing better to do. I expected a better comment than that. The inevitable consequences of this shambles is that there are still about 1 million families which ought to have child benefit but have not yet made claims. There is only eight weeks to go. Those 1 million families represent about one-third of the one-child families for whom claims have to be made.
My hon. Friend the Member for Wallasey (Mrs. Chalker) was told yesterday that at the end of January 2 million one-child families had so far made a claim. But 3 million claims were expected. That was stated in reply to the hon. Member for Sheffield, Heeley (Mr. Hooley). That means that there are still about 1 million claims to be made. That is inevitable. It is unrealistic to expect huge Departments to respond minutely to such changes of direction. It is like trying to take three giant tankers round the course of the race for the Admiral's Cup. Departments cannot cope with that kind of change of direction. We must now learn from the Secretary of State or the Minister of State what the Government will do in the last few desperate weeks. We have just eight weeks to go to get a proper take up.
Those 1 million families include many families with older children and will there- 1464 fore lose the larger bits of tax allowance. They also include many of the neediest cases, those whom it is most difficult to reach. Their tax allowances will be cut and they will not receive child benefit.
The confusion does not stop with what the Daily Mail called leaflet lunacy. It involves many matters of substance. The Secretary of State's statement of 23rd September left more questions unanswered. The statement was peppered with such phrases aswill be decided later",will have to be decided later",will be the subject of a later statement".It included matters such as phasing out the tax allowance for children under the age of 11, the arrangements for students, future arrangements for non-resident children and the revision of PAYE codes. The statement was not so much an announcement as an agenda.
When we had the Chief Secretary's statement of 16th November the full horror of the complexity of what the Government were trying to do began to emerge. That was the statement dealing with the reduction of child tax allowances. Instead of the present three rates of child tax allowance, the Inland Revenue will have to grapple with nine separate rates. For overseas children under 19, the existing three rates will be kept. For United Kingdom children who are the first children in the family there will be a different three rates, and for second and subsequent children there will be yet another set of three rates.
We should bear in mind that, when the Child Benefit Scheme was conceived and built on the tax credit Green Paper, it was envisaged that in place of the matrix of nine combinations of child tax allowance and family allowance—three rates of tax allowance and three rates of family allowance—we should be able to arrive at one rate of child tax credit, a major simplification. Now we shall have nine levels of tax allowance and three rates of child benefit. According to my simple mathematics, that means that a combination of 27 possibilities must now be applied, meaning an overwhelming new complexity in our system of child support. In addition, we shall have to have special rules for one-parent families, widows, students under 19 and overseas children—in that case different according to whether they are over or under 19.
1465 If we take a perfectly ordinary, straightforward case, one offering no real complications, the result it baffling. My hon. and learned Friend the Member for Wimbledon (Sir M. Havers) received from a constituent a letter which is worth reading to the House. His constituent said:I have a daughter of 19 at university, a daughter of 16 still at school and a son of 14.Nobody could claim that that is an unusual family.According to my husband's new notice of coding, his tax allowance for the first child will be reduced by £104 (for whom I shall receive no child benefit), for the second child by £130 (for whom I shall receive £1 per week child benefit), and by £130 for the third child (for whom I shall receive £1.50 per week child benefit). Hence the only deduction which makes any sense is for the third child! …On checking with the Inland Revenue today, I have been told that …although my second daughter counts as a first child for child benefit purposes, she has to be counted as a second child by the Inland Revenue. I would add that the man at the tax office told me that he personally felt that the whole scheme was quite crazy and had not been properly thought through.I hope that in replying to his constituent my hon. and learned Friend pointed out that the scheme was hatched up by the Labour Party and the TUC and that it was perhaps a little optimistic to think that it had been properly thought through.
That letter provides a useful peg for a number of questions. The first concerns students. The Chief Secretary said in his statement that there were to be increased grants for students to compensate for the loss of child tax allowance. What will be the adjustment in the grants of students on advanced courses? When can we expect it to be announced? Child benefit starts in eight weeks. Will the increase in the grants take effect from April and cover the rest of this academic year, or will it start next September or October when the next academic year begins? Is it true that, as was said in the letter, a child can be treated as a first child for child benefit and as a second child for child tax allowance? If so, has that been taken into account?
What about the child over 19 who is on an advanced course but does not have a grant, perhaps because the course qualifies only for a discretionary grant or because his parent does not qualify? Will such a child lose the child tax allowance and receive nothing in return? Has that been thought of?
1466 My hon. Friend the Member for Wokingham (Mr. van Straubenzee) has been warning the country that as a result of financial stringency many fewer discretionary grants are likely to be awarded in the next year. Therefore, many more families will be trying to see their children through college on their own, without grants. Are they to lose the child tax allowance and have nothing in return? We must have answers to that question tonight.
Worse is to follow. After the Chief Secretary's statement there was the Minister's statement about family income supplement. Even the experts in such organisations as the Child Poverty Action Group are having the greatest difficulty in understanding what will happen in eight weeks' time when all this starts. Some FIS families will receive the bare 30p extra. Some will receive 30p child benefit plus 25p more FIS. Some will receive 30p plus 50p more FIS. For one-parent families the position is even more involved. For some reason, they will receive an extra 17½p child benefit plus 75p extra FIS, giving an extra 92½p.
I do not suppose that there is any hon. Member, including Ministers, who can explain why that is so. But these families are supposed to understand it. Some will receive 17½p child benefit plus £1.25 more FIS and so on. How many more families will be brought into FIS as a result of these changes and, therefore, for the first time made dependent upon means-tested benefits?
There is a whole range of other matters. For free school meals there is one set of rules and there is the question of the appropriate amount of child benefit to be disregarded as income. There are different rules for housing benefits, and for milk and vitamins, there is yet another rule based on existing discretionary powers. We are also told that there will be special arrangements for the electricity discount scheme. The complications are fearsome.
There is a question of substance here on which we must have answers. I hope that I can have the Secretary of State's attention. I appreciate that he must consult the Treasury, as the Treasury probably has the answers when he has not.
§ Mr. Jenkin
The Treasury knew the answers in my day. The question of substance is very serious and goes to the heart of the whole scheme. The introduction of a tax-free benefit such as child benefit or a tax credit is intended, among other things, to lift people out of dependence on means-tested benefits. That is one of the prime purposes of the entire scheme.
The House will recall that when we produced our figures we estimated that about half of the old-age pensioners would have been lifted out of dependence on supplementary benefit. But if at every stage of the introduction of a non-taxed, non-means-tested benefit like this, there is an automatic increase in the levels of every means-tested benefit, by definition nobody will be lifted out of dependence on means-tested benefits at all. That appears to be the Government's intention this time round. As a question of principle, will that be the position at each successive round of this phased programme? Will there be an intention to lift people out of dependence on meanstested benefits?
So far, I have talked about basic-rate taxpayers and existing welfare recipients, but what about taxpayers who pay at higher rates of tax? For them, the Government do not even pretend that the arrangements are fair. After all the crocodile tears from the Chancellor about the appalling tax burdens on middle management, the Treasury is now cheerfully conceding that the tax burden on many families will be increased, and it does not intend to do anything about it. The Chief Secretary to the Treasury said:A minority of higher rate taxpayers could be slightly worse off than they would have been under our earlier proposals, but this only arises for those paying at a marginal rate of 55 per cent. or over".—[Official Report, 16th November 1976; Vol. 919, c. 505.]Even if one accepts—and I do not—that it could be right to add to the tax burden of middle managers and professional men at this time, the situation is 1468 far worse than the Chief Secretary suggested. If these people are parents of students they will be very much worse off, because, presumably, the improvement in the student grant will take account of the loss of the child tax allowance at the basic rate of tax. These people will lose their child tax allowance only at the higher rate of tax. Or is it suggested that the improvement in student grant should compensate for the higher rate of tax? If it is, that will lead to a new complication for the calculation of grant because for the first time it will depend on the marginal rate of tax of the parent.
Second, if the parents are receiving no grant at all and are trying to finance their children on their own, if they have two student children—there are plenty of families with that number of students—they could well find that they are hundreds of pounds worse off, and it may make it impossible for them to take their children through college.
§ The Chief Secretary to the Treasury (Mr. Joel Barnett)
I have noted the right hon. Gentleman's concern not to have too many child tax allowances. Surely, he is not suggesting that we should have a special higher rate of child tax allowance. If he wishes to be fair about the figures, perhaps he will point out that in 1977–78 the loss to a man earning £9,000 a year would be £5.20 a year.
§ Mr. Jenkin
The Chief Secretary has not taken account of either of the points that I have made about parents of students. Even if it is right to increase the tax by that small amount, that still leaves out of account those with students over 19 years old, and no child benefit, many of whom will be able to get no compensation for the loss of child tax allowance. The Chief Secretary has to give a better answer than that.
§ Mr. Joel Barnett
With respect, the right hon. Gentleman has bundled together a package of questions. I shall not answer all his questions now—my right hon. Friend is more than capable of doing that—but the right hon. Gentleman is misleading the House in pretending that there will be a massive loss to the higher rate taxpayer. As I say, for a married man with two children under 11 the loss in 1977–78 is £5.20.
§ Mr. Jenkin
What about students? We must have an answer tonight about that, including the case of students who have been refused discretionary grants and who, therefore, have no grant at all.
Wherever one looks, this scheme is now in a shambles. The leaflet campaign has gone utterly haywire. Major Departments are struggling to cope with wild changes of direction and policy. There are massive new complexities in the tax system. There are added complexities with means-tested benefits, and there will be new bitterness among managers and professional people as they find themselves paying more tax. There will be new worries about student support, and real anxieties on the part of parents with children over 19 with no grant and no child benefits.
Looming over it all, with only eight weeks to go, is the fact that there are 1 million one-child families who have not yet submitted claims. The astonishing thing—I note that the right hon. Member giggled when I said that—is that this does not seem to worry Ministers at all. They are blind to the crumbling realities around them, and they continue to laud their achievements with almost biblical fervour. What was it that the Minister for Social Security said the other day at a meeting of the Child Benefits Now Campaign?—The child benefit scheme …will be a central pillar of the Welfare State".That is rubbish if it will crumble away in the way that I have described. The sad thing is that it could have been a central pillar of the Welfare State if the two mighty Samsons of the Labour Cabinet had not wrapped their arms around it and brought the whole edifice crumbling down. The Prime Minister and the Chancellor have a great deal to answer for in the shambles which they have caused.
§ Mr. Jenkin
I see that Delilah is not in her place at present. Perhaps she would have saved the scheme if she had been there. Because of this threatening shambles, and because of our anxieties about the threatening debacle, we intend to divide the House tonight.
§ 4.57 p.m.
§ The Minister for Social Security (Mr. Stanley Orme)
I welcome the Opposition's choice of subject for the debate but I am surprised that they have used up half a day on this issue. They really are flogging a dead horse on the leaflets issue. Nevertheless, it gives me a chance to emphasise the Government's achievements on social security matters in general and on child benefits in particular.
Before going on to talk of those achievements, I say to the right hon. Member for Wanstead and Woodford (Mr. Jenkin) that we admit that there will be problems affecting the introduction of the child benefit scheme. But we had no answers from him about what he would have done, or the cost in public expenditure if he had taken the action which he is asking the Government to take.
§ Mr. Patrick Jenkin
I do not want to interrupt the Minister more than I have to—we have a short debate, and I made a short speech—but I spelled out in the June debate exactly what we should have done, at less cost than the scheme that the Government are proposing.
§ Mr. Orme
The social security measures introduced by this administration are among the most far-reaching innovations this decade. The new pension scheme will, on maturity, substantially raise the incomes of the elderly and reduce the numbers who currently have to seek help from supplementary benefits.
§ Mr. Orme
If the hon. Member will allow me to develop these points, I shall give way later.
The disabled are being helped by a number of aids, such as the new mobility allowance and the new non-contributory invalidity pension. The method of family support is to be dramatically changed by the introduction of child benefits in place of family allowances and child tax allowances. The Government have nothing to apologise for on any of those points.
The introduction of these social policies would represent no mean achievement in good economic times. In the current difficult economic climate, they 1471 should be seen as a real contribution to improving the lot of the less well off sections of our community.
Today's debate also gives me a chance to reply to the alarmist rubbish which has surrounded this subject and which has been reiterated by the right hon. Member for Wanstead and Woodford this afternoon. Because of the misrepresentations I would like to mention briefly the basic principles of the child benefit scheme.
