§ Pensioners' Lump Sum Payments Order 1985
§ Child Benefit (Up-Rating) Regulations 1985
§ Family Income Supplements (Computation) Regulations 1985
§ Housing Benefits (Increase of Needs Allowances) Regulations 1985
§ Supplementary Benefit (Resources) Amendment (No. 2) Regulations 1985
§ Supplementary Benefit (Requirements) Amendment and Up-rating Regulations 1985
§ Social Security Benefit (Dependency) Amendment Regulations 1985
§ 12.5 p.m.
§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington) rose to move, That the draft orders and regulations laid before the House be approved.
§ The noble Baroness said: My Lords, I beg to move that the draft Social Security Benefits Up-rating Order 1477 1985 be approved. This order is accompanied by a report from the Government Actuary on the effects of the proposals on the National Insurance Fund and by a statement on mobility allowance.
§ With your Lordships' permission, I will also deal with the other seven Motions in my name on the Order Paper—rather a few, I fear. I propose to deal separately with the Vaccine Damage Payments Order since my noble friend Lord Campbell of Alloway has given me notice of his intention to raise a number of quite specific points which are best perhaps looked at apart from the generality of up-rating considerations. These instruments put into effect the up-rating of social security benefits announced by my right honourable friend the Secretary of State for Social Services in another place on 18th June. They also provide for the payment of the £10 Christmas bonus and make certain other changes which I shall come to later.
§ Perhaps it will be to your Lordships' convenience if I briefly outline the major features of the up-rating package, which will take effect during the week commencing 25th November. As your Lordships are aware, this is the last time that benefits will be increased in November. The next up-rating will be in July 1986: and in 1987 and from then on the increases will take place in April. But to return to 1985, the majority of benefits, including retirement pension, unemployment benefit, widows' benefits and war pensions, will be increased by 7 per cent., in line with the movement in the general index of retail prices in the 12 months to May this year. Supplementary benefits will he increased by 5.1 per cent.—in line with the Retail Price Index minus housing costs. Almost all housing benefit needs allowances will be increased by between 5.5 and 6.2 per cent., according to the usual formula, and child benefit will be increased to £7 a week.
§ The major feature of this up-rating is the protection of almost all the main benefits against inflation. We have not let the temporary up-turn in the inflation rate alter our determination to keep our pledge to pensioners and other long-term beneficiaries to protect the value of their benefits. Furthermore, we are also protecting unpledged benefits such as unemployment benefit and supplementary allowance. Because these increases are significantly higher than the rate of inflation expected in the latter part of the year, your Lordships might wish to reflect that, were we still using the forecast method of up-rating favoured by the last Labour Government, pensioners and others would be receiving an increase substantially less than that set out in the instruments before you today.
§ The one major benefit which will not be increased in line with inflation is child benefit, which will go up by 2.2 per cent. to £7 a week. As your Lordships will be aware, increases in child benefit are extremely expensive, and having decided that it was right to retain child benefit in its present non-means-tested, non-taxable form we would be doing less than our duty if we did not look very carefully at whether any increase in the level of child benefit was justified in the context of the burden imposed by a social security up-rating of this size.
§ We shall, however, direct most help to those families who are on low incomes. Accordingly, we 1478 have increased the family income supplement prescribed amounts by more than 7 per cent. and have modified the scheme to take account of the higher costs faced by families with older children. The new prescribed amounts for a one-child family will therefore be increased to £97.50 a week where the child is under 11, £98.50 where the child is 11 to 15 years old, and £99.50 where the child is 16 to 19 and still at school. For each additional child the prescribed amount will increase by £11.50, £12.50 and £13.50, again depending on the age of the child.
§ As well as targeting help more effectively, this measure will help mitigate the effects of the unemployment trap, by aligning more closely the rates paid to low-income working families with children and the rates paid to families who are unemployed and receiving supplementary benefit. To the same end we are increasing the housing benefit child's needs allowances by nearly £1 a week more than the normal up-rating formula would require.
§ Invalidity pensioners will also receive an up-rating beyond the rate of inflation—some 12 per cent., in fact, worth over £4 a week to single beneficiaries and £6.50 a week to married couples. This is because, as your Lordships will know, we are restoring the 5 per cent. abatement of invalidity pension, despite the fact that there are, at present, no plans to bring the benefit into taxation.
