HL Deb 10 May 1982 vol 430 cc61-77

7.3 p.m.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Lord Trefgarne.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AMPTHILL in the Chair.]

Clause 29 [Up-rating of needs allowances]:

Lord Wallace of Coslany moved Amendment No. 29: Page 23, line 45, leave out paragraph (a).

The noble Lord said: I understand that in relation to the previous Bill the Committee has adjourned during pleasure, but so far as I am concerned it is during displeasure because it is regrettable that the Committee stage of an important Bill like this should be the odd job done during the dinner break for noble Lords. However, I shall refrain from calling a Division so as not to upset noble Lords while they are having their meal.

This amendment is in fact a probing amendment. I passed that news on, and I hope that Government Ministers received the information. It goes back to Clause 28. Subsection (4) of Clause 29, which relates to the uprating of needs allowances following a review period, states that the Secretary of State must lay a report before Parliament explaining why he is not awarding an appropriate increase in the needs allowance, if that is his decision, unless in his opinion the amount by which those elements will not have retained their value or, as the case may be, the amount by which the increase is less than the appropriate amount is inconsiderable …".

This would mean that if the Secretary of State felt that a 1 per cent. or 2 per cent. rise was inconsiderable he could avoid having to make it, and need not explain himself to Parliament. Such a decision would effectively erode over a period of time the difference between the supplementary benefits scales and the needs allowance reducing the rebates available.

While I fully understand that there is no statutory obligation on a Government to operate the needs allowance in any case, the custom has always been for it to rise by the same amount (not percentage) as the retirement pension. I make no bones about this because Age Concern have raised the issue. The point itself was raised in another place, but no satisfactory response was received from the Minister, who so far had managed to get away without saying anything about this aspect either in Committee or on Report. Looking at the Bill it seems to me that there is a complete get-out of parliamentary protection, because the Minister, if he thinks an increase in inconsiderable, need not bother. This is something that worries a number of people very much indeed. As the Minister in another place "dodged" the issue in Committee and on Report, I am now hoping that the noble Lord will be able to come forward with something a bit better than what happened in another place. I beg to move.

The Earl of Avon

I think I can set the noble Lord's mind at rest, and I shall try to do so. The Government freely put down what is now Clause 29 in the other place to make provision for the uprating of housing benefits, and I am sure the Committee will understand why we could not mortgage the future by making provision for automatic index-linking of the needs allowances. But the Government freely put down a provision that where the Secretary of State considers that some or all the needs allowances have not retained their value over the course of a year, but decides not to increase some or all allowances, or only to increase some or all of them by part of the amount required to restore their value, then he must report his reasons to Parliament. I feel that this is surely what the Opposition would most wish us to do, and it is in fact what this clause does do.

The noble Lord may perhaps have misunderstood the clause. Deleting it will not oblige the Secretary of State to uprate the needs allowances each year. All that will happen is that the Secretary of State will no longer have to table a report if he decides no increase is appropriate. I hope that that has satisfied the noble Lord and that he will be able to withdraw his amendment.

Lord Wallace of Coslany

It satisfies me to the extent that I shall have something to read in Hansard tomorrow; and, having read that, I shall decide what action to take on Report. But, at this stage, and in the circumstances under which we are regrettably operating, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Wallace of Coslany had given notice of his intention to move Amendment No. 30: Page 24, leave out line 27.

The noble Lord said: This amendment was dealt with together with my Amendment No. 25. I spoke about it then and I do not intend to do so now, so I will not move it.

[Amendment No. 30 not moved.]

Clause 29 agreed to.

Clause 39 [Local schemes]:

Lord Kinross moved Amendment No. 31: Page 25, line 38, at end insert— ("( ) Without prejudice to the generality of the powers conferred by subsection (1) above, a variation under that subsection of the statutory scheme, may provide that in ascertaining for the purposes of a rate rebate, a rent rebate and rent allowance the weekly income of a person to whom this Part of this Act applies and his spouse, if any, there is a total disregard of war disablement pension and war widows pension.").

The noble Lord said: I beg to move the amendment which stands in my name and in that of Lord Haig, who had hoped to be here tonight but who, in his capacity as President of the Royal British Legion (Scotland), is attending a function in Glasgow at the opening of an ex-servicemen's sheltered housing scheme.

