HC Deb 24 February 1986 vol 92 cc680-98 3.41 pm
The Secretary of State for Social Services (Mr. Norman Fowler)

With permission. Mr. Speaker, I should like to make a statement about the uprating of social security benefits. As the House knows, benefits were increased only three months ago at the end of November. We have made it clear that we intend to move to April upratings from 1987 in order to bring tax and social security closer together and to ensure that benefit changes coincide with changes in rents and rates. The uprating that I am announcing today enables the transition to be made and is the second of these upratings in the 16-month period from November 1985 to April 1987.

Those further increases will be paid in the week beginning 28 July and will be based on the change in prices between May 1985 and January 1986 when the retail prices index rose by 1.1 per cent. The overall cost of the new increases will be an extra £410 million in a full year and they follow the 7 per cent. increases in benefits which were paid from last November. As a result, the retirement pension for a married couple will rise from £61.30 to £61.95 a week and for a single person from £38.30 to £38.70. Public service pensions will be increased by the same percentage as will benefits for disabled people and war pensioners. Mobility allowance will go up to £21.65 a week although transport costs have in fact fallen over the period. The basic rate of unemployment benefit will also be increased by 1.1 per cent. from £30.45 to £30.80 for a single person and from £49.25 to £49.80 for a married couple. Other main contributory and non-contributory benefits will be similarly increased.

I made it clear last year that the Government believe it right to continue child benefit for all children irrespective of the income of their parents, but I also said that we have to consider its level both in relation to overall priorities within social security and with the aim of doing more for families with children on low incomes. I have considered the uprating of child benefit on that basis. My conclusion is that child benefit should be increased by 10p a week to £7.10—rather more than the rate of inflation. The older children's rates for supplementary benefit and the age-related amounts for family income supplement will also go up by slightly more than 1.1 per cent.

Three upratings in 16 months places inevitable administrative burdens and costs on local authorities and local offices of the Department of Health and Social Security. To contain this extra work sensibly I propose to increase the long-term rate of supplementary benefit and the housing benefit needs allowance by the same cash amount as will apply to retirement pension, which means putting supplementary benefit up by 1.1 per cent. although the increase in prices after excluding housing costs is 1.2 per cent.

For similar reasons, I do not propose to make any general changes in the additional amounts paid with supplementary benefit. In some cases no increase would be due in any event, and in others only small amounts. However, I have thought it right to increase the higher rate of heating addition which goes to the very elderly, the severely disabled and to people with homes which are specially difficult to heat. This addition will increase from £5.45 to £5.55 a week. One other change will be made from this July which is consistent with bringing the current supplementary benefit scheme into line with the new proposed income support arrangements. From the date of the uprating, no new awards of the non-householder housing addition will be made between the ages of 21 and 24. Equally, no deductions will be made from the householder's housing benefit or supplementary benefit in respect of such non-dependants in this age group. This means that the poorest households will remain fully protected. There will be no increase in the amount of non-dependant deductions generally nor will there he any increase in the deduction from benefit which applies during industrial disputes.

There are two other matters I should mention. First, over the last few years there has been a steep rise in supplementary benefit single payments. Since 1981 the number of these payments has risen from under 1 million a year to over 4 million and the real cost has increased by over five times to more than £300 million a year. My hon. Friend the Minister for Social Security has reviewed the position and, as a result, I am today referring draft regulations to the Social Security Advisory Committee for consultation in the normal way.

Secondly, concern has been expressed over future policy on the payment of benefits at post offices. In a report by the Public Accounts Committee last summer the possibility was discussed that cash incentives should be offered to beneficiaries to encourage payment directly into bank accounts. I am aware that this has led to anxiety that the existence of many sub-post offices might be threatened if inducements were paid which reduced significantly the volume of benefit business which they transact. To remove that anxiety I want to make it clear that the Government do not intend to offer cash incentives. We recognise that very many people wish to retain the option of being paid in cash at post offices, and it is clear that post offices will retain an important role in the payment of benefits in the future. To ensure that the service to the public is as effective as possible, a joint study is being carried out by the Post Office and my Department to see what improvements can be made.

I am laying before the House a full schedule detailing all benefit rates payable from next July. This uprating will mean that in 1986–87 spending on social security will be almost £43 billion—that is 31 per cent. of all public spending.

The last time that an uprating statement was made less than a year after the previous one was in 1975, but the circumstances today are different. In 1975 inflation was out of control and the value of savings was being sharply eroded. Today inflation is low, which is to the benefit of the whole nation—but perhaps most of all to millions of pensioners. This interim increase keeps pensions ahead of the rise in prices since this Government came into office and I will be making a further uprating statement in the autumn.

Mr. Michael Meacher (Oldham, West)

Is the Secretary of State aware that an increase of only 1.1 per cent. for pensioners is insulting when, by the time they get it in July, the annual surge in prices following the Budget and rates rises will have pushed up inflation to probably four times that level? Is he aware that it is deeply offensive to offer a single pensioner a crumb of 40p a week, enough to buy a couple of first-class stamps, when at the same time the Chancellor is deploying every device to make tax handouts next month running into thousands of pounds for the well-off and the rich?

Is the right hon. Gentleman aware that he is cheating pensioners when he says that the change in the uprating date makes no difference and that what pensioners may lose in this uprating they will make up in the next? Is he aware that if the uprating had taken place at the normal time in November, single pensioners would have received double the extra cash from a 4 per cent. increase over a four-month period to April 1987 than they will get under today's uprating from a 1 per cent. increase over an eight-month period to April 1987? Is the right hon. Gentleman aware that every time the Government make a simplification or adjustment in social security that always involves a cut, and on this occasion the change in the uprating arrangements will mean a loss for pensioners of £120 million, which they will not recover?

