§ The Minister for Social Security (Dr. Rhodes Boyson)
I beg to move,That the draft Social Security Benefits Up-rating Order 1984, which was laid before this House on 6th July, be approved.I hope that it will be for the convenience of the House if at the same time we deal with the following motions:That the draft Supplementary Benefit Uprating and Additional Requirements Regulations 1984, which were laid before this House on 6th July, be approved.That the draft Child Benefit (Up-Rating) Regulations 1984, which were laid before this House on 6th July, be approved.That the draft Family Income Supplements (Computation) Regulations 1984, which were laid before this House on 6th July, be approved.That the draft Pensioners' Lump Sum Payments Order 1984, which was laid before this House on 6th July, be approved.That the draft Supplementary Benefit (Requirements and Resources) Amendment Regulations 1984, which were laid before this House on 6th July, be approved.That an humble Address be presented to Her Majesty, praying that the Supplementary Benefit (Miscellaneous Amendments) Regulation 1984 (S.I., 1984, No. 938), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled.That an humble Address be presented to Her Majesty, praying that the Family Income Supplements (General) Amendment Regulations 1984 (S.I., 1984, No. 979), dated 11th July 1984, a copy of which was laid before this House on 13 July, be annulled.That an humble Address be presented to Her Majesty, praying the Child Benefit (General) Amendment (No. 2) Regulations (S.I., 1984, No. 939), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled.That an humble Address be presented to Her Majesty, praying that the Child Benefit (Residence and Persons Abroad) Amendment Regulations 1984 (S.I., 1984, No. 875), dated 26th June 1984, a copy of which was laid before this House on 29th June, be annulled.
The instruments are accompanied by a report from the Government Actuary on the effects of the uprating on the national insurance fund, by a statement on the uprating of mobility allowance, and by the report of the Social Security Advisory Committee, including the Secretary of State's reply. The effect of this package of instruments is to put into effect the uprating of benefits which my right hon. Friend the Secretary of State announced on 18 June, to provide for payment of the £10 Christmas bonus, and to make certain other changes.
I do not wish to repeat the main details of the changes in the individual benefits. I propose to confine myself to the main features of the uprating and to the more important changes.
On the uprating, the majority of benefits will be increased by 5.1 per cent. in line with the movement in the retail price index to May, while the supplementary benefit scale rates will be increased by 4.7 per cent. in line with the RPI, excluding housing. That is the method that has been followed in previous years.
As in 1983, the uprating is based on the historic movement in prices in the 12 months to May this year. The Government are convinced that the historic method is the best way of determining benefit rates. It may take some of the excitement out of the uprating announcement, but it means that pensioners can watch the movement of the RPI and work out what increase they will be getting in November.
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
I am sorry to interrupt the Minister so soon. Will not the pensioners 573 also think that it is not without significance that, two years running, May will have had the lowest RPI of any of the 12 months? Will they not see a conspiracy in the way that the building societies drop the mortgage rate just at the right time to affect the May RPI only to raise it after the uprating has been announced?
§ Dr. Boyson
It is always a pleasure to give way to the hon. Gentleman to cleanse him of the conspiracy theory which could poison his temperament unless we help to release the demon from inside him.
It is as well to remember that the forecast method was adopted by a previous Labour Government only to save them spending the equivalent of £1 billion on an uprating on the historic method. But in five years out of seven the forecast was wrong. The hon. Gentleman would not bet on horses if he were wrong five times out of seven. In the long run, people cannot lose by the present method because, whatever the increase from May to May, it is paid to them in the following November. In the long run, there can be no loss at all attached to the historic method. It is much more likely to be correct than the method used by the hon. Gentleman's Government.
In total, the uprating will add over £1.5 billion to the social security budget in a full year, taking it to £39 billion —almost one third of all public spending. That is £700 per man, woman and child in Britain. In real terms, indexed for inflation, we are spending 27 per cent. more on social security than was the Labour Government in 1979.
If Labour Members require, I can give figures to show that after allowing for the increase of unemployment and for the increase of 650,000 pensioners, there is still between £3 billion and £3.5 billion more in real terms being spent than when the Labour Government left office in 1979. So, whatever we are doing, we are certainly not eating humble pie as a result of the money that we are spending on social security.
§ Ms. Clare Short (Birmingham, Ladywood)
The Minister makes a fascinating and important point, and I can instantly think of some reason why that might be so. For example, we know that there has been a massive increase in rents. Therefore, the cost of housing benefit has gone up. We also know that there has been an increase in low pay, so presumably entitlement to family income supplement has gone up. Can the hon. Gentleman give us any more details, or will he undertake to give on another occasion an analysis of exactly where the £3.5 billion is being spent?
§ Dr. Boyson
Nothing would delight me more than to address Labour Members on this subject. Perhaps they would tear up their party cards afterwards. By sheer chance, I have some figures with me. Between November 1978 and November 1984, the increase in the RPI is expected to be 76.4 per cent. During the same period, family income supplement will have gone up by 119 per cent., one-parent benefit will have gone up by 112.5 per cent., mobility allowance will have gone up by 100 per cent. and the retirement pension, widow's pension and the attendance allowance will have gone up by between 83 and 83.7 per cent. I could list all the figures and I am sure that it would give great pleasure to hon. Members on both sides of the House to see how well we have done under difficult circumstances.
§ Dr. Boyson
People are living longer. They see the satisfaction of living under a Conservative Government. I wish the hon. Member for Perry Barr long life.
§ Mr. Brynmor John (Pontypridd)
As the hon. Gentleman took well over two months to reply to a letter in which I outlined the case of a lady in my constituency who had to bury six of her family on the present death grant, does he not realise that his flippancy and stupidity are beyond measure? We were told in 1979 that the death grant was to be re-examined, and an announcement was expected at Christmas 1980. That announcement has still not been made. Will the hon. Gentleman treat more seriously a subject which causes great worry to many people?
§ Dr. Boyson
I do take it seriously and I receive hundreds of letters on the subject. The Labour Government were in power for five years and did nothing about the death grant. I do not intend to eat humble pie on that. When my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) held my post, he circulated a consultation document. The Labour Government never did that. The only reason why nothing was done was that there was no agreement in the responses to that consultation paper. We accept that there is a problem and we know that it causes concern. However, we will not bow to the Labour party.
§ Mr. Tony Lloyd (Stretford)
The Minister refers to his desire to consult about the death grant. It is interesting to compare that attitude with the Government's approach on other matters, such as the GCHQ affair, when they refused to consult. Is it not time that the Government decided to increase the death grant in the interests of all those who are suffering because it is so low?
§ Dr. Boyson
The Labour Government did nothing to change the basis of social security. They tinkered with bits and pieces, but did nothing radical. We have set up four surveys—on children and young persons, supplementary benefits, pensions and the age of retirement, and housing benefit. When we receive those reports, we shall make our decisions. The Government may be attacked for giving too much consideration to various matters, but we have asked the survey teams to report by the end of the year. I do not doubt the good intentions of the Labour party; I do not doubt anyone's good intentions—there are no demons inside me. However, we do not bow to the Labour party, because the Labour Government did nothing.
§ Dr. Boyson
I know that it is a serious matter and I will give the hon. Gentleman some serious figures.
By November this year, pensions will have increased by 83.6 per cent. since the Government came to office, against an expected rise in prices of 76.4 per cent. At the same time, more people are benefiting from the build-up of the earnings-related pension scheme. The maximum earnings-related addition for a newly retired person is over £15 a week.
§ Dr. Boyson
Yes. When Labour do something worthwhile, we agree with it. Labour Governments are bound, even by accident, to get things right occasionally, and we give them credit when they do.
I remind hon. Members that the last Labour Government presided over inflation of 112.6 per cent. 575 between 1974 and 1979. Inflation under this Government, over a similar period, has been 63 per cent. We do not like that, but it is only just over half the rate under Labour. Runaway inflation is a disaster for pensioners, anyone with savings or those living on fixed incomes. The improvement in controlling price rises is the Government's most important gift to pensioners.
§ Dr. Boyson
I will check the hon. Gentleman's figures tomorrow, but I do not doubt that he is correct. However, let us remember that all those who saved in piggy banks, building societies or the Post Office savings bank lost more than half their money under the Labour Government. I know the working class as well as any Labour Member, having been born into it. People saved all their lives so that they could have a decent retirement and their savings were destroyed. The people who suffer from inflation are not the rich, but the poor. It always amazes me that Labour Members do not understand that. Poor people do not invest in foreign stamps, gold or land; they rely on their savings. Inflation destroys the pride of the poor and hardly touches the rich.
Apart from the benefits that we are pledged to protect, we will this year maintain the value of all the main benefits, including family income supplement, mobility allowance and the supplementary benefit scale rates. Child benefit will be maintained at its highest ever level. The retirement pensions earning rule will again be increased by more than inflation — from £65 to £70 a week. Following last year's increase of 14 per cent., that underlines our intention to abolish the limit when resources permit.
I wish to deal with two issues in depth—"creep" and the scale margin.
§ Dr. Boyson
Most people know that we do not have 52 weeks in a year. We have 52 weeks and one day in a year. In a leap year, we have 52 weeks and two days. That is creep; it creeps on.
§ Mrs. Margaret Beckett (Derby, South)
Will the hon. Gentleman accept that, as the Government crept two weeks forward in 1980, there is no need for them to creep forward another week this year? Should they not be creeping back?
§ Dr. Boyson
If the hon. Lady could add up, she would know that we must go back a week every four or five years. I will explain what would happen if we did not "creep".
The uprating this year will take effect on 26 November, which is 53 weeks after the last uprating. Some hon. Members seemed to think that that was a trick designed to deprive pensioners of a week's benefit increase. It is nothing of the sort. When we introduced the requirement 576 that upratings should take place by the end of the month of the anniversary of the last uprating the right hon. Member for Salford, East (Mr. Orme) recognised what he calledthe problems of the British calendar"."Creep" is part of the problems of the British calendar. Every year contains one day more than 52 weeks and a leap year contains two days more than 52 weeks.
The right hon. Member for Salford, East accepted the need for the uprating to be fixed to prevent it sliding forward. In a debate in the Standing Committee on the Social Security Bill 1980 he said:We are trying to set a date in the middle of the month which would become more or less fixed" — [Official Report, Standing Committee E; 12 February 1980, c. 317.]We must have an interval of 53 weeks every few years or the uprating will slip forward gradually until it moves right out of November into October. The mathematicians among us will realise that in 50 years' time we would be uprating in mid-summer. If we had upratings every 52 weeks, as Opposition Members seem to want, the date would creep forward every year until, by my reckoning—Opposition Members should check that and inform me if I am wrong—around the year 2243 we would be uprating on 1 January, with another uprating on 31 December—two upratings in one year.
§ Mr. Boyson
We are optimists and live long. We plan for the future. Opposition Members are supposed to be the planners' party, but we are looking after the next 200 years.
§ Mr. Andrew Rowe (Mid-Kent)
Would the problem be eased if we were to adopt the Greek calendar? That would also solve the vexed problem about Easter.
§ Dr. Boyson
I am sympathetic to that view. However, we must sort out social security before we adopt the Greek calendar.
§ Dr. Boyson
The double uprating would occur in 300 years' time, not 200 years' time. I admit that I was totally wrong. It is nice to know that the Opposition are right from time to time.
I should now like to mention two of the more important changes we will be making. To start with the supplementary benefit changes, I should like to refer to two changes in particular which will come into effect in August. First, people on supplementary benefit will in future be able to claim reimbursement of fares to visit relatives in residential homes and hostels. Until now fares have been payable only for visits to close relatives in hospital, and this extension represents a further step in the Government's commitment to community care by ensuring that a person discharged from hospital to a residential home or hostel can continue to receive visits.
When my hon. Friend the Member for Braintree (Mr. Newton) replied to the previous debate, he pointed out that, although the concessions were small, they were important to the individuals involved because without them they could not fulfil their social and family duties.
Secondly, in order to provide an incentive to supplementary benefit claimants to take on part-time work, we shall extend single payments for work expenses 577 to people taking up part-time work of not less than 15 hours a week. This will include people working on projects under the community programme.
I turn to the vexed problem of the available scale margin. As hon. Members know, weekly payments of supplementary benefit consist of: first, the "scale rate"—an amount for claimants' normal living expenses; and, secondly, in some cases, an extra amount for special expenses, such as special diets or heating needs.
