HC Deb 03 December 1981 vol 14 cc425-40
Mr. Deputy Speaker

Before I call the hon. Member for Stockport, North (Mr. Bennett), it may be helpful to the House if I indicate that Mr. Speaker has accepted the hon. Gentleman's application to initiate a second Adjournment debate. The subject is the effect of the Chancellor of the Exchequer's proposals upon the recipients of unemployment and short-term social security benefits.

5.53 pm
Mr. Andrew F. Bennett (Stockport, North)

I am grateful, Mr. Deputy Speaker, for this opportunity to raise the issue that you have just outlined. 1 apologise to the Minister for Social Security and the Under-Secretary of State for the fact that they have had to break other engagements to be here to answer the questions that I shall put. I am sorry that they were unable to persuade Treasury Ministers to be present to answer those questions.

It would have been much better had the Secretary of State for Social Services come to the House to comment on the effects of the Chancellor's statement on the groups with which we are concerned. That would have given hon. Members on both sides of the House the opportunity to ask questions and to clear up many of the issues that have been left extremely clouded.

From my reading of the morning newspapers, it appears that in several areas they have got the Chancellor's statement wrong. It is therefore important that this uncertainty should be cleared up at the earliest opportunity.

I start with a general comment about what the Chancellor said yesterday. His message was that we were turning the corner, that the problems were being resolved—albeit slowly—and that things would improve. Against that background, he said that the Government would reduce benefits to the worst-off in society by 2 per cent. It is amazing that he should say that. In other words, the sick, the unemployed and most of those on supplementary benefit will lose a week's money at the very time when we are turning the corner.

Let us recall what the Chancellor said when, according to him, things were most difficult. In his Budget Statement last year, he said: Again, any civilised society should provide a safety net below which a poor person's standard of living should not fall. We can all debate what is the proper level. Should it be a relative level or, as Beveridge had contemplated, an absolute level, which seeks to meet the basic needs of a person and his family? These are difficult questions. The answers are not made any easier by the fact that the supplementary benefit scheme covers so many varied circumstances, with more than 3 million beneficiaries at any one time, ranging from the old and infirm to healthy young people capable of work. But clearly no action we take should be at the expense of the really weak and needy."—[Official Report, 26 March 1980; Vol. 981, c. 1458–9.] That is what the right hon. and learned Gentleman said when he claimed that the problems were greatest. Are we no longer a civilised society, as he now feels that the weakest must bear the cuts?

What about the comments of the then Secretary of State for Social Services? When justifying cuts in other benefits, he made it absolutely clear: The Government are determined to maintain the safety net for the poorest people and accordingly the scale rates of short-term supplementary benefit will be fully price protected".—[Official Report, 27 March 1980; Vol. 981, c. 1659.] What has changed? The Chancellor says that we are supposed to be turning the corner. Why have the Government chosen to hit the least well-off? That fundamental question must be answered.

I understand that other hon. Members wish to participate in the debate. I therefore hope that the Minister will clearly state what has happened to these beneficiaries. I think he will confirm that pensioners will lose 2 per cent. for a year—in other words, a week's benefit—but that it will be made good in 12 months' time from then on. I think he will also confirm that there will be no back pay for the missing 2 per cent.

Perhaps he will also confirm that unemployment benefit will be cut by 2 per cent. this year and that that will continue. The unemployed who are also on social security will also experience a 2 per cent. cut this year, which will continue.

What about unemployed people on short-time supplementary benefit, such as people with families? If a man has registered for work but his unemployment benefit has run out, he will never be able to get on the long-term rate. Benefit for that group will be cut for this and continuing years by 2 per cent. Yet again, they will lose a week's money for each year they continue to be on supplementary benefit.

The next group consists of people on short-term supplementary benefit, particularly one-parent families, who must wait for a year before getting on the long-term rate. Will the Minister confirm that for this and future years they will lose a week's benefit?

What about people other than pensioners on long-term supplementary benefit? I understand that that group will lose the 2 per cent. for this and future years. That group will also be penalised a week's income this year and in future years.

If that is correct, the statement that appeared inThe Guardian today about the 9 million people who, although subject to this year's cut will escape future cuts, is wrong. Will pensioners be the only group to be protected in the future, or will it also include people below pension age who are on the long-term supplementary benefit rate? That was the impression that people got from the Chancellor's statement but, as I understand it, that is not what is being done. The Government are now putting forward proposals for three rates of supplementary benefit—one for pensioners; another at a long-term rate for those people below pension rate, but a lower rate than the pension rate; and a short-term rate. In other words, for everyone but pensioners on supplementary benefit, there is a week's cut this year, which will be perpetuated.

