HL Deb 12 July 1968 vol 294 cc1254-64

1.45 p.m.

BARONESS PHILLIPS

My Lords, on behalf of my noble friend Lord Bowles, I should like to move the approval of these Regulations. These Regulations provide for increases and changes in the rates of supplementary benefit to take effect from October 7. The increases form part of the Government's programme for protecting the most vulnerable sections of the community from hardship arising from price increases which must result from the Government's measures to restore the economy of the country—in particular from devaluation and increases in taxation. The main proposals are for an increase of 5s. in the single householder rate and 8s. for a married couple. This results in new rates of £4 11s. and £7 9s. to which provision for rent is added. For adult non-householders an increase of 3s. on the scale rate and of 1s. on the fixed rent addition is proposed. Increases for children and for the blind are also proposed.

My Lords, beside the increases in the scale rates two other changes are proposed in order to take account of the special needs of special groups. First, the long-term addition which is payable to supplementary pensioners and to all others (excluding the unemployed) who have been getting benefit for two years, is to be raised from 9s. to 10s. a week. Secondly, to help parents with adolescent children, the age-band for children aged 11 to 15 is being replaced by two bands, covering children aged 11 to 12 and 13 to 15, and a proportionately higher increase is being given on this occasion to the latter. This is being done to make some increased allowance for the higher expenditure which is generally incurred at adolescence.

As I have explained to your Lordships, the increases are to compensate for rises in prices. The price changes which have taken place since last October, when supplementary benefit rates were last raised, would call for an increase of about 3s. 11d. in the single householder rate. The basic increase of 5s. now proposed will thus compensate for the rise in prices which has taken place following devaluation and the Budget, and give some margin. And then, of course, there is on top of this increase, the increase in the long-term addition, payable to 80 per cent. of all claimants.

My Lords, the beneficiaries will include the old, the widowed, the sick and the unemployed and their families—people who are unable to support themselves and who need special protection against price rises. All these people will be helped by the supplementary benefit increases at the same time as the lower paid family man will be helped by the higher family allowances—due to come into effect on October 8.

It may be helpful to your Lordships if I say a word about what will happen where a family on supplementary benefit receives an increase in the family allowance. As supplementary benefit is designed to bring a claimant's resources up to the guaranteed levels, family allowances and National Insurance benefits have to be taken into account in working out the supplementary benefit payable. But as supplementary benefit rates are going up, the total increase which the family will receive from all the benefits taken together will normally be an amount equivalent to the increases in the supplementary benefit rates.

I should like to say something also about those families whose supplementary benefit is restricted under the "wage-stop" provisions to the amount which the father could have earned had he been in work. They cannot benefit directly from the increase in the supplementary benefit levels, because the changes proposed do not affect the father's potential level of earnings. They will, however, benefit in full from the higher family allowances because family allowance which is payable whether a man is in work or not is ignored in calculating the level of the wage-stop. It is one of the advantages of increasing family allowances as well as supplementary benefits, that wage-stopped cases on supplementary benefit can be helped too.

In addition to wage-stopped families there are a few small groups of people who will receive amounts differing from those laid down in the Regulations. For example, there are people receiving, under powers exercised by the Supplementary Benefits Commission, an exceptional circumstances addition to cover special expenses over and above their long-term addition which is meant to cover expenses up to 9s. Because they are already getting more than the long-term addition they will not in general benefit from the 1s. increase in it. The amount for these special expenses will remain the same, but 10s. instead of 9s. will be covered by the long-term addition. This is because any increase in the cost of special expenses does not have to wait for any amendment of the Regulations, but can, for the most part, be met as it is found to occur. For example, an addition for extra laundry goes up if laundry charges rise. The only case where this is not true is where a person is receiving an addition for a special diet at a fixed rate laid down by the Supplementary Benefits Commission on medical advice. In these cases the Supplementary Benefits Commission propose to increase the amount by 1s. so that in these cases there will be an increase of 1s. in the total payable, over and above the increase in the basic scale rate.

Then there is the group of claimants paying an inclusive charge for board and lodging. The requirements of such a claimant are not laid down in the Regulations, but are determined by the Supplementary Benefits Commission. Currently, his requirements are taken as the amount he pays for his board and lodging (which of course will rise automatically as costs rise), plus £1 7s. 6d. for personal expenses. This latter amount is now being increased to £1 9s. 6d.

Finally, I should tell your Lordships that the cost of these proposals will be some £44 million on existing cases in a full year. This compares with the estimated net cost of supplementary benefit in the present financial year of some £394 million. My Lords, I beg to move that these Draft Regulations be approved.

Moved, That the Draft Supplementary Benefit (Determination of Requirements) Regulations 1968 laid before the House on the 18th of June last be approved.—(Baroness Phillips.)

1.53 p.m.

LORD ILFORD

My Lords, I do not intend to detain your Lordships for very long this afternoon. I desire to put only one or two points to the noble Baroness. I do not suppose the noble Baroness would claim that these scale rates do very much more than make good the loss in purchasing power attributable to the increase in the index of retail prices. When I was chairman of the Board, we always found it a convenient course when altering the scale rates to give ourselves a margin over and above what was required to make good the loss of purchasing power. That enabled us, if the index figure caught up on us, to be satisfied that all our applicants were still receiving the scale rate which Parliament had intended they should.

