HL Deb 17 July 1975 vol 362 cc1444-63

7.30 p.m.


My Lords, I beg to move that this Bill be now read a second time. The noble Viscount, Lord Colville of Culross, said he would like to end on a happy note. I should now like to begin on a happy note by saying how delighted we are to see the noble Baroness, Lady Elles, on the Front Bench opposite. She will not misunderstand me if I say that we have had ample opportunity to see her in action on the Back Benches. We have warmly welcomed the standard of the contribution which she has made, and in some respects I feel happy but also a little apprehensive in having her as what will be a quite formidable opponent. But we are delighted to see her and I am sure that her own side are comforted in the fact that they have her on the Front Bench.

It was only yesterday that we finished the Report stage of the Social Security Pensions Bill. I say this because it is perhaps reasonable that I should point out that this was a pledge which we on this side gave in our Manifesto. The second pledge which we gave, and which we were very concerned about, was that we would endeavour to attack family poverty by increasing family allowances and extending them to the first child through a new scheme of family credits payable to the mother. This is, we hope, the fulfilment of that second pledge. Noble Lords will be aware that this Bill is one whose principles are—I emphasise that I am speaking about principles now—supported by all the major Parties. The idea of paying a tax free family allowance in place of child tax allowances and a family allowance which is taxed has been envisaged for many years by social security experts of all political colours. It was shaped into a definite form as part of the tax credit scheme proposed by the previous Administration.

Those proposals, in so far as they affected children, were consistent with the existing Labour Party policy. But it can fairly be claimed that the child benefit scheme which the Bill seeks to introduce is directly related to the child credit which the previous Administration had in mind to introduce. I am happy to acknowledge this fact. I hope it is evidence that I am trying to establish the best possible relationship with the noble Baroness opposite, so that not only to-night but in the future we have a happy working relationship.

I do not propose to dwell for very long on this subject, because I imagine that if there is anything between us we shall use the appropriate stages allowed in your Lordships' House to introduce some points and to put others right. Before taking your Lordships briefly through the principal provisions of the Bill, it might be helpful if I outlined the major objectives which it seeks to achieve. First, child benefit will be paid for every single child in the family. Thus, it will extend the benefit of a cash payment to the first child in something like 4½ million families as well as to about 3 million single child families. This reform will undoubtedly be generally welcomed and will bring us into line with the practice in many of the most advanced countries in Western Europe and elsewhere.

There is a second and socially equally important objective which will be achieved. Poorer families who have not been able to take advantage of the child tax allowances in full, if at all, because of their low incomes, will in future be able to do so as the new benefit progressively extends the cash advantage of the allowances to all the families that I have mentioned. Their number will depend upon tax thresholds at the time the scheme is introduced in April 1977. Your Lordships may like to know, as an indication, that there are at present something like 150,000 families with upwards of 300,000 children who are below the tax threshold, and not on either supplementary benefit or family income supplement.

To turn to the content of the Bill itself, I think it necessary to give only a short resumé since, unlike some other social security legislation, the Child Benefit Bill is reasonably intelligible to the non-expert. The substance of the new child benefit scheme lies in the first five clauses. Clause 1 provides for child benefit to be paid to a person for any child for whom he is responsible out of monies provided by Parliament, and also for the payment of family allowances to cease. These provisions are in the first five clauses. Clause 2 defines a child as a person under 16 years of age or one between the ages of 16 and 19 years who is undergoing full-time education. Clause 3 defines just who it is who shall be treated as responsible for the child. This can either be the person with whom the child is living, or someone else who is contributing to the upkeep of the child at a weekly rate—this is important—which is at least equivalent to the rate of child benefit. Your Lordships will be interested to know that priority of title to child benefit will always belong to the person with whom the child is living, and where a child is living with both parents the mother will have priority over the father.

