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Mr. Davies: Obviously I did correctly quote the hon. Gentleman's words. The words that he has used in his intervention reinforce my argument. We are told that the fact that there is now something called the minimum income guarantee will change things. We are presented with the wonderful--characteristic--Labour party illusion that a change of name changes the substance. I have to tell the hon. Gentleman that one does not change the substance by changing the name, and that the minimum income guarantee is just another version of a means-tested benefit.
My hon. Friend the Member for Arundel and South Downs (Mr. Flight) made the valid point that the Government's purported radicalism in social security is profoundly bogus. If one puts the best interpretation on the measures that they have introduced, working families tax credit is merely an extension of family credit. In our view, it is an ill-conceived and unnecessarily expensive extension of family credit. Nevertheless, it is conceptually an extension of family credit. Welfare-to-work is conceptually an extension of the jobseeker's allowance.
Credit for the concept of bringing together advice on finding work and the distribution of benefits is rightly due to the last Conservative Administration, although I never suggested then and I do not suggest now that everything that the last Conservative Administration did was for the best, in the best of all possible worlds.
My hon. Friend the Member for Arundel and South Downs made the point that badly needed to be made in the debate--that in speaking about uprating benefits, we must not forget that there is always another side to the balance sheet: the taxpayer must pay for whatever we decide to allocate as welfare benefits. Certain levels of such expenditure will not be socially acceptable.
To continue the logic of my hon. Friend's argument, I should point out that those of us who care about having an effective and humane welfare system must be careful that we do not cross the line beyond which the payment of welfare ceases to be socially acceptable and therefore politically feasible. In the United States recently that line was crossed, with unfortunate results for the recipients of benefits.
My hon. Friend the Member for Arundel and South Downs highlighted, as did my hon. Friend the Member for Gainsborough, the essential anti-family bias of the Government's attitude towards welfare reform. There is no doubt that if a couple receive more benefit overall if they split up than if they stay together, that is an inducement which may, with successive changes in that direction, become a powerful and even an irresistible inducement for them to split up. That would create the tragic situation in which the welfare system could induce family breakdown.
Most of us would think that that was tragic, but I am not sure that all members of new Labour would consider it tragic. When my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) introduced the debate, he produced a devastating quotation from a leading Labour thinker, which suggested that she thought that it was a thoroughly good thing if the welfare system contributed to family breakdown. At least we know where we stand with such people.
The hon. Member for Gravesham (Mr. Pond), with his background in the Select Committee, knows a lot about the subject, although his speech sounded as though it had been drafted by Labour party headquarters. He said all the right things from the point of view of those on his Front Bench, and I hope that he is suitably rewarded. Of course, it is a classic tradition, not an invention of this Government, to use Back Benchers sometimes to prepare the ground for unpleasant initiatives that the Government plan to spring on the public.
I was therefore particularly concerned to hear the hon. Gentleman's remarks about preparing the ground for the taxation of child benefit. I fear that that rather sinister proposal is being contemplated by the Government.
Mr. Pond:
I do not know whether the hon. Gentleman is aware that, for some time, there has been a debate in this place about whether it would be sensible for future increases in child benefit to be subject to taxation at the higher rate. That is no revelation; my right hon. Friend the Chancellor said that in his last Budget statement.
Members of the Social Security Committee have been having a sensible and adult debate about those issues to see whether that is an option for the future and whether we will be able to provide greater increases in the basic rate of child benefit and target more effectively a benefit that is already well targeted. It is for the Government to decide, one way or the other. There has been no announcement on that.
Mr. Davies:
The hon. Gentleman is good at calling for sensible and adult debate on important matters without explicitly telling the House his view. He hints, but, using a certain amount of common sense, we can glean his view on this matter. He never states it, but I conclude that he is in favour of the taxation of child benefit. I am extremely sorry about that.
The hon. Gentleman said exactly the same, and used an almost identical phrase, when he talked about the future of the contributory principle and national insurance. Again, he called for a debate. When evidently very loyal and well-directed Back Benchers make such statements at the end of debates, we should all be extremely anxious. What he says today about the taxation of childbenefit--or, indeed, about further winding-down of the
contributory principle and undermining of the national insurance system--may tomorrow be a formal proposal from the Secretary of State.
A number of important points emerged from the debate, and the most important is that it is absolutely clear that the Government have abandoned their explicit commitment to bring down social security spending. We can argue about whether they ever meant it seriously, or whether they were simply laughing up their sleeve when they said that to British public. I agree with the interpretation of my hon. Friend the Member for Gainsborough.
Whether the Government originally meant what they said or not, and whether the Prime Minister thought that he was being honest or not when he made that commitment, it is clear that the Government have no intention of achieving it, and no prospect of doing so. What do new Labour Members do when they find that they either no longer can or no longer want to fulfil a manifesto commitment? Do they say to the House, "We are sorry, we got it wrong. We have thought again. We won the election on a false bill of goods and we are now telling you that we cannot deliver"? No, they do not.
New Labour Members come to the House and use every subtle subterfuge in the handbook of the PR gurus to try to divert attention from what is really happening. We had that again this afternoon. The Secretary of State--who is a brilliant man and a past master at this kind of thing--came to the Dispatch Box and talked about shifting welfare expenditure from income support and the jobseeker's allowance to the disabled, pensions and more long-term forms of benefit, as if that had been the commitment the Government had given. It was not; the commitment was to bring down social security spending.
What the Secretary of State suggested this afternoon may really have been in the Prime Minister's mind. But it could not have been new Labour's commitment for a basic reason: Labour Government's fiscal strategy depended on getting total social security spending down.
We were told at the election, "You can trust new Labour. We are no longer the spendthrift, mad-dog party that we were back in the 1970s. We will not ruin the country and have the International Monetary Fund in here. We will tell you how we will pay for all our extravagant electoral commitments. We will spend all this money on the national health service and on education, but do not worry. Do not lose any sleep over it. You can trust us. It will not mean crippling taxation, ruin for the country and the IMF coming to take us over again. We shall make savings elsewhere." Where were the savings to be made? In the social security budget.
If we take away those savings--the aggregate, global reductions in social security spending that Labour promised--the whole fiscal strategy collapses. There are two alternatives. One is that Labour cannot deliver on its health and education promises--and, as we know, it is not delivering on those promises: the NHS is breaking down, and class sizes are increasing. We know the story all too well. Alternatively, Labour will have to return to the agenda of crippling taxation and crippling deficits. This is a key part of the thoroughly bogus strategy with which Labour bamboozled the public and won the last election, and the central column of the edifice has been shattered this afternoon.
Another important issue has emerged today. The right hon. Member for Birkenhead probably understands social security better than any other Labour Member: he is an expert. He was alone among Front Benchers who joined the DSS after the election in having done his homework and considered the issues thoroughly when in opposition--and, of course, because he knew so much about them he was sacked after a year.
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