HL Deb 23 June 1983 vol 443 cc28-38

3.39 p.m.

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

My Lords, with the leave of the House, I shall now repeat a Statement that is being made in another place by my right honourable friend the Secretary of State for Social Services. The Statement is as follows.

"With permission I would like to make a Statement about the annual up-rating of social security benefits which will take effect from the week beginning 21st November. Under the Social Security and Housing Benefits Act 1983, which the House debated and approved earlier this year, I am required to review the level of various benefits each year, having regard to the movement in the general level of prices in the twelve months up to 31st May.

"The Retail Price Index figures for May were published last Friday and they showed a rise of 3.7 per cent. in the year from May 1982 to May 1983. That was the lowest annual figure for inflation for 15 years and is particularly welcome to those living on fixed incomes, including pensioners.

"I therefore propose to increase most benefits, including retirement pensions, by 3.7 per cent. However, in the case of supplementary benefit, which goes to those most in need. I propose to increase all scale rates, including those for supplementary pension, by a higher amount of 4.3 per cent. This is in line with the Retail Price Index after the exclusion of housing costs. Details of the proposed new rates are set out in a schedule which, for the convenience of the House, I have placed in the Vote Office and will be included in the Official Report. I will shortly lay before the House for approval the draft orders and regulations which give effect to the main up-rating proposals, and at the same time I will table the usual report from the Government Actuary on the estimated effects of the changes on the National Insurance Fund.

"Mr. Speaker, I would like to mention five main groups who will be given particular help this November. First, retirement pensioners. The standard basic rate of pension will go up from £32.85 to £34.05 for a single person and from £52.55 to £54.50 for a married couple. The earnings related additions and public service pensions will also go up by 3.7 per cent. We intend to make a further substantial improvement in the pensioners' earnings rule by raising the limit by 14 per cent. from £57 to £65 a week. In addition, as was announced in the Budget, the capital limits for supplementary benefit will be increased in November in a way which will encourage personal saving.

"Second, there is special help for pensioners and others on low incomes. The long-term supplementary benefit scale rates will go up by 4.3 per cent. from £32.70 to £34.10 for a single householder and from £52.30 to £54.55 for a married couple. These rates now go automatically to all claimants over the age of 60. The ordinary scale rates for those under 60 go up by the same percentage. Housing costs for those on supplementary benefit will continue to be met separately, and normally in full. The housing benefit needs allowances will go up by an average of 4 per cent. I also propose to increase supplementary benefit heating additions for those with special heating needs. These are paid to all supplementary benefit recipients over the age of 70 and to over 2 million households in total. The additions will go up by 8.6 per cent., to reflect the rise in fuel costs in the last year. The lower rate will go up from £1.90 a week to £2.05 and the higher rate from £4.65 to £5.05 a week. These increases mean that total spending on help with special heating costs will rise to a record level of well over £350 million a year.

"Third, we are this year giving particular help to families. From November child benefit will increase by 11 per cent. from £5.85 to £6.50 and one-parent benefit will also go up by the same percentage from £3.65 to £4.05. Both these benefits will then be at their highest ever level in real terms. Following these substantial improvements in child support the Government intend to bring forward legislation to abolish the child dependency additions paid with short-term national insurance benefits as from November 1984. In the meantime I propose to halve these additions from 30p to 15p. The supplementary benefit scale rates for children will go up by a full 4.3 per cent. and for families in full-time work the family income supplement limits are being raised so that the prescribed amount is increased from £82.50 to £85.50. Families receiving family income supplement will also have the advantage of the full increase in child benefit. I also propose to increase further the children's needs allowance for housing benefit from April 1984 by an extra £1 on top of the November increase of 50p. This will directly help some 700,000 low income families with children.

"Fourth, we have given priority to those who are unemployed, particularly those approaching pension age. We are restoring the 5 per cent. abatement made in 1980 and that means that in November the standard rates of unemployment benefit go up by over 8 per cent. to £27.05 for a single person and to £43.75 for a married couple. As was announced at the Budget unemployed men over 60 can now qualify for the long-term rate of supplementary benefit and in addition they qualify for credits to protect pension rights without having to register.