Is the right hon. Gentleman aware that if Labour's formula for uprating benefits in line with prices or earnings, whichever was higher, had not been levelled down by the Government in 1980, a single pensioner would now be receiving a pension of £4 a week more and a married couple one of £6.50 a week more? Is he further aware that if Labour's earnings link had been retained, even this shortened assessment period of the last eight months, during which earnings rose by over 4 per cent., would have given single pensioners a rise of £1.60 a week, instead of the measly 40p which they are being offered today?

Is the right hon. Gentleman aware that an increase. of 10p for child benefit is piffling and does not begin to compensate 7 million mothers for the loss of 35p per child per week which they suffered at the last uprating?

Is the right hon. Gentleman aware that it is a mean innovation to lower the uprating formula for the poorest claimants of all on supplementary benefit, which is what he is doing today, and, although the cut today is small, in the future it may involve significant losses for those on the lowest breadline?

Is the right hon. Gentleman aware that the statement means that there will be no increases in 1986 for pensioners under 80 for diets or heating, and that the increases for the very elderly and severely disabled are precisely 10p a week—not enough to keep a bar fire going even for one afternoon?

Is the right hon. Gentleman aware that the statement represents yet another attack on young people's incomes, when the 21 to 24-year-olds are already at the forefront of a Government drive for poverty wages? Is he also aware that the statement heralds the end of single payments for essential furniture, bedding and clothing for the poorest claimants? Where, in future, will a single mother or unemployed family find the money to pay for even a secondhand cooker or gas fire? Is this not paving the way for the abolition under the social fund of claimants' rights for basic essentials which any civilised society would provide?

This Scrooge-like and miserly statement gives no one more than the barest minimum, and it gives millions of pensioners, single mothers, the unemployed and children a great deal less in real terms than they had even last year.

Mr. Fowler

I entirely reject what the hon. Gentleman has just said. He talks about Labour's formula. We have costed Labour's formula on the basis of the interview that the hon. Gentleman gave last week on social security plans. The proposals which the hon. Gentleman is putting forward would mean an extra £15 billion a year. The public will not be taken in by such deceptions.

The uprating follows a 7 per cent. uprating in November, when inflation was only 5.5 per cent. It is the second of three upratings between November 1985 and April 1987. Between May 1985 and January 1986, 1.1 per cent. was the measure of inflation. An autumn uprating statement will follow, based on the period between January and September. We are spending an extra £410 million, which will take social security spending to more than £43 billion.

For pensioners, the increase—[Interruption.] If the hon. Member for Derby, South (Mrs. Beckett), who keeps on interrupting from the Front Bench, wishes to come to the Dispatch Box and question me, I invite her to do so. For pensioners, the increase comes on top of an increase last November, when pensions were increased by £4 a week for a married couple and £2.50 for a single pensioner. Clearly the Government remain committed to keeping pensions at least in line with prices.

With regard to uprating dates, I believe that the hon. Member for Oldham, West (Mr. Meacher), with his knowledge of social security, will accept that it is not possible to have an uprating at the end of November 1986 and another in April 1987. The DHSS would have to work on two upratings at the same time, and the hon. Gentleman will be the first to confirm that that is simply not possible.

The increase in child benefit demonstrates our belief that, under the tax and social security systems, child benefit is the only way of recognising the added responsibility that children represent. That is why we have increased child benefit by 10p.

On the question of the additional requirements, I have made it clear that we shall uprate the higher rate of heating addition, which goes to the elderly and the severely disabled and to hard-to-heat homes.

The hon. Gentleman is wrong about single payments. He has got the facts wrong, and I suggest that he reads what is set out in my statement.

The hon. Gentleman is saying that low inflation is of no benefit to pensioners. That is untrue. The banana republic economics which the hon. Gentleman wishes to practice, which provides high inflation so that upratings can seem higher, is ludicrous and is entirely in line with the policy of the Labour Government, which presided over an increase in inflation of 110 per cent.

Sir Ian Gilmour (Chesham and Amersham)

I congratulate my right hon. Friend on maintaining the real value of child benefit. As child benefit is the best way of dealing with family proverty, will he do his best on the next occasion to restore the previous cut?

Mr. Fowler

I shall take into account what my right hon. Friend has said. I accept that child benefit is the only way in the social security and tax systems of recognising the undoubted added expense that children represent. We hope that under the new system of family credit, which will be in operation in 1988, that position will be better recognised and that more low-income families with children will be helped. I shall in the next uprating bear in mind what my right hon. Friend said about child benefit.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

The Secretary of State said that he was spending an extra £400 million. Does he accept that when the increases reach the pensioners' pockets they will be seen as derisory, and that those who do not follow these matters will be confused? As the statutory uprating percentage is small, will he take this opportunity to follow the advice of the SSAC and made the link with earnings, not with price increases? If he were to do that, it would give him the opportunity to appear generous.

Will the Secretary of State tell us more about the terms of reference of the Post Office study and the time scale for the report?

Mr. Fowler

The kind of earnings link which the hon. Gentleman advocates would have cost an extra £3 billion during the lifetime of the Government. From the pensioners' point of view, it is important that pensions should be uprated in line with prices and that inflation should be brought down. The most significant achievement of the Government has been to bring down inflation. Ten years ago inflation was running at between 23 and 24 per cent. That was dramatically bad news for pensioners.

