HC Deb 08 July 1992 vol 211 cc381-94
Dr. John Marek (Wrexham)

I beg to move amendment No. 9, in page 8, line 32, leave out clause 12.

Mr. Deputy Speaker

With this it will be convenient to consider the following amendments: No. 1, in page 9, line 6, at end insert— '(3) Subsection (1) shall not have effect with respect to any individual who was entitled, at 30th June 1992, to exemption from vehicle excise duty by virtue of section 7 of the Finance Act 1971 or section 7(2C) and (2D) of the Vehicles (Excise) Act 1971.'. No. 2, in page 9, line 6, at end insert— '(3) Subsection (1) shall not have effect with respect to any individual aged under five or over sixty-five years of age if. apart from this section, they would be entitled to exemption from vehicle excise duty by virtue of section 7 of the Finance Act 1971 or section 7(2C) and (2D) of the Vehicles (Excise) Act 1971.'.

6.45 pm
Dr. Marek

The Opposition certainly had no prior knowledge of the fact that new clause 15 was not going to be moved. I believe that some of my hon. Friends came here for the express purpose of debating it. However, as it has not been moved, we have to turn to the next set of amendments.

I am grateful to you, Mr. Deputy Speaker, for grouping amendments Nos. 1 and 2 with amendment No. 9. In our view, it makes sense, since they all relate to clause 12 and to the withdrawal of a concession to a group of disabled people.

Hon. Members receive a lot of mail from charities and societies that represent disabled people— and rightly so. In the Opposition's view, the needs of disabled people are not properly recognised. It is right that hon. Members should be informed of lacunae in the legislation and also of Government proposals to take away rights and privileges that disabled people have hitherto enjoyed. Clause 12 will lead to the Government taking away one such right from disabled people.

I have received many letters recently from people who drive ambulances for leagues of friends and other charities. They pay value added tax on their petrol. They are wondering whether there is any way in which they could be exempted from paying VAT on petrol that is used to drive disabled people around the country. Without that service, disabled people would not be mobile. If the Paymaster General could say something about that, I should be grateful. However, that is not the import of the amendments. They principally concern vehicle excise duty and the fact that the Government seek to withdraw an exemption from a particular group of disabled people.

Three groups of disabled people are exempted from the payment of road tax for a vehicle registered in their name. About 2,500 people qualify as a result of belonging to the pre-1976 invalid carriage scheme. The answer to a recent parliamentary question of mine showed that, at 31 March 1992, 2,125 people qualified for exemption. The invalid carriage scheme was phased out in 1976, so a diminishing band of people qualify under that scheme.

In addition, approximately 400,000 people qualify because they receive the higher rate of mobility component in the disability living allowance. Clause 12 does not seek to change the status of people who receive the higher rate of mobility component in the disability living allowance. They will continue to be exempted from paying road tax for a vehicle that is registered in their name. However, about 20,000 people under the age of five or over the age of 65, who are virtually unable to walk and who receive the higher or middle disability living allowance care component, need to be driven by another person. The Government seek to remove exemption from payment of road tax from that group of people.

People are disabled for all sorts of reasons—either from birth or through accident. If people are disabled, they ought to receive special help so that they can be mobile. In previous years, the Government have recognised that. Those three groups of people were in a scheme which by and large was considered satisfactory, and people who wanted help with mobility could get it in various ways —not least of which was the exemption from vehicle excise duty.

According to the parliamentary answer on 30 June, among the approximately 20,000 people in the third category who receive the exemption, there were more than 4,183 first-time successful applications during the period 1 April 1991 to 31 March 1992. The Government seek to stop that group of people gaining exemption from VED. It is likely that the figure of 4,183 represents a continuing level, so basically the Government are stopping an allowance for about 4,000 new disabled applicants every year.

Although there are temporary provisions in the clause to ensure that everybody in the third category who receives the exemption will continue to do so, I believe that anyone not already exempted will he unable to obtain exemption once the Bill is enacted.

There is an interesting political point here. The Government have slipped clause 12 quietly in, couched in parliamentary language so that it is difficult for anybody reading it to understand exactly what it is about. It has taken the House and the interested organisations representing disabled people largely by surprise. Nevertheless, I have had a reasonably heavy postbag on the subject, pointing out the problem, and I hope that some of my hon. Friends have too. It may be late in the day, but it is not too late, because now we can discuss the clause on Report.

