SOCIAL SECURITY: OVERLAPPING BENEFITS

HL Deb 19 May 1978 vol 392 cc677-96

2.46 p.m.

Lord BANKS rose to ask Her Majesty's Government what plans they have to reform the rules relating to overlapping Social Security benefits. The noble Lord said: My Lords, I beg to ask the Question standing in my name on the Order Paper. The Question asks what plans the Government have to alter the rules affecting overlapping Social Security benefits. I look forward as always to hearing the reply of the noble Lord, Lord Wells-Pestell, and I am grateful to the noble Baroness, Lady Macleod, and to the noble Lord, Lord Lyell, for taking part in this short debate.

The basic rule relating to overlapping Social Security benefits is that only one payment can be made from public funds for the same purpose for the same period. The application of this rule gives rise to the greatest proportion of the letters on Social Security matters which I and my right honourable and honourable friends in another place received. It is not really understood and is the cause of a great deal of bitterness, which has arisen particularly acutely over the introduction of child benefit, where people who expected to benefit have found that in fact they do not.

May I just look briefly at the effect of this rule on supplementary benefit. Child benefit is merely deducted from supplementary benefit. One can see some logic in that. Supplementary benefit, after all, seeks to provide a minimum level of income maintenance, It is means-tested and all other sources of income must be taken into account. When the retirement pension is raised, supplementary benefit is raised at the same time. If that were not done, the argument could be urged that the poorest were gaining nothing at all. The difficulty about that arrangement is that it is very difficult indeed to take people off supplementary benefit. In fact, one does not do so, and the Government have devised the two-pension approach—the two-pronged approach of the 1975 Act with the basic pension and the earnings-related pension—to get round that point. The earnings-related pension will not be added to the supplementary benefit and will, in time, take people off supplementary benefit.

However, with child benefit, when rises occur, as in April of this year and April of next year, when supplementary benefit is not being received, the supplementary benefit recipients—the poorest—get no extra. As I said, there is logic in this, but it has this effect of the poorest receiving no help, which is not understood, and it causes anger and disillusionment. It would therefore be better to find a system which did not require the application of this particular logic.

The way to do this is to get away from means-tested benefits. This could be done by the introduction of a tax credit system. If the Government were to convert the personal allowances—the single person's allowance and the married couple's allowance—into positive tax credits or payments like child benefit, a major step in that direction would have been taken. Under a tax credit system, supplementary benefit would become a thing of the past, except for a very few who slip through the welfare net which the credit income tax system provides.

There is one anomaly with regard to child benefit and supplementary benefit which I referred to in our recent debate on the family and which I should like briefly to mention now. Next November the one-parent family will receive for the first child £3 child benefit, plus the special benefit of £2 which is reserved for the first child of any single-parent family. That is a total of £5. But the supplementary benefit level for a child under five is £4.40 and the extra 60p—and it will be £1.60 from next April—is deducted from the remaining supplementary benefit; and so the benefit of that 60p, or later on £1.60, is not received by the single-parent family. In my view that position should be rectified, and it could be done by increasing to £5 the supplementary benefit scale for a child under five.

Now I should like to look briefly at the effect of the rule and National Insurance benefits. I have said with regard to supplementary benefit that there is some logic in the arrangement, but that it is not understood and the sooner we change the system the better; but I am not convinced that there is always a logic where the rule about overlapping benefit is applied to National Insurance benefits. These benefits are paid as of right, in the main on the basis of a contribution record; they are not means-tested, and other income, however large, is not taken into account. Why then should one National Insurance benefit be set off against another? Remember that the rule is that only one payment can be made from public funds for the same purpose for the same period, and it all revolves around the interpretation which is placed on the phrase "same purpose". The Government tend to argue that National Insurance benefits are designed to provide income maintenance and, therefore, they are all, or almost all, for the same purpose. I can see that unemployment and sickness benefit have the same purpose and should be so treated, but I wonder whether this can really be said of unemployment benefit, invalid care allowance, widow's pension and invalidity pension.

