HC Deb 23 March 1982 vol 20 cc827-41

'Regulations made under section 26 shall provide that if a person's weekly income exceeds the needs allowance, the rebate or allowance payable to him shall be reduced by the percentages shown below, being in each case a percentage of the amount by which his weekly income exceeds the needs allowance:—

  1. (a) in the case of a rent rebate or rent allowance, 19 per cent.;
  2. (b) in the case of a rate rebate, six per cent. '.—[Mrs. Ann Taylor.]

Brought up, and read the First time.

Mrs. Ann Taylor (Bolton, West)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to take the following: New clause 8—Tapers (No. 2).

Amendment No. 86, in clause 26, page 20, line 31, at end insert— '(2A) Regulations under this section shall provide that where the weekly income of the tenant and his spouse is equal to the needs allowance, the rebate or allowance shall be equal to the amount by which the weekly rent exceeds the minimum weekly rent, and that the minimum weekly rent shall be—

  1. (a) in the case where the weekly rent is 25 per cent. or more above the national average council house rent, 40 per cent. of the amount of the rent up to the level of 25 per cent. above the national average council house rent plus 15 per cent. of any amount of the rent above that level, or
  2. (b) in all other cases 40 per cent. of the weekly rent.'

Mrs. Taylor

The Opposition believe that new clause 7 is extremely important, although it does not make the scheme entirely acceptable. There is a basic problem with the housing benefits scheme proposed by the Minister, because he is still trying to introduce a scheme which has a nil cost overall. It is a significant failing on the part of the Minister that he has not even tried to get the money out of the Treasury in order to make it a good and reasonable scheme.

We do not consider that new clause 7 is ideal or that it is a complete improvement on the scheme because it does not abolish all the losers under the Government's proposals. In new clause 7 we have made an attempt to be constructive and to propose a change which improves the scheme in the Government's terms. It is an attempt, in the best sense of the words, at constructive opposition. I hope that the Minister will constructive and say that he is willing to accept the proposals because they would, undoubtedly, make the scheme much better from everyone's point of view.

The proposals in new clause 7 reduce the number of losers. The losses that different categories of individuals will suffer are reduced. The proposals that we are suggesting improve the administrative simplicity of the scheme. We believe that the changes can all be done within cost constraints that ought to be acceptable to the Minister

5.45 pm

I think that the Minister is aware that, since the publication of the consultative document last year, much concern has been expressed by hon. Members on both sides of the House and by many organisations outside that over 2 million households will lose because of the changes that he proposes. I remind the Minister that that means that the weekly incomes of more than one in ten households will be lower because of the proposed changes.

There are so many losers simply because of the Minister's insistence that it is possible to go ahead with a nil-cost scheme. The Minister is simply redistributing resources from the poor to the very poor, whereas his priority ought to be to improve the situation of all those whose incomes are so low that they are in receipt of housing benefit in any form.

It has been obvious in the discussions that we have had that at times the Minister has shown himself to be uncomfortable about the consequences and implications of the no-extra-cost constraint that he has set himself. At various times he has suggested minor improvements in the scheme in order to divert attention from the total number of losers and in order to claim that he has been doing something for some categories of people.

The latest announcement that the Minister made was the increase of 75p in the needs allowance for pensioners. That is one of the measures that the Minister has considered as a means of reducing the number of losers by a small amount. The Minister has opted for the 75p increase in the needs allowance for pensioners because he has been concerned to reduce the number of topping up cases. While we understand that he wishes to do that because of the administrative complexity of the topping up procedure, we think that there are some adverse consequences of that proposal. It is not an adequate proposal to make the scheme good, not least because it takes only 16, 000 people out of topping up cases and leaves 123, 000 people still within that category. If the scheme is to cost £24 million, that does not seem an effective use of that amount of money.

It is against the background of the Government's approach on the number of losers that we have tabled new clause 7. As I have said, it is an important new clause and one that we hope the Minister will see his way to accepting.

The current position with regard to tapers above the needs allowance is that claimants pay an extra 17p of their rent for every pound that their income exceeds the needs allowance. The Government propose to change that figure to 21p. That means that the claimants will be 4p in the pound worse off in the part of their income that is above the needs allowance. Similarly, for rate rebate the Government propose to change the figure from 6p to 7p. That means that the claimants are 5p in the pound worse off on their income that is above the needs allowance. The Minister ought to acknowledge that that is not an insubstantial amount for the categories of people whom we are talking about, because often those are people who are already verging on the poverty trap.

In new clause 7 we are suggesting that the tapers in the scheme should be 90 and six—90 per cent. for rent and rates allowances and six per cent. for rate rebates. In doing this we are eliminating 3p of the 5p in the pound loss that the Government are writing into the scheme from the start. A loss of 2p in the pound for these people on the incomes above the needs allowance is not our preferred position, but it is something that the Government ought to consider seriously because the amendment has many advantages.

