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Development Land Tax (Amendment)

Volume 981: debated on Tuesday 18 March 1980

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4.4 pm

I beg to move,

That leave be given to bring in a Bill to amend the Development Land Tax Act 1976 by repealing section 2 relating to the charge on deemed disposal; to make further amendments to enable advance assessments to be reached on the calculation of gains, and to introduce a system of relief for development losses against development gains; and to make provisions for matters consequential upon the foregoing.
I declare an interest. As a valuation surveyor, I have had the opportunity to see the way in which commercial decisions taken by people, particularly those connected with the building industry, are affected by the Development Land Tax Act, which received its Second Reading almost exactly four years ago to the day, on 15 March 1976.

The amendments that my Bill seeks to achieve are based not upon private prejudice or partial affections but upon practical experience born of commercial experience in the intervening years. I am concerned that not enough new homes are being built for sale, particularly for young married, first time buyers. Until the building industry starts to expand again, no new jobs will be created.

I accept that increases in land values resulting from planning decisions should bear a special tax. I accept that capital gains resulting from planning permission should be in a special category. I acknowledge that in his Budget last year the Chancellor of the Exchequer lightened the tax burden considerably across the board by reducing the element of tax from 80 per cent. to 60 per cent. However, I believe that certain anomolies and inequities still exist at the margin and that further trimming is necessary. If the Act remains unamended in the particular, it will continue to discourage the construction industry from making its vital contribution to housing the nation and thus discourage it from expanding and creating new jobs for those with skills upon whom the economy so desperately depends.

My Bill seeks to draw attention to three main points of principle. First, I believe that any system designed to tax development gains should recognise that there is a distinction between windfall or speculative gains and gains which are created by the combination of enterprise, endeavour, expertise and risk. The Development Land Tax Act treats both windfall gains—those that merely happen—and development gains—which are created and earned—in exactly the same manner. The effect is to discourage the stimulus of enterprise, hard work and the reward for effort.

The technical device in the Development Land Tax Act which gives effects to discrimination against effort is called "deemed disposal". In seeking leave to introduce legislation to repeal section 2 of the Development Land Tax Act 1976, I seek to strike out that provision which penalises gains made by those who are in the business of creating homes, factories, shops and offices and which, perhaps inadvertently, devalues the importance of their contribution to the fabric of society.

The fiction of "deemed disposal" works only if another fiction is invented—that there are only development gains and never development losses. The effect of taxing the development and construction industry particularly on "deemed disposal", that is, at the start of a development, is that over a period the base of the industry is severely eroded. That is because each time a builder starts a development—before a brick is laid—he is taxed on any gains that may arise on that development on the basis of the market value of the land on which he starts the development. At the same time, however, he must go back to the market and buy more land to replenish his land bank to build more houses for first time buyers and to keep his skilled men employed. He must do that unless over a period he is to run down the size of his enterprise with the consequent loss of jobs and new homes.

Having paid development land tax, the builder inevitably has less money to get back into the market to replenish his land bank. The result is that he reduces his output, cuts the number of new homes that he builds or increases his borrowing to maintain his output. In commercial terms, he runs faster to stand still or he goes backwards.

That form of taxation creates two anomalies. First, it stifles the output in the private house building industry—indeed it may even reduce that output particularly by the small and medium-size builders who cannot extend credit or obtain overdrafts. It inevitably leads to an expansion of demand for domestic credit and an increase in overdrafts as builders seek to extend their borrowings in order to maintain the same level of production.

It is the only form of tax which is levied upon a series of hypothetical assumptions. It is the only form of tax which becomes due for payment before a profit is made. Indeed, it becomes due for payment whether a profit is realised or a loss is made.

The second anomaly of the Act is that tax liabilities cannot be calculated until a development scheme has been started and until material development takes place. As a consequence, builders are unable prudently to plan in advance in a businesslike manner for their tax liabilities, simply because they do not know what they will be until they have made a material start.

There are no provisions in the Act to enable builders, as of right, to obtain a valuation on the land at the time of their acquisition of it, or at some other point prior to the start of that material development. They are therefore forced, as it were, to buy blind and to guess what might be the opinion of the district valuer as to its value at the start of that actual material development and to hazard the best guess as to what their tax liability might be. In effect, they are, metaphorically speaking, laying drains with one hand and signing a blank cheque with the other.

There can be no more unfavourable climate, no greater discouragement imaginable, within which any major industry has to operate. For that reason, I seek leave to amend the Development Land Tax Act to allow for advance valuations to permit tax liabilities to be planned prudently.

I draw the attention of the House to the structure of the Development Land Tax Act. Although it allows for development gains, it makes absolutely no allowance whatsoever for development losses, or for losses to be offset against development gains, as indeed happens in every other form of commercial activity.

I therefore seek the leave of the House to amend the Development Land Tax Act to permit development losses to be offset against development gains and to ensure that all relevant costs incurred in holding land ripe for development are also eligible to be offset against gains.

I believe that my Bill will have beneficial effects. It will encourage the building industry to bring forward land for development. This will bring about an expansion in the building industry and provide new jobs and new homes at stable prices.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Heddle, Sir Derek Walker-Smith, Sir Graham Page, Mr. Paul Hawkins, Mr. Tony Durant, Mr. Sydney Chapman, Mr. John Ward and Mr. Stephen Ross.

Development Land Tax (Amendment)

Mr. John Heddle accordingly presented a Bill to amend the Development Land Tax Act 1976 by repealing section 2 relating to the charge on deemed disposal; to make further amendments to enable advance assessments to be reached on the calculation of gains, and to introduce a system of relief for development losses against development gains; and to make provisions for matters consequential upon the foregoing; And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed. [Bill 170.]

Social Security Bill (Allocation Of Time)

Ordered,

That the report [13 March] from the Business Committee be now considered—[Mr. Patrick Jeakin.]

Report considered accordingly.

That—

(1) the order in which proceedings on Consideration are taken shall be New Clauses. amendments to Clauses 1 and 2,, Schedule 1, Clauses 3 to 6, Schedule 2, Clauses 7 to 10. Schedule 3, Clauses 11 to 20, Schedule 4, Clause 21, Schedule 5 and New Schedules:
(2) the allotted days which under the Order [25th February] are given to the proceedings on Consideration and Third Reading shall be allotted in the manner shown in the Table set out below subject to the provisions of that Order, each part of the proceedings shall, if not previously brought to a conclusion, be brought to a conclusion at the time specified in the third column of that Table.

TABLE

Allotted day

Proceedings

Time for conclusion of proceedings

First dayNew Clauses.9.00 p.m.
Amendments to Clause 1.Midnight
Second dayAmendments up to the end of Schedule 2.9.0 p.m.
Remaining proceedings on Consideration.11.00 p.m.
Third Reading.Midnight

Question, That this House doth agree with the Committee in thier resolution put forthwith, pursuant to Standing Order No. 43 (Business Committee), and agreed to.

Following is the Report of the Business Committee:

Orders Of The Day

Social Security Bill

[1ST ALLOTTED DAY]

As amended (in the Standing Committee), considered.

New Clause 1

Death Grant

'For each of the amounts specified in paragraph 2 of Part II of Schedule 4 to the principal Act there shall be substituted the sum of £45 with effect from 17 November 1980.'.—[ Mr. Orme.]

Brought up, and read the First time.

4.15 pm

I beg to move, That the clause be read a Second time.

First, I want to say how modest is the new clause, which I move on behalf of the Opposition. My hon. Friends and I feel that something should be done about the death grant. It should be uprated.

In the Labour Party manifesto of 1979 we were committed to raising
"the burial grant to a more realistic level."
This is why we are moving this modest clause. In view of the economic situation and rising inflation, something must be done this year about the death grant. A 50 per cent. increase—a modest increase from £30 to £45—will not resolve the problem, as I am the first to acknowledge, but at least it starts to raise the death grant. It has been at its present level since 1967.

The new clause also does one or two other important things. It makes the grant payable at full rate for children. At present the death grant for a child under 3 years of age is £9, £15 for a child between the ages of 3 and 6, and £22 for a child between the ages of 6 and 18. With this clause we propose to remove anomalies affecting those families who have the unfortunate experience of losing a young child. The proposal is a step in the right direction.

The clause proposes a further change. I am sure that there has been much pressure on hon. Members about the fact that half the normal rate is paid on the death of a man aged over 87 and a woman aged over 82. The clause removes that anomaly and enables the full rate to be paid at any age. Therefore, if it were accepted, the total death grant for a child or a person in his eighties or nineties would be paid at £45.

The modest clause goes no way towards meeting what many hon. Members on both sides feel is a more realistic figure. A more realistic figure would cost between £80 million and £140 million a year. We are testing the good faith of the Government with the clause. Perhaps the Minister will tell us whether she has calculated what the cost of the clause would be in a full year. We estimate that the cost would be about £10 million in a full year. I see that she confirms that figure.

Is the right hon. Gentleman aware that if the death grant were confined to those genuinely in need—I have my right hon. Friend's reply to the written question on 30 January—the figure could be raised to £100 without any further expenditure from the public exchequer?

That means instituting a means test and a complicated system. I do not know how the figure can be assessed on death. It is a complicated issue. The facts often come out only when the relatives face the problems of deceased persons, especially lonely people, who leave no estate of any consequence. Therefore, this is not an issue that can be means tested, even if one is in favour of means-tested benefits.

Does my right hon. Friend agree that there is obviously a problem for the people who must bury the dead person? However, the Opposition are conscious that the problem must be faced by people before they die. They worry that they will not leave sufficient money for, in their view, a decent funeral. We seek to alleviate that anxiety by means of these proposals rather than deal with the problem left to the relatives.

I thank my hon. Friend. I want to come to that point. The clause deals with the genuine point raised by the hon. Member for Windsor and Maidenhead (Dr. Glyn). I do not denigrate his point. I am examining the issue. I shall come later to the point underlined by my hon. Friend.

First, I refer to what was said recently by the Under-Secretary of State for Health and Social Security in Committee:
" … since 1967, when the death grant was £30, prices have increased by 280 per cent. But if we allowed for an illustrative 10 per cent. increase in prices between now and next November, the spirit of the amendment would require the grant to rise to over £125, which would add over £50 million to the current expenditure of £16 million on the death grant." [Official Report, Standing Committee E, 29 January 1980; c. 152.]
That is why we have put down the new clause, which will cost £10 million initially. I recognise that there is a lobby on at the same time as this debate. It was arranged a long time ago. I think it is that of the Dignity in Death Alliance, many organisations of which have come together and are meeting in a Committee Room of this House while we are discussing this matter. Most of those people would say that our new clause does not go far enough. We say to them, as we are saying to the Government, that the Government could come some way to meeting the position for a very modest sum by accepting this new clause.

With regard to what my hon. Friend the Member for Stockport, North (Mr. Bennett) said, we have before us the report of the Department of Health and Social Security, which the hon. Lady has rushed through. Many hon. Members will not have had the chance to see it yet. It is entitled "Families, funerals and finances: a study of funeral expenses and how they are paid".

I apologise for interrupting the right hon. Gentleman, but I must point out that he has an advance copy and there are errors in it. The full publication will not be available for a few weeks yet. I have done my best to get as much information as possible to hon. Members even at the eleventh hour.

I know that the hon. Lady has worked very hard to get out the report and I am not in any way saying that she has tried to delay it or keep it back. I happened to receive a copy of it by accident. We have all heard of things coming under plain cover, and I got the copy of this report in draft form under plain cover last week. I have read it, particularly the conclusions, and it contains a very interesting explanation of the death grant and how this situation developed in the late nineteenth century and the twentieth century because of the poverty and pauperism at that time. The necessity for the death grant was pressed on the incoming Labour Government in 1945 and, as the House knows, later the death grant was introduced, and many of the millions of small subscriptions that were collected began to be phased out.

The report deals with the answer to this question as being back to Beveridge, which means linking it to the cost of living and meeting the cost, a selective grant or the abolition of the grant. Each of these ideas is canvassed in the report and no doubt hon. Members will he interested to read it when it is available.

Perhaps the right hon. Gentleman would take into account in his argument the fact that many people in this country over the age of 60 or 65 are not able, because of their age, to increase their private insurance, and consequently for them the death grant has much greater relevance. The cost of burying a person has increased. Certainly a funeral cannot be obtained for £250 to-day and the odds are that the cost is now about £300 per funeral. The private insurance of these people was taken out at a time when the cost of a funeral was £50 of £60. That is why the death grant, whatever its origins, is an essential part of the social structure of this country today.

I take the hon. Gentleman's point, but I think, that the hon. Lady would quote the report, which says that in relation to incomes the position has not deteriorated. But the important point the hon. Gentleman has made is that particularly for the more elderly people, many of whom are not covered by the full grant and some of whom are completely excluded, great difficulty arises.

Coming back to the point my hon. Friend the Member for Stockport, North made, this survey of relatives who arrange funerals does not reflect the anxieties of old people approaching death, with their small savings eroded by inflation, and knowing that they will not leave enough money to pay for their funeral. The fact that their relatives may be able to pay without hardship is no comfort to them. A survey of elderly people's feelings about the death grant would have produced very different results. It would certainly show no support—I say this to the hon. Member for Windsor and Maidenhead—for the idea of a means-tested grant. I think it is a question of dignity and a person knowing for certain that if he is in an unfortunate position financially and dies he is assured of a proper burial, with all the normal courtesies and provisions.

To many elderly people, this is a very serious matter. Therefore, the House ought to take serious note of this also. I shall be very interested to hear what the hon. Lady has to say, because I can see no reason why the Government should not accept it. Certainly they cannot oppose it on a cost basis.

Before my right hon. Friend leaves question of the survey, he has very carefully illustrated that the wrong group of people was questioned, but would he agree that the survey was carried out on deaths that occurred in the autumn of 1974? Would he not agree that since then the cost of funerals has almost doubled and that therefore the information about people's attitudes to the problem of paying for them is extremely out of date?

I accept my hon. Friend's point. What makes the position so serious is the inflation rate. I think all hon. Members would agree that the inflation rate hits people on fixed incomes, not least retired people, and I would expect this point to strike a note among hon. Members on the Government Benches, because they often pay great attention to this point. Perhaps some of them will be prepared to express an opinion on it this afternoon.

We therefore feel that the new clause, which is modest and to the point, because it deals with an uprating this year, removing the anomalies as between the young and the old and making a start on an uprating, with the obvious purpose that it should continue in future years, should be accepted. I certainly press the Government seriously to consider it.

The hon. Lady has given us figures on uprating the death grant to £135, £150 or £180. Some hon. Members may want to give that priority, but I think we could all unite on doing something now.

I would point out that, in accordance with Mr. Speaker's selection, we are taking amendment No. 15—clause 5, page 10, line 14, at end insert—
'(5) The sum specified in paragraph 1 of Part II of Schedule 4 to the principal Act shall be increased to £40 with effect from 17th November 1980.'.
It deals with the maternity grant, which is a separate issue, and my hon. Friend the Member for Barking (Miss Richardson), if she catches your eye, Mr. Deputy Speaker, may move it later. I have spoken purely on the new clause.

4.30 pm

My interest in and involvement with the death grant are nothing new. Ever since I came to the House 10 years ago, I have spoken in debates when the matter has been raised under Conservative and Labour Governments. I stand today as convinced as I was on the first occasion when I addressed the House on the subject that there is a powerful demand from both sides of the House and from many people outside for the death grant to be put on a more rational basis.

There is no difference between the two sides of the House in the feeling which has manifested itself over the years that a major improvement is overdue. It is fair to say that any benefit that has stayed at the same value since 1967 is well overdue for review. As 1967 was the last occasion on which the death grant was raised, and as prices have increased by 280 per cent. since that time, the House may conclude that the case almost makes itself.

I hope that I shall be forgiven if in the course of my remarks I put a different emphasis on this matter of the death grant from that which was given to it by the right hon. Member for Salford, West (Mr. Orme). I hope in the process that the concern which both of us feel for people who are particularly disadvantaged in this respect will be thought at least to be parallel.

The death grant is undoubtedly an emotive subject. It conjures up the vision, perhaps even the reality, of the inability of relations to bury their dead. Feelings about this go very deep. It is a provable fact that countless thousands of elderly people go without during the later years of their life because they feel it incumbent upon them to provide enough for what they no doubt would describe as a decent burial. This is an extension of that element of thrift which has been more apparent among our population in the past than it is today. Certainly those people believe that to run the risk of a pauper's funeral is almost the negation of all that they have lived for. To that extent, therefore, the House cannot deal with this matter purely on the basis of economics or politics. It must deal with it on the basis of the humanity that lies behind our discussion today.

Genuine anxiety exists. There can be no doubt in anyone's mind that a death grant of £30 is a totally inadequate contribution. I wonder whether that word "contribution" does not lift the veil on why successive Governments have felt able to retain the death grant at this inadequate level. To most people the £30 is a contribution towards the cost of burial. There is no doubt that where it is of prime importance to receive a contribution from the State to assist in the burial expenses the £30 is inadequate. So, too, is the £45 proposed in the new clause. I wonder whether the Opposition, in putting forward the clause, have given it the right emphasis. I hope I shall be forgiven for questioning whether this is the right way to go about it. I certainly question whether £45 is the right amount.

The real argument revolves around the simple question: to whom is the death grant important? Is it important to everyone? I respectfully suggest that the answer to that is "No". It is comparatively unimportant to most of those who are entitled to receive it in 1980. That may be because their standard of living is comparatively high and so they have no special difficulty in finding the amount required for burial expenses. It may be because they have an adequate life assurance policy. Most people who are now aged 40 or over have been brought up in a period when it has been normal to make provision for death by taking out a life assurance policy. I pose the question again: to whom is the death grant important? Is it the majority? I respectfully suggest that it is not but to the minority of people it is crucial.

Whom do we find within this minority? I agree that it is difficult to specify the deserving minority. In looking for need, do we consider the person who has died or the relatives who are left and upon whom the responsibility to arrange the burial devolves? I am not this afternoon proposing any specific way of overcoming that problem, except to say that it would seem reasonable to assess need on the basis of the person who has died. If there is a respectable argument which still takes care of my point of paying the grant to those who particularly need it but which leads people to feel that it would be better to reverse my argument, I am prepared to be convinced. However, it would be almost impossible to convince me that there is a need among the majority of the population for a death grant to be paid, be it £30 or £45.

If I am challenged that that involves a means test, clearly I have to concede that it does. Those hon. Members who have listened to me over the years when I have spoken in social security debates—they are a dwindling band—will concede that I have never dodged the fact that if, as I profoundly contend that there must be, there is to be selectivity in the payment of social benefits, I have to accept the corollary of that policy, which is the necessity for an assessment of means before benefits are payable.

I am saying that the death benefit should be increased, that it should be increased to much more than £45, but that it should be increased to that much higher level only for those who, after a means test—if that emotive phrase is the best way we can find to describe it—are found to be in particular need.

We are also talking about the maternity grant. I take the view which I took on a recent Friday in the debate on a Bill dealing with the maternity grant which was proposed by the hon. Member for Kingston upon Hull, Central (Mr. McNamara). No doubt there are a small number of people who are in the greatest need and to whom I would give priority treatment without hesitation. To put the death grant at £45 and the maternity benefit at £40 as proposed would be of no value to those who are in need. The House would be ill-advised to go along the road proposed in the clause and in amendment number 15. Instead, I am persuaded that there is a powerful case to be made for a totally fresh approach to maternity grant and death grant. There is a powerful case for an inquiry to see whether the selectivity that I would prefer for the payment of death grant and maternity grant is a better way of looking after those in real need in 1980 than the course that has been followed since the introduction of the Welfare State in 1948.

There may be an argument for saying that selectivity should not take the form I have suggested and that it should pay no more at all or pay no more than £30 only to those aged over 65 at death. That is an alternative basis. I should be prepared to listen to arguments on those lines. But a conscious decision is involved to move away from the universality of the benefits which has proved of little value to those receiving benefits and on to a basis of selectivity that would perhaps lead to the elimination of payment of death grant or maternity grant to a sizeable number of people. Selectivity would turn attention on to those who are really in need and would enable the Government to increase benefits to amounts more in line with those required in 1980.

I am calling for nothing less than a fresh approach. The House would take a small step in the wrong direction if it decided on a move from £30 to £45 in death grant and from £25 to £40 in maternity grant. It would be far better to give those in need some real hope of amounts which will truly relieve the great burden and pressure of poverty that continues to rest upon their shoulders.

The hon. Member for Brentwood and Ongar (Mr. McCrindle) went to the nub of the different philosophies that exist between the two sides of the House on social security and social security benefits. The hon. Gentleman argued for the discriminatory assessment and for the means test. We on the Opposition side argue in favour of universal benefits. The reason is not that we are more blatant, more spendthrift, or more rash with the public purse. We believe that, if equity is to be achieved in the payment of benefits and if too many people are not to fall through the holes in the safety net to which those who speak of discriminatory payments refer, there is a need for universal benefits.

The take-up level of benefits which are optional, discretionary, or have to be singly or separately applied for, falls far below what anyone would consider to be reasonable or acceptable. One needs only to examine family income supplement to know that this is the case. The nature of some of those benefits is as vicious a form of taxation as one is ever likely to see.

I do not agree with the hon. Member for Brentwood and Ongar. The Government have accepted in some small degree the question of universality of payment of benefit with regard to maternity grant. It would be churlish if I did not acknowledge the fact that the Government have on this occasion accepted the universal principle. I do not hand out compliments lightly. I introduced a Bill on maternity grant last November. It sought to deal with other matters as well. It would be wrong for me not to acknowledge that the hon. Lady, the Under-Secretary of State, has kept her undertaking she gave when she said:
"However, on this one specific issue I have every sympathy with the case put forward today. The implications of it need to be studied and I assure right hon. and hon. Members that we shall give careful consideration to the proposition that the grant be made non-contributory ".—[Official Report, 23 November 1979; Vol. 974, c. 812.]
The hon. Lady has done that. I must acknowledge that fact.

As so often happens in the House, my hon. Friend is no doubt coming to the point that I wish to raise. While the Government have conceded what he has described in response to an amendment proposed by one of their own hon. Members, my hon. Friend will recognise that it is not to come into force until 1983. The cost of a new clause that the Government accepted is about £1 million or £1½ million. That is a small sum in relation to social security payments. The Government have put off the day of implementation. We are keen to see this year's date both in the maternity grant amendment and in the new clause on the death grant.

My right hon. Friend has forestalled what I intended to say. If one accepts the point about universality, one accepts that in the past the Labour Government—it was contained in the manifesto—and the present Government recognise the problem faced by those women who are not covered at present by the Act. I should like to deal with the point raised by the hon. Member for Brentwood and Ongar. It is no good talking about jam tomorrow for people who need benefit today. There is no means of which I am aware of prolonging a pregnancy for two or three years once it has started in order to get the rather mean benefit that the Government are giving.

There would have been a degree of sense and graciousness if the Government, having accepted the principle, had been prepared to put it into operation at once. This is the point of my right hon. Friend's proposal that it should come into operation this year. All these people, the girl under 16, the girl married to a student, the unmarried mother, the wife of an immigrant, and the wife of a long-term prisoner, will be faced with this problem for at least three years if the Govern-merit's position remains unchanged. I congratulate the Government on giving way on the principle. But they have ruined their position.

4.45, pm

Referring to my Bill, it is important to see how little the granting of universality has achieved. We were looking not only at the question of universality to help women when most in need but also at a positive and real upgrading of the benefit. Last November, we estimated a figure of £85. My colleagues, in their amendment, have stipulated the very modest sum of £40. I understand that the intention is to try to achieve parity with the death grant. I support the increase in the death grant, although I regard the sum suggested as far too modest.

The hon. Member for Brentwood and Ongar said that it would be better for people to wait longer. But people need the money now. The expense is incurred now. Expense occurs at the time of the confinement. There is no point in suggesting that a committee should examine the matter, all its possibilities and all its ramifications. There has been mention of the report on funeral costs, based on figures six years too late. The majority of children and their mothers need the benefit at the time of birth. We looked for a reasonable and decent uprating. Although a figure of £40 has been pro- posed, whereas I would have put forward a figure of £85 or £100, as representing a decent maternity grant, I believe that the Government should respond.

There is also a lack of acceptance by the Government of the need to index. All benefits should be indexed. That principle, above all others, is under attack, as we read in the press every day. The Prime Minister refused to come clean when she replied to a question about it from my right hon. Friend the Leader of the Opposition. We must wait until Budget day to know whether various benefits will be indexed or de-indexed. We know that this benefit, more than any other, needs to be indexed.

My hon. Friend referred to well-founded speculation about future Government policy. He said, rightly, that all would be revealed on Budget day. Is my hon. Friend aware that later tonight we shall be discussing and voting against the de-indexing of benefits? Pensioners' benefits will be de-indexed because the earnings factor is to be removed from their uprating.

I am aware of that. Because I have been ill I have been unable to take part in previous proceedings on the Bill. In deference to my colleagues I do not wish to steal their thunder, as many of my hon. Friends will have broadsides to level at the Government about de-indexing.

Indexing of maternity benefit is essential. The Government have missed a magnificent opportunity to link maternity grants with their attitude to and their philosophy on and awareness of perinatal deaths and ante-natal care. It is essential to ensure that women are examined once they become pregnant. We must encourage them to visit clinics early in their pregnancy. We must encourage them to take the necessary exercise and medicine to ensure that their children are born as safely as possible. That opportunity has gone by the board. We could have taken the example of France, where care is taken to ensure that expectant mothers receive proper treatment and that their new babies are well cared for. All that care is knitted together with the payment of maternity grants and benefits.

The Government may take credit for the fact that in times of hardship and economic stringency they are prepared to grant the principle, albeit not for three years. We should not lose sight of the importance of the argument which applied from the initiation of the maternity grant, namely, that it should be a means towards achieving healthy mothers and healthy children. The Government have missed that opportunity. The credit that they hoped to receive for accepting the principle will be lost and gone for ever.

Birth and death are the most important events in anybody's life. Nobody can judge, allow for, or gain from, birth or death. We do not know to whom we shall be born, and we do not know when we shall die. There is a duty upon society to ensure that people come into the world and depart from it decently. We could ensure that degree of decency by supporting the new clause and amendment No. 15.

We are debating a serious problem. Hon. Members who represent constituencies with large numbers of elderly people have daily experience of the distress and the fear of what death means to them, especally the cost of burying their loved ones.

Quite recently I opened an old people's home. One old couple said to me "This is Heaven. It is a wonderful home. Our only worry is that, having been married for 55 years, one of us will die first and the other will have to spend all our savings on burying the loved one." I was struck by the sincerity of that argument.

I shall not support the new clause because it does not deal with the matter in the proper manner. As my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) made clear, to raise the death grant by £10 will not do the job at all. It will raise false hopes. Those who are anxious now will not be any less anxious because they have been given an additional £10.

I hope to add my voice to the debate in a few minutes. I accept the hon. Gentleman's argument that the first increase is a modest one, but does he not agree that even £15 will be of some help in the difficulties faced by pregnant women? If they are forced to wait, in the way that he and his hon. Friends suggest, the moment of their pregnancy will have passed and they will never receive the extra benefit.

I was dealing with the death grant, not with the maternity grant. With all respect to the hon. Lady, it is not the same matter. The case that I was developing was that elderly couples, married for more than 50 years, were not worried about dying—some of them welcomed the fact that they would die—but were more worried about what would happen to those whom they left behind and who would have to live in poverty because they had spent their savings on burying their loved ones.

I shall not support the new clause because it does not go far enough. I expect my hon. Friend the Under-Secretary to give the House a definite assurance that this matter will not be put aside year after year. Few people actually need the death grant to the extent that I have expressed. They need the assurance that it is available if it is necessary. I agree with the idea of a means test. The public would agree that death duties should be increased and that a means test should be applied. The cost of burying a loved one is about £150. Could the Chancellor be given a hint that many of the deceased's relatives would not miss £150 if it were taken off the amount that they were to receive as beneficiaries? Why not organise a system whereby those who died with a reasonable estate had the £150 deducted from it before it passed to the beneficiaries? That sum could be transferred to a fund and be used to help those who could not afford to bury their loved ones. The Government would not then be able to say that they could not afford to pay the benefits.

I hope that my hon. Friend will give the House an assurance that the Government will make a serious effort to deal with the matter.

5 pm

I rise to support new clause 1 and amendment No. 15. We are in major difficulties with the death grant and the maternity grants. No Governments have raised them since 1967 and 1969 respectively, and it is never the right time to raise them. We are in danger of that position continuing year after year.

