Child Benefit

HC Deb 25 June 1991 vol 193 cc952-66 9.41 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Michael Jack)

I beg to move, That the draft Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment No. 2 Regulations 1991, which were laid before this House on 7th June, be approved. The draft regulations lay the foundations for the October increases in child benefit—the second this year —announced by my right hon. Friend the Chancellor of the Exchequer in his Budget statement on 19 March. They provide for child benefit to rise, from 7 October this year, by £1 per week for the eldest eligible child—from £8.25p to £9.25p—with an increase to £7.50p per week for all remaining children. It is the first part of a process which will ensure that every family will gain from the increases, including those on income support and family credit and those in receipt of national insurance benefits with child dependency increases.

The child benefit increases are being made in addition to the extra £l per week that each family has been receiving since April and, with our undertaking to index link from next April, they confirm our commitment to child benefit, which we see as the cornerstone of our policies for family support. The changes bring our expenditure on child benefit this year to £5.3 billion, or almost a tenth of total social security spending. Yet that is only a part of the total package of benefit expenditure on families, which amounts to more than £11 billion. I am sure that hon. Members would like to know that that is an average of £30 per week for each family with children.

Dame Elaine Kellett-Bowman (Lancaster)

Is my hon. Friend aware that there can be few hon. Members who are more delighted than I that the Government are taking this proper line on child benefit and giving the benefit to mothers, who so urgently need it? We have fought this battle for many years, and it is delightful that the Government are being so positive.

Mr. Jack

I thank my hon. Friend the Member for Lancaster (Dame E. Kellet-Bowman), who represents the neighbouring constituency to mine, for her assiduous support. Her message will have been noted by all mothers.

I am sure that the House would like to know what the increases will mean for individual families. For more than 40 per cent.—those with only one child—it will mean that from October their income from child benefit, which is tax free, will increase by £2 per week, which is a rise of more than 27 per cent. compared with the position before April. For a family with two children, child benefit will be increased by more than 15 per cent.—from £14.50 to £16.75 per week, equivalent to £72.50 per month or £870 per year. To produce the same effect through wages for people paying standard rate tax and national insurance contributions would require them to earn an additional£1,300 gross per year—about an extra £25 per week. Those increases, paid to mothers, will bring to nearly 7 million families worthwhile extra help with the costs of bringing up their children.

The measures have been warmly welcomed. I believe that I can sum up the mood of those who have campaigned for them by quoting Ms. Fran Bennett of the Child Poverty Action Group. In a letter to my right hon. Friend the Secretary of State, she said: I am writing on behalf of CPAG to say how delighted we were that this year's Budget included announcements on both immediate increases in child benefit and the government's longer term intentions. The regulations underline the philosophy of all post-war Governments of accepting the need for sharing between parents and the state the financial responsibility for bringing up children. Child benefit goes to all families with children as a recognition of the fact that at all levels of income they face greater expenditure than other families. For those families who need it, this universal provision is supplemented by extra help through the income-related benefits. We will be bringing forward further regulations to ensure that those groups, too, will benefit from the October increases in child benefit.

The Government did not forget those groups in drafting their child benefit proposals, but the Opposition did when they presented their alternative Budget proposals. The House may recall that this matter was spotted only through the astuteness of my right hon. Friend the Secretary of State in the debate on family hardship on 13 March. He highlighted the inconsistency between the costings and stated objectives on child benefit in the so-called shadow Budget—long may it remain so—and it was only his kindness in pointing this out which enabled the Labour party to amend its pledge to include families on income-related benefits.

This continuing recognition of the needs of the less well-off families lay at the heart of our 1988 social security reforms. At a time when the majority of families were benefiting from rising earnings, we recognised that some people, through no fault of their own, had not yet fully shared in the nation's increasing prosperity. We decided, therefore, that the least well-off families—those on income-related benefits—should be one of our main priorities for extra help. Instead of just universally increasing child benefit, we made substantial extra help available to those families, over and above the annual increases required to maintain the value of their benefits. Those families are now better off than they would have been simply relying on an increase in child benefit.

When we introduced income support, we provided a system which was flexible and which allowed us to respond swiftly and sensitively to the changing needs of families and individuals. I will give the House an example of the way in which that works. We enhanced the age-related provision for children by introducing a family premium, including a special premium for lone parents. In addition, there is now a premium of £16.65 per week for a disabled child, on top of the basic family premium of £7.95.

