Clause 10 - Entitlement

Tax Credits Bill – in a Public Bill Committee at 2:45 pm on 17 January 2002.

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Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs 2:45, 17 January 2002

I beg to move amendment No. 78, in page 7, line 16, at end add

'and having one or more children or qualifying young persons in their direct care, in the case of the basic element as defined in section 11(4)'.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

With this it will be convenient to take the following amendments: No. 79, in page 7, line 24, leave out from 'persons' to ', or' in line 25 and insert

'has one or more children or qualifying young persons in their direct care'.

No. 80, in clause 11, page 7, line 31, after 'persons', insert

'having one or more children or qualifying young persons in their direct care'.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

The amendment is a drafting amendment designed to help the Government. The clause uses the phrase:

''responsible for one or more children or qualifying young persons''.

We suggest a sharper definition. That relates back to the question of whether credits might be divided between two separated families who are responsible for more than one person in their direct care. However, that is not the main reason for the amendments, which deal primarily with one of the more important aspects of critiquing the Bill.

The Government will be well aware of the arguments advanced by the Institute for Fiscal Studies against extending working tax credits to couples without children. There is no established evidence that such an incentive to work is needed for that group of the population. A considerable number of people will be brought into the net of tax credits, yet there is no logic in doing so. When various parties asked, ''Why are the Government are doing this?'', the

only answer they received was, ''Well, the French do it.'' The Government have not in any way justified why they are extending the scope of tax credits to a component of the population for which the pricing people into work argument is not valid.

This is not a desirable measure. That goes right back to the main theoretical objections to tax credits that were raised 25 years ago, when I was standing as a candidate for Parliament. Help should be focused on those in need. Although it does not appear explicitly in the Bill, I understand that the Government do not intend to include parents under 25 in the working tax credit system, yet they are among the poorest, and perhaps the most deserving of help, in the population. What is the logic of adding to the benefits of those who do not really need them, while failing to address the situation of a group that does need assistance?

I hope that the Paymaster General will be able to respond to those points. We would need a great deal of persuasion as to the merits of supporting the principle of extending tax credits to couples without children.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 3:00, 17 January 2002

This helpful group of amendments takes us to the nub of whether we need working tax credits as distinct from simply adding adult elements to the children's tax credit. I shall try to refine the arguments that I advanced on Second Reading, instead of blowing £15 billion as I did on that occasion. The objectives that the Government want to achieve through working tax credits could be achieved by other means that would be less burdensome on business, better for the Exchequer and more effective in tackling poverty.

The Government's proposals for working tax credits in respect of childless people will help only those who work for more than 30 hours a week and are aged over 25, with additional amounts for those aged over 50. The over-50s are a distinct group for whom there is a new deal programme because it is important to get them back into work. That alone does not, however, justify a tax credit for the whole population.

I cannot help noting in passing that the hon. Member for Arundel and South Downs stood for Parliament 25 years ago.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I was at primary school at the time, which puts it in context.

What is the point of extending tax credits to a group of people who, with the exception of housing benefit, have not been in the means-tested benefits system since they began work? There could be an anti-poverty argument, but poverty rates are lower among childless people than among couples. The Government gave a figure—I cannot remember whether it is in the regulatory impact assessment or the summary of responses to the consultation—of 1 million childless families who are in work and in poverty. How many of those 1 million will fall within the scope of the working tax credit? Will it cover people who work more than 30 hours or the over-25s?

I am not being facetious, because if poverty is the issue and 1 million childless people are in work and in

poverty, one would hope that the mechanism designed to address that was catching most of them. My hunch is that the poor people in work are young people starting out on a career and people who are unable to do a full-time job, which means that they perhaps do a part-time job that they combine with caring. As the hon. Member for Arundel and South Downs pointed out, the Institute for Fiscal Studies states that cross-sectional poverty rates are higher among people who are unable to do a full-time job. There may be an issue about the dynamics of poverty and how long they stay poor, and I know that the Treasury has a view on that.

The question is whether this is an effective anti-poverty measure, and we have not had sufficient information from the Government about that. How many of the 1 million will it catch? If we are going to pay tax credits to everyone who is childless, but we are going to take all the family support away from the pay packet and deliver it to the mother, or whoever, through a bank account or direct payment, one is left with a rump of £15 a week, although sometimes it would be quite a lot more than that, and other times it would be next to nothing. Nevertheless, that is the average figure that I have in my head for the residual working credit. I hesitate to say, ''Is that all?'' because that is a lot of money to some people, but compared with the sums that families with children have been paid, it is radically smaller. However, we will need the whole bureaucratic infrastructure of payment through the pay packet to deliver payments of £15 a week.