There was no indication in the Chancellor's statement of what would happen to the 5 per cent. cut in unemployment and sickness benefits. We were told once that when those benefits came into taxation the cuts would possibly be restored. I know that that was not much of a promise but it should be spelt out whether the cuts will be restored.

We must then look at what has happened to those people who are unemployed. The first cut in their benefit came when the Government decided to reduce the earnings-related supplement from 15 per cent. to 10 per cent. The second cut, which will come into effect in January next year, is the abolition of the earnings-related benefit. The unemployed are at least £11 a week worse off for the first 30 weeks of their unemployment.

The Government assumed that they would tax unemployment and sickness benefits and abate them by 5 per cent. They accepted that that was a crude measure and that it would be ideal to tax the benefits. They readily admitted that many of the people who had to depend for 12 months on unemployment, sickness or invalidity benefits were close to the tax threshold anyway, so the 5 per cent. by which they were being penalised amounted to more than if they had been taxed. That was supposed to be a temporary measure but as yet we have had no indication whether the 5 per cent. will be restored.

In addition, this year the Government got the figures wrong. The uprating in November was at least 2 per cent. less than was necessary. We cannot blame anyone for making that sort of mistake. It is a crazy system that expects the Secretary of State for Social Services to predict the inflation rate six or seven months ahead. I was always taught firmly that if a person made a mistake he should try to put it right at the first opportunity. Not this Government. They got the inflation rate wrong to the extent of one week's benefit in 12 months for each of the groups of claimants. Instead of trying to put the mistake right straightaway, they said that they would not put it right for 12 months and then only for some groups and not for those in the greatest need.

We should be clear about what is at stake. Almost all beneficiaries are losing one week's benefit—in other words, the amount that is required in many cases to pay the new television licence fee, or to meet a fuel bill or the cost of a major household item. We are not talking about small amounts. For most of those people in need one week's benefit is a substantial amount.

The unemployed will go on losing because, as a result of the way in which this legislation has been worked out, they will lose this year and next year. The Chancellor says that the number of unemployed people will increase. Not only will the number increase, but the length of time that individuals are unemployed is steadily increasing. I assure the Minister that it is not pleasent being made unemployed in any circumstances. If a person is unemployed for a week or a fortnight and gets back into work, it is a disaster that he can get over, but if the unemployment goes on and on, it begins to bite.

Part of the cruelty of the present system is that it does not allow the unemployed to get from the short-term supplementary benefit rate to the long-term rate. Why do we have two rates? The idea is that the short-term rate is for a short period, and it accepts that when a person comes on to benefit he may have some reserves of clothing and household items and can defer replacing them for a certain length of time. It is eventually accepted that he will need extra income to start to replace some of those major items.

People who have been receiving supplementary benefits for 12 months qualify for the long-term rate, but not the unemployed, who are left to go on and on on the short-term rate—a rate that is designed never to give enough to replace capital items. Those people not only lost a week's income this time round but they will be left a week's income short for each succeeding year.

I wonder how often the Minister talks to people receiving benefits. I talk to many of my constituents and I receive many letters from them. I am conscious when I go into their houses that there are now many people living in abject poverty and finding it almost impossible to make ends meet. They have had a week's money taken away from them this year—by accident, but it has happened—and now they will lose that week's money this year and each succeeding year.

A lady to whom I spoke the other day at my advice bureau said that by the time she had met her bills—her mortgage and other commitments—she had nothing left to live on and nothing with which to buy the food. She had a choice of either breaking a commitment that she had entered into before her husband had died or going short of food.

Another letter that I received yesterday stated: It is impossible to make ends meet. My constituent set out a careful budget showing that she was at least £5 a week short. Another constituent wrote to me saying: I can see no way out. All I wanted to do was to give my children a good chance in life. With no job and no prospects of one, what can I do? The only hope for my family would be if I were run over by a bus. That is from a person with young children who wanted to give them a good start in life, yet he can see no way out of the net of debts steadily closing in around him.

Fairly frequently I do the shopping for my family and I go round one of the supermarkets because it is the quickest way. It always hits me very hard that by the time I have filled up my trolley, I know that I have spent as much as many people have to live on for a whole week. I also see people who have a few tins huddled together in a corner of their trolley, who are struggling week after week just to keep body and soul together on the present benefits.

Another constituent wrote to me saying: I am scared to go to the supermarket because I can afford so little. That is fairly typical. She continued: I have to buy at the corner shop. I live on tick. I know it is a dear way to do it but I cannot get off tick. In other words, she has no reserves to get in front. The Chancellor should have realised that people such as those would be penalised as a result of his measures.