"Fifth, we are making changes to help disabled people. The invalidity trap which has previously prevented some 50,000 sick and disabled people from benefiting from the long-term rates of supplementary benefit has already been ended for those over 60. From November other disabled people under 60 will be able to qualify for the long-term rate after one year's receipt of a long-term incapacity benefit. This will be worth up to £7.30 extra for a single householder and up to £11.05 a week for a married couple. Mobility allowance will go up from £18.30 to £19.00 a week and the new mobility supplement for war pensioners with special mobility needs will initially be set at a rate of £21.15 a week. There will also be a further increase in the therapeutic earnings limit which will go up from £20 to £22.50 a week. The rates of other disability benefits go up by 3.7 per cent.

"The improvements we are making will increase the cost of the social security budget by £1½ billion a year and will mean that in 1983–84 the total social security budget will be £35 billion. This increase is within the Government's expenditure plans as announced in the last Budget.

"Mr. Speaker, this range of measures gives particular help to families with children and those on the lowest incomes, including the elderly. It also gives encouragement to those who are trying to make personal provision beyond the help which the state can provide. Taken together with the Government's achievements on inflation they demonstrate our commitment to protect the standard of living of the most vulnerable groups in this country."

My Lords, that concludes the Statement. Copies of the schedule referred to in the Statement have been placed in the Library of your Lordships' House.

Following is the schedule referred to above:

Existing weekly rate Proposed weekly rate £
£ £
Child benefit Each child
Each child 5.85 6.50
One parent benefit First or only child of certain lone persons
First or only child of certain lone persons 3.65 4.05
Standard rate of retirement* and widows' pensions, and widowed mothers' allowance Single person
Single person 32.85 34.05
Wife or other adult dependant 19.70 20.45
Earnings limit for retirement pensioners 57.00 65.00
Standard rate of invalidity pension Single person
Single person 31.45 32.60
Wife or other adult dependant 18.85 19.55
Invalidity allowance
Higher rate 6.90 7.15
Middle rate 4.40 4.60
Lower rate 2.20 2.30
Standard rate of unemployment benefit:
Beneficiary under pension age
Single person 25.00 27.05
Wife or other adult dependant 15.45 16.70
Beneficiary over pension age
Single person 31.45 34.05
Wife or other adult dependant 18.85 20.45
*An age addition of 25p is payable to retirement pensions who are aged 80 or over.
Existing weekly rate Proposed weekly rate
£ £
Standard rate of sickness benefit:
Beneficiary under pension age
Single person 25.00 25.95
Wife or other adult dependant 15.45 16.00
Beneficiary over pension age
Single person 31.45 32.60
Wife or other adult dependant 18.85 19.55
Widows' allowance (first 26 weeks of widow-hood) 45.95 47.65
Maternity allowance 25.00 25.95
Attendance allowance
Higher rate 26.25 27.20
Lower rate 17.50 18.15
Retirement pension for persons over pensionable age on 5th July 1948 and for persons over 80*
Higher rate 19.70 20.45
Lower rate 11.80 12.25
Non-contributory invalidity pension 19.70 20.45
"Therapeutic" earnings 20.00 22.50
Invalid care allowance 19.70 20.45
Increase of non-contributory invalidity pension and invalid care allowance for a wife or other adult dependant 11.80 12.25
Mobility allowance 18.30 19.00
Guardian's allowance, child's special allowance 7.95 7.60
Rate of benefit for children of widows, invalidity, non-contributory invalidity and retirement pensioners, invalid care beneficiaries' un-employment and sickness beneficiaries when claim is over pension age 7.95 7.60
Rate of benefit for children of all other beneficiaries 0.30 0.15
*An age addition of 25p is payable to retirement pensions who are aged 80 or over
Existing weekly rate Proposed weekly rate
£ £
Disablement benefit (100 per cent.) assessment)** 53.60 55.60
Unemployability supplement†‡ 31.45 32.60
Special hardship allowance (maximum) 21.44 22.24
Constant attendance allowance (normal maximum), exceptionally severe disablement allowance 21.50 22.30
Industrial death benefit
Widows' pension during the first 26 weeks of widowhood 45.95 47.65
Higher permanent rate 33.40 34.60
Lower permanent rate 9.86 10.22
**The rates for beneficiaries not over the age of 18 will also be increased.
†Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions.
‡The amount of earnings permitted with unemployability supplement will also be increased.
Existing ordinary weekly rate Existing long term weekly rate Proposed ordinary weekly rate Proposed long term weekly rate
£ £ £ £
Supplementary benefit:
Couple 41.70 52.30 43.50 54.55
Person living alone 25.70 32.70 26.80 34.10
age 18 and over 20.55 26.15 21.45 27.25
age 16–17 15.80 20.05 16.50 20.90
Any other person aged:
11–15 years 13.15 13.70
Under 11 years 8.75 9.15
Existing weekly rate Proposed weekly rate
£ £
Boarders personal expenses:
Ordinary—couple 17.00 17.70
—single 8.50 8.85
Long term—couple 18.90 19.70
—single 9.45 9.85
Heating additions to supplementary benefit:
Lower rate 1.90 2.05
Higher rate 4.65 5.05
Central heating additions:
Lower rate 1.90 2.05
Higher rate 3.80 4.10
Estate rate heating additions:
Lower rate 3.80 4.10
Higher rate 7.60 8.20
Existing level Proposed level
£ £
Supplementary Benefit—Capital cut-off 2,500 3,000*
—Capital limit for single payments 300 500
*From November the first £1,500 surrender value of life assurance policies will also be disregarded.
Existing weekly rate Proposed weekly rate
£ £
Needs allowances:
Single person 41.40 43.05
Couple/single parent 61.00 63.50
Single handicapped person 46.15 48.00
Couple (1 handicapped) or single handicapped parent 65.75 68.45
Couple (both handicapped) 68.00 70.80
Dependent child addition* 11.40 11.90
*From April 1984 this addition will increase to £12.90.


