HC Deb 02 April 1984 vol 57 cc652-60 3.46 pm
The Secretary of State for Social Services (Mr. Norman Fowler)

With permission, Mr. Speaker, I shall make a statement on my plans for taking forward a series of reviews on the social security system.

As the House will know, I have already set in hand a thorough review of the largest single element of social security provision through the inquiry which I am chairing into provision for retirement. We have made good progress on that inquiry. I have now received no fewer than 1,700 submissions from interested organisations and members of the public on the subject of portable pensions alone. We have now completed our public sessions on that subject, but I intend to hold further public sessions on the wider issues of pensions policy in the coming months.

I also announced in February that I intended to establish a review of the housing benefit scheme. That scheme, which now accounts for some £4 billion of expenditure a year and is paid to one household in three throughout the country, has increased rapidly in scale. The announcement of a review was widely welcomed and I am glad to be able to report that the review will be chaired by Mr. Jeremy Rowe, chairman of the Peterborough Development Corporation, deputy chairman of Abbey National Building Society and chairman of London Brick Company. His experience makes him well suited to this important task and I am grateful to him for agreeing to take it on. He will be commencing the review when his involvement with London Brick Company ends later this month and I expect then to announce the two other independent members of his review team.

Although these reviews represent a substantial undertaking, I believe that the time is right to look at the other major parts of the social security system as well. Spending on the social security budget now totals more than £35 billion and accounts for almost 30 per cent. of all public expenditure. Payments — including national insurance pensions — go to well over 20 million beneficiaries; and the whole system requires the employment of almost 80,000 staff in my Department to administer the various schemes. Given the importance of social security, no responsible Government can avoid the duty to look carefully at the way the system works. I am therefore establishing two further reviews. The first will be concerned with the supplementary benefit scheme. The scheme now deals with well over 4 million claimants, of whom 1½ million are pensioners. Over 7 million people live in households in receipt of supplementary benefit and total expenditure on the benefits is more than £5½ billion. Following the review undertaken by the last Government, a number of major changes in the scheme were introduced in 1980 to make the scheme subject to a much greater extent to specific parliamentary regulations. The aim was to consolidate legal entitlement to benefit and to reduce the dependence of the system on the discretion of staff.

The changes, however, have not resolved some central problems. In particular, the system is complex to administer and difficult to understand. The result is that it is still necessary for some 35,000 staff in my Department to be employed wholly on the administration of supplementary benefit; and the procedures and rules under which the scheme is administered remain extremely complicated both for staff and for claimants. I believe it is essential that we should look again at supplementary benefit, and I have asked my hon. Friend the Under-Secretary of State for Social Security to lead a small team which will review the structure of the scheme and consider the scope for easing its administration.

The second major area in which we have decided that a review is required is that of benefits for children and young people. At present, we pay out very large sums of money through a particularly complex pattern of social security benefits. For instance, a working family may get help for children through child benefit alone, or with housing benefit, family income supplement, or one-parent benefit, or a combination of them. As for young people generally, the amount of social security support depends not just on personal or family circumstances, but on whether they are in employment, education or training. All these benefits have a sensible purpose, but we need to be sure that this is the best way of providing support. I have therefore asked my hon. Friend the Minister for Social Security to lead a team in reviewing the present social security arrangements for giving financial help to families with children and to young people above school leaving age.

The largest remaining area within the social security programme is that of providing disablement benefits. Here I propose a somewhat different approach. With the ending of the invalidity trap, the introduction of war pensioners' mobility supplement and our proposals for a severe disablement allowance, we are making useful progress towards our declared objective of a more coherent system. We shall continue to look for further practical steps in this direction.

But it is clear that in the longer term the development of our policy would be helped by more reliable information about the numbers of disabled people, their circumstances and their needs. There has been no comprehensive study of the extent of disablement in the population for 15 years, and even that excluded some important groups. I therefore intend to take steps to fill this gap in our knowledge by undertaking a full-scale survey. A feasibility study on this is already under way.

As to the arrangements for each review, they will all involve independent figures from outside the Government. The reviews will also follow the lead of the inquiry into provision for retirement by seeking public evidence. Each of the reviews will aim to identify the needs which should be provided for and consider how, within the resource constraints we face, those needs can most sensibly be met. I have asked the leaders of each of the reviews to report their conclusions to me later this year.