Child benefit is non-means tested and non-taxable. The scheme has two big advantages over the present method of family support which relies on child tax allowances and family allowances. The child benefit will be paid to the mother, as it is typically the mother who is responsible for the house keeping in raising the children. This contrasts with the child tax allowances, which typically go to the father. Thus, income is transferred within the family from father to mother. Wage earners who earn under the tax threshold do not get the benefit of the child tax allowances, but they will get the child benefit. In the initial modest start to the scheme this April the benefit is £1 per week, but it will rise as the full scheme is phased in.
Let there be no misunderstanding. We definitely wished to introduce the full scheme, under which the child benefit rate would have subsumed the whole of the under 11 tax allowances. I am also aware that many of my hon. Friends would like a higher rate of benefit immediately. But this is an expensive proposition. I must point out that any additional resources put into family support cost £6 million a year for an extra penny a week on the benefit that is, a 50p increase would cost an extra £300 million in a year. Child benefit is one among a number of our priorities that have to be considered in the field of social policy. So it will be appreciated that no easy choices exist regarding the level of that benefit.
Hon. Members will appreciate that, given the economic situation, it was necessary to defer a decision on the benefit rate until it had to be settled for operational reasons. Then, in May of last year considerations of pay policy had added a vital new dimension to the problem 1472 of transfer. This ruled out any complete overnight transfer from the pay packet to the purse. Conservatives are fond of referring to their 1972 tax credits scheme, so they should be aware of what the TUC had to say to the Select Committee about the child credit in this context. The TUC were not in favour of an increase in benefit to the mother which would be wholly clawed back from the husband's income. As regards the transfer of support within the family it wanted, in the late Lord Feather's wordssome phasing of this transfer, as it were, from the pay packets to the mother's child credit".That was in April 1973, not May 1976, and it underlines the massive problems involved in this change to child benefit.
Taking public expenditure constraints and pay policy together, the full child benefit scheme was not an immediate possibility. The suggestion of the right hon. Member for Wanstead and Woodford, that we could have had a low-cost full scheme, just does not stand up because of its disproportionate effect on take-home pay. Husbands with one child would have lost over £2 in their pay packets. The two-child family would have lost over £3, the three-child family would have lost over £4, and so on.
§ Mr. Patrick Jenkin
This matter was debated at the TUC Congress last September, and a resolution calling for a full child benefit scheme was passed, according to Press reports, with no dissidents at all. If the 39 million leaflets had been used to explain to trade union members that although their pay packets were to be cut their wives would be getting more in cash over the counter, the TUC would have fully understood what was happening.
§ Mr. Orme
The TUC wanted more public expenditure at that time. The right hon. Member for Wanstead and Woodford will find that the TUC support what the Government are doing at the moment. Of course, it would have been different if the transfer could have been improved by switching substantial extra resources on to the child benefit rate, but this is not a suggestion which people who are constantly complaining about public expenditure could put forward. Indeed, they recognised this in their "no extra cost scheme". I will 1473 take criticism from my hon. Friends on this matter, but not from the Opposition Front Bench.
We had two choices at the end of May last year. We could either put off the scheme, or we could take the first step, which took account of the public expenditure and pay policy realities. Operationally—and I will not weary the House with a catalogue of the administrative problems with which my Department and the Inland Revenue were wrestling—we had to decide on the rate of child benefit there and then, and we had to be sure we could effectively put it into operation. We were determined to press ahead with the scheme—it really is nonsense to say we did not want it—and the only alternative in the conditions I have described was to provide £1 for the first child and tax it in the ordinary way.
Despite these difficulties we continued to work urgently on the method of phasing in the full scheme. The Government joined with the Labour Party and the TUC in a Joint Labour Party/TUC Working Party to seek a solution to this problem. The working party was unique in that it brought together the TUC, the National Executive of the Labour Party and Government Ministers, and during this meeting we worked out the phasing-in proposals that will now be put into effect. It took a great deal of intensive work to enable us to announce the September scheme as soon as we did. I should like to pay tribute to the members of the joint working party for their sustained and constructive help, particularly my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham). The hon. Member for Rushcliffe (Mr. Clarke) has had details of the factual evidence which the Chief Secretary and I contributed to their deliberations.
The result of this further consideration was the scheme announced by my right hon. Friend on 23rd September, with the consequential tax arrangements announced by my right hon. Friend the Chief Secretary, on 16th November. This is the scheme that is going ahead and it is not on the rocks. I am sure it will not disappoint Opposition Members—or perhaps it will disappoint them—if I say that it is going ahead very satisfactorily.
I must point out to the House that under the scheme the transfer from pay 1474 packet to purse will take place over three years. In the tax year beginning April 1977, the mother will receive £1 for the first child and £1.50 for the others, and in a family paying basic rate tax the father will lose 70p. In the next two years, take-home pay will be reduced, in two further stages, by further reductions in the CTAs, which will be made good by increased child benefit payable to the mother. On current tax rates and allowances the further transfer from take home pay to benefit over the two years taken together would be £1.32 a week for the first child and £1.14 a week for every other child. How this will be divided between the two years will be announced later. I think that there is still quite a lot of explaining to do, certainly to husbands, about this transfer and what it means.
In spite of their criticism, it is apparent that the Opposition have little to criticise. They have focused their criticism on a minor administrative problem. Instead of giving credit to the Government for introducing this major social change, all they can do is bleat about leaflets. Let me give the House the facts, therefore—
§ Mr. Patrick Jenkin
The right hon. Gentleman must not say that. I spent less than a third of my speech talking about leaflets, and I have asked him many serious questions. If we do not get answers to those questions this evening the right hon. Gentleman will have much to answer for.
§ Mr. Orme
Any valid questions will be answered by myself or by my right hon. Friend when he winds up. The anger that the right hon. Gentleman managed to work up, however, was misplaced.
Last May, for the reason I have explained, we had to change our original intention to remove the whole of the tax allowances for children under 11 in April 1977. By this time the leaflet CH1(T) was printed and delivered to the Post Office depot. There are, through the Post Office, 24,000 outlets, and they may be unevenly distributed. Do I gather from what the right hon. Gentleman said that he would prefer to have fewer outlets? Or would he prefer to have the 24,000 that are spread throughout the country? Reprinting the whole thing would have meant, apart from the waste—which was £300,000 for the initial 1475 leaflet—abandoning all hope of introducing the first child benefit in April 1977. Instead, a one-page information slip, CH1(T)A, was printed to correct, where necessary, the information in leaflet CH1(T).
After the joint Labour Party/TUC working party had evolved a method of phasing in the child benefit scheme over the period 1977–79 it was necessary to print a new information slip CH1(T)B explaining the current position. The Post Office replaced the previous information slip with CH1(T)B, and this latter slip accompanies the main leaflet and claim form CH1(T). It does not act as a substitute for the main leaflet.
I dealt with all these points in answering a Question on 27th October. My right hon. Friend the Chancellor also wrote at great length—it seems to have been a waste of time—to the right hon. and learned Member for Surrey, East (Sir G. Howe) and the right hon. Member for Wanstead and Woodford, so that it is very surprising that Conservative Members should continue to bring up this issue.
Let us get the basic facts straight. There has been time enough for these changes: the scheme does not start until April. No one can now be in any doubt as to the details, the vast majority of which are still percisely the same as they were when the main leaflet was printed to reflect the original full scheme as planned. This leaflet, with the appropriate correction slip, has been in post offices since the end of November, and since the Chief Secretary's statement no one can be in doubt on the consequential tax arrangements in 1977–78 which are very clearly covered in the leaflet issued with the individual tax coding notices.
Hon. Members are perfectly entitled to say that we have made two changes. So we have, and I do not apologise for that. We listened to what Parliament said and we made the changes. We have never denied making the changes; indeed I have myself underlined the fact by pointing out that we had very solid reasons for doing so. This scheme covers virtually every child in the country. Because the administrative processes of launching such a vast scheme had to start well in advance of the scheme itself there have 1476 been changes in the account of the scheme we have had to give to families. This is a very different matter from saying, as the Opposition keep repeating, that there is considerable confusion and inconvenience.
The big change between the May and September schemes was simply that the benefit became tax free. This made no difference whatever to the vast majority of families, who pay the basic rate of income tax. The mother's benefit is the same, and the father's take-home pay is affected to precisely the same extent. For those paying higher rates of tax the change means that it is now always worth while to claim. This is not confusion, but a simplification.
If people were confused one would expect both a high proportion of unsuccessful claims and poor take up. The take-up position of all those families now getting family allowances is safeguarded. They do not need to claim. Many will simply receive their new child benefit by way of orders for the higher amount in the annual order book which contains their family allowances up to next April. Others—about 2 million—need only, in the course of this month, take or send their order books to their local offices for uprating.
Of those families with one dependent child who need to claim we already have 2 million claims. In fact, the Newcastle office today received its two-millionth claim. Allowing for the "converted" and uprated order books, we already have an effective take-up rate of about 90 per cent., and there are still two months to go. So much for the confusion.
§ Mr. Peter Bottomley (Woolwich, East)
Will the right hon. Gentleman spell out how many more claims are needed to secure full take-up?
§ Mr. Orme
The hon. Gentleman is anticipating my next few words. There are now about 800,000 claims outstanding. They have been reduced in number quite dramatically, but I cannot claim that we shall have virtually complete take-up by next April. Nor can I say that if we get a sudden last-minute rush even the resources of our offices at Newcastle and Washington—I pay tribute to the work of our staff there—could cope immediately. That is why the last stages of our 1477 extensive publicity campaign will be concentrating on claims this month rather than next.
If, at worst, however, there are some late claims, or a sudden bunch of claims at the end of March, no one will lose out. There is a year's grace, and arrears will be paid as soon as possible. We are talking about, at most, a small minority who, despite the continued publicity, have not claimed yet and who are under no threat of eventual loss of benefit if they do not do so. It might make for administrative convenience, but it would surely be wrong, to try to dragoon them. For many people—for school leavers at the end of May, for example—relatively little is at stake. Also, many better-off people who normally rely on their accountants in tax matters may simply be postponing their claim.
As I have said, this is a small minority at most. Overall take-up is already very good. What then about the other and more significant indicator of confusion—the unsuccessful claim? Two million claims have been received. Of the 1.5 million decided by December last year, only 329 have been disallowed. Not much confusion there!
Let me say in conclusion that the child benefit is a central pillar in our social security system. When the transition is complete the scheme will usher in a new era in family support. This success is one of which we on the Labour Benches are justifiably proud. We already have a 90 per cent. take-up rate, and I urge hon. Members to bear in mind that we are dealing with about 7 million families and nearly 14 million children.
Although the April 1977 phase 1 of the child benefit scheme is modest, it is clear that the scheme is getting established. It has been an achievement to make the administrative price minimal for the public at large. It has also been an achievement to find about £90 million for family support in 1977–78 after the substantial increase in family support less than a year ago. The arrangements for launching the scheme have been both thorough and widely discussed. The only shambles is the Opposition's pitiful attempt to discredit the scheme.
§ 5.18 p.m.
§ Mr. Tony Newton (Braintree)
I am left almost speechless by the speech of 1478 the right hon. Gentleman. I had already gathered from our proceedings in Standing Committee on the Social Security Bill that his normal answer to difficult problems was to address either the Committee or the House as if it were a rowdy public meeting in Salford. That is roughly what we have had again this afternoon. He told us that no one could now be in any doubt about the details. If that is his position, why did he not answer some of my right hon. Friend's questions? Barely one of those questions has been answered.
We have certainly heard no convincing explanation of the fact that 1 million of those who are among the primary targets of this benefit have not yet claimed, despite preparation for the scheme having been under way for a year. If the right hon. Gentleman thinks that the explanation he has given today will satisfy my hon. Friends or many of his hon. Friends, I suspect that he has another very big think coming in the course of the debate.
I understand that the right hon. Gentleman is on a difficult wicket. That difficulty was clear throughout his speech. However, I do not think that even he believes that there is no confusion about the details of the scheme and nothing to worry about in all the complexities of the leaflets. The right hon. Gentleman should not overlook the fact that there will be genuine and considerable confusion among many people about the effect on their family allowances.
The real reason for the concern now being expressed by my right hon. and hon. Friends does not arise merely because of the stupidity of the leaflets issued and the jokes that can be made about the farcical situation in post offices; it is because there is a real danger that the way in which this affair has been handled will end up discrediting the whole approach to tackling the family poverty problem and the approach to the confusion of our tax and social security system, the latter being one of the most important problems that we have to face.
The more that Ministers dismiss this problem and the more that they fail to face the difficulties that the public are facing over the scheme, the greater risk they run that, as a community, regardless of party politics, we shall not derive from the approach now being adopted the advantages that all of us would like to see.
