HC Deb 18 June 1985 vol 81 cc169-83 3.30 pm
The Secretary of State for Social Services (Mr. Norman Fowler)

With permission, Mr. Speaker, I should like to make a statement about the annual uprating of social security benefits which takes place in the week beginning 25 November.

The improvements that we are making, which have been allowed for within the Government's public expenditure plans, will increase the Government's social security budget by over £2,000 million in a full year.

As the House will know, the retail price index published last Friday showed a rise of 7 per cent. between May 1984 and May 1985. The Government are pledged to increase pensions and other linked long-term benefits in line with this rise in prices. Accordingly, the retirement pension for a single person will rise from £35.80 to £38.30, an increase of £2.50 a week, while the pension for a married couple will rise fom £57.30 to £61.30, an increase of £4 a week.

This will mean that between November 1978 and November 1985 pensions will have gone up by over 96 per cent. some 10 percentage points more than the expected rise in prices over the same period. Thus, we have more than fulfilled our pledge to protect the retirement pension against rising prices.

Public service pensions will similarly be increased by 7 per cent. We shall also further ease the earnings rule—that is the amount which a pensioner can earn without a reduction of his pension. This will be increased from £70 to £75 a week.

The basic rate of unemployment benefit will be increased by 7 per cent. from £28.45 to £30.45 for a single person and from £46 to £49.25 for a couple.

Supplementary benefit is increased in line with the retail price index excluding housing costs. This is because people on supplementary benefit have their housing costs met separately through housing benefit. All the main supplementary benefit rates will therefore be increased by 5.1 per cent. The long-term scale for a couple will go up by £2.90 to £60 a week. The ordinary scale for a couple will go up by £2.30 to £47.85 a week. The scale rates for children will go up to £18.20 for a child aged between 16 and 17 years, £15.10 for a child aged between 11 and 15 years, and £10.10 for a child under 11.

The extra weekly payments to cover items such as heating and special diets will be increased in the usual way. Heating additions will be increased by 4.4 7per cent. in line with the rise in fuel prices, while the additions for special diets will go up by 3 per cent. in line with the rise in food prices.

I also intend to make a change to the additions which are given to supplementary benefit households with central heating systems. Those special additional payments were introduced in the early 1960s because at that time central heating was more expensive. That is no longer generally true. In the meantime, there has been an extensive development of additional help with heating costs for those such as pensioners and the disabled. Claimants already receiving central heating additions will continue to receive them while they remain on benefit. However, I propose that no further awards of such additions should be made to people claiming on or after 5 August, but the range of automatic heating additions for the special needs of particular groups will be extended so that from November the lower standard rate of heating addition, which will then be £2.20 a week, will be paid automatically to sick and disabled householders on the long-term rate of supplementary benefit.

Turning to housing benefit, the needs allowances, which are increased according to a formula which takes account of increases in average local authority rents and rates as well as the supplementary benefit rates, will be increased by the full 5.8 per cent. to £47.70 for a single person and £70.20 for a married couple.

The uprating of the housing benefit needs allowances will further increase spending on a benefit which is already paid to well over 7 million households. Expenditure will increase to £4½ billion in a full year. The Government believe that it is right to restrain further growth in housing benefit expenditure. We therefore propose to increase the rates taper above the needs allowance from its current level of 9 per cent. to 13 per cent.

No one on supplementary benefit or with income within £10 of the scale rates will be affected by the change. Indeed, a pensioner couple would need to have an income nearly £13 a week above the retirement pension level before their overall benefit increase was reduced by even lop a week as a result of this change.

The Government believe it right to maintain child benefit for all children, irrespective of the income of their parents. Nevertheless, we have to consider its level both in relation to overall priorities within social security and, in particular, with the aim to do more for families with children on low income.