With the help of family credit—our other major change—people can move off income support to become better off in work. The success of this benefit is mirrored in the fact that we now have a record caseload of 328,000 people on family credit. We believe that this year we shall spend more than £500 million. Compared with 1978–79, in real terms that represents more than eight times the expenditure on family credit's predecessor, family income supplement. It goes to more than three times the number of people receiving FIS, with the average award of more than £30 a week being some three times higher in real terms.

Not content with that, we shall make family credit more accessible by reducing the hours of eligibility from 24 to 16. That is a further commitment to helping families on low incomes.

When we came to office, we deliberately set out to increase people's ability to earn more, to retain more of what they earned and to contribute to the general prosperity. Working families with children have benefited from the Government's policies of reducing the rates of income tax and simplifying the system of national insurance contributions. A family on average male earnings, for example, has seen the real value of its take-home pay increase by a third since 1978–79.

The Opposition continue to concentrate on headline figures when talking about child benefit, but they completely overlook the fact that the money from not uprating child benefit has been spent on extra help for the poorest families with children when better-off families were benefiting from increased earnings and lower rates of taxation. The Opposition have conveniently ignored the fact that, from October, the total support for families with children will in a full year be greater than if we had merely indexed child benefit. From October, the additional real-terms help that we have provided since 1987–88 will be worth a massive £500 million in a full year.

The Opposition also fail to appreciate that families mean more than families with children. There are families with, perhaps, an elderly member or someone who is sick or disabled. They, too, have considerable needs. We have considered those families and have made available, for example, an extra £200 million for older and disabled pensioners through the 1989 measures. An extra £80 million was made available in April for those aged between 65 and 74.

I mentioned the need to balance the help that we provide for all families and the help for low-income families. In previous years, with mainstream family incomes arising, our judgment was that it was right to concentrate resources on the less well-off familes through the income-related benefits. This year, after careful consideration, we decided that the time was right to look after families with children generally. The extra £1 per week child benefit which all families have been receiving since April recognises the additional costs faced by all families with children, and it is a clear signal of our continuing commitment to the benefit. The October increases build on the April improvements and, as I said, we shall bring forward regulations to ensure that these increases are carried through the benefits system so that families at all income levels will gain from them.

My hon. Friend the Member for Lancaster adverted to the fact that we should be proud of the help that we give to families with children. Not only do United Kingdom families benefit from the most comprehensive income support system in Europe, and from having family credit which is unique in its construction in Europe in giving help to the families of the employed and the self-employed on low wages, but we compare very favourably in our overall provision of basic child benefit. There is a problem in making an accurate European comparison because of the range and complexity of financial support for families in different European countries, but I must draw the House's attention to the fact that several Community countries have extra conditions for entitlement to child benefit. For example, Germany, Greece and Italy have means tests, and Belgium, Italy, Portugal and Spain link eligibility to insurance status, so not all families can qualify.

Therefore, although it is true that all European Community countries have a cash benefit equivalent to child benefit, many have additional qualifying criteria which do not apply in the United Kingdom. However, in cash terms alone, if we consider the 40 per cent. plus families in this country with only one eligible child, in July 1990 we ranked fourth in our child benefit provision for such a child up to the age of five. This year, we are increasing that provision by more than 25 per cent. Perhaps it is worth drawing the House's attention to the fact that in France there is no such provision. If replicated here, that would remove entitlement to child benefit from those 40 per cent. plus United Kingdom families.

I hope that I have demonstrated to the House how we have developed a balance between universal and income-related benefits and how we have balanced help to families with children. Nor have families without children been ignored. The draft regulations will increase child benefit from October and, as I said, we shall introduce further regulations to carry those increases through into other benefits so that all families with children will gain. Those regulations are for the benefit of our children and for the families responsible for their upbringing. I commend them to the House.

9.54 pm

Mr. Michael Meacher (Oldham, West)

We are told that there is more joy in heaven over one sinner who repenteth than over 99 just men. In that context, I welcome the order and the Government's final change of heart on the question of child benefit, although I somewhat suspect their motives.