I know and accept that benefits have to be paid for, and I do not expect anything for nothing. However, the Government are not only telling people in work that they must pay for the benefits, but they are now telling people out of work and on social security that they will have to pay for the benefits. That is appalling. Are not people who earn average and above average salaries prepared to contribute a little extra in taxes or in national insurance to pay for decent levels of benefits for the poorest in our society? If most of those who have above average earnings saw the poverty that exists, they would part with extra money without too many complaints.

The Chancellor's statement left many questions unanswered. It seems odd to be making some predictions about what will happen to benefits in November 1982 without completing the picture. If we are talking about public expenditure, we should be discussing the whole of it or claiming that predictions cannot be made too far into the future.

What will happen to child benefit next year? It is a major item and the decision that is taken on it might make all the difference to most of the other measures that we are discussing. If the Government were to announce that they intended to double child benefit, I should stop complaining about many of the shortfalls for families with children. Sadly, we know that the Government will not double child benefit. However, I hope that there will be a significant increase. Child benefit is part of the equation and it matters very much to families living in poverty.

It is amazing that we can calculate the level of unemployment benefit from next November onwards for the second half of the year, but we cannot calculate child benefit over that period. Perhaps the Government want to keep something nice for their spring Budget. I hope that they will offer a generous increase in child benefit in the spring. It is clear that it is needed.

The Chancellor's announcements included no statement on the family income supplement, which is a crucial benefit for those who are in work.

What is the level of uprating to be next November? The last six upratings have all been wrong. Sometimes they have been too low and sometimes they have been too high. They have not often been too high. The level of uprating that the Government predict for next November will be crucial. Having made a mistake and erred on the low side on this occasion, I hope that they will ensure that any errors in November will be on the plus side.

In Committee we are busily discussing the new housing measures. What level of rebates will be set for them, especially for those on social security?

The Chancellor failed to answer so many questions. I hope that the Minister for Social Security will make clear which groups will have the 2 per cent. put back on. Will it be pensioners on supplementary benefit or all those below pensionable age in receipt of supplementary benefit except those on short-term supplementary benefit?

I welcome the opportunity to raise these issues now. I hope that the Minister will find time to answer some of my questions. I am sure that many more hon. Members will want to raise the same issues and I trust that they will have an opportunity to do so before the Minister replies. Will you confirm, Mr. Deputy Speaker, that we are entitled to discuss this subject until 7 o'clock, when it will be interrupted for Private Business? If that Private Business folds up before 10 o'clock, I understand that we can return to this debate. If the Private Business continues until 10 o'clock, I understand that it will be possible to continue from 10 o'clock to half past 10 on this subject if sufficient Members seek to catch your eye.

Mr. Keith Best (Anglesey)

On a point of order, Mr. Deputy Speaker. Will you be kind enough to clarify what the hon. Member for Stockport, North (Mr. Bennett) said at the end of his remarks? If the Private Business folds up before 10 o'clock, and this Adjournment debate continues until 10 o'clock, can the debate continue until half-past ten?

Mr. Deputy Speaker

This debate can continue after the Private Business until 10 o'clock, when the Question, That this House do now adjourn will be disposed of. That having been done, the debate may then continue until half-past 10 on the same subject.

6.15 pm
The Minister for Social Security (Mr. Hugh Rossi)

Despite the havoc that this sudden Adjournment debate has played with my diary today, it is nevertheless a debate that I welcome. It gives me an early opportunity to put the record straight. Despite the rhetoric of the hon. Member for Stockport, North (Mr. Bennett), the Government have already done much to implement what the Conservative Party promised to do in its election manifesto. The manifesto stated that a Conservative Government would do what they could to simplify the system and bring more effective help to those in greatest need. We shall continue on the course that we have set.

The main fabric of the social security system remains as it was in May 1979. We have made some changes, but, taken as a whole, it is probably more effective in bringing help to those who need it.

I shall give some examples. We have reformed the supplementary benefit system by chanelling more help to those in greatest need and by establishing clear statutory rights to benefit. More help is going to lone parents who do some work, to families with young chidren and to families that have gained from the halving of the qualifying period for the higher rate of benefit from two years to one year. More recently, we have extended the higher rate to all unemployed persons over 60 years of age who are within the qualifying period.

