§ 6.42 p.m.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, I beg to move that the four draft orders and four draft regulations, all of 1991, standing in my name on the Order paper be approved.
Before I address the orders I wish to repeat a point made by my right honourable Friend the Secretary of State for Social Security on 24th October last year in announcing the up-rating of social security benefits. In the corning year we shall be spending a record amount on social security; that is more than £60 billion. I believe that this is a measure of two important issues: first, the success of the Government's policies in generating wealth which can be shared by all: and, secondly, the level of our commitment to a social security system able to provide real help to those whose need is greatest.
I should first like to set out our intentions for financing contributory benefits, on which we plan to spend more than £33 billion in 1991–92. For the eighth year running we do not propose to increase the rates of Class 1 contribution in the coming year. In fact, as the House will already be aware, we propose to reduce the rates of national insurance contributions payable by employers. The standard rate will be reduced from 10.45 per cent. to 10.4 per cent. More importantly, the lower rates, currently 5, 7, and 9 per cent. in respect of employees earning up to £175 a week, will be reduced 1160 to 4.6, 6.6, and 8.6 per cent. respectively. These changes will reduce employers' costs by some £250 million and are likely to be especially helpful to employers, often in small businesses, whose employees are among the less highly paid, and will go a considerable way towards offsetting any additional costs which employers may meet as a result of the changes to statutory sick pay (SSP) made by the Statutory Sick Pay Act.
The lower and upper earnings limits will be raised to £52 and £390 per week respectively, the effect of which is that most employees will pay less in Class 1 contributions. I am sure the House will welcome that. As regards employers, we also propose as usual to increase each of the earnings limits below which they pay lower contribution rates. For self-employed people, we propose to increase Class 2 contributions by 60 pence to £5.15 per week from next April. We do not propose any changes to the profits related Class 4 contribution rate paid by some self-employed people; however, the profits limits between which contributions are payable will be increased to £5,900 and £20,280 respectively.
Before moving on from the subject of national insurance, I should like to make mention of the Social Security (Contributions) Amendment Regulations 1991, which deal with the special rate of Class 2 contribution paid by share fishermen. Unlike most self-employed people, share fishermen are, under longstanding arrangements, able to receive unemployment benefit and industrial injuries benefits. They earn their entitlement to these benefits by paying a special rate of Class 2 contribution. This consists of the standard Class 2 contribution paid by the majority of self-employed people with an additional amount related to the costs of the extra benefits payable to them.
I am sure the House will recollect that one of the measures contained in the Social Security Act 1990 was the removal from the scope of the National Insurance Fund of industrial injuries benefits, which are now funded from general taxation. Clearly it is no longer appropriate for share fishermen to pay extra contributions for benefits which are funded from taxation—and from April we propose that they should no longer pay the extra amount. I hasten to add that this change will have no effect on their rights to benefits. As a result of our proposals, the share fishermen contribution will rise this year by just 5p, from £6.15 to £6.20. They will therefore continue to enjoy unchanged benefit rights at very little extra costs. I am sure that the House will welcome this.
I turn now to the draft Statutory Sick Pay (Rate of Payment) Order. It provides for an increase in the lower rate of SSP, of £4.25 to £43.50 a week. The higher rate remains unchanged at £52.50. The order also proposes that the earnings threshold, which determines when the higher rate becomes payable, be increased from £125 per week to £185 per week, thus extending the coverage of the lower rate across the whole range of earnings for which employers pay lower rates of national insurance contributions. We discussed this matter at some length during the passage of the statutory sick pay legislation.
1161 The Government also recognise that there is very much less occupational cover for maternity than there is for sickness. We propose, therefore, to move away from the current link between the flat rate element of statutory maternity pay and statutory sick pay. As a consequence, the main draft benefits uprating order will increase the SMP rate by £5.25 to £44.50 per week, which is £1 above the retail prices index increase of 10.9 per cent. An additional £1 will also be added to the state maternity allowance, which will go up by £4.90 to £40.60 per week. There will thus be a real increase in benefit for some 315,000 mothers-to-be.
