§ The Secretary of State for Social Security (Mr. Peter Lilley)
I beg to move,That the draft Social Security Benefits Up-rating Order 1993, which was laid before this House on 21st January, be approved.
§ Madam Deputy Speaker (Dame Janet Fookes)
I understand that with this it will be convenient to discuss at the same time the following motions:That the draft Social Security (Contributions) (Re-rating) Order 1993, which was laid before this House on 21st January, be approved.That the draft Social Security (Contributions) Amendment Regulations 1993, which were laid before this House on 21st January, be approved.That the draft Statutory Sick Pay (Rate of Payment) Order 1993, which was laid before this House on 21st January, be approved.That the draft Guaranteed Minimum Pensions Increase Order 1992, which was laid before this House on 3rd December, be approved.
§ Mr. Lilley
The orders implement the decisions that I announced following the autumn statement at the end of the public expenditure round. I shall discuss how they affect different groups of beneficiaries, but it is just possible that the House will wish me to expand a little upon the implications for social security of the long-term review announced by my right hon. Friend the Chief Secretary to the Treasury on Monday. With your indulgence, Madam Deputy Speaker, I shall do so after dealing with the orders themselves.
I am pretty certain that the long-term review will have two things in common with the public spending round: it will be accompanied by sustained, reckless and unfounded scaremongering by the Opposition, and the outcome will show that scaremongering to be wholly baseless. In October, for example, the hon. Member for Dunfermline, East (Mr. Brown) put out a statement saying that the Government were planning to cut benefits forthe poorest, weakest and frailest who have been targeted to pay the price of the Government's policy".We are used to hearing that sort of thing from the hon. Member for Dunfermline, East—but he was joined by the hon. Member for Glasgow, Garscadden (Mr. Dewar). who should know better. The hon. Member for Garscadden accused the Government of planning a campaign of "social vandalism", "singling out those on benefits", breaking our pledges and so on.
Needless to say, both hon. Gentlemen were wrong. In fact we kept our pledges to families and to the elderly, maintained support for people hit by recession and focused additional support on the most needy. Today we are implementing those decisions.
§ Mr. David Winnick (Walsall, North)
The Secretary of State is keen to accuse the Opposition of scaremongering, but is he not aware that on Sunday almost every newspaper—including those that usually support the Government—stated, presumably as a result of leaks, that the Government intended to means-test the state pension? It was not suggested that that would happen during this Parliament, but that was supposed to be the long-term 1042 objective. Will the Secretary of State now give a guarantee that in no circumstances and at no stage, in the short or the long term, will the state pension be means-tested?
§ Mr. Lilley
The hon. Gentleman has a dispute with his own Front-Bench spokesmen. It is the Leader of the Opposition who has set up a review to consider means-testing all universal benefits.
§ Mr. Lilley
In the section of my speech dealing with the long-term review, I shall deal with the precise point that the hon. Gentleman raises.
We are fulfilling our manifesto pledges to uprate pensions and child benefit in line with inflation. We are uprating all other major benefits fully in line with inflation and are confirming decisions to channel £1 billion extra to those on income-related benefits. In a tough spending round, it was possible to find the resources to maintain and improve benefits only by the most rigorous scrutiny of costs.
Above all, it was essential to staunch the flow of money to those whom Parliament did not intend to receive it. In the autumn, I set a target of £500 million for fraud identified and stopped by the Benefits Agency alone. I am delighted to say that we are well set to exceed that this year.
§ Mr. Donald Dewar (Glasgow, Garscadden)
The form of words that the Secretary of State used might have given someone listening less than carefully the impression that the right hon. Gentleman would have liked to do better, but that, of course, he did well in the stringent financial conditions. Will the right hon. Gentleman clarify the Government's position? Is it not true that, as a matter of policy, they would not want the basic pension, for example, ever to rise in real terms?
§ Mr. Lilley
It is a fact that the Labour party is committed to linking pensions to earnings. We are committed to linking the basic pension to prices. That is clear—and it has important implications. It means, for example, that, as I have said, we can channel additional resources to those in greatest need. The Labour party would not he able to do that. That is why a Labour Government would be compelled to means-test the pension if they were uprating it in line with earnings and wished to channel any resources away from the better-off to the most needy. That is a dispute that the hon. Member for Garscadden must have with his Back Benchers.
I am delighted to say not only that we are set to exceed our target for Benefits Agency fraud for this year, but that for next year I shall set the agency and local councils a combined target, covering all benefits, of nearly £1 billion worth of fraud identified and stopped. If we abandoned the battle against fraud, as Opposition Members often urge, we should not have that £1 billion—and without that I could not have increased benefits for those on income support.
The hon. Member for Garscadden may tell Selina Scott, as he did the other night:
we are united on the need to tackle fraud".Who would not tell Miss Scott what she wanted to hear? But the fact is that the Opposition have opposed and derided every step that we have taken to bear down on fraud. They opposed our measures to curb the payment of benefits to people not actively seeking work, be they new 1043 age travellers or others. They opposed our measures to prevent bogus asylum-seekers from ripping off the system with multiple applications. They ridiculed the target that I set at Brighton, which we are now set to exceed. That is why the public are convinced that Labour is the friend of the freeloader. It is not I who said that, but the hon. Member for Sheffield, Brightside (Mr. Blunkett).
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
I am grateful to the Secretary of State for giving way, in his characteristically courteous manner. How will the uprating scheme benefit women in receipt of invalidity benefit? Will the right hon. Gentleman confirm that a few days ago the Advocate General of the European Court of Justice issued an opinion to his colleagues that the British Government had discriminated against women by cutting off invalidity benefit at the age of 60, which was in contravention of an equality directive passed, I believe, as long ago as 1979? When does the Secretary of State expect the European Court of Justice to issue a judgment based on the Advocate General's opinion?
§ Mr. Lilley
We are uprating invalidity benefit, so the hypothetical constituent to whom the hon. Gentleman refers will benefit.
It is the final ruling of the European Court, not the opinion of the Advocate General, which matters. We abide by such rulings, although I am reluctant to consider it sensible to set policy by having it decided by unelected judges rather than by this elected House.
§ Mr. Lilley
I would rather make progress. However, the hon. Gentleman is always so polite that I shall give way.
§ Dr. Godman
I always try to be polite; the Secretary of State is always polite in his dealings with me.
The Secretary of State made an important observation. He said that it is not the Advocate General's opinion but the ruling of the 13 judges which is important. He also said that he always abides by such judgments. If the judges rule against the Government, will the 470-odd constituents to whom I referred receive not only the invalidity benefit, but the back payment of that benefit?
§ Mr. Lilley
I do not want to give a hypothetical response to a hypothetical ruling of the court which we have not yet seen. The hon. Gentleman may come back to me at a future date on the issue.
The main feature of the debate is the uprating of all the main benefits in full. People said that we would not or could not do it. When I announced last November that we were doing so, the hon. Member for Garscadden promptly started looking for shortcomings in the basis of the uprating. He alleged that by indexing on the basis of price rises over the previous 12 months, I was
leaving pensioners' living standards vulnerable to rising inflation in the coming year"—[Official Report, 12 November 1992; Vol. 213, c. 1018.]The hon. Member for Garscadden was wrong again. Far from rising, inflation has been falling. The retail prices index showed a 3.6 per cent. rise in the 12 months to September and that is the amount by which all benefits will be uprated. The RPI now shows a rise of just 2.6 per cent. A change to using forecast inflation would probably have disadvantaged everyone on social security.
It was rather unwise for the hon. Member for Garscadden to make that suggestion because it merely 1044 reminds the House that in 1976, Labour changed to the forecasting method. It was a blatant ruse to cut benefits and it resulted in an uprating 6 per cent. less than would have been the case under the method used now. The poor were truly vulnerable under Labour because inflation reached 27 per cent.— 10 times the current rate—slashing the value of benefits between upratings and wiping out savings.
In his response to the uprating statement, the hon. Member for Garscadden suggested that an index excluding housing costs would be better for pensioners. The pensioners' prices index excludes most housing costs, but if that index had been used since 1979 instead of the RPI, the pension would now be worth £6.65 a week less than the current rate. We are not in the business of playing around with indices. Our way is straightforward: to attack inflation and to protect honestly the real spending power of benefits.
It may be helpful if I now explain how the benefit uprating helps different groups of people: the elderly, families, the unemployed, the sick and disabled, carers and those in residential care. The Government have shown that we honour our pledges. Our pensions policy has three main strands. The first is to maintain the real value of the basic retirement pension, so we are increasing the basic pension next April from £54.15 to £5610 for a single person and by £3.10 a week to £89.90 for a couple.
The second strand is to focus extra help on those who most need it, so we have raised the pensioners' premium in income support by £2 for a single person and by £3 a week for a couple. Together with the ending of any requirement to pay any council tax, that channels £500 million extra to the neediest pensioners.
The third strand is to encourage people to make additional pension provision in line with their earnings. The Guaranteed Minimum Pensions Increase Order 1992 protects members of occupational pension schemes by uprating guaranteed minimum pensions by 3 per cent.
The success of our policies to encourage more choice in pensions can be seen by the number of people who have chosen to contract out of the state system. Since the pension reforms of the 1980s, 5 million people have become personal pension holders. Some 500,000 additional people have joined occupational schemes and the number of schemes has increased by 31,000.
Once again, for families we have honoured our manifesto pledge by fully uprating child benefit. It will rise to £10 a week for the first child and to £8.10 for other children in the family. Family credit has been uprated in full. It now goes to more people with family responsibilities than ever before. Some 450,000 families are being helped to maintain themselves in work by an average payment of £42 a week. Almost 300,000 will gain from improved arrangements for non-dependent reductions in housing benefit and in income support housing costs. The three lower rates of non-dependent deductions will remain the same. Those with higher incomes will be expected to contribute £21 a week, which is not an unreasonable amount, as it represents less than one sixth of their income.
I have been especially mindful of those hit by the recession in my scrutiny of benefit levels, so I have uprated unemployment benefit fully in line with prices. The Chancellor does not include expenditure on benefits for the unemployed within the overall control total for public 1045 spending. It is right morally and economically to accommodate the extra help for the unemployed during the recession.
We are spending £2 billion on programmes for the unemployed, including youth training. That is two and a half times as much as was spent on training under the previous Labour Government.
The House has already heard that I propose to uprate invalidity benefits fully in line with inflation for people unable to work because of sickness.
§ Dr. Godman
In the west of Scotland, a number of men are in receipt of invalidity benefit because they are suffering from asbestosis or from related ailments. In pursuit of their legitimate claims against their employers for placing them in such dangerous circumstances, they had to submit themselves to an independent medical by a specialist. They had to pay for that examination. I appeal to the Secretary of State to examine most sympathetically the problem that the men face in having to find the money. It is an added burden for those men and I should be extremely grateful to the Secretary of State if he would find a way in which to remove that burden from these men, all of whom are terminally ill.
§ Mr. Lilley
I shall look at the hon. Gentleman's point. I suspect from the way in which he puts it that he is referring to industrial injuries benefit rather than to invalidity benefit. Either way, I shall look into the matter and contact him afterwards.
§ Mr. Andrew Rowe (Mid-Kent)
I have argued for a while that people who are following a course of study with the intention of making themselves more employable or people who have chosen for a while to leave the labour market to do worthwhile voluntary work should be able to negotiate with their social security or unemployment benefit office the opportunity to withdraw voluntarily from the labour market while they are engaged in socially worthwhile activities. I very much hope that my right hon. Friend will take that suggestion seriously into consideration in these hard times.
