Social Security Changes

HL Deb 04 May 1988 vol 496 cc638-69

7.59 p.m.

Lord Banks rose to ask Her Majesty's Government what their response is to the comments on the social security changes contained in the sixth report of the Social Security Advisory Committee.

The noble Lord said: My Lords, I should like to begin by thanking all those noble Lords who have indicated that they intend to take part in this short debate. The Question asks the Government what their response is to the comments on the social security changes contained in the sixth report of the Social Security Advisory Committee. These changes have been much criticised in recent weeks as the scale of the losses suffered as a consequence of them has become more evident.

The criticism of Conservative Back-Benchers in another place has caused the Government much embarrassment and forced them to make some modifications. The Opposition parties and all the organisations concerned with the disadvantaged warned the Government what the situation would be. The noble Lord, Lord Skelmersdale, will recall that when I suggested on the Third Reading of the Social Security Bill that he had not taken the effect of the housing benefit changes fully into account, his reply was: I can advise the noble Lord, Lord Banks, that I fully understand the effects of the housing benefit changes".—[Official Report, 10/3/88; col. 880.]

In view of the Government's subsequent concessions it would appear that he and his colleagues did not fully take into account the effects of the housing benefit changes. At least, that is the most charitable construction to put on recent events.

Any concession which reduces the hardship caused by the changes is welcome, but a concession totalling £100 million does not go very far in a social security budget of £46,000 million. The raising of the capital maximum to £8,000 is welcome, although many considered that £10,000 would have been a more reasonable figure. Unfortunately there is no change to the tariff that is to apply between £3,000 and £8,000. Over the £3,000 exemption every £250 is assumed to earn £1 per week or £52 per annum, which is over 20 per cent. That seems an unrealistically high rate of return.

The transitional protection for certain categories of those losing £2.50 per week will presumably be phased out by inflation, so all it does is to postpone the evil day. I shall be grateful if the Minister will confirm that in his reply.

Since the last of our discussions in the House about these changes the sixth report of the Social Security Advisory Committee has been published. The Social Security Advisory Committee, I remind the House, is a statutory advisory body. It is not a pressure group seeking to promote particular interests, however worthy. The committee states clearly where it agrees with the Government. It says, for example, that it agrees with the alignment of income support, housing benefit and family credit and the use of net income. But in the introduction to its report it reiterates objections which it has previously expressed to aspects of the changes; objections to which it holds, having heard all that the Government have had to say.

Its objections can be summarised under six different headings. First, it regrets that the new arrangements for pensions make no provision for, a periodic uprating of the basic retirement pension in line with earnings". With earnings increasing at 8½ per cent. and inflation at 3½ per cent. pensioners are being left further and further behind earners. It is no use telling us that pensioners' income from all sources is increasing on average. That is the usual reply which is given. It is good that more pensioners are drawing occupational pensions. It is good that more pensioners have a share in the earnings-related state pension, but there are those who depend entirely, and others who depend almost entirely, on basic pension. They are not sharing in the increased prosperity. Are they never to do so?

Secondly, the committee is concerned about the impact of the new scheme on young people. It says that lower rates of personal allowances will make it very difficult for 18 to 24 year-olds to live independently and virtually impossible for the small minority of 16 and 17 year-olds who cannot live with their parents.

Thirdly, with regard to income support, the committee regrets that: the rough justice which accompanies the simplification is not backed up by any system for making regularly weekly payments to the minority of claimants who have special needs which are not met by the premiums". We know that in this respect we are talking about the very severely disabled. That criticism has been made many times in this House during our discussions on the changes. The Independent Living Fund is supposed to fill the gap. When we discussed that recently, I suggested that what the Government were doing was replacing statutory entitlement by cash limited charity. Is that a fair description of what is happening? If it is not, why not? I wonder whether the Minister will tell us more about how the fund will work. I understand that it is to be a temporary arrangement only and that it is to be replaced by a permanent system in due course. Is that correct, and, if so, how long is the temporary period to last?

Fourthly, the committee says that it does not believe that the basic rates have been increased sufficiently in comparison with supplementary benefit to allow for the fact that claimants needing to replace major items of furniture may now be offered help by way of a repayable social fund loan rather than a grant. So the committee is saying that the rates of benefit are too low. What do the Government say to that?

Fifthly, on housing benefit the committee welcomes the simplification and the equal treatment of people with similar incomes whether in or out of work, but its main concern is with the steeper tapers; the capital cut-off (about which it shares the general concern); the requirement that all claimants should meet 20 per cent. of their rates with compensation amounting to 20 per cent. of national average rates for those on income support; the expectation that 18 to 24 year-olds living with their parents or in someone else's household and claiming income support will contribute £3 towards the household rates without any addition to their benefit.

Sixthly, on the social fund the committee shares the objections to certain aspects which have been expressed in many parts of the House—the discretionary basis and the emphasis on loans rather than grants. The committee says that the majority of payments should be grants and it criticises the fact that the fund is cash limited and that there is no independent appeal system.

Those criticisms under the six headings of pensions, young people, severely disabled, level of benefits, housing benefits and the social fund are reiterated by the Social Security Advisory Committee after hearing all the Government's arguments. I hope that the noble Lord, Lord Skelmersdale, will tell us that the Government will take these sustained criticisms very seriously indeed.

The report considers certain aspects of the social security system in further detail. It considers again the position of young people and the committee points out that with regard to income support 16 and 17 year-olds who believe they fall within one of the exemption categories may pursue their claim through the independent appeals system. Those not exempted who take a YTS place and then leave because it is not suitable will have a bridging loan to cover until they take a new YTS place. If they do not like that place and leave again they may lose their bridging allowance altogether and could face destitution.

The decisions with regard to YTS and the bridging allowance are taken by officials of the Department of Employment and there is no appeal. The committee urges that there should be provision for appeals against decisions on YTS and bridging loan matters. That will make the procedure equally fair for exemptees (if I may so call them) and non-exemptees. I should be grateful if the Minister will tell the House of the Government's view regarding that suggestion.

The committee draws attention to the fact that while there is now a powerful disincentive to unemployment as an option for school leavers there remains much less of a incentive to opt for education. It states that for a significant minority financial factors will be important. Have the Government considered that point since it was made by the committee and, if so, what is their reaction?

The committee gives statistical evidence to show that a 17 year-old on the second year of YTS and living on his own will have only £20.12p to live on after meeting housing costs, compared with £30.23p under the pre-reform arrangements. It realises that the number of 16 and 17 year-olds living on their own is small but it urges the Government to find a solution to the problems of that small group of people. Do the Government recognise that problem?

In closing, I should like to return to housing benefit and what the committee says about it. It was originally planned that from April of this year there should be a saving in housing benefit of £640 million per annum. With the concessions that have been made under pressure, that will now be £540 million. There are two figures on which the Government base their case. In 1979–80, rent and rates rebates and supplementary benefit housing costs amounted to £1.24 million. In 1986–87, housing benefit was £5.4 million; in other words, an increase of approximately £4 million. I believe that that increase has led the Government to state that there is a case for a cut.

However, the report points out that the cost increase in housing benefit is due in part to increasing rents. In the public sector increasing rents are due in part to a reduction in the subsidy to local authorities as part of the Government's strategy to reduce public spending. In 1980–81, housing expenditure was £4.4 billion. It fell to £2.4 billion in 1987–88, a fall of £2 billion. One must take into account the effect of inflation and in real terms the fall in the value of expenditure on housing amounts to over £5 billion at 1987–88 prices. There has been a shift from subsidising bricks and mortar to cash assistance. As one figure has fallen, the other has risen; in other words, government policy has contributed substantially to the increase in the cost of housing benefit.

On Third Reading of the Social Security Bill the noble Lord, Lord Skelmersdale, said that it was wrong that two-thirds of householders should be subsidising one-third. He did not say how many of the two-thirds were enjoying mortgage interest tax relief, which is also a subsidy. If one looks at the total amount spent on housing by the Department of Environment, the amount lost through mortgage interest tax relief and the cost of housing benefit, one finds that, in 1987–88, 43 per cent. of that total expenditure went on housing benefit. But 38 per cent. went on mortgage interest tax relief; that is nearly the same amount. In the light of all those considerations, it appears to me that the case for a saving of £540 million on housing benefit disappears.

In conclusion, I repeat that the Social Security Advisory Committee is an independent body. It was established to advise the Secretary of State for Social Services on security matters. In its sixth report it has reiterated some of its fundamental objections to much that is involved in the new social security system. It has pointed out further problems for urgent consideration. My question is designed to discover what response the Government propose to make.

8.15 p.m.

Lord Nugent of Guildford

My Lords, I should like to thank the noble Lord, Lord Banks, for raising this interesting topic and causing me to read the sixth report of the Social Security Advisory Committee. In that context I should like to congratulate my noble friend Lord Skelmersdale and his right honourable friend on setting up the advisory committee. It is a good body of public spirited people who have come together to carry out such important work. The report is a highly informative document and the noble Lord, Lord Banks, has shrewdly picked out the most penetrating criticisms. There are a few compliments here and there in the report, but I agree that there are also important criticisms. However, the committee gives credit to the Government for restructuring social security and it makes its criticisms, some of which I shall mention.

