HL Deb 29 June 1998 vol 591 cc499-508

7.13 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham) rose to move, That the draft regulations laid before the House on 8th June be approved [37th Report from the Joint Committee].

The noble Baroness said: My Lords, the Government came to power with a mandate to reform social security. One of the key principles guiding reform is that the system should support families and children and tackle child poverty. We are committed to supporting all families with children. All families have extra costs as a result of bringing up children. That is why we are committed to retaining child benefit as a universal benefit and why we are increasing the standard rate of child benefit for the first child by £2.50 a week.

We believe that support for families should be based on the needs of children, not on family structure. We also believe that the benefit system should recognise specifically identified costs that any family may face. That is why we have increased benefit allowances in respect of children under 11 years of age and why we revolutionised the support that parents can receive towards the cost of childcare.

Within that context, we do not believe it is right to pay a higher fixed rate of child benefit to lone parent families. Direct help with the cost of childcare addresses the in-work costs of lone parents much more effectively. Many lone parents will be able to receive substantially more in-work help. These regulations implement the measures of Clause 72 of the Social Security Act. We debated those measures at some length on a number of occasions during the passage of the Bill and I do not intend to detain your Lordships by repeating those arguments now.

Instead, I thought it might be helpful to your Lordships if I were to outline what the regulations are designed to achieve. Regulation 1 covers citation, commencement and interpretation provisions. Regulation 2 amends Regulation 2 of the 1976 regulations by revoking the provision for a higher rate of child benefit to be paid in respect of the elder or eldest child of a lone parent. However, the Government's intention is to ensure that existing lone parents are protected. Regulations 3 and 4 set out the details of that protection.

Regulation 3 provides protection for existing lone parents who are not currently entitled to receive the lone parent rate of child benefit because they are receiving what is described in the 1976 regulations as a "specified benefit". These specified benefits, such as invalid care allowance, overlap with the lone parent rate of child benefit. So, if a lone parent is receiving one of these benefits, she will be able to receive the standard rate of child benefit only for her only or eldest child. Regulation 3 provides for such a lone parent to be able to receive the lone-parent rate of child benefit after these regulations come into force if she ceases to receive the specified benefit, as long as she applies for it within one month of the award of the specified benefit ending.

Regulation 4 provides transitional protection for existing lone parents in other circumstances. It includes protection for lone parents who are already receiving the lone-parent rate of child benefit at 5th July 1998—this will ensure that there are no cash losers; for some lone parents who are not already receiving the lone-parent rate of child benefit at 5th July 1998; and for those who have entitlement at 5th July but have not yet claimed it, as long as they claim it within a specified period. So, if a woman without a partner gives birth shortly before the regulations come into force, she will not be penalised if she is unable to get her claim to the child benefit centre before 6th July. Moreover, if a mother leaves her partner shortly before these regulations come into force, she will not be penalised if she is unable to get her claim to the child benefit centre before 6th July.

The regulations will also protect existing lone parents who move off benefit into work. Many lone parents do not take up their entitlement to the lone-parent rate of child benefit when they are receiving income support or jobseeker's allowance. That is because it is deducted from their benefit entitlement. Such a lone parent will still be able to claim the lone-parent rate of child benefit after these regulations come into force provided that she leaves income support or jobseeker's allowance for work and was receiving the lone-parent rate of family premium or, in some cases, a higher overlapping premium when her benefit award ended, as long as she claims it within a month of leaving benefit. This will preserve work incentives for existing lone parents.

The regulations deliver our commitment to protect existing recipients and preserve work incentives for existing lone parents. They also give all existing lone parents ample time to claim the higher rate even beyond the 6th July period.

The electorate have made it clear that they expect more from social policy than the previous administration delivered. They told us that they want an active approach to welfare so that everyone can take part in society and work for their living if they can. That is what we have promised to do; and that is what we are doing.

The combination of the national childcare strategy and the New Deal for lone parents, together with a working families tax credit, a childcare tax credit and a national minimum wage, will help make the transition to work much more attractive to the thousands of lone parents who currently feel trapped on benefits. However, at the same time, we are protecting vulnerable families through increases in child benefit and in the family premium in the income-related benefits and by providing extra help for families with young children. We promised to provide help to lone parents in moving into work. We promised to protect vulnerable families who are unable to work. That is what we are delivering. I commend these regulations to the House. I beg to move.