§ Mr. Lilley
My hon. Friend has mentioned the point to me behind the Speaker's Chair. We shall consider it seriously.
On benefits for the sick and for the disabled, I intend to increase fully in line with inflation sickness benefit for short-term sickness and the lower rate of statutory sick pay, but I do not propose to increase the higher rate which goes to employees earning £195 or more a week. Most employees who qualify for the higher rate have their statutory sick pay topped up by occupational sick pay schemes. It would therefore be an inappropriate use of taxpayers' resources to increase that rate.
For people with disabilities, we shall in particular continue the support provided by the two new benefits introduced last year—disability working allowance and disability living allowance. This will be the first uprating of the new benefits. Since the introduction of disability living allowance in April last year, 370,000 awards have been made, including more than 200,000 to less severely disabled people who have gained from the new benefit. That increases to nearly 2 million the number of people receiving help with the extra costs of disability.
1046 I also plan to increase the amount that carers may earn before their benefit entitlement is affected. Those carers entitled to the carer premium in income support, housing benefit or council tax benefit who currently qualify for a lower earnings disregard will be able to earn up to £15 a week without losing any of their income-related benefit.
Most of the income support limits for those in residential and nursing homes will be increased by £10 a week—that is more than inflation in most cases. I have also decided to increase the grant to hospices. I shall be making an extra grant of £1 million in 1993–94, and that is in addition to the £1 million for each of the public expenditure survey years announced in 1991.
I promised that I would address the issue of the long-term review of spending announced on Monday by my right hon. Friend the Chief Secretary. In the annual public expenditure round, the focus is essentially short term. We review spending plans for the next year and two subsequent years, yet in the Department of Social Security in particular, most of our spending—who gets it and how much—is laid down in statute. Because of the time that it takes to legislate, implement and protect existing beneficiaries, the main impact of any change is likely to fall beyond the PES period. Consequently, the annual public expenditure round provides insufficient incentive to get to grips with longer-term trends. The social security budget is rather like a giant super-tanker: it takes some time to respond to the movement of the rudder. That is why it is sensible and essential from time to time to undertake a long-term review as we are doing at present.
Let me make one thing crystal clear. We have no intention of reneging on our manifesto pledges. Our manifesto was quite explicit. We believe that the basic pension must remain the foundation for retirement and we will protect its value against price rises. We are likewise committed to child benefit, which will continue to be paid to all families—normally to the mother—and uprated in line with prices.
By contrast, the Opposition are jettisoning—like cargo from a sinking ship—the pledges that they offered the electorate. Every time the hon. Member for Garscadden appears on television, he abandons a pledge—a pledge before breakfast, a pledge before lunch and a pledge before dinner, if I may coin a phrase.
The aim of our review is not just to control expenditure. It is to ensure that spending is geared to the needs of the 1990s and the 21st century and not to the patterns of the past. We intend to improve as well as save. So let us be quite clear: excessive expenditure on social security can be doubly damaging because when the state takes too much money from one person to give to another, it reduces the first person's incentive to work and undermines the second person's incentive to support himself. It is a double whammy of disincentive and dependency.
Let us face it:one of the tragedies of the present system is that it does encourage dependency. I only have to look around my constituency to see people who have become dependent, not because they want to but because of the way the system operates—because of the poverty trap. Can we break out of that? I am certainly not afraid to say that there are duites as well as rights for those on benefit.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
Before the Secretary of State continues with this rather familiar passage from his conference speech, let me ask him this: does he recognise that the reason why so many people 1047 depend on social security benefit is that they are unemployed through no fault of their own and that the public expenditure problem that the Government face arises largely because of the amount of benefit paid to the unemployed and the loss of tax revenue from those same people?
§ Mr. Lilley
The hon. Gentleman may find the phrases that I have just uttered familiar. I may say that they were not from my conference speech but were the words used by the hon. Member for Garscadden to describe the dependency syndrome that he sees in his constituency. So we all agree that there is an irresistible case for a thorough long-term review of social security. The Government are quite clear as to the principles that should animate that review. I have spelt them out to the House before but I repeat that the keys are to focus improvements in benefits on those in greatest need and to harness private provision wherever possible.
§ Mr. Winnick
I am grateful to the Minister for giving way a second time.
He referred to the state pensions, and we understand the position regarding this Parliament. So that those in their 40s and 50s, whether in employment or out of employment, may know the situation, will he now state it unambiguously? Is he telling the House and the country that, as far as the Government are concerned—leaving aside anything that may or may not have been said by the Opposition—the state pension itself will remain without any form of means testing whatever?
§ Mr. Lilley
We have made it absolutely clear what our pledges are and that we have no plans to means-test. I cannot tell what would happen in a future Parliament if the Labour party were ever elected. It seems to be working out plans for precisely that—but, fortunately, it does not seem to be very good at winning elections.
We have made it clear what our principle are. We want to give people wider choice, stronger incentives and more control over their own money. The Opposition reject that route, because they know what they are against but they have not a clue what they are for. That is why the Leader of the Labour party set up a commission—a total cop-out. The right hon. and learned Gentleman has always opposed the practice of putting Government services out to contract but now he is contracting out the Opposition's entire policy. It is the first time in history that a party has had to ask outsiders what its principles are.
In his much-heralded speech on Sunday, the Leader of the Opposition did not mention social security once so we should not expect too much from Labour's commission on social justice. I have been looking at the list of the people whom the right hon. and learned Gentleman has placed on the commission. There are two conspicuous absences,, the first of which is the Labour spokesman on social security, the hon. Member for Garscadden, who, as a result, is left floundering in interviews, unable to state what his policies are and unable to influence what they will be. Even more remarkable is the absence of the Chairman of the Select Committe, the hon. Member for Birkenhead (Mr. Field), whom I welcome to our proceedings. The hon. Gentleman is living proof that it is possible to be a member of the Labour party and a creative thinker, but he is also proof that it is not worth the risk—one will not be put on a commission, one will not be put on the Front Bench and one will be excluded from its counsels.
§ Mr. Frank Field (Birkenhead)
The Secretary of State has stated that, in this Parliament, the review will not touch the two benefits in respect of which the biggest savings could be made if it were decided to make a change in the overall level of social security expenditure. He will therefore be dealing with more minor benefits, which are nevertheless important to those claimants who may be affected. The right hon. Gentleman said that we all know the principles by which the Government operate. Will he undertake that, as far as possible, the review will be undertaken in public and that, as happened with the Fowler review, the background papers will be published so that affected claimants and their representatives at least know what is going on and can perhaps influence the Government's decisions in advance of their conclusions?
§ Mr. Lilley
The review is likely to be rather wider in scope initially so I do not think that we shall adopt that approach, although we shall of course be responsive to any suggestions that come from the Select Committee, from hon. Members or from people outside the House.
§ Mr. Frank Field
But unless we know what the Secretary of State is planning, it will be terribly difficult for outsiders to contribute.
§ Mr. Lilley
We are planning a long-term review. As my right hon. Friend the Chief Secretary said, we hope to be able to feed back some of our findings to inform the short-term public expenditure round, but the rest will take longer. The review is likely to inform the whole process of the transformation of the social security system as time goes by rather than being a one-off decision.
Let me return to the subject of the commission on social justice, on which the hon. Member for Birkenhead sadly does not sit, and consider who does serve on it. Apart from the statutory business man, it consists of one BBC producer, one professional trade unionist, one economist, one charity director—[Interruption.] I seem to have a fan who reads all my speeches in advance. The list also includes a charity director, a chair, a baby expert, who I take it is the high chair, a provost, Neil Kinnock's press secretary and seven professors. I suspect that their idea of poverty is a shortage of port at high table.
Characteristically, the leader of the Labour party has set them off in the wrong direction. At the last general election, he tried to persuade the electorate to accept higher national insurance. Now he is considering cutting the benefits of those who contribute most. Of course, he is opposed to private provision. Can there be a more irrational combination: take the lid off contributions, means-test benefits and discourage private provision? That is the Labour party's recipe. I am glad that it is learning it by heart. I hope that it will soon get its lessons right.
The orders which we are debating today demonstrate the Government's commitment to the needy. They prove that we keep our pledges, and they demolish the Labour party's scaremongering. The same will be true of our long-term review. I commend the orders to the House.
§ Mr. Donald Dewar (Glasgow, Garscadden)
I recognise that it is important to get a high return on capital. The Secretary of State must recognise that there are not many young Conservatives in the House at present, and the 1049 speech which was suitable for a gathering of Young Conservatives, and the humour that went with it, is not necessarily suitable for this debate.
I understand and accept that the Secretary of State takes great pride in the uprating which he has announced and which we are legislating for today. It is almost as though he surprised himself—and perhaps he did. If he surprised himself, that would explain the black propaganda that he and his team spread before the announcement.
I have had exchanges with the Secretary of State on the point before, and I do not intend to go over the evidence. There was plentiful evidence in the press and quotations and reports of what the Secretary of State had been saying to groups of his own Back Benchers about the tough nature of the poublic expenditure round and its impact on social security. Of course, it did not come to pass. I am at least grateful for that, and I made that clear, undoubtedly to his disappointment, from the beginning of the statement.
It has not stopped the Secretary of State from polishing a passage which has appeared, to my knowledge, in at least three speeches about the disappointment which ran across the Labour Benches when the 3.6 per cent. was announced. The passage is somewhat tired and predictable. We are almost invited by the Secretary of State to imagine that singlehandedly and bravely, as a sort of Horatius figure, he thwarted the Treasury's wish to do wicked things to social security. That is not a likely story, and the relief which greeted the 3.6 per cent. figure perhaps tells him a fair degree about his reputation and record.
The Secretary of State is in the habit of gloating. He got that reputation during his address to the Young Conservatives, small bits of which have been recycled today. I did not admire the speech, so I especially deplore its reappearance, even in a greatly truncated form. Quite a little theme is being developed. For example, at the beginning we had a rather risqué joke about the sexual mores of Young Conservatives which I thought was quite courageous and perhaps a matter for interested speculation.
We got another Gilbert and Sullivan pastiche, as we always do. We also got another mark of the right hon. Gentleman. I say in passing that we got some rather unpleasant personal jibes about some of my colleagues, although I escaped on this occasion.
What was interesting, and what I especially enjoyed in the speech, was the ringing defence of the Government's European stance. It was especially satisfying to hear that sounding out loud and clear. If that is the sort of support which the Prime Minister gets at the Cabinet table, I am not surprised that he looks distinctly nervous on occasions.
I shall make my final reference to the speech, and it is perhaps a more serious point. The Secretary of State does not do himself much good when he misrepresents the position and opinions of others in the political spectrum. For example, the suggestion which was implied—it was qualified only in a minor way—that the Labour party hates families and wishes to make fathers redundant and mothers dependent is an unpleasant distortion of our position.
§ Mr. Lilley
I certainly did not say that about the Labour party; I said the left. Indeed, I would commend to the hon. Gentleman an interesting pamphlet published by the Institute of Economic Affairs by two Labour party members about families without fathers. I should think that it would be of great interest to the whole House and would have a broad measure of interest but not necessarily total agreement. It is not an issue on which the Labour party is to be condemned, only the left.