In recent weeks public debate, especially in the other place, has tended to concentrate on the hard cases, especially those in the housing benefit sector. The noble Lord mentioned the fact that the Government spend almost £48 billion per year on social security across the board, as mentioned in the report. That covers pensions and child allowances which, in one way or another, affect nearly everyone. That is approximately one-third of the annual budget and 11.8 per cent. of the total GDP of the nation. I regard that to be an enormous figure. I should not think that many other countries spend such a large amount of their total income in that way. I hope that as our income grows we shall be able to afford to increase that figure for the benefit of everyone. However, a government that can spend such a large figure for the benefit of the old, the young and the needy must be given credit for being a caring government. Of course they can always be asked to spend more.

The noble Lord referred to some of the main objectives of the restructure. They are to remove the anomalies and confusion of the administration which have been serious, to simplify, to strengthen incentives for employment, and—the major controversial issue—to bring housing benefit expenditure under control.

The noble Lord ingeniously tried to diminish the significance of the rise in expenditure on that account by fourfold since 1979–80. I believe that that is a very large rise, and I hope that the Government will examine that factor. The committee referred to the fact that as a result of the reorganisation more money will go to families with children, single parents and the sick and disabled. Inevitable criticism has been directed in relation to those who will lose out by the reduction in housing benefit. However, 7 million households—that is one in three—are receiving housing benefit. The Government regard that as too high a figure, and I am bound to say that I agree. The reform will reduce that expenditure to approximately £6 million.

Inevitably that is bad news for many people—for all who will lose something that they are receiving. However, bearing in mind the fact that those who are affected are all above income support level, it cannot be right to give taxpayers' money except in cases of proven need. Therefore, I support the Government's assertion and I am glad that they have been able to mitigate the severity of the cut, because it is severe, by extending the capital figure from £6,000 to £8,000, and particularly by giving transitional help because it is a grievous blow to people with small incomes when suddenly there is a cut. However, I believe that the mistake has been to allow the growth of this expenditure to go on for far too long and therefore the correction is all the more painful.

The advisory committee observes that the revised scheme will provide better support for those on the lowest incomes in regard to housing costs, which is to be welcomed; and it welcomes the removal of the anomaly whereby an unemployed person on supplementary benefit received a 100 per cent. grant but a person in work on the same income received only a 60 per cent. grant. Many of the side variations in different local authority administrations have also been removed.

In that context, the advisory committee welcomes the new management information system to monitor this administration. I am sure that is most desirable. It also refers to the appeals system to a review board of local councillors, which is to be continued. I am surprised that the noble Lord, Lord Banks, did not pitch into that because the committee doubts its adequacy, as I do. I hope that my noble friend will accept the recommendation of the advisory committee that the independent legally qualified Social Services Appeal Tribunal is a much more satisfactory body. Perhaps my noble friend will consider that point. I am on the same wavelength as the noble Lord, Lord Banks, in taking up the committee's point that the progressive narrowing of the scheme alongside the prospect of the rising trend of rents obviously may cause problems. My noble friend should keep an eye on that matter.

I agree with the imposition of payment of 20 per cent. of rates because I believe that the principles of the Local Government Finance Bill are right, and I would expect that the income support provision will provide for that payment in the lowest income levels. Evidently the new management information system will play an important part in the future administration there.

I agree with the noble Lord that the report was particularly interesting in its two chapters on young people and incentives. The Government's major achievement of the YTS on a national scale next September offers an attractive prospect with payment for all 16 and 17 year-olds who do not have a job. Income support cannot be claimed by school leavers which, the report says, makes unemployment a powerful disincentive for school leavers. This I believe was always very demoralising, but the exempt categories are to be provided for as they always were.

The committee welcomes the general provision of training with payment for all 16 and 17 year-olds but, as did the noble Lord, Lord Banks, I express anxiety about youngsters who opt for continuing education and whose families are not supportive. They will obviously need more help than is contemplated at present, and I hope that my noble friend will look at that point.

The report has a useful chapter on service to the public of which I am sure my noble friend has taken note. There are over 500 local offices and services are variable in the view of the committee. Delays and mistakes are too frequent—something like 10 per cent. on average, which is fairly high. Local offices vary from clean, bright and efficient with few delays, to run-down inner city premises with frequent staff changes and therefore the staff are unable to master the complexities of the system.

Having studied the matter for the last week or two, I am not surprised. The Government have embarked on a strategy of computerisation which is obviously right, but it will take some years to complete. The aim is to improve efficiency and reduce staff, which is a very big undertaking. However, the advisory committee advises that the staff should be redeployed in order to improve the service. I should have thought that that would be a good idea because there must be continuing anxiety about the percentage of non-take up, and if the service is better, so is the take-up.

The report concludes with a most interesting chapter headed: Meeting need—how much is enough? I daresay that we cannot agree on that matter across the House. Noble Lords on the other side will say that what we are now giving is nothing like enough, and we shall say that we have to be careful because we must balance the budget. The point is that there are no absolute standards and various criteria are used to try to make the safety net concept effective. The chapter concludes with the observation that existing sources of information from the DHSS, such as statistical monitoring together with a family expenditure survey cannot provide sufficient satisfactory information, and I quote: on the problems caused by life on low income, or the strategies which people adopt to make ends meet or … the ways in which people manage to avoid dependence on benefits or get themselves back into work". The report makes out the case for a stronger research programme, and I ask my noble friend to consider allowing an increase in finance for the very small amount required, in the total context of the expenditure, for a research system in order to give better information. Bearing in mind that that huge national expenditure must rest on the backs of the working section of the whole nation, it is obviously of vital importance that my noble friend should be as fully informed as possible in order to justify that expenditure and, even more so, if there are increases expected in the future.

Therefore, I conclude that the report is a valuable, constructive document and I thank the noble Lord, Lord Banks, for calling the attention of the House to it and giving us the opportunity of this debate.

8.28 p.m.

Baroness Turner of Camden

My Lords, I also would like to express appreciation to the noble Lord, Lord Banks, for putting down this Unstarred Question and introducing a debate on social security. It is not very long ago that we discussed this subject at length in the context of the legislation which is now on the statute book. As the noble Lord, Lord Banks, said, Peers in Opposition sought to persuade your Lordships, mostly unsuccessfully, that there should be a whole series of amendments. Had some of them been adopted, some of the problems which have since emerged would not now be there.

Incidentally, when we fought for those amendments we received very little media coverage, but when the right reverend Prelate the Bishop of Durham made his intervention, whether or not one agreed with what he said, it had the effect of producing publicity and a public debate on the whole issue of social security. Whether or not one agrees with him, to that extent one can be grateful for that, because it is a very important subject and should be a matter of public scrutiny.

The report of the Social Security Advisory Committee—which is, as the noble Lord, Lord Banks, said, a committee of experts in that complicated field—raises a number of issues which give cause for much concern. However, the most striking feature of the report—and in that respect I agree with the noble Lord, Lord Nugent, that the report sets it out with great clarity—is that it shows how much we are paying for social security. In December 1986 32 per cent. of public expenditure was involved and over 5 million of our fellow citizens were dependent to some extent on state benefits. In February 1986, 2 million pensioners and over 2 million children under the age of 16 were living in families dependent on supplementary benefit. As the report also makes clear, that may well be an underestimate, since there is a substantial shortfall in take-up.

As the report says, it is clear that a lot of this deprivation is due to unemployment. The regional figures for unemployment are quite striking. For Merseyside it is 18.8 per cent., for example, compared with 4.5 per cent. for Berkshire and 6.6 per cent. for the South-East as a whole. The report is realistic about the problems of securing work in some of the regions where unemployment is high. It says that the problem is not the lack of incentive to work—I believe that to be important—but the lack of jobs offering suitable incentives. Moreover, the report shows an understanding of the difficulties of moving workers to meet employment needs.

The point that I wish to make very strongly is that it is not only unemployment that forces people into dependency on what the Government choose to call the benefit culture; it is also low pay. In the debate on housing benefit in another place last week my honourable friends in opposition gave numerous examples of people existing and bringing up families on wages as low as £82 per week. It is true that under the new system they will have an increased sum from family credit. However, they will lose out on housing benefit, as has already been indicated, and their children will lose free school meals. Overall, therefore, families in this situation will be worse off and even though the Government are making some welcome changes in the cut-off for savings in regard to entitlement to housing benefit, it is a very modest and minor adjustment to meet the furore that has arisen over the whole issue of social security.

The point I make is that one of the reasons why we are spending much more on social security is that employers are getting away with paying people too little. We have heard a great deal about subsidies and people standing on their own feet without public support from the Government, but the extent to which the public actually subsidises low pay through the benefit system is very rarely referred to by Ministers. In reply to criticisms Ministers boast that we are spending more on social security than ever before. The noble Lord, Lord Nugent, made that point.

