HC Deb 19 February 1997 vol 290 cc882-9 12.30 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I am pleased to have secured parliamentary time to debate this issue, which will undoubtedly apply to thousands of people throughout the British Isles.

The best way of highlighting the problem is by describing the circumstances surrounding the case of my constituent, Mrs. Ann Weatherby of Brynhailog, Abertafol, Aberdyfi. In 1989, due to her having to retire on the ground of ill health, Mrs. Weatherby applied successfully for invalidity—now incapacity—benefit. She did not wish to relinquish her post as a headmistress, but she had no option but to do so because of her medical condition. In September 1992, she was informed that she would no longer qualify for incapacity benefit when she attained the age of 60—state retirement age—the following January.

I shall pause in Mrs. Weatherby's story for a minute or two to explain the background. The Government's reasoning for incapacity benefit is really an application of the principle of restitutio in integrum—in other words, it is an income replacement benefit that is designed to replace loss of income during working life, and the rate of benefit after state pension age is linked to pension entitlement as part of an interlocking system of contributory benefits.

Mrs. Weatherby's contract of employment and her conditions of service—the national conditions of service applicable to head teachers—would have allowed her to continue in employment until 65. This is therefore a clear case of discrimination which is embodied in United Kingdom law. It is also the crux of my argument, and it will assist us in our detailed consideration of the case and its ramifications if I refer to two recent authorities on this subject.

The two cases that bear directly on the facts of Mrs. Weatherby's case are those of Graham—which is reported in CS27/1991—and Thomas and others v. the Secretary of State for Social Security, which came before the European Court of Justice. At first instance, a social security commissioner ruled that a woman receiving invalidity benefit should not have her benefit reduced when she reached 60, because a man would not have his benefit reduced until he reached 65.

There is a body of European law that outlaws discrimination on the ground of sex. I refer briefly to council directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security. Article 4 states: The principle of equal treatment that there shall be no discrimination whatsoever on grounds of sex either directly, or indirectly by reference in particular to marital or family status in particular as concerns: —the scope of the schemes and the conditions of access thereto, —the obligation to contribute and the calculation of contributions, —the calculation of benefits including increases due in respect of a spouse and for dependants and the conditions governing the duration and retention of entitlement to benefits. However, in article 7(1), the directive allows member states to exclude from its scope the determination of pensionable age for the purpose of granting old-age and retirement pension and the possible consequences thereof for other benefits". These are the most important words, because they seem to justify legal discrimination in this area.

The Thomas case went to the Court of Appeal, where it was held that the words and the possible consequences thereof for other benefits had to be construed strictly and in accordance with the Community principle of proportionality. Indeed, any derogation from the equality principle must remain within the limits of what was appropriate and necessary for achieving that aim.

In a case parallel with that of Thomas, a social security commissioner in the Graham case took an important view of the whole matter—interestingly, the commissioner concerned was called Skinner. He looked at the argument advanced by the Secretary of State in Thomas, which was reported in The Times on 22 August 1990. It was contended that Parliament had found it necessary to distinguish between people of working life and those not of working life by reference to the pattern of employment—the working patterns of men and women differ, with women tending to retire at 60 and men at 65—and that, until that pattern changed, income replacement benefit had to be tied to pensionable age. There was a link between the use of pensionable age in connection with retirement pension and its use in connection with other income replacement benefits.

The commissioner rejected that approach. He referred to the Court of Appeal judgment in Thomas in which, as I have said, the court held that the words and the possible consequences thereof for other benefits had to be construed strictly and in accordance with the Community principle of proportionality. The commissioner quoted from the judgment of Lord Justice Slade, who said: Construing the phrase 'and the possible consequences thereof for other benefits' strictly and in accordance with the principle of proportionality, I conclude that it gives Member States authority to prescribe or retain different age limits for men and women when defining the qualifications for entitlement to benefits other than old-age and retirement benefits only when this is a necessary consequence of their having defined the qualifications for entitlement to old-age or retirement benefits by reference to different age limits for men and women and only in a manner which is appropriate to meet this necessity. The commissioner, rejecting the argument advanced on behalf of the assessing officer, said that he had difficulty accepting the concept of a deemed end of working life and that he could see no reason why invalidity benefit should have a different cut-off point for men and women. He went on to say: I have asked myself whether the fixing of pensionable ages—different ages for men and women—requires a special rule relating to invalidity pension which would also discriminate. I cannot see that such is a necessary consequence of Parliament having defined the qualifications for entitlement to retirement pension by reference to different age limits for men and women. I see no objective link … in my view it was not necessary to gear invalidity benefit to retirement age. Finally, the commissioner went on to consider the issue of invalidity allowance. The claimant was awarded invalidity pension in April 1989 when she was 58 years old. It was argued on her behalf that, if a man had become incapable at the same age as the claimant, he would have been entitled to invalidity allowance. He would have been more than five years away from the pensionable age for men, which is 65, whereas the claimant was not more than five years away from the pensionable age for women, which is 60. The commissioner accepted that argument, and concluded that the claimant was also entitled to invalidity allowance payable at the lower rate.