The regulatory impact assessments suggest that we will pay fewer payments because some families with children will get no working tax credit. On the other hand, we are bringing in new people such as childless couples and single people, and those numbers roughly offset each other. The number of people receiving payment through the pay packet will be roughly the same although they will be different people. We shall have the same number of payments through the pay packet as we have at present, which is more than 1 million for each pay period, to deliver £15 a week. If we are worried about childless people and money for adults, we could tweak the tax system, although not in the crude way that I mentioned on Second Reading, by looking at the lower rate band and thresholds to get money to these people in a way that imposes no burden on business or the Inland Revenue in making those 1 million payments.

The amendment would stop working credits going to childless people. In many ways it does not go far enough, because if the working credits go only to families with children, one would not want a separate payment. All families with children are being paid a child credit, and one probably wants to lump it on the child credit and be done with it. The issues raised by the amendment are correct, and I should be grateful for clarification from the Minister as to how many of the 1 million childless families would get lifted out of poverty.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Let me start by clearing up a point on which the hon. Member for Arundel and South Downs was not quite right. On the question of who would have access to the working tax credit, the age of 25 is the entry point for childless households, but

where there are children within the household, the same qualification as that for the children's tax credit applies. The age limit and the 30-hour rule for the working tax credit are specifically aimed at households in which there are no children.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

What is the age of access for younger people with children?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

It is 16. It is unlikely that we shall find many households with parents who are 16 with dependent children, but it is conceivable. [Laughter.] It has been a long day.

I want to address the point made by the hon. Member for Northavon—I am trying not to laugh at my faux pas—about why we settled on 25 given that the purpose of the two tax credits is to support children and to provide a work incentive. We recognise that in some cases they come together in one household, but in others they do not. If we return to our experience of the working families tax credit, given the criticism that it was too complicated and that people could not understand it because it combined those two activities, separating it into two credits makes sense. I get the feeling that the hon. Gentleman is not convinced on the working tax credit, but the Government are, which counts for something given our parliamentary majority, and I shall explain why.

The amendment's fundamental purpose is to exclude from entitlement those people in low-paid work who do not care for children. It would also provide an alternative test of whether a family cares for a child. Turning to the restriction of the entitlement to support to those without children, that entitlement is a fundamental part of the changes that we intend to make to improve support for those in low-paid work. There are several other initiatives such as the new deal 50-plus and the new deal for lone parents to move people into work. One objective of the working tax credit is to tackle the unemployment trap by increasing the gains from work for people on low wages who may otherwise face poor work incentives.

The hon. Member for Northavon suggested that the benefit might only be £15 a week, and I do not know what his constituents say to him, but my constituents consider their income in terms of 50p or £1 when they decide whether they are better off and how much better off they would need to be before they will move into paid work. We have been examining that range and whether it would be sufficient incentive to get people into work.

The unemployment trap is predominantly an issue for those with children and for older workers, who may have been made redundant and who are trying to return to the labour market, without children. It is also a problem for couples who face serious barriers moving into work because the gains can be very small indeed. A couple without children, of whom one earns £175 a week, are only £20 better off in work than on benefit. As the hon. Gentleman will know, people look at their entry wage. They know how much they need, and then look at the wage at which they can enter the labour market because of their qualifications and what is available.

We are looking to ensure that we can reduce that barrier as much as possible, so that such people get on the ladder of opportunity and start moving through the labour market. The hon. Gentleman rightly pointed to the figure of more than 1 million. There are more than 1 million people without children living in households in which someone is in work, but that have a household income below 60 per cent. of the median. The current in-work support, the working families tax credit and disabled person's tax credit, does not help those people.

The age is difficult to settle on—why 25? We are being cautious, but we are trying to help households that are moving into persistent poverty, if I can use that concept. Of course, there are other people in low-paid jobs not earning as much as they need, but they might be moving through that because of their age, or because they are new to the market. There are others, however, who have been in the labour market and, in that age range, are trapped in persistent poverty. The interaction with the minimum wage is also very important here. We have intervened for those people, in a similar way as with the new deal 50 plus.

The working tax credit will give us a broad-based system to enable us to identify problems in the labour market of persistent poverty and barriers to work and re-entry, so that we can intervene at those points. We have come to the conclusion that it is right to do that in households without children or disabled workers. Disabled workers are already in the scheme, outside the age range starting at 25.

Photo of James Clappison James Clappison Shadow Spokesperson (Treasury)

With statistics flying between the Paymaster General and the hon. Member for Northavon, I wonder if she can clarify the figure of 1 million? Does that include people working less than 35 hours a week and aged under 25?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I do not have the exact point about the hours to hand, but I appreciate why the hon. Gentleman wants to know. I will do my best to tease that figure out and communicate with Committee members about it in the normal way.