One of the effects of the amendment is to reduce the number of losers under the scheme by 1.1 million households. That is reducing the number of losers by half, which is an important factor. Moreover the proposals that we have put forward mean that individual losses will be less. This specific proposal means that 500, 000 applicants will be safe from losing more than 50p a week. That is quite a substantial number.

This suggestion makes it unnecessary to operate the 75p safety net that the Minister has been proposing. I do not think that he or the local authorities are sure how it will operate because the number of people who will lose more than 75p per week under new clause 7 is relatively small. The people who will lose will, in the main, only lose up to £1 a week and they will all be those whose income is more than £35 above the needs allowance. The amendment has the benefit of improving the simplicity of the scheme, and therefore its administration, and it ought to be attractive to the Minister.

The total cost of the scheme that we put forward in this clause is calculated on the basis of the information that the Minister gave us during questions in Committee, and on his figures the cost is £46½ million. In the context of overall subsidies on housing, that is a very small amount of money. There is the £2, 000 million that goes in tax relief for mortgage payments, beside which £46½ million is chickenfeed. We know that the Minister is reluctant to go to the Treasury and ask for more money for housing subsidies for the very poor so we have to tell him that it is possible for him to find that money from the changes that he has already made in housing benefits.

For a start, the Minister has admitted to the House that the changes in the formula for assessing the needs allowance for supplementary benefit is producing a saving to his Department in a full year of £30 million. That was the figure quoted by the Minister when he followed advice, stuck to the formula and told us exactly what the figures were.

Therefore, the Minister has saved £30 million in a full year from a removal of the housing element. That £30 million ought to be redirected into other forms of housing subsidy for the very poor—that is, those affected by the legislation. That is £30 million of the Minister's costs. The 75p maximum safeguard loss, the safety net mechanism that the Minister is considering introducing, will cost between £40 million and £50 million. Those again are the Minister's figures. Our new clause will make that safety net unnecessary and therefore £40 million to £50 million can go towards financing the new tapers suggested under new clause 7.

The scheme that we are putting forward is administratively simpler than the Government's proposals, so there will be other savings to local authorities which, although we cannot quantify them, will be almost certain to be in the region of the £1 million to £1½ million that we need for this scheme to pay for itself. What is more, that does not take account of the 31p and the 81p about which my hon. Friend the Member for Pontypridd (Mr. John) was talking earlier.

These savings are based on the figures that we have at the moment and it is possible that in a future year there will be even higher benefits to the Department because of the exclusion of housing costs from the RPI. It is important that the Minister should understand that it is within his power to justify to his right hon. and hon. Friends in the Cabinet and the Treasury that this scheme can be done without any new finance for his Department simply by using to better effect the savings that the Minister has already made.

Given the kind of rent and rate increases that people have suffered recently, the Minister ought to reconsider his approach to the problem because he is increasing the poverty trap for many people by making them lose the 5p in the pound above the needs allowance. We are trying to put forward a constructive alternative so that the Minister will not push so many people into the poverty trap. I hope that the Government will consider this new clause carefully.

Mr. Andrew F. Bennett

I support my hon. Friend the Member for Bolton, West (Mrs. Taylor) on new clause 7 and ask the Minister to support new clause 8. The question of tapers is a difficult issue. I shall look with interest tomorrow at the newspaper reports about proceedings to see which journalist manages to explain the idea of tapers in a short, snappy sentence or two so that anyone outside can understand it. I shall listen with considerable interest to "Yesterday in Parliament" to see how someone manages in a few seconds to paraphrase the comments about tapers so that they may be understood. I think that we shall find that the press have difficulties.

I recommend to hon. Members who are now in the Chamber that they ask their colleagues who come to vote what they understand about tapers. I suspect that we shall not find many hon. Members who understand the meaning of tapers. I also suspect that if we start to ask the experts outside, who pass advice to us, we shall find that they are not happy about tapers. I have yet to find anyone who could give me a briefing about tapers without immediately turning to a piece of paper and starting to draw a graph. One of the problems of talking in the Chamber is that we cannot put up visual aids to explain the question.

It is against that background that we have to remember why the Government are introducing a Bill that is meant to simplify and make more understandable the social security and housing benefit scheme. It is worrying that the vast majority of hon. Members and people outside find it almost impossible, even if they get down to reading our proceedings, to understand the issue of tapers. The task is very difficult.

We must try to come to grips with the problem. We should remember that a certain proportion of people have a 100 per cent. payment of their rent and rate rebates because they are on supplementary benefit. We are then concerned with the remainder of those who have so far been getting some assistance from the housing department for their rent and rates.

In working out the amount of assistance that those people receive the Government have thought up the idea of needs allowances. The needs allowance has little practical effect for these individuals. In effect, the system means that we are merely thinking of a sum from which we can start to make the calculations. In the previous debate we were arguing that the sum should be higher and that the calculations should start from a higher base. That argument having been rejected, we must now consider the way in which the calculations are made.

