| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Child Benefit Bill
1.34 p.m.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I beg to move that this Bill be now read a second time.
I am very pleased to have the opportunity today to introduce the Child Benefit Bill to the House. It is very short, but it paves the way for significant improvements in the financial support available for young people who continue in education and training beyond the age of 16.
Before I explain the detail of the Bill, I think it would be useful if I began by setting it in the context of the Government's commitment to ensure that all young people reach the age of 19 ready for higher education or skilled employment, regardless of their background.
Reaching the age of 16 is, of course, a major milestone in the transition from childhood to adult life, not least because it marks the end of compulsory education. At this point, young people, for the first time in their lives, have the freedom to choose what to do with their days. The choices they make are of great importance in shaping their future life chances and opportunities. Opting to continue in learning to develop further skills and qualifications brings many benefits to the individual. All the evidence shows that the level of educational achievement is linked to future success in the labour market, and that basic skills and level 2 qualifications in particular are key to preventing social exclusion.
What young people do matters a great deal to the country as a whole because it directly determines the level of skills flowing into the labour market. Raising the participation of young people in education and training is essential to meet the demand for skills in a dynamic, modern economy such as the United Kingdom. By 2010, it is forecast that 80 per cent of new
3 Mar 2005 : Column 384
jobs will require high and intermediate levels of qualifications and that 95 per cent will require at least a level 2 qualification.
The Government are committed to supporting post-16 choices, ensuring that all young people reach the age of 19 ready for higher education or skilled employment. We have much more to do to reach this objective. We have increased the number of young people participating in education and training after the age of 16 but a quarter of 15 to 19 year-olds are still not in formal learning. The UK compares badly internationally in this respect: we currently lie 25th out of 30 OECD countries for participation in education at age 17. That goes a long way to explaining the skills gap in this country. More than 30 per cent of UK workers—about 7.8 million people—have low skills, compared with less than 20 per cent in Germany and 15 per cent in the United States.
The Government are determined to reverse the historic failures in the education system which have caused this skills shortage. We have made much progress since 1997, with pupils now getting the best ever results from primary through to GCSE and A-levels. But some historic weaknesses still remain, particularly in the post-16 phase. Over the next 10 years, we want to raise our post-16 participation to match the best in the OECD, increasing it from 75 per cent to at least 90 per cent at age 17.
Our strategy to achieve this has three strands. First, as set out in the 14 to 19 education and skills White Paper published last week, the Government are reforming the curriculum structure in Britain to make it more flexible, rewarding and engaging. However, I shall not repeat the arguments which have already been put forward on that issue.
Our second strand, designed to underpin these curriculum and training reforms, is to strengthen the advice, guidance and support we offer young people to ensure they are able to make informed choices about the range of learning options and opportunities.
The third and final element of the Government's strategy is to remove the financial barriers to learning. The Chancellor announced in Budget 2003 that the Government would review financial support for 16 to 19 year-olds, with the aim of delivering a more accessible system which provides every young person with the support and incentive they need to participate in education or training. The review sought to build on the success of the educational maintenance allowance pilots which have demonstrated the important role of financial support in delivering higher rates of post-16 participation. It was rolled out nationally for 16 year-olds in September last year, with a framework of rights and responsibilities for young people who decide to stay on at school and college.
The review of financial support for 16 to 19 year-olds sought to find ways in which the principle could be extended to other groups of young people to ensure that all individuals are supported and encouraged to make the most of their potential. The initial findings and proposals of the review were set out in the report, Supporting Young People To Achieve, which was
3 Mar 2005 : Column 385
published alongside last year's Budget. The evidence collected during the review indicated that the complexity and anomalies in the current system of financial support create major barriers to learning for some young people, particularly the most vulnerable. To remove those obstacles, the review proposed a long-term vision of a single, coherent system of financial support, designed to engage young people and support their post-16 choices and transitions. The consultation with young people, parents, voluntary sector organisations and employers has demonstrated strong support for that approach. The Government will respond to that consultation and setting out the next steps in the Budget on 16 March.
In addition to these radical, long-term proposals, the review identified two specific, short-term measures to tackle some of the worst distortions in the current system. The first aims to support young people's choices between classroom-based and work-based learning by creating a level playing field in the financial support available for both.
About three-quarters of young people at 16 choose to continue in full-time education at school or college, and a further 10 per cent enter waged apprenticeships with an employer. But some young people, particularly the most disadvantaged, may not be ready or willing to enter structured learning. They may need basic skills training such as the Entry to Employment programme in England provides. At the moment, what activity an individual decides to pursue at 16 determines the financial support to which they are entitled. If they continue in education at school or college, a very generous package of child benefit and child tax credit is paid to their parents, and educational maintenance allowance is paid directly to them. That can total around £75 a week for a low-income family, depending on household circumstances.
Some young people prefer to continue learning in the workplace; for example, through an apprenticeship programme. Most apprentices do not need financial support from the Government because they are based—
Lord Higgins: My Lords, I did not quite catch what the Minister said was "paid directly to them". I presume he means the "child".