§ Mr. Dewar
That is what I meant about qualifications that amount almost to sophistry. In the context of the speech and the way in which it developed, there is undoubtedly the impression that the Secretary of State intended to give in his remarks. I will not pursue the matter, but he should be more careful in the future. Occasionally, he takes certain pleasure in misrepresenting the position. There is enough genuinely between us without that sort of distortion.
I accept that the 3.6 per cent. covers the inflation figure for the 12 months to September. No one has quarrelled with that. We have made it clear that it is welcome, so far as it goes. We are entitled to say that it is a standstill award: it represents no progress and solves no problems. There are still a lot of queries, questions, difficulties and disasters in the social security world and none of them is tackled by this measure or the figure.
I do not think that the House would want me to go through the difficulties in great detail. The Secretary of State will recognise that there is still great concern, for example, about the disability living allowance in terms of the administrative process. I have been told that we have reached a steady state, but the mailbags of my colleagues deny that daily. There is still an enormous number of people who have been waiting an inordinate time for results.
The Secretary of State will be aware of the distress about the developments in the independent living fund and the sudden decision to close that fund on 25 November. I mention that in conjunction with the disability living allowance because, as Ministers will know, many people wanted to apply for the independent living fund. To qualify, they would have had to get a disability living allowance. They put in an application early in the year, perhaps in March or April, and by the time the gate came down on 25 November they still had not received a response to their application from the DLA.
It is doubly chawing for people to get the news that their applications have been successful and qualified for the independent living fund only to discover that they cannot apply because of the ruling that the door shut on 25 November. It will be interesting to see the Government's response to that problem.
Difficulties still attend the social fund. We have had a great deal of talk from Ministers about the need to work on the basis of loans to maintain the flow of cash for the social fund. The Labour party's point of attack is the real difficulties which arise from the cash limiting which can be arbitrary and affect the chances of success, to some extent at least conditioned by the area in which people live and the point in the financial year in which they apply.
There are many difficulties and troubles. Although the Secretary of State is entitled to take what credit he can from the settlement, modest though it is, he must recognise 1051 that the worries still exist and are very much part of the daily life of those who must live with the system and, to some extent, rely on it.
The 3.6 per cent. will not cure those problems. I have no doubt that many hon. Members are uncomfortably aware, from constituency experience, of the fact that there are people on income support at present. No one thinks that income support is a generous provision to cover the cost of living. In fact, many people receive less than the income support entitlement because of the enormous number of deductions which are being made from income support levels.
The figures I saw—undoubtedly the Secretary of State will be familiar with them—show that, in England, about 495,000 recipients of income support are repaying social fund loans. Another 262,000 are paying poll tax arrears. No doubt a distinction can be drawn between those making social fund repayments and those paying poll tax arrears and one could say that it was the fault of the second group that they had less money because they should have paid the poll tax. But the fact remains that families are struggling on a level that none of us comtemplated or expected.
I gather that in Scotland—I am being unashamedly parochial in using that statistical base—20 per cent. of recipients of income support are subject to deductions for social fund repayments. That is a staggering figure, to which soon will be added those subject to the new arrangements, for example. for deducting £2.20 for child maintenance under the child support unit. So there are major problems which the House should not forget when we consider the narrower point of the uprating.
The Secretary of State quoted me—I do not know whether it was a compliment or an attack—on the subject of dependency. I am not ashamed of what I said. Of course I believe that some people have become dependent. The Secretary of State was right to mention the caveat that I included—that it was the fault of the system. People are dependent because of the position in which they find themselves. It is not a matter for moral judgment or the assumption of some moral failing.
If the Secretary of State and I agree that there is a problem of dependency, I must remind him that his Government have been in power for almost 15 years.
I should have thought that by now they would have had time to turn the tanker or at least marginally to adjust its course to deal with that problem. I will not apologise for recognising that a problem exists—it would be a mistake to brush it under the carpet—but the Secretary of State should recognise that what we do about the problem is the matter for discussion and debate.
I am grateful to the Secretary of State for saying a word or two about the long-term review. I accept that it is perhaps difficult for him to give us a great deal of detail about the end product, but I hoped that he would go a little further than he did. For several reasons, I wish to press him on the matter. I make the preliminary point that there is a distinction between a long-term review—obviously, changes in benefits will have a phasing-in period and will be some way ahead—and the short-term financial problems of the Government. However, the two are to some extent interconnected.
There was a touch of panic about what was announced the other day. It is some evidence, for which perhaps we should be grateful, that Ministers are beginning to face up to the economic failure for which they are responsible.
1052 I shudder to think of the abuse that would have fallen on the heads of a Labour Government if they had run a public sector borrowing requirement of £45 billion, moving happily ahead to some £50 billion in the next year or 18 months. We would have been told that it was the height of fiscal irresponsibility and an example of the insanity of having a Labour Government.
I suspect that the realisation that in the coming financial year the Government will borrow £1,000 for every man, woman and child in Britain and will borrow about £1 billion per week to fund the shortfall in their income has triggered at least some of the Government's activity, which is being described as a long-term policy review. The Government are in an awful mess and there is no disguising that fact.
We gather—I should like to press the Secretary of State on this—that the Government's activity is not a search for immediate savings. It is not just a matter of finding a few million here and there. In the Chief Secretary's statement and the briefings that have been given to the press, he implied that the review would be a fundamental change in structure. That makes it a serious matter. One of the press reports, allegedly based on a Treasury briefing, said that the review would not be a cheeseparing exercise but would be fundamental in its impact.
We were told specifically by the Chief Secretary to the Treasury that on the agenda is a search for areas of provision from which the Government can withdraw altogether. That is an interesting phrase. It must mean something. It must have been put in with specific thought because it appears in the introductory statement made to the House. When the Minister replies, we should be given some idea which areas are being considered. We do not want hard decisions but we want to know roughly frorn which areas the Government may seek to withdraw.
§ Mr. David Willetts (Havant)
If the hon. Gentleman presses Ministers on that point, will he say what the Leader of the Opposition was referring to in a recent interview in The Times when he said that the social justice commission would be free to propose all sorts of "subtractions" from social security benefits? Surely, if the hon. Gentleman expects the Government to explain what they mean by withdrawal, he should explain what the Labour party means by subtraction.
§ Mr. Dewar
The hon. Gentleman should be pleased that people are already speaking for him. His cause is being advanced with all the persuasive powers for which the Under-Secretary is famous. I am not sure whether that bodes ill or well for his career, but I will leave him to make up his mind about that.
If the hon. Gentleman aspires to the Front Bench—I suspect that he is a man not without ambition—some of the pamphlets that he has written recently will make doubly interesting reading on the day that I hear of his appointment. But at the moment I am asking the questions. We have given a fair amount of information about the areas that we would examine. That is why the 1053 Secretary of State's attacks were unfair and inaccurate. We have not been totally silent. Let us hear something similar from the Minister.
I repeat that the phrase "areas of provision from which Government can withdraw altogether" will hang in the air. It will be analysed and will be the source of much speculation if the Government do not do something to help the problem of definition. Perhaps I could tempt the Minister by mentioning some of the matters which have been suggested not by Labour politicians but by journalists who say that they have received a hidden briefing from Government sources.
We have been told that unemployment benefit and invalidity benefit will in future be largely a matter of private insurance cover. Those who cannot afford private insurance cover will be left with some sort of safety net provision, but the Government will basically withdraw from unemployment and invalidity benefit. It will be left to the private insurance market and those who can afford the premiums to take steps to cover against misfortune at some later stage.
That is a specific suggestion. If that is all nonsense, if it is wide of the mark, if that is not the type of provision from which the Government intend to withdraw, the Minister will be able to make that clear. That would be of some help, at least in a negative sense, and would perhaps save many people scribing many columns on the basis that that is what is in the Secretary of State's mind.
§ Mr. Patrick Nicholls (Teignbridge)
The hon. Gentleman has always given way to me in these debates and I am grateful to him for his courtesy on this occasion. Will he tell me the difference, in principle at least, between the position which he asks my right hon. Friend the Secretary of State to clarify and the principle set out by the Leader of the Opposition, who said of benefits:
There may be a case for many of them remaining universal, but it's only right we should be prepared to re-examine everything. I have not ruled anything out of court".What did he mean?
§ Mr. Dewar
He meant what he said. The hon. Gentleman will be surprised to know that I am grateful to him for raising that point because it allows me to come to the subject of pensions. I intended to read out that passage. My right hon. and learned Friend pledged that the social justice commission would be prepared to look at areas of difficulty and consider what was the right balance between universal and targeted benefits. His following passage made it clear that there were strong arguments for the universal principle, but that has been translated with remarkable ingenuity and a good deal of brass neck into an alleged Labour party mission to means-test everything.
I am struggling to find the right parliamentary language. It seems that the hon. Member is showing a great deal of sophistry in that respect, and he well knows it. There is no way that the words that the hon. Member—from a southern seat which I cannot remember all by myself—quoted can be construed to have the meaning that he seeks to place upon them for partisan but unjustified reasons.
The Secretary of State is being very careful and has said that there will still be a basic pension which will never be means-tested. Exactly what has he got in mind?
1054 I have no doubt that the Secretary of State remembers the report by Andrew Grice on the front page of The Sunday Times, which stated:
Plans under consideration include ending the automatic right to a state pension for people who can afford to make their own private provision for retirement. The state pension would become a safety net for those who could not do so.That is Mr. Grice's interpretation and he may be quite wrong, but later in the article the following words—allegedly those of the Secretary of State—are printed in direct quotation marks:
We need to look for ways in which the state pension could better targeted and private provision harnessed … We need to focus money on those who are in greatest need and open up greater opportunities for those who can provide for themselves.It is easy to be misled by words. I do not object to such concepts in the right circumstances, but it is remarkable for the Secretary of State to use such words when he speciously accused us of being interested in means-testing the basic pension, and to say that there is no doubt about his position.
§ Mr. Lilley
Mr. Grice is a good journalist, but I did not give him an interview or say those words. Obviously, through some Chinese whispers, he got a mangled version. I did not utter those words and, when asked, he acknowledged that, he has no recording of me doing so.
§ Mr. Dewar
That is extremely interesting. In The Sunday Times it is a direct quote. It states:
he told The Sunday Times.I understood what the Minister is saying and I do not want to make too much of it as it is a matter for him and Mr. Grice, but I still want to know exactly what is contemplated.
I shall suggest what I think is contemplated. Perhaps there will be a safety net provision—called the basic retirement pension—but people will be invited to contract out of it and will be paid incentives to do so. I do not want to open a major debate and shall be brief, but I must state why that concerns me.
It would be dangerous if the better-off people in society were asked to contract out, not merely into an alternative to the state earnings-related pension scheme, but also out of basic pension provision and cover for illness and unemployment. A vast and important part of the population would be encouraged to see the welfare state as something for other people. Inevitably they would see it as an incubus from which they derived no benefit, and therefore as something unimportant to them. Once we achieve that, we will wreck something that is important and central to our values and our community.
§ Mr. Winnick
The Secretary of State seems to disagree with the prominent article in The Sunday Times last week and to deny what it says. Why did he not immediately issue a statement? That would have received a great deal of publicity and by Monday the papers could have made clear that the article was inaccurate. The Secretary of State's silence must be a sign that the article was basically correct.
§ Mr. Dewar
As my hon. Friend will understand, I cannot answer that. However, it is a fair question and the Minister may want to deal with it or to get his colleague to do so later.