The Government have concluded that child benefit should be increased in November to £7 a week. However, one-parent benefit will be increased by the full 7 per cent. from £4.25 to £4.55 per week; and families on supplementary benefit will not be affected and will benefit from the increases in the scale rates for children. At the same time, we propose to take two important steps to give additional help to less-well-off families with children.

First, the prescribed amounts in family income supplement will be increased by more than 7 per cent. to give all FIS families extra help. In addition, we shall introduce new higher prescribed amounts for families with older children. That will mean, for example, that the prescribed amount for a child aged between 11 and 15 years will be increased by an extra £2 and for a child aged 16 and over by an extra £3 a week ahead of prices.

Secondly, we shall increase the child's needs allowance in housing benefit to £14.50 per week—£1 a week more than the normal uprating would have required.

Taken together with the reduction in national insurance contributions for lower paid workers announced in the Budget, those two measures are further steps towards reducing the unemployment trap and directing help more effectively to the families most in need.

Benefits for disabled people, war pensioners and war widows will all be increased by 7 per cent. This will mean that the pension for a war widow will go up to £49.80, the higher rate of attendance allowance will increase to £30.60 a week and mobility allowance will go up to £21.40.

For invalidity benefit, the Government propose to make a total increase of 12 per cent. This will restore the 5 per cent. abatement as well as giving the full 7 per cent. uprating. It will mean that invalidity benefit will increase from £34.25 to £38.30 for a single person and from £54.80 to £61.30 for a married couple. This will bring it in line with retirement pension once more and give an increase of £4.05 a week for a single person and £6.50 for a married couple.

I should also take this opportunity to tell the House that it is our intention to take powers to increase the £10,000 vaccine damage payment, which has remained at that level since 1979, to £20,000.

The measures announced in this statement will add over £2 billion to the social security budget. The result is that the budget will now stand at over £42 billion a year, almost a third of all Government spending. I shall be laying a schedule giving the increases in the main benefit rates before the House.

As I have already told the House, this will be the last time that benefits are uprated in November. Next year an uprating will take place in July before the new annual cycle based on April begins in 1987. The Government will be introducing an amendment to the Social Security Bill in another place to enable this change.

Had we continued with the unreliable forecast method of uprating introduced by the last Labour Government, the uprating of benefits that I am announcing today would be substantially less. As it is, this uprating will protect those people in greatest need, give extra help to many disabled people and fulfil our pledges to the pensioners of this country.

Following are the main social security and housing benefit rates:

