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Earl Russell: My Lords, before I decide what to do with this amendment, can the Minister tell me why the Government adopted the previous government's spending limits? That is a very material point.

Baroness Hollis of Heigham: My Lords, we made a manifesto commitment in that respect. Hoping that the electorate would endorse our manifesto, we did not give undertakings that we did not then intend to observe when in office. That is why we made that commitment and why we are observing it. It is perhaps not the same situation that applied to the Liberal Democrat Party.

As regards the lone parent measures, we did not, and do not, believe that simply turning the clock back would be the right approach even if it were affordable. As I have said, we do not accept the principle that simply by being lone parents they should receive special cash benefits over and beyond what couple families in similar workless situations should receive. Instead, as and when resources have become available, we have chosen to spend them on our priorities, by helping those lone parents who want to work to do so through the New Deal; helping all families, whether with one parent or

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two, through increases in child benefit; helping all low-income families out of work to increases in out-of-work income-related benefits and helping all low-income families in work through the working families tax credit and the childcare tax credit. It is now clear that, as resources become available, we are implementing those measures. As I said in Committee, the total value of all those measures is something like £3 billion extra going to help lone parents and workless couples alike who have children and who need help into work or who are in low-paid work.

Nonetheless, we have protected the right of those lone parents already on benefit while they remain on benefit. There are no current cash losers. Today nobody will find that tomorrow, or sometime in October, November or any other time, their actual income will drop from what they are currently receiving. I was pressed on this matter by my noble friends in Committee. We have introduced a linking rule to protect them for 12 weeks so that if they start a job which does not work out they can return to their benefit level.

The year 1998-99 is a tight year for expenditure, not least because we have uprated all the main benefits in line with the actual inflation we inherited rather than the lower figure assumed in the 1996 Budget which we inherited. That has given the department an additional bill of some £600 million which was not built into the original budget figures, but nonetheless we have honoured it in order to uprate benefits in line with inflation.

That means that there are real constraints on the budget and our priority and choice has been to help all vulnerable families, especially those on low incomes with young children. After that we have made it our priority to give more help to all families from next April as extra resources are available. We are delivering this help through increases in child benefit and to the family premium in the income-related benefits.

Once that strategy has unfolded, over 1 million lone parents will have a direct financial gain. We have ensured that the earliest help, in November of this year, is directed to the most vulnerable families, such as those on low incomes with young children. From April 1999 no family with a child under the age of 11, and in receipt of income-related benefits, will be any worse off and some families will see significant gains. Many lone parents will also gain from the opportunities to work created by the New Deal, the working families tax credit and the national childcare strategy, to say nothing of the proposals that we hope to bring forward through the reform of the child support system. Work will bring further gains in the standard of living of lone parents, and the important benefits of improved self-esteem and increased independence, as well as providing a role model for future generations.

If the Government were to accept this amendment it would increase expenditure not only in this year and the next, but there would be a knock-on effect for a number of years and beyond. It would add over £250 million to our expenditure in the first three years alone.

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Our priority is to divert available resources to all families and specifically to low income families with young children. These amendments would reduce the resources available to us and undermine our strategy to direct assistance to those groups. Our principles are clear. We will align benefit rates for children for all family types, but we shall ensure that the financial needs of families, especially those with younger children, are recognised through the benefit system. We will do that while maintaining our commitment to the prudent management of government finances.

We have already announced almost £3 billion of extra help for families, and a £300 million investment in childcare and already we are investing almost £200 million in the New Deal for lone parents. We believe that we are working with lone parents to deliver what they themselves are asking for.

Our first problem with the amendment is, therefore, the principle. Our second problem relates to cost. As the noble Lord anticipated, our third problem relates to public administration. It is not only a question of the amendment being technically flawed; although I fear that it is flawed; we cannot revoke the 1997 regulations, as the amendment seeks, because they have been revoked already by the Budget. Therefore, even if Amendment No. 53 were to be passed, it could have no effect.

The Social Security (Lone Parents) (Amendment) Regulations 1998 are already in force. The administrators have already made all the necessary computer changes. I do not want to hang on the technical points because clearly the technicalities could be amended, but the significant point is that the regulations are already in force and are taking effect. The necessary computer changes have been made, together with all the necessary changes to procedures, leaflets, guidance and forms to administer the new legislation. Many thousands of lone parent claimants are already being paid on the basis of the new benefit rates. If we were now to make a retrospective change, we would create a huge administrative problem, particularly given that we are to make another change, a step up, for the same lone parents in November, with a further step up taking place from April 1999.

Even if we were able to accept the amendment, staff would have to work around computer systems; existing recipients would have to be re-identified and their order books recalled, adjusted and reissued. Mistakes would be made and error rates would rise. Recipients would be paid the wrong rate of benefit. It would be a huge administrative operation. Given good notice of changes, computers can be adapted and staff issued with the necessary training and guidance. However, the amendment does not give good notice. It would make a retrospective change, and that would lead to mistakes and bad policy.

