Welfare Reform Bill

I hope that I can give my noble friend more comfort on this amendment than on the previous one—although perhaps not total comfort; I do not want to raise her hopes unduly. We announced in our response to the Gregg review that the department would test an improved financial incentive for parents with younger children to work less than 16 hours while on benefit in the progression-to-work pathfinders. On the question whether mini-jobs lead to other employment opportunities, research—which I think is the research to which my noble friend referred—shows that mini-jobs could play a role in engaging mothers in the labour market and allowing them to combine both caring for children and working. Mini-jobs may be appealing particularly to those who are further from the labour market, such as those with young children, or those who have a larger family and lack of qualifications. Being in a mini-job helps them remain in employment. The impact of mini-jobs for couple-mothers is less clear. The evidence suggests that participation in mini-jobs tends to be a stable activity of couple-mothers. As a result of our desire to test and improve financial incentive, we are proposing to introduce in the pathfinders an earnings disregard higher than the current £20 a week into income support for lone parents working below 16 hours a week. Our evaluation has indicated that an appropriate amount to test would be to increase the current disregard to £50 a week. The rationale is that it balances the increase in income that a lone parent receives when working on benefit when they obtain a mini-job and the need to ensure that lone parents have an incentive to move off benefit altogether by working more than 16 hours a week and take advantage of the additional help available for low-income groups through, for example, tax credits. As my noble friend pointed out at Second Reading, we would not want a lone parent to miss out on moving into work of 16 hours or more a week and accessing tax credits where they can. Some people are able to double their take-home minimum wage and make work really pay—again, as my noble friend instanced. It is crucial to test the improved incentive of a £50 disregard within the pathfinder areas to try out work while on benefits. It will represent one way in which lone parents can be encouraged to take up work-related activity that helps them make the transition into full-time work as part of the progression-to-work pathfinders. The new amount also represents a relatively simple and clear increase in the disregard and a much improved incentive to try out work while on benefits, without allowing lone parents to receive significantly more by working fewer hours and staying on benefits than if they were working 16 hours or more. The provision would not provide the step-progression that my noble friend referred to, because, at a £50 disregard, you are pretty much on the cusp of whether working just slightly under 16 hours equates to working 16 hours and being out of benefits and into the tax credits system. With the £50 disregard, there would be a level income for somebody working about eight hours through to working just under 16 hours. The provision does not deal with the step-progression that my noble friend sought, but seeks to test improved financial incentives for parents in mini-jobs, which is the key point that my noble friend was pressing. We also feel that it is inappropriate to specify an amount in primary legislation, because we would have to debate a new amount every time we wanted to change it. That is best left to delegated legislation and the processes already in place; for example, scrutiny by the Social Security Advisory Committee. Having heard what we intend to do, I hope that my noble friend will feel able to withdraw the amendment.