HL Deb 22 March 1977 vol 381 cc393-407

3.15 p.m.

Report received.

Lord WELLS-PESTELL moved Amendment No. 1: After Clause 1, insert the following new clause:

Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations

. The power to amend regulations made before the passing of this Act under section 13(4) of the principal Act (crediting of contributions for the purpose of enabling contribution conditions to be satisfied) may be so exercised as to restrict the circumstances in which and the purposes for which a person is entitled to credits in respect of weeks before the coming into force of the amending regulations; but not so as to affect any benefit for a period before the coming into force of the amending regulations if it was claimed before 18th March 1977.

The noble Lord said: My Lords, I beg to move the Amendment standing in my name introducing the new Clause 1A and will, if I may, deal also with Amendments Nos. 3, 4, and 5 which are also down in my name, to Clauses 23 and 24. I must preface my introduction of these Amendments, however, with an apology to your Lordships that we should be amending the Bill still further at this late stage in its proceedings. I assure your Lordships that we would not take up the time of the House unless it was absolutely necessary.

These Amendments arise from a problem in connection with our legislation which we simply must put right. Their purpose is to avoid the unintended effect of a complex of changes to the National Insurance Scheme made since 1975, which would have enabled people to acquire contributory benefit rights although they have not paid contributions or received contributory benefit for many years. The new clause will extend the existing power to make regulations, and it will enable regulations to be made restricting the use of existing credits in establishing future benefit rights. I hope that your Lordships will regard it as helpful if I give some background to this matter. I may say that the problem is a highly complex one—as regrettably some of our social security legislation undoubtedly is; and I made this point yesterday, your Lordships will recall, when introducing the new regulations relating to family income supplement.

Perhaps your Lordships will not expect me to venture too far into its intricacies. The problem concerns entitlement to contributory benefits where this is based on credited contributions, and not on contributions actually paid. As your Lordships will know, under the Social Security Act 1975 there are provisions enabling people not in work because of sickness or unemployment to be credited with contributions so as to maintain their contribution record for entitlement to contributory benefits. This was, I understand, seen at the time as a continuation, in slightly relaxed form, of similar provisions under the scheme which existed before 1975, and as part of the general easements for contributions under the new scheme. It has, however, become apparent that the effect of these provisions, together with that of other new or changing provisions—notably the new noncontributory incapacity benefits, and the arrangements for phasing out the married woman's contribution option—produce a quite unlooked-for, and until quite recently unnoticed, consequence. As a result, it would have been possible for large numbers of people to qualify through credits for contributory benefits though they have been for a long period removed from the employment field and also from contributory benefit entitlement, have therefore not paid contributions for many years and, generally, could have had no expectation whatever of contributory benefit. In brief, if a person had at some time, however remote that time, paid some contributions, incapacity or unemployment years later could lead to credits and thence to contributory benefit.

As your Lordships will appreciate, it is hardly consistent with the principles of a contributory scheme to provide benefits where there is only a very tenuous connection with contributions. Furthermore, there are expenditure implications which, while it is not possible at this stage to estimate precisely what they might be, could be in the order of something like £100 million per year. This is an amount which, I suggest, is totally inconsistent with the Government's stance on public expenditure and, indeed, incompatible with proper husbandry of our resources.

In order to prevent this wholly unintended effect of our legislation—which, as I have said, arises from the combined effect of a number of developments in the social security field—we are proposing to make regulations to place some appropriate limitation on the circumstances in which credits given under the new contribution scheme can count for benefit entitlement. The details of the regulations, as to the circumstances and the benefits involved, have still to be settled. They will, however, aim to achieve a restriction consonant with our original intentions and with the contributory nature of the scheme, and, incidentally, rather closer to the pre-1975 arrangements.

The new clause itself is necessary to enable regulations to be made restricting future benefit rights where these depend on credits given between 1975 and a current date. The extension of existing powers is needed if we are to avoid letting in a large number of unwanted claims from this coming May, when the post-1975 rules come fully into effect. But, as the clause itself makes clear, we shall not be seeking to touch benefit claimed before the 18th March for any period before the regulations bite. That sets the outer limit of the new provisions. Within that outer limit, we in fact have it in mind to be rather more generous, both to avoid anything that looks like retrospection and to match so far as possible the pre-1975 arrangements. For example, credits given while in receipt of contributory benefit will not be affected.