Existing weekly rate £ Proposed weekly rate £
Main contributory and non-contributory rates
Child benefit
Each Child 6.85 7.00
One parent benefit
First or only child of certain lone parents 4.25 4.55
Standard rate of retirement * and widows pensions, and widowed mothers allowance
Single person 35.80 38.30
Wife or adult dependant 21.50 23.00
Earnings limit for retirement pensioners 70.00 75.00
Standard rate of invalidity pension
Single person 34.25 38.30
Spouse or adult dependant 20.55 23.00
Invalidity allowance
(i) Higher rate 7.50 8.05
(ii) Middle rate 4.80 5.10
(iii) Lower rate 2.40 2.55
Standard rate of unemployment benefit Beneficiary under pension age
Single person 28.45 30.45
Wife or other adult dependant 17.55 18.80
Beneficiary over pension age
Single person 35.80 38.30
Wife or other adult dependant 21.50 23.00
Standard rate of sickness benefit Beneficiary under pension age
Single person 27.25 29.15
Wife or other adult dependant 16.80 18.00
Beneficiary over pension age
Single person 34.25 36.65
Wife or other adult dependant 20.55 22.00
Widows allowance (first 26 weeks of widowhood) 50.10 53.60
Maternity allowance 27.25 29.15
Attendance Allowance
Higher rate 28.60 30.60
Lower rate 19.10 20.45
Severe disablement allowance 21.50 23.00
Retirement pension for persons over pension age on 5 July 1948 and persons over 80* 21.50 23.00
Therapeutic earnings limit 23.50 25.00
Invalid care allowance
Increase of invalid care allowance for wife or other adult dependant 12.85 13.75
Mobility allowance 20.00 21.40
Guardians allowance/child's special allowance 7.65 8.05
Rate of the child addition to windows, invalidity, and retirement pensions, invalid care allowance and severe disablement allowance and unemployment and sickness benefits where claimant is over pension age 7.65 8.05
Existing weekly rate £ Proposed weekly rate £
Industrial injuries benefits
Disablement benefit (100 per cent. assessment) 58.40 62.50
Unemployability supplement 34.25 38.30
Special hardship allowance (maximum) 23.36 25.00
Constant attendance allowance/exceptionally severe disablement allowance 23.40 25.00
Industrial death benefit widows pension
First 26 weeks 50.10 53.60
Higher permanent rate 36.35 38.85
Lower permanent rate 10.74 11.49
Main supplementary benefit rates
Ordinary rate
Couple 45.55 47.85
Person living alone 28.05 29.50
Non-householder 18 and over 22.45 23.60
Non-householder 16–17 17.30 18.20
Any other person aged 11–15 14.35 15.10
Any other person aged under 11 9.60 10.10
Long-term scale rate
Couple 57.10 60.00
Person living alone 35.70 37.50
Non-householder 18 and over 28.55 30.00
Non-householder 16–17 21.90 23.00
Board and lodging limits
Ordinary board and lodging † £45.00 to £70.00
Hostels £70.00
Residential care homes £110.00 to £170.00
Nursing homes £138.60 to £198.60
Heating additions
Lower rate 2.10 2.20
Higher rate 5.20 5.45
Central heating additions
Lower rate 2.10 2.20
Higher rate 4.20 4.40
Estate rate heating additions
Lower rate 4.20 4.40
Higher rate 8.40 8.80
Housing benefit needs allowances
Single person 45.10 47.70
Couple/single parent 66.50 70.20
Single handicapped person 50.30 53.20
Couple, one handicapped/single handicapped parent 71.70 75.70
Couple, both handicapped 74.15 78.25
Dependant child addition 12.85 14.50
Main increased war pension rates
Disablement pension for Private or equivalent (100 per cent. assessment) 58.40 62.50
Age allowance with assessment of:
40 per cent. to 50 per cent. 4.05 4.35
Over 50 per cent. but not more than 70 per cent. 6.35 6.80
Over 70 per cent. but not more than 90 per cent. 9.10 9.75
Over 90 per cent. 12.70 13.60
Unemployability allowance
Personal allowance 38.00 40.65
Increase for wife or other adult dependant 21.50 23.00
Increase for child 7.65 8.05
Existing weekly rate £ Proposed weekly rate £
Constant attendance allowance
Exceptional rate 46.80 50.00
Intermediate rate 35.10 37.50
Normal maximum 23.40 25.00
Half and quarter day 11.70 12.50
Comforts allowance
Higher rate 10.10 10.80
Lower rate 5.05 5.40
Mobility supplement 22.25 23.80
Allowance for lowered standard of occupation(maximum) 23.36 25.00
Exceptionally severe disablement allowance 23.40 25.00
Severe disablement occupational allowance 11.70 12.50
Clothing allowance (per annum)
Higher rate 79.00 85.00
Lower rate 50.00 54.00
Widows pension—Private's widow
Standard rate 46.55 49.80
Childless widow under 40 10.74 11.49
Rent allowance (maximum) 17.70 18.95
Age allowance for elderly widows
Age 65 to 69 5.00 5.35
Age 70 to 79 10.00 10.70
Age 80 and over 12.50 13.40
Family income supplement
Prescribed amount, family with one child 90.00
Child under 11 97.50
Child 11–15 98.50
Child 16 and over 99.50
Increase for each additional child 10.00
Child under 11 11.50
Child 11–15 12.50
Child 16 and over 13.50
Maximum amount payable, family with one child 23.00
Child under 11 25.00
Child 11–15 25.50
Child 16 and over 26.00
Increase for each additional child 2.00
Child under 11 2.00
Child 11–15 3.00
Child 16 and over 3.50
* An age addition of 25p per week is payable to retirement pensioners who are aged 80 or over.
†. Depending on area.

