§ The Secretary of State for Social Security (Mr. Tony Newton)
I beg to move,That the draft Social Security (Contributions) (Re-rating) Order 1991, which was laid before this House on 13th February, be approved.I understand that it would be for the convenience of the House for us also to consider the following motions:That the draft Guaranteed Minimum Pensions Increase Order 1991, which was laid before this House on 11th December, be approved.That the draft State Scheme Premiums (Actuarial Tables) Amendment Regulations 1991, which was laid before this House on 18th February, be approved.That the draft Social Security Benefits Up-rating Order 1991, which was laid before this House on 13th February, be approved.That the draft Social Security (Contributions) Amendment Regulations 1991, which was laid before this House on 13th February, be approved.That the draft Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1991, which was laid before this House on 21st February, be approved.That the draft Statutory Sick Pay (Rate of Payment) Order 1991, which was laid before this House on 13th February, be approved.That the draft Statutory Sick Pay (Small Employers' Relief) Regulations 1991, which was laid before this House on 20th February, be approved.
§ Mr. Newton
It is just possible that hon. Members may also agree that the main interest of the House and perhaps the main focus of the debate will be on the draft rating order.
However, in line with my duties to the House, I must first refer to the purpose and content of the other orders and regulations, although I do not propose to refer to the order concerned with state scheme premiums which is entirely technical, not to say dense. However, I am prepared to say something about that order if pressed.
The draft contributions re-rating order is, as always, concerned with national insurance contributions which determine people's entitlement to pensions and other important contributory benefits and which are the source of finance for more than half of what is spent each year on social security. A notable feature of the draft re-rating order is that, for the eighth year in succession, we propose no increase in the main rates—the class I rates paid by employed people and their employers.
As the House will already be aware, this time I have been able to propose a reduction in the rates of national insurance contributions payable by employers. I propose to reduce the standard rate from 10.45 per cent. to 10.4 per cent. and, perhaps more important, to reduce the lower rates, which are currently 5 per cent., 7 per cent. and 9 per cent. in respect of employees earning up to £175 a week, to 4.6 per cent., 6.6 per cent. and 8.6 per cent. respectively. Those changes will reduce employers' costs by about £250 million. I remind the House that they are likely to be especially helpful to employers—often smaller employers—whose employees are among the less highly paid, and will go a considerable way towards offsetting any 984 additional costs that employers meet as a result of changes to statutory sick pay made by the Statutory Sick Pay Act 1991.
The House will be aware also that there are boundaries for contribution liability, called the lower earnings limit and the upper earnings limit, and they will change as usual. The LEL applies to employers' and employees' share of contributions, but the UEL applies to the employees' share only. The order does not set those two earnings limits; that is done by a set of regulations to be laid after the benefits uprating order has been approved. However, the LEL, which is linked by law to the nearest pound below the retirement pension rate, will be £52 a week, and the UEL will be £390 a week.
The effect of the increase in the lower earnings limit will be to reduce most employees' contributions by 42p a week, or by 30p if they are in contracted-out employment. The effect of raising the upper earnings limit is that those having earnings of £390 or more a week will pay an extra £3.18 a week or £2.50 if they are contracted out.
A few minutes ago, I mentioned the proposed reductions in the rates of contributions paid by employers. Additionally, as on previous occasions, the re-rating order provides that the earnings limit below which they pay lower contribution rates will be increased. From April, employers' contributions will be 4.6 per cent. in respect of employees earning between the lower earnings limit and £84.99, 6.6 per cent. for those earning between £85 and £129.99, 8.6 per cent. for those earning between £130 and £184.99, and 10.4 per cent. for those earning more than £185 a week.
In 1991–92, class 1 contributions, which are the ordinary contributions that most people make, are expected to yield more than £35 billion. As is the case with contributions made in all classes, that revenue will be apportioned between the national insurance fund and the national health service.
I shall now say a word about self-employed people, who pay national insurance contributions in two portions—the flat-rate class 2 contribution and the profits-related class 4 contribution. We do not propose any change to the class 4 rate, which will remain at 6.3 per cent. in the coming year. The profits limits for class 4 contributions, which determine the level of annual profits on which contributions are payable, will once again be increased to £5,900 and £20,280 respectively. The upper profits limit is exactly 52 times the class 1 upper earnings limit.
We propose also to increase the class 2 contribution by 60p, to £5.15, per week from next April. That class 2 rate is broadly linked to the class I lower earnings rate, and its increase reflects the proposed rise in that limit. The result of all that is that self-employed people with profits at or below the present upper limit of £18.200 will pay about £28.35 less in class 4 contributions per year, and that will largely offset the increase of £31.20 in their class 2 contributions. Those with higher profits will pay up to £102.69 more in class 4 contributions. Self-employed people are expected to contribute nearly £1.4 billion overall in contributions in 1991–92.
Certain categories of people—for example, those who are not gainfully employed or who are receiving contributions credits, such as people who retired before the age of 60—can pay class 3 contributions if they wish. They are voluntary contributions. We propose to increase class 3 contributions by 60p, making them £5.05 per week.
985 As usual, the Government Actuary's report on the effect of our proposals on the national insurance fund has been laid with the re-rating and uprating orders. It is estimated that the total income received by the national insurance fund will be around £33.5 billion in 1991–92. Total expenditure, including administration, is estimated at £34.5 billion. However, although expenditure is likely to exceed income, the balance is expected to remain comfortably above the minimum recommended by the Government Actuary.
The changes in national insurance that I have just described will determine the contributions of the vast majority of people, but I should like to say a word about one interesting corner of the system which is of particular interest, although to only a limited number of hon. Members—the Social Security (Contributions) Amendment Regulations 1991, which deal with the special rate of class 2 contribution that is paid by share fishermen. I notice that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is pricking up his ears. He is one of the hon. Members whom I had in mind. I refer to the 13,000 people who are jointly engaged in a fishing enterprise and who are paid wholly or in part by a share of the profits from the catch. Unless they are working under a contract of service, they are regarded as self-employed for national insurance purposes.
Unlike self-employed people generally, however, under a long-standing arrangement, share fishermen can receive unemployment benefit and industrial injuries benefits. They earn their entitlement to these benefits by paying a special, enhanced class 2 contribution. This consists of the standard class 2 contribution paid by the majority of self-employed people, with an additional amount related to the costs of the extra benefits payable to them.
Hon. Members—including the hon. Member for Roxburgh and Berwickshire—will recall that one of the measures contained in the Social Security Act 1990 was the removal from the scope of the national insurance fund of industrial injuries benefits, which are now met from general taxation. Clearly, therefore, it is inappropriate for share fishermen to pay extra in contributions for benefits that are no longer funded from these contributions. From April, we propose that share fishermen should no longer pay this extra amount, although I hasten to reassure the House that this change will have no effect on their rights to benefits.
To make the position clear in financial terms, I should explain that, with additions for both unemployment benefit and industrial injuries benefits, the share fishermen's contribution currently stands at £6.15. By removing the addition for industrial injuries benefits, but adding the normal increase in the standard class 2 contribution, which this year is 60p, the share fishermen's contribution rate from April will be £6.20. This means that, for a very modest increase of 5p a week on their contributions, share fishermen will continue to receive their extra benefits in the same way as before, as well as benefiting from the coverage given by standard class 2 contributions. I had hoped that the hon. Member for Roxburgh and Berwickshire might pop up to say what good news that is and what a generous Government we are.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
Hope springs eternal. Although this welcome rationalisation reconciles the longer-term problems faced by share fishermen, they also face more urgent short-term problems, such as the eight-day tie-up period during which they are excluded from unemployment benefit. Will the right hon. Gentleman look at that as a matter of some urgency, to try to bring about some short-term relief in the coming year?
§ Mr. Newton
From long experience in the House, perhaps I should have known that it is impossible to do good work without somebody seeking to get one to do more. I shall, of course, look at the points that the hon. Gentleman has raised, but I hope that he will understand me when I say that I shall do so without commitment. That matter has the air of a point that somebody has looked at fairly closely several times previously——
§ Mr. Newton
As I have said, I can make no commitment—only an expression of good will in the hon. Gentleman's direction.
I turn with some relief, which I suspect is shared by the House, from the rather tedious details of national insurance to the Statutory Sick Pay (Rate of Payment) Order, which represents changes that are part of a wider package of shorty-term sickness provisions for those in employment, other elements of which are contained in what is now the Statutory Sick Pay Act. As the ground was well, not to say exhaustively, trodden during the debates on the Statutory Sick Pay Bill both in this House and in another place, I shall not take the time of the House this afternoon by going over it again in great detail. I simply state briefly and factually that the order increases the lower rate of SSP by the full retail prices index increase of 10.9 per cent. from £39.25 to £43.50 a week and leaves the higher rate unchanged at £52.50 a week.
At the same time, the earnings threshold between the two rates will increase from £125 to £185 per week, thus extending the coverage of the lower rate across the whole range of earnings for which employers pay lower rates of national insurance contributions. Those proposals will reduce public expenditure on SSP by about £100 million in 1991–92. [Interruption.] In view of the faint sounds of muttering from Oldham, I should like to remind the House once more that the majority of employees will see no effect on the total payments that they receive when sick. That is because of the way in which occupational sick pay under employers' schemes interacts with SSP.
To pre-empt one of the points which the hon. Member for Oldham, West (Mr. Meacher) will undoubtedly make, not all employees are covered by such schemes, either because they are among the 9 per cent. of employees who work for an employer who does not have an occupational sick pay scheme or because they do not satisfy the qualifying conditions of their employer's scheme. But I hope that the hon. Gentleman will recognise that those who do not satisfy the qualifying conditions, and possibly a significant proportion of the others, will be mainly employees who are modestly paid or who work part-time and will generally be on the lower rate of statutory sick pay. Their entitlement once again will be fully protected in real terms by the increase that is proposed in the order.
Before I finish dealing with SSP, I should refer to the Statutory Sick Pay (Small Employers' Relief) Regulations, 987 which are also in the package before the House. As hon. Members will realise, those regulations are in consequence of the Statutory Sick Pay Act 1991, passed earlier this month. The regulations enable small employers who experience abnormal sickness in their work force to revert to an SSP reimbursement rate of 100 per cent., instead of 80 per cent., after an employee has been sick for a spell of six weeks or more.
I do not intend to go over the background to those provisions today, because they were the main focus of our recent debates on the Statutory Sick Pay Act 1991, but I can confirm that, as foreshadowed in that debate, the regulations provide for an employer to be defined as a small employer where his contribution payments in the preceding tax year do not exceed £15,000. Small employer's relief—that is, 100 per cent. recovery—will apply once an employee has been entitled to SSP for six weeks in a period of incapacity for work. The regulations also modify the provisions on the position of new employers.
Before I move on, I want to say a few words about the proposals for statutory maternity pay. As I said in my uprating statement, the considerations which apply to statutory maternity pay are different from those which apply to statutory sick pay. In particular, there is much less occupational cover for maternity than for sickness. So we propose to move away from the link which currently exists between the flat-rate element of statutory maternity pay and statutory sick pay.
Indeed, the main benefits uprating order increases the rate of statutory maternity pay by £25 a week to £44.50 per week, which is a full £1 above the retail prices index increase of 10.9 per cent. In other words, a real, additional £1 is being added. Indeed, a real, additional £1 is also being added to the state maternity allowance, which will go up by £4.90 to £40.60 a week. The effect of that is a real increase in benefit for some 315,000 mothers-to-be. That is a modest improvement but a useful and welcome one, which has been less noted than I should have wished.
§ Mr. Newton
It is £5 million, if I remember rightly, so it is a significant sum, nevertheless.
I will touch only briefly on the Guaranteed Minimum Pensions Increase Order, which is in line with my statutory duty under the Social Security Act 1986. It requires occupational pensions schemes which are contracted out of the state earnings related pension scheme to give post-award increases in guaranteed minimum pensions earned since the 1988–89 tax year of 3 per cent. from 6 April this year.
On child benefit, as I made clear in my uprating statement and am happy to have another opportunity to make clear today, the benefit is and will remain a strong element of our policies for family support. As the House knows, I decided that the right course of action this year was to give practical recognition to the fact that all families with children face additional costs compared to families with none, by proposing an additional payment of child benefit of £1 a week for every family with children.
That will be paid for the eldest eligible child in each family, and will go to around 7 million claimants, in most cases the mother. The net cost will be over £250 million a year. As the extra fl will go to every family and will indeed 988 be larger than a retail prices increase would have been in one-parent benefit—which is itself defined as an increase for the eldest eligible child—I decided that, on this occasion, it would not be right to make a separate increase in that benefit as well.
The extra payment for all families with children complements the real terms increases in income-related benefits which we have introduced over the past three years to focus additional help on the less well-off families with children. Families on income support and family credit will also, of course, have their benefits increased From April to compensate them for price increases in the usual way. Taken together with the earlier real increases, it means that spending on income-related benefits for families with children is expected to be worth some £400 million more in real terms in 1991–92 than in 1987–88.
The Draft Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations are the legislative means by which the extra £1 a week will be implemented. They provide for £1 extra per week to be paid for the only, elder, or eldest child for whom a family is receiving child benefit at any time. For the sake of equity, there are provisions to ensure that every family receives one extra amount of child benefit each week.
Historically, there has always been a link between child benefit and other benefits for children. When child benefit for the first child in a family was increased from £1 to £2.30 in April 1978 by the previous Labour Government, there was a corresponding decrease of £1.30 in the rate of other benefits for that child. We therefore propose to make further regulations to be laid before Parliament in due course to ensure that the general principle, that benefit rates for children should be based on the overall level of child support, continues to apply. We propose that benefits payable under the Social Security Act 1975 in respect of children be adjusted where the child in question is one for whom the increased rate of child benefit is payable.
