§ 7.18 p.m.
§ The Countess of Mar
My Lords, before the noble Lord, Lord Henley, rises to speak, I wish to raise a point of order. The Companion to the Standing Orders states:No Motion to approve an affirmative instrument (as defined for this purpose in S.O. 69) may be moved until there has been laid before the House the report thereon of the Joint Committee on Statutory Instruments and, in the case of a hybrid instrument, the proceedings under S.O. 216 or 216A have been completed".I have checked with the Printed Paper Office and the Minute Room. The Joint Committee reports have not been published and laid before the House, although I gather that they have been reported on. Is it in order for us to debate these measures tonight?
§ Lord Henley
My Lords, my understanding is that it is entirely in order to debate them. I understand that there was some query about this in another place when they debased the regulations last week but that largely related to the negative instruments. All these have been laid before the House. All of them have been before the Joint Committee on Statutory Instruments. Four of them have been reported on by the Fifth Report of the Joint Committee and the others by the Sixth Report of the Joint Committee. Therefore, I hope that the noble Countess, Lady Mar, will bear with me in debating these orders on this occasion.
§ The Countess of Mar
My Lords, can the noble Lord give me a definition as to the meaning of the words "laid before the House"? Should not the reports be available to us in the Printed Paper Office?
§ Lord Henley
My Lords, my understanding is that the fact that the Joint Committee has reported on the orders is sufficient and that it is perfectly in order for the House to debate them on this occasion. I intend to move the Motion standing in my name at this present time.
§ Lord Carter
My Lords, what the noble Countess said is correct. I have been to the Printed Paper Office. Usually, if the Joint Committee's report has not been printed there is a typed script copy available. In neither case—that is, in respect of the fifth or the sixth report—is there even a typed script available to us. As I said, I believe that the noble Countess is quite correct. According to the Companion to the Standing Orders, I do not think that we should be debating these regulations.
§ Lord Henley
My Lords, that is simply not the case. The noble Lord will know that it takes some time for the Joint Committee to produce its reports. I understand that it is the practice of the Printed Paper Office to prepare, as the noble Lord said, an extract from the report but only when an instrument has been drawn to the special attention of both Houses. None of today's instruments have been so drawn to the attention of both Houses. Therefore, I see no reason why we should not proceed with the business and debate these orders this evening.
§ Earl Russell
My Lords, it is not the first time that this has happened. The point was been drawn to the attention of the House by my noble friend Lord Airedale in respect of an order dealing with the growing of mushrooms. I drew it to the attention of the House in respect of the student loans regulations. Reports from the Joint Committee can be of great assistance to the House. I think that they should be made available. But they have not been in the past. As this is not the first time that this has happened, I do not know what we must do to ensure that such reports are laid before the House in future.
§ Lord Henley
My Lords, I can only return to what I have already said. The Joint Committee did not think that there was anything that needed to be brought to the attention of both Houses. Therefore, it was not necessary for the Printed Paper Office to prepare an extract from those reports. In the circumstances, I believe that it is perfectly legitimate to debate the orders on this occasion.
§ Lord Dormand of Easington
My Lords, if the report is not brought to the attention of both Houses, which I believe is what the Minister just said, what is the purpose of it?
§ Lord Henley
My Lords, there are occasions when the Joint Committee wants to bring the attention of the House to certain comments it may have made about the statutory instruments put before it; for example, as to whether they are ultra vires, and so on. 1085 If the committee felt that there was nothing which needed to be brought to the attention of the House there would be no need for a report. Of course, there may be other comments not relating to ultra vires, and so on. On this occasion the committee felt that there was no need for a report to be brought to the attention of the House. In the circumstances, therefore, I think that it is quite legitimate—
§ Lord Dormand of Easington
My Lords, surely this is a matter for the House to decide. There may be certain points for consideration. The Joint Committee may feel that there is nothing upon which it wishes to comment, but I am sure that the history of both Houses of Parliament has shown that such reports have been subject to comment.
§ Lord Henley
My Lords, that is the purpose of debating these orders this evening. If the House wishes to make comments on the eight statutory instruments on the Order Paper, as I said, that is the purpose of the debate. Members of the House are quite at liberty to make any comments they wish. That is why I intend—that is, as soon as the House is prepared to listen to me—to move the eight instruments tabled in my name on the Order Paper.
§ Lord Elton
My Lords, I should like to support my noble friend on the Front Bench. As I understand it, the Joint Committee exists only to act virtually as a watchdog to alert either House if a statutory instrument is proposed which is ultra vires. There is not much point in the committee reporting every time that nothing is ultra vires; but there is every point in it reporting when something is ultra vires.
We need some procedure whereby your Lordships can be reassured, before an intervention occurs on the Question as to whether an order should be discussed, that no report has been made by the Joint Committee but that it has considered the matter. I am sure that the usual channels will take note of these exchanges and ensure that that is done in the future. I do not think that we should further delay matters this evening.
§ Lord Carter
My Lords, the Order Paper actually refers to the fifth and the sixth report "from the Joint Committee". Therefore, they are connected to the regulations. I suppose that we must take the Minister's word—which I am sure is correct—that there is a fifth and sixth report. But do they actually exist? Is the noble Lord saying that there is, or that there is not, a fifth report?
§ Lord Henley
My Lords, I am prepared to give the noble Lord the assurance that there is a fifth and a sixth report.