The aim of this amendment is to re-enact certain of the provisions of existing legislation concerning the total disregard by local authorities in Scotland of war disability pensions and war widows' pensions in assessing entitlement to rates and rent rebates and rent allowances. The current legislation is contained in two Scottish Acts. The first is the Housing (Financial Provisions) (Scotland) Act 1972, Section 18 of which authorises local authorities to make variations in what the Act describes as their "model" schemes for rent rebates and allowances; and the second is the Local Government (Scotland) Act 1973, Section 114 of which authorises local authorities to make variations in what that Act describes as their "standard" schemes for rates rebates. Both sections have a subsection in substantially similar terms, to the effect that, in assessing the income of a person to whom the scheme applies, there is a total disregard of war disablement pensions and special war widows pension". There is a definition of "war disablement pension" and "special war widows" in both statutes, but suffice it to say that the term "special war widow" includes a war widow and is also wide enough to include a serviceman disabled or killed in the service of his country in the past or the future; and wide enough to include Falkland Island casualties.

The reason behind this authority to disregard war pensions is that these are paid in compensation for loss of the amenities of life and not as a supplement to income. For the same reason, war pensions and war widows' pensions are not subject to income tax. Perhaps I should declare that I am myself a war pensioner, although I am not in receipt of a rent or rates rebate, as yet. Before 1972, a local authority had a general discretion to decide what, if any, part of a war pension to disregard and certain of the more enlightened local authorities disregarded part of the pension and, some of them even the whole, sometimes at the request and with the encouragement of the British Legion. But it was only after the specific authority contained in the 1972 and 1973 Acts to operate a total disregard was promulgated, that local authorities made wide use of the power to do so.

Today, the position in Scotland is that all nine regional, three island and 53 district councils operate a total disregard, as do five new town development corporations and the Scottish Special Housing Association. I am confident that this situation, so advantageous to the war pensioner and the war widow, would not obtain were it not for the specific reference to total disregard in the two statues. Certainly, their existence very greatly helped the Royal British Legion Scotland to bring to the attention of local authorities the very special position—and it is a very special position—of those ex-servicemen and ex-servicewomen who suffered wounds or disease in two world wars and later. We must not forget that, even now, the services are suffering casualties in the South Atlantic, some of whom may be glad of the total disregard of rates should they be looking for a rate rebate pension in years to come.

The concern of the Royal British Legion Scotland is that the 100 per cent. disregard should continue to be brought to the attention of local authorities—which was why we wanted to see the appropriate subsections of the two statutes carried forward into this Bill. But, alas! we find that, instead of being reenacted, they are actually repealed by Clause 28(5)(b) of the Bill. Surely, this is a retrograde step. It is one which my amendment seeks to remedy. It has been said by the Minister of State for Social Security and the Disabled that, while he appreciates the concern of the British Legion that authorities in Scotland should continue to operate a total disregard, he does not accept that a specific reference to it in the new legislation is necessary. His reason is apparently that under the existing provisions Scottish local authorities cannot vary their local schemes without the consent of the Secretary of State and that, under the new scheme, no such consent is required. This, to my mind, is quite irrelevant, and successive Secretaries of State for Scotland have always willingly given their consent. It is further said that this amendment is unnecessary because local authorities will have the discretion anyway.

But a new generation of councillors is emerging who know nothing of war and of its aftermath of suffering. The Legion cares for ex-servicemen from the First World War whose average age is 82 and from the Second World War whose average age is 64—and much younger for subsequent conflicts. The need to keep the needs of the pensioners before councillors will therefore still subsist well past the year 2000. I suggest that for this reason it is desirable that specific attention should be drawn in the Bill to the war pensioners and war widows. My amendment seeks to do this I beg to move.

Lord Campbell of Croy

May I support my noble friend? He has very ably stated the purpose of his amendment and I am very glad that he and my noble friend Lord Haig have enabled this matter to be clarified. I know that the British Legion are much concerned about these matters, because they have been in touch with me about them in my capacity last year as chairman for Scotland of the International Year for Disabled People. As my noble friend Lord Kinross has said, parts of the 1972 Housing (Financial Provisions) Scotland Act and of the 1973 Scottish Local Government Act are being repealed; and they are the ones which, in Section 5, are described as entries relating to rent rebates and rent allowance subsidies. I, as Secretary of State for Scotland, introduced both those Bills and was responsible for them going through Parliament and, in particular, the other place, where I was at that time.

I made certain that there were the proper disregards for war disabled pensioners. I introduced rent rebates and allowances into Scotland for the first time ever. in that 1972 Bill, which became an Act. There may be some satisfactory explanation which the Government can give us. I entirely understand that it may not be necessary to put words in the Bill, as my noble friend has suggested, but I think we need this to be carefully explained. Certainly, there will be numbers of people in Scotland who will need to be satisfied that the Bill continues the disregards and also makes sure that all local authorities concerned are informed about these disregards. I must declare an interest in case I have been successful in disguising the fact that I myself am in the category of 80 per cent. war disabled—although I do not ever intend to apply for a rebate or allowance myself.