It would be appropriate for me to say a few words about the Statutory Sick Pay (Small Employer's Relief) Regulations at this point in my speech. I do not intend to spend long on these regulations; the House will recognise that they follow directly from the discussions we had on the Statutory Sick Pay legislation which changed the reimbursement rate for employers from 100 to 80 per cent. with effect from next April. The regulations fulfil the undertaking given during our earlier debates. They provide that an employer will qualify to be treated as a small employer where his contribution payments in the preceding tax year do not exceed £15,000 and that small employers' relief—that is 100 per cent. recovery of SSP—will operate once an employee has been entitled to SSP for six weeks in the same period of incapacity for work. They also modify the rules where the employer has only recently started up in business.
I should briefly mention the Guaranteed Minimum Pensions Increase Order 1991 which requires occupational pensions schemes which are contracted out of the state earnings related pensions scheme to provide post-award increases of guaranteed minimum pensions (earned in or after the tax year 1988–89) of 3 per cent. from 6th April this year.
I turn now to the Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1991. My right honourable friend the Secretary of State confirmed in his up-rating statement that child benefit is and will remain a strong element in our policies for family support. Families with children, at all levels of income, face additional costs compared to families with none. This year we recognise that fact by means of an additional payment of £1 a week for the eldest child for whom child benefit is in payment. This represents a worthwhile extra amount of child benefit for claimants—the majority of them mothers—in some 7 million families, and it involves a net cost of over £250 million a year.
The House will see that, overall, the various measures which we are introducing from this April acknowledge responsibilities towards the old as well as towards the young. They recognise that disability and the need for special care mean that families can face exceptional pressures. Consideration of the needs of families in that wider context and in the light of available resources did not allow an increase in child benefit for all children on this occasion. Bearing in mind that the extra £1 will go to every family and will be larger than a retail prices increase in one parent 1162 benefit, which is similarly payable for an eldest child, it was not possible to propose an up-rating of that benefit as well.
This year's increase in child benefit reflects the Government's complementary policy objectives of assisting families generally and providing extra help for the low income families who receive income-related benefits. The improvements to income support and family credit—introduced over the past three years to help less well-off families with children—will be maintained and increased in April to compensate for rises in the cost of living. This means that spending on income-related benefits for families with children is expected to be worth some £400 million more in real terms in 1991–92 than in 1987–88.
Historically, there has always been a link between child benefit and other benefits for children. When child benefit for the first child in a family was increased from £1 to £2.30 in April 1978 there was a corresponding decrease of £1.30 in the rate of other benefits for that child. We therefore propose to make futher regulations, to be laid before Parliament in due course, to ensure that the general principle whereby benefit rates for children are based on the overall level of child support continues to apply.
This year the draft up-rating order provides for an increase, from £9.65 to £10.70, in the rate of dependants' additions to contributory benefits. The effect of the proposed overlapping benefit adjustment to which I have just referred will therefore be to reduce the amount of such a benefit by £1 where the increase in child benefit is paid; £1 is of course the amount by which child benefit is increased.
Before moving on, I should like to say a brief word about the State Scheme Premiums (Actuarial Tables) Amendment Regulations. These are entirely technical and are concerned with the calculation of premiums which are payable in certain circumstances when people previously in contracted-out employment wish to buy back rights in SERPS. The formula for calculating the premium takes account of an index compiled by the Financial Times and the Institute and Faculty of Actuaries of 25-year British Government stocks. The FT and actuarial bodies have decided no longer to compile that index from the beginning of April but are replacing it with an equivalent index for 20-year stocks. The regulations are consequential on that change.