§ We propose to make a couple of changes to the heating additions paid with supplementary benefit, which will be up-rated as normally by the rise in fuel prices—4.4 per cent. between May 1984 and May 1985. From 5th August there will be no new awards of central heating additions. These additions were introduced in the early 1960s, when the few claimants with central heating spent more than other claimants on fuel. Now about half of all claimants have central heating; central heating is more efficient; and claimants with gas and electric central heating systems spend less on average than claimants without central heating. These heating additions have thus outlived their purpose. I would stress, though, that these proposals will not affect existing claimants: anyone who is receiving a central heating addition on 5th August will continue to do so while they stay on benefit and remain eligible under the current rules.
§ We also propose to extend lower-rate heating additions, which will be worth £2.20 a week from November, to all sick and disabled claimants on the long-term rate of supplementary benefit. This is in recognition of the extra heating that claimants in this position may need. It is expected to benefit around 18,000 claimants.
§ The Social Security Benefit (Dependency) Amendment Regulations provide for an amended earnings rule for adult dependants of recipients of certain long-term benefits. The level of the earnings rule will be set at the rate of unemployment benefit—more generous than the existing rules applying to husbands of wives getting a long-term benefit but less than that for wives of men getting benefit. The regulations thus provide for equal treatment of men and women. By linking the level of the earnings rule to the rate of unemployment benefit we are ensuring that the rule will be regularly increased. There will be transitional protection for 1479 existing beneficiaries so no one will actually lose. The new limits will apply to new claimants from 16th September.
§ The limits on payments for board and lodging do not form part of the regulations before your Lordships' House today. However, the Government undertook, when announcing the new limits in March, to give further information around the time of the up-rating debates about the arrangements for review.
§ As your Lordships know, we have set in hand extensive arrangements for monitoring the operation of the revised board and lodging rules as well as commissioning research. By the turn of the year we hope to have at least preliminary results which will enable us to conduct a comprehensive review of the limits. In association with this review we intend also to review the level of the meals allowances for boarders and people with no fixed abode. We are not up-rating these allowances in November, unlike the boarders' personal expenses allowances. The meals allowances already stand at nearly £30 a week—more than the total benefit available to most non-householders for all purposes, not just food. We have had several representations about this anomaly. The underlying assumption—that people have three cooked meals a day—is increasingly out of touch with current lifestyles.
§ We intend to implement the outcome of our full review at the time of the next up-rating, in July 1986. But that is not all. Without prejudice to the outcome of the review we have also decided to make some increases this autumn in the limits which apply to residential and nursing homes. Early reports from our monitoring suggest that the limits set earlier this year, though based on the best information available at the time, were tighter than we intended, particularly for nursing homes. Naturally we want to put this right at the earliest opportunity.
§ The information available to us is still limited and certainly does not permit fine tuning; that must await the full reviews. Meanwhile, as an interim measure, we shall this autumn be increasing the limits for all types of residential homes by £10 a week, so that these limits will fall in the range of £120 to £180 per week. We shall also be increasing the supplement which is added to these amounts for nursing homes to £50 a week. This means that the limits for nursing homes will be increased by nearly one quarter and will, after November, fall in the range of £170 to £230 a week.
§ In conclusion, I should like to say that, with this up-rating, at a cost of over £2,000 million in a full year, we have shown our determination to keep our pledges over pensions and linked long-term benefits; we have gone further by protecting almost all other benefits; and we have given extra help to invalidity pensioners and to many low-income working families. My Lords, I beg to move.
§ Moved, That the draft order laid before the House on 5th July be approved [28th Report from the Joint Committee];
§ That the draft order laid before the House on 5th July be approved [28th Report from the Joint Committee];
§ That the draft regulations laid before the House on 5th July be approved [28th Report from the Joint Committee];1480
§ That the draft regulations laid before the House on 5th July be approved [28th Report from the Joint Committee];
§ That the draft regulations laid before the House on 5th July be approved [28th Report from the Joint Committee];
§ That the draft regulations laid before the House on 8th July be approved [29th Report from the Joint Committee];
§ That the draft regulations laid before the House on 8th July be approved [29th Report from the Joint Committee];
§ That the draft regulations laid before the House on 22nd July be approved [30th Report from the Joint Committee.]—(Baroness Trumpington).
§ 12.15 p.m.
§ Baroness Jeger
My Lords, I have a great sympathy for the noble Baroness, and for the rest of us, in the way we are having to handle these complicated matters today. I have said before that I do not think our business managers in either House, or of either party, have yet achieved the right way in which we ought to deal with these complicated social security affairs. We have had the Green Paper debate; we have had a Social Security Bill; and now we have all these orders today.
