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But I accept that sustainable economic growth is not possible without security, so that must remain our primary objective. Large areas, including the north, are now relatively stable. While the outlook in other areas may appear very difficult, we should also note on these occasions what has been achieved: the first ever democratically elected Government, and the destruction of a brutal dictatorship, in which, as we heard from the noble Lord, Lord Hurd, torture and murder were state policy. A parliament and Government were elected by 76 per cent of the electorate—a massive vote of confidence in democracy. Hundreds of newspapers, magazines and radio and television stations have been launched. Many thousands of new NGOs are beginning to build civil society.
Perhaps I may say in respect of that that some of the critical work is being done with women. I am grateful to my noble friend Lady Gould for raising this benchmark issue. The UK has been at the forefront of activity to promote women’s rights and to support a growing role for Iraqi women in public life by funding training, seminars, workshops and visits to this country by Iraqi women active in public life, including politics and the trade union movement. The review of the constitution is due to end on 15 May 2007, and I assure my noble friend that the removal of Article 41 indeed remains one of our objectives.
For the first time in recent Iraqi history, the seeds of democracy are there. For the first time, millions of Iraqis can look at the prospect of freedom, justice and choice—the basic human rights denied to them under a brutal regime. They want those rights and we should applaud that.
Yet a minority of extremists and fanatics, who represent no Iraqi community, are trying to hold that country to ransom and to destroy the fragile democracy. The stronger democracy becomes, the fiercer their assault against it. If the democratic process in Iraq succeeds, their cause—to subject the people to their own form of brutal repression—will be lost. Iraq’s neighbours and other countries in the region have a key interest in supporting efforts to improve this situation in Iraq and in ensuring that instability does not spread across the region.
In this debate, I greatly welcome the focus that there has been on exactly that issue. There has been focus on the role of Iran and Syria in Iraq. The noble Lord, Lord Jay, has argued for a better regional approach, and the noble Lord, Lord Alderdice, asked about the international support group. We completely agree on the importance of unambiguous support for Iraq from its neighbours and of machinery that will assist in developing that kind of support. Everyone will have their own views and it is not for us as outsiders to impose what the form of that support should be, but it is plainly needed. The noble Earl, Lord Sandwich, made the same point on working
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As the Prime Minister and others have made clear on many occasions, we believe that these neighbours should play a constructive role in Iraq’s development. However, we must acknowledge that in the past they have chosen violence and terrorism in Iraq. Iran and Syria have a strategic choice to make. They can behave as responsible members of the international community—and I am eager that we should work with them to achieve that—or they can continue to support terrorism and instability in the region. If they do, there are consequences of such actions.
The Prime Minister answered the question this morning about any military threat to Iran. There is no threat. I shall say that in terms that I hope will be taken as more straightforward: we make no threat. I am with the noble and learned Lord, Lord Howe of Aberavon, on the need for multilateral work on Iran, on the importance of the EU in this matter and on the importance of diplomacy, as well as in respect of the nuclear portfolio, doing what we can to deal with it through the appropriate United Nations methods.
Perhaps I may say to the noble Lord, Lord Lamont, that it is imperative that we all act with accurate information on Iran and not on some sort of theatrical demonstration in the newspapers or elsewhere about what is really happening. It is vital to be accurate and objective; I could not agree with him more. I also agree with the noble Lord, Lord Howell of Guildford, that we need more information.
I was grateful for the historical perspective set out for us by the noble Lord, Lord Thomas, because it helps us to see the context. My noble friend Lord Campbell-Savours was right to remind us of a particular part of that historical context: the failure of the sanctions regime, which might have had much more of an effect.
However, as we look at the whole situation, I think that we need to draw out one key lesson above all others today. For me, it is that democracy may be very hard to create but, once it is there—if it is achieved—it is very hard to destroy; it becomes the bedrock. We in the international community must be steadfast in our resolve to support the Government of Iraq and Prime Minister Maliki in their efforts to root out violence, to rebuild the economy and to give that democracy a chance. I see no alternative to that. When we deliberate on these matters and the lessons to be learnt, as I have no doubt we will, I believe that we will also want to deliberate on the ethics of the proposition that we supported as our fundamental basis.
