§ (" . No schemes for working families' tax credit or disabled person's tax credit shall be prescribed under functicns transferred under section 2(1)(a) until the Chancellor of the Exchequer has laid before both Houses of Parliament a statement showing the calculation of the tax credit for lone parents who receive maintenance payments and the calculation of the tax credit for parents who do not receive maintenance payments.")
§ The noble Lord said: My Lords, this amendment introduces a new clause to place an obligation on the Government to lay before both Houses of Parliament a detailed statement explaining how maintenance payments will be calculated under the working families' tax credit and the disabled person's tax credit before any regulations are made under the powers transferred to the Treasury under Clause 2. The new clause would require that statement to contain figures indicating how much credit a family would receive if they do not receive 267 maintenance payments—for example, a lone parent who fails to receive maintenance because the payer is in default—compared with that which would be paid to families who do receive maintenance payments.
§ As the Committee stage debates indicated, the treatment of maintenance payments is both important and complex. The first indication that the Government were considering a change from the family credit treatment was given by the Paymaster General in an intervention in Committee in another place. In Committee in this place, the noble Baroness, Lady Hollis, gave an insight into the Government's thinking. But before either House is asked to pass affirmative resolutions approving these two tax credit schemes there is the need for a full statement supported by examples which show the amount of credit that would be payable to families in different circumstances. That would seem to be a reasonable request, given that the issue was not discussed in the Treasury's consultative document or by the House of Commons Social Security Committee.
§ I am concerned that, without such a statement, serious anomalies may be created which would become difficult to correct and families with the same income would not be treated equitably.
§ In Committee, the Minister said that one of the Government's reasons for changing the treatment of maintenance payments was that it would make, "a significant contribution to tackling child poverty". We all want to relieve child poverty. The maintenance payment proposals will increase a lone parent's disposable income and therefore make these families, many of whom are certainly not well off, better off. But the question that needs to be asked is whether the beneficiaries will be moved from below the poverty line to above it by these proposals.
§ The poverty line is commonly taken to be half average household income. This is the measure of poverty used by the Treasury in Tackling Poverty and Extending Opportunity. According to the latest statistics published by the Department of Social Security, this means living on a weekly equivalised income of less than £125 a week. As the Minister will know, but others of your Lordships may not, and I certainly did not before I received the briefing, "equivalised income" means an income which has been adjusted, either up or down, by comparison with a childless couple to take account of family structure, size and ages. I understand that very few, if any, lone parents who will benefit from the 100 per cent disregard proposal would have an income below half the national average under the original WFTC rules.
§ If I have correctly understood the Government's new proposals for maintenance payments—and no official examples, so far as I am aware, have been published—a lone parent with a net income of £90 or less will not benefit from the maintenance payment disregard, as they will already get the full working families' tax credit. I am told that a lone parent with one or two young 268 children, with net income before working families' tax credit of £90 a week, would already have an equivalised income of more than £120 a week.
§ Baroness Hollis of HeighamMy Lords, it may help the noble Lord if I try to clear up the previous point that he made. He may be misunderstanding the difference between the proposals that my honourable friend the Paymaster General described in the House of Commons and the existing family credit arrangements for childcare. He is absolutely right in terms of those arrangements, that if one is at maximum family credit level one gets no benefit, not from child maintenance, but from childcare credit, because one is already receiving the maximum family credit and therefore it cannot be extended by having an increased disregard for childcare.
We are not talking about childcare; we are talking about maintenance payments from the non-resident parent. What will happen under these proposals, as outlined by my honourable friend, is that when it comes to calculating the lone parent eligibility for WFTC, if she is in work for more than 16 hours a week, whatever moneys she may get coming in from maintenance from the non-resident parent for her child will simply not be put into the calculation.
Therefore, one lone parent getting no maintenance and another lone parent getting the average assessed maintenance of £28 a week will receive the same working families' tax credit assessment income, children for children, whatever. But the difference in the maintenance will not be brought into account. It is simply not calculated; it is totally disregarded.
§ Lord SwinfenMy Lords, I am not sure that the noble Baroness's intervention is necessarily all that helpful. I shall have to read what she said. I must admit that I have quite a lot of difficulty in understanding the matter, being a bear of very little brain.
The other question I would like to raise is whether the proposals as I understand them—and, in the absence of official guidance, I may well not understand them correctly, as I have said—will be fair to all families.
If I do understand the proposals correctly, the credit payable to families with the same amount coming in each week will differ significantly, depending on whether or not they receive part of their income in maintenance payments. I have written to the noble Baroness. I have not had a reply. It may be that she has sent one but that it has not reached me. A reply might have helped me. It may well be that I should leave the matter now and come back to it at Third Reading, if I need to, when I have read the noble Baroness's reply. In the meantime, I beg to move.
§ Baroness Hollis of HeighamMy Lords, I am not quite sure what the noble Lord is inviting me to do. I am happy to try to give a detailed reply to the amendment as drafted, but if it is based on a misunderstanding—that would be understandable because much of the explanation has been given verbally rather than in writing—of how the maintenance disregard will work, and if he would therefore find it 269 helpful if I wrote to him very fully on this point, and if that would allow him to withdraw his amendment at this stage, I shall not trouble the House by giving a full reply tonight to his amendment. I shall do whatever the noble Lord would like. I can either give him a full reply now or, if there is some misunderstanding between us, I can write to him and allow him to return with a further amendment at Third Reading, if that is his preference.
§ Lord SwinfenMy Lords, I should be delighted if the Minister would write to me and perhaps copy the letter to other noble Lords who have taken part in this debate. I say that particularly as I have not had a reply to my original letter to the noble Baroness. It may well be in the pipeline somewhere. Indeed, I am sure that it is because the noble Baroness is a very courteous person. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Swinfen moved Amendment No. 8:
§ Alter Clause 2, insert the following new clause—