§ 3.8 p.m.
§ Baroness Young
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Baroness Young.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The EARL of LISTOWEL in the Chair.]
§ Clause 1 [Up-rating orders]:
Baroness Jeger moved Amendment No. 1:
Page 1, line 13 after ("a") insert ("reasoned").
The noble Baroness said: This may seem a very simple amendment: it asks that the word "reasoned" be inserted at page 1, line 13 after "a", so that the sentence would read that the Secretary of State should,
cause to be made, in each House of Parliament a reasoned statement".
To those who think that all Government statements are both reasoned and reasonable, this may seem a tautologous amendment, but we have tabled it because we think it is absolutely essential that when statements are made to the House they should in fact be reasoned, in the sense that the full background and understanding should be made clear. May I add, not only clear to your Lordships; our anxiety is for the millions of people outside this House whose lives and incomes will be directly affected by such statements made in Parliament. Therefore, I very much hope, because this
is so simple, so obvious, so unexceptionable, that it may be possible to make a good start to this Committee stage by accepting it. I beg to move.
§ Lord Cullen of Ashbourne
Disappointingly enough, I am afraid I cannot accept this amendment, reasonable as it looks on the face of it. The new subsection (3) to Section 125 already requires the Secretary of State to ensure that the essential information relevant to the uprating is given—the date, his estimate of the increase necessary to restore the value of benefits, and the actual increases which he proposes. The new statutory requirement to make a statement is thus fairly comprehensive. But in any case it has always been the practice for the uprating announcement to be full and "reasoned" and certainly no further statutory provision for this is needed. The Minister making it always has been and always will be anxious to explain what he is proposing and why; and what is true of the Secretary of State is also, of course, true of the Chancellor who, again by convention, gives broad details of social security changes in the Budget Statement immediately before the Secretary of State's statement. I hope in the light of that the noble Baroness will feel able to withdraw the amendment.
§ Baroness Jeger
I am not totally satisfied about the present Government's interpretation of the word "reasoned", but in view of what has been said I beg leave to withdraw the amendment, but I assure noble Lords that we shall watch like cats watching sparrows to see what sort of statements come out.
§ Amendment, by leave, withdrawn.
§ 3.12 p.m.
Baroness Jeger moved Amendment No. 2:
Page 1, line 14, after first ("date") insert ("being a date not later than 20th November in each of the years 1981, 1982 and 1983.").
§ The noble Baroness said: I beg to move Amendment No. 2. The purpose of this amendment is again linguistic. It is to establish in the statute that a year consists of 52 weeks and not of 54 weeks, because we complain bitterly, and so do many pensioners and many of the poorest people in our country, at what seemed to be a bit of a trick of stretching the year to 54 weeks, which was done recently. It might be said that because of leap years there is a gradual crawling up of year on year and it is difficult to stick to precise dates of uprating. I have been looking at some of the dates that have been chosen, and I find that in 1975 the date was 17th November, in 1976 15th November, in 1977 back to 14th November, and in 1978 13th November; better still in 1979, 12th November; then of course last year's disaster of 24th November, which meant stretching out for another fortnight people's entitlement to increased benefits. This meant that pensioners were deprived, in the case of a single person of £7.70, and for a married couple £12.30.
I believe, and so do most of my noble friends, that this was purely a money saving exercise. This was borne out in Standing Committee in another place (Col. 322, Standing Committee on Social Security (No. 2) Bill, 24/4/80) when the Minister said:
For the 1980 up-rating of all these items the cost of bringing the up-rating forward by one week or the saving in deferring it for one week would be £60 million.".
So it seems to me quite clearly a money saving exercise, money saved to the Government but depriving those who needed it most. I think that if any business engaged in such shady arrangements they would be in serious trouble. It seems the most extraordinary breach of faith and common understanding that a year should be made, to suit Government's financing, to consist of 54 weeks instead of 52 weeks. Therefore, we have put down again a simple amendment to suggest that a year shall be a year in the sense that everybody means it, and that nobody should have money taken away from them because certain Governments want to pretend that a year lasts 54 weeks. I beg to move.
§ Lord Boyd-Carpenter
May I ask the noble Baroness what I hope she will not think is too simpliste a question? Why does her doctrine of the 52 week year extend only up to 1983? If her general proposition is a sound one, why stop there? Is she somewhat frightened of what may happen in 1984, as George Orwell was?
§ Baroness Jeger
The short answer to that is that I am confident there will be a very different Government in 1984.
§ Lord Cullen of Ashbourne
The current provisions relating to the date of the uprating require it to be not later than the end of the month in which the anniversary of the previous uprating falls. Last year it was the week beginning 24th November. This year's had to be before the end of November. Since different benefits are uprated on different days of the week this year's uprating could not be later than the week beginning 23rd November, the date announced by my right honourable friend on 11th March, and precisely 12 months after the last uprating. These current provisions were introduced as recently as last year in the Social Security Act 1980. The noble Baroness referred to the 54 week period. This was to prevent the up-rating date creeping forward, as it has been, with consequential additional expenditure implications.
This amendment would involve additional expenditure. For example, it would require the uprating to take place this year in the week beginning 16th November, which would involve additional expenditure of about £40 million. For this reason we must resist these amendments. The present provisions approved by Parliament last year are flexible and ensure that beneficiaries get their increases in good time before the winter sets in. I hope the noble Baroness will withdraw the amendment; otherwise I must recommend the Committee not to accept it.
Before the noble Lord sits down, may I intervene to say this: The noble Lord has made it clear that the Government are wholly opposed to the uprating date creeping forward. Are they equally opposed to it slipping backwards? The purpose of these amendments is to avoid slippage in the other direction.
§ Lord Cullen of Ashbourne
What we are trying to do is to maintain the position we have now, that the up-rating should be not later than the end of the month in which the anniversary of the previous uprating falls. This year, your Lordships will see, we are having precisely the same date as last year.
§ Lord Wells-Pestell
I should like to ask the Minister to take this matter back and to have a look at it again. It really is quite disgraceful; call it whatever you like, it is depriving people of a very substantial amount to which they are entitled. It has been the practice to uprate pensions each year and a year means precisely what it says. It does not mean 53 weeks; it does not mean 54 weeks; it means certainly 52 weeks. It is the people in the community who are least able to stand the loss of money who, in fact, are deprived of it. Last year, whatever way one looks at it—and I can understand that it can be argued a number of different ways—it was a disgraceful performance. It is something that ought to stop. It is not beyond the wit of the Government to think of some means whereby pensions can be paid around the 365th day—that is all that we are asking for. I would say that this is of sufficient importance to a section of the community to ask the Government to take it back and to come forward with something that is perhaps a little more reasonable than the practice that they followed last year and the practice that they want to follow in this particular Bill.
§ Baroness Young
The noble Lord, Lord Wells-Pestell, and the noble Baroness, Lady Jeger, are always very persuasive on these subjects and they make us sound very mean and hard-hearted when we feel that we must resist them. We have of course been over this ground many times before, and we appreciate their concern and that of the Opposition about the two weeks which were lost in the 1980 uprating. The fact of the matter is—if both the noble Lord and the noble Baroness will reflect on the uprating of pensions over the past six years since 1975—that neither political party has an unbroken record of doing in all circumstances the very best that they might have done. They have both, for a variety of reasons, come up against the very painful hut hard economic facts of life as regards cost.
I accept, as my noble friend has said quite rightly, that one of the reasons why we cannot accept this amendment is that in fact it would increase the cost. As it is, we have written into the Bill a flexible arrangement so that the upratings will take place by the end of November which gives a degree of flexibility before the winter sets in. On the other hand, it may vary a little. Of course we would all like to do more and I have no doubt that, as the economy improves, we shall do more. But it is for that fundamental reason that we are unable to accept the amendment and unable to put matters right in respect of the whole of the fortnight that was lost in the year before.
§ Lord Wells-Pestell
I trust that the noble Baroness will read tomorrow in Hansard what she has just said, because she has said by implication that, if it suits the Government to have another 54 weeks before they uprate in order to save money, they will do so. That is the implication of what she has just said, as I under- 538 stand it. I think that it really is deplorable. I am sorry that the noble Baroness is so unyielding about this matter. I do not deny that in the past Governments may not have done all that they could have done to help the aged, but it is a very different theme as regards the level of pensions to say, "All right, when it suits the Government in order to save money we may uprate it after 54 weeks rather than 52 weeks". I think that what the noble Baroness has just said really does not reflect credit on the Government.
§ Lord Boyd-Carpenter
The noble Lord, Lord Wells-Pestell, suggested that the noble Baroness on the Government Bench should read carefully in Hansard what she has said. I should like to reciprocate by suggesting that he joins me in asking that the noble Baroness on the Opposition Bench should do the same, because your Lordships will recall that when I invited an answer to the question as to why this amendment was framed only up till 1983 inclusive, the noble Baroness said, in a mood of happy optimism, that it was because she thought that there might be a Government of another colour in 1984. In other words, this is intended to be a restriction on only a Conservative Government while apparently a Labour Government are to be free to have a 54-week or a 60-week year. I hope also that when the noble Baroness reads Hansard that will give her a little bit of a kick.
§ Baroness Jeger
The noble Lord stated that this amendment would cost £40 million. That means that the Government admit to taking £40 million away from the people who need it most. I really am impatient, as I am sure are many of the pensioners and invalids in our country, at hearing reference to the poverty of the Government in not being able to meet these needs. We had a Budget that gave away £1,400 million to those who needed it least, and then we are told that we cannot afford £40 million to save doing the poorest people out of a couple of weeks' money which they deserve. I am sorry, but in view of what has been said I cannot beg leave to withdraw the amendment. I hope that there will be strong support on all sides of the Committee for what is a very fair and proper amendment.
§ 3.26 p.m.
§ On Question, Whether the said amendment (No. 2) shall be agreed to?
§ Their Lordships divided: Contents, 95; Not-Contents, 105.540
|Amherst, E.||Brooks of Tremorfa, L.|
|Ampthill, L.||Bruce of Donington, L.|
|Amulree, L.||Burton of Coventry, B.|
|Ardwick, L.||Byers, L.|
|Aylestone, L.||Chitnis, L.|
|Bacon, B.||Cledwyn of Penrhos, L.|
|Beaumont of Whitley, L.||Crook, L.|
|Birk, B.||Crowther-Hunt, L.|
|Bishopston, L. [Teller.]||David, B.|
|Blease, L.||Denington, B.|
|Blyton, L.||Donaldson of Kingsbridge, L.|
|Boston of Faversham, L.||Elwyn-Jones, L.|
|Briginshaw, L.||Elystan-Morgan, L.|
|Brockway, L.||Evans of Claughton, L.|
|Ewart-Biggs, B.||Peart, L.|
|Fisher of Rednal, B.||Phillips, B.|
|Gaitskell, B.||Pitt of Hampstead, L.|
|Gardiner, L.||Plant, L.|
|Gifford, L.||Ponsonby of Shulbrede, L. [Teller.]|
|Greenwood of Rossendale, L.|
|Grey, E.||Rochester, L.|
|Hale, L.||Ross of Marnock, L.|
|Hall, V.||Sainsbury, L.|
|Hampton, L.||Sefton of Garston, L.|
|Hayter, L.||Segal, L.|
|Houghton of Sowerby, L.||Shinwell, L.|
|Hunt, L.||Smith, L.|
|Hylton-Foster, B.||Spens, L.|
|Ilchester, E.||Stamp, L.|
|Janner, L.||Stedman, B.|
|Jeger, B.||Stewart of Fulham, L.|
|Jenkins of Putney, L.||Stone, L.|
|John-Mackie, L.||Strabolgi, L.|
|Kennet, L.||Strauss, L.|
|Kilbracken, L.||Taylor of Blackburn, L.|
|Kilmarnock, L.||Taylor of Mansfield, L.|
|Kinloss, Ly.||Tordoff, L.|
|Lawrence, L.||Underhill, L.|
|Leatherland, L.||Vernon, L.|
|Lee of Newton, L.||Wallace of Coslany, L.|
|Listowel, E.||Wedderburn of Charlton, L.|
|MacLeod of Fuinary, L.||Wells-Pestell, L.|
|Melchett, L.||Whaddon, L.|
|Milford, L.||White, B.|
|Milverton, L.||Wigg, L.|
|Northfield, L.||Willis, L.|
|Oram, L.||Winstanley, L.|
|Pargiter, L.||Wynne-Jones, L.|
|Airey of Abingdon, B.||Gage, V.|
|Alport, L.||Gainford, L.|
|Avon, E.||Geddes, L.|
|Bellwin, L.||Gibson-Watt, L.|
|Belstead, L.||Glenkinglas, L.|
|Berkeley, B.||Gowrie, E.|
|Bessborough, E.||Gridley, L.|
|Boyd-Carpenter, L.||Grimston of Westbury, L.|
|Brookeborough, V.||Hailsham of Saint Marylebone, L.|
|Caccia, L.||Halsbury, E.|
|Campbell of Croy, L.||Hastings, L.|
|Cawley, L.||Henley, L.|
|Chelwood, L.||Hereford, V.|
|Clifford of Chudleigh, L.||Hillingdon, L.|
|Clwyd, L.||Hives, L.|
|Cork and Orrery, E.||Home of the Hirsel, L.|
|Cottesloe, L.||Inglewood, L.|
|Crathorne, L.||Kinnoull, E.|
|Cromartie, E.||Kissin, L.|
|Cullen of Ashbourne, L.||Lane-Fox, B.|
|Daventry, V.||Lauderdale, E.|
|Davidson, V.||Long, V.|
|de Clifford, L.||Luke, L.|
|De Freyne, L.||Lyell, L.|
|Denham, L. [Teller.]||McAlpine of Moffat, L.|
|Derwent, L.||Macleod of Borve, B.|
|Dudley, B.||Mancroft, L.|
|Dundee, E.||Mansfield, E.|
|Dundonald, E.||Marley, L.|
|Ebbisham, L.||Morris, L.|
|Eccles, V.||Mowbray and Stourton, L.|
|Effingham, E.||Murton of Lindisfarne, L.|
|Elliot of Harwood, B.||Norfolk, D.|
|Evans of Hungershall, L.||Nugent of Guildford, L.|
|Exeter, Bp.||Nunburnholme, L.|
|Faithfull, B.||Orkney, E.|
|Ferrers, E.||Porritt, L.|
|Ferrier, L.||Portland, D.|
|Fortescue, E.||Rankeillour, L.|
|Fraser of Kilmorack, L.||Reigate, L.|
|Renton, L.||Strathclyde, L.|
|Robbins, L.||Stuart of Findhorn, V.|
|Rochdale, V.||Swinton, E.|
|Rodney, L.||Terrington, L.|
|Sandford, L.||Thorneycroft, L.|
|Sandys, L. [Teller.]||Tranmire, L.|
|Savile, L.||Ullswater, V.|
|Selkirk, E.||Vaux of Harrowden, L.|
|Sharples, B.||Vivian, L.|
|Soames, L.||Wakefield of Kendal, L.|
|Stodart of Leaston, L.||Ward of Witley, V.|
|Stradbroke, E.||Young, B.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 3.34 p.m.
