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Baroness Hollis of Heigham: My Lords, I thank the Minister—at least I think I thank him—for that reply. We have now debated two amendments. The first related to the fact that, as a result of this Bill, parents with care out of work can be worse off. We tried to remedy that in the previous amendment with a maintenance disregard. Noble Lords overwhelmingly defeated that attempt and accepted that parents with care out of work can, and perhaps should, be worse off when their maintenance displaces their benefit. That was the last decision of this House.

Now we are dealing with a second amendment which relates to the fact that the parent with care who is in work and on family credit can also become worse off by receiving maintenance because of the six months rule. The Government rejected the first amendment. I had hoped that they might not reject the second.

I believe that the Government misrepresented the function of this amendment—whether as the result of an error of draftsmanship on our part, which I hope is not the case, though perhaps it may be, or because they misunderstood its purpose, I do not know. But it is not the case that with this amendment we argue that family

6 Jul 1995 : Column 1268

credit should be constantly reassessed in the light of maintenance. That is not our argument because we do not want in any way to impugn the principle of the 26-week rule. We are trying to uncouple family credit from maintenance arrangements. In other words, we are making use of the fact that the CSA could be a collection agency for family credit and maintenance, as it is for income support and maintenance. Just as, if maintenance falters, income support goes up, there is no reason, since the CSA is a collection agency, why, if maintenance falters, family credit should not go up.

The Minister says that that can also apply to earnings—

Lord Mackay of Ardbrecknish: My Lords, in the example I tried to give, I suggested to the noble Baroness that the payment could actually exceed what a person was due under family credit. So the noble Baroness asks us to go a great deal further than she tries to make out in her speech.

Baroness Hollis of Heigham: My Lords, I am sure the Minister would not want me to toss back at him the phrase that he often uses to me; namely, that if he could contain himself for just a moment I shall be very happy to come to that point. The Minister will perhaps forgive me; it was irresistible, and I promise not to say it again.

This amendment would uncouple family credit from payment of maintenance. The Minister made the point that if family credit were to float up and down according to maintenance, it might equally apply to earnings. That is not so. We accept that family credit is an in-work benefit associated with earnings level. The difference here is that maintenance is meant by government to displace family credit pound for pound, once the disregard and the 70 per cent./30 per cent. taper are taken into account. That is why it is in a different category from that suggested by the Minister.

The technical issues of the £15 disregard, the 30 per cent. balance, and even the fact that someone might appear to be paying more are all mechanical matters. It is perfectly possible to write into the programme that no one should receive more under this arrangement than they would if they received no maintenance whatever. That is perfectly easy to put into any such programme. It is a mechanical and technical matter which can easily be overcome.

The fact remains that, as it stands, if a woman goes on to family credit, goes back to work, receives maintenance and that maintenance falters, her family credit does not float up to compensate; she is worse off. At present she would be wise to do what neither the Minister nor we would want her to do; namely, to leave work, go back on to income support, float up the calculation and start afresh. If she did that, she would be financially very sensible. As the Bill is now structured, she would have a perverse incentive to leave work in the hope of—I give way to the Minister.

Lord Mackay of Ardbrecknish: My Lords, the noble Baroness is very keen on the perverse incentives. All these systems have their difficulties at the margins. But does she agree with me that, if a woman comes in the second half of the 26 weeks and has a job, it would be puzzling and perverse of her if she were to leave

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work because of the problem illustrated by the noble Baroness. Just a few weeks later there would be a total recalculation on her new income which would last for the next 26 weeks and—dare I say it?—during that period her maintenance would backup and she would receive the benefit of that without her family credit being reduced.

Baroness Hollis of Heigham: My Lords, the Minister is entirely right. If she is towards the end of her family credit period and her maintenance is falling, she may very well make a rational calculation that she should stay where she is because the situation would improve for four weeks' time—but not, if it were to improve for five months. Nor, if she has the offer of a job and she cannot guarantee the flow of her maintenance or that family credit will sustain her if her maintenance were to drop in the future, can one expect her to go into work with the same confidence. She would not have the same surety of income that she has on income support.

The Government have structured the Bill so that family credit is fixed, even though maintenance may falter, whereas under income support, if maintenance falters, income support picks up the stress. For a woman with only marginal advantages from going into work—given childcare costs and that the work is part-time, say, 16 or 17 hours or so, so that she is over the income support threshold—that degree of irregularity of income, if that has been her experience, will deter her from going back to work.

It would not be difficult for the Government to ensure that the woman can rely on a combination of maintenance plus family credit, if they accept the amendment and the two are uncoupled in the way proposed. It would not threaten the six-month rule but would give her the surety of income to which she is surely entitled. I feel very strongly about this matter. In fairness to women who will be very vulnerable under a 26-week rule, if the Government do not accept this amendment, I should like to test the opinion of the House.

5.2 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 60; Not-Contents, 139.

