SOCIAL SECURITY BENEFITS

HC Deb 24 June 1976 vol 913 cc1994-2014

11.33 p.m.

The Minister of State, Department of Health and Social Security (Mr. Stanley Orme)

I beg to move That the Supplementary Benefit (Determination of Requirements) Regulations 1976, a draft of which was laid before the House on 13th May, be approved.

Mr. Speaker

With this we may take the Social Security Benefits Up-rating Order.

Mr. Orme

As you have said, Mr. Speaker, it may be for the convenience of the House if we discussed at the same time the second motion, That the Social Security Benefits Up-rating Order 1976, a draft of which was laid before the House on 13th May, be approved. The purpose of these two instruments is to provide for most of the increases in benefits announced briefly on 6th April by my right hon. Friend the Chancellor of the Exchequer. and in detail in her statement on 7th April by my right hon. Friend the Member for Blackburn (Mrs. Castle) as Secretary of State at that time. I say "most of the increases" because those for war pensioners are dealt with in separate prerogative instruments. I shall deal first with the national insurance and industrial injuries benefits which are covered by the Order and turn later to the supplementary benefit increases provided for by the Regulations.

A list of the main national insurance and industrial injuries rates is to be found in Appendix 1 of the Government Actuary's Report on the uprating Order. Command Paper No. 6478, published at the same time as the Order, it is available to the House. It might be helpful if I refer to some of the principal items. For example, the standard rates of retirement pension will be increased from £13.30 to £15.30 for a single person and from £21.20 to £24.50 for a married couple—increases of about 15 per cent. Other long-term benefits will rise by corresponding amounts. The standard rate of sickness and unemployment benefit will rise by about 16 per cent, from £11.10p to £12.90 for a single person and from £18 to £20.90 for a married couple. Other short-term benefits will rise by corresponding amounts.

On this occasion a higher percentage increase has been given to the short-term benefits. The Government have thought it right, in present circumstances, that there should be some closing of the gap, in percentage terms, between short and longterm benefits. It is proposed that the rates of benefit in the Order will become payable in the week beginning 15th November which is one year after the last increase.

The Order is short and simple. Article 1 is formal. The increased rates are provided for by Article 2 together with the Schedule, while Article 3 provides for the dates from which the various increases in benefit are to take effect in the week beginning 15th November. Articles 4 and 5 are technical. One updates the Social Security (Pensions) Act 1975 and the other formally revokes last year's uprating Order.

As the Chancellor and my right hon. Friend the Member for Blackburn indicated when announcing these increases, we have changed the method of estimating the movement of prices and earnings from November of last year, when the previous uprating took place, to November of this year, when the present one is due. That estimate is needed to calculate the increase required in pensions and other benefits.

Before I go into any further details of the uprating I wish to emphasise that the Government have not gone back on their pledges or sought to escape from their legal obligations. In our election manifesto of 1974 we made a firm pledge to increase pensions immediately to £10 a week for a single person and to £16 a week for a married couple and thereafter to increase pensions in line with the movement of average earnings. Pensions were increased to £10 for a single person and to £16 for a married couple in July 1974. Further, we specifically provided in the Social Security Act that the Secretary of State must review the rates of pensions not less frequently than once a year and ensure that pensions maintain their value in line with the general level of earnings or prices, whichever is the more advantageous to pensioners.

So far the Government have raised pensions three times—in July 1974 and in April and November 1975. These increases at relatively short intervals were intended to protect pensioners during a period of exceptionally high inflation. That intention has been fulfilled. Between July 1974 and November 1975, when we last raised pensions, prices and male manual earnings rose by 31 per cent. while the single pension rate rose by 33 per cent. We are now, with a falling rate of inflation, returning to the system of annual reviews, as we have always said we would. The rates we are proposing for November 1976 give a further increase of 15 per cent. We are confident—and I stress this—that this increase will be more than sufficient to maintain the November 1975 value of the pension.

Since the last uprating by the previous Government in October 1973, we have increased the single rate of pension by over 70 per cent., and the proposed rises will take that to 97 per cent. in November. Since October, 1973 prices have risen by 61 per cent. up to May, 1976. These figures show clearly that not only have we protected pensioners from inflation but we have given a substantial increase in real terms in the value of their pensions.