The commissioner had originally adjourned the hearing of that case to await the outcome of the appeal by the Secretary of State from the decision of the Court of Appeal in Thomas. The Court of Appeal had heard five cases together, collectively known as Thomas. The Court of Appeal held that the discriminatory upper age limit is in breach of the directive on equal treatment in social security. It said that it was not a "possible consequence" of the setting of different pension ages for the granting of old-age or retirement pension and therefore did not escape the requirement that there should be no discrimination. Women were entitled to severe disablement allowance or incapacity allowance, as appropriate, in the same way that a man of the same age would be.

"Halsbury's Laws of England", from which Lord Justice Slade quoted in the Thomas case, states: The principle of proportionality requires that the means used to attain a given end should he no more than what is appropriate and necessary to attain that end; in other words, persons may be obliged only to make the least sacrifice consonant with achieving the objective sought. In order to establish whether a principle of Community law is compatible with the principle of proportionality, it is necessary to establish whether the means it employs to achieve its aim correspond to the importance of the aim and whether those means are necessary in order to achieve it. Whether a measure is disproportionate or not is not necessarily determined by reference to the individual position of any one particular group of operators. The principle of proportionality applies also to national measures. In his judgment, Lord Justice Slade said: Thus, even apart from the inconclusive nature of the statistics placed before the court, the, as yet unknown, impact of the Barber decision was a further reason why the sex discrimination involved in sections 36(4)(d) and 37(5) could be justified by reference to the assumed working life of a woman as opposed to a man. A general assumption of that kind, which took no account of individual circumstances and made without adequate factual basis, itself discriminated against women. The onus had to fall on the secretary of state to show that the designation of different age limits for men and women, when defining the qualifications for entitlement to SDA and ICA, was a necessary consequence of Parliament's having defined the qualifications for entitlement to old-age and retirement benefits by reference to different age limits for men and women. For the reasons that he had given earlier, his Lordship concluded that he did not think that that onus had been, or could be, discharged. Accordingly, the Secretary of State's appeal was dismissed.

The Secretary of State then appealed to the House of Lords, which in turn referred the case to the European Court of Justice for a preliminary ruling. That court eventually held in favour of the Secretary of State. It is interesting that the Government were able to put aside their disdain for, and distrust of, the European Court of Justice and apply to it in this case when they found it convenient to do so.

Whatever financial repercussions might result from changing the law, I believe that there is a moral imperative to do so. To put it another way: what price justice, fairness and decency? Surely there is not too high a price on those principles, which I think should be uppermost in the thinking of any Government Department—especially the Department of Social Security. How can any Government pay lip service to the principle of equality and stand by this iniquitous position?

The Minister may respond by telling me that matters of social security are outside the scope of the Sex Discrimination Act 1975, by virtue of section 51. I am fully aware of that fact. However, the EC directive to which I referred lays down certain minima that are expected of member states in awarding statutory social security benefits. I believe that the Thomas decision is unsatisfactory because it upholds sexual discrimination and, therefore, the law should be changed. I believe also that it is abhorrent that women should be treated so unfairly with the full sanction of the law.

In the case of my constituent, Mrs. Weatherby appealed the decision, and was initially successful in that her payment was restored in full. However, consequent on the Thomas decision, the position was reversed, and Mrs. Weatherby was told to appeal to a social security tribunal. She did so, and I appeared before a tribunal—unpaid—on her behalf on 28 January this year. Although we received a very sympathetic hearing, the tribunal considered itself bound by the Thomas decision and, therefore, could not find in my constituent's favour.

That is why I applied for the debate today. By highlighting this problem, I believe that we can initiate a serious debate that will lead to a change in the law. I am indebted to my constituent, Mrs. Weatherby, for her determination and perseverance and for her resolve to fight for a principle, despite the fact that she was unlikely to gain personally. I applaud her tireless efforts and her selfless attitude. The Equal Opportunities Commission and the National Association of Citizens Advice Bureaux have assisted me in highlighting the argument.