Clause 4 enables regulations to prescribe the circumstances in which child benefit will not be payable in respect of children aged between 16 and 19 years who are in full-time education. This is to deal with certain possible developments in the field of student support. Clause 5 provides that child benefit is to be paid at such weekly rates as may be prescribed. As a result of Amendments made in another place, the Bill differs from that originally introduced in that it now specifies that different rates shall be prescribed in relation to different cases from a day to be appointed. It is our intention to introduce benefit at a flat rate at the outset some time in April 1977, but then later to develop the scheme by means of varying rates according to such criteria as may be chosen—for example, the age of the children is one, but there are other factors which we shall need to consider carefully between now and 1979, the earliest date when it would be technically possible to make such variations.

The clause also provides that the Secretary of State shall each year examine the rates of child benefit to see whether they should be uprated. This is a considerable advance over what has gone before, since neither family allowances nor child tax allowances are statutorily subject to any such regular reappraisal. And any uprating can be carried out by Affirmative Regulations, which again is an improvement over the existing position where principal legislation is required. The following batch of clauses, Clauses 6 to 12, provide the administrative framework for child benefit and deal with such things as claims, payment and offences. Most of this is common form to social security benefits in general and I need not dwell at length on this matter.

Having set out the structure of child benefit and how it is to be administered, the next group of clauses, Clauses 13 to 15, cover the residence requirements and reciprocal agreements with Northern Ireland and other countries. The general rule will be that no person will be entitled to receive child benefit unless the child in question and one of his parents has been in Great Britain for more than 182 days of the preceding 52 weeks, and that no person will be entitled to receive child benefit for any week unless he is in Great Britain during that week and has been in Great Britain for more than 182 days in the preceding 52 weeks; in other words, six months in the year. There is power by regulations to make exceptions in appropriate cases.

May I say a word or two about child interim benefit? In Part II of the Bill, Clauses 16 to 18, we come to three important items. First, in Clause 16 is contained the full provision for the interim benefit and its administration. This benefit, which will be introduced in April 1976, will have the same effect for one-parent families as if a family allowance was payable for the first child. It is to be taken fully into account for supplementary benefit purposes, and will be paid at the same rate as that running for family allowance, which is £1.50 at the present time. It will be subject to tax in the same way as family allowance but it is an interim benefit. The benefit is purely a temporary one—the means of doing something quickly for this group of people, rather than leaving them to wait until 1977 when the general child benefit scheme is introduced and when the interim benefit will then be absorbed within the main scheme.

The next clause, Clause 17, makes provision whereby benefits and increases in benefits in respect of children under the Social Security Act 1975 may be reduced to take account of the introduction of child benefit, and of any subsequent increases in the rate of child benefit. This continues the long-standing practice whereby dependency benefits—paid, for instance, with sickness, unemployment and invalidity benefit—are set at a rate which takes account of the existence of family allowance so that together the payments provide a standard maintenance income for the child. Finally within this group, Clause 18 provides for the repeal of paragraph 2 of Schedule 2 to the Supplementary Benefit Act 1966. This abolishes the wage-stop. There are now only some 5,000 of the poorest families affected by this provision, but none the less this is a change which I am sure all your Lordships will welcome.

The remainder of the Bill covers the transitional and financial provisions. On the latter, until a rate of benefit is settled, it is not possible to give any figures, save for two minor items. Interim benefit is expected to cost about £21 million before taxation—£10½ million taking income tax into account—during the year for which it runs, together with an administrative charge of £1½ million. The abolition of the wage-stop is unlikely to cost more than £100,000 in a full year.

This brings me to two major issues which were the subject of considerable debate in another place, and on which I think I should say a word at this stage, if I am not pre-empting the noble Baroness; namely, that the Bill contains no actual rates of child benefit and that it will not be possible to introduce the child benefit scheme until 1977. We are alive to this; the two issues are linked. This is essentially a structural Bill. Because this must be so, there was an attempt in another place to cast doubt on the Government's intentions to create a worthwhile scheme. I hope that there will be no serious attempt to cast doubt on it in your Lordships' House, because any such attempts honestly rest on a false premise. It is vital to get the structure for the future development of family benefit right, and we have to settle the structure now in order to get the operational machinery completed. This is far too early to decide the rates for a benefit which is not due to come into operation until 1977. Consequently, the Government say that the rates cannot be written into the Bill. As the Chancellor of the Exchequer said in his Budget Statement, it will be necessary to accommodate the cost of the new scheme within the limits which, in the light of future Government commitments, can be devoted to public expenditure at large in the years beyond 1976 and 1977.