I turn to the draft Regulation which provide for increases in supplementary benefit scale rates under Schedule 2 to the Supplementary Benefit Act 1966. As in previous upratings, the increases in the rates are, broadly speaking, the same as the increase in national insurance pension and benefit rates. The new rates will take effect at the same time as the national insurance increases—the week beginning 15th November 1976.

As regards details of the increases, Regulation 2 provides first for increases in the supplementary benefit scale rates. These rates represent the level to which retired and other people not in full-time work can have their incomes made up. They cover all normal requirements other than rent, for which an addition is made to the scale rates. It is proposed that the long-term scale rates, which apply to supplementary pensioners and to people other than the unemployed, who have received supplementary allowance continuously for two years, should be increased by £2 for the single householders to £15.70, and by £3.30 a week for a married couple, to a new rate of £24.85. If a supplementary pensioner or his wife are over 80, the rate will continue to be 25p higher at each point.

The ordinary scale rates, which apply to the unemployed and to people who have been receiving supplementary allowances for less than two years, will be increased by £1.80 to £12.70 for a single householder, and by £2.90 to £20.65 for a married couple. These are the same cash increases as in the short term national insurance rates.

Scale rates for other adults and children are being increased, and the special rates which apply to the blind will go up by the same amount as the corresponding rates for sighted persons, so that their special preference is continued.

Regulation 2 proposes increases in the amounts added for attendance requirements for in assessing supplementary benefit for a person who receives an attendance allowance. These requirements will be increased by the same amount as the increases proposed in the attendance allowance itself. It is also proposed that the standard weekly addition in the case of a claimant living as a member of another person's household should be increased by 20p to £1.20.

As a result of the changes in the scale rates the income of adult non-householders goes up by £1.80 a week for supplementary pensioners and other long-term recipients, and by £1.65 for other non-householders.

There are two other changes which are not provided for in the regulations, but which are an important element in the uprating. As the Former Secretary of State announced on 7th April, the Supplementary Benefits Commission has decided to increase the discretionary addition for extra heating and the standard addition for special diets by about 25 per cent. These changes take effect from 15th November 1976—the same time as the increases in scale rates.

About 12,500,000 people will receive an increase in benefit next November as a result of these proposals, at an additional annual cost of £1,335 million. At the same time there will be an additional cost of £37 million for war pensions and of about £14 million for the increases in supplementary benefits discretionary additions. This gives a total expenditure of £1,386 million in a full year.

I have pleasure in commending the Order and the Regulations to the House.

11.45 p.m.

Mr. Robert Boscawen (Wells)

Regrettably I cannot accept these two uprating instruments with wild enthusiasm. I should like to be able to do so as I have always had to accept uprating Orders before with gratitude, whichever Government introduced them. This year will prove, however, a vintage year for reneging on solemn commitments to pensioners, and we on the Conservative side of the House are deeply disappointed at the way in which pensioners have been treated. It is a year in which the poor have never been taxed so high, if they are lucky enough to have jobs, that is. Regrettably, 1976 will be a vintage year for the poverty trap, a year when thrifty pensioners are told to put off the evil day of paying astronomical fuel bills with small hopes of extra help coming when their doomsday arrives.

The Labour Chancellor has allowed inflation to cheat pensioners whom he had promised to defend, by breaking his commitment to them to the tune of £500 million. Quite simply, the Government have gone over to a new method of calculating the benefits by shifting the relevant base period for the latest uprating. It is very easy for a Government to confuse the uninitiated over this, and I intend to explain in detail later in my speech what we think they have done. In essence they have eliminated any protection for pensioners against the peak months of inflation between March and November last year. Very few commentators in the Press were taken in at the time by this measure, and least of all was the Child Poverty Action Group taken in.

First, let me deal with the way in which the House now alters the benefits. In the past there has always been an important uprating Bill on each occasion to introduce the new levels of benefits. In the Social Security Act 1973 the then Conservative Government decided no longer to do that. Thus tonight is only the second occasion on which we have altered benefits by Order. It is the first year in which a whole area of social security benefits and contributions has not been raked over in Standing Committee.

