HL Deb 03 June 1985 vol 464 cc512-27

4.34 p.m.

Baroness Trumpington

My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Services about the social security review. The Statement is as follows:

"Over the last 18 months the Government have been examining the major areas of social security provision. In that time over 40,000 consultation documents were issued, 4,500 pieces of evidence were received and 62 organisations and individuals gave oral evidence at public sessions. The Government are today publishing a Green Paper which sets out their proposals. We will now be seeking comments on the proposals from interested organisations and will be providing an opportunity for the House to debate them.

"The social security system in this country owes a great deal to the report of Sir William Beveridge in 1942. Although much of what he proposed was changed when it came to implementation and more has been changed since, many of the principles on which his proposals were founded remain sound. The Government remain committed to the concept of a national insurance system under which entitlement to the major benefits is earned by the payment of contributions during a working life. The Government also believe that our tradition of state support for those in need is one which should be maintained and developed. But social security is not a function of the state alone. It should be a partnership between the individual and the state—a system built on twin pillars.

"Any review of social security in this country must recognise its considerable achievements. But the review has shown that there are several major causes for concern.

"By common consent the social security system is too complex. That is to the disadvantage of both the public and the staff. In particular, the research evidence shows that substantial numbers of supplementary benefit claimants do not understand how their entitlement is worked out—in spite of the fact that 38,000 staff are now working exclusively on supplementary benefit. With the pressures now being faced, there is a danger that some parts of the system will break down. It is, therefore, a matter of urgency that we devise a simpler and more coherent system.

"The social security system also needs to be modernised. It is not properly co-ordinated with the tax system and operates with outdated equipment. We now need a major computerisation strategy for social security which can link effectively with other Government systems, including that of the Inland Revenue.

"In terms of spending, the cost of the social security system has increased five-fold in real terms since the war and now totals some £40 billion a year. That is over 30 per cent. of all public spending and represents over 11 per cent. of gross domestic product compared with only 4.7 per cent. after the war. Nor has the pressure for growth in spending ended. In the first part of the next century we need to provide for an extra 4 million pensioners. That, taken together with the state earnings related pension scheme, means that spending on pensions will at least treble. We must ensure now that we have a soundly based social security system which the country can afford.

"Above all, perhaps, the social security system does not always help those most in need. Over half those living on the lowest incomes in this country are in families with children. This affects not only the unemployed but also families where the head is working. Yet, under the present system, low income working families can face both the difficulty of escaping the poverty trap—where they may get no increase in total income when their earnings rise—and also the unacceptable position that they can be better off out of work. That position must be changed.

"Making better provision to meet the needs of poor working families with children has been a major priority of the review. We therefore propose to introduce a new benefit—to be called family credit—to provide better help for such families. Family income supplement will be abolished. The new family credit will be paid on the same basis as help to unemployed families, in that help will be related to the age of children. It will be related to take-home pay, not gross earnings, as happens with family income supplement. And it will be paid by employers through the pay packet.

"Family credit will be paid in addition to child benefit. The Government believe that the extra responsibilities carried by all those bringing up children should be recognised. Child benefit will, therefore, continue to be paid for all children, irrespective of the means of the family.

"Family credit will be part of a coherent system of income-related benefits. That system, covering basic income support, assistance with housing costs and help for low income families, will be based on a common income test and a common structure. It will be simpler, fairer and easier to administer; and it will provide the same level of help at the same level of income for those in and out of work.

"We propose to replace supplementary benefit with a new income support system. The central concept of this income support scheme is that the regular extra payments now made on the basis of detailed individual assessment should be absorbed into the main rates of benefit. Those rates will provide a special higher level of benefit for pensioners, the long-term sick and disabled and lone parents. Families with children will not only receive assistance for each child but also a premium to reflect the extra pressures they have to cope with. At the same time the capital rule will be eased by introducing a taper between £3,000 and £6,000 instead of the present inflexible £3,000 cut-off; we shall ease the earnings rule for the long-term unemployed and the disabled.

