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Lord Mackay of Ardbrecknish: My Lords, let me say first that I have some sympathy and agreement with the noble Baroness in that we both want the benefit system to support and reinforce incentives for those who want to work. However, while I am sympathetic to much that she said, I do not think we should exaggerate the problem here. The great majority of claimants—even single or childless claimants—will always be better off in work than on benefit. They will usually be better off financially in the short term, and for many people a relatively low-paid job may be the first step to a higher paid job in the longer term. The Government have taken important steps to make sure that for most people there is a clear financial advantage in working. The reforms

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of the in-work benefits at the end of the 1980s and the introduction of family credit have had a major impact on helping people to take and stay in relatively low-paid work. We are taking further steps with the introduction of JSA to help partners of benefit claimants to take and stay in work. Ten thousand to 20,000 couples are expected to benefit from the change in the couples hours rule in JSA and IS, increasing from 16 to 24 hours a week with the introduction of JSA, and a partner's earnings will help to build up the back to work bonus.

Despite my sympathy for the noble Baroness's aims, I cannot accept that we should guarantee that claimants will always and in every case be better off in work than on benefit. There are some people with high mortgages, for example, for whom that guarantee would effectively rule out almost every job that was available in their locality or at their skill level. At the same time, taxpayers in relatively low paid work would be financing the system which kept that claimant on benefit. I do not believe we can go as far as the noble Baroness suggests in her amendment and actually offer people a guarantee of a minimum income through the benefit system in the way that her amendment would like. The jobseeker's allowance is designed to help unemployed people and their families. As I said before, it is a long standing principle in income-based benefits that couples are treated as a single unit and benefit is payable only if neither is in remunerative work. Of course, I accept that the rule means that a number of couples—and I think it would be a tiny minority—could find themselves working over 24 hours with pay, as described by the noble Baroness. But I believe that it would be a very tiny number of people in that position.

9 p.m.

Baroness Hollis of Heigham: My Lords, if the Minister will allow me, I gave the Government's own figures and I am sorry if he missed them. From the Government's figures it is not a tiny minority; the figure given in the other place was that 60,000 couples would be affected.

Lord Mackay of Ardbrecknish: My Lords, I suppose it depends on how one defines a minority as against the 4 million people who are unemployed and making claims for benefit who come on to the system in one year.

Lord McCarthy: My Lords, is the Minister telling us that there are 4 million unemployed? We have been saying that for years.

Lord Mackay of Ardbrecknish: My Lords, that is a clever point but the noble Lord knows very well that I referred to the 4 million earlier this afternoon. Perhaps he was out of the Chamber at the time but the 4 million are the people who make new claims during the year. Perhaps I may remind the noble Lord that many cease being unemployed. Unemployment has fallen by over 600,000 since the end of December 1992. The figure is continuing to fall—a fact which probably does not particularly please the noble Lord because it takes away one of his constant complaints about the Government. That was a nice intervention, but I fear that it was on entirely the wrong point.

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My noble friend Lord Swinfen asked about the cost of abolishing the rule. It is extremely difficult to give a reliable cost, but the figure could be between £20 million and £50 million, if we assume that fewer than half the employed earning couples and fewer than a quarter of the self-employed—

Earl Russell: My Lords, perhaps I may ask the Minister to withdraw the charge that the fall in unemployment does not please those of us on this side of the House. It pleases us but we would like to be even more pleased.

Lord Mackay of Ardbrecknish: My Lords, I am delighted to say that of course I know that it pleases noble Lords on the other side of the House just as it pleases us. I trust that it will continue to please us all for many months to come.

However, to return to the question, as I mentioned earlier in my speech we have tried to address the problem by the introduction of family credit. As your Lordships know, we have announced plans to pilot a new in-work benefit for single people and childless couples which would help those without children who cannot qualify—obviously because they do not have children—for family credit. That is the way in which we would like to tackle the incentives problem which I agree exists for a small minority of people. With that explanation of how we hope to tackle the problem I hope that the noble Baroness can withdraw her amendment.

