§ The Secretary of State for Social Services (Mr. John Moore)With permission, I wish to make a statement about the next uprating of social security benefits and the introduction of a reformed system of income-related benefits. This will take place for most benefits in the week beginning 11 April 1988, the first full week in the tax year, and the same provisions will apply in Great Britain and Northern Ireland.
The retail price index published on 9 October showed an increase in prices over the 12 months to September 1987 of 4.2 per cent. Retirement pension for a married couple will accordingly rise from £63.25 a week to £65.90, and for a single person from £39.50 to £41.15. These increases of £2.65 and £1.65 a week respectively mean that the cash amount of basic retirement pension has risen by almost £35 a week for a couple since this Government came to office. The increase will add about £780 million to the social security budget next year. It must be seen in the context of significant improvements in pensioners' total incomes. Total state pension provision represents, on average, about half of pensioners' net incomes, and those net incomes have risen by 18 per cent. in real terms since 1979. The uprating increases will ensure that the value of this provision is maintained. They are fully in line with our pledges to pensioners and recipients of other linked long-term benefits.
I have decided to uprate all contributory benefits, benefits for the disabled, war pensions and similar benefits by 4.2 per cent. also. Public service pensions will likewise increase by 4.2 per cent. as will statutory sick pay and statutory maternity pay paid by employers. Because of the payment arrangements for SSP and SMP, the changes will take effect from the start of the tax year.
In April 1988, we shall be introducing our new system of income-related benefits. Supplementary benefit will be replaced by the simpler income support; housing benefit by a reshaped system aligned with income support; and family income supplement by the new family credit, which will provide help to more than twice as many low-paid working families. This new, more coherent and better-targeted structure will direct help more clearly where it is most needed and will foster incentives to work.
I shall shortly be laying before the House regulations for the new benefits. Since these are new schemes, the regulations will include the relevant rates. I shall also be laying revised regulations on claims and payments which will provide common basic provisions between benefits. Earlier this month, I consulted the local authority associations, as I am required to do under the Social Security Act 1986, on the proposed rates for housing benefit. Because of the close alignment of the benefit rates for all three income-related benefits, final decisions cannot be reached until I have considered their responses.
The income support rates proposed are £33.40 for single people aged 25 and over, and £51.45 for couples. These would also apply as the applicable amounts for housing benefit purposes and as the threshold in family credit. The family premium would be £6.15, the premium for a single pensioner £10.65, and for couples £16.25.
The personal allowances include the average amounts which we expect householders who are income support claimants will have to pay next April as their minimum 180 contribution to domestic rates. These amounts are £1.30 for couples, lone parents and single claimants aged 25 and over, and £1 for other single claimants over 18.
Compared with the illustrative figures published at the time Parliament approved the reformed benefit schemes, the premium payments would be some 6.5 to 7 per cent. higher—essentially the movement in the relevant price index. The personal allowances, leaving aside the element for domestic rates, would be some 4.5 to 5 per cent. higher; including that element they would be 7 to 9 per cent. higher. So, overall, income support claimants would be receiving higher real levels of benefit than under the previous figures. The number of gainers from the structural reform would rise by a million — from 2.2 million to 3.2 million. [Interruption.] Hon. Members outside the House who are benefit recipients will be as interested as those hon. Members who have the patience to listen to this statement.
The number who gain or are unaffected would go up to 4.9 million, while the number who lose would drop to 3.7 million. In reality, of course, existing supplementary beneficiaries moving to income support would not lose any of their benefit at the point of change. We are spending £200 million to make sure of that.
We are proposing to introduce the capital limits and the family credit and rate rebate tapers at the same level as those illustrated in the 1985 White Paper. Under the new schemes, housing benefit claimants at all income levels will be fully reimbursed for any increases in their rent. In view of this, I now propose that the rent taper should be 65 per cent. calculated on the basis of net income. This is equivalent to 42 per cent. in the present system, based on gross income for someone paying standard rate tax and national insurance.
For the convenience of the House, I am today publishing tables which show the likely distributional effects of the new schemes. Copies are available in the Vote Office. I am particularly pleased to note that the figures show for sick and disabled people getting the disability premium an increase under the new scheme of nearly £5 a week in disposable income. This is in addition to substantial increases in estimated expenditure on the disability benefits themselves.
Complementing the new structure of income-related benefits, the social fund will be fully introduced next April. Its gross budget for community care grants and budgeting and crisis loans for the first year will be just over £200 million, of which some 70 per cent. will be in the form of loans recoverable over a period. Separate announcements will be made concerning social fund provisions in Northern Ireland.
I turn now to child benefit, which currently costs over £4 billion, nearly 10 per cent. of the whole social security budget. Every 10p increase has a net additional cost of over £40 million. Yet higher child benefit would he of greatest help to people who are already relatively well off, whose living standards are already rising. By contrast, it would give no extra help to over 3 million children in families on benefit, including low income working families: they gain the same from the uprating whatever is done to child benefit. Against this background, and the particular need to target help on those who most need it and to control the overall growth in social security expenditure, I have concluded that an increase in child benefit would not be the best use of resources at present. Therefore, I do not propose to increase the rate next April. 181 One-parent benefit will, however, increase to £4.90, and the maternity payment from the social fund will be increased to £85.
Let me emphasise to the House that, even with no change in the rate of child benefit, we will be increasing, not reducing, the overall level of resources devoted to families with children. We shall be spending £220 million extra on the new family credit and £100 million extra on families on income support. By contrast, a full uprating of child benefit would have cost £120 million. Moreover, family credit will go directly to help low income working families with children and will reach twice as many people as the present family income supplement. Thus, more will be spent on families overall, but the greatest emphasis will be on those with the greatest needs.
The details of what this announcement will mean for individual benefits and the proposed housing benefit rates as issued for consultation are set out in a full schedule of rates which, as previously, is now available in the Vote Office and, with permission, will be published in the Official Report. The schedule also covers our proposals for board and lodging limits for the coming year.
Overall, the uprating increases will add some £1.3 billion to a social security budget which already stands at over £44 billion this year. This is a substantial increase in spending on a programme that is already the biggest in Government. We believe that our proposals strike a fair balance between protecting the interests of the poorest and of those, such as pensioners, who have substantial reliance on state benefits; and protecting the interests of those whose taxes and contributions pay for benefits.
§ Mr. Robin Cook (Livingston)May I be the first to congratulate the Secretary of State on achieving a new record, even by the standards of his Government? Is he aware that the statement that he has made today will result in a cut in benefit for more claimants than any uprating statement by any of his predecessors during the past eight years? That may be the path to promotion in the modern Conservative party, but it is rough justice for the poorest families in Britain who must live on the benefits that he has just announced.
Is not the net effect of the figures that he has quoted for income support that almost 4 million claimants on supplementary benefit will not get a penny extra in increased benefit next April? Is he not concerned that those who will be the worst affected will be those disabled claimants who do not qualify for disability premium and who could lose entitlement of up to £50 a week? Does he appreciate that at current levels of inflation such claimants will wait 12 years under the new scheme before their next annual increase? How does he square that with his predecessor's claim that the new scheme would direct more help, more effectively, to those who need it most?
