Child Benefit

HC Deb 12 June 1996 vol 279 cc229-49

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coe.]

Mr. Nigel Evans (Ribble Valley)

It is always good to follow my hon. Friend the Member for Falmouth and Camborne (Mr. Coe), who has just delivered his maiden speech as a Whip. I congratulate him on that. I hope that many of his subsequent speeches will be equally short.

We have a great opportunity this morning to discuss an issue that is important not only to me, but to many other hon. Members. There has been much discussion—a lot of heat rather than light—about child benefit. The question whether child benefit for 16 to 18-year-olds should continue has been turned into a token of political virility by Labour Members as they try to demonstrate, within their current internal battle, where the soul and heart of the Labour party lie.

Many of us have in our constituencies youngsters of 16 to 18 who are in further education and whose families receive child benefit. I have estimated that more than 8,000 young people in my constituency would be affected by any plans to stop child benefit for families who have youngsters at sixth-form colleges and schools. They study in Ribble Valley and beyond, in places such as Preston college, Clitheroe royal grammar school, Queen Elizabeth grammar school, which is just outside my constituency, and Stoneyhurst, which is at the heart of it.

About 7 million families receive child benefit for about 13 million children. It was phased in between April 1977 and April 1979, replacing the redundant child tax allowance and the family allowance. I requested this debate to show why child benefit is so effective and why it is that Labour Members should speak out in support of this vital benefit which helps so many families. It has become clear that the issue is more than just a row over spending; it has become an issue of social justice. Child benefit gives money to families effectively by providing for the children at whom it is targeted at a time when they most need it.

No one can argue that limited resources should not be spent carefully and effectively, but to raid the child benefit kitty in order to appear responsible is as damaging as making an assault on the old-age pensioners' Christmas bonus, as was done in 1975 and 1976. It is the Conservatives who have proved their ability to control Government spending while targeting benefits more effectively. The Secretary of State for Social Security has won almost universal praise for the way in which he has trimmed welfare spending. He will save £5 billion by 2000 and £14 billion into the next century, while maintaining essential public spending such as universal child benefit.

It is safe to assume that we are all agreed on the benefits of education, not just to the individual, but to the economy as a whole. Surely, then, we should look at ways in which to ensure that young people get the best opportunity to further their education. There should be no dogmatic obstacles in the shape of a new tax to hinder young people in getting a good education. Perhaps this is just a softening-up exercise, the beginning of a tax continuum, with a new tax at 16, a graduate tax penalising higher education later, and finally, a good kicking in the world of work with penal rates of taxation after full-time education.

The Government have proved time and time again that they back education, with Government funding for further education and training at more than £3.5 billion for 16 to 18-year-olds. The number of young people staying on at school after 16 has now reached 72 per cent.—up from 59 per cent. in 1979. Even among the children of unskilled parents, the staying-on rate has reached 56 per cent., compared with 20 per cent. under the last Labour Government. That is due at least in part to the opportunities delivered by child benefit.

Dame Elaine Kellett-Bowman (Lancaster)

Does my hon. Friend agree that child benefit is of particular importance to Lancashire, where the wage rate is lower than in many parts of the country? We also have exceptionally good secondary schools in my constituency, including two grant-maintained grammar schools and a specialist language school. Therefore, people go to endless lengths to try to keep their children at school. If we kick them in the teeth with a tax of £550 for every child who stays on at school, that will be an enormous deterrent and will send fewer students to the excellent university of Lancaster.

Mr. Evans

My hon. Friend makes a strong case. I know that she feels deeply for the young people who benefit from education in Lancaster, who, we hope, will go on to university having left full-time education at 18.

In 1979, one in eight children went to university; now, the figure is one in three. The last thing we want to do is reverse that trend. We want to give young people the opportunity to realise their full potential. That is what I fear is at the heart of the matter. If families are denied child benefit, some young people will have to decide whether they can remain in full-time education. Many young people in Lancaster and elsewhere may be forced out of full-time education because of this dreadful punitive tax.

Mr. Michael Fabricant (Mid-Staffordshire)

Does my hon. Friend agree that Labour's proposed tax—he is quite right to say that it is a tax—is the most regressive of all taxes? Is it not typical of Labour to propose a tax that would attack the very people they profess to support—those most unable to help themselves? Is it not typical that the Labour party always goes not for the highest common factor, but for the lowest common denominator? Labour would tax to drive people down, and in this case it would drive down their education.

Mr. Evans

My hon. Friend, in an intervention on his birthday—we all wish him well—is absolutely right.

Removing £10.80 a week from the families of those with children between 16 and 18 in full-time education would be proportionately more damaging to those on lower incomes. Those who are extremely well-off may not miss it so much, but it would target everybody between 16 and 18. It is important that everybody should have access to child benefit irrespective of their means, as there is an important principle at stake.

Lady Olga Maitland (Sutton and Cheam)

Does my hon. Friend agree that Labour is proposing essentially a dog in the manger tax? The Labour party is deeply resentful of hard-working middle classes scrimping and saving to keep their children at school. Penalising those people by £1,000 to keep one child in school for those precious two years to give them the opportunity of going from further education into university is frankly mean-spirited and unworthy, and I am delighted that my party opposes that policy with great vigour. Does my hon. Friend agree that we have to do away with that cheap attitude?

Mr. Evans

My hon. Friend is absolutely right. It is a tax of more than £1,000 over a two-year period, at a time when families would need the money most. I imagine that keeping 16 to 18-year-olds is most expensive, with all the designer clothes they demand.

Lady Olga Maitland

Trainers cost more than £100.

Mr. Evans

As my hon. Friend says, trainers cost more than £100.

A tax of £1,000 would be extremely damaging to many families. Child benefit is £10.80 a week, or about £560 a year per child. That would make a difference to a youngster either staying at school or being forced to get a job, especially as 90 per cent. of expenditure on child benefit goes to families on middle and low incomes. Opposition Members may concentrate on the minute percentage of families with very high incomes and ask why they should receive child benefit, but the vast majority of families are on middle or low incomes.

That is the reason for the existence of child benefit. Its success lies in its simplicity, as demonstrated by the fact that almost 100 per cent. of mothers who are entitled to claim it do so. As my hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) said, the poorer the parents are, the more important it is as a percentage of their income.