We recognise that many people want payments in cash at post offices, so it is sensible that the service is made as good as possible. We are considering what improvements can be made to counter services in the survey which the DHSS and the Post Office are carrying out.

Mr. Ian Gow (Eastbourne)

Is my right hon. Friend aware that the major cause of the synthetic indignation shown by the hon. Member for Oldham, West (Mr. Meacher) is the Government's massive achievement in keeping the rate of inflation at only 1.1 per cent. between May 1985 and January 1986? [Interruption.] Can he tell us now, or will he circulate in the Official Report, the best and the worst figures for inflation achieved by the Labour Government in any period between May and January, so that we and our pensioners can see the Government's genuine achievement?

Mr. Fowler

My hon. Friend is on to the right point, and to judge from the reaction of the Opposition, they also recognise that. I shall seek to set out in the Official Report the detailed figures that my hon. Friend seeks. [Interruption.] The hon. Member for Derby, South makes a great deal of noise. I wish that she would come to the Dispatch Box and ask me a question. If she is not the Labour party spokesman on social security, perhaps she should make a takeover bid.

During the last period of the Labour Government inflation rose by 110 per cent. That was their economic achievement. At this time 10 years ago, inflation was between 23 and 24 per cent. That was another economic achievement of the Labour Government.

Mr. Frank Field (Birkenhead)

Given the past defeats of the Secretary of State to increase child benefit, I congratulate him on today's announcement and say that it is welcome to both sides of the House. Will he comment on his uprating formula? By changing that formula, has he not gained substantial savings for the Exchequer, which will allow him to double the Christmas bonus? Will he give pensioners that increase, or will cheat them of it?

Mr. Fowler

I am grateful to the hon. Gentleman for his point on child benefit, which is in stark contrast to the view expressed by the hon. Member for Oldham, West. With regard to indexing, we are talking about the difference between 1.1 and 1.2 per cent. That is a difference of 5p or 10p, and in some cases there is virtually no difference. The savings made from that would not remotely pay the cost of the increase that the hon. Gentleman seeks.

Mr. Robert McCrindle (Brentwood and Ongar)

In describing the uprating statement as an insult, was not the hon. Member for Oldham, West (Mr. Meacher) delivering the most complete insult, by making it clear that a future Labour Government would have learnt nothing from the inflation experience of the previous Labour Adminstration? I note what my right hon. Friend proposes for heating benefits, but does he feel, as some of his hon. Friends feel, that the severe weather payments are not working effectively? Can we anticipate a review of the system before the next uprating statement?

Mr. Fowler

As my hon. Friend the Minister for Social Security said, severe weather payments are being reviewed. The House will want the review completed and a decision on it before the next uprating statement. Last year, exceptionally severe weather payments amounted to about £1.7 million. The main help for heating comes both through the supplementary benefit scale rates and through the heating addition. Help with heating costs now totals some £400 million, which is £140 million more in real terms than under the Labour Government.

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

Will the Secretary of State confirm that he originally intended to make the statement tomorrow, but that because he was so embarrassed by the fact that it is so mean and miserly he produced it today, thinking that he would get an easier ride in a thin House? I assure him that that will not be so. The choice before the Government was either to give pensioners a real increase, instead of just keeping them up with the cost of living, or to give tax handouts to the rich. The Government have chosen the latter, as we shall see in the Budget, and the pensioners will be screwed again to pay for them.

Mr. Fowler

The hon. Gentleman has it wrong on both counts—not untypically.

Mr. Foulkes

That is not true.

Mr. Fowler

The hon. Gentleman is mistaken, and I shall put it no higher than that. If he seeks to challenge that, any of my hon. Friends and anyone who knows anything about the matter will confirm it.

On the question of tax thresholds, the hon. Gentleman talks about tax reductions for the rich, but the Government seek to take many people on low earnings out of tax. That seems to be a good policy.

Mr. Tony Favell (Stockport)

I recognise the importance of providing benefits for the needy, but will my right hon. Friend spare a word for the millions of people who must go to work to earn those benefits? Will he assure them that he will not buy short-term cheap popularity at the expense of jacking up inflation?

Mr. Fowler

Yes, and I think that both sides of the House will agree with me on that. The hon. Member for Oldham, West proposes to spend an additional £15 billion to £20 billion a year, which must be raised from taxpayers. I am content to compare the Government's policies with those of the Labour party, because Labour party policies will never be put into effect.

Mr. Robin Corbett (Birmingham, Erdington)

Is the Secretary of State aware that the 40p a week increase for a single pensioner will purchase about six eggs, two small lumps of coal, one and a half small loaves or 110 peanuts? What has he to say to the 10,000 pensioners in my constituency who are fearful of putting on an electric fire because they cannot meet the bill?

Mr. Fowler

I would say that the increase comes on top of last November's increase, when pensions were increased by £4 a week for a married couple and £2.50 for a single person. I would also tell the people of Erdington that the Government have been more successful than any other Government in recent times in bringing down inflation. The hon. Gentleman had better realise that low inflation is good both for industry and for the millions of pensioners.

Mr. Andrew Bowden (Brighton, Kemptown)

Will my right hon. Friend look urgently at the regulations for the extra heating allowance for severe weather in relation to the savings figure of £500, which is wholly unfair? Will he take steps to ensure that applications for money are considered on the basis of receipted bills, not merely unpaid bills?

With regard to the three pension increases during the change-over period, will try right hon. Friend assure me that no pensioner will be worse off in future when the assessment is made, assuming that the three increases are based only on the retail prices index? If that were to be the case, will he ensure that the final increase in the autumn is above the rate of inflation, to take that into account?