The main up-rating order follows the announcement made by my right honourable friend the Secretary of State in October about the generality of social security benefit rates that will be payable from April. It provides for an increase in retirement pension and virtually all other benefits which are not income-related of 10.9 per cent., which is the increase in retail prices which took place between September 1989 and September 1990. Income-related benefits will be increased by 8.1 per cent., which is the increase over the same period in retail prices other than housing costs. The difference reflects the fact that for people on income support help with rent is available through housing benefit and help with mortgage interest separately within income support itself.
1163 However, in a number of areas the Government have been able to go beyond the normal uprating of benefits through a package of extra help to priority groups. This year we shall be spending an extra £80 million through increases in the basic pensioner premium which is paid to people aged 60 to 74. These increases will directly benefit about 400,000 pensioners on income support and will also feed through to housing benefit and community charge benefit. The premiums for single pensioners aged 60 to 74 will go up by £1 a week over and above a straightforward up-rating, while couples will receive an extra £1.50 a week. This comes on top of a previous measure, taken in October 1989, which directed extra resources to older and disabled pensioners through income-related benefits at a cost of £200 million in the first year.
There is also extra help for the elderly in another important area—residential care and nursing homes. The increases have been decided upon with the aim of providing the greatest help where it is needed most. The available evidence from voluntary and charitable bodies and organisations of home owners, as well as that provided by the Price Waterhouse survey into running costs, confirmed our view that the pressure was grater in nursing homes.
It was clear that although there was not a sufficiently clear pattern of geographical variation, except for Greater London, the limits for residential care homes are reasonably close to median costs across the whole country while those for nursing homes are significantly too low. The increases seek to redress that balance, and the increase in the nursing home supplement in Greater London from £23 to £33 addresses the higher costs facing nursing homes in London. That increase requires a separate amendment rather than forming part of this evening's debate.
For residential care, the basic limit will rise by £5 a week to £160 and the other limits—for the very dependent and blind elderly who include, for example, Alzheimer's disease cases and covering mentally handicapped, mentally ill and physically disabled people—by £15. There are higher increases for nursing homes of between £15 and £45 a week.
Although the increase for residential care may seem low when compared with the more substantial increases proposed for nursing homes, this limit has in recent years increased faster than inflation. It was increased by £10 in April 1990, and £5 in August 1990. This further increase of £5 means that, on the basis of the Price Waterhouse evidence, the limit is now fairly set in relation to median costs in homes across the country. I should also point out that the residential care limits for the more dependent groups, including that for very dependent and blind elderly people, are to be increased by £15 from April. I should re-emphasise that income support payments are not, and never have been, intended to meet all fees in full, however high they may be.
I am also aware that some anxiety has been expressed about the proposed increase of £15 in the terminally ill limit. However, the House will remember that not only was this limit increased by £10 along with all other limits in April 1990, but it was increased again by £15 (which was more than any other limit) in 1164 August 1990. The proposed increase of £15 this April will mean a total increase over the year of £40 a week. The terminal illness limit still remains the second highest limit and is exceeded only by that for younger physically handicapped people, for whom providing care generally incurs the greatest cost.
The total cost of those increases will be some £225 million. Together with those made in April and August last year, the increases mean that income support expenditure in homes will have risen by over £400 million a year, over and above the £1 billion it had already reached.
I am also pleased to take the opportunity of this debate to inform the House of some further good news which my right honourable friend was able to announce yesterday in another place. The lump sum available to those who suffer severe mental or physical disablement as a result of vaccination—payments made under the Vaccine Damage Payments Act 1979 —was last increased in line with inflation in 1985. The Government have decided to restore the value of the payment broadly to what it was then. Consequently, the necessary action will shortly be taken to increase payment in cases arising from April by £10,000 to £30,000. I ought to make it clear that that increase does not represent a judgment about a change in the risk of vaccination—it is merely the appropriate time to restore the value of the payment.