May I give your Lordships very quickly four examples of overlapping National Insurance benefits. A non-contributory invalidity pension is now being paid to handicapped married women who are both unable to work and unable to carry out their normal household duties. At £10.50 per week this is equal to the addition for a wife paid with the retirement pension or invalidity pension. If in fact the husband of a woman receiving the non-contributory invalidity pension is himself receiving retirement pension or invalidity pension, then he will lose the whole of the wife's addition which goes with that pension. The argument is that the housewife's non-contributory invalidity pension and the husband's pension are both maintenance payments, but the able-bodied wife of a pensioner is able to earn £40 per week before the husband's pension is reduced and is able to maintain the household. The housewife's non-contributory invalidity pension is paid for a disability which does not apply to the able-bodied wife, and it is ridiculous that the National Insurance benefit should have to be the same for both courts.

Secondly, widows who wish to train to acquire new skills using the training opportunities scheme, known as TOPS, are also faced with the problem of overlapping benefits. A widow cannot get widow's benefit plus the normal weekly payments which are made to trainees. She has to choose whether to claim widow's benefit or widowed mother's allowance and receive a reduced training allowance, or whether to opt to receive training allowance only. A working widow receives benefits plus wages, but the trainee widow does not receive what really is the equivalent of wages, the training allowance in addition to her widow's benefits.

Thirdly, widows who are working full-time cannot claim unemployment benefit or sickness benefit on top of widow's benefit, even those who pay the full-rate National Insurance contributions. While they are working full-time, of course, they receive their widow's benefit, so they are receiving their widow's benefit and their salary or wages from their occupation. The widow's pension is not reduced when a widow is in employment; so why is unemployment benefit refused when she is unemployed but with a full contribution record?

Then, fourthly and finally, there is the case which I raised in this House last November. A married woman in employment can qualify for maternity grant and maternity allowance. She gets the maternity allowance on the basis of her own contributions. If she is widowed during pregnancy then she cannot draw the maternity allowance in addition to any widow's benefit to which she may be entitled. She can have the one or the other, but not both, although she can draw any earnings-related widow's benefit to which she is entitled. Therefore, a woman who has lost the support of her husband's earnings will receive less maternity benefit than a woman who continues to enjoy the benefit of her husband's earnings, yet the widow's benefits replace in part the husband's earnings and derive from his contributions while the maternity allowance replaces in part the wife's earnings and derives from her contributions. Surely, the one should not be offset against the other?

I have put forward four cases where it seems to me that the application of this rule produces a thoroughly illogical situation. To sum up what I have been saying, there appears to be a logic as far as supplementry benefit is concerned, but it is not generally understood and it is widely resented, so the sooner we move to another system—and I suggest a tax credit system—the better. With regard to National Insurance benefits, sometimes the application of the rule is logical but often it is totally illogical. Again, a tax credit system would solve the problem, but I have no doubt that the application of the rule to National Insurance benefits should be reviewed right away in the context of the present system. I hope that in answering this Question the noble Lord will indicate that the Government are aware both of the anomalies to which I have drawn attention and of the depth of feeling which surrounds these issues.

2.58 p.m.

Baroness MACLEOD of BORVE

My Lords, I am indebted to the noble Lord, Lord Banks, for drawing the Government's atttention once again to the problems of those who, having been widowed, are left alone to cope with their own finances, and who have problems with the overlapping benefits system. I will be brief because it is a Friday afternoon and also because the noble Lord, Lord Banks, has taken most of my points. I should like just to quote what the noble Lord, Lord Wells-Pestell, said on 17th April, in the debate on the problems of widows. It was this: The restriction on a widow receiving both her widow's pension and the full amount of the training allowances stems from a long-established overlapping benefits principle which goes right throughout our social security system ".—[Official Report, 17/4/78: col. 935.] Well, of course, it does. I know that, and I am well aware of it. But what I should like to say is that this principle is man-made and I do not believe that it is irrevocable or irreversible. I should like to say that it is high time that this Government, or any following Government, looked much longer and much harder at the problems that arise from the overlapping benefits system.

