DEPENDANTS' ALLOWANCES (ASSESSMENT) (Hansard, 17 July 1947)

§ Mr. Kenyon (Charley)
I desire to raise what I consider to be a point of principle regarding the way in which dependants' allowances are assessed. I think that in the formation of the Regulations governing dependants' allowances a point has been overlooked that causes unnecessary hardship in certain cases. It is accepted as a right that a relative 728 in certain prescribed categories authorised under the Regulations, who is dependent on a person called into the Services, shall be entitled to a dependant's allowance, if the income, after various deductions, falls below 23s. per week, or, in the case of one dependant, 26s. per week. The point to which I desire to call the attention of the Minister is that all moneys coming into the home are considered as income, irrespective of their source. I fully agree that under the present Regulations that is correct, but I submit that certain moneys entering into the home are not income in the accepted sense of the word, but are capital income, when it becomes necessary, in order to sustain the home, for a person to withdraw invested capital.
In this respect, cases of capital sums which have been awarded under workmen's compensation fall into two distinct classes. There is the compensation which can 'be invested in a lump sum, and the compensation which is granted in a weekly allowance. In the former case, when the income is assessed for the purposes of a dependant's allowance the interest only on the capital sum is considered. In the other case, if a person is granted workmen's compensation in a weekly sum of, say £1 then £52 is considered as income. This places the two cases in an entirely different category, and in my submission is quite unjust. A person who is able to invest £100 at 3 per cent. is considered to have the 3 per cent. interest as income, but in the case of the person who is granted compensation of £100 which is given to that person at the rate £2 of a week, that £2 per week is considered as income, and entirely debars that person from obtaining a dependant's allowance.
Let me state briefly a case as it actually works out in practice. The widow of a man killed in 1943 by a fall of rock, earning £5 145. a week at the time, was granted partial compensation of £285. At that time an elder son was working in the home, and that was the reason she was granted only partial compensation. But at a later date that son married and made no further contribution. Therefore, it became necessary for her to ask permission of the court for the money to be granted to her in weekly sums. The court granted the compensation at the rate of 23s. a week. She made application for a dependant's allowance when her 729 younger son—who, at the time of his father's death, was only 15 years of age—entered the Services, but she was refused a dependant's allowance because her income was more than 26s. a week. Her income was made up as follows: She had a widow's pension of 10s. a week; her son made her an allotment of 10s. 6d a week: and the compensation of 23s. a week made her total income £2 3s 6d.
I submit that the 23s. a week compensation ought not to be taken into account in a case of this nature. It is granted by the court because of the loss of the husband. Considered in the financial aspect, it is a most inadequate sum for the loss of the husband—23s. replacing £5 14.s. a week. At the time the younger son joined the Forces he was earning £3 a week. The mother now loses that £3 and obtains only 10s. 6d. from his Army allowance. So, because compensation has been granted to her in a weekly sum she cannot obtain a dependant's allowance. If the compensation had been granted to her in a lump sum, which she could have invested had she had sufficient capital, or other income, she would have been able to draw the dependant's allowance.
I want to point out what the effect of this will be when the younger son comes home. He will return home when he is over 21. Let us suppose, for the purpose of illustration, that he gets married. The mother will then have no other income coming into that home except for the 10s. per week widow's pension, because she will have spent the whole of the £285 granted as compensation. I do submit that here is something which requires the consideration of the Government. I understand from the Service Departments that this is a Treasury regulation which has been laid down, and they are tied to the principle of considering weekly compensation as an income. I hope that the Minister, in his reply, will be able to say that the Government will consider this position where it is falling very hardly indeed upon widows and their dependants. In submitting this case tonight I hope that the Minister will have something good to say on this point

