§ The Secretary of State for Social Services (Mr. Norman Fowler)
I beg to move,That this House welcomes the Government's Green Paper, Reform of Social Security, Cmnd. 9517–9; and endorses the Government's aims of achieving a better social security system which would direct help to the people who need it most, make the benefit system simpler to understand and run, base pensions on a partnership between the state and individuals, and put social security on a sound basis which the country can afford.
§ Mr. Speaker
I should inform the House that I have selected the amendment in the name of the Leader of the Opposition. As no fewer than 32 right hon. and hon. Members have expressed interest in contributing to this important debate, I propose that speeches should be limited to 10 minutes between 6 pm and 8 pm, but I hope that those contributing later in the debate will also observe that limit.
§ Mr. Fowler
The central question in this debate is what changes should be made to social security to equip it for the role that it has today and to prepare it for the developments that are to take place in the next half century. Whatever differences there may be in the solutions suggested, very few people outside the House are arguing that nothing should be clone. The case for reform—the need for change—is overwhelming. In the Green Paper the Government have set out their plans for reform. These plans are based on an 18-month examination of the social security system—the most extensive examination for 40 years. In that time we received 4,500 separate submissions of evidence and held some 20 public sessions to take further evidence.
It is clear that social security suffers from a range of defects. It is too complex, with more than 30 different benefits, each with its own rules. Help does not always go where it is most needed despite the vast budget devoted to social security. There is also the totally unjustifiable position in which some people can find themselves worse off if they take a job than if they remain on benefit. The system is not properly equipped with computers to provide the best possible service to the public. The potential for co-operation between the social security and tax systems is not being achieved.
The whole system cries out for reform. That is why the Government are tackling the matter. Of course, there are those who argue that it is all so immensely difficult that Governments should avoid the challenge, but I do not believe that such an attitude is justifiable. Fundamental problems exist today and other emerging problems, such as the future cost of the social security budget, will affect not only our children but many contributors today. Any Government worthy of the name must face those issues. To do otherwise would be an abdication of responsibility.
There is also a responsibility on any other party which has any pretensions to form a Government to set out its policies. In the debate in the coming months we shall want to know just where the Labour party and indeed the other parties stand on their own policies—not just what they are against, but what they are for.
We should not forget that the Labour party has been conducting its own review of social security. According to The Observer of 14 April, the review undertaken by the hon. Member for Oldham, West (Mr. Meacher) was 188 intended to pre-empt the Government's Green Paper and was seen by his colleagues as an election winner. On 15 April the hon. Gentleman published his proposals. They involved scrapping mortgage tax relief, scrapping the married man's tax allowance, which would bring about 1 million people back into tax, and spending a further £15 billion. Clearly, not all the hon. Gentleman's colleagues regard him as a natural election winner, but the fundamental point remains that we are still waiting for the Labour party's full report.
§ Mr. Fowler
We have published several volumes of our report. When the hon. Gentleman published the first two chapters of his report he said that the full proposals would be published shortly by Spokesman Books. I hope that nothing nasty has happened to them at the printers.
It is just not good enough for the Opposition, not only to avoid setting out their own policies, but to duck the real debate on the structure of the system on the basis of a bogus argument about figures. The Government have made it clear—and I make it clear again today—that we shall set out a range of illustrative figures with the White Paper in the autumn. The purpose of the Green Paper is to get discussion of the structure and the principles of reform. I hope that by the time we put forward our range of figures the Leader of the Opposition will have put forward not just illustrative figures but some illustrative policies on behalf of the Labour party.
§ Mr. Fowler
Perhaps I may continue.
The central purpose of the Green Paper is to focus discussion on the structure of social security that we want for the next 30, 40 or 50 years. Nowhere is that more important than in the context of pensions. I hope that one point, at least, will be accepted by the House—that the projections have changed since the estimates published before the introduction of the legislation which set up the state earnings-related pension scheme. The 1974 White Paper published by the Labour Government appears to have assumed that the number of retirement pensioners would rise from 8.2 million in 1975–76 to about 9.5 million in the years 2010. No prediction of the number of pensioners was provided beyond that year. In fact, there are already not 8.2 million, but 9.3 million, people receiving retirement pensions. Moreover, evidence is now available which was not available at that time — in particular, the results of the 1981 census, which did not become available until 1984.
As a consequence of the census figures, the Government Actuary has increased his estimate of the number of pensioners in 2010 by 1 million—that is, 1 million more than expected in 1974. Beyond that, the best estimates available to us show that there will be a further 2.5 million pensioners by 2035. The peak number of pensioners will therefore be up to 3.5 million more than was publicly acknowledged in 1974 and 4 million more than we have today. At the same time, the ratio of contributors to pensioners worsens. The assumptions on which the SERPS scheme is based have thus been overtaken not only on population projections but on the other central assumption of 2.5 per cent. unemployment and a certain 3 per cent. annual growth.
§ Mr. Fowler
Perhaps I may continue.
It is important that the Opposition should understand the thesis on which this is based. The result in terms of cost is basically this. There are now 9.3 million pensioners in this country. Providing pensions currently costs £15.4 billion, excluding the extra £1 billion of pensions spending that I have announced today.
In 50 years' time there will be 13.2 million pensioners. Providing basic pensions for them will cost between £22 billion and £43 billion a year at today's prices, depending on the basis of uprating—whether it is by prices or by earnings. On top of that, the state earnings-related pension scheme will add £23 billion a year. That is not significantly dependent upon the basis of the uprating. It is inflexibly fixed by the rules of the scheme and the promises which we are now making to ourselves about what our children should pay. In short, we face a pensions bill which will at least treble in real terms if we do not act now.
I do not believe that this evidence can be ignored or simply swept under the carpet. At some stage those issues will have to be faced. The real question is not whether anything should be done, but what should be done. That, of course, is not just my view, or just the Government's view; it is a view supported by a range of other organisations.
§ Mr. Brynmor John (Pontypridd)
What is the change since 20 May 1983 and what new figures have become available since then, when the Government fought the last election on a pledge to keep SERPS as it was?
§ Mr. Fowler
The census figures which came through in 1984 revealed that there would be 1 million extra pensioners, not by 2035, but by 2010. The hon. Gentleman has great experience in this area. On the best evidence available to the Government—which would be available to any Government — the increase in the number of pensioners between now and 2035 will be 3.5 million to 4 million.
It is not just the Government who are setting out this case. It has been made by organisations such as the Institute for Fiscal Studies, which, referring to SERPS, said:It is difficult to discuss the future of social security rationally in the shadow of this foolish commitment.One has to consider the views of the political parties. The Liberal party has never agreed with the introduction of SERFS. Indeed, in April, Lord Banks, the Liberal party's spokesman in the other place, wrote to The Daily Telegraph to point out that he and his party hadconsistently opposed the introduction of SERPS".For the Social Democratic party, Mr. Dick Taverne, the party's social security expert, was entirely unequivocal. Speaking on Channel 4 in February, he said:The state earnings-related pension scheme is something which we won't be able to afford in the long run, so we should scrap it now before too many rights are acquired.I concede—if that is the right word—that the leader of the SDP has changed the emphasis from that admirably clear statement of policy. As I understand his position now, it is not that SERPS should be left unaltered. He believes that, rather than a replacement, a restricted SERPS might be a better answer.
That is an option which we looked at in the review and which we discuss in the Green Paper. It is an option which one of the outside advisers on the review, Mr. Lyon, has made it plain he would prefer. I was surprised to hear the right hon. Gentleman the Leader of the Opposition quoting 190 Mr. Lyon's views with such reverence last week, for basically what restricting SERPS means is that contributions to the state scheme remain the same while benefits are reduced.
Whatever is done to restrict SERPS simply cuts the benefits without putting anything in their place. That will still leave the two nations in pensions—one nation with its own occupational pension and the other nation without. Frankly, I do not believe—and I am content that the leader of the SDP should pursue that point—that Mr. Lyon's proposals have much attraction, either economic or human.
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
Is it not the case that the Government said in 1981, on the first quinquennial review of the state earnings-related pension scheme, that changing from the relationship of prices to earnings, to prices only, would undermine SERPS? Was that not the reason why the Secretary of State said before the review even started, in November 1983, that to set up the inquiry was not to call into question the fundamental pension structure which had been established with all-party support and to which he was himself a party? Finding another one million people is one thing; calling into question the fundamental structure is a totally different matter. Why has the Secretary of State overturned the promise which he gave when he set up the review in the first place?
§ Mr. Fowler
For the very good reason—and it is for the House and for the parties to decide on the merits of the investigation—
§ Mr. Fowler
I accept that, and I am prepared to debate this matter anywhere with the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley).
All the evidence that has become available to us in the course of this review has led me and the Government to question whether SERFS is an obligation. That was the purpose of the review. There is no point in having a review of this kind unless one is prepared to look at the options and at the evidence. One of the most depressing things about this is that Opposition Members call for the figures, but when the figures are produced, they take no notice of them.
§ Mr. Meacher
The Secretary of State speaks with much confidence about these population projections. How does he reconcile this with his own speech, when he said:the population forecasts are uncertain; they need to be treated with some caution.I am glad to see the right hon. Gentleman nodding. He went on to say that now that it was policy to uprate pensions in line with prices rather than earningsit would be difficult to argue that we are unloading an intolerable burden on future generations.Furthermore, why did the Green Paper include the worker-pensioner ratio only to the year 2035, when it is at its lowest point, and not include that same ratio at the year 2050 — figures which were available to the Government — which shows that the figure is considerably better?
§ Mr. Fowler
It seems to me that, not untypically, the hon. Gentleman has just shot himself in the foot. He questions my forecasts up to 2035, he says that those are uncertain, and then he wants me to produce forecasts to 191 2050. The hon. Gentleman has only to look at the Green Paper, in which we have not only set it out up to 2035, but, in the third volume, if I remember correctly, have shown an ultimate position for the number of pensioners. The point which the hon. Gentleman is seeking to make is that 2035 represents a peak of pensioners and a trough of workers, but it is a peak which has to be afforded and sustained. However the hon. Gentleman does his sums—God knows he does them in some peculiar ways at times—over the next 40 or 50 years we shall have between 3 million and 4 million extra pensioners. As social security spokesman for the Labour party, the hon. Gentleman has to face that fact. If he wants to argue that nothing can be changed, that is up to him, but we must argue on some factual basis.
§ Sir David Price (Eastleigh)
Will my right hon. Friend point out to the hon. Member for Oldham, West (Mr. Meacher) that the figures depend upon an improvement in the birth rate, and that if the decline of the past 30 years is not reversed the ratio between pensioner and contributor in 2010 will be a good deal worse than the figures in the table?
§ Mr. Fowler
Yes, and the ratio between contributors and pensioners depends also upon a substantial improvement in employment. The hon. Member for Oldham, West will find it difficult to sustain the case that we are taking an unduly pessimistic view of the future.
The Government's approach is to begin now to face the long-term problems, and to do so constructively. The problem of SERPS is a problem for the next century and we have put forward proposals which will have their effect in the next century. We do not intend to change the position of any existing pensioner or anybody retiring this century. The time scale of pensions, I fully accept, is too long to make changes suddenly, but by beginning now to increase occupational and personal pension cover we will achieve a position where everybody is building up his own pension through his job.
In short, we are proposing, first, that the basic state pension will continue, and will continue to be protected against inflation; secondly, that the state earnings-related scheme will continue for everyone nearing retirement so that no one who retires for the rest of this century will be affected; and, thirdly, that men in their 40s and women between 35 and 45 will be given a special extra entitlement of rights which will be added to their pension.
In other words, the Government are facing the major problems and the major issues now, while at the same time giving everyone the right of an occupational pension or a personal pension with his job. These proposals should be added to the measures which we are already taking to improve the rights of early leavers from occupational pension schemes and to establish transfer rights so that there should be no obstacle to mobility.
§ Mr. Anthony Nelson (Chichester)
Many people will agree with my right hon. Friend's proposal for changing the structure that deals with an actuarial probability of the liability in the future, but we are still left with the problem of having to pay for the substantial cost of the basic state pension and the new proposals for portable pensions. With the new figures, about which we know, of substantially more elderly people, this will, predictably enough, leave an enormous burden which has to be met out of total expenditure. Is there not a case for saying something about 192 grasping the real nettle, which is whether we are prepared, and can afford, in future years annually to index and uprate these substantial benefits?
§ Mr. Fowler
I shall listen to what my hon. Friend says on that. The sensible way to approach this problem—we are agreed that a problem exists — is to put one's emphasis on the basic state pension. The Government are committed to increasing the basic state pension in line with the rise in prices, which is a sensible social and economic priority. At the same time, we want to move to a situation where virtually everyone in a job is building up a pension at the same time. In other words, we want to keep the advantage of personal pensions, but also have the flexibility which a pay-as-you-go system gives as well.
One of the fundamental mistakes in the debate on the pensions scheme is that there is a belief that the national insurance pension and SERPS will be paid from a fund. It will not be paid from a fund, because there is not one. We are seeking to put obligations upon future generations of contributors. The Government are trying to tackle that problem. Strengthening individual provision is only one of the Government's objectives. We also recognise the vital role of our social security system in supporting those in need. Our aim is to develop the system of help for those on low incomes so that it is simpler, easier to understand and administer and fairer in providing help to all those who need it.
The shortcomings of supplementary benefit, for instance, are well established. The endless rules and detailed guidance on their interpretation inevitably lead to inaccuracy and frustration for claimants and staff alike. All too often the present system is also ineffective in achieving its aims. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) asked me about the family income supplement in a question on my earlier statement. It is based on a one-child family, it gives only small additional increases in benefit to those with more children, and it takes no account of the children's ages. Because its structure is to different from supplementary benefit, many families especially larger families and those with children—can find themselves worse off than if they were out of work. That position cannot be supported.
Family income supplement, like housing benefit, is also paid on the basis of gross income. This ignores the 40p in the pound deductions for tax and national insurance which many people in receipt of these benefits still face. The result is that, in some cases, the cumulative loss of benefit is so large as to more than wipe out any increase in take-home pay. The proposals which the Government have now put forward will tackle those problems at their roots.
For the first time ever in this country, a Government have attempted to deal comprehensively with the needs of all low-income families. Up to now, income-related support has always been provided in a piecemeal fashion and different benefits have been cobbled together at different times to meet different problems. They have never been brought together within a single consistent framework.
The new family credit scheme is at the heart of the Government's approach to income-related benefits. It is based on the belief that there should be an effective bridge for low-income working families between the full support provided for children of those who are out of work and the level of universal assistance through child benefit.
193 Family credit will provide that bridge. It will be based on the same structure as the new income support scheme, with extra help for older children and larger families, to help ensure that families cannot be worse off in than out of work. It will be assessed against pay after tax so that families cannot find benefit being withdrawn faster than their take-home pay increases. It will be paid by employers through the pay packet, so that it acts as an offset to tax and national insurance.
I believe that this method of payment will represent a significant narrowing of the gap between the tax and benefit system. Indeed, once the computerisation of the systems has been completed, it may become possible to use the same system for assessment as well as for payment. I also believe that payment through the wage packet will help to ensure that the benefit is taken up by more of those for whom it is intended.
Our proposals for a new income support scheme, backed by the social fund, will also be a major step forward. The new scheme will do much to end the intrusive personal questioning to which so many supplementary benefit claimants presently have to submit. Our system will be simpler. It will use the same resources—I emphasise that—in a better way to help those who are most in need.
Today, for example, additional assistance for heating and laundry is provided through individually assessed payments. The new scheme will build in the additional help automatically for those groups who are most likely to need it.
There is no question of just scrapping the additional requirements payments and of putting nothing in their place. We would be replacing a complex system, where help goes only to certain individuals after a process of assessment, by a simpler system in which entitlement will be clear and automatic. It would be a matter of taking the available resources and applying them so that they are shared equally and as of right by those groups whose needs are likely to be the greatest.
It is the social fund which will have the task of dealing with the genuinely exceptional circumstances and problems which inevitably arise. This goes much wider than the question of single payments under the existing supplementary benefit scheme. The purpose of the social fund will be to provide help much more flexibly and sensitively in a wider range of circumstances. We will be training staff specially to approach problems from a perspective which takes account of the whole range of an individual's problems. There will, of course, continue to be financial crises which have to be met.
More generally, we would expect the social fund to help people in response to their real needs. This will involve providing loans to those on income support to cope with the cost of unusually large purchases. It will also involve providing extra help with funeral costs and the new larger maternity grants. We will also be looking to develop the role of the social fund as a more active partner, with the health and social services authorities, and with the voluntary sector, in finding the right mix of cash and care to meet the needs of the elderly and other priority groups.
§ Dr. David Owen (Plymouth, Devonport)
Will the Secretary of State accept that if the social fund is to win acceptance it cannot be cash limited, and that it must be able to reflect need?
§ Mr. Fowler
I accept that it must be able to establish that it is meeting need. I do not accept that it cannot operate within a budget in much the same way as many other areas in the social field operate. What I say to the right hon. Gentleman, who has had experience in the DHSS, is that there is no dignity in the present single payments system. Whatever criticisms may be levelled now at the social fund, I think that very few people would want to perpetuate the present system.
§ Mr. Frank Field (Birkenhead)
I think that the Secretary of State's statement on family credit is the most significant that he has made on the Green Paper. He said that it would result in a significant narrowing of the gap between benefit and wage levels. How can he give that assurance to the House if he has not worked out his new scheme with figures? If he has, may we have the figures?
§ Mr. Fowler
For the very good reason that the movement to net pay is the most significant movement and the most significant policy development in the whole Green Paper. That is set out in the Green Paper, as the hon. Gentleman knows.
§ Mr. Neil Kinnock (Islwyn)
We shall have more of the family credit system later. In the meantime, is the Secretary of State giving us a guarantee that, notwithstanding the fact that it will be cash-limited, the social fund cannot run out and that, if there is in any year a large number of claims on that fund, it will be extended?
§ Mr. Fowler
I said that we believe that the social fund can operate within a budget in the same way as, in the Health Service, for example, the hospital service works within a budget and the health authorities work within a budget. What we are trying to do here is to improve the position, and clearly we will be guided by the experience that we have in the operation of that fund. The right hon. Gentleman knows perfectly well—if he does not know, he should know — that the present position is indefensible. The present position, which has existed not just under this Government and not just under the previous Government, but since the 1940s, is indefensible.
The new role for social security will take time to develop, but, as with our aim of improving co-operation between the tax and benefit systems, we are anxious to see those parts of the welfare state which provide help to those in need work more closely and effectively together.
The final part of the new co-ordinated system of income-related benefits will be a much simpler housing benefit scheme. As with family credit, it will be assessed on the basis of net, not gross, income and will be based on the same broad structure as income support. This will mean that those on equivalent incomes will get equivalent help with their housing costs whether they are in or out of work—and that help will extend to 100 per cent. of rent for the poorest groups. As I have made clear, we are seeking to check—and. I am being entirely frank—the amount of money going on housing benefit, for the good reason that one third of all households are receiving help with their housing costs, and help with domestic rates can extend to people well up the income scale.
We have therefore proposed to set a maximum limit on the help which can be given with rates. Much will 195 obviously depend upon the outcome of the Government's review of local government finance, but the principle that everybody should make at least some contribution to the cost of local services is one which the Government believe to be right.
I should just like to clear up one point on which some misunderstanding has arisen. Our plan for the restructuring of widows' benefits was based on the objective of giving greater help to widows at the time when they need it most — that is at the time of bereavement. We intend to replace the present widow's allowance by a sum of £1,000 payable at the time of bereavement. This will be in addition to the continuing benefits payable to widows with children and older widows.
I can tell the House that the lump sum payable to all widows will be entirely tax-free, unlike the existing widow's allowance which it will replace.
The Green Paper is intended to carry forward the debate about the sort of social security system which we want in this country. It is a fundamentally important debate. It is a debate about principles, structures and policies. In that debate, the Government's position is clear. We want a simpler system—one which gives better service to the public and directs help most to those most in need. We want a system which is soundly based—now and for the future —and we have set out in the Green Paper our proposals for achieving those ends.
The responsibility to set out policies is not just on us alone. What has been lacking from the debate so far is any clear statement of the policies and principles which the Opposition Parties wish to put forward. Therefore, we look forward to hearing today from the right hon. Gentleman the Leader of the Opposition what his policies are. We welcome also the opportunity that he has to set out the position; for example, whether he endorses the £15 billion spending programme of the hon. Member for Oldham, West, and what his plans are for changing mortgage tax relief. Will he tell us whether he intends to abolish the upper earnings limit for employees? Will he tell us whether his pledge to retain the state earnings-related pension scheme is also a pledge to reintroduce contracting out, or will he instead be looking to put into effect the Labour party's plans for Government direction of pension funds investment? I say to the right hon. Gentleman seriously that those are the questions to which the public and the House will want to know the answers.
The Government's aims are clear. We are seeking a new partnership in social security. We are setting provision by the individual alongside provision by the state. We are looking for a simpler system which is fairer between those in and out of work and which directs more help more effectively to those who need it most. Above all, we are looking for a modern and better managed social security system which is adjusted to the needs of today and able to meet the challenges of the future.
§ Mr. Neil Kinnock (Islwyn)
I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:'whilst seeking to achieve a more just and efficient system of provision and contribution for social security, strongly condemns the proposals made in the Government's Green Paper, Reform of Social Security, which would, if implemented, destroy many of the established and widely supported principles of care for the needy in Britain, bring about substantial reductions in income, security and, therefore, freedom for pensioners, mothers, 196 widows, low income and pensioner home owners and low paid and unemployed families, result in increased means-testing for the poor in order to produce savings in resources for the rich, and force the great majority of workers to pay higher contributions for pensions without providing for the needs of the disabled; and rejects as fraudulent the Government's claim to be undertaking consultations when they refuse to provide proper estimates of payments and contributions resulting from proposals for major and retrograde change which they have never put to the electorate 'We have just been treated to the extraordinary spectacle of a Secretary of State in a Government with a huge majority in their second period of office, and with major proposals to put to the House, concentrating much of his speech not upon a defence of his Green Paper but on a series of questions addressed to the next Government. That is a confession of a massive weakness in the Government case, and we look forward to hearing more of that from the Secretary of State. Before we go any further, I should tell the right hon. Gentleman that when the Labour party puts its proposals before the House and the country before and after the next general election, there are two things that we shall not do. I shall not write to right hon. and hon. Members saying, as the Prime Minister did on 20 May 1983,nor are there any proposals to change the system.Nor will I permit my Secretary of State for Social Security to give any undertaking — [Interruption.] I know that this embarrasses the Secretary of State greatly. I will not permit my Secretary of State to give any undertakings that, if he should set up any inquiry, it will not call into question the fundamental pension structure that was established by the Social Security Act 1975, to which he was a party. He ratted on that, and he has been twisting all afternoon. It is about par for the course.
The Green Paper on the reform of the social security system calls itself the "most major fundamental" review of the welfare state since William Beveridge's report on social insurance and allied services in 1942. With such a monumental project in hand, it is a shame that we could not depend upon the Prime Minister to present it to the House. I am glad, together with my right hon. and hon. Friends, to demonstrate the great importance that the Labour party attaches to this destructive set of proposals. The Prime Minister is using the Secretary of State as a figleaf, and never was there such an emaciated figleaf.
This fundamental review—the biggest for 43 years, as the Government repeatedly tell us—was never put before the electorate for their assessment. The independent experts recruited to assist in its compilation are deserting the Prime Minister even faster than she is disowning them. If the review is a set of reforms with the benevolent purpose of improving and clarifying the social security system, Sweeney Todd was a medical researcher and the blitz was an exercise in town planning.
The Government tell us that their review and the changes proposed by it have five objectives: resolving the financial issues of future pensions provision; directing resources effectively; clarifying the social security system for claimants; simplifying the administration of the system; and promoting personal independence. At face value, those are noble aspirations, decent intentions and worthy objectives, and we could all support them. But, Mr. Deputy Speaker, by their deeds shall ye know them.
The deeds of the Government stretch like a guilty list through the past six years. Those deeds have resulted in a cut in social security for the disabled, the poor and the unemployed of £9,000 million, at the śame time as the 197 Government have made awards averaging £2,000 million a year to the richest 5 per cent. in society. Those deeds include a change in the formula for calculating old-age pensions, which means that a pensioner couple are £4 a week worse off than they would have been had the Government sustained the earnings pension link. Those deeds include the removal of housing support, which has increased rents by a record 165 per cent. during the past six years. They include the denial of board and lodging allowances to youngsters, which has turned thousands of them into travelling paupers.
§ Mr. Roland Boyes (Houghton and Washington)
Does my right hon. Friend agree that the Government's proposals will subject jobless and homeless under-26-year-olds to a range of economic, social and psychological pressures with which some of them will be unable to cope, leading to some of them taking up crime, drugs and other symptoms of despair?
§ Mr. Kinnock
I am sorry to have to say it, but my hon. Friend is right. Many reports have already been received to show that that sort of thing is happening — [Laughter.] I hope that the constituents of the hon. Member for Bexhill and Battle (Mr. Wardle) have noted his amusement about the position of many thousands of young unemployed people. Yesterday, I heard of the case of a constituent of my hon. Friend the Member for Livingston (Mr. Cook). A young man who went to Edinburgh in search of work was living on the board and lodging allowance, but was later denied that allowance, so that his income was cut from more than £60 a week to just over £20 a week. The allowance ended on 30 May. He was ejected from his lodgings a week later, and two days later, a young man with no history of instability or suicide attempts, committed suicide. I hope that the hon. Gentleman is still laughing.
I do not say that the consequence for every young person, or for most youngsters, will be to fall into such despair and difficulty. I am saying that a completely unjust system has been inflicted upon those youngsters. That is part of the record of this Government, by whose deeds we know them. Therefore when they protest that they wish to tidy up the welfare state and make it coherent and more direct in its application to needs, I say, "Rubbish." I also say that it is hypocritical rubbish from the Secretary aof State and his hon. Friends.
§ Mr. Eric Forth (Mid-Worcestershire)
Does the right hon. Gentleman agree that a great problem caused by the complexity of the present system is the low take-up rate, whereby many people in real need do not obtain benefits that they deserve? Does he agree that the new proposal, which involves a simplification of the process, must lead to higher take-up rates and to real benefit for those in need?
§ Mr. Kinnock
Although I applaud the hon. Gentleman's motives, I must tell him that he does not understand the scheme. How can the take-up rate for housing benefit be increased, when the scheme will deny such benefit to 7 million people who presently receive it? The same system of application to the DHSS applies to the family credit scheme as it does to the family income supplement. How will there be an increase in take-up 198 there? If the hon. Gentleman's aspiration is to increase take-up rates, he will be a sadder and wiser man when he investigates the matter. I hope that, after he has considered the proposals properly, he will vote with the Opposition tonight.
Hardly anyone, except perhaps for the more gullible Conservative Back-Bench Members, believes that the Government are innocent of malice or that they have decent intentions with regard to this measure. Not even the Government believe it. They know that the proposals are not for the reform of the welfare state, but for a raid on the welfare of millions of poor people and pensioners. They know that it is not a shake-up of the benefits system, but a shake-out of the most needy and some of the poorest people in society. That is why they are so coy about giving the figures that will enable a proper assessment to be made, not just of the structure but of the practical implications for those who will be at the sharp end of the proposed changes.
