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Earl Russell moved Amendment No. 9:

6 Jul 1995 : Column 1292

Page 26, line 22, at end insert ("including the costs of car ownership when it is impossible or unreasonable to expect the applicant to travel to work by any other method.").

The noble Earl said: My Lords, in moving Amendment No. 9, I hope that I shall be a little more brief than we were with the last amendment.

The amendment allows for departure in respect of the costs of car ownership where it would be unreasonable or impossible for the parent to travel to work by any other means.

The basic argument is simple. There are many places where a person without a car cannot work. If he cannot work, he cannot pay maintenance, which is not in the child's interest. If he cannot work, he cannot pay taxes, which is not in the taxpayers' interests either. Therefore, priority must be given to allowing people to continue working. A formula which does not achieve that is not achieving its object.

The Minister gave me a little ground for faint hope when we discussed this matter in Committee. I am not building too much on that, but I should like to know how far the Minister's thoughts have progressed. He said:

    "we are looking at how to deal with the costs of travelling to work if the person concerned must go by car".

He said that he was concerned with the problem of,

    "how to define car costs as opposed to petrol costs when it comes to how much use a person makes of the car for one purpose against another",


    "I hope that I have indicated to the noble Earl that we are looking carefully at how we can make some allowances for those costs".—[Official Report, 19/6/95; col. 98.]

If that is an invitation to further discussion I should be happy to accept it. If he has any specific form of words in mind I should be very glad to hear it. If he has nothing in mind I suggest that there is a case for allowing the whole of the road fund licence and the insurance as a basic cost, because without that a person simply cannot work at all. If one possesses a car one may use it for other purposes, but the essential factor in these cases is the need to allow people to work. That is the hub of the whole argument and, in the hope of hearing the Minister's further thoughts, I beg to move.

Lord Carter: My Lords, I intervened briefly when we discussed the matter in Committee, and I shall be brief again. The noble Earl has a point when he refers to the costs of car ownership. One could be pernickety and say that this is a running cost and the ownership of a car is a different matter from the running costs, and so on. However, the noble Earl has a point. Perhaps I may repeat what I said in Committee. It is possible to separate from the costs of car ownership that proportion which applies to travel to work. I hope that if he is not happy with the wording of the amendment the Minister will be able to suggest wording that will meet the point that the noble Earl has made.

Lord Mackay of Ardbrecknish: My Lords, this is the same amendment as the noble Earl tabled in Committee. He wants to hear my further thoughts on the subject. In order to give him my further thoughts, perhaps I should for completeness remind the House of what I said in Committee.

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I said then that the Government intend to bring forward regulations for each of the grounds for departure listed under the category of special expenses. The detailed criteria for the granting of departure directions for each of the grounds are being considered, including the possibility of making some allowance for the costs of car ownership, at least in limited circumstances. The report of the Delegated Powers Scrutiny Committee explicitly approved our approach of secondary legislation to provide the detail of the departure scheme.

The issue of whether some account should be taken of the costs of car ownership where use of a car is essential for the purpose of travelling to work raises issues that need careful consideration. Most people—and I emphasise "most"—have the option of using public transport to work, although I acknowledge that there will be instances where individuals have no option but to travel to work by car, for example, where there is no public transport or perhaps in the small number of cases where a disability makes use of public transport impractical.

The noble Earl's amendment highlights the high cost of car ownership. Indeed, he narrowed that down in his contribution and referred in particular to the road fund licence and insurance costs, which are two costs that we all recognise as being considerable. I recognise that the costs of car ownership can be high. However, it would be rare for someone to run their car for the sole purpose of travelling to work and not use it for other social and leisure purposes. Would it be right, therefore, to make allowance for the costs of car ownership ignoring that fact? It is easy to narrow down the cost of fuel used in the journey to and from work. Where people travel by car purely as a matter of personal preference there is a strong argument that petrol costs in excess of the cost of public transport should not be considered for the purposes of the departure scheme. I believe that the noble Earl will agree with me about that.

I am asked whether I have some specific words in mind. At this stage I do not. However, I can make it clear that at this stage nothing is ruled out. There may be a case for including in the departure scheme some recognition that in a small number of cases individuals will have no choice but to travel to work by car. If that is so, details will be brought forward in regulations and your Lordships will have the opportunity to consider our proposals then. I take on board the point made by the noble Earl that the road fund licence and insurance are clearly identifiable costs. Insurance varies with the type of car but is fairly independent of the car you have and its value.

At this stage we wish to preserve the flexibility to develop the system in a way that is fair to all concerned. I am sure that the noble Earl appreciates that his amendment would erode that flexibility. I appreciate that I have not gone much further, if any further, than in Committee, but I have underlined the fact that we are looking seriously at this issue. I understand the point made, but there are some difficult issues to be addressed. How does one determine that it is essential? There could be an argument about that. How does one determine the costs?

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The noble Earl has made his point forcefully on two occasions and in today's debate has made a suggestion concerning the road fund licence and insurance. I hope that he will leave the matter on the basis that we shall try to deal with these issues in secondary legislation which at some stage, probably next Session, I (certainly after yesterday) shall bring before the House. We can then have a discussion on those proposals. I hope that we shall be able to look seriously at these points.

