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Finance (No. 4) Bill

It is complicated, particularly as free school meals are obviously not a universal benefit. Child benefit has a 96% or 97% take-up rate, and the Government's proposals in the Finance Bill are designed to reduce that take-up rate. A number of people might opt out of receiving child benefit, so it will no longer be a universal benefit. As the hon. Gentleman says, if we want a debate about universal benefits, let us have one, but let us do so in the context of a Green Paper, some draft legislative proposals and so on. In December 2010, in response to the consultation on the issue of a new approach to tax policy making, my hon. Friend the Exchequer Secretary said:"““This new approach is vital to the Government's aim of restoring the UK tax system's reputation for predictability, stability and simplicity.””" There it is: simplicity. We are now talking about employing, on my estimate, between 500 and 1,000 extra staff in order to claw back child benefit to the extent of £1.5 billion from 1.2 million households. How complicated and complex is that? One has only to look at the detailed figures produced by the Treasury in connection with the Budget and to read the report of the Institute for Fiscal Studies to realise that it is incredibly complicated. That is why my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said in the media not long ago that when he was a Treasury Minister, he was asked to consider this issue on a number of occasions by Treasury officials and he always reached the conclusion that one could do something with child benefit but not in a way that was fair and equitable. The Government have come up with a proposal that is not fair and equitable. We know that the Government are relying on getting £1.5 billion in income from the measure and I realise that it is very difficult at this stage, when the Budget and the sums have been done, to move amendments that are in order to try to show how an equivalent sum could be raised in an alternative way. If the money was not all being raised from the people being targeted at the moment and there was a proposal to increase the contributions of some other people, such an amendment would be calling for an increase in tax and so could not be tabled by a humble Back Bencher under the Standing Orders of the House. Notwithstanding that, however, I hope to refer briefly to another way in which an equivalent amount of money could be raised by the Exchequer, which would be much fairer and simpler and which might find favour with a surprisingly large number of people if put out to consultation. Let me conclude my comments on the lack of advance consultation on the child benefit measures. I think that some draft clauses should have been published and discussed. The Government had been thinking about the measures since October 2010 and, contrary to what they had said they would do, they did not produce any draft clauses for consultation, so we are effectively left to scrutinise a Bill that was published during the recess. We have had two weekends to look at it and this Thursday we will have to decide on all the amendments on child benefit in what will probably be, at most, a three-hour debate, under the timetable motion that the Government seek to impose on the House. I urge my right hon. Friend the Chancellor, when he considers next year's Budget, to revisit his proposals for having a better system with a lot more consultation. With such a consultation, I do not think we would be in our present difficulties with the VAT on static caravans, the removal of the pensioner age-related allowance, the capping of tax relief on charity donations and so on. The Chancellor and his Treasury team must be pretty concerned about the adverse publicity that has followed the Budget, but all those difficulties could have been avoided if the team had been a bit more trusting of their fellow parliamentarians and had shared information on these measures before the final decisions were made. The consequence of the proposals on child benefit is that 1.2 million of the 7.9 million families receiving child benefit will lose out. Some 70% of those families will lose the full amount whereas others in the band between £50,000 and £60,000 will lose some if not all of their child benefit. Why do the Government want taxpayers with children to make a greater contribution towards deficit reduction than those on equivalent earnings without children? I have asked that question a number of times in the House but I have never had a satisfactory answer. I want to put forward an alternative proposal in this public forum. There are about 2 million people earning more than £60,000 a year in this country. I have here some figures from a response to a parliamentary question that was asked on 27 February 2012, column 63W, which gave the number of taxpayers in 2010-11 in detailed income bands. The figures suggest that there were about 1.85 million taxpayers with incomes of more than £60,000 in 2011. The Library note that I have says that the information in HMRC table 2.5 and on the rate at which people's incomes are increasing suggests that there will be around 2 million taxpayers with incomes over £60,000 in 2011-12. Those are the people I thought the Prime Minister and the Chancellor of the Exchequer had in mind when they said that those on higher incomes should make a larger contribution to deficit reduction. All those people—the best part of 2 million taxpayers—could each be charged £1,000. That would generate £2 billion and at a stroke we would be free of interfering with the universal child benefit and would be free of being accused of picking on people with children rather than people without children. It would remove at a stroke the need to employ all the extra civil servants needed to administer a system that will be very complex, particularly in relation to those earning between £50,000 and £60,000 a year. It would also remove the administrative burden of having to introduce into the tax system definitions of couples living together—that is already a nightmare in the benefit system, so why introduce it into the tax system? I do not think the measures have been thought through, but rather than being negative about them, I am saying to my hon. Friend the Minister that I hope the Government will reconsider this issue between now and Report and perhaps consult on the possibility of asking, ““Why don't all those people earning over £60,000 a year make a contribution of £1,000 and thereby collectively generate £2 billion in income for the Treasury in the next financial year?”” Incidentally, that would also remove the need to interfere with age-related allowances because the yield would be slightly larger. I do not have any personal interest in this issue now because my two children are past the age at which they enabled their parents to qualify for child benefit, but if we were to bring this down to Members of the House, I ask why a colleague of mine with one, two, three or four children on a parliamentary salary should be forced to forfeit child benefit or have a child benefit charge, which may run to several thousand pounds a year, placed upon them while I, who no longer have the responsibility of having children in school, do not make a contribution. It just does not seem fair to me. There is a fairer way to do this. When I originally raised my idea with the Chancellor of the Exchequer he said, ““Who wants to start increasing the higher rate of tax?”” but we do not need to do that because, fortunately, the Treasury has come forward with a form of introducing an arbitrary extra charge—a fixed sum, which is effectively a tax—that comes into play as soon as somebody's income passes a particular threshold, which would be £60,000 in this case. That would enable us to avoid a situation in which 670,000 households with a family income of more than £60,000 will retain some or all of their child benefit while single-parent households on £60,000 will lose everything. I do not have the figures to hand but there are tens of thousands of single-parent households. Given the additional disincentives that will result from the introduction of the measure, I hope that Treasury Ministers will think again about the wisdom of what they plan to do. There could be perverse consequences as people try to avoid the charges. There could be all sorts of hard luck stories. A person earning £60,000 or £70,000 might take pity on a widow with several children and go to live in her house. They would then find that they had to pay, because they were earning more than £60,000 and living with someone who was in receipt of child benefit. Is that really the sort of message the Government want to send? I do not think it is. We want to keep the tax system simple. We want to promote the importance of families with children and recognise their extra responsibilities, not penalise them in the tax system.