The Green Paper is for consultation and public debate, but no participant in the debate and no one who will feel the results of the proposals is entitled to see the figures. The Government are asking all of us in the House and elsewhere to judge a monumental proposal for a huge structural change—as they say—with hardly any costing of the components of the various schemes and without saying who will gain or lose by the changes, or what they will gain or lose. It is not so much a review as a riddle.
§ Mr. Patrick Nicholls (Teignbridge)
Given the concern of the right hon. Gentleman with figures, does that mean that he will be telling the House by how much a Labour Government would increase taxation so as to maintain services, bearing in mind the cost to the Exchequer? If he intends to criticise us for our lack of figures, how much does he intend to raise tax to restore SERPS?
§ Mr. Kinnock
I am coming to that. In the meantime I hope that the hon. Gentleman will cogitate on why in 1975 his party entirely supported SERPS, why it fought two elections supporting it, and why the Secretary of State said that it was not his intention to change that scheme. Those are the questions that have to be answered. It is the Green Paper bearing the name of the Conservative Secretary of State currently in office that we are debating, and not a Green Paper, White Paper, Queen's Speech or any other proposal from the next Government. At that time, if the hon. Gentleman survives the next general election, I shall be glad to respond to his inquiries.
The excuses for changing the figures have moved with astonishing speed over the past fortnight. On 4 June, when I asked the Prime Minister for dependable estimates, she told me that in accordance with custom we would have to wait for the May retail price index figures. When on 6 June I asked for a reliable indication, the Prime Minister wrote to tell me that we could not have the figures for two years because they would have a spurious precision and might be actively misleading. By last Thursday, 13 June, much had changed. The Prime Minister told us then that they would provide a range of illustrative figures when the White Paper was published in the autumn. It was all very matter-of-fact. Indeed, the Prime Minister was almost eager.
The hon. Member for Suffolk, Coastal (Mr. Gummer), who in addition to his job as Paymaster General is 199 currently temping as chairman of the Conservative party, went even further. On a radio programme last Friday he was so matter-of-fact that he said the figures were always to be in the White Paper. Yet for nearly a fortnight previously the Prime Minister had been resisting all efforts to get her to acknowledge that.
We know that the Government have the information; we know that the DHSS has the information; we know that even the printers have the information. The only people who cannot have it are the House of Commons and the British public who have to deal with the proposals. When we know that the Government have the information and will not give it to us, we can reach only one conclusion —that to publish now would be bad politically for the Prime Minister and for her Government; therefore, the figures have to be studied by the Government's statistical beauty consultants so that, with the advantage of the passage of time and two upratings in pensions and benefits within eight months, they can start to become politically presentable. That is why the Government will not come clean.
Of course, if I may coin a phrase, we are given a lot of fudge and mudge about the figures not being available. Would 'it not be extraordinary if, after all the wrangling and toing and froing of Her Majesty's Government, the Cabinet and the Cabinet committees, there were still no figures available?
§ Mr. Tim Eggar (Enfield, North)
In the Green Paper it is stated clearly that the Government estimate that the cost of provision for pensions will quadruple by the year 2033. Does the right hon. Gentleman accept that figure and, if so, how would he finance it?
§ Mr. Kinnock
I shall come to that in a moment if the hon. Gentleman will bear with me.[Interruption.] I insist on making my own speech. The Secretary of State need have no fear; I shall deal with the matter in detail and with delight. Meanwhile, he can give further attention to inventing excuses as to why — proud as he is of his proposals—he still will not give the figures upon which they are based and how many gainers and losers there will be. This makes the right hon. Gentleman restless but I intend to keep on saying it because that is what the people want to know, and they are right to want to know.
The deviousness and the reluctance of the Government to publish figures extend to the review itself. They used William Beveridge as an alibi. On the second page of the Green Paper they quote from paragraph 9 of Beveridge's report in 1942:The State in organising security should not stifle incentive, opportunity, responsibility; in establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family.
We all say amen to that. There can scarcely be a right hon. or hon. Member who would not agree with every word of that aspiration.
What the Government do not add is that when William Beveridge wrote that he argued that a genuine system of social security went beyond benefit and pension payments and involved full employment, a free National Health Service and decent housing available to all. When he wrote that in 1942 he was trying to organise the conquest of want, idleness and poverty; eventually he got the consent of all parties in the House of Commons.
200 No such motive inspires this Government. On the contrary, they are the Government of mass unemployment, not full employment, the Government of cuts and charges in the National Health Service, not of a free National Health Service, and the Government who have presided over the biggest rise in rents, rates and mortgage payments and the lowest number of building starts in the whole of modern history. That is the difference between Beveridge and Fowler. They should not try to perpetrate such a confidence trick on the British people as to quote in aid William Beveridge with his different aims. They cannot use that alibi.
Wherever it is examined, the Green Paper demonstrates that the Government do not have the purpose, the tenacity or the humanity of Beveridge or of anyone who has come since. That is evident from the proposed abolition of the state earnings-related pension scheme. The Government have convinced themselves that in the second quarter of the 21st century the nation will not be able to afford SERPS. The Government's own Social Security Advisory Committee does not think that. It says that there are no firm grounds for coming to that conclusion. That advisory committee is right, because the Government's assumptions, built into their excuse for abolition, are the most perversely pessimistic that can be made.
For instance, the Government assume in their figures that real pay will rise by only 1.5 per cent. per annum on average over the next 50 years, when over the last 40 years it has risen by an average 2 per cent. The Government assume in the figures that they offer us that the basic pension will rise in line with earnings. That might be good news. Are they planning to do that five years after abolishing the link and causing so many problems for pensioner couples? They go on to try to argue both ways because in regard to the future they say that the cost would be unsupportable, but they neglect the record of the past.
The Government say that we cannot afford a 2 per cent. rise in pension contributions over the next 50 years but they neglect the fact that during the past six years the Government have sponsored an increase of 2.5 per cent. in those contributions. Why can we not sustain that level of contribution over 50 years when we have—because of the Government's policies—sustained a greater level of contributions for the past six years?
The Government assume in their figures that the work participation rate will remain constant over the next 50 years. In the past 40 years it has risen by 4.5 per cent. They assume that the number of pensioners will rise. At last, they are right, but they also assume that the economic growth rate will fall. That will occur only if we have a succession of Governments over the next 50 years who are as ruinous as this Government have been.
§ Dr. Alan Glyn (Windsor and Maidenhead)
Does the right hon. Gentleman think that Beveridge realised what the proportion of the working population to the retired population would be? Did he have any idea that the percentage would be so great?
§ Mr. Kinnock
We can discover Beveridge's figures. I can meanwhile talk about 1985 and the attitude that is consistent with William Beveridge's philosophy. In 50 years' time three workers will be getting the equivalent of six workers' incomes now. Every three workers will earn twice in real terms what is being earned now. Even on the Government's assumptions, that will be "the equivalent of 201 double what is being earned now. Nobody says that no problems will arise from that, but that does not make it impossible to sustain a proper pension scheme for retired people.
The Government are pessimistic. They have failed to take into account changes in the economy, the increasingly intensive capitalisation of the economy and the higher production which will occur as soon as they are out of office. They assume next to nil growth over the next 50 years. If that were to be the case, we would be worried about pensions, but that worry would be subsumed in our immense anxiety that the country was going out of business. The Government make all those assumptions and come to the conclusion that we cannot afford SERPS. Even if their calculations were correct, their reactions to the calculations would still be wrong. If the nation will have difficulty paying its retired people a decent pension, the situation will be made worse by abolishing SERPS, which is the fairest, most efficient and cost-effective of the pension schemes in the present system.
As a result of the abolition of SERPS, everyone will pay more for their pensions than they pay at present. That is made clear in one of the few facts that is offered to us in the Green Paper. Some 11 million people contracted into SERPS pay 19.4 per cent. in national insurance and pension contributions. That figure will rise to a minimum of 20.5 per cent. The 11 million people contracted out of SERPS, who now pay a minimum of 17.25 per cent. in national insurance and pension contributions, will be required to pay a minimum of 20.25 per cent.
The abolition of SERPS will make pension provision more expensive for everyone currently and in the future. A guarantee of a decent pension is to be torn up by the Government. With their proposals to abolish SERPS, the Government are not facing the future, as they claim. They are betraying the future of millions of people who will have no realistic means of providing themselves with a decent and dependable post-retirement income. That is a betrayal that applies to today's citizens as much as to tomorrow's. The Government are trying to give the impression that they are seeking to direct benefit more effectively. That is their second aspiration.
The Government talk a great deal about targeting and trying to give the impression that they want to mix compassion and prudence, and that they want to offer the country a mixture of provision and genuine pity.
All experience of Toryism, ancient and modern, is that targeting is not inspired by the aim to help those in need. It is a system operated to limited means-tested aid to the most pathetically destitute. That is what the Government mean when they talk about targeting. Whether it is applied to heating allowances, death grant, matenity payments or housing benefit, the targeting system—nothing that the Secretary of State said this afternoon dissuades us from this—exists to deny, to deprive and cheapen, and not to meet genuine needs of our society. It exists to humiliate, not to help. It exists to put shame back into need.
§ Mr. Richard Tracey (Surbiton)
A few moments ago the right hon. Gentleman promised my hon. Friend the Member for Teignbridge (Mr. Nicholls) that he would tell us the rate of taxation that our children would be paying 202 to finance the Labour party's plans for SERPS. Will the right hon. Gentleman now tell us whether it is right, as The Economist predicts, that it will be 45p in the pound?
§ Mr. Kinnock
No, that is not right. [Interruption.] Here we have a Government with a majority of 190 asking for the figures. I am not going to give them. The hon. Gentleman had better answer two other questions. First, what contribution rate will be needed to meet social security needs and pensions in 2015 or 2035? Secondly, if he thinks that SERPS must be abolished to lighten the load, how does he think that private pension schemes will pay for the pensions of the next century? Will that be any cheaper? It will be cheaper only as a result of the conscious betrayal of the people by a Tory Government in 1985 because the basic national insurance benefit, which is all that they will have, will be worthless. That is what the hon. Gentleman must accept if he will not face up to the options and the requirements of the future. We shall do that. Let him try to persuade his right hon. Friend to do so, then we shall have more respect for him.
The Government propose what they call "nilcost" reform — the idea that the sums taken from some claimants and beneficiaries can be transferred to others. As the poor will assist the poor, it is an exercise in crumb shuffling. It is a transfer from the near-poor to the near-destitute; from the needy to the wretched. It means depriving those who are barely managing. They are to be robbed, but even the transfer of those resources—which is not guaranteed—will fail to help those in the depths of poverty.
The result of depriving those who are near-poor to help those who are near-destitute will be a huge increase in poverty overall. I shall use the example of housing benefit. Some 7.2 million households, including 4 million pensioner households, will lose some benefit, and some 1.8 million households, including 1.2 million pensioner households, will lose benefit completely. That will deprive those households without giving anything worthwhile to those who are even poorer—conceivably their sons and daughters. That will hammer pensioners with small occupational pensions.
In my constituency, for example, there is a 68-year-old widow. She is an owner-occupier, as so many of my constituents are because Wales has a great many owner-occupiers. She may be in receipt of a pit pension, a British Steel Corporation pension or a works pension of some kind. She will be hit, because she and her husband were prudent, thrifty, earnest and fastidious enough during their working lives to set something aside to provide an extra £10 or £12 a week. The Government now intend to take housing benefit away from that woman.
They will not admit it yet, but Conservative Members know very well that there is poison in the Government's proposals for those people who might currently think, in their thriftiness in retirement, that they are not affected by the Government's proposals and that the Government would not harm them after their lifetime of service and work. Well, they have some sad news coming and the most appropriate people to tell them are Conservative Members. They ought to tell their constituents now what will happen to the 70 to 80 per cent. of them who are getting housing benefit. They should do one of two things — stand up against the Government and stop them undertaking this act of larceny or take cover, because the wrath, when it comes, of those people—the unjustly 203 deprived—will be mighty and just. It will happen in other spheres—for example with the social fund. The Secretary of State was characteristically evasive when I asked him about it. It is cash limited, but it is as long as a piece of string, or that is what we were given to believe. We shall examine it more closely when we have some figures.
Whatever benefits may be claimed for the social fund or the income support system, simplicity is not one of them. They will introduce a system of eight different classes of benefit in the income support system and a cash limited social fund, presided over by local benefit officers with supplementary training. That will be very good for local benefit officers. How many ways can you say no? Will they need special training to tell people they have run out of the fund or that these people are getting too much pay to qualify for the income support system? Is that what the Government mean by simplification? It does not give simplification or coherence. It gives us a nasty byzantine mess which will snarl up and deprive even more people.
The Government say in the Green Paper that they want to end the Dickensian paper chase. That is a sweet thought. They cannot do that by installing a Dickensian pauper chase which only Mr. Bumble the Beadle and possibly the Secretary of State would be happy with. Family credit will be a nightmare for employers and for those entitled to claim. Employers will need to know the household income of claimants to judge their entitlement. The implications of that in terms of privacy, complexity and administration costs for the employer are huge. The Government, in their family credit proposals, are not decreasing complexity and introducing coherence or simplification, but increasing complexity and passing it on to employers. These days it seems that even chaos must be privatised.
The Government tell us that unemployment is caused by higher wages and, in the same breath, they tell us in the Green Paper that unemployment is caused by higher benefits. Well, it is one thing or the other. They say people cannot get work because wages are too high and that people will not take work because the benefits are too high. It is never the Government's fault. That is what they always tell us. Now, with family credit, they have a new message for the low paid. They are saying, "Take low wages to price yourselves into jobs like good little workers, but do not take wages so low as to entitle you to family credit for, if you do that, you will either not dare to take increases for fear of losing credit or you will be in such problems" — [Interruption.] Is the right hon. Gentleman trying to tell me that family credit, subject to a six-monthly review, will not vary according to the level of wages received by the low paid?
§ Mr. Fowler
No, but I am trying to tell the right hon. Gentleman that it represents a considerable advance on the family income supplement system, and that basing it on net earnings is a substantial step forward. I am sure that the right hon. Gentleman wants people to be better off and to be taking an increase in salary so that they are better off in work than on benefit. Does he not want that?
§ Mr. Kinnock
I am strongly in favour of that, but perhaps the Secretary of State can answer another question. Does he think that there is no danger of employers in the system further reducing wages, confident that the deficit can be topped up by the taxpayer? I am anxious for a reply. It appears that the right hon. 204 Gentleman does not think that there is any such danger. I must tell him that the sad thing is that, because of the Government's majority, we might have a chance to find out, but I think that my estimation will be nearer to what happens than his.
In the family credit system, there is no extra independence as the Government suggest is the last and the finest of their objectives. It is insulting and dishonest for the Government to suggest that their proposals do anything to increase people's independence. We are being offered "stand on your own feet" Toryism which will give more people the right to live on their own knees. That is the essence of the Green Paper and of the philosophy of the proposals behind it.
The Government can quote Beveridge and say that security should not stifle incentive, opportunity and responsibility in establishing a national minimum, but when the national minimum is so low, so conditional, so inaccessible, so subject to poking and prying and so subject to means testing, it creates permanent insecurity. That is what the poor will be doomed to if we implement the proposals in the Green Paper. When that permanent insecurity exists, there is no incentive to respond to, no opportunity to be taken, no means of exercising responsibility—much as people would like to exercise it. There is only that paralysing, numbing and disabling state of poverty. Conservative Members must be familiar with it. They do constituency work and must meet people who are poor and who are obsessed in every word and action and thought by their poverty. It is inescapable. It surrounds them constantly and dominates their every consideration.
The idea of those people exercising initiative and of their taking an opportunity of fulfilling responsibility is a taunt and a mockery. That affects men and women, but most it affects women because women and children form the majority of the poor, whether they are low-paid mothers with families, widows with or without families, single parents, wives of men who are unemployed, low-paid or part-time workers getting Britain's lowest wages, or single women unemployed. The fact is that those women are the majority of the poor. Under this Government, for the past six years, women and children have come last for aid and first for attack.
§ Mr. Kenneth Carlisle (Lincoln)
Is the right hon. gentleman aware that what drives our constituents to despair is the fact that they simply cannot understand the complexity of the system and that when they get wage increases they are worse off? Those are two aspects of the system which we are trying to cure.
§ Mr. Kinnock
I am sure that the hon. Gentleman is sincere about his question and that he makes every effort to service his constituents. However, in this Green Paper, none of those needs are met. He had better re-examine what the Secretary of State says and the impetus behind the proposals. It is nothing to do with introducing kindness or tenderness into the welfare state, but it is the product of a Government who have shown such gross incompetence in their conduct of economic affairs that they have increased unemployment by 2 million and increased poverty by 3 million, the results of which are the vast new bills for social security which they must meet. With typical meanness, they have decided to respond not by generating employment, growth and new investment, but by cutting benefits and making the poor poorer.
205 The condition of women should concern us all. It is extraordinary that the awful disadvantages have been inflicted upon women in this country, by, to her credit, the first woman Prime Minister, who preaches thrift and prudence as great virtues—we endorse that entirely—and penalises people for exercising those virtues throughout their working lives. She penalises women and deprives them of the very means of being prudent and thrifty, which they want to be.
§ Mr. Kinnock
I shall accept no more interruptions.
People in such depths of poverty know that, despite their being careful, prudent and fastidious, their income will nevertheless run out after five days of the week, and they will remain poor, not merely next week or the week thereafter, but next month and next year. They remain poor because the right hon. Gentleman who presides over the system has no ambition to use it to release people from poverty.
The poor hate their poverty, and we hate their poverty with them, yet the Government will now make it worse. The Government will worsen their position with the interlocking system of family credit and with cuts in housing benefit and income support. Poor people will be caught in an even bigger snarled-up mess of bureaucracy and means tests. The non-working poor will be disadvantaged by losing benefits and suffering new burdens, and the working poor will suffer from reductions ranging from school milk and school meals to housing benefit and other pass book benefits, which they can claim under the present system.
In this plan, as in every other, the Government will ensure that the burdens are borne by the working population, the poor population, the unemployed population, the pensioner population and the disabled population. That is what they have done in every respect in every Act during the past sad, sour, six years. Their changes will inflict massive disadvantages on many millions of people today and tomorrow. Their policies first impoverish people by denying them work and by inflicting cuts and disadvantages on them through local government fund cuts, health cuts and low pay. When the Government have created that extra poverty, they define the impoverished as a parasitic group who must be afforded only the most reluctant charity. When the Government have turned claimants of right into supplicants for benefits, they pass on their responsibility and put the blame, pressure, power and responsibility on overworked benefit officers, who become the front line between our needy and the British state. That is a poor law philosophy and practice, which demeans both the givers and the takers.
We are fighting and we will continue to fight the Government's defeatism. We shall fight their philosophy and proposals, not because we are complacent about or content with the present system, but because we want greater efficiency, simplicity and accuracy in affording help in the welfare state. In that enterprise our purpose must be to defeat poverty and insecurity, to provide care and opportunity, and not to increase misery and decrease dignity, which will be the direct consequences of the Government's proposed changes. Those aims must be common to the whole House.
206 The purpose of reforming our system must be to remove all divisions, not create further divisions, to eliminate poverty, not stigmatise it, and to enhance security, not destroy it, which will be the consequences of the Government's proposals. We have widespread support for those objectives of change, with consent and in the name of humanity, justice and opportunity. We have widespread backing in our campaign against these proposals. We shall continue to have support, because the Government's policies will diminish the whole country in that they will divide, impoverish and offend against the decency of the whole country.
Every measure of public opinion demonstrates the strong resilient decency of the British people, and shows that they want to wage war on poverty, not on the poor. The British people demonstrate that they are prepared to pay, not merely for themselves but to help those in need. When that comes from the British people, it is not soft sentimentality, but plain, common, ordinary British decency — the greatest attribute of our society. With their pinched and prejudiced attitude, their meanness and malice, the Government are entirely eccentric to that feeling of decency. We are left with the bile and spite of a Tory Government who are pre-Churchillian in their attitudes. I say to the Government, do not commit further wrongs, get rid of these plans and be British.
§ Sir David Price (Eastleigh)
Hon. Members will agree with the right hon. Member for Islwyn (Mr. Kinnock) about the need to find consensus for changes in our social security system. Other than in that respect, his speech bore no relation to the Green Paper. It was a pantomime effort and consisted of all the hyperbole that he uses in his more emotional moments.
Unlike the right hon. Gentleman, I congratulate the Government on their courage in introducing these proposals and in trying to face the changes in our society and their effects on our social security system. I congratulate them on their readiness to look deep into the next century. In pension terms, to think 50 years ahead is to deal with the present generation. In political terms, it is thinking at least 12 general elections ahead. Although some people would argue that that is thinking too far ahead, I congratulate my right hon. and hon. Friends on having the courage to think so far ahead. There was a time when the Labour party talked about forward planning, but from the right hon. Gentleman's speech it seems that the only planning that it does is thinking and looking backwards, if not in anger, at least with nostalgia.
The need for a major reform of our social security arrangements is shown in the chilling figures which appear in table 1.2 in volume 2 of the Green Paper, to which my right hon. Friend the Secretary of State referred. I remind the House, not in absolute terms, but in percentage terms, of what my right hon. Friend said. In 50 years' time the number of old-age pensioners will have increased by 42 per cent., and the number of contributors to pay for those pensioners will have decreased by 30 per cent. One does not need to be a senior wrangler in mathematics to realise that that is a major problem. Anyone who ignores that is being wholly irresponsible.
Furthermore — I interrupted my right hon. Friend when he quoted them—those figures are based on the assumption that we shall recover the birth rate, which has been declining during the past 20 years, to what it was in 207 previous decades. They are also based on assumptions about employment and economic growth which are by no means certain. The figures could be a great deal worse than those quoted. Therefore, my right hon. Friend and hon. Friends are being prudent in trying to face those harsh facts. It would be easy for them to ignore that and merely look to the end of this decade. The Government showed great responsibility by looking so far ahead.
We must never forget that, although we talk about the insurance fund, our retirement pension scheme is not funded, but works on a pay-as-you-go basis. We must always consider how big a burden we are entitled to place on the next generation at work. If the burden is too great, they will kick. Therefore, the Government are right and brave to undertake these massive reviews.
The Government are right to introduce their proposals as a Green Paper. I trust that none of us, above all not the Government, will be dogmatic about the proposals and that they are genuinely open for discussion. I am sorry that the Leader of the Opposition has already made up his mind about the proposals and closed his mind to further discussion. I found them complicated, and they require a great deal of study. I hope that my right hon. Friend the Secretary of State is open to changes in them that will come up during the period of discussion. I ask him; how green is his Green Paper? I hope that it is very green.
The scope of the Green Paper is massive, and I therefore regard this debate as simply the beginning of a long period of inquiry and discussion by us all. In view of the speech of the Leader of the Opposition, perhaps this is a needless and hopeless plea, but I plead for an attempt to find consensus in these matters. The time scale alone requires consensus, because over the next 50 years there will be changes of Government.
The Government's objectives as laid out in the Green Paper are threefold. They are objectives on which I think we can find reasonable consensus. The first objective is that the social security system must be capable of meeting genuine need. I think that we can all agree on that. The second objective is that the social security system must be consistent with the Government's overall objectives in the economy. I know what my right hon. Friend the Secretary of State is after, but I think that it would be more acceptable if it were rephrased to say that the social security system must be consistent with the economic and social stability of the nation. Other parties are entitled to disagree with the overall objectives of the Government of the day. I think that my phraseology would command more general consent.
The third objective is that the social security system must be simpler to understand and easier to administer. My right hon. Friend has pointed out, on numerous occasions, the complexity of the system. There can be no doubt about that. We have to accept a broader approach to the categories of clients for whom we will be providing help and support. It rejects the "fine tuning". I think that that appealed to many of us as a concept. From experience, I think that it is impossible to achieve "fine tuning" that is too sensitive and too selective. The Green Paper supports that view.
I agree with the criticism of the Leader of the Opposition about the absence of numbers in the Green Paper. We ignore at our peril the wise words of the great physicist, the late Lord Kelvin:When you can measure what you are speaking of, and express it in numbers, you know that of which you are 208 discoursing. But when you cannot measure it, and express it in numbers, your knowledge is of a very meagre and unsatisfactory kind.Many right hon. and hon. Members wish to participate in the debate, so I shall briefly draw the attention of the House to only three topics in the Green Paper. The first is the provision for the chronically sick and disabled I find this disappointing, and the reason is the absence of definite proposals. I know that my hon. Friend the Minister for Social Security is conducting a new survey of the disabled — a new Amelia Harris — and until we have it, it is difficult to proceed much further.
I hope that my right hon. Friend and his Department accept what to me is basic in our approach to the chronically sick and disabled; that is the difference between income support and the help that is given to disabled people, because of their disability, to bring them up to the starting gate in life. Into that category I put benefits such as the mobility allowance and attendance allowance. I believe that they are of an entirely different character from what is done on income support, and I hope that during these debates my hon. Friend the Minister for Social Security—
§ Mr. Jack Ashley (Stoke-on-Trent, South)
When the Secretary of State eventually gives the figures, and if they prove that disabled people will be worse off at the end of the review, will the hon. Gentleman be prepared to vote with the Opposition and against the Government?
§ Sir David Price
I have no reason to think that it will go that way. I was about to say that one thing that my right hon. Friend the Secretary of State has said in his Green Paper about the chronically sick and disabled is that he intends to bring in the blind more positively than hitherto. Several hon. Members on both sides of the House have been campaigning for quite a long time for an improved position for the blind, so as one of them I am very pleased. In general, therefore, I am hopeful that there will be not a worsening position, but an improved position, for the seriously disabled.
§ Mr. Frank Field
Can the hon. Gentleman give us an idea of the structure of benefits that we should advocate for the blind?
§ Sir David Price
I should be delighted to do so, but I am not a Minister; I am not in the Department. We are debating the Government's proposals. I could take up too much of the House's time by describing my own views. I was one of the original supporters of the Disablement Income Group. I should have thought that my general position on the disabled was well known to the House.
Secondly, I should like to refer to the age of retirement. In the last Session of Parliament I produced my own Bill, based on our Select Committee report, to try to make the retirement age equal between men and women, and flexible between 60 and 65. I was delighted to read in the Green Paper that the Government take that idea a stage further and are proposing that it should be made flexible between 60 and 70. That is totally constructive. As far as I am concerned, my right hon. Friend the Secretary of State need not carry consultation on this proposal any further, but should implement the proposal.
§ Sir David Price
I should also like to put to my right hon. Friend the thought that he should consider not just full retirement but the problem of semi-retirement. In a civilised society, many people wish to reduce their work burden as they get older. There is something between total retirement and total work. If we are trying to look ahead, we must bring that factor a great deal more into our thinking.
§ Sir David Price
With the growing number of older people in our society, that becomes a great deal more important, and we must think much more imaginatively about what my right hon. Friend the Secretary of State calls a decade of retirement.
§ Sir David Price
I do not want to detain the House for longer than I need to.
