HL Deb 19 July 1994 vol 557 cc133-5

2.40 p.m.

Baroness Gardner of Parkes asked Her Majesty's Government:

Whether a move to make the costs of employment in the home eligible for tax relief for employers would help to reduce unemployment.

The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)

My Lords, it is unlikely that such a move would have a significant impact on unemployment.

Baroness Gardner of Parkes

My Lords, I thank the Minister for his reply, but does he agree that it is time to destroy for good any vestige of past stigma attaching to the outdated "upstairs downstairs" concept? Does he also agree that every job carries its own dignity and it is time to recognise the significant contribution made by those men and women who choose to work in the home, either as domestic workers or care providers, by treating these as jobs like any other?

Lord Henley

My Lords, I agree with my noble friend up to a point, but I have to say that tax relief of the sort she suggests would be a very costly and ineffective way of attempting to reduce unemployment. There would be very considerable deadweight costs of people being taken on who would have been taken on anyway, or people who are already in work. The cost to the Revenue would be considerable.

Lord Skelmersdale

My Lords, I believe that my noble friend is also responsible in this House for speaking for the Treasury. Does he accept that an idea such as my noble friend Lady Gardner of Parkes has put forward would make an enormous dent in the black economy?

Lord Henley

My Lords, I can assure my noble friend that I am speaking for the Treasury today and not for my own department, the Department of Employment—but perhaps I am wearing both hats. It might have the effect that my noble friend points at, but I very much doubt it. The point to stress is that it would really be a very very expensive way of trying to reduce unemployment.

Lord Dixon-Smith

My Lords, does my noble friend agree that it might be worth studying experience in other countries? I believe that the French, by relaxing conditions of employment for domestic; workers, have considerably increased the volume of jobs and thereby reduced unemployment.

Lord Henley

My Lords, certainly we would be prepared to look at the experience of other countries, but I do not believe there is evidence that expenditure of this sort—again I stress to my noble friends the very considerable deadweight costs—would actually have the effect that my noble friend seeks.

Baroness Faithfull

My Lords, does not my noble friend the Minister agree that to be able to get domestic help in the home for the care of children, the elderly and the disabled would contribute greatly to care in the community, which is recommended by the Ministry of Health?

Lord Henley

My Lords, my noble friend is correct. Help of that kind in the home is obviously very useful. However, whether the tax system should distort the position and subsidise what are in fact personal expenses is another matter.

Lord Mackie of Benshie

My Lords, is the Minister aware that there might be another benefit to the economy if a great many of our ablest women were able to continue to work and at the same time bring up their families?

Lord Henley

My Lords, they can do that at the moment but they have to pay their own child care costs, or possibly their employer might provide for such costs. But I do not think that there is a case for distorting the tax system by subsidising such employment.

Lord Eatwell

My Lords, following on from the general issue of the relationship between distortions of the tax system and employment, will the noble Lord tell the House what would be the impact on employment of the Chancellor of the Exchequer's newly professed desire to extend VAT to goods and services which are currently exempt such as children's clothes, food, books and newspapers, all of which are labour intensive industries? I notice that noble Lords opposite do not seem to be concerned about the impact of taxation on employment.

Lord Henley

My Lords, I think that the House will agree with me if I say that yet again the noble Lord is abusing the rights of the House. That is another Question. I should be delighted to answer it on another occasion if the noble Lord were to put down such a Question.