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Earl Russell: My Lords, could we perhaps consider this as a case where we need flexibility within guidelines? Would that get us anywhere near satisfying both sides?

Baroness Hollis of Heigham: My Lords, I have a dilemma here. If I could predict with any confidence where and when we might need such powers, I could insert one of those provisions used in the Chester case; for example, that "The Secretary of State shall have the power", and so on. However, I cannot do so. While thinking on my feet, I have been trying to give noble Lords possible examples of developments of which I am aware that could conceivably affect the appropriate use of tax credits in the future in ways that benefit those people whom we most want to help. Should we need to increase the support given to large families or ethnic minority families, I said that we may choose to do so. Alternatively, we may want to look at the elements surrounding working tax credit for those without children. Indeed, if we found particular examples in that respect, we might wish to reconsider the position.

I also gave a possible example of the interlocking of education maintenance allowances for those under the age of 16 with, say, either the family element or child benefit. The latter are all possible situations. I have absolutely no knowledge of whether government may wish to revisit that area in, say, one year, five years, or even 10 years' time. It must surely be wise to have a residual power to enable us to alter the constituent elements, provided that that power is subject to proper parliamentary scrutiny; and it will be, because it will be dealt with by way of affirmative regulations.

Earl Russell: My Lords, before the Minister sits down, may I ask whether she understands that her point on not foreseeing the circumstances applies also to the fact that we cannot foresee the circumstances in which future Ministers may wish to use the regulations, and that scrutiny without control is of limited use?

Baroness Hollis of Heigham: My Lords, that is the point that I was making. This is not a power for the Secretary of State to decide by guidance; the decision will be made by Parliament when it receives regulations for consideration under the affirmative procedure. Those regulations will be subject in the usual way to the publicity generated by lobby groups and to other factors.

This type of debate always arises when legislation provides for a power to make further provision. In this case, however, the alternative would be to deny the possibility of adjustments or alterations to benefit those we are seeking to help without joining the queue for primary legislation. Your Lordships are realistic about this. As we know, every department has a queue for primary legislation. Unless it can be parachuted

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into other legislation, enacting a provision can take one or two years. Without this power, we shall for the foreseeable future be freezing development in the sphere of family social policy. It would deny my department and the Inland Revenue the ability to make representations to make adjustments in the light of information and experience. That cannot be sensible.

The objective should be to scrutinise the Government and to hold them to account for their actions. I believe that this Bill goes further than any preceding legislation in terms of publishing regulations in advance, scrutinising delegated powers and other protections. In social policy terms, I believe that it would be daft to remove this power. The important point is to ensure that the power, if exercised, is exercised subject to proper parliamentary scrutiny. I do not think that I can say any more about it without repeating myself ad nauseam.

The Earl of Northesk: My Lords, I fear that the noble Baroness was a little premature. I was going to say that we have some sympathy for the Government's dilemma. None the less, we still believe that there is a strong argument for tightening the drafting. I shall certainly have to study this very carefully between now and Third Reading, but I invite the noble Baroness to consider our perspective on the point. There is certainly a feeling in the House that the drafting is too wide and could perhaps be narrowed to the agreement of all sides of the House. As I said, we have some sympathy for the Government's dilemma, but I suspect that we shall have to return to the issue at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.15 p.m.

Lord Freeman moved Amendment No. 33:

Page 7, line 7, at end insert ", with a view to ensuring that the amount of credit paid to all claimants supplements their household income to a broadly equivalent degree having regard to the different income levels and personal and domestic circumstances of different households"

The noble Lord said: My Lords, we move from the general to the particular in subsection (4). My amendment deals with the principle of equivalency and the use of the McClements scales. The McClements scales might sound very much like an engineering device that the Indian Army might have used in the 19th century, but I assure your Lordships that they are a very important part of determining the relative need of families and other claimants for income-related and housing benefits.