My third point is about family support. As I read it, the proposals for the family support—
§ Sir David Price
As I read it, the proposals for family support seem close to ideas which some of us were discussing in the 1972–73 Session in the Select Committee on Tax-Credit. That is why I await with anticipation the Green Paper of my right hon. Friend the Chancellor of the Exchequer on personal income tax. I believe that this is relevant; otherwise these proposals would be only a revamp for the family income supplement. I assume that they are very different. Let me remind the House of what we said in our Select Committee report. I refer in particular to the minority report produced by Lady Castle, in which she said:The one field in which there is an overwhelming case for merging tax allowances and social benefits is in the case of children since there is no other equally effective way of preventing the existence of children from plunging a low-paid family into poverty. The proposed merger of child tax allowances, family allowances and FIS into a child endowment payable to all children including the first is therefore in principle wholly desirable.
That is something to work on. I see Opposition Members nodding—
§ Sir David Price
I shall not give way. I would love to carry on the debate, but I am not giving way, for the simple reason that many more Members wish to speak.
§ Mr. Ray Powell (Ogmore)
On a point of order, Mr. Speaker. Is it right within the rules of the House for an hon. Member to refer to the report of a Select Committee? The hon. Gentleman has read from it at some length. Is that in order?
§ Mr. Speaker
If the Committee has reported to the House, it is in order. If it has not, it is not in order, but I imagine that it has reported.
§ Mr. Frank Field
Is there not one point that makes a difference between what the hon. Gentleman is commending to the House and what the Green Paper is 210 commending to the House — the fact that both the majority and minority reports of the Select Committee said that the credit should be paid to the mother rather than to the father, whereas the Green Paper says that it should go to the father?
§ Sir David Price
These are all matters for debate. I am glad to have the hon. Gentleman's support for my view that we should move towards a tax credit system. A further consideration is when both husband and wife are working. I look forward to my right hon. Friend telling me the Government's view on that. I am sure that the House and the Select Committee will go into that matter in detail. However, I am glad that we have established the principle that the tax credit approach is desirable.
I take seriously your counsel, Mr. Speaker, to be brief. Let us enter into what I believe will be a long debate about the future of our social security system constructively and enthusiastically, and not simply defensively and bitterly.
§ Mr. Speaker
Order. As the House knows, I have been out of the Chamber for a while. When I announced that I would limit speeches between 6 pm and 8 pm, I had not anticipated that the Front Bench spokesmen would take 84 minutes. I therefore propose to revise my judgment and apply the 10-minute limit between 7 pm and 9 pm. I hope that those hon. Members who are called will not abuse that limit.
§ 6.1 pm
§ Dr. David Owen (Plymouth, Devonport)
A review of social security was inevitable and right. But what do we have from this Government? We have a menu without prices and a menu in which the central proposal is half baked—that is, the way in which they have chosen to abolish the state earnings-related pension scheme. It is a menu for which we are now beginning to calculate some of the prices. The poorest households—those with a gross income of £70 a week or less—will be worse off as a result of the changes. Among working families, single-parent families make big gains and there is some redistribution in favour of couples with children generally, which is welcome. But families with high housing costs, whether public or private tenants, will lose housing benefit and will be substantially worse off.
Among pensioners, those on or just above the supplementary benefit level will gain £2.50 a week. Pensioners who own their own houses lose heavily—as much as £3.83 per week. On the whole, the Institute of Fiscal Studies calculates that more than half of all pensioner households will be worse off.
The gainers under the review will be working and non-working families, with children, earning £90 to £150 a week. The losers will be the single unemployed under 25, childless couples in work and pensioners. It is now all too clear why the Government have withheld the figures so far and why they have insisted on a menu without prices. Put simply, it is because 3 million pensioners will be made worse off by the review. That is the larceny, and that is why we charge the Government with stealing from pensioners. That is why, in or out of SERPS, the basic pension element must be increased substantially.
The SDP-Liberal alliance sees considerable merit in a 25 per cent. increase in the basic pension as the consequence of the abolition of SERPS. If SERPS is 211 abolished, there is no more contracting out, so we could give an increase in basic pension by transferring the amount that is currently being put into the private pension industry through contracting out. I calculate that to be £3.5 billion, which could finance a 20 to 25 per cent. increase in the basic pension. It is a more comprehensive change, but it provides for comprehensive cover. It is also by far the most egalitarian scheme. It means swapping the contracted-out portion of occupational contributions under SERPS for a basic pension rise.
The half-baked portion of the review's menu relates to the privatisation of pensions. Although the Secretary of State has been fair in the terms that he has offered for the phasing out of SERPS, the compulsory private earnings-related pension scheme that he wants to take its place has neither the support of significant sections of the private pension industry—which were not consulted and are showing increasing signs of concern—nor the support of actuaries or accountants who doubt whether a private scheme is any more affordable than the presently structured SERPS that it is meant to replace. It does not have the support of the SDP, the Liberal party or the Labour party, so there is no all-party agreement on the Secretary of State's proposals.
It does not have the support of organisations devoted to the alleviation of poverty. Will the disabled, as Mr. Stewart Lyon fears, be sacrificed on the altar of expediency? In short, the Government's privatisation proposals put pensions back into the very political cauldron from which many of us hoped the inter-party agreement in 1975 had rescued pensions. While the current Secretary of State for Foreign and Commonwealth Affairs was very keen on the proposals; the Secretary of State for Social Services was less keen. That poses a dilemma not only for alliance Members but for everyone in the House who wants radical reform but political stability. We have lived through the period of the Boyd-Carpenter scheme, there was the Crossman scheme, the Joseph scheme and then the Barbara Castle partnership. All credit to Barbara Castle for her readiness to compromise in 1975. What I fear is that we may ditch that scheme and replace it with a Fowler scheme which, too, will be ditched in its turn. The pensioners will be the innocent victims of a party political squabble in which none of us is prepared to make any change in what we think are our most prized objectives.
Pretending that there is no problem over SERPS, as the Labour party does, is, quite frankly, to bury one's head in the sand.[Interruption.] If the Leader of the Opposition recognises that there is a problem with the financing of SERPS, we can begin to talk about what should be done. If he is saying that, he must be ready to enter into some form of discussion on how to reduce the cost of SERPS. If he is not prepared to do that— [Interruption.] I am prepared to do that. I have made it clear that we want a basic pension. The alliance has recognised the virtue of some degree of stability. We are prepared to look at the cost. Before the Labour party goes to the rescue of SERPS—
§ Mr. Kinnock
The House should have the benefit of greater detail about what the right hon. Gentleman is proposing. Nine years after heartily endorsing SERPS—together with the actuarial estimates about its installation and continual running—the right hon. Gentleman said recently that he wanted the qualifying period to be 212 extended from 20 to 30 years. That would grossly reduce the effectiveness of the scheme, but that is what he told the pension fund that he spoke to a couple of months ago. He also said that he did not want anyone to be able to claim under the age of 65, including women. He also said that other changes for widows would be desirable. If we are to have a general discussion, it would be worth while for everyone to know about that.
§ Dr. Owen
The right hon. Gentleman's intemperate speech is now more explicable. I never said anything of the sort. I said that we should keep the 20-year eligibility rule—not the best 20 years, but the average. I did not say that the pension retirement age should be raised to 65 for women; I said that we should follow the Social Services Select Committee's proposals for averaging out, bringing it to between 60 and 65 and having a flexible pension age.
Much more important, if we want to cut the cost of SERPS, we should look at the provision of the three pensions. We should allow the survivor to choose which pension is more favourable to him. Those are three serious proposals to cut the cost of SERPS. If the right hon. Gentleman is prepared to consider them, he should exact a price from the Government for changing the structure of SERPS. He should say that he will not cut the cost of SERPS unless the Government are prepared to trade in, as it were, to make it a more redistributive scheme. The scheme was a compromise in which the then Labour Government were forced to make concessions, as a result of which 50 per cent. of SERPS current costs are now due to inflation-proofing private occupational pension schemes.
The right hon. Gentleman should face the fact that no couple earning less than £6,500 per year benefits financially from SERPS. They get instead a basic pension plus supplementary benefit. It is not a perfect scheme. It could be changed with advantage to make it more redistributive, even at a lower cost. Such a response would make sense.
It would, of course, mean that we should all be giving up a little, but the prize would be great. The prize of all-party agreement would be immense, being stability in pension provision and structure into the next century at a cost the nation could afford, with a fairer and more redistributive system. Do not let anybody tell me that that would not be widely welcomed, including by the private pension industry and by pensioners, who are currently apprehensive about what will happen— [Interruption.] We are prepared to compromise. It would mean the Government dropping their scheme of privatised pensions. It would mean the Labour party recognising that there must be changes and a cutting of the cost of SERPS. It would mean us in the alliance giving up our basic wish to have a 20 to 25 per cent. basic pension. But it would be an important and substantial provision, and perhaps only now those in the private pension industry could bring it about. They made the compromises possible in 1975. They, in 1985, could make this House compromise.
We have heard much about Beveridge. For the long term, what would be the approach of a really radical Government? First, they would link benefit reform with tax reforms. The two go hand in hand. A basic benefit would be introduced simplifying and integrating the tax 213 and benefit system. Some of what the Secretary of State has done on child credit represents an important step towards a basic benefit, and we welcome that.
Secondly, such a Government would inject new money to float off the individual anomalies and restrictions that are always created by any reform of benefit. That is where this reform falls down; there is no new money and, while it is meant to be neutral, it is savage in its consequences on some individuals. To create that buoyancy for a radical reform of the social security system, we have said for some time that we should be prepared to abolish the married man's tax allowance, adding to any reform package £4.1 billion, which would ensure that the poorest made substantial gains and that nobody suffered harshly or unfairly.
Thirdly, a radical Government would tackle the hidden welfare state, where relief goes to the well-off through preferential tax treatment of the savings of the rich and where payments in kind distort the tax and benefit distribution pattern, company cars being the most obvious example.
Fourthly, a radical Government would expose the mythology surrounding the contributory principle. National insurance contributions are deeply regressive. They do not fund benefits. They are part of the Chancellor's overall tax take. The Conservatives have raised national insurance from 6.5 to 9 per cent. from 1979 to 1984, raising three times as much through national insurance contributions as they have lost through much vaunted reductions in income tax.
The combined effect of the present tax and benefit separation is that a couple earning £8,000, living in a council house and without an occupational pension scheme pay 26 per cent. of total earnings in tax. On the other hand, a couple earning £24,000—that is, three times as much — with a £25,000 mortgage and contributing 6 per cent., which is about average, to an occupational pension scheme pay 24 per cent. of total income in tax, 2 per cent. less. Such are the distortions of the system, and many hon. Members in all parties believe it is high time that it was reformed.
National insurance takes a far greater proportion of the income of the lower paid because national insurance has a threshold which starts lower, on £34.50, than with tax; employees pay a contribution, once over the threshold, based on all of their earnings, not on that portion that is above the threshold, as with tax; and there is a ceiling to the contributions, unlike for tax, beyond which the better-off pay nothing. It is time that we looked into that.
The course of true radicalism would be to abolish in time national insurance contributions both for employees and for employers and to abolish the rating system and introduce a progressive and simple personal tax structure based on three separate identifiable elements—income tax, social security tax and local taxes. A new corporate tax — perhaps a cash flow tax — would be needed to replace both the employers' national insurance contribution and non-domestic rates.
What we have is no Beveridge. It is, in many senses, a miserable reform package. It has within it the ingredients of some excellent ideas, but it lacks the financial buoyancy to make it a great reform. It also lacks that sense of trying to bring the nation together which is unfortunately the hallmark of this Government's divisive policies. If only 214 the Prime Minister would listen to the voices and treat this consultation period as a genuine period of consultation and say that she is willing to pay a price for stability in pension provision into the next century. That would be the modern equivalent of Beveridge—a great Liberal reformer—and it is no accident that it is to such a broad programme that the alliance is committed.
§ Mr. Ralph Howell (Norfolk, North)
I wish at the outset to congratulate the Government on those parts of the Green Paper with which I agree. I congratulate them on their courage and foresight in tackling the problem of SERPS. That was indeed a courageous step and they have my fullest support in tackling what is a grave problem confronting the nation.
The Government were also right to have initiated major reviews, although they should have included the taxation system, as the right hon. Member for Plymouth, Devonport (Dr. Owen) pointed out. More has come out of the reviews than I had expected. Although what we have is not a new Beveridge, it could be an important stepping stone towards the new Beveridge that we must have at the earliest opportunity.
I welcome the proposed changes for the under-25s. It is high time that we put a stop to some of the nonsense that has been going on, with young people leaving home and being able to obtain benefit too easily. That has been a major factor in discouraging young people from working. Even worse, it has destroyed the authority of the family. Reform of that aspect of the system is long overdue, and I welcome the steps that are being taken.
That said, there are other aspects on which I am not so keen. I am particularly disappointed that there is not to be a radical change in the system of child benefit. It no longer makes sense to give a universal child benefit to everybody, including the most wealthy. It should be means-tested. Any family with an income of more than £120 a week pays more in income tax and national insurance than it receives in child benefit and housing allowance.
It is ridiculous for us to be imposing heavy taxation with one hand and giving benefits with the other. Taxation could be cut by £3 billion if we had the courage to face up to means-testing child benefit. Nobody who needed it would suffer and it would be a logical step to take. We tax the very poor—for example, widows and pensioners—to give tax-free money to the richest, the highest taxpayers, and that must be wrong.
§ Mr. Frank Field
The hon. Gentleman is ignoring one point about which he normally informs the House. Child benefit has two roles — first, the benefit that he is describing, and, secondly, the tax role. How can the hon. Gentleman put forward an argument along the lines he has described unless he says also that other personal tax allowances should be abolished at the same time as child benefit is abolished? Unless the hon. Gentleman does that, he is shifting the burden of taxation from those with children to single people.
§ Mr. Howell
I agree that some tax allowance should be incorporated in the new system.
This brings me to another criticism. We are proposing to extend social security in the form of family credit to those in work to solve the problem of making it worth while to work. This is the wrong way to proceed. We are 215 suggesting that we shall repeat the mistakes that were made in 1970 or 1973 when we extended housing benefit to the private sector. We must find a means of reducing the extent of social security. Between 20 million and 22 million people — nearly half the population — are receiving benefits. I think that everyone will agree that it is intolerable that more than half the population are receiving benefits.
My criticism is that we have not combined this review with an overall review that includes taxation. There is no logic in this proposal, nor can it he successful. The graphs in the Green Paper are meaningless because they do not take account of the impact of income tax at 30 per cent., or whatever the percentage will be in two years' time. The graphs cannot be smooth because the poverty trap will be seen when the impact of taxation is imposed on them.
I urge my right hon. Friend the Secretary of State to consider holding back the review until we have the Green Paper on taxation. We should then combine the findings of that Green Paper and the ensuing White Paper in an overall White Paper that takes account not only of welfare and taxation but of our employment systems.
We have heard a lot about the Beveridge report. This Green Paper has been portrayed as a new Beveridge report. Neither my right hon. Friend the Secretary of State nor the Leader of the Opposition mentioned what Beveridge said about unemployment. We have never put the Beveridge report fully into operation. Therefore, we are in this appalling position. We still have not found a clear way out of our difficulties. It is as though we are in a similar position to a case reported a few weeks ago in the press. A lady was driving up the motorway with only three wheels on her car and sparks were coming out as the axle hit the highway. I do not want to go too far along the road of that analogy. Suffice it to say that the Beveridge coach has had only three wheels—the fourth was never put into position.
Beveridge said that, after a certain period, people would become dependent upon benefits and would become comfortable living on them. He said that paid work or training must be offered to the long-term unemployed in place of benefit. I believe that that can and should be done. We have come a long way with community programmes and other schemes. Why not have a comprehensive, as-of-right community programme? We would then be able to make considerable savings. If every adult were offered work at £80 per week, or £2 per hour, and unemployed 16-year-olds were paid, say, £40 a week, the 17-year-olds £50 a week, and so on, the entire cost would be less than £11.5 billion. Not all the unemployed would turn up for work — many would not wish to work the full 40 hours—and the probable cost of offering every one of the long-term unemployed the right to a job would probably he no more than £7 billion. We are spending between £15 billion and £20 billion on unemployment benefit and measures to solve the unemployment problem. Considerable tax cuts could then be made to get the Government off the backs of all those who are working and creating wealth. If this suggestion were seriously examined, I believe that we would find a way of raising tax thresholds — hon. Members on both sides of the House recognise that this must be done — and disengaging benefits from taxation.
No person should pay tax and receive benefit at the same time. Those with high incomes should pay tax and those with insufficient incomes should receive 216 benefits. There should be an incentive area where a considerable number of people in the middle neither receive benefit nor pay tax. Until we have such a comprehensive review, we shall never get out of our difficulties.
§ Mr. Hugh Brown (Glasgow, Provan)
It is a privilege to participate in this debate, which has been excellent so far. There have been some original ideas, even from the hon. Member for Norfolk, North (Mr. Howell). I hope that I shall maintain that standard.
I begin by referring to some qualifications to enable one to contribute to the debate. I should refer to the type of constituency that I represent. Half of my constituency is officially described as a deprived area. A report published last week referred to my region in these terms:Male unemployment of 40 per cent. and much higher in some neighbourhoods;Overcrowding at seven times the national rate;Three in four households without a car—twice the national level; andAlmost one in 20 infants dying before their first birthday—five times the national rate.That shows some of my qualifications to contribute to this debate.
The local DHSS office in my constituency is one of the largest in the country, with a staff of more than 200 and a live load of 14,500 supplementary benefit cases, 7,000 of them unemployed. There are 27,000 claims for single payments a year, 2,000 of which are either disallowed or are the subject of appeal. About 4,000 people receive direct fuel payments. That is another reason why I think that I can highlight some of the problems concerning social security.
Another qualification for participating in this debate is one's personal experience. I know that I am getting old. I can even remember when the Beveridge report was introduced. I have been a member of the parliamentary Labour party's health and social security group since becoming a Member. I have had the unique distinction of spending 15 years in a local DHSS office. I think that I am in a better position than most to appreciate the words of my right hon. Friend the Member for Islwyn (Mr. Kinnock). The result is that the service to the public too often fails as the staff hunt for files in a Dickensian paper chase. Anybody who has worked in such an office will know the truth of that statement.
There have been changes during the 40 years since Beveridge was introduced in a wartime atmosphere of full employment. It is sad that the only countries that enjoy full employment are either Communist or Fascist or democracies during periods of war. No hon. Member can suggest convincingly that we have all the solutions and that society can be transformed overnight by abolishing unemployment. Nevertheless, we should examine present conditions and those that prevailed at the time that Beveridge reported.
There were hopes then of a better life. Peoples' aspirations had not been so tainted by the poverty and depression caused by unemployment during the 1930s as is apparent now. It is tragic that, although 4 million people are unemployed, there is no outcry. Even the attitude of the Left wing of the Labour movement was different then; it was fashionable to be against Beveridge because it was 217 thought that to support reform would help to bolster capitalism. Thank goodness that the Left wing of the Labour party has learnt a wee bit during the past 40 years.
§ Mr. Brown
My hon. Friend the Member for Islington, North (Mr. Corbyn) says that we have not learnt much. However, I am a pragmatist. If I am properly to represent my constituents, there is merit in looking at the way in which we can help the disadvantaged. The Labour party's manifesto for the general election in 1983 contains certain points upon which we can all agree. On a fairer benefit system the manifesto said, "We shall reform it." It then said:Forty years have elapsed since the Beveridge Report which led to the setting up of the National Insurance scheme by the postwar Labour Government. We shall conduct a thorough review of the scheme in the light of today's circumstances.All hon. Members agree that the system needs to be reviewed and reformed.
That does not take us very far, but it provides a background for the next point upon which I hope that there can be agreement—the need for simplicity. There is no hon. Member who is not completely baffled by the complexity of the system. I used to be able to say what the rate of benefit would be and that a constituent would qualify if he had made various contributions, but when a constituent comes to see me now, I sometimes have no idea what kind of benefit he is talking about, so many of them are available. It is desirable that any system should be made as simple as possible. Computers would provide better assistance for overworked and sorely tried staff who are trying to provide this service.
All hon. Members are in favour of the general principle, but how can it be implemented? I am a practical man. My constituents do not like waffle, rhetoric and speeches from me. They want to know whether they will be better off under the new system than they are at the moment. What is the answer? I am sure that the Secretary of State could not provide them with an answer to their question. He would have to say that it would depend upon this and that and it would depend upon the level of benefits and personal circumstances.
The Secretary of State knows that single payments are an important part of the income of very many people. If all the single payments are to be absorbed into a universal rate, it must be set at a much higher level than is contemplated. That is the dilemma that will face any Government. They will have to try to find resources with which to apply a sound principle that is accepted by most people. Will the Secretary of State be able to provide further information? I am unable to tell my constituents whether they will be better off, or whether this is just a sham and a public expenditure exercise that is designed to save money. I do not think that it is, but there is an element of doubt about it. The Secretary of State knows that he is stuck with a review that has been badly costed. It is not very encouraging to have to begin a review of anything in that way.
It is said that income support will be simple to administer, but it is surrounded by practical problems. Premiums will be paid to different client groups. We shall need to know into which group a constituent fits. The payment will then be topped up with a certain premium, 218 but we do not know what it will be; and if the premium is not sufficient the social fund will be used. The Secretary of State was asked about the size of the social fund budget.
There is merit in local benefit officers being given discretion to provide a top up, but that is very difficult to comprehend after more than 40 years of an adjudication and appeals procedure. There will be no appeals machinery against the new system and no scrutiny. I do not complain about the officers who serve my area. They are co-operative and thoughtful, but a great responsibility will be placed upon their shoulders.
The Secretary of State said that we should not build up a great deal of case history. There is merit in that suggestion. Commissioners' decisions are getting out of hand. An expert is needed to advise upon what another expert said about something one did not understand in the first place. How is humanity to be built into the system? Is my constituency to be treated in the same way as those of Conservative Members who know very little about the way of life of my constituents? Will the machinery allow my constituents to get more out of the system than the constituents of other hon. Members? Who will make the judgment? What will be the criteria? Shall I, as a Member of Parliament, be consulted? Will the community groups in the area be consulted?
I should warn the Secretary of State that now there are welfare rights officers. Welfare rights organisations are to be found throughout the country, and a decision that is favourable to one of my constituents in Provan is soon communicated to other people throughout the country. We are almost back to where we began in trying to consider the universality of benefits and rights and the tremendous increase in resources that will have to be devoted to this part of the social security system.
I have not referred to housing benefits, savings on pensions or many other matters that my hon. Friends will be raising. I have simply raised some of the practical problems facing any Government in this one aspect of one part of the social security system, but I say this with some conviction. The priority should not be tax concessions for the wealthy. That would be obscene in view of the contrasting life styles and opportunity to enjoy life in society today.
It would be quite wrong and it would not be tolerated if any Government proceeded with a cost-saving exercise designed purely to hand out more to the wealthy. I believe that a Labour Government could distribute wealth more fairly and better than ever before. The challenge is whether we can create more wealth. I am not complacent. This is a huge, complex problem. It will take a great deal of guts and ability to solve it, but I believe that we can do it.
§ Mr. Tim Eggar (Enfield, North)
The hon. Member for Glasgow, Provan (Mr. Brown) will forgive me if I do not follow the observations that he made, but one cannot but respect his experience and sense of perspective.
The structure and objectives of the Government's proposals have been widely accepted outside the House, even if the debate so far has not given that impression. I especially welcome the assistance given to working families and the emphasis on simplification of the system.
I do not believe that the Government would have achieved that widespread acceptance outside the House if my right hon. Friend the Secretary of State had not had the courage to go to open consultation. In my view, it is no 219 coincidence that the proposals which have created the most controversy—those regarding the state earnings-related pension scheme — were the least discussed and publicised. I hope that lessons will be drawn for other areas of Government from the success of the consultation process instituted by my right hon. Friend.
In today's debate and throughout the discussions since publication of the review documents, a great deal of fuss has been made about the lack of figures. Yet when the Leader of the Opposition was asked today to comment on certain figures relating to SERFS 30 years on he deliberately refused to comment or to explain how the real increase in the cost of pensions would be met. In other words, having figures to discuss did not raise the level of the debate. I am convinced that my right hon. Friend the Secretary of State was right to ask us to concentrate on the structure before discussing the details. Had we been given the details, we should have had the fragmented discussion that we had in the consultation phase when each pressure groupb pleaded for its own section of the community.
§ Mr. Peter Griffiths (Portsmouth, North)
I do not often interrupt, but does my hon. Friend agree that if we are to have a Green Paper which does not contain detailed figures there must be adequate time between publication of the White Paper and the introduction of legislation to implement it?
§ Mr. Eggar
My hon. Friend anticipates my next point. If my right hon. Friend the Secretary of State and the Treasury wish us to concentrate on the structure at this stage, as I believe is right, they should not jump to any conclusions about the willingness of Conservative Members to accept particular levels of benefit. That discussion will come later and follows logically from the position that we have taken so far.
I have one major reservation about the proposals. I, too, should have welcomed more progress towards integration of the tax, national insurance and benefit systems. As was pointed out at Question Time today, there has been some movement in that direction with employers' payment of family benefit and the alignment of the pension and tax years. They are definite steps forward. I am surprised that my right hon. Friend the Secretary of State and my right hon. Friend the Chancellor of the Exchequer have gone out of their way to stress the importance of the contributory principle, because their measures actually move away from that principle. I hope, therefore, that after publication of the Green Paper on personal taxation they will make a clear and unequivocal commitment to work towards integration of benefits and taxation. I believe that that would be welcomed in all parts of the House.
I am tempted to make various detailed comments, but I shall restrict myself to three areas. First, I believe that Conservative Members and the public in general accept that everyone in the community should make some contribution to the provision of local services. We must, however, look very carefully at how the level of that contribution is implemented. I believe that a sudden increase to a 20 per cent. contribution to the rates bill would bear unduly harshly on many people, whether they have frugal or high-spending local authorities. I do not believe that the problem can be circumvented by means of the income support system. I believe that the contribution should be phased in over a period of years rather than increased it to 20 per cent. at one gulp.
220 Secondly, there is the suggestion that we are moving towards a decade of retirement and a flexible retirement age. I welcome that unequivocally, but I hope that there will be a very speedy response to that proposal from the occupational pension funds. Many of them are significantly overfunded and this is a major opportunity for them to work with the state to produce an incentive for people to retire in their early 60s. I hope that my right hon. Friend the Secretary of State for Employment will play a catalytic role in this context.
Thirdly, there is the impact of the reviews on DHSS staff and their method of operation. In 10 years' time, local offices will bear no resemblance whatever to those that we know today. In addition to technical change, the advent of the social fund, which I certainly support, will demand a level of skill, responsibility, discretion and decision-taking from local benefit officers far exceeding that which they are called upon to exercise today. The first priority of the new social security management board must therefore be to institute major training programmes and to develop further the proposals already introduced in the Department towards devolving budgeting and decision-taking to regional offices and from there down to local offices.
§ Mr. Eggar
I would rather not, if the hon. Gentleman will forgive me, because the time is short.
We all know that these proposals involve major change — change which is long overdue and is certainly welcome to nearly all of us on the Conservative Benches. The proposals are a challenge to Ministers, which they have so far risen to and met extremely well. But I suspect that there are choppy waters ahead as we come to discuss the detailed levels of benefits.