I agree with my hon. Friend the Member for Birkenhead (Mr. Field). If we took at face value the 1055 Minister's assurances that pensions and other major benefits such as child benefit will not be touched, we would be left with a puzzle. However, the Secretary of State may be thinking of an extension of the contracting-out principle of the sort that I described. Perhaps he will confirm or deny that.
I am not sure that such a system would be a good buy for the Treasury. As we know from the premiums for the private pension system, the Treasury has had to go without a substantial amount of national insurance contributions and has had to pay substantial sums because of the contracting-out payments and incentives over and above those, which have run to billions of pounds during the past five or six years. I suspect that the arithmetic may be a good deal less comfortable than the Secretary of State makes out.
Above all, my objections are social and philosophical. If one relegates the welfare state and the benefits system, which the Secretary of State is in charge of, to a safety net or fall-back provision, successful people who are assured of their position in society will think that the system has nothing to offer them. That would be a mistake and we would not be prepared to contemplate it.
The Secretary of State's attempts to represent himself as generous to pensioners do not hold water. He says that the retirement pension is so important to him, but he has confirmed that it is his policy to freeze it in real terms, which means that it will drop substantially as a percentage of average earnings.
§ Dr. Godman
I have been listening carefully to my hon. Friend. Does he agree that the changes to certain elements of our welfare system proposed by the Secretary of State may not only constitute a mistake but be capable of being challenged in the European Court of Justice? The Government face certain challenges at the court on Department of Social Security matters. May I remind my hon. Friend that the European Court, in every sense of the word, is becoming an international supreme court for the 13 legal systems contained within the 12 member states.
§ Mr. Dewar
I agree, but I do not know whether the Secretary of State for Social Security is the best man to appeal to about the European Court of Justice. Judging by what he said in his Young Conservatives speech, I suspect that he is not particularly sympathetic. He may be more worried about the court of public opinion if he goes ahead with the schemes that I suspect that he has in mind.
Many other suggestions are swimming around. For example, the hon. Member for Havant has, among other things, recommended a retirement age of 67 for men and women. Government withdrawal from industrial injury benefits is on the agenda. It seems to me that the contracting-out principle—taking people out of the comprehensive welfare system—is writ large at the back of the Secretary of State's mind. I hope that he will be able to comment on that before we adjourn this evening.
We are obviously not going to vote against the uprating assessment. Although it is a standstill and a legal minimum, we have made it clear that it is welcome, as far as it goes. The Secretary of State mentioned some figures. A single person over 25 will get £44 in income support after housing costs, but someone between the ages of 18 and 24 will get £34.80, although many of their expenses word be the same as if they were over 25. That difference is sometimes difficult to defend. The pension of £56.10 and 1056 even the married person's pension are not generous. I do not believe that the Government could be proud of those figures, and they will be greeted with muted enthusiasm by those people who have to struggle to make ends meet on incomes on which I should not like to live. I suspect that the Secretary of State would not like to live on them either.
§ Mr. David Willetts (Havant)
I very much welcome the uprating of all social security benefits by 3.6 per cent. in the orders before us today. Not only are we expecting an uprating of 3.6 per cent., but it comes when inflation has been reduced to 2.6 per cent., so people on benefit will enjoy an increase in the value of their benefits in April above the current rate of inflation. As inflation is low and falling, we can also be confident that the real value of benefits will be maintained during the year. One of the hidden costs of high inflation rates is the damage done to the value of social security benefits, so that by the 11th or 12th month of the year, benefits can be 15 or 20 per cent. lower in real terms than they were at the start of the year. Thank heavens the present low inflation means that that problem, which made it difficult for people on modest incomes to budget carefully, has largely disappeared.
Today's debate also covers the review of social security expenditure announced by my right hon. Friend the Chief Secretary to the Treasury on Monday. This year's uprating puts some of the scare stories that we have heard into perspective. We have not only an extra £2.5 billion spending on social security due to inflation, but a further £1 billion spending on social security due to the increases in the real value of benefits to the poorest members of our society. There have been increases in the value of income support and extra help has been provided with the new council tax as there is no reduction in income support to take account of the disappearance of the old requirement to contribute to the community charge. That is good news for people on low incomes.
The Labour party is trying to make hay with the review announced by my right hon. Friend the Chief Secretary, but it has its own review under way. It seems odd that the Labour party is allowed to have a review of social security while, according to the Labour party, the Government —who have the responsibility of taking important decisions on the long-term future of social security and do not merely indulge in political speculation—are not allowed to have a review. If the Labour party has a review, it makes it infinitely more important that the Government should have one.
The hon. Member for Birkenhead (Mr. Field)—who is sadly not in his place at present—is Chairman of the Select Committee on Social Security, on which I am honoured to serve. Speaking about the review, he urged his Labour colleagues:
if we do not think very radically, we will drift into our fifth election defeat, and we will deserve that."—[Official Report, 30 November 1992; Vol. 215, c. 84.]The Conservative party should also think radically. Radical thinking has won us four election victories and will be the basis for our fifth.
I shall outline some of the ideas that I hope will be considered in the Government's review. One of the themes must undoubtedly be targeting. It is striking that we have a budget which now runs at more than £70,000 million a year, but which is not so well targeted at helping people on low incomes as it should be. The Government's figures on 1057 households on below average income show that 7 per cent. of recipients of income support live in households with incomes above the national average.
I hope that I may be allowed to refer to a pamphlet entitled, "The Age of Entitlement", published by the Social Market Foundation earlier this week. The author's name temporarily escapes me—[Interruption.] I am being asked to identify the author. The pamphlet happens to have been written by David Willetts, Member of Parliament.
The pamphlet contains figures from a parliamentary answer on pensioner incomes and shows that pensioners in the top two quintiles of pensioner incomes—the fourth and fifth quintiles—receive a higher income in absolute terms from social security benefit than pensioners in the bottom quintile. It seems difficult to defend a social security system under which pensioners at the top of the income range do better out of the state than pensioners in the poorest 20 per cent. That is why the improved targeting of social security benefits must be placed high on the agenda of any social security review.
It is important to make a distinction—one which is often overlooked. The hon. Member for Glasgow, Garscadden (Mr. Dewar) overlooked the fact that targeting does not necessarily mean means testing. Means testing is one way of targeting, but there are other ways. One of the insights contained in the original report of William Beveridge was that if one defines the category of benefit recipient carefully enough, one can produce a benefit that is well targeted on poverty without having to use means testing.
In preparing his report, Beveridge surveyed the social conditions of England at the time and identified the groups of people on low income—such as unemployed people and pensioners—and saw that benefits going to them would be well targeted on poverty. Patterns of income and social conditions in this country have changed, so it seems reasonable for the Government to investigate whether there are different categories of recipients who should receive benefits, and to ensure that the benefits are well targeted on them.
Let us consider the stages in the life cycle. It is clear that, by and large, poor families are one-earner families, which generally have young children. Nowadays, when children reach school age, most mothers go out to work. If we want to target a benefit on families on particularly low incomes, we should focus any increase in child benefit expenditure on children under the age of five. In that way, we shall be targeting the benefits on poverty among families. I have seen the mischievous suggestion that I am keen on the idea as I have two children aged under five, but my argument is not entirely autobiographical.
I accept that the direct costs of young children are lower than the costs of teenagers, but if one also includes in the equation the income that the family sacrifices because mothers with young children tend not to work, then the overall picture is different. There is clear evidence that the poorer families tend to be those with young children.
The analysis can also be applied to the other end of the life cycle. When we consider poverty among pensioners, it becomes clear that the pensioners who find it most difficult to make ends meet are the older ones—those over 80, particularly widows. That is why it would be absurd to 1058 spend any social security resources on extending pensions to men aged 60 to 65. I do not know of one social policy expert who says that the real target for extra social security spending should be men aged 60 to 65. They all say that the target should be to help alleviate poverty among older pensioners over the age of 80, particularly widows.
It is for those reasons that I hope that the Government's current review of the pension age will raise the female pension age to 65. Once that process has begun, there is no reason why it should not go further. Some of the savings reaped by that measure could be put towards increasing the value of the pension for those aged over 80. That would be a considerable improvement in targeting and could be achieved without means testing.
§ Mr. Frank Field
The hon. Gentleman used the phrase, "some of the savings". Is his speech on reforming the welfare state purely about targeting, or about targeting and cutting the size of the social security budget?
§ Mr. Willetts
Our social security budget is heading towards 13 per cent. of the entire national income, so it is important to save money on that budget as it will be difficult to sustain. However, it is possible both to save money on social security and to target the remaining expenditure more effectively. There is no reason why a responsible Government should not achieve both aims.
The scope for shifting from state provision to private provision through insurance should also be considered in the review of social security. I should like to identify some areas where progress could be made. The hon. Member for Garscadden referred to industrial injuries benefit. I agree with him on that point. It seems absurd that companies do not themselves take responsibility for compensating employees who suffer industrial injuries and that compensation is provided through a state scheme with a standard contribution. That means safe employers subsidising dangerous employers. It sends out the wrong signals.
Employers in dangerous industries where there are high rates of industrial injuries should be forced to contemplate the improvement of their working practices, not because of cumbersome interventions from Brussels but because their insurance premiums are high and they recognise that they can reduce them by reducing the number of injuries. That would be sensible privatisation of a social security benefit, which would also contribute to the important objective of ensuring that workplaces are safe.
Another area is the expenditure, now running at nearly £1,000 million a year, on mortgages for people who are on income support. There is no reason why the state should act as the guarantor of last resort for commercial loans entered into by building societies. Why should it not be possible for people to take out insurance so that their mortgage payments could be maintained if they suffered the misfortune of losing their jobs?
Unemployment benefit has also been talked about. I must confess to some scepticism there. If any progress can be made in that regard, I would welcome it, but we have to acknowledge that many unemployed are young. They have either no earnings record or only an intermittent record on low pay. For them to accumulate the record of paying insurance premiums which would be the basis for sustaining them while unemployed seems difficult. That is a practical problem which would need to be addressed.
1059 Finally, there is the pension itself. As we have heard several speculative quotations from newspapers, some of which we have established were not accurate, I will quote from a newspaper article of 40 years ago. The heading is "Social Security Under Review". Almost exactly 40 years ago, the Conservative Government launched a review of the social security budget.
Lord Beveridge contributed an article to The Times, identifying the options which he thought should be examined. He made it clear that he already thought that his system of national insurance benefits had suffered as a result of the extra costs imposed by the Labour Government. He set out an agenda for the issues which should be considered when contemplating the future of the pension and it may be a good guide to the issues that the present Government might wish to address in the years ahead. He said that the Phillips Committee, the body set up then,should examine any methods by which the prospective burden on the general taxpayer for pensions to those past work can be lightened. The methods possible in theory include encouraging voluntary delay of retirement; raising the minimum age for pensions; exclusion from social insurance pensions and contribution for them of persons adequately covered by superannuation schemes in their particular employments; increase of insurance contributions.In regard to the minimum pension age, I might point out that he later advocated that a full pension should not be payable until the age of 67. There is no reason why the Government should be reluctant to embark on an examination of the options which Lord Beveridge raised 40 years ago.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I feel slightly left out in these debates. I have always felt left out in the past because people were never nasty about. me. I do not know why that is. What I have said is never quoted or questioned. That is bad. I am beginning to develop a complex. I am also feeling left out because I am not having a review. Everybody else seems to be having reviews, so I might as well announce a review, just by myself. I will do a deal with the Secretary of State; I will submit evidence to his review if he will submit evidence to mine.