All ranks receive the same increase, officer's rates being expressed in pounds per annum.

Existing weekly rate Proposed weekly rate
£ £
Disablement pension for Private at 100 per cent. rate 53.60 55.60
Age allowance with assessments of:
40 to 50 per cent. 3.70 3.85
Over 50 and not exceeding 70 per cent. 5.85 6.05
Over 70 and not exceeding 90 per cent. 8.35 8.65
Over 90 per cent. 11.70 12.10
Unemployability allowances:
Personal allowance 34.85 36.15
Increase for wife or other adult dependant 19.70 20.45
Increase for child 7.95 7.60
Constant attendance allowance:
Special maximum 43.00 44.60
Special intermediate 32.25 33.45
Normal maximum 21.50 22.30
Half and quarter day 10.75 11.15
Comforts allowance:
Higher rate 9.30 9.60
Lower rate 4.65 4.80
Mobility supplement* 21.15
Allowance for lowered standard of occupation (maximum) 21.44 22.24
Exceptionally severe disablement allowance 21.50 22.30
Severe disablement occupational allowance 10.75 11.15
*A new allowance payable from November 1983.
Existing annual rate Proposed annual rate
£ £
Clothing allowance:
Higher rate 72.00 75.00
Lower rate 46.00 48.00
Existing weekly rate Proposed weekly rate
£ £
Widow's pension—private's widow:
Standard rate 42.70 44.25
Childless widow under 40 9.86 10.22
Rent allowance (maximum) 16.25 16.85
Age allowance for elderly widows:
Ages 65.69 4.15 4.30
Age 70 and over 8.30 8.60
Adult orphans 32.85 34.05
Existing weekly level Proposed weekly level
£ £
Family Income Supplement:
Prescribed amount for family with one child (income below which FIS is payable) 82.50 85.50
Increase in prescribed amount for each additional child 9.00 9.50
Maximum weekly amount for a one.child family 21.00 22.00
Increase in maximum amount for each additional child 2.00 no change

3.48 p.m.

