§ 3. Mr. Patrick Jenkin
asked the Secretary of State for Social Services what plans his Department is making to reform the system of social benefits.
§ The Secretary of State for Social Services (Mr. David Ennals)
The right hon. Gentleman will already be aware that our new pensions scheme will commence in April 1978, non-contributory invalidity pension will be extended to married women incapable of housework in November 1977, and the child benefit scheme will be phased in over the years 1977 to 1979. In addition, I have put in hand a major study to reform the supplementary benefits scheme.
§ Mr. Jenkin
Does the right hon. Gentleman accept that the system has got out of kilter when so many people find themselves with more spending money when they arc out of work than when in work? Whose statement are we to accept as to the Government's policy on taxing the short-term benefits? Is it his own—that the short-term benefits should, in equity, be taxed—or the Chancellor of the Exchequer's statement that he has no intention of doing this?
§ Mr. Ennals
The question whether short-term benefits should be taxed was dealt with by my right hon. Friend the Prime Minister. He said, as I had said, that this had been decided upon when the scheme was introduced in 1948 and was found to be impossible to administer. Successive Governments—the right hon. Gentleman's as well as ours—have tried to see whether there was a workable administrative system. We have not succeded in finding one. There is no difference now, unless the right hon. Gentleman is now proposing some legislation or alteration which would discriminate particularly against the unemployed.
667 However, on the question whether there are certain people who can get more when they are unemployed than when they are working, I must point out that it is a very small minority indeed, to whom earnings-related supplements, tax rebates, rent and rate rebates, and so on, are paid. It is these payments rather than the increase in the basic benefit rates which are the significant factors. It is, I assure the hon. Gentleman, a very small percentage indeed.
§ Mr. Nicholas Winterton
A reform of social security system would be advantageous and long overdue, but does the Secretary of State agree that his proposals to reduce unemployment benefit for people who are forced, for one reason or another, to retire at 60 is wrong when those people are determined and will try extremely hard to obtain employment? Is this justice? Is it social justice?
§ Mr. Ennals
There is a further Question on that point—Question No. 7—but one has to ask whether it is right that in these times, when we look closely at public expenditure, a man should be able to receive unlimited unemployment benefit when he has already retired from a job which gives him a pension. We are dealing with a very small percentage—in fact, much less than 1 per cent. of the total number of occupational pensioners.
§ Mr. Pardoe
Is the Secretary of State aware that in 1948 it was decided, on purely administrative grounds, not to proceed with taxing short-term benefits, and that very few people were then in receipt of short-term benefits and in the tax net? The situation is now very different. Does not the Secretary of State think that the balance of advantage may have changed?
Will the Secretary of State comment on the fact that the reason why his right hon. and hon. Friends turned down the Conservative Party's proposals for a tax credit scheme was precisely that it would have involved taxing the short-term benefits?
§ Mr. Ennals
The Conservative Party never said how it would finance the tax credit scheme. It will be most interesting to know whether it now has plans for financing such a scheme. The hon. Gentleman must recognise, as I said, that it was because of straight administrative reasons, and that the cost in terms of 668 staffing, particularly, would be many thousands of pounds. We estimate that about 13,000 civil servants would be required to undertake this task. It is a matter worth looking at, but the chances of our finding a way through are very small.
§ Mrs. Castle
Will my right hon. Friend tell us what would be the current cost of the Conservative's tax credit scheme?
§ Mr. Ennals
I am not quite certain what the Conservatives' proposal is at the moment. If they would explain it, we might be able to cost it.