4.51 pm
Lord Hurd of Westwell: My Lords, I think that under the rules of the House a little time is left, but your Lordships will be glad to hear that I do not
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I want to make one point of substance about one thrust of this debate—namely, an inquiry. I am grateful for the support for that idea from all sides of the House. The support was not unanimous and not unqualified but it was fairly general. I was particularly fascinated by the very careful comments of the two former senior civil servants—the former Permanent Secretary to the Foreign Office, who supported the idea with qualifications, and the former Secretary to the Cabinet, who opposed the idea but with qualifications. Their views were carefully set out and are worth study, but, on the whole, I am encouraged. The wagon is moving. It will take some time to move but it is on the way, and this is not a partisan matter; an inquiry is clearly widely supported.
The Minister’s reply was disappointing on that issue in particular—although not on others—but it was not unexpected. However, I do not see the logic of postponing even the start of an inquiry until all our troops are out. Our troops may be in Iraq for some years to come according to what he and, indeed, the Prime Minister said. We simply do not know how long they will be there, and rightly he has refused to give any dates. But there is no logic in saying that the whole question of an inquiry must wait until then. That would be true only if we were talking about the rights or wrongs of war, but we are not. The proposal is for an inquiry into the preparation and conduct, which is a different point. All kinds of questions arise under those headings and they need fairly urgent consideration and examination if the lessons are to be learnt.
However, this is the House of Lords and the debate has ranged widely and interestingly in a way that would not be possible in another place. The Minister has dealt in great detail, as he always does, with the points raised and the different interests. But particularly moving were the accounts given by noble Lords who basically support the war and base that support on what is being done for good in Iraq. That is part of the picture that we certainly should not forget, but it has to be weighed against all that has gone wrong, all the people who are dead but would otherwise be alive, and all the chaos that has ensued.
I thank the Minister in particular. It is his duty, which he always undertakes very skilfully, to set out the picture as a whole but to put touches of brightness into it to support his case. We have listened to that before and we have now listened to it again. It is in all our interests that his vision of the bright side, which he hopes for and is working for, will turn out to be correct. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.
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Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2007
4.55 pm
Lord Davies of Oldham rose to move, That the draft order laid before the House on 24 January be approved.
The noble Lord said: My Lords, for the convenience—and, I hope, with the will—of the House, I shall speak also to the other orders in my name on the Order Paper. In my view, the regulations and orders are compatible with the European Convention on Human Rights.
First, the order concerning national insurance contributions increases contribution rates and thresholds for the self-employed and the weekly rate of voluntary class 3 contributions, broadly in line with inflation. The review of contribution rates is accompanied by a report from the Government Actuary detailing the effects of the draft order and the draft order up-rating benefits laid by my right honourable friend the Secretary of State for Work and Pensions on the National Insurance Fund. I am pleased to say that, for the eighth year in a row, there is no expectation that the fund will need a Treasury grant. Nevertheless, a prudent provision of 2 per cent of all benefit expenditure is made.
Northern Ireland has a separate national insurance scheme from Great Britain, but the two schemes are closely co-ordinated and maintain parity of contribution rates. This draft order covers both Great Britain and Northern Ireland.
On the other orders, tax credits, together with child benefit, deliver financial support to the vast majority of families with children in the UK and are vital to our commitment to tackle child poverty. I am pleased to introduce the regulations and orders, which increase certain elements and thresholds of tax credits and raise the rates of the child benefit and guardian’s allowance.
Turning to the Tax Credits Up-rating Regulations 2007, tax credits play a major role in ensuring that work pays and in helping people to move up the employment ladder. Overall, nearly 6 million families containing nearly 10 million children are benefiting from tax credits. These regulations increase the child element of tax credit by £80, in line with earnings, to £1,845 a year from 6 April 2007. This element has increased by £400 since its introduction in April 2003, benefiting 6.8 million children. In addition, the regulations increase the disabled child elements of child tax credit in line with inflation.