"The income support scheme should provide for the needs of almost all claimants but we recognise that the system must be ready to cope flexibly and quickly with particular problems. Instead of the present single payments system, we propose to set up a social fund which will be operated on a discretionary basis by specially trained staff at DHSS local offices. It will provide emergency help where needed and help those who face particular difficulties. We also expect that the social fund will, in time, provide a better basis for contributing cash help to enable people to be cared for in the community rather than in institutions.

"I am also publishing today the report of the housing benefit review team and have accepted most of their recommendations. The review, team found that housing benefit was excessively complicated, involving six different tapers applied to different groups at different income levels. It is also expensive and poorly targeted with over one-third of all households—some with incomes up to average earnings—receiving benefit.

"We intend to move to a simpler, clearer system. It will be based on the same net income assessment basis as the income support and family credit systems. It will also provide help on the basis of rent and rates together rather than separately as at present.

"For the poorest families, housing benefit will meet 100 per cent. of rent. At present 100 per cent. help goes only to those on supplementary benefit. In future it will apply equally to those in and out of work.

"We believe, however, that the basis on which help is provided with rates needs to be changed. At present some 7 million householders receive help with some or all of their rate bills and over 3 million householders pay no rates at all. As a result a large proportion of people live in households in which no rates are paid. This means that there is no effective link between payment for and use of local services. The whole structure of rates is currently under review but the Government believe that, so long as domestic rates remain, all householders should be directly responsible for making some payment towards them. The Government have in mind a figure of the order of 20 per cent.

"The review also examined the contributory national insurance benefits for unemployment, maternity and widowhood. As I have already made clear, the Government remain committed to the principle of basic provision for these contingencies organised by the state through the national insurance system. We propose no change in unemployment benefit, which will continue to be paid for 12 months.

"For widows under 60, we propose to replace the widow's allowance currently payable for the first six months after bereavement by a single lump sum payment of £1,000 to give them more help when it is most needed. In addition, widowed mother's allowance will now be paid from the time of bereavement rather than after six months as at present. Widow's pension will also be paid from the time of bereavement but the rules of eligibility will be modified to concentrate help more on older widows who are least likely to be able to resume work. The changes will not affect the benefit paid to any existing widows.

"In maternity, we propose to adjust the rules governing maternity allowance so that the mother can have greater freedom in choosing when, around the time of her confinement, she wishes to be paid the allowance. We also intend to change the qualification period so that the benefit is more likely to be paid to women who have had to give up work in order to have their baby.

"The maternity grant and the death grant have been left at their present level—£25 and £30 respectively—for many years and are now quite inadequate for their purpose. The average cost of a funeral is now over 10 times as much as the death grant and it costs £20 in administration to pay out each £30 grant.

"We propose instead a new maternity grant of £75—three times the level of the present grant—available to all low income families. Help with the full cost of funerals will also be made available more widely than at present to anybody who has responsibility for a funeral and lacks the resources to pay for it. Help will be provided through the social fund to ensure that it can be given quickly and flexibly and with the minimum of detailed inquiry. These changes will concentrate help where and when it is most needed instead of providing a token contribution to everybody when it may be of little practical use.

"Mr. Speaker, the largest single area of social security spending is on pensions. The basic pension alone accounts for over £15 billion a year and is paid to 9 million people. That pension accounts, on average, for half the income of pensioners and has been a major factor in raising pensioners' living standards since the war. It is, and must remain, the basis on which individuals can build additional pension provision. The question is how that extra provision should be made.

"At present only about half the working population belong to occupational pension schemes. The development of occupational pension schemes has been an important factor in improving living standards since the war. But the coverage of schemes has not increased since the mid-1960s. The development which it was hoped would follow the 1975 Social Security Pensions Act has not taken place.

"Nor has the forecast of cost on which the 1975 scheme was based proved sound. The analysis undertaken during the review has shown that the number of pensioners for whom we will eventually need to provide is 3 million greater than was recognised in 1974 and 4 million higher than it is today. It is clear, therefore, that the long-term cost of state pensions is set to rise steeply in the first 30 years of the next century. If the basic pension was uprated in line with prices, then its cost would increase in real terms by half to £22 billion. If it kept pace with earnings the cost would treble to nearly £45 billion. On top of that, the cost of the state earnings related scheme will add another £23 billion. Thus, the total pensions bill will at least treble and could increase by over four times. At the same time the ratio of contributors to pensioners will worsen and it is estimated that there will be only 1.6 contributors for each pensioner compared with 2.3 now.

