HL Deb 12 May 1981 vol 420 cc453-61

3.34 p.m.

The Minister of State, Department of Education and Science (Baroness Young)

My Lords, with your Lordships' permission, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Services, on arrangements for paying social security benefits. The Statement is as follows:

"The House will recall that last December I published a consultative document (Cmnd. 8106) setting out the Government's proposals for improving the efficiency of paying social security benefits. I can now report the outcome of our consultation and announce our decisions.

"The Government's proposals in the consultative document fell into three categories: first, that most beneficiaries should be able to have their benefits paid direct into their bank accounts if they wished; second, that child benefit should be paid four-weekly to most mothers except for certain vulnerable groups who could retain weekly payment if they wished; and third, that certain improvements should be made in the efficiency of DHSS internal administrative procedures for paying benefits. These changes would have produced savings in administrative costs rising to £38 million a year (at today's prices) by 1987–88.

"There was general acceptance of the changes in DHSS administrative procedures and these will go ahead. I will publish a list in the Official Report. There was also a wide welcome for giving people the option to have their benefits paid direct into bank or other accounts. I stress that this is an option: pensioners, for instance, will continue to draw their pensions weekly from the Post Office unless they decide otherwise. We will begin to offer the choice of bank payments from mid-1982. These changes will save eventually about £25 million a year at today's prices.

Most of the 600 responses I have received from individuals, organisations and local authorities objected to the proposal to pay child benefit every four weeks to most mothers. Criticisms varied, but the general theme running through many letters was that mothers should be able to make a voluntary choice between weekly or four-weekly payment.

"There has also been anxiety about the impact of the changes on the Post Office and in particular on the sub-post office network.

"In putting forward their proposals, the Government have had two objectives in mind: first, to reduce the cost of administration, and second to encourage the movement away from weekly cash transactions to more modern methods of money transmission. The question is how to reconcile these highly desirable aims with the anxieties which have been put to us.

"We are in no doubt that in the longer term it is right to encourage the great majority of mothers to accept four-weekly payment. Hcwever, we have decided that it would not be right to expect existing claimants to move to four-weekly payments subject only to the exceptions which were set out in the White Paper. Accordingly, we will give all mothers currently in receipt of child benefit a free choice to decide whether they wish to continue to receive payment weekly or to switch to four weekly payment. Towards the end of 1981, mothers receiving child benefit will be sent a simple form which they will need to return to my department if they wish to continue with weekly payment. From January 1982, for mothers who claim child benefit for the first time, and who already wait about six weeks for the first payment, four-weekly payment will be the norm. Options for weekly payment of child benefit will, however, be available to three categories of new claimant—those receiving supplementary benefit, those receiving family income supplement, and lone parents.

"The Government consider that this approach strikes a fair balance between the needs of beneficiaries and our duty to keep administrative costs down. We estimate that about half the existing beneficiaries will opt for weekly payment. On this basis, the saving under this heal estimated (in Cmnd 8106) at £13 million a year by 1987–88 will be reduced to about £7 million a year.

"The Government remain firmly committed to maintain an adequate sub-post office, network. The modifications I have mentioned will mean that over the next five years DHSS business over Post Office counters will drop by the equivalent of about 5 per cent. of total counter business. But this will be more than compensated for by growth of counter business from other customers. The Government have re-examined with the Post Office the forecasts of new business in Cmnd. 8106, on the assumption that the British Telecommunications Bill is enacted, so that the Post Office can provide counter services for a wider range of public sector customers. The Government are confident from this re-examination that over the period to the end of 1985–86 counter business from new and existing customers can be expected to grow by up to 10 per cent. This is twice as much as the likely reduction in DHSS business. To provide a further safeguard, the Government also propose to make available from the administrative savings up to £2 million over the next five years to help smaller sub-post offices which are adversely affected if the new business does not grow at the same rate as DHSS bus ness is reduced.

"These changes will together reduce administrative costs by about £32 million a year eventually. They will provide more modern methods of paying benefits without either harming the sub-post office network or causing hardship to beneficiaries. I hope honourable and right honourable Members will accept that we have done our best to meet the concerns expressed in the House and elsewhere while moving ahead to achieve more efficient ways of paying social security benefits."

Following is the information referred to above:

Changes in DHSS administrative procedure which will result in an annual saving of some £13 million by 1987–88:

Computer-produced order-books are being standardised at 20 weeks—they were 12, 13 and 18 weeks;

Payment of invalidity benefit and sickness benefit is being combined with payment of supplementary benefit;

The level at which evidence of identity is required when cashing a giro-cheque is being increased from £30 to £50;

The foil limits on order-books have been raised to realistic levels to avoid issuing 2 books: they will be reviewed each year;

The period for implementing nationally the DHSS local office computer system is being reduced from 4 years to 2 years, subject to reconsideration following the pilot study;

Retirement and widows' pensions of less than £1 a week will be paid annually in arrears.