Mr. Michael Meacher (Oldham, West)

Is the right hon. Gentleman aware that the uprating of child benefit by less than one third of the rise in prices is targeting children as the first losers in his Green Paper cuts package? Is he aware that that decision will deprive 7 million mothers and 12 million children of £220 million during next year? Is he aware that that betrays the pledge solemnly given by his predecessor and restated frequently by Ministers that it is the Government's intention to uprate child benefit each year to maintain its value." —[Official Report, 28 July 1980; Vol. 989, c. 1063.] Is it not clear that the uprating was revealed today only because the Government had no choice? Otherwise, it would have been concealed like the rest of the cuts in the pipeline. Is this not a clear sign of the shape of things to come, and does it not reveal all too blatantly why the Government have refused to give the Green Paper figures—so that we could not know who the losers would be?

Is the right hon. Gentleman aware that surveys have shown that one third of all children now grow up in poverty or in low-income families? Does it not demonstrate the Government's scale of values that they would rather cut cash to children than tax perks to the rich? Is it not now clear that the Government have signalled further cuts in or freezing of child benefit when they say in paragraph 4.49 of the Green Paper that they will have regard to the need to concentrate resources on the area of family credit in determining the overall level of child benefit? Does that not mean that the Government intend to cut the value of child benefit even further?

Is the right hon. Gentleman aware that we welcome the restoration of the 5 per cent. abatement of the invalidity pension, while pointing out that it should not have been cut in the first place? When will the Government restore the cumulative loss to the long-term sick and disabled for the annual 5 per cent. shortfall over each of the past five years? Why is not the 5 per cent. abatement on maternity allowance and sickness benefit being restored at the same time? Why have the Government three years after the abolition of the earnings-related supplement, still not fulfilled the promise then given by the then Under-Secretary of State for Social Services, the hon. Member for Wallasey (Mrs. Chalker), to improve maternity pay when the earnings-related supplement is no longer paid with the maternity allowance."—[Official Report, 14 May 1981; Vol. 4, c. 920.] Is the right hon. Gentleman aware that one of the most significant points about his statement today is what it omits? It omits to give our 10 million pensioners any share in rising living standards. Is he aware that if Labour's policy of uprating pensions in line with either prices or earnings, whichever is the higher, had not been chopped by the incoming Tory Government, single pensioners would today have a pension £3.90 a week higher than today's uprating, and married pensioners would have a pension no less than £6.15 higher every week this year?

The statement is a cuts statement. It shows the path on all the issues other than those for which the Secretary of State is statutorily required to uprate by law which the Government intend to take over the next few years. It shows who the Government Will discard first. Even this Government cannot blame children for their dependence, yet they have started to whittle away the only income guaranteed to every child without fear or favour.

Mr. Fowler

That is one of the most ludicrous responses that I have heard even from the hon. Gentleman. We have announced today an extra £2 billion of spending. The effect is that the social security budget will now exceed £42 billion. That is one third of the total of public spending. Against that background, it is ludicrous to say that the Government are attacking social security.

The fact is that, in spite of all the problems of past years, we have maintained our commitment to those most in need and those in retirement. The fact is that the pensions increase, to which the hon. Gentleman referred, means that pensions have increased by 96 per cent. since November 1978, which is 10 percentage points ahead of inflation. When the hon. Gentleman lectures us about our concern for the pensioners, let me remind him that it was his Government who presided over a 110 per cent. increase in inflation, which was devastatingly bad news for every pensioner.

