§ Consideration of amendments on Report resumed on Clause 6.
§ Baroness Turner of Camden moved Amendment No. 43:
Page 12. line 42, at end insert:
("(3C) Where a person is entitled to the disability working allowance by virtue of section 20(6A) (c) (i) or (ii) above the amount shall include an amount in respect of his mortgage interest payments or other housing costs as are prescribed.").
§ The noble Baroness said: My Lords, this amendment concerns mortgage interest repayments. I moved an amendment on the subject in Committee but did not press it because I wished to look more carefully at the Minister's response. I now raise the issue again because I do not believe that adequate reasons for rejecting it were given by the Minister when I first moved it.
The intention of the amendment, as I said in Committee, is to try to ensure that mortgage interest and other housing cost provisions are provided for in the calculation of DWA as they are in the calculation for income support. In Committee the Minister claimed that there would be immense problems in estimating how many people with mortgages might claim DWA. He further said:
The majority of people who will be considering claiming disability working allowance will not be receiving any benefit which includes an allowance for mortgage interest or other housing costs. Invalidity benefit and severe disablement allowance do not include any allowance for mortgage interest".—[Official Report, 11/3/91; col. 36.]
§ While it is true that receipt of SDA does not itself entitle people to have mortgage interest paid, a large number of such people have to receive income support to supplement their income. Thus, many people who at present receive SDA will have their mortgage interest paid.
§ DWA is surely more likely to attract claimants and thus disabled people into work—which we keep on saying is one of the objectives—if they are assured about their housing costs. Otherwise, many claimants will have no incentive to opt for DWA. Many disabled people will have to consider very carefully indeed whether they may lose out if they were to opt for a job plus DWA. This nullifies the so-called incentive effect. Therefore I wish the whole matter to be reconsidered in this House. For that reason, I beg to move the amendment.926
§ Lord Henley
My Lords, I have studied the Official Report of our debate on the noble Baroness's amendment in Committee. That amendment was identical—I stress identical, not similar—to the amendment she has just moved. I have to repeat the same arguments. I remain convinced that we were right to follow the model established for other benefits for people in work—family credit and its predecessor, family income supplement.
It will be possible for people with quite reasonable wages to receive some DWA. I quoted an example in Committee, using the illustrative rates we have given in the note on DWA. A couple with two children aged between 11 and 15 could still receive DWA if they were earning £170 a week. On top of that, they would have child benefit and some would have the disability living allowance. If mortgage interest were paid in addition, we would pay an income related benefit to people whose income was around the national average. I feel that would be hard to justify.
The family credit model helps to ensure that the benefit is comparatively simple to understand and to operate. This is of considerable importance to potential claimants. They need to be able to understand the benefit in order to take it into account when deciding whether to take a job. They also need to be confident that their claim can be dealt with quickly and that they will get the money they are entitled to within a matter of days.
From time to time the department's claim forms are criticised for being too long and difficult to complete. Questions about mortgage interest would add to this. Information has also to be checked and taken into account in the benefit calculation. Having to gather and include details of mortgage interest would add to the time taken to process DWA claims and would also add to the potential for errors and disputes.
It is not possible to estimate precisely how many people with mortgages might claim DWA. Probably about 10,000 will claim and will be better off, working and claiming DWA than they would be on income support. We have said that probably a much smaller number with larger mortgages and low earnings will not be better off on DWA. But, as I said in Committee, if they want to work they will be better off with DWA than they would be if the benefit were not introduced.
Most DWA claimants will not have been receiving any benefit which includes an allowance for mortgage interest or other housing costs. As your Lordships know, and as the noble Baroness said, invalidity benefit and severe disablement allowance do not include any allowance for mortgage interest. Those who are already in work when DWA is introduced—perhaps 15,000 people, 30 per cent. of the caseload we are expecting to reach—will be getting no help with their mortgage interest other than tax relief.
Since DWA will make them better off even without an allowance for mortgage interest and other housing costs, it is hard to justify the extra cost and the administrative complexity which would result from including such an allowance.
Disability working allowance is a broad brush scheme designed to be as easy as possible to understand and operate. It would be a very big step to 927 allow for mortgage interest and other housing costs. Such a step would be out of keeping with all we have done to streamline the benefit and, on balance, I do not think it would improve the effectiveness of the benefit. I hope therefore that the noble Baroness will not press her amendment but will be prepared to withdraw it.
§ 8.15 p.m.
My Lords, before the noble Lord sits down and before the noble Baroness replies, will he explain a little further a remark he made earlier? He attempted to adduce a parallel with the previous benefit, family income supplement, which was the precursor of benefits like this. I believe that he said there was no allowance in it for mortgage interest. There was no allowance in it for anything. It was a benefit given to people who received low wages to enable them to manage. The benefit was not apportioned so that one could spend so much on this, so much on that and so much on the other. I hope that the noble Lord will not deny that an enormous number of families who were in receipt of that family income supplement found it immensely helpful. It enabled them to keep up their mortgage interest payments.
§ Lord Henley
Yes, my Lords, that is why we introduced family credit, which is a somewhat better benefit than family income supplement. It has had a far higher take-up than family income supplement.
§ Baroness Turner of Camden
My Lords, we have had pretty much the same discussion as we had in Committee. I remain basically unconvinced. It seems to me that the Minister is arguing yet again that people will inevitably be better off with DWA. According to the information that I have received from organisations representing the disabled, that is rather problematical. Some people will be better off, others will gain so little that by the time they have looked at what they are likely to lose as a result of opting for DWA they may well decide not to go down that route at all. That would be a pity. As I said earlier, the intention of everyone in this House is, I am sure, that DWA should be a successful benefit and should encourage many people back into the labour market.
The Minister said that in the other benefits to which I referred people did not receive mortgage relief. That is absolutely true. However, some people would receive income support and perhaps receive mortgage interest relief as a result of getting the benefit.
