HC Deb 08 April 1982 vol 21 cc1081-2
12. Mr. Andrew F. Bennett

asked the Chancellor of the Exchequer if he will delay the introduction of the taxation of unemployment benefit until he has restored the 5 per cent. abatement of that benefit taken in lieu of taxation.

Mr. Bruce-Gardyne

No, Sir.

Mr. Bennett

Does the Minister agree that the proposal to abate unemployment benefit by 5 per cent. in lieu of tax was a particularly mean attack on those living on benefits, which could possibly be justified only as an interim measure? Is it not now essential that it is taken away once the benefit has come into taxation? Will the hon. Member remind the House what a married man with two children has to survive on when receiving unemployment benefit, and will he confirm that there are many hon. Members who will take their family out for a meal and spend on that one meal as much as a family man will receive in unemployment benefit in a week?

Mr. Bruce-Gardyne

It was made quite clear by my right hon. and hon. Friends when the abatement took place that this would be reviewed at the point at which the benefits came into tax. That review has taken place, with the result of which I am sure the hon. Gentleman is aware. I remind him that, from the very start of the benefits system in 1948, successive Governments have accepted the principle that unemployment benefit logically belonged within the tax net.

Mr. Straw

The Minister cannot wriggle out of this one. The Secretary of State gave a clear and categoric undertaking that this 5 per cent. abatement was in lieu of taxation. I again return to the Government's practice of the politics of greed. Is the truth not that, as a result of this 5 per cent. cut, the introduction of taxation and the abolition of the earnings-related supplement, most families entering unemployment will be £20 a week worse off than they would have been had Labour's system remained? Will the Minister also confirm that in every Budget the Chancellor has gratuitously given further tax concessions to the rich, well above those needed to maintain their real standard of living, at a cost far higher than the cost of restoring this 5 per cent. abatement?

Mr. Bruce-Gardyne

Had the hon. Gentleman listened carefully to the answers to earlier questions he would have gathered that the reductions in the confiscatory top marginal levels of taxation left by the last Government would make a derisory contribution to changing the fiscal balance. Let me make this absolutely clear, because the hon. Gentleman has made this allegation before. There was a firm commitment to restore abatement of the invalidity pension when that was brought into tax. As a token of our commitment to that, the abatement of the invalidity allowance was restored at the last benefit uprating. We did not give a similar commitment to restore the abatement of other benefits, including unemployment benefit. We undertook to consider it, and that we have done, as my hon. Friend the Minister for Social Security made absolutely clear.

Mr. Peter Bottomley

Does my hon. Friend accept that restoring the abatement would cost 10 per cent. of the revenue that comes from taxing the benefits? Should the House look to the Treasury, the DHSS or elsewhere for the review that will take place on this abatement?

Mr. Bruce-Gardyne

As my hon. Friend knows, the undertaking given by my hon. Friend the Minister for Social Security was that the matter would be kept under review. The House must recognise that there are conflicting claims at all times on the revenue. I find it difficult to understand the attitude of the Labour Party, which has constantly complained about the burden of the increased national insurance contributions on the employee. These are the sorts of benefits which that contribution goes to meet.