§ 5.34 p.m.
§ Baroness Turner of Camden rose to call attention to the effects of Her Majesty's Government's social policies, particularly among young people, the poorly paid and the elderly; and to move for Papers.
§ The noble Baroness said: My Lords, there is no area of policy where the philosophical division between this side of the House and the Government is more pronounced than in the field of social policy. I therefore believe that the debate is likely to be controversial. I make no apology for that, because I believe that it is an important subject. The Government have made their policies clear. Their philosophy of deregulation and of the so-called enterprise culture pervades almost all the legislation that comes before your Lordships' House. It is a massive departure from the policies of previous governments, since the war.
§ A series of so-called social security reforms has substantially modified the whole system of social insurance that the Government inherited in 1979. The contributory social insurance scheme designed by Beveridge was intended to provide protection for all employees against the principal insecurities of working life: unemployment, sickness and accident, and to provide for retirement.
§ In the 1960s and 1970s there were further improvements in the social insurance system through the introduction of earnings-related contributions and benefits so that earnings-related supplements became payable for a short time during unemployment and sickness.
§ The mid-1970s also saw the introduction of the state earnings related pension scheme (SERPS) with all-party support at that time. In the 1980s, those earnings related benefits have been abolished. The 728 Government at first intended to abolish SERPS. Opposition to that proposal prevented it from happening, although SERPS has been undermined to a great extent in the hope of encouraging private personal pension schemes.
§ In addition, we are witnessing a considerable tightening up of conditions for claiming unemployment benefit. If adopted, the new Social Security Bill will mean that claimants will have to demonstrate that they are actively seeking work rather than merely being available for work. The Government have a clear intention that unemployed people should be compelled to take whatever jobs are on offer, despite inadequacy or poor pay.
§ The result of those moves has been that more people have been forced onto means-tested benefits. The Government's view is that it is better to target resources. We have heard that argument many times in the House; but social insurance has great advantages over means-testing. It is cheaper to administer. It preserves claimants' sense of independence. A wide contribution base has the advantage of spreading the risks across the working population. National insurance sought to achieve that aim by bringing all workers within a single comprehensive system. Beveridge also envisaged that there should be a tripartite system of contribution with the national exchequer contributing part of the cost. Since 1981 however, the Treasury contribution has been progressively diminished and in the new Social Security Bill it is proposed that it should be withdrawn altogether.
§ It is clear that since 1981 the Government have been gradually running down the social insurance scheme with a view to pushing people into means-tested benefits. As already indicated however, such benefits are expensive to administer and take up, especially among the elderly, tends to be low.
§ When we look at the effect of social policies on the elderly, we see that two-thirds of pensioner householders still rely on state pensions and means-tested benefits for the greater part of their income. Until 1980, pensions were uprated in line with the higher of the retail prices index or earnings. In 1980 that earnings link was broken with devastating consequences for pensioner incomes. As earnings have steadily risen, pensioners have fallen further behind.
§ The state pension from April 1989 would be £53.30 for a single person and £82.25 for a married couple had that link been sustained. The actual figures are £43.60 and £69.80, which represent only four-fifths of those amounts. Of course it will be said that the recent Budget contained some benefits for the elderly. We must all be glad that the earnings rule, so much detested, is to go, but tax concessions on the purchases of private health insurance for the elderly is unlikely to benefit poor pensioners or their families. Without an adequate state pension, the majority, who have little or no independent income, must have recourse to social security benefits. Those benefits have themselves been subject to a number of changes that have affected the income of the elderly. For example, last April supplementary benefit was replaced by income support, as a result of the passage of the Social Security Act 1986. Under 729 supplementary benefit people could in some circumstances claim special additions for heating, laundry and dietary needs. These were not carried over into income support, with the result that for many claimants the amount they received was less than they would have had under supplementary benefit Transitional protection was made available for some 1.4 million people, but they received no increase to compensate for increases in the cost of living.
§ An estimated 200,000 pensioners receiving transitional payments will receive no increase in income when benefits are uprated and a further 300,000 will not receive the full increase. I am indebted for this information to Age Concern, an organisation that does a great deal in this area. It tells me that it has received many inquiries from confused and angry pensioners. I very much hope that something will be done about this unacceptable situation.
§ Then there is the matter of community care. Demographic changes, of which we are all much aware, indicate that a major effort needs to be made to ensure that care is available for the elderly and infirm. Age Concern has told me that it is deeply worried about the cost of caring for elderly people in private residential homes. Estimates for 1988–89 suggest that the cost will be in the order of £1 billion, representing a 40-fold increase since 1980. Income support levels are often inadequate to meet the cost of care and what, asks Age Concern, is happening about the Griffiths Report?—a point also raised in the preceding debate.
§ We must not forget the role of government policies for housing, heating, transport, consumer and leisure services in ensuring that the needs of elderly people are met. Access to these would be improved if all elderly people had sufficient income to exercise choice in their expenditure and to participate fully in the life of the community. Sadly, this is far from being the case.
§ When we come to the poorly paid, also mentioned in my Motion, it has to be understood that the problem here is a very large one. By no means everyone is benefiting from the alleged economic revival. We all rejoice in reduced unemployment. High rates of unemployment add to the pressure on individuals and their unions. There is a very strong argument that the existence of large-scale unemployment has been responsible for what the Government term improved industrial relations—in other words, people are prepared to put up with conditions they would not put up with otherwise—rather than successive tranches of employment legislation. Much of the new employment, on the Government's own figures, is part-time since such jobs are counted as full-time in official statistics. Changes in the social security claiming rules have repeatedly affected the statistics, as we have often said in this House, making it difficult to draw meaningful comparisons between now and 1979 when unemployment—however it is looked at—was very much less.
§ It is estimated that around 5 million people in the UK are dependent to some extent on state benefits. Supplementary benefit was itself a not very adequate 730 means of providing support. The indications are that income support is even less. As far as the social fund is concerned, the criticism that it would turn out to be unfair and unreasonable appears to have been correct. Social fund payments, predominantly in the form of loans rather than grants, have forced people to choose between getting into debt with DSS loans (at repayment levels of around 15 per cent. deducted from the claimant's benefits) or going to loan sharks with very high interest rates or else doing without essentials. The voluntary organisations with which I am in touch predict that loan repayment problems emerging this summer with claimants unable to subsist on the residue of benefits will be very substantial.
§ Some benefits such as family credits have been increased as a matter of policy. It seems to be the Government's view that this subsidises low paying employers. However, child benefit which would be of particular assistance to low paid families, has been frozen at the old level and has actually risen by less than prices since 1978–79.
§ It is here that we have heard and will probably hear again a great deal about targeting of benefit, but a relevant amendment was successfully moved by the noble Lord, Lord Banks, in this House. Incidentally, perhaps I may say how sorry we are on these Benches to learn that the noble Lord is seriously ill, otherwise I am sure that he would have been here today. We very much miss the considerable expertise that he brings to bear on these subjects. The noble Lord, Lord Banks, was successful in moving an amendment in your Lordships' House last year when the Social Security Bill was before the House. That was moved quite specifically on the basis that whatever the wording said—and it referred to "reviewing"—it nevertheless meant that the benefit should be annually uprated. But uprating has not yet occurred and it is scandalous that it has not done so. This is at a time when we are told that there is an economic revival.
§ I need hardly go over in detail the arguments we have repeatedly advanced on this side of the House—although I am sure that a number of my noble friends will do so—that child benefit replaced tax allowances then available to everybody; that the absence of means testing ensures a high take-up; and that in many poor families it is the only income upon which a mother can rely. I shall simply say that I think that the Government have a moral obligation to uprate this benefit and should do so.
§ We have discussed previously in your Lordships' House the proposals contained in the Government's consultative paper on wages councils. The intention is to abolish the wages councils. The Government seem intent upon abolishing whatever minimal protection against exploitation exists. However, membership of the EC may well result in our having to make some minimum wage provision. This may be introduced across the Community to prevent what is known as "social dumping"—the movement of jobs towards regions and countries of low pay and poor employment protection.
§ As I said earlier, the Government seem to believe that family credit will make up for poor pay. But 731 why should employers who cannot or will not pay a decent wage be subsidised in this way? Whether this is desirable even within the Government's own objectives is debatable. It can be argued that dependence upon cheap labour provides a way in which inefficient producers and obsolete technologies can survive and compete. It is in any event surely better that workers should be enabled to earn a living wage rather than have inadequate wages subsidised by social benefit.
§ Finally, there is a growing and justifiable concern about the fate of young people from deprived backgrounds, particularly the 16 to 18 year-olds. Many families on low wages or suffering from the effects of unemployment simply cannot afford to keep these young people at home, or else there is a break-up of family life itself. The Government's policy is clearly to try to ensure that such young people are kept at home with their families and either get a job or a YTS place. However, YTS places are not as available in some parts of the country as we had been led to imagine. I am informed, for example, that in November in Manchester 13,000 young people wanted YTS places which were not available.
§ Young people who leave home find themselves in a cruel dilemma. If they are homeless, they cannot get a job. Without a job, they remain homeless. It is estimated that some 50,000 young people are homeless in London but nobody knows the real figure. The Government's policy of deregulating the rented housing sector is likely to make the situation worse rather than better. It is true that the Government have recently promised some amelioration. Clearly something urgently needs to be done and I look forward to hearing from the Minister when he replies precisely what the Government have in mind in this area.
§ As in the case of other vulnerable groups, young people from deprived backgrounds have not benefited from government policies. The so-called "trickle down" effect has simply not happened. If somebody was well off to start with, he has remained well off or become richer. If he was poor he has remained poor or has become poorer.
§ Of course, one hesitates to call the Government's social policies a failure. It depends what the objective was in the first place. If the creation of an enterprise culture means creating a society where the ruthless and unscrupulous derive the greatest benefit then clearly the Government's policies have been successful. If the intention is to create an entrepreneurial paradise of a flexible labour market with a supply of cheap labour, with weakened unions and no employment protection and with social benefits so poor or so humiliating for people to claim that they will work for very little rather than be reliant upon them, then the Government's policy is being very successful. But that is not the kind of image that wins elections. We are supposed to be a caring and civilised society, so policy must not be presented in such stark terms. We on the Opposition Benches have a duty to expose the policy, and the results of it for what it is. My Lords, I beg to move for Papers.732
§ 5.50 p.m.
§ Lord Trafford
My Lords, I am grateful, as I am sure are other Members of your Lordships' House, to the noble Baroness for introducing this debate. She started by saying that her remarks would probably be controversial. Her speech lived up to that promise in the sense that she made many severe criticisms of the social policy of the Government. However, she was not as radical as I would have been, had I ever been in a position to do anything about this matter. I shall not pursue that line at the present time simply because I have mentioned it before and each time the Minister who was due to reply squashed it quite properly. My proposals were always regarded as far too expensive a solution and far too widely tax-based.