6 pm

My hon. Friend the Member for Bolton, West, in moving new clause 7, was arguing on behalf of those who have an income above the needs allowance and trying to establish what proportion of their income above the allowance should be used to meet their rent and rates until the stage is reached when they receive no assistance at all. New clause 8 relates to those who have an income that is below the needs allowance but is not sufficiently low to enable them to qualify for 100 per cent. rebates because they are on existing supplementary benefit levels. How much of each pound that they have less than the needs allowance should be contributed towards rent and rates and how much should be left with them to spend in other ways? It is a fairly complicated concept.

My hon. Friend the Member for Bolton, West was trying to improve the situation for those who have incomes above the needs allowance so that they may retain a little more of their income to spend on things other than housing and have to contribute a little less of it to their housing needs. I am concerned that those who are between the needs allowance and the level at which they would receive 100 per cent. supplementary benefit should have their positioned eased. I have slight reservations about new clause 8, which stands in my name, because on reflection I am not quite sure whether I do enough to help the disabled and one or two other groups, especially the unemployed, who are on short-term benefits if they come into this category.

The basic issue is how much assistance the Government should give to those who on the whole will lose by the introduction of the scheme. My plea to the Government is to accept new clause 7, which would give some assistance to those who are moving into smaller and smaller amounts of help with their housing because they are above the needs allowance, and to give more assistance to those who come between the needs allowance and the level at which supplementary benefit is paid.

During the 1979 election and the election before that the Conservative Party made great play of the "Why work?" syndrome. It was argued that people were better off when in receipt of benefits. Since the election the Government have made great claims about the poverty trap. The gentler the line of the graph, the gentler the taper that we introduce and the less severe the poverty trap will be. If the Government want to live up to their election promises, it is important that they produce the gentlest taper possible. However, it seems that with this measure the Government are making the poverty trap a little harsher and a little deeper.

If new clause 7 is carried and new clause 8 is not, we might be making ourselves a little more of a trap for those in receipt of earnings between supplementary benefit level and the notional needs allowance. Therefore, I hope that the Minister will have sympathy with both the new clauses and will appreciate that the graph should be as gentle as possible to ensure that the transition from 100 per cent benefit to no assistance at all is as long and as gentle as possible, so that we give as much incentive as we can to those who are in work or in receipt of high levels of benefit and ensure that they get the full value from the extra pound or the extra pence and do not feel that every extra penny they earn is clawed back by the Government because they lose their housing benefit or rent rebates.

Mr. Race

The new clause is designed to remove the 1, 990, 000 households that will be caught by the Government's new reduction of social security benefits. It is designed to stop the Government attacking once again the living standard of the poorest in society by trimming 5p, 10p, 15p or 20p of their weekly benefit from the local housing office. It is important that the public should recognise that the Government intend to do that. I strongly suspect that many families will not even recognise that their benefit has been reduced. If they realise that it has and they ask for an explanation, I suspect that they will not get an adequate one. When we were debating an earlier new clause even the Minister presented a convoluted hotch-potch of ideas which he could not explain to the House adequately.

The new clause seeks to stop nearly 2 million families from being rooked by the Government. It would halve the number of losers and reduce the extent of the losses, saving about 500, 000 households from losing more than 50p a week. The clause also removes the need for the 7.5p safety net, which the Government have introduced for 12 months initially. We do not know how long this special offer will last. It may last for no longer than the price of a packet of soap powder on a shelf in a supermarket. It may be with us for 12 months and no longer.

Once the safety net is removed the chances are that many more people will lose a lot more in benefit each week. The safety net is the only thing that stands between them and the full rigours of this so-called no-cost system. It will have a cost to those who are being asked to accept a reduction in their social security and housing benefits. They will lose money as a result of the scheme that the Government are proposing.

We have been told by the Minister on Second Reading, in Committee and on Report, that it is a no cost scheme. As I have said, it will have a cost to those who will lose benefit. It will have a cost to those who will lose because of the poverty trap. It will have a cost to those who will not receive passported benefits in other parts of the housing benefit changes that have been announced by the Government. Therefore, I hope that the Government will change their mind and accept new clause 7, or introduce new tapers that will remove or reduce the number of losers substantially.

Other Social Security Bills have been introduced in this Parliament and the Government have said that changes in the benefit system must be introduced without any net cost to the Exchequer. I suspect that 2 million households will be worse off as a result of the Bill's enactment because the Minister was told plainly by Treasury Ministers that he could not have any substantial sum to make the scheme work and to make it palatable to the beneficiaries. I and many of my hon. Friends believe that a small additional sum would have greatly improved the scheme. There would have been no losers and there would have been hardly any hassle in the House.

The cost of introducing new clause 7 would be about £46.5 million. That would be a microscopic proportion of the housing support that is given to the community. It must be compared with the amount of money that is being squandered in other parts of the public sector, or with the sums that are being given to those with very large mortgages in the form of interest relief on their income tax.

It is perfectly plain that the Government could have advanced a scheme that would have cost the Treasury little and would have ironed out the awful inequities that now exist in the system. I am worried that there will be a repetition of the Government's first Social Security Bill in 1980. The Government said that they must do it on a no-cost basis. They said that they were giving rights to people, not giving discretionary duties to local social security offices, and therefore they would not try to pump any more money into the system.

