HC Deb 23 July 1984 vol 64 cc729-35

Lords amendment: No. 12, in page 63, line 38, leave out "paragraphs 1(a) and" and insert paragraph 1(a) and (c) and in paragraph

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Tony Newton)

I beg to move, That this House doth agree with the Lords in the said amendment.

The amendment is technical. It adds to the schedule of repeals in the Bill a further reference to a child dependency addition which is made redundant because of its abolition by clause 13 and paragraphs 2 and 3 of schedule 5.

The amendment repeals an entry—in paragraph 1(c) —relating to the child dependency addition to sickness benefit, in order to be consistent with the entry for unemployment benefit, in both cases for beneficiaries under pensionable age. The provisions of clause 13 and schedule 5, paragraphs 2 and 3, of the Bill have the effect —we discussed this point in Committee—of confining child dependency additions of sickness and unemployment benefit to beneficiaries who are over pensionable age.

The amendment simply corrects an error. In making the necessary consequential amendment, sickness benefit was inadvertently omitted. We are now suggesting an amendment to tidy up the Bill. We want the schedule to be consistent with the basic purpose of the main provisions of the Bill.

Mrs. Margaret Beckett (Derby, South)

Is the effect of the amendment consistent with what is being done in the Bill with regard to such provisions? It is consistent in its mean-mindedness and in its disadvantageous result for poor families. The amendment completes the removal of child dependency addition from all the short-term benefits.

Not only between both sides of the House but among many of those who comment on social security for the Government or some other body, it has always been common ground that it would be desirable over a period to subsume those additions into child benefit. However, the Minister will not, I am sure, deny that when that was agreed on all sides, the impression was created that subsuming such additions into the benefit meant adding them to the benefit in a way which preserved a similar level of income and resources for poor families.

However, over the past few years the Government have significantly reduced the value of the additions, and can now therefore say that it is hardly worth while to retain them. They expect no one to notice or care when they remove them.

That is particularly disgraceful because we have never made sufficient allowance in any of our social security calculations—whether connected with child dependency additions, child benefit or anything else — for the maintenance of children. The levels of such benefits and additions were set a long time ago after a study which was not remotely scientific or, indeed, justifiable. A calculation was made of how much it would cost to support a man in prison and then, without any separate study being undertaken, it was assumed that it would naturally cost less to support a woman. The support for a woman was therefore set an arbitrary percentage—I believe about 60 per cent.—of that for a man. The level of support for a child was equally arbitrarily assessed at a certain percentage of the level required for a woman.

Anyone with experience of rearing children will know that they are not only frequently as costly to keep as adults but that, at some periods of their lives, they may cost even more. In the United States—conditions may be different there, but we may be heading in that direction—it has, recently been calculated that the cost of supporting a teenager amounts to 110 per cent. of the cost of supporting an adult. Yet, in dealing with the system which supports our poorest families, we persist in perpetuating the myth that such individuals cost less to support. That has never been the case.

Furthermore, such families are facing particular difficulties at present. Apart from changes such as this, and apart from the general flaw which runs through the whole system of calculating benefit, the Government have taken steps to reduce the amount of help available to such families towards the cost of rearing their children. I am thinking, for instance, of single payments for clothing. It has now been ruled that no payment will be made where the ground of the request is merely that the child has grown out of his coat or shoes. That change would be difficult to defend at any time, and it adds to the burden on the families who are now losing this extra addition.

The level of the addition has now fallen to 15p, and that is the Government's justification for abolishing it. However, the Government's case is not helped by the fact that the rate of the addition was reduced between November 1980 and November 1983, at a time when child benefit itself was worth less than in 1979. It is clear that four or five years ago the Government had already discarded a principle on which, in theory, we are all agreed —that of subsuming these additions in child benefit and maintaining the value of the subsumed benefits.

It was through a change in the method of calculation that the Government managed to reduce the value of the addition to 15p. Depending on the statistics which one accepts, the value of the addition under the old method of calculation would now have been either £1.70 or £1.85. The Child Poverty Action Group suggests that the figure is £1.70, and the statistics section of the Library gives it as £1.85—a slightly unusual situation.

I can explain the reason for that decline in value. At an earlier stage, child benefit was added to the dependency addition, that total sum was increased by something like the percentage at which all benefits were increased, and then the new rate of child benefit was subtracted. The result was the new rate of dependency addition. On such a method of calculation, the figure would now have been £1.85 rather than 15p. For the families involved, that is a substantial sum. As the Minister has said, they are the families of the unemployed, living on short-term benefits, which are not set very high. Those benefits are calculated to support people for only a comparatively short period. For those individuals, £1.85 a week would make a substantial difference to their income.