Moved, That the draft regulations laid before the House on 8th June be approved [37th Report from the Joint Committee].—(Baroness Hollis of Heigham.)

Lord Higgins

My Lords, the House will be most grateful to the Minister for that explanation, not least because in another place on 25th June the Minister in that House failed almost entirely to explain what the provision was about—I notice the expression on the noble Baroness's face!—and spent most of his time being called to order by the Chairman. No one could accuse the noble Baroness of being in that situation this evening. Therefore we are much clearer about the provision than was previously the case. However, there are one or two points which could reasonably be clarified.

On 25th June, when he finally got around to it, the Minister assured honourable Members that existing recipients would continue to receive the higher rate of child benefit as long as they continued to satisfy the entitlement conditions. He said the Government are protecting work incentives for lone parents who are on income support and receive the job seeker's allowance with the lone parent rate of family premium or higher overlapping premiums. He said they would be able to claim the lone parent rate of child benefit when they leave benefit for work. I was slightly puzzled by that. I am not at all clear what the situation is if they then go back on to benefit, and whether they are still protected in that regard. That may be the case. It would be helpful if the Minister could explain that point.

As the noble Baroness said, we debated a number of these matters at considerable length on the recent Social Security Bill, which is now an Act. Of course it is the case that what the Government are doing here is completely contrary to what they said when they were in opposition. However, we understand the other points that the noble Baroness has made and I do not want to go over that ground again any more than the Minister does. However, the situation with regard to child benefit has become a little less clear than it was, in particular the situation with regard to taxation of child benefit. It would be helpful if we could be told whether the situation with regard to taxation of child benefit is a matter on which the Government have taken a permanent decision—if I may put it that way—or whether it is still under review.

I referred to the debate in the House of Commons last week. As the noble Baroness will know, we have already had a Statutory Instrument—I believe that is No. 766—which deals with the question of the so-called linking arrangement. We debated at length whether that should be 12 weeks or, for example, a year. That is why I am not at all clear as to whether what the Minister said in another place is correct. The Minister laid great stress on the welfare-to-work programme for lone parents. It is certainly common ground between both sides of the House that people are better off in work than on benefit. I believe there is no dispute about that. However, there is now considerable confusion as to the extent to which the welfare-to-work programme is working. Last Wednesday the Prime Minister asserted at Question Time that, 30,000 young people have got jobs as a result of the new deal".—[Official Report, Commons, 24/6/98: col. 1041.] My understanding is that even if one were to include the lone parents who are covered by the New Deal and the welfare-to-work programme, the figure is substantially lower than 30,000, as mentioned by the Prime Minister. Perhaps the noble Baroness will tell us the figure.

Another reason there has been some confusion about the welfare-to-work programme is because we seem to be short on figures of those who have taken up a job as against the number of people who have come off income support. The two figures are evidently not the same because a number of people who have come off income support may have got married and their partner may now earn more and therefore they have come off income support. As regards the welfare-to-work programme, what figures do we have of the number of people who have gone into work as against those who have simply come off income support? As regards that programme, it would appear that a considerable percentage go back on to income support after going into work. As we all know from previous discussions, that is related to the linking period. But my understanding is that about one in five go back on to income support within that three month period. Perhaps the noble Baroness will tell us whether that is the case.

The other matter on which the statistics are obscure is the extent to which the welfare-to-work programme—which is in effect designed to offset what these regulations seek to achieve—has helped people to obtain jobs. There seems to be a number of different estimates as to how many lone parents have taken part in the programme and how many have obtained jobs as a result. The costs of the programme are substantial. Therefore it would be helpful for the House to be given an estimate of the cost per job. As I understand it, few people have obtained permanent jobs as a result of participating in the programme. However, given the present state of the economy, it would not be surprising if a considerable number did obtain jobs. I believe that about 80 per cent. of young people—as opposed to lone parents—who have been unemployed for six months find a job within the following year. In reflecting on the so-called success of the welfare-to-work programme, one has to allow for that point.

