HL Deb 24 July 1975 vol 363 cc523-44

7.21 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Lord Wells-Pestell.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord AMHERST of HACKNEY in the Chair.]

Clause 1 agreed to.

Clause 2 [Meaning of "child"]:

Baroness ELLES moved Amendment No. 1:

Page 2, line 4, leave out ("under the age of nineteen and").

The noble Baroness said: The purpose of this Amendment is to draw attention to the eventual exclusion from the Bill of children who are in full-time education and over the age of 18. Surely, the purpose of the Child Benefit Bill is not only for the benefit of the child, but also for application of the benefit by parents for the child. We on this side of the Chamber recognise the great importance of this Bill as a basis of family policy, which is to help families in need regardless of the age of the child. At present, the child tax allowance would give a parent with a child in full-time education over the age of 18 about £100 net per annum, because the parent would get £305 child tax allowance, 33⅓ per cent. of which gives approximately £100 net. If the child was a second child enjoying full-time education over the age of 19—and that is not impossible, because education can go on to the age of 23 or 24—he would also draw the family allowance. If this class of person is not excluded from the Bill, the first child would also get a family allowance, so the difference in net income would be something like £250 net a year by exclusion from this Bill if a parent had two children over the age of 18 in full-time education.

I think we should bear in mind that the income of the parents is assessed when a student grant is being allocated, and the parent is expected to contribute to the well-being and welfare of the student during the course of his further education. We all know the theory of the independence of youth, and that over 18 a child is legally no longer a child. But we also know, both as parents and in practice, that all parents contribute financially to the support of their children in full-time education at universities, whether by providing a home during vacations, or extra cash for books, or feeding them during the holidays, or whatever it might be. Anybody who has done any social work will know that it is always the poorer families of our society who are the most generous to their children, in percentage terms at any rate, when they have children pursuing further education, very often at great sacrifice to themselves.

What we should like to know is whether the Minister can tell us anything about a replacement for child tax allowance if it is withdrawn under this Bill. It was made clear in another place that there would be no additional expenditure if the child tax allowance had been withdrawn, and the benefit of £1.90p was given to all children up to the age of 19, and over 19 if they were in full-time education. I should like to make the point that this Amendment in no way results in extra public expenditure. Perhaps it should also be borne in mind that in all the other Member States of the EEC the age for receiving any family support for children in full-time education goes up considerably over the age of 18. To quote two examples, both Belgium and Germany go up to the age of 25. In comparison, we might bear in mind that Luxembourg, with a population of about 350,000, goes up to the age of about 26. So on this side of the Committee, we feel there must be no disincentive to education. The need for scientific and technological development is very clear, and any benefit system which is introduced to prevent children from being able to pursue further education cannot, in principle, be good; indeed, it must be retrogressive.

Can the Minister give us any indication of what the Goverment have in mind for the replacement of the child tax allowance? Can he tell us what measures he will take for families, particularly poorer families, who are prepared to sacrifice additional income from children who would otherwise be earning, when they go to university? Can he tell us what additional benefits or income will be available to families in this situation? I beg to move.

7.28 p.m.


If I remember correctly, this matter was raised in the debate on Second Reading. I attempted then to say something which I thought would meet the situation. We ought to get it clear in our minds exactly what we are talking about. This Amendment would remove the upper age limit of 18 and permit child benefit to be paid regardless of age, provided the person was undergoing full-time education. Family allowance is never payable over the age of 19, so that family allowance and child tax allowance together are payable only until the age of 19.

As the noble Baroness, Lady Elles, implied, the Opposition put down an Amendment, in identical terms in Committee in another place, but following the assurance that income tax child allowances for students over the age of 19 would not be withdrawn unless and until there was some change in the arrangements for students doing advanced courses, it was not pressed to a Division. I hope that this will be the position tonight. Family allowances always come to an end at the age of 19, regardless of the stage of education reached by the qualifying child. Occasionally, he may still be at a secondary school and, commonly, will be in the first or second years of an advanced course. On the other hand, child tax allowances can be claimed by the parents of a student beyond the age of 19, so it has been necessary to make a choice between the two systems. Here the social security approach has been adopted, and it has been adopted for this reason.

