HL Deb 01 August 1978 vol 395 cc1252-9

5.26 p.m.

Lord WELLS-PESTELL rose to move, That the draft Family Income Supplements (Computation) Regulations 1978, laid before the House on 13th July, be approved. The noble Lord said: My Lords, I beg to move that the Draft Family Income Supplements (Computation) Regulations 1978, a copy of which was laid before this House on 13th July, be approved.

Your Lordships will know, because I think this is the seventh consecutive year that these regulations have been introduced and I have certainly introduced them for the past five years—Family Income Supplement is a weekly cash benefit for working families bringing up children on low incomes. The amount of supplement payable, subject to a maximum, is half the difference between the family's total gross weekly income and an amount prescribed by Parliament. These regulations are entirely beneficial. Their purpose is to increase the prescribed amounts and maximum payments with effect from 14th November next, which is a year after the last uprating.

Under Regulation 2, the prescribed amounts will be increased by £2.20, so that the prescribed amount for a one-child family will go up from £43.80 to £46.00; from £47.80 to £50.00 for a two-child family; from £51.80 to £54.00 for a three child family. An extra £4.00 will be paid in respect of each child above the third child. The effect of these increases will be to give all families not already receiving maximum awards an extra £1.10 weekly supplement from 14th November.

If I may give an illustration for those of your Lordships who are perhaps not aware of how these calculations are made, the scale for calculation for a one-child, two-child, three-child, and so on, family is broadly comparable—and I repeat "broadly "—with that of supplementary benefit. For example, after November, a two-child family will have as the basis against which the calculation is made, £50.00. So that if a husband is earning over £40.00 there will be a difference of £10.00 between the £40.00 that he earns and the £50.00 which is the figure that has been arrived at for making the comparison and he will get half that £10.00—namely, £5.00—from the Government. To qualify for the maximum after November next it means that a father would have to earn something like about £27, which I think every one of your Lordships would agree is an exceedingly low amount. Your Lordships may well wonder how many such people there are. My information is that there are at the present moment something like 820 people who are in full-time employment—and full-time employment is calculated as working for over 30 hours a week—who are earning that amount, £27. Fifty-five thousand of the people who are receiving family income supplement are two-parent families and the balance are one-parent families.

Under Regulation 3 all families receiving maximum awards will get an extra £1 per week on the same date. This will bring the basic maximum up from £9.50 to £10.50, with, as I said a moment ago, another £1 added to the basic for each child additional to the first. Thus everyone will get a broadly comparable cash increase in November whether or not they are receiving the current maximum. A few moments ago I explained how the amount of benefit payable is calculated, half the difference between the family's total income and the appropriate prescribed amount. I think it is true to say that virtually any money received by the family counts as income for this purpose, although, as your Lordships who are familiar with this will know, child benefit was disregarded as income. In addition to child benefit, the first £4 of war disablement pension, and the full amount of any attendance allowance and mobility allowance are also disregarded. There are one or two others which I do not think I need go into. But, generally speaking, virtually any money received by the family counts as income for this purpose. with the exceptions I have just mentioned.

One major exception is child benefit, including the premium for lone parents. None of this counts as income when awards of family income supplement are calculated. So the extra £1 or so family income supplement in November will be paid on top of the two increases in child benefit which these families are getting this year. The first of these increases came last April when child benefit went up to £2.30 for every child. The second increase will be in November, at the same time as the family income supplement uprating, when child benefit will rise to £3 for each child. I should emphasise that this uprating has to be seen along with the increased income from child benefit which is wholly disregarded in the calculation of awards of family income supplement.

In addition to this extra benefit and family income supplement, lone parents who are trying to combine a full-time job with the task of raising a family single-handed will have the child benefit premium which was doubled in April to £1 and which will be doubled again in November to £2. Taking these increases together—the extra family income supplement and the disregarded child benefit—thus uprating is equivalent to increases ranging from about 9 per cent. for a family with one child to somewhere in the region of 14 per cent. for a family with four children. And because the child benefit premium is disregarded the increases are worth even more to lone parents.

As I said earlier, these regulations are relatively simple and wholly beneficial. Following the uprating in November, up to about 90,000 working families will benefit from family income supplement at a cost of about £23.5 million in this financial year. The number receiving at the moment is not nearly as great; it is something like 83,000; but when the amounts go up, of course, it will bring in other people who will qualify.

I do not think there is any need for me to say very much more. The Government, let me be quite frank about it, are pleased that they have been able to do this for working families despite the severe economic difficulties which have been with us now for some years. We have introduced the child benefits scheme and have made swift and substantial improvements in the amounts payable. We have endeavoured, I think successfully, to maintain the relativity of the incomes of the lower paid with the rest of the earning population, which this Government restored by, I think everybody will agree, a generous uprating of family income supplement in 1976. The uprating effected by the draft regulations before your Lordships represents a small but important element in the Government's determination to assist poor families. I commend these regulations to your Lordships. I beg to move.

Moved, That the draft Family Income Supplements (Computation) Regulations 1978, laid before the House on 13th July, be approved.—(Lord Wells-Pestell.)