3.40 p.m.

Baroness Jeger

My Lords, the whole House will wish to thank the noble Baroness the Minister for repeating this Statement, but there are a number of questions arising out of it. While we are glad to accept the partial retreat of the Government in the face of widespread opposition to the original proposals, there are some difficulties which arise for many people. I should like to ask the Minister whether it is possible to look again at some of them. It seems clear that the option which we welcome for pensioners is not to be extended indefinitely to mothers receiving child benefit. Although the Statement makes it clear that the general theme running through many letters was that mothers should be able to make a voluntary choice between weekly or four-weekly payments, it appears that the Government are asking mothers who want to take up this option to opt in. It seems to us to be much fairer to ask mothers who want to opt out to take the initiative. It always seems to me to be much fairer that people who want to depart from the norm should have to make the effort rather than that it should be the other way round.

I hope the Minister can help us over the question of mothers claiming for the first time. Does it not seem from the Statement that they have no choice at all unless they come into certain categories? Is it not a fact that these certain categories will cover only about 20 per cent. of mothers and that therefore the vast majority of mothers seeking child benefit will have no option at all? There seems to be very little choice, from this party of freedom of choice for the individual, in this connection.

Then we are making, are we not, categories of claimants who come within this 20 per cent.? It is not the view on this side of the House that we should put unnecessary labels upon people. It is not practical. May I ask the Minister what happens in the case of a woman who, one week, is a lone mother but who the next month is in receipt of family income supplement for some other reason? People do not stay in these categories all their lives. This seems to be imposing upon women a rigid labelling: putting a notice on their backs saying, "I am a lone mother" or, "I am a woman getting social security".

May I ask the Minister whether or not it is a fact that the weekly uptake of child benefit has increased during the last year from 35 per cent. to 45 per cent., which means that nearly half the mothers of this country are trying to get their child benefit paid weekly? Goodness knows! that is understandable enough, in view of the pressures of unemployment, poverty and other difficulties in sorting out the family income. I very much hope that because this will result in a comparatively small saving the Minister will look again at the matter.

Of course we welcome the references in the Statement to sub-post offices. We are not absolutely clear where the extra business is to come from, but we shall watch this and do everything we can to see that the business and the very essential social work and social significance of the sub-post offices continue.

I must ask one other question which arises from a piece of paper that was tacked on to the Statement. I read that retirement and widows' pensions of less than £1 a week will be paid annually in arrears. I do not know where this comes from, but to me it is extraordinary that the poorest people who get less than £1 a week in pension will have to wait for a year before they get it. It means, does it not, that the Government will be hanging on to £50 of their money? With £50, one could let a little something from the Post Office, perhaps some Granny Bonds, or one could go to the pictures with it, or go to Southend for the day. It seems extraordinary that when one owes the Inland Revenue some income tax, interest is charged from the start of the debt but that here the Government are saying, "You poor old people, we are going to sit on £50 of your money. We are not going to pay it half-yearly. We are not going to pay it quarterly". I very much hope that the Minister will take at least this point back again.

3.44 p.m.

Lord Banks

My Lords, I should like to join in thanking the noble Baroness, Lady Young, for repeating the Statement which has been made in another place. We on these Benches welcome the option for pensioners to have their pension paid into a bank account. Equally, we welcome the fact that they will be able to continue to draw it weekly from the Post Office if they so wish. We are glad that existing claimants of child benefit may, if they wish, continue to receive the benefit weekly, but we regret very much that new claimants of child benefit after January 1982, except those receiving family income supplement, supplementary benefit and lone parents, will have to receive child benefit four-weekly, whether they want to or not.

Would not the noble Baroness agree that where wages are paid weekly it is better that child benefit should also be paid weekly? Can the noble Baroness say what proportion of those now receiving child benefit are in families where the breadwinner is paid weekly? I believe that the figure for the population as a whole is 81 per cent. Can the noble Baroness confirm this?

Finally, we are glad that the Government are taking steps to see that the smaller sub-post offices are maintained. We on these Benches, as I have said before in this House, attach great importance to them. We wonder whether the proposed compensation will be enough. Am I right in thinking that it works out at about £400 per annum for five years for each sub-post office, which is riot a very substantial sum?