In dealing with social policy—I take this as a general debate—all governments face a number of problems. The first is that we have the contributory flat-rate benefit system introduced by Beveridge in the 1940s. Therefore we are stuck with a system in which most benefits and pensions are issued as of grace and not of right. By that I mean that, unlike a directly actuarial system which could probably have been introduced at that time, the up-rating of benefits and pensions and the introduction of new pensions have all been dependent to the greatest extent on the generosity of the current taxpayer, if one can put it that way. That will present very significant problems in the future. Most of us are already aware of those problems.
The second problem was that the system needed modification. All the modifications led to considerable complications. The first of those, incidentally, was that the system itself became changed. It was never possible thereafter for it to be actuarial. Someone made a calculation, which I think was repeated in The Economist, that if one considers the number of variations and changes in benefits prior to the 1986 Act, one sees there have been 476 different variations. That is quite something to find one's way through.
Similar difficulties arise as regards income, whether it be low income, high income or any other rate of income. As everybody knows, any wage dispute or argument about incomes hinges on whether one is referring to gross income, net income, net disposable income or net income with deductions, and what the deductions entail. I point out to the noble Baroness that the minimum wage to which she referred is theoretically somewhat attractive. The theory that no one should fall below a certain level of payment for work done is attractive. However, the problem is that minimum wages lead to loss of jobs. That is one of the great difficulties which those who advocate such solutions find when they try to introduce such policies.
In a mixed economy it is inevitable that there will be different levels of earnings and these will extend through quite a wide range. It is useful to use the term "low pay" only in one sense; that is, that one identifies a particular section of the population who, although working, must be protected from any particular penalty as a result of fiscal or benefit change. The problem with the definition of poverty 733 is a matter of statistics. The Low Pay Unit is often mentioned. That unit uses a methodological system which results in a greater number of poor people whenever benefits are up-rated. That is not very helpful from the point of view of producing solutions to the problem. In my view the poverty trap and the high marginal rate of tax at which people enter the system is far more significant. That is why I welcome very much the changes introduced in the recent Budget. They proceed in the right direction in this regard.
National insurance contributions which bring in something in the order of 70 to 75 per cent. of the level of income that income tax brings in, have been changed. That means that for the first time since the introduction of the contributory welfare system in the 1940s, we have the lowest cost of entry to the contributory system; it is approximately 86p. That is the lowest figure in over 40 years. That factor and the further reduction in the standard rate, which one hopes will follow, is probably of greater help to the lower paid than almost anything else. However, I accept the argument that the raising of thresholds as well as the lowering of rates will also be of some benefit. I do not say that this is a total answer, but I think it is of some use.
We must target our remarks in this debate as we cannot cover the whole field in the time allotted. Therefore I shall refer quickly to the elderly. I think the noble Baroness was a little unfair to the Government. In fact the levels of return to pensioners are something in the order of 7 to 10 per cent. higher now than they were at the beginning of the decade relative to average earnings. The return in real terms has gone up by approximately 3 per cent. per annum compared with 3 per cent. during the whole period that the party of the noble Baroness was in government.
Pensions represent the largest section of costs in the social budget. Clearly, with the rising numbers of elderly, the situation will become very serious within 10 to 20 years. I suggest there are three possible alternative approaches to solving this problem. There is the present approach, which includes the fiscal reliefs and the changes made in personal pension policies. Approximately 1 million personal pensions have been taken out since 1988. Then there is the pluralistic method used in the United States. I deplore that method because it leaves so many people out. Also there is the insurance system with an actuarial element. That system is very attractive to our Continental neighbours. That system would take 20 to 30 years to introduce, but I encourage the Government strongly to move towards that system, as I fear that unless the burden on taxpayers is dealt with during that period of time, the cost of social benefits will hit the buffers of taxpayers' resistance.
Although I said I would prefer another system, what I would like to see is a Tory Government who, having already tackled major industrial and economic problems, are now looking at the professions, making as their top priority for the next period of government the determination to concentrate on the problems we are discussing 734 tonight. I should like to see them putting in place long-term viable plans for their greater alleviation, if not their ultimate solution.
§ 5.57 p.m
§ Lord Rochester
My Lords, I shall start by thanking the noble Baroness, Lady Turner of Camden, for the sympathetic remarks she made about my noble friend Lord Banks. He is indeed an expert in the matters we are discussing and would have undertaken very much better than I the task I shall now endeavour to perform.
The Motion before us is welcome both for its intrinsic importance and because it has provided the House with its first opportunity to comment on the impact that last week's Budget will have on the Government's social policies. Clearly in the time available to me it is not possible to deal with all three of the effects of the policies to which the Motion refers. Therefore, I shall concentrate almost entirely on the poorly paid.
I, too, welcome the Chancellor's proposals to abolish the earnings rule for pensioners and to extend the scope of the age allowance to include those aged over 75. However, we should bear in mind that the first of those concessions will be of no help at all to the two-thirds of pensioners who are too poor to pay tax. Moreover, I am most unhappy about the proposal that taxpayers generally should subsidise private medical care for people over retirement age to the tune of £40 million in 1990 to 1991. That is money which will benefit people who already have the means to look after themselves in this special way. That money should be spent instead on improving the National Health Service.
I welcome also, so far as they go, the proposed changes in national insurance contributions. However, although people on average earnings stand to benefit from these proposals by about £3 per week, most of the low paid will gain very much less. Moreover, the reduction in the real value of personal allowances, which are to be raised by only the minimum of 6.8 per cent. required by law, will have the effect of compelling even more low paid people to pay tax.
It is also regrettable, as the noble Baroness mentioned, that child benefit is once more to be frozen at £7.25 a week. That benefit of course replaced child tax allowance. Since: 1983 it has decreased in real terms by 13 per cent., whereas over the same period other tax allowances have increased by 22 per cent. Given the disappointing take-up of family credit, I wish the Chancellor had taken the opportunity of the Budget to say that he proposed next autumn to restore the real value of child benefit.
However, I would most welcome a statement that, in the light of responses the Government have received to their consultative document, they have decided to abandon their plans to do away with wages councils. It is discouraging that in that document comments were invited not on an open question as to whether wages councils should be retained, reformed or done away with., but on:the Government's view that the time has come for the councils to be abolished".735 Despite that lead, and the brief consultation period of only two months (including Christmas and the New Year), I understand that the great majority of respondents—more than half of them employers'organisations—opposed complete abolition of the system. They included the British Institute of Management and the Institute of Personnel Management. The CBI said that some of its members believed that wages councils could fulfil a useful role in the sectors in which they operate.
It does not follow that such organisations are satisfied with the present system. A number of them accept that there are anomalies and anachronisms within it. However, they regard that not as a justification for ending the system but as a reason for rationalising it to make it more effective. Abolition of wages councils would leave this country as the only member of the European Community without any legally enforceable minimum wage protection for the low paid. Already the number of inspectors employed to oversee payments has been reduced by more than 50 per cent. since 1979. Despite that, figures recently released by the Wages Inspectorate showed that last year there was an increase of more than 25 per cent. in illegal payments.
The White Paper Employment for the 1990s states:In the Government's view there are real questions about whether the councils have been giving sufficient weight to the impact of settlements on jobs".That was the point made by the noble Lord, Lord Trafford. No evidence was given in the document to support that contention. There is, however, plenty of evidence of an overall increase in the United Kingdom, particularly in the service sector.
In its submission the IPM said:Whatever reasons the Government may have for abolishing wages councils the alleged deficiencies of national bargaining do not stand much scrutiny. We are certainly not convinced by the conventional wisdom that national pay bargaining leads to higher wage rates being set than is the case under regional or local arrangements. Indeed, all the evidence shows that where employers have decentralised pay bargaining it is more from a desire to pay more in tight labour markets than from any intention to pay less in other areas".In relation to the argument that low pay can be supplemented through social security, the IPM expressed the view that government assistance to employees on low wages amounts to a hidden subsidy for inefficient employers. The BIM made it plain in its response to the consultative document that it does not favour this new dependency culture. If the Government insist on enforcing their view that wages councils should be abolished, at least let them take the step only following a sector by sector review which takes account of the views of the parties concerned.
I look forward to hearing what the noble Lord, Lord Skelmersdale, has to say about the future of wages councils, and indeed about other matters raised by noble Lords in this very timely debate.
§ 6.4 p.m.
§ The Lord Bishop of Southwark
My Lords, it is all too easy to have a debate in which the charge that some people are worse off is countered by the charge that other people are better off, and therefore, it is argued, the system must be delivering the goods. The 736 truth is that the social security changes of a year ago have made some people better off, both relatively and in real terms, but others have suffered a relative and real deterioration, notably in the categories mentioned by the noble Baroness in her Motion and opening speech. Further, as we have heard, those changes are not simply the result of miscalculation, although they have been in some cases, but rather the consequence of a deliberate choice of priorities. That choice of priorities is bound to lead to a still further widening of the gap between the majority of the relatively well off in our society and a minority who are becoming poorer.
When the prosperity of the country is as great as it is, one has to ask whether such a harsh and growing discrepancy is not morally unacceptable, socially unwise and economically wasteful. I should like to ask the noble Lord, Lord Trafford—and I wish we could debate the matter—whether an actuarial system, which might have been a better road to go down originally, does not still require that those who have contribute to the needs of those who do not have, as we all take for granted in our own families. It seems strange that we find it so difficult to accept the necessity for that, in whatever form, in the community as a whole.
One of the major thrusts of this shift of policy rests on the premise that the so-called welfare state has become extravagant, sluggish and inefficient and needs to be replaced by a much more accurate and defined system of targeting benefits on those most in need. Two major issues need to be addressed with urgency arising from that priority. First, what is the basis on which minimum benefits are ultimately calculated, and how much is included in that figure for long-term needs such as the replacement of clothing, items of household equipment, furnishing and so on? I ask that question because we have heard that under the old system there used to be single payments for just such needs, assessed after a personal interview and visit and often with some attempt at a genuinely welfare dimension to the claim. Now we have the social fund, under which such requests must nearly always be dealt with by a loan and within a budget for the particular DHSS office.
Guidelines lay down that such loans can be up to 15 per cent. Is the benefit figure calculated so that basic needs, to keep people above the poverty level, will be covered leaving a surplus of 15 per cent. for those rather major items? Or is it just a guess? Or is it a device to frighten off all but the most hard-pressed? If so, what does one then make of the refusal of social fund officers to give some claimants any loan at all on the grounds that they are too poor to pay it back?
I should therefore like to ask the Minister whether he will press his department to give very careful consideration to ameliorating the operation of the social fund by at least enabling officers to give a mix of loan and grant, or outright grants in some cases, where they deem this advisable and in the best interests of the family or person concerned. I ask him as a matter of urgency to assess how much it is reasonable to expect people to pay back out of such very basic incomes at a time when inflation is again 737 on the increase and moving ahead of the level of benefit, as it nearly always does.