"As a country we cannot ignore these emerging costs. If the best estimates available to us lead us to question whether we will be able to afford the promises we are making, then we have a duty to re-examine the position. It would be an abdication of responsibility to hand down obligations to our children which we believe they cannot fulfil.

"The real question is not whether action should be taken on the state earnings related scheme, but what action. There are those who argue that we should restrict the emerging cost of the state scheme by changing its provisions. The difficulty of that course is that contributions would remain the same while benefits would be reduced. There is no reason to believe that there would be any increase in occupational pensions to fill that gap.

"The Government have concluded that it would be better to adopt a different approach. This would be based on the aim of ensuring that in addition to the basic pension everyone has his own pension with his job—whether it be an occupational pension, membership of an industry-wide scheme or a personal pension. In all cases every employee would have the right to a contribution from his employer.

"We recognise, however, that relatively older workers have difficulty in building up an adequate occupational pension. We have decided, therefore, not to make any changes for those within 15 years of retirement. For men aged 50 or over and women aged 45 and over at the time of implementation the existing state earnings related arrangements will continue. This means that no one retiring during the rest of this century will be affected by the change and neither will any existing pensioner.

"All rights built up in the state scheme at the time of the change will be honoured. In addition, we also intend to give a special enhancement of rights for men aged between 40 and 49 and women aged 35 to 44. They will be given a bonus of added years of entitlement which will give them higher pensions when they eventually retire.

"For those to be covered by the new arrangements the Government will lay down a minimum contribution level of 4 per cent. of earnings at least half of which must be provided by the employer. The new arrangements will be phased in over three years.

"These changes will mean that in due course all employees will be contributing to their own additional pension through their jobs. This will represent the biggest ever extension of occupational pension coverage in this country and will add to the reforms of occupational pensions, involving improved rights for early leavers and transfer of pensions, currently in legislation before Parliament.

"Mr. Speaker, the Government must also ensure that the system is managed as effectively as possible to provide the best possible service to the public. The Government's benefit proposals will in themselves make the system simpler. But we are now to embark on the largest programme of computerisation ever undertaken in this country to modernise and improve its operation.

"The benefit changes and the computerisation both of my department and the Inland Revenue will provide opportunities to achieve better co-operation and closer working between the tax and benefit systems. The Government intend to take advantage of those opportunities and will be considering this further in the context of the Green Paper on Personal Taxation.

"Meanwhile, we have decided to take a major step towards better harmonisation by aligning the tax and benefit years. Instead of benefits being uprated in November each year the uprating date will be moved to April. This means that all tax and benefit changes will be implemented at the same time. It will also be of considerable assistance to local authorities who at present have to reassess housing benefit cases twice a year.

"The change in the benefit year will be brought in at the time of implementation of the major structural reforms. We expect this to be in April 1987. After the uprating of benefits due at the end of November 1985, there will, therefore, be a 16-month period before the change in April 1987. It would clearly be wrong to allow such a gap between upratings but it would not be practicable to have upratings both in November 1986 and April 1987. Accordingly, the Government have decided that, following the November 1985 uprating, there will be two upratings at eight-month intervals, the first in July 1986 and the second in April 1987.

"Mr. Speaker, the programme of reform I have announced will provide a system which is easier to understand and simpler to administer. It will mean the most substantial changes in income-related support for 50 years and for the first time give equal support for those in and out of work. It will provide more help for low income families with children. It will establish a better partnership between state and individual provision, especially in pensions, giving everyone the right to his own pension with his job. Above all, the reforms will provide a modern social security system to take us into the next century."

My Lords, that concludes the Statement.

4.56 p.m.

Baroness Jeger

My Lords, I must congratulate the noble Baroness. She is getting better and better at reading ill-written scripts. The noble Baroness told us in conclusion that what was announced today would make the system easier to understand. I did not feel that there was a great rapport of understanding among your Lordships as this complicated document was being read out.