Division No. 2


Addington, L.
Avebury, L.
Beaumont of Whitley, L.
Broadbridge, L.
Bruce of Donington, L.
Butterfield, L.
Callaghan of Cardiff, L.
Carmichael of Kelvingrove, L.
Carter, L.
Cocks of Hartcliffe, L.
David, B.
Donaldson of Kingsbridge, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Elis-Thomas, L.
Foot, L.
Gallacher, L.
Gladwin of Clee, L. [Teller.]
Gould of Potternewton, B.
Graham of Edmonton, L.
Gregson, L.
Hanworth, V.
Harris of Greenwich, L.
Haskel, L.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Holme of Cheltenham, L.
Jay of Paddington, B.
Jeger, B.
Jenkins of Hillhead, L.
Jenkins of Putney, L.
Judd, L.
Kennet, L.
Kilbracken, L.
Longford, E.
Macaulay of Bragar, L.
McIntosh of Haringey, L.
Merlyn-Rees, L.
Milner of Leeds, L.
Molloy, L.
Monkswell, L.
Morris of Castle Morris, L.
Nicol, B.
Ogmore, L.
Rea, L.
Redesdale, L.
Ritchie of Dundee, L.
Rochester, L.
Russell, E. [Teller.]
Seear, B.
Stedman, B.
Stoddart of Swindon, L.
Strabolgi, L.
Tonypandy, V.
Tope, L.
Wallace of Coslany, L.
White, B.
Williams of Crosby, B.
Williams of Elvel, L.


Aberdare, L.
Abinger, L.
Addison, V.
Alexander of Tunis, E.
Allenby of Megiddo, V.
Arran, E.
Ashbourne, L.
Astor of Hever, L.
Balfour, E.
Barber, L.
Belhaven and Stenton, L.
Birdwood, L.
Blaker, L.
Blatch, B.
Blyth, L.
Boyd-Carpenter, L.
Brabazon of Tara, L.
Braine of Wheatley, L.
Bridgeman, V.
Brougham and Vaux, L.
Burnham, L.
Cadman, L.
Carnegy of Lour, B.
Chalker of Wallasey, B.
Chelmsford, V.
Chesham, L.
Clark of Kempston, L.
Courtown, E.
Craigavon, V.
Cranborne, V. [Lord Privy Seal.]
Cranworth, L.
Cumberlege, B.
Daventry, V.
Davidson, V.
Dean of Harptree, L.
Denham, L.
Denton of Wakefield, B.
Dilhorne, V.
Dixon-Smith, L.
Donegall, M.
Downshire, M.
Dudley, E.
Eccles of Moulton, B.
Ellenborough, L.
Elles, B.
Elliott of Morpeth, L.
Elton, L.
Ferrers, E.
Finsberg, L.
Flather, B.
Fraser of Carmyllie, L.
Fraser of Kilmorack, L.
Gainford, L.
Gardner of Parkes, B.
Geddes, L.
Gisborough, L.
Goschen, V.
Gridley, L.
Harding of Petherton, L.
Hardwicke, E.
Harmsworth, L.
Harrowby, E.
Hayhoe, L.
Henley, L.
Hogg, B.
HolmPatrick, L.
Hooper, B.
Hothfield, L.
Howe, E.
Inglewood, L.
Jeffreys, L.
Jenkin of Roding, L.
Killearn, L.
Kimball, L.
Knutsford, V.
Lane of Horsell, L.
Leigh, L.
Lindsay, E.
Lindsey and Abingdon, E.
Long, V. [Teller.]
Lucas, L.
Lucas of Chilworth, L.
McColl of Dulwich, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. [Lord Chancellor.]
Macleod of Borve, B.
Merrivale, L.
Mersey, V.
Miller of Hendon, B.
Milverton, L.
Monk Bretton, L.
Munster, E.
Murton of Lindisfarne, L.
Newall, L.
Noel-Buxton, L.
Norfolk, D.
Norrie, L.
Northesk, E.
O'Cathain, B.
Onslow, E.
Oppenheim-Barnes, B.
Orkney, E.
Orr-Ewing, L.
Oxfuird, V.
Pearson of Rannoch, L.
Pender, L.
Perry of Southwark, B.
Platt of Writtle, B.
Rankeillour, L.
Rathcavan, L.
Rawlings, B.
Rees, L.
Renton, L.
Renwick, L.
Romney, E.
St. Albans, Bp.
Salisbury, M.
Seccombe, B.
Sharples, B.
Shaw of Northstead, L.
Skelmersdale, L.
Soulsby of Swaffham Prior, L.
Strathcarron, L.
Strathclyde, L. [Teller.]
Suffield, L.
Swansea, L.
Thomas of Gwydir, L.
Thomas of Swynnerton, L.
Torphichen, L.
Torrington, V.
Wedgwood, L.
Westbury, L.
Willoughby de Broke, L.
Windlesham, L.
Wise, L.
Wolfson, L.
Wyatt of Weeford, L.
Wynford, L.
Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

6 Jul 1995 : Column 1271

Clause 4 [Determination of applications]:

5.10 p.m.

Lord Carter moved Amendment No. 4:

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