I am sure that the Government are not intending to take away any benefit which war disabled people have been eligible for. It is not an expensive matter. The war disabled are a small and diminishing band of people in our population. We sincerely hope that that will continue to be the case and that there will be no future world war which would add to their numbers, and so we hope that this trend will continue and that it is a known and comparatively small part of our population who are affected. But T must reinforce what my noble friend has said. That is that, with the onset of old age, their problems and their situation have become more serious. The very large majority of the people we are considering are over 60, many in the late 60s and 70s. Their state is not improving either medically or in other ways.

Knowing that this is a Committee stage and that one can speak more than once, I will not say any more now. I think the situation has been described very well by my noble friend. I will await the explanation of the Government and then, depending upon that explanation, will add any points that may need to be made.

The Earl of Avon

Perhaps it would be helpful if I intervene now. Clause 30 carries forward authorities' discretionary powers to make, at their own expense, more generous local rebate/allowances schemes than the provisions of statutory schemes. May I first make it clear to the Committee that the Government wholeheartedly agree with my noble friends that authorities should be able, as now, to disregard war pensions completely when they assess claimants under local schemes. Nothing in the housing benefit scheme will prevent authorities from doing so. In fact, local authorities will have power under Clause 30 to frame more generous schemes within their areas which disregard war widows and disablement pensions completely.

What concerns the Government about the amendment is, first, that it is both unnecessary and declaratory and I know that this kind of legislation disturbs some noble Lords. Secondly, we do not think that this kind of provision is the most effective way of achieving the aim of my noble friends, that is to bring the power of disregarding war pensions to the attention of authorities. So it is a question of method and perhaps I may explain.

First, I said that the amendment is unnecessary. That is because Part II of the Bill essentially sets out enabling powers to set out the details of the housing benefits scheme in regulations. The enabling powers are sufficiently wide to provide for total disregards of war pensions so no further primary legislation is required.

My noble friends cited a precedent for their amendment, the existing Scottish legislation; but, with respect, I hope to show that is not relevant. The current legislation was framed in this way—as my noble friend Lord Campbell of Croy told us—because Scottish authorities must seek the Secretary of State's approval before making enhancements to the national schemes. In England and Wales prior permission is not required. That is why the Scottish provisions at present give authorities power to disregard war pensions—otherwise permission would be required in individual cases. We have decided for housing benefits to bring Scotland into line with the simpler English and Welsh provision. They will no longer need the Secretary of State's permission to make local modifications, so no general legislative clearance is required.

My noble friends have argued that, despite the points, the amendment is still desired to draw the provision to the attention of authorities. They have indeed advocated this approach in preference to the alternative proposed by my honourable friend the Minister for Social Security that attention should be given to this point in the major advisory circular that will be issued by DHSS in connection with the new scheme. My honourable friend the Minister suggested his approach because this seems to be the most effective way to bring the matter to the notice of authorities. Few officials are likely to study the primary legislation when it only gives enabling powers. They will, rather, concentrate on the regulations and the parallel guidance issued by DHSS. That is why my honourable friend made his proposal—he wanted the provision to get the widest publicity. I am sure all those noble Lords who have experience of local government matters will agree that clerks and other officers dealing with rebates and allowances will look to the circulars for guidance rather than to a subsection of the Act.

In addition, if authorities did not wish to make this provision, I fear that they are just as likely to ignore declaratory phrases in an Act as they are advice in a circular. The special nature of war disability and war widows' pensions has always been recognised by the rent and rates assistance schemes. A partial (£4) disregard is included in the schemes. This disregard will be carried forward into housing benefit. I know how strongly my noble friends feel about this, but I hope I have reassured the Committee that the Government are anxious to do the best by war pensioners. We believe that the amendment is unnecessary to this end and I would therefore ask my noble friends to consider my remarks.

Lord Campbell of Croy

Perhaps I should speak before my noble friend decides what to do and closes the debate. I am grateful to my noble friend for giving that explanation of the Government's reason for not including specifically the wording or something like it that appears in the Scottish legislation. For my part, I should like to examine what my noble friend on the Front Bench said and ask advice from legal experts and those who are concerned about this matter in Scotland. So I hope my friend may decide not to press his amendment at this stage.

May I give one warning. It was stated at one period when this matter was being discussed that the Minister for the Disabled would send a letter or circular round to local authorities. The Minister for the Disabled appears to have functioned only for England. He may function for Wales too, I do not know. There was a debate last year in another place on the whole question of the International Year for Disabled People during which the Minister for the Disabled announced a competition. Everybody taking part in that debate—and certainly the newspapers—thought that it was a competition for the whole country. I was a little suspicious because the judges' names were given and there was not a single one from north of the border. When I inquired in correspondence, the Minister, Mr. Rossi, kindly replied but said that of course I was right. It was limited to England. I do not think that it even covered Wales. I am sure nobody taking part in the debate realised that at the time.