I want to speak for a few minutes in this important debate. Sometimes such debates degenerate into ritual. I hope that hon. Members will not take the wrong meaning from that. The debate is an annual event in the social security calendar and it becomes ritualistic. Nevertheless it is an important opportunity to discuss aspects of social security generally.
Although it is not related directly to the uprating statement, the Secretary of State commented on fraud and the need to examine the administrative procedures to be used by his Department. I am as keen as every other hon. Member to make savings on fraud, and to try to root out housing benefit fraud particularly with the assistance of local authorities. However, I am concerned about some claims that the Secretary of State seemed to be making about the amount that he could save on the fraud provisions which he announced in the uprating statement.
I would be reassured if in the reply to the debate, or in a letter subsequently, the Secretary of State could flesh out what further thought had been given to the issue. I understand that the Department had to put up a strong case to the Treasury to get the grant, which I support, but 1060 I am nervous that the Secretary of State's claim about the amount which he could save on fraud, £1 billion a year, may be a bridge too far. I would be reassured by more of the detail behind that statement.
In that connection, I have had interesting correspondence from people who work in the Department and who are concerned about administrative changes. I understand that floating around the Department there is a document called the Mayhew report, if I have the name right. I should like to see that report. Responsible staff who are conscientious about their duties are concerned about some administrative changes that have been made. In a time of citizens charters, open government and all the rest of it, perhaps all I have to do is ask for the report, which I have just done. If I cannot get a copy of it, perhaps in the letter which the Secretary of State will send me about fraud he will tell me precisely why.
I too think that 3.6 per cent. may be par for the course in terms of the legal requirements. However, I have to draw attention to a point which is made with monotonous regularity in these debates; benefit recipients are falling further and further behind those who are earning more than the increase in the retail price index. I accept that the RPI is 3.6 per cent. I accept what the hon. Member for Havant (Mr. Willetts) said about what that will mean in real terms, having regard to inflation, this spring, but year in, year out, pensioners and other benefit recipients fall further behind in the wealth stakes in comparison to those who are lucky enough to be in employment.
The average male earnings figure equivalent to the 3.6 per cent. RPI increase is 4.7 per cent. It may be true that the difference does not add up to a big row of beans in one year, but year by year that inexorably puts people in receipt of benefit at a chronic disadvantage. We must never forget that in the social security uprating debates.
I was not particularly taken with the Secretary of State's comments about statutory sick pay. That is to be frozen, saving some £20 million. I do not understand why statutory sick pay was singled out. Maternity pay has also been frozen at £100. I am worried about future increases. The capital limits and earnings disregards should be considered carefully in the Government review, because there is real scope for progress. The 21-hour study limit and the 24-hour employment limit for those engaged in voluntary activity could be changed to try to encourage people to do part-time work to assist themselves when they are on benefit.
The reduction in invalidity benefit of £240 million is premature. A research project that is currently under way, which is expected to report towards the end of 1993, would provide a valuable insight into what could be done with invalidity benefit. I understand what the Government have done in that direction and I welcome the fact that a great deal more money is being spent, but it is wrong to use this uprating statement to make a change in advance of those research findings.
It is becoming obvious from my case work and from talking to other Members of Parliament that insufficient account is being taken of the increases in water charges. I hope that the Government will monitor their effect on the benefit system. I welcome the fact that the Government have not adopted the proposal to claw back funds relating to the community charge.
I continue to be worried about the take-up rates for some means-tested benefits, especially family credit and income support. The evidence from research projects is 1061 equivocal. The Government may say that it is still early days, that the changes only came in in 1988 and that such matters take a little time to take effect; I am aware of that. Nevertheless the Government should pay careful attention to how the take-up rates develop.
I am also a little disappointed that something more progressive and beneficial was not done with the social fund. If the Minister has the opportunity when he replies, I hope that he will say something about the comments made by the Social Services Advisory Committee and the Social Policy Research Unit about the social fund.
I have been making some desultory overtures to the Department about the needs of share fishermen in Scotland. A real problem is beginning to emerge. I do not complain that the Government have not dealt with it, because it is a new problem. Share fishermen are having their earning capacity statutorily reduced by the provision for tie-up days in the Sea Fish (Conservation) Act 1992. I think that they are the only earning group in the British economy with statutory restrictions placed on the amount of money that they are entitled to earn.
The fishermen are self-employed and there are some problems with how help could be administered. I have been casting around, trying to find some way of getting them access to additional support while statutory restrictions apply to their right to go to sea to earn a living. I accept that it is a complicated matter, but I hope that the Government recognise the problem and will carefully monitor what is happening The number of people involved is not large, but some families are dependent on crew members of boats that are now tied up for long stretches. They are suffering badly.
§ Mr. Frank Field
Does the hon. Gentleman agree that there is inconsistency in the Government's attitude? They say that one reason why they do not want the House to adopt the Maastricht social chapter is that it lays down foolish rules, such as limiting the amount of work that people can do. They want people to be able to work for as long as they want to work. On the other hand, the Government are limiting the amount of work that can be done by the fishermen to whom the hon. Gentleman referred.
§ Mr. Kirkwood
The experience of the Chairman of the Social Services Select Committee is all-knowing and all-embracing. He even speaks effectively on behalf of share fishermen. I shall report that with some pleasure to the fishermen at the quayside market in Eyemouth on Friday afternoon.
§ Dr. Godman
Is it not true that at one time those fishermen were allowed to draw unemployment benefit when they could not put to sea because of circumstances beyond their control—for example, heavy weather or the boat being out of the water for repair? Because of the statutory limit on days at sea, those fishermen are now in precisely the same position.
§ Mr. Kirkwood
The change in the weekly earnings rule had a severe impact on share fishermen, some of whom were denied access to unemployment benefit. That blow hit them some years ago. I represent a fishing constituency and my experience is that something is wrong and action needs to be taken.
1062 I want to voice two more gripes before I sit down. The first refers to war pensions and the changes in the provisions for noise-induced hearing loss. I understand and accept that we are discussing a package deal, so the rank differentials that have been eroded or abolished are acceptable. However, although it is right to have stringent conditions when ensuring that there is a direct link between hearing loss and active service, having established that link I do not understand how it can be fair not to base the award on the degree of disability. I have always understood that war pensions were a legal entitlement, but that entitlement is being summarily withdrawn.
I understand the Government's case that the package, in the round, will benefit people in other directions. That is welcome. However, former service men who have suffered that disability are right to feel slightly let down and to hold the Government to account. They want further explanations of exactly why the change was made.
Secondly, I am concerned about the demise of the independent living fund. I noticed some interesting exchanges in written questions and answers between the hon. Member for Glasgow, Garscadden (Mr. Dewar) and the Minister. The hon. Member for Garscadden is looking surprised. He asked how much it would cost to extend the successor to the independent living fund to those who had gone beyond retirement age. The answer is interesting. Only a £2 million increase in the successor fund would be needed to extend it to people beyond retirement age. The figure would increase to £6 million next year and £9 million the year after. Those are not insignificant sums, but I hope that the Government will seriously consider providing them. That is food for thought for the Department.
I want to say a few words about carers. The increase in the invalid care allowance and the carer premium of 3.6 per cent. to £33.70 and £11.95 respectively are all very well as far as they go. The Government have estimated that the changes will benefit 189,000 recipients of invalid care allowance and 70,000 recipients of carer premium. However, carers are the main providers of community care and they save the country almost £24 billion a year, according to figures produced by some pressure groups.
Some 26 per cent. of all carers and 40 per cent. of all older carers are living in some poverty, often as a direct result of their caring responsibilities. The increases announced in the uprating statement will mean that the invalid care allowance will represent only 10.69 per cent. of national average earnings, which is not adequate recompense for the service to the community that those people perform. Older carers cannot claim ICA for the first time after the age of 65, and without entitlement to ICA the poorest older carers cannot claim the carer premium either.
There are also problems with claiming unemployment benefit when the individual returns to the employment market after he or she has finished caring. If that individual was looking after someone receiving the lower rate of care component, they cannot claim ICA. I appreciate that big sums of money are involved in making some of those changes, but I hope that the Government's review will consider carefully the support that carers are to receive in the longer term.
I hope that the review is successful, and that it will be open and genuine. I hope also that we shall all have a chance to make submissions. I shall do so to the best of my ability. The uprating statement is acceptable and welcome 1063 as far as it goes, but the Government have missed another opportunity to be more progressive and imaginative in providing more support to those who need it most.
§ Mr. Patrick Nicholls (Teignbridge)
I like to think that not the disagreement between both sides of the House but the large degree of agreement will impress people who are watching this debate, or who rush out to buy copies of Hansard to read all about it. Ultimately, however, the chasm is narrow but deep—which means that there is a living for us to earn. One thing I noticed is that, since the hon. Member for Glasgow, Garscadden (Mr. Dewar) has been in charge of his present duties, the tone of these debates is much more reflective.
That is something of a disadvantage. Sometimes it is easier to repel a polarised situation by indulging in coarse oratory. When the hon. Gentleman sets out his stall, he does so in such a persuasive way that one has to pinch oneself to think that he might be in error. Whatever other tricks one may produce in debates in which the hon. Gentleman participates, a knee jerk or an elbow to the solar plexus will not repel the hon. Gentleman.
In tonight's debate, as in some recent debates, it has become clear that there is common ground in the sense that it is acknowledged that some regard must be paid to where the money to pay the benefits one wants to pay is to come from. I do not say this in any partisan way, because there has been no trace of that tonight, or for some little while. Even in the 10 years that I have been in the House, I have heard vestigial voices saying that the way to achieve the pension system that we want for all our constituents in need is to raid that great pot of gold out there, if only the Government of the day would do that.
For a long time, it was thought that if one could only get one's hands on the money of the rich, one could improve the benefits system dramatically. That is a lovely idea, but it does not hang together. Around 89 per cent. of taxpayers pay only basic rate tax, so if one confiscated all the money earned above the basic rate level, it would still be a drop in the ocean in terms of improving the benefits system generally. It is common ground on both sides of the House that we must to a large extent have a benefits system that we can afford.
It was clear from the experiences of the last Labour Government that, no matter how good one's intentions, at the end of the day one's finances can find one out. In a bygone age, one could swap remarks across the Chamber about Labour being the party that took away the Christmas bonus one year, or rigged its own pension arrangements so that, having awarded pensions linked to incomes, it then had to avoid them.
All that is true, but I do not say that it was done with dishonour. That Labour Government had the best of intentions. They produced a mechanism which, had the Government been able to fund it, would have brought substantial benefits to the pensioners concerned. Ultimately, that Labour Government's good intentions failed because the country could not generate the income necessary to realise them. The common ground between us now seems to be that the Government must be able to raise the money needed from the tax revenue produced.
The hon. Member for Garscadden said that, although he could accept the 3.6 per cent. uprating, it was not very much. One might ask him rhetorically, "Given the state of 1064 the economy, where would you get the money to produce a better level of pensions?" Quick as a flash, the hon. Gentleman would reply, "We would never be faced with that problem because we wouldn't get the economy in this state." If I sat on the other side of the House, I would defy the facts and make that reply as well. It remains true that, in any economy, one must see what can be afforded. I do not see what more could be done, and we must simply face up to that.
