Finance Bill

Lord Beamish Excerpts

Tuesday 28th June 2011 Commons Chamber

[Sir Paul Beresford]

I agree with my hon. Friend. Not only that, it would allow spaces for the NHS to provide choice and opportunity.

The new clauses would allow basic tax relief at 65-plus and rising, and the age would rise as the pensionable age increased. It would encourage people either to keep or take out health insurance just as they reached the period of life in which demand can be expected to increase. If they do not have or cease to have insurance, they will add to the call on the NHS. This approach in no way degrades my or, indeed, their respect for the NHS, but it is intended to take some of the load of numbers and cost off our tax-paid national health service.

As UK life expectancy increases, as my hon. Friend the Member for North East Hertfordshire (Oliver Heald) just mentioned, and as the wonders of medical research improve, our pensioners’ life expectancy and well-being will increase. That will be an incentive for more to choose not only to pay their taxes—thus supporting the NHS—but to use health insurance to take an increasing load off our NHS, to the benefit of others.

[Mr Kevan Jones (North Durham) (Lab)]

I rise to oppose the new clauses. I have to say that it is pleasing to see the real Conservative party still alive and kicking on the Back Benches, wanting to create a privilege for a small section of the population. I understand that when tax relief was in operation, it affected only about 5% of the population. It feels as if we are going back in time a little, because if we accepted the new clause we would be stepping back to the late 1980s, when the Conservative party introduced relief on private health insurance—I acknowledge that the new clause would apply to the over-65s, rather than to the over-60s, as was the case then. That was introduced to address a lot of the arguments put by the hon. Member for Mole Valley (Sir Paul Beresford); the aim was to try to ensure that people would be given choice. I hasten to add that people have a choice if they can afford it, but they have no choice whatsoever if they cannot. I believe, as I understand the Conservative Front-Bench team does these days, that we should seek to improve the health service and opportunities for all, rather than give a tax cut and perk to a very small section of the population.

[Mr Leigh]

Surely the point is that the proposal applies to pensioners, that they have paid tax all their life and that, just at an age when they might need private medical care, they find that their insurance premiums rocket. Surely it is only elementary natural justice that they should get tax relief on those insurance premiums.

[Mr Jones]

I disagree with the hon. Gentleman. I do not understand why a low-paid worker in South Stanley in my constituency who has worked hard all his or her life should be given no tax relief or assistance and should pay their taxes just to give a tax relief and perk to individuals who not only might be able to pay for care, but who have an advantage over them. We should seek to ensure equal access to health care.

I understand what has been said about waiting lists and the health service, but when I was elected in 2001 my constituency contained two old hospitals, one of which—the old workhouse—was a disgrace. We now have two new hospitals, thanks to a Labour Government. The hon. Member for Mole Valley mentioned hip and knee replacements, and I can tell him that the industrial legacy of a mining community meant that my area had a long waiting list; it was not uncommon for people to wait for more than two years. I recall people coming to my surgery arguing about how they could get up the list any faster. Waiting lists have more or less been abolished over the intervening 10-year period, which is testament to the changes the previous Labour Government made and the investment we put in. Investment in the health service should be about ensuring equal access to care, not about giving a tax perk to a very small section of the population—the less than 5% who actually have private health insurance—as this proposal seeks to do.

[Mr Redwood]

I would be more persuaded by this argument if the Labour party had, when in office, prevented the rich from buying the health care they wanted when they wanted it. The truth is that neither the Labour party in office, nor the coalition Government, have had any intention of preventing the rich from using their power and wealth to get the health care they want. The new clause is a measure to enable people who are not that rich to be able to do so.

[Mr Jones]

The facts do not bear that out, and I shall return to that point in a moment. If people wish to spend their money on health care, that is entirely up to them—I am not opposed to that. What I am saying is that I and others should not be subsidising that choice. We should be putting the money, as the Labour Government did, into ensuring that the general population have access to good-quality NHS care and do not have to worry about the cost.

[Mr Peter Bone (Wellingborough) (Con)]

The hon. Gentleman is making a powerful socialist speech, which is nice to hear in this Chamber. Is he not wrong about the new clause, however, because we would not be subsiding from the taxpayer? Anyone who takes out new private medical insurance because of the subsidy would be saving money for the NHS and so more money could be spent on the people who wish to use the NHS? [Interruption.]

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[Mr Jones]

Not necessarily, as my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) says from a sedentary position. As I have seen in my constituency, people who have access to the private sector cherry-pick. Routine operations might be covered by private health insurance but with the more difficult, specialist treatments, the last recourse is often the NHS. A few years ago, a constituent of mine came to my surgery and complained that she could not get her knee replaced on the NHS. I found that remarkable, because by that stage the waiting lists were reduced in my constituency, until I found out from the NHS trust that there were medical reasons why she could not have that operation at that time—basically, she had weight and heart problems. She subsequently had the operation in the private sector, against all the advice, and lo and behold, when there were complications they were picked up not by the private sector but by the NHS. A full NHS care package and local social services were needed to support that woman through an operation that she was determined to have against medical advice.

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[Mr Christopher Chope (Christchurch) (Con)]

I am delighted to be regarded as the true face of the Conservative party, but I am also very pleased that there are lots of other true faces of the Conservative party present to listen to this debate. Not everyone recalls the great excitement that there was in the Conservative party and on the Conservative Benches back in 1989 when the then Secretary of State for Health, who is now the Justice Secretary, said that he was going to introduce tax relief for health insurance premiums. That policy, which was announced in a health White Paper and then put into practice in the 1990 Budget by Nigel Lawson, was the action of a self-confident Conservative Government. That same self-confidence carried on through the years when John Major was Prime Minister, and right up to 2001, when a proposal to restore the relief, which had been taken away by the mean Labour Government, was in our manifesto. Since then, we seem to have rather lost our way.

[Mr Kevan Jones]

I would never accuse the hon. Gentleman of losing his way, but can he remember why the Labour Government did that? It was not just because the relief was unfair but because they went on to use part of the money to reduce the VAT on heating fuel.

[Mr Chope]

That was the excuse put forward at the time, but I doubt whether it was the real justification. I suspect that the real justification was a feeling on the part of a lot of socialists—people on the Labour side of the House—who resented the idea that the health service should in any way be funded by the private sector. The problem we have in this country is that although our health service is funded by taxpayer money to the extent of most health services across the G7 or G8 countries, we lag behind those other countries in that we do not have enough private sector contributions to the health service. That is why the new clause tabled by my hon. Friend the Member for Mole Valley (Sir Paul Beresford) is brilliant, because it sends out a very strong signal to people that we want to encourage them to participate in and contribute to the cost of their health care.

It is good for people to contribute to the cost of their health care, and that of their family, if they can afford so to do. Some people who can afford to do that pay for their health care outright: in a sense, they pay as they go. Others who can afford to do that pay through insurance policies. Yet others who can afford to do that do not make a contribution at all, because they believe that it is in the national interest that the whole cost of their health care should be borne by other taxpayers, many of whom are less well-off than they are. Those are the three categories, and we should try to move more people from the category of those who could afford to pay for, or contribute towards, their health care but do not, into the category of those who do contribute.

[Mr Jones]

I totally disagree with the hon. Gentleman, but I understand where he is coming from. However, the scheme introduced in the 1980s did not do what he wants. It basically just gave a tax cut to about 500,000 people who already had private plans, so it did not work the last time it was tried.

[Mr Chope]

Obviously, the Treasury will always say that there is what is described as a dead-weight cost associated with such initiatives, in that people who would be paying for health insurance anyway would get the tax relief—but that is looking at only part of the issue. What I am trying to do—as is my hon. Friend the Member for Mole Valley in his new clause—is to encourage more people to come into that category, so that we grow that cohort of people. We certainly do not want to allow that cohort to be reduced, as it inevitably is when people who were on schemes provided by their employers retire and lose that provision. Taking on that burden, or responsibility, for themselves is a significant expense; my hon. Friend’s new clause would not eliminate that cost, but it would reduce it by a useful amount.

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[Mr Chope]

Exactly. My hon. Friend is absolutely right. There is a lot of resentment about the fact that people who arrive in this country can latch on to the health service, at no cost to themselves, when they have not made any contribution at all. The new clause would give people who have been making a contribution, either through their employers or by paying insurance premiums themselves, a bit of help in the form of tax relief when they retire. We are talking about modest sums, but that would send a useful message and be an incentive.

[Mr Kevan Jones]

If we were designing a system to increase the number of people with private health insurance, would not this proposal be a very inefficient way of doing it? I must draw the hon. Gentleman’s attention to the Institute for Fiscal Studies and King’s Fund report, which showed that when the scheme was abolished, 0.7% of people—4,000 people—gave up their policy. It strikes me that for most people, the scheme was a not a great incentive to buy health insurance.

[Mr Chope]

The hon. Gentleman quotes figures from the Institute for Fiscal Studies that go back, I think, to 2001—10 years ago. What concerns me is that there has been no update of those figures. If my hon. Friend the Financial Secretary to the Treasury, whom I am delighted to see on the Front Bench, comes forward with up-to-date statistics that show that the Government have been considering the issue seriously, obviously I will listen to his arguments, as I always do.

I am concerned that the issue has become one that the coalition Government do not want to discuss, and they are not prepared to commission research into it. They are not prepared to consider the argument put forward by my hon. Friends and myself that our proposal would generate more private sources of income for the health service. The Government are going for the simplistic version and concentrating on the idea that there would be an up-front dead-weight cost. There might be, but that would be outweighed by the other benefits.

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[Mr Chope]

My hon. Friend makes a good point. I think, and some of the research suggests, that when people contribute directly to the cost of their health care they take a greater interest in outcomes and hold the health service to account to a greater extent than when they can be told, “It’s all free, so what do you expect?” We talk about the health service being free at the point of delivery, which of course it is, but I want a health service that is available at the point of need, and the two things are very different. That is the gap that exists at the moment. A little more private sector resource, which would relieve some of the burden on the taxpayer or complement taxpayer resources, would be a good thing.