The Government want to exclude the third group of disabled passengers from road tax exemption, even though that may be the only form of assistance with mobility costs they receive. Children under five cannot get the mobility component of the disability living allowance, and people over 65 can receive it only if they qualified for it before their 66th birthday.

Such severely disabled people are more likely to need a car because they experience difficulties in getting around, yet they are less likely to be able to afford to purchase and maintain one, because their incomes are generally low, and they are under pressure from other costs caused by their disabilities. I wonder whether the Government understand the financial pressure that people suffer simply to make ends meet, as they get older and need extra heating and incur extra mobility costs—as I shall seek to demonstrate later.

Children under five with cerebral palsy, for example, need great care and help if they are to be mobile at all, and substantial extra costs are incurred by parents, some of whom must purchase and maintain a car. It is perhaps easy for us in the House to say that, if parents with one or more children with cerebral palsy have a household income that is not high, they should use public transport, but in practice it is not that easy, and some parents have to purchase and maintain a car, which causes a lot of hardship.

It is mean and niggling for the Government to withdraw the vehicle excise duty concession for parents who have to look after such children under the age of five. Those people are angry that the Government refuse to accept that they have extra mobility costs. Will the Paymaster General confirm that, or will he admit that those costs exist?

Here is a clear example—a child under five with cerebral palsy. At the moment, his or her parents can obtain the exemption on the child's behalf so as to allow the child mobility. The Government propose to withdraw that exemption. I should imagine that, on hearing about that, everybody in this country would say that it was entirely wrong—and I hope that some Conservative Members will think so too, so that something can be done about it.

The provision would affect not only children under five but people over 65 in that third category of about 20,000 disabled passengers. They have to be unable or virtually unable to walk, to receive the higher or middle DLA care component, and to he driven by another person. If such people do not apply, or do not demonstrate their eligibility, by their 66th birthday, they will not be able to get the exemption in future—or rather at present.

However, some old people—including, I believe, people with cerebral palsy as they grow older—get arthritis, and that disease may not become evident, or may not become serious enough to satisfy the present regulations for securing exemption from VED, until people are well beyond their 66th birthday. People who develop arthritis in advanced years would not be able to gain exemption if the clause as it stands were enacted.

I should be happy for exemptions under the disabled passengers scheme to be abolished, but only when the Government remove all discrimination on the grounds of age from the DLA mobility component. Amendment No. 2 seeks to do that, so that disabled people under five or over 65 would be able to claim exemption through receipt of the mobility component, like everybody else. While that age discrimination remains, the current method of exemption under the disabled passengers scheme will continue to be necessary.

I feel strongly on this subject. The measure is a petty attack on what could be described as a small concession for disabled people—but a disabled person with limited means will look upon it not as a small attack but as something much bigger.

The Government do not have to do as they propose. I should like them to accept our amendment No. 9, which would remove clause 12 from the Bill—there would be no problem in doing that at this stage. They could ensure that the needs of the under-fives and over-65s are properly looked after and table a new clause to next year's Finance Bill. They should not object to leaving the situation as it is for another year. I am aware that a new DLA scheme will be introduced in September, but despite that there is no need for the Government to insist on clause 12 remaining in the Bill.

If the Government cannot accept amendment No. 9, they should accept amendment No. 1 or 2, and I should prefer them to accept amendment No. 2. However, if they want to be obstinate and to drive the knife into this class of disabled people, I ask them to give the organisations that represent disabled people a chance to show the need for the exemption from vehicle excise duty. If they did so, I would withdraw some of my strictures.

Clause 12 is a petty measure that sticks the knife into a group of people who desperately deserve our help. I hope that the Government will consider the clause with a social conscience and accept the amendments.

7 pm

Mr. Peter Mandelson (Hartlepool)

Hon. Members who served on the Committee or who have read our proceedings will know that clause 12 was the subject of long and occasionally sharp exchanges between myself and the Paymaster General, which were truncated only by the lateness of the hour. The right hon. Gentleman will agree that we now have a better opportunity to consider clause 12.