On housing benefit, will the Secretary of State confirm the estimate contained in the circular from his Department that one million claimants will lose all their entitlement to housing benefit — or, as the same thought was more delicately expressed in the circular:
There will be a reduction in caseload of a million"?Is the Secretary of State aware that the cut that he has just announced in the rent taper is the fourth cut that has been made by his Government since they invented housing benefit only four years ago? Does he not appreciate that, 182 every time that he sharpens the rent taper, he sharpens the poverty trap also, and that a family of four who receive family credit and housing benefit could lose 98p in benefit for every extra pound of earnings? That is a higher rate of marginal taxation than is paid by any Cabinet Minister. How does the right hon. Gentleman square that with his own speech last month on the importance of reducing dependency on benefits?Does the Secretary of State recognise that the exclusion of a fifth of rates from housing benefit will mean that a couple of million pensioners will now receive a rates demand for the first time in years? The Secretary of State assured the House that the figures that he announced for income support contained an extra £1.30 in compensation for such demands. The right hon. Gentleman misled the House. If the figures for income support that were published in the White Paper in 1985 are fully uprated in line with prices, it is plain that the allowance that he has announced today does not include £1.30 a week for rates demands, but a beggarly 30p a week. How does he square that with his party's pre-election pledge to protect claimants from the new liability in rates next year, and the poll tax in two years, to which his Government have exposed them?
Once again, the Secretary of State announced that pensions are to increase by no more than prices. Is he aware that, during the past year, earnings have increased twice as fast as prices? Will he confirm that, if the Government had preserved the link between pensions and earnings, the pension next April for a couple would be worth £14.60 more per week than he has just announced? If, as the Prime Minister keeps claiming, Britain has the fastest-growing economy in Europe, why has she given us the lowest pensions in Europe?
Finally, I turn to the biggest cut of all—the freezing of child benefit, which will affect 7 million mothers. At the last election, the Conservative party's manifesto stated:
Child benefit will continue to be paid as now".We were obviously intended to take that strictly literally. How can Conservative Members pose as the party of the family, when their Government have cut support for school meals, school transport and school clothes, and are now cutting the value of child benefit for the second time in three years? Will the Secretary of State deny press reports that he has set up yet another review of the future of child benefit? How can he square such a review with assurances, given a month before the election, by the then Minister for Social Security:child benefit will continue as a non-means-tested universal payment, paid to the mother tax free. There ought to be no question about that"?What has changed during the past six months to bring that into question, other than the fact that the election is safely out of the way?Today's statement is a package of broken promises and breadline benefits. As a result, next April millions of claimants who already have to survive on incomes that Conservative Members could not even begin to imagine will face still worse hardship. We shall therefore oppose every regulation that is designed to impose the cuts that have been announced today.
§ Mr. MooreMay I start by reminding the House of the facts, as opposed to the hyperbole that we have just heard? As opposed to a cut, the decisions on the new rates do not involve an overall cut. Quite the contrary — total spending on income-related benefits is now estimated to 183 be half a billion pounds higher than in the last published plans. I should repeat that total income-related benefits will be half a billion pounds higher. That is my answer to the first point made by the hon. Member for Livingston (Mr. Cook).
On pensions, Opposition Members do not seem to understand the difference between their election promises and the reality of what occurred to the real income of pensioners under the previous Labour Government and what has occurred since we took office. That is one of the reasons why the Labour party has failed three times in three general elections. The reality is that, whatever that Labour Government sought to do — I recognise that they sought to give during their last period in office by uprating the pension by whichever was the better of earnings or prices—Opposition Members do not seem to understand what that produced as a consequence of their appalling failure to manage the economy or to understand that pensioners have an income beyond that which is given to them by the state.
We are concerned with the real well-being of pensioners and not simply, as are Opposition Members, with electoral promises. In terms of real well-being, the pensioner saw a real improvement between 1974 and 1979, a real increase —[Interruption.] I accept that the facts hurt Opposition Members—of only 3 per cent. That 3 per cent. over five years was an average of 0.6 per cent. per year, which was appalling for pensioners. During the past six years, the figure has increased by 2.7 per cent. a year.
Despite the uprating in earnings during most of the period between 1974 and 1979, I acknowledge that pensioners' average net total income fell slightly as a proportion of the incomes of people in work.
§ Mr. Graham Allen (Nottingham, North)Did the Secretary of State not like the question?
§ Mr. MooreI am delighted with the question. Although during the Labour Government the position of pensioners' income relative to that of workers worsened, during the past six years it has increased to 60 per cent. The Opposition seem to forget that more than 70 per cent. of pensioners and 83 per cent. of those who have retired have other savings. Those savings were stolen during Labour's period of office. Their income from savings decreased by 3.4 per cent. a year, so the Government need no lectures about concern for the real well-being of pensioners, in contrast to simple Socialist pretence.
The hon. Gentleman asked me about the net effect. I thought that I had suggested an improvement on the technical annex illustrations in 1985, so that 4.9 million people in the overall reform package will either gain or not suffer losses. For another 3.7 million people, there will be transitional protection so that they do not suffer cash losses.
The hon. Gentleman asked me specifically about the disabled. Again, the Opposition should look more carefully at the overall package. There will be a net increase to the disabled of nearly £60 million. The hon. Gentleman referred especially to the severely disabled, 4,500 of whom receive the domestic assistance additional requirement, which averages £6.35 a week and which represents a total expenditure of £1.5 million. Under the proposed reforms, about 7,000 people will receive the special disability premium of £24.75 a week. That is a significant increase for that important section of the 184 community. However, as the hon. Gentleman rightly said, only about 250 people get more than £20 a week and very few get as much as £50 a week. I am conscious of that group. It is hard to arrange a reform structure to target that group, and my hon. Friend the Minister for Social Security and the Disabled is trying hard to find a way of targeting that tiny group. But, overall, the disabled will benefit from the reform structure.
The hon. Gentleman also asked me about housing benefit reforms. He was right to say—this has already been announced in the House — that the number of people who will receive housing benefit will decrease by 1 million, but hon. Members should remember that, during the Conservative Government, housing benefit expenditure has increased from £1.25 billion to more than £5 billion. We should see it in that context.
The hon. Gentleman was right to draw our attention to the change in the taper, because matters have changed since we published the illustrated technical annex to the White Paper. As the hon. Gentleman knows, we are moving to 100 per cent. protection against rent rises as opposed to the previous figure of 60 per cent. But that fact was known during the discussions on the technical annex Since then, there has been an increase in the number of beneficiaries to about 600,000 and an increase of 100,000 in the potential recipients of housing benefit under the arrangements for income support. There is also the important addition to income support rates of the 20 per cent. compensation, which clearly affects the housing benefit calculation. Just to put the hon. Gentleman's point in context, I should say that the net impact of the movement from 60 per cent. to 65 per cent. of net income will mean an additional loss to 100,000 people out of the 6 million people who receive housing benefit.
The hon. Gentleman also mentioned the 20 per cent. contribution. He knows that I would not try to mislead the House, and I hope that at some stage he will rephrase the words that he used. The commitment that was made before the election in relation to the 20 per cent. has been maintained. The hon. Gentleman might argue that overall income support is not as high as he would have wished, but the commitment made specifically in regard to the 20 per cent. uprating has been matched in full.
§ Sir Ian Gilmour (Chesham and Amersham)Can my right hon. Friend not see, especially in view of what the Chancellor told us this afternoon about the sound state of public finances, that his thoroughly insensitive treatment of child benefit is discrimination pure and simple against families with young children? Since, even before this afternoon, the real benefit of child benefit has fallen since 1979 and the real value of the married man's allowance and the single person's allowance has increased, how can my right hon. Friend justify such discrimination?