If, as the Government are doing by still having losers in the scheme, they continue to neglect the basic rates of benefit, or in this case, the basic level of the needs allowance, they will not help but hinder people and cut their social security benefits. Unless the Government change their mind, nearly 2 million families will be worse off. They will not thank the Minister for what he has done.

Mr. Rossi

New clause 7 proposes rent tapers above the needs allowance of 19 per cent. and rate tapers of 6 per cent. as compared with the Government's proposals of tapers of 21 per cent. and 7 per cent. respectively. As the hon. Member for Bolton, West (Mrs. Taylor) has said, the object is to reduce the number of losers that otherwise might occur in the scheme.

The tapers suggested by the Opposition would cost £46.5 million more than the Governments proposals. The hon. Lady's figures were correct. That money must be found somewhere. The hon. Lady suggested that it should be found out of the money made available by the decision to take housing costs out of the index used for uprating supplementary benefit, from the money being used for the 75p maximum loss transitional safeguard and from the administrative savings to local authorities from the elimination of that 75p safeguard.

The Opposition's argument is wrong on two counts. First, as I have explained all along and as has been pointed out by Opposition Members, I must introduce the housing benefits scheme on a neutral-cost basis. In other words, the scheme must cost no more than the current scheme that it will replace. It is no good Opposition Members arguing that I can find the £46 million or £47 million needed for their proposals from outside the scheme.

The Government decide their priorities in the light of available resources. Those priorities mean that there is no extra money for housing benefits. That is the situation with which I am faced. Of course, I am able to make the best possible scheme from existing resources. I hope that that is what I have done. It is certainly what I have tried to do. The Opposition have not been able to produce a better scheme which operates within the constraints that I have described.

6.15 pm

I have transferred up to £10 million from administrative expenditure to benefit expenditure. That saving arises because the new scheme is being introduced. Therefore, administrative costs of £10 million are being translated into benefit costs. That comes about because the Government are creating the new housing benefit scheme.

I have also protected the poorest. There are no losers below the needs allowance. I have used resources to give extra help to many pensioners. Obviously I could have done more, had I been given more resources—

Mr. Andrew F. Bennett

rose—

Mr. Rossi

—but the money is not available to me and it is a waste of time to imagine that it is.

Mr. Bennett

Will the Minister give way?

Mr. Rossi

I listened to the hon. Member for Stockport North (Mr. Bennett) carefully and with patience. Perhaps he will allow me to finish and try to catch your eye later, Mr. Deputy Speaker. My second reason—

Mr. Bennett

Will the Minister give way?

Mr. Deputy Speaker

Order.

Mr. Rossi

My second reason for rejecting the Opposition's argument is that their sums are wrong.

Mr. Bennett

Will the Minister give way?

Mr. Rossi

No. I shall not give way. I agree that the benefit saving from removing the transitional taper protection is available. Indeed, I am using the money—

Mr. Bennett

Will the Minister give way?

Mr. Deputy Speaker

Order. The Minister has said that he is not giving way.

Mr. Rossi

I am using the money towards the extra 75p on the needs allowance for pensioners. However, the administrative savings are not available in that the taper protection is envisaged as being only temporary. The administrative costs are also only temporary, so there are no permanent savings to be made.

Money from the supplementary benefit uprating is also not available. Apart from the fact that the money is not a part of the housing benefit scheme, it is neither a steady nor a permanent feature. The £30 million arises only because of the relationship between the RPI and the RPI less housing costs in 1982. In other years, the relationship will be different and sometimes it will be reversed.

Mr. Race

It all depends on Government policy.

Mr. Rossi

If savings in 1982 from the change in the supplementary benefits uprating provisions are to be built into housing benefits, we would logically have to take costs out in the years when that occurs. Thus, for the costing of the package there would be no £30 million available as the overall effect of the change will alter from year to year. Therefore, the hon. Member for Bolton, West is mistaken to believe that she has a source of finance—it is not available.

I admit that on the nil-cost constraint within which I must operate, the rationalisation of the supplementary benefits scheme with the current rent rebate and allowance scheme means that losers will be produced. I repeat, however, that no one with an income below the needs allowance will lose. Poorer claimants will not lose benefit. Indeed, 750, 000 pensioners below the needs allowance and 220, 000 just above it will gain by an average of £1 per week. That is an important consideration. The poorer will benefit from the changes.

Secondly, the losses that the hon. Member for Bolton, West mentioned are in proportion to income. The higher the income, the greater the loss. Thus, in 1981 terms, married pensioners receiving rent and rate rebates with incomes of more than £60 per week will lose 25p per week, and those earning more than £70 per week will lose 75p per week.

Mr. Race

What is the average wage?

Mr. Rossi

Nearly half of the losers will lose 25p or less per week.

The changes are necessary so that the two existing schemes can be more easily harmonised. Those receiving supplementary benefit can be brought into the rebate scheme comparatively easily. Passporting arrangements, whereby the DHSS supplementary benefit officer certifies that a supplementary benefit claimant is entitled to 100 per cent. assistance with rent and rates, will ensure that claimants receive as much assistance as they do under the present scheme.

