HL Deb 23 June 1982 vol 431 cc1106-16

7.53 p.m.

Baroness Lane-Fox rose to ask Her Majesty's Government whether they have considered the report of the Multiple Sclerosis Society on Benefits for Partial Disability, and if so whether they are prepared to institute within social security a system of partial incapacity for work.

The noble Baroness said: My Lords, generally when one submits a scheme to improve the lot of disabled people it involves passing around the begging bowl. The scheme explained in the report mentioned in my Question is very different since it contains elements which could be a saving to the economy. Prepared for the Multiple Sclerosis Society by the Economist Intelligence Unit to look at the cost implications of partially incapacitated provisions, the report suggests that its recommendations could save the social security budget several million pounds per annum. Most important of all is that its recommendations are not just economic but are also humane.

Let me stress to your Lordships that, partly because of the progress of medical science, many people now could live a long life span. While incapable of full-time employment, they are able and eager to work part-time. There are for example, young stroke victims, those with various mental handicaps, people with multiple sclerosis and other afflictions of the central nervous system, the bronchitics, old polios, some sclerosis people, the congenitally handicapped, heart cases and others that I have not mentioned—all of whom should have the chance to work if they can. They should be encouraged to accept the best career opportunity available to them.

Your Lordships may think that I sound bossy, if not a slave-driver, but to justify my stance let me declare what a thrilling moment it was for me when, at the age of 21, I got my first paid job at 30 shillings a week. From that time I realised that not only was this a release from the fetters of disablement (for it offered a chance to participate more fully in life) but that it also reduced the sense of being such a burden on the family. It became quite obvious to me that in work lay the best way for any disabled person to live an interesting, useful and fulfilled life.

What later seemed incomprehensible was that my right to draw invalidity pension would be jeopardised if I earned more than a certain set limit. At first that limit was only £4.50 per week. My noble friend Lord Crawshaw spoke scathingly of the demoralising effects of this in a witty and excellent speech during a debate on the Social Security Benefits Bill in February 1975. The case against the rule has been made repeatedly by the Disablement Income Group and other groups. Indeed, the limit has been raised several times in recent years. Admittedly, during my last two years as an employee, to avoid the hassle of having to notify the social security office every time my earnings were boosted unexpectedly—perhaps by writing an article or by the odd broadcast—I even sacrificed my untaxed invalidity pension in return for the taxable retirement pension. Now, in November this year, this earning limit is to be raised to £20—the steepest rise yet made and, as such, very welcome.

Nevertheless, the situation remains that there are those who cannot do a full week's work yet cannot afford to live on part-time pay. In order to hang on to their invalidity pension they have to give up their healthy urge to work. This is ludicrous. I need not remind your Lordships of the therapy provided by work; the earnings rule applied in these cases itself is called the "therapeutic earnings rule". It was called "therapeutic" as the intention was that it should be reward for work prescribed by a doctor, although in effect I am told that at the moment therapeutic earnings are not automatically payable. What can be said is that the name of this earnings rule, for those of us desperately trying to become self-supporting, far from being "therapeutic" is likely to threaten the onset of hypertension and high blood pressure. In the more kindly climate in which disabled people find themselves at present, such harsh rulings seem strangely out of tune.

From a number of figures and statistics quoted in the report it would appear that about 100,000 people fall within the provisions of these schemes. The numbers are not great. From researches made into the subjects by expert market researchers Nicole Davoud, Judith Buckle and Melvyn Kettle, and economist Jean Shrimpton, it appears that the large percentage of those who wish to become working disabled—provided there was no financial disincentive against doing so—could now be given the go-ahead to make the very most of their working abilities if the last of the schemes recommended in the report is adopted.

It seems more than coincidence that this report has been published now. The Chancellor has spoken fairly recently of a desire to do everything possible to assist the working disabled. There is now a new emphasis on job sharing and on part-time work. There is new technology and new working practices which are on the side of disabled people—both in helping to simplify our lives and in offering us jobs within our capacity.