It is quite usual to have orders which are formal and only intended to meet the rise in inflation. But I feel that this mass of orders before us today is commencing the implementation of the Green Paper. I understood that consultation on the Green Paper was supposed to continue until September. There are many points in these orders today which seem to pre-empt consultation and which reaffirm the thoughts of many of us that consultation was never intended to be real: it was just a pleasant phrase thrown into some rather difficult documentation.
I promise your Lordships that I shall not go into a lot of detail, although I should quite enjoy going line by line through every single order today; but we are beginning the elements of the restructure which is not supposed to have begun yet. I think that that must be the background to however short a debate we have. For instance, I have been trying to find out—especially after the noble Baroness said how much more money was being spent—how much money was being saved by the totality of today's changes. Having got up early enough to read yesterday's Hansard for the other place, I find in col. 1356 that the Government are expecting to save—not spend—£2,000 million in a full year as a result of this handful of pieces of paper that we are discussing today.
Most of these orders are referred to as up-ratings. But they are not up-ratings for everybody. In fact, they are downratings so far as child benefit is concerned. There is of course an up-rating of 7 per cent. for pensioners which we welcome. But the effects of adverse changes which are being made in housing benefit and in heating allowances, and the proposed cuts in single payments under supplementary benefit, will erode that 7 per cent. improvement in income for very many people.
I must say something friendly. I welcome—I am sure that we all do—the increase in the limits of 1481 payments for nursing and residential homes. The original limits have caused a lot of anxiety and distress to residents who felt that they were likely to be put out on the streets, because their charges were not within the limits. I hope that the Government will continue to watch that very carefully so that these people continue to be protected as much as possible.
But so far as child benefits are concerned, this is the greatest disappointment to many people of all parties, and when one reads the reports of debates in another place one can see that the concern is not limited to any particular party. I remember—I cannot think why I did it—that I inflicted on myself the pleasure and displeasure of watching the last Conservative Party conference on television. It was very interesting because several speakers emphasised the importance they found in their constituencies of the child benefit arrangements. I understood that undertakings were given that the care of the family was nearest to the heart of this Government.
Now there is to be an increase of 15p and the amount is to go up from £6.85 to £7. If it were to keep in line with inflation of 7 per cent. the amount would go up by 35p. But instead of getting a 7 per cent. up-rating, as for pensioners and other beneficiaries, the child benefit is going up by only 2.2 per cent. I cannot see how that can be justified. I do not know why the Government picked on 2.2, instead of 1.2 or 3.2 per cent. It seems an extraordinary way to have gone about this very important question because we know that the most effective and cost-efficient way of dealing with family poverty is through child benefit. When I was in another place this was agreed between all parties when arrangements were made to abolish the income tax allowance for children and to abolish family allowances and instead to bring in this child benefit. Like the question of SERPS, which we discussed the other day, it is a great pity when some all-party arrangement, which has been made one hopes for the benefit of the community, is overturned in this unilateral way.
I understand that because the child benefit is going up by only 2.2 per cent., the Government will save £175 million. Because I cannot count I took that figure very carefully from col. 1349 of Hansard of the other place for 25th July. The noble Baroness said—and I know her colleagues have also said it on many occasions—that the whole idea of these changes is to target on the poorest, so the attitude is that, instead of spreading out the 35p over every child, there shall be a targeting on the very poorest children, and the Government save £175 million by this policy.
Then I tried to find out how much they are spending on the targeting on increases in family income supplement and other benefits. The figure that was given in the other place was £26 million. The Government saved £175 million, but increased expenditure by £26 million. I cannot see where the targeting on the poorest families is going. It is not a transfer of benefit from the well-off; it is a straight cut and it is from the poor to the poorest.
I rather liked a letter which I read in the Daily Mirror. It is not a paper which I read every day, but one mother wrote this on 9th July 1985: 1482The child benefit rise of 15p during November will, at least, pay for another pair of shoe laces for my son, provided I save it for two weeks, because they cost 25p now. By November they will probably be 30p".That is an illustration of the sort of expenses which families have to meet and of which I do not think Ministers are always aware.
We are in a situation—and I do not apologise for taking a little while on this because it is fundamental; we ought not to be discussing fundamentals on an order today, but this is the background of it—where the combined value of the child tax allowances and the family allowances that we used to have amounted to more public expense than the cost of child benefit today. It certainly was not our intention—and, as I understood it, it was not the intention of leaders of other parties—that that should happen. I know the Minister hopes that the improved rates of the family income supplement will help the poorest, but there is a very low take-up of family income supplement. I know of many families which, for reasons best known to themselves, do not take it up, and which will suffer from what is in reality a cut in the child benefit.