[Mr Kevan Jones]

Where is the evidence for that? The old scheme that the hon. Gentleman says was so great clearly did not do that, for example in relation to waiting lists. It would cost £140 million, and it would be far better if that money went into the health service to improve care for all, rather than to the small section of society that he is trying to benefit.

[Mr Chope]

Of course, the original scheme was brought in on the basis that it would apply to everyone over the age of 60, and initially would give full tax relief to higher-rate taxpayers, so the figures would be nothing like as high under the new clause, because its proposals would apply only to people over 65, and would give only 20% in tax relief.

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[Frank Dobson]

Let us turn to a bit of history. When the previous scheme was introduced, neither the Department of Health nor the Treasury made any calculation whatever of what it would cost the taxpayer. It was a decision flying blind—[Interruption.] I notice the Financial Secretary looking to the Box, but if those in the Box give him an honest answer, he will have to confirm that the Treasury made no calculation of the cost of introducing the scheme originally and neither did the Department of Health. When I had the scheme abolished, I found it very difficult to discover how much it had cost. It took the Treasury quite a bit of time, too, because it had not logged the effect of the scheme—which it introduced.

The proposition is that, if people have private health insurance, they will not place any demands on the national health service. First, however, they would get the tax concession most of the time, but, during the years—one would hope that there were many of them—when they did not need any health care at all from anybody, they would not be relieving demand on the national health service because they would not have any demand to supply.

Secondly, as my hon. Friend the Member for North Durham (Mr Jones) has already pointed out, large numbers of people—certainly if they have a difficult or complex operation—do not resort to their private health insurance, because private providers are not up to providing them with the quality of care that is needed, so they resort to the national health service.

I remember a proposal to build a private hospital on the Odeon site on Tottenham Court road, and the brochure that the projectors of this brilliant scheme provided had a paragraph that can be summarised as stating, “It doesn’t matter if anything goes wrong in our private hospital, because you’ll be next door to the world-famous University College hospital, so you’ll be transferred there and then you’ll be okay.” Almost all intensive care is provided in the national health service; private sector providers do not generally provide it, so when things go wrong people are shifted.

[Mr Kevan Jones]

Does my right hon. Friend agree that, if we wanted to move to the market-led initiative that some Government Back Benchers have put forward, we would find that private hospitals had to train all the nurses and doctors whom they currently get through state-subsidy and training in the NHS?

[Frank Dobson]

The private sector creams off the straightforward, relatively simple and less risky operations for people who are otherwise healthy, leaving the national health service to provide similar operations for people who are unhealthy, which can be much more complex. For instance, if someone needs their hip joint replaced, and they are okay apart from their bad hip, that is fairly straightforward, but, if they have a dickey heart or something wrong with a kidney, it is altogether more complex, and you can bet your boots that that operation will take place in an NHS hospital. Similarly, an NHS hospital will provide intensive care, accident and emergency care and emergency beds, and it will carry out the training that by and large the private sector does not.

All those burdens stay with the NHS, none of it transfers to the private sector, and we are being asked to provide a tax incentive for people to do something that they do already. There was no evidence in the 1990s of any increase in the use of private health insurance as a result of the Government’s tax benefit.

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[Mr Bone]

It is a great pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson), who has been very consistent in his views over the years and, I think, represents the real views of the Opposition.

I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on proposing—

[Mr Kevan Jones]

Will the hon. Gentleman give way on that point?

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[Mr Bone]

The proposal applies to retired people, so I think that it will affect people who have private medical insurance through their companies or who can afford to have it while they are employed, but who drop it when they retire, at the very time when they are most expensive to the national health service. The more people we can encourage to take it up, the better.

[Mr Kevan Jones]

I am very interested in this point. Will the hon. Gentleman say what evidence there is? When this tax relief was withdrawn, 4,000 people did not continue with their health insurance, so there is no evidence at all that people drop out. Likewise, there is no great evidence that by introducing this measure, the previous Conservative Government increased the numbers. What it did was give a tax break to people who already had private health insurance.

[Mr Bone]

I am grateful to the hon. Gentleman, because he said first that 4,000 dropped out and then that nobody dropped out. He had already proved that 4,000 people dropped out.

I believe that the proposal will improve the uptake of private medical insurance enormously, which will mean that there will be less of a burden on the national health service and that more money will be put into private hospitals, allowing them to develop. This country needs more health care of a higher quality. That does not need to be centrally controlled, but can be done by a mixture of NHS and private providers.

To get the idea that the priority of this Government has not been the NHS, Opposition Members must have been asleep. A thorough new Bill has come forward, which has been scrutinised by Parliament. There have been slight shrivels on the way, and it has now gone into Committee. This proposal would be a very minor adjustment to the NHS programmes of this Government. It deserves the support of the House and it will be interesting to see what happens when we divide.

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[Thomas Docherty]

The hon. Gentleman shakes his head, but that is exactly what people with private health care do—they jump right to the front. There might be a six-month waiting time for a minor operation—I suspect that waiting times will get longer—but people who choose to have private health care go to the front of the queue and are seen within a fortnight. I have seen various television adverts for very reputable private health care companies that advocate the services that they provide. I do not think that that should be forgotten.

[Mr Kevan Jones]

Does my hon. Friend also recognise that when we had long waiting lists, the incentive that a lot of these companies used in their advertising was that people could get to the front of the queue? Is there not an argument that now that we have short waiting lists—for the time being—there is less need for private health care?

[Thomas Docherty]

My hon. Friend is entirely right. It is interesting that there are now far fewer adverts for private health care. He is right that part of the reason for that is that we have a superb national health service. Having served in the House for longer than I, he should take a great deal of credit for the fact that we have a first-class health service. The second reason why I suspect private health companies are not advertising is that thanks to the policies of the Government parties, people cannot afford to have private health care. Of course, many people are losing their jobs. I will return to that point shortly.

The other huge issue about burden is that the private health system is a burden on the national health service, because it takes doctors, nurses and other medical professionals away from it.

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The hon. Gentleman spoke about the fact that many people have private health care through their employers. Let us remind ourselves why companies have historically offered it.

[Mr Kevan Jones]

Does my hon. Friend recognise that it is the top 40% of earners who have access to private insurance? In the bottom quartile, less than 5% have it.

[Thomas Docherty]

My hon. Friend is absolutely correct, and the new clause is, yet again, all about the few, not the many. It would do nothing for the squeezed middle, the people who, thanks to the economic policies of Treasury Ministers, are finding life much harder at the moment. We should perhaps reflect on the fact that for all the passion about tax breaks on insurance, hon. Members of both Government parties did not hesitate to go through the Lobby and vote to raise VAT, which has made life much harder for many of my hon. Friend’s constituents and mine.

There are two reasons why companies have historically offered private health care. One is as an incentive to get people to come and work for them in a competitive market. As I said, thanks to policies of the Government parties, that is not particularly a problem in the current climate of job losses and rising unemployment.

The second reason is a hard-nosed business case for key employees. There is obviously a good reason why companies decide that to minimise the amount of time for which certain key employees are absent from the workplace due to illness or injury, they will provide a fast-track or—wait for it—queue-jumping approach to health care. I understand the argument for that, and it is a matter of choice, but companies have not offered private health care beyond retirement because they have no further use for that employee. That is why we tend not to see companies giving a lifetime guarantee, as they do in the United States. It is therefore a slightly false argument to say that when a company provides private health care up to the age of 65, the state needs to step in after that. It is a hard-nosed business reason.

[Mr Jones]

Is not one of the hard facts of life in the United States system, as many individuals there are seeing now, that as soon as people become unemployed, their health insurance stops? In some cases the public sector then has to pick it up. Although there may be a benefit when somebody has work, there clearly is not if they do not have work.

[Thomas Docherty]

My hon. Friend is entirely correct that that is the case for the vast majority of people. Of course, care is often continued for highly paid executives, the group of people whom Conservative Members seek to help—as I have said, the Conservatives are the party of the very few, not the many. However, he is entirely right that the vast majority of US citizens lose their private health cover in that situation. That is why Opposition Members have worked so hard to resist the attempts of the Secretary of State and his Liberal cohorts to introduce privatisation by the back door.

I am conscious that the hon. Member for Mole Valley (Sir Paul Beresford) will wish to make his closing arguments prior to dividing the House. We look forward to seeing the strength of feeling that exists, and I urge Liberal Democrat Members to stand up for the health service and stand up to their Conservative allies.

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[Mr Iain Wright (Hartlepool) (Lab)]

rose—

[Mr Kevan Jones]

rose—

[Mr Redwood]

I give way first to the hon. Member for Hartlepool (Mr Wright).

[Mr Redwood]

I will take the other intervention before I respond.

[Mr Jones]

I can help the right hon. Gentleman and say that the proportion of people who would be helped is 5% of the population.

[Mr Redwood]

That may have been the case in the past, but what we are interested in is the new clause.

The answer to the hon. Member for Hartlepool is that no, I cannot tell him that. It is not my new clause and I have not researched the matter. I was about to say that I would be more likely to vote for it if a case could be made on the money involved. It seems to me that it would be a good-value purchase if the savings on health care that it generated for the NHS were considerable. We need to balance the two things—we need to know what the revenue loss would be, based on a sensible estimate of take-up, and what the savings to the NHS would be.

The Labour party has to accept that it is not a one-sided matter. The whole point of the scheme is that there would be cost savings to the NHS. That money going into the NHS could then be spent on other people and other treatment. The NHS may still have to do the really difficult things for the people involved, but there could still be an overall benefit both to them and to the NHS if the extra money coming through the private sector led to extra care.