It would, however, no doubt be of help to your Lordships in getting an idea of the sums involved if I repeated the illustrative costing which the Secretary of State gave on Second Reading in another place. A child benefit rate, introduced now, which would involve no extra cost to the Exchequer, would be £1.94 a week. This purely illustrative rate assumed that the child tax allowance of £240 a year for children under 11 is the rate that is replaced, and that the extra allowances for children over 11 are retained as residual tax allowances. Under this nil cost formula, the poorest families below the tax threshold and not already on social security benefit would gain the full £1.94 for the first child and 44p for each other child. As an indication of the rate at which costs increase thereafter—it is important to take this into account—every extra 1p on this rate of £1.94 would involve a net cost to the Exchequer of £6½ million a year. Your Lordships must bear in mind—I am speaking now off-the-cuff—that we are dealing with something like 14½ million children and, as I say, a penny a week on that rate of £1.94 would cost an extra £6½ million a year.

I want to say something about the starting date, because I realise how some noble Lords will feel about this. I said that because this scheme is not being introduced until 1977 nothing more than such an illustrative costing can be given, but I am sure noble Lords will expect me to say a few words about the fact that it has not proved possible to introduce the benefit, as we had hoped, in April 1976. To prepare for the take-on of the 3 million singleton families, we need a building large enough to house 2,200 staff situated near Newcastle Central Office where all family allowance work is done and where the family allowance expertise exists. New buildings in the Washington New Town were commissioned by the Property Services Agency to be ready for occupation by the staff in July 1975; and against the possibility of delay in the building programme fall-back arrangements were made to use, on a temporary basis, another large building already under construction in Washington by the Property Services Agency for other purposes. By March 1974 is was clear that the programme on the purpose-built accommodation had slipped and it was necessary to rely on the fall-back arrangements. That building became our mainstay for the take-on operation.

Then, last autumn, it was learned that high alumina cement had been used for some components in its construction, and work had virtually to stop while the need for precautionary measures was considered. This delay ruled out the use of our fall-back building for the 1976 start. There were no other buildings in the Newcastle locality which were suitable and which could be made ready for use for April 1976. Once the April 1976 date had been lost we had to wait for another complete tax year. This is because the introduction of child benefit is inextricably linked with the commencement of the progressive withdrawal of income tax child allowances—a matter, of course, for a Finance Bill. It is not practicable, both for policy and operational reasons, for the Inland Revenue to withdraw these allowances other than from the beginning of an income tax year.

I hope I have been able to give your Lordships a sufficiently general account of the Bill and its contents. It was only intended to be general and its purpose was to enable us to have an informed debate. Therefore, my Lords, I conclude by commending the Bill to your Lordships' House, and I beg to move that it be now read a second time.

Moved, That the Bill be now read 2a. —(Lord Wells-Pestell).

7.51 p.m.

Baroness ELLES

My Lords, first, may I thank the noble Lord, Lord Wells-Pestell, for his very kind words. Whatever I may say against him in the future he will know that it is never against him personally, and I shall look forward to working in co-operation with him, and indeed with other noble Lords. But he will know, like me, because we have both worked with poor families for many years, that one of the most immoral examples in our society is that there are children who are poor and who are being underfed. I will not go at length into the question of child poverty, because I know it is a subject on which we both agree, and therefore my comments are made bearing in mind that there are children who are being underfed, who today are being undernourished and who are being neglected in the United Kingdom, in what is one of the most highly developed industrial countries in the world, and I think we must look at this question against that background.

