Select Committee on Social Security First Report


APPENDIX 1

Memorandum submitted by Professor Ruth Lister (TAB 61)

SUMMARY

  (i) Drawing on recent research, supported by the Joseph Rowntree Foundation, two operational recommendations are made concerning the payment of Working Family Tax Credit in one-earner couples. These are that:

    —  payment to the caring parent should be presented as the default position in such couples;

    —  where payment is made through the pay packet, it should be separately identifiable and, if practical, the Inland Revenue should inform the caring parent of the amount.

  These measures are essential if the payment is to be safeguarded as money earmarked for meeting the needs of children in the family and if the Chancellor's admirable Budget objective of putting women and children first is to be achieved.

  (ii) The research also indicates the importance of sensitivity in operating the extension of the New Deal to the partners of unemployed claimants.

INTRODUCTION

  1. This brief memorandum addresses two practical issues arising from measures announced in the 1998 Budget, drawing on recent research conducted for the Joseph Rowntree Foundation (JRF):[1]

    —  the provision of choice as to payment method for one-earner couples claiming the working families tax credit (WFTC);

    —  the extension of the New Deal to the partners of job-seekers allowance (JSA) claimants.

  These are both welcome developments but their effectiveness will depend very much on how they are operationalised.

WORKING FAMILIES TAX CREDIT

  2. The JRF study demonstrated the continued importance of the issue of the distribution of resources within the family. It confirmed the findings of earlier research that the best way to ensure that household income is allocated to children is to put it in the hands of mothers. When men controlled family income they were more likely to retain a proportion of it as personal spending money for themselves. This was especially true in relation to their wages which were seen by both partners as "his" to allocate. Wages conferred on men (but not on women) an entitlement to personal expenditure. In almost two thirds of families, men exercised this entitlement to the detriment of the family as a whole. Women, on the other hand, were more likely to "go without" in order to prioritise their children's needs.

  3. Women felt that replacing family credit with a payment through the pay packet would risk diminishing their access to a vital weekly budgeting tool. They were adamant that income for children should be paid directly to mothers. The importance of weekly payments was also emphasised in some cases. In inegalitarian households, where the father's wage is not distributed fairly, the loss of family credit could materially disadvantage children.[2]

  4. In its Third Report, the Committee recommended that "families be given the choice to receive Working Family Tax Credit either in the wage packet or by cheque or bank transfer to the principal caregiver if they so wish and at the same frequency of payment as that available under Family Credit" (paragraph 6). It also, in its conclusions, expressed "concerns about the transfer of income from women to men which might be a consequence of the move to paying Working Family Tax Credit through the wage packet" (paragraph 22).

  5. The Government's acknowledgement of this issue and its proposal to offer a choice of payment method to one-earner couples is therefore welcome. The key issue now is whether choice can be presented in such a way as to prevent such a transfer of income from women to men, which could undermine the Chancellor's admirable goal of putting women and children first.

  6. The JRF study suggests that choice will not, of itself, necessarily solve the "purse to wallet" problem. This is not just a problem of where the couples cannot agree on the claim form; in such instances, the Government has indicated that "the present presumption is that, where the couple disagree about which of them is to receive the credit, it would normally be paid to the partner who mainly cared for the children".[3] Important as this is, it will address only the tip of the iceberg, as it is probably unlikely that many couples would want to reveal a dispute of this kind to officials. The bigger problem is, in fact, where there is not a dispute as such because the woman does not even feel able to stake a claim for the credit to be paid to her.

  7. The power relations associated with women's lack of an independent income mean that, in inegalitarian families, mothers are unlikely to be able to express a preference let alone exercise the choice to receive the WFTC payment. Moreover, it is not only in extreme cases of an imbalance of power between partners that women are at a disadvantage. In "male breadwinner" couples, women are dependent upon their partners' goodwill in accessing sufficient money to care for their families. There may be an initial presumption among eligible families that the WFTC should go to the father as the "breadwinner". As one woman commented: "If you're getting family credit and it's the man that's working I suppose some men would think, I'm earning it, it's my money. When you get family credit now, it goes to the woman even if it's the man that's working, so at least the woman knows she's got something there each week rather than having to ask her husband for it."

  8. A few of the men interviewed had initially expressed minor surprise or even irritation that family credit, based on their wages, was paid to their partners. Nevertheless, as a result of this method of payment, they saw the logic of what came to be seen as money for collective family needs, typically spent on children, being paid to the mother. If the social security system itself channels payment to the mother, this seems to act as a legitimation of payment to her for both partners.