The previous Government took the view that when there was just a straightforward uprating of benefits it would be for the convenience of the House to enable pensions to be raised without any legislative delays such as would be necessary if a full Bill had to be introduced. But I sincerely question—and this is not a party matter—when there is a significant departure in the method of calculating the benefits, as there is in these uprating Orders, and when there is some shift in priority, whether the conditions envisaged by the former Government's legislation still hold good.

Tonight it is possible only to scratch the surface of a wide range of benefits. In the past, we have spent many hours in Committee going over the benefits and hon. Members have benefited from that opportunity. Are we satisfying the House or doing our best by the recipients by introducing such a wide range of benefits in this way?

The Government have made a modest shift in priorities away from the longterm beneficiaries—retirement pensioners, widows, the disabled and war pensioners—to those on short-term benefits—sickness and unemployment up to 312 days, industrial injuries up to 26 weeks and widows' and maternity allowances.

This is a modest, but significant, shift of 1 per cent. I do not believe that the Government have grounds for saying that the short-term beneficiaries—even the many unemployed who have considerable difficulties—are in such dire need as the very elderly and the long-term sick.

Short-term benefits are not taxable and for the first six months, there is an earnings-related element in many people's unemployment pay, as well as tax repayments in some cases.

I hope that the Government thought it out carefully before making this shift and that it is not yet another retreat before the self-interest of trade union members. Many hon. Members on this side believe that if there is to be a shift, the emphasis should be placed where the shoe pinches most and particularly on those receiving the age addition, which has not been increased since its introduction by the last Conservative Government.

The first letter that I took from my postbag this morning was a copy of a letter sent to the Prime Minister. It came from an old lady of well over 80 who was pleading with the right hon. Gentleman to help old people in the West Country. She said: Why are we old age pensioners having to suffer so much? My family is all married. We can't honestly go on. Please help Somerset old people. Give them a little happiness in this last few years. So many have got ill. Speaking for them all as well as myself, don't let us die. Let us have a bit of happiness in our old age. That was a cry from the heart. Many hon. Members will have had similar letters. People on the age addition in my view are the most in need of help in any shift of emphasis.

Returning to changes in differentials, I am perturbed to see that industrial injury pensioners with the maximum degree of disablement and the 100 per cent. disabled war pensioners have not moved in fact in line with other long-term beneficiaries and have consequently suffered a slight reduction in the differentials. I do not know whether this is intentional or a matter of rounding-up, but it requires a satisfactory explanation, otherwise it will be widely resented. I must declare a small personal interest—namely, that I am entitled to a disability pension.

It is right to mention the position of war widows. For the first time they have become taxable on their war widow pension alone. That pension is taxable even if they have no other income. That illustrates how tax thresholds have been reduced and how deserving people are being hit.

I now turn to some of the non-contributory benefits, especially the non-contributory invalidity pension. I draw attention to what is said about it in page 6 of the Government Actuary's Report, which is a matter for concern. We find that the level of take-up of the non-contributory invalidity pension has been very slow. I know that these are early days, but the report states: The major reason for the lower total of take-up was that about half of those receiving supplementary benefit chose to remain on that benefit rather than to switch to a combination of non-contributory invalidity pension and supplementary benefit. That is exactly what we were warning the Government would happen if they did not do something about introducing a sensible level of disregard for supplementary benefit purposes. I recall hon. Members on both sides of the House, especially those who took a great interest in bringing about the pension, including my hon. Friend the Member for Wallasey (Mrs. Chalker), and all the members of the All-Party Disablement Group, warning the Government that unless they disregarded part of it for supplementary benefit purposes, the new non-contributory invalidity pension would be meaningless for the poorest people. That is virtually what has happened.

I remind the House that the Conservative Party produced a document before the last election in which it suggested that it was essential to allow a substantial disregard, otherwise it would be meaningless for the poorest. Many of those who are entitled to non-contributory invalidity pensions have been too impaired ever to have worked in their lives. We are talking about an area in which there is great poverty.