In 1966, under the Labour Government, a standard long-term addition to the scale rate was introduced for supplementary pensioners and others, except unemployed people, who had been getting national assistance or supplementary benefit for two years or more. One reason for its introduction was to provide an extra margin of expenditure for these groups and, for example, to help towards the purchase of new household equipment. But it was also intended to reduce the need for discretionary additions to weekly benefit, the number of which had grown rapidly in recent years, and to limit the need to ask detailed questions about special expenses is something with which all hon. Members would agree. The Labour Government of the time therefore decided that the "long-term addition", at that time 45p, should be offset in full against any weekly payments for special circumstances, including payments for extra heating costs, to avoid double provision for the same expense. The long-term payment was introduced at 45p instead of making a payment in another way. That was sensible, and I do not attack the Labour Government for it. I am merely filling the background to the available scale margin.
During the Second Reading debate on the Bill, the Minister of Pensions and National Insurance in that Labour Government, the right hon. Margaret Herbison, said:The purpose of this long-term addition is a simple one. It is to remove in these cases the need to inquire into the small day-to-day expenses for which the bulk of the discretionary allowances are now made. Under the new scheme no special inquiries will be necessary in long-term cases, unless there are indications that there is chronic ill-health or disability giving rise to such heavy expenditure that further provision is necessary. Thus, one of the features of the existing scheme which has both made it difficult for the elderly person to estimate what he would be likely to receive if he applied and which has been a source of embarrassment and dislike to those who have applied will be eliminated." — [Official Report, 24 May 1966; Vol. 729, c. 341.]Long-term supplementary benefit was introduced at 45p instead of giving the benefit in other ways.
§ Mr. Rooker
Given that the year was before decimalisation, will the Minister tell us whether we are talking about 3s. 9d. or 9s.?
§ Dr. Boyson
In that case we are talking about 45p in current terms. The amount does not matter for my argument. Long-term supplementary benefit then was at a higher level so that benefits would not have to be paid out in other ways. People did not have to apply for it, but received it regularly.
In effect, therefore, the long-term rate was intended to pay for most special expenses for which additions had been given under the National Assistance Act 1948, so removing the embarrassment to claimants of claiming and also reducing administrative costs in dealing with claims.
578 The long-term addition was increased to the equivalent of 50p in 1968, by the then Labour Government, who continued to offset all of it against additional requirements in 1972 the Conservative Government of the time increased the long-term addition of long-term supplementary benefit to 60p, but, for the first time, part of the addition was not offset. The amount available to be offset remained at 50p.
The following year, 1973, the Conservative Government decided to incorporate the long-term addition into a new set of long-term scale rates. They also decided to keep the amount to be offset—now for the first time known as the "available scale margin"—at 50p. That Government also decided in 1973 that the ASM should no longer be offset against additions for heating. If we had continued as before, the available scale margin would have been off-set against them. Since then, as we all know, the difference between the long-term and the short-term rates has steadily increased. From November 1984, for example, a couple on the long-term rate will be £11.55 better off than they would be on the ordinary rate. But the amount of this extra benefit which is offset against additional payments for special expenses—the available scale margin—has not been increased since a Labour Administration put it up to 50p 16 years ago. It therefore seems reasonable, and arguably long overdue—and within the then Labour party's philosophy — that we should increase the margin to bring it up to the relatively modest level of £1.
It is a modest increase. My hon. Friend the Member for Braintree made the point in the debate on disabled people on 29 June. He said:the chief Opposition Front Bench spokesman on social security, the hon. Member for Oldham, West (Mr. Meacher) described the difference between 50p and £1 as paltry when the proposal was announced. It does not lie in the mouths of Opposition Members now to pretend that there is some massive attack on the rights of the sick, disabled and elderly"—[Official Report, 29 June 1984; Vol. 62, c. 1330.]
Nor is it unreasonable that the margin should be offset against heating additions, as it was until 1973. But we are not applying the margin to heating additions for children, who do not receive the long-term scale rate. Indeed, for the first time we are exempting additional payments for children's laundry and for boarding-out fees from the available scale margin, which will benefit more than 3,000 families who would otherwise have problems. Therefore, what we are doing with the available scale margin is taking a modest step back towards the original principle underlying it when it was introduced by the Labour Government. It is equivalent to a return to clause 4 of the Labour party's constitution — [Interruption.] I have clause 4 here in case anyone wishes me to read it. If I decided to be mischievous, I could compare this step back towards first principles with the Labour party moving back to its basic objectives—to clause 4 of its constitution.
§ Dr. Boyson
I have never said that the hon. Gentleman was inconsistent. All that I said was that if one followed the Labour party's principle the figure would now be £11.55. The figure for the available scale margin was equivalent to the difference between their long-term and 579 short-term rates. Hon. Members may not like it, but one can see that from previous debates. They may have changed their minds—they would be right to do so—but that is what happened in the beginning. It may hurt them now, but those are the facts.
Our changes to the available scale margin should also be seen—Opposition Members must listen to this—in the context of improvements made by the Conservative Administration in the coverage of the long-term supplementary benefit rate. From 1966 to 1980, only pensioners and other claimants who had been in receipt of supplementary benefit for two years or more—except the unemployed who have never been able to qualify—qualified for the long-term rate. In 1980, the Conservative Government reduced the qualifying period for non-pensioners to one year. Similarly, in 1981, the Conservative Government changed the rules so that unemployed men aged more than 60 could qualify after a year; and in 1983 the Conservative Government again extended the rules so that men aged more than 60 qualified automatically without having to wait for a year. Those provisions did not exist under the Labour Government who were in office until 1979. We have also solved the invalidity trap by taking into account time spent in receipt of long-term incapacity benefits against the qualifying period for the long-term rate of supplementary benefits. Those are major achievements.
At the same time as proposing changes to the available scale margin, we plan to extend the scope of heating additions, as my right hon. Friend the Secretary of State announced in the House on 18 June. We propose to introduce new automatic heating additions at the higher rate of £5.20 for supplementary pensioner householders aged more than 85. It is estimated that about 90,000 people will gain from this. We are also extending automatic heating additions to all supplementary pensioner householders aged more than 65, as a result of which a further 80,000 people will gain.
I remind the House that in 1979 the Conservative Administration introduced automatic heating additions for householder claimants with children aged under five and for supplementary pensioners aged 75 or more. In 1980, we reduced the qualifying age for supplementary pensioners to 70. Therefore, the Conservative Government have considerably increased the range of people entitled to heating additions.
We have also increased the real value of heating additions. Between November 1978 and November 1983 we increased the basic rate by about 140 per cent. compared with an increase in fuel prices of about 100 per cent. That tells the hon. Member for Birmingham, Ladywood (Ms. Short) where the extra money has gone. Therefore, heating additions are worth more than ever before. We expect to spend about £400 million on heating additions this year, after allowing for the savings from applying the available scale margin to heating additions. That represents about £140 million more in real terms than was spent in the final year of the Labour Administration. There is no question about what the Conservative Government are doing to help people in need.
§ Dr. Boyson
The average price of gas has increased by only 2 or 3 per cent. during the past two years, but when 580 the Labour party was in office it was increasing by that amount almost every six weeks. The hon. Member for Perry Bar should not say too much on that point. I have great respect for the hon. Gentleman, but he is not on a winning wicket with that point.
Apart from the uprating of child benefit, which I have already mentioned, two sets of regulations on child benefit are before the House. The first are the Child Benefit (Residence and Persons Abroad) Amendment Regulations 1984, which reduce the period during which child benefit is payable on a temporary absence abroad from 26 weeks to eight weeks.
§ Dr. Boyson
If the hon. Lady listens to the next sentence, she will understand. Child benefit is linked to residence in this country, and the new period of eight weeks will be sufficient to take account of holidays and other short visits abroad and will avoid short breaks in payments. In its report, the Social Security Advisory Committee considered that, on the whole, the change was reasonable. I hope that hon. Members have absorbed that sentence.
§ Mr. Max Madden (Bradford, West)
What justice is there in British citizens, or the children of British citizens living in this country perhaps with relatives, who can receive child benefit although they may reside here only for a short period, whereas child benefit is denied to the children of other British citizens who, for cultural and traditional reasons, visit their countries of origin often for much longer than eight weeks? Why are they denied child benefit if they are away for more than eight weeks but other British citizens are not denied it? That is discrimination and injustice, whether or not the Social Security Advisory Committee believed so.
§ Dr. Boyson
People see plots everywhere. If people are abroad for more than eight weeks, whether they are black, white or striped, they will not receive child benefit. There is no discrimination involved. It is the same for everyone, including Labour Members, Conservative Members and even alliance Members. I notice that one of the latter has joined us. We make rules for everyone who lives here. We are not discriminating on the grounds of race, religion or sex. Eight weeks would appear to be a reasonable period. The school holidays in Britain last for only four weeks, so those children should not be out of school for any longer.
§ Dr. Boyson
I shall give way, but I trust that the hon. Lady will not try to say that this is a conspiracy.
§ Ms. Clare Short
Why has the rule been introduced? The Minister knows, because we talked about this matter last week when I visited him, that families who originate in the West Indies or the Indian subcontinent have parents, aunts and uncles living abroad who are often not allowed to visit them here. Families, especially those with children aged under five, wish to visit their grandparents. It is clear that the change will hurt especially the Asian community. I wish to know why the Minister has introduced it. If he does not explain, I shall conclude—I believe rightly—that it is intended to discriminate against the Asian community.
§ Dr. Boyson
Again, hon. Members see conspiracies everywhere. For one thing, the normal school holidays are 581 four weeks, not eight weeks. It strikes me that the biggest discrimination is taking children out of school for long periods. Those who understand child benefit will know that it is linked to the payment of tax, and people cannot pay tax if they are not here. The period of eight weeks is fair enough.
§ Dr. Boyson
The two are linked. We do not have time to run round every rabbit warren, so let us move on.
§ Dr. Boyson
The same could be said of Opposition Members.
The Child Benefit (General) Amendment (No. 2) Regulations 1984 and the related amendments to the Supplementary Benefit (Conditions of Entitlement) Regulations clarify and simplify the arrangements which cover the benefit entitlement of unemployed people who are studying. I know that many constituents will raise this point with hon. Members, so to reduce the number of letters that I shall receive, perhaps hon. Members on both sides of the House will pay close attention to what I say. The regulations introduce a statutory definition of full-time education, for child benefit and supplementary benefit purposes, of more than 12 hours' instruction a week, excluding homework, meal breaks and unsupervised private study. The main effect is to clarify the amount of study that unemployed young people aged between 16 and 19 can do during the three-month qualifying period for the 21-hour rule without putting their supplementary benefit entitlement at risk.
The changes were welcomed by the Social Security Advisory Committee as introducing a clear definition of full-time education for child benefit and supplementary benefit purposes. The committee ended its comments by saying:We are particularly glad that the proposed definition is in terms of hours of supervised study, since we understand that a number of difficulties have been caused by the inclusion of homework within the 15 hours allowed.That has nothing to do with saving or spending. We are trying to amend the difficulties of administering a system based on 15 hours of study, of which a changeable amount could be homework, about which nobody knew. With general agreement, we have pinned the requirement down to 12 hours of instruction, and whatever is done as homework is in addition. This has not been done to decrease any benefit but to make it simpler for the institutions and the benefit officers to know what is going on.
There are two sets of regulations before the House that concern family income supplement. The first regulations are straightforward and increase the FIS levels from 27 November. The second set of regulations give effect to the proposal announced by my right hon. Friend the Secretary of State on 18 June that changes in the FIS level should, like all other changes in circumstances, only be taken into account when a new award is made. This is achieved by a simple revocation, but there are a numer of provisions leading to renewal awards that I have no time to explain.
Certain decisions have been made about this so that on balance, people do not lose out. If any hon. Members have queries about this, I am sure that my hon. Friend the Under-Secretary of State will deal with them later.
§ Dr. Boyson
My hon. Friend is a very effective end of innings batsman, as we saw before the Division at the end of the previous debate.
