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Lord Desai: I ask my noble friend to clarify one matter. I start by confessing that rules for social security payments are so complicated that I find it very difficult to understand what is going on. I am extremely grateful to the noble Earl for explaining case by case what is happening.
I was surprised and shocked--as were my other noble friends--by the cuts in lone parent benefit. I understand that the Government wish to encourage lone parents to get back into work. I understand also that that particular cut applies only to lone parents entering benefits as of this year. But there is an anomaly and I should be grateful to my noble friend if she will clarify the matter when she replies.
It is concerned with lone parents who are in jobs but who may lose their jobs. I understand that if that happens, they cannot obtain the benefit to which they were previously entitled. If that is the case, that is a great disincentive to taking work, and I am sure the Government do not want that. Even going along entirely with the Government's logic, I still see an anomaly in relation to cutting benefit for people who lose their jobs because those people must go back to zero and start all over again. That seems to me to be an added injustice and perhaps my noble friend will clarify the position.
3.30 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): There are two principles underlying the Government's strategy for benefit rates for families. First, we do not believe that the current structure, which pays a higher fixed rate of child benefit and family premium to all lone parent families and to no two-parent families, is the best way or the right way to address the extra costs which particular families may face. Therefore, it is right that we should change that structure to align the rates of benefits paid to families in respect of their children irrespective of the family structure. That is why we are going ahead with this measure.
Secondly, the Government are committed to supporting all families with children. We believe that support for families should be based on the needs of children and, as I say, not on the basis of family structure. Therefore, it may help the Committee if I seek to set out the measures which we are implementing to deliver those two principles.
As the noble Lord, Lord Higgins, mentioned, we inherited measures aligning rates of benefit from the previous government. The Social Security (Lone Parents) (Amendment) Regulations 1998 were laid on 8th March. They align the rate of family premium in the following income-related benefits--income support, income-based jobseeker's allowance, housing benefit and council tax benefit. Those measures come into force today and will apply to all new claims from lone parent families. Existing lone parents will not be affected and will continue to receive the higher rates, as Members of the Committee have already identified.
Those regulations replace regulations already debated in this House--the Social Security (Lone Parents) (Amendment) Regulations 1997. Perhaps I may address the point made by my noble friend Lord Desai by saying that the only substantive difference is the introduction of linking rules to protect lone parents who take up work and return to benefit after a short period of work. For the first time, we are introducing a 12-week linking rule which is more generous than the linking rule proposed by the Social Security Advisory Committee. That was only eight weeks. I hope my noble friend will take comfort from that fact. We are seeking to introduce those linking rules to protect lone parents who take up work and return to benefit after only a short period of work and to ensure that lone parents who receive the higher premium, such as the disability premium, but have an underlying entitlement to the lone parent premium, receive the same protection as other existing recipients.
The measure we are debating today is not the regulations associated with family premium and not, with this amendment, the linking rule, although we shall return to that. This measure will align the rate of child benefit because that is required to be changed through primary legislation while other aspects of child support can be dealt with through regulations. It is our intention that this measure should come into force in June 1998, at the same time as improvements to the childcare disregard. Again, it will apply to new claims only, with existing recipients continuing to receive the higher rate.
However, this Government recognise that all families have extra costs as a result of caring for their children. That is why we are committed to retaining and uprating
universal child benefit which is paid to all families irrespective of income. That is why we announced a £2.50 increase in the standard rate of child benefit for the first child. That was announced in the Budget on 17th March and will be implemented from April 1999. We will introduce an increase of £2.50 a week in the rate of family premium for income-related benefits such as income support, income-based job seeker's allowance, housing benefit and council tax benefit at the same time. We shall do it in that way because, as the Committee knows, child benefit is not paid separately to families in receipt of an income-related benefit; it is subsumed within their benefit. Therefore, to offset or to "equivalise", if I may use that word, the child benefit gain for those families in work who receive child benefit, we are making a parallel move on family premium for those families on income-related benefits to the same extent of £2.50 a week. So families not in work and families in work will be treated in similar ways. Existing lone parents will not receive this increase because they will already be receiving the higher lone-parent rates of child benefit and family premia, but all other families and all new lone parents will receive these new rates.In addition, we are introducing extra help for families with very young children. The child allowance in all the income-related benefits will be increased by £2.50 a week; in other words, there will be an extra £2.50 per week per child for those under the age of 11 for all families who are on income support or other income-related benefits. Again, that was announced in the Budget and will be implemented from November of this year.