We are putting in place the working tax credit to help bridge the gap of families with no children and no disabled members. We thought it right for there to be no barrier if those people were working 30 hours a week. For those reasons, we decided that intervention was important, but it comes down to a matter of judgment.

On the point that the hon. Member for Northavon made, the working tax credit is a work incentive measure. Everyone who receives it, whether or not they also receive the child tax credit, will see the rewards in working and will be better off. Again, all the information that we have today shows that that is working in narrowing gaps and helping people to move into work.

The hon. Gentleman went on to talk about payment by the employer. That is the simplest way, and it works. It reinforces the link with work, and he will see in the Bill that, because of the new design of the tax credits, we have been able to reduce

requirements on employers. Obviously, when the research under way is done, we will have much more detail on working tax credit, but again the information coming back to us from employers and workers is that, despite a tiny minority who do not like it, it is working very well and achieving many of its objectives. I think that the Government fully recognise the points that are being made about having a working tax credit and about the need to intervene cautiously. That is why we have set the age levels and hours test that we have.

Miraculously, I can now answer the question about the figure of 1 million. That figure does include under-25s and those working less than 30 hours.

Photo of James Clappison James Clappison Shadow Spokesperson (Treasury)

I am grateful to the Paymaster General for that speedy and helpful clarification, and I have another question following on from it. How many of the people in poverty fall into those two groups, the under-25s and those working less than 30 hours?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

At this rate, I will not need to write any letters, because the answers are coming very speedily.

Photo of Mark Hoban Mark Hoban Conservative, Fareham

I shall give the Paymaster General a break, and give her officials another task to perform in the meantime. How many of those 1 million people, if they are in work, are paying income tax? It sounds to me as if we are in danger of simply recycling money. People are paying tax through their pay packets and getting it back, through the Government's generosity, by a different calculation.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The calculation at employer level gives the tax credit. That will be named on the payslip as a payment of tax credit. Some people will still be paying some tax, but for those on the lowest incomes, the tax credit payment back is greater than if there had not been a tax credit and they had paid their tax.

It is odd that the hon. Member for Fareham (Mr. Hoban) should ask that question, given that his party, when in power, taxed people, sent them all the way through one Department, then made them apply separately to another Department—in fact, several other Departments—to receive back payments in recognition of their low income, such as family credit. We are streamlining the system into one place. This system is more efficient than interfering with the tax code. We have had all the discussions about why it would be inappropriate to use that and why this system is more targeted than using the allowances or rates to maximise income for those in the lowest income groups, whom we want to help in the greatest numbers.

We have accepted the principle that the Government should give a continuous stream of support for children through the children's tax credit, and that they should, through the working tax credit, tackle the barriers to work and the unemployment trap. We must do that if unemployment is to continue to fall, and if we are to tackle unemployment and the poverty trap, where

people want to work, and there are jobs for them, but it does not make economic sense in their family arrangements to make the transition to work. Tax credits are one way of breaking that cycle, and the minimum wage is another. The Government's strategy is working through that and has been very successful. Any policy can be pulled apart and questioned, but we have seen how the system worked in the past and our proposed system is the simplest, most direct and clearest.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

I have another question about the precise relevant number of people. We need to know how many fall into the category of the replacement for 50 plus. How many of the 1 million people are relevant to the point that we are discussing?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I do not have that information with me. I really do not have it, and Committee members may keep me on my feet for as long as they wish, but I know that I shall not have the information immediately to hand. Hon. Gentlemen started asking for more information as soon as I put the figure of 1 million on the table. We are trying to deal with the problem in the labour market caused by persistent poverty that traps households of people aged 25 and over without children. There are plenty of indications that that needs to be dealt with, I shall be a little more careful when I cite figures in a certain area because they may be sliced in many ways. There is a problem in the labour market for that age range and we must approach it cautiously. Our objectives are correct, but we must be careful about the way in which they interact with the minimum wage and opportunities in the labour market.

We have taken the cautious approach of starting with 25 years, notwithstanding the exceptions, and the 30-hour rule. That will help people in that group to move on through the labour market and to improve their position and wages without the current stark comparisons between households with children and those without, even when compensation is available for the cost of children in those households.

On the alternative test and the definition of direct care, I do not understand why the hon. Member for Arundel and South Downs wants to use the concept. Clause 8 was the correct place in which to deal with responsibility and care, but I do not see what benefit would be gained from using a concept of direct care. The concept of the main carer having responsibility, as we discussed under clause 8, is well understood here and in other areas—for example, child benefit. I just cannot see what would be gained by using the concept of direct care. It would simply add another definition, but would in fact mean the same as the existing definition.