§ Lord Henley
My Lords, neither of them made any comment on these particular regulations which needed to be brought to the attention of the House. Obviously, if the House is unhappy with what is happening here I am quite prepared to suggest that the matter should be reopened with the Procedure 1086 Committee. However, in the meantime I think it would be far better for us to continue with the business. Perhaps I may now move the eight Motions standing in my name on the Order Paper.
§ Earl Russell
My Lords, we are in the hands of the noble Countess, Lady Mar. I congratulate her on bringing the matter to our attention. But, for myself, I am prepared to leave the matter where the noble Lord, Lord Elton, suggested.
§ The Countess of Mar
My Lords, I thank all noble Lords who have taken part in this short exchange. I have done a great deal of chasing around this afternoon. Can it be made clear in the future in respect of any such debates that, where such reports are required, they are made available to us? We should at least know that we are in the clear, so to speak. I am quite happy now to allow the noble Lord to continue.
§ Lord Henley
My Lords, I thank the noble Countess, Lady Mar. I repeat the assurance that I gave earlier that the matter can be brought to the attention of the Procedure Committee so that it may examine such matters.
I now beg to move, That the draft regulations laid before the House on 26th November and the draft orders laid before the House on 4th December be approved [5th and 6th Reports from the Joint Committee].
I start with the SS (Contributions) Re-Rating (No.2) Order 1991. For the ninth year running we do not propose to increase the rates of Class 1 contribution but, as usual, the lower and upper earnings limits will be raised to £54 and £405 a week respectively. The effect is that most employees will pay a little less in Class 1 contributions. I am sure that the House will welcome that. For employers, we propose as usual to increase each of the earnings limits for employers, below which they pay lower contribution rates.
For self-employed people, we propose to increase Class 2 contributions by 20p to £5.35 a week from next April. Once again, we do not propose any change to the profits related Class 4 contribution rate paid by many self-employed people; however, the profits limits between which contributions are payable will be increased to £6,120 and £21,060 respectively.
I turn now to the Statutory Sick Pay (Rate of Payment) (No.2) Order, which provides for the lower rate of SSP to be increased by £1.80 a week from £43.50 to £45.30, an increase of 4.1 per cent. in line with the movement in the retail prices index over the 12 months ended in September 1991. The higher rate of SSP remains unchanged at £52.50 per week. The order also proposes that the earnings threshold, which governs when the higher rate becomes payable, is increased from £185 to £190 per week.
Even though the higher rate of SSP remains unchanged, the vast majority of employees will receive no reduction in the total amount they receive when sick because the difference will be made up by their employers occupational sick pay scheme. Those who 1087 are not covered by such schemes are mainly those low paid and part-time workers who will be fully protected by the RPI increase in the lower rate of SSP.
Before I tell the House about the uprating order and the regulations prepared for the new disability benefits, I must briefly mention the Guaranteed Minimum Pensions Increase (No.2) Order 1992. It requires occupational pension schemes that are contracted out of the state earnings related pension scheme to provide post award increases of GMPs earned on or after the 1988–89 tax year by 3 per cent. with effect from 6th April this year.
I turn now to the Social Security Benefits Up-rating (No.2) Order 1991, which follows the announcement made in October by my right honourable friend the Secretary of State for Social Security on the social security rates payable from next April. The order provides for increases of 4.1 per cent. in retirement pensions and most other contributory benefits. The increase reflects the low rate of inflation in the year up to September of this year.
I shall now say something about child benefit, which remains a strong element in our policies for family support. From next April each of the rates which came into force in October will rise by the full 4.1 per cent. RPI increase. These increases—the third in a year—mean that the rate for the eldest eligible child will rise to £9.65, and the rate for other children to £7.80.
Many of those on benefits are keen to work, and I am happy to announce some useful changes to assist such people. The earnings limit for invalid care allowance will be increased from £30 to £40 per week, which means a further significant improvement in the opportunity to combine working with caring. From next April we shall introduce a disregard of the first £15 of any maintenance received in calculating entitlement to most income-related benefits which reduces the amount of take home pay needed to make them better off in work.
I move now to income related benefits. My right honourable friend the Secretary of State indicated last month that the Government did not propose to make a reduction in the value of income related benefit recipients because they will no longer have to pay the 20 per cent. minimum contribution to local taxation when council tax is introduced in 1993. That will mean that from April 1993, income support levels will be at least £1.40 a week higher for single people, and £2.80 a week higher for couples than they might otherwise have been. Those benefits will therefore be worth some £680 million more, in 1992–93 terms, than already provided by normal upratings since 1989.
I should like to briefly touch on the Rossi index, which is used for uprating the main income related benefits and is based on the RPI figure less certain items relating to housing. That has long been accepted as a fair method, as housing costs are provided for elsewhere in the benefit system. In this uprating, for the first time, the Rossi index will take into account the effects of water and sewerage charges, 20 per cent. of the community charge, and certain other miscellaneous housing costs. At next year's uprating, the Rossi index will need further adjustment to reflect 1088 the fact that there will be no minimum contribution to the council tax. Water charges and miscellaneous housing costs will of course continue to be taken into account in that uprating.
Income-related benefits will be uprated next April by 7 per cent., nearly 3 per cent. more than the current increase in the RPI over the same period. In addition to that increase, the level of benefit provision for those over 80 years old, and disabled pensioners over 60 will be increased to the tune of £60 million in a full year with more than 1 million pensioners gaining from the proposed increases. The total expenditure for all income-related benefits will rise to more than £22 billion during the next financial year.