I am not at all happy with what has been said. The organisations representing the disabled felt strongly enough about this provision to ask us to press it again on Report. As I said earlier, the director of Shelter wrote to me to say she thought this was an important amendment and that if it was accepted it would represent a great benefit to many people who otherwise would have enormous difficulty in opting for DWA. However, I do not intend to press the amendment at this stage of the proceedings. Despite my misgivings about the response we have been given, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Baroness Turner of Camden moved Amendment No. 44:
Page 12, line 46, at end insert:
("( ) The following subsection shall be inserted after subsection (6) of section 21 of the 1986 Act—
(6A) In the case of the disability working allowance the regulations shall provide that—
- (a) the maximum rate for a single person shall be the same as the adult rate for family credit with an addition of 20 per cent of that adult rate;
- (b) the maximum rate for lone parents and couples shall be the same as the adult rate for family credit with an addition of 45 per cent of that adult rate;
- (c) the rate for couples where both are disabled shall be the same as the adult rate for family credit with an addition of 65 per cent of that adult rate; and
- (d) the rates for children shall be the same as those prescribed for children in relation to family credit." ").
§ The noble Baroness said: My Lords. in moving this amendment I shall speak also to Amendment No. 45 as I understand they are grouped together. The object of the amendments is to try to raise the levels of DWA as an incentive to disabled people to opt for employment. All the organisations catering for the disabled are currently concerned that the levels of DWA, particularly in view of the 70 per cent. taper, are such that relatively few people will be tempted to opt for work. As we see it, that would nullify the whole intention of DWA. The provision therefore links the amounts to the family credit rates, but with additions because of disability. The reason for this is that disabled people have special needs. We have often referred to those needs during debates on the Bill. When they work, they incur working expenses. such as travel expenses, even taking account of help that is available under the fares to work scheme. They also incur clothing expenses and expenses for food, in particular for food that must be purchased at midday.
§ The Spastics Society has provided me with examples of such expenses. Some of the examples are detailed, but it becomes fairly clear that for a person coming off incapacity benefits and income support, the benefits of working would sometimes hardly be worth while. If such a person earns £36 a week, for example, from working, plus £36.22 DWA top-up, he could end up, after working 16 hours a week, only £1.92 per week better off. Then he or she would lose entitlement to health benefits which are passported under income support. Reducing the taper would have helped. However, as we know, the Minister has not been prepared to accept that. This is another attempt to try to provide a genuine incentive for disabled people to take paid employment.
§ As the illustration I have mentioned indicates—I have many detailed examples that I could provide—a benefit of ultimately around £1.92 a week is hardly an incentive for someone who is prepared to work 16 hours a week, particularly when health care benefits are also lost. Noble Lords will know that we attempted to remedy that position in Committee but we were not successful.
§ I have given an example that relates to a single person. The amendment I am moving now also seeks 929 to cover the position of lone parents and couples where both partners are disabled. Again we emphasise that being disabled involves extra costs that those of us who are lucky enough not to be disabled can hardly imagine. There are the costs of medicines and sometimes costs for special equipment and clothing which may be specialised or different from normal clothing. Those costs are incurred in addition to the normal costs of working which involve, as I have already indicated, travel costs and the costs of meals taken away from home. For those reasons I commend the amendment to the House. I beg to move.
§ Lord Henley
My Lords, there are various technical objections to these amendments. For example, they fix the benefit rates in such a way that if the Government decided on a more generous uprating for DWA this would have to be done by primary legislation. I appreciate that the noble Baroness has tabled the amendments in order to debate the generosity or otherwise of the level at which DWA is to be introduced. Therefore, I do not propose to dwell on the technical objections save to make one point.
By tradition the Government have set benefit rates by regulation. This ensures that the rates are given appropriate parliamentary scrutiny but also allows the Government flexibility to tune the rates. In this way it is possible to give a little extra to particular groups where appropriate—for example, last year we increased both the adult and the children's disability premiums by more than inflation, at a cost of £26 million. Subject to parliamentary approval, it also allows the Government to make judgments between wider competing priorities. Resources are always limited and the Government must decide how to apportion them. It must be right that governments can do this without constant recourse to primary legislation.
For that reason the Government propose to set the DWA rates by regulation. We intend to do this in the autumn. The rates will be set after considering all the views expressed during the Bill's passage through Parliament and in the light of wider decisions about the resources which are available.
I now turn to Amendment No. 44. We set out illustrative rates for DWA in the note we published last November. In two respects the rates we proposed then are the same as or similar to those this amendment would require. As suggested by this amendment, we propose to set the rates for children at the same level as they are set from time to time for family credit. The illustrative rate we have given for couples and single parents is only 95p. less than the level it would be if the formula in this amendment was applied. The important differences are in the rates for single people and for couples where both partners are disabled.
At present benefit rates the formula would give single claimants £6.40 more than the illustrative rates. We arrived at our illustrative rates by setting the rate for single people at 60 per cent. of the rate for couples. This is roughly the ratio used in other social security benefits and seems to us to be reasonable. We considered giving a special higher rate of DWA where both partners are disabled but decided against that 930 because of the practical problems of identifying whether the partner is disabled. Short of devising a disability test for partners, I am not sure how we could make the suggested formula work in such cases.
Amendment No. 45 would set the applicable amount for all DWA recipients at the same level and would set this level 20 per cent. higher than the family credit applicable amount. I am not clear why this particular ratio was selected, but if it proved too high or low it would require primary legislation to refine it. There is the question of whether it is right to adopt the same applicable amount for single childless people as for couples. I think it is reasonable to acknowledge in the benefit structure the fact that two people's needs are greater than those of one person.
I am grateful to the noble Baroness for tabling the amendments and giving us the opportunity to discuss the rate at which DWA should be introduced. We shall take note of what she has said. This is in fact the first debate on the subject during the Bill's passage through Parliament.
There are very important issues. I hope that the noble Baroness will accept that it is more appropriate to set the benefit rates by regulation and that the Government must decide the level nearer the time taking into account the resources which are available. I hope therefore that the noble Baroness will withdraw her amendment.
§ Baroness Turner of Camden
My Lords, I thank the Minister for that not unsympathetic response to the amendment. I appreciate that he said that note would be taken of my comments in speaking to the amendments. Clearly, as I emphasised in my opening remarks, we wished DWA to be set at a generous enough rate to encourage people who otherwise might not do so to opt for DWA and join the labour market. That is the whole objective of this exercise. We were concerned—this is also a concern of the organisations involved with the disabled—that the rates set would simply not provide the appropriate incentive.
