UP-RATING BENEFITS (Hansard, 22 July 1985)

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

§ Mr. Deputy Speaker (Mr. Ernest Armstrong)
With this we may discuss Lords amendment No. 38, in schedule 6, page 69, line 26, column 3, at end insert—

"In section 125(1), the words "in the month of June".

In section 126A(1), the words "in the month of June"."

§ Mr. Newton
The amendments make it possible for the Government to align the social security uprating year, which currently runs from November to November, with the year which applies to tax, rent and rates—April to April. The Government have given notice of that intention.
There were two possibilities. One was to have a 16-month gap between upratings, from November to April. We did not find that prospect attractive, so we decided to adopt the obvious alternative—to have two 744 upratings in the 16-month period. We intend to make social security upratings in November 1985, July 1986 and April 1987.
We need to amend the Bill because the current law requires the Secretary of State to review social security benefits in June. The amendment allows the Secretary of State flexibility to conduct upratings at shorter intervals over the next two years. I hope that the House will think that reasonable.
I emphasise that the change in the law will not allow us to make upratings at intervals of more than 12 months. Benefits must be reviewed at intervals which cannot exceed 12 months. We intend to stick to the historic method. Upratings will be related to a measured past increase in prices—the latest that we can consider in order to carry out the uprating when it is due. I hope that the House will agree to the amendments.

§ Mrs. Beckett
We understand the proposed mechanism, but we have reservations about the dates. Are the dates likely to be in legislation. or will they be arbitrary? Most of the proposals for the social security' review are likely to be unpopular, so perhaps we can see a hint of the date for the next general election, as we are to have two upratings before April 1987.

§ Mr. Frank Field (Birkenhead)
Twice in our history Governments have tried to change the length of the year. The first was in medieval times, and the second was during the period of this Government, when claimants had to live in a 53-week year and then in a 54-week year.
The House should welcome the move so long as we have an undertaking that it will not be used to cut the real value of benefits. I have three questions for the Minister. When the Government calculate the move to July and then to April, will the calculation accurately reflect the number of weeks involved? Secondly, may we have an undertaking that because prices vary throughout the year, with peaks and troughs which are evened out on a year-to-year basis, the move will not lead to benefit levels which are lower than the old November-to-November levels? Thirdly, since convention, and not statute, links supplementary benefit to prices, will that convention be maintained?

§ Mr. Newton
I shall answer first the hon. Member for Derby, South (Mrs. Beckett). The amendments will give the Secretary of State flexibility in the uprating date, although the interval cannot be longer than 12 months. My off-the-cuff reaction is that I can see no reason why the actual dates for the uprating need to be written into legislation.
I do not understand the first question asked by the hon. Member for Birkenhead (Mr. Field). The problem about the number of weeks in a benefit year arises because of the quirks in the calendar. Our calendar does not have precisely 52 weeks in a year. I do not wish to weary the House with another lecture on the phenomenon which came to be known to the cognoscenti as "creep", but the hon. Gentleman will be aware that if upratings take place religiously at 52-week intervals they steadily advance through the year, and if one projects into the next century there could be two upratings in a year because of that phenomenon.
We propose two upratings at eight-month intervals, so it is fruitless to argue about how many weeks there are in a month. I do not understand the hon. Gentleman's 745 argument. We shall take the latest available retail prices index for the appointed time, which enables us to carry out the uprating at the time that we want to do it, and apply that faithfully to the benefit figures.
I understand the hon. Gentleman's second question more clearly. We abandoned the old forecasting method because of its uncertainties. Without going back to that method, it is difficult to estimate the precise effects on benefit levels of using different periods. It is clear that any change in the period of uprating means that at some point in the following period benefit will be higher than it would otherwise have been because the uprating has been advanced. At some other period it would be lower for the opposite reason. The exact effects at a particular time will depend on the pattern of inflation, which I cannot predict.
I hope that I understood the hon. Gentleman's third question. We certainly intend to maintain the historic basis of uprating and to apply it in the way described. We shall not alter the method without making it plain to Parliament. We think that our proposal is sensible and right.
I do not wish to mislead anybody. Supplementary benefit uprating is related to the retail prices index, less housing costs. That is another complicated factor which makes it difficult for me to give better answers to the hon. Gentleman's questions. I hope that the hon. Gentleman will be reassured.

	"In section 125(1), the words "in the month of June".
	In section 126A(1), the words "in the month of June"."