Lone Parent Employment

: I thought we were making progress towards agreeing that we needed a single benefit. Now the Minister is telling me why we have not got a single benefit: she is not willing to increase the rate of JSA and she is not willing to cut incapacity benefit from the rate that the Government envisage. If that is her view, how will we ever have a single rate? Yes, I would argue that there is a strong case for having a single rate of benefit for people of working age who are not in the labour market, and for the distinction between those on incapacity benefit and those who are not on incapacity benefit being related to the costs of the disability, not to the fact that one set of people are on work-related activity because they have a disability and another set are on work-related activity because they cannot find a job. That may sound like a bogus distinction now, but were we to return to the situation we were in 10 or 20 years ago, when millions of people were unemployed and many towns across the country suffered huge worklessness, the distribution of benefits between two types of household, both of whose members are workless and want jobs, would be irrational. The Government would be sending out a signal—as it is now, although we do not know how powerful it is—that people would do better to have themselves classified as unable to work than to be on JSA trying to get work in the labour market. That is not a sensible structure for benefits, and it was not the structure we started off with in the 1940s. I see you leaning forward, Mr. Gale, and I will not extend this debate any further in case you get impatient with me, but I must ask the Minister one question. As the Green Paper is considered, will she mull over the issue and tell us what the long term is? I fear that the long term is even further away than the time when child poverty is completely abolished, and that is quite a long way ahead. I will raise only one more point, because I have spoken considerably longer than I expected—buoyed, perhaps, by the good news from down the road. The point relates to any attempts to get single parents or anybody else back into the labour market. There continues to be strong disincentives within the benefit system, the council tax system and the housing benefit system against getting back into the labour market. The Government have been conscious of the issue since 1997 and they have taken some action to reduce the number of people who experience high marginal tax rates when they go back into employment because they lose a lot of their benefits. However, the number of such people who are experiencing marginal tax rates of 60 per cent. or more in the labour market has increased from 760,000 when the Government came to power in 1997 to almost 1.9 million. The spread of means-testing, as the Government increasingly seek to target resources on those on low incomes, has meant that more people are being trapped in this net. When the Prime Minister debates the structure of the income tax system, he always says that a 50 per cent. upper rate of tax for people with incomes of more than £100,000 a year would have horrific effects, and that those people would immediately stop working or flee aboard. However, a much greater number of people, almost 2 million, face tax rates that are higher than that—60 per cent. or 70 per cent.—when they go back into the labour market. Whether the Government can do, or try to do, anything to reduce those marginal tax rates is an issue, as is whether they can continue along the route of tackling child poverty by for ever increasing means-tested benefits without increasing the extent of disincentives in the system. Doing so could damage their ability to get others back into the labour market. That is a point on which the Minister could usefully concentrate. We have had an interesting debate so far; I have acknowledged some of the Government's successes on this subject since 1997, but also pointed out some of the problems ahead. Without tackling those problems, it is unlikely that the target that the Government set themselves will be met.