We must consider some of the more sombre steps that we may yet have to take. Reference has been made, properly, to the amount of Government borrowing necessary to finance the present benefits system. I am not sure whether the hon. Gentleman was suggesting that we had gone too far, and should set about cutting benefits; the fact is, however, that the Government have decided that they can fund benefits on current levels, through taxes and borrowing.
That is an important point, which may yet be the basis for a significant difference between the two sides of the House. In the last public expenditure settlement, my right hon. Friend the Chancellor started on the basis of the amount that the country could afford, and then decided how that money could be allocated. It is clear that my right hon. Friend the Secretary of State for Social Security fought his corner with considerable skill: he managed to ensure that all benefits were uprated sufficiently, while at the same time operating within a budget that had been decided in the first place not on the basis of what we would like to spend, but on the basis of what was available. That was rather brave.
For all our different reasons, we hope that my right hon. Friend's move will work this year. If it does, however, we must look into the future, and ask ourselves whether such action will always be possible. Will there come a time, sooner or later—perhaps sooner—when the Chancellor of the day decides what can be afforded, and then looks at the social security budget in its entirety? If so, that Chancellor may decide that it is simply not possible to maintain benefits along the lines that we would like.
It is curious that remarks such as this should be swapped across the Floor of the House—for instance, that it should be suggested that the Leader of the Opposition may be thinking of taxing or means-testing benefits, or, at least, not entirely ruling out such action—when the Government are having to conduct a review. I see nothing dishonourable in some of the remarks made by the Leader of the Opposition.
When I quoted some of those remarks to the hon. Member for Garscadden, he said that the words meant what they said: I think that he was accusing me of putting a gloss or spin on them. I did not need to, because the right hon. and learned Gentleman's words were perfectly plain. He said that there might be a case for many benefits to remain universal, but that it was only right to be prepared to re-examine anything; he did not rule anything out of court.
More recently, the right hon. and learned Gentleman spoke ofa strong case for maintaining universality, everyone having access to child benefit and retirement pensions to which they have contributed during their working lives. The commission is perfectly free to propose all sorts of subtractions and additions and alternatives".A cynic might say that the right hon. and learned Gentleman really meant that, even if the commission made 1065 such a proposal, he would not adopt it; but I do not think that that is a mark of this Leader of the Opposition. I believe that, if the right hon. and learned Gentleman is telling his own commission that it isperfectly free to propose all sorts of subtractions and additions and alternatives",he genuinely intends to consider them.
I see no great difference between that and the concept mentioned recently by my right hon. Friend the Chief Secretary to the Treasury. He suggested that people with sufficient means might wish to make their own arrangements rather than relying on the state system. Surely, we are talking about two ways of acknowledging the same truth—that it is not sufficient to say that we would like to do without dealing with how such action is to be funded.
The hon. Member for Garscadden countered that argument with great force and sincerity. He suggested that there would be something" wrong with a system that allowed, indeed almost obliged, the prosperous middle classes—to coin a loose phrase—to contract out of the welfare state, and then simply to leave it there for those who would have to rely on it. I accept, in terms of argument and debate, that it would be wrong, unwelcome and thoroughly unhelpful if those who had been obliged to contract out entirely then regarded what was left as an incubus.
I cannot tell the hon. Gentleman that some mean-minded people would not see it in that way; clearly they would. However, I do not think that that would be the predominant view in British society. I do not believe that those who educate their children privately have no regard for those who educate them in the state sector, and I know that no one would seriously make that bald statement in the House.
Let me cite a more homely example. The level of owner-occupation is probably very high on both sides of the House, but I cannot imagine that those who own their own houses would have no regard for people who live in council houses on rents essentially subsidised by the Department of the Environment.
I understand the point that the hon. Member for Garscadden makes. If what he fears were to come to pass, it would be a powerful argument against going in that direction, but I do not believe that British society works in that way. If that seems too extravagant a proposition, let me put it another way. In the House of Commons, even in this new age of the middle ground, there is still a pretty wide descrepancy between those on the right of the Conservative party and those on the left of the Labour party. But those two groups have one thing in common: they are both prepared to come here and legislate in this way. I accept that the hon. Gentleman believes that there is a risk. I do not think so. What I see are different ways of reaching the conclusion that the Leader of the Opposition seems to be working towards.
A moment ago, I said that we might yet, in the not too distant future, have to face decisions that would make it simply impossible for us to spend and uprate across the board. It will be particularly difficult for the governing party to face up to such decisions, and particularly tempting for the party in opposition to exploit the situation. If the roles were reversed, the Conservative party would be subject to that temptation. One has only to 1066 consider what has happened to the retired population to realise that we are storing up a problem of gigantic proportions, which we shall have to try to address. At present, the proportion of supporting taxpayers to pensioners is slightly more than three to one. By the early decades of the next century it will have fallen to about two to one.
If one makes that point to the classic awkward pensioner whom every Tory candidate is terrified to meet during a general election campaign—the Albert Tatlocks of this world—they say, "I don't want to know about the burden on the working population. I paid my dues over the years. I fought in a world war." I know a few people who fought in two. They don't want to know about the burden their pensions represent for the working population. Although those people's contributions give them the right to be supported by the working population, the practical ability to maintain them in the style to which they wish to be accustomed lies outside what can be achieved with the tax contributions of the working population.
As the proportion of workers to pensioners decreases markedly, there will be some pretty tough decisions to be made. Perhaps the most partisan remark that I need to make in this connection is that, to some extent, the justification for the optimism of the Labour party in thinking that it can once again be the governing party will be indicated by the extent to which it helps the Government in this debate. I cannot for one moment imagine that the Opposition spokesman wants to spend the next 20 years fighting on the Labour Front Bench and finally, in his grey-haired years, come to the Government side and find that he has only two taxpayers to support each retired person. It seems to me that, if the hon. Gentleman really believes in the Labour revival, he will have to enter into this debate.
On these occasions, it is worth concentrating on the points that unite us. As this debate proceeds, it will be interesting to see the extent to which, in the end, there is no difference between us. As a member of the Select Committee on Social Security, I sometimes find myself outflanked on the right by the Chairman, and sometimes think that I am outflanking him on the left. If that is an indication of a constructive debate, it will ultimately be so much harder for the Government to cover up any sins. Of course, they do not have such sins, so the risk does not exist.
§ Mr. Malcolm Wicks (Croydon, North-West)
It is no surprise that this debate about the uprating statement has also been a debate on the Government's reviews of public spending—particularly the reviews of social security spending. Future uprating statements, whether under a Conservative Government or a Labour Government, will depend critically on our ability to look rigorously at public spending on social security.
Although Front Benchers may have fun with one another about each other's reviews, it is surely no coincidence that both the Labour party and the Government have now launched fundamental reviews. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) felt a little anxious that the Liberal party did 1067 not have a review. If I were he, I should say that my party had had a very good review—the Beveridge report of 50 years ago—even if it needs some radical updating.
It was a bit rich of the Secretary of State to attack us for having an independent review. Why should he attack a privatised review? He made it clear in answer to my hon. Friend the Member for Birkenhead (Mr. Field) that his will be a secret review, and therefore a classic nationalised review. We live in strange times when such criticisms are made.
I welcome the need for a fundamental and long-term review, but note much foreboding in our community about the Government's review and their intentions. I see many honest citizens in Croydon and throughout the country reaching for their purses and wallets when they hear about the Government's review. I ask why that is.
The Chief Secretary to the Treasury, announcing the public expenditure review, said that we needed to distinguish between essential and avoidable costs. That must be right; it is simple and truthful stuff with which we can all agree. What are the implications for this review? Although any proper analysis of social security spending should start at the beginning, I worry that the Government might start at the end. In other words, they might start where they can save money—what benefits they can cut —and make a political calculation about what they can get away with at the next election. Perhaps I am being too logical, but I think that we should start not at the end but at the beginning. I will say what I mean by that in a moment.
Let us acknowledge that this is not the first Government review. At least two or three times since 1979 the Government have said, "We need a fundamental review; we need to constrain or reduce public expenditure."
§ Mr. Wicks
The Fowler review comes to mind, but in their 1990 White Paper the Government clearly stated their objectives:
The Government intend to reduce public expenditure progressively in volume terms over the next four years.That did not work. They did not reduce public expenditure in real terms or any other terms. In fact, public spending increased dramatically from £203 billion in real terms at the beginning of this Administration in 1978–79 to a significant £258 billion in 1992–93.
Although there have been many differences across the Chamber—more, frankly, than some hon. Members, in a spirit of politeness, have acknowledged—any Government will face fundamental questions. What do I mean when I urge the Government to start at the beginning of the story and not at the end? I think that we need, first, to ask questions about social change in Britain: how do people live and work, and how will that look up to the year 2000? Given that analysis, what trends are making for social insecurity, and what trends and what policy development could make for social security? My fear is that in future we may not have enough money to give decent benefits to people who have to rely on social security because, for the want of better policies, we are having to provide benefits for people who, in a better world, would not need to depend on social security.
The second task of a proper review would be to state its objectives. The objectives of any proper review of social security would be to ask, how do we develop policies, 1068 which often have nothing to do with the DSS, that enhance economic well-being and enable our citizens to become financially independent? Only after that would we need to focus on those who, because of disability or advanced old age, have to depend, quite properly, on universal state benefits.
I will explain my point in three ways. The first is the most obvious, but I make no excuse for returning to the theme of unemployment. Unless we make up our mind as a society to attack Beveridge's giant evil of idleness or unemployment, all our plans, as he said 50 years ago, and as I more modestly say today, for social well-being and social security are out of reach. If we have to spend large sums of money, often paying very low benefits but to masses of people, we shall not in future be able to cater for all the modern needs for which a decent society should cater.
We shall not be able to cater for the needs of the carers, as the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said, the needs of the growing numbers of people with disabilities or those who, in frail old age, often and rightly—have to turn to the state for help. They include not least the generation which has missed out on the private and occupational pension revolution.
The Government must come clean at the beginning of their review. Do they see a future of mass unemployment? If so, they can hardly quarrel with the expenditure implications which consume a daily growing proportion of our social security budget and of our gross domestic product. They must come clean about their employment, full employment or unemployment assumptions.
The White Paper on public spending clearly shows how much we as a society are spending to keep people out of work who want to work. When we consider the trends among one-parent families and some longer-term sick people who are on benefit, we cannot but ask questions: how many of them would be in work and not on benefit if we were to approach full employment again? There are hidden costs of unemployment in the public expenditure White Paper, which we should make as visible as possible.
A fundamental review of social security and unemployment is more about macro-economic and employment policies and about child care and training than about social security policy. Therefore, I urge the Secretary of State to introduce an interdepartmental element into his inquiry.
My second illustration of starting at the beginning rather than the end of the story involves family breakdown. One of the demographic and social revolutions affecting not only a European society such as ours but others across the world is, sadly, the growing number of children who spend some or all of their childhood in one-parent rather than two-parent families. Almost four out of 10 new marriages will end in divorce, so a large percentage of children exprience family breakdown.
That revolution has not been painless. The fact that 70 per cent. of today's one-parent families depend on income support reflects the failure of society to comprehend or to cope with that revolution. A higher proportion—about 85 per cent.—of one-parent families will spend some time on state income support. That is bad news not only for mothers, children and society as a whole, because life on income support is rotten, but for taxpayers, public expenditure and the economy. I do not believe that life needs to be like that.