Lord McIntosh of Haringey: My Lords, the educational maintenance allowance is paid directly to them, in addition to the child benefit and child tax credit paid to the parents.
Most apprentices do not need financial support because they are based with an employer who pays their wage. The review recommended that all employer-based apprentices should be paid a weekly wage of at least £70 to £80.
Some young people in some occupations may need preparatory training before they are ready to proceed to a waged apprenticeship. For example, they may need to acquire basic skills or develop personal and social competencies, particularly if they have been disengaged from mainstream education. The Learning and Skills Council for England and the devolved
3 Mar 2005 : Column 386
administrations therefore fund and manage unwaged training places for such young people. An example of this is the Entry to Employment programme in England, which is delivered on behalf of the Learning and Skills Council by local training providers such as voluntary organisations.
This is why I call the Bill the Padraig Harrington Bill. My wife is the chair of a charity in north London called the Harington Scheme. It provides horticultural training for young people with learning disabilities. They are exactly the kind of people for whom this programme is designed, because they are simply not able to stay in school or college and they are not able to get paid jobs. The charity, with the support of the Learning and Skills Council, provides horticultural training. Fifty per cent of the trainees land up in jobs at the end, and the others are able to join a scheme where assisted work is available for them. The problem which that scheme addresses is that those who are aged 16 to 19 simply do not have the support that they would enjoy if they had stayed in school or college. That is what this Bill is designed to correct.
At the moment, young people who want to pursue an unwaged training programme such as the Harington Scheme are entitled only to a minimum training allowance of £40 a week. The difference between the financial support available for that form of learning and the generous package available for those who stay at school or college distorts the choices of young people. Together, child benefit and child tax credit make up an important stream of income for a young person's family. The loss of that money may mean that some low-income parents are no longer able to support their child. The young person may be forced into a course at college— if he can get in—that may be inappropriate for him, rather than join a course with a training provider because of the additional financial support available. He may end up dropping out of learning altogether if the course does not suit him.
We believe that young people should be able to choose their learning route, rather than making a decision based on the amount of financial support available to them. That is why the Bill is important. It is the first step in removing the distinction between education and unwaged training in the financial support system. The changes will strengthen young people's choices between learning in the classroom and the workplace. They will bring about additional investment in financial support for unwaged trainees of around £100 million a year, delivering more money for tens of thousands of young learners, especially those from low-income families who are unable to live in the family home.
The second damaging anomaly that the Child Benefit Bill will enable us to remove is the automatic cut-off in financial support at the age of 19. The current rules are based on the assumption that post-16 participation consists of two years of A-level study at school or college, completed before the 19th birthday. That model of post-16 education does not match the pathways and experiences of many young people who continue in learning today. Each year, thousands of young people reach the age of 19 while still studying
3 Mar 2005 : Column 387
for non-advanced qualifications. Many will be in that situation because their education has been disrupted. Vulnerable groups such as care leavers, young offenders and homeless young people often face challenges that prevent them from completing their non-advanced education before the age of 19.
Under the current rules, child benefit and child tax credit cease on the young person's 19th birthday, irrespective of whether they are studying. Young people from low-income households may be forced to leave their course before achieving their qualification because of the pressures on family finance. The situation is even worse for young people who cannot live in the family home. Their entitlement to income support may cease, and they must instead claim jobseeker's allowance, which requires them to be available for work rather than studying full-time. The loss of income support triggers the loss of housing benefit, making it impossible for those young people to continue on their course without losing their home or running up rent arrears. The personal testimonies which the Government received during the review revealed the distress and frustration caused by those rules. It is a wasted investment for government and young people if they drop out. That is why we are proposing to reform the rules on child benefit, child tax credit and income support so that young people who reach 19 while still studying for non-advanced qualifications are supported until they complete their course, up to an age limit of 20. About 80,000 young people a year will benefit from the measure.
The Child Benefit Bill is the essential first step in implementing these two important reforms. The Bill restructures the existing definition of a "child" in child benefit rules by introducing a separate definition of a "qualifying young person". A "child" will be defined as a person who has not reached the age of 16, so there is absolutely no impact on the universal payment of child benefit for under-16s. The Bill enables the Treasury to lay regulations prescribing the circumstances in which someone aged 16 and over is defined as a "qualifying young person". That replicates the approach that is already used in the legislation for child tax credit, ensuring greater consistency in the criteria for the two streams of support.
The Treasury published draft regulations on 10 January to indicate how it intends to use the powers in the Bill setting out the proposed new entitlement for unwaged trainees and 19 year-olds completing a course. The Government intend to implement these reforms in April 2006, along with the corresponding changes to child tax credit and income support which will be made via separate amending regulations.
It is essential that we equip all our young people with the skills and qualifications they need to face the challenges and opportunities of global economic change over the next few decades. Choices made at 16 matter a great deal. The Bill will help to support those choices by removing some of the worst financial barriers to learning. I have great pleasure in commending the Bill to the House.
3 Mar 2005 : Column 388
Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)
1.50 p.m.
| Next Section | Back to Table of Contents | Lords Hansard Home Page |