I have mentioned some of the more controversial changes that will take place in November, but I shall also remind the House about an improvement that we shall be making, and one of which I am particularly glad in a year in which we celebrate the 40th anniversary of D-day. We are able to direct some special help to elderly war widows. War widows receive differing amounts, according to the year in which their husband was killed. These days, pensions are built in to service conditions and today widows of service men killed have better conditions than do widows whose husbands were killed in the second world war. By this change, we are helping widows whose husbands who fought in the first or second world wars. We propose to increase the existing age allowances by over 15 per cent. and to introduce a new rate of £12.50 a week at the age of 80. Some 50,000 war widows will benefit from these improvements.
With regard to uprating, hon. Members will know about the strike by a number of computer staff at the Department's central office at Newcastle, which is currently disturbing payments of retirement pension, widow's benefit and child benefit. I deplore this action, as it is causing concern and anxiety to pensioners and other beneficiaries. We remain ready to resume negotiations, which the unions broke off to take strike action, and therefore I welcome a recent initiative by the Advisory, Conciliation and Arbitration Service, reported in a number of newspapers that hon. Members will have read this morning, to bring both sides together. The Government gladly accept this offer. I hope that this inititative will also be welcomed by the unions and that a speedy settlement can be achieved, so that there will be no delay in the uprating.
Given an early return to normal working, I am confident that the uprating will be completed broadly on time. I can assure the House, however, that whatever happens, no pensioner will lose any of the increase as a result of the dispute. Every effort will be made to pay the increases with as little delay and inconvenience as possible.
This year's uprating package is fair both to those who receive benefits and those who pay for them. Many of those who are in work are having to learn that pay rises have to be earned by increased productivity. It is right that during a recession we should be particularly concerned about those who are most in need, but we also have to strike the right balance. We believe that this uprating will maintain the real value of all the main benefits and scale rates, and it also concentrates some small but worthwhile improvements where help is most needed.
§ Mr. Michael Meacher (Oldham, West)
As is so often the case with the Minister, we have had a great deal of knockabout. We have heard a lot about "creep" in the year 2243, we have had a lengthy diatribe about the Labour Government in the late 1960s, we have had many selective statistics about previous selected years, but we have had rather little about some of the more important aspects of these regulations.
I make it clear that we are opposing the uprated regulations not because we oppose uprating but, because, 583 as with so many previous Tory uprating regulations under this Government, these regulations are pitted with hidden cuts. Once again, the Government have used what should be a relatively straightforward and routine operation for a major cuts exercise, worth more than £100 million.
I shall respond first to the Minister's remarks at the end of his speech. In one other important respect, the Government have seriously mishandled this uprating exercise. I refer to the current dispute at Newcastle and at Washington. That has clearly been provoked by the Government, as I shall go on to explain. As a result, the Government have put the uprating date of 21 November at risk.
§ Dr. Boyson
It would help for me to intervene now, as I do not believe that the Government have provoked anything. I have been involved in this episode from the beginning, and the Government have bent over backwards to keep the office working. It would help considerably if the Opposition, instead of making cheap remarks, would ask the unions, as we have done, to accept the conciliation of ACAS.
§ Mr. Meacher
My remarks are not cheap, but I am more than happy to recommend that there should be a resumption in negotiations. As the Minister mentioned this dispute, it is only fair that the other side should be put.
The Government's proposals, which led to strike action being taken, were made on the basis of saving money by running shifts in a cheaper way and by, in effect, taking money out of members' pockets and expecting them to work more unsociable hours for pleasure. Originally, it would have cost the Department £44,000 to meet the trade union's demand to protect the position of employees. Industrial action has been going on for so long that it has already cost well over £10 million, and the costs rapidly escalate every week.
It is to be hoped that both sides will return to serious negotiation through the mediation of ACAS on this issue, so that pensioners and other beneficiaries will not be disadvantaged because of the uprating date. That requires a recognition from the Government that greater efficiency, which we support, cannot be obtained by worsening employees' take-home pay and conditions of service. I hope that there will be a speedy conclusion of the dispute.
I repeat that there are £100 million-worth of cuts in this package. This is detailed in a parliamentary answer that my hon. Friend the Member for Pontypridd (Mr. John) received on 21 June. In it, the Minister listed the additional expenditure involved in these regulations, which comes to £29.4 million. The cuts, listed in the same place, total £97 million—those are the Government's figures. However, the Minister has excluded from the cuts set out in the answer the one week delay in the uprating for pensioners and others. That date should have been 19 November, but it has been put back to 26 November.
The Minister's defence of this, by reference to "creep"—an interesting word which may come into the social security vocabulary but which nobody had heard before tonight — is farcical. As long as there is a 52-week 584 interval preserved between upratings, there is no reason why upratings should not come forward one week in the calendar year every five or six years. The Minister seems concerned about "creep". Is he satisfied with the Government's achievement four years ago, when there was a delay at the expense of the pensioner of two weeks in the uprating which saved the Government £100 million? There is absolutely no reason this time why pensioners should be deprived of the uprating for one further week. The order represents a further cut by the Government. The Minister may disagree, but I believe that the cost of the delay for the further five days amounts to between £35 million and £40 million. Therefore, all told, the cuts in this package amount to about £135 million.
The nastiest element in the package has been referred to by the Minister and is the change in the obscure "available scale margin". Indeed, we are grateful to the Minister for the history lesson that he gave us. However, that is the name given to the 50p that is currently deducted from the total of weekly additions that those on long-term supplementary benefit receive, except where the additions involve heating, blindess or age. I think that I have got that right, but it is, indeed, a very obscure point.
I believe that there are more than 2.25 million claimants on the long-term rate. Almost by definition, they are some of the poorest people in Britain. However, 80 per cent. of them will lose out as a result of the changes proposed in the regulations. That is why we shall vote against them. Nearly 1.5 million of them will now have between 50p and £1 a week taken away from them and pensioners—I am sure that the hon. Member for Brighton, Kemptown (Mr. Bowden), who is not in the Chamber at present, will be concerned about this—will be the largest group. Of course, we are very concerned about that. Families with children—which were recently identified in the Policy Studies Institute report as suffering the greatest hardship of those on benefit—will also be forced to take a cut. Indeed, 80,000 of them will lose between 50p and £1. In our view, this is a particularly mean, nasty and unnecessary measure. It is screwing £86 million—that is the total—out of the very poor, despite the fact that in the last Budget, four months ago, the Government gave away more than £700 million to the very rich through the abolition of the investment income surcharge, a halving of stamp duty on stock exchange transactions, a relaxation of capital transfer tax and a raising of the higher rate thresholds. It is the contrast in the treatment between the poor and the rich that we find so absolutely objectionable.
If there must be public expenditure cuts—and we do not accept that—the very least that is fair is that the money should be taken equally from all sections of the population or, as we would say, that more should be taken from the rich who can bear it more. As has happened so many times before, the Government have done the exact opposite. Moreover, in doing this, the Government are flying in the face of the advice that they have received from their own civil servants.
In a pamphlet entitled "Social Assistance" the Whitehall inquiry recommended:abolition of the 50p offset would simplify the scheme and achieve a greater measure of equity.Those are not our words. It is not often that the Government now set up an independent inquiry. They prefer to stack them with Ministers, but a few years ago they had an independent inquiry and that was its conclusion. Given that this Government are the most 585 inequitable in modern times it is perhaps not surprising that, instead of abolishing the available scale margin, they are doubling it.
Our next objection is to the whole range of cheese-paring cutbacks in benefits for children. Instead of the Government taking a positive view—as any Government should do, in the circumstances—of the overall benefit framework needed in child care, they have given us a whole series of nasty little cuts that are the very opposite of a planned and sensible system. There is no way of rationalising such cuts. One example is the delay in the family income supplement uprating. For the first time, the Government are decreeing that existing claimants will not receive the new level of benefit until, or if, they make a fresh claim.
That trip wire involves an £11 million cut. It will affect 200,000 of the poorest families in this country and will take away £65, on average, from a typical two-child family. It will also deprive some families of as much as £100 to £150. That is a big cut, as anyone who has ever tried to live on FIS will know. It means that this year the Government are increasing child benefit by £36.40 for a two-child family, but are at the same time not only cancelling that child benefit increase for the lowest paid families on FIS but, as one can quickly see from the figures, extracting a further major cut of £30 million from those poorest families with children. That cannot be right.
Another example of the Government's cuts mentality that destroys a rational system of child care involves the abolition, this November, of the short-term child dependency additions. Surely, in logic and fairness, families should receive the same level of benefit for their children regardless of whether they are in work. That is the only fair and proper system that will preserve incentives. But the Government have systematically reduced the real value of the child dependency additions to those out of work. We believe that that is wrong, for the reasons that I have given. Another example of inequity in child support arrangements under these regulations is the meanness of the child benefit increase. I am only too glad to offer in support of my case a quote that comes from an unusual quarter. The Conservative National Women's Committee recommended:Child benefit should be increased in line with any increase in tax allowances … remembering that child benefit has replaced the former system of child tax allowances.That is absolutely right. However, whilst the personal tax allowances will have increased by about 13 or 14 per cent. between April 1978 and November 1984, child benefit will have increased over the same period—assuming that the Government's inflation forecast is about right—by only 2.7 per cent.
I am indebted to the Child Poverty Action Group—as no doubt all hon. Members are—for its excellent advice on such debates and for some of its calculations. But as it has made clear, on that basis, if child benefit were to be increased by the same amount in real terms as tax allowances, it would rise in November to £7.60 instead of £6.85. In other words, there should be an increase of £1.10 instead of the Government's 35p. That is the measure of the shortfall in the increase in this crucial benefit, which perhaps lies right at the heart of the social security system.
Our last major objection to these regulations is their unjust and discriminatory treatment of young people, whether in work or unemployed. In our previous debate, I used the phrase "a vendetta", and the Minister did not 586 like it. But if I give my reasons, he may see why I feel so strongly. First, it is surely incongruous that it is now proposed that school leavers' earnings should lead to a deduction in their parents' benefit. Surely a 16 or 17-yearold recent school leaver, who is considered old enough to support himself or herself when in work, is equally entitled to an independent income when unemployed. Surely that is a sensible principle.
Secondly, the Government are introducing new rules under these regulations regarding unemployed young people which will make part-time study much more difficult. The Government propose that under the so-called 12-hour rule—the system is incredibly complicated for hon. Members, so I hate to think what it is like for unemployed youngsters—young people aged under 19 who have not yet been unemployed for three months will not be entitled to benefit if they study for more than 12 hours a week. What a rule to introduce into the social security system. The effect will be that thousands of genuinely unemployed young people who want to improve their job prospects by study while looking for work will be denied the opportunity to do that. That cannot be right, even by this Government's philosophy.
We are not opposed to uprating in principle, but we oppose these uprating measures for five reasons. First, we oppose them because interspersed in these upratings are major and damaging cuts of about £110 million. Secondly, we oppose them because, under the social security regulations, cuts are being directed exclusively at the poor while, at the same time, under the Government's Budget orders this year, much larger sums are being given away in huge tax reliefs directed exclusively at the rich.
Thirdly, we oppose them because thousands of families on family income supplement—nobody disputes that they are among the poorest families in work—will lose far more than they gain from the child benefit uprating by simultaneous cutbacks in the operation of FIS. Fourthly, we oppose them because they deliberately deprive young unemployed people of the opportunity for part-time study so as to improve their job prospects.
Fifthly, we oppose them because, yet again, the Government have turned their backs on what we believe is now a central deficiency in the social security system, and that is the need to extend the long-term rate of supplementary benefit to the long-term unemployed; I know that that finds echoes among some of the more civilised elements on the Government Benches.
Because, in so many ways, these uprating measures are more about cuts—mean, niggardly and unjust cuts at that—than about uprating, my hon. Friends and I will be voting against them tonight.
§ Mr. Andrew Rowe (Mid-Kent)
I wish to pursue a narrow point which the hon. Member for Oldham, West (Mr. Meacher) laboured earlier, because it is a point with wider implications. I speak about the benefit for those wishing to study.
Even within the narrow confines of our present policy, why must we have this restriction? Is it not more to do with policing the benefits system than with adding any advantage to the recipients of benefit? The SSAC has said that it does not believe that the qualifying period is the best way to separate bona fide from frivolous students. Yet we persist with it. Will the Minister explain why?