The second point is that social security payments, as we all know, do not stand alone. They have to be seen in a context. That context includes a steady shift towards indirect taxation and unsubsidised or low subsidy charges for a whole range of basic goods and services—water, electricity, gas, rents, transport, part of the community charge and so on. The evidence makes clear that basic rates of benefit are not keeping pace with those other costs and that they also bear particularly heavily on the elderly and low paid. Indirect taxation usually does. The high rate of taper on income support and family credit prolongs the existence of a substantial poverty trap. The recent change in national insurance contributions for the low paid has not made all that much difference for many people.
As we know, one of the great merits of child benefit is that it has cushioned many mothers and children against the worst effects of the poverty trap. It has helped people through the difficult first stage after unemployment, for example. Another great merit is that it has reached everyone and been cheap to administer. I am aware that family credit, when it is taken up, now helps some families more than did the previous payment, but, as noble Lords know, it has become necessary to launch a £5 million campaign—if the information is right—to try to reach people to tell them that they are entitled to that particular benefit. It still requires a form of 12 pages, which is quite a long one.
When comfortably-off people appear on television telling us that they do not need child benefit—which is of course true—I wonder whether they would be equally ready to appear on television to tell us that they do not need mortgage interest tax relief. Both are universal benefits. It is hypocritical to attack the one while defending the other, especially when child benefit reaches a far greater number of families and children in need—the next generation and the people most at risk in our society—for all sorts of reasons and when one remembers that mortgage interest tax relief is partly responsible for inflating the cost of housing in recent years.
The General Synod of the Church of England recently passed a Motion by 270 votes to none asking Her Majesty's Government to review the workings of the Social Security Act after 12 months with a view to ameliorating the lot of those who can be seen to have drifted deeper into the poverty trap. That Motion originated in Carlisle and not in London; considerable anxiety was expressed and many examples adduced from all over the country. I should like to ask the Minister whether he can give us some assurance that that review will not only be undertaken in his department but that we shall be allowed to hear about it.
We know that all forms of social security are imperfect, but at a time of increasing national wealth there is surely scope for fairer and more generous treatment, at least for the least well off in our society, and—I stress this point—for a more flexible system to meet genuine and urgent need.
§ 6.12 p.m.
§ Lord Kilmarnock
My Lords, the noble Baroness, Lady Turner, to whom we are so indebted, has cast her net wide. I shall concentrate on only one area of her Motion; namely, community care, particularly as it affects the elderly.
It is estimated that the number of people over 75 will have increased by almost a million between 1981 and 2001, yet there was no mention of that in the White Paper on the National Health Service reform. The Government have had the Griffiths Report for over a year—the noble Baroness mentioned that point—but a curious paralysis seems to have come over them in that field since they have so far issued no response. One of the reasons for that delay may be the recommendation to concentrate most of the power and responsibility in the hands of local authorities, which runs contrary to the Government's obsession with clipping local government's wings. On those grounds, they may reject the main thrust of the Griffiths Report and, conversely, on the same grounds the Labour Party may welcome it. But, if so, it will be rejected or welcomed—as the case may be—for the wrong reasons as there are legitimate grounds for worry over the Griffiths proposals irrespective of the Government's feud with local authorities. Those worries concern the rights of individuals.
There are some sensible proposals in the Griffiths Report. The proposal for a single point of access to community care, which the SDP has long advocated, is one of them. However, in our view that need not and should not imply a single body with overall responsibility both for provision and finding of care, especially if the new system is to be based on a budgetary approach to community care—as Griffiths proposes—rather than on entitlement.
That is the crunch point. Under Griffiths, earmarked resources would be canalised through local government in the form of specific grants to social services departments, but it would be a difficult and complex procedure for local authorities to arrive at the level of funds necessary to fulfil the community care needs of their areas. There will have to be a per capita formula for assessing needs, based on the numbers of the elderly, mentally handicapped, mentally ill and physically disabled people living within a local authority's boundaries, which would involve an expensive and intrusive bureaucracy. In addition, the grant or budget, when calculated, would be cash limited and would therefore incur exactly the same problems as the social fund—to which the right reverend Prelate referred—but on a much larger scale. Furthermore, the fixed budget would seem to conflict with Griffiths' proper concern that people should receive individually tailored packages of care, if only because there would be an inevitable bias against residential care as a result of budgetary constraints. Griffiths argues that there are many people currently in residential care who should not be there, yet research carried out by the Social Policy Research Unit at York concluded that 93 per cent. of those in residential care out of a sample of 200 were appropriately placed.
739 However, to my mind, the most telling of all criticisms of the Griffiths Report is that it militates against individual choice. The report plumps for a system which allows the professionals to make all the important decisions. As noble Lords may recall, the Wagner Committee report, Residential Care: A Positive Choice, published in March 1988, wanted the social security system to provide support either at home or in a home, thereby giving people the choice irrespective of income. The Wagner Committee was attracted, as I am, to the concept of a community care allowance to be given to those with special needs to enable them to procure care services of their choice. That would mean that there would still be a prominent role for the social security system, contrary to the main recommendations of the Griffiths Report.
The objection of cost may be advanced against continued social security funding for the elderly in long-stay accommodation, but in the nature of things social security is open-ended because it deals with unforeseeable contingencies, such as the death of a daughter or spouse, which make continued independence impossible. It must also be remembered that social security payments for long-stay accommodation are strictly means tested. Those who have saved throughout their lives have to run down their capital almost to zero before the DSS steps in. In my belief, that system of means-tested entitlement and individual choice should be preserved along with the local authority provision of crucial services, such as home helps and meals, for those who remain at home.
In that field the Griffiths Report, following the Audit Commission, makes a sound recommendation that there should be a new occupation of community carer to act as care assistant and provide much needed respite care for informal carers. I hope that the Government will accept that recommendation. The dimension of home care is of the utmost importance. At the last census, just over 91 per cent. of persons over the age of 75 were living in private households, 41 per cent. of whom were living alone. As the number of people in that age group increases, it is important that that pattern should continue to be possible. In our view, a vital step forward would be the introduction of a carer's allowance which we have long championed. It would have to be more widely available than the stringently tested attendance allowance and invalid care allowance, but it would make a vast difference to people pinned down almost beyond endurance by the care of elderly relatives and would save on escalating residential costs.
Such a stimulus to home care would be the single most cost-effective and humane step that the Government could take in that field. Will the noble Lord, Lord Skelmersdale, tell us this evening whether the Government will take such a step and, if not, why not? The Government are open to severe criticism for sitting on the Griffiths Report for a year, but if the result of that prolonged gestation is a properly financed framework for community care which takes the best from Griffiths but preserves the rights and interests of the individual, no doubt we 740 shall be able to welcome it and even to forgive the Government. However, we are still in the dark as to the Government's intentions. Will the noble Lord lighten our darkness this evening or at least give us a date when the Government will do so?
§ 6.20 p.m.
§ The Earl of Onslow
My Lords, we must be thankful for the luck that has allowed the noble Baroness, Lady Turner, to have her success in the draw for this extremely well-timed debate which comes so soon after the Budget. In spite of what strike me as very welcome changes to national insurance contributions, and the abolition of pensioner earning rules, we still have earnings and poverty traps at the bottom end of the tax scale which provide real unfairness and disincentives. In the year of my birth—which was 1938—only about 3,800,000 people paid income tax. Under the benign and light taxing influence of the late Lord Attlee, 14 million paid income tax. Under the even more benign and lighter taxing influence of my right honourable friend the present First Lord of the Treasury, 21 million people pay income tax.
Income tax now starts at £86 a week for a married man. That is about a third of average earnings, which are £236 a week. The national insurance contribution starts at £43 a week, which is 20 per cent. of that average wage.
What is frightening about the new and very welcome reduction in the amount paid on the first £43 of earnings is that, when the wage grows from £43 to £44 a week, the tax on the successive pound is 86 per cent., or 230 per cent. compared with the tax paid by the Chairman of British Oxygen on the top slice of his income. I believe that that is a funny way to tax people. It is admittedly only on the first pound. But what is also frightening is that the cost of abolishing that tuppence on the first £43 earned is £800 million. This illustrates how infinitely complicated it is to get the bottom end of the tax and benefit system into decent shape.
Thresholds are still far too low, as I have said, and act as a major disincentive to work openly. They are a great encouragement to the black economy. If one encourages the black economy one encourages unscrupulous employers to pay low wages because they have the people who receive those wages under a threat of some form of blackmail. The Government have recognised the disincentive effect of high tax on high incomes and have correctly, and with great courage, dealt with that disincentive. They have also seen the disincentive and unattractive effect on pensioners of having an earnings rule. They have now abolished it. Therefore can they not apply the same medicine to lower incomes?
On the great majority of wages below about £15,000 per year the combined tax and national insurance contribution is 34 per cent. It is called a national insurance contribution but it is no more a national insurance contribution than is sitting in a Bedouin tent. What has happened is that we have been told by Parliament that 9 per cent. will be raised on people's incomes. That is a tax; it is not an insurance contribution.
741 Above £15,000 to the starting point of the higher tax band—which is now £20,700—there is no 9 per cent. NIC. In effect therefore those people pay only 25 per cent. tax. Equally those who earn their income from stocks and shares, or interests on savings or deposit accounts, or whatever it may be, pay only 25 per cent. tax. The noble Lord, Lord Trafford, or perhaps it was the noble Baroness, Lady Turner, who pointed out that national insurance raises about two-thirds of the amount that income tax does. I am advocating that the two should be combined. We must therefore go to an integrated tax benefit system devoid of all the distorting allowances.
One man's mortgage tax relief, pension fund relief or freedom from capital gains tax on his house when multiplied up, amounts in lost tax to between £15,000 million and £20,000 million a year. All those allowances have to be paid by someone else's tax.
I am not a redistributor of income. I like the idea of having better off people. However, I should like to have the system changed so that the poor are properly looked after. In my view, we can do that only with a tax benefit system which is paid for by general revenue. I see no possible merit in a quasi-insurance cum tax system which was invented by a megalomaniac Prussian with a moustache. It was not invented by the late Lord Beveridge or that great son of Lord Beveridge, Norman Fowler. It was invented by Bismarck to keep the Silesian working class loyal to Prussian rearmament before the 1870s war with France. If my right honourable friend can upset the lawyers and the doctors, surely she can have a good old bash at Bismarck's memory.
§ 6.26 p.m.
§ The Earl of Longford
My Lords, I have listened with much pleasure to the noble Earl, Lord Onslow. I should not like him to think that in any sharp remarks that I make about his Government I am referring to him or, for that matter, to the noble Lord, Lord Trafford. I count it a privilege to support the brilliant speech of my noble friend Lady Turner, who is so expert in these matters. Since the late Lord Beveridge was mentioned, I was, I suppose before Norman Fowler was born, personal assistant to Sir William Beveridge, as he then was, for three years. But those days are long since past. I shall confine myself to matters with which I am more familiar.