Lord Kilmarnock moved Amendment No. 3:
Page 2, line 3, after ("date") insert ("and to compensate for any failure to restore their value at the previous review").
§ The noble Lord said: In the absence of my noble friend Lord Banks, who is in Strasbourg, I beg to move Amendment No. 3 standing in our joint names. In so doing, I think that it would be convenient if I spoke also to Amendment No. 5. This, of course, relates to the 1 per cent. claw-back applicable to pensions and other long-term benefits, including guaranteed minimum pensions, which was the main subject of our debate on Second Reading.
§ It will be remembered that the ground of the claw-back was that the uprating order of 14th August 1980, which set the rate of 16.5 per cent. for the increase due on 24th November last, turned out to be an overestimate of 1 per cent. of the general increase in prices. Therefore, the Government argued that it would be reasonable to recalculate the basis for the next increase due next November as if the increase for the year from November 1980 to November 1981 had been only 15.5 per cent. and not 16.5 per cent.
It was argued, I thought persuasively, on Second Reading that the expenses of old age pensioners and low income families are not fairly reflected in the general retail price index. In view of these factors, I quote my noble friend Lord Banks at column 1070 of Hansard of 1st June during the Second Reading debate:
the Government might well have regarded the 1 per cent. over-estimate as a small and fortuitous modification of the cuts already made".
But apparently this could not be afforded, so provision for the claw-back was written into this Bill.
However, of course, the question immediately arose in a number of people's minds: what about the obverse side of the coin? What would be the position if the Government under-estimated the next time round? Probed on this point on Second Reading in another place the Secretary of State for Social Services, Mr. Jenkin, said:
I was about to pose the question of what happens if next November it turns out that the increase to be announced at the time of the Budget falls short of the rate of inflation. The answer has already been given by my right hon. Friend the Prime Minister in the clearest possible terms: compensating pensioners fully for price increases over the lifetime of a Parliament means making good any such shortfall should it occur. The reference is in Official Report, 25th November 1980, Vol.. 994, c. 488.
The Government stand firmly by that pledge, which I repeat today.
When asked why it should not be put in the Bill, Mr. Jenkin replied:
This is a matter which can no doubt be explored in Committee".—[Official Report, Commons, 24/2/81; col. 763.]
So it was, with no end result; though Mrs. Lynda Chalker, the Under-Secretary of State for Health and Social Security, repeated in full on 26th March 1981 in Standing Committee G, at col. 290, the Prime Minister's assurance of 25th November 1980, which reads as follows:
The full value of the pension in terms of what it will buy will be preserved. Last year, we added to the provision for pensions because the amount that had been provided was not sufficient. This year, we provided more than was warranted by the price increase. The undertaking is to compensate fully for price increases over the lifetime of a Parliament … That means either making up the shortfall or taking into account the over-provision next time
At the bottom of the same column Mrs. Chalker said:
I hope that I have made clear exactly where we stand on the matter of making good the shortfall. The power is already there. It will be used to make good the shortfall, because that is what the Prime Minister said".
§ The power is that contained in Section 125 of the Social Security Act 1975, which, I would remind your Lordships, has already been modified once by this Government when the Social Security (No. 2) Act 1980 introduced into that clause a right to abate by 5 per cent. the uprating of certain benefits. That is the power on which we are asked to rely.
Reverting to our own Second Reading debate, a similar undertaking to those given in another place was given by the noble Baroness, Lady Young, who, at col. 1082 of the Official Report of 1st June, 1981, said:
I should like to reaffirm … that the shortfall"—
she seems to assume that there will be one—
will be made good for pensioners, as for other long-term beneficiaries … It is the intention that the provision will cover only this year's 1 per cent. overpayment and will not extend any further than that. So there is no question of this arising under this Bill at another time".
However, there is an inconsistency here, because the claw-back is provided for under subsection (3) of Section 1; but subsections (1) and (2) on any reasonable reading deal with uprating in general. There is no doubt about that in my mind.
§ There is I submit a danger that an uncompensated shortfall could take place under this Bill, for the Secretary of State is only obliged to uprate by the percentage by which those sums—that is, the benefits—would in his opinion—I repeat "opinion"—have to be increased in order to restore their value as at that date. That date is the date of the uprating order. But this opinion may be wrong, because he is going to make a judgment, probably in August, about what the rate of inflation will have been from November to November. If he is wrong, there is nothing here that I can see to oblige him to remedy his error.
Our first amendment therefore seeks simply to add the words in line 3 on page 2,
and to compensate for any failure to restore their value at the previous review".
This is, after all, no more than the Government have undertaken to do. But Governments come and go, Ministers change, and this section applies on any reasonable interpretation to uprating in general and not only to the current year. Amendment No. 5, to which I would also speak briefly, simply makes the
same provision for contracted-out guaranteed minimum pensions, which are also covered by Section 125 of the principal Act.
§ There is another reason why we have tabled these amendments, and this is one of rather greater urgency. The noble Baroness stated in column 1081 that subsection (3) of Section 1 of the present Bill enables the Government to base the November 1981 uprating on the recalculated rates, and she then spoke of increasing those recalculated rates by 10 per cent. But the last available figures for the retail price index and for the tax and price index show that the RPI rose by 12 per cent. between April 1980 and April 1981, and by 6.6 per cent. between November 1980 and April 1981. The TPI rose by 15.7 per cent. and 9.24 per cent. over the corresponding period, owing in the latter case to the failure to increase the tax threshold in the last Budget. If we stick to the RHI, which rose by 6.6 per cent. in the first six months of the period we are immediately interested in, we get a very possible projection of 13 per cent. over the whole period.
§ But what happens if the Secretary of State comes along, in perfectly good faith of course, with his uprating order in, say, August, proposing 10 per cent., to use the noble Baroness's figure, or perhaps 11 per cent. or 12 per cent. if he is more realistic, but the final outturn is 13 per cent.? Will he come forward with a further supplementary order later on, or will the pensioners and others simply have to abide by his under-estimate until such time as he, or the Government, can find time for another Bill?
§ I am sorry if I have wearied your Lordships by expanding on this at some length, but it is an important matter. There are nearly 10 million pensioners, to say nothing of other long-term beneficiaries, waiting to hear what the Government have to say. As I said at Second Reading, this seesaw method of mid-term calculations is thoroughly unsatisfactory and ought to be reviewed. But in the meantime I am convinced that we must at least secure a statutory undertaking that any shortfall that may arise—and they are only too likely to arise under this system—will be made good. That is the purpose of these amendments.
I shall of course listen to what the noble Baroness has to say with the greatest of care, but I should like to repeat the words of my noble ally Lord Banks at Second Reading:
if future over-estimates are to be dealt with in the same way, then we require cast iron assurances that under-estimates will be made good".—[Official Report, 1/6/81; col. 1069.]
I think I have demonstrated that the undertaking given in this Bill is less than cast iron. I beg to move.
§ 3.44 p.m.
§ Baroness Young
I appreciate from what the noble Lord, Lord Kilmarnock, has said that this is a matter which was debated at considerable length in another place, and was certainly referred to at quite great length at the Second Reading of this Bill. I hope that I can show him in the course of what I have to say that I can give an answer to the particular points that he has raised. I think it is better to stand on the principle that he has raised rather than look in detail at actually what his amendment says.
First of all, should like to repeat to the Committee 543 that we as a Government are fully committed to maintaining the level of pensions in line with inflation, and to improving them beyond that level when economic circumstances permit this. As my right honourable friend the Prime Minister said in another place on 25th November 1980, and indeed as has been said on numerous occasions since then, we shall price protect pensions over the lifetime of this Parliament, and this means making good any shortfall.
The Prime Minister's remarks were concerned with pensions and, as has been made clear, other related long-term benefits, for example, the disablement benefits. As regards short-term benefits the Government's view is that if the situation arose the position could be properly considered only in the light of the amount of the shortfall and of the economic circumstances of the time. However, I should like to repeat to the noble Lord, Lord Kilmarnock, that there is already power in the legislation for shortfalls to be made good. This, as he quite rightly said, is in Section 125 of the 1975 Act. It is the Government's view that our pledge on long-term benefits, coupled with this power, make the amendments that he has tabled this afternoon unnecessary.
The noble Lord raised one or two specific points which I should like to try to answer. He said that it is difficult to make an accurate forecast on prices. Indeed it is very difficult, but if he looks over the last few years he will find that the forecasts on prices have been remarkably accurate. As it turned out, one of the difficulties about the forecast on prices last year was that the forecast did not suggest that the rate of inflation would fall quite as rapidly as it did, and hence the Bill is involved in this because the forecast was wrong. But, on the whole, the forecasts have been accurate.
He said, "Well, how can we trust the Government", if I paraphrase his remarks, "to make good a shortfall, if there should be a shortfall, because we have amended the 1975 Act and we could of course amend other legislation?" Well, as he will know, Parliament can of course amend any piece of legislation. It could amend this Bill further if the noble Lord's amendment was put into it. I do not think he would be saved from this particular difficulty just by that.
But what I can tell the noble Lord is that in the first uprating under our Government in 1979 we made good the shortfall of 1.9 per cent. from the 1978 uprating. So we did in fact make good the shortfall of that year—quite properly, because it was what we had promised that we would do, to keep pensions up with prices—and in this particular Bill we are still keeping pensions up with prices. And we have, as he quite rightly said, in the first clause of the Bill got this power to lower the uprating this year to be based on 15.5 per cent. as from last year instead of the 16.5 per cent.
If I may sum up my remarks, I hope he will accept that in this Bill we have once again reiterated the Government's pledge to keep pensions up with prices; something about which we all of us who are concerned in these matters, and indeed the entire Government, are very concerned to do. It is a pledge that has been reiterated not only by my right honourable friend the Prime Minister but by my right honourable friends the 544 Secretary of State for Social Services and the Chancellor of the Exchequer, We have the power to make good the shortfalls, and given those pledges, and the power to do so, we believe that the amendments that the noble Lord has put down are unnecessary. I hope that under those circumstances he will feel that it is right to withdraw them.
§ Lord Wells-Pestell
I appreciate what the noble Baroness says about there being power in the measure to make a shortfall good should one arise, but that is not obligatory, as I understand the situation; it depends entirely on whether the Government are so minded to do it, whereas the amendment would make it obligatory. Am I right in thinking that?
§ Baroness Young
I think the noble Lord, Lord Wells-Pestell, is correct in that what the noble Lord, Lord Kilmarnock, is arguing for is a duty and not just a power, and I recognise the difference. I am saying that we have the power and we have given the promise, and we feel that is the right way to deal with the matter.
§ Lord Kilmarnock
I have listened with care to the remarks of the Minister and the noble Lord, Lord Wells-Pestell, and the question is whether, in the equasion, power plus pledge equals duty, and that is what I understood the noble Baroness to say was the position. However, before deciding what decision to take as regards the amendment, may I ask the noble Baroness to give the Committee a specific undertaking that any shortfall that may arise as a result of whatever uprating order is brought forward later this year—any shortfall that arises as a result of that in November 1981—will be made good?
§ Baroness Young
We have given a pledge that pensions will be kept up with prices. The noble Lord's anxiety is that from November 1980 to November 1981 the rates of inflation will prove to be higher than the forecast estimate of 10 per dent. I believe we should be going back on our pledges to keep, over the lifetime of the Parliament, pensions in line with prices if we did not look at the shortfall, because that is what it must mean. I hope the noble Lord will accept my integrity when I say that the pledge about keeping pensions in line with prices would mean just that.
§ Lord Pargiter
I think I heard the Minister use the phrase "over the lifetime of the Parliament". Does that mean the Government could go for three or four years without making good a shortfall?
§ Baroness Young
I should like to think that perhaps the lifetime of this Parliament might last that long. If the noble Lord considers it, he will see that it could not.
§ Lord Kilmarnock
I do not in the least want to impugn the integrity of the noble Baroness or even of the Government; my concern is simply that the first part of the Bill is a general provision which does not apply only to this year. Further, as I pointed out, Governments and Ministers change. However, in the light of the Minister's very thoughtful response, I shall read in Hansard very carefully what she said 545 on the subject and, while reserving to myself and my friends the right possibly to come forward with an amendment on Report, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 4 and 5 not moved.]
§ The Deputy Chairman of Committees (The Earl of Listowel)
Before I call Amendment No. 6, I should point out to the Committee that if that amendment is agreed to, I shall not be able to call Amendments Nos. 7, 8 or 9.
§ 3.54 p.m.
Baroness Jeger moved Amendment No. 6:
Page 3, line 1, leave out subsection (3).
