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Session 2005 - 06 Publications on the internet Standing Committee Debates |
Draft Guardian’s Allowance Up-rating Order 2006 |
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Column Number: 1 Third Standing Committee on Delegated LegislationThe Committee consisted of the following Members: Chairman: †Mr. Roger Gale †Cable, Dr. Vincent (Twickenham) (LD)†Cooper, Rosie (West Lancashire) (Lab) †Crausby, Mr. David (Bolton, North-East) (Lab) †Francois, Mr. Mark (Rayleigh) (Con) †Gray, Mr. James (North Wiltshire) (Con) Jack, Mr. Michael (Fylde) (Con) †Jones, Helen (Warrington, North) (Lab) Laws, Mr. David (Yeovil) (LD) Malins, Mr. Humfrey (Woking) (Con) †Primarolo, Dawn (Paymaster General) Reed, Mr. Andy (Loughborough) (Lab/Co-op) Selous, Andrew (South-West Bedfordshire) (Con) †Smith, John (Vale of Glamorgan) (Lab) †Spellar, Mr. John (Warley) (Lab) †Tami, Mark (Alyn and Deeside) (Lab) †Watson, Mr. Tom (Lord Commissioner of Her Majesty’s Treasury) †Wright, Mr. Iain (Hartlepool) (Lab) Glen McKee, Committee Clerk † attended the Committee Column Number: 3 Monday 27 March 2006[Mr. Roger Gale in the Chair]Draft Guardian’s Allowance Up-rating Order 20064.30 pmThe Paymaster General (Dawn Primarolo): I beg to move,
The Chairman: With this we shall consider the draft Guardian’s Allowance Up-rating (Northern Ireland) Order 2006 and the draft Child Benefit (Rates) Regulations 2006. Dawn Primarolo: Good afternoon, Mr. Gale. It is a pleasure to see you in the Chair this afternoon. I am informed that the regulations and the orders are compatible with the European convention on human rights. They will increase benefit rates in line with inflation. From 10 April 2006, child benefit will be worth £17.45 a week for the first child and £11.70 for each subsequent child. For the first child, that represents a 25 per cent. increase in real terms since 1997. The guardian’s allowance will be increased to £12.50 a week. The draft Child Benefit (Rates) Regulations replace and consolidate the Child Benefit and Social Security (Fixing and Adjustment of Rates) Regulations 1976. Child benefit benefits almost all families and has a vital role in the Government’s commitment to eradicating poverty. I commend the instruments to the Committee. 4.31 pmMr. Mark Francois (Rayleigh) (Con): It is a pleasure to serve under your chairmanship, Mr. Gale. I hope to remain strictly in order. It is a pleasure to be opposite the Paymaster General once again. Our Monday afternoon meetings are becoming a regular entry in our respective diaries. Indeed, the right hon. Lady will recall that we had a lively debate last Monday on a statutory instrument on the matter of tax credits. Although the matters that we are dealing with this afternoon are important, I suspect that our temperature this afternoon will not be quite the same as it was last week. I place that on record early in our proceedings. We frequently hear Liberal Democrat Members talking about child benefit and children, and it would have been good if they had taken the trouble to join us this afternoon in order to participate in our deliberations. All too often, unfortunately, they do not bother to turn up to debate secondary legislation. I am
I turn to the meat of our debate, and start with guardian’s allowance orders for Great Britain and for Northern Ireland. People receive the allowance for bringing up a child because both of the child’s parents have died or because one has died and the other cannot be traced, is serving a prison sentence in certain circumstances or has been detained by the courts in a mental hospital. In 2005–06, the current year, the allowance is worth £12.20 a week for each qualifying child. The orders will increase that in line with the retail prices index to £12.50 a week, in accordance with an existing statutory requirement. The explanatory notes state that the cost of the provision is “negligible”. The Paymaster General once kindly paid me the compliment of saying that I do my homework. In order not to disappoint her, I took the trouble to check what “negligible” means. A helpful note from the Library says that the total cost of the guardian’s allowance was about £1.6 million in 2004–05. That is much less than the cost of uprating child benefit, to which I shall turn in a moment. As the Committee might expect, we do not object to the uprating of the guardian’s allowance in line with inflation; it is a relatively modest benefit, although it is important to those who receive it. A rough calculation suggests that it is paid to fewer than 3,000 people a year in the United Kingdom. We therefore have no intrinsic problem with uprating it in line with RPI, which would be about 2.7 per cent. for 2006–07. The Child Benefit (Rates) Regulations 2006 are a much larger provision, at least in financial terms. Child benefit is a tax-free, non-contributory, non-means-tested benefit, which is paid to