I note what the Minister said about the flexibility involved in setting rates by regulation rather than in primary legislation. I suppose that there is something to be said for that approach if account is taken of what Members of this House and of another place have to say about those rates when they are made known. Certainly, unless the rates are reasonably generous they will not provide the appropriate incentive.
However, it is not my intention to press the amendments tonight. As the Minister said, this is the first time we have debated the rates themselves during the course of the passage of the Bill through this House. I am very glad that note is being taken of what is being said, because what I am saying to your Lordships tonight does not come out of the air. They are points that have been put to me by organisations which represent the disabled and which have been so active in lobbying on the Bill and which do so much work on behalf of people who are disabled who, we all hope, will ultimately benefit from the provisions of the Bill.
§ Having said that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.931
§ [Amendment No. 45 not moved.]
§ 8.30 p.m.
§ Baroness Turner of Camden moved Amendment No. 46:
Page 12, line 46, at end insert:
("( ) The following subsection shall be inserted after subsection (5) of section 22 of the 1986 Act (calculation)—
(5A) Subsection (5) above shall not apply where a
person is claiming the disability working allowance." ").
§ The noble Baroness said: My Lords, I moved an amendment to this effect at Committee stage. I believe that it was the same amendment—or similar. As it was getting late I did not press it to a Division. Nevertheless, this is a matter which we are justified in asking to be reconsidered.
§ Under the Bill as it stands, if one member of a couple claims DWA the partner's income will be taken into account when assessing entitlement and calculating the amount of benefit payable. It will be seen immediately that numbers of disabled people—mostly women-are likely to be disadvantaged by that requirement. Yet if the intention is, as we have said, to try to ensure that people with disabilities join the workforce at levels of work that they can manage that must surely be a major disincentive.
§ The argument has been that disabled people should be encouraged to be independent and, where possible, look after themselves. However, unless an attempt is made to individualise the benefit that simply will not happen.
In replying to the debate on the amendment in Committee, the Minister said that DWA:
is not a personal benefit. The amount of benefit due for the whole family will be calculated and the whole family's resources (with certain specific exceptions) will be aggregated and taken into account".—[Official Report, 11/3/91; cols. 47 and 48.]
He further said:
Disregarding the partner's income and capital would increase the cost of DWA and I do not believe it would be a good use of public money".
He also said:
The question of incentives was one we considered very carefully when designing DWA".
§ Organisations representing the disabled believe that approximately half the disabled people living as couples would fail to qualify for even the minimum level of DWA. I think it particularly important that women who are disabled should have the opportunity of earning in the wider community and should have the incentive to do so. As we have said, we support the whole concept because we believe that undertaking suitable work, perhaps with reduced hours, breaks down the isolation felt by many disabled people. However, if a partner's income is to be taken into account the whole notion of independence breaks down.
§ I know that once again the question of cost will be raised, as it was in Committee. However, I believe that helping disabled people to independence will ultimately cost less, rather than more, as well as being emphatically the right thing to do.
§ Lord Henley
My Lords, I note what the noble Baroness said about her amendments not coming out 932 of the air. In addition, I can assist the noble Baroness by telling her that the amendment is exactly the same as, rather than similar to, the amendment she tabled in Committee. I should also comment, as I believe I did at Committee stage, that while I appreciate the figures will be speculative the cost of the amendment could be about £10 million—a not inconsiderable sum.
There are two issues to be considered. The first is whether an income-related benefit should, as a matter of principle, be paid to someone whose partner has sufficient earnings or capital to take the family above the general income-related benefit level. The second is the extent to which DWA should be expected to offer an incentive to disabled people to work.
On the first, the answer is very clear. The rules governing income-related benefits should reflect the pooling of resources which takes place in the majority of families. Income-related benefits are paid for by taxpayers, some of whom themselves have quite low earnings. The principle which applies and has always applied to income-related benefits is that the financial resources of both partners should be taken into account in calculating the benefit paid for the family. It would be inequitable to do otherwise.
As for the second issue, again the answer is very clear. The indications are that, by and large, disabled people want to work and be fully integrated into the community. They say that the benefit system obstructs them in their attempts to work, and we have done a great deal to remove the obstacles.
DWA provides an opportunity for disabled people, as I have said on a number of occasions. The opportunity offered is that disabled people on incapacity benefits can take work, even at a very low wage, confident of two points. First, their earnings can be supplemented to ensure they are not taken below income support level as a result. Most will be somewhat better off than this. Secondly, if they take a low paid job with the help of DWA they have two years in which to establish themselves. During that time if their attempt at work fails and they prove incapable of work they can go back to their incapacity benefit without having to wait 28 weeks to requalify.
As I said, I believe that disabled people should decide whether or not to go to work on the basis of a judgment of their capacity to do so. They may well want to work because of the financial and social rewards, but I do not believe that the benefit system should push them to go before they are ready.
I hope, therefore, that the noble Baroness will feel able to withdraw her amendments and accept the fact that disregarding the partner's income and capital would increase the cost of DWA. As I said in Committee, I do not believe that that would necessarily be a good use of public money.
§ Baroness Turner
My Lords, again I rise to say that I note what the Minister said without necessarily agreeing with it. I was under the impression, and we have been told repeatedly by the Minister during the course of our discussions on the Bill, that DWA is a new and entirely fresh benefit. It is a different and completely new approach. The whole idea is that disabled people should be made more independent, and should be encouraged to become more 933 independent, by joining the workforce. If one intends to encourage independence this part of the Bill is not the right way to go about it.
I am very sorry indeed that it should be regarded as appropriate that in this benefit the same criteria should apply as in relation to the other benefits to which the Minister has referred. I thought that it was a rather different benefit with a different approach.
In particular, I am concerned about the position of women. Surely we would like to encourage more disabled women to become independent and independently to join the labour market. It seems to me that this provision will militate against that. Nevertheless, it is not my intention to divide the House at this stage of the Bill. Having expressed my disagreement with the Minister, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Henderson of Brompton moved Amendment No. 47:
Page 12, line 46, at end insert:
("( ) The following subsection shall be inserted after subsection (6) of section 22 of the 1986 Act (calculation)—
(6A) For the purposes of subsection (6) above if the person is claiming a disability working allowance the prescribed amount shall not be less than £16,000." ").