I want to say a word about the fuel changes. I understand from what the Minister said that there are to be no new central heating awards made after 5th August. What is magic about 5th August? Some half blind old lady may not find out until 6th August that she might have applied. What is the difference between 5th August and 6th August? I want to ask the Minister what steps are being taken to inform people of this magic date? If I were not in the unfortunate position of having to see all these pieces of paper in your Lordships' House, I would not have known, and I am not sure what steps the Minister is taking to inform the public of this deprivation. How are the Government to explain this to old people? Are there to be no exceptions? Are there to be no appeals?
The Minister made some glib statement about how central heating is improving and how it would not cost very much. I can take her to places where it is not improving and where the situation is as had as it ever was. I want to know why these people, who have expensive and not very efficient central heating, have to be penalised. At the same time, the Government are artificially raising costs of heating by the hidden taxation which they have imposed, particularly on the electricity industry. The noble Baroness the Minister said that there are many people with central heating who spend less on average than people with other forms of heating. All right, there may be some in that category, but what happens to those who pay more than the average because of their central heating costs?
We got into a terrible muddle over heating costs in the last severe winter. We had the absurd situation where, if you lived in Scotland you had to be colder than if you lived in Kent, and if you lived in Sussex you had to be colder than if you lived in Cornwall. I hope that the Government will have a complete overhaul of this business of the prevention of hypothermia and of keeping people warm in severe weather, and avoiding the situation where if people keep warm they do not eat, because that is not good for them, either. Instead we have this quite incredible new rule with a date plucked out of the blue, as far as I can see: a date when I imagine many of your Lordships will be sitting in the 1483 warm sunshine of places healthier than this and not thinking about next winter's central heating bills. I leave that question with the noble Baroness. How will the public be informed? The new claimants had better get their letters in quickly or else, just because of a fluke in the date, they will miss this help.
§ 12.30 p.m.
§ I understand that we are to take the vaccine order separately. Is that right?
§ Baroness Jeger
My Lords, then I shall not refer to it at this point.
The changes in housing benefit are again very fundamental and I think should have waited until the new legislation, to which we look forward with dread and despair in the next Session. This is not the way to deal with matters which affect so many people. At least 460,000 people will lose their rate rebates and very many people will lose their housing benefits. This has to be put together because people's expenditure is not divided up into little parcels for the rates and the heating. All they know is that they have a lot of bills to pay.
I had hoped that we were going to have something more comprehensive. I know that before we have the next round of legislation the only way for the Government to bring in what are, on the whole, unhelpful measures is to use the procedure through which we are going today. But I can assure the Minister that these measures add up to a total of meanness and deprivation. However many people the Minister says will be helped, more will lose; otherwise it would not have been possible for the Minister in another place to give the figures that he did. He said that by these measures he was going to save the Government £2,000 million in a full year and that the extra expenditure would be much less than that.
I leave it there. I hope I have made it clear that we shall be continuing this argument for a long time, because we feel that fundamental principles are involved in spite of the casual nature of these orders.
§ Lord Banks
My Lords, I should like to thank the noble Baroness, Lady Trumpington, for her explanation of these orders. As this is the last July when we shall be discussing up-rating orders, perhaps I may be permitted to say that this is the eleventh successive year in which I have had the privilege of taking part in these discussions. I do not know whether that is a record.
The noble Baroness told us that the cost of the up-ratings would be £2,000 million in a full year. She also had some interesting things to say about board and lodging, which are not actually covered by these orders; and like the noble Baroness, Lady Jeger, I welcome the fact that there is to be a relaxation of the limits. This is a matter which has caused a great deal of concern and we shall want to analyse very carefully what the noble Baroness has said.
I return to the up-ratings which the noble Baroness said would cost £2,000 million in a full year. We ought to be clear that this is not largess. It is to make up for 1484 the rise in prices, this year standing at the higher figure of 7 per cent. As far as national insurance benefits are concerned—they are the bulk of the benefits which we are considering: not all of them by any means, but the bulk of them—they are financed by national insurance contributions on earnings for the most part with a reduced Treasury supplement these days in addition. Those earnings on which the contributions are based have risen faster than prices. Therefore there is a buoyant revenue available to help cope when there has to be an up-rating because of inflation. I say that just to put the matter in perspective, because sometimes it sounds as though the Government are being tremendously generous in providing in this case another £2,000 million per year.