The fundamental mistake that we have heard from the Opposition tonight in their approach to these issues—although it was not the mistake of many Labour Ministers—is the idea that the resources to be provided are finite, to be used either in the private sector or in the public sector. The whole idea, surely, is that we need more resources, more trained people, more treatments, more supplies and more medical activity, because people are living longer, they need more health treatments and the population is growing for a variety of reasons.

As some of my hon. Friends have said, the one big gap between Britain and our European partners, which are normally the example held out by the Labour party, is the amount of private sector money that goes into health in Britain. It is a considerably smaller proportion than in countries such as Germany or France or the Scandinavian countries. If Labour Members are interested in the squeezed middle, they would be well advised to consider any scheme that might help to increase or release private sector money in health in a way that creates more resources, more medically trained people, and more medical treatment.

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[Michael Connarty]

The right hon. Gentleman leads me to my next point. He recommended that we look at the EU system. I am glad that in reply to an intervention from one of my hon. Friends he said that he objects to the idea of a comprehensive, insurance-based health service in this country. I, too, have looked at that on the continent and in EU countries, and I have seen that it does not work.

In fact, other EU countries do have a larger number of doctors—there are more doctors per head of population in most of them than in this country—but that is because of the elitist structure of the medical profession in this country. That structure keeps the numbers down and pays huge bonuses to people once they get to the higher gradings. Many of those people are the very same ones who moonlight in the private sector for additional personal financial gain.

[Mr Kevan Jones]

Insurance-based health systems such as that in the United States may have large numbers of doctors, but those doctors are not accessible to the large proportion of the population who do not have private health care.

[Michael Connarty]

The figures in the US are—

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[Kerry McCarthy]

I can confirm that the Opposition oppose new clause 1. The Prime Minister spent the years in the run-up to the general election and the year since trying to convince us that he valued the NHS, that it was “safe in his hands”. Sadly, however, given the current shambles over the health Bill, which has yet again returned to Committee, it is safe to say that he and his Health Secretary have spectacularly failed. On current evidence, it seems that the Prime Minister did not even attempt to persuade his Back Benchers—it seems that they now want to reinstate a policy introduced by Baroness Thatcher’s Government.

As we have heard, new clauses 1 to 4 would introduce a tax relief on medical insurance for over-65s. The hon. Members who tabled the new clauses stood on a manifesto that proclaimed we “believe in the NHS”. It turns out that they believe so much in the state that they think even private sector provision should receive state funding.

[Mr Kevan Jones]

Does my hon. Friend not think it strange that this proposal has not appeared in a Conservative party manifesto since 2001? The fact that it was dropped in 2005 and 2010 shows clearly that it is not a vote winner.

[Kerry McCarthy]

I thank my hon. Friend for that intervention. I believe that I will come to the point that he raises in a moment.

New clause 1 would reinstate a benefit that was withdrawn by the Labour Government in 1997 because, quite simply, it had failed. As my hon. Friend the Member for North Durham (Mr Jones) said, it was not picked up by the Conservative party during the recent general election. As noted by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who was in government at the time—I congratulate him on his excellent speech—the measure had little impact. One of the problems with the previous Conservative Government's tax relief was that they did not do their homework on what impact it would have. I would be interested to hear what research the hon. Members who tabled the new clause have done. I note that the hon. Member for Mole Valley (Sir Paul Beresford) pleaded numerical dyslexia when asked about the statistics. I think he should have got someone to do his maths homework for him before proposing a spending commitment. The first thing hon. Members should have done was to see whether it would have the desired effect in spending that money.

The Justice Secretary, the then Chancellor, claimed when originally introducing the relief that it would provide an incentive to older people to buy private insurance and reduce the pressure on the NHS. That has been echoed by many Government Members today. However, the tax relief did not reduce the burden on the NHS or help those patients who relied on it. It simply subsidised health insurance for those who could already afford it and had chosen to buy it. When originally announced in 1989, it was estimated that the relief would cost £40 million. A telling warning for Government Members who want to reintroduce the expenditure at a time of such fiscal restraint is that by 1997 the cost had multiplied to £140 million, because there was no limit on the state’s generosity to private providers. It would be wholly irresponsible to reinstate a policy whose costs could spiral to such an extent.

As NHS patients knew to their cost in the 1980s and early 1990s, the then Government were far more comfortable limiting expenditure on the NHS and letting waiting lists rise for the majority of pensioners and others who could never contemplate private insurance, which, as my hon. Friend the Member for Brent North (Barry Gardiner) said, was primarily a way of financing queue jumping for those who could afford it. For just a 10% increase in the number of people covered by insurance qualifying for relief, there was a 100% increase in costs in just the first three years. Over the lifetime of that Government’s policy, the number of people covered rose from 500,000 to 600,000; so, for a 20% increase in the number of people covered, the costs shot up by 350%.

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[The Financial Secretary to the Treasury (Mr Mark Hoban)]

New clauses 1 to 4 seek to provide for tax relief on medical insurance premiums for individuals above the age of 65. I understand that the argument for introducing such relief is that it would encourage individuals above that age to take up private medical insurance and therefore reduce pressure on NHS resources, and that this would result in a net saving for the Exchequer in the medium to long term.

The Government introduce new tax reliefs only when there is a compelling case that to do so would represent a good use of public money. Turning first to cost, we estimate that this relief would have a direct and immediate cost to the Exchequer of at least £135 million pounds a year—a significant amount, especially given the fiscal climate in which we are now operating. That would reflect the cost of restricting relief to the basic rate of tax.

[Mr Kevan Jones]

I am interested to find out where the Minister got his figure from, because the figure in 1997 was £135 million. Has it not changed since then?

[Mr Hoban]

That is the Treasury’s latest estimate, and it is a number that we are going to stand by.

In his opening speech, my hon. Friend the Member for Mole Valley (Sir Paul Beresford) said that he wanted to restrict the tax relief to the basic rate, but subsection (3) of new clause 1 would not have that effect. It suggests that the relief could be obtained at the highest marginal rate that a person paid. He has used the 1990 legislation, whereas in the 1994 legislation the relief was restricted to the basic rate.

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[Mr Leigh]

As so often in Finance Bill debates, the devil is in the detail. The hon. Lady has made a perfectly reasonable point. However, I hope to establish in my speech that the present system is unfair and, specifically, militates against single-earner families. That applies especially to those who are struggling out of poverty, but it is not necessarily the very poorest about whom we should be concerned. We should also be concerned about families on fairly modest earnings who are desperately trying to look after their children, and who decide that someone, usually the mother, should stay at home and care for them. But, as I have said, the devil is in the detail, and I will try to deal with the hon. Lady’s point later. It is important, and we need to tease the answer out of Ministers. We want to know why action has not been taken.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Mr Leigh]

I want to make progress, but I will give way.

[Mr Jones]

I agree with the hon. Gentleman that the devil is in the detail, but surely the new clause would unfairly disadvantage those who lost partners through no fault of their own as a result of broken relationships or death.

[Mr Leigh]

That argument has been used against transferable tax allowances. It is true that it is impossible to create a transferable tax allowance that helps everyone, but I do not consider the fact that in certain circumstances, through no fault of their own, people will not be allowed to enjoy the benefits of such allowances to be a good argument against trying to help others—and that is all we are trying to do.

Let us examine the extent of support for marriage in Britain. It is no surprise that marriage rates are at an all-time low and family breakdown is a massive problem, affecting many different areas and, it is estimated, costing us directly between £24 billion and £41 billion per annum. The “Breakdown Britain” report motivated the then Leader of the Opposition, now the Prime Minister, to come up with this policy—our policy—and launched the debate. It was promoted by my right hon. Friend the Secretary of State for Work and Pensions; although he is not present today, I pay tribute to him for his fantastic work.

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The ongoing arguments for recognising marriage in the tax system have been greatly enhanced by the fact that, other things being equal, the tax burden placed in this country on one-earner married couples on an average wage with two children will rise to more than 50% of the OECD average. We need a swift recognition of marriage in the tax system—the case is overwhelming. It will also probably take Her Majesty’s Revenue and Customs two or three years to make the necessary changes. Depressingly, even if the Minister were suddenly to announce today that he was going to do this, it might take two or three years for it to happen, so it is even more important to act. This is even more important than raising the personal allowance to £10,000. That Lib Dem policy concentrates on individuals, rather than families and, thus, favours two-income couples, rather than single-earner couples. The Government’s policy is actually making the situation even worse. With that, I rest my case and just plead with the Minister to try to recognise a solemn manifesto pledge.

[Mr Kevan Jones]

New clause 5 would allow married couples to transfer their personal income tax allowances between each other, along the lines of what was said by the Prime Minister and the Secretary of State for Work and Pensions during the election campaign about recognising marriage in the tax system. The new clause is not exactly what the Conservatives were proposing at the general election, and I shall deal with the differences in a while. The important point, which has not been clearly articulated by the hon. Member for Gainsborough (Mr Leigh), is that this policy arose from a 2005 report by a Conservative think-tank, the Centre for Social Justice, on the breakdown of the family. Its main argument was that marriage is the important point in keeping families together, tackling poverty and dealing with all the other arguments that he has covered. It also supported the introduction of an incentive in the tax system to encourage people to marry, and I shall return to that in a moment. I am not sure that most people who get married are thinking about the tax system before they decide to do so.

[Andrew Gwynne]

My hon. Friend makes a reasonable point and one that we were discussing on the Back Benches earlier. I am married and all three of my children attended my and Allison’s wedding in 2003. We did not need a tax allowance in order to get married—that is the important factor here that is being missed.

[Mr Jones]

I am sure that the hon. Member for Gainsborough will be shocked at the fact that my hon. Friend’s children actually attended his wedding. I did not realise that my hon. Friend was such a progressive individual, but he makes a perfectly good point.

[Mr Leigh]

The hon. Gentleman knows perfectly well that I am not suggesting for a moment that people get married in order to get tax allowances—I have never said that. All I am saying is that the current system is unfair, because it militates against a family on modest earnings where one person wants to stay at home to look after children. Of course nobody gets married in order to get a little tax allowance, but why should we have an unfair tax system?