I have been endeavouring to ascertain from such statistics as are available what margin the Government are retaining in these scale rates. According to my cal- culation the Government have given themselves a margin of something like 5 per cent. Now, my Lords, is a margin of 5 per cent. sufficient or will the Government have to come back again for a higher scale before very long? Five per cent. is not really very much. The index figure rose by nearly five points between October, 1967, and last May. A rise of that magnitude could mean that the Government would have 10 come back for new scale rates before very long. Of course, there is no reason why the Government should not come back and ask for what is required to maintain the standards, but I would remind your Lordships that the alteration of the scale rates is a very considerable administrative operation. These new scale rates involve many hours of overtime work. It will be done by a very devoted staff, because the staff of that department have always shown themselves very conscious of the special public service which they perform. Nevertheless, it will mean that many hours of overtime will have to be worked. That will mean that the expenditure will also be very considerable.

I should not like to make an estimate of what the cost of this alteration of the scale rates would be—my recollection of these matters is fading—but it is a very considerable sum. It is really better, in the interest of economy, that when the scale rates are altered an adequate margin should be provided which will cover the increase in the index figure for as long a time as can be foreseen. I am afraid it reflects no great credit on the economic policy of the Government that the index figure should have risen as much as it has. But there it is, five points is a pretty good rise for the period since last October.

I have one or two matters that I should like to put to the noble Baroness before she replies. I wonder whether she can tell us if there is any real evidence that progress has been made with the problem which confronted me when I was chairman and has confronted the Board even since—that is, the problem of the individual who is entitled to assistance but steadfastly refuses to apply for it. That was a very intractable problem. We set to work in different ways. We sent out a circular letter, and I believe that the Supplementary Benefit Commission has followed that example.

We invoked the assistance of the clergy, the doctors, the district nurses and other persons whose daily calling brought them into close contact with the population.

The Supplementary Benefit Commission has gone a stage further. It has done something which was often pressed upon me, but which I never did—it has altered the name. It was felt that the name "National Assistance" had a disagreeable connotation, and that if it was changed a good deal of the objection to claiming National Assistance would disappear. My Lords, I never believed that that was so. I can look back on a good many changes of name. "Outdoor relief" in 1929, on the break-up of the old Poor Law, was thought to have unpleasant associations, and so it turned itself into "public assistance". "Public assistance" lasted until 1948, when again, and for the same reasons, it was transformed into "National Assistance". I do not know whether the noble Baroness is able to tell us if the change to "supplementary benefit" has produced any tangible results. It is extremely difficult to ascertain whether these new measures which have been taken, changing the name and the additional visit—and the additional visit is not always welcome—have produced any tangible results. There are, of course, many more pensioners now than there were five or ten years ago, and it may be that that is some indication that the reluctance of these old people is being overcome. But there are other perhaps more powerful reasons why the number of pensioners should increase. It is difficult to say whether this problem has been finally overcome.

The magnitude of the problem has been very much overstated. One commonly hears it said that there are 700,000 old people entitled to National Assistance who will not ask for it and who are living below National Assistance standards. That figure is based on a complete misunderstanding of the survey of pensioners which was carried out by the National Assistance Board. That survey found that 700,000 households were apparently entitled to National Assistance but had refrained from asking for it. That represented about 850,000 pensioners. But of the 700,000 households, 400,000 households were in possession of resources which for one reason or another were disregarded by the Board,

Many more lived with relatives who paid the rent or the household expenses or maintained their aged relatives. When all those households were taken into account there remained about 300,000 households. Of those 300,000 it was found that two-thirds had resources of some description. The actual number of persons who had no resources but the retirement pension and were living below assistance standards, but who would have been entitled to assistance had they asked for it, was only 85,000. A figure of 85,000 is considerable and it is a major problem but it is nothing like 700,000. One must get this problem in its right perspective. I hope that the noble Baroness will be able to tell us whether it is possible to say that this problem has now been overcome.

One of the other major problems which used to confront the Board when I was Chairman was the problem of what is called the wage stop, the man with low earning capacity. We had to treat him on the basis of his assumed earnings when he was in work. If we had not done that, the scale rates would have given him more than he was able to earn when he was working. There was much comment from the newspapers that we were paying men more on National Assistance than they were able to get when they were working. That was not so. We scaled the man down and he was paid by the Board the wage which we found in all the circumstances of the case was that which he could command when in work.

The Government have attempted to tackle this problem by the use of family allowances. I must not speak disparagingly of family allowances, because probably they are the right solution. Family allowances are taken into account in assessing National Assistance allowance. I notice that the noble Baroness safeguarded herself against all the disagreeable letters she is going to receive from recipients of family allowances who find that the amount of their National Assistance goes down by the amount that their family allowance goes up. I used to have this problem every time the insurance scale rates were altered. I received a number of disagreeable letters from people who were disappointed that they did not get the new insurance benefit rates which they expected, from reading their newspapers, to get. But one cannot avoid that sort of thing; it is one of the difficulties of the whole system.