First, on behalf of these Benches I wish to welcome the principles established in the Child Benefit Bill. As the Minister has said, the principles were established already in the proposals for a tax credit system which was put forward by a previous Conservative Government, and he will also know that the idea of a payment for the first child has been the major concern of nearly all social welfare workers. When we from the Women's National Conservative Association gave evidence to the Finer Committee, we strongly recommended that one of the best, quickest, safest and most secure ways of relieving immediate poverty for families was to give a cash benefit for the first child. So we approve and endorse that principle which is established in the Bill. Of course we also support the principle that the cash benefit should be paid to the mother as the person responsible for buying the household necessities on a day-to-day basis. The noble Lord did not confirm—and I should be glad if he would—that the child benefit will be tax free and that it will not be aggregated to the income of either parent.

However, what does disturb us—and I know that the noble Lord has already raised this point—is the time factor of when this money is going to be paid. He has said that there are 300,000 children (I think that is the figure) in families who are below the tax threshold and who do not draw supplementary benefit. Is he really prepared to say that these children are not to get any help for two years because of a slip-up in a building programme near Newcastle? Does he really think that a Party which claims to put social justice above every other principle should think that that number of children in this country should be left with no financial support of any kind from the Government? Therefore, I must ask the Minister whether he considers that the Government have their priorities right—a Government who can spend £1,000 million on a National Enterprise Board to take over companies, who can spend £4,000 million on community land, yet can delay the payment to 300,000 children in order that they might be able to eat. I should have thought that this was a disgrace that the Government should not have to face.

With regard to food prices, perhaps the Minister will bear in mind that when we had 90p family allowances the average wage was about £23 a week and the average cost of food was £2.19 for the poorest family. The average cost of food per week now is £2.89. I have taken the official figures for October 1974. Yet the family allowance has gone up by only 60p. It has not gone up enough to pay for even the minimum weekly food bill per head for the poorest families in the country. Yet we manage to have an average industrial wage now of over £56 a week. I think we must look at this problem in relation to the figures that we are seeing every day in the newspapers.

I would also suggest to noble Lords that very much more should be done about equal pay for women, because surely it is the mothers who must have the money in their pockets. There are at least 3 million working mothers with children who, if they had even £1.50 increase in their salaries to make them nearer the standard average wage would be able to benefit from this extra money to spend on their children. At the moment, the average wage for a woman is £27 as opposed to about £48 for a man, so there is a great margin which the Government can do something about earlier than 1977, the date on which their computer will be working.

I should like now to look at some of the details in the Bill, and I should be grateful if the noble Lord could comment on one or two problems which are of concern to us on this side of the House. The first problem I should like to refer to is the question of definition of a child under Clause 2(1)(b). The fact that a child must be under the age of 19 and receiving full-time education, I think will be very detrimental to apprentices. I know that there are apparently very few at the moment who are affected by the removal of child benefit, but this problem must be looked at in the context of enormously increasing youth unemployment. Surely one of the best ways of saving children from lounging about the streets and having no job is to encourage firms to take them on as apprentices, even at low wages. The children would get the child benefit, but their parents would lose the child tax allowance, because as I understand it that is going to be gradually withdrawn as it is replaced by a child benefit.

Further, of course, if a child is over 19 and is receiving full-time education, he will be no longer eligible for the family allowance, and the parents will be no longer eligible, as I understand it, for the child tax allowance. The families who send children for further education, and particularly the poorest families, are surely the ones who will suffer most because they have to make the greatest sacrifices in order that their children shall carry on with their education rather than taking a job. Would the Minister look at this point to see whether he can make a more satisfactory proposal to cover these poorer families who will lose the child tax allowance, but who still have to provide for and help their children when during holiday times they come back from universities or from courses of education, or whatever it may be? These families also have to help their children while they are receiving their education during term time. As we all know, the minute you take away a benefit of any kind it is always the poorest families who suffer. I think this matter should be looked at again.