The hon. Gentleman's major point was about child benefit. We are spending £2 billion in this uprating. We have had to decide the social priorities for that spending. The first priority must be to give help to families in greatest need. That is why we are giving a full uprating of one-parent benefit. That is why we are giving a full uprating of the children's scale rate on supplementary benefit as well. That is why we are giving more help to family income supplement families with older children. That is why we are giving more help through the housing benefit child needs allowance. The first aim is to direct help to the poorest. We have identified the poorest families as being one of the areas that we most want to help. That is precisely what we are doing.

Mr. Robert McCrindle (Brentwood and Ongar)

If, as many commentators predict, the rate of inflation in November, when these increases are paid, has fallen again below 7 per cent., will not that represent a small but welcome increase in the standard of living of the beneficiaries?

Mr. Fowler

That is precisely the point that I made in my statement. As my hon. Friend realises, inflation is now at 7 per cent. The forecast is about 5 per cent. for November-December this year. Had we kept to the forecast method of the Labour Government, the uprating would be less, and pensioners would receive £1 less in their pension than under this up rating.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Is the decision to cut back the increase in child benefit a one-off decision, or has the right hon. Gentleman taken the view that child benefit will continue to suffer in terms of indexation in the foreseeable future?

Mr. Fowler

Each year, and at each uprating, we have to decide what the social priorities for spending are. We have made it absolutely clear that the first aim, the first call on resources, is direct help for families whom we define as being in greatest need. However, we shall keep the issue under review.

Mrs. Edwina Currie (Derbyshire, South)

Does not my right hon. Friend feel even a little sorry for the Opposition spokesman, the hon. Member for Oldham, West (Mr. Meacher), who constantly uses the lurid language of Armageddon and attributes to the Government all sorts of nefarious motives and activities when the facts are just the opposite? Cannot we buy the hon. Gentleman a violin, and then it might sound a bit better? Does not today's uprating of £2 billion show that the Government keep their promises and will care for the most needy in our society?

Mr. Fowler

We do not want to attack the hon. Member for Oldham, West (Mr. Meacher) too much, because he might be moved unless we are very careful. What the uprating most certainly shows is that we are keeping our word and our pledges to the pensioners, and we shall continue to do so.

Mr. Jack Ashley (Stoke-on-Trent, South)

Is the Secretary of State aware that I welcome the increase in the vaccine damage payment? However, does he agree that it is no real substitute for a comprehensive compensation scheme, which is what the children merit and deserve?

Rather than feeling sorry for my hon. Friend the Member for Oldham, West (Mr. Meacher), will the right hon. Gentleman reflect on the fact that any increase must be more than 7 per cent. — the inflation rate—to be meaningful, and that any increase less than 7 per cent. would be a cut, which would be disgraceful?

Mr. Fowler

I do not accept the right hon. Gentleman's last point. As I have explained to the House, we have increased spending by more than £2 billion as a result of the uprating. The right hon. Gentleman will know that within a budget of more than £42 billion decisions must be taken.

I am grateful to the right hon. Gentleman for his comment on the vaccine damage payment, and realise that he would like us to go further. Nevertheless, I hope that he feels that we have taken a fairly giant step in the right direction.

Mr. Ian Lloyd (Havant)

Whatever its merits against a wide range of criteria—and I do not dispute that there may be some—does not the announcement represent a massive transfer of real resources from the economically active to the economically inactive population? Do the Government accept that there is a limit to that transfer, and, if so, what is it?

Mr. Fowler

It seems to me and to the Government that we have a responsibility to care for and to provide resources for those in our country who are most in need. It is a responsibility that the Government will fulfil.

Mr. Frank Field (Birkenhead)

I thank the Secretary of State for his announcement of benefit increases. May I draw his attention to the part of his statement on which he did not dwell? Will he list those benefits and parts of benefits that have been cut? How many millions of claimants will be affected? What will be the total saving of public expenditure?