The two other Amendments follow on from the introduction of the new clause. The Amendment to Clause 23 provides that the regulations we shall be making under our extended powers need not be referred beforehand to the National Insurance Advisory Committee. The Amendments to Clause 24 enable us to make use of two previous Amendments immediately the Bill receives Royal Assent. As noble Lords will appreciate, we wish to bring the limitations to which I have referred into operation as soon as we can. We shall therefore be making the regulations as soon as we can after Royal Assent, and, in the normal way, these will be laid before Parliament after they have been made. I hope your Lordships will feel that I have said enough on this matter, and I therefore beg to move.


My Lords, the noble Lord has dealt very largely with people who were credited with contributions though they were unemployed or sick. I wonder whether he could say a word about the people who are presumably credited with contributions because they earn too little to be subject to National Insurance. Could he say what is their position? Their case has been changed recently. I think that as from 5th April they will be allowed to earn £15 a week without contributing anything. Are they credited in any way so that in due course they can get their various benefits and/or pension?


My Lords, my understanding of the situation is that those who are earning too little to pay National Insurance contributions in the ordinary way are in fact covered but, as I understand it, they will not be given any credits now. So I think the answer to the noble Lord is that there are no credits for anybody who is earning less than the £15 a week. It is now £13 but, as the noble Lord points out, it will be going up to £15 in April.

Baroness YOUNG

My Lords, I think we are all grateful to the noble Lord, Lord Wells-Pestell, for his explanation of these Amendments. He has my sympathy. I think he has been put into a very difficult position over these Amendments, coming, as they do, at a very late stage of this Bill. As they apply to the 1975 Act, they have obviously been put down to meet, as he has indicated, what has proved to be a loophole in the law. From this side of the House we shall not oppose any of these linked Amendments, because we appreciate the reason for them; namely, the need to save public expenditure and, indeed, to fulfil my understanding of what Parliament intended in the case of the 1975 Act, which it now appears was not correctly drafted.

I am bound to say that I think that this is an example of over-legislation, and one is bound to ask what would have happened had this Bill not been going through the House at this time. I suppose it would have meant that the Government would have had to bring forward amending legislation. I am also bound to say that I think it very unfortunate that what could prove to be a major loophole has been allowed to escape attention for such a long time.

Perhaps I could now question the Amendments themselves. The noble Lord spoke, I think, to Amendments Nos. 1, 3, 4 and 5 at the same time. His Amendment No. 3 is in fact slightly different from the Amendment which was tabled with the first list at the weekend. He may find that there is a perfectly reasonable explanation of this, but I would not want us to leave the Report stage and still find that we had not got the matter completely in order. On my reading of it, Amendment No. 4 is also slightly different, again, from the one tabled before the weekend. The earlier Amendments are, of course, unnumbered, so it is a little difficult to tell. There are explanations in italics, of course; but in the case of Amendment No. 4 the original one said, "insert (1A)". I hope that the explanation is in fact a suitable substitute for the new clause. It no doubt means precisely the same thing, but I think the House should know, for our sake as well as for the sake of the noble Lord, that we are not going through all this and will then have to face further Amendments on Third Reading tomorrow.

Baroness SEEAR

My Lords, could I ask the noble Lord one question? I am afraid I must have misunderstood him. He said that people below £15 a week, as the figure will be, are covered. In what sense are they covered?


My Lords, I think that I ought to have added something more after that. I was aware of this when I saw the look on the face of the noble Baroness as I sat down. They are covered only in respect of supplementary benefits. They would be entitled to this. They are not covered so far as contributory benefits are concerned. One has to bear in mind that in the ordinary way, as I understand the situation, it would be young people who might be earning less than £13 or £15 a week. They eventually come into the category of contributors.


My Lords, I think the noble Lord is mistaken. A considerable number of these people will be elderly ladies who work part-time.