The hon. Member for Arundel and South Downs is trying to tighten the provision, but his amendments would not work and are unnecessary. I can see that I have not done so well this time in convincing him. Unless he stands up to voice blindingly obvious points that will make things clearer, and I do not see how he could, the question on direct care is not relevant. I ask him to withdraw the amendment.

I hope that I have clarified, in terms of age and household type, who would qualify for the working tax credit. I have also demonstrated the Government's thinking on how we will target a particular group, the age range of which starts at 25, by dealing with the restrictions in the working tax credit. The beauty of the tax credit is to allow for a foundation on which we can respond as the labour market changes. Pressures on work incentives and assistance, and on tackling poverty and unemployment traps, might change over time, so we have a framework. I hope that the hon. Gentleman will withdraw the amendment, and if he does not I will ask my colleagues to vote against it.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 3:30, 17 January 2002

I am grateful for the Minister's response. When I say that £15 is not much, I mean that it is not enough to justify a separate administrative system—£15 could be delivered in another way. It is not a question of £15 or nothing, but one of £15 through the pay packet, a tax allowance increase or another mechanism such as reducing the lower-rate band. I want the low-paid to have the £15, but we must address how to deliver it effectively. Delivering the money through tax allowances and bands, rather than credits, still gets the money in the pay packet and people will be able to see the benefit of working. They will look at their pay packets, see what they are being given and judge whether it was worth working and whether they feel better off. That argument does not undermine the reward to work, but delivers the money in a cleaner fashion.

I will not stray on to the under-25 issue because it will be dealt with under the next amendment. A critical point is the unemployment trap and the fact that childless couples will find that the sorts of jobs that they can get will make them only £20 a week better off. There are two sorts of households: those who are renting and those who are buying. The figure of £20 will mean something different to different households. The reason why some childless couples are virtually no better off in work is because they have a socking great rent, which is covered almost in full when they are not working and almost not at all when they are in a job that puts them beyond the housing benefit taper. They really wonder about working. Someone with a mortgage that is not being covered by the income support system—that applies to a growing number—has a bigger incentive to return to work because they do not lose housing help.

The argument for the working tax credit and work incentives does not apply strongly to those with mortgages. The gap is bigger than £20 for people with mortgages and probably £20 or less for those renting. If the problem is rapid withdrawal of housing help and high rents, the answer must be to tackle that and not to invent a system that covers the entire working adult population over 25. We have not talked about housing, although it is central to the unemployment trap. I hope that the Government will continue to think about that.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

I thank the Minister for her comments but I fear that she is correct that we have not been persuaded of the Government's position. Even though the amendment may be in the wrong place, I will

briefly deal with a semantic point. It is fair to say that ''responsible for'' is slightly woolly, and although the Government have made their position clear on appointing a sole carer, our wording—''in their direct care''—is much sharper. That is not an issue of huge importance, but the more sharply legislation is drafted, the better.

It seems to us, however, that the Government have got main issue wrong. Of the group that they are targeting, on the figures from the Institute for Fiscal Studies, only 2.5 per cent. fall within the definition of poverty. The employment tax credit is available only to adults without children who work full-time for 30 hours a week. They are not the problem group in our society. Those under 25 are very different. Of those, some 21.5 per cent. fall into the poverty category. For better or worse, the measure is not fulfilling its main aim of alleviating poverty. If the Government's aim is to help those in need, they are tackling the wrong target.

As the Institute for Fiscal Studies points out, the only other case, which the Minister tried to put, is that the measure will be an incentive for couples without children over 25 to move from part-time working below the target of 30 hours a week to fuller-time working, and that the Government have introduced the measure because they want to encourage that. However, I see that as a little area in which Speenhamland disadvantages could operate, and if this could be an incentive to employers to let the state become a part of their wage costs, they will let it do that.

There is therefore an argument that the measure will depress remuneration for just the category of people on whom it will impact. Our position is that the Government have got the measure wrong, so I am not inclined to withdraw the amendment. The IFS paper has put the onus on the Government to make a case that is not there.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 10.

Division number 4 Adults Abused in Childhood — Clause 10 - Entitlement

Aye: 4 MPs

No: 10 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I beg to move amendment No. 62, in page 7, line 22, at end insert—

'except that the minimum age of entitlement shall not be less than that for the child tax credit.'.

I intend not to cover old ground again but to flesh out, on the issue of age, what we are trying to achieve here. It has been suggested, and it is apparent in clause 10, that the Government plan regulations about the age of relevant people, and that that age will be 25 in

the case of childless people. We are suggesting that that age should be no less than the minimum age of entitlement for the children's tax credit. We may have gone a bit far in that respect, given that, as the Paymaster General said, that age is 16. Someone who spent an awful lot of time doing paper rounds might be caught.

