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Lord Inglewood moved Amendment No. 7:

Page 2, line 19, leave out from ("not") to end of line and insert ("entitled to income support.").

The noble Lord said: My Lords, in moving Amendment No. 7, I shall speak also to Amendments Nos. 8, 9, 10, 111 and 112. These amendments are a small tidying-up exercise which align the wording of the Bill with that which currently applies in the Benefits Act.

The provisions affected are intended to prevent the making of duplicate awards of JSA and income support to the same claimant, or duplicate awards of benefit to members of the same family. As your Lordships know, both JSA and income support are intended to cover the needs of the whole family, so clearly that would be inappropriate.

The current wording in the Bill does not quite achieve that, as it refers to benefit being "payable". The term "payable" implies that an award of benefit has been made and benefit is due to be paid to the claimant in a given week. In most cases, if the claimant is entitled to receive JSA or income support benefit will normally be payable. However, in a small number of circumstances, for example, if a claimant is undergoing a sanction or if the sum awarded is less than 10p, the benefit is not in fact payable. In those circumstances it would be possible for the claimant or another family member to have a new award of benefit while the first award was still open. There is a risk of confusion and overpayments where that occurs.

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By referring to entitlement that confusion is removed. However, the amendment in no way removes the choices open to the claimant and his family to choose the benefits and claiming arrangements they prefer. If a claimant wants to switch between income support and JSA he needs only to terminate one claim before the next is made. The same applies if a couple wish to swap arrangements for claiming JSA. I commend the amendments to the House. I beg to move.

Lord McCarthy: My Lords, although I consider that the concept of entitlement is somewhat hypothetical, we do not oppose the amendment.

On Question, amendment agreed to.

Clause 3 [The income-based conditions]:

Lord Inglewood moved Amendment Nos. 8 to 10:

Page 3, line 1, leave out from ("not") to end of line and insert ("entitled to income support;").
Page 3, line 2, leave out from ("family") to end of line 3 and insert ("one of whose members is entitled to income support;").
Page 3, line 4, leave out from ("family") to end of line 5 and insert ("one of whose members is entitled to an income-based jobseeker's allowance;").

On Question, amendments agreed to.

Baroness Hollis of Heigham moved Amendment No. 11:

Page 3, line 7, after ("work") insert ("provided that the remuneration exceeds the applicable amount (determined in accordance with regulations under section 4) for the claimant and his family, regardless of the hours worked").

The noble Baroness said: My Lords, I hesitated because I hoped that the Minister would move this amendment among his blockbuster.

I am sure that Amendment No. 11 will commend itself to the Minister because it keeps people in work and cuts the social security Bill—objectives which I am sure we all share. It concerns the adult dependency hours rule, which I find one of the most perverse twists of the Bill.

Let us go back a step. After six months a claimant is moved on to means-tested JSA. His partner's earnings are taken into account, as are their savings. As the benefit is income-related, some 70,000 people will lose it altogether. On this side of the House we deplore the introduction of means testing after six months rather than a year. However, at least the means-testing rules are coherent. They are income related. They are coherent until one comes to the cruel twist of the hours rule. Let me explain.

Two couples live side by side. In each family one partner earns £63 and the other partner receives contributory JSA. Neither couple has children. In one household they move on to means-tested JSA. In that first house the woman is earning £63 a week in a job, say in a shop, which pays £3.50 an hour. She works 21 hours a week. Her partner can then claim a further £21 a week in means-tested JSA after deductions. Their total income is £83.

At the house next door the woman also earns exactly the same sum, £63. However, she has a harder time because she receives only £2.50 an hour for cleaning in the shop in which the other person is an assistant. She

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therefore works 25 hours a week, not 21 hours, for the same money. It is heavy cleaning work; she is tired. But because she works more than 24 hours, he can receive nothing from JSA or income support because of the hours rule. Therefore the person who earns £63 has it set against JSA and receives an additional £20—a total income of £83, as well as access to the back to work bonus. Next door the person earns £63, receiving no JSA, and has a total income of £63. She receives £20 less than her neighbour and has no access to the back to work bonus. Why, my Lords?