The proposals are a challenge to the Department as well, because it will be called upon to make a major management and philosophical change in the way that it operates. The permanent Civil Service officials within the Department have a duty to show all of us in society that they have the ability to manage that change. That is a significant challenge.
The proposals are a challenge also to all of us in the House. We must have the courage to face some political criticism now in order to avoid placing a burden on future generations. That is not an easy thing to do as politicians. That will also be a challenge in the coming months, as we have to take a broad view of the benefits to society as a whole of these proposals, rather than the benefits or disbenefits to certain particular sectional interests, which I am sure will be championed very effectively by many of the claimants' unions and others.
I believe that my right hon. Friend's proposals should command the support of the House tonight.
§ Mr. Jack Ashley (Stoke on Trent, South)
The hon. Member for Enfield, North (Mr. Eggar) is obviously living in cloud-cuckoo-land. He says that these proposals have been widely accepted outside the House. Could anyone believe that? I have never heard a sillier comment in any debate for years. These proposals have aroused a sense of outrage among ordinary people, because they are going to damage ordinary people. When hon. Members speak 221 about "outside the House" they should not be speaking just of stockbrokers and other well-off people outside the House; they should be speaking also of disabled people. People I have spoken to, and other ordinary people, are outraged by these proposals.
It has also been said that these are courageous proposals. They are not so much courageous as callous, because they will damage poor people very much indeed. And of all the destructive actions in these Green Paper proposals the worst is the abolition of SERPS—the state earnings-related pension scheme.
The Government cynically suggest that the simple substitution of private pensions will solve all problems. Of course, they live in a very different world from the millions of poor and disabled people who were relying on SERPS for a decent old age. The prosperous people with friendly bank managers and accountants and all the accoutrements of wealth and a comfortable middle age will have no difficulty in fixing up nice cosy pensions; there will be no problem for people like that. But the poor people and the disabled people will not know who to turn to.
The Government are to give free rein to the fly boys. Many pension companies will not bother looking at poor people; they will not want to know disabled people with small incomes; they will reject them and provide nothing. And the clever fly-by-night pension schemers will come back. We shall find people operating just as they operate with encyclopaedias and double glazing. The smooth talk will go on and ordinary people will be flummoxed and will not know what to do. They will be out-talked and out-manoeuvred by the crafty boys, and they will suffer very much indeed. Their pensions will be either non-existent or very low. It will be the "Fowler's Folly" pension line for the poor and the disabled.
The ending of SERPS is a disaster for disabled people because SERPS, unlike private pension schemes, gives flexibility and allows help for the less fortunate. In particular, state earnings-related pensions are based on the best 20 years of earnings, and that makes all the difference between poverty levels and an adequate pension.
Disabled people are also very worried about what will happen to the earnings-related element of invalidity benefits when SERFS goes. The little bit of security that this gives disabled people is threatened by the bland comment in the Green Paper:The Government is giving further consideration to the implications of the new arrangements for invalidity benefits.They can say that again. I hope that it will be very careful consideration.
Three quarters of disabled people rely on supplementary benefit in their effort to get a decent standing of living. They face very heavy additional costs, and supplementary benefit is of crucial importance to them. The proposal to end the supplementary benefit additional payments and replace them by a disablement premium sounds fine when Ministers stand at that Dispatch Box, but I warn the Government that this premium will have to be a very generous one indeed. We do not want any piffling token gesture by the Government, because if they do not make a very generous payment, severely disabled people are going to be in what the hon. Member for Enfield, North called "choppy waters"—a good phrase for the plight of 222 someone with no money, no pension and unable to buy food even. "Choppy waters," the Government will say, "that is what you are in."
Disabled people will require about a 30 per cent. supplement to their income provided by the special premium. That is necessary. Anything less than 30 per cent. given by the Government in that special premium would mean serious hardship for disabled people.
The supplementary benefits extra payments, although means-tested, were made available by right and each one could be claimed if it could be justified. They are a tolerable way of meeting individual needs until we get a proper disability income. The proposed system of just one premium will falter at that fence and will actually fall, I think, at the other fences.
I also note that the Minister has pledged full protection only in cash terms and at the point of transition. In other words, that is a loss leader. What happens when the disabled people get past the shop window? What commitment is there—I should like an answer to this at the end of the debate, if possible—on real value and for the longer term?
I have no doubt that many disabled people will find the extra costs of disability far higher than one disability premium. Few non-disabled people quite appreciate what extra costs mean. Disabled people require extra heating because they cannot move and are confined to wheelchairs; they require extra food for special diets; they require extra clothing because of heavy wear; they require extra bedding if they suffer from incontinence. All those extra costs are the responsibility of society, and society is represented by the Government. The Government really ought to meet those special needs in their new system. The indications are that the premium will be grossly inadequate.
Finally, there is no mention in the Green Paper of those who care for disabled people. They are very important. I do not mean the paid professionals but the friends and relatives and people like that who go along to the homes of disabled people and help out. There must be some special provision for those carers because without them, the Government's bill for looking after disabled people in institutions would be enormous. The Minister might be able to calculate what sort of bill he would have to pay if the carers backed off. They do not do so. They help disabled people because they want to.
I have kept well within my 10 minutes, and I should be congratulated for that. I hope that the Government will do far more for disabled people than they are doing. They should talk to the organisations for the disabled, which have well-briefed, expert individuals. They will help out and give him all the facts and figures, and disabled people will give their experience. If that is taken into account, then, and only then, shall we have a proper Green Paper for disabled people.
§ 7.1 pm
§ Mr. Robert McCrindle (Brentwood and Ongar)
There is much in the Green Paper of which I strongly approve. Some parts of it require clarification and one or two approaches are flawed. To start by accentuating the positive, the Government are to be congratulated on recognising the disincentive effects of what has been called the unemployment trap. The promise in the Green Paper that we shall be moving towards a situation in which it will be impossible for anyone out of work to have a 223 larger income than anybody in work is a move in the right direction that should be welcomed by both sides of the House.
The family credit scheme is broader in its application than the family income supplement. It is an effective bridge between the incomes of those in and those out of work. The fact that we are moving towards a system whereby employers will be responsible for payment, which will be carried out through the wage packet, is a move in the right direction, as is the consideration of the net income after tax as the trigger for payment rather than what has been the case in the past.
Still accentuating the positive, I turn my attention to the income support scheme, which is to replace supplementary benefits. Here, the aim is to provide a reasonable level of help and then let people manage their own financial affairs. I noted from Labour Members a tendency to expect not only high benefits, which we understand, but a nannying approach to people as though to imply that, because one is on social benefit, one is incapable of looking after one's own finances. That is not a proper approach, and the income support scheme aims in the direction of the removal of that approach.
Under the scheme there will be welcome additional help for particular groups. Among those groups are families with children, the long-term sick and disabled and lone parents. That commends a scheme which I sometimes think, while I listen to Labour Members, they must have overlooked.
Another part of the Green Paper that I warmly welcome is that relating to the proposed changes in capital and earnings rules. I warmly welcome the idea that there is to be a sliding scale up to £6,000 before benefit is discontinued. The sharp cut-off is a disincentive for thrift, and this party, of all parties, should never be on the side of penalising those who seek to make some preparation for their old age or misfortune.
The proposal that people will be able to earn up to £15 a week before unemployment benefit is effective, subject to two years unemployment, is a step in the right direction. If I were to press my right hon. Friend the Secretary of State at all, it would be in the direction of considering whether the same approach is not possible after one year. After all, for most people, one year is still long-term unemployment. Will he give some thought to that?
I warmly welcome two changes in the Green Paper—those in the maternity grant and the death grant. I have long considered that the £25 maternity grant is not even capable of purchasing a decent cot. It is not required and not appreciated by a vast number of people, but some require a great deal more. To be moving in that direction earns my commendation.
The same applies to the death grant. The £30 death grant is an insult to many people, while it is cruel and inadequate to some who need vastly greater help. The fact that the Government are to concentrate assistance on those areas where it is needed will ensure that anything up to 10 times the £30 is payable when it is needed.
I warmly welcome the idea of the social fund, but I am a little concerned about the fact that it is to be cash limited. By all means, let there be some intimation in, the Budget as to how far we can go in that regard, but if it is to meet emergencies there is a possibility of an overspill in finance. Will my hon. Friend the Under-Secretary tell us 224 whether something can be done to bring a greater sense of assurance to those who will obtain their benefits in future from the social fund?
There is no question but that housing benefit has been difficult to administer and not always understood. Therefore, simplification has been needed and reform is overdue. However, to move from six tapers to one can lead only to a loss of part or all of the benefit for people who are by no means well off. Has my hon. Friend considered the fact that those with a small occupational pension, and in particular widows of those with a small occupational pension, could be affected by this change?
Furthermore, if we are to commend the idea of occupational pension schemes in one part of the Green Paper, it may not be altogether wise to penalise in another part those who moved into occupational pension schemes some years ago. I appeal to the Government to keep an open mind on housing benefit reform and to see whether there is some way to cushion the movement from housing benefit.
I am quite well disposed to the idea of expecting people to become involved in a contribution to local rates. However, I wonder whether it is wise to contemplate moving to a system in 1986 in which all will have to contribute to local rates when, in 1988, if one is to accept the direction in which I think the Government are moving, there may no longer be rates to contribute to. Is there not a better way than introducing a system only to wind it up fairly shortly afterwards?
I have a long connection with the pensions business, and I believe that there is great merit in taking pensions out of politics. I should regret any move in the other direction. However, I must pay some attention to the Government's suggestion that we shall not be able to afford SERPS in the early part of the next century. While I do not deny the burden, I wonder whether it is entirely fair of the Government to base their estimates as to whether we can afford SERPS in the early part of the next century on predictions that seem to allow for no growth in the economy. While there may be a burden, the Government seem to have gone out of their way to accentuate it, and if there is even the smallest growth in the economy I suggest that, although it will be difficult, it will not be impossible to meet.
On balance, I should have preferred to opt not for the abrogation of SERPS but for simplification and amendment. I see no reason why we should not turn our attention to an adaptation of the benefits to reflect average pay over 20 years rather than the best 20 years of a person's working life.
However, I have to accept that the proposals before us are a great deal more acceptable than those that we thought might emerge before the publication of the Green Paper. On balance, I am prepared to accept that we shall move in that direction. I am prepared to welcome warmly the opportunity that this provides for the private pension sector, but I warn the House that this will provide only a panacea.
It is not often noted that the payments that are required under SERPS will not produce the same benefits under a private scheme. In part, this is due to the administrative costs of a private scheme and in part to the fact that index linking can be brought about only if there is sufficient Government index-linked stock. Nobody has referred to this. So that we can estimate the comparative benefits under SERPS and under a private pension scheme, perhaps 225 the Minister when he responds will pay some attention to whether the Chancellor of the Exchequer is likely in the new situation to issue sufficient index-linked stock to enable some form of index linking to continue in the development of personal pensions, which, broadly speaking, I very much welcome.
Although, this presents a great opportunity to the financial community, I think it also places a considerable responsibility upon it. I will be watching as the months go by with growing interest to see whether the Government will expect the private pensions world to be rather cautious in the estimates it makes of the pensions which are likely to be received. I shall have to leave the matter there and expand on it on a future occasion.
§ Mr. Frank Field (Birkenhead)
I hope that the hon. Member for Brentwood and Ongar (Mr. McCrindle) will forgive me if I do not directly refer to all the points that he raised. I will, I hope, touch on a few before I have finished. I aim to speak well within the 10 minutes.
Much has been made in this and previous debates about the lack of figures. The Government assure us that what we are considering is the structure of the scheme and that it is unimportant to have the figures to consider whether the structure is right. That is similar to someone in the medical profession saying that he can easily and effectively undertake X-rays without barium meals, yet we all know that it is the barium meal in the X-ray which points out the dangers, the weaknesses and the points of pressure. Without those figures, the Government know perfectly well that we cannot sensibly discuss the structure which they are putting forward, and discuss with them what we see as the scheme's weaknesses and dangers.
Even though the Government have hidden the figures from us, it is clear that one group will be singled out for special treatment. That one group is receiving this treatment because of the Government's concern to increase incentives to work. Without the figures, we know already that the under-25s who are unemployed are less likely to receive more benefit under the review than they now receive. In addition, we have to consider the Government's proposals to cut board and lodging allowances.
I begin my short contribution with a plea to the Government to look back to the measure introduced by the Labour Government of 1966 to 1970. It was very similar to the measure which the Government have now introduced, and was called the four-week rule. If there has been one move in the whole social security field since the war which I would dub as evil, it is that one measure. For reasons similar to those given by the present Government in putting forward this reform, the then Government became concerned about the length of time that young people were remaining on benefit, and cut benefit to four weeks for young claimants in certain areas. About 160,000 young people lost benefit.
Thanks to the work that Molly Meacher did, we now know what happened to many of those people. We know that half of them who were denied benefit did not find the jobs which the then Government said existed and were waiting for them to pick up, but had to resort to male prostitution and crime. Therefore, I put it to the Government that, whereas they are right and have the 226 support of the House in their attempt to control the abuse of some, perhaps many, landlords under the scheme, they are wrong in aiming those measures at young single claimants. I fear that many such young claimants will end up in the same position as many of the young claimants under a similar measure introduced by the Labour Government of 1966 to 1970.
In the absence of figures for the scheme, I want to consider the objectives which the Government say the scheme will fulfil and to ascertain whether those objectives are fulfilled. If one reads the Green Paper carefully, one sees that there are four in all. First, the Government say that help will be targeted on those who are most poor. Without figures, it is difficult to respond to that. We know overall that those who are most likely to be poor are women and children, yet throughout the Green Paper there are a series of measures which transfer resources from poorer women and give them to poorer men.
Let me give the Secretary of State a few examples. Under the family credit there will be a system which moves from the family income supplement, which is mainly drawn by the mother, to a situation in which, for reasons which the Secretary of State has explained and which carry weight in the House, the benefit will be transferred to most men. That is one of the transfers from men to women.
We also know that, with the abolition of SERPS, the widow's additional component will be lost. With the abolition of SERPS, we know that women generally stand to lose in another way. I believe that there are considerable faults with SERPS, and I was pleased that my right hon. Friend the Leader of the Opposition did not say today that we will re-enact SERPS when we win the next election. I think that that is a welcome non-pledge. One of the advantages of SERPS, however, is that it takes account of the fact that most women spend a great deal of time outside the labour force bringing up children and should not be disadvantaged when it comes to drawing a pension. But in the abolition plans women will lose. SERPS favoured lower-paid workers as against higher-paid workers. As most women are low-paid workers, this is yet another blow to women.
How can the Government say that this measure will target on those in greatest need? We know that it is women more than men who are poorer in society, yet in this reform women will be significantly disadvantaged by this move.
The second objective which the Government have set themselves is to simplify the social security system. Once the social fund has come into operation and questions are asked in the House about its operation, I wonder whether the Government will continue to maintan that that has been an effective simplification. Thanks to pressure from the Government's own Back Benchers, we now know that SERPS is to be phased out over a long period. Can one really say that that phasing out over a long period will add to the simplification? Given the solution which the Government have come up with, thanks again to pressure from their own Back Benchers and beyond, a number of us may well have three pensions on which to draw to make up one basic pension. Is that the simplification of the scheme at which the Government are aiming? Lastly with regard to simplification, the new family credit is to be run by employers. We all know the difficulties that will occur with take-up in a scheme run by employers. The 227 calculations will continue to be done by social security officers and they will be referred to employers. Where is the simplification in that measure?
Thirdly, we are told in the Green Paper that the scheme, once enacted, will increase incentives to work and will lessen the poverty trap. Both sides of the House should welcome any moves which achieve that end, but are the Government really telling us that the proposals which they are putting forward will add more weight to the incentives to work than, say, tax levels or wage levels? The Government's plans will ensure a reduction in the 100 per cent. marginal rate of tax which some claimants face to a situation where many more claimants face a marginal tax rate in the 90 to 100 per cent. bracket. Will that make a major difference to the real problem which many of our constituents face with regard to incentives to work—a problem with which I believe the Opposition have yet fully to grapple?
Lastly, we are told in the Green Paper that the aim is to reduce state help. Twenty or 30 years hence, will we be able to say that that objective has been achieved? The Secretary of State knows that the only measure on the statute book which will lessen the number of those who end up drawing poverty relief from the Supplementary Benefits Commission is SERPS. That is the only measure which in time is likely to break the link between poverty and old age, and that will be abolished by these measures if they go through. In its place is a proposal to fund part of the pension scheme from the private sector, yet nobody from the private sector has come forward to state that the level of contributions put at 4 per cent. will give a pension which will be inflation-proofed at a decent enough level to break the link between old age and poverty — a problem from which most of the population in the past have suffered in this country.
These, then, are the four objectives which the Government have set themselves and which I believe will not be fulfilled. If I am to achieve my objective of finishing within 10 minutes, I had better sit down now.
§ Mr. Andrew Bowden (Brighton, Kemptown)
I pay tribute to the Secretary of State, his team and all those involved in the immense amount of work that has been done in producing the Green Paper. We live in a very different world from Beveridge. In the late 1940s, the single pension was £1.30 and the married pension was £2.10. However, the Green Paper leaves many unanswered questions, and I believe that it has some serious flaws.
The only comment that I wish to make on SERPS is that if my right hon. Friend the Secretary of State wishes his scheme to remain in place for many years, he must, as the right hon. Member for Plymouth Devonport (Dr. Owen) said, look for broad, all-party agreement. If he does not obtain that, as the political history of the past 40 years has shown, his scheme will be scrapped and replaced by another. That would not be in the best interests of future pensioners.
I shall concentrate my remarks on housing benefit and housing subsidies. When one considers the history of housing subsidies, one understands that it was logical to reduce the general subsidies that used to exist, to change the system for rent and rate rebates and to provide a safety net for poorer tenants. In those days, the schemes were financed by, the Department of the Environment. It is 228 worth reminding the House that there have been tremendous savings in that Department's budget since 1979—at least approaching £1.5 billion. However, my poor right hon. Friend the Secretary of State for Social Services has had to pick up the bill in his budget. I wonder whether, considering the overall figures, that position was sufficiently taken into account by the Treasury. I doubt it.
Assuming that the Government are thinking about reducing housing benefit by about £500 million, I must say that, on the basis of one taper for rent and for rates, the proposals are unjust, severe and even callous. They will create real hardship for many pensioners. I cannot believe that the Government intend to hit 4 million pensioners, many of whom have had three cuts in their housing benefit during the past 18 months. I estimate that 1.2 million will lose benefit altogether, and that nearly 3 million will lose between £1.40 and £5 a week. I base those figures on the information presently available, but I trust that events and time will alter that position.
Let us consider a pensioner on a far-from-high income, remembering that we are talking about the joint comprehensive taper for rent and rates. A pensioner couple living in their own home with an income of £75 a week and paying rates of £9 a week will, as I interpret the proposals, lose no less than £4.70 a week. The proposals will hit many pensioners who worked for their occupational pensions, which are not inflation-proofed, on an unreasonable scale.
Another proposal in the Green Paper that disturbs me greatly is the intention to abolish the discretion given to local authorities. That would hit war pensioners and war widows especially hard. Do the Government really intend that some war pensioners will lose up to £10 a week? That is what their proposals, as presently interpreted, would mean.
I shall make two specific suggestions. First, the Government should consider separate rent and rate tapers. Instead of a composite 70 per cent., they should consider 20 per cent. for rates and 50 per cent. for rent. That would be fairer and workable. Secondly, local discretion must not be abolished. The Secretary of State said earlier today when he presented his uprating statement that the Government will help those most in need. That is right, but I remind him that there are also those to whom the nation owes a debt and those who through no fault of their own have had the purchasing value of their savings and occupational pensions largely destroyed.
I ask my right hon. Friend to think again about housing benefit. He must not penalise war pensioners and those whose occupational pensions have been destroyed by the policies of previous Governments.
§ Mr. Brynmor John (Pontypridd)
First, I should say that a consultation period which started at six weeks and which has now wound its way up to three months is a derisory period for a Green Paper of this importance. It shows what some Conservative Members still do not realise—that the Government have made up their mind on this matter, and that there will be no significant, as opposed to cosmetic, changes. The Government's approach to the matter is an attack on consensus
I wish to concentrate my speech on SERPS. I hope that I can base my argument on the affordability of the present system and on the burden, but one of the problems in this matter is the value of the words "the Prime Minister". This 229 is not the first time that rumours of what is proposed have surfaced. They surfaced before the 1983 general election, and I wrote to the Prime Minister—I gave her notice that I would raise this matter today—asking her for reassurance that she would support the SERPS scheme as it was then constituted. On 20 May 1983, she replied:Nor are there any plans to change the earnings-related component of the state penson. The 1975 Act was in fact brought on to the Statute Book with the full support of Conservative Members.The Government have gone back on that clear and unambiguous pledge. We must examine the reasons for that with some care. First, perhaps the Conservative party was considering those changes before the Prime Minister wrote the letter, but she did not choose to disclose it. That would be a very serious matter for the country and for the House. Secondly, to return to what the Secretary of State said earlier, perhaps something happened after the general election and the Prime Minister's letter to change the Government's mind—something so radical and startling that the viability of the scheme changed. The Secretary of State said that one reason was the availability of the 1981 census figures. It is interesting to note that Conservative Members, who are now calling for a return to concensus, do not remember that at no time since the census figures were available has the Secretary of State tried to discuss with other parties the difficulties that would be caused. Indeed, until just before the publication of the Green Paper, much more condign remedies were being mentioned.
The true reason for the change cannot have been the population assumptions. First, if his hagiographers are to be believed, in 1975 the Secretary of State warned about the affordability of the scheme in the long term and pointed out the ratio of retired to working people. Indeed, we knew then all the major assumptions of those who were in work to those who were retired. As the Secretary of State said, the retired population can be calculated, but what cannot be calculated, because someone born during this debate will be 50 years old before we reach the point of maximum strain on the insurance system, is what the working population will be.
The other factor to be taken into account in whether it is affordable is the relationship not with prices, as the right hon. Gentleman seems to pretend in his Green Paper, but between the rates of contribution and the cost to the retired population. It is precisely there that the right hon. Gentleman, who is so reticent in other regards, gives two figures, both of which are misleading.
First, he relates the cost of the scheme to prices and not to earnings,. and for good measure throws in a spurious earnings link that the Government have no intention of restoring. Secondly, he assumes for the future a rise in real earnings of 1.5 per cent. per annum. The average annual rise over the last 35 years has been 2.1 per cent. per annum. The difference between the assumption of the Government and the historical figure makes a great deal of difference to the contribution.
Let us examine both points. The present class 1 contribution in respect of pensions in 1984–85 is 12.5 per cent. On the assumption that 1.5 per cent. is the real growth, the percentage contribution in 2025 will have gone up from 12.5 per cent. to 14.7 per cent.—hardly a scheme-busting rise. If we assume a 2 per cent. growth 230 rate in real wages over the next 40 years, the class 1 contribution will rise by only 0.6 per cent. to 13.1 per cent.
Are my figures wrong? Do the Government challenge those calculations, or do they say that the increase will be such that future generations cannot afford it? The people who will lose on SERPS are fairly charted. Those who are forced into private pension schemes will not get anything like the same retirement pension as people in SERPS. They will get a 4 per cent. money purchase scheme. One can never hope to reproduce the same level of benefit with such a scheme, nor can there be any certainty in the scheme because a money purchase scheme is the product of how well or how badly the fund performs. People who need certainty in planning their retirement will never know what their income will be.
My hon. Friend the Member for Birkenhead (Mr. Field) talked about the way in which women will be affected disproportionately. But people in occupational pension schemes will also be adversely affected. They will have to pay towards national insurance 3.5 per cent. more than the 13 per cent. they are already paying, without any rise in benefit. They will no longer have inflation proofing of their guaranteed minimum pension after retirement. They will lose the benchmark for their scheme, that it must be at least as good as SERPS to be contracted out. Therefore, all comparability will be lost.
Most of all, there will be a strong temptation for employers to wind up schemes or to worsen the terms for existing contributors or for new entrants. Therefore, the whole pensionable population is threatened by the Government's proposal. Any Government, faced by that, would pause for thought. We know that the Government are doing this on ideological grounds and with the connivance, not of the pension funds, which have behaved honourably, but of some life assurance companies whose greed has known no bounds and whose selfishness to get a piece of the action is becoming an obscene feature of modern development.
When we obtained a consensus in 1975 it was a monument to the work of the late Brian O'Malley. His search for a consensus was much more honest, open and painstaking than that of the Secretary of State in his co-called consultation. The work of Brian O'Malley should not be in vain. We should resurrect this scheme, which would be a monument to his memory.
§ Mr. Roger Gale (Thanet, North)
May I first take up a point made by the hon. Member for Birkenhead (Mr. Field) about board and lodging payments? He and the Leader of the Opposition sought to give the impression that the reduction in board and lodging allowance for young people could lead again to male prostitution and crime. The Leader of the Opposition quite disgracefully sought to imply that that measure had somehow led to the suicide of an unfortunate young man in Edinburgh. My suspicion is that the right hon. Gentleman does not know the full circumstances of that case. Certainly he should not have used it.
Those who in the past have encouraged young people to move away from their homes into big cities, where there is neither accommodation nor often work available, are culpable, and not the Minister of State who has in a courageous measure sought to get to grips with the problem. It is also wrong to suggest that there are no 231 alternatives available to young people. My hon. Friend the Minister of State spelt out in a parliamentary answer only last week the alternatives. Funding under the non-householder allowance is available to young people and it is pitched at a level that is designed specifically to ensure that young people can still be accommodated in what used to be known as digs. It is more desirable that a young person should be accommodated in a family unit—not necessarily his own—than in the sort of field kitchens that some disreputable hotel proprietors have been operating recently.
The prospect of good hostel accommodation is also available to people in the 18 to 25 age bracket. So is accommodation in the private rented sector with support from housing benefit, if that is necessary. Those options are available and are all more attractive than the enticing young people away from their home areas to big cities. The impression that we are creating a nation of gypsies and compelling young people to move is wrong.
The hon. Member for Birkenhead is not lacking in courage — and never has been — in supporting a good idea when he sees it. When my hon. Friend the Member for Norfolk, North (Mr. Howell) expressed his belief, which I endorse entirely, that the introduction of a full programme of community work for the long-term unemployed offered the only real prospect of a long-term solution to some of our difficulties, I noted that the hon. Member for Birkenhead was nodding. I should like to take that a stage further, because it is important that the House recognises the implication in that kind of proposal. It is a consideration we should undertake. We must terminate unemployment benefit after one year and move to such a scheme, but the one is dependent on the other. Whether the hon. Member for Birkenhead is still nodding, I am not sure.
§ Mr. Frank Field
The point with which I was agreeing was Beveridge's point that the payment of benefit should be linked to a genuine search for a job. That is something we need to put back on the agenda and which we have moved away from in the last 20 years with the establishment of jobcentres and so on.
§ Mr. Gale
With respect, my impression is that the measures introduced by my hon. Friend the Minister of State to curb the payment of supplementary benefit willy-nilly were designed to do exactly that.