The child benefit is a cash allowance made weekly to the parents. It is right that it should follow the rules for other cash benefits and be campatible with, for example, what is done about dependancy benefits for children. Secondly, child benefit replaces family allowance, and it would therefore be inappropriate, in our view, in the social security context, to extend the new benefit to cover a group of people who have never qualified for family allowance and who are able to claim benefit, for example unemployment benefit and supplementary benefit, in their own right during the vacation period.

No one will lose as a result of the retention of the age 19 limit. The full rate child tax allowance will continue to be allowed for the over-19 students unless and until some other arrangement is made for students from this age group who are on advanced courses as part of the review of student support which has been undertaken in the light of the advent of the child benefit scheme.

I do not think I can take it any further than that. Let me be quite frank: we are still working on the details. I hope that the noble Baroness has got the assurance she wanted. This, as I say, is not going to be removed until we have been able to put something in its place. The scheme contains the same upper age limit, 19, as family allowance. If I may just repeat what I have said, child benefit will be payable only in respect of students, whether at school or college, aged under 19. Those over the age of 19 will be outside the scope of the scheme, but parents will still be able to recover and receive child tax allowance. But on looking ahead to the time when child tax allowances for all childen under 19 will have been incorporated into child benefit suggested the opportunity to consider afresh the interaction between child benefit, child tax allowances and the student support system as a whole, and this is being looked at by an inter-Departmental study group. As I said at the beginning, I can give the noble Barones and your Lordships the assurance that the income tax child allowances for students over the age of 19 will not be withdrawn unless and until there is some change in arrangements for students on advanced courses. I hope that that satisfies the noble Baroness and that she will be able to withdraw her Amendment.

Baroness ELLES

I should like to thank the Minister very much for his reply. The matter that concerns me, which I raised when speaking earlier, is the effect on the parents of the withdrawal of child tax allowance in the light of the new consideration over student grants. I wondered whether we could have some assurance that in the consideration of the new system for payment of grants and so on to students, the position of poorer families who send their children to further education will be considered, because some form of cash benefit or tax allowance or some incentive must be given to parents to enable them to allow or help their children to continue their further education. They are getting this at the moment through the child tax allowance, as the Minister has readily conceded. Does he think that at least this might be considered in relation to the overall problem of students on advanced courses, in the light of what he has already said?


In reply to the noble Baroness, if we are going to reconsider the whole question, as we are committed to do, obviously we have to bear in mind all factors, including the factors she herself has raised, in order that people are not going to be worse off. The whole idea is not to put people in a position where they are worse off. One would hope that when the financial situation is a little easier than it is, and when we can think in terms of what each child is going to get ultimately, they are going to be better off. I am certain that this must be considered.

Baroness ELLES

I am very grateful to the Minister for that reply, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Baroness ELLES moved Amendment No. 2:

Page 2, line 6, at end insert ("or is an apprentice who is not in receipt of earnings which, after allowing for such deductions as may be prescribed, exceed the appropriate rate of supplementary benefit for a person aged not less than 18 years.")

The noble Baroness said: I beg to move Amendment No. 2, and with the permission of your Lordships I should like to speak to Nos. 3 and 11, which are consequential, and also to No. 10, which deals with the meaning of "apprentice" in the terms of the Bill.


If I have understood Amendment No. 10 correctly, I agree that it deals with apprentices, but those who are really on sandwich courses, and I do not know whether the term "apprentice" would be the appropriate term. I was wondering whether the noble Baroness would feel that it might be better to speak to Nos. 2, 3 and 10, and take Amendment No. 11 separately.

Baroness ELLES

Certainly. I will therefore speak to Nos. 2, 3 and 10. The position of apprentices is rather similar to the position of children in further education. The Minister has made it clear that they have adopted a policy, as underlined by family allowances, within the social security orbit, and, if I may be permitted to say so, I think they have taken a rather narrow approach to the problem of helping families in need. The effect of the Bill is to remove young people over 16 who are undergoing training from receiving family allowances or the parent receiving the child tax allowance; that is, from any future element of child benefit that might have been available to them. As I understand it, there are very few apprentices who are actually affected—I think the figure is something like 38—and who again do not draw family allowance. I believe I am right in saying this. If the child benefit is to be payable for the first child, they would come within the net of the Child Benefit Bill, because I believe first children who under the present scheme do not get anything, if they benefited from the Bill would themselves benefit by getting the first child's benefit of £1.50, or whatever the figure would be.