[Mr Jones]

I actually do not understand why all this is unfair, because the new clause would give an advantage to people who are married but do not have children. I do not know how the new clause does what the hon. Gentleman is proposing in terms of keeping family units together and alleviating child poverty.

The important point relates to what was in the Conservative manifesto. What came out of that Conservative think-tank was the idea that marriage was an important point in keeping the family unit together and ensuring that children and wider society were not disadvantaged by a breakdown in the family unit. The manifesto made a commitment to “recognise marriage” in the tax system. It proposed that couples and civil partners who were basic rate taxpayers should be entitled to transfer just part of their allowance—this was worth, in effect, up to £150 a year. That is very different from what is contained in the new clause, because it makes no mention of civil partnerships. Given the names of the people who are supporting this proposals, I suspect that this has come from the wing that has not quite gone all the way in being the new cuddly Conservative party in terms of even envisaging the idea that civil partnerships, with or without children, could constitute a family unit.

As the hon. Gentleman mentioned briefly, the policy came unstuck in the coalition agreement because this proposal is clearly not supported by the Liberal Democrats. I believe that during a general election television interview, the Deputy Prime Minister called it “Edwardian”.

[Helen Goodman]

Edwardian!

[Mr Jones]

Well, yes. I can think of several people in the Chamber who are—

[Mark Tami (Alyn and Deeside) (Lab)]

Mediaeval.

[Mr Jones]

They are mediaeval in some cases, as my hon. Friend mentions.

[Andrew Gwynne]

The Deputy Prime Minister did not just say that this proposal was Edwardian. I believe that he went on to say that it was also patronising drivel.

[Mr Jones]

That is a bit rich coming from the Liberal Democrats, because most of the things that they come out with are patronising drivel. However, they were clearly not happy about this policy, so in the scramble to get the red boxes and cars they had to reach some type of compromise. Thus, the coalition agreement simply states that there will be a provision whereby the Liberal Democrats can abstain at some point in the future when this policy is introduced.

[Helen Goodman]

Are they going to abstain tonight?

[Mr Jones]

Possibly. The 22 June Budget made no announcement on where this policy stood and on what was happening to it. I can understand the annoyance felt by the hon. Member for Gainsborough and others, who clearly think that this is a vital piece of legislation that was promised to the electorate. It was obviously a key point: I am sure that a lot of people went to the ballot box thinking that if they would get an extra £150, they would vote Conservative. That pales into insignificance when set against what has been taken away from them since this Government came into power.

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[Mr Jones]

I am not trivialising the subject, but I will say to the hon. Gentleman that the real difference in North Durham was made by provisions opposed by him and his party, such as tax credits, which raised hundreds of families out of poverty, and the Sure Start initiatives, which were important in poor communities such as Stanley in my constituency and gave real life chances to youngsters from poor backgrounds. I will not take any lectures from a Conservative on alleviating child poverty. I hasten to add that since this coalition Government came to power, many families, including many individuals whom I met the other day at a school in my constituency, will lose the education maintenance allowance. That was not a luxury but a vital part of supporting those children in education and giving them the access to higher education that generations before them had never had.

[Mark Tami]

Would my hon. Friend like to add the minimum wage to that list? That was also opposed by the Conservative party and helped to lift many children out of poverty.

[Mr Jones]

I totally agree with my hon. Friend. I remember the debates on the minimum wage as a trade union official, as he will too, and we were told that it would wreck the economy, but in the north-east alone 110,000 people got a pay rise thanks to that change. It is interesting that we are now hearing proposals from Conservative Back-Benchers to change the system and that people who are disabled and others should perhaps be offered a lower rate of minimum wage.

[Dan Rogerson (North Cornwall) (LD)]

While the hon. Gentleman is patting himself on the back about the great successes of the previous Government, can he tell us which he thinks would have the best effect for working families with low incomes: scrapping the 10p rate or raising the income tax threshold, as this Government are doing?

[Mr Jones]

The hon. Gentleman must be honest with my electorate in North Durham about the fact that although the Government have increased personal allowances they have taken away money in others ways, such as the increase in VAT and the £140 million of cuts that Durham county council will have to impose over the next three years. Those cuts will have a direct effect on many of those poor families. The Liberal Democrats can claim that they have had great success, but if that is their only claim they should be honest with people and tell them what they have lost, as well, through such vicious policies. The hon. Gentleman should remember that this Conservative Government would be doing nothing without the support of him and his Liberal Democrat colleagues.

[Helen Goodman]

Another problem with raising the tax thresholds—a provision constantly promoted by the Liberal Democrats—is that, as I am sure my hon. Friend has not forgotten, the biggest beneficiaries are those who are highest up the income scale. The biggest value of the change is not to the people at the margins—those who are just caught or just not caught by the tax boundaries—but to the people higher up the income scale.

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[Mr Jones]

My hon. Friend makes a good point, but she knows as well as I do that many people in County Durham are facing unemployment as a direct result of the spending cuts. Many of those people will be taken out of paying income tax altogether because they will not have a job. For Members to try to trumpet that policy, not realising the damage they are doing to regions such as the north-east of England, is disingenuous.

I understand the argument made by the hon. Member for Gainsborough, which is that marriage is key in ensuring that we have the units that will lead to less crime, less social breakdown and so on, but—I am sorry—I do not accept that. The root cause of many of those issues is poverty. If we consider the examples given by the hon. Gentleman, as well as those given by the Secretary of State for Work and Pensions when he toured his Glasgow housing estate, we can see that £150 will not make a great difference to lifting anyone living on such a council estate out of poverty or giving life chances to the young children who live there. We should address poverty, and, in my opinion, provisions to do with the tax system and marriage are not the way to do that.

[Mr Stewart Jackson]

The hon. Gentleman is being very generous in giving way. Would he care to comment on the UNICEF study, produced in 2007, which showed a league table ranking the well-being of children in 21 developed countries, including their material, educational and subjective well-being, their health and safety, their behaviour and the strength of their family and peer relationships? Under the hon. Gentleman’s Government, Britain came bottom of the league.

[Mr Jones]

I think that report has been discredited, but I can look at the north-east of England and my constituency and consider the changes in employment that happened under the previous Labour Government as well as the life chances we gave to individuals, the new hospitals we provided and the investment we made in things such as Sure Start centres. Although I accept that such changes will not have benefits straight away, they will have real benefits over the lifetimes of those individuals. The Government that the hon. Gentleman supports is taking away such provision and says that the state is not important in one respect while, in this case, they want the state to engineer people’s private lives socially. I find that a completely contradictory stance, but, again, the hon. Gentleman is a Conservative and is therefore allowed to be contradictory.

[Andrew Gwynne]

My hon. Friend is being generous in giving way and he is making the point that the state can be family friendly through its policies without having to give away a tax break to people based on their marital status. The previous Labour Government made great changes by giving life chances to young families, in particular, without having to manufacture the tax system in such a way.

[Mr Jones]

My hon. Friend makes a good point. A little later, I shall discuss what our Government did to recognise the fact that if we are to address the issues raised by the hon. Member for Gainsborough about child poverty, the tax system and marriage are not necessarily the way to do it. The way to do it is to ensure that the money goes to the families and children who are affected. That is why the child tax credits and other such provisions were vital in raising people out of poverty. Earlier, my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned the minimum wage, which lifted a lot of very poor individuals out of poverty who were getting a pittance. I remember seeing as a trade union official an advertisement in the jobcentre in Newcastle that read, “Night guard, bring your own dog, £1.35 an hour.” That is a thing of the past. I hope that it will remain so, but I do not know, as we hear from Conservative Back Benchers that they might want to change the minimum wage in some way.

[Helen Goodman]

It was interesting that the hon. Member for Peterborough (Mr Jackson) mentioned the UNICEF report, because Denmark came at the top and Britain came very low down. I want to remind hon. Members that Denmark has the highest rate of lone parenthood and the Danish can combine that with good child well-being because they have a strong welfare state. Does not my hon. Friend think that that is far more important in addressing child poverty and well-being?

[Mr Jones]

It is. To be fair to the hon. Member for Gainsborough, he did say that being a lone parent does not make someone a bad or unfit parent. My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) had three children before he got married, but that does not make him a bad parent. [Interruption.] He says, “I don’t know,” but I do not think it makes him a bad parent: it is something that he and his partner chose to do. As he said earlier, the offer of a tax break of £150 a year would not make any difference to whether people decide to have children before or after they marry. Indeed, I have many friends who have children and who have never married and have no intention of doing so.

[Barry Gardiner]

Has my hon. Friend considered the situation of people like my mother whose husband, my father, died when I was a child? Under the proposed system, she would have found that the support was taken away at the very time when financially she needed it most. That would be the effect of the measure, which pays no real attention to the needs of the family or the needs of the child.

[Mr Jones]

My hon. Friend makes a very good point. The proposal is not subtle at all and his personal example is a good one. Why should someone who loses a spouse in an accident or through natural causes be penalised because, through no fault of their own, they have lost their spouse? That is the problem with trying to use tax in relation to marriage. As I have said, the measure is very different from what was put forward in the Conservative manifesto because it does not include civil partnerships. It clearly is not what Conservative Back Benchers have read in their own manifesto.

[Mr Chope]

The answer to the hon. Gentleman’s point was put succinctly in a Daily Telegraph editorial of 11 July 2007, which asked

“why should favouring married couples be an unacceptable interference when favouring single ones, as this Government does, is not?”