In Committee, the Paymaster General was at great pains to assure Members that no one who is eligible for vehicle excise duty exemption would lose it. He said that the clause would increase, rather than decrease, the number of disabled people who are assisted and that, far from achieving savings—a term that he described as a legal term and not one to detain the Committee—the Government would offer disabled people more help.

Closer examination shows that the Paymaster General was being less than forthcoming and complete in his description of clause 12. Its effect is to disqualify disabled people over 65 or under five from the exemption from vehicle excise duty which they have come to rely on. I should have thought that there would be cross-party agreement on that provision continuing, but, unfortunately, that is not the effect of clause 12, which the Paymaster General described as a tidying measure.

It may be helpful to give the history of the exemption to understand better why it is becoming less than full and is being withdrawn from a small but severely disabled group of people. The original exemption scheme, to which clause 12 refers, was first introduced in section 7 of the Finance Act 1971, which exempted three categories of people from vehicle excise duty. The first category were disabled drivers of cars and invalid tricycles issued by the then Department of Health and Social Security. The second was disabled drivers eligible for a grant from the DHSS in respect of their own cars.

The third—this is the crucial category—were persons having a particular disability that so incapacitates them in the use of their limbs that they have to be driven and cared for by a full-time constant attendant. That last group was excluded from help under the DHSS vehicle service because they were too disabled to drive, but it was thought reasonable, appropriate and desirable for them to receive exemption from vehicle excise duty on cars used for their use and benefit. The criterion for eligibility was deemed to be met if the person was in receipt of attendance allowance at the higher rate.

Subsequently, the DHSS vehicle service began to be phased out, and mobility allowance was introduced. Disabled drivers in categories one and two and some disabled passengers in category three were exempted from vehicle excise duty by their receipt of the new mobility allowance.

In many respects, the introduction of the mobility allowance represented a significant step forward in provision for and the extension of benefits to disabled people. Unlike the original DHSS vehicle service, the new mobility allowance equitably helped those who could drive in spite of their disability and those who were too disabled to drive. There was no discrimination—those who could drive and those who were too disabled to drive equitably received the same benefit.

The equity was maintained when section 7 of the Finance Act 1971 was amended by the Finance Acts 1972 and 1974. Significantly, the amendments made in 1972 and 1974 meant that those in the original third category, who were too old to be eligible for the mobility allowance, were still entitled to receive the vehicle excise duty exemption.

Even at that stage, when the 1971 Act was amended in the subsequent Acts of 1972 and 1974, there was no age bar or disqualification for those under the age of five or those who became disabled passengers after reaching the age of 65. However, it was in the transition from the simple mobility allowance to the higher rate mobility component of the disability living allowance that the Government effectively changed the rules and abolished the eligibility of that small but severely disabled group. The House will recall that the change was made in April this year, when the disability living allowance was introduced.

Unlike the previous simple mobility allowance, the higher rate mobility component of the disability living allowance cannot be claimed by people over 65 or under five. The crucial change was made in the transition from the former simple mobility allowance to the new higher rate mobility component of the disability living allowance, which was introduced in the Government's new provisions in April this year.

As the Paymaster General said in Committee, clause 12 tidies the Finance Act and brings it into line with the changes introduced when the disability living allowance became operative in April this year. As my hon. Friend the Member for Wrexham (Dr. Marek) said, its savage effect is to stop very severely disabled people, who after reaching the age of 65 find that they cannot walk or drive, enjoying vehicle excise duty exemption. In effect, as a result of the tidying and consequent to the changes in the transition to the introduction of the disability living allowance, the Government are saving a not insignificant sum of money at the expense of some very severely disabled people.

In passing, without any great elaboration or explanation and at a late hour, when our consideration of these issues was drawing to a close, it was perhaps understandable that the Paymaster General did not speak in as much detail or with as much specificity as the Committee might have expected in view of the consequences and implications of the changes being proposed. Nevertheless, he said: there is no longer machinery for setting entitlement for those who become 65 and become disabled passengers and who previously have been eligible for exemption, because the machinery for the new allowance … cannot he used."—[Official Report, Standing Committee B, 18 June 1992; c. 151.] 7.15 pm

I hope that the Paymaster General will now give a proper explanation as, if necessary, we have the whole evening ahead of us to discuss this issue. I suggest that there is machinery for awarding the highest rate care component of the disability living allowance, which used to be called the higher rate attendance allowance. The existence and availability of the new highest rate care component of the DLA could be used to provide suitable criteria, as the care allowance did, to make exemption available to all, whether they are under five or over 65 when they become severely disabled and too disabled to drive their own cars.