Lord Kilmarnock

My Lords, may I ask—

Baroness Young

My Lords, perhaps I may answer now the two Front Bench speakers who have already spoken. Then I will answer the noble Lord's point.

Lord Aylestone>

My Lords, I wonder whether I may make a procedural point. I am sorry to interrupt the noble Baroness. It would, of course, be convenient for any Minister to listen to two series of questions before replying, but until such time as the Whips have decided, which may be later today, on the order of speakers, surely the correct order at the moment is for the spokesman of a party to follow on, as has happened in this case?

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)

My Lords, it has always been the practice that a Statement should be replied to by a member of the Opposition and then by a member of the Liberal Party. We accept that a new dimension has been thrown into the pool, but it would be suitable to keep to the convention until such time as it has been decided that the procedure of the House should be altered.

Baroness Young

My Lords, I should like to thank the noble Baroness, Lady Jeger, for her remarks. I shall attempt to answer her worries. I think she accepts the point about pensioners but she is concerned about child benefit. She asked me why the vast majority of people who receive child benefit are not going to get the option. The vast majority who receive child benefit will have the option. Every mother who currently receives child benefit will have the opportunity to choose whether to have it paid monthly or whether to continue to receive it weekly. The only people to whom the new system will apply will be mothers who have their first baby in January 1982, and from then on.

Practice shows that most mothers do not in fact make arrangements for receiving child benefit for about four weeks and that they do not actually receive it for about six weeks; so the first six weeks of the child's life will have gone by before they receive child benefit, anyway. We therefore think that those who will be receiving it for the first time and who have never had the option should start on the monthly payments. The exceptions are mothers who are on supplementary benefit, on family income supplement or those who are single parents. They can automatically have the child benefit paid weekly, if they so wish, and indeed if mothers who currently have it paid weekly decide to have child benefit paid monthly; but perhaps the husband dies or they find themselves in receipt of supplementary benefit or family income supplement, they have the option, if they so wish, to receive child benefit weekly again and arrangements can be made for this quite quickly for a mother who wishes to do so.

In this way we feel that we have the flexibility which those who were concerned about it quite rightly pointed out to us—we have the flexibility for those currently receiving child benefit, for those who might prefer to have child benefit paid weekly (having decided currently to have it paid monthly but whose circumstances alter so that they later want it to be paid weekly). We have this flexibility built into this matter and at the same time, for those who have never received it before, we shall be moving to a new system. Therefore, over a very long period of time—16 years—we should gradually move to a system where everybody would have it paid monthly, unless they fell into these certain categories.

The noble Baroness asked me what the weekly option was for receiving child benefit. She is quite right; it is about 45 per cent. of mothers who now take child benefit weekly. It shows, of course, that slightly more collect it less frequently than that. She also asked me where the extra business for sub-post offices would come from. In fact, we expect that extra business will come from collecting stamps at the post office towards fuel bills; we believe that there will be opportunities for collecting rail cards for British Rail and other cards of this nature, as well as stamps for television licences. These are all ways in which we think the post office will increase its counter business, and we are anxious to see that happen.

The answer to the noble Lord, Lord Banks, who again welcomed the options, is that in fact any mother who currently receives child benefit and who wishes to continue to have it paid weekly, will find that there will be a slip put into the child benefit book to enable her to apply to have it weekly, so that if her husband is on a weekly wage and she wishes to be paid child benefit weekly, she can continue to do so. Clearly, when these arrangements come into force, it will he necessary to have a publicity campaign with posters at post offices and so on, so that people will fully understand that the options are available to them if they wish to make use of them.

Baroness Jeger

My Lords, I thank the Minister for those replies—

Several noble Lords


Baroness Jeger

My Lords, I wish to ask a supplementary question—

Noble Lords


Earl Ferrers

My Lords, with respect to the noble Baroness, Lady Jeger, I think it would be fair to let the noble Lord, Lord Kilmarnock, have his intervention.

3.54 p.m.

Lord Kilmarnock

My Lords, before this slight procedural contretemps arose I was about to thank the Government on behalf of this Bench for the courtesy that they have shown by circulating us with an advance copy of this Statement, for which we are grateful. I was also, of course, about to thank the noble Baroness, Lady Young, for repeating the Statement. Furthermore, I was going to say—and shall proceed to say—that concerning the provisions for the safeguarding of sub-post offices, we are grateful to the Government for the concern that they appear to show for this very important service provided at village and small community level. We agree entirely with the Liberal spokesman, the noble Lord, Lord Banks, on that point.