Secondly, we have legislated to make maternity grant non-contributory, thus helping young mothers and others without a contribution record. Thirdly, we have published proposals for improving the industrial injuries scheme by concentrating on the more severely disabled. Fourthly, we have removed the invalidity trap for young people on noncontributory invalidity benefit. Fifthly, we have put the Christmas bonus on a regular statutory basis. Sixthly, we have kept our pledge to maintain the value of the retirement pension and other similar benefits for widows and the disabled. About three-fifths of social security expenditure is on these benefits.

Lastly, a number of other benefits have risen faster than price increases since the Government took office. For example, the family income supplement, the mobility allowance and one-parent benefit have increased substantially more than the increase in prices. In his announcement yesterday my right hon. and learned Friend the Chancellor of the Exchequer maintained the forward movement of the social security programme without interruption. His statement did not introduce any changes in benefit provision and it preserves the process of uprating by price increases. Given that it is a predominant component in public expenditure, it might be that the Government should be congratulated on not impairing a vital social programme.

The Opposition will not be able to find much to criticise when they look elsewhere in our programme. We are continuing the previous provision for expansion of hospital and community health services. We are allowing them resources to enable them to expand at the previously planned rates. The pressure of current economic constraints is being met by a consistent strategy, as in social security, of increasing charges and contributions for those who can afford them and fully maintaining the exemptions for those who cannot. The constraints are not being met by a reduction in services.

The main burden of the hon. Gentleman's argument was shortfall. He seemed to base his main attack on that, for want of anything better. The Chancellor was explicit yesterday and the position is clear. There will be no abatement of benefits in the November 1982 uprating. The Chancellor will announce in the ordinary way the forecast of price inflation between November 1981 and November 1982 at the time of the spring Budget. He has said clearly that all benefits will then be uprated in line with that forecast.

There was some abatement of short-term benefits at the November 1980 uprating, and a fine fuss the Opposition made about it. I should have thought that they would welcome a clear commitment by the Government that that would not happen again next year. No such luck. Instead, we had an exaggerated and disproportionate concentration on this year's shortfall.

As the Chancellor of the Exchequer made clear, the movement of prices over the past year is likely to turn out as being about 2 per cent. higher than was forecast at the previous Budget. The final figure will not be known until later this month when we have the RPI figure for November. However, we can assume that there will be a gap of the order of 2 per cent., as the Government Actuary has been instructed to do, and as can be seen from his report that was published today. That means that the uprating that has just occurred will have fallen short of the movement in prices. The argument is whether the shortfall will be made good at the next uprating in November 1982.

The Government are pledged to maintain the value of the main long-term benefits, notably pensions, over the life of this Parliament. We accept, as the Chancellor made clear, that it means that the shortfall should be made good by adding back the 2 per cent. in November 1982 on top of the other increase that is guaranteed at that time. That applies to the benefits on which many people rely permanently for their income. Presumably there is no quarrel with the Government's proper concern to give those benefits special protection. For example, retired widows and war pensioners will have the value of their benefits fully maintained. No less than 60 per cent. of all benefit expenditure will be embraced in that guarantee. If there have to be priorities in these matters——

Mr. Chris Patten (Bath)

Am I wrong in thinking that in the debates on the 1980 Budget we committed ourselves to protecting the value of short-term benefits? As I recall, we said that we were determined to continue protecting the value of short-term supplementary benefit at that time. Is that wrong?

Mr. Rossi

The Government's pledge and commitment was to the long-term benefit, as I have just described to the House. Therefore, if there must be priorities—in the present economic constraint, priorities are the name of the game—there is surely no dispute that these are the people who should have their benefits fully protected. I should like to know whether the Opposition would have done that differently.

Mr. Best

Before my hon. Friend leaves that point, he said a moment ago that our pledge was to maintain the rate of long-term benefits. Does that assurance include long-term supplementary allowances as well as long-term supplementary pensions?

Mr. Rossi

Not the long-term rate. I cannot give my hon. Friend that assurance.

Mr. Andrew F. Bennett

Just tell us what it does not apply to and then it will be clear.

Mr. Rossi

If the hon. Gentleman would like a list, I will give the House the benefits covered by the pledge: retirement pensions, both contributory and noncontributory; widows' pensions, including widowed mothers' allowance and widows' allowance; industrial death benefit, paid as a widow's or widower's pension; war disablement pension and war widows' pension; industrial disablement pensions; attendance allowance; invalid care allowance; invalidity benefits; non-contributory invalidity benefit; unemployability supplement and supplementary pension. Those are the benefits that are covered by the Government's pledges.

Mr. Bennett


Mr. Rossi

I must finish what I have to say and give other hon. Members an opportunity to raise matters. The hon. Gentleman has already had his chance.

