DEATH GRANT (Hansard, 25 June 1979)

§ Mr. Geoffrey Dickens (Huddersfield, West)
I am delighted that my hon. Friend the Minister who is to reply to the debate has such a good record in the matter of pensioners' care.
The subject of death is often avoided by politicians, but the greatest certainty of life is that finally we have to die. If we are fortunate enough to be spared into old age, there comes that time when the mind must adjust to passing, and we think of the enormous cost of a funeral. It worries people to think of the cost of even a modest funeral.
This brings me to the need to raise the level of the death grant, which is today exactly what it was in 1967—a paltry £30. The history of the grant is a sad reflection on successive Governments, who since its introduction in 1949, at £20, have between them increased it only twice in 30 years. This is a disgrace.
It took nine years, from 1949 to 1958, to raise the grant by just £5, and another nine years, from 1958 to 1967, to raise the level again by only £5. Here we are in 1979, 12 years on, with no increase whatsoever.

§ Mr. Andrew Bowden (Brighton, Kemptown)
It is a scandal that there has been no increase in the death grant for 12 years. Is it not an even greater scandal that tens of thousands of our most elderly pensioners are entitled to no death grant at all?

§ Mr. Dickens
I am grateful to my hon. Friend for that intervention. Certainly there are limitations to the grant of which people are not aware. I was coming to this matter. For instance, when death occurs at age 95 or over in the case of men, or 90 or over in the case of women, no grant is paid. Therefore, my hon. Friend is right. Where death occurs at the age of 85 or over in the case of men 254 or 80 or over in the case of women, a reduced grant of £15 is paid. A grant of £15 is payable in respect of children aged 3 to 5 and £9 in respect of children under 3.
Let me deal with the human angle before returning to the cost, which is not often realised by the decision-makers here in Parliament. Many elderly people in my constituency—

§ Mr. Donald Thompson (Sowerby)
It is not only Huddersfield. In many urban areas there is an ageing population. In my constituency, for instance, at the Todmorden end, many people are very old, and the age rate is higher than in many so-called retirement areas, such as Harrogate. Great distress is caused amongst an ageing population.

§ Mr. Dickens
My hon. Friend is quite right. This is not a problem in my constituency alone, although of course I wish to refer to my constituency in this debate. It is a problem throughout the United Kingdom.
People are haunted by the prospect of a pauper's burial. A modest funeral these days can cost between £250 and £400, excluding charges for churches, cemeteries, doctors, legal costs and so on. Pensioners who truly wish to make provision for their own funeral are unable to keep up with inflation, which outpaces their ability to save from their pensions. Years ago pensioners took out insurance for pennies or tuppence, and thought that when the policies matured they would provide enough money at least to bury them. But in this inflationary world it has not proved to be enough. This is very sad. Pensioners are cutting down on their food and heating because they cannot save sufficient funds.

§ Mr. George Foulkes (South Ayrshire)
Does the hon. Gentleman agree that many pensioners, in cutting down on the cost of heating and food, are hastening their death and will regrettably have to meet the cost of their funeral far earlier than they might otherwise have done?

§ Mr. Dickens
The hon. Member is right. Although I have no concrete evidence, we hear of hypothermia in the winter, and it must be the case. If elderly people cut down on their heating that would be the result for a number of them. 255 It is sad and silly, but we cannot say that they are unwise. I am pleased to say that we cannot yet rule the hearts of the elderly from Westminster.
I do not wish to take away the responsibility for funerals from individuals and their families. The State should not have to pay to bury people. Families wish to do that for their elderly folk and elderly people wish to try to save sufficient money. I am trying to highlight the problems so that the death grant can be made a more meaningful contribution.
I ask the Government to consider the following action. First, I ask them to restore the death grant to its original 1949 value of £132. That is based on the general index of retail prices. Secondly, there should be an immediate abolition of the age restriction.
The cost of paying the grant at the higher level will be about £55 million a year and the extension of the grant to those very elderly people excluded would cost a further £12 million a year. The House will agree that £67 million is a small item in our total national budget. I hope that we can move towards a situation in which people can preserve dignity even in death with the help of us all and in the fullness of time with the help of the Minister.