4.30 pm

The Minister said in Committee that about £2 million is being saved in the social security budget by the proposal in the amendment. The abolition has been condemned by the Opposition and by the independent social security advisory committee which the Government set up, no doubt in the hope that it would give more favourable verdicts on their actions than they obtained from its predecessor. However, the committee said in 1981: We support the Government's objective of including the short-term child dependency additions in child benefit but only in so far as the overall value of child support for people on contributory benefits is maintained in real terms. We consider that the method used by the Government for uprating the dependency additions does not achieve this … We are equally clear that the present method of achieving this is wrong. The objective is a sound one only if there is no loss of income in real terms of families dependent on contributory benefits. That could hardly be more condemnatory and it is instructive to note that, despite those firm commitments, the Government have nevertheless persisted in this unfair, unjust and morally wrong method of calculating benefits.

Apart from the £2 million that the Government intend to save by this abolition, they saved £50 million a year between 1979 and 1981. It is wise to remember that, because the Government continually praise themselves for the changes that they have made, the increases that they have given and the improvements that they have achieved in bits of the benefit system, but they almost never add that in almost every case, improvements have been paid for by another group among the poor or the slightly less poor. In no case has the money for improvements come from those who can best afford to pay it, and to whom the Government have given thousands of millions of pounds a year.

It is particularly sad that the changes are being made, because poverty is on the increase. Some of the most recent figures available — for 1981 — show that 2.8 million people were living on an income below supplementary benefit level—a 25 per cent. rise since 1979. Within that group, the number who were unemployed had risen threefold in the previous two years, the number who were in that group because of disability had risen by 67 per cent. and the number of single parents in that category had risen by 55 per cent. The cumulative effect of the changes was that 2.8 million families were living below the supplementary benefit level, which is calculated to support people only at subsistence level. In other words, they were living at below subsistence level.

In 1981, about 38 per cent. of those living below the poverty line were families with children; about 500,000 children were involved. The Government estimate that about 200,000 children will be affected by the saving in the amendment alone, although the Government told us in Committee that there will be little difference for those on supplementary benefit.

We ought to take another look at the history of the additions. It is a bad and boring habit of Ministers when making comparisons to look back not to the record of the previous Conservative Government, but at the achievements of the last Labour Government. Let us look at the record of that Labour Government in this context.

Before 1977, the Labour Government used the method of calculation that the present Government use. In that year, we faced a far worse economic crisis than this Government have yet managed to induce, and, unlike the present crisis, it was not of our making, but was caused by other people. Nevertheless, we decided that the existing method of calculation was insufficiently generous and that we were not giving enough help to poor families. Therefore, in 1977, we changed the method of calculating the additions and implemented the method which, if it were used today, would give an addition of £1.85 a week. One of the Conservative Government's first actions in 1979 was to reverse that beneficial change and to go back to the method of calculation that has left us with a child dependency addition of 15p a week.

I remind the Minister of those facts to save him the trouble of searching for comparisons with the Labour Government and because the proposed change is typical of the Government's attitude to the welfare state. Step by step, they are trying to reverse all the beneficial changes made not only by the last Labour Goverment, but by Labour Governments over the decades. The amendment is technical and consistent, but the policy with which it is consistent is to be deplored.

Mr. Newton

I shall resist the temptation to respond to the comments of the hon. Member for Derby, South (Mrs. Beckett) about the cause of the economic difficulties experienced by this country in 1976 and 1977. However, if she really believes that the difficulties were generated outside this country rather than by the policies of the then Government, I hope that she never serves in a future Government, because if she does we shall soon have the IMF on our tails again. The first to suffer, as they were the first to suffer in 1976, would be many of the social security beneficiaries whose benefits would have to be cut to meet the requirements laid on us. That happened in 1976 as a result of the profligacy of the policies of the Labour Government.

Whatever else may be said about the hon. Lady's speech, she certainly showed astonishing ingenuity in stretching the remarks about a technical amendment so far. I understand the reasons for that and I am not criticising her. I am expressing genuine admiration at the fact that so many bricks can be made from so little straw, especially as the amendment does nothing more than tidy up a part of the Bill and does not make the change about which she spoke at such great length.

More seriously, the hon. Lady dwelt at length on the 15p addition, which relates only to sickness benefit and not to unemployment benefit, which is not touched by the amendment, because it was effectively dealt with in the original drafting of the Bill. Therefore, her estimates of the number of children affected must be inflated.

That 15p does not, of course, even go at present to most of those who are short-term sick. For most of them, sickness benefit has been replaced in the first eight weeks by statutory sick pay, and the question of the child dependency addition does not arise. Again, for those who are on sickness benefit for more than six months and who go on to invalidity benefit, the question does not arise because a higher child dependency addition continues in payment. On the uprating technique that the hon. Lady mentioned, the 15p would have disappeared last year rather than this year if we had had the power to abolish it then. In that sense, there has been a small and uncovenanted bonus for the beneficiaries concerned, in that that sum has been paid this year.