The amendment would also add to the confusion that benefit claimants face. To date, the Government have given a coherent and consistent message. New lone parents will receive the same rates of family premium and child allowances as other families, and existing lone parents will retain their existing protected rates. If the

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amendment were to be adopted by the House, having been technically redrafted to include a change of year, the message would become very confused. Who would know whether they were a protected lone parent? Who would know whether they were one of the current recipients who should return their payment book for adjustment?

If we were to accept the amendment, it would not just be wrong in principle; it would result in poor administration of public policy and create immense difficulties and confusion to add to the problems which benefit claimants already face. For those three reasons, I very much hope that your Lordships will not be minded to support the amendment.

Lord Ashley of Stoke: My Lords, I have listened carefully to my noble friend and, as usual, she puts a very good case indeed--

Noble Lords: Order!

Earl Russell: My Lords, is the noble Lord asking a question before the Minister sits down?

Lord Ashley of Stoke: No, my Lords, I am making a contribution.

Baroness Hollis of Heigham: My Lords, perhaps I may help my noble friend. We are now at Report stage, rather than in Committee and, although I do not want to handcuff any Member of your Lordships' House, and I try always to be helpful, the convention of the House is that the Minister speaks to wind up the debate and is then normally followed by the proposer of the amendment who then decides what to do with the amendment in the light of the Minister's reply. In other words, we are not in Committee when the debate could continue. As I do not want in any way to impede my noble friend, I wonder whether he would like to make a brief comment before I sit down, perhaps in the form of a question to me, so that I may respond to it before concluding my remarks.

Lord Ashley of Stoke: My Lords, that is very generous of my noble friend. I had been about to rise before my noble friend sat down, but she moved so very quickly that it was impossible for me, as an old man, to do so. The Minister is young and fit. However, she is not fit enough to make a convincing case on this issue. I support the amendment. If my noble friend will allow me to do so, I ask her to reflect on her comments in Committee when she said:


    "lone parents with children under ... 11 who will lose the child benefit from June 1998 will, nonetheless, gain in April 1999 by the sum of £1.85".--[Official Report, 6/4/98; col. 513.]
I cannot see people dancing in the streets because of a payment of £1.85. According to my noble friend, people with older children will not have the same recompense as my noble friend had hoped--that is, according to that extract from her speech. I wonder what the Government were hoping for. Single parents were hoping to win the lottery--if they could afford a ticket, which is doubtful. I cannot believe that the Government would go into that.

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Briefly, the basic fact, which has been candidly admitted by my noble friend, is that there is a gap between the cut in the income of lone parents and that payment by the Chancellor of the Exchequer.

Will my noble friend answer one question? Is it true that, although single parents will make some gains in the period before October 1999, the main gain will come from the working families tax credit in October 1999? If that is the case, it means that single-parent families will suffer between now and October 1999. Perhaps my noble friend could enlighten the House on that point.

6.15 p.m.

Baroness Hollis of Heigham: My Lords, perhaps I may clarify the position. All existing lone parents on the higher rate of lone-parent benefit will continue to receive it. There will be no cash losers. All existing lone parents will have their position protected. Indeed, if they move into work but then come back on to benefit within 12 weeks, they will resume their former higher level of benefit. From April this year, in terms of the income support regulations and subsequently in terms of child benefit or premium (for those on income-related benefits), in benefit terms new lone parents will start life as lone parents on a lower rate of benefit than they would have received six or 12 months previously. However, in the course of the forthcoming year most of that loss will be recovered for them by two steps of increase. If they have children under the age of 11--most lone parents who are not in work are in that position--they will recover £2.50 of that benefit in November and in the following April--that is, April 1999--they will regain a further £2.50 either directly through child benefit for the oldest child or through the additional sum for the family premium. But--this is the important point--it will not only be lone parents who will gain that amount; the provisions will apply equally to workless couples or to couples in work for their eldest child, in relation to child benefit. In other words, the poor and the most vulnerable will be paid first under our system.

I entirely accept that in an ideal world it would be desirable to have continuity from one system to the other, but that could not happen, given that we inherited these measures. They were introduced to your Lordships' House in July. It was only in the context of the Budget that the Chancellor was able to find the resources to mount a new attack on the poverty of lone parents, workless couples and couples with young children who are vulnerable in terms of their poverty. As a result, there is an inevitable gap. We are doing our best to cover that gap by our staged increases, which will come into effect in November and next April. There will subsequently be improvements through the working families tax credit. As a result, lone parents and workless couples alike will have not only a more generous benefit regime; they will have not only access to child care which will enable them to move into work; but, once in work when the working families tax credit is operating, they will have a lower taper for the withdrawal of various sums and a more generous benefit regime.

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I believe that, with those strategies, the Chancellor of the Exchequer has devised an attractive and supportive package for families with young children, whatever the family structure. I very much hope that with that broader picture in mind your Lordships will not be minded to support the amendment moved by the noble Earl, Lord Russell.


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