Why cannot the new care component be used to deem that the criterion of having to be driven and cared for by a full-time constant attendant is being met, just as it was if the person was in receipt of the previous attendance allowance at the higher rate? I contend that the two are comparable and that it is possible to transfer that eligibility, definition or qualification using the new higher rate care component in exactly the same way that the previous care allowance was used under the previous arrangements.

If the available machinery were utilised, it would mean that those who became severely disabled after the age of 65 and who would previously and easily have qualified for exemption could continue to do so, thus obviating the need for clause 12.

The Opposition strongly believe that vehicle excise duty exemption should remain available to disabled passengers —the original third category—who become disabled too late to be eligible for the mobility allowance or for the new higher rate mobility component of the disability living allowance. Eligibility for the higher rate care component would qualify for entitlement to the higher rate mobility component but for the fact that the people involved are over the age of 65.

I strongly urge the Paymaster General to consider using that simple comparison and the transferred use of the care component—the former care allowance and the new higher rate care component. If he were to do so, it would obviate the need for clause 12. Acceptance of the amendment would enable the Government to withdraw clause 12.

There is absolutely no reason for clause 12 to be included in the Bill. It tidies what does not need to be tidied, because there is machinery available to transfer and extend the exemption in the way that it has always operated. Clause 12 excludes those who are under five and have severe disabilities, and those who are not yet 65 may become disabled passengers after that age. They should not be excluded from such an important exception.

I hope that, in understanding the full history of the measure and in accepting my argument for the comparability and transferability of the machinery that is available to the Government to use, the Paymaster General will accept the amendment so that clause 12 can be removed from the Bill. That will benefit a significant number of considerably disabled people in our community.

Mr. John Hutton (Barrow and Furness)

Like my hon. Friend the Member for Wrexham (Dr. Marek), who so ably moved the amendment, I and many of my hon. Friends have strong and deeply held views on the subject. It is reasonable to say that clause 12 can be described only as the most lamentable feature of the Bill as it provides for the repeal of the disabled passengers' scheme. Those affected by clause 12 include severely disabled elderly people aged 65 and over and severely disabled children under the age of five who are already denied help under the disability living allowance with extra mobility costs. Although the Government have made it clear that clause 12 will protect entitlement for existing claimants—that must be good news—no new claims under the disabled passengers' scheme will be possible if clause 12 remains in the Bill.

Age Concern, the Disability Alliance and many other organisations have expressed the view that the clause is an attack on severely disabled people. I share their concern and that of many of my hon. Friends that that is precisely the import of the clause. As my hon. Friend the Member for Hartlepool (Mr. Mandelson) made clear, we do not believe that we can regard the clause as a tidying-up device. It is no such thing. Clause 12 can best be described as a convenient fig leaf which conceals a wider and reprehensible attack on the rights of disabled people.

We can legitimately regard clause 12 as discrimination against two of the most vulnerable and needy groups of disabled people. I and many of my hon. Friends share the concern of many organisations in the area that that will be the real effect of the clause. That is why I support the amendment and urge the Government to think again.

Some 20,000 people currently qualify under the scheme that clause 12 seeks to abolish. In the past year, more than 4,000 people who come into those two groups of disabled people came under the cover of the scheme. Those are significant numbers. It is worth bearing in mind that the Government have never actively promoted or publicised the disabled passengers' scheme. I suspect that the figure of 4,000 can be regarded as the tip of the iceberg. There may be significantly more disabled people in the two crucial categories who may be entitled to vehicle excise duty exemption but who do not apply for that exemption. Clause 12 is likely to have severe long-term effects, especially as the overall population is ageing. The number of people reaching the age of 65 will increase, so the effect of clause 12 will be cumulative as the years pass.

The Treasury stands to gain from clause 12, but it will do so at the expense of very disabled people. In the current climate, that says a lot about the Government's real objectives. It is fair to describe the clause as an act of indescribable meanness. Part of the Government's case, as my hon. Friend the Member for Hartlepool said, is that the necessary machinery to assess who qualifies under the disabled passengers' scheme is no longer in place. That follows changes introduced by the disability living allowance and by the process of self-assessment.

