§ The Secretary of State for Social Security (Mr. Tony Newton)
With permission, Mr. Speaker, I wish to make a statement about the uprating of social security benefits. This will take place for most benefits in the first full week of the tax year—that is to say, the week beginning 8 April. The necessary statutory instruments applying both to Great Britain and Northern Ireland will in due course be laid before the House for debate.
As is customary, I will deal first with the main national insurance benefits, including most notably the retirement pension which now goes to some 10 million people. The basis for the uprating is the latest available figure for the increase in the retail prices index: the 10.9 per cent. rise recorded for the year to September 1990.
The retirement pension will accordingly rise by £5.10 per week for a single person, from £46.90 to £52, and by £8.15 per week for a couple from £75.10 to £83.25. This increase alone will cost about £2.3 billion, underlining once again our clear and continuing commitment to maintaining the pension's value.
Unemployment benefit will rise from £37.35 to £41.40 for a single person and from £60.40 to £66.95 for a couple; and sickness benefit from £35.70 to £39.60 for a single person and from £57.80 to £64.10 for a couple.
National insurance invalidity benefit will go up in line with the retirement pension. There will also be a 10.9 per cent. increase in all other non-income-related benefits for disabled people or those who are sick for a long period—severe disablement allowance, industrial injuries benefits, war disablement pensions, invalid care allowance, mobility allowance and attendance allowance. The 615,000 people now receiving mobility allowance will see it rise by nearly £3 per week, to £29.10. For the 750,000 people now receiving attendance allowance, there will be an increase of £2.75, to £27.80 in the lower rate, and of over £4, to £41.65 in the higher rate.
The age-related additions known as invalidity allowances, currently confined to those receiving invalidity benefit but being extended in December to give up to £10 per week extra to some 100,000 people receiving the non-contributory severe disablement allowance, will rise further in April to a maximum of £11.10.
Similarly, 10.9 per cent. increases will take place in widows pensions including widowed mothers allowance, war pensions, and all public service pensions, together with the special Ministry of Defence payment to the pre-1973 war widows, which my right hon. Friend the Secretary of State for Defence will raise from £40 to £44.36 per week.
For the income-related benefits—income support, housing benefit, community charge benefit and family credit—the uprating will be based, again as usual, on the RPI less housing costs. This is because, for those receiving these benefits, help with rent is available through housing benefit or help with mortgage interest through income support itself.
This index rose by 8.1 per cent. in the year to September 1990, and the relevant benefit rates, with one exception to which I will come later, will go up accordingly. Thus, income support for a single person under 25 will go from £28.80 to £31.15, the rate for an older single person from £36.70 to £39.65, and the higher pensioner premium from 349 £17.05 to £18.45. For a family on income support with two children aged 10 and 12, benefit will rise by £7.75 per week to £103.30, plus full mortgage interest if they have been on benefit for more than 16 weeks, or full rent if they are tenants, and 80 per cent. of their community charge.
As the House is aware, statutory sick pay and statutory maternity pay are both paid through employers. The link between the two schemes is frankly somewhat artificial, resting more on considerations of administrative convenience than on consistency in either structure or purpose. I have concluded that the sensible development of policy in both fields would now be better served by treating them separately.
First, I propose to build on the restructuring of SSP undertaken last year, taking account of the considerations that I outlined to the House at that time. Occupational sick pay schemes have grown to such an extent that more than 90 per cent. of the work force now work for employers providing this cover, reflecting what is in my view a proper acceptance by employers of a much greater responsibility to cover short-term sickness among their employees. This in turn means that, for the great majority of those in work, the rates of SSP bear little or no relation to the amount that they actually receive when sick. In those circumstances, it is better for additional resources from the taxpayer to be concentrated more clearly on those least likely to have occupational provision, or in other areas of social security for which employers cannot be expected to provide.
Therefore, I propose to uprate fully, from £39.25 to £43.50, the lower of the two SSP rates, which goes to the lower-paid employees who are generally less likely to be covered by occupational schemes to extend the coverage of this rate across the whole range of earnings bands within which employers pay lower rates of contributions, which currently covers employees earning less than £175 a week, and to leave the higher rate of SSP unchanged at £52.50. These changes will reduce expenditure by about £100 million in 1991–92, while fully protecting the lower-paid and with little or no effect for the great majority of others.
I intend also to adjust the arrangements under which employers are fully reimbursed, by deduction from their remittances of national insurance contributions, for the whole of their expenditure on SSP plus an amount to cover payments of such contributions on SSP itself. I propose instead to move to 80 per cent. reimbursement. This will reduce public expenditure in this area by about £180 million in 1991–92, in addition to the £100 million to which I have just referred. At the same time, however, I propose to make some offsetting reductions in the rates of employers' national insurance contributions. Full details will be given in the normal statement about contributions which is made at the time of the Chancellor's autumn statement, but I can say now that my intention is to reduce each of the lower rates—those which currently apply in respect of employees earning up to £175—by at least one quarter of a per cent. and to reduce the standard rate by 0.05 per cent. These changes will reduce employers' contributions by over £200 million, and take account also of the compensation employers currently receive for contributions paid on SSP itself. They will go a considerable way in helping employers, particularly 350 smaller employers who tend to have lower-paid employees, to meet any extra costs which might otherwise arise from the new arrangements. Legislation will be required.