The noble Baroness said: Nobody would be happier than my noble friend and I if this amendment were carried, so saving the Committee a great deal of time and trouble in not having to proceed to the various subsequent amendments which we shall have to deal with in the sad event of this being defeated. I would remind your Lordships that subsection (3), which we propose to delete, is described in the Explanatory Memorandum as providing
for the up-rating of sums under those sections in 1981 to be adjusted to take account of the fact that they were up-rated in 1980 by 1% more than would have been the case if the estimate of the increase in the general level of prices had been accurate".
I do not want to repeat what was said, I thought effectively, by several noble Lords on Second Reading, but our case is very much on the lines that the estimate of the increase in the general level of prices was not inaccurate; if anything, it was less than would have been needed if pensioners were to have had their income kept in line with general prices.
§ I remind the Committee that we are dealing in this nasty subsection with a very wide range of benefits covering literally millions of people. When it is maintained that pensioners received too much, we know, even on the basis of the Government's price index, that the amount overpaid was 25p per week. In suggesting that we abandon this mean little provision, we are only asking that people who are deemed to have received 25p a week too much shall be left undisturbed and in sonic enjoyment of that, not feeling that they are to be punished because of that "excess of generosity".
§ Our case rests largely on the fact that we do not accept that pensioners' expenses are accountable in terms of the general retail price index. I appreciate that there are separate indices for pensioners, and I shall refer to them briefly because when we have disposed of this amendment we shall not be dealing with the subsequent more detailed amendments. For instance, last year gas went up 32 per cent.; electricity, 27 per cent.; and coal between 23 and 28 per cent.
§ I remind the Committee that the pensioner price index is based on three years of expenditure—it has a three-year expenditure profile—so that it is always lagging behind. Therefore, price increases which tend to level out over three years might in any one particular year present the pensioner with a great shock. While we are working on a three-year basis for the pensioner price index, the Government are asking us 546 to accept a one-year calculation in relation to the general price index, which is based on a much shorter period. In other words, an old person can get a sudden surge in expenses from one item—say, the price of paraffin suddenly going up—while that sudden surge may not appear for three years in an on-going situation, when it might take three years for the full effect to be felt in the figures.
§ That is why I say we are driving ourselves mad with statistics in that we are not comparing like with like. In some debates we are told about the retail price index, in the Explanatory Memorandum we are referred to general price levels and in other debates we are referred to the pensioner price index. I submit that all these statistics make no sense at all. The very fact that we have a separate index indicates that there is a general acceptance that the retail price index does not wholly apply to pensioners, although it appears that the Government are using it in relation to this subsection.
§ I have found the Family Expenditure Survey much more reliable. That makes it clear that a single pensioner spends 69.6 per cent. of his income on food, fuel and housing, compared with a single wage earner who expends 43.5 per cent. on those items. Thus, those items have particular relevance to the pensioner's budget. On the other hand, the pensioner price index does not include housing; so those who understand statistics and those who are misled enough to want to be guided by them are in further difficulty because the separate pensioner index leaves out housing altogether. I know that that is partly because of complications in rent and rate rebates, but I would point out that those do not apply only to pensioners. So those factors find their way into the retail price index, and in my unmathematical view the two are certainly not at all consistent.
§ The retail price index includes all kinds of goods that pensioners would never dream of buying. Pensioners are much less concerned with the increased cost of motor-cars than they are with the increased cost of paraffin, to quote that example again. We know that during the coming months they will still have to face rises in essential goods and services. That will be against a background of decreasing provision of local services, with fewer meal centres where they can get a cheap, subsidised meal and keep warm, while on the other hand home helps will become more expensive; and they will have to face all kinds of financial hardships. Then the Government come along and say that they have had 25p a week too much.
§ The best thing that we can do is to leave out subsection (3) altogether. I have spent time dealing in particular with pensioners, but as I stated at the beginning of my remarks, the subsection applies to all benefits under the national insurance scheme, and so there is felt not only hardship, but a sense of hardship. I cannot understand why so many noble Lords who are intelligent, kind, gentle people do not realise that what really matters is how people feel about it and that people at the bottom of the heap feel that this is a mean approach. I have not spoken to one old-age pensioner who thinks that he received too much in his pension in the last upgrading. If more of your Lordships did your own shopping, and met more of the people who are living on these miserable allowances—the fact that so many millions of them need to 547 have supplementary benefits in order to live proves that they are miserable—you would not come to the Chamber and go through the Division lobby maintaining that 25p per week was an accidental extravagance and that this hard-faced Government are going to see that it does not happen again.
§ I must anticipate one argument that I am tired of hearing and this, too, concerns the question of cost. How a country spends its money depends on the principles which underlie its approach to society. I know that many noble Lords must be tired of our pointing out the imbalance in the distribution of resources under the present Government. No one on this side of the Committee is arguing against the fact that the country is in economic difficulties. What we are saying is that given that the cake is not very big, it simply ought to be divided differently. That is the answer to those who say, "Well, when we have a little more money we shall be a little nicer to the poor old people". We are asking those who are least able to carry the load to put up with the difficulties.
There is another question to which I should like an answer. We are talking as if we are giving this money away, as if we have to collect it from somewhere, and give it away, as though we had been holding many flag days. I should like to point out to the Committee that we are talking about national insurance benefits, benefits for which people have paid all their lives. I understand that there is a surplus of over £600 million this year in the national insurance fund and that this is the eigthth successive year that there has been a surplus in the fund. So it is quite irrelevant to talk about the poverty of the Government. The Government are making the situation much worse for the national exchequer, since supplementary benefits are financed from taxation. Forcing increasing numbers of people on to supplementary benefits means that a higher demand is made on taxation.
§ What are we talking about is people's own money, and it is against that background that I very much hope that the Committee will delete subsection (3), which gives power for this mean adjustment which in effect tells people who are among the most impoverished in the country that they have been enjoying an extravagance of 25p a week too much. I beg to move.
§ 4.5 p.m.
§ Baroness Young
I can quite understand why the noble Baroness, Lady Jeger, introduced her remarks in the way that she did, because if the amendment were to be carried, it would of course defeat the entire object of the Bill, and so it is absolutely essential to the Bill as well as to the debate that we are having. Therefore the noble Baroness will not be surprised when I say that I cannot accept the amendment. The intention of subsection (3) is to take account, at this year's uprating, of the effect on last year's uprating of the 1 per cent. overestimate of the 54-week increase in prices: 16½ per cent. instead of the actual 15½ per cent.
Subsection (3) provides that we recalculate the new benefit rates provided by the 1980 uprating order as if they had been based on an estimated price rise since the 1979 uprating of 15½ per cent., instead of 16½ per cent. Those recalculated rates then form the new 548 base line. They fall to be increased in November 1981 by 10 per cent.—the actual estimated increase in prices over the period between the 1980 and 1981 upratings. In other words, next November's increase will be based on what beneficiaries were intended to receive last November, rather than on what they actually received. That is how the new rates announced by my right honourable friend the Secretary of State were calculated.
The impression has been given that this proposal is being made in order to punish someone in some way. I should like to make it quite clear that the net result of the proposal will be an increased cost to the social security budget in this financial year of £2,700 million. So in fact people are to be quite considerably better off, in that over the 2-year period they will receive pensions that keep up with prices—
§ Baroness Jeger
I have already explained that I am very deficient when it comes to figures, but in the figure that the noble Baroness has just quoted relating to the total cost, is she taking into account the higher amount of money to be spent on unemployment due to the tragically increasing numbers of unemployed, rather than speaking in terms of individuals being better off?
§ Baroness Young
The point is that all individuals will have an increase in pensions of 10 per cent. The figure that I have quoted includes that increase and the facts of demography and unemployment. But there is at the same time an increase. We are not talking about a decrease. That is the point that I am trying to make—and a very important one it is, too.
The noble Baroness asked why we use the retail price index and not the pensioner index. The retail price index is the index that is, and always has been, used, and I understand that under it each item is given a weighting derived from the findings of the Family Expenditure Survey. So it gives an average picture of the expenditure patterns of nearly 90 per cent. of all households in the United Kingdom. It is in fact a very large and representative basket of goods and services which is costed each month to provide evidence of the movement in the price of the total basket. The different weightings are changed each January in the light of the Family Expenditure Survey findings, so that the expenditure pattern remains as up-to-date as possible.
It has been suggested that rather than use that index we should have used the pensioner index, but, as I understand it, had we used the pensioner index, it would have been seen that in 1977, 1978 and 1979 the pensioners' indices rose by less than the general index, excluding housing. It is true that over the 12 months from the fourth quarter of 1979 to the fourth quarter of 1980 the general index, excluding housing, rose by 13.3 per cent., compared with 14.7 per cent. for the pensioner index.
I make these points, not because I wish to make a debating point but because if you choose another index there could be a period of time in which you do rather better but there has been another period of time in which you would definitely have done rather worse. I would suggest to the noble Baroness that the reason why her Government did not use the pensioner index is 549 because, under the pensioner index, pensioners would in fact have been worse off in the sense of keeping up with prices than they would have been under the retail price index. The situation has now, for a short period of time, reversed itself, but I think a period of consistency is needed here. I think that is very important because otherwise it would suggest that you would move around until you found an index which you believed, rightly or wrongly, might give you the result you would like. So I think that if you go back over a period of time you will find that pensioners have done probably better, and certainly as well, under the retail price index as they would have done under the pensioner price index.
If I may then turn to the point made by the noble Baroness about insurance benefits, she asked why we could not ignore the shortfall because the insurance fund is showing a very large surplus. I understand that the surplus covers about 16 weeks of money that would have to be paid out from it, and indeed that proportion of time has been going down. As the noble Baroness will recognise, we on the Government side are being asked to give all sorts of pledges on shortfall. A provident Government attempt to keep something in balance against contingencies of precisely this kind, and against others that might arise, and we would be justifiably accused of being very bad managers if we simply spent right up to the hilt from the fund. I think that this would be a quite inappropriate way for a Government to proceed.
I think we should take it as read in your Lordships' House that we are all trying to do the best we can for pensioners. As indeed this is a central debate to this Bill, I think it is worth reminding ourselves, as I said in my remarks in the debate we had on the second amendment, that neither party has always and consistently done as well as no doubt that party would have liked when they were in government. I am just reminding myself that in November 1976, when the noble Baroness's party was in power and the IMF stood firmly behind them, and when they had considerable difficulties, they actually switched to the forecast method for reckoning inflation, and thereby saved £500 million. We can all understand why they had to do that; they had to do it because the country was in a difficult economic situation. We are having to do things now which we do not necessarily like because the country is in a difficult economic situation and the world is going through a recession.
I make these points only because I think we should say that, although we should like to have done more, as I am sure the noble Baroness would have liked to have done more in 1976, the facts of economic life are against us. That is why we have this Bill before us today, and that is why I cannot accept the amendment that has been moved.
§ 4.14 p.m.
§ On Question, Whether shall be agreed to?
§ Their Lordships divided: Contents, 76; Not-Contents, 123.551
|Amherst, E.||Kennet, L.|
|Amulree, L.||Kilbracken, L.|
|Ardwick, L.||Kilmarnock, L.|
|Aylestone, L.||Leatherland, L.|
|Birk, B.||Lee of Newton, L.|
|Bishopston, L.—[Teller.]||Listowel, E.|
|Blease, L.||Lloyd of Kilgerran, L.|
|Blyton, L.||Mackie of Benshie, L.|
|Boston of Faversham, L.||Maelor, L.|
|Briginshaw, L.||Milford, L.|
|Brockway, L.||Mishcon, L.|
|Brooks of Tremorfa, L.||Pargiter, L.|
|Bruce of Donington, L.||Phillips, B.|
|Byers, L.||Pitt of Hampstead, L.|
|Chitnis, L.||Ponsonby of Shulbrede, L.—[Teller.]|
|Cledwyn of Penrhos, L.|
|Crowther-Hunt, L.||Rochester, L.|
|David, B.||Sainsbury, L.|
|Denington, B.||Sefton of Garston, L.|
|Donaldson of Kingsbridge, L.||Segal, L.|
|Elwyn-Jones, L.||Shinwell, L.|
|Elystan-Morgan, L.||Stedman, B.|
|Evans of Claughton, L.||Stewart of Fulham, L.|
|Ewart-Biggs, B.||Stone, L.|
|Fisher of Rednal, B.||Strabolgi, L.|
|Gaitskell, B.||Tanlaw, L.|
|Gardiner, L.||Taylor of Blackburn, L.|
|Gifford, L.||Taylor of Mansfield, L.|
|Gosford, E.||Tordoff, L.|
|Grey, E.||Underhill, L.|
|Hale, L.||Vernon, L.|
|Hampton, L.||Wallace of Coslany, L.|
|Hanworth, V.||Wedderburn of Charlton, L.|
|Henderson, L.||Wells-Pestell, L.|
|Houghton of Sowerby, L.||Whaddon, L.|
|Janner, L.||White, B.|
|Jeger, B.||Willis, L.|
|Jenkins of Putney, L.||Winstanley, L.|
|Airey of Abingdon, B.||Effingham, E.|
|Alexander of Potterhill, L.||Elliot of Harwood, B.|
|Alexander of Tunis, E.||Energlyn, L.|
|Alport, L.||Evans of Hungershall, L.|
|Armstrong, L.||Exeter, M.|
|Auckland, L.||Faithfull, B.|
|Avon, E.||Ferrers, E.|
|Balfour of Inchrye, L.||Ferrier, L.|
|Bellwin, L.||Foley, L.|
|Belstead, L.||Fortescue, E|
|Berkeley, B.||Fraser of Kilmorack, L|
|Bessborough, E.||Gainford, L|
|Boyd-Carpenter, L.||Gibson-Watt, L.|
|Brookeborough, V.||Glenkinglas, L.|
|Burton, L.||Gore-Booth, L.|
|Caccia, L.||Gowrie, E.|
|Cairns, E.||Gridley, L.|
|Campbell of Croy, L.||Grimston of Westbury, L.|
|Chelwood, L.||Hailsham of Saint Marylebone, L.|
|Clifford of Chudleigh, L.|
|Clwyd, L.||Halsbury, E.|
|Cork and Orrery, E.||Hastings, L.|
|Cottesloe, L.||Hayter, L.|
|Craigavon, V.||Henley, L.|
|Crathorne, L.||Hereford, V.|
|Croft, L.||Hillingdon, L.|
|Cullen of Ashbourne, L.||Hives, L.|
|Daventry, V.||Home of the Hirsel, L.|
|Davidson, V.||Hylton-Foster, B.|
|de Clifford, L.||Ilchester, E.|
|De Freyne, L.||Inglewood, L.|
|Denham, L.—[Teller.]||Kemsley, V.|
|Derwent, L.||Kinloss, Ly.|
|Dundee, E.||Kinnoull, E.|
|Dundonald, E.||Lane-Fox, B.|
|Ebbisham, L.||Lauderdale, E.|
|Eccles, V.||Lawrence, L.|
|Long, V.||Saint Oswald, L.|
|Loudoun, C.||Sandys, L.—[Teller.]|
|Luke, L.||Savile, L.|
|Lyell, L.||Selkirk, E.|
|McAlpine of Moffat, L.||Sharples, B.|
|Macleod of Borve, B||Soames, L.|
|Mancroft, L.||Somers, L.|
|Mansfield, E.||Spens, L.|
|Marley, L.||Stodart of Leaston, L.|
|Merrivale, L.||Stradbroke, E.|
|Mills, V.||Strathcarron, L.|
|Milverton, L.||Strathclyde, L.|
|Montagu of Beaulieu, L.||Stuart of Findhorn, V.|
|Mowbray and Stourton, L.||Swinfen, L.|
|Murton of Lindisfarne, L.||Swinton, E.|
|Nugent of Guildford, L.||Terrington, L.|
|Onslow, E.||Tranmire, L.|
|Perth, E.||Ullswater, V.|
|Portland, D.||Vaux of Harrowden, L.|
|Rankeillour, L.||Vickers, B.|
|Rawlinson of Ewell, L.||Vivian, L.|
|Renton, L.||Wakefield of Kendal, L.|
|Robbins, L.||Ward of Witley, V.|
|Rochdale, V.||Young, B.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 4.23 p.m.