§ Mr. MooreI have great respect for my right hon. Friend. I hope that he listened to what I said and that he is not trapped, as many hon. Members on both sides of the House sometimes are, in a set of historical views. I said with great care that I was seeking to increase help to families with children. Three million children in the poorest families in the land — families on income support, low-income families and families on family credit —would not receive a penny piece from an increase in child benefit. I should have thought that my right hon. Friend, with his long-standing legitimate interest in trying 185 to assist the poorest, would have complimented me on securing increased assets of more than £300 million to spend on those people as opposed to the better off. I should have thought that he would have wanted me to target those people intelligently.
§ Mr. Jack Ashley (Stoke-on-Trent, South)The Secretary of State said that some Opposition Members do not understand the figures. Does he accept that the severe disability premium is a fine concept in theory but is in fact, according to what the Government intend to do, a grossly inadequate, generalised substitute for the individual help now given to severely disabled people who are trying to live at home and stay out of institutions? Those people will be worse off in future. Why is the Secretary of State discouraging severely disabled people from living at home and instead propelling them into institutions?
§ Mr. MooreI always listen carefully to the right hon. Gentleman. Indeed, I do more than listen. The Government have an outstanding record, as do other Governments, on the disabled. I hope that the right hon. Gentleman will remember what I said. The reform structure will increase help to the disabled —[Interruption.] Some of us in this House care about the disabled, as I know the right hon. Gentleman does. The reform structure will add £60 million of benefits to the disabled. The right hon. Gentleman rightly emphasised the small group of severely disabled people whom we would wish to help to stay in their homes. The severe disability premium will help many more people than the 4,500 who receive £6odd a week at present. We intend that more than 7,000 people will receive about £24.75 a week. I accept that a few people do not fit into the classic structure. Sir Roy Griffiths is advising us on how to help in this area, and I have asked my hon. Friend the Minister for Social Security and the Disabled to focus on those few hundred people because I recognise that they do not fit naturally into the system.
§ Dame Jill Knight (Birmingham, Edgbaston)Does not my right hon. Friend find it rather odd that the Opposition should have declared a fight on the question of reform of a system whereby wealthy people immediately draw—untaxed and unneeded — weekly benefits on the very same day that they may well be putting down their sons or daughters for Eton or Benenden? Is there any sense to be found in a system that pours public money on to people who have no need of it and denies extra benefit to those who have?
§ Mr. MooreMy hon. Friend is of course right. I find the debate very difficult. There are those who simply cannot get out of the past and understand that, in this announcement, we are focusing £320 million on families with children — 3 million-plus children. I fully understand people's attitude towards child benefit, but we are talking about a child benefit system that is still spending £4.5 billion on top of the amount that I am talking about, so I find it a very unusual set of priorities for the Opposition to focus on the degree to which we are trying to target—[Interruption.] I apologise; from a sedentary position I have been reminded that I did not properly answer one of the questions on child benefit put by the hon. Member for Livingston. He asked whether 186 there was a review in progress. I repeat that I have no specific proposals at present to change the nature of child benefit, but—I believe that this has been said from the Dispatch Box by almost every Minister of every Government since the benefit was introduced—in view of its cost and its ill-targeted nature, there is clearly a need to keep it constantly under review. I am beholden to do that.
§ Mr. Ronnie Fearn (Southport)If child benefit is to be frozen, is it not a fact that a great administrative cost will be involved? Is it also true that the Secretary of State now has a team working in the belief that child benefit will be abolished some time next year?
§ Mr. MooreNo. I have made the position on child benefit quite clear. I read clearly the precise words that I obviously intended to use. I am beholden under section 63 of the Social Security Act 1986 to look at the uprating of child benefit each year, but there is no statutory requirement. I have explained precisely why I believe that this year I have been able to target better on those families with children who are poorer. I have also clearly said that there is no review in progress.
§ Sir Brandon Rhys Williams (Kensington)May we warmly welcome the move to family credit, which is a big improvement on the old, defective family income supplement?
With regard to what my right hon. Friend has said on child benefit, does he not agree that what he is doing is incompatible with the policies for which the Prime Minister has won widespread approval — namely, her support for the family as an institution and her desire to reduce the tax burden on families and to encourage the British people to work and save for their independence? For the large majority of families who draw child benefit and pay more in income tax than they draw in benefit, a cut in the real value of child benefit constitutes an increase in their relative tax burden, targeted particularly against the mothers.
For the more than 2 million families who draw more in child benefit than they pay in income tax, is not my right hon. Friend simply forcing them down into dependency on means-tested benefits? That is also incompatible with the Prime Minister's injunction to people to work and save. Therefore, will my right hon. Friend undertake that, for a future year, he will keep an open mind on a completely fresh approach to taxation and benefit for families, so as to release the millions to work and save for their independence without breaking the rules?
§ Mr. MooreI start by thanking my hon. Friend for, so far, being one of the few who have noticed the importance and significance of the family credit. I imagine that family credit will be welcomed by all sides of the House. Although I respect his views, may I ask my hon. Friend to try to see what I have sought to achieve today — to secure additional resources of £320 million as opposed to the £120 million which a simple, indiscriminate uprating of child benefit would have secured. I believe that that suggests that I have done precisely what my hon. Friend would have wanted, to concentrate rare resources on the area of greatest need.
§ Mr. Frank Field (Birkenhead)Does the Secretary of State accept that the House is aware that the increased support of £320 million going to families is accompanied 187 by a real cost? By means-testing that support, he has increased the disincentive to work. Since, as we learned from a well-leaked speech just before the Tory conference, the aim of the Secretary of State is to increase the incentive to work, why has he done a U-turn so early in his career?
Secondly, can he help us to clarify whether there have been real cuts in the amount of money spent bringing in income support? Can he tell the House what would have been the cost of uprating the old system had it not been reformed by today's statement? How does that figure compare with the total sum being spent on the new system, minus 20 per cent. for rate support? Lastly, as he was very precise about the real value of pensions for old people, will he confirm that, in money terms, 4 million people will not be worse off as a result of this scheme, but that in real terms 4 million people face cuts?
§ Mr. MooreI will try to cover the points raised by the hon. Gentleman, because he always brings a good mind to these issues.
On his last point, there are obvious shifts when there is a structural reform as between—
§ Mr. Ernie Ross (Dundee, West)Cuts.
§ Mr. MooreNo—shifts. There are obvious shifts when there is a structural reform as between the benefits that go to different parts of the community. This was debated well before the election, and the electorate seemed to make a clear judgment on 11 June as to their view of the nature of the shifts.
With regard to the transitional system, 3.7 million people will be disadvantaged, whereas 4.9 million people will be advantaged or their position will stay unchanged. I am aware of the extent to which the hon. Member for Birkenhead wishes to consider the technical annex and I am sure that that study will produce more detailed debates at a later stage. With regard to that technical annex, the hon. Gentleman was trying to get me to give a precise figure on the relative moneys involved in the whole of income support as opposed to the offsetting 20 per cent. compensation for income support recipients against benefits.
The hon. Gentleman will be aware that the technical annex rates were illustrative. To demonstrate some of the difficulties involved in making the comparisons that the hon. Gentleman understandably wants, those illustrations covered 4.3 million people on income support. The revised illustration covers nearly half a million more people. Obviously, when we came to set the rate, we had to take account of the increase in claimant numbers, the rising costs and the continuing need to keep public spending under control. That is the perfectly proper judgment that I am seeking to express to the House today.