Lord Wallace of Coslany

My Lords, I would like to thank the noble Lord for the rather extensive and long Statement he has made—and I would also like to congratulate him on his new appointment; I certainly wish him well. If he can rise to the standards of his predecessor he will have achieved considerable advance. However, my congratulations to the noble Lord are very genuinely tinged with a degree of sympathy for him because he has to deal with such a controversial and complicated measure at his first appearance in his new job at the Dispatch Box.

One of the few points in the Conservative manifesto which were specific was that pensions will be protected against price rises. The Statement made today so early in the life of the new Parliament in my opinion makes that pledge so much hot air and not much else. Today's figures mean that pensions and other benefits will go up by a mere 3.7 per cent. next November. Inflation is expected to rise over the summer and is likely to reach 6 per cent. by November. That is the previous Chancellor's forecast, and I wonder if the noble Lord might be able to confirm that the Government's estimate is still 6 per cent. by November, bearing in mind that we have already had the mortgage rate increase. Failure to match the full rise in prices will entail a loss of £1.20 a week per couple and 75p a week per single pensioner. Anyone involved, as indeed I am, in weekly shopping knows full well that prices of essential foods and goods for people on low incomes have risen more than is shown by the official index. Even the retail price index after exclusion of housing costs shows a rise of 4.3 per cent., which is taken into account in the Statement for increases in supplementary benefit; and that figure will itself be higher by November.

Naturally we welcome the restoration of the 5 per cent. cut in unemployment benefit now that it is taxable, but what about the invalidity benefit? When will the Government announce restoration of the cut in this benefit? Will it become taxable?

The details involved in the schedules to be published in the Official Report are extensive and extremely complex, and it is simply not good enough for them to be added to the Statement as a type of minor appendix. In the interests of democracy and in the particular interest of the worse-off sections of the community, these matters should be discussed and dealt with in detail in debate in both Houses. It is simply not good enough to smuggle them through by means of a Statement. I accept, of course, that we shall debate orders in due course, but in my view there is a need for a far wider ranging debate. Perhaps the usual channels might take note.

With all due respect, the final words of the Statement almost amount to hypocrisy. No full protection is yet given for the undoubted hardship that exists. In fact, a fall in living standards is being inflicted on those who are already the poorest in the land. The Statement does not restore in full previous cuts inflicted by a long series of social security measures brought in during the last Parliament. In fact, we are still two nations. We all talk so glibly in percentages, meaningless as they are to the victims of poverty and ill-health. Is it not time—and I address my remarks to all quarters—that we dealt with actual values and costs of the shopping basket and of essentials? Percentages mean nothing until they are translated into costs at the point of purchase by the least well-off.

This Statement is a grim warning of what to expect in the next five years. As has already been stated from these Benches, the large majority in another place will indeed place greater responsibility on this House.

Lord Banks

My Lords, I join in thanking the noble Lord for repeating the Statement made in another place, and I also join in congratulating him on his first appearance in his new role. We on these Benches approve in principle of going back to the historic method of determining the increase to be made in benefits in order to take account of inflation, but we do not agree with going back to it when the Government are forecasting a rise in the rate of inflation. Inflation is expected to be higher than 3.7 per cent. between November 1982 and November 1983. If that should prove to be the case there will be a loss to beneficiaries as a result of making this change—a loss which will not necessarily be made up in the following year. I welcome the additional increase in supplementary benefit of 4.3 per cent., but this is also subject to what I have already said about the inflation rate between November 1982 and November 1983.

I also welcome the increase in the earnings rule limit for pensioners. When in opposition, members of the present Government were very strongly committed to the abolition of the earnings rule completely. In fact, they insisted on dividing this House on the issue; but they are taking rather a long time to achieve that abolition. What do the Government propose to do for those already retired who will receive very little or no benefit from the earnings-related pension? The Select Committee on Social Services in another place has recently underlined the inadequacy of the retirement pension.

We shall want to comment in detail on the remaining matters referred to in the Statement when the orders incorporating them are laid before the House. Some of the measures mentioned in the Statement have already been announced, and are therefore not new.