I want to start by saying something rather serious about the procedure of the House. I do not think that the House has done itself any good today in the arrangements for business. According to the Companion to the Standing Orders, a Statement should be followed not by a debate but only by questions and limited comment. I assure your Lordships that I shall do my best. But the Government have put us in a big difficulty. As I understand it, a Green Paper is supposed to be a discussion paper, but now we are in the situation where, if we abide by the rules of the House, we shall not discuss this discussion paper.

I do not think that it is to any advantage for the House to be presented with a discussion document—on which there will be many more debates to come—in the middle of another piece of legislation with which it has some connection. I hope that my memory is not playing me false, but I seem to remember the days when Green Papers were simply published; they were not made the subject of Statements. The Statement came at the later stage when the White Paper was published, and then it was debated. I am encouraged beyond all measure to see a former Speaker of the House of Commons nodding in my direction. I hope that those who arrange Government business will take note of that.

To get to the Statement and to try to keep myself within order, I have to welcome the fact that the Government have had many discussions. We hear there are to be more. What I am unclear about is whether those discussions will have any effect, or whether we are being presented today with a rigid list of the Government's thinking. The noble Baroness said time and time again, "The Government have decided this, that, and the other. The Government have decided something else". Therefore, the status of future discussions is a little unclear. By common consent", the Statement says, the social security system is too complex". I have to ask your Lordships: who has made it complex? It has become more and more complex as the Government have had to try to bring in additional assistance for one problem or another which they themselves have created. Most people need heating allowances because we have what is virtually taxation on gas and electricity prices. More people need housing benefits because we do not have any sensible policy on housing finance. More people need special diet subsidies because the basic allowances are too low.

However, I want to make it absolutely clear—and I have been involved in this field for a long time—that I agree with one statement that the noble Baroness read out; namely, that there should be a revision of the social security system in this country. But that should not be to the extent of undermining the basic principles of the Beveridge Report which were that we as a society, as a community, should take responsibility for those who are also members of that society and who are not as fortunate as ourselves. My complaint is that this has not been, so far as we can see, radical enough. It is just tinkering with various allowances without getting down to what is vital. I must say a word about these extra 4 million pensioners. I think I might be one of them if I live long enough. I resent being referred to as if I were a nuisance.

Baroness Trumpington

No, my Lords! We are in the same boat. I do not want to be a nuisance either.

Baroness Jeger

Thank you, my Lords. What I cannot understand about this document is that it suggests that the children will not be able to pay for the old people. The contributions which the children make are for their old-age pensions. I have paid my contributions. I have been at work since I was 18 and I do not want anybody telling me that I am a burden on the younger generation. I should like to know what has happened because I am very suspicious of where my pension contributions have gone. I think that they have been swallowed up by the Chancellor of the Exchequer. I do not think that they have been properly invested. I should have done better to have put them in a building society or in national savings. Therefore it is wrong for the Government to put out this verbiage suggesting that old people are a nuisance and that the young people will not be able to afford to keep us. The logic of that would be to kill us all off, and that certainly would be cheaper.

This is a very depressing Statement because it seems to suggest that the Government are not hoping for an increase in productivity, that prosperity will be static, that there is no brave new world for the younger generation. I would have hoped that they would be living in a richer, fairer world and that their share of looking after old people in the community would be totally acceptable.

I am in trouble here of doing what I objected to before. Briefly on housing benefit review, let me ask the question: who introduced housing benefit in its present state and took no notice of those of us who foresaw some of the difficulties? Let me also ask the following question. As far as the poorest families are concerned, the noble Baroness says that housing benefit will meet 100 per cent. of the rent; but will it meet 100 per cent. of the mortgages? Many poor people are trying to buy their own houses especially since the introduction of the sale of council houses. Many people, encouraged by the Conservative Government, bought council houses, are now out of work and are having great difficulties in paying their mortgages. The Statement refers only to rent. I should like to know about these other people who number more than half the population of this country.

I am glad that the Government propose no change in unemployment benefit, but for different reasons. I was afraid that the Government would reduce the period from 12 months, but unfortunately there is nothing in the Statement to carry out the Social Security Advisory Committee's recommendation that this was a priority for more help.