What worries us on this side of the House is this grey area which exists between the child leaving full education in school and finding a job or career to which he is suited. We consider that any step, certainly in the field of finance or economics, which is going to impede a child from benefiting from the opportunity of training or learning a profession, even at a very low wage, is to be discouraged. There was one aspect of it which was also worrying.

In the Standing Committee, at the first meeting, the Minister in another place mentioned the fact that there were a few thousand apprentices, particularly in hairdressing, who had very low wages, but what was never actually made clear was whether these few thousand apprentices at the moment benefit in any way, either from the family allowance or their parents from the child tax allowance. I know he spoke disparagingly about girls going into hairdressing, but nevertheless they have to learn a career like anyone else. They frankly do not earn very much, as I know from my experience of going to hairdressers. I think that any encouragement given to girls to do a job of work, even if they are paid very little, is of social benefit and good for society generally. So I wonder whether the Minister could perhaps tell us a little more as to the effect of removing apprentices from the Bill, particularly in relation to these so-called few thousand who are in hairdressing. I quite understand that at the moment the £1 for £1 disallowance from child tax allowance means that any child who earns over £8 a week in fact extinguishes the effect of the child tax allowance, but how many of these several thousand hairdressing apprentices in fact do earn, including deductions and so on, over £8 a week. I should be grateful if the Minister could tell us how many apprentices or parents would he affected financially by this Bill.

7.41 p.m.


I was a little surprised to see this Amendment down because I wrote quite a long letter to the noble Baroness and I had thought that I dealt very successfully with the matter, but obviously I did not. Perhaps it is a good thing, on reflection, that the Amendment has gone down because it will enable me, for the benefit of your Lordships, to state the position a little more fully than I did in the letter, although it was a full letter.

The noble Baroness has quite rightly pointed out that the effect of the Amendments is to extend the payment of child benefit to apprentices under 19 years of age with net earnings not exceeding the supplementary benefit rate for a non-householder aged 18 years or over. That is currently £7.65 a week and in November it will be £8.70. It is true that income tax child allowances and family allowances, make some provision for apprentices but that provision is far more apparent than real, as I will try to demonstrate to the Committee. First, a parent may claim an income tax child allowance for a child undergoing training for any trade, profession or vocation for at least two years; but this is subject to a reduction in the parent's allowance of £1 for £1 in respect of the child's own earnings over £115 a year. Under that amount there is no deduction; but when it is over that, as the noble Baroness pointed out, the parents lose £1 for £1 of child tax allowance and the allowance is extinguished entirely when the child's earnings exceed £420 a year, or £8 a week.

There are very few claims—perhaps hardly surprisingly—and of those that are made, many fail in practice because the training is not full-time or is for less than two years. Secondly, family allowances may be paid in respect of an apprentice, defined as a person undergoing full-time training for any trade, business, profession, office, employment or vocation and not in receipt of earnings exceeding £2 a week (after deductions of National Insurance contributions and after allowance of certain specified expenses). Currently just 38 apprentices are included in families for family allowances purposes but for none of these is family allowance being paid. Their inclusion in the "family" simply qualifies a younger child in the family for payment. This is particularly relevant for child benefit, as I have to demonstrate.

Provision for apprentices under the existing family allowance scheme and the income tax arrangements is something of an anachronism since it applies to only a minute proportion of the industrial trainees in the ordinary sense of the word. The largest single group of the people we are talking about—and it is not all that large—are hairdressers apprentices. One ought not to forget—and I hope in this matter the noble Baroness is very generous—that there are substantial amounts in tips in this occupation. The only other noticeable group in this very small fringe to industrial training in the ordinary sense are riding school instructors. There is surely no social case for developing a system of family support on the basis of groups of this kind. If we were to do this we could not exclude the industrial trainee in the ordinary sense of the word and it would be a misuse of social security funds, and a retrograde step in the industrial context, to subsidise less well paid industrial training in this way.

