HL Deb 17 December 1996 vol 576 cc1480-4

Lord Mackay of Ardbrecknish rose to move, That the draft regulations laid before the House on 25th November be approved [5th Report front the Joint Committee].

The noble Lord said: My Lords, these regulations provide for the introduction of child maintenance bonus, provision for which was contained in the Child Support Act 1995. I do not intend to go over the detail of all the regulations, so perhaps I can give a brief outline of the main points of the scheme.

Basic entitlement to a child maintenance bonus rests on the claimant satisfying three main conditions. First, the parent with care or her partner must be entitled to either income support or income-based jobseeker's allowance; secondly, child maintenance must be in payment, whether it be paid direct to the parent with care or collected by the Secretary of State on her behalf; and, thirdly, the parent with care or her partner must start work, or increase their hours if they already work part time, so that they stop claiming the qualifying benefit.

The child maintenance bonus will be paid to the parent with care as a tax-free cash lump sum when she leaves benefits. As long as the parent with care has a maintenance assessment of £5 or more, the bonus will build up at a rate of £5 for each week she has been on benefit and receiving child maintenance. The maximum bonus will be £1,000.

This scheme has been designed with two important goals in mind. The first relates to getting people back to work, the second to encouraging co-operation with the Child Support Agency. We do not require parents with care to seek work if they have no wish to do so. However, we do wish to give every encouragement to those parents with care who do wish to improve their family's standard of living by returning to work. The tax-free cash lump sum which this scheme will provide for parents with care when they return to work will go a long way towards both encouraging them to look for work, and helping them make the transition from benefit to work as successfully as possible.

The second goal of the scheme is to encourage co-operation with the Child Support Agency. I repeat that it is a widely accepted principle that parents should maintain their children wherever they have the means to do so, and not pass financial responsibility for their children on to the taxpayer. And that means co-operating with the Child Support Agency in the assessment and collection of maintenance.

By linking the amount of bonus which a parent with care can receive to child maintenance in payment, we have ensured that the scheme will act as an incentive for all parents to co-operate with the agency—parents with care will receive a direct cash benefit from maintenance paid for their child, and absent parents will see their child benefiting from the maintenance they pay.

We discussed the child maintenance bonus at some length in Committee. There was general agreement, although I know that the noble Baroness, Lady Hollis, would like to go further with disregards, and I am sure that she may return to that, but I believe that the child maintenance bonus represents a major step forward in trying to help those parents with care who want to go into work. So far as concerns the collection of pre-April 1993 cases, we have no plans at this stage to bring on those cases, so that may help the noble Baroness. I have perhaps been on my feet long enough, and I beg to move.

Moved, That the draft Regulations laid before the House on 25th November be approved [5th Report from the Joint Committee].—(Lord Mackay of Ardbrecknish.)

Baroness Hollis of Heigham

My Lords, we obviously welcome the bonus which the Minister has explained means that from April 1997 there is effectively a £5 a week disregard for up to four years which is then paid to lone parents entering work. May I press the Minister? When he says that the bonus will be paid to lone parents who no longer qualify for benefit, is he saying that lone parents who are on family credit would not be eligible for the work bonus, because that would suggest a problem with issues such as childcare disregard? The Minister talked about benefit; he did not confine himself to income support. Perhaps the Minister can help me on that point. That was not my understanding of it, but his remarks suggested some possibility of confusion. Perhaps the Minister can help me.

Lord Mackay of Ardbrecknish

My Lords, I am happy to help the noble Baroness on this point. I think I said at one stage that I was talking about moving off income support or jobseekers' allowance. Perhaps I did not repeat that later, but that is the position.

Baroness Hollis of Heigham

My Lords, I am happy to have the Minister's reassurance. It is clear that a lone parent entering work has additional costs and worries from clothing to transport to childcare, as well as the worries of coming off a low but reliable income. To that extent, the bonus is of considerable help.

We also welcome the fact that the bonus signals that the parent with care is receiving the equivalent of a modest disregard. However, we regret that it is not a proper, true maintenance disregard, however modest, which is payable to all lone parents with care, including those with very young children who not unreasonably put their parenting responsibilities first. We also regret that it is tied to child maintenance paid. We understand the thinking behind that but it means that the bonus of a lone parent returning to work will depend not on her returning to work but on whether the absent parent is himself in work and has therefore paid child maintenance. Otherwise it means that his poverty will reinforce hers; if he is on benefit there will be no bonus for her. I would love to be wrong about that, but I understand that if he is on income support and therefore paying only a relatively small disregard—in other words, the top-slicing of his income support far below £5 per week at £2.50—I do not see how that can roll up to the job bonus which the Minister indicated. Therefore, whether she receives the bonus depends not on whether she is in work but on whether he is in work. That turns the whole job bonus into a lottery, which is regrettable. I do not have an easy answer but it presents a genuine problem to which I hope the Minister can respond in reply.