On widows under 60, can the noble Baroness say whether the £1,000 is to be taxed, whether payment of it will depend on the husband's contributions or on the length of marriage? I gather from this Statement that the death grant as we know it is to be abolished, but that the poorest people are to be helped. The phrase used is "lacking the resources to pay for a funeral". I wonder what criterion there will be of the lack of resources to pay for a funeral. That is liable to involve all sorts of difficult subjective decisions.

I also think that the Government seem to be on the wrong track in their reference throughout to pensions as costing the state money. If we take more money out of the pockets of pensioners, they have less to spend, there is a drop in demand and therefore it does not do anybody any good. The payment of fair pensions and fair welfare benefits circulates money and creates employment because needs can be met. The Treasury has not heard about that yet.

As for the question of what is unbeautifully called SERPS, I shall restrain myself from that because I know that we shall be having a fuller debate. But I cannot find any reference in the Statement to the self-employed. We know that the Government are fond of the self-employed and the small businessman; but throughout this document refers only to employers and to employees. Many anxious people will be wondering what will be happening to their efforts to stand on their own two feet and to run their own small businesses perhaps by themselves or with a wife.

I know that many noble Lords will have questions to ask so I move now to limited comment, which I gather I am allowed to make. My limited comment is that we shall never get this aspect of life right until we fuse income tax and national insurance. That is the kind of radical reform for which many of us are looking. This is already fused in the minds of ordinary people. When I held my surgeries when I belonged to another place, people would come with their pathetic pay-slips and would say, "Look what the Government have taken". What the Government had taken was national insurance and income tax. There is no separation in the minds of ordinary people between what they pay in tax and what they pay in national insurance: it is all money that the Government take. We might as well accept that fact. There is no genuine relationship between personal contributions and the benefits which people need.

There is this tangle of benefits and I am frankly disappointed because I had hoped for more imaginative and more far-reaching benefits. I may not have read it carefully enough but I cannot find in the Statement how much the Government expect to save, because many of us fear that this is a Treasury exercise. If there is any reduction in the amount being spent on welfare, that money is being taken away from the people who need it. Until we can ensure somehow that our social security review and the changes which need to be made are not based on Treasury economics, we shall never get the answer right.

5.9 p.m.

Lord Banks

My Lords, I should like to thank the noble Baroness for repeating that lengthy but important Statement. There will be general relief that the period of waiting and speculation is over and now the period of consolation—

A noble Lord

Oh! A better word, my Lords!

Lord Banks

Consultation, my Lords. Whether there will be any consolation for the noble Baroness and the Government remains to be seen, but there is some consolation for me in putting to the House this proposition: that we shall require to consider what has been put before us by the Government and we shall need to analyse it in order to see whether it is in fact the great review, the wide-ranging review of social security that we have been promised or whether or not it is a piecemeal, cost-saving exercise, as has been alleged.

In that connection I regret, as did the noble Baroness, that the integration of tax and social security seems to have been postponed to another day—which would seem to indicate that we shall have to have another complete rethink in a few years' time when that is undertaken, as I am sure that invevitably in the long run it will. I should like to ask the noble Baroness whether comprehensive tax credit systems have been considered. We shall certainly be very interested in the answer to that. I echo the question asked by the noble Baroness, Lady Jeger, as to how much saving, if any, the Government are proposing to make. I would make it clear that we on these Benches are not seeking any immediate net saving although we share in the general concern about the long-term cost of the present state pension scheme. We believe that if genuine savings can be made and justified then benefits which are recognised to be inadequate should be raised. I refer to items such as the basic retirement pension and unemployment benefit, benefits which at the present time require to be supplemented so often by supplementary benefit. We shall judge the Government's proposals in the light of that.

I should like to ask a question about child benefit once the new arrangements come into force, once the family credit is operating. Will child benefit then continue to be index-linked to rise in line with prices? There have been various rumours about that in the press in recent weeks. With regard to the death grant, would it not have been simpler to put the death grant at a level which was more approximate to the cost of the funeral but to recover it from people whose estates were more than a certain amount, which of course is known already to the Government?