My Lords, I would also ask the noble Lord the Minister for further particulars on the question of which children shall be eligible. I know there are certain regulations as to how much time they should spend in this country. Can the noble Lord say whether the children of immigrants will be covered by the Child Benefit Bill? I would refer to the problems which have arisen in Germany where, as the noble Lord will know, the new family allowance for children was introduced last year. The family allowance was to be given only for children in Germany. This created the situation where literally thousands of migrant workers brought their children into the country in order to benefit from the child allowance, and, in turn, this created housing and other social problems. Therefore, it was decided that it was easier to accept that children living outside the EEC should also have the benefit of the child allowance. I am speaking to the case of Germany, not of the EEC regulations as a whole. The result was that in the country of which I am specifically thinking, suddenly a very large number of of children became the children of the immigrant workers by adoption or fostering. This in its turn created an escalation in costs. This might be worth looking into concerning satisfactory definition. We must also bear in mind that if the child tax allowance is removed from immigrant workers working in this country, they would suffer financial hardship and loss. Can the Minister give some indication of his thinking on this matter?

I should like to ask the Minister in connection with Clause 3(1)(a) which refers to "the child living with him in that week", whether he can assure the House that a mother drawing maintenance for a child would nevertheless continue to draw child benefit and that, though the father is contributing to the cost of maintaining the child, the mother would be able to have the benefit of this new social security. I am sure this will be of great concern to many women on their own who have children, if they cannot carry on drawing a family allowance or the new child benefit. I should be most grateful for the Minister's comments on this.

Can the Minister also tell us about the different rates which shall be prescribed? In our evidence to Finer given in 1971, we drew up a scale of payments based on our experience as mothers, of knowing how families work and of expenses, whereby the first child would receive £1.—we must remember it was 1970 when we made this scale—the second child aged over 5 received more, and over the age of 11 more still. The sums were graduated by relation in the family, that the first child should have more, the second child slightly less and the third child slightly less, on the grounds that a first child always costs more. Both these principles are recognised in various forms of social benefits, either in supplementary benefit or perhaps National Insurance benefit. I would hope that the Minister will look at this to see whether some kind of scale can be worked out whereby both these principles are taken into account.

Again I must say that we on this side of the House find it difficult to accept that a computer is not able to work out these scales, or whatever scale is decided, until 1979. The bank system of personalised cheques shows that if you were to ask a bank to open an account for you and they said you could not have a cheque book for four years, they would lose a great many clients, especially as it would be based on immutable data which, in this case, is the date of birth. Can the Minister find his way to seeing whether the administrative difficulties, of which I know he is aware, can be overcome for the benefit of the thousands of children who at present are undernourished and desperately in need of help?

On the other hand, having made our comments about what we find wrong with the Bill and on why we are disturbed on this side of the House, we welcome certain measures taken in the Bill, particularly the introduction as from April 1976 of the interim benefit for one-parent families. As the noble Lord the Minister will know and confirm, there must be now at least 1 million one-parent families. According to the 1971 figures, there were 620,000 families and the average number of children involved in divorces over the years is about 80,000 each year. I checked these figures in the latest statistics available. Nevertheless, it is with regret that we note that this particular help will not be of assistance to the poorest families—that is, those drawing supplementary benefit—because of the disregard. I understand that the £1.50 paid to the first child of those families who draw supplementary benefit will mean that they will have their supplementary benefit reduced accordingly. I wonder whether the noble Lord could look into this and make some comments for our benefit. It seems to me that if an interim benefit is to be brought in to help poor families, it should be made to help them and should not work against them.

My Lords, another point on which the noble Lord might enlarge is the number of civil servants who will be needed to implement these schemes. I read with care the Second Reading debate in another place. I understand that about 3,500 extra civil servants will be needed to implement the plan. I must confess that this caused me some dismay when I remembered reading in the proposals for a tax credit scheme, at paragraph 123: A system of tax credits would simplify the tax system and its administration saving many thousands of Civil Service posts. As I presume both schemes must have been written to some extent by civil servants, perhaps we could have clarification on this particular point. Will the system need thousands of extra civil servants, or will it in the end save thousands of Civil Service posts?