I want to flesh out the subject of age. It could be that 21 or 18 is the right age for the threshold. We made the assertion that poverty rates among young people, especially those who are not working full time, are higher than among older childless people, and the IFS figures bear that out on a cross-sectional basis. It is a question of persistent poverty. Will poor 21-year-olds always be poor, or is it so transitional that we do not need to worry about it? One could argue that any year spent in poverty is a year too many—the fact that those people are in poverty now is a problem, and the possibility that they might not be in poverty in three or four years' time is of little reassurance to them now. That alone would be a reason not to exclude them on poverty grounds.

How can a 21-year-old be in persistent poverty? If the Government's definition of persistent poverty relates to people who have been in poverty for the past three consecutive years, 21-year-olds may not count as poor because they were students resident with their parents for half the year, so cannot have been caught in the definition. I wonder whether we are comparing like with like. On poverty grounds, there are two good reasons for saying that we should not exclude 21 to 25-year-olds. First, any time spent in poverty should be dealt with, and secondly, they may be heading for persistent poverty but we do not yet know that.

The 25-year-old cut-off was invented by the Conservatives in 1988, when the system changed from one in which people got money through supplementary benefit for being a householder or a non-householder to one where people got some money for being 25 and less for being under 25. In effect, the Government of the day said, ''We don't want the state to support young people living away from their parents—they shouldn't be helped to do that.'' The benefits system switched from supporting householders, which would have helped young people who lived away from their parents, to supporting the over-25s, on the grounds that by that age they would be living independently anyway.

That system is hard for those who do not fit, especially for younger people who become householders under the age of 25, who fall foul of the working tax credit rules as well. Not only do householders under 25 who may have had to leave the family home through no fault of their own get less support through housing benefit merely by dint of their age, but if they can get a job they get less support through the working tax credit.

The threshold of 25 is utterly arbitrary and is being used because there is already such a threshold in the system. However, that threshold was itself introduced entirely arbitrarily. Obviously any threshold is arbitrary and one can ask why someone is different the day before or the day after. However, this

threshold requires justification. A threshold of 21 could perhaps be justified on the grounds that people will typically have gone through graduate education and will be starting in the work force, but the threshold of 25 seems to have no external justification other than that it is already in the system.

We wanted to ensure that the minimum threshold for the working tax credit could not be lower than the entitlement to the children's tax credit. As that is 16, we may have been going a bit far. Something between 16 and 25 might be appropriate.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 3:45, 17 January 2002

I make no apologies for the Government's being cautious in interpreting the data available to us on problems and barriers in the labour market and incentives to work, and in balancing the initiatives at the different points at which we are engaged throughout the age range. The hon. Gentleman does not want a wage subsidy, yet he proposes introducing one at 16. He understands the importance of the interaction with the minimum wage and the point made by the hon. Member for Arundel and South Downs about not putting in place something that inadvertently leads to a cap on the wages that employers would pay in that range. We are carefully and cautiously considering the issues surrounding the labour market. I am not persuaded by the suggestion to make the age 16, or any age other than 25. Caution is necessary.

For those under 25, other issues are involved, on which the hon. Gentleman touched. We are trying to identify persistent poverty—not when people might be in poverty but when a problem is definitely being experienced in the labour market. For the under-25s, not only is an age point involved, relating to how long people have been in the labour market—there may be lots of reasons why they have entered it only recently—but the proposal would cut across the Government programme to raise skill levels, improve training and encourage people to stay in education—and especially proposals such as the new deal for the 18-to-24s. That group is well covered by the new deal, and if a problem persists, the working tax credit would be introduced, as no child responsibility or disability is involved.

I hesitate to speak in these terms, but I cannot think how else to phrase my point. The hon. Gentleman is right to say that suffering poverty for any period is a dreadful experience for anyone, and best avoided. However, there may be reasons for it. People move quickly through the labour market, which is an unpleasant experience but one that is none the less short. We are trying to deal with circumstances in which the problem is much more deep-seated, according to our information.

We are not attracted to the proposal for a lower age. The concentration for those aged 25 and over who have no children and are in full-time work is greater than that for the under-24s. We shall start where we believe the maximum problem is, and we shall be careful, which is what the hon. Gentleman usually implores us to do. Ironically, we are following his usual caution, which is to recognise that an issue is

involved, that trends are emerging and that we have arrangements up to that point and should go steady, because we must watch the interaction with the minimum wage and what is happening to wage rates generally and to that age range. No one disputes that there is an issue for households without children in that age range in particular income ranges.