587 If we accept the need for a qualifying period, then this change — which, given that it did not accept the principle, was recommended by the advisory committee—is a modest improvement. Under the previous rule, the 15 hours a week excluded homework and there were some horrifically mean-minded cases where young people were caught studying at home — no doubt under the bedclothes with a torch—and debarred from benefit. Now at least they can undertake unlimited homework. From his experience as a headmaster, does the Minister consider that the 12 hours allowed to young people is enough to enable a student to study for two A levels, remembering that that qualification is the gateway to higher education?
The problem is only a symptom of a much wider conundrum. For historic reasons, supplementary benefit still carries the connotation of something for nothing. It is understandable that groups in society who are in work, who earn low wages and who nevertheless manage to keep their homes neat and their children tidy, should feel resentful when they see other people who, in their eyes, are doing nothing, bringing home in some cases a sum not unlike that which they work so hard to achieve. Indeed, Beveridge perpetuated the idea of a work test.
But we are now in new circumstances and the Government, for example, find themselves, for entirely compassionate reasons, in a difficult dilemma. I, like all Conservative Members utterly detest involuntary unemployment. Ministers have constantly repeated their detestation of it and are wholly committed to reducing it. So that nobody, inside or outside the House, should misunderstand that message, Ministers come here regularly and speak as though the ending of unemployment were not only the goal of policy but as though a return to full employment would be a return to normality. That carries with it the implication that the traditional principles of the benefits system should endure unaltered, with the work test still, in certain ways, in place.
I believe that the time has come to move from that position. In one part of our policy the Government are encouraging people to leave work voluntarily. Early retirement and job-sharing are examples, and the people who accept them are, in a sense, heroes of the Great British monarchy as they make their contribution to easing the unemployment problem.
At the same time, however, the Government are persisting in rules that lay down that if one is not available for work—if one is not competing in that market which is so hopelessly overcrowded at present—one shall have no benefit. There is nothing heroic about the people at that end of the scale. Yet those who have the least chance of finding employment in society are the low skilled and the poorly qualified.
This provision hits at them, and it hits them at the very moment when they are taking steps to better their chances of finding work. It is then that they are cut off from benefit. That is absurd and, non-Conservative and it must be changed.
The Government must now accept that even without political strikes, it will take many years to end unemployment. To say that is not to presage a relaxation in the war against it. However, it changes the assumptions behind the benefit rules. It opens the path to accepting the principle — which has existed in practice for many 588 people—of a guaranteed minimum income which would eliminate destructive policy rules such as those we are discussing. I hope that the Minister will comment on the remarks that I have made.
§ Mr. Tony Lloyd (Stretford)
I shall be brief because several other hon. Members, particularly on these Benches, wish to speak in the debate.
As I listened to the Minister, I thought it curious to view him as the human face of the Tory party. I also found it curious to listen to the history lesson that he gave, containing almost no comment about the deficiencies that my hon. Friend the Member for Oldham, West (Mr. Meacher) highlighted.
It is as well to realise that we are discussing the stark contrast between the Government's treatment of the rich and of the poor. In this year alone, we are witnessing the cumulative effect of tax cuts, in the main to the rich, of about £4 billion. Yet, as my hon. Friend the Member for Oldham, West said, the Government are imposing cuts on the poor of about £135 million, an act of almost monumental pettiness compared with the amount that the Government are giving away.
I was interested to hear the Minister of State say that child benefit was linked to the taxation system. I believe that that statement raised some eyebrows among Labour Members. If the Minister is prepared to defend that position, he must defend equally the view of my hon. Friend the Member for Oldham, West, who said that the uprating of child benefit falls considerably behind the operation of tax thresholds and tax bands. If child benefit is linked to taxation, that link should be formally analysed. Child benefit should be uprated to the level of £1.10 to bring it back into line with the various tax thresholds during the past five years. I hope that the Minister will say when that action will be taken.
It is important for the House and the country to recognise that, despite the Minister's protestations the action on changing child benefit regulations involving residents and persons abroad is especially squalid. How much money do the Government intend to save? Even if the Minister is right in his submission that the action was not taken to discriminate against various ethnic groups — and who am I to challenge his view? — the Government have taken an incredibly mean-minded step because the measure will save almost no money. It will, however, cause genuine worry to many members of the Asian and various other ethnic communities who, because of family habits and practices, take children abroad for considerably longer than eight weeks. It is important that we recognise that the measure will hurt individual families.
Slightly more than half of my constituency is in the Conservative-controlled borough of Trafford, in which discretionary grants for students have not existed for many years. It may not seem wholly unreasonable to hon. Members to accept that many of my constituents in the student age group think that the supplementary benefit regime should support those who wish to pursue education when they know very well that they have no opportunity to go into full-time employment. My constituents are discriminated against because the local authority denies them the right to grant and because there is no acceptable provision from central Government sources through the benefit structure. That discrimination would not occur in 589 other areas—for example, in Manchester where some of my other constituents live. It is time that we reviewed the position of students vis-a-vis those claiming supplementary benefit, but that has not been done in these regulations.
The most disgraceful aspect of the uprating involves those who are denied the long-term rate of supplementary benefit. We are talking about a mere £485 million, which would allow the Government to bring in this reform. That figure can be contrasted with the £4 billion which the Government are giving away to the very rich in tax cuts. We can, therefore, note the Government's precise priorities—they talk about the poor as the peripheral and the uprating of benefits for them as a residual part of the Treasury's calculations. The rich will again inherit the benefits of our society.
If we accept the definition of "poverty" as a prison with glass walls, the poor, who once again have not been given an acceptable standard of living in our society, will look out of their glass-walled prisons and deeply resent the Government's actions.
§ Mr. Alistair Burt (Bury, North)
Looking back through Hansard one notes that debates on changes in social security benefits tend to follow an all too predictable pattern. The Government of the day make a case that, despite economic difficulties and crises of one sort or another, they have ensured that the benefit system has protected those whom they consider to be the very poorest from the effects of rising prices and poverty. The Government get a certain amount of support from their Back Benchers—apart from tonight—and a certain amount of criticism from the same source. I shall have to do both jobs.
For their part, the Opposition, regardless of party label, launch a predictable attack claiming financial mismanagement, that more money should be spent to protect more people and that, given the chance, they could do things much better. That last point flies in the face of all previous evidence, which tends to suggest that when they were last in government they behaved more or less the same as those they seek to criticise from the Opposition Benches.
To a certain extent, that same pattern of debate has been followed today, and for a few moments I shall probably continue in the same fashion. There is little doubt that the present Government have succeeded in convincing the vast majority of British people that public expenditure, no matter how it is given away, is largely financed by the taxpayer. The free lunches in the British economy brought about by the post-war boom began to vanish in the late 1970s, and reality was brought home with a vengeance during the 1980s. Those who watched the very fine television series recently on BBC2, "All Our Working Lives", cannot fail to have been impressed by a cogent analysis of British industrial history which in a nutshell demonstrated that one can write whatever one likes upon the wall, but one cannot always make a fool read it.
If the day of reckoning has arrived for British industry, it cannot be far away for our benefit system because, stripped of various pleas for more money for this or that group of disadvantaged people, this debate should really be about the system that underpins the various benefits.
Despite the claim that severe ideological pressure has coloured the Government's thinking towards public finance, there is little real evidence to suggest that the 590 benefit system has been destroyed in the manner claimed by some Opposition Members. Real spending on social security benefit has continued to increase since 1979. Despite the financial constraints of recent years, the Government have maintained all the key elements of the social security scheme and are spending a greater percentage in real terms on that scheme than when they first took office.
Facts and figures on the Government's record have already been given. I believe it is fair to say that the very poorest in our society have been protected. It would always be nice to spend more; but to examine social security uprating solely in the light of "how much money can we give?" is fatally unrealistic. The link between public expenditure and the economy generally is now accepted by all and was certainly accepted by the last Labour Government who failed on occasions to achieve a naive, though well-meant, earnings-linked target. If there is one thing more cruel than poverty, it is a party, whether in government or opposition, which raises the hopes of the poor and then dashes those hopes due to the unreality of its economics.
Especially helpful this year has been my right hon. Friend the Chancellor's raising of tax thresholds and the continuing attention paid to heating additions. Perhaps the DHSS would have to pay out less in heating additions if it were able to fire a warning shot over the bows of the Treasury to convince it not to put its fingers in the energy scene unnecessarily. To force electricity prices up—albeit by a minute percentage compared with the previous Labour Government—and then to raise heating additions to allow the poorest to pay for them is surely an object lesson from the "How Not To Do It Book of Political Savvy and Administrative Expertise". Certain things in the Government's benefit record have not been so good.
I spoke in the last housing benefits debate before today's and, without rehearsing all those ideas, I still think that it is crass to have a major review to decide how best housing benefit should be administered and to whom, while at the same time persisting with the sort of changes that produced the pressures to have the review in the first place. It will be no compensation to those who have been suffering because of the effect or threat of changes for the review at the end of the day to say, "We do not think those changes should have been made, and we shall now restore what has been lost."
It makes neither political nor administrative sense and it would have been far better to wait, as many commentators suggested, for the housing benefit review to complete its deliberations before any further decisions on housing benefit were made. Similarly, the reduction in supplementary benefit for more than 1½ million pensioners is most unwelcome. According to the Child Poverty Action Group, 20,000 families will lose up to 50p per week and 80,000 families will lose between 50p and £1 per week.
For the families on low incomes these reductions, the equivalent perhaps to just a few cups of tea for those of us in the House of Commons, can mean a great deal. A reduction in supplementary benefit does not make it easy for those of us on these Benches to seek to establish our claim that we intend to protect the poorest in our society.
Pious exhortations from the Opposition about what we should do ring a little hollow. One cannot seriously sit on th Opposition Benches and support two of the most 591 damaging strikes in the British economy in recent years and expect that same economy to be strong enough to provide more money for the people one claims to protect.
The days of the great claims for money to support more groups in society, regardless of the state of the public purse, have surely gone, and rightly so. In much the same way as politically motivated strikes in the docks and mines are sabotaging the economy, the same economy that last year managed to hand out nearly £1 billion to the mining industry, a demand for a great increase in public expenditure, willy-nilly, will sabotage the economy. In the same way that industrial strikes are often the worst thing for the working man, so a vast increase in public expenditure could be the worst thing to affect the poor.
We must face the fact that, like the National Health Service, the claims for expenditure on social security relate to a bottomless pit. It is difficult to find the correct balance and this Government, in much the same way in all fairness as all previous Governments, have tried to do their best. We are fast approaching a time when the public expenditure indicators on social security trends suggest that doing our best will not be enough.
I find it a great disappointment that neither this Government nor any previous Government have considered—though I now urge it upon them as a matter of great urgency — a fundamental and deep-rooted reform of the social security system along the lines set out by the Institute of Fiscal Studies in its recent publication entitled "Reform of Social Security".
It is that which goes to the heart of the problem that we have been discussing. The benefits system has few friends but many flaws. We have created a baffling system of means-tested benefits with many means-related benefits subject to different tests. We have created circumstances where few of those who administer the benefits truly understand the complexities of the benefits that they administer. Depending upon which Sunday paper one reads, either 5p or 10p of every pound of social security that is handed out is spent on administration.
In housing benefit alone, we have succeeded in creating a system designed to simplify which has produced only further confusion. If the social security system were designed to prevent poverty, it does not. Although we do not face—and claims to the contrary are fatuous—the poverty that the country faced in the 1930s, some 1.3 million households still struggle around the poverty line. There are a further 1.5 million households just above that.
The system created the poverty trap, a system which flies in the face of attempts by men and women to cloth themselves with the respectability of work without being financially penalised for so doing. The system has created marginal tax rates of over 100 per cent. for some families with children. In addition to the poverty trap, we have created the unemployment trap.
The system is so complicated that we know that many thousands of people eligible for benefits do not even claim them. What pressure would there be on the economy if the take-up were 100 per cent.? We have created a system which we know, and about which we tell ourselves from time to time and about which we do nothing, gives money to those people who do not need it and denies money to those who do.
The benefit of the system put forward in the Institute of Fiscal Studies' report is that it deals with some of those 592 fundamental problems. It tries to tackle the unemployment trap, the poverty trap, the black economy problems and the problems of low take-up by a simple system that combines tax credits with benefit credits. It can be done, and using new technology it is something that we should think about.
The acceptability of a social benefit and welfare system lies not just in the minds of those who receive the benefit, and should not be judged solely upon that, but also in the minds of those who pay for the system. In my view, the current social security system fails both tests. A pensioner saw me recently in my surgery and asked me why she should receive benefits with one hand and yet pay tax on them with the other. The complicated system of to and fro has gone on long enough.