I want to say a word about the abolition of the earnings-relating pension. Naturally I am interested to see how the proposals which the Government put forward compare with the plan which I put before your Lordships' House a little while ago and which was submitted by the Minister at that time to the review body. I was interested to hear from the noble Baroness that employees would be able to take out personal pensions as of right and be able to claim a contribution from an employer. That procedure applied to those without an occupational scheme is the procedure which I have been advocating since 1958 and indeed put forward as an alternative to the plan introduced at that time by the noble Lord, Lord Boyd-Carpenter. It has in fact been the policy of my party since 1960.

As I understood the Statement, that, applied to those without an occupational scheme, will also apply under the new regime to people covered by occupational schemes. I would ask the noble Baroness whether that means that those employers who are paying into an occupational scheme will also have to pay 2 per cent. to a personal pension scheme in addition if that is claimed by an employee.

We shall be particularly concerned, in examining these proposals carefully, with the position of those who at the moment are not covered by an occupational scheme. The proposal that I have just been referring to should help them. As to those who are already retired and who have little or no earnings-related pension, an increase in the basic pension would have helped them; but unfortunately I do not see any reference to that in the Statement.

5.15 p.m.

Baroness Trumpington

My Lords, I thank the noble Baroness, Lady Jeger, for her compliments about my reading abilities. It is nice to have something goodish. She cannot hold me responsible for the way procedures worked out, but I would remind her that this is a Green Paper and that, as she knows, there will be further opportunity for consultation. The noble Baroness raised various points, but perhaps I may start with one which the noble Lord, Lord Banks, raised in regard to integrating taxes and benefits. The review has been concerned with the structure and objectives of social security. This is the right place to start but we are looking at links between the tax and benefits systems where these make administrative sense. Family credits is an example of this. The possibilities opened up by computerisation of the two systems are also being looked at and further ideas will be put forward in the Green Paper on personal income tax later this year.

Returning to the noble Baroness, who said there were more people who needed heating addition, housing assistance and diet help and that we must not undermine the basic support, these proposals do not undermine the basic level of support provided by the state but the new income support scheme will provide this basic support in a much easier and more effective and simpler way than now. If I may elaborate on the points and questions she raised about heating, the help currently given to supplementary benefit claimants by way of extra heating additions will be taken into account when the new supplementary benefit rates are set. But the evidence is that the current complex system of extra heating additions does not necessarily give the money to those most in need. We think that the new, simpler income support system will be better and I very much hope and believe that this is true.

With regard to people's contributions paying for their own pensions—a point which the noble Baroness also raised—the state system works on what is known as the "pay as you go" basis: today's contributors pay for today's pensioners. That has been the system for a very long time. On the question of paying for funerals, perhaps I may at the same time take up the point raised by the noble Lord, Lord Banks. In answer to the noble Baroness, Lady Jeger, I can repeat that the new system for help with funeral costs will be operated through the new social fund, as I have said. It will be operated flexibly and sensitively by DHSS local offices. Help will not be limited to supplementary benefit claimants as it is now, but the precise details have not yet been finalised.

With regard to the point raised by the noble Lord, Lord Banks, I have to say that paying a large death grant to everyone and then recovering from estates would impose a most unwelcome and cumbersome addition to administrative processes and the various hoops that the bereaved have to go through. I think it would probably also end up being more expensive for everybody, excepting perhaps the people who most need help. The noble Baroness, Lady Jeger, asked whether the £1,000 would be taxed and whether it would be based on the husband's contributions. The question of taxation and the new lump sum will be considered alongside the forthcoming Green Paper on personal taxation. The award of the new lump sum will depend on the satisfaction of the same national insurance contribution conditions by the late husband as apply now to the widow's allowance.

The noble Baroness asked why the self-employed are not covered by pension proposals. The self-employed are not at present covered by SERPS. They already have access to personal pensions, with very favourable tax advantages; and many take them out. It would not be right to impose rigid rules on people building up their own businesses. The noble Lord, Lord Banks, asked about personal pension and occupational pension schemes. The personal pension option will be alternative to occupational cover. Employers will not be required to contribute to both.

The noble Baroness, Lady Jeger—I am sorry to be jumping around from speaker to speaker like this, my Lords, but that is the way the cookie crumbles—asked me about housing benefit, and whether that provided 100 per cent. help with mortgages. The current system is that those on supplementary benefit get their mortgage interest paid in full. The Government think that consideration needs to be given to arrangements which provide less additional help for the unemployed compared with those in work, so we will be discussing arrangements which mean that more of the risk is borne by borrowers, in particular those unemployed for a short time. These proposals will be discussed with building societies and other interested bodies before any change is made.