In opening this important debate, I said that I believed that the situation would affect thousands of women throughout the British Isles. This morning, I received a telephone call from a constituent of my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Dafis), Mrs. Morfidd Strange of Gelli Aur, Commins Coch, Aberystwyth, who told me about her situation. She was also a teacher who suffered extreme facial pain and was forced to retire early through ill health. When she was awarded incapacity benefit some years ago, the officer assured her that it would be paid until she was 65. Recently, and without warning, she received a letter saying that the benefit would cease when she attained the age of 60. Her weekly income from that source summarily dropped from £76.33 to £40.72. She also told me that she knew of at least three similar cases in the Aberystwyth area alone. Therefore, I conclude that the problem is widespread.

I am sure that we all believe in equal treatment for people of different sexes. I think that this situation is a glaring omission which must be put right. I invite the Minister to state today whether that area of policy will be reviewed. Failure to do so would condone unfairness and discrimination—which can never be the aim of any Government in any civilised society.

This is only the start of the campaign, and I urge any future Labour Government to make a commitment to equal rights, such as evidenced by Labour's worthy campaign to secure greater female representation in the House. I believe that it is also incumbent on any future Labour Government to put that principle into practice and end this iniquitous and offensive discrimination, whatever the cost.

12.46 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Andrew Mitchell)

The issue that we are debating concerns the rules for the payment of invalidity benefit to people over pension age. Until April 1995, invalidity benefit was the main social security provision for sick and disabled people who were incapable of work in the long term. Hon. Members will recall that we overhauled that benefit provision in April 1995 and replaced invalidity benefit with the new incapacity benefit.

I think that it is important to ensure that we do not lose sight of the background to that significant improvement. The rapid growth in recent years in both expenditure on invalidity benefit and in the number of people receiving it was beyond dispute. if left unchecked, spending on that benefit alone was forecast to reach £10 billion by the end of the century; yet there was no evidence of any deterioration in the health of the nation as a whole—no wonder concerns were growing that invalidity benefit might be going to people for whom it was never intended. No responsible Government could ignore those developments.

That is why we replaced invalidity benefit with incapacity benefit in April 1995. We have provided a more objective test of people's ability to work, to ensure that benefit is focused on those who are genuinely incapable. The changes ensure a fair system for people who are unable to work that is also fair to the taxpayer. These reforms are a major success, and are on course to reduce expenditure by £2.3 billion a year in the long term.

I pay tribute to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) for the energy that he has devoted to pursuing this specific case, and I congratulate him on securing this Adjournment debate. His interest in these matters is such that my officials had no difficulty identifying the case that he wished to raise. I am grateful to him for confirming the specifics of that case, and I welcome the opportunity to debate the issue. Having examined Mrs. Weatherby's case, I am satisfied that her benefit claim has been handled correctly by the Benefits Agency. The hon. Gentleman may find it useful if I outline the background to the rules that have led to the decision in Mrs. Weatherby's case.

Under the invalidity benefit scheme that existed before the introduction of incapacity benefit in April 1995, payment of benefit could continue for up to five years beyond the state pension age. However, for people over pension age, the amount of benefit paid was based on the rate of retirement pension to which they would be entitled if they had claimed it instead. That meant that invalidity benefit changed to the pension rate, as the hon. Gentleman said, at the age of 60 for women and 65 for men.

Unlike invalidity benefit, the amount of retirement pension to which people are entitled depends on their overall national insurance contribution record throughout their working life. That is why people who chose to stay on invalidity benefit found that it went down after they reached pension age, if they had not paid enough national insurance contributions to qualify for a full-rate retirement pension. That is what happened in Mrs. Weatherby's case.

I should explain that that rule simply put such people in the same position as those who had been working immediately before reaching retirement age. That is clearly right, as to do otherwise would have placed pensioners who chose to remain on invalidity benefit at an unfair advantage over those receiving their retirement pension.

We have always believed that those rules complied with European equal treatment law. In particular, directive 79/7/EEC on equal treatment in social security specifically allows different pension ages for men and women, along with the possible consequences for other benefits. However, on 1 April 1992, as the hon. Gentleman mentioned, a social security commissioner decided that such different treatment of men and women was not permitted by the directive, and that invalidity benefit in payment to women should not be changed to the pension rate when they reached the age of 60.

The Secretary of State and the chief adjudication officer jointly appealed against the social security commissioner's decision to the Court of Appeal. As a result, the increased rate of invalidity benefit awarded to women after the age of 60 was suspended by the Secretary of State pending the outcome of the appeal and clarification of the law.