Lord Glenarthur

My Lords, I am grateful to noble Lords opposite for their welcome—or, in the case of the noble Lord, Lord Wallace of Coslany, for something of a welcome. I am certainly grateful to both noble Lords for their kind words about my new appointment. I must say that I find the area incredibly complicated. As the noble Lord, Lord Wallace of Coslany, pointed out, I am probably not the only one who finds it complicated. It will take some time to get used to it.

I cannot accept the charges made by the noble Lord, Lord Wallace, in many respects. He talks for example, about the loss of £1.20 a week for pensioners. The noble Lord ignores the 2.7 per cent. additional amount which pensioners received in the 1982 up-rating. That is being maintained; pensioners will keep that amount. The movement in the retail price index from this May onwards will, of course, be reflected in the 1984 up-rating, which I think the noble Lord will accept.

Another point he made can easily be shown not to be the case. There was a period when his party was in office during which inflation rose by 110 per cent. That was between 1974 and 1979. That rate of increase is fairly devastating for anyone who has any savings at all. The Government have repeated their pledge to maintain the value of retirement pensions and associated long-term benefits. When the proposed increases come into effect this November retirement pensions will have increased by 74.6 per cent. since November 1978. Therefore, our pledge on price protection will have been fully maintained.

Our manifesto made quite clear our intention to up-rate benefits by reference to the actual movement in prices in the 12 months prior to the June review. That commitment has been fully met. In 1982 the benefits were increased by 2.7 per cent. more than the amount necessary to maintain their value. In fact, the increase in November 1982 was more than sufficient to cover the price rises to May 1983. The further increase of 3.7 per cent. to take effect in November will continue to protect the value of benefits maintained since 1978. In reply to the noble Lord, Lord Banks, the Government have of course kept their pledge to maintain the value of the basic pension, and we hope to do more as and when the country can afford it.

We come now to the question of the invalidity pension, raised by the noble Lord, Lord Wallace of Coslany. We have undertaken that the abatement of the invalidity pension will be made good when invalidity benefit is brought into tax. A date for taxation has not yet been fixed. The noble Lord, Lord Wallace, did not mention that it was his party which, when in power, changed from the historic to the forecast method, which we are now reversing. The Labour Government paid 6 per cent. less then than they should have done. It saved them £500 million. That figure now would be £1 billion. The pensions have never caught up. So, although it might seem to the noble Lord that we are not doing as much as he would like to be done, we are doing a tremendous amount, and by far the greatest achievement is the fact that the rate of inflation is down to 3.7 per cent. That is the cardinal underlying benefit that has come to pass in the last four years, and it is something which the country will, I am sure, appreciate, and on which we shall no doubt seek to improve further in due course.

Lord Boyd-Carpenter

My Lords, can my noble friend say whether in accordance with past practice this welcome Statement which he has just made will be accompanied by a similar Statement in respect of war pensions, the problems of which, particularly in respect of war widows, are, as he well knows, now so acute?

Lord Glenarthur

My Lords, with respect to my noble friend, I think that that is in fact another subject. It is certainly one which I shall look into. I do not know the answer off the top of my head now, I am afraid.

Lord Wells-Pestell

My Lords, may I ask the noble Lord the Minister whether he is in a position to inform the House when these increases will be paid, or do the Government propose to do what they did on a former occasion and not pay the increase at the end of the 52nd week but at the end of the 53rd or 54th?

Lord Glenarthur

My Lords, I am afraid that I cannot give the noble Lord, Lord Wells-Pestell, the answer that he would like. It is a technical matter. I am not familiar with it at the moment but I shall certainly find out and let the noble Lord know.

Lord Kilmarnock

My Lords, we on this Bench would also like to thank the noble Lord for having repeated that Statement and to welcome him to his new position. We are sure that he will handle the ample remit of the Department of Health and Social Security in this House with great skill. I have just one or two points. I should like first of all to welcome the Government's decision to extend the long-term rate of supplementary benefit to those who are unemployed and over 60. This was a recommendation of the Select Committee on Unemployment of your Lordships' House. Those of us who were on that committee are naturally glad to see that some of its recommendations have been accepted by the Government. We regret on this Bench that the Government have decided to start their retrospective method of calculation with 3.7 per cent., whereas 4.3 per cent. seems to be generally accepted for supplementary benefit.