There are three points that I wish to cover briefly in connection with the Green Paper. First, in regard to support with rates, I endorse entirely my right hon. Friend's suggestion that we should go back to a system of accountability. It is wrong that people should be encouraged to vote, with no responsibility for the manner in which the money they are voting is spent.
The Green Paper contains a proposal — I hope that it is only for discussion — that a maximum of 80 per cent. rate support be provided while the ratepayer pays the remaining 20 per cent. That would give the ratepayer some responsibility. I suggested to my right hon. Friend that, following a review of the domestic rating system, there should be a scheme of nationally agreed rates. The amount would be paid in full by the Government for those receiving benefit. If the recipients of that benefit voted for a local authority and persuaded it to fix a rate which was lower than the national scale, they would not receive a bonus. If, however, they chose to vote for local 232 government expenditure above the nationally fixed level, they would have to pay the extra. A level of responsibility would therefore be fixed. It is an alternative to the proposal that my right hon. Friend outlined this afternoon, and I believe that it is worthy of consideration.
I agree entirely with my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) that the timing of the introduction of any such proposal is vital. I agree with him that it is ludicrous to consider introducing a benefit change and then to change the entire rating system and confuse the issue still further. The two measures should be introduced in tandem.
I wish to deal with disablement allowances. The Green Paper states that an in-depth survey on the needs of the disabled is being conducted. I hope that the result will provide an opportunity to consolidate the many and varied benefits that are available to the disabled and enable us to exercise the true Conservative principle of allowing disabled people, like everyone else, to choose how they spend their money. The social fund will not be an answer to that problem. A social fund will not work if it is cash limited.
§ Mr. Gale
The enthusiasm of hon. Members is overwhelming. I said that I wished to make three points, and I believe that I have a couple of minutes left.
I notice that the discussion document says that the basic national insurance pension will remain unchanged. I believe that that unfortunately is a missed opportunity. The review provides the Government with an opportunity to introduce a basic pension that caters for living, transport and leisure needs. It will involve expenditure and we then have to decide how it will be funded. I agree with the right hon. Member for Plymouth, Devonport (Dr. Owen) that, as the contracted-out system was to be ended, a sum of money could be released for the retirement pension.
The Green Paper mentions the building up of additional benefits on the basic pension. It is wrong for some profligate councils to give transport passes to people who patently do not need them. The passes are given away by Socialist-controlled authorities, and lie unused in drawers, at a cost to the ratepayer. It is wrong that some pensioners should receive a 5p television licence because they live in one type of property, while others have to pay the full cost because they live in their own houses.
We must introduce a basic pension that understands and recognises the three needs of elderly people — living, transport and leisure. There is no reason why one person should be compelled to have a free television licence when he or she may not own a television and may prefer to use the money to go to the opera. I hope that those matters will be considered during the consultation process.
I welcome the proposals contained in what I believe is a far-sighted overview. The decisions taken now will ensure that our grandchildren will not be left with a legacy of bankruptcy, and they will meet the immediate requirements of those in genuine need.
§ Mr. D. E. Thomas (Meirionnydd Nant Conwy)
In 1966, national assistance was rechristened supplementary benefit. It appears that we shall be going through the same exercise in 1986. We shall rechristen supplementary benefit income support, and there will be a discretionary social fund.
233 It is clear that the reality of a means test is not changed for those people dependent upon such benefits. It is significant that the most important aspect of the supplementary benefit system is scarcely discussed in the Green Paper.
If we compare the Tory Government's 1980 reforms with the present proposals, we can see that the take-up issue figured in the 1980 objectives with the Government's desire for a simpler system, while the present reforms aim for clarity.
It is clear that the issue of take-up is now less important than fitting the social security system into the Government's overall public expenditure policies. It is important to remember that the latest estimates show that 30 per cent. of those people eligible for supplementary benefit do not claim it. That amounts to more than 1.25 million people. Between £760 million and £800 million of benefit is unclaimed. The so-called reforms contained in the present proposals will not tackle the crucial issue of take-up.
The change from supplementary benefit to an income support system wth premiums is unlikely, as the hon. Member for Thanet, North (Mr. Gale) said, to make a real change in the income levels of the beneficiaries.
The Green Paper contains theory but no facts. It is literacy without numeracy. Although the proposals for a premium for pensioners, the long-term sick, the disabled and families appear to provide a broad structure of support, that will not be the result. The structure will not change the income of those people dependent upon the scheme because of the level set for the benefits and the items that will be excluded from the income support. Those items will be swallowed by the catch-all social fund, which is to be cash limited, as the hon. Member for Thanet, North said.
Some anomalies are thrown up by the Green Paper. Premiums relate to client groups and not to regions. Water rates as a proportion of household expenditure are an important issue for Wales. They will be left out of the income support system. It is proposed to abolish the weekly additions. Some people receive as much as £20 in weekly additions. Those people will have to look to the social fund.
The new social fund will become a propping-up device, a new safety net and a catch-all for many people in need. The Green Paper proposes that we move from the appeals and accountability which have been a traditional and democratic part of the way in which clients have been treated under the social security system to a system which provides expert advice on budgeting.
The social fund, with its four elements of community care needs, which can be described as short-term, maternity and funeral expenses, budgeting arrangements and financial crises, will be a fund to which people will increasingly have to turn because of the low level of basic income support. It will not be possible to administer the fund coherently throughout the United Kingdom because of its being cash limited and because of the failure of accountability of the system between local offices.
We are all aware of the amount of pressure on local DHSS office staff. It would be difficult to get accurate information about how the social fund operated throughout the United Kingdom. It is unacceptable that the urgent 234 needs payments of the present system should be absorbed into the social fund and be determined by some budgetary expert.
I should like to consider a matter that worries members of and workers in social services departments. No doubt a link between the administration of the social fund locally, and the work of social services departments' section 1 money, and the work of voluntary bodies will emerge from the review of personal social services. We must ask what kind of local poor law institution the Government are reviving and consider how the family credit scheme is proposed as an alternative to family income supplement, with its 13-week proof of earnings and 26-week period of credit payment.
What will happen to the 27,000 family income supplement claimants who are self-employed? How will administration through employers work? We must consider the low-wage sector in which the scheme is supposed to operate and remember the Government's other proposals which attack the wage rates and living standards of low-paid people such as the abolition of wages councils.
If we consider how benefit will be paid, it is clearly a form of sexual discrimination as, unlike family income supplement, family credit will be paid mainly to the male breadwinner through the employer. What will happen if child benefit goes the same way?
I am also worried about the withdrawal of entitlement to free school meals. The Government have been unable to say that the value of those meals will be made up in the level of replacement benefit. This is the Government who undermined the nutritional standards of school kids by doing away with the minimum requirements for school meals imposed on local education authorities. This is another attack on living standards.
The Green Paper is a further attack on the basis of the welfare state system. Two great Welsh Members of Parliament established the British national insurance system—Lloyd George and James Griffiths. In 1935, the Welsh people rose up in a mass demonstration against real cuts in unemployment benefit. I warn the House that, if the Government push these proposals through, there will be a similar uprising next year.
§ Mr. David Heathcoat-Amory (Wells)
I congratulate my right hon. Friend and his colleagues on the Green Paper. On the whole, it is well written and an honest attempt to redirect the system, which is obviously and demonstrably failing in several important respects.
The final product is a good deal more impressive than the manner of its birth. The leaks and counter-leaks earlier in the year were unedifying. It is always disappointing when it is clear that newspaper editors are better informed than hon. Members about Government thinking. That is the past, however, and the pension proposals of the Green Paper are persuasive.
Much has been made of the fact that the predictions in the Green Paper are open to question. They are estimates, as they must always be, because who can predict future growth rates, birth rates, death rates and the rest? That is another reason for not guaranteeing high and inflation-proof pensions well into the next century, regardless of how the economy performs in the intervening years.
If the predictions and assumptions in the Green Paper turn out to be pessimistic, it will be open to future Governments to increase the basic pension. As I represent 235 a great many old-age pensioners, I hope that it will be possible in time to release more resources to them. That is a better mechanism than locking ourselves into SERPS now, which would be impossible to disentangle.
I ask alliance spokesmen to make their attitude to pension increases clear now. In the debate on the elderly on 6 June it seemed to be Liberal policy to increase the basic pension now. If that were done, taxes and national insurance contributions would have to rise, and that would accentuate the poverty traps which we all agree are an unacceptable feature of the present system.
Under assumptions in the Green Paper, even if the basic pension is maintained in real terms, the cost overall will increase by about 40 per cent. in the next 50 years. If it is alliance policy to promise to increase the basic pension some time in the future, will it not therefore pass on to the next generation a similar and unsupportable obligation on basic pensions instead of SERPS? I hope that alliance spokesmen will address themselves to that and give us some figures. They have been critical of the lack of figures in the Green Paper, so we should have some from them.
As for housing benefit, I should like to re-emphasise the importance of every householder making some contribution towards the rates. I hope that we continue to use rates as a means of financing at any rate the non-educational expenditure of local authorities. If that is to be done, the rating system must be reformed and the rate base must be broadened.
The Green Paper proposes that everyone should pay at least 20 per cent. of the rates. My hon. Friend the Member for Thanet, North (Mr. Gale) had an ingenious formula, but I would prefer everybody on full housing benefit to receive a basic lump sum and only 50 per cent. of any excess, leaving the other 50 per cent. to be paid for by the householder. For about the same expenditure, that would give people a more lively interest in what happens to their rates and whether they are increased.
My more serious and fundamental criticism of the Green Paper is that it is timid and misses an opportunity. This might be our last chance fully to integrate the tax and social security systems. The Green Paper says rather coyly that the matter will be discussed further in a future Green Paper on personal taxation, which is to be published later in the year. That is not good enough, and I am not bought off by the assurance that the two systems will be coordinated better in future.
Once again we are being drawn into discussing two separate systems in isolation when we should be discussing the future of one integrated system. The moves towards simplification in the Green Paper are in the right direction and ought to be welcomed, although any move towards simplification must entail an element of rough justice.
The present system attempts to deal with individuals case by case. It is supposed to put the money where it is needed, but we know that the system does not work. There is plenty of evidence to show that people who do not deserve money are getting it, whereas others who need it do not receive it. Anyone who has seen the supplementary rules will know what I am talking about. The regulations are longer than the Bible, and not as well written. It is not enough to streamline and prune the regulations. At the end of the day what matters is whether an individual receives money from the state or pays money to the state. The income tax system is as much a part of that as the social security system.
236 The family credit system outlined in the Green Paper is on the right lines. It is based on logical principles and will be paid through the wage packet or salary cheque. I do not find it a serious objection that family credit will be received by the family breadwinner, and not always by the mother. I know that that worries Opposition Members, but the distribution of money within a family is a matter for husband and wife, not the state. It is a clumsy way of enforcing the redistribution of money from husband to wife, to tax the husband, churn the money through the Inland Revenue, the Treasury, the Department of Health and Social Security and the Post Office, and to pay it into a mother's purse.
Having set out what I regard as the right payment system, the Green Paper reform stops halfway. The DHSS will still administer family credit. As this is a structural review, that is a structure which should be altered. The tax system provides the best way of assessing eligibility for benefits because information is already held there. A tax return or an income tax coding is a means test. When Opposition Members refer to means tests, it is as though they are talking about a Victorian rite, and a way of stopping Oliver Twist from getting his bowl of soup, yet when they fill out a tax return, they are undergoing a means test. That information could and should be used to determine whether an individual is eligible for benefit, either in cash or through tax relief. Instead, the Green Paper regrettably proposes that we should continue with two separate systems, even if better co-ordinated.
The most striking mistake, which is a consequence of that failure, is that we are to continue with child benefit as an indiscriminate subsidy to rich and poor alike. The cost of child benefit this year is more than £4 billion, which is more than the housing budget. Why should wealthy mothers continue to receive what to them is mere pocket money? They pay for it through their taxes and then receive it after it has been churned around the system. The Green Paper fudges that issue. Child benefit in its present form must be abolished or merged with family credit, or has child benefit become one of those well-loved anomalies of British life, to which the Chancellor of the Exchquer referred in his Budget statement? If so, it is expensive and equivalent to 4p on the standard rate of income tax.
Child benefit and family benefits should be assessed and administered by one system, using one source of information, making one benefit calculation and leading to one payment. We should have a spectrum that extends from cash benefits being paid to the badly off, through tax reliefs to those who pay tax, to nothing for those whose income is above a certain level.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. The hon. Gentleman should have concluded his speech.
§ 8.4 pm
§ Mr. Robert N. Wareing (Liverpool, West Derby)
When I heard the Secretary of State introducing his Green Paper, I said that it was a kick in the teeth for disabled people. The Secretary of State expressed his dislike at what I had to say and waved in front of me the prospect of the special premium rate for the disabled. On further study of the so-called reform of social security, I am convinced that the sum result of the review for disabled people will be to undermine their already low standard of living. They will be under attack in three ways.
237 Disabled people will come under attack in terms of additional payments of supplementary benefit, the abolition of the state earnings-related pension scheme and the reduction in housing benefit. The most severe of those attacks is probably the proposal to sweep away the legal entitlement of disabled people to the vital additional payments which they now receive as of right. Because of the absence of a comprehensive disability income and the inadequacy of existing invalidity pensions, disabled people are forced on to supplementary benefit. Although that may be deplorable, under the present supplementary benefit system additional payments are available to meet special needs.
I endorse what my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) said about the special needs of disabled people for extra heating. People who are confined to a wheelchair or to bed require a special allowance for heating. In many cases the chronically sick and disabled require a special diet, for which there is no concession, and allowances, which are at present on offer from the Department of Health and Social Security. Many of them are incontinent and require money to cover the extra costs of laundry services. Many people rely on their families, but those without a family gathered around them require the assistance of a domestic help.
In 1982, 62 per cent. of all claimants received an additional allowance, and 87 per cent. received £7 or more a week. The Disablement Income Group has shown that in many cases—this is well documented—20 to 30 per cent. of benefits are paid out in additional allowances. In many cases the amounts are between £15 and £20 a week. The general secretary of DIG, Pauline Thompson, stated that if the proposed special premium, of which the Secretary of State seems so proud, is to be paid to disabled people, it will have to be at least £16 a week above the present £57.10 a week supplementary benefit level for a couple, if they are not to suffer a loss of income.
So far, as in many other cases in the review, the Secretary of State has produced no figures. Disabled people are entitled to know what they will receive. I challenge the Secretary of State to tell us whether the figure of £16 that DIG mentioned will be met under the special premium, which is to maintain the standard of living of disabled people.
In 1982, 1.5 million people claimed single payments averaging £54 a week. Those payments are to be swept away. Some 3.5 million claimed weekly additional allowances — that is, 90 per cent. of supplementary pensioners. Those allowances are to be swept away. The abolition of additional allowances is all to save a relatively measly £670 million. The aim of the exercise is cost-cutting, not cost-effectiveness.
What are the Government's proposals on payments for domestic help, which is so often required by those who are sick and handicapped? The allowance for a live-in domestic help can now reach £44.90 a week. What is to happen to that under this proposal? How is the special premium to take that into account? We want more details and figures to explain that. When my party returns to power after the next election—that becomes more of a certainty because of the proposals that we are now discussing—I hope that we shall endorse a comprehensive disability income for all disabled people. Disabled people, who are often disabled all their lives, should not 238 be catered for merely by a supplementary benefit system or a special premium income support system that is thought sufficient for those whose needs may be temporary because they are unemployed, or for some other reason.
The abolition of SERPS will hit disabled people; 800,000 disabled people who are on invalidity benefit cannot buy into private pension schemes. How ludicrous it is that they should be faced with the prospect of appealing to a private insurance company. Is it not known that insurance companies regard the chronically sick as bad risks? What is in it for them after the year 2000? If the proposal becomes law, young disabled people have the dismal prospect, not of a welfare state, but of a workhouse state in the very near future.
Of the 800,000 disabled people who are on invalidity benefit, only 120,000 are in receipt of supplementary benefit, so many of the remainder are dependent on housing benefit. Many disabled people who work are often in low-paid jobs. For them, housing benefit is crucial, but under the proposed scheme no one will get a 100 per cent. rate rebate; 20 per cent. of rates will have to be paid by everybody. That is indeed a redistribution of income, but it is not a redistribution from the rich to the poor; it is a redistribution from one section of the poor to another. Far from likening the system to Beveridge, one could liken it to Scrooge when he said, "Are there no workhouses?"
There is no doubt that under this Government disabled people have lost on several occasions. This is not the first. They lost when the supplementary benefit scheme was simplified in 1980. They lost when the available scale margin was extended to heating allowances and increased at the same time from 50p to £1. In many cases they lost when the severe disablement allowance was introduced to take the place of the non-contributory invalidity pension. They lost when optical services were withdrawn from the National Health Service.
Those who advise the Government are not the people who are now writing to us to advise us against their policies. They are not the disability organisations, not those who will inundate us with correspondence in the near future. I hope that those people will not only push at the open doors of Opposition Members, but will inundate Tory Members, particularly the one-term Members whose stay in the House is now probably limited to a year or two.
The Conservatives should be challenged on the cash limits for the social fund. Under this Government, there are cash limits for the social fund to aid poor and disabled people, but there are no cash limits when it comes to Trident or satisfying the greed of the NATO generals. I would never discredit the Government by saying that they have failed, because I have said on previous occasions in other debates that they intend to recreate the old Victorian society, and to keep the poor, disabled and handicapped in their place.
Therefore, there is not much consolation in the Green Paper for anybody who is in want. There is not much consolation beyond the fact that the measures will bring about the inevitable demise of this Tory Government. The Green Paper is probably the last nail in the Tory Government's coffin. I believe that more and more people will come to understand—
§ Mr. Peter Griffiths
On a point of order, Mr. Deputy Speaker. Am I not right in believing that Mr. Speaker changed the time for 10-minute speeches from 6 pm until 239 8 pm to 7 pm until 9 pm? If so, the hon. Member for Liverpool, West Derby (Mr. Wareing) is out of order in continuing his speech.
§ Mr. Deputy Speaker Sir Paul Dean
I am grateful to the hon. Gentleman. I had not realised that. In that case, the hon. Member for Liverpool, West Derby, (Mr. Wareing) must finish his speech with one more sentence.
§ Mr. Wareing
I am sorry, Mr. Deputy Speaker. I do not think that I have had 10 minutes.
The one sentence is this. I hope that there might just be enough Tories with guts tonight to go into the Division Lobby with us in advance of the letters that they will receive, which will tell them what ordinary people think of the way in which they are being treated compared with the Tories' rich friends in the stockbroker belt who will benefit from the massive reductions in taxes which they have been promised but which the Chancellor of the Exchequer is finding it difficult to deliver.
§ Mr. Roy Galley (Halifax)
It is a pity that the Labour party has decided to debunk the whole of the Green Paper in advance of reading it. Labour Members wrote their scripts in advance of the Green Paper coming out, and now they have decided to debunk it. In doing so, they are in great danger of throwing out several healthy babies with what they regard as rather murky bath water.
There is one point which I should like to urge on my right hon. Friend the Secretary of State, and which has been made strongly. We should have some indicative figures earlier that November. I say that not because I regard that as sound management. It is obviously sound that we should discuss principles, consult and then establish rates. However, I am concerned that the hysterical reaction of the Left that we are seeing in the debate and in the country will cause considerable mischief primarily for the most vulnerable and needy in our society, who will be needlessly frightened by the exaggerated tales that are already coming from the Opposition. I beg my right hon. Friend to take that factor into account when he issues the figures.
Opposition Members claim to care about the vulnerable in our society, but in fact they regard them simply as pawns in their power game. Surely everyone will welcome the intention in the Green Paper to remove the unemployment trap and, as far as possible—it may not be entirely achieved—to ensure that people in work are not disadvantaged compared with those out of work. The anticipated reduction of 100 per cent. in marginal tax rates is crucial. Even if the price that we have to pay is that more people will have a marginal tax rate of 90 per cent. or more, it is an improvement on the present 100 per cent. marginal tax rates, with which we must deal. One hopes that one will minimise the 90 per cent. rate, but it will be a vast improvement.
The family credit scheme based on take-home pay calculated by the employer is also potentially a vast improvement, in that it will target money on those in greatest need. The critical problem, as ever, will be that of take-up. It is not axiomatic that a six-monthly application system, a 13-week income assessment system and employers making the payment in the pay packet will necessarily improve the take-up. One hopes that it will do so, but it will not necessarily of itself do so. There will 240 need to be a substantial marketing effort and a positive, active role by employers in encouraging their employees to take up the benefit.
If we are to deal effectively with family poverty, we need a high take-up rate of family credit. We will need additional resources to achieve that. From where will the resources come? They could come from other parts of the package, but if that is the intention, the resources will be tight.
I wish to give considerable support to the plea made by my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) on child benefit. It is becoming a popular plea from these Benches that those who are rich should not automatically be entitled to child benefit. Unless we have a system of taxing child benefit, or having an income cutoff point, we will not produce the resources to make family credit an adequate response to our family poverty problem.
I doubt that we will solve the problem of family poverty unless we have a partial tax benefit integrated system with family credit, child benefit and tax brought into the same system as a first step. All the signs are that we can do that fairly soon, so let us get on with it as soon as possible.
There is silence in the Green Paper on whether the credit will apply to the self-employed. It is vital that it should do so, because there are low-earning self-employed people, many of them starting new businesses, who need help and encouragement. We need to know how the system will work for them.
The family credit proposals include the highly commendable principle that people should be given cash in their hands, not benefits in kind, so that they can decide how to spend it. Already the hysterical Left is claiming that free school meals will be abolished, rather than applauding the fact that we will be giving people money and the dignity and independence to decide how to spend it.
So often it has been claimed that a great deal of stigma attaches to benefits in kind, such as free school meals. The issue is greatly exaggerated, but for some people there is an element of stigma. If we have the opportunity to abandon that, let us do so. If the argument can be applied to family credit, why is it not logical to extend it to those on income support? Surely the most potent argument for the retention of free school meals must be the variation in payment from one area of the country to another. If it is accepted that we can achieve an appropriate addition to family credit, why cannot that addition be added to the child rate for income support, so that we can go further along the road of abolishing the ludicrous benefits in kind?
The whole principle of income support with circumstantial premiums is to be commended. It will target benefit on those in greatest need. When deciding on the premiums and the rates, I ask my right hon. Friend to bear in mind the poverty often found in single households, especially among pensioners. I suspect that, after families with children, that is the greatest area of poverty. We must take that into account in setting income support levels.
I wish to raise three points relating to income support. For the first time, the Green Paper has established the presence test for income support, which is to be commended. It is quite right that foreigners, of whatever origin, should not be allowed to enter this country and immediately claim benefit. The reality may not be as substantial as the inclusion of the presence test suggests since primary immigration is virtually at an end, so there 241 may not be too great a difficulty. The only problem is what to do about political refugees. Will they be paid from money in the social fund?
The capital rule change for income support will be widely welcomed. The £3,000 cut-off has been a source of resentment to many people for a long time. In carrying out this reform I hope that my right hon. Friend will also take the opportunity to align the rules for charges for local authority and private homes with the changes. At present there are anomalies and there is an incentive for old people with capital of between £1,200 and £3,000 to enter a private home, while there is an incentive for those with capital over £3,000 to enter a local authority home. I hope that that anomaly will be tackled when the new changes are introduced.
The easing of the earnings rules and the disregard rules will also be welcomed, but I wonder whether we could be a little more generous in the disregard rules, especially for overlapping benefits. There are many groups for whom the disregard rules mean the loss of all the £4 of their secondary benefit. For example, I especially wish to mention the war disabled on supplementary benefit, which is their only source of income. They are currently losing substantially.
There are many gems in the Green Paper which have not been given sufficient attention this evening. I commend much of it to the House.
§ Mr. Gordon Brown (Dunfermline, East)
What we are debating tonight is a review that the Government call the most fundamental reform of the welfare state for 40 years. It is a review from the consequence of which they admit almost no family or household will be spared. It is a review about which the electorate was not warned, about which details are still denied, to which additional weekly cuts —such as in child benefit—are added and from which advisers are daily deserting the Government, having sat on the review teams.
Quite simply, the Government have had to impose the review because the economy that they are running can no longer meet the standards necessary for a civilised and decent society. The review displays principles of simplification, targeting and partnership only as a pretext for what has become clear as penny-pinching and piecemeal cuts in provision for ordinary people.
With £500 million cuts in housing benefit already announced, with almost 4 million pensioners affected as a result, how can the Government say that to simplify is just not another shorthand for cutting? When the Secretary of State had to admit on "A Week in Politics" 10 days ago that the housing benefit cuts were only the major savings of this review, and when we know that £200 million is to be saved in child benefit, how can he maintain that this is a nil cost review? We know that the right to a death or maternity grant is to be abolished, that single payments to more than 1 million households are to be abandoned, that heating additions to more than 2 million households are to be abandoned, and that in their place all we will get is citizens claiming or begging from a social fund with no rules, regulations or right of appeal. How can Conservative Members, even with their new-found interest in philosophy and structures, tell us that the philosophy of targeting presented in the review is not 242 simply the proliferation of more means testing, linking shame to need, even at birth and even, in some cases, for people beyond death?
How can the theorists of the new Right tell us that cutting benefits for the unemployed under-25s by perhaps £5 a week, and then asking them to pay £2 a week in rates —at a time when we know that, for example, in my constituency there is only one vacancy for every 30 people seeking work, which is true for most constituencies—is fostering work incentives when all that they are doing is penalising the unemployed?
I have a question for Conservative Members who applauded the Secretary of State two weeks ago and who have been laughing tonight as my hon. Friends and I have been explaining some of the facts and figures about the reviews. They cannot blame the Government's recommendations on expert advisers, because those advisers do not submit to the review conclusions. Nor can they blame the review recommendations on their manifesto, because the proposals were not in it. They cannot even blame the state of the economy for the proposed cuts, because they say that we are in the fourth year of sustained growth.
I ask them what they intend to say to their constituents to justify the plight of a pensioner on £35.80 a week who was promised protection by the Conservatives but who is now to be penalised for his or her thrift, who will be deprived of perhaps all help with rates because that pensioner saved up and has a small occupational pension worth, say, £10 or £15 a week?
What excuse can Conservative Members give to the young unemployed for cutting their benefit, when the Secretary of State for Social Services said just prior to the last general election that cutting unemployment benefit was an unacceptable price to pay? They are now, however, likely to be worse off to the tune of £7 a week as a result of the reviews.
What explanation will Conservative Members give to the widow whose allowance of £50 a week paid over six months is to be consolidated into a smaller, one-off benefit of £1,000, remembering that many widows, particularly those who are childless, will lose hundreds of pounds as a result of the changes?
What justification will they give to pensioners who will be deprived of their heating addition? What will they say to the 7 million mothers who will be deprived of a rising level of child benefit and even of the right to maternity benefit?
The Secretary of State has compared himself with Beveridge. The Leader of the House said of the right hon. Gentleman that his reforms would stand alongside those of Beveridge and Lloyd George. The test which the Secretary of State asks us to apply to his proposals is the test of a Beveridge report which commanded national consensus.
