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I have laid out our strategy, but I shall now say something briefly about the Opposition’s approach, as exemplified in the speech by the right hon. Member for West Dorset and the document published yesterday. They say that their policies are designed to break the
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cycle of disadvantage in the early years of a child’s life—that is a central part of the report. I welcome that, and I have said that we will look at the proposals.

There are, however, two areas in which I feel that I must part with the tempting consensus that is breaking out. In an intervention, the right hon. Member for Chingford and Woodford Green said that we should not engage in point-scoring on public spending and how much a policy costs. I agree with that, to an extent, but we would not be discussing the spending implications of this report, which amount to billions of pounds, and I do not criticise the right hon. Gentleman for that, were it not for the fact that the Opposition are committed to cutting public spending as a share of national income.

I welcome the fact that Opposition Members have come to this debate saying, “We do think that poverty and social justice matter, and that the issues that our society faces are important.” However, I fail to understand how they can also say, “As a precondition of deciding our strategy, the one thing that we know is that public spending must fall as a share of national income.” I am not asking them to say that it must rise as a share of national income. All I am saying is, do not tell us that we need more spending on dealing with drugs and alcohol, more spending on special needs, more spending on people with learning disabilities and more spending across the board—we share many of those views—yet then say, “But we must cut the state as a share of national income.”

That is the problem for the Conservatives. They are caught between their new-found embrace of social justice, which we welcome, and what their hearts tell them they believe in—the smaller state. The right hon. Member for West Dorset is in transition, if I may put it that way. In 2001, in a famous—or infamous—episode, he told the Financial Times that we should cut the share of national income to 35 per cent. of GDP. He then disappeared, and reappeared in a toga in his constituency. I notice that he has not being saying that for the past six years, which I very much welcome. However, we cannot have the grown-up debate that the right hon. Member for Chingford and Woodford Green wants following his report if the Opposition say, “We know we need a smaller state to achieve the outcomes that we want,” when nothing in the speech of the right hon. Member for West Dorset suggested that the smaller state was the key.

That is what is remarkable about this debate. I will be honest—I expected the right hon. Gentleman to say, “And here’s why we need to cut public spending. Here’s why cutting public spending as a share of national income is the answer to the social problems that we face,” but he did not do so. So I suppose I am urging him to go that one step further in his transition, and to say, “Well, look—that is probably not the right approach. It probably isn’t right to pre-judge the size of the state in that way. It’s probably right to say that in fact, that is an old ideological hang-up from 2001 and the toga episode.”

I will gladly give way to the right hon. Gentleman if he wants to change the Conservative party’s policy on this issue. He is its policy guru—he wants to be the Rab Butler of today. After 1945, Rab Butler changed the Conservative party’s ideological position out of all recognition. I know that the right hon. Gentleman
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wants to go down in history as the Rab Butler of his time, so I offer him the opportunity to follow that tradition and to come to the Dispatch Box and be Rab Butler.

Mr. Letwin: Rather than satisfying the right hon. Gentleman on that point, may I ask him a question? Do the current Government’s spending plans involve a reduction in the share of national income taken by the state due to public spending growing more slowly than anticipated as a proportion of GDP, or not?

Edward Miliband: Yes, they do. [Hon. Members: “Ah.”] However, there is one crucial difference: it is a matter of discretion, not of dogma. That is the difference in this debate. We have increased the share of national income used for public spending significantly over the past 10 years, but we would never have been able to do so under the proceeds of growth rule.

Mr. Duncan Smith: I was listening with great interest as the Minister expounded what he saw as the moral duty to increase the state. It now appears that the Government’s plan is to bring it back down again, but I want to get beyond all that. Crime costs the state £60 billion a year, and family breakdown £24 million, while failed education, together with drug and alcohol abuse, are also huge costs to the Exchequer and the taxpayer. Is he arguing that they are good and should be kept, or is he trying to reduce them? If the latter, I wonder whether he would agree that we should reduce the size of the state.

Edward Miliband: I completely share the right hon. Gentleman’s worry about the costs of social breakdown, although I do not think that all the costs that he identified are costs on the state. I have no doubt at all that his report is genuine in its concern about poverty, but it is incumbent on him to say how its long list of spending commitments would be met. I can tell him that that cannot be done if there is a dogmatic view in advance that the size of the state should be cut.

The right hon. Member for West Dorset did not take up my invitation to make the transition and be Rab Butler, so I shall turn now to families, the second area of disagreement between us.

We all believe in supporting families, and the Government have a clear strategy. It involves supporting parental income and extending leave, and improving the relationship counselling and parenting advice available. All hon. Members know that the Government have invested in supporting children and families through tax credits, and that, by and large, that approach has been acknowledged as a success. However, should we go further and spend an extra £3 billion on transferable tax allowances?

