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Noble Lords: Oh!

Lord Mackay of Ardbrecknish: —to withdraw his amendment.

Baroness Hollis of Heigham: Freud says that one never makes mistakes!

Lord Carter: We now know what happens to Ministers and officials when they have served in the DSS for a period of time—their unbridled and uncontrolled enthusiasm for amendments is converted into, "Yes, that doesn't seem too bad an idea". I am extremely grateful to the Minister who has seen the sense of the argument. Obviously, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 [The income-based conditions]:

[Amendments Nos. 18 and 19 not moved.]

The Deputy Chairman of Committees (Lord McColl of Dulwich): If Amendment No. 20 is agreed to, I cannot call Amendment No. 21.

Baroness Hollis of Heigham moved Amendment No. 20:

Page 3, line 6, leave out paragraph (e).

The noble Baroness said: This amendment relates to the hours that a partner of someone on means-tested JSA may work. The aim of the amendment is to abolish the rule whereby a partner's hours of work rather than his or her level of wages can disqualify a couple from receiving means-tested JSA. Why is that necessary? Under income support rules, one partner loses entitlement to income support, pound for pound, when the other partner is in work. We will return to debate the folly of that on Amendment No. 35. However at least it is an income-based test: his part-time earnings, if he has any; her earnings, if she has any; and the putative income from any savings, are all taken into account in determining the level of income support. It is a test of need based on income. As I say, we may object to it but at least it is a clear and consistent rule.

Why then do we have another test based on hours worked? Admittedly most women—we will assume for this purpose that it is a woman—working 24 hours or more are likely to earn enough to float both of them off income support, and, if they have children, on to family credit. What if they do not? We are saying that if someone works 24 hours or more and does not have children, the couple will retain an income which amounts to less than income support.

With the abolition of the wages councils, as my noble friend Lady Dean said, wages have been forced down. We now have plenty of reports of retail work—hairdressing and the like—which pays less than £2 an hour. Nearly 1.25 million people are currently earning less than £2.50 an hour. If someone works 25 hours for £2.50 an hour, he or she earns £62.50. From that they pay national insurance. That is less than the £73 a week regarded as the poverty line for a couple and which would incidentally passport them on to housing and council tax benefit. Yet, by working for more than 24

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hours a week, even though that person may be earning less than he or she would receive on income support, the partner loses entitlement to income support. It is calculated that some 60,000 couples with one partner in work for more than 24 hours may have an income lower than income support.

That is perverse as well as being difficult for those families. Clearly if the couple have children the problem tends to be resolved by family credit, which tops up an in-work benefit, but if they do not have children, and if they are not in a piloting area—we have some concerns about that—they will have to live on an income below income support. In practice the woman will leave work so that the couple may have an enhanced standard of living based fully on benefits. We get back into the disincentive trap about which we were talking earlier. Because, once the woman has lost her work, the family has moved from being work-rich to work-poor; they become locked on to benefit; they fall out of touch with the world of work, and it costs us all as taxpayers infinitely more to pick up their total benefit bill. It is a vicious downwards spiral when it can so easily be rectified by merely scrapping the hours rule. The income test should be enough. We do not need an hours test as well.

The Government recognise the problem by saying that they may extend family credit to families without children; in other words, couples. We have real doubts about that, because family credit was designed as a benefit whereby the taxpayer contributed to the support of children in low-wage families. If there are no children it becomes a benefit which merely encourages the employer to pay whatever wages he likes, knowing that they will be topped up by the taxpayer through an in-work benefit. I should have thought that we would have wanted to avoid that situation if possible.

Why not instead let people work the hours that are appropriate and then apply the income rule alone and not the hours rule? That would save us all money. It would keep the second partner in work and give both partners the opportunity to return to the world of work, something we surely want. I beg to move.

9.15 p.m.

Lord Swinfen: It may be for the convenience of the Committee if I say that I propose to deal separately with Amendments Nos. 21 and 181, which were originally grouped with this amendment.