The bogey that is thrown up time and again by the Labour party is that a small number of families with children at fee-paying schools are able to claim it. Let us look at the figures. Some 75,000 of the 1.1 million youngsters whose families receive child benefit are at fee-paying schools—about 10 per cent. of 17-year-olds in full-time education. That is a small price to pay to ensure that the bulk of the money goes to those at whom it is targeted.

Many children who attend independent schools are on grants bursaries or scholarships. The fact that they attend independent or private schools is no clear indicator of the wealth of the family. They may have been fortunate enough to be able to gain a bursary, a grant or an assisted place. The removal of child benefit would not only be a tax on fortune, but a tax on the good fortune of the families of children who gain places at those schools, if that is the education they want for them. Again we see Labour returning to its familiar pattern of the politics of envy.

To take the benefit away from those people and target it on those who earn considerably less would be almost impossible without creating additional costs, and thus balancing out any perceived gains. There would have to be massive bureaucracy to put in place the social engineering of the Opposition.

According to the Coalition for Child Benefit: Child benefit is cheap to administer with such costs taking only 2 per cent. of its overall budget". Any other way of administering child benefit would cost much more, and that would surely defeat the desired object of the exercise for the hon. Member for Dunfermline, East (Mr. Brown).

Although child benefit was introduced by the Opposition during their last Administration—I emphasise the word "last"—it was supported in principle by all parties, and has been supported in the past even by the hon. Member for Dunfermline, East, the Labour party now wants to remove it.

In the Conservative consultation paper "Reform of Social Security", published in 1985, the Government committed themselves to keeping child benefit, and reaffirmed that commitment in the 1992 manifesto, even though they had made a detailed study of the alternatives. The document explained: The first aim in helping families is to provide help generally, while the second is to provide extra help for low-income families. It would be a serious mistake to confuse these quite distinct purposes or to seek to restructure benefit design to meet one aim at the expense of another aim. That is especially true today, and the hon. Member for Dunfermline, East was in favour of increasing the benefit at the time of the consultation document. He said in an Opposition Day debate on 27 June 1985: Child benefit could be doubled or at least raised by £6 … An increase in child benefit … would be a … cost-effective way … to ease family poverty".—[Official Report, 27 June 1985; Vol. 81, c. 1122.] If it was right then, what has changed now?

Originally, child benefit was seen as having three main advantages over the provisions it replaced—the child tax allowance and the family allowances. First, it helped those families that did not benefit from child tax allowance because they did not earn enough money to pay tax; secondly, it was payable for the first child and was tax-free; thirdly, it put the money for the care of the child directly into the hands of the mother. For some mothers, it may be the only reliable source of income, if they do not have access to their husbands' earnings, for whatever reason. Those advantages remain true today, and affect only the children they were meant for. The proposals of the hon. Member for Dunfermline, East would inevitably take those advantages away.

I know that not every member of the people's party believes that parents should be clobbered in this way. Indeed, such a betrayal of families will come very hard to some Opposition Members. It will be interesting to see whether they, too, sacrifice their principles in the pursuit of power. For example, the hon. Members for Brent, East (Mr. Livingstone) and for Hackney, North and Stoke Newington (Ms Abbott)—who would have thought that I would ever utilise those characters as part of my defence?—would support my arguments. In a letter to The Guardian of 23 April this year, they wrote: the party leadership needs to stand by its past pledges to retain Child Benefit in full". They are right.

The Parliamentary Under-Secretary of State for Social Security (Mr. Andrew Mitchell)

In quoting that senior Labour source, my hon. Friend has put his finger on the nub of the debate. If there is no case for child benefit for 16, 17 and 18-year-olds, is that not the thin end of the wedge? Surely, if there is no case for child benefit for that age group, the whole principle of universal child benefit is undermined by Labour's proposals.

Mr. Evans

Absolutely. The philosophy and the principle are at stake, not just the provision of child benefit for 16 to 18-year-olds. If the proposal is implemented, everything else will be up for grabs.

Another Opposition Member who agrees with our position is the hon. Member for Islington, North (Mr. Corbyn). He wrote in the Evening Standard on 19 April: I know of many young people and families who rely on Child Benefit to help them out and enable them to continue in education. He is right. According to the hon. Member for Birkenhead (Mr. Field), the loss of child benefit as a universal benefit would create a poverty trap by making it more economically worth while for low-income mothers to give up their jobs and claim benefits. He, too, is right.

A quarter of families currently receiving child benefit for children aged between 16 and 18 are claiming other income-related benefits. The change could result in members of families that formerly enjoyed child benefit, but who are now just above the threshold to receive the new upgraded level, deciding that it is more worth while to give up work and collect benefits. New Labour would create a new poverty trap.

The loss of working people would have two obvious results. First, unemployment queues would increase substantially; secondly, a much bigger burden would be placed on the taxpayer as more people claimed other benefits.

The existence of a benefits system that encourages people to live off the state is exactly the kind of poverty trap that we should be striving to eradicate. Surely this cannot be the way in which we want to run our welfare state. We need to get people to stay in education rather than taking the option of becoming unemployed because short-sighted politicians have foolishly made that more economically rewarding. The fact that child benefit is not taken away if a family's overall income goes up could act as a work incentive, but it certainly is not a disincentive to work hard, earn overtime and so forth.

Sally Witcher, director of the Child Poverty Action Group, has also come out against plans to reform child benefit. On 19 April, in a press release, she said: If you remove Child Benefit, how are young people's basic needs going to be met? We recognise the value of training and education but we don't want the benefit taken away". Several alternatives have been discussed at one point or another, but none is as effective as child benefit. What about means testing, for example? It would ensure that take-up rates for the benefit fell, even among those on low incomes, because—for whatever reason—some would see it as degrading. They might decide not to bother to claim the benefit, feeling that it would seem as though they were sponging. They would not be, however. That is the one thing that child benefit gets over.

Means testing would achieve the aim of saving money in one area, because people would not be claiming the benefit, but it would be a false economy. Children would have to leave school, and some would claim other benefits—income-related benefits, or even the dole. What is at stake is not just child benefit for a few rich kids; it is the principle that is under fire. The very soul of the child benefit system is under attack.

Moreover, as the Minister has said, means testing would be only the thin end of the wedge. If the philosophy is to remove child benefit from 16 to 18-year-olds and target families with lower incomes, why stop at 16? What about 14, or even 12? In fact, if the principle is right, why impose any age limit?