The Government say that between November 1978 and November 1985 the retirement pension will be up 10 per cent. more than the cost of living and that there will in fact have been a real increase. I should like to ask how much this is due to the link with earnings which existed in the early years of the present Government as far as the pension is concerned, but which they subsequently abolished. The Government said when they abolished it that pensioners would share in increased general prosperity. The question that I should like to ask is: when will they share?
Earnings have been increasing faster than prices but nothing seems to happen to raise further the real value of the retirement pension. Of course the earnings-related pension, which it is proposed to abolish, would have helped in the future. Indeed, the substitution of a 4 per cent. contribution to private pensions, if that is eventually introduced, will help in the future. It is significant that in looking to the future in the Fowler Review the Government felt compelled to provide something over and above the basic pension for those who retire in the future, feeling it was not right for them to have only the basic pension. But what about those already retired? I very much regret that in the Fowler recommendations the increased contributions of those formerly contracted out are not to be used to increase the basic pension.
But for the break in the link with earnings, the single pensioner would be getting £3.90 a week more than he is and a married couple would be getting £6.15 per week more than they are. The increase in the rates taper above the needs allowance for housing benefit from 9 per cent. to 13 per cent. means that pensioner couples with incomes of more than £670 a year above the pension level of £3,187 per year will be worse off. The cuts begin to take effect at £3,857 per annum, which is rather a low point at which to begin making cuts—cuts which will in fact save £57 million in rates rebate.
We have already expressed from these Benches regret that child benefit is not to be increased by 7 per cent. but in fact by less than one-third of that—by 2.2 per cent. I should like to ask the noble Baroness what is the future for child benefit and what role do the Government see for it in the future. The noble Baroness, Lady Jeger, reminded us justifiably that child benefit replaced family allowances and the income tax allowances for children. It is true that child benefit today is worth considerably less than the combined value of child tax allowances and family allowances 30 years ago. Is child benefit to be run 1485 down further, as it is being run down this year? That, after all, is what is happening year by year to the £10 Christmas bonus for pensioners. When will the point be arrived at when the Government say that this is now too small to be maintained any longer?
Returning to the subject of the child's allowance, I should like to try, as the noble Baroness, Lady Jeger, did, to see whether we can get the figures right. The noble Baroness had a go at them, and I shall have a go at them. The family income supplement has been increased by slightly more than 7 per cent. and the prescribed limit for older children has been increased. The child's needs allowance in housing benefit has also been increased. These increases are welcome; I say that without any reservation. However, is my arithmetic right? I calculate that the increase in family income supplement will cost £17 million per annum and that the increase in housing benefit child's needs allowance will cost £12 million per annum—£29 million in all—but that the saving on child benefit will be £175 million. It therefore appears that £146 million less will be spent on children. Have I given the right figure? If not, what is the right figure?
The trouble with family income supplement, as the noble Baroness, Lady Jeger, said, is that it has such a poor take-up—only about 50 per cent. whereas child benefit has a take-up of about 100 per cent. Analysis of low incomes in Volume III of the Green Paper shows that in 1982 about 700,000 families with children were headed by a wage-earner in the bottom fifth of income, but only about 200,000 families receive family income supplement today, compared with 158,000 in 1982.
Although there are a very large number of families in that low income bracket, less than half of them are receiving family income supplement. The others are receiving child benefit, and child benefit is now to be reduced in value. I should like to ask the noble Baroness: since family income supplement is taken into account in calculating housing benefit, how much of the increase in family income supplement will be lost from housing benefit?
We welcome the restoration of the 5 per cent. abatement of invalidity benefit but regret that there is no recompense for the loss of benefit while the abatement prevailed. This was a point we stressed during discussion of the Social Security Bill. There do not appear to be any matters of concern in the Government Actuary's report this year, but I will conclude by stressing again that we are very concerned indeed about the future of child benefit.
§ Baroness Trumpington
My Lords, I have listened with interest to the points which have been made to me. I shall try to answer as many of them as possible without taking up too much time on this particular day. I shall write to those concerned in respect of any points I fail to mention.
The noble Baroness, Lady Jeger, if she carefully reads my speech in Hansard, will see that a number of her questions have already been answered. As to her remarks concerning lack of consultation on the Green Paper and her suggestion that the measures we are considering today pre-empt the Green Paper, I could 1486 not agree with her less. My honourable and right honourable friends who conducted the reviews received a mass of evidence and now there is a short time for further consultation. The changes we are making, clearly, are broadly in the same direction. It would be absurd to make changes that were contrary to our proposals. Certainly we are carefully consulting before introducing our proposals in the next Session.