The Chancellor has also had to make it clear that there are benefits that are not covered by the Government's pledge and that will not have the shortfall made good. Those concerned receive a minority of the total social security expenditure—about 40 per cent. Many of them are in and out of benefit in a short period and the loss for them is not significant. In many cases it is merely a matter of one or two weeks. Restoring the value in November 1982 would not mean anything for the many who had gone on and off the books before then.

A decision of that kind is not palatable and I shall not pretend that it is. However, against the whole of our record of maintaining benefits through a period of economic difficulty unparalleled since the war, it ill-behoves the Opposition to pretend that this is a major inroad. Social security expenditure is approaching £30,000 million a year. It will increase by £2,500 million in 1982–83 as a result of the decisions announced yesterday. The amount missing as a result of the shortfall in a minority of benefits will be £65 million in 1982–83, as against the £2,500 million that is being added on.

It is pointless to speculate or to make detailed calculations about the effects of the shortfall in individual instances. We have not had the final RPI figures and we do not know what the forecast of price inflation will he at the time of the Budget. Final decisions about the rates of the benefits affected will not occur until then.

Not all benefit increases are calculated to match the rate of inflation to the precise penny—there has to be rounding off. Mobility allowance and FIS, for example, have been increased by Government well ahead of the rate of inflation already. If hon. Members are interested in figures, I can give them. The retail price index has increased since the Conservative Administration took office in May 1979 by 42.2 per cent. Against that, we have increased the family income supplement and, taking as an example a married couple with two children, it has risen by 73.91 per cent. We have increased the one-parent family benefit by 65 per cent. and the mobility allowance by 65 per cent. Those benefits are well ahead of the rate of inflation, and if they have to meet the 2 per cent. shortfall they will still remain well ahead of inflation.

For supplementary beneficiaries, the rate of benefit depends on family size and the ages of children. Even with shortfall, many families with young children will still be keeping ahead of the rate of inflation, because of the changes we have made in the children's supplementary benefit rates. Child benefit, which has been mentioned, is usually fixed at a rounded figure, but how it can be worked out cannot be determined until the final decisions and judgments are made by the Chancellor at Budget time. Until then, all argument about the precise effects on particular people can only be speculation.

Mr. Frank Haynes ( Ashfield)

The Minister referred to increasing mobility allowance, and I must accept that. It has happened. But will he tell the House how many people who were receiving mobility allowance in May 1979, when the present Government took office, have since been disqualified?

Mr. Rossi

People are disqualified from receiving mobility allowance only if the medical conditions that originally entitled them to it no longer prevail—[HON. MEMBERS: "Oh."] Most certainly. Last November that allowance was increased to £16.50 a week. When the Government took office it was £10 per week. That is a substantial increase by any yardstick. When the mobility allowance was first introduced, an application rate of about 1,200 a month was expected. Applications are now running at about double that figure, and the take-up is enormous. That is a measure of the Government's success in helping people in that area of disability.

The Opposition let their speculation and imaginations run not, but I ask them what they would have done—no doubt the hon. Member for Pontypridd (Mr. John) will tell us in due course—faced with the difficult choices that the Government have had to take. We consider that our decisions have been balanced and responsible, and that the main fabric of the benefit system is untouched. The Opposition's record is not beyond reproach when they have found themselves in difficulties. What about the Christmas bonus that the Opposition withdrew in 1975 and 1976? We have maintained it every year we have been in office and, moreover, enshrined it in statute so that it is now permanent.

Mr. Brynmor John (Pontypridd)

Talking of enshrining things in statute, if there are to be three classes of beneficiaries as a result of the Chancellor's measures—the long-term allowance recipients, the long-term supplementary benefit pensioners and the short-term benefit pensioners—will the Minister confirm that that will have to be dealt with by legislation?

Mr. Rossi

There will be three rates, but I doubt whether it will be necessary to deal with them by legislation.

I was asking the Opposition what they would do, faced with similar circumstances.

Mr. John

We would not be facing them. We do not have the most incompetent Chancellor of the century.

Mr. Rossi

What about the biggest social security swindle of all time—the missing £500 million in the 1976 uprating, when the Labour Government altered the rules to reduce the uprating by that amount? They deliberately created shortfall.

Mr. Reg Race (Wood Green)

One swindle deserves another.