We are all aware now of what Thatcherism means. Some Members in this House presumably love it; I do not know who they are. Some of us certainly detest it. Most of us know what it is by this time. It stands above all for the appeal to self-interest. Appeal to self-interest is all very well in its way. We could hardly get up in the morning, say our prayers or clean our teeth without some element of self-interest entering our activities. However, it can be grossly overdone as it is by Thatcherism.
It is a system that has brought great rewards to a few gentlemen, perhaps not many, who work in the city and in related places. It has been very cruel to those who do not fit in. I am not thinking only of those at the lowest end of the scale. I have been 742 reading a fascinating new autobiography by the noble Lord, Lord Rawlinson, in which he revealed that in 1987 it was made plain to him that he was not on speaking terms with the Leader of his Party, the present Prime Minister. It is in his book. A little earlier he had offered his services for some voluntary work and had been told that he could expect "no preferment from me". It is therefore possible even for an eminent lawyer——
§ The Earl of Longford
My Lords, perhaps I may finish my sentence. It is possible therefore for an eminent lawyer and a Conservative Peer to be treated with contempt by the Leader of the Thatcherites.
§ Lord Trafford
My Lords, I should not like the noble Earl to make a mistake. That was not a statement made by the Leader of the Party but by a then civil servant. It is quoted in the book of the noble Lord, Lord Rawlinson.
§ The Earl of Longford
My Lords, it was conveyed to him by the present noble Lord, Lord Armstrong, Secretary to the Cabinet, on behalf of the Leader of the Party. It is rather a quibble to say that she did not come to him personally and say, "You can expect no preferment from me." That is rather too much to expect. However, let us leave that issue aside for the moment. I have only the same amount of time as everyone else.
I shall turn to the young. I might have dealt with the old but I discussed them on the last occasion and the subject has been dealt with most effectively by the noble Baroness, and the noble Lord, Lord Kilmarnock. There is therefore no opportunity for me to add anything of value, though I repeat the tributes to Age Concern which I paid last time. Its service in this field are unique.
I was instrumental in starting a centre for young people in Soho 20 years ago, which now receives about 3,000 young people a year. Although I am no longer in an executive role, I am still a patron. I have made enquiries from some of those who work there and some of them have worked there almost thoughout the Thatcher period. They agree that the situation of the young homeless is worse now than it has been in their recollection. It is worth pausing to ask ourselves why that should be, when we are told again and again that we are living in a period of economic success. At times there are references to the economic miracle. There is not much sign of a miracle in a visit to the New Horizon youth centre in Macklin Street—at least it is a miracle the wrong way round. It is some kind of miracle to produce so much wealth for a certain number and so much poverty for others, as the right reverend Prelate explained.
I will take a minute or so to say how things look from that end and just to describe the measures. I do not have time to develop the consequences but I can explain how the young workers, who devote their lives to helping the young homeless, see matters. They point out the following changes that have occurred that have damaged the young people whom 743 they are trying to help. The changes began with the board and lodging regulations in 1985, which limited the length of time that under-25's were allowed to spend in any one place. Secondly, there was a social security upper limit for bed and breakfast. Thirdly, the situation was worsened in April 1988 when the DHSS was instructed to pay supplementary benefit two weeks in arrears. I cannot remember what possible arguments were introduced for that. Fourthly, the benefits were cut for the under-25s and, fifthly, in September 1988 compulsory youth training schemes were introduced for 16 to 18 year-olds without scant concern for the impact on the young people. There were five changes. I just mention them, but I do not have time to spell out the consequences. They represent an evil policy of which this country should be ashamed.
§ 6.34 p.m.
My Lords, I am grateful to the noble Baroness for introducing this important debate this evening. I have discovered that out of a population of over 56½ million people, 10 million are of pensionable age. Inhouseholds which had one or more persons aged 65 or over living in them, 36 per cent. lived on their own, 52 per cent. lived with their spouse, 12 per cent. lived with their children or relatives and 1 per cent. lived with a non-relative. Of those receiving care from family, friends or neighbours, 76 per cent. were elderly, of which 15 per cent. were over 85.
Elderly people occupy 43 per cent. of the unfit housing in England, which means that resources must be found for repairs and improvements. We have been fortunate that the past two winters have been mild; but we must be prepared for severe conditions in the future and not have to worry about it when it is far too late. Pensioners spend one and a half times more on fuel than the rest of the population. We appreciate the Government's help during the winter when conditions reach a certain level, but it does not have to be freezing for people to endure hardship living in a draughty and damp environment.
We welcomed the Prime Minister's statement last week that the health service is not to be privatised. The proposal that GPs should be given their own budget for buying hospital treatment for patients and the purchasing of drugs is of doubtful value. The elderly are the largest users of the health service. The Government intend to make it easier for patients to move from one practice to another. In rural areas, where there is often only one practice, this is impossible. Also in rural areas, such as the South-West, a high proportion of the population is elderly, and the work of local doctors is stretched enough already in caring for these people.
We welcome the abolition of the earnings rule. That is right and fair for pensioners who wish to continue working without being penalised. The Chancellor described that as a long-overdue reform. He is right, but it has taken 10 years for the Government to implement a promise made. I wish that the measure had come into force many years ago. We also welcome the extension of the age allowance to those who are aged 75 or over. The Chancellor's 744 prediction of increasing inflation is alarming for all of us, but even more so for the lower paid and the elderly members of our society.
With reference to the community charge which will soon be with us, Age Concern is worried because of the elderly people on low incomes who live in areas where the charge will be high. It is estimated that one third of pensioner couples will be worse off than under the domestic rate system.
Pensioners in residential and nursing homes are exempt, which is welcoming news, but those moving in and out of care or living in sheltered accommodation will be liable. It must be difficult continually to monitor, assess and account for the movement of these people, and it will incur unnecessary cost of time and money. Will the Minister give some thought to that problem?
It is a worrying situation for households where an elderly person or persons is being cared for by relatives or friends living under the same roof. I believe that there are 6 million carers in this country of one kind or another, and 2 million of these have no help at all, often causing great hardship to them and to the person they are looking after. I should like to see more publicity in order to make people aware of the various kinds of help that they can receive, not only in terms of financial aid, but also of a practical and physical nature.
Last week's Budget has improved the conditions of the elderly. I hope that next month a generous increase for pensioners will be announced. That would be most welcome. It would be of great comfort if fewer people had to claim supplementary benefit in order to keep up their standard of living.
I should like to give a special thanks to those voluntary organisations and the people who give their free time to visit and involve themselves with caring for the elderly. Their contribution is invaluable and of great comfort to those in need. The more the elderly are in contact with the outside and the greater the encouragement to be in contact, the greater the chance for them to leade a worthwhile satisfying life.
§ 6.37 p.m.
§ Baroness Ewart-Biggs
My Lords, I join other speakers in thanking my noble friend Lady Turner for giving us the opportunity to discuss this very important subject this afternoon. I also congratulate her on a clear and comprehensive introduction to the debate. For my part, I shall make a few comments on how social policies are affecting perhaps the most vulnerable group of all: those young people, girls and boys, who through no possible fault of their own lack a sound and protective family base.
It is a fact that although leaving home is for most young people a natural process, for some there is no choice about when they leave. Many have been in care and at the age of 18, or often earlier, they must manage on their own. For others unemployment, poverty, over-crowding, physical or sexual abuse, or simply family tensions with step-parents and so on, mean that remaining at home is not a real option.
In considering the problems which face those young people, how are Government policies 745 compensating them for the lack of family support which they so badly need? Here the answer is very stark. So far as a clear policy towards these young people can be discerned, it would seem to suggest the view that young people need controlling and coercing into becoming useful citizens rather than being given the extra support that they so obviously need. Their chances to make a choice among training work or voluntary work or improving their educational qualifications is severely restricted. There is no guarantee that an adequate safety net will be provided for those who need it.
To illustrate what I mean I should like to give a few examples of the problems faced by young people using a day centre for young homeless people. I follow the line set by my noble friend Lord Longford. The centre is called London Connection and I was partly instrumental in setting it up. It is situated behind St. Martins-in-the-Fields. We must remember that Shelter estimated that in 1987 there would be between 25,000 and 40,00 young people sleeping rough. There is little doubt that since then accommodation options for young people with little money have been seriously curtailed.
As has already been mentioned, bed and breakfast accommodation is no longer a stopgap. The private rented market has contracted over a number of years and the new Housing Act, without the protection of fair rents or housing benefit thresholds set at appropriate levels, will mean that young people will find no opportunity with private landlords. The sale of council housing means that boroughs, which at one time were far-sighted enough to treat young people as vulnerable under the Housing and Homeless Persons Act, no longer have the housing units to maintain them. Finally, hostel places for those lucky enough to find them are being placed in jepoardy by proposals to remove payments for essential service costs.
An additional cause of concern for those who work with young people is the devastating impact which they anticipate the poll tax will bring. It is feared that homelessness among young people will become an increasing burden when low-income families can no longer support their children.
The cumulative effect as seen by the youth workers at the London Connection day centre is that more young people are being forced into insecure forms of accommodation—for example, friends' floors, squatting (which is becoming increasingly dangerous with the growth of the protection racket) and sleeping out.
When visiting the centre I have often seen the young people who come in after a night out. They are totally exhausted and immediately go to sleep. When lying asleep they look incredibly young; indeed, they are incredibly young. Many are only 14 or 15 years old and they have finally found a place of safety offering warmth and someone who will protect them from the dangers of a big city.
It has also been noticed that there has been a rapid deterioration in the motivation and self-respect which exists among young people who must suffer such difficulties. There is also increasing evidence 746 that the street culture is developing as they become more disaffected with the system which they rightly consider provides nothing for them.
The majority of young people who go to London Connection are willing to take a place on YTS. However, they are unable to retail it unless they have accommodation. As my noble friend Lady Turner has said, they are caught in aCatch-22 situation of not having the resources to find accommodation until they are established on a scheme. For those people under the age of 18 not on a YTS course or in work, the removal of the safety net has led to extreme hardship. One sees involvement in begging and in other means of survival, and the rapid criminalisation of young people in such a situation is extremely worrying. Last Wednesday we talked about the increase in crime among young people. This Wednesday we are giving some of the reasons for that increase.
In my final minute I should like to illustrate what I have said by giving a few examples of the young people who visit the centre. There is a young man aged 18 who came out of care. lie is currently homeless while waiting for a housing association flat. He left his last job because he believed that it was unsafe—and I expect that it was. Consequently his income support has been reduced. He has been told that when housing is available he must make a contribution to his rates of 20 per cent. from his income support. One asks oneself how he will cope on £27 per fortnight to cover rates, food, travel and so forth.