My second point relates to the Minister's remarks about work incentive. He is right in saying that we should help lone parents with transitional costs to encourage them with the risks of taking up a job. We welcome that. However, given that philosophy which I entirely share, why in the Budget did the Government first choose to freeze and then propose to abolish the lone parent benefit, which, because it is not means tested can be carried by the lone parent into work? It is therefore a positive incentive for her to find work knowing that benefit—in other words, a platform—is securely in place. Why are the Government producing a child support bonus on the one hand while taking away a similar well established benefit which is doing a similar job—that is, the lone parent benefit—on the other hand? Give with one hand and take away with the other—apparently nowhere is that more true than in child support. The three cap trick is a good trick for conjurers at a children's party but it is not a sound basis for Government policy as regards the children of lone parents. It sends out a signal that government value a lone parent who works more highly than a lone parent who parents properly. As the Social Security Advisory Committee stated: We believe in looking a work incentives for lone parents. The legitimate need to support the parenting role rather than encouraging the parent to work should be given due weight". Potentially the welfare of 2.7 million children depends on the conclusions which the Government reach about benefit provision for lone parents. I repeat that we welcome the bonus but we wish that it were more widely extended and that it did not appear to be the lottery that it apparently is.

8.30 p.m.

Earl Russell

My Lords, the Minister made one quite serious mistake in the course of introducing his regulations. He said that the noble Baroness and I wished to go further and have a maintenance disregard. He is right that we wish to have a maintenance disregard but he is wrong to suppose that that is going further. It is travelling in a quite different direction.

We on these Benches are strongly in favour of incentives to return to work. But that is a second priority. The first priority is to ensure adequate levels of support so that people can eat. That is the problem to which we were addressing the maintenance disregard.

As was pointed out in 1991, the problem is that, because of the operation of passported benefits, receiving maintenance puts the women below income support level. The back-to-work bonus has never done one thing to meet that and therefore it is addressing the wrong problem. I have one or two more points to make about it.

First, it takes four years to reach a bonus of £1,000. I wonder whether that is a very realistic incentive. Secondly, it applies only to full-time work, whereas more and more jobs are part-time. Is the Minister prepared to consider doing anything for people who get part-time work? Thirdly, it provides only for getting into work. What happens to the person who gets into work, banks the bonus and leaves after a week? With the Minister's attitude to sin, he might have foreseen that possibility. I am surprised that he has not. Fourthly, I agree with the noble Baroness, Lady Hollis, about the burden on the CSA of budget cuts during the changed programme. Does the Minister really believe that giving the CSA a large extra job of work at the moment is expedient?

Lord Mackay of Ardbrecknish

My Lords, the noble Baroness described the disregard as modest. Indeed, it certainly starts off as modest but it builds up, as the noble Earl pointed out, over quite a long period of time to £1,000. The point is that it builds up, so at any stage between the first week and after almost four years it will be between £5 and £1,000. It depends on how long the parent with care is receiving maintenance payment and building up the bonus before she goes back to work. That is entirely her decision, but we all know and have agreed that one of the best ways to improve the living standards of parents with care and their children is for them to find and return to work. We are also agreed that sometimes the most difficult part of that operation is the transition. That is why we have devised a number of ways of helping people to get back into work. This is one of them, together with the other bonus in the jobseeker's allowance which helps people who work part-time while on benefit and allows them to put aside some money and have up to £1,000 when they move into full-time work.

I believe that the key to the problem is coming off income support or jobseeker's allowance. I do not believe that it is so much the definition of work but I will check that. I believe that I am right in saying that it is coming off either of those benefits.

We are tying the bonus to child maintenance paid. We are doing so because, as I said, we want to give incentives to both parties. By tying the bonus to child maintenance paid we hope to give an incentive to the absent parent to encourage him, usually, to adopt a regular pattern of maintenance payments in the interests of the parent with care and of the child, so that if the parent with care goes into work some of the money which the absent parent has paid over will be available for that bonus. Therefore, we see this as a double incentive. It will help and provide an incentive to a parent with care moving off benefit and into work. We also hope that it will act as an incentive to an absent parent to ensure that he pays the maintenance and that it is not assumed to be notional, whether paid or not. It does have to be paid—

Baroness Hollis of Heigham

My Lords, perhaps I may ask the Minister to clarify the point. Does it mean that if the absent parent is on benefit it does not count as child maintenance paid and therefore, for that period of time, the mother though going back into work will not be eligible for any job bonus?

Lord Mackay of Ardbrecknish

My Lords, I was just coming to that point. I was trying to be as logical as possible. The noble Baroness asked about the absent parent who was on benefit. Of course, that absent parent will normally pay a contribution to maintenance of £4.80 a week. While that may not be £5, it will build up towards the bonus. I hope that that is a satisfactory answer.

I hope that I have answered all the points arising in respect of the child maintenance bonus regulations. I commend them to the House.

On Question, Motion agreed to.