The real problem, as the hon. Member for Bolton, West said, arises when people move from one scheme to the other. There is a problem in ensuring that they do not lose weekly benefits. The topping-up arrangements ensure that supplementary benefits claimants floated off benefit will receive at least as much weekly benefit as now. As the great majority of topping-up cases will be poor pensioners, we introduced the higher tapers for pensioners below the needs allowance and added 75p to the needs allowance to reduce the number of topping-up cases.

Those improvements cost £70 million and have to be funded from within the scheme. It seemed that the fairest way to find the money was to obtain it from people with the highest incomes relative to their need. The cost of the improvement that I have mentioned was met by increasing rent and rate tapers for those above the needs allowance from the current 17 per cent. and 6 per cent. to 21 per cent. and 7 per cent respectively.

The right hon. Lady's proposal may not have quite the consequences that she expects. The rate rebate taper change wipes out a significant proportion of losers, but in a sense it is illusory. If a claimant is on rate rebate only, thanks to this proposal he will have no losses even if his income is £50 or more above the needs allowance, but if he is on both rent and rate rebate he will still lose as compared with the present position even if his income is only £1 above the needs allowance. I am not sure that hon. Lady intended to protect owner-occupiers and tenants paying low rents, who will not qualify for rent assistance, while leaving poor tenants to pay higher rents with losses, but that is the consequence of the hon. Lady's proposal.

We believe that the best way to help poor working families remains the family income supplement. That is the best form of direct help for this group's needs. Housing benefit can only help towards part of their housing costs. Under new clause 7, the money is shared with many thousands of others. The help is not targeted. I am using the £24 million that I have been able to find to give the greatest help to the poorest, who are my target group. Moreover, I put the numbers game aside to help topping-up claimants and my proposals do not go beyond the resources at my disposal. By contrast, the Opposition are overspending, and they are not even giving the greatest help to the poorest claimants in their target group. The Government's proposals, therefore, make far greater sense than new clause 7.

Again, the hon. Member for Stockport, North may not have appreciated some of the consequences of his new clause 8. It will complicate administration and it will give many supplementary benefit claimants less help with their rent and rates than they will receive under the Government's proposal or than they now receive. I am sure that the hon. Gentleman did not envisage that consequence in tabling the new clause. I shall try to explain why this would happen.

Under the Government's housing benefits proposals, the level of rent rebates and allowances for claimants on supplementary benefit will be worked out as at present. The claimant's resources will be considered in relation to the appropriate needs allowance. If his income equals the needs allowance, the claimant will receive a 60 per cent. rebate. If it is more than the needs allowance, the rebate will be reduced by a proportion of the excess, using the tapers that we have discussed. If his income is less than the needs allowance, the rebate will be increased by a proportion of the shortfall.

The hon. Gentleman proposes that supplementary benefit claimants be treated in the same way. Housing assistance for those entitled to the long-term scale rate would be worked out using the 50 per cent. and 20 per cent. tapers. For others, which by implication includes those on the ordinary scale rate, the 25 per cent. and 8 per cent. tapers would apply.

The Government take a different approach. I hope that when the hon. Gentleman has reflected on What I have said he will appreciate that we have taken the right course. Instead of the 100 per cent. passporting and automatic payment of all housing costs to those on supplemenatary benefit, he would subject them to the needs allowance and the tapers and in terms they would thereby lose. I am sure that that was not his intention, but that would he the consequence of his new clause. I must therefore invite the House to reject it.

For the reasons that I have given, therefore, neither of the new clauses produces the results intended by the Opposition. In many ways, they would disadvantage the people whom they seek to help. They would also unnecessarily increase public expenditure by distributing many millions of pounds to people whom they did not set out to help in the first place. I therefore ask the House to reject both new clauses.

Mrs. Ann Taylor

The Minister's reply is absolutely incredible. It is matched only by the lack of interest on the Conservative Benches. It is remarkable that not one Conservative Back Bencher has shown any interest in the debate. Had we been discussing changes in mortgage tax relief or capital gains tax, I am sure that the Conservative Benches would have been full and Conservative Members would have shown an interest. Clearly they are not at all interested in the 2 million households which will lose under the Government's proposals.

The Minister acknowledged that our objective was to halve the number of losers under the scheme. We could have tabled further proposals to remove all losers and to protect all those whom the Government are attacking. Knowing that the Minister was intent on operating on a nil-cost basis, however, we were somewhat constrained in our proposals. We therefore put forward realistic options, which the Minister should have considered more seriously rather than simply reading out the brief prepared for him.

The Minister agreed that our costings were correct. He simply refused to try to find the money for this better scheme and gave spurious reasons for rejecting it. He said that the Government decide their own priorities and that no extra money can be found for housing benefit. That comes from the same Government who defined their own priorities and removed housing as an element to be considered in the retail price index for the uprating of supplementary benefit. We do not believe that the Minister has to be constrained by a nil-cost scheme, so it is ridiculous for him to say that we could not produce a better nil-cost scheme. We have shown him where to find the money to help the many people who need help under the scheme.