Let me make it clear that I do not aspire to being any sort of trained economist or accountant. But I have been led through this report by the experts and am impressed that the people about whom we are talking are those who tire more easily than normal, through muscular and other conditions and malfunctions, so that they cannot sustain continuous effort for a full working week; or those who vary with their good and their bad days et cetera. Up to date, this provision through invalidity pension has been based not on sickness or disability as such but on their resulting inability to work.

The report gives these three options for correcting the present hardships, but of those it favours a system of a partial incapacity benefit on the basis of modification to invalidity benefit. Such a two-tier benefit already exists as attendance allowance, payable as it is at a high or a low rate. Such a partial incapacity benefit would remove the obstacle of the earnings rule to those it discouraged from making the most of their working talents. It is very encouraging that the Minister for Social Security and the Disabled, Mr. Hugh Rossi, said last week in another place: We recognise the force of the DIG argument for a partial incapacity allowance ".

Extensive calls are made on the DHSS for benefits to meet the extra expenses of disability, but it seems not very likely that all these can be met just yet. The scheme I am mentioning, if adopted, could prove to be quickly possible to implement. It would be assessed on an economic as well as on a medical basis, giving a realistic impression of the effect of disablement on a working life. It is thought by the authors that by using the assessment of this relatively small section of the total population of people with disabilities there could evolve a mechanism for assessing disability more realistically, which has so far been sadly lacking, helping towards the wider benefit scheme long sought by pressure groups. It should be said that such a partial benefit would not presumably amount to more than two-thirds of that for total disability, and for those enabled to work it might be a good deal less than this once their earnings are established.

In my humble view, this main proposal in the report deserves to be quickly incorporated within social security. I repeat that it is both economic and humane, and with due respect I commend it to my noble friend the Minister, hoping that he may find it possible to give a favourable reply.

8.3 p.m.

Lord Wallace of Coslany

My Lords, may I first congratulate the noble Baroness on the clear and very positive way she has put her case. Indeed, the noble Baroness, Lady Lane-Fox, has raised an important and human issue which is deserving of a wider ranging debate. The report itself I found to be well prepared and comprehensively presented. The prospect of employment, mainly part-time, for those suffering from partial incapacity has a beneficial effect to the individual. It gives a degree of independence and widens life's horizon for those so affected. I agree with the very obvious conclusion of the report that earnings from part-time work do not provide a living wage. The effect to the individual, however, with a degree of independence and feeling of use to the community, cannot be ignored.

I would like to quote from Section 9.2 of the report, part of which was referred to by the noble Baroness. The Chancellor, in his Budget speech, spoke of a desire to do all possible to assist the working disabled. The report goes on to say: New technology and new working practices are on the side of the partially disabled. Work sharing and part-time working are increasing, making this a particularly timely point at which to give further consideration to the potential, at present wasted, of this group of people who have significant disability but who none the less could be among the working disabled if they were permitted to do so. I would not disagree with this, but to assume, as the report does, that 100,000 people would be affected and involved in employment, mainly part-time, is, I fear, a degree optimistic in view of the critical unemployment figure of over 3 million at the present time. Of course, we are not necessarily talking only about the present time but also about the future. But I am bound to put that point.

In any case, opportunities for part-time working vary considerably from area to area, and this, of course, must be taken into account. For instance, if one lives, as I do, in a residential suburban area, there is not the same opportunity as in other areas. However, even taking a somewhat pessimistic view, the case remains that the present limitation to certain cases allowed "therapeutic" earnings, subject to limited level of earnings, should be widened; in other words, to extend the opportunity not only to those suffering from multiple sclerosis but others with permanent disabilities and many other conditions reducing full or part-time employment potential. The report points out the problem of providing suitable legislation, and would appear to come down in favour of a partial incapacity benefit on the basis of modifications to invalidity benefit. But, of course, with this and other ideas some system of tapering is involved, with the added complication of the danger of bureaucratic administration.