In the same way, I suggest that if the Minister for the Disabled is going to write to local authorities, he should remember that means either he has to extend his normal remit as DHSS Minister dealing with health, and also take in other local authorities in the United Kingdom or else his counterparts, including the Parliamentary Under-Secretary concerned in the Scottish Office and the other Ministers in the other parts of the United Kingdom, will need to do the same. Otherwise the same trap could be fallen into as was in that debate in another place.

Lord Kinross

Having heard the Minister's reply, for which I am very grateful, I concur with my noble friend Lord Campbell of Croy in saying that we should like to take this amendment away and consider his reply in greater detail. There is one point that I should like to make. He referred to a circular to be sent to all local authorities—in Scotland presumably as well as in England—advising them of the necessity to consider 100 per cent. disregards for the war pensioners and war widows. The objection to that is the same as I have to not carrying this provision forward into legislation, because councillors change. We have a generation now of councillors who were not in the last great war and some of them do not have very much sympathy therefore for war pensioners, and that situation will increase. Circulars get pigeon-holed. They get thrown away and they get filed, whereas if the provision is in an Act of Parliament, it is less likely to be overlooked. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 30 agreed to.

Clause 31 agreed to.

Clause 32 [Subsidies to authorities]:

7.28 p.m.

Lord Wallace of Coslany moved Amendment No. 32: Page 26, line 22, leave out from ("be") to end of line 24.

The noble Lord said: This is a probing amendment. This should be fairly simple for the Government to answer, if in fact they have the information to give me in an answer. The purpose of the amendment is to receive from the Government information on what basis local authority costs will be calculated. Will the total be aggregated on a national basis or shared among local authorities? If so, on what basis would the division be made—on the total amount the authority pays out or the number of cases dealt with? On the other hand, would it be the amount paid in housing benefits together with administrative costs? This is something that everybody—in the local authority world anyway—is waiting to find out.

In another place, indication was given by the Minister that negotiations were proceeding with local authority associations and therefore my question to the noble Earl and the Government is this: Have these been finalised and, if so, what is the position? I beg to move.

The Earl of Avon

The Government's position is that local authorities will be fully compensated for additional costs incurred as a result of the provisions of this Bill. That remains our intention and I have no hestiation in repeating that pledge. The order to be made under Clause 32 in due course will ensure that authorities receive full reimbursement not only for the extra benefit costs arising from the new scheme but also for any additional expenses in administration which they need to incur in dealing with the extra work which the new scheme brings them. This clear undertaking could be no more generous than this. Where authorities' costs are forced up by this Bill, they will be met in full by central Government. But nothing in the Bill provides any justification for increasing the rate of subsidy for existing cases or for those cases which will be dealt with by an authority irrespective of the new scheme.

Rebates and allowances granted in these case already attract a central Government subsidy of 90 per cent. and administration costs are reflected in the rate support grant arrangements. There can be no question of transferring responsibility for the balance of expenditure to the Exchequer. In terms of benefit costs alone, this amounts to about £100 million for 1981–82, and it would not be right to transfer to the taxpayer the financial stake which the ratepayer has always had in schemes of housing assistance administered to the benefit of the local population. Without this degree of commitment, authorities will simply become agents of central Government in the matter and it does not seem right to down grade their standing in this way.

There is an important distinction between the new responsibilities of authorities and those they have held for the last 10 years. The former represents a duty transfered to them from central Government and the supplementary benefits scheme; and it would clearly be unreasonable to expect authorities to take this on without full recompense. But in the latter case there is no such justification and the Government cannot contemplate an additional charge. I hope I have satisfied the noble Lord and that he will feel able to withdraw his probing amendment.

Lord Wallace of Coslany

I thank the noble Earl for the extremely lengthy reply he has given. I think he has given me a little more detail than was given in another place. That, after all, is something that we all expect from this Chamber. Therefore, I will beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 agreed to.

Clauses 33 to 35 agreed to.

Clause 36 [Other supplementary provisions]:

The Earl of Avon moved Amendment No. 32A: Page 31, line 6, leave out ("the use of furniture or").

The noble Earl said: This amendment simply tidies up the legislation following the announcement of my noble friend Lord Bellwin during the Committee debate last week that furniture charges would become eligible for help under housing benefits. Furniture charges are not assisted under the current rebate and allowance schemes and to save authorities granting rebates or allowances having to do a second assessment of the ineligible furniture charges where the rent has already been assessed for rent registration purposes rent officers and rent assessment committees are required to note separately in the rent register: amounts fairly attributable to the use of furniture". Now that the Government have decided to make furniture charges eligible for housing benefit, these charges will no longer be noted separately on the rent register. This amendment simply removes the requirement. I beg to move.