The draft uprating order provides for an across the board increase from £9.65 to £10.70 in the dependant's additions to contributory benefits. The effect of the proposed overlapping benefit adjustment to which I have just referred will be to reduce the amount of such a benefit by £1 where the increased child benefit is in payment; £1 is, of course, the amount by which child benefit is increased.
§ Mr. Graham Allen (Nottingham, North)
I am pleased to see the Secretary of State in good health. If the worst came to the worst, and he were to fall under the proverbial bus, can he tell those in receipt of child benefit anything about the reports in The Independent on Sunday of serious splits in his ministerial team, of the think tank and of Mr. David Willetts coming up with other ideas? Can he reassure us that, if he were to leave his present position, child benefit would remain safe?
§ Mr. Newton
The hon. Gentleman should perhaps have taken the answer to his question as already having been given in my firm reiteration, made to the House and elsewhere on several occasions, that child benefit is and will remain a strong element in our policies for family support. I made that statement on 24 October, as a statement on behalf of Her Majesty's Government 989 collectively; it was not made off the cuff by the Secretary of State for Social Security. That seems to make the position absolutely clear.
§ Mr. Frank Field
It is possible to accept that the Government now, thank goodness, have no intention of abandoning the child benefit scheme—they want to spend the money within that framework in a different way. Press reports sometimes suggest that a Tory party inquiry is being held, sometimes a departmental one, on the various options. Is it possible for the Secretary of State to tell us whether such inquiries are taking place in the Department, in the Tory party or in both?
§ Mr. Newton
I do not believe that it is possible for me to answer the hon. Gentleman's question in the way in which it has been phrased, but it is certainly not true that all thinking has ceased on the Conservative Benches about possible further development of the benefit system—I presume that the same is true of the Opposition Benches. I am not able to predict the outcome of regular consideration of what is the right way in which to deal with social security matters.
§ Mr. Newton
In that case, the answer to the hon. Gentleman is that, such is the liveliness and vigour of all of us in the Conservative party—I was grateful to note the remarks of the hon. Member for Nottingham, North (Mr. Allen) about my appearing to be in reasonable health—that we are constantly thinking about social security matters in all sorts of ways, at every level and in a variety of forums.
§ Mr. Newton
I think that it is a very good one, and I do not propose to try to come up with something better.
The draft Social Security Benefits Up-rating Order 1991 provides for an increase in retirement pensions, and in virtually all other benefits that are not income-related, of 10.9 per cent. That is the increase in prices that took place during the year ending September 1990. As for income-related benefits, the draft order provides for a general increase of 8.1 per cent., which is the increase in retail prices, other than housing costs, over the same period. That difference, as is now well understood, reflects the fact that, for people on income support, help with rent is separately available through housing benefit and help with mortgage interest separately within income support itself.
Rather than rehearse all the many benefit rates to which the general increases give rise—they are set out in the order—it would be more helpful, especially in view of the relatively short time that the House has to consider the order, to concentrate on two ways in which its provisions improve on the general pattern that I have outlined.
This year, we are proposing to spend an extra £80 million through a real increase in the basic pensioner premium that is paid to people on income support aged 60 to 74. That increase will directly benefit about 400,000 pensioners on income support and will feed through to housing benefit and community charge benefit. The 990 premiums for single pensioners in that age group will go up by an extra £1 a week, over and above a straightforward uprating, while couples will receive an extra £1.50 a week. That increase builds upon the improvements we made to the premium structure for other pensioner groups on income support in October 1989, which provided £200 million of extra assistance in its first year.
§ Mr. Winnick
Perhaps that is true, as I want to refer to a report in The Independent today, which says that there were 2,347 more deaths, mainly among the elderly, than was expected during the cold spell. The charity Winter Action on Cold Homes puts a great deal of blame for those deaths on inadequate heating, fuel poverty and the like. Although I was pleased that two payments of £6 were made, far too many elderly people are simply financially incapable of keeping their homes warm, and that leads to a great deal of deprivation and, sadly, death. I hope that the Government will take more effective action than they have so far to deal with that problem.
§ Mr. Newton
I have seen the report in The Independent this morning and the comments that go with it, but I cannot pretend to have had an opportunity in the intervening period to make a detailed analysis of the figures underlying it. I learned from my previous experience in the job now done by my right hon. Friend the Minister for Social Security and Disabled People, when there was discussion and controversy on the subject, that this country is not alone in experiencing the problem of higher mortality rates in winter than in summer. It is clear that the causes of that problem, which go well beyond this country, are by no means simple to identify or overcome. Those mortality rates include people who, by no stretch of the imagination, could be described as badly off and may be in comfortable and heated residential institutions. It is difficult to draw firm and clear conclusions from the statistics.
I go along with the hon. Member for Walsall, North (Mr. Winnick) in acknowledging that a range of measures is required. I hope that the cold weather payments recently made will make a contribution. In addition, the Government recently introduced—it was contained in the Social Security Act 1989, although it is not strictly a social security measure—a home energy efficiency scheme, the latest version of a number of schemes designed to improve the way in which the houses of elderly people and others are insulated. The advisory services' "keep warm, keep well" campaign, run by Help the Aged, with Government support, can also make a contribution. There is certainly a problem, towards which a range of measures are directed. This Government, and any other Government, would acknowledge that we constantly need to find new ways to address it.
I do not believe that the evidence suggests that the problem can be solved as simplistically as the hon. Member for Walsall, North suggests—by simply using more money on it. The hon. Gentleman intervened at a point in my speech when it was logical to make his remarks, but the paragraph at the end of which he 991 intervened made it clear that, during the past 18 months, we have directed additional regular, weekly support—worth almost £300 million—to the very groups about whom he is concerned.
Another significant way in which the order varies from the overall retail price index or "Rossi" uprating pattern to which I referred, is the increase in the income support limits governing the amounts payable to those in residential care and nursing homes, by amounts ranging up to no less than £55 a week for a nursing home in Greater London—at an overall cost of £225 million. I should make it clear that, under a technicality, the £10 increase in the London nursing home supplement requires a separate set of regulations distinct from the uprating order under debate.
As the House knows, the balance of the increased limits is weighted towards nursing homes. All the evidence, including the Price Waterhouse survey of costs that we commissioned, shows that that is where large increases are most needed.
In view of some of the comments made, I should emphasise two points about the residential care home limits. First, the basic residential care home limit has increased faster than inflation during the past five years. Secondly—this is too often overlooked in such discussions—the structure includes a separate and higher limit for residential care homes for the very dependent elderly, whose care is obviously likely to entail higher costs. That limit, which covers well over a third of all elderly people on income support in residential homes, is being increased by £15 a week.
I hope that it is in order to refer to a matter which is not about uprating but which is of considerable interest to many hon. Members, including my hon. Friend the Member for Wyre Forest (Mr. Coombs) who has rightly pressed us on it. It is the lump sum made available to those who suffer severe neural or physical damage as a result of vaccination. Such payments are made under the Vaccine Damage Payments Act 1979 and were last increased from £10,000 to £20,000 in 1985, when I held the post now occupied by my right hon. Friend the Minister for Social Security and Disabled People.
I am glad to tell the House that we have decided to increase the amount by a further £10,000 to £30,000, which rather more than restores its value to the 1985 level. The necessary order will be laid shortly. That increase does not represent a changed judgment about the risk of vaccination, but simply our view that it is once again appropriate to increase the payment. I hope that that will be welcome.
§ Mr. Anthony Coombs (Wyre Forest)
I welcome my right hon. Friend's news about the increase. It will be especially welcomed by young people who, through no fault of their own or of their parents, have been damaged by vaccine. The increases are in response to representations that I and other hon. Members have made over the past year. I should like the Minister to look at the rules and regulations under which vaccine damage payments are made. Currently, an 80 per cent. disability has to be proved before any payment can be made. I have urged the Minister in the past to look at this matter, and I hope that he will do so. I thank him for his valuable contribution.
§ Mr. Newton
I am grateful to my hon. Friend for his comments. I shall consider the issue that he raises but, 992 obviously, I cannot make any commitment at this stage. I pay tribute to him and to other hon. Members for the way in which this issue has been pressed. I am glad that we have been able to announce a response.
§ Mr. Paul Flynn (Newport, West)
While we all appreciate the increase, it seems to be just below the increase in earnings for the period and probably in line with inflation. How many vaccine-damaged children will benefit from the change?
§ Mr. Newton
As with the previous change, this change will apply to new claims made after a certain date, in this case after 15 April. The reasons for doing it in that way were fully explained in 1985, but I can repeat them if hon. Members wish me to do so. Only about four or five vaccine damage awards are made each year. It is a small scheme, and I hope that it is clear to the House that I am not trying to oversell it. However, the matter has been sensibly and rightly raised, and we have responded to it in the same way.
It is customary in such debates for the Secretary of State to conclude by reminding the House of the huge amounts with which we are dealing. The increase in social security expenditure between this year and next, most of it arising from the uprating order, is nearly £5 billion, and it will take the total next year to well over £60 billion. [Interruption.] I wish that Opposition Members would stop muttering.
§ Mr. Michael Meacher (Oldham, West)
Instead of trying to take credit for the fact that the budget has increased by £5 billion a year, the Secretary of State should eat a little humble pie by acknowledging that his economic colleagues have completely lost control of inflation, and that that, and that alone, is the cause of the increase.
§ Mr. Newton
It is absolutely clear that inflation is falling at a very significant rate, and that is welcome to all of us. The hon. Gentleman might have spotted that, although I felt it, as it were, routinely necessary to refer to these macro-economic figures, I was about to move to a rather different way of bringing my speech to an end.
It is possible to take those huge sums and present whatever arguments we may have as to their basis. I prefer to concentrate on what this is all about—the people we are helping. In raising the national insurance retirement pension by £5.10 for a single person, and by £8.15 a week for a couple, we are firmly maintaining our pledge to raise pensions in line with price rises. In providing a real increase in income support for many less well-off pensioners, we are building on what was done 18 months ago for those in this group who are disabled or who are over 75—taking the total of real additional help to nearly £300 million in less than two years.
With the increase in child benefit, we are helping more than 6 million families, complementing the £400 million of real extra help already provided to families who are less well-off, compared with the position that obtained before the social security reforms of 1988. When all that is taken together with legislation that the House passed recently to bring an additional £300 million a year of help to many disabled people, it will be seen that we can take some pride in this order and in the Government's record.
§ Mr. Michael Meacher (Oldham, West)
The annual debate on social security uprating is, in effect, a debate on the living standards and prospects of the poorest one third of the nation. On that subject, we have just had a rather modest speech from the Secretary of State. It was a speech full of minor details, but perhaps that is not surprising as, when it comes to protecting the living standards of our poorest citizens, he has a lot to be modest about. However, modesty is not a quality that comes naturally to the present Government. Last July, the then Prime Minister roundly declared:all people of all incomes have increased their standard of living under this Government."—[Official Report, 24 July 1990; Vol. 177, c. 304.]Let the Secretary of State say that to the 100,000 claimant households that have not had a penny rise in their benefits since April 1987. Ironically, 24 hours before that declaration by the Prime Minister, the Government published statistics which, for the first time, publicly admitted the opposite.
A Department of Social Security document bearing the sexy title, "Households below average income"—I suppose that only a Government Department could dream up such a title—for which we were grateful, despite its late publication, shows that, between 1979 and 1987, the average income, after housing costs, of the bottom one tenth of the population fell by 5.7 per cent. in real terms, and that the average income of the bottom one fifth of the population fell by 1.1 per cent. in real terms. The 10 million people affected are the subject of today's debate.
Ministers like to say that they have concentrated help on the most needy. I am glad to see that the Minister for Social Security and Disabled People has woken up now that the Secretary of State has finished and I am speaking. On 30 January 1990, he said:We have adjusted the system to concentrate help on the poorest elderly and disabled pensioners."—[Official Report, 30 January 1990; Vol. 166, c. 211.]I wrote to the Secretary of State and asked for more details of the poorest 1 million people in this group—the most disadvantaged in our society. After four months, the Minister replied, confirming what we had always suspected—that under the present Government the 1 million in the population with the lowest incomes have suffered a fall in their real living standards of no less than 10 to 15 per cent.
§ Mr. David Nicholson (Taunton)
The hon. Gentleman mentioned comparative modesty between the two Front Benches. He will know that, since 1979, the Government have increased spending on family benefits by 29 per cent. in real terms. When the last Labour Government cut spending on family benefits by 8 per cent., where was the hon. Gentleman and what did he do?
§ Mr. Meacher
I should certainly like to know where those statistics come from. The hon. Gentleman must know that, during their last term of office, the Government have cut child benefit by more than 25 per cent.
Among the groups that I mentioned—they are the subject of today's debate—one group about which the Government like to claim they are concerned is precisely the group mentioned by the hon. Gentleman, families with children. Indeed, the Minister for Social Security and Disabled People said in his revealing speech a year ago:We try to establish those parts of the social security system where the shoe pinches unduly and make adjustments 994 to it. We have helped families on low incomes, whether in or out of work."—[Official Report, 30 January 1990; Vol. 166, c. 211.]On 26 July 1990, the Government published what has really been happening to families on low incomes. I mention that date only because, as hon. Members may remember, it was the day that Parliament rose for the recess. I am sure that my hon. Friends know that there is no more important Hansard to read than the one that is circulated after Parliament has closed for the recess. That is when all the unwelcome information that the Government have been trying to conceal for the past year finally sees the light of day. It is worth reading carefully. It shows that where the shoe pinches unduly—the poorest 10 per cent. of families on low incomes—have not been helped by the Government. According to the Government's figures, those people are 7 per cent. worse off in real terms compared with 1979. That is on the record, and I recommend that the hon. Member for Taunton (Mr. Nicholson) look at that Hansard.
