Child Benefit

Tuesday 30th October 2012 Lords Chamber

Question

15:00

Asked by

[Lord McKenzie of Luton]

To ask Her Majesty’s Government whether they have plans further to restrict child benefit.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government are exploring further options for making the welfare system fairer and more affordable. Details will be announced in due course.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that reply, but I am not particularly comforted by it. We are, of course, among the shambles that is engulfing the introduction of the current change to child benefit policy for higher rate taxpayers—evidence, if we needed it, that policy should not be made on the hoof. Hundreds of thousands of people have been brought into the self-assessment process at a time when HMRC staff numbers are being savagely reduced. But my question for the Minister on the matter of evidence-based policy-making is to ask how he justifies the proposals aired by the right honourable Iain Duncan Smith, a fellow Minister, that child support for those unemployed should be restricted to just two children because, he asserts:

“Large numbers of families on welfare are having more children because they believe taxpayers will support them”.

Will the Minister give us the evidence for that assertion? Should such a policy ever be introduced, what impact does he think that there would be on child poverty in this country, which is already on the rise under this Government?

[Lord Sassoon]

My Lords, first, I am sorry that the noble Lord, Lord McKenzie of Luton, was not comforted in his terms by my answer. Does he disagree with the idea that the system should be fairer and more affordable? We know that the previous Government’s system was unaffordable, and we are putting that right. As to his question about some of the ideas that are being floated at the moment, it is simply not fair that it is possible for someone to be better off on benefits than they would be in work. How can we justify a system in which people in work have to make decisions about having a child or having another child based on what they can afford, whereas those out of work know that their benefits will just increase?

[Lord German]

My Lords, could the Minister help the House to understand the reasoning behind the statement by the Secretary of State for Work and Pensions, Mr Iain Duncan Smith, that the number of children in a family would be capped at two, which seems a strange way of doing family structure in this country? Was Mr Duncan Smith pitching for the 2015 general election manifesto or was he pitching for a change in expenditure of this current coalition’s policy? If it was the latter, what response did he get?

[Lord Sassoon]

My Lords, this idea, which is one of a number of ideas to meet the very big affordability and fairness challenge that we have, responds to concerns that, while working families have to consider affordability before having another child, those who are out of work do not, for the reason that I have already given—that their benefits will increase. My right honourable friends, the Chancellor and the Work and Pensions Secretary, are working together on ideas, of which this is but one.

[Baroness Hollis of Heigham]

Leaving aside issues of decency—and there are real questions behind that—how does the Minister reconcile two apparently conflicting government views? The first will come from his department; no doubt, with the arrival of the Pensions Bill in this place, he will say that we need more, younger workers to help to support an increasingly elderly population. But he will also say, no doubt, in support of his right honourable friend Iain Duncan Smith, that extra children are for the poor a luxury while for the rest of us they are a burden. How does he reconcile these two statements—that we need more young people to support pensioners but we cannot afford to have them as taxpayers?

[Lord Sassoon]

My Lords, that is a complete misrepresentation of the position of my right honourable friend the Work and Pensions Secretary, so the question becomes completely redundant.

[Baroness Afshar]

My Lords, are the Government aware that for many minority families, particularly women working in the informal, “black”, sector, it is not easy to fill the forms required or meet the criteria established? Yet for those people family allowance is the only means to enable them to continue working.

[Lord Sassoon]

My Lords, what we are talking about principally this afternoon is the restriction of child benefit. The restriction starts to come in only where one taxpayer in the family is earning more than £50,000. In those circumstances, clearly there will generally be a capability for dealing with the forms. I went on to the website this morning and while I could be highly critical of some of HMRC’s forms, I found that the guidance on the changes to child benefit was remarkably clear and easy.

[Lord Davies of Oldham]

My Lords, the Institute for Fiscal Studies has indicated that under present government welfare cuts 80,000 children each year will be reduced to poverty. Have the Government ambitions to increase that number?

[Lord Sassoon]

My Lords, the changes to child benefit affect only the 15% of highest earning families in this country. This Government believe that those with the broadest shoulders should share the pain of the massive deficit consolidation and reduction programme that we inherited from the previous Government. That is what we will continue to do.