At the start of my speech I said that the Government are committed to raising the amount of expenditure on social security to record levels. The sums of money involved are very large indeed, but of equal importance is the fact that not only have we honoured our pledges to up-rate benefits for the elderly and the long-term sick in line with prices but that we have also directed extra help towards those in the community who are in particular need. It is a record of which we should all be proud, and I commend all the orders and regulations to the House.
Moved, That the draft order laid before the House on 13th February [11th Report from the Joint Committee]; the draft regulations laid before the House on 13th February [11th Report from the Joint Committee]; the draft order laid before the House on 13th February [11th Report from the Joint Committee]; the draft regulations laid before the House on 21st February [12th Report from the Joint Committee]; the draft order laid before the House on 13th February [11th Report from the Joint Committee]; the draft regulations laid before the House on 20th February [12th Report from the Joint Committee]; the draft regulations laid before the House on 18th February [11th Report from the Joint Committee]; and the draft order laid before the House on 11th December 1990 [6th Report from the Joint Committee] be approved.—(Lord Henley.)
§ Lord Carter
My Lords, the House will be grateful to the Minister for explaining the eight orders so clearly. On Tuesday evening I had the pleasure of expressing the good wishes of the House to the noble Lord and his wife on their expectation of increasing their eligibility for child benefit. I understand that that expectation has now been fulfilled and I offer our congratulations to the noble Lord and his wife.
1165 I particularly enjoyed the noble Lord's explanation of the State Scheme Premiums (Actuarial Tables) Amendment Regulations, on which he waxed lyrical. We welcome the increase in the lump sum payment for vaccine damage.
I do not propose to cover all of the eight orders in detail. Instead, I prefer to raise specific points in relation to individual benefits. It is familiar ground and there is no need to repeat the arguments made in previous debates on the general subject of social security provision. We all know where we stand on that issue.
If I may deal first with child benefit, I fear that the order marks yet another stage in the Government's downgrading of this benefit as a provider of help for poor families who are not in receipt of benefit, those who are just above the poverty line, because we know that the child benefit is by far the most effective way of helping people during that situation. The extra pound for the first child is welcome; but, as I said to the noble Lord earlier, we feel that it is not targeted, which we are told is the aim of the Government in their handling of benefits generally.
The example which I have—I have given it before but it is worth repeating—is the rich family with one child, which will receive exactly the same increase in total weekly income as the poor family with three or four children. We do not feel that that is the right way to deal with this problem. We also feel that this benefit will never fulfil its intended role, until it is brought up to date in terms of inflation and is no longer frozen. This we are committed to do on this side of the House when we are returned to power.
I noticed the phrase of the Minister when he said that the child benefit was a strong element in the Government's policy towards the family. I ask him: what are the intentions of the Government on child benefit? There are a number of ideas apparently floating about. For example, replacing it with tax allowances, increasing it generally or handling it in a different way. It would be interesting to know what are the Government's plans in respect of the benefit.
To turn next to the one-parent benefit. This is frozen and it saves £14 million net or £19 million gross, which seems a small sum to save in terms of the problems that the freeze will cause to single parents. I know the Government argue that the increase in child benefit for the first child helps to make up for the freeze; but we feel that this takes no account of the extra costs of the lone parent and the losses which are due to the freeze in child benefit since 1987. If those losses were to be made up, the rate of child benefit would now be £9.55 a week instead of £7.25. Again, I ask the Minister: what is the intention for the future of the one-parent benefit? How do the Government propose to handle it in their rethinking of the child benefit?
As the noble Lord said, the up-rating of income support omits housing cost. No account is taken of increases in the poll tax or in water rates. The water charge is particularly important because of the recent 1166 announcement about the impending increases. It will be interesting to know how those on income support benefit from the recent announcement concerning poll tax relief, which I believe will not produce the reductions in poll tax that some people are expecting.
I believe that the figure the noble Lord gave was £80 million for the effect of this relief, which he said will work through into community charge benefit. That does not seem to me to provide a vast amount of relief for the substantial increase in poll tax which we all expect.