families to help them with the cost of raising children. It is paid for each child or qualifying young person. For a first child, the current rate is £17 a week; for subsequent children, it is £11.40. There is also a separate, higher rate of £17.55, which is paid to lone parents in certain circumstances. However, it has been frozen since 2000, and I shall return to that in a moment, because I have a question for the Paymaster General. The regulations will increase the rates for first and subsequent children by RPI, which, as I said, is about 2.7 per cent. [Interruption.] Ah, the Liberal Democrats have joined us; it is very kind of the hon. Member for Twickenham (Dr. Cable) to turn up. For 2006–07, the payments will be £17.40 and £11.70 respectively, as the Paymaster General said. The higher rate remains frozen at £17.55, which is now only 15p above the increased rate for the first child. In addition, the regulations act as something of a consolidation measure, as the explanatory memorandum points out. Given that we are consolidating, it is important to put on the record what the Government are doing. The explanatory memorandum states:
Column Number: 5 This new instrument will apply to the whole United Kingdom, unlike the two separate instruments that it replaces, so, in a sense, it is a simplification measure. The cost is £257 million, which is much greater than the cost of the guardian’s allowance—indeed, at just over a quarter of a billion pounds in a full year, it is no small beer. Given all those points, I have a few questions about how the new regulations will work in practice. I also want to raise an operational issue, which Citizens Advice brought to my attention. Indeed, I particularly want to highlight it because child benefit is now administered by Her Majesty’s Revenue and Customs. Before I do so, however, and in the interests of transparency, I should declare an interest. I am the president of the Friends of Rayleigh Citizens Advice Bureau, which does very worthwhile work in raising charitable funds for the upkeep of the two local bureaux in Rayleigh and Rochford. In these days, is important to record our interests accurately, and I am proud to be the group’s president. Let me turn now to my specific questions on child benefit. The so-called higher rate, which is payable to lone parents in certain circumstances, is just 15p short of the new total rate for the first child. By way of background, let me say that the higher rate apparently stems from the old one-parent benefit, which the Callaghan Government introduced back in 1977—not that long after the Paymaster General was born. It was abolished for new claimants in 1998 and has been frozen since 2000. What are the Government’s plans for its continuance, given that the rate for the first child is likely to surpass it in 2007–08 if, as we might reasonably expect, a similar uprating in line with RPI takes place next year? That is a legitimate question given that we are consolidating, and I hope that the Paymaster General has an answer for us. On the administration of the child benefit system, I have, as I said, received representations from the policy section of Citizens Advice. I am sure that all members of the Committee will concede that Citizens Advice has considerable experience in dealing with the administration of child benefit on behalf of people who have come to it with queries. In essence, it points out that there are particular difficulties where responsibility for children is switched or shared between parents, such as in circumstances of family break-up, which, as we know, are, unfortunately, all too frequent in this day and age. The policy section forwarded an e-mail to us on the subject, at the end of last week, and I think that it is self-explanatory, so with your forbearance, Mr. Gale, I wonder if I may read the key paragraph for the attention of the Paymaster General, as it summarises the problem quite well:
Column Number: 6 care for their children, often having to give up work, and without financial support. Clearly it is necessary for the Child Benefit Office to establish clearly which parent has continuing responsibility before making a switch of payment, but our bureaux often report considerable delays to the process, because an estranged parent is asked to agree to the transfer, and through administrative delays. Should you have any opportunity to raise questions about this matter we would be grateful.” I hope that I have done my duty by the CAB this afternoon, having declared my interest in the matter. I can recall some examples of such problems from my own casework. I believe that such things can also affect Child Support Agency matters; assessments for maintenance are sometimes determined on the basis of which parent is in receipt of child benefit. I should be grateful if the Minister commented on that matter, at least with reference to tax credits, and, if possible, with reference to the