§ The noble Lord said: My Lords, I see that Amendment No. 47 has been grouped with Amendment No. 48 but I do not think that they are about the same subject. Therefore, I propose to speak only to Amendment No. 47, which deals with the capital limit which may be prescribed. It is now £8,000 and the amendment proposes that it should he not less than £16,000. I should like to be able to move—but I expect without hope—that there should be no prescribed capital limit.
§ I should like to say that this amendment is not similar but identical to the amendment I moved in Committee. I move it in order to elicit some kind of response from the noble Lord, Lord Henley, who very kindly undertook in Committee to consider the amendment before the next stage.
§ There was all-round support for the amendment in Committee, and it was noticeable that the support came, almost especially, from the Conservative Benches. First, there was support from the noble Baroness, Lady Gardner of Parkes, secondly, there was support from the noble Lord, Lord Swinfen, and, thirdly, late in the day there was rather unexpectedly support from the noble Baroness, Lady Carnegy of Lour—though perhaps that was not her intention. Among other remarks, she said that nowadays £8,000 was not very much capital; nor indeed was £16,000. I can count upon her as a supporter in withdrawing this amendment in the hope of good things to come following discussion between myself and the noble Lord, Lord Henley.
§ It so happened that I was not well and was extremely ably represented by the noble Baroness in front of me. She and her experts came along and talked to the noble Lord. I am told that they had a very agreeable and promising conversation. I cannot 934 count my chickens before they hatch, and I am just hoping that the good things adumbrated earlier by the noble Lord are about to be vouchsafed.
It is quite clear that good Conservatives like people to acquire nest eggs. That approach is documented particularly in regard to the present amendment to the Bill in paragraph 3.18 of The Way Ahead. The Government identify as a priority for targeting resources those who have not had the,
opportunity to earn, to build up pension rights and to save".
§ By imposing an £8,000 capital limit the Government will clearly be running against their own aims. Therefore, we are trying the bring them into line with their aims as set out in The Way Ahead. Disability working allowance should be a very different benefit from family credit. It is designed to enable disabled people to work part-time and to take an active part in society, whereas family credit is designed to assist families on low income.
§ If the capital limit were removed I believe it would not add significantly to the cost of the disability working allowance. I have authority for saying that, in that when the Government were asked in the House of Commons by Mr. John Hannam (one of their own supporters) about the cost of raising the capital limit for this benefit, the Minister replied that, given the small numbers involved, it was not possible to estimate with confidence the gross or net cost.
§ I appreciate that it is impossible to do so, but the implication was that it was not very great.
§ I think I have made the case for the amendment and given the opportunity for the Minister to let us know the result of his conversation with his noble friend Lady Darcy (de Knayth). I beg to move.
§ 8.45 p.m.
§ Lord Swinfen
My Lords, I should like to support the amendment so ably moved by the noble Lord, Lord Henderson of Brompton. At Committee stage in response to a question from the noble Baroness, Lady Turner, my noble friend the Minister said that compensation for personal injury held in trust would be disregarded as far as the calculations were concerned. Sometimes it can take a very long time for compensation to be paid following an industrial or other injury. It may well be that by the time compensation is paid the newly disabled person has reached the stage where he is ready to go back to work. What is the position in relation to compensation which is not in trust? Is that also to be disregarded? Some people will have the ability to get legal advice and have compensation put into trust and some will not. Is one to penalise those who do not have their compensation put into trust?
The current figure of £8,000, which the noble Lord by his amendment wishes to raise to £16,000, is very low. The cost of special adaptations required by physically disabled people is peculiar to those people. Disabled people are far more individuals than able bodied people because they need things to be specially designed for them.
In addition, in many cases when people get jobs they need to move. It is not always the case that local housing authority dwellings specially designed for 935 disabled people are available in those areas where such people getting new jobs would require to obtain homes. They may well have to buy. The cost of buying a house and moving can sometimes be horrendous. On top of that is the cost of all the necessary adaptations. Therefore, to encourage disabled people to get work and be prepared to move to get work we need to keep the capital level as high as possible. It has to be borne in mind that a physically disabled person cannot get a home just anywhere. Even if a disabled person's home is within the recommended distance of a quarter of a mile of shops, the situation is hopeless if the house happens to be in the bottom of a valley with the shops at the top of the hill. The disabled person cannot get up the hill in his or her wheelchair.
Even if they do not have to move and they stay in one place, they have to maintain their homes. Most of us maintain our homes on a do-it-yourself basis. We may not do it as well as the professionals, but it is done, But a disabled person in a wheelchair would, for instance, have the greatest difficulty in redecorating a ceiling. They would have to get somebody in to do that. As opposed to paying just a few pounds for equipment, it could cost them several hundreds of pounds. They will not be able to get into the attic to deal with the plumbing or the electrical wiring above the ceiling. There are so many aspects of disability which attract far more expense than one realises. It is essential that a disabled person should have a capital sum upon which he or she can fall back in emergencies. I heartily support the amendment.
§ Baroness Turner of Camden
My Lords, I rise briefly to support the amendment and to say that on this side we agree that there is no reason for grouping this amendment with the following one in my name. With the leave of the House, we would be happy to have them debated entirely separately. We agree with the noble Lord, Lord Henderson, that the two amendments raise different issues.
I shall add very little to what has been said. In fact a great deal of it was said in Committee. The £8,000 limit is very low. Arising from disability there are costs which have to be shouldered and which are not imposed upon people who are not disabled. The noble Lord, Lord Swinfen, has already referred to them.
I am grateful to the noble Lord for having raised again the whole question of industrial compensation. I raised the matter in Committee and received from the Minister a response to the effect that if it were compensation in trust it would be disregarded. But as has already been indicated, there may very well be money simply paid in compensation and remaining in a bank account before any decisions had been taken as to what should be done with it. Moreover, advice may not be available as to what should be done with it in any event.