As for the wage stop the family allowance is not set off against that. The man receives what he would get if working, not an assistance allowance. In addition, he gets family allowances, and this was the only way the problem could be tackled. Whether or not it is proving adequate I do not know, and no doubt the noble Baroness will be able to tell us.

I was hoping that the noble Baroness would have told us a little about the work of the Supplementary Benefits Commission. I naturally regret the passing of the old National Assistance Board. I think that there were great administrative advantages in a body which enjoyed a substantial measure of independence from other departments, and indeed, from the Government themselves, a body which was devoted solely to the identification of poverty and to its relief. There were great advantages in that system which are not present in the current system. However, I must be careful to say nothing which reflects on the Supplementary Benefits Commission. It is a most ingenious administrative device. And my information is that it is working well. I am delighted to know that that is so. I know something of the people who have to work it, and I am sure that if a success can be made of it, it will be made.

The Supplementary Benefits Commission, which has inherited the legacy of the National Assistance Board, was produced to get over the difficulty in which the Labour Party found themselves when they came into office, that they had committed themselves to many things which, when confronted with the administrative task of carrying them out, proved to be impracticable. The Commission was designed primarily to get over that difficulty. I hope and believe that it has got over that difficulty quite satisfactorily, and nothing that I say to-day is intended to reflect on the work which the Commission is doing. I hope that it will continue to carry on with the great task with which it has been entrusted and that its work will prove as successful as I hope the old Assistance Board was.

I have put a number of questions to the noble Baroness, of some of which I have given notice and of others I fear that I have not; but I am quite sure that, from her knowledge of the walking of the system, she will be well able to answer.

2.10 p.m.

BARONESS PHILLIPS

I should first like to express my appreciation to the noble Lord, Lord Ilford, for his courtesy in mentioning the two points that he proposed to raise to-day. I am afraid that at this juncture I am not able to give him an outline of the work of the Supplementary Benefits Commission, though I should have liked to do so. But I should like to thank him for his words: coming from him of all people, they are greatly appreciated. We all know of his own distinguished work in this field, and quite recently I met somebody who referred to him with great affection, remembering him from the period when he laid down so many of the types of benefit which we carry on to-day.

On the question of those entitled to benefit but not yet getting it, we are dealing here with a generation to whom I am only too delighted to pay tribute. I know that the noble Lord will agree with me, that we often pay tribute to youth, but we pay far too little tribute to the people of this other generation, who of course, were taught that independence was the great virtue. I ant sure that we should be the last to deplore that, but it still inhibits many of them from taking something which is rightly theirs, and which they perhaps feel they would rather not claim.

As the noble Lord will know, it is difficult to get precise figures, but between November, 1966, and September, 1967, the number of retired people receiving supplementary benefit went up by about half a million, and since the inquiry into the financial and other circumstances of retirement pensioners, to which the noble Lord, Lord Ilford, referred, well over 800,000 retired people have claimed rate rebates. So there is some indication that some of this group are coming forward. Nevertheless, Her Majesty's Government are only too well aware that there are still a number of people entitled to supplementary benefit who have not yet claimed it. The Ministry feel that considerable progress has been made over the past three years in getting the news over to these people, following on some of the plans which the noble Lord himself originally laid down and carried out. There is, of course, the use of posters, and the fact that letters are sent and invitations are given, even to the newly widowed, to say whether they wish to claim. So we can only hope that as time goes on the number of people who claim will increase, though it is always very difficult to assess figures.

The noble Lord mentioned the increase in the scale rates in relation to the cost-of-living index. I believe that the precise figure is 4.6 per cent., which is perhaps a little different from 5 per cent. But the increase in the scale rates which we are dealing with to-day will be just under 6 per cent. on the basic scales, and rather more than 6 per cent. in many cases where the long-term addition is payable. It is felt that since many of the increases which were forecast, such as in electricity and so on, are already known, this 6 per cent. will well cover the increases when the final introduction comes in October—though, as the noble Lord himself has so truly said, Her Majesty's Government are always watching this point.

LORD ILFORD

Is the figure of 4.6 per cent. the margin which has been allowed in the scale rate?

BARONESS PHILLIPS

No, my Lords. It is not the margin; it is the increase in prices. This is, of course, relevant, as the noble Lord said. So at this point of time it is felt that the 6 per cent. increase in the benefit rates is adequate, though no Minister would be foolish enough to make a very long-term forecast of this changing situation. But the Government will watch this continuously.

The noble Lord asked me about the wage stop. I think I made the point that the family allowances would have been increased whether the man had been working or not. I am well aware of the type of communication which a Minister would receive under the circumstances, but one can only point out that it would be unfair if one section of the com- munity were to make what one might call a profit, while others did not. One attempts only to keep pace with existing price changes. I hope I have covered the points raised by the noble Lord, and I thank him for welcoming this Order.

On Question, Motion agreed to.