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Baroness Scotland of Asthal: My Lords, may I saw how warmed I am by all the comments made by various noble Lords which demonstrate the change in the complexion of our society. Good men and women from every community, as represented in this House, have already spoken. That is a demonstration of what joining in friendship can do. That friendship threatens bigotry, threatens prejudice and threatens hate. Those who stand against friendship, community and warmth will feel threatened indeed by the sentiments expressed in your Lordships' House. I endorse everything said by the Minister and my other noble friends. We must not be afraid; we must be resolute in our objection and resistance to such racist terrorists as live amongst us.

Lord Williams of Mostyn: My Lords, my noble friend is quite right. For evil to triumph, it is only necessary that good men remain silent. It is only when one has friends--in my case, a wife--who are Indian that one realises that the key to all this is the total, utter, mindless irrelevance of racial or anti-Semitic prejudice. It has completely nothing to do with human society. They are deeply sad people--happily, in a very small, pathetic minority.

Lord Clinton-Davis: My Lords, is it not encouraging that noble Lords have indicated today that there is no place for bystanders in relation to thuggery and racial bigotry of the kind we have witnessed over the past two weekends? Will my noble friend give an assurance that the police and Home Office will be especially vigilant in prosecuting where appropriate those who are responsible for journals spewing out racial hatred in the most vile way? Will he also indicate that people who have telephoned claiming responsibility for these vile crimes are, at least prima facie, guilty of crimes of causing public mischief and conspiracy and that if the evidence becomes properly available they will be prosecuted with the utmost diligence?

Lord Williams of Mostyn: My Lords, my noble friend is right. That is why I thought it helpful to give such details as I could about the claim of criminal liability that was made on Saturday. My noble friend is right also that we need to be vigilant about any spewing out of material in any form of publication, including the Internet, that causes racial damage. I shall not be as absolute in saying that offences have been committed because it would be a catastrophe if people were prosecuted and were then able to say that they had not had a fair trial. They will have a fair trial and, thereafter, what they deserve.

Lord Alli: My Lords, I am on my feet for the second time in less than a week, not having spoken for eight months. I agree with many of the sentiments expressed by members of all Front Benches, but I must detract from something said by my noble friend the Minister.

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I have not found very satisfactory the way in which the police in this House have reacted to me and a number of my colleagues who have been subject to personal threats. I have found it difficult to receive any co-operation and to get them to take any of the comments seriously. I believe that those of my colleagues who have received personal threats and letters will agree. When in particular the officer who is responsible for our security in this House was asked to investigate, he told at least two of us that it was not his job to do so. The House should be aware of that. I should be grateful if the Minister would look into the matter and report back to the House.

Lord Williams of Mostyn: My Lords, I am sorry to hear that. I had not heard it before. If the noble Lord would be so kind as to give me as much detail, chapter and verse as possible, I shall personally take up the matter with my colleague, Paul Boateng, who has responsibility for the Metropolitan Police. As soon as I receive his letter I shall take up the matter and reply to him with as much detail as I can obtain. To carry out that kind of inquiry on behalf of those in this House, I do need detail. Subject to the agreement of the noble Lord, Lord Alli, I shall place my reply to him and a copy of his letter in the Library. If he thinks that inappropriate, then of course I shall be guided by his judgment about confidential matters.

Tax Credits Bill

5.50 p.m.

House again in Committee on Clause 1.

[Amendments Nos. 2 and 3 not moved.]

Clause 1 agreed to.

Clause 2 [Transfer of functions relating to tax credits]:

Lord Swinfen moved Amendment No. 4:

Page 1, line 10, at beginning insert ("Subject to subsection (1A) below,")

The noble Lord said: This amendment is a paving amendment for Amendment No. 9, to which I shall also speak.

This is a probing amendment. Its aim is to obtain a statement from the Government which clarifies and explains the treatment of maintenance payments for working families tax credit and disabled persons tax credit purposes. A statement is needed, because WFTC replaces family credit. WFTC is, like family credit, a means-tested payment designed to help people into work and to subsidise families on low and modest incomes.

Both family credit and WFTC are income-related. The amount of credit any family receives depends on the normal earnings of the family and any other income that they might be receiving. Income for both purposes means a family's net income after income tax and national insurance contributions have been deducted. Certain types of income are, however, ignored. Child benefit is ignored; and, for family credit, the first £15 a week of any maintenance payment is also ignored.