Another disturbing factor about the Government Actuary's Report is that we have no news about the extension of the non-contributory invalidity pension to the disabled housewife. I was privileged to move an amendment to try to bring the disabled housewife within this secheme during the Report stage of the Social Security Benefits Act last year. We had a long and very moving debate about it, in which the Under-Secretary, the hon. Member for Manchester, Wythenshawe (Mr. Morris), and my hon. Friends, particularly my hon. Friend the Member for Wallasey, made memorable speeches. At the end of the debate we withdrew that amendment because an undertaking was given to us by the Minister for the disabled, the hon. Member for Wythenshawe, that the Government would do their best to introduce this allowance for them as soon as they could after making the proper administrative arrangements.

There are I know a number of difficulties about the definition of an individual who is incapable of performing normal household duties. But we have been waiting for a very long time since we withdrew that amendment to hear a date when the disabled housewife will be included in the scheme. This is a matter on which the House feels very strongly. I know that the Ministers concerned now were doing other important jobs at the time, but if they had been present at that debate I am quite sure that they would have been moved by it. It would help the House if they could give any indication at all tonight that they are prepared to give some date to which the disabled housewife can look forward to becoming entitled to the non-contributory invalidity pension.

I turn now to the supplementary benefits scale rates. I am immediately struck by the fact that the Government have not yet grasped the full urgency of the need to tackle the problems of the high cost of fuel for pensioners. The fuel bills that pensioners have been receiving lately have been appallingly high. The sort of bills I have been seeing in my constituency for the winter quarter have been in the order of £80 to £90, and in one case £110, in some of the cold villages on top of Mendip. The highest scale rate is now to be increased to £2.10 a week only. Thus one quarter's worth of electricity would absorb the whole year's scale rate.

It is not good enough. It will not help people who are now terrified of the electricity bill for the winter quarter. The House must consider much more seriously what we are to do in future, and in the coming winter—we have not got very much time to think about it—about the level of fuel bills of all kinds for some elderly pensioners.

Mr. Orme

I think that the hon. Gentleman is probably aware that the Government are now discusing this matter with some urgency to see what can be done, or whether anything more can be done than the uprating that I have announced tonight. While the hon. Gentleman is making the case, however, he must take on board the fact that this will mean increased public expenditure and the fact that these higher fuel costs have arisen because the nationalised industries are made to balance their budgets and stand on their own feet commercially. The hon. Gentleman's party has advocated those policies and he cannot now duck out from the responsibility involved in them.

Mr. Boscawen

I do not duck from such responsibilities. I bitterly regret that the economy is in its present mess. The Chancellor has had to cut about £500 million off Social Security benefits after a solemn undertaking last year to do otherwise, but we should look carefully at our priorities for helping those people more, otherwise some of them will die of hypothermia. They cannot pay such bills. We have to shift priorities. The Government are spending so much money on their schemes in many spheres, and that money could be shifted to this more vital area of need.

The death grant is at an absurd level. I do not suggest that we can spend a lot more public money on putting it up—I tried to suggest that on many occasions when times were considerably better than they are now. The death grant is now £30. That is ridiculous when I am told that the minimum cost of a reasonable funeral is between £125 and £130. About £25 million is being spent on that minimal death grant of £30. Perhaps we could go back on some of our commitments not to extend means tested benefits and hand over that sum to the Supplementary Benefits Commission for it to use to pay considerably higher death grants to those on supplementary benefit. I realise that that would be against many hon. Members' principles. We have said that we do not want to extend means tested benefits but this is a humane case which we should look at again.

Mr. Orme

I think that the figure for death grants is £15 million, not £25 million.

Mr. Boscawen

I am grateful to the Minister. I obtained my figure from the Government Actuary's Report in Appendix II which gives the figure of £25 million for 1976–77. But I may have misread the figure which could refer to some other matter.

The income tax system is having an increasingly serious effect on social security benefits. I hope that I shall be allowed two minutes to discuss that without being called out of order, Mr. Speaker. In Committee Room 8 upstairs hon. Members are discussing measures which slice into the income of the low paid and into the benefits which we are seeking to examine and approve on the Floor of the House. Someone from another planet would think that we were not worth visiting. It is ridiculous. We have reached the stage when for many thousands of families it does not pay to work and there are two official standards of poverty, one for those on the supplementary benefit scale and another for those on low wages who are paying a supertax.