Baroness Williams of Crosby: I support the noble Baroness, Lady Hollis. She has made out a strong case with regard to the effect on the one member of a couple who is likely to hold a part-time job of 24 hours or less. Incidentally in many cases that can now be a man, because one of the interesting facts which is emerging from the recent employment statistics is the rise of short-time work among men as well as women. Therefore it could be the man who might have to abandon his job or live on a lower income than he would receive from benefit. As I understand it, that has never been part of the Government's policy. Indeed the reverse has consistently been their policy: that people should be persuaded to work and not to live on benefit.

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There is another factor which applies also to the amendments in the name of the noble Lord, Lord Swinfen. All the subsections of the clause are essentially family-breakers. The way someone can continue receiving income support is by leaving the family of which he or she is part, one of whose members has some kind of income-based support benefit. That cannot be in anyone's interests. When all of us talk a great deal about the importance and strength of families, not least in bad economic circumstances, do we want to make it the case that someone can receive benefit if he or she leaves the family but cannot receive benefit if he or she stays with it? I cannot think that that is what the Government intend, but it is what the face of the Bill appears to say. Perhaps the Minister will be kind enough to address himself to that point when he answers the amendment.

Lord Mackay of Ardbrecknish: Amendment No. 20 would mean that income-based jobseeker's allowance could still be payable when a claimant's partner is engaged in remunerative work. It would remove a long-standing principle of income-related benefits that couples are treated as a single unit and benefit is payable only if neither is in remunerative work. JSA is a benefit for people looking for work. The removal of the rule would mean that people undertaking substantial amounts of work for low income could still be entitled to the benefit. Those people cannot be classified as unemployed, and other in-work benefits, such as family credit, are available and are more appropriate for the people in those circumstances.

We have also announced plans to pilot a new in-work benefit for single people and childless couples. It will help those without children who cannot qualify for family credit. I am sure that on another day we shall discuss whether or not that benefit is good. However, we recognise the importance of incentives for partners of unemployed people to remain in or to take up small amounts of work. JSA will introduce a number of new measures which will help those whose partners undertake part-time work. We are increasing the remunerative work rule for partners from 16 to 24 hours. We are introducing a new £10 earning disregard for couples. Moreover, a partner's part-time earnings will count towards the build-up of the back-to-work bonus, which can be paid when either the claimant or his partner moves into work.

All those measures will help to address the problem of the working partner and will encourage the working partner to remain in work. The idea that working partners necessarily desert work is not widely observed. As the noble Baroness said in respect of work-rich and work-poor families, there is no doubt—

Earl Russell: I do not believe that my noble friend Lady Williams said that anyone must desert. She said that the rules created an incentive to do so, and that I believe to be correct.

Lord Mackay of Ardbrecknish: I believe that the noble Earl misheard me. I was talking about deserting the job and was addressing a question put to me by the noble Baroness, Lady Hollis, that partners would desert a part-time job in those circumstances. As a result of the undoubted problems of unemployed couples and their

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disadvantage compared with couples where one party has a part-time job, the attractions of staying in work, in particular in the light of the improvements that we have made, will be considerable. I hope that they will prevent people from making a wrong decision and leave a part-time job because that may appear in the short term to be of benefit. There is a great deal of evidence that staying in work, even part-time work, is a better position from which to develop and to get more work, or for the partner to get work, than deserting the work. I do not believe that any responsible person would take the decision to desert work and place herself and her husband in a worse position.

The noble Baroness, Lady Williams, opened up a wider issue about the treatment of families and couples as opposed to single people. The subject is causing a great deal of anxiety but I do not particularly wish to address myself to it because I do not believe that there are any easy solutions. However, at least one of our European partners does not provide as we do, but pays a couple double the benefit of a single person. We have tried to be more generous to a single person, which leads inevitably to the kind of problem that the noble Baroness suggests. I hope that there exists more moral and social pressures and advantages in staying together and staying married than the possible economic advantage that may lead one to desert a marriage. I fear that marriage break-up, which is all too prevalent, is caused by other deep-seated social reasons and conditions arising from (dare I say?) our more permissive society.

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