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Lord Higgins: There is integration in the sense that the amount is knocked off and netted off. None the less, I shall consider carefully the various points that have been raised.
Finally, the noble Lord objected to my using the word "suffer". He said clearly that there is a reduction in the benefit which, for whatever reason, employers have
enjoyed since the 1940s. If that is not suffering, I do not know what is. At all events, this has been a helpful discussion. We shall need to consider carefully what has been said and whether we should return to the matter at Report stage. On that basis, I beg leave to withdraw the amendment.Amendment, by leave, withdrawn.
Lord Higgins moved Amendment No. 31:
The noble Lord said: This is a different kind of amendment. We have already had considerable discussion on whether there is any real advantage in the system which the Government propose--that the working families' tax credit should be paid through the payroll rather than in some other way. As the noble Lord, Lord Goodhart, pointed out earlier, the principle of that has been undermined by the fact that the Government have said that couples where one person is working and one is not will have that option. What we are saying here is that single parents should have that same option and the same degree of choice as couples in the circumstances I have just described.
I am somewhat reinforced in the view that the amendment should be accepted because it has very widespread support. That support comes not only from the National Council for Single Parent Families, the Low Pay Unit and the Trades Union Congress but also from the CBI, the Institute of Directors and the Federation of Small Businesses. All take the view that restricting the way in which the single parent may receive the benefit should not be supported. We share that view and that is why we are moving the amendment.
Perhaps I may say at the outset that it seems paternalistic--I am not sure what the politically correct equivalent of paternalistic is nowadays--to say that lone parents are not able to make up their own minds or understand that if they take a job they will receive a working families' tax credit as well. It is clearly something they are likely to appreciate. There is a simple point in this respect that has not been made previously. Only when they receive the first payslip will they be able to see the credit. Even under the Government's scheme they will not be able to see in advance what the situation is. We are effectively saying that this is a matter in which lone parents should have a choice.
Much of the debate has centred on whether the Government's change of plan will reduce stigma. I have some doubts about the working families' tax credit as opposed to family credit. It is argued that people are reluctant to claim a particular benefit because of stigma. When there is a take-up rate for family credit of 85 per cent by expenditure--the take-up rate by lone parents is something over 90 per cent--it is difficult to see how this change will help to reduce stigma to the extent that there is a greater take-up. The Government have not hitherto given an estimate of the extent to
A related question is loss of privacy, particularly, as the noble Lord, Lord Goodhart, said, in small companies, where the individual family circumstances of a particular lone parent will be known far more than would be the case in a larger company. That will be even more the case if the lone parent is in receipt of child benefit as well as working families' tax credit and the equivalent child benefit.
There are additional problems. The system may well result in delays in benefit payment if it is not made directly. Concerns have been expressed that businesses, particularly small businesses, may not pay on time. At present that is not the case. The Low Pay Unit has stressed that aspect. Direct payment will be made for the first few weeks, but thereafter there may be delays in payment.
In addition, firms may be deterred from taking people on if they know that they are in receipt of working families' tax credit. At the very least, the firm will be involved in the kind of calculations that we have discussed. So there is a problem in that respect. It was made clear in earlier debates that the costs are regressive in percentage terms so far as small firms are concerned. If some lone parents opt for direct payment rather than having benefit paid through the employer, to that extent the burden on individual firms will be less, and those firms might be more inclined to take on people.
There are also problems with regard to changes of employment and where a lone parent has more than one job. Again, there is a strong case for their having a choice. I emphasise that we are not saying that it must happen automatically, but that they should have a choice as to whether they are paid directly or through the payroll. We do not accept that the arguments advanced by the Government as to the virtues of benefit through the payroll are such that the problems that lone parents may face as a result of not having that choice justify their being compelled--that is effectively what the Government are doing--to have the payment made in a particular way.
These are strong arguments, and there is an overwhelming case for accepting the amendment. As I have indicated, it has widespread support from almost every outside group that one can think of. No doubt the noble Baroness will tell the Committee if there are others who take an opposite view. I beg to move.
Lord Goodhart: I support the amendment. My noble friend Lord Russell and I tabled an amendment of a rather more limited nature but for a similar purpose. I refer to Amendment No. 39. Although it is not grouped with this one as its subject is not quite the same, it comes close to it.
Amendment No. 39 provides an opportunity for employees to opt out in certain specified circumstances and to claim payment direct from the Board of Inland
Therefore, there are likely to be acute problems with certain classes of worker; for example, with workers with part-time jobs it is a question of who pays. At the time of the review of the proposals on tax credits by the Select Committee on Social Security in the House of Commons, the Inland Revenue had still not decided. The Select Committee was critical of the failure to decide, and suggested that one of the options that it should consider was direct payment. The Inland Revenue now proposes payment by the main employer. But identifying the main employer is sometimes more easily said than done.
Another class of employee also will have problems. I refer to people on short-term contracts, who usually work intermittently. The tax credit, once granted, runs for 26 weeks. Where a contract is for less than 26 weeks, it is surely simpler and better all round to pay the tax credit directly. If receipt through the pay packet is an incentive for some to take a job, they will not want to opt out. Why not allow those who face problems with payment through the wage packet to opt out? There will be a particular problem for single parents. Couples can, of course, get out of the situation quite easily by agreeing on payment to the non-working partner or the partner in the more secure job. Single parents cannot do that.
Then there is the privacy argument. I accept that from the amount of credit it will not normally be possible to work out details of the family situation of the employee. But in some cases an employee may not want an employer to know that he or she is receiving tax credit at all. There are some communities in this country in which an unmarried woman might well not want her employer to know that she has a child to support. Tax credit cannot be claimed unless there is a dependent child, so the very fact of the claim would indicate to an employer that the woman had a dependent child. If a woman in that position can produce the necessary information to enable the Inland Revenue to calculate the credit, why not allow her to receive the credit direct from the Inland Revenue? I accept that in such a circumstance there will be problems if the Inland Revenue has to carry out compliance checks with an employer. But I do not see why it should be impossible to carry out those checks without disclosing that the checks are for family tax credit, or, if there is more than one employee, which employee is claiming.
If there are cases of reasonable objection to payment through an employer--there certainly are some; if not all that many--why not allow an opt-out? My amendment suggests that there should be certain categories. But why stop there? Having seen the amendment proposed by the noble Lord, Lord Higgins,
Page 3, line 35, at end insert--
("( ) The Board shall ensure that any single parent can decide to receive payment of any tax credit direct from the Board rather than from the employer.")
5 p.m.
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