HC Deb 22 May 1989 vol 153 cc662-4
5. Mr. David Nicholson

To ask the Secretary of State for Social Security what assessment he has made of the level of Government financial support for the family in the EC; and if he will make a statement.

The Secretary of State for Social Security (Mr. John Moore)

The United Kingdom compares very favourably with other European Community member states in the financial support made available for the family. As far as child benefit is concerned, the real value of benefits for the majority of families is considerably higher than in most of the other states. Furthermore, our family credit scheme has no parallel elsewhere in the Community.

Mr. Nicholson

As the elections to the European Parliament will give the Government's opponents the opportunity to make the usual far-fetched allegations about our welfare benefits and contrast them with those in the EEC, will my right hon. Friend say whether other EEC countries have the same system of child benefit as ours, which is universal and tax-free? Will he also confirm that other EEC countries do not have our system of income support to low-income families, which is most welcome to such families?

Mr. Moore

There are quite a few points in that question. Essentially my hon. Friend is absolutely right. There is no comparable pattern of benefit. Italy, Germany and Greece have means tests for their child benefit systems. France does not pay benefits for the first child. To take an overall pattern, of the domestic purchasing power, for a two-parent family with one child under the age of two, the United Kingdom child benefit payment is the highest in the Community. For a two-child family with both children under the age of six—the average family size in Europe—the United Kingdom ranks third in the Community. I confirm my hon. Friend's point about income support. That structure, like family credit, must be seen in relation to the £9 billion which we spend to help families with children while part of that—£4.5 billion—goes to child benefit support.

Ms. Short

Will the Secretary of State confirm that the elderly members of our families—our pensioners—have the worst income in the EEC and that the situation is getting worse for pensioners throughout the country as their transitional protection is eroded? Does he accept that it was a mistake and wrong to break the link between pensions and earnings and that unless he changes that, British pensioners will become even poorer, when they are already feeling the squeeze?

Mr. Moore

The hon. Lady's first point was complete and utter nonsense. It was factually inaccurate and I must make that clear time and again. One of our difficulties in trying to make comparisons between our pensioners' rates and those in Europe is that our pensioners, like pensioners in only two other countries in Europe, have the benefit of a basic pension as well as the additional benefits to which my hon. Friend the Minister for Social Security referred earlier, such as income support. The only accurate way to try to assess and judge the way in which this country tries to assist pensioners relative to the way in which other European countries treat pensioners is in regard to the percentage of gross domestic product overall——

Ms. Short

Flannel.

Mr. Moore

Those who shout "flannel" or "rubbish" from sedentary positions may like to be reminded of this. Would they like a system whereby those on low incomes for most of their lives—the vast majority in continental countries—receive no basic pension because pensions are earnings-related? I do not imagine that they would like such a system. The only comparison that can be made is with gross domestic product, and in that respect our pensioners rank third highest in the European league table, if there can be said to be such a thing.

Mr. Tredinnick

Child benefits in this country are universal and tax-free, but can the same be said of other EEC countries?

Mr. Moore

No. As I said earlier, the position varies enormously. Germany, Italy and Greece operate a means test, and much lower benefits are paid in most European Community countries by comparison with our child benefit. We pay the highest child benefit in Europe for a family with a child aged below two. As to the typical two-child family, we rank third in the Community. It is not possible to make specific comparisons, and I have tried to abjure from doing so.

Mr. Frank Field

How many claimants in Europe have been affected by transitional protection arrangements? So that we may make a comparison between this country and our European neighbours, can the Secretary of State also say how many British claimants failed to secure increased income in 1986, 1987 and 1988?

Mr. Moore

I commend the hon. Gentleman for trying to get in the question that his three absent hon. Friends were unable to put, but which I looked forward to answering. Those in Europe who might like to put such questions might be delighted to have the kind of income support structure that the Labour party has not sought to deny in its review, as I believe it is called.

Mr. Burns

Does my right hon. Friend agree that £1 billion of the £4.5 billion spent on child benefit goes to families with incomes in excess of £20,000? Would it not be better if more of the money going to wealthier families were targeted instead on genuinely less well-off families?

Mr. Moore

My hon. Friend was among those who recognised what I sought to do in this year's uprating decision, which was to add more than £70 million for the assistance of poorer families with children, thus recognising how much better off are many families with higher than average incomes. My hon. Friend is right to draw attention to one specific group benefiting from the £4.5 billion that we spend on child benefit.

Mr. Robin Cook

Did the Secretary of State, in his study of EEC data, consider the Commission's recent report that the number of families in Britain with below half the average income has almost doubled? Is not that the real reason why he is so anxious to judge poverty by the absolute standards of the Victorians? Does the right: hon. Gentleman accept that, judged by any relative standard, the rich are much richer and the poor are even further behind them?

Mr. Moore

I am surprised that the hon. Gentleman seeks to embrace the absurd statistical illusions which suggest by definition that half of a nation, whatever its wealth, is in poverty. That kind of statistical absurdity, as I have tried to persuade people—[Interruption.] The hon. Member for Birkenhead (Mr. Field) would not like it to be drawn to the attention of the House that he recognised and supported the point that I am trying to make in an article in The Sunday Times. I do not for one moment doubt that there is a need, and I would not be expending £51 billion —the largest social security expenditure this country has ever seen—if I did not think that there was a requirement to help and assist people. I would never deny that there is need, but that is not the same as citing absurd statistical nostrums which suggest that one third to half the nation is in poverty, which is rubbish.