Baroness Jeger moved Amendment No. 7:
Page 3, line 7, leave out ("15/") and insert ("17").
§ The noble Baroness said: I think it might be for the convenience of the Committee if, in moving Amendment No. 7, I were to refer briefly to Amendments Nos. 8, 9, 10, 11, 12 and 13. These amendments are consequential on the Division which has just taken place, which means that subsection (3) as a whole stays in the Bill, but by these amendments we are seeking to try to mitigate hardship in certain special cases. For instance, Amendment No. 8 refers to the case of invalidity benefit.
§ I feel sure that there will be a great deal of sympathy and understanding in the Committee for those who have to live on invalidity benefit, especially over the long term. Many of these people were very adversely affected by the earlier social security provision which virtually reduced their entitlement by 5 per cent., because benefit was reduced to 5 per cent. below what was the agreed rate of increase in prices. I understand and I will anticipate the noble Baroness making references to previous Governments; we have all had our difficulties, as she rightly said, in trying to meet the needs of those who have the greatest problems in coping with life. But these are people, many of them invalidity pensioners, who cannot qualify for the normal rate of supplementary benefit, some not for the long-term rate either, and some who are not even entitled to free prescriptions. There are all sorts of ways in which people get caught in this sort of trap.
§ I am told—and I take my figures from column 825 of the Hansard of another place for May 13th—that it would cost £15 million to release families from this sort of difficulty and to enable invalidity pensioners to enjoy a slightly better income. I feel that this is a very modest amendment. We are really asking for what is usually called the 5 per cent. abatement to be abandoned and for these people to qualify for a more generous payment. I think we are taking about between 90,000 and 100,000 people, but I am sure that 552 the noble Baroness has better ways of finding out statistics than I have, and therefore I hope very much that, in this case if not in any other, some sympathetic consideration will be given.
§ On Amendment No. 9, noble Lords and I myself have referred earlier to the case of retirement pensions. I am sure that if no stony heart has yet been moved, it still will not be moved. On Amendment No. 10, the reference is to Part IV of Schedule 4 to the Social Security Act 1975, which, if I may remind your Lordships, deals with rates of benefits, grants and increases for dependants. The other amendments are, I think, self-evident. We refer particularly to unemployment benefit as well as, once again, to invalidity benefit. There are subsequent amendments on some of these things which will be raised again so that I do not propose to detain the Committee for long, but I think that I must say a word about the unemployment situation, to which Amendment No. 12 refers. We ask that unemployment benefit should again be exempt from the reduction that was brought in on the 5 per cent. basis under previous decisions.
§ We are talking about a single man living at present on £20.65 a week, a couple on £33.40 and £1.25 for each child—and this at a time when earnings-related benefits are being reduced and when we know that they are going to be phased out. We know also—and there is a subsequent amendment and I touch on it briefly now—that in some cases of payment, people go on to a higher, longer-term rate after one year but that that does not happen in the case of the unemployed. That means that the full impact of unemployment and poverty are cumulative. We could approach this matter differently if we were in a situation where unemployment was going down. However, sadly it is not. That gives urgency to our debate.
§ We are talking about thousands of our fellow citizens and their children. I hope I may be forgiven for mentioning a local figure. In the borough of Camden, where I live—which is not usually looked on as one of the deprived parts of the country—I find from the employment exchange that at March 1981 we had 5,993 registered unemployed and 234 vacancies. Those are the figures that are the background to our consideration of an amendment like this. We are talking about thousands and thousands of people—and the number is increasing—who are having to face a lower standard of living, many of them after a long time out of work when poverty accumulates.
§ Among them are quite a number of disabled people who are anxious to get work and are very often those least able to get it in spite of efforts that the noble Baroness and her department have made with the full support from all sides of the Committee to encourage the employment of disabled people. It is a fact that we are now thinking about a situation where it seems inevitable that the number of unemployed, especially the older unemployed, will be increasing. We are not now talking about people changing their jobs and figures on the unemployment register for just a short while. There are many people in this country who are not going to get a job again. It is for the sake of many of the older unemployed that we are particularly anxious that the Committee should give consideration to this amendment.553
§ I know that the Social Security Advisory Committee are at work. I hope we shall hear when we might have a report from them and what proposals are likely to be made. Again, we have come back to the matter of costs. I do not know how the Government have estimated the cost of this amendment, but we shall be told that it is a matter of financial stringency, and we shall have to say that there are people who can afford to be taxed more in order that others may get better benefits. There is again the question of social responsibility in sharing the assets of the nation.
§ I understand that at the beginning of January 1980 there were over 335,000 people who had been unemployed for over 52 weeks. The figure for January 1981 was over 430,000. This situation is becoming endemic in our society. We can no longer look on unemployment benefit as a payment just to tide people over a bad patch while they look for another job. We are having to face the problem of men and women and their families who are being asked to accept poverty and a lower standard of living which is totally unfair and which really ought to make the rest of us feel ashamed. This is where children are affected and where older people are affected. It is where all the good things of life are the first that have to go by the board. I hope that so far as the unemployed are concerned, as they have become the major problem of our time, the Government will give this amendment special consideration.
§ I have not spoken at length on the other amendments which have either been referred to before or are self-evident. In looking at our attempts to make some ameloriation in regard to subsection (3) I hope that the noble Baroness will be able to bear in mind our genuine concern for certain groups of people and that the Government will be able to share it. I beg to move.
§ 4.35 p.m.
§ Baroness Young
The noble Baroness has moved Amendment No. 7 and spoken to about six other amendments. I hope that it will be convenient if I reply on Amendments Nos. 7, 8, 9, 10 and 11 and ask my noble friend Lord Cullen to reply on Amendment No. 12 which quite specifically deals with unemployment.
As the noble Baroness has quite rightly said, now that subsection (3) of Clause 1 remains in the Bill, this series of amendments are designed quite specifically to remedy what she regards as defects in the present proposals. They each deal with a different area of social security policy of one sort or another. Amendment No. 7 is one which has been brought to the attention of the Committee quite particularly by the organisation which greatly concerns itself with the elderly; namely, Age Concern. All of us would like to place on record our tribute to the work which this organisation does. I shall explain why the Government do not feel they can accept the proposals which come from it.
The intention of Clause 1(3) is to take account, at this year's uprating, of the effect on last year's uprating of a 1 per cent. overestimate: the 16½ per cent. instead of the actual 15½ per cent. This amendment would not only preclude any such recovery but would require the payment of an additional ½ per cent. 554 on top of this, bringing the increase up to 17 per cent. I understand that the intention of this amendment is to make good shortfalls in relation to earnings from previous years. The effect would be to make good shortfalls in relation to earnings not only for long-term benefits but for short-term benefits as well. I understand that it has never been the policy of the Opposition that short-term benefits should be uprated in line with earnings. I do not intend to embark here on a detailed argument about the figure. All I should like to say is that the Government regard the proposals embodied in subsection (3) as it stands as essential in the present economic situation.
It might be helpful in turning to the next amendment to say something generally about retirement pensions because they have been discussed at considerable length. I should like to confirm a figure that I gave in my previous reply and say that the cost of uprating the retirement pension together with unemployment and the other benefits is £2.1 billion. I hope that will set the record straight. It is true that when in 1976 the previous Government switched from a historic to a forecasting basis for reckoning upratings, a series of decisions different from those actually taken would have produced a higher rate of pension than the pensioners actually received. The precise calculations are a matter for argument. Some of the figures given by Age Concern seem too high; others are probably too low. We would all agree that the principle is undeniable. The rates of pension payable from November 1980 have more than maintained their real value since 1948 if the rates payable in previous years are revalued at November 1980 prices. The 1981 uprating is intended to secure the same result.
If the comparison is made with the net average weekly earnings of male manual workers, the pension has broadly maintained its relative position. If the additional earnings-related pension is also included, then the relative position of the pensioner has improved. The improvement will continue as the new scheme matures. This is something we would all regard as a very important factor. As more people reach retirement age, so their basic pension will be increased by this added earnings-related pension. Modest pay settlements in line with what the country can afford will help to maintain these relativities—and this is a very important point for everyone to recognise.
Two of the amendments moved by the noble Baroness, Nos. 8 and 11, are quite specifically concerned with invalidity benefit, and of course we on this side of the Committee regret very much the fact that the clawback at this November's uprating will apply to the invalidity benefit and will not be exempted from the 1 per cent. adjustment. But we have considered this at very great length. One of the constituents of invalidity benefit is the invalidity allowance. We are proposing that the allowance should be brought back into line with the retirement pension this November—that is, the abatement applied for 1980 will be made good. With that in mind, it is difficult to be sure what effect the amendment would have on the allowances if invalidity benefit was exempted from the 1 per cent. adjustment and the retirement pension was not. The rates might be put back out of alignment again.
Indeed, to turn to Amendment No. 11, which is also 555 concerned with invalidity benefit though on a slightly different point, again the reasons for the abatement of the invalidity benefit at the 1980 uprating still hold good and the restraints on public spending continue to be necessary. But we do have the assurance given by my right honourable friend that the value of invalidity benefit will be restored to the level of the retirement pension when it is brought into tax. I should like to repeat that, and I am sure there will be a general welcome for the proposal I have already mentioned on the invalidity allowance which will be restored next November. Indeed, although the invalidity allowance is only a small part of the invalidity benefit it is not negligible, and in fact it is received by 83 per cent. of beneficiaries. Twenty five per cent. receive the higher rate, which will increase to £6.20; 20 per cent. the middle rate, which goes up to £4; and 38 per cent. the lower rate, at £2. It will cost £5 million in a full year and will make good the abatement of the invalidity allowance in this way—
§ Baroness Jeger
I do appreciate that the noble Baroness is trying to help us very much in this very complicated situation. Can she give us any information as to when the taxation of benefits, to which she has referred, is likely to take place?
§ Baroness Young
On this matter I do not think it is going to be possible to bring invalidity benefit into tax in 1982, as was at first thought to be possible. I think we would all regret this, but I can assure the noble Baroness that the abatement will he made good as soon as it is taxable. I do not think I can go further than that this afternoon.
Finally, perhaps I might deal with Amendment No. 10 which was concerned with dependency increases. This amendment would have the effect of precluding the recovery of the excess uprating in November 1980 for increases for children and adult dependants of those getting unemployment benefit, sickness benefit, invalidity pension, maternity allowance, widow's allowance. widow's and mother's allowance, retirement pension, child's special allowance and invalidity care allowance. The amendment would have the effect of precluding the recovery of the 1 per cent. for increases for children. The cost of this would be about £20 million, of which £18 million would be attributable to adult dependants. The effect on beneficiaries would, of course, be small. An unemployed person would get 10p extra for an adult dependant and 5p extra for a child dependant, but in any event we do not believe it would be right to single out these dependency additions for exemption. The dependency additions go to the basic personal benefit to provide an income for the family group as a whole.
I understand fully the desire to mitigate the effects of Clause 1 and in another place a whole series of similar amendments were tabled and the case must surely lie for or against the 1 per cent. generally. I should emphasise that the 1 per cent. merely ensures that what the Government intend to happen and what Parliament approved last year actually does happen.
I am conscious of trying to give an answer to six amendments at once, but I have covered a lot of ground and of course if there are points that I could pursue 556 further I should like to do so, either on this occasion or by correspondence. I have done my best to answer the points raised by the noble Baroness, and unless she wishes to raise any further points at this stage, I should like to ask my noble friend Lord Cullen to speak on Amendment No. 12.
