Low-income Households (Hansard, 3 February 1994)

§ 4. Mr. Kirkwood
To ask the Chancellor of the Exchequer what proposals he has to provide financial relief for low-income households; and if he will make a statement.

§ The Chief Secretary to the Treasury (Mr. Michael Portillo)
The Government have recently taken measures by introducing a child care disregard in family credit and making a substantial package of help with fuel bills available to pensioners and those on income-related benefits.

§ Mr. Kirkwood
Has the Chief Secretary had a chance yet to study the report that was recently issued by NCH Action for Children? Will he understand that NCH Action for Children believes that its report has been substantially misrepresented in the press? It never said that children were worse off now than they were in Victorian times. It argued that, although the standard of living has increased dramatically all round, the gap between the rich and the poor is as wide now as it was then. What further steps will 1014 the Treasury take, together with the Department of Social Security, to meet the urgent needs of low-income households with children?

§ Mr. Portillo
Our concern is to increase the prosperity of the country generally by following the economic policies that we have, and to provide protection for people on low incomes. The figures of people on low incomes show how well they have done in recent times. Disposable income increased, on average, by 35 per cent. between 1979–80 and 1990–91, and pensioners' real incomes increased by 54 per cent. during that period. The real take-home pay for a household, even on half average earnings—that affects the children about whom the lion. Gentleman is talking—has increased by 34 per cent. during the period of the Conservative Government.
If the hon. Gentleman cares to measure not what people earn but what they have, he will find that 69 per cent. of households in the bottom fifth have central heating—it was only 39 per cent. when the Conservatives came to power —and that 50 per cent. of those in the bottom fifth have cars, compared with 39 per cent. in 1979. There has been an enormous change in living standards in the country and the hon. Gentleman should recognise it.

§ Mr. Forman
Is my right hon. Friend aware that the attention that he drew to benefits such as family credit was appropriate because they greatly help low-income households, and especially those who are on low incomes in work? Does he also recognise that the greatest benefit of all for low-income households would be to achieve price stability during this Parliament, and will he redouble his efforts to that end?

§ Mr. Portillo
My hon. Friend makes a good point—low inflation is extremely good for people on low incomes. It is of special benefit to the elderly. Even while we have low inflation, income-related benefits will rise, at the next increase, by about 3.9 per cent. That is obviously well above the rate of inflation, and it is a great deal better than the increase that will be experienced by most of the people who are in work.
I am sure that my hon. Friend will also think that the rates of withdrawal for people who are on benefit are an important factor, and I would remind him that now only per cent. of households face a withdrawal rate of more than 90 per cent., whereas before 1988 there were 70,000 households that had a withdrawal rate of more than 100 per cent.

§ Ms Harman
Can the Chief Secretary explain a bit further the answer that the Financial Secretary gave to an earlier question—that it is the Government's economic success that has caused them to break their promise to cut taxes? Can he also explain why low-income families will pay more tax after April than they would have done in 1979, whereas families on incomes of more than £64,000 will pay less tax than they would have done in 1979?

§ Mr. Portillo
I thought that the point that my hon. Friend made, very effectively, was that if the Labour Government were in power today—if we had continued the allowances that the Labour Government had—there would be 1 million more tax-paying households. That burden would fall on the lowest paid, those who are least able to pay. The hon. Lady needs to consider her party's record closely before she starts to criticise us.

§ Mr. John Greenway
Was not it this Government who introduced very low rates of national insurance for low-paid workers? Has not that greatly helped to get many people back into work?

§ Mr. Portillo
My hon. Friend is correct. He will also remember that we have taken steps to help the most disadvantaged groups. He will remember that, in October 1992, we increased the income support premiums for pensioners by £3 a week for couples and £2 a week for singles. He will also remember that the £700 million worth of additional assistance given to help people pay 20 per cent. of the community charge was not withdrawn when the community charge was abolished.