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Lord McKenzie of Luton: I do not usually come to the Minister's aid but if you have two people in business together, that would be a partnership and you would typically look at each person's share of the profits and presumably aggregate those if they are part of the same household, not if they are in different households.

Lord Freud: My Lords, this is one area where a single earner disregard makes life rather easy. I hope that we will be congratulated on that structure.

Lord McKenzie of Luton: Can I just make one other point? It is wrong of us to press the Minister as I know that this is embryonic and a lot of work is going on. If the process is to be some early report in that has to be assessed against what is eventually a tax assessment or consistent with VAT accounts, that sort of presupposes that there has to be some look-back or process of adjustment-in a sense the tax credit-type arrangement, which is quite different from the real-time earnings for employed people. Does the noble Lord envisage that as part of the system?

Lord Freud: It is clear that we cannot use real-time information for the self-employed. It is another system. It will be much closer to the kind of reporting systems for tax credits in this area-and for that reason.

Lord Wigley: A disabled person might have feared going self-employed in the past because of the possibility of losing benefits and not being able to get them back at some future date. That would have been a psychological barrier. Could the Minister confirm-I am sure that he can and will be eager to-that that problem should be overcome by this system? It should be sympathetic to, and encouraging of, people becoming self-employed.

Lord Freud: Yes, the system is absolutely straightforward for a disabled person who goes into employment, where it is unequivocally much safer. There is a difference in self-employment in that, in cases of low earnings, we will look for an element of potential conditionality and a relationship with that person when they do not want to observe the minimum income floor. You have a choice: either have a minimum income floor and then there is not conditionality; or you come below it and there is a conditionality regime. That does not mean there is an instruction saying, "It is out to work. Stop what you are doing". It absolutely does not mean that. It means that we know what people are doing and, after discussing it with them, can reach an assessment of what they should be doing. In many cases we will be absolutely happy for them to continue that regime. It

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offers us an opportunity to know what is really happening out there-I suspect in a way that we do not know now.

Baroness Donaghy: I am extremely grateful to the noble Lords who took part in this discussion-the noble Lord, Lord Wigley, and my noble friends Lord McKenzie, Lord McAvoy and Lady Hollis. I have learnt something today. I did not know that my noble friend Lord McAvoy owned a pub. I do not know if that makes him a licensee. I thought that I was the only licensee in the House of Lords. I was one for 16 years. We must obviously now compare notes.

I am also extremely grateful to the Minister. I take assurances from some of the things that he said. He accepted that the self-employed are different and that their situation is complex in relation to this subject. He is determined to produce clear rules-I have written that down: "clear rules". I do not know if those rules will be as clear as those in Amendment 52B from the noble Baroness, Lady Howe, and my noble friend Lady Lister, which was just debated. Let us hope that they are really clear.

I take assurance from the Minister saying that we cannot use real-time information. I am aware that this is work in progress. I have some worries about the when. In my contribution I asked when this information was going to be available. I am pleased that we will have the opportunity to look at this in terms of the affirmative situation to which he referred. We will have another chance to look at the regulations. He acknowledged that specific rules will try to cope with things like the start dates and what happens when things go badly wrong. Again, I welcome the fact that he has tried to cover the entire patch.

I understand why he baulked at mentioning the issue of bogus self-employment. It is a big subject but I must come back to the comment that some of the real abuses are around the edges of the twilight zone of informal economy, bogus self-employment and people who abuse the system-sometimes all three. The sooner we can get some co-ordination in our systems, the better for everyone. I may come back to haunt the Minister about this whole area on another occasion but in the light of those positions, although still with some question marks, I beg leave to withdraw the amendment.

Amendment 52BA withdrawn.

Lord De Mauley: I hope noble Lords would agree that this might be a convenient moment for the Committee to adjourn until 2 pm on Thursday.

Committee adjourned at 7.31 pm.


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