For all those reasons I support the amendment. I suppose that the main reason is that £8,000 is too low in current circumstances. There seemed to be general agreement earlier when we debated this issue that that was the situation. Indeed, the Minister himself said that he would be prepared to take away and look through the first of the amendments, which was the 936 amendment relating to the £8,000 and creating a situation in which the prescribed amount should not be less than £16,000. I await with interest the Minister's response.
§ Lord Clifford of Chudleigh
My Lords, first, I must thank the noble Lord, Lord Henderson, for bringing up this issue. He may remember that last time also I spoke in favour of the amendment. I congratulate the Minister for the steps that he has taken already today to increase the amount of money which will be paid in the form of benefit for those people who congenitally or later on in life are unfortunately mentally affected and disabled.
I should like to ask him whether the figure of £8,000 was considered before the recent Budget when value added tax went up to 17.5 per cent. In fact was it considered in line with the fact that we shall go into the European Community a little bit more integrated physically and in other ways in 1992 or perhaps 1993? Was the £8,000 also considered—I hope that the Minister is listening too—when the tax was increased on fuel? That is a tax which affects heating, travel and the cost of carers for the disabled. What about the new local government taxes which the Minister in another place talked about which will come into effect possibly within three years? Very well, within three years, but does that mean to say that the £8,000 will be reconsidered in 1992? In fact can the people whose cases we are trying to represent this evening make do with £8,000 a year? Can they manage on it? The answer is no.
Can they manage on £16,000? I totally agree with what has been said already this evening by two or three speakers. The amount is paltry. Noble Lords will remember that the last time I spoke on this matter I said that we had the privilege of taking an allowance for meals. I incorrectly calculated it at £24 a day; I understand now that it is £26. If one were to take that sum for 365 days—I hope my mathematics are correct—it would come to £9,490. That would mean that out of the £16,000 the disabled person would have left £6,510 for the remainder of what he or she had to manage with for that year in order to live. I do not call that generous. I do not think that enough thought has been put into this issue. I can assure the Minister that, as a partially disabled person—I know there are others present in the House who come into the same category—I am fortunate not to earn only £16,000 per annum.
I should be grateful if the Minister would consider £16,000 as the lowest rate. I thank the noble Lord, Lord Henderson, for again bringing up this point. I thoroughly support the amendment.
§ Lord Henley
My Lords, I thought that the two amendments, Amendments Nos. 47 and 48, were grouped together. However, if the noble Baroness and the noble Lord, Lord Henderson, want them to be "ungrouped" then that is fine by me.
As we have said, the disability working allowance is an income-related benefit. Resources are limited and must be used first to help those who are relatively less well off. The proposal reflects that aim by giving most 937 help to people with less than £3,000 capital and tapering off that help as their capital rises to the appropriate limit, at which point no benefit is payable.
Perhaps I may say a word or two about our record on increasing capital limits in the past. In 1980 up to £2,000 was disregarded but no supplementary benefit, as it then was, was paid to people with more capital than that. The limit was then increased to £2,582 and £3,000 in 1983. Since 1988 the rule has been that £3,000 is disregarded but—it is a big but—tariff income is assumed on capital above that level. That cut-off point was £6,000 from April 1988. In April last year it was raised to £8,000 for income support and family credit and £16,000 for housing benefit and community charge benefit.
It has been argued that DWA recipients, being disabled, have a particular need to be able to accumulate savings. I accept that, but one must bear in mind forms of capital which are wholly disregarded. For example, compensation for personal injury held in trust will be entirely disregarded.
My noble friend Lord Swinfen asked about compensation for personal injury which was not held in trust. The problem is that capital held in trust is easy to distinguish from any other capital and so can be disregarded without any difficulty. A payment in compensation which is paid into, say, the ordinary account of a claimant would he difficult to distinguish from any other capital. The compensation payment might have been made some years ago and other capital might have been inherited or have accrued since then. If all that capital were in the same account now, it would be difficult to distinguish one form from the other.
In reply to my noble friend I would recommend anyone to take advice on these matters and make sure that any personal injury money is held in trust. That only involves taking the appropriate legal advice. Other forms of capital will also be disregarded, such as the claimant's home, as I mentioned at Committee stage, and his personal possessions, of which I gave a rather extreme example.
§ Lord Carter: That was the Rembrandt, my Lords.
§ Lord Henley
My Lords, it was the Rembrandt, as the noble Lord said. And also of course the surrender value of a life assurance policy and an annuity or an occupational pension.
During the debate on this matter at Committee stage particularly in relation to the upper limit of which we are speaking—the noble Baroness wants to have the amendments ungrouped and they will be ungrouped—I promised to take away this matter and reconsider our proposals in the light of arguments advanced by Members of this House. Since that debate I have discussed the issues further with the noble Baroness, Lady Darcy (de Knayth). I hoped to be able to discuss them with the noble Lord, Lord Henderson, but I regret that he was unable to attend on that occasion. I might be wrong but I understand that he was in Cumbria, which was a perfectly good excuse. The noble Lord shakes his head. He was not in Cumbria. I am sure nonetheless that he had an equally good excuse for not having been there.
938 The noble Baroness made a convincing case for raising the upper capital limit to £16,000. In the light of all the arguments, I have reconsidered these matters, and I accept the contention that has been put forward that there is a special case for setting the capital cut-off point for DWA higher than the £8,000 limit used in income support and family credit. On that basis I can confirm that we will set the upper capital limit for DWA at £16,000.
The noble Lord will understand that this will be done by regulation. I am sure that he will accept my assurance that this will be the case: obviously it cannot be a matter for the Bill. I hope therefore that the noble Lord will feel able to withdraw his amendment.
§ 9 p.m.
§ Lord Henderson of Brompton
My Lords, I must say that that is a handsome reply on what may be recorded for posterity as the Rembrandt amendment, or indeed it could be called the Carnegy of Lour amendment. The noble Baroness, perhaps inadvertently, helped us considerably to this substantial concession. We are grateful to her as well as to the noble Lord for this fine result.
Certainly the goodies that he had laid out for future pleasure have now been consumed with gratitude, and we are grateful. I am sure that all in the disabled world will be grateful too. With those words, and with the promise of amendments by means of regulation, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Baroness Turner of Camden moved Amendment No. 48:
Page 12, line 46, at end insert:
("( ) The following subsection shall be inserted after subsection (7) of section 22 of the 1986 Act (calculation)—
(7A) For the purposes of subsection (7) above, if the person is claiming a disability working allowance the prescribed lower amount shall not be less than £5,000."").