There is the problem of people in residential care and nursing homes. I wonder whether the noble Lord has seen the recent independent report from the National Association of Citizens Advice Bureaux. There are three of the main conclusions of that report which are worth considering, and I should welcome the Minister's response. The report states in paragraph 7.5:income support rates should be set at levels which ensure that in all parts of the country there is a choice of homes available within income support limits.In paragraph 7.7, it states:We therefore recommend that, as an interim measure until the relevant community care provisions are implemented"—which, of course, will be in 1993—provision should be made for benefit levels to be 'topped up' by the Department of Social Security where the only alternative would be for a resident to be forced to leave the home, and it is demonstrated that this would cause severe hardship.The only other recommendation which I shall quote is in paragraph 7.8:We further recommend that until such measures can be introduced, claimants should retain their existing entitlement to housing benefit, as in some circumstances this can avoid claimants having to face the consequences of an income support shortfall.Just to illustrate the effect of the problem at the moment, I have a briefing from Age Concern. They point out that they recently heard from a retired couple in the Home Counties. The husband is forced to work to top up the £55 shortfall per week in income support, which his elderly aunt receives for her residential home care. The couple have already spent thousands of pounds of their own savings in topping up fees and feel that they cannot go on, but can see no solution to their problem. This issue is of particular concern in view of the delay in implementation of the community care proposals. We are now hearing over and over again of the problems that this is causing.
I know the Minister says that the Government are relying on the Price Waterhouse analysis of the median level; but it seems that, in practice, they either calculated the figures incorrectly or there was something skewed about the sample because we are now receiving information about a large number of cases of people who are in very real need.
I have a final word on statutory sick pay. I can only repeat our regret at the raising of the higher rate band from £125 to £185 a week, which I am afraid we regard as the sleight of hand with which we are now becoming rather familiar.
1167 On the small employer relief—and certainly we spent some time on that in discussing the Act—we all know that unless the £15,000 limit for small employer relief is increased annually, it will lift more and more employers out of the small employer relief as the level of earnings goes up and hence the level of insurance contributions.
For the record, it would be helpful if the Minister could reinforce the point that was made in the debate on the Act, that the Government recognise and accept this point. I am sure that they do. The Act, in words which were well chosen, requires the Secretary of State to,consider whether that amount should be increased.Lastly, do the Government have it in mind to increase the amount annually, unless there are very substantial reasons for not doing so? I know that the Minister cannot commit the Treasury, but at least to know the intentions will be helpful. After all, the cost to the Government will be very small since the whole of the small employer relief scheme will cost less than £4 million.
To conclude—and I intend to be brief—as I said at the beginning, I have no wish to repeat all the arguments that we have had many times before. Both sides of the House recognise the views which we each hold about the level and direction of social security benefits. I repeat that when we return to power we shall increase child benefit to make up for the losses since 1987; we shall increase pensions and, over time, we shall restore the link between pensions and earnings. Again, over time—as I said only on Tuesday evening—it is our intention to introduce a comprehensive and coherent policy to compensate for disability costs and to provide a disability income. It will all take time and perhaps will take more than one Parliament; but I have to say that the thrust of policy when we are in power will be very different from that of the Government.
§ 7.8 p.m.
§ Earl Russell
My Lords, I should like to join in the congratulations to my noble kinsman on his wife's new entitlement to receive an extra child benefit. I hope that it will be in the spirit of our debate if I also express the hope that my noble kinsman, as he realises that he incurs expenses which are not otherwise recognised in the taxation system, will feel entitled to draw this benefit with a clear conscience and to receive regular up-ratings on it.
The House will be glad to hear that I shall deal first, very briefly, with the statutory sick pay regulations. The important change in the first one, the rate of payment, is to alter the limit at which the higher rate becomes payable from f125 to f185. I shall confine myself to saying that after lengthy debates on this subject I have heard no good reason for that change and I am not satisfied with it.