I am certain that every hon. Member on the Labour Benches would like to see much bigger increases than the ones now proposed. In Committee we tried to get substantial increases in both these grants. We tried to see that both were at least restored to their values of 1967 and 1969 in real terms. At that stage we heard from the Government that they just could not afford it. Therefore, we have gone for very much more modest proposals in these amendments on the basis that, if we increase them by a little each time we have the opportunity, we can get round the major argument that the cost is too great.

Will not the hon. Member concede that in his suggesting that a litle should be put on each benefit history is not on his side? Would not successive Governments see that as a reason for doing nothing more? There is a perfect precedent in that nothing has been done since 1967.

Nothing has been done and both grants have lost their value. Had each Government since 1967 put a few pounds on the grants each year in the Budget, the present Government would not be faced with such a daunting task to restore the value. Having failed in Committee to convince the Government that they should restore the value in one go, we are trying the gradual approach.

Rather than adding a little on here and there, would it not be preferable for us to determine a proper and appropriate level for both of these benefits and then index-link them?

Of course that would be a much better approach. That is what we tried in Committee, but we got nowhere. The Government said that it was impossible because of the amount of money involved. If we cannot persuade them to go along with that approach, we must try to persuade them to go along with the gradual approach, which is to put a little bit on each time.

What are the consequences if we do not do this? Because these benefits have not been increased for 11 and 13 years, increasingly the cost is in administering them, rather than actually paying money to those who need it. One of the problems of means testing these benefits is that once again the cost of administration would take up almost as much money as the benefit. We are getting to the stage where administration of the death grant appears to be costing almost half of the amount of money paid out in grants. The maternity grant may not cost quite so much to administer, but it is still expensive. Also it is ridiculous that in some local offices the death grant is sent out together with a letter instructing those who receive it that if they do not need all the money for funeral expenses, they must return the surplus. That is an example of a ridiculous administrative expense.

If the Government cannot get round to increasing these benefits they must ask themselves whether they are worth while at all because of the increasingly large administrative costs. I believe that both benefits are worth while and therefore, if the Government want good value for money, they must increase them both pretty quickly.

I receive many representations from my constituents, particularly clergymen, pointing out the upset caused by the funeral costs to a husband or wife who is burying his or her spouse. They make strong representations that it would help those people in their grief if the death grant were raised substantially. I also receive representations from elderly people themselves who worry about their own deaths and the costs that will be involved for others. Both these groups feel very strongly that increasing the death grant is a just cause.

Many of these elderly people point out that they fought in the First World War, they played a less aggressive, but none the less hard-working role, in the Second World War, they have worked all their lives for a fairly modest income and they have now been on pensions and benefits for a long time. They feel that they have made a major contribution to this country in difficult times and that it would be reasonable for them to receive some recognition of their efforts on behalf of their country in that at least the State should be prepared to make a generous contribution towards their funeral costs.

The Minister has given us today a survey entitled "Family Funerals and Finances". I have a suspicion that the Government managed to make this available rather belatedly because they feel that it helps their case in this debate rather than ours. It is a tragedy that a major piece of research which was carried out in 1974 should come out now when it appears to be asking all the wrong questions. For example, it asks people after the funeral whether they experienced any hardship. Also that question was asked more than six years ago when the grant was, in real terms, worth considerably more than it is now.

Many hon. Members suggest that the questions should be asked of elderly people, who are worrying about the expense of their funerals, and not of the relatives. Certainly the relatives should not be asked 12 months afterwards whether they experienced any hardship at the time of the funeral. Often those who are involved in burying their parents, grandparents or uncles and aunts do not feel that it is a hardship. But that does not alter the feelings of the elderly themselves who feel that it is very important not to leave a burden on their relatives. They feel that it is most important that they should have sufficient wherewithal, as of right, for a respectable funeral.

This survey goes very carefully into the attitudes which existed in the 1920s and 1930s about the problems of having sufficient money to bury the dead. Of course, the people who are now worried are those who lived through that period and who have firmly in their minds the attitudes that are so well described in the survey. Therefore, had the right questions been asked, and had some of the evidence from this survey been used, it would have made a strong case for the need to increase the benefit.

The House has fully debated the question of the maternity benefit. It was discussed in the debate on the Private Member's Bill introduced by my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara). The House appeared to be very sympathetic, but the view was that there was not sufficient money available. The Government have indicated that they will make the grant non-contributory, which is a small step, but it is a pity that they have delayed that for three years. Again, there is an administrative cost in checking up on who is entitled to the grant. I hope that tomorrow when we debate amendment No. 14 the House will agree that the benefit should be non-contributory from next November.

I am very interested in my hon. Friend's points. I am sure that he will be interested to know that the authorities responsible for providing the services for expectant mothers in my constituency have just issued a directive to general practitioners that they must now make preparation for home confinements because of the serious shortage of maternity nurses in the area. That definitely means that the cost of confinement will rise substantially. Confinements will be at home. Surely that provides an unanswerable case for approving the grant now instead of waiting three years.

I fully accept that argument. There is an overwhelming case for an increase in the maternity grant. That case was well deployed in this House on the occasion of my hon. Friend's Private Member's Bill. It was also well deployed in Committee. What we need is some response from the Government that they accept that some action is necessary.

This amendment asks for a minimal increase as a first step. I feel that the grant should be raised to the figure of £80 or £90 that we discussed in the debate on the Private Member's Bill. At this stage if the Government still believe in the maternity grant they should at least increase it a little. I hope that the Government will accept these modest proposals.

Conservative Members would like both benefits to be means-tested, to ensure that the money goes to those who are most in need. My hon. Friend the Member for Kingston upon Hull, Central pointed out that many people who should receive benefits do not claim them, either because they do not know about them or because they do not like to claim. That is the major problem with the death grant.

Labour Members believe that elderly people want to get away from what used to be called the pauper's funeral—the means-tested funeral—and that they want to feel that they are entitled to a benefit from the State as a result of their contributions. As soon as it is means-tested, it gives them a slap in the face.

Does not the hon. Member for Stockport, North (Mr. Bennett) agree that it is fairer to have a means-tested system, in that those who are in greatest need will then receive the benefit? If he extends his argument that it is easier for those people to receive a benefit as of right—the present death grant is received as of right—where will he draw the line? Will he extend that principle to all benefits? If not, someone will have to make an arbitrary decision to restrict it.

I am glad that the hon. Member has now joined us. If he had been here earlier he might have heard one or two of the interesting suggestions made by Conservative Members. The hon. Member for Folkestone and Hythe (Mr. Costain) suggested that the benefits should be universal but that the money should be clawed back by capital gains tax or by capital transfer tax.

I said that the benefit should be paid universally, but that, instead of a means test at the time of the funeral, it should be adjusted by means of death duties or a capital gains tax.

That suggestion has some advantage. The general argument of Labour Members is that it is better not to means-test benefits, but to make them general benefits. There is evidence that, because of means testing, people who need the benefits most do not apply for them.

I suggest that a means-tested benefit for elderly people would be counterproductive. They want to feel that at the end of their lives they have sufficient money to enable them to have a decent funeral. If we say that a State contribution must be means-tested, we are saying that they will receive State help only if they can prove that they have not saved up sufficient resources during their lifetime. Most elderly constituents to whom I have spoken feel that it is important to have savings for a funeral, and to be able to give a small amount to their grandchildren. Because of those feelings, however, they neglect themselves and do not spend sufficient on food or on looking after themselves.

If we raise the death grant to a realistic level, we will take away many of the worries those people have. The Government should make their intentions clear. Do they intend to let these benefits wither away, and eventually let administrative costs overtake the money that is being paid out? Do they have some intention of uprating the benefits? If so, when will they be uprated? All Governments over the last 10 or 13 years have felt that it was not the right time to raise benefits. Will it ever be the right time?

These are modest proposals, and we should say that now is the right time to increase the benefits to a realistic level.

5.15 pm

I should like to concentrate my comments on the death grant. Like many other hon. Members, I have been involved in the Dignity in Death Alliance since its formation. Indeed, it has been meeting in. the Grand Committee Room this afternoon, and its members are in the process of lobbying a number of hon. Members.

I remind the House of the terms of an early-day motion that was submitted to the Order Paper at the beginning of this Parliament. It was also on the Order Paper at the end of the last Parliament. The motion reads:
"That this House is of the view that steps should be taken as soon as possible to restore the death grant to its original 1949 value, in real terms, which would require an increase to £133·70, [Official Report, 25 June, c. 257], and to abolish the age restriction and end the discrimination against very elderly people who are at present unable to get any form of death grant, as urged by the Parliamentary All Party Group for Pensioners and the Dignity in Death Alliance consisting of over 37 national organisations representing many pensioners, parents, religious denominations, social workers, residential workers, service families and children's organisations."
There are now no fewer than 192 signatories in favour of that motion. In the last Parliament more than 200 Members put their name to that early-day motion.

One of the most significant points about the Dignity in Death Alliance is the organisations that have united to support the campaign. I shall not bore the House by naming all of them, but I wish to name a few, because it shows the variety of organisations that are involved. The organisations include Age Concern England, Age Concern Scotland, the British Limbless Ex-Servicemen's Association—the parliamentary group of which I have the honour to be chairman—the Foundation for the Study of Infant Deaths, the London Boroughs Association, the Methodist Church Division of Social Responsibility, the National Council for the Single Woman and her Dependants, the National Federation of Old Age Pensions Associations and the Soldiers', Sailors' and Airmen's Families Association. That is a wide range of organisations.

Naturally, they have different interests in different areas, but it is worth looking briefly at one or two of the interests of two of those organisations. The Foundation for the Study of Infant Deaths was formed to raise money to try to solve the problem of cot deaths—very young children who die suddenly with no explanation why. I do not have to remind any Member of the tremendous shock to a family when a very young child who is loved dearly by its parents, who might have left it for a few hours, dies suddenly in its cot. In recent months I have been in touch with a number of families who have suffered that frightening experience, because of the work carried out by my wife, as president of the Sussex branch of the foundation. It is a shattering blow to a family, and the last blow that they want is wondering how to find the money to meet the costs of the funeral of that child.

We can look at the problem from a different angle in age terms. Many members of the British Limbless Ex-Servicemen's Association have been without one or other limb for up to 50 years. Can those of us who are fortunate enough to have all our limbs understand what it must mean to live for so long with one or two limbs missing? We should remember the discomfort and pain that such people suffer. The Dignity in Death Alliance has therefore made a powerful case. It has received support from a wide range of organisations and individuals.

The new clause is moderate. If it were accepted, the campaign of the Dignity in Death Alliance would lose considerable strength. I cannot vote against the new clause. I shall pay close attention to the remarks that will be made by my hon. Friend the Under-Secretary. However, if I vote in favour of the new clause, and if it is accepted, it could have a serious effect upon the impact of the Dignity in Death Alliance. We must pay careful attention to the Under-Secretary's remarks.

The hon. Gentleman cannot have it both ways. He has campaigned honourably for a long time for an increase in the death grant. He now has a clear-cut opportunity to increase it. I admit that it will be increased by only a moderate amount. Indeed, that amount is too small. Nevertheless, it represents an increase of 50 per cent. It will be of enormous significance to the recipients. The hon. Gentleman claims to represent those people. He should therefore consider them tonight. He has no option but to support the new clause.

The hon. Gentleman might understand my position more clearly if I develop my case. He should not exaggerate the amount of money involved. The average modest funeral cannot cost less than £250. If the death grant is increased from £30 to £45, it will do little more than pay for the doctor. Only a few pounds will be left. Those families that are at present in an impossible situation will receive little benefit.

The very elderly have seen two world wars. No death grant is paid for them. The moderate sum of money proposed in the clause should be spent on that group. The very elderly could be given real help. If the money is spread widely, it will have only a minimal effect. The hon. Member for Stockport, North (Mr. Bennett) made a powerful case. He spoke about the feelings of the very elderly. We are discussing those in their eighties and nineties. That generation has an inborn fear of paupers' funerals. Many of them have no relations to take on the cost of a funeral. They fear that they will be given a pauper's grave and coffin. They fear that they will be put into the equivalent of a mass grave.

All hon. Members know that that does not happen, but I have experienced great difficulty in explaining the position to some of my elderly constituents. I have discussed the problem with individual elderly constituents at considerable length. I have not always succeeded in persuading them of the truth. That group should be given special attention. Those who are approaching retirement, and those who have just retired, would have a clearer understanding of the position if sufficient resources were available for the funeral. I hope that I have made my position clear.

The hon. Gentleman accepts that a special case should be made for the very elderly. Does he agree that the new clause has that effect? At the moment, a man aged over 87 and a woman aged over 82 receive only half of the grant to which everyone else is entitled. At least the new clause increases that amount by £30. More help is therefore being given to the very elderly. No doubt the hon. Gentleman has read the report of the Committee's proceedings. He will know that we got no joy out of the Government when we tried to achieve the higher amount that he seeks. Surely he will agree that we should now press for this minimum amount?

If the money is available I should like to see it concentrated on the very elderly. It would be of substantial help to those people. Above a certain age there should be no means test. In that way we might alleviate the fears of the very elderly. We are now moving into a different era. I shall not vote against the proposal. However, the proposed resources will not be used effectively.

All Governments have argued that "present circumstances are not right", for increasing the amount. Last spring the Government spokesman in another place pointed out that the death grant could not be considered as a top priority in the present economic climate. Governments have failed to understand the importance of the death grant. They underestimate the strength of people's feelings. The Dignity in Death Alliance has brought people together under a broad umbrella. That alliance demonstrates that far deeper feelings exist than has been appreciated. I can only repeat that I shall not vote against the new clause. I await the Minister's remarks with great interest.

It is difficult to understand the remarks of the hon. Member for Brighton, Kemptown (Mr. Bowden), although I pay tribute to him for his part in the campaign. Like his hon. Friends the Members for Folkestone and Hythe (Mr. Costain) and for Brentwood and Ongar (Mr. McCrindle), he appears to believe that, apart from the very elderly, it is preferable for people to wait for the whole amount than to take up an immediate increase.

5.30 pm

I wrongly interrupted the hon. Member for Folkestone and Hythe. My mind was racing on from death to maternity—and perhaps it should be the other way round. The principle is the same. A little extra money for the expectant mother or the bereaved, even if it is only £10 or £15, must make some difference. I have known people in both circumstances who have had to borrow £10 here, £5 there and £20 there. An addition would benefit a bereaved person who has no savings.

In Committee we fought hard and long for a major uprating and indexation. We lost, and procedurally we cannot reintroduce the issue on the Floor of the House. The Government would not accept a larger figure or indexation. It is no use arguing that we should put forward such proposals, because the Government rejected them.

My right hon. Friend has virtually taken the words out of my mouth. I wish that the hon. Member for Kemptown had read our debates in Committee. He would then have followed our good fight on both subjects.

The hon. Gentleman referred to the very elderly, who do not get any grant. If the hon. Gentleman is suggesting that the whole amount should go towards assisting those people, why did he not table such an amendment? We should have been happy to debate an alternative method of using an amount of money.

As my right hon. Friend the Member for Brent, East (Mr. Freeson) confirms, and I repeat, we are putting forward this modest or moderate amendment because in Committee we were defeated in our attempt to secure a larger amount for the death and maternity grants.

We have made the extra sum £15 on both grants. That would be a welcome addition to many people who are in dire straits and are having difficulties in either a hopeful or tragic situation. It is curious that these two amendments should be linked, when one concerns a hopeful beginning to life and the other a possibly tragic end.

I echo what my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) said about the maternity grant. The original Bill was his—I hesitate to say "baby"—idea. He used his Private Member's Bill for that purpose. My hon. Friend gave impetus to the campaign for increasing the maternity grant by putting forward that Bill, which, sadly, fell. He was following a commitment that we made in our manifesto. I know that I shall not be contradicted by any of my hon. Friends when I say that it will be in the next manifesto, too. We are even more determined that a realistic maternity grant should be available.

My hon. Friend is not in the Chamber, but I know that he will not mind my saying that, with his well known views on abortion, he put forward his Bill in an effort to help anyone who might have considered having an abortion because of financial as well as social difficulties. Those of us who take a different view on abortion were happy to support him and press for an increase in the maternity grant.

One of the precincts of the North-East London Polytechnic is in my constituency. I was there at lunchtime today to attend an open day to discuss the cuts. The department of applied economic studies is among those that may be cut. A few weeks ago, while the Bill was still in Committee, that department produced an interim report called:
"Maternity rights project, interim report on maternity benefits."
It is not a long report but it is interesting and well researched. It mainly concerns the contributory and non-contributory question, which we are to debate tomorrow. The adequacy of the current £25 grant was not specifically considered, but many women were asked their views on the level of the grant. The principal reactions of the women questioned are summed up by the first comment, where the lady interviewed, a secretary, said that the grant was disgustingly inadequate. The sum of £25 is paltry in the light of the financial problems facing a woman when she needs to be relaxed and in a state of genuine expectation of the joyful event to come.

We originally asked for the £25 to be increased to £80, which is still not an enormous sum. Organisations and individuals that have researched the matter and considered prices in shops believe that £85 would in no way cover the expenses of a mother who has to kit out herself and her first child.

I shall not go over the ground that bored the hon. Member for Louth (Mr. Brotherton) in Committee, when I tried to compare our niggardly maternity grant with those paid in other countries. However, I repeat that we pride ourselves on our social security system, which has faults and on which there are disagreements. We hope that it is based on the principle of helping those less well able to help themselves.

It seems odd that we should be one of the countries with the meanest maternity benefits. It should be stressed that the people who need this benefit most are the most vulnerable and the poorest. It is perfectly true that the comfortably-off wife, whether working or not, of a man with a good job will not have the same difficulties when she becomes pregnant as an unmarried mother, whether working or not, or the wife of a man in a low-paid job who may have other children and who may not have been working. It is the poorer and most vulnerable whom we seek to protect and for whom the maternity grant was originally designed.

I am totally opposed to any means testing of the maternity grant. I am opposed to it for all sorts of reasons, not least because I am not mad about means testing in principle. I am also opposed to it because administratively nothing much would be gained by the time that staff have been recruited to do the job, and we all know that the Government are trying to cut down in every way on staff recruitment.

We have a duty seriously to consider increasing this grant. The amount by which we propose that it should be in-increased is modest. I am sure that with the recoupment, if one can call it that, which the Government hope to obtain from their fraud squad tactics and other ways of recouping money from people who they feel are not doing right by the State, they can find it in their hearts to consider the family who suffer a bereavement or find that they have to look after a pregnant woman. I hope that the Minister will consider that when she replies. I am sure that the hon. Lady has always been most sympathetic to this idea, and I hope that she will be able to persuade her own Department and the Treasury that this is a modest way forward, because her acceptance of the amendment will be well received by all women.

I rise very briefly to comment on the death grant. The right hon. Member for Salford, West (Mr. Orme) was kind enough to listen to what I had to say and gave me what I considered to be a courteous reply.

I believe that the whole House is convinced that the present level of death grant is insufficient to cover the cost of burial. There is no doubt about that. It must be accepted on a purely economic basis. The difficulty is how best to employ the amount available. As the hon. Member for Barking (Miss Richardson) said, we must make it available to those who need it most and not spread it right across the board.

My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) made a point which I take seriously, because he has a constituency in which there is a large number of elderly people, and he realises the genuine anxiety of many of those elderly people about what will happen to them when they die. There is no controversy about this on either side of the House.

I do not believe the amendment is of any help except in a marginal way. The whole approach to the problem is wrong. If we are to have a grant, it must be made available to those who really need it. The hon. Member for Rochdale (Mr. Smith), who is not present in the Chamber, rightly said that many people had saved all their lives and had not appreciated the inroads that inflation would make into their savings. That is perfectly true. We understand and accept that. But, given those facts, the question now is who has to pay for the funeral expenses.

I put down a question to my right hon. Friend, the reply to which I thought to some extent gave the answer. I asked my right hon. Friend on 30 January whether he would make an analysis of what the death grant could be raised to if it was confined to those genuinely in need. I will summarise his very full answer. He said that it might be possible to raise the grant to £100. I hope my hon. Friend the Under-Secretary of State will give this point a moment's attention.

5.45 pm

If we raise the grant, it will enable those in need to receive a substantial sum and those not in need will not get any grant at all. I believe that that is fair. My hon. Friend may say that the administrative costs will be very great, but I turn back to what my hon. Friend the Member for Folkestone and Hythe said. He said that this could be adjusted on death and that, because those whose estates showed that they did not need it could not claim it, the grant would not be allowable. There must be some way in which we can confine the grant to those who need it and make it a realistic sum.

The hon. Member for Barking rightly said that it was the poorest members of our society who needed this grant. My hon. Friend the Member for Folkestone and Hythe said that the people aged 80 and 90 were the sort of people to whom we should give a worthwhile grant. The amendment, in my opinion, would spread the jam far too thin over the bread. We must look for ways in which we can genuinely help those who need the grant. If a person dies, we must see that the relatives who cannot afford them receive a reasonable sum towards the funeral expenses.

I hope that my hon. Friend will turn her attention to the answer to my parliamentary question, which I thought was extremely clear. Is the cost of administration too much? Is there any possibility of confining the grant to those who genuinely need it? Should those to whom the grant goes be the people who carry out the burial or the relatives? The effect of the amendment is that the grant is not directed towards those in genuine need. We must find some selective method of making the grant worth while for those who need it.

I shall be as brief as I can, because I know that other hon. Members wish to speak and I am aware that we have a reasonable timetable to keep to.

I join my hon. Friend the Member for Barking (Miss Richardson) in her tribute to the hon. Member for Brighton, Kemp-town (Mr. Bowden), who has consistently fought for and argued in favour of an increase in the death grant. I do not think any of us wishes to downgrade his contribution to this great campaign. It was the hon. Member for Kemptown who said that today probably the largest and most representative lobbies were the two which represented millions of people up and down the country, expressing concern about the death grant and the maternity benefit, as well as about the Government's nil-cost Social Security Bill. There is no doubt strong feeling in every constituency about the levels of grants, including the death grant.

The hon. Member for Kemptown also mentioned the early-day motion signed by members of the all-party pensioners group. That has attracted 192 signatures in this Parliament. That must surely say something to the Government. It must say something about constituency support and pressure on Members of Parliament—rightly in my view—for some alteration to these benefits, bearing in mind especially the high cost of dying.

I do not think that the Government are entitled completely to ignore that weight of opinion. I have always been told that when an early-day motion attracts 100 signatures it has almost reached the magic number which means that a debate may be requested. When an early-day motion has attracted nearly 200 signatures, I submit that one is almost entitled to a debate. With that strength and support across the Floor of the House, it is surely right to say that this is not a party matter. It is an all-party motion.

Surely the Government are bound to take notice of the content of the motion and the demand for a debate. I hope that we shall be supported in the Lobby by many of the Conservative Members who have signed the early-day motion, especially by those who have spoken on platforms outside the House on the death grant.

I know that the hon. Member for Kemptown is in a personal difficulty. The hon. Gentleman rightly said that he could not vote against the new clause but he has difficulty in voting for it. I appreciate that. I am in almost exactly the same position. I think that that is the position of most of us. We would prefer to argue for the figures contained in the early-day motion which many of us contend are minimum figures. However, those arguments were lost in Committee because of the voting in Divisions by right hon. and hon. Members on the Government Benches.

There are difficulties in presenting the argument on Report. We felt that it was necessary to have the issue redebated in public. There was almost total censorship of our proceedings in Committee. Apart from the honourable exception of The Times, it is necessary to search high and low for references to the debates that took place on the death grant, the maternity grant, child benefit, uprating and on shortfall in any of the other newspapers. We felt that it was necessary to have the issue debated in public in the Chamber so that our arguments would be heard and understood by the public.

I thank the Minister for supplying us with a pre-publication document. I was instrumental in asking that that be done. I recognised immediately I had read the first page that the hon. Lady was on a loser. She could not win. If she had not produced the document, she would have been accused of ducking it because it was unfavourable. If she had produced it, she would have been accused of producing it because it was favourable. I understand that and I sympathise with her.

The document contains a great deal of information. However, I do not think that it will contribute much to the argument in 1980. The document states:
"The information was collected in interviews with 1,339 people who had recently been responsible for meeting the funeral expenses of an adult dying in Great Britain. They were interviewed in the autumn of 1975 about deaths that had been registered in the autumn and early winter of 1974."
The interviews took place a year after the funerals, and the funerals took place six years ago. No one will deny that there has been a tremendous change in the climate, atmosphere and financial situation since then. We cannot gain much from the document apart from the general approach and people's attitudes. As has been said, it posed the wrong questions at the wrong time and to the wrong people. It was concerned not so much with relatives but with the problems and plight of old people. I recognise that those are serious problems. Many old people save what they think will be enough to meet their funeral expenses only to discover that they have not saved anywhere near enough.

A letter was read today at the Dignity in Death Alliance lobby from a clergyman living in South Wales who is connected with Age Concern. He said that he was horrified and shocked, having been present in the house of a deceased person when the undertaker arrived and the details were discussed, to learn that the simplest funeral without any trappings cost £468. That is a colossal amount. I know that the total cost is upwards of £400 in London for a simple funeral.

I know that even undertakers are concerned about the price of funerals. I have received a letter from an undertaker. The letter states that, despite the increased number of cremations—even the 1974 document mentions the increase—we still hang on to the need for two certificates if the body is to be cremated. The price has increased to £22 each. Therefore, the death grant does not cover the cost of the certificates. That must concern many people.

As the hon. Member for Kemptown said, concern about funeral expenses extends to the relatives of pensioners. Of course, many of the relatives of older pensioners are pensioners themselves. However, there are many children's organisations that are concerned about the present level of the death grant. Not long ago I received a harrowing letter from a constituent about the sad plight of a family whose child was involved in a road accident. That accident resulted in sudden death. The family was struggling to pay living expenses from the husband's wages. The husband and wife were bringing up two or three other children and they were in serious trouble. They were faced with a colossal bill for which no family budgets at that stage. So apart from pensioners, there are others who are equally seriously and tragically involved.

There are two main features of the amendment that surely commend themselves to the whole House. There has been procedural discussion on whether the level should be £45, £60 or £75. We have been told that no figure would be acceptable. As I have said, we believed that the paramount requirement was to have a debate. One feature of the amendment is that, if agreed to and imple- mented, the full rate would be payable for children. There is no reason why the children's rate should be so low. At present the grant is £9 for a child under three years of age. For a child between three years and six years it is £15. For a child between six years and 18 years it is £22. There is no justification for that. The amendment would make the full rate payable for children, and that would be across the board.

The second feature that I commend to the whole House is that the grant would be payable in full instead of a half payment for those in the older age bracket—the man over 87 years of age and the woman over 82 years of age. In Committee the Minister said:
"since 1967, when the death grant was £30, prices have increased by 280 per cent. But if we allowed for an illustrative 10 per cent. increase in prices between now and next November, the spirit of the amendment would requite the grant to rise to over £125, which would add over £50 million to the current expenditure or £16 million on the death grant."—[Official Report, Standing Committee E, 29 January 1980, c. 152.]
On that ground the hon. Lady considered the proposal to be unacceptable.

We estimate that the amendment would add about £10 million to current expenditure. However, it would do away with the anomalies that I have mentioned concerning children and the very old. It would be a minimal step forward. I hope that hon. Members on both sides of the Chamber will reconsider their position and support the amendment. I hope that we shall get on to the right lines and persuade the Government to consider the possibility of further increases.

6 pm

I rise to support the new clause and the amendment which seek to increase the death grant from £30 to £45 and the maternity grant from £25 to £40. This has been an extraordinarily civilised, polite and affable debate, given the subject matter and the fact that it is 13 years since the death grant was increased and 11 years since the maternity grant was increased. The death grant has stood at £30 for 13 years and to bring it up to its real value in 1967 purchasing terms it would need to be in the region of £120 to £130.

It is nothing short of a disgrace that successive Labour and Tory Governments have allowed those grants to stay put for such a long time, thus allowing their value and their purchasing power to be eroded. It cannot be anything but a scandal, yet here we are debating these grants in an old-pals, friendly, civilised, no-recriminations and no-complaints mood. The hon. Member for Brighton, Kemptown (Mr. Bowden) made the cop-out speech of the century when he said that he would not vote against the clause but that he could not find the courage to support it. That is an extraordinary state of affairs.

Hon. Members on both sides of the House have pointed out that the value of these benefits has been substantially eroded since the last increases were introduced by a Labour Government. They have been eroded to the extent that the average funeral now costs from £250 to £300 while the death grant has remained at £30. That is a relatively insignificant contribution towards the cost of a funeral compared to the contribution that it made when the grant was last increased, in 1967. The same factors apply to the maternity grant and the cost of having a baby.