The principle of equivalency, which I shall describe in a moment, does not seem to apply to tax credits. By "equivalency" I mean the commonly used definition of the term—that the same degree of support should be provided to households so that incomes are broadly equivalent, taking into account not only income but the composition of the family unit. I should give a concrete example. Let us assume the same household

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income in two cases: a lone parent with two children; and a couple with two children of the same age as those in the first family, with all other family circumstances being similar. This Bill provides that the child tax credit, the relevant portion of the Bill, would be the same for the lone parent and the couple. I am sure that your Lordships will immediately appreciate the inequity in that. As I think stands to reason, in the raw definition of income need, two adults on low income will need more to support the family unit than will a lone parent.

The McClements scales have been used in the social security system as broadly defined in the past to provide equivalency by indicating how much extra is needed, for example, for a couple as compared with a lone parent, and vice versa, and in relation to the number of children in the family. However, that principle has not been used for either current tax credits or for those proposed in the Bill. I think that we need to probe why that should be so. I should add that I appreciate that, going back some years, both Labour and Conservative administrations have changed policy on the treatment and support of lone parents. This Bill is neutral in discriminating between lone parents and couples. I am also well aware that couples are mutually supportive in the sense that, unlike lone parents, one or both are more likely to be able to increase the family income.

I think that the House would appreciate any guidance the Minister can offer on this. We would also appreciate an explanation of the thinking behind excluding the principle of equivalency from the Bill. I beg to move.

Lord Higgins: My Lords, my noble friend Lord Freeman has produced a very interesting amendment which introduces the concept of equivalence. I suppose that, in one sense, the Government are generally trying to achieve equivalency. The idea is that, once people are on benefit, all their personal circumstances will be taken into account, and the social security system should not be used to produce inequality rather than equality within that context. Thinking immediately of the situation with regard to hospital down-rating rules, I am a little worried as to whether such objectives are pursued as effectively as one might wish. However, that is a rather detailed point. I shall be absolutely fascinated to hear the Minister's response to the amendment, which raises some very interesting points.

Baroness Hollis of Heigham: My Lords, there seem to be two conflicting goods—in the moral rather than the material sense—in this situation. It is clearly true that a second adult in a household will require more food, transport and so on. One might therefore conclude that extra allowance should be made in the working families' tax credit system and elsewhere to deal with those requirements. Conversely, as we know from previous arguments on withdrawing, reducing or levelling out the benefits that lone parents receive in relation to other families, lone parents are not only more likely to be poor than couple families, they are more likely to stay poor. Couple families are more

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likely to receive financial support only for relatively short periods, usually when a job ends, work hours are reduced or overtime is lost. It is a temporary safety net from which they bounce back.

Unlike couple families, lone parents cannot trade low incomes for low hours. Men in couple families are particularly likely to make that trade. As lone parents have sole childcare responsibility, they must reduce their hours to cope, tending to work between 20 and 22 hours per week. Therefore, they remain on tax credits or in-work benefits longer, and consequently remain poorer, than couple families. That is the double consideration. In any particular week a couple family may eat more food and have higher outgoings, but over time the lone parent, whether in or out of work, is likely to be on benefit for longer and will experience both persistent and deeper poverty than will the couple family. It is that poverty that scars.

One cannot win in trying to get those two matters right whether one examines Family Budget Unit assessments or household income patterns. At one stage under a previous Conservative administration lone parents received a higher premium. That was a decent recognition of the problem. We are not saying that one family should receive a different level of support from another. The family premium and the lone parent premium were introduced in 1988 by a previous Conservative administration. I believe that that was a recognition that there is no right answer here. You are trying all the time to balance two considerations with regard to short-term and longer term needs. I believe that we have the matter right but I can see that there are arguments to the contrary. That is the thinking behind the measure. I could talk for much longer about different patterns of poverty experienced by workless couple families and lone parent families but this may not be the occasion for such a social policy extended speech.

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