Where does the review, in its many aspects, raise its horizons to those of Beveridge? Where does it refer to the giant evils of poverty, want and idleness which concerned Beveridge? Where does it refer to the present worsening poverty that would have challenged Beveridge? Where does it refer to the inadequacy of benefit levels which would have enraged Beveridge? Where does it refer to the need for the redistribution of wealth, from rich to poor, instead of the redistribution of poverty, as the review proposes, among the poor?
243 We are looking for a vision to deal with the giant evils of want, idleness and poverty. All we find is an obsessive, compulsive concern about the burden on taxpayers, about costs and about cuts.
What the Government propose is not designed to meet the social challenges of the future. It is designed to deal with the chaos of economic failures on the part of the Government. The test for the Chancellor in the reviews is not a reduction in poverty but a reduction in the public sector borrowing requirement.
Under the SERPS proposals, it is suggested that the growth rate of the economy in 40 years' time will be half what it is now. In other words it will be less than it has been under almost every Government since the last war. The truth that emerges about the Government's policies is that we have a third-rate welfare state for a second-rate economy.
The Government should know that the British people are concerned more with poverty, are less selfish and are less self-centred than the M3-obsessed faction who are now ruling over the nation. They should know that the British people do not regard the welfare state as a luxury but as a lifeline. They do not see it as a sort of optional extra to be discarded at the whim of the Government. They see it as an essential component of a decent, modern society.
The Labour party believes in the welfare state. The country believes in it. The Government are isolated in their proposals to cut benefits, to penalise the unemployed and to introduce new means tests into our society.
§ Mr. Robin Squire (Hornchurch)
Most Back Benchers — rightly, considering that we are debating a Green Paper — have concentrated on making constructive suggestions. It is all the more to be regretted, therefore, that the opening speech by the Leader of the Opposition was a 45-minute Second Reading rant, and he lost a great opportunity to express some of his views.
I congratulate the Government, as other hon. Members have done, on the prodigious amount of work that has been involved in the reviews. I welcome a number of the proposals, though I shall, like other hon. Members, concentrate on those things with which I do not agree.
I wish at the outset to put the alternative argument on child benefit, and I do so because I have for long believed, as my right hon. Friend the Minister knows, that until and unless we have a proper, working, operational, combined benefit and tax system, it is folly in the extreme to do away with the most effective means of reaching out to poor families. Literally dozens of reports sustain me in that view, and I need quote from only one. That is the Policy Studies Institute report, which is well respected and which states:PSI research … clearly identified hardship experienced by out of work families with children, and leads to the suggestion that increased rates for children should be the number one priority for social security … In fact the overwhelming majority of families in receipt of child benefit are tax-payers; the most efficient mechanism for targeted tax relief is child benefit. An increase in this could be counted as a tax credit to avoid an apparent effect on public expenditure. The resources are available from a demonstrably less well-targeted form of family tax relief, the married man's tax allowance.My hon. Friends the Members for Wells (Mr. Heathcoat-Amory) and for Halifax (Mr. Galley) and others who have not yet spoken should accept that if we are to launch into 244 an attack on all-embracing universal benefits, we should consider that one and, even more obviously, mortgage tax interest, before we start tackling a benefit that goes to the very heart of support for the family.
I come to supplementary benefit, or income support, as we may have to learn to call it. I welcome without reservation the simplification proposed in the Green Paper. Few, if any, hon. Members can doubt that the present complexity of the scheme prevents many people—who justly and rightly should be receiving it—from getting this benefit.
I hope that the House will forgive me for dealing with an instance of the consequences of removing all special single payments. I quote from a letter that I have received from the Newham neighbourhood energy project, a voluntary project which I know well and which does a great deal to assist low-income and elderly people with their heating. The letter states:Dear Mr. Squire,I wrote to you in March regarding the possible cessation of 'single payment' provisions for draught-proofing under the review which the Government were then carrying out. As now announced, this provision is being dropped and there appears to be no replacement provision under the proposals published in the Green Paper. This is devastating news to our potential clients and to the 170-odd staff whom we employ on these projects, sponsored by the Manpower Services Commission. A substantial number of our elderly, sick, disabled and low income clients rely on this single payment provision to cover the costs of the draught-proofing materials which we install … Over 40 per cent. of the long-term unemployed whom we recruit subsequently find full-time permanent work. The removal of the single payment provision will seriously affect the numbers whom we can potentially assist and will have a detrimental effect on our provision of jobs for those who most need them. Yet, nationally, we are talking about very modest sums. If every one of the 4 million currently qualifying for single payments were to have their homes draught-proofed to an efficient and effective level, the cost would be less than £100 million and the energy savings alone would recover this sum in less than two years —disregarding the qualitative benefits of warmer homes and greater comfort. 1986 has been designated 'Energy Efficiency Year,' yet one of the main-stays of the service which we provide is now under threat.I do not expect the Minister, when summing up tonight, to give me a detailed answer to that, but I trust that he will look into it and contact me in due course. If that were a consequence of the change, I and many other hon. Members would regret it.
Having called for some time for a simplification of what is universally accepted as a hopelessly complex system of housing benefits, I thought that all others would, like me, welcome what is proposed. I am surprised, therefore, that some hon. Members have not agreed on that. Wherever the blame for the present system lies, it is self-evident that any scheme that involves the DHSS and local authorities in interminable negotiation must need major reform, such as that outlined in the Green Paper.
Other hon. Members, including my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) have pointed out the consequences of moving from six tapers to one. Ultimately, that is a political judgment which the Government and the House will take. If we combine the housing benefit for both rent and rates, there will be substantial losses of £3 or £4 a week for those receiving benefit. Often these people are the elderly. I am sure that my hon. Friend the Minister of State will take that aspect into account.
I urge the Government to continue to listen to the various experts. Of course, political decisions must 245 properly lie with the Government, but I urge the Government to listen to the experts when considering the mechanics of the benefits to be implemented. Many warnings have been given by groups such as the Child Poverty Action Group, the Shelter Housing Aid Centre and Shelter before the introduction of the housing benefits system. It is incumbent upon us to listen to the warnings from people who say, "If you implement the system, it will be chaotic and haphazard."
I turn to the general principles that permeate each of the benefits. It is easy for hon. Members, especially Conservative Members, to welcome the improved targeting of benefits towards those most in need. I would be the first to say that, where that can be done, it must be done. The benefits are obvious. A balance must, however, be struck. Time and again in the Green Paper we see that the consequence of making that targeting the only standard would be unacceptably high marginal rates of income tax. We must be consistent. The Government rightly deplore any suggestion of again imposing income tax at the lunatic levels of 80 per cent., 90 per cent. or even 95 per cent. We must continue to point out the danger that that would cause if an alternative Government pledged that they would introduce that system.
If we are consistent, we must recognise the disincentives of such taxation levels being imposed on people with a fraction of the resources of the people to whom I have referred. If part of the cost of making the slope of benefit withdrawal more gentle is regarded as a direct contribution to a reduction in the marginal income tax rate, that is money well spent. It is important to make that point rather than to believe, with all our experience of means-tested benefits, that an abrupt termination of any benefit would do anything other than keep many people in a poverty or unemployment trap. I know that all hon. Members want those traps to be removed.
As I wished to demonstrate that I can speak in less than 10 minutes, Mr. Deputy Speaker, I am happy to give a fulsome welcome to the Green Paper. I look forward to the discussions continuing beyond this evening.
§ Ms. Jo Richardson (Barking)
I hope that the hon. Member for Hornchurch (Mr. Squire) will forgive me if I do not follow his last argument, but I have only a few minutes in which to speak.
An underlying theme of the Green Paper worries me greatly. Apart from the individual measures proposed, their merits and demerits and the review's poor law approach, I am worried about the underlying assumption that women are the dependants of their husbands. I deplore that. For some time we have been trying to move away from that concept. Although the state believes that women are dependants of their partners, that view is becoming increasingly less acceptable to women, especially the 40 per cent. of the work force who are women and the 1.25 million women who are the main breadwinners in their families. In spite of that trend, many of the proposals in the Green Paper take us backwards and encourage a more Victorian and outdated approach.
The ending of the state earnings-related pension scheme, which puts the onus on the individual to organise an individual pension on top of the basic state pension, will be disastrous for women, because they are already in a 246 dependent and unequal position. The present system does not provide equal pension rights, but at least it gives women some protection. Many women will not be able to organise themselves to have an additional pension. They will be subjected to the new high street cowboys, who will try to sell them a cheap pension which will appear attractive but which may prove not to be so. They will be landed with an inadequate pension. This applies to many groups, including the low-paid and women.
Women who do not work will be dependent upon their husbands' schemes, which may not always be adequate. Widows will suffer if no scheme is organised or if the scheme is discriminatory or inadequate. The proposals hit a vulnerable section of our community who are at the bottom end of the pay scale.
It is proposed to abolish family income supplement and to replace it with the family credit scheme. This will involve payment through the wage packet rather than through the Post Office. Free school meals and welfare foods will go in favour of a possible increase in benefit. I say "possible" increase because no one has quantified what will happen. In the majority of cases, payment of family credit will be made through the male wage packet. The woman in the family will have no guarantee unless she and her husband have a good and shared relationship. She is in charge of the family income and has to budget, yet under this system she could be much worse off.
There is no guarantee that family credit will reach the woman's purse. Removal of the safety net benefits, such as free school meals and welfare foods and the payment of money through family credit, may mean that the woman will not receive the resources. This is a reversal of the concept of redistributing resources within the family and will mean an increase in the number of women who are seen as dependents of their partners.
Whatever the age groups or the circumstances, the Government are hitting women. The Government do not even protect women during pregnancy, which is a vulnerable time. For a long time I have campaigned for maternity grant to be increased. It is abysmally low. It is no good telling me that the flat rate, means-tested benefit of £75 paid from the social fund to replace the concept of a universal maternity grant and single payments for baby clothes are improvements. We shall lose the principle of the maternity benefit, which is a precious principle on which we should build. We are saying that women will have to go with hand outstretched to the social fund to obtain money for their children.
Next week the DHSS will go to the other place on appeal against the judgment in the case of Mrs. Gillick, who wants to ban the giving of contraceptive advice to girls under 16 years. As a result, there may be more pregnant girls under 16, yet the Government propose in the review to cut off maternity benefits to schoolgirls. That is a disgrace. This is a vulnerable group of people who have made mistakes, but who should be protected.
As far as can be calculated from the maternity allowance, half a million women will lose the maternity grant, and women on income support may get less than they receive from the single payment, plus the maternity grant. Expectant mothers, who might have expected the review positively to update the benefits to which they are entitled, will not benefit from it.
The abolition of the death grant will affect the elderly, a large proportion of whom are women. The death grant will be discretionary and I understand that it could be 247 repayable. Why is this extra worry being heaped upon the bereaved? The Government believe that they are being generous by abolishing the weekly widow's allowance and replacing it with a lump sum payment, but most of the £1,000 will be spent upon burial expenses and resettling the widow in new circumstances.
The Government had a golden opportunity to provide women with greater equality and financial independence, instead of which they are thumping women. The Government thump girls when they are at school and might get pregnant; when they grow up, get married and try to set up home and start a family; when they try to make ends meet on a low family income; when they work and try to provide for their retirement; when they retire and also when they are bereaved. If a woman is beaten up by a violent and uncontrollable husband, that is called domestic violence. I call this Government violence, and the sooner we get rid of it the better.
§ Mr. Edward Leigh (Gainsborough and Horncastle)
The principal reaction to the Green Paper, which I share, has been one of homage to the political skills of my right hon. Friend the Secretary of State for Social Services in avoiding the numerous banana skins that lie in the path of any Conservative politician who proposes the modernisation of the welfare state. The avoidance of banana skins, however, is not a sufficient guide to statesmanship. True, one does not fall over if one does not stride purposefully forward, but one does not achieve very much either, apart from being remembered for shrewdly defending one's corner. For however much the Labour party may attempt publicly to adhere to the sacred shibboleths of "welfarestate-speak", every independent commentator has come to accept in recent years the need not just for a review of the welfare state but for a radical reform, not merely to improve the old ways but to change direction altogether.
It would be unfair to describe my right hon. Friend's review as mere patching of a rotting edifice. He has planted the seeds of an exciting new structure, but they still lie buried very deep. In these seeds I hope we see the beginning of the end of the contributory principle, long since dying in fact if not in sentiment, the end of the principle of universality and the beginning of negative income tax and the integration of the tax and benefit systems. We see that in the new family credit.
But why is a new start needed? It is needed because Lord Beveridge in his wildest dreams could not have conceived his creation developing into a bureaucratic monster employing 70,000 people administering 43 different means-tested benefits, costing £40 billion and now £42 billion a year—more than we spend on defence and health combined—and allowing, according to the Daily Mail, so it must be right, middle-class Italian students the privilege of free holidays in Great Britain.
Three weeks before this year's Budget I was lucky enough to come top of the ballot for private Members' motions and I chose as my subject for debate the need for the integration of benefits and taxation. I like to think that that motion was a provocative thrust against the Treasury mandarins who, it is becoming increasingly clear, are determined to adhere to the outdated principle that we are two nations: a nation of thrifty workers paying taxes, and a nation of the poor, the elderly, the disabled and the unemployed gratefully receiving the fruits of the nation's labour in benefits.
248 To the Treasury mandarins the glory of PAYE stands as a monument to their ingenuity: pure, intellectually whole and satisfying but quite separate from the messy jumble of those 43 means-tested benefits. Alas, the truth is very different. All of us — I apologise for vulgar language—have our noses in the trough of state support.
The most infamous example is that of child benefits. This afternoon, in questions to my right hon. Friend the Secretary of State for Social Services, I asked him what rational justification there is for taxing struggling young families on low incomes into the poverty trap in order to subsidise the child bearing of a duchess. "Ah," said my right hon. Friend, if I may paraphrase him, as he desperately searched for an answer which would not smack of political opportunism, "child bearing carries particular costs and responsibilities for the duchess as for everyone else." Granted; but why make her pay crippling income and capital taxes on the one hand and give her a benefit that she does not need on the other? Do we really think that the higher income classes of this country are such dolts that they enjoy the state deciding for them what crumbs they shall be offered in return for the taxes that they pay in order to subsidise the monstrous leviathan of an out-of-control bureaucracy spending £40 billion a year?
But child benefit is only one perk that we all enjoy from the state, however well off and successful we are. Old-age pensions, mortgage tax relief, free health care, and income tax thresholds are all there. The Treasury mandarins are wrong. The walls of their castle have long since been breached by middle-class voters who would rather enjoy a perk now than look forward to the chimers of tax cuts.
However, my right hon. Friend's success in his Green Paper has been to start a move towards the reluctant acceptance by us all that the apparatus which aims to mix up contributory and non-contributory benefits and universal benefits for the well-off and the hard-up alike cannot survive. It is not fair; we cannot afford it. It does not adequately target help to those most in need. We must choose between a whittled-down Beveridge concept based on the state paying the premiums of those unable to contribute and a fully integrated tax and benefit system. To choose the former way is to suffer under the continuous and effective, if outrageous, arrows of the onslaught of the unprincipled thrust of Opposition argument as perk by perk, benefit by benefit is salami-sliced away. We all receive those benefits in one way or another.
The latter approach is difficult, expensive and radical, but it has one virtue—it is right, rational and feasible and it will make it politically possible and acceptable to remove child benefit from the well-off and to give it to the hard-up. To that extent I welcome the Green Paper, but only as a first step on a long path, not as a final settlement.
§ Mr. John Hume (Foyle)
I am grateful for the opportunity to take part in the debate, as I believe that my constituency has a higher rate of dependence on social security than any other represented in this House. There is 40 per cent. unemployment in Strabane and 30 per cent. in Derry, and 21,000 of the 60,000 people on the electoral register in my constituency are supplementary benefit claimants, so I can perhaps claim more direct experience than right hon. and hon. Members on the Conservative Benches of the effects of social security arrangements.
Many of the people who come to my office are trapped between monetarism and terrorism. The Government's 249 neutron bomb economics has left workplaces standing but taken the people out of them. The terror bomb tactics of the IRA have destroyed the workplaces and left the people standing — on the dole queue. One closes down workplaces as uneconomic targets while the other blows them up as economic targets. One uses unemployment as a tool of economic strategy while the other uses it as a tool of political strategy, and we all know who pays the price —the people who end up on social security.
Government and Opposition seem to be agreed on only one claim—that the proposals in the Green Paper will have far-reaching effects. No matter how far-reaching the effects on Great Britain, the effects in Northern Ireland will be especially pronounced because social security payments represent about 26 per cent. of household income in Northern Ireland compared with about 13 per cent. in the United Kingdom as a whole. If the Green Paper is implemented, it will have a profound effect on the lives and living standards of many people in the north of Ireland, not just the unemployed and the elderly but many people at work, because social security payments account for one quarter of the spending power in the Northern Ireland economy.
Few would dispute that our social security structures, methods and levels of payment need reform, but the primary aim of any attempt at simplification must be to ease access and attainment for those entitled to benefit rather than to ease administration and accounting for management. The review has correctly identified many problems in the present system but, unfortunately, it has failed to identify many answers correctly. That is hardly surprising given that, by announcing a nil cost review, the Secretary of State had already more or less decided what the score would be before the exercise began.
The nil cost criterion was presumably the reason why some of the most obvious questions were not asked. For instance, what level of benefit is necessary to protect people from poverty? That is surely a fundamental question. What effect will means testing have on the take-up rate and to what extent will those just above the arbitrary means test limit be penalised? Those questions are fundamental to any serious consideration of whether a scheme would actually insure against poverty and provide for need, but those questions have been ignored. Means testing is to be extended on the basis that it ensures that help goes to those who really need it, but no study was undertaken to see whether that would be the effect and whether there would be side effects. I contend that means testing does as much to deny help to people who really need it because those people have their dignity as it does to ensure that help is given to those who are technically entitled to it.
The nil cost criterion also means that, at best, money will be taken from the poor and given to the poor in a redistribution of poverty. Given that savings of at least £1 billion — the lowest figure yet conceded by the Government—are expected to flow from the proposals, it is clear that in fact money is to be taken from the poor and given to the wealthy in future tax cuts. The Government's economic statement includes much talk about incentives to the wealthy in terms of tax cuts, higher profits and ownership of former public enterprises, but the incentives to the less well-off are low wages and restricted social security benefits. The recent Budget was mainly a 250 strategy to bring about a low-wage economy and the Green Paper is the other side of that coin—the residualisation of the welfare state.
The Opposition have referred to it as the distinction between the deserving and the undeserving poor, while the Government talk of concentrating resources on those in greatest need. In fact, it is a residual scheme of assistance for people who will feel stigmatised as a social and economic residue. That is a retreat from Beveridge and a return to the values of the Victorian poor law. It is attacking the poor instead of attacking poverty. The family credit scheme as proposed in the Green Paper is surely a licence for low wages and is obviously in keeping with proposals in the recent Budget. Rather than helping overcome the problem of low wages, this scheme will help sustain low wages. Rather than providing assistance to employees, it will provide wage relief to employers, a hidden grant to encourage low wages. Will the Secretary of State tell me what the difference is between the family credit scheme and the Speenhamland system?
The Government are trying to tell us with their low-wage strategy that poverty is the answer to unemployment. Northern Ireland already has lower income levels and higher unemployment than Great Britain and we are being told that if we have higher unemployment and lower wage levels that will be the spur that will make people get on their bicycles and go to get work. We already have a pilot area in which we have the highest unemployment and the lowest wages imaginable, and the result is community strife and instability. That is the direction in which that sort of Victorian thinking leads.
With regard to the proposed changes to supplementary benefit, in my constituency, with 60,000 people on the electoral roll, there are 21,000 claiming supplementary benefit. The income support proposal which is to replace it can be given a full analysis only when we know what levels of benefit we are talking about, and we do not. It is not clear either on what criteria or indices the Government will determine the levels of payment under the income support scheme, except that it must be lower than a low wage. This gives ground for suspicion and I am particularly worried about that portion of support which is meant to help with heating costs. For example, some parts of the United Kingdom have much higher heating costs than others and a greater incidence of fuel poverty. If the Government's intention is to help those in most need, what is their method of linking support payments to such particular social and regional factors?
Single payments are to be replaced by grants from the social fund. This is probably one of the most pernicious aspects of this Green Paper. Again, there is the example of my constituency. In the life of this Government, from 1978 to 1984, these are the statistics. In Derry city, in 1978, 2,789 single payments were made; in 1984, 12,959 were made. In Strabane, the figures were 1,200 in 1978, and 10,000 in 1984. The figures have been multiplied by six in the lifetime of this Government.
Those figures demonstrate the growing need among people in poverty under the policies of this Government, yet their answer is to give them loans. The people I am talking about are people with dignity. The net result of asking those people to be means-tested for loans is that they will end up with loan sharks and moneylenders—another opportunity for private enterprise.
Secondly, there is this business of assistance with budget management. There is no greater arrogance or 251 insult to the poor people of our country and society than to suggest that what they need is assistance in managing their budget rather than a rise in their income level. Could any hon. Member manage his family budget on supplementary benefit and feed his family as well as those people do? The best managers of budgets in this country are the women who feed and rear families on the pittances they receive on supplementary benefit. It is a damned insult to the integrity of those people to suggest that what they need is advice on how to manage their budgets.
The philosophy that appears to underlie this effort is based on the notion that a high percentage of social security payments in relation to GDP is bad for economic growth. Why, then, is it that the United Kingdom has a lower percentage of GDP going on social security than many other member states of the European Community? Why is it much lower than in West Germany, which is consistently held up to us as a model economy?
All this has effects on society. I have some experience of deprivation, poverty and alienation. I give a warning from a man with great experience of what deprivation and enforced poverty did to human beings—Martin Luther King. He said:When an individual is no longer a true participant, when he no longer feels a sense of responsibility to his society, the content of democracy is empty. When the social system does not build security but induces peril, inexorably, the individual is compelled to pull away from a soulless society. This produces alienation, perhaps the most pervasive and insidious development in contemporary society.I warn the Government that they are not building security but inducing peril. Inexorably, the individual in this soulless society that they are creating will be driven away.
§ Mr. Timothy Wood (Stevenage)
Despite the passionate opposition from the hon. Member for Foyle (Mr. Hume), I give a strong welcome to the proposals in the Green Paper. Over the years, it has amazed me that the Labour party, with all its protestations about the need to help the poor, has been prepared to support a social security system which is incredibly complex and often most unfair.
Although some Labour Back Benchers made constructive points of criticism about the Green Paper, from the Front Bench we heard only blanket opposition, without any detailed consideration of the merits of some of the proposals. In particular, the family credit system is a major step forward from the family income supplement. Its assessment of those in need is based on net income. Secondly, there is an obvious need to simplify the housing benefit system. Although one can argue in due course about numbers, the case for that simplification is overwhelming and I am delighted that at last we are beginning to approach such a simplification.
For years some people in work have been worse off than those out of work. For years, an increase in wage for a family with children could make a family worse off. For years there has been a multitude of benefits which the needy have not understood and which many have not claimed. That is not a satisfactory welfare state.
I can give an example. At my surgery last Saturday, a married man with two children came to see me. His wage meant that his family income was just above that giving an entitlement to family income supplement, but he was entitled to housing benefit. About six months ago, finding 252 himself short of money, he started to work overtime. Three months later he received a notice from his council saying that it was terribly sorry, but his increased income meant that he lost £120 housing benefit. He worked more overtime, and another three months later he was told that another £98 was owing. There is a case for modifying such absurdities.
The assessment of family credit and housing benefit on the basis of net income is immediately a major step forward. It will mean that the combination of loss of benefits and the incidence of tax will have a marginal rate on the increase of income where the marginal rate of tax and loss of benefit will be about 85 per cent. rather than, as at present, rising to 110 per cent., or even higher percentages. It is obviously desirable that we make those changes. I should like to see the Opposition at least welcoming that sort of change, even if they are discontented about some other aspects.
The Opposition have complained about a lack of figures. In reality, it is possible to develop a variety of sets of figures on the basis of the structures that have been put forward. Indeed, the right hon. Member for Plymouth Devonport (Dr. Owen) did precisely that in his contribution. Even the hon. Member for Oldham, West (Mr. Meacher) has put forward some figures, although I must admit that they are so bizarre that he has been either scaremongering or incompetent.
I believe that there is every likelihood that the family credit slope will be about 50 per cent., as it is now, and that, the housing benefit slope will be something similar. As a consequence, an increase in income will be subject to a total rate of about 85 per cent. If we go along that path, I believe that we will achieve a considerable step forward in the alleviation of the poverty trap and the unemployment trap. I support the proposals.
§ Mr. Michael Meacher (Oldham, West)
The Secretary of State made two new points in opening the debate, and I think only two, in an otherwise fairly predictable speech. The first was to announce that the widow's allowance of £1,000 will be tax-free — what a concession that is. What he did not add was that most widows on £50 a week or so pay hardly any tax now. In any case, the widow's allowance is all too likely to be taken into account in the calculation of entitlement to the death grant if it is applied for.
Secondly, the right hon. Gentleman made it clear that he would give no commitment that the social fund would be topped up if it ran out. This means that, after doubling poverty since 1979, the Government are now cash-limiting the relief of poverty. That is an extraordinarily harsh decision. I notice that even his hon. Friend the Member for Thanet, North (Mr. Gale), who is no Tory softie, could not stomach it. It says something about the nature of the Green Paper exercise, which my hon. Friend the Member for Birkenhead (Mr. Field) aptly described as similar to having an X-ray without a barium meal, that even the Thatcherite wing of the Tory party finds it difficult to stomach parts of it.
The Green Paper is surely unique in at least two respects. Its declared aims are almost wholly belied by its own evidence. Not only does it blank out all the relevant conclusions; it conceals the fact that, on all the main 253 issues, the Government countermanded the conclusions of their own review committee, in every case to the marked detriment of claimants.
The Secretary of State has repeatedly made it clear—he did so again today, and it is stated in the Government motion—that the four major themes of the Green Paper are targeting of the needy, simplification, improving work incentives and a new partnership between state and individual. It is truly astonishing that the Government should have chosen to justify in the Green Paper four themes which are manifestly and explicitly contradicted by the contents of their own Green Paper.
Targeting is, of course, the current Tory buzz word for more means testing and more cuts. But SERPS is not being targeted better; it is being abolished. Housing benefit is not being targeted better; it is being cut. Unemployed families, where some of the worst poverty in Britain today exists, are not being targeted with increased aid; they have been victimised with further cuts. If targeting were really the aim, why are the poorest being required for the first time ever to pay a minimum of 20 per cent. of their general rates out of an already meagre and inadequate basic benefit? If targeting were the real aim of the exercise, why are 1.8 million families being excluded altogether from housing benefit, of whom the great majority are owner-occupier pensioners, especially widows with small occupational pensions? Is targeting now to be the reward for a lifetime of thrift?
I commend the brave speech of the hon. Member for Brighton, Kemptown (Mr. Bowden) because he had the courage to point out how punitive the new rules on the tapers are. I hope that his right hon. Friend took note of those honest comments.
The only targeting in which the Government are interested is targeting on the rich, and they have certainly concentrated on them. According to an answer from the Treasury on 4 April, no less than an extra £2,000 million in real terms has been targeted since 1979 on the richest 2 per cent. of the population—those earning more than £30,000 a year. Had that money been targeted on pensioners, every pensioner in Britain would receive a Christmas bonus of £200 this year.