[Mr Jones]

The hon. Gentleman knows that there are always winners and losers in any tax system. I am very surprised at him because I know that he has very libertarian views on a whole host of subjects, which we have heard on many occasions in the Chamber. Is he really suggesting that we should use the tax system socially to engineer society by saying that people should marry rather than cohabiting or, as has been mentioned, becoming single through separation or bereavement? I am surprised at him because I thought he was very much against the state doing anything, but the measure has the state wanting to determine or influence exactly what an ideal society should be. I am sorry, but the statistics just do not bear out what the hon. Gentleman proposes. If such tax measures worked as a way of bolstering marriage and keeping families together, we would have expected marriages to rise with the married man’s tax allowance through the 1960s and 1970s, but they did exactly the opposite—we had record levels of divorce and separation. Hon. Members should look at the facts. Tax measures have not succeeded in doing that in the past, and I doubt whether they will in future. They certainly will not encourage anyone to get married for a small financial benefit.

It is important to dispel one myth, which has been put forward again by the Conservative party—the fact that a wicked Labour Government somehow did away with the married couple’s tax allowance and that Labour is responsible for the degeneration of society that the Secretary of State for Work and Pensions describes in his report. It is important to recognise what the previous Conservative Government did on this. It was Chancellor Norman Lamont in the 1993 Budget who proposed that the married couple’s tax allowance should be restricted to 20% from April 1994. That was the first time that happened for the basic MCA, which for a couple under 65 was then £1,720, so it was worth something like £608 for those who were on marginal rates of 40%, but only £344 for those on marginal rates of 20%. We then had the argument that it was unfair to have different amounts for people on higher tax rates than for those on lower tax rates. The then Chancellor said:

“There is no good reason why an allowance intended to recognise the responsibilities of marriage should give least to those on low incomes and most to those right at the top of the income scale.”—[Official Report, 16 March 1993; Vol. 221, c. 182.]

In the November 1993 Budget, the current Justice Secretary confirmed that change and went on to announce that the MCA would be further restricted to 15% from April 1995, so there was a slow change in the system. The provision restricting the MCA was made in section 77 of the Finance Act 1994. When this was debated in Committee, there was general support for the idea that the MCA should be the same across the board.

[Helen Goodman]

My hon. Friend’s description of what happened in the 1990s reminds me of an issue that I do not think the hon. Member for Gainsborough (Mr Leigh) addressed. One of the big debates on this subject was about the fact that transferable allowances reduce any scope for financial privacy within a marriage. A number of people felt very uncomfortable about that. Does my hon. Friend have any comments on that?

[Mr Jones]

My hon. Friend makes a key point and I understand why she makes it. This goes right back to when income tax was introduced in the 1790s, when a spouse’s income was the property of the husband. That was the basis on which income tax was brought in and it continued for centuries. There was no recognition that even within marriages people might have separate tax affairs or sources of income that needed to be recognised.

It is interesting to look back at the debate that took place about the MCA. Baroness Maddock, who was then a Member of this House, argued that the MCA was

“a relic of the days when a husband was taxed on his wife’s income as well as on his own. It contravenes the principle that marriage should be tax neutral.”—[Official Report, Standing Committee A, 22 February 1994; c. 344.]

[Mr Chope]

The hon. Gentleman quotes my predecessor, the then hon. Member for Christchurch, but in order to emphasise how out of touch her opinions are, may I tell the hon. Gentleman that there is no longer a single Liberal Democrat councillor in the whole of my constituency?

[Mr Jones]

I am very pleased to hear that but I am not sure that that is very good news for the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) to whom I understand the Baroness is now married. However, I take the hon. Gentleman’s point.

Interestingly, the then Chief Secretary to the Treasury, Michael Portillo, concurred with Mrs Maddock’s view. The then Chancellor, who is now the Justice Secretary, recognised that and announced in his Budget speech that there would be a two-stage restriction of the MCA, stating:

“Now that husbands and wives are taxed independently—one of the best taxation reforms in recent years—the married couple's allowance is a bit of an anomaly.”—[Official Report, 30 November 1993; Vol. 233, c. 935.]

The important thing that this demonstrates is that change was taking place under a Conservative Government, and that it was not the wicked previous Labour Government who came up with this idea. However, the change did set off the forces who were arguing that the changes were wrecking marriages. In 1995, a major paper called “Farewell to the Family” appeared. It made much of the fact that the measure would change families and discourage people from marrying.

[Stephen Pound (Ealing North) (Lab)]

Does my hon. Friend agree that it is a pretty poor show if a couple united in love and affection for each other decide to get married simply for the sake of some miserable, mean, pusillanimous fiscal mechanism? Would it not be a more healthy world if we could get the accountant out of the couple’s marriage bed, and concentrate on the important thing: two people who love each other, not two people who are trying to save a few bob from the Treasury?

[Mr Jones]

As usual, my hon. Friend makes a very good point. He raises the idea of the accountant in the bed. I do not know of many couples who, when they are ready to get married, sit down with their accountant to work out the financial benefit to them. I am sure that for many, something other than money comes into the decision to marry or start a family—a point that I demonstrated earlier.

[Mr Stewart Jackson]

As I said earlier, the hon. Gentleman aspires to be the County Durham filibustering champion; no doubt he will be on his feet for many more minutes. Is he seriously denying the findings of the British household panel survey, which found that the average length of cohabitation is just over three years, and led it to conclude in its paper that, compared to marriage, cohabitation was a significantly more fragile and temporary form of family? Just one in 11 married couples split up before their child’s fifth birthday, compared to one in three unmarried couples. Those are the facts; is he disagreeing with them?

[Mr Jones]

As for filibustering, this is nothing; I think that my record is two and a half hours. If the hon. Gentleman would like to keep intervening, I am sure that I can try to beat that. I do not deny what he says, and it is all right to cite the facts, but should one necessarily go on to say that those facts are a bad thing for society? Is he genuinely saying that the relationships of people who cohabit are any poorer than those of people who are married? Likewise, is he suggesting that if people decide, after marriage or cohabiting, to split up, that makes them bad individuals in some way—or, if they have children, bad parents? I know many cohabiting and divorced couples and single parents who are perfectly good parents and role models and work very hard to ensure that their families contribute to society financially and to local community life. The statistics that he cites are fine, but what is not fine is the next bit—the suggestion that the situation will somehow lead to the breakdown of society, or the idea that the family as a unit is the only answer to people’s lives these days. It is not.

That goes back to a Victorian notion. Before the Victorian period, it was not uncommon for people not to get married for many years. Marriage was a Victorian fashion, but in Georgian times many people did not get married at all, and raised perfectly good families. I am not sure that society came to a grinding halt because people were not married, or because there was not a tax system that encouraged people to marry.

[Mr Jackson]

Perhaps I might invite the hon. Gentleman to make a causal link, because he is not challenging the substantive point that I made with the figures that I gave. He will know that the Centre for Social Justice report of May 2011 found that children who do not grow up in a two-parent family are 75% more likely to fail at school, 70% more likely to be a drug addict, 50% more likely to have an alcohol problem, and 35% more likely to experience unemployment. That is not about traducing single-parent families, or besmirching their commitment to their children, but there is a causal link to family breakdown, which the hon. Gentleman denies.

[Mr Jones]

That is complete nonsense. When the Secretary of State for Work and Pensions was in opposition, we saw him walking around the Easterhouse estate, saying how dreadful things were. That is not down to whether people are married; it is down to poverty. That is the key driver of the pressures that people face. It is all very fine talking about drug use, but I have worked with an organisation for parents of drug addicts in Durham, and most of those parents are middle class. They have stable homes, but they have drug-addict sons and daughters. They are not bad parents, and it is not down to whether they are married. The hon. Member for Peterborough (Mr Jackson) and the Centre for Social Justice report make the mistake of saying that the family units that he describes are the reason for poverty. They are not. Addressing poverty, which we were doing through measures such as tax credits, is the way forward, rather than social engineering, and £150 a year will not go very far in encouraging people to stay married—or, for that matter, alleviate child poverty at all.

[Stephen Pound]

Does my hon. Friend agree that there is not a person in this marvellous, glorious, gorgeous building who fails to accept that couples together often nurture and raise children in a happier and better way, although they are not the only ones? However, we are not arguing about the sanctity of marriage; we are arguing about a backhander from the state—a few bob. The hon. Member for Peterborough (Mr Jackson), who was a bank manager and may well have interposed himself in a few intimate relationships in his time, is speaking very much from the perspective of the Conservative who sees everything in terms of money and fiscal benefit. Is there not a better way?

[Mr Jones]

There is, but the new clause that we are debating—I do not know whether the hon. Member for Peterborough would agree with this—refers only to married couples; it does not refer to civil partnerships, for example. I know that the new Conservative party is supposed to be modern and reflective, but what about people in a civil partnership who have children, whether from previous marriages or afterwards? Are we saying that that is a worse family unit than marriage? This debate is not about the tax system for those who are married and those who are not; it is about what is in the best interests of the child. Single parents—they may be separated, or their partner or spouse may have died, as my hon. Friend the Member for Brent North (Barry Gardiner) said—work very hard. This is about the child. The problem with the proposal is that it would reward people with no children.

[Barry Gardiner]

Does my hon. Friend accept that he has perhaps calumniated Georgian England—inadvertently, I am sure? Does he accept the wisdom of Jane Austen, who of course said:

“It is a truth universally acknowledged, that a single man in possession of a good fortune”

of £5,000 a year

“must be in want of a wife”?

My hon. Friend’s suggestion that marriage was not as common in Georgian England as in Victorian England is somewhat belied by Austen and other authors of the age.

[Mr Jones]

Let us consider Georgian and Victorian England. It might have been fashionable for someone with £5,000 a year in Georgian England to be married, but in many post-industrial cities of northern—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I fear that we are straying a little far from the point. Any chance of getting back to the 21st century?

[Mr Jones]

I think this is an important point, Mr Deputy Speaker. The main thrust of the argument that has been made is that marriage, and taxation in marriage, has been consistent throughout history, but it has not. Like a lot of things in this country, it has been looked at through a Victorian prism that seems to bend the reality of what took place way back then. However, I will move on to my next point.

