§ Families are the bedrock of a stable and healthy society, and, in a fast-changing economy—with its uncertainties and vulnerabilities—families, now more than ever, need the security of support when bringing up children.
§ "Family values" means that we value families—all families. So our economic policy must not only encourage a stable and healthy society based on mutual rights and responsibilities, but directly support families as they bring up children. That is not just for the 4 million children growing up in poverty in Britain today, but for every child who should have the best opportunities.
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The system of child and, indeed, family, support which the Government have inherited is confused in its aims and contradictory in its impact, and it must now be reformed
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on the basis of clear objectives. The starting point in 1998 is exactly the same as stated by the Beveridge report in 1944:
that nothing should be done to remove from parents the responsibility of maintaining their children and that it is in the national interest to help parents to discharge that responsibility properly.
§ We implement those objectives in a changed economy where parents try to strike the right balance between paid work and family responsibilities. In that new context, we must do more to encourage family-friendly employment that will help children and their parents. That is why, as part of the social chapter, we shall legislate to guarantee unpaid parental leave, and I am pleased to confirm that the Confederation of British Industry and others support that endeavour.
§ Giving children the best start in life requires good schools, good health services, good child care, good public services as well as cash help. This country invests some £10 billion a year in a wide range of services for young children. For the first time, a broad-based review of how we can integrate the whole range of services involved in the support and care of young children and their families is being carried out, and proposals will be announced with our spending review in the summer.
§ Giving a child the best start in life takes more than money, but it cannot be done without money. Child benefit remains the fairest and most efficient and cost-effective way of recognising the extra costs and responsibilities borne by all parents. Raising it allows us to do more for mothers who choose to be at home, working at home bringing up children. To underline the view that child benefit is society's support for, and investment in, the upbringing of children, child benefit should and will remain universal where it is already universal, and it should be paid, as now, directly to the mother. Thus, future support for children will be built around universal child benefit and I am convinced of the case for raising its level.
§ After careful examination, I believe that we should make three complementary changes. First, we all know that circumstances dictate that some families will need more help than others. The case for additional support for children in poorer families is strong, but that support should be on the basis of the identifiable needs of children, not on whether there happens to be one parent rather than two. There is no case for a one-parent benefit and we shall not return to that. Additional support should be provided on the basis not of family structure but of family need.
§ Secondly, our benefits system provides less help for children when families need it most—in the early years. Low-income families on benefit, in or out of work, receive £8 a week less for a child under 11 than for a child over 11. That distinction does not reflect some of the high costs of the early years and takes no account of the costs to mothers of staying at home when their children are young, or of the extra costs of child care if mothers work, so it is time to do more for children under the age of 11.
§ To achieve our goals, we must look more broadly at the current approach to children and families in the tax system. The state pays a tax allowance to married couples, 1108 but pays exactly the same amount at exactly the same rate to unmarried couples with children, whether or not they have ever been married. The state pays exactly the same amount at the same rate as married couple's allowance to single parents. Indeed, the state pays the same amount for up to a year to couples who separate or divorce, and does so whether they have children or not. Such is the confusion of the current system that if a married couple with children splits up, both man and woman can each receive the equivalent of a full married couple's allowance for up to a year. Thus, separated, they can receive up to twice the allowance of a married couple.
§ The only way to make sense of that chaotic system is to make our primary aim that of supporting families through supporting children. That is why, from next year, we propose to raise child benefit by reducing those allowances, now paid at 15 per cent., to 10 per cent. The change will not affect elderly taxpayers, whose extra allowances will be protected.
§ I have therefore decided that, from next April, for the first child, child benefit will be raised by more than 20 per cent.—a £2.50 a week rise in child benefit, in addition to the normal uprating for inflation. The £130 a year rise is the biggest increase we have seen in child benefit. These changes will be fully reflected in the family premium for income support. It is the right thing to do to support and strengthen families in our country, and, from November this year, for those on family credit and income support, child support for under-11s will be raised by an additional £2.50 a week, so that the needs of Britain's youngest and poorest children are properly recognised.
§ With these measures, we can give every child a better start, and I believe that, in future years, we can and should do even more. For those who want child benefit raised, the question undoubtedly arises whether it should be taxed for those at the top of the income scale. It must be right in principle that if child benefit is raised, there is a case for higher rate taxpayers paying tax on it. Modernisation of the welfare state makes possible more investment in the children of our country, and following the children's review, we shall bring forward detailed recommendations for reform.