Here I would give the House an instance of what I mean. This comes from the Guardian diary of yesterday. This is the reply sent by the DHSS office at Richmond-on-Thames to a mentally ill 19 year old living on invalidity benefit who managed to get a job for two days washing dishes at Olympia and wrote to the DHSS asking them to reduce his benefit accordingly. The reply is: The claimant is disqualified for receiving non-contributory invalidity benefit for 17.5.82 because he failed without good cause to observe the rule that he should do no work other than work which he had good cause for doing and from which his earnings were ordinarily not more than £16.50 a week. S.S. (Unemployment, Sickness and Invalidity Benefit) Regulations, reg. 12(I)(a)(iii). As a result an overpayment of non-contributory invalidity benefit has been made amounting to £2.95 as detailed below. Repayment of this sum is required because it has not been shown that the claimant has throughout used due care and diligence in the obtaining and receipt of benefit to avoid overpayment. Yet this poor individual had previously written and asked them to adjust his benefit.

My Lords, a partial incapacity benefit could work, but in view of what I have indicated, it has to be administered with sensitivity, because you are dealing with people not fully able to deal with their own affairs. The report hints at financial savings and at one point mentions a figure of £5 million. I would say that financial savings are not unimportant, but certainly should not be the prime factor leading to possible change. The main issue is that we can do our utmost to ensure that the disabled and partially disabled shall be helped and encouraged to play as much a part as possible in the life of the community by productive work and effort and in so doing enhance their own dignity, self-reliance and independence. My Lords, this, I believe is the main objective behind the report, and may I say that it is one that has my wholehearted support.

8.10 p.m.

Lord Kilmarnock

My Lords, I would like to begin by making an apology to the noble Baroness, Lady Lane-Fox, for the fact that it is I and not my noble friend Lord Banks who is intervening in this short debate. He would have done it a great deal better than I, but he has asked to be associated with what I am going to say. He is absent simply owing to a longstanding engagement.

This document raises two important questions. The first is the question to which it specifically addresses itself, the other is the whole matter of the limitation on earnings in relation to social security benefits. The noble Lord, Lord Wallace of Coslany, mentioned the Guardian yesterday, but there is an article in the Guardian today which trenchantly points out that the interaction of tax and social security in Great Britain is an incoherent mess.

First, to the substance of the Unstarred Question. The present arrangements limit disabled part-time earners to £16.50 per week—I believe the noble Baroness, Lady Lane-Fox, said that it was to rise to £20 in November—after which they forfeit entitlement to invalidity benefit. These permissible earnings are entitled "therapeutic earnings", a term which I myself feel is rather unfortunate if not offensive. The report proposes a new category for which it suggests the name "concessionary earnings" and I believe that this would be a great improvement. I understand that on medical grounds these new concessionary earnings would be particularly appropriate in the case of multiple sclerosis which not infrequently afflicts people in their twenties and thirties who would otherwise have the expectation of almost a whole working life ahead. I am also led to understand that the condition is remissible in the sense of receding for periods, during which an increase in the sufferer's working capacity may well take place.

On page 30 the report tells us what I am sure we would all accept: Most younger disabled people and many of those in their middle years want to be as independent as possible. It is evident that this would encourage and help to create an atmosphere in which people are expected to contribute as far as possible to their own income, instead of feeling defeated by a system which concentrates on their incapacity. That seems to me to be very well expressed.

A further point is that I am given to understand that we arc almost alone in the European Community in not having provision for partial incapacity outside our war and industrial pension schemes. All these things reinforce the desirability of enabling those who are able and anxious to take part-time work to do so. At present, the rule is that if a person can do some work, that person is not "incapable of work" so sickness and invalidity benefits cannot be payable. This is quite unduly rigid and indeed is an unrealistic approach to the real world of partial disablement. This report looks at ways of recognising and encouraging the residual capacity for work, which may be very considerable in some cases.

It is not only a question of creating the framework for a more interesting and satisfying life for the partially disabled, desirable though this is. There are also, as the noble Baroness, Lady Lane-Fox, has pointed out, and the report points out on page 29, potential savings to the economy: For those recipients who re-established adequate earnings there would be a gradual increase in tax and National Insurance contributions. Even in cases where recipients' earnings would not be at a sufficient level to extinguish or partly extinguish benefit, the addition to their purchasing power would mean greater contribution to indirect taxes. They would also be able to pay for services and purchases which would help to provide employment for others". That is a very important consideration.