§ The noble Baroness said: My Lords, I too should like to take this opportunity to thank the Minister for the enormous concession made on the previous amendment, although it has nothing to do with this amendment. On this amendment we are looking at the lower end of the scale and at the question of the £3,000, which is the figure at which the taper begins and the figure at which reductions in benefit begin. The Minister has confirmed tonight that this has been in existence since 1983/84. I cannot understand why this figure has never been uprated in line with inflation. If it were uprated it would be nearer the £5,000 that we are suggesting.
§ The Minister has been good enough to accept the arguments that we put forward from all sides of the House in regard to the £8,000. I wonder therefore why it is not possible for him to move on the £3,000. He indicated in Committee that he did not feel that this figure was something on which he could move. Although it would not tie in with anything else on income-related benefits, neither, as I understand it, would the concession that he has just made in regard to £8,000.939
§ I wonder, therefore, without my having to make a case about it because we have discussed it quite a lot in Committee and the arguments are similar to the ones advanced in relation to the £8,000, is the Minister prepared to make any concession at all in relation to the £3,000? It has remained the figure in family credit for a long time, and, as we have indicated on a number of occasions in discussion on this Bill, DWA is a rather different sort of benefit. I beg to move.
§ Lord Henley
My Lords, after a successful appreciation of my previous concession I am not sure that I shall be able to help the noble Baroness here.The £3,000 is the lower capital limit —or it is proposed to be—not just for DWA but for all the other four income-related benefits, and I see no case for giving this one particular income-related benefit a different base limit from the others.
The noble Baroness asked, if that was the case, why we were able to increase DWA to £16,000. The point I made at Committee stage was that there were two income-related benefits with a capital limit of £8,000 and two with £16,000 and that we had decided to attach DWA to the £8,000 limit. In the light of representations made today I have been able to offer an increase in the upper capital limit to £16,000. Therefore, there are now three benefits on £16,000 and two on £8,000.
The noble Baroness tried to make the point that £3,000 has been the fixed lower limit since 1983. That is not quite the case. Three thousand pounds was also the upper capital limit in 1983. What we have done since then is to bring in the tariff income that is assumed on capital above that level. The noble Baroness will know that that tariff income assumes an income of a pound a week for each £250 of extra benefit. Either the noble Baroness, or possibly her noble friend Lord Carter, have argued that these are punitive interest rates and argued that they represent something of the order of 17, 18 or 19 per cent. assumed interest on the extra income. That is not the case. If one looks at an individual with capital of £3,250, the rate of interest, because one has also to take into account the first £3,000, is something quite marginal; some 1 or 2 per cent. It gradually works up from that, and, I admit, reaches to a relatively high figure towards the higher levels of the upper capital limit.
We do not see a case for increasing the lower limit from £3,000 at the moment. I would also say again that we shall continue to review those capital limits, as we have done in the past, and shall continue to ensure that both the lower and upper capital limits are pitched at about the right level. I hope, particularly in the light of the concession on the earlier amendment, which was originally grouped with this amendment, that the noble Baroness may be able to withdraw her amendment.
§ Baroness Turner of Camden
My Lords, I thank the noble Minister for his explanation, although it seems to me that what we are talking about is an attempt to get everything nice and tidy, with a sort of bureaucratic tidiness where you have everything 940 related to everything else. That is a pity in view of the fact that we are talking about what is a new and quite different benefit.
However, I am grateful for the concession on the previous amendment, as I am sure we all are. I am also grateful for the assurance that it will be the intention to continue to review, when it seems appropriate to do so, not only the upper but the lower capital limit. In the light of those assurances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 7 [Disability working allowance—supplementary]:
§ Lord Henley moved Amendment No. 49:
§ Page 13, line 17, leave out ("for the purposes of section 20(6A) (b) above") and insert ("that for the purposes of section 20(6A) (b) above he has such a disability (in accordance with regulations under section 20(6C) above)").
§ The noble Lord said: My Lords, I wish to correct an error on the Marshalled List. It indicates that this is an amendment to Clause 6; in fact, it is an amendment to Clause 7. It is a drafting amendment to make it clear that the disability test for initial claims will be defined in regulations. I beg to move.
§ On Question, amendment agreed to.
§ Schedule 3 [Disability working allowance: amendments]:
§ Lord Henley moved Amendment No. 50:
§ Page 32, line 7, leave out ("115C") and insert ("115D").
§ The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 28. I beg to move. On Question, amendment agreed to.
§ Lord Henderson of Brompton moved Amendment No. 51:
§ After Clause 8, insert the following new clause:
§ ("Effect on remission of NHS charges of entitlement to DWA
§ .In the calculation of resources for entitlement to remission of charges under the National Health Service Act 1977 and the National Health Service (Scotland) Act 1978 the Secretary of State shall by order prescribe that payments of disability working allowance shall be disregarded.").
§ The noble Lord said: My Lords, this amendment is not identical to that moved in Committee but is a modification. Its provisions will cost less than those of the amendment moved in Committee. We hope therefore that it will be attractive to the Government. Its purpose is to lessen the incidence of National Health Service charges on those in receipt of DWA. The previous amendment would have passported DWA beneficiaries to immunity from national health charges. This amendment does rather less.
§ The purpose of DWA is to encourage people who are partially capable of work to return to or take up work by topping up their earnings. A great deal of that incentive is taken away by the Bill as drafted because such people lose the immunity to National Health Service charges that they can claim on family credit. Therefore they may not be encouraged to take up DWA.
§ It is notable that DWA is modelled on family credit. The prima facie reason for moving the amendment is to bring it more into line with family credit and we hope that the Government will be 941 willing to do that. The alternative proposal that we are putting forward today only partially achieves that aim and we hope that it will be more acceptable to the Government. It will bring DWA into line with attendance allowance and mobility allowance, both of which will be replaced by disability living allowance under Part I of the Bill.
