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Baroness Hollis of Heigham: I attempted to deal with this point fairly fully. The figure of £37 was the average. However, we also said that in the case of an employer with one to five employees, where one was receiving WFTC, we expected the average cost to be about £135 a year, bearing in mind that it should take about six minutes and cost 70 pence a week. That is because some of the costs apply to all employers whether or not they have a WFTC employee. That is why you cannot do the multiplication by 10.

As to the noble Lord's previous point regarding extending choice in the way that applies to working couples, again, that is not the case. If the choice of the couple is for the payment to be made to the man who is in work, he does not have a choice of being paid at home; he can only be paid through the pay packet.

Lord Goodhart: I am perfectly well aware that if the man elects for payment he will receive it through the wage packet and that it will not be paid directly to him. However, if a couple elects for the payment to be made to the caring non-earning parent, the payment does not go through the wage packet. That is a major infringement of the purity of the system.

The Minister made a point about non-wage labour costs and pointed out that the figure for Scandinavia was more than 50 per cent of the actual wage costs. She also mentioned that for France, Germany and Italy the figure was around 44 per cent and that it was 27 per cent for the United Kingdom. My reaction to that would be to say: good, let us keep it that way. It seems to me that

4 May 1999 : Column 568

this is one of the costs which is unnecessary. Indeed, I can see no serious benefit either to the economy or to the employees through doing it that way.

I have no doubt that the Government have carried out widespread consultation. But we have not been told the results of it. It is clear that business, especially small business, is vehemently opposed to these proposals. The poverty groups undoubtedly welcome the higher level of support which will be given via tax credits, as compared with family credit. However, as far as I am aware, they do not put any serious emphasis on its payment through the wage packet rather than directly to the earner. Indeed, I believe that many of them are as worried as we are about the effect of switching from the purse to the wallet--an argument with which we have dealt before.

It may be a short-sighted policy on the part of employers to reject employees who are likely to be eligible for tax credits, but it will not necessarily be that difficult to identify which potential employees are more likely to be eligible. Short-sighted or not, I believe that employers are likely to discriminate in that respect. Of course, the Government have done what they can through Schedule 3 to the Bill to prevent that, but there is no way in which one can identify every case, or a substantial number of cases, in which that is the undisclosed reason for one employee being preferred to another.

The working families' tax credit may increase people's willingness to take up jobs, but I believe that that is due to its total income effect. I am afraid that I remain unpersuaded by what the Minister said. I therefore wish to test the opinion of the Committee.

4.17 p.m.

On Question, Whether the said amendment (No. 29) shall be agreed to?

Their Lordships divided: Contents, 161; Not-Contents, 121.

