HC Deb 10 December 1996 vol 287 cc105-7
4. Mr. Wilkinson

To ask the Secretary of State for Social Security what was the percentage of gross national product represented by Government spending on social security in (a) 1995, (b) 1990, (c) 1985 and (d) 1980. [6848]

Mr. Lilley

The figures are 12.5 per cent., 10 per cent., 11.5 per cent. and 10 per cent. respectively. Social security spending is now projected to drop as a proportion of national income over the remaining years of this century.

Mr. Wilkinson

I am grateful to my right hon. Friend for that detailed reply. As social security spending still accounts for a considerable proportion of gross national product, thereby preventing wealth from going into investment and the creation of wider prosperity and jobs, will he put in the Conservative manifesto imaginative, radical proposals such as a funded national state pension scheme, which, in the medium to longer term, would reduce the proportion to well below 10 per cent.?

Mr. Lilley

My hon. Friend is right. Social security has been among the fastest growing areas of expenditure for the past 50 years, since the welfare state was established.

Mr. Tony Banks

That is a mark of failure.

Mr. Lilley

The hon. Gentleman thinks that it has been a failure since Beveridge set it up. We have introduced reforms that will result in spending growing less rapidly than national income, to leave scope for reducing taxes and creating a more prosperous economy, getting people off work and enabling them to save and meet the costs of retirement, as my hon. Friend suggests.

Mr. Banks

You have been getting people off work for the past 17 years.

Mr. Frank Field

Will the Secretary of State tell the House the percentage increase in real terms in social security expenditure since 1979? When he meets the electorate, will he consider that record a matter for congratulation or for concern?

Mr. Lilley

I cannot give the figure offhand, but I think that it is about 4 per cent. a year. That is a matter both for congratulation and for concern. It is a matter for congratulation that we have met and safeguarded the needs of the unemployed, the sick, the disabled, the elderly and carers. However, it is a matter for concern because the bill has been outstripping the nation's ability to pay. My predecessor, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), introduced reforms in 1986, which I have continued. The beneficial effects of those reforms have begun to show. We are now almost alone in the western world in having got a grip on the problem, and we can look forward with confidence to the future.

Mr. David Shaw

Can my right hon. Friend explain the fact that, in 1980, just after the Government took office, social security expenditure represented quite a low proportion of gross domestic product? Was it because there were a number of social security cuts between 1974 and 1979? Is my right hon. Friend old enough in political terms to recall Labour cutting the pension in real terms in 1976? Is it not a tribute to the Government that, since 1979, we have always increased social security in relation to inflation?

Mr. Lilley

My hon. Friend is absolutely right. I do recall the cuts in real terms to pensions and the fact that for two years in succession Labour broke its promise on the Christmas bonus for pensioners. I do not believe that pensioners can look forward with confidence to another Labour Government, and I trust that they will remember that next May.

Mr. Wicks

Given the spending total on social security, does the Secretary of State really expect war pensioners to contribute to social security cuts? Is he really planning to stop the four-yearly assessments that lead to increased entitlements for veterans? Given the great service of our veterans, is that not a cut too far? Will the Secretary of State confirm that the war pensions memorandum was called "Sweeteners" and that he received a copy of it? Does he accept that people do not want sweeteners, but want justice for veterans?

Mr. Lilley

I had thought better of the hon. Gentleman than that he should join in such shameful scaremongering. He has got it wrong. The changes in long-term assessments to which he refers mean that pensioners can seek a review at any time they wish, but they will no longer receive a letter, which many pensioners and the pensioner lobbies found disturbing as it suggested that their pensions would no longer be paid. That will no longer happen. The change will not save significant money, but it is welcomed by the pensioner lobbies. It is particularly extraordinary that the Labour party should suggest that we pick and choose our medical advice on such matters. That is a frightening suggestion, as the only part of the benefit system that allows Government some discretion as to how much they give war pensioners is in local government matters, and all but two of the local authorities that do not give full help to war pensioners are Labour-controlled—[Interruption.] There are 18 of them. If anyone decides to pursue the scare, I shall list those 18 local authorities in the House.

Mr. Brazier

Will my right hon. Friend confirm that, apart from invalidity benefit, nearly all benefit increases have been in means-tested benefits, not universal benefits? Does he agree that we have to consider the dynamic effects of changes to the benefits system on social structures, not merely their immediate short-term impact? Does he accept the support of many Conservative Members for the courageous changes that he has made to housing benefit and payments to single-parent families as, in the long run, they should benefit the social structure and not merely produce short-term savings?

Mr. Lilley

I am grateful to my hon. Friend for the points that he makes. The growth has been not just in means-tested benefits. Benefit spending on war pensioners, for example, will increase next year—just as it has this year—because, unlike the Labour party, we are determined to protect and help war pensioners. My hon. Friend is right about trying to avoid means testing: I deplore Labour's plans to extend means testing into child benefit for those staying on at school and to pension entitlements—a proposal that Lady Castle has rightly condemned as a major extension of means testing to all pensioners.