Taken together, the various reviews and studies I have set in hand constitute the most substantial examination of the social security system since the Beveridge report 40 years ago.

Mr. Michael Meacher (Oldham, West)

Is the Secretary of State aware that we suspect that his statement has a good deal less to do with the welfare of pensioners, tenants and all the poor than with the planning of yet further public expenditure cuts, and this proposal of his has the fingerprints of the Treasury all over it? Does it not expose the nature of the Government's reviews when the Treasury's own budget reports now show the cumulative value of tax cuts to the rich since 1979 at £13,000 million, while the cumulative value of cutbacks in benefit to the poor since 1979, by lowering the pension uprating criterion, by abolishing the earnings-related supplement and by other means, now exceeds £5,000 million?

Will the right hon. Gentleman now give an assurance, which he has refused to do before, that, whatever else the pensions inquiry does, it will not erode the state earnings-related pension scheme, which the Labour Government introduced in 1975, and which offers pensioners the best deal that they have ever had?

Will the terms of reference of the review team on housing benefit include a no extra cost constraint? If so, how does the right hon. Gentleman justify forcing through a £190 million cut in benefit for the poor, when only three weeks ago the Chancellor gave a £520 million tax handout to the rich by abolishing the unearned income surcharge, and halving stamp duty on share transactions?

On supplementary benefit, while we recognise that legalisation of the system has not generally operated in favour of claimants and has led to a proliferation of secret documents, will the Secretary of State give a categorical assurance that reviewing the structure of the scheme will not involve any cut in the level or the coverage of the supplementary benefit in what is, even under this Government, the safety net for the poorest claimants?

On benefits for children and young people, while we believe that child benefit needs to be enhanced, is the Secretary of State aware that his previous reviews on this issue have always involved cuts in benefit such as scrapping the short-term child dependency additions and reducing the non-dependent allowance in housing? Therefore, will he give us an unequivocal pledge that this time it will not be the same again?

On disablement benefits, is the right hon. Gentleman aware that, while we support the principle of a comprehensive and coherent scheme, what is missing is not further information about the disabled but a readiness to give financial priority to them? Is he prepared to do that?

Will all these reviews he published in full when completed? Is the Secretary of State aware that we would have a great deal more confidence in these reviews if he had not in the past so often proved to be acting as an agent for the Treasury?

Mr. Fowler

That is a typically foolish response from the hon. Gentleman.

The last time the hon. Gentleman spoke from the Dispatch Box he complained about the piecemeal way in which social security provision was approached. We have now announced a series of reviews that adds up to the most comprehensive review of the social security system for 40 years. It is in everyone's interest to see whether the schemes about which we are talking are working as effectively as possible. An open review must mean open discussion, and the hon. Gentleman is foolish to fear that open discussion.

On finances, the aim is to make the best use of the available resources and to channel them to where they are most needed. The premise of working within overall budgets remains, and we must recognise that there are resource restraints.

As the hon. Gentleman will perhaps acknowledge, supplementary benefit is complex. The two manuals of guidance contain 16,000 paragraphs of instructions for the DHSS staff who administer the scheme. It is administered by 35,000 staff, and I should have thought that it was in the interests of everyone, including claimants, to ensure that the schemes and the system were as simple as possible.

We are already making progress towards a more coherent system for the disabled, but the development of that policy requires reliable information about the numbers of the disabled and their needs. The hon. Gentleman appears to be disagreeing, but that is the case.

Mr. Meacher

There has been a comprehensive review.

Mr. Fowler

The hon. Gentleman is wrong. There has been no comprehensive survey for 15 years, since the Amelia Hams report. If the hon. Gentleman wishes to make an issue of that, he will not take many people with him.

The Government will announce their proposals for support, and it will be at that stage that we shall publish the separate results of the inquiries. Clearly, the need is to bring together the separate work of the reviews. This is the most comprehensive inquiry for 40 years.