§ The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker)
I should first, like to thank my hon. Friend the Member for Huddersfield, West (Mr. Dickens) for raising this subject because of the welcome opportunity it gives us to look at the national insurance death grant.
It is welcome, first, because of the concern which has been expressed over the grant in many quarters, not least by the all-party committee concerned with the affairs of pensioners, led by my hon. Friend the Member for Brighton, Kemp-town (Mr. Bowden) and others. In the short period since taking office, I have received from many honourable Members and the public representations that reflect the concern expressed by various organisations and many individuals in different parts of the country.
However, it is also welcome because many years have elapsed since the grant was introduced and that is, in itself, suffi- 256 cient reason to suggest that there is a case for looking at it afresh.
The death grant as introduced by the National Insurance Act 1946 was an entirely new feature of State insurance which originated in the proposals made by the wartime Beveridge report for a "universal funeral grant". The report justified the inclusion of such a benefit in compulsory State insurance on the grounds that that was administratively the simplest—and probably financially cheapest—way of meeting a universal need.
The grant introduced by the Act was a straightforward lump sum payment made on the death of a contributor, his spouse or children. Amendments were later introduced to include the handicapped adult relatives of contributors. Since the grant was a new benefit it was decided that only people who contributed under the scheme should be eligible for it. Hence, those who were over pensionable age at July 1948 were ineligible and those within 10 years of pensionable age qualified for only half the standard grant. This is the point raised by my hon. Friend the Member for Kemptown, to which I shall return.
There was a simple contribution condition to be met and this was, in later years, relaxed even more. It now requires at most the payment of 25 weeks' contributions—even less with employed earnings above the minimum level. This is a test which very few people fail to satisfy. But the grant still stands at £30.
When the grant was first introduced at a rate of £20 it went some way towards the cost of a simple funeral, but we should note that, in framing the legislation, it was decided quite deliberately that, unlike Beveridge's proposals, the grant should not be linked to the cost of funerals. It was, as I say, simply a lump sum payable on the death of most contributors and their families. It was a contribution towards the cost of a funeral. Even if it was not absolutely universal, the grant was available to most contributors to meet a need which, at that time, was felt to be widespread.
When the first grants were paid in July 1949 there were reduced amounts payable for children as well as those who, because of age, qualified for only half the standard rate. In 1958 the standard rate 257 was increased to £25 and in 1967 to £30, with corresponding increase in the reduced rates. The rates have remained unchanged since 1967.
It is obvious, therefore, that the grant has failed to keep up with inflation and that its real value has fallen over the years. For example, based on the movement of the index of retail prices to May 1979, the latest month for which figures are available, the grant would have to be increased to £133.7 to have the same real value as it did in July 1949. To equal its value when last increased in October 1967 the grant would have to be £103.78.
Similarly, if one compares the level of the grant with funeral expenses, it has clearly fallen behind. It is hard to be certain about the figures, as funeral costs vary widely throughout the country, but it seems that in 1949 the grant met about 60 per cent. of the cost and in 1967 about 35 per cent. Nowadays, with the average cost of even a simple funeral probably about £200, the grant contributes 15 per cent. or less towards the cost. It has been suggested that, because of the declining value of the grant, it ought to be increased. We must, therefore, consider the costs which would be involved.
The present grant costs about £16 million a year. To increase the grant to restore the real value it had in 1967 would mean spending an extra £40 million a year, while to restore the real 1949 value would cost an extra £55 million a year. To increase the grant to £200, as has peen suggested by some correspondents, would cost an extra £91 million a year.
As my hon. Friend has said, these figures do not take account of the groups who, on account of their age, are excluded from the grant or qualify for only a reduced rate. Whatever justification there might have been in 1949 for excluding them because of the contributory principle underlying the grant, it could now be argued that these people have suffered more than most from the effects of inflation, particularly in recent years. They include many of the individuals who most need the help of the State. To include them in the present grant would require an extra £10 million a year, on the basis of the 1949 value, or, on the basis of a £200 grant, about an extra £17 million a year.
258 To restore the value of the grant would, therefore, involve considerable extra sums of money. At the same time, however, I very much appreciate the concern which has been expressed about the grant. I have, for example, received letters from those who are involved with pensioners—not just organisations which write to us frequently but individuals such as home helps working with elderly people who express clearly the worry of elderly people about this matter. There is no doubt that many elderly people are frightened about dying and about what will happen to them.
It is because of the concern which has been expressed that I feel that the Government must give consideration to the whole problem of the grant's future role, not simply to paying more to those already entitled to the grant.
Of course, people would be helped it we were to increase the grant across the board. We shall consider this, but I am sure that it is not necessarily the best answer to the problem. It can be argued that, although the death grant is insufficient for many, it is not needed by some; that is to say, the grant is at present paid in cases where it is no longer essential. If that is the case, I question whether it would be right to increase the amount paid to everybody, without reconsidering the purpose of the grant and the needs it should meet.
In fact, to obtain more information on the payment of funeral expenses and the part played by the death grant, the research branch of my Department has carried out an independent survey. It has not yet been published, but it might be appropriate if I say a little about the results which seem to be emerging.
First, it notes that there has been, since the war, a trend towards more simple, modest funeral practices. Some of the more expensive customs of the past have become the exception and burials are now less common than cremations. It records that most of those in the sample surveyed received payment of a life assurance policy following the death, to which were added payments from superannuation and other sources such as the savings of the deceased. Very few of the respondents said that they had any difficulty in finding money to meet the costs; 93 per cent. of them said that they had no difficulties.
259 The survey makes the point that the payment of funeral expenses—despite the decline in the value of the death grant—has ceased to be the major social problem of the scale experienced 40 or 50 years ago. The reason for this may lie in social factors. There are changes in funeral customs. There has been a relative steady fall in the relative cost of a funeral when compared with wages, and there is a decline in the number of people dying in extreme poverty. But that does not diminish the problem for those who are in difficulty. It is shown by the genuine concern apparent in letters I receive.
However, the problem is a different one from that which had to be faced when 260 the death grant was introduced in 1948. As the problem has changed, we must look more widely than at a simple increase in death grant if an appropriate solution is to be found. I assure my hon. Friends and others who have written to tell me their thoughts on the matter that this wider consideration which is taking place is bound to take time and regretfully we have been forced to conclude that we cannot consider any action on the grant this year. Nevertheless, I should like to assure the House that we are considering the matter as urgently as possible and that as soon as we can make an announcement we shall certainly do so.