HC Deb 15 July 1977 vol 935 cc991-2

The House is now agreed that the reduction already agreed in petrol duty should take effect from 6 p.m. on 8th August. I do not intend to look for offsetting tax increases elsewhere.

The Government also accept the principle expressed in certain amendments made at Committe stage of the Finance Bill that the income tax personal allowances should be increased further. However, the Government wish to concentrate relief this year particularly on families. By contrast, the Committee stage amendments would tilt the balance in favour of the single personal allowance. I shall therefore be proposing at Report stage of the Finance Bill to substitute an amendment which will increase the allowances but to restore the balance of my original proposal in favour of families. It will increase the single personal allowance by £40 and the married person's allowance by £70 as compared with the increase in these allowances which I originally proposed in my Budget speech, at a cost of some £490 million; and there will be corresponding increases in other allowances.

At the same time, I shall propose a reduction in the basic rate of income tax by lp from 35p to 34p, at a cost of some £470 million.

The total full year costs of the income tax reliefs in this year's Finance Bill will thus come to some £2 billion—closely in line with my original intention in the Budget.

The Government have also decided to increase family support in 1978–79 by a substantial improvement in the rates of child benefit as part of the further phasing in of the child benefit scheme. From April 1978 child benefit rates will be increased from the present £1 for the first child and £1.50 for subsequent children to £2.30 for all children, together with a doubling of the present premium for the first child of one-parent families to £1, at a net Exchequer cost in 1978–79 which will be over £300 million. The new rates will result in part from a further step in the phasing out of child tax allowances, the basic level of which will be reduced to £100. A fuller statement about the level of child tax allowances in 1978–79 will be made in due course. Regulations for the new child benefit rates will be laid very shortly.

The Government have decided to prevent certain increases in the cost of living which would otherwise take effect before the end of this year and which are particularly burdensome for people on low incomes or with family commitments. Milk is an important item in family budgets, especially when there are several children. The Government have therefore decided to increase the milk subsidy so as to prevent an immediate further price rise of l½p a pint and to keep the price of milk unchanged until the end of the year. The cost of this will be about £110 million, falling in the financial year 1977–78.

The Government have also decided to raise the income limits for eligibility for free school meals. This will provide over half-a-million more children with free school meals and increase the number benefiting to about one-quarter of all those children who take school meals. School meals will now be free for a family with two children having earnings up to over £60 a week, and for a family with four children up to over £75 a week. The cost will be £18 million in 1977–78 and £28 million in a full year, and local authorities will be consulted about how this should be reimbursed.

The electricity discount scheme will be operated again this winter, in order to relieve households receiving family income supplement or supplementary benefit of 25 per cent. of one quarter's bill.