§ Lord Cullen of Ashbourne
The noble Baroness, Lady Jeger, spoke most movingly on the subject of unemployment, which worries all of us so much, and so I should like to say a word about this matter in reply. The Government have repeatedly said that we shall consider what the rate of unemployment benefit should be, when it is brought into tax, in the light of all the circumstances at the time. I understand, of course. the force of the arguments that the noble Baroness has put forward, that abatement must end when taxation starts. Those arguments will be high among the considerations of which we shall have to take account. But restoring the abatement will cost some £50 million a year and we must take that into account as well.
§ Baroness Jeger
The noble Lord has just referred to a figure of £50 million, if I heard it aright. That means that the unemployed are being deprived of £50 million.
§ Lord Cullen of Ashbourne
It can be put in any way one likes, but from a public expenditure point of view this would make a difference of £50 million; and at a time when we are having to constrain public expenditure as much as we possibly can, clearly we cannot visualise this sort of expenditure, at any rate at this moment, with any equanimity. What I have said is that we shall consider this along with the other considerations at a time when unemployment comes into tax.
It is perfectly true that when we decided we had to make savings in social security as in other areas of public expenditure, we chose to trim back the increases in those benefits which both sides of your Lordships' House have agreed ought to be subject to tax, but which for practical reasons could not be brought into tax straight away. We therefore thought it right to introduce the abatement provision, pending taxation of the benefits in question, as one of our savings measures. But we have had to make it clear that invalidity benefit apart, what the level of benefit should be once it was made liable to tax would have to be considered when the time came in the light of all the relevant circumstance, including the economic situation. That time has not yet come; and your Lordships must not expect me to anticipate the decision. I can only repeat at this stage that all the relevant factors will be taken into account. I cannot give any commitment beyond that. Still less can I accept the suggestion that the abatement should be restored even before unemployment benefit becomes taxable. In the present economic situation that is not a realistic expectation.
I have to remind your Lordships that the rates proposed by the Government for November 1981 have been announced. We do not intend then to restore the abatement; nor, on the other hand, are we using the power which Section 1 of the No. 2 Act provides to make further abatement. I hope that the noble Baroness will withdraw her amendment; but, failing that, I must ask your Lordships to reject it.
§ Baroness Jeger
This debate will have brought no cheer and no consolation to those outside who will be wondering what your Lordships are going to do to mitigate the hardship under which many of them are suffering. The only note of comfort we have had from the noble Lord is that they can look forward to the time when they have to pay income tax on their benefits, which seems to me to be something of less than cold comfort. I have listened very carefully to what the noble Baroness and the noble Lord have said, and I do appreciate the complicated way in which these amendments have had to be dealt with. In view of all that has been said, I will ask leave to withdraw the amendment for the moment. We feel very strongly about certain of these matters and we shall want to come back to them again. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 8 to 13 not moved.]
§ 4.50 p.m.
§ Lord Wallace of Coslany moved Amendments Nos. 14 and 15:
Page 3, line 24, at end insert—
(6) The Secretary of State shall request the Social Security Advisory Committee to investigate and report on the inadequacy of the current level of child support provided through the child benefit, supplementary benefit and social security schemes and this report shall be laid before Parliament ".)
at end insert—
(6) The Child Benefit Act 1975 shall be amended as follows—
(1A) In subsection (1) above the words "total child support" shall mean the combined total of child benefit and any increase equal of benefit payable under section 41 and Schedule 4 Part IV to the Social Security Act 1975."").
§ The noble Lord said: I think it will be for the convenience of the Committee if Amendments Nos. 14 and 15 are taken together, because they deal with the same subject. They deal with support for the children of parents who are sick, unemployed, disabled or widowed. Before November 1980, such children received £5.70 per week, made up of £1.70 for the person who was sick or unemployed and £4 for the mother in child benefit. When the uprating of 16½ per cent. was made last November, the £5.70 should have been increased by approximately 95p. That would have taken the weekly payment from £5.70 to £6.65. Actually, the child benefit went up to £4.75, but the dependency addition was reduced to £1.25—an increase of 30p per week for each child.
§ For the majority of people, social security benefits will increase by 9 per cent. next November. For the parents of about 500,000 children, the child benefit will increase by 50p. National insurance payments for the sick, unemployed and industrially injured will be reduced from £1.25 to 80p per week. Taking into account the two increases between November 1979 and November 1981, the total increase for the child 558 of someone who is sick or unemployed will have risen from £5.70 per week to £6.05—an increase of 35p over two years; well below the other benefit rates.
§ The cost of keeping a child has risen by more than 35p over two years, as those with children or grandchildren will realise. That is obvious, because of rising prices and so on, and I do not think anybody can doubt it. But there is an even more disturbing factor in this rather sorry picture, which affects not only the benefits that I am talking about, but others as well. I refer to the unfortunate possibility—and the somewhat clear possibility—of inflation rising to 12 or 13 per cent. in the final quarter of the year, whereas the social security benefit uprating is based on an estimate of 12 per cent.
§ A lot of people who are more experienced than I have already forecast this and, apart from the drop in the value of the pound—and, I admit, that the value can fluctuate—raw material costs over the past six months have been increasing at an annual rate of 23½ per cent., which, in turn, indicates an increase in retail prices in about nine months' time. What I want to ask, apart from the general question about child benefits, is: what will be the Government's action if the estimate of inflation proves to be too low in November next? This is a question which is very relevant and very much in the public mind at the moment. It calls for a clear-cut and honest answer from the Government.
§ I must be fair and say that I do not expect the two Ministers on the Government Front Bench to be in a position to answer the question now; that lies further ahead. I do not think it lies with the dead hand of the Treasury; it lies with the dead hand of the Prime Minister. In the old days, we used to refer to the dead hand of the Treasury, but, from information received from various sources, it looks to me as if it is the dead hand of the Prime Minister. I beg to move.
§ Baroness Young
The noble Lord has spoken to two amendments, Nos. 14 and 15. I think that he has devoted most of his remarks to No. 15, so it may be for the convenience of the Committee if I deal first with that, and then go back to say something about child benefits.
The effect of the amendment which the noble Lord has moved, which was debated at length in another place, would be to prevent the Secretary of State from using the up-rating method which was used at the last two upratings. Instead, full price protection of the combined child benefit and child dependency increase would be required. In fact, the method to be used at the uprating means less than this when the child benefit increase is taken from the dependency increase for children.
This is a very technical matter, as the noble Lord has already indicated, and I should like to try to put the issues as simply as I can. This year, the uprated national insurance child dependency increases are being reduced by the amount of uprating of child ben-fit. The method that has been used is one that was used in 1980 and, indeed, in 1977. So it is entirely in line with the law and is not being used for the first time
Over the two upratings, 1980 and 1981, total child support as defined in the amendment, will have risen from £5.70 a week with short-term benefits and £11.10 559 a week with long-term benefits, to £6.05 for the short term and £12.95 for the long term respectively. At the same time, the rates of supplementary benefit on account of children have gone up substantially; in particular, with the changes made in November last year. I should like to emphasise that these have given full price protection—indeed, the increases in percentage terms range from 21 per cent. to 52 per cent. The biggest increase is in the scale rate for the youngest children, which rose from £5.20 to £7.30 in November 1980, and will go up again to £7.90 next November.
As the noble Lord said—and, indeed, an assurance was given by my honourable friend Mrs. Chalker in another place—there is a fair measure of agreement on the desirability, in principle, at any rate, as a long-term objective, of having the same child support available to people whether they are in work or out of work. The short-term national insurance dependency increase—80p from next November—has reached a level at which this objective is foreseeable as a practicality. In terms of simplification, and as a sensible allocation of resources, it will probably be felt that this process ought not to be halted at this point.
So, in asking your Lordships to reject this amendment, I would emphasise the fact that the Government, far from penalising the poorest families, have in real terms improved their position and, at the same time, taken a further and significant step towards the simplification of this complicated social security system. I am sure that we can all agree on that, because this is a complex matter. But I should like to emphasise once again that we are, by deliberate choice, helping the poorest families in this regard.
The noble Lord also spoke to Amendment No. 14, and it may be for the convenience of the Committee if, at this stage, I say something about child benefit. We announced an increase of 50p, taking the rate to £5.25 next November. We have given an undertaking that we will fully protect the November 1980 rate, and it meets in full the commitment given by my right honourable friend the Secretary of State for Social Services last July that, subject to economic and other circumstances, we would maintain the real value of child benefit. This increase will cost £275 million net in a full year. It is the most that the country and the Government can afford in the present difficult economic situation. I, for one, should have liked to see more, but it is very important, because it shows the Government's concern to give help to all families through the child benefit scheme.
Finally, may I comment in detail on Amendment No. 14, and make a general point about the Social Security Advisory Committee? The committee has established good relations with a wide range of representative organisations, and I understand that members of the committee have been visiting social security offices before they launch their first major public initiative. They will be monitoring how the new supplementary benefits scheme is working, drawing on the experience of the department and of representative bodies who have been asked to provide evidence to it.
We believe that we must give the committee all the help it needs, but we do not want to start loading it 560 with major new studies of the kind envisaged in this amendment without proper consideration of the other priorities competing for its attention. The committee have already chosen family support, together with benefits for long-term unemployed people and for disabled people as their key interests for 1981. The committee will no doubt comment on these important issues in their first annual report. I suggest that it would not be wise for us to try to tell them what the format of their work should be at this early stage. We have already said that the committee hope to produce this and subsequent annual reports in time for them to be available in the Budget debates and succeeding discussions.
With these comments on both Amendment No. 14 and Amendment No. 15, I hope I have been able to answer the points raised by the noble Lord, Lord Wallace of Coslany, and that he will feel able to withdraw his amendments.
Lord Wallace of Coslany
So far as Amendment No. 14 is concerned, I fully understand the point which the noble Baroness has made. I do not want to be unreasonable about it. There is a limit to what advisory committees can cope with at any one time, so I withdraw Amendment No. 14 completely and absolutely. Turning to Amendment No. 15, as the noble Baroness has said the position is very complicated. She has certainly given me a great deal of food for thought. I shall withdraw that, too, for further consideration. It is a matter that one cannot rush into in a quick debate of this kind. One needs to be fully informed. Therefore I beg leave to withdraw Amendments Nos. 14 and 15.
§ Amendments, by leave, withdrawn.
§ Clause I agreed to.
§ 5.2 p.m.
Lord Wallace of Coslany moved Amendment No. 16:
After Clause 1, insert the following new clause:
§ The Secretary of State shall review the relationship of the Retail Price Index (as at present constituted) to the needs of Social Security Beneficiaries and shall submit to Parliament a revised index based on such needs.").
§ The noble Lord said: In the absence of my noble colleague Lady Jeger, who is undertaking certain matters which would interest me if I had the time, I beg to move Amendment No. 16, which I hope is couched in parliamentary draftsman's terms. I drafted it myself. It is based on the remarks made by my noble friend Lady Jeger during the Second Reading debate. A great deal of argument is taking place—in fact, there has been argument this afternoon—on what indices shall be used for various purposes.
§ Without forcing the issue—we are not asking the Government to make sensational moves—we believe that there is a case for a general review. Having had this review, the Minister will in due course report to Parliament. The present situation on indices is mixed. Therefore I recommend the Committee to accept the amendment. I hope the Government will give me the shock of my life by doing so.
§ Baroness Young
I must begin by expressing a certain degree of sympathy with the noble Lord, Lord Wallace 561 of Coslany, who finds himself, in this complicated Bill, suddenly having to move an amendment of this kind. I think he will understand that in our discussion of Amendment No. 6 we went into the question of what index of prices is to be used for determining what the rise in prices in a given year actually is. I should like to assure him, because he asked the specific question, that the measurement of price changes is kept under review.
Other indices besides the retail price index are available. It has been mooted that we should look at others but the traditional practice of successive Governments has stood the test of time. It is true that the general retail prices index does not cover all social security beneficiaries. Pensioner households in which at least three-quarters of the total income is derived from national insurance or similar pensions are excluded from the households covered by the index. But it covers the majority of social security beneficiaries, including about half of pensioner households, together with other households receiving unemployment benefit, sickness and invalidity benefit, supplementary allowances and other benefits.
Pensioner households excluded from the general index are covered by two other indices: that for one-pensioner households and that for two-pensioner households. However one must accept that the pensioner indices are limited in scope. In particular, for technical reasons they exclude housing costs and are only published quarterly. It would not be appropriate to uprate benefits in line with an index which did not cover housing. In any event, if we compare movements in the general index, excluding housing, with the pensioner indices, over the years they have diverged little.
As I indicated in an earlier answer, for three years the pensioner indices rose by less than the general index, excluding housing, so it would be very much a question of taking one year on one index, which would perhaps show a higher rise in prices and in another year a lower rise in prices. In these circumstances, I think that the Government (indeed, the noble Lord's Government when they were in office did so) are quite right to accept the retail price index.
The noble Lord's point that changes should be kept under review is very important, and I understand that this is the case. What is important in maintaining the general acceptability of the retail price index is that its method of construction—what it measures and how it is compiled—is decided by the Retail Prices Index Advisory Committee which includes members from the TUC, the CBI and from trade and consumer organisations, as well as leading academic experts and Government statisticians. The Committee reports when necessary to the Secretary of State for Employment with recommendations for changes. The index is accepted as a reliable and accurate method of measuring the changes in the cost of living.
I hope that this reassurance will meet the point which the noble Lord has made on the price index and that he will withdraw his amendment.
§ Baroness Jeger
I apologise for the fact that I did not hear the beginning of the reply of the noble Baroness. However, I did hear her say that the previous Government had agreed that to link pensions to the retail price index was the best answer. May I 562 point out that the policy of the previous Government was to link pensions to average national earnings or to the price index, whichever was the higher. It is the breaking of that link with average earnings which has caused so much hardship and confusion. In view of the fact that nobody seems to be able to find a sensible retail price index, may I ask the Minister whether or not it would be worth looking at this again?