1479 This is a short debate and I do not want to add very much to what my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) has said about the muddle, the leaflets, and various other matters. I think that he made his points tellingly, in a telling speech. He asked nearly all the questions that needed to be asked. As they have not been answered by the right hon. Gentleman, we can only hope that the Secretary of State will answer at least some of them at the end of the debate.
I shall mention only one specific problem before turning to slightly wider issues. What alarmed me as much as anything else in the past half hour was that neither the Minister nor his right hon. Friend the Chief Secretary of the Treasury could begin to answer what my right hon. Friend had to say about students, especially those who do not have grants.
This is not only a matter of students who do not have grants because their parents are so well off that the parental contribution is virtually the whole of the grant; also involved are students who are not getting grants because they are eligible for only discretionary grants, and discretion is not being used in their favour. Those students and their parents represent a hard-hit group. Many of them are in the same group that is being especially hard hit by the increase in university fees. As far as I can judge, they are getting no compensation. If they are now to suffer under the child benefit scheme it will be disgracefully unfair and will do serious damage to an important part of our education system. We must have an answer to the students' problem.
I shall now deal fairly briefly with two further points, on a broader theme. Part of the purpose of the debate, apart from helping Ministers to clarify to the House and the public what they have in mind, should be to look to the future and the way in which we are moving in respect of our tax and social security systems, to consider how we can undo some of the damage that has been done by the muddle that has occurred, and, further, to consider how we can rescue some of the opportunity that has been missed by the Government's handling of these matters over the past two or three years.
1480 First, I turn to Budget implications. It is inescapable in this scheme that tax thresholds, not so much on family income but on the earnings of the family breadwinner, will fall by a minimum of £2 a week. That is inescapable from the fact that in the case of the first child there will be a deduction of £104 and no offsetting benefit through the tax system arising from the removal of the old reduction of allowances for the family allowances. There will simply be a straightforward reduction in the tax threshold of the breadwinner of £2 a week for the 3 million who have one child. The effect of the tax thresholds for all the other groups with more than one child will be more complicated.
It is an inevitable part of the scheme that tax thresholds on earnings will drop by £2 a week for families with one child. I accept that in principle, but we must recognise that because of the way in which the tax system has been affected by the right hon. Gentleman's earlier policies, because of the rising worry about tax and because of the fact that tax thresholds have fallen in real terms, there is a serious problem, and we shall add to the disincentive effects that are already so powerful in our tax system, even among those who may understand the concept of family income as a whole and the effect on the family income as a whole.
First and foremost, I believe that there is an important implication in all this for what the Chancellor should be doing in his Budget. I do not expect social security Ministers to answer for what the Chancellor will do in his Budget, but it is my view that we cannot afford to have this drop in tax thresholds at this moment, however good the reasons may be in principle, especially after what has already happened. Among the tax reductions that the Chancellor is evidently to include in his Budget should be an increase in the married man's allowance of at least £104. I say that it should be at least £150 so that the effect will be mitigated for at least the majority of families that would otherwise be affected by what is being done in the scheme.
§ Mr. George Cunningham (Islington, South and Finsbury)
Perhaps the hon. Gentleman will clarify whether he is referring to a reduction in the tax threshold this April or over the whole period of three years of the phasing in of the new scheme. Surely it is true that no net reduction is 1481 occurring in the tax threshold this coming April; it is a reduction that is wholly offset by a corresponding increase by making the family allowance untaxable.
§ Mr. Newton
Not—I think the hon. Gentleman will agree—in the case of those who do not at present receive family allowances. That is why I have concentrated on the one-child family. In that case there will be a reduction of £104 in the child allowance. They will have no offsetting reduction in the existing tax allowances.
Let us assume that it is the man who is the breadwinner. For that man there is a straightforward reduction in the tax threshold on his earnings of £2 a week. The effect is much more complicated in respect of two-child families, where it is necessary to make allowances for the existing reduction in tax allowances arising from the existing family allowances. I have not gone into those matters as they are complicated. However, any family that is to get child benefit will at least get a reduction of £2 a week in the tax threshold on earnings—that is the tax starting point on earnings—arising from the minimum reduction of —104 in the tax allowance for children.
§ Mr. George Cunningham
But there will be £1 tax free that will be new and additional to what they have had before.
§ Mr. Newton
It may be that I did not make myself fully clear. This is a complicated matter. I stress that I was talking about the tax threshold in relation to earnings and not in relation to family income. That is why I accept that in principle it is a reasonable thing to do. However, I believe that at this stage it is a matter that we have to take seriously—this is why the TUC was worried last year—because of the psychological effect on many men at a time when tax burdens are already so high and tax thresholds are so low.
§ Mr. Robert Hughes (Aberdeen, North)
The psychological effect that the hon. Gentleman has mentioned will apply at the beginning, but once people get used to it the effect will diminish.
§ Mr. Newton
That may well be true. My judgment—I suspect that it is the TUC's judgment—not least arising from the statement that the TUC has issued about what it would like to see happen 1482 in respect of income tax, which even 10 years ago would have been regarded as an incredible statement to come from the TUC, is that there is now sufficient worry about the burden of tax and the low level to which thresholds have fallen to make these matters important problems.
In a Budget in which the Chancellor, we hope, will find room to reduce taxation—I certainly think that he should find that room—he should also seek to offset to the maximum possible extent the effect of the reduction in tax thresholds on earnings. If he does that, he will minimise the problems that will otherwise be faced by those who do not necessarily fully understand the scheme and will automatically go a long way to offset the effect on the higher earnings to which my right hon. Friend referred—which I, too, believe is a serious matter.
§ Mrs. Audrey Wise (Coventry, South-West)
Does the hon. Gentleman realise that his proposal to increase the married man's allowance would mean giving help to families which may consist of a man and wife both earning with no children? Would it not be more sensible to concentrate the money on the children?
§ Mr. Newton
Yes, it would. I must ask the indulgence of the House. I had better not give way to any more interventions, because this is a short debate and my speech is being extended. I have deliberately not gone into that matter any further because it would take me into the complexities.
The trouble is that the Chancellor and the DHSS have boxed themselves into a corner as a result of what has happened. I should like the benefit to be concentrated on families with children, but there is no way currently of doing that except by increasing the basic rate of child benefit. That apparently is not an immediate option. I hope that it will be taken as soon as possible. The only other way would be to introduce a compensating increase in child allowances. But that would create the same problem in the same way this time next year.
I suggest that there is no way of entirely solving the problem, but tackling the married man's allowance as a priority in any tax reductions is at least one method about which the Chancellor should be thinking in deciding what tax reductions to make in his Budget. It is 1483 not a perfect solution, but it would go some way towards solving these problems.
In view of the interventions which have been made, I shall curtail the rest of what I intended to say. We all agree that we want to proceed in a direction which will bite into the poverty trap, reduce the size of it, take people out of supplementary benefits and reduce means testing. There is agreement in principle between Opposition Members and the Government Front Bench about the need for a scheme to make it possible to tax short-term benefits as an additional help to rationalising our tax and social security systems.
It seems clear that what the Government are proposing will do very little to achieve any of these aims. We are looking not for an explanation by Ministers of the muddle into which they have got themselves over leaflets, but for a commitment to move forward as fast as possible not just to child benefits but to the whole concept of the tax credit scheme which the Opposition, when in Government, put forward and would by now have sought to implement.
A great deal of the debate on these matters is in danger of becoming totally sterile. One group of hon. Members is apparently mainly worried about social security abuse and another group claims to be mainly worried about abuse of the tax system. Surely we should be able to agree that both problems need to be taken seriously. It is often the same people who are abusing both systems. Does anyone suppose that the moonlighter who is doing a part-time job when he is claiming social security benefit declares his income to the income tax authorities? Of course not. He is an abuser of both the social security and the tax systems.
There are problems with regard to means tested benefits, take-up, and so on. To talk about scroungers takes us no further. The problem is the number of people who have been put into an intolerable situation because of the way that we organise our tax and social security affairs and the growing number of people who are not very much better off by working than by not working. They are not scroungers, but they are put into an intolerable position.
1484 We must tackle this fundamental problem. We shall be able to deal with it only if we move beyond the child benefit scheme and apply the concept of tax credits to the whole of our tax and social security systems. I should like the debate to move away from the details of the leaflets. I should like to hear more about the details of the scheme, but T think that we ought to concentrate on how the Government propose to build on what we are talking about and to tackle the fundamental problems facing us in this area.
§ 5.35 p.m.
§ Mr. John Ovenden (Gravesend)
I welcome this debate, although I fear that, as usual, it was initiated for the wrong reasons. However, the debate gives us the opportunity of discussing the problem of family support and what we as a nation should do about that issue.
Recently I asked the Chancellor of the Exchequer what we were doing and what we had been doing in recent years by way of giving support to families through the tax system, because it is only through that system that we can give the majority of them our support. I was appalled to discover that the real value of the allowances given to families has declined considerably over the last 15 years. I was told by my right hon. Friend the Financial Secretary to the Treasury that whereas in 1961–62 a single person had a tax allowance of £203 a year and in 1976–77 he had a tax allowance of £238 assessed at 1961–62 prices—an increase of 15 per cent.—a married couple with four children with a tax allowance of £910 in 1961–62 found that had fallen to a real value allowance of £763 by 1976–77—a 16 per cent. reduction.
Successive Governments have a pretty shameful record of support for families. They have an even worse record if we attempt to make international comparisons. There are few European and non-European countries with which we stand any comparison in this league. That is why it is important to talk about the whole level of family support and why we should commit ourselves to policies aimed at relieving the problem of family poverty.
I have always regarded the introduction of child benefits as a major plank in the social security system. That view is shared by most organisations concerned 1485 with family poverty. When the Child Benefit Bill was introduced the Child Poverty Action Group said:This Bill when fully in force will be the most important change since 1946 in provisions within the social security system for the maintenance of children.That was no exaggeration. The telling words in that statement were "when fully in force".
It is a source of regret to many Labour Members that it will not be possible to go ahead with the full introduction of the scheme in April 1977. Many of us still remain unconvinced by the explanations which were given for the deferment. However, we are now in that situation. We must make the best of it and get the scheme introduced in full as soon as we can. It is important to go ahead with the scheme and to get away from the farcical system of tax allowances on which we have so far relied for family support. It is a farcical system which gives more help to those with the highest income than to those with the lowest incomes.
We have today witnessed another example of the confusion in the minds of Opposition Members about what they want to see in a system of child benefits. My justification for changing from a tax allowance to a child benefit system is to get away from a system which gives more to the wealthy and less to the poor. Yet the right hon. Member for Wanstead and Woodford (Mr. Jenkin) has today condemned the system because it does not give as much help to the man on a tax rate of 55 per cent. as to the man on 35 per cent. I understood that we wanted to get away from that ridiculous system. Surely we do not want that privilige to be enshrined within a new system.
The hon. Member for Braintree (Mr. Newton), criticising the whole basis of the child benefit system, said that we should go ahead with the child benefit system and the reduction of child tax allowances only if we could compensate taxpayers by increasing their allowances in some other way—for example, by giving them a higher married allowance. The hon. Gentleman seemed to be raising a fundamental objection to the principle of the child benefit system.
The idea of having a child benefit system is to reduce tax allowances and 1486 to get away from the old system. We do not want some cumbersome machinery to restore the tax allowances that have been taken away. Indeed, as my hon. Friend the Member for Coventry, South-West (Mrs. Wise) pointed out, the scheme proposed by the hon. Member for Braintree would give a great deal of assistance to people with no family commitments at all and in particular to those married couples both of whom are working an enjoying a high standard of living. That is not a cul-de-sac into which we should be led.
This scheme is a vital step towards tackling family poverty. It does something for the 200,000 families who have been too poor to pay tax and have, therefore, never benefited from the tax allowance system. It is also a vital step towards improving the living standards of people in work.
We have heard much synthetic indignation about people who are better off on social security than at work. If such people exist the situation is shameful, but, it is a grave indictment, not of the generosity of our social security system, which is not particularly generous, but of the neglect of family poverty in this country, particularly of those who are in full-time work.
§ Mr. Ovenden
I agree with my hon. Friend for Aberdeen, North (Mr. Hughes).
A realistic level of child benefit will go a long way towards tackling the problems of family poverty. The present system of means-tested benefits is a nightmare for everyone. It is a nightmare for hon. Members who are expected to understand the system and explain it to their constituents. It is a tangle for people who have to wade their way through it. The more we can dispense with means-tested benefits the greater contribution will be made towards solving the problems. Benefits should be available as of right.
