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Baroness Amos: My Lords, I hesitate to interrupt the noble Baroness but she has been speaking for eight minutes. That means that the Minister will not have sufficient time to reply.

Baroness Buscombe: I apologise, my Lords. I shall bring my speech to a close.

There is no doubt that reforms to the job market implemented when we were in government mean that the British economy has a wealth of opportunities for part-time jobs which help single parents in fulfilling their role as carers. We need practical, workable measures, not bureaucracy, interviews and more initiatives and programmes that sound good but cost the taxpayer more and which, more importantly, do not deliver real help to lone parent families.

8.23 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, first, as other noble Lords have done, I should like to thank my noble friend Lady Ashton for so eloquently introducing the debate. Both she and my noble friend Lady Crawley have emphasised that the poor in this country are children and, indeed, that one-third of all children are poor.

The number of lone parents has grown--up 50 per cent in 10 years--so that now one family in four is headed by a lone parent. They are bringing up 3 million children. One million of those lone parents are on income support. They are poor. Half of all lone parents are in the bottom income quintile whereas only one-fifth of couples are. Even more importantly, lone parents and their children are also more likely to be persistently poor than other people, remaining in the bottom quintile for years--and, if moving up, falling back again within a couple of years. It is this persistent poverty that scars.

There are many children in low income couple families, but their low income is less likely to be persistent. It is the children of lone parents, where the child's family is not only workless but fractured, that

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the poverty scars. We know that their poverty is accompanied by poor health, poor education, poor life chances. That is the problem that the Government's cross-ministry Sure Start programme seeks to tackle.

So how are we seeking to help lone parents and their children? The Government do not underestimate the need for direct financial support. The combined effect of the financial measures introduced in the Budgets of 1998 and 1999 will raise the incomes of the poorest fifth of families with children by £1,000 a year--that is £1,000 in two years; some £6 billion extra spent on children by 2001. That is a significant achievement by any standards. For example, for children under 11 in workless families the value of their income support has risen in two years by 50 per cent.

None the less, as your Lordships have acknowledged, we believe that the only reliable path out of poverty is for the parent to move into work. Lone parents share that culture. They tell us that they want to work, and most of them want to work now or in the near future. As your Lordships have recognised, it is harder for them than if they were in a couple. Married women are far more likely to work because they have the childcare within their family. They are more likely to be older and better educated--51 per cent of all lone parents have no educational qualifications at all--and they can share childcare with their family.

That is why your Lordships were right to dwell on the New Deal, which is the second part of our strategy. Financial support, yes, but also help into work. I am grateful for the remarks made by my noble friends on this matter. We are spending £190 million on the programme and personal advisers, who support lone parents through training, job search, childcare arrangements, better-buy calculations and benefit roll-on.

This programme is already a success, even though it is in its early days. More than 120,000 lone parents have voluntarily joined the New Deal; that represents 90 per cent of those who came to an interview. Some 41,000 of them have found jobs and more than 14,000 are in training since the programme began in July 1997. For many it has turned their lives around.

Both the noble Earl, Lord Russell, and the noble Baroness, Lady Buscombe, criticised the New Deal. I wonder whether they have read the three evaluation reports. Have they read, for example, the calculation of the cost effectiveness of the programme, which shows that the average cost for a lone parent on the New Deal is £640 and that 20 per cent of them have made a clear gain? The lone parents themselves say that it is 28 per cent, but the researchers have taken 20 per cent as the figure. At 23 per cent--which is lower than the figures given by lone parents--that programme breaks even.

If there is no substitution--and the report suggests that there is no evidence of substitution--that programme makes a profit for the community and is a rich resource for the lone parents.

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Earl Russell: My Lords, I rise only to say that the report--

Baroness Hollis of Heigham: My Lords, I do not wish to give way. I have only 12 minutes to speak and I am trying to answer many of the points made by noble Lords. I very happy to take up points in correspondence with the noble Earl.

If there is no substitution, unless there is additionally a wage premium--the research shows that one of 6 per cent almost certainly exists--then again that programme is in profit. It is already clear that the total gain of people coming off benefit is exceeding the cost of the programme when these other factors, substitution and wage premium, are put into effect. If we strip out the differing labour markets of the comparator areas, it is already clear that the New Deal is having a significant and valuable effect. It is early days but the programme is a success for those who are reaching it. Given those assumptions, it is already breaking even.

The problem--a legitimate problem--lies with those lone parents we are not reaching--almost three-quarters--who, despite letters, are not coming to a New Deal interview. That is the problem. They are often those who have been lone parents for many years. Half of those tell us that they would have come on to the New Deal with further encouragement. It is clear that we must work with that group. None the less, we face a problem in regard to those parents who inherit many years off work, who may have poor health, whose children may have poor health, who have low skills and qualifications, and who live on run-down estates. It will take time to build up their skills and confidence, but we must reach them--and we are determined to do so.