I believe that the hon. Member for Birkenhead (Mr. Field) wanted me to express the net product for income support recipients. For singles over 25, the net product will be 80p higher in real terms compared to the technical annex; for singles between the age of 18 and 24 the net product will be 50p higher in real terms; for couples the net product will be 30p higher in real terms; and for 16–17-year-olds the net product will be broadly unchanged.
With regard to income support — [Interruption.] Some hon. Members are seeking to ask more questions from a sedentary position, but I am seeking to answer the hon. Member for Birkenhead, who had the courtesy to 188 rise. With regard to the overall gross figures, I thought that I had made it clear at the beginning of my statement that there was half a billion net addition to public expenditure as a consequence of the changes.
As for the first question put by the hon. Member for Birkenhead, I do not regard this statement as in any way a U-turn. Quite the reverse: it is an attempt by some of us, in a confused and, I recognise, difficult structure, to ensure that we use rare resources to help those in genuine need.
§ Mr. SpeakerOrder. I appeal to the House not to repeat questions that have been asked before and not to ask a great many questions, because all these matters will be subject to later debate, and I am anxious to get as many Members in as possible.
§ Mr. Robert McCrindle (Brentwood and Ongar)Although I agree with my right hon. Friend that we must try to target benefits much more accurately, does he not agree that his announcement on child benefits runs the severe risk of increasing the poverty trap? If an unemployed man, receiving frozen child benefit and, in addition, some assistance through family support, were to take a job and lose that support, there would be a particular disincentive to seek a job in the first place.
§ Mr. MooreI do not deny for one moment my hon. Friend's recognition of one of the means-testing problems, but equally, looking at the overall context of the introduction of the reform package, he will be aware that, as a consequence of having net income throughout, we are reducing that overall marginal disincentive. Thus we are looking at an overall package that has improved, not decreased, the incentive to work.
§ Rev. Martin Smyth (Belfast, South)The Secretary of State said that pensioners felt that, when the Opposition were in government, they robbed them of the money. Does he recognise that, under the new package, some pensioners will say that they have lost because they have been thrifty and have saved? Does the right hon. Gentleman recognise further that, in adjusting finances, while we welcome an increase, there is something wrong with a system that makes anybody worse off in April 1988 than he is now?
§ Mr. MooreLet me repeat that those people will not be worse off, but with regard to the housing benefit taper —[Interruption.] We are back to the debate from a sedentary position that we had earlier about the relativity of the position of those people as opposed to the cash protection. The hon. Gentleman asked a specific question. about, I assume, the capital disregard. It has been doubled. but there is a taper between the £3,000 and £6,000 so that it affects those who, I accept, have been thrifty and have assets, but they are thus slightly better able to contend with the problems they face than those who have no such assets.
§ Mr. Michael Latham (Rutland and Melton)While it is obviously proper that state basic pensions should be uprated by the rate of inflation, could not we have done better than that this year, when the PSBR may fall to zero?
§ Mr. MooreBut I thought that I tried to draw the attention of my hon. Friend and the House to the fact that, as a consequence of sticking to our election manifesto promises, and of our ability to run the economy effectively, pensioners' real income, as opposed to that 189 part of it that they receive from the state, has improved beyond anything comparable when the Labour party was in office. That is the reality of what we have been able to achieve because of our policies. Therefore, I am not sure why we should seek to hurt pensioners by changing those policies.
§ Mr. Andrew F. Bennett (Denton and Reddish)Does not the Secretary of State agree that the decision of the Secretary of State for Education and Science to make it legal for schools to charge parents for things such as music lessons, field trips and so on will increase considerably the problems for families with children? Does not that make the right hon. Gentleman's decision not to increase child benefit particularly mean? Does he accept that the more he talks about targeting, the more he must come up with a solution to the problem of take-up among families on low incomes who do not apply for many of the means-tested benefits, so the attraction for the Government of such benefits is that many people do not apply for them? The big attraction of child benefit is that there is almost 100 per cent. take-up.
§ Mr. MooreOn the hon. Gentleman's final point, I recognise the problem of take-up, although we are expecting over 70 per cent., and I hope more, take-up of family credit. I hope that the hon. Gentleman will address the issue, which is how one seeks to help the poorest families with children. He does not seem to have accepted the reality, which is that by increasing child benefit, they receive not a penny piece more. Through the measures that I have announced today, those families will receive additional help of £320 million. Such help would have disappeared if we had used child benefit.
§ Sir William Clark (Croydon, South)Does not my right hon. Friend agree that the welfare payments since 1979 have kept well in front of inflation, and the Government should be congratulated thereon? Does he agree that, with regard to the retirement pension, the best service that any Government could give to the retired person is to keep inflation under strict control, which the Government have done? Does my right hon. Friend further agree that the first duty of any Government of any party is to make certain that taxpayers' money is distributed to those in need, and it is incumbent upon the Government to ensure that? Consequently, is it not economic madness to continue paying child benefit to all and sundry, irrespective of need? For example, a person on a 60 per cent. tax rate is receiving child benefit at the gross amount of over £18 a week, which is nonsense. Surely it would be much better to channel that money to people in need, to increase their benefits.
§ Mr. MooreMy hon. Friend is right to remind the House —although I made the position clear on child benefit—that somebody on a 60 per cent. tax rate has an £18 gain as opposed to someone who does not pay tax and gets £7.25. My hon. Friend is also right to remind the House that benefit expenditure has increased massively during the Government's period of office—in fact, by 43 per cent. in real terms. For taxpayers and the public, especially the old who do not have the opportunity to earn any more, the fear of inflation is the most destructive disease imaginable. The last thing we must do is to allow 190 those pensioners to suffer that fear again. We have protected their real income successfully, far better than the Opposition did when in power. We shall do that by sticking to the economic policies that will destroy inflation.
§ Mrs. Audrey Wise (Preston)Will the Minister admit that he is not taking adequate steps to improve the incomes of the poorest children, but he is using their poverty as an excuse for attacking children in general, by freezing child benefit? Does he not understand that, instead of playing off one section of children against the other, he should be diverting large national resources towards children in general? Furthermore, if the right hon. Gentleman is so interested in the poorest, why is he instituting the cash-limited social fund, which will give 70 per cent. loans, thus plunging the poorest further into debt?
§ Mr. MooreI have seldom heard such a bizarre description of the realities of trying to help those in need. Having said that, I do not think that I need make further comment on child benefit. The gross amount of £203 million that I announced today, which is planned for the social fund, looks reasonable alongside the reality of the expected level of expenditure on single payments this year, which is running at around £190 million. Hon. Members on both sides of the House should put into context that £200 million against the totality of income support of £8 billion. The social fund should be seen alongside the £8 billion of income support, when one sees the purpose for which it is intended—to help those in genuine difficulty and in crisis.
§ Mr. Robin Squire (Hornchurch)Does my right hon. Friend accept that one of the major concerns of those of us who support child benefit, and have done for some time, is that a switch to the means-tested benefits which, on the Government's best estimates, will not be collected by 40 per cent. of those entitled to do so, means only that many poor families will not get such assistance? Will my right hon. Friend consider instead discussions with the Chancellor of the Exchequer with a view to taxing benefit at the higher rates of taxation — in other words, for those who pay tax at more than the standard rate—if he wishes to make the distinction between the well off and the less well off in our society?