1069 In Sweden, for example, the picture is quite different. About 80 per cent. of one-parent families are not on the Swedish equivalent of income support, but in employment. There are many reasons for that, including the fact that the state has intervened through labour market policies, employment training and child care to help people socially. Of course there are costs involved in intervening through the state, but the social and economic savings have been colossal. Our failure not only to comprehend family breakdown but to prevent it and to help its victims has major public expenditure implications. The Government should start there rather than by asking whether they can cut a bit off benefits for one-parent families.
My third example deals with the subject of aging, which various hon. Members have mentioned. There has also been a social and demographic revolution of aging, which has major consequences for public expenditure and pensions policy. We shall hear more about that after I April, when the so-called community care policy comes into effect.
We are beginning to have a vigorous debate, but there is not yet a consensus on who should meet the costs of aging, either for pensions or, in particular, for care. Soon the Government—any Government—will have to grapple with the equalisation of pension ages.
That is a several billion pound question. Do we go back to 60? The Government would say that we could not afford that. Do we equalise at 63? Do we go to 65? Do we follow the advice of the hon. Member for Havant (Mr. Willetts) —we now find out that he was apparently quoting Beveridge—and go for 67? Those are important questions. We should not consider those questions in isolation, but should relate them to the other questions with which hon. Members on both sides of the House have to grapple, about the right future mix between public and private provision. We may disagree about that mix, but we should have the debate.
As has been pointed out, the poorest groups are people in their late 70s and in their 80s and 90s, who have missed out on the private pension revolution and who may now need targeted help. I agree with the hon. Member for Havant that such help need not be means-tested—indeed, I urge that it should not be means-tested.
Let us ask questions about the pattern of retirement. Let us not talk about pensioners as a grey mass, which they are not: they are many millions of individuals, some of whom want to retire early and some of whom want to work until they drop and never retire. Let us have flexibility and look at the actuarial implications in ways which make sense to people. Let us not treat people as a mass who have to retire either at 60, 65 or 67—or even 57. Let us offer them choices and freedom, and discover how we can do that in ways which enhance social welfare but also make sense in terms of public expenditure. Those are the important questions.
Finally, the review—
§ Mr. Wicks
Both. I agree with my hon. Friend the Member for Birkenhead who, almost echoing Government policy, called for open government on the issue. Such fundamental questions should not be about political fixes and cutting benefits. Why do we not 1070 encourage public debate on them? Why not consider a discussion paper, a Green Paper, a series of meetings or whatever, to engage the public in the discussion? There are no clear answers. There may be disagreements. At the end of the day, the Government will come to their own decision, with a White Paper and perhaps legislation. But why not encourage a public debate?
I support the review if it turns out to be long-term, fundamental and open. We need to review those questions. Any Government approaching the year 2000 will face difficult social questions involving public expenditure. Let us open the debate beyond this Chamber to the wider mass of people who have a major interest in the issues.
§ Mr. Charles Hendry (High Peak)
There has been some discussion during the debate about speeches being recycled, so I shall say at the outset that I wrote my speech myself, and that it has not been used before. When I have finished it hon. Members may realise the benefits of recycling speeches and using them time and again—especially when they are as good as the one that my right hon. Friend the Secretary of State made to the Young Conservatives conference at the weekend.
I was briefly tempted to use again the speech which I made in the debate on the Social Security Bill last November, because no one took any notice of it at the time, so no one would have realised if I had used it again tonight. But then I was much more tempted to re-use the excellent speech of my hon. Friend the Member for Havant (Mr. Willetts), which brought in so many new ideas and so much enlightened thinking.
I listened carefully to the speech by the hon. Member for Glasgow, Garscadden (Mr. Dewar), and during its 29 minutes I was wondering whether he might effectively dispel Conservative Members' belief that there had indeed been a gloomy feeling among Opposition Members at the time of the uprating statement. On that occasion we could see, as Opposition Members could not, the faces of those sitting on the Benches opposite us. We saw how miserable they were. Where, even today, were the words of welcome for the uprating statement?
Eventually, after twenty-eight and a half minutes, the hon. Member for Garscadden got there. He said that he welcomed the statement "as far as it goes." That was a magnanimous gesture by the Labour party—but the hon. Gentleman immediately went on to attack the amounts of money involved. We always hear from the Labour party how to spend wealth. Now and again it would be nice to hear Labour Members tell us about how to create wealth.
We hear attacks on the amount of money paid in benefits. The hon. Member for Garscadden says that it is not enough, that it is a measly amount—but does he tell us how much he would spend? Does he give us an inkling of how much the Labour party believes the benefits should be? He does not, because we would ask how much that would cost. Labour Members would not tell us; we should have to tell them how much it would cost. Please will the Labour party come clean? If Labour wants to challenge us on the amounts paid in benefits—all Conservative Members would like to see the levels of benefits increased —please will Labour Members tell us the level to which they think benefits should be increased?
It is only a year ago that Labour was more open and was telling us that Labour party policy was that pensions 1071 should be raised for a single person to one third of average income and to half average income for a married couple. The hon. Member for Garscadden makes an unlikely Father Christmas. Indeed, it has been uncharitably said that he thinks that charisma is 25 December. Christmas presents come ill from the Labour party which twice cancelled the pensioners' Christmas bonus.
Labour's commitment to raise pensions by that amount would have cost £25 billion. We do not know whether Labour still stands by that policy. If Labour had stood by that policy and if it was now in government, we should not be considering a fundamental review of Government spending and how to allocate resources, but a closing down sale. As happened before, we should have found that we were spending infinitely more than we could afford. We at least have the courage to recognise that and the integrity to try to challenge those issues.
We are now told that we have a new Labour party, the fourth new Labour party after four election defeats. From his remarks, it is clear that the hon. Member for Birkenhead (Mr. Field) recognises, as we do, that a fifth election defeat is likely for Labour.
§ Mr. Hendry
In view of the charitable comments that my hon. Friends pile on the hon. Gentleman, it would be churlish not to give way to him.
§ Mr. Field
I was not saying that a fifth defeat was inevitable. I said that a victory is there for us, but that we need to make fundamental changes. These debates offer that opportunity. Other opportunities arise to make that contribution to the party. I believe that we should run the Conservatives really close next time and that we should put the fear of God into them that they will lose their red boxes, their chauffeur-driven cars and all the trappings of power. Labour should be serious this time about that objective.
§ Mr. Hendry
We do not mind Labour running us close as long as it does not win. As long as the majority does not drop below 19, we can live with it. We plan to increase that majority ourselves.
Having seen the new, new model Labour party, we could look around justifiably for clarification about its policies. We looked forward with great excitement last week to the speech by the Leader of the Opposition in which we thought that he would set out the new agenda and the way forward. We thought that he would of course talk about social security. Sadly, he did not. Social security did not get a mention.
We were obliged to wait until this week when the Leader of the Opposition was interviewed by The Times. That shows how much the party has changed. A few years ago, even last year, the right hon. and learned Gentleman would have had an interview with The Guardian. Some of his colleagues would have gone to the Morning Star. Now, Mr. Murdoch is in favour and Labour Members are prepared to talk to The Times. We welcome that transformation. However, we find that we still lack a clear explanation of the party's way forward.
We know of Labour's commission on social justice. Conservative Members have attempted to find out how fundamental the review will be. I quote what Labour has said:
There is a strong case for maintaining universality".1072 As has been said already in this debate—we have to challenge you on the issue because you will not tell us what it means—
§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
Order. The hon. Gentleman must not use the word "you". He has repeatedly done so. I am not responsible for anything of which he has accused me.
§ Mr. Hendry
I apologise, Mr. Deputy Speaker. I should have realised that.
The quotation continues:
everyone having access to child benefit and retirement pensions to which they have contributed during their working lives.Again, there is universality. The quotation continues:
The commission is perfectly free to propose all sorts of subtractions and additions and alternatives.In spite of the challenges from Conservative Members, the Labour party will not tell us whether it means that as an open-ended review or whether it seeks to use weasel words to pretend that it wants both sides of the circle playing together.
I shall concentrate not on the way of the past, which is what we hear from the Labour party, but on the way forward. I shall pick up some of the points so excellently explained by my hon. Friend the Member for Havant (Mr. Willetts).
We have two priorities in social security. First, how do we stop people drifting or moving into dependency? Secondly, how do we help people to come out of dependency? I do not see it as one of our priorities to seek to sustain people and keep them in dependency. That should not be one of our goals.
If we are to stop people moving into dependency, one of our key principles must be to help people to prepare for times of difficulty or illness, or simply for the process of getting older. That is why we believe so strongly in private, personal and occupational pensions. It is a source of great sadness to us that there is still no cross party recognition of the fact that planning ahead should be welcomed rather than scorned.
It cannot be right to spread benefits so wide that those in need do not get the help that they genuinely require because too much help is being given to those who do not require it. I referred just now to massive increases in pensions. If one gives large increases to everyone—including people with large personal incomes on retirement—we shall make it increasingly difficult to target help on those in genuine need. If one asks a child, "Do you want a lollipop?" he will say yes. If one asks a child, "Do you want to pay for it?" one will get a slightly different reply. We must accept that higher levels of benefit cost money.
As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said, we are faced with the problem of a working population that is shrinking relative to those who will be living and requiring support from the state. Planning ahead is not callous. It is not a vicious 19th-century Tory principle. It is common sense and reflects the aspirations of people throughout the country.
If we are to be honest about targeting, we shall have to look at some other sacred cows. I know that this does not necessarily fall within the Department's responsibilities, but we must challenge the long-term future of mortgage interest relief. We spend more than £5 billion a year 1073 helping people with their mortgages, even though many of them can well afford to pay them. As a result, other people in need of housing support receive less than they require.
Now that the housing market has bottomed out, I hope that we shall gradually start to tackle that principle. With a base rate of tax of 20 per cent., we could start by saying that mortgage interest relief should start at 20 per cent. rather than 25 per cent. That alone would create a saving of £1 billion which could go towards reducing the deficit or towards spending elsewhere.
How does one help people to move out of dependency? Too often, the policies of the past have worked to trap people in dependency. Over many years, choice has been removed. Let us consider what has happened in our inner-city areas, where such policies are most important. The state—either at local or national level—has said to people, "We will look after you. We will look after your housing, education and health. We will look after you when you are young and when you are old and in all aspects of your life. You need worry about nothing. The state knows best. The state will look after it."
In many areas, we have rolled back that principle, but in some areas it survives and people have lost the ability to choose. It is not that they do not want to choose but that they do not understand how to. They are frightened of making choices. Over the past 14 years, we have been tackling those problems gradually. Initially, we told people who wanted to take an opportunity that we would take off the lid that had been holding them down and allow them to make a choice. We told people that, if they wanted to buy their council house, buy shares in a company or start up a business, they could go ahead and do it. Then there was a second tranche consisting of people less willing to take the leap. To them, we said, "We will give you an incentive to start taking out personal pensions and to buy shares."
Our priority must now be to consider people who come into neither category. We shall not achieve that merely by shaking the benefits tree—although it is certainly important to ensure that people do not get benefits to which they are not entitled. For many people, the benefits tree represents security. It is not like a tree of apples from which ripe fruit drops when one shakes it. Many will cling more tightly because the tree is their security.