This week we have received in our office two letters from people who have been widowed recently and who have, before their widowhood, been granted invalidity pensions. One suffers from multiple sclerosis; in the other case the position is not so serious. The one suffering from multiple sclerosis received £28.50 a week. She was also helped by her husband who contributed to the family finances and no doubt kept her in food and lodging. He died, and directly he died she was obviously made a widow and was told by the Social Services Department that she would no longer get her invalidity pension of £28.50 but would at once be reduced to £17.50. I think the noble Lord will tell me that she gets immediate payments of, I believe, £24.50 for 26 weeks. All widows do that and all widows are grateful for that. However, it ceases after 26 weeks, and this particular woman will go hack from £28.50 to £17.50 on which, of course, she will have to pay tax.

The noble Lord, Lord Banks, mentioned the sickness and unemployment overlapping benefit. This seems to me particularly unfair. They are all unfair. I am only talking about women who, throughout their lives, have been working and have paid full contributions. I think this is the point. So many people seem to think that women going out to work, do not pay full contributions and more or less live off their husbands. That is not so. Those who perhaps know more about this than I do know that, having paid full contributions, it seems to be particularly unfair that quite suddenly they are not allowed to have a second amount of money from Government sources.

As regards the education grant, we have had eight cases in the office this week of people who have small children, and who want to take further education courses, have applied for a grant and are not allowed to have both a grant and a widow's pension. They still have to keep their children, but they are not allowed the grant. All eight of them have stopped the course because they cannot afford to do it.

I shall not prolong this debate, but I want to ask the Government three questions. One is whether in the future they will look to see if the overlapping benefits rule could be less inflexible. It seems that there is this particular rule by which everybody in all the offices in the country has to abide, and I think it is far too inflexible.

Will they also look into making special provision for widows and one-parent families with children of school age? Those people have great financial difficulties due to inflation and, where they cannot take an extra course because their widow's pension will be docked, it seems to he particularly hard.

Will they also treat all applications and cases individually and on their merits? This might mean a means test but I do not think that would be a bad thing. I do not think that any widow or one-parent family would resent this. There is nothing to be ashamed of. If it could be treated with more sympathy and understanding, I think that those people who are left alone to try to cope not only with earning their own living but also with keeping their children, and sometimes their brothers and sisters and perhaps aged parents as well, would have a better deal. We went over this very complicated subject when we were talking about widows and, as it is late in the afternoon, I shall not add any more.

3.4 p.m.

Lord LYELL

My Lords, I think that the House will be very grateful to the noble Lord, Lord Banks, for raising and for explaining these incredibly difficult regulations. In another place, I think on 10th May in a Statutory Instruments Committee, the Minister said that he believed he could understand these regulations. Yet he admitted that he had had to read his brief several times in order to grasp not merely the regulations but the issues raised by them. I think that is probably one example of how difficult these overlapping regulations tend to be.

For my part, I owe the House an apology in that I am not guilty of wanting to run away from this debate or from the complications raised by it; simply, the normally well-oiled machinery of the usual channels suffered a minor malfunction in one respect: my name did not appear on the list.

So far as the debate this afternoon is concerned, the basic position in these pension and social security matters is that no one can receive two benefits for the same purpose. It appears to be the case that a vast number of variations exist on this simple proposition. Clearly, some anomalies give rise to legitimate grievances, especially in the case of widows, as the noble Baroness, Lady Macleod, has ably pointed out.

The regulations become really intricate when we enter the field of the new benefits which have arisen to help the disabled. I believe it is the case that someone who is disabled could, and very often does, receive, first, a disability pension, secondly, a mobility allowance, and, thirdly, an attendance allowance. All these are paid without any problem of overlapping to the basic recipient of the pension on top of any one maintenance benefit such as an invalidity pension or the unemployability supplement. I wonder in passing, whether the noble Lord, Lord Wells-Pestell, whose help I gratefully acknowledge in unravelling some of the more distant problems of this legislation, may be able to confirm—probably at a later stage—that the attendance allowance that we are discussing now is indeed that one which is dependent on National Insurance contributions. I hope that I have that part of it right. If I have it wrong, perhaps he will let me know at a later stage what is the position.