Lord Wallace of Coslany

I think I can be satisfied with the Government's amendment because, if I remember correctly, it followed an undertaking given by the noble Lord, Lord Bellwin, who gave me a very broad hint of possible action later. This appears to be the Government's reply, which is extraordinarily good because it is a starred amendment; so they have come to a conclusion very quickly. What is the cost of this? I suppose it would be about £1 million: have the Government estimated it?

The Earl of Avon

I have not got that figure with me but I am told that the amount suggested by the noble Lord is correct.

Lord Wallace of Coslany

I am very grateful to the noble Earl, and also to the noble Lord, Lord Bellwin.

On Question, amendment agreed to.

Clause 36, as amended, agreed to.

Clause 37 [Sick pay to count as remuneration for principal Act]:

Lord Cullen of Ashbourne moved Amendment No. 33: Page 32, line 2, at end insert— ("(2) In any case where regulations made under subparagraph (1) above have the effect of requiring a registered friendly society (within the meaning of the Friendly Societies Act 1974) to make amendments to its rules, the amendments may, notwithstanding any provision of those rules, be made in accordance with the procedure prescribed by regulations made by the Chief Registrar of Friendly Societies for the purposes of this paragrph. (3) Regulations made under sub-paragraph (2) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Lord said: This is essentially a technical and beneficial amendment. The regulations which it will allow would enable friendly societies to change their rules to comply with regulations made under Clause 37(2) without going through the elaborate procedures which such a change would normally require.

Clause 37 brings into the definition of "earnings" liable for contributions sickness payments made to employees, where the secondary contributor (normally the employer) has paid towards their provision. Typically these would be where an employer has made arrangements, by taking out a policy with an insurance company or setting up a trust fund, for an employee to receive payments when he is off sick.

As these payments will attract liability for contributions, the secondary contributor will need to know about them so that he can calculate the contributions due. This may also involve aggregating the sickness payments with any other earnings paid for the same period before working out what contributions should be paid. So Clause 37(2) enables regulations to be made prescribing how and through whom these sickness payments are to be made. This will enable the Secretary of State to require them to be routed through the employer, who will then be in a position to calculate contribution liabilities.

Clause 37(2) has been generally welcomed by the friendly societies, who are involved in some of the schemes which it will catch. But to comply with a statutory requirement to route payments through employers they would need to change their rules. This is a long and expensive business, involving consultation with all their members. So a simplified procedure for changing their rules specifically to comply with regulations under Clause 37(2) would obviously help them, and this is what the Amendment would make possible.

Regulations made under this provision could enable the rule change to be made by the approval of the societies' committees of management, subject to endorsement by the Registrar of Friendly Societies. There is a precedent for this, where the change in rules was needed purely to comply with a statutory provision. The Amendment would therefore be of real help to friendly societies and would not have implications for other bodies. I beg to move.

On Question, amendment agreed to.

Clause 37, as amended, agreed to.

Clauses 38 to 41 agreed to.

Lord Banks moved Amendment No. 34: After Clause 41, insert the following new clause:

("Up-rating of sickness and unemployment benefit.

. The Secretary of State shall in preparing any increase in sickness and unemployment benefit in November 1982 include in it such sum as is necessary to make good the effect of section 1(1) and (2)(a) of the Social Security Act 1980 upon these benefits.").

The noble Lord said: I beg to move Amendment No. 34 in the name of my noble friend Lord Kilmarnock and myself. The Social Security Act (No. 2) of 1980 provided for short-term national insurance benefits, including unemployment benefit and sickness benefit, to be increased by 5 per cent. less than the increase in prices. It was argued in support of this that this was purely an interim measure designed to fill the gap until these benefits were brought into tax. However, the five per cent. abatement was suffered by those who would have paid no tax as well as by those who would have paid tax.

To that extent, it was exceedingly unfair. The abatement was only applied in one year but of course the effect is cumulative. Further increases in subsequent years were calculated on the reduced figure. Provision is being made for these benefits to be taxed, but even when that is established the cumulative effect of the abatement will be continued. Now that the Government are to receive the benefit of a reduction in costs through taxation, it is only right and proper that the effect of the abatement should be removed. This the proposed new clause would do for sickness and unemployment benefit. I understand that the taxation of unemployment benefit will raise some £525 million in a full year, and that to restore the abatement for unemployment benefit would cost £60 million in a full year. I imagine that the relationship of the figures is not very different for sickness benefit, so that the money will be there to meet the cost. An impression was undoubtedly given, however unintentionally, that the abatement would be made good when benefits were brought into taxation. This was an expectation supported by logic and by a sense of fairness, and I hope that the Government will recognise this. I beg to move.

