HC Deb 18 June 1986 vol 99 cc1078-81 5.17 pm
Sir Brandon Rhys Williams (Kensington)

I beg to move, That leave be given to bring in a Bill to require the Secretary of State for Social Services, in the event of an increase in the Retail Price Index in any calendar year, to lay before Parliament the draft of an uprating order which will make an increase in child benefit with effect from the beginning of the following financial year of not less than a corresponding percentage; and to make future increases in child benefit a charge on the National Insurance Fund. It is 40 years since Parliament adopted, with all-party support, the introduction of the family allowance. That was a weekly child credit which is now incorporated in the child benefits that are the subject of my proposed Bill. The weekly tax-free allowance, payable directly to the mother, has become the central feature of our system of family income support, and it has been relied on by millions of mothers to help with the feeding, clothing and care of what must now be the majority of British citizens. It is the most economical allowance in terms of administration, because it is a universal benefit. There is no case-work. It has nearly 100 per cent. take-up. It is highly popular. One reason for that is that mothers can rely on it every week in making their plans for the household budget.

In the course of the 1970s, it was decided by Parliament to amalgamate family allowances with the child tax allowances, which were included by William Pitt in our income tax system at the very beginning— before the end of the 18th century. The purpose of the child tax allowances was to leave families with children relatively better off than those without children to support. That is a social objective which I do not think would be seriously challenged by anyone.

I have sought the leave of the House to introduce the Bill because I am concerned at two recent developments in official policy regarding families with children. One is the proposal to replace the family income supplement, which is also normally drawn by the mother, with a new family credit to be added to the pay packet of the breadwinner. The Secretary of State agreed at Report stage on the Social Security Bill to reconsider that suggestion, which has been widely condemned, but we have not yet seen his alternative proposals. My view is that we must maintain the practice of paying the money to support the children direct to the caring parent.

The other evidence of official policy towards the support of the family which is causing concern to hon. Members on both sides of the House is the lack of commitment to maintaining the real value of child benefit. The object of my Bill is to ensure that the real value of child benefit is not diminished by inflation with the passage of time. It is, in fact, a Bill almost identical to the one that I introduced with the support of the hon. Member for Birkenhead (Mr. Field) and one of my hon. Friends—now a member of the Government—in 1980. That Bill was not opposed by a single hon. Member, but the DHSS and the Treasury have not taken due notice of that fact.

If child benefit fails to hold its real value, the practical effect is to raise the share of the total tax burden which is borne by the section of the community—between a quarter and a third of all income tax payers—who have responsibility for the care of children. In so far as child benefit is the successor to family allowances, if its real value is reduced, there is a fall in the amount of help that we give to support poor families without obliging them to submit to a test of means.

Last year's uprating of child benefit effectively took 35p a week off its real value. The increase proposed for the coming year would not significantly restore that cut. The effect is to add to the difficulties of families seeking to keep out of the growing number of people dependent on means-tested benefits. That number has now risen to the terrible, unacceptable total of 14 million.

For those in work, an increase in child benefit has the effect of a cut in income tax, aimed selectively at families with children. For those who are not in work, a rise in child benefit assists poor families without diminishing in any way their incentive to take work and to save to improve their position.

In 1975, in the Committee on the Child Benefit Bill, an amendment proposed by my right hon. and learned Friend the present Paymaster General and Minister for Employment on behalf of the Conservative party and supported by, among others, my hon. Friend the present Economic Secretary to the Treasury and myself would have linked child benefit to the retail price index. Unhappily, under Treasury pressure, it was defeated by one vote.

In the debates on the Finance Bill in 1977, my right hon. Friend the present Chancellor of the Exchequer, the Foreign Secretary and other prominent people made clear their commitment to the indexation of the tax allowances on the basis of the principle of the Lawson-Rooker-Wise amendment; but the child tax allowances were not covered by the new rules because they were already being phased out. If child benefit had been raised since 1979 in line with the personal and married persons tax allowances, it would now be £8, not £7, a week. What has happened in practice is that a sum of more than £600 million a year in potential spending power has been lost by families with children and has been distributed to taxpayers at large, the majority of whom do not have children to support.