The Secretary of State in another place when talking about government changes in housing benefit regulations, which, as I have already indicated, have been made in response to heavy pressure, said that, the effect of the package of measures will add a further £100 million to the largest ever social security budget". He apparently sees no inconsistency between that statement and the one he made seconds later, when he said (at col. 361 of Hansard:) Because of our extremely successful management of the economy we have been able to respond to the tune of £48 billion a year". One is entitled to ask, if the economy is so successful, why is it necessary to spend so much on social security? No one could describe the benefits as exactly generous.

It is a myth, and that is emphasised in the report, that people opt for social security rather than work. I, and I suspect many of your Lordships, would find it very difficult to maintain a reasonable standard of living if one were simply confined to benefits. Of course benefits are now to be made more difficult to obtain in the sense that, as we said in the discussion of the Bill in this House, there is a move away from contributory benefits payable as of right and towards means-tested benefits as a result of the policy of the Government in targeting benefits.

If in such a successful economy over 5 million citizens—I have said already that that is probably an underestimate—require state support, clearly the benefits of that success are not trickling down in the shape of jobs paying reasonable wages. Indeed, one has only to look at the Government's employment policy to see what effect that has on social security. There has been a series of measures designed to remove wage protection from the poorly paid. We no longer have the Fair Wages Resolution. Schedule 11 of the Employment Protection Act, under which the Central Arbitration Committee was able to make awards in cases where wages were below the general level, has been removed. The Wages Act has eroded and undermined wages councils and the Wages Inspectorate has been substantially diminished. More recently, local councils have been prevented from using contract compliance to ensure that contractors do not use sweated labour on public contracts.

In the field of social security, regulations in regard to availability for work have been tightened up and disqualification from unemployment benefit in respect of anyone who loses a job through misconduct, who voluntarily leaves a job without good cause or who fails to apply for or to accept suitable training has been extended to 26 weeks.

The report states that disqualification from unemployment benefit for six months with reduced income entitlement is a harsh penalty; and so it is. It is part of the battery of measures designed by this Government to pressurise people into work which is low paid. At the same time continuous steps have been taken by the Government to weaken and undermine the capacity of the unions to organise and to obtain wage increases in these areas.

The net result of all this is that the public, through the benefit system, support employers who do not pay decent wages to their employees. I regret that we cannot expect very much in this direction from this Government. However, it is my firm belief that legislation establishing certain minimum standards is the only way of ensuring that employers must pay a reasonable wage to employees: at least there should be a minimum standard wage. Moreover, if this were to happen it would decrease substantially the public subsidy which has to be paid through the benefit system.

The report does not make that kind of recommendation. However, it sets out with great clarity some of the problems that we are now facing. We are constantly being told that we are experiencing an economic miracle. In the debate that we had earlier this afternoon several of your Lordships made precisely that point. If that is so, remarkably little seems to be done to ensure that the so-called benefits are felt in the areas of high unemployment or among those who are rapidly becoming an underclass dependent upon the benefit culture and as such are vulnerable to government re-vamping and economies which always seem to leave numbers of people who are already poor and vulnerable worse off than they were before.

Before I sit down I should like to make one point on the amendments that we discussed when the social security Bill was before your Lordships. It may be recalled that the noble Lord, Lord Banks, was successful with an amendment on child benefit. It required a review of child benefit every April. Clearly the intention was that it should be up-rated. When the Minister replies to the debate I should like him to state the Government's intentions in that regard because I understand that it is now part of the Act. Furthermore, I should like him to comment upon some of the press observations which seem to indicate that the Government may once again be considering whether child benefit should be a targeted rather than a non-means tested benefit. That is an area where there is almost a 100 per cent. take-up. There is a consensus on all sides of your Lordships' House that child benefit is valuable and must be protected.

Finally in my view the report is an excellent one. Noble Lords who have already spoken have referred in detail to the recommendations that it makes. I too will be interested to hear from the Minister what are the intentions of the Government as regards the recommendations of this highly competent and respected body.

8.38 p.m.

Lord Winstanley

My Lords, there are many things that I should like to say on this subject but I shall try to discipline myself if only because I am very anxious that the attention of the Minister should not be deflected from the very important points put to him by my noble friend Lord Banks and by the noble Baroness, Lady Turner. I hope that he will answer all of those points.

This is an excellent report. It is understandable that my noble friend Lord Banks, who knows as much as if not more than anybody in your Lordships' House about social security should focus attention on the areas of the new social security system which the advisory committee has found to be possibly flawed and perhaps in need of some change. It is also understandable that the noble Lord, Lord Nugent of Guildford, should point to those parts of the report which welcome the changes and suggest ways in which they have been helpful.

My involvement in this subject, which has continued professionally for some quarter of a century, has not been so much whether things are right or wrong but in helping the public to understand what the rules are. My principal complaint at the moment is not whether the changes are good or bad. It is that the people who depend on benefits frankly do not understand the new system. It is important that understanding should be improved.

I should now like to turn to the report. Paragraph 6.29 on page 40 states: The DHSS Communications Strategy launched in 1987 is intended to explain the restructured system to the public and raise awareness of social security generally". It goes on to pay tribute to what the department has done in improving the quality of language used in leaflets. It says in regard to that matter: The DHSS has made great strides in this area". I acknowledge that the leaflets have improved in terms of the intelligibility of the language, but they have defects in other ways to which I shall come presently. At paragraph 6.34 of the report, on page 41, the committee refers to what was called Freefone DHSS, a means by which people can pick up the telephone and ring up entirely free to get information. It is now called Freeline Social Security. That is an immensely valuable service.

In my professional capacity I often have to answer questions about the social security system and I keep that telephone number at hand all the time. So that noble Lords themselves know it, I shall give the number. It is 0800 666555. If any noble Lord finds that his questions are not fully answered by the 'Minister he should go out of the House and dial 0800 666555. He will then receive a clear factual answer. I pay tribute to that service. I have had immense benefit from it. I use it frequently. Indeed, some of the operators recognise my voice straight away and say, "Is it you again? What is it this time?" I tell them and they always know the answer.

The noble Lord. Lord Nugent, referred to the end of the report. It is related to communications in the sense that it deals with the image of the social security department in the minds of those who depend upon it. I shall quote from the conclusion on page 42: there is no consistent level of service provided by local social security offices. In some inner cities the local office is characterised by rundown accommodation, a switchboard which is closed for part of the day, and staff who do not stay long enough to become experienced in administering a highly complex system". I have had experience of offices just like that, particularly in Merseyside. It is regrettable that offices of that kind tend to be situated in the very areas in which there is the greatest need for help by people claiming benefits. The report goes on: In other areas the office is clean and bright, and callers have only a short wait before they are seen by long-serving and experienced staff". That is entirely true and I confirm it myself.

The report goes on: Public perception of the social security system often seems to be dominated by the image of the problem offices, but many claimants and welfare rights agencies can testify to the helpful service which they receive from their local office". That is true. As the report says: Performance indicators for the social security system produce averages which conceal both the best and the worst in the system. We believe that there is an important public relations and practical task for the Government to tackle". Let me go on to show how the Government are tackling that. I referred earlier to greater clarity in leaflets and in claim forms. I have just been dealing with a new claim form for family credit. I have it before me. It is in beautiful language and it runs to 17 pages. As an exercise, in part to help a claimant but also in part to help myself to understand the system, I helped somebody to fill it in. We spent all day dealing with the 17 pages. The language is clear. The person concerned then had to go away and find out some information. We then spent much of another day on it. That is burdensome. Although the language is better, is it necessary that a claim form for family credit should go to 17 pages? I really feel that that is a little long.

However, I shall move on because I have come across another form. It is an interesting one. I do not have the original with me but I have a photocopy. The original is coloured and is beautifully set out. It opens up lengthwise and is about three feet long. It is called Income Support Information Sheet. It is sent to beneficiaries and is headed with these words: Changes you must tell us about". It goes on: The amount of money that you are entitled to is based on the information that you have given us. If anything changes and you do not tell us … you could be breaking the law". That is true, but is it not a rather menacing statement?

I shall now move down to the section headed "Earning money". It says: Tell us if you, your partner, or children who have left school do any work at all, including work that is not paid". What on earth does that mean? Is there anybody who does not do some work that is not paid? Does it include washing up and gardening? What on earth does it mean? Bearing in mind the menacing warning at the top: If anything changes and you do not tell us … you could be breaking the law", I think that will worry people. Further down, under the heading "Changes to do with other money coming in", it says: Remember to include things like Social Security benefits". It continues: Tell us if you start getting any benefits". The DHSS is sending the benefits. We now have the admirable computer system. I should have thought that the DHSS would know if it is sending someone a benefit. However, I move on. The information sheet continues: Tell us if you … start to get a different amount of benefit". What does that mean? We all know that benefits are periodically uprated. When invalidity benefit is uprated next April, will people be breaking the law if they do not write to the DHSS with that information? This is not entirely clear and I think it should be.