Is this the secret agenda on which we are about to embark? Will the proposal be aimed not just at 16 to 18-year-olds to save £700 million, but at every family in the land? If that happens, and child benefit is means-tested, the vast majority of families will be under direct attack, and will lose a universal benefit that they treasure.

Lady Olga Maitland

Would not means testing be an extremely divisive way of going about our business? We should have to work out the level at which to carry out the means test, which in itself would prompt a big debate. If the level is too high, we shall be chucking money across the country, when a broadly based system would be far fairer. Alternatively, only a small number of people will receive a bloated sum, leaving a marginalised group desperate and unable to keep their children on at school. Means testing was a much hated system; how can the Labour party possibly want to bring it back?

Mr. Evans

I agree. The level at which the system is introduced will be important, because, whatever it happens to be, some people will be just above it. That is where the new poverty trap comes in. I suspect that the means test will be so punitive that many people will be drawn into that trap. This is nothing more than a raid on the wallets of families: it is stealing £10.80 from mothers' purses, week in, week out. We must stop it.

Today it is child benefit; what state benefit will be targeted next? Where will Labour turn its spotlight? Although the hon. Member for Dunfermline, East has said that Labour has no plans to introduce means testing of child benefit as a whole, his record is lamentable. As his shadow Treasury gains in strength, who knows what other U-turns in Labour policy he will have up his sleeve?

Other alternatives that have been suggested include child care allowances and taxing child benefit. Both ideas are fatally flawed, the first because it would not help children whose parents are not working, the second because it would introduce anomalies and divert resources from the intended target—the children.

It is obvious that changing the child benefit system by means of some form of tax mechanism will inevitably disadvantage some children, especially given that child benefit took the place of the discredited child tax allowance in the first place. To abolish it for those who wish to continue their education would be the equivalent of imposing a selective tax increase of 5p in the pound on the average family with one child aged between 16 and 18. Furthermore, tax allowances simply add to the family income as a whole, rather than producing specific sums of cash for children, as child benefit does.

Another downside of taxing child benefit has been pointed out by various people, including the Child Poverty Action Group. Taxing the benefit for higher earners would cut right across the important principle of individual taxation for men and women. It would fail in the end, simply because a non-working wife would not be affected even if her husband was earning £100,000 a year. Or will that principle be up for grabs as well?

To change a benefit which, it is almost universally agreed, works where, when and how it should, and to introduce the failed mechanism that it replaced originally, is nothing short of madness. Child benefit offers the only easy, clear and effective way of providing an incentive for children to stay at school after the age of 16, and we should not throw it away.

Child benefit provides all our youngsters with an incentive to continue their education, irrespective of the means of their families. It provides an extra £560 a year, which for those youngsters could mean the difference between staying at school and being forced out to get a job before they wish to. Child benefit is successful, because nearly 100 per cent. of mothers collect it. It is simple, clear and effective. Withdrawing it would be like imposing an extra 5p in the pound in tax on average incomes. This proposal is ill thought out, and should be chucked out.

If our youngsters do not get the education they deserve, and if families do not get the support that is their right, it will not just be the youngsters and their families who suffer, but all of us. This country will suffer for years as this spiteful act of small-minded envy works its way through the system.

9.59 am

Mrs. Audrey Wise (Preston)

I am completely opposed to the withdrawal of child benefit from 16 to 18-year-olds, but Conservative Members would be wrong to think that that means that I am with them on this issue. I was interested that the hon. Member for Ribble Valley (Mr. Evans) did not attempt to use my name in support of his argument, although, as a neighbour of mine, he knows my views. I am here to make my views clear, and I will not allow them to be distorted by Conservative Members.

So far, the debate has been absolutely fascinating, and I shall treasure the Hansard report. Conservative Members have given a commitment to universal benefits, referred to "our welfare state" and come out against targeting, giving a good explanation of its drawbacks and disadvantages. It is unusual to hear those views from Conservative Members, who normally tell us about the advantages of targeting. It is Labour Members who usually talk about the administrative costs, unfairness and lack of take-up of targeted benefits. There has now been a conversion, and it is the Government who are in favour of universal benefits. I shall look at the future utterances of Conservative Members on this subject with great interest.

The hon. Member for Sutton and Cheam (Lady Olga Maitland) said that Labour would bring back the hated means test, but I can tell her that it has never gone away. Means test after means test is carried out in pursuit of that darling of the Conservative party, targeting. If Conservative Members are to debate the matter convincingly, they will have to do more homework. The hon. Member for Ribble Valley suggested that the proposal to remove child benefit might lead to youngsters claiming the dole, but they cannot do so. The Government have waged war on 16 to 18-year-olds and their families, and I say that advisedly.

The hon. Member for Ribble Valley talked about Labour's meanness towards what he referred to as "old-age pensioners"; the modern term, I believe, is "retirement pensioners". That is rich from the Tory party, one of whose first acts in office was to ensure that retirement pensioners would no longer share in any increase in national prosperity, by breaking the link between pensions and earnings. That immense attack has cost pensioners dear, year after year. We are not talking about one frozen Christmas bonus, but about pensioners receiving less, week after week, year after year. If the hon. Gentleman is going to delve into history, he should do so a little better.

I am very much in favour of social justice and the maintenance of essential public spending, but it is news to me that that spirit motivates the Secretary of State for Social Security. If so, why was an order laid before the House on Friday concerning the withdrawal of mobility allowance from people in NHS care? I am pleased to see that the order is to be prayed against by my right hon. Friend the Leader of the Opposition.

That allowance has been accepted as necessary for vulnerable people since its inception about 20 years ago—it was, of course, introduced by a Labour Government. Some £40 million will be saved by an act of meanness that will affect children, as well as adults, and the most vulnerable 16 to 18-year-olds who are unable to work because of disability. If they happen to be in NHS care, bang goes their mobility allowance. Then the Conservatives have the nerve to accuse Labour of meanness and to claim that they stand for social justice.

A distinct ignorance about young people has been shown in the debate. When child benefit was introduced—and family allowance before it—it did not extend to youngsters over 16 who left school or full-time education, because it was assumed, correctly, that they were going to work. If they were at work, they would have an income, would be making a contribution to the family budget, and would have some money left over for themselves. They would therefore not be treated as dependent children.