The noble Lord, Lord Banks, does us a service in asking how and when we can begin to reform or even to consolidate this legislation—all the Acts, the Statutory Instruments, the Orders and Regulations which are so relevant and so necessary. The facilities available in this House are first class but I found that the updating of Statutory Instrument Number 554 of 1975, referred to in the Overlapping Benefits Regulations for today, 1978, as "the principal regulations", makes it incredibly complicated to follow the regulations of this year. Certainly I and, I believe, the House admire the staff of the Ministry who have to explain all these problems and individual cases to the public.

There are over 60 different types of benefit. Perhaps the noble Lord, Lord Wells-Pestell, may be able to tell us, as he probably has the information, how many permutations of these 60 individual benefits there are. I think the noble Lord has done some mathematics and will have some idea of the figure. My mathematics are not that hot, but I should certainly be pleased to hear from the noble Lord, as I understand there is a very large number of permutations.

Surely this number of permutations from the individual benefits is one outstanding reason for at least attempting to consolidate some of this legislation, as so much of it is not easily understood, even if it were easily obtained. I believe that much resentment is caused by not being able to ascertain the correct entitlement to one or more forms of benefit by members of the public.

There are so many forms of benefit, some of which are treated as overlapping and some are not. Some of these benefits are taxable and some are not. Some benefits are contributory and some are non-contributory. I think it is small wonder that various groups become upset and possibly disenchanted. Each case, whether individual or relating to a group, large or small, tends to be something of a one-off operation for the staff at the Ministry and naturally gaps and what I would call "lacunae" appear. Each of these raises a grievance which is remedied with commendable speed in some cases and with less speed in others. This means that the main Act has to be amended and the process of amendment may result in a fresh grievance which will be felt among those who have not gained from the particular amendment or change.

It is late in the afternoon and I should like to thank the noble Lord, Lord Banks, for raising this problem and for what I would call his courage and his skill in explaining the cases so clearly. I believe he was right to recommend the tax credits scheme. I do not say this merely as a Party point, but I hope it could be a major step to simplification of this jungle of legislation. I also believe he valuably highlighted another major source of grievance, which will be dear to the heart of the noble Baroness, Lady Macleod—that of widows, who do not receive what would be received by a married woman when both the married woman and the widow are taking a Training Opportunities Scheme course. This I believe to be a valid point.

It is sad that so much effort and thought in providing abuse-proof benefits going to those who should receive them, have resulted in these regulations and in Acts which are far beyond the ken of the public, in spite of the leaflets which one can find in post offices and Ministry offices all over the country. These regulations are indeed complicated, but I believe them to be necessary. Having said that, I should like to thank the noble Lord, Lord Banks, once again, and look forward to hearing what the noble Lord, Lord Wells-Pestell, has to say.

3.11 p.m.

Lord WELLS-PESTELL

My Lords, I sometimes think that we are over-ready to thank noble Lords for initiating debates or putting down Unstarred Questions. However, I do so today sincerely, because I believe that the noble Lord, Lord Banks, has rendered a service in bringing this subject forward, one, to invite the Government to express an opinion on this matter, and two, to draw noble Lords' attention to the situation. I am glad that he has raised this matter of overlapping benefits. The subject has latterly attracted some attention in various quarters, and is sometimes, I know, a subject unpopular in some quarters so far as the social security scheme is concerned. If noble Lords will bear with me, I will try to explain these provisions, why they are necessary, and their purpose in the scheme.

I do not think that anybody in your Lordships' House would run away from acknowledging that in we this country have a right to be proud of our social protection schemes. While individual rates of benefit may not always be as high as those in other countries—where they are matched, if I may say so, by a correspondingly heavier contribution burden—everyone in employment in this country is covered by a contributory scheme, and there is a safety net in the form of supplementary benefit for those who did not achieve membership of the National Insurance scheme. The social security scheme is supplemented by a wide range of measures that help the poorest earners, by the child benefit system, applicable to all, by other schemes such as war pensions, which provide benefits for special groups of people, and others.