Under the heading of "Changes to do with where you live", the form says: Tell us if you … pay more money or less money for a mortgage or home loan or service charge". Those things are constantly fluctuating because of changes in interest rates, and so on. Are claimants breaking the law if they do no send regular messages to the DHSS to say, "Have you noticed that my mortgage has gone down?", or whatever? This is part of a public relations exercise, it says here.

The leaflet goes on to say: Tell us also if someone comes to stay in your home". If you do not tell them, you are breaking the law. If grandma stays the night, must claimants get on to the DHSS to say, "I am awfully sorry but the old lady missed her bus and she stayed the night"? I am sorry to turn this into what appears to be a laughing matter, but at the front the document says: The amount of money that you are entitled to is based on the information that you have given us. If anything changes and you do not tell us … you could be breaking the law". I believe that it could be simplified in some way so as not to have such a menacing appearance to those who are fortunate enough actually to have been able to receive a benefit.

I have done a great deal of work in this field for some 25 years. During the past three weeks I have done more work than I ever did in studying this truly excellent report and learning about the way in which the DHSS system operates. I have to tell the Minister that as a result of that recent research into the way in which the DHSS now operates in certain areas, particularly perhaps in Merseyside, I have decided that the time I still have in active life—I do not know how long it will be—I shall use in order to make absolutely certain that I never have to depend on the Department of Health and Social Security.

In conclusion, perhaps I may say that I welcome many things. The DHSS is making an effort to make itself more approachable. The freefone is splendid. I hope that noble Lords will ring up and get some answers which they may not get otherwise. I welcome the efforts to change the image. However, the leaflet which I have just read out is unlikely to change the image favourably.

8.49 p.m.

Lord Henderson of Brompton

My Lords, that is a very hard act to follow. Instead I propose to make reference to the debate which preceded this one, because I believe that it is a happy coincidence that that debate on productivity should take place on the same day as the one on the excellent Sixth Report of the Social Security Advisory Committee. In this connection I refer to Chapter 8, which begins by saying, Social security has many objectives". It goes on to say that there are some broader economic and social objectives such as fostering enterprise and initiative—which is just what the noble Lord, Lord Joseph's debate was all about. It also refers to: expressing society's recognition of those who for any reason are financially disadvantaged". So I think that these two debates have a connection. Incidentally, the noble Lord, Lord Joseph, said that those concerned with low pay should also concern themselves with low productivity. I agree with him and I hope that he would agree with me that those concerned with low productivity should also concern themselves, as I admit he does, with low wages. They go together, as Chapter 8 of the report says, but in reverse.

The noble Lord, Lord Joseph, said—and I think I quote him correctly—that as productivity rises all sorts of good things will follow. Among those good things will be the alleviation and prevention of poverty. These are—again I quote from the report— two principal aims of the social services". But that cannot happen without redistribution of resources between the rich and the poor. By the poor—again this is very interestingly analysed in the report—we mean, broadly speaking, those who for any reason are financially disadvantaged. That includes the young and the old and also the physically and mentally disadvantaged. So there is a connection between what has been said earlier and now later today.

I want to concentrate on only one category: the young who come from parents in the bottom fifth of income distribution. That category shows an increase in the number of families falling within it and there is a consequent reduction in the number of pensioners within the group. So this is a rising group with which I am concerned.

Those children mostly grow up in areas where there are the highest indicators of deprivation, areas with the highest number of those in receipt of benefit, high levels of unemployment and very few amenities or opportunities to become entrepreneurs in the legitimate sense used by the noble Lord, Lord Joseph. There is a strong link between poverty and unemployment on the one hand and criminal behaviour, mainly concerned with property offences, on the other.

As the report shows so well, poverty is not just a matter of material deprivation but must take account of the individual's place in society—that is to say, whether he is excluded from the normal pursuits of his peers and so on. Again I quote from the report, because wherever it may be in the report it is well expressed, as in this case: As society becomes more affluent it may become in some ways more difficult for the poor. The young entrepreneur from the deprived background, for example, areas of high unemployment, with no capital or access to legitimate sources of capital is tempted—I may almost say is likely to use his enterprise illegitimately. I commend that thought to the noble Lord, Lord Joseph.

I happen to be chairman of a comparatively new organisation called Action on Youth Crime which is especially concerned about offenders and levels of youth crime. We are particularly worried about some of the changes in the social security regulations which will have a damaging effect on young people under the age of 25. These changes affect the young particularly heavily in many ways. For example, young people under 25 will be subject to lower levels of income support than other sectors of the population. Why? Those under 18 years of age receive only £19.40 per week. When you get to the 18 to 25 band—and I quote from the report— these are the years in which young people start to break with their parents"— the income support rate, net of housing costs, is £26.05. Those figures speak for themselves. Moreover, finding accommodation is going to be much more difficult, as the deposit for a month's rent in advance will be either not available or extremely hard to find. Setting up home will become more difficult as lump sum payments for the basic necessities will be less readily available and, if available, will be obtainable only in the form of repayable loans.

Implicit in many of these regulations, as is well stated in the report, is the assumption that young people could and should be living at home with their families. What this fails to take into account is that this is simply not an option for many young people, who for many reasons may not be able to live in their parental homes. In Chapter 1 and in the whole of Chapter 2 that is made abundantly plain, and there are also wider implications to these changes.

This age group is already heavily over-represented in the crime figures. Nearly a quarter of all known offenders are young adults between the ages of 17 and 20, and they constitute a growing proportion of those in custody. This serious situation may well become worse as a result of these social security changes. The crimes committed by this large group are predominantly property offences: that is what I am talking about. As life in general will become very much more difficult for them, the temptation to resort to petty theft as a way out of overwhelming financial problems may well increase.

It will also be increasingly difficult for young people to repay fines, for instance. The number of young people appearing before the courts as a result of fine default is likely to rise, probably resulting in more custodial sentences. As those coming out of custody are in the group with the highest re-offending rate, I am afraid that these new social security measures could eventually increase crime levels even further.

I should like also to refer briefly to Chapter 2 of this excellent report, which is specifically related to young people. It concludes that the benefit changes will leave: a small minority of young people in serious hardship". Again I quote: the decision to introduce differential benefit rates for these young adults will make it difficult for young men and women to leave home, whether to seek work, to escape domestic tension or simply to establish their independence". There is plenty of evidence of constructive thinking by Her Majesty's Government which is reflected in this document about the young, and I fully acknowledge it. There is a recognition in the report of co-operation and common thinking among the DHSS, the Department of Employment and the Department of Education and Science. I should like the DHSS to extend its interest in the effect of some of those measures on child crime and to interest the Home Office likewise in regard to the young offenders of 18 to 21 years of age. The report shows unmistakably, but unfortunately, that the benefit changes are adverse for the young from poor and deprived backgrounds and that this is likely to cause the crime figures to rise, thus swelling the prison population, which is exactly the opposite of what we all so earnestly desire to achieve.

9 p.m.

Lord Stallard

My Lords, I too should like to thank the noble Lord, Lord Banks, for giving us the opportunity to focus attention on what other noble Lords have quite rightly described as an excellent and extremely important report.

I begin, as did the noble Lord, on the first page of the introduction at paragraph 1.3 which mentions a subject which we have both been interested in and which has been discussed and debated many times in this House; namely, pensions. The paragraph talks about the link between pensions and earnings and the effect on pensions of the breaking of that link. I do not have the 1988 figures with me but I can say that up until April 1987, if pensions had still been linked to earnings, a single persons's pension would have been £46.65 instead of £39.50—that is, a difference of £7.15. A married couple would have been receiving £74.55 instead of £63.25—that is a difference of £11.30. The figures would be much more now of course because those statistics are 12 months old.

The sole link with the retail prices index excludes many items which are essential to pensioners. For example, it does not wholly include the standing charges for fuel and other costs. It does not include the increase in television licences, which are quite important to pensioners, or travel costs and a whole range of other expenses. The paragraph also refers to the dangers of, too large a gap between incomes in work and in retirement". That is an issue which we have been arguing about for many years. Indeed, we argued many years ago that the figure should be 33 per cent. of average earnings. I think the demand has now increased to 50 per cent. An argument can be quite justifiably mounted to support the claim for 50 per cent.

It is interesting to note that in 1979 a single pension was 20.4 per cent. of average male earnings and in 1987 it was 17.7 per cent. That means the figure had been reduced by almost 4 per cent. since this Government came into office and it is certainly nowhere near the meagre demands of the pensioners' organisations, which still seek 33 per cent. as a minimum. Therefore there is no improvement on the position and I should like to underline the noble Lord's request to the Government that they should accept the recommendation in that paragraph for the need for: periodic uprating of the basic retirement pension in line with earnings". That is the situation in other countries, so we would not be on our own if we were to implement it.

I should now like to draw your Lordships' attention to Chapter 4 of the report, which deals with another subject that I have been especially interested in over the years; that is, heating costs. Previous reports of the SSAC have also taken up the issue of heating costs and indeed there was a great deal of concern in that regard in its first two reports.