So we have not only a socially desirable end but one that looks as if it would be at the very least self-financing. The noble Baroness had slightly greater hopes for it, but at the very least it would be self-financing. The report sets out three options: modifications to the present law governing invalidity benefit; a scheme modelled on the present industrial disablement benefits; and an assessment of partial incapacity benefit on an economic as well as a medical basis—that is, taking account of loss of earnings. If I heard the noble Baroness aright, she expressed a preference for the third of these options. I am open to guidance and we must listen to the Government's point of view here. I look forward with great interest to what the noble Lord, Lord Trefgarne, is going to say.

I confess that I am marginally drawn to the first option; that is, modification of invalidity benefit involving a graduated withdrawal of the benefit on a tapering scale as earnings rise. We are warned on page 18 that tapers are more expensive to administer than a flat rate cut-off and that there is a danger of producing yet another technical "trap" unless the stepped withdrawal is properly designed. I do not believe, however, that that is beyond the wit of man. It is certainly not beyond the wit of the DHSS. The anticipated administrative costs are still very considerably less than in the other two options and the adaption of the existing benefit would probably be the speediest and most efficient way of achieving the desired object. Furthermore, it would not be out of step with the Government's approach to certain other benefits, such as unemployment benefit, on which they have raised the earnings disregard on bringing the benefits into tax.

Here I cannot refrain from widening the debate for a moment just to draw the logical conclusion from the various problems of designing tapers, avoiding traps and taxing benefits, that sooner of later we shall simply have to move towards a tax credit scheme on the lines which have long been promoted by the Liberals and are under very active consideration by my party. In fact, it was once a Conservative proposal, too, with which the noble Lord, Lord Cockfield, was not unconnected, so that it has very respectable credentials all round.

The total integration of the tax and benefit systems is the only way we will iron out the anomalies and difficulties to which I have referred. I should say here that I told the noble Baroness, Lady Lane-Fox, that I was going to mention this. She did not object, because it turns out that she, too, shares my belief that that is the way we shall have to go in the long run. I will not pursue it any further here and now, because the noble Baroness very properly has a specific object in view from which I do not wish to distract the Government's attention. It would be quite wrong if nothing was done now, because we are setting our sights on a beautiful new scheme which may still lie many years ahead. Limited improvements can and must be made and this is one of them. I therefore want to end by asking the noble Lord, Lord Trefgarne, when he comes to reply, to tell us in which way the Government themselves propose to give effect to the undertaking of the Chancellor of the Exchequer in his budget speech to "do all possible to assist the working disabled".

8.18 p.m.

Lord Trefgarne

My Lords, I must join other noble Lords who have thanked the noble Baroness, Lady Lane-Fox, for introducing this short debate this evening, because it gives me the chance to welcome the report prepared by the Multiple Sclerosis Society on benefits for partial disability. The report has understandably generated much interest in the continuing debate on the need for provision for those who are unable to work full-time because of disability or chronic illness. It has also made some useful suggestions on how such help could be given.

As my noble friend has told your Lordships, the present system of benefit was not designed for people who, although ill or disabled, have some capacity to earn. Partial incapacity, also known as partial disability, is disability which leaves an individual with some capacity to earn. People in this position are not incapable of work in the traditional sense, and accordingly are generally barred from receipt of the normal incapacity benefit for which incapacity for work is a condition of entitlement.

The main contributory benefits in this area of social security—sickness and invalidity benefit—are payable only to those who are incapable of any work. The only exception to this is the so-called therapeutic earnings provision. This enables a person to be treated as incapable of work and to receive benefit if he is doing a job which may be regarded as of therapeutic value and for which his earnings are under a ceiling of £16.50 at present, and £20 from November. I will say more on that matter in a moment; it was raised by all the speakers this evening.

In addition to the difficulties which partially incapacitated people have in qualifying for incapacity benefits, they may also, of course, face considerable problems in attempting to support themselves by working. They may be restricted in the hours that they can work, the range of jobs they can do or the responsibilities that they can accept; or they may be able to work intermittently or in special conditions. Even when a disabled person's earnings are at a reasonable level, the demands of a job may well put an abnormal financial burden upon him in respect of travel, attendance or special clothing which will leave him significantly less well off than others.