Mr. Fowler

I cannot make any promises about the future, but the Government are committed to keeping pensions ahead of prices, and we have also made it clear that we shall abide by the historic method of measuring that inflation. That is fair and reasonable, and that was put before the country clearly at the general election.

I shall bear in mind what my hon. Friend said about heating, and if we can help along the lines that he has suggested I shall seek to do so. The severe weather allowance is only one, and a small, part of the help with heating that we are providing. The fact that £400 million is being devoted to heating costs shows the priority that we place on that help.

Mr. Dennis Skinner (Bolsover)

Will the Secretary of State and his Friends in the Tory Government use all the information that he has given the House today and put it in a leaflet for the Fulham pensioners in the by-election campaign? If he does, there is a fair chance that some of his Friends will not want to take the leaflets round, but he will get a few takers among Labour party members, such is the miserly offer that he has made today. Is he aware that he should not have instructed the hon. Member for Hove (Mr. Sainsbury) to come here the other Friday and object to the Standing Charges (Abolition) Bill, which would have relieved pensioners of fairly substantial charges on heating and other bills? Had he not done so, the announcement today, plus a little extra, might have got more than one cheer from the many millions of pensioners, who will now say that there must be a lot of money around because those on top salaries received 19 per cent. extra only six months ago, and top business managers have had increases of 17 per cent. overall in 1985, while the pensioners are to be given 40p. What a scandal. The right hon. Gentleman should be ashamed of himself.

Mr. Fowler

The hon. Gentleman again ignores the fact that this increase follows the 7 per cent. uprating in November, when inflation was at 5.5 per cent. He also ignores the fact that inflation has been brought down by this Government, which is of considerable benefit to millions of pensioners. As to the heating benefit, the hon. Gentleman also ignores the fact that the Government are devoting £140 million more to heating than did the last Labour Government.

Mr. Nigel Forman (Carshalton and Wallington)

I welcome the figures in my right hon. Friend's statement, notably the continued price protection for pensioners, but does he realise that many Conservative Members would give him the strongest possible support if he would negotiate with the Treasury a real increase in child benefit? The recent record shows that a married man's tax allowance has gone up by 17 per cent. in real terms, but child benefit, before the announcement today, had decreased by 3 per cent. in real terms.

Mr. Fowler

I understand what my hon. Friend says, and clearly the Government have decided, by increasing child benefit, to take account of those feelings. All I can say is that for the next uprating statement in the autumn we shall bear in mind what my hon. Friend has said.

Mr. Charles Kennedy (Ross Cromarty and Skye)

We give the Secretary of State credit for the consolidation of child benefit, although I echo the sentiments expressed on the Conservative Benches that more should be done as soon as possible to restore it to its real value following the developments of last year.

There will be a welcome in many constituencies for the statement about the security of the future of sub-post offices. Is not the most profoundly damaging aspect of the Secretary of State's statement the circular going to the Social Security Advisory Committee for consultation, which encompasses some quite horrendous constraints on future single payments? Does this not auger badly for the future of the social fund? Is the right hon. Gentleman aware that by constraining the level and range of single payments the Government, who have become known for selling off the family silver, are showing that they want to inhibit the right of the poor to keep their family furniture?

Mr. Fowler

I thank the hon. Gentleman for what he said about child benefit and the policy on post offices. When he has had a chance to look at the proposals on single payments more closely, he will see the case set out. Single payments have escalated since 1981 from 834,000 to over 4 million in 1985. That is not a simple product of unemployment. In 1981 there were 231 single payments per 1,000 claimants, while in 1985 there were 880 such payments per 1,000. As the hon. Gentleman will know, substantial campaigns are being run by a number of councils and others to increase the take-up of these payments. There is an overwhelming case for reform and the proposals that we have laid out for consultation with the SSAC strike a fair balance between the rights of the individual claimant and those of taxpayers generally.

Mrs. Virginia Bottomley (Surrey, South-West)

Do not pensioners want financial security and predictability, and does not the reaction of the Labour party suggest that it has failed to learn the lessons of the past? Should it not recognise the fear under which pensioners live, of inflation rising again to 25 per cent.? Does my right hon. Friend agree that since the Government came into office pensions have more than kept up with prices, and that what matters to pensioners is not letting inflation run away, as it is the most cruel tax of all?

Mr. Fowler

My hon. Friend is right. Pensions in this period of government have kept ahead of prices, but the Government have also brought inflation down. Everything that the hon. Member for Oldham, West has said during this and other exchanges shows that the Labour party has learnt nothing from the past.

Mr. Ernie Ross (Dundee, West)

The Minister will know that, despite what his hon. Friends are saying, pensioners want the security of knowing that they can put clothes on their backs, shoes on their feet and coal on their fires, which they will not be able to do following this statement. How much will the right hon. Gentleman save by moving the uprating from November to July?

Mr. Fowler

It is not possible to say that, because there is no way in which I can predict what the May to May inflation will be. That would be the measure if there were an uprating in November, but the whole question is academic because, for the reasons that I have stated, it would not be practical to have a November uprating.

Mr. Tim Smith (Beaconsfield)

Does not the statement graphically underline the Government's achievement in getting inflation down—something that is of benefit to pensioners in Fulham and elsewhere? Has my right hon. Friend seen the forecast yesterday from the London Business School, which shows inflation moving below 4 per cent. this year, and 3 per cent. next year? Is this not the best possible news for anybody living on a fixed income or having a fixed amount of capital?