JSA is not only a means tested benefit. It has to face another, in my view irrelevant, hurdle—the hours rule. If you have no children and work for 24-plus hours, you lose all entitlement to means-tested JSA irrespective of whether the pay is £20, £60 or £80. Literally, the woman in the second household cannot afford to work because we have constructed for her a marginal tax rate of over 120 per cent. She works for £63 and loses £73. The couple cannot afford to do that.

The hours rule is sensible for couples with children because it marks the point at which you come off income support and go on to family credit, whereupon your income is topped up. We have no problem with that. But where there are no children and therefore no family credit, the hours rule still applies. The consequence is that the hours rule cuts right across the income related rule to ensure that many people who are below income support level cannot be topped up. As the Government have admitted, 60,000 couples will be below income support level because they are foolish enough to continue working.

No couple can live on such an amount. What happens, my Lords? If the partner cannot reduce her hours to below 24, she will come out of work because to work will make her poorer. Therefore, instead of paying that couple £20 in addition to the £63 to top them up to the JSA level, we now pay them the JSA of £73 instead. That does not top up the earnings; it replaces them. We then make it harder for either person caught in the benefits trap ever to return to work. Are we not clever? We have penalised work; we have penalised the very low paid; and we have added to the benefit bill all at the same time. We are very clever; we should be proud of ourselves. It is all because of a redundant and unnecessary hours rule.

If JSA is to be means tested after six months, so be it. But for those without children we should not add the double hazard and double penalty of an hours rule. The provision is redundant. It is cruel, costly, cynical and short sighted. It is stupid too. I hope therefore that the Minister will accept the amendment. It will keep people in work and save us all some money. I beg to move.

Lord Skelmersdale: My Lords, on the face of it, the noble Baroness's amendment has much merit. I go along with all the arguments that she adduced for childless couples. But, unfortunately, the amendment would need some reworking because it refers to "the claimant and his family". A family is more than a couple.

Lord Swinfen: My Lords, what is the point of the hours rule? The important point relates to the income of the couple, not just to the hours worked. Regarding the

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person who works long hours at low pay, it may be the only skill that he has. He may be working extremely hard to support his family. He should not be penalised.

When he replies, can my noble friend tell us what research has been undertaken into the cost or savings of abolishing or retaining the hours rule? When drawing up the Bill, no doubt my noble friends have undertaken research to ensure that the legislation works sensibly.

Earl Russell: My Lords, it is an important amendment. The noble Baroness outlined her arguments about the effect of the Bill on couples as long ago as 1st December when she spoke on the uprating Statement. That was a remarkably able speech, as was her speech on the subject at Second Reading.

I do not know what I would have done about these points had I been a Minister. However, I know that I would have asked long ago for some fairly serious work to be done on the force of the points made and various alternative ways of meeting them.

With the Bill we have constructed an unintended consequence which may be somewhat serious. I listened to the Minister in Committee defending the hours rule. He seemed to me to be aware that he was in some difficulty. I believe that there is room for a good deal of thought on the subject.

There is room also for a good deal of thought about the effect on couples. The noble Baroness concentrated on one potentially harmful effect—getting people to give up work. However, it is not the only harmful effect of the measure. Couples are put into a situation where it is not economically sensible for them to continue to work as a couple. But there is no bar on them continuing to work separately. The structure that the Bill sets up is also an incentive to the break up of marriages. I am not nearly as panicked about the spread of divorce as are some noble Lords. But I believe that where people wish to remain married, forcing them apart by the use of economic tools is a very high crime indeed. It is a wanton interference with an attempt to live a loving and stable private life. That is something that legislation should not do.

When the Minister replies, I beg him to indicate that there is serious thought about the pit into which the Government have inadvertently walked and that they are seeking some way of getting out of it. I hope that they will remember the first law of the noble Lord, Lord Healey, on holes: when you are in one, stop digging, and then you might get out some day.

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