Although the hon. Lady recognised what I said in Committee, most of her remarks about the amount needed to keep a child were literally irrelevant to the debate because they were directed at the supplementary benefit scale rates for children and not at the child dependency additions paid either with short-term or long-term national insurance benefits. Indeed, one of the justifications for removing this residual 15p child dependency addition is that at the margin it has enabled us to ensure that we can protect—and, over the past five or six years, more than protect — the children's scale rates on supplementary benefit. Where the total income of the head of household or of the family is below the level of supplementary benefit due to sickness or unemployment, that family will get not 15p but the children's scale rates on supplementary benefit. The 15p literally does not make any difference, because it will be taken of their supplementary benefit. Perhaps I should say rather that the ultimate payment of supplementary benefit would be a net calculation if the 15p continued to be paid.

Thus, there should not be any misunderstanding. The poorest families, where the head of household is sick or unemployed, are not in any way affected by what the hon. Lady described as the proposal. Those on supplementary benefit are not at all touched by this claim. As the hon. Lady did not mention it, I should point out that the 1980 reform of the supplementary benefit system included a significant increase in the scale rates paid for many children. There was a real increase then, and it remains the case that the amount of benefit paid for significant groups of children on supplementary benefit is much higher, in real terms, than when this Government came to power. That, indeed, was part of the trade-off for the change in single payments in relation to clothing. I believe that it was right to pay a higher level of basic benefit in respect of several age groups of children rather than to perpetuate a system under which, on a geographically very variable basis, some families received additional help for clothing rather than regular weekly payments of additional benefit, as are now made with the higher scale rates for some groups of children.

Mr. Dobson


Mr. Newton

As the hon. Lady and the hon. Member for Holborn and St. Pancras (Mr. Dobson) apparently attach some importance to single payments of supplementary benefit—whether for clothing or other purposes—I shall gently point out that if they had their way, and the short-term child dependency additions were maintained at the 15p level or at the higher level that the hon. Lady apparently wants, some families at the margin would be taken off supplementary benefit altogether. Their incomes would rise above the assessed level for supplementary benefit purposes, and they would cease to be entitled to single payments of supplementary benefit.

4.45 pm
Mr. Dobson

Does the Minister still stand by the view that it is good that families can no longer receive contributions towards reclothing children who have simply grown out of their clothes? How does he square that with the Prime Minister's famous speech in the United States of America in which she said that she wanted a society in which all children could grow tall but some could grow taller than others? Apparently that did not apply to those who needed such benefits.

Mr. Newton

The hon. Gentleman will be aware that there are provisions in the supplementary benefit regulations for certain exceptional cases. But the general policy involved in the 1980 scheme of restricting some aspects—and it was only some—of the supplementary benefit single payment regulations in favour of an increase in the scale rates for two substantial age ranges of children was only sensible, is particularly since the way in which clothing single payments were paid varied very unfairly from one part of the country to another. It was notorious, for example, that in some parts of Scotland clothing payments were handed out very freely, while in other parts of the country they were much more difficult to obtain. Such differentiation in the treatment of payments is very difficult to defend. Thus the basic policy that we adopted in 1980 was sensible.

Mrs. Beckett

The Minister is right to say that it was recognised that the previous system was unfair as between one area and another. But those who wanted to remedy the situation did not imagine that the best way of doing it was effectively to abolish the payments altogether. The hon. Gentleman is being slightly disingenuous when he says that there are still grounds for such payments to be made, since he knows perfectly well that the grounds are those of wholly exceptional wear and tear for some reason, such as health. Secondly, some grounds, such as the ground that children have grown out of their shoes, are specifically disallowed. The Minister may recall that I cited the example of a man who had had a health claim for such a payment on the ground of exceptional wear and tear. His claim continued for several years, as he continued to have such a need, but eventually the DHSS officers ruled that, because it had existed for several years, his need was no longer exceptional for him. The Minister will probably agree that such a decision was a mistake, but it shows that the grounds are now more, and not less, difficult to establish.

Mr. Newton

There is no doubt that grants for clothing and shoes are now much more difficult to obtain. I am not denying that. That was one of the purposes of the change made in 1980. However, I cleave to the view that it was sensible to increase the regular amount paid to two substantial age ranges of children—the main subject of the hon. Lady's remarks — thus giving their families greater weekly payments of benefit and making it that little bit easier—although I do not say easy —for them to budget for regular replacements. It was, indeed, more sensible to do that than to maintain a system under which the benefit rates for those groups of children were lower and under which their parents had to ask for a separate assessment by a DHSS office every time that they needed clothes or shoes. That was not a particularly attractive proposition administratively and, even more importantly, it was not very attractive to the families involved to have to face a special means-tested assessment and to have to show that they had less than a certain amount of capital every time they wanted to replace little Johnny's shoes. In the long run, we should try to move away from that approach as much as possible.

Question put and agreed to.