Surely it would be easy for the relevant Department to devise a few self-assessment questions for the purpose which would allow the identification of need to be established and assessed at an early point. It is ludicrous to argue that the only response is to abolish the scheme altogether. That is not a credible or coherent approach for the Government to adopt.

I urge the Government to think again about clause 12 and to do the decent thing for those deserving categories of disabled people. They need our help, and it is inconceivable and cruel for the Government to maintain the fictitious argument that they have deployed throughout proceedings on the Bill.

The Government have frequently expressed their commitment to improving the quality of life for older people and to enabling them to live as full and independent lives as possible. In that context, I strongly urge the Government to reconsider the proposal and to move towards ending discrimination against people who become disabled later in life. I urge the Government to think again, to go back to the drawing board and to come back to the House with more credible and reasonable policies which address fully the mobility needs of those with acute and severe disabilities.

I have one comment about the interaction between the fiscal and tax system, and the social security system as a whole. I understand that part of the Government's case is that the benefits should be part of the social security system. I do not believe that the two groups of disabled people whom my hon. Friends have identified as losers from clause 12 will receive any equivalent extra benefit if the clause remains in the Bill.

I seek an assurance from the Paymaster General that there will be no losers if clause 12 remains in the Bill. It would be contemptible for those two groups of disabled people to lose as a result of the clause. Concern about clause 12 is shared by hon. Members of all parties. I hope that the Paymaster General will confirm that there will be no losers and that he can categorically assure me and many of my constituents who are concerned about the proposals that none of them will lose a penny piece because of clause 12.

Mr. Clive Betts (Sheffield, Attercliffe)

The proposals stem initially from the changes which brought in the disability living allowance. No Opposition Member has sought to undermine the main thrust or benefits of those proposals. What we have done is to highlight a problem whereby, under clause 12, only those who receive the higher rate mobility element within the DLA will get vehicle excise tax exemption.

As my hon. Friend the Member for Hartlepool (Mr. Mandelson) rightly stressed, in Committee we did not have as thorough a discussion of the matter as we might have done. We tried to raise questions and to get some information about how many people would be affected by clause 12. We wanted to know how many people who had been in the category of being able to get vehicle tax exemption would not have that right in future. We have now been given information that about 20,000 people will be in that position. If the scheme were retained, with better publicity the number might grow, but currently it is about 20,000.

We are dealing with the two categories of people who are the passenger element in the scheme—children under five and people over 65 whose lack of mobility came about after the age of 65. The number of people is not enormous compared with the total benefit arrangements that the Government make, but that does not mean that those people should be forgotten or treated any old how without any thought or care for their welfare.

7.30 pm

As only 20,000 people are involved—although the number might be increased with proper publicity—the issue is relatively easy for the Government to deal with. No doubt the Paymaster General will tell us that transitional arrangements will be put in place to ensure that people who currently benefit from the exemption keep it. That is fine for the time being, but in the future people in exactly the same circumstances will no longer be exempt. Ultimately, the 20,000 people who were previously exempt from vehicle excise duty will have to pay it. As transitional arrangements will be made, the number of people who will lose next year and the year after is small. It must be possible for the Government to find a way to assist that small number of people.

Responses from Treasury Ministers always cite costs as the reason why they cannot do things. As only 20,000 people are involved, the expenditure or income forgone by the Treasury must be about £2 million. As the transitional arrangements will deal with most of the 20,000 people immediately, the extra cost of continuing the exemption for people who would newly qualify must be minuscule in this and the next financial year. The cost may be minuscule, but the impact on many families will be considerable. For some families, £2 a week may not be much, but many families of disabled people are on low incomes and £2 a week is a lot to them.

To take another comparison, under the parliamentary mileage allowance scheme, £2 might take one only three miles, but for some families £2 can be a lifeline. Hon. Members must see it in that context. I have spoken to Mencap about the proposal, and Mencap had a simple view, especially on how the proposal affects children under five. When someone has a child with learning difficulties under five, it is all very well to say, "You can put it under your arm and take it on the bus. There is no difficulty with that." Many such children have behavioural difficulties. They often create a disturbance and get upset by the experience of travelling on public transport. Private transport is crucial to the family of such a child. The spokesman for Mencap said: Many of these families are under real pressure. The Government's proposal will simply add to the pressure on families who have real difficulties in any event.