The Minister made certain statements with which we cannot possibly agree. He said, for example, that no one with an income below the needs allowance would lose under the new proposals. That is not necessarily so. He assumes that the topping-up system will work perfectly in every case. As anyone who has examined the scheme knows, he has not yet shown that topping up will work and that all those entitled to extra benefit will know about it and will know the amount that they will receive.

There is a further problem for people with incomes below the needs allowance, because those with incomes greater than the supplementary benefit scale rates who would have been transferred to the long-term supplementary benefit scale rates will lose that in the future. Those people will therefore lose and they are not protected by what the Minister has said.

The Minister also spoke, especially towards the end of his speech, as though tenants did not pay rates as well, because he quibbled about the fact that our proposals would help a large number of people by means of rate rebates. That is deliberate on our part, because the Minister intends to penalise those people so that they will lose in any case.

The Minister did not mention—and I did not mention this earlier—the effect of dropping the high rent scheme, which is one way in which he intends to provide the extra 75p needs allowance for pensioners. The Minister brags about helping pensioners under the scheme. I remind him that there will still be 1 million pensioner losers under the scheme even after the needs allowance to pensioners has been increased. The Minister should make that clear rather than pretending that he has done something for all pensioners. In dropping the high rents scheme, the Minister has done very little indeed for families. By dropping the high rents scheme the Minister has, in fact—

6.30 pm
Mr. Rossi

I do not want a wrong impression to be created outside the House. There is an existing high rent scheme, which will be kept. What the hon. Member was referring to was the possible addition to that which was in the consultative document. I did not address my remarks to that because the hon. Member did not speak to it earlier. What we decided to do was to use the money in a far better way by helping the pensioners and the poorer off.

Mrs. Taylor

The Minister knows that we discussed in Committee the fact that he was dropping his new high rent scheme—perhaps I should refer to it in those terms—the scheme which was intent on helping those people who are paying a high rent for their accommodation. But by dropping his new high rent scheme the Minister has created a situation where there will be more potential family losers because the high rent scheme would have helped some of those families who would have got extra benefit and who will now not get that extra benefit because the scheme has been dropped. May I remind the Minister—

Mr. Rossi

It is perfectly true that if we had introduced the new high rent scheme it might have had the effect of avoiding some 120, 000 losers. But the way in which we have deployed the money has instead meant that we have avoided 300, 000 losers. That is why I said that we had found a better way of using the money than by introducing the new high rent scheme which we contemplated for a short period but then rejected because we decided that it was not as satisfactory as we had hoped it might be.

Mrs. Taylor

The Minister's whole scheme is not as satisfactory as many people hoped it might be. When the Minister talks about avoiding 120, 000 losers by the introduction of a new high rent scheme, the Minister has to acknowledge that by dropping that new high rent scheme he is creating another 120, 000 losers.

The people I want just to say a word about are those families who will lose because their numbers will increase because of what the Minister is doing by dropping the new high rent scheme. On the Minister's own figures, there are 530, 000 families with children who will lose under this scheme. There are also 490, 000 families without children who will lose. As the Minister has acknowledged by what he has just said, there are now 120, 000 more losers because of the dropping of the new high rent scheme. All these people are non-pensioners.

It is worth remembering that the people who will lose most under the Government's scheme are those who are earners and those families with dependent children. As I said initially when I was speaking specifically to new clause 7, by these proposals the Minister is making the poverty trap worse by 5p in the pound on the (family's income above the needs allowance. We think that the Minister should avoid making the poverty trap worse. We know that Tory Members have frequently complained about the poverty trap. We have given the Minister a way out. We have made constructive suggestions on how he can minimise that poverty trap situation on the tapers, and Labour Members will be very disappointed indeed by the Minister's response. We must divide the House on new clause 7.

Mr. Race

rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. I have only just taken the Chair but my impression is that I saw the hon. Member's name on the annunciator earlier.

Mr. Race

Yes, Mr. Deputy Speaker. By leave of the House, I just want to make it absolutely clear to those outside whom the Minister is so concerned about that the people he is describing as losers under this scheme are those people on half average earnings. The people whom he described as losing 20p or 25p a week are those people earning about £70 a week. National average earnings at the present time are around £120 to £125 a week. In London, the area that the Minister and I both represent, the average is £140 a week for male manual workers. Therefore, what he is saying is that the people on half average earnings are being paid too much now in housing benefit. That is the consequence of the scheme that he is introducing. That is why it is disgraceful and that is why we shall vote against it.

Question put, That the clause be read a Second time:—

The House divided: Ayes 143, Noes 200.