5.37 p.m.

Lord SANDYS

My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining these regulations, which, as he has said, are fairly simple, but of course they are part of a pattern which has evolved over a period of years. When family income supplement was introduced by a Conservative Government in 1971 it was never envisaged that this was anything other than a short-term measure. However, unhappily, circumstances have proved that this was a false hope. We welcome the uprating proposals that the Government have brought to your Lordships' House this afternoon. I do not think that we would wish to comment in any great detail, because, as your Lordships will be aware, this was discussed in considerable depth in another place, and I am obliged to the noble Lord, Lord Wells-Pestell, for his private discussions with me this afternoon about this. The only point I should like to raise is this. On the question of working hours, his honourable friend the Minister in another place said that he was going to look at the question of a reduction of hours from 30 to say 24. But these are complicated matters. We have examined what the Minister has said in another place, and we hope the Government will be able to keep this matter under review.

Lord BANKS

My Lords, I would join with the noble Lord, Lord Sandys, in thanking the noble Lord, Lord Wells-Pestell, for his very comprehensive explanation of these regulations. Family income supplement is a cheap method of bringing help to families where the breadwinner is on low pay. When I say it is a cheap method, I mean it is a cost-effective method of doing this. It is nevertheless open to two objections. First, perhaps a quarter of those eligible do not actually take it up, and, secondly, being means tested, it makes a significant contribution to the poverty trap. On these Benches we have argued for some time that a tax credit system would be the solution, but this is not the occasion to develop that. However, so long as we have family income supplement it will be necessary at regular intervals to increase the prescribed amount which determines the weekly benefit to take account of inflation, and also the maximum amount which any one family may draw.

As the noble Lord said, the regulations provide an increase of £1.10 for all families except those who are already on the maximum, who will receive an increase of £l. Those increases apply no matter how many children there may be. That seems unfair at first sight, but the noble Lord has explained that we must take into account the increases in child benefit which are disregarded for family income supplement purposes. That really means that child benefit is taking over a small part of the task from family income supplement, and that in itself is a small further move towards a tax credit system. I should like to support the passage of the regulations through the House.

Lord SOMERS

My Lords, I do not know whether what I have to say is strictly in accordance with the Motion that we are considering; but I wonder whether the noble Lord could tell us if there is likely to be any tax relief for a married couple without children who, I am sure he will agree with me, are just as much a family as those who have children and who in many cases are finding it very difficult to make ends meet.

Lord WELLS-PESTELL

My Lords, my right honourable friend, is looking very carefully at the whole question of hours. I am speaking entirely from memory, but I think that Finer recommended that it should come down to 25 or 20 hours, but that it should not be below 20 when assessing the number of hours that a person must be at work before he or she can qualify for family income supplement. I am not sure where the 24 hours comes from, but I understand that it might be as a result of this figure being used by a number of pressure groups. However, whether it comes down to 25 of 24 hours, I happen to know that the Government are not unsympathetic. The question that they must consider—and I am sorry to keep saying this—is the question of the financial implications. However, I think that we are all agreed that it would be much more realistic if it could come below 30 hours.

The noble Lord, Lord Banks, said that there are two objections and I am with him as regards this matter. The first is the question of the take—up. A large number of people do not take it up and that is one of the matters which has caused us great concern. Indeed, this is not the only benefit that is not taken up fully. Very many times we have sat round a table to consider how best the situation can be remedied—whether it can be done by television, radio, posters and advertisements in newspapers. I think that all of your Lordships will agree that a considerable amount of money has been spent on national advertising, but it still leaves a large number of people who, for reasons best known to themselves, do not take advantage of the facilities.

I personally think that it is a pity that we still have to rely upon means-tested benefits. That is certainly the view which all of us on this side of the House take, but I do not want to imply that nobody on the other side of the House does not share that view. We do not like means-tested benefits. In fact, we are of the opinion, as I am sure is the noble Lord, Lord Banks, that the whole of our benefits system needs looking into. At present, my colleagues the Ministers are thinking in terms of whether something can be done following the review which has recently been undertaken with regard to supplementary benefits and which has now appeared as a consultative document. We are hoping that by providing consultation on this matter we might be able to come up with something which will eventually produce a better system of benefits.

I cannot say anything more to the noble Lord about a tax credit system than what I have said for the past two or three years. We are not opposed to it in principle, but rightly or wrongly—I think that the noble Lord takes the view that we are quite wrong about this—we understand that it would be far too costly. I do not think that the noble Lord and I agree on that matter, but that is our information and it is the best information that we have been able to get. As I have said, this is not something which, from a political point of view, we have set our face against. We have not done that and in point of fact we see a great deal of merit in it. However, again I must say, as I have said to the noble Lord, Lord Sandys, that we feel that at present the financial implications make it impossible.

As regards the point raised by the noble Lord, Lord Somers, it is really a matter for the Chancellor of the Exchequer and not for my Department. I say some things sometimes, but I would not presume to say anything which might commit my right honourable friend the Chancellor of the Exchequer. However, I shall certainly ensure that this matter is drawn to his attention.

On Question, Motion agreed to.