As several hon. Members have said, by definition these costs bear most heavily upon the poorest and most vulnerable members of our community. Those costs do not matter to the very rich, to whom the hon. Member for Folkestone and Hythe (Mr. Costain) referred. A death grant of £30, £45 or £130 is irrelevant and immaterial to the rich. But that £30—or, as it should be, £130—is highly relevant to many of my unemployed constituents and to those who do not have substantial enough means to look after their dead.

I accept entirely what Conservative Members have said about elderly people being extremely worried. Old people do not like the notion of a pauper's funeral and a pauper's grave. They do not like to think that when they die an additional burden is placed upon their families. They wish to provide for themselves and to have a good send-off, as the expression has it in my constituency. However, they believe that that good send-off should be paid for by themselves.

It is not just young people who are expected to pay for funerals. Today, I had a letter from a constituent of mine who is in her sixties. Unfortunately, in the past week her mother and her motherin-law—both in their eighties—have died. Under the present rules, neither of those women was eligible for a death grant. Therefore, my constituent was unable to get any grant or assistance towards the cost of the two funerals. As the sole surviving relative of her mother-in-law and her mother, she, a pensioner in straitened and poverty-stricken circumstances, had to bear the full burden, without the help of a death grant, of the burial of both her relatives. Two deaths in a week must have been disturbing to a woman in her sixties, but to have experienced the added anxiety of having to find the money for the funerals by borrowing and begging from neighbours and friends and by going into debt is unacceptable. That situation would be covered by the motion.

It disturbs me that we have allowed the value of these grants to be eroded by inflation and that no Government have seen fit to increase them even minimally in line with the increase in the cost of living. But the argument advanced by the hon. Member for Kemptown also disturbs me. Of course an increase of 50 per cent. in the death grant is not enough. I accept that, and so do my right hon. and hon. Friends. Unlike the hon. Gentleman, in Committee they made the case for a greater increase. They put their votes where their mouths were and tabled the amendment. The hon. Gentleman did not table an amendment for the Committee stage. Even though he was not a member of the Committee, he was entitled to do so.

I find it extraordinary that the hon. Gentleman should go round the country—I do not doubt his sincerity—pontificating upon the problems of the elderly and the niggardliness of the Government in not increasing the death grant to the proper level. Tonight he has a golden opportunity to do something realistic and practical. He should vote with me and my right hon. and hon. Friends for what he believes should be given by way of grants. I do not talk of the full amount; I do not mean anything irresponsible. I am not talking about anything immoderate—not even the £130 that should be paid. I am talking of a fairly respectable, modest £45. Yet the hon. Member for Kemptown cannot find it in his heart, or find the courage, to do that.

The hon. Gentleman knows that neither we nor our constituents are given anything freely by the Government. One has to make raids on the Government. We are not the Government; nor is the hon. Gentleman. The Government are outside this House. We cannot determine priorities, nor can we determine the order in which matters are dealt with nor the way in which money is spent. But we can, in a cockeyed way, irrational way, determine that we must take the only opportunities available to us. This is one such opportunity. The opportunity was taken by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) in the matter of index-linked tax rates—the Rooker-Wise amendment. I took the opportunity to get war widows exempted from income tax. None of that would have happened had we left it to the Government. The hon. Gentleman now has an opportunity, in the light of his past record and his pronouncements in the country, to do something practical. He cannot in all conscience afford to miss that opportunity tonight.

I am intrigued to know why the hon. Member for Ormskirk (Mr. Kilroy-Silk) has reserved the most vitriolic part of his speech for his attack on an hon. Member who goes furthest towards agreeing with him.

If that part of my speech was vitriolic I do not know what I have been saying on other occasions. The hon. Members for Windsor and Maidenhead (Dr. Glyn), Folkestone and Hythe and Kemptown are saying the right things and displaying their sincerity in public, but when it comes to the crunch and they are asked to vote for the principle they all espouse and support, they cannot do it. They have neither the courage of their convictions nor the political will. I have got that, and so have my right hon. and hon. Friends, and we have had that political courage in the past. It ill hecomes Government supporters to lecture Labour Members when they are not prepared to put their votes where their convictions are.

I am being told by my Front Bench that I must conclude my remarks. I hope, therefore, that the hon. Member for Windsor and Maidenhead will forgive me if I do not give way to him.

Everyone accepts that these grants should have been increased a long time ago and that we should have determined as a House the proper and appropriate level at which they should be fixed, and that they should be index-linked. If we had done that we should not have the problem of attempting to force an unwilling and recalcitrant Government into performing what we all say is their public duty. We must have from the Minister tonight—it has been asked for by her hon. Friends as well as mine—a clear and specific commitment that the Government do not intend to let these grants wither away and become redundant by the gradual and erosive process of inflation. If the Minister intends to give that commitment she must say when and by how much the grants will be increased.

I apologise for not being in the Chamber at the beginning of the debate. Perhaps I should not apologise, because I was meeting people who were lobbying on this issue. I wish that some other hon. Members had been at that meeting to hear a tearful lady from Brent tell us that it cost £440 to bury her husband last week. What contribution is £30 towards such an expense? Hon. Members would have also heard a lady from the spina bifida group talk of collecting money in the streets to pay for the funerals of young children from poor families. They would have heard equally harrowing tales about the difficulties of elderly people and families with young children.

Many comments have been made that I should repeat if I had more time. I offer a warning. The Minister, good lady that she is, is about to distract us from the issue. I am sure that she will quote from the report on families and funerals. I am sure that she will use statistics and try to convince us of the wrong interpretation of those statistics. I shall put her right before she starts. That report confirms the oft-repeated phrase that there are
"lies, damned lies and statistics".
The way in which statistics are used in that report is devious.

The report purports to show that because 56 per cent. of recipients are able to meet the cost of a funeral the grant is not necessary. The reason for that is that elderly people skimp and save, particularly during retirement, often cutting food and fuel and thereby hastening death, in order to leave enough money to pay for a decent funeral and to avoid a pauper's burial.

The Government might use those statistics as an excuse to move in another direction, towards getting rid of the death grant. I warn the Government that there will be an uproar if they try to do that. The report says that 24 per cent. of recipients say that the grant makes only a small contribution to the cost. That is because the grant is so pitifully small. The only way to make a more significant contribution is to increase the grant.

I should be happier to vote for a major increase in the death grant. That is not possible, but it would be wrong of any Government Members who signed the early-day motions in this Parliament or the last and who said, when there was a Labour Government, that there should be a major increase in the death grant, to vote against even a small increase. That would be hypocrytical.

I shall be brief, because we are anxious to reach the debate on child benefits and we want adequate time to deal with that. I have received many letters from working-class families who are dismayed at the present level of the death grant. They want it to be improved to reflect the cost of living and the rate of inflation. They recognise, however, that any improvement would be an advantage. Many of the representations are from families who have not been able to save. They have spent all their incomes on bringing up their families and they simply do not have the hundreds of pounds now necessary for a funeral. Burial and funeral costs of about £400 cause enormous problems.

6.15 pm

I urge the Government to accept the modest proposition. The Under-Secretary of State is one of those bleeding-heart Tories who, when there was a Labour Government, travelled the country saying that a Tory Government would improve benefits all over the place. What do they do when they come to office? They give massive tax concessions to the well-off, which have achieved nothing. They have lined the pockets of their friends but they have not produced the jobs that they claimed would be produced through stimulating entrepreneurs.

Since the Government came to office 200,000 redundancies have occurred and few new jobs are in prospect. By giving tax concessions and not recognising the real and serious need for decent death and maternity grants the Government are taking away the opportunity to give money to those who are really in need.

I urge the Government to accept our modest and reasonable proposition. We know that it is not enough, but half a loaf is better than none. Let us have compassion. The Chief Secretary said that compassion was not limited to one side of the House. Compassion is indicated by action. Like intention, it is not easy to define without action. If the Government want to demonstrate that they have compassion they should agree to our proposals and take a tiny but moderate step towards the provision of adequate grants.

We have had an interesting debate, as we anticipated. It was a difficult debate because there was confusion between the two grants. I make no complaint about that, because there is an underlying debate about selectivity versus universality. Obviously we shall not solve that problem, because it goes beyond the two grants that we are discussing. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) really put his finger on the problem when he talked about the size of the grant and whether the size was really important. I shall examine that question.

I am grateful to those who assisted in producing the 20 advance copies of the report. There are some errors in it, but it will be properly published in a few weeks. I thought that it was right to allow hon. Members to have it tonight.

The hon. Member for Stockport, North (Mr. Bennett) asked why the report was produced so long after the field work. Because of other work in the Department between 1976 and 1979 which had to be given greater priority, the report was not completed. Former Labour Ministers will be aware of the many demands that put the report at the back of the queue.

We realise the importance of putting the report on the record so that the debate can be widened by the information in the report. It may not be so relevant in absolute terms, but the detailed tables illustrate a certain direction. I am sure that hon. Members feel that it is important to have such research made available. Copies of the report will be put in both Libraries of the House.

When we consider who pays the funeral costs we find that there are some important dichotomies. About 63 per cent. of men are buried by their widows. In many of these cases there is no doubt that annuities and life assurance help to cope with funeral costs. On the other hand, the majority of women are buried by the next generation. Only 29 per cent. of women are buried by their bereaved spouses. We also know, within the limits of statistical probability, that in the survey a lower percentage of those who paid funeral bills were earners than was the case in the total population. If anything, we have erred on the side of those who had less resources to pay the funeral costs than those in the population at large. Set against that, I accept that the passage of six years puts a different complexion on the total cost. I do not deny that for one moment.

It is important to consider the sources of money used to meet funeral costs. There is no doubt that 83 per cent. of those in the survey mentioned the death grant and 59 per cent. mentioned a deceased's life assurance. Some mentioned 10 per cent. tax rebates. The point that impressed me about the detail that we have is that those whom I assume to be in most difficulty, and who would go for help to the Supplementary Benefits Commission or to collections from friends or neighbours, are very few. The Supplementary Benefits Commission helped in fewer than ½ per cent. of cases in the survey. Collections from neighbours or workmates and grants from voluntary associations applied to only about 3 per cent. Although I fully accept the tremendous fear, particularly among elderly people, about meeting their own funeral costs, I gained from the survey and other information the knowledge that there is money within families, both through the estate of the deceased and other sources, that in a majority of cases can help to meet funeral costs.

This bears out what was said by my hon. Friends the Members for Windsor and Maidenhead (Dr. Glyn) and Folkestone and Hythe (Mr. Costain). There is a group in our society that has extreme difficulty in coping with the problem of meeting funeral costs, especially at today's prices, but it is not as widespread as it was some years ago. We must ask ourselves whether the new clause and the maternity grant amendment, to which I shall turn in a moment, meet the real needs that exist.

The £45 would be useful and much welcomed, but it may not be the first priority that the Government must face at a time of scarce resources.

I shall not give way. I promised the Opposition Front Bench that I should be as brief as I possibly could.

The direction of information has not been fully studied. Even I have not had the opportunity to study it in great detail. There is a signficant difference between the death grant and the maternity grant. We may discuss them both in the context of selectivity or universality. When a young woman becomes pregnant, especially if she is unmarried, very often she is left on her own resources, as the hon. Member for Barking (Miss Richardson) has so often said. In the case of family bereavement there is in the vast majority of cases a family to assist in the burial and funeral arrangements. Therefore, if we compare one with the other, we see that the young woman alone might not seek help early enough. She perhaps needs a greater incentive, and we should give her the first attention. On many occasions I have been asked what the Government would do about the two issues.

One member of the Opposition said that they expected to see compassion matched by action. In one small way we have started to do it—I accept that it is small and less than we wished—in making the maternity grant non-contributory. However, it is a small step, which will be brought in as soon as possible. At the moment it looks as though that will be November 1982. That is a small step at a time of the economic difficulties facing the country. However, it is by small steps that we shall advance on all these problems, including the problems of the death grant and the maternity grant.

The new clause and amendment would cost about £20 million. Obviously, I cannot forecast my right hon. and learned Friend's Budget Statement. That is another reason for not forcasting the result of the present study.

The hon. Member for Stockport, North asked a number of questions both in Committee and since. He asked about the administration of the death grant, and death grant procedures. He will be happy to know that the review of death grant procedures, forms, and the obsolete items that he saw in a local office that he visited some weeks ago, is being carried out alongside a thorough study of the data put before us.

I gave an assurance to the two joint chairmen of the all-party committee on pensioners, who worked so hard—I refer especially to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden)—to bring to the notice of Parliament, and especially that of Ministers, the problems faced by those who are left with the bills for funerals. I told both my hon. Friend and the hon. Member for St. Pancras, North (Mr. Stallard) that we would consider every representation sent in on this issue and that we would make a decision when the report was available and the facts were clear. Already a wide variety of information is coming in.

No decisions have been taken on the question of selectivity versus universality. Selectivity does not necessarily mean means testing. Everybody has fallen into the trap of believing that if we are selective there must be some means-testing answer. There may be—I have no information to give to the House—another means of helping those who are most in need of help with funeral costs.

If I give way now, the House will be detained for far longer than the Opposition would like.

The situation is complicated. It would be helped by this expenditure. However, under present circumstances there is not the money to meet the amendment. We wish to consider in greater detail the representations made.

New clause 1, which was moved by the Opposition, would not make the grant payable to the men who were over 65 and women over 60 on 5 July 1948 and who today do not qualify for a grant. I must give that warning. The Act specifically provides that no grant shall be payable in such cases. I accept that that provision could be amended. However, the new clause does not do what the right hon. Member for Salford, West (Mr. Orme) said it did. I regret that the state of the nation does not give us the funds to accept these new clauses and amendments today. We are thoroughly examining the whole matter. Of that I assure the House. I have nothing but understanding for those who face the problem. However, I regret that at present we cannot accept the new clause or the amendment.

We hope that as inflation starts to be brought under control it will be possible to improve those benefits for which people often call without counting the cost or considering the source from which they will be paid. Then, improvements may become a reality.

6.30 pm

I am afraid that is a pretty feeble start to our proceedings as far as the Government response is concerned, and I imagine that we are going to have a great deal more of it both tonight and tomorrow. The Minister hardly discussed the issue of the new clause or the amendment. She touched on it in passing, almost, and spent more of the time she devoted to the death grant, quoting from or paraphrasing the report, that is to be published in a week or two's time, than she did discussing the very moderate proposals that we have put forward.

On the death grant, she said—I think I took down her words accurately—"Of course, I fully accept the tremendous fear of elderly people about funeral costs". Then she made some other comments, and said "but it is not as widespread as years ago". That about summed up her view.

In Committee, as I indicated in an intervention earlier tonight, on this as on other matters we put forward proposals urging an even greater increase, in the spirit of the hon. Member for Brighton, Kemptown (Mr. Bowden), the hon. Member for Folkestone and Hythe (Mr. Costain), the hon. Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Windsor and Maidenhead (Dr. Glyn). We argued in favour of a sum of about £135, to try to upgrade the grant in real terms to the 1967 level. Of course, we were told that was far too costly and that we could not afford it, and the hon. Lady quoted figures in which she calculated that it would mean another £50 million on the death grant alone.

We argued forcefully on this, as on other matters, the principle of either practical or statutory indexation. Again, we were told that this would be pre-empting the choice of the Government, and, indeed, of Parliament. So we lost on both counts. It was not that we did not try and it is not that we do not believe it to be right now to go for £135 to £140 for the death grant and an appropriate figure, which I will come to later, for the maternity grant, and for other changes. We know that procedurally there are difficulties in returning to the same issues in identical form on Report after they have been dealt with and defeated in Committee. In any case, our views would not be accepted, nor would hon. Gentlemen have their views accepted by their own Government.

We put forward very moderate proposals, and I am truly sorry that we have come to this, after the extensive debate and argument we had in Committee, after all the information that has been published—not only the report that has been referred to, but other documentation, and representations from the Death in Dignity Alliance, from the Child Poverty Action Group in connection with other matters, and the like. I am deeply sorry that we have come to this and that we shall be coming to other matters on which we shall be getting a negative response, I fear, tonight and tomorrow. But if we do our best to withdraw and make some little move forward, even this is rejected by the Government. The hon. Lady did not advance any argument; she simply repeated at the end that the £10 million to provide for this marginal increase cannot be afforded.

I wonder whether the right hon. Gentleman could explain to the House—I really am seeking information from him—why, if he fought so hard in Committee because he believed it important that there should be an increase of £120 or so in the death grant in 1980, he did not when he was in government do something in 1974, 1975, 1976, 1977, 1978 or 1979.

It was quite wrong not to have done so. [Interruption.] That is not a joke; it is honesty. I hope that I shall get support in the Lobby tonight from those who are cheering me now. But, this point, too, was argued very extensively in Committee. I believe that we must choose priorities. We also recognise arguments when they are put to us that to aggregate all the things that one is putting forward, which is what hon. Members do in Committee when campaigning on particular issues, will cost too much to do in one or two years, or whatever the time may be.

So I reply to the hon. Gentleman in the same spirit as I did on Second Reading when discussing a much wider issue on the Bill, by saying that while that is perfectly true, in good times as well as in bad, economically speaking we try to create a strategy in order to move forward in stages; we campaign and implement stage by stage things that we wish to see done. Not enough was done in many fields in those five years, or indeed in the 11 out of the 15 years, or whatever it was, in which there was a Labour Government. This was also true in the time of the last Tory Government. But a lot of things were done, and we shall be returning to some of those things later today and tomorrow. We covered them also in Committee.

Had we stayed in office, other things would have been done. It was not that nothing was done; a lot was done—all the things that the hon. Gentleman supported at the time and wishes to see more done about now. That is my answer—that everything cannot be done in one month, or six months, or twelve months but that these things are done stage by stage and a commitment is made to do more as they are completed.

That brings me to a very important point, which will be repeated, probably, on other occasions during the course of our debate and on other occasions in this House, I am sorry to say, in the next few years. We ended, as I said a moment ago, with the hon. Lady saying that we really could not afford the £10 million and whatever additional sum would be required for the maternity grant. But this country was much poorer in 1945–46, when the death grant was proposed in readiness for the 1948 legislation. It was a much poorer country in the 1940s and 1950s, when we introduced other steps to implement the concept of the Welfare State in a variety of fields.

Furthermore, during the periods of Labour Government in 11 out of the last 15 years we were not without economic crises or financial problems. We have had these for many decades, but tonight is not the occasion for an economic review. But one thing that we tried to do and, on the whole, did effectively, was to protect the worst-off in our society by deliberate acts of policy.

The present Government have done the opposite, and the hon. Lady knows it in her heart. She does not like saying that we cannot afford £10 million for this moderate proposal. She does not like saying that we cannot afford £15 on top of the present maternity grant. In Committee we argued in favour of £80-odd on the maternity grant. I am not going to review all the arguments that we put for-

Division No. 231]AYES[6.40 pm
Abse, LeoCampbell-Savours, DaleDeakins, Eric
Adams, AllenCanavan, DennisDean, Joseph (Leeds West)
Allaun, FrankCant, R. B.Dempsey, James
Alton, DavidCarter-Jones, LewisDixon, Donald
Archer, Rt Hon PeterCartwright, JohnDobson, Frank
Armstrong, Rt Hon ErnestClark, David (South Shields)Dormand, Jack
Ashley, Rt Hon JackCocks, Rt Hon Michael (Bristol S)Douglas, Dick
Atkinson, Norman (H'gay, Tott'ham)Cohen, StanleyDouglas-Mann, Bruce
Bagier, Gordon A. T.Concannon, Rt Hon J. D.Dubs, Alfred
Barnett, Guy (Greenwich)Conlan, BernardDuffy, A. E. P.
Barnett, Rt Hon Joel (Heywood)Cook, Robin F.Dunn, James A. (Liverpool, Kirkdale)
Benn, Rt Hon Anthony WedgwoodCox, Tom (Wandsworth, Tooting)Dunnett, Jack
Bennett, Andrew (Stockport N)Craigen, J. M. (Glasgow, Maryhill)Dunwoody, Mrs Gwyneth
Booth, Rt Hon AlbertCrowther, J. S.Eadie, Alex
Boothroyd, Miss BettyCryer, BobEastham, Ken
Bottomley, Rt Hon Arthur (M'brough)Cunliffe, LawrenceEdwards, Robert (Wolv SE)
Bowden, AndrewCunningham, George (Islington S)Ellis, Raymond (NE Derbyshire)
Bray, Dr JeremyCunningham, Dr John (Whitehaven)Ellis, Tom (Wrexham)
Brown, Hugh D. (Provan)Dalyell, TamEnglish, Michael
Brown, Ronald W. (Hackney S)Davidson, ArthurEnnals, Rt Hon David
Brown, Ron (Edinburgh, Leith)Davies, Rt Hon Denzil (Llanelli)Evans, loan (Aberdare)
Buchan, NormanDavies, Ifor (Gower)Evans, John (Newton)
Callaghan, Jim (Middleton & P)Davis, Clinton (Hackney Central)Ewing, Harry
Campbell, IanDavis, Terry (B'rm'ham, Stechford)Field, Frank

ward, which have been touched upon briefly again here, in favour of improving the death and maternity grants. I made my speeches in Committee, as others did, and it is all on the record. But I say that we can afford this money.

We can certainly afford the moderate proposals that we are putting forward in the new clause and the amendment, and there is not one hon. Member opposite who really believes otherwise. If anything, we have been criticised for not being radical enough tonight. In Committee we were being criticised and attacked for being too radical. Where do we end up? Will we have one hon. Gentleman not just campaigning outside the House but campaigning where it counts—in the Lobby? The Government have no reason to be satisfied with the spirit in which they approach these matters. I suspect that we shall be repeating that theme during the course of the next day or so and on other occasions.

We are moving into a shameful period in our country's political history, when we can afford to do many things and are deliberately not doing them. I suggest that the Government should quickly change their mind and at least make a modest move in our direction. I hope that we shall have some support in the Lobby from the Government Benches in favour of these moderate proposals.

Question put, That the clause be read a Second time:—

The House divided: Ayes 246, Noes 300.

Fitch, AlanLestor, Miss Joan (Eton & SloughRoberts, Gwilym (Cannock)
Flannery, MartinLewis, Ron (Carlisle)Robertson, George
Fletcher, L. R. (Ilkeston)Litherland, RobertRobinson, Geoffrey (Coventry NW)
Fletcher, Ted (Darlington)Lofthouse, GeoffreyRooker, J. W.
Foot, Rt Hon MichaelLyon, Alexander (York)Ross, Ernest (Dundee West)
Forrester, JohnLyons, Edward (Bradford West)Ross, Stephen (Isle of Wight)
Foster, DerekMabon, Rt Hon Dr J. DicksonRowlands, Ted
Foulkes, GeorgeMcCartney, HughRyman, John
Fraser, John (Lambeth, Norwood)McDonald, Dr OonaghSandelson, Neville
Freeson, Rt Hon ReginaldMcElhone, FrankSever, John
Freud, ClementMcGuire, Michael (Ince)Sheerman, Barry
Garrett, John (Norwich S)McKay, Allen (Penistone)Sheldon, Rt Hon Robert (A'ton-u-L)
George, BruceMcKelvey, WilliamShore, Rt Hon Peter (Step and Pop)
Gilbert, Rt Hon Dr JohnMacKenzie, Rt Hon GregorSilkin, Rt Hon John (Deptford)
Ginsburg, DavidMaclennan, RobertSilkin, Rt Hon S. C. (Dulwich)
Golding, JohnMcMillan, Tom (Glasgow, Central)Silverman, Julius
Gourlay, HarryMcNally, ThomasSmith, Cyril (Rochdale)
Graham, TedMcNamara, KevinSmith, Rt Hon J. (North Lanarkshire)
Grant, George (Morpeth)McWilliam, JohnSnape, Peter
Grant, John (Islington C)Magee, BryanSoley, Clive
Grimond, Rt Hon J.Marks, KennethSpearing, Nigel
Hamilton, James (Bothwell)Marshall, David (Gl'sgow,Sheltles'n)Spriggs, Leslie
Hamilton, W. W. (Central Fife)Marshall, Dr Edmund (Goole)Stallard, A. W.
Hardy, PeterMarshall, Jim (Leicester South)Steel, Rt Hon David
Harrison, Rt Hon WalterMartin, Michael (Gl'gow, Springb'rn)Stewart, Rt Hon Donald (W Isles)
Hart, Rt Hon Dame JudithMason, Rt Hon RoyStoddart, David
Hattersley, Rt Hon RoyMaxton, JohnStott, Roger
Haynes, FrankMaynard, Miss JoanStrang, Gavin
Heffer, Eric S.Meacher, MichaelStraw, Jack
Hogg, Norman (E Dunbartonshire)Mellish, Rt Hon RobertSummerskill, Hon Dr Shirley
Home Robertson, JohnMikardo, IanTaylor, Mrs Ann (Bolton West)
Homewood, WilliamMiller, Dr M. S. (East Kilbride)Thomas, Dafydd (Merioneth)
Hooley, FrankMitchell, Austin (Grimsby)Thomas, Jeffrey (Abertillery)
Horam, JohnMorris, Rt Hon Alfred (Wythenshawe)Thomas, Mike (Newcastle East)
Howell, Rt Hon Denis (B'ham, Sm H)Morris, Rt Hon Charles (Openshaw)Thomas, Dr Roger (Carmarthen)
Howells, GeraintMorton, GeorgeThorne, Stan (Preston South)
Huckfield, LesNewens, StanleyTilley, John
Oakes, Rt Hon GordonTorney, Tom
Hudson Davies, Gwilym EdnyfedOgden, EricVarley Rt Hon Eric G.
Hughes, Mark (Durham)O'Halloran, MichaelWalker Rt Hon Harold (Doncaster)
Hughes, Robert (Aberdeen North)O'Neill MartinWatkins David
Hughes, Roy (Newport)Orme, Rt Hon StanleyWeetch, Ken
Janner, Hon GrevilleOwen, Rt Hon Dr DavidWelsh, Michael
Jay, Rt Hon DouglasPalmer, ArthurWhile, Frank R. (Bury & Radcliffe)
John, BrynmorPark, GeorgeWhitlock, William
Johnson, James (Hull West)Parker, JohnWigley, Dafydd
Johnson, Walter (Derby South)Parry, RobertWilley, Rt Hon Frederick
Johnston, Russell (Inverness)Pavitt, LaurieWilliams, Rt Hon Alan (Swansea W)
Jones, Rt Hon Alec (Rhondda)Pendry, TomWilliams, Sir Thomas (Warrington)
Jones, Barry (East Flint)Penhaligon, DavidWilson, Rt Hon Sir Harold (Huyton)
Jones, Dan (Burnley)Powell, Rt Hon J. Enoch (S Down)Wilson, William (Coventry SE)
Kaufman, Rt Hon GeraldPowell, Raymond (Ogmore)Winnick, David
Kerr, RussellPrescott, JohnWoodall, Alec
Kilfedder, James A.Race, RegWright, Sheila
Kilroy-Silk, RobertRadice, GilesYoung, David (Bolton East)
Lambie, DavidRees, Rt Hon Merlyn (Leeds South)
Lamborn, HarryRichardson, JoTELLERS FOR THE AYES:
Lamond, JamesRoberts, Albert (Normanton)Mr. Donald Coleman and
Leadbitter, TedRoberts, Allan (Bootle)Mr. James Tinn.
Leighton, RonaldRoberts, Ernest (Hackney North)