All families in receipt of these benefits with children under the age of 11--not just children under five--will receive this higher allowance, including all existing lone parents, even though they will retain entitlement to the existing higher lone-parent premia. We will follow up these measures by introducing more help for families in work, as has been mentioned, through the working families tax credit and the childcare tax regard in October 1999. So there is an increase in the rate of the family premium for families who are on income-related benefits, an increase in the rate of child benefit for those families who are in work and not on an income-related benefit, an increase of £2.50 per child for those families on income-related benefits whose children are under 11, and additional help through the working families tax credit and the childcare tax credit in October 1999.
I believe that I am right in saying that something like four separate measures will come together and produce, in our view, real help to all families, whether they consist of single parents or two parents and whether they are fractured or intact. They will be concentrated, focused and targeted on the needs of the children, especially those under the age of 11. I trust that the Committee will accept that these four measures together meet the two principles that I outlined at the beginning of my remarks. They align the benefit rate for families with children for all family types but they will also ensure that the financial needs of families, especially those with younger children, are recognised through the benefit system.
However, those measures do not mean that the tax and benefit system will not take account of the specific difficulties and extra costs that some families face. We are focusing resources specifically on meeting those costs rather than giving higher fixed rates to particular families. Perhaps I may identify them. Our childcare tax credit will provide extra help for all working families who need help with childcare costs. Lone parents will be the main beneficiaries of that tax credit and will receive more help with childcare costs--which is the main obstacle to their being able to spring out of the poverty trap and move into work--than has previously been the case.
But some two-parent families may also need help with childcare. It is right that the childcare tax credit should also help those families. The improvements to the childcare disregard that we will be introducing in the interim will also be open to all families. We believe it is right to give extra help to families who are unable to work or whose opportunity to maximise income from work is limited by parental responsibility. That is why we are introducing those two measures to improve the incomes of those families. I repeat: we are increasing the family premium in income-related benefits by £2.50 a week for all workless couples and we will increase the child personal allowance for the under 11 year-olds by a further £2.50 a week. This means that a family with two young children will be better of by £7.50 a week. I hope that the Committee will agree that that is consistent with our strategy to help all vulnerable families receive an adequate income when out of work.
The third element of our strategy is to help those people move into work. We are already breaking down the barriers between lone parents and work by way of the New Deal and our national childcare strategy; indeed, our working families tax credit will guarantee every working family, including lone-parent working families, an income from full-time work of at least £180 a week. We have also put in place measures to ensure that all four year-olds have an early education placement at the start of the school year.
The Government inherited measures to remove differential benefit levels for the children of lone parents and the children of two-parent families. We believe it is right that benefit rates should be aligned. We have introduced legislation to implement that measure. However, that would have meant, if I can use the cliche, "levelling down" lone parents to where jobless couples find themselves. We have taken the obverse approach: we have sought to increase benefits by targeting them on children and children in need for all families--both lone parents and two-couple families--which is effectively a levelling up of couples to where lone parents, in very broad terms, though not exactly, currently find themselves. That is why we are introducing this package of measures and doing so as early as possible. We believe that it is right to target specific help. That is why we are meeting the needs for childcare through our national childcare strategy and why we are helping lone parents into work.
I hope that the Committee will agree that, with these four measures--the increase in the family premia for all couples; the increase in child benefit for couples in
work; the increase in the income support rates for couples and lone-parent families who are receiving income support for children under 11; and the proposed improvements through the childcare disregard and the working families tax credit--we have a far-reaching strategy for families. I believe that those measures represent key milestones in implementing the strategy. Where extra help is needed, we have sought, through the Budget and through the changes being announced today under the New Deal and so on, to deliver it. I trust that the Committee will agree that we have in place a broad-brush set of proposals which will help all families, whether lone parent or couples, equitably. On the one hand, we will be increasing the help to those who have young children under the age of 11, and, on the other, we will be helping those who can move into work to do so through childcare credit. We believe that that is the right way forward. Those who cannot work because of parental responsibilities will be given additional help; but, where they are in a position to seek work, we will help them to do that, too, by removing the major obstacle in their way; namely, childcare costs.
Finally, we have the linking rule which I mentioned earlier. Therefore, with all those measures in place, I hope that noble Lords will agree that we genuinely have a new deal for all lone parents, as well as workless couples, as they enter the next few years.
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