Mr. Rossi

If we were to emulate that shining example of fairness, that £500 million in 1976 would today require us to deny those people £925 million—nearly £1 billion. Today we are talking about £65 million in the context of a £2,500 million increase. How can Opposition Members come to this House and shed crocodile tears? Where choices have to be made, the choice must be clear. Maintaining long-term support for pensioners and others is our overriding priority. Bearing in mind the difficulties that many of those in work are having to face, and the contributions and taxes of those upon whom this entire edifice depends, the level of benefit that we are maintaining, even where shortfall is not made good, and backing with the promise of a full uprating without abatement next year, what we are doing is not ungenerous in comparison with what has been happening previously under a Labour Government.

Mr. Tristan Garel-Jones (Watford)

I hope that Opposition Members will join me in thanking my hon. Friend for coming to the House at such short notice and answering this debate. We are very grateful to him. He has said that child benefit is not something on which he can commit himself fully now. However, has he taken on board the importance of ensuring—particularly where poor families are concerned—that the uprating in child benefit, when the time comes, is to the full amount and that no shortfall will be kept there?

Mr. Rossi

I am aware of the anxiety of many of my hon. Friends on this matter. I shall make sure that the attention of my right hon. and learned Friend the Chancellor is drawn to the remarks made on this matter during the debate, although it is not for me to prejudge the judgment that will have to be made by my right hon. and learned Friend at the time of his Budget, as my hon. Friends will understand.

So far from dismantling the social security scheme, as we sometimes hear Opposition Members accusing us of doing, it is one of the present Government's achievements that we have managed to interfere very little with the basic structure of the benefit. On any reasonable view, we have kept the essential structure of benefit intact. This has been and remains a firm and consistent plank in the Government's strategy. That same consistency necessarily demands that, as contributory benefits rise or as claims on them increase, so national insurance contributions must also rise. It makes no sense whatever to proclaim a belief in the contributory principle and in the same breath to complain about higher contributions.

A key feature of the national insurance scheme is that it is funded on a pay-as-you-go basis, so today's benefits are paid for overwhelmingly by the contributions of the people who have work and who are paying to get benefit rights themselves and by their employers. Of course, this means periodic rises in contributions. Anything else would be a dismantling of the national insurance scheme.

The contribution increases that my right hon. and learned Friend announced yesterday are in themselves wholly consistent with our strategy. We have held the employers' contributions steady. We have shifted the main burden resulting from higher benefit claims away from the general taxpayer and on to the contributor, and we have even managed to give a modest stimulus to small businesses by holding down the increase in the class 2 contributions for self-employed people.

Therefore, I make no apologies for what the Government have done or for what the Chancellor announced yesterday. Given the present economic situation, the Government have more than honoured their pledge and have struggled hard to maintain the benefits of those in greatest need. I have given to the House the list of the people who will not be affected by the shortfall that I have just mentioned, and in the other cases I have shown how already, in most cases, the benefits people receive have outstripped the rate of inflation since we came to office. We have done that despite Britain's present difficulties.

However, it must remain our determination to restore the economy of Britain, first and foremost. All levels of public expenditure, all demands upon business and the taxpayer, must ensure that we restore British industry's competitive position, because until we do that we shall not earn the money that we want to pay to people in our society who need help.

6.40 pm
Mr. Reg Race (Wood Green)

I am not surprised by the tone of the Minister's speech, but I find it particularly disturbing. He did not say that his are the first Government for half a century to cut and abolish social security benefits. Their record on these matters is outrageous and deplorable. If the hon. Gentleman thinks that we shall pull our punches tonight and not criticise him because of his speech, he has another think coming. I shall remind him of all his Government"s actions.

The Government are the only Government for 50 years to stretch the year to 54 weeks for pensioners—they have changed the timetable of the seasons. The Cabinet in its generosity has abolished, for example, the earnings-related supplement to many benefits, including unemployment and maternity benefit.

Mr. Garel-Jones

Will the hon. Gentleman give way?

Mr. Race

No, I shall not.

The only benefit that the Government have given to the people has been to make them unemployed and then to cut the benefits on which the unemployed depend.

Last year the Government introduced social security legislation which abolished the right to go to social security offices and obtain exceptional needs payments. As a consequence, when people go to local social security offices to claim those payments they are given a leaflet that tells them that they may not be entitled to the money and that they had better reconsider their claim. Those are the rights to which the Minister referred.

The other magnificent benefit that the Minister has given the poor is a 5 per cent. cut in unemployment and invalidity benefits and in a whole host of other benefits which have so magnanimously been given to the poor. At the same time as giving wonderful tax concessions to the rich the Government have been cutting the living standards of the poor. The Labour Party will throw that fact back in their faces every time that the Government come to the Chamber and say how marvellous they are in providing social benefits.