Mr. Fowler

Yes, and that is what the public will see as the position. This is good not only for pensioners and those living on fixed incomes but for employment, business and industry. If the Labour party wants to stand as the party of high inflation, it can do so. This party and this Government stand for low inflation, which is to the benefit of the nation.

Mr. John Evans (St. Helens, North)

Is the right hon. Gentleman aware that the announcement of these miserable sums will be greeted with anger and disbelief by pensioners and their organisations everywhere? They will bear in mind his Government's performance when they cast their votes at the next election. Is he also aware that his announcement of a 10p uprating in the heating allowance is adding insult to injury at a time when the severe weather payments are a national scandal? Will he answer the question about how much benefit there will be to the Treasury by changing the formula?

Mr. Fowler

If the hon. Gentleman means the change to May to May, that would depend on the May rate of inflation, and there is no way of knowing that at the moment, self-evidently. Also, there is no way in which we can have a November uprating followed by an April uprating. As to the other points, I am content that the Government are judged on their record in the economic and social sectors, compared with the disaster that we inherited from the Labour Government.

Mr. Robin Squire (Hornchurch)

I congratulate my right hon. Friend on increasing the child benefit by more than the rate of inflation, but I gently remind him that the 2.5p per week is modest when set against the 35p a week reduction in real terms last November. Is he aware that many Conservative right hon. and hon. Members will expect even greater progress by the time of the next statement?

Mr. Fowler

I have taken on board my hon. Friend's point. I hope he will recognise that by introducing the family credit system we are seeking to help an additional 200,000 families with children on low incomes. My hon. Friend should concentrate on the two policies, but I shall take into account what he has said about child benefit.

Mr. David Winnick (Walsall, North)

Is the Secretary of State aware that if he had any self-respect he would feel humiliated at having to make a statement about these miserable increases? Is he aware that one of the reasons for the unpopularity of the Conservative party is that there is a growing recognition that this Cabinet is concerned with helping the rich in every way, and is utterly unconcerned about the plight of the unemployed, pensioners and others who have to live on the smallest possible incomes? Does the right hon. Gentleman not realise how nauseating it is to see Conservative Member after Conservative Member get up in this Chamber and praise him? They are extremely complacent about these increases, although in many cases those Conservative Members are earning large sums of money because they have two, three or four jobs. They are in no position to lecture pensioners who are having to struggle on £50, £60 or £70 a week.

Mr. Fowler

The hon. Gentleman is making a constituency speech. He is mistaken if he thinks that low inflation is of benefit only to the rich. The Government's policies have resulted in low inflation. We are also trying to take out of tax many more of the people who are on low incomes. Those are the realities, rather than the complete nonsense that the hon. Gentleman talks on every ocassion.

Several Hon. Members


Mr. Speaker

Order. I shall call those hon. Members who have been rising to ask a question, but I can allow these exchanges to continue for only another four minutes before I call the Opposition Front Bench.

Mr. K. Harvey Proctor (Billericay)

If the elderly, the sick, the disabled and those on fixed incomes are the hardest hit by high levels of inflation—which they are—should we not all rejoice at the low level of inflation that underpins my right hon. Friend's statement?

Mr. Fowler

Yes, that is right. I have said during these exchanges that low inflation is of the greatest benefit to the most vulnerable in our country.

Mr. Michael Stern (Bristol, North-West)

I congratulate my right hon. Friend on that part of his statement which shows his confidence in the ability of the Post Office and sub-post office network to compete with the banks, provided that no element of subsidy is involved. Will he ensure that pensioners and others retain the right to choose for themselves their method of collecting benefits?

Mr. Fowler

Yes, I recognise the concern. That is why I believe that it is right to make clear the Government's policy. I hope that the statement of policy will be noted not only by those concerned but by the sub-postmasters. Freedom of choice for the beneficiary is implicit in our policy.

Mr. Richard Hickmet (Glanford and Scunthorpe)

Will my right hon. Friend tell the House what would be the position of pensioners today if inflation were running at 25 per cent., rather than at 5 per cent.? Am I right in thinking that pensions have increased by more than 10 per cent. since the Government came to office in 1979? What would be the position of pensioners if the £24 billion of public expenditure promises that have been made by the Labour party were put into effect? Would not the result be a dramatic increase in inflation?

Mr. Fowler

Since November 1978 there has been a 98 per cent. increase in pensions, compared with a 91 or 92 per cent. increase in prices. A 25 per cent. inflation rate would have the clearest effect on the savings of pensioners. During the last Labour Government savings were eroded and tax was increased. As far as one can tell, that is what is promised by the Labour party if it ever gains power again.

Mr. Kenneth Hind (Lancashire, West)

I congratulate my right hon. Friend on his announcement about the future of sub-post offices. Will he confirm that today's announcement about pensioners means that for the foreseeable future they can rely upon the Government to allow them to continue to use post offices for the payment of their pensions?

Mr. Fowler

Yes. In addition, everyone will have the freedom to choose which form of payment he or she requires.

Mr. Christopher Chope (Southampton, Itchen)

I, too, thank my right hon. Friend for what he said about sub-post offices. Is he aware that profitable urban sub-post offices are still being closed down by the Post Office? Will he assure me that in his negotiations with the Post Office he will ask it to ensure that it maintains its existing network of profitable urban sub-post offices?

Mr. Fowler

My hon. Friend's question goes a little further than my responsibilities, but I shall bear in mind what he has said.

Mr. Peter Bruinvels (Leicester, East)

I, too, welcome the lifeline that has been given to sub-post offices by my right hon. Friend. Their future has been in question.