§ Mr. MooreI shall draw the attention of my right hon. Friend the Chancellor of the Exchequer to my hon. Friend's remarks, but, with regard to his first point, I imagine that he is seeking to encourage take-up. We do not want to deny the ability to target effectively towards those in real need, but we want to encourage far more to take up what they are entitled to.
§ Mr. Dafydd Wigley (Caernarfon)The Secretary of State mentioned £203 million for the social fund. Will he clarify the position of local DHSS offices, which may be requested to make a crisis loan to someone in considerable difficulty, who may already have loans which the local DHSS office feels he does not have the means to repay? Does the £203 million include provision for writing off old loans in those circumstances or converting them to a grant, or are the offices expected to refuse to make a further loan?
§ Mr. MooreWithin the figures, there are arrangements for local offices to be able to do so. We must make a set of assumptions about the extent to which some loans will 191 have to be written off. I should prefer it if I or one of my colleagues could go into further details with the hon. Gentleman when we debate the specifics. There will be not only a contingency fund at the centre but the ability to recognise that some loans will not be repaid. Enshrined in the figures is the assumption that not all loans will be repaid. That must be an assumption.
§ Mr. John Hannam (Exeter)Is my right hon. Friend aware that the majority of disabled people will benefit from the introduction of the new two-tier support system but, as he has acknowledged, is he not aware that a problem can develop with the severely disabled? Will he confirm that those who are at present severely disabled will continue to receive the income support that they receive at present? Will he look carefully at finding a method to help those who are severely disabled after April next year, since otherwise the process of bringing them out into the community will be reversed and they will go back into institutionalised care?
§ Mr. MooreMy hon. Friend is quite right to raise that point. I should make it clear that they will be protected in real terms. That is essential and I have tried to make it clear that we want to target the very few—they are very few—as opposed to the vast majority who will benefit from the changes. I shall consider the premiums regularly in the light of the surveys that are taking place. I am delighted to say in public to my hon. Friend and other hon. Members who have argued so vehemently for the disabled over the years that they should be proud that the share of national wealth for the disabled has increased by 50 per cent. since 1979. That is a very praiseworthy achievement.
§ Mrs. Alice Mahon (Halifax)Does the right hon. Gentleman deny that hundreds of thousands of pensioners now receiving a works or occupational pension will be worse off in terms of housing benefit if they pay rent and rates?
§ Mr. MooreThere will be some richer people who will suffer because of the way in which the disregard works. There cannot be a reduction in the housing benefit caseload from 7 million to 6 million without some of the better-off, including pensioners, suffering as a consequence and losing some of their benefits.
§ Mr. Nicholas Winterton (Macclesfield)Will my right hon. Friend accept that concern about the impact of freezing child benefit is not felt on this side of the House only by the so-called "wets"? Following the excellent question of my hon. Friend the Member for Exeter (Mr. Hannam), will he give a categoric assurance that there will be no loss of income for the severely handicapped, even those who register as severely handicapped, after 1 April 1988?
§ Mr. MooreObviously, I can repeat my reassurance about those who are already registered. Clearly, those who register after 1 April 1988 will come under the scope of the new system, but we must find a way of targeting more effectively those few people whom we have not been able to recognise within the system.
With regard to my hon. Friend's previous question, I recognise his dryness and his long history of support for child benefit. [Interruption.] He is a genuinely honourable friend and he considers these matters rationally and 192 objectively. He will be pleased that we have been able to set aside additional resources for families with children. I know that he welcomes that.
§ Mr. Alastair Darling (Edinburgh, Central)Will the Secretary of State accept that many of the increases that he has announced this afternoon will be funded by removing many people from the protection of benefit? Both the changes in tapers in the housing benefit. regulations and changing the method by which single payments are made will pay for the increases. Does he not accept that people will be paying for the increases and that, if he wants to help those on low incomes, one of the best routes would be to encourage the Chancellor of the Exchequer to change the income tax regime so that low income taxes are not provided for by the expedient of cutting the amount of money used on social expenditure, such as the benefits that we have discussed this afternoon?
§ Mr. MooreFirst of all, I said earlier that we are in a process of structural reform and change. However, I also said—I wonder if the hon. Gentleman heard me—that the net product of these changes is £500 million additional public expenditure, so it is not a matter of the Chancellor of the Exchequer saving. He is funding £500 million additional net public expenditure. However, I will draw the hon. Gentleman's tax suggestions to the attention of the Chancellor of the Exchequer.
§ Mr. Tim Yeo (Suffolk, South)I welcome the concern of my right hon. Friend in targeting help among the poorest families. In the light of the very important contribution which child benefit has made to helping those families, will he undertake to monitor the consequences of the proposals which he has put forward today?
§ Mr. MooreOf course, like any Secretary of State in my position, I shall be considering carefully a budgetary area that still spends £4.5 billion. I have a duty to review that constantly and I will continue to do so.
§ Mrs. Margaret Ewing (Moray)Given the Secretary of State's repeated emphasis on helping those most in need, how can he reconcile today's statement and the Government's overall strategy with the reality of the continuing rise, as shown by statistics, in the number of people living in poverty? Is he aware, for example, that one recent survey in Scotland showed that more than one third of Scots lived on or below the poverty line, as defined by his own Department? Will the right hon. Gentleman therefore tell the House how many people will be lifted out of that situation by today's statement? If he cannot give the figures now, will he record them in the Official Report as soon as possible?
§ Mr. MooreFirst, just to correct the record, my Department does not have such a definition. There is a set of definitions that some people outside use with regard to the relativity of supplementary benefit. One of the absurdities about this debate in the national context is that by reducing supplementary benefits I could theoretically reduce poverty. That is complete nonsense. I ask the hon. Lady to recognise, as do most people who study our country, that while we recognise the value of targeting those in genuine need, there has been a relative improvement in the well-being of all our people.
§ Mr. Tim Janman (Thurrock)May I first inform my right hon. Friend that, at the last general election, I did not gain a seat from the Labour party by preaching messages 193 of increasing public expenditure, taxation, inflation or blanket benefits that go to the whole population, irrespective of need? I took the seat from Labour by standing on the Government's record of reducing taxation and inflation, and of pinpointing the expenditure on areas of real need. In that context, and given the statement made by my right hon. Friend the Secretary of State on child benefit, which I and many of my hon. Friends warmly welcome, will he give us an assurance that the Government will carry out a review with the specific objective of examining changing this appalling blanket benefit to one that can be effectively targeted on those really in need?
§ Mr. MooreI am interested in my hon. Friend's support, especially his concern to target benefits on those in need. I made the position clear earlier: I said that, in view of its cost and its ill-targeted nature, we obviously have a responsibility to keep child benefit constantly under review, and we shall continue to do that.
§ Mr. SpeakerOrder. I am bound to have regard to the large number of right hon. and hon. Members who wish to take part in the subsequent debate. I shall allow a further two questions from each side, and then we must move on.
§ Mr. John Fraser (Norwood)Since, historically, the tax-free child benefit has taken the place of child tax allowances, is not the effect of the Secretary of State's announcement to tax some families with children in order to help other families with children; whereas, in the Budget next March, under the Rooker-Wise amendment, those whose tax allowances are not related to having children will automatically have their tax allowances increased? Would it not be right to spread the burden among all taxpayers instead of among only families with children?
Secondly, how on earth does the Secretary of State work out that a woman in poverty can have a child for £85?