There is a boy aged 17 years from Manchester. He came to London to look for work having finished a YTS course in Manchester. There was no chance of obtaining the job he hoped to find in London. He was accepted on a YTS course in south London but was unable to find local accommodation. He had to leave temporary night shelter accommodation, slept rough and tried to continue on his YTS course. That indicates that many young people are trying to deal with impossible situations. He found it too difficult to cope and is now sleeping rough and begging money to survive.
A girl aged 17 from London is currently attending college taking a B-tech course and trying to live without benefit. The course is 27 hours per week; that is six hours over the limit for income support. Although housing benefit is being paid to the hostel where she is staying, she receives no income support. She is having to survive on £7 grant per week for travel, clothes and so forth, and may have to leave the course because of financial difficulties.
The Earl of Dundee
My Lords, I am sorry to interrupt the noble Baroness, but in view of the time limit I wonder whether she can draw her remarks to a close.
§ Baroness Ewart-Biggs
My Lords, I was doing so, but as my noble friend Lord Blease did not speak, I thought that I might avail myself of one extra minute.
The Earl of Dundee
My Lords, that may be acceptable but perhaps the noble Baroness could prepare to draw her remarks to a close.
§ Lord Graham of Edmonton
My Lords, the noble Earl has taken two minutes to tell my noble friend that!
§ Baroness Ewart-Biggs
My Lords, I mentioned to my noble friend that I might use an extra minute. I have reached the end of my remarks and should like to draw the situation to the Minister's attention in the hope that he will take it to heart.
§ 6.46 p.m.
§ Lord Bauer
My Lords, the few noble Lords present must warmly thank the noble Baroness, Lady Turner of Camden, for providing the opportunity to act not as a revising Chamber but as a forum of discussion. It is a role which inevitably recedes amidst much controversial legislation.
Although I sit on the Government Benches I have serious misgivings about major aspects of policy, but for reasons different from those of the noble Baroness. Inflation, which has hardly been mentioned today, exceeds 7 per cent. That is a result of lax monetary policy. Even with 7 per cent. inflation, money loses half its value in 10 years. The hardships and injustices of inflation are familiar. So are the difficulties of people with modest means to protect themselves. To the extent that some are protected others suffer more. That is why Keynes wrote:We must make it a prime object of deliberate state policy that the standard of value…should be kept stable".As though inflation were not bad enough, in spite of last week's budget the low paid are still heavily taxed. This is inequitable and encourages moonlighting, as was noted and developed in the speech of my noble friend Lord Onslow. His speech was serious, informative and yet also amusing. The earnings rule for pensioners was abolished only the other day. Wages councils, which deny employment to needy people, still operate as does the dock labour scheme. More important, the malfunctioning of the housing market bears hardest on the young and elderly. It is exacerbated by local authorities with unused or underused housing stock, or those which refuse planning permission to convert houses into flats for fear of gentrification.
Universal child benefits include payments to the rich. The DHSS pursues well-to-do women who do not take them up. Labour and SLD critics rarely address those shortcomings. Instead they urge more indiscriminate spending for the unemployed and the poor. For my part, failure to address those issues is most disturbing and unexpected. Mrs. Thatcher has been Prime Minister continuously for longer than anyone—since before 1832—yet these and other anomalies persist.
I am baffled by some statistics. Currently approximately 250,000 people are recorded as being unemployed in Greater London. Yet department stores, restaurants, shops and hotels, persistently advertise vacancies at all levels, many requiring neither experience nor training. One advertisement I saw read:If you can walk, talk, read or write we have a job for you".748 Statistics about poverty are also baffling. How can millions be at or near subsistence level when in 1985 97 per cent. of all households had television, 86 per cent. in colour? State-provided or subsidised necessities continue amid well-nigh universal ownership of colour television and other appliances
This encourages reliance on handouts and undermines the family. Some of this is visible as, for instance, widespread child neglect and extensive criminality. Some aspects of the latter figured in the debate last Monday initiated by my noble friend Lord Reay. We see the emergence of an underclass of people with little respect for themselves, their families or others, and who in turn enjoy little respect, but evoke a mixture of condescension and fear. These matters are discussed much more openly in the United States than here. Black American professors have written eloquently on the destructive effect of state welfare on the negro family.
There are in this country, sadly, large numbers in real distress—emotional, mental and financial distress—who cannot help themselves and may not be helped by relatives or friends. There are old and lonely people, disabled or mentally disturbed or chronically ill people, victims of rapid change or of inflation and other categories. But state-provided benefits often cannot reach such people. Non-politicised charities, religious bodies and other voluntary activities can do so much more effectively, together perhaps with specialised government agencies. But insistence on universal benefits and allegations of mass poverty and unemployment divert attention and resources from helping the distressed.
Until recently there was in Britain a strong tradition of self-reliance. I once lived in Pimlico, then a very poor area, and saw the strenuous, even heroic, efforts of many people to provide for their families and to help themselves and others. Until very recently many people did not claim supplementary or child benefit, even when they knew their entitlements. Most now claim child benefit just because it is available. But some have misgivings because they do not think it right that they should receive taxpayers' money to bring up their children. Self-reliance, self-respect and family responsibility battle against an overwhelming tide of state provision. However tentative some of these observations may be, one conclusion is firm: the supporters of universal welfare payments do not enjoy a monopoly of compassion and understanding of social realities.
§ 6.53 p.m.
§ Lord Stallard
My Lords, I should like to congratulate my noble friend Lady Turner for having initiated this debate, allowing us a further opportunity to discuss these important issues. I should also like to add my sympathy for the noble Lord, Lord Banks, who is not well enough to attend today. He has contributed a great deal over very many years to our debates on these issues in this House. I look forward to him being well enough to resume his place and to give us the benefit of his expertise as soon as possible.
I should like briefly to refer to last Wednesday's debate on crimes of violence and public protection. 749 It was an important, interesting, informative and constructive debate on a subject which is worrying many of us who live in inner city areas. We are becoming more and more alarmed. While I accept that the causes for crime and violence are many and very complex, I remain unconvinced that there is no correlation between unemployment, bad housing, environment or deprivation and crime. There seems to be some doubt about that, according to some of the speeches. There is no doubt in my mind or in the minds of many thousands of people that these factors have some influence on the level of crime and violence. I live in inner London in what is called a high-risk area, where car crimes and burglaries are so frequent that unless someone is injured in the course of a crime it is pointless to report it to the police. That only adds to the problems of people living in such areas, and provides incentives for those who engage in crime.
The noble Earl, Lord Ferrers, in winding up the debate on 15th March said at col. 300 of Hansard:My noble friend said that if criminality becomes the norm and lawfulness becomes eccentricity, black becomes white and you turn your values upside down. I thought that was a graphic description and one which is very true, because once one's values are turned upside down one's sensitivities become capsized and dulled and nobody knows what is right or wrong.I, with thousands of others, would certainly endorse that, and I would say that we are halfway there already: certainly we are going down that road already. Unless a more realistic approach towards the special problems and needs of policing in the inner-city areas is adopted, and soon, by this Government, the situation will worsen. That of course will be a direct result of government policies.
Thousand of people, as has been said, are living in bed-and-breakfast accommodation; thousands more are in temporary hostel accommodation; hundreds of thousands are on local authority waiting lists; and people are sleeping rough in our major cities in cardboard boxes in shop doorways and on park benches. Why, in the face of all that, are we building fewer houses now than at any time since 1920? There are one and a quarter million fewer homes available for rent now than there were in 1979, and for every £100 invested in housing in 1979 only £32 was invested in 1988. Why is that, in the face of all those circumstances that exist?
At the moment council tenants all over London are worried sick about the possible effects of the Housing Bill. Representatives of property companies are working very hard on estates, trying to persuade tenants to buy their flats and offering them special endowment polices for the purpose. They are generally exploiting and increasing the fears that already exist among tenants. If time permitted I should like to enlarge on that situation, but there will be other opportunites. One thing is for sure: the predicament of thousands of council tenants as well as of private rented tenants is fairly and squarely a direct result of government polices.
More people are suffering from breakdowns, depressions, drug abuse, alchoholic abuse and 750 associated problems. So I ask: why are voluntary organisations, who do so much sterling work in these areas, being starved of resources at national level and, as a result of financial restrictions on local councils, at the local level as well? Some are being forced to close down and others are having to limit their facilities. We have demonstrated on many occasions the reasons for this state of affairs, and we shall continue to do so.
The same applies to hospitals. There are increased waiting lists, empty beds, unused equipment, threats of closure and now a major upheaval arising from the White Paper on the National Health Service. Add to all these, as has already been said, the imminent effects of the poll tax and we fear that in many areas families with grown-up children living at home will have to pay three or four times as much as their existing rates. Imagine what would have been the result if any council had announced increases of that order in rates in any given year. We all remember the Tory campaigns mounted against far smaller and more easily justifiable increases in the recent past. The effect of this will be to drive more youngsters to leave home; more families will be broken up and all our social problems will be exacerbated. The reactions of people in the next few months, in my view, will leave no one in doubt as to who is to blame for this unnecessary development.
I should like to finish with two points that have already been touched on. The first concerns the funding arrangements for special hostels. I have asked questions about this before. Although I can welcome the Secretary of State's Statement of last Thursday concerning support for this sector, I am left wondering why the Statement is so vague and why it does not seem to offer a satisfactory long-term solution. Why not delay the implementation from October and continue with the present arrangements while the promised consultations are used to hammer out a long-term solution? I should like the noble Lord who is to reply for the Government to say something about that.
I should also like to welcome the Government's decision to abolish the earnings rule for pensioners, as other speakers have done. However, the Sunday Telegraph three days ago soured my welcome a little. It said:The move may have an altruistic look about it: certainly Britain's pensioners are not complaining. But it is hard economic reality rather than philanthropy which has persuaded the Government to act.The reality is that Britain's employers urgently need to woo our rapidly growing elderly population back into the labour market if they are to survive the demographic 'time bomb' on which the country has been sitting since the 'baby boom' of the mid- 1960s.That is not what the Conservative Party said in its manifestos in 1970, in 1983 or since. Nevertheless, it is welcome.
Having said that—there is much more that I could say—I am convinced that the Government's social policies have amounted to a dramatic reduction in the standard and quality of life of millions of people. I only wish that I had more time to develop my arguments further.
§ 7.1 p.m.
§ Lord Johnston of Rockport
My Lords, I was both pleased and grateful to the noble Baroness, Lady Turner of Camden, when in the closing remarks of her opening address she said that she could not claim that the Government's policies were all a failure. Unfortunately, or sadly, the noble Baroness qualified the remark by adding that it all depended on where one started. I should like to dwell on two or three points where I think they have a very good record.