The arrangements for statutory maternity pay, where occupational cover is very much less extensive, will be left entirely unchanged except for any minor modifications needed in consequence of the separation from SSP. That separation, however, enables me to go further on the standard rate of statutory maternity pay than I have proposed for SSP. I intend not only to increase it by the RPI, which would take it from £39.25 to £43.50, but by a further £1 a week to £44.50. An additional £1 will also be added to the national insurance maternity allowance, taking it from £35.70 to £40.60 instead of the £3960 which an RPI uprating alone would have indicated. There will thus be a real increase in benefit for some 315,000 mothers-to-be in the course of a year, at a cost of about £5 million
. Apart from this increase in maternity pay, my proposals on SSP, which I believe strike a sensible new balance in the partnership between the state and employers which has developed in this field, open the way to a number of other important improvements, both small and large.
In turning to those improvements, I should make one point clearly to the House—that support for families does not relate only to families with children, important though that is. It must acknowledge responsibilities towards the old as well as the young, and not least the particular pressures that families can face arising from disability, or the need for special care. In framing my proposals I have sought to take account of all those strands.
I come first to the needs of disabled people and their carers. We are already carrying through the major programme described in my uprating statement last year. Last April we made real increases in the disability premiums in income support, housing benefit and community charge benefit, including in particular those for children, extended mobility allowance to the deaf-blind, and extended attendance allowance to disabled babies under two. This month we have introduced a carers' premium in the income-related benefits, and extended attendance allowance to meet the special needs of the terminally ill. In December we shall make the increases in severe disablement allowance to which I have already referred, and we are preparing new benefits for introduction in 1992 to help those disabled people who wish to work and further to extend help with disability costs.
Against that background, I cannot of course propose today further measures on the same scale, but what I can and will do is to make five more specific improvements particularly directed at the needs of some of the most severely disabled people and their carers.
The independent living fund, now providing extra help—averaging £74 per week but in some cases several hundred pounds a week—to some 6,000 severely disabled people in the community, will have its resources nearly doubled to £62 million next year. It will thus have risen twelvefold, from an initial £5 million, in only three years.
We shall make an additional grant to Motability of £1 million per year to enhance the assistance that it can give with the expensive adaptation of cars which severely disabled people often need.
I intend, too, to modify the mobility allowance regulations to help those particularly unfortunate people 351 who suffer the amputation of both legs. The House will be aware of two recent cases—Mrs. Sandra Stones in Durham and Sergeant Andy Mudd in Colchester—where either mobility allowance was withdrawn or doubt was cast on continuing entitlement. While cases in doubt may be resolved by review or appeal, as I am glad to say has already happened in the case of Sergeant Mudd, we ought to do everything possible to avoid this sort of uncertainty and the distress that it can cause. I therefore propose an amendment to put the payment of mobility allowance in such cases beyond doubt.
I propose also two further useful improvements for carers. The amount which can be earned without affecting entitlement to invalid care allowance, increased last year from £12 to £20 per week, will in April go up by a further 50 per cent. to £30 per week. I intend to provide that the carers' premium, just introduced in income support, which as things stand would cease immediately on the death of the person being cared for, can continue to be paid for up to eight weeks thereafter.
With regard to pensioners, as I have said on a number of occasions in the House and elsewhere, in welcoming the rise in pensioners' real average net incomes which has taken place as a result of the spread of occupational and personal pensions and the growth of savings, we must not overlook those who have not yet gained from those trends. I therefore propose to make this year a real increase in the basic pensioner premium for those aged 60 to 74 in income support, housing benefit and community charge benefit, which will go up by £1 per week more for a single pensioner, and £1.50 more for a couple, than in a straightforward uprating. It will thus rise by £1.95 from £11.80 to £13.75 for a single pensioner and by £2.95 from £17.95 to £20.90 for a couple, contributing to total increases of £4.90 and £7.60 respectively in their income support.
This will cost nearly £80 million. It will assist some 400,000 pensioners directly through income support, and well over 1.5 million through housing benefit and community charge benefit. Taken together with the premium increases for the older and more disabled pensioners which took place in October 1989, it means that over 18 months there will have been a real increase in every one of the premiums applying to around 6 million less well-off pensioners, at a total cost of about £300 million.
I am making a major upward adjustment in income support in a field which brings together the interests of both elderly and disabled people and the families to which they belong—the limits relating to residential care and nursing homes.
The survey of costs we commissioned from Price Waterhouse to give us additional information in this field is being placed in the Library today. In brief, it shows that, while the limits for residential care are reasonably close to median costs across the country, those for nursing homes are significantly too low; but it does not provide evidence of a sufficiently clear pattern of geographical variation, except for Greater London, to justify the introduction of further such variations at this stage.
What I now propose takes account both of the Price Waterhouse results and of the many other representations to us by voluntary and charitable bodies and organisations of home owners, as well as by many hon. Members on behalf of their constituents.
For residential care, the basic limit will rise by £5 per week to £160. There will be larger increases of £15 to £185 352 per week for the category covering the very dependent and blind elderly, which includes, for example, Alzheimer's disease cases; and for those covering mentally handicapped, mentally ill and physically disabled people.
For nursing homes, the increases will be much larger—£45 per week, bringing the total to £255 per week, for the main category catering for the elderly, and also for the mentally ill; an increase of £35, bringing the total to £260 per week, for the mentally handicapped; and an increase of £35, bringing the total to £290 a week, for the physically disabled. On this occasion, the increase for terminal illness homes will be somewhat smaller, an increase of £15, bringing the total to £275 a week, taking account of the fact that this type of home received the largest increases last year, that the distinction between these homes and others is becoming increasingly artificial, and that voluntary hospices—many of which do not seek to make use of income support anyway—are now receiving extra financial help specially geared to their needs under the arrangements introduced this year by my right hon. and learned Friend the Secretary of State for Health.
Additionally, I propose to introduce a special further nursing home supplement in Greater London to take it from £23 to £33 per week. Thus for an ordinary nursing home in Greater London the overall increase will be £55 per week.