The Opposition sought to have the regulations debated on the Floor of the House for three main reasons. The first was to condemn the astonishing convolutions and inconsistencies in Government policy which have plagued child benefit over the past four years. The second was to point up the large shortfall in child benefit which still exists after the zig-zags in what is euphemistically called "child benefit policy". The third was to press again the view that child benefit be allowed to play its full and unique role in combating child poverty.

In June 1987, as everyone now knows only too well, the Conservative manifesto stated: Child benefit will continue to be paid as now, and direct to the mother. Four months later, the Government broke the pledge. The former Secretary of State for Social Security, who made a distinctive contribution to social policy by denying that poverty existed, announced that child benefit would be frozen. In October 1988, the then Secretary of State repeated the freeze on the ground that benefits needed to be targeted. It did not seem to occur to him that, in the autumn of 1988, at the height of the boom, it was hardly consistent to reject child benefit because a small fraction of it went to the wealthy while lavishing unlimited public subsidies on some of the richest people in the country in the form of mortgage interest tax relief.

In October 1989, the present Secretary of State again repeated the freeze. He sought to justify it on two main grounds. The first was: it helps only those who do not receive income support and family credit."—[Official Report, 25 October 1989; Vol. [58, c. 846.] That is the opposite of what the Government, in the form of the Parliamentary Under-Secretary, are saying today. When the hapless Secretary of State tries to defend the indefensible Thatcherite dogma of freeze, he says one thing. When he is trying to win an election, he says the reverse, and all in the space of two years.

The other main ground cited by the Secretary of State was that it was better to concentrate extra help on less well-off families. That ignores the important fact that child benefit has vastly better coverage of less well-off families than a device such as family credit could ever have.

Mr. Peter Thurnham (Bolton, North-East)

The hon. Gentleman mentioned family credit. Will he clarify his own party's policy on family credit? Is it to abolish it o r to let it wither on the vine, as the hon. Member for Holborn, and St. Pancras (Mr. Dobson) said?

Mr. Meacher

It is neither. The hon. Gentleman should read our policy document. We have made it clear that we, unlike the Conservative party until an election heaves into sight, believe in child benefit, which is what our debate is about.

I was making the point that half a million mothers in households with an income of less than £100 a week receive child benefit—and it goes to them virtually 100 per cent. —and that more than 2 million mothers in households with incomes of less than £200 a week also receive it. That represents a far greater body of families in near poverty than the fewer than one third of a million—I hope that the hon. Member for Bolton, North-East (Mr. Thurnha m) will take this point on board—who manage to obtain family credit. There is a low take-up rate and there is still some doubt about exactly what it is. It is probably around 60 per cent. to 65 per cent., but the overall numbers are small. Even above the level that I have mentioned, child benefit remains well targeted. Some three quarters of all Government expenditure on child benefit goes to fami lies with incomes below the average. That is very important.

Three successive years of Tory freeze have left their mark, especially on poorer families. They reduced the value of tax-free income provided by child benefit and thus increased the impact of taxation on all families with children. They had a particularly severe effect on large families and they gradually forced more and more families who previously had been able to maintain their independence to apply for more means-tested benefits. They have slowly but surely intensified the poverty trap.

Three successive years of Tory freeze of child benefit have also left their mark on the Treasury. Its cumulative saving over those years reached £1.2 billion at current prices in 1990–91.

The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe)

indicated dissent.

Mr. Meacher

It is no good the Under-Secretary of State shaking her head. Those are the official Government figures.

One might be forgiven for thinking that successive Secretaries of State, when they announced or re-announced a freeze, failed to announce that the Treasury made a killing on each of those occasions and that that was the driving force behind the policy.

In October 1990 with a general election mooted for the middle of 1991, the Government got cold feet about the increasing unpopularity of their freeze policy, particularly as inflation was then heading towards 11 per cent. The Secretary of State then announced that he would increase child benefit, but only for the first child. There would be £1 extra for the first child, but nothing for the other children. He tried to justify that by suggesting that priority was needed for the first child to compensate the mother for the loss of earnings after giving up work. He has failed to explain how an extra £1 a week in child benefit compensates for the loss of perhaps £100 a week in earnings. We would still be interested in an explanation of that.

That was not the only thing that was wrong with the new policy. The £1 was clawed back from widows and the poorest families on income support so that those who needed it most received nothing. So much for a Government who have spent the last three years obsessively proclaiming the merits of targeting. They gave the child benefit increase to the rich and denied it to the poorest—[Interruption.] I can understand why Conservative Members might be embarrassed about that, but the first £1 increase did exactly what I have said.