CSA as well. However, it is a fairly specific inquiry so I shall understand if she wants to make a preliminary comment now and follow it up by writing to me. It can be very frustrating for the parents who are caught in the trap that I have outlined. The two measures uprating guardians’ allowance in line with the RPI for 2006–07 are non-controversial, and we support them. We shall not oppose the third order, consolidating child benefit regulations and uprating the two main categories of the benefit in line with the RPI. However, I have this afternoon raised several questions with the Minister about the likely future administration of child benefit, and I should be grateful if she would do her best to deal with those. The Chairman: Before I call the hon. Member for Twickenham, I should mention that Mr. Speaker has deprecated the fact that hon. Members turn up after the opening speeches. It is incumbent on all members of Committees to be present for the ministerial statement if they want to contribute to the debate. 4.43 pmDr. Vincent Cable (Twickenham) (LD): I apologise for turning up late, Mr. Gale. I was perhaps excessively excited by the Foreign Secretary’s statement on Europe, and overstayed my time in the Chamber, but I accept your criticism and apologise to you and the Minister. I have a few questions for the Minister about the future of the child benefit system, and particularly its structure. As I understand matters, the process of uprating has been interrupted. There were several years in which the allowance for the second, third and subsequent child was not fully indexed, as a consequence of which the real benefit of child benefit for the second and subsequent children is less than it was in the Thatcher era of the mid-1980s. That is not true for the first child but it is for the others. Will the Minister confirm that? A more general question arises from that point, about why there is a stepped structure for child benefit. I think it is something like £17, then £11; the Minister will be able to confirm it. What is the rationale for that?
My final comment partially echoes what the Conservative spokesman, the hon. Member for Rayleigh (Mr. Francois), said. In many ways, the benefit is rather good, and I understand that take-up rates are high. As such, it contributes substantially to the Government’s child poverty reduction objectives. However, there seems be some uncertainty about its long-term future. Given that there is a great deal of confusion about the distinction between child tax credit and child benefit, is it the Government’s long-term intention to integrate the two systems? Do they see child benefit as having an existence of its own and if so, what is it? 4.46 pmMr. James Gray (North Wiltshire) (Con): I rise briefly because, unlike my hon. Friend the Member for Rayleigh, who spoke so convincingly and in some detail, I did not, sadly, have a significant amount of time to scrutinise the provisions in advance. Therefore, I arrived a quarter of an hour or so before the Committee met to read them and a number of questions occurred to me to ask the Minister, although they may be obvious questions that she will find easy to answer. I hope that she will forgive me if I am being excessively diligent in my scrutiny, but I would not like to leave the Committee Room without understanding some of the points that have eluded me. Before I do that, I should like to agree with the hon. Member for Twickenham. I have always had a slight doubt in the back of mind as to why we should have child benefit at all in these days of child tax credit. I am not sure that we entirely approve of the child tax credit; the principle is a good one, but the Government have not executed it particularly well. The principle of a means-tested benefit for children seems reasonable, but I do not know why we should continue with a non-means-tested benefit such as child benefit. It is odd that a multi-millionaire should be able to claim child benefit at its new uprated level. The point about child benefit helping the
Helen Jones (Warrington, North) (Lab): For the benefit of the Committee, perhaps the hon. Gentleman could elaborate on his statement. Is he speaking in a personal capacity or is it now his party’s policy to withdraw child benefit from all those who do not qualify for child tax credit? Mr. Gray: The hon. Lady has been a Back Bencher for a long time; I have been one for only a short time now, but I am rather enjoying the freedom to examine such statutory instruments. Of course I do not speak for my party in any shape, size or form. I merely ask a question in the pleasant surroundings of this Committee. My wife, for example, collects her child benefit and she likes it, because it is in cash. I merely ask why a Member of Parliament, who is reasonably well paid, should necessarily draw such a benefit. Might the money not be better targeted at the truly poor? That is the point that sprang to