As my hon. Friend the Member for Hartlepool said, if the Government do not have the machinery available at present to continue the vehicle excise duty exemption, for heaven's sake let them create it. They should not take it out on the families. Eminently sensible proposals have been made and I hope that the Minister will respond to them. As my hon. Friend the Member for Barrow and Furness (Mr. Hutton) said, if the Government contend that the matter should be dealt with not through fiscal arrangements but through the benefit system, let the Government tell us what extra benefit will be paid to such families. Let them tell us that there will be no losers.

I simply ask the Government to change their mind. The proposal in clause 12 is mean, miserly, despicable and hard hearted. It is the product of an uncaring and unfeeling Government. Our proposal will not destroy their plans for next year's public sector borrowing requirement. It will not undermine the Government's fiscal, economic or social policy in any respect. It is simply a relatively cheap, simple proposal to give a little help to a small number of families who need it. I hope that the Government will accept the amendment.

The Paymaster General (Sir John Cope)

I wish to deal first with some of the smaller points and go on to the main questions, which Opposition Members mostly addressed. The effect of amendment No. 1 would be to write into the law one way of delivering the undertaking which the Government have given, and which I am happy to repeat, that no one who currently benefits from the vehicle excise duty exemption will lose it as a result of clause 12.

It is important for me to emphasise—several hon. Members asked me to do so—that there will be no losers at the point of change. However, as I explained in Committee, we seek to achieve that by means of the order which will introduce transitional provisions as well as fixing the date from which the clause takes effect. That is the best way of doing it. It is better than doing it by the means proposed in the amendment.

There is a drafting problem with the amendment. Vehicle excise duty, and thus exemption from it, attaches to vehicles, not people. The position is not as described in the amendment. That is one reason why it would not be a good thing to accept the amendment. However, I accept the point behind the amendment. Indeed, we have said all along that there should be no losers at the point of change. Everyone who currently receives the exemption will continue to do so.

There are other difficulties with the amendment. It fixes the date as 30 June and relates to eligibility rather than to whether or not someone receives the exemption. That could give rise to other complications, but I shall not dwell on them. I am anxious that people should appreciate that we take the point behind amendment No. 1. However, we intend to achieve the aim in a different way.

The hon. Member for Wrexham (Dr. Marek) raised in passing value added tax on fuel used by leagues of friends and other organisations which often provide transport for the disabled. There is always a problem with proposals to extend zero-rating. It is the problem of the sixth directive —indeed, it was signed by the Labour Government— under which we agreed with our European partners not to extend zero rates. So we could not do precisely what the hon. Gentleman requested. However, it is relevant that vehicle excise duty exemption for passenger vehicles involved in transporting mentally and physically disabled passengers is not affected by clause 12.

Since 1979, no VAT has been charged on the purchase price of cars leased to certain disabled people. A little later, in 1984, we also removed VAT on leasing payments. Subsequently, in 1989, we lifted the car tax on such cars. Various other changes have been made, but we could not pursue the precise change proposed by the hon. Member for Wrexham.

Most of the comments made this afternoon have dealt with the main point behind clause 12. Amendments Nos. 2 and 9 have the effect of removing clause 12, but achieve it in slightly different ways.

The hon. Member for Hartlepool (Mr. Mandelson) complained of the lateness of the hour, although I see from the record that it was only 10.17 pm when we finished debating the clause in Committee. As I am sure the Opposition Deputy Chief Whip, the hon. Member for Jarrow (Mr. Dixon), knows, we sat considerably later than that on several occasions, but I shall not make much of that.

The hon. Member for Hartlepool again used the phrase "tidying up", which is not one that I would have used to describe the proposal. However, I was anxious to ensure that the Committee considered the clause in the context of the wider reforms of help for the disabled and the introduction of the disability living allowance. It is clear from the debate that hon. Members have understood that the clause must be considered in that context.

Several hon. Members have described the amount as petty, which it is, as it covers only vehicle excise duty. One hon. Member said that amounted to only £2 per week, but it is slightly more than that. I do not seek to hide behind that. As I told the Committee and as has been reflected in the debate, the introduction of the new allowance makes it difficult to provide the machinery to continue the allowance for the two groups of people to whom attention has been drawn.