As the spring 1991 general election faded in the depths of the recession and Government eyes began to fasten on October 1991, the Government had another try. After no increase for three years, we have now had two increases in a single year. I can only say that the children of this country should demand annual elections, because they do wonders for child benefit under this Government.

It is now proposed that there will be a further £1 increase for the first child in October plus a derisory 25p for second and subsequent children. Twenty-five pence is about a third of the price of a school meal. That is the only increase in child benefit that 5 million children who happen not to be the eldest child in a family have received in child benefit over the past four years.

This time round, the child benefit will go to those on income support. That is welcome as far as it goes. However, perhaps the Secretary of State could explain the inconsistency of giving a £1 increase to the first child in April which is clawed back from families on income support and then giving another £1 increase in October only six months later which is not clawed back from families on income support.

Throughout the past four years, the Government have treated child benefit not as help for families, but as an ideological pawn in their battle against the welfare state. The only consistency in the wild and rapid changes of policy has lain in the Government's perception of their own electoral self-interest.

After all those convolutions and gyrations of policy, child benefit is still far short of being restored to its real value in April 1987. Even for the first child, it will still be 30p a week short of that level, but for all subsequent children the shortfall will be considerable—just over £2 a week. For an average three-child family, that still represents a loss of £228 a year.

The first priority is and must remain to make good for all children the losses over recent years. The Labour party remains committed to restoring the real value of child benefit at its 1987 level for all children. We shall make those substantial increases for all children, particularly for second and subsequent children, without deductions for children on income support.

Mr. Thurnham

Will the hon. Gentleman give way?

Mr. Meacher

I shall give way to the hon. Gentleman just once more because no one else is seeking to intervene.

Mr. Thurnham

I am grateful to the hon. Gentleman for making the Labour party's policy a little clearer than it was. Would he like to put a cost figure on that pledge?

Mr. Meacher

Certainly—£695 million.

Having stated again that overriding priority from which the Government still fall far short, I wish to raise two specific points of detail about the order. The first is whether the Government will now reconsider the long-term structure of child benefit, having produced what can be described only as lop-sided after a series of panicky, last-minute compromises. It certainly does not reflect any social reality. A recent cross-section poll of hon. Members —it certainly did not include me—found that only 12 per cent., two thirds of whom presumably must be Conservative Members, supported the present structure of child benefit. Many other countries in the EEC have child benefit or its equivalent which increases with the number of children in a family or with the age of the child, but none which actually decreases it according to the number of children.

How do the Government justify the oddity? The Under-Secretary of State made no attempt to talk about that matter. Perhaps he could give some assistance with the Government's view if it is not quite as cynically expedient as I believe it to be. If there is any rationale behind it, we would like to know what it is. When the Government consider the matter in a more measured manner, what more considered proposals do they have for the longer-term shape of child benefit?

Secondly—this is related to my first question—what will be the mechanism of index linking in future? From an answer that was given in the Official Report of 22 May, it appears that the Government intend to inflation-proof the overall amount spent on child benefit rather than index each rate. Some of us had automatically assumed that it would be each rate, but that appears not to be. If it is the Government's intention to index the overall amount rather than each separate rate, that would be undesirable. If the Government wished to alter the balance—it certainly needs to be altered—between the two rates, it would be much better if that were done by over-indexing one or other of the rates. That is a much better way to get the matter into balance while still ensuring that at least both rates will maintain their real value over time.

After three years of the freeze and neglect that we have seen a further year of patch up and make do, which is riddled with inconsistencies, the order, although it is certainly welcome as far it goes, raises more questions than it answers. We want an explanation about that in the wind-up speech. The fundamental point is that, until the real value of child benefit has been fully restored for all children and the commitment to its future made absolute, child benefit policy will remain a major difference between the parties which will be resolved only at the coming election.

10.10 pm

Mr. Peter Thurnham (Bolton, North-East)

I wish to speak briefly because I am not satisfied with the speech of the hon. Member for Oldham, West (Mr. Meacher), who did not make Labour party policy clear and did not answer the point about family credit. He said that the Labour party's policy was not to abolish it or to let it wither on the vine. What is the Labour party's policy and where does it leave the hon. Member for Holborn and St. Pancras (Mr. Dobson), who said that the party's policy was to let family credit wither on the vine? Do the Labour party spokesmen have two different policies? Why does not the hon. Gentleman come clean and state his party's policies?