Photo of James Clappison James Clappison Shadow Spokesperson (Treasury)

I think that the Minister said that there was a greater concentration among over-25s working full-time. She did not say what it was that was concentrated. I would be grateful if she could clarify what the Government are saying on that subject.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Among households without children but in full-time work, over-25s are five times more likely to be in poverty than 22 to 24-year-olds. Those are Government figures. That shows that there appears to be a particular problem for over-25s in terms of concentration.

We are making a simple policy choice. Either a political party accepts that it should intervene to eradicate poverty, and takes the necessary steps as gently as it can, or it does not. The Government take the view that they should intervene. Households with children were our first priority, but we have always known that there were issues for childless households, although they are affected to a lesser extent as they do not have the responsibilities and costs of raising children. None the less, such issues exist, and we are now tackling them.

I do not know whether the hon. Gentleman wants to press the amendment, which would take the minimum age down to 16. I could tell him how much that would cost—that might clarify his position. I am trying to explain to him that we have not simply put our finger in the air and decided that 25 seems a convenient age. We have tried to analyse the information available. It is the first time that such a measure has been introduced, and we should go cautiously. I hope that he will consider withdrawing the amendment.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

The Minister raises the important issue of the new deal, which is a major program that coincides with the over-25 threshold. She made a fair point. The minimum wage changes when people reach 21 or 22 years of age. That is an argument for a different threshold, but I take her point.

The hon. Member for Hertsmere (Mr. Clappison) intervened on the subject of relative poverty rates. I presume that the Minister was referring to rates of persistence of poverty, rather than cross-sectional poverty. The incidence of cross-sectional poverty is much higher for the under-25s.

Under the amendment, we envisaged an age threshold of about 21 years. Clearly, it would be going too far to lower the age to 16. For that reason, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I should like to raise an issue that I told the Minister I would raise this morning. We have not yet covered it in our discussions on the amendments. It

is how the definition of ''remunerative work'' affects expectant mothers. Maternity Alliance raised the issue with me, and pointed out that under the proposed rules, when a woman shifts from paid to unpaid maternity leave, she could fall foul of the remunerative work rule as she had ceased to do remunerative work, and could lose the working tax credit. Under the existing working families tax credit, there would be no adjustment because of the fixed six-month rule, and once the money was awarded, the expectant mother would receive help. Will the Government consider whether, under the provisions for remunerative work, mothers whose maternity pay ceases after birth would still be entitled to the working tax credit?

The Government have an agenda for maternity and paternity leave. In general, it will not be paid by the state beyond statutory minimum levels. If the Government want to encourage parents to take that leave, making the working tax credit available would create more of an incentive for them to do so.

The final issue raised by Maternity Alliance is whether people come into eligibility only after the birth of the child. That relates to the clause, because whether one receives the working tax credit and is subject to the relevant hours threshold depends on whether one has children. The Government might consider whether a woman during her period of confinement, or in the latter stages of pregnancy, might start to come within the scope of the working tax credit or child tax credit, given the strong evidence that maternal welfare during pregnancy has a strong bearing on the welfare of the child and its subsequent development. Do the Government have any thoughts along those lines? The question of remunerative work and whether women receiving maternity pay would lose it under the new system should be addressed.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

One of the attractions of opposition—they are few—is that those who normally remain silent are occasionally allowed to give voice. In that, I have an advantage over the hon. Member for Bradford, South (Mr. Sutcliffe). I hope that he and the Minister will think that it is appropriate that I allow myself the luxury of a few words.

I am glad that the hon. Member for Northavon spoke first, as he highlighted the inadequacy of this and several other clauses in the Bill. In a sense, the Minister's response to what he just said is terribly easy. She can just say, ''We'll deal with that through regulations when they are drafted.''

My concern, which I have not expressed in previous debates—as I am a member of the usual channels, it is an especially lively concern—is the extent to which the Bill and the clause confer regulation-making powers on the Government. The Minister will be familiar with my concern, which she will have heard expressed in other Standing Committees, and which her Government colleagues will have heard from other Opposition Members on previous occasions. I am genuinely puzzled by the number of occasions on which, increasingly, Bills merely confer order-making powers on the Government. This Bill seems to be a

classic example. It provides the Government with permission to go away and do what they choose, how and when they choose to do it.

Arbitrarily, I have alighted on clause 10 as an opportunity to make that point. There are other clauses under which matters that could have been determined subsequently by regulation are spelled out in considerable detail. Clause 11 seems to be one such—the Minister may correct me on that—whereas clause 10, which contains important provisions in relation to the workings of the Bill, leaves it to regulation. The definition of work in relation to the working families tax credit is subject to regulations, whereas the next clause spells out a maximum rate in considerable detail. Why is that?

