§ 3. Mr. FlynnTo ask the Chancellor of the Exchequer what changes there will be in revenue to the Treasury over the next 10 years as a result of the incapacity Bill and the Child Support Act 1991.
§ The Chief Secretary to the Treasury (Mr. Michael Portillo)Focusing incapacity benefit on those genuinely incapable of work and requiring absent parents rather than the taxpayer to take responsibility for maintaining their children will save taxpayers at least £3 billion a year in the long term.
§ Mr. FlynnThe Chief Secretary has not answered the question. Are not the two measures both Trojan horses, because hidden inside them are two massive tax hikes that will be paid for by the sick and by parents—£2 billion in new taxes every year? That is not child support or incapacity benefit but two Treasury support measures to pay for the Government's financial incapacity.
§ Mr. PortilloThe hon. Gentleman's question—
§ Mr. PortilloI shall answer the question, but the question on the Order Paper asked not about taxation but about the incapacity Bill. If the hon. Gentleman is now talking about the taxation of incapacity benefit, of course that has revenue consequences. It has been the stated Government intention since 1981 to bring invalidity benefit into tax. The benefit is an income replacement benefit, comparable to unemployment benefit and retirement pension; both of those are taxed, and I do not believe that there is any dispute between the Government and the Opposition spokesmen over the idea that income replacement benefits should be taxed when they are in the hands of those who have the means to pay the tax on them.
§ Mr. CongdonIn view of the enormous impact of Department of Social Security spending on public expenditure, and the fact that it has grown by 75 per cent. in real terms since 1979, does my right hon. Friend agree that it is right and proper to seek any possible way of reducing that enormous bill? Do not the measures outlined in the question represent a proper way of trying to ensure that we get better value for money from the enormous amount that we spend on social security benefits?
§ Mr. PortilloMy hon. Friend is right. The important thing is to ensure that the moneys that we pay in benefits are concentrated on the people who need them. The state will not be able to afford to pay people who do not need benefits. Everybody knows that invalidity benefit has become broadly extended, and has gone much further than was intended when it was first created. The numbers on benefit have trebled over the past 15 years, while the nation has been becoming more healthy. Clearly the time has come to concentrate the benefit on those for whom it was intended—the people who are incapable of going to work.