Mr. Robert McCrindle (Brentwood and Ongar)

I warmly welcome what is clearly a most radical review of the social security system and one that arguably should have been undertaken by Governments of both political complexions in the past. Will my right hon. Friend take on board the fact that the system has become so difficult to operate and so complex to understand that if there were widespread recognition of the need for changes across the board we should be looking almost to starting from scratch, with a clean sheet? Will he take into account that that might be the best way, rather than to go on doing a little here and a little there, and thereby building up to the manuals of instruction which few people, including his civil servants, understand?

Mr. Fowler

My hon. Friend has made a fair point. One of the fundamental aims of these reviews is to ascertain whether we can simplify the system. I believe that the system's complexity is recognised by the public. That aspect affects staff in offices and, above all, the public. I believe that the public wish the Government to make some attempt to reduce that complexity and simplify the system.

Mr. Robert N. Wareing (Liverpool, West Derby)

I point out to the right hon. Gentleman, who now seems to be worried about how to work out the number of disabled people, that I am in a position to help him. Tomorrow afternoon the other place will debate the Third reading of a Bill which bears a great similarity to the Bill that I introduced on 18 November 1983. Part II will allow the Secretary of State to conduct a thorough survey of the number of disabled people in the United Kingdom.

What are the right hon. Gentleman's intentions about that Bill now that he admits that legislation is needed? In view of the tremendous reform which the right hon. Gentleman tells us he has introduced, how much better off will the young man or young woman who wishes to take a course in a college of further education and to do home work at the same time be? Can such people now receive supplementary benefit, which was denied them in the past?

Mr. Fowler

The hon. Gentleman is wrong if he thinks that legislation is required to conduct a survey of disabled people. I welcome the fact that, unlike the hon. Member for Oldham, West (Mr. Meacher), the hon. Gentleman believes that such a survey is necessary. We agree on the necessity of the survey. The last survey was conducted 15 years ago. We intend the Office of Population Censuses and Surveys to carry out a survey, because we have been getting our forecasts wrong. Attendance allowance is one aspect for consideration. I hope that, whatever other differences we may have, the hon. Gentleman will support the idea of this survey going forward.

Mr. Ralph Howell (Norfolk, North)

I welcome my right hon. Friend's intention to conduct these reviews into social security. Bearing in my the interaction of taxation and welfare benefits, I urge my right hon. Friend to refrain from conducting those reviews in isolation. He should conduct a comprehensive review into the whole area of taxation and welfare.

Mr. Fowler

I have heard what my hon. Friend says about that matter. He has made substantial points. Clearly, my right hon. Friends in the Government will want to take them into account.

Mr. Archie Kirkwood (Roxburgh and Berwickshire)

The alliance gives these proposals a guarded welcome and looks forward to playing a positive and constructive role during the inquiries. I have three short questions. First — this point has just been made to the right hon. Gentleman — is it possible to extend the terms of reference of the supplementary benefit inquiry to consider the interface between taxation and the social security system with a tax credit scheme? Secondly, will he extend the terms of reference of the children's inquiry to consider parental careers in the first years after childbirth and schemes prevalent in other European countries? Thirdly, in the survey of the disabled, will the right hon. Gentleman take account of the needs of those who look after the elderly and disabled people?

We note that the reports are due this year, and we hope that the right hon. Gentleman will not hide behind them. We hope that he will say what will happen in the next 10 years rather than hide in the same way as he has been doing about a decision on the death grant. Can we expect firm proposals after those inquiries have been carried out, and for leadership to be shown?

Mr. Fowler

I assure the hon. Gentleman that we shall go as far as he wishes with the children's inquiry. Clearly, we wish to conduct the inquiries as speedily as possible. I hope that they will all be completed this year. I believe that, if the hon. Gentleman reflects, he will realise that that means imposing a very short timetable. Some people will argue that simplification can be secured only by tax credit, and Ministers will consider that argument. We shall consider also the unresolved problems of tax credit, for example, for married women.

Mr. Peter Hordern (Horsham)

My right hon. Friend mentioned the Beveridge report. Will he include in his review the payments and benefits paid by Departments other than the Department of Health and Social Security, as was suggested by Beveridge? Beveridge suggested that unemployment benefit should be paid by the same Department that paid supplementary benefit.