§ Baroness Young
I think that the noble Baroness has raised a quite separate point from the one raised in the amendment. However, this is the Committee stage and of course she is perfectly entitled to do so. We have been over the fairly well worn ground of the Government's decision to link pensions to prices and not to earnings. As the noble Baroness will be aware, it was not always easy for her Government to keep up pensions against earnings. There was an earnings shortfall which was made good in November 1979, and there was a shortfall against prices which was not made good in 1979. If one goes back through the years one finds that at different times Governments have been faced with difficult economic circumstances and that they have been unable to do as much as they would have wished.
On the question of keeping up with prices, I very much hope that the noble Baroness will feel that there is a degree of agreement between all parties that the retail price index is the index to be used, in particular as I understand that it reports regularly, unlike the pensioners' index. It is drawn up on the advice of this advisory committee which must obviously consider all the matters which are regarded as appropriate to be included in the index. Even if any of us might have views about the appropriateness of one or other of the items in the index—and I must honestly confess that sometimes I have looked at it and have been rather surprised—nevertheless it does cover the broad spectrum of what are regarded as items which should be included in this kind of index, which is used as a measure for so many other matters apart from pensions. If we were not to use this for pensions I think we could be criticised for not using one which has a national acceptability over so many different Government departments.
§ Amendment, by leave, withdrawn.
§ 5.11 p.m.
Lord Wallace of Coslany moved Amendment No. 17:
After Clause 1, insert the following new clause:
§ ("Take up of Benefits
§ At the same time as the Secretary of State makes any statement under the provisions of section 1(1) he shall make or cause to be made in each House of Parliament a statement of the actions which he is taking and propose to take to acquaint persons eligible to claim benefits to which they are entitled, their right to claim and to encourage them to do so.").
§ The noble Lord said: This is quite an important new clause—I say that with the greatest of respect to myself! In fact, as the noble Baroness, Lady Young, or her advisers will have spotted, it is a modified version of an amendment that was moved in another place. In my candid opinion the one moved in another place asked for too much of the Government. It wanted 563 statistics and all sorts of things which would take up much valuable time. I personally realised that it would be pointless to ask the Government to produce masses of statistics in the present situation.
§ Having said that, I would say that this simple clause deals with the issue of social security benefits, means-tested benefits where, except in the case of child benefit, the take-up of such benefits is not as high as is socially desirable. It means that a considerable number of people are not availing themselves of benefits to which they are fully entitled and which in fact they need. In the case of supplementary pensions it is estimated to be in the region of 700,000 people or more. In most cases the take-up is about 70 to 75 per cent. of those entitled. Some are just a shade lower.
§ I frankly admit that the situation is not new, as previous Governments have not tackled the problem effectively. Perhaps the most worrying instance is the failure to take up the attendance allowance, the benefit available for disabled people who need frequent or constant assistance from others. One could quote a number of other examples, but I shall not take the time of the Committee to do so. It is a situation which is worrying many voluntary bodies such as the National Association of Citizens' Advice Bureaux, the Disability Alliance and others, including—as I indicated in my Second Reading speech—the local authorities.
§ There is the distinct possibility that many more fully entitled people will not claim because of the fear generated by the Government's anti-scrounger campaign. I can understand the Government taking action against fraud but it is being carried out on a scale which may put people off. I say "may" because it is my opinion that it would do so, but there may he a difference of opinion on that. It may be arguable but it is my own experience as a former constituency MP that many people, honest and straightforward, are sensitive and fearful of authority when placed in the position of needing help.
§ With elderly people particularly, pride enters into the question. To them it is seeking charity or public assistance; to them their financial affairs are private and straitened circumstances produce an agony and a determination to manage and to do without. That is the position. I go right back to my youth, when I became one of the unemployed in the depression of the early years after the First World War. I was faced with going on to the dole and my pride would not let me, but my mother had to have some help. So I went to a company and got a job addressing in my room envelopes for sale catalogues, working day and night, with my mother keeping the fire burning in the grate to keep me warm, because it was in the winter. At the end of the week I had earned 18s.—which was one shilling less than the dole, but I had maintained my pride. Of course my mother had expended money on maintaining the fire. I only mentioned that, not in any soft way of my own experience, but because this is the attitude particularly in the minds of many elderly people, and it is worrying.
§ Leaflets and forms are not always simple. Some are all right, but not all elderly people can really understand what on earth it is all about. Some of them are just scared stiff. Many of us have had to help people to fill in such forms and to get advice. I readily accept 564 that the remedy is not an easy one, and the new clause does not attempt to tie the Secretary of State down to exact detail. Consultations with voluntary bodies, local authorities and others would be worth while; and perhaps a little more help from the media, with more attention on the needy rather than on scroungers, which has been a tendency which has caused a great deal of public alarm and Government reaction, would be very much worth while. Without running the Government into a great deal of expenditure there is something here about which we could all get together and do something.
§ I am not introducing the point as such, but some people will say that they will not accept this simply because it will cost more money. But that is not the point at issue. I think the noble Baroness and her colleague, who are very kindly people at heart, will accept that there are a number of very worrying cases of people who have not taken up that to which they are entitled. Deal with the scroungers, yes, and deal with them ruthlessly. I have no argument about that and I would not disagree; but here is something where we can have a joint operation, whether we be in public service or volunteers in social organisations. We can do something about a social problem that exists and something which I am sure, in the way in which I have worded this amendment, the Government can accept. If the wording is wrong I will change it, but I do not think they will disagree with the principle; indeed, I shall be very surprised if they say otherwise. So I sincerely hope that this clause, which I am sure in general terms is acceptable to all sides of the Committee, will have some acceptance from the Government, and that is the very least I ask. I beg to move.
§ Lord Cullen of Ashbourne
The noble Lord has raised a very important point. I entirely agree with him on the principle, and certainly I know that all my colleagues feel as strongly as he does that the take-up of benefits should be improved in any way possible.
The amendment would have the effect of requiring a statement in each House, at the time of uprating, of the action which the Secretary of State proposed to take to acquaint people of their rights and benefits and to encourage them to claim. Whereas the amendment that was debated in another place on 13th May was concerned only with certain benefits, this amendment has a wider effect, requiring the statement to cover all benefits for which the Secretary of State is responsible. The statement envisaged on take-up of benefits would have no immediate relevance to the up-rating of benefits required by Clause I of the Bill. That Parliament which provides entitlement to certain benefits at certain levels wants people who are entitled to them to get those benefits is undoubtedly true. I confirm once more that all my colleagues share that desire.
The action taken to encourage people to claim specific benefits or benefits generally is kept under constant consideration. However, the uprating announcement is not the best time to air all this, and the Government consider it more appropriate for such information to be made available at other times and in other ways—for example, in relation to specific benefits as the occasion arises. A statement on take-up made at the time of the uprating announcement 565 would not add anything to the strenuous efforts we are making to ensure that people claim benefits to which they are entitled. I should like to repeat that for the noble Lord opposite; we do make strenuous efforts, and I am sure the noble Lord, Lord Wells-Pestell, will remember the efforts that were, and are, made in the department. We are trying all the time to increase the take-up of benefits. The Government would always be glad to have any suggestions on matters of this kind.
We do not think there is any need to have this amendment in the Bill. I am going to ask the Committee not to accept it, and I should like to make one other point. The noble Lord referred to fraud and abuse. I know that it is the case that some disabled people actually fear that others are abusing the system, and that deters them from claiming benefits. This is the other side of the coin on the point which the noble Lord made. In many ways I sympathise very much with the aim of the noble Lord's amendment, but I shall ask the Committee to reject it.
Before the noble Lord, Lord Wallace, decides what course to pursue, perhaps I may say something else on this matter. It seems to me there is one aspect of this very important question of take-up which was not referred to by the noble Lord, Lord Wallace, in moving his new clause, or by the noble Lord, Lord Cullen, in replying. All my experience of investigating the extent of take-up of different benefits—a subject in which I have been deeply involved over many years—has shown me that time and again we find very substantial local and regional variations. I think that that is a most important point. It is not actually referred to in the clause, though I know there is nothing in the new clause which would preclude the Secretary of State from collecting differential figures from different districts. I have no doubt that steps will be taken by whatever party happens to be Government; I believe that there is general concern about the low level of take-up of certain benefits, and, if Parliament goes to the trouble of voting money for the specific help of certain people, it should obviously take steps to make sure that those people do get that help. If we take things like the attendance allowance, the invalid care allowance, there is no doubt in the early days there were enormous differences in the extent of take-up between one area and another. If statistics are to be collected from time to time, as I very much hope they will be—and I am absolutely certain that, whether or not this new clause is incorporated into the Bill, Ministers, either in your Lordships' House or in another place, will be required to make statements because they will make statements in reply to questions which will undoubtedly be put to them—I very much hope that, those collecting them will make a point of collecting differential statistics, because I think there may be some message to be learned there.
I have been concerned in this field mainly through presenting for 11 years on a citizens' advice basis a television programme in the Granada area. We were able at one time to achieve a situation where the take-up of family income supplement in our area was double that of any other area in the country. That was mainly because we went to great lengths to explain 566 to people how they should apply, to whom they should apply, and so on. At one time we were looking very closely into certain forms of assistance provided by social services departments—which is perhaps slightly out of the scope of this Bill—for example, various steps taken under the Chronically Sick and Disabled Act. We were able to collect differential statistics and publish them on television, showing, for example, the number of telephones installed in Salford, in Oldham, in Bury, in different districts, and it was quite remarkable that, when we had shown that one area was right down at the bottom of the league, within no time at all it was up near the top. Once those figures are published and publicised it is quite remarkable how quickly the people concerned take action to remedy the situation.
My experience in investigating these differences between one locality and another shows that they relate to a number of things. The noble Lord, Lord Wallace, has referred to the difficulty of making Government publications readable. I think it is very difficult to make a leaflet wholly readable to the people concerned, because it has to be accurate and therefore has to be couched in terms not necessarily very readily assimilated by ordinary folk. So there is a difficulty centrally. But locally there may very well be a difficulty arising from the attitudes of individual people who act in this field. I do not wish to level any criticism at all at some of the excellent people who work away in supplementary benefit departments in different parts of the country. But I do think you will find a close correlation between the level of take-up in a certain area and the attitude and demeanour of people in the office in that area. I think one will find a correlation between the actual number of health visitors recruited in particular areas and the take-up of certain benefits about which it is the duty of the health visitor to advise patients, for instance, by asking when calling at a patient's home, "Have you applied for this or for that"? The extent of the take-up will be very much related to the attitude, behaviour and general conduct of the people involved in the whole area. I merely make this extra point.
I am entirely in support of what the noble Lord, Lord Wallace, has said, and I entirely accept what the noble Lord, Lord Cullen, has said in regard to the Government's intention. But I do urge most strongly that, when they collect statistics on these matters and report them to the House, they can do nothing but good if they also report differential statistics which will show levels of success in certain areas and levels of failure in others. If the Government do that openly and loudly, it will be remarkable how quickly the different extremes will level themselves up.
§ Baroness Phillips
We do all accept that the generation we are talking about is a very proud generation, and I think that that is one of the difficulties in getting over to them that this is something to which they are entitled and not something that appears to be charity. It is very significant in London how they will quite cheerfully apply for their bus passes and their rail cards. This, I think, is because they do not see them in the same way as they still see supplementary benefit. The other difficulty it seems to me we have to overcome is that once you are brought within the net of the Health 567 Service you will know all about benefits; the social worker will tell you, the doctor will tell you. But a lot of people go on collecting their pension, not troubling their doctor or anybody in the social security or the health service. This is the group which is the most difficult to get at, and they will continue to struggle on on what they have rather than seeking extra help. I have no ideas on how we should reach them, but would merely say that perhaps we should look a little more at why certain groups are very successful in take-up and others not so successful.
§ Baroness Faithfull
May I add one or two points? First, it is extraordinarily difficult to get some people to take up benefits and there is nothing you can do which will make them take up. I might also perhaps suggest to my noble friend that one of the very real difficulties is that the Citizens' Advice Bureaux are the bodies best able to give advice, and many of them at the moment are very short of money and partly short of staff. Perhaps that is something we could give consideration to.
Lord Wallace of Coslany
I am very grateful indeed to the noble Baroness who has just spoken and to the noble Lord, Lord Winstanley, and my noble friend Lady Phillips because they have added fuel to the case which I have made out. I am also grateful for the expected sympathy from the noble Lord, Lord Cullen of Ashbourne, because I knew that he personally would express sympathy. I think that I was a bit naughty as regards the Second Reading because they both thought that I was attacking them. They are people with their hearts in the right place, but they have a rotten Bill to deal with. That is the trouble.
I rather gathered from the remarks of the noble Lord, Lord Cullen, on this important subject—and it is obvious that we are all at one somewhere or other on this particular clause—that it is tainted with reference to Section 1. Section 1 is a nasty section in the Bill. It occurs to me, with my ingenuity and with the help of people who are far more expert than I am, that if I removed, the taint of Section 1 and just put down a simple amendment on Report, there would be no objection to this going into the Bill. I think it is rather important that it does go in, because we must draw attention to the problem. It is a constant problem and I certainly agree that it is a regional problem—it depends on the type of people with whom one is dealing. If the Government accept that I should be given the chance to think about the matter and to remove the taint of Section 1—I regard it as a taint, but I do not know their personal opinion—then I shall beg leave to withdraw the amendment. However, I should like some reassurance.
§ Lord Cullen of Ashbourne
Before the noble Lord withdraws the amendment I should like to point out that my noble friend Lady Faithfull mentioned the Citizens' Advice Bureaux. The director recently met the Social Security Advisory Committee to discuss common interests in this area. I think that that is the type of move that we can make that will really help in this matter. On the question of disablement benefits, there is now a new poster in post offices featuring 568 Brian Rix with a handicapped child. The DHSS regional information offices play an important role. There is a lot of movement taking place as regards this matter. I can see that the noble Lord may wish to come back to this matter on Report, but I am not sure that to have the Bill amended will help tremendously as regard the activities which are going on to try to get people to take up benefits.
