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Earl Russell: My Lords, I congratulate the Minister on the clarity with which she has expounded these regulations, especially the helpful exposition of Regulation 3. I agree with her that we have debated these matters many times. In fact I think she and I know each other's arguments well enough to be able to argue in our sleep. However, I shall not attempt to force the Minister to do so. I do not intend to make a meal of this.

I shall touch briefly on the point made by the noble Lord, Lord Higgins, about the taxation of child benefit. It is my understanding that whatever one may feel about it in principle--the question of principle is not an absolute one--the technical difficulties in the way of taxation of child benefit to get any substantial amount of money out of it are difficult indeed, especially if one wishes (as I am sure the noble Baroness and I both do) to preserve the separate taxation of married women's incomes because a vital principle is at stake there. I do not see how to get round that difficulty. But that is a practical point. I am most grateful to the Minister for her remarks about the treatment of claims presently in the pipeline. That is a point of substance and I welcome it.

For the record, I wish to touch on the main points on which we agree and disagree. I do not invite an answer; the Minister will agree which they are. We agree quite strongly that single parents should be helped to work wherever they want to. We agree strongly that help with childcare for that purpose was badly needed and is in principle to be welcomed. We agree that the situation was ameliorated by the measures in the Budget; and we agree that the new linking rule is to be welcomed--though on that point I am tempted to play Oliver Twist and wish that it had been a little more.

Turning to where we disagree, we on these Benches believe that there is a substantial gap between the cut in benefits brought in by these regulations and others and the effect of the measures in the Budget, some of which do not come into effect until October 1999. We disagree profoundly about the issue of single-parent costs. I think we understand each other's arguments perfectly well on the matter; we are simply not convinced by them. That issue will continue and I am sure the noble Baroness and her party will expect to hear more of it in future.

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We also disagree about the financing of the help with childcare. Welcome though it is, we on these Benches feel very strongly that it should not have been financed in part by these cuts. There is also to some extent an issue of choice--though here I remain grateful for what the Minister said on 3rd June last year about the right of single parents not to go to work if they so choose.

I gave notice earlier this afternoon--I do not know whether the notice has reached the Minister--of a point I wished to take up in relation to her letter of 26th June. If the notice has not reached the Minister, I shall leave the matter and deal with it by letter. It had to do with freedom of choice in relation of childcare and whether mothers will remain free to decide for themselves whether the childcare on offer is sufficient and suitable for their children. That is not the same as whether it is in general of good quality. I shall leave the matter now and return to the point later. The Minister may expect a letter.

7.30 p.m.

Baroness Hollis of Heigham: My Lords, I thank noble Lords, I think, for their contributions. Like them, I am sorely tempted to stray into wider debates about lone parents, work, opportunity and so on. However, I shall resist the temptation and do my best to answer the points raised. If I miss any, as usual I will write to noble Lords.

The noble Lord, Lord Higgins, asked: if a lone parent who is on benefit and receiving the higher rate moves into work, the job ends for her and she comes back on to benefit, will she continue to receive the higher rate? Yes, the child benefit goes with the birth of that child and is therefore with the parent while she is a lone parent for the rest of her life, whether she is in work or on benefit. That is good news and addresses the noble Lord's point.

Secondly, the noble Earl, Lord Russell, raised a point about the taxation of child benefit. There is not a Labour Party view on this matter at present. It is an issue that is under review. There are clearly arguments for and against the taxation of child benefit. It may in time be introduced. It is a matter for the Chancellor to decide on its relative merits against other issues. The Chancellor has made clear that he would in no way seek to compromise the well-established principle of independent and separate taxation. That takes us into the territory identified by the noble Earl. I think we all understand the issues; namely, whether child benefit is independent of income level or whether, given finite resources, we should seek to target what help there is on those who are poorer off through the principle of taxation or means testing. It is an honourable debate and one that we shall no doubt explore in the future, particularly should the Chancellor be minded to propose such changes for the future. At present, there is no specific commitment either way on this issue.

