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House of Lords

Thursday, 15th January 1998.

The House met at three of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.

Prayers--Read by the Lord Bishop of Bradford.

Lone Parents: Welfare Benefits

Earl Russell asked Her Majesty's Government:

    Whether their decision to cut benefits for single parents arises from a need to stay within spending limits, or from a desire to encourage single parents into work.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, the changes will apply only to lone parents making new benefit claims. Existing recipients will not be affected. There will be no cash losers. At the moment, lone parents receive higher levels of benefit for their children than couples. The effect of the change means that lone parents making new claims will receive the same rates of benefit for their children as couple families. Lone parents, however, do face additional costs in work because they have to pay for childcare, which is why we are improving the childcare disregard, introducing the national childcare strategy, and reforming the tax and benefits systems.

Earl Russell: My Lords, I thank the Minister for that reply; I am not quite sure whether I can say that I thank her for that "Answer". Does the noble Baroness understand that it would be easier to debate this subject if we understood exactly why the Government were doing this? If the reason is to encourage people into work, is the noble Baroness aware that the cut in child benefit premium will injure only those who are already in work and that it therefore contradicts the policy? If the reason is to do with the spending limit, does the noble Baroness remember that in the last parliament we used to say that the Conservatives were in office, but not in power? Now that they can fix our spending limits and have no responsibility for them, does it follow that they are in power but not in office?

Baroness Hollis of Heigham: My Lords, in terms of welfare reform, this Government are not only in office, but are in power. The publication today of the Welfare Reform Focus Files, together with the Prime Minister's trend-setting speech and the forthcoming Green Paper, will, I am sure, provide the noble Earl with the context to understand our proposals on welfare reform.

The noble Earl's Question referred particularly to child benefit. At the moment, a lone parent in work enjoys £17.10 in child benefit for the first child and £9 thereafter whereas a couple in work receive only £11.05 for their first child and £9 thereafter. That can mean that, income for income, a lone parent with one

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child can have a higher income after tax and deductions than a couple with one child. We do not think that that is appropriate.

Lord Higgins: My Lords, has the Minister seen a report in today's Financial Times which suggests that when answering questions in this House two days ago she had escaped the clutches of the Blairite thought police? In the light of that, may I ask her to clarify a point which was not clarified in another place yesterday; namely, that we have a Minister for Welfare Reform who wants less means-testing and a Secretary of State for Social Security who wants more? Given that we are said to be a "spin-free zone", can the Minister resolve that problem?

Baroness Hollis of Heigham: My Lords, when I was newly married my husband said to me that one of the key things to know about people was whether they offered their compliments forehand or backhand. I think that the noble Lord's comment counts as a "backhand". No, I have not read today's Financial Times. However, I can advise the noble Lord that there is consistency across not only the Government's social security team, but across the Government as a whole that what we are seeking to do is to ensure that every pound that is spent by all of us on welfare benefits and the welfare state is appropriately and prudently targeted, and wisely spent. That is what we are seeking to do while ensuring that we begin to remove some of the perverse anomalies which the previous administration built into welfare by which they actively discouraged those who wanted to seek work from doing so, including lone parents and the disabled. We are seeking to ensure that we have a welfare state which encourages people to do what they want to do and which does not put hurdles in their way.

Lord Ashley of Stoke: My Lords, as the proposed cut is an obvious disincentive, can my noble friend tell us how it fits into the welfare-to-work scheme?

Baroness Hollis of Heigham: My Lords, any lone parent who is currently on income support and who moves into work will take the existing higher rate of child benefit with her into work. Therefore, there is no disincentive.

Lord Marsh: My Lords, is the Minister aware that very many people will want to offer the Government warm congratulations both on the direction in which they are travelling and on the priorities which they have chosen in this long-overdue reform of the social security system which is clearly failing on every count? So far, so good, but is the Minister also aware of the growing concern that those individual initiatives, in which some of us believe strongly, lack the context of a clear, total and detailed strategy so that we can judge the entire package? When will we get that whole package?

Baroness Hollis of Heigham: My Lords, the noble Lord is absolutely right. For all of us to appreciate the context within which the Government propose to renew and reform the welfare state so that it regains the

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confidence of those who pay for it and those who use it the Green Paper is required, and we expect it next month.

Lord Barnett: My Lords, is my noble friend aware that I strongly support and recognise the need for a policy of welfare reform? Referring specifically to lone parents, the Government are very much in favour of protecting the poor and needy and I agree with them. Can my noble friend tell the House how she proposes to do that for those lone parents who will have a cut in income?

Baroness Hollis of Heigham: My Lords, no existing lone parent on benefit will have a cut in income. However, in future new lone parents will receive proportionately the same level of income as workless couples. Having checked it, there is little research to suggest that lone parents have proportionately higher costs than workless couples except when it comes to childcare where they do not have the support of a partner. That is why the Government, in my view appropriately, concentrate their efforts on childcare on the one hand and reform of the Child Support Agency to deliver child maintenance on the other.

Lord Campbell of Alloway: My Lords, is the noble Baroness aware that her interesting dissertation in response to the noble Earl did not answer, or attempt to answer, the Question on the Order Paper? The reference to what Mr. Blair will do and all that is very interesting, but it does not begin to answer the Question on the Order Paper.

Baroness Hollis of Heigham: My Lords, I did my best to answer the Question. If noble Lords are dissatisfied with my answer they are entirely entitled to do precisely what the noble Lord has done and press me further.

Earl Russell: My Lords, the Minister has relied on the argument for equalisation between lone and married parents. Is she aware of the finding of the Rowntree survey Small Fortunes that since the child premium on income support is very far from meeting the total cost of a child it must be subsidised out of the income support to the parents? Is she further aware that one parent on income support carrying the whole burden is twice as heavily burdened as two on income support? Is this not a case where to impose equality between the unequal widens inequality?

Baroness Hollis of Heigham: My Lords, I have read that report along with others which come up with somewhat different findings. The substantive point, with which I suspect the noble Earl agrees, is that lone parents are poorer than workless couples not so much because of the level of benefit but because of the length of time that they spend on income support. Only one workless couple in five is on JSA for three years or more, but one lone parent in two is on income support for three years or more, and they are often on income

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support long after their youngest child has gone to school. We know that when a lone parent moves into work, on average, income rises by £50 per week. We believe that to provide opportunities for work is the best way to help them out of the trap of long-term poverty.

British Aerospace Industry

3.16 p.m.

Lord Evans of Parkside asked Her Majesty's Government:

    Whether they have any plans to provide financial assistance to the British aerospace industry in order to secure and create high-technology engineering jobs in the United Kingdom.

Lord Haskel: My Lords, certainly. The Government consider the aerospace industry to be very important. So, they have recently awarded launch aid of up to £200 million to Rolls-Royce for the development of three new engines, one of which, the Trent-500, will be used to power the new A340-500/600 Airbus. They are also currently considering an application from British Aerospace in respect of this aircraft. In addition, the Government support the UK aerospace industry under the Civil Aircraft Research and Technology Demonstration programme.

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