The committee tended to concentrate to some extent on the problems of Northern Ireland—quite rightly so—because the differences in the costs of fuel were quite stark and dramatic compared with the rest of the United Kingdom. In paragraph 4.6 the committee's concern is repeated: In 1984/5 Northern Ireland average fuel expenditure per household was 46% higher than in the UK as a whole and for the lowest quintile the difference was 60%. Looked at another way, Northern Ireland households on average spent 70% more of their disposable income on fuel than other UK households". That is quite a chunk when we consider the type of people and the incomes that we are discussing in the lower quintile.

Of course the problems in the rest of the United Kingdom are equally as serious in some ways. We have debated those many times before and will continue to do so. However, I mentioned Northern Ireland because it was of particular concern to the committee and I happen to share its concern from my knowledge of the position in that part of the United Kingdom. Paragraph 4.12 maintains that: the safety-net benefit should enable its claimants to achieve an adequate level of warmth", but recognises that, the difficulty lies in deciding how this should be achieved". It continues: The new scheme gives extra help to certain client groups … but it is not sensitive to variations in fuel expenditure within these groups. This means that a pensioner, for example, living in an old, poorly insulated property with an expensive heating system receives no more help than one living in a small, well-insulated home with an economical heating system. Claimants living in hard-to-heat accommodation who do not qualify for a premium receive no extra help at all". I have also read another document from the National Right to Fuel Campaign which beavers away at the problem of fuel costs consistently, year in and year out. The campaign organisers recently published a closely reasoned and well-researched paper about those problems. They put the case roughly like this: By paying exactly the same levels of income to many thousands of households within each client group the Government have, by implication, assumed that each household in the various groups has the same quality of accommodation, the same heating system, the same degree of insulation and the same degree of draught-proofing"— which of course they do not have. Therefore the present system is totally inadequate to meet the needs of thousands of people.

In paragraph 4.17 the report says: The prevalence of poorly insulated and badly heated homes in the United Kingdom may be an important factor in the 40,000 extra deaths which occur each year in the months of January to March, compared with July to September". It is obvious from reading that report and other analyses that while some improvements have been made we still do not have the solution for those with serious heating problems. A great deal still has to be done. Will the Minister comment on the suggestion made in paragraph 4.22 that: We urge the Government to review the problem of low income households with high fuel bills, to ensure that all those on low incomes—whether or not on income support—are able to buy an adequate level of warmth". I shall happily participate in any debate on that subject.

I should like to say a few words on housing benefit. The subject has already been well covered. I have spoken about this issue before, as have the noble Lord, Lord Banks, and my noble friends. The noble Lord, Lord Nugent, seemed to be interested in housing benefit. He said that the Opposition only pick the cases that suit us. He was worried about the added expenditure. I think that point was adequately replied to by my noble friend Lady Turner in her excellent explanation of why we are spending more on supplementary benefit and why it costs more than it should if the economy is as strong as we are told that it is.

The noble Lord, Lord Nugent, mentioned losers. I should like to put a thought into his mind. As soon as one becomes a claimant one is a loser. One must be a loser to be in that situation to begin with. When we talk about losers we are talking about people who cannot go much further down. To say that such people are losers means that they are in a drastic situation. We sometimes talk too glibly about that problem. It is not something to be sniffed at. I do not blame noble Lords opposite who have probably never been in that position.

Lord Nugent of Guildford

My Lords, the noble Lord said that something was not to be sniffed at. Is he implying that I was sniffing at it?

Lord Stallard

My Lords, I said that it is nothing to be sniffed at. I was not implying that the noble Lord was sniffing at it. I do not blame noble Lords opposite, who have probably never experienced a queue in a supplementary benefit office or filled in one of the forms that the noble Lord, Lord Winstanley, mentioned. He raised a few laughs and part of his speech was a bit lighthearted. The position is not lighthearted. I know that he will agree that there are thousands of people in this country who are absolutely terrified at the sight of a form. There are many more thousands—I have met many of them—who are heartily sick. They cannot claim benefit because they cannot fill in the form, and they are too ashamed to admit to anyone that they cannot do so. That situation does not only apply to a handful of people. The position is serious.

One cannot just say that there are losers. The position is much more serious. Last week, as has been said, the Secretary of State for Social Services announced an extra £100 million expenditure on housing benefit; £30 million of that was to relax the capital rule and £70 million for transitional protection. We of course welcome any extra expenditure which will help to ease the grim picture that had been put to us.

The new measures which were introduced recently cut the housing benefit budget by £650 million. On the Government's own figures, they are helping about 400,000 people. But nearly 5½ million people are what is termed "losers" under the new system. The Government are helping 400,000 people but there are 5½ I million in that serious situation.

Lord Nugent of Guildford

My Lords, will the noble Lord give way again?

Lord Stallard

My Lords, of course I will.

Lord Nugent of Guildford

My Lords, where are the 51 million people who are losing under the new arrangements?

Lord Stallard

My Lords, I do not have all the details.

Lord Nugent of Guildford

My Lords, they are not there.

Lord Stallard

My Lords, I am happy to justify what I said.

Lord Nugent of Guildford

My Lords, the noble Lord is using the figures very loosely. He knows that 5½ million represents the total number of beneficiaries. The broad effect of the changes has been specifically to benefit a number of beneficiaries, especially those on lower incomes.

Lord Stallard

My Lords, I am grateful to my noble friend Lord Carter who has supplied me with a piece of paper that I had misplaced. It is a quotation from Hansard from the other place dated 27th April 1988. Col. 355 states: As Ministers have accepted that part of our motion, I am all the more disappointed that they appear to be resisting the remainder of the motion because, although a change in the savings rule will be welcome to those people hit by that rule, they are relatively few. To put them in perspective, such a change would help 150,000 claimants. The Government admit that 5.5 million people"— that is near enough 5½ million, is it not?— the vast majority of whom have no capital to their names, are losing as a result of the changes".

Lord Skelmersdale

My Lords, will the noble Lord allow me one intervention? I did not quite hear from whom he was quoting. If it was not from the Minister's speech in another place, I am afraid that the remark is out of order.

Lord Stallard

My Lords, I accept the noble Lord's stricture. The remark is out of order, but that is not the point. There were 5½ million. I stand by the figure, and I am happy to supply further particulars and quotations that will be in order.

The capital figure has been extended to £8,000, as the noble Lord, Lord Banks, said. The Government say that 1,000 people will be helped by the measure, but families will still lose. All capital over £3,000 will count towards tariff income and reduce entitlement. There will be a loss of £1 housing benefit for every £250 in savings over £3,000. One does not have to be a mathematician to work out that the extra tariff income will virtually wipe out the prospect of any improvement. Those affected must be added to the 5½ million.

Transitional protection was mentioned as the other part of the deal. That will not cover the losses for the 20 per cent. rate contribution that most of the very poor will have to pay. Another myth is being built up by many people in regard to 20 per cent. of a notional sum that has been allowed for rates. People in a borough like Camden will pay much more: they will pay 20 per cent. of the rates. It is not an allowance to the effect that eveyone will get 20 per cent. of the rates; 20 per cent. of a notional sum only is allowed for in the new system. There is also a limitation to losses greater than £2.50 per week. If people are not caught in one way, they are caught in another. This will not cover rent and rate increases since April, and many groups are totally excluded.

New claimants and claimants whose circumstances change—the noble Lord, Lord Winstanley, brought this to our notice—will not get any protection. New claimants will sustain massive losses. The figure amounts to quite a few pounds. At that level of income, the loss need not be much to have a dramatic effect. Rents are increasing and will increase considerably as a result of the Government's policy on deregulation. We shall hear more of that when we consider the housing Bill. Those who have read the proceedings of the Committee in another place will know what is on the way. No allowance is made for that and, as I say, new clients and others will lose dramatically as a result.

In spite of that, many problems resulting from the April changes remain untouched. The tapers have not been changed. Old claimants will lose 85p in every pound over the threshold—more than twice the highest rate of taxation. The noble Lord, Lord Banks, is right. All this means that the Government have done nothing for working families on low income or for pensioners with a small occupational pension. Nothing has been done to help new claimants on industrial injuries benefit. No rebate has been allowed on water charges or amenity charges. Local authorities are still being penalised for backdating schemes even in their own good causes, of which there are a number. The Government have not restored to local authorities the right to have discretionary schemes as was the case under the old system.

Paragraph 5.5 of the report confirms that the April restructuring will produce savings of £640 million. By adding up the figures in previous reports, I have calculated that since 1983 savings totalling more than £1,000 million have been made from housing benefit. As long as this saving, or cost cutting, is to be the basic approach, no real improvements will be made to the housing difficulties of millions of people, be they council tenants, private sector tenants or owner-occupiers. The casualty list gets ever longer.

Paragraph 5.5 of the report confirms also that the majority of households on housing benefit will receive less help with their rent and rates, and over 1 million claimants will lose entitlement altogether. I stress that they will lose not just some entitlement but all. Those are not my figures; it is what the report says.

