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Earl Russell: My Lords, I am grateful for that small but very real mercy. I thank the Minister for it.

That does not, of course, put the basic problem right. I still simply cannot understand the argument about lower earnings. I am sorry to be so thick. I have listened to it many times, but I really cannot make it out. It seems to me that the Minister is on a fork. Our problem is why it is relevant. We cannot see that it ought to be relevant at all because we think it is a subsistence benefit. I have had no answer to that point. I have gone for five years without an answer to it, and I may go another five years without one, but I shall keep on asking.

If it is relevant, why is it relevant only to the case of youth? Why is it not relevant to other groups with lower earnings? Take, for example, people with disabilities. We all agree that the disabled tend to have lower average earnings than others. Imagine the outcry if a rule were introduced that people with disabilities would get benefit at a lower rate than others. The Minister would be swept away by the indignation. It does us no credit that we are not expressing the same indignation on behalf of the young, on behalf of people who are still learning a sense of social responsibility and whose sense of social responsibility is likely to be determined by the example they are set by us. I do not look forward to that. Can the Minister explain to me sometime before we are through with the Bill why low earnings are relevant and why they are only relevant to this group?

I have heard these answers many times. I am no nearer understanding them than I have been. I shall beg leave to withdraw the amendment for tonight, but at Third Reading I hope that I may receive a response which actually answers the questions I am asking. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 18 to 20 not moved.]

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Baroness Turner of Camden moved Amendment No. 21:

Page 3, line 43, at end insert:
("( ) Regulations shall provide for a prescribed amount of earnings to be disregarded in calculating the amount payable by way of a jobseeker's allowance, and that prescribed amount shall be reviewed annually in the light of the previous year's price inflation.").

The noble Baroness said: My Lords, in moving Amendment No. 21 I speak also to Amendment No. 60. We are again addressing the issue of disregards. We attempted to raise the issue in Committee in respect of the earnings of part-time workers. However, that did not meet with support from the Minister. Amendment No. 21 allows for the amount of the disregard—the amount that an unemployed person can earn before the benefit is affected—to be the subject of regulations instead of the fixed amount current with the present arrangements.

The amendment also proposes that the amount should be reviewed annually in the light of inflation. Surely that is sensible and in line with what occurs with regard to most social security benefits. The Government are anxious, so they say—we have heard it stated again tonight—to get people back to work; hence their proposal for a back-to-work bonus. Those moves are entirely welcome. However, they should not be seen as invalidating the need to improve disregard arrangements.

Welcome as the back-to-work bonus is, it will only help those who manage to obtain an offer of full-time employment which they accept. Such moves do not help those who cannot find suitable employment but who may obtain casual or part-time work. I do not understand the Government's objection to what seems to be a useful way of getting people involved in the job market again, even if only in a very modest way.

Amendment No. 60 deals with much the same principle. The amendment attempts to ensure that,

    "Any amount prescribed in regulations as a limit upon capital or income affecting eligibility to a jobseeker's allowance shall be reviewed annually in the light of the previous year's price inflation".

That is a similar principle to the one enunciated in Amendment No. 21.

I hope that this time round the Government will tell us that they have considered the issue of part-timers since we discussed it in Committee and have decided to regard the amendments as entirely acceptable. Amendment No. 21 seems very reasonable to me. I beg to move.

Lord Mackay of Ardbrecknish: My Lords, in Amendment No. 21 the noble Baroness returns to an issue on which I am sure we shall yet again find it difficult to reach agreement. As I explained in the earlier debate, we share the desire to improve work incentives for unemployed people and their partners. But raising earnings disregards is an expensive, and, more importantly, an uncertain way of doing that.

Taking the expense first, if we had increased the current earnings disregard in line with inflation since 1988, then the cost in JSA would be approximately £15 million. Applying this across the other benefits—income support, housing benefit and council tax benefit—would add on in the region of another £75 million per annum. This is a total cost of £90 million.

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The noble Baroness contends that we have not taken into account certain behavioural factors in our estimates. I do not know and I do not suppose that the noble Baroness knows either, how far the earnings disregard is a factor which unemployed people consider when undertaking part-time work. There are many other issues, such as childcare, which may or may not influence a person's decision to undertake part-time work. What we can say is that, while increasing the disregard might encourage some claimants to take up work, it might have the opposite effect on others. By reducing the financial incentives to take up full-time work which takes them off benefit, an increase in disregards could simply encourage some claimants to remain on benefit combined with small earnings. We therefore cannot accept that increasing the disregard automatically every year in line with inflation is necessarily the best and most cost-effective option for helping unemployed people.

No government in the past have adopted the policy of increasing disregards regularly each year. When inflation is low such a policy would add only pence to the disregard. We prefer to use resources to introduce substantial new incentives for unemployed people to move out of unemployment into work. We have brought forward new measures like the back to work bonus whereby claimants will receive a lump sum equal to half their earnings above the disregard when they go back to work. That is far more generous financially to many claimants than simply putting up the disregard by a few pounds. Of course, it deals with the difficult bridge problem between being out of work and going into work. We have discussed, and agreed about, the existence of the problem on a number of occasions. Although we have disagreed about some of the details of the partner's rule, we have taken the measure which increases the partner's hours rule from 16 to 24 hours, and the whole £600 million package of work incentives announced in the last Budget is designed to do what we believe would be a more effective job than index-linking disregards.

I am not sure to what extent the noble Baroness addressed Amendment No. 60 which concerns capital limits. As she rightly points out, it is the same issue. I believe that, just as with earnings disregard, increasing the capital limits annually would not be the best use of resources. Uprating them on an annual basis would simply lead to already scarce resources being diverted to those people who already have some means of their own. That would, as I have said before, represent poor targeting when the priority must be maintaining benefit levels, improving help for those most in need and, above all, helping unemployed people back into jobs.

I believe that the present limits strike a reasonable balance by allowing people to maintain a cushion of savings to fall back on, while expecting those with more substantial capital to use some of their resources towards their own living expenses. However, I can assure the noble Baroness and other noble Lords who I know are interested—although they have not spoken this evening because of the lateness of the hour—that capital limits are kept and will continue to be kept under review. They have been and will continue to be uprated from time to

15 May 1995 : Column 399

time, but only as and when resources and priorities allow and not through the automatic method which the noble Baroness seeks in her amendment. I hope that with that explanation she will feel able to withdraw her amendment.

Baroness Turner of Camden: My Lords, I am not surprised at the response I received this evening because, with one or two exceptions, the Minister has not been favourably disposed towards the amendments we have moved from this side of the House. He said that people might be discouraged from going for full-time employment and prefer to go for low paid part-time employment in order to benefit from increased disregards. However, I believe he overlooks the fact that for many people it is difficult to obtain full-time work. They take part-time and often badly paid casual work because that is all that is available. It seems to me that if that is all that is available, people should not be discouraged from taking it. By improving the disregard situation they might be encouraged into taking some form of employment, even though it may not be what they ideally desire.

As to the Minister's comment about capital limits, I note that he said that they are kept under review, but I am not happy about that. I do not know when they were last reviewed. Perhaps some time ago. I fear that it was certainly not recently. It is not necessarily the right response simply to say, "We cannot move these because it will all be terribly expensive". It seems to me that practically everything we cite as being responsible and responsive to people's needs is regarded as being off limits because it is too expensive.

As the Minister rightly said, we have not had much of a debate this evening because it is late. Therefore, it is not my intention to press the matter to a vote, although I regard the response we have had as not being at all satisfactory. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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