Thirdly, the noble Lord, Lord Higgins, raised a question on welfare-to-work and the statistics associated with the new deal. If there is any additional statistical information, I will write to the noble Lord; however, it is my understanding that some 1 to 2 per cent. of lone

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parents in control group areas have come off benefit and, we understand, taken up work beyond what would be expected by comparison with the control groups. That represents some 800 lone parents. We cannot guarantee that all of those have gone into work. Some may have re-partnered, as the noble Lord said. The comparison is, after all, with a control group. Most lone parents who come off benefit will either go into work or re-partner, or possibly receive a higher or different benefit. Those are the three exit strategies. The point for us is that the eight new deal lone-parent pilot areas are carefully controlled. We can therefore see the difference, taking all those factors into account. Our information is that some 800 parents have left income support over and beyond the figure that would have been expected in those same pilot groups but for the intervention of the new deal.

Lord Higgins: My Lords, I am grateful to the noble Baroness for giving way. I understand what she says; namely, there is a pilot group and a group not included in the scheme. She refers to 700 or 800 people. What is the difference in percentage terms between one group and the other as regards the number who appear to have gone into work? The figure 800 does not mean a thing. What is the differential between the group who are coming off benefit and those who are assumed as the result of the calculation to have gone into work?

Baroness Hollis of Heigham: My Lords, I thought I had given that figure. We understand the difference to be between 1 and 2 per cent. That is what the figure 800 represents. That is the extra effect, as it were, of the intervention of the new deal: 1 to 2 per cent. more lone parents have come off benefit in the pilot areas than their equivalents in the control group. That is the differential between the two. The noble Lord looks puzzled. It seems very clear to me, but I have obviously not made myself clear. The 800 represents the 1 to 2 per cent.

Lord Higgins: My Lords, I am indeed somewhat puzzled by that figure, since it would seem to suggest that the whole scheme is a complete failure, which I presume is not what the noble Baroness seeks to indicate. Perhaps it would be better to pursue the matter outside the Chamber.

Perhaps I may return to the consequence of what the noble Baroness just said; namely, what does she think the cost is per job for the people who have gone into work as a result of the scheme in the period up to now rather than simply going off benefit?

Baroness Hollis of Heigham: My Lords, as I say, the 1 to 2 per cent. represents lone parents in the population. I was about to refer to the setting-up costs. Perhaps I may first return to the statistical point. Nobody is trying to suggest--certainly I am not--that the new deal is the answer to all the problems of overcoming the hurdles or barriers to lone parents entering work. What the pilot areas are beginning to indicate is that there is a useful contribution and a statistically significant effect

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as a result of the intervention of the new deal. The impact on a lone parent clearly varies according to the age of the child, the state of the local economy and the adequacy in her judgment of available childcare. I do not for a moment suggest that this is "success in capital letters". What it does indicate is a useful statistical improvement in the opportunities for lone parents to move into work as a result of the intervention of the new deal. That is all I am claiming. I suspect that the effects may well be down the line--that is, when a child who is now three years old is five, six or seven. That is when we shall begin to see the opportunities come through. I do not want to over-claim for the scheme. But the fact that it is showing some of the results that it is is distinctly encouraging and should be welcomed by all Members of this House.

As to the costs on which the noble Lord pressed me, the setting-up costs were £6 million. But these are front-end loaded costs. These are gross costs. They do not include the reduction in benefits paid to parents who would otherwise have remained on benefit, which work out at about £42 per person saved.

More broadly, it is about changing the culture and expectations of lone parents. I hope we shall see more and more lone parents coming into work as the cultural effects, the halo effects, of the New Deal spread, and as lone parents realise just how much better they and their children are once they believe that it is appropriate for them to move into work.

I turn to the comments made by the noble Earl. With his usual laser accuracy he identified the points of agreement and disagreement between us. We all accept that help for lone parents to work and have childcare is vital, particularly for children under five. I emphasise that the Government stand at the shoulder of the lone parent, helping her to be able to make choices as to what she thinks is the best strategy for herself and her family. Those choices were not realistic before the New Deal because the things necessary to facilitate them, such as childcare, were not in place. That is what the Government see themselves doing.

Therefore, in terms of childcare, as in terms of opportunities for jobs, of course lone parents have the right and freedom of choice. We are trying to take steps to ensure that information on childcare provision is available. For example, we are having audits of local childcare facilities to identify what facilities are available. We encourage the use of IT to ensure that information is widely available.

The scheme funds registered childcare only, which is an assurance of quality. In that way no lone parent need feel pressured into using childcare of inadequate quality if she does not believe that it is a reasonable option.

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