Lord Wallace of Coslany
I think it will, because, if we associate the Secretary of State and the Government with it, there will be far more effect than just leaving it to the voluntary organisations. I admire the work of the Citizens' Advice Bureaux. They are worried about this situation. I have had their literature. The other organisations are also worried. I want to associate the Minister and the Government with what they are doing. The amendment is not asking the Government to pay out money, although the CAB and other people could do with a little more income. I want the support of the Minister and the Government and I do not care whether it is this Government or a future Government, the party label of which I have no idea at present. My point is that I want the Government associated with this. Therefore, I shall bring the matter back on Report and I shall see what I can do, with the advice of other colleagues here, to get something to deal with this very important question. This is the first non-arguable debate that we have had in this Committee stage. I am very keen about it and I hope that the House will do something about it in due course. I beg leave to withdraw the amendment for the moment.
§ Amendment, by leave, withdrawn.
§ 5.35 p.m.
Baroness Jeger moved Amendment No. 18:
After Clause 1, insert the following new clause:
§ ("Benefits for the Long-Term Unemployed
§ The Secretary of State shall request the Social Security Advisory Committee to report on the adequacy of current benefit provision for the long-term unemployed with special reference to the level and duration of unemployment benefit and the level of supplementary benefit paid to the long-term unemployed and this report shall be laid before Parliament.").
The noble Baroness said: I beg to move Amendment No. 18. This amendment is a very modest amendment—in fact, in my view it is far too modest considering the enormity of the subject. However, we thought that if we asked for something small we might get a crumb or two, as we have had such an unsuccessful afternoon. The amendment asks only that:
The Secretary of State shall request the Social Security Advisory Committee to report on the adequacy of current benefit provision for the long-term unemployed with special reference to the level and duration of unemployment benefit and the level of supplementary benefit paid to the long-term unemployed".
§ We are quite well aware that the Social Security Advisory Committee must have a degree of independence. It was set up as a very experienced body to get on with its work and I am sure that we shall be told that it is, of course, already looking at this problem. However, I do not think that that goes far enough. At the end of the day, however, many experienced and wise committees we set up, it is Parliament which must take responsibility. We are only asking this 569 afternoon that there shall be written into the Bill a request for a report to be made to Parliament on this subject.
I am encouraged in that request because, reading through the last report of the Supplementary Benefits Commission before it was dissolved, paragraph 3.20, on the subject of the long-term unemployed, states:
We regard this discrimination against the unemployed and their families as wrong and its removal is our highest priority for the improvement of the supplementary benefits scheme".
I very much hope that the successors to the commission have taken that on board, as I am sure they will have done, and therefore I cannot see any possible objection to writing it into the Bill so that it is clearly a statutory responsibility to make such a report.
§ Why is it so important? Reference was made earlier this afternoon to the question of unemployment and I must emphasise again that it is the question of the long-term unemployed that concerns us so greviously. In January 1980 there were over 335,000 people who had been unemployed for over a year. In January this year the figure had increased to 430,000 people who had been out of work consistently for over a year. We have been worried often in your Lordships' House about the young unemployed. I find that 10 per cent. of the unemployed under 25 years have been out of work for over a year. We all know some of the sad social consequences of the long-term unemployment of young people. In the age group of 25 to 54 years, 20 per cent. of the unemployed have been without a job for over a year. Sadly, in the over 55 age group, 37 per cent. have been without a job for over a year.
§ When we look at those long periods of unemployment we must wonder why long-term benefits which apply to the disabled and other recipients of social security benefits, are not made available for the long-term unemployed who are specifically excluded from the long-term benefits which other beneficiaries are entitled to claim. Looking at the picture as a whole, with the phasing-out of earnings-related supplements, the position becomes very sad and worrying indeed.
§ There is the added hardship to these families of the less than generous uprating of children's additions. In my calculation, for an unemployed family with two children the changes that have already taken place have done them out of about £145 a year. That has happened against the background pressure on local authorities, the welfare services and the social serivces to cut their budgets, to make even less and less provision and to make less of what one might call "the social wage" available to those whose actual financial income has already suffered.
§ Asking only for a report means that we hope that the Government will come back when they have received this report—and may it be soon—and resolve to make some legislative changes that will increase the long-term benefits to include the unemployed. I am sure that everyone here is sympathetic and imaginative and can think of what it must mean to be out of work year in, year out. At first there is a shock; often there is some redundancy pay to help; sometimes there are savings to help. But as the year goes on, and the next year and the next year, the savings disappear and the redundancy money goes, and real poverty bites, and it bites at the whole family. It increases; it is a sort of geometric progression because things wear out and inflation means 570 that they cost more to replace; the children get bigger and their clothes cost more. As they get older at school they want to join in more activities; they want to go on school journeys and they want more money in their pockets for their evening pastimes of sport and recreation, which we all agree that they need and deserve and which make such a difference in their lives.
§ We then reach a situation where the savings have gone and where, in fact, a man gets no more after he has been out of work for four or five years; how many years has a man of 55 to wait before there is any real improvement in his income to help him catch up on the fact that household equipment is wearing out and that life, in all sorts of ways, is wearing out for him? We would not expect a car to stay in good condition without any servicing, yet we seem to expect men and women to carry on without the wherewithal to keep their homes going and to keep their lives even in some modest state of enrichment and pleasure.
§ Earlier I gave some figures for the number of people who have been out of work for over a year. For those who were registered in April as being out of work for more than six months, which is long enough, especially for young people, the figure was over 1 million. I only remind your Lordships of the gravity of these figures because they back up our argument in asking for at least a report on what is happening to these people and to their children, how they are managing; and what are the adverse effects on their lives and the effects on other branches of the social services which might be forced into higher expenditure when the fabric of home life breaks down. It seems to me that we are always more ready to put a child into care because of some family breakdown than to spend a little more to prevent that family breakdown. All of us who do any work in this field know of many families where the stains of long-term unemployment have led to severe breakdowns either in health or in matrimonial happiness.
§ In discussing this with employers, I have found that the longer a man has been out of work, the less likely he is to get another job. The other day an employer told me that if two men applied for a job, with all things being equal, and one had been out of work for a year and the other for three months, he would always take the one who had only been out three months because he was afraid that the first man, with over a year sitting around at home, would have lost his work pattern and would have become demoralised. He said that he finds himself wondering, subconsciously, whether the fact that the chap could not get a job for over a year meant that he was not up to much. The employer admitted that this was totally unfair and totally subjective; but I am sure that if one employer thinks like that, others must have the same kind of reaction.
§ Even more important, the unemployed themselves feel like it. I have spoken to men of 55 and 56 years of age who do not believe that they will get another job. They go off in a dreary, sad way when there is a chance of an interview, with very little confidence and with even less hope. Therefore, there are many reasons why we cannot simply tackle long-term unemployment as a fact that a man has been out of work for a little longer than another man. It is a separate social problem which eats deep into family life and which causes all sorts of side effects which I do not believe happen in very short-term unemployment, but which 571 certainly happen in areas of the country where people are increasingly feeling not only that they have to change their jobs, but that they will never get a job again.
§ Of course, we know that this is all tied up with other problems of economic recovery. Meanwhile we have the Social Security Advisory Committee at work, and all we are asking is that this part of their work should be put into statute so that it is laid on them as a duty. I am sure that this would be helpful to them, and it will at least be something that this Government can say they are doing for the long-term unemployed. For too long the unemployed have been used as a tool in this Government's economic policies. They have already paid grievously with loss of jobs and broken careers. Certainly the sort of help which they so badly need is little enough to ask, and I very much hope that, instead of putting a heavier load on them, the Government will accept this modest amendment and ask the Social Security Advisory Committee to report at the earliest possible time, and later on a regular basis. I beg to move.
I should like to raise one specific matter arising from the new clause of the noble Baroness. If I raise it now, it might be for the convenience of the Committee if the noble Baroness or noble Lord who is to reply could take on board this point as well. I am concerned with the narrow point—and I share the view of the noble Baroness in general about this—of the effect of the savings rule with regard to supplementary benefits for the long-term unemployed. I have encountered this so often that I thought that if I raised it now I might receive an answer.
Once a person who has been long-term unemployed is not entitled to national insurance unemployment benefit, his only recourse is to fall back on supplementary benefit; of course, if his or her savings exceed £2,000—which I think is the appropriate figure at the moment—by £1 or £2, that is an absolute bar to the receipt of supplementary benefit. I am responsible for advising many of these people and it seems curious that if a chap tells me that he has £2,025 in a building society savings account, which is the remains of his redundancy payment or something of that kind, I have to tell him that when he runs out of national insurance unemployment benefit in a fortnight's time he will be disqualified from receiving supplementary benefit, and that the sensible thing for him to do is to go out and spend £50 or £30, or whatever is the appropriate figure.
I accept that once there is a savings limit there will always be demarcation difficulties of this kind with anyone who is very close to the limit. However, this is a problem that arises very much more now, because not only are there more and more people who are long-term unemployed, but we are tending to get more and more long-term unemployed people who have certain savings which have sometimes been eroded to the point of being very close to the savings limit. I know that the savings rule excludes the value of personal possessions, the family house, chattels and so on, but with this new situation of a greatly increased number of long-term unemployed people, I just wonder whether those responsible for this inquiry might look 572 at the present operation of the savings rule in relation to entitlement to supplementary benefit.
§ Baroness Young
The noble Baroness, Lady Jeger, spoke to Amendment No. 18 and the precise point in that amendment is, in fact, a request that the Social Security Advisory Committee should report on the adequacy of the current provision for the long-term unemployed. The principle here is very similar to the principle which we debated under Amendment No. 14, which was a request to the advisory committee to consider the adequacy or otherwise of child benefits. But in this particular case, I do not believe that there is in fact a need for my right honourable friend the Secretary of State to ask the Social Security Advisory Committee to consider matters, because they are already considering them without any prompting from Ministers.
I recognise the sincerity of the noble Baroness's views, and the matters that she has described are of great importance. I do not think that any of us in your Lordships' Committee today would dispute that, and I am not in the least surprised that the committee have decided that they should take a high place among the many questions to which they could address themselves. The Government are glad that the committee are studying the issues, and we shall naturally welcome their considered advice upon them.
That being so, it seems to me that it is not necessary to include this new clause in the Bill, but I do not necessarily accept that that is just a conclusive reason for rejecting it, and it might be helpful if I go on to say that we have established the committee, and that if we went on telling it, certainly within Acts of Parliament what it ought to be studying it would limit its freedom of action. Once this happened, after a period of time many of your Lordships would quite rightly get up and say, "What is the point of having an advisory committee if you keep telling it what to do and not allowing the committee to advise as it thinks appropriate to do"? So, there is an issue of principle; but on the particular point of the amendment, this has actually been met by the Government.
As the whole question of the long-term unemployed has been raised, I should like to make a further comment on this issue, because it is a matter of concern to everyone when the numbers are unfortunately as high at they are. That was why when we had to make savings of contributory unemployment benefit we made sure that the level of provision for long-term unemployed people from supplementary benefit was not affected, and thus the position of those worse off has in fact been safeguarded, for you will know that the higher long-term scale rate recognises the fact that after being on supplementary benefit for some time claimants can be expected to have extra expenses, of the sort described very movingly by the noble Baroness, over and above the normal day-to-day living expenses provided for by the short-term scale rates.
In the nature of things, pensioners particularly are long-term claimants and they get the long-term rates at the beginning of their claim. Apart from unemployed people, all other claimants, such as the long-term sick and single parents, move on to the long-term rate after one year on supplementary benefit. The 573 Government accept that there is an argument for extending the long-term rate to unemployed people. We regret very much that because the change would cost well over £100 million at current benefit rates we cannot consider it until the financial situation has improved.
The noble Baroness's Government were well aware of the arguments for such a change, but unfortunately they were unable to find the money to carry it out. What we have managed to achieve even in the current straitened economic circumstances is to reduce the qualifying period for the long-term scale rate from two years to one year.
May I make one final comment on this matter. We are all very concerned about the whole question of unemployment. This is something which unfortunately is now widespread throughout the industrialised world, and it has in fact been growing in this country for a number of years. Whatever the advisory committee may or may not recommend on the scale rates for unemployment benefit, this is not in fact going to create new jobs. Of course, at the end of the day, it is the creation of new jobs, real jobs, which will solve this problem, not unemployment benefit, however generous that might be. I am sure that is again a point on which we would all agree. I hope that on the particular point of her amendment the noble Baroness will feel that I have met this case—it is being considered—and that she will feel that she can withdraw her amendment.
The noble Lord, Lord Winstanley, raised a quite separate point about the operation of the savings rule. I am aware of the difficulties. Whenever there is a cut-off point for capital there is always the difficulty of those on the margin who are clearly affected by it. As this is a slightly separate point, might I write to him if I have any further information about it, because I do not think that I can go further on that this afternoon, except to acknowledge his point and to acknowledge the difficulties which would arise wherever the cut-off point came.
§ Baroness Jeger
Can the noble Baroness give the Committee any information as to when the report of the Social Security Advisory Committee might be expected?
§ Baroness Young
I am afraid I do not have that information before me, but if I can let the noble Baroness have any information before the next stage of the Bill I will do so.
§ Baroness Jeger
In anticipation of receiving that useful information, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 5.55 p.m.
Lord Wallace of Coslany moved Amendment No. 19:
After Clause 1, insert the following new clause:
§ ("Long-term Benefits
§ Within six months of the passing of this Act the Secretary of State shall consider and report to Parliament whether persons who have been in receipt of a national insurance benefit for longer than 12 months and whose resources are less than their requirements as measured by the long-term supple- 574 mentary benefit rates (including housing requirements and any additional requirements) should be deprived of entitlement to supplementary benefit by virtue of the fact that they do not qualify for supplementary benefit at the ordinary rate".)