When my right hon. Friend has completed his social security review of those who claim unemployment benefit but who may have a job and may not therefore necessarily be unemployed, will he ensure that the additional £410 million is provided for those who are genuinely unemployed and also for doubling next year's Christmas bonus for the elderly?

Mr. Fowler

I cannot give any commitment about the Christmas bonus. However, nobody wants benefit payments to be made if they are not justified.

Mr. Meacher

The Secretary of State has ostentatiously evaded two central issues. Will he confirm that the cuts in pension increases as a result of this double change in the uprating arrangements until April 1987 means that pensioners will lose about £120 million? Will he acknowledge that most of this money will end up in tax cuts which, contrary to the Secretary of State's claims today, the Prime Minister has recently admitted go overwhelmingly to the better off and the rich?

Secondly, the Secretary of State has made several claims about lower inflation. Will he confirm that what matters to pensioners is the real level of the pension increase over and above inflation? Will he acknowledge that after six years of Labour Government the real increase in the pension was 20 per cent., but that after six years under this Government the real increase has been only 5 to 7 per cent.?

Mr. Fowler

The hon. Gentleman has always ignored, and he continues to ignore, any savings that pensioners may have made. During the period of the last Labour Government inflation increased over 110 per cent. Not a great deal of imagination is required to know what happened to the savings of millions of pensioners. Until the hon. Gentleman takes that point on board, he will continue to bring forward only half-baked social security plans.

As for the May to May proposals, it is not possible to have an uprating at the end of November 1986 and another one in April 1987. Therefore the issue does not arise.

Following is the schedule:

