ENTITLEMENT (Hansard, 26 June 2002)

§ Dawn Primarolo

These amendments are all aimed at ensuring that we have the flexibility to ensure that, if appropriate, any family responsible for caring for a child or young person could have access to the appropriate level of support.

I shall explain the Government's reasoning for introducing these amendments, as the matter did not detain us during the Committee stage, nor is it directly relevant at present, but given what might happen in the future, it is important to include in primary legislation the ability to respond to change. I shall thus set out in a little more detail why we believed it was appropriate to introduce the amendments.

Clauses 8 and 9 provide the framework for entitlement to the child tax credit. The draft Child Tax Credit Regulations, which were made available on 9 May, provide the detailed provisions that will sit within that framework. Together, those measures create a system that ensures that the family with main responsibility for a child will be provided with a suitable level of support, depending on their needs. That is similar to many current systems of support for children, and we believe that—currently—it provides the most suitable means to ensure that we can focus support on raising children out of poverty.

Our present aim is to enable one family to claim support for any particular child at any one time. That is the principle on which the Bill, the draft regulations and the business systems being developed are based. There are several sound reasons for that approach. Usually, the person or couple who have the main responsibility for care of a child bear more of the everyday responsibilities for the child, and meet the everyday expenditure for him 927 or her. It is vital, especially for families on lower incomes, that enough support is directed to that family to lift the child from poverty, or to keep him or her out of poverty.

However, we recognise that patterns of care may be changing. That is the reason for the amendments. Many more families share responsibility for children than was previously the case, especially where a family has split up—resulting in both parents sharing responsibility for the children from the former relationship. The increase in shared responsibilities between families raises the question of whether, in future, directing support to one family will continue to be the right approach. We are determined to keep the provision of Government support in such cases under review, in order to ensure that we meet the needs of the children involved.

We have no intention, however, of making any hasty or ill-considered changes to our present approach. The question of shared responsibility for children goes wider than tax credits and affects other systems of support that recognise the needs of families with children such as housing benefit. Even if, in the light of the changing climate on this issue, we became persuaded that a change in approach was warranted, such a change could not be made overnight.

The consultation exercise on the tax credits and our continuing contact with lobby groups have shown that payment of support to the family with the main responsibility for the child is seen as the most appropriate way to deal with the vast majority of families with children. If there were to be a change, it would have to be carefully thought about; there would need to be careful preparation of the ground with claimants and advisers. Any change would also entail extensive—and expensive—IT and business systems changes, which would require detailed analysis and take time to establish.

We will continue to stand by our intention to direct payment to the family containing the person with the main responsibility for the child, and entitlement will not be divided in cases where more than one household is involved in care of a child.

Against that background, we see the need to make some protective changes to the Bill to equip us to change the way we deal with shared care cases—if it became apparent that a different approach was more appropriate. To provide us with that flexibility, Lords amendment No. 14 would allow us to vary the amount of the individual element in the child tax credit to reflect any relevant factors, such as shared responsibility for a child. That mirrors a similar power already present in the family element.

Lords amendment No. 15 would enable us, where more than one claim is received for a particular child or children, to pay each family a reduced amount of any element payable in respect of any particular child—to reflect the level of care that the family provides. If we decided, in the future, to recognise a claim for a child by more than one household at any one time, we would not want those households to be in a better position in terms of tax credits than a family who had stayed together throughout and were solely responsible for a child.

Lords amendments Nos. 13, 16 and 101 allow us to define the phrase being responsible for a child 928 separately for the purposes of the child tax credit and the working tax credit. However, the key factor in making the amendments is to make clear in the Bill that, if, in future, tax credits have to reflect shared care responsibility, entitlement can be divided and not duplicated.

The new tax credits will provide an important source of financial support, especially for families on the lowest incomes. We recognise that it is important to be able to process claims as quickly as possible and get awards into payment. However, as with all forms of support, we have to reflect the complexities of real life; the rules may be complex. That is why we do not think it appropriate to rush into making changes.

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We are already aware that in many cases where a dispute arises over who is responsible for a child, its resolution can be time consuming and difficult. Those difficulties are unlikely to reduce if, in future, we recognise more than one claim. It will be necessary to undertake a great deal of detailed discussion and consultation about the practicalities of how we could deliver such a change. For example, we might wish to confine access to child credit to those who care for a child for at least three or four days a week, or, looking at the matter more broadly, for about 40 per cent. of the time on a regular basis. The powers that we have taken would enable such matters to be covered in secondary legislation, which can be fine tuned more readily if necessary, following detailed considerations and consultation.

I hope that I have made it clear that the Government's intention is as was stated on Second Reading, in Committee and in the debates in another place, and that that is purely to provide for a secondary legislation route if at any time we need to take account of shared care.

I have been careful to give a fuller explanation to the House on this issue because it had not been covered previously in debate in Committee or on the Floor. I hope that hon. Members recognise that it is necessary to have the power, although it does not mean that we will use it, because there is a long way to go in changing the system before such a power could be contemplated.