Let us take a single individual in category B in the new scale rates of supplementary benefit, whose minimum essential needs are deemed to be £15.70 a week—about £1.50 a week above the new income tax threshold level of another single person working for a similar amount. The luckless man in work pays 35 per cent. tax on that £1.50, plus a National Insurance contribution.

That sort of effect invites the cynicism and despair of people outside the House. It must in part contribute to the sickness of this country and must damage the will to work. Yet the Government are making no attempt to prepare the way for a sensible system in which tax and benefits are brought together under one umbrella and the level of taxation is reduced.

The sooner we get rid of this debilitating dual nonsense, the better. The longer the reform of the tax benefit arrangements is put off, the worse it will be for the country and the longer it will take us to recover.

I return to the gravamen of our charge against the Government, the broken pledge to protect fully the pensioner from the ravages of inflation. Most of us believe that in the 1975 Social Security Act the Government had committed themselves unequivocally to the existing historical basis for calculating the benefits that would be payable this autumn.

I should like to quote something that was said by the late Brian O'Malley, whom we always regarded as someone who always acted in absolute good faith. He drew on great experience in these matters. On the question of the historical basis for calculating benefits, he said in the Standing Committee on the then Social Security Benefits Bill: I believe that I have demonstrated to the hon. Gentleman that the historic method is, in the end, the fairest method. It means that there is a consistent link between the movement of earnings on the one hand and the movement of retirement pensions and long-term benefits on the other."—[Official Report, Standing Committee B, 12th December 1974; c. 191.] We on this side of the House believed that we also had this commitment spelt out in Section 125(3) of the Social Security Act 1975, which says: If on any such review"— it is referring to the review which the Secretary of State had to undertake annually, under an earlier part of the section— the Secretary of State concludes that any of the sums in question have not retained their value as mentioned above, he shall prepare and lay before each House of Parliament the draft of an up-rating order increasing those sums at least to such extent as he thinks necessary to restore their value. We believe that that section means sticking to the existing historical basis for calculation.

The relevant period for the last up-rating was defined for us by the right hon. Member for Blackburn (Mrs. Castle), then Secretary of State, when, referring to the uprating last November, she said that These increases are in line with the movement in earnings of nearly 15 per cent. that has taken place in the period from August 1974 to March 1975, which is the relevant period for calculating this uprating."—[Official Report, 22nd May 1975; Vol. 892, c. 1624.] Last but not least, there was the statement a year ago from the hon. Member for Oldham, West (Mr. Meacher), then Under-Secretary of State, Department of Health and Social Security. He said: Changes in the movement of earnings and prices after March 1975 will of course be reflected in the next following uprating."—[Official Report, 24th June 1975; Vol. 894, c. 376.] If that does not mean that the calculations should be made on the levels of change in earnings or prices following March 1975, I do not know what does. It is spelt out as clearly as can be. What could it mean but that the Government intended to increase long- and short-term benefits by the amount that prices or earnings had risen between March 1975 and March 1976, now known to have been some 21 per cent. in the case of prices?

The Government have devised instead a brilliant way of cutting the social security bill by £500 million. Not content with making pensioners wait a full 12 months before their rise took place—in itself a substantial saving—the Government skipped neatly over the worst months of inflation between March and November 1975, and based their calculations on an estimate of the inflation rates between November 1975 and November 1976. Thus the expected rate for the pension increase which we are now debating was cut from 21 per cent. to this rise of between 15 and 16 per cent. Therefore we are back where we started—to the annual review and to the falling standards of the poorest in this country, with every week seeing a reduction in their purchasing power.

Mr. Orme

I am listening very carefully to the argument that the hon. Gentleman is deploying on this issue, but the fact is that when these benefits are paid in November there will be a net increase for pensioners which will compensate for the increases over the 12 months. The hon. Gentleman cannot get away from that point.

Mr. Boscawen

But the Minister has not yet compensated those concerned for the months from March 1975 to November 1975 when the highest rate of inflation of all was in operation. That is the problem. I hope that the Minister will go back and do his sums. He cannot go on saying that he has taken account of those months.