New Social Security Benefit rates
Old rates New rates
Attendance Allowance
higher rate 30.60 30.95
lower rate 20.45 20.65
Child Benefit—each child 7.00 7.10
Child's Special Allowance 8.05 8.05
Death Grant (Lump sum) 30.00 30.00
Dependency Additions
Adult Dependency Additions For spouse or person looking after children, with: 23.00 23.25
retirement pension on own insurance, invalidity pension, unemployability supplement and, if beneficiary over pension age, unemployment benefit non-contributory retirement pension, invalid care and severe disablement allowance 13.75 13.90
sickness benefit if beneficiary over pension age 22.00 22.25
unemployment benefit:
standard rate 18.80 19.00
three-quarter rate 14.10 14.25
half rate 9.40 9.50
maternity allowance/sickness benefit
standard rate 18.00 18.20
three-quarter rate 13.50 13.65
half rate 9.00 9.10
Child Dependency Additions
For each child with:
retirement pension, widows benefit, invalidity benefit, invalid care and severe disablement allowance, higher rate industrial death benefit, unemployability supplement an sickness/unemployment benefit if beneficiary over pension age 8.05 8.05
Old rates New rates
Earnings Rules
Retirement Pension 75.00 75.00
Invalid Care Allowance 12.00 12.00
Unemployment Benefit Subsidiary Occupation (daily rate) 2.00 2.00
Therapeutic Earnings Limit 25.00 25.50
Industrial Injuries Unemployability supplement permitted earnings level (annual amount) 1,300.00 1,326.00
War Pensioners' Unemployability Supplement permitted earnings level 25.00 25.50
Earnings rule for Adult dependant's benefit with Sickness Benefit where
claimant is under pension age 18.00 18.20
claimant is over pension age 22.00 22.25
Maternity Allowance 18.00 18.20
Unemployment Benefit where
claimant is under pension age 18.80 19.00
claimant is over pension age 23.00 23.25
Retirement pension, invalidity pension, Severe Disablement Allowance, Unemployability supplement where dependent living with claimant 30.45 30.80
As above where dependant still qualifies for tapered earnings rule 45.09 45.09
Retirement pension, Invalidity pension and Unemployability Supplement where dependant is non-resident 23.00 23.25
Severe Disablement Allowance where dependant is non-resident 13.75 13.90
Invalid care allowance wife or female housekeeper 13.75 13.90
Child dependency additions point at which CDAs payable with long-term benefits are affected by earnings of claimant's partner
for first child 85.00 85.00
for each subsequent child 10.00 10.00
Family Income Supplement
Prescribed amount for one-child family, where child is aged
under 11 97.50 98.60
11–15 98.50 99.60
16 and over 99.50 100.60
increase for each additional child
under 11 11.50 11.65
11–15 12.50 12.65
16 and over 13.50 13.65
Maximum amount for one-child family where child is aged
under 11 25.00 25.30
11–15 25.50 25.80
16 and over 26.00 26.30
increase for each additional child
under 11 2.50 2.55
11–15 3.00 3.05
16 and over 3.50 3.55
Guardian's Allowance
each child 8.05 8.05
Old rates New rates
Hospital Downrating
20 per cent. rate 7.65 7.75
40 per cent. rate 15.30 15.50
60 per cent. Rate 22.95 23.25
Resettlement benefit 62.00 62.00
Reduction where wife has pension on own insurance (category A) 22.95 23.20
Housing Benefit
Needs allowances
single person 47.70 48.10
couple/single parent 70.20 70.85
single handicapped person 53.20 53.65
couple (one handicapped) or handicapped single parent 75.70 76.40
couple (both handicapped) 78.25 79.00
pensioner addition .85 .85
dependent child addition 14.50 14.60
Non-dependant deductions/contributions
Rate rebates
aged 18 to pension age, and not on supplementary benefit or YTS, nor qualifying for modified deduction after 56 days 2.60 2.60
of pension age, or over 21 and on supplementary benefit or qualifying for modified deduction after 56 days* 1.10 1.10
age 16–17 and not on supplementary benefit, YTS or Severe Disablement Allowance 1.10 1.10
Rent rebates and allowances
aged 18 to pension age and not on supplementary benefit or YTS nor qualifying for modified deduction after 56 days 7.80 7.80
of pension age, or over 21 and on supplementary benefit or qualifying for modified deduction after 56 days* qualifying for modified deduction 2.80 2.80
aged 16–17 and not on supplementary benefit, YTS or Severe Disablement Allowance 2.80 2.80
Disregards for:
Claimant's earnings 17.30 17.30
spouse's earnings 5.00 5.00
various pensions etc. 4.00 4.00
for maintenance of non grant-aided students (maximum) 23.60 23.85
applied to grant-aided students London 20.80 20.80
Elsewhere 15.75 15.75
for amenities (maximum) heating 6.55 6.70
hot water .80 .80
lighting .50 .50
cooking .80 .80
all fuel 8.65 8.80
Expenses allowed for sub-tenants
furnished letting 3.00 3.00
unfurnished letting 1.50 1.50
garage or outbuilding .40 .40
Industrial Death Benefit
Widow's pension first 26 weeks 53.60 54.20
higher permanent rate 38.85 39.25
Old rates New rates
lower permanent rate 11.49 11.61
Allowances for children paid with pension 8.05 8.05
Industrial Disablement Pension
over 18 or under 18 with dependents
per cent.
100 62.50 63.20
90 56.25 56.88
80 50.00 50.56
70 43.75 44.24
60 37.50 37.92
50 31.25 31.60
40 25.00 25.28
30 18.75 18.96
20 12.50 12.64
under 18
per cent.
100 38.30 38.70
90 34.37 34.83
80 30.64 30.96
70 26.81 27.09
60 22.98 23.22
50 19.15 19.35
40 15.32 15.48
30 11.49 11.61
20 7.66 7.74
Maximum life gratuity 4,150.00 4,200.00
Unemployability Supplement plus where appropriate an increase for early incapacity 38.30 38.70
higher rate 8.05 8.15
middle rate 5.10 5.20
lower rate 2.55 2.60
Adult dependant increase 23.00 23.25
Child dependant increase 8.05 8.05
Maximum special hardship allowance 25.00 25.28
Constant attendance allowance normal maximum 25.00 25.30
part-time rate 12.50 12.65
intermediate rate 37.50 37.95
exceptional rate 50.00 50.60
Exceptionally severe disablement allowance 25.00 25.30
Invalid Care Allowance 23.00 23.25
Increase for adult dependant 13.75 13.90
Invalidity Benefit
Invalidity pension 38.30 38.70
Invalidity allowance
higher rate 8.05 8.15
middle rate 5.10 5.20
lower rate 2.55 2.60
Maternity Benefit
Maternity Allowance
adult single full rate 29.15 29.45
adult dependant full rate 18.00 18.20
adult single three-quarter rate 21.86 22.09
adult dependant three-quarter rate 13.50 13.65
adult single half rate 14.58 14.73
adult dependant half rate 9.00 9.10
Maternity Grant 25.00 25.00
Mobility Allowance 21.40 21.65
Old rates New rates
One Parent Benefit 4.55 4.60
Pneumoconiosis, Byssinosis, Workman's Compensation and Other Schemes
Major incapacity allowance (maximum) and allowance for total disablement 62.50 63.20
partial disablement allowance 23.00 23.25