NOES

Adley, RobertBonsor, Sir NicholasCarlisle, John (Luton West)
Altken, JonathanBoscawen, Hon RobertCarlisle, Kenneth (Lincoln)
Alexander, RichardBottomley, Peter (Woolwich West)Carlisle, Rt Hon Mark (Runcorn)
Amery, Rt Hon JulianBoyson, Dr RhodesChalker, Mrs Lynda
Ancram, MichaelBraine, Sir BernardChannon, Paul
Arnold, TomBright, GrahamChapman, Sydney
Aspinwall, JackBrinton, TimChurchill, W. S.
Atkins, Robert (Preston North)Brittan, LeonClark, Hon Alan (Plymouth, Sutton)
Atkinson, David (B'mouth, East)Brooke, Hon PeterClark, Sir William (Croydon South)
Baker, Nicholas (North Dorset)Brotherton, MichaelClarke, Kenneth (Rushcliffe)
Beaumont-Dark, AnthonyBrown, Michael (Brigg & Sc'thorpe)Clegg, Sir Walter
Bell, Sir RonaldBrowne, John (Winchester)Colvin, Michael
Bendall, VivianBruce-Gardyne, JohnCope, John
Benyon, Thomas (Abingdon)Bryan, Sir PaulCormack, Patrick
Benyon, W. (Buckingham)Buchanan-Smith, Hon AlickCorrie, John
Best, KeithBuck, AntonyCostain, A.P.
Bevan, David GilroyBudgen, NickCritchley, Julian
Biffen, Rt Hon JohnBulmer, EsmondCrouch, David
Biggs-Davison, JohnBurden, F. A.Dean, Paul (North Somerset)
Blackburn, JohnButcher, JohnDickens, Geoffrey
Blaker, PeterButler, Hon AdamDorrell, Stephen
Body, RichardCadbury, JocelynDouglas-Hamilton, Lord James

du Cann, Rt Hon EdwardLamont, NormanRidley, Hon Nicholas
Dunn, Robert (Dartford)Lang, IanRifkind, Malcolm
Durant, TonyLangford-Holt, Sir JohnRippon, Rt Hon Geoffrey
Dykes, HughLatham, MichaelRoberts, Michael (Cardiff NW)
Eden, Rt Hon Sir JohnLawrence, IvanRoberts, Wyn (Conway)
Edwards, Rt Hon N. (Pembroke)Lawson, NigelRossi, Hugh
Eggar, TimothyLennox-Boyd, Hon MarkRost, Peter
Elliott, Sir WilliamLester, Jim (Beeston)Royle, Sir Anthony
Emery, PeterLewis, Kenneth (Rutland)Sainsbury, Hon Timothy
Eyre, ReginaldLloyd, Ian (Havant & Waterloo)St. John-Slevas, Rt Hon Norman
Fairbairn, NicholasLloyd, Peter (Fareham)Scott, Nicholas
Fairgrieve, RussellLuce, RichardShaw, Giles (Pudsey)
Faith, Mrs SheilaLyell, NicholasShelton, William (Streatham)
Farr, JohnMcCrindle, RobertShepherd, Colin (Hereford)
Fell, AnthonyMacfarlane, NeilShepherd, Richard (Aldridge-Br'hills)
Fenner, Mrs PeggyMacGregor, JohnShersby, Michael
Finsberg, GeoffreyMacKay, John (Argyll)Silvester, Fred
Fisher, Sir NigelMcNair-Wilson, Michael (Newbury)Skeet, T. H. H.
Fletcher, Alexander (Edinburgh N)McNair-Wilson, Patrick (New Forest)Smith, Dudley (War. and Leam'ton)
Fletcher-Cooke, CharlesMcQuarrie, AlbertSpeed, Keith
Fookes, Miss JanetMadel, DavidSpeller, Tony
Forman, NigelMajor, JohnSpence, John
Fowler, Rt Hon NormanMarland, PaulSpicer, Jim (West Dorset)
Fox, MarcusMarlow, TonySpicer, Michael (S Worcestershire)
Fraser, Rt Hon H. (Stafford & St)Marshall, Michael (Arundel)Sproat, Iain
Fraser, Peter (South Angus)Mates, MichaelSquire, Robin
Galbraith, Hon T. G. D.Mather, CarolStainton, Keith
Gardiner, George (Reigate)Maude, Rt Hon AngusStanbrook, Ivor
Gardner, Edward (South Fylde)Mawby, RayStanley, John
Garel-Jones, TristanMawhinney, Dr BrianSteen, Anthony
Gilmour, Rt Hon Sir IanMaxwell-Hyslop, RobinStevens, Martin
Glyn, Dr AlanMayhew, PatrickStewart, Ian (Hitchin)
Goodhew, VictorMellor, DavidStewart, John (East Renfrewshire)
Goodlad, AlastairMeyer, Sir AnthonyStokes, John
Gorst, JohnMiller, Hal (Bromsgrove & Redditch)Stradling Thomas, J.
Gow, IanMills, Iain (Meriden)Tapsell, Peter
Gower, Sir RaymondMills, Peter (West Devon)Taylor, Robert (Croydon NW)
Grant, Anthony (Harrow C)Mitchell, David (Basingstoke)Taylor, Teddy (Southend East)
Gray, HamishMoate, RogerTebbit, Norman
Greenway, HarryMonro, HectorTemple-Morris, Peter
Grieve, PercyMontgomery, FergusThomas, Rt Hon Peter (Hendon S)
Griffiths, Eldon (Bury St Edmunds)Moore, JohnThompson, Donald
Griffiths, Peter (Portsmouth N)Morris, Michael (Northampton, Sth)Thorne, Neil (Ilford South)
Grylls, MichaelMorrison, Hon Charles (Devizes)Thornton, Malcolm
Gummer, John SelwynMorrison, Hon Peter (City of Chester)Townend, John (Bridlington)
Hamilton, Hon Archie (Eps'm&Ew'll)Mudd, DavidTownsend, Cyril D. (Bexleyheath)
Hamilton, Michael (Salisbury)Murphy, ChristopherTrippler, David
Hannam, JohnMyles, DavidTrotter, Neville
Haselhurst, AlanNeale, Gerrardvan Straubenzee, W. R.
Havers, Rt Hon Sir MichaelNeedham, RichardVaughan, Dr Gerard
Hawksley, WarrenNelson, AnthonyViggers, Peter
Hayhoe, BarneyNeubert, MichaelWaddington, David
Heath, Rt Hon EdwardNewton, TonyWakeham, John
Heddle, JohnNormanton, TomWaldegrave, Hon William
Henderson, BarryNott, Rt Hon JohnWalker, Rt Hon Peter (Worcester)
Heseltine, Rt Hon MichaelOppenheim, Rt Hon Mrs SallyWalker, Bill (Perth & E Perthshire)
Higgins, Rt Hon Terence L.Osborn, JohnWalker-Smith, Rt Hon Sir Derek
Hill, JamesPage, John (Harrow, West)Wall, Patrick
Hogg, Hon Douglas (Grantham)Page, Rt Hon Sir R. GrahamWalters, Dennis
Hooson, TomPage, Richard (SW Hertfordshire)Ward, John
Hordern, PeterParris, MatthewWarren, Kenneth
Howe, Rt Hon Sir GeoffreyPatten, Christopher (Bath)Watson, John
Howell, Rt Hon David (Guildford)Patten, John (Oxford)Wells, John (Maidstone)
Howell, Ralph (North Norfolk)Pawsey, JamesWells, Bowen (Hert'rd & Stev'nage)
Hunt, David (Wirral)Percival, Sir IanWheeler, John
Hunt, John (Ravensbourne)Pink, R. BonnerWhitelaw, Rt Hon William
Irving, Charles (Cheltenham)Pollock, AlexanderWhitney, Raymond
Jenkin, Rt Hon PatrickPrentice, Rt Hon RegWickenden, Keith
Jessel, TobyPrice, David (Eastleigh)Wiggin, Jerry
Johnson Smith, GeoffreyPrior, Rt Hon JamesWilkinson, John
Jopling, Rt Hon MichaelProctor, K. HarveyWilliams, Delwyn (Montgomery)
Joseph, Rt Hon Sir KeithPym, Rt Hon FrancisWinterton, Nicholas
Kaberry, Sir DonaldRalson, TimothyWolfson, Mark
Kellett-Bowman, Mrs ElaineRathbone, TimYoung, Sir George (Acton)
Kimball, MarcusRees, Peter (Dover and Deal)Younger, Rt Hon George
King, Rt Hon TomRees-Davies, W. R.
Kitson, Sir TimothyRenton, TimTELLERS FOR THE NOES:
Knight, Mrs JillRhodes, James, RobertMr. Spencer Le Marchant and
Knox, DavidRhys Williams, Sir BrandonMr. Anthony Berry.

Question accordingly negatived.

We now come to new clause 2, with which it is convenient to take amendment (a), new clause 5 and new clause 9.

I should like to ask for some clarification on new clause 2, amendment (a) in the names of Conservative Members, and new clause 9. I understand that if a debate took place until 9 pm on new clause 2, amendment (a) would fall. We would not, therefore, be able to take amendment (a) or new clause 9. Is it the case, Mr. Deputy Speaker, that if we were to dispense with nevi clause 2 before 9 pm, we could take new clause 9 at the time of the guillotine. Can you help me on the position?

The right hon. Gentleman is correct. The only difficulty is that there may be some intervening clauses that would have to be taken before new clause 9 was reached or not moved.

Thank you, Mr. Deputy Speaker. It puts the House in some difficulty. We wish to move new clause 2 for reasons that I shall explain, but I know that there are strong feelings in regard to amendment (a) and new clause 9, which we would also wish to discuss. Can you explain, Mr. Deputy Speaker, what are the intervening amendments that give rise to difficulty? There is only new clause 5 that intervenes. [HON. MEMBERS: "There are new clauses 3, 4, 5 and 6."] I understand that there are new clauses 3, 4, 5 and 6.

The usual procedure is to work through the Amendment Paper as printed and take the new clauses and then the various amendments in accordance with the place where they appear in the Bill. In those circumstances, everything that appears before new clause 9 would have to be out of the way before the House could vote on new clause 9.

On a point of order, Mr. Deputy Speaker. I understood that so long as we had moved to a vote by 9 pm, you would have to put amendment (a) to new clause 2 at that time. Is that not correct?

The debate up to 9 pm in those circumstances would be on new clause 2. Until the Question that new clause 2 be read a Second time was disposed of it would not be possible to take a vote on amendment (a). In those circumstances, anything that happened after 9 pm, if new clause 2 had not been read a Second time, would not be called.

Further to the point of order, Mr. Deputy Speaker. I seek further guidance. I understand from what you say that the substantive debate will be on new clause 2 and that at the end of that debate you will put the Question that the new clause be read a Second time. If that is passed, we can proceed to other amendments, grouped with new clause 2. If that fails, am I right in understanding that the amendments and the other new clauses grouped with it would fall as well?

Further to that point of order, Mr. Deputy Speaker. If the House wishes to take a decision on the £1·20 increase in both amendment (a) to new clause 2 and in new clause 9, am I right in saying that the House will have to dispose of new clause 2 and get rid of, or not have moved, intervening new clauses, so that by 9 pm the House would need to be discussing new clause 9 to get a vote on a £1·20 increase in child benefit?

That clarifies a tricky situation. We are in an unusual situation. We have a new clause that calls for a £6 rate for child benefit with an amendment that I would have been prepared to accept. Under normal procedure that amendment would become part of the new clause and the £1·20 would replace the £2 increase. I understand from your ruling, Mr. Deputy Speaker, that this is not possible and that the House will not be able to vote on amendment (a) in any circumstances. Is that correct?

Only if we happen to have dealt with the Question that new clause 2 be read a Second time before 9 pm and there is time to spare.

I understand that new clause 2 would have to be passed before we could deal with this point. There would be some difficulty in achieving that—

On a point of order, Mr. Deputy Speaker. I am assuming that the right hon. Gentleman has not yet moved new clause 2. Would it be right to say that if the right hon. Gentleman did not move new clause 2, we would move to the next new clause in the selection? It would then be possible to hold, on new clause 9, the debate that most hon. Members were anticipating would arise on new clause 2 combined with amendment (a).

7 pm

If the Opposition declined to move new clauses 2, 3 and 4, and if my hon. Friend the Member for Kensington (Sir B. Rhys Williams) declined to move new clause 5, is it right to assume that we could reach new clause 9 in about two minutes?

It is not in my gift, but in the gift of the hon. Member for Kensington (Sir B. Rhys Williams) to decline to move new clause 5.

If it would help the House, I should be prepared not to move new clause 5.

New Clause 9

Rate Of Child Benefit (No 2)

'In section 5 of the Child Benefit Act 1975 there shall be inserted the following sub-section—

"(7) The weekly rate of child benefit prescribed for any child with effect from 17th November 1980 shall not be less than £5·20'.—[ Mr. Orme.]

Brought up, and read the First time.

Rate of child benefit (No. 1).

I thank you, Mr. Deputy Speaker, for the clarity in which you gave your advice. We now have the best of all worlds. I can speak to new clause 2, and we can vote on new clause 9. When the Division occurs, presumably when the guillotine falls, we shall vote on new clause 9, and if it is carried it will mean an increase in child benefit of £1·20 per child per week.

I have not cast aside new clause 2. I wish to discuss it, although we shall vote on new clause 9. No doubt other hon. Members will wish to participate in the debate. I hope that it will be a short and sharp debate. It is not my intention to speak for a long time.

The previous Administration intended to raise child benefit to £4·50 in November 1979 as a further step towards eliminating the short-term national insurance benefit increase for children. A 20 per cent. addition for inflation up to November 1980 would bring the rate to £5·40. The proposed rate includes a further instalment towards the elimination of the short-term increases. If they rise by 20 per cent. from £5·70 to £6·85—both figures inclusive of child benefit—a £6 child benefit rate would narrow the gap between child benefit and the short-term dependency rate to 85p, the rate at which it stood in April 1979. The gap would be eliminated over the next one or two years.

When the Secretary of State was in opposition and when I was in government, we were both in favour of moving towards the elimination of the gap between child benefit and the short-term dependency rate. That would have been a step towards eliminating the poverty trap. I appreciate that it will be a costly exercise, and no doubt the Secretary of State will refer to that when he replies.

However, we are discussing steps that could be taken to make child benefit a benefit for the family, which would be of real use to the low-paid and the working poor. Judging by the attendance in the House tonight, not least on the Conservative Benches—[Interruption.] I shall not go into any detail about the reasons why so many Conservative Members are here tonight. What they are doing, I have done in the past. I appreciate that they consider this to be a crucial issue. We are dealing with their Government and the Budget. Labour Members are clear on how we shall vote this evening. I am not in any way deriding the attendance of Conservative Members. Indeed, I welcome their interest in the issue. It is a central issue within our society. It is no good talking about the family, but not doing anything to help it.

A vital interest arises from the elimination of child tax allowances. It is not possible for the Chancellor of the Exchequer to help the family in his Budget, because there are no child tax allowances as such. Despite the economic problems that face the Chancellor, it would be unthinkable for him to do nothing about child benefit and relief for the family.

We know that the Chancellor will say something about the matter in his Budget next week, but nothing will happen until next November. However, single persons or married couples without children will receive the benefit from any change in tax relief in July, and it will be backdated to the date of the Budget. Everybody in the House knows that.

We are dealing with positive discrimination against the family. That was not the intention of the child benefit system. It was not our intention, and I am sure that it was not the intention of the Secretary of State. I am not here to score political points. One could quote other people at length. Mr. Hugo Young's column in The Sunday Times last week was based on the CPAG report, and he quoted the Secretary of State. I believe that the Secretary of State meant what he said to Mr. Young. On many occasions in the House he has given a passionate defence of child benefit.

The previous Labour Administration faced great difficulty when phasing in the increases in child benefit. They were phased in over a three-year period. Many problems and anomalies were created. Throughout that period the present Secretary of State, quite rightly, used his position in Opposition to tell us that the increases were not sufficient. He denounced the Labour Administration for not implementing the increase immediately so as to achieve immediate transfers from the wallet to the purse. He made child benefit one of the central points of his philosophy on the tax system.

The child benefit itself, because it is not taxable and is paid on a flat-rate basis to all families, provides a definite incentive and benefit to working families. In my constituency there are many mothers who cannot go out to work because they have two or three young children, and to whom that £12 a week is a life line. Certainly many families are facing difficulties. In some cases the husbands are difficult and do not treat their wives properly. In such cases the earnings are not shared fairly within the family. That is why we insisted that child benefit should be paid to the mother as a right.

When we phased in this benefit and the amount went up from £2·30 to £3, there were delays in Newcastle over making the payment and we had many phone calls from husbands—not wives—who were chasing the money. This may occur in a minority of cases, but I know that child benefit is a lifeline. We are dealing with this issue against the background of increasing inflation and all the problems that that has created for everyone, particularly families.

We are now making families wait 18 months for an increase in child benefit. We have heard a lot tonight about the proposed 50p increase that a Labour Government would have paid in November had they been re-elected last May. We have had arguments about the payment from the Contingency Reserve. The Secretary of State is aware that child tax allowances are calculated on one basis, and child benefit on another. Whatever the Government do, such benefits must come out of the Contingency Reserve this year, because that is the basis of financing. Whatever one may say about our 50p., the fact remains that the incoming Conservative Government did not pay it. It is regrettable that the Government did not promise an increase in April, 12 months after the last increase.

The right hon. Member is putting forward an important argument, but will he address himself to the problem? Child tax allowances were eliminated in April 1979, and as any increase in child benefit must be accompanied by a corresponding adjustment of the child dependency addition for the national insurance benefit and for supplementary benefit, had we done as the right hon. Member suggested we should have had to make two adjustments to these benefits in a year. In those circumstances, it seemed more sensible to have the child benefit uprating announced in time to enable it to take place at the same time as the adjustment to the short-term benefits. There are cogent procedural and conceptual arguments in favour of that.

I can see the argument for bringing the payments of the benefits into line. That is important. However, there is a problem with child benefit. In the east the family would have received the benefit arising from the Budget. If we move this benefit to the November uprating, that will mean a delay from April to November of this year. In those circumstances, we must at least take account of the mean level of inflation, otherwise child benefit will have been reduced.

I am putting the case for £6, but I realise that that is an ideal objective. The £1·20 increase is not an objective it is a target which people believe should be met by the Government because it will compensate for the rise in inflation by making the benefit £5·20. It will not be retrospective. Therefore, there will be a loss for the family while they are waiting for the uprating. There will be no net gain, as it were, and the family will have lost between last April and next November. However, if the amount is £5·20, at least by November the family will be keeping pace with the current rate of inflation. In other words, the purchasing power of the child benefit would be returned to what it was previously. This is crucial.

7.15 pm

We all have commitments to certain aspects of policy. I have said, quite fairly, that the Secretary of State's commitment to child benefit is strong—in fact it is no less strong than mine. I see child benefit as the start of a major social revolution within our country. The family must be taken care of. If we allow its position to be eroded, and if the Chancellor decides each April to keep the benefit below the level of inflation, we shall begin to eat away at the whole principle of child benefit. I assure hon. Members that it was difficult to in- crease the benefit to £4, because included in that money was not just the transference of the child tax allowance but a real input of public expenditure, which came out of the Contingency Reserve, and which, therefore, affected the public sector borrowing requirement. The Labour Government faced that. The 70p increase was a straight input, as was the extra 40p at the time of the initial phasing in. The proposed 50p in November would have been another direct input.

A great deal is heard about the work syndrome—the workshy and the question of incentives. If hon. Members are looking for an incentive for those in work and those who want to work, there cannot be a better one than child benefit. There cannot be a better incentive for the working family. It is an incentive for people who are struggling, many on below average wages. Many of these people have two or three young children, and that £12 per week is a lifeline to them.

A total of 7 million mothers draw child benefit every week on behalf of 13 million children. Some mothers can afford to wait several weeks before they collect their money and then use it to buy something for the children or the home. They are the more fortunate ones. Incidentally, they still go along and collect their benefit. The take-up of child benefit is 99·9 per cent. Nobody leaves it at the post office. Of course, the better off are paying for this benefit out of taxation. They are entitled to it, and they are not getting anything for nothing. They are helping —we are all helping—the poorer families and the working poor. That is the crucial factor, and I am sure that the Secretary of State will address himself to it this evening. I could give instances of families with one, two or three children who would be better off if they were earning £35 a week, and so on. One of the ways in which to deal with the problem is to give proper child benefit.

I deal briefly with new clause 9. Whatever the increase, or whatever the success of the measure, if it were implemented by the Government they, not the Opposition, would get the credit. We have had the same situation in reverse—I think that it was called the Rooker-Wise-Lawson amendment. I am concerned—I do not give a damn where the credit goes—about getting a decent level of child benefit. If £1·20 is the level that is acceptable to the House, based on firm logic, and on the rate of inflation. I support it, and I hope that Conservative Members will also support it.

There are many reasons why the child benefit should be raised by at least £1. When considering which reasons to put forward, one is confronted with an embarras du choix. However, as so many Conservative Members wish to speak I shall keep my remarks brief, and confine myself to one or two points only.

The principal reason why child benefit should be increased, as the right hon. Member for Salford, West (Mr. Orme) said, is that it is widely regarded as the most efficient way of providing support for families in general, and for working poor families in particular. The 1978 supplementary benefits review "Social Assistance" comes to the conclusion that families with children are at present at a disadvantage, even as against old-age pensioners. It says:
"An increase in child benefits should be the first priority for any additional expenditure on the whole system of social security benefits… The first priority should be to raise the living standards of low-paid workers with children."
I do not think that many hon. Members would disagree with that.

Over the years the tax burden has continually and consistently moved against families with children. From the years 1960–61 to 1979–80, the proportion of income tax and national insurance paid by a childless couple on three-quarters of average earnings increased by 106 per cent. The increase for a couple with two children, one aged 11 and the other aged 16, was no less than 340 per cent. In 1978–79 the proportion for childless couples was reduced by 5·7 per cent., whereas a two-child couple continued to have the ratchet moved against them, and their proportion was increased by 2·1 per cent. That is a pattern that many Conservative Members believe should be reversed.

I wish to deploy one other argument —the cost-effectiveness argument. For example, if my right hon. and learned Friend the Chancellor were in his Budget Statement to decide to increase child benefit by, say, £1, it would be less than we are asking for. If he did that every family with two children would receive £2 a week extra. The cost of doing that would be £600 million in any one financial year. If the Government wish to achieve the same effect—

Does my hon. Friend accept that in this financial year —l980–81—the cost would be £250 million?

That is correct. I am grateful to my hon. Friend for that intervention. Assuming that the increase was made from November—it would not run for a full financial year—

Does my hon. Friend also accept that the increase might be slightly less than that, because if there were no increase in child benefit, the net Government funds that would have to be appropriated for other measures—particularly supplementary benefit—would be all the higher?

Yes, indeed. Already we are experiencing what I referred to as an embarras du choix, as the arguments in favour of child benefit come rolling in. The cost to the Government of achieving £2 a week per family with two children through tax and personal allowances would be £1,460 million. It would be considerably more expensive, and it would leave out the very low paid, who pay no tax.

I had intended to raise another point, but I shall not do so, because some of my hon. Friends will wish to make the point in more detail.

The reason why I and other Conservative Members have felt it necessary to table an amendment is that the clause that was originally moved by the Opposition, providing for £6, seemed to us—we accept the Opposition's honourable motives—to be too much to ask for now, given the economic climate. It is more even than the Child Poverty Action Group is calling for. We also accept that the Labour Party has an interest in defeating the Government, and it will not be surprised to learn that Conservative Members do not share that enthusiasm. We should all bear in mind the remarks made by my right hon. Friend the Prime Minister when she spoke to the nation on television recently. She said that the Government
"walk a tightrope between the need to face the economic facts of life and the claims of common humanity".
We recognise that the Chancellor is walking a tightrope, and we have no desire to pre-empt his Budget decisions. I shall be in the Lobby with the right hon. Member for Salford, West (Mr. Orme), voting for this clause, but I hope that not too many of my hon. Friends will follow me. I hope also that the Government will regard what is happening in the House today as a serious warning of the strength of feeling in the Conservative Party, in the House in general and in the country on this matter.

I say to the Labour Party with great respect that we do not claim to have an exclusive lien on concern. We have never claimed that. However, we resent the claim made from Labour Members from time to time that their party and their party alone has a claim to concern.

I refer to the remarks of my right hon. Friend the Prime Minister some days ago, when she made a spirited defence of the record on social services of the Secretary of State for Industry. My right hon. Friend did not tell the House that the Conservative Party was in Opposition from 1964–1970, she was vice-chairman of the policy group on social services. She was the Front Bench spokesman on social security. She was a doughty fighter in Committee. Indeed, she took a great interest in the Committee. My right hon. Friend who is now the Secretary of State for Industry introduced a record number of benefits between 1970 and 1974. He was able to do that largely as a result of the work done by the present Prime Minister when she was in Opposition. As Secretary of State for Education and Science she undertook the biggest programme that this country has ever seen. That programme involved the replacement and improvement of secondary schools.

We make no claim to an exclusive lien on concern. However, no Conservative Member, including the Prime Minister, will accept that the Opposition have such a claim.

7.30 pm

During the same broadcast, the Prime Minister said that
"we must ensure that the changes that are made, and on which our whole future depends, come about as humanely as possible."
I am sure that she meant what she said. She is not the type of woman to say or do anything that she does not believe in.
"Those who cannot look after themselves, such as the old, the sick, the disabled and children, should be properly cared for, and protected from the harsher winds of change. We have to walk a tight-rope between the need to face the economic facts of life and the claims of common humanity."
An increase in child benefit is a matter not merely of common humanity but of common sense.

I welcome part of the speech made by the hon. Member for Watford (Mr. Garel-Jones). He will not expect me to continue his defence of the Prime Minister. However, I shall not make an attack. Many hon. Members feel that it is more important to achieve a major increase in child benefit than to defeat the Government. If those Conservative Members who agree with the hon. Member for Watford join him in the Lobby we are more likely to achieve that increase. I hope that they will not take his discouragement too seriously. Many Conservative Members are as committed as the hon. Gentleman. They should not decide which six should go into the Opposition Lobby, and keep the others out. They will all be welcomed.

I have some sympathy for the Secretary of State. When I became Secretary of State the first problem that I faced was that of child benefit. My hon. Friend the Member for Birkenhead (Mr. Field) and the right hon. Gentleman know that well. The right hon. Gentleman made some thundering attacks on me when we went through the painful process of phasing in child benefit. We chose to phase in that benefit. The process took three years. The right hon. Gentleman had great fun at my expense. In his heart he is deeply committed to child benefit. The Under-Secretary is also deeply committed to that principle. No issue put me under greater pressure when I was Secretary of State.

My right hon. Friend the Member for Salford, West (Mr. Orme) and I fought a battle, and we won it. A Labour Government achieved the phasing out of the child tax allowance. Child benefit was finally brought to the level of £4. That sum would have risen to £4·50 last November. I am glad that the right hon. Gentleman and his colleagues put pressure on us at that time. I am sure that he is faced with the same problem. He would have liked to make an increase in November and again in April. I am sure that he would like to see an additional increase. We are trying to give him more strength than he at present holds in the Cabinet so that he can achieve that end. He is not faced with the problem of phasing in child benefit. Indeed, unless there is a substantial increase in that benefit, he will be involved in phasing it out. However, the child tax allowance will not be reintroduced.

The House was under a moral obligation to supply child benefit, if it removed the child tax allowance. If child benefit is allowed to shrink as a result of inflation, without reintroducing the child tax allowance the Government will break faith with the commitment that was made. I am not suggesting that that allowance should be reintroduced. I agree with the hon. Member for Watford that child benefit provides the most effective way of supporting families. That support is desperately needed. Inflation is rising and parents need more money in order to look after their children. Child benefit may also affect the incentive to work.

My right hon. Friend and I organised a seminar. It received wide publicity, although that was not its intention. We invited pressure groups representing the elderly, disabled, unemployed and children to attend. We wanted to hear their views on social priorities. Although everyone wanted an increase in pensions and an increase in mobility allowance, they all agreed that top priority should be given to child benefit. I hope that we shall convince the Secretary of State with our votes and that we shall give him the strength to convince the Prime Minister and the Chancellor of the Exchequer.

Seven million families draw less and less each week in real terms. Those families will be let down unless they receive some compensation for the loss of value of that child benefit. I support my right hon. Friend.

I am not moving new clause 5. That clause would have increased child benefit to the equivalent of the present rates of supplementary benefit. That is a larger increase than that implied in new clause 2 or new clause 9, so needless to say, I am rising to speak in favour of new clause 9.

Child benefit is one of the most important elements in our tax and benefit system. It is right that that benefit should keep pace with inflation. There are several reasons why child benefit is important. It is important for the mental and physical health of mother and child that all families should have sufficient income. We have sadly fallen behind other countries in regard to the matter of perinatal death rates. The British figures are disappointing. Perinatal deaths are particularly associated with social class. There may be absence of sufficient care in certain districts and so on; but I am certain that much of the trouble is due to fatigue, deprivation and malnutrition. We cannot let it rest on our consciences that we do not do enough for child health. Handicap and ill-health are a high price to pay for social parsimony.

Everyone is familiar with the argument about the incentive to work. Increasing child benefit is the cleanest and most obvious way of allowing people to escape from the poverty trap. It encourages them to earn their livings. There are also mothers who know that they should remain at home with their children but who feel that they have to take part-time work in order to have sufficient money to look after them. Latchkey children have to let themselves into an empty house when they come home from school because their mothers are out doing part-time work, perhaps at the check-out desk of a supermarket. They have to earn the extra money that society should be giving them at a crucial stage in the evolution of their family.

Increasing child benefit is a selective method of meeting rising living costs. Some Labour Members will not like to hear this, but it has to be admitted that increasing child benefit at a time of economic stringency is far better than agreeing to blanket increases in wages, which go to single people, teenagers and second wage earners, who are not in the same need. The breadwinner with a wife and children to support needs that money. We should give it to him selectively through child allowances rather than through having to pay blanket wage increases.