The Statutory Sick Pay (Small Employer's Relief) Regulations, as my noble kinsman said, give effect to a great deal of what was said during the passage of the Bill through this House. It fixes the definition of a small employer in terms of national insurance 1168 contributions at a level at or below £15,000. I shall only comment on that, but that seems to me to create an incentive to keep down wages, which may tend to exacerbate the problems of low pay and may therefore tend sideways to exacerbate the burden on income support.
I share the misgivings expressed by my noble kinsman Lord Stanley of Alderley when this measure passed the House about the length of six weeks as a limit beyond which the employer becomes entitled to relief. I have been surprised, particularly in following the debates on the Bill elsewhere, to find how little support for industry there now is in the Conservative Party. I grew up thinking of the Conservatives as the party of industry. It seems to me that the Conservatives have now become the party of commerce. Their claims to be the party of industry are now distinctly questionable.
On the State Scheme Premiums (Actuarial Tables) Amendment Regulations, I am deeply grateful to my noble kinsman for his extremely lucid exposition. He said a great deal more about them than the Secretary of State did in another place. The Secretary of State confined himself to observing that he did not propose to say anything about the measure, which he said was entirely technical, not to say dense. I very much appreciate my noble kinsman's effort in going further than that. I find what he says appears to make sense; I have at present no complaint.
I had thought, at first sight, that the order which deals with Class 2 contributions paid by share fishermen might have been something about which I could afford not to say anything. It turns out that this is not the case. I should have known better. Whenever one starts ignoring any interest group on the ground that one does not need to know anything about it, one always ends up committing an injustice. The background, as my noble kinsman explained, is that industrial injuries are no longer a charge on the National Insurance Fund but on general taxation. Therefore, because of not having to meet industrial injuries compensation, national insurance Class 2 contributions are decreased.
But there is another problem affecting share fishermen which the regulations do not affect. I should perhaps explain that share fishermen are people who take a catch in common, sell the catch collectively, and take their profits in the form of a share of the catch. The problem is that they have an eight-day tying up period during which they do not fish and therefore receive no income. If that period is divided between two weeks and part of their fishing takes place in each week, they may be just above the level at which they would have been entitled to unemployment benefit in each week. It seems that this is a regulation which produces an accidental injustice. I agree with my honourable friend Mr. Kirkwood in asking the Government to think again about whether anything can be done.
On the Social Security (Contributions) (Re-rating) Order, I have little to say. The only point I want to make relates to the level of Class 4 national insurance contributions. We have heard a great deal about the 1169 burdens created by the recession for small businesses and the self-employed. If anyone listens for any length of time to the complaints of the self-employed, Class 4 national insurance contributions usually come high on the list. I wondered whether, in a situation where the National Insurance Fund does have a degree of solvency, there might have been an opportunity to think about some possible reduction in the level of Class 4 national insurance contributions. I am sorry that this opportunity was not taken.
We have next the Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations. My noble kinsman, because he was better occupied, yesterday missed an extremely interesting debate initiated by the noble Baroness, Lady Ewart-Biggs, on the report by Professor Jonathan Bradshaw for UNICEF on levels of child poverty. If my noble kinsman were to read that debate, and even more if he were to read Professor Bradshaw's report, he might be induced to think again about the question of whether child benefit increases should be extended beyond the first child. It is in families with large numbers of children that poverty and malnutrition often create the severest burdens.
The Government do not entirely seem to appreciate the beauty of the dual purpose nature of child benefit. It is both a vital welfare benefit for those who are worst off and a measure of fiscal equity in lieu of a tax allowance for those on other parts of the income scale. It is because it is able to achieve those two purposes at once that it is such an excellent benefit. That combination should be borne in mind. On the clawback, which my noble kinsman mentioned, I say only that we expect to debate it further.