The total cost of the increases will be some £225 million. Together with those made in April and August this year, income support expenditure on those in homes will have risen by more than £400 million per year in quite a short period—over and above the more than £1 billion that it had already reached by the end of March this year.
As the House knows, pending the changes now planned for 1993, the income support limits in this field are, and always have been, designed to help towards not only income maintenance but also housing and care costs. It has never been the intention, nor is it sensible, that in the generality of cases housing benefit itself should be available as an alternative to income support. An anomaly exists in the regulations, which has enabled such claims to be made, and in the light of the large increases in limits which I have announced, I intend to consult on amendments to re-establish the policy intention more clearly.
Last, but not least, I intend to make an increase in child benefit, which is and will remain a strong element in our policies for family support. It will not, however, surprise the House, in view of what I said earlier about considering the needs of families more broadly and the major improvements that I have just announced, that I am not able simply to uprate it across the board, which would have a gross cost of some £500 million and a net cost of some £380 million.
In fulfilling my statutory duty of review, I have therefore looked not only at whether there should be an increase but at the form it should take to make the most effective use of the resources that I am able to make available. I have concluded that the right course this year is to make an increase which gives a worthwhile amount to all mothers, and which will be particularly welcome to new mothers because it recognises that for the great majority of parents the arrival of the first child has much the largest impact on their finances, not only because of the initial costs that they incur but because, in a world where the great majority of women work while they are childless but where most feel it necessary or right to give up work, or to 353 work less, for some considerable time thereafter, it is frequently associated with a sharp reduction in the family income.
I therefore propose this year an increase which acknowledges that fact by making an additional payment for the first or eldest eligible child of £1 per week, normally payable to the mother, of course, and in addition to the continued payment of £7.25 per week for each child. As it will go to every family, and will be larger than a retail prices index increase in one-parent benefit—itself, indeed, defined as a payment for the first or eldest child—would have been, I do not propose on this occasion to increase that benefit as well.
The measure will complement what we have already done in recent years to steer some £350 million of real extra help to low-income families through income support and family credit. It will give an extra £1 per week in child benefit to every mother in nearly 7 million families, at a gross cost of more than £350 million and a net cost of £260 million.
By choosing what I believe to be sensible priorities, I have been able to make a number of important improvements in social security, especially for families, without adding overall to what is in any case the very large cost this year of maintaining our uprating commitments.
What I have announced helps families with children and families-to-be. It helps large numbers of less-well-off pensioners. It will ease the anxieties of families concerned with the care of elderly or disabled relatives, and of those relatives themselves, and it builds on what we are already doing to give greater help to disabled people. In short, it carries forward the reshaping of our social security system, which was conceived in the 1940s, to meet the needs of the 1990s.
§ Mr. Michael Meacher (Oldham, West)
I welcome the small but useful increases in statutory maternity pay, in independent living fund resources and in the basic pensioner premium. Those are long overdue and will certainly bring some relief to a number of hard-pressed groups. Welcome as they are, however, they will not appease the deep anger felt by people with disabilities that these various minor improvements are being funded by much deeper cuts in the budget for disabled people over the period ahead.
We unreservedly welcome the significant increase in nursing home income support, which is necessary to prevent the increasing level of closures and evictions already occurring. Those are important additions, but they must be balanced—and, indeed, have been largely paid for—by the cuts in statutory sick pay, which amount to £280 million a year.
For child benefit, I cannot give the same welcome. I invite the right hon. Gentleman to recall that in the Tory party manifesto for the 1987 election he and his colleagues gave an unequivocal pledge thatChild benefit will continue to be paid as now, and direct to the mother.Will the right hon. Gentleman acknowledge that, having broken that explicit promise for the fourth year running, the Government have forfeited any claim not only to be the party of the family but even to basic honesty? Will he confirm that, had child benefit been raised each year as the Government promised, he would today be announcing a 354 rate of more than £9.50 per week for each child—£2.30 per week higher than the rate at which it was frozen four years ago? Will he confirm that an average family with three children, even after taking account of the extra benefit for the first child that has just been announced, will this year be deprived of more than £300 which the Government promised and have since withheld? That sum is equal to almost 3p on income tax for a family on average earnings.
Will the right hon. Gentleman recognise that paying an extra pound a week for the first child only, with nothing for the others, is a mere fig leaf to cover the Government's deeply unpopular policy of perpetual freeze and, moreover, has been prompted by by-election panic? What is the principle behind it? If, as the right hon. Gentleman said, it is to compensate the mother for the drop in earnings at the birth of the first child, what compensation is £1 per week for a loss of earnings of perhaps £100 per week or more?
Is it not clear that the Government's real motive for this bit of window dressing is that it is cheaper? By letting child benefit wither on the vine, is it not manifest that the Government still have no family policy worth the name? Uprating child benefit for all children, at least in line with inflation, is the litmus test of commitment to the family because the Government cannot be in favour of the family while cutting benefits for children. By that test, the Government have failed.
Is the right hon. Gentleman proud that for the 12th year running the Government are denying any rise in living standards to the 2 million poorest pensioners, who are wholly dependent on the basic retirement pension? Is he proud that, as a result, the basic pension, which represented almost a quarter of average earnings in 1979, is now, even after his announcement, worth only a sixth? Will he confirm that had the Government not broken Labour's uprating link with earnings he would be announcing today a single person's pension of not £52 per week but £65 per week and a married couple's pension of not £83 per week but £105 per week? Will he admit that, as a result of the breaking of the pensions link with earnings a decade ago, the Exchequer has cumulatively saved no less than £22,000 million at the expense of pensioners? Does it not reveal the Government's real priorities when they choose to remove more than £20 billion which should have gone to pensioners, and which under Labour would have gone to pensioners, and to use it instead to fund a cascade of tax relief for the rich?