My Lords, if that is so, then it may well be that they have a substantial contributory record behind them, so that if and when they are sick they would be entitled to benefits. What I am concerned about is people who normally work for only a short period earning now less than £13 a week, or in April less than £15 a week. If they have no contributory entitlement, then they are covered in the sense that they can apply for supplementary benefit in order to live. But when people advance in years and have a shorter period of work, they often have behind them a substantial contribution record which brings them into contributory benefits as and when they require them. The noble Baroness, Lady Young, is right. The answer to what she has said is, Yes. It is merely a tidying-up by the draftsman and there is no change in substance whatsoever.


My Lords, this Amendment raises the question of the desirability of the contribution system as the principal determining factor for entitlement. If your Lordships will consider for a minute the position of invalidity pensioners, the point I am making will be appreciated. The invalidity pension on a non-contributory basis was introduced because it was felt that there were people who, because of their disability, had not been able to build up a contribution record at all. But if you look at the figures you find that the contributory invalidity pensioner gets £15.30p a week, and the non-contributory invalidity pensioner £9.20 a week. One is bound to ask whether that difference is fair.

It is not as if the £15.30p level was excessive. We know that many people on that level are obliged to resort to supplementary benefit in addition. So there is a case for saying that all who fall into a particular category shall receive the same basic benefit as of right. It would of course be the aim of a comprehensive tax credit system to bring that about. So long as there is a distinction between Contributory and non-contributory benefits, there will be pressure to maintain the differential. Clearly, so long as the distinction remains, it will be illogical to allow non-contributory benefits to entitle the recipient to secure contribution credits. Although we have these reservations, we nevertheless will not oppose the Amendment.


My Lords, in preparing the regulations, will the noble Lord bear in mind the considerations which my noble friend Lord Hawke has mentioned? Some people—be they men or women—look after disabled people who may live until they are in their 'eighties. A person looking after such an invalid may have spent his or her entire life doing this without payment. I suggest that, in the changes which are taking place here, there is room to provide for these people in some way or another. I have a good deal of sympathy with what the noble Lord, Lord Banks, said in this regard.

There ought to be some means for exempting from paying the contributions people who have no income or a very small income, while at the same time treating them as having contributed in some way. The saving to the State, among other things, is considerable by having invalids looked after by relatives rather than putting them into hospitals or homes. This is a consideration which ought to be taken into account in the changing character of the whole of our benefits system.


My Lords, I accept what noble Lords have said. If the noble Lord, Lord Banks, will not mind my saying so, it has been declared Liberal Party policy for a good many years, if I understand the situation, that there should not be this difference between contributory and non-contributory benefits. But the system being as it is, it would be a little unreasonable to expect people who had contributed over a period of years a considerable sum of money to secure certain National Insurance benefits, to receive precisely the same benefits as those who had not contributed, although possibly through no fault of their own.

This would be seen as involving a degree of unfairness, until people realise that one has a responsibility to do this in order to help those less fortunately placed. We are, I feel, not living at the moment in a society which would accept that. One also has to bear in mind that there are a wide range of allowances and benefits for people who, for various reasons, cannot receive the normal National Insurance benefits. I was thinking of the attendance allowance and the invalid care allowance. Of necessity, there has to be this difference between the amount one receives on a non- contributory basis and the amount one gets an a contributory basis, bearing in mind that if the non-contributory pension or benefit is not sufficient, then there are other ways—or at least one other way—of getting it made up, so that people get enough on which to live.


My Lords, could I put it in another way? I am wholly in favour of the contributory system. I think that it ought to be safeguarded. There are in certain circumstances occasions when a person could be treated as having made a notional contribution because of the saving he—or more often she—is making to the State in other ways. There are considerable savings to the State from people looking after parents or relatives at home.


My Lords, this is so. Later we will deal with the question of the allowances to foster parents in the matter of handicapped children. Undoubtedly they are saving the State a considerable amount, because if the children became the responsibility of the local authority that would be an additional cost to the State. It is very difficult to introduce a scheme which would produce a great deal more complexity than the existing schemes are producing at the present moment. We need to have a deep and close look at the whole benefits system with which we are faced at present.

