Lone Parents

Part of the debate – in the House of Lords at 8:23 pm on 16 March 2000.

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Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security 8:23, 16 March 2000

My Lords, I do not wish to give way. I have only 12 minutes to speak and I am trying to answer many of the points made by noble Lords. I very happy to take up points in correspondence with the noble Earl.

If there is no substitution, unless there is additionally a wage premium--the research shows that one of 6 per cent almost certainly exists--then again that programme is in profit. It is already clear that the total gain of people coming off benefit is exceeding the cost of the programme when these other factors, substitution and wage premium, are put into effect. If we strip out the differing labour markets of the comparator areas, it is already clear that the New Deal is having a significant and valuable effect. It is early days but the programme is a success for those who are reaching it. Given those assumptions, it is already breaking even.

The problem--a legitimate problem--lies with those lone parents we are not reaching--almost three-quarters--who, despite letters, are not coming to a New Deal interview. That is the problem. They are often those who have been lone parents for many years. Half of those tell us that they would have come on to the New Deal with further encouragement. It is clear that we must work with that group. None the less, we face a problem in regard to those parents who inherit many years off work, who may have poor health, whose children may have poor health, who have low skills and qualifications, and who live on run-down estates. It will take time to build up their skills and confidence, but we must reach them--and we are determined to do so.

That is why, through the new ONE pilot schemes, we seek to interview all lone parents when they first come on to benefit so that they do not join the stock of those lone parents who have remained socially isolated and beyond our reach. Following the interview, they are not, of course, required to go into work or take training if they do not wish to. But I believe that a lone parent is the best person to judge what is in the best interests of herself and her child. I am sure, also, that that lone parent needs to be empowered to make that judgment. If she does not know about the options, which will be explained to her in the setting of a supportive ONE interview, she cannot take up the opportunities. If she does not know the choices, she cannot choose.

So I repeat: the New Deal is already a success. It is turning around the lives not just of one generation, but of two. But we need to ensure that when people become lone parents they are fully aware of all the opportunities available to them so that, when they judge that the time is right, they too will be able to make that springboard leap into work which alone will guarantee them relative prosperity.

But we need to do more than provide financial support; we need to offer more than the New Deal. We need also to adapt the benefits system in order to ensure that work pays. Understandably, lone parents will not take jobs that do not pay. The new WFTC and its generous childcare tax allowance will improve incentives to work. As a result, the financial benefit for someone with two children moving into work and receiving a typical entry wage has increased from £30 a week to a £54 a week gain. Half of those claiming WFTC are lone parents; half the rest are in families where women are the main wage earner. WFTC is a woman worker's benefit. It will raise women's wages and will help those working in traditionally female, low-paid sectors such as catering and retailing.

But, in turn, the WFTC must be underpinned by a minimum wage, so that WFTC does not subsidise the exploitative employer. That point has not been mentioned in the debate. Beneficiaries of the minimum wage too are women, young people, part-time and casual workers and, above all, lone parents. One effect which again was not mentioned during the debate and is little noticed, but in which I take a great deal of pleasure, is that the minimum wage takes a further one-quarter of a million women over the lower earnings limit, allowing them to build up contributory benefits, including incapacity benefit and stakeholder pensions, in their own right.

Research suggests that, put together, the lower rate of tax, the national insurance changes, the minimum wage, and the WFTC mean that a quarter of a million extra people will enter the labour market and relative prosperity; and that, overwhelmingly, the beneficiaries will be women, among them lone parents.

If the perception of low and insecure wages has been one major barrier to re-entering the labour market, the cost and availability of decent childcare has been a second. It was mentioned by several speakers. The more generous childcare credit, which unlike the arrangements under family credit actually aids the poorest, will fund up to £70 of a £100 weekly childcare bill for one child, and up to £105 of £150 for two or more. And we are improving the supply of childcare: we are investing nearly £500 million in England alone.

A number of my noble friends, including my noble friend Lady Crawley, asked whether there should be a role for grandparents. We know that informal care by grandparents is the childcare choice of many lone parents. It is obviously an issue on which the Government must reflect.

The third problem that lone parents tell us they encounter is surviving the transition from income support to work, surviving that first month without money--and hence the housing benefit roll-on and the income support roll-on. I am glad that those have been welcomed by my noble friends.

A final problem, mentioned by my noble friends Lord Brett and Lady Kennedy, has been the question of support for lone parents when they enter further and higher education. Those who enter HE come within the student support system, but they remain eligible for income support and housing benefit if their income permits them to claim it. As for lone parents entering FE, I am sure that my noble friend will be aware that the ring-fenced budget for childcare access funds will be increased to £25 million in the year 2001--nearly three times the amount in 1999-2000. That will help some 37,000 students, particularly those on low incomes and including, above all, lone parents.

If one reason that a child is poor is because her parent with care is not in work, the other reason is that the non-resident parent is failing to support her. Children of lone parents are doubly disadvantaged. Too often, they are in a workless family; invariably they are in a fractured family. So I am grateful for the kind words of my noble friend Lord Warner welcoming our child support measures.

We inherited a CSA in which 70 per cent of mothers and 70 per cent of fathers failed to co-operate with the CSA and, as a result, some 1 million children were denied the maintenance that they should have received. We hope that as the result of our reforms he will co-operate under a simple system and that she will help us, because she will stand to gain £5 if he is on benefit, £10 a week if he is in work and she is on benefit; and if she is on working families' tax credit, the lone parent will keep every penny of the maintenance that she will receive. Her children will not only gain from the extra cash; they will see their father contributing to their keep and will, I hope, learn how decent dads behave.

Finally, we shall seek to introduce the integrated child credit: a sort of basic citizen's income for children which will move seamlessly from out-of-work benefits to in-work provision, thus ensuring the well-being of children.

We value all families, but we know that lone parent families are not only poor, but persistently poor and find it very hard to spring the trap of that poverty. That is why, together, our financial support for those lone parents who remain on income support, our New Deal, the minimum wage, the WFTC, the national childcare strategy, and our work for supporting families and children have shown such significant progress over the past two to three years. We have more to do, but we are getting there. If we succeed, we shall not only springboard one generation, but two, into a secure and prosperous life.