If we turn to other parts of the social security system, a disabled part-time worker may, if his total income is low, be eligible for supplementary benefit which, of course, has some special rules for disabled people. If he has children and is in low-paid work for at least 30 hours a week-24 hours for a one-parent family— he may get family income supplement. There are preferences for disabled people in the rent and rate rebate schemes, and there is a range of means-tested benefits, such as free prescriptions and free school meals, for people with low incomes in general.

This does not, however, add up to a coherent system of help for disabled workers which would encourage them to make full use of whatever capacity for work they may have. It has been argued that there is thus some room for improvement in this as in other areas of social security, and the main question directed at me tonight is what our intentions are in respect of partial incapacity, Let me say straight away that I acknowledge the force of this case. If there is a disincentive to disabled people to obtain part-time work, then we clearly need to study ways around this. And we have confirmed that we are looking at the possibilities. Whether improvement can be achieved by amending the social security schemes or by other means is something that we shall need to consider very carefully.

However, as I am sure that your Lordships will recognise, this is a complex problem and there are no simple solutions. Indeed, the report recognises that there needs to be more work on the details of the approaches suggested in it. We are at present looking at these and other possibilities. The Social Security Advisory Committee are themselves considering this, and their advice, when it is available, will, I am certain, be of great assistance, But at the moment we are not able to say which is the best approach to adapt or when it would be possible to put it into effect.

The cost of any new provision for partial incapacity is certainly an important factor in considering the, relative merits of different possibilities, and also, of course, in determining when the Government could afford to introduce such a measure. The point has been made that there would be offsets against any cost, and this was one of the points made by my noble friend. Not only might some people take up work who would otherwise he totally reliant on benefit, but there would of course, also be increased tax revenue. That may well be so, but we need to do a lot more work on costs, taking into account such factors as the effect on people in full-time work who, because of disability, may find a combination of earnings and other financial support preferable to earnings alone. More work is needed before it is unequivocably clear that a worthwhile provision could he made at virtually no cost, as has been suggested. The report claims that the overwhelming majority of the potential client group for a partial incapacity benefit are already receiving one or more benefits, primarily invalidity benefits. As I say, we accept that some offsetting savings could be gained from taking such people off sole dependence on benefits. But it is necessary to look at the whole picture, and I think that your Lordships will appreciate that there might be costs as well as savings. We shall have to look at the whole equation.

There are other factors which need careful consideration also. One of these is the question of whom we should be trying to help. I think from what has been said that there is a consensus that provision on the lines we are discussing should be aimed at the disabled person capable of part-time work, and I imagine that in the definition of "disabled" your Lordships would wish to include those suffering from mental disability. But translating the concept of capability of part-time work into a legal framework will not be easy. Those of your Lordships with experience in social security will know the problem of drawing dividing lines so as to target provision at those for whom it is intended. I mention that difficulty not in any defeatist sense but to underline the complexity of the issues we are discussing.

The cost and scope of any scheme as well as its effectiveness will, of course, be determined by the nature of the scheme itself. That means that I cannot give figures this evening. What I can do, is suggest some of the ways in which it might be possible to take better account of partial incapacity.

The report itself suggests three approaches. The first is adjustment of the existing rules for social security benefits in order that people may work part-time without losing all their benefit. That is certainly worth looking at, since, on the face of it, it would result in a simple scheme. But I should perhaps alert your Lordships to the problem of drawing up rules so that the help goes only to those for whom it is intended. I am sure that no one would wish for the introduction of a scheme which, at the end of the day, provided benefit for people in part-time work even if they were in fact capable of doing full-time work.

The other two approaches suggested in the report relate to what I might describe as a full-blown, separate benefit for partial incapacity. The first option suggested is to use the criterion of loss of faculty. The second is to carry out both a medical and an occupational assessment of the individual. Both these approaches have much to be said for them. But I think —and the report recognises this—that both suffer from requiring a fairly high level of administrative effort.

