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Lord Mackay of Ardbrecknish: I do not think that there is much between us on the general matter of principle, of the recognition of the importance of child care, especially in the context of assisting lone parents back into employment. But I am afraid that I do not accept the need for such expenses to be incorporated into the departure system. Perhaps it will clarify why I do not accept that need if I explain how the current legislation makes provision for child care costs.

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When a maintenance assessment is made, the first stage is to calculate the maintenance requirement, the amount calculated as necessary to meet the basic needs of the child. The maintenance requirement is based on income support rates and includes an amount in respect of the fact that a child needs to be cared for. This carer element is £45.60 if the youngest child is under 11 years of age. Because the need for day-to-day care lessens as children get older, this amount reduces with age and is removed completely when the child reaches the age of 16. The carer element is designed to recognise that either the parent with care has costs, if she stays at home and provides care; or she incurs costs in providing for care, if she chooses to work. Thus, the formula already makes a significant contribution towards any childcare costs that may be incurred.

In addition, when a working person with care is eligible for family credit, up to £40 of her income can be disregarded, as the noble Earl pointed out, in assessing her entitlement to that benefit. Moreover, the family credit rules also allow the disregard of the first £15 of any maintenance received. The additional income provided by that disregard can be used towards the costs of childcare where such costs are incurred. Where the person with carer's income is above those levels, she should have sufficient income to meet such costs. To make any allowance in child support would be to duplicate the childcare provisions in family credit by allowing twice for the same costs.

Baroness Hollis of Heigham: I am speaking now from memory but perhaps the noble Lord would just confirm one point. Am I right in saying that if you receive maximum family credit, you are not effectively in a position to take advantage of the £40 childcare sum?

10 p.m.

Lord Mackay of Ardbrecknish: If you receive maximum family credit, yes, that is probably right. My recollection of this complicated matter is that that is right.

Baroness Hollis of Heigham: I am glad to have that confirmation. In that case, it would follow that those mothers who are on family credit and the poorer mothers, because they receive full family credit, would effectively have no additional allowance for childcare. Therefore the amendment pressed by the noble Earl and my noble friend Lord Carter is even more urgent.

Lord Mackay of Ardbrecknish: Yes, but they would still have the carer's allowance which comes from the maintenance from the absent parent because, as I explained, the carer element is £45.60 of the maintenance requirement in that regard. So, while my argument is that there should not be double counting, equally my argument is that there is already provision in the system, whether or not the parent with care stays at home. The money is not designed for her. I gather that that is one of the great aggravations of absent parents, who believe that it is designed for her. It is not designed for her as some kind of spousal maintenance. It is in fact designed for her as the carer of the child. If she chooses to work, then that money obviously is available for help in providing alternative care for the child, if that is needed. I think that that is quite clear.

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Baroness Hollis of Heigham: That element is certainly clear. But then there is the ambiguity that if, for example, a mother was receiving full family credit (let us say, £60 or £65 a week) and she was in work receiving another £40, and getting maintenance of, say, £50 or £60, she would be getting the carer's element in maintenance; but because she was on maximum family credit she would receive no additional disregard for childcare. But if she was getting £20 or £30 less than that in family credit because she was earning more and she was also getting maintenance, she would then be entitled to an additional disregard on her family credit. In other words, those with the greatest need and maximum dependence on family credit are least likely to benefit from the childcare arrangements and childcare allowances that they would need to propel or lever them into work.

Lord Mackay of Ardbrecknish: That is an issue on family credit, whether or not we are talking about a parent with care. Here we are talking about the parent with care and the portion of the allowance that comes from the absent parent that is designed to represent the caring part as opposed to the direct payment, if I may call it that, to the child. So the payment has already been made.

I was saying that if the person with care is eligible for family credit, then up to £40 of her income can be disregarded. I use the words "up to" because I appreciate that that does not necessarily mean that £40 is available for every case. That is one of the complexities of family credit.

My principal argument is that included in the amount of money which comes from the absent parent is a portion which takes care of, so to speak, the carer element. If that element is present, then the parent with care either stays at home, and that sum helps to maintain her in her role of looking after the child, or chooses to go to work, when that money is available to help pay for any childcare that she needs while she is out at work. As I said, a parent with care on maximum family credit is unlikely to be working full time. That would mean, therefore, that she would not require the child to be looked after for as long as if she did work full time.

Earl Russell: Before the noble Lord, Lord Carter, decides what to do with his amendment, perhaps I can answer one or two of the Minister's points. I thought he would rely on the carer element. He said £45.60 but I believe he should have said £46.50. He did not answer my point that it is not targeted money. It is not in any way related to the amount actually spent on childcare. It is flat rate and goes to everybody. In fact, the Minister would employ money a great deal more effectively if he would concentrate it on childcare. Then it would provide the incentive effect and enable people to go out to work. That is the crucial point; that people who want to work should be free to do so.

There is an issue of human rights in this regard as well as convenience to the Treasury and everyone else concerned. If the Minister is not prepared to do it this way, then he may be prepared to consider a disregard on income support. He may remember that I made that point on the up-rating statement instantly when the Chancellor brought in his concession on family credit. I know he set his face against that, so I believe he should consider this

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instead. The trouble with doing it only on family credit is that we help only those who have got into work already and gone through the very slow process of getting family credit set up. I know that the Government are trying to speed that up, which I welcome, but it is a slow job. We need something that will get people back to work. I believe these amendments will; I do not believe that any of the alternatives the Government suggest would. I think this is better and I look forward with great interest to see what the noble Lord, Lord Carter, proposes to do with the amendment.

Lord Carter: The noble Earl will not be too surprised when I decide what to do with the amendments at this time of the evening and at this stage of the Bill. I am now responding to Amendment No. 32 in the name of the noble Earl, Lord Russell, and I have to decide what to do with it as I moved it.

A number of complicated points were made, not least by my noble friend Lady Hollis who made an excellent point about family credit. The Government are adamant on this matter. By reading what was said in the other place I tried to answer the Government's arguments which were made there. Not surprisingly, the brief put the arguments again and did not answer the points I made. Perhaps next time I should allow the Government to make the arguments again and then try to answer them.

We have not finished with this issue. I do not intend to press the matter to a Division now. It is an important point. The report produced earlier last week by the Institute of Fiscal Studies throws some light on the whole of the family credit argument, which is extremely complicated to build into the childcare point in the Bill. We shall have to try again. We shall certainly come back to it on Report. In the meantime I beg leave to withdraw Amendment No. 32.

Amendment, by leave, withdrawn.

[Amendments Nos. 30 and 33 not moved.]

Earl Russell moved Amendment No. 34:

Page 26, line 10, leave out ("an agreement between them of a prescribed kind") and insert ("a legally binding agreement between them").

The noble Earl said: In moving Amendment No. 34 I wish to speak also to Amendment No. 36, which is a related case. The amendments deal with grounds for departure. They deal with subsection (2), where agreements will be allowed which are of a "prescribed kind". The Committee will know that I am allergic to those words. It is a particular medicine which I do not wish to be prescribed. But it so happens that I also disagree with the policy intention.

I have been trying to lay my hands on the Government's excellently lucid memo to the Delegated Powers Scrutiny Committee. They say that they will not cover all agreements and that they intend to leave out some. They are not going to deal with all legally binding debts or agreements, only with a few. I believe that that is a mistaken decision, clothed in a discretion which is so generally worded that we simply cannot address it and try to persuade them to change their mind. That is making a mistake behind a smokescreen, which is confounding a felony. I beg to move.

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