My Bill is intended to ensure that this process does not continue. It proposes, in effect, that child benefit in future should be treated at least as favourably as the major tax allowances under the Lawson-Rooker-Wise formula, which is accepted on both sides of the House.

My Bill includes the proposal that the necessary funds should be drawn from the national insurance fund. This is not just a trick to get around the rules of order. I think that it is important to revitalise the national insurance fund and to resurrect the contributory principle. Since the contributions to the national insurance fund were put on an income-related basis in the 1970s, many people have come to regard their contributions merely as a form of income tax. I prefer to think that the acceptance of the liability to contribute to society by paying income tax should be seen as the qualification of the citizen for the benefits of a system of income support at the times of dependency, which of course are the reasons why we pay child benefit, unemployment benefit and old-age pensions. The national insurance principle should not be lost hut, instead, should be relied on to produce the necessary buoyant source of funds for the provision of a basic income guarantee.

The gross cost per week of maintaining a child in community placements with foster parents range between £37 and £50 a week. The cost in local authority residential care ranges between £270 and £420 a week. Those figures surely prove that it is good sense to give every encouragement we can to parents to look after their children in their family home. I trust that the House will approve my motion.

5.24 pm
Mr. Frank Field (Birkenhead)

I rise to oppose this measure being passed without a vote. I do so because, as the hon. Member for Kensington (Sir B. Rhys Williams) has already reminded us, in 1980 the House passed a similar measure without any objection, yet the passing of that measure did not have the effect that we had hoped for on the collective judgment of the Government. Since 1980, we have had an early-day motion which has shown how strong is the support from both sides of the House for this measure. Indeed, those voluntary organisations interested in promoting child benefit have been busy at work and gained private assurances from numerous hon. Members.

Although I fully realise that votes in the House are only one way of bringing our collective view to weigh on the Government, I believe that it is a very important one. I think that I know my colleagues well enough to believe that the assurances they have given in private will be reflected, when they have a chance in the Division Lobbies, in public. Therefore, when the appropriate time comes, I shall divide the House. Needless to say, I hope that the Bill is passed with a substantial majority.

Question put, pursuant to Standing Order No. 15 ( Motions for leave to bring in Bills and nomination of Select Committees at Commencement of Public Business):—

The House divided: Ayes 152, Noes 3.