Under DLA and attendance allowance for the over-65s, we shall no longer be able to rely on a doctor's examination to provide the information needed to decide about walking ability for the purposes of exemption. That is the central difficulty and, with respect, I do not think that hon. Members have tackled it as they might have done. It is not a question of costs. One hon. Member said that they were minuscule; in terms of Government expenditure and the help that we give to the disabled, they are. I do not seek to dismiss the proposal on that account, but that is a fact.

The hon. Member for Barrow and Furness (Mr. Hutton), among others, suggested that if the scheme had been publicised, the costs involved might have been larger. All mobility allowance recipients received a leaflet about vehicle excise duty exemption, and those awarded attendance allowance were told about it in the award notice. I have heard no suggestion, nor do I believe, that the scheme was not understood by those eligible for it. Therefore, the number of people in receipt does not understate the number that would have been in receipt if there had been more publicity.

Even if hon. Members did not know it before they came to the House, once they have been here for a short while, they must realise that the interaction of the benefit system and the tax systems is extremely complex. It is difficult to ensure that people receive all the benefits for which they are eligible. That is a constant problem, which does not get easier when we extend allowances. On the contrary, it tends to become more complicated. We are all familiar with that, and would like to solve the problem, but it is inevitable.

Several hon. Members mentioned the under-fives, one of the categories involved. We have extended entitlement to help with extra costs for children by making the new, lower rate of the care component and the higher rate available to all children, which in turn gives access to the disabled child premium in the income-related benefits. We more than doubled those in April 1990, and they are important for the under-fives, among others.

As for the over-65s, the clause does not affect any people who benefit from the allowances. We are proud of our record on help for pensioners. It is not irrelevant to remark that expenditure on benefits for the elderly has risen by 33 per cent. in real terms since 1978–79. I hope that we can be acquitted of any general charge as regards the elderly, although it is true that the Government wish to do the best that we can for them, as would all right hon. and hon. Members.

7.45 pm
Mr. Mandelson

No one questions the Government's desire that those who receive benefits should continue to do so. My remarks were aimed principally at those who have yet to become 65 and to qualify for the category three group which I defined. The right hon. Gentleman needs to explain clearly his argument about the machinery before he concludes his remarks. Why cannot the machinery for awarding the highest rate of care component of the disability living allowance, introduced in April, be used to provide the benefit and exemption to those people who meet the criteria, who would previously have fitted in that category and would have been eligible for the exemption after they reached 65? Will he explain that clearly?

Sir John Cope

The criteria provided for that component of DLA are not relevant to this benefit. In any case, the care component does not apply to those who become disabled after the age of 65. That is the nub of the difference that we are introducing in clause 12.

The hon. Member for Wrexham, who opened the debate and sought to remove clause 12 from the Bill, acknowledged that the effect was relatively small and asked whether we would consult organisations about the matter and about the genuine difficulty in which we find ourselves, which gives rise to the clause. My right hon. and hon. Friends—especially those in the Department of Social Security who are mainly responsible for benefits —are continually in touch with the organisations that have been mentioned. I am sure that they will remain in touch about that matter, as they will about other matters concerning disability and benefits.

Dr. Marek

The debate has been useful, and the gist of what the Government are doing has been conveyed to the House by Opposition Back Benchers. I am in a charitable mood this evening, because the Paymaster General answered the debate honestly. I have been in the House for a few years now and in my time on the Finance Bill I have seen and heard Paymasters General who have been decidedly shifty in their replies on clauses. That is not the case this time—[HON. MEMBERS: "Name them."] I must not succumb to my hon. Friends' entreaties on that matter. It would be unfair to refer to other Paymasters General, but I absolve the present Paymaster General of being shifty.

Mr. Mandelson

I would be the last Member of this House to accuse the Paymaster General of being shifty or dishonest at any time. [Interruption.] He may have been when he was in the Whips Office, but that was long before I came to the House. Although he may have been honest, his answer to my question about machinery was less than complete. Originally, the criterion that a person had to be driven and cared for by a full-time constant attendant was deemed to be met if the person was in receipt of the attendance allowance at the higher rate. Why cannot the equivalent of that former attendance allowance at the higher rate—the higher component of the new disability living allowance—be used now? The Paymaster General has consistently refused to explain why that machinery cannot be used, and we should not let him off the hook.