By my arbitrary calculation, I reckon that clause 10 represents the seventh occasion in the Bill on which we have been invited to confer on the Government the power to make regulations. In this instance, the regulation is rather straightforward. I chose not to speak on earlier clauses because they contained matters of substance that the Committee had debated, and I was anxious that we should make progress. I shall not labour this point, as you would rule me out of order if I did, Mr. Beard, but clause 4 is another example, and clause 6 in particular is merely a list of regulations that the Government could make. Arguably, a whole series of regulations could be made. By my calculation, power is conferred on the Government to make regulations on 19 separate occasions in the Bill. Clause 6 is one of the worst examples—

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

Order. The hon. Gentleman should return to clause 10.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

I take your advice, Mr. Beard, and am grateful for it. I certainly will. However, I do not want to rise each time that a clause mentions a regulation-making power. The Government Whip would think that I wanted to delay the Bill unnecessarily, and I do not want to do that. If you could give me a modicum of indulgence, I will not refer to such issues again during our proceedings.

There are about 19 separate occasions that specify the way in which the regulations under clause 10—and most worryingly those under clauses 60 and 61—will be applied. I shall not refer in detail to clauses 60 and 61, because I do not wish to debate them now—

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford 4:00, 17 January 2002

Order. I have allowed the hon. Gentleman a modicum of latitude, but he should stick to clause 10.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

It is important to say that the clause relates strictly to clause 61, because that defines each regulation, including the one under discussion, as being implemented by the negative procedure. The hon. Member for Northavon raised an important point about the treatment of expectant women, but such regulations cannot be amended or even debated. That is a worry. I will not labour the point, Mr. Beard, because you have already chastised me on several occasions.

I read the explanatory notes to clause 10, to see why regulation-making powers are necessary. They are the most unilluminating notes I have ever seen. They simply repeat the clause using different words. In one sense, that is a tribute to the parliamentary draftsman, because clause 10 is easy to understand. One of the reasons why I did not speak to earlier clauses was the fear that I might get dragged by interventions into discussing the details, which, frankly, I have often not understood. Members of the Committee include a barrister, a professor of social policy and a distinguished figure in the City of London, all of whom have detailed understanding of such matters.

Clause 10 is the type of provision under which regulations are unnecessary. Clause 1 introduces the working tax credit, and surely it should define work without relying on a subsequent definition introduced under the negative procedure at a later date? That is a most unsatisfactory procedure.

Although there have been rulings that there be no stand part debate, there has, in fact, been no yearning for one, because members of the Committee take the Bill seriously and are anxious to make progress. In response to clause 10 stand part, will the Minister explain why clause 10 does not define work without relying on a regulation-making power at a subsequent date? Will she also say why the Bill relies so heavily on regulation-making powers at a later date with regard to almost everything of any importance that it wishes to do? That is a serious flaw. Perhaps the hon. Member for Bradford, South and I should be pleased about the negative procedure because it means that we spend little time discussing regulations in Committee.

The issues are important for the people that they will affect. The Government are rushing the Bill through—particularly clause 10—before they have finished thinking about what they want to be in it. Had they delayed for a month or two, they could have provided a definition of work. The issues—the number of hours worked, the age of the claimant, the disability, the responsibility for a child—are spelled out in both the clause and the explanatory notes. With a little more time and consideration, the Government could have paid members of the Committee the courtesy of a definition of work under the Bill.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

I hope that the Minister will not accept the hon. Gentleman's invitation to go beyond clause 10.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I would most certainly not accept such an invitation. I wish first to deal with the regulation-making powers. I remember making similar points to those made by the hon. Gentleman when I was a member of Her Majesty's Opposition before the general election in 1997. Under our parliamentary system, Opposition parties are duty bound to make such points. Government have also determined what is—and what is not—to be provided for under regulations for a considerable time. I remind the hon. Gentleman of when his party proposed similar legislation and the extensive regulation-making powers that they used. Certain Bills and regulations allow us to alter some of the variables according to changes in circumstances, without recourse to parliamentary time, because primary

legislation requires more time and is more difficult to programme.

For the record, I inform the Committee that the levels at which family credit—the system introduced by the Conservative party—was paid were set out in regulations and subject to the negative resolution procedure, and so was the mechanism by which family credit was withdrawn, although we have set that out clearly under the Bill. The definition of work in respect of family credit was determined under regulations and, guess what, they were negative resolutions.

I shall save the hon. Gentleman's blushes. Although I may damage his political career, I must say that I like him.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

None the less, he made an important point about how regulations are used. I have tried at every opportunity in Committee—as has my right hon. Friend the Financial Secretary—to spell out in great detail the Government's thinking in respect of the regulations. Those in the other place take great care in such matters and they will want to see the draft regulations. By the time the Bill returns to this House, members of the Committee will also have the opportunity to examine them.

