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Earl Russell: My Lords, is the Minister aware that alcohol and tobacco are entirely excluded from Professor Bradshaw's low cost budget, which is the basis of much of the work done?

Baroness Hollis of Heigham: My Lords, yes, but that was in 1993 and if the noble Earl looks at the research of Reuben Ford on making work pay, he will see that he says that one of the largest influences which increases hardship is that of being a smoker. That is on page 65. Therefore, further research has clarified that point.

Do not misunderstand me. I do not say that because lone parents are smokers, therefore they are foolishly wasting their money. I am not saying that at all. I am saying that the distinction between what is essential and

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what is less than essential is often a question of genuine debate between the lone parent and how she spends her money and the researcher. That is why so many different studies come up with such different findings.

The Cost of Children and the Welfare State by Dickens, Fry and Pashardes suggests, for example, that, relatively, all families with children on income support are over-compensated for the cost of their children and that coupled families are under-compensated for the cost of a second adult. That means that any expenditure survey must guess which expenditure is on the basis of "need" and which on the basis of "taste". Without making a judgment about the propriety of that, that is what is built into the difficulty of assessing that research. It means that different approaches lead to different and therefore inconclusive results. That means that a second researcher asking the same questions of the same families would arrive at a different answer. That is why the research is not scholarly and cannot be scholarly in the same way as scientific research. It is not the less valuable for that but it cannot be conclusive in the way that we can, for example, establish links between cancer and smoking.

Secondly, there is the "budget standard" approach. As the noble Earl has said, that type of analysis depends crucially on questions of judgment as to what is to be included in a budget standard. We know that lone parents have the same costs as a couple in relation to housing and I shall return in a moment to the point made by the noble Lord, Lord Newton. Lone parents have higher costs as regards child care. However, there are areas where lone parents have lower costs. For example, a coupled family has an extra mouth to feed and an extra person to clothe.

The noble Lord, Lord Newton, pressed me on housing costs. He gave a perfectly fair example of a situation in which the man was in low-paid work and therefore receiving housing benefit; his wife left; and as a result, he was in the same house with the same number of children and paying the same rent but the amount of his housing benefit would fall. He asked whether that was reasonable. Yet it is. I say that because the difference is that there is one adult fewer in the household. In the noble Lord's example, where there is no wife, there is one adult fewer in the household. Therefore, the rest of that man's money is going on less expenditure. In other words, by having one adult fewer in the household, there is less expenditure on other items, including food and clothing, and that will therefore fall. So that man's applicable amount will be lower analogous to the income support rates being lower. However, the housing benefit taper and withdrawal will kick in in exactly the same way.

Lord Newton of Braintree: My Lords, I apologise for intervening at this point, but I am grateful to the Minister for allowing me to do so. I shall try not to make it too much of a habit. I do not see how that line of argument stands up, unless it is being argued, against all the theory of the whole system, that the income support rates include an amount which is available to meet housing costs. But the whole basis of the system, given that 100 per cent. of rent is met for people on income

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support, is that the income support rates contain no element for rent costs. The Minister has just argued that when there is one adult in the household in the circumstances that I described, somehow some part of the benefit which is not paid for housing costs, for rent, becomes available for it.

Baroness Hollis of Heigham: My Lords, the noble Lord has made my point for me. When on income support, a lone parent with one or two children receives less money in income support than two people with two children will get on JSA. That is the precise point. Indeed, the noble Lord has exactly made my point. In other words, you are carrying forward the equivalent of that lower figure on income support for a single adult, plus two children, compared to a couple with two children--the applicable amounts--into the structure of housing benefit. The reason that the lone parent with one child or two children receives a lower amount than a couple with two children is that that family has lower expenditure on food and clothing. That is why their income support is lower. Therefore, although they receive full housing benefit at the level of their income support, their applicable amount, which is their income support equivalent, is at a different level. That is then carried over into the work situation because, if there is only one adult in the household compared to two, there is lower expenditure--exactly analogous as in income support--and, therefore, lower applicable amounts apply, even though the structure of housing benefit remains the same in both situations. As I said, I believe that the noble Lord has made my point for me. Indeed, he has probably done so better than I could have done.

Research suggests in differing ways that lone parents may have higher costs than a couple. However, sometimes the reverse is the case. Perhaps I may take the obvious example, and this reflects the point made by the noble Earl about the Bradshaw Report. Let us suppose that a lone parent on income support re-partners. Therefore, we are now talking about a couple family which has to cover all the needs of an additional adult going into that family from just £28.65 a week--that is, £4 a day--for his or her food, clothing and transport. So we can begin to understand why much research concludes that lone parents are relatively better off than couples on benefit. Perhaps we should consider the lone parents quoted in the Graham study and requoted by Lister in the past month in her PSI report. Indeed, lone parents are quoted there as saying that they are better off being lone parents than when they were married because, when they were married, the men were relatively so expensive given the costs particularly of their food, and, to a lesser extent, their clothes and their transport. Therefore, they prefer to remain single and found themselves better off accordingly. That is the result of research which is only one month old.