Division No. 102] [6.35 pm
AYES
Allaun, Frank Douglas, Dick
Archer, Rt Hon Peter Douglas-Mann, Bruce
Ashton, Joe Dubs, Alfred
Bennett, Andrew(St'kp't N) Dunlop, John
Booth, Rt Hon Albert Dunwoody, Hon Mrs G.
Boothroyd, Miss Betty Eastham, Ken
Bradley, Tom Edwards, R. (W'hampt'n S E)
Brown, Hugh D. (Provan) Ellis, R.(NE D'bysh're)
Brown, Ronald W. (H'ckn'y S) English, Michael
Buchan, Norman Evans, Ioan (Aberdare)
Callaghan, Jim (Midd't'n&P) Evans, John (Newton)
Campbell-Savours, Dale Ewing, Harry
Carter-Jones, Lewis Field, Frank
Cartwright, John Fitch, Alan
Clark, Dr David (S Shields) Fletcher, Ted (Darlington)
Cocks, Rt Hon M. (B'stol S) Ford, Ben
Coleman, Donald Foulkes, George
Concannon, Rt Hon J. D. Freud, Clement
Cook, Robin F. Garrett, John (Norwich S)
Cowans, Harry Golding, John
Craigen, J.M.(G'gow, M'hill) Graham, Ted
Crowther, Stan Grant, George(Morpeth)
Cryer, Bob Hamilton, W. W. (C'tral Fife)
Cunliffe, Lawrence Harrison, Rt Hon Walter
Cunningham, G.(Islington S) Hart, Rt Hon Dame Judith
Cunningham, Dr J. (W'h'n) Haynes, Frank
Dalyell, Tam Home Robertson, John
Davidson, Arthur Homewood, William
Davis, Terry (B'ham, Stechf'd) Hooley, Frank
Deakins, Eric Howell, Rt Hon D.
Dean, Joseph (Leeds West) Howells, Geraint
Dixon, Donald Hoyle, Douglas
Dormand, Jack Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport) Race, Reg
Jay, Rt Hon Douglas Radice, Giles
John, Brynmor Richardson, Jo
Jones, Rt Hon Alec (Rh'dda) Roberts, Albert(Normanton)
Jones, Barry (East Flint) Robertson, George
Kerr, Russell Robinson, G. (Coventry NW)
Kilfedder, James A. Rooker, J. W.
Kilroy-Silk, Robert Ross, Ernest (Dundee West)
Lamond, James Rowlands, Ted
Leighton, Ronald Sandelson, Neville
Lewis, Ron (Carlisle) Sever, John
Litherland, Robert Sheerman, Barry
Mabon, Rt Hon Dr J. Dickson Short, Mrs Renée
McCartney, Hugh Silkin, Rt Hon J. (Deptford)
McDonald, Dr Oonagh Silverman, Julius
McElhone, Frank Skinner, Dennis
McGuire, Michael(Ince) Smith, Cyril(Rochdale)
McKay, Allen(Penistone) Spearing, Nigel
McKelvey, William Spriggs, Leslie
MacKenzie, Rt Hon Gregor Stoddart, David
McNamara, Kevin Stott, Roger
McWilliam, John Summerskill, Hon Dr Shirley
Marks, Kenneth Taylor, Mrs Ann (Bolton W)
Marshall, Dr Edmund (Goole) Thomas, Dafydd (Merioneth)
Marshall, Jim (Leicester S) Thomas, Dr R.(Carmarthen)
Martin, M(G'gowS'burn) Varley, Rt Hon Eric G.
Mason, Rt Hon Roy Wainwright, E.(Dearne V)
Maynard, Miss Joan Wainwright, R.(Colne V)
Mikardo, Ian Welsh, Michael
Mitchell, R. C. (Soton Itchen) White, Frank R.
Morris, Rt Hon A. (W'shawe) Whitlock, William
Morris, Rt Hon C. (O'shaw) Williams, Rt Hon A.(S'sea W)
Morris, Rt Hon J. (Aberavon) Wilson, Gordon(Dundee E)
Morton, George Winnick, David
Oakes, Rt Hon Gordon Woodall, Alec
O'Neill, Martin Wright, Sheila
Park, George
Parker, John Tellers for the Ayes:
Parry, Robert Mr. James Hamilton and
Pitt, William Henry Mr. James Tinn.
Powell, Raymond(Ogmore)
NOES
Alexander, Richard Cope, John
Alison, Rt Hon Michael Costain, Sir Albert
Ancram, Michael Cranborne, Viscount
Arnold, Tom Dean, Paul (North Somerset)
Aspinwall, Jack Dickens, Geoffrey
Atkins, Robert(Preston N) Dorrell, Stephen
Atkinson, David(B'm'th, E) Douglas-Hamilton, Lord J.
Beaumont-Dark, Anthony Dover, Denshore
Bendall, Vivian Dunn, Robert(Dartford)
Benyon, Thomas(A'don) Edwards, Rt Hon N. (P'broke)
Berry, Hon Anthony Eggar, Tim
Best, Keith Eyre, Reginald
Biffen, Rt Hon John Fairgrieve, Sir Russell