There may be other ways in which to approach the problem of partial incapacity—for example, we should need to consider the possibility of support more directly related to employment. And in all our considerations we shall have to bear in mind the tax position of the people concerned. It would not be sensible to introduce a scheme in which the marginal tax on earnings was approaching 100 per cent., because, of course, of reduction of benefit, though, in saying that, I recognise what has been said about the high level of motivation of the people we are discussing. For many of them—and my noble friend referred to this when she talked about the very first job that she had—the status of having a job is at least as important as the earnings deriving from it.

As I have made clear, we have not reached any decisions on this matter. When we see what the Social Security Advisory Committee have to say, it may be that the picture will be clearer and the options available will be capable of analysis as to cost and numbers involved. But, even then, we shall have to look at the resources available and weigh up what priority to give such a provision compared with other objectives, including those in the social security field. But, nevertheless, the important point to take from this debate is that we have been persuaded that there is a problem and that we must look carefully at all possible solutions to it. We are now setting about that task.

Let me turn now to one or two points that have been made during the course of the debate. First, let me correct one matter raised by both my noble friend Lady Lane-Fox and, indeed, the noble Lord, Lord Kilmarnock, about the therapeutic earnings provision. The therapeutic earnings provision is not an earnings rule: it is a measure of the work that can be done by someone without being incompatible with incapacity for work. It is a guideline to the insurance officer who makes decisions about such incapacity. The noble Lord, Lord Kilmarnock, in fact, specifically questioned the terminology. I should explain that these earnings are permitted only if the work undertaken is approved by the claimant's doctor and is thus therapeutic. Perhaps the phrase "concessionary" would be better, but I fear that that would still be only a semantic difference for so long as we retain the present system of benefits for sick and disabled people. The important point is that the therapeutic earnings limit is just that; it applies only to work that the doctor certifies as being of therapeutic value. Thus, I was careful to say that it is not just a question of being only £16.50, or £20 later in the year when it is raised.

I think that the noble Lord, Lord Kilmarnock, referred to some foreign schemes. It is true that other countries make provision for partial incapacity, and naturally my department has studied these. But I would just make the point that such schemes have to be set in context. There are invariably important differences in the general structure and administration of other systems of social security, health care and social services. This means that their arrangements cannot readily be translated into our own context, though there is perhaps always something to be learned from the way other people deal with problems similar to our own. As I say, their schemes will certainly be studied and, indeed, have been already.

The noble Baroness and, I think, both other noble Lords who spoke argued that provision can be made at nil cost. I referred to that a moment ago. I cannot dispute that, in terms of figures that we have been discussing tonight, that may appear to be so. But there could be a cost if people move from earnings to earnings plus other provision. What I think is needed is a long, cool study of these costs. Your Lordships may be interested to know that my officials have already met with the author of this report to discuss the point, and we are beginning to work towards a clarification of what is, frankly, a rather unclear or, if you like, muddy area. The statistics are not readily available at present and we are seeing what we can do to get a closer appreciation of the facts in the matter. But I must say that I am not wholly convinced at this stage that such a scheme could be introduced at nil cost or even at some saving, as has been suggested.

The noble Lord, Lord Wallace of Coslany, referred to a specific issue which he had read about in the Guardian today or yesterday.

Lord Wallace of Coslany

My Lords, yesterday.

Lord Trefgarne

My Lords, I, too, have seen the report of that matter and I and my colleagues have asked for some advice and information about that particular case. I must agree that it appears to be something that needs to be looked into.

I hope I have made clear that we are sympathetic to the arguments put to us in the debate tonight. I say that not simply because the Government's long-term aim is to rationalise and improve provision for disabled people. It is because what has been argued tonight strikes a chord with this Government's philosophy of creating the right environment to encourage people to work. To the extent that there is a disincentive to some disabled people who want to work, we cannot condone that. But correcting the situation may not be straightforward and may have a cost. Thus we must explore carefully the implications of the various possibilities and determine how and when to make changes.

I hope that the generally sympathetic approach that I have been able to enunciate in response to the Question of the noble Baroness tonight will convince your Lordships that we have this matter very seriously in hand, and I hope that before long we shall be able to take a further step forward.