Child benefit does not carry the stigma and disincentive to claim carried by means-tested benefits. I have never heard anyone suggest that there is a stigma attached to the acceptance of family allowances. All levels of society accept and claim family allowances. However, stigmas are attached to many means-tested benefits. That is the reason for 1487 the relatively low take-up rate of family income supplement, rent and rate rebates, even though those schemes have been in operation for a long time. The means-tested approach to the problem will not work. Means-tested benefits should be replaced by universal benefits which people accept as their right as citizens.
I regret the decision by the Government to defer the scheme. They should look again at the timetable. The joint committee's plan is not the last word on the issue. Perhaps at that time, when the scheme was considered in the current economic climate and when there were administrative problems, that plan might have been the best that was available, but circumstances change and economic circumstances change particularly.
All hon. Members must have read in today's newspapers about the rumours of large tax cuts next year. It has been suggested that the standard rate will be cut from 35 per cent. to 25 per cent. Although I usually regard as ominous the presence in the Chamber of the Financial Secretary to the Treasury, I am sorry that he is not here now. The Treasury should look at the child benefit scheme to see what priority can be given for its speedy introduction. If money is to be available in April for tax cuts on the scale that is rumoured that money should be devoted instead to provide social benefits, and child benefits should be given the highest priority. If the money is available child benefit could be introduced at a more realistic and more generous level than has been assumed in the past.
That would ease its introduction and overcome many of the objections that existed in the past. It would overcome the objection, for instance, that a child benefit scheme would only transfer money from the wage packet. We would be able substantially to increase total family income, and that would go a long way towards overcoming the objections that have been made.
If money is available we must use a fair proportion of it for social benefits rather than for tax cuts. We must not repeat the appalling mistake that was made last year when, at a time when we were supposed to be reducing tax allowances and introducing a system of child benefits, we increased child tax allowances 1488 and made the problem worse. That was an example of the lack of liaison between the Treasury and the Department of Health and Social Security. We must use our money wisely and bring in the child benefit scheme.
The debate is short and I shall try to be brief. The Minister spoke about priorities. Government Ministers often talk about priorities in a narrow sense. The Minister spoke of priorities within our social services. It is our job to look at priorities in a wider sense. We did not do that last year. That is why we had the mix-up about child tax allowances and child benefits.
The Minister said that by every 1p by which we increase child benefit the cost is £6 million. That is a high level of expenditure and one at which we must look carefully within the context of our overall priorities. There have been occasions when the Government have spent money on far less desirable projects than child benefit. With some of my hon. Friends I went into the Lobby to oppose tax cuts amounting to £100 million for people who were earning £6,000 a year. That sum of money could increase child benefit by 16p. I also went into the Lobby to oppose the £500 million increase in defence expenditure. That sum would have made 80p or 90p available for child benefit. We must look at the overall priorities within Government.
When we are asked to approve larger and larger sums of money for projects that can hardly be regarded as worth while and to approve tax cuts which are not socially necessary or desirable we must bear in mind that we are deferring for a long time a major attack on child poverty.
I shall not go into details about leaflets as some hon. Members have done, but I shall raise a few detailed points about the scheme. I apologise to my right hon. Friend if I have the wrong end of the stick, but if I have, that indicates that there is more confusion than the Minister is prepared to admit.
I shall deal first with the problems of widows and whether they will get anything out of the new scheme. I understand that there are to be adjustments to the widows' tax bill so that what they lose on child tax allowances will be made up. I understand that a widow's child allowance is to be reduced to cancel out 1489 the child benefit and that that may have overcome the fear of many widows that they will lose money, but I do not see how widows will gain. The net result for most widows will be nil. Most standard taxpayers will receive a net benefit of 30p a week and those on the higher tax level a net benefit of 40p. Widows are the only people who will get nothing at all. If that is true, I hope that my right hon. Friend will see what he can do about it, even within the next eight weeks.
It grieves me very much to agree at any time with anything said by the right hon. Member for Wanstead and Woodford. However, although he may well have exaggerated and may have tried to make far too much political capital out of the affair of the leaflet campaign, many of us on the Government side of the House are very aware of the fact that there has been confusion, and that amendment slips, for example, have been missed out of leaflets. One constituent came to me in great panic because she had read the leaflet without the amendment slip. The amendment slip had not been inserted. She was being told that as from April she would get £1 a week child tax allowance and that her husband would lose the whole tax allowance for that child. That is a terrifying prospect with which to be faced. This alarm was caused by the fact that this matter was handled in the way in which it was.
My right hon. Friend the Minister for Social Security said that the Government had no option but to send out amendment leaflets because of the time factor and that the cost was such that we could not reprint the leaflets entirely. I am not utterly convinced by that. I have found on occasions that when Governments really want to get out leaflets and propaganda they are quite capable of producing leaflets at vast expense and very quickly.
§ Mr. Ovenden
As my hon. Friend says, with the pay policy. I was about to give the example of the Common Market referendum. When the Government wanted to brainwash electors into supporting their stand the leaflets were made available at far greater cost than these would have involved, and very quickly as well.
1490 It would have been far more satisfactory if we had been able to produce a new leaflet. It would have been even more satisfactory if we had gone ahead with the original scheme. We should not then have had to reprint the leaflets at all, but that is another point.
This is a short debate. I do not want to take up any more time. I am grateful for the opportunity to make those few points.
§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
It may be of assistance to the House for me to mention that, including the winding-up speeches, eight right hon. and hon. Members give me the impression that they may want to catch my eye. I understand that the debate ends at 7 o'clock.
§ 5.52 p.m.
§ Mrs. Margaret Bain (Dunbartonshire, East)
As is often the case in debates such as this, I find myself in the position of yet again having to remind the Government Front Bench that there is more than one Opposition party in the House. I listened earlier to the righteous indignation of the official Opposition spokesman. We become extremely angry, listening to such speeches, when the official Opposition increasingly refuse to set out their policies on public expenditure cut-backs. The Scottish National Party has consistently opposed public expenditure cutbacks, and we would remind the Government of that fact in this debate.
We on the SNP Bench have supported the child benefit scheme throughout its passage in the House, because we, like the hon. Member for Gravesend (Mr. Ovenden), believe that it is an important plank in solving the problem of poverty in this country and in the whole system of family support. However, those of us who have followed this legislation from the outset must be forgiven if we feel that not only is the general public confused but we ourselves are confused.
First, we were told that the scheme could not be implemented any earlier because there was trouble with a computer. Then we had the situation of various Cabinet leaks, and more fury was exercised over the fact that there had been Cabinet leaks than was exercised over the fact that there had been a killing off of a commitment to the scheme. 1491 Those of us who believe in open government felt that the wrong priorities had been given to those matters. Finally, we have the changes in the different leaflets and amendments. Therefore, we find it difficult to know what is happening about this scheme.
I ask for a genuine commitment from the Government this evening that the legislation will be fully implemented by 1979 so that those of us who deal with the problems of our constituents can reassure them, because they are genuinely concerned that some of the very good aspects of this legislation will not be implemented, in that they have seen their hopes raised and then dashed.
Back-Bench Members are being inundated with letters on this subject. Like the hon. Member for Gravesend, I also raise the question of widows. I have in my hand a letter signed "Disgusted Mum". When the person concerned first applied, as a widowed mother, for the interim allowance, she was told that as a widowed mother she was ineligible. She then received her allowance book for £1 a week, which was to start in April, but she has now received her new widowed mother's allowance book, only to find that £1 a week has been taken off her pension, so that she is no better off. Will the Government review the position of benefits for widows?
The take-up level is one of the more important aspects of the issue at stake today. The Minister said that 800,000 cases were still outstanding and had not been taken up. He pointed out that there would be a year's grace and that arrears could be claimed next April. What worries me is that it is precisely those people who are most in need of this type of benefit who are the least likely to apply for it. Those of us who work in constituencies where there are high levels of poverty know that it is those in most need who are most reluctant to come forward and to make claims. Will the Minister give the House an indication—I do not imagine that he will be able to do so tonight, but at some stage—of the analysis of the levels of income of households for which the take-up has already been implemented? I feel that we should thereby discover an interesting fact—that it is those on the lowest levels of income who have not taken up the benefits.
1492 We should bear in mind that this is taking place against the whole background of public expenditure cuts, unemployment and rising prices, which are affecting this section of the community the most. One of the more optimistic statements that has been made in the House recently was during the most recent Question Time to the Treasury. In reply to the hon. Member for Caernarvon (Mr. Wigley), the Chancellor of the Exchequer indicated that tax thresholds would be raised at the next Budget, although he could not give any indication of the details of that. Perhaps we could have a reassurance from the Department tonight that it is putting pressure on to ensure that tax thresholds will be rising and that the money necessary for the child benefit scheme will be made available as soon as possible.
§ 5.57 p.m.
§ Miss Jo Richardson (Barking)
Like the hon. Member for Dunbartonshire, East (Mrs. Bain), I listen with a certain amount of scepticism when the official Opposition talk about bringing in the scheme in a much better way, because I have serious doubts about whether they would have brought in such a scheme at all.
I absolutely agree with those of my hon. Friends who campaigned very hard indeed for the original scheme to have been brought in. We all still wish that it had been brought in in the way in which it was originally conceived. In that event it really would have been something. It would also have overcome the criticisms that are now being levelled from all sides about the confusion that has arisen regarding forms and so on. I shall be making a couple of points about that shortly.
The compromise scheme is better than the second suggestion that we had when the first scheme was abandoned—of paying and taxing a £1 family allowance for the first child. That was quite iniquitous. However, it would have been much better all round if we could have had the proper Child Benefit Scheme in its original form and the tax-free allowance, which would have netted about £2.70 or £3 into the pocket of the woman in the family. That is something for which all Labour Members have been workng for a long time. It would have replaced 1493 the family allowance and child tax allowance and have given one straightforward tax-free scheme which would have been simple for everyone to understand.
Now, we shall be phasing out the rest of the child tax allowance over the next few years and using it for child benefit. I hope to goodness that it will not be used for anything else. That always makes me nervous, and I, like my hon. Friend the Member for Gravesend (Mr. Ovenden), wish that the Chief Secretary had been here to listen to what I have said. It will mean that by 1979—when tax allowances are properly phased out and added to child benefit—a benefit will be paid in that year at a rate which some of us feel would be too low in 1977. It will not take account of any inflation.
The original scheme would have been something on which to build. It was not stopped by cohabitation, and it would have bridged gaps which other benefits will fail to look after. But we have killed that, and we do not have a Child Benefit Scheme at all. We have a family allowance scheme dressed up and called a Child Benefit Scheme, and we might as well acknowledge that.
I think that there is considerable confusion about what is intended, and we might as well face it. We have all had queries from our constituents about this. I was interested to read in The Sunday Times two or three weeks ago—in the Business News, no less—in an article entitled "Your Tax and You", a tax expert describing the effects of the Child Benefit Scheme. I was horrified to note that even he, expert though he is, got one fundamental point wrong and made several misleading statements. Fortunnately, somebody corrected him the following week. I am not blaming the author of the article, but if he is confused how much more confused are those who will claim?
I want to ask specifically about the order books. As I understand it, for one-parent families—I am talking only about them now—there are two books, not one. One book is for £1, which is the Child Benefit Scheme. The other is for the extra 50p which single-parent families will receive in the form of £2 orders. In other words, they claim four weeks' payment in one £2 order. The hon. Member for Wallasey (Mrs. Chalker) 1494 is looking confused, so perhaps I had better restate that. As I understand it, there will be two books for single-parent families. One will be for £1 and the other will be for 50p, but the 50p allowance will be collected in the form of a £2 order—that is, covering four weeks. That is confusing enough, and although I agree that there are many lone parents I cannot see why a single book could not have been issued to cover their allowances.
However, the situation is even more confused, because the title of the old child interim benefit which lone parents claimed has now been changed to child benefit increase. What is more, that increase is issued from Blackpool. The book comes from Blackpool, but the £1 for the child benefit comes from Washington New Town. From inquiries that have been made at official level in the Department—not at ministerial level—it seems that neither the twain shall meet. One part of the Department does not know what is being dealt with by another part. If we get confused by two books, heaven help the lone parent who is trying to find out what is supposed to happen. Why could not the books have been made more simple? In fact, why have two books and why have two offices? Why have two sets of civil servants?
I know that we need civil servants. I am not one of those who believe that we should cut down the number of civil servants in this Department—far from it. I wish that we had more staff in my local social security office. They are so hard-pressed that they are unable to carry out routine checks on pensioners and people in receipt of supplementary benefit to make sure that they are receiving their full entitlement. That is the purpose for which we should use our civil servants, and not for the kind of duplication that is being carried out here.