On the Continent, where family allowances are much higher than in this country, many people suggest that the high level of child allowance affects the propensity to strike. When the cost of living rises, the people most badly affected, the breadwinners with several mouths to feel are protected through increases in child benefit and do not have to force their employers to give them higher wages, as many people in this country find that they do. I hope that the Government will bear that in mind.

It is not possible to achieve any of these results to the same degree—or at all—through an increase in the family income supplement or supplementary benefits. I would not argue against an increase in either, but, if the Government want to achieve those desirable objectives, they must do so by raising child benefit.

I wish to deal briefly with certain objections that one sometimes hears, and particularly those which might be appropriate tonight. The first is the idea that the Chancellor must be allowed to make his own Budget judgment, and the House, the press and everyone else may comment, but must not force his hand right up to the moment when he announces his Budget in the House. But it is not right for the Chancellor to take it on himself to pre-empt decisions that fall to important Departments of State, such as the Department of Health and Social Security. The Treasury already has too much power. The House should not allow the Treasury to take decisions for all other Departments and keep those decisions secret until the last minute. The idea of Budget surprise is delightful for the Press but undermines the influence of the House of Commons.

One also hears the argument that there is something derogatory about universal benefits such as child benefit, and that people should be willing to resist such handouts because they undermine their ability to stand on their own feet and look after their families through their own earnings. One might as well say that a soldier should be ashamed to wear his uniform because everyone else in the same regiment wears the same uniform. There is nothing derogatory about accepting a universal benefit. In a computer age it is much the most efficient way of dealing with that angle of the redistribution of income.

About 35 per cent. to 40 per cent. of marginal increases in earnings goes back to the Exchequer either through income tax or national insurance contributions in any event. Child benefit is not, therefore, a handout. It is a means-tested benefit. As people increase their income, they pay the money back.

Then one hears the argument that a tax concession is simply the Chancellor paying back to wage earners what is, in effect, their own money, whereas to increase a universal benefit like child benefit is somehow not an equivalent concession. People who make that point are succeeding in a meretricious platform trick, which sometimes deceives an audience for a short time.

If we say that when the Chancellor makes a cut in taxation he is simply handing back to people more of their own money, that means that he is admitting that he has no right to levy taxation on individuals. If it is their own money, they have no obligation to pay it to the Treasury, and tax evasion is perfectly right. Of course that is not the case. If we levy taxation it is because our society recognises that one has obligations to contribute just as one is entitled to expect society to provide a reasonable minimum income guarantee in return. Taxation and benefit are part of a lifelong relationship between the individual and the community. The balances and judgments that have to be made from time to time are an interesting social problem. However, we should not fall into the error of thinking that the State is not entitled to ask anybody to pay income tax. That is quite wrong.

How do we pay for the increased child benefit? First, transfer payments are not Government spending. When money is given to mothers it is spent by them and not spent by civil servants or wasted in bureaucratic muddles. The mothers decide how to spend their child allowance and make their own choices.

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We need to attack the second wage if we have to find money from within the income tax system. There are people in our society, particularly teenagers living with their mothers and fathers, who are responsible for the household expenses, who are earning a full adult wage and yet do not have much to spend that money on. They have no dependants and no rent to pay. Those are the people who are buying the Japanese electronic trash, motor cycle kits, cosmetics and many imports that they truly do not need. Five or 10 years later those same people may be extremely hard up. It is far better that they should contribute more to society while they can, and for society to give them more back at a later stage in their lives.

I do not disagree with the logic of my hon. Friend's argument, but how does he propose that that should be done?

To answer that would take us beyond the limits of a guillotined debate. In a few words, I suggest that the Chancellor should make a sharp reduction in the amount of personal allowances across the board, and simultaneously introduce a householders' allowance, which would be payable to those responsible for rent, rates and particularly mortgages. I have worked out the figures, and my hon. Friend the Minister has them. I should be glad to provide a copy to my hon. Friend the Member for Enfield, North (Mr. Eggar) and anyone else who is interested. My recommendations are quite specific and they balance. If the Government were to decide to accept my recommendation that child benefit should be raised to supplementary benefit level, it could be paid for without undue hardship to anyone by the means that I suggest.

I believe that the Chancellor should abolish the 25 per cent. band in his Budget next week if he is seriously looking for money. There is no disincentive in so doing. The concession does nothing but complicate the collection of income tax. My personal preference would be that this year the Chancellor should not implement the Rooker-Wise-Lawson amendment, which would get the balance of tax concessions wrong. My priority is for the family and, from the numbers on our Benches, that appears also to be the priority of the Conservative Party. In his previous Budget the Chancellor seemed to forget families. This time he must put the balance right.

The logic of the way that the House is to vote is complicated. In my opinion, those who think that the Chancellor should agree to an uprating of child bene- fit to catch up with the rise in the cost of living will vote for the £5·20 amendment. If the Chancellor is planning to go further, our votes will simply help him on his way, and will do no harm. Those who are prepared to leave it to the Chancellor will abstain. That is perhaps a respectable position, but I shall be disappointed if too many hon. Members do that. Hon. Members who study these issues should make a decision. Those who definitely do not want child benefit to be raised in line with the change in the value of money will vote against the amendment.

I said that that was the logic of the position Of course, the issue is not so clear cut. I realise that those who vote against the amendment will be joined in the Lobby by many who have not followed the debate and who prefer to stick to the convention that the Chancellor can make his Budget judgment in his own time. For myself I believe that that would be wrong.

Unless my right hon. Friend the Minister is able to give us a clear undertaking in winding up that the Government intend that child benefit should be uprated this year to take full account of changes in the value of money since the previous increase, I shall vote for new clause 9.

I welcome the two speeches from the Government Benches, which indicate that at least two hon. Gentlemen will be voting for new clause 9. I was a little concerned that the hon. Member for Watford (Mr. Garel-Jones) said that although he would vote for the new clause, he hoped that his hon. Friends would pull him back from the brink of defeating the Government.

I am sure that no right hon. or hon. Member wants to see the Government defeated. We would much prefer a guarantee that child benefit will be increased to £5·20. If we could arrive at that without a vote, I am certain that we on the Opposition Benches would be happy. When the hon. Member for Watford has had more time in the House, his experience will be that the only effective way to make certain that Governments take notice of Back Benchers is to vote.

When I first came to the House and was on a Committee discussing the Child Benefit Bill, I accepted assurances from Ministers which I now bitterly regret. Of course, Ministers come and go, and after they have given assurances it is difficult to hold their successors to them. The only effective way is to attempt to force the Government in the Division Lobby and to make sure that as many as possible of one's right hon. and hon. Friends support the move. That does not actually force the Government to do anything. The Government merely have to make a choice about the seriousness of the action. If the Government wish to, they can bring us back two or three days later on a vote of confidence and make us vote the other way. It is as simple as that. But on most occasions, if we show the Government the strength of our feelings and an amendment is carried, they will take that into account and will not bring us back and make us vote the other way.

That is the choice. It is far better to go into the Division Lobby hoping that the £5·20 will be carried, than simply hoping that one will be saved by one's right hon. and hon. Friends and that the Government Front Bench will be so impressed by the strength of feeling that it will do it in the Budget, anyway.

At the start of this debate we hurriedly pushed through, or at least did not debate, new clauses 2 to 8. My name was on all but one of those—new clause 5—which is the one that I should most like to have seen included. That illustrates that hon. Members appreciate that although much can be done to improve the Bill, what is most important for families with children is to increase child benefit. In allowing those clauses not to be debated, we were simply stressing, in a guillotined debate, that it was most important to have child benefit increased.

Over a long period the merits of child benefit have been debated again and again and we have failed to achieve the necessary action on them. For years and years people accepted that families with children should receive tax relief. It was argued that those families that were not paying tax had just as many, if not more, needs; so the idea was put forward to develop child benefit or negative income tax.

Those arguments were made and won in the 1960s, yet it has taken us 10 years —the whole of the 1970s—to achieve a child benefit allowance of any significance. We are now fighting merely to ensure that that benefit is brought up to date with inflation by £1·20. We are still not into the argument of increasing it to the realistic level that new clause 5 proposed.

We pressed hard in Committee to get this benefit increased to the minimum child dependant's allowance for supplementary benefit—the level that is really necessary, the level that has most administrative advantages, and the level that does most to defeat the poverty trap and ensure that whether people are working or drawing benefit their incomes for their children do not rise or fall.

If we could increase child benefit to a realistic level, the advantage would be that many of the other benefits paid out for children on a means-tested basis could be eliminated. We could simplify the system a great deal. In new clause 2 we suggested that we might be getting a little way there with £6.

It is important that the House should vote for the £5.20 tonight and say that after all the arguments we do not intend to slip back this year, but hope that in future we can increase child benefit to a level where it will remove families with children and the working poor from the poverty trap.

April 1979 was an important turning point, as I see it, in both the social security scheme and the tax relief arrangements. One of the reasons why we are having this debate is that we have not yet fully worked through the logic of that change. There are some who regard the changeover to the child benefit scheme with a cash payment to the mother as a first step towards the tax credit scheme that was originally proposed by a previous Conservative Administration. On the other hand, there are those who regard it as a botched-up scheme, which means that personal taxation has to be kept higher than it would otherwise be to pay out a cash benefit.

Whichever side of the argument one is on, the fact is that we now have child benefit. It is the main mechanism for assisting parens in work with dependent children. In my view, therefore, the logic is that it should now be regarded as an inherent part of the social security scheme.

Child benefit should be uprated on an annual basis in line with the other benefits in November.

There is another equally important factor, and that is the need to link the rate of child benefit with the dependency benefits within the national insurance and supplementary benefit schemes. If the dependency benefits are increased annually, as they are, and child benefit is not, these benefits are bound to get out of balance. Therefore, we get the aggravation of the poverty trap and a reduction in the incentive to work—the "Why work?" syndrome. All these matters are of significance to the one-parent family.

Therefore, there is a clear case for this benefit to be linked with the social security scheme and cease to be the odd man out that it is at present. Alternatively, child benefit should be linked with a man's tax allowance arrangements, which again are looked at on an annual basis. So whatever way one looks at it, it would seem that there is the strongest possible case for annual review and a clear link between child benefit and either the social security scheme or the tax allowance arrangements.

As has been said by my right hon. and hon. Friends and by Opposition Members, there is a strong argument this year for restoring the value of the child benefit, since it was last increased in April 1979. In my view, it is right to restore the relativities and to assist the working family with dependent children. It is a high family priority, it is a high social priority, and it is also important in providing incentives to work and for wealth production in present circumstances. In my view, the argument is overwhelming.

I cannot help reflecting on the strange episode that we had at the beginning of this debate, when the right hon. member for Salford, West (Mr. Orme) threw away new clause after new clause with gay abandon, apparently in order to accept the wisdom of a figure that had been put on the Notice Paper by some of my hon. Friends. I should like to put this reflection to the House: it seems to me that within about a week—

I am sure that the hon. Member does not want to be unfair in his argument. I remind him that he is speak- ing to new clause 9, which is in my name and the names of a number of my hon. Friends.

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I intended the remark to be good-humoured. The right hon. Gentleman abandoned a number of new clauses at the drop of a hat. Some of the clauses contained conflicting figures. I do not want to make too much of that.

Is it reasonable and right for the House to bind on one issue the Chancellor of the Exchequer, who is within a week of his Budget speech? We all hope confidently that there will be an announcement in my right hon. and learned Friend's speech next week about increases in pensions, widows' benefits and in benefits for the disabled and the sick. We hope that there will be an announcement about what is to happen to tax allowances, including the Rooker-Wise provision.

It has emerged clearly in the debate that there should be a clear link and the right balance between child benefit and the other benefits that my right hon. and learned Friend will be announcing next week. It would be unwise of the House to try to bind my right hon. and learned Friend to a specific figure on child benefit when we are so near to the Budget, in an attempt to achieve the right relativities and the right balance.

I hope that my right hon. Friend the Secretary of State for Social Services will be able to help the House in view of the obvious strong feeling that exists on both sides of the Chamber but that is reflected especially on the Government Benches. Throughout the whole of the debate there have been at least twice as many Conservative Members as Labour Members in the Chamber. I hope that my right hon. Friend will be able to give a definite iindertaking—I do not regard it as reasonable at this stage to ask for such an undertaking on a specific figure—that there will be a substantial increase in child benefit, in view of the strong arguments that have been advanced.

I too, shall be as brief as possible. I note that it is recognised on both sides of the Chamber that child benefit provides the best means of helping the family. The benefit has been strongly commended. I hope that many Conservative Members will feel able to support the new clause in the Lobby, or at least to abstain, so that the message of the value of child benefit is brought home firmly to the Government, and especially to the Chancellor of the Exchequer in the last few days before the Budget.

It is true that child benefit appears to be an expensive benefit. To increase it by 1p for each child in 1980–81 would cost £5·6 million. To increase it by 10p would cost about £56 million in that year. The cost would be rather less than the Under-Secretary of State, the hon. Member for Wallesey (Mrs. Chalker), intimated in a recent answer.

In spite of the costliness of the benefit to the Exchequer, it is vital that it is increased. By April the £4 child benefit will be worth about £3·20. The real value of child support for the standard rate tax paying family will be much lower in April 1980 than in all the years between 1950 and 1966. In other words, our support for families, apart from 1979–80, has fallen. It will need the Chancellor of the Exchequer to take the sort of action that is proposed in the amendment and raise child benefit sufficiently to reflect the commitment to support families that was known in earlier years and in the last year of the previous Labour Government's administration.

Whether we increase child benefit to £6 or adopt the £5·20 proposal of Conservative Members, it is worth setting out the costs of keeping a child. The May 1980 costs have been estimated. The estimated cost of a two-year-old child is £7·84 a week. The estimated cost of an 11-year-old is £11·55 a week. If child benefit is increased to one or other of the proposed figures, it will go nowhere near fully maintaining a child, certainly a child of 11 years of age.

We are pressing for an immediate increase in child benefit. That is the right step for us to take. However, in future we must ensure that the child benefit scheme is examined thoroughly. We must ensure that it is uprated annually and that gradations are introduced to take account of the fact that at certain ages children cost very much more. That is what we should aim for in future. To fight to increase the benefit above the £4 level is perhaps sufficient for the moment.

An anxiety has been expressed to help the Secretary of State as much as possible. In the past he has made extremely clear his commitment to child benefit and the need to support families. In earlier times, in "The Great Child Benefit-U-turn", he indicated that he understood well the principles involved in engaging in a fight with the Treasury over the issue of raising child benefit, a costly benefit in terms of public spending. The right hon. Gentleman said that a
"commitment to treat increases in Child Benefit in the same way as reductions in taxation"
is extremely important. He argued that
"once the switch from child tax allowances to child benefits had been completed, there should be 'an improvement in the real value of child benefit as part of an overall reduction in the burden of direct taxation and a shift to indirect taxation'."
I hope that the Secretary of State will hang on firmly to the concept of child benefit being part of an overall reduction in the burden of direct taxation. Perhaps even in the past few days he has been able to discuss with the Chancellor the issue of increasing child benefit. I hope that he has been able to encourage his right hon. and learned Friend so to do.

Conservative Members seem to regard child benefit as an important work incentive and as a way of discouraging people from coming out of employment and relying on social security. I have never felt that the tax incentive argument has been an important motivation in keeping people in or out of work. To regard child benefit as a reduction in the burden of direct taxation is important. It helps working families in general. It helps ordinary and low-income working families. In particular, it is a means of helping families that are caught in the poverty trap. The right hon. Gentleman will no doubt recall that answers have revealed that his Department expects an unprecedented increase in the number of families caught in the poverty trap during this year. It is estimated that the level will reach at least 90,000. It is some time since that answer appeared, and it may be that the number has increased already.

I must warn the right hon. Gentleman that when I asked the Chancellor if he would adopt the practice of treating an increase in child benefit in the same way as a reduction in direct taxation, rather than as an increase in public expenditure for accounting purposes, the Chief Secretary replied:
"No. Child benefit is a cash transfer from the public to the private sector which is voted by Parliament as public expenditure and is so treated in national accounting."— [Official Report, 21 December 1979; Vol. 976, c. 450.]
That is an important issue. It appears from certain indications that, in the forthcoming White Paper, reductions in taxation through tax allowances of various sorts will no longer appear as tax expenditures. That means that the Chancellor can sneak in money to assist rich people, the better-off, in a variety of ways. That does not appear to be the position when we examine closely the Chancellor's White Papers, whereas an increase in child benefit appears as an increase in public spending.

I hope that the Secretary of State will recall his earlier words and lean on the Chancellor of the Exchequer to adopt the method whereby tax expenditures are used as a way of indicating the money spent on, say, tax relief on mortgages to show this as Government spending in terms of the lost revenue. I hope that the Secretary of State will recall his words and encourage the Chancellor to regard the increase in child benefit as a reduction in direct taxation. Armed with the arguments that he put forward so strongly earlier today, I trust that the right hon. Gentleman will press the Chancellor to ensure that child benefit is raised at least to the level proposed by many of his hon. Friends, if not to the level proposed by the Opposition.

Child benefit was one of the most important measures introduced by the Labour Government. It is one of the most valued and appreciated of benefits and one of the most widely and effectively used benefits for helping children and mothers. When mothers are asked what they do with child benefit, they say that they put it away to buy shoes for their children or use it in the middle of the week to buy food for their children for the rest of the week. I see that Conservative Members agree. That means that replies from their constituents about how child benefit is used are exactly the same as the ones which we have received.

If the Government really want to be known as a Government who assist the family, the raising of child benefit now and the use of the arguments formerly advanced so forcefully by the Secretary of State when he was in Opposition are what we wish to see them undertaking.

My reasons for signing the amendment were that I felt that child benefit was of vital importance to the families of the long-term unemployed, particularly when we read rumours in the press that the earnings-related supplement may be abolished and that supplementary benefit may be de-indexed.

Other disadvantaged groups, such as one-parent families and old-age pensioners, have strong supporters. The problems facing the long-term unemployed were summed up by the Supplementary Benefits Commission in its report in 1977.

Paragraph 2.15 said:
"It is the unemployed claimant with children who is generally the poorest of all."
In the light of the Government's economic policy and their determination to rationalise the economy, to reduce overmanning and improve productivity, and to deny State support for lame ducks, the immediate effect on the next two years must be dramatically to increase the numbers of people out of work and further to increase the problems of the poorest section of society, namely, the long-term unemployed.

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I believe, therefore, that an increase in child benefit in line with inflation is vital to those seeking work. As many right hon. and hon. Members have said, the benefit is no disincentive to work, since it is payable to those in work and out of work. It is perhaps not always fully appreciated that the long-term unemployed are not entitled to long-term benefit. At the moment, with average earnings for a married man with two children of £98, when a man loses his job his basic entitlement falls to £48.15. Above that, he receives an earnings-related supplement of £14.75. Any benefit above that is means tested. I refer again to the report of the Supplementary Benefits Commission for 1977. Paragraph 3.10 states:
"For the unemployed it is no straightforward matter to claim supplementary benefit. Their claims can be amongst the most diffi- cult to deal with, posing complex questions about the treatment of last wages and the interaction of supplementary benefit with possible awards of unemployment benefit. Questions must also be asked about circumstances giving rise to the loss of the last job which may affect the amount of benefit. Unemployed claimants are required to deal with three separate offices: one for supplementary benefit, one for unemployment benefit, and one for job-seeking."
The difficulties facing the unemployed in obtaining benefit—should child benefit be increased—would not be quite so great.

If we compare today with the 1930s and take the figure that I have just given, of £62·90 compared to an average wage of £98, we see that in the 1930s the corresponding figures were 52s. 6d. as the average wage of a married man with two children and benefit amounting to 30s. The argument that could be put forward for de-indexing the supplementary benefit might be that it was only right that everyone should share current hardships.

My answer to that is that there is a level of poverty in our society at which the State should intervene and below which people must not be allowed to fall. Surely it is the basis of the Conservative Party's philosophy that the State has a duty to help those who cannot help themselves. The long-term unemployed are, according to all the figures and all the evidence, those who most require that help.

For that reason, I believe that it is of great importance that child benefit should be increased in line with inflation. I shall not vote against the Government, since the only indication that I have of a change of heart on their part, from their previously stated policy, is based on rumour. However, I believe that arguments, particularly on behalf of the unemployed, are much better put forward before the Budget than after it.

I shall spend a few moments only in commenting on the importance of this debate. Whatever the outcome of the vote, the Secretary of State will go away very pleased. The debate on child benefit has entered a new era. There are more Conservative than Labour Members in the Chamber—that is not a normal phenomenon in welfare debates. I think that it is fair to say that at this stage there would probably not be as many hon. Members in the Chamber for most other Bills as there are for this one. We have entered a new era in our debate on supporting families and for everyone, inside and outside the Government, that should be welcomed without reservation.

Because the technicalities of the debate have been won, I should like to spend a few minutes directing our thoughts in another direction. We are now experiencing the luxury of being able to talk about the kind of society that we are trying to create with the help of a generous system of child benefit. There are three powerful arguments why, if the Chancellor of the Exchequer has any sense at all, he will not stop at £5·20.

We spend much time in this Chamber talking about freedom, but we rarely bring that concept down to earth and ask how we can extend freedom in a practical way. Child benefit is important because it extends freedom to a greater proportion of the population. It takes power away from Whitehall and gives it to mothers. The society that I wish to see is not one in which politicians or bureaucrats make the decisions, but one in which the decisions are taken by individuals and by families. On the issue of freedom, this is an important debate, as will be the Budget that is to follow.

We are discussing the kind of Welfare State that we should like to see. Child benefit has an important part to play in that State. I wish to see a Welfare State which acts as a floor on which people can build by their own efforts and where they are not penalised for doing so. That combined arguments from both the Left and Right. The Left's argument is that it is important to have the floor of protection for those who fall. The Right-wing argument is that in the society in which we live and die people want to improve the lot of their families and that it is foolish to try to restrict that freedom and incentive too much.

Before my Front Bench dismisses me as a true Right-winger I emphasise that there is a difference in the type of society that we want to build. Some hon. Members try to take the argument back to the 1920s, when the emphasis from Socialists was on the individual and not on the collective. That is a struggle in my party, and the help that we sometimes get from the Conservatives is sometimes of use.

We are making decisions about families. We are saying that the best way to raise children is in families. Many criticisms can be made of a family unit, but nobody has come up with a better way of raising the next generation. If we believe that, we must be straight and give the family unit the resources to do a good job.

We are moving from arguing in detail to discussing the overwhelming advantages of child benefit. Child benefit extends freedom in a real and practical way. It helps to create a Welfare State which is a floor on which people can build their own efforts. In a practical way it helps to build strong and effective families.

In the 104 hours which I enjoyed in Committee I learned a tremendous amount, especially from those who work profesionally in the social services and those who have been involved in them politically. In Committee hon. Members were in broad agreement on a number of issues. We were agreed about the importance of child benefit. There also appears consensus on that subject in the House.

In a previous incarnation, my right hon. and learned Friend the Chancellor of the Exchequer spoke eloquently about the need to operate a child benefit scheme. My right hon. Friend the Secretary of State for Social Services and the National Women's Commission have also recognised the importance of uprating child benefit. In 1977 the Secretary of State spoke so eloquently about child benefit that I can do no better than to quote him. According to the pamphlet "The Great Child Benefit-U-turn" he said:
"First, that child benefit was important because that is the way to restore the position of families. Secondly, it is the best way to ease the poverty trap. Thirdly, it is the best way to help the poorest families in work—those who earn their poverty. Fourthly, it is the best way to reduce the nonsense of people being much better off out of work. Fifthly, it is the best way of reducing the dependence of families on means-tested benefits."
I cannot better the description of the importance of child benefits. I cannot believe that the Secretary of State, whose lips were just moving in time with mine, does not still agree with what he said then.

I wish my right hon. Friend good fortune, as St. George sallying forth to wage battle with the Treasury dragon, in his struggle. I must dispel the rumour which I fear has been put about by our political opponents. It is not true that the Tory policy of caring for the family has died. That rumour is much exaggerated. There is a consensus in the House. Based on Christian doctrine, there is a belief in the family unit. All policies, fiscal and domestic, should be viewed with the family unit in mind.

I have re-read the excellent speech which the hon. Member for Birkenhead (Mr. Field) made on the ultimate day of the Committee on the Bill. I had hoped that he would not be quoted before me because that would have disembowelled my speech. He spoke about the freedom of the family. He said that despite its drawbacks and problems the family unit was the best method that we had to raise children happily.

I wish to dispel a myth about child benefit. The myth is that child benefit is a form of soup kitchen or disreputable hand-out which is used and abused by scroungers and wasters alike and which is handed indiscriminately to those who can afford to do without it. That myth has been dismissed by right hon. and hon. Members on both sides of the House and I shall not dwell on it. However, the finest accolade and the finest act of the previous Administration was to give child benefits in cash payments to mothers. Before that, although the State recognised the importance of the family unit through tax allowances, the well-off prospered because they paid substantial income tax and the poor who paid no tax did not benefit. Now the mother is paid in cash. The system shows that the State recognises the importance of children and it represents the beginning of a tax credit system. Long may it continue.

An uprating in the child benefit is in tune with current Conservative philosophy, as it is a tax cut for the poor. Surely that is the only way in which it can be given. If the benefit is not uprated in line with inflation it will lag behind so that next time, when a Chancellor of the Exchequer wishes to uprate it in line with inflation, the increase will have to be even larger and therefore harder to make. Two other benefits have lagged behind in the last 10 years. The maternity and death grants have been ignored by Chancellors for the last 11 years. Those grants, like icicles in strong sunshine, have melted away. It is now much more difficult to uprate those grants so that they relate to 1969 prices. If those grants had been uprated gradually the problem would not be so difficult.

The £4 currently granted for a child will be worth £3·20 in April, £3 in November and goodness knows what this time next year. The family unit has suffered considerably since 1948. The single person's tax allowance in 1948 was £100. It has risen to £800. However, the allowance for a family with children has risen only from £100 to £400. The family with children has done much worse than the single person.

Since May there has been a further problem. The family has come under increasing attack. The tax cuts given in the previous Budget were obviously splendid. It would lie ill in my mouth to say otherwise.

Does the hon. Gentleman agree that families should have received their share of those tax cuts—we already have child benefit at £5·70 a week—and that they were left out?

I take the hon. Gentleman's point. The poorer family unit is not earning enough to benefit from the tax cuts. However, it pays increased VAT, although to be fair a substantial proportion of its expenditure goes on goods which are VAT exempt. However, there are increases in rent, rates, gas, electricity and school meals. But for the grace of the House of Lords there was nearly an increase on transport. The social services have been cut back. The cuts are falling not on the administration but on the services. There are problems of increasing unemployment. If there are cuts in child benefit in real terms compounded on top, one despairs for the future of our poor families.

8.30 pm

To uprate child benefit to £1·20 is the least we can do. For children over the age of 11 the figure would need to be £1·30. We justify the cost, first, on grounds of healthy children. Second, proper levels of child benefit would be a real contribution to reducing delinquency and emotional problems in families. The financial pressures placed on families which are short of money lead to increased levels of rates of divorce. We should measure the extra money that that would cost. We must also take into account the cost of institutional care. From the compassionate point of view, the borderline between hunger and anger is thin. When families suffer tremendous financial constraints I am not surprised at the increase in child abuse and child battering.

The hon. Member for Birkenhead (Mr. Field) quoted Churchill as saying that the levels of family benefit should provide a floor below which families should not fall. One can hardly improve on that well-known figure of speech.

The problem facing the Chancellor, if child benefit is to be uprated, is how it should be paid for. As the Conservative Party said in the election, we as a country are spending £9,000 million more than we are earning. There are two methods of doing that—either printing money or creating wealth. We believe that a precondition of social concern and expenditure on social concern is the creation of wealth. That presents a problem, the reasons for which I shall not discuss now. The Chancellor is faced with the considerable problem of how to pay the extra £6 billion if family child benefit is to be uprated.

I thank my hon. Friend for correcting my inflated figures.

I do not presume to tell my right hon. and learned Friend the Chancellor how to expand his cake. He might consider the Rooker-Wise amendment to see how that may be done. I do not believe that the Conservative Party, with its fine history of social concern, will do a U-turn on this subject. It would be wrong for us to presume that my right hon. and learned Friend the Chancellor and my right hon. Friend the Secretary of State for Social Services would not face up to the obligation that our party and they, as individuals, entered into before we came to office in the last election. I do not believe that the promises that we gave before the election on this important matter will turn to dust.

This has been a vital debate. I found it stimulating. I hope that my right hon. and learned Friend the Chancellor and my right hon. Friend the Secretary of State will take that point to heart. I shall listen to the speech in winding up the debate with great fascination. I am not declaring which way I intend to vote until I have heard it.

