Welfare Reform Bill

As the noble Lord, Lord Skelmersdale, identified, there are two separate issues. One is a premium for taking part in work-preparation activity. This one, as he rightly identified, is about disregards. Lone parents on IS currently have a disregard of £20 a week, which equates to about three and a half hours of work. Thereafter, any further hours they work carry no financial benefit at all until, if an employer will allow them to do so, they reach 16 hours a week at which point they switch on to wage plus tax credit and double their take-home pay. That cannot be sensible or good public policy. I hope that other Members of the Committee will agree with me that we want to encourage the lone parents to progress through mini-jobs until they are finally in tax-credit-supported work. It makes sense, given that they are sometimes patching together part-time jobs whose hours will alter according to their own needs and those of their children, such as during holidays, and those of the employers, many of whom want extra seasonal help—and many of whom deliberately peg jobs at 15 hours a week to avoid NI contributions and keep the lone parents below the lower earnings limit. Mini-jobs, as Kate Bell’s research at Gingerbread has shown, make good sense for many lone parents. They increase their income and skills, whether till work, teamwork or stock control. They increase sociability and self-esteem and the parents learn about a wider world of work opportunities: the knowledge network that comes from knowing what is going on, which those isolated on benefit so often lack. All the research shows that one of the biggest barriers to getting back into work is the lack of access to the knowledge economy of what is going on in the labour market. We want a staircase into work, not the daft present system. It is worth it if you are a lone parent working for three to four hours a week: you keep every penny. Then for the next 12.5 hours or so a week, you lose every additional penny. Then, at 16 hours—bingo!—you double your pay. Who could have thought of such a scheme? Not women, I think. The amendment is obviously more probing than most, because it puts a figure of £87 in the Bill, which is not sensible at all—in fact, it is really rather silly—as we would need primary legislation to uprate it. However, that figure is there to indicate the purpose of the amendment. The disregard is worth at least 15 hours a week at the minimum wage, and at 16 hours a week you go into tax-credit-supported work. The amendment sounds generous, but it has already been conceded that claimants on ESA can earn up to £88.50 a week without losing access to benefits. We have always had similar and rightly helpful benefit top-ups, such as therapeutic earnings for disabled people. It would cost the taxpayer nothing because the lone parent receives the benefit as usual and the employer, not the Government, tops it up with a part-time wage. I willingly concede that, providing it is kept simple, a taper might be appropriate or we could limit such an arrangement to the first two years back to work or until the youngest child is seven. Recent research by Gingerbread and the Institute for Fiscal Studies suggests that this would increase voluntary employment of lone parents by 5 per cent or more, which is as much as we have achieved in the past five years of elaborate policy-making and new deals. Make work pay, and work works. It is already the case that 27 per cent of jobs advertised in jobcentres are for less than 16 hours a week because employers need flexi-working. Indeed, lone parents who are currently working 16 or 18 hours a week are, in a recession, finding their hours cut back to 12 or 14 hours a week and they immediately cannot afford to work because they lose every penny beyond the original disregard of £20. That is what happens when you have snakes instead of ladders, which is the system we have devised. Even if my noble friend cannot agree today to introduce a staircase of opportunity moving from benefits into work, I am sure he would wish to do so once he has thought through all the implications. I accept that it would be an 18-month policy haul because of the read-across to other benefits that always bedevils social security, although it is easy enough to do. However, we could give much of the same help if we took the path that the noble Lord, Lord Skelmersdale, indicated and increased the disregard for lone parents from the current £20 a week to £50 a week, although that is not as generous as my £87. What would that mean? For the lone parent it would be worth working nine hours a week before benefits deduction came into play; it is very simple, and it can easily be done in 48 hours by regulation rather than after 18 months’ policy haul. Bluntly, this is the amendment I would really like to see delivered, for reasons I hope to argue, and I might wish to come back to it on Report, if that seemed appropriate. What are the amendment’s virtues? First, it would help child poverty. An extra £50 a week on top of benefits would be transforming. For the lone parent, along with any child maintenance, it would lift her and her children well above the poverty line. Is it not worth going after a really noticeable reduction in child poverty? After all, we have a child poverty Bill ahead of us. Secondly, it would help the lone parent remain attached to the labour market. The evidence shows that mini-jobs are the best preparation for a 16-hour tax-credit-supported proper job. Working nine hours each week, sorting out the transport and the childcare and learning the appropriate skills are a far more effective way to prepare a mother for conventional, full-time work than all the interviews, action plans, CV training, skills courses—which may not relate to local jobs—newspaper adverts search and the rest in the work-preparation package. I support that work-preparation package, but the best preparation for work is not work preparation, with hours spent travelling to and from the jobcentre, but work. Precisely because the mother is a willing employee, not a reluctant conscript, she will sustain it and build on it and we are there. She is doing exactly what we want her to do and gaining experience in the world of real work, so why do we not make that possible and attractive rather than punish her by taking away some of her benefit? Child poverty reduction and the lone parent in work are the first two arguments. The third is that it would help the employer, who would have a larger pool of flexible labour on which to draw. I repeat, more than a quarter, and I suspect it will soon be a third, of jobs in Jobcentre Plus are for fewer than 16 hours. As the recession recedes, an employer with a woman in a nine-hours-a-week job would be poised to increase her hours so that, in time, she can come off benefit and go into tax-credit-supported work. Many employers hesitate to employ a lone parent, as they do a disabled person, because of possibly misguided fears of unreliability. It would take the employer’s risk out of employing her, as the risk of entering work is taken out for her. She would know that she can cope and that she is comfortable. We all know that the best way of getting a better job is to be in one already, preferably with the same employer. Fourthly, it would also help to get fraud out of the system. One of the biggest reasons for fraud is that a lone parent, understandably from hers and her child’s point of view, does work on the side—perhaps cleaning—which she does not declare and she is always nervous about whether a neighbour might report her to the social, which adds to the stress in her life. Finally, it would be really cheap. With more wet towels I could possibly establish that it might even save the Government real money. Taxpayers pay benefit exactly as is—no change—and forgo only the tiny amount of benefit that a highly scrupulous, lone parent now declares which is deducted. Of course, they either do not work now, because it is not worth it, or they do and they do not declare it. The extra money—the £50—which the lone parent gets comes because she has worked for it and the employer is paying for it; it does not come from taxpayers. If even half of lone parents with children under the age of seven work nine hours, it would cost taxpayers a modest £20 million a year and, I suspect, even that is a serious overestimate. The cost of putting all lone parents through the work-preparation scheme would also be about £20 million a year, a tentative figure, according to the regulatory impact assessment. Given the much greater likelihood of lone parents moving fully off benefit earlier from a mini-job than from any work-preparation scheme, however desirable—and I support them—the Government could expect to see savings much sooner as those parents will no longer need to rely on benefit. There is no contest and I would have thought it was a no-brainer. In net terms, we might even save the Government money. I urge my noble friend to bring a proposal forward on Report, or possibly, more sensibly, a commitment to do this by regulation, as it should be done of course, to increase the disregard to £50 a week. I know that the previous Secretary of State and the department were exploring that. Think of the gains: first, a real contribution to lifting children out of poverty; secondly, as it is a mini-job, it is a sensible and decent preparation for work, infinitely more effective, appropriate and in real time than action plans, work preparation and the like; thirdly, it would take fraud out of the system; fourthly, it would help the employer; and, fifthly, it would be so cheap and effective that compared with work-preparation programmes it could well save the Government money. I suggest to my noble friend that it is a no-brainer. I beg to move.