Finally, there are the "deprivation studies". The noble Earl quoted from Small Fortunes which found that children in lone parent families are more deprived than in couple families. That is because a large proportion of lone parent families are on income support. It does not

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compare apples with apples; it compares apples with pears. It is also clear from the PSI and DSS reports produced during the past 12 months that lone parents on levels of income support vary quite widely in how much hardship they report to the researchers that they have experienced.

If the argument of the noble Earl and my noble friend was correct, all lone parents on the same level of income would actually experience a similar level of hardship. That would follow, would it not? But it does not. Why is that? It is because it depends on differing factors, such as the number of children, on their health and on whether the family has any access to savings. Moreover, given that half of all lone parents smoke, it also depends on whether they smoke and, in turn, whether that relates to any health problems. In other words, the disposition of income, together with capital--that is, the human capital and the financial capital--with which a lone parent goes into the situation of lone parenthood determine whether any individual lone parent experiences hardship.

What we accept--and I certainly would not dream of contesting it--is that a large number of lone parents are on low income and that a much greater proportion of lone parents experience low income than other family types. Indeed, that is absolutely undeniable. However, the response to that is to recall--and, again, all the research shows this and no one has contested it today--that the reason that lone parents proportionate to couples are on low income and why many of them experience hardship, which undoubtedly they do, is that they feel unable to work. They remain trapped for long periods on income support and, once on income support, they stay there longer and cannot get back into work. That is the problem: they remain trapped on income support, unable to go into work. All the research shows that when they go into work, even more than when they re-partner, that is when their standards of living begin to rise. It is when they cannot get into work and remain trapped on income support for long periods that their levels of income support become increasingly less adequate to meet their needs. That is why we are making such changes to the Social Fund.

That is why our strategy is to develop the New Deal for lone parents, to develop the national childcare strategy and to develop the working families tax credit and the childcare tax credit. That will allow lone parents an unprecedented opportunity to move into work, to improve their incomes through work and to improve the living standards of their families.

I am sorry, but I do not believe that we could accept the amendment because it presumes that there is a definitive answer which somehow or other inadequate research has so far failed to produce. We have received something like eight reports on lone parents in the past year. I have read them, as I am sure have many noble Lords. Judging by the assumptions which have been brought forward and what is being tested, we know that some answers will be found. That is not because they are not scholarly or because they are not reputable or coherent. Indeed, they come with different assumptions and ask different questions. You choose your questions and your findings.

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Given that fact, the right answer is not to ask for more and more research but to accept, as we all do, that many lone parents suffer hardship because of the length of time that they spend on benefit. Therefore, the right way to respond to the situation is not to commission more research, which I am confident will continue to be inconclusive. The right response is to offer lone parents the opportunities that they themselves call for; namely, the opportunity to work, which is possible only with decent and affordable childcare. That is what we propose to do. In the light of that explanation, I hope that the noble Earl will feel able to withdraw his amendment.

5.45 p.m.

Earl Russell: My Lords, I should like, first, to thank those who have supported my amendment, especially the noble Lord, Lord Ashley of Stoke, who has supported me on this issue consistently from the beginning. I am most grateful to him. I am also most grateful to the noble Lord, Lord Newton of Braintree, for his extremely interesting and powerful contribution. Indeed, I thought that his reply to the Minister was conclusive. I hope that the noble Lord will continue to ask such questions as we approach the review of housing benefit. Mr. Field has suggested that people should meet an element of their rent out of their own funds, which must mean their income support. If there is any danger of that, I hope that the noble Lord, Lord Newton, will repeat the same questions.

On the virtue of work for those single parents who want it and on the great importance of childcare to help them get into it, I must say again to the Minister that there is nothing between us. There is no issue there, so I shall not pursue it. However, the noble Baroness accused me of believing that research can be conclusive. If she had listened very carefully to my opening remarks, she would know that I did say that she might argue that it could not be conclusive but that, in that case, she could not do what she proposes to do. If the burden of proof is too heavy for her to carry, she should not do what she is doing.

This is not just a matter of tastes. When we have dealt with needs I have been careful to restrict myself to two basic needs--enough food to preserve body and soul and, if possible, health, and enough clothing to keep out the cold. The indicators I mentioned in the example I gave were three meals in a day, one warm coat and one waterproof pair of shoes. I do not believe that in saying that people need those I am making an assumption which is a matter of taste. I believe those are genuine needs. One might possibly dispute the warm coat in the Sudan but one is hardly likely to do so here.

Study after study has found that single parents and their children find it much harder to get those things than other families. Before I decide what I shall do with the amendment I ask the Minister once more, with regard to the findings in Small Fortunes, if she does not

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explain them as a result of the disadvantages of single parents, how does she explain them? Before I leave this subject I should like to hear her answer.

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