We are all in favour of people going from welfare into work. However, the extent to which jobs are being obtained as a result of this substantial outlay is doubtful. I hope that the noble Baroness can give us an up-to-date appraisal of the extent to which the programme is working, particularly as regards lone parents, and the extent to which that is reflected in the cost per job with regard to the departmental budget. Again I thank the noble Baroness for the explanation which she has given. As I said, the measure is wholly inconsistent with what the Government said when in opposition. However, we have to consider it in the present day context. I believe that is what the House would wish to do.

Earl Russell

My Lords, I congratulate the Minister on the clarity with which she has expounded these regulations, especially the helpful exposition of Regulation 3. I agree with her that we have debated these matters many times. In fact I think she and I know each other's arguments well enough to be able to argue in our sleep. However, I shall not attempt to force the Minister to do so. I do not intend to make a meal of this.

I shall touch briefly on the point made by the noble Lord, Lord Higgins, about the taxation of child benefit. It is my understanding that whatever one may feel about it in principle—the question of principle is not an absolute one—the technical difficulties in the way of taxation of child benefit to get any substantial amount of money out of it are difficult indeed, especially if one wishes (as I am sure the noble Baroness and I both do) to preserve the separate taxation of married women's incomes because a vital principle is at stake there. I do not see how to get round that difficulty. But that is a practical point. I am most grateful to the Minister for her remarks about the treatment of claims presently in the pipeline. That is a point of substance and I welcome it.

For the record, I wish to touch on the main points on which we agree and disagree. I do not invite an answer; the Minister will agree which they are. We agree quite strongly that single parents should be helped to work wherever they want to. We agree strongly that help with childcare for that purpose was badly needed and is in principle to be welcomed. We agree that the situation was ameliorated by the measures in the Budget; and we agree that the new linking rule is to be welcomed—though on that point I am tempted to play Oliver Twist and wish that it had been a little more.

Turning to where we disagree, we on these Benches believe that there is a substantial gap between the cut in benefits brought in by these regulations and others and the effect of the measures in the Budget, some of which do not come into effect until October 1999. We disagree profoundly about the issue of single-parent costs. I think we understand each other's arguments perfectly well on the matter; we are simply not convinced by them. That issue will continue and I am sure the noble Baroness and her party will expect to hear more of it in future.

We also disagree about the financing of the help with childcare. Welcome though it is, we on these Benches feel very strongly that it should not have been financed in part by these cuts. There is also to some extent an issue of choice—though here I remain grateful for what the Minister said on 3rd June last year about the right of single parents not to go to work if they so choose.

I gave notice earlier this afternoon—I do not know whether the notice has reached the Minister—of a point I wished to take up in relation to her letter of 26th June. If the notice has not reached the Minister, I shall leave the matter and deal with it by letter. It had to do with freedom of choice in relation of childcare and whether mothers will remain free to decide for themselves whether the childcare on offer is sufficient and suitable for their children. That is not the same as whether it is in general of good quality. I shall leave the matter now and return to the point later. The Minister may expect a letter.

7.30 p.m.

Baroness Hollis of Heigham

My Lords, I thank noble Lords, I think, for their contributions. Like them, I am sorely tempted to stray into wider debates about lone parents, work, opportunity and so on. However, I shall resist the temptation and do my best to answer the points raised. If I miss any, as usual I will write to noble Lords.

The noble Lord, Lord Higgins, asked: if a lone parent who is on benefit and receiving the higher rate moves into work, the job ends for her and she comes back on to benefit, will she continue to receive the higher rate? Yes, the child benefit goes with the birth of that child and is therefore with the parent while she is a lone parent for the rest of her life, whether she is in work or on benefit. That is good news and addresses the noble Lord's point.

Secondly, the noble Earl, Lord Russell, raised a point about the taxation of child benefit. There is not a Labour Party view on this matter at present. It is an issue that is under review. There are clearly arguments for and against the taxation of child benefit. It may in time be introduced. It is a matter for the Chancellor to decide on its relative merits against other issues. The Chancellor has made clear that he would in no way seek to compromise the well-established principle of independent and separate taxation. That takes us into the territory identified by the noble Earl. I think we all understand the issues; namely, whether child benefit is independent of income level or whether, given finite resources, we should seek to target what help there is on those who are poorer off through the principle of taxation or means testing. It is an honourable debate and one that we shall no doubt explore in the future, particularly should the Chancellor be minded to propose such changes for the future. At present, there is no specific commitment either way on this issue.