The contributory National Insurance scheme provides benefits on a massive scale. I am trusting to memory, but I believe there are something like 11 million people in this country receiving benefits from this field. Obviously some will, in a sense, not be treated as well as they think they ought to be treated. We must keep in the forefront of our minds that the expenditure from the National Insurance Fund will reach something like £11,000 million this year, and the expenditure will be financed by employers to the tune of £5.2 billion, by the tax-payer via the Exchequer to the extent of £1.9 billion plus £400 million interest on the National Insurance Fund. The balance, which is slightly less than one-third of the total outgoings, namely £3.5 billion, will be paid in contributions by insured persons.

I want to reply to the noble Baroness, Lady Macleod. I am not getting at her—I think she will know this by now—but when we talk about the fact that people have paid for this we might remember that the contributions from the contributors are less than one-third of what we pay out. The noble Lord, Lord Banks, may well say that we have to take the employers' contribution into account. I do not deny that, but if we are talking about what people have paid for, they have paid less than one-third of the total amount that we paid out. The noble Lord, Lord Banks, knows better than most of us that the scheme is financed on this pay-as-you-go basis and I should have thought that, looking at what has been paid in and what is paid out, it is fairly advantageous.

I have never gone into this but I ask myself the question: What benefits would I have received if I had asked an insurance company to provide me with benefits for the amount of money that I have paid into National Health Insurance? I think that it would be a pretty poor benefit all round. I do not think that for the amount I have paid each week for a good many years, any insurance company would have given me the cover that I can get if the occasion arises.

I think that married women do particularly well under the National Insurance scheme. Not only do their pensions start five years earlier, but if they have not contributed they still get a dependant's retirement pension on the husband's insurance and a range of widow's benefits. In 1976, which is the last yar for which we have figures, 65 per cent. of our 8.3 million retirement pensioners were women. Of these, about one-third had pensions on their own insurance; the other two-thirds in about equal proportions were drawing either a dependant's retirement pension or a full rate retirement pension by virtue of their deceased husband's contributions.

I think this is a very important point. One of the things which is so often said by persons who dislike overlapping benefit rules is that their benefits have been paid for by themselves or by their husbands, and that we are cheating them out of what is rightfully theirs. I do not want to go back over how much has been paid in, but it is a criticism which is often made without any justification. Not only do the potential beneficiaries contribute less than one-third of the money spent on benefits, but contributions are levied at the same rate whether or not someone has dependants. There are a good many people in the scheme who are paying precisely the same rate who have no dependants and never will have. They may well say that they are being unjustly treated.

My Lords, you may ask what is then the contributory basis of National Insurance or, to put it another way, what is the philosophy behind it? I think it is this: the payment of contributions secures membership of a National Insurance scheme and full membership entitles the contributor and his dependants to benefit as of right according to the rules of the scheme. That is pretty well the philosophy behind any scheme of this kind. Overlapping benefits are part of those rules. They ensure a degree of equity between beneficiaries in different circumstances, and between those who contribute and those who receive benefits. My short answer to the noble Lord, Lord Banks, is that it would not be equitable if one permitted overlapping benefits. It may well be that the system is inadequate but I think that the system that we are working on at the moment does give equity.

When one discusses overlapping benefits one usually has in mind some particular case, for example, a widow pensioner who normally works and cannot be paid sickness benefit on top of her widow's benefit when she falls sick. But it is not difficult to think of a case where someone might be entitled to several benefits at the same time. We know that if we got rid of the overlapping benefits rule it would be possible for some people to receive eight to 10 different kinds of benefits. There are 43 different benefits provided by the Social Security and Social Security Pensions Acts alone. Then there are the various benefits under the Child Benefit Act, War Pensions Instruments, the Pneumoconiosis and Byssinosis Benefit Scheme, the old cases act, supplementary benefit, Family Income Supplement and a range of benefits paid by the Manpower Services Commission for such things as training, rehabilitation, youth training, premature retirement and so on, and all these benefits are either comparable to, or in some way complement, benefits under the insurance scheme.