When we first came in, the manifesto committed the new Government to finding ways to simplify the social security system. It had three aims: to restore the incentive to work, to reduce the poverty trap and to bring more help to those in greatest need. In coping with these requirements, the Government's long-term strategy towards the needs of the family culminated in the major reforms of the social security system in April 1988. That is not to say that improvements to the welfare system were not constantly under review. For example, even before these reforms supplementary benefit levels had increased by 6 per cent. ahead of inflation and family income supplement rates for children had increased by 20 per cent. ahead of inflation.
The Government's record on support for the family is proof positive of their intention to continue the financial assistance to low income families and keep it as a top priority. In all, nearly £10 million now goes on help for the family, half on income related benefits, family credit and income support, and half on child benefit. Family credit goes well up the income scale, and steps are being taken to improve its take up.
As noble Lords will know, an announcement made on Monday last stated that some £7 million is to be spent on a nationwide advertising campaign to persuade more people to claim family benefit. Child benefit remains a substantial contribution to the financial upkeep of a family, but uprating it simply spreads the load wider, helping the richer families and not those on family credit and income support. In the hope of getting financial assistance to those whose needs are greatest, £70 million extra will be targeted this year to 1.6 million poorer families and 3 million children. I know that some noble Lords on the Opposition Benches speak in terms implying that child benefit no longer exists, whereas I am sure most people would confirm that it accounts for some 10 per cent. of the 1988–89 social security budget amounting to some £4.5 million. Its value will be reviewed again this autumn.
We have heard many opinions expressed today covering all aspects of the Government's social policies, but one subject has concentrated my mind. It concerns the employment of disabled men and women. While I appreciate that some are too disabled to work, there are some young disabled men and women who, despite their handicaps achieve with adequate training a creditable boost to their morale and to their pocket.
As we all know, we are an ageing society. If the forecasts are right, the number of school leavers will not match the job vacancies available in the future. Would it not be a wonderful chance for us to do 752 something really helpful for the disabled and bring them in as an additional workforce? There are snags to this. Nevertheless, we have to consider their situation today. If they start work, they immediately lose the benefits that they receive covering their incapacity to work—statutory sick pay, sickness benefit and invalidity benefit. They do not necessarily lose benefits relating to a medical condition such as mobility allowance and attendance allowance, but the overall loss of benefits as they now stand will act as a frightening deterrent to anyone in their position. I submit that that is wrong. It was an aberration when in 1984 the House voted to disallow the right to buy for disabled people. However, this was rectified in the last housing Bill, as we know.
It is because of all the difficulties facing the disabled that I wish to make a special plea to my noble friend the Minister to consider whether there is some way in which a premium may be granted to those who choose to work. I feel sure that special help given in this way would lift a burden not only from their mind but from the mind of their families too. I believe that they deserve our consideration.
§ 7.6 p.m.
§ Earl Russell
My Lords, I wish to join in the thanks to the noble Baroness, Lady Turner of Camden, for introducing the debate. I should like to thank her also for her kind remarks about my noble friend Lord Banks. As his understudy, I am fully aware of how much the debate loses by his absence.
When I was a boy, I learnt to recognise when there had been a great storm out at sea by the flotsam that drifted up on the shore of the Atlantic. Similarly, one recognises disturbances in society by looking at what happens to the social security budget. In particular I believe that one can recognise the failure of many other government policies by the effect that they have on social security figures. The social security budget indicates demographic change, which in many ways must be welcomed. It shows also the effect of a good many government policies. The Government have learnt their lesson in the case of unemployment. Now that the unemployment statistics have been lowered, that effect is reduced.
I am slightly surprised to notice in the Government's public expenditure White Paper that spending on the long-term sick and disabled has increased by 90 per cent. in real terms since 1978–79. That made me wonder whether it is really the case that the health service is safe in their hands. I notice the effect on housing benefit of a continually rising cost of housing and the likelihood that that will be exacerbated by the move towards market rents through the Housing Bill. The Government projection is that the number of people in receipt of rent rebate is likely to drop from 3.6 million this year to 3.1 million next year. I wonder whether the effect of government policy may not be to falsify that prediction altogether. I notice that the effect of a 1 per cent. increase in the retail prices index is a cost to the social security budget of £455 million. He is indeed a very expensive Chancellor!
I take the point that the noble Lord, Lord Trafford, made about the generosity of the taxpayer, but in 753 many fields costs have to be met somewhere. I have never been convinced that there is an ultimate net saving by shifting things from the public to the private purse if the net result is that it costs the country more. The noble Lord mentioned the danger of running into buffers. I want to suggest that there are buffers at the other end of the line too and that we may be rather nearer running into those.
The nearest we have in the poorer parts of London to the old style Sherlock Holmes-type agony column are the notice boards in the windows of local tobacconists. In looking at those in Kilburn I first notice the many advertisements for rooms to let but which state "No DHSS". They are not, of course, up to date with the change in the name of the department but, once they are, "No DOSS" will become an even more popular notice.
There is a considerable problem and, one suspects, a considerable waste of money. Keeping people in bed and breakfast accommodation can cost twice as much as a new council flat. I have seen the figure quoted in the Independent that in London the cost for a family of three can be as much as £24,000 a year. I wonder whether that represents value for money.
I cannot deputise for my noble friend Lord Banks without touching on the issue of child benefit. I have a vivid memory of the day when I brought my first child back from hospital. On my fourth agitated visit to the chemist, he shook his head at me and said, "Expensive things, these babies". He was right. If the Government are really concerned about the money going where it is needed, perhaps they will consider the option of uprating the benefit and taxing it. They would then be targeting the money at the people who really need it, who are many, and doing so efficiently.
One of the biggest problems that we must touch upon now is the effect on the young. I understand the case for having people living with their parents. Relations between the young and their parents are much better than they were in the 1960s, and I welcome that, but it is not a universal situation. There are families where people have an allergy to each other and in those cases it is better for the health of both children and parents that they should have the option of being apart. However, it cannot be done on the sort of money available, which could easily be spent in a week in London merely genuinely seeking work—that is extremely expensive to do in London.
If a person cannot live on benefit and cannot find anywhere to live, he may well beg. When I introduced this subject in a Question about the young on social security, the noble Lord, Lord Skelmersdale, said that it was a bit far a field. I beg leave to doubt that. In reading today's Independent, your Lordships may also think of what else people can do when they cannot live on their social security benefit. I wonder whether the oldest profession is not the one in which this Government have done most to increase employment. I will not dwell further on these points, but the noble Baroness, Lady Ewart-Biggs, said a great deal on them which demands attention.
754 I must mention also the possibility of crime as one option that those who are destitute can turn to. I ask the Minister whether putting people in that position really is the best way to foster self-respect.
Finally, I should like to touch on one special category of the young, about whom I know something. I refer to students. The position is extremely tight. One of my students put it to me that on the normal grant you can just about afford a pint every other day. That is not destitution but that is the position of someone who is a good manager living in a hall of residence. You do not need much to go wrong to be in severe trouble. The changed need allowance for housing benefit has caused acute hardship among students in London. I hear about that almost every day.
I mention only one other point before I resume my seat—the under-staffing of benefit offices and the difficulties resulting from that. One of my pupils lived close to Broadwater Farm. He referred to one aspect which no paper has yet mentioned. There were delays of six weeks at Broadwater Farm in paying out unemployment benefit. That twice led to the office being sacked. I wonder whether that is a case of saving public money proving in the end a very expensive policy.
§ 7.15 p.m.
§ Baroness Jeger
My Lords, we are all indebted to my noble friend Lady Turner for initiating this debate. In the minimal time at my disposal I should like to raise one or two topics.
I refer first to the report, Children in Danger Fact File 1989, published by the National Children's Home. That is not a bolshie organisation but a respectable and very knowledgeable institution which is quoted in The Times today. The article states:The gap between the rich and poor is widening. Twelve years ago, the top 20 per cent. of households had five times the annual income of the bottom 20 per cent, Now top households have seven times that income.Poverty and ill-health are inter-related, the organisation says in its annual review of child welfare. 'The health of the nation's children shows itself to be stubbornly attached to class and income. It is hard to be optimistic about a society which seems to be bent on exposing the already disadvantaged to further hardship and danger'".That is the problem before us tonight.
We have to be brief but I should like to ask the Minister, for whom I have a great respect, how we can continue in a situation of government confusion and inefficiency. The social security commissioners recently upheld four test cases on widows' pensions which, taken together, represent just one example of the muddle in the department. There is confusion about transitional benefits for the disabled and in regard to housing. We heard from the other place last night that there are to be changes in housing benefit. As I understand it, some old people who have lived in their homes for years, their young people having flown the nest, will lose housing benefit because it is held that they should not have a spare room for their grandchildren or for someone to use if either of them becomes ill. That seems to be absolutely brutal and wicked.
755 We do not know what is happening about transitional benefit for disabled people. We do not know what is happening about the differences in housing benefits. We do not know what is going to happen about family credits. We know that the Minister in the other place is seeking to encourage more people to claim. I believe that he should not be doing that but should be abolishing the whole scheme.
Family credit is only partly taken up because people do not like it. It is also poorly taken up because the application questionnaire is so appallingly ridiculous. It has 87 questions in 15 pages. It has the most absurd questions, and that is one of the reasons why there is such a low take-up. Apart from the fact that it has 87 questions and 13 sections, some of the questions are absolutely appalling.
I wish the Minister to tell me how he would deal with one of them. It is in these words:If you or your partner are not getting Family Credit now, fill in this form, and send it to us as soon as you can".Then it states,We cannot deal with your claim if you send it in too soon. And if you send it in late you could lose money".Nowhere else is this situation explained. When the Minister is trying to discover the reasons for the low take-up he might take into consideration the total ridiculousness of these forms. I believe that the reason is that people do not like being means tested for benefits; that is the real answer to this question. When we turn to the question of child benefit, people know that they get it and there is no problem. It is absolutely absurd for the Government to say that money is being wasted on people who do not need it.
When we consider the Budget we find that the personal allowance and the married person's allowance have been increased. There is no question there of money. The married man's allowance is not related to his pay or to his rich wife. Therefore I ask the Minister how this mattter can be worked out. Social security has gone up by 5.9 per cent., but in the Budget the marriage allowance and the personal allowance have gone up by over 6 per cent. Surely that is not fair.
The Chancellor of the Exchequer said that he was trying to help people on lower incomes. National insurance has to be adjusted so that the contributions are reduced for the poorest people. There has been a great deal of publicity stating that £3.70p would help the lower paid people. I am very modest because I cannot add up. But I have found that if a man or a woman is earning £70 a week, he or she would gain 21p from this change in national insurance. If he is living next-door to a chap who is earning £80 a week, that chap will receive £1.41p. I honestly believe that we need a ladder, and that that is a fair concept. But we have the rungs of the ladder in the wrong place. We need more fundamental changes in the relationship between taxation and national insurance.