In conclusion, we accept the Bill and its principles but, of course, we are concerned with the fact that it is to be delayed for so long. We know that there are thousands of families drawing FIS, but the level is higher than the tax threshold, so many FIS families pay income tax under the new rate of personal allowances. Because the number of families drawing FIS is dropping, as I understand it, I implore the noble Lord the Minister to take some measures to advertise the fact that there is the benefit of the family income supplement. We all know that with means tested benefits, unless people are aware they can get them they will not have them. It is as simple as that. Advertisements have to be displayed in areas where the need is greatest, where people likely to need FIS will be able to see them. They should be in legible and easy form. I again refer to the document in which we published our evidence to Finer, Unhappy Families, published in 1971: Better publicity is needed to inform the public of the welfare services availab1e. This is the only way these people will be able to survive until the Government in 1977, or indeed in some other cases 1979, bring in their child benefit. We on these Benches look forward to that time, knowing that this child benefit will be able actually to help those who need it so greatly now.

8.11 p.m.

Baroness SEEAR

My Lords, it has been a long day and I do not intend to detain your Lordships' House for very long. Of course, we on the Liberal Benches—those of us who are here and those of us who are not—give the warmest welcome to this new policy of the Government, which has adopted measures which we in our Party have urged for a very long time indeed. Family allowance for the first child has been an item of Liberal policy for as long as I can remember and we are very glad indeed to see it brought into force; or at least the commitment to bring it into force. I should particularly like to emphasise just how important is the additional payment for the first child.

Studies in this field are underscoring, even more than in past years, just what a break in the life of the woman and the family occurs at the birth of the first child. You have the situation where there had been two earners and then, in a great many cases, with the advent of the child the family income drops. There is a growing amount of evidence that this is a very crucial moment in the life of the family, and that additional support to the family and the woman when the first child arrives is particularly needed. It has been an extraordinary blindness to what is a very obvious consideration that has restricted family allowance in the past to the second and subsequent children. The need was so palpably great at the financial and psychological levels when the first child arrived.

We are also very glad indeed to see that there is to be some recognition and adoption of the recommendations of the Finer Report in giving assistance to the single parent family. I think there is no difference between all Parties on these matters, and I welcome that innovation. I should also like to say that we are very glad indeed, having been active early about the idea of a tax credit scheme, to see that the Government are moving tardily and partially in this direction. In the view of the Liberal Party, the tax credit scheme is probably the most creative idea in policy since the days of the Beveridge Report. It was the greatest mistake, in our view, that the Government apparently, for reasons we never understood, saw fit to bury the idea of tax credits when they returned to Office in 1974. If this new child benefit means that the Government have rediscovered the benefits of this extremely creative new policy, then this is the beginning of a very welcome change in the handling of social policy.

Having said that, I would echo very strongly the regret that it is impossible to bring in child benefit for the first child until 1977. I am afraid I was totally unconvinced by the Minister's explanation that failure with building programmes and problems of this kind have held up the introduction of what all recognise as the most necessary innovaaion. I simply cannot believe that an efficient Administration, recognising how urgent this issue is and determining that something should be done about it, could not have found a way to see that the payments started to be made in 1976.

There has been pressure on the Government to do this for years, and the acceptance of the fact that obstacles of this kind are an adequate explanation of why a plan, which we are now told was intended to be introduced in 1976, is calmly to be delayed for 12 months is a real and serious criticism of the calibre of administration in this country. Any go-ahead enterprise would have found a way of getting around this difficulty and it is lamentable that a Government, who are forever preaching to the private sector to get on and be more efficient, confronted with an obstacle of this kind just withdrew and said, "We will delay the delivery date for 12 months". I suggest that the National Enterprise Board ought to look at the way in which these matters are handled.