Youngsters who leave school now have no income, and that has introduced unfairness into the system. My hon. Friends on the Opposition Front Bench are wrong if they think that the way in which to deal with that is to remove, or partially remove, the payment of child benefit.

We must ensure that young people and their families are not left without income. But the claimed lack of universality of the benefit arose because, at the time it was introduced, it was not necessary to go on paying those youngsters child benefit, because they would be going to work. Later, it was thought that youngsters in that age group would receive training and a training allowance. So a youngster could be at school or in full-time education and getting child benefit; in training and receiving an allowance; or in work and getting wages.

It is unfortunate that work has just about disappeared for 16 to 18-year-olds, and training and training allowances are woefully inadequate. Not enough suitable training is available, and some 16 to 18-year-olds are left in limbo. That matter should be addressed, and my hon. Friends intend to do so. I give them full credit for reviewing the situation; the Government do not review or consult—they simply act against young people.

The review will have caused my hon. Friends to concentrate their minds because of the strong objection to the removal of child benefit from Opposition Back Benchers and from within the Labour movement. But Labour's opposition comes from people who are consistent in their determination to safeguard the rights of young people, whereas the Conservative party is simply engaging in some mischievous politics to try to stir up trouble.

I can assure Conservative Members that there is no need for them to tell Labour Members how to make their views on the matter clear to Opposition Front Benchers—we will do so. We know, however, that they are acting with good intentions. The intent of our Front-Bench spokesmen is to ensure greater provision for 16 to 18-year-olds. I could give them a few suggestions, which would not be popular with Conservative Members, about how to get the funds to do that. However, we are in the process of discussing that.

There is no harm in a review, as long as it is undertaken with an open mind and a listening ear. I am sure that our Front-Bench spokesmen will say that that is the spirit of the review. I hope that we will quickly bury the notion of an attack on child benefit.

Mr. Nigel Evans

The hon. Lady suggests that she wants increased expenditure. That money must come from somewhere else. Does she back the proposal by Labour Members to cut defence expenditure by £4.5 billion? If she does, what impact would that have on British Aerospace in her constituency, where there are many defence procurement jobs?

Mrs. Wise

Come on, that is more mischief making. This is not a defence debate. You would soon come down on me, Mr. Deputy Speaker, if I tried to turn it into one. I am on very good terms with the British Aerospace work force, as the hon. Gentleman knows. This is not the place for a constituency squabble between us. We can do that elsewhere in so far as it is worth doing at all—which is not very far. This matter does not affect only our constituencies, but young people at large. We must get back to that.

Young people cannot get jobs or, often, suitable training. They are treated with contempt. They cannot get social security payments. Even a pregnant 16-year-old is not entitled to financial recognition of the fact that she is unemployed. She has to prove that she is not only 16 and pregnant but suffering from severe hardship before she gets a penny out of the Government. From the party of the family, that is quite remarkable. We often get remarkable demonstrations of the meaning of "party of the family" through its impact on real families. To me, a pregnant 16-year-old has problems, and is already suffering hardship.

For the linguistic education of Conservative Members, I might say that the concept of "hardship" includes the concept of "severity". I once spoke for 20 minutes on that very point, but I shall not do so this morning.

I remind Conservative Members that they inflict such things even on pregnant 16-year-olds. They tell them to go on training schemes. They tell the people running training schemes to take such girls for three or four months, knowing that they will not be able to pursue it, that it dilutes the training scheme and is a waste of everyone's time and money.

However, unless a girl proves severe hardship—which, as I said, means that she must prove that her condition is doubly severe—she will not get a penny. Such youngsters cannot claim the dole. Even in that extremity, the Government have no compassion, and do not recognise what young women in that situation need. To me, a 16-year-old pregnant girl is in deep trouble, and her unborn baby needs to come into a world in which his or her mother has not been driven into more and more poverty as well as being over-young.

I have put that to Conservative Members, for instance, during Select Committee inquiries. On one notable occasion, I was given a shrug as an answer when I pointed it out. I have been told that such girls can go to local authorities. The sudden interest of Conservative Members in the plight of 16-year-olds would carry more weight if it was a little more regular, widespread and consistent and a lot more honest.

Lady Olga Maitland

The hon. Lady has been going on about the unfairness of the system and how 16-year-olds who are pregnant and suffering hardship cannot get support. The latest published figures, for 1995, show that they get very good support—79 per cent. of those who apply for hardship payments get them. That amounts to 111,000 young people. How can she suggest that their plight is being ignored?

Mrs. Wise

A pregnant 16-year-old should not have to prove that she is in severe hardship. The fact that 79 per cent. of them go through that charade and prove that their trouble brings severe hardship only illustrates the problems that face young people and the peculiarity of the Government's approach.

Conservative Members, from the humblest Back Bencher—such as the hon. Member for Ribble Valley—to the Prime Minister, have no regard for the welfare state. The welfare state is our welfare state, and that of the people of Britain. It is not the Government's welfare state, except in so far as they unfortunately have a great deal of power to destroy, distort and damage it, which they regularly do.

This debate was instituted not out of care for young people and their families but to make political mischief. I do not think that it will succeed. Labour is having a civilised look at provision for 16 to 18-year-olds with the intention of producing better arrangements.

I am prepared to show my Front-Bench colleagues that one option that was mentioned should be abandoned, but it was first raised in a throwaway manner. I have studied the speech of my hon. Friend the shadow Chancellor. Its thrust was different from that suggested by the reports that came out. In so far as those reports were accurate, I think that it will prove to be a temporary aberration, because the whole Labour movement is showing our Front-Bench spokesmen that it would be a mistake.

However, reviewing provision is not a mistake. To review the situation of the children of unskilled manual workers who leave education with no qualifications with the intention of improving it is good. I will forgive one or two mistakes along the way as long as they are corrected in due time, as I am sure they will be.

Let Conservative Members focus their beady eyes on the Secretary of State for Social Security. Let them consider the attack on those on family credit which will come into force on 2 July. People on family credit with 16-year-old children who leave school will cease getting family credit instantly, instead of having it run to the end of the six-month period. There are problems with that. It might be said that they have ceased to have a dependent child in the family, but that is not so. The 16-year-old will not cease to be dependent, and will not have an income, as I have explained.

