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Baroness Knight of Collingtree: My Lords, until I read the Bill, I had no intention of speaking in today's debate. However, several aspects of what is proposed

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worry me. In the interests of brevity, I propose to speak on only three, each of which touches upon what is for me a fundamental belief.

The first is that it is wrong and foolish to arrange for people to claim state benefits when they could manage without them. It is wrong for the individual and wrong for the state. The more that people find they can obtain money without working for it, the less they are inclined to bother to work at all, and the tax burden grows heavier on those who do work. Governments have no money of their own; all they have is what they take in tax from the workers and savers among us. I sometimes think that that should be said more often. It is not widely understood outside this place.

I believe that state benefit should always go, and only go, to those who are in need. There should always be help for the sick, the disabled, those who are unwillingly unemployed and all who cannot, for one reason or another, help themselves. But any country making handouts available to those who can perfectly well stand on their own feet must sooner or later face economic ruin.

During the first part of the Minister's speech, I thought that she and I were on exactly the same rails. "Hooray", I thought, "there is agreement across the Floor on this". But, in spite of what she said about encouraging people to go back to work, and so on, this Bill puts more people than ever into the state benefit net.

The Institute for Fiscal Studies, analysing the Bill, says:

    "There are ... significant incentives for [some] to leave employment altogether". It goes on to say:

    "Almost [a million] men and women in two earner couples see their financial returns to employment fall as a result of WFTC". It also says:

    "The increased generosity of in-work support may be used to allow the second earner to give up working". I continue to be worried about that point.

Secondly, I believe most profoundly in the importance of marriage, and I thought that the Government did, too. Silly me! But perhaps I can be forgiven because they did say in a recent Green Paper:

    "Marriage is still the surest foundation for raising children ... We want to strengthen the institution of marriage; to help more marriages succeed".

I believed that that was what they meant. If it is what they meant, why pass a law such as this which discriminates so clearly against married-couple families? In the Bill married couples stand to receive less credit than unmarried couples. How does that strengthen the institution of marriage? Perhaps it should be obvious, but I do not understand. Does enabling single parents to receive more than married couples in similar circumstances really "help more marriages succeed"?

Why do the Government not recognise that it is a good thing for the country and the family if a mother of very young children chooses to stay at home and look after them, taking responsibility for them until they are a little older? The Government should recognise that and

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take account of the costs of it, which are not insubstantial. The way that the Bill totally disregards the cost to the mother of very young children of staying at home to look after them is wrong. Instead of making money available to the mother, it is to be made available for the mother to give to someone else. As the noble Lord, Lord Goodhart, so rightly said, to pay for two women with children to look after each other's children rather than to stay at home to look after their own children is absolutely absurd. Some would say that the Government actually bribe the mother to leave her children in the care of someone else. There are thousands of women who would like to stay at home and look after their small children but they cannot afford to do so. The Government are now dangling money in front of them to go out and get a job and pay a sitter for the children. It would be far better to help the mother to look after the children.

I said at the outset that I had three fundamental objections to the Bill. My third relates to my respect and concern for businesses. I believe that no country can prosper if businesses are collapsing all around. We depend more than we ever admit on businesses succeeding. It is my belief that governments should not take actions or impose burdens which make it more difficult for those who run businesses. If we constantly hamper business and industry, the country suffers. We live in a highly competitive world and business people today have quite enough problems in keeping going at all. They already carry out far too many tasks, unpaid, for the Government and many of them struggle to survive. This Bill gives them yet another duty; it imposes yet another burden; it inflicts a yet greater workload. They will have to administer working families' tax credit. Until I heard what the noble Lord, Lord Goodhart, said today--and he has looked at the costs of this--I was not aware that such a careful study had been made. Any calculation that I made was much shallower than the noble Lord's. I was very worried when I considered what the cost to business would be. And what about the cost to the Inland Revenue? It will surely be enormously complicated for it. I believe that that has not been addressed as an extra cost of the Bill.

However, I think it will be worst of all for small businesses. They cannot allocate work-hours from one of their clerical staff if they only have one clerical member of staff, as many do. The overwhelming majority of businesses are small businesses, and they work very much hand to mouth. The CBI has expressed its concern about this matter and the employers' associations which have seen the proposals--and not all have--describe them as a logistical nightmare. The Social Security Select Committee in another place was told in evidence from the Citizens Income Trust that there were "enormous problems involved" in the Bill.

From next April employers will not only have to oversee who receives the money but will have to find the money themselves, out of their own cashflow initially. All the Government have said in response to complaints is that, if there is any difficulty, employers can apply in time to the Inland Revenue. Heaven knows what "in time" means. Is it before they are bankrupted?

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I do not know. How much time after they have complained about having to find the money will the Inland Revenue take to pay them the money? If the firm in question has a dispute going on with the Inland Revenue--and many do--I can envisage the Inland Revenue not paying the money back at all until the dispute is settled. With great respect to the Minister, to decide who gets the benefit will not be nearly as easy as she believes. This matter has dogged Bills of this kind in another place for many years. I always had a feeling of deja vu. At an earlier point in this debate the noble Baroness shook her head very decisively and believed that there would be no difficulty at all. I tell her now that there will be difficulty because who should receive the benefit is a big bone of contention between many thousands of men and their wives. We came down very strongly on the side of the mother receiving the benefit because all the information and experience at our disposal indicated that men would not spend the money on the children but mothers would.

I do not believe that the Government have begun to understand how serious a burden this will be on the employer. I can envisage an angry mother having a real row with the employer if she does not agree that her husband should be paid the money. I am absolutely certain that there will be rows of that kind. I do not believe that the majority of men and women who run small businesses know what will hit them. Having come down Park Lane this morning, I pale at the thought of what hauliers will say when this is added to their present problems.

Once again the Government have demonstrated their penchant for saying one thing and doing the opposite. They trumpet their support of marriage and businesses, the reduction of social security and tackling fraud, but their actions utterly belie their words. I was very interested in the observations on fraud of my noble friend Lord Buckinghamshire. As I understand it, Canada, which adopted a Bill that followed exactly these lines, had to jettison it because it was an open invitation to fraud. Frank Field, whom all of us respect because he speaks from great knowledge of this area of politics, said:

    "The whole of the family tax credit venture is fraught with great dangers. It offers huge bonuses for dishonesty. It strengthens the employers' hold over working people--'These are the conditions: cheat and both of us will be better off'. It thereby pulls employers into a spider's web of dishonesty and corruption". If that had come from anyone but Frank Field I would have looked at it much more critically, but he is a spokesman who knows what he is talking about. For these and other reasons I have the greatest concerns about the wisdom of this Bill.

5.43 p.m.

Lord Skelmersdale: My Lords, I am grateful to the noble Baroness the Minister for the extensive rationale which she gave for this Bill, including what she described as her two throw-away introductory paragraphs. I only half-heard them, so I shall have to read what she said to find out whether they add to or subtract from the argument that she mounted. I say straightaway that I believe that it is a proper role for the

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state to support low-income families either in or out of work. Today we are discussing the former and what the Government believe is a better way.

However, rather like my noble friend Lady Knight, I am confused. It was only a few short weeks ago that I sat bolt upright in my place when I heard a noble Lord use a mixed and anatomically incorrect metaphor. He spoke of a tiger changing its spots. It may have been an error--I do not know--but I believe that it is applicable to the Minister today. She will remember--patience, patience--the then government's policy to extend family credit to families without children in 1995--

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