§ Mr. Newton
My first point is not my main point, but it needs to be made. The hon. Gentleman appeared to be referring to households on below average income and to the date of publication for certain figures. Those figures were not published on the day that Parliament rose for the recess. I remember that they were published when I was due to appear before the Select Committee on Social Security. We felt that it would be right, if possible, to publish those figures then so that the Select Committee could examine me on them. That must have been before Parliament rose for the summer recess.
I wish to make a more substantive point about the way in which the hon. Gentleman is using the figures. He will acknowledge that he is referring to figures after housing costs, rather than to the total income available to the family. In reckoning their standard of living, most people look at their total income rather than their income after paying their rent or mortgage, although they may need to do that calculation for other purposes.
By concentrating on the figures after housing costs, the hon. Gentleman runs the risk—I put it no higher than that because I am sure that the hon. Gentleman is not seeking to run that risk—of being seriously misleading. I shall give one simple example, which I also gave to the Select Committee last year. If a young couple save £50 a week to put towards a deposit on a house, that £50 will still be in their income after housing costs and they will probably be several deciles up in the tables to which the hon. Gentleman referred. When that couple stop saving £50 a week, but instead start paying £50 towards a mortgage, it becomes a housing cost and the couple drop a decile or two in the tables and are suddenly defined as poor. The only change is that they are putting £50 a week into a mortgage instead of saving £50 a week for a deposit. That shows how absurd some interpretations of statistics can be.
§ Mr. Meacher
The right hon. Gentleman is not correct on a number of points. First, I was not quoting the "Households below average income" figures; I was quoting Hansard for the last day of the Session, which I think was 26 July, and which was circulated 10 days after. It is correct that the HBAI figures were issued two or three days before, but what the right hon. Gentleman does not add is that they had been sat on by the Government for at least a year. They had been promised the Christmas before, they had been promised in the new year and they 995 had been promised before Easter. We finally had them in the last week of the Session, when it was not impossible but extremely difficult to make use of them in the House.
Whether taking incomes before or after housing costs is the fairest representation of the state of overall income is a genuine issue, but it is curious to hear the right hon. Gentleman make such a point on behalf of a Government, who have constantly said that we should ignore the cost of mortgages in the retail prices index—[Interruption]. That is exactly what the Government have repeatedly said. They say that the mortgage element should be put on one side and that we should look at incomes minus mortgage payments. I do not think that I need to take any lessons from the right hon. Gentleman about which is the correct way of representing the figures.
§ Mr. Frank Field
Is not one of the difficulties that the Government face that they have been hoist on their own low income figures? When the figures after housing costs showed that the poorest were doing twice as well as everybody else, the Government wanted to use them, but when they were revised the Government came up with some rather good reasons why we should not use them. Should not all the data carry a Government health warning, since both sides of the Chamber use figures for political reasons rather than because they reflect what is happening to the poor?
§ Mr. Meacher
My hon. Friend, who was Chairman of the Select Committee on Social Services at the time, makes a relevant point. The Government statistics at that time were said to show that the poorest 10th—I think that it was the lowest decile—had increased their standard of living twice as fast as the rest of the community. That seemed an incredible claim and the Select Committee and my hon. Friend rightly subjected the Government's statistics to independent assessment by, I think, the Institute of Fiscal Studies. It showed that the figures were bogus. Therefore, we should take into account my hon. Friend's point and the way in which the Government have moved the goal posts by presenting figures calculated on a different basis.
The Government have only released figures for up to 1987. That is just as well for them because 1989 was a bad year, 1990 was a dreadful year and 1991 looks like being a disastrous year, not only for the nation, but above all for those on the lowest incomes. Since 1987, for them—it is mainly for them—unemployment has risen sharply and child benefit has been frozen. It can safely be said that if a quarter of the population were worse off in real terms after eight years of Tory government, as the Government have now admitted, they are even worse off now, after 12 years of Tory government.
We may be told, although the right hon. Gentleman has not yet said so, that all that occurred under the previous regime—the ancien regime. The Conservative party is now the purveyor of the classless society. Frankly, I have never heard such cant. It was the Prime Minister who used that phrase and it was the Prime Minister and the Secretary of State who, five years ago, presided over the legislation that introduced the social fund; that virtually ended free school meals; that abolished entitlement to 90 per cent. of disablement benefit; that extended the penalty for so-called voluntary unemployment from six weeks to six months; that removed all entitlement to benefit for 16 to 17-year-olds which led directly to cardboard city; that 996 hacked £500 million off housing benefit for pensioners and other poor families, and which, according to the National Association of Citizens Advice Bureaux caused 82 per cent. of social security claimants to be worse off.
All those damaging changes were the direct result of the Prime Minister and the Secretary of State and they came into effect in 1988—the same year in which the Prime Minister, who was then Chief Secretary to the Treasury, and a former Chancellor of the Exchequer handed out £2 billion in tax reliefs to the well-heeled and the rich.
I seem to remember that someone once said that people should be judged not by what they say but by what they do. Far from ushering in a classless society, the Prime Minister has handed down some of the most class-conscious and divisive legislation that Britain has suffered since the war. If the Prime Minister really believed in a classless society, he would not be making short-term gestures such as raising cold weather payments by £1 a week for a few elderly people for just two weeks. He would be restoring heating additions to all pensioners in need. He would be reversing the Tory's break of the pension uprating link with earnings, which has made pensioners a class apart—the only people who are denied the rise in living standards enjoyed by the rest of the community.
If the Prime Minister really believed in a classless society, he would not merely be offering an additional £1 in child benefit for just this year for the eldest child only; he would be reversing the four-year Tory freeze on child benefit for all children. If the Prime Minister really believed in a classless society, he would not merely be talking about opportunity and fairness; he would be abolishing the social fund that traps millions of our people deeper into poverty and debt.
§ Mrs. Marion Roe (Broxbourne)
Does the hon. Gentleman agree with the president of Pensioners' Voice, who says that Labour's commitment to pensioners is weak?
§ Mr. Meacher
I did not see that and it surprises me because we are proposing—I am grateful to the hon. Lady for giving me the opportunity to include this in my speech—an extra £5 a week for the single pensioner, an extra £8 a week for the married pensioner on top of the normal uprating and, even more important in view of the experience of the past decade, to restore the link with earnings. As a result of that link being broken, pensioners have lost £12 a week if they are single and £20 a week if they are married. Our proposal is not weak—it is a formidable commitment.
§ Mr. Winnick
Is my hon. Friend aware that, whatever criticism Pensioners' Voice may or may not have about our record and commitment, it has only contempt for what the Conservative Government have done and the fact that married pensioners have lost some £23 a week and single pensioners between £13 and £14 a week as a result of the decision taken in 1980? [Interruption.] I do not know what the junior Ministers are muttering about, but I know that many pensioners in Britain are bitterly disappointed that they are way behind pensioners in other European countries and that they are being treated with contempt by this Administration.
§ Mr. Meacher
Labour also should be judged not by what it says but by what it does. The previous Labour Government increased, over five years, the real value of a 997 pension by 20 per cent., whereas 12 years of Conservative government—as the Secretary of State implicitly admitted when speaking about prices indexes—produced a real increase in the value of pensions of next to nothing. That is a formidable difference between the two parties, and one of which I am sure pensioners will take account at the next general election.
§ Mr. David Sumberg (Bury, South)
Does the hon. Gentleman recall that, in January 1987, in the Bill promoted by the hon. Member for Walsall, North (Mr. Winnock), he voted in favour of free concessionary television licences for pensioners? Will the hon. Gentleman confirm that it is Labour's intention to implement such a measure during its first year in office? If so, how much will it cost the taxpayer?
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I cannot see how that question arises from the motions on the Order Paper.
§ Mr. Meacher
I share your view, Mr. Deputy Speaker, that, while I ought to answer relevant questions, I am being dragged a long way from the subject of the debate.
§ Mr. Peter Bottomley (Eltham)
On a point of order, Mr. Deputy Speaker. The hon. Member for Oldham, West (Mr. Meacher) has spoken for 19 minutes, but has not mentioned any of the orders once. If he is allowed to do that, the House ought to be permitted to hear his answer to my hon. Friend's question about concessionary television licences.
§ Mr. Meacher
In that case, I shall certainly continue with my speech.
For all the Prime Minister's soothing rhetoric, it is obvious that he does not believe in a classless society or in a welfare state for the needy. His record shows that he believes in a welfare state for the wealthy. Governments are not judged by little gestures—by a little concession or minor amendment here, a further detail there—they are judged by the changes that they make to overall flows of income and by their operation of the social security and taxation systems. That is the measure by which Governments stand or fall.
In successive Budgets during the past decade, the Government have, according to independent estimates, engineered a rise in the incomes of the richest one tenth of the population of about £6 billion. According to a parliamentary answer that I received a week ago, the Government have also poured £3.75 million into a public subsidy during the past five years for private pensions for the well-off.
On the other side of the balance sheet, according to the Government's own figures, during the past decade, pensioners have had £22 billion taken from them as a result of the break of the earnings link. That puts Conservative Members' comments into perspective. The Government's minuscule improvements are no doubt welcome, but they are insignificant when compared with the financial effect on pensioners of their other measures.
The £22 billion would be enough to give every pensioner a Christmas bonus this year of more than £2,000.
§ Sir Robert McCrindle (Brentwood and Ongar)
I invite the House to reflect on what happened when there was last a Labour Government. The hon. Gentleman said that he regrets the Government's severing the link between pensions and earnings and linking pensions to prices instead. Is it not the case that, when Labour was in power between 1974 and 1979, it gave an undertaking similar to that which the hon. Gentleman is now offering but, because of the state of the economy, on only three out of a possible five occasions was it possible to honour it?
§ Mr. Meacher
The hon. Gentleman is not right. The relevant consideration is what happened to pensions in overall terms. As I said, pensioners were 20 per cent. better off after five years of Labour government, but they are zilch better off after 12 years of Tory government. If the hon. Member for Brentwood and Ongar (Sir R. McCrindle) is satisfied with that, I hope that he will give that message to the electorate.
§ Mr. Newton
The hon. Gentleman cannot be allowed to get away with the line of argument that he has used in the last few minutes. What matters to pensioners ultimately is the totality of the effect on them of Government policies. The combination of the pension uprating and the inflationary, taxation, and slow-growth policies pursued by Labour meant that the standard of living of pensioners rose by only 3 per cent. under a Labour Government, whereas average net incomes have risen by 31 per cent. under our Government.
§ Mr. Meacher
Those figures have been used repeatedly, but they are fundamentally flawed in at least two respects. The growth in shareholding dividends that they incorporate—which can be considerable at a time of rapid growth—have been averaged out over all pensioners. That is absurd. There are some rich pensioners, and they have it all—but the majority of pensioners are poor, and some are very poor. What matters to the poorest of them all is what the Government have done in respect of the state retirement pension, or the additional pension through SERPS. Under the present Government, there has been no increase at all for the poorest 2 million pensioners. They are the people who really matter, because they do not enjoy the advantage of private pensions or of shareholdings. They are the responsibility of the Government and of our generation, yet they have enjoyed no real increase under the Conservatives. They enjoyed a 20 per cent. increase under the last Labour Government.
Families have had £750 million pounds taken away from them as a result of the four-year freeze on child benefit. As a result of all the changes to national insurance benefits since 1979, claimants have had an additional £1 billion taken away from them by successive cuts in benefits. That was revealed in a written answer given on 6 February in reply to an excellent question asked by my hon. Friend the Member for Leeds, West (Mr. Battle).
Vast changes in income flows are continuing, and are growing year by year. The Government have already timetabled huge additional cuts for the future—most 999 notably the abolition of the additional pension for invalidity benefit, from which, in time, the Government will save no less than £1 billion per year, according to their own estimates. Staggering as it may seem, the Exchequer will gain more from cuts in benefit from the poorest one third of the nation than from the proceeds of all the Government's privatisations. That is not producing a classless society, but engineering the sharpest class division since the Edwardian era.
This year, there has been a new phenomenon—one that has not occurred even during 11 years of Thatcherism. I refer to the creation of a new army of debtors, dependent on the ultimate safety net of income support, yet forced by punitive Government measures to subsist, in large numbers, below the poverty line. According to the Government's own estimates, nearly 750,000 people on income support will be subject this year to deductions because of the poll tax.
The most recent Government figures that I have seen show that a further 430,000 people on income support have been forced to make social fund repayments averaging £5.25 a week. According to a number of parliamentary answers that I have received over the past two months, a further 250,000 families are repaying electricity and gas arrears averaging about £9 a week, 80,000 are paying back rent arrears, and 45,000 are repaying water charges. In all, more than 1.5 million people—one in seven of all those on income support—are now being forced below the poverty line by compulsory benefit deductions.
Even earlier Tory Governments, in their most repressive phases, never did that. I wonder how many of the Government's grinning supporters realise what it really means. Indeed, I wonder whether a single hon. Gentleman opposite can tell me how much income support is received today by either a single or a married adult. I shall gladly give way to any Conservative Member, or indeed Minister, who can tell me.