Lord Kilmarnock

I wish very strongly to support the noble Lord, Lord Banks, in this amendment which he has outlined with his usual thoroughness. In the other place there were debates at Second Reading and on Report on this issue. In the latter, on 18th March, 1982, it was shown conclusively that the Minister for Social Services had said on 9th February in Standing Committee: The abatement will be restored as soon as benefits are brought into taxation. That undertaking is unqualified". Mr. Douglas Hogg, for the Government, strove to override this retrospectively by referring to what the Minister had said in 1980, when introducing the abatement measure. He even turned to this House in his distress, quoting from the noble Baroness, Lady Young, when she said on 2nd June 1980, at col. 1190: I should like to make it clear … that we have taken no decision at all on the 5 per cent. abatements in the following years 1981 and 1982". But that, at least, leaves the matter open, and might well be taken to imply that the introduction of taxation would be taken into account. At any rate, it was not sufficient to reassure all the Government's supporters and a number of them went into the Division Lobby against the Government, and in favour of the new clause to restore the abatement. One of them said that it was a matter of principle and conscience.

So far as I am concerned, that is what it remains. It is quite simply unfair to perpetrate what is, in effect, double taxation on the unemployed. The 5 per cent. abatement was further compounded by a 2 per cent. shortfall in the up-rating in 1981. The cumulative loss of unemployment benefit from November 1982, if the abatement is not made good—and this is not counting the shortfall—will be £1.05 a week for a single person and £1.70 for a married couple. If the married man has two children, the cumulative loss rises to £5.50, as a result of the continuing application of the November 1980 formula to the calculation of child dependency addition. That cannot be right.

If the Government seek to justify themselves on the grounds that they agree in principle, but that present constraints will not permit them to repair this injustice, they really cannot be allowed to get away with that, as it has been calculated by the Social Security Advisory Committee that the social security savings made by measures introduced since the Government came into office—and I am not including the SSP which is not yet law—amount to approximately £1.4 billion. Furthermore, it has been calculated that the taxation of unemployment benefit will yield something like £500 million—though I think that the noble Lord, Lord Banks, said £525 million—in a full year; whereas the restoration of the abatement would cost, on my figures, only £50 million, although the noble Lord, Lord Banks, said £60 million (there is not a great deal of difference) some of which would also return home in tax.

It is surely relevant, also, to look at the advice of the Social Security Advisory Committee on page 26 of their first report, where they say: The growth in numbers of people unemployed long term, the entry into unemployment of young people who have paid too few or no contributions, the 5 per cent. cut in the real value of unemployment benefit and the abolition of the earnings-related supplement are all increasing dependence on supplementary benefit". So all that will happen if the abatement is not restored is that more and more short-term unemployed are going to be thrust on to supplementary benefit, which was never intended to play the massive role which it does today in our social support mechanisms.

I do not object, in principle, to the taxation of benefits, as that it is a first step towards a tax credit scheme in which I, like our Liberal allies, believe. I am not quarrelling with that. What I am quarrelling with is this constant raiding of benefits, snatching a percentage point here and a percentage point there and even, in this case, a whacking 5 per cent., in the hope, presumably, that no one will notice. The trouble is that they do. Watchdogs like the SSAC notice, pressure groups notice, back-bench Conservative MPs notice and, above all, people themselves notice. A pound or two a week makes a great deal of difference if you are trying to survive on, for example, £30 a week. The Government are harming people and they are harming themselves. Their honour and reputation are at stake here. I beg them to think again on this issue. I warn them that if they do not, we shall lose no opportunity to return to it.

Baroness Jeger

May I associate my noble friends on this side with the amendment that has been put forward. Many quotations have been brought before us about statements from various Ministers on the question of bringing taxation into benefits when benefits were up-rated. But what we are dealing with tonight in this amendment is the situation where it is proposed to tax these benefits without up-rating them. This seems to us absolutely wrong and we therefore support the amendment. We very much hope that the Government will abide by the indications which they gave in the other place, that there was to be a link between the taxation of benefits and the up-rating of benefits.

Lord Molloy

The proposal of this new clause is of fundamental importance to your Lordships' House on two counts. One has been mentioned by the noble Lord, Lord Kilmarnock, who pointed out that in another place, and indeed in this House, promises were made by Government spokesmen. Now is the opportunity for those promises to be redeemed and, if Government spokesmen cannot do that this evening, no one in this Chamber will be able to take too seriously anything that is said from the Front Bench opposite. The noble Baroness, Lady Young, was mentioned, not in her capacity as Lord Privy Seal, when she was answering a debate on this issue. Noble Lords on the Front Bench opposite might do well to read the Hansard report of what was said at that time.