Unemployability supplement; plus where appropriate increases for early incapacity 38.30 38.70
higher rate 8.05 8.15
middle rate 5.10 5.20
lower rate 2.55 2.60
Constant attendance allowance normal maximum rate 25.00 25.30
part-time rate 12.50 12.65
intermediate rate 37.50 37.95
exceptional rate 50.00 50.60
Exceptionably severe disablement allowance 25.00 25.30
Lesser incapacity allowance (maximum) 23.00 23.25
—based on loss of earnings of over 30.60 30.95
Retirement Pension
category A or B—on own insurance 38.30 38.70
category B (lower)—spouse's insurance 23.00 23.25
category C or D—non-contributory 23.00 23.25
category C (lower)—non-contributory 13.75 13.90
graduated retirement benefit (unit) 0.05 0.05
increments to basic and additional pension, guaranteed minimum pension, and graduated retirement benefit increased by (1.1 per cent.)
(also paid with widows' and invalidity benefits)
addition for over 80's 0.25 0.25
Severe Disablement Allowance 23.00 23.25
increase for adult dependant 13.75 13.90
Sickness Benefit
over pension age single rate 36.65 37.05
increase for adult dependant 22.00 22.25
under pension age single full rate 29.15 29.45
adult dependant full rate 18.00 18.20
single three quarters rate 21.86 22.09
adult dependant three quarters rate 13.50 13.65
single half rate 14.58 14.73
adult dependant half rate 9.00 9.10
Supplementary Benefit
Scale rates ordinary rates
single householder 29.50 29.80
couple 47.85 48.40
non-householder 18 or over 23.60 23.85
non-householder 16–17 18.20 18.40
long-term rates single householder 37.50 37.90
couple 60.00 60.65
non-householder 18 or over 30.00 30.35
non-householder 16–17 23.00 23.25
Old rates New rates
dependent children over 18 23.60 23.85
16–17 18.20 18.40
11–15 15.10 15.30
under 11 10.10 10.20
Board and lodging personal expenses: short term
single 9.70 9.80
married 19.40 19.60
personal expenses: long-term
single 10.85 10.95
married 21.70 21.90
personal expenses: dependants
18 and over 9.70 9.80
16–17 5.85 5.90
11–15 5.00 5.05
under 11 3.25 3.30
Maximum special increase in board and lodging
single person 17.30 17.50
married couple 34.60 35.00
Personal expenses
for claimants in private and voluntary residential and nursing homes 8.95 9.05
for claimants in re-establishment centres 9.85 9.95
for claimants in resettlement units 7.50 7.60
for claimants in hospital and local authority accommodation 7.65 7.75
for claimants in the Polish home Ilford Park 10.85 10.95
Additional requirements Heating additions (including age-related heating additions)
higher rate 5.45 5.55
lower rate 2.20 2.20
Central heating additions
higher rate 4.40 4.40
lower rate 2.20 2.20
Estate rate heating additions
higher rate 8.80 8.80
lower rate 4.40 4.40
Special dietary additions
lower rate 1.60 1.60
higher rate 3.70 3.70
haemodialysis rate 10.65 10.65
Blind addition 1.25 1.25
Over 80's addition .25 .25
Laundry cost deduction .55 .55
Addition for extra bath .30 .30
Housing costs Reduction for non-dependants aged 18 to pension age, and not on supplementary benefit, YTS nor qualifying for modified deductions after 56 days 7.80 7.80
of pension age or over 21 and on supplementary benefit or qualifying for modified deduction after 56 days* 2.80 2.80
non-householder rent addition 3.90 3.90
Old rates New rates
repairs and insurance allowance 1.85 1.85
Capital Limits
For reciept of Supplementary benefit 3,000.00 3,000.00
for single payments and related items 500.00 500.00
for interest on loans for repairs and improvements 500.00 500.00
lower rate voluntary unemployment deductions 100.00 100.00
Other limits
expenses on starting work religious requirements 35.00 35.00
for funerals 75.00 75.00
for repairs 325.00 325.00
Earnings disregard £4 and in the case of single parents half the next £16
Deductions for direct payments fuel direct
5% rate 1.50 1.50
10% rate 2.95 3.00
housing costs direct 1.50 1.50
Reduction in benefit for strikers 17.00 17.00
Unemployment Benefit
Claimant over pension age
single rate 38.30 38.70
increase for adult dependant 23.00 23.25
Under pension age
single full rate 30.45 30.80
increase for adult dependant 18.80 19.00
single three-quarters rate 22.84 23.10
adult dependant three-quarters rate 14.10 14.24
single half rate 15.23 15.40
adult dependant half rate 9.40 9.50
War Pensions
Disablement pension private or equivalent (100 per cent.) 62.50 63.20
officer (100 per cent.) (£ per annum) 3,259.00 3,295.00
Age allowances
40 per cent. to 50 per cent. 4.35 4.40
over 50 per cent. but not over 70 per cent. 6.80 6.85
over 70 per cent. but not over 90 per cent. 9.75 9.85
over 90 per cent 13.60 13.70
Disablement gratuity specified minor injury 4,150.00 4,200.00
unspecified minor injury 2,282.50 2,310.00
Unemployability allowance
personal allowance 40.65 41.10
increase for adult dependant 23.00 23.25
increase for each child 8.05 8.05
Invalidity allowances higher rate 8.05 8.15
middle rate 5.10 5.20
lower rate 2.55 2.60
Constant attendance allowance
normal maximum rate 25.00 25.30
part-time rate 12.50 12.65
intermediate rate 37.50 37.95
exceptionable rate 50.00 50.60
Old rates New rates
Comforts allowance
higher rate 10.80 10.90
lower rate 5.40 5.45
Mobility supplement 23.80 24.05
Allowance for lowered standard of occupation (maximum) 25.00 25.28
Exceptionally severe disablement allowance 25.00 25.30
Severe disablement occupational allowance 12.50 12.65
Clothing allowance
higher rate (per annum) 85.00 86.00
lower rate (per annum) 54.00 55.00
Education allowance (per annum) 120.00 120.00
War widows' pension standard rate for widow of private 49.80 50.30
childless widow under 40 11.49 11.61
widows' age allowance
age 65 to 69 5.35 5.40
age 70 to 79 10.70 10.80
age 80 and over 13.40 13.55
war widow's child addition 11.55 11.55
addition for motherless or fatherless child 12.60 12.60
Unmarried dependant living as wife 47.75 48.25
Rent allowance (maximum) 18.95 19.15
Adult orphan's pension 38.30 38.70
Widower's pension (maximum) 49.80 50.30
Widow's Benefit
Widows' allowance 53.60 54.20
Widowed mothers' allowance 38.30 38.70
Widows' pension
standard rate 38.30 38.70
Non-contributory category C' 23.00 23.25
Age-related widows' pension standard rate age 49 35.62 35.99
age 48 32.94 33.28
age 47 30.26 30.57
age 46 27.58 27.86
age 45 24.90 25.16
age 44 22.21 22.45
age 43 19.53 19.74
age 42 16.85 17.03
age 41 14.17 14.32
age 40 11.49 11.61
Non-contributory category C
age 49 21.39 21.62
age 48 19.78 20.00
age 47 18.17 18.37
age 46 16.56 16.74
age 45 14.95 15.11
age 44 13.34 13.49
age 43 11.73 11.86
age 42 10.12 10.23
age 41 8.51 8.60
age 40 6.90 6.98

* From 28 July 1986 this will read "aged 25 or more for new cases".

Rate to be increased in September.