On Question, Amendment agreed to.

Clause 13 [Amendments of Supplementary Benefits Act 1976]:

3.40 p.m.

Baroness YOUNG moved Amendment No. 2:

Leave out Clause 13.

The noble Baroness said: My Lords, I put down this Amendment not because I have any intention of pressing it this afternoon, but because at an earlier stage we had a discussion on allowances for foster parents and the noble Lord, Lord WellsPestell, then said that the Government were prepared to accept the principle of the Amendment that we on this side had put down, but that they would implement it by regulation.

Following upon the Committee stage of the Bill, the noble Lord was kind enough to write me setting out the circumstances of how this would apply. It seemed to me that it would be valuable to have this on the record, as the question of paying attendance allowances to foster parents who foster severely handicapped children is a matter of considerable concern to a number of organisations as well as to individuals. I therefore thought it would be helpful to quote part of the letter and to ask the noble Lord one more question arising from that quotation. The letter reads: The Government accept the case for making the change which your Amendment was designed to secure and we have sufficient powers under the law as it stands to make the regulations necessary to achieve the result which you wish to be brought about. We will make these regulations which will be subject to the Negative Resolution procedure at an early opportunity at a cost at current rates of attendance allowance of the order of some £200,000 a year and benefiting, we estimate, something like 300 children. It goes on: We shall make these regulations at an early opportunity after the Royal Assent and we hope to have them in operation by the date you had put in your Amendment.


My Lords, will the noble Baroness allow me to intervene? It is probably I who am at fault; but I am rather under the impression that the noble Baroness is speaking to Amendment No. 6 and not Amendment No. 2. Am I right?

Baroness YOUNG

No, my Lords. I am sorry if I have caused confusion about this; but I wished to raise the point about my Amendment on foster children and it is difficult to know where to bring it in. I have done so at what seemed to me an appropriate moment in the course of the Bill. I want to say something about the regulations on another Amendment which we shall come to later.

The question which I shall ask the noble Lord is straightforward and, as we are grateful for the Government's agreeing to implement this suggestion, the last thing I wish to do is to put any difficulties in his way or in the way of the Government. Naturally enough, those who might expect to receive the attendance allowance are anxious to know when this would come about. I understand that the Bill is to have a Third Reading in this House tomorrow, will be considered in another place on, I think, Thursday, and will receive the Royal Assent on April 1st. If this timetable is correct, the regulations would be laid immediately afterwards. What I should be grateful for is an assurance that they would come into effect by the Summer Recess. The other regulations concerning students will, I understand, come into effect immediately on the Royal Assent. If the noble Lord could tell me when these regulations could come into effect that would be helpful.

I am grateful for the assurance given in the letter and it is merely to make this absolutely clear to a number of interested organisations that I have put down this Amendment. As the noble Lord will be aware, we could not on Report discuss this matter unless I had put down an Amendment on which we could have some debate. If the noble Lord could let me have this information I should be grateful.


My Lords, let me admit at the beginning that I am not in any real difficulty except that, on reading it, I had understood the noble Baroness's Amendment No. 6 to deal with the attendance allowances for foster children. It does not much matter, but this is how I understood it. However, I can deal with it now. The regulations with regard to students we intend to bring in immediately after the Royal Assent, and the other regulations, which will deal with attendance allowances for foster children, as soon as possible. I should like to repeat what I said earlier, that the Government accept the case for paying attendance allowance to foster parents, and we have sufficient powers under the law to make the regulations necessary to achieve this result and to bring about what the noble Baroness wishes. I can assure the House that our intention is to make these regulations as soon as possible and that the regulations will be subject to the Negative Resolution procedure. At the current rates of attendance allowance, which are £12.20 per week at the higher rate and £8.15 at the lower rate, the cost will be about £200,000 a year. We estimate that the allowance will become payable for about 300 children. We aim to make the regulations in time to begin payment by September 1st at the latest.