§ Miss Emma Nicholson (Torridge and Devon, West)
Does the hon. Gentleman want a gender-free House of Commons?
§ Mr. Meacher
I certainly do. If my terminology fails to adhere to that excellent principle, I apologise.
I was, however, making a much more important point. I think that it speaks volumes that more than 1.5 million people are in such a position. It is interesting that not one Conservative Member can tell me the current level of income support for a single or a married adult, although a Conservative Government are forcing 1.5 million people to live below the poverty line. Government policy has condemned those people to live on less—sometimes substantially less—than £36.70 a week in the case of single adults over 25, and £57.60 a week in the case of married couples over 18, yet not one Conservative Member can give me the figures.
§ Mr. Newton
Once again, the hon. Gentleman is using figures in what can only be described as a misleading way. Those figures take no account of the fact that either all or part of their mortgage interest—all of it, if they have been receiving benefit for any length of time—is being paid for those self-same people, amounting in some cases to substantial sums. If they are tenants, they will receive either a rent allowance or a 100 per cent. rent rebate, as long as they are also receiving income support. No one else 1000 uses the income figures in such a misleading way. Income support levels must be seen in the context of the meeting of housing costs—in full, in many cases.
§ Mr. Meacher
Actually, they should be seen in the context of people being able to survive to pay all the costs of normal daily living. Housing is certainly one of those costs, but there are plenty of others, including food, clothing, transport and everything else that people require to look after themselves. I see that the Secretary of State at least has the grace to be embarrassed by what I have said: the figures are indeed deeply embarrassing. They suggest that 1.5 million people are receiving substantially less than income support. I have said before, and make no apology for doing so again, that one Tory Member—Matthew Parris, who is no longer in the House—who was young and fit tried to live on income support for a week, but was unable to do so even for that long. These people are being forced to live on it for months and years.
§ Mr. Frank Field
I congratulate my hon. Friend on bringing the Secretary of State back to the Dispatch Box. Has he noticed that the right hon. Gentleman has changed his stance in less than five minutes? When he was talking about low income statistics, the right hon. Gentleman said that it was important not to use figures that took account of housing costs; he has now told us that it is important to think of income support as the amount remaining after housing costs have been met.
§ Mr. Meacher
The right hon. Gentleman has already made his speech. I realise, however, that he should probably be given an opportunity to reply to that point—although it was extraordinarily effective and relevant.
§ Mr. Newton
It strikes me as the complete opposite of the real position. I complained before that the hon. Member for Oldham, West (Mr. Meacher) was concentrating on the figures after housing costs; I am now making exactly the same point—that he is concentrating on the benefit rates after housing costs, regardless of those costs.
§ Mr. Meacher
s: The central point, from which the right hon. Gentleman cannot escape, is that, for the first time since Beveridge or perhaps a little earlier—I do not go back to the 1930s—people are being forced to live significantly, and sometimes substantially, below the Government's safety-net level. It is almost impossible to live satisfactorily and healthily on income support for a long time, but to force people to live below it is unbelievably punitive.
§ Mr. Meacher
I will not give way again, especially in view of what the hon. Gentleman said to me earlier.
Only the present Government have punished people for being poor. This new army of 1.5 million people is at the bottom of the heap—along with the homeless and those who sleep rough, whose numbers are unprecedented. The cuts in living standards go far wider. In a parliamentary answer that I received about a week ago, the Government admitted that single pensioners are now £12.80 a week worse off, and £20.50 a week worse off than they would have been if they had not broken Labour's earnings link.
1001 The Secretary of State, of course, says that the Government have kept up with prices, and that pensioners are no worse off in real terms. Even that proves untrue when we consider, as we must, pensioners' increased outgoings, notably the poll tax. This year, the average poll tax is likely to rise by about £1.15 a week. Following the implementation of the orders, pensioners will have less disposable income in real terms this year than last. The same will apply to many of the 2 million people who are unemployed—whose numbers may rise to 3 million within a year—and to hundreds of thousands of low-income families who are now £1.30 a week worse off for the first child and £2.30 a week worse off for the subsequent children as a result of the four-year child benefit freeze.
Moreover—the Secretary of State touched on this—the latest evidence shows that thousands of elderly people, and people in residential and nursing homes, will be in even worse straits next year than this year. The most recent independent survey shows that the income support shortfall will rise this year—even after the increases proposed in the uprating orders—to some £25 a week in residential homes and some £52 a week in nursing homes. Evictions of elderly people and closures of homes can therefore be expected to increase. Even more ominous, the survey found that half of all registered homes now refuse to take elderly people who are receiving benefit and cannot afford to top it up from a private source at a rate of up to £52.60 a week. Those people will not receive the care that they need.
§ Mr. Meacher
I have abundant evidence to support my comments.
Another group—applicants to the social fund—is, in increasing numbers being faced with a blank order to go without. Last year, three quarters of such people were refused help. One quarter were refused help because their local Department of Social Security office did not have enough cash left. According to the recent devastating National Audit Office report published a fortnight ago, refusal rates are up to 73 per cent. for loans, up to 79 per cent. for grants and up to 51 per cent. for crisis loans.
The Secretary of State said that the social fund allows assistance to be targeted on those most in need. That is Toryspeak for rationing. It is also a lie. Those most in need—those without any money—are the people most likely to be refused help on the ground that they cannot repay the loan. That must surely be the ultimate hypocrisy.
The social fund is an ugly throwback to the Poor Law. It is a state-funded charity under which officers ration patently insufficient money among desperate claimants who have no right to an independent appeal against refusal. I can tell the Secretary of State and the Prime Minister that there will not be a classless society, let alone any decency or civilised values of care and compassion, until the social fund and its authors are swept away.
Our social security system is a negation of all that it should be. It does not provide social security; it provides a growing level of insecurity for millions of our people. 1002 Much of it is not administratively efficient, but wasteful. The National Audit Office report found that one third of the social fund's budget is spent on administration. The huge savings made by the computerisation programme are not being used to harmonise or improve the quality of the service. They have already been forfeited to the Treasury in staff cuts.
The priorities of current policy do not reflect need, they reflect dogma. This year, £1 billion is being spent on tax reliefs for personal pensions while the neediest are turned away from the social fund in their thousands. The poorest pensioners and low-income families with children are being made even worse off this year and specific benefits continue to be cut—notably statutory sick pay, the motion about which we will certainly vote against tonight. Britain now has the lowest pensions in Europe in cash terms and as a proportion of average income. The same applies to many other benefits.
After 12 years of Tory rule, poverty is again high on the political agenda as it shames the conscience of the nation. If the Government will not act to restore justice and decency in public life for all our citizens, the Labour party soon will after the general election.
§ Miss Emma Nicholson (Torridge and Devon, West)
I will be brief, as my colleagues want to challenge the picture of deprivation painted so poignantly during the past 45 minutes by the hon. Member for Oldham, West (Mr. Meacher).
The hon. Member painted a poignant picture of an army of millions of paupers in the United Kingdom, with thousands of people who are beggared by an uncaring Conservative Government. The hon. Gentleman should come to my constituency and witness the outstanding, first-class social services provision provided by a superb committee from county hall, and by first-class social workers.
We have superb social workers in north Devon who care for the poorer elements in our society, of which there are many, because people regard the area as a Mecca. They come to live in Devon, but do not want to work. Instead, they try to live off the taxpayers in Devon.
If the hon. Member for Oldham, West visits my constituency, he will see that the way in which society comports itself, even when it is in difficulty in relation to income, is different from the picture that he painted.
§ Mr. David Nicholson
Did my hon. Friend note that the amazing tirade from the hon. Member for Oldham, West (Mr. Meacher) was witnessed by a massive audience of only three Labour Back Benchers?
§ Miss Emma Nicholson
That always seems to happen when Opposition Members believe that they can rant and rave to maximum effect. However, they only do that to empty Opposition Benches. That always happens on Supply days. It is extraordinary that so few Opposition Members turn up.
I wonder whether the hon. Member for Oldham, West realises how much the age profile in this country and in 1003 other western nations is changing. We have a rising age profile. We are all getting older and living longer because of the health and welfare services run by this Government. We are also working longer, because there is not such a strict ceiling on working. We are living to a healthier old age, but we are having fewer children.
I am not making a political point; I am trying to introduce realism into this debate, following the speech of the hon. Member for Oldham, West. As a result of the rising age profile, the growing band of old people must be supported by an ever-shrinking group of younger earning people. We should look most keenly at those people in terms of income. I have a large number of pensioners in my constituency, and there is a rising age profile in Devon. In fact, in that respect, we are in advance of the rest of the country. However, as we grow older, we will all need to be supported by younger people who are earning, and that proportion of people is smaller than it has ever been.
We should not think that pensioners today have paid for the totality of the health and welfare provision that they are receiving after retirement. They made the modest contributions that the state sought from them at the time. However, pensioners are now dipping into state benefits in a very big way, because so much more is available in terms of social benefits, and particularly in terms of health care, and the younger people are paying for that.
§ Mr. David Shaw
In the picture that my hon. Friend paints, does she agree that, with the expanding number of pensioners and a smaller group of young people supporting them, we would expect, with limited resources, to find falling living standards for pensioners? However, under this Government, the reverse is the case. More pensioners than ever before own consumer goods such as televisions, telephones and cookers. Under this Government, the total income of pensioners has increased to record levels.
§ Miss Nicholson
I agree. I have a note which tells me that, on average, between 1979 and 1987, pensioners' net incomes in total grew by 32 per cent. above inflation, which is more than five times faster than they grew under Labour, when there were fewer pensioners.
It is important to strike a fair balance in society between pressure on younger earners and the proper welfare and health benefits that we offer the older recipients of those younger people's earnings. It is important to recognise that and not continually to ask unrealistically for full benefits across the spectrum of pensioners.
More and more of us have second pensions. As my right hon. Friend the Secretary of State rightly says, more and more people have a much wealthier life style than the word "pensioner" implies. According to the hon. Gentleman, when we think of pensioners, we might think of someone who is acutely poor. Yes, there are people who are pensioners and who are in poverty, and we must consider them even more rigorously than we have managed so far.
Most pensioners are far better off than pensioners have ever been. They should be well off, and they should be able to have holidays in Florida, colour televisions, two cars, and a longer, healthier and wealthier life. Let us not run away with the idea, however, that that is every pensioner in the United Kingdom—it most certainly is not. My right hon. Friend has struck a fair balance, which is difficult to find, between pressure on younger earners and benefits for older pensioners.
1004 The hon. Gentleman remarked that the Government are not judged by little concessions. I agree—but nor were the previous Labour Government. However, my colleagues and I judge the current Labour Opposition by the proposed concessions that they disdainfully offer to the most needy group in our society, which must be those who are disabled, either mentally or physically. I am appalled that disabled people do not feature at all in Labour's priority social security pledges. They are just not there. They are an invisible element of society.
Two weeks ago, the right hon. and learned Member for Monklands, East (Mr. Smith), the Opposition spokesman on such matters, said that all promises to disabled people were contingent upon the capabilities of the economy. If disabled people are contingent upon the capabilities of the economy, and if the Labour party is in charge of the economy, there will be nothing for them.
§ Miss Nicholson
I refer to the excellent changes that my right hon. Friend the Secretary of State has offered for disabled people. I am delighted that my right hon. Friend the Minister for Social Security and Disabled People is on the Front Bench. Far from being uncaring and insensitive, my right hon. Friend treats the disabled on an equal basis, without the patronage that we frequently see in the Opposition.
I am delighted to note the increase in mobility allowance, for example. That is no minor concession. The Government have increased the mobility allowance in real terms by 550 per cent. since 1978–79. The number of recipients has increased six times—it is well over 0.5 million and it is approaching 0.75 million. Also, £4 million of new money has been allocated to include the deaf-blind, and double amputees will be included from April 1991, with a new grant of £1 million to Motability to convert cars.
Those are not concessions; they are ways of providing independence of thought, mobility, and accessibility to the disabled. That is what counts. They are a huge group of people. By any account, they are people in need. They genuinely cannot help themselves. They are very unlike the family in my constituency of whom I was reminded when we heard from Opposition Members about all the beggars in the United Kingdom. Indeed, three generations of one family—the grandfather and grandmother, father and mother, and now the children—are now living off the state. Not once has any member of that entire family done a job. They are beggars par excellence. Would hon. Members give more to such a family?
It is acutely important that we give independence of thought, life and ability to work to the disabled. I am therefore very excited that we have now given far more money to help people to go to work if they are disabled. That is an important point, because the number of disabled people is rising. The Government instituted the first study of how many disabled people there are in the United Kingdom and of what their disabilities are. Also, there is a consultation paper, and we on the Select Committee on Employment did a special study and recently published our findings. The Government have 1005 proved their credentials time and time again to that most needy group in society. It is enormously important for employment and employment prospects for the disabled that matters such as the mobility allowance are taken into account and uprated as they have been.
I strenuously welcomed the establishment of the independent living fund. I am delighted that its funding for 1991–92 has almost doubled compared with that of the current financial year. The fund has the flexibility which is the hallmark of the Government's treatment not only of the disabled but of those on lower incomes. Provision can be tailored finely to meet individual needs. Treatment is sensitive, and people are interviewed in their own homes.
We now see the real divide between the Government and the Opposition. The blanket coverage that the Opposition desire and constantly demand for everyone in the United Kingdom whom they define in a patriarchal manner as in need is 1 million light years away from the truly thoughtful, sensitive, intelligent and accurate pinpointing of need by the Conservative Government. I believe that I have made my case in talking about what the Government have done for the disabled in this uprating, and I support my right hon. Friend the Secretary of State.