In that context we have to judge the recent announcement of the Government. Any benefits to claimants from housing benefit are outweighed entirely by the Government's determination to cut the costs of the system to a drastic level. There is no movement upwards.

There are many other issues that I should like to raise, including the question of youngsters and board and lodging, which was referred to by the noble Lord, Lord Henderson of Brompton. However, I hope that the House will debate the Griffiths Report as soon as possible.

I agree with the noble Lord, Lord Nugent of Guildford, about the need for more research. I heartily support him in this respect. I look forward to the Minister's reply.

9.20 p.m.

The Countess of Mar

My Lords, I too am most grateful to the noble Lord, Lord Banks, for enabling us to ask the Government for their comments on this report. If there is a theme to the Sixth Report of the Social Security Advisory Committee it is the need for the distribution of social security benefits to be fair. While the committee rightly refrains from commenting upon the effects which the new income support and related schemes have had, judging it too early for the true results to be known, it highlights certain aspects of the social security system which continue to cause concern.

I do not hesitate to repeat and possibly underline some of the remarks made by the noble Lord, Lord Henderson of Brompton, about young people. Chapter 2 considers the plight of a small group of young people who are seemingly penalised for circumstances beyond their control. The Government seem to hold the view that every family should be a nice cosy unit within which parents are able and prepared to support or at least to subsidise the living costs of their children until they have completed their education and training and are able to earn their living or reach the age of 25.

In most cases this may be so but there is a substantial minority of families where for social or psychological reasons the children cannot continue to live in the family home. The Government recognise those who have been in local authority care and others who are at risk from abuse. In a small minority of cases children will simply have to leave home or be thrown out by their parents because they cannot get on emotionally. It is unrealistic of the Government not to recognise this factor. The result can be disastrous for the youngsters concerned, as the noble Lord, Lord Henderson of Brompton, said.

We all know what may happen to this group when they gravitate to the cities. It is wrong of the Government to assume that by reducing the level of benefits parents will be struck by conscience to assume responsiblity for their offspring. I too ask the Minister to ask his right honourable friends to reconsider their policy towards young people who fall into this category.

There is a particular problem for young people who leave local authority care at the age of 18. The only accommodation they can afford is that provided by landladies because the rates of social security benefits are so low. But their circumstances prior to leaving care will have given them little opportunity to learn normal living skills and even with the help of social services staff their development of these skills will be further retarded.

The difficulties surrounding the provision of incentives to work rather than to remain dependent upon benefits is thoroughly discussed in Chapter 3. The steepness of the taper for housing benefit is a positive disincentive for those people who are in low paid employment to look for a better paid job. For every extra £10 wages the housing benefit claimant will lose £6.50. Would not the Minister agree that for the system to be fair the argument which the Government apply to the disincentives of high income tax to the rich should also apply to the benefit reductions to the poor? There is also of course the possibility that the steep taper will increase the tendency of claimants not to report earnings increases despite the warnings on the forms that the noble Lord, Lord Winstanley, mentioned.

I turn now to the question of sanctions. I have spoken before about those people who may have a personality disorder which is not severe enough for them to be receiving medical attention and who will not have sought the help of a social worker. They do not recognise the fact that they suffer from a disorder but will be unable to explain their reasons for their inability to stay in work. They may have little skill but are willing to try. The employer may say that they left the job for good reasons or simply that they were dismissed.

Will the Minister please say what guidance is given to adjudication officers as to when the maximum sanction of 26 weeks disqualification should apply and when the period should be less than 26 weeks? Do the officers have the opportunity to refer a client to his general practitioner or a social worker?

We have heard a great deal about housing benefit during the past few weeks and again particularly this evening. I do not propose to dwell upon the subject except to say that the arrangements for transitional protection announced last week in another place seem to be what has been described to me as a dog's dinner.

Why on earth have the Government created a separate unit within the DHSS to assess and pay the allowance when it could have been done by the local authorities? May I also ask the Government what is the notional income assumed for those who have capital of up to £8,000? Is it really the 20 per cent. plus mentioned by the noble Lord, Lord Banks, and is this really reasonable? Will there be any flexibility to take fluctuating interest rates into account?

Chapter 6 rehearses many long-standing problems surrounding service to the public. The department is trying to improve the working conditions of its staff and this presumably will improve morale and the standard of service given to the public.

None of the DHSS offices in my locality provides access for the disabled, while all the Department of Employment offices and jobcentres are on the ground floor. The report stresses the importance of leaflets and display material in public waiting areas. In many instances the disabled client cannot see them because he has no access to the main waiting room.

The claim form for income support is clearly presented. Why did not the designers take into account the higher postal charges which would be incurred by its weight? Will the Minister ensure that the department reviews that matter when there is a reprint in the interests of economy? It must cost a huge amount of money in postal charges.

I also hope that the Government will not only note but act on the recommendations in Chapter 6, paragraph 6.32 of the report, which deals with ethnic minorities. Finally, is the Minister able to say when the statistics will be available to substantiate the Government's claim that the take-up of family credits will be greater than that for family income supplement?

I realise that I have asked the Minister a large number of questions. I do not expect him to answer them all instantly. If he is going to say that he will write to me, perhaps I may receive an answer in reasonable time and not have to wait several months for a reply, as I have previously.

9.25 p.m.

Baroness Jeger

My Lords, I should like to thank the noble Lord, Lord Banks, for bringing this matter before your Lordships. The Question which he has asked covers an enormous area and I do not think that we can go into all the details tonight. However, perhaps I may raise one or two points.

I am very interested in the social fund. I hope that the Minister will be able to give us some information about it. Obviously we shall have to wait to find out exactly how it is working out. However, I wrote to the noble Lord on 16th February 1988 and I have not received a reply. We have all heard that the National Audit Commission has reported the appalling behaviour of the DHSS in dealing with applications.

I wrote to the Minister about the case of a lady who was on social security and who had a daughter who was a gifted dancer. She could not receive payment for ballet shoes from the DHSS. The Times of 15th February 1988 reported that a charity had offered to buy the ballet shoes. However, she was told that if the charity sent her the money, that amount would be deducted from her benefit. However, if it sent her the shoes and paid the postage for them, that would be all right. I asked the Minister if the report was true. I have not received a reply. I think it likely that the woman and her daughter will not have received a reply either.

On 26th April there was a leader in the Guardian which pointed out that if someone was refused a gas cooker on a social fund application and then found a charity, as the social fund instructs, if the gas cooker was then sent by post that would be all right. However, if a cheque for the gas cooker was sent instead, the amount would be deducted from benefit.

I hope that I am wrong. I hope that the Guardian is wrong and The Times is wrong. However, I have not been unfair to the noble Lord because I sent him this inquiry from The Times on 15th February but I have not had a reply.

I think that this issue is very important. We have not had time tonight to go sufficiently into the problems of the social fund, but we must know about this nonsense. When voluntary organisations are paying money to help people—as they are supposed to under the new system—it is unacceptable that these problems are not dealt with.

The committee stated that there ought to be £350 million for the social fund but we have not had that. It also suggested in paragraph 1.6 that there should be an independent appeal system. Why do we not have an independent appeal system? There are many suggestions from the committee about changes but we have heard nothing from the Government.

The question of incentives is referred to in paragraph 3.2 of the committee's report. It discusses how unemployment incentives could he dealt with. The committee reported that in Berkshire the unemployment rate is 4.5 per cent. while in Strathclyde it is 17.1 per cent. How can we tell young people, or even older people, to go out and find a job when they live in areas with such a diversity of unemployment rates? Ministers like to talk about the dependency syndrome, which suggests a failure on the part of some people to go to work. I would suggest that it is the same government who condemn people to dependence because of low pay and inadequate benefits.

I am very glad that there have been contributions from noble Lords who share my concern about the impact of the scheme on young people, which is referred to in paragraph 1.4. I am also concerned about the steeper tapering of housing benefit and I should like particularly to refer to the question of rates. We are told that all but 20 per cent. of rates will be remitted for people receiving benefit. However, that is 20 per cent. of the national average rate charges which will be payable by people on income support. People on income support who live in areas with high rates will be overcharged. No account will be taken of the rates in individual areas. People in high rate areas will suffer because they will have to pay 20 per cent. of the national rate without any thought on the part of the Government about the level of local rates.

There are a great many points in this report which we could discuss at great length. However, I believe that it has given us a number of ideas and thoughts. I shall wait to hear what the Minister has to say.

9.35 p.m.

Lord Skelmersdale

My Lords, I too am grateful to the noble Lord, Lord Banks, for raising the matter of the Social Security Advisory Committee's sixth report. The Government welcome the committee's contribution to the debate about the benefit system, as indeed they welcome all such constructive and learned publications. I am sure that this House is extremely impressed by the thorough-going nature of the analysis in what is, as we all know, an extremely complex area.