§ Mr. MooreThe hon. Member seems to ignore the fact that the proposals are coincidental with a major restructuring of the whole social security system. Consequential upon that restructuring, an extra £220 million will go to families with children through family credit—as opposed to what happens under the present family income supplement system — and an extra £100 million will go to families with children in income support. It is the net product of the ability to put an extra £320 million into the system, as opposed to the £120 million that could have gone into child benefit uprating, that denies the thrust of the hon. Gentleman's remarks.
§ Mr. Tony Marlow (Northampton, North)My right hon. Friend has answered one question about his decision on child benefit, but he has not answered the main question. Looked at overall, if child benefit is being frozen at the same time as—hopefully—my right hon. Friend the Chancellor reduces the rates of taxation, among the taxpaying public there will be a transfer of wealth from those with children to those without them. As a representative of the party of the family, my right hon. Friend will, I am sure, agree that that would be nonsense. What discussions has my right hon. Friend had with the Chancellor to reintroduce the child tax allowance?
§ Mr. MooreI know of my hon. Friend's deep interest in this matter. He will be aware that, as far as this statement is concerned, I am adding half a billion pounds net to public expenditure. Clearly, I must have had discussions with the Chancellor of the Exchequer to be able to do that.
Equally, I know that my hon. Friend will be aware that, whatever the Chancellor does in his Budget and tax judgment, I can put £220 million more into helping families with children than I would have been able to do with an increase in child benefit, and those specific families would not have benefited by one penny from a child benefit increase.
§ Mr. Nigel Griffiths (Edinburgh, South)Will the Secretary of State confirm to someone like me, who worked for an organisation for the disabled for eight years prior to coming to this House, that many organisations for the disabled may find his statement very misleading? In particular, they will find misleading his claim that millions of disabled people will not lose out from April as new claimants. Will he confirm that among the groups that will lose out are new claimants for kidney dialysis who can presently claim £10.85 a week; new claimants who are blind and presently get the non-householder addition of £7.70 which is to be abolished; and new claimants who are incontinent and elderly who at the moment can claim £11.05 and more a week and who will not be able to claim after April? Will he also confirm that people who because of incontinence or disability require additional clothing and who receive up to £10 a week now will not be eligible after April? Not only do those lost benefits total £45 a week or more, but existing claimants will lose as well because those benefits will not be uprated.
§ Mr. MooreI compliment the hon. Gentleman on his ability to put many reasonable points. He will obviously expect me and my hon. Friend the Minister for Social Security and the Disabled to stay in close touch with the disabled lobby about these matters. [AN HON. MEMBER: "Is he right or wrong?"] He was wrong not to have heard what I said twice before, that new claimants would be covered under the new system. I referred to that particularly. I know that the disabled organisations will not have made that mistake and will have noticed that there is a substantial overall increase for the disabled from this restructuring. There is no question of that not being accepted by those organisations.
I assure the hon. Gentleman and the House that I shall keep closely in touch with the nature of the premium arrangements in this area. I shall keep closely in touch with my hon. Friend the Minister for Social Security and for the Disabled, because I am concerned to ensure that the reality of the additional money that we are putting into this area is received by the disabled.
§ Mr. Neil Hamilton (Tatton)Does my right hon. Friend accept that probably as many as 75 per cent. of families in receipt of child benefit pay income tax as well? Child benefit is expensive to dish out and if we are to solve the continuing problems of the poverty trap and make substantial increases in tax thresholds and reduce income tax rates, we must not only target benefits more distinctly, but remove altogether the universality of benefits such as child benefit. If my right hon. Friend is not already contemplating a review of that position, he should be.
§ Mr. MooreI have heard very different advice from different parts of the House on this issue, but I shall stand where I was before by saying that we are not in the midst of a review, but that I have a statutory duty to review this issue each year.
§ Mr. SpeakerI will bear in mind those hon. Members that I have not been able to call.
§ Mr. Dennis Skinner (Bolsover)So I have got two in the bank.
§ Mr. SpeakerWell, there will be plenty of other opportunities, and I shall do my best to ensure that everyone is fairly treated.
| Following is the schedule of main proposed rates: | ||
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| CONTRIBUTORY BENEFITS | ||
| Retirement Pension | ||
| On own insurance—Category A or B | 39.50 | 41.15 |
| On spouse's insurance—Category B (lower) | 23.75 | 24.75 |
| Non-contributory— | ||
| Category C or D | 23.75 | 24.75 |
| Category C (lower) | 14.20 | 14.80 |
| Additional pension, guaranteed minimum pension and graduated retirement benefit | Increased by 4.2 per cent. | |
| Graduated retirement benefit (unit) | 5.17p | 5.39p |
| Increments to basic and additional pension, guaranteed minimum pension, and graduated retirement benefit | Increased by 4.2 per cent. | |
| Prescribed maximum amount of additional pension (also paid with widows' and invalidity benefits) (from 6 April) | 29.11 | 34.75 |
| Addition at age 80 | .25 | .25 |
| Invalidity Benefit | ||
| Invalidity pension | 39.50 | 41.15 |
| Invalidity allowance | ||
| higher rate | 8.30 | 8.65 |
| middle rate | 5.30 | 5.50 |
| lower rate | 2.65 | 2.75 |
| Widow's Benefit | ||
| Widow's allowance | 55.35 | 57.65 |
| Widow's payment (lump sum) | — | 1,000.00 |
| Widowed mother's allowance | 39.50 | 41.15 |
| Widow's pension | ||
| —standard rate | 39.50 | 41.15 |
| —age related | ||
| 54 (49) | 36.74 | 38.27 |
| 53 (48) | 33.97 | 35.39 |
| 52 (47) | 31.21 | 32.51 |
| 51 (46) | 28.44 | 29.63 |
| 50 (45) | 25.68 | 26.75 |
| 49 (44) | 22.91 | 23.87 |
| 48 (43) | 20.15 | 20.99 |
| 47 (42) | 17.38 | 18.11 |
| 46 (41) | 14.62 | 15.23 |
| 45 (40) | 11.85 | 12.35 |
§ Note: For entitlements arising before 11 April 1988 refer to age points shown in brackets.