The noble Baroness, Lady Jeger, said also that the cuts in housing benefit pre-empted consultation. The proposed increase in the rates taper from 9 per cent. to 13 per cent. is not included in the orders before the House today. We are still consulting the local authority associations on this proposal. However, that change does not pre-empt consultation on the Green Paper. Given that changes were necessary to contain the cost of housing benefit, it made sense to make changes which were consistent with our long term proposals. The November changes will be a useful step in the right direction, but they do not pre-empt the radical structural changes which are proposed in the Green Paper.
I hope that the noble Baroness reads the Daily Mirror more carefully than she did yesterday's Hansard for another place, because it reports that the changeswill cost over £2,000 million in a full year".—[Official Report, Commons, 25/7/85; col. 1356.]The total extra cost of the up-rating will be £2 billion in a full year. The changes we have made involve both savings and extra expenditure. The net effect of the savings is to reduce the extra cost of the up-rating by about £250 million.
§ 12.45 p.m.
§ The noble Baroness said that we need to consider the combined effect of the changes. I am glad to say we have some figures showing the effect of several of the changes on low-income families. Taking the effect of the reduced national insurance contribution announced in the Budget, the improvements in the family income supplement, the extra expenditure on the child's allowance in housing benefit and the lower increase in child benefit, a family with two children aged four and six earning £60 a week will be £2.3p a week better off. On the same earnings, a family with children aged 12 and 14 will be £2.70p a week better off.
§ The noble Baroness was concerned about the impact of cuts on housing benefits. We approached the changes very carefully and were determined that the poorest should be protected. First, no householder receiving supplementary benefit will be affected by the changes in housing benefit. They will not lose benefit. Secondly, no householder whose income is below the housing benefit needs allowance will lose benefit. Indeed, some 200,000 families with dependent children will gain from the real improvement to the dependent child's addition to the needs allowance.
§ Thirdly, only those with higher incomes will lose; that is, those with incomes above the needs allowance. Even here the smallest losses will be experienced by those only a little above the needs allowance. The largest reductions will generally apply to those whose incomes are the highest above the needs allowance.1487
§ The noble Baroness expressed concern about the central heating allowance and the date specified of 5th August when we propose to make the changes. Perhaps I may clarify the position. Anyone entitled to a central heating addition before 5th August will continue to receive one as long as he or she remains on benefit and eligible under the current rules. If someone has claimed and been awarded benefit before 5th August and is then found after 5th August to have been eligible for a central heating allowance continuously since before that date, then the addition will be paid with arrears. For the time being, we are continuing to publicise those additions in our leaflets.
§ The noble Lord, Lord Banks, asked about the link with earnings. We are pledged to protect the value of basic pensions against rising prices. This we have achieved despite the present difficult economic climate. Of course we should like to do more, and we shall do so when resources permit. With regard to the first group of figures which the noble Lord gave, he is quite right. May I at the same time congratulate him on his stamina in achieving his eleventh anniversary of dealing with these matters? That is quite an achievement.
§ As to the impact of the proposed rates taper change on pensioners, average losses for pensioners will be less than those for other groups—about 47p per week as opposed to about 51p per week for other groups. No pensioner with income up to £10 above the basic retirement pension will lose, and pensioners will still benefit from the £2.50p per week increase for single pensioners, £4 a week for couples, in the state retirement pension.
§ I remind the noble Lord that it was this Government who made the Christmas bonus a regular statutory benefit. It costs more than £100 million a year, and to increase it now would therefore be costly. Once again, it is a question of priorities.
§ Lord Banks
My Lords, can the noble Baroness say whether it is intended to phase that out, as must surely happen if it is never increased to meet inflation?
§ Baroness Trumpington
No, my Lords. I believe there was one year when the previous Government did not pay it—at least one year—but we have no intention of phasing it out.
§ Lord Ennals
My Lords, I am grateful to the noble Baroness for giving way. Can the noble Baroness say when it was last up-rated? How much has this Christmas bonus been shrinking away?
§ Baroness Trumpington
My Lords, I do not think that it has ever been up-rated. I believe it has been £10 from the start, bar the years when the noble Lord's Government did not pay it at all.
§ Lord Stallard
My Lords, I join my noble friend Lady Jeger and the noble Lord, Lord Banks, in congratulating the noble Baroness, Lady Trumpington, on her introduction of this marathon list of up-ratings of social security benefits. I welcome, too, as they did, the changes announced in the board and lodging allowances, and her promise that a review will take place at, I think she said, the turn of the year. 1488 We certainly look forward to the outcome of that review and the discussions which will then take place.