The more mathematically minded of your Lordships—and let me say, quite frankly, it does not include me, and I do not think it includes the noble Lord, Lord Lyell—may wish to attempt a count of the possible combinations and permutations of these 60-odd benefits. I am told that there may be more than 4,000 permutations. In this situation, but for overlapping benefits rules, it could become something of a lottery and weekly benefits of, in some cases, over £100 a week could be paid to some individuals who were lucky enough—or perhaps I ought to say unlucky enough—to satisfy the conditions for several personal benefits at the same time. All this at a time when the basic rate of a retired person's pension is £17.50 a week.

This state of affairs is not difficult to explain. What has happened is that every contingency, such as sickness, unemployment, retirement, widowhood and so on, is recognised in social security law by specific provisions which give the claimant a complete benefit, consisting of personal pension or allowance, increases for dependants, sometimes an earnings-related addition or graduated benefit, special additions to benefit such as invalidity allowance related to age of onset, benefits designed to meet extra expenses connected with some aspect of disablement, such as attendance allowance or mobility allowance and so on.

As I have said, it is perfectly possible for someone to satisfy the conditions for two or more sets of benefits. For example, everyone entitled to industrial injury benefit will also satisfy the incapacity test for sickness benefit. It is important to bear in mind that the contingency for which both sickness and injury benefit are provided is the need for a maintenance benefit because of the interruption of earnings due to incapacity for work. If this is due to an industrial cause, benefit is payable at a preferential rate and leads into disablement benefit, which is compensation for the lasting effects of an injury, even if capacity for work is not affected. But it is well understood—at least I hope that I can say that is is well understood—that the injury benefit is a replacement for sickness benefit, and no one would expect us, when someone qualifies for injury benefit, to pay sickness benefit in addition.

I said a moment ago that it could be quite frightening if we did not have this overlapping benefits rule. I do not want to spend a long time on it, but would this be really logical? It would be perfectly possible for some person to satisfy the qualifying conditions for a whole range of benefits. A widow could qualify for a widow's pension obviously, for sickness benefit, for injury benefit in respect of a recent accident. If she was pregnant when her husband died, she could qualify for maternity benefit. She might be able to qualify for an earnings-related supplement to sickness benefit and an earnings-related supplement to maternity allowance, bringing her in a weekly income of £95 a week.

Lord BANKS

My Lords, I am grateful to the noble Lord for allowing me to intervene, but he seems to be working on the assumption that what I was arguing was that the rule should be abolished completely. That really was not part of my argument. I drew attention to four specific examples where it seemed to me that the rule was illogical. It would appear that it is up to the noble Lord either to say that it is not illogical and why, or else to say: "It is illogical, but for various reasons, such as administrative convenience or expense, we cannot do anything about it". I am not arguing that we should abolish the whole of the rule as it stands at the present time. I am asking the noble Lord to think that it may be wise to review the present working because of the number of anomalies which have been revealed.

Lord WELLS-PESTELL

My Lords, I am most grateful to the noble Lord. I will not carry on with this. I thought I had something which was pretty good, but I will not carry on with that. I do not want to waste anybody's time. But if I am asked whether I recognise that there is an anomaly, I think, generally speaking, that we would say that, Yes, in certain cases there is an anomaly. I would then say, if I was asked whether we are prepared to rectify it, that I think that it would be virtually impossible to do so without creating more discontent than exists at the present time, having regard to the basis of our National Insurance policy. As I said, the philosophy of it was to provide a benefit commensurate with what people have paid in, to see that they have a reasonable amount to compensate them for the situation in which they find themselves. If they have not, there is, of course, the second string—that of supplementary benefit, about which I should like to say something later.