§ Mr. Frank Field (Birkenhead)
Unlike the hon. Member for Torridge and Devon, West (Miss Nicholson), I shall speak briefly, because, if the House will forgive me, I have a meeting at 5.30 pm. Also, unlike the hon. Lady, I have two points to make, and they are about the orders. Before the hon. Lady makes too much of the independent living fund, I bring her bad news. I share her views about the fund, but it is the Government's intention to chop the scheme when community care is introduced. If she wants to conduct a little campaign, many Opposition Members would join her.
First, I refer to fees for residential care. Over the past 10 years we have witnessed a massive change from hospital care for our very elderly citizens to care in private residential nursing homes. That would not have mattered if the costs were not borne by some families. Many of my constituents not only fought through two world wars but, unlike the beggar family whom the hon. Lady frequently mentioned, worked every year that they could work, paid their contributions and expected that, at the end of their working lives, they would be looked after—if need be, in hospital.
Now, in all our constituencies, some homes refuse access to constituents on benefits. The Minister for Social Security and Disabled People may have seen the citizens advice bureau report which shows that, in some areas, no homes are taking constituents who are on income support. We have changed from a situation in which our older citizens could have expected care in hospital—I am not saying that that was a desirable aim, but there were no bills—to one in which people should be cared for in residential homes, and we are now finding that an increasing number are refused entry because they cannot pay.
Also, an increasing group of constituents—pensioners—are being asked to pay a contribution to their parents' fees in nursing homes or residential homes. As the Minister knows, some of his hon. Friends can give him examples of contributions of about £25 per week being made to meet 1006 their parents' fees from the children's pensions. We shall shortly reach the stage where some of our constituents will face eviction. I know that the Government hope that, before that stage is reached, they will have managed to hand over that entire responsibility to the local authorities—although some of us may use the word "dumped". However, it is not a good enough policy for the Government to hope that time will be on their side and that that responsibility will not be theirs, but one for the local authorities to accept.
I hope that, with the help of the careful information that he will have been given by his hon. Friends on the Treasury Bench, the Minister will to some extent share with the House his thoughts on this matter. We may be faced with evictions, and we should debate this issue now, rather than wait until it is raised in an emergency debate once evictions occur.
I am grateful for the increases that the orders make. They are necessary and go some of the way, although not the whole way, that we have been seeking.
In the single minute left to me, I shall concentrate on the second issue that I wish to raise, child benefit. As my hon. Friend the Member for Oldham, West (Mr. Meacher) said, we now have a new regime. The upratings relate to the old regime. I do not want in any way to detract from the credit that must go to the Government team for getting through this botched measure, because, although it is indeed botched, that is not its importance. What is important is that, when getting the increase through, the old regime was nailed to a commitment to continue child benefit. All hon. Members are grateful to the Treasury Bench for achieving that.
However, there are now some difficulties with the child benefit scheme, about which I asked a serious question, but did not receive a serious answer. Both the Tory party and the Government are debating the future shape of the scheme. It is right that there should be such a debate in those two organisations, but it should be more open. Between 7 million and 8 million mothers draw child benefit every week. I do not think that the Government should conduct a review about the future shape of the child benefit scheme, guaranteeing that child benefit should remain, but wanting to debate the way in which the money is spent, in private, without including mothers or some of their representatives who are among my hon. Friends——
§ Mr. Field
Yes, and among Conservative Members.
In his reply, perhaps the Minister could give us some idea about the way in which the Government see the future shape of the child benefit scheme. We do not want the old patter, which states that it will be there for ever. We are grateful for that, and we know that we are in a new situation. We want to take the debate further. As a result of the Minister being open and honest with us, we might have a really good debate in the country as a whole about what mothers would like the future shape of child benefit to be, instead of about what a few Ministers or Members of Parliament would like.
I said that I would be brief, and I have already taken two minutes longer than I set myself, but I wanted to raise not only the issue of the future shape of child benefit but also, despite the Government's brave talk about how much more money is being allocated to cover the costs of 1007 residential care, the real problems of residential care provision, to which we shall have to face up before frail and elderly people are evicted on to the streets.
§ Sir Anthony Durant (Reading, West)
My hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) said that the Opposition's proposals do not mention disability. I must correct my hon. Friend and advise her that the Opposition document refers to a scheme for a new disability benefit. However, what the Opposition have not told anybody is how much it would cost or how it would be introduced. We do not know how the Opposition's proposals will work and we have not been given any costings. Nevertheless, as disability benefit is mentioned in one of the Labour party's documents, I must correct my hon. Friend.
The Government's record on pensions is not bad at all. Pensioners' total incomes are up by 32 per cent., on average—and it is total income that matters to pensioners, not the amount of state pension, which is a different issue altogether.
There are three types of pensioner and the differences between them are growing daily. The first group comprises the 50 per cent. of all pensioners who now have a second pension. Indeed, more than 70 per cent. of people currently retiring now have second pensions, many of which are substantial. Those people have quite a good life. On top of that, the Government have legislated to ensure that private pensions should be automatically increased by 3 per cent. per year to take account of the inflationary spiral. That, too, will help pensioners tremendously. Hon. Members of all parties have wished to ensure that people of pensionable age are well provided for.
The second group of pensioners comprises those who have low incomes and few resources but who live in a property that they own. Very often, those pensioners do not know how to get out of that property or what to do about it as it becomes run down. The Government should have taken more seriously what my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) proposed to try to enable those pensioners to use some of the money tied up in their houses to do up the property and obtain some tax relief while so doing. They may wish to sell the property, or they may wish to continue living there, but in better conditions. That group of pensioners certainly exists in my constituency.
The third group of pensioners comprises the small and declining group who do not have a second pension and who depend solely on the state pension and other state benefits. They are the poor group in our society, and I accept that they exist. Although they are a diminishing number, they are getting more resentful. Many of them live in old people's homes, where people with second pensions may also be living, but rather more comfortably. As the state-dependent group does not have the same amount of money, pensioners in that group feel more aggrieved.
That is why I strongly support the Government's move to put money in that direction. The Government have started to do that, and the uprating proposes a further £78 million to increase the benefits for those on the lowest incomes. The right way to tackle pensions is to acknowledge that it is the total income which matters, not the basic pension.
1008 The Labour party has promised an extra £5 per week for single pensioners, but it has not mentioned uprating the whole thing to put back the money that Opposition Members keep saying that pensioners have lost. They are careful not to promise that, because it would result in enormous bills, which they do not want. The Labour party has said that it will link the basic state pension to prices and incomes, as used to happen, but I wonder whether it will actually do that if it ever comes into office. Its promises on pensions do not always live up to expectations.
As I have said, we have three groups of pensioners. There are those now benefiting from a second pension, who are doing extremely well and are very comfortable. There are those who have problems with their houses, many of whom have low incomes and only a small amount of capital. Then there is the smaller group, which is declining all the time, which comprises those who are dependent on the basic state pension and other benefits. That is the group that we must assist and on which we must concentrate. The Government have started to do that, by providing a further £78 million today.
The Labour party always talks about looking after the poor and those on low incomes, but what really matters to pensioners is inflation and what always happens with a Labour Government—it will happen again if the Labour party takes office—is that inflation takes off. Inflation averaged 16 per cent. when Labour was last in office, which meant that pensions diminished in value. Pensioners would be unwise to think that they would get a better long-term deal from the Labour party. What it says sounds attractive and very nice, but the reality of the Labour party's last period in office was that inflation increased and pensions decreased. The present Government have a good record. I support what they are doing on pensions, and I am proud to sit on this side of the House and to be a member of the Conservative party.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I listened with interest to the hon. Member for Reading, West (Sir A. Durant). I understand and sympathise with the point that he made when he identified a group of poorest pensioners, which he described as small and diminishing. Although it may be a diminishing group, it is certainly not small. We should not make light—I appreciate that he did not seek to do so—of the problems that they face. What worries me more than anything else in the Government's policy is that they are not taking any steps to address the diminishing value of the state pension in relation to the income available to the rest of the earning community. I accept that it is a difficult matter which could involve large sums of money.
Irrespective of whether one believes that universal increases in benefits should be available to all, between now and the beginning of the next century the Government—whatever their colour—will have to address the fact that, year in and year out, the group of pensioners to whom the hon. Member for Reading, West referred is losing out in relation to the community fortunate enough to be in work. The hon. Gentleman said that the £78 million was welcome, and indeed it is, so far as it goes, but it does not begin to deal with the problem. This is not just a problem for the coming year, to which the orders relate, but one that pensioners have experienced for the past five years, and it will continue for the next 15, 20 or 1009 25 years until all pensioners have second pensions. Everyone recognises that, when my generation comes to retire, people will have occupational pensions and second pensions, will own their own homes, and so on. There is indeed an urgent problem, but the hon. Gentleman is not right to say that the Government are addressing it adequately.
I wish to ask a few questions in the context of the background against which the orders are being introduced. I am worried by some of the admittedly anecdotal evidence from my casework and other sources that the problem of indebtedness is getting out of hand. The hon. Member for Oldham, West (Mr. Meacher) rightly mentioned debt, and the consequences of financial deregulation have had far-reaching effects throughout the economy in terms of monetary policy, banking and so on. One of the implications which is only now coming home to me fully is that people in dire financial circumstances can get hold of enormous amounts of credit without any security. Week in and week out, I see more and more evidence that that is exactly what is happening.
Even in my constituency, rent arrears are reaching worrying proportions. Poll tax arrears are also becoming extremely worrying. The House should remember that Scotland is a year ahead of the rest of the country. Mortgage repossessions throughout the country are further evidence of the debt problem. Fuel costs and water charges are exacerbating the debt problem. Welcome though the increases in the orders may be so far as they go, evidence is coming through that there is a real problem out there for a large section of the community and it has not been addressed by the Government.
I have dealt substantially with the points about pensioners made by the hon. Member for Reading, West. I trust that the Government will not take the problems of pensioners lightly. The Government gave pensioners the Lawson bonus 18 months or two years ago. A one-off payment of £2.50 was made to certain elderly pensioners. I am not necessarily in favour of such piecemeal payments because the problems are more urgent and need a more strategic long-term approach and to be dealt with adequately. However, I hope that one-off payments are not off the agenda as an immediate way to bring some urgent relief to a section of our retired population.
As the hon. Member for Birkenhead (Mr. Field) said, there is a debate in the Conservative party and in the Government about child benefit. That is of fundamental importance. It is happening in my party, too. In the approach to a general election, parties reconsider their policies. I detect from the tone of the debate today that the general election is not far away because of the manner in which manifestos and statistics were traded across the Floor of the House. Luckily, most of the political ammunition goes above my head, so I propose to keep my head down for as long as I can. The debate on the future of child benefit is crucial. Some 7 million mothers receive it and £250 million is paid out. It is a major plank in any Government's policy.
If any fundamental changes are to be made, they should be debated in the open, as the hon. Member for Birkenhead said. Also, any changes that are to be made must be expressly included in party manifestos. In the recent past it has worried me that some of the social 1010 security changes that we have witnessed were virtually not discussed during the general election campaign. That happened during the time of the present Administration, so my objection is targeted exclusively at the Conservative Government. My plea is that if there are to be changes in child benefit, they should be discussed openly beforehand and included explicitly in the election manifestos of all major political parties.
I have a series of short questions about the detail of some of the orders. I may have missed them, but I have not seen any published figures for the level of the social fund budget for the next financial year. I do not know when that will appear in the annual cycle of uprating statements, public expenditure announcements, White Papers, and so on. If the figure has not yet been published, I hope that the Government will do so shortly. Certainly, the grants and loans budget, even if it is only uprated in line with inflation, should be in the region of £230 million. My experience—I am sure that it is not unique—is that even that will not be enough to meet the demand. Certainly it is not enough to meet demand for community care grants and to move towards implementing the community care system of finance. The amounts paid in grants must be watched carefully during the period of these orders. I hope that consideration is being given to increasing significantly the community care grants within the social fund.
I cannot possibly make a speech on the uprating orders in relation to the social fund without saying a word about severe weather payments. We have been up hill and down dale since the beginning of the year on this. I understand perfectly that it is not an easy matter to deal with, and the Minister of State is on record as saying that a review is to be undertaken. I hope that the review will be undertaken quickly, because the experience during the recent unusually cold snap was not happy. Statistical evidence is beginning to filter through from reports that large numbers of people in Britain have suffered as a result of the cold weather this year and that that was not an accident. That needs to be addressed as a matter of urgency.
We may see substantial, indeed swingeing, increases in the level of the poll tax in the near future. I do not want to get into a battle about who is responsible——
§ The Minister for Social Security and Disabled People (Mr. Nicholas Scott)
Before the hon. Gentleman goes on to his next point, I remind him that I am committed to reviewing the cold weather payments. He said that many people had suffered. We deemed the whole country as qualifying to trigger the cold weather payment during the period of the most excessive cold, and we made the necessary payments. I should be grateful if the hon. Gentleman would give me as much evidence as he has to assist my review. I want to listen to the constituency experiences of all hon. Members. If the hon. Gentleman will let me have any evidence that he has, I will take it into account.
§ Mr. Kirkwood
I take the spirit of that intervention as helpful. I was referring to the statistical evidence that our mortality rates during the winter months are worse than in other countries. I accept that the whole country was entitled to cold weather payment. That was welcome, but there was some confusion about the way in which the payment was introduced.