mind from what the hon. Member for Twickenham said. There are a couple of points in the detailed provisions on which the Paymaster General might like to enlighten us. Again, they are probably easily answered, but I do not quite follow them. First, the explanatory notes to the Child Benefit (Rates) Regulations 2006 indicate that a new class of person is introduced under regulation 2(2) in respect of whom child benefit may be claimed and paid from 10 April 2006. However, unless I am being very dim, I have not spotted any definition of that new class of person, so perhaps the right hon. Lady could tell us what it is. I was also a little puzzled by the fact that the word “his” is used throughout those regulations. There is no provision giving definitions, as there would normally be in a statutory instrument, to say that the word “his” equally well means “hers”. In this case the provisions say “his” throughout. Over the years, surely the generality has been that child benefit is paid to the mother; not always, of course, but by and large. Therefore, if the word “his” is intended to refer to both his and hers, might it not be fairer to use the word “hers” instead? That would seem sensible. Equally, in regulation 2(2)(a)(iii)—and elsewhere, I think—reference is made to polygamous marriages. I am sure that there is a very good reason for that; I suspect that people who have entered into polygamous marriages overseas and then come to this country are allowed, even under our laws, to remain in polygamous marriages, even though they could not, of course, enter into such a marriage in this country. However, am I not right in thinking that, in most religions, the only kind of polygamous marriage involves one man and several women, rather than the other way round? Again, the reference to “his” in that connection seems puzzling. Perhaps the Minister would tell us what polygamous marriages she has in mind, and why the statutory instrument should need to refer to them. Column Number: 9 4.50 pmDawn Primarolo: Perhaps I may start by responding, in reverse order, to the series of questions asked by the hon. Member for North Wiltshire (Mr. Gray). He is correct in saying that we do not recognise polygamous marriage in the United Kingdom but that those who have married before coming to the United Kingdom may be in such a marriage. The provision follows the social security legislation in recognising only one wife or partner even though there may be others. That has been the practice for a long time, and the Government are simply continuing arrangements that were introduced by the previous Government. I entirely agree about the use of the word “his”. I had rather that the regulation used the word “her”; in fact, I had much rather that all legislation used the word “her”. But the parliamentary procedure—I cannot refer the hon. Gentleman to the precedents, but am happy to find them and send them—is that “his” is always to be read as “his and/or hers” and that is why the provision is worded as it is. As to the new class of person in respect of whom child benefit may be claimed, I refer the hon. Gentleman to the Child Benefit Act 2005, which was given unanimous passage through the House just before the general election. I think that the hon. Gentleman was here and was party to that. It extended the definition of the term “qualifying young person” to include two other categories. I am sure that many hon. Members have received representations at their surgeries about withdrawal of child benefit from the parents of young men and women doing A-levels, before the course has been completed, because of the trigger of the 19th birthday. That caused financial difficulty to many parents, because they depended on the child benefit, and it was illogical and unresponsive to current arrangements. The Government therefore decided, with the agreement and support of the House, that “qualifying young persons” should include people beyond their 19th birthday, until the finish of their course, if it had already been commenced. We were considering it as a matter of a few months, with 20 months as the ultimate cut-off. The issue was when the individual’s birthday fell, and when the A-level course was begun. The second category was of young people undertaking unwaged workplace training. The reason for that change was that there was a distortion in the system, driving those who might have chosen to enter recognised unwaged work-based training courses away from those courses and into other areas, even though they might have been their first choice, and more suitable. That one aspect of the definition in the 1976 legislation of a qualifying person meant that they were not included, so there was some tidying up to do. The question of poor targeting may cross over into the question that the hon. Member for Twickenham asked about the previous Administration’s freezing of child benefit and the resulting reduction in its value.