Turning back smartly to the noble Lord, Lord Banks, who asked whether more pensioners would need supplementary benefit because SERPS is being wound up, my answer to him is that the Government proposals are aimed at ensuring reasonable pensions for everyone. We do not anticipate any significant rise in pensioners getting supplementary benefit in the future. Indeed, that will continue to fall. I think that I have covered the questions asked by the noble Baroness and the noble Lord.

Baroness Ewart-Biggs

May I ask the noble Baroness two short questions? The noble Baroness said that it was families with children who needed help most. Can she elaborate a little on how one-parent families are going to benefit through the changes; whether they would indeed go on receiving one-parent family benefit, or whether they would benefit from the family credit scheme that the noble Baroness was describing? Secondly, the noble Baroness implied that an older widow was in greater need of help because she would be less likely to get employment. That is what I understood her to say. Would she not think that a young widow—after all, there are some—is in greater need because she still has children to support and to bring up? I wonder whether she might clarify that point for me.

Baroness Trumpington

With regard to the second point, I think I am right in saying that the younger woman with children will get protection; but if she has no children she will not get the same protection as the older woman because she can go out and get a job. That is the principle of it. In reply to the noble Baroness's first question, the one-parent family benefit is to continue to aid one-parent families.

Lord Kilmarnock

My Lords, I wonder whether I may ask the noble Baroness for a number of crumbs from her cookie before it crumbles away. On the question of family credit, am I right in thinking that this is designed to be paid through the husband's pay packet? If that is the case, would she not agree that it must be adapted so that the mother can claim the benefit if she chooses? Unless that happens, there is going to be a major redistribution from the woman to the man within the family.

One welcomes the extension of the capital and earnings allowance under the income support scheme; but would the noble Baroness not agree that a great opportunity is being missed to raise earnings allowances for the long-term unemployed? Even if the Government felt they could not have done that for those unemployed for over one year, could they not have started perhaps with those who have been unemployed for over two years? Will the Government consider that during the consultative process, if it is going to be a genuine consultative process?

Finally, the Statement refers to providing an opportunity for the House to debate these very substantial Green Papers. Am I right in thinking that the Government are going to make their own time available for such a debate on these very important proposals?

Baroness Trumpington

My Lords, it would be for the usual channels to decide when there would or would not be a debate.

Lord Kilmarnock

My Lords it would not be for the normal channels to decide that in principle. The Government will have to guarantee in principle that they are offering time, and then we can try and work it out.

Baroness Trumpington

My Lords, the noble Lord will have to wait and see. The cookie has not crumbled; the yeast is rising. With regard to the first question that the noble Lord asked me, the answer is that the money will be in the breadwinner's pay packet. To turn to the second question that the noble Lord asked, earnings allowances will be raised to £15 for those unemployed over two years.

Baroness Faithfull

My Lords, the noble Lord, Lord Banks, asked whether child benefit would be raised in line with index linking. I think all of us are very concerned about child benefit. We are grateful that it is still standing, but we do want to know whether it will be index linked. Secondly—this is outside the Green Paper—as a social worker who has often accompanied claimants to supplementary benefit offices, and also as one who sat on the Fisher Committee, may I ask my noble friend the Minister whether she would bring to the notice of her right honourable friend the Secretary of State the difficulties that there are in supplementary benefit offices from the point of view of managerial structure? Very often the people on the counter dealing with claimants are very young girls, much to be admired and respected, but they have a very difficult time. I would submit that with this new Bill, with completely new outlines of work, there should be a different managerial structure in the supplementary benefit offices. I quite appreciate that that is not a question which my noble friend the Minister can answer, but perhaps I may just bring it to her notice.

Baroness Trumpington

I thank my noble friend Lady Faithfull for that last observation, which I feel sure will be noted by my right honourable friend in another place. With regard to child benefit up-ratings, that will be a matter for consideration at the time, and priority will be given to more money for low-income families through the family credit arrangements, which I have already referred to in the Statement.

