CHILD MAINTENANCE DISREGARD (No. 2)

Part of Orders of the Day — Child Support Bill – in the House of Commons at 4:35 pm on 22nd May 1995.

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Photo of Mr Keith Bradley Mr Keith Bradley Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Social Security) 4:35 pm, 22nd May 1995

I beg to move, That the clause be read a Second time.

Throughout the passage of the Bill, whether on the Floor of the House or in Committee, the Labour party has attempted to be constructive. In that spirit, I have moved new clause 3, which would introduce a child maintenance disregard into the legislation.

As I am sure you are aware, Madam Speaker, this is the fourth time that we have tried to insert a child maintenance disregard into the Bill. We first attempted to do so by way of a reasoned amendment to the Second Reading debate, and we tried to introduce it in two different ways in Committee. We are now attempting on Report to introduce the disregard, which we believe is a crucial omission from the legislation.

As we have made three previous attempts to introduce a disregard, I do not intend to range over all the issues involved this afternoon. We have always intended to be constructive in the debates, and I hope that our proposals will at last find favour with the Government. However, I proceed with some trepidation, as I do not know whether the Secretary of State, who is lined up against me in the debate, will be persuaded by the logic of the arguments in support of the disregard.

Under the current arrangements, any maintenance that is paid to the parent with care who is in receipt of income support is deducted pound for pound from that income support. Therefore, the parent with care—normally the mother—and subsequently the children do not receive a single penny from any maintenance payment. Despite all the changes that have been made to the Child Support Act 1991 at various stages through the regulations and through this legislation, the situation will not alter, and the arrangements whereby income support is reduced pound for pound will remain in place.

However, the situation could be rectified if income support claimants were able to keep a small amount of every maintenance payment, which would be known as the maintenance disregard. We are attempting to establish the principle of such a disregard in new clause 3. If the Government were to accept that principle this afternoon, we would welcome their views about the level at which to set the disregard, which would then be debated subsequently as part of the regulations and the provisions in the Bill.

Such a child maintenance disregard would essentially have two effects. First, the poorest children would gain from maintenance payments. Secondly, the so-called absent parents—I accept that that definition is not satisfactory, but it is the terminology used in the Bill, so I shall use it for the purposes of the debate—would have an incentive to pay, and parents with care would have an incentive to apply for maintenance through the Child Support Agency.

Let me put the proposal in some overall context. According to official statistics, seven out of 10, or 70 per cent., of one-parent families claim income support. In February 1994, 42 per cent. of all claimants having benefit deducted to replace social fund loans were lone parents, and in 1993, 46 per cent. of parents with care on benefit were repaying fuel debts. Those and other official statistics show that lone parents on income support face particular financial hardship. The child maintenance disregard proposed by the Labour party is an attempt to address the problem.

The Government consistently oppose the proposal, because they do not wish to incorporate any work disincentives into the benefit system; hence their proposal in the Bill to introduce a child maintenance bonus instead. However, that proposal is inadequate.

Like the back-to-work bonus in the new jobseeker's allowance, it does not benefit families at the point of real need, but instead promises help, probably in future but perhaps never, as it may take as long as four years of consistent eligibility to reach full entitlement to the new bonus. We believe strongly that split families, with one parent caring for children, need help immediately, not at some future date.

The Government should recognise that many factors are involved in the decision to seek work, particularly when the needs of young children or other responsibilities, such as caring for sick or disabled relatives or friends, have to be taken into account. Those acting in a caring capacity may not be able to seek work. Even if such a person were available for work, there is clearly no guarantee that work would be available.

Throughout our deliberations on the matter, the Government have been unable to provide clear evidence that introducing a maintenance disregard on income support creates a disincentive to work. I should be grateful if they could provide that evidence this afternoon.

However, to allay the Government's fears on that point, it may be possible to run the small weekly disregard alongside the child maintenance bonus in order to help people back to work, thus enabling lone parents on income support perhaps to take part-time work, and therefore immediately reducing the social security bill and the cost of the disregard, and allowing lone parents to obtain skills and ultimately move into full-time work in the longer term, when their children become less dependent.

In addition, a small disregard provides protection against the complete loss of income support that may be associated with maintenance payments, and other losses, such as free school meals and other benefits, that lead to the classic poverty trap, where someone might end up far worse off through the loss of their total entitlement to income support and insufficient compensation.

It must be stressed that the introduction of such a child maintenance disregard is not the only answer in addressing the enormous problems associated with child poverty, but we believe that it is a clear and proper step in the right direction. The Government, on the other hand, believe that only if lone parents return to work will the problems of poverty really be overcome.

It is interesting to note that, in one of our debates in Committee on that point, there was an exchange of views between my hon. Friend the Member for Croydon, North-West (Mr. Wicks) and the Minister. When he was asked how many people were lifted off benefit by the proposals so far, the Minister recognised that, despite the massive £9 billion currently paid in support of lone parents, only 8,000 out of 1 million people—or less than 1 per cent.—had been lifted off benefit. That shows that more must be done to effect the changes that the Government intend.

4.45 pm

The Opposition are clear that it is not enough to look only at in-work benefits. We have to consider the reality for lone parents who are out of work, their availability for benefit, and the amount of money they should be given to ensure proper care for their children. Many organisations, such as the Child Poverty Action Group, the citizens advice bureaux and many others representing lone parents and single people living in poverty, identified that the Government's approach is far too simplistic, and that we cannot look at work as the only way out of poverty.

There are many reasons why it may not be possible to obtain paid employment. Lone parents with young children may feel it more appropriate to remain at home to care for their children, particularly in their early years.

By refusing to accept the need for a small maintenance disregard, the Government are perpetuating the anomaly whereby children of lone parents who cannot take employment do not gain from the payment of child maintenance. According to the Child Support Agency's own statistics, they represent not only the great majority of CSA clients, but the poorest of those clients.

In Committee, the Government claimed that the welfare of the child was at the heart of the legislation. If that is the case, they would surely wish to accept new clause 3. It would give more money to the children of parents with care; it would act as an incentive to co-operate with the agency; it would provide an incentive for so-called absent parents to pay maintenance; and it would help restore public confidence in the agency by showing people on income support that the Treasury was not the only gainer and that, crucially, the children would also gain, as was clearly envisaged by the Government's White Paper entitled "Children Come First".

I hope that, even at this late stage in our deliberations, the Government will accept that there is clear merit in introducing the child maintenance disregard. If they accept that, they will clearly wish to add new clause 3 to the Bill.