Few of us in the House expect miracles from any Government. There is no production line for them, and we understand the constraints which tend to prevent them occurring, but we charge the Government not just with an obligation to present generations to create an economy which will be strong enough to allow individuals to provide for themselves, and a benefit system which will ensure that those who cannot so provide are assisted, but we also charge the Government with an obligation to future generations. That obligation takes the form of a charge upon Government to read the writing on their own wall, to anticipate problems and take action in good time to prevent them. With social security, that writing is well and truly upon the wall.
A combined tax benefit system has much to recommend it, and it is clear from the public reaction to the Institute of Fiscal Studies' publication that there is scope for thought and immediate consideration of how the system might work.
§ Mr. Rowe
Does my hon. Friend agree that in the short term, the major preoccupation should be to ensure that the many reviews which the Government have had the courage to initiate should not take decisions which make the combined system of which he is such a proponent more difficult to attain? There is no doubt that it will take a long time to introduce.
§ Mr. Burt
Absolutely. The short-term reviews of social security are to be welcomed, but I believe that to describe them as fundamental and radical would probably be wrong. They will be too short-term for that. I doubt whether the reviews will result in anything more than realistic tinkering with the present system and also whether a full-scale, detailed review along the lines that I am suggesting would be affected by any results of the current review. We shall need to wait and see what they produce. I believe that, with the best will in the world, it will be only tinkering with the present system.
A tax credit and benefit credit system, coupled with technological changes which are now available to us in the 1980s, and which were not available before, might just be what the country has been waiting for. Whether it is such an opportunity will demand long-term detailed scrutiny. I believe that it is the task of Government to give the suggested combined tax benefit system that detailed scrutiny. I believe that we fail in our obligations to future generations if we turn down the chance now.
The Government have been in power for some five years and are likely to remain in power for some time. However, this issue transcends party politics, because the administration and infrastructure of a social security 593 benefit system can be agreed between parties and set up without politics coming into it. It becomes a political issue when we decide how much money we give to a system and where that money is distributed, but it cannot be argued by anyone that we all seek the most efficient use of our resources, and the present flaws in the social security system suggest that that is not presently the case.
We should recall that the success of the Beveridge proposals, in the first instance, was that they were laid upon a bedrock of consensus through work done at a time of national peril over a period during the second world war. Those proposals could not be perfect, and some of their frailties have now been rather cruelly exposed. It would be good for the reputation of politics, good for us in the House, and good for the reputation of a Western democracy if people outside the Chamber could see the parties looking at a potential disaster and avoiding it in the same reasonable way that many people outside might employ to resolve their differences given a chance. There is no need to be naive. Party politics will enter into the matter soon enough, but the bulk of the work can be done without that.
The Conservative Government have the chance to take the first steps to such a reform by welcoming the IFS proposals and considering how best to assess their feasibility. They have the time, the means and the blueprint. They have the need. I hope to goodness that they have the compassion. It is also about time that they had the will to stop patching the system and sort it out. Many Conservative Members will not rest content until our party is identified not just as the party which will give the country the sound economy needed to satisfy and secure the aspirations of the people but also, through its strength of purpose and economic welfare policy, as the party for those who find themselves in financial difficulties through no fault of their own.
There have been shining moments in history when the Conservative party has been so identified. The greatest son of my constituency, Sir Robert Peel, whose various offices included that of Prime Minister, said after the repeal of the corn laws that he hoped that he might be remembered with sympathy and fondness in the homes of the poor for the fact that their bread was no longer leavened with a sense of injustice. As our tax benefit system continues to rob Peter to pay Paul, occasionally robbing the poor to pay the better-off, it would be a good thing indeed if a Conservative Government could set in train the removal of the sense of injustice from the bread of the social security system.
§ 9 pm
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I follow the hon. Member for Bury, North (Mr. Burt) in his condemnation of the premature introduction of upratings while the Government are reviewing the benefit system. It is right that that should be put on record today. I certainly do not follow the hon. Gentleman in his economic analysis. If the Government dig huge holes and put people out of work they have no right to squeal about the cost of supporting the unemployed afterwards. They should restimulate the economy, with a certain amount of inflation and the taxation necessary to redistribute wealth towards those most in need.
I listened with interest to the hon. Gentleman's comments about a tax credit scheme. I believe that there is much to be said for amalgamating the taxation and 594 benefit structures. I, too, have studied the IFS report. It is an interesting contribution to the general debate, but I do not support all its conclusions. In the short term, I believe that the emphasis must be on increasing child benefit.
I should say at once that I intend to follow the hon. Member for Oldham, West (Mr. Meacher) in voting against the regulations, principally for the reasons that he gave. First, they disguise cuts of more than £100 million. Secondly, I could never advise my colleagues to subscribe to the proposed changes in the available scale margin. Thirdly, the changes miss an opportunity to achieve a whole range of improvements.
I should say at this point that we welcome the Government's decision to go for arbitration in the DHSS strike in Newcastle and Washington. The decision comes rather late in the day, but I hope that arbitration will be successful as I am worried that many old people going on holiday will suffer if the dispute is not speedily resolved.
I am especially concerned at the way in which the upratings will affect pensioners. The remainder of my comments will thus fall into two sections, dealing first with pensions and then with other benefits. The number of pensioners in poverty, as defined by claims for supplementary benefit, including certified housing benefit, is estimated in the Government's recent public expenditure White Paper as about 1.8 million. The category in receipt of standard housing benefit covers 2.43 million, 160,000 claim housing benefit supplement and it is estimated that a further 880,000 are entitled to benefit but do not claim it. All those are official estimates. Rounded up, they show that more than 5 million households — more than half our pensioners — are experiencing some poverty.
I subscribe to the view of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) who adverted to the fact that it is a strange coincidence that for the past two years, since the historic method was adopted, the uprating month has been May. In that month, in each of those years, the retail price index was at its lowest. It will be interesting to see what happens in future.
Many things could have been done to alleviate the lot of the pensioners. I do not wish to make extravagant claims. Government Members often say that Opposition Members can make extravagant claims because they do not have the responsibility for raising revenue. That is fair enough. Nevertheless, the Government should make it clear what priority they give to some important aspects of supplementary benefit and pension regulations as they apply to old-age pensioners.
First, the capital limit is a cause of much concern, as I know from dealing with pensioner pressure groups and individual pensioners in my constituency. I regret the fact that the Government have not taken this opportunity to raise the capital limits for entitlement to supplementary benefit or single payments. The Government should lift the limits again. I believe that about 160,000 families are prevented from claiming benefit because of the capital requirements. Among them are many pensioners on very small fixed incomes.
Another cause of concern is the problem of unclaimed benefit. The Government are not doing enough about that. Some 880,000 pensioner households have incomes below the poverty line, it is estimated, and the weekly amount unclaimed is £5 or so. We need imaginative schemes that would increase the take-up. Such schemes would probably 595 necessitate taking on more DHSS staff. There should also be more house visits, particularly in rural areas, as old folk find it difficult to check their benefit entitlements. We on these alliance Benches would countenance any increase in expenditure that the employment of more DHSS staff for such work would entail.
I have already referred to the retail price index in connection with the month in which the uprating is carried out. As I have said many times in these debates, I believe that the RPI itself is flawed, as it relates to pensioners in a substantial number of ways. Age Concern estimates that, in the period 1974–1982, inflation has increased for pensioners by more than 12 per cent. more than it has increased for any other comparable group in society. We must use the RPI figures with caution when discussing the needs of the elderly.
The Government should clarify their views about the frequency of upratings. In this white-hot technological age, it must be possible to uprate pensions twice a year. There are arguments about whether the weekly books could be changed, and so on. However, I have a quotation here—I shall not read it out—which shows that in 1974 the present Secretary of State for Health and Social Security tried to persuade the then Secretary of State, Mrs. Castle, to consider a bi-annual increase. There is no argument against such a change. The upratings would then be much fairer and would keep up with the cost of living in a much more efficient way. The rate of increase chosen in these uprating regulations—the various benefits are to be increased by 5.1 per cent. or so—will be quickly overtaken by the rate of inflation in the next six months. In regard to pensions, the Conservative pledge of 1979 to abolish the earnings rule is still unfulfilled. I accept that there have been changes but they have not gone far or come fast enough. I should like the Government to make it clear how they intend to approach that.
I have often stressed the need to increase pensions above the minimum price relationship. The Social Security Advisory Committee's second report made it clear that pensions would inevitably fall behind the cost of living unless they were given occasional upgradings above the minimum price relationship provided for in the Social Security Act 1980. The Government's promise in their strategy statement of 1981 entitled "Growing Older" promised:As the economy improves, elderly people will share in that improvement".They are not at the moment.
Two regulations concern child benefit. The first uprates child benefit by 35p and the second affects children who are temporarily abroad. The alliance parties would like a 95p increase. Such an increase has been costed and put into our published tax credit scheme. The changes in the upratings are a form of anti-family taxation and the best short-term means of increasing the resources available for people who need them most is to increase child benefit by at least 95p. The Government must come clean on what future they think child benefit has. It was formerly understood that child benefit increases should match those in personal allowances. I deeply regret that that is not happening. I agree with what has been said about the practicalities, difficulties and potential discrimination of the changes in child benefit regulations for those who go abroad.
596 In regard to the family income supplement regulations, according to the Child Poverty Action Group the Government will save about £11 million and about 200,000 families will be affected. Their losses will vary, according to their circumstances, from £65 to £150 a year. That will effectively wipe out the child benefit increase that many families have succeeded in getting. The Government could not expect our support for the family income supplement regulations.
The first supplementary benefit regulation concerns young people and people who apply for refugee status and the second affects the available scale margin. According to figures supplied by the Child Poverty Action Group, the Government will save up to £86 million a year, 400,000 people will lose up to 50p a week, 1.4 million people will lose between 50p and £1 a week, 20,000 families will lose up to 50p a week and 80,000 families will lose between 50p and £1 a week. Many pensioners will also be worse off.
The Government should address their mind to the extension of the long-term rate of supplementary benefit to the long-term unemployed. That is long overdue and the social security advisory committee argued the case cogently. The Government should restore the taxation of invalidity benefit. That is also an old chestnut but long overdue.
I am prepared to accept that, if one took a calculator and costed everything I have recommended to the Government it would be impossible to achieve at a stroke. The Government have missed an opportunity to bring forward the uprating benefits and make their position clear on some of these issues. Some benefits could have been marginally improved, with modest increases. The Government should make their long-term position clear. Regretfully, I must tell the Government that we shall be following the hon. Member for Oldham, West into the Lobby tonight.
§ Mr. Brynmor John (Pontypridd)
Anybody in the country who is observing the House tonight must think that it is a crazy place. We are talking about uprating the state benefits of 40 million people — or uprating state handouts, as the Chief Secretary to the Treasury called them in the economic debate. We are discussing the benefits in barely an hour more than we devoted to the bishops on Monday night. That is a crazy scale of priorities, when Opposition Members who are willing and able to participate in the debate must cut short their remarks so that my hon. Friend the Member for Derby, South (Mrs. Beckett) will have a fair chance to make the summary of our case in the time that she deserves.
I do not care whether these debates are arranged through the usual channels. It is high time that we came back to a sense of reality. No one observing the debate would think that we treated them with anything other than contempt by debating a matter of such importance in 2½ hours. Frankly, there is no other point that I really want to make. I could have done so, but I do not want to make a point that is slipped in because it is quick and meretricious.
I believe deeply that this subject touches the poorest of this country. The contempt with which the country will view these proceedings is not helped by the Minister of State. He must choose whether he is to be a statesman or 597 a buffoon. There is a great war within him. I am bound to tell him that, to the detriment of his reputation, the George Formby side of his nature came out very markedly.
The subject should not be treated with undue solemnity, but nor is it a frivolous subject. The regulations that we shall pass tonight mean that people will have to live on these benefits for a year, week in and week out. In many cases the benefits will be the sole source of income.
The combination of the time allowed and the way in which the debate has been treated forces me to say that the debate on this subject is unworthy of the House of Commons. I wish to take no further part in it.