The right hon. Member for West Dorset did not take up the invitation extended by the hon. Member for Yeovil (Mr. Laws) to say yea or nay to the proposals made by the right hon. Member for Chingford and Woodford Green. I shall be more candid: I am not in favour of the proposal for transferable tax allowances, and I shall explain why.

I agree with the right hon. Member for Witney (Mr. Cameron), who said last year:

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That is right, but I am afraid that the transferable tax allowance proposal fails that test. The poorest people in our society would receive least help from that allowance, as just 3 per cent. of the benefit would go to the poorest tenth of the population.

Therefore, I do not believe that the transferable tax allowance—which the right hon. Member for Chingford and Woodford Green has proposed with honesty and genuine intent—can possibly be in tune with the new Conservative party. If the priority of every policy is to help the disadvantaged, how can a policy be adopted when it gives just 3 per cent. of the benefit to the poorest tenth of the population?

Again, in the spirit of building consensus on these matters, I am very happy to give way to the right hon. Member for West Dorset so that he can come to the Dispatch Box and explain that I am wrong and that the proposal would help the most disadvantaged. Alternatively, he might be tempted by me, as he was not tempted by the hon. Member for Yeovil, to say that it is not such a good idea after all.

The right hon. Member for West Dorset is obviously not keen to intervene, so I will give way for a final time to the right hon. Member for Chingford and Woodford Green.

Mr. Duncan Smith: The Minister knows that that proposal is part of a package. I can understand why he is being so explicit, as he made his reasons clear yesterday, but will he be just as explicit about his position in respect of the couple penalty? Given that 60 per cent. of children in poverty live with couples who are disadvantaged by the benefit system, will he now say that he agrees with our proposals to eradicate that disadvantage and rebalance the system?

Edward Miliband: Again, the right hon. Gentleman makes a proposal costing £3 billion as though there were unlimited money to spend. Of course, we will look at all the proposals in his report, but the same structure was used for family credit and the family income supplement. We have not changed the benefit system; the structure is the same.

Mr. Frank Field: In the House, we have all noticed how careful the official Opposition have been about endorsing the idea of transferable tax allowances, although they seem to be much clearer about getting rid of the bias in the benefit system that operates against two-parent families. May I suggest to my right hon. Friend that just as Members on the Opposition Benches are beginning to distance themselves from transferable tax allowances, we should look seriously, well before the next election, at the bias against couples in the benefit system?

Edward Miliband: My right hon. Friend knows far more about the benefit and tax systems than I do. He raises a fundamental issue: in an income-related system, people with more income receive less tax credit. The couples proposal would not fundamentally change that situation. Of course, we will look at everything in the report produced by the right hon. Member for Chingford and Woodford Green and I am happy to talk further to him about it.

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John Bercow: I am glad that we are having a proper debate about these matters. The couple penalty issue warrants the closest and most serious scrutiny, and I think that the right hon. Gentleman will need to come back with a somewhat fuller response at some point. There is an honourable view in support of the transferable tax allowance to married couples, but it is not everybody’s view. I think it is a thoroughly bad idea: it will be highly expensive; it will not cause anyone to get or stay married who would not otherwise do so; and it sends a detrimental signal to many other people. It should be relegated to the circular filing tray sooner rather than later.

Edward Miliband rose—

Mr. Deputy Speaker: Order. Before the right hon. Gentleman responds, I point out to the House as a whole that although the debate has been very intense and, no doubt, of high quality, several Back Benchers are hoping that they might be able to make a contribution. Perhaps that could be borne in mind from now on.

Edward Miliband: I take your point, Mr. Deputy Speaker, and will shortly act on it.

The problem is not simply that the transferable tax allowance is unfair in its impact on the affluent and less affluent, but that it picks and chooses which families to support. Widows with children receive nothing. Spouses abandoned by their partners receive nothing. Married couples where both partners work receive nothing. On the other hand, people married twice, three times or four times receive help.

The Conservative party has found lots of new friends over the past two years—its period of transition. It has new friends in the Child Poverty Action Group, One Parent Families and Relate, the family counselling service, but all of them say that the transferable tax allowance is a thoroughly bad idea. That view is shared by another person: Camilla Batmanghelidjh, who has appeared on a number of platforms with the right hon. Member for Chingford and Woodford Green and the leader of the Conservative party. Indeed, in his report, the right hon. Member for Chingford and Woodford Green said that

What did Camilla Batmanghelidjh say yesterday about the proposal?

There we have it: the Conservatives’ proposals for a transferable tax allowance condemned by the people to whom they said they would listen.

We should be seeking consensus on these issues in the House, but it takes two to build, perhaps—

Mr. Laws: Three.