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During debate in Committee in the other place on Clause 1 of the Bill, the Paymaster General indicated that for WFTC purposes there would be a 100 per cent. disregard for maintenance payments. That was the first indication that the Government proposed more favourable treatment for maintenance payments than is given for family credit. An explanation is clearly required. As a result, it appears that some families will receive a much greater credit than other families with the same income. The implications appear to be that a lone parent would be significantly better off than a widow in similar circumstances; and, secondly, that a lone parent would also be significantly better off than a single-earner married couple in otherwise similar circumstances even though there would also be a second adult in the household. I certainly want to see lone parents properly looked after. However, it is unclear why they should be treated preferentially.

If the Government believe that earned income that is used for the maintenance of children should be disregarded for the purposes of working families tax credit, it is difficult to see why a more generous rule should apply where the income is earned by a providing parent who is separated from the parent with whom the children are living than is the case when the income is earned by the parent with whom the children are living.

Will all maintenance payments be disregarded, or only those paid as a result of CSA intervention? Neither the income tax rules nor the family credit rules draw a distinction between CSA payments and other payments.

The proposed treatment of maintenance payments will also affect families' entitlement to the so-called passport benefits. If family credit rules are followed, entitlement to these will depend on whether a family receives working families tax credit. Unless, therefore, the rules have changed, families headed by a lone parent in receipt of maintenance payments will be entitled to these benefits, whereas a family headed by a married couple with less income coming in each week will not. Will the Minister, in replying, give an assurance that anomalies of that kind will not be allowed to arise? I beg to move.

Lord Astor of Hever: I support these amendments. As my noble friend said, the Paymaster General told Standing Committee D that the Government were proposing to disregard all maintenance payments because that followed the income tax treatment.

Both WFTC and DPTC are based on a family's income after tax has been taken off. If maintenance payments are exempt from income tax and deducted from the family's net-of-tax income, the same payments are deducted twice. Parents who benefit from this treatment will end up with more WFTC than those who do not; namely, families where both parents are living together.

There would seem to be an unanswerable case for saying that the cost of maintenance--whether it be the cost to a couple living together or a single parent--should be disregarded in calculating WFTC and DPTC

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either for all families or for none. This matter is complicated. I should be grateful for clarification from the Minister as to why there is this difference.

Baroness Hollis of Heigham: In replying, I shall also respond to the grouped amendment, Amendment No. 9.

These two amendments anticipate a good deal of the debate on Amendment No. 28. I wish now that we had grouped them together: many of the questions quite properly raised by the noble Lord, Lord Astor, reflect rather more on Amendment No. 28 than they do on these amendments. I may therefore stray into Amendment No. 28 territory, given that I have been invited to do so.

The purpose of these amendments is to provide that the disregard of maintenance payments should not result in a lone parent receiving more WFTC than a couple. I believe that the Committee will agree with that description of the amendment.

I must confess that I am rather sorry at the reasoning behind the amendment. Although it is expressed in entirely reasonable terms, I am somewhat concerned by it. I shall attempt to explain. The amendment centres on the treatment of maintenance payments within WFTC. Given the welcome statement by the Paymaster General in February, the Government have decided that, for the purposes of calculating income for WFTC, no account will be taken of maintenance payments received by the claimant. At present, after the first £15, it is deducted from family credit, with the usual taper as presently exists.

We see this change to allowing a lone parent what is effectively a 100 per cent. disregard for maintenance as providing a significant contribution to tackling child poverty. It will mean that those lone parents who claim WFTC will keep all the maintenance that they receive, which can then be used directly for the child or children rather than having it tapered off after the first £15.

Why is that so desirable? First, the change will provide a clean break from the benefits system at the start of the new tax credits; secondly--this is an administrative argument--it will make child support within WFTC simple and easy to administer; most importantly, it will help us to address child poverty. One child in three in this country lives in relative poverty. Of those children, 1.8 million, 80 per cent, who fail to receive any maintenance from the non-resident parent--usually the father--are in workless families. If, as a result, maintenance flows and the mother goes into work, anything over £15 is tapered away quite sharply, with the rest of the family credit deductions.

By allowing 100 per cent. disregard, first, we make a serious contribution to tackling child poverty. Even if a lone parent is in work, if she earns such low wages that she has to draw on WFTC, she is not generously paid. By allowing her to keep all this money, we are making a contribution to trampolining her and her children out of poverty, we hope for life.