My noble friend Lady Jeger mentioned this question of Friday statements. I go further and say that I object to the way that social security matters have been treated by the Government—or the usual channels, whoever is responsible—throughout the whole of this Session. They have been seriously skimped. The agenda has always been overloaded, and there has always been insufficient time for those of us who do not have the benefit of research resources, and so on, of our own. I have the impression that the whole issue has been handled in something of a rush and a panic.
This also emerges from some of the Government spokesmen when they make these statements. They seem almost to be making policy on their feet, as they go along, monitoring policy and changing policy as they are criticised and as debates develop. That is not the best way to deal with social security legislation. Therefore, I hope that we shall have proper opportunities in the next Session for the much more important debates which will take place on the outcome of the reviews, and that they will not be crushed up and skimped as has been the case in this Session.
In introducing these up-ratings the noble Baroness was at pains, as she always is, to intimate how much the Government are pledged to protect these benefits and to protect pensioners. That is fine if one has a very short memory. However, of all people pensioners have very good memories, and they, like me, query this protection of benefits. For example, they will remember the 1980 Acts. They will remember the 54-week year, when they lost two weeks' benefit because of the extension of the benefit year. They will remember the clawing back because of a mistake in the estimates as to the rate of inflation. Some was clawed back, in spite of the assurance that if the rate was the other way round and the estimate was below, there would be no making up of the losses. They remember, too, the break in the link between wages and prices, whichever was the higher, and they remember that they lost on those changes.
§ Lord Ennals
My Lords, I am grateful for my noble friend giving way. I do not intend to make a speech, and that is why I ask him to give way. The noble Baroness made a merry quip about the one year when the Christmas bonus was not awarded. Will my noble friend accept that that was the year when pensioners were getting their pensions week by week, linked with the earnings level and not the inflation level?
§ Lord Stallard
My Lords, I am grateful to my noble friend. I had intended to mention that because I clearly remember that occasion.
As I was saying, pensioners remember when their pensions were linked with wages or prices, whichever was the higher. My noble friend Lord Ennals has just mentioned one of the consequences. There is another. Unfortunately, the latest figures for 1985 are not yet available so we are unable to make a direct comparison with the November increase. However, we can make a comparison with 1984. Had the link with the average earnings index for the whole economy continued, seasonally adjusted, in 1984 single persons 1489 would have received £38.85. In fact, single people received £35.80. Therefore, they could quite rightly argue that they lost a further £3.05 as a result of that breaking of the link. A married couple would have received £62.71 but instead received £57.30—a loss of £5.41. Those figures would be higher if one followed the same comparison through to 1985. Therefore, pensioners will have long memories as to the protection they have had since 1979.
As has already been mentioned, the £10 Christmas bonus gets smaller, in effect, every year that it remains at £10. Like the noble Lord, Lord Banks, I can envisage that it will disappear, like the death grant, maternity allowances, and so on, which are allowed to dwindle until they are worthless, which is the excuse for cutting them altogether. I would have far preferred the noble Baroness, who is at pains to protect pensioners' interests, to have announced this morning that the bonus would be increased by at least the rate of inflation. That would have been a move towards protection; and perhaps she will be able to reconsider that and advise us when she next speaks.
I now want to deal briefly with the housing benefit. I was able only to scribble a few notes while the noble Baroness was speaking, but she will know of my interest over many years in housing benefit. I have had a Motion set down for exactly twelve months seeking a debate on housing benefits. I do not know how long one has to wait while this process of choosing debates takes place, but I have been waiting for twelve months. Such a debate would enable me to draw attention to a whole series of anomalies which still exist in regard to housing benefits. It is true to say, in talking about protecting benefit, that the housing benefit scheme has been subject to cuts ever since it was introduced in 1983. Almost from the word "go" it began to be cut. In fact, in 1983 because of cuts 400,000 people lost entitlement altogether—that is, in the first year of operation. One and a quarter million people lost part of the benefit as a result of the cuts. The cuts amounted to £50 million and the ink was hardly dry on the Act introducing the benefit. The following year, 1984, a further 500,000 people lost entitlement altogether and 1.75 million people lost some of their benefit—in fact, quite a lot of it. The amount of those cuts was £215 million. Where is the protection element there? The scheme was introduced and, within months, cuts of almost £300 million were made.