I agree with some of the comments made by my hon. Friend the Member for Croydon, North-West (Mr. Wicks), who said that we require a cross-departmental system. The benefits system is part of the package, but we also need to look more widely. Let me give a couple of examples. Many single parents are in dependency for the simple reason that they do not have the opportunity to go out to work. The mother cannot raise income because she has no one to look after the child, and she cannot simply get a job. We need to look at that cross-departmentally.
In my constituency, we have a shortage of housing. In one area we have a number of empty police houses. We have two empty police houses side by side, which is a chronic waste in an area of housing shortage. We should examine whether those empty houses could be turned into units for single parents with children under school age. The houses could be turned into four or five units and single parents would have facilities on site and a child minder. The mother would have the opportunity to get a 1074 job without placing an extra burden on the state for a massive provision of child-minding support. In that way, we could help single parents to find work, start tackling their problems and looking to a brighter future.
The same could be said of the unemployed. We should not look simply at how we support unemployed people. We must see how we can give people the cross-departmental support which they need to make them ready to move back into work. For that reason, we need to be open-minded on the principle of working for benefits.
§ Mr. Winnick
If I heard the hon. Gentleman correctly, he referred to unemployed people moving back into work. Does he realise that the overwhelming majority of unemployed people do not want to rely on benefits of any sort? When vacancies occur, there will often be 500 or 600 people applying for a single vacancy. Sometimes they queue all night for the opportunity of getting a job. The responsibility for what has happened lies with the Government. The hon. Gentleman should be concerned that millons of people are denied the right to work.
§ Mr. Hendry
If the hon. Gentleman looks across the channel, he will see a socialist Government which has pursued socialist policies and which has an unemployment rate that is almost the same as that in the United Kingdom. It is not a question of the Government's policies having failed. The United Kingdom, significantly as a result of our refusing to take on board the social chapter, is ready for growth, and most of the independent reports expect it to have the highest rate of growth in the European Community by the end of this year. Perhaps the hon. Member for Walsall, North (Mr. Winnick) can look more at the positive aspects than the negative ones.
The hon. Gentleman makes the important point that unemployed people want jobs. The worst waste for unemployed people is having nothing to do, sitting around all day at home or getting up late and losing the work attitude.
I have been unemployed twice—once when I left university 12 years ago, in a similar time for graduates as it is now, and shortly thereafter. I know what it is like to write letters and wait for replies. One finds that many people do not bother to reply and many other people simply give one a dismissive letter as though they have not considered the application. In those circumstances, it is difficult to maintain morale and continue looking for work daily.
One of the reasons for looking at the principle of work for benefits is the question of how to put people in a frame of mind whereby they are in a position to apply for jobs and be enthusiastic about getting them. Many questions need to be examined: whether working for benefits would be part-time or full-time, whether it would be compulsory or voluntary and whether it would apply to everybody or only to those who have been unemployed for some time.
We need to challenge things. It was President Kennedy who said:
Change is the law of life, and those who only think of the present and the past are certain to miss the future.He had vision and imagination in many other areas. We are right to challenge the principles, think the unthinkable and hope to do the unthinkable. That is the way in which we should move forward.
There has been a creeping dependency over many years which the Government have sought to reverse in the past 14 years. That creeping dependency is not desirable. 1075 Moreover, it is something which we cannot support. I support the Government's social security initiatives as part of the package to put those problems right. I will be supporting the Government on the order tonight.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
In the past two and a half hours we have heard several wide-ranging and deeply intellectual speeches from people who are plainly formidably expert on social security matters. As I am sure you know, Madam Speaker, I am not an expert on social security. But as a Back-Bench Member of Parliament I am worried for those constituents of mine who, for reasons beyond their control, are unable to defend themselves against the irregularities that arise in their dealings with the local Benefits Agency offices. I shall use some examples to show the need for reviews of the social security system.
All the examples that I shall use come from my two most recent surgeries. One involved a man living in Port Glasgow who told me that he applied for disability living allowance in May 1992. He brought to my surgery a formal acknowledgement of his application dated 1 June 1992. He has heard nothing from Blackpool since. I find that disgraceful.
§ Dr. Godman
Whether it is common or not, it is a matter of deep regret for my constituent.
Another example concerns a young girl who came to see me at my constituency surgery. She is 17 and four months pregnant. Her parents put her out of the house when she announced that she was pregnant. She refused an abortion. She is living in a house which is much too big for her in a part of my constituency where the houses are known as "difficult to let".
The young girl went along to the local benefits office in Port Glasgow to ask for help in her difficult circumstances. She was turned away because she was not in receipt of income support. She is undergoing youth training. Why did not one of the officials sit the girl down—a girl is what she is; she is 17 years old—and say, "We cannot pay you because of the harsh regulations governing payments from the social fund. You are not on income support. But did you know that if you are in such difficulties you can go along to the local social work department?" The hon. Members for Banff and Buchan (Mr. Salmond) and for Roxburgh and Berwickshire (Mr. Kirkwood) will correct me if I am wrong, but I believe that, under section 10 of the Social Work (Scotland) Act 1968, a social worker may have been able to give the girl some financial assistance. Why was not the girl given that advice?
Another example of the failure of the state to protect individuals who find themselves in difficult circumstances is the case of a constituent of mine who is suffering from asbestosis. He is deeply ill, like many of the sufferers whom one finds in shipbuilding constituencies for reasons that I do not need to spell out to the House. He has been advised that he needs an independent medical examination. The man is living in poverty, but he is expected to find the money for that independent medical examination which is required by the Department.
I was grateful to the Minister for saying that he would look into this difficulty for men and women suffering from asbestosis. As you know, Madam Speaker, in almost every 1076 case asbestosis is terminal. I am pleased to say that at long last the law in Scotland has been brought into line with English legislation, in that the claim no longer dies when the victim dies. We are grateful for some small mercies.
I raised the question of invalidity benefit earlier with t he Secretary of State. He courteously gave way and listened tolerantly to what I had to say. If any benefit needs to be subjected to a tough-minded review, it is invalidity benefit.
Under United Kingdom law, a women loses invalidity benefit at the age of 60 and is given a retirement pension instead. In a case heard in Liverpool, Commissioner Skinner decided that Mrs. Rose Graham had suffered sexual discrimination vis-a-vis EC directive 79/7/EEC. The Secretary of State is appealing against the Secretary of State. The assistant chief adjudication officer telephoned me last summer to tell me that that was the case and I have received correspondence from Ministers on the subject.
The social security commissioner decided that United Kingdom social security law discriminates against women, and that they should be treated in the same way as men when in receipt of invalidity benefit. On the basis of the Liverpool case, I made representations on behalf of a constituent, Mrs. McLatchie, whose invalidity benefit was restored plus the payment of arrears. That was fine and good, and I thought that the Government were acknowledging that EC law has supremacy over our legislation. They are, however, appealing to the English Court of Appeal.
I organised a take-up campaign on behalf of constituents caught in the same trap and about 400 made late appeals. They have all been told that they cannot be paid, despite the fact that Mrs. McLatchie was paid. Incidentally, one of my constituents is going to take the Government to the sheriff court, because under Scots law it is argued that she should receive her money.
I wrote to the then European Social Commissioner, Mrs. Papandreou, formally to request that she initiate proceedings at the European Court of Justice against the Government for that act of gross sexual discrimination. Mrs. Papandreou has gone, but I received a response from the acting director-general, Steffen Smidt, who said:
With reference to Mrs. Thomas case, I can inform you that there is actually a proceeding before the Court of Justice of the European Community deferred by the House of Lords on the basis of Article 177 of the Treaty of Rome.That article enables a national court to refer a case to the European Court of Justice, and that has profound implications for any review of social security systems throughout the European Community, let alone in this place.
The letter continues:
This case concerns Mrs. Thomas and four other persons"—two are male: Mr. Murphy and Mr. Morley.
Hearings took place in November 1992, and the Commission is awaiting with the greatest of interest the forthcoming judgements.At this stage, the Commission has to wait for the above judgement before introducing any proceedings for infringement against the Government of the United Kingdom.As I said in an intervention in the speech of the Secretary of State, the Advocate-General has proffered his opinion to his colleagues. The other judges may well choose to reject his recommendations, but I suspect that the omens are not good for the Government. If his colleagues accept his recommendations, it will cost the Department of Social Security dear, as more than 400 people in my constituency have appealed.
1077 It seems that, in future, people who believe that they have a genuine grievance against the Department of Social Security, and hence the Government, may, under the Maastricht treaty—if it is resuscitated by the second Danish referendum—have the right to take the Government to a domestic court. Those people will not have to undertake the long and winding road to Luxembourg but can take the Government to a domestic court because of their perceived failure to protect those people's interests.
In its 15th report for the 1991–92 Session, on page 49, paragraph 34, the Select Committee on European Community Legislation stated:
There is now a new factor. The jurisprudence of the Court has developed to a point where it has recognised a right for individuals (in carefully defined circumstances) to sue their Member States in their national courts for damages flowing from non-implementation of obligations intended for their protection. In relation to obligations of this nature, the prospect of a flood of actions in national courts may be a greater deterrent to dilatory Member States than the prospect of a simple fine.In future, people who feel that they have a legitimate grievance against the Government for their failure to protect them under social security legislation may take the Government to court. Those people can use the European Court of Justice as a tactical convenience. The provision is contained in the Maastricht treaty. I make no apology for attempting to use the European Court of Justice for tactical convenience to protect several hundreds of my constituents whose invalidity benefit was stopped when they reached the age of 60, which is the present position.
When the learned men sitting in Luxembourg decide that the Government are guilty of sexual discrimination when paying invalidity benefit, it may result not in reductions in the social security budget, but in the problem of where to find the extra money to pay the scores of thousands of women who will be involved. I look forward to that decision, about which I am fairly optimistic. No doubt Ministers are hoping that my optimism is misplaced and believe that I should not place too much reliance on the European Court of Justice. However, if Ministers and Government officials fail to protect my constituents, I shall willingly use the European Court of Justice and our national courts—if the Maastricht treaty is resuscitated by the Danes—to protect my constituents.
Even the hon. Member for Roxburgh and Berwickshire is going to conduct a review of the social security system. The reviewers, whether professors or Department of Social Security officials, may have to take cognisance of the role of the European Court of Justice in determining, by way 1078 of European Community legislation, what is fair and proper in the administration of individual social security systems in the European Community—soon to be called the European union, I believe. That is an important subject, especially for hon. Members like me who are not experts but have to defend constituents' interests.
The three examples that I gave of constituents who came to my surgery involved people caught in deep poverty. I hope that this evening the Minister will respond sympathetically to those examples.
§ Mr. Keith Bradley (Manchester, Withington)
This has been a reflective and wide-ranging debate. I will try to comply with the suggestion of the hon. Member for Teignbridge (Mr. Nicholls) that we stick to the reflective mood and do not lapse into crude oratory. I shall try to avoid that temptation.
When the uprating statement was made, it was with great relief that we heard that benefits are to be protected. There was always a suspicion that sooner or later the social security budget would come under close scrutiny. Although there is the gloss of a general review of the whole benefit system, it has to be made clear that there is a suspicion—I say no more than that—that the review is based on the need to get the Government out of the economic mess that they have got themselves into—
It being Ten o'clock, MADAM SPEAKER interrupted the proceedings, pursuant to Standing Order No. 53 (Questions on voting of estimates, &c.)
MADAM SPEAKER then put the Question which she was directed to put at that hour, pursuant to Standing Order No. 53 (Questions on voting of estimates &c.).