§ The Under-Secretary of State to the War Office (Mr. John Freeman)
I am grateful to my hon. Friend for raising this matter. It has served to draw attention to the practice which I think bears the 730 examination of this House. I am also grateful to him because he has been very courteous in not suggesting of the Department which I represent that we have, in any way, unfairly administered the regulations which at present exist to meet this case. The substance of his contention is that where compensation under the Workmen's Compensation Act is being paid to a widow in the form of weekly sums making up a total lump sum, it should be regarded as capital and not as income.
The position about dependants' allowances in the Forces is that it is not in any sense part of the ex-Serviceman's emoluments. It is an allowance which is paid by the State to meet immediate needs which are brought on by the fact that the State has taken into the National Service the breadwinner of the family, and the justification for the regulation which I have hitherto had to administer in this connection is that since that money is coming in, whatever be its source, there is at that moment not a degree of immediate need which would otherwise justify the payment of this allowance. Circumstances must necessarily be taken account of and the allowance should not be paid. I have given very careful consideration to this matter following a series of letters which my hon. Friend has written to me, and I have come to the tentative conclusion that there is substance in his argument.
The reason, I think, is that there is a distinction which we should not lose sight of between capital and income in this connection. The distinction is simply this, that in the case of ordinary income at the end of any given period you are still left with the capital. In the case of lump sum compensation of this kind, which is paid in periodical packets at the end of the same period, your capital has disappeared and I think that there is some substance in what my hon. Friend has said that it does constitute an entirely different case.
I would not like to give the impression to the House that I or my predecessors are sheltering in this matter behind the Treasury. It is of course perfectly true that in the administering of warrants of this kind one draws up for ordinary day to day practice, a series of regulations which, if they work well over a period of time, are usually held to have almost statutory force. I cannot at this late stage 731 of dependants' allowances, which is, after all, a purely wartime measure, undertake to reverse the practice of the last seven years without very careful thought. There are objections to doing so. We must be very careful in these matters not to remove one anomaly, and in doing so, create a whole series of other anomalies. These matters of dependents' allowances and the various operations of the Assistance Board, to say nothing of the other two Services which are also concerned in this, hang together in a complex way, and I shall have to consider with the greatest care whether it is reasonable for the Government at this late stage to make some sort of alteration to meet my hon. Friend's point.
However, this is the argument which really sways me. When the court, in the original workmen's compensation case, made its award, it made it having regard to family circumstances and having regard to the fact that there was a young person at home who was earning money and contributing to the upkeep of the family. The effect subsequently, when the State had called that young man up, of not allowing the weekly compensation to be excluded from the assessment of income is that we are, in effect, compelling the widow to spend that lump sum of compensation at a faster rate than the court originally intended her to do, and to that extent it appears to me that these regulations tend, as they stand at the present time, to frustrate the intention of the court which originally gave the compensation.
That is a frank argument, which I think largely concedes my hon. Friend's case, and if he will allow me to say so, it is the most forceful argument which can be adduced in this matter. I cannot give a categorical reply one way or the other this evening, but I will say that my hon. 732 Friend will observe, from the way I have argued this case, that I am considerably sympathetic to the concession which he is seeking to get, and I will undertake in the immediate future to look into it and to see if it is reasonable at this late stage of an allowance which is rapidly disappearing, to make such a change. In order to avoid misunderstanding, I wish to make it quite clear that I am giving no binding undertaking, but I will look at the whole question with the utmost sympathy and with a desire to help my hon. Friend. Having said that, I think he will be well advised not to press me further this evening.

§ Major Legge-Bourke (Isle of Ely)
May I ask the hon. Gentleman one question? He said the dependant's allowance was purely a wartime measure. May I ask if it is the intention of the Government to continue it for the period of the National Service Bill which has just been before the House, because if his argument in favour of the dependant's allowance was in order at a time when we were at war, it is equally in order while the National Service Bill is in operation.

§ Mr. Freeman
I can speak again only by leave of the House. I would rather not give a categorical reply; indeed, I am not in a position to do so. When I referred to a wartime measure, I would have been better advised to say "a National Service measure or expedient." The future has not arisen, but we will deal with it when it does arise. Had I spoken in that way, it would have avoided the difficulty which the hon. and gallant Member had.