Earl Russell: My Lords, I am most grateful to the Minister. He is saying in effect that nothing is ruled in and nothing is ruled out. I remember those words. I gave them the benefit of the doubt before. I turned out to be right. If I give them the benefit of the doubt again, I hope that I shall once again turn out to be right. However, I ask the Minister not to wait too long, because once a person has to sell his car then for him work is ruled out. We do not want that to happen too often.

With that one final thought, and with warm thanks for the Minister's care in working out the arguments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 10 not moved.]

Baroness Seear moved Amendment No. 11:

Page 26, line 40, at end insert:
("( ) child care costs incurred by a person with care who is in full-time or part-time employment;").

The noble Baroness said: My Lords, on behalf of my noble friend, who is not available at the moment to move the amendment, I want to make the fairly obvious point that we are all agreed that we want to encourage people to take employment if they possibly can when they have care responsibilities. However, the amount of money that is allowed under the government scheme to help with child care does not meet all the costs of child care which can be incurred in many cases. To have to pay that additional cost may well stop someone taking a job which, if they wished, they would be able to take. Therefore, in calculating the amount of money which should be paid by the absent parent, the child care costs should be taken into account. I beg to move.

Lord Carter: My Lords, I apologise to the noble Baroness. I had not noticed that the noble Earl, Lord Russell, had left the Chamber.

The noble Baroness outlined the purpose of the amendment. As she said, its effect is to allow child care costs to be included as grounds for a departure. The amendment would allow lone parents access to the departure system where they have increasing work-related expenses. The maintenance formula is such that it takes the lone parent's work gains into account but not the costs. When a parent with care returns to work and/or increases her working hours, her increase in income will be taken into account and at a certain point will begin reducing the level of maintenance which is payable by the absent parent. However, the formula does not currently include the work-related costs in exempt income.

We believe that there is a strong case for including child care costs in exempt income in the formula, which we would prefer. However, the Minister might like to

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touch on another option when he replies: to allow those with particularly high care costs access to departure. When we discussed the matter in Committee, the Government argued that existing legislation already covers child care costs. We are advised that many lone parents who want to work have prohibitively high child costs. For example, parents with care who have more than one child or whose child care is significantly higher than the average of £40 commonly referred to may be prevented from taking employment. In addition, it is also true that a relatively small percentage of lone parents are expected to benefit from the child care disregard; and certainly those who are in greatest need—for example, those on maximum family credit—will not benefit from the disregard. Even though the current legislation may offer some help to some people, the departure system should be available where that is not the case.

As we have already mentioned in Committee, the increase in maintenance would be granted only if the absent parent had the resources and it was fair and equitable to do so. If he has the resources, we believe that it would be fair to allow the parent with care to seek an increase in maintenance on the basis of work related expenses, including child care costs.

6.45 p.m.

Lord Mackay of Ardbrecknish: My Lords, the noble Baroness, Lady Seear, proposes that child care costs of a person with care should be eligible to be treated as a special expense for which a departure direction could be given. The Government, of course, recognise the importance of child care in the context of assisting lone parents back into employment. However, although at first sight this would appear to be a reasonable amendment—it is one which the noble Lord, Lord Carter, indicated that he supports—there are strong arguments against allowing a departure on these grounds.

Current legislation makes substantial provision for child care costs. The first provision is in the child maintenance calculation itself. The first stage of the assessment process is to calculate the "maintenance requirement", which is the amount deemed necessary to meet the basic needs of the child or children. The maintenance requirement is based on income support rates and includes an amount intended to reflect the fact that there are costs associated with child care. This so called "carer element" is currently set at £46.50 if the youngest child is under 11 years of age. Where the youngest child is aged 11 but under 14 years of age, the amount of the carer element reduces to £34.88 on the basis that the need for day-to-day care lessens as children grow older. The amount reduces still further to £23.25 when the youngest child is 14 or 15, and is removed completely when the child reaches age 16.

It is important to understand that the carer element was specifically included in the formula in recognition of the fact that persons with care have costs, mainly in terms of earnings that they forgo, if they stay at home to provide care for their children, or conversely that they incur costs in providing for care if they decide to go

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out to work. Therefore the formula assessment already provides a significant sum that can be put towards child care should such costs be incurred by the person with care.

Additional help is available where the person with care is working and is eligible for family credit. In such cases up to £40 of child care costs can be offset against income before any entitlement to that benefit is assessed. Furthermore, the first £15 of any maintenance received is ignored when family credit is assessed. A person with care whose income is above the level where she will qualify for family credit should be better able to meet the costs of child care and will still benefit from the carer element in the formula. To make a specific allowance in child support would be to duplicate the child care provisions in family credit by allowing for the same cost twice.

I ought to reiterate that the departure system is designed to deal with issues that have been of major concern since the Child Support Act came into operation. Child care costs of the parent with care in the context of child support were not an issue on which we received significant representations when the review was taking place. I do not accept the need for the amendment.

The carer element in the formula and the maintenance and child care disregards in family credit provide, I believe, sufficient help with those expenses. With that explanation of how we understand the answer to the question posed by the noble Baroness, I hope that she will feel able to withdraw the amendment.

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