FAMILY INCOME SUPPLEMENTS (COMPUTATION) REGULATIONS 1972

HL Deb 03 February 1972 vol 327 cc1045-50

7.31 p.m.

LORD ABERDARE rose to move, That the Draft Family Income Supplements (Computation) Regulations 1972, laid before the House on January 18 last, be approved. The noble Lord said: My Lords, the Family Income Supplements Act 1970 provides for the payment of a benefit for families with small incomes where the breadwinner is in full-time work and there is at least one dependent child. The supplement is payable when the family's weekly resources fall below the amounts prescribed in Section 2(1) of the Act, as amended by regulations made under Section 2(2). The weekly rate of the benefit is one half of the amount by which the family's total income falls below the prescribed amount, subject to a maximum weekly payment determined by Section 3(1) of the Act, as amended by regulations made under Section 3(4).

The Bill fixed the prescribed amount at £15 a week for a one-child family, increasing by £2 a week for each additional child. The maximum weekly payment was set at £3. These amounts were increased before the scheme started by the Family Income Supplements (Computation) Regulations, 1971, which the House approved in April. The prescribed amounts were raised by £3—that is, to £18 a week for the one-child family, still increasing by £2 steps for larger families —and the maximum payment by £1—that is, to £4 a week. The present Regulations increase the prescribed amounts by £2 for each family size. Thus the new prescribed amount for a one-child family will be £20 a week, for a 2-child family £22, and so on. This is achieved by Regulation 2. Regulation 3 increases the maximum weekly payment to £5. Regu- lation 4 revokes the 1971 Computation Regulations with effect from April 4 1972, which is the date on which the new regulations will take effect if they are approved by Parliament.

Since F.I.S. is half the difference between the gross family income and the appropriate prescribed amount, the effect of the Regulations will be to increase F.I.S. entitlement by £l a week for all families entitled to F.I.S. when the regulations take effect; and to bring into entitlement a number of other families who are at present excluded because their incomes are over the existing limits, or who will be excluded when their current awards expire. My Lords, I beg to move.

Moved, That the Draft Family Income Supplements (Computation) Regulations 1972, laid before the House on January 18 last, be approved.—(Lord Aberdare.)

7.35 p.m.

LORD WADE

My Lords, I have a few observations to make before these Regulations are approved. As the noble Lord, Lord Aberdare, has pointed out, the Regulations authorise increases in family income supplements. In so far as these help families on very low incomes, one cannot do other than welcome them. But the very fact that these Regulations are before the House is a recognition of the existence of a large number of families with very low incomes for whom we must express our concern. Moreover, the increases are some acknowledgement of the fall in money values. In considering the operation of this scheme there are just four short questions which I should like to put to the noble Lord, Lord Aberdare, and of which I have given him notice.

The first is this. Are the Government satisfied with the take-up? According to my own calculations there is only about a 50 per cent. take-up; that is to say, 50 per cent. of the total who might be entitled under these provisions are taking advantage of the scheme. Such a situation is not entirely satisfactory. Secondly, I wonder whether the noble Lord would agree that there are many anomalies. For example, it has been pointed out that where there has been a wage increase introduced by the employer to cover an increase in superannuation contributions by the employees, this may have the effect of reducing, and possibly eliminating altogether, the benefit of the family income supplement. It is felt that this is, to say the least, unfortunate. Thirdly, as the noble Lord is aware, there has been a good deal of discussion about the possible disincentive effect of F.I.S., but I should like to know what progress has been made by Her Majesty's Government in the attempt to overcome any disincentive effect.

The fourth question is this. Are the Government satisfied that those in need are not put off by the additional form-filling which this involves? I say "additional form-filling" because the families who come into this category are often under some other form of means test, and every means test involves some kind of filling up of forms. I have the claim form here. I would not suggest that this is the most complicated of forms; I have seen many worse. But for the kind of families who have to cope with this problem I think that any form-filling is difficult. I am not at all sure whether the majority would know exactly what "gross earnings" are. For example, where some of the payment by the employer is in kind, where it includes rent and fuel, is that taken into account in working out gross income? I should have thought there might well be some confusion in filling up these forms. Alternatively, it may be that some families are put off altogether by the fact that they have to fill up a form, and the increase in benefit will not overcome that because it is a problem which is part and parcel of the whole means-testing system.