Indeed, looking at the wider field, the findings of a survey carried out by the Department of Employment last year support the view that the traditional apprentice receiving little more than pocket money has largely disappeared. This does not really exist today. On the basis of that survey it is estimated that of a total of 350,000 apprentices and trainees under 18 none, statistically speaking, are now receiving less than £5 a week and only a few thousand less than £10 a week. It could perhaps be argued that there is some case for including apprentices within the scheme if, as with family allowances, their exclusion could affect the title to benefit of a younger child. But this will no longer be the case. Each individual child has his or her own benefit under the child benefit scheme. No child younger can lose benefit as a result of the exclusion of an older apprentice member of the family from child benefit. So at the point of changeover no one is going to be deprived of family allowance. And therefore on the merits of the situation as a whole the Government do not consider it would be right to start paying a benefit for these young people which could be seen as an inducement to employers—and I want to be frank about this—not to pay proper wages for trainees; and I think it is reasonable to say that no employers should be encouraged to pay for the services of a youngster under training a net wage of less than the bare supplementary benefit rate for a non-householder, which is in the region of £7.65 a week, and will go up in November.

When the Amendments dealing with similar changes were considered in another place, the Government argued strongly that it would be quite wrong to extend child benefit into the general field of individual trainees, since this really amounted to no more than subsidising the unreasonably low earnings which a handful of employers in a very few fields of employment could choose to pay. However, as a result of an undertaking given to a Government Back-Bencher, the Minister of State wrote to the Minister of State, Department of Employment, to ensure that he was aware of this problem, small as it was. I am not sure, but I think that I mentioned this in the letter to the noble Baroness.

We also strongly oppose the Amendment on practical grounds, although perhaps this will not commend itself to some noble Lords. It has always been the experience in family allowances that there is a heavy administrative cost in dealing with claims for apprentices. These claims must receive individual attention and often involve extensive inquiries from employers and others, and the numbers rejected far outweigh awards. In addition there is a high rate of turnover, as children drop out of training or exceed the earnings limit, leading to frequent reviews of awards and a disproportionately large number of over-payments. We know this from experience. The earnings limit envisaged in the Amendment, bearing in mind that this is a net figure, might encourage claims for a sizeable proportion of the 500,000 to 600,000 school leavers who enter employment every year.

I think I can say without fear of contradiction that, of that number, a very small number might succeed, but on our present experience there would certainly be a very large number of appeals, mainly on the interpretation of the rules regarding deductible expenses. Also, if the limit were linked to a figure subject to review, we should have the situation where children who had already reached the earnings limit once could be brought back into child benefit, perhaps for a very short time. Claims could be of the order—we have gone into this carefully—of between £50,000 and £100,000 a year and even though most would fall this would add something like 200 members of staff; it would need that sort of increase. However, leaving that out, we do not feel able to accept the Amendment for the other reasons I have given and I hope the noble Baroness will feel that in the circumstances my explanation has been reasonable.

Baroness ELLES

I am grateful to the noble Lord for his full explanation and, of course, for the letter he sent me in which he set out part of the explanation. I do not think it at all satisfactory to be told that, out of 300,000 apprentices, statistically there is none getting less than £5 a week, because one need have only two or three under £5 to appreciate that there must be poverty. When the Government are introducing a Bill which is designed to improve family incomes and remove poverty, I do not feel that statistics provide a good enough reason for not making the change which the Amendment proposes. Further, we have not yet discovered how many are earning under £10 a week. I should like to know whether any action can be taken by the noble Lord's Department to help the wages of these apprentices.

I realise that it will be a matter for the Department of Employment, but if financial help is to be withdrawn from parents who are drawing child tax allowance, and if the possibility of any chance of benefit under this Bill is removed, then it is up to the Department of Employment to see that youngsters coming out of school and learning a job are adequately paid. I am not sure that it is the responsibility of an employer to pay a high wage to a child who is not really contributing to the benefit of the business, although the child is learning. It is right that employers should help youngsters acquire a profession, but it is not up to the employer necessarily to pay them out of non-existent profits.

I should therefore like an assurance that action will be taken to see that apprentices who are learning a profession—and it is vital for the nation that young people should have an opportunity of being trained and should not be thrown into jobs just because they are well paid; what I fear is the consequence of the thinking of the Department of Social Security for not giving them child benefit—are adequately paid when they are training. The noble Lord knows my thinking on this, but perhaps he will give me an assurance that this matter of seeing that apprentices are more adequately paid will be looked into. Perhaps I might draw his attention to the benefits of the European Social Fund, which trains young people once they have had a job and provides cash payments to help them in training for their careers.