§ Mr. Roy Galley (Halifax)
I was grateful to hear the remarks from the Liberal Benches because, from the general tenor of remarks from the Opposition Benches, one would not have thought that we were discussing an increase in public expenditure of some £2 billion. Instead, the Opposition have concentrated on so-called cuts of just over £100 million.
One would not have thought, from the tone of the debate, that child benefits had been increased in the past five years by about 3 per cent. more than the rate of inflation, or that, with an inflation rate of 76.4 per cent., child benefit has increased by more than 79 per cent. in that time. One wonders, therefore, what will produce a balanced approach from Opposition Members. With an inflation rate of 76.4 per cent., we are increasing pensions by more than 83 per cent. over five years.
The Government's record on social security in terms of total expenditure and expenditure in take-up of mobility and invalidity allowances and so on has been very good. The real increase in specific benefits has been extremely good. One wonders from the tone of the debate what would satisfy Opposition Members. Do we have to pay more and more so that eventually we get into the bankruptcy court, as we did in 1977?
I support the remarks of my hon. Friend the Member for Bury, North (Mr. Burt). We are faced with a series of documents of inordinate complexity. We are changing 50p here and 50p there. We are determining the price of a duffle coat and a pair of underpants. It is incredible that Parliament should be involved in such details. Every week millions of payments are made from families to the state and from the state to families. There are over 12 million payments of child benefit, over 9 million payments of pensions, over 1 million payments of unemployment benefit and hundreds and thousands of payments of many other benefits. Constant transfers are going on.
I wonder whether my hon. Friend the Minister groaned when my hon. Friend the Member for Bury, North yet again mentioned tax credit, or what is better termed the integrated tax-benefit, system. The matter has been raised many times in the House, and has been a long saga. My hon. Friend the Minister might say later that, on the basis of the estimates of benefit not taken up and other factors, it could cost about £6 billion or £7 billion more than the £39 billion that we are now paying in the social security budget. Therefore, it is important to draw to the attention of my hon. Friend the suggestion of the Institute for Fiscal Studies that its proposals would result in a reduction of about £10 billion in public expenditure. It would mean a considerable redistributive effect. One cannot have such a reduction without a significant redistributive effect. There may be a case, particularly for child benefit for those 598 who are better off and some other benefits, for having a certain amount of redistribution at that end of the scale. That shows that an integrated tax-benefit system need not involve greater public expenditure.
I urge my hon. Friend to look closely at that principle while he is carrying out his reviews and to consider the fact that the administration of social security now costs over £1.6 billion.
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
I want to introduce some sour grapes into the debate, as the Minister of State would expect.
Since 1979 the Christmas bonus, the age addition to retirement pension, death grant, maternity grant, supplementary benefit, additions for blindness and for a claimant over the age of 80 have all fallen in real terms. That fact will not be changed after the uprating instruments have been passed. The Government have not struck a blow for a single one of those benefits since 1979. They have finally abolished the child dependency addition to no less than 13 other benefits. Sickness benefit, invalidity pension, maternity allowances and unemployability supplement were cut by 5 per cent. in 1980, and that cut has not been restored. I obtained that information from one of the Minister's parliamentary answers earlier this year, which he will recollect. All those benefits have been cut. Therefore, there is no credit for the Government.
I reiterate what my hon. Friend the Member for Pontypridd (Mr. John) said about the management of our affairs, but in the short time available I want to concentrate on one aspect — the Prime Minister's view of the situation. On 28 June the Chief Secretary to the Treasury, from the Dispatch Box, referred to the social security programme as state handouts. I wrote to the Prime Minister and asked whether that was the kind of language used around the Cabinet table. I received one of the most ill-tempered letters from the Prime Minister which I have ever received. It was not only ill-tempered but grossly inaccurate.
On 5 July she claimed that the rise in the RPI has been only 71 per cent., including housing costs. She meant excluding housing costs. Whoever drafted the Prime Minister's letter was inaccurate. Including housing costs the RPI is about 76 to 77 per cent. Therefore, the Prime Minister was wrong on that count.
The Prime Minister had the brass cheek to say that spending on the sick and disabled will be increased by 30 per cent. in real terms without pointing out that there has been a cut of 66 per cent. on expenditure on benefits to the short-term sick. She then repeated the claim that has been made here tonight that child benefit is at its all-time high. I refute that claim. It is not possible to take child benefit on its own. As the Minister said, child benefit is just another name for the combination of child tax allowances and family allowance. Although child benefit will go up in November, the Government will not have put child support to the taxpayer back to the level of 1976–77 under the Labour Government. So the Prime Minister is not telling the truth when she claims that it is at an all-time high.
It is worth putting the figures on the record. In 1976–77 the maximum child tax allowance was £365 and child benefit for the second child and above—one has to take that because the system was slightly different — was £1.50. So child support for a basic rate taxpayer in 599 1976–77 under the Labour Government was £202.10 a year. From November child benefit will be £6.85 a week, equivalent to £365 per annum. But in 1976–77 prices that is only £1.60. That compares with £202 under the Labour Government. It is no good the Under-Secretary of State shaking his head. Those figures cannot be denied. So child support to taxpayers is nowhere near what it was under the Labour Government. It is about time the Prime Minister took that point on board. She is making misleading assertions. Obviously if the Government change the name of the benefit and only count their assessment of it from that year, they are open to accusations of juggling the figures.
The Chief Secretary let the cat out of the bag when he referred to the social security system as state handouts. He did not qualify that. At Question Time last Thursday he qualified it by saying that he was referring to the non-contributory part of the social security system; but he did not say that the week before. He was referring to widows' pensions, retirement pensions, unemployment benefit, any national insurance benefit, maternity grant, mobility allowance, attendance allowance and all the benefits for the disabled. The Chief Secretary called those state handouts.
Yet this year we have had a Budget in which tax reliefs have been given to owners of stud farms, employees earning £100,000 a year by means of tax options, and woodland owners, of which the Chief Secretary is one. Even to individuals, well over £1 billion has been given to high-rate taxpayers. There have been tax handouts in respect of stamp duty, development land tax, corporation tax, and capital gains tax, and higher rate taxpayers have been given over £1 billion. But none has been given to the people we are discussing tonight.
Tax reliefs total £45 billion—more than the cost of the social security system. There is an imbalance in our affairs. Some Conservative Members have referred to that in relation to the Institute of Fiscal Studies report. Unlike one or two Conservative Members, we do not agree entirely with that report, and nor did the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). However, it is right to put it on the agenda. We need to find a different way of ordering our affairs, but we are not prepared to discuss a way that takes £10 million off social security benefits so that the Government can use it to give tax handouts to their masters in the City. That is not on offer.
If the Government can come up with a way of ensuring that the money involved in the regulations gets to the people who are eligible to receive it, they will receive our whole-hearted support. But they will not run an effective take-up campaign. They know that about £700 million of social security benefits are not taken up.
The additional requirements regulations increase the allowances for clothing for the first time for a few years. Earlier this year, Parliament discussed massive tax handouts to the rich. Tonight, we are discussing regulations which include sums as little as 75p for stockings and tights for women and 90p for plastic pants for children.
Many of the people for whom such help is available will not receive it, because they do not know about it and because neither they nor the operators of the social security system on the desks — I do not criticise them individually—fully understand the system. If they did, 600 the Minister and his colleagues would not have to sign so many letters to hon. Members and occasionally send out circular letters to us all saying, "Please do not write to us; go to your local office." Ministers are signing thousands of letters a year, and that it is only the tip of the iceberg.
After five years in office, the Government cannot claim that they have had great success in increasing the take-up of benefits. Frankly, it is not in the interests of the Treasury that the Government should succeed. That is why the DHSS is not given the money to ensure that the benefits that we are being asked to approve get through to our fellow citizens. That is a shame and a moral disgrace and it reflects on the Treasury and DHSS Ministers who go along with it and stay in office.
§ Mrs. Margaret Beckett (Derby, South)
For the second time this evening, we have heard suggestions from the Minister and from Conservative Members—though one or two of them made criticisms — that the Government are being generous to the poorest members of our society. The timing of the presentation of the instruments suggests that most of them are urgently needed.
Most of what the Minister said about the Government's generosity has been demolished by my hon. Friends. I add only one comment to their criticisms. The Minister outlined a list of achievements by the Government, but he failed to mention that they have introduced five pieces of legislation on social security — quite apart from the many amending regulations that seem to crop up with amazing frequency—and every piece of that legislation has contained net savings in the provision made for social security and for the welfare state.
Although the Government may have been forced by circumstances into making some increases, they have done all that they can to take back from other groups among the poor the sums that they have given to some of the most needy. At the same time, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed out, they have given, given, and given again to the rich.
The matter of the death grant was raised by my hon. Friend the Member for Pontypridd (Mr. John). The Minister mentioned his anxiety about the different recommendations he had received and the amount of time that would be needed to consider the death grant. The Minister and the Government are inconsistent, in that for changes in something like the death grant there is never enough time. Such matters must be considered thoroughly and reported on. Yet with regulations such as these, which, as the SSAC pointed out, contain 52 changes, for which the draft regulations were not available even to the Committee, let alone to those who wished to comment on them, and for which the consultation period lasted only two months, the Government are in a hurry. They hurry to take away benefits, yet they are dilatory in handing them back, except to the wealthy.
The SSAC pointed out in several contexts the Government's inconsistency in rushing through many of the changes in the proposals while at the same time announcing what they claim will be a fundamental review. As we will probably not have another such debate before the autumn, I point out to the Government that many of us are cynically wondering whether these reviews are simply a cover for a set of decisions that the Government have already made, which are governed by the amount of 601 money that the Government have decided to make available. That would not be the first time that that has happened. I hope—although I doubt it—that we shall be proved wrong in that respect.
I should like the Under-Secretary, either when he replies to the debate or in a letter, to answer a question about the regulations which deal with allowances for laundry. This is only one question in the myriad of proposals. The SSAC and the Secretary of State referred to the circumstances in which public laundrettes are available. The Under-Secretary will know from his correspondence that it is difficult to see whether the rules will be applied consistently or whether it will be easy and convenient for the benefit offices to say, "If there are other accessible facilities such as a laundrette available, they must be used in all circumstances." When the Minister considers the implementation of the regulations, will he ensure that guidance is given, either in the S manual or however he chooses, so that the regulations are interpreted in the reasonable way suggested by the SSAC and scope for less reasonable interpretation does not exist?
There are plenty of omissions in the regulations. They omit to extend the long-term rate to the unemployed. That is probably the greatest piece of injustice that the Government continue to perpetrate. They omit to restore the 5 per cent. abatement of some benefits and to extend the invalid care allowance—the only benefit where we discriminate against people purely because they are married women. They omit to increase the earnings disregard. Many people have called for that, as they have done for long-term supplementary benefit. That is especially worrying today when the disregard is so small and people fall foul of it for other reasons.
Apart from the sins of omission, there are the sins of commission. The most notorious one is the available scale margin. The Government intend to save £86 million despite their generosity to the poor. Of that figure £74 million is expected to be saved at the expense of pensioners. Few pensioners will share the Government's view that they have been generous to pensioners especially when they realise the amount that the Government will save in these petty ways.
There are delays in the implementation of FIS. The review will take place only on the year's anniversary. That will cost the poorest families tens and perhaps hundreds of pounds. There is a change in the entitlement to child benefit which will, as the Minister must know in his heart, whatever he may choose to say in the Chamber, unquestionably discriminates against Asian families and other ethnic minorities.
Although it is not mentioned at great length in the body of the SSAC comments, I note the final comment on the amending regulations, which refers to the restriction on benefit that will be paid for a child who is born abroad. Has it occurred to the Minister or his advisers that for strict Hindus or Muslims there are restrictions on travel after birth? It is difficult to understand how the Minister can argue in those circumstances that the changes will not be discriminatory. I also note from paragraph 9 of the comments on the proposed changes that they are unlikely to apply to people travelling on business, but only to people travelling on holiday, especially in the circumstances in which many families travel to the Indian subcontinent.
Perhaps the worst aspect of these many complicated and difficult changes are those which penalise initiative among 602 the people who already have the least hope. I pay tribute to the Conservative Members who had the courage to mention that criticism. The change in the rules with regard to young people who are allowed some period in education and still to draw benefit is, to some extent, welcome; but the underlying philosophy behind it, and the assumption that the rules which were satisfactory when there were plenty of jobs for most people should be even more rigidly applied today, is wholly unsatisfactory and unreasonable. Not only the Government but society will, in the end, suffer from narrowing the initiatives available to young people.