§ I have one further announcement: for hundreds of thousands of men and women, care within the family extends beyond caring for children to caring for disabled or elderly relatives, so valuing families means valuing carers—spouses, grandparents, and all the carers who contribute to the family. As a first step to recognising the importance of carers within the family, I can today announce that I am ending an injustice that the previous Government tolerated. The tax allowance that has been available only to men with children whose wives are incapacitated will be extended to mothers with dependent children and incapacitated husbands. Because of the importance that I attach to ending this unfairness, I will backdate this additional help to April 1997.
§ I now turn to the environment. The Kyoto summit was a landmark for international agreements on the environment, and the work of my right hon. Friend the Deputy Prime Minister in securing agreement has been widely applauded. Having signed up to an 8 per cent. reduction in European Union carbon emissions, we are determined to play our part—nationally and internationally—in meeting those targets. In those 1109 important policy decisions, which affect generations ahead, there will be proper information, proper consultation and full openness in government.
§ I can confirm, first, that VAT on the installation of energy-saving materials funded under certain Government grant schemes will be cut from 17.5 to 5 per cent. That will help to insulate 40,000 more homes a year, and we are pursuing with our European partners a wider relief.
§ There has been increasing pressure, not least from businesses, for measures that encourage greater energy efficiency in industry. I am grateful to Sir Cohn Marshall, the chairman of British Airways and, until July, president of the CBI, for agreeing to head a Government review into economic instruments to improve the industrial and commercial use of energy. It will include a study of whether new economic instruments, such as an industrial energy tax and/or other market mechanisms, should be introduced to help to curb industrial emissions, and, if so, how that will be done.
§ Concern for the environment is, of course, not limited to the use of energy. Last year, we commissioned work on the environmental costs of the quarrying of aggregates, and on the options for dealing with water pollution. Detailed results will be published in the near future by my right hon. Friend the Minister for the Environment. We already know that we need to do more to reduce the amount of waste going to landfill, so I shall raise the standard rate on active waste from £7 to £10 per tonne from 1 April 1999. Consistent with our environmental objectives, from October next year I am exempting from landfill tax the inert waste used in the restoration of sites.
§ Road transport is the fastest growing source of carbon emission, so we need a more balanced transport policy. The Government therefore propose to make two major environment-led changes to long-term transport policy.
§ The quality and quantity of public transport must be improved. I am pleased to announce that, over the coming three years, as a result of this Budget, a total of over £500 million additional money will be invested in public transport. My right hon. Friend the Deputy Prime Minister will announce details later this week.
§ I can announce today a £50 million a year rural transport fund. Three quarters of rural parishes and communities have no bus service. Our aim must be to extend the range of transport services throughout the country. The fund will invite applications from rural communities that want to improve their local transport services. As an added incentive, I shall increase the rebate on fuel paid to bus operators to help to keep bus fares down.
§ The Government recognise that, for many people, especially in isolated areas, car ownership is not a choice but a necessity, so I now want to rebalance car taxation so that it falls less on car ownership. I want to make the change in an environmentally sensitive way.
§ From January next year, I am cutting the licence fee for lorries and buses with clean engines by up to £500. But I also want to make a major reform of the licence fee for cars. From next year, I plan to reduce the licence fee for cars with the lowest emissions. For the cleanest and the smallest cars, I plan to cut the licence fee by £50.
§ As we make the preparations for this long-term environmental change, for this year I propose, at a cost of £145 million, to freeze the licence fee for all vehicles. 1110 To encourage lower emissions, the costs of converting company cars to road fuel gases will, from now on, be disregarded for income tax purposes. At the same time, I am increasing the scale charges for fuel provided by an employer, which will cost the typical company car user around £1 a week. The duty on road fuel gases will be frozen, increasing the incentive to use those cleaner fuels.
§ The previous Government introduced a road fuel escalator, the principle of which we supported. They set it at 5 per cent., and since July it has been 6 per cent. There is agreement that only with the use of an escalator can emission levels be reduced by 2010 towards our environmental commitments.
§ As a result of the escalator, road fuel tax will rise by 4.4p a litre for unleaded petrol and for ultra-low sulphur diesel. As is normal, that change will take effect on Budget day at 6 pm. To encourage all diesel users to switch to cleaner fuels, ordinary diesel will increase by 1p more than that. These increases will reduce carbon emissions by 1.7 million tonnes of carbon.
§ Of course, the price of petrol will also be affected by movements in oil prices. The oil price has fallen by 25 per cent. in the past six months: a benefit enjoyed by oil companies which has yet to be passed on to consumers, especially consumers in rural areas, who already pay higher fuel prices, which is something the Office of Fair Trading is already investigating.
§ Whatever the short-term changes in oil prices, however, the Government have a duty to take a long-term and consistent view of the environmental impact of emissions, and that is what we have done. Today we are publishing in the Red Book an environmental assessment of our proposals.