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Mr. Bennett: If it is so important to help the family, why should families have to wait so long for help?

Mr. Ottaway: We have made it clear that we intend to phase the help in over the first three years of the next Parliament. The hon. Gentleman and the Minister know that we have accepted the Government's spending plans and tax plans for the first year of the next Parliament.

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We will introduce tax cuts and achieve reductions in public expenditure in years two and three. The figure that I mentioned is for 2003-04.

Dawn Primarolo: Did I hear the hon. Gentleman correctly? Did he confirm that if by some disaster his party were elected at the general election it would be committed to spending cuts and tax cuts, and it would expect the electorate to believe that everything would remain the same?

7 pm

Mr. Ottaway: The Paymaster General makes it seem like I have revealed some secret. We have made it perfectly clear in countless press conferences that by 2003-04 we will have reduced public expenditure by £8 billion on the figure announced in the Red Book and in the comprehensive spending review last November. That is well-documented. It is our policy, and the hon. Lady knows what public expenditure we are committed to maintaining and where our adjustments will be made.

Mr. Hendrick: The Conservative party is willing to pay £1.6 billion to entice people into getting married. If those people decided to divorce, would it be willing to claw back all the benefits they received when they were married to prove that it was not a marriage of convenience?

Mr. Ottaway: I am not quite sure what point the hon. Gentleman is making. If people were to divorce, they would not be entitled to the married couples allowance, because they would no longer be married.

Mr. Hendrick: The Conservatives would spend £1.6 billion of taxpayers' money to give people an incentive to get married. If they decided to get divorced a few years later, would the Conservative party claw back that extra benefit to prove that it was not a marriage of convenience?

Mr. Ottaway: The hon. Gentleman is getting his figures in a twist. We are not proposing to spend £1.6 billion on the married couples allowance: the figure is £1 billion. I am afraid that the hon. Gentleman's point about clawing back the benefit is lost on me. Perhaps he would write to me about it, and I will give him an answer.

Dr. William McCrea (South Antrim): Is not it strange to talk about £1.6 billion or £1 billion to encourage people to get married? Labour Members seem to be sneering at the basic morality of marriage. Why should we sneer about the fact that people get married?

Mr. Ottaway: The hon. Gentleman is on to something. For the past 20 minutes, there has been nothing but criticism and sneering at the concept of marriage. I should like mildly to correct the hon. Gentleman on one point. Our proposal is not a reward for marriage: it is a recognition of marriage. The Conservative party believes in marriage, whereas it is becoming manifestly clear that the hon. Member for Preston (Mr. Hendrick) does not.

Mr. Hendrick: Will the hon. Gentleman give way?

Mr. Ottaway: This is a guillotined debate, and I have given way three or four times, so I shall not give way again.

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Families have suffered a systematic increase in taxation over the past four years. How does it help our children if their parents are taxed up to the hilt? If people smoke, drink, drive a car, have a pension or are married, they have been subjected to 45 increases in taxation during this Parliament. Such regressive taxes hit those on lowest incomes hardest--the people in Labour's heartlands. The average family pays more than £600 a year more tax under Labour. The Conservative party will reverse the trend. We will take 1 million pensioners out of taxation. We will make income from savings tax free for millions. That is the way to help our children.

The Conservative party is in tune with the British public. We will reduce taxation and will liberate the nation's creativity.

Mr. Edward Davey: There may be a germ of a good idea in this new clause. The serious, wider policy debate is about the best way of providing support for families and children, whether couples are married or unmarried. The Government are gradually moving towards a coherent approach, and they may get there by hook or by crook. At the moment, the system is highly complicated, with child benefit, child care tax credit, working families tax credit and children's tax credits. Previously, we had the married couples allowance, which was available whether couples were married or not.

This is a complex area, and the Finance Bill adds to that complexity by introducing the babies tax credit, which is available to families with children under the age of 1. Having created some of that complexity to meet their laudable objective of reducing child poverty, the Government are now trying to tidy things up. The Chancellor is working towards an integrated children's credit. As the Government move towards a more rational, streamlined approach to ensure that families have the resources they need to tackle child poverty, the question is whether it is a good idea to include families with children under the age of 5 in the proposals for an integrated children's credit.

Mr. Bennett: Do the Liberal Democrats think that it is a good idea? My impression from listening to the arguments about child benefit was that, although one could identify loss of earnings as a problem for families with very small children, after the first year small children do not cost families anything like as much as young teenagers.

Mr. Davey: I am grateful for that intervention, because I was just about to explain my party's position on this issue and the thinking behind it. We have some sympathy with the idea of rewarding families with children under the age of 5. That could be achieved through a premium on child benefit or through the mechanism in the new clause. The hon. Gentleman is right that children cost more in their first year. The Government were right to acknowledge that, although we believe that they could have gone about it differently--for example, through a maternity grant. Many of the costs in the first year are up-front and not spread through the year, as the proposal for a babies tax credit suggests.

We understand that argument, but I suggest to the hon. Gentleman that there are not just costs but benefits in ensuring that a family has more money in those early years. It would give parents a real choice between staying at home to look after their children or going to work.

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The Government have continually tried to give the impression that they want new mothers to go back to work as soon as possible: that has been part of the rhetoric and, indeed, part of the Government's tax and benefits strategy. I fear that they may have gone too far in advocating an early return to work for new mothers, and it is in that context that I see the germ of a good idea in new clause 2.

It may well be--and I believe some sociological studies suggest--that it is beneficial to young children for their parents to have more contact with them in their earlier years, before they go off to nursery school, playschool or primary school. There is a serious policy question to be asked: should the tax and benefits system make it easier for parents to remain at home during those first five years?

I hope that, in response to today's debate and as they proceed with the debate on integrated children's credit over the next year or two--I say that assuming that Labour will be returned to office--the Government will consider the issue in some depth. The commissioning of research, and a wider public debate, may be required to establish whether it makes sense--in terms of effects on the labour market, and in terms of effects on the welfare of families and children--to ensure that the money that we are putting aside is targeted at the early years.

In many ways, the whole debate is about where resources should be targeted. One of the aims of the children's tax credit was to augment the funds going to families, without augmenting only a universal benefit--child benefit. The Government considered taxing child benefit, as the Conservatives had done before them, but for various reasons they decided against it, and ended up with the children's tax credit. Again, they were trying to find the best way of targeting resources more effectively.

The new clause raises the important question of whether we should target resources at children during those early years. I think that there is a strong argument for doing so, but I should like the Government to commission further research, and I think that we should engage in a wider public debate. Only when we see the results of research will we know the facts. Perhaps we should target even more resources at families with children under five than the new clause suggests; perhaps we should be much more ambitious. That might be the quickest, most tax-efficient and most expenditure-efficient way of meeting the Chancellor's objective of halving child poverty in 10 years.

As I have said, there is a serious issue behind new clause 2. I hope that, rather than taking the partisan, political point-scoring route down which the hon. Member for Croydon, South (Mr. Ottaway) seemed to be tempting Ministers, the Government will address themselves to what I consider to be the really serious policy issue.


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