1011 With regard to increases in the community charge, the House will know that in 1988–89 the Government compensated people on benefit for having to pay 20 per cent. of their community charge or poll tax. Substantial increases in poll tax are in the pipeline in Scotland—I do not know about other parts of the country—far in excess of any compensation that the Government ever envisaged. The Government decided to increase benefits by about £1.30 per week to compensate for the 20 per cent. payment. That will have to be reassessed in view of the current level of increases in community charge that people face, especially as water charges are not rebateable at all.
In Scotland, water rate charges have certainly been spiralling. Even with the recent relief scheme for the community charge, benefit increases do not compensate for the basic increases that have to be paid. If the Government could identify the level of compensation within income support that is earmarked to address the extra amounts that poll tax payers and water charge payers have to meet, that would help. The Government may not have realised that poll tax and water charges would spiral.
The Audit Commission report said that one of the most cost-effective things that the Government could do would be to sweep away the 80 per cent. enforced ceiling on rebates, because the net benefit annually to the average person paying a 20 per cent. poll tax contribution is £6, while the net collection cost is £15. It would save money if the Government did away with the 20 per cent. enforced contribution.
I support everything that the hon. Member for Birkenhead (Mr. Field) said about residential charges. The Price Waterhouse report suggested that Scotland was the second most expensive area outside London for ordinary residential charges; I am not talking about charges in nursing homes or specialist homes. The increase of £5 in residential home fees is not enough. I have evidence of friends, neighbours and family having to contribute in order to meet residential home charges.
I hope that the Government will do something about national insurance benefits for fishermen. I was given the opportunity to raise the issue by the Secretary of State's announcement about a change in class 2 payments. I welcome that, because it has been a bone of contention in the recent past for fishermen. The change in the weekly earnings rule, coupled with the new lower earnings limit, puts fishermen at a disadvantage in terms of unemployment benefit, particularly if half the eight day tie-up is in one week and the other half in the second week. Fishermen can earn enough in the working days of both weeks to take them out of benefit. That is an unfair consequence of the recent benefit changes, and I hope that the Government will review it.
In relation to non-dependant deductions on applicable amounts for housing benefit, can someone tell me why there have never been stiff increases? According to my arithmetic, the increase is 25 per cent. The sums were done by me, so they may be suspect. So far as I can see, however, the non-dependant deductions at the higher level have gone up from £10.85 to £13.50—a 25 per cent. increase. Even at the lower level there is a 25 per cent. increase—from £4.55 to £5.70. I do not understand that, and I would welcome clarification.
I have come across the case of two 19-year-old non-dependants with someone who was claiming housing benefit. I do not know what average local authority rents 1012 are in other parts of the country, but £27 per week is the about average in my area. If two non-dependant 19-year-olds both get assessed at £13.50, it means that the householder will be deprived of all housing benefit and will have to meet the full rent. If the non-dependants happen to be unemployed, that produces further financial and domestic problems. I do not understand why there should be a 25 per cent. hike when there are much lower increases in other areas. Is there a different way of calculating the non-dependant deductions? If so, I am unaware of it. I should like clarification.
I do not think that the Government's announcement and these upratings do anything other than the Government are statutorily obliged to do. There may have been small increases and insofar as there have been increases, I welcome them, but we need something more if the Government are to show that they recognise the stark financial reality faced by many poor pensioners and families.
§ Mr. John Bowis (Battersea)
I am pleased to support my right hon. Friend's proposals in the package of upratings of benefits. It is yet another step forward by the Government in looking after people who need our support. I had hoped that the debate would have been a serious discussion, with observations from both sides of the House on how to improve benefits still further, bring in new schemes, enhance existing ones and so on. Although I exempt the hon. Members for Roxborough and Berwickshire (Mr. Kirkwood) and Birkenhead (Mr. Field), who spoke briefly, I cannot exempt the hon. Member for Oldham, West (Mr. Meacher) from the charge of not really being interested in the welfare of the people we are seeking to help. He was much more interested in trying to make party political points in what he presumably sees as the run-up to a general election in the not too distant future.
The hon. Gentleman's speech was amazingly disappointing. I can only imagine that he looked at the proposals before him, realised that his party when in power had not produced such ideas, and tried to camouflage the fact that it had come up with nothing in the past and had no credible policies for the future. When one meets people who are in need or those who look after them, one hears of great respect for my right hon. Friends the Secretary of State and the Minister of State who is responsible for people with disability. One does not hear much about the hon. Member for Oldham, West; having heard him today, we understand why.
The Government cannot solve overnight the problems of all the people in need. They have never claimed to do so, but when they perceive a problem and understand it, they bring forward solutions. Under the Conservative Government, we have had a remarkable and sustained improvement in the living standards of people in the groups about which we have been talking.
One has only to consider the overall position of pensioners. Of course one can find individual pensioners who have not done as well as others, but the broad band of pensioners have been much better off under the Government, partly because of the improvement in the economy, partly because of the Government's ability to 1013 get inflation under control and partly because of the benefits in cash and in kind that older people have received from the Government.
Pensioners are better off to the tune of over 30 per cent. in real terms since the Government came into power. That is the result of a combination of factors. Pensioners' income from savings has gone up phenomenally because of high interest rates. Occasionally, pensioners slightly regret a tumble in interest rates. Nevertheless, low inflation and sound investments mean that pensioners have done better from their savings. They have also done considerably better from occupational pensions.
Is it possible to tabulate comparisons with our friends and neighbours in the European Community? One often hears misleading statements about how we compare with other countries. In any given figures, the comparison is often of like with unlike. Perhaps the spouse is not covered by a non-contributory pension in the other country, whereas that spouse is covered here. Perhaps the comparison does not take account of benefits in kind from local or national Government. It would be helpful to have real comparisons instead of occasionally misleading statistical ones.
I am always ready to press my right hon. Friends to go further on that category of pensioner who is just above benefit level and tends to miss out. I do so for good reason, because I spoke about that in my maiden speech. Such pensioners do not get the basic benefit, and, on top of that, they miss out on consequential benefits. I am especially pleased that, this year, the Government have introduced an additional benefit for those pensioners on low income who receive enough from that income to be judged above the benefit level. I am sure that the extra £1 a week will help such pensioners, but I urge my right hon. Friends to go further.
It is good to note that the problems associated with child benefit are being solved. I refer to that tentatively as I remember the days when our late colleague, Sir Brandon Rhys Williams, tabled an amendment to Government policy to ensure that we did not forget the aims behind child benefit—to help children judged to be in need, especially those who may not be caught by other benefits. I supported the change advocated by Sir Brandon, and I am pleased to note that the Government have now found it possible to increase the benefit for the first child. I hope that they will continue to study how further improvements could be made—for example, benefits for children under five. Certainly there are merits in that.
I am conscious of the need to consider other ways in which to improve the income of families with children. The measures taken to encourage fathers who have deserted their families to make a contribution is welcome.
I am pleased to note the proposals on nursing and residential homes. The Price Waterhouse factor has, I am sure, led to the additional support for nursing homes in the uprating. The extra £45 per week, together with the London supplement, is welcome. I am also pleased to note the emphasis given to centres geared to people with alcohol and drug-related problems. I pressed for such improvements some months ago for the Davies centre, which is part of the Turning Point group. That centre helps 1014 people who have come out of detoxification units to go back into the community and without such support those people would find that difficult.
The Government should consider, however, voluntary hospices and the contributions that they invite, but do not demand, from their patients. Department of Social Security offices have disallowed those contributions to be taken as supplements to income support. I know the arguments about that, but that is a hard ruling, as it requires the voluntary hospice movement to make a charge when it has not done so previously. That ruling has affected people with a short lifespan. Many hospices are reluctant to make that charge, so they are losing out.
The House has a particular duty to look after people with disabilities. I welcome the various measures that have already been introduced, but it is important to continue to consider the various problems associated with living and coping with disability, mobility and the ability to work. I pay tribute to my right hon. Friend the Minister of State for creating the independent living fund and I hope that, whatever the future may bring, that scheme, or something like it, will continue. I especially welcome the fact that that fund has been doubled this year. The improvements in invalidity care allowance, motability and mobility allowances are also welcome.
People with disabilities are always close to our hearts when we consider policy. We have reached the stage where we no longer lock away people with disabilities; rather, we encourage them and enable them to come into the community. Children with disabilities are no longer automatically sent to special schools or colleges—we have enabled them to join mainstream schools and colleges. People with disabilities now work in shops, offices, factories and even in this House. Those people no longer work in enclosed workshops in residential homes. We have enabled people to get to work under their own steam so that they do not have to wait to be wheeled out from their homes. We have enabled people to nurture hopes and ambitions to achieve things with their lives. The carers allowance also means that we look after those who look after people with disabilities.
If we accept that there is nothing that people with disabilities cannot achieve if the House, Government and nation so enable as a result of various measures, such as the allowances we are discussing today, we shall do right by them and by all the others for whom we have a duty of care.
§ 6.5 pm
§ Mr. Paul Flynn (Newport-West)
Sir Thomas Beecham used to refer to the encores that he gave at the end of his concerts as "musical lollipops". They were always pieces of music that were light and attractive, but there was no great substance to them. Since the new Prime Minister took over, we have seen the advent of political lollipops. At various Question Times, the Prime Minister—the Secretary of State for Social Security did the same today—has contrived to award such a lollipop to the waiting, admiring population. Those lollipops have a mammouth publicity value, but are protozoan in terms of the money they represent.
Today the Secretary of State announced an incease of £10,000, equivalent to a 50 per cent. increase, in the award to the parents of vaccine-damaged children. That money will go to about five families a year, so the amount 1015 awarded is microscopic in terms of the available budget. Those families have suffered a particularly harrowing experience. Part of the grief felt by the parents for a dead child is guilt. That feeling is especially harrowing in the case of vaccine-damaged children, because the parents took a deliberate decision—with no blame to themselves—that resulted in that damage.
Everyone will welcome the award to those parents, but we are entitled to display some cynicism about it. The uprating of that award is below the level of earnings at which it should have been set—it is possibly above the level of inflation—and it is significant only because it applies to a small number of children. In other cases, tens of thousands, even millions, of children are involved, but there has been no such generosity or uprating.
One of the most important changes has been that to child benefit—rightly described as a "botch-up". I agree with my hon. Friend the Member for Birkenhead (Mr. Field) that it is good to see the log-jam broken, and that that benefit will no longer be allowed to wither on the vine. The £1 increase for the first child—it is not in the uprating order, but in separate regulations—is slightly more than the going rate of benefit. For the first child, that extra £1 is more than the 10.9 per cent. allowed for inflation for a one-child family, but the increase is less than that 10.9 per cent. for a two-child family—10.9 per cent. of £14.50 is £1.58. Those families are losing when one takes into account the inflation rate. The larger the family, the greater the shortfall. A four-child family would need £3.16 to compensate for inflation. but they shall receive only £1.
All lone parents not getting means-tested benefits will lose, including those with only one child. A one-parent family with one child now gets £7.25 plus £5.60 one-parent benefit, which is not being increased—a total of £12.85. The uprating on that amount would have been £1.40, and lone parents will only receive an extra £1. Therefore, a one-parent family with two children would need an extra £2.19 to compensate for inflation, but will receive just £1.
The reduction in the child dependency allowance increases by £1 per week per family to deprive them of the extra £1 benefit. There will not be four or five such payments a year, but 192,000. That is not included in the uprating order, but will be achieved subsequently by regulation. However, the order covers the partner's earning limits, above which the child dependency increases cease to be payable. They are to be increased in line with prices, when they should obviously be increased in line with earnings. They were introduced in 1984, when the limit was set at £80 for the first child, plus £10 for each subsequent child. Since then, average earnings have risen by 70 per cent., so the limit should now be £136, plus £17 for each additional child. Instead, the new limit will be £110, plus £14—a significant cut.
The £1,000 widow's payment remains the same, but there are not four or five widows in the country, but tens of thousands, possibly hundreds of thousands of widows who regularly claim benefit, which has been frozen for the third year running. It has been frozen for nearly six years since it was announced in June 1985—and it was not introduced until April 1988. It replaced the former widow's allowance, which used to be paid at a higher rate than other widows' benefits for the first six months of widowhood. If the widow's allowance had not been abolished, it would have increased over that period from £50.10 a week to £72.80—an increase of 45 per cent. On 1016 that basis, the £1,000 should now be £1,450—the Government have made enormous savings by cutting the amount given to widows.
In Committee, Social Security Ministers take an affable approach; we all find them persuasive and want to believe what we are told. But it is interesting to recall that, when the widow's allowance was replaced by a lump sum widow's payment in 1986, the present Secretary of State resisted an amendment providing for automatic annual increases and told the Standing Committee:When the final decisions on all rates of the new benefits under the Bill are taken in the autumn of 1987, we shall obviously consider whether it would be appropriate to change the level of widow's benefit stated in the Bill."—[Official Report, Standing Committee B, 17 April 1986; c. 1439.]Will the Minister say why it has not been considered appropriate to change the important benefit given to widows? In 1986, the Committee might well have taken a different view of the proposal if the Minister had admitted that the £1,000 payment was to be frozen indefinitely.
Although most of the means-tested benefit rates are increasing in line with prices—excluding the housing benefits—the disregards are not. In particular, the £3,000 capital disregard has been frozen, not only since it was introduced in 1988, but since it was announced in 1985 in a Green Paper on the reform of social security. Merely to compensate for price increases since then, the benefit should be not £3,000, but £4,350.