§ The noble Lord said: I beg to move the new clause, Amendment No. 19 on the Marshalled List. This clause deals with what is generally known as the invalidity trap. The trap arises because many invalidity pensioners have an income which is too high for them to qualify for supplementary benefit at the ordinary rate, yet it falls below what they would receive were they eligible for supplementary benefit at the long-term rate. Because they do not qualify for the former they can never qualify for the latter, though their situation is a long-term one and their income is less than the minimum regarded by the Government as necessary for people in that situation.
§ The 5 per cent. abatement of invalidity benefit in 1980 reduced its value relative to the long-term rate of supplementary benefit, and will therefore have increased the number of people who were caught in the trap. Even before the 5 per cent. abatement the Government's estimate was that the people involved numbered about 100,000 individuals. The invalidity trap has many ramifications for those caught in it. The total financial help forgone in a particular case will depend on the particular circumstances, but it could be substantial. The long-term rate of supplementary benefit is intended to represent the minimum acceptable level of income for people who are unable to work and whose situation is a long-term one. Yet at least 100,000 chronically sick and disabled people who are in such a situation are receiving lessthan they would receive if they were eligible for the long-term rate.
§ There can be no justification for refusing to extend entitlement to the long-term rate of supplementary benefit for those who are now caught in the trap. The Government cannot justify the position. In fact, they do not attempt to, but have indicated that they will put it right when the economic situation permits. We have heard that so often. In other words, that it would cost too much for the moment. The £15 million involved is only 7½ per cent. of the £200 million saving resulting from Clause 1 of the Social Security Bill in a full year, and a mere £1 million more than the amount saved in a full year on invalidity benefit alone as a result of the 1 per cent. clawback.
§ That is the situation. The Government do not deny that the situation exists. They say that it will be put right when the economic situation permits. I would submit that this situation is one that does not permit of waiting for some future date if and when the economic situation allows it. I submit to the Committee that here is an outstanding moral case for the Government to think again and accept the amendment. I beg to move.
§ Lord Cullen of Ashbourne
The noble Lord has drawn attention to the trap about which we have heard so much, and it is a matter of great concern to all noble Lords. The subject was discussed in some detail at the Committee and Report stages of this Bill in another place, and the problem arises, as the noble Lord explained to the Committee, because entitlement to any one of the three benefits mentioned may prevent some people, depending on their circumstances, from ever 575 qualifying for the higher long-term rate of supplementary benefit. This is because the level of their invalidity benefit and other resources are higher than their ordinary supplementary benefit requirements, and so they do not qualify for this benefit. This in turn means that they can never be assessed at the higher long-term rate, for which there is a "qualifying period" of one year on the ordinary rate of benefit.
The cost of counting periods on these benefits towards qualification for the long-term rate of benefit would be quite large. The best estimate we can make is that about 100,000 people would become entitled to the long-term rate after a year on incapacity benefits, and that at current levels of take-up about 70,000 people might be expected to claim. At November 1980 benefit rates, the annual cost of this would be about £15 million a year, but one must add the administrative costs to the department, which are estimated at about 340 additional staff in the first year and 300 in subsequent years.
The Government are well aware of the problem. Only last November, when the qualifying period for the long-term rate was reduced from two years to one, we relaxed the rules to enable 16 and 17 year-old recipients of non-contributory invalidity pension to count periods in receipt of NCIP towards the qualifying period for the long-term rate. We need no prompting to look at this problem. However, I must remind the Committee that the Government's resources are limited and that before we can decide on a major change of this sort we must first generate the wealth to pay for it. When the economy is on a sound footing once more we can decide on priorities for change. My honourable friend the Minister of State for Social Security said in another place:I assure my honourable friend and the Committee that this issue is very much in our minds. It is something with which we have the utmost sympathy and we intend to take action as soon as circumstances permit".I cannot say more than that; that is exactly the position the Government are in.
Lord Wallace of Coslany
Frankly, that was a shocking answer for the Minister to give. The Government admit the whole position and the noble Lord agreed that the financial involvement was not great. He said it would involve a few more civil servants. The Government have a considerable number checking on scroungers. Why not, in all sincerity, put a few on the task of putting right what the Government themselves admit is a situation that is wrong? I have already given the figures; it is a negligible amount of the saving the Government intend to make, anyway, under Clause 1. There is no substantial argument the Government can advance against the amendment. They say all will be put right at some time in the future, but meantime the deserving people suffer. I cannot accept the Government's attitude and must divide the Committee.
§ 6.4 p.m.
§ On Question, Whether the said amendment (No. 19) shall be agreed to?
§ Their Lordships divided: Contents, 56; Not-Contents, 98.577
|Ardwick, L.||Kilmarnock, L.|
|Aylestone, L.||Lee of Newton, L.|
|Barrington, V.||Listowel, E.|
|Beaumont of Whitley, L.||Mackie of Benshie, L.|
|Birk, B.||Maelor, L.|
|Bishopston, L.||Mishcon, L.|
|Blease, L.||Molloy, L.|
|Blyton, L.||Peart, L.|
|Boston of Faversham, L.||Pitt of Hampstead, L.|
|Brockway, L.||Ponsonby of Shulbrede, L. [Teller.]|
|Brooks of Tremorfa, L.|
|Bruce of Donington, L.||Rochester, L.|
|Chitnis, L.||Ross of Marnock, L.|
|Cledwyn of Penrhos, L.||Scanlon, L.|
|David, B. [Teller.]||Seear, B.|
|Donaldson of Kingsbridge, L.||Segal, L.|
|Evans of Claughton, L.||Shinwell, L.|
|Ewart-Biggs, B.||Stewart of Alvechurch, B.|
|Foot, L.||Stewart of Fulham, L.|
|Gaitskell, B.||Stone, L.|
|Gardiner, L.||Tordoff, L.|
|Gladwyn, L.||Underhill, L.|
|Gosford, E.||Vernon, L.|
|Hampton, L.||Wallace of Coslany, L.|
|Hanworth, V.||Walston, L.|
|Houghton of Sowerby, L.||Wedderburn of Charlton, L.|
|Irving of Dartford, L.||Whaddon, L.|
|Jeger, B.||Winstanley, L.|
|Jenkins of Putney, L.|
|Abinger, L.||Hereford, V.|
|Airey of Abingdon, B.||Hives, L.|
|Alexander of Tunis, E.||Home of the Hirsel, L.|
|Alport, L.||Hylton-Foster, B.|
|Auckland, L.||Kemsley, V.|
|Avon, E.||Kinloss, Ly.|
|Bellwin, L.||Kinnoull, E.|
|Belstead, L.||Lane-Fox, B.|
|Bessborough, E.||Lauderdale, E.|
|Bolton, L.||Lawrence, L.|
|Bridgeman, V.||Lindsey and Abingdon, E.|
|Brookeborough, V.||Long, V.|
|Brougham and Vaux, L.||Loudoun, C.|
|Burton, L.||Lyell, L.|
|Cairns, E.||Macleod of Borve, B.|
|Chelwood, L.||Mancroft, L.|
|Clifford of Chudleigh, L.||Mansfield, E.|
|Cockfield, L.||Marley, L.|
|Colville of Culross, V.||Marshall of Leeds, L.|
|Cork and Orrery, E.||Merrivale, L.|
|Cottesloe, L.||Mills, V.|
|Craigmyle, L.||Mottistone, L.|
|Crathorne, L.||Mowbray and Stourton, L.|
|Croft, L.||Murton of Lindisfarne, L.|
|Cullen of Ashbourne, L.||Northchurch, B.|
|Daventry, V.||Nugent of Guildford, L.|
|de Clifford, L.||Orkney, E.|
|Denham, L. [Teller.]||Rankeillour, L.|
|Digby, L.||Rawlinson of Ewell, L.|
|Dilhorne, V.||Renton, L.|
|Eccles, V.||Rochdale, V.|
|Evans of Hungershall, L.||St. Germans, E.|
|Faithfull, B.||Sandford, L.|
|Ferrier, L.||Sandys, L. [Teller.]|
|Forester, L.||Savile, L.|
|Fortescue, E.||Shannon, E.|
|Fraser of Kilmorack, L.||Sharples, B.|
|Gainford, L.||Skelmersdale, L.|
|Gisborough, L.||Soames, L.|
|Gowrie, E.||Spens, L.|
|Grimston of Westbury, L.||Stradbroke, E.|
|Hailsham of Saint Marylebone, L.||Strathclyde, L.|
|Stuart of Findhorn, V.|
|Hastings, L.||Swansea, L.|
|Henley, L.||Swinfen, L.|
|Swinton, E.||Wakefield of Kendal, L.|
|Teviot, L.||Ward of Witley, V.|
|Tranmire, L.||Westbury, L.|
|Vickers, B.||Young, B.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.11 p.m.
Lord Wallace of Coslany moved Amendment No. 20:
After Clause 1, insert the following new clause:
§ ("Take up of Child Benefits
§ At the same time as the Secretary of State makes any statement under the provisions of Clause 1, subsection (1) he shall cause to be published a report on the number of children for whom no child benefits are paid, because they are in the care of a local authority; and any proposals he has for altering this situation.").
§ The noble Lord said: This is the last amendment of the Committee stage and I have no doubt that noble Lords on the Benches opposite will be very pleased about that. The noble Baroness has another hard stint ahead of her, and I, too, shall have to be present later. Therefore, I shall now be as quick as possible. The new clause containing the amendment is a matter of interest so far as I am concerned. I shall be frank about it: I picked up the point of it from debates in another place. It is an intriguing question. The new clause deals with an anomaly affecting foster parents who do not receive child benefit for the foster child. Children who are in care do not attract child benefit because the local authority receives money from the Government via the provisions which support the rates. In other words, included in the Government's allocation to local authorities is a sum to compensate for the fact that child benefit is not paid, and in theory, and to some extent in practice, the local authority allows for this in formulating the boarding out allowance.
§ Unfortunately, Governments' cash allocations can get lost in other expenditure. In addition, local authorities budget for April when decisions are taken on boarding out allowances, whereas child allowance increases are effective in the following November; but boarding out allowances do not take this into account, having been already settled.
§ I am open to correction on this, but I would submit that it would be fairer and more practical for child allowances to be paid to foster parents for children in care, as with other children, so as to put them on the same level. There is an anomaly here; that is admitted. But apart from that—and this is a point which concerns me, since at present it is a question of rates so far as boarding allowances are concerned—what happens when the Secretary of State for the Environment imposes his threatened sanctions on some local authorities? That is another reason for some careful consideration being given to this matter. I think that it would be better to pay the foster parents the child benefit. Fostering of children is becoming increasingly popular, and it is a good thing for children to have a home background. This is a side issue of the matter that is not unimportant. I beg to move.
§ Baroness Young
Before answering the amendment moved by the noble Lord, Lord Wallace of Coslany, 578 perhaps it would be convenient to the Committee and in particular to the noble Baroness, Lady Jeger, if I refer to an earlier matter. On Amendment No. 18 the noble Baroness asked me when the Social Security Advisory Committee was likely to report. I can now tell her that it is thought that it will report next March on this matter. It seemed to me to be helpful to clear up that point before we went any further.
The amendment now before the Committee deals with quite another matter. The regulations under the Child Benefit Act 1975 provide that child benefit is not paid for children who have been in local authority care for more than eight weeks, unless they return home each week for at least one complete day. It is also payable where a child returns home for a complete week.
Child benefit is regarded as a contribution towards the cost of a child's maintenance. Once a child leaves home to go into care, the onus of maintenance lies with the local authority, which receives Government funds for this purpose through the rate support system. It is true that an authority can require a parent to make a contribution towards a child in its care, but once the parent ceases to receive child benefit any contribution can be expected to be reduced accordingly. There are therefore no real grounds for continuing to pay benefit for children in care. It is paid for the first eight weeks to avoid the necessity of terminating or adjusting benefit for short periods of care.
I do not at present have information about the number of children in care in respect of whom benefit is not paid. This information is not available. It would be expensive to set up a procedure for obtaining it, and in the circumstances the Government do not think that the expense would he justified. I am sure the noble Lord would agree that if money is available it is better to spend it on the benefit rather than on collecting information about the benefit.
I now wish to turn to the noble Lord's other point, about fostering. This was raised in another place, and it is indeed an important point. We all accept that fostering of children is often best in the children's interests, and it is much to be encouraged. I accept that the fostering of children in care—that is, giving to these children the kind of family life that other children have—is valuable to the child and indeed to the whole community. Central Government funds go towards this, as they go towards other local authority services. But I do not think this means that central Government should by-pass the normal arrangements by substituting child benefit for part of the local authority payments to foster parents. As regards the timing of any increase in payment to foster parents, I think that this is a matter that we would want to leave to local authorities. We believe that the existing balance of payments arrangements seems to be probably about right.
There is always an argument as to whether, if the child benefit was paid, it would actually mean less in terms of general Government grants or in the amount paid by the local authority. One is trying to achieve the maximum payment for the foster parents or, alternatively the local authority home looking after the children. That would be achieved, because it looks to me as if there would be a redistribution of the money that was being paid, rather than the giving of 579 the extra to the person who was in fact looking after the child. I believe that it is for those reasons that Governments of neither political party have altered the arrangements which were agreed by Parliament under the 1975 Act. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Wallace of Coslany
I am very grateful to the noble Baroness for what she has said and for the information that she has given the Committee. This is a very interesting point and, quite frankly, I tabled the new clause simply to obtain information for myself and for the rest of the Committee. I am very grateful to the noble Baroness, and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clauses 2 to 5 agreed to.
§ Clause 6 [Reciprocity with other countries]:
§ On Question, Whether Clause 6 shall stand part of the Bill?
§ Baroness Young
The reference in relation to Clause 6 is that, on page 4, lines 22 and 23 should read:may, instead of or in addition to making specific modifications or adaptations, provide generally that this Act shall be modified";and, on page 5, line 3 should read:("4) Any enactment mentioned in subsections (1) to ".
§ Clause 6 agreed to.
§ Remaining clauses and the schedules agreed to.
§ House resumed: Bill reported without amendment.