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Lord Mackay of Ardbrecknish: My Lords, we have heard a compelling defence of child benefit and a compelling argument from the noble Baroness. But would it not be really compelling if it were an argument being used against someone who wanted to take away child benefit from 16 and 17 year-old children of United Kingdom citizens who have full residence here? Yet that is what the party opposite would like to do. It wants to take away child benefit from 16 and 17 year-olds and I do not know how the noble Baroness can square her argument with that policy.

Baroness Hollis of Heigham: My Lords, I am grateful to the Minister for giving way--I rather assumed he would. We are not taking child benefit away from 16 and 17 year-olds. We are conducting a review of all the expenditure on 16 and 17 year-olds, including child benefit and educational maintenance allowances, to ensure that it goes to those who need it.

Lord Mackay of Ardbrecknish: My Lords, if I tried that sort of argument the noble Baroness would tell me that it was very weak.

Baroness Hollis of Heigham: My Lords, the Minister uses that argument all the time.

Lord Mackay of Ardbrecknish: My Lords, it is a very weak argument. It would seem to me that the Labour Party is now walking away from what I thought was a pretty firm commitment to stop child benefit for 16 and 17 year-olds. Perhaps the noble Baroness has managed to convince her colleagues in the Front Bench team--

Baroness Hollis of Heigham: My Lords, will the Minister kindly give a reference?

Noble Lords: Order!

Baroness Blatch: My Lords, this is Report stage. This is wholly out of order and the Minister must have his way.

Baroness Hollis of Heigham: My Lords, if the Minister misrepresents the position of the Labour Party I am entitled to correct it for the record.

Baroness Blatch: My Lords, this is Report stage and this is a misuse of standing orders.

Baroness Hollis Of Heigham: My Lords, Report stage does not permit the Minister to mislead as regards the position of the Opposition Benches.

Lord Mackay of Ardbrecknish: My Lords, if I am misrepresenting the Opposition Benches, I am happy to check tomorrow morning what Mr. Gordon Brown said in his original statement. I appreciate that it has been qualified a bit since then through review. But that does not detract from the question that if the benefit is just being reviewed, has not the noble Baroness given

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a compelling argument for keeping it for 16 and 17 year-olds and concluding at the end of her review that we were right and the initial proposal that the benefit should be removed was simply wrong?

But, once again, one of the problems of this argument is that it is bedevilled by a great overstatement of the numbers of people involved. I said earlier this evening that 88 per cent. of asylum seekers were people with no dependants. The fact is that 12 per cent. of asylum seekers have dependants but many of them are just one wife and do not include children. The idea that the great bulk of asylum seekers are families with children who are, in the word of the noble Baroness, "destitute" is not true.

That is also true of a statement that the noble Baroness made a second time today, which I ignored the first time but I cannot ignore the second time. She conjured up a picture of people flocking into the United Kingdom and within four hours applying for asylum. A few might do that but the great majority apply for asylum in-country a great deal longer than four hours after their arrival. For example, in the first quarter of 1996 there were 15 per cent. within a week; a week to a month, 17 per cent.; one to two months, 9 per cent.; two to six months, 31 per cent.; six to 12 months, 6 per cent.; and over 12 months, 23 per cent. That is the Home Office analysis of the applications that come in from in-country applicants.

There are three pieces of extravagant language that I want to knock on the head at the beginning. The purpose of this clause is to bring child benefit into line with the provisions for people from abroad we intend to apply in the other non-contributory social security benefits and which have operated since February. This amendment would undermine that purpose. It would mean that entitlement to child benefit was no longer in line with the intended entitlement to other non-contributory benefits. It would fix the entitlements for some asylum seekers in primary legislation, whereas for others regulations would continue to be needed to confer entitlement.

The aim of the amendment is to align with the discretionary provision in the Immigration Rules to allow asylum seekers to take work where they have been in the country for six months without a decision on their application. They would then receive child benefit when they begin to work and pay taxes.

Superficially, this sound plausible but there are a number of reasons why the argument is unsound. First, permission to work is not granted automatically and application has to be made. Secondly, although child benefit is financed from general taxation, so are other benefits. There is no direct link between taxes paid and benefits received. Thirdly, the amendment would apply to all asylum seekers, whether working or not. Fourthly, the amendment would create inequity between groups of people from abroad, allowing asylum seekers to receive child benefit and others not.