The Secretary of State justifies his proposals on grounds of simplification, but the Green Paper shows that the opposite is the case. The proposals will involve greater complexity. Instead of a single set of supplementary benefit rates, there will be four tiers of the new income support scheme, and a proliferation of at least seven premiums to the basic rate. My hon. Friend the Member for Glasgow, Provan (Mr. Brown) spoke eloquently on that point. There will be two premiums for the elderly, two for the unemployed and others for single-parent families, the disabled and families in general. That is not simplification. It is swapping one complicated system—I agree that the present system is highly bureaucratic—for another, which I predict will be just as confusing to claimants as its predecessor, supplementary benefit. The Government's two main alleged objectives—targeting and simplification—not only do not coincide, but are incompatible.
"Targeting" is Fowlerspeak for more means testing. As the Secretary of State wrote to the Child Poverty Action Group a year ago: 254By their nature, means-tested benefits are complicated to legislate for, administer and understand.He was entirely accurate. He should not try to fool us that this is an exercise in simplification.
Moreover, the new social fund will not simplify; it will do the reverse. It will replace unambiguous rights with vague discretion. Local social security officers will be put in a highly invidious position, to which no civil servant should be subjected, of deciding who is helped in an emergency and who is not. In the Prime Minister's brave new Victorian world, they will be like the guardians of the Victorian poor law. There will be no independent appeal against their decisions, however idiosyncratic. This is not simplifying, it is maximising bureaucratic discretion and arbitrary power.
Perhaps when the Secretary of State mentioned simplification, he meant the housing benefit scheme, to which the hon. Member for Stevenage (Mr. Wood) referred. If so, all I can say is that it is a bit rum to make a virtue of simplifying a scheme that he created—warts, complexities and all. A little more humility and contrition would not come amiss from the right hon. Gentleman for wishing on us whatThe Times, which is not given to Left-wing rhetoric, recently described asthe biggest administrative fiasco in the history of the welfare state.Another rationale used by the Secretary of State for the Green Paper is that it improves work incentives. Apart from the fact that that is a Tory euphemism for penalising the unemployed, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, the Secretary of State is refuted by his own document. If, as is stated, the withdrawal rate on housing benefit is 70 per cent., and that on family credit is 60 per cent., as the leaks have said — the leaks have proved to be accurate so far —taxpayers claiming family credit and housing benefit will lose about — [Interruption.] The Secretary of State obviously has a distaste for figures. Although he is not prepared to give them to the House, perhaps I can give one or two. Such a family would lose 93p on every extra pound that it earns. That is no great incentive to work harder.
What matters even more is that the Green Paper shows that there will be an increase in the number of poor people who pay marginal tax rates well above the 60 per cent. tax rate incurred by millionaires. One wonders how many Tory MPs would view with equimimity being subjected to a tax rate at that level in the interest of improving work incentives.
The Government's fourth justification for their proposals is the so-called twin pillar approach—the joint partnership between state and individual. It is mind-boggling that the Secretary of State has the brass neck to proclaim as a guiding principle an objective which even a moment's reflection shows is blatantly contradicted by what is by far the most important proposal in the Green Paper—the abolition of SERPS. I can only presume that it is based on the notion that if one tells a big enough whopper, and tells it often enough, no one will notice it.
So much for the Government's stated objectives, none of which stands up to close examination. Therefore, it is obvious that the Government's real motives, unstated, are different. They are perhaps best indicated by one key piece of evidence—the decisions taken by the Secretary of State himself, which overrule the recommendations that his own reviewing team made to him. They are extremely revealing.
255 First and foremost, the Secretary of State overruled the view of the committee reviewing pensions, which he himself chaired, so as to insist on the abolition of SERPS. The right hon. Gentleman shakes his head, but we now know that all three—which must be unparalleled—of the independent specialist advisers on his own inquiry team wholly opposed this move.
The Secretary of State overruled his housing benefit review committee to insist that the poorest families should be required to meet a minimum 20 per cent. of their rates bill. In the debate today even some of his Back Benchers have been jibbing at that. That is his decision. In its letter to the Secretary of State, the review committee said:We have concluded that for those on supplementary benefit or equivalent net income, it would be unrealistic to suppose that even a small proportion of housing costs could be met at the expense of other personal requirements. We believe that 100 per cent. help with housing costs for those on the lowest incomes is the only fair way of meeting their needs within the present vagaries of the housing market.That was uncompromising advice, but it was deliberately repudiated by the right hon. Gentleman.
The committee made it clear that it disagreed with the Government's argument that making low income families pay a proportion of rates would help control the level of rates. The committee could find no evidence—and the right hon. Gentleman has given us no evidence—that such families have any control over the level of rates set.
The right hon. Gentleman overruled the committees even though their members were all personally handpicked Conservatives. The housing benefit review committee argued:clearly there would have to be some flat-rate addition to current supplementary benefit scale rates to cover the contribution towards housing costs".Again, the Secretary of State overruled the committee. There is no mention of any such compensation in the Green Paper.
The housing benefit review committee recommended that, to make up for the loss to owner-occupiers from changes in the rates taper, an element of mortgage interest should be covered by housing benefit. The Secretary of State not only overruled the committee but has gone to the other extreme by seeking to restrict mortgage interest payments to those on supplementary benefit for the first six months, even though, when the rate of repossession is already known to be rising, that decision is bound to lead to increased homelessness and to many unemployed families being thrown out on the street.
There is one connecting theme running through all these examples. At every point where the Secretary of State has intervened directly and personally to overrule his own review committees, it is to insert major cuts in benefit. The work of the review committees may have been about restructuring, but the Secretary of State's contribution has been very different.
The damaging parts of the package which will hit people hardest were not recommended—they were often directly opposed — by the review committees. The Secretary of State is responsible for them. He is the guilty man. That is why we are suspicious about his and the Prime Minister's constant excuses and prevarications about the one glaring omission from the Green Paper which has still not been cleared up in the debate—the publication of the figures.
I make no apology for returning to that subject, because it is crucial. We have had plenty of promises and 256 assurances, but how many times does one trust a tainted source? First, the Secretary of State promised that he would not abolish SERPS. On 23 November, 1983 he said:My aim in setting up an inquiry is not to call into question the fundamental pensions structure that was established in the 1970s with all-party agreement, and to which I was a party." —[Official Report, 23 November, 1983; Vol. 49, c. 360.]The Secretary of State's commitment was so unequivocal that that matter was not debated by the pensions inquiry. That promise has now been calculatedly broken.
On 3 June 1984, the Secretary of State gave an undertaking and said:it is impossible to provide a detailed analysis, because clearly it depends on the benefits rates set in April 1987."—[Official Report, 3 June, 1985; Vol. 80, c. 42.]That excuse has now been exposed for the charade it always was by the revelation that the Secretary of State suppressed the details of gainers and losers at the last moment when the report was at Bemrose Security Printing at Derby. If that is not the case, we shall be glad to know about it.
When will we get the figures? Ministers say that they cannot provide them because they cannot predict the benefit rates of April 1987. If they cannot estimate what the benefit rates will be in less than two years, how can they estimate the cost of SERPS in 50 years time with such precision that they already know that it is unviable? [Interruption.] If the Secretary of State would like to assist us and show how his mind works on any of those matters I should be happy to give way. Does the Secretary of State want to speak?
Stalling until 1987 is a cover-up. Why do they not give the figures of gainers and losers that apply now? They are much the same as those shown to the Cabinet. Under pressure of questioning from my right hon. Friend the Leader of the Opposition, the Prime Minister has been forced to bring forward the publication of the figures from April 1987 to November 1985. What will be known in November this year that is not already known?
One telling piece of internal evidence makes it clear that the figures exist and are available. If the saving from housing benefit changes is known to be £500 million, as the Government have repeatedly stated, the new income support scheme levels must be known or that figure could not be calculated. If the figures are available, why can we not have them now?
For the Secretary of State, after the most extensive review of the welfare state since Beveridge—as he likes to call it—to produce a Green Paper without figures is the biggest con since Horatio Bottomley. It comes from a Government who are always talking about closer financial control but who cannot even tell us the aggregate cost of their proposals. I wonder what Conservative Members would think at the company meetings which they no doubt attend if the company chairman presented an annual report but said that the profit and loss account was not yet available.
The Secretary of State has once again declared himself not guilty; nothing could be further from his mind than that he might refuse to publish the figures to conceal the details of benefit cuts.
The Government stand convicted too often of grievous bodily harm to the low paid and the poor. Innocence is not a very plausible posture from a Government who, according to the independent estimates of statisticians in the House, have already robbed the poor of £8.2 billion 257 since 1979 — enough to give every pensioner in the country an extra £16 a week for every week this year. It is even less plausible when one considers the malice aforethought being committed against SERPS. The Government's able defence of that act of ideological vandalism is that there will be too many pensioners in the third and fourth decades of the next century for the scheme to be affordable.
I will repeat that quotation. Given that it is now Government policy to uprate pensions in line with prices rather than earnings,it would be difficult to argue that we are unloading an intolerable burden on future generations.That is not a quotation of a Labour spokesman or even Mr. Stewart Lyon, from whom the truth is now finally being forced out, but from the Secretary of State on 13 October 1983. He was a defender of SERPS then. He still saw its merits, through relatively independent and objective eyes.
§ Mr. Meacher
No. I have undertaken to finish in five minutes.
According to the Secretary of State, just one thing has changed since then. The worker-pensioner ratio has been revealed to worsen in 2035, and so it does. There is only one thing wrong with that argument—the Government Actuary's projections as used in the Green Paper also forecast that the worker-pensioner ratio will substantially improve again by 2050. There is no mention of that in the Green Paper, although such information will certainly have been known to the Secretary of State and to his committee.
Several other important questions about SERFS are conveniently unanswered in the Green Paper. I hope that we shall get an answer from the Minister. If a universal state earnings-related scheme cannot be afforded, how can a universal scheme of private pensions be afforded any better when both are paid for out of the same current production of the working population? How can it be justified to force people to make higher contributions to receive a lesser pension?
I pay tribute to my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) and to my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) for what they said about the disabled. How will invalidity benefits fit into a regime of compulsory private pensions when the disabled are such bad risks in the private insurance market? How can it be justified in terms of administrative efficiency, which is so dear to Conservative Members, to abolish SERI'S for which administrative costs work out at 1.5 per cent. and to replace it with private pensions for which administrative costs average 18 per cent.?
What effect will it have on the alleged savings to the Exchequer if large numbers of companies decide to contract their schemes back into SERPS, as many of them will because it is in their interests to do so? Above all, how can it be justified to consign millions of low-paid workers—women, long-term sick and disabled and those who care for them—to poverty in retirement, as will be the inevitable result of abolishing SERFS, when the Government's Social Security Advisory Committee had this to say about the future of SERFS: 258At this distance in time we do not think there can be solid grounds for altering the scheme now for fear of all the worst outcomes occurring steadily for 40 years."?In trying to give a veneer of respectability to this operation candle-end, intermingled with some really damaging cuts, the Secretary of State has tried to wrap himself in the mantle of Beveridge. A more bizarre garb for him it is difficult to imagine. To compare Beveridge with Fowler is to confuse the Samaritan with the thieves he fell among. There is no political mandate for these proposals. Not a word was whispered about them in the last Tory manifesto. As my hon. Friend the Member for Pontypridd (Mr. John) pointed out, there has been no consultation with Opposition Members, and the consultation period is far too short. The polls show that most of the proposals are repudiated by the electorate, in some cases by large majorities.
The proposals carry no moral or political legitimacy. They have none of the social vision of the real Beveridge. The general election will consign them to the dustbin of history. It will be left to a Labour Government, whom the British people know genuinely believe in the welfare state, to produce a new and better vision of security, with dignity and without a means test, which was always the ideal of the Beveridge revolution.
§ The Minister for Social Security (Mr. Tony Newton)
I must first ask whether the proposals which the hon. Member for Oldham, West (Mr. Meacher) brought before the House about two months ago are already in the dustbin of history. Not surprisingly we have not heard them repeated tonight. [HON. MEMBERS: "Answer the debate."] I shall answer the debate. [Interruption.]
§ Mr. Speaker
Order. I ask the House to give the Minister a chance. He has hardly been speaking for a minute.
§ Mr. Newton
I could not refrain from commenting on what appears to be the fastest movement from printing to dustbin in history.
This has been a genuinely important debate for two reasons. First, as my hon. Friend the Member for Eastleigh (Sir D. Price) pointed out in a wry fashion, the Government are seeking to consult widely and fully on the Green Paper. I am sure that hon. Members will agree that it is appropriate that the House should have this early major opportunity to express its views on the Government's proposals. Secondly — this cannot be disguised, despite all the rhetoric from Opposition Members—the debate has been encouraging in that no one has seriously questioned the need for reform or that the Government have taken a proper initiative in looking at a system which no one believes is doing the job that we want it to do, and in seeking to focus attention on those problems and a solution.
It would be idle to pretend that the degree of consensus about the background to the problems in social security has been reflected in the debate by the views expressed by Opposition Members on some of the proposals. But even there, on an important question, which is basic to the whole of our welfare state, there is a degree of unanimity, which I welcome. It is the determination of both sides of the House —I emphasise this as being central to the Government's proposals — to maintain and protect the basic state national insurance retirement pension as the 259 foundation of our provision for people in their old age. That has been demonstrated again in practice today by the uprating that the Government have announced, and restated firmly in the Green Paper as the basis of our policy.
The difference between us comes in our view of how that basic state provision should be topped up or added to in providing additional pensions for people's retirement. The Labour party's position, as defined in the debate, is to defend a position that no one else, either in the House or, as far as I can judge, in the country, believes is tenable—
§ Mr. Newton
Perhaps the hon. Gentleman will allow me to answer his first question before even dodging the reply. It is simply untrue that all the advisers on the Government inquiry into retirement take the view that has been attributed to them. That is clear to anybody who knows them. The Labour party takes the position of defending the existing SERFS structure. The alliance, as I understand it—is not entirely clear whether its policy reflects an agreement between both parts of the alliance, but it was represented by what the right hon. Member for Plymouth, Devonport (Dr. Owen) said—is in favour, to put it bluntly, of a policy of cutting the benefits and putting nothing in their place.
The Government's policy on SERFS is to develop the partnership between the state and the individual, a partnership that was central to the Beveridge report in a new and fruitful way. My right hon. Friend gave the figures in his speech, which have led us to the conclusion that the new development in place of the present arrangement for SERF'S in the longer run is required. I shall not attempt to repeat them now.
Neither the Leader of the Opposition in his opening speech nor the hon. Member for Oldham, West (Mr. Meacher) in his closing speech appeared to dispute the figures that my right hon. Friend gave. Indeed, they did not seriously discuss them. My right hon. Friend gave the figures of the projections that have been made by the Government Actuary's department of the prospective cost of SERFS on various assumptions at various periods until the first third of the next century. Those figures were not seriously disputed by the right hon. Gentleman or his hon. Friend. Indeed, as I said, they were not seriously discussed. The Leader of the Opposition simply sought to deluge them with words.
The Leader of the Opposition gave estimates for the contribution levels that would be required to pay for SERFS around the year 2033. He suggested that about a 2 per cent. contribution increase might accommodate the bills that would be building up. His estimates are farfetched compared with the estimates that he can read in the Government Actuary's report published for the pensions inquiry, showing what the case might be on the most difficult assumptions, when there might be up to a 10 per cent. increase in national insurance contributions.
§ Mr. Robert C. Brown (Newcastle upon Tyne, North)
The Minister misses the extremely serious point that is at 260 issue. If, 10 years ago, the Government Actuary and all the parties in the House agreed a scheme that was tenable for the next 50 years, what confidence will the British public have in any scheme that the hon. Gentleman and his right hon. Friend the Secretary of State put forward in the future?
§ Mr. Newton
As my right hon. Friend the Secretary of State made clear in his speech, the factor that has forced itself on the Government's intention is that the estimates and assumptions on which the decisions about SERFS were based—
§ Mr. Newton
Because 18 months ago the data from the 1981 census were not available. [Interruption.] It is no good Opposition Members disputing the fact that the estimates on which the decisions about SERFS were based in 1975 reflected an estimate of the number of pensioners in the early part of the next century 1 million less than — [Interruption.] If they were all alive, and if the Labour Government knew what would happen, why did they not publish the figures at the time? [Interruption.]
§ Mr. Speaker
Order. The debate is becoming disorderly. As far as I know, those addressing the Minister from a sedentary position did not take part in the debate.
§ Mr. Newton
We now know that there will be 1 million more pensioners in the early part of the next century than was known, let alone said, in 1975. By about the middle of the next century—2033 to be precise—there will be 4 million pensioners more than we have to provide for now.
As my hon. Friend the Member for Eastleigh made clear, the projections that relate to the ratio of contributors to pensioners, reflecting the absence of any improvement in the birth rate in the intervening period, suggests a steady decline to that point in time of the number of contributors in relation to the number of pensioners. The Labour party may wish to ignore those figures. I accept that the alliance recognises that there is a real problem.
The Government believe that it would be wrong to ignore the new evidence which has come to light during the course of the analysis of the inquiry. There are three reasons for that—first, knowingly to place on the next generation a burden that we cannot be sure they can afford is not an act of responsible government. Secondly, and perhaps more important, unless we can be sure that the promises we are making to pensioners can be fulfilled, it is wrong to let people go on for 30 or 40 years building up expectations that may not be fulfilled when the time comes.
§ Mr. Kinnock
If the hon. Gentleman is arguing that it is only possible to make provision by extending the private sector and diminishing SERFS, can he tell us how the private sector will meet all those new obligations, especially as the most obvious place for investment is in index-linked gilts introduced by the Secretary of State, which is precisely where the Government could be investing any surpluses that they collect from SERFS?
§ Mr. Speaker
Order. I am sure that the House wishes to hear the answer to the right hon. Gentleman important question.
§ Mr. Newton
If, as we now know, the Leader of the Opposition does not even realise that the present state pension scheme is a pay-as-you-go scheme, it is no wonder that the Labour party is in a mess. The right hon. Gentleman has committed a masterpiece of building a monumental brick without straw and then dropping it on his own feet. The Government are not prepared to seek to maintain a system—
§ Mr. Newton
I have answered the right hon. Gentleman. [Interruption.] I can wait for Opposition Members to listen. The trouble with the right hon. Gentleman's question is that it shows that he does not know what he is talking about. And if he does not know what he is talking about, no wonder the pensioners of the future cannot rely on his promises.
What the Government are proposing faces up to the realities of the projections that we have for the number of pensioners and the ratio of contributors; recognises that it would be irresponsible to continue to make promises that we cannot guarantee that our children will be able to fulfil; and puts in place a structure that we believe can sustain pensioners in the future, with a promise on which they can really rely.
The Leader of the Opposition has recognised the mistake he has made in what he said. We now want him to recognise that the policy that he is proposing is unsustainable and that it is time that the Labour Government — [HON. MEMBERS: "Hear, hear."] — the Labour party—
§ Mr. David Winnick (Walsall, North)
It will be the Labour Government in two or three years from now.
§ Mr. Newton
It is time that the Labour party faced up to its responsibilities.
The question put by the Leader of the Opposition revealed more clearly than ever what has come through in the speeches of the right hon. Gentleman and his hon. Friend the Member for Oldham, West in this debate, that they have absolutely nothing constructive to say about the policy that is required to sustain the social security system in Britain today. Not a constructive word have we heard throughout the debate from them. We have had torrents of rhetoric from the right hon. Gentleman and one extravagant adjective after another from the hon. Member for Oldham, West.
What has been the contribution to the debate of the hon. Member for Oldham, West? It has been to complain that the Government have not done everything that their advisers advised. But the Opposition do not even do what their spokesman on social security advises — [Interruption.]—and when we ask Labour Members what they would do and what their view is of our proposals we get no answer. When we ask them what their proposals are, we get no answer. When the Leader of the Opposition was asked on the radio recently to give his figures, he replied, "I will not give figures that will not be known for two or three years."