The family will have to say whether the child will return to school in September, but they may not know. Some families may lose their family credit, then their child returns to school after all. Will they get a refund? Others may claim family credit thinking that their child will return to school, but, by September, some other thing has supervened and they will no longer be entitled to family credit. Will they be accused of having claimed unfairly?

All such matters are, of course, beyond the scrutiny of Conservative Members, who would be well advised to focus their attention on their own party's attacks on 16 to 18-year-olds in particular and the welfare state generally.

10.19 am

Lady Olga Maitland (Sutton and Cheam)

Over the past few weeks, young people in their hundreds of thousands have been going into their school examination halls to sit A-levels. More students have been sitting A-levels than ever before in British history. They have been doing so with the justifiable aspiration to go on to further education and university to improve themselves. They have been able to do that because their parents have been receiving child benefit, which is worth, over two years, £1,000. It keeps children in education to improve their chances instead of having to try their luck in an unskilled world. The Government are trying to improve young people's chances, not hinder them.

The proposed removal of child benefit is a sixth form tax; it is punitive. Those who are being punished are the young people on whom our hopes and the good of the country rely. We do not want to return to the dark ages of throwing them into low-paid work. We want to give them the opportunity to improve themselves, and we want to facilitate their progress.

Labour's muddled, totally misconceived scheme attacks the wrong people. Of course we want to support those who in the lowest incomes groups, and they have such support. Labour's scheme attacks hard-working, middle-class parents who scrimp and save and do everything possible to give their children the chances that they themselves never had. The Conservative party is giving such people that chance. As I said in an intervention on my hon. Friend the Member for Ribble Valley (Mr. Evans), this sixth form tax is a dog in the manger tax, killing chances and opportunities.

Surely it is more important to ensure that, at a vital stage in many young people's lives, they are properly skilled in the three Rs. We are living in a very competitive world. For Britain to have a chance to compete in the world, we must ensure that we have the best skills and the most educated people available. We are not part of the unfortunate skivvy world of third-world nations. We want to ensure that we can compete in the most effective way, and we must therefore prepare our young accordingly.

The other day, I spoke to the headmaster of one of the schools in Sutton—John Vaughan of Cheam high school. The school is interesting and non-selective, and aims to help what I call master and miss average—not obviously academic high flyers. Such young people are being given chances that their parents never had. The school is pushing them forward and giving them the chance to go on to higher education and improve themselves.

They are not children of wealthy parents. The headmaster said that the parents were alarmed at the thought that child benefit, which is essential to keep their children supplied with equipment, clothing and support, could be withdrawn. It would be a tragedy to throw the chances of such children away on a half-baked scheme, when he or she could be the one child in three who goes on to university.

The Labour party is staggering and faltering because even its own Back Benchers do not believe in the proposed scheme. It is salutary that the hon. Member for Preston (Mrs. Wise) began her speech by asking for the withdrawal of the mad idea.

Mrs. Wise

That is far too free a paraphrase.

Lady Olga Maitland

Well, the hon. Lady did not say "mad idea".

However, the Labour party's approach is confused and muddled; it cannot make up its mind. If it is trying to help young people into training, it should get it right. It is getting it so wrong in trying to force employers to enter training schemes that represent disincentives to taking on young people. We should consider examples on the continent. When one goes down the road of artificially forcing employers to enter such schemes, costs of employment rise, and all that happens is that young people do not get jobs.

It is worth noting that, for instance, in France, youth unemployment is 27 per cent., and in Spain it is 38 per cent. That compares with 15 per cent. in this country. The Government are getting the economy right, and ensuring that they do not shackle employers with the minimum wage.

Mr. Nigel Evans

Does my hon. Friend agree that the Labour party is somewhat dishonest in trying to paint the picture that it wants to support people on low wages and middle-income earners? Leaflets and literature are distributed that say: New Labour, new Britain. Taxes which are fair for all and do not hit middle and low income families hardest. That is what Labour is saying to the public, but we know what it is doing. If it removes child benefit for 16 to 18-year-olds, families earning low to middle incomes will be hit hardest.

Lady Olga Maitland

I could not agree more with my hon. Friend. In essence, the Labour party is covering its tracks. It is being dishonest and deceitful, and trying to lead the country by the nose. At the end of the day, the electorate will give a very clear message to Labour. They will say, "No, no and no again. We want to preserve our children's chances. We do not want to be faced with more punitive taxes." Such taxes are the hallmark of the Labour party. I believe without any doubt that the country will reject the Labour party's daft notions—today and in future.

10.27 am

Ms Liz Lynne (Rochdale)

I am grateful for a chance to debate child benefit, and I thank the hon. Member for Ribble Valley (Mr. Evans) for raising it. The Labour party is obviously in total turmoil about child benefit. It does not know what to do about it, especially for 16 to 18-year-olds.

It is not the first time that the Labour party has been in turmoil over child benefit. Twenty years ago, it announced that it would not introduce child benefit for three years, despite the passing of the Child Benefit Act 1975. It introduced child benefit only when the reasons for the delay were made public. The Cabinet minutes about the postponement were leaked to New Society. The magazine's headline read: Killing a commitment—the Cabinet v Children". The magazine revealed that the reasons for the delay were that the Labour party was concerned about the cost, and the fact that the money would be paid to the mother. Of course, under child tax allowance, the money had been paid to the man. It was also revealed that the Labour party's other concern was that the trade union movement was not keen on the idea, and the movement's alienation could not be risked. When the Labour party's views were made public—it thought that they never would be—it suddenly decided that it had to change, and change quickly. So child benefit has never had the full enthusiastic support of the entire Labour party. We can see those divisions reopening in the current dispute.

The question is whether the Labour party is serious about retaining child benefit as a universal benefit. It currently argues that child benefit is paid to wealthy mothers whose 16 to 18-year-olds go to public schools. It argues that there are better ways to use taxpayers' money. If that is its case for scrapping the benefit for 16 to 18-year-olds, surely the case is the same for scrapping it for all children. That would be a case for bringing in means testing. The Labour party cannot use the argument it has deployed about 16 to 18-year-olds without following it through.

The Labour party must also accept that it is not cheap to feed, clothe and house 16 to 18-year-olds. I am afraid that many families will say to their children once they reach the age of 16, "We cannot afford to keep you any longer. You will have to go out and try to find work." That is what I fear will happen, not just in poorer families, but in families across the board. I wish that the Labour party would change its mind.