The noble Baroness may know that to some extent we, in this House, have been anticipated by three Questions which were put down yesterday in another place, two of them by a Member of the Conservative Party and one by a Member of the Labour Party. Both are members of the disabled group on this very matter, for which I think the noble Baroness ought to take much of the credit. Perhaps it would be of interest to your Lordships if I read part of the reply given by my honourable friend the Minister for the Disabled. He said: This is a matter in which the honourable Gentleman and my honourable friend with their colleagues in the All-Party Disablement Group have taken a sustained interest. They will he glad to learn that the regulations for extending the allowance to qualified foster children will be laid shortly. While at this stage I cannot give the precise date from which payment will be made, it will not be later than 1st September, 1977". [Official Report (Commons W.A.); 21/3/77, col. 409]. I had hoped that I could have said this in this House. We have been anticipated; but a good deal of the credit should not be taken from the noble Baroness in this matter.

Baroness YOUNG

My Lords, I am grateful to the noble Lord for his answer and for the help and courtesy he has shown throughout this matter. The important matter which arises from all this concerns the number of foster parents and children who will benefit. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 23 [Supplemental]:

Lord WELLS-PESTELL moved Amendment No. 3:

Page 23, line 21, at end insert ("or that they contain provisions made by virtue of section (Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations) of this Act.").

The noble Lord said: My Lords, I spoke to this Amendment when dealing with the first Amendment. I beg to move.

On Question, Amendment agreed to.

Clause 24 [Citation, commencement and extent]:

Lord WELLS-PESTELL moved Amendment No. 4:

Page 23, line 38, after ("1(5)") insert ("Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations)").

The noble Lord said: My Lords, I spoke to Amendment No. 4 when dealing with Amendment No. 1. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 5:

Page 23, line 39, leave out ("and 17") and insert ("17 and 23(1) to (5)").

The noble Lord said: My Lords. I have already spoken to this Amendment. I beg to move.

On Question, Amendment agreed to.

3.50 p.m.

Baroness YOUNG moved Amendment No. 6: Leave out Clause 24.

The noble Baroness said: My Lords, again, the intention of this Amendment is to get on the record a part of the letter that the noble Lord, Lord Wells-Pestell, was kind enough to write me following our proceedings at Committee stage. We had a considerable discussion about whether or not the regulations, particularly those governing students, should be by Affirmative or Negative Resolution. We on this side were very anxious that these regulations should be by Affirmative Resolution as the effect of them was to put back the position of students to what it had been in 1966.

The noble Lord indicated in his reply that because of the timing of this it was necessary to use the Negative Resolution procedure since it was the intention of the Government that the provisions should come into effect immediately following Royal Assent. The reasoning for that is understandable because, of course, the Easter vacation is now upon us, and were the regulations not to be enforced it would be possible, following the court case, to claim supplementary benefit in the Easter vacation. Therefore it is necessary that the regulations should come into force if Government policy, as we have always understood it, was to be kept.

Two points concern me. We also had a debate about disabled students, and it would be very helpful if the noble Lord could confirm that disabled students will still be able to apply for supplementary benefit. The important point is that they should have the £4 per week disregard and it is a matter about which the disabled feel very strongly. If we could, once again, have that on the Record it would be very helpful indeed. The position of disabled students is clearly quite different from that of other students and it is a matter of concern to a great many people. Therefore, it will be very helpful to have the information before us.

The other point is purely technical. I am grateful to the noble Lord for having sent me a copy of the proposed regulations. If, as I understand it, they are to come into effect immediately on Royal Assent, does it mean that even under the Negative Resolution procedure they will not be scrutinised by the Committee which looks at subordinate legislation? If so, is that not a rather unusual step to take? I can quite understand the difficulty as regards the timetable, but my understanding is that regulations, even under the Negative Resolution procedure, are normally looked at by the Joint Committee on Statutory Instruments. Perhaps in the present circumstances there is not time for that to be done. I beg to move.