Thirdly, the noble Lord, Lord Higgins, raised a question on welfare-to-work and the statistics associated with the new deal. If there is any additional statistical information, I will write to the noble Lord; however, it is my understanding that some I to 2 per cent. of lone parents in control group areas have come off benefit and, we understand, taken up work beyond what would be expected by comparison with the control groups. That represents some 800 lone parents. We cannot guarantee that all of those have gone into work. Some may have re-partnered, as the noble Lord said. The comparison is, after all, with a control group. Most lone parents who come off benefit will either go into work or re-partner, or possibly receive a higher or different benefit. Those are the three exit strategies. The point for us is that the eight new deal lone-parent pilot areas are carefully controlled. We can therefore see the difference, taking all those factors into account. Our information is that some 800 parents have left income support over and beyond the figure that would have been expected in those same pilot groups but for the intervention of the new deal.

Lord Higgins

My Lords, I am grateful to the noble Baroness for giving way. I understand what she says; namely, there is a pilot group and a group not included in the scheme. She refers to 700 or 800 people. What is the difference in percentage terms between one group and the other as regards the number who appear to have gone into work? The figure 800 does not mean a thing. What is the differential between the group who are coming off benefit and those who are assumed as the result of the calculation to have gone into work?

Baroness Hollis of Heigham

My Lords, I thought I had given that figure. We understand the difference to be between 1 and 2 per cent. That is what the figure 800 represents. That is the extra effect, as it were, of the intervention of the new deal: 1 to 2 per cent. more lone parents have come off benefit in the pilot areas than their equivalents in the control group. That is the differential between the two. The noble Lord looks puzzled. It seems very clear to me, but I have obviously not made myself clear. The 800 represents the I to 2 per cent.

Lord Higgins

My Lords, I am indeed somewhat puzzled by that figure, since it would seem to suggest that the whole scheme is a complete failure, which I presume is not what the noble Baroness seeks to indicate. Perhaps it would be better to pursue the matter outside the Chamber.

Perhaps I may return to the consequence of what the noble Baroness just said; namely, what does she think the cost is per job for the people who have gone into work as a result of the scheme in the period up to now rather than simply going off benefit?

Baroness Hollis of Heigham

My Lords, as I say, the 1 to 2 per cent. represents lone parents in the population. I was about to refer to the setting-up costs. Perhaps I may first return to the statistical point. Nobody is trying to suggest—certainly I am not—that the new deal is the answer to all the problems of overcoming the hurdles or barriers to lone parents entering work. What the pilot areas are beginning to indicate is that there is a useful contribution and a statistically significant effect as a result of the intervention of the new deal. The impact on a lone parent clearly varies according to the age of the child, the state of the local economy and the adequacy in her judgment of available childcare. I do not for a moment suggest that this is "success in capital letters". What it does indicate is a useful statistical improvement in the opportunities for lone parents to move into work as a result of the intervention of the new deal. That is all I am claiming. I suspect that the effects may well be down the line—that is, when a child who is now three years old is five, six or seven. That is when we shall begin to see the opportunities come through. I do not want to over-claim for the scheme. But the fact that it is showing some of the results that it is is distinctly encouraging and should be welcomed by all Members of this House.

As to the costs on which the noble Lord pressed me, the setting-up costs were £6 million. But these are front-end loaded costs. These are gross costs. They do not include the reduction in benefits paid to parents who would otherwise have remained on benefit, which work out at about £42 per person saved.

More broadly, it is about changing the culture and expectations of lone parents. I hope we shall see more and more lone parents coming into work as the cultural effects, the halo effects, of the New Deal spread, and as lone parents realise just how much better they and their children are once they believe that it is appropriate for them to move into work.