I am also extremely perturbed about the cut-back for another reason. At the same time as pensioners are suffering a cut-back following the enormous increases in prices in relation to the Retail Price Index, they are also suffering cuts in public services—services on which hitherto they have been able to rely.

We all know that there are cut-backs in the number of home helps in many parts of the country. I understand that because of cost many hundred of pensioners have asked for their telephones to be removed. Furthermore, public telephones are now being removed by the Post Office. On a new housing estate in my constituency—an estate containing many old people—the Post Office refuses to put in a public telephone within a reasonable distance of the housing estate because the Post Office says it cannot afford it. The Post Office refuses even to put in a pillar box. This is happening in a rural area in my constituency in which village after village is virtually without bus services.

All these are deteriorating services—services that are most necessary to the elderly people and others in the community. We bitterly regret that the economy is in such a state that the Government cannot meet the commitments they have made in respect of this most deserving group of people in the country.

12.23 a.m.

Mr. D. E. Thomas (Merioneth)

I shall not detain the House for long, but wish to make only a few remarks.

In debates on social security expenditure, I am conscious of the dependence of people in areas such as those I represent on social security benefits. If we look at per capita spending on social security, we find that the figure in Wales exceeds that in the United Kingdom as a whole by £5 per head. Invalidity benefit expenditure in Wales amounts to a figure of £15 per head compared with only £7 per head in the rest of the United Kingdom. In terms of sickness benefit, the level of expenditure in Wales is almost £16 per capita compared with a figure of £9 in the United Kingdom.

I have said on other occasions in this House that one of the major reasons for the high per capita expenditure in Wales flows from our greater dependence on social security benefits. This is partly due to the industrial structure. The sickness benefit figure can partly be explained by the far greater investment in Wales per man at risk. Furthermore, Wales has a higher percentage of elderly in the population and a great number of people on low incomes.

If we regionalise the situation and examine constituent parts of the United Kingdom, we find indicators of the relative dependence on sickness benefits and other social security benefits that are not often highlighted. Therefore, it is important for us to look not just at the overall level of benefit—in other words, at standard benefit throughout the United Kingdom—but also at areas in which there is a higher dependence on such factors and we must examine particular needs in those areas.

Again, in Wales we find that the expenditure per head on supplementary benefit is £17.76. Only Scotland and two English regions, the North and the North-West, have higher figures. The same applies if we look at the claims for supplementary benefit over the same period.

On behalf of the recipients of benefits, we welcome the upratings, but, like the hon. Member for Wells (Mr. Boscawen), I question the basis of the uprating. I should like to know whether the Minister can confirm that, if the peak period formula had been used, the retirement pension increase for a single person would have been to £16.10, as opposed to £15.30, and that for a married couple would have been to £25.65, instead of the £24.50 which we are offered now. The same applies to the supplementary benefit rates in that the ordinary rate after up-rating in November 1975 was £23.95. But, by November 1976, on the present formula, its real value will be eroded. The estimates range from £21.77 to as low as £21.01. The same applies to the erosion in real value of unemployment and sickness benefit and of retirement and invalidity pension.

Given that the inflation rate for low-income families is likely to be greater than it is for families generally, here we see a greater deprivation and a greater inflation burden being carried by those sections of the population least able to carry those burdens.

I wish to make one further general point on these regulations. This is the opportunity that we have to make general points about the supplementary benefit system and about the social security system. I repeat what I said earlier about the extent of dependence on supplementary benefit and the fact that, over the period from 1948, when the national assistance scheme was first introduced, when we had 3 per cent. of the population dependent on the system, to 1974, which is the latest figure that I have, the percentage of the population dependent on supplementary benefit is now 7.5. It can be said, therefore, that the safety net which Beveridge talked about has become a dragnet. This has happened because our level of national insurance benefits the general social security benefits paid—is not sufficiently above the poverty line or the threshold of supplementary benefit payment. Until we get a clear commitment from both main parties to aim at an increase in the general level of national insurance benefits, to bring them substantially above—£3 or £4 above—the basic poverty line of supplementary benefit, we shall have this continued and increasing dependence on this means-tested benefit.

I come now to one or two points that I wish to make about specific benefits. I was disappointed to see that the maternity grant had not been increased, and here I declare a personal interest as an indirect recipient of the grant three months ago.