Why have Labour's statements on child benefit produced a gradual climb down from its own original statement in its paper, "Meet the Challenge, Make the Change"? That paper stated: we will increase Child Benefit in our first year by a substantial amount which will more than make good the loss in value through this Parliament. In its policy document, "Looking to the Future", the Labour party said that an increase in child benefit would be implemented at least to make up the loss in value". Now, we hear that it is to be restored to the 1979 level, at a cost of £695 million, which shows that the original statements were not thought through properly—a characteristic of Labour party policy on this subject. The Labour party has obviously not thought through its ideas on family credit.

The hon. Member for Oldham, West dismissed family credit as going to only a small number of families. Eight times as many families have benefited from family credit than benefited from family income supplement—390,000 families receive it, which is not a small number. The benefit of family credit is that it helps families to stay in work, whereas the policies of the hon. Member for Oldham, West, such as a national minimum wage, would throw people out of work. The Labour party obviously prefers to have people out of work than in work. Why does riot the Labour party acknowledge the benefits of the family credit scheme, go with it, and say that it supports the Government policy, which has been successful?

We have been able to make some increase in child benefit, but, because it is not targeted as well as family credit, we place an emphasis on family credit in helping people to stay in work. We do not agree with the policies of the hon. Member for Oldham, West, which would increase taxes and throw people out of work.

Mr. Meacher

If the hon. Gentleman still opposes a national minimum wage, will he retract the statement that he made not long ago, that it would be much better if the whole of Britain reflected sweatshop conditions?

Mr. Thurnham

If the hon. Gentleman looks at what I said in my speech, he will see that I was talking about wealth shops. He should not confuse a question with a statement in a speech, and should read the Hansard report. He would then see that I was advocating wealth shops.

The difference between Government policies and Labour party policies is that we want people to be in work, whereas the Labour party want people out of work. I cannot see the benefit of that. The hon. Gentleman would do better to argue with his fellow party members about the disadvantages of a national minimum wage, and climb down from that policy, because it is getting him nowhere. He should look at Government policies, which target benefits to help people back into work instead of taking them out of work.

10.13 pm

Mr. Archie Kirkwood (Roxburgh and Berwickshire)

The proposed increase is welcome, but it has been a long time coming. It is right for the House to take a moment or two to consider the consequences that flow from the changes introduced by the regulations.

There are three major sectors that deserve additional scrutiny. I am sure that the Minister will acknowledge that there will still be real losses for second and subsequent children in relation to the amount of money that they could otherwise have expected had child benefit been fully indexed. The additional element for first children needs to be considered carefully, because it is a fundamental change and the Government's future policy in that respect must be analysed.

The mechanism for index linking the new system is potentially problematic, if my understanding of it is right. The hon. Member for Oldham, West (Mr. Meacher) was right to say that the Government's policy on that issue does not bear examination because of the changes that have been made in the past five or more years. That will be a matter of some concern and will be debated publicly at the general election.

Child benefit remains by far the most effective way to target families in poverty. That is my experience as a constituency Member of Parliament and my opinion as someone who tries to study such matters as effectively and diligently as I can. Will the Minister confirm that the increases to £9.25 and £7.50 in October will also have a knock-on effect for claimants of other benefits, rather than being deducted from other benefits as such increases have been in the past? 1 understand that orders are in the pipeline to implement that measure between now and October. Although we may debate the issue when the orders are published, if the increased payments are to be made in October we have little time to study the orders.

I should be interested to know how that will be done because when one considers the complications involved in ring fencing the child benefit increases, I doubt whether it will be as easy as it sounds. If the Department of Social Security has given any thought to how it will approach that, I shall rest a little easier in my bed tonight if the Minister will say a word about it. I welcome the fact that the increases will be ring-fenced. Because of the increases in child support personal allowances, it will benefit principally parents under the age of 25. That is good news because that group of claimants has suffered from some of the recent changes in Government policy, and they are hard-pressed and in urgent need of support.