The draft up-rating order re-enacts the current rates of non-dependant deductions in housing benefit and income support for housing costs where a claimant shares his or her home with another adult who may reasonably be expected to contribute to the cost. As the House will recall, my right honourable friend the Secretary of State announced in his uprating statement that he proposed to lay separate amending regulations to introduce a new structure for those deductions from April 1992.
Separate amending regulations introducing a new structure will shortly be laid. They provide for the existing two rates of deduction, set at £5.70 and £13.50, to be replaced with four, ranging from £4 to £18. There are also some minor beneficial changes. The regulations provide that where a non-dependant is temporarily absent in prison, and therefore unlikely to have any income from which to contribute to housing costs in his normal home, no non-dependant deduction is to be made. The same will apply to non-dependants who have been in hospital for more than six weeks.
Overall, those changes will reduce benefit expenditure by about £50 million. However, they establish a more equitable structure and respond to criticisms about the level of contributions assumed from those on low incomes. I believe that those changes should be welcomed by your Lordships' House, and indeed the Social Security Advisory Committee decided not to consult formally on the draft regulations.
I turn now to the social fund. Since the initial allocation of funds to the discretionary social fund in April the Government have added £43 million to the budget. That additional funding has taken the total budget for the loans and grants element of the scheme to £271 million for this year. This means that the money available to the fund is over 21 per cent. higher than last year's expenditure and my right honourable friend the Secretary of State for Social Security has announced that the budget for next year will be in the order of £300 million.
I know that the House will want to hear about the financial help given by my department to people in residential care and nursing homes. For both residential and nursing homes the majority of limits will increase by £15 a week, well ahead of inflation, but will be even more for those in residential care homes.
1089 For the very dependent elderly and the mentally handicapped in residential care homes, the increase will be £20 a week—more than a 10 per cent. increase on the current limit.
The limit available to those who claim the terminal illness level of care will also be increased, this time by £5 a week, bringing that limit to £280 a week, reflecting an emerging concern that the terminal illness limit is often not helping those who are terminally ill within the accepted definition of this term. Further to help that group of people, £1 million from the social security budget will be transferred to the Department of Health for the direct funding of hospices, which will ensure funds are specifically directed at those who are terminally ill. That is in addition to the £17 million already announced by my right honourable friend the Secretary of State for Health.
The supplement in Greater London will go up to £25 for residential care homes and £35 for nursing homes on top of the applicable limits.
The new limits will range from £175 to £245 for those in residential care homes and from £270 to £305 for those in nursing homes, plus any Greater London addition, making an extra total annual cost of £190 million. That underlines the Government's unswerving commitment to those in the community requiring residential or nursing care.
I turn now to the four orders which pave the way for the introduction of two new disability benefits next April. The House will recall that these new benefits are DLA and DWA. I shall deal briefly with each of the four sets of regulations in turn; first, the two more technical sets—the adjudication regulations, and the DLA introduction regulations. Those are, I am afraid, necessarily difficult for the House to follow: the adjudication regulations, because they amend heavily an existing order; and the introduction regulations, because the transition from two old benefits with entirely different assessment systems to a single new benefit with a completely new method of assessment, is not a simple matter.
The key part of the adjudication regulations is the introduction of new appeal rights to a new form of tribunal—a disability appeal tribunal. Those tribunals will stand at the pinnacle of the new adjudication system. The House will recall that the whole emphasis of that system is on self-assessment. Disabled people will be given for the first time an opportunity to tell us about their everyday needs and to enlist in support of their claims evidence from people involved in their care who are best placed to know about their needs.
Those new tribunals too put the emphasis on practical experience and knowledge of disability. Every tribunal will include a person with experience in the needs of disabled people, and we hope that many will include a member who is himself or herself disabled.
The DLA introduction regulations are also complex, but the intentions behind them are simply expressed. The regulations enable us to transfer people who are already receiving one or both of the existing benefits automatically onto the new benefit. There is 1090 therefore no question of us reviewing, removing or down-rating people's benefit because of the changeover.
The key sets of regulations are of course in many ways the DLA and DWA benefit regulations. The DWA regulations do, I am conscious, look like a formidable bundle of paper. But I hope that the House will be impressed by what it finds, because much of the space is devoted to the radical new functional disability test which underpins DWA. That test covers a comprehensive range of difficulties which will qualify people for DWA. I should of course remind the House that the majority of claimants will not even have to fill in the claim form which sets out that test, because someone who is on a disability benefit, or who has recently been getting an incapacity benefit, will be accepted automatically as being at a disadvantage in getting a job.
The disability living allowance benefit regulations are much shorter than their DWA counterparts, largely because the conditions of entitlement are clearly set out in the primary legislation which the House debated extensively earlier in the year. We shall need to see how each of the new conditions for the new lower rates of DLA come to be interpreted in practice, but I can of course undertake that the Government will be monitoring closely to assure ourselves that the substantial number of people to whom we wanted to see this new benefit go do in practice gain from it.
The Government have again fully backed their social security commitments to the community. We have not shirked our responsibilities. The total expenditure in the next financial year will be £67 billion. We have honoured our pledge to uprate long-term benefits for the elderly, the long-term sick and widows. Once again we have directed funds at those in need. Next April two new benefits, both aimed at helping disabled people, will become available after careful consideration and consultation. In this country we have a social security system which is fully resourced and carefully targeted to those in need. We can all be proud of that system. I commend all the orders and all the regulations to the House.
Moved, That the draft regulations laid before the House on 26th November and the draft orders laid before the House on 4th December be approved [5th and 6th Reports from the Joint Committee].—(Lord Henley.)
