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Baroness Fookes: I warmly support Amendment No. 31. Amendment No. 39 provides reasons, but giving the lone parent an absolute right to decide is very reasonable. Members of the Committee will be aware that I am not much impressed by the proposed change to the system as a whole. I have yet to be convinced that it is superior to the present system but, given that I cannot win that argument, I believe it is reasonable that single parents should be given the choice. It is not for nothing that so many outside organisations support this measure. There are very good reasons. Freedom of choice is important in itself. In this age we should give citizens as much freedom as possible to decide how they want to be paid. It is easy to under-estimate individual circumstances. Someone may find it extremely uncomfortable if his or her general circumstances are known to an employer, especially in a small firm. One can enjoy a certain anonymity in a very big firm. That is not so in a very small firm.
This is a very important matter if individuals do not want their circumstances to be known or guessed at. People may not know precisely but will make all kinds of assumptions that may or may not be correct. The individual--the lone parent is often a woman--should have the right to decide without being suborned or required to act in the way the Government wish. For that reason, I support Amendment No. 31.
Baroness Turner of Camden: During the Second Reading debate I had some sympathy with the view that in the case of single parents there was an argument in relation to confidentiality, privacy and so on. Since then I have examined the matter again. I wonder whether the argument on confidentiality is slightly exaggerated. In the case of family credit, I understand, the majority of employers have some involvement in and knowledge of their employees' claims. As the noble Lord, Lord Goodhart, indicated, the employer will be aware of the amount paid and nothing else. The noble Lord accepts that it will be very difficult for employers to work out details of their employees' personal circumstances from the single amount involved.
Lord Goodhart: I apologise for interrupting. There is one exception to the statement that the employer will simply know the amount and nothing else. The employer will inevitably know that the claimant is responsible for the maintenance of a child.
Lord Skelmersdale: I am interested to hear that the noble Baroness is less convinced about the strength of the argument on confidentiality. I wonder whether the noble Baroness has seen the Revenue's draft earnings inquiry form TC500 (version 4 BMSD4/99) which is required to be completed when a new earner straight off unemployment is unable to send in pay slips with the tax credit application. If he has just started a new job he fills in his part of the form and gives it to the employer to fill in the rest. By definition, the point raised by the noble Lord, Lord Goodhart, comes straight to the fore. Once the employer has received this form to be filled in he knows two things: first, that the employee is applying for working families' tax credit; and, secondly, that he or she has a child.
Baroness Hollis of Heigham: I believe that my noble friend made clear that the employer would simply know that the individual was applying for a tax credit, not whether it was DPTC or WFTC. As the Committee is aware, a person can be single and without a child and be eligible for DPTC.
Lord Skelmersdale: That point is taken. Surely, however, the employer will be able to make a very good guess by means of the amount received. First, he knows that the individual is making the application and, secondly, that the individual has received it. After a few months' experience of either benefit he will be aware that the levels apply to different persons in different circumstances.
Earl Russell: Listening to the Minister's exchange with the noble Lord, Lord Skelmersdale, reminded me of my noble friend Lord Addington once saying that if a person saw him coming down the street he would never think of him as disabled. Suppose that my noble friend were female and in receipt of the working families' tax credit. It could very well lead an employer to suppose that he was the parent of a child when he was not. I believe we shall find that the issue of privacy--as I am sure the Minister realises after the amount of work she has done on the CSA--has many more ramifications than any of us can possibly imagine.
Baroness Hollis of Heigham: The object of this amendment is different from that of the proposed amendments to Clause 3 which would ensure that couples had no choice in certain situations whereas they would have choice under our proposals. Here the object is to provide a group of applicants with a new choice.
I do not repeat all of the issues raised at Second Reading, the first day of Committee stage and the previous debate, but I continue to emphasise that this runs contrary to one of the drivers of the policy behind tax credits, which is payment through the wage packet to reinforce the link between tax credits and work. I give an analogy with which the noble Earl, Lord Russell, will be comfortable. As someone who has written the occasional book, one of the things that most irritates me is that reviewers criticise me at great length for not having written a different book. I believe that to be an unfair review. If reviewers want a different book they should write it themselves and not expect me to do it.
This Bill is about tax credits. Every amendment appears to suggest that what are needed are family credits, not tax credits. The Liberal Democrats want to keep the same amount of money through family credit. We are not sure whether the Tories believe in that, given the fact that when we first introduced family credit they wanted it to be paid through the pay packet but were overturned by the Federation of Small Businesses whose vocabulary they still quote this evening.
While at the same time supporting families, with this Bill we seek to encourage work incentive through a tax credit Bill. Therefore, the Government will resist any amendment which seeks to destroy that basic premise of the Bill. This is not family credit (mark II); it is the Tax Credits Bill (mark I). I ask the Committee to respect the philosophy underlying the Bill and not seek to turn it into a different Bill from that envisaged by the Government. To do so is, in effect, to make a wrecking amendment. We have another here today.
The policy underlying the Bill is to provide families with extra help through the wage packet if they are employed, and to give families with two partners a free choice as to which of them is to receive it. But the choice for a family couple is not how the tax credit is paid. I come back to the point raised by the noble Baroness, Lady Fookes. If the person elected to receive it is in work--for the purpose of this argument we shall say it is the man--he will have no choice but to have it paid through the pay packet. The working partner (if, for example, it is the man) cannot choose to have it paid at home but only via his wages. There is no choice as to how the payment is made but only, in the situation of a couple, to whom the payment may be made.