The Government acknowledged that, while the appeal was outstanding, this area of the law remained unsettled, and were sensitive to the concerns of the women affected. That is why we decided not to impose the suspension of the increased benefit in cases of hardship. Mrs. Weatherby was one of a number of women who were allowed to continue receiving the higher rate of benefit awarded as a result of the commissioner's decision, even though that decision remained the subject of an appeal.

In January 1994, the Court of Appeal decided to refer the case to the European Court of Justice for a preliminary ruling on questions of European law relevant to the case. The European Court of Justice delivered its ruling on 11 August 1995. That ruling fully supported the Government's position and confirmed that the linking of invalidity benefit rules to state pension age was permitted by European law.

The case was formally disposed of by the Court of Appeal in December 1995. By that time, invalidity benefit had been replaced by the new incapacity benefit, and those receiving it had transferred to the new benefit. Following the European Court's decision, the Benefits Agency undertook to review those cases where an increased amount of invalidity benefit was—as we now know—incorrectly awarded, following the commissioner's decision in April 1992.

Once those cases had been reviewed by an adjudication officer, in line with the court's decision, it followed that there was no longer any legal entitlement to the increased invalidity benefit. Accordingly, payments that were being made on the grounds of hardship automatically ceased.

I set out those points clearly to the hon. Gentleman, as that is precisely the position that applied to Mrs. Weatherby. I emphasise that the increased money paid to people in that position was based on a decision that was later held by the European Court to be incorrect. The money has therefore been overpaid. I can, however, reassure the hon. Gentleman that we will not take any action to recover those overpayments from his constituent or any others who were involved.

Mr. Llwyd

I appreciate the Minister's detailed response. It is a principle of social security law that, if the applicant has not fundamentally misled the agency, there is no ground for it to claim repayment, but I hear what the Minister says.

Mr. Mitchell

The hon. Gentleman is right in his interpretation of social security law. I stress that, in the circumstances, the money was overpaid, but that the Government will not seek to recover it.

The hon. Gentleman noted that the European Court ruled in Thomas that the different upper age limit breached European law. My response is that the Thomas case concerned non-contributory severe disablement allowance. The Graham case was decided by the European Court after the Thomas case, and the court held that the linking of contributory benefit to pension age was permitted by the European equal treatment directive.

Invalidity benefit and its replacement, incapacity benefit, are contributory benefits designed to replace earnings during periods of sickness. We believe that it is reasonable to limit or, as with incapacity benefit, to cease paying such a benefit when people reach an age where they are no longer required to work. Once a person has reached pension age, we believe that retirement pension or a benefit paid at the equivalent rate is appropriate.

Mr. Llwyd

The Minister is generous in giving way again. The point at issue in the Weatherby case and the other cases to which I referred is that, under the national conditions of service, teachers are entitled to work until age 65. The Minister referred to people being no longer required to work. There is a requirement to work until 65. It is a choice, of course, but it is a standard condition of service in the teaching profession. That distinguishes those cases.

Mr. Mitchell

I understand the hon. Gentleman's point. Sadly, however, for whatever reason, his constituent was unable to work. That is the key fact that the law and the Department of Social Security should take into account.

Income-related benefits would remain available for people who subsequently found themselves without sufficient income or other resources. The Government have made additional sums available to poorer pensioners who have no means of support other than the state pension. That is to protect people, especially poorer pensioners, on low incomes.

Linking the payments of invalidity benefit to people who have reached pension age to the retirement pension rate was not a new rule. It operated under successive Governments and was a long-established principle in the national insurance system as a necessary consequence of the different retirement ages for men and women.

The European Court of Justice ruling has confirmed that the United Kingdom may retain those rules linked to pension age, but in the longer term, as I am sure hon. Members are aware, the state pension age for men and women will be equalised at age 65. The change will not be fully implemented until 2020, as it is being phased in gradually from 2010. When it is fully implemented, there will no longer be any difference in benefit provision for men and women. That meets, at least in part, the hon. Gentleman's concern about sex discrimination. Equalisation is the Government's policy and will be achieved by 2020.

Finally, I again congratulate the hon. Gentleman on securing the debate and on the diligence with which he has pursued the case of Mrs. Weatherby, his constituent, including attending a social security appeal tribunal. Clearly, he has well served his constituent. I hope that my remarks, which may not satisfy him in full, will explain to him and to the House why the Government reached the conclusion they did in the case of his constituent.