I would conclude with this general observation. I do not really think that F.I.S. gets to the root of the problem. I think that if I were introducing this increase I should have to acknowledge that it is only a temporary expedient. I cannot to-night suggest alternatives. I should like to see a statutory minimum-earnings rule. As to our general policy of social security benefits, I believe that our aim should be not to extend means-testing but to find ways of avoiding it. There are a number of proposals, that we could put forward—as negative income tax, for example—though again we cannot discuss them to-night. But surely so long as there are these families on low incomes the aim should be to alleviate the hardship arising from low incomes and at the same time avoid, so far as possible, the embarrassment of means testing. The Government may say that it will take time. If so, I think the right attitude is to regard this as a temporary expedient. The impression I have from statements of the Government is that this is to be regarded as a permanent feature of our social legislation, and it is with that that I cannot agree. However, with those reservations, I believe, these Regulations should be approved.

LORD ABERDARE

My Lords, I am very grateful for the way this increase in family income supplement is received by noble Lords sitting on the Labour Benches. I take their silence to mean general approval. I am sorry that the noble Lord, Lord Wade, is so gloomy about it all and I think he is quite wrongly gloomy. I think this scheme has made a very good start. I should like just to comment quickly on some of the things he said. He was talking about means testing. He thought that I might say that to get over means testing to some other system would take time. I think it would also take money, and the thing to get over is that the means testing system spends the limited amount of money in those areas where it is most needed. He said that it is a permanent part of our social system, but this is not necessarily so. We have always said all along that it is one of the ways in which we can start helping people who need this sort of help. It is not necessarily a permanent part of our social security system.

I should like to say a few words on the four points that the noble Lord raised. First of all, the take-up. There are 68,000 people at present enjoying the Family Incomes Supplement and a further 25,000 who are benefiting from Supplementary Benefit, because this affects the wage-stop provision. So these are quite a number of families, involving something over a quarter of a million children who are receiving help. Most of the help, something over three-quarters of the awards, are to those who are receiving £2 to £4 of Family Income Supplement, and these are the people who need it most. The cost is actually running at £6 million at the moment. Therefore, £6 million is going into the hands of families affecting over 250,000 children, which is surely some help.

Secondly, the noble Lord asked me about wage increases. If somebody gets a wage increase they may well go out of the range of entitlement, but on the other hand this regulation that we are passing this evening will help in this respect because it changes the qualifying figure. So far as the disincentive effect is concerned, yes, of course, all these benefits involve a certain amount of disincentive effect, but the fact that this scheme works on a 50 per cent. award between the prescribed figure and the gross wage does mean that the disincentive effect is only 50 per cent. That was why this figure was put into the scheme.

So far as the forms are concerned, I can only think that we are all becoming extremely expert in filling up forms, because in fact there has been very little difficulty about it. The forms have been satisfactorily completed in most cases. Some of them have had to go back for further information, but the number of home visits, which is the last resort when trying to sort out the claim, have been less than 1 per cent. of the total claims. One must not forget—and it is an important part of the Scheme —that once a claim is awarded it gives a passport to other benefits: to free prescription charges, free welfare milk and foods, and free school meals, so that one form covers a number of other benefits. I hope, therefore, that I have convinced the noble Lord, Lord Wade, that this is not quite such a bad Scheme as he painted it.

LORD DELACOURT-SMITH

My Lords, before the noble Lord sits down, may I ask this question? He may have mentioned it, but I do not think he dealt with the point raised by the noble Lord, Lord Wade, about the anomaly which can arise when there is an increase in pay to cover an increased superannuation contribution.

LORD ABERDARE

My Lords. I think I did deal with that. I said that when there was an increase in pay, for whatever reason, it might well take somebody out of the prescribed level. All I can say about it is that the Scheme, by raising the prescribed level by £2, helps to keep more people in. I am afraid that where there is a rise in gross wages, that naturally affects the entitlement.

LORD DELACOURT-SMITH

My Lords, would the noble Lord not take note of the point that what is significant in such a case (I think this was the noble Lord's point) is that although there is an increase in gross pay, that increase is immediately absorbed by this additional superannuation contribution. Therefore, the net pay, leaving superannuation aside, is unchanged. I think that was the anomaly the noble Lord had in mind.

LORD WADE

Yes, my Lords, that is the point.

LORD ABERDARE

My Lords, I think I had got the point. The answer is that I will certainly look into it. It is a new point to me, but, so far as I know, the answer is that this is intended to be a simple scheme; the level is set at a certain point, and if a man goes beyond the point then he loses entitlement, although of course he gets the entitlement for six months.

On Question, Motion agreed to.