My other point relates to the tax form or, more specifically, to the notes for guidance on child benefits. I find these notes which are going out for 1977–78 utterly confusing. These notes ought to be one of the main sources of information for wage earners. They are something that wage earners read closely. This was a golden opportunity for the Government to get over their case about the full impact of the scheme. It is of the utmost importance that these notes should be as 1495 clear as possible, but in fact they are almost unreadable.
The notes do not emphasise the intention and overall effect of the changes, and they do not explain what the whole thing is about. There is a sentence in section 3 of the notes which tries to explain the overall impact. It says:The £104 and £130 reductions are the same as the amount on which tax would have been due if child benefit (of £1 and £1.50) had been taxable like family allowances (including the £52 reduction from personal allowances).I read that three times and I still do not quite know what it means. That, however, is supposed to be the explanation that wage earners have to follow.
I hope that it is still not too late for the Treasury to give an instruction for an explanatory note to be sent out with these tax forms. I understand that not all the forms have been sent out. The note should be in simple terms explaining what the whole thing is about. We have heard a lot about the dangers and difficulties of wage earners not understanding why their tax allowances will be phased out. Here is a golden opportunity for clearing up any misunderstanding.
I echo what was said by my hon. Friend the Member for Gravesend. We want to press the Government as hard as possible to phase in the scheme more quickly than is their intention at present. I impress on my right hon. Friend the need to make these benefits reviewable annually to take account of inflation. It is ludicrous to give £1 or £1.50 and say that that will continue to be paid until 1979, 1981 or any other date without attaching it to the cost of living to make sure that those who genuinely need this sum added to their income have it inflation-proofed. I hope that the Minister will discuss that suggestion with the Treasury.
§ 6.8 p.m.
§ Mr. Robert Boscawen (Wells)
I should like to clear up one confusion which the hon. Member for Gravesend (Mr. Ovenden) added to the debate, amongst all the others. He said that the Conservatives were not wholly committed to introducing a scheme that would abolish tax allowances and replace them by a form of child credit. That is not so, for it is the essential way for bringing help to 1496 those on low incomes below the tax level. On previous occasions when a Chancellor of the Exchequer has been able to improve the lot of taxpayers by reducing the level of tax, he has not been able to bring benefit to those most in need. It was my hon. Friend the Member for Kensington (Sir B. Rhys Williams) who first proposed this system of child credits as being one way of getting over this hitherto difficult problem.
The Minister said that he had a lot of explaining to do. I agree. Why is it, therefore, that he did not initiate a debate on this subject in the first place? Why did he leave it to the Opposition to arrange a debate at this late stage of planning for a new benefit before trying to clear up to the House some of the obvious confusion that exists? If the Minister thinks that there is no confusion about the Government's intentions, he must be living in a dream world.
I foresee hon. Members having a great deal of correspondance in the next few weeks as parents start receiving their child benefit books and wondering what will happen. The reasons for the confusion are obvious. First, no one will gain in terms of cash in his pocket, except the lone parents. Many people who believed that they would get a little more for their children will be disappointed. It is hardly surprising, too, that they want to know what will happen when they hear that their precious tax allowances are to be whittled away.
Explanation will also be needed about the cutting back of any other social security benefits that parents may receive now by £1 when the new child benefit has come in. Some retirement pensioners have young children and will want to know what their tax position will be under this new arrangement. Many parents are genuinely concerned.
Another issue which has not been thought through is the question of the attitude that local authorities will take in assessing income levels for purposes of free school meals, rate rebates, day nursery rates and so on. Will they take into account the fact that an individual's actual income is no higher although his taxable income has been increased? People will need to be reassured that there will not be an automatic change in assessment that will take them out of these local authority benefits. These are 1497 some areas in which confusion reigns. Several constituents have asked me for explanations, and I think that all hon. Members will soon be getting such requests.
There should also be some explanation about the case of the single-parent family. I understand that such families will be entitled to a continuation of their child interim benefit of £1.50 for the first child after 1st April, which means that they will be getting a higher child benefit for the first child than two-parent families would get. But then we learn that this is only an interim measure which it is intended to phase out. The Chief Secretary to the Treasury said on 16th November:This is not intended to be a permanent feature, and they will be put on the same footing as other families as soon as that is practicable."—[Official Report, 16th November 1976; Vol. 919, c. 504.]What does that last phrase mean? Is it just a few weeks before the extra £26 a year received by single-parent families will be phased out? I believe that it should not be phased out at all. Many of us have pleaded for the single-parent family in this context. Child benefit is more valuable to such one-parent families, which generally suffer more from poverty. I hope that the Government will have second thoughts and retain the extra £26.
The Secretary of State has many questions to answer if the scheme is to be understood. As others have said, it is important that the new Child Benefit Scheme is accepted because it is the right way to go ahead in helping to overcome family poverty.
§ 6.16 p.m.
§ Mrs. Audrey Wise (Coventry, South-West)
I have been a little sceptical about the Opposition's plans since, on the last occasion we debated this subject, they explained how they would work out a scheme which would cost less but give everyone more, but their audacity today is positively breathtaking. We have heard complaints about the poverty trap and the proliferation of means-tested benefits, with the resulting confusion. Yet it was the Conservatives who were the architects of the poverty trap, with the introduction of family income supplement. It was they who supervised the proliferation of means-tested benefits.
1498 Before I was a Member of this House, my hon. Friend the Member for Oldham, West (Mr. Meacher) put down many Questions to bring out the enormity of the complex means-tested benefits that the Tories were introducing.
§ Mrs. Lynda Chalker (Wallasey)
The record needs to be put straight. When my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) introduced FIS in 1971, it was as a temporary measure while work was being done on the full tax credit proposals. They were put forward in the Green Paper in 1972, which was considered later. Before either the hon. Lady or I came to the House, that was there to alleviate a special problem which was growing up at the time. There was every intention that it should be taken over by a much fairer proposal, and the hon. Lady knows it.
§ Mrs. Wise
It was there as part of the Tories' much-vaunted intention to direct help where they considered that it was needed. That intention may be laudable, but it constantly produces the confusion of means-tested benefits of which the Conservatives now complain. It is quite incompatible to say at one and the same time that money should go where it is needed but that help should be given to middle management and those who lose because their high incomes attract higher rates of tax.
We have heard a great deal today about students. That is surprising. I have marched with students and spoken in Trafalgar Square for students, and on those occasions Conservative Members have been conspicuous by their absence. The problem for students is a real one, but it is not intimately connected with child benefit. The question is one of student grants, and in the case of discretionary grants it is a question of public expenditure, which the Conservatives constantly say should be reduced.
The move from a discretionary grants system to a much more extended mandatory system is being hamstrung by the cuts introduced by our Government—and it would be even more hamstrung by the havoc that would be wrought if we had a Tory Government. That has nothing to do with child benefit. Students are not children, and it is time we got away from this view of them. We must recognise them as adults with a right to an income 1499 and should not regard them as adjuncts of their parents.
§ Mr. Newton
I agree with what the hon. Lady is saying on this point, but surely the scheme will make matters worse. Does she believe that what is happening is correct? If not, would she like to see something done about it?
§ Mrs. Wise
I certainly want to see something done about discretionary grants. I want to see the Opposition muting their constant calls for cuts in public expenditure and coming to grips with reality and the need for the improvement of discretionary grants.
We have heard a great deal about the difficulties of take-up. It is a new benefit, and I am puzzled why the Government did not introduce the benefit on the basis of tax returns. I do not see why a universal benefit has to be applied for.
The Opposition make a great deal of fuss about the take-up situation, but they must be aware that only 72 per cent. of those eligible take up the supplementary benefit to which they are entitled. They should remember this when they are making so much noise on the subject. If the Opposition feel so strongly about these matters, they should make a strong plea for a debate on why those who are entitled to supplementary benefit are not claiming it. Instead, the Opposition appear to take the view that many of those who are receiving benefit are nothing but lazy layabouts.
Some Opposition Members have again suggested that short-term benefits should be taxed and that the unemployed are better off than people who are at work. However, an examination of the official statistics shows that in 1975 a married couple with two children received after tax a figure of £45.72 when at work and £30.65 when unemployed or sick, including earnings-related supplement. How does that figure prove the point that the unemployed are better off? I suggest that it is an Opposition smokescreen to give the impression that they want to distribute largesse but that they will use fairy money without requiring payments from anyone.
I appreciate that genuine criticisms can be made of the system, questions can be asked about it and warnings 1500 sounded. My right hon. Friend is well aware that much of the trouble that has plagued us arose from the fact that the Chancellor of the Exchequer in his last Budget pre-empted the introduction of the Child Benefit Scheme by increasing child tax allowances. He spent £300 million on family support, apparently without consulting the responsible Department. He went about it in a way that made things infinitely more difficult.
The Chancellor had before him certain alternatives. For example, he could have increased family allowances to £2.68 at no greater cost than £300 million. He could have increased family allowances to a lesser figure because at that time they did not cover the first child and he could have increased the child tax allowance only for that child. However, he chose not to do that, and considerable embarrassment was caused to his colleagues on the Front and Back Benches. I urge my right hon. Friends to do their utmost to see that this does not happen again and to see that the money allocated to family support in future Budgets is concentrated on the Child Benefit Scheme.
We are informed that it is impossible to make any quck change in arrangements which have already been made. I believe that the Government fall into a trap which to some extent is of their own making or the making of the Civil Service. I still remain unconvinced that it is impossible to say that an order book token with a face value of £1.50 shall from a particular date be given the value of £2. Civil servants managed to cope with the complexity of the rationing system, and surely they should be able to undertake the kind of exercise which I have suggested in relation to the uprating of benefits.
An arrangement which would be relatively simple and cheap would be to provide the post office counter clerk with a rubber stamp with which to stamp the order book token with the additional value when it was handed over. It would certainly result in a great saving of administrative effort. I hope that my right hon. Friend will listen sceptically to the dreary tales of administrative difficulty which he probably hears day after day. The suggestion which I have advanced about the stamping of additional benefits would be one attempt to 1501 break through the alleged administrative problems.
If it is found to be impossible to bring in such a breath of bracing fresh air in a matter of two or three months, perhaps my right hon. Friend could look at the magic month of November when so many other upratings take place. Could he not tell the Chancellor that it would be a good idea if he were to make money available for family support by uprating child benefits in November? That surely is not impossible, and it would go a great part of the way to impove the Government's standing in these matters. It would also remove from the Opposition the opportunity to throw out yet another smokescreen.
I hope that my right hon. Friend will examine these suggestions. There is no doubt that those with small children, especially when the mother is not employed, are hard pressed financially, and it is extremely important to take action to relieve family poverty. Only a Labour Government are likely to do anything to relieve family poverty. We earnestly believe that that is the case, and may I, please—please—ask my right hon. Friends to prove us right.
§ 6.28 p.m.
§ Mr. Peter Bottomley (Woolwich, West)
I enjoyed the speech made by the hon. Member for Coventry, South-West (Mrs. Wise), although I did not agree with the first three-quarters of her speech or with its concluding sentence. I agreed with her suggestion about stamping the order books. However, the hon. Lady went somewhat astray on other matters. She must know that in the last two and a half years more people have come on to means-tested benefits than at any other time in our history. One cannot lay that at the door of the excesses of previous Governments.
The hon. Lady also referred to the possible havoc that would be created if a Tory Government were to come to power. She must not forget the havoc that has been created by the Labour Government in terms of inflation, the fall in the value of the pound, and unemployment.
I shall take a very short time indeed in which to make two important points. A great deal of advice on the social wage, if I may use the Government's language, 1502 comes from the TUC and CBI. A recent ministerial reply sought to make the point that both organisations represent many families, but we must appreciate that households with two people at work are represented by two voices in the TUC. However, the household with a single parent who is not in employment probably has no voice at all. Furthermore, even if a parent is able to work, he or she is usually unable to attend union meetings and will be unable to make his or her voice heard.
The second thing is that we will never solve our means-tested problems until we have a high level of child benefit, especially for the first child. Some people say that we cannot afford this. If we give a child benefit of £5 a week to a child for 20 years, when that child grows up he wil pay tax at a rate of £10 a week, at current rates, for 40 years. There is no way in which the country cannot afford that.
§ 6.31 p.m.
§ Mrs. Lynda Chalker (Wallasey)
This short debate has told us, although the Minister tried to deny it, that there is a considerable amount of confusion within the House and outside about the introduction of the Child Benefit Scheme. I have heard from all sides and from all parts of the country that people do not understand what is happening. My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) went to some lengths to explain why this was so.