§ Baroness Hollis of Heigham
My Lords, we have heard an important statement from the Minister tonight. It is important in so far as it affects 17 million people. It would be churlish for us on this side of the House not to recognise some of the improvements in the benefit system that are proposed for April 1992. There is the useful addition to the income support level for residential care. That is up by £15 or £20, even though, following the Price Waterhouse report, there remain real fears that that increase will be inadequate to cover a shortfall which that firm estimates to be something closer to £60 in many parts of the country.
We also welcome the principle of self-assessment in the disability living allowance highlighted by the Minister. In the light of the disability living allowance and disability working allowance debates, we welcome 1091 the extension—this was not mentioned by the Minister—from four to 12 weeks in the payment of the care element when disabled children go into hospital. However, we wish that was longer. Following those debates, we welcome the extension of the higher mobility component to people with severe learning disabilities and challenging behaviour.
We also welcome the increases to the Independent Living Fund. Drawing on other reports and the comments made by the Minister this evening, we welcome the news that, when the council tax replaces the poll tax, there is to be no withdrawal of the deemed 20 per cent. contribution. Perhaps the Minister would care to make it clear that income support levels will be fully upgraded in future years and not frozen, either in whole or in part, until the older benefit catches up in real terms.
I wish to discuss national insurance and pensions. As the noble Lord has said, they are up by 4.1 per cent. or £2 a week. That is pitifully little and it is less than the underlying rate of inflation excluding mortgage costs—I understand that that rate is currently running at 5.7 per cent.—although, as few pensioners pay mortgages, they would not have gained the financial benefit of the reduced mortgage interest rates. What is perhaps more significant, they have received far less than would have been the case had this Government retained the link made by the previous Labour Government which ensured that pensions should rise in line with earnings, or the retail prices index, whichever was the higher. I am sure my figures are known to the Minister, but they are worth restating. Had that been the case, the state retirement pension for a single pensioner in April 1992 would be not £54 but nearer £70. For a couple, it would be not £86 but nearer £111. In other words, it seems clear from everything that researchers into poverty have estimated, that two-thirds of the Government's income tax cuts have been paid for by the breaking of the link between pensions and the rise of earnings.
As the Minister has said, unemployment benefit is up by £1.80 for a single person and by £2.85 for a couple. That increase is considerably lower—by one-quarter to one-third—than would have been the case without the 15 cuts in benefit, worth £1.5 billion a year, that this Government have introduced since 1979. That is before one takes into account the narrowing of eligibility, whether that concerns the 26-week rule or the cutting out of student eligibility. Now, at one-seventh of average earnings for a single person, unemployment benefit is one of the lowest in terms of its ratio to earnings to be found anywhere in Western Europe.
In the context of Maastricht it is clear that the British Government have rejected any support for the Social Charter. Therefore I believe we shall see sweated wages and in that case it is even more important to ensure a floor of adequate benefits. After all, these are contributory benefits to which people have rights and for which they have contracted. The temporarily unemployed and the retired elderly are entitled to a share of the country's prosperity through their contributions, but that is being denied.
1092 It is the same story as regards child benefit. We have seen that with pensions the Government have broken the link with wages. As regards unemployment benefit, there have been cuts in eligibility and rates. Child benefit has been frozen for three of the past 12 years and has not been properly upgraded for a fourth. As with pensions and unemployment benefit, the average family has lost out. In the case of child benefit the average family has lost £2 a week per child, or £6 a week for three children. That again means that, compared with the situation in 1979 or compared with the situation in the rest of Europe, we have one of the least generous and most impoverished child benefit systems. The system offers the least to the largest families—that is, the families in greatest need.
Worse still is the case of the 200,000 families where a parent is widowed, sick, disabled or retired and eligible for the child dependency addition. Here in 12 of the past 13 years—I know a Labour Government did this once—what should have been an addition for vulnerability has been offset at every increase in child benefit. But for such straight cuts, the level would have been £6 per child a week higher. It would not have been £19.40 but £25.50. In the October increase the Government said for this round the increase would not be deducted. Will the Minister say whether the same undertaking will be observed in April 1992?
I now wish to discuss the disabled. As these are new benefits, it may be worth exploring them a little further. It is already clear that some of the worries expressed in previous debates on DLA and DWA have been met in part, while others have not been met at all. We all accept that being disabled is the point at which extra costs and lower income intersect with higher need. There are extra costs, whether these be costs for housing, for aids and appliances or for diet, heating and laundry. The Spastics Society has estimated that even at the lower levels of disability the costs are worth at least £25, and rising. There are costs for those disabled people who have to employ someone to do what they cannot do for themselves, be it hiring taxis, cleaning, household maintenance or changing a plug.
Disability involves real extra costs estimated at some 10 per cent., or higher, than those of the average family. We also know that two-thirds of disabled adults live in households where there are no earners; in other words, they are households on benefits. Therefore, on average, the disabled family has only 70 per cent. of the income of, and 10 per cent. higher costs than, the average able-bodied family. Therefore there is an intersection of needs, costs and low incomes.
The passport to DLA is the attendance and the mobility component yet the disability lobbies are rightly worried that the benefit levels for those eligible for DLA and DWA are low. The lower level for DLA starts at £11.55. I understand that that will only pay for three hours of care, or possibly two taxi rides. Many of the more costly items such as additional heating and laundry needs are not reflected at all. Therefore people whose disability is based not on the need for personal care and not on the need for mobility have no passport access to further additional income.