We are faced not only with the cuts, the abolition of benefits and the extension of the year, but with yesterday's failure by the Government to come clean about what they are doing. They pretend that somehow those people will next year be uprated and recover the 2 per cent. The papers in the Vote Office show that that is not what the Government intend. There will be a 40 per cent. cut—I assume that is in the value of the social security benefits, and not in the number of people claiming social benefits. Millions of people may have their benefits cut by 2 per cent. in real terms because the Government will not restore the shortfall this year. Why on earth did not Ministers have the decency to be honest and say that at the Dispatch Box yesterday? They were not prepared to say that because they knew that it would bring contempt and odium from the public—and rightly.

If the Government's record is deplorable, their reputation next October and November will be equally so. The miserable Government pittances of millions of people who are dependent entirely on short-term social security benefits will be cut. One of the reasons why the Government say that they must cut social security benefits is that they cost so much. Let us examine why.

The Government Actuary's report contains the only Forecast of unemployment that the Government are prepared to make. Treasury Ministers and the Prime Minister will not tell us what unemployment will be in the next 12 months. We think that we know, but the Government Actuary, who is instructed politically, knows the trend. Page 2 of the report shows that the average level of totally unemployed people, excluding school leavers, in 1982–83 will be 2,900,000. In additiion, 225,000 school leavers and adult students will be unemployed. That calculation is made on political assumptions that the Government are forcing the Government Actuary to make to calculate national insurance contributions.

Bleating about the size of the social security budget is nonsense. The Government have increased unemployment. They have driven millions of people onto the dole. We shall not let them get away from that.

Mr. Garet-Jones

I am sorry that the hon. Gentleman has introduced the bitter tone that we have come to expect of him in such debates. Can he answer two questions, since he is so concerned with morality? First, what was his reaction to the unprecedented cut in social services by the Labour Party in 1976? Secondly, what qualifications would he make to his attitude in 1979 during the Health Service strike when he stood outside hospitals refusing to allow doctors to enter?

Mr. Race

My attitude to the actions of the last Labour Government is well known to the hon. Gentleman. That is why he asks the question. I thought that the cuts in public expenditure by the last Labour Goverment were disgraceful. I am consistent. That is why I am attacking the Government for doing the same and for actions that are far worse.

The Government have not only cut social security benefits—they have made a £700 million cut in housing subsidies this year. In my constituency, thousands of people are living in extremely miserable conditions because three quarters of the public expenditure cuts fall on housing.

National insurance and supplementary benefits are now too low for people to live on. One of the problems is that people receiving benefits have to do the rounds. They have to go to the local social security office to claim supplementary benefit if they are not entitled to any form of national insurance benefit. They have to obtain dribs and drabs from wherever they can, including charity, to make up their weekly income.

The character of the Government's attack on pensioners and people receiving short-term supplementary benefits can be judged not only by their failure to increase the benefits by the 2 per cent. shortfall this November, but by the facts that they have ignored the rise in prices which pensioners have to pay.

The Minister was wrong to use the retail price index to calculate those increases. The Government have their own special indexes—the one and two persons pensioner household price indexes. The increase in prices for pensioners has been much more substantial than the increase in the retail price index. The real standard of living of pensioners, notwithstanding the restoration of the shortfall for pensioners next November, will be further eroded. The reality of their spending power and the price rises that they have to meet is not reflected in the retail price index.

I ask the Minister one specific question. How much money will the Government save by not replacing the shortfall in the long-term benefits now rather than later? It is well known—I do not say this in any spirit of rancour—that there are people receiving benefits now who will not be claiming benefit in November 1982 either because they are not eligible or because they have died. I want to know from the Minister how much the Government will save by failing to uprate the benefits now.

Another question that has to be raised with the Government is future legislation. It is known that there will be a Bill that seeks to represent the increased national insurance contributions. The question that arises is whether hon. Members will see any legislation that gives effect to the three rates of supplementary benefit. It is the opinion not only of Opposition Members but of the people we have consulted since yesterday that legislation would need to be laid before the House to give effect to those three rates of benefit. Hon. Members want to know whether there will now be a Social Security (No. 3) Bill. We wish to develop our arguments on those matters as quickly as possible and to alert people to the damage that the Government are wreaking on social security beneficiaries over the next few months.