[Helen Goodman]

I should like to back up what my hon. Friend says. In the major study of marriage in England from 1550 to 1750, Lawrence Stone demonstrated that in a commercial society with a commercial attitude—

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[Mr Jones]

It is important to note that income tax was introduced in the 1790s. We need not go back to the 15th century, but my hon. Friend the Member for Bishop Auckland (Helen Goodman) makes a good point, which was made earlier—the tax system treated women and their income as the property of their husbands. The supporters of the new clause argue that it would strengthen society, but there is no evidence for that. The new clause will help many people who have no children. It would apply to married couples and even retired people.

[Mr Stewart Jackson]

To what does the hon. Gentleman attribute the fact that many more people in County Durham, Northumberland and the north-east of England generally are keen on getting married than in, say, the south of England and London? Are his constituents wrong in supporting the institution of marriage?

[Mr Jones]

No, not at all. Many things in the north-east are obviously better than anywhere else in the country, but the statistics show that the number of people getting married is going down. The Secretary of State for Work and Pensions seems to think that a tax break of £150 a year will encourage people to get married, but that is not the case at all. He misses the main point.

The MCA was abolished in the Budget speech by the then Chancellor in 1999, and withdrawn in April 2000. Only married couples who reached the age of 65 by that date would be able to continue to claim the MCA. The additional personal allowance was also withdrawn at that time. The allowance equalised the MCA so it was given to lone parents, whether single, divorced or widowed, caring for one or more children under the age of 16.

Importantly, the then Labour Government introduced the child tax credit, which was vital to ensure that support went to the children. The Centre for Social Justice report suggested that marriage was important for keeping families together, but that is not the case. The important thing is how we support children. By introducing the tax credit system, we lifted thousands of children out of poverty by helping the families, whether they were married or not.

The credit took the form of an allowance which was then set at £5,200, on which relief was given at 10%. Families eligible to claim the child tax credit were able to cut their annual income tax not by £150, as is proposed, but by £520 a year. In April 2002 the credit was increased in line with inflation, making it worth £10 a week more. That was the fairest way of supporting families. I do not question the Secretary of State’s intention to help families, but the child tax credit was a far better way of doing it than through the married tax allowance.



The debate tonight has glossed over the cost of the proposal. We are told by the Government that we face hard times and that we must make every penny count. One reason given to explain why the proposal was not brought forward was the coalition Government; another was cost. The IFS estimated the cost of various options for introducing a transferable allowance based on different criteria. On the assumption that the allowance applied only at the basic rate of tax, which was due to be 20% in April 2008, the figures are eye-watering.

If the allowance applied to all married couples, the IFS estimates the cost at £3.2 billion. I am not sure where the Government would get such a sum from. If the allowance applied to all married couples but only half the personal allowance was transferred, that would cost £1.6 billion, so we are not talking about small amounts of money. If the object is to get that money to children, is this the best way? There is no realistic hope of the present Government doing this. I understand the annoyance of the hon. Member for Gainsborough, who thinks that he stood on a manifesto which will now not be implemented.

[Stephen Pound]

No one in this place would begrudge that sum if there was the slightest empirical evidence that it would be of any long-term benefit to society. There is no such evidence. Does my hon. Friend agree that that money could be far better spent on a raft of supportive mechanisms for families, particularly families with young children? That would ensure the longevity of the family unit.

[Mr Jones]

I agree. The money should be directed into Sure Start centres and the child tax credit, for example, but the Government are penalising single parents in some of their benefit proposals.

Another option that the IFS considered was targeting the allowance at married couples with dependant children or those receiving carer's allowance. The estimated cost of that was £1.5 billion. The final and cheapest option was that it would be given only to married couples with children under the age of six, which would cost £900 million. The various options illustrate the complexity of the policy and the questions that arise from it—whether it should apply to everyone or only to the groups that I outlined.

As the hon. Member for Gainsborough pointed out, whatever system is chosen, there are winners and losers. If we believe, as the hon. Member for Peterborough clearly does, that keeping people married is so important that everyone should get the allowance, the price tag is totally unaffordable, but doing anything less would undermine the main argument put forward.

It is worth recognising what that would translate into in cash terms. If it applied to the full personal allowance, the amount provided as an incentive to remain married would be quite meagre, at about £20 a week, which I am not sure is a great incentive. The rationale is that it needs to be fair and large enough to make a difference, but I do not think that a couple whose marriage is breaking down would stay together for an additional £20 a week. Whatever figure we come up with, I doubt whether it would actually make a real difference in determining not only whether a couple gets married in the first place, but whether they will separate after a period of marriage. When it comes to enabling families to stay together as a unit, clearly the important point is poverty. That pledge was made before the general election by the previous Prime Minister. I think that everyone, even those influenced by the darker forces on the traditional wing of the Conservative party, agrees that the modern family takes many forms.

[Stephen Pound]

My hon. Friend is young and has not been around for a enormously long time. When Mrs P and I were married in June 1976, virtually everyone got married just after the beginning of the financial year, which was a nonsensical system, with churches doubling the cost of altar servers. I assure him that one of the disadvantages of the married couple’s allowance was the great logjam of spring weddings. Despite that, Mrs P and I are still together.

[Mr Jones]

I have not had the pleasure of meeting Mrs P, but she certainly deserves a medal for the longevity of her marriage to my hon. Friend.

[Mr Leigh]

I am not sure that that intervention was entirely helpful, because the hon. Member for Ealing North (Stephen Pound) has just proved that tax policy at that time did influence behaviour.

[Mr Jones]

It might have done, but clearly if it raised the cost of a wedding, any financial benefit that people got from their £150 would soon be used up as a result of the extra costs involved. It did nothing to ensure that people stayed together longer.

[Stephen Pound]

I appreciate that we are treading on you patience, Mr Deputy Speaker, but I should note that it was probably a fear of Father Padraig that kept Mrs P and I together for the first three decades, rather than any small financial advantage.

[Mr Jones]

I understand why my hon. Friend and Mrs P have stayed together. Although the allowance might be an incentive to get married, the important point is that it does nothing to ensure that people will stay together for longer than the tax year. As has been mentioned, what is proposed would be very unfair. What happens if someone loses a spouse though no fault of their own, for example as a result of a tragic accident? Why should someone who finds themselves suddenly bereaved through no fault of their own after an accidental death, possibly with young children, be penalised by the tax system? It would be very difficult to introduce flexibility into this system to take account of that, and if we compare that with the tax credit system we will see that the important point is to support families and their children.

I will turn to some of the statistics on marriage that the Conservative party is putting forward. The hon. Members for Gainsborough and for Mole Valley (Sir Paul Beresford) are not known as great state interventionists, but by arguing that the tax system should be used to encourage people to marry, they are suggesting that the state should determine a certain model of behaviour. I find that very strange coming from Conservatives who deplore the nanny state and argue that the state should not interfere in people’s lives. There is an inconsistency there that needs to be answered.

[Mr Stewart Jackson]

The charming Maggie Pound deserves a long-service medal at the very least for putting up with the hon. Member for Ealing North (Stephen Pound).

On the merits and logic of the argument that the hon. Member for North Durham (Mr Jones) is making, is he suggesting that there is no place for fiscal incentives in directing personal and public policy? If so, does he think that we should not fine motorists for breaking the speed limit, for instance, because that is the logical corollary of his last remark?

[Mr Jones]

I am not saying that at all. I am saying that the hon. Gentleman, his party and, certainly, the more blue-blooded elements of it very strongly argue that the state should not intervene in people’s lives, including, in some cases, motorists’ lives, but what we have in new clause 5 is the right of the Tory party arguing for direct state intervention in something very personal: somebody’s personal relationship.

Earlier, it was said that a tax system would encourage people to get married, but there is no evidence of that at all. In the late 1960s and ’70s, when the old married man’s tax allowance was in place, there was a record rise in divorces, but that was less to do with the tax system and more to do with the change in society and the law that clearly made it easier to get divorced or to choose not to marry at all. Again, the idea that £20 a week will encourage somebody not to divorce is quite ludicrous. All the studies find that we would need to offer a considerable amount of money to prevent people from divorcing.

My hon. Friend the Member for Bishop Auckland (Helen Goodman) raised the issue of international comparisons, somebody else mentioned Denmark and other countries and the hon. Member for Gainsborough mentioned the fact that we are one of the few countries not to recognise marriage in the tax system, but there is no evidence to suggest that taxation as an encouragement to get married does anything to hold the family unit together.

[Clive Efford (Eltham) (Lab)]

I have listened to my hon. Friend’s speech with a great deal of interest. On fiscal incentives for people to stay together, does he agree that the cost of running two separate households is a major financial consideration for people living apart? It far outweighs any fiscal benefit that the taxation system could deliver.

[Mr Jones]

I agree. The changes being made to housing benefit will not do anything to help families stay together. My hon. Friend is a London Member, so he will know that families will be forced to move out of central London because of the Government’s changes to housing benefit rules. That is one of the inconsistencies of this Government. On the one hand they say that a tax break of £150, or £20 a week, will help to keep the social unit together, and on the other they—the same Minister, I hasten to add—pursue policies on housing benefit and other benefit changes that will not help at all to keep families together but will lead to the root cause of most of these issues: the poverty that affects such individuals.

I turn to some of the problems with the Bill as framed, and to what we have before us. New clause 5 is not the measure in the Conservative party’s most recent election manifesto. This proposed change includes married couples but excludes civil partners, who would not be covered by the new clause. When there was an outcry and complaints about what had been proposed at the election, the Prime Minister included civil partners at the last minute.

People would have to opt in to this system and elect to transfer their part of an allowance. That would be very unfair to many people who do not understand tax codes. I have just got my annual tax return and I keep putting it to one side, as most people do, until the deadline arrives. Introducing a system whereby people have to elect to transfer a certain allowance may well help the more articulate middle-class people who can do that when they fill in the form, but I am not sure that some of the people on poor council housing estates in Glasgow whom the Secretary of State for Work and Pensions is trying to address will have the wherewithal or knowledge to do it even if they knew that the option was available.