1093 I do not believe anyone would begrudge the estimated further 300,000 people brought within reach of DLA. That is a total of 1.9 million in all. However, the OPCS has estimated that, of the 6.5 million disabled, less than one-third will receive that allowance. The disability groups are also concerned about a residual unfairness, in that DLA will not apply to those over 65 for whom attendance allowance will continue. I know that the Minister will perhaps argue—possibly correctly—that there is a greater income gap between the younger disabled and those not disabled than there is between older folk. However, I rather doubt whether that applies between the ages of 64 and 66. It is surely not right that the level of entitlement depends not on the degree of one's disability but on the timetable of that disability's occurrence.
Every Member of the House must surely accept that the disability working allowance was well intentioned. We welcome, for example, the two-year link and self-assessment. However, there are real fears that the intention of DWA cannot be realised within the financial and technical regulations as so far determined. It is, after all, meant to be a benefit to aid by virtue of their disability those who are disadvantaged when they are seeking employment.
However, the definition of that disability, as was insisted in Committee, has been too narrowly drawn. It excludes those with respiratory problems—and approximately one in 10 of the unemployed suffer from respiratory problems. It excludes those suffering from urinary and incontinence problems, which are also very real disabilities in certain forms of employment. It excludes disfigurement and other forms of disability. As a result, although it is estimated that 3 million disabled people are capable of working, DLA will probably reach only 50,000 of them.
The second problem which DWA will engender is that of the poverty trap. With the loss of housing benefit, poll-tax and related benefits it appears that there will be a marginal tax rate for those moving on to DWA of 94 pence in the pound, possibly rising to 97 pence or 99 pence in the pound once the taper comes into effect under the council tax. Those claiming the new allowance will immediately become ineligible for other benefits such as mortgage interest payments, free prescriptions and free school meals. Therefore, couples with mortgages, those with children and those receiving invalidity benefit may well be worse off claiming DWA under the present regulations. The disability groups would have much preferred a proportionality arrangement rather than the taper system.
We all know that the greatest problems in relation to benefits are the adequacy of levels, the complexity of the scheme and therefore the poor take-up rate, and the problems of the poverty trap and taper. We fear that both DWA and DLA fail all three of those tests.
I turn finally to income support and means-tested benefit. On this side of the House we are obviously pleased that for once the ROSSI index works in claimants' favour. I should like to raise five points with the Minister. First, will Ministers reconsider their 1094 denial of benefit to 16 and 17 year-olds? Only 30 per cent. of them now have access to benefits. There are 115,000 who are not receiving education or training and who are without jobs or income support. They are on the streets, sleeping rough, they are sexually vulnerable and are begging and thieving. Many have no homes to return to. They have come out of care and too often have been damaged as a result, for reasons which the courts have so recently explored. Their income support is not an insurance benefit. It is not contributory. It is meant to relate to need. The needs of those 16 and 17 year-olds are acute and urgent and are sharpening every night of this year.
My second point to the Minister concerns the ROSSI index and water rates. I notified him of the point in advance. It is a problem which I believe will loom ever larger. The old supplementary benefit included an element of £1.65 for water rates. What is the assumption within income support? Already water rates are running at between £3 and £4 a week and are rising by between 15 per cent. and 25 per cent. a year—several times faster than the rate of inflation. That is before taking into account the environmental clean-ups which are to be expected. It is before the introduction of metering, which will fall very heavily on the disabled, families with large numbers of children and families in which the wage-earner has a physically laborious and dirty manual job. It is estimated that in a couple of years' time water rates will top-slice approximately 15 per cent. off income support. What does the Minister propose to do about that? Clearly the ROSSI formula cannot take account of water rates which are rising so sharply in excess of the rate of inflation.
My third point stems to some degree from the previous point. Does the Minister accept that top slicing is leading to increasing problems, as a result not only of the recovery of water rates, of poll-tax arrears, of fuel arrears, of housing benefit and of the recovery of social fund loans but also, from April 1992, of fines—all at £2.15 a time. Together they can take £15 or more from the single person's income support of £33.60, pushing those people well below the poverty floor—the minimum amount needed in order to survive—and thrusting them further into debt. As we know, 44 per cent. of those serving prison sentences of less than six months have defaulted on fines. Such people fell into debt because their income support level was inadequate for their needs. By top slicing to recover those debts the Government are ensuring that they create a self-fulfilling prophecy.
Fourthly, I should like to comment on the reduction from 24 to 16 in the number of hours worked for employment to be regarded as full time. Under the old supplementary benefit system an individual was regarded as being in full-time work for benefit purposes at 30 hours. In 1988 that was reduced to 24 hours. From April 1992 that will be reduced to 16 hours. Incidentally, that is regarded as full-time work if one is able-bodied but part-time work if one is disabled, which is a somewhat perverse reading of what constitutes full-time work.
That means that single people and childless couples who are not eligible for family credit will lose their 1095 right to income support at 16 hours of work a week, whereas if they are low paid they will be better off on income support with the £8.15 disregard. Many of those who are eligible for family credit—those with children—will lose their rights to mortgage interest relief: the current figure of 90,000 repossessions is already a matter of anxiety to us all. They will lose their passport to free school meals, prescription charges and their access to the social fund if they claim family credit at all. Unlike income support, which has a claim rate of almost 100 per cent., for family credit the rate is barely 50 per cent. I acknowledge the existence of transitional arrangements, but can the Minister tell the House how many people will lose entitlement to income support under the 16-hour rule and what assumptions about take-up he is expecting to make?