The big issue is the up-rating order. I feel a good deal of regret about the fact that in Schedule 2 the Government have made no attempt to close the gap between the rates of income support for those over and under 25. That gap is entirely unjustifiable and sooner or later will have to be abolished. When that time arrives, if it had been narrowed first, the immediate burden on the Treasury would be a good deal less. I hope, by way of keeping options open, the Government might consider the case for narrowing the gap.
I warmly welcome what my noble kinsman said about the increased vaccine damage limit. However, it raises the technical point of whether there is a case for making more effort to up-rate the capital limits annually in line with inflation just like the sums of income. My noble kinsman confessed that this sum had remained where it was for a pretty long time. If you move capital limits once every five or 10 years the movement becomes rather gentle, and inequities may on occasion result.
I shall not go into the arguments raised by Schedule 10 on community charge benefits. It still seems to me a rather expensive method of robbing Peter to pay Paul. I shall however ask the Government to think again about whether the benefit should be more closely related to the actual levels of community charge that people have paid, not the notional sum of 1170 an ideal, platonic community charge floating in the heavens which the Government imagine somebody might reach. Unless related to the actual sums that people have to pay, it will not be effective.
It appears that the principle that everybody should contribute something towards the community charge is becoming impossible. Community charge benefit has not been set at viable levels. This is a principle that our Victorian ancestors recognised as quite impractical. They agreed with the government view that people should pay taxes if they voted. They regarded that as an argument against universal suffrage. I think this is something that the Government are going to have to face, but I shall not go further into that at present.
I echo what my honourable friend Mr. Kirkwood said about cold weather payments. I know that we have had a concession on cold weather payments this winter, which is warmly welcomed. I also know that the Minister's right honourable friend, Mr. Scott, is engaged in a review of cold weather payments, which I warmly welcome. But there is a further problem to investigate. The entitlement emerges after the cold weather and therefore people are not sure whether they can put on the heating when they need it. Secondly, these things are uprated in line with the RPI. We know perfectly well that all heating costs are going up a great deal faster than the RPI. There may be a case for a really substantial uprating here.
The last thing I want to ask my noble kinsman about is the level of the budget for the social fund. It needs to be increased at least to £230 million to bring it up to date with inflation. That does not appear to be announced in the Social Security Benefits Up-rating Order. I should like to ask when it is going to be announced. Since it is a vital figure, will it be announced on an occasion and in a form in which there will be opportunity for the House to address it?
Will my noble kinsman and his right honourable friend consider this question? If the shotgun marriage between discretion and budgeting—which is the basis of the social fund—is to be preserved, is there a case for adjusting the amount budgeted to the social fund to the amount of unemployment in any particular year? Is there a case for increasing the social fund in line not only with inflation but with recession?
I agree with my noble kinsman about the huge sums that the Department of Social Security is spending. I regard them as the cost of unemployment. I hope that that will come down.
§ Lord Henley
My Lords, I am grateful for the remarks of the noble Lord, Lord Carter, and my noble kinsman Lord Russell concerning my wife and the recent addition to our family. I should stress that I have acquired no extra entitlement. My noble kinsman touched on this point. Child benefit will continue as now to be paid direct to the mother. It makes no difference to me whether my wife receives it.
§ Lord Henley
My Lords, I may not have phrased it as felicitously as I wished.
1171 I am grateful to the noble Lord for his welcome of the increase of £1 for the eldest child of the family. Much the same argument was raised in the debate on the up-rating last October. I am always surprised that the noble Lord, who is a keen supporter of child benefit, objects that it will go as much to the rich as to the poor but then states that his party would do exactly the same except to up-rate it generally.
The noble Lord asked for an assurance about our intentions concerning child benefit. I repeat what my right honourable friend the Secretary of State said in the up-rating statement and only recently when speaking to Barnardo's. He stressed that it is and will remain a strong element in our policies for family support. However, one must always remember that it has never been intended to meet all the costs of bringing up a child. As is his statutory duty, my right honourable friend will continue to review levels of child support when he makes his up-rating announcement each October.