The other point which I should like to make is that, as my noble friend Lady Jeger has said, this is bound to cause great upset to all kinds of organisations, because there are very many people who believe that the massive total of unemployed has been an act of deliberation on the part of this Government; that they have set out to create unemployment. Whether or not that be true, the test will come with regard to this new clause, because they will be adding a new distasteful feature. If they have assisted in the creation of unemployment—though I am bound to say that the world recession has made a large contribution as well—the failure of the Government was in not recognising that recession. But if, in addition to that, they are now going to add penalties on the unemployed, that is highly distasteful, and what this new clause does is to give the Government an opportunity to maintain promises that were made, and not to make any unjustified attack upon the unemployed of our country.

Lord Trefgarne

The noble Baroness, Lady Jeger, and other noble Lords and Ladies who have spoken, will probably not be surprised to hear that the Government cannot accept this amendment. The 5 per cent abatement of short-term benefits and invalidity benefit in November 1980 was part of a package of measures designed to secure essential public expenditure reductions. It was carried out in anticipation of the taxation of these benefits, and it takes from claimants overall very much less than the tax would have yielded. We have given a commitment that the 5 per cent. abatement of invalidity pension will be restored when the benefit is brought into tax, but we have said on many occasions that the restoration of the abatement in the case of the other benefits would have to he considered in the light of the economic and other circumstances prevailing at the time that each benefit was to be brought into tax. Proposals for taxing sickness benefit have not yet been brought forward and we have no plans to restore the abatement of this benefit.

As regards unemployment benefit which will be taxed from July 1982, we have reviewed the abatement but in the present difficult economic circumstances we have been unable to restore it. We are up-rating unemployment benefit fully in line with estimated price increases in November 1982, and in addition we are making good the 2 per cent. shortfall in last year's up-rating. Restoration would cost £60 million in a full year and we have decided that further resources cannot be made available for this purpose. We shall, however, continue to keep the matter under review and, when circumstances allow, the claim will be considered, along with other priorities for the available money.

Much has been made, in particular by the noble Lord, Lord Molloy, of various Government pronouncements on this matter. May I draw your Lordships' attention to the words of my honourable friend the Minister of State for Social Security. Speaking during the Report stage of this Bill in the other place on 18th March my honourable friend said: We have said the abatement will not be a permanent reduction. It is equally clear that the abatement cannot be made good now, but it will be made good. My right honourable friends have the matter under review. At the right time it will be made good".

Lord Banks

I am grateful to the noble Lord, Lord Kilmarnock, to the noble Baroness, Lady Jeger, and to the noble Lord, Lord Molloy, for the support which they have given to this amendment. And I thank the noble Lord, Lord Trefgarne, for his reply, which he will not be surprised to know I find very unsatisfactory. He said that the abatement was designed to get reductions in expenditure. Well, they got them, and they have had the reduction over the years since it was reduced. Now that they are going to have a reduction through taxation, which is going to give them a bigger reduction than the one they have obtained through the abatement, it seems right at this point to restore the cumulative effect of the abatement. I am quite sure that all logic and all fairness is on the side of that argument. Because of that, I should like to test the opinion of the Committee.

7.53 p.m.

On Question, Whether the said amendment (No. 34) shall be agreed to?

Their Lordships divided: Contents, 41; Not-Contents, 55.

Ardwick, L. John-Mackie, L.
Aylestone, L. Kaldor, L.
Banks, L. Kilmarnock, L.—[Teller.]
Beaumont of Whitely, L.—[Teller.] Kirkhill, L.
Llewelyn-Davies of Hastoe, B.
Birk, B.
Bishopston, L. Molloy, L.
Boston of Faversham, L. Northfield, L.
Brooks of Tremorfa, L. Peart, L.
Bruce of Donington, L. Pitt of Hampstead, L.
Chitnis, L. Ponsonby of Shulbrede, L.
Collison, L. Ross of Marnock, L.
David, B. Stedman, B.
Davies of Leek, L. Stone, L.
Elwyn-Jones, L. Strabolgi, L.
Evans of Claughton, L. Tanlaw, L,
Fisher of Rednal, B. Underhill, L.
Hampton, L. Wallace of Coslany, L.
Harris of Greenwich, L. Wells-Pestell, L.
Houghton of Sowerby, L. White, B.
Jeger, B. Winstanley, L.
Jenkins of Putney, L.
Airey of Abingdon, B. Lane-Fox, B.
Allerton, L. Lindsey and Abingdon, E.
Avon, E. Long, V.
Bellwin, L. Lyell, L.
Belstead, L. McFadzean, L.
Boardman, L. Mackay of Clashfern, L.
Brougham and Vaux, L. Mansfield, E.
Campbell of Croy, L. Margadale, L.
Cathcart, E. Marley, L.
Coleraine, L. Mersey, V.
Craigavon, V. Mottistone, L.
Craigmyle, L. Mountevans, L.
Cranbrook, E. Murton of Lindisfarne, L.
Cullen of Ashbourne, L. O'Neill of the Maine, L.
Denham, L.—[Teller.] Pender, L.
Drumalbyn, L. Plummer of St. Marylebone, L.
Eccles, V.
Elton, L. Rankeillour, L.
Enniskillen, E. Ridley, V.
Fortescue, E. Sandford, L.
Fraser of Kilmorack, L. Sandys, L.—[Teller.]
Gainford, L. Savile, L.
Gardner of Parkes, B. Skelmersdale, L.
Gridley, L. Trefgarne, L.
Harmar-Nicholls, L. Vaux of Harrowden, L.
Hastings, L. Ward of Witley, V.
Holderness, L. Windlesham, L.
Kinross, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Clauses 42 to 46 agreed to.