I am sure that the hon. Member for Croydon, North-West (Mr. Wicks) will say that it is the Opposition's policy to help those in greatest need. The abolition of child benefit, which is paid to the mother, will not do that. Any means testing will cause some in greatest need not to claim the benefit, and administration costs will absolutely soar. I honestly do not believe that any money will be saved by redistributing it anywhere else, especially when one considers the administration costs.

Child benefit has many, many advantages. It is still guaranteed to those in work and out of it. It helps to overcome the poverty trap. That is another reason why I am extremely worried about the Labour party proposal, because it will create, yet again, a new poverty trap. If one has to claim for child benefit, a stigma will be attached to it. Because it is a universal benefit, there is little evidence of benefit fraud. The Labour party must change its mind—I mean those on the Opposition Front Bench, because I know very well that many of their colleagues on the Back Benches are totally opposed to scrapping child benefit for 16 to 18-year-olds.

The Conservative party must also make clear its commitment to child benefit as a universal benefit, and say that it will increase it each and every year in line with inflation. I would like the Minister to make that commitment today.

Child benefit is vital, and any plans to scrap it for 16 to 18-year-olds make no sense and have been broadly condemned. Child Poverty Action Group played a vital role in introducing child benefit in the late 1970s. In response to the Labour party proposal on child benefit for 16 to 18-year-olds, it has said: We welcome the recognition of the importance of education and training for young people, but it is vital not to ignore the immediate basic needs of those on low incomes. The fact remains that you cannot eat education, wear it or heat your home with it. I think that the CPAG has made my case.

10.33 am

Mr. Malcolm Wicks (Croydon, North-West)

I welcome the debate, and congratulate the hon. Member for Ribble Valley (Mr. Evans) on introducing it, because, whatever his motives, there is a need for fresh thinking about that important age group of 16 to 18-year-olds. Some important points have been made.

Fresh thinking is required, because a number of significant trends and developments have affected that group of young people since the mid-1970s. One need only go back to that time to discover that six out of 10 children left school at 16 and found jobs. My hon. Friend the Member for Preston (Mrs. Wise) reminded us of that. Today, of course, only a small proportion of that age group are in employment. The great majority are in education and training, but too many are unemployed or unskilled, and often ill equipped for the jobs that are on offer in a modern economy.

Policy must therefore be based on two things first and foremost. First, we must analyse the characteristics of that age group. Who are they? Where are they in terms of education and employment? Secondly, we need to assess how current policy and practice impacts on that group of young people.

Although today's debate has been wide-ranging, it is essentially about child benefit. We should therefore ask questions particularly about the impact of child benefit on 16 to 18-year-olds.

Child benefit goes to those in full-time education. Currently, according to the figures I have, 56 per cent. of 16 to 18-year-olds are in full-time education—that includes 71 per cent. of 16-year-olds; 58 per cent. of 17-year-olds and 38 per cent. of 18-year-olds. Of that entire age group, 17 per cent. are in maintained schools; 35 per cent.—a significant proportion—are in further or higher education, and 4 per cent. are in independent schools.

Of course, a large proportion of young people do not stay on in education, and that inevitably correlates with their income and socio-economic status. In simple terms, poorer children are less likely to stay on in education. The youth cohort study for England and Wales for 1994 found that, whereas 85 per cent. of 16-year-olds from managerial and professional families were in full-time education and an equally large proportion—83 per cent.—from other non-manual families, that proportion declined to 61 per cent. of children from semi-skilled and manual families and 56 per cent. of children from unskilled manual families. Those facts alone represent major challenges for public policy.

Current policy includes a range of options—significantly, child benefit. Obviously, as that benefit is paid after the age 16 only to those families with children in full-time education, it follows that the distribution of child benefit resources is skewed. That means that, while a child from a high-income family in full-time education receives child benefit, a family supporting an unemployed 16-year-old receives no child benefit.

As for other options, the policy governing the education maintenance allowances is frankly a mess, because there is no rationale or fairness to it. The amount paid in those allowances ranges from just 90p a week in some local authorities to as much as £20 a week in others. In some local education authorities, as few as one child in 1,000 receives education maintenance allowances.

Similar problems are apparent in the provision of grants. At present, some 16-year-olds receive grants for their fees while others do not, but they are taking exactly the same educational courses. Again, there is no uniformity nationally, and the policy is in a mess. Some young people have their fees paid for courses, while others do not.

What about youth training schemes? We all understand that young people need to take training seriously and that that training must be of a high quality. It must be successful and effective. According to Sir Ron Dearing, just 46 per cent. of young people who enter youth training schemes complete their course of study. In Merseyside, 72 per cent. of those who start such courses fail to complete them. In Sunderland, that figure is 66 per cent. Only one in five training and enterprise areas has a completion rate better than 50 per cent. I put it to the House that that is a pathetic record.

Lady Olga Maitland

Does the hon. Gentleman agree that, far from having a so-called pathetic record, the youth training scheme has been an enormous success? Is he not aware that 80 per cent. of those who complete youth training courses go on to jobs? Surely that is a success.

Mr. Wicks

I am pleased that many of those who complete their courses find jobs; that is the purpose of the scheme. To be fair, the hon. Lady must be extremely concerned that less than half those who start youth training courses complete them. I use the word "pathetic" because something is wrong with the quality of the courses.

Faced with these facts, and given the immense challenges facing policy for young people, can anyone say that resources are currently being spent effectively and equitably? Are policies encouraging young people to pursue their education or to enter training courses? We consider those questions to be vital, so we have announced a review of policies and resources for children post-16.

The review will examine the whole range of post-16 finance and policy, including grants, fees, discretionary allowances, education maintenance allowances and child benefit. The Government are seldom able to look effectively at policies across Departments—we are doing that through this review, in shadow government.

Despite the scaremongering from the Government Benches this morning, the Labour party has no intention of interfering with child benefit for children under the age of 16. The Labour party initiated the child benefit scheme—in fact, the great pioneer Eleanor Rathbone was the founding mother of family allowances in this country. The Labour party is committed to child benefit as a universal payment, not least because it is an income for mothers. Let there be no scaremongering about that.