§ Mr. Newton
I will give the right hon. Gentleman the answer. When we have settled the structure that we propose, we will give the figures to illustrate the consequences. When we give our figures, perhaps we shall have the right hon. Gentleman's figures and, for the first time, a serious contribution to the debate from the Labour party.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 178, Noes 335.265
|Division No. 241]||[10.00pm|
|Abse, Leo||Foot, Rt Hon Michael|
|Anderson, Donald||Foster, Derek|
|Archer, Rt Hon Peter||Foulkes, George|
|Ashley, Rt Hon Jack||Fraser, J. (Norwood)|
|Ashton, Joe||Garrett, W. E.|
|Atkinson, N. (Tottenham)||George, Bruce|
|Bagier, Gordon A. T.||Gilbert, Rt Hon Dr John|
|Banks, Tony (Newham NW)||Godman, Dr Norman|
|Barnett, Guy||Golding, John|
|Barron, Kevin||Gould, Bryan|
|Beckett, Mrs Margaret||Gourlay, Harry|
|Bell, Stuart||Hamilton, James (M'well N)|
|Benn, Tony||Hardy, Peter|
|Bennett, A. (Dent'n & Red'sh)||Harman, Ms Harriet|
|Bermingham, Gerald||Hart, Rt Hon Dame Judith|
|Bidwell, Sydney||Hattersley, Rt Hon Roy|
|Blair, Anthony||Healey, Rt Hon Denis|
|Boothroyd, Miss Betty||Heffer, Eric S.|
|Boyes, Roland||Hogg, N. (C'nauld & Kilsyth)|
|Bray, Dr Jeremy||Home Robertson, John|
|Brown, Gordon (D'f'mline E)||Howell, Rt Hon D. (S'heath)|
|Brown, Hugh D. (Provan)||Hoyle, Douglas|
|Brown, N. (N'c'tle-u-Tyne E)||Hughes, Dr. Mark (Durham)|
|Brown, R. (N'c'tle-u-Tyne N)||Hughes, Robert (Aberdeen N)|
|Brown, Ron (E'burgh, Leith)||Hume, John|
|Buchan, Norman||Janner, Hon Greville|
|Caborn, Richard||John, Brynmor|
|Callaghan, Rt Hon J.||Kilroy-Silk, Robert|
|Campbell, lan||Kinnock, Rt Hon Neil|
|Carter-Jones, Lewis||Lambie, David|
|Clark, Dr David (S Shields)||Lamond, James|
|Clarke, Thomas||Leadbitter, Ted|
|Clay, Robert||Leighton, Ronald|
|Clwyd, Mrs Ann||Lewis, Ron (Carlisle)|
|Cocks, Rt Hon M. (Bristol S.)||Lewis, Terence (Worsley)|
|Cohen, Harry||Litherland, Robert|
|Concannon, Rt Hon J. D.||Lloyd, Tony (Stretford)|
|Cook, Frank (Stockton North)||McCartney, Hugh|
|Cook, Robin F. (Livingston)||McDonald, Dr Oonagh|
|Corbett, Robin||McGuire, Michael|
|Corbyn, Jeremy||McKay, Allen (Penistone)|
|Cowans, Harry||McKelvey, William|
|Cox, Thomas (Tooting)||MacKenzie, Rt Hon Gregor|
|Craigen, J. M.||McNamara, Kevin|
|Crowther, Stan||McTaggart, Robert|
|Cunliffe, Lawrence||McWilliam, John|
|Cunningham, Dr John||Madden, Max|
|Davies, Rt Hon Denzil (L'lli)||Martin, Michael|
|Davies, Ronald (Caerphilly)||Mason, Rt Hon Roy|
|Davis, Terry (B'ham, H'ge H'I)||Maxton, John|
|Deakins, Eric||Maynard, Miss Joan|
|Dewar, Donald||Meacher, Michael|
|Dobson, Frank||Michie, William|
|Dormand, Jack||Mikardo, lan|
|Douglas, Dick||Millan, Rt Hon Bruce|
|Duffy, A. E. P.||Miller, Dr M. S. (E Kilbride)|
|Eastham, Ken||Morris, Rt Hon A. (W'shawe)|
|Edwards, Bob (W'h'mpt'n SE)||Morris, Rt Hon J. (Aberavon)|
|Ellis, Raymond||Nellist, David|
|Evans, John (St. Helens N)||Oakes, Rt Hon Gordon|
|Ewing, Harry||O'Brien, William|
|Fatchett, Derek||O'Neill, Martin|
|Faulds, Andrew||Orme, Rt Hon Stanley|
|Field, Frank (Birkenhead)||Park, George|
|Fields, T. (L'pool Broad Gn)||Parry, Robert|
|Fisher, Mark||Patchett, Terry|
|Pavitt, Laurie||Snape, Peter|
|Pendry. Tom||Soley, Clive|
|Pike, Peter||Spearing, Nigel|
|Powell, Raymond (Ogmore)||Stewart, Rt Hon D. (W Isles)|
|Prescott, John||Stott, Roger|
|Radice, Giles||Strang, Gavin|
|Randall, Stuart||Straw, Jack|
|Redmond, M.||Thomas, Dafydd (Merioneth)|
|Rees, Rt Hon M. (Leeds S)||Thomas, Dr R. (Carmarthen)|
|Richardson, Ms Jo||Thorne, Stan (Preston)|
|Roberts, Allan (Bootle)||Tinn, James|
|Roberts, Ernest (Hackney N)||Wardell, Gareth (Gower)|
|Robertson, George||Wareing, Robert|
|Rooker, J. W.||Welsh, Michael|
|Rowlands, Ted||White, James|
|Ryman, John||Wigley, Dafydd|
|Sedgemore, Brian||Williams, Rt Hon A.|
|Sheerman, Barry||Wilson, Gordon|
|Sheldon, Rt Hon R.||Winnick, David|
|Short, Ms Clare (Ladywood)||Woodall, Alec|
|Short, Mrs R.(W'hampt'n NE)||Young, David (Bolton SE)|
|Silkin, Rt Hon J.|
|Skinner, Dennis||Tellers for the Ayes:|
|Smith, C.(Isrton S & F'bury)||Mr. Frank Haynes and|
|Smith, At Hon J. (M'kl'ds E)||Mr. Don Dixon.|
|Adley, Robert||Chope, Christopher|
|Aitken, Jonathan||Churchill, W. S.|
|Alexander, Richard||Clark, Hon A. (Plym'th S'n)|
|Alison, Rt Hon Michael||Clark, Dr Michael (Rochford)|
|Amery, Rt Hon Julian||Clark, Sir W. (Croydon S)|
|Amess, David||Clarke, Rt Hon K. (Rushcliffe)|
|Ancram, Michael||Clegg, Sir Walter|
|Arnold, Tom||Cockeram, Eric|
|Ashby, David||Colvin, Michael|
|Aspinwall, Jack||Cope, John|
|Atkins, Rt Hon Sir H.||Cormack, Patrick|
|Atkins, Robert (South Ribble)||Couchman, James|
|Baker, Rt Hon K. (Mole Vall'y)||Cranborne, Viscount|
|Baker, Nicholas (N Dorset)||Critchley, Julian|
|Baldry, Tony||Crouch, David|
|Banks, Robert (Harrogate)||Currie, Mrs Edwina|
|Batiste, Spencer||Dickens, Geoffrey|
|Beaumont-Dark, Anthony||Dicks, Terry|
|Bellingham, Henry||Dorrell, Stephen|
|Bendall, Vivian||Douglas-Hamilton, Lord J.|
|Benyon, William||Dover, Den|
|Best, Keith||du Cann, Rt Hon Sir Edward|
|Biffen, Rt Hon John||Dunn, Robert|
|Biggs-Davison, Sir John||Durant, Tony|
|Blackburn, John||Dykes, Hugh|
|Body, Richard||Edwards, Rt Hon N. (P'broke)|
|Bonsor, Sir Nicholas||Eggar, Tim|
|Bottomley, Peter||Emery, Sir Peter|
|Bottomley, Mrs Virginia||Evennett, David|
|Bowden, Gerald (Dulwich)||Eyre, Sir Reginald|
|Braine, Rt Hon Sir Bernard||Fallon, Michael|
|Brandon-Bravo, Martin||Farr, Sir John|
|Bright, Graham||Favell, Anthony|
|Brinton, Tim||Fenner, Mrs Peggy|
|Brittan, Rt Hon Leon||Finsberg, Sir Geoffrey|
|Brooke, Hon Peter||Fletcher, Alexander|
|Brown, M. (Brigg & CI'thpes)||Fookes, Miss Janet|
|Browne, John||Forman, Nigel|
|Bruinvels, Peter||Forsyth, Michael (Stirling)|
|Bryan, Sir Paul||Forth, Eric|
|Buchanan-Smith, Rt Hon A.||Fowler, Rt Hon Norman|
|Buck, Sir Antony||Fox, Marcus|
|Budgen, Nick||Franks, Cecil|
|Burt, Alistair||Fraser, Peter (Angus East)|
|Butcher, John||Freeman, Roger|
|Butler, Hon Adam||Fry, Peter|
|Butterfill, John||Gale, Roger|
|Carlisle, John (N Luton)||Galley, Roy|
|Carlisle, Kenneth (Lincoln)||Gardiner, George (Reigate)|
|Carlisle, Rt Hon M. (W'ton S)||Gardner, Sir Edward (Fylde)|
|Cash, William||Garel-Jones, Tristan|
|Chalker, Mrs Lynda||Gilmour, Rt Hon Sir Ian|
|Channon, Rt Hon Paul||Glyn, Dr Alan|
|Goodhart, Sir Philip||Macfarlane, Neil|
|Goodlad, Alastair||MacGregor, John|
|Gorst, John||MacKay, Andrew (Berkshire)|
|Gow, Ian||MacKay, John (Argyll & Bute)|
|Gower, Sir Raymond||Maclean, David John|
|Grant, Sir Anthony||McNair-Wilson, P. (New F'st)|
|Gregory, Conal||Madel, David|
|Griffiths, Sir Eldon||Major, John|
|Griffiths, Peter (Portsm'th N)||Malins, Humfrey|
|Grist, Ian||Malone, Gerald|
|Ground, Patrick||Maples, John|
|Grylls, Michael||Marland, Paul|
|Gummer, John Selwyn||Marlow, Antony|
|Hamilton, Neil (Tatton)||Marshall, Michael (Arundel)|
|Hampson, Dr Keith||Mates, Michael|
|Hanley, Jeremy||Maude, Hon Francis|
|Hannam, John||Maxwell-Hyslop, Robin|
|Hargreaves, Kenneth||Mayhew, Sir Patrick|
|Harris, David||Mellor, David|
|Harvey, Robert||Merchant, Piers|
|Haselhurst, Alan||Meyer, Sir Anthony|
|Havers, Rt Hon Sir Michael||Miller, Hal (B'grove)|
|Hawkins, Sir Paul (SW N'folk)||Mills, Iain (Meriden)|
|Hawksley, Warren||Mills, Sir Peter (West Devon)|
|Hayhoe, Rt Hon Barney||Miscampbell, Norman|
|Hayward, Robert||Mitchell, David (NW Hants)|
|Heath, Rt Hon Edward||Moate, Roger|
|Heathcoat-Amory, David||Montgomery, Sir Fergus|
|Heddle, John||Moore, John|
|Henderson, Barry||Morris, M. (N'hampton, S)|
|Heseltine, Rt Hon Michael||Morrison, Hon C. (Devizes)|
|Hickmet, Richard||Morrison, Hon P. (Chester)|
|Hicks, Robert||Moynihan, Hon C.|
|Higgins, Rt Hon Terence L.||Neale, Gerrard|
|Hind, Kenneth||Needham, Richard|
|Hirst, Michael||Nelson, Anthony|
|Hogg, Hon Douglas (Gr'th'm)||Neubert, Michael|
|Holland, Sir Philip (Gedling)||Newton, Tony|
|Holt, Richard||Nicholls, Patrick|
|Hordern, Sir Peter||Normanton, Tom|
|Howard, Michael||Norris, Steven|
|Howarth, Alan (Stratf'd-on-A)||Onslow, Cranley|
|Howarth, Gerald (Cannock)||Oppenheim, Phillip|
|Howell, Rt Hon D. (G'ldford)||Oppenheim, Rt Hon Mrs S.|
|Howell, Ralph (N Norfolk)||Osborn, Sir John|
|Hubbard-Miles, Peter||Ottaway, Richard|
|Hunt, John (Ravensbourne)||Page, Sir John (Harrow W)|
|Jackson, Robert||Page, Richard (Herts SW)|
|Jessel, Toby||Parkinson, Rt Hon Cecil|
|Johnson Smith, Sir Geoffrey||Parris, Matthew|
|Jones, Gwilym (Cardiff N)||Patten, J. (Oxf W & Abdgn)|
|Jones, Robert (W Herts)||Pattie, Geoffrey|
|Jopling, Rt Hon Michael||Pawsey, James|
|Joseph, Rt Hon Sir Keith||Peacock, Mrs Elizabeth|
|Kershaw, Sir Anthony||Percival, Rt Hon Sir Ian|
|Key, Robert||Pollock, Alexander|
|King, Roger (B'ham N'field)||Porter, Barry|
|King, Rt Hon Tom||Portillo, Michael|
|Knight, Gregory (Derby N)||Powell, William (Corby)|
|Knowles, Michael||Powley, John|
|Knox, David||Prentice, Rt Hon Reg|
|Lamont, Norman||Price, Sir David|
|Lang, Ian||Prior, Rt Hon James|
|Latham, Michael||Proctor, K. Harvey|
|Lawler, Geoffrey||Pym, Rt Hon Francis|
|Lawrence, Ivan||Rathbone, Tim|
|Lawson, Rt Hon Nigel||Rees, Rt Hon Peter (Dover)|
|Lee, John (Pendle)||Renton, Tim|
|Leigh, Edward (Gainsbor'gh)||Rhodes James, Robert|
|Lennox-Boyd, Hon Mark||Rhys Williams, Sir Brandon|
|Lewis, Sir Kenneth (Stamf'd)||Ridley, Rt Hon Nicholas|
|Lightbown, David||Ridsdale, Sir Julian|
|Lilley, Peter||Rifkind, Malcolm|
|Lloyd, Ian (Havant)||Rippon, Rt Hon Geoffrey|
|Lloyd, Peter, (Fareham)||Roberts, Wyn (Conwy)|
|Lord, Michael||Roe, Mrs Marion|
|Luce, Richard||Rossi, Sir Hugh|
|Lyell, Nicholas||Rost, Peter|
|McCrindle, Robert||Rowe, Andrew|
|McCurley, Mrs Anna||Ryder, Richard|
|Sackville, Hon Thomas||Thurnham, Peter|
|Sainsbury, Hon Timothy||Townend, John (Bridlington)|
|St. John-Stevas, Rt Hon N.||Townsend, Cyril D. (B'heath)|
|Sayeed, Jonathan||Tracey, Richard|
|Shaw, Giles (Pudsey)||Trippier, David|
|Shaw, Sir Michael (Scarb')||Trotter, Neville|
|Shepherd, Cohn (Hereford)||Twinn, Dr Ian|
|Shepherd, Richard (Aldridge)||Vaughan, Sir Gerard|
|Silvester, Fred||Viggers, Peter|
|Skeet, T. H. H.||Waddington, David|
|Smith, Tim (Beaconsfield)||Wakeham, Rt Hon John|
|Soames, Hon Nicholas||Walden, George|
|Speed, Keith||Walker, Bill (T'side N)|
|Speller, Tony||Walker, Rt Hon P. (W'cester)|
|Spencer, Derek||Walters, Dennis|
|Spicer, Jim (W Dorset)||Ward, John|
|Spicer, Michael (S Worcs)||Wardle, C. (Bexhill)|
|Squire, Robin||Warren, Kenneth|
|Stanbrook, Ivor||Watson, John|
|Stanley, John||Watts, John|
|Steen, Anthony||Wells, Bowen (Hertford)|
|Stern, Michael||Wells, Sir John (Maidstone)|
|Stevens, Lewis (Nuneaton)||Wheeler, John|
|Stewart, Allan (Eastwood)||Whitfield, John|
|Stewart, Andrew (Sherwood)||Whitney, Raymond|
|Stewart, Ian (N Hertf'dshire)||Wiggin, Jerry|
|Stokes, John||Wilkinson, John|
|Stradling Thomas, J.||Wolfson, Mark|
|Sumberg, David||Wood, Timothy|
|Taylor, John (Solihull)||Woodcock, Michael|
|Taylor, Teddy (S'end E)||Young, Sir George (Acton)|
|Tebbit, Rt Hon Norman||Younger, Rt Hon George|
|Thatcher, Rt Hon Mrs M.|
|Thomas, Rt Hon Peter||Tellers for the Noes:|
|Thompson, Donald (Calder V)||Mr. Robert Boscawen and|
|Thompson, Patrick (N'ich N)||Mr. Carol Mather|
|Thorne, Neil (Ilford S)|
§ Question accordingly negatived.
§ Main Question Put:—
§ The House divided: Ayes 335, Noes 196.268
|Division No. 242]||10.13 pm|
|Adley, Robert||Brooke, Hon Peter|
|Aitken, Jonathan||Brown, M. (Brigg & Cl'thpes)|
|Alexander, Richard||Browne, John|
|Alison, Rt Hon Michael||Bruinvels, Peter|
|Amery, Rt Hon Julian||Bryan, Sir Paul|
|Amess, David||Buchanan-Smith, Rt Hon A.|
|Ancram, Michael||Buck, Sir Antony|
|Arnold, Tom||Budgen, Nick|
|Ashby, David||Burt, Alistair|
|Aspinwall, Jack||Butcher, John|
|Atkins, Rt Hon Sir H.||Butler, Hon Adam|
|Atkins, Robert (South Ribble)||Butterfill, John|
|Baker, Rt Hon K. (Mole Vall'y)||Carlisle, John (N Luton)|
|Baker, Nicholas (N Dorset)||Carlisle, Kenneth (Lincoln)|
|Baldry, Tony||Carlisle, Rt Hon M. (W'ton S)|
|Banks, Robert (Harrogate)||Cash, William|
|Batiste, Spencer||Chalker, Mrs Lynda|
|Beaumont-Dark, Anthony||Channon, Rt Hon Paul|
|Bellingham, Henry||Chope, Christopher|
|Bendall, Vivian||Churchill, W. S.|
|Benyon, William||Clark, Hon A. (Plym'th S'n)|
|Best, Keith||Clark, Dr Michael (Rochford)|
|Biffen, Rt Hon John||Clark, Sir W. (Croydon S)|
|Biggs-Davison, Sir John||Clarke, Rt Hon K. (Rushcliffe)|
|Blackburn, John||Clegg, Sir Walter|
|Body, Richard||Cockeram, Eric|
|Bonsor, Sir Nicholas||Colvin, Michael|
|Bottomley, Peter||Cope, John|
|Bottomley, Mrs Virginia||Cormack, Patrick|
|Bowden, Gerald (Dulwich)||Couchman, James|
|Braine, Rt Hon Sir Bernard||Cranborne, Viscount|
|Brandon-Bravo, Martin||Crouch, David|
|Bright, Graham||Currie, Mrs Edwina|
|Brinton, Tim||Dickens, Geoffrey|
|Brittan, Rt Hon Leon||Dicks, Terry|
|Dorrell, Stephen||Hubbard-Miles, Peter|
|Douglas-Hamilton, Lord J.||Hunt, John (Ravensbourne)|
|Dover, Den||Jackson, Robert|
|du Cann, Rt Hon Sir Edward||Jessel, Toby|
|Dunn, Robert||Johnson Smith, Sir Geoffrey|
|Durant, Tony||Jones, Gwilym (Cardiff N)|
|Dykes, Hugh||Jones, Robert (W Herts)|
|Edwards, Rt Hon N. (P'broke)||Jopling, Rt Hon Michael|
|Eggar, Tim||Joseph, Rt Hon Sir Keith|
|Emery, Sir Peter||Kershaw, Sir Anthony|
|Evennett, David||Key, Robert|
|Eyre, Sir Reginald||King, Roger (B'ham N'field)|
|Fallon, Michael||King, Rt Hon Tom|
|Farr, Sir John||Knight, Gregory (Derby N)|
|Favell, Anthony||Knowles, Michael|
|Fenner, Mrs Peggy||Knox, David|
|Finsberg, Sir Geoffrey||Lamont, Norman|
|Fletcher, Alexander||Lang, Ian|
|Fookes, Miss Janet||Latham, Michael|
|Forman, Nigel||Lawler, Geoffrey|
|Forsyth, Michael (Stirling)||Lawrence, Ivan|
|Forth, Eric||Lawson, Rt Hon Nigel|
|Fowler, Rt Hon Norman||Lee, John (Pendle)|
|Fox, Marcus||Leigh, Edward (Gainsbor'gh)|
|Franks, Cecil||Lennox-Boyd, Hon Mark|
|Fraser, Peter (Angus East)||Lewis, Sir Kenneth (Stamf'd)|
|Freeman, Roger||Lightbown, David|
|Fry, Peter||Lilley, Peter|
|Gale, Roger||Lloyd, Ian (Havant)|
|Galley, Roy||Lloyd, Peter, (Fareham)|
|Gardiner, George (Reigate)||Lord, Michael|
|Gardner, Sir Edward (Fylde)||Luce, Richard|
|Garel-Jones, Tristan||Lyell, Nicholas|
|Gilmour, Rt Hon Sir Ian||McCrindle, Robert|
|Glyn, Dr Alan||McCurley, Mrs Anna|
|Goodhart, Sir Philip||Macfarlane, Neil|
|Goodlad, Alastair||MacGregor, John|
|Gorst, John||MacKay, Andrew (Berkshire)|
|Gow, Ian||MacKay, John (Argyll & Bute)|
|Gower, Sir Raymond||Maclean, David John|
|Grant, Sir Anthony||McNair-Wilson, P. (New F'st)|
|Gregory, Conal||Madel, David|
|Griffiths, Sir Eldon||Major, John|
|Griffiths, Peter (Portsm'th N)||Malins, Humfrey|
|Grist, Ian||Malone, Gerald|
|Ground, Patrick||Maples, John|
|Grylls, Michael||Marland, Paul|
|Gummer, John Selwyn||Marlow, Antony|
|Hamilton, Neil (Tatton)||Marshall, Michael (Arundel)|
|Hampson, Dr Keith||Mates, Michael|
|Hanley, Jeremy||Maude, Hon Francis|
|Hannam, John||Maxwell-Hyslop, Robin|
|Hargreaves, Kenneth||Mayhew, Sir Patrick|
|Harris. David||Mellor, David|
|Harvey, Robert||Merchant, Piers|
|Haselhurst, Alan||Meyer, Sir Anthony|
|Havers, Rt Hon Sir Michael||Miller, Hal (B'grove)|
|Hawkins, Sir Paul (SW N'folk)||Mills, Iain (Meriden)|
|Hawksley, Warren||Mills, Sir Peter (West Devon)|
|Hayhoe, Rt Hon Barney||Miscampbell, Norman|
|Hayward, Robert||Mitchell, David (NW Hants)|
|Heath, Rt Hon Edward||Moate, Roger|
|Heathcoat-Amory, David||Montgomery, Sir Fergus|
|Heddle, John||Moore, John|
|Henderson, Barry||Morris, M. (N'hampton, S)|
|Heseltine, Rt Hon Michael||Morrison, Hon C. (Devizes)|
|Hickmet, Richard||Morrison, Hon P. (Chester)|
|Hicks, Robert||Moynihan, Hon C.|
|Higgins, Rt Hon Terence L.||Neale, Gerrard|
|Hind, Kenneth||Needham, Richard|
|Hirst, Michael||Nelson, Anthony|
|Hogg, Hon Douglas (Gr'th'm)||Neubert, Michael|
|Holland, Sir Philip (Gedling)||Newton, Tony|
|Holt, Richard||Nicholls, Patrick|
|Hordern, Sir Peter||Normanton, Tom|
|Howard, Michael||Norris, Steven|
|Howarth, Alan (Stratf'd-on-A)||Onslow, Cranley|
|Howarth, Gerald (Cannock)||Oppenheim, Phillip|
|Howell, Rt Hon D. (G'ldford)||Oppenheim, Rt Hon Mrs S.|
|Howell, Ralph (N Norfolk)||Osborn, Sir John|
|Ottaway, Richard||Stanley, John|
|Page, Sir John (Harrow W)||Steen, Anthony|
|Page, Richard (Herts SW)||Stern, Michael|
|Parkinson, Rt Hon Cecil||Stevens, Lewis (Nuneaton)|
|Parris, Matthew||Stewart, Allan (Eastwood)|
|Patten, J. (Oxf W & Abdgn)||Stewart, Andrew (Sherwood)|
|Pattie, Geoffrey||Stewart, Ian (N Hertf'dshire)|
|Pawsey, James||Stokes, John|
|Peacock, Mrs Elizabeth||Stradling Thomas, J.|
|Percival, Rt Hon Sir Ian||Sumberg, David|
|Pollock, Alexander||Taylor, John (Solihull)|
|Porter, Barry||Taylor, Teddy (S'end E)|
|Portillo, Michael||Tebbit, Rt Hon Norman|
|Powell, William (Corby)||Thatcher, Rt Hon Mrs M.|
|Powley, John||Thomas, Rt Hon Peter|
|Prentice, Rt Hon Reg||Thompson, Donald (Calder V)|
|Price, Sir David||Thompson, Patrick (N'ich N)|
|Prior, Rt Hon James||Thorne, Neil (Ilford S)|
|Proctor, K. Harvey||Thurnham, Peter|
|Pym, Rt Hon Francis||Townend, John (Bridlington)|
|Rathbone, Tim||Townsend, Cyril D. (B'heath)|
|Rees, Rt Hon Peter (Dover)||Tracey, Richard|
|Renton, Tim||Trippier, David|
|Rhodes James, Robert||Trotter, Neville|
|Rhys Williams, Sir Brandon||Twinn, Dr Ian|
|Ridley, Rt Hon Nicholas||Vaughan, Sir Gerard|
|Ridsdale, Sir Julian||Viggers, Peter|
|Rifkind, Malcolm||Waddington, David|
|Rippon, Rt Hon Geoffrey||Wakeham, Rt Hon John|
|Roberts, Wyn (Conwy)||Walden, George|
|Roe, Mrs Marion||Walker, Bill (T'side N)|
|Rossi, Sir Hugh||Walker, Rt Hon P. (W'cester)|
|Rost, Peter||Walters, Dennis|
|Rowe, Andrew||Ward, John|
|Ryder, Richard||Wardle, C. (Bexhill)|
|Sackville, Hon Thomas||Warren, Kenneth|
|Sainsbury, Hon Timothy||Watson, John|
|St. John-Stevas, Rt Hon N.||Watts, John|
|Sayeed, Jonathan||Wells, Bowen (Hertford)|
|Shaw, Giles (Pudsey)||Wells, Sir John (Maidstone)|
|Shaw, Sir Michael (Scarb')||Wheeler, John|
|Shepherd, Colin (Hereford)||Whitfield, John|
|Shepherd, Richard (Aldridge)||Whitney, Raymond|
|Silvester, Fred||Wiggin, Jerry|
|Skeet, T. H. H.||Wilkinson, John|
|Smith, Tim (Beaconsfield)||Wolfson, Mark|
|Soames, Hon Nicholas||Wood, Timothy|
|Speed, Keith||Woodcock, Michael|
|Speller, Tony||Young, Sir George (Acton)|
|Spencer, Derek||Younger, Rt Hon George|
|Spicer, Jim (W Dorset)|
|Spicer, Michael (S Worcs)||Tellers for the Ayes:|
|Squire, Robin||Mr. Carol Mather and|
|Stanbrook, Ivor||Mr. Robert Boscawen.|
|Abse, Leo||Brown, N. (N'c'tle-u-Tyne E)|
|Alton, David||Brown, R. (N'c'tle-u-Tyne N)|
|Anderson, Donald||Brown, Ron (E'burgh, Leith)|
|Archer, Rt Hon Peter||Bruce, Malcolm|
|Ashley, Rt Hon Jack||Buchan, Norman|
|Ashton, Joe||Caborn, Richard|
|Atkinson, N. (Tottenham)||Callaghan, Rt Hon J.|
|Bagier, Gordon A. T.||Campbell, Ian|
|Banks, Tony (Newham NW)||Carlile, Alexander (Montg'y)|
|Barnett, Guy||Carter-Jones, Lewis|
|Barron, Kevin||Cartwright, John|
|Beckett, Mrs Margaret||Clark, Dr David (S Shields)|
|Beith, A. J.||Clarke, Thomas|
|Bell, Stuart||Clay, Robert|
|Benn, Tony||Clwyd, Mrs Ann|
|Bennett, A. (Dent'n & Red'sh)||Cocks, Rt Hon M. (Bristol S.)|
|Bermingham, Gerald||Cohen, Harry|
|Bidwell, Sydney||Concannon, Rt Hon J. D.|
|Blair, Anthony||Cook, Frank (Stockton North)|
|Boothroyd, Miss Betty||Cook, Robin F. (Livingston)|
|Boyes, Roland||Corbett, Robin|
|Bray, Dr Jeremy||Corbyn, Jeremy|
|Brown, Gordon (D'f'mline E)||Cowans, Harry|
|Brown, Hugh D. (Provan)||Cox, Thomas (Tooting)|
|Craigen, J. M.||Martin, Michael|
|Crowther, Stan||Mason, Rt Hon Roy|
|Cunliffe, Lawrence||Maxton, John|
|Cunningham, Dr John||Maynard, Miss Joan|
|Davies, Rt Hon Denzil (L'lli)||Meacher, Michael|
|Davies, Ronald (Caerphilly)||Meadowcroft, Michael|
|Davis, Terry (B'ham, H'ge H'l)||Michie, William|
|Deakins, Eric||Mikardo, Ian|
|Dewar, Donald||Millan, Rt Hon Bruce|
|Dixon, Donald||Miller, Dr M. S. (E Kilbride)|
|Dobson, Frank||Morris, Rt Hon A. (W'shawe)|
|Dormand, Jack||Morris, Rt Hon J. (Aberavon)|
|Douglas, Dick||Nellist, David|
|Duffy, A. E. P.||Oakes, Rt. Hon Gordon|
|Eastham, Ken||O'Brien, William|
|Edwards, Bob (W'h'mpt'n SE)||O'Neill, Martin|
|Ellis, Raymond||Orme, Rt Hon Stanley|
|Evans, John (St. Helens N)||Owen, Rt Hon Dr David|
|Ewing, Harry||Park, George|
|Faulds, Andrew||Parry, Robert|
|Field, Frank (Birkenhead)||Patchett, Terry|
|Fields, T. (L'pool Broad Gn)||Pavitt, Laurie|
|Fisher, Mark||Pendry, Tom|
|Foot, Rt Hon Michael||Penhaligon, David|
|Foster, Derek||Pike, Peter|
|Foulkes, George||Powell, Raymond (Ogmore)|
|Fraser, J. (Norwood)||Prescott, John|
|Freud, Clement||Radice, Giles|
|Garrett, W. E.||Randall, Stuart|
|George, Bruce||Redmond, M.|
|Gilbert, Rt Hon Dr John||Rees, Rt Hon M. (Leeds S)|
|Godman, Dr Norman||Richardson, Ms Jo|
|Golding, John||Roberts, Allan (Bootle)|
|Gould, Bryan||Roberts, Ernest (Hackney N)|
|Gourlay, Harry||Robertson, George|
|Hamilton, James (M'well N)||Rooker, J. W.|
|Hancock, Mr. Michael||Ross, Stephen (Isle of Wight)|
|Hardy, Peter||Rowlands, Ted|
|Harman, Ms Harriet||Ryman, John|
|Hart, Rt Hon Dame Judith||Sedgemore, Brian|
|Hattersley, Rt Hon Roy||Sheerman, Barry|
|Healey, Rt Hon Denis||Sheldon, Rt Hon R.|
|Heffer, Eric S.||Short, Ms Clare (Ladywood)|
|Hogg, N. (C'nauld & Kilsyth)||Short, Mrs R.(W'hampt n NE)|
|Home Robertson, John||Silkin, Rt Hon J.|
|Howell, Rt Hon D. (S'heath)||Skinner, Dennis|
|Hoyle, Douglas||Smith, C.(Isl'ton S & F'bury)|
|Hughes, Dr. Mark (Durham)||Smith, Rt Hon J. (M'kl'ds E)|
|Hughes, Robert (Aberdeen N)||Snape, Peter|
|Hume, John||Soley, Clive|
|Janner, Hon Greville||Spearing, Nigel|
|Jenkins, Rt Hon Roy (Hillh'd)||Stewart, Rt Hon D. (W Isles)|
|John, Brynmor||Stott, Roger|
|Kennedy, Charles||Strang, Gavin|
|Kilroy-Silk, Robert||Straw, Jack|
|Kinnock, Rt Hon Neil||Thomas, Dafydd (Merioneth)|
|Kirkwood, Archy||Thomas, Dr R. (Carmarthen)|
|Lambie, David||Thorne, Stan (Preston)|
|Lamond, James||Tinn, James|
|Leadbitter, Ted||Wainwright, R.|
|Leighton, Ronald||Wallace, James|
|Lewis, Ron (Carlisle)||Wardell, Gareth (Gower)|
|Lewis, Terence (Worsley)||Wareing, Robert|
|Litherland, Robert||Welsh, Michael|
|Lloyd, Tony (Stretford)||White, James|
|McCartney, Hugh||Wigley, Dafydd|
|McDonald, Dr Oonagh||Williams, Rt Hon A.|
|McGuire, Michael||Wilson, Gordon|
|McKay, Allen (Penistone)||Winnick, David|
|McKelvey, William||Woodall, Alec|
|MacKenzie, Rt Hon Gregor||Wrigglesworth, Ian|
|Maclennan, Robert||Young, David (Bolton SE)|
|McTaggart, Robert||Tellers for the Noes|
|McWilliam, John||Mr. Frank Haynes and|
|Madden, Max||Mr. Derek Fatchett|
§ Question accordingly agreed to.
§ That this House welcomes the Government's Green Paper, Reform of Social Security, Cmnd. 9517–9; and endorses the Government's aims of achieving a better social security system which would direct help to the people who need it most, make the benefit system simpler to understand and run, base pensions on a partnership between the state and individuals, and put social security on a sound basis which the country can afford.