No one is in doubt that a proper child credit scheme is needed. I stick by what we have always said: that this would have been the first part of a Conservative tax credit scheme. The one thing we need above all is a simpler form of family support, as was so amply illustrated by my hon. Friend the Member for Woolwich, West (Mr. Bottomley).
It is 47 years since Lord Keynes said that family allowances and child tax allowances should be amalgamated. Command Paper No. 5116, printed in 1972, contained proposals for a tax credit system. There, we said that the system should be more readily comprehensible than at present so that low income families could understand without difficulty the help to which they were entitled. Even though there may be disagreement in detail about tax credit schemes, there is 1503 all-party agreement that we need a simplified scheme. We know of the Labour Party's commitment to child credits; we know of other party commitments from both 1974 General Elections, but we are four and a half years on since that 1972 Green Paper.
We have had the earnest efforts of the right hon. Member for Blackburn (Mrs. Castle), the probing of my right hon. Friend the Member for Wanstead and Woodford, the unrelenting pressure and determination by my hon. Friend the Member for Rushcliffe (Mr. Clarke) and further determined efforts by my hon. Friend the Member for Ealing, Acton (Sir G. Young) to get the details out and to push ahead with the scheme for child benefits. At the end of it all, however, it is a sad story that we stand here today with an appalling muddle concerning the people who operate the system because they are beset by continual changes.
The result is that the scheme is being brought into disrepute before it has begun. The reason is that the Treasury was so busy interfering in other sectors of our nation that it failed to work with and to allow the Secretary of State for Social Services to produce an adequate comprehensible working scheme, as he would genuinely wish to do. The interrelationships are now too complicated. We should be helping the poor large families. About 750,000 children are still beset by the complications of the changes we have had for the last six months.
It was only this week that Dr. Wilfred Beckerman, of Balliol College, Oxford, in evidence to the Royal Commission on Distribution of Income and Wealth, said:In spite of a rapid increase in some forms of public expenditure, the proportion of people below the poverty line has not fallen significantly.In an answer to a question of mine, the Minister of State said that at the end of December 1975 there were 90,000 working families subject to a 75 per cent. rate of marginal taxation, compared with 60,000 in December 1974. Although this is subject to much error, the trend is and has been consistently upwards and is continuing in that direction.
Both sides of the House accept the need to concentrate resources on those in 1504 real need, the poorest in the community. The Government have succeeded in making this scheme so complicated and confused that there is now not only a problem of take-up in some quarters but of sheer understanding, even in this House.
I could go on to say many other things, but there has been excuse after excuse. In 1975 the problems of high alumina cement at Dusham House in Washington were the reason for delay as explained by the right hon. Member for Blackburn. But 1976 was even more disastrous than the year in which the Child Benefit Act received Royal Assent. We had the rumblings of the effects of Government pay policy last spring. I could go through all the horrors of the summer of 1976, when the Minister announced that he could not introduce the full scheme. His scheme was described by the right hon. Member for Blackburn as an abandonment of one of the Labour Party's major reform, a new system of family support. I do not think that the right hon. Lady dissents from that today. She is as sad as anyone that the scheme was not implemented. I regret that she is not here. [Interruption.] She has been unrelenting in her efforts to try to persuade the right hon. Gentleman and his friends, particularly in the Treasury, to do better than to believe in this scheme.
We have heard about the saga of wasted paper or printed paper—I see that the Minister sighs. I shall not go into it again, except to say that the Minister said first of all that the benefits would be tax-free and would not be means-tested. A couple of months later he said that they would not be tax-free but would be taxed like FAM. CTAs were not to be reduced or withdrawn. This is confusing for the average British man or woman in the street. [Interruption.] It is incredible that the first information slip should be later withdrawn. 9bout 14 million slips had been printed before the Secretary of State's next correction on 23rd September. Only 6 million of these were printed. We wonder what the recipients of 7 million of the CH1(T) original forms were doing without the proper correction slip. There is a severe discrepancy in the figures.
We understand that the Government have had problems, but they have not 1505 helped themselves out of the confusion by any of the steps taken. It would have been better to pause and get the scheme correct before making further announcements.
The chink of light really came on 16th November with the Chief Secretary's statement about what was to happen to the child tax allowances. We were delighted to see that. But even in the leaflet produced by the Inland Revenue as a result of that announcement there had to be an item 7 at the end of the leaflet. This said that any references to child benefit deduction and child benefit on the notice of coding with which it was sent out were to be ignored.
So be it. The Government were trying to get it right, but the last paragraph of the leaflet had to put something right in another that went in the same envelope to so many people across the country. There are a lot of people still in doubt and there are a lot of others who have not read the small print of the announcement which they received from the Minister of State on 28th January. Some people hope that he will clarify further, because there is a lot which is unclear. We know that he is doing his best, but it does not help people to calculate what will happen unless he can be more specific in the second part of the leaflet where he talks about its being impossible, without disproportionate expense, to eliminate the possibility of any loss in respect of means-tested benefits. He goes on to say that the free school meals and appropriate part of the child benefit will be disregarded. He makes a number of very open-ended commitments. They are very welcome because he is trying to sort out the confusion. Can we have a final statement about the effect of the poverty trap which results from means-tested benefits which cannot be fully offset by those who take up child benefit?
In addition to the leaflet saga, we had the problem of the low take-up. The Minister tried to dismiss this earlier. I checked in Hansard some figures which he gave when he said that only 83 per cent. of those eligible for interim benefit applied for the benefit. That was not as good as he wanted, but it was not too bad a figure.
1506 In reply to my Question tabled the other day, the right hon. Gentleman said that there was a 70 per cent. take-up among single-child families where that child was under eight years of age. There was a 75 per cent. take-up in families where the only child was between the ages of 8 and 12 but only a 45 per cent. take-up where the child was between the ages of 13 and 19. We have done a little research to find out what sort of families have or have not been taking up this benefit. What worries us most gravely is that those who are not taking up the benefit are the ones who need it most. It is the families for whom the transfer from wallet to purse was truly designed who need to improve their take-up. We must examine other ways of getting this through to women—not just to their men-folk. Further, we must find ways of doing this other than through post offices.
With this low take-up—the figure is about 1 million—
§ Mrs. Chalker
I do not believe that the right hon. Gentleman gave it, but we shall be able to check Hansard tomorrow to make sure. There are families who are only just realising that they are about to lose their child tax allowances. If nothing else comes out of this debate other than the message that child tax allowances are on their way out—that there is to be a phased withdrawal over the years, with different categories for different groups and that everyone should claim child benefit—we shall have done something worth while which may improve take-up of child benefit.
My right hon. Friend the Member for Wanstead and Woodford has referred to many problems. One to which he did not refer concerns the number of families who did not claim family allowance and who are not used to making regular weekly trips to a post office. Such people will want to have the child benefit paid, perhaps on a monthly or quarterly basis, through a bank. I hope that the Minister will examine this, because it could facilitate 1507 some of his Department's paper work and save administrative costs.
There are other problems, which worried the hon. Members for Gravesend (Mr. Ovenden) and Dunbartonshire, East (Mrs. Bain), concerning widows. The situation is fully spelt out, or as fully as any of these decisions are spelt out, in the Chief Secretary's statement of 16th November. It is clear that the Secretary of State has taken up the worries about widows being worse off as a result of these developments and has done something about it. There can be no doubt that there are still a number of misunderstandings.
I must tell the hon. Member for Dunbartonshire, East that she is misunderstanding the situation a little. She voted with us in June of last year when my right hon. Friend the Member for Wanstead and Woodford set out the various ways of improving child benefit levels. The hon. Lady voted with us and now has said that she did not think such a scheme was on. She must look at her own voting record before she tells us that we have got it wrong.
The crunch situation will arise in respect of local authority rate and rent rebates. Many people came off long term supplementary benefit because of the confusion and went on to rate and rent rebates. They may now find themselves in a position when they would be better off if they did not receive such rebates but instead claimed child benefit and supplementary benefit. But if they go back to supplementary benefit they return to the short-term level of £3 or more less than the level they would have been on earlier. There are other regulations which might be enacted to put this right.
As child tax allowances come down, will all the other means-tested benefits, rates and entitlements be altered? At present, what is puzzling people who are working to help families who so badly need help is whether it is better to go for one thing rather than the other.
My right hon. Friend the Member for Wanstead and Woodford asked the Minister three questions which he failed to answer. He asked about students, especially about those with no discretionary grants, and about the child who 1508 was considered to be a first child for child benefit purposes and a second child for the purposes of the child tax allowance. I hope that the Secretary of State will deal with these points.
There can be no doubt that hon. Members on both sides have shown that there has been utter confusion over this issue. The phasing-in over three years has nothing to do with the needs of poor families. It has everything to do with the need of the present Government to totter along, playing lackey to the TUC.
I must remind the Secretary of State and his hon. Friends that there are two social contracts. There is not only that contract with trade union-organised labour aimed at achieving economic recovery; there is also a contract between the State and those in society who badly need support. We have had cobbled-together schemes and schemes of utter muddle together with muddled leaflets. We want an end to that. We want a proper Child Benefit Scheme and we want to see the country working towards a tax credit system which my hon. Friend the Member for Braintree (Mr. Newton) mentioned and which will give proper support without this confusion, endless spending and additional administrative cost.
§ 6.46 p.m.
§ The Secretary of State for Social Services (Mr. David Ennals)
I am glad that we have had this opportunity to debate such an important subject. A number of questions have been put and some powerful arguments have been used by my hon. Friends. I suppose that I was being too optimistic, when looking forward to this debate, in thinking that any credit would be given to the Government by the Opposition for our achievement in introducing child benefits in spite of the economic difficulties. I suppose that it was too much to expect a little bit of grace from the Opposition Front Bench. All that we have had has been petty, niggling, carping, party political criticism.
The statement by the Opposition that the Child Benefit Scheme is heading for the rocks can only do harm to what I believe is an important social measure. Accordingly, I wish to give one or two assurances. It was never stated by this Government, in May or at any other time, that we would abandon the full Child 1509 Benefit Scheme. When I made my statement in May, I explained the reasons and many hon. Members on both sides of the House recognised the pay policy arguments. I never said that we were abandoning the scheme.
I was glad that we were able to make a statement in September in which we said clearly that the whole scheme would be phased in and would come in by April 1979. I give the assurance to the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain) that it is a Government commitment that the full scheme will be phased in and that it will start in April. The scheme is not heading for the rocks.
My hon. Friend the Member for Coventry, South-West (Mrs. Wise) was absolutely right to say that she can look only to a Labour Government for this sort of achievement. I am prepared to take the criticism of Conservative Members on some things but certainly not on matters of social policy. Let us look at the Conservatives' record. When I ceased to be a Member of Parliament in 1970, we almost had the Crossman pension plan on the stocks. It was dropped. All that was carried into law was the attendance allowance and the invalidity pension. It needed a Labour Government to be returned to power to bring in a proper piece of pensions legislation—as well as all of what we have done to help the disabled.
Let us look at the question of child support. The last time the Conservatives came to power, they did so on a promise to increase family allowances. They had four years when they did not increase those allowances. The Labour Government came to office saying that we would introduce a new system of child cash allowances for every child, including the first, payable to the mother. That is exactly what we shall have done as from April of this year. It is the first step in April, but it is the first step in a major social reform. Conservative Members always come up with their tax credit proposals as if they are somehow a total panacea. Opposition Members ask us why we do not do more. This comes from a party which urges us to cut back even further on public expenditure.
The hon. Member for Wallasey (Mrs. Chalker) asked why we are not introducing a tax credit scheme. On my latest 1510 estimate, the cost of introducing a tax credit scheme in 1977 would be about £5,000 million. If the Opposition thought that such a scheme was so important, they had four years of office in which they could have introduced it, but they did not do so. Why, therefore, should we believe that they would do it now? In any case, the wisdom of doing so does not seem to be accepted by all Conservatives.
The Young Conservatives, in their recent pamphlet "A Credit to Us All", suggested certain weaknesses of the tax credit Green Paper. They said that it failed to state its clear priorities and that it did not eliminate the need for a complicated social benefit system. They suggested that it had not been properly thought out in its financing. They concluded:The seemingly overwhelming desire to achieve one tax rate and one rate of credit for most people irrespective of income appears to be the only clearly expressed priority.
§ Mr. Patrick Jenkin
What the authors of that pamphlet, like many other people, have failed to understand is that the Green Paper stated clearly that the figures were put in for purely illustrative purposes. The Select Committee fully understood that even if the right hon. Gentleman does not.