Mr. Nigel Evans

If the Labour party is opposed to parents who are wealthy or on high incomes getting child benefit for children aged between 16 and 18, why does it not hold the same view in relation to wealthy parents with children below the age of 16?

Mr. Wicks

Those below 16 are children; those between the ages of 16 and 18 are in a vital transition period through childhood, into adolescence and then into adulthood. We are talking about a range of policies—education, training and social security—that impact on that age group. I have argued that, at the moment, those policies are ineffective, and that is the case for a review—we want something better, fairer and more effective. No decisions have been made because the review is currently under way. It would be wrong to pre-empt any options at this stage.

I believe that the review represents a major step forward. It shows that the Labour party is not complacent about the position facing many young people in Britain today. I think I heard the Under-Secretary of State for Social Security say that we have had four years—by golly, the Government have had more years than that, and look at the mess that we are in.

It is sensible to examine the use of existing resources to see how they are being spent and whether they can be spent more effectively. The review deals with some substantive and complex matters. The prime concerns of the review are to encourage and enable significantly more young people to enter education or training, and equip them to take their place in the employment market in a modern, complex and challenging world. The review is about offering support to young people and their families, and about producing a coherent system that operates uniformly across the nation.

Ms Lynne

Does that mean that the Labour party is committed to restoring benefits to those aged between 16 and 18?

Mr. Wicks

There is no point in us undertaking a review if we know all the answers before the review. We are looking rigorously at the resources and the policies, so that, when we take our place in government, we will have the policies that Britain needs.

I have welcomed the debate with great enthusiasm because it enables us to remind the House of the Tory record on child benefit. The hon. Member for Ribble Valley—who clearly has a dry sense of humour— presented the Tory party as the party of child benefit. That is one of the better jokes we have heard in the House in an already somewhat whimsical week for the Tory party.

The Government's record on child benefit includes a three-year freeze on the level of child benefit in the late 1980s. Today, Conservative Members have posed as the champions of the family and of child benefit. However, so committed were the Conservative Government to child benefit that they chose to freeze it for three consecutive years: 1987–88, 1988–89 and 1989–90. This was a withering on the vine strategy. The Government thought that, if they could get away with freezing the benefit, it would disappear and be replaced by the means-tested family credit.

How does that square with what the hon. Member for Ribble Valley had to say today about the universality of child benefit and his critique of means tests? When he was a parliamentary candidate and Conservative activist in the late 1980s, did he have the courage to attack the Conservative Government because of the freeze of child benefit? I suspect not.

Nigel Lawson was the Chancellor of the Exchequer at that time. In his memoirs, he was remarkably candid about the strategy. He stated: The argument was that help should be concentrated on the poorest families—which meant that what mattered was not the indiscriminate Child Benefit, but the means-tested Family Credit. I wonder what the hon. Member for Ribble Valley has to say about that? Nigel Lawson continued: Needless to say, having established the principle, John Major (the then Chief Secretary to the Treasury) … with my strong backing, was anxious to consolidate it with a further Child Benefit freeze". That was the strategy of today's Prime Minister. The Government froze benefits—they had a frozen heart about social policy. The policy was implemented by the then Chancellor of the Exchequer and by his loyal Chief Secretary—today's Prime Minister.

This policy, mean-minded as it was, was changed only because of the force of public opinion, led by attacks from the Labour party. The so-called party of the family, after its three-year freeze-up, was forced to increase the rate of this key family benefit. In 1991, child benefit was uprated, and the Conservative party had to commit itself to raising benefits in line with inflation. Why did this happen in 1991? Because a general election was forthcoming—for political reasons, they had a change of heart.

Mrs. Thatcher, the then Prime Minister, was hardly happy about this, as she revealed in her memoirs—they all write memoirs. She stated in her memoirs—I am sure that Government Members know every passage off by heart: This sum was paid—tax free—to many families whose incomes were such that they did not really need it, and it was very expensive. She would have preferred a reform that included child tax allowances.

More recently, the No Turning Back Group—which includes the hon. Members for Rutland and Melton (Mr. Duncan), for Chingford (Mr. Duncan Smith), for Colchester, North (Mr. Jenkin), for Milton Keynes, South-West (Mr. Legg) and for Colchester, South and Maldon (Mr. Whittingdale)—issued a paper on the welfare state. They are the welfare state sceptic wing of the party.

What did these five social philosophers have to say about child benefit? Did they agree with the hon. Member for Ribble Valley? No, they did not. They stated in their pamphlet of 1993: We believe that the full up-rating of Child Benefit … is unsustainable. That is the view of the hard right of the British Conservative party. It is certainly different from what we have heard today. So much for the Tory party posing as the friends of child benefit.

The Labour party faces the future with confidence—Government members should watch the next election to see how confident we are. We propose a review, for positive social and educational reasons. We care about British families and their children. In contrast, the Conservatives are never less convincing than when they pose as the defenders of the family. When the Tories pose as the friends of child benefit, mothers should hold their purses tightly, and parents should ensure that their children are safely tucked up in bed. The Conservative party has attacked the family; the Labour party will defend it. That is why we need a review.

10.48 am

The Parliamentary Under-Secretary of State for Social Security (Mr. Andrew Mitchell)

As the hon. Member for Croydon, North-West (Mr. Wicks) said, this is a timely debate. My hon. Friend the Member for Ribble Valley (Mr. Evans) has done a service to the House in introducing the debate: it can examine the extent to which the thinking of the Labour party on this most important area of public policy has progressed since the debate on 17 May. As is becoming increasingly clear, the answer is that it has not progressed at all.

We absolve the Labour Front-Bench spokesman from any guilt, because he is far too intelligent to believe in that absurd proposal. To use a military metaphor—there was reference to defence earlier in the debate—he has laid down smoke, and not addressed the proposal that we are discussing today. He is simply the hapless Labour spokesman who must come to the Chamber today to defend it.

The proposal lies alongside Labour's much-vaunted social security review, which has been revealed as a sham and a shambles. The Leader of the Opposition urged his social security team to think the unthinkable, but I am sure that those hon. Members could not have dreamt that such an unspeakable proposition would emerge. To be fair to the hon. Member for Islington, South and Finsbury (Mr. Smith)—who is my Member of Parliament when I am in London—it is not entirely the fault of him and his colleagues. He has had to endure an ill thought-out intervention from his colleagues in the shadow Treasury team.