§ Disregarding DWA from the calculation for help under the low income scheme would at least increase the value of help provided to DWA claimants. The lack of help towards the cost of prescriptions remains serious. The charges will rise in the near future to £3.40 per item. At least the recipients of DWA will be able to claim the season ticket which will be some help. However, I maintain that it is not enough help. The only help with prescription charges available to non-exempt groups is via the season ticket.
§ We know that the season ticket is of little help to people on low incomes who may be unable to find the cost of the immediate charge, let alone pay in advance of future charges. This time our proposals do not go that far; our amendment asks for much less. We still hope for largesse from the Government. In that spirit, I beg to move.
§ Lord Carter
My Lords, I was pleased to add my name to the amendment. It was moved so well by the noble Lord, Lord Henderson, that I wish to add only two points. The proposal brings the DWA into line with the attendance allowance and mobility allowance which are also disregarded. Therefore, what is the logic for not also disregarding DWA?
In Committee the Minister said:To exempt recipients of DWA from health charges would cost some £3.3 million a year in loss of income from prescription charges, dental charges and provision of sight tests and optical vouchers. Those benefits would go not to those in greatest need—who will be eligible for help under the NHS low income scheme—but to those above the threshold for that scheme'.—[Official Report, 11/3/91; col. 43.]That implies that the cost of our amendment would be less than £3.3 million and would direct help to those who would be eligible for help under the NHS low income scheme. I hope that in the light of that explanation the Minister will be able to accept the amendment.
§ Baroness Masham of Ilton
My Lords, I support the amendment. Those people receiving unemployment benefit or income support—I am terribly muddled because the names keep changing and just as I learn one name it changes, so I shall call it unemployment benefit —are exempt from prescription charges. As a disabled person may need various prescriptions, it may be a considerable disincentive to take up employment if one has to pay for prescription charges. If people can work, it is so much better for self-esteem and so much better for the family, should there be a family. Unless the amendment is accepted there will be a serious disincentive. It must be remembered that we are speaking of disabled, not able-bodied, people.
Baroness Darcy (de Knayth)
My Lords, I hope that the noble Lord will accept the amendment. As my noble friend said, this is very much a bottom line amendment
§ 9.15 p.m.
§ Lord Henley
My Lords, I have a feeling that I have come to the end of my generosity this evening. We are considering an amendment moved in Committee to exempt DWA recipients from NHS charges. As the noble Lord, Lord Henderson, will remember, that was rejected on a Division. I accept that this amendment is not identical and may not even be similar, to use the word of the noble Baroness, Lady Turner, but its intention is very similar.
Perhaps I may deal with the point made by the noble Baroness, Lady Masham. She is correct that a person on income support would be exempt from these charges. That has always been the case. The great majority of DWA recipients will be better off in work than on an incapacity benefit. It follows that they must expect the help given to the least well off by the welfare state to be withdrawn as their income rises above income support level.
Many people are automatically exempt from NHS charges and many more receive help under the low income scheme, which has been referred to. But those who can afford to contribute to the cost of their medication and of their dental and optical treatment should do so.
The NHS low income scheme is designed to protect people with limited resources who are not otherwise exempt from NHS charges. The threshold for exemption is set at about the same level as that used in assessing entitlement to income support, although the NHS scheme also allows for net housing costs to be taken into account. We believe that this is fair and sensible. Many DWA recipients will be eligible for help under this scheme but I can see little justification for a special disregard of DWA which would put them in a rather better position than all others with low incomes.
I now turn to family credit and the question asked by the noble Lord, Lord Carter, as to why those on family credit will be exempted from NHS charges while DWA recipients will not be. The noble Lord, Lord Carter, also mentioned attendance and mobility allowance.
Exemption from NHS charges has been granted to recipients of family credit and its predecessor benefit family income supplement since its introduction in 1971; and the Government have not subsequently thought it right to reduce the entitlement of this group of beneficiaries. However, it is a central principle of government policy that help should be targeted towards those whose need is greatest. Recipients of DWA will be better off than those on income support (and DWA will be more generous than family credit) and it is not unreasonable that recipients of DWA should lose entitlement to automatic help with NHS charges.
Except for prescription charges, where availability of season tickets minimises the additional costs which can be incurred, DWA recipients will be able to apply for help with NHS charges through the NHS low income scheme, and can expect to receive at least partial help with charges unless their income is 943 substantially above income support level. I believe that this makes the most effective use of the resources available.
Having listened to the arguments, I remain unconvinced. Wherever the line is drawn there will always be people who fall just the wrong side of it. It was decided in Committee that the Government's position is right. Therefore, I hope that the noble Lord will feel able to withdraw the amendment.
§ Baroness Masham of Ilton
My Lords, with the leave of the House, I should like to take issue with one remark made by the Minister. How can a disabled person ever be on equal terms with others on low incomes? The disability is permanent. They cannot be on the same level. That is the argument which we always put forward and we cannot find Ministers who understand it. If a Minister became disabled, then he would understand it, but I hope that that will not happen to this Minister.
§ Lord Henley
My Lords, I hear odd noises from behind. In my response I was attempting to say to the noble Baroness that we feel that recipients of DWA will be in a better position than those on income support. That is the point behind DWA. I then went on to say that DWA payments will be more generous than family credit. To some extent that takes account of the fears expressed by the noble Baroness.
I accept that no matter how far we amend the Bill we would not be able to meet the requirements of the noble Baroness. I appreciate that, happily, I am not in the same position as the noble Baroness and therefore it may be argued that I fail to understand these matters fully. However, the noble Baroness knows that I have listened to her on many occasions and always take note of her arguments. I am sure that the noble Baroness has had ample opportunity to ensure that I understand these matters as well as I ought.
§ Lord Henderson of Brompton
My Lords, clearly that response is a disappointment. The tap has been turned off; the fountain no longer runs, and I am athirst.
I disagree with the noble Lord, Lord Henley, that this issue was decided in Committee. It was not. Something rather dissimilar was decided in Committee and therefore we remain capable of continuing the argument. I still hope to persuade the Minister and his colleagues of our view.
As the noble Baroness, Lady Masham, said, the provision remains a powerful disincentive to what are, after all, poor people. One must be poor to qualify for DWA and therefore it is a disincentive. The whole power behind this imaginative scheme will be lost to many families where the breadwinner would be able to elevate his self-esteem within his family and friends. For those reasons we are disappointed by the Minister's reply.