In particular, will the right hon. Gentleman further consider the plight of two of the poorest groups in society, who will remain vulnerable following his statement? The first consists of the 100,000 frail and disabled——
§ Mr. Meacher
The first consists of the 100,000 frail and disabled elderly people in private residential and nursing homes who depend on income support. As I said, we welcome the increase in income support that the right hon. Gentleman announced, but is he aware that the Independent Healthcare Association estimates that maximum state support levels currently fall short of by more than £100 per week fees actually charged for a nursing home and by nearly £40 per week for a typical residential home? Is it not, therefore, clear that the 355 announced increases of only £5 per week for residential homes and £15, £35 and £45 for nursing and other homes will still leave many thousands of frail elderly people desperately worried about problems of growing debt and possible eviction?
Is the right hon. Gentleman also aware that 130,000 claimants in desperate need are entirely omitted from his statement? They are the losers from the Fowler social security changes in 1988 who are on transitional payments and who, next April, will enter their fourth year running without any increase in benefit at all. How can the Government justify giving discounts on electricity bills this year to investors in the privatisation while pensioners and low-income families are struggling to pay fuel bills and some get no rebates and no increases in their benefits either?
There was one other important omission from the right hon. Gentleman's statement. Will he now recognise that pensioners and others on income support who for the first time are being made to pay 20 per cent. of their poll tax are not being fully compensated as Ministers claimed that they would be? That is partly because of clawbacks, partly because the poll tax turned out to be higher than forecast, and partly because of large regional variations. As the Prime Minister has said that income support claimants are meant to be fully compensated, will the right hon. Gentleman now undertake to make good that shortfall, and will he also ensure that the poll tax compensation element is separately identified within income support and uprated each year in line with the average increase in poll tax? Several polls have detected a clear change of mood in the country, which is now rejecting the endless enrichment of the better off at the expense of the less well off and the poor. The inadequacies and the gaps in the statement made by the Secretary of State today illustrate clearly the extent to which the Government are failing to meet growing public concern about the indefensible extremes of wealth and poverty in our society today.
§ Mr. Newton
It was almost with a sense of relief that I noted, by the end of the hon. Gentleman's remarks, that he was back to his usual overheated form. I was quite taken aback by the muted nature of his earlier comments, which seemed to suggest that he thought that I had done some rather good things. I am grateful to him for recognising that at the outset.
The hon. Gentleman raised a wide variety of questions, and I will deal with as many as I can. First, he made the ludicrous suggestion that my proposals on child benefit somehow breached the pledge that he accurately quoted. No one has seriously contended that the number of occasions on which there has been no increase in child benefit has been inconsistent with the pledge.
§ Mr. Newton
The Opposition may have said it, but they have never managed to get anyone else to believe it. Given that fact, it is beyond belief that now that we propose to increase child benefit we are accused of breaking the pledge.
Another of the hon. Gentleman's suggestions should be knocked firmly on the head—the suggestion that what I have announced today, whether in respect of child benefit or in any other major respect, is in some way the result of a sudden change that has taken place in the past few days, 356 let alone since last Thursday. The proposals are precisely what I agreed with my right hon. Friend the Chief Secretary to the Treasury nearly a fortnight ago—[Interruption.]
§ Mr. Newton
The third major suggestion that the hon. Gentleman sought to make was that the Government were not interested in the needs of families. I think that I had the support of a large number of hon. Members on both sides of the House when I said in my statement that family policy is not only a matter of helping families with children. Important though that is, we must also take into account the needs of elderly and disabled people and their families. As the whole of my statement showed, we have sought to make changes that help families across the whole spectrum of their need and in a sensible and balanced way.
It is rich for the hon. Gentleman to talk about pledges to pensioners. If I remember rightly, he was a social security Minister when the last Labour Government fiddled the way in which they uprated pensions, precisely to avoid fulfilling their commitment to uprate in line with earnings or prices, whichever were the higher. So I am not prepared to listen to lectures from the hon. Gentleman on that.
I await with interest the next occasion on which the hon. Gentleman quotes from an organisation of private home owners to justify the suggestion that what they would like by way of increases in the residential care and home limits—although of course I understand that that is what they would like—is to be preferred to the evidence that the hon. Gentleman can read for himself in the Price Waterhouse survey. The increases in the limits for nursing homes are the largest ever made. They will greatly reduce anxieties and the hon. Gentleman should welcome them as warmly as others will.
§ Mr. Speaker
Order. I know that the House is put in great difficulty by the fact that we have three statements on one day—especially on a day on which the main business has to end at 7 pm. As the Chairman of the Select Committee on Procedure is here, it may be worth suggesting that we might look into whether statements of such great importance should be printed and placed in the Vote Office so that hon. Members may study them before asking questions.
As we have another statement today, as well as a very important debate on the scrutiny of European legislation, and as the contents of the statements are debatable and could perhaps be discussed during our debate on the Queen's Speech, I propose to allow questions on the social security statement to go on for no more than 20 minutes—until 5.20 pm.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
What would the figure be if the current benefit levels this year were uprated by 10.9 per cent? Would they come to more or less than the package announced this afternoon? Will the right hon. Gentleman confirm that, for an additional £120 million net, he could have uprated child benefit across the board? Is it not hypocritical for a Government who have had £100 billion-worth of proceeds from oil and gas and £40 billion-worth of privatisation 357 proceeds, and who profess an interest in promoting family policy, to refuse year after year to uprate child benefit fully?
Also, it is profoundly unsatisfactory to have crisis Downing street summits as a way of managing this country's benefit policy. Far too many people depend on it for that. What was the Prime Minister's impact on the policy change? What is the future for child benefit in the Secretary of State's hands?—[Interruption.]