I have to shut up very quickly. The child benefit freeze saves the Government £203 million. How much of that money is being re-targeted? Can the 756 Minister say what part of that sum has been put on to family credit, which we know has been very small in its take-up level? Are the Government gaining from this £203 million that they are supposed to have in their pocket because of the freezing of child benefit? I wish also to ask the Minister what he is doing about the social fund. Is it in profit and what is the Minister doing with it? Is he making sure that there are more funds available for people who are really in need?
§ 7.26 p.m.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Skelmersdale)
My Lords, if I learnt nothing else in the period when my right honourable friend the Chancellor of the Exchequer was Secretary of State for Energy, and I was the spokesman in your Lordships' House, it was the art of timing. I do not recall the noble Baroness, Lady Turner, as a fellow disciple, but the House will recognise her lucky timing in having her debate only eight days after the Budget on which views have emerged on all sides of the Chamber in varying shades of grey, tinged on one or two occasions with the green of envy. All that money wasted on repaying the National Debt, seems to be the theme behind some of the speeches I have heard Opposite. Nonetheless I genuinely congratulate the noble Baroness.
Even though the subject is so wide it means that I am unable to give more than a broad brush response. I shall of course convey your Lordships' thoughts to the most appropriate of my right honourable friends. For instance, I cannot add anything to what my noble friend Lord Hesketh said about community care on 1st February or what my noble friend Lord Ferrers said about crime last Wednesday. Your Lordships will be debating tomorrow the housing benefit paid for under occupied property. For now, I shall only remind the House that local authorities have always had similar provisions.
Why do I start with the Budget? The noble Baroness was good enough to give me notice some time ago that she expected the debate to concentrate on benefits. She is quite right of course. I can think of nowhere else in Whitehall where social policies and prudent monetary control are so inextricably entwined and this year's Budget was indeed a social policy document. Before I develop that theme, I should like to state the Government's overriding belief, in a misquotation:Be you ever so humble the state is below you".It is, in a word, the country's biggest insurance policy, and vast amounts of it are free at the point of use; namely, health care, education, non-contributory benefits and so on.
The noble Baroness, Lady Turner, struck straight at the jugular. I was glad to hear the balanced views of the right reverend Prelate. In 1986 this House approved and improved, in agreement with another place, the Social Security Act—the biggest reform of Social Security since 1948—and in so doing reaffirmed Sir William Beveridge's principles. The Government's objective in putting that legislation 757 forward was to build on the belief that people wanted as far as humanly practicable to be responsible for their own lives and it concentrated more on families with children than ever before. That huge reform was not perfect; nor though was the 1948 Act which over the years had numerous tinkerings by many governments of all persuasions, but surprisingly moving further and further away from the essential simplicity of the original scheme, and becoming more and more expensive to administer using money which would be far more effectively spent on improving benefits.
That reform was implemented in 1988 based on information about the social state of the nation that was already out of date. It was based on figures collected between 1983 and 1986. Today my right honourable friend the Secretary of State is setting his hand to the wheel of getting and using up-to-date figures as a basis for future improvements in the benefit system, keeping always in the back of his mind simplicity, efficiency and value for money in its operation.
Two sets of figures are topical. The ones that currently excite your Lordships are those on the take up of family credit. The Government's original forecasts were made in 1987 and were based on the 1983 to 1985 family expenditure surveys—the most up-to-date information available. Assumptions therefore had to be made about what would happen to wage levels and so on by 1988. There was also an assumption that take up would be 60 per cent. What has actually happened is that the numbers are down on our forecasts, but the average award, at some £25 a week, is considerably higher, so that despite the lower numbers we will still be spending more in 1988–89 than in the original estimate—£422 million instead of £400 million. This indicates that those families which are entitled to higher amounts of family credit are indeed coming forward and making their claims.
Recently we have obtained preliminary data from the 1988 family expenditure survey. This very latest information reveals that our estimate of the eligible population was too high, mainly because of increases in earnings levels and employment in the meantime, which are a reflection of our continuing success in stimulating the economy and reducing taxation. There is no question of cutting 250,000 people out of benefit, as suggested by the Sunday Times this week. What has happened is that we have revised our estimates in the light of more up-to-date information. What all this now indicates is that in 1988 take up by numbers was around 50 per cent.—about the same as for family income supplement—and take up by expenditure was 65 per cent.
We shall not allow any sterile argument about statistics to obscure the fact that substantial amounts of extra money are available through family credit. The Government want more working families to come forward and claim the help that is due to them. For this reason we are mounting a major advertising campaign starting in April.
Several noble Lords spoke of low pay and the possible abolition of wages councils. I should tell 758 them that there is no simple link between the low pay of individuals and the low income of households. This occurs because households in which a low paid individual lives often receive income from other sources—unearned income, earnings from other household members and in-work benefits like family credit. So if the distribution of earnings widens or indeed narrows, this does not imply any corresponding movement in the distribution of household income, or in the incidence of poverty, however defined.
There is mounting evidence that young people are receiving adult wages earlier, and there have been reports in the press recently that some firms are giving their young staff higher increases earlier. Compare this with wages councils, which have the opposite and insidious effect. Also, firms cannot indefinitely deny higher grades of worker the same increases as councils require for the lower paid without distorting differentials or inflating wage bills.
From time to time we hear calls for a national minimum wage, or the Council of Europe's decency threshold. There is no such thing as the latter. True, the Council of Europe asked a committee of independent experts to advise on the matter. This advice has never been endorsed by member states, either in the governing committee on the European Social Charter or in the council itself. My noble friend Lord Trafford is right.
Even in its own terms, this so-called decency threshold, as a relative measure of low pay, shares the weaknesses or other definitions which relate low pay to average or median earnings. It has risen in real terms by about 25 per cent. between 1979 and 1988 in line with the overall growth of earnings because of the artificial distortions of the 1970s'incomes policies. It is therefore not surprising that the numbers paid beneath the threshold should increase since 1979, given this sharp rise in the real value of the threshold and the widening of the earnings distribution.
Not surprisingly, many noble Lords spoke of child benefit. They conveniently forgot, though my noble friend Lord Johnston clearly did not, that in 61 out of 62 months of the previous Labour Administration, there was a lower rate of child support for families with young children than during the whole of this Government's period of office. To increase child benefit by the 45p that index-linking would have meant this year, we would give nothing to those families on income support or family credit because these benefits are adjusted to take child benefit into account. From this April not only will those families get their normal uprating of the income-related child benefit allowances, but in addition we have given an extra 50p per child. Those noble Lords who call for index-linking of child benefit tend to forget the fact that the poorest families stand to gain nothing at all. The rich getting richer, my Lords. Yes, they certainly would.
In that connection, I should like to mention the most unfortunate absence of the noble Lord, Lord Banks. He persuaded your Lordships during our discussions on the Social Security Bill to pass an amendment—an amendment against the 759 Government—which subsequently I described as tautologous. Another word for it, more normal in parliamentary circles, is otiose. The effect of it was rather worse than the current statutory provision for reviewing child benefit, which my right honourable friend is committed to do in advance of each and every uprating.
On appointment, any social security Minister rapidly becomes like the nicer side of Fagin. My right honourable friend is reviewing the situation; and what reviews they have been. The OPCS reports on the numbers and financial circumstances of disabled people are starting to come through. We should have the complete set by the Summer Recess and be able to establish whether the existing benefits really are reaching their goal. New ones, I can tell my noble friend Lord Johnston and the noble Lord, Lord Kilmarnock, will be fully investigated. This is a form of targeting of which this House, in my estimation, would fully approve. Against this, it is interesting to note that spending on the sick and disabled in 1983–84 was £4,320 million. It will have doubled by next year. I accept that the figure is in cash terms and not real terms.
Noble Lords have also mentioned the social fund which, contrary to expectations of noble Lords opposite, is working well. Non-repayable community care grants and interest-free budgeting and crisis loans are providing exactly the kind of help that was needed. Loans have reached anticipated levels of expenditure and community care grants have risen steadily to a point where, in January, they exceeded 100 per cent. of anticipated expenditure for that month. It is interesting to note that some people are on their second and third loans from social security benefits.
From April the average amount of money in the fund will be £46 per eligible applicant compared with £39 at the time the current year's allocations were announced. Nearly 800,000 interest-free loans have been made and more than 100,000 community care grants have been awarded. The review system is proving to be a quick and effective means of handling disputed decisions. Reviews are normally completed in the local office within a matter of days rather than the many weeks it took for an appeal to be completed.
Pensioners, of whom the Motion makes mention, have also been targeted. As the House is fully aware, pensioners overall have benefited during the Government's time in office. The average total net income of pensioners has risen on average by 3 per cent. a year between 1979 and 1986 compared with a total of 3 per cent. in the time the party opposite was in power, a point made by my noble friend Lord Trafford.
The Government have acted quickly to help those who are too old to have benefited in the growth of occupational pensions and SERPS. They needed help. In an announcement last November, forgotten, I suspect, by the noble Baroness, Lady Turner, we said that pensioners on income support would, if 75 or over, receive £2.50 extra if single and £3.50 extra if a couple. The House will be delighted to know that at the point of introduction in October there 760 will be no erosion of any transitional addition there may be in payment. Because of alignment those changes will also help disabled people over the age of 60 and those on housing benefit. In all, the changes will benefit nearly 2 million single pensioners and couples, including around 100,000 who may now be able to qualify for income support or housing benefit for the first time, at a total cost of near £200 million in a full year.
I am pleased to have this opportunity to refer to the Government's announcement on 28th February that all those women who were widowed in the six months before 11th April 1988 will be treated in exactly the same way as they would have been if their husbands had died in the previous six months. We have gone further than the commissioners decision on the case of Mrs. Doreen Whitbread by extending it to widows with children. I believe that the Government deserve great credit for this.
Only last week, another change was announced. This time it was for the benefit of 16 and 17 year-olds. I do not accept the premise of the noble Earl, Lord Longford, that that is evil. Further, I can tell the noble Baroness, Lady Ewart-Biggs, that those youngsters who are entitled to income support but who are forced to live away from home will, from July this year, no longer get the level of benefit appropriate to their age, but the £27.40 a week given to 18 and 24 year-olds. The higher level will also apply to all 16 and 17 year-olds claiming housing benefit who are on YTS or in low paid work.
I cannot condone a system where a very real option for healthy youngsters is to exist mainly on social security benefits. Of course, the object of the reforms was to get away from that situation. Not only has this change of status, so to speak, been given, but we shall be extending entitlement to income support during the child benefit extension period to those 16 and 17 year-olds who are genuinely estranged from their parents. Moreover, payments made by local authorities to young people leaving care will be wholly disregarded for benefit purposes.
While I am on the subject, again last week we announced that at last hostel dewellers were to be put on the same basis as those in board and lodging and bed and breakfast hotels by receiving housing benefit and income support. No one I dare say was very surprised. However, what did surprise some people were the transitional payments—that is to say, exactly the same monies are to be available to individuals so long as they stay in the same hostel—and the protection for the hostel movement as a whole.