I am pleased to speak following my "hon. Friend" the Member for Abingdon (Mr. Benyon). He is my near neighbour and he has quite clearly understood the effect that the last Budget had on families, especially those with children. Undoubtedly families with children are burdened with additional costs, including VAT. They are suffering at present.

I am particularly pleased that there are so many Conservatives here this evening who have not forgotten the manifesto promises to look after the family. Those promises are important because, as has been said by so many, the family unit is an important linchpin of our society.

I am also pleased to hear that they at least are not among those who believe that children are a liability, because children are not a liability but an asset; they are an asset to families themselves and to the nation. Indeed, we must for ever remind people that that is so.

I will be brief, because I know that the Secretary of State wishes to make an important statement, but I want to confess that when child benefit was first mooted I was one of those who were against the proposal. The reason was that I believed that Governments of various colours would not meet the promises that had been made when the change was made from tax allowances and family allowances to child benefit. So, in fact, it has proved, and families with children have fallen behind. The child benefit itself has fallen behind, and, as we see from the amendments, needs to be considerably uprated.

What is more, there are people—I fear that the Prime Minister is among them—who believe that child benefit should he a means-tested benefit. I hope that the Secretary of State and his colleagues will be able to convince the Prime Minister and other Ministers who think similarly that it was intended to be not a means-tested benefit but a universal benefit, and that, indeed, should remain the case.

I hope, therefore, that hon. Members of all parties will go into the Lobbies to ensure that child benefit is increased, that we shall not have to wait for a Budget announcement and that the House will make it clear to the Government to- night that it intends that families with children should be protected and that child benefit, too, should be protected.

I am most grateful both to my right hon. Friend and to the right hon. Member for Salford, West (Mr. Orme) for making this debate possible, so that the House can come to a decision. It seems to me that the debate is taking place at the right time, because I believe that the Cabinet will be taking a decision on child benefit during the next few days. I pay no attention to the malicious rumours spread by enemies of the Treasury that it is considering an increase of only 75p, because that would be a net reduction of about 63p on what the child benefit increase needs to be if the gap between the child benefit for people at work and that for people out of work is to remain the same. In practice, we need to close that gap over the next five or 10 years, which by my calculation on the retail price increase over 18 months, requires an increase of at least £1.63. That is why I should not mind if, by mistake or intentionally, the House passed this new clause tonight and got £1.20 introduced as a minimum.

When one party offered a £4 increase to pensioners during the last election campaign, another party offered nothing but gave an increase of £6. If the House approves £1.20 tonight, I hope that my right hon. and learned Friend the Chancellor of the Exchequer likewise will say next week that he wants the House to vote for £1.60. He will have a second opportunity to surprise the House.

I hope that the Chancellor will recognise that those of us who are voting in favour of £1.20 are willing to offer suggestions as to where the money can come from. Using tax and the prices index for personal allowances is a suitable way of saving some money, and abolishing the 25 per cent. rate of tax is another. For other suggestions, I refer the Chancellor to an article I wrote in "Crossbow", published this week, which offers other suggestions as to how a large amount of money could be saved. The £1 increase in child benefit last year was not a £1 increase, because of the withdrawal of the residual tax allowances. The number of children covered by child benefit next year will be lower than the number covered this year.

Child benefit needs to be increased for many reasons, but the greatest reason is the implication for public expenditure and pay increases of 20 per cent. next year when we shall be running at least 17 per cent. ahead of production. If we want to get our trade unions to accept levels of pay increase below the rate of inflation, it is essential that child benefit should rise by more than the rate of inflation for this year, so that people will be encouraged to accept lower rates of pay next year.

I was delighted to hear the "Tribune group" of the Conservative Party giving such splendid support to the argument that traditionally comes from the Opposition. The position of my right hon. and hon. Friends on child benefit and index linking is well known. We have heard arguments that would have us believe that increased child benefits will cure anything with the possible exception of athlete's foot. I agree.

Child benefit is the most effective of all benefits. It endorses the State belief in the power of mothers and the devolution of power to mothers. I accept and endorse the argument put forward by the hon. Member for Birkenhead (Mr. Field) that it creates a floor below which we should not and must not fall.

Hon. Members on both sides of the House will, I am sure, realise how hard pressed is the Department of Health and Social Security. We all have sympathy with, rather than contempt for, the Department for taking so long to answer letters. I mean that quite genuinely because I know what enormous pressure of work there is on the DHSS. I ask the Government Front Bench to bear in mind that some of that pressure will be removed because the consequence of increasing child benefit will be that the take-up of a number of other means-tested benefits will fall. A significant or, at the worst, an index-linked increase in benefit will be appreciated not only by both sides of the House, but by the Department and its staff.

I well remember speaking in the House, I think in a Finance Bill debate, from the Opposition Front Bench and totally misjudging the tone of the House. I received a letter the next day from the late fain Macleod, who had listened to me in some pain, in which he said that the House could be as fickle as a trout.

I had totally misjudged the way in which today's debate would go. I pay tribute to the right hon. Member for Salford, West (Mr. Orme) for the reasonable way in which he moved the clause. I congratulate right hon. and hon. Members on both sides of the House on the ingenuity with which they managed to get the debate on the new clause which they wanted, although I hope that in the event it will not make the difference they might have thought.

I welcome, too, the fact that the debate has taken place, not least because it has enabled right hon. and hon. Members on both sides to put on record the case for the payment of child benefit as part of our social security system. The House will have been impressed by the contribution made by hon. Members on both sides who did not take part in the debates before the last election because they were not here—my hon. Friends the Members for Watford (Mr. Garel-Jones), for Chippenham (Mr. Needham) and for Abingdon (Mr. Benyon) and the hon. Member for Birkenhead (Mr. Field), whose remarkable speech when child benefit was debated in Committee I have read.

8.45 pm

I do not think I have heard a single argument from either side, with the possible exception of that of my hon. Friend the Member for Kensington (Sir B. Rhys Williams), whose antecedents are of immense respectability and some antiquity, which I have not at some stage adduced myself in support of child benefit The House has dealt kindly with me in the sense that few hon. Members on either side have felt it right to quote at length from my speeches. I have some quotations myself, I might say, from the right hon. Member for Salford, West (Mr. Orme) the right hon. Member or Norwich, North (Mr. Ennals), Mrs. Barbara Castle and others. I shall forswear the pleasure of quoting them, because the House has dealt gently with me.

I should like to put the figures on the record. I had the impression that the right hon. Member for Salford, West was not too clear about the cost of new clause 2. An increase of £1 in child benefit from £4 to £5 would cost £210 million in the next financial year, 1980–81, and £560 million in a full year. The figure of £5·20, which is the subject matter of new clause 9 and amendment (a), would cost £250 million in 1980–81 and £670 million in a full year. The figure of £6 to which the right hon. Gentleman displayed his closest attachment, in new clause 2, would cost £420 million in 1980–81 and £1,120 million in a full year. To complete the picture, I should perhaps give the cost of accepting new clause 5, to which my hon. Friend the Member for Kensington spoke The cost would be £650 million in 1980–81 and £1¾ billion in a full year. By any standards—

I am grateful for my right hon. Friend's courtesy in allowing me to take part in a debate that might not have taken place in quite this form. Will my right hon. Friend confirm the figures given to me by my hon. Friend the Under Secretary, when she estimated, in an answer hedged with sensible caveats, that there was a considerable saving in supplementary benefits to be netted from those figures? She estimated that for £1 of child benefit there would be a figure, in a full year, of £60 million to be netted.

If my hon. Friend gave those figures, that is the best estimate that we can make. I take my hon. Friend's point. One has to recognise, in relation to child benefit, that Governments of both parties have had to wrestle with the fact that, although we address ourselves, as many hon. Members have done, to the problems of families at the margin, poor families and families who earn their poverty, and although we talk in terms of the impact on incentives, child benefit is a universal benefit, as my hon. Friend for Abingdon stated. There is no soup kitchen about this matter. It goes to families right up the income scale. The hon. Member for Birkenhead first used the phrase "Families who earn their poverty" although I get the credit in the Financial Times this morning, wrongly, for having invented it.

Because child benefit goes to families right up the income scale, the cost, even after taking account of offseting savings on supplementary benefit, is a very substantial element. This is the situation that Governments of both parties have found themselves facing when they come to grapple with the problems of child benefit.

I wish to answer the point raised by the hon. Member for Thurrock (Dr. McDonald), which was raised also by my hon. Friend the Member for Kensington. Both argued that child benefit should eventually reach the level of supplementary benefits. With respect, I am not sure that that is the right approach. I do not think that there is any division between the two Front Benches on the matter. From its inception, child benefit has never been seen as anything more than a contribution towards the cost of bringing up children.

I am grateful for the assent. Mrs. Castle, when speaking in the debate on the Child Benefit Bill in 1975, said.

"It does not claim to cover the whole subsistence need of a child."—[Official Report, Standing Committee A, 24 June 1975; c. 161.]
I find it interesting that she was answering a question from my hon. Friend the Member for Kensington. I recognise that even the supplementary benefit figures do not succeed in meeting that need, though that is the objective in theory.

A point about procedure was raised by the right hon. Member for Norwich, North (Mr. Ennals), when he spoke about the difficulty in phasing in child benefits. That subject was touched on by my hon. Friend the Member for Somerset, North (Mr. Dean), when he said that child benefit should either be tied each year to the increase in social security benefits, or tied each year to the changes in the personal allowances for income tax. As I suggested in an intervention during the speech of the right hon. Member for Salford, West, there is an overwhelming argument for the former treatment as long as we maintain anything like the present machinery for payments of child benefit. The new rate of child benefit has to be announced months in advance of the day on which it will become effective because of the sheer mechanical problem of printing and distributing the child benefit books. Perhaps one day, with the full use of the micro-chip, it will be possible to uprate such a benefit as quickly as one can deal with tax tables and PAYE.

Surely my right hon. Friend means that the timing of the increase should be linked to social security benefits, rather than the increase itself being linked to social security benefits. If we are trying to close the gap between sickness benefit paid in respect of children and the child benefit for those at work, we should ensure that the increase in child benefit rises faster than the increases in social security benefits.

We are not discussing that problem. I was talking about timing. It is convenient to make an announcement at the time of the Budget, and for the uprating to take place at the same time as the increase in social security benefits. Provided there is an offsetting difference between the benefits, which we are bound to have for several years yet, that operation can be carried out once each year instead of twice.

I am sorry that I did not hear the first part of the Secretary of State's speech. Does he agree that there is every advantage, at the right time, in being able to index-link child benefit so that it does not require some new decision each year about its level compared with other benefit levels?

Interestingly enough, that is an argument that the right hon. Gentleman found himself resisting fairly substantially during the lifetime of the previous Parliament. I do not have the relevant quotation before me, but the matter was stated clearly by Mrs. Castle when debating the Child Benefit Bill, when she said that if everything was indexed it would make no difference to anybody. There is a general feeling that if we continue to index more and more and more, we shall end up in the same position as Brazil and Israel, with a 100 per cent. rate of inflation—[HON. MEMBERS: "Milton Friedman".] I do not think that Milton Friedman ever recommended that.

The decision on the amount of the up-rating of the child benefit should be considered at the same time as decisions on increases in personal tax allowances, on the rates of taxation and on the question of changes in indirect taxation. If the Government are considering increases in other social security benefits, all the logic points to the child benefit uprating being considered at the same time. Because the last increase was in April, and coincided with the final phasing out of the child tax allowance, the question was whether one had a seven-month gap or a one-year seven-month gap. We have had the argument over and over again about the Labour Party's proposal of 50p. There was no provision for that.

I said earlier that I had not changed my views and that I did not recant on anything that I said in the last Parliament. Child benefit is an essential element in achieving a proper relativity between families with children and those without. It is the best way of helping families—

We all accept the point that the Secretary of State is making, which is reaffirming what has been said in debate. We would be interested to know whether—without necessarily having any figures—it is the Government's policy this year to make good the value of child benefit in order to keep pace with inflation.

I shall come to that. Hon. Members have adduced all the arguments about incentives, the work syndrome and the poverty trap. The argument was also advanced about putting cash into the hands of mothers. I have advanced all these arguments myself and I do not recant a single word. But what could I be expected to say about the level of child benefit? Surely the whole logic of the argument of paying child benefit, together with the other social security benefits and tax allowances, is that the Government, the House and the country can judge whether the right decision has been made on any single element only if they can see it in the context of the whole. Of course we must have regard to the borrowing requirement and the impact on the economy generally. Of course we must have regard to the different impact of taxation, allowances and benefits on families of different compositions and with different incomes. Only when one sees all that together, can one form a judgment.

I understand and have sympathy with all the arguments put forward, and with the feeling that the amendments would help to pin the Government down on one element out of the entire spectrum of benefit. But just eight days before the Budget it would not make any sense at all if we adopted this course. It is not a matter of leaving the question entirely to my right hon. and learned Friend the Chancellor of the Exchequer. These issues have been thrashed out over many months between Ministers in the Cabinet. When my right hon. and learned Friend presents his Budget to the House, as he will do a week tomorrow, he will put forward his proposals on taxation, and the Government's main proposals on benefits including child benefit, pensions, benefits for the disabled, and others as well. It will be done in the context of the overall economic judgment, the size of the public sector borrowing requirement, and everything else. I have taken the most careful

Division No. 232]

AYES

[9.00 pm
Abse, LeoEastham, KenKilfedder, James A.
Adams, AllenEdwards, Robert (Wolv SE)Kilroy-Silk, Robert
Allaun, FrankEllis, Raymond (NE Derbyshire)Lambie, David
Alton, DavidEllis, Tom (Wrexham)Lamborn, Harry
Archer, Rt Hon PeterEnglish, MichaelLamond, James
Armstrong, Rt Hon ErnestEnnals, Rt Hon DavidLeadbitter, Ted
Ashley, Rt Hon JackEvans, Ioan (Aberdare)Leighton, Ronald
Ashton, JoeEvans, John (Newton)Lestor, Miss Joan (Eton & Slough)
Atkinson, Norman (H'gay, Tott'ham)Ewing, HarryLewis, Ron (Carlisle)
Bagier, Gordon A. T.Field, FrankLitherland, Robert
Barnett, Guy (Greenwich)Fitch, AlanLofthouse, Geoffrey
Barnett, Rt Hon Joel (Heywood)Flannery, MartinLyon, Alexander (York)
Benn, Rt Hon Anthony WedgwoodFletcher, L. R. (Ilkeston)Lyons, Edward (Bradford West)
Bennett, Andrew (Stockport N)Fletcher, Ted (Darlington)Mabon, Rt Hon Dr J. Dickson
Booth, R' Hon AlbertFoot, Rt Hon MichaelMcCartney, Hugh
Boothroyd, Miss BettyFord, BenMcCusker, H.
Bottomley, Rt Hon Arthur (M'brough)Forrester, JohnMcDonald, Dr Oonagh
Bottomley, Peter (Woolwich West)Foster, DerekMcElhone, Frank
Bray, Dr JeremyFoulkes, GeorgeMcGuire, Michael (Ince)
Brown, Hugh D. (Provan)Fraser, John (Lambeth, Norwood)McKay, Allen (Penistone)
Brown, Ronald W. (Hackney S)Freeson, Rt Hon ReginaldMcKelvey, William
Brown, Ron (Edinburgh, Leith)Freud, ClementMacKenzie, Rt Hon Gregor
Callaghan, Rt Hon J. (Cardiff SE)Garel-Jones, TristanMaclennan, Robert
Callaghan, Jim (Middleton & P)Garrett, John (Norwich S)McMillan, Tom (Glasgow, Central)
Campbell, IanGarrett, W. E. (Wallsend)McNally, Thomas
Campbell-Savours, DaleGeorge, BruceMcNamara, Kevin
Canavan, DennisGilbert, Rt Hon Dr JohnMcWilliam, John
Cant, R. B.Golding, JohnMagee, Bryan
Carter-Jones, LewisGourlay, HarryMarks, Kenneth
Cartwright, JohnGrant, George (Morpeth)Marshall, David (Gl'sgow,Shelties'n)
Clark, David (South Shields)Grant, John (Islington C)Marshall, Jim (Leicester South)
Cocks, Rt Hon Michael (Bristol S)Grimond, Rt Hon J.Martin, Michael (Gl'gow, Springb'rn)
Cohen, StanleyHamilton, W. W. (Central Fife)Mason, Rt Hon Roy
Coleman, DonaldHardy, PeterMaxton, John
Concannon, Rt Hon J. D.Harrison, Rt Hon WalterMaynard, Miss Joan
Conlan, BernardHart, Rt Hon Dame JudithMeacher, Michael
Cox, Tom (Wandsworth, Tooting)Hattersley, Rt Hon RoyMellish, Rt Hon Robert
Craigen, J. M. (Glasgow, Maryhill)Haynes, FrankMikardo, Ian
Crowther, J. S.Heffer, Eric S.Miller, Dr M. S. (East Kilbride)
Cryer, BobHogg, Norman (E Dunbartonshire)Mitchell, Austin (Grimsby)
Cunliffe, LawrenceHome Robertson, JohnMorris, Rt Hon Alfred (Wythenshawe)
Cunningham, George (Islington S)Homewood, WilliamMorris, Rt Hon Charles (Openshaw)
Cunningham, Dr John (Whitehaven)Hooley, FrankMorris, Rt Hon John (Aberavon)
Dalyell, TamHoram, JohnMorton, George
Davidson, ArthurHowell, Rt Hon Denis (B'ham, Sm H)Moyle, Rt Hon Roland
Davies, Rt Hon Denzil (Llanelli)Howells, GeraintNewens, Stanley
Davies, Ifor (Gower)Huckfield, LesOakes, Rt Hon Gordon
Davis, Clinton (Hackney Central)Hudson Davles, Gwilym EdnyfedOgden, Eric
Davis, Terry (B'rm'ham, Stechford)Hughes, Mark (Durham)O'Halloran, Michael
Deakins, EricHughes, Robert (Aberdeen North)O'Neill, Martin
Dean, Joseph (Leeds West)Hughes, Roy (Newport)Orme, Rt Hon Stanley
Dempsey, JamesJanner, Hon GrevilleOwen, Rt Hon Dr David
Dixon, DonaldJay, Rt Hon DouglasPalmer, Arthur
Dobson, FrankJohn, BrynmorPark, George
Dormand, JackJohnson, James (Hull West)Parker, John
Douglas, DickJohnson, Walter (Derby South)Parry, Robert
Douglas-Mann, BruceJohnston, Russell (Inverness)Pavitt, Laurie
Dubs, AlfredJones, Rt Hon Alec (Rhondda)Pendry, Tom
Duffy, A. E. P.Jones, Barry (East Flint)Penhaligon, David
Dunn, James A. (Liverpool, Kirkdale)Jones, Dan (Burnley)Powell, Raymond (Ogmore)
Dunnett, JackKaufman, Rt Hon GeraldPrice, Christopher (Lewisham West)
Eadie, AlexKerr, RussellPrescott, John

note of what has been said about the importance attached to child benefit. The House may be certain that these matters are—

It being Nine o'clock, Mr. DEPUTY SPEAKER proceeded, pursuant to the Order [25 February] and to the Resolution this day, to put forthwith the Question already proposed from the Chair.

Question put, That the clause be read a Second time:—

The House divided: Ayes 252, Noes 296.

Race, RegSmith, Cyril (Rochdale)Torney, Tom
Radice, GilesSmith, Rt Hon J. (North Lanarkshire)Varley, Rt Hon Eric G.
Rees, Rt Hon Merlyn (Leeds South)Snape, PeterWalker, Rt Hon Harold (Doncaster)
Rhys Williams, Sir BrandonSoley, CliveWatkins, David
Richardson, JoSpearing, NigelWeetch, Ken
Roberts, Albert (Normanton)Spriggs, LeslieWelsh, Michael
Roberts, Allan (Bootle)Squire, RobinWhite, Frank R. (Bury & Radcliffe)
Roberts, Ernest (Hackney Nortn)Stallard, A. W.White, James (Glasgow, Pollok)
Roberts, Gwilym (Cannock)Steel, Rt Hon DavidWhitlock, William
Robertson, GeorgeStewart, Rt Hon Donald (W Isles)Wigley, Dafydd
Robinson, Geoffrey (Coventry NW)Stoddart, DavidWilley, Rt Hon Frederick
Rooker, J. W.Stott, RogerWilliams, Rt Hon Alan (Swansea W)
Ross, Ernest (Dundee West)Strang, GavinWilliams, Sir Thomas (Warrington)
Ross, Stephen (Isle of Wight)Straw, JackWilson, Rt Hon Sir Harold (Huyton)
Rowlands,TedSummerskill, Hon Dr ShirleyWilson, William (Coventry SE)
Ryman, JohnTaylor, Mrs Ann (Bolton West)Winnick, David
Sandelson, NevilleThomas, Dafydd (Merioneth)Woodall, Alec
Sever, JohnThomas, Jeffrey (Abertillery)Wright, Sheila
Sheerman, BarryThomas, Mike (Newcastle East)Young, David (Bolton East)
Sheldon, Rt Hon Robert (A'ton-u-L)Thomas, Dr Roger (Carmarthen)
Shore, Rt Hon Peter (Step and Pop)Thorne, Stan (Preston South)TELLERS FOR THE AYES:
Silkin, Rt Hon John (Deptford)Tilley, JohnMr. Ted Graham and
Silkin, Rt Hon S. C. (Dulwich)Tinn, JamesMr. James Hamilton.
Silverman, Julius

NOES

Adley, RobertCostain, A.P.Heath, Rt Hon Edward
Aitken, JonathanCrouch, DavidHeddle, John
Alexander, RichardDean, Paul (North Somerset)Henderson, Barry
Amery, Rt Hon JullanDickens, GeoffreyHeseltine, Rt Hon Michael
Ancram, MichaelDorrell, StephenHiggins, Rt Hon Terence L.
Arnold, TomDouglas-Hamilton, Lord JamesHill, James
Aspinwall, Jackdu Cann, Rt Hon EdwardHogg, Hon Douglas (Grantham)
Atkins, Robert (Preston North)Dunn, Robert (Dartford)Hooson, Tom
Atkinson, David (B'mouth, East)Durant, TonyHordern, Peter
Baker, Kenneth (St. Marylebone)Dykes, HughHowe, Rt Hon Sir Geoffrey
Baker, Nicholas (North Dorset)Eden, Rt Hon Sir JohnHowell, Rt Hon David (Guildford)
Beaumont-Dark, AnthonyEdwards, Rt Hon N. (Pembroke)Howell, Ralph (North Norfolk)
Bell, Sir RonaldEggar, TimothyHunt, David (Wirral)
Bendall, VivianElliott, Sir WilliamHunt, John (Ravensbourne)
Benyon, Thomas (Abingdon)Emery, PeterHurd, Hon Douglas
Benyon, W. (Buckingham)Eyre, ReginaldIrving, Charles (Cheltenham)
Best, KeithFairbairn, NicholasJenkin, Rt Hon Patrick
Bevan, David GilroyFairgrieve, RussellJessel, Toby
Biffen, Rt Hon JohnFaith, Mrs SheilaJohnson Smith, Geoffrey
Biggs-Davison, JohnFarr, JohnJopling, Rt Hon Michael
Blackburn, JohnFell, AnthonyJoseph, Rt Hon Sir Keith
Blaker, PeterFenner, Mrs PeggyKaberry, Sir Donald
Body, RichardFinsberg, GeoffreyKellett-Bowman, Mrs Elaine
Bonsor, Sir NicholasFisher, Sir NigelKimball, Marcus
Boscawen, Hon RobertFletcher, Alexander (Edinburgh N)King, Rt Hon Tom
Bowden, AndrewFletcher-Cooke, CharlesKitson, Sir Timothy
Boyson, Dr RhodesFookes, Miss JanetKnight, Mrs Jill
Braine, Sir BernardForman, NigelKnox, David
Bright, GrahamFowler, Rt Hon NormanLamont, Norman
Brinton, TimFox, MarcusLang, Ian
Brittan, LeonFraser, Rt Hon H. (Stafford & St)Langford-Holt, Sir John
Brooke, Hon PeterFraser, Peter (South Angus)Latham, Michael
Brotherton, MichaelGalbraith, Hon T. G. D.Lawrence, Ivan
Brown, Michael (Brigg & Sc'thorpe)Gardiner, George (Reigate)Lawson, Nigel
Browne, John (Winchester)Gardner, Edward (South Fylde)Lennox-Boyd, Hon Mark
Bruce-Gardyne, JohnGilmour, Rt Hon Sir IanLester, Jim (Beeston)
Bryan, Sir PaulGlyn, Dr AlanLewis, Kenneth (Rutland)
Buchanan-Smith, Hon AlickGoodhart, PhilipLloyd, Ian (Havant & Waterloo)
Buck, AntonyGoodhew, VictorLloyd, Peter (Fareham)
Budgen, NickGoodlad, AlastairLuce, Richard
Bulmer, EsmondGorst, JohnLyell, Nicholas
Butcher, JohnGow, IanMcCrindle, Robert
Butler, Hon AdamGower, Sir RaymondMacfarlane, Neil
Cadbury, JocelynGrant, Anthony (Harrow C)MacGregor, John
Carlisle, John (Luton West)Gray, HamishMacKay, John (Argyll)
Carlisle, Kenneth (Lincoln)Greenway, HarryMcNair-Wilson, Michael (Newbury)
Carlisle, Rt Hon Mark (Runcorn)Grieve, PercyMcNair-Wilson, Patrick (New Forest)
Chalker, Mrs LyndaGriffiths, Eldon (Bury St Edmunds)McQuarrie, Albert
Channon, PaulGriffiths, Peter (Portsmouth N)Madel, David
Chapman, SydneyGrist, IanMajor, John
Churchill, W. S.Grylls, MichaelMarland, Paul
Clark, Hon Alan (Plymouth, Sutton)Gummer, John SelwynMarlow, Tony
Clark, Sir William (Croydon South)Hamilton, Hon Archie (Eps'm&Ew'll)Marshall, Michael (Arundel)
Clarke, Kenneth (Rushcliffe)Hamilton, Michael (Salisbury)Mates, Michael
Clegg, Sir WalterHannam, JohnMather, Carol
Colvin, MichaelHaselhurst, AlanMaude, Rt Hon Angus
Cope, JohnHavers, Rt Hon Sir MichaelMawby, Ray
Cormack, PatrickHawksley, WarrenMawhinney, Dr Brian
Corrie, JohnHayhoe, BarneyMaxwell-Hyslop, Robin

Mayhew, PatrickRathbone, TimTebbit, Norman
Mellor, DavidRees, Peter (Dover and Deal)Temple-Morris, Peter
Meyer, Sir AnthonyRees-Davies, W. R.Thatcher, Rt Hon Mrs Margaret
Miller, Hal (Bromsgrove & Redditch)Renton, TimThomas, Rt Hon Peter (Hendon S)
Mills, Iain (Meriden)Rhodes, James, RobertThompson, Donald
Mills, Peter (West Devon)Ridley, Hon NicholasThorne, Neil (Ilford South)
Mitchell, David (Basingstoke)Rifkind, MalcolmThornton, Malcolm
Moate, RogerRippon, Rt Hon GeoffreyTownend, John (Bridlington)
Monro, HectorRoberts, Michael (Cardiff NW)Townsend, Cyril D, (Bexleyheath)
Montgomery, FergusRoberts, Wyn (Conway)Trippier, David
Moore, JohnRossi, HughTrotter, Neville
Morris, Michael (Northampton, Sth)Rost, Petervan Straubenzee, W. R.
Morrison, Hon Charles (Devizes)Royle, Sir AnthonyVaughan, Dr Gerard
Morrison, Hon Peter (City of Chester)Sainsbury, Hon TimothyViggers, Peter
Mudd, DavidSt. John-Stevas, Rt Hon NormanWaddington, David
Murphy, ChristopherScott, NicholasWakeham, John
Myles, DavidShaw, Giles (Pudsey)Walker, Rt Hon Peter (Worcester)
Neale, GerrardShelton, William (Streatham)Walker, Bill (Perth & E Perthshire)
Nelson, AnthonyShepherd, Colin (Hereford)Walker-Smith, Rt Hon Sir Derek
Neubert, MichaelShepherd, Richard(Aldridge-Br'hills)Wall, Patrick
Newton, TonyShersby, MichaelWalters, Dennis
Normanton, TomSilvester, FredWard, John
Nott, Rt Hon JohnSkeet, T. H. H.Warren, Kenneth
Oppenheim, Rt Hon Mrs SallySmith, Dudley (War. and Leam'ton)Watson, John
Osborn, JohnSpeed, KeithWells, John (Maidstone)
Page, John (Harrow, West)Speller, TonyWells, Bowen (Hert'rd & Stev'nage)
Page, Rt Hon Sir R. GrahamSpence, JohnWheeler, John
Page, Richard (SW Hertfordshire)Spicer, Jim (West Dorset)Whitelaw, Rt Hon William
Parris, MatthewSpicer, Michael (S Worcestershire)Whitney, Raymond
Patten, Christopher (Bath)Sproat, IainWickenden, Keith
Patten, John (Oxford)Stainton, KeithWiggin, Jerry
Pawsey, JamesStanbrook, IvorWilkinson, John
Percival, Sir IanStanley, JohnWilliams, Delwyn (Montgomery)
Pink, R. BonnerSteen, AnthonyWinterton, Nicholas
Pollock, AlexanderStevens, MartinWolfson, Mark
Prentice, Rt Hon RegStewart, Ian (Hitchin)Young, Sir George (Acton)
Price, David (Eastleigh)Stewart, John (East Renfrewshire)Younger, Rt Hon George
Prior, Rt Hon JamesStokes, John
Proctor, K. HarveyStradling Thomas, J.TELLERS FOR THE NOES:
Pym, Rt Hon FrancisTapsell, PeterMr. Spencer le Marchant and
Ralson, TimothyTaylor, Robert (Croydon NW)Mr. Anthony Berry

Question accordingly negatived.