My Lords, I appreciate the point raised by the noble Baroness. It is desirable that we should have this in Hansard, and I think the best thing I can do at this stage—I hope the noble Baroness will agree—is to read part of my letter to her, dated 16th March. I was referring to Amendment No. 12, put down by the noble Baroness at Committee Stage, and I said this: …I am afraid that there could be no question of our accepting your Amendment No. 12 if you were to put it down again for the Report stage. What this Amendment would do would be to delay the implementation of the regulations which we are going to make under Clause 12(1) of the Bill, effectively until certainly the end of April, since there could be no question of the necessary Affirmative Resolutions going through both Houses until Parliament reassembled after the Easter Recess. The result would be that, instead of our being able to reapply the longstanding provisions relating to parental contributions and to no disregard of a student's grant from very shortly after the Bill receives Royal Assent—our intention is in fact to bring the regulations into effect on the day after Royal Assent, that is to say from 1st April—we would have to continue the procedures which we are having to apply as a result of the Court of Appeal judgment throughout the Easter vacation. As I made clear on Monday, there is no question of our not applying the law as the Court of Appeal has stated it to be for the moment; but equally we do not want to continue to do so for one unnecessary day after we have the legal powers required to enable us to revert—because the additional public expenditure incurred if the Court of Appeal judgment had effect throughout the whole of the Easter vacation would be of the order of £2 million. Almost all of this would arise in relation to the £4 disregard of student grants which we would have to allow. I went on to say that, under a Bill, the prime purpose of which is a saving of public expenditure, this particular additional expenditure, for this particular purpose of all purposes, could in no conceivable circumstances be justified…". I pointed out that disabled students would continue to get a disregard but that it would be only £2, as it is at present, and also that there would be a disregard of any special allowances paid by the local educational authority.

The Joint Committee will scrutinise the regulations, but that will be after they have come into operation and not before. In point of fact, they will scrutinise them and I should imagine that if there were any really serious defects they must of necessity call the Government's attention to them. I hope I have covered all that the noble Baroness asked me to deal with.


My Lords, I think we are in some difficulty here. Not only are we now on Report, but my noble friend and I are privy to a letter which the noble Lord, Lord Wells-Pestell, was kind enough to send, and he has quoted to us that section of the letter which deals with the Court of Appeal case. As we understand it, as a result of that case the disregard was increased from £2 to £4. If I am wrong, I hope the noble Lord will interrupt me at this stage. Then may we take it that the Court of Appeal did so declare and therefore we must be concerned with the Court's judgment in regard to the drafting of regulations? The noble Lord was kind enough to send us both copies of the proposed draft regulations under Clause 13(1) to 13(3) and Clause 14 of the Social Security (Miscellaneous Provisions) Bill. A particular point is made that the disregard is to be only a factor of £2. There appears to be some inconsistency here, because the Court has made a ruling but the Government do not appear to be taking that into account in drafting their regulations.

Further, I should like to draw the attention of the noble Lord to another matter; that is, the position of single-parent families and the fact that they are subject at the moment to a £6 disregard. In the case of a disabled student there is perhaps a case for increasing the £4 disregard to £6. However, I will leave that point with the noble Lord.


My Lords, in the letter to which the noble Lord has referred I pointed out that the Court of Appeal did not increase the disregard. That is normally £4, but not for students, who will again get no disregard unless disabled or single parents, and such students will get the £2 disregard. I do not think I can add anything more.

Baroness YOUNG

My Lords, I thank the noble Lord for that explanation, and for the points he has made. I am bound to say that, as a procedure, it does not seem to me very satisfactory to make regulations and then to have them scrutinised after they have been made and have come into effect. But no doubt this is a matter which, at this stage of the procedures on this Bill, we can do very little about.

I am disappointed that the noble Lord does not feel that the Government can maintain the position on the £4 disregard of income, which followed the Court of Appeal judgment in the student case; and, in fact, in putting the situation back for all students, they are also putting it back for disabled students to what it was before the case. I have, of course, considered this matter and I did not feel (I have not tabled Amendments on it) that it would be appropriate at this stage to pursue it further. But I should like to leave the noble Lord with this thought about it. When money does allow, this is the kind of instance where a relatively small sum would make a great deal of difference to people who will frequently find themselves in a difficult position, as they are, of course, unable to work in the vacations and are therefore in an entirely different position from able-bodied students. My Lords, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.