I am also grateful that both noble Lords welcomed the State Scheme Premiums (Actuarial Tables) Amendment Regulations. I am grateful that they understood my explanation of those regulations.
I turn now to one-parent benefit. The noble Lord, Lord Carter, objected to the fact that it has been frozen. Again I must stress that lone parents will benefit from the increase in child benefit for the eldest child. Child benefit, as we have already said, will be increased by £1 a week for the eldest, whereas if one-parent benefit had been increased, the increase in line with RPI would have been 60p a week for the eldest child. One-parent benefit has been up-rated every single year since 1977. In April 1990 its real value was 15 per cent. higher than in November 1978.
I turn now to the questions asked by noble Lords about how those on income support benefit from community charge relief. Income support recipients will benefit from the recently announced community charge reduction schemes—which are to be introduced in April at a cost of £1.3 billion—like everyone else who is a former ratepayer and satisfies the conditions of the schemes. The total expenditure on government reduction schemes in 1991–92 will be £1.8 billion. It must not be forgotten that those on income support automatically receive a rebate of 80 per cent. in their community charge.
The noble Lord, Lord Carter, also raised the question of residential care in nursing homes and the NACAB report, of which I am aware. The noble Lord has put down a Question which I look forward to answering next Wednesday. All I wish to say today is that it is obvious to me, as I believe it must be to him, that at whatever rate we set our limit we cannot meet all charges levied by all homes. The increases that I announced at the beginning of the debate were based on evidence from various homes, but in particular the Price Waterhouse report—to which I shall return when the noble Lord asks his Question—which considered costs in homes. I believe that that is a more important figure to consider than charges which the NACAB report considered.
1172 The noble Lord, Lord Carter, and my noble kinsman Lord Russell asked various questions about small employers' relief in the new statutory sick pay arrangements, and whether the figure will be increased from £15,000. I stress that there is a duty in the Bill on my right honourable friend the Secretary of State to consider up-rating every year. He will certainly exercise that duty. As I said during the course of the Bill, we would never envisage it being up-rated by a fixed RPI figure every year, thereby producing rather peculiar figures. I imagine that we shall consider up-rating by rounded thousand pound figures whenever necessary.
My noble kinsman also objected to the change in the higher rate for SSP, increasing it from £125 to £185. He said that he was not satisfied and doubted that we ever would satisfy him. Nevertheless, I shall try yet again. Raising the earnings band to £185 extends the coverage of SSP across the whole range of earnings for which employers pay the lower rates of national insurance contributions. Again I stress the much larger reductions we made in the employers' rates in this year's up-rating.
The Government went part way towards this objective last year by moving to a threshold of £125, which was the top point of the then 7 per cent. rate of contribution. The movement this year completes that process. However, I should emphasise again that so far as concerns the majority of employers, the difference in SSP rates will be made up by occupational sick pay.
My noble kinsman spoke of the burden created by the current economic climate. He claimed that levels of Class 4 contributions were too high and that this would be an opportunity to make reductions in Class 4. We feel it only right that the better-off self-employed paying Class 4 contributions should make their contribution to the National Insurance Fund, just as the better-off employed people pay extra amounts in their Class 1 contributions. My noble kinsman referred to yesterday's debate. I assure him that I shall read the debate and take note of everything that was said.
He raised the question of cold weather payments. I can only repeat the assurance given by my right honourable friend the Minister for Social Security and Disabled People that they will be reviewed at the end of the winter. It would not be right for me therefore to say any more.
I was asked when the figures for the social fund budget would be announced. They will be announced in due course. My noble kinsman asked whether there would be a means in this House to debate them. I am sure that with his usual ingenuity he will find one.
Before I sit down I should like to reiterate a point that I made in opening the debate. It is the Government's aim to direct an increasing level of resources to those in the community whose need is greatest. I am sure that noble Lords will agree with me that the orders I moved today have achieved that aim. I commend them.
On Question, Motions agreed to.