Virtually no Labour Members defend the proposal. My hon. Friend the Member for Ribble Valley referred to the Labour Members of Parliament who live in or near Islington and to their comments about the scheme. The hon. Member for Rochdale (Ms Lynne)—with whom I usually never agree—eloquently highlighted the foolishness of Labour's proposal. Although the hon. Member for Preston (Mrs. Wise) was not keen on my hon. Friend's argument, in a concise and a withering attack, she dismissed the thinking—if one could call it that—of her own Front Bench. She has the courage to say publicly in the House what her Back-Bench colleagues are saying in the highways and byways of Westminster.

It is important to examine where this absurd proposal has come from. It is wrong in principle, profoundly unfair in practice, based on inaccurate information, and likely to achieve the opposite result to that which is intended. On 17 April, the shadow Chancellor announced plans to abolish the child benefit for 16 to 18-year-olds for the purpose of providing additional educational opportunities to children from less well-off families. It seems this week that young people would receive up to £20 per week to encourage them to stay on at school.

Whatever the plan, Labour's policy is founded on the assertion that 80 per cent. of children with unskilled parents leave school at age 16. It would be shameful if the Government had presided over such a record. Some 20 years ago—after four years of a Labour Administration—those figures prevailed. However, the figure today is 56 per cent. Last year, 72 per cent. of 16-year-olds stayed on at school or further education—an increase from 42 per cent. in 1979–80. Almost 90 per cent. of all 16-year-olds now take part in education or training—five percentage points higher than four years ago.

As my hon. Friends have said, Labour's proposal would take away £560 per year from families with one child. That sum would not be returned to taxpayers, in whole or in part, through lower taxes. Therefore, it is effectively a tax increase equivalent to a 5p increase in the standard rate of tax for families on average earnings. It is Labour's teenage tax. Labour Members who are always keen to suggest that our provision is deficient in comparison with that of other European Union states should note that removing child benefit would make the United Kingdom the only country in Europe that did not provide assistance to families with 16 to 18-year-olds in non-advanced education.

It is an understatement to say that the response to the initial proposal was critical. It was criticised by other Opposition spokesmen who had not been consulted, and it was roundly condemned by Back Benchers on both sides of the House in early-day motions. The Child Poverty Action Group opposed the proposal, and correspondence columns in the newspapers showed that the public were profoundly unimpressed. In fact, apart from the Leader of the Opposition and the shadow Chancellor, the only person to support the proposal was the hon. Member for Rotherham (Mr. MacShane)—a man whose good sense is clearly exceeded by his ambition.

It was then suggested that child benefit be withdrawn only from those children at fee-paying schools. That idea was also based on erroneous statistics. We were told that 25 per cent. of 17-year-olds in education attend fee-paying schools, but the true figure is closer to 10 per cent. That is another miscalculation, by a margin of 150 per cent.

Parents naturally want to do the best for their children, and many make great sacrifices to send them to fee-paying schools. The children who attend such schools are not all from well-to-do families. The 75,000 families who would be affected by such a change include many of modest means. That is useful information, which proves that Labour has lost none of its malice and envy towards those who try to better their position and that of their children in that way. Young people must be supported while they stay on in education, and child benefit can make an important contribution in that regard.

As the hon. Member for Rochdale pointed out, child benefit may be crucial in determining whether young people from less well-off families stay in education to gain better qualifications that improve their prospects and life chances. Economic pressures may force many young people to leave school and enter the world of work prematurely. For example, child benefit for a 16-year-old contributes a healthy chunk of the income for a family that is just above the point where entitlement to income-related benefits runs out.

The absurdity of Labour's proposal to abolish child benefit is highlighted by its other proposal, to make it available to bogus asylum seekers. I recently received a letter from the Labour Nottinghamshire county council urging me to support Labour's amendment in another place to pay child benefit to the children of those who seek to enter this country illegally. In other words, Labour believes that ambitious young people from British families should be penalised, but that the children of those who come from overseas and have no right to remain in this country should retain child benefit.

It is not only young people in education who will be penalised: the Opposition's other policies would damage the opportunities available to any young person with ambition. Between now and the general election, the electorate must try to imagine what life would be like under a Labour Government. They should heed this warning: "Don't be young under Labour. Don't come from less well-off families. Don't try to better yourselves."

Labour's policies would hit people from five directions. First, they would hit those young people who want to stay on at school after the age of 16. As I have described today, Labour would take £560 from families by abolishing child benefit as a result of introducing the teenage tax. Secondly, Labour's policies would hit those young people who wish to leave school and enter employment. Labour's minimum wage would cost hundreds of thousands of jobs, as employers would find it more costly to hire new staff.

Thirdly, young people, who tend to earn low wages, would be hit the hardest. Those who choose to leave school and learn a trade would face many difficulties. At present, employers are taking on more young people as apprentices and training them in a practical and successful manner. Under Labour, employers would have to give 16 to 18-year-olds one paid day off a week—whether or not it suited their training needs. Labour would tell employers that they must give five days' pay for four days' work. Why should employers take on young people in those circumstances, when they could employ older people whom they could train in the manner which best suited the firm and the individual concerned?

Fourthly, young people will be damaged by the abolition of grants as a result of Labour's proposal to introduce a graduate tax. Fifthly, there is Labour's proposal for a curfew on young people, which even some Labour Front Benchers have rightly dismissed as crackers. Under that proposal, Labour would make it a police priority to catch youths, whether guilty or innocent. who are not in their homes after a certain time. Labour fails to understand that guilty youngsters, not the innocent. are the real problem. While the Government seek to crack down on the guilty with our tough law and order policies, Labour Members regularly vote against our proposals.

Conservative Members understand what young people need: they need to learn and we have helped them to learn. In 1979, one in eight young people went to university, now that figure is one in three. Young people need to work and we have helped them to work: since December 1992 unemployment has fallen by nearly 800,000. Young people need to learn a trade and we have helped them to do so: by the year 2000 there will be 150,000 modern apprentices with the right skills to succeed in the businesses of the next century.

What the hon. Member for Preston said about the opportunities available to 16 to 18-year-olds was a caricature of the reality; she painted the wrong picture. Young people do not need their opportunities abolished by a future Labour Government. As today's debate has shown, a Labour Government would be an unmitigated disaster for young people and we shall not hesitate to remind the electorate of that fact at every opportunity.