Biggs-Davison, Sir John Faith, Mrs Sheila
Blackburn, John Fell, Sir Anthony
Boscawen, Hon Robert Fisher, Sir Nigel
Bottomley, Peter (W'wich W) Fletcher, A. (Ed'nb'gh N)
Bright, Graham Fletcher-Cooke, Sir Charles
Brinton, Tim Fookes, Miss Janet
Brooke, Hon Peter Forman, Nigel
Brotherton, Michael Fowler, Rt Hon Norman
Brown, Michael(Brigg&Sc'n) Fox, Marcus
Browne, John(Winchester) Fry, Peter
Buck, Antony Gardiner, George(Reigate)
Budgen, Nick Glyn, Dr Alan
Burden, Sir Frederick Goodlad, Alastair
Butcher, john Gorst, John
Cadbury, Jocelyn Gow, Ian
Carlisle, John(Luton West) Gray, Hamish
Carlisle, Kenneth(Lincoln) Greenway, Harry
Chapman, Sydney Griffiths, Peter Portsm'th N)
Churchill, W.S. Grist, Ian
Clark, Hon A. (Plym'th, S'n) Gummer, John Selwyn
Clark, Sir W. (Croydon S) Hamilton, Hon A.
Clarke, Kenneth(Rushcliffe) Hamilton, Michael(Salisbury)
Clegg, Sir Walter Haselhurst, Alan
Cockeram, Eric Hawksley, Warren
Hayhoe, Barney Pawsey, James
Heddle, John Percival, Sir Ian
Henderson, Barry Peyton, Rt Hon John
Hicks, Robert Pink, R.Bonner
Higgins, Rt Hon Terence L. Pollock, Alexander
Hill, James Porter, Barry
Hogg, Hon Douglas(Gr'th'm) Prentice, Rt Hon Reg
Holland, Philip(Carlton) Proctor, K. Harvey
Hooson, Tom Rathbone, Tim
Howe, Rt Hon Sir Geoffrey Rees-Davies, W. R.
Hunt, John(Ravensbourne) Renton, Tim
Hurd, Rt Hon Douglas Rhodes James, Robert
Jessel, Toby Rhys Williams, Sir Brandon
Johnson Smith, Geoffrey Ridley, Hon Nicholas
Jopling, Rt Hon Michael Rifkind, Malcolm
Kaberry, Sir Donald Roberts, M. (Cardiff NW)
Kellett-Bowman, Mrs Elaine Roberts, Wyn (Conway)
Knox, David Rossi, Hugh
Lang, Ian Sainsbury, Hon Timothy
Latham, Michael Shaw, Giles (Pudsey)
Lawrence, Ivan Shaw, Michael(Scarborough)
Lawson, Rt Hon Nigel Shelton, William(Streatham)
Lee, John Shepherd, Colin(Hereford)
Lester, Jim (Beeston) Shepherd, Richard
Lewis, Kenneth (Rutland) Silvester, Fred
Lloyd, Peter(Fareham) Skeet, T. H. H.
Lyell, Nicholas Speller, Tony
McCrindle, Robert Spicer, Jim (West Dorset)
Macfarlane, Neil Spicer, Michael (S Worcs)
MacGregor, John Sproat, lain
Macmillan, Rt Hon M. Stainton, Keith
McNair-Wilson, P. (New F'st) Stanbrook, Ivor
Major, John Stanley, John
Marland, Paul Stevens, Martin
Marlow, Antony Stradling Thomas, J.
Marten, Rt Hon Neil Taylor, Teddy (S'end E)
Mather, Carol Tebbit, Rt Hon Norman
Maude, Rt Hon Sir Angus Temple-Morris, Peter
Mawby, Ray Thomas, Rt Hon Peter
Mawhinney, Dr Brian Thompson, Donald
Maxwell-Hyslop, Robin Thorne, Neil(llford South)
Mayhew, Patrick Thornton, Malcolm
Mellor, David Townend, John(Bridlington)
Meyer, Sir Anthony Townsend, CyrilD, (B'heath)
Miller, Hal(B'grove) Trippier, David
Mills, Iain(Meriden) Viggers, Peter
Mills, Peter (West Devon) Waddington, David
Miscampbell, Norman Walker-Smith, Rt Hon Sir D.
Moate, Roger Waller, Gary
Monro, Sir Hector Ward, John
Montgomery, Fergus Warren, Kenneth
Moore, John Watson, John
Morgan, Geraint Wells, Bowen
Morris, M. (N'hampton S) Wells, John(Maidstone)
Morrison, Hon C. (Devizes) Wheeler, John
Morrison, Hon P. (Chester) Wickenden, Keith
Murphy, Christopher Wilkinson, John
Neale, Gerrard Winterton, Nicholas
Nelson, Anthony Wolfson, Mark
Neubert, Michael Young, Sir George(Acton)
Newton, Tony Younger, Rt Hon George
Page, John (Harrow, West)
Page, Richard (SW Herts) Tellers for the Noes:
Parris, Matthew Mr. Tristan Garel-Jones and
Patten, Christopher(Bath) Mr. David Hunt.

Question accordingly negatived.

Forward to