I do not think I can close the gap between the noble Baroness and myself. It all depends on what we mean by "adequately paid" and I feel that there is a moral responsibility on all employers to see that their employees, apprentices or not, are adequately paid for the job they do. I recognise the value to apprentices of the sort of training they are getting, but this should never be regarded as an opportunity for cheap labour; employers must be told this and they must be told it in no uncertain manner. As for the trade unions, I am sure that they watch this situation. This is borne out by the fact that the noble Baroness and I have both had some experience, theoretical though not practical, of the evils of low pay. I am informed that at present cut of 230,000 boys only about 6,000 are earning between £5 and £10 a week, and of 120,000 girls only 9,000 are earning between £5 and £10 a week.

I assure the noble Baroness that I will read her remarks in the Official Report and draw them to the attention of my right honourable friend, because in the last analysis, however much she and I disagree, we want to do the right thing by the people concerned. I am not making a political point when I say that there is abundant evidence to show that we are anxious to see that people get an adequate income so that they can maintain their existence at a reasonably high level.

Baroness ELLES

I thank the noble Lord, Lord Wells-Pestell, for that reply. I did not find it particularly satisfactory, because he has just said that about 15,000 children are earning, or, at any rate, getting less than £10 a week. The noble Lord knows that that is completely inadequate and to encourage these children to learn something instead of roaming about the streets or being unemployed, their families need financial help. Thus, while reserving my right to return to this issue on Report, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clauses 3 and 4 agreed to.

Clause 5 [Rate of child benefit]:

7.59 p.m.

Lord WELLS-PESTELL moved Amendment No. 4:

Page 3, line 29, leave out ("shall") and insert ("may")

The noble Lord said: With the permission of the Committee, I will speak at the same time to Amendments Nos. 5 and 9 which stand in my name. The effect of these Amendments is to write into the Bill a statutory duty to introduce different rates of child benefit for different cases at such a time as the Secretary of State may by order specify. The Amendments put into an appropriate form Amendments made in another place which, though acceptable in principle to the Government, were technically defective. The wording here should put that right.

I am grateful for this opportunity to explain to noble Lords, and particularly to Baroness Elles who raised this question during the Second Reading of the Bill, the Government's views on a variation of rates in child benefit. For technical reasons, when the scheme starts in April 1977 there will be a flat rate of child benefit for all children. However Clause 5(2) of the Bill enables different rates to be prescribed in relation to different cases—and this of course includes age-differentiation—and this will be practicable when new computer equipment becomes available in April 1979.

We all know that older children cost more to look after than young children and there is therefore a natural bias in favour of age-related benefits. But because age-differentiation is so attractive it must not be concluded that it is the only viable alternative to a flat-rate scheme. It is not. There is evidence to show it is often the first child who has the most serious effect on the family income because the mother must then give up work or work far more restricted hours; and this effect may well continue so long as there is any very young child in a family. A further factor in family poverty is the size of the family. The effect is twofold: first, a large family is likely to contain at least one young child which keeps the mother at home over a longer period; and, secondly, the physical requirements of coping with a large number of children, of whatever age, again often prevent her from seeking employment. This is not to rule out age-differentiation, but simply to say that it would be premature; and we have plenty of time, before a decision must be made, to decide now on the future development of the scheme. There are further studies on hand within the Department of the impact of children on family income in order that closer to 1979 the Government may decide on the fairest method of distributing among families the resources which will be available for child benefit.

This Bill will, in April 1977, set us on the road to replacing child tax allowances by child benefit. It is the Government's intention to complete that process. Indeed, one important advantage of that process, namely, the easing of the Inland Revenue's workload, cannot be realised until it is complete. This implies a move towards age-grading, because this would be the cheapest way in which residual child tax allowances can be wholly converted into child benefit. We are all clearly aware of the advantages of introducing, as soon as facilities permit, some measure of age-grading. But as I have already said, this cannot happen for some four years. The residual child tax allowance will of course provide age-related family support meanwhile, and the main effect of the child benefit structure with age relation would be to extend this support to those below the tax threshold. The Amendment firmly establishes the Government's commitment to the principle of variation in rates of child benefit; we intend to use the time available to us in establishing more surely and more informedly what are the best social priorities for such money as will become available.