Then there is the death grant. Age Concern has written to the Minister about it. Although I appreciated the Answer given me by the Minister's predecessor, the late Brian O'Malley, that this could not be accorded high priority, there are ways, through exceptional needs payments and so on, within the supplementary benefit system in which the intention of the death grant could be achieved.

One other matter is that of child special allowances paid as part of the various national insurance benefits. A point which we ought to look at is whether the child special allowances generally should be age related. I am thinking specifically of the industrial death benefit and, particularly, of the invalidity and retirement pensioners' child special allowance, which are not age related. There is an increase for the first child and then a figure for any other child. An age relation would make it much fairer.

These are some detailed points which the Minister might like to pick up later in the debate.

12.31 a.m.

Mr. Orme

With the leave of the House, I will reply to the debate. The hon. Members for Merioneth (Mr. Thomas) and Wells (Mr. Boscawen) may like me to look at some of their points in more detail and I will write to them. In respect of maternity allowance, a case can be made out for all such benefits.

There are many deserving recipients and a multitude of important benefits. It all boils down to a matter of priorities. There is a limit to what any Government can do with limited expenditure. A famous previous Minister of Health often said that Socialism was the language of priorities. What he meant was that one had to decide. Even if there was a booming economy, and we had money to spare, there would still not be enough to improve many of the benefits because pressures would come in from all sides in that regard.

The hon. Member for Merioneth in a thoughful speech, made many important points. He asked whether the Government were right to go for a short-term benefits preference over the longer-term ones, in particular—pensions. I accept that this is a matter of judgment. One has got to take into account the position of the unemployed and other people who, at the moment, are having to claim these short-term benefits. The Government decided, in their judgment, to make a small change in favour of the shorter-term benefits. It is only a matter of 1 per cent. but it is an important shift.

Mr. Patrick Jenkin (Wanstead and Woodford)

If my hon. Friend the Member for Wells (Mr. Boscawen) will permit me, what many of us find so puzzling in this is that the closing of the gap, increasing the short-term benefits by a higher percentage, has coincided with the time when the tax threshold affecting long-term benefits is as low as it is. It is at a record low level in real terms. Many of the long-term benefits will be taxed while the short-term benefits are not taxed. This seems a strange time to start closing the gap.

Mr. Orme

This is an endless argument. One wants to take those people in the lower income groups out of tax and one raises the tax threshold, but incomes increase and so do costs and so on. More people then come back into the tax net again. It is an endless argument, and the right hon. Gentleman can point to anomalies in that situation.

The Government had to make a judgment about whether to do anything more in respect of the short-term benefits and we felt there were people on short-term benefits who needed more assistance at the moment.

The hon. Member for Wells mentioned war pensions. He is a distinguished recipient of a pension himself and he declared an interest. Hon. Members are not often called upon to declare such an interest, and in the hon. Member's case it is a distinguished interest.

The hon. Gentleman said that the pension appears to be slightly reduced. First, the increase was the same in percentage terms. Then, as is normal, it was rounded down, but only by a few pence. There was no distinct discrimination.

The hon. Gentleman also mentioned the incapacity and invalidity pension and the earnings rule. In a previous debate, my predecessor and friend—I need not reiterate the feelings of respect we all had for Brian O'Malley—pointed out that earnings are incompatible with the basic concept of incapacity.

Mr. Boscawen

I was talking not about the earnings rule but about the level of disregard for supplementary benefit purposes. There is a nil disregard in the case of the non-contributory invalidity pension.

Mr. Orme

I take the point and I should like to look into it. Anyone who deals with this subject knows the labyrinth of complications involved. It is a very wise hon. Member who, when tackled about benefits and entitlements—as I am in my local Labour Club and elsewhere—can give an absolutely correct answer without checking. The multiplicity of benefits and the problems of means testing create difficulties which I should like to see greatly reduced. But that is easier said than done.

I know the hon. Member's personal concern in this area. All hon. Members are concerned about these matters but their arguments would mean extra public expenditure. I have been asked about the change of the method and the sum of £500 million. The suggestions made would directly affect the borrowing requirement. We cannot talk about this fund and divorce it from the Government's general economic problems.