That is why, through the new ONE pilot schemes, we seek to interview all lone parents when they first come on to benefit so that they do not join the stock of those lone parents who have remained socially isolated and beyond our reach. Following the interview, they are not, of course, required to go into work or take training if they do not wish to. But I believe that a lone parent is the best person to judge what is in the best interests of herself and her child. I am sure, also, that that lone parent needs to be empowered to make that judgment. If she does not know about the options, which will be explained to her in the setting of a supportive ONE interview, she cannot take up the opportunities. If she does not know the choices, she cannot choose.

So I repeat: the New Deal is already a success. It is turning around the lives not just of one generation, but of two. But we need to ensure that when people become lone parents they are fully aware of all the opportunities available to them so that, when they judge that the time is right, they too will be able to make that springboard leap into work which alone will guarantee them relative prosperity.

But we need to do more than provide financial support; we need to offer more than the New Deal. We need also to adapt the benefits system in order to

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ensure that work pays. Understandably, lone parents will not take jobs that do not pay. The new WFTC and its generous childcare tax allowance will improve incentives to work. As a result, the financial benefit for someone with two children moving into work and receiving a typical entry wage has increased from £30 a week to a £54 a week gain. Half of those claiming WFTC are lone parents; half the rest are in families where women are the main wage earner. WFTC is a woman worker's benefit. It will raise women's wages and will help those working in traditionally female, low-paid sectors such as catering and retailing.

But, in turn, the WFTC must be underpinned by a minimum wage, so that WFTC does not subsidise the exploitative employer. That point has not been mentioned in the debate. Beneficiaries of the minimum wage too are women, young people, part-time and casual workers and, above all, lone parents. One effect which again was not mentioned during the debate and is little noticed, but in which I take a great deal of pleasure, is that the minimum wage takes a further one-quarter of a million women over the lower earnings limit, allowing them to build up contributory benefits, including incapacity benefit and stakeholder pensions, in their own right.

Research suggests that, put together, the lower rate of tax, the national insurance changes, the minimum wage, and the WFTC mean that a quarter of a million extra people will enter the labour market and relative prosperity; and that, overwhelmingly, the beneficiaries will be women, among them lone parents.

If the perception of low and insecure wages has been one major barrier to re-entering the labour market, the cost and availability of decent childcare has been a second. It was mentioned by several speakers. The more generous childcare credit, which unlike the arrangements under family credit actually aids the poorest, will fund up to £70 of a £100 weekly childcare bill for one child, and up to £105 of £150 for two or more. And we are improving the supply of childcare: we are investing nearly £500 million in England alone.

A number of my noble friends, including my noble friend Lady Crawley, asked whether there should be a role for grandparents. We know that informal care by grandparents is the childcare choice of many lone parents. It is obviously an issue on which the Government must reflect.

The third problem that lone parents tell us they encounter is surviving the transition from income support to work, surviving that first month without money--and hence the housing benefit roll-on and the income support roll-on. I am glad that those have been welcomed by my noble friends.

A final problem, mentioned by my noble friends Lord Brett and Lady Kennedy, has been the question of support for lone parents when they enter further and higher education. Those who enter HE come within the student support system, but they remain eligible for income support and housing benefit if their income permits them to claim it. As for lone parents entering FE, I am sure that my noble friend will be aware that the ring-fenced budget for childcare access funds will

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be increased to £25 million in the year 2001--nearly three times the amount in 1999-2000. That will help some 37,000 students, particularly those on low incomes and including, above all, lone parents.

If one reason that a child is poor is because her parent with care is not in work, the other reason is that the non-resident parent is failing to support her. Children of lone parents are doubly disadvantaged. Too often, they are in a workless family; invariably they are in a fractured family. So I am grateful for the kind words of my noble friend Lord Warner welcoming our child support measures.

We inherited a CSA in which 70 per cent of mothers and 70 per cent of fathers failed to co-operate with the CSA and, as a result, some 1 million children were denied the maintenance that they should have received. We hope that as the result of our reforms he will co-operate under a simple system and that she will help us, because she will stand to gain £5 if he is on benefit, £10 a week if he is in work and she is on benefit; and if she is on working families' tax credit, the lone parent will keep every penny of the maintenance that she will receive. Her children will not only gain from the extra cash; they will see their father contributing to their keep and will, I hope, learn how decent dads behave.

Finally, we shall seek to introduce the integrated child credit: a sort of basic citizen's income for children which will move seamlessly from out-of-work benefits to in-work provision, thus ensuring the well-being of children.

We value all families, but we know that lone parent families are not only poor, but persistently poor and find it very hard to spring the trap of that poverty. That is why, together, our financial support for those lone parents who remain on income support, our New Deal, the minimum wage, the WFTC, the national childcare strategy, and our work for supporting families and children have shown such significant progress over the past two to three years. We have more to do, but we are getting there. If we succeed, we shall not only springboard one generation, but two, into a secure and prosperous life.


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