Because the couple have that choice as to whom the payment is made, it also allows, as my noble friend Lady Turner said, the Inland Revenue to protect the position of the carer in those, I hope, rare circumstances of conflict or dispute. The noble Baroness, Lady Fookes, referred to that point on the first day of Committee. There is that protection for a woman who may be in a position of considerable vulnerability.
I repeat: couples do not have the choice to have payment made to the working partner at home. They have only the choice as to whom it is made; and the payment method then follows. If you are in work, it is paid to you through your work. It is exactly the same for lone parents as for couples. Because, by definition, in a lone-parent family there is only one adult, not two, the question as to which of the two it is paid is simply not relevant. The lone parent is not being denied a choice. She is in the same position as the working partner in a family couple when payment is chosen to be made to him. Lone parents are paid through the pay packet. As a single adult, such a lone parent does not need the default powers to pay it to her at home because, unlike in the rare but regrettable situations where there may be dispute, she does not need protection from herself.
Lone parents comprise half the current recipients of family credit. I was asked how much take-up of family credit there is by lone parents. The latest figures indicate that 79 per cent of lone parents take up family credit. They are over half the claimants of family credit and, by definition, they are employed and consequently receive wages. As I hope I have said, for this group, whether women or men, there is no purse-to-wallet argument. They receive the wages, put them in their purse or wallet, go to the shops and purchase essentials using money from their purse or wallet. For them, it is one and the same thing.
I hope that I have addressed the Committee's concern that lone parents are being denied a choice that couples have. It is not true. Couples can choose to whom the amount is paid. But if they choose the person who is in work it will be paid through the pay packet. If the person is in work, that person cannot choose to be paid at home. Exactly the same applies to lone parents. I hope that I have addressed the first argument.
The second argument relates to confidentiality. My noble friend Lady Turner dealt well with the points. Fears about breaching confidentiality are, I believe, unfounded. The lone parent may need to ask the
There were concerns--some have been aired today--that employees' circumstances could be inferred from the amount notified to the employer. That point was pressed on us by the noble Lord, Lord Skelmersdale. I can assure the Committee that because of the effect of the taper, the number of children, the possibility of a second job, and the childcare tax credit, it would be almost impossible for an employer to disentangle someone's tax credit award and have access thereby to personal information. No doubt payment through the wage packet will mean that the employer will be aware that the employee is eligible either for WFTC or DPTC, but that is the extent of his certain knowledge. He will not even know for which of those two credits the employee is applying; for example, whether the woman is entitled to DPTC by virtue of a qualifying benefit, or whether she is a lone parent with several children. The employer will not know.
Employers already have to certify half the family credit certificates. They will not necessarily know any more by handling WFTC. I think that the Committee can too easily assume that there is complete privacy with family credit and no privacy with WFTC. On the contrary, employers already handle over half the certificates as regards family credit. I believe that it is as onerous, or as little onerous, as WFTC. Employers should have no additional information for WFTC than they currently have through handling family credit forms. Family credit requires them in over half the circumstances to certify basic information about wages and hours.
One of the concerns, based on the assumption that the employer would have knowledge which he does not have, was that employers would therefore discriminate against employees who might cause them administrative hassle by claiming tax credits. An employer is unlikely to know enough about the family circumstances of a person when he takes them on to be able to make an accurate judgment. Once the credit has been claimed, it will become clear that the employee is receiving it. But it is precisely to protect the employee in that situation that we have Clause 7 and Schedule 3, which we shall discuss later.
In fact--I am sure it is a consequence unintended by the noble Lord, Lord Goodhart, but I ask him to reflect on it--by giving lone parents a choice of payment method which is denied to couples, the amendment opens up a new opportunity for employers wishing to avoid their responsibilities under tax credit legislation to pressure those employees into getting the tax credit paid directly to them at the next renewal whether or not they want that.
This amendment cannot be reconciled with the amendment that the Committee has already passed. In either case, I believe that it is a wrecking amendment. It seeks to turn a Tax Credits Bill for more than half of those who currently claim family credit into a family credit stage two Bill. It leaves open the opportunity for pressure by employers and for more active discrimination than we have discussed so far. For all those reasons, I hope that the Committee will reject the amendment.
Earl Russell: I have been here long enough to know that Ministers do not like amendments to their Bills. They are always tempted to say that amendments are wrecking. That temptation ought occasionally to be resisted. The Minister has argued that this is a wrecking amendment because it stops the Bill being a Tax Credits Bill as the money will not come through the pay packet. However, the Government have already breached that principle in the money which goes to a non-working partner, if that election is made. Already, the Government have allowed a direct payment from the Inland Revenue to be qualified as a tax credit.
From time to time, I have the pleasure of receiving refunds from the Inland Revenue. They have been known to come direct to me and not through my pay packet. When those refunds reach me, I do not suppose that they are social security benefits. Again, the basic principle of money coming through the Inland Revenue, through the tax system, is a more logical definition of what constitutes a tax credit than the insistence, which the Government have already breached, that it should come through the pay packet.
I have always said that Ministers recognise two categories of amendment; the wrecking and the unnecessary. I thank the Minister for conceding that the amendment is not unnecessary.
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