People granted entry on the basis that they have no recourse to public funds may well be working. Many in this category come here specifically to pursue their profession, and pay income tax here. But we shall not

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be allowing them entitlement to child benefit and are holding them to their undertaking to be self-supporting. Asylum seekers may or may not be granted the discretionary permission to work and they may or may not obtain a job and pay income tax. This amendment is indiscriminate and allows everyone in the group access to benefit. I submit that there is no justification for paying them child benefit while their application is under consideration when the decision, which may follow within a short time, may refuse them both refugee status and exceptional leave to remain. We should not forget, as I was reminded earlier on this evening, that that applied in 79 per cent. of cases in 1995. So the position is that 79 per cent. of the cases turn out not to be eligible in any shape or form.

We have made clear how we intend to use the powers under Clause 10 and we have given the House details of the groups who will retain entitlement to child benefit. They include all those accepted as genuine refugees and those granted exceptional leave to remain, as well as those people from abroad covered by reciprocal and other EU agreements. It seems to us logical and consistent to have all of the conditions for entitlement to child benefit for people from abroad set down in one place in regulations rather than partly in primary legislation and partly in secondary legislation.

I do not believe that the amendment is justified. Our approach is simple and straightforward. It aligns child benefit with other benefits. It ensures that people from abroad who come here on the firm undertaking that they will not be a burden on the UK taxpayer do not turn up asking for child benefit until and unless they receive permission to stay here as asylum seekers or have exceptional leave to remain. I hope that the noble Baroness will feel able to withdraw the amendment.

12.15 a.m.

Baroness Hollis of Heigham: My Lords, first, the Minister first said that my statements were extravagant and then that the argument "superficially sounds plausible." Which is it to be? I shall stay with my argument superficially sounding plausible--and the best explanation for that is that it is a valid argument. My valid argument is what "superficially sounds plausible" to the Minister. I suppose that that is at least some acknowledgement, however grudging, of the case being made from these Benches.

I asked the Minister some questions which he did not answer although I repeated them. I should appreciate any intervention the noble Lord cares to make. My point is that, unlike every other benefit, child benefit started partly as a tax relief. Had it remained a tax relief, every asylum seeker who was working after six months would be paying a lesser tax bill than another asylum seeker without children. The logic of that is to continue to recognise that child benefit is therefore different from all other benefits because it originated in the tax relief that was abolished and incorporated with family allowances into child benefit. It is no use the Minister saying, "We want to align it with all the other benefits". He cannot align it with all the other benefits when it has traditionally served a different function. That is the point about lateral, horizontal distribution from those without

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children to those with children even at the same level of income. That is why it is different from all the other means-tested benefits.

I am sure that the Minister in his heart of hearts--or even in his word of words--recognises that that is more than superficially plausible; that is a fact. Child benefit has always been partly a tax relief. The Minister is saying that if you are an asylum seeker, you can pay your taxes but you will not get the tax relief that comes from having children which you would get if you were a British citizen in the same job, earning the same money and with the same number of children. That is unfair by any tax law in any tax regime.

Secondly, if the decision of the Government follows in a short time--the Government have said, "Why bother?"--the expenditure will then be very low. However, the amendment is targeted. It states that child benefit shall continue after the six months, which is when a British citizen would be eligible for it, until a decision is made. If the Government are as efficient as Ministers would no doubt like, that decision will be made within the first six or seven months, so there will be only a few weeks of child benefit. But if the Government are tardy and inefficient and if the destitution of the asylum seeker is because of government delays, the Government then owe some responsibility back to that family and those children. The amendment would help to bridge that.

The third argument is that where destitution occurs because of government tardiness and delay, the cost will fall directly onto social services departments under the Children Act 1989. The Government can either pay child benefit direct to the family or they can pay twice that amount to the local authority social services department to help to support those children. Take your pick. I can tell Ministers which is the cheaper, the more targeted, the more cost effective and the more civilised. It is to pay the money direct to the parents rather than loop it through the local authority which will have to pay for food and clothing.

Finally, although I asked the Minister the question twice he has not answered once. I would accept one answer to two questions. What would happen in the situation of a British child born of foreign national parents? Would that child and therefore the parents be eligible for child benefit? Can the Minister help me?

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