Mr. Fowler

We shall look at the interface between the different Departments. My colleagues and officials in other Departments will be kept closely informed about the progress of the inquiries.

Mr. Brynmor John (Pontypridd)

Does the Secretary of State recognise that there will be a weakness in having four inquiries simultaneously into a matter that deserves a comprehensive remedy? Will he ensure that before the proposals are brought before the House there is a public debate, as occurred on the Beveridge report? Will the right hon. Gentleman confirm that one of the shortcomings of his proposals is that he has concentrated on the inequities of the scheme, as he sees them, and has made no proposal to inquire into the weaknesses of the scheme? Is the right hon. Gentleman aware that, for example, the criteria on attendance and mobility allowances are becoming more complicated in view of recent legal decisions? It is high time that further definitions were made of what entitles people to those benefits, so that they can secure justice.

Mr. Fowler

The fact that we have set up the inquiries does not mean that we do not intend to make progress in areas such as those the hon. Gentleman has mentioned. That would be absurd. The hon. Gentleman, on reflection, might feel that the only way that we shall speedily complete the work schedule that I have set out is by organising it in the way that we have done. The holding of a debate is not a decision for me, but clearly the House will wish to debate these matters at some stage.

Mr. Roy Galley (Halifax)

I welcome this important statement, but I should like to press my right hon. Friend on some aspects of the terms of reference. Will they include an examination of the fact that some benefits appear to go to those who are not in most need. For example. an increasing number of single payments are being made under supplementary benefit rules. Other people in specific groups appear to need those benefits more than some people who are presently receiving them. Is my right hon. Friend prepared to take tough decisions which mean that some may lose and some may gain? I press my right hon. Friend further about negative income tax or tax credit. I believe that all Conservative Members accept that such a scheme would not be cost-effective for some time.

Mr. Speaker

Order. Another statement and more business are to follow this debate. Hon. Members should ask only one question at a time. I am sure that the House will return to this subject on another occasion.

Mr. Fowler

The aim of the inquiry is to make the best use of the available resources and to channel them to those most in need. I believe that that is the point made by my hon. Friend. We want to examine especially single payments to claimants, because almost 2 million single payments are made a year by local offices, totalling £140 million. That is a vast administrative effort, involving a comparatively small part of the total social security budget.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Is the Secretary of State aware that the House, in testing his sincerity on these five reviews, will bear in mind that it is now the second anniversary of the completion of the review on the death grant? Will the right hon. Gentleman show his sincerity by saying when he intends to make an announcement about an increase in the death grant, for which the vast majority of the people who contributed to his review asked?

Mr. Fowler

As the hon. Gentleman is aware, we have published proposals on the death grant. We issued a consultation paper. The only sensible thing that I can say is that we shall want to consider the death grant together with the whole of social security over the coming years.

Mr. Andrew Rowe (Mid-Kent)

Will my right hon. Friend assure us that, while constructing the terms of reference of these inquiries, he will pay particular attention to the difficult subject of people's savings? It always seems to me to be entirely opposed to the Conservative philosophy that those people who manage to save a little day by day are worse off when it comes to claiming a whole range of benefits than those who have been unable to do so or have not cared to do so.

Mr. Fowler

That was one of the original points that was put in the Beveridge report. Many of the principles remain applicable today—the co-operation between the state and the individual, and the encouragement of voluntary action. These are principles which have lasted and which we shall want to strengthen.

Mr. Kevin Barron (Rother Valley)

Why does the Secretary of State believe that one in three households receives housing benefit and that the figure is rapidly rising?

Mr. Fowler

The reason for that is that we have extended housing benefit. At the moment about one in three households — over 6 million households — are taking housing benefit. Most people would favour and support the idea that there should be an inquiry into the structure and administration of housing benefit. That is what we propose this afternoon. We have had many debates on housing benefit, but I would ask the hon. Gentleman to look forward rather than forever backwards.

Several Hon. Members

rose——

Mr. Speaker

Order. I have to protect the subsequent business of the House. I shall allow questions on this matter to continue for a further five minutes, and then I shall call the Front Bench speakers.