§ Mr. Ennals
Very well. That may he so, but I have produced a conclusion as to what those figures, illustrative as they might be, would cost.
§ Mrs. Wise
Would my right hon. Friend confirm that, apart from many ill-thought-out and complicated schemes put forward by the Conservative Party, Conservative Governments have not put a penny on family allowances, which were introduced by a Labour Government and have been increased only by succeeding Labour Governments?
§ Mr. Ennals
Exactly. The Conservatives did not increase allowances in their four years of office between 1970 and 1974. Nor did they do so in their previous term. I am prepared to accept Opposition criticism on many issues, but not on this one. Labour Governments have a solid record of steady achievement in many sectors compared with the virtual void in the record of the Opposition.
The right hon. Member for Wanstead and Woodford (Mr. Jenkin) and the hon. 1511 Member for Wallasey went on and on about leaflets. We had to produce a supplementary information sheet when it was concluded that we could not introduce the whole scheme at once in April 1977. That sheet had to be replaced when we decided last September that the scheme would be phased in over three years and that the benefit would be tax-free. Now, the Opposition say that we should have postponed the scheme for a whole year. I do not believe that those who will receive the benefit will think that. I think we are entitled to point out to those who will receive the additional benefit from April that the Opposition would not have introduced it in full.
This change did not detract from the main purpose of the leaflet, which was to get the families with one child to apply for child benefit. My hon. Friend the Member for Coventry, South-West asked why it could not be paid automatically, using tax returns. But we do not have a full record of one-child families. Tax returns could not be used because many people do not make them annually, and the person entitled to child benefit is not always the person who gets the tax allowance. It is not possible to do it in the way suggested by my hon. Friend.
Much has been said about the difficulties in the post offices. There are 24,000 post offices, some of them very small. Some of them did not have the leaflets at the time. If we had limited distribution to the major post offices, it would have made things more difficult for claimants. The main question is whether people are applying for the benefit to which they are entitled. More of them are doing so now, and that was the whole purpose of the leaflet. There is a 90 per cent. take-up of child benefit, which is significantly higher than the take-up of the family income supplement over the years since it was introduced by the Conservative Government. But about 800,000 people could still apply. I do not know where the hon. Lady gets her information that it is largely the poor families which have not applied, because that is not my impression.
Again, about 300,000 families have a child who is leaving school perhaps in May or at about that time but who 1512 would be entitled to benefit until then. Clearly, such families would get only a small benefit for one or two months, and many of them might not bother to apply. We shall not have a complete take-up. My impression is that many others who have not applied are higher earners who will apply as soon as they get advice from their tax advisers. They will not suffer if they have not made their application before April.
I assure the hon. Lady that, through the publicity that is continuing this month and which will lead up to April, we expect a substantial increase in applications. One of the advantages of a debate like this is that it will, I hope, gain publicity. I hope that all those who are entitled to claim child benefit will do so in the next three months.
The hon. Lady asked about payment through the banks. On 25th January, in a Written Answer, my right hon. Friend the Minister for Social Security said that the Government were bearing in mind the possibility of payment direct to bank accounts but that it would have to come at a later stage. There are complications in introducing such a scheme. This has been an enormous operation, carried out in Washington and Newcastle.
My hon. Friend the Member for Barking (Miss Richardson) asked reasonably, why there had to be two books for a one-parent family. She also asked why both Blackpool and Newcastle were involved. There has been plenty of contact between the two. When we came to introduce the child interim benefit, it was possible in the time available only by using both Blackpool and Newcastle. It could not have been done otherwise without an increase in staff. Because of the pressure at Newcastle, it had to be done at Blackpool as well. As soon as the new computer system comes into use the two offices will come together. Meanwhile they will keep in close contact. Eventually the systems will be merged and operated from one office.
I was asked why the increased benefit could not be paid by the post office clerks rubber-stamping order books. That device would not work for the only child, who would not have a book to himself. Technically, there are also problems of fraud.
I was also asked about the students' position. Regulations to exclude students on advanced courses will be laid before 1513 the House in due course, but I cannot give an exact date. Nor can I at this stage add to what my right hon. Friend the Chief Secretary to the Treasury said in his statement on 16th November. I can, however, say that talk by the right hon. Member for Wanstead and Woodford about people losing hundreds of pounds is nonsense. Even for a man on an income of £21,000 a year upwards, paying 83 per cent. tax, the reduction in tax allowance for the first child would cost him only £86 a year. What the right hon. Gentleman said was, therefore, a gross exaggeration.
§ Mr. Patrick Jenkin
But the people who do not get the grant, and who, therefore, will have no mechanism for replacing the value of the tax allowance, will be losing. Can the right hon. Gentleman say something about that?
§ Mr. Ennals
I do not know whether the right hon. Gentleman is asking for a special child tax allowance or what proposal he is putting. He said the scheme is complicated. Presumably he is seeking to make it more complicated.
Several hon. Members referred to FIS and the effect of child benefit upon FIS. There has obviously been some uncertainty about this. This was reflected in an article in New Society only last week. I would repeat and make clear that our proposal for FIS will mean that no family will lose FIS or have the amount of FIS reduced. In fact, a family with more than one child, and lone parents with one child who have been receiving child interim benefit, will gain on the basis of our FIS-child benefit proposals. I am sorry that there has been some misunderstanding about this.
The right hon. Member for Wanstead and Woodford said that higher-rate taxpayers would lose. There was a great deal of exaggeration, but that, fortunately, was dealt with by my right hon. Friend the Chief Secretary. The number of highrate taxpayers for whom the loss of child tax allowance may not be fully matched by child benefit may be about 300,000 1514 —that is, those paying 55 per cent. up-wards. But the losses do not start to exceed 50p a week until the 70 per cent. marginal rate is reached. The maximum loss for an 83 per cent. marginal rate taxpayer with two children is no more than £1.23 a week. That is a small sum.
The Opposition's carping attitude in this debate does them no credit at all. They have shown very little appreciation of the importance of what this Government have achieved with regard to child benefit. For years, people concerned with child poverty have campaigned for a new benefit and form of child support. They argued that family allowances were not paid for the first child, even though in many respects the first child was the most expensive to keep. The campaigners complained that child tax allowance should go to help those who were too poor to pay tax and to those who most needed help. They argued the case for a benefit paid directly to the mother as the one who is the most responsible for paying for a child. They argued the case for a tax-free benefit.
All these are done in the Child Benefit Scheme to be initiated in April this year. It is being introduced at a time of great economic stress. Suggestions from the Opposition that we ought to be spending more money, or doing it in a different way, are ones that I cannot accept. Of course a scheme such as this has problems. There will be difficulties and developing problems. I believe, however, that all of us can feel a sense of pride that in April the Child Benefit Scheme will begin. All of us must accept that child benefit is the main way of relieving family poverty.
I assure my hon. Friends that I want to see a higher rate of child benefit. Although I cannot give an assurance about what the Government will do next year, the year after or the year after that, I can say that we as Ministers are committed to the scheme and its social benefit. In so far as funds can be made available in times of economic stress, they will be. That is the pledge I give in launching the Child Benefit Scheme.
§ Question put, That this House do now adjourn:—1516
§ The House divided: Ayes 271, Noes 278.1519
|Division No. 62.]||AYES||[7.4p.m.|
|Adley, Robert||Gardiner, George (Reigate)||Maxwell-Hyslop, Robin|
|Aitken, Jonathan||Gardner, Edward (S Fylde)||Mayhew, Patrick|
|Alison, Michael||Gilmour, Rt Hon Ian (Chesham)||Meyer, Sir Anthony|
|Amery, Rt Hon Julian||Gilmour, Sir John (East Fife)||Miller, Hal (Bromsgrove)|
|Arnold, Tom||Glyn, Dr Alan||Mills, Peter|
|Atkins, Rt Hon H. (Spelthorne)||Godber, Rt Hon Joseph||Miscampbell, Norman|
|Awdry, Daniel||Goodhew, Victor||Mitchell, David (Basingstoke)|
|Bain, Mrs Margaret||Goodlad, Alastair||Moate, Roger|
|Baker, Kenneth||Gorst, John||Monro, Hector|
|Banks, Robert||Gow, Ian (Eastbourne)||Montgomery, Fergus|
|Beith, A. J.||Gower, Sir Raymond (Barry)||Moore, John (Croydon C)|
|Bell, Ronald||Grant, Anthony (Harrow C)||More, Jasper (Ludlow)|
|Bennett, Dr Reginald (Fareham)||Grieve, Percy||Morgan-Giles, Rear-Admiral|
|Benyon, W.||Griffiths, Eldon||Morris, Michael (Northampton S)|
|Berry, Hon Anthony||Grimond, Rt Hon J.||Morrison, Charles (Devizes)|
|Biffen, John||Grist, Ian||Morrison, Hon Peter (Chester)|
|Biggs-Davison, John||Grylls, Michael||Mudd, David|
|Blaker, Peter||Hall, Sir John||Nelson, Anthony|