The elements of working tax credit will also increase in line with inflation. The working tax credit provides support to low-income working families, including people who do not have children. The tax credit system has been designed to offer support to people as they move between jobs and as their circumstances change. Building on the lessons from the first two years of tax credits, the 2005 Pre-Budget Report announced a package of measures to improve the system. These measures will ensure that the
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I turn to the Child Benefit Up-rating Order 2007 and the guardian’s allowance orders. Child benefit is payable to 6.7 million families for around 13 million children and young people, providing almost all families in the UK with a worthwhile contribution towards the cost of bringing up their children. These instruments increase rates in line with inflation. From 9 April 2007, child benefit will be worth £18.10 per week for the first child and £12.10 for each subsequent child. The Government are committed to increase child benefit in line with prices. As a result of these increases, the rate payable for the oldest qualifying child remains more than 25 per cent greater in real terms than the rate payable in 1997. The guardian’s allowance will increase to £12.95 per week.
With the increases effected by these instruments, we will be delivering even more support next year. We remain committed to the Government’s long-term aim of eliminating child poverty within a generation and halving it by 2010. Tax credits and child benefit will remain a key part of this. Indeed, in his Budget, my right honourable friend the Chancellor of the Exchequer made a commitment to increase the child element of the child tax credit at least in line with average earnings until the end of this Parliament. I commend these regulations and orders to the House. I beg to move.
Moved, That the draft order laid before the House on 24 January be approved. 8th Report from the Statutory Instruments Committee.—(Lord Davies of Oldham.)
5 pm
Lord Taylor of Holbeach: My Lords, as we heard, the first of these orders deals with the resetting of rates and levels of national insurance contributions; the regulations increase the thresholds of child and working tax credits; and the other three orders provide for the uprating of the level of guardian and child benefit. Overall, we welcome these orders, which are a necessary response to inflation over the past year. However, I would like to address a few issues that arise from the presentation of the orders and probe the Government about their future plans.
I shall start with tax credits. I am sure the Minister is not surprised that I do so, but the facts alone make the point. The statistics on the tax credit system as a whole are telling: the finalised awards for the tax year 2004-05 show that only 56 per cent of tax credits were paid correctly and that £1.8 billion were overpaid and £550 million were underpaid, leaving nearly a million households without the support to which they were entitled. That led to 2 million recipients having to pay back the overpaid money from the payments they received in the subsequent year. That this situation is not acceptable is evidenced by the fact that even Labour Members criticise it. In October last year, David Blunkett was quoted as saying that the system was a shambles. The Comptroller and Auditor-General, Sir John Bourn, called it ridiculous. It is so
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What is just as worrying is that these tax credits are clearly failing to achieve their primary purpose, which is to reduce child poverty. A reduction in the number of children being brought up in poverty is an objective shared, I am sure, by all Members of the House. However, when tax credits cost the equivalent of 5 pence off the standard rate of income tax and the target for reducing child poverty is still missed, noble Lords may wonder whether there are not better ways of going about improving the welfare of children.
That brings me to the last three orders that we are discussing today. First, I shall raise a point that I have been wondering about for a while. Can the Minister explain to the House why the guardian’s allowance is set at a lower rate than child benefit? I am curious about whether there is any rationale to that. The costs of bringing up a child are identical whether you are the biological parent or not. Is it just a long-running inconsistency that no one has taken the time to address?
I also hope that the Minister will be able to shed some light on the Government’s plans concerning child benefit and associated tax credits. Do they have any plans to give child benefit a larger role within the tax and benefit system, as has been suggested? I understand that they intend to undertake a wholesale reorganisation and simplification of child benefit and the associated premiums and tax credits. Is that correct? Simplification is certainly needed because the UK now sits 67th in the world for the complexity of our tax system. If the Government have such plans to do so, can the Minister give us an idea of when more precise plans will be announced?