Division No. 1

CONTENTS
Aberdare, L.
Addington, L.
Addison, V.
Ailsa, M.
Alexander of Tunis, E.
Ampthill, L.
Anelay of St. Johns, B.
Annaly, L.
Astor of Hever, L.
Avebury, L.
Belhaven and Stenton, L.
Bell, L.
Berners, B.
Biddulph, L.
Biffen, L.
Blaker, L.
Blatch, B.
Bowness, L.
Brabazon of Tara, L.
Brentford, V.
Bridgeman, V.
Brougham and Vaux, L.
Butterworth, L.
Cadman, L.
Caithness, E.
Calverley, L.
Campbell of Alloway, L.
Campbell of Croy, L.
Carlisle, E.
Carnock, L.
Chadlington, L.
Chesham, L.
Clanwilliam, E.
Clement-Jones, L.
Colwyn, L.
Cope of Berkeley, L.
Courtown, E.
Cowdrey of Tonbridge, L.
Cox, B.
Davidson, V.
De Freyne, L.
Dean of Harptree, L.
Deedes, L.
Denham, L.
Denton of Wakefield, B.
Dholakia, L.
Dudley, E.
Eden of Winton, L.
Elliott of Morpeth, L.
Exmouth, V.
Ezra, L.
Falkland, V.
Fookes, B.
Freeman, L.
Gainford, L.
Geddes, L.
Glentoran, L.
Goodhart, L. [Teller.]
Gray of Contin, L.
Hampton, L.
Hamwee, B.
Harding of Petherton, L.
Harmar-Nicholls, L.
Harmsworth, L.
Harris of Greenwich, L.
Harrowby, E.
Hayhoe, L.
Henley, L.
Higgins, L.
Holderness, L.
Hooper, B.
Howe, E.
Hylton, L.
Jellicoe, E.
Kimball, L.
Kinnoull, E.
Kitchener, E.
Knight of Collingtree, B.
Lane of Horsell, L.
Lauderdale, E.
Lawson of Blaby, L.
Leigh, L.
Lester of Herne Hill, L.
Long, V.
Lucas, L.
Lucas of Chilworth, L.
Ludford, B.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
McConnell, L.
Mackay of Ardbrecknish, L.
Mackay of Drumadoon, L.
Mackie of Benshie, L.
McNair, L.
Maddock, B.
Marlesford, L.
Mayhew of Twysden, L.
Mersey, V.
Meston, L.
Methuen, L.
Middleton, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Monro of Langholm, L.
Montgomery of Alamein, V.
Morris, L.
Mountevans, L.
Mowbray and Stourton, L.
Moyne, L.
Munster, E.
Murton of Lindisfarne, L.
Newby, L.
Nicholson of Winterbourne, B.
Noel-Buxton, L.
Norrie, L.
Northesk, E.
Nunburnholme, L.
Oppenheim-Barnes, B.
Pender, L.
Perry of Southwark, B.
Quinton, L.
Rathcavan, L.
Redesdale, L.
Renwick, L.
Rodgers of Quarry Bank, L.
Romney, E.
Rotherwick, L.
Rowallan, L.
Russell, E. [Teller.]
Saatchi, L.
St. John of Fawsley, L.
Sandberg, L.
Sandford, L.
Sandwich, E.
Seccombe, B.
Sharp of Guildford, B.
Skelmersdale, L.
Soulsby of Swaffham Prior, L.
Stodart of Leaston, L.
Strathcarron, L.
Sudeley, L.
Swinfen, L.
Teviot, L.
Thomas of Gwydir, L.
Thomas of Walliswood, B.
Tope, L.
Tordoff, L.
Trefgarne, L.
Trumpington, B.
Vivian, L.
Waddington, L.
Wade of Chorlton, L.
Wallace of Saltaire, L.
Wigoder, L.
Wilcox, B.
Williams of Crosby, B.
Winchilsea and Nottingham, E.
Windlesham, L.
Wolfson, L.
Young, B.

NOT-CONTENTS
Acton, L.
Ahmed, L.
Allenby of Megiddo, V.
Alli, L.
Annan, L.
Archer of Sandwell, L.
Ashley of Stoke, L.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Blackstone, B.
Blease, L.
Blyth, L.
Brightman, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Bruce of Donington, L.
Burlison, L.
Carter, L. [Teller.]
Castle of Blackburn, B.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cocks of Hartcliffe, L.
Craigmyle, L.
Crawley, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Dixon, L.
Donoughue, L.
Dormand of Easington, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Gilbert, L.
Gladwin of Clee, L.
Glenamara, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Hacking, L.
Hardy of Wath, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howie of Troon, L.
Hoyle, L.
Hughes, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hylton-Foster, B.
Ilchester, E.
Irvine of Lairg, L. [Lord Chancellor.]
Islwyn, L.
Janner of Braunstone, L.
Jay of Paddington, B. [Lord Privy Seal.]
Jeger, B.
Jenkins of Putney, L.
Johnston of Rockport, L.
Judd, L.
Kirkhill, L.
Lockwood, B.
Lofthouse of Pontefract, L.
Longford, E.
Lovell-Davis, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller.]
Mackenzie of Framwellgate, L.
Marsh, L.
Mason of Barnsley, L.
Merlyn-Rees, L.
Merrivale, L.
Milner of Leeds, L.
Molloy, L.
Monkswell, L.
Montague of Oxford, L.
Morris of Castle Morris, L.
Morris of Manchester, L.
Murray of Epping Forest, L.
Orme, L.
Palmer, L.
Paul, L.
Peston, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Randall of St. Budeaux, L.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rix, L.
Sainsbury of Turville, L.
Sawyer, L.
Scotland of Asthal, B.
Sefton of Garston, L.
Serota, B.
Shepherd, L.
Simon, V.
Simon of Highbury, L.
Smith of Gilmorehill, B.
Stallard, L.
Stoddart of Swindon, L.
Strabolgi, L.
Taylor of Blackburn, L.
Tenby, V.
Thornton, B.
Turner of Camden, B.
Uddin, B.
Varley, L.
Walker of Doncaster, L.
Walpole, L.
Weatherill, L.
Wedderburn of Charlton, L.
Whitty, L.
Williams of Elvel, L.

Resolved in the affirmative, and amendment agreed to accordingly.

4 May 1999 : Column 570

4.28 p.m.

Lord Higgins moved Amendment No. 30:

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