Mr. Fowler

The major changes concern child benefit, housing benefit and the central heating additions. The measures all told will reduce the increase in the social security bill by £85 million this year and £250 million in a full year.

Mr. Douglas Hogg (Grantham)

Does the fact that my right hon. Friend feels unable to uprate child benefit by the full 7 per cent. suggest either that wealthier people should pay tax on the benefit or that they should not receive it? If either of those policies were pursued, would not more resources be available to those in greatest need?

Mr. Fowler

Perhaps my hon. Friend will concede that we have sought to direct more resources to those families in greatest need through the family income supplement scheme. I am sure that my hon. Friend already knows that if we followed his advice on taxation of child benefit the result would be a reduction in the take-home pay of literally millions of people. That is a step about which we should think carefully before taking it.

Mr. Derek Foster (Bishop Auckland)

Will the Secretary of State confirm that one of the most urgent priorities is families with children? Does he recall the statement of former Secretaries of State and successive Ministers that one of the most effective ways of tackling family poverty is child benefit? How does he justify failing to uprate child benefit in line with inflation?

Mr. Fowler

For the reasons that I have just given, not only are we retaining child benefit as a universal benefit, but in the uprating we are providing a full uprating of one-parent benefit, children's scale rates on supplementary benefit and more help for families on family income supplement. That seems to me a sensible priority aimed at providing more help for low-income families.

Mr. Patrick Cormack (Staffordshire, South)

Does my right hon. Friend remember that when many of us were first elected to this House 15 years ago today the Conservative party was already committed to the abolition of the earnings rule? Can he now set a date for that abolition?

Mr. Fowler

I very much wish that I could, but I cannot at the moment. We have eased the earnings rule and we are entirely committed to abolishing it. We will continue to keep under review the exact date when that can take place.

Mr. Harry Ewing (Falkirk, East)

Is the right hon. Gentleman aware that had the Government not abolished the earnings-related rule in relation to pensions, single pensioners would today be £3.90 and married couples over £6 a week better off? That means that under his stewardship pensioners are worse off than they would have been had the Conservatives not been in office.

Mr. Fowler

It would also have meant that contributions and tax would have had to be increased—[Interruption.] Either contributions and tax would have had to be increased or there would have had to be cuts elsewhere in the social security budget. It would have been a matter of choice. I should have thought it more sensible to keep to the policy that we are pursuing and to keep pensions in line with prices.

Mr. Michael Stern (Bristol, North-West)

Does my right hon. Friend agree that the only way in which this policy of keeping pensions rising faster than prices can continue in future is to abolish the impossible commitment to the SERPS scheme?

Mr. Fowler

To the extent that the emphasis in future should be on the basic pension rather than on the state earnings-related scheme, I agree with my hon. Friend.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

While the general uprating is to be welcomed, will the right hon. Gentleman agree that the comments made by him and the Minister for Social Security at Question Time begin to look rather cynical? Is it not evident that by not increasing child benefit to the rate at which it should be increased and by ploughing enhanced cash support into family income supplement — which the right hon. Gentleman spent Question Time discrediting because of its low level of take-up — this is a cost-cutting exercise which is not targeting in on family poverty?

Mr. Fowler

No, it is making use of the mechanism and structure that we have. We want to replace FIS by the new family credit scheme, but, clearly, that will take some time to achieve. Family income supplement is being increased, and that is one of the effects of what I have announced.

Sir William Clark (Croydon, South)

By all accounts, £42 billion spent on welfare in this country is rapidly approaching, if it has not passed, the maximum figure that the taxpayer can afford to pay. If it is Government policy, with which I agree, that the poor should be helped, why is not child benefit taxed in respect of the wealthy? Take-home pay will be reduced if child benefit is taxed, but that must be equitable if we wish to help the poorer people.