The noble Lord said something with which I can readily agree; that those who can pay for National Health Service charges should do so. But I question whether those on DWA can pay. Those in receipt of DWA are, almost by definition, poor people. I should 944 like to know how many people on DWA the Minister estimates will he eligible for National Health Service prescription cost waiver or disregard. According to the noble Lord quite a number who are in receipt of DWA will be rich enough to pay for their NHS costs. I wonder how many he estimates fall into that favourable category and remain eligible for DWA. I do not know whether the Minister is able to answer that question. I should be interested to hear his reply.
§ Lord Henley
My Lords, with the leave of the House perhaps I may say that I cannot answer the noble Lord on that matter. However, I shall undertake to write to him after consulting colleagues in the Department of Health. I cannot give a figure off the top of my head.
§ Lord Henderson of Brompton
My Lords, on the face of it that would be an interesting figure to have. We are disappointed. We are speaking of a small amount of money—between £3 million and £4 million. Even at this Report stage I hope that the Minister will consider something on the lines of our amendment. However, I reluctantly beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ Clause 9 [Entitlement to other benefits after termination of entitlement to disability working allowance]:
§ Lord Carter moved Amendment No. 52:
Page 15, line 11, at end insert:
("( ) In section 17(1) (d) of the 1975 Act, after paragraph (e) there shall be inserted—
(f) Where a person has been in receipt of disability working allowance, paragraph (d) above shall have effect with the substitution for "8 weeks" of "13 weeks" " ").
§ The noble Lord said: My Lords, Amendment No. 52 relates to a subject discussed in Committee and is intended to clarify the issue. The aim is to extend the current linking rule, which applies to incapacity benefit, from eight to 13 weeks, which was the linking period up to 1980. This amendment would restore that linking rule of 13 weeks for ex-DWA claimants.
§ The House will know that the linking rule allows two periods of incapacity for work or employment to be treated as one continuous period as long as any gap is no longer than eight weeks. The continuation of the original period of interruption of employment—that is to say, PIE—is crucial, otherwise claimants lose the link with their paid national insurance contributions or age additions and so forth.
§ As drafted, the amendment is a compromise. We simply propose that people who have recently used DWA to try out their capacity for very limited work can later progress to better paid work for a short trial period without putting into jeopardy the invalidity benefit or SDA entitlement for ever. This is a small change but it would make it significantly easier for people with disabilities to surmount a major benefit disincentive which faces them when they attempt to try out their capacity for work. A break in the period of employment—the so-called PIE—for all claimants from eight to 13 weeks was suggested years ago by the Social Security Advisory Committee. For all these 945 reasons I hope that the noble Lord can either accept the amendment or explain the reasoning behind his possible rejection of it. I beg to move.
§ Lord Henley
My Lords, I think I understand what the noble Lord is getting at. His amendment would provide a small extension to the normal eight-week linking rule to anyone who was getting DWA or had received DWA at any time in the past. We are extending the eight weeks to two years as a special reassurance to DWA recipients because they may not be confident that they will be able to continue working. I cannot see any justification for the special 13-week linking rule which the noble Lord has suggested.
The arguments against the amendment are very clear. First, employers would have to operate a different rule for SSP purposes for a small number of their employees. This would add to their SSP administration costs. Noble Lords know this is already a sensitive matter for employers. With the best will in the world, this is bound to make them think of DWA recipients as a nuisance and possibly discourage them from recruiting disabled people. I was trying to give reassurance to employers about that.
There is also the issue of confidentiality. We have been asked repeatedly for reassurances that we will not tell employers that an employee is getting DWA. We are taking some trouble over this. But if the employer is told not to pay SSP to an individual should they become sick within 13 weeks rather than the usual eight weeks, the proverbial cat will be out of the hag. The employer will know that the employee is getting DWA, or, worse still, that at some time in the past he or she received DWA. For ever and a day an employer would be liable to find out that at some stage in the past an employee had been sick or disabled for a protracted period.
Another argument hardly needs mentioning. Your Lordships will appreciate that the amendment would require us to keep quite a large number of records for decades in case a former DWA recipient re-qualified for invalidity benefit or severe disablement allowance. Given the complexity of the existing rules and the infrequency with which the special linking rule would apply, there is also a distinct risk that it would be 946 overlooked. I hope that that explanation is sufficient for noble Lords and that at this hour of the night the noble Lord will not feel in the mood to press the amendment to a Division.
§ Lord Carter
My Lords, I am not too sure, but that is an extremely helpful explanation of a rather complicated point. I am grateful to the Minister. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Henley moved Amendment No. 53:
§ Page 16, line 1, leave out from ("to") to end of line 8 and insert ("that pension or allowance, it was increased in respect of a dependant by virtue of—
- (i) regulation 8(6) of the Social Security (Dependency) Regulations 1977;
- (ii) regulation 2 of the Social Security (Savings for Existing Beneficiaries) Regulations 1984;
- (iii) regulation 3 of the Social Security Benefit (Dependency) Amendment Regulations 1984; or
- (iv) regulation 4 of the Social Security Benefit (Dependency and Computation of Earnings) Amendment Regulations 1989,
§ for the purpose of determining whether his pension or allowance should be increased by virtue of that regulation for any period beginning with the day on which he again becomes entitled to his pension or allowance, the increase in respect of that dependant shall be treated as having been payable to him on each day between the last day on which his pension or allowance was previously payable and the day on which he again becomes entitled to it.").
§ The noble Lord said: My Lords, this is a drafting amendment. It completes the provisions necessary to ensure that, if a DWA recipient needs to go back to IVB or SDA using the new long linking rule, his benefit will be calculated in the same way as before in all respects. I beg to move.
§ On Question, amendment agreed to.
§ Schedule 4 [Repeals]:
§ Lord Henley moved Amendment No. 54:
§ Page 34, line 17, third column, at end insert:
§ ("subsection (4) (b) and the word "and" immediately preceding it;")
§ The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 26. I beg to move.
§ On Question, amendment agreed to.
§ House adjourned at half past nine o'clock.