Mr. Kenneth Clarke (Rushcliffe)

Would the Minister not accept that it would be possible to have respect for a Government who said that, because of economic strictures, they would have to cut £500 million off the anticipated up-rating and that they could not abide by the commitment which my hon. Friend the Member for Wells (Mr. Boscawen) spelled out and which has been made by former Ministers? What is not acceptable is what the Minister tried to do in his opening speech—that is, to pretend that there was no real change, by using bogus dates and comparisons in his reference to the uprating, and to try to gloss over the fact that £500 million has been cut from the uprating and that the pensions have not been uprated in line with the Government's commitment.

Mr. Orme

I do not accept that. The percentage increases prove my point. In spite of the Acts that were quoted, what the Government did was legally correct. The pension increases which will come into effect on 15th November are inflation-proofed. We do not accept the arguments producted by the Opposition.

We all know about the pressures which the Government face. Tonight we have seen the human face of Conservatism. However, some members of the Opposition, who are not present this evening, have a different attitude towards expenditure cuts. They do not care where the cuts are made as long as they are made. That is what we face now.

Mr. Patrick Jenkin

I must make this point abundantly clear, as I did in reply to the right hon. Member for Blackburn (Mrs. Castle) when she made the initial announcement. We charge the Government with reneging on their explicit and express promises. But we recognise that this is inevitable in view of the economic situation in which the Government find themselves as a result of their mismanagement. I have made this clear to the pensions organisations. We cannot press the Government to spend more and to increase the total. It is shameful that this must be done, but we recognise its inevitability, given the position into which the Government have placed themselves. That is the position of my party.

Mr. Orme

I listened to what the right hon. Gentleman said about that. However, I do not go back on the statement that I made. The Opposition want the argument both ways. They want to press for more expenditure and say in the next breath that they are against it. The hon. Member for Wells said that not enough was being paid for pensions but that the people were paying too much tax. How otherwise shall we finance these benefits?

Mrs. Chalker

From the Exchequer.

Mr. Orme

The Exchequer makes a basic contribution. I think that the hon. Lady knows what are the percentages. That contribution comes from tax. The Opposition cannot have it both ways.

Reference was made to people who need telephones but who cannot afford them. It was said that the Post Office would not install telephones for old people as it was considered that they would not be able to pay for them. But which political party bayed at the door of the Post Office and other publicly-owned industries calling for the ending of subsidies, which means that those services will inevitably become much dearer? The Opposition must answer that point. I think that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) may agree with me on this point. I am sorry that we are not debating these matters at an earlier hour in front of a full House. These issues must be debated.

Tonight I am moving an Order for £1,335 million of Government expend- iture in one year. That is the highest increase on record. It will give outstanding benefit to those concerned.

I next refer to retirement pensions increases. Let us go back two years. There was inflation in the last 12 months of the previous Conservative administration. What did the Labour Government do when they came to power? They increased pensions. There was a tremendous campaign throughout this nation. We increased pensions to £10 and £16. Since then we have increased pensions three times.

Mr. Kenneth Clarke

Since the last election the pension has been increased to compensate for inflation. The right hon. Gentleman cannot claim credit for the fact that £1,300 million extra is being spent when the real value of none of these pensions is being increased. The expenditure is necessary because of the rate of inflation, and the right hon. Gentleman is not able to compensate for that.

Mr. Orme

I gave the figures in my opening speech and no one challenged them. Since 1974, when the Government came into office, pension increases have more than compensated for both the increase in prices and the rise in average earnings. This is the basic argument and it is one which will be rehearsed on Monday.

We shall be asked what we are doing about introducing other benefits when, in reality, the Government are implementing the policies on which they were elected, despite a difficult economic background. The Government will ensure that those who deserve to be assisted do not suffer. That is where our priorities lie and where they will remain.

Question put and agreed to.

Resolved, That the Supplementary Benefit (Determination of Requirements) Regulations 1976, a draft of which was laid before this House on 13th May, be approved.

Resolved. That the Social Security Benefits Up-rating Order 1976, a draft of which was laid before this House on 13th May, be approved.—[Mr. Orme.]