In the present situation I think that this is as much as we can do, having regard to our resources. I do not think that one could hope to have overlapping benefits in some instances without facing up to the fact that there would be a large number of people who would quite rightly want to know why they were not entitled to overlapping benefits in their particular circumstance. Noble Lords will know that in many instances overlapping is prevented by conditions laid down in the Act for the receipt of benefit. For example, a person who claims unemployment benefit must show that he is capable of work, if he has to show that he is capable of work before he can get unemployment benefit, obviously sickness and unemployment benefits—both maintenance benefits payable during an interruption of earnings—must be mutually exclusive; one cannot have the two.

Similarly, the Act does not permit the payment of sickness or unemployment benefit to people who are over pensionable age and retired. A retired person may receive only one basic retirement pension, so a married woman cannot have both a dependant's retirement pension on her husband's contribution and a basic pension on her own contributions. But there are many situations like this where she would be entitled to whichever is the greater, as the noble Lord knows. The overlapping benefits regulations as such merely mop up, as it were, all the cases where duplication is not prevented by a provision built into the main legislation. Your Lordships may be interested to know that it has been estimated, although I admit that it is not easy to calculate this precisely, that it would cost something like £2,000 million a year or more to remove all the provisions preventing duplication. I know that the noble Lord is not suggesting this. What I am saying is that, if one does it in one area or one field, I do not know what the justification would be for not carrying it to its logical conclusion. This is a tremendous problem.

It is not just this large amount of money that would be at stake. One has to face that, in a sense, benefits would become a kind of lottery and any semblance of equity would go out of the window. I said this before. It is a price that no Government could afford to pay. All the way along the line one has to see that there is some kind of equity. I am sure that noble Lords will agree that what I am describing is a very complicated situation indeed. It is more complicated than it was in 1948, when there were only 13 benefits in the National Insurance Act and about 11 in the Industrial Injuries Act. Since those days, another 19 National Insurance benefits have been added to the list and, as more benefits are added, more provisions against overlapping must also be added to keep the scheme sensible.

We are not the only country which has this kind of structure. I am told that provisions against overlapping feature also in the schemes of other countries, and relevant reciprocal agreements as well as EEC Regulations also contain provisions in this matter. It might be helpful if I explained fairly briefly the criteria on which the overlapping benefit rules are based. First, a person may not receive at the same time more than one of the basic personal maintenance benefits of the scheme or any analogous benefit. These benefits include not only sickness and unemployment benefit, which I have already mentioned, but such things as widow's, invalidity and retirement pensions. The amount of the higher or highest of these benefits is, of course, the one which is paid.

Only one special addition of the same kind may be paid on top of the basic benefit, but special additions of different kinds are not affected. For example, a disabled person could get a disablement pension, a mobility allowance and an attendance allowance on top of one of the maintenance benefits such as invalidity pension or unemployability supplement. Only one dependency benefit is payable for any one dependant at any one time, and a person who has a personal maintenance benefit cannot count as a dependant. Once again, any balance of benefit can be paid if the personal benefit is lower than the dependency benefit would be.

May I give an example of that—although I believe that the noble Lord, Lord Banks, himself referred to it. A married woman could, because of deficient contributions, qualify for sickness benefit at less than the standard rate. If, for example, her sickness benefit was at the rate of £7.35, her husband, who was an invalidity pensioner, could get £3.15 for her, bringing the total benefit up to the rate of dependency increase of invalidity pension to £10.50. So she gets no more money. She can exercise her right in one direction, but it must be taken into account. We take the view that this is quite the right thing to do. I was going to give other examples, but perhaps I could leave that for the time being.

From next April, earnings-related additional components will become payable under the new pensions arrangements on top of invalidity, widow's and retirement pensions. These are meant to be special additions for the purpose of bringing benefits up to a level related to a contributor's earnings, and they are the counterpart to occupational pensions which are not affected by the payment of State benefits. We have consequently made regulations to ensure that these fall within the second rule I have mentioned, and remain payable on top of the best basic maintenance benefit to which a beneficiary is entitled.