All these increases are subtle and hidden, they are not obvious. They are not introduced with a blare of trumpets and trombones from the Dispatch Box, but they represent deep cuts. Similarly, since it was increased in November 1983 the £500 capital limit for social fund payments has been frozen for everyone except those aged 60 or over. Et was then the capital limit for single payments under the supplementary benefit regulations. Since then, prices have risen by more than 50 per cent., so the limit should be more than £750 just to keep pace with inflation, let alone with earnings.
The child benefit regulations provide £1 extra for the single family. I remember in another Committee discussing a comment by Beveridge, when he talked about certain anomalies and said he hoped that they were buried for ever and would never again rise from their dishonoured grave, but for us, another little nasty has been resurrected by that extra £1. An important advantage of child benefit compared to the pre-1976 system of family allowance is that it is payable at the same rate for every child in the family. The family allowance excluded the first child, and complicated rules were needed to decide, if parents were separated—unhappily, an increasing occurrence—whether the two children were members of the same family or different families.
The extra £1 reintroduces those complications, since it is payable only to the first child. Hence the incomprehensible provisions of regulation 2(b), about which I have written to the Minister—I longingly await his reply. If my interpretation of the regulation is correct, it will, in some cases, disqualify both parents from receiving the extra £1, which is obviously nonsense and cannot be the intention.
Further anomalies arise from the statutory sick pay regulations, upon which we shall vote tonight, and I believe that they will be the subject of a speech by my hon. Friend the Member for Nottingham, North (Mr. Allen).
Tonight, Social Security Ministers are working their old magic like the old illusionists they are and providing, up 1017 front, obvious little benefits—tiny lollipops; but under the welter of complex social security legislation, there are deep and serious cuts.
§ Mr. Peter Bottomley (Eltham)
It is a pleasure to follow the hon. Member for Newport, West (Mr. Flynn), who produced his statistics more briefly than the hon. Member for Oldham, West (Mr. Meacher), who kept us for 42 minutes and spent hardly any time on the orders.
The hon. Member for Oldham, West forgot to remind us that it was a Labour Chancellor who, in 1967, was the first to try to take family allowance away from the majority of families. He also forgot to tell us about the child benefit cheat—when the House approved the move to combine child tax allowances and family allowances to produce a child benefit, with which the Labour Government refused to go ahead. He also talked about a Christmas bonus of £2,000, but forgot to tell us that the Labour party took away a Christmas bonus of £10. This strikes me as the sort of sterile speech which we are used to hearing from the hon. Member for Oldham, West, and the sooner he is moved on to other pastures to make way for the hon. Member for Newport, West, the faster we shall proceed in our debates.
There are some serious problems to tackle in the years ahead, and we should approve the orders. I shall spend a few moments talking about what has been called child benefit, but which I think should be called child cash allowance. In the mid-1970s, we discussed whether it would be more sensible to get rid of child tax allowances, whereby the rich received more and people below the tax threshold got nothing. No one then anticipated that the name "child benefit" would mean that it would always be argued about in the bilateral discussions between the Department of Social Security and the Treasury.
A problem was anticipated, which was why my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), who became the Chancellor, and Patrick Jenkin, the then Member for Wanstead and Woodford, agreed in 1978 that child benefit would not be taken into account in social security spending but would, in effect, be netted off against tax.
We face two problems, for which I do not in any way blame the present Front Bench team or the Chief Secretaries over the years. It is in the nature of the bilaterals for the Chief Secretary to ask how he can squeeze down Government spending, while the Department of Social Security wants to concentrate help on those who most need it. Those are the two functions; the problem is a functional one.
I have a proposal that I do not expect my right hon. Friend the Minister of State to comment on in winding up. I expect that he will spend most of his time batting the hon. Member for Oldham, West round the court. I suggest, first, that the debate should consider whether there should be an allowance for the child. If the answer is clearly yes, taxable capacity is reduced and needs are increased. Plainly there should be a child allowance. Secondly, is it better for the allowance to be a tax allowance or cash? It should be a cash allowance and decisions about the level of such allowances should be removed from the Department of Social Security, thereby lifting one of the 1018 burdens from my right hon. Friend the Secretary of State. Decisions about child allowance should be made by the Treasury.
I have discovered a secret in the House. In answer to a question asked by my hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle), my hon. Friend the Minister of State, Treasury said that she would not answer any questions about child benefit because the Budget is on the way. That reply is contained in the Official Report of 31 January 1991, column 1094. The Minister of State gave the same reply to the hon. Member for Sheffield, Central (Mr. Caborn). I do not think that that was a coded signal, because I do not think that the next Budget will set the level of child cash allowances. If I am wrong and I have underestimated the speed at which the Treasury accepts the logic of an argument, I shall willingly apologise, by public press release and not secretly in the House.
The term "child benefit" is a mistake. It is sensible for the Treasury to ask the Department of Social Security to be the paying agency, but the allowance must be taken out of the public expenditure round. That is where things have gone wrong. It is wrong to say that, if my right hon. Friend the Member for Finchley (Mrs. Thatcher) had continued as Prime Minister, we would not have had the same improvement. I believe what I have heard—that the previous Chief Secretary to the Treasury, now my right hon. Friend the Chancellor, and my right hon. Friend the Secretary of State for Social Security had agreed and shown the results of their agreement to my right hon. Friend the previous Prime Minister before all the excitement.
The freeze for the three years before that was a mistake, and I said so when I was a Minister. If we are to avoid such mistakes, we must change the name of the benefit and transfer the responsibility. When we do that, we will make further progress and the child allowance will not just be indexed to inflation, but increased. There was newspaper speculation that the previous Prime Minister had some people in.
§ Mr. Newton
I had no intention of getting involved in this issue. I thought that I had listened carefully to the hon. Member for Newport, West (Mr. Flynn). If the hon. Gentleman seriously suggested or implied that the child benefit increase had anything to do with the change of Prime Minister and leadership of the Conservative party, he was talking utter nonsense. The uprating statement was made the best part of a month before the events in question.
§ Mr. Bottomley
I do not think that the hon. Member for Newport, West (Mr. Flynn) said that. It was mentioned slightly earlier, when we were discussing new and old regimes. I hope that we can move the matter forward. Child allowance should be cash or a tax allowance. I hope that we will hear less from David Willetts until he comes to the House.
§ Sir Timothy Raison (Aylesbury)
I cannot give an authoritative answer on these issues, but my hon. Friend should explain why he thinks that the Treasury would be more generous than the Department of Social Security.
§ Mr. Bottomley
The Treasury would have to consider the matter when it considered the proportion of mortgage relief granted to people with incomes of more than £20,000 a year. About 50 per cent. of that relief goes to those of us 1019 who are so poor that we have mortgages of £30,000 or more and pay tax at the rate of 40 per cent. or more. The value of the tax relief to two people, perhaps television producers or trade union officials, with a combined income of £70,000 a year, is equivalent to 12 child benefits every year and not just during the years when they have children. When the Treasury and the Inland Revenue look at the issue, they will come up with the answer that they used to give and not an answer relating to the structural problem and the name problem.
Having trespassed on the House's hospitality for the second day running, I had better stop. I hope that my speech has been noted. May I please be told whom to ask to get involved in these discussions—whether they are members of the party or the Government? Perhaps that information could also be given to the hon. Member for Birkenhead (Mr. Field). That would enable all of us to move forward, including my right hon. Friend the Member for Aylesbury (Sir T. Raison) before he moves off to advertising. I hope that the House can find some suitable structure.
§ Mr. Graham Allen (Nottingham, North)
I am pleased to reply to my first debate on social security. This is probably the last uprating debate before the general election, and therefore the last time that I and my hon. Friends will speak on uprating from this side of the House. In that context, it is worth looking back at the social security dark ages, from which we shortly hope to emerge, and towards the enlightenment that is about to begin.
I reaffirm the whole notion of national insurance. It is to the credit of neither Conservatives nor Labour Governments that ordinary people now feel remote from and unconnected to national insurance, which has become an almost secret tax raising revenue of billions of pounds. One of our prime tasks in government will be to ensure that we not only address the level and scope of benefits but that we return to the whole idea of a communal insurance policy. We shall return that idea to the heart of the civilised values that we cherish.
There is such a thing as society, and our standard will be an honest national insurance fund separate from taxation and able to meet needs as they arise. That will be a monumental task, and that is evident when we look at the overgrowth of political expediency and short-tennism which encrusts the present system. One of the worst abuses of that system has been the rip-off of our pension funds to the tune of perhaps £10 billion. That matter is still being investigated by the Public Accounts Committee, which will no doubt report in due course.
§ Mr. Scott
It is important for the hon. Gentleman to clarify his suggestion.. Is he saying that the whole of the social security system as we presently understand it, with its contributory and non-contributory benefits, will be funded from a new national insurance fund? If so, how will contributions to that fund be paid by employers and employees, and what will be the level of contribution?
§ Mr. Allen
I shall resist any temptation by the Minister of State to go wide of the terms of the orders.
There is evident extravagance and profligacy about subsidising and sweetening private pension companies. Therefore, I hope that no Conservative Member is brainless enough to ask where all the money will come from to give decent pensions to the elderly and adequate child benefit to the mothers. The great SERPS robbery—a wholly party political racket—makes even the £1 million a day fraud by employers on insurance stamps look like a minor misdemeanour, yet both sets of villains have escaped attention—first, because of the technical nature of the offences and, secondly, because the victims are tomorrow's pensioners. Like the sleeping victims of a burglary, they do not know what awaits them and will not find out until morning.
Many of today's pensioners know better, because they have seen what the Government have done to the basic state pension. However hard the Conservatives wriggle, and whatever statistical wheeze they employ, the plain fact that hangs around their necks and will stay there until the election is that breaking the earnings link has robbed the single pensioner of £12.80 a week and a couple of £20.50 a week. That is not a one-off smash and grab, but a recidivist return each and every week so long as they shall live.
Much has been said today about child benefit. The uprating, such as it is, bears all the hallmarks of a "John'll fix it". First, there is a lack of will to tackle the real problem, thinly concealed by a half-hearted, half-baked and, above all, half-priced gesture. One can picture the then Chancellor of the Exchequer, in the last days of the Thatcher Reich—with high interest rates, a massive trade deficit and looming recession all around him—struggling with the knotty problem of which twin should be awarded the new first-born benefit—or should it have been the "Eastbourne" benefit?
Not that honest John would ever try to purchase short-term popularity for a by-election victory. I cannot help thinking that the phraseChild benefit will continue to be paid as nowmust have been put in the Conservative manifesto in 1987 by somebody, perhaps a junior Social Security Minister—some anal retentive determined to tell the literal truth, but misleading the gullible, rather in the way that the Prime Minister said recently that the last Labour Government did not have a cold weather payments scheme. That too is literally true, but it ignores the fact that, because of the generous extra needs payments and the electricity discount scheme then in operation, but abolished by the Conservative Government, such a scheme was not necessary. It is petty, it is cheap, and "it is coming to a social security office near you".
Whatever way one looks at these uprating orders, one sees a shabby deal—a budget cut here, a corner cut there. The social fund is a very sad example. The fund is meant to help the most needy in our society—those from broken homes, ex-prisoners, former drug abusers, the mentally ill, the mentally handicapped, and the plain poor. Despite this, the budget is a fraction of the one under the scheme that it replaced, and two thirds of payments come in the form of loans rather than grants—loans, to people already trying to live on £30 or £40 a week.
The Conservative Government should be ashamed of themselves. Instead, they find someone else to blame. In this instance, they foist the blame on the local offices of the 1021 Department of Social Security, whose social fund budgets are so constricted that ridiculous anomalies arise. At the Public Accounts Committee on Monday, I drew the attention of the permanent secretary of the Department to a particular case in my constituency. A battered wife from the Nottingham, North women's refuge is not high enough on the priority list to get from the Nottingham social security office a grant for a bed, a table and some other furniture. Had she lived in nearby Alfreton, she could have received those payments. Such are the differences in priorities from one office to another.
Meanwhile, people surviving on income support are among those who are being squeezed hardest by increases in water, electricity and gas charges. Public utilities were privatised, in a "money no object" exercise, by the selfsame Conservative Government. The present Government can blow billions of pounds of North sea oil revenue, yet there are 130,000 individuals on transitional additions-130,000 people who have not had an increase in income support for three years.
Others who will judge for themselves the generosity of the uprating include the rising numbers of people being made redundant as a major recession steamrolls them. A few of the severely disabled are assisted by the independent living fund, which the Conservative Government still refuse to put on a statutory footing, despite the obvious and chronic demand.
I am very proud to say that the independent living fund is in my constituency. The officers who serve it do a magnificent job—a job of which the Secretary of State and his team and, indeed, the rest of us should be proud. None the less, it is a scheme created to put a problem—as the Government see it, a public expenditure problem—at arm's length. Next, I understand, there may be an agency, or the problem may be referred to local authorities. This is a way of sweeping a difficult situation under the carpet.
The creation of a social security benefits agency is another case in point. When Members of Parliament table questions about matters within the competence of that agency, the answers will not be printed in Hansard for the benefit of all Members, who might then ask questions relating to the benefits of people in their constituencies. Members making such inquiries will receive letters from the chief executive of the agency, and if other Members wish to see those letters, they will have to go to the Library. That undermines what little democracy and accountability this House has in respect of social security matters.
§ Mr. Ian McCartney (Makerfield)
What my hon. Friend is describing is a broken promise. At meetings of the Select Committee on Social Security, it was made absolutely clear that the opportunities to question Ministers about the internal workings of the Departments would be undiminished.
§ Mr. Allen
My hon. Friend has made a very pertinent point. I hope that, even at this stage, the Secretary of State will reconsider the way in which social security matters within the realm of the benefits agency might be brought before this House. This is a central point of parliamentary accountability.