I do not feel that I can usefully add anything more to what I have said. I hope the Amendments will be acceptable to your Lordships. I beg to move Amendment No. 4.

Baroness ELLES

I thank the noble Lord for that explanation. I feel that the Amendment does not seem to be quite in the spirit of the reply given in another place that "shall" is to replace "may" in the Bill, which would make it mandatory. The effect of the Amendment, as I understand it, leaves the power to be exercised by the Secretary of State possibly indefinitely. The year 1979 seems a very long way away for families which are waiting for cash benefits, and there is no specified date in the Bill to say that this power need ever be exercised at all.

I believe we are all agreed on the principle of age-related benefits. It was established in the Beveridge Report, and even Professor Kaldor agreed, that it was clearly a sensible scheme. The Weaver Committee in 1957 clearly showed the difference in cost of feeding a child aged two and one aged fifteen. Everybody knows that to feed a small child costs as much as to feed a big one, and the same is true of clothing. Surely the combination of common sense and present administrative practice should make it essential for age-related benefits to be introduced immediately the system starts, without waiting until 1979. We have already heard extraordinary excuses as to why child benefit cannot be introduced until 1976. Apparently it is something to do with concrete. Something worse than concrete seems to be gumming up the works if a computer cannot work out age-related child benefits until 1979.

We all know the effect of starting off with flat-rate benefit. We shall never get an age-related scheme because once we start with the £2 or £1.50 a week, it will require more than heaven and earth to move the invisible administrative practice and to change to a different system. So we on this side of the Committee feel that, despite the noble Lord's efforts to persuade us, his Amendment is not satisfactory and does not make mandatory the principle of age-related benefits which we should like to see introduced in 1977, when the scheme comes in.


I, too, welcome the prospect of having an age-related benefit, and also the possibility which the noble Lord, Lord Wells-Pestell, mentioned, of paying a higher benefit for the first child than is paid for subsequent children. It has always seemed to me wrong that we should be working in the opposite way, paying nothing for the first child, a reduced amount for the second child and not until the third child paying the full benefit. I welcome the possibility of reversing that situation.

The noble Lord has explained how age-related benefits would be tied in with the gradual phasing out of the tax allowance. However, like the noble Baroness, Lady Elles, I am not quite clear why the word "may" is being substituted for the word "shall". I do not feel that the noble Lord made that clear in his explanation. Perhaps he could return to that part of his explanation so we can understand why it is to be permissive and not mandatory.


I am advised that it is much more appropriate to use the word "may" than the word "shall". I recognise the force of "shall", but we are advised that "may" is the more appropriate word. I am not particularly worried about changing the word "shall" for "may". The flat rate benefits come into force in 1977, and while we can promise flat rate benefits in 1977, we want a period over and above that to consider the best way of dealing with this particular child benefit scheme, in the light of experience which we hope to gather in the next year or so. Rather than hold the scheme up, we want to come in with a flat rate benefit and then modify it, according to the information that we get from our own resources.

I should have thought that this was quite reasonable. The important point about child benefit is to get it operating as soon as we possibly can. There has been abundant evidence over the past 18 months that this Government have been alive to the needs relating to pensions, allowances and awards, and it is borne out by what we have done. I do not think that there is any need for your Lordships to have anxieties as to whether we are to do this, or whether we are to give adequate and proper benefits. The answer is that there is abundant evidence that we have done so.

On Question, Amendment agreed to.


I beg to move Amendment No. 5:

Amendment moved—

Page 3, line 31, leave out from ("otherwise") to end of line 32 and insert—

("(2A) The power to prescribe different rates under subsection (2) above shall be exercised so as to bring different rates into force on such day as the Secretary of State may by order specify.")—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clauses 6 and 7 agreed to.

Clause 8 [Suspension, and effect of adjudication on payment and recovery.]:

8.13 p.m.

Lord WELLS-PESTELL moved Amendment No. 6:

Page 5, line 29, leave out ("with the necessary modifications").