There is only one point which we are not entirely happy about, and which has in fact been made by the noble Baroness, Lady Jeger, and also by the noble Lord, Lord Banks. It concerns the question of the option to continue to receive weekly payment. Most mothers, as f am sure your Lordships are well aware, budget on a weekly and not on a monthly basis. Therefore, certainly for those whose husbands receive a weekly wage, and possibly for some others, family budgeting is easier if they can draw their child benefit weekly. Therefore, the only change that we should like to see in these arrangements is that the option to be able to retain the weekly base should be extended to new beneficiaries.

Several noble Lords


Lord Kilmarnock

My Lords, is the noble Baroness aware that the restriction that she is proposing on weekly claims for new beneficiaries could cause considerable difficulties to some families, and will she consider restoring this option to new beneficiaries as they become eligible for child benefit?

Baroness Young

My Lords, I am glad of the general welcome given to the Statement by the noble Lord, Lord Kilmarnock. We have made the distinction between those who are currently in receipt of child benefit and those who will receive child benefit for the first time. If it follows that someone receives child benefit for the first time and therefore automatically has the child benefit on a four-weekly basis and, through misfortune or otherwise, either becomes a single parent or is on supplementary benefit or on family income supplement, she will be eligible to apply immediately for weekly payments if she so wishes. We should want to see how this system works out before considering any change in it, because, as I indicated in the Statement, one of the threads in the argument—but by no means the only one—is a wish gradually to move over to four-weekly payments for benefits, but to do this over a long period of time; and in this particular case it is only applying to those who receive child benefit for the first time.

Baroness Trumpington

My Lords, may I ask the noble Baroness, supposing a mother opts for the monthly payments and is improvident and gets through the monthly money in three weeks, will that not put an awful strain on the social services? Who is going to bail them out?

Baroness Young

My Lords, I think this must be a matter of seeing how these arrangements work out; but if a mother who currently receives child benefit opts to receive it monthly, she will again have the opportunity to receive it weekly if she goes on to supplementary benefit or she becomes a lone parent. If in fact she decides that it does not work for her to have it as a monthly payment and there are some other circumstances, it would be possible for her to switch back. She can make the arrangements to do so by going to the social security office, otherwise she will continue automatically on a four-weekly basis.

Baroness Jeger

My Lords, I have two brief supplementary questions, if the Minister will allow me. She referred to "new mothers". I was not clear whether she meant new mothers or new babies. What is the position with regard to a mother who is already receiving child benefit for two or three children and then has a new baby? If she is getting a weekly payment, will she, in respect of the new baby, now have to come under the monthly rules? Secondly, I tried to attend very carefully, but I did not hear the noble Baroness reply to my point about the £50 payment in arrears for certain retirement and widow's pensions.

Baroness Young

My Lords, the answer to the first question is that the automatic monthly payment will apply only to mothers having their first baby in 1982; so if you have subsequent babies and you are already in receipt of child benefit, the option applies. On the second question, I understand that it applies to very few people indeed, and because it is such a low sum it applies only to certain graduated pension schemes.

Baroness Jeger

My Lords, if it is a low sum in the view of the Government, it may not be a low sum to the individuals concerned. Is it not possible to make this at least a six-monthly payment, so that someone could perhaps have a little holiday or a little pleasure, or perhaps buy some new curtains? Surely to an old person a year is a very long time. I wish to press the Government on this.

Baroness Young

My Lords, I accept that a year is a long time, but the sums of money are going to be very small; it is going to be less than £52. I will take note of what the noble Baroness has said and if there is anything further I can add I will write to her about it.

Lord Holderness

My Lords, may I press the noble Baroness a little further about my noble friend's question. While the improvident mother is changing her mind and going back to weekly payments, I think my noble friend wanted to know who would pick up the bits. I should certainly like to know that too.

Baroness Young

My Lords, clearly, if a family gets into difficulties and it is a family which is known to the social services department, they would no doubt consider the matter and advise the family as to whether or not they ought to change to weekly payments. But in most instances this will be a matter which will have to be resolved within the family, because it assumes that there is a husband, that they are not on supplementary benefit and therefore he is in work. This is a matter which the Government would feel would be for the family to resolve, rather than asking somebody else to step in and sort out something which might simply be a temporary difficulty which the family could resolve themselves.

Lord Wallace of Coslany

My Lords, could the noble Baroness assure us that we shall not have too much comment about "improvident" mothers. Circumstances might arise in families which might be classified by somebody, not knowing or understanding, as "improvident". We cannot always guess what is going to happen to a family. I do not like this phrase.

Baroness Young

My Lords, I would not attempt to draw distinctions between families. My noble friend Lady Trumpington was merely drawing attention to what might be one circumstance, to which I was trying to give an answer.