I turn to the comments made by the noble Earl. With his usual laser accuracy he identified the points of agreement and disagreement between us. We all accept that help for lone parents to work and have childcare is vital, particularly for children under five. I emphasise that the Government stand at the shoulder of the lone parent, helping her to be able to make choices as to what she thinks is the best strategy for herself and her family. Those choices were not realistic before the New Deal because the things necessary to facilitate them, such as childcare, were not in place. That is what the Government see themselves doing.

Therefore, in terms of childcare, as in terms of opportunities for jobs, of course lone parents have the right and freedom of choice. We are trying to take steps to ensure that information on childcare provision is available. For example, we are having audits of local childcare facilities to identify what facilities are available. We encourage the use of IT to ensure that information is widely available.

The scheme funds registered childcare only, which is an assurance of quality. In that way no lone parent need feel pressured into using childcare of inadequate quality if she does not believe that it is a reasonable option.

Earl Russell

My Lords, I thank the Minister warmly for that reply. However, does she take the point that childcare may in general be adequate but not adequate for a particular child? Will the parent remain the judge of whether it is adequate for the particular child?

Baroness Hollis of Heigham

My Lords, I wonder whether we are at cross-purposes. The New Deal is a voluntary activity. If the lone parent believes that the child has special needs, has a disability, a learning impairment or whatever or is perhaps vulnerable because of the recent break-up of a relationship, that lone parent will make the judgment as to whether it is appropriate for her to go to work. If she seeks to go to work, she will decide the appropriate quality of childcare. I am sure that if a responsible lone parent did not believe that the available childcare was suitable, of sufficient quality and appropriate for her child, she would decide to delay going to work. That would be a judgment for her; no one makes her do any of it.

As a result of the childcare strategy, we expect to see a strengthening of both the quality and the quantity of childcare available which will give lone parents a real choice as to how they think it most appropriate for their children to be looked after. It is not just an under-fives problem; it is a before and after-school problem for children from the age of five to 12 or 13. As the noble Earl knows, much of the activity of the childcare strategy has been directed at after-school clubs as well as direct nursery care and the like.

I emphasise that we seek to work with the grain of what lone parents themselves want to do. That is clear from the research reports which the noble Earl and I have swapped and bantered over through many a happy evening in this Chamber, as we went through the DLA legislation. The research consistently shows that lone parents want the opportunity to work when they feel their child is of sufficient age and if the childcare is in place and they think the work is suitable to them—that is, as regards access and so on.

The Government are saying: "We are on your side, we are standing shoulder to shoulder with you on this. We will try to help you overcome the hurdles which in the past stopped you exercising the choice that married women have". As part of a couple, they have the childcare help, they have the work knowledge at hand that they get from their marriage. That is our strategy. I am confident that no one in this Chamber will disagree with it.

Finally, although I promised myself that I would not make too obvious a party point, I cannot let the challenge from the noble Lord, Lord Higgins, go by when he said that this was directly opposed to what we said in opposition. Rubbish, my Lords. We made it very clear—I have now said it three times. If the noble Lord reads a copy of The Guardian four times, on the fourth time he may believe that what it says is true. So I shall try again. In opposition we said that it was unreasonable to change lone parent benefits in isolation. However, we now have in place a new deal for lone parents: a childcare strategy, the proposed new tax credit and the minimum wage. Shortly, I hope we shall have a reform of maintenance arrangements. In that system, lone parents have all the opportunities that we seek to offer them which they were denied under the previous administration. Had the noble Lord offered those opportunities then, he would have had our wholehearted support.

Lord Higgins

My Lords, perhaps I may intervene before the noble Baroness sits down. I very much hope never to mention the matter again and look forward to the noble Baroness never again mentioning anything that the previous government did.

Be that as it may, perhaps I may clarify the point about start-up costs. Was she referring to the start-up costs of the scheme for the entire country or only for the pilot areas? Do we know what she expects the costs per job to be at the end of the day?

Baroness Hollis of Heigham

My Lords, I shall write to the noble Lord, but my understanding is that the start-up cost is for the pilot schemes. It works out at £6,000 or £7,000 per job. We do not think that that is an appropriate way to do it because start-up costs are, by definition, front-end loaded. What really matters is the average recurrent revenue costs, once the scheme is unrolled. I cannot give figures for the country as a whole and I shall write to the noble Lord if we have the information to hand.

On Question, Motion agreed to.