§ Mr. Newton
I am afraid that I missed the hon. Gentleman's last phrase in the slight hubbub. I can only repeat that what I have announced on all the major points today is precisely what I agreed with my right hon. Friend the Chief Secretary to the Treasury nearly a fortnight ago.
With regard to the hon. Gentleman's other points, I can only say that of course I should have liked to do all sorts of other things, as any Secretary of State for Social Security would, but if I had adopted the policy that the hon. Gentleman has been urging on me in respect of child benefit it would have been much more difficult for me to do what I have done for residential care and nursing homes. In balancing the needs of families, I believe that I have struck about the right balance.
§ Dame Elaine Kellett-Bowman (Lancaster)
I am delighted that my right hon. Friend the Secretary of State has helped the family through the whole age range. That is extremely important. He will not be surprised to learn that I welcome in particular the uprating of the family allowance, as I still think of it, for the first child. That will be of enormous assistance to mothers when they have to stop work and if they wish to stay at home and look after children. On behalf of them, including my daughter who is to have a child at any moment, I thank my right hon. Friend.
§ Mr. Newton
I am grateful to my hon. Friend, and I reciprocate her good wishes by sending my good wishes to her daughter.
§ Mr. Frank Field (Birkenhead)
How much have families lost as a result of the Government not indexing child benefit fully during their stewardship? Does he agree that if it has been politically expedient at this distance from the election to pump an extra £230 million into the child benefit scheme—and I welcome that—it would be folly for a party to enter an election advocating the abolition of a scheme which is clearly popular among one third of the voters unless that party was drawing up a suicide note for the voters?
§ Mr. Newton
First, the calculation which the hon. Gentleman is inviting me to make, which his hon. Friend the Member for Oldham, West (Mr. Meacher) tried to get me to make earlier, is artificial in the extreme. As with some of the pension calculations, had those sums of money been put into social security instead of being deployed in other ways, contribution rates would have been higher and tax rates would have been higher including taxes paid by the selfsame families about whom the hon. Member for Birkenhead (Mr. Field) is concerned.
With regard to the other point raised by the hon. Member for Birkenhead, I can only refer him to the sentence in my statement which states: 358child benefit … is and will remain a strong element in our policies for family support.
§ Sir Norman Fowler (Sutton Coldfield)
Contrary to what the hon. Member for Oldham, West (Mr. Meacher) said, may I congratulate my right hon. Friend the Secretary of State on his statement today? May I particularly congratulate him on the extra support that he has provided for families? Will he clarify and perhaps emphasise one point? Will he give an assurance that there is no intention to change the general child benefit system to which we as a party and as a Government have been committed?
§ Mr. Newton
I have just underlined the relevant sentence in my statement in answer to the hon. Member for Birkenhead (Mr. Field):Child benefit … is and will remain a strong element in our policies for family support.Of course that does not exclude consideration of other ways of helping families. However, that should give my right hon. Friend—whose views in this area I obviously greatly respect, having worked rather closely with him for six years—the reassurance that he wants.
§ Mr. Dafydd Wigley (Caernarfon)
Is today's statement the last word before next April on the subject of improved community charge benefits, which are so important to so many people on low incomes, particularly disabled people? Is the right hon. Gentleman aware that many disabled people who used to benefit under the old rate rebate system for adaptations are suffering and are as much as £400 worse off as a result of the community charge system? Does he accept that RADAR has dozens of cases of people who are worse off in that respect? That issue must be seriously considered.
§ Mr. Newton
I am obviously aware of the point that is frequently made in that area. Equally, the hon. Gentleman will be aware that the concession in respect of the rating system was specifically related to adaptations for disabled people's houses. It is difficult to accommodate that within the community charge system. I will draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for the Environment, but I am not planning a further statement.
§ Sir David Price (Eastleigh)
Is my right hon. Friend aware that his uprating in respect of the disabled and particularly the extra money for the independent living fund will be welcomed by Conservative Members? Will he therefore consider modifying his White Paper proposals and make the ILF a permanent statutory feature of our total form of help for the disabled?
§ Mr. Newton
I do not think that I can undertake to do the latter, but we shall be looking with great care at the arrangements for 1993 when local authorities will take over new responsibilities for community care and care for disabled people and others.
§ Mrs. Audrey Wise (Preston)
Why did the right hon. Gentleman decide to recoup part of the cost of the child benefit change by refusing to uprate the single-parent additional premium when those are usually the poorest parents? Will he explain the thinking which led to the selection of the figure of £ 1 for the eldest child when he said 359 that it was partly to compensate for the loss of the woman's earnings? Women's wages are low, but not that low.
§ Mr. Newton
I am not, of course, suggesting that the problem to which I referred in my statement can be met entirely through the social security system. However, it is sensible to recognise within that system the obvious contemporary reality of what happens to family incomes when the first child is born. As for the £1, that relates to the large sum of money which I felt able to make available in that area alongside the equally large sums of money that I wish to deploy in other areas which are also important to many families.
§ Sir Ian Gilmour (Chesham and Amersham)
I warmly congratulate my right hon. Friend on his partial uprating of child benefit while deeply regretting that it has not been uprated in full. What my right hon. Friend has done is a great deal better than nothing. As the only countries in the world which give more for the first child are Malta and Iran, can my right hon. Friend explain what particularly persuaded the Government to follow their example?
§ Mr. Newton
I cannot speak for the rationale in other countries. However, it may well be that that goes back, as ours did with the old family allowance system, to a different world in which many women gave up work when they were married, not when they had children. The world has changed dramatically in recent years and over the last generation or so. I believe that it is sensible to recognise that in the social security system.
