Welfare Reform Bill

Before my noble friend responds, the noble Baroness’s understanding of the position 30 years ago is absolutely right. Since 1998, however, we have introduced the tax credits system precisely to ensure that you can have earnings disregards of, say, £50 a week without any problem; this is the main thrust of my second amendment. If you are on the minimum wage, something like £5.85 or £5.95 an hour, a tax credit doubles the take-home pay so that an unskilled lone parent will get the take-home pay of semi-skilled man. As a result, there is no poverty trap, because of the effectiveness of the tax credits. What the noble Baroness said was absolutely true when disregards were first introduced. It is no longer true. We therefore have a clean sheet and can move forward.