I should also be interested to know whether there are any plans to move tax credits, child benefit and child trust funds from the Treasury to the Department for Work and Pensions, where common sense suggests they should be placed. The high levels of fraud and mis-payment of funds are clear testimony to the inappropriateness of the current arrangements. The Treasury's role should be one of keeping a close watch over the spending of taxpayers’ money, ensuring that it is spent effectively and reducing inefficiency in other government departments.
I should like to finish by referring to the index used to measure the rate of inflation against which the level of upgrade is calculated. These orders up rate the benefit levels at the rate of inflation determined by the retail price index. Although that has been the most common and convenient measure of inflation in use for a long time now, I am sure the Minister will agree that it does not paint the full picture. It, of course, neglects to include higher-than-inflation tax rises, council tax rises or more expensive mortgage repayments in the calculations. It is also a general measure that fails to identify the particular patterns of expenditure of the young families for whom these orders seek to make provision.
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It therefore increasingly fails to give a representative picture of the true cost of living for those people whom it is intended to help. Over time, the use of the RPI erodes the value of the benefits the Government intend to provide for in these up ratings. It is, of course, tax credit benefits that are intended to help those most in need and who are struggling to cover inflating expenditure with incomes that do not rise as fast, but, as I have pointed out to the House, the tax credit system is severely and fundamentally flawed. I hope that, as inflation rises, and tax increases rise even faster, the Government will reflect on the efficacy of their key benefit tool, the tax credit system, and consider how it can be remodelled or whether they should be considering a replacement.
Lord Kirkwood of Kirkhope: My Lords, I am pleased to follow the noble Lord, Lord Taylor, and I concur with much of what he has said. Our uprating system is a quintessentially important part of the process for delivering benefits. These are important orders, and I am grateful to the Minister for introducing them so eloquently.
There is a sense that people get frightened by the technicalities in some of these orders and pay less attention than maybe they would because they are overwhelmed by those technicalities. In a sense these are very technical orders. However, the Minister will agree that there are some very big principles and sums of money involved in what the House is considering this afternoon. I want to look at some overarching principles, which I think are important, and I want to look at some of the technical details.
This is an important annual occasion, which gives us a chance to look at how the Government are reviewing the relative values and benefits in front of us. It also gives us a chance to look at the coherence and complexity behind the system. Finally, it does and should give us a chance to look at what is happening in the long term because I believe that there is a predisposition—it is perfectly natural—to think, “Well, the change from last year is pretty understandable; it is related to prices” or to some other factors.
So, from year to year there is not very much change. But the House should look very carefully at the change that happens over years. You do not need to be an economist to understand that if the main mechanism for uprating is always anchored to prices, and earnings are going ahead thanks to the wonderful way the Government are discharging their duties in relation to the economy, there is a differential that is a built-in gap which is exacerbated as we go forward. Therefore, every year, although we look at the perhaps relatively individually small increases, we have to look back over the period since these benefits were put in place—they were all put into place for very good purposes—and ask ourselves whether over that period the balance is correctly kept in place as we go forward.
My first question for the Minister, although I do not expect him to spend a lot of time at this stage of the day explaining this in his reply, concerns the process of review. Under the Social Security
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I have been trying for nearly 20 years to find out exactly what is involved in that duty to review. How much ministerial involvement is there? Are there meetings? Are there papers? I am not looking for state secrets—well, actually, I am always looking for state secrets, but not necessarily in this instance. It would give me more confidence to know a little more about the process that goes on. I am being a little facetious; I am sure that it is not done casually. But I would feel better if people were really spending some quality time thinking about the consequences. Obviously there is a large number of benefits and that cannot be done for every benefit every year but there are some very high-quality people in the Treasury and in the Department for Work and Pensions who know about these things. If I could be given some assurance that a meaningful deliberative process goes on year by year, I would sleep easier in my bed.
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