Lord Swinfen: My Lords, before my noble friend sits down, I asked him what was the purpose of the hours rule. I do not understand it. I should have thought that the finances of the couple were the most important point. What is the purpose of that rule? It seems to me to be totally illogical.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, perhaps I may answer my noble friend. In the course of my speech I said that it is a long standing principle in income-based benefits that couples are treated as a single unit and benefit is payable only if neither is in remunerative work. On the point about the 16-hour rule, which now becomes the 24-hour rule, it is a lessening of the condition that the benefit is paid for couples who are unemployed. My noble friend still looks puzzled. The purpose is to encourage people to take up part-time employment. But clearly, as they move towards full-time employment, they cease to be unemployed as a couple. I should have thought that was self-evident. One has to draw the line somewhere. We are moving the line to 24 hours. I should have thought that was a reasonable dividing point between defining people as being in part-time work and beginning to become full-time workers.

Lord Swinfen: My Lords, with the leave of the House, I am sorry but I still do not understand how the number of hours of work during the week at a very low wage affects the income. It is the income of the couple that is important. I do not understand why working more than a certain number of hours at an extremely low wage should deprive someone of benefit.

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Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, perhaps I may help my noble friend. It seems to me that there are two ways of considering work. I should have thought that the number of hours worked was a factor. As my noble friend will recall, we define 40 hours as the kind of availability that people should have for work. I have made the point that as people increase the number of hours they work then surely my noble friend can see they move from a position where they are doing part-time work to where they begin to work longer than is defined, in the normal sense of the word, as being unemployed. I am sorry that I cannot help my noble friend further.

Lord Swinfen: My Lords, with the leave of the House, we are not talking about the jobseeker, but about the jobseeker's partner. I understand that the jobseeker must be available to work, but not his partner.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House again, I have said twice that it is a long standing principle in income-based benefits that couples are treated as a single unit and benefit is payable only if neither is in remunerative work.

Baroness Hollis of Heigham: My Lords, I do not usually say this but I believe that the Minister is totally unpersuaded by his own case and he cannot therefore expect to persuade us of it. He has accepted almost every argument we have adduced. For example, he said that we want people to be better off in work than in benefit. The fact that the Government not only support family credit, as we do—and the noble Lord, Lord Skelmersdale, is absolutely right, we are talking about those without children—but also that they propose to pilot an in-work benefit for childless couples exactly addresses our problem. However, what the Government will do is to introduce a new benefit extending family credit. Incidentally, it would help if the Minister could tell us the cost of that as against the cost which he gave his noble friend Lord Swinfen of £20 million to £50 million for this proposal.

The Government propose to introduce a new in-work benefit when all they have to do for a large number of people is simply to abolish the hours rule. That rule was introduced in 1988. It has not been written in tablets of stone ever since the Victorian or the Elizabethan Poor Laws. I should have thought that all the evidence showed that the system is not working. For childless couples the hours rule forces them to choose between working and not working. My example was of them working for £63 a week, or not working and having benefit as a couple for £73 per week. Alternatively, as the noble Earl, Lord Russell, said, they could break up as a couple. Those are the choices they have. To get around that dilemma—and the Minister conceded tonight that it is a dilemma—the Government will bring in some fancy new benefit, an in-work benefit which will apply to many more people, in order to deal with the problem when it could simply be achieved by repealing the 24 hours rule.

I realise that this is not Committee stage and I apologise if I am stretching the tolerance of the House. With the leave of the House, will the Minister explain, since he introduced the material in connection with the

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new in-work benefit for childless couples, the advantages of that over scrapping the 24-hour rule, as we suggest tonight? Is it cheaper? Will it help more people? How quickly can it be applied, and will it, or will it not, help more people back into work? Can the Minister help us on this point?

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