On the decision to freeze child benefit, the hon. Member for Twickenham will have to ask Conservative Members why they froze child benefit in the years that they did. As I said in my opening remarks, however, the Government have taken steps to correct that. I was also asked about the two steps—the one for the first child and the other for the second child. Again, we inherited that arrangement with the system. I was the eldest child in my family, but family allowance—the predecessor of child benefit—was not paid for the first child at that time. However, child benefit pays more for the first child, with a step change for the second and subsequent children. That is in recognition of the fact that the first child’s arrival—the hon. Gentleman alluded to the fact that one parent often gives up work—has greater financial consequences than the arrival of the other children. However, there continues to be a lot of debate and a lot of questions about whether we should have two-step rate. If the Liberals have any proposals on the issue—including on how to pay for what they have in mind—we would be happy to hear them. The take-up rate for the universal benefit is 98 per cent. However, I should tell the hon. Gentleman that the take-up rate for the child tax credit is 93 per cent. in the first year of operation for the poorest sections. I think that that answers his final question, which was about whether we intend to keep both instruments, one of which is universal and recognises the general principle of assisting families to meet the cost of bringing up their children, and the other of which is more specifically targeted at supporting child benefit, but which then takes it further to eradicate child poverty. Mr. Francois: On the debate about universal versus means-tested benefits, let me briefly quote a briefing from the Child Poverty Action Group, whose view was:
The Paymaster General mentioned the 93 per cent. take-up rate for tax credit, but child benefit does not
Dawn Primarolo: The hon. Gentleman referred to that point at the beginning of his contribution. The issues raised by the tax credit’s operation in the early months are well known, but despite all the forecasts by the hon. Gentleman and his party that take-up would be low and that people would not bother to claim again, take-up rates have been massive and have continued to increase. The policy’s twin steps are having a dramatic impact on reducing child poverty. It does not matter, therefore, what system we have; indeed, the hon. Gentleman has raised more questions about the administration of child benefit itself. The hon. Gentleman asked about lone parents. He is right that the rate was frozen, although I thought that that happened in 1998. There were no new entrants into the system, and lone parents who received that rate at the time were protected. Those payments were allowed to run on, and, in a sense, they will run out of the system by virtue of the fact that the parents’ children are growing up—the children will no longer be dependent on them, and therefore the parents will stop claiming the associated lone parent rate. However, at that time, there was a commitment that those in receipt of such payments would continue to receive them. Tax credits actually pick up and give to lone parents a far better series of supports than the previous lone parent benefit. But the measure is transitional. The hon. Member for Rayleigh asked about the difficult issue of shared care. Child benefit has always been dependent, rightly so, on identification of the parent with care. Often, when relationships break up, the child benefit system cannot adjudicate as to which of the two parents should have the majority of care and therefore receive the child benefit. That is a difficult area and, not surprisingly, it is not easily resolved. Frankly, I do not think that we could write legislation that could do that, and nor should we, because parents must recognise that whatever has happened to their relationship, they have a responsibility to their children and they must make arrangements accordingly. Afterwards, child benefit can be paid to the parent with care. Tax credit payments to families have a similar role, although it is possible for one parent to receive child benefit, and the other to claim tax credits. That would be a matter for agreement between them. Like the hon. Member for Rayleigh, I get case work, and I hear from citizens advice bureaux about the difficulties that result when two parents cannot agree, but I do not think that the Government should have a role in such circumstances. They set down the rules: under child benefit legislation, it is a matter of fact who has the majority of care, and child benefit follows. |
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