The noble Lord said: I understand that there is some difficulty about time and we may have to adjourn this Committee stage within the next 15 minutes. I suggest, therefore, that we make as much progress as we can, and presumably we shall have to complete it tomorrow. In moving Amendment No. 6, I also wish to speak to Amendment No. 7. These Amendments are to enable the duties and responsibilities of a beneficiary to be applied to a person who does not have title to child benefit but who receives it, as an agent, on behalf of the beneficiary. The Amendments are largely technical. Their purpose is to ensure that where a person is receiving child benefit on behalf of a beneficiary, any responsibilities which the beneficiary may have—for example, to notify certain absences of the child—also apply to the agent. As these are technical Amendments, I do not propose to say anything further about them. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL I beg to move Amendment No. 7.

Amendment moved—

Page 5, line 33, at end add (", with the necessary modifications (in particular in relation to payments of child benefit not made to the person entitled but made to some other person on his behalf)")—(Lord Wells-pestell.)

On Question, Amendment agreed to.

Clause 8, as amended, agreed to.

Clauses 9 to 17 agreed to.

Lord WELLS-PESTELL moved Amendment No. 8:

After Clause 17 insert the following new Clause:

Provisions as to the exclusion from a family for family allowances purposes of children entitled to non-contributory invalidity pension.

"—(1) In section 11 (which provides that certain children are not to be included in a family for family allowance purposes) of the Family Allowances Act 1965 after subsection (7) there shall be inserted"

"(8) Where a person is entitled to a noncontributory invalidity pension under section 36 of the Social Security Act 1975, he shall not be treated as included in any family as being a child for the purposes of this Act as respects any period during which he is so entitled.".

(2) In section 13(1) (regulations) of the said Act of 1965 after paragraph (e) there shall be inserted—

"(f) for treating an allowance as having been paid on account of a non-contributory invalidity pension in case where in consequence of a subsequent decision under the Social Security Act 1975 a child who had been treated as included in a family for the purposes of this Act is entitled to a non-contributory invalidity pension for any period for which the allowance was paid, and for reducing or withholding accordingly any arrears payable by virtue of the subsequent decision;

(g) for treating a non-contributory invalidity pension paid to a child which it is subsequently decided was not payable as having been paid on account of an allowance in cases where in consequence of a subsequent decision under this Act he is treated as included in a family for any period for which the non-contributory invalidity pension was paid, and for reducing or withholding accordingly any arrears payable by virtue of that subsequent decision."."

The noble Lord said: With the permission of your Lordships, in moving Amendment No. 8 I should like to speak also to Amendments Nos. 12 and 13. I can take this briefly, and I hope that I shall be able to satisfy your Lordships on the matter. The purpose of the new clause, which is in line with existing provisions in this Bill relating to child benefit, is to prevent duplication between family allowances payable to parents and non-contributory invalidity pension which a young person might receive in his own right. A young person aged 16, but under 19 years, although severely handicapped, may be receiving such education as is consistent with his condition and thus count as a child for family allowances purposes. Under the proposed clause this would continue in these cases unless following a claim it is possible to award non-contributory invalidity pension.

It would then be better to treat him as a beneficiary in his own right, rather than as a child for family allowances purposes. The clause further enables regulations to provide that any family allowance paid for a period for which non-contributory invalidity pension is subsequently awarded shall be regarded as paid on account of the arrears of the non-contributory invalidity pension; and that the non-contributory invalidity pension paid for a period for which it is subsequently decided that it was not payable shall be regarded as paid on account of arrears of family allowance which becomes payable for that period. The Amendments to the Title and to Schedule 5 are consequential Amendments. I beg to move.

On Question, Amendment agreed to. Clauses 18 to 20 agreed to.

Clause 21 [Regulations and orders]:


I beg to move Amendment No. 9.

Amendment moved—

Page 15, line 41, after ("section") insert ("5(2A")—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clause 21, as amended, agreed to.

Remaining clauses agreed to.

Schedule 1 [Exclusions from entitlement]:

8.19 p.m.

Baroness ELLES moved Amendment No. 11:

Page 18, leave out lines 16 to 19.