Finally, is the Minister satisfied with the working of the social fund? I noted the extra sums being paid into it, but what would he say to a diabetic of my acquaintance receiving unemployment benefit who, presumably because the local office was running out of funds, was refused a grant for a fridge in which to keep his insulin and refused a loan because it was estimated that he could not pay?
The Prime Minister has said that benefit claimants must know where they stand and what service they have a right to expect in terms of the Citizen's Charter. What would the Minister say about the uncertainties, inconsistencies and sheer random cruelties which too often underlie the effect of the social fund as presently constituted?
This is not the time to talk about patterns of poverty and pathways out of it, but, some minor and welcome improvements aside, this package, together with the rejection of the social charter, means that low-paid and part-time workers will continue to be underpaid and exploited in the labour market; the benefit levels which should help to underpin a wage floor will continue to drop further below average earnings; major areas of need are inadequately met on income support or denied altogether to 16 and 17 year-olds; and modest gains such as the higher pensions premium are simply recycled from other means-tested benefits. There is no new money and the poor are helping the poor.
Harold Macmillan said:It is only so far as poverty is abolished that freedom is increasedThe evidence is around us. The Institute for Fiscal Studies found that the poorest 10 per cent. had seen a rise in their living standards of only 2.6 per cent. through most of the 1980s—half the national average. By European definitions we now have more poor people than any other European country. One in four of all EC households defined as poor is in Britain. That is either a comment on the Government's economic record of the past 13 years or a comment on the level of social security. Which alternative does the Minister prefer?
The Viscount of Falkland
My Lords, as the Minister is probably aware, in the normal course of events his noble kinsman Lord Russell would respond and would comment on the orders and regulations.
1096 However, my noble friend is busy on the Further and Higher Education Bill and even he has to eat. I feel particularly inadequate to replace him and the noble Lord may feel that he is to have an easy run. I am therefore particularly happy and relieved to follow the noble Baroness, who has covered very many of the points most eloquently and comprehensively, and perhaps I may be forgiven for concentrating my remarks mainly on the plight of the elderly, of which most noble Lords have some knowledge.
Were we in a position to do so, we on these Benches would immediately raise the pension by £5 for a single person and £8 for a couple. The noble Baroness mentioned the problem of average earnings rising faster than inflation. The gap between pensions and average earnings grows daily. Average earnings are currently £263 a week. Even after the increase, pension rates are, by comparison, at a derisory level: £54 a week for a single person and £86 for a married couple. No one would disagree—I am sure that the Minister himself would not disagree if it were not for the constraints of being in government—that it is not a happy position for an elderly person in the community today, no matter what his or her means, and particularly in the present climate.
There is great hardship for those people who are short of money, and that means the great majority of elderly people. It seems to us on these Benches that we should be ashamed that so many of our old people live in poverty. Given the present severe weather, surely the Minister's department could do more about severe weather payments and heating allowances for the elderly. The noble Baroness referred to the 20 per cent. poll tax payment. I am sure that that should have been abolished completely this year. It is an extraordinary position and an extraordinary penalty to impose on the elderly at this time.
From my experience of elderly relatives, I know that standing charges are one of the most punishing costs that old people have to bear. I do not seek to make a political point—the noble Baroness showed great restraint in not saying this—but, given the extreme hardship faced by elderly people and the higher standing charges and bills, it is almost insulting to read in the newspapers about the astonishing rises in the remuneration of chief executives of newly privatised companies in the energy field. The press has quite rightly taken up the matter and more and more people in this country are feeling uneasy about it. We are told that it is to ensure that the people in charge of those important services are paid the market rate. We are not entirely convinced by that when we see, at the other end of the scale, the hardships suffered by people having to pay the increased charges. As everyone knows, the cost of living today—the cost of food and heating—has grown to such an extent that it is extremely difficult for anyone on limited means to live, let alone the elderly.
Perhaps I may deal briefly with the disability living allowance regulations. I agree with the noble Baroness that one should not be churlish—I think that that was the word she used—and that one should graciously welcome any increase in benefits. However, knowing that I would have to deal with the matter this evening, 1097 I grappled with the disability living allowance regulations. It was a hard job. I do not know how an elderly or handicapped person would deal with the complexities of the new regulations or how they would avoid being discouraged from claiming by not knowing whether or how to claim. There have been attempts to make matters simpler. In the Social Security Act of 1986, the Government attempted to make it simpler for people to claim those sums to which they were entitled. But it is extremely daunting for people to work out how to claim and to know, if they claim, whether they will prejudice certain other benefits to which they would be entitled. That is a worry shared by many elderly people.
I have here a letter from the Royal National Institute for the Blind. Blindness and partial sightedness is an area covered by the new disability living allowance regulations. There are particular features about being blind or partially sighted which make the disability living allowance inadequate. Certainly, the lower levels are much too low. The matter has been discussed in this House. I remember a point being raised about the allowance being applicable only to people under 65. There was an unsuccessful attempt to amend the legislation in that respect. Most disabled people tend to be over the age of 65 and there are many people, particularly partially sighted or blind people, who are over 65 and are living on very low incomes. The range of costs in relation to disability do not appear to have been taken fully into account by the people who have drawn up the regulations. For people who are blind or partially sighted, some simple functions of everyday life are extremely difficult. Understandably, there is concentration on care and mobility needs, and areas of additional expenditure which are often of importance to blind or partially sighted people appear to have been underestimated. As to the disability working allowance, I am particularly anxious about people's ability to understand what is now happening and to know how to claim.