I also feel it is quite extraordinary that something could not be done about this problem of the first children in families before the Child Benefit Act comes into force, if it has to be delayed. We have been told in the last week that the Government are to pay another £150 million into food subsidies and rent support. This will go, as previous food subsidies and rent supports have gone, to help people who are well able to pay the additional prices for food, to families where there are two and sometimes three wage-earners, grown-up families in rent supported houses. And yet the Government see fit to direct £150 million into this old and wasteful channel rather than taking that money and using it where it is urgently needed, where there are young children to feed and house.

However, with those two very strong criticisms of lack of urgency in dealing with the matter, and lack of courage in using our resources in the best possible way—my goodness me, at a time when resources are as short as they are, to allow them to be diverted away from areas of high necessity into areas of very marginal necessity is surely an indictment of Government social policy—we are very glad that, belatedly, the Government are moving in this direction.

8.18 p.m.

Baroness VICKERS

My Lords, I did not put my name down to speak, because I thought I would wait to see whether all the points I was interested in had been covered—and most of them have been—by the two previous speakers. But I could not let this debate go by without congratulating my noble friend Lady Elles on her very eloquent speech. We are delighted to see that she is on the Front Bench. From what she said, it is obvious that the knowledge she has gained from her work in Europe has been an asset to her in discussing this Bill.

I should like to say how much I welcome the cessation of the wage stop, and to ask whether this could be brought forward. This is one of the worst means tests there are. I believe there are about 40 means tests still in existence, but I have always thought the wage stop was one of the cruellest. I should like to ask about Clause 15 which deals with reciprocal agreements. There are the EEC, Australia, Austria, Canada, Spain, Norway, New Zealand, Finland, Sweden, Switzerland and Yugoslavia with whom we have reciprocal agreements. I know that in France and Holland the allowances are very much higher than they are here. I should like to know exactly what "reciprocal" means in this case. When somebody goes to live in France or Holland, they get the family allowances of that country. If a French person comes to live here, does he have to come down to our very much lower family allowance, which will interfere with his standard of living? I understood that "reciprocal" meant "in return and mutual", expressing mutual relations. I do not know whether the noble Lord can reply today, but I think it is very important.

Finally, Clause 16 says on cohabitation, Subject to the provisions of this section, a person who is the parent of one or more children shall be entitled to a benefit under this section for any week in the interim period in which … (c) he is not cohabiting with any other person as his spouse. I know quite a lot of people who are cohabiting, and both the man and the woman have children. Perhaps the man is a widower and looking after his children entirely. Does he get it even if he is cohabiting with another woman as his spouse? If the noble Lord cannot reply today I should be very grateful if he would look at the points I have raised.

I should like to add my congratulations to him on his excellent explanation of the Bill. As the noble Baroness, Lady Elles, said, I am sure that we shall do our best to co-operate to see whether we can get this Bill through—it is not much good my saying "very quickly", because it will not come into operation for such a long time, but I should like to see it on the Statute Book. Perhaps when the economic situation is better, and the Government get over the difficulties which have been outlined, we will be able to get the Bill onto the Statute Book and get action taken.

8.21 p.m.


My Lords, I do not think for one moment that I have been able to take everything on board. The noble Baroness has certainly established herself as a sharpshooter. I have tried to make a note of everything. I will go through Hansard rather carefully and if I have missed anything I will endeavour—I say "endeavour", because I have written so many letters of late—to give the answers. I can say that the wage-stop ends this month; it finishes on 23rd July. In many ways I think we are in agreement with the noble Baroness, Lady Seear. We take no comfort in the fact that we cannot bring this in sooner. What I have said is quite sincere, in the sense that we have been, and are being, severely handicapped on the question of space. This is something which we did not foresee. Many of us, including myself, have suffered because of high alumina cement and it certainly presents a tremendous problem.

I cannot remember who raised the question of staff, but my understanding of the situation is that something like 3.500 temporary staff will be needed in the Department of Health and Social Security during the year preceding the start of the scheme. Thereafter, the permanent addition to staff to deal with the servicing of the awards and claims will be about 1,300.