The October increases will still leave all children with less benefit in real terms than in 1987, and second and subsequent children will receive substantially less. First children need an additional 30p a week and second and subsequent children need an extra £2.05. If the level of child benefit had been properly uprated to 1991–92 levels, it would have been increased to £9.55. That is a substantial amount of money, and a substantial loss will have been suffered over the years by families who need it.

As for the new structure, what was the Government's thinking in moving in that direction? The differential of £1.75 a week is welcome, but what does the future hold in respect of differentials? What examination did the Department undertake before it moved in that direction? Was consideration given to alternatives? Were the results of the family household survey analysed? Why have the Government brought forward an increase in this way? There have been a number of conflicting rationalisations and justifications for making the move. First, we heard that the increase for the first child was necessary because of start-up costs. If a couple experienced start-up costs when the first child came along, it was daft to have abolished the maternity grant under the Social Security Act 1986.

Start-up costs were the first justification for considering giving extra support for the first child in the family. However, in some uprating statements the Secretary of State and other Ministers have said that that was not the rationale behind the change, and that the presence of any child, rather than the number of children, was the factor that had decided the Government to move in that direction. We should have a public debate about such significant changes. If the Government have evidence and have conducted analyses which lead them to that conclusion, it is right that they should share their thinking with the House.

The announcement was made in the Budget statement, which is all very well and good. I understand that Treasury Ministers have to go into purdah and do not tell anyone what they are thinking until they release the contents of the Red Book. However, we should be given some insight into the reasons behind making this move.

In the meantime, the priority as regards resources should be to try to do everything possible, and for Social Security Ministers to try to make good the losses for all children—losses sustained as a result of cuts in the past five or six years.

Finally, I have several questions about the consequences of the index-linking of child benefit. The Government have made a commitment that inflation proofing will take place from April 1992. However, the hon. Member for Oldham, West mentioned inflation-proofing the overall amount and it is right that the House should ask the Government to explain exactly what is involved in that. If one inflation proofs the amount of money, but gives discretion to the Secretary of State to allocate money within the increased total it introduces some uncertainty into the type of indexing that we may be confronting. It would be far simpler if the Government made an early commitment that they will index each rate, so that there is no doubt about that. Otherwise, people will not be able to make any sense of what faces them.

Once the system for indexing of increases in child benefit is up and running, what period of time will be used, because the annual retail prices index runs from September to September, but these increases will be introduced in October? Will the Minister clarify the confusion that exists in my mind by saying a few words about that?

Finally—

Mr. Robert G. Hughes (Harrow, West)

For the second time.

Mr. Kirkwood

Finally, twice—the hon. Gentleman is quite right, this is the last "finally". What changes, if any, will this make to the Secretary of State's statutory duty —placed upon him in section 63 of the Social Security Act 1986—to review all the factors and circumstances relating to child benefit, before he decides whether to increase it? Is there a change in that? If not, it would be good if we were told that that was the case.

Finally, for the third time—[Laughter.] I was just testing. Do the Government intend to introduce inflation-proofed index-linked guarantees into primary legislation, or will they rely on a series of secondary statutory instruments? If this is a new Government policy, let them give a copper-bottomed guarantee that they will take the early opportunity of next year's social security Bill —because there is one every year—to try to enshrine—

The Secretary of State for Social Security (Mr. Tony Newton)

Not this year.

Mr. Kirkwood

If the Secretary of State is complaining about lack of legislation for his Department, he is complaining unnecessarily. If there is a social security Bill next year, will the Government take the opportunity to enshrine the promise that they will index link child benefit into primary legislation, so that there can be no hedging of bets in the future?

10.24 pm

Mr. Graham Allen (Nottingham, North)

And finally, in this brief but instructive week in politics, we have seen the great contrasts that exist under the Conservative Administration. We have seen the results of the privatisation of the electricity industry, with massive profits being announced this week by the East Midlands electricity company. In addition, we have seen the fat salaries that have been paid out, most notably this week to the chairman of British Gas.

In contrast, this packed House, with its packed Press Gallery, is now considering child benefit and social security regulations. On the one hand, there is privilege, with individuals and organisations raking in thousands and thousands of pounds, while on the other hand, we are faced with the beneficiaries—if they can be called that—of the regulations, which give the princely increase in child benefit of 25p per week to the second-born child, with a £1 increase to the first-born child, whom I have referred to as the Eastbourne child, given that the increase was first announced prior to that famous by-election.