Why not delay this? The answer to the noble Lord, Lord Stallard, is that even with such a guarantee we shall not know exactly how to finance hostels on a long-term basis until we see how the changes work in individual cases.
Perhaps I may mention housing benefit. We have heard a lot about it. But no one on the Opposition Benches has acknowledged the achievements of the Government in this field. Only this Government has had the courage to ensure that for the first time the system provides help on a sensible and consistent basis. We had the courage to reform the system 761 both in 1982–83 and in 1988. The last Labour Government knew that there were problems—the then Supplementary Benefits Commission told them so—but they did not act.
The Government have fulfilled their objectives in reforming the system and fulfilled their commitment to monitor the changes. For the first time help with rent is provided in a way that does not penalise unfairly those in low-paid employment. For the first time everyone on benefit has full protection against reasonable rent rises. For the first time every ratepayer has an interest in the cost of local government. For the first time the taxpayer is not subsidising those who may be richer than he is through having large amounts of savings. But the Government recognised that there were some in vulnerable groups who suffered too sharp a drop in income at the point of change as a result of our fundamental structural reforms. That is why we introduced a transitional payments scheme. And our commitment to keep a close eye on this whole area is demonstrated by the very sensible and sensitive decision my right honourable friend took on 3rd March to extend the closing date for application for transitional payments a further three months to 30th June.
I cannot recall speaking in a debate when the noble Lord, Lord Stallard, was also speaking and not having housing mentioned, especially that of local authorities. I too my Lords have seen terrible things in local authority housing and one event that will remain etched on my memory was going to a bed and breakfast place in West London that had been totally burnt out the week before, one occupant having died. I also knew of local authorities with properties empty for more than six months and which still spend over £10,000 a family on bed and breakfast accommodation. I was interested in the figures put forward by the noble Earl on that point. However, it is no part of my brief today to rehearse the arguments which I was using two years and more ago in another political incarnation. However they remain as valid now as they were then, but I am glad to note that down in local government housing departments, helped by the Estate Action Team, things are slowly improving.
No one attempting to do my job could fail fully to share the concern expressed by noble Lords on the plight of homeless people. The Government's overall housing strategy is to widen consumer choice, target resources on areas of greatest need and improve performance and efficiency in the use of local authority stock. The 1988 Housing Act paved the way with provisions to encourage the private rented sector through deregulation of rents. The current Local Government and Housing Bill follows on from this to lay the foundation for the new system of local housing finance which we consider to be an essential step towards improving local authority performance.
I should tell the noble Earl, Lord Grey, that fear of a disease is often much worse than the disease itself. Indeed, that philosophy is proving to be true in relation to the community charge in Scotland. I 762 believe that it will also do so in England. All those measures will provide wider choice and a more efficient housing service for all income groups, including the homeless.
I return now to the Budget, which was indeed a Budget for the people as highlighted by the noble Baroness in her Motion. I agree with my noble friend Lord Bauer that inflation is public enemy number one and this has been very definitely a non-inflationary Budget. But it has been a great deal more than that. It has been a very imaginative use of conservatism.
My noble friend Lord Onslow talks of combined tax rates, and I see his point. It is hot the case that the new system implies high marginal rates at earnings slightly above £43, the lower earnings limit. At £44, a person will pay two per cent. of £43—that is 86p—and nine per cent. of the £1 over the £43 per week. That gives him total liability of 95p per week. A person earning £44 a week will gain £1.25 per week from next October. I should also add that the combination of personal tax and national insurance contributions is not a simple matter. Integration would mean either that elderly people, who of course do not pay national insurance charges, would pay more, or that the elderly would be exempted from the combined charge. I think that that would actually cost more to achieve than the benefit which would result.
At the new tax free limit of £53.56 for a single person, from October he will only pay £1.81 in national insurance contributions, itself some 87 pence less than he pays at the moment. At a stroke my Lords, my right honourable friend has simplified the social security system. He has got rid of two of the three steps in the national insurance contributions scheme which can result in pay increases being more than offset by higher contributions, leaving these employees worse off. At 2 per cent. of your income as the gateway to a valuable set of benefits, like unemployment benefit, invalidity benefit, widow's benefits and retirement pensions, the now initial NIC (national insurance contributions) rate is the lowest since the national insurance scheme was restructured in 1975 by, I believe I am right in saying, the right honourable Mrs. Castle. The noble Lord, Lord Rochester, complained that a reduction of £1.29 per week to 86 pence at the lower earnings limit is peanuts and that we have benefited the higher earner to the tune of £3 a week. But I would ask the noble Lord to remember two things. First, taken together with the reforms to national insurance contributions introduced in my right honourable friend's 1985 Budget, which helped the lower paid contributor and his employer, everyone will be £3 a week better off from October ——
§ Lord Skelmersdale
Yes, my Lords, everyone; that is, taking the effects of the two Budgets together. Secondly, at £43 a week, net pay will increase by 3 per cent., whereas at the higher earnings limit of £325 per week net pay would only increase by about 1 per cent. due to the Budget.
763 The noble Lord, Lord Wilson, made a deep impression on me when all those years ago he talked about the pound in one's pocket. That is how many people measure self-respect these days, however the rest of us may feel. Self-respect is what the Government's policies are all about, and why not?
§ Baroness Jeger
My Lords, before the Minister sits down will he explain to the House why he says that everyone will be £3 a week better off? From the figures which I did him the courtesy of putting to him, many people will be only 21p better off.
§ Lord Skelmersdale
My Lords, I hope that I explained in the closing moments of my rather too long speech, for which I apologise, that I was referring to two Budgets not the one Budget upon which the noble Baroness based her figures.
§ Lord Kilmarnock
My Lords, before the noble Lord sits down again will he remind the House of what his noble friend Lord Hesketh said on 1st February about community care, because some of us were not in the House? As that was the Minister's only reference to the topic, does he not agree that that was a slightly dismissive treatment of a matter which falls squarely within the terms of the Motion? Are we not entitled to a straight answer on the Griffiths Report? It is not a frivolous question.
§ Lord Skelmersdale
My Lords, in view of the various things that have been going on in social security over the past year or two and because the debate was time limited, I was within my rights to say that I was unable to add to the recent remarks made by noble friends. So far as it concerns community care, I am sure that the noble Lord will read with interest the debate on the 1st February in the name of my noble friend Lady Cox.
§ Lord Skelmersdale
My Lords, what my noble friend said on the Griffiths Report, for example, was that announcement would be made shortly. He also pointed out that "shortly" was not as soon as when he used the expression some days previously in answer to a parliamentary Question. Beyond that, I do not believe that it is productive to go tonight.
§ 7.53 p.m.
§ Baroness Turner of Camden
My Lords, I should like to thank those noble Lords who have participated in what was an extremely interesting debate. It has, as noble Lords have said, covered wide ground because the terms of the Motion were wide. We could probably have gone on for a great deal longer than two-and-a-half hours had we had the time. I am sure that noble Lords could have said a great deal more had they had more than seven minutes each in which to speak.
I noted with interest and some pleasure that only three noble Lords—the noble Lords, Lord Trafford 764 and Lord Bauer, and the noble Earl, Lord Onslow—did not agree with the main thrust of the argument that I put forward in my opening address. I should like to thank the Minister for the great amount of detail he put into his reply. I shall read Hansard with interest because there was too much to take in at the one sitting. Nevertheless, his reply did not convince me that the main thrust of my arguments is without cause. It seems to me that he was saying that the social security system that we had before 1986 needed revision, amendment and simplification, and no one on this side of the House has ever argued otherwise. When the social security legislation of 1986 was before your Lordships' House, I remember saying that we accepted that the existing social insurance system needed revision and simplification.
Our arguments have been, and remain, that what has happened to the social security system since then has not resulted in simplification, but, as a number of noble Lords have said, there has been a lack of simplification in certain areas. One of the reasons why family credit has had a low take-up, apart from it being means tested and people not liking means-tested benefits, which I can well understand, is that one has to go through an incredible form-filling exercise before being in sight of receiving benefit. I am glad to learn that the Government intend to do everything that they can, even though that means spending £7 million, to try to persuade people to apply for family credit if they are entitled to it.
As regards the Budget, we are happy that there were some moves in the direction of the low paid. Our argument is that they were minimal. Judging from the way in which the Chancellor presented his Budget and from what was said on the government side about the economic revival and our economic achievements, resources exist to do a great deal more for the low paid than was done in the Budget, which was the thrust of some of our arguments this evening.
As to the arguments on wages councils, I agree with what was said by the noble Lord, Lord Rochester. I say to the noble Lord, Lord Trafford, that there is no evidence of which I am aware, or of which anyone else is aware, to show that if we have a minimum wage or wages councils' minima the result is to decrease the number of jobs available. After all, wages councils have existed since the end of the war. They existed during the 1970s and as far as I am aware they did not have the effect of reducing the number of jobs available.
On child benefit, I remain unconvinced by the arguments advanced by the Minister. There is not much point in rehearsing those arguments again this evening. There is a philosophical gulf between the two sides of the House on the whole question of child benefit. The Opposition believe that child benefit should be uprated and that the Government have a moral obligation to uprate it, as I said in my opening address. It is a benefit which has a high take-up. In some poor households it is the only benefit that a mother can count on having. Since it replaced tax allowances anyway, the arguments that have been advanced about it being a benefit that helps the rich as well as the poor are not valid. The noble Earl, Lord Russell, asked whether it should be taxed. That 765 is a point at which the Government might look. If it were up-rated and taxed, that would answer the arguments advanced by the Minister.
I am glad to learn that something is being done about widows' pensions. I shall again read Hansard to see precisely what is involved. I am glad, as I said in my opening address, that the Government intend to do something about the 16 to 17 year-olds. The question is whether it will be enough to remove the threat of homelessness from young people in that vulnerable group. Not everyone can be looked after in a family. It would be good if they could be. As we know, we live in an era when there are many broken homes; children may suffer from various kinds of abuse; and when the family home is just not available. There is therefore an obligation on society to look after those young people. I question whether what has so far been proposed will be adequate to do that.
The Minister was self-congratulatory about the social fund; but that does not tie in with information that I have received from a number of voluntary organisations acting in that area. The Child Poverty Action Group has undertaken a survey into how the social fund is operating. Other voluntary organisations have done the same. There are many cases of individuals who have suffered greatly. They were not allowed a loan even for essential items because they were not judged to have the resources to repay it. The replacement of the single payment system by loans from the social fund was not a progressive move. We should have stuck with the single payment arrangements.
That is about as much as we have time for this evening. I should like to repeat my thanks to everyone who participated in the debate. I beg leave to withdraw the Motion.
§ Motion for Papers, by leave, withdrawn.