I understand the hon. Gentleman's frustration. I assure him that I did not sit down and say, ''Goody, goody, let's have regulations four sentences long and, what is more, let's have them under the negative procedure''—much as I may have been tempted. These are procedural points, but the Bill will be doing nothing that does not follow a path well trodden by Conservative Governments. It is important that such points are on the record, and I am not complaining about them. I am grateful that he waited until clause 10 to advance such an argument and did not consider that he had to do so under each clause. I note the seriousness of the issue that he raised, which is that of enabling hon. Members to scrutinise proposed legislation properly.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

I am grateful to the Minister, particularly for her expression of an affection that I reciprocate. She gave us an assurance on draft regulations. I do not imagine that she meant that that would apply to every regulation in the Bill before Report, but if she did mean that, it is welcome. Will she clarify her exact undertaking? That is not a criticism, but a request for information.

On her broader point, the Minister is correct that two wrongs do not make a right. I was uncomfortable about some things that happened in the past. Will she look back through all the regulations and consider whether any could be introduced under the affirmative rather than the negative procedure? One of my hon. Friends may wish to examine that on Report.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I hope that the hon. Gentleman will excuse me if I do not do that right now. After we have considered each clause and moved to the next, I have sighed with relief and tried to make my brain accelerate to the next points. It is difficult to go into reverse.

The hon. Gentleman's point referred to detail. I will try to make as many of the draft regulations available as possible. However, it is clear from the Committee's discussions that there are key sets of regulations in which hon. Members are particularly interested. They happen to be the regulations on which we are still consulting.

I intend to get as much information as possible before Report but if I do not achieve that, I do not want the roof to come down. If I get all the information, that will be fine. The regulations must come in, but the key regulations will appear toward the end of the process because consultation is still occurring. However, I understand clearly that members of the Committee will want to see them.

I hesitate to make my next point. The hon. Member for Northavon is correct to identify the example of a woman in receipt of statutory maternity pay or extended maternity leave from her employer. The question centres on the ability of a person who is in work, or not, to access the working tax credit, and also crosses over to other programmes that support parents, such as the sure start grant. We must address the matter following further decisions by other parts of Government. I will examine carefully the issues—forgive me for saying this—when we draft the regulations. None the less, returning to the hon. Gentleman's point, it would be difficult to put a provision in the Bill while another Department is finalising exact points during consultation on maternity and paternity leave. The matter will be dealt with when we have the information that we need.

I have covered the major points that were addressed in the debate, and I hope that members of the Committee will support the clause. I understand the frustration of the hon. Member for Mid-Worcestershire (Mr. Luff) about regulations and details. I hope that he accepts that I am doing my best to give as much information as possible without misleading the Committee by implying that a decision has been taken, when the matter may still be open for discussion.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs 4:15, 17 January 2002

May I ask the Minister for clarification on the most important point under clause 10, which is the number of hours worked? As the explanatory notes point out, that will be the main definition of entitlement. The Institute for Fiscal Studies has raised questions about this matter. Given that we will be working on an annual—rather than six-monthly—basis, will we be dealing with the average for a year? As the mechanism of past year earnings will be used, how will that be interlaced with the future number of hours worked? I assume that the current number of hours worked will be the relevant criterion, but what is the principle behind the Government's approach with regard to the number of hours worked?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The 16-hour rule will carry forward, with regard to the working families tax credit and disabled person's tax credit, and we are looking closely at how to measure that across the year,

so that people do not fall in and out of categories, which might happen in some cases.

During the consultation process, we received representations in favour of varying the 16-hour rule, but we are not prepared to do that. However, the annual assessment could be tailored to give some latitude, with regard to the calculation of hours.

It is important to get that matter right. With regard to the current tax credits, the calculation of hours is rigidly fixed. We do not think that that is appropriate. We are examining ways in which the new tax credits might address that calculation more flexibly, because—for example—people's hours could fall and then rise during the course of a year, so that their annual average would be high enough to reach the 16-„hour rule, and it would be difficult to explain why they did not qualify. However, we also need to ensure that changes to the rule will not cut across any employment rights, such as contributions. We have nearly achieved our aims in that regard.

It is true that the introduction of the new tax credits gives us the opportunity to make matters smoother. We might be able to help certain groups, such as people who have a chronic disability, and whose health deteriorates, resulting in a reduction in their hours, but who subsequently return to the labour market; that variation will not be reflected in their hours across the year.

I cannot be more specific about such matters at the moment, but the new regulations will not be as rigid as they are in the current arrangement. The annual assessment gives us more room for manoeuvre, and it helps with administration, because it will be easier to understand.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.