The regulations perpetuate the changes made to the single payments for furniture and other such items, which are desperately needed by many people trapped in often expensive furnished accommodation which, although expensive, is frequently appalling. However, again no hope can be held out to those people because the Government have changed the regulations and deprived them of hope.
The group of changes and the rules confine many of our young people to dead-end jobs, dead-end accommodation and dead-end dole queues. All of us, not just the Government, will suffer from that.
The Minister and some of his hon. Friends have told us repeatedly about the Government's generosity. Has the Minister had an opportunity to study the report commissioned by his department from the Policy Studies Institute on the reform of supplementary benefit? If he has examined it, I do not understand how he can stand at the Dispatch Box with a straight face and talk about the achievements of the Government. An article on the report states:Three out of five adults are missing standard items of clothing such as a warm coat or change of shoes, both for themselves and their children. More than half are in debt, often over fuel bills. Half run out of money most weeks"—as did the hon. Member for Derbyshire, West (Mr. Paris) when he tried to live on supplementary benefit.
Apart from that general experience of people who live on supplementary benefit, I quote from the conclusions of the article on the report:The problem for the Government … is that most changes that would simplify the system look likely either to cost money, or to exclude people from payments which they may not be getting but which, on the evidence of the PSI study, they do actually need.
The Government have made much of the reviews that they are undertaking. When we see those reviews and the choices and decisions which the Government make on them, we shall judge whether they are prepared to have a simplified system that gives a fair entitlement to all. If not, people will not receive payments which they desperately need.
§ Mr. Newton
I can see that the hon. Member for Liverpool, West Derby (Mr. Wareing) has decided to make me disabled, as well as the Minister responsible for the disabled.
603 I have a great deal of sympathy with the comments made by the hon. Member for Pontypridd (Mr. John) about the slightly absurd way in which we have ended up debating this large and important series of instruments. It is something that both Front Benches — without revealing any secrets about how the arrangements are come to—and all of us who are concerned might bear in mind for future occasions. I apologise, at least on behalf of the Conservative party, to the hon. Member, who did not feel able to contribute to the debate in the way in which he undoubtedly would have wished. We have noted his point.
I shall try to respond as well and as seriously as I can in the relatively short space of time left to me, to the specific points made by hon. Members on both sides of the House. I start by referring to the points made by the hon. Member for Derbyshire, South (Mrs. Currie)—I beg the hon. Lady's pardon—Derby, South (Mrs. Beckett).
§ Mr. Newton
My hon. Friend the Member for Derbyshire, South also regards this as an important distinction. I do not want to upset the pair of them. It is difficult enough to when one upsets one of them.
I noted the remarks made by the hon. Member for Derby, South about laundry additions. She raised a complex point, and it is one that I shall look into and write to her about, as she suggested.
The hon. Members for Oldham, West (Mr. Meacher) and for Roxburgh and Berwickshire (Mr. Kirkwood) referred to the Newcastle dispute. I place it firmly on record that the origin of the dispute were Government proposals, not dreamed up by a Minister but arising from an audit report conducted by other civil servants, which suggested that we were not running the Newcastle benefit computer system as efficiently and effectively as we could. It suggested that, by changing the working arrangements, we could make economies in public expenditure that we estimate at about £700,000, and not the £40,000 or so that the hon. Member for Oldham, West mentioned. In all seriousness, if he were a Minister, he would also have felt that, faced with such a report, it was right for both senior official management and ministerial management to respond by proposing changes that would maximise efficient use of resources in administering the benefit system. It was in that spirit that we approached the matter.
The hon. Member for Oldham, West spoke very much in terms of protecting the earnings of those who are currently engaged in particular forms of shift working at Newcastle, and we accept that. I know that I can speak for my hon. Friend the Minister in saying that we recognise the proper concerns about protecting earnings of existing workers in that part of the complex. We have already made proposals that would protect them for at least two years, subject to review after that period. We are prepared to consider a negotiation about modifications of those proposals.
However, we should be concerned—it is important to make this point—about the suggestion that we should perpetuate these arrangements and take new people into the system on what can be seen as an artificial and 604 excessive earnings level. We accept the need to consider the protection of existing workers and we have shown our willingness to do that in the negotiations.
I am grateful to the hon. Member for Oldham, West for what he said about welcoming our willingness to accept conciliation by ACAS. If I read his words aright, he was urging the union to accept that also. Generally speaking, he said this in a constructive spirit, which is the way in which we approach this. We are willing to resume negotiations and hope to bring to an end this difficult dispute. I am sure that no hon. Member would wish to see an uprating threatened by any unnecessary continuation of the dispute.
I turn to some of the more contentious issues raised, and shall begin with what has been said about family income supplement. In the course of the many remarks made by Opposition Members, no one acknowledged that the unique factor about FIS is that it is not normally changed during the course of the year's award for any reason other than an uprating. Its whole merit as a benefit and its simplicity of administration stem from the fact that once it has been assessed on the basis of the family's circumstances, including its income at the time of assessment, it stays in payment over a year, regardless of changes. If the family gain an extra child, it does not change. Most importantly of all, if the family's income suddenly increases, even dramatically, it does not change. No other changes in circumstance are taken into account during a year's currency of FIS.
Looking back, it is odd not that we now propose to change the one curiosity of taking account of the uprating alteration, but that from the very beginning it was felt sensible to maintain the rate of benefit throughout the year in which the award has currency. In the context of that basic method of operating FIS, I believe that the proposal that the uprating changes should also be excluded from consideration until the award falls due for renewal makes sense.
However, I accept that there may be problems this year, particularly as FIS awards are normally for 52 weeks and, for reasons connected with the calendar, there will be a 53-week benefit year this year. Earlier, my hon. Friend the Minister was unable to include in his speech our transitional proposals to help to deal with that problem. In general, as I have said, most renewal awards will be treated in the same way as new awards, in that the assessment will be based on the prescribed levels applying at the date of commencement of the award. But there are two easements. First, people whose awards terminate on 19 November, and who successfully renew their awards, will receive one week at a rate based on the 1983 levels and 52 weeks at a rate based on the 1984 levels. Had it not been for the fact that the period between the 1983 and 1984 upratings was 53 weeks, they would have been able to renew this year with the advantage of the new levels, and we do not think that they should be penalised because of the coincidence of the 53-week period and the change that we propose.
Secondly, those who make a successful renewal claim following an award that terminates on either 5 or 12 November 1984 will be given the choice of an award based on the 1983 levels, but running consecutively from their previous award, or an award based on the 1984 levels but running from 27 November. Effectively, that means that those people can break the cycle of renewal and obtain the advantage of the 1984 levels if that is what they wish to 605 do, rather earlier than they could do under the general provisions now existing. I apologise if that seems slightly complicated, but I thought it important that I should try to make it as clear as possible.
The question of child benefit overseas exercised the minds of the hon. Members for Stretford (Mr. Lloyd) and for Birmingham, Ladywood (Ms. Short), and several other hon. Members. I should make it clear that the majority of those who receive benefit under the current rules for up to 26 weeks travel not to the Indian subcontinent but to the middle east, the United States of America and South Africa. Only 17 per cent. travel to the Indian subcontinent. In other words, 83 per cent. do not.
Of course, I accept that hon. Members have expressed sincerely felt concern. However, we have given an undertaking to the Social Security Advisory Committee that we shall monitor the effect of the proposed new regulations on families in general. I ask the House to accept that these regulations were not in any way conceived as an attack on the interests of ethnic minority families. Indeed, when considering the proposals, Ministers specifically asked for the figures that I have just given, to ensure that they would not appear to be—and could not statistically be shown to be — directed at ethnic minority families, but rather at the more general problem of people leaving this country for some considerable time. In those circumstances, most reasonable people would feel that such people should not continue to be entitled to child benefit.
Another point that exercised hon. Members on both sides of the House was study by the unemployed. As this whole area will be considered by the review of benefits for children and young people, I do not feel it appropriate tonight to respond beyond that to the broader comments that my hon. Friend the Member for Mid-Kent (Mr. Rowe) and others expressed.
The three months' qualifying period is not affected by the regulations. Our purpose is only to make as sensible and workable as possible the existing arrangements, which are necessary within the existing system for distinguishing between those who are genuinely unemployed and seeking work, whom we do not wish to prevent studying while they are unemployed, and those who are, in effect, full-time students who have opted out of the employment market.
§ Ms. Clare Short
The Minister is probably aware that Youth Aid did research—I was involved in parts of it—on this question which showed that the regulations were so complex that few young people were taking the benefit of them. It showed that some colleges had gone to enormous trouble to provide 15-hour courses to comply with the old regulations. This change will destroy those courses. It will, therefore, damage the opportunity for young, unemployed people who want to study.
§ Mr. Newton
I accept that this is a complex area. Against what the hon. Lady said, there were cases where youngsters, under the old 15-hour rule, were ruled out on homework grounds because homework was included. It was a muddy area which was causing increasing confusion. We have now reduced the period from 15 to 12 hours but have excluded homework, so that there is absolute clarity.
Additional hours can be spent in doing homework. Many youngsters who were cut out by the previous rules, because of the amount of homework they did, now have 606 clarity. I believe that it will be much easier—the SSAC shared this view—for courses, and, above all, for young people to plan their activities in the certainty of what the rules are, rather than leaving it to accidents of interpretation in benefit offices.
§ Mr. Newton
I must not give way further.
Frankly, I do not believe that it is beyond the wit of colleges which had carefully devised courses to get within a rule of a vague character to devise courses to get round a rule which is much clearer and more straightforward.
I hope that I do not offend the hon. Member for Birmingham, Perry Barr (Mr. Rooker) when I say that in two respects his contribution was significantly below his usual level. His comparisons of the real value of child benefit with the tangle of different tax allowances for children of different ages that existed in the past was so meaningless as to be positively misleading.
The hon. Gentleman was able to make the point only by taking the most extreme case. If the same extreme case were applied to the record of the last Labour Government, one could say that the real value of child support fell sharply and dramatically from £8 a week to less than £7. I do not press that charge against the hon. Gentleman, but if he uses misleading statistics, he must not complain if he gets them quoted back at him, and I hope that he will not do it again.
I say not only to the hon. Member for Perry Barr but to the whole House that the notion that, whatever we may do in the uprating, this Government are not interested in getting benefits to those who should have them, is absolute and utter nonsense. In the last two years, claims for both mobility allowance and attendance allowance have risen by 20 per cent., with considerable encouragement from the Government. We have recently introduced a free telephone service designed to improve our advice and information services throughout the country. The take-up of one-parent benefit has risen sharply and we are continuing to make extensive efforts to get the benefits; to the people who deserve to have them.
§ Question put and agreed to.
That the draft Social Security Benefits Up-rating Order 1984, which was laid before this House on 6th July, be approved.