The noble Lord, Lord Henderson, started with Chapter 8 of the report and it might therefore be appropriate for me to do the same. The chapter is headed: Meeting need—how much is enough? The Government welcome the committee's clarification of the important and complex issues raised in the discussion of the adequacy of the safety net benefit to meet claimants' needs. They further welcome the intention of widening the audience to this discussion, but it is the Government who are confronted with the real issues of helping the poorest in society. It was for that reason that in the Green Paper on the reform of social security consideration was given to what more could be done to review the changing needs of different groups with the aim of ensuring that the social security resources provided by Parliament were properly focused on those with the greatest need.

It may interest noble Lords to know that the quintile analysis approach was adopted for the Green Paper and enabled analysis of the characteristics of the poorest groups to proceed without getting too bogged down in the rather academic debates on the measurement of poverty. That led to some of the policy adjustments reflected in the new benefit structure, and notably the increased targeting on families with children.

The Government acted upon the findings of this analysis and those commissioned from outside bodies. They all contributed to the new structure of personal allowances and flat rate premiums for those groups identified as having the greatest need—families with children, sick and disabled people and pensioners. In setting the rates for those personal allowances and premiums we channelled some £220 million to those groups most in need.

Social security expenditure now accounts for a third of all public spending. A solution has yet to be found which reconciles the opinions of academics on what is adequate with what the taxpayer can pay. Therefore, no more can be expected of government than to create the conditions in which the incomes of most people at most levels, including the poorest, can rise. In that the Government are succeeding.

The noble Lord, Lord Banks, took me to task for saying—and I make no apology for repeating it—that between 1979 and 1985 pensioners' incomes, for example, rose by 18 per cent. more than inflation, which is a bigger rise than for any other group in society including those in work. We have met our pledge to maintain the value of the state retirement pension in real terms. It is being paid to 1 million more pensioners. Its total cost is £18½ billion and total public spending on benefits for the elderly has gone up by 29 per cent. in real terms since 1979. To raise pensions and linked benefits in line with earnings would cost about £1½ billion in 1988–89. Even those pensioners who comprise the lowest 20 per cent. have had increases in real incomes in excess of the national average. I shall say a little more later on about the pensions position.

Noble Lords are well aware that this is not a mean and penny-pinching government. It is a government who respond to the concerns of people, reflected as they have been in recent weeks and months in both Houses of Parliament. This House will recall that on 23rd June 1986 the noble Lord, Lord Henderson, successfully moved an amendment to the Social Security Bill which sought to give a "community care addition" to "chronically sick or disabled or elderly" people at a rate determined by their need for "care and attention". That provision was found to be too wide-ranging, potentially including the entire income support pensioner population and I am advised that it would have been unworkable.

The Government responded with an alternative amendment which, in keeping with the aims of income support, gives entitlement to extra benefit of £8 million in the form of the severe disability premium. This premium is payable at a set rate and based on clear-cut, easily identified criteria. I think that noble Lords will agree that that is a considerable achievement for this House.

On top of this there is the Independent Living Fund. I am not sure that I can be very helpful to the noble Lord, Lord Banks, at this moment. However, as soon as the fund is set up under its new trustees I shall be delighted to report to the House by means of a letter; or, if the noble Lord would like to put down a Question for Written Answer, that might be a way to attack the problem. Work on the way in which the fund will be administered is at an advanced stage but final arrangements must be ratified by the trustees. As noble Lords know, we shall be looking at the needs of all disabled people once we have considered the report of Sir Roy Griffiths. In the meantime the immediate requirement is to provide for the needs of severely disabled people.

I can agree with all noble Lords who have referred to a particular paragraph of the SSAC report. This is the need for better, constant and consistent information. I have advised the House before that we have asked the Office of Population Censuses and Surveys for a report on the disabled in this country. We expect to be able to receive this within the next 18 months or so. I should not like to be tied to an exact date, but I believe that this is important.

The Independent Living Fund, and the Government's acceptance of a version of the amendment of the noble Lord, Lord Henderson of Brompton, are examples of the Government's preparedness to listen to those who have constructive points to make on the Government's reform of social security. A further example is my right honourable friend's recent announcement on changes to the social security benefits. These have caused some very strange comments on the Benches opposite this evening. Given the complexities of the old scheme it would be extraordinary if the new arrangements did not produce some problems. We are acting promptly and decisively to alleviate problems affecting particular individuals while leaving the underlying, improved structure intact.

The changes to the capital limit for housing benefit mean that people with capital up to £8,000 will become eligible for housing benefit. This is an increase from £6,000. An estimated 100,000 more people will then be entitled to support with rates and rents. The total cost is approximately £30 million. The extension will come into force as soon as possible.

The noble Lord, Lord Banks, questioned me on the fact that we were assuming £1 income for each £250 step of capital, and that this was far higher than anyone could reasonably expect to receive in interest. It is important to remember that the first £3,000, together with any income that it produces, is wholly ignored. That means that on the £6,000 limit—and I accept that it has increased to £8,000; my figures do not reflect the £8,000 figures, but nevertheless the point is valid—we are assuming £1 a week on £3,200 of capital, not £1 on each £250 itself. The sum of £3,200 invested at 6 per cent. interest would produce a higher income of £3.69 a week. But the noble Lord, Lord Stallard, picked up this point and commented that they lose £1 of housing benefit for each £250 above £3,000. The effect of the extra income assumed for capital above £3,000 is affected by the tapers. Where the total income, including the assumed income from capital, exceeds the applicable amount, the effect of each £1 excess is to reduce a rate rebate by 20p and a rent rebate allowance by 65p.

We had a little discussion, a rather noisy discussion, about whether there were or were not 5½ million losers. I think I have it right, although it was at moments rather difficult to follow the argument. For the record these exist. Some 5½ million people do lose housing benefit to a greater or less extent. These include some 700,000 who lost all benefit because of the introduction of the £6,000 capital cut-off, and a further 300,000 as a result of other structural changes.

As your Lordships are aware, in another place my right honourable friend announced an increase in the capital rule to £8,000, which will bring back some 100,000 people into housing benefit, but for the other housing benefit losers it is important to look at the overall benefit and other income. It will be seen when looking at the total picture that some 2 million are overall gainers. Transitional help will also be offered to housing benefit claimants whose benefit has been sharply reduced following changes such as the curtailment of discretionary schemes operated by local authorities. The help will be available to claimants with benefit reductions over £2.50 a week—mainly to disabled people, pensioners, families with children and lone parents. Transitional help provisions will include people with capital up to £8,000 who have been affected by the £6,000 limit. This help will also be backdated to 1st April.

To answer another question of the noble Lord, Lord Banks, as is usual with transitional arrangements increases in benefits will erode the provision necessary under transitional protection over time. Eventually the need for it will disappear, although the detailed arrangements for its withdrawal are still being worked out.

I said earlier that an estimated 300,000 people will be helped. The total cost will be £70 million. Help will be backdated to 1st April. The changes announced by my right honourable friend also affect income support rules for the disposal of property. Claimants will have six months, or longer in exceptional circumstances, to realise the value of property in which they are no longer living before it is taken as a capital asset for benefit purposes. A publicity campaign will be mounted to inform people who may gain by the changes and as to how they can apply. The Department of Health and Social Security will set up a special unit to administer the transitional housing benefit scheme.

One question from the noble Countess, Lady Mar, that I can answer is that there are two reasons why local authorities should not run this central unit. First, no legislation is in place which will permit that to happen. Secondly, we have recognised the considerable resources devoted by local authorities to implementing the new scheme. I am sure noble Lords all round the House would correctly have criticised us if we had imposed even more burdens on them once they had got used to running the scheme as it was originally planned.

We have never made any secret of the fact that one result of the reforms will be to take some people out of benefit altogether. When individual calculations were made, the Government saw that what was planned was having an unduly severe effect on some people and we decided that we had to adjust it. That is right. We have done so, and I make absolutely no apology for it whatsoever. At the risk of disappointing some noble Lords, I have to tell the House that this is not a U-turn by the Government. It is entirely consistent with the assurances that I gave during the passage of the recent Social Security Bill, that the Government will keep social security benefits under review. If that is not keeping them under review I should certainly like to know what is.

The noble Baroness, Lady Turner, referred to another review, also in connection with the recent Social Security Bill: that on child benefit. The future of child benefit will be reviewed each year as annual upratings are considered. I give that commitment.

I accept that while these adjustments will work to the advantage of many there will still be some who lose. That is inevitable to some degree. As my noble friend Lord Nugent has said, wherever we set the upper limit on capital there are bound to be some hard cases which fall just outside the scope of the scheme. However, I shall continue to defend the decision to have a capital rule in housing benefit. It is a vital part of targeting public resources where they are most needed.

I can tell the noble Baroness, Lady Turner, that I am not ashamed to say that people with no savings, or only a small amount, are in greater need of help than those who have demonstrated that by their own efforts they have the capacity to help themselves by saving more. The structure for housing benefit is now the same as for income support and that remedies the previous illogicality of taking savings into account for one benefit but not for the other. But by being prepared to change the rules in response to a fair demonstration that they were hurting some people too much, I firmly believe that we have shown that we are prepared to listen to reasonable and constructive expressions of concern and that we are flexible enough to respond in a meaningful and compassionate way.