Mr. Timothy Yeo (Suffolk, South)

Is my right hon. Friend aware that his statement will be welcomed by everyone who is interested in simplifying the social security system and particularly those interested in disability? Is he further aware that there can be no progress towards a comprehensive disability income scheme without the type of information that will be gathered under this survey? I ask for an assurance that the voluntary organisations will be fully consulted in the framing of the survey. Will he also consider seeking information about the causes of disability, which can be so valuable and lead to long-term preventive measures?

Mr. Fowler

Yes, Sir. I shall immediately consider the point that my hon. Friend makes about voluntary organisations and the input that they can make to the survey. Clearly, we want to take voluntary organisations with us on this survey, and I shall give urgent consideration to the point.

Mr. Max Madden (Bradford, West)

Will the Secretary of State acknowledge that the record number of people living in poverty will not be helped by official reviews but that they need more money now? Does he accept that the only way to tackle poverty in old age is by way of a big increase in pensions now; that the only way to tackle family poverty is by way of a big increase in child benefit now, and that the only way to help the unemployed is to provide more jobs now?

Mr. Fowler

If the hon. Gentleman studies the Government's record, he will find that we are not only spending £35 billion a year on social security, which by any standards is a formidable amount of public spending, but that there have also been real increases in the value of pensions, supplementary benefit, mobility allowances and other benefits. I ask the hon. Gentleman to consider whether he believes it sensible that we should also examine the structure and administration of social security, because that is also in claimants' interests.

Mrs. Edwina Currie (Derbyshire, South)

If I am only allowed one question, Mr. Speaker, may I ask it about the housing benefit review? While welcoming the appointment of Mr. Jeremy Rowe as chairman, because he knows a great deal about housing, could we also have on the review someone who knows a great deal about the administration of housing benefit, particularly from the local authorities?

Mr. Fowler

I hope that within the next few days I will be able to announce someone who comes up to my hon. Friend's specifications.

Mr. Gavin Strang (Edinburgh, East)

Instead of tinkering with the social security system, when will the Government address themselves to the policies that have forced so many people to claim social security? Surely the best way to reduce the number of pensioners claiming social security is to increase the pension, and, for non-pensioners, to reverse the policy of destroying millions of jobs, including those in productive industries such as mining.

Mr. Fowler

I have just answered that question. If the hon. Gentleman looks back, he will see that in 1978—in the period of the previous Labour Government—there were 3 million claimants on supplementary benefit, affecting 5 million people. It is foolish of him to look back and believe that there was some golden age when supplementary benefit was not given. It would seem sensible to study supplementary benefit to see whether it is being given in the right way and whether it is comprehensible to the people receiving it.

Mr. James Couchman (Gillingham)

I welcome this report. Will my right hon. Friend undertake to ensure that any decisions that follow the surveys will be coherent and cohesive so that we do not get a number of conflicting decisions afterwards?

Mr. Fowler

The whole purpose of what we are doing is to bring the subjects together and not to deal with them piecemeal. As my hon. Friend says, we want to deal with them much more comprehensively than they have been dealt with hitherto.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

While I welcome any review that could lead to a reduction in complexity in the present system, particularly if it leads to more take-up by claimants, does the Secretary of State agree that the die has already been cast on this review by the 'Treasury Green Paper published at the time of the Budget? Is it not clear that public expenditure will not rise in real terms between now and 1986–87 and, therefore, the greater demand that is being placed on the social security network will create greater tensions, which no review will meet under present Treasury guidelines?

Mr. Fowler

We must clearly recognise the financial constraints that there are and always will be on any social security system. That does not invalidate the case for studying the structure and administration of the social security system.

Mr. Meacher

Will the Secretary of State confirm that in his answer to me he said that these reviews would be working within their existing budgets? Does that mean that they will all be at no extra cost? The Secretary of State seems to be nodding. If that is so, is it not clear—judging by his record—that this will not be the most radical examination of social security since Beveridge, but the most radical dismantling of the welfare state since the war?

Mr. Fowler

The hon. Gentleman must have had that point left over from the last election campaign. It has about as much impact as it did during the last election campaign. We are working on the premise of operating within the existing overall budget. We must recognise that there are resource constraints, but if there are any savings in a particular area, the Government clearly have the choice of seeing whether there are other areas within social security to which that money should be diverted.