Clause 1

Amendments Relating To Up-Rating

I beg to move amendment No. 2, in page 1, line 13, after 'prices', insert:

'and to the increase in the general level of earnings over the whole period commencing on 17th November 1980'.

With this we may take the following amendments:

No. 3, in page 1, line 16, leave out from 'earnings;' to end of line 22.

No. 4, in page 2, line 10, leave out subsection (3) and insert—

'(3) In section 126(5) of the Social Security Act 1975 the words "12 months" shall be replaced with the words "6 months" and in section 125 (1) after "1975–1976 and" there shall be inserted the words "twice in" and after "tax year" there shall be inserted the words 'after 1980".'.

I shall confine my remarks to amendment No. 2. Other hon. Members will no doubt wish to speak to the other amendments.

On behalf of the Opposition, I should start by making it perfectly clear, as is indicated by amendment No. 1, that we still stand by our view that it is wrong to accept clause 1(1) of the Bill, which breaks the earnings link with pension increases that has operated since the Act of 1975.

9.15 pm

We argued long and hard against the policy contained in the Bill, both on Second Reading and in Committee. We stand by all the arguments that are on the record and our votes against the Government. I make that clear, because that is not what is immediately before us to night, and there should be no misunderstanding.

What is now before us is a proposal that stands on its own merits whatever divisions there may be between the two sides of the House on the clause. Indeed, I hope that we shall carry at least some Government Members with us on this matter, as we have the support of most people outside the House who are concerned with the policy and legislation relating to retirement pensions.

Whatever the divisions on clause 1, it is fair to say that the principle of an earnings-related pension is fundamentally accepted by the House and by people outside by virtue of the support that we had for carrying through the Social Security Pensions Act 1975, which ultimately established the proposition of full earnings-related pensions in future years. That Act will be phased in gradually. It does not directly benefit all State pensioners at present. It will gradually benefit them as the decade proceeds. I do not think that the new State scheme operating under the 1975 Act will have much effect until we approach the year 1990. There will be a gradual introduction of the benefits under that Act, but it will not be anywhere near fully operative until 1990. In other words, it will take a long time for the earnings-related system introduced by the Act to take effect.

If it is accepted that the earnings-related principle is the right one—and we must presume that it is, because we all support the operating of the 1975 Act, which is based upon that principle—how do we apply the principle now? How can we do so without having the so-called ratchet effect, which so concerns the Government and which led them—so we must accept, though we never understood the argument—to introduce clause 1? We never accepted the argument, because the so-called ratchet effect has never operated in practice, despite all the arguments of the Government. It has had no financial effect yet, and we argued in Committee and on Second Reading that it could not possibly have an effect until later this decade. Even then it would be gradual and would be overtaken in 1990 by the full operation of the 1975 Act.

However much that does not worry us, and others concerned about pensions outside the House, it concerns the Government. For the moment, therefore, it matters not that it does not worry us. What matters is the concern of the Government, combined with, we must assume, their acceptance of the principle of the earnings-related pension, which will operate under the 1975 Act.

If we could rid ourselves of the problem that worries the Government and looms so large in their mind and at the same time link pensions to the level of earnings, I should expect and hope that we could establish common ground between the parties in the House. The answer to that, as I sought to argue in Committee, is that it is possible to do it. The amendment shows the way. It offers a way of guaranteeing pensioners their share of rising living standards without the ratchet effect of the present uprating formula, if it were still operating, later this decade.

The effect of the amendment would be that pensions would normally rise in line with earnings over a period and not year by year. In any year when prices rose more than earnings pensions would be increased in line with prices. They would continue to rise in line with prices only until the 1980 relationship between earnings and pensions was restored. It will be recalled that in Committee we argued for a different dateline.

If the Government seriously intend pensioners to share in rising prosperity when it comes they cannot logically oppose the formula. It is the formula suggested in an article by Tony Lynes, which appeared in New Society on 17 May 1979 and which the Secretary of State has repeatedly quoted with approval. I stress that the amendment before us would ensure that pensions did not fall in real value by tying them to the price index, which is what the Government propose to do.

The amendment would require the Government, as and when the real value of average earnings rises above the 1980 level, to give pensioners a similar percentage increase provided that the ultimate relationship between 1980 levels, in real terms, is maintained. That is the objective. Over the next few years—I accept that there may be the odd year out, as occurred in 1979—no one expects annual earnings to rise higher than the present inflation rate. If that were not so the Government would not be expressing so much concern about the need for austerity and for holding back—in other words, suffering economic restraint to get back on a path of expansion at a later date. I am assuming that there is general acceptance that although there may be a fluke period from time to time, from now onwards, for the next two or three years, we may generally expect merely a holding, and possibly a lowering, of our standard of living. I put it no stronger than that.

If that is to be the position, the operation of the amendment, were it to be accepted, would not produce any of the dire effects that have caused the Government to be fearful of the proposition until now. It would not produce a situation in which pensions would outrun the general standard of living. Even on the basis of what we would say are the wrongly based fears that have been expressed about the operation of current legislation, the operation of the amendment would merely mean that over a run of time the relationship between pensions and the standard of living as at 1980 would be maintained.

In due time the new State pension scheme operating under the 1975 legislation will take over. By so doing it will be floating the bulk of pensioners off the supplementary benefit scheme. One of the benefits of accepting and operating the amendment is that ahead of that time there would gradually be a floating off of a greater number of State pensioners—certainly more than at present—from the supplementary benefit scheme. That would be good in itself for the pensioners as individuals. It is also in direct line, in certain respects, with the objective of the Bill.

We have been told that one of the ultimate objectives for which the Bill is a base is that as benefits can be improved beyond the no-cost basis of the Bill more and more recipients will be taken off supplementary benefit into the normal State social security system. The effect of the amendment would be to enhance that gradual movement for State pensioners.

The ratchet arguments cannot be used in this context. Hon. Members cannot argue that it will put a burden on public expenditure, at least at this stage. I accept that ultimately it might do that, but is will depend on the flow of the economy and the relationship between prices and incomes in the years ahead. The proposal will not produce the ratchet effect about which there have been complaints. It cannot be argued that it will impose a burden on public expenditure above that which can be carried at present.

The proposition can be accepted in principle. I have gone over the arguments that we had in Committee in my short introduction to the amendment. I cannot see that the Government can oppose the amendment on either of those grounds. There is a case for accepting the principle as it affects pensioners. I hope that the Government have reflected and that they now accept that which we thought they accepted in principle when they noted with approval the approach in the New Society article, which they have quoted at us. I hope that we shall have the Government's support.

The amendments fall into two parts. They propose to restore an element of linkage between pensions and earnings, which was removed by the Government in the Bill. They also propose to pay pensions on a six-monthly basis. At present unemployment and sickness benefits are linked to prices only. Pensions and other long-term benefits are linked to prices or earnings, whichever is more favourable. The Bill removes the earnings link for pensioners.

The Opposition's proposal does not quite gel with past experience. In November 1976, for example, the Labour Government increased pensions by 15 per cent. That was less than the increase in earnings, which was 19·4 per cent., and the increase in prices. That was done by changing the basis on which pensions were calculated. In doing that the Labour Party deprived pensioners of about £500 million in a full year.

In November 1978 the Labour Government gave a pension increase of 11·4 per cent., although earnings rose by 13·3 per cent. In March they proposed a pension increase of 12·8 per cent., when earnings were rising by about 15 per cent. On top of that, the right hon. Gentleman who was Secretary of State at the time admitted that the earnings link was not necessarily enforceable in a court of law. When he was tackled about the 1978 pension deficiency he said that there was a statutory obligation to take those figures into account and that he had done that. He said that those figures referred to earnings, but that there was no statutory obligation to get them right.

On the basis of that record it seems to me that the Opposition do not have a strong case or compelling reasons to show why we should retain the link with earnings, by which they chose not to put any great store.

9.30 pm

I do not wish to go into details in an intervention, but this canard was trotted out several times on Second Reading and was also discussed in Committee. If the hon. Member would do us the courtesy of reading the record more accurately and fully, he would not repeat that canard. It is not even relevant to the matter that we are now discussing.

It is relevant to the extent that it goes to the force of the Opposition's argument about whether we should take this set of amendments seriously.

I turn my attention primarily to amendment No. 4, with which I have great sympathy. Hon. Members on both sides of the House will know that one of the first things that I did on coming to this House was to table an early-day motion in somewhat similar terms to this amendment. That early-day motion urged the Government to give early consideration to paying pension increases twice a year. That is still my commitment and I believe, for reasons that I shall expand upon shortly, that we should uprate pensions every six months rather than every 12 months. I have made it clear that I take my stand this evening in support of the amendment as part of the commitment that I made to my constituents before and during the general election.

I believe, if my memory serves me right, that in my election address I said that I would work to try to achieve six-monthly pension increases. Because I believe that integrity is an important aspect of the life of a politician I am trying to give voice to that commitment this evening by supporting the amendment of the hon. Member for Stockport, North (Mr. Bennett).

I understand the problems facing the Government. To increase pensions every six months would increase administrative costs, and that is a particularly unattractive prospect at present. There would be two aspects of increased costs. One would be the administrative costs of increasing pensions every six months, and the second would be the cost to the Exchequer of the second half-yearly increase on the first half-yearly increase. In other words, if pensions were increased in line with prices after six months, the second six-monthly increase would be on the increase accorded over the first period.

That is not necessarily a large sum. If we assume that pensions are now paid at an annual figure of £8,000 million, with inflation running at 20 per cent. the increase in this aspect amounts to 1 per cent. of the total cost, or £80 million in a year. If inflation fell to 10 per cent., the increase in costs would be only ¼ per cent., or £20 million per year. The main obstacle to an increase of the kind that I advocate, which I expect the mover of the amendment had in mind, would be the increase in administrative costs.

We are entitled to ask my right hon. Friend the Minister what his Department is doing to reduce the administrative costs of pension payments. Could some other way be found to pay pensions which would reduce administrative costs? It should not be beyond the ingenuity of the Department to find a mechanism to reduce the cost, essentially, to zero. For example, would it be possible to print pension books that did not have a specified amount on them? The amount could be raised quickly and easily, without having to reprint books every time an increase was announced. There are a number of ways to solve the problem. In a previous debate my right hon. Friend mentioned the problem in relation to child benefits. What are the Government doing to reduce the administrative cost to zero and remove this stumbling block to the pensions increase proposal?

That is a Government problem. On the other hand, they must understand the strength of feeling in the country about the payment of pensions and the role of pensioners in our society. First, there are economic pressures on old people, many of whom are solely dependent upon the State pension. Those pressures are becoming stronger in the face of rapidly rising energy prices. Old people face an insecure future. They experience a difficult change in their circumstances when they leave work. Many of them have little to look forward to in their declining years. Some of them simply sit at home waiting to die.

In that situation, there is no question but that the pressures in their minds lead them to make extravagant overstatements of the difficulties and the economic pressures upon them. The Government must be aware—as are hon. Members with active pensioners' federations in their constituencies—of the pressures that old people face. Some pensioners are old enough to remember a time when economic pressures, without the benefit of State aid, were intolerable and scarred them for the rest of their lives.

There is the argument that pensioners contributed to the welfare of this country over many years. If the country does not owe people something when they retire, at least it has a responsibility to ensure that they are not unduly burdened. We ask not that the Department should treat them extravagantly but that it should treat them perhaps slightly more kindly than is the case at the moment.

Next, and perhaps most vexatious of all, there is the time-lag argument. It is a source of considerable aggravation to pensioners that an award is announced in April but is not paid until November, and that in many cases a considerable part of the increased value of that award is eroded before they get their hands on it. Of all the arguments in favour of increasing pensions on a six-monthly basis, this is unquestionably the strongest. It is certainly the factor that most annoys, upsets and irritates the pensioners in my constituency, and I have great sympathy for their argument.

Again, I think that we are entitled to ask the Minister what his Department is doing to try to reduce this time-lag. It is an argument that is constantly advanced as a reason for not doing anything, but equally there is no concomitant commitment to try to do something to reduce that time-lag. So I hope that when the Minister winds up the debate he will make it clear what steps his Department is taking, or planning to take, to tackle this problem.

I wish that I could have spoken after the hon. Member for Stockport, North (Mr. Bennett) introduced his amendment. If I understand the amendment correctly, it seems to me that he is saying that the Government should look every six months at the increase in prices and pay a pension increase every six months in line with the rise in prices. If that is the essence of his amendment, I find myself in support of it—support which is not recently generated, but which I have maintained.

As I have pointed out, if the Government could find a device to remove the administrative cost of such an uprating, the actual cost to the Exchequer of the uprating itself would vary from £20 million to, perhaps, £50 million in a year. Bearing in mind all the arguments which the Government will advance about reducing and containing public expenditure—with all of which I agree, and to all of which I, together with my hon. and right hon. Friends, am committed; on which I campaigned and from which I do not deviate—it seems to me that within the pension budget of the DHSS it ought to be possible to find this small amount of money in order to enact something that would have considerable effect in the country.

The benefit that would accrue from this move would be out of all proportion to the cost to the Government. It would be a reassurance. It would be, as it were, a vote of confidence in the people who have devoted their lives to the benefit of this country, and it would reaffirm for the minority—and we acknowledge, as was acknowledged in the last debate, that there is a minority—who have a suspicion that our party does not care—a suspicion which I reject but which is felt by a number of people—that we do indeed care. It would be an earnest of the commitment of this Government to try to protect those who, in many cases, are least able to help themselves.

From what I have said it will be clear to right hon. and hon. Members that I shall not have any difficulty in supporting the Government on amendments 2 and 3, but I have to say quite honestly that, because of the commitment that I have made to my constituents, I shall have to listen very carefully indeed to the reply which the Minister gives before I can make any similar commitment on amendment 4.

9.45 pm

There were certain aspects of what the hon. Member for Peterborough (Dr. Mawhinney) said that I would tend to agree with. When he spoke about the plight of the elderly he was echoing the feelings of those of us on the Opposition Benches. One of the most unfortunate actions of the Government has been the decision which has been rightly very much criticised outside the House as well as by the Labour Party to discontinue the practice of increasing pensions in line with price increases or earnings, whichever happens to be the greater. I must say straight away that the decision which the Government have taken has undoubtedly meant an attack on the living standards of the poor and elderly in our community.

I do not wish to be personal, but the people who are responsible for making those decisions do not live the sort of life that many elderly people live, neither are they likely to suffer the same hardships when they, the policy-makers, retire.

A feeling has grown up recently that the position of retired people has improved substantially. That view is somewhat exaggerated. I believe that the standard of living of the elderly has improved, mainly as the result of the previous Government's actions, but it started from a very poor base.

Many of the elderly in our community have to rely solely on the State pension and supplementary benefit. Members of Parliament do not lead isolated lives. We go to our constituencies and speak to elderly people. We know what it means, in face of present-day prices and other pressures, to keep up a decent standard of living with only the State retirement pension and supplementary benefit to live on. It is a tremendous ordeal for many of our elderly citizens to try to make ends meet, and they suffer great hardship in trying to live on a small income.

Recently I raised the question of fuel prices and the need to ensure that people on low incomes receive assistance with their fuel bills. I have received a number of letters, some from my constituents and some from other parts of the country, explaining what a great hardship it is for pensioners to meet their fuel bills.

One of my party's main concerns is to ensure that when people retire they are able to have a fair standard of living. We must end the present position whereby when people with no private income retire they automatically suffer a substantial reduction in their standard of living and many have to endure poverty. Retirement should not mean hardship, poverty and not knowing from day to day how to make ends meet. That is what we are trying to get away from.

It is unfortunate, to put it mildly, that, whereas the Labour Government, by increasing the retirement pension in line with the increase in prices or earnings, whichever was the greater, at least ensured that the standard of living of pensioners improved, the Conservative Government have reversed that policy. There are many actions of the Government which I deplore, but to hit out at the people in our community who have to live on such a small income after working for years is shameful and degrading. That is why the attempts that are being made by our amendment to put the matter right should be supported.

If the hon. Gentleman so much deplores the actions of the Government, will he not deplore the Labour Government's action in 1975 and 1976 in withdrawing the Christmas bonus?

No doubt one could deplore that. As a critic of certain aspects of the Labour Government's policies, I nevertheless believe that their record on pensions is a good record which was appreciated by many retired people, not all of them Labour voters. There can be no doubt that pensioners, faced with the latest decision of the Government, will adopt the same attitude as the Opposition. That is understandable. The action of the Government means that their standard of living will be reduced.

Perhaps the Minister can give some indication of an announcement of help for pensioners in paying their fuel bills. Action is needed following the substantial increase in gas prices and the fact that the price of electricity is to rise by a substantial amount. Hon. Members were told a few weeks ago that there was to be an announcement. It is about time that the House and the country were told what action is to be taken to provide assistance for many people on low incomes in meeting their fuel bills.

If the Labour movement—I cannot speak for the Government side of the House—wishes to ensure that the elderly get a fair deal and that those who retire do not become isolated from the rest of the community, there needs to be the closest connection between the trade union movement and the retired. When someone retires, there is sympathy and understanding. But these people are not always looked upon as part of the general working population. They have retired from the working community.

I have always held the view that retired people should be active in organisations in their locality. They should certainly have a strong pensioners association. That association should also be strong nationally. I hope that the day comes when the TUC will be flexible enough to say that, although people have retired, they can remain affiliated, as an organisation of pensioners, to the TUC. If retired people are to get a fair deal, the Labour movement has to ensure that the retired and elderly and those living on limited incomes are not isolated but are seen as part of the general community. I believe that, when there is a Labour Government again, we can put right what the present Government are now doing for they are harming people who can least afford to be harmed.

The right hon. Member for Brent, East (Mr. Freeson) described the amendment as modest and added that he did not expect that it would have any ratchet effect. I found difficulty in following his argument. There were many questions that the right hon. Gentleman left begging in introducing the amendment. The main argument against what he seeks to achieve is that a statutory link with earnings has a pretty unhappy history. There have been endless arguments about the precise definition. There have been different interpretations in different years.

We on the Government side feel that one can demonstrate, clearly, by the record of the previous Government, that they failed in most years to achieve the statutory objective laid down. When one gets into a situation in which pensioners feel so aggrieved and so cheated of their statutory rights that they have to haul the Government before the courts, it suggests that there is something unsound and unsatisfactory about the position. Looking at the history of this so-called statutory link, I do not regret that the present Government have decided to move away from it. It seems to me a more secure and better understood base of security for pen- sioners to be given a guarantee that their pensions will be linked with prices rather than any other more artificial criteria.

It seems to me that the Government are on sound ground. This does not mean that in setting a modest, well-understood objective they will not do better in practice. We hope that if the economy improves it will be possible for the wealth of the community to increase and for pensioners and other beneficiaries to share in that increase. That is the aim of the Government. That is what previous Conservative Governments were able to achieve in practice when the link, as hitherto, was to prices rather than to earnings.

Does the hon. Gentleman agree that a month or two ago the Government refused to make good the shortfall in their forecasting? Earnings rose higher than prices last year by a significant amount, which was against all the forecasts upon which the pension increase was based. The pensioners lost out by £195 million.

That is precisely my point. I said, in criticism of the right hon. Gentleman's earlier speech, that the present basis for pension increases was unsound. It is difficult to understand. Pensioners thought that they had been mislead and cheated by the previous Administration.

It is far better to link the pensions to prices, and to do better than that if possible—as was the case in many instances under a previous Conservative Administration.

I shall not give way, because many other hon. Members wish to speak. I have to take into account the fact that we are debating on a timetable.

I turn to another important issue, namely, the need to retain flexibility within our pension arrangements. We know that the number of pensioners in our community will grow over the years to come for as far ahead as we can foresee. That must be taken into account. The proportion of the elderly in the community will grow in relation to those who are of working age.

We find that the growth of the economy is not keeping pace with additional burdens. We must think more carefully about the priorities within our social security arrangements. We must try to maintain as much flexibility as possible. I regret that we have not been able to do more for the very old. There is a strong case for saying that as pensioners become older, frailer, and less able to cope with the household chores—it becames increasingly difficult for a man to paint the outside or the inside of his house—the business of living becomes more costly. There is the additional factor that clothing wears out.

In recent years we have not given sufficient priority to the frail elderly. Their numbers will increase substantially over the coming years. If we set ourselves too high a target for pensioners as a whole, the arrangements will not be sufficiently sensitive to deal with the especially vulnerable groups among those over pension age.

There is the fuel allowance. Many people have well justified fears about their fuel bills, and it is one of the problems that the elderly dread most. If we are to have a reconstructed fuel scheme, covering all types of fuel, without the disadvantages of the old scheme, more resources will need to be made available.

10 pm

I turn to the question of the Christmas bonus. I had something to do with the introduction of that bonus and I am glad that the Government have reintroduced it. However, we must accept the fact that it is extremely expensive—it cost more than £100 million. In order to restore its real value, that £10 bonus would now need to be about £20.

Within the pension arrangements I want some manoeuvering room for the Christmas bonus. That lump sum at Christmas does enormous practical good for the people concerned. The fact that an elderly person can allocate some of this money to buying Christmas cards or gifts for grandchildren is most important to that person. We should not underestimate the enormous psychological effect of the bonus.

If we want to maintain flexibility within the arrangements, we must not set ourselves too ambiguous targets for pen- sioners as a whole, otherwise we cannot be sufficiently sensitive to the varying needs within the pensioner group.

Is the hon. Member not aware that the only reason why the Christmas bonus is necessary is that we do not give our pensioners a decent amount each week? If we raised the pension to a decent level we would not need to give a Christmas hand-out. Anyone who advocates a Christmas bonus is merely emphasising the fact that the present level of pensions is inadequate.

The hon. Member is being wholly unrealistic. With the resources available it is not possible to raise the substantial proportion of pensioners above supplementary benefit level. If the money were available, who would benefit from it? The beneficiaries would be those who are already above supplementary benefit level.

We must maintain the most flexible mechanism, and above all that means maintaining the reconstructed supplementary benefit scheme. We will find that money for the special needs allowances within the supplementary benefit scheme will be required as well.

My hon. Friend the Member for Peterborough (Dr. Mawhinney) raised the question of increases in pensions twice a year rather than once a year. I have been attracted to that proposition as well, particularly in these days of heavy inflation. But I wonder whether the real problem here is not presentational. We hope that an increase in pensions will be announced in the Budget next Wednesday. Then probably months will elapse before the increase actually comes into operation. Understandably, people will say that the increase should either be backdated, as wage increases are if the negotiations take some time, or that there should be clear evidence that the cost of living between the date of the announcement and the date of operation is taken into account.

Rather than have an increase twice a year, I would prefer to see the increase announced in the Budget backdated to Budget day. The presentational effect would be considerable, and it would mean an increased cost in the first year while we were moving into the system. Perhaps the presentational problem might be best dealt with in that way.

In the long run, this amendment will not be satisfactory for pensioners. It will not give the firm, clear criterion on which they can calcuate, and it is likely to inhibit any Government in introducing the sensitivity and flexible arrangements that are required to meet the many different needs and circumstances of a large number of pensioners. For those reasons I hope that the House will not accept the amendment. If the Opposition persist with it, I shall vote against it.

If this group of amendments is not enforced, I am convinced that we shall all have been betrayed. The amendments are directed to clause 1, which would, if unamended, break solemn and binding pledges that were made to the electorate by the Prime Minister during the general election campaign under the full glare of national television publicity. In context, the Government said, in effect, that whatever else happened the standards of living of pensioners would not be eroded in any way, shape or form.

We all have a vested interest, because we are all embryo pensioners. Some people will try to opt out of responsibility by saying that they should not be expected to contribute in areas where they cannot expect to become beneficiaries—for instance, in the area of child benefit. In spite of the fact that today's children are tomorrow's wealth producers, there are still a few childless couples and others who will argue that they should not be expected to keep other people's kids.

We all aspire to become pensioners one day. Even young people in the first flush of youth who may maintain that they do not wish to become old and decrepit invariably change their minds when, at the age of 65, they face the stark reality of the choice of either public benefit or public borrowing. There is no choice. They prefer to be pensioners. We are all involved, and I am convinced that we are all under attack.

The standards of pensioners have been attacked on many fronts. Clause 1 of the Bill would remove from pensioners the right to share in the future growth of the economy—whenever a future Labour Administration return to power and make that possible. If this clause is enacted it will preclude for ever any improvement in real terms in the standard of living of those people who have given a lifetime of service to the nation.

When the previous Labour Government introduced a wages link for pensions they did so not only in order to recognise the rights of pensioners to partake in prosperity they were urged on by the altruistic eloquence of Ministers in this Administration. The previous Opposi- tion paid lip service and brought pressure to bear to bring about improvement, not only on pensions but right across the spectrum of benefits. However, their eloquent altruism in opposition is matched only by their persistent parsimony in office.

Pensioners are also being attacked in respect of prices. A closer look at clause 1 reveals that there is an implied ambiguity with regard to the measuring of price increases. Price increases have traditionally been measured by the retail price index. The Government have created a new index. Inflation has been reduced from 20 per cent. in real terms to 16 per cent. in paper terms. Tax relief has been discounted. Hon. Members will note that tax relief applies mainly to those in the upper income brackets.

The Bill empowers the Secretary of State to use the new index or any other index. The new Government index will take account of income tax reductions. However, pensioners are generally so impoverished that they do not pay any income tax. The Secretary of State is therefore saying RIP to the RPI. He can introduce something that is indefinable, unquantifiable and a pig in a poke. Indeed, it will be worse than that. The alternative index can be weighted to the detriment of pensioners, because they do not usually pay income tax. The amount that we contribute towards pensions through our national insurance payments is related to earnings. Pensions should also be related to earnings. Of course, that will be denied.

In the 10 short months since the Government were elected, pensioners have been attacked by massive increases in VAT. Most pensioners have received no benefit from the reductions in income tax. They have been subject to increases in the cost of all fuels. Most of those increases were Government-induced. That cannot be denied. Prescription charges and bus charges have increased. Predominantly geriatric hospitals in my area, such as Ashgate hospital, in Chesterfield, have been closed. Rents have also increased. It has been forecast that the Budget will bring about swingeing increases in the tax levied on drink and tobacco. All those increases have been carried out in the name of reducing expenditure.

In the darkest days of the immediate post-war period we did not treat our pensioners in such a way. The nation was then in dire straits. However, the pensioners' tea and tobacco allowance was sacrosanct and tax-free. We are now awash with North Sea oil. Nevertheless, the Government have selected the helpless and elderly people of Britain for this punitive attack. They are prepared to renege on their pre-election pledges.

The Bill has not yet been enacted. The law now indicates that the pensioner and his wife should receive an extra £26 a year as a result of the shortfall between prices and incomes. That shortfall has existed since last November. Hon. Members often mention the £10 Christmas bonus. However, that pales into insignificance when compared with the £26 that has, been filched from pensioners. That money should form an intrinsic part of all pensions. The Government have welshed on their moral obligations. If we endorse these amendments we shall reject the false prospectus on which the Government were elected. We shall regain some credibility and respect for this House. I therefore ask hon. Members to endorse these amendments.

10.15 pm

I apologise to the right hon. Member for Brent, East (Mr. Freeson), who is not in his place, for not having been present for most of his opening comments.

As the House knows, I voted against the Second Reading of the Bill, and I intend to vote for the amendment.