I am conscious that I have strayed some way from the original terms of the Question but I am hardly alone in that this evening. These important but none the less small adjustments which I have detailed do not detract from this Government's major achievement in introducing social security reforms. It is therefore instructive to reflect upon what the SSAC report said on the reforms. My noble friend Lord Nugent, to whom I am grateful for speaking this evening, illustrated one or two of those. It backs the Government's aim of simplification, improved targeting of help and incentives.

As regards housing benefit I thought that the noble Lord, Lord Banks, quoted the report rather selectively. It also states that the new housing benefit scheme will provide a better system of support for those on the lowest incomes. It approves the simplification of income support by the introduction of personal allowances and standardised premiums. It believes that family credit will significantly improve incentives for people to take low paid jobs. It states that the new system ends the worst disincentive effects of the poverty trap whereby an increase in earnings could result in a reduction in net income. We have discussed that issue several times in recent weeks.

Of course, the report also raises some criticisms, criticisms which the Government take very seriously. In its sixth report, the committee has made clear its concern for minorities as well as majorities. With this in mind the committee considered in some detail the effects on young people and drew attention to two specific concerns. That has been reflected in the comments of several noble Lords this evening.

First, the committee suggests that the new income support scheme has not solved the incentive problem for the young person in a low income family who wants to stay on at school. I have to say that the Government do not share this view. Sixteen to 18 year-olds in full-time education will not be affected. Overall the effect of withdrawing benefit for 16 to 18 year-olds, unless on a YTS course, in full-time education or covered by exemption, is likely marginally to increase the tendency for this age group to study full-time and for there to be a reduction in the number of part-time students.

Secondly, the committee considers that young people who need to live independently will suffer a substantial drop in assistance with rent and rates even if they are in work. For the very small minority of 16 and 17 year-olds who need to live independently it will be difficult to make ends meet. However, noble Lords will know that the vast majority of under 25 year-olds live at home. Indeed the report itself acknowledges this. Our policy in the treatment of young people is geared to this fact and reflects our aims to simplify and target help on groups with priority needs.

In the long-term very few young people will have to look for income support for their maintenance. Most will be in training. Those exempt from training will usually qualify for a premium on top of the personal allowance. Clearly, if a YTS course really is unsuitable and another place has to be found, it will be found quickly. My right honourable friend the Secretary of State for Employment guaranteed that YTS places will be available for all, including those with disabilities and learning difficulties. I am sure that he will monitor the operation of the bridging allowance. There will be young single people who lose as a result of the reforms but the reforms generally give more help with rent to many poorer claimants and more to many paying unavoidably high rents.

The committee also draws attention to the fact that some low income families will still face combined marginal tax and benefit withdrawal rates—over 90p in the pound. That is true of a very few. Any income related benefit providing generous help paid to people in need has to be withdrawn as their income rises. There is no way round that. Under the old scheme a pay rise could mean that people lost more than they gained through a combination of higher taxes and the withdrawal of benefit. The report welcomes the fact that the reforms end that absurd situation.

The noble Lords, Lord Banks and Lord Stallard, criticised the requirement for all housing benefit recipients to pay at least 20 per cent. of their domestic rates. We have made it clear that we are committed to the principle of greater accountability of local authorities to their electorate. Under the old scheme about 3 million claimants were totally insulated from rises in domestic rates. Under the new structure if we were to start with 100 per cent. protection for those on income support or similar levels of income, even greater numbers would be insulated from the effects of their local authority's spending policies. For that reason we decided that the maximum level of help with rates would be 80 per cent. of the rates bill. I can tell the noble Lord, Lord Stallard, that that is not based on a notional figure but on the average bill across the country.

I have already referred to the fact that we need more information. The noble Lord, Lord Winstanley, and, indeed, other noble Lords, may have missed a recent Gallup poll on the subject of what people feel about what goes on in benefit offices. It was conducted on behalf of the National Audit Office and included the following results. Three out of four found the service to be fair to good; two out of three considered the staff to be polite; two out of three preferred to go to their DHSS local office with their problems, and it is instructive that one in 10 preferred the Citizens' Advice Bureaux; four out of five found written replies easy to understand; 17 out of 20 said the visiting service was good or fair; two out of three rated the office interviewing service good or fair.

All those remarks were made before the introduction of these changes and inevitably there will be a time for them to be assimilated both in the advice given and in the receipt and understanding of that advice by the individual claimant. I believe that we shall need to repeat that exercise in due course to see what the result has been.

The noble Lord, Lord Winstanley, made a most amusing speech, but the points that he made were very well taken indeed. However, he surely appreciates that it is important that claimants tell us when their other benefits change. As the House is well aware, my department administers many benefits from both central and local offices. If a particular benefit drops, the claimant may well need more money from other sources. The sooner he tells us of that, the sooner he receives his correct benefit. It is also important for us to know about changes, both up and down, in mortgage interest. We need to know those facts in order to get the benefits right. However, although I have used two of the noble Lord's illustrations, I accept that his speech deserves study within the department and that study will certainly be made.

I do not know whether the noble Baroness, Lady Turner, heard my noble friend Lord Young at the end of his speech in the last debate say that he believed in a high wage, high value added economy.

Baroness Turner of Camden

So do I, my Lords.

Lord Skelmersdale

I am delighted that my noble friend and the noble Baroness clearly agree. Perhaps the noble Baroness will also accept that one can only have that by getting people into work in the first place. In part, that is what government policy seeks to achieve. However, one has to ask oneself which is better—to have people in work with low wages topped up by social security benefits or merely have them on social security and not in work. I have no difficulty in telling the House which I should prefer.

Again, I remind the noble Baroness that benefits for those out of work set a floor to the wage structure. I suspect that she knows far more about this subject than I do. I am advised that that is the effect, and the benefits such as family credit are specific to those with children and not to employees generally. Employers in their wage bargaining with employees cannot discriminate between those with and those without children and also those who do and those who do not receive housing benefit. There is no evidence that benefits for people in work drive down wages. If the noble Baroness has that evidence, I shall be interested to look at it. In recent weeks we have covered the extension of the voluntary unemployment reduction to 26 weeks. I do not intend to rehearse the arguments on that.

I very much regret that the noble Baroness, Lady Jeger, has not received an answer to her letter which she wrote to me in February. I shall investigate the matter, but I should point out that she was dealing with a specific case. I do not know whether this is the reason, but it may be that it has been necessary for officials at headquarters to get facts not only from the responsible local authority office but also from the local office of the department and very likely back files from Newcastle central office. Even so, I accept that there is no excuse for a reply taking this long and I shall certainly look into the matter.

Baroness Jeger

My Lords, perhaps I may say how much I appreciate the Minister's courtesy about this case. I should like to ask him a question on the principle. If someone is turned down by the social fund for a preliminary grant and then goes to a voluntary organisation, is the money that the voluntary organisation gives to the applicant for his gas cooker, new tools, or new clothes to go to a job deducted from benefit? If the assistance is in the form of, say, ballet shoes or a screwdriver it is not deducted. This does not just relate to the letter I wrote to the noble Lord. Can the Minister say whether it is a rule that the social fund can provide implements and artefacts, but if it gives money then somehow that gets into the circle of benefit?

Lord Skelmersdale

My Lords, the noble Baroness pre-empted me on what I was going to say on this precise fact. The original question asked by the noble Baroness was about charities and not about the social fund. The first £250 of any occasional payments made by a charity will be treated as capital and will not therefore affect the level of benefit in payments unless it takes existing capital above the £3,000 limit, in which case the normal income rules that I have described would apply.

Alternatively, a charity may send a claimant a cheque made payable to the supplier of, for example, a gas cooker and the payment will be disregarded. This will also be the case if the cheque is sent direct to the applicant; in other words, to the claimant. I am not sure that it profits us very much, after nearly half an hour of my answering your Lordships' very interesting debate, to go into details of the social fund. Perhaps it may be appropriate if I write to those noble Lords, who have raised specific questions.

It is the belief of this Government that the social security reforms take us closer to the vision of Beveridge of a benefit system designed to help with need but not to demolish the incentive to work. The new system is simpler and more humane. It gives extra help to those who are disabled without the need for intrusive questions. It recognises different needs at different ages. It gives more to the unemployed man in his fifties both for his daily needs and for his housing than to the 19 year-old who has never worked. It means that for virtually every family to be in work will be worth while, and to work harder will pay off. It is to fulfil this vision that we need a growing economy.

Only growth enables the most fortunate in our society to help those most in need. It is because of our economic record that our society has been able to respond generously to prevent the poverty that would otherwise exist. The poorest in the nation have shared in the improvement in national prosperity. At every level average standards have risen. We all want those standards to go on rising. For this reason we all want a strong economy to continue. These are substantial achievements of which the Government are proud.