§ Motion made—[Dr. Boyson] —and Question put,
§ That the draft Supplementary Benefit Uprating and Additional Requirements Regulations 1984, which were laid before this House on 6th July, be approved:—
§ The House divided: Ayes 244, Noes 168.609
|Division No. 418]||[10 pm|
|Amery, Rt Hon Julian||Clarke, Rt Hon K. (Rushcliffe)|
|Atkins, Robert (South Ribble)||Clegg, Sir Walter|
|Baker, Rt Hon K. (Mole Vall'y)||Colvin, Michael|
|Bottomley, Peter||Coombs, Simon|
|Bottomley, Mrs Virginia||Cope, John|
|Bowden, Gerald (Dulwich)||Crouch, David|
|Boyson, Dr Rhodes||Dorrell, Stephen|
|Brandon-Bravo, Martin||Douglas-Hamilton, Lord J.|
|Buck, Sir Antony||Dykes, Hugh|
|Burt, Alistair||Emery, Sir Peter|
|Butcher, John||Farr, Sir John|
|Butler, Hon Adam||Favell, Anthony|
|Carlisle, Rt Hon M. (W'ton S)||Fenner, Mrs Peggy|
|Cash, William||Finsberg, Sir Geoffrey|
|Chapman, Sydney||Fletcher, Alexander|
|Clark, Dr Michael (Rochford)||Fookes, Miss Janet|
|Clark, Sir W. (Croydon S)||Forman, Nigel|
|Forsyth, Michael (Stirling)||Luce, Richard|
|Forth, Eric||McCrindle, Robert|
|Fox, Marcus||McCurley, Mrs Anna|
|Franks, Cecil||Macfarlane, Neil|
|Fraser, Peter (Angus East)||MacKay, Andrew (Berkshire)|
|Freeman, Roger||MacKay, John (Argyll & Bute)|
|Fry, Peter||Maclean, David John|
|Gale, Roger||McNair-Wilson, P. (New F'st)|
|Galley, Roy||McQuarrie, Albert|
|Gardner, Sir Edward (Fylde)||Madel, David|
|Garel-Jones, Tristan||Malone, Gerald|
|Glyn, Dr Alan||Maples, John|
|Goodhart, Sir Philip||Marland, Paul|
|Goodlad, Alastair||Marlow, Antony|
|Gow, Ian||Mather, Carol|
|Grant, Sir Anthony||Maude, Hon Francis|
|Green way, Harry||Maxwell-Hyslop, Robin|
|Gregory, Conal||Mayhew, Sir Patrick|
|Griffiths, Peter (Portsm'th N)||Mellor, David|
|Grist, Ian||Merchant, Piers|
|Ground, Patrick||Meyer, Sir Anthony|
|Gummer, John Selwyn||Miller, Hal (B'grove)|
|Hamilton, Hon A. (Epsom)||Mills, Iain (Meriden)|
|Hamilton, Neil (Tatton)||Mills, Sir Peter (West Devon)|
|Hanley, Jeremy||Miscampbell, Norman|
|Hargreaves, Kenneth||Mitchell, David (NW Hants)|
|Harris, David||Moate, Roger|
|Harvey, Robert||Montgomery, Fergus|
|Haselhurst, Alan||Morris, M. (N'hampton, S)|
|Havers, Rt Hon Sir Michael||Morrison, Hon C. (Devizes)|
|Hawkins, Sir Paul (SW N'folk)||Morrison, Hon P. (Chester)|
|Hawksley, Warren||Murphy, Christopher|
|Hayes, J.||Needham, Richard|
|Hayhoe, Barney||Nelson, Anthony|
|Hayward, Robert||Newton, Tony|
|Heathcoat-Amory, David||Nicholls, Patrick|
|Heddle, John||Normanton, Tom|
|Heseltine, Rt Hon Michael||Norris, Steven|
|Hicks, Robert||Onslow, Cranley|
|Higgins, Rt Hon Terence L.||Oppenheim, Philip|
|Hind, Kenneth||Ottaway, Richard|
|Hirst, Michael||Page, Sir John (Harrow W)|
|Hogg, Hon Douglas (Gr'th'm)||Page, Richard (Herts SW)|
|Holland, Sir Philip (Gedling)||Parris, Matthew|
|Holt, Richard||Patten, John (Oxford)|
|Hooson, Tom||Pawsey, James|
|Hordern, Peter||Percival, Rt Hon Sir Ian|
|Howard, Michael||Pollock, Alexander|
|Howarth, Gerald (Cannock)||Powell, William (Corby)|
|Howell, Rt Hon D. (G'ldford)||Powley, John|
|Hubbard-Miles, Peter||Prentice, Rt Hon Reg|
|Hunt, David (Wirral)||Proctor, K. Harvey|
|Hunt, John (Ravensbourne)||Raffan, Keith|
|Hunter, Andrew||Rees, Rt Hon Peter (Dover)|
|Hurd, Rt Hon Douglas||Renton, Tim|
|Jackson, Robert||Rhodes James, Robert|
|Jenkin, Rt Hon Patrick||Ridley, Rt Hon Nicholas|
|Jessel, Toby||Ridsdale, Sir Julian|
|Johnson Smith, Sir Geoffrey||Roberts, Wyn (Conwy)|
|Jones, Robert (W Herts)||Robinson, Mark (N'port W)|
|Jopling, Rt Hon Michael||Roe, Mrs Marion|
|Joseph, Rt Hon Sir Keith||Rowe, Andrew|
|King, Roger (B'ham N'field)||Ryder, Richard|
|King, Rt Hon Tom||Sainsbury, Hon Timothy|
|Knight, Gregory (Derby N)||St. John-Stevas, Rt Hon N.|
|Knight, Mrs Jill (Edgbaston)||Sayeed, Jonathan|
|Knowles, Michael||Scott, Nicholas|
|Knox, David||Shaw, Giles (Pudsey)|
|Lang, Ian||Shaw, Sir Michael (Scarb')|
|Lawler, Geoffrey||Shepherd, Colin (Hereford)|
|Lawrence, Ivan||Shepherd, Richard (Aldridge)|
|Lawson, Rt Hon Nigel||Shersby, Michael|
|Lee, John (Pendle)||Silvester, Fred|
|Leigh, Edward (Gainsbor'gh)||Sims, Roger|
|Lennox-Boyd, Hon Mark||Skeet, T. H. H.|
|Lightbown, David||Smith, Sir Dudley (Warwick)|
|Lilley, Peter||Smith, Tim (Beaconsfield)|
|Lloyd, Ian (Havant)||Soames, Hon Nicholas|
|Lloyd, Peter, (Fareham)||Spencer, Derek|
|Lord, Michael||Spicer, Jim (W Dorset)|
|Spicer, Michael (S Worcs)||Vaughan, Sir Gerard|
|Squire, Robin||Viggers, Peter|
|Stanbrook, Ivor||Waddington, David|
|Stanley, John||Wakeham, Rt Hon John|
|Steen, Anthony||Walden, George|
|Stern, Michael||Wall, Sir Patrick|
|Stevens, Lewis (Nuneaton)||Waller, Gary|
|Stevens, Martin (Fulham)||Walters, Dennis|
|Stewart, Allan (Eastwood)||Wardle, C. (Bexhill)|
|Stewart, Andrew (Sherwood)||Warren, Kenneth|
|Stokes, John||Watson, John|
|Stradling Thomas, J.||Watts, John|
|Sumberg, David||Wells, Sir John (Maidstone)|
|Taylor, John (Solihull)||Wheeler, John|
|Taylor, Teddy (S'end E)||Whitfield, John|
|Temple-Morris, Peter||Whitney, Raymond|
|Thompson, Donald (Calder V)||Wiggin, Jerry|
|Thompson, Patrick (N'ich N)||Winterton, Nicholas|
|Thornton, Malcolm||Wolfson, Mark|
|Thurnham, Peter||Wood, Timothy|
|Townend, John (Bridlington)||Yeo, Tim|
|Townsend, Cyril D. (B'heath)||Young, Sir George (Acton)|
|Tracey, Richard||Younger, Rt Hon George|
|Trotter, Neville||Tellers for the Ayes:|
|Twinn, Dr Ian||Mr. John Major and Mr. Michael Neubert.|
|van Straubenzee. Sir W.|
|Abse, Leo||Dubs, Alfred|
|Adams, Allen (Paisley N)||Dunwoody, Hon Mrs G.|
|Alton, David||Eadie, Alex|
|Anderson, Donald||Eastham, Ken|
|Archer, Rt Hon Peter||Edwards, Bob (W'h'mpt'n SE)|
|Ashdown, Paddy||Ellis, Raymond|
|Ashley, Rt Hon Jack||Evans, John (St. Helens N)|
|Ashton, Joe||Fatchett, Derek|
|Atkinson, N. (Tottenham)||Faulds, Andrew|
|Barnett, Guy||Fields, T. (L'pool Broad Gn)|
|Beckett, Mrs Margaret||Flannery, Martin|
|Beith, A. J.||Forrester, John|
|Bermingham, Gerald||Foster, Derek|
|Bidwell, Sydney||Foulkes, George|
|Blair, Anthony||Fraser, J. (Norwood)|
|Boothroyd, Miss Betty||Freeson, Rt Hon Reginald|
|Boyes, Roland||Freud, Clement|
|Bray, Dr Jeremy||George, Bruce|
|Brown, N. (N'c'tle-u-Tyne E)||Gilbert, Rt Hon Dr John|
|Brown, R. (N'c'tle-u-Tyne N)||Godman, Dr Norman|
|Brown, Ron (E'burgh, Leith)||Golding, John|
|Bruce, Malcolm||Gould, Bryan|
|Buchan, Norman||Hamilton, James (M'well N)|
|Callaghan, Rt Hon J.||Hamilton, W. W. (Central Fife)|
|Callaghan, Jim (Heyw'd & M)||Hardy, Peter|
|Campbell-Savours, Dale||Harman, Ms Harriet|
|Carlile, Alexander (Montg'y)||Harrison, Rt Hon Walter|
|Carter-Jones, Lewis||Haynes, Frank|
|Cartwright, John||Healey, Rt Hon Denis|
|Clark, Dr David (S Shields)||Heffer, Eric S.|
|Clarke, Thomas||Hogg, N. (C'nauld & Kilsyth)|
|Clay, Robert||Holland, Stuart (Vauxhall)|
|Clwyd, Mrs Ann||Howell, Rt Hon D. (S'heath)|
|Cohen, Harry||Hoyle, Douglas|
|Coleman, Donald||Hughes, Dr. Mark (Durham)|
|Conlan, Bernard||Hughes, Robert (Aberdeen N)|
|Cook, Robin F. (Livingston)||Hughes, Sean (Knowsley S)|
|Corbett, Robin||Janner, Hon Greville|
|Cowans, Harry||John, Brynmor|
|Cox, Thomas (Tooting)||Johnston, Russell|
|Craigen, J. M.||Kennedy, Charles|
|Crowther, Stan||Kilroy-Silk, Robert|
|Dalyell, Tarn||Kirkwood, Archy|
|Davies, Rt Hon Denzil (L'lli)||Lamond, James|
|Davies, Ronald (Caerphilly)||Leadbitter, Ted|
|Davis, Terry (B'ham, H'ge H'l)||Leighton, Ronald|
|Deakins, Eric||Lewis, Terence (Worsley)|
|Dewar, Donald||Litherland, Robert|
|Dixon, Donald||Lloyd, Tony (Stretford)|
|Dobson, Frank||Lofthouse, Geoffrey|
|Dormand, Jack||Loyden, Edward|
|McDonald, Dr Oonagh||Rooker, J. W.|
|McKay, Allen (Penistone)||Ross, Ernest (Dundee W)|
|McKelvey, William||Ross, Stephen (Isle of Wight)|
|Mackenzie, Rt Hon Gregor||Rowlands, Ted|
|McTaggart, Robert||Sedgemore, Brian|
|Madden, Max||Sheerman, Barry|
|Marek, Dr John||Sheldon, Rt Hon R.|
|Marshall, David (Shettleston)||Shore, Rt Hon Peter|
|Maxton, John||Short, Ms Clare (Ladywood)|
|Maynard, Miss Joan||Silkin, Rt Hon J.|
|Meacher, Michael||Smith, C.(Isl'ton S & F'bury)|
|Meadowcroft, Michael||Snape, Peter|
|Mikardo, Ian||Soley, Clive|
|Millan, Rt Hon Bruce||Spearing, Nigel|
|Miller, Dr M. S. (E Kilbride)||Strang, Gavin|
|Mitchell, Austin (G't Grimsby)||Straw, Jack|
|Morris, Rt Hon A. (W'shawe)||Thompson, J. (Wansbeck)|
|Morris, Rt Hon J. (Aberavon)||Thorne, Stan (Preston)|
|Nellist, David||Tinn, James|
|Oakes, Rt Hon Gordon||Torney, Tom|
|O'Brien, William||Wardell, Gareth (Gower)|
|Park, George||Wareing, Robert|
|Parry, Robert||Weetch, Ken|
|Patchett, Terry||Welsh, Michael|
|Pavitt, Laurie||White, James|
|Penhaligon, David||Wigley, Dafydd|
|Pike, Peter||Williams, Rt Hon A.|
|Powell, Raymond (Ogmore)||Wilson, Gordon|
|Prescott, John||Winnick, David|
|Radice, Giles||Woodall, Alec|
|Redmond, M.||Young, David (Bolton SE)|
|Rees, Rt Hon M. (Leeds S)|
|Roberts, Ernest (Hackney N)||Tellers for the Noes:|
|Robertson, George||Mr. John McWilliam and Mr. Lawrence Cunliffe.|
§ Question accordingly agreed to.