Noble Lords


Lord Kilmarnock

We shall contest this later.

Noble Lords


Lord Kilmarnock

Finally, I should like to ask the noble Lord the following question. The Statement refers to an increase in family income supplement from £82.50 to £85.50 and refers to that as the prescribed amount. Will the noble Lord undertake that his department will take steps to do something about the scandalously low take-up of family income supplement, which is currently running at about 50 per cent.?

Lord Glenarthur

My Lords, may I first of all respond to the noble Lord, Lord Kilmarnock, and in doing so answer the noble Lord, Lord WellsPestell—although I see that he is not now in his place—who asked about the date. The date that I should have given him is 21st November. Before I respond further to the noble Lord, Lord Kilmarnock, may I tell my noble friend Lord Boyd-Carpenter that the increases which we have talked about will apply to war pensions also.

Lord Boyd-Carpenter

Hear, hear!

Lord Glenarthur

I hope that clarifies that particular point. The noble Lord, Lord Kilmarnock, asked about family income supplement. I am not in a position to give him the answer, I am afraid, without looking into it more fully, but I shall do so and let him know.

Lord Hatch of Lusby

My Lords, I wonder whether the noble Lord has yet had time in his new department to recognise that the money he is talking about is money that has been contributed either through national insurance schemes or through the wealth creation of the workers whom he is referring to. May I ask him about his statement concerning the unemployment benefit. I congratulate him on having given me an answer to a question I have now been asking for over 12 months as to when the 5 per cent. would be restored. But can he tell me what will happen to the money that the Government have been collecting from the taxation of unemployment benefit since July of last year when the Government stated that the 5 per cent. reduction in unemployment benefit was to be applied only until benefit came under taxation? As benefit came under taxation in July of last year, what will happen to the money of the unemployed that the Government have taken during the ensuing period?

Lord Glenarthur

My Lords, I am sorry to have to tell the noble Lord, Lord Hatch of Lusby, that from what I understand, with my very basic knowledge of the situation at the moment—and I apologise that I do not know more about it—I believe what he said is not the case, although I cannot give him a full answer. I shall certainly look into it further and perhaps correspond with him. But I am given to understand that the statement he has just made is not correct.

I feel rather a new boy to this game, as I hope the noble Lord will appeciate. It is highly complex and is not an area which is easy to get to grips with. But I think that the House will accept the fact that what has been done in the past by reducing inflation to 3.7 per cent. was a considerable achievement. Of course, it is one which affects pensioners and everybody else entitled to benefits, because the rate of inflation is the most important single underlying feature of the whole performance. People who want to buy things in the shops do not now have to pay the sort of increases which they had to pay under the Labour Government, when there was up to 26 per cent. inflation. We have got the basic rate down. It is an unfortunate fact of life that when inflation comes down so do the increases that naturally accrue to the benefits that have been described in the Statement.

Lord Hatch of Lusby

My Lords, I accept that the noble Lord has had very little time to master the details. I sympathise with him. But can he just tell me which statement I made that he suggests is incorrect?

Lord Glenarthur

My Lords, perhaps I can talk to the noble Lord afterwards, or certainly write to him. I shall be quite honest about it and say that I am slightly lost myself. I hope he will forgive me for that. I promise the noble Lord that I shall do my best to become much more expert in the next few weeks.

Lord Kaldor

My Lords, can the noble Lord tell the House how much of the 110 per cent. inflation which he mentioned between 1974 and 1979 was the automatic consequence of the threshold agreements which were embodied in legislation by the previous Government and how much was due to the 10 per cent. rise in the price of oil between those two dates?

Lord Glenarthur

My Lords, I think that that has very little to do with the Statement. With respect, I do not honestly think that it would serve the noble Lord much purpose for me now to go into the details of exactly why the Labour Government achieved those inflation rates.