|Body, Richard||Hall-Davis, A.G.F.||Neubert, Michael|
|Boscawen, Hon Robert||Hamilton, Michael (Salisbury)||Newton, Tony|
|Bottomley, Peter||Hampson, Dr Keith||Nott, John|
|Bowden, A. (Brighton, Kemptown)||Hannam, John||Onslow, Cranley|
|Boyson, Dr Rhodes (Brent)||Harvie Anderson, Rt Hon Miss||Oppenheim, Mrs Sally|
|Braine, Sir Bernard||Hastings, Stephen||Page, John (Harrow West)|
|Brittan, Leon||Havers, Sir Michael||Page, Rt Hon R. Graham(Crosby)|
|Brocklebank-Fowler, C.||Hayhoe, Barney||Page, Richard (Workington)|
|Brotherton, Michael||Heath, Rt Hon Edward||Pardoe, John|
|Brown, Sir Edward (Bath)||Henderson, Douglas||Parkinson, Cecil|
|Bryan, Sir Paul||Heseltine, Michael||Pattie, Geoffrey|
|Buchanan-Smith, Alick||Hicks, Robert||Penhaligon, David|
|Buck, Antony||Higgins, Terence L.||Percival, Ian|
|Budgen, Nick||Hodgson, Robin||Peyton, Rt Hon John|
|Bulmer, Esmond||Holland, Philip||Pink, R. Bonner|
|Burden, F.A.||Hooson, Emlyn||Price, David (Eastleigh)|
|Butler, Adam (Bosworth)||Hordern, Peter||prior, Rt Hon James|
|Carlisle, Mark||Howe, Rt Hon Sir Geoffrey||Pym, Rt Hon Francis|
|Carson, John||Howell, David (Guildford)||Raison, Timothy|
|Chalker, Mrs Lynda||Howells, Geraint (Cardigan)||Rathbone, Tim|
|Channon, Paul||Hunt, David (Wirral)||Rawlinson, Rt Hon Sir Peter|
|Churchill, W.S.||Hunt, John (Bromley)||Rees, Peter (Dover & Deal)|
|Clark, Alan (Plymouth, Sutton)||Hurd, Douglas||Rees-Davies, W. R.|
|Clark, William (Croydon S)||Hutchison, Michael Clark||Reid, George|
|Clarke, Kenneth (Rushcliffe)||Irving, Charles (Cheltenham)||Renton, Rt Hon Sir D. (Hunts)|
|Cockcroft, John||James, David||Renton, Tim (Mid-Sussex)|
|Cooke, Robert (Bristol W)||Jenkin, Rt Hon P. (Wanst'd & W'df'd)||Rhodes James, R.|
|Cope, John||Johnson Smith, G. (E Grinstead)||Ridley, Hon Nicholas|
|Cordle, John H.||Jones, Arthur (Daventry)||Ridsdale, Julian|
|Cormack, Patrick||Jopling, Michael||Rifkind, Malcolm|
|Corrie, John||Joseph, Rt Hon Sir Keith||Rippon, Rt Hon Geoffrey|
|Costain, A.P.||Kaberry, Sir Donald||Roberts, Wyn (Conway)|
|Critchley, Julian||King, Evelyn (South Dorset)||Rodgers, Sir John (Sevenoaks)|
|Crouch, David||Knight, Mrs Jill||Ross, Stephen (Isle of Wight)|
|Crowder, F. P.||Knox, David||Rossi, Hugh (Hornsey)|
|Davies, Rt Hon J. (Knutsford)||Lamont, Norman||Rost, peter (SE Derbyshire)|
|Dean, Paul (N Somerset)||Langford-Holt, Sir John||Royle, Sir Anthony|
|Dodsworth, Geoffrey||Latham, Michael (Melton)||Sainsbury, Tim|
|Douglas-Hamilton, Lord James||Lawrence, Ivan||st. John-Stevas, Norman|
|Drayson, Burnaby||Lawson, Nigel||Scott, Nicholas|
|du Cann, Rt Hon Edward||Lester, Jim (Beeston)||Shaw, Giles (pudsey)|
|Durant, Tony||Lewis, Kenneth (Rutland)||Shelton, William (Streatham)|
|Eden, Rt Hn Sir John||Lloyd, Ian||Shepherd, Colin|
|Edwards, Nicholas (Pembroke)||Loveridge, John||Shersby, Michael|
|Emery, Peter||Luce, Richard||Silvester, Fred|
|Evans, Gwynfor (Carmarthen)||McAdden, Sir Stephen||Sims, Roger|
|Eyre, Reginald||MacCormick, Iain||Sinclair, Sir George|
|Fairbairn, Nicholas||McCrindle, Robert||Skeet, T. H. H.|
|Fairgrieve, Russell||Macfarlane, Nell||Smith, Cyril(Rochdale)|
|Farr, John||MacGregor, John||Smith, Dudley (Warwick)|
|Fell, Anthony||Macmillan, Rt Hon M. (Farnham)||Speed, Keith|
|Fisher, Sir Nigel||McNair-Wilson, M. (Newbury)||Spence, John|
|Fletcher-Cooke, Charles||McNair-Wilson, P. (New Forest)||Spicer, Michael (S Worcester)|
|Fookes, Miss Janet||Madel, David||Sproat, Iain|
|Forman, Nigel||Marshall, Michael (Arundel)||Stainton, Keith|
|Fowler, Norman (Sutton C'f'd)||Marten, Neil||Stanbrook, Ivor|
|Fox, Marcus||Mates, Michael||Stanley, John|
|Fraser, Rt Hon H. (Stafford & St)||Mather, Carol||Steel, Rt Hon David|
|Freud, Clement||Maude, Angus||Steen, Anthony (Wavertree)|
|Fry, Peter||Maudling, Rt Hon Reginald||Stewart, Rt Hon Donald|
|Galbraith, Hon T. G. D.||Mawby, Ray||Stewart, Ian (Hitchin)|
|Stokes, John||Trotter, Neville||Whitelaw, Rt Hon William|
|Stradling Thomas, J.||van Straubenzee, W. R.||Wiggin, Jerry|
|Tapsell, Peter||Vaughan, Dr Gerard||Wigley, Dafydd|
|Taylor, R. (Croydon NW)||Viggers, Peter||Wilson, Gordon (Dundee E)|
|Taylor, Teddy (Cathcart)||Wakeham, John||Winterton, Nicholas|
|Tebbit, Norman||Walder, David (Clitheroe)||Wood, Rt Hon Richard|
|Temple-Morris, Peter||Walker, Rt Hon P. (Worcester)||Young, Sir G. (Ealing, Acton)|
|Thatcher, Rt Hon Margaret||Wall, Patrick||Younger, Hon George|
|Thomas, Dafydd (Merioneth)||Walters, Dennis|
|Thomas, Rt Hon P. (Hendon S)||Watt, Hamish||TELLERS FOR THE AYES:|
|Thompson, George||Weatherill, Bernard||Mr. Spencer Le Marchant and|
|Thorpe, Rt Hon Jeremy (N Devon)||Wells, John||Mr. Michael Roberts|
|Townsend, Cyril D.||Welsh, Andrew|
|Abse Leo||Dunn, James A.||Kinnock, Neil|
|Allaun Frank||Dunnett, Jack||Lambie, David|
|Anderson, Donald||Eadie, Alex||Lamborn, Harry|
|Archer Peter||Edge, Geoff||Lamond, James|
|Armstrong Ernest||Edwards, Robert (Wolv SE)||Latham, Arthur (Paddington)|
|Ashley Jack||Ellis, John (Brigg & Scun)||Leadbitter, Ted|
|Ashton Joe||English, Michael||Lee, John|
|Atkins, Ronald (Preston N)||Ennals, David||Lestor, Miss Joan (Eton & Slough)|
|Atkinson Norman||Evans, Fred (Caerphilly)||Lever, Rt Hon Harold|
|Barnett, Guy (Greenwich)||Evans, loan (Aberdare)||Lewis, Ron (Carlisle)|
|Barnett, Rt Hon Joel (Heywood)||Ewing, Harry (Stirling)||Lipton, Marcus|
|Bates, Alf||Faulds, Andrew||Litterisk, Tom|
|Bean, R. E.||Fernyhough, Rt Hon E.||Lomas, Kenneth|
|Benn, Rt Hon Anthony Wedgwood||Fitch, Alan (Wigan)||Loyden, Eddie|
|Bennett, Andrew (Stockport N)||Fitt, Gerard (Belfast W)||Luard, Evan|
|Bidwell Sydney||Flannery, Martin||Lyon, Alexander (York)|
|Bishop E. S.||Fletcher, Ted (Darlington)||Lyons, Edward (Bradford W)|
|Blenkinsop, Arthur||Foot, Rt Hon Michael||Mabon, Rt Hon Dr J. Dickson|
|Boardman, H.||Ford, Ben||Mc Cartney, Hugh|
|Booth, Rt Hon Albert||Forrester, John||Mc Donald, Dr Oonagh|
|Bottomley, Rt Hon Arthur||Fowler, Gerald (The Wrekin)||Mc Elhone, Frank|
|Boyden, James (Bish Auck)||Fraser, John (Lambeth, N'w'd)||MacFarquhar, Roderick|
|Bradley, Tom||Freeson, Reginald||McGuire, Michael (Ince)|
|Bray Dr Jeremy||Garrett, John (Norwich S)||MacKenzie, Gregor|
|Brown Hugh D. (Provan)||Garrett, W. E. (Wallsend)||Mackintosh, John P.|
|Brown, Robert C. (Newcastle W)||George, Bruce||Maclennan, Robert|
|Brown Ronald (Hackney S)||Gilbert, Dr John||McMillan, Tom (Glasgow C)|
|Buchan, Norman||Ginsburg, David||McNamara, Kevin|
|Buchanan, Richard||Golding, John||Madden, Max|
|Butler, Mrs Joyce (Wood Green)||Gould, Bryan||Magee, Bryan|
|Callaghan, Rt Hon J. (Cardiff SE)||Gourlay, Harry||Mahon, Simon|
|Callaghan, Jim (Middleton & P)||Graham, Ted||Mallalieu, J. P. W.|
|Campbell Ian||Grant, George (Morpeth)||Marks, Kenneth|
|Canavan, Dennis||Grocott, Bruce||Marshall, Dr Edmund (Goole)|
|Cant, R. B.||Hardy, Peter||Marshall, Jim (Leicester S)|
|Carmichael, Neil||Harrison, Walter (Wakefleld)||Mason, Rt Hon Roy|
|Carter, Ray||Hart, Rt Hon Judith||Maynard, Miss Joan|
|Carter-Jones, Lewis||Hattersley, Rt Hon Roy||Meacher, Michael|
|Cartwright, John||Hayman, Mrs Helene||Mellish, Rt Hon Robert|
|Castle, Rt Hon Barbara||Healey, Rt Hon Denis||Mendelson, John|
|Clemitson Ivor||Heffer, Eric S.||Mikardo, Ian|
|Cocks, Rt Hon Michael||Hooley, Frank||Millan, Rt Hon Bruce|
|Cohen Stanley||Horam, John||Moonman, Eric|
|Coleman, Donald||Howell, Rt Hon Denis (B'ham, Sm H)||Morris, Alfred (Wythenshawe)|
|Colquhoun, Ms Maureen||Hoyle, Doug (Nelson)||Morris, Charles R. (Openshaw)|
|Cook Robin F. (Edin C)||Huckfield, Les||Morris, Rt Hon J. (Aberavon)|
|Corbett, Robin||Hughes, Rt Hon C. (Anglesey)||Moyle, Roland|
|Cowans Harry||Hughes, Robert (Aberdeen N)||Mulley, Rt Hon Frederick|
|Cox, Thomas (Tooting)||Hughes, Roy (Newport)||Murray, Rt Hon Ronald King|
|Craigen, Jim (Maryhill)||Hunter, Adam||Newens, Stanley|
|Crawshaw, Richard||Irvine, Rt Hon Sir A. (Edge Hill)||Noble, Mike|
|Cronin, John||Irving, Rt Hon S. (Dartford)||O'Halloran, Michael|
|Crosland, Rt Hon Anthony||Jackson, Colin (Brighouse)||Orbach, Maurice|
|Crowther Stan (Rotherham)||Jackson, Miss Margaret (Lincoln)||Orme, Rt Hon Stanley|
|Cryer, Bob||Janner, Greville||Ovenden, John|
|Cunningham, G. (Islington S)||Jay, Rt Hon Douglas||Owen, Rt Hon Dr David|
|Cunningham, Dr J. (Whiteh)||Jeger, Mrs Lena||Padley, Walter|
|Davidson, Arthur||Jenkins, Hugh (Putney)||Paisley, Rev Ian|
|Davies, Bryan (Enfield N)||John, Brynmor||Palmer, Arthur|
|Davies, Denzil (Llanelli)||Johnson, James (Hull West)||Park, George|
|Davies, Ifor (Gower)||Johnson, Walter (Derby S)||Parker, John|
|Davis, Clinton (Hackney C)||Jones, Alec (Rhondda)||parry, Robert|
|Dean, Joseph (Leeds West)||Jones, Barry (East Flint)||Pavitt, Laurie|
|Dell, Rt Hon Edmund||Jones, Dan (Burnley)||Pendry, Tom|
|Dempsey, James||Judd, Frank||Perry, Ernest|
|Doig, Peter||Kaufman, Gerald||Prentice, Rt Hon Reg|
|Dormand, J. D.||Kelley, Richard||Price, C. (Lewisham W)|
|Douglas-Mann, Bruce||Kerr, Russell||Price, William (Rugby)|
|Duffy. A. E. P.||Kilroy-Silk, Robert||Radice, Giles|
|Rees, Rt Hon Merlyn (Leeds S)||Spearing, Nigel||Watkinson, John|
|Richardson, Miss Jo||Spriggs, Leslie||Weetch, Ken|
|Roberts, Albert (Normanton)||Stallard, A. W.||Weitzman, David|
|Roberts, Gwllym (Cannock)||Stewart, Rt Hon M. (Fulham)||Wellbeloved, James|
|Robinson, Geoffrey||Stoddart, David||White, Frank R. (Bury)|
|Roderick, Caerwyn||Stott, Roger||White, James (Pollok)|
|Rodgers, George (Chorley)||Strang, Gavin||Whitehead, Phillip|
|Rodgers, Rt Hon William||Strauss, Rt Hon G. R.||Whitlock, William|
|Rooker, J. W.||Summerskill, Hon Dr Shirley||Willey, Rt Hon Frederick|
|Rose, Paul B.||Swain, Thomas||Williams, Rt Hon Alan (Swansea W)|
|Ross, Rt Hon W. (Kilmarnock)||Taylor, Mrs Ann (Bolton W)||Williams, Alan Lee (Hornch'ch)|
|Rowlands, Ted||Thomas, Jeffrey (Abertillery)||Williams, Rt Hon Shirley (Hertford)|
|Ryman, John||Thomas, Mike (Newcastle E)||Williams, Sir Thomas (Warrington)|
|Sandelson, Neville||Thomas, Ron (Bristol NW)||Wilson, Alexander (Hamilton)|
|Sedgemore, Brian||Thorne, Stan (Preston South)||Wilson, William (Coventry SE)|
|Selby, Harry||Tierney, Sydney||Wise, Mrs Audrey|
|Shaw, Arnold (Ilford South)||Tinn, James||Woodall, Alec|
|Sheldon, Rt Hon Robert||Torney, Tom||Woof, Robert|
|Shore, Rt Hon Peter||Tuck, Raphael||Wrigglesworth, Ian|
|Short, Mrs Renee (Wolv NE)||Urwin, T. W.||Young, David (Bolton E)|
|Silverman, Julius||Varley, Rt Hon Eric G.|
|Skinner, Dennis||Wainwright, Edwin (Dearne V)||TELLERS FOR THE NOES:|
|Small, William||Walker, Terry (Kingswood)||Mr. Joseph Harper and|
|Smith, John (N Lanarkshire)||Ward, Michael||Mr. James Hamilton.|
|Snape, Peter||Watkins, David|
§ Question accordingly negatived.