§ Unemployment Benefit
| Over pension age | 39.50 | 41.15 |
| Under pension age | 31.45 | 32.75 |
| Occupational pension abatement | 35.00 | 35.00 |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| Sickness Benefit | ||
| Over pension age | 37.85 | 39.45 |
| Under pension age | 30.05 | 31.30 |
| Maternity Allowance | 30.05 | 31.30 |
| Statutory Sick Pay | ||
| Earnings threshold | 39.00 | 41.00 |
| Standard rate threshold | 76.50 | 79.50 |
| Lower rate | 32.85 | 34.25 |
| Standard rate | 47.20 | 49.20 |
| Statutory Maternity Pay | ||
| Earnings threshold | 39.00 | 41.00 |
| Lower rate | 32.85 | 34.25 |
| Industrial Death Benefit | ||
| Widow's Pension | ||
| first 26 weeks | 55.35 | 57.65 |
| higher permanent rate 1 | 40.05 | 41.15 |
| lower permanent rate | 11.85 | 12.35 |
| 1 Subject to Parliamentary approval of the Social Security Bill 1987 | ||
| Industrial Disablement Pension | ||
| 18 and over, or under 18 with dependants | ||
| 100 per cent. | 64.50 | 67.20 |
| 90 per cent. | 58.05 | 60.48 |
| 80 per cent. | 51.60 | 53.76 |
| 70 per cent. | 45.15 | 47.04 |
| 60 per cent. | 38.70 | 40.32 |
| 50 per cent. | 32.25 | 33.60 |
| 40 per cent. | 25.80 | 26.88 |
| 30 per cent. | 19.35 | 20.16 |
| 20 per cent. | 12.90 | 13.44 |
| Under 18 | ||
| 100 per cent. | 39.50 | 41.15 |
| 90 per cent. | 35.55 | 37.04 |
| 80 per cent. | 31.60 | 32.92 |
| 70 per cent. | 27.65 | 28.81 |
| 60 per cent. | 23.70 | 24.69 |
| 50 per cent. | 19.75 | 20.58 |
| 40 per cent. | 15.80 | 16.46 |
| 30 per cent. | 11.85 | 12.35 |
| 20 per cent. | 7.90 | 8.23 |
| Maximum life gratuity (lump sum) | 4,290.00 | 4,470.00 |
| Unemployability Supplement | 39.50 | 41.15 |
| plus where appropriate an increase for early incapacity at | ||
| higher rate | 8.30 | 8.65 |
| middle rate | 5.30 | 5.50 |
| lower rate | 2.65 | 2.75 |
| Maximum reduced earnings allowance | 25.80 | 26.88 |
| Constant attendance allowance | ||
| part-time rate | 12.90 | 13.45 |
| normal maximum | 25.80 | 26.90 |
| intermediate rate | 38.70 | 40.35 |
| exceptional rate | 51.60 | 53.80 |
| Exceptionally severe disablement allowance | 25.80 | 26.90 |
| Guardian's Allowance—each child | 8.05 | 8.40 |
| Child's Special Allowance | 8.05 | 8.40 |
| NON-CONTRIBUTORY BENEFITS | ||
| Child Benefit—each child | 7.25 | 7.25 |
| One-parent Benefit | 4.70 | 4.90 |
| Invalid care allowance | 23.75 | 24.75 |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| Severe Disablement Allowance | 23.75 | 24.75 |
| Attendance Allowance | ||
| higher rate | 31.60 | 32.95 |
| lower rate | 21.10 | 22.00 |
| Mobility Allowance | 22.10 | 23.05 |
| War Pensions | ||
| Disablement pension (100% rates) | ||
| private or equivalent | 64.50 | 67.20 |
| officer (£ per annum) | 3,363.00 | 3,504.00 |
| Age allowances | ||
| 40%–50% | 4.50 | 4.70 |
| over 50% but not over 70% | 7.00 | 7.30 |
| over 70% but not over 90% | 10.05 | 10.45 |
| over 90% | 14.00 | 14.60 |
| Disablement gratuity (£ per annum) | ||
| —base figures for | ||
| specified minor injury | 4,290.00 | 4,470.00 |
| unspecified minor injury | 2,359.50 | 2,458.50 |
| Unemployability allowance | ||
| personal allowance | 41.95 | 43.70 |
| adult dependency addition | 23.75 | 24.75 |
| addition for each child | 8.05 | 8.40 |
| Invalidity allowance | ||
| higher rate | 8.30 | 8.65 |
| middle rate | 5.30 | 5.50 |
| lower rate | 2.65 | 2.75 |
| Constant attendance allowance | ||
| part-time rate | 12.90 | 13.45 |
| normal maximum rate | 25.80 | 26.90 |
| intermediate rate | 38.70 | 40.35 |
| exceptional rate | 51.60 | 53.80 |
| Comforts allowance | ||
| higher rate | 11.10 | 11.60 |
| lower rate | 5.55 | 5.80 |
| Mobility supplement | 24.55 | 25.60 |
| Allowance for lowered standard of occupation (maximum) | 25.80 | 26.88 |
| Exceptionally severe disablement allowance | 25.80 | 26.90 |
| Severe disablement occupational allowance | 12.90 | 13.45 |
| Clothing allowance (per annum) | ||
| higher rate | 88.00 | 92.00 |
| lower rate | 56.00 | 58.00 |
| Education allowance (per annum) | 120.00 | 120.00 |
| War widows' pension (private) | ||
| widow | 51.35 | 53.50 |
| childless widow under age 40 | 11.85 | 12.35 |
| age allowance | ||
| —age 65 to 69 | 5.50 | 5.75 |
| —age 70 to 79 | 11.00 | 11.50 |
| —age 80 and over | 13.85 | 14.45 |
| child addition | 11.60 | 12.00 |
| addition for motherless or fatherless child | 12.70 | 13.15 |
| Unmarried dependant living as wife | 49.30 | 51.45 |
| Rent allowance (maximum) | 19.55 | 20.35 |
| Adult orphan's pension | 39.50 | 41.15 |
| Widower's pension (maximum) | 51.35 | 53.50 |
| Pneumoconiosis, byssinosis, workman's compensation (supplementation) and other schemes | ||
| Total disablement allowance and major incapacity allowance (maximum) | 64.50 | 67.20 |
| Partial disablement allowance | 23.75 | 24.75 |
| Unemployability supplement | 39.50 | 41.15 |
| plus where appropriate an increase for early incapacity at | ||
| higher rate | 8.30 | 8.65 |
| middle rate | 5.30 | 5.50 |
| lower rate | 2.65 | 2.75 |
| Constant attendance allowance |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| part-time rate | 12.90 | 13.45 |
| normal maximum rate | 25.80 | 26.90 |
| intermediate rate | 38.70 | 40.35 |
| exceptional rate | 51.60 | 53.80 |
| Exceptionally severe disablement allowance | 25.80 | 26.90 |
| Lesser incapacity allowance | ||
| based on loss of earnings over | 31.60 | 32.95 |
| maximum rate of allowance | 23.75 | 24.75 |
| COMMON PROVISIONS | ||
| Dependency Additions—Adults | ||
| For spouse or person looking after children, with:— | ||
| Retirement pension on own insurance, invalidity pension, unemployability supplement and, if beneficiary over pension age, unemployment benefit | 23.75 | 24.75 |
| Non-contributory retirement pension, invalid care allowance and severe disablement allowance | 14.20 | 14.80 |
| Sickness benefit if beneficiary over pension age | 22.70 | 23.65 |
| Unemployment benefit | 19.40 | 20.20 |
| Sickness benefit, maternity allowance | 18.60 | 19.40 |
| Dependency Additions—Children | ||
| For each child with: Retirement pension, widows benefit, industrial death benefit, invalidity benefit, invalid care allowance, severe disablement allowance, unemployability supplement and, if beneficiary over pension age, with sickness or unemployment benefit | 8.05 | 8.40 |
| Earnings Rules | ||
| Retirement pension | 75.00 | 75.00 |
| Invalid care allowance | 12.00 | 12.00 |
| Unemployment benefit (daily rate) | 2.00 | 2.00 |
| Therapeutic earnings limit | 26.00 | 27.00 |
| Industrial injuries unemployability supplement permitted earnings level (annual amount) | 1,352.00 | 1,404.00 |
| War pensioners' unemployability supplement permitted earnings level (annual amount) | 1,352.00 | 1,404.00 |