The noble Baroness said: This Amendment refers to the position of young persons over 16 who will be doing sandwich courses and taking some form of payment or wage for part of the time, but who will at the same time be receiving education. I understand that under the Bill they will not be eligible to receive child benefit, and the parents will again be in the same position as parents of apprentices. Therefore one of the eventual effects of the Bill will be that they will not get their child allowance. I must say to the noble Lord that this seems to be another case of withdrawing financial help from those families who need it most, and who need every financial and economic encouragement for their children to have the most and best opportunities for increasing their scientific and technological training, in order to enable them to earn their living in the future.

I should like to ask the Minister whether he would comment on this and say how many people will be affected by the withdrawal of eligibility not only from family allowances but from child tax allowance. It seems that, in general, this Bill is having the effect of being very narrowly defined on the family allowance principle, and not on the more generous views which have been taken by the Inland Revenue as regards giving child tax allowances, and ultimately it will be the individual family who will suffer. I should be grateful if the Minister would comment on this.


This is not quite on a par with the apprentices, as I hope to explain to your Lordships in a moment. The noble Baroness will know that the Opposition put down an Amendment at the Committee stage in another place. This matter was fully discussed and I had the impression that they were satisfied with the reply and the Amendment was not pressed to a Division. The purpose of paragraph 2 of Schedule 1 is to prevent the payment of child benefit, during periods of full-time education, received by persons on sandwich courses arranged by their employers. The effect of the Amendment is to remove this. Paragraph 2 of Schedule 1 is concerned with the person who has finished his secondary education and is seeking qualifications required in his chosen employment. The course of study to be followed will be laid down by, or agreed with, his employer and will generally consist of alternating periods of practical training during which he will receive a wage or salary and full-time education at a college or similar institution. Frequently, if not entirely, he will be supported by his employer during the periods of full-time education, either by the continued payment of wage or salary or by a grant. This is our experience.

It is true that sandwich course students can at present qualify for both child tax allowances and family allowances and it might therefore be thought that they should also qualify for child benefit as the successor to the present system of child support. However, the value of what they at present qualify for is very small. Thus, provided the training is to last for at least two years, their parents can claim child tax allowances—and we have been through this—whereby they can get £115 a year. If they get above that, then they lose pound for pound of the student's income, and this is extinguished if his earnings are over £420 a year.

Family allowances can be claimed in respect of any periods of full-time education provided there is another child in the family, and these after tax will produce a net amount of 62½p per week. It is almost always the case that the youngster on the sandwich course is the eldest child and no family allowance is paid for him in the ordinary way. He qualifies only if there is a younger child, but under child benefit the younger child will qualify in his own right. Therefore, the position is not adversely affected by the child benefit scheme.

The proposals to exclude these sponsored trainees from child benefit are very defensible even when compared with the present position. The realistic assumption must be that child tax allowance will normally be extinguished by the student's own income. The greatest "loss" which will not arise under transitional arrangements in the case of someone on the educational part of his sandwich course when the scheme starts—will be the family allowance element of those periods which would now count as full-time education in the very rare case where the trainee was not the eldest child. It is difficult to mount a case on social grounds in these very rare instances for paying child benefit in situations where there are substantial earnings from the employment part of the course over the year as a whole, where there may sometimes be a student grant in payment, and where some earnings commonly continue during the educational part of the course. For the extreme case, where the course undertaken involves very long periods of full-time education, there will be a fallback position. Regulations under subparagraph 2(2) will provide for child benefit to be paid to a student under 19, if a period of full-time education exceeds six months and he is not supported by his employer. I should have thought, on reflection, that the position will not be worsened and, in the circumstances, the Amendment is not necessary.

Baroness ELLES

I thank the Minister for that explanation and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Schedules 2 to 4 agreed to.

Schedule 5 [Repeals]:


I beg to move Amendment No. 12. I spoke to this with Amendment No. 8.

Amendment moved—

Page 30, line 11, column 3, after ("16") insert ("Provisions as to the exclusion front a family for family allowances purposes of children entitled to non-contributory invalidity pension.").—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Schedule 5, as amended, agreed to.


I beg to move Amendment No. 13. I spoke to this on Amendment No. 8.

Amendment moved—

Line 4, after ("children;") insert ("to amend the Family Allowances Act 1965 as respect children entitled to non-contributory invalidity pension;")—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Title, as amended, agreed to.

House resumed

Bill reported with the Amendments.

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