§ Mr. Jack Ashley (Stoke-on-Trent, South)
Is the Secretary of State aware that, in the social security review to which he referred, many severely disabled people lost the additional supplementary benefit payments which were suitable for their special needs and they have now become heavily dependent on the independent living fund? Despite the doubling of that in the Secretary of State's announcement, that is still neither adequate nor permanent and that is causing deep distress among the most disabled people. Can we consider something more permanent?
§ Mr. Newton
I have obviously been aware for a long time of the right hon. Gentleman's concern in this matter and I very much respect him for that. However, the independent living fund has, to a very substantial extent, met not only the problems about which he was concerned at the point of transition to the new scheme, but has gone well beyond that to help people who would not have been helped under the old scheme. I have said that we intend to deploy additional resources in it and I believe that that will maintain its value as an important source of assistance for the people with whom the right hon. Gentleman is rightly concerned.
§ Miss Ann Widdecombe (Maidstone)
Is my right hon. Friend aware that, by the arrangements that he has announced for increasing payments to those in nursing homes, he will have laid to rest a tremendous amount of anxiety, particularly in the south-east? He will not only have brought immediate relief to the anguish of relatives but he will have built some base on which homes can plan their financial futures, particularly in the interim between now and the implementation of the community charge.
§ Mr. Newton
I am grateful to my hon. Friend. I hope that she will think it right for me to acknowledge that, in referring to representations by hon. Members on behalf of their constituents in considering these matters, she was one of those whom I had very much in mind.
§ Rev. Martin Smyth (Belfast, South)
How many pensioners will lose, especially with the withdrawal of housing benefits and the new uprating? That spectre has existed for years. How many more will be caught in the trap as a result of this uprating? I was aware of the Secretary of State's answer concerning Price Waterhouse. Mencap has said that the residential care allowance should have gone up to about £225, failing which some homes might close and others might not open. Did Price Waterhouse say anything about the possible growth of the cardboard city?
§ Mr. Newton
The Price Waterhouse report, a copy of which I have placed in the Library, does not go into quite as much detail in respect of individual categories of home, for sample reasons, as the hon. Gentleman or indeed I might like. Perhaps it would be better if the hon. Gentleman looked at the report before pursuing me further on such points of detail.
I was not quite sure what the hon. Gentleman meant in his earlier point. I have said that an anomaly has appeared, which seems to be making it possible for some people to make claims to housing benefit when it is absolutely clear that the income support limit is meant to embrace housing costs. That is not very sensible, and we need to tidy it up.
§ Mrs. Edwina Currie (Derbyshire, South)
May I congratulate my right hon. Friend on commandeering the largest budget for pensions and benefits that this country has ever seen? Does he agree that it would be wise to consider also who is paying for all of it and that the burden of taxation still falls most heavily on ordinary families, often with children? They are also the ones who would gain most from a modest cut in tax rates and the ones who would suffer most if tax rates were forced to be increased in the way in which they would have to be if Labour's promises were ever fulfilled.
§ Mr. Newton
My hon. Friend has restored a healthy perspective to some of the things that we hear from the Opposition Benches. My only reservation about what she said is that I am not really sure whether I should like to be accused of commandeering resources. I prefer to think of myself as doing good work.
§ Mr. John Battle (Leeds, West)
Before the Secretary of State gets away with masquerading as the family friend, or, perhaps more particularly, as the friend of the first born, are he and the Cabinet aware that £1 does not buy even one packet of 10 disposable nappies for the baby? They cost £1.24. Is he aware that a pair of shoes for a five-year-old costs about £15 and that an anorak for an eight-year-old now costs £12 to £15? How on earth can the first-born get assistance from that kind of increase? Why will the Secretary of State not return to his original pledge, or would he rather retitle child benefit and from now on call it first-born benefit as that is what it is proving to be?
§ Mr. Newton
I have no intention of renaming it because I have made it absolutely clear that the payments continue for all children, except that I am making an increase in respect of the first. As to the rest of the hon. Gentleman's 361 remarks, no one—not even the hon. Gentleman in his most extravagant moments, and they are pretty extravagant—and not even the hon. Member for Oldham, West (Mr. Meacher), has suggested that he expects child benefit to be at a level that would fully meet the costs of all children in all families. That has never been the intention, let alone the reality. What my pound does is to make a useful additional contribution.
§ Mr. Nicholas Winterton (Macclesfield)
I thank my right hon. Friend for his excellent statement and for the way in which he has targeted additional resources to those groups most in need—for example, families and the disabled—the way in which he has doubled resources for the independent living fund, and substantially increased income support for those in residential homes and in nursing homes. I do not wish to take from my right hon. Friend the praise that will be heaped upon him, but will he give an assurance that he will seriously reconsider the uprating of child benefit in future years not just for the first child but for all children as it is the most effective of universal benefits?
§ Mr. Newton
Until the last few seconds I was going to say that I had better quit while I was ahead. On my hon. Friend's last remarks, the only assurance that I can properly give my hon. Friend is that, just as I have demonstrated that I have carried out in good faith my statutory duty to review this year, so I shall continue in future years.
§ Mrs. Sylvia Heal (Mid-Staffordshire)
While welcoming some of the small increases that the Secretary of State has announced, I must express my regret and that of many people with disabilities that there has been no increase in the earnings disregard. It was first introduced in 1988, and the sum was then set at £15. In effect, that means that the small number of people who are working and who have had pay rises have received no increase in their income. When will the Government break the link between dependency and disability?
§ Mr. Newton
Possibly the hon. Lady has missed the fact that one of the really substantial new benefit improvements that we are working on at the moment with a view to introducing it in 1992 is what we originally called disability employment credit, which some other people have called partial incapacity benefit. It is designed to find a much more constructive solution to the problem by enabling people to work and enjoy continued benefit but to get off income support and into a different kind of benefit that will help them while they are working.