  9. It is therefore essential that payment to the mother is not presented as a reduction in the father's take-home pay. For instance, in questioning Mr Martin Taylor, a member of the Committee presented the option of choice in the following way:

    Why could not the Inland Revenue offer that choice and say: "Look, normally we would expect to pay this through the pay packet but because we are sensitive to this issue about getting money to children, we are offering the family, perhaps the mother in particular, an option as to whether it can be paid as a credit into her post office (sic) or through the post office or whatever", HC 423 Q355.

  10. Unfortunately, by presenting payment through the pay packet as the norm, this approach could undermine women's ability to exercise the choice to receive the payment. Instead, both publicity about the WFTC and the actual claim form should legitimate payment to the mother as the default position in male single- earner families. The current claim form makes clear that the woman is the claimant and that the choice as to how payment is made (i.e. into a bank or building society account or through the post office) is hers.[4] It should be possible to design the form in such a way as to provide an additional section for one-earner couples which states that in such couples "the WFTC will normally be paid to the partner at home in recognition of their responsibility for meeting the everyday needs of the children. But that if both partners would prefer for payment to be made through the earners' pay packet, then tick here".

  11. It is recognised that the Government might consider that this weakens the WFTC's role in promoting work incentives. However, if it serious about the credit's other objectives of tackling child poverty and strengthening the family, then it will do all that it can to ensure that the money gets into the hands of the person responsible for meeting the children's everyday needs.

  12. Where the WFTC is paid through the pay packet, it is very important that it is separately identifiable in the earner's pay slip. If practical, the Inland Revenue should also notify the carer at home of the amount of the credit. This would help to identify the payment as separate from the wage and as money that is earmarked primarily for the children and the family's collective needs and would strengthen the woman's hand in gaining access to the money. As noted above, women as well as men in the JRF study tended to accord ownership and control of the male wage to the male wage-earner.

  13. Notification to the mother would also mean that she had the necessary information to inform the Inland Revenue should the couple separate. Otherwise, it is quite possible that the father could continue to receive the WFTC when he was no longer eligible.

NEW DEAL FOR THE PARTNERS OF JSA CLAIMANTS

  14. The Budget proposed that in childless couples, under 25-year-old partners of unemployed claimants should be required to participate in the New Deal. Older partners would be offered a variant of the New Deal for lone parents, through a number of pilot projects.[5] The JRF study throws some light on how this opportunity might be received in couples with children.

  15. It showed how the benefits systems currently discourages the partners of unemployed people from seeking work. In particular, it found that rules for claiming Jobseeker's Allowance (JSA) reinforced the work patterns of those couples who subscribed to a traditional male breadwinner model. The stringently enforced "actively seeking work" requirements diminished the couples' ability to respond to changing child-care needs and employment opportunities. Where couples wanted to exploit such opportunities for whichever partner had the best prospect of success, sharing child-care put them in a very difficult position. One JSA claimant, for example, who sometimes looked after his child during the day to allow his wife to promote her embryonic business, had been warned about contravening the rules. These rules, which require one partner to be the full time job-seeker, will need to be amended.

  16. Over a third of couples interviewed were willing to share breadwinning responsibilities and such couples might be expected to respond positively to the proposals to open up the New Deal to the partners of unemployed claimants. Even the larger group, who continued to subscribe to a more traditional male breadwinner model, also showed signs that they were willing to adapt to new kinds of employment opportunities. But sensitivity will be needed in bringing about change in the face of some women's, as well as men's, personal investment in more traditional work patterns. This has important implications for how the partners' New Deal is presented to both claimants and their partners. Training of officials could usefully include awareness of gender and, in the case of some minority ethnic groups, cultural issues.

  17. In the longer term, as Martin Taylor observed, "the extension of availability requirements to both partners may strengthen the case for separate benefit payments".[6] This raises difficult issues of social security policy that the Committee might wish to explore at some future date.

June 1998


1   J Goode, C Callender, R Lister (1998), Purse or Wallet? Gender Inequalities and Income Distribution within Families on Benefit, Policy Studies Institute. This memorandum incorporates comments from Jackie Goode and Claire Callender. Back

2   Another possible danger raised by a number of commentators, but not explored in the study, is that payment through the man's pay-packet could lead to pressure on a female partner not to take paid work. Back

3   Written answer by Dawn Primarolo MP, House of Commons Hansard, 31 March 1998, col. 452. Back

4   According to the Family Credit Helpline, the only circumstances in which family credit is paid to the man (other than in cases of "mental incapacity") is if the marriage breaks up, he gets custody of the children and becomes the claimant in his own right as a lone parent. In couples, the payment is always to the woman. She can authorise payment into her partner's account or can authorise him to cash the book (by countersigning it) but she cannot "sign the book over to him" and she remains the official recipient. Back

5   This means that they will not be provided with a training or education option which could be of particular value to women wanting to return to the labour market. Back

6   M Taylor (1998) Work Incentives, HM Treasury. Back


 
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Prepared 2 December 1998