Additional components may be inherited, and in this situation the overlapping rules follow the precedent of the Pensions Act to ensure that no one can get more additional component from two sources than would be the biggest amount one contributor could have earned. We are also providing that graduated retirement benefit, like additional component, will not be lost in overlapping situations. In view of the time, perhaps I might turn to one or two matters which have been raised.

The noble Lord, Lord Banks, raised the question of child benefit and supplementary benefit. In so far as there is a problem here—and he admits that there is some logic about this—it arises from the Government's success in phasing in child benefit and achieving such a good rate of child benefit so quickly. Noble Lords will recall that the aim of supplementary benefit is to bring a family's income up to a given level, and this includes allowances for children. In assessing entitlement to supplementary benefit, a family's income from all sources is added up and supplementary benefit is awarded to meet the gap. If income from other sources such as child benefit goes up, the amount of supplementary benefit needed to cover the gap is reduced, as the noble Lord, Lord Banks, said, by the same figure. If this did not happen, the Government would fail in their aim of replacing means-tested benefits by universal benefits, and would not help the problem regarding incentives.

There is nothing new in this approach. In the past family allowances were offset against supplementary benefit, and increases in them led to corresponding reductions in supplementary benefit. The need for this to happen was well recognised, if I may say so, by Frank Field of the Child Poverty Action Group in his letter of 17th April to The Times in which he encouraged the Government to stand by this policy as a way of getting people off means-tested benefits. But, in view of the strength of the noble Lord's feeling on this, I would draw the attention of my honourable friend the Minister for Social Security to the points raised by the noble Lord.

One must bear in mind that supplementary benefit is designed to meet the needs of individual families. However much some people may dislike means-tested benefits—and I am not myself altogether wedded to the concept of means tests—I think one must recognise that, if not in all cases, in the majority of cases it is a workable and fair way of dealing with a situation and being able to assess each individual family's needs and to meet the needs of that particular family.

The noble Lord raised the question of a tax credit system. If he asked me why the Government do not take it on board, I think the short answer and the true answer, as things stand at the moment, is cost. I do not think we would agree on that. I have heard the noble Lord say before that perhaps the Government have made too much of this question of cost, but we have done our own costing. But having said that, I think in a sense it could be said that child benefit incorporates many of the features of a full tax credit system even if it does not go the whole way. One does not know but that perhaps in time something may be done about it.

I wanted to deal with the question of the widow who takes one of the full-time Government-sponsored training courses who forfeits her National insurance widow's pension and relies on training allowances. She can do that, or she can keep her pension and allowances for children and get an abated training allowance. This is not the whole story. If a widow takes the second of these options, and she keeps her pension and allowances for children and gets the abated training allowance, she will receive first her personal widowed mother's allowance at the current weekly rate of £17.50; secondly, an abated training allowance of £8.20, and the balance needed to bring her benefit up to the standard personal rate of training allowance of £25.70; thirdly, National Insurance allowances for her dependent children at the higher rate of £8.40 per week—those normally paid with training allowance are at the lower rate of £4.50; fourthly, an earnings-related addition for training allowance based on her previous earnings, if any, at a weekly rate of up to £15.42; and, finally, an allowance to cover various expenses connected with her training. We take the view that these arrangements make adequate and fair provision for her; that she really is not at the disadvantage that sometimes, I think, people are led to believe.

I think the only other thing I want to refer to is the point made by the noble Baroness, Lady Macleod, who wondered whether there could not be some elasticity in these matters of overlapping benefits. Frankly, of course, that is not possible. Who is going to make the judgment? We have 600 local offices working to the rules laid down in the various Acts—in other words, laid down by law—and we cannot possibly give managers of our local branches discretion to administer matters according to their own judgment without there being (shall I say?) some injustice to many. It is one of these things that are laid down; it must be applied. And although one would like to think that there is always a measure of discretion, I do not think there can be a measure of discretion in matters of this kind. My Lords, I conclude where I began, and say that I am grateful we have had this opportunity to discuss this subject. I know my right honourable friends in my Department will be looking at this, and I hope that perhaps one of these days we can give an account which will be more acceptable to some of your Lordships.