The Government have told us that they wish to simplify the tax system, but the new clause would make it a lot more complicated. In trying to bolster marriage, it would help certain groups of people but not others. Whenever we do anything with the taxation system, we should try to make it as user-friendly as possible. If someone opted to move their allowance around, that would be quite complicated because people’s incomes change throughout the year, so they might have a certain allowance available in one year but not another. The system would incur not only the £3 billion-plus cost of having it open to everyone but the cost of trying to work out how the tax office would administer it. In that respect, the new clause is not well thought out.

The Government have got themselves into a bit of a logjam on this. The Prime Minister is clearly committed to this policy. His Back Benchers are now worried that it cannot be implemented because of the coalition agreement. Huge amounts of public money would be used, but would it have any effect on child poverty? No, it would not, and neither would it affect most families. Moreover, it would help people without any children, including pensioners.

[Kate Green (Stretford and Urmston) (Lab)]

Leaving aside couples where there are no children in the household, does my hon. Friend agree that married couples typically tend to come from the better-off social classes and that, while I am sure that this is not what the hon. Member for Congleton (Fiona Bruce) intends, a tax break for marriage would therefore benefit the better-off?

[Mr Jones]

My hon. Friend has great experience in this area, and she makes a clear point. People on lower incomes and possibly of lower educational standing than others will not look at the tax system and say, “I’m going to stay married because somehow I will be financially better off.” That is why it is important to simplify the tax system.

If we are looking to help children, this proposal would not do that. Indeed, some aspects would be detrimental to families, especially put alongside the Conservatives’ existing proposals on changes to the tax and benefits system. We need an honest debate on the family, child poverty and how we can build communities. By investing in Sure Start and child tax credit, the last Labour Government raised a whole group of individuals out of poverty. That was the way to do it. If money is tight, it needs to be targeted very carefully.

The approach that has been put forward, which recognises marriage, is not targeted and will not have the effect that the Secretary of State for Work and Pensions wants. That is unfortunate, because I think that he is well intentioned and has just come to the wrong conclusions. It will be interesting to see whether the Government accept the new clause. I do not think that they will, because it is not what the Prime Minister and the Secretary of State for Work and Pensions outlined in the manifesto or in the lead-up to the general election. It will be interesting to see how much pressure the Liberal Democrats can bring to bear to ensure that this proposal never sees the light of day. The coalition agreement says that they can sit on their hands if it is brought forward.

In conclusion, the individuals who are trying to address this issue, including the hon. Member for Gainsborough who is well intentioned and thoughtful in trying to do the best for families, have got it wrong in thinking that the answer is marriage. The root cause of social breakdown is not that people are not married, but poverty. We need to ensure that not only the tax system, but the benefits system and everything else, supports families, whether the parents are married, single, in a civil partnership or whatever. As has been said, and as the modern part of the Conservative party recognises, the modern family comes in all shapes and sizes. One size does not fit all and one solution does not fit all. Giving a pathetic sum of money to support marriage will not relieve child poverty; nor will it ensure that people stay together longer if the taxman will raid their savings or income if they do not. I do not think that this is the answer, and if it goes to a vote I will oppose it.

[Fiona Bruce (Congleton) (Con)]

Only a few days ago, on father’s day, the Prime Minister stated:

“I want us to recognise marriage in the tax system so as a country we show we value commitment”.

I believe that the Government’s commitment to introduce such a provision is genuine. It was in the Conservative manifesto, it is in the coalition agreement, and I trust that the Government will introduce it in this Parliament, just as they are addressing the couple penalty. I warmly congratulate the Government, and in particular my right hon. Friend the Secretary of State for Work and Pensions, on the work being done to address this subject.

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[Fiona Bruce]

Is it fair that when incomes are equivalised, one-earner married couples with children—

[Mr Kevan Jones]

On a point of order, Mr Deputy Speaker. I am sorry, but like my hon. Friend the Member for Nottingham East (Chris Leslie), I heard the hon. Member for Congleton (Fiona Bruce) say “not moved”. I think that I saw one of the Tory Whips at her beforehand, so I do not know whether they tried to persuade her not to have this debate, but I think we need to clarify this point before we move on.

[Mr Deputy Speaker]

The position has been made absolutely clear. Now can we please continue with the speech that is being made?

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[Fiona Bruce]

I have already indicated that my hon. Friend the Member for Gainsborough kindly moved the new clause in my stead. I am very pleased that he did so.

[Mr Kevan Jones]

Why, because you’re not up to it?

[Mr Deputy Speaker]

Order.

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[Kate Green]

The hon. Gentleman raises a number of important points. First, I have been struck this evening by the interventions by Government Members about the opportunity for couples to make a choice—particularly that which many of them would like to see, which is for one parent in the couple, often the mother, to take some time out of the workplace to stay at home and care for children. They seem willing to spend money on offering that choice to mothers in couple relationships and to spend more on offering it to mothers in married couple relationships, but not to offer it to single mothers. The economic pressure on single mothers to go out to work to support their children is being ratcheted up by this Government. If it is right for children to have a parent at home for a time, not necessarily just when the children are very young, it must be right irrespective of the marital status of the parents. Government Members must think about the child-focused approach to deploying resources. If we think it right that parents should have the choice to be at home with their children, all parents must have that choice, not just those in married relationships.

In response to the interesting and important point made by the hon. Member for Peterborough (Mr Jackson) about what goes on in other European countries, let me say that one of the distinguishing factors is that the experience of poverty among lone parent families in this country and the much lower experience of such poverty in other European countries shows that one can design a fiscal system so that lone parenthood need not be a determinant of poverty. It need not lead families and children into poverty. This is about the redistributive choices that we make in our fiscal system. When we have such pressure on the public finances, making a choice to spend money on favouring a group of families, many of whom are already economically advantaged, rather than focusing spending on those who are most economically disadvantaged is a strange priority, particularly given that we have no evidence of the efficacy of spending money on keeping people married as a route to keeping them out of economic disadvantage.

[Mr Kevan Jones]

My hon. Friend talks about international comparisons, but does she agree that there is also no evidence in European countries or anywhere else that having a tax system that encourages marriage leads to more stable marriages or more coherent family units?

[Kate Green]

It is very clear that putting the weight of expectation for supporting marriage on the fiscal system is a very unrealistic and unlikely way of providing adequate support for strong couple relationships. Of course everybody wants strong couple relationships to be sustained and of course it is right to use every instrument of public policy that we can—cost-effectively and in terms of outcome—to do so, but the evidence about what sustains strong couple relationships is not that we should give tax breaks to the already better-off, and particularly not to the already better-off who do not have children, if we are concerned about child well-being. The evidence about what sustains strong couple relationships is about a much broader landscape of social and emotional support. It is about early relationship and social education in schools and ensuring we have strong services to support families in the community, including the universally welcome Sure Start services and the very good-quality child care and play facilities that can be available to support parents in raising their children.

To isolate money and spend it in the fiscal system rather than direct our attention to what genuinely supports strong family relationships and children in whatever family structure they are growing up is in my view a misapplication of public funds, particularly at a time when those public funds are constrained. As hon. Members have pointed out, it is particularly strange to spend money on couples who have no children if we are concerned about child well-being, rather than to spend money in a way that specifically focuses on the well-being of kids. I am very concerned that the new clause would take money from those with higher levels of need and give it to many couples in lesser need. I accept that, as hon. Members on the Democratic Unionist Benches have said, some married couples are in low-income groups and in straitened circumstances, but in general we would be diverting resources to better-off families from lower-income families, and particularly from lower-income families with children.

Finally, let me address the issue of the couple penalty, about which we have heard a great deal and about which I am deeply sceptical. Let us start by remembering that there are economies of scale of living with another adult in one’s household. It does not cost twice as much for two adults to live in a household as it costs one. The couple penalty that has been much talked about by Conservative Members fails to identify that the material circumstances of children in lone-parent families are measurably worse than those of children in couple families. Whatever the intellectual and fiscal modelling might suggest about a financial couple penalty, the reality—the outcome—is that there is no such couple penalty. Indeed, the penalty works in quite the opposite way. To seek to extend the material advantage that couples enjoy at the expense of single parents seems to me a strange choice for a Government who are particularly concerned about social mobility and improving the prospects of the most disadvantaged children.

I hope that hon. Members will consider the new clause very carefully and the fact that it simply fails to achieve the laudable goals of Members on the Government Benches to improve the prospects of some of our most disadvantaged children. I hope that they will look instead at how best we can direct resources to support parents who are bringing up children on their own, usually through no choice or fault of their own. I hope that they will relieve what is often a burden from the parents who are often proud to take on that burden and who deserve to be rewarded for taking it on, as they are the parents who stay and make the commitment. Surely they are the parents to whom we should be giving extra financial support if there is extra financial support to be made available. I really do plead with Members on the Conservative Benches, and with DUP Members who I think are giving them some support this evening, to think again about the likely effect of such a new clause and about the children who would lose out. I am sure that their intentions are honourable, but I am afraid that the results will be anything but.

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[Mr Jackson]

My hon. Friend makes an intelligent point, with which I wholeheartedly agree.

Reference was made earlier to the Centre for Social Justice report of May 2011. The hon. Member for North Durham, who is ambling along the Back Benches towards his place, did not refute the causal link and the difference between marriage and cohabitation and some of their negative socio-economic impacts.

[Mr Kevan Jones]

I do not know whether the hon. Gentleman was listening; I said nothing of the sort. I said that a possible reason for marriage break-up was poverty, but the link that he is making by suggesting that marriage break-down somehow leads to poverty is not the point that I was making at all.

[Mr Jackson]

The hon. Gentleman is trying the patience of the House. We will have a look at Hansard tomorrow to see what he said. He did not refute the details and facts that I put before the House in my interventions on him and others.