Having said that, I should like to associate myself and my noble friends on these Benches with all the points made by the noble Baroness. I wish also to make a particular plea that the Government should, either themselves or by seeking outside help, urgently try to find a way of making matters simpler and more easily understood. I have concentrated on that issue today. I put all my Christmas cards and other worries aside and tried to understand the matter, but I found it extremely complicated and daunting. I dread to think how someone much older and in pain would have coped. I therefore make a plea to the Government to find a way of making the system much more comprehensible and easier to use so that the right people may claim and understand what they are claiming rather than being put into a state of anxiety as to how to proceed.
§ 8.7 p.m.
§ The Countess of Mar
My Lords, I heartily endorse the closing remarks of the noble Viscount. Matters seem to become more and more complicated as time 1098 goes on. We are discussing a diverse range of social security regulations. I shall touch on some aspects of the administration of two of them: the disability living allowance and the disability working allowance.
I read the Hansard account of the debate on these regulations in another place on 11th December 1991. Questions were asked that I wish to raise with the Minister. I did not find the response given by his right honourable friend the Minister for Social Security and Disabled People entirely satisfactory. I understand that new applicants for disabled living allowance complete what is known as a filter form which they send to a warehouse in Heywood, Lancashire. A full claim form is then sent to the applicant, stamped with the date of receipt of the filter form at Heywood, and another date, six weeks' ahead, by which time the claim form must be returned to the claims office in Blackpool.
Will the Minister explain the necessity for a filter form? What claims are being filtered out? As there is apparently to be no record kept of filter forms received at Heywood and no advice of their receipt is to be sent to Blackpool, why cannot the full application forms be made available to all the specialist workers who deal with the disabled, including local social security offices, instead of just to citizens' advice bureaux which have comparatively limited contact with the disabled in that context? I am thinking of social services departments, hospital social workers, special schools and advice agencies. Does the Minister realise that, under the system as currently set up, specialist workers will need to see their clients twice—once to complete the filter form and again, within six weeks, to complete the main application form? Many of the applicants will have learning difficulties and will need help to complete the very daunting forms. It is widely known that claimants often do not return to their advisers. The drop-out rate is likely to be enormous, unless the advisers make a note of each person to whom a filter form has been issued and follow it up with a personal visit within the six weeks. That seems to be a ridiculous waste of scarce resources.
I believe that both the policy division of the DSS and the benefit agency are aware of the possibility of fraud open to claimants because of the lack of recording the receipt of filter forms at Heywood. What is the Department of Social Security doing to prevent it? What will happen if the main application form goes astray in the post between Heywood and the applicant or between the applicant and Blackpool, and the six-week claim period is exceeded?
I understand that application forms are to be made available in January for claims to be processed from February onwards. As the training by the benefit agency at Blackpool of DSS supervisory staff does not commence until January and of clerical staff in February and March, how are the claims to be processed efficiently? Will there be an initial backlog? Social security officers at local benefit agency offices will receive little or no training, despite the inter-relationship between disabled living allowance and income support premiums. Social security officers will not be able to give local assistance. Will the Minister look into that matter?
1099 I now turn to disabled working allowance. This new allowance is very welcome in theory but I believe that there are a number of practical difficulties. Again, the advice agencies are finding it very difficult to train their staff because the department has made so little information available. Disablement resettlement officers employed by the employment agency have no information to enable them to advise disabled, unemployed people whether and how to apply for disabled working allowance. The allowance is plagued with the problem of complex "better off' calculations. Each potential claimant will need personal advice on the effects of obtaining work which relies on DWA to make up his or her income.
As the noble Baroness, Lady Hollis, pointed out, a disabled person currently on invalidity benefit may lose free school meals for children of the family, entitlement to free prescriptions, and travel and local authority concessions. I understand that Ferret Information Services are writing a computer software program which will assist disablement resettlement officers and employment agency staff with those "better off' calculations, but the program will not be available until March 1992 and may not be enough to meet the individual needs of each client. There is a danger that disabled people will not discover that they are worse off until it is too late.
If a disabled person gives up invalidity benefit, accepts a job supplemented by DWA and then finds that, because of his disability, he cannot cope with the job, he will have no difficulty in returning to his former benefit status. Can the Minister give an assurance that claimants who give up employment because they are worse off will have their previous benefits reinstated? Or will they be penalised because an adjudication officer has decided that they are capable of work and must therefore continue in employment?
I have asked a number of quite complex questions. If the Minister finds that he is unable to answer them all this evening, I should be grateful if he would write to me.
§ Lord Carter
My Lords, perhaps I may intervene briefly with regard to the mobility component. The noble Lord will know that I have taken an interest in this matter almost since I have been in the House in order to secure an extension of the mobility allowance, as it used to be, to the deaf and blind and the severely mentally impaired.
I congratulate the department on the drafting of Regulation 12 of the disability living allowance regulations. In the light of the drafting of that regulation, which is very comprehensive, what is the department's latest estimate of the numbers likely to qualify for the higher and lower rates of the mobility component? If the Minister does not have the answer now, perhaps he will write to me.
§ Lord Henley
My Lords, certainly I shall start by promising to write to the noble Lord, Lord Carter. He will be aware that a great many questions have been put to me and, bearing in mind the time and the demands of other business, it might be better if I press on.