Division No. 227] [5.26 pm
Abse, Leo Cohen, Harry
Alexander, Richard Cook, Frank (Stockton North)
Alton, David Cook, Robin F. (Livingston)
Anderson, Donald Corbyn, Jeremy
Archer, Rt Hon Peter Cormack, Patrick
Ashdown, Paddy Craigen, J. M.
Aspinwall, Jack Critchley, Julian
Bagier, Gordon A. T. Crouch, David
Banks, Tony (Newham NW) Cunningham, Dr John
Barnett, Guy Dalyell, Tam
Barron, Kevin Davies, Rt Hon Denzil (L'lli)
Beaumont-Dark, Anthony Davis, Terry (B'ham, H'ge H'l)
Beckett, Mrs Margaret Deakins, Eric
Beith, A. J. Dewar, Donald
Bell, Stuart Dixon, Donald
Bennett, A. (Dent'n & Red'sh) Dobson, Frank
Benyon, William Dormand, Jack
Bermingham, Gerald Dubs, Alfred
Boothroyd, Miss Betty Eastham, Ken
Bottomley, Mrs Virginia Fatchett, Derek
Boyes, Roland Fisher, Mark
Brown, N. (N'c'tle-u-Tyne E) Flannery, Martin
Brown, Ron (E'burgh, Leith) Foot, Rt Hon Michael
Bruce, Malcolm Forman, Nigel
Buchan, Norman Forrester, John
Buck, Sir Antony Foster, Derek
Caborn, Richard Foulkes, George
Callaghan, Rt Hon J. Freeson, Rt Hon Reginald
Callaghan, Jim (Heyw'd & M) George, Bruce
Canavan, Dennis Gilmour, Rt Hon Sir Ian
Carlile, Alexander (Montg'y) Goodhart, Sir Philip
Cartwright, John Greenway, Harry
Clark, Dr David (S Shields) Gregory, Conal
Clarke, Thomas Griffiths, Peter (Portsm'th N)
Clay, Robert Hamilton, James (M'well N)
Clelland, David Gordon Hardy, Peter
Clwyd, Mrs Ann Harvey, Robert
Cocks, Rt Hon M. (Bristol S) Hattersley, Rt Hon Roy
Haynes, Frank Richardson, Ms Jo
Healey, Rt Hon Denis Roberts, Allan (Bootle)
Hughes, Robert (Aberdeen N) Roberts, Ernest (Hackney N)
Hughes, Simon (Southwark) Robertson, George
Hume, John Rogers, Allan
Hunt, John (Ravensbourne) Ross, Stephen (Isle of Wight)
Janner, Hon Greville Rowe, Andrew
Johnson Smith, Sir Geoffrey Rowlands, Ted
Jones, Barry (Alyn & Deeside) Sheerman, Barry
Kaufman, Rt Hon Gerald Sheldon, Rt Hon R.
Kellett-Bowman, Mrs Elaine Shelton, William (Streatham)
Kennedy, Charles Shields, Mrs Elizabeth
Kinnock, Rt Hon Neil Shore, Rt Hon Peter
Knox, David Short, Ms Clare (Ladywood)
Lewis, Terence (Worsley) Short, Mrs R.(W'hampt'n NE)
Lloyd, Tony (Stretford) Skinner, Dennis
Lyell, Nicholas Smith, C.(Isl'ton S & F'bury)
McCartney, Hugh Smith, Rt Hon J. (M'ds E)
McCrindle, Robert Speller, Tony
McDonald, Dr Oonagh Steel, Rt Hon David
McGuire, Michael Stewart, Andrew (Sherwood)
McKay, Allen (Penistone) Stewart, Rt Hon D. (W Isles)
MacKenzie, Rt Hon Gregor Stott, Roger
McTaggart, Robert Strang, Gavin
Madden, Max Temple-Morris, Peter
Marek, Dr John Thomas, Dafydd (Merioneth)
Marlow, Antony Thomas, Dr R. (Carmarthen)
Maynard, Miss Joan Tinn, James
Meacher, Michael Torney, Tom
Meadowcroft, Michael Townsend, Cyril D. (B'heath)
Meyer, Sir Anthony Wainwright, R.
Michie, William Wallace, James
Orme, Rt Hon Stanley Walters, Dennis
Owen, Rt Hon Dr David Wardell, Gareth (Gower)
Peacock, Mrs Elizabeth Wilson, Gordon
Pike, Peter Winnick, David
Powell, Raymond (Ogmore) Winterton, Nicholas
Prescott, John Woodall, Alec
Price, Sir David
Radice, Giles Tellers for the Ayes:
Rathbone, Tim Sir Brandon Rhys Williams and Mr. Robin Squire.
Raynsford, Nick
Rees, Rt Hon M. (Leeds S)
Finsberg, Sir Geoffrey Tellers for the Noes:
Howell, Ralph (Norfolk, N) Mr. Frank Field and Mr. Archy Kirkwood.
Wells, Bowen (Hertford)

Question accordingly agreed to.

Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. David Crouch, Mr. Nigel Forman, Sir Geoffrey Johnson Smith, Mrs. Elaine Kellett-Bowman, Sir David Price, Mr. Tim Rathbone, Mrs. Renée Short, Mr. Robin Squire and Mr. Dafydd Wigley.