As my hon. Friend the Member for Oldham, West (Mr. Meacher) asked, what does 25p buy? Most mothers would say that it does not buy a heck of a lot—not even a bar of chocolate these days.

Mr. Meacher

Don't spend it all at once.

Mr. Allen

My hon. Friend says, "Don't spend it all at once," but it is very easy to spend it all at once because even £1 will hardly pay for an average loaf and pack of butter. People will hardly be rejoicing in the streets at that miserly increase. However, even the increase—small as it is—is due more to the likelihood of a general election than to any great generosity on the part of the Government.

Let us analyse the Conservative Government's record on child benefit. Better still, let us ask British mothers about it. They will say that the purchasing power of child benefit has been reduced throughout the lifetime of this Government. Clearly, child benefit has not been safe in their hands. Even after the much trumpeted U-turn on child benefit, the child benefit for all children—first-born, second-born and any others—is worth less than at the time of the last general election. Even after the increase, it is now worth 30p less for the first child and £2.05 less for all the other children. Using the 1987 figures, that represents a loss over a year of £154.70 for a two-child family. If we use 1985 as the base, child benefit would now have to be £10 per week to maintain its value.

We have a Government who can waste billions of pounds trying to prop up the poll tax. I am glad that my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) is in his place. The Government have also wasted billions of pounds encouraging people to opt for private pensions—[Interruption.] As I have said, I am glad that at least one Sheffield Member is present. The hon. Member for Sheffield, Hallam (Mr. Patnick) is not, but in any case, I see far too much of him in Committee on the Child Support Bill. The Government are also wasting billions of pounds on other ideological lunacies, yet they cannot find the relatively far smaller sums to maintain the value of child benefit, which is the main benefit for this country's children.

The Government appear totally confused about their policy. They seem to be asking, "Shall we keep child benefit or not? Shall we let it wither on the vine or index-link it?" The Government's changes of position continue to mock and to abuse the 1987 Conservative manifesto pledge, which was quoted by my hon. Friend the Member for Oldham, West: Child benefit will continue to be paid as now". Never has such a catch-all been used to catch so much. At least under the former Prime Minister all Ministers knew what they had to do—they just had to obey their orders. Now, however, in the era of indecision and dithering, the child benefit system appears to have been designed by a committee. At the moment, we are unique in Europe in having a two-tier system, in which the second and subsequent children are valued at £1.75 per week less than the first child. All of them receive less than they did before the benefit was frozen by this Administration. The larger the family, the larger the loss.

The Government's family policy owes more to the scissors and paste of the right hon. Member for Huntingdon (Mr. Major) than to long-term principle. As the Family Policy Studies Centre understated: the rationale of the new structure is unclear. It deserves a medal for describing the position in such terms.

Even the return to inflation-linking in April 1992 is edged with uncertainty. It is not the £7.50 and £9.25 but the overall amount spent on child benefit that will be linked to inflation. That is as if to underline the Government's lack of confidence that they have got the differential between the first and second child right and their belief that at some stage they will need to adjust or even scrap the differential. The Opposition would certainly support any measures to scrap the differential and level up child benefit to a reasonable level again.

Before next July, the next Labour Government will be in office and we will restore child benefit to its 1987 levels. Currently, that would carry a value of £9.55. That will be for all children. We will end the discrimination between children in the same family. We believe that child benefit is the best way to help families with children. It is better targeted than means-tested benefits because it reaches all the people whom it is intended to help. As it is not withdrawn when income rises, it does not create a poverty trap and lock low-paid families into poverty incomes. It does not penalise mothers for taking paid employment when it is vital for them to do so in the labour market of the 1990s. Most importantly, child benefit helps to prevent child poverty and gives a subsidy to families at a time when their needs are greatest.

These shameful increases in child benefit have been levered out of the Government by impending electoral catastrophe, rather than a caring and thoughtful assessment of the needs of children and mothers. Labour will restore child benefit to its rightful place and its rightful level.

10.31 pm

Mr. Jack

To listen to the hon. Member for Nottingham, North (Mr. Allen) is to listen to a travesty of a description of accurate policy-making. I reminded him and his hon. Friends that it was my right hon. Friend the Secretary of State who had to point out the failings of Labour policy and its shadow Budget. Lurking somewhere in the remarks made to the House this evening by the hon. Member for Oldham, West (Mr. Meacher) and the hon. Member for Nottingham, North, there seemed to be yet another shadow spending pledge. I am sure that when we examine the words of the hon. Member for Oldham, West, we will find that his statements go further than the simple pledge that his party has made. I shall examine his words in great detail.