Mr. Fowler

My hon. Friend is right to say that we are spending an enormous amount on social security. About one third of all public spending is going on the social security budget. There is not much that I can add to what I said about child benefit. I know of no other country in western Europe which does not recognise—through the tax system or the benefit system, or both — the additional cost for all parents of having children. I regard that as a sensible policy and a sensible recognition.

Mr. James Lamond (Oldham, Central and Royton)

If the budget is £40 billion when inflation is running at 7 per cent., surely that should be increased by £2.8 billion to keep up with inflation. Is the right hon. Gentleman aware, therefore, that £800 million more is required, in addition to the increase that he has announced? Does he appreciate, in other words, that his statement represents for many people a real cut in benefits of £800 million?

Mr. Fowler

The hon. Gentleman is allowing his conspiracy theory to run away with him. I have explained that there is a different benefit uprating and that it is 5.1 per cent. for supplementary benefit, and we must bear in mind the administrative costs of the system. I gave (Mr. Field) the figures, and I assure the hon. Member for Oldham, Central and Royton (Mr. Lamond) that there are no hidden cuts.

Mr. Nigel Forman (Carshalton and Wallington)

Is my right hon. Friend aware that many of us on the Conservative Benches warmly welcome the overall shape of his announcement and its components, notably the real price protection for the unemployed and pensioners? Will he bear in mind that when the change in child benefit was made it was part of the deal that, because it was a move from a system of tax allowances to one of child benefit, it should be available throughout the income scale?

Mr. Fowler

I entirely agree with my hon. Friend.

Mr. Dennis Skinner (Bolsover)

Is the right hon. Gentleman aware that, if he really wants to help pensioners, those on supplementary benefit and others, the easiest way of doing so is to get more people back to work to reduce the £20 billion that is spent on financing the dole queue? If the right hon. Gentleman did that, he would really help the people who are suffering. If the right hon. Gentleman is so sure that he is doing the right thing, why are there now many more millions of people in poverty than when the Conservative party took office? Although the Tory press will applaud the right hon. Gentleman tomorrow, the truth is that he has tried to turn a pan of boiling water into a seven-course dinner, but we shall see through it.

Mr. Fowler

We look forward to the hon. Gentleman's offerings. The way to reduce unemployment is not to preside, as the last Labour Government did, over an inflation rate which went out of control because that—

Mr. Neil Kinnock (Islwyn)


Mr. Fowler

If the Leader of the Opposition does not agree, his credibility is even shakier than it was before.

Mr. Gordon Brown (Dunfermline, East)

Why is the Secretary of State implementing his social security review decisions with cuts in housing benefit, heating additions and the real value of child benefit? Does he recall the Prime Minister saying that raising the value of child benefit was evidence of the Government's commitment to the family? Does he recall his statement before the election that child benefit was the most cost-effective way of helping families with children? How many people will lose because of these decisions?

Mr. Fowler

I have already sought to set out the areas of loss with respect to child benefit, housing benefit and central heating additions and the amounts involved. I must point out to the hon. Gentleman, who continues to be sour on every conceivable point concerning supplementary benefit, that, by any standards, an uprating that costs more than £2 billion a year cannot be dismissed as the action of some mean-minded Government.

Mrs. Virginia Bottomley (Surrey, South-West)

Does my right hon. Friend agree that his decision that families on family income supplement should receive higher prescribed amounts for older children will make an enormous contribution to the working poor and will alleviate the poverty and unemployment traps prior to the introduction of family credit?

Mr. Fowler

It can certainly be seen as a step in that direction. One of the anomalies of the present position is that, although the child rate for supplementary benefit distinguishes between ages, that does not occur with respect to in-work credit. We have tried to move in that direction.

Dr. Oonagh McDonald (Thurrock)

Will the right hon. Gentleman now admit that he was trying to mislead the House in his remarks about Labour and pensions upratings, as was shown in his reply to my hon. Friend the Member for Falkirk, East (Mr. Ewing)? Will the right hon. Gentleman now state clearly that, if the link between earnings and pensions had not been abolished by his Government, single pensioners would be better off by £3.90 a week and married pensioner couples by £6.15 a week? If the earnings link had applied, they would have received a similar uprating during the Conservative party's period in office. Will the right hon. Gentleman now admit that honestly and truthfully to the House?

