Unemployment Benefit: Abatement (Hansard, 13 July 1983)

§ Lord Hatch of Lusby
I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Glenarthur
No, my Lords, the abatement was made to achieve savings in public expenditure, as well as in anticipation of taxation. We reviewed the position when the benefit came into tax, as we had undertaken, in the light of the resources available and competing priorities. Taking those factors into account, we decided that we could not make good the abatement at last year's uprating; we can do so from this November—but not retrospectively.

§ Lord Hatch of Lusby
My Lords, may I thank the noble Lord for the letter that he sent me following our exchange concerning his Statement on 23rd June in which he wrote on the same lines as he has just answered? If this 5 per cent, abatement in the unemployment benefit was made at least partially as a matter of savings may I ask whether he is then saying that the Government over the past 12 months have been cutting the unemploymnent benefit by 5 per cent, simply as a matter of Government savings?

§ Lord Glenarthur
My Lords, as I have said, we do not intend to back-date the making good of the abatement. That would be contrary to the intention to make savings; and furthermore the administrative problems it would raise would be enormous. In discussion on the Bill in 1980 it was repeatedly stated that the level of benefit, once it was brought into tax, would have to be considered in the light of the prevailing economic circumstances, and that is precisely what we did. Resources and priorities simply did not permit us to make good the abatement of unemployment benefit until this year.

§ Lord Hatch of Lusby
My Lords, so the noble Lord is saying that over the past 12 months unemployment benefit has been cut by 5 per cent, as a deliberate matter of Government policy?

§ Lord Glenarthur
My Lords, all I was explaining to the noble Lord—which I think he knows perfectly well—was that there were competing priorities and this was one area where it was thought that it was necessary to make a specific cut. It has not been possible to restore the abatement until next November for the reasons which I thought I had explained just now.

Lord Wallace of Coslany
My Lords, is the Minister aware that unemployment is a domestic and financial tragedy to those involved? In view of the Chancellor's recent Statement on cuts in public expenditure and the obvious signs of further cuts to come, will the Minister give a concrete undertaking that unemployment benefit will not be cut; and furthermore that the system of payment will continue? Is the Minister aware that I asked that last question because of the Prime Minister's insistence on a return to Victorian values, and Mr. Peregrine Worsthorne's article in the Sunday Telegraphwhere he talks about returning to the era of the deserving cause? That is my concern and I hope for a guarantee from the Minister.

§ Lord Glenarthur
My Lords, I am certainly not responsible for what is written in the Sunday Telegraph. On 23rd June I repeated a Statement here which indicated the way in which benefits would be uprated in November by 3.7 per cent., which was the figure worked out as a result of the reversion from the forecast method to the historic method. There is no intention to cut them at all.

§ Lord Vaizey
My Lords, is my noble friend aware that the rise in unemployment benefit which was anticipated, was in anticipation of a rate of inflation that never occurred, and therefore talk of a 5 per cent, cut in the rate of unemployment benefit is absurd? It is a 5 per cent, cut in an unanticipated increase because the rate of price increases was much lower than had been expected.

§ Lord Glenarthur
My Lords, my noble friend puts his finger on the point very fairly and firmly.

§ Lord Hatch of Lusby
My Lords, surely this is not accurate.

Noble Lords
Question!

§ Lord Hatch of Lusby
My Lords, will the Minister confirm that a 5 per cent, deduction in unemployment benefit took place from 1980 and took into account the whole issue of inflation? Will he again confirm that, despite the fact that the Government used the excuse that the abatement was to be imposed until the time that benefit came under taxation, the Government have been penalising the unemployed by 5 per cent., irrespective of the fact that benefit came under taxation 12 months ago? For the past 12 months the unemployed have been underpaid by 5 per cent, irrespective of inflation.

§ Lord Glenarthur
My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the decision to abate the increase in short-term benefits was made in 1980 when we had to curb the 799 growth in public expenditure as an essential basis of our economic strategy. Social security could not be exempted from those necessary curbs.
As to the second part of the noble Lord's question, when there is a benefit improvement of any kind those who are no longer entitled to benefit when changes take effect do not gain from it, nor do those still on benefit gain retrospectively. Supplementary benefit has throughout been available to those who needed it and has not been subject to any abatement.

§ Lord Banks
My Lords, will the Minister say whether the Government have rejected suggestions that national insurance, including unemployment benefit, should be privatised?

§ Lord Glenarthur
My Lords, with respect, that is a rather different question.

§ Lord O'Hagan
My Lords, will my noble friend agree that the exchange of statistics across the Chamber on this matter is extremely difficult for everyone in the House to follow with precision? Notwithstanding what my noble friend Lord Vaizey said, will the Minister use his best endeavours to ensure that the House has an opportunity to debate these matters more fully in depth rather than at Question Time by means of Question and Answer, so that we can have an authoritative statement on the Government's position on unemployment benefit in the future?

§ Lord Glenarthur
My Lords, I quite agree that this is a very complicated matter. Whether or not there will be time for a debate on it is a question for the usual channels.