Baroness ELLES

My Lords, would the Minister kindly explain whether the extra staff will be for the DHSS and the reduction in staff will be for the Treasury, or was paragraph 112 in the proposal for the tax credit scheme wrong?


My Lords, I was coming to that. It will be what the DHSS needs. Strangely enough, I think I am right in saying that the Inland Revenue will be able to save something like 1,300 staff, so the two will cancel each other out. This came out in a reply, which I shall not read, by Mr. Robert Sheldon to a Question which was asked in another place. I hope that will be a sufficient answer for the noble Baroness. The child benefit, as I thought I said but obviously did not make clear, will be a cash benefit and tax free. The child tax allowances for children over 19 will continue until such time as other arrangements are made for student support. In my opening speech, I said that there is an inquiry into a possible scheme of student support, but until that has been resolved the child tax allowances will continue. I should think that would meet the point raised by the noble Baroness.

Baroness ELLES

My Lords, would the Minister confirm that this support will be not only for the student but for the parents? This is the point I was trying to make, that the loss of the child tax allowance would hit the parents, and I wondered whether the student support envisaged would cover that point.


I understand it continues beyond the age of 19, so that the answer must be, Yes. I should like to come back to the question of the 300,000 children who will get no help until 1977 and whose families are below the tax level. I shall probably not give the noble Baroness a satisfactory answer, or at least one that she will accept. The Government have increased the family allowance to £1.50. It was introduced in 1968, was not raised by a single penny between 1970 and 1974, and was as necessary then as it is now. I know that this is a very debatable point and I shall not cam, the noble Baroness, Lady Seear, with me. We have increased food sub- sidies considerably, and it is a matter of opinion as to whether or not these are desirable or whether the money could be used in a better way. The children in one-parent families will get an extra £1.50 per week in April 1976 when the child benefit comes into being. It may well be that the sum total of all these measures may not do as much as some people would like, but I think it is probably as much as we can do at the present moment.

I was asked, I think by the noble Baroness, Lady Elles, whether the child benefit would continue for mothers drawing maintenance for children. The answer is, "Yes". The parent with whom the child is living will always have a priority to child benefit. I am sorry if I did not make that clear. A child may not necessarily be living with the mother, but possibly with an aunt or a grandmother. Notwithstanding any amount she may be getting from other sources for the support of the child, she will be entitled to the child benefit. If the person who is maintaining the child is contributing less than what the child benefit will be, he or she would not be able to claim the child benefit over and above the person who has the child. The fact is that the person who has the child will benefit.

May I deal quickly with the question of immigrants. In our view it would be wrong to bring non-resident children into the scheme, so that people living and working here and whose children are living abroad will not be included. I am not quite sure whether this is the point which the noble Baroness is raising. Obviously, children living in this country who fulfil the conditions will be included, but the non-resident children of people living in this country will not be incorporated in the scheme.

The question was asked: why no disregard of the interim benefit or supplementary benefit? Briefly, the child benefit is being treated in the same way as family allowance. It is generally accepted that the primary role of supplementary benefits in the social security framework is to assist those whose requirements exceed the amount which they received by way of non-means-tested benefits like National Insurance benefit, pensions and family allowance. These benefits are not, therefore, disregarded, and it is logical that the interim benefit which is akin to family allowance should be treated in the same way.

The Government attach importance to reducing the dependence of people on means-tested benefits and no progress will be made if each time a universal benefit is introduced or an existing benefit is increased, that benefit is disregarded in the means test. We must recognise that we are faced with certain difficulties and at the moment in our view there is no other way of dealing with the matter.

I am not sure that I have taken on board all the questions that were asked, but if any useful purpose will be served, perhaps I may be permitted to write to the noble Baroness after I have read the Official Report of their remarks. I hope, however, that I have dealt with the major points.

On Question, Bill read 2a, and committed to a Committee of the Whole House.