Mr. Fowler

The hon. Lady has said absolutely nothing about how that will be afforded and how the resources will be gathered. To provide benefits of the size proposed by the hon. Lady, contributions and taxes would have to be increased, or she would have to cut elsewhere in the social security budget. If the hon. Lady wants an example of what the Labour Government did, she should look back to the mid-1970s when Mrs. Castle was Secretary of State for Social Services. She changed the uprating rules, operated on a forecast basis and saved more than £1 billion from pensioners.

Mr. J. F. Pawsey (Rugby and Kenilworth)

Does my right hon. Friend accept that the £4 per week increase for pensioner couples will be widely accepted by both sides of the House as the action of a caring and compassionate Government? Does my right hon. Friend accept, however, that some hon. Members believe that child benefit should be concentrated on those who are most in need?

Mr. Fowler

I do not have anything further to add on the question of child benefit. I am certain that the increase for pensioners, which we are announcing this afternoon, will be widely welcomed because it shows the Government's continuing commitment to pensioners.

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

Why will not the Secretary of State confess that, even on pensions, he has not been generous? He has done only the absolute minimum required by law to keep up pensions with inflation. There has been no real increase. Will he admit that, because of cuts in housing benefit and heating assistance and his failure to increase the age allowance in line with inflation, many hundreds of thousands of pensioners will even have part of this increase clawed back.

Mr. Fowler

We have committed more than £2 billion of extra resources to social security. The bulk of those resources will go to pensioners. That is a fact, and it does the hon. Gentleman no credit to deny it.

Mr. Patrick Nicholls (Teignbridge)

My right hon. Friend has been criticised for the fact that this Government abolished the earnings link with pensions. So that pensioners may assess what is on offer from the two parties, will my right hon. Friend remind the House that, in three of the five years when the earnings link existed, the Labour Government had to get out of it because they could not even honour their own legislation? When the then Labour Secretary of State for Social Services was criticised for not taking that factor into account, he said, "We had to take it into acccount; we did not have to get it right." What sort of cynicism is that? What prospect does that hold for the future of pensioners under a Labour Government?

Mr. Fowler

My hon. Friend is entirely right. We are content to be judged on our record with respect to pensioners and to let the public decide on that record.

Mr. William Cash (Stafford)

I congratulate my right hon. Friend on his statement and on the Green Paper, which represents a landmark in responsible government. Will he explain more precisely how he will protect widows? Will they receive the 7 per cent. increase that has been allowed for everyone else? He was not entirely specific on that point.

Mr. Fowler

Widows' benefits will increase by 7 per cent. in the normal way and will be fully uprated. I shall make a further announcement concerning widows in the speech that follows these exchanges.

Mr. Meacher

Will the right hon. Gentleman confirm that. the non-indexing of child benefit will cut about £220 million a year while the extra resources that he boasts of concentrating on children in families on family income supplement will amount to only about £5 million? Will he acknowledge that he misled the House a moment ago when he said that pensioners would have lost out under Labour's pension uprating formula? That formula included the earnings link, as a result of which after six years of Labour Government pensioners were 20 per cent. better off in real terms, which is far more than after six years of Tory government.

Mr. Fowler

The figure for which the hon. Gentleman is searching is not the one that he has cited. The net saving in child benefit in a full year is £175 million. If the Conservative Government had kept to the forecast method used by the last Labour Government, this uprating would have been less. The Labour Government—I think that the hon. Gentleman was a Minister in the Department at that time—changed the uprating formula to save money. In present terms, a Labour Government would be saving more than £1.25 billion in one of the most cynical moves ever perpetrated by any Government.