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Baroness Hollis of Heigham: My Lords, the amendment seeks to ensure that neither WFTC nor DPTC can be paid to households with incomes in excess of £9,542. Before we knew the reason behind that figure, we circulated a bottle of wine around the department for anyone who could determine it. We worked through half average incomes, European standards of poverty and many other permutations, including "typos", to see where the figure came from. We are grateful to the noble Lord for explaining it.

However, he explained it by saying that it was the figure at which the 50 per cent taper in IB would kick in. I do not accept any such read-across. But even if that were used, he accepts that he has taken the figure of a single person when with WFTC one is comparing a family credit. There might be a read-across to the lower rate of DPTC, but that would be the only point at which his analogy would be valid.

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A family on IB, with a wife and dependent children, and with the appropriate dependency increases, would need an occupational pension of £320 a week, or more than £16,000 a year, to lose all its IB. Roughly speaking--I will reconfirm it--the point at which WFTC would taper out for a family of similar size, but without childcare costs which were being reimbursed, would not be wildly different. Therefore, the point being made by the noble Lord has been taken, because his figure has been based on a singly disabled person and not on the appropriate family household rate. Were he to take a family household rate and exclude the childcare element from WFTC the figures would not be wildly divergent. I shall give him the figures at a later stage.

Lord Higgins: My Lords, perhaps the Minister will allow me to intervene. Some of the figures came from outside groups which have considered the matter in considerable depth. I am not clear where the Minister gets her figures for incapacity benefit.

Baroness Hollis of Heigham: My Lords, they are in the impact assessment of the Bill. A person who has been entitled to the long-term rate of IB of £135 a week would have an addition which would include an adult dependency increase of £39.95--that is for a wife looking after a child--dependency increases of £21.25 and an age addition of £7.05. That person would need an occupational pension of £320 a week, or more than £16,000 a year, to lose all his IB. In other words, the IB case has been made reasonably on the case of a single adult, whereas with WFTC we are dealing with families. Therefore, if one is going to make such an analogy, one must compare it with an IB family in similar circumstances. At that point, the income analogy is with the £16,000 and IB. What I was trying to suggest is that if we were not including any childcare element the figures would not be wildly divergent for WFTC.

I have a second objection to the noble Lord's amendment. It was identified by the noble Earl, Lord Russell. It does not make clear whether the £9,542 refers to gross or net income. If it is net income, which equates to about £11,600 gross for a single earner family, the WFTC caseload would come down from 1.4 million families to 800,000 and the DPTC caseload would come down from 31,000 to 22,000. But it gets worse! If the figure of £9,542 reflects gross income, the drop in caseload would be even greater; down to 700,000 families who would qualify for WFTC and 19,000 families who would qualify for DPTC.

The noble Earl, Lord Russell, was indicating the point that the amendment would not only deprive between 600,000 and 700,000 people of the support of tax credits, but, worse, it would mean that between 10 and 20 per cent of current family credit and DWA recipients would fail to qualify for WFTC and DPTC. In fact, not only would it not become the more generous work incentive, but it would make it more severe, more punitive, and therefore put more families into hardship than existing family credit and DWA procedures.

The purpose of tax credits is twofold. First, it is to produce work incentives to make work pay so that people see that the entry wage is worth taking.

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Secondly, it is designed to support families. We know that the best way of supporting families, particularly small children, is to ensure that one parent is in work. The amendment would increase the number of children in poverty because it would cap the figure for WFTC, if it were gross, below the current figures of family credit. I cannot believe that the noble Lord intended that and I cannot believe that if he were minded to pursue it the House could support him. It would be unreasonable.

I could have advanced many other arguments of a technical nature. However, given the double explanation that, first, the noble Lord has underestimated the IB figure for a similar family and, secondly, the implication that it would not only take money away from moderate earners but from very low income families, too, I hope that the noble Lord will not press his amendment.