There is no dithering on this side of the House on policy. The hon. Member for Oldham, West accused us of making savings in some way. I find it amazing that he seems to wish not to listen to the simple message of the £500 million of extra spending by the Government on families with low incomes since the changes in 1988. I can certainly give him a blow-by-blow account of where some of that money has gone. We made £200 million available to less well-off families in April 1988. In April 1989, another £70 million and in April 1990 another £70 million was made available. The list goes on. It is a roll of honour of which we are proud, and I am proud to put it on the record tonight in replying to the hon. Gentleman's comments.

One of the themes running through the speeches made by hon. Members was the basis on which we are increasing child benefit both in April and, under the terms of the order, in October. My right hon. Friend the Secretary of State decided that the right balance was, with effect from April 1991, to recognise the additional costs faced by families by paying the extra £1 of child benefit to the first child. Clearly, the major impact on a family's budget is when the first child arrives. It was in pursuit of dealing with that that my right hon. Friend reviewed child benefit in both April and October. As I said in my opening speech, some 40 per cent. of families in Britain have one child. I also alluded to how the change in benefit would affect two and three-child families.

Hon. Members have asked about our policy on uprating. I reiterate that we are pledged to increase the new rates of child benefit in line with movement in the retail prices index each year, starting in April 1992. My right hon. Friend the Secretary of State will carry out his statutory duty to review the level of child benefit at the appropriate time in the uprating statement he will announce the allocation of the individual amounts between the eldest eligible child and other children. In answer to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) I should not like to go further than that because I would not like to anticipate the views of my hon. Friends. However, the policies were clearly stated in a parliamentary answer to my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) on 22 May.

The hon. Member for Roxburgh and Berwickshire also asked how the rest of the package would be introduced. That will be done by regulations subject to a negative resolution. I shall write to him about the details of precisely how that will be done.

The hon. Member for Oldham, West, in contrast to my hon. Friend the Member for North-East (Mr. Thurnham), chided and perhaps criticised us for our policy. He suggested that in some way we have been penny-pinching to poorer families. Tonight, we have demonstrated the additional help that we have given. The hon. Member for Oldham, West always seems to forget that the rates of income support and family credit have increased at times when child benefit has not been increased. The hon. Gentleman should study those figures carefully.

The hon. Member for Oldham, West also spoke about poverty statistcs. I can but draw his attention to a letter published in The Guardian by my right hon. Friend in response to his outburst on poverty statistics. The hon. Gentleman has been found wanting in his use of those statistics. He should not chide the Government too much because the recent report from the Select Committee on Social Services on low incomes revealed that, using 1981 prices held at constant levels, the numbers below half average incomes fell in real terms from 2.89 million people in 1987 to 2.77 million in 1988. That demonstrates an improvement in overall standards of living and some of the dangers of using the statistics with which the hon. Gentleman chooses to chastise us.

Mr. Meacher

If the Parliamentary Under-Secretary has unwisely chosen to debate statistics, will he deny that, according to the Government's own publication "Households below Average Incomes" the number of households that are below half-average income doubled between 1979 and 1987? Will he also accept that in the Government's 1987 publication the lowest decile was found to have had a fall—

Mr. Robert G. Hughes

Decile?

Mr. Meacher

The lowest tenth of the population—for ignorant Conservative Members. That group's income fell by 5.7 per cent. Does the Minister accept that that is the Government's figure? Perhaps he will apologise to the House for the fact that that can happen at a time when the income of the rest of the population has increased by about 30 per cent.

Mr. Jack

When the hon. Gentleman has the courtesy to apologise for his inaccurate use of the statistics given to a Select Committee, perhaps I will respond in kind to the points that he has put to me.

In the brief time available to me, I have tried to deal with the main themes raised in the debate. The House and outside bodies welcome the Government's commitment to child benefit increases now and in the future. I commend the regulations to the House.

Question put and agreed to.

Resolved, That the draft Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment No. 2 Regulations 1991, which were laid before this House on 7th June, be approved.