| Adult dependency additions with:— | ||
| Sickness benefit if claimant is | ||
| under pension age | 18.60 | 19.40 |
| over pension age | 22.70 | 23.65 |
| Maternity allowance | 18.60 | 19.40 |
| Unemployment benefit if claimant is | ||
| under pension age | 19.40 | 20.20 |
| over pension age | 23.75 | 24.75 |
| Retirement pension, invalidity pension, severe disablement allowance and unemployability supplement where dependant: | ||
| is living with the claimant | 31.45 | 32.75 |
| still qualifies for the tapered earnings rule | 45.09 | 45.09 |
| Retirement pension, invalidity pension and unemployability supplement where dependant not living with claimant | 23.75 | 24.75 |
| Severe disablement allowance where dependant not living with claimant | 14.20 | 14.80 |
| Invalid care allowance | 14.20 | 14.80 |
| Child dependency additions— |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| Level at which child additions payable with long-term benefits are affected by earnings of claimant's spouse or partner | ||
| first child | 85.00 | 90.00 |
| each subsequent child | 10.00 | 11.00 |
| Hospital downrating | ||
| 20% rate | 7.90 | 8.25 |
| 40% rate | 15.80 | 16.50 |
| INCOME-RELATED BENEFITS | ||
| Provisions common to all three benefits | ||
| Capital | ||
| upper limit | — | 6,000.00 |
| amount disregarded | — | 3,000.00 |
| child's limit | — | 3,000.00 |
| Tariff Income | ||
| £1 for each complete £250 or part thereof between amount of capital disregarded and capital upper limit | ||
| Income Support and Housing Benefit—Common Provisions | ||
| Personal allowances | ||
| Single | ||
| —under age 18 | — | 19.40 |
| —age 18–24 | — | 26.05 |
| —age 25 or over | — | 33.40 |
| Lone parent | ||
| —under age 18 | — | 19.40 |
| —age 18 or over | — | 33.40 |
| Couple | ||
| —both under age 18 | — | 38.80 |
| —at least one age 18 or over | — | 51.45 |
| Dependent children | ||
| —under age 11 | — | 10.75 |
| —age 11–15 | — | 16.10 |
| —age 16–17 | — | 19.40 |
| —age 18 | — | 26.05 |
| Premiums | ||
| Family | — | 6.15 |
| Lone parent (income support) | — | 3.70 |
| Lone parent (housing benefit) | — | 8.60 |
| Pensioner | ||
| —single | — | 10.65 |
| —couple | — | 16.25 |
| Pensioner (higher) | ||
| —single | — | 13.05 |
| —couple | — | 18.60 |
| Disability | ||
| —single | — | 13.05 |
| —couple | — | 18.60 |
| Severe disability | ||
| —single | — | 24.75 |
| —couple (one disabled) | — | 24.75 |
| —couple (both disabled) | — | 49.50 |
| Disabled child | — | 6.15 |
| Income Support | ||
| Maximum amounts for accommodation and meals in | ||
| a. Ordinary board and lodging | between £45 and £70 | between £45 and £70 |
| b. Hostels | 70.00 | 70.00 |
| Maximum special increase (a and b) | 17.50 | 17.50 |
| c. Residential care homes | ||
| —old age | 130.00 | 130.00 |
| —very dependent elderly | 145.00 | 155.00 |
| —mental disorder (not handicap) | 130.00 | 130.00 |
| —drug/alcohol dependence | 130.00 | 130.00 |
| —mental handicap | 150.00 | 160.00 |
| —physical disablement |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| —(under pension age) | 190.00 | 190.00 |
| —(over pension age) | 130.00 | 130.00 |
| —others | 130.00 | 130.00 |
| —maximum Greater London increase | 17.50 | 17.50 |
| d. Nursing homes | ||
| —mental disorder (not handicap) | 180.00 | 185.00 |
| —drug/alcohol dependence | 180.00 | 185.00 |
| —mental handicap | 200.00 | 200.00 |
| —terminal illness | 230.00 | 230.00 |
| —physical disablement | ||
| —(under pension age) | 230.00 | 230.00 |
| —(over pension age) | 175.00 | 185.00 |
| —others (including elderly) | 175.00 | 185.00 |
| —maximum Greater London | ||
| increase 17.50 | 17.50 | |
| Allowances for personal expenses for claimants in Board and lodging accommodation and hostels | ||
| Lower | ||
| —single | 10.00 | 10.30 |
| —couple | 20.00 | 20.60 |
| Higher | ||
| —single | 11.15 | 11.50 |
| —couple | 22.30 | 23.00 |
| Dependent children | ||
| —under age 11 | 3.35 | 3.45 |
| —age 11–15 | 5.15 | 5.30 |
| —age 16–17 | 6.00 | 6.20 |
| —age 18 | 10.00 | 10.30 |
| Private and voluntary residential care and nursing homes | 9.25 | 9.55 |
| Dependent children allowances above apply except —age 18 | 9.25 | 9.55 |
| Hospital and local authority (Part III) accommodation | 7.90 | 8.25 |
| The Polish home Ilford Park | 11.15 | 11.50 |
| Housing costs | ||
| Deduction for non-dependants aged 18 or over and in remunerative work | 8.20 | |
| others, aged 18 or over or on income support and over 25 | 3.45 | |
| Low earnings threshold | 49.20 | |
| Deductions for direct payment of fuel debt | ||
| 5% rate | 1.70 | |
| 10% rate | 3.35 | |
| Arrears of housing costs | 1.70 | |
| Reduction in benefit for strikers | 17.00 | 17.70 |
| Disregards | ||
| Standard earnings | 5.00 | |
| Higher earnings | 15.00 | |
| War pensions | 5.00 | |
| Voluntary and charitable payments | 5.00 | |
| Students covenanted income | 5.00 | |
| Income from boarders | 35.00 | |
| Expenses for subtenants | ||
| Furnished or unfurnished | 4.00 | |
| Where heating is included, additional | 6.70 | |
| Housing Benefit | ||
| Amenity deductions for | ||
| heating | 6.70 | |
| hot water | 0.80 | |
| lighting | 0.50 | |
| cooking | 0.80 |
| Weekly rates unless otherwise shown | ||
| Old rates 1987 | New rates 1988 | |
| all fuel | 8.80 | |
| Non-dependant deductions | ||
| Rent rebates and allowances aged 18 or over and in remunerative work | 8.20 | |
| others, aged 18 or over or on income support and over 25 | 3.45 | |
| Rate rebates, aged 18 or over | 3.00 | |
| Low earnings threshold | 49.20 | |
| Expenses for subtenants | ||
| Furnished or unfurnished | 4.00 | |
| Where heating is included, additional | 6.70 | |
| Earnings disregards | ||
| where disability premium awarded | 15.00 | |
| various specified employments | 15.00 | |
| lone parent | 15.00 | |
| one of a couple in employment | 10.00 | |
| single claimant | 5.00 | |
| Other income disregards charitable or voluntary payments | 5.00 | |
| war pensions | 5.00 | |
| students covenanted income | 5.00 | |
| Family Credit | ||
| Adult Credit | 32.10 | |
| Child Credit | ||
| under age 11 | 6.05 | |
| age 11–15 | 11.40 | |
| age 16–17 | 14.70 | |
| age 18 | 21.35 | |
| Capital | ||
| upper limit | 6,000.00 | |
| amount disregarded | 3,000.00 | |
| child's limit | 3,000.00 | |
| Tariff Income | ||
| £1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit | ||
| Disregards | ||
| war pensions | 5.00 | |
| voluntary and charitable payments | 5.00 | |
| students covenanted income | 5.00 | |
| Expenses for subtenants | ||
| furnished or unfurnished | 4.00 | |
| where heating is included, additional | 6.70 | |
| Applicable amount (ie taper threshold level) | 51.45 | |
| Maternity Payment | 80.00 | 85.00 |