Lord Higgins: My Lords, that was one of the more convincing arguments put forward by the Minister. Incidentally, I noticed that she did not refer to some of the other benefits--for example, income support--where the capital allowance figure must be re-examined against the background of WFTC. The amount of income generated by such capital is a pittance and causes serious problems. I know that well from years of constituency experience. However, I understand the arguments made. No doubt we shall return to incapacity benefit in the near future during debates on the other Bill. The figures she has given us today are interesting in a number of respects and, subject to what I have said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Astor of Hever moved Amendment No. 5:

After Clause 2, insert the following new clause--


(" . Regulations made by the Board under section 2(1)(c) shall provide that where a couple is entitled to a tax credit, in the case of a dispute between the parties, the credit shall be paid to the mother.")

The noble Lord said: My Lords, I beg to move Amendment No. 5. We shall not move Amendment No. 6, although the House has chosen not to place a duty on the Government to write on to the face of the Bill that the mother alone, if she fears domestic violence, should received the tax credits. However, it is important that there is protection for the mother when there is a dispute between the couple. There should be an assumption that the tax credit is paid to the mother. Academic research has found that money paid directly to the mother is more likely to meet family needs, while men tend to use some of that income as spending money.

We recognise that that was what the Minister intended when she spoke to Amendment No. 6 on Report. However, in the case of a dispute between the parties, we would like to see special protection on the face of the Bill for this vulnerable group. I beg to move.

6.30 p.m.

Earl Russell: My Lords, I understand that there are seriously good intentions behind this amendment. However, I have some problems with the drafting. We have been arguing, and I understand that it is the

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Government's position, that where there is a dispute between two parents, the working families' tax credit should be paid to the carer. That is a rather different way of distinguishing between two parents from the way used in the amendment. I am perfectly happy with distinguishing between two parents in terms of what they do, but distinguishing between them in terms of their gender causes me problems.

We are subject to the European Convention on Human Rights in our domestic law as well as in our more general legal relations. To distinguish simply in terms of gender will cause us problems. Inevitably, we shall see more cases where the care of the child does not rest with the woman. Already 9 per cent of single parents are male and they are too easily forgotten, but they are entitled to exactly the same rights.

A situation that insists that the woman should receive the tax credit, even if she does not have the care of the child, is unfortunate in practice and unequal in its effect. Will the Minister take advice on whether that will be convention compatible? I would be interested to know the result of that advice.

Lord Swinfen: My Lords, I rise to support the amendment. However, I understand the points raised by the noble Earl, Lord Russell. As there is no time to redraft anything in this House, perhaps the Minister should accept the amendment today, allow her officials to look at it and leave it for the other place to improve it or to throw it out. I suggest that they improve it.

Baroness Hollis of Heigham: My Lords, the speech of the noble Lord, Lord Swinfen, surprised me. I return to the point raised by the noble Earl, Lord Russell. There is clearly a problem in defining someone not by what they do but by their gender role. Time and again, we have said that, with three-quarters of married women now working, we should not automatically assume that the father is the primary earner and the mother is the primary carer. That may be the case, but increasingly there are all sorts of other arrangements. Fragmented families may reform themselves so that the mother in the family, who is the primary carer, is not necessarily the biological mother of the children. That produces complications for such amendments.

I accept, as I believe the House will--I think the noble Lord, Lord Swinfen, also accepted this--that the points made by the noble Earl are entirely valid. There is another reason. I am happy to reiterate the commitment that the forms will be amended to reflect the disputes procedure. Following the queries from the noble Lord, Lord Goodhart, the disputes will be explicitly covered on the face of the regulations.

The Government entirely accept the substance of what the noble Lord is asking for, as amended by the framework of the noble Lord, Lord Goodhart. The amendment has all sorts of flaws, as indicated by the

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noble Earl, Lord Russell, and others. The Government have already given a commitment as to the substance of what the amendment is trying to achieve.

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