Clause 47 [Short title etc.]:

Lord Cullen of Ashbourne moved Amendment No. 35: Page 40, line 13, leave out from beginning to ("and") in line 16 and insert— ("(3) The following provisions come into force on the passing of this Act—

  1. (a) sections 7, 26, 40, 42 and 44 to 46;
  2. (b) paragraphs 1 to 4, 7, 10, 13(1) and (3), 15, 19, 21 to 23, 28 to 32, 35 and 36 of Schedule 4; and
  3. (c) subsections (1) to (4) and (7) of this section and subsection (5) of this section so far as it relates to the provisions mentioned in paragraph (b) above").

The noble Lord said: This is a technical amendment. Its effect is to include subsection (5), which gives effect to Schedule 4 to the Bill, among those provisions which take effect immediately on Royal Assent. It will be obvious to noble Lords that this amendment is not introducing anything new but is intended to correct a defect in the Bill. As presently worded, subsection (3) brings specified paragraphs of Schedule 4 into effect on Royal Assent. However, it does not bring subsection (5) into effect at that time. As it is subsection (5) which gives effect to Schedule 4, the legal unsoundness is clear and I commend this amendment to the House. I beg to move.

Baroness Jeger

This amendment is so technical that my noble friends and myself could not possibly have any objection to it.

On Question, amendment agreed to.

Clause 47, as amended, agreed to.

Schedules 1 to 3 agreed to.

Schedule 4 [Amendments and transitional provisions]:

Lord Trefgarne moved Amendment No. 36: Page 59, line 3, leave out paragraph 36 and insert— ("36.—(1) Neither section 141(2) of the principal Act nor section 10(1) of the Social Security Act 1980 (duty of Secretary of State to refer proposals for regulations to Industrial Injuries Advisory Council and Social Security Advisory Committee) shall apply to any regulations contained in a statutory instrument which states that it satisfies the requirements of this paragraph. (2) A statutory instrument satisfies the requirements of this paragraph if it contains only one or more of the following—

  1. (a) regulations made under or by virtue of any provision of this Act and before the expiry of the period of six months beginning with the commencement of that provision;
  2. (b) regulations made under any enactment in consequence of a provision of this Act, or in consequence of any provision made by virtue of a provision of this Act, and before the expiry of the period of six months beginning with the commencement of the relevant provision of this Act;
  3. (c) regulations proposals for which are not subject to the requirements of section 141(2) or section 10(1).").

The noble Lord said: This amendment substitutes for paragraph 36 of Schedule 4 to the Bill before your Lordships a slightly longer paragraph with exactly the same objective in view but rather better designed to achieve that objective. Usually, social security regulations have to go to one or other of the two independent advisory committees. In most cases, it is the wide-ranging Social Security Advisory Committee. The traditional view, reflected in a succession of social security Bills, is that where a social security change is being effected by main legislation and by regulations made under that legislation, and within six months of Royal Assent to it, then the regulations are part and parcel of what Parliament has discussed already and it is not sensible to refer them to an advisory committee for further discussion. In some cases the timetable for carrying through the Bill changes would make a reference to the advisory committee difficult or impossible in any event.

Paragraph 36 follows the usual practice but elaborates a little on the original text simply because the lawyers have spotted that we had not got quite what was needed and intended. In particular, one set of regulations may be made under the Act but this in turn will require a consequential amendment of another set of regulations. Social security regulations tend to interact with one another because we have an overall system with various benefits within it. So the chain of causation from the Act itself is unbroken; it is just a little longer than the Act to initial regulations link on which the original draft focused. I hope therefore that your Lordships will agree to this modest change. I beg to move.

Baroness Jeger

We cannot understand why this was not properly set out at the previous stage, but as the Government have obviously recognised that there were mistakes and have now brought the matter to us in a more proper way, we will certainly agree. We hope this amendment will now pass.

On Question, amendment agreed to.

Schedule 4, as amended, agreed to.

Remaining schedule agreed to.

Title agreed to.

House resumed: Bill reported with the amendments.