§ Mr. Peter Bottomley (Eltham)
Does my right hon. Friend agree that his statement will be very welcome to carers and dependants with special needs and also to those who wish to live independently and to the 10 million pensioners and the parents of 12 million children?
To see only 12 Labour Back Benchers shows how much the Opposition care.
Does my right hon. Friend also accept that his meeting commitments on inflation-proofing of many benefits and pensions and finding £350 million for parents and children is much to be welcomed?
To those who are worried about child benefit going to the well-off, may I point out that the value of two personal 362 allowances with the married man's allowance and mortgage relief allowance is equivalent to 12 child benefits? Perhaps the hard-hearted could look at those before getting at children.
§ Mr. Newton
I will not join in the aggression of my hon. Friend's remarks. I welcome his second remark. I shall have to study his third remark with some care.
§ Mr. Jim Sillars (Glasgow, Govan)
Is the Secretary of State aware that he has not increased child benefit as he claimed, that the accurate description is that he has increased benefit for some children, and that by freezing the rest he has effectively cut it for other children? Is he aware that most mothers will not accept the ludicrous rationale in his statement about the first-born having a far greater financial impact than subsequent children in the family and that most mothers cannot distinguish between the needs of the first-born and subsequent children in the family? Does not his position appear more ludicrous because he is really saying that, in the case of a mother who has twins when childbearing for the first time, the child who was born a few minutes earlier than the other is worth a pound more?
§ Mr. Newton
The latter question is a good one, and I shall reflect on it. I am sure that we shall be able to find a solution. On the hon. Gentleman's first point, I do not think that anybody could read into my remarks, either in my statement or subsequently, the suggestion that there was a particular difference in costs per child. However, I said that the impact on families is greater with the first child because of the simple, observable fact that at that point the household income tends to fall.
§ Mrs. Elizabeth Peacock (Batley and Spen)
I thank my right hon. Friend for his statement. I welcome his commitment to two matters with which I am concerned. I welcome the commitment to child benefit continuing, although I should have liked it to be raised more. I also welcome my right hon. Friend's announcement regarding nursing homes and residential homes.
Will my right hon. Friend clarify one point regarding sufferers of Alzheimer's disease? He knows that I have a great interest in that matter. Quite often, nursing homes cannot cope with people suffering from Alzheimer's disease and families are asked to remove them to more specialised homes which provide terminal care but are not hospices. Will my right hon. Friend clarify whether such individuals and their families will be entitled to the higher rate of benefit to pay for that care?
§ Mr. Newton
It is rather difficult for me to do precisely what my hon. Friend has asked, although I shall not disguise the fact that she was another hon. Friend whom I had in mind when making the statement—hence the reference to Alzheimer's disease. Because the position depends on whether we are talking about a residential care home or a nursing home, and in which part of the country, and because I cannot specify particular limits for particular diseases, the provisions would depend on all the circumstances.
§ Mr. John McAllion (Dundee, East)
Does the Secretary of State accept that his announcement about child benefit will mean absolutely nothing to the millions of children in families who depend on income support because the extra pound that will be awarded to them in child benefit will 363 mean £1 lost in benefit entitlement? Will he accept that the time has now come to exclude child benefit completely from income support assessments so that its application will be genuinely universal and so that we do not have the nonsense that those who need the benefit most are those who are excluded from it?
§ Mr. Newton
The latter point does not really make sense in terms of any sensible operation of the system. The normal offset between child benefit and income support will operate this year as on other occasions when child benefit has been increased. It is important that the hon. Gentleman should understand that another effect of the operation of this system is that those on income support will effectively receive the amount that they would have received if child benefit had been fully uprated across the board.
§ Mr. Speaker
Order. As the hon. Member for Wyre Forest (Mr. Coombs) has intimated to me that because of the pressure on time today he does not intend to move his 10-minute Bill on licensing reform, for which I am sure the whole House will thank him, I propose, therefore, to allow questions on this matter to continue for a further 10 minutes, but then we must move on.
§ Mr. Timothy Raison (Aylesbury)
Although I believe that the general uprating of child benefit is still essential, I, too, think that my right hon. Friend has done well in what was clearly a different public expenditure round in achieving additional resources for child benefit. His statement that child benefit will remain a strong element in our policy will be widely welcomed. Does it mean that any alternative ideas of proceeding by way of child tax allowances have now been dropped and will the new extra benefit for the first child require primary legislation?
§ Mr. Newton
No, the extra benefit for the first child does not require primary legislation. Indeed, one of the advantages of that provision is that it will be possible for me to make the payments effective from April next year, at the normal uprating time. Obviously, child tax allowances are a matter for my right hon. Friend the Chancellor, and nothing that I have said this afternoon rules out any consideration that he might want to give to complementary measures. I am grateful to my right hon. Friend the Member for Aylesbury (Mr. Raison) for welcoming my statement.
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
Surely the Secretary of State will accept that far more people receive residential care support than nursing home support, yet his statement increases residential care support by only 3 per cent. Is the right hon. Gentleman willing to accept the extra personal stress, tension and the loss in quality of care that will inevitably accompany his statement, especially in those parts of cities where residential care homes have now become a substantial industry? What has the right hon. Gentleman to say to the home owners and to the residents of those homes? Does he propose to put any gate or restraint on accepting more people currently in hospital care into that type of residential care?
§ Mr. Newton
The last point is, of course, primarily a matter for my right hon. and learned Friend the Secretary of State for Health. The hon. Gentleman is well aware of 364 the plans, which have recently been deferred, for operating a different system from 1993. In answer to the hon. Gentleman's first point, I can only ask him to read the Price Waterhouse survey—I appreciate that he has not yet had the time to do so—which dealt with the numbers of people in the two types of home. Although the number of people in residential care homes is larger than the number in nursing homes, as the number in nursing homes is moving towards being half the total I do not entirely accept the hon. Gentleman's point. However, the main point is that the disparity in costs as against our income support limit is clearly much greater in nursing homes. It therefore seems sensible to put the extra resources principally there.