Edward Miliband: It takes three. The consensus requires us to make a balanced analysis of the past 10 years, to support children and families on the basis of
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family need, not family circumstance, to propose costed, not uncosted, change, to abandon dogmatic attachment to cutting the size of the state and to acknowledge in a spirit of humility where people have been wrong. I believe the Opposition have not done those things, so I urge my hon. Friends to vote against the motion.

5.34 pm

Mr. David Laws (Yeovil) (LD): We have had an extremely interesting debate so far, involving two of the most thoughtful and generally reasonable Front-Bench Members from the Government and the Conservative party. To do justice to a subject of this breadth—it must be the most important of all the domestic policy challenges—we would need far longer than we have today. However, I hope in a reasonably brief period of time to put on record our views about the issue and some of the policy challenges that we have identified. I hope that I can do so in a way that will leave time for others to contribute to the debate.

I congratulate the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) on his report. I must confess that I, like the Minister, have not managed to read it all yet. Indeed, not only have I not managed to read the section on drug abuse, because of its length, I have not even managed to print it off so far, because I ran out of printer paper while I was printing the rest of the report. The report is a valuable contribution to the debate and I recognise a lot of the characteristics of today’s society that are identified in it—in particular, the breakdown of family life in this country over the past three or four decades. The social consequences of that breakdown are important and are issues that all the parties need to think about carefully. It is a matter not only of the consequences, but of what action the Government can usefully take to have an impact on the issues.

What is striking about the UNICEF report that was published earlier this year, whether or not it is based on slightly out-of-date data—that was a moderately fair point, although I am not sure that it would have changed the overall league table position greatly—is just how badly Britain performs in the league table, not only on some of the relative poverty measures, but on many of the issues that relate to family and child well-being, and factors such as drug and alcohol abuse, which are in the right hon. Gentleman’s report. To me that indicates that there is nothing inevitable about the nature of the problems that we have in this country, in their widest sense. If having greater family fluctuation and breakdown than in earlier years, or less social mobility, or more drug and alcohol abuse, were simply characteristics of any liberal society, we would expect to see those problems replicated across a lot of advanced countries, but we do not. The United Kingdom does extremely badly, and that is a challenge to us to think about what we can do to have some influence in those areas.

Tom Levitt: The hon. Gentleman made a point about the UNICEF report. The date of the data is very important. In many cases, the data relate to five or more years ago, which means that the effects of child tax credit, Sure Start, and the big increase in outcomes for primary schools in recent years are not included in the report.

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Mr. Laws: The hon. Gentleman makes a half-reasonable point. The factors that he points out would affect particular measures in the UNICEF report; they certainly would not affect others. Any fair analysis of the Government’s record would recognise not only that they have sought to do a tremendous amount since 1997, or perhaps more accurately 1999, but that, so far, the results are mixed and that it is too early to say quite how successful they are going to be. These things obviously take a considerable amount of time to work through. That is true of areas such as social mobility, where we are commenting on figures that relate to an earlier time.

Before I move on to the Government and the present situation, I would like to say that I particularly welcome the fact that the Conservative party is taking an interest in these issues. In fairness to other parties in the House—I am sure that the right hon. Member for West Dorset (Mr. Letwin) would be the first to acknowledge this—although some of the problems identified in the report relate to family breakdown that may have nothing to do with any Government, many of them relate to the problems of unemployment, homelessness and economic breakdown that occurred in the 1980s and 1990s, when his party was in power, and are not unrelated to Conservative party policies. If the report reflects an acknowledgment that the Conservative party must focus on not only economic efficiency, but a fairer society and social mobility, that is a good thing.

Let me turn to the present situation before I comment briefly on several of the proposals in the report by the right hon. Member for Chingford and Woodford Green and some of the issues that we want to be flagged up. The Government have a record of enormous commitment to tackling many of these problems, even though there is marked ambiguity about their attitude to the breakdown of the family. The Minister’s speech did not really touch on whether the Government believe that family breakdown is an enormous cause of social problems and on whether they take the view that they simply do not have any mechanisms to influence that. If we look at what has happened over the past few years, while there are certain signs of improvement as a consequence of the Government’s policies, there are big unresolved, challenges and areas in which things have moved backwards. When the Minister defends the Government’s record, I hope that he will not understate the enormous problems of social breakdown that remain unresolved because if he does, he will be giving up the leadership that his party has displayed over the past few years by failing to recognise how bad some of these problems are.

Let me draw the Minister’s attention to a few specific problems, such as housing. As the Prime Minister acknowledged today, we have gone backwards with regard to access to affordable housing and the number of people on the homeless list since 1997. We now have more children in overcrowded accommodation and outside a stable home environment. Those factors must be enormously important for determining whether someone will do well.

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