Lord Roberthall

My Lords, I think we must recognise the tremendous importance of the subject that has been opened up today, and all that is in the Green Paper will no doubt be very widely discussed. I should like to congratulate the Government on grasping this nettle at last, in a way which is so full of promise.

I think that most important in what the noble Baroness has said is the reference to the problems of the future. I think our grandchildren are living in a fool's paradise, because the rapid change in the aid structure means that a much smaller number of workers has to support a very much larger number of pensioners. It is important that this question has been opened up.

Baroness Trumpington

My Lords, I am very grateful to the noble Lord, Lord Roberthall, who I hope has practically finished this sort of "baking session" on a very happy note.

Lord Ennals

My Lords, almost finished! Since the state earnings-related pension scheme and child benefits were introduced during the period that I was Secretary of State for Social Services, I wonder whether the noble Baroness can confirm one or two points. Does she accept that the scheme, when it was approved by both Houses of Parliament in 1975, was totally supported by the Conservative Party, then in Opposition, as well as by the Labour Party in Government? Does she accept that when it was launched in 1978 it was launched, again, with the full support of the Conservative Party and that Mr. Patrick Jenkin, as my shadow, spoke at the launching ceremony? Will the noble Baroness also accept that during the period of the last election, when the question of the state earnings-related pension scheme was put to the Prime Minister, she said there were no plans to change the earnings-related component of the state pension? It was brought on to the statute book, she said, with the full support of the Conservative Members.

Will the noble Baroness also accept that when the Secretary of State for Social Services announced the reviews, he made it quite clear that SERPS was not to be up for review? Can the noble Baroness say why all these assurances have been overturned?

If such assurances given by the Prime Minister and members of the Cabinet to the public and to Parliament are then overturned in this blatant way, does this not bring into some disrepute the words not only of the Prime Minister and Ministers but of politicians generally, if assurances that they have given are then totally broken?

Baroness Trumpington

My Lords, I will take separately the three points that have been made by the noble Lord, Lord Ennals. With regard to his first question, about the 1974 pensions Act, we made clear at the time our reservation about pay-as-you-go schemes, which are a blank cheque drawn on the future. My right honourable friend the Secretary of State warned specifically that the financing of SERPS could become extremely onerous if the assumptions in the Government's actuarial paper at the time changed. They have done so; and it was only right in the light of experience since then that my right honourable friend should look again at the state earnings-related pension scheme—

Lord Ennals

It was voted for on Third Reading, my Lords.

Baroness Trumpington

My Lords, if I may. I will remind your Lordships of what the Prime Minister said in 1983: that there were no plans to change the pension. I think I have her words correctly. That was true, and had we had any specific plans at that stage for changing the pension structure there would have been no point in setting up the inquiry. We did so against the background of public concern on a number of aspects of pension provision, and not only in regard to SERPS. It was in the light of detailed evidence and discussions during the inquiry that it became clear that radical change was needed.

The noble Lord, Lord Ennals, referred to my right honourable friend in another place speaking in the 1970s. My right honourable friend said when the inquiry was set up that the aim was not to call into question the fundamental pension structure of the 1970s. That was not the aim of the inquiry. The statement was made in an admittedly vain attempt to head off the predictably hysterical claim from the Opposition spokesmen that we were setting up an inquiry with preconceived objectives and ideas. May I say that the aim of the inquiry was to look in a sensible and balanced way at all aspects of state and occupational pension provision. That could not sensibly exclude SERPS. We reached our conclusions on the basis of inquiry, evidence and discussions. I think that answers the noble Lord's questions.

Baroness Gardner of Parkes

My Lords, may I ask the Minister a brief question, or at least ask her to pass this point on for consideration? I certainly welcome the suggestion that everyone should be aware of what rates are and what services cost. I think it remains to be seen whether this is worked out in a humane way. However, may I ask her to ensure that when the new system of rate rebate comes into operation there will be no limitation in regard to the rateable value of property, in view of the fact that some people have suffered great hardship perhaps towards the fag-end of a lease in respect of what is a highly-rated property? Can that point be passed on to her colleagues?

Baroness Trumpington

My Lords, I thank my noble friend and I will see that her point is passed on as part of the consultations.