[Mr Jones]

I know the hon. Gentleman is not a good listener. He is drawing the conclusion that poverty, and things such as drug abuse among children of single parents and others, is a result of the fact that their parents are not married. What I said, and what is clear from the work of the Secretary of State for Work and Pensions, is that the root cause is poverty, not whether people are married or not married.

[Mr Jackson]

My capacity to listen is in inverse proportion to the length of the hon. Gentleman’s peroration. Given that he spoke for an hour, at the end, like many others, I lost the will to live. I expect better of the hon. Gentleman because he has given some very informative speeches over the years. Sadly, that was not the case tonight. I am sure he is distressed at my observations.

The hon. Gentleman failed to take on board any of the comments that were made or the facts that were presented. A study by the Bristol Community Family Trust in December 2010 demonstrated that cohabiting couples accounted for 80% of family break-ups, whereas divorce accounted for only 20% of break-ups. He did not specifically seek to break the causal link that I was making. One in 11 married couples break up before their child is five, compared with one in three unmarried couples. None of us wants to see the dire social consequences of family breakdown. There is a consensus across this country about it, from the Prime Minister down.

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[Mr Chope]

In making a brief contribution to this very important debate, I congratulate my hon. Friend the Member for Gainsborough (Mr Leigh) on getting it going. It came as a bit of surprise when my hon. Friend the Member for Congleton (Fiona Bruce) did not speak to the new clause, but I am delighted that she subsequently joined the debate to speak in support of it.

I come at this subject on the basis that the Prime Minister supports exactly what I support: recognising marriage in the tax system. He promised that the Government would recognise marriage in the tax system after the general election, and this debate rightly puts the focus on how that commitment will be implemented. I hope that when the Minister responds, he will say exactly when that is going to happen. Over a year ago, on 2 June 2010, the Prime Minister said:

“I believe that we should bring forward proposals to recognise marriage in the tax system. Those in our happy coalition will have the right to abstain on them, I am happy to say, but I support marriage. We support so many other things in the tax system, including Christmas parties and parking bicycles at work, so why do we not recognise marriage?”—[Official Report, 2 June 2010; Vol. 510, c. 428.]

Those were excellent words from my right hon. Friend. Then, some three or four months later—

[Mr Kevan Jones]

rose—

[Mr Chope]

No, I am not going to allow anybody to interfere with the words of the Prime Minister.

On 5 October 2010, the Prime Minister said:

“I have always supported the idea of supporting marriage through the tax system, specifically supporting the idea of a transferable tax allowance. The idea of a transferable tax allowance is in the coalition agreement.”

That is where my hon. Friend’s new clause comes in, because it calls for just that. One is entitled to ask why, having had two Budgets since the general election, we still do not have proposals to implement that very important pledge.

Labour Members are misrepresenting this proposal as an attempt to build new privileges for those who are in a marital relationship, but, as has been brought out time and again during the debate, the question is what we are going to do to prevent those who are married from suffering disadvantage under the tax system. That is what we are trying to put right with the new clause.

--- Later in debate ---

[Mr Chope]

My hon. Friend makes a very good point. We are seeking a route towards a destination. The Prime Minister set out the clear destination, but so far we do not seem to have made any progress towards achieving it. What was set out in detail on the Conservative website at the time of the election was a very modest proposal, which talked about a small proportion of the tax allowance being transferable, with quite a tight maximum income threshold in order for people to be eligible. Even that modest proposal has not yet been put forward by the Government in the Finance Bill so that we can support it and implement it.

[Mr Kevan Jones]

The hon. Gentleman has talked about the Prime Minister’s support for this proposal. Does he recognise that the Prime Minister included civil partnerships in what he said? If we agreed to this proposal tonight, civil partnerships would be excluded, which is clearly at odds with what the Prime Minister wants.

[Mr Chope]

If there is a defect in the wording of the new clause and it fails to recognise everything that the Prime Minister said—he certainly referred specifically to civil partnerships—the hon. Gentleman may have a point about that, but he does not have a point about much else, in my submission.

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[Chris Leslie]

I am not quite sure what the hon. Gentleman’s point is. Maybe in the cool light of day that intervention will have more light shed on it. In his contribution earlier, he asserted that there was a causal link between marriage and the socio-economic well-being of society, child well-being and so forth. He may well have a set of statistics in which he sees a correlation, but I am sure he understands the difference between causal and correlative effect. It may well be that car ownership has a similar correlation with child well-being, but that does not mean that setting up the tax system to the advantage of a particular institution will necessarily have the outcome that he seeks.

My hon. Friends the Members for Stretford and Urmston (Kate Green), for North Durham (Mr Jones) and others have overwhelmingly proved that we need a tax and benefits system focused on need and on poverty alleviation, particularly poverty among children. That must be the driving force behind a sane and rational tax system. We do not want a system with the peculiarities and idiosyncrasies that Conservative Members advocate.

[Mr Kevan Jones]

Does my hon. Friend agree that one causal link might be with poverty? The hon. Member for Christchurch (Mr Chope) says that couples in Dorset stay together longer, but might that not have a lot to do with the affluent nature of that part of the world compared with, say, inner-city Glasgow?

[Chris Leslie]

Absolutely. Of course that is the case. It is so obvious that it is surprising that Conservative Members cannot see it. What is worse is that the new clause that they have moved—or rather, that one of them has moved—would cost more than £4 billion. It would cost £4.1 billion to create a personal allowance transferable between all couples, married and unmarried. That would be the price tag of new clause 5. That is the equivalent of a penny on income tax, a penny on employee national insurance rates, a 1% increase in VAT or putting VAT on fuel and power, as we know the Government sometimes like to do. If Conservative Members advocate spending that amount of money, surely it would be better to target it on the basis of need and where it would have the best and most direct benefit to society.

There is a long history of the transferability of personal allowances, and I will not go through it.

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[Roberta Blackman-Woods]

I want to support new clause 10. It is very important that the assessment of VAT considers the effects of the rise on both individuals and businesses. We need to consider both categories to understand fully the impact that the rise could have on economic growth. I know from sitting through the last debate that the Conservative and Liberal Democrat parties have no understanding and no idea of the pressures that are being placed on family budgets. This debate seems to be showing that they do not have any understanding of the stresses and strains being put on businesses in constituencies such as mine. In fact, as my hon. Friends have said, the Government seem to have very little understanding of what is happening to businesses across the north of this country.

I know from my constituency postbag and I hear from my local citizens advice bureau that more and more people are looking for advice not only because they are concerned that they might lose their jobs, which is affecting a large number of people in my constituency and the neighbouring areas, but because those who are in work are experiencing increasing rises in food, energy and petrol prices while facing a cut in wages in order to keep themselves in employment. If we add those factors together, we can see that consumers are concerned about the future, which is affecting what they purchase on the high street. That has a huge impact on all our constituencies and we have heard tonight of many examples of businesses in the retail sector that are falling daily.

[Mr Kevan Jones]

Does my hon. Friend agree that a vivid example of that can be seen when one walks through the centre of the fine city of Durham? An increasing number of shops are closed with no trade taking place at all.

[Roberta Blackman-Woods]

I am grateful to my hon. Friend for making that point and I shall come to the city of Durham in just a moment or two.

The situation that I am describing, with reducing consumer confidence and increasing stresses on business, would definitely be helped by a reduction in VAT, even if it were temporary.

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[Roberta Blackman-Woods]

My hon. Friend makes an excellent point, and reduced demand, not just from sectors but from individuals, appears to be very damaging for communities such as mine.

I want to talk about tourism in my constituency. Tourism was mentioned earlier; we know that VAT rises have really had an impact on the tourism industry, and cities such as mine are suffering because of that. People do not have as much disposable income as they did, so they are not spending as much on leisure, and that has an impact on tourism.

[Mr Kevan Jones]

It took the Minister with responsibility for tourism a year to visit the north-east; he finally turned up in the north-east last week. Is my hon. Friend as concerned as I am not just about the effect of VAT on tourism in Durham, but about the fact that the Minister had no answers whatever when it came to the issue of replacing One North East’s marketing campaign to promote tourism? He basically said to local businesses that they had to get on with it themselves.

[Roberta Blackman-Woods]

I am not sure that I am surprised that that was the answer from the Minister with responsibility for tourism. I shall come on to the regional development agency in a moment or two.

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[Toby Perkins]

If I had had any idea that my hon. Friend so desperately wanted to intervene I would have given way earlier, but I am pleased to have been able to make her dream come true. The strong point that she makes, and on which Members should reflect, is precisely why my right hon. Friend the Member for Delyn (Mr Hanson) suggests that we assess the impact of the VAT increase.

I am not trying to get into a class war thing, but one reason why the Chancellor has got things so wrong and why so many of his policies seem so out of kilter is that he has no concept of what people can actually buy with a half-decent salary. That is one reason why, at the drop of a hat, he introduced the changes to child benefit. As someone who was loaded the day he was born, he has no idea of the difference between a salary of £50,000 a year, £20,000 a year or £12,000 a year; he just knows that they are a lot less than he has, and that people on £50,000 seem to earn more than the average so they are probably okay.

[Mr Kevan Jones]

Has my hon. Friend noticed that the same applies to the majority of the Cabinet? I understand that among both its Conservative and Liberal Democrat members there are some 20 millionaires, so they say that we are all in it together, but they are clearly not.

[Toby Perkins]

My hon. Friend makes a valuable point. No one is suggesting that because someone is wealthy they do not have a right to go into politics, just as we would never keep someone out of politics because they were poor—[Interruption.] Well, we would never do so! The central point, however, is that when the policies that the Government pursue seem so directly to hit the most deprived people, to attack pensioners and, particularly, to attack women as they have on so many different occasions, people will understandably look at the background of the people making those decisions. When people hear them in opposition say that they recognise that VAT is a regressive tax, but see them go into government and try to claim something different, they will understandably question their credibility.

VAT hits the poor, the workless and pensioners. Are those really the people the Chancellor wants in his sights?