1100 I very much welcome to social security debates the noble Viscount, Lord Falkland. I was surprised when he told me that my noble kinsman needed to eat. I was not aware of it, but if that is the case, so be it. Perhaps I may also say that I am sorry that the noble Viscount, Lord Falkland, finds the whole of social security very complicated, as does the noble Baroness, Lady Hollis. Necessarily the administration of the social security system must be complicated but we do our best to keep it as simple as possible. Certainly in terms of the changes that we have made to DLA, we have taken great steps forward in simplifying matters whatever people might say or whatever the noble Countess, Lady Mar, might have said. It may be best if I write in some detail to the noble Countess, Lady Mar, about her detailed questions on the administration of DLA and the claims for it. I can assure her that there are very good reasons for it. In writing to her I shall certainly make copies available to the noble Baroness, Lady Hollis, and either to the noble Viscount, Lord Falkland, or possibly to my noble kinsman.
I am glad to say that the noble Baroness, Lady Hollis, welcomed the improvements for income support for those in residential care homes. She went on to say that they were not enough, which is what I should have expected of her. She cited the recent report by Price Waterhouse which followed the report that we commissioned from Price Waterhouse some time earlier. The report that she mentioned was a much smaller one than the report that we commissioned. We feel that the selection and size of the sample means that the information that it produced cannot be accepted as a fair reflection of the costs across the country, compared with our document which was a fully comprehensive report into the costs in some 700 homes of all types in all areas. The results from the second report gave higher capital costs than in the earlier report but that may easily have been caused by the distortions inherent in the small selective sample. That has to be considered alongside the more stable running cost figures at which we looked in the report that we commissioned last year. I must also suggest that interest rates have fallen since that date.
The noble Baroness went on, as did the noble Viscount, Lord Falkland, to complain about the level of pensions. She said that we must restore the link with earnings and prices rather than continuing to maintain our promise to upgrade pensions in line with prices. What is relevant is not the level of the state retirement pension but the growth in the pensioners' total income. Since 1979 the average total net income of pensioners has increased by some 34 per cent. That is over 3 per cent. a year. Under the last Labour government pensioners managed just 3 per cent. in Labour's entire five years of office. That is 0.6 per cent. per annum. Along with that, savings have increased by 110 per cent. Under the last Labour government they fell by 16 per cent. Seventy-four per cent. of pensioners now have savings or occupational pensions and the average income from occupational pensions has nearly doubled. Overall, expenditure on benefits for the elderly has risen by some 29 per cent. in real terms.
1101 Moving on briefly to income support, I was glad that the noble Baroness welcomed our announcement that changes would be made to take out of it the community charge. She asked for an assurance that in future years income support would be uprated. I can make it quite clear that we have promised that future upratings will be revised on the basis of the Rossi index.
Again, the noble Baroness welcomed the increases in unemployment benefit, but again predictably she said that they were not enough. I should like to know from the noble Baroness or her party whether they want unemployment linked with earnings. Is that another Labour promise? If it is another Labour promise, does the noble Baroness have permission from her honourable friend the shadow Chief Secretary to the Treasury to make such a promise in the run-up to the election?
I reject totally the allegations from the noble Baroness that our child benefit is the least generous in Europe. That is simply not true. To start off, the rate of child benefit for families with just one child is at the moment the highest in Europe. If one takes the average child benefit payable for those with two children under six years of age, we are the fourth highest, and so it goes on. Different countries take a different approach to their child benefit in terms of where they put their money.
On disability, again the noble Baroness said that she did not wish to be grudging about the extra £300 million that we promised. That was exactly what she then proceeded to be—grudging. She said that needs other than care and mobility should be taken into account. We have always made it clear that DLA will provide help to people with a very wide range of needs. The OPCS surveys showed that entitlement tests based on personal care mobility problems were a simple way of targeting all those with the most commonly occurring and most costly disabilities.
She also suggested that there are disabilities which will be excluded from the disability working allowance tests. Most people with respiratory problems or urinary disorders will be picked up by one or other of our tests.
The noble Baroness asked about Rossi. She asked whether Rossi could have water charges excluded so that water could be included in housing benefit. The new Rossi includes the appropriate amount for water charges. Any increase in the cost of water, as with any other goods and services, will now be fully reflected in that new index. We see no reason to allow housing benefit to move on to cover those costs, just as costs for other utilities are not included. I stress that the weight attached to water in the Retail Prices Index is 0.8 per cent. In Rossi the figure is slightly higher at 0.9 per cent.
I turn to the question of alleged high marginal tax rates in DWA and the taper. I stress that the important point is that disabled people will be better off for every extra pound that they earn whereas at present disabled people have to choose between total incapacity for work or finding a job which will pay 1102 them enough fully to replace their benefit. That is the problem which we hope that the disability working allowance will remove.
The noble Baroness raised the question relating to 16 and 17 year-olds and the changes in the hour rates for income support and other benefits. I prefer to leave the changes in hour rates to another occasion. We have no plans to reconsider our position on 16 and 17 year-olds. The issue was debated in this House some months ago, and the House came to a conclusion.
I apologise to the noble Countess, Lady Mar, for not being able to answer her detailed points on the procedures relating to applying for DLA and DWA. I assure her that they are not complicated. They are as simple as possible. I assure her that I shall write in some detail to her on the matter.
I believe that I have made it clear that the Government have made great steps forward over the past 12 years in social security provision. They have protected the very obvious interests of the taxpayer. However, at the same time we have been able to increase expenditure on social security by about 40 per cent. in real terms. Spending on the elderly has increased by about 29 per cent, and spending on the long-term sick and disabled by far more than 100 per cent.
The orders, in particular the uprating order, exemplify our commitment to the less well off in society. I commend them to the House.
§ On Question, Motion agreed to.