Mr. Best

I want to give the hon. Gentleman the opportunity to be completely fair, as I know he would wish. The hon. Gentleman deprecated what the previous Labour Administration had done. I share that deprecation. Will he accept that the shortfall in 1976, if translated into current prices, would be £925 million compared with the shortfall of £65 million over a total increase of £2,500 million that we are now talking about? Is he not aware that prior to the 1981 uprating, the only three previous occasions since 1948 when a pension uprating did not fully compensate for price increases were under Labour Administrations in 1951, in 1969 and April 1975? I appreciate that the hon. Gentleman deprecates the actions of the previous Labour Administration. Where does his loyalty to the Labour Party lie? Does he deprecate the actions of all previous Labour Administrations?

Mr. Race

The hon. Gentleman has no doubt been given those figures. My reaction to any cuts in social security benefits in real terms, under whatever Government, is to deprecate those cuts. The hon. Gentleman cannot come to the House like the Minister and say that one wrong is as good as another. If he deprecates what Labour Governments have done in the past he must also deprecate what his Minister is now doing. I should like to know in which Lobby the hon. Gentleman will be voting when the Social Security and Housing Benefits Bill comes out of Committee, and also in which Lobby he will be voting when a Social Security (No. 2) Bill comes on to the Floor of the House for Second Reading. If the hon. Gentleman feels that people should be protected against the ravages of inflation, he will presumably agree that his Government have broken their pledges on the matter. I recall the previous Secretary of State, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), at the Government Dispatch Box and again in Committee, boasting time after time that the Government had price protected supplementary benefits. We are now seeing the breaking of that pledge. I want to give the hon. Gentleman the opportunity to say whether he agrees with the breaking of that pledge and with the abandonment of Government policy. The people we are discussing are the poorest in Society——

Mr. David Ennals (Norwich, North)

There seems to be some strange agreement across the Floor of the House concerning the record of previous Labour Governments. The hon. Member for Anglesey (Mr. Best) went back as far as 1951 in dredging up history. I should like to ask the hon. Gentleman and my hon. Friend whether they agree that there was an increase in real terms of 20 per cent. for the elderly under the previous Labour Government. At no stage were cuts in social security benefit introduced, as has happened under this Government. I hope that my hon. Friend will agree and will not join in accusations made against the Labour Government.

Mr. Race

I shall not be diverted by anyone on this matter. I deprecate cuts in public spending no matter by whom they are introduced. I deplore all shortfalls in benefit that are not made up. That is why I criticise the Government tonight. Opposition Members have been right to ask the Minister to come to the House to justify himself in the face of what is a terrible attack on the living standards of ordinary people. Opposition Members will continue to attack the Government for what they have done and to explain that they can get out of the hole they have dug for themselves by making the only cut that we favour— to cut the dole queues. We favour getting people back to work so that they can pay their tax and national insurance contributions to the Exchequer and bring about a cut in the social security budget. If the Minister wanted to suggest to his Cabinet colleagues a positive step towards cutting the social security budget he could start by advocating reflationary policies to get people off the books of the social security offices and out of the dole queues.

That is a relevant policy. We wish to see further cuts in public expenditure in defence and other areas in order to make way for better social provision for our people. The cuts in social security benefits introduced by Conservative Governments alone in the last 50 years—the Conservatives have been the only party in Government that has abolished benefits—must be criticised. We are here in the House tonight to pin that label on the Government.

6.58 pm
Mr. Peter Bottomley (Woolwich, West)

If the hon. Member for Wood Green (Mr. Race) had been only a selected candidate in his constituency, he would have been disowned by his party and his leader this afternoon during Prime Minister's questions but no doubt he is an endorsed candidate——

Mr. Garel-Jones

No, he is not.

Mr. Bottomley

In that case, he may face trouble.

The issue we are discussing is important and merits more than the speech made by the hon. Member for Wood Green, which sounded like rabble-rousing outside a hospital gate. The contribution of the hon. Member for Stockport, North (Mr. Bennett) was the sort of speech that could have been made by a Conservative Member or a member of any other party. He is concerned about the millions of people affected by the Chancellor of the Exchequer's statement yesterday, some of whom are getting full protection and some of whom are not.

It may be some time before I can develop my theme on that, but I wish to put one point to the hon. Member for Wood Green. What level of pay settlements does he wish to operate during the forthcoming year? If it is 4 per cent. rather than 10 per cent., that in effect raises the standard of living of people on short-term benefits by 3 per cent. for the year—which is nothing to laugh at, as the hon. Gentleman is doing—but a serious point. If inflation runs at 20 per cent. during the year it means a reduction of about 10 per cent.——

It being Seven o'clock, and there being private business set down by THE CHAIRMAN OF WAYS AND MEANS,under Standing Order No. 7 (Time for taking private business), further Proceeding stood postponed.