I was not the only one to criticise this. The cuts were condemned by all the professionals and people involved, including the Government's own Social Security Advisory Committee. At the time of these cuts the committee stated;It is clear that for many people the loss of income will be very severe. We join with all those who gave evidence to us in deploring the reductions, which we believe will have an unduly harsh effect on many individuals. It seems extraordinary that so much money should now be taken out of housing benefit within so short a time.That comment was contained in the February 1984 report of the Social Security Advisory Committee, Cmnd. 9550. Therefore, I do not think that the people who are entitled to that benefit will accept that their position has been protected. It is exactly the opposite.
I understood that from this November the withdrawal rate—that is, the rate at which rate rebate 1490 is altered as income changes—was due to increase from 9p to 13p. I thought the noble Baroness said that that would not now take place, or that it is not included in to-day's up-rating. I shall be glad if she will confirm that. If it goes up from 9p to 13p we have to recall that in 1983 it stood at 6p, so the 13p will be more than twice what it was in March 1983. If this takes place—and I have no confirmation that it will not—many more thousands of people will lose benefit altogether and many more thousands will lose part of the benefit. I do not think that that is an example of protecting the benefit.
My noble friend Lady Jeger has already mentioned child benefit and the fact that it will not be increased by the rate of inflation. It goes up to £7 instead of £7.35. But even that is not the whole story with regard to child benefit on this protection theme about which I am talking. The tax allowances that have been changed in recent years have on the whole never applied to child benefit. Child benefit always lagged behind the tax allowances that were given over and above inflation. Had it risen in line with the higher increase in tax allowance in the past three budgets, it would now need to be raised to £8.25 instead of £7.35, so on that basis the increase in November 1985 would have been £8.25.
As well as that, if it had been operated in line with the allowances, as I have mentioned, whichever was the higher between the tax allowances each year since 1979, child allowance would now be standing at £8.65, so the real cut in child benefit is £1.65. Parents and people who are involved in that will not consider that the Government have protected their interests or their benefits.
I thought I should make those one or two comments following the noble Baroness's boast (for which I do not blame her because the boast is repeated everywhere) that the Government are protecting the benefits. I say the contrary is true: they are cutting them.
§ Baroness Trumpington
My Lords, I have listened with interest to the remarks of the noble Lord. Lord Stallard. He raised two points which I should like to answer. He was concerned about cuts every year since the introduction of the housing benefit. The noble Lord conveniently overlooks the improvements we have made to the scheme. For example, on the introduction of the scheme we improved the tapers below the needs for pensioners by 12 per cent. on rates and 25 per cent. on rents. Over one million of the poorest pensioners gained an average of £1 per week. Last year we were able to make a real improvement, 50p, in the child's addition to the needs allowance. We shall be improving it again this November by 95p.
But the fact is that we do not have limitless amounts of money. Housing benefit expenditure has more than doubled in real terms since 1979. To hear noble Lords opposite talk, one would think there was a limitless supply of money. The fact is that they, the party opposite, put forward a series of expensive proposals in their manifesto at the last election without the slightest attempt to explain where all the money would be found.
The noble Lord, Lord Stallard, said that the increase in rates taper from 9 per cent. to 13 per cent. would not 1491 now take place. I think the noble Lord misunderstood my earlier comments on our proposal to increase the rates taper above the needs allowance from 9 per cent. to 13 per cent. I said the provision for this change was not included in the orders before the House today. That is because we are still consulting the local authority associations on the proposal. Subject to their views we shall be laying regulations providing for this change in the Recess. The change will come into effect in November.
With regard to the link with earnings, the present Government are not prepared to make promises to pensioners which the country cannot afford to meet. The link with prices means that the pension maintains its real value. Where we have limited resources, and when the number of pensioners has risen by 800,000 since the Government came into office, this represents a good deal for pensioners.
I think I have managed to answer nearly all the questions I have been asked. These matters are very important indeed. As far as I am concerned, I am prepared to stay here until closing time going through the orders, line by line if noble Lords so wish. However, in conclusion, I should like to emphasise to your Lordships that in the period since November 1978 retirement pension will have increased by over 96 per cent. when the new rates come into force in November. Over the same period the rate of inflation is expected to have risen by about 86 per cent., giving a real increase to pensioners and others and linked long-term benefits. Surely this answers those who claim that we are not a caring Government. My Lords, I commend the orders to your Lordships.
§ Lord Banks
My Lords, before the noble Baroness sits down may I ask her a question arising out of her last point, which is about this 10 per cent. increase in pensions? I did ask her how much of that was due to the link with earnings, which is no longer there.
§ On Question, Motions agreed to.