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Tax Credits Bill
8.40 p.m.
Lord Goodhart moved Amendment No. 13:
After Clause 2, insert the following new clause--
(" . Regulations made by the Board under section 2(1)(c) shall provide that, in the case of a claim for working families' tax credit, where a married or unmarried couple is included in the family and one member is in employment and the other member is receiving education or training of a specified kind and for a specified period, the tax credit may include such credit for child care as may be specified.")
The noble Lord said: The amendment raises a short and simple point. At present a couple cannot claim the childcare disregard for family credit unless both of them are working for at least 16 hours a week, or unless one of them is working and the other is incapacitated. Those requirements are to be carried over into the working families' tax credit.
There may frequently be cases where mothers have been bringing up children for perhaps 10 or more years and need retraining in order to get back into the workforce. However, their children still need care and the mothers may be unable to become retrained if they cannot afford to pay for childcare. Would it not be a good idea for a couple to be able to claim the childcare element in the working familes' tax credit in order for the mother to be retrained and get back into the workforce?
The amendment leaves matters as flexible as possible. It would be up to the Inland Revenue Board to decide, for example, the minimum period of retraining per week to qualify for the right of the childcare credit. The board could restrict the childcare credit, for example, to cases where training is directly related to a prospective job, and to exclude what I might loosely call recreational education. In principle, I believe that the amendment is clearly desirable. I ask the Government to give it favourable consideration. I beg to move.
Lord Skelmersdale: Immediately before dinner, we heard the main reason for working families' tax credit. If the whole objective of the exercise is to get people into work, one has to have a mechanism which encourages take-up of work. If one has that, some of those people whom one is encouraging into work will need education and training. I support the amendment.
Lord Higgins: As the noble Lord, Lord Goodhart, said, it is a simple and straightforward amendment. I hope that the Government will accept it.
8.45 p.m.
Baroness Amos: The new clause seeks to extend the childcare tax credit to couples where only one of the couple is in work but the other is in a specified type of education or training. The normal rules would require both the partners in a couple to be in work for them to be able to claim the childcare tax credit. In his introduction to the amendment, the noble Lord, Lord Goodhart, mentioned that the rules are the same for the childcare disregard in family credit and disability working allowance.
Working families' tax credit is primarily a work incentive measure. It might be argued that where one partner is in education, the childcare tax credit is a work incentive for the other to go out to work, a point already made. But, equally, where one partner in a couple is already in work, it would act as an incentive for the other partner to go into education instead of employment. That is not necessarily a bad objective but it is not the objective of this measure.
The common element in the examples is the entry of one of the partners into education, and increasingly we need to address the needs of couples with children who are in, or want to enter, education or take up training. The noble Lord, Lord Goodhart, said that that point is at the heart of the amendment. The national childcare strategy Green Paper, Meeting the Child Care Challenge, issued last year shows conclusively that these issues are being met by more money for the appropriate access funds. Those funds allow institutions
to help such students, and more money has been provided for such funding since the Green Paper was published.Channelling help through the childcare tax credit would provide help for families which had a worker in it but not for families without a worker--for example, because both are students, or one is a non-earner, or the student is a lone parent. I can assure the Committee that the Government are alive to the problem. The issue remains under review. But the Government do not think it necessary to provide the key to change through primary legislation. The details, such as the rules for eligibility, are in secondary legislation and they could be changed without the new clause.
Social security provision is not available to the majority of full-time students because social security is not intended to support people who are studying full time and are not therefore available for, or able actively to seek, work. I repeat. The working families' tax credit is primarily a work incentive measure. On that basis, and on the basis of the commitment of the Government to review the problem, I ask the noble Lord to withdraw the amendment.
Lord Higgins: Perhaps I may intervene before the noble Lord, Lord Goodhart, replies. We are naturally interested in the reply we have received. Can the noble Baroness give some indication of the amounts involved under the arrangements to which she referred for training and education compared with the amounts as regards childcare under the amendment? I presume that an individual may receive the benefit whether there were or were not children. However, there is a different problem for those with children, even though they receive the same financial help as regards training.
The noble Baroness refers to secondary legislation. I find that somewhat surprising. The Government have been extremely good in providing drafts of the relevant statutory instruments. Can the noble Baroness indicate under which aspects of the statutory instrument it would be possible to extend the scope of the Bill in the way the noble Lord seeks. I find it slightly surprising. I should have thought it was more appropriately achieved by primary rather than secondary legislation.
Baroness Amos: With regard to childcare credit, the figures are £70 of £100 for the first child; and £100 of £150 for two children.
Students have access to loans. There is a standing weekly disregard of £10 on loan income. Any amount specifically included in a full-time student's grant for books and equipment is disregarded. If no amount is specified, a standard amount--currently it is £295 a year--is disregarded. Where a student is in receipt of a standard maintenance grant of £1,180--it is slightly more in London--the amount currently disregarded for travel is £166 a year or £256 if the student lives in the parental home and travels to his or her educational establishment. If a student were to receive by way of grant any other amount specifically for travel, that amount would be disregarded. From the start of the 1999-2000 academic year, in order to reflect the changes in student funding, the disregard on books, equipment
and travel which currently applies to grant income will be applied to student loan income for new students to ensure that they are not financially disadvantaged by the new arrangements.
Lord Skelmersdale: The noble Baroness has totally and utterly confused me. Under educational law, what childcare help will the grant system give to a man, or more usually a woman, who has a working partner and goes out to be trained or retrained?
Baroness Amos: I understand that, it does not give them specific childcare help in that instance.
Lord Higgins: Will we be given an answer on the statutory instrument point?
Baroness Amos: Was that the point about primary as opposed to secondary legislation?
Lord Higgins: The noble Baroness's reply indicated that the provisions which the noble Lord, Lord Goodhart, seeks to write into primary legislation could be achieved by means of secondary legislation. The Government have efficiently provided the Committee with all the relevant statutory instruments in draft form which are involved in the Bill. Consequently, if the noble Baroness is saying that the change can be achieved through secondary legislation, where can we find provisions which can be altered to meet the noble Lord's point?
In any case, is it not more appropriate for the change to be made through primary legislation? It would seem extraordinary to do so by secondary legislation and it would be undesirable when we now have the opportunity to do so through primary legislation. No doubt the noble Lord, Lord Goodhart, may have other points to make.
Baroness Amos: The point I made about secondary legislation is that the Government are currently looking at other mechanisms to support parents who wish to return to full-time training. I mentioned specifically the Green Paper on childcare, which provides for access funds which institutions can use to encourage and enable individuals to return to education and training. However, if in the context of the review which the Government are undertaking it was perceived that such a change would be useful in the context of legislation currently before Parliament, we could look at Regulation 46.
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