RATE REBATES (Hansard, 19 July 1974)

§ Mr. Kenneth Clarke (Rushcliffe)

I beg to move: That an humble Address be presented to Her Majesty, praying that the Rate Rebate (Amendment) (No. 2) Regulations 1974 (S.I., 1974. No. 1086), dated 25th June 1974, a copy of which was laid before this House on 1st July, be annulled. As we have only 10 minutes remain-in to us, perhaps it will be for the convenience of the House if we take at the same time the following motion: That an humble Address be presented to Her Majesty praying that the Rent Rebate and Rent Allowance Schemes (England and Wales) Regulations 1974 (S.I., 1974. No. 1076), dated 24th June 1974, a copy of which was laid before this House on 25th June, be annulled. I have just a few minutes in which to draw to the attention of the House what appears to be an administrative pig's ear that has been created by two Government Departments which will create a rather unfortunate anomaly in the financial position of pensioners from 22nd July onwards. This is a matter to which the attention of a number of hon. Members has been drawn by Age Concern throughout the country.

The regulations before the House will mean that those pensioners who apply for a rent or rate rebate or allowance before 22nd July will be better off than those who apply afterwards, even though their financial means are the same. The reason for this is that pensions are to be increased on 22nd July. That is a matter which we all welcome and on which the Government should be congratulated.

However, the Department of the Environment has not increased the needs 1001 allowance for rent and rate rebates. The needs allowance is used together with income as a basis for the assessment of rebates and allowances. Were it not for the regulations, many pensioners would have their rebates reduced when their pensions were increased. For that reason we have no intention of dividing against the regulations. Without them the Government would give with one hand and take back with the other.

The regulations ensure that all pensioners applying for a rebate or allowance before 22nd July will have the increase in their income ignored. However, the regulations do not extend to pensioners who apply after 22nd July. Their new income will be taken into account and the rebate will be less. Therefore, the date upon which pensioners apply can make a considerable financial difference. It appears to be the case that a couple who apply after 22nd July could be up to £1 a week worse off than they would have been if they had applied the day before if they were eligible for both rent and rate rebates. The Minister might perhaps have time to give the exact figures and to indicate how much the difference could be because of a day or two's delay in applying. Many people are affected.

A disappointingly low number of those who are eligible for rent and rate rebates have taken them up. Of the millions who are eligible but have not yet applied, I am sure we can agree that a high proportion are pensioners. They should come forward and apply for that to which they are entitled, otherwise they will miss out. If they do not apply before 22nd July their position will be prejudiced.

What do the Government intend to do about this situation? I accept that they have been well-intentioned in bringing forward these regulations and that they have tried to avoid penalising those who now have the rebates. However, they must recognise that there is an anomaly. I hope we shall receive reassurance that the interests of those adversely affected will be considered.

At some stage the Government must raise the needs allowance. Clearly it is bound to be raised again. When that happens rebates will be raised for all. 1002 When will the needs allowance be raised? How long will these anomalies remain? When the allowance is raised, will it be possible to consider the money that has been lost by post-22nd July applicants for rent and rate rebates who will be receiving less than their neighbours who were on the ball and who applied in time? Will the position of those people be considered and their money made up when the needs allowance is next raised? Is there no way in which the post-22nd July applicants could be assessed on all income so that their new pension increase could be disregarded?

Age concern suggests that perhaps the level of the old pension could be recorded in the new pension books, so that there would be no administrative difficulty in assessing pensioners' old income. Is that possible?

Finally, I touch on an important matter of principle. I ask whether Government Departments will improve liaison with each other so as to avoid creating anomalies of this sort. In our present system there are now so many benefits and allowances that very many interact upon each other. When one hand of the Government does not know what the other is doing, or when they get out of time, anomalies of this kind can be created. There is then a failure to make people better off, which is what the Government and Parliament intended.

This is the second example of this sort of anomaly that we have had from the present Government. By raising the family income supplement eligibility limits more than the personal tax allowances were raised in the Budget, the Government have unintentionally increased the so-called poverty surtax and the disincentive to earn more at the lower end of the scale. I realise that the difficulty is the great number of means -related benefits which interact on each other. We have this maze of a system which constantly gives rise to these problems.

We propose to simplify that maze by our tax credit system which would cover some of these points. If the Government are not going ahead with that, I ask them what they propose to do. May we be assured that blunders of the kind revealed by the regulations will be avoided in future?

§ The Minister for Planning and Local Government (Mr. John Silkin)

The hon. Member for Rushcliffe (Mr. Clarke) and I have served in our respective Whips' Offices, and if there was one lesson which I learned, as I am sure he learned, it was that there is always greater resentment when a benefit is given to some but not given in full to others than if no benefit had been given at all. The temporary anomaly to which the hon. Gentleman has referred is a good example of that. But it is only a temporary anomaly. I do not object to the Opposition raising it. They are voicing the worries of perfectly respectable organisations, such as Age Concern. However, I wonder at their tardiness in raising it.

For example, I wonder why the point was not made by the right hon. and learned Member for Surrey, East (Sir G. Howe) in the debate on the Budget resolutions on 28th March 1974 when my right hon. Friend the Secretary of State for Social Services made the announcement. She said: My right hon. Friend the Secretary of State for the Environment … has told me that … the increases in pensions and other benefits should not affect existing rent and rate rebates and rent allowances".—[OFFICIAL REPORT, 28th March 1974; Vol. 871, c. 646.] My right hon. Friend was perfectly clear about the matter, and it is astonishing to me that the point was not raised then.

The anomaly arose because of the desire to raise the retirement pension as soon as possible, in July rather than in October. I am sure the whole House approves that. Had the normal process been carried out—the process which was carried out in the Conservative administration as well as in the Labour administration before that—there would then have had to be counted in the total income in assessing rate rebate the increased pension which pensioners would have received on 22nd July. That would have meant a reduction in people's incomes, which both my right hon. Friends—they were acting in concert with one another and knew what each other intended—were determined should not happen.

The price is a temporary anomaly—I hope for not very long. Whereas the original decision of March this year 1004 meant that nobody had a reduction in income, equally nobody has had a reduction in income now and pensioners' incomes will have increased.

Some hon. Members opposite criticised me for the amount of money which I spent on publicity in ensuring that people were made aware of their rights under the rebate scheme. I went on and on about it. My Department spent £200,000 and it was accused of extravagance. However, all the information coming to us from local authorities is that this is the highest take-up figure ever for a means-tested benefit of this sort, and I am delighted by it.

The position is not as grave as the hon. Member for Rushcliffe thinks, because people on supplementary benefit have their rent and rates paid for them anyway. The hon. Gentleman mentioned the needs allowance and asked why it should not be increased straight away. There are 4 million people entitled to rate rebates. To have increased the needs allowance for 2 million pensioners would have meant that we would have increased it for 2 million people unselectively. That seems to me bad sense, and bad Tory doctrine.