It is eight years since I became joint chairman of the all-party parliamentary group for pensioners, a position that I hold with great pride. In my early days in that position my co-joint chairman was Mr. Arthur Latham, the former hon. Member for Paddington, who was not reelected at the last election.

Earlier this evening the hon. Member for Ormskirk (Mr. Kilroy-Silk), who I am glad to see has just entered the Chamber, made some general comments about me and about the way that we have debated the Bill. He expressed regret that these debates were not more vicious, angry or nasty.

One of many reasons why I am deeply proud to be an hon. Member of this House is that although there may be differences between hon. Members, we conduct our proceedings in a civilised and reasonable manner. There were many political issues on which Mr. Arthur Latham and I could not agree during our joint chairmanship, but we worked in our own way for the interests of pensioners. We put our disagreements to one side and did not allow an unpleasant, personalised or vicious attitude to enter our relations.

Any hon. Member who preaches such attitudes in a democratically elected House of Commons does no service to democracy or to our party political system. If that is what the hon. Member for Ormskirk meant, he has shamed this House. If I have misinterpreted him, he will no doubt explain that to the House in due time.

The hon. Gentleman obviously does not mean what he is saying, because of the attractive and wholesome smile that adorned his face when he joined us in the Lobby earlier. The hon. Gentleman is making far too much of this.

The earlier debate was civilised, polite, affable and amicable, and I decry none of that. However, one element was lacking—justifiable anger and discontent with successive Governments of both parties for not having raised the death and maternity grants in 1967 and 1969 respectively. It is extraordinary that the House can debate that disgrace and scandal in an almost academic, supine manner. I am sure that the hon. Gentleman wishes the House properly to represent the deeply held views of hon. Members and their constituents.

The House is grateful for that explanation. However, I emphasise that a great hallmark of our democracy, which has taken many years to develop, is that we can show the world that however strong our feelings or deep our emotions we still behave in a civilised manner. There is no need to have false anger to personalise debates in order to make them effective. A calm, sensible debate, where reasonable views are exchanged among all hon. Members, is one of our greatest blessings. Those who seek to destroy them only play into the hands of our enemies.

I turn to the essence of the amendment—the link between prices and earnings and its application to pensions. It would be wrong to break that link, but that, in effect, is what clause 1 will do. I shall tell the House why I hold this view.

Let us first examine the retail price index. My right hon. Friend the Secretary of State for Social Services has made it clear that the Government's pledge will be at least to maintain the value of the pension in relation to the RPI. The Government hope to do everything possible—I have no doubt that they will—to do more than that. But what worries me is that the RPI, upon which immediate increases may well be based, does not truly reflect the increase in prices and living costs of pensioners. Our pensioners spend disproportionately more of their incomes on three major items—housing, food and heating. They spend a much higher proportion of their incomes on these three items than do the vast majority of people who are in full-time employment.

Inevitably, housing costs rise. Food has always tended to be well in front of the RPI figures. Invariably pensioners have to buy in small quantities, often do not have the advantage of the freezers or refrigerators that are available to a high percentage of our population, and cannot stock up with food when it is cheap as a balance against times when it is expensive. So they lose out in that area.

Inevitably heating and fuel costs will rise substantially over the next 12 months. There have been various heating schemes. The electricity discount scheme of the previous Government was far from satisfactory. It did not help those who used gas, paraffin and solid fuels. To the average pensioner, the scheme meant less than £8 in total. I must also say that the present scheme of my Government is far from satisfactory, but at least it concentrates a real degree of assistance upon a section of our elderly who need it—namely, those over 75 and in receipt of supplementary pensions—to the tune of £50 a year, which is not an insignificant sum.

However, in the light of the increases that will come over the next 12 months, I urge my right hon. Friend to ensure that the Government prepare and present to the House an effective heating discount scheme that covers just not electricity but all fuels, and helps not only those over 75 on supplementary pensions but all pensioners.

I am unhappy that it is now the Government's intention to make it their minimum obligation to increase pensions only in line with the RPI, because that index does not reflect the true cost of rising prices to the vast majority of pensioners.

In recent years when the previous Labour Government were in office, the link that some Labour Members tried to pretend was sacrosanct and must not and could not be broken was broken. It was broken not once but twice. It was on the way to being broken a third time. There is no doubt that it would have been broken a third time if the nation had made the tragic mistake of returning the Labour Party to power.

I am following the hon. Gentleman's argument closely. He is courageous in the way in which he deals with the Government and we are prepared to accept criticisms of the previous Labour Government. However, he knows that it is not correct to suggest that the previous Government did not meet the shortfall when the forecast was wrong. He knows that because of the link with earnings pensions were increased 20 per cent. above the rate of inflation during the five years of the Labour Government.

I am amazed that the right hon. Gentleman intervened. He will recall that he did precisely the same thing on Second Reading. He will also recall that I quoted to him, chapter and verse, the precise and exact increases of prices and earnings on two occasions during the administration of the Labour Government when the link was broken. He did not challenge my figures. I do not believe that he is attempting to challenge them now. I invite him to get a copy of my speech on Second Reading.

I shall try to keep going long enough to enable the right hon. Gentleman to read it again. If he wishes to return to the Chamber to challenge the specific figures that I gave the House on Second Reading, I shall be only too pleased to allow him to intervene again.

I do not think that my right hon. Friend the Member for Salford, West (Mr. Orme) need consult Hansard. The previous Labour Government did not break the commitment over matching pensions with prices, whichever was the greater. In fact, they fudged it. As a result of the court case in which some of us had a hand, it was impossible to fudge it any more. That is why clause 1 appears in the Bill. There is no more room to manoeuvre within the formula. That formula was strangling the Government. Instead of meeting the commitment they are trying to cut loose. To his credit, the hon. Gentleman is trying to prevent them from so doing. However, I think that he undermines his contribution by trying to make party points based on my right hon. Friend's contribution while in government.

I have great respect for the hon. Gentleman's work in social services and pensions. However, he is not credible when he says that the previous Government did not break the link but fudged it. What he means is that they fiddled it. They produced a set of figures to suit themselves at that time. If the House is to be honest with itself, and if the Labour Party is to be honest with itself, as I have tried to be in this debate, let Labour Members say frankly and bluntly that they were unable to meet the obligations embodied in the 1975 Act.

Although I disagree with the position that has been taken by my right hon. Friend the Secretary of State for Social Services—

Although I disagree with that position, it is a totally honest one. My right hon. Friend is saying "We cannot take any further obligation than to increase pensions in line with prices, but we shall do our utmost to try to do more in future." I do not find credible the statement made by the hon. Member for Birkenhead (Mr. Field), any more than I find credible the statements of those who said that the 1975 Act was not enforceable in law and that it should be changed. My argument is that we should enact a measure that is enforceable. That is part of the responsibility of the House. Although I disagree with my right hon. and hon. Friends on the Government Front Bench, at least they have taken an honest position, although I believe it to be a rotten one.

10.30 pm

I turn to a comment made by my hon. Friend the Member for Peterborough (Dr. Mawhinney). He said that the country did not owe pensioners certain obligations and he went on to develop his speech in that context. I believe that this country does owe our pensioners something specific and clear. All of us who have been in this House for any length of time have a responsibility to the pensioners, because we have destroyed their savings. The pensioners of this country, many of them having been through two world wars and all of them through one world war, are owed something for that loss of savings. Do we not have a responsibility to them in the light of their service and their hard work? Should not their savings maintain their value and should not their living standards be protected in future?

I would point out to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) that he is, perhaps, making more of my choice of the word "owe" than is justified. It seems to me that he and I are in entire agreement. I was trying to propound the idea that we have a responsibility to pensioners and that it was that responsibility that I wish to see demonstrated by the twice-yearly increase.

I am most grateful to my hon. Friend for that clarification, because it leads me to my next point.

I support my hon. Friend in his view that when inflation reaches 10 per cent. there is a real obligation upon the Government to review pensions on a twice-yearly basis. The last Government failed to do that and the present Government have not yet given any indication that they are prepared to do it. I hope that they will reconsider this carefully, because there is deep resentment among millions of pensioners who realise, when they receive their pension increase in November each year, that that increase has been largely whittled away and destroyed by inflation. I hope that we can find a way of increasing pensions on a much fairer basis than any Government have been able to do in the past.

I shall vote for amendment No. 2 not because I have faith in the policies of the Labour Party—the contrary is the case—but because I believe that this House has not provided the elderly with the pensions that they deserve. I believe that it is our duty to do everything in our power to protect their savings and their standards.

I rise primarily to speak to amendment No. 4. I had waited to speak to that amendment because I had hoped that the main debate would have taken place on amendments Nos. 2 and 3, which seemed to me to deal with the more important issues. I had intended to spend some time on amendment No. 4 at the end of that debate. I realise that some difficulty has also been caused to Conservative Members who had proposed to address their remarks to amendment No. 4.

I begin, however, by speaking to amendment No. 2. It seems to me that the question that the House must ask itself in discussing pensions is whether pensions are adequate. It is clear, bearing in mind the number of people whose pensions have to be supplemented by benefit to afford them even a minimum standard, that pensions are not adequate. If they are not adequate our first task should be to get them raised to an adequate level.

I know that in the long term the earnings-related provisions will eventually bring pensions up to the desired level, but if in the meantime pensioners benefitted by having their pensions increased by whichever went up most, earnings or prices, we would not be pushing pensions up to an extravagant level. They would still be below a minimum acceptable level for another five years. It is indefensible to say that we cannot afford to allow pensioners the benefit of the two forms of indexing and that we must take one of them away.

Amendment No. 2, in an unsatisfactory manner, aims to maintain some linkage with earnings. We debated that issue at length in Committee and we are limited in the amendments that we can table at this stage. At least the amendment has the merit of trying to maintain the double linkage. The main argument against the linkage is that it has a ratchet effect. Nobody has been able to prove that pensions would rise too quickly. The odds are that in the next two or three years the linkage with earnings will have no effect, because of the rate at which prices are rising. If the Government manage to contain inflation most of the problems will be overcome and the country should have no difficulty in paying the pensioners the little extra involved in the linkage with earnings. It is amazing that the Government want to get rid of the linkage.

Perhaps the Government are waging an attack on the whole question of linkage. Perhaps they are not de-indexing pensions alone. Perhaps they want to cut back on all benefits. Many leading articles suggest that the indexing of benefits is dangerous. We should understand that indexing ensures only that those involved remain relatively the same as everybody else. We do not suggest that they should do better than anybody else but that they do as well as others.

De-indexation means that those involved have to make a special sacrifice, which amounts to a greater sacrifice than that made by everybody else. That is totally indefensible. By retaining indexation we shall say to those on supplementary benefit and pensions that they should benefit—or not benefit—to the same extent as everybody else and that they should not be asked to make a special sacrifice.

One could argue that such people should not be asked to make a sacrifice and that there is a minimum standard below which we cannot ask people to fall. A famous cartoon of the 1930s shows a ladder rising out of the water. People are standing on each rung. The man at the top is saying "One step down". That means that each man's view is a little worse. Those near the bottom will probably get their feet wet, but the man at the bottom of the ladder sinks below the water. By asking for equality of sacrifice one must assume that everybody has something to sacrifice, but many pensioners have such a low standard of living that it is unreasonable to ask them to make any sacrifice. Some people are so poor that even when the country has to tighten its belt they should not be asked to make a sacrifice.

The amendment does not go that far. All that we say is that there should be an equality of sacrifice. Those who argue against indexing are saying that they want those people on benefits to be relatively worse off. There is no justification for saying that people on pensions should be worse off and make more sacrifices than the rest of the population. I hope that Conservative Members other than the hon. Member for Brighton, Kemptown (Mr. Bowden) will have the courage to vote against the Government and in favour of the amendment.

Amendment No. 4 deals with the way in which pensioners are paid. It will not cost the Government anything. I do not claim that twice-yearly upratings will result in making more money available to pensioners. I am basically concerned about the injustice suffered by pensioners. They must wait six months for their up-ratings, yet everyone else receives his increases much quicker. Pensioners must meet extra costs. They cannot delay for six months. I should like more money to be made available, but a change from one annual uprating to two does not automatically increase costs.

Does the hon. Gentleman agree with my figures? He says that there would be no increase in cost. There is a small increased cost in the second half of the year over the first half-year's increase. I put this at £20 million with inflation at 10 per cent. and at £80 million when it is 20 per cent. Does the hon. Gentlemen accept those figures, even though they are small?

I do not accept those figures. The argument that there should be twice-yearly upratings does not imply that more money should be made available. There should be more money. However, there can still be two upratings and the money can be shared in such a way that there is no additional cost, unless we are going to argue about administrative costs.

In arguing this amendment I do not want to argue about costs. There should be much more frequent upratings. Obviously the costs depend on the first and second increases. There is a strong argument for spending more money, but that is not essential to this amendment.

The Government studied the ways in which they could save on administrative costs. It is amazing that the Rayner inquiry examined the way in which pensions were paid out through the post offices and considered the possibility of making small savings, which would have done a great deal of damage to the service provided to pensioners. It did not seem to spend much time considering the rest of the bureaucracy involved in the paying out of pensions. It would have been much more useful for it to consider the way in which pensions books were organised than the post office end. It caused a great deal of anxiety and worry to pensioners and offered little improvement to the service.

Let us consider what happens at the moment. There is an announcement in the Budget of what will be paid out in November. People wait for six months until they get their money. Most people have spent it several times over and have begun to think that the sum is greater than it is. When they receive the uprating most of them are pretty disappointed. Some of them do not live to see the uprating. This is what upsets them most. Just as it is announced in the Budget that pensioners will receive an uprating in November, through the door comes a demand from the town hall for increased rates. It is likely that pensioners' rents will go up. They also receive increased water rates demands.

None of the authorities says that it will put up the rates in six months' time, it puts them up immediately. That causes pensioners a great deal of upset. In addition, if pensioners receive supplementary benefit for rates or rent they are told to wait for some months for that to increase. They may even have to go into arrears, as, for administrative reasons, the increase cannot be made. Most pensioners feel resentful about that. They ask, justifiably, "If some increases can be made at four or five weeks' notice, why cannot the pensions go up in the same period?"

10.45 pm

At least the Labour Government, when it had a high level of inflation, once, and only once, managed to put the benefits up twice in the year. Certainly, with the inflation rates that we have got this year, there is a strong argument for the Conservative Government doing the same. Once we managed to get the uprating done by July, following the Budget announcement, rather than waiting for November. There are some people who say that, having done it once, there was so much difficulty getting it done by July that a guarantee was given that it would never be done in less than six months. Whether or not that is true, I do not know.

The important thing is to look at the system. If only we could relieve the majority of pensioners from having to depend on supplementary benefit there would be no need to link these together. The only reason why the uprating is so complex is that the pension goes up and all the supplementary benefits have to be adjusted at the same time. That is what makes it complicated; that is what creates the need for the delay. It would be most useful to get the majority of pensioners off supplementary benefit. Then it should be possible to put the pension up pretty quickly.

There ought to be ways of doing it at the present moment. The major problem is that we still print a figure in the books and then new books have to be issued, or that figure has to be overprinted, and it involves a great deal of administration. I have never been able to understand why figures instead of letters have to be put into the books. There could be a chart in the post office giving the letter and the amount that it represented—A equals a certain amount, and so on through the alphabet, if necessary using several letters to indicate a sum of money. Then, when the pension changed, a new chart could be put up showing the new amounts that the letters represented because of the uprating.

It seems to me that that would be a relatively simple way of doing it and I would have thought that within the resources of the Department it ought to be possible to find ways in which that uprating could be done quickly. A large amount of administration could be saved, which ought to make more money available for the Department to carry out the uprating.

Far be it from me to explain the Government's position, but I think there are more than 26 different varieties of pension payment—in fact, there are probably thousands. But the alternative that my hon. Friend has implied is that we could make the second uprating a flat-rate uprating and the original calculations could be done on the same basis, so that the single flat-rate second time round, halfway through the year, could be quite easily done, and this would not add to administrative costs because there would only be one calculation.

I understand my hon. Friend's argument but I suggest to him that, first, there is not much of a problem with the letters of the alphabet, because we can have permutations, which would provide many possible rates. I agree that the second uprating could be a flat-rate uprating, which would not have to vary all the other rates.

There are many different ways. As an illustration, I do not like the Christmas bonus because I believe that pensioners ought to get an adequate amount, but if a bonus can be paid one week it is perfectly possible to pay a bonus for 26 weeks in the year, of whatever amount is felt to be necessary. This is illustrated to us time and time again by the way in which people put up pensioners' costs. If the town hall can put the rents up and the rates up that quickly—and, of course, it is happening all over the country—why on earth cannot their pensions go up as quickly?

It seems to me that there ought to be a serious look by the Government at ways of uprating quickly. If amendment No. 4 were accepted and the Government made a commitment for next year, not this year—and if inflation continues at the present rate they are certainly going to need twice yearly upratings—they would have the administration for the future so that they could uprate if and when pensioners' costs went up dramatically.

It is always a great pleasure to follow the speech of the hon. Member for Stockport, North (Mr. Bennett). That appears to have been my habit in this House over the past few months.

One of the things that has intrigued me in the past about hon Members opposite is the bland assumption that is so often made by them that only they understand what the words "care" and "compassion" really mean. We on the Government Benches also have the poor and the pensioners in our constituencies, and we know and care just as much as the Opposition do about the aged, the sick and the unemployed.

Social security was intended for those in need, whether by virtue of age, sickness or any other disability. It is necessary to strike a balance between what is desirable and what is feasible. To paraphrase a remark by the right hon. Member for Huyton (Sir H. Wilson), one man's benefit is another man's tax. That is where clause 1 requires explanation.

Pension increases must be in line with price increases, and pensions and benefits must be protected against the effects of price increases. Those who are in receipt of pensions and benefits are protected against the fear of losing their independence and not being able to pay their way; they are protected against the effects of poverty.

Does the, hon. Gentleman accept that the effect of inflation is worse for old-age pensioners, as was pointed out by the hon. Member for Brighton, Kemptown (Mr. Bowden)? Pensioners spend a greater proportion of their meagre income on goods and services, on which inflation is higher. Does the hon. Gentleman accept that that difference should be reflected in the way we treat pensions?

I note what the hon. Gentleman says. We do not have to link pensions with wages. Perhaps what he says might act as a restraint upon those who make irresponsible wage demands. Perhaps those with industrial muscle will take note of the effect of irresponsible wage demands on people with fixed incomes, and pensioners in particular.

Just as the family learns to live within its means, so must the State. For far too long that fact of life has been omitted from economic thought. Hon. Members must surely be concerned about the consequences of overspending and living beyond our means.

Since 1974, when the legislation came into force, it has been disregarded twice: first in November 1976, when pensions were not increased by either the earnings or the prices yardstick and again in 1978 when pensions were increased by 11·4 per cent. The Labour Government failed to increase pensions in line with wage increases.

The hon. Gentleman knows full well that the shortfall in November 1978 was not discovered until January 1979. The Labour Government made a firm commitment to make the shortfall good, and that was followed through by the Conservative Government. It is not true to say that there was a shortfall which was not made good. It was impossible to discover the shortfall earlier, because earnings figures are always two months out of date. That argument cannot apply. The hon. Gentleman must be honest with the House.

If the hon. Gentleman is underlining the complexities within the system, does not that mean that the system is unworkable? With respect, that is what he is implying. Since coming into power the Conservative Government have increased pensions by almost 20 per cent., by £6.10. They have raised the earnings rule from £45 to £52 per week. I argue that the Government are in those terms the pensioner's friend.

This House believes in the Welfare State. We must be careful, however, not to undermine the basic family responsibility. The State is no substitute for the family. The family, in this context, means the three generations, the grandparents, the parents and the children. I do not subscribe to the view, sometimes mooted by Opposition Members, that the State always knows best what is right for me, for my neighbour or for any thinking individuals capable of making decisions for themselves—and the majority of British people fall into that category. They should be allowed to make decisions.

I agreed with every word of my hon Friend the Member for Brighton, Kemptown (Mr. Bowden) on the heating discount scheme. Too many old people and pensioners suffer grievously from the effects of hypothermia and really feel the cold. The Government should treat pensioners with special consideration and formulate a suitable scheme.

Mr hon. Friend the Member for Somerset, North (Mr. Dean)—I am sorry that he is not in his place—referred to the delay in the announcement of a pension increase and its actual payment. Few items cause people more distress. I hope that my right hon. Friend can devise some system for bringing closer together the date of the announcement and the payment of the increase in pensions, for there is no doubt that pensioners resent the five months' delay, the five months' frustration, that occurs. I do not believe that it is beyond the wit of man to produce a system under which pensioners could be paid sooner, so avoiding considerable hardship.

I support the attempt to maintain the link between the increase in pensions and the increase in prices or earnings, whichever is higher. That link was first established by the previous Labour Government. It is the fact, despite what Conservative Members say, that the last Government established this important link to enable pensioners to experience the rising prosperity of the community as a whole and to share in that prosperity.

More important, at the end of the period of the previous Labour Government, as a result of the link, pensioners were 20 per cent. better off in real terms than at the start of that Government's term of office. The present Prime Minister, during the last general election, was photographed extensively and lavishly with pensioners, announcing that they, of all people, would be protected if the Conservative Party came to power. In the relatively short period that the Government have been in office, pensioners, together with others, but more so than others, have been hit dramatically by increases in value added tax, increases in gas and electricity prices, increases in rent and rates and the general level of price increases. Those price increases will be exacerbated in the next few months.

To make matters worse, the Government now propose to break faith with the pensioners, established when the Labour Government's Act was enacted, and to remove the mechanism whereby pensions will be increased with earnings or prices, whichever are higher. The hon. Member for Brighton, Kemptown (Mr. Bowden), my hon. Friend the Member for Stockport, North (Mr. Bennett) and others have indicated that pensions at their present level are not adequate or acceptable. Many pensioners live on supplementary benefits. One-third of pensioners are at the poverty level of subsistence income.

Few hon. Members would regard the present level of pensions as acceptable in a so-called compassionate, civilised society. Many of us accept that we have a responsibility to pensioners, as the hon. Member for Kemptown emphatically indicated. We have a responsibility not least because pensioners are some of our most vulnerable and disadvantaged fellow citizens. We have a responsibility to ensure they share fully in the rising prosperity of the rest of the community. We have a moral responsibility to ensure that they do not fall behind because of inflation or because the general population, through earnings increases, move ahead at a faster rate. The previous Labour Administration attempted to prevent any major or rapid decline in the value of the pension, so that it could be maintained at the level of inflation or the level of earnings increase.

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The Government, while proclaiming concern about protecting pensioners and wanting to share in the attribution of compassion and care, are not only swindling the pensioners out of the increase to which they are entitled; they intend to swindle them on a continuing basis by ensuring that they will be discriminated against. The pensioners will no longer share in the rising prosperity of the community. They will suffer a real cut in their living standards and in their pension. The Bill proposes a cut in the pension that the pensioners would have otherwise received. There will be some increase in pension, but not to the extent to which they are entitled.

This is the first step—that we shall witness again and again in the Budget and elsewhere—to cutting social and welfare benefits across the board, whethey they be pensions, unemployment pay, social security benefits, or child benefit.

The Government will have to answer for the disgraceful way in which they are treating pensioners and families with children. They have much to answer for. Conservative Members who dislike and resent the Government's proposals should take action tonight in the Lobby to prevent their carrying out the proposals in practice.

It has been an interesting debate, which has gone further than the strict subject matter of amendments Nos. 2, 3 and 4. No one will object to that. It has provided an opportunity to debate the fundamental issues raised in clause 1, and, perhaps, to go wider than that.

I wish to discuss amendment No. 2, moved by the right hon. Member for Brent, East (Mr. Freeson). His speech was confined to the amendment. The Opposition have been opposed to clause 1 from the beginning. It is the most controversial part of the Bill. It featured in the Second Reading debate. There was an argument about it, and we got the better of both the argument and the vote.

In Committee the Opposition moved a number of amendments to delete the whole or parts of the clause. Now they are trying once more, quite legitimately, to edge the Government away from the basic concept of the clause. The Opposition are limited in what they are able to do because parliamentary convention does not allow them to repeat amendments tabled in Committee.

The right hon. Member for Brent, East gave a description of amendment No. 2. I shall give my description of it, which is similar to his. It is important that the House should recognise what we are discussing. The amendment, in a sense, meets the point about the danger of the ratchet effect. The right hon. Gentleman said that he did not accept our argument about that. The intention of amendments Nos. 2 and 3 is to provide an earnings link, in addition to a price link, without the ratchet effect of the present provisions. Pensions would rise in line with earnings unless prices rose more. In the latter case pensions would be increased in line with prices, but only until the 1980 relationship between earnings and pensions was restored.

The amendments are similar to amendment No. 3, which we discussed in Committee, except that in that case the base year was 1978 instead of 1980.

The right hon. Gentleman said, quite rightly, that here is a relationship between the amendment and the ideas promulgated by Tony Lynes in his article in New Society. The right hon. Gentleman should not assume that my right hon. Friend or I quoted Tony Lynes with quite the degree of approval that he attributed to us. We do not accept his solution. We made the point that it was significant that Tony Lynes, as a senior adviser of the Labour Party on these matters, accepted the existence of a rachet effect and accepted that some action had to be taken on the matter. His answer was different from the answer in clause 1, but he provided an alternative similar to that in the amendment.

My preference is for a solution in these terms: first, that the Government should be committed to a minimum legal guarantee to review pensions in the light of price increases; and, secondly, that any increase beyond that should be decided by the Government in the light of the circumstances every year, the state of the economy, and other relevant matters. This should then be put to Parliament for Parliament to judge whether it is right or wrong. That gives maximum flexibility to the Government to decide whether, and if so, by how much, they should go above the statutory minimum.

Unless one believes that such flexibility would be used by the Government from time to time to increase pensions at a rate higher than the earnings rate, which might be higher in that year than price increases, the only flexibility that the Government seek is a flexibility to provide pensions that are lower than the rate of earnings. Therefore, the flexibility argument is rather oblique. It means flexibility downwards and not upwards.

Of course it is a flexibility downwards. Equally, the Government are prescribing a statutory minimum in clause 1, and it is possible for Governments to do more than the minimum.

I shall make three basic points in favour of our choice. Price protection is what the pensioners want. All the evidence that we have had from the pensioners in our constituencies and the pensioner organisations shows that it is their constant concern to relate the value of their pensions to the cost of living. Pensioners want prices protection rather than earnings protection.

Secondly, in the post-war period both Conservative and Labour Governments uprated pensions and other benefits by the statutory minimum. I quoted the record of the Conservative Government between 1970 and 1974 as an example on Second Reading. In recent years the cost of living went up, in round terms, by 40 per cent., pensions by 55 per cent. and earnings by 55 per cent.

The Minister is quite wrong in saying that pensioners merely want to keep pace with the cost of living. Like every other group in society, pensioners want to advance their standard of living in line with technological changes. That is what the amendment is all about.

Of course, everyone in the House would share that aspiration. Several hon. Members have stated that, basically, pensions are too low. I would add that they have always been too low. Whatever the statutory provisions, we have a joint concern and commitment to improve them.

My third argument is that the best way to help pensioners directly and to build the foundations for a healthier economy, which will enable us to pay better pensions, is by fighting inflation effectively. One of the main reasons—probably the most important single reason—why there has been excessive inflation in Britain compared with other Western countries is the tendency of successive Governments to over commit themselves with over-elaborate plans and promises, such as those contained in the 1975 legislation on pensions.

I noted the remarkable speech made by my hon. Friend the Member for Somerset, North (Mr. Dean), in which he said that targets that were too ambitious were not necessarily the best way to help pensioners. Surely that is right. We owe it to pensioners to fight inflation so that their pensions keep their value, so that their occupational pensions—if they have them—keep their value, so that their savings keep their value, and so that we can build the foundations of an economy whereby we can afford better pensions in real terms.

The right hon. Member for Brent, East rightly said that we are aiming at a situation whereby the earnings-related scheme will ultimately float people off the sort of levels about which we are talking tonight. He rightly said that we shall not see that in meaningful operation until 1990. He claimed that the amendment would help to take modest steps towards that now. With respect, I think that he is wrong. He is proposing to alter the basis on which the uprating would occur. He will recall that regulations must be made under another part of the Bill to align pension rates with supplementary benefit rates, so we shall not, in effect, be floating people off supplementary benefits if we make the sort of amendment that he suggests. It may be a good amendment for other reasons that he has advanced, but it does not achieve that.

Does the right hon. Gentleman accept that if he changed his mind and did not break the link as suggested in clause 1, that would certainly float a growing number of pensioners off supplementary benefits over the coming years?

No, Sir, with respect. If the basic long-term rates of supplementary benefit are to be in accordance with the basic provisions for pensioners, people will not be floated off, no matter what formula we adopt.