§ Mr. Peter Thurnham (Bolton, North-East)
My right hon. Friend has obviously spent considerable time putting together this detailed and welcome package, so will he totally scotch the Opposition's idea that it was rushed together last night?
§ Mr. Newton
Anybody who believes that the statement was put together hastily last night will believe anything. I have now said twice and, in view of my hon. Friend's question, will say a third time that the major elements in what I have just announced were agreed with my right hon. Friend the Chief Secretary to the Treasury nearly a fortnight ago.
§ Mrs. Maria Fyfe (Glasgow, Maryhill)
How many disabled people will still be below the poverty line in spite of today's minor improvements? Has the right hon. Gentleman noticed that, although a mother's income drops considerably if she gives up work as a result of the birth of her first child, it remains pretty low between her first and second children if she is out of work or even if she takes a low-paid part-time job, which is the lot of the vast majority of Britain's young mothers?
§ Mr. Newton
I am not sure what definition the hon. Lady was using in her point about disabled people. However, she can check that last year we significantly increased the disability premium, including the premium for disabled children, and made a wide range of other improvements in disability benefits. I forgot to comment earlier on the comments made by the hon. Member for Oldham, West on this matter, but contrary to the impression that he is seeking to create, the provisions will substantially increase the amount of help given to disabled people in the next few years.
§ Mr. Anthony Nelson (Chichester)
May I join in welcoming the partial uprating of child benefit, but advise my right hon. Friend that the decision to give the increase in respect of the first-born appears to be a radical change in the system of child benefit that we have had thus far? If we seek to provide most assistance to those most in need, would it not be fairer to recognise that some of the largest families are some of the least well-off families? Might it not therefore be better to have a smaller uprating for all children rather than a larger uprating only for the first?
§ Mr. Newton
These things are obviously matters of judgment, and I have outlined the reasons for my judgment. Larger families are, on the whole, much more likely to be receiving one of the income-related benefits, including family credit. About 40 per cent. of families with 365 more than three children are being helped either by income support or family credit, which we have improved substantially in recent years.
§ Mr. Dave Nellist (Coventry, South-East)
The Secretary of State said that the arrival of the first child is most frequently associated with a sharp reduction in family income. What real effect does he expect £1 a week to have on that, especially when, with £1 a week, it will take about one and half years to save up for a second-hand pram, and more than three years to save for a new cot? We should compare that with the position of directors earning £70,000 a year who, in the past 10 years, have received £600 per week in tax cuts from the Government. Does not the right hon. Gentleman accept that most parents will see his announcement as being a transparent attempt at Elastoplast politics by Tory Ministers who are on £1,000 per week and have not a clue about the real costs of bringing up children?
§ Mr. Newton
I do not think that the nearly 7 million mothers who will receive an extra pound a week in child benefit will engage in the kind of political posturing in which the hon. Gentleman indulges.
§ Mr. David Nicholson (Taunton)
At a time of a tough spending round, with other Departments pressing for increases in real resources, my right hon. Friend deserves warm congratulations for having secured these nuggets. He will recall the meaning of that expression from an earlier incarnation. Is he aware that we welcome the fact that, despite the attention that will rightly be given to the increase in spending on the family, my right hon. Friend has not forgotten the poorer pensioners and the long-term sick and disabled?
§ Mr. Newton
I am grateful to my hon. Friend because that is precisely what I have sought to do—to bring forward what I regard as a balanced package, looking broadly at the needs of families. I sense that most of my right hon. and hon. Friends think that that was the right thing to do.
§ Mr. Dennis Skinner (Bolsover)
Nothing that the Secretary of State has said today will compensate those pensioners who have been crippled with £20, £30 and £40 per month poll tax bills and who will receive only £5 366 perweek extra as a result of his statement today, notwithstanding the fact that the wealthiest 1 per cent. in our society have received more than £26,000 million from the Government in tax cuts in the past 10 years. The pensioner in Downing street is living on £8 million per year from the taxpayer. That keeps her in Downing street and Chequers and as she gallivants around the world while 10 million other pensioners have to make do with an extra £5 per week. Does not that sum up the Government's attitude to the welfare state?
§ Mr. Newton
In this statement, we have fully fulfilled our commitments to raise the retirement pension and to steer some additional help to less-well-off pensioners. But for the taxation and economic policies that the Government have pursued over 10 years and more, it would have been far more difficult to sustain the improvements that I have announced this afternoon.
§ Mrs. Maureen Hicks (Wolverhampton, North-East)
I congratulate my right hon. Friend on so effectively fighting his corner on behalf of all those mothers who depend on child benefit and have lived in uncertainty for the past three years.
Will he, however, acknowledge that there have been difficulties in giving help to the most needy families by targeting family credit? The money was there, but families were not always forthcoming. I hope that that lesson on targeting will help to convince him, as it has convinced me, that the present procedure for child benefit is the most popular and should remain a universal benefit. My right hon. Friend was absolutely right not to cause a divide by separating the under-fives from older children.
Could I also ask——
§ Mr. Newton
I suppose that I, too, had better be brief.
I hear what my hon. Friend says and I am grateful to her. I am not sure that I want to refer to "fighting my corner" with the Chief Secretary. As I have said three times, we agreed on these matters a fortnight ago.
§ Mr. Speaker
Order. I am very sorry that I could not call those hon. Members who wished to speak. I shall certainly bear them in mind when we return to the subject.