Secondly, it is a real work incentive. It becomes like child benefit. You can go into work, carrying it with you, knowing that, provided your former partner pays

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reliably and regularly, you can be assured of that income, which will be a steady floor, irrespective of what may happen to your earnings and, as a result, irrespective of what may happen to WFTC.

The third argument, which I hope Members of the Committee will accept, is that it has long been the case that father' organisations have complained about paying maintenance, which they say goes not to their children but to the Treasury--that the old Child Support Act was Treasury support, not child support. Our proposal has been welcomed not just by women's groups but also by men's groups. Decent fathers who pay reliably and properly, as they should, and as so many of them tell us they want to do, will see that the maintenance will go directly to the benefit of the child. The children, in turn, will see that the responsibility of a non-resident father continues even when the marriage breaks down. The children will continue to enjoy something of the same living standards, although not as generous as they would enjoy if both parents were still together.

The scheme is simple to administer and represents a clean break between a benefits system and being in work. It is to the direct benefit of the lone parent going into work; it is a direct attack on child poverty; and it sends messages to fathers and to their children, particularly boy children, that this is the way that responsible men behave: that they continue with their financial responsibilities, even though the relationship may have broken up. I say "men"; I hope Members will forgive the gender point. Most non-resident parents are men.

When that money is clawed back by the Treasury, men often use the excuse: "Why should I pay? It is Treasury support, not child support". We believe that our proposal has been warmly welcomed by men's groups as well as by women's groups.

The amendment suggests that the question of maintenance does not arise within an intact family or a widowed family--the example given by the noble Lord, Lord Swinfen--because, by definition, if a woman is a widow she will not receive maintenance because the spouse is not there, or, if, there is an intact family, maintenance will not flow, and, if that is the case, a lone parent who should be receiving support for her child should not enjoy it either. I believe that, on reflection, Members will not want to support such a position. It is ungenerous and sends wrong signals to men, to children and to lone parents wishing to go into work.

We are committed to tackling child poverty at every opportunity. Children of lone parents are likely to be financially worse off than children with two parents. The family has the same household expenses as a couple. In addition, she--in something like 97 per cent. of cases it is a woman--will have to cope with the pressures of bringing up her children alone, without the active help of a partner and her partner's family. When she works, as a woman she is likely to receive only 70 per cent of the equivalent male rate. She may find that her children are damaged, if they have come out of a difficult relationship break-up, and she needs extra support for them. All the research shows that after a break-up women lone parents have on average only

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two-thirds of the income of men and their income falls after a break-up. After a marriage split-up, the income of most men improves compared to when the couple were living together.

If the amendment were to be accepted, it would subvert and undermine all the messages we want to send with regard to child support, tackling child poverty, work incentives, having fathers support their children, and so on. Worse still, the amendment would put lone parents in a worse position than they are currently in for family credit, where there is already a £15 disregard for maintenance payments, which, by definition, cannot apply when someone is a widow or is in an intact family. I accept that the amendment is a probing amendment, but its effect would be to make poor lone parents and their children poorer than they currently are on family credit.

The noble Lord, Lord Swinfen, asked me what type of maintenance was to be disregarded and whether it was just CSA maintenance. No, the disregard will apply not just to CSA maintenance but also to maintenance arranged through the courts and to voluntary maintenance.

It is not a mirror-opposite situation that there should also be a disregard on the father's income. That is the substance of Amendment No. 28. That would represent a subsidy from the Treasury to the father of more than half his maintenance payment. Instead of the Treasury taking it from the father to offset against the mother's benefits, we would be subsidising him to pay her the maintenance she should have. In terms of cost and of social policy, that would be unacceptable.

Only one parent with care in three receives regular child maintenance. One of the objects of reforming the Child Support Act, which I hope will command the support of the House, should the measure come in the forthcoming parliamentary Session, is to ensure that men pay, women co-operate and children benefit. That would not be the case if the amendment were to be accepted. The effect of the amendment would be to make lone parents even poorer and subvert our other objectives of tackling child poverty and providing work incentives. I hope that the Committee will not wish to pursue this matter any further.

A minor but perhaps relevant point is that the amendment would not work as currently drafted as it refers to a paragraph in the family credit regulations which does not exist. The substantive points are the ones that matter. The amendment discriminates, is unjust to lone parents, will damage their children, will send out the wrong signals to men and will subvert work incentives. For all those reasons, and for many more that I could offer the Committee, I hope that the amendment will not be pursued.

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