I should like to answer a query about the amount of money spent on state pensions. We can all bandy statistics. This is an area in which that happens all the time. Central 1022 to our commitment to social security expenditure must be the principle that those people who, in some way, are cared for out of social security expenditure should share in the prosperity of the nation. So far as I am concerned, the most startling statistic in this area is the reduction in expenditure as a percentage of gross domestic product. Between 1984–85 and 1989–90, expenditure fell from 12.2 per cent. to 10.3 per cent. That is a very significant and sad statistic. Perhaps the Minister of State will comment on it..
§ Mr. Allen
The hon. Gentleman asks what we shall do. I do not want to stray too far from my brief, but I am pleased, in reply to a question from a sedentary position, to say that the hon. Gentleman will be made very well aware of our intentions. I do not know whether he has read the Labour party's documents. If not, I shall be very glad to send him copies. We shall, of course, insist on an immediate increase of £5 a week in the pensions of single people. That £5 will be over and above the increase that will be made in April. In the case of a married couple, the increase will be £8. Thereafter, there will be immediate linkage to earnings or inflation, whichever is the higher.
§ Mr. Allen
The hon. Member for Harrow, West (Mr. Hughes), also from a sedentary position, asks how much it will cost. I shall gladly give him figures provided by his own Government. The pension rise will cost £2.3 billion, and the increase in child benefit will cost £0.75 billion. I make this commitment. Indeed, it is in the Labour party documents for all to see. [Interruption.] There is no hidden agenda here. Child benefit will be restored to the level of 1979. In other words, we are prepared to invest in children and in the future of this nation.
§ Mr. Peter Bottomley
Is the Labour party committed to restoring child benefit to the record level of 1983, or does it consider the lower level of 1979 as the limit? Is it committed to expenditure in any other areas? What proportion of the total increase in public spending promised by the Labour party is made up of increases in child benefit? Is it 100, 50, or 30 per cent. of additional spending?
§ Mr. Allen
The hon. Gentleman has a cheek. He was a member of a Government who have presided over a reduction in child benefit during the past four or five years. I shall say slowly, for the benefit of the hon. Gentleman, that the next Labour Government will return child benefit to its value when Labour was last in office. That would mean a very much higher level—£2.30 higher than it is under this Government, in which the hon. Gentleman served for many years.
I must make it clear that, much as I would be pleased to make commitments about spending in other areas, the hon. Gentleman must know that no additional commitments can be undertaken until such are considered appropriate in the light of economic developments and economic growth [Interruption.]. Hon. Members must allow me to finish my remarks. I should love to answer questions on health, but unfortunately my remit does not stretch that far, just yet.
1023 There can be little doubt that, as the election comes closer, the Prime Minister is seeing in his private opinion polls confirmation that the Conservative myth that being the party of the family is buried under an incontrovertible mountain of payment hooks. In view of the Prime Minister's style, I guarantee that behind the grin there will be more social security fixes, more opportunist gifts, a little Budget sweetener here and a little panic response there. The day of reckoning is coming sooner than Conservative Members think. For those dependent upon pensions and benefits, that day cannot come soon enough.
§ The Minister for Social Security and Disabled People (Mr. Nicholas Scott)
As the hon. Member for Nottingham, North (Mr. Allen) came towards the end of his speech, we had some insight into the scale of commitments that the Labour party will offer in its next election manifesto. It may wrap the manifesto in weasel words, but today we have had a commitment on pensioners which appears to amount to some £3 billion. In Committee on the Disability Living Allowance and Disability Working Bill, we discussed a variety of Labour amendments that would have amounted to a further £3 billion expenditure. There is also another range of commitments on child support.
Every time I face the Labour party across the Floor of the House, I am reminded of the comment of my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) about the last Labour Government promising the earth and delivering the International Monetary Fund. I am afraid that that is exactly the position in which any future Labour Government—remote though that possibility may be—will very quickly find themselves.
Today, we are discussing a series of orders, the most important being the uprating order, which provides additional resources of £5 billion for the social security system. The Labour party may say that it is possible to have generous increases across the board, but our approach to social security is to protect the generality of people in receipt of social security benefit from the impact of price increases. Within that overall approach, we wish to ensure that additional help goes to the most vulnerable groups in our society. I should like to refer briefly to each of those groups.
We must, of course, consider the position of pensioners in our society. Any society owes a debt to those who have spent their lives working in the community, for society, and who then look to the state and to the companies which employed them to look after them in their retirement. As was said earlier, the real standard of living of pensioners as a whole has increased dramatically in recent years. Since 1979, it has risen by 31 per cent. in real terms compared with a 3 per cent. increase under the last Labour Government. Indeed, pensioners' incomes have risen twice as fast as the incomes of the remainder of the population.
I know that it is part of the Labour party's attitude of mind that it should think only about the benefits that people receive from the state. We believe that we should consider pensioners' standards of living as they are affected both by their occupational pensions and by the savings that they have accumulated during their working lives, as well as in the context of state benefits. As I said, there has been a 31 per cent. increase in pensioners' 1024 standards of living since we took office in 1979, compared with a 3 per cent. increase under the last Labour Government.
I recognise, as any hon. Member recognises, that I am referring to the general position, and that it disguises the fact that some people have had increases in their standards of living greater then 31 per cent., while others have had a lesser increase. We can all identify with the pensioner who has lost out.
§ Mr. Scott
I am not disguising any facts. There are a number of pensioners whose savings were destroyed by inflation during the 1970s. Those people spent most of their working lives at a time when occupational pensions were not so widespread or so generous as they are today. Many working careers were interrupted by the second world war. Our approach, over successive years, has been to give additional help to poorer pensioners. We have provided millions of pounds in additional help for them——
§ Mr. Ronnie Campbell
Will the Minister tell the House about the cost of the poll tax to pensioners? Is it not 10 to 15 per cent. of their income? Even pensioners on low incomes have had to suffer that sort of increase.
§ Mr. Scott
The hon. Gentleman makes a fair point. The poorer pensioners benefit from community charge rebate and from various other help that we have given to those paying the community charge. That help was extended recently. I recognise that there is a group of poorer pensioners, and we have concentrated help on their specific needs rather than making the sort of grandiose promises made by the Opposition.
§ Mr. John Battle (Leeds, West)
I regret that I have not been able to contribute to the debate. The Secretary of State made great play of the fact that housing costs were no longer included when working out the uprating statement. The difficulty is that the housing costs element of the retail prices index includes other crucial items such as the poll tax and water rates. People must pay a minimum of 20 per cent. of their poll tax, and must also find the money to pay rising water rates. Is it not true that the uprating of means-tested income support takes no account of those vital increases?
§ Mr. Scott
If the hon. Gentleman would use his influence with some of the council leaders in socialist authorities to hold down the level of community charge, he might be making a sensible contribution to the debate.
In winding up the debate, I seek not to wind up Opposition Members, but to make a serious contribution. I wish to identify groups of people in our society who need some sensible additional help in sustaining their living standards. I want to mention one group that is especially close to my heart, and comes within my job description, and that is disabled people. Again, during our time in office we have more than doubled the provisions for the long-term sick and disabled. We are now spending more 1025 than £10 billion on benefits for the long-term sick and disabled—an increase in real terms of £5.6 billion since we took office. It is easy to talk in such global terms——
§ Mr. Scott
That is precisely the point that I was making when the hon. Gentleman sought to intervene. Surely he welcomes as much as I do the fact that many more disabled people are now receiving the benefits to which they are entitled. Those people did not become disabled under this Government; they were there under the Labour Government. They were not receiving the benefit then, but they are now.
Despite the smirk on the face of the hon. Member for Oldham, West (Mr. Meacher) I hope that he will recognise that that is a real point. The last time he was at the Dispatch Box he criticised me in a rather snide way for "marketing" benefits. Of course we want to do that. We want to make people aware of the benefits to which they are entitled and ensure that they take them up. We will go on marketing both our existing benefits and the new ones that will come into operation in April next year in order to ensure that they go to the people who need them.
§ Mr. Allen
I, too, would criticise my hon. Friend the Member for Oldham, West (Mr. Meacher). I do not believe that the Minister is marketing some benefits as well as he could. Were he to do so, the Financial Secretary and the Chief Secretary would come down on him like a ton of bricks because of the financial implications. Perhaps he will market family credit a little more effectively.
§ Mr. Scott
With the greatest possible respect to the hon. Gentleman, who is comparatively new to the subject—I am not being patronising—he knows that this area is demand-led. If people apply, they receive the benefit. It is nothing to do with the Chief Secretary. People get the benefits for which they apply and for which they are entitled. We have seen a dramatic increase in the take-up of benefits and we shall go on seeking to ensure that that continues.
§ Mr. McCartney
Will the Minister explain why one benefit has been taken away from disabled people—the reduced earnings allowance? Most disabled people become disabled as a result of accidents at work. In areas such as mine, where there is mining and heavy engineering, a considerable number of people who were once entitled to that benefit can no longer claim it. Yet they originally received it in recognition of the fact that they had become disabled because of their activities in industry, either as a result of an accident or because of the environment in which they worked. The Government have abolished that allowance.
§ Mr. Scott
I understand the point that the hon. Gentleman makes. Last year, I took through the House the Bill that made that change in the benefit system. It is increasingly right that at this time we should concentrate state help on those people who are disabled early in life, perhaps congenitally or as a result of some accident early in life, and who do not have the opportunity to build up entitlements to occupational pensions, compensation from their employers or in other ways. Philosophically that is right. It would be difficult, even for the hon. Member for Oldham, West, who is muttering on the Front Bench, to disagree with that as a principle.
§ Mr. McCartney
To take that to its logical conclusion, what does the Minister say about the young 21-year-old who has an arm amputated and can no longer claim reduced earnings allowance? There are many such specific cases. Thousands occur in industry each year. There is no reason for withdrawing that important benefit from the industrially disabled, other than to reduce public expenditure.
§ Mr. Scott
What we have done, in essence, is to alter the priorities within the provision for disabled people while increasing it substantially. I do not want to weary the House with the figures. The philosophical approach that I have sought to outline would need widespread approval.
We are concerned too about the needs of low income families and families generally. We are anxious to look at the whole pattern of provision in that area and if hon. Members would like to contact my right hon. Friend or myself and come forward with ideas for improving the pattern of family support as it presently exists, we would be only too happy to listen to them.
The social fund has proved to be an effective, fair and flexible way of meeting needs that are outwith the normal scope of the social security system. I do not disguise from the House my feeling that that is a difficult area. The single payment system did not work particularly well. It was capricious in the extreme. It was doubling in cost every two years, I think, and it was becoming unsustainable. The social fund has proved a sensible way of providing grants and loans to people with exceptional needs at exceptional times while keeping the pattern of expenditure under sensible control. It is straightforward and it is becoming understood by claimants, and I believe that it works in an effective manner.
§ Mr. Scott
If the hon. Gentleman looked back to the pattern of single payments and the geographical and social spread of take-up under that, he would see that there was even less understanding of the single payment scheme than there is now of the social fund. There is an increasing awareness of the social fund and its capacity to help.
§ Mr. Tom Clarke (Monklands, West)
Has the Minister's attention been drawn to The Independent today 1027 where it says that there were 2,347 deaths during the latest spell of sub-zero temperatures.—[Interruption.] Am I entitled to ask a question, Mr. Deputy Speaker, or are the hooligans on the Tory Benches determined that the issue will not be raised? The social fund has been extremely unhelpful when it comes to hypothermia. What does he intend to do about that?
§ Mr. Scott
If necessary. If we have a period of general and excessively cold weather, it is sensible for the Government to respond to that in a flexible and common sense manner. We have done it twice already. I admire and respect the hon. Gentleman considerably, but if we had stuck rigidly to the rules, he would have been criticising me. The fact that we responded in a flexible and sensible manner should be a matter of congratulation rather than criticism.
The hon. Gentleman made some complimentary remarks about the independent living fund. In Committee, he has been trying to persuade me to turn that into a completely regulated system removing all the flexibility, all the attention to the individual needs of the claimants judged by social workers in order to produce a package of care. That would not and could not work.
Even the Labour party knows that it is not possible to direct more help to the most vulnerable groups in society while promising vast increases in the generality of provision within the social security system. There are many needs in our society, but it is much better to be able to meet them by identifying particular groups and concentrating help on them.
Social spending today is 40 per cent. higher in real terms than in 1979. Most of that growth is the result of the general increases that have protected people against the impact of price increases. Many of them have come about also because of our ability to concentrate help on those most in need. The Government have shown themselves to be caring, and concerned with the needs of the most vulnerable in our society and have produced substantial extra resources to look after them—no lollipops, but real extra money for those who need help most.
§ Question put and agreed to.
That the draft Social Security (Contributions) (Re-rating) Order 1991, which was laid before this House on 13th February, be approved.
That the draft Guaranteed Minimum Pensions Increase Order 1991, which was laid before this House on 11th December, be approved.—[Mr. Newton.]
That the draft State Scheme Premiums (Actuarial Tables) Amendment Regulations 1991, which were laid before this House on 18th February, be approved.—[Mr. Newton.]
That the draft Social Security Benefits Up-rating Order 1991, which was laid before this House on 13th February, be approved.—[Mr. Newton.]
That the draft Social Security (Contributions) Amendment Regulations 1991, which were laid before this House on 13th February, be approved.—[Mr. Newton.]
That the draft Social Security (Contributions) (Re-rating) Order 1991, which was laid before this House on 13th February, be approved.—[Mr. Newton.]