Dr. Marek

I agree with my hon. Friend. A gallery of rogue Conservative Whips is displayed in today's Evening Standard, and the Paymaster General's face does not appear among them. So I shall continue in my charitable mood and appeal to the Paymaster General's sense of fair play. He said that his hon. Friends in the Department of Social Security were in continual touch, and that he was sure that they would continue to be in touch, with organisations representing disabled people about that matter.

Sir John Cope

I had the impression that the hon. Gentleman might be bringing his remarks to a close, and I wished to respond to the intervention by the hon. Member for Hartlepool (Mr. Mandelson). I tried to explain—perhaps I was not clear enough—why we cannot use the machinery that he suggested. The care component is concerned with people's need for attention and supervision, not with whether people are incapacitated in the use of their limbs. That is why the criterion is not relevant in this matter.

Mr. Mandelson

rose—

Dr. Marek

I shall give way in a moment but, in accordance with the rules of the House, I must make a comment first.

I am grateful for the Paymaster General's explanation, and I shall give way to my hon. Friend.

Mr. Mandelson

I hope that the Paymaster General will understand the spirit in which I am pursuing this matter. If the criterion of being driven and cared for by a full-time constant attendant was a perfectly adequate definition and basis for qualification then, why is that not the case now? Why has the criterion changed? The severity of people's disability and their need for exemption from vehicle excise duty have not changed. Nothing has changed apart from the Paymaster General's redefinition of the criterion for reasons that I do not understand.

Dr. Marek

That is a pertinent question. I shall not press the Paymaster General to reply, but I shall give way to him in due course if he can do so.

I agree that there is a much greater reliance on self-assessment in the new scheme for the operation of DLA. An obvious question to ask is why a doctor's note could not be demanded before exemption from the VED was allowed. It would be simple to construct a form in such a way that people would be allowed certain benefits on a self-assessment basis, but if they wanted VED exemption and were under five or over 65—if they belonged to the third group that receives those benefits at present—they would need a doctor's note. If that is the only problem, a bit of ingenuity could get round it.

The Paymaster General replied to the debate in an honest manner. I take it that the sum of money is not at issue—as one of my hon. Friends said, it is only about £2million—and the Treasury does not seek to recover £2 million to make inroads into the £28 billion of public sector borrowing requirement that it must fund. I do not believe that the Government are hard-hearted and want to hit the disabled where it hurts, so they must be taking this step because their advisers and civil servants have told them that the difficulties in continuing the allowance for the disabled are insuperable and the best way is to get rid of it. Such advice cannot be accepted without thorough and searching scrutiny.

I therefore rely on the Paymaster General's words and shall read them carefully in the Official Report tomorrow. He said that his hon. Friends will talk to the groups representing disabled people, such as the Spastics Society and Mencap. If the various societies can convince them that there are ways to get round the problems, I hope and expect that the Government will put the matter right in a future Finance Bill.

The Paymaster General said that the Conservative party is proud of its record on pensioners. I cannot let that remark pass, because it is not true and the myth should not be given credence. Old-age pensioners have received increases based on the retail prices index. The increases are not based on a proportion of average earnings.

While the rest of the country has been growing richer because the world has been growing richer and GDP has been growing faster than the RPI—although slower than in many other states of the European Community— pensioners have not partaken of that increase. Even worse, besides increasing the burden of taxation—as a percentage of GDP it is much higher now, under Conservative rule, than it ever was under Labour rule—the Government are shifting the balance from direct to indirect taxation. By and large, pensioners do not pay income tax, but they all pay value added tax.

Therefore, I challenge the Paymaster General's statement that pensioners have done well or that the Conservative party has a proud record on pensioners. Disabled people, especially those over 65, who need all the help that we can give them, would value a continuing exemption from vehicle excise duty if it could be arranged.

I hope that the Government will continue to talk to organisations representing disabled people, because £2 million is a small sum. If they can find a way round the drafting difficulties to ensure that the allowance goes to those who properly qualify, I hope that they will do so in next year's Finance Bill.

Amendment negatived.

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