Skip to main content

Child Benefit (Uprating)

Volume 983: debated on Wednesday 23 April 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

4.28 pm

I beg to move,

That leave be given to bring in a Bill to provide that the weekly rate of child benefit for any child with effect from November 1980 shall be not less than £5·00; to provide that the rate of child benefit thereafter shall be adjusted not less than once per annum to correspond with changes in the index of retail prices; and to provide that the additional cost of the foregoing provisions shall be borne by the National Insurance Fund
On 26 March, my right hon. and learned Friend the Chancellor of the Exchequer introduced a logical and popular Budget, but it contained two surprises. One was that the alcohol and tobacco taxes were increased by only half or in some cases by less than half the amount which might have been expected by reference to the change which has taken place in the value of money since the last increases. The second was that the Chancellor announced an increase in child benefit to bring it up to 4·75 although the change in the value of money by November this year would have indicated a rise to over £5·00. I recognise that by the increase of 75p in the child benefit the Chancellor broadly met the indexation requirement of the Finance Act 1977 after allowing for the withdrawal of the 25 per cent. band—which, incidentally, is a step which I entirely support.

The cost of maintaining the real value of child benefit however would not have been very large. I understand that it would have been £50 million this year and £140 million in a full year. I regret that my right hon. and learned Friend did not therefore proceed to increase child benefit by that amount. It would have been equivalent to 1p a pint on beer, plus corresponding additions to the duties on wines and spirits, or 3½p on a packet of cigarettes plus parallel increases in other types of tobacco. I believe that a combination of these increases would not have caused resentment in the country—indeed, it was generally expected.

In effect, by his proposals the Chancellor seems likely to bring about, through the effect of market forces, a significant reduction in the amount the public spends on children's food and clothing, and an increase in spending on tobacco—which at present is static when many hon. Members think that it should be declining—or on alcohol, consumption of which appears to be rising alarmingly.

My first object, therefore, in seeking to introduce the Bill is to ask the Chancellor to think again about this aspect of his Budget. I am sure that it would be generally welcomed in the House and popular in the country if he did so. But, more important, I am convinced that it would be right.

In his Budget Statement, the Chancellor said:
" Any civilised society has a special obligation to those who have completed their working life."—[Official Report, 26 March 1980; Vol. 980, c. 1458.]
But if the concept of " One Nation " has any meaning, all of us who have come through our childhood adequately fed and cared for must also want to see that a reasonable minimum income is guaranteed to the children of our own time who will constitute the nation of the future.

The second object of the Bill is to deal with the question of future upratings of child benefit. The House must recognise that this raises serious issues which are not a matter of party politics. The first question that divides hon. Members on both sides of the House is how far it is proper to tax the breadwinner in order to transfer resources to his wife and children. Another question which gives cause for anxiety on both sides of the House is whether family support could even be undermining parental responsibility by giving some parents the feeling that they are not wholly responsible for their own children but can leave them to the social worker or the social services because society is ultimately responsible and they no longer have the primary responsibility for their own children. And another question which concerns the House is the extent to which family benefits are destroying the incentive to work.

It is important to put all those points in perspective. The combined value to standard rate taxpayers of child tax allowances and family allowances, even at the figure of £5 which I am seeking to recommend in my Bill, would still be less in real terms than it was in 1946 and 20 per cent. less than it was in 1955. These figures refer to a family with three children aged under 11.

What this means is that whereas we have brought old people along with the growth of the prosperity of the country, with child benefits we have allowed family support to fall behind, and it has not even kept pace with the real value of the shopping basket.

It is important not to confuse child benefit with the supplementary benefits addition for children which, from November, will be raised to £7.30 per week for children up to the age of 10 and to £10.90 per week for children aged from 11 to 15. That is substantially more than the child benefit figure which either the Chancellor or I myself am recommending.

I am indebted to the National Foster Care Association for providing me with figures of the boarding-out allowances for children aged 11 which are paid by local authorities for the most part at rates about three times as much as the basic child benefit, namely, £14, £15, £16, and in some cases substantially more, per week. Those figures may be a much fairer indication of the real cost of a child to the family.

If the Government were to make a commitment to a regular uprating of child benefit, I believe it would be advantageous and would help to take the issue out of party politics; but it would be essential to revise the composition of the retail prices index. The index is an extremely blunt and inaccurate instrument and it has two particular disadvanges. In the present make-up of the RPI, alcohol and tobacco are reckoned to amount to over one-tenth of average household expenditure. Thus if there were a 10 per cent. increase in the price of tobacco products and alcoholic drinks the index would rise a full point and the Government would be obliged to add £33 million to child benefit, although the amount of money that the mother would have to spend on the children because of the change in the price of alcohol and tobacco would obviously be negligible or nothing.

The second consideration is that the index lakes no note of family size. It is deemed to refer to an average sized household, but when we are suffering an increase in the price of bread, for example, as we are at the moment, it is a serious matter for a single person but it is four or five times as serious for a breadwinner with a wife and two or three children to support. The retail prices index, therefore, should take into account the real circumstances of the family if we are to use it as a measure of the future uprating of child benefit. We need to reconsider the way we calculate the RPI to ensure that it measures real-life situations.

In the long title I also propose that the additional cost should be borne by the National Insurance Fund. That is not just to keep within the rules of order. We are now paying earnings-related contributions for national insurance, but we are moving exclusively towards the payment of flat-rate benefits. I am not necessarily opposing that reform, but it is a total break with the original concept of national insurance. It is fair to point out that, if contributions rise with incomes and some benefits rise with with prices, but child benefits do not necessarily rise at all, we shall create a system which will gradually transfer resources from children to the tax collector. This is a matter which the House should study carefully.

My third specific suggestion, which I have already discussed with the Leader of the House, is that we might set up a Select Committee, or at least a joint Sub-Committee of the relevant Select Committees, to study our whole policy for the redistribution of income and the administrative methods by which we carry it out. Such a committee could study the issues related to child benefit. It could look at the Green Paper which we are promised for the autumn on the tax treatment of husband and wife. It could consider, for instance, the whole structure of housing subsidies and many other questions with a direct bearing on family policy.

By introducing the Bill I am seeking not to divide the House but rather to unite it. I have been warned that an hon. Member might seek to force a Division out of mischief. That would cheapen the whole issue and introduce a note of party opportunism which would be out of place. In that case, I would ask supporters in all parts of the House not to take part in the vote. However, I hope that the House will consider it useful for a Bill such as I propose to be brought in, and that I shall have the leave of the House to introduce it.

Question put and agreed to.

Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Peter Bottomley and Mr. Frank Field.

Child Benefit (Uprating)

Sir Brandon Rhys Williams accordingly presented a Bill to provide that the weekly rate of child benefit for any child with effect from November 1980 shall be not less than £5·00; to provide that the rate of child benefit thereafter shall be adjusted not less than once per annum to correspond with changes in the index of retail prices; and to provide that the additional cost of the foregoing provisions shall be borne by the National Insurance Fund: And the same was read the First time; and ordered to be read a Second time upon Friday 9 May and to be printed [Bill 195].