Social Security

HL Deb 12 November 1992 vol 540 cc355-70

5.20 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, with the leave of the House, I should now like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows: "Madame Speaker, with permission I wish to make a Statement on social security following directly from my right honourable friend's Autumn Statement.

"As the Chancellor has announced, spending on social security in each of the next three years will be: £79.8 billion, £82.9 billion and £87 billion. That is a gauge of this Government's commitment to the needy, the sick, the elderly and to families.

"Despite the intense pressure on the social security budget, we will maintain support for those hit by the recession; we will focus additional support on the most needy; and we will keep our pledges to families, to the elderly, and to disabled people.

"I can today announce that all major benefits will be increased fully in line with inflation. Subject to parliamentary approval, benefit rates will therefore go up by 3.6 per cent. next April. The basic retirement pension for a single person will increase by £1.95 a week to £56.10. That for a couple will rise by £3.10 to £89.90. Unemployment benefit will increase by £1.55 for a single person and by £2.50 for a couple, and I propose to make no other changes to that benefit. Child benefit will be £10 for the first and £8.10 for each subsequent child. In addition, by uprating all benefits, we will keep our promises to focus increased support on those in greatest need.

"Last month the Government boosted the income support rates for pensioners by £2 for a single pensioner and £3 for a couple. From next April there will be an increase in the real value of income support. Thereafter nobody on income support will be required to contribute a minimum of 20 per cent. of the local government taxation charge, as they have up to now.

"But the increase in basic income support levels introduced to match that liability will be maintained. This is worth on average £1.40 a week for a single person under 25, £1.60 for a single person over 25, and £2.80 for a couple. That means: the disposable income of a single unemployed person over 25, on income support, will actually increase by an average of £3.15 next April, and the disposable income of an 80 year-old couple on income support will be £9.35 more, on average, than it was last April, taking their income support over £100 a week for the first time. The uprating itself will cost £2½ billion next year. And the real increase in disposable income for those on the income-related benefits is worth a further £1 billion.

"It has only been possible to meet these commitments, in full, as a result of a searching scrutiny for savings in all of my department's programmes. My first priority has been to find savings which do not involve curtailing entitlement to benefit. I have therefore subjected my department's running costs to rigorous examina-tion whilst maintaining my department's full commitment to the Citizen's Charter, and enhancing capital spending, which will rise by £159 million over the next three years, bringing total capital expenditure to over £1 billion in that period.

"A major component of running costs is the payment of benefits by order book or giro. That is markedly more costly than payment through the banking system. I therefore propose to encourage more customers to accept payment of benefits directly into their bank or building society accounts. In addition, my department will be working closely with the Post Office to improve efficiency and reduce theft and fraud involving order books and giros. This along with fraud elsewhere in the system can involve very substantial sums of money. I have already announced my determination to tackle fraud and abuse of benefits. Those who defraud the system have nothing in common with the vast majority of honest and genuine claimants. And every pound lost through fraud means less for those in real need. I therefore plan to step up the fight against fraud.

"I am increasing our investment in fraud work by £10 million a year. This, aided by better use of our existing resources and new techniques, will have an expected annual return of £100 million a year. I am today laying the regulations withdrawing income support from those—be they new age travellers or others—who are not even actively seeking work. And I will consult the local authority associations on a new initiative to encourage local authorities to stop fraudulent claims for housing and council tax benefits. By taking these measures I hope the total of fraud identified and stopped will increase to nearly £1 billion each year.

"But it is also necessary to look carefully at how well benefit spending is focused on those whom Parliament intended to help. There has been a significant increase in the numbers on invalidity benefit and in spending on it. There are now more than twice as many people drawing this benefit as in 1979 at a cost nearly two-and-a-half times as great. By 1996 invalidity benefit will cost well over £7 billion. Against that background, I intend to tighten up the administrative and medical procedures for controlling this benefit. This will ensure that medical examinations are better targeted and that more effective action will be taken when people fail to attend for their examination or are found to be capable of work. These changes are expected to reduce spending by £240 million over the survey period. A major research study into invalidity benefit was launched last year. Some results have been received, and others will be received during 1993. I will consider these results carefully as they become available.

"I have also looked at two aspects of war disablement pensions. Officers receive more compensation for a given disability than other ranks. In today's world there is no reason why they should. I therefore intend to abolish rank differentials for disablement pensions by moving everyone up to the rate for officers. This will benefit nearly 200,000 war disablement pensioners who will gain up to £5 per week. This will be made possible by the second change, which is to bring the rules for noise-induced hearing loss more into line with the industrial injuries scheme. As under that scheme, awards will no longer be made to those whose noise-induced hearing loss is assessed at less than 20 per cent. disablement. But I can assure the House that no existing war pensioner will suffer a reduction in the cash that he or she is currently receiving. These proposals will now be discussed with the Central Advisory Committee on War Pensions.

"I also intend to introduce two minor savings measures: I propose to increase the top rate non-dependant deduction in housing benefit and income support, but to freeze the three lower rates. I propose also to freeze the higher rate of statutory sick pay as most employees who benefit from it are covered by occupational sick pay schemes.

"These enable me to make a number of modest, but worthwhile, improvements. I plan to increase by £10 per week all but one of the income support limits for those with preserved rights in residential care and nursing homes. I plan to extend the severe disability premium to those sharing a household with a blind person. I am increasing the amount carers may earn without affecting their benefit. I am giving £1 million to help hospices, more money to help severely disabled drivers, and we are introducing improvements in the benefit arrange-ments for orphans.

"I now turn to the Social Fund. By using loans we can help far more people with a given amount of money than if it were given as grants. Improved repayments of these loans enabled me last week to announce an extra £8 million for the Social Fund discretionary budget for the current year. Together with a further small injection of cash it means I now expect next year's budget to be up 12 per cent. at £340 million. That is a 50 per cent. increase in two years.

"In accordance with my statutory duty, I have carried out a review of national insurance contributions. The National Insurance Fund is obviously affected by the state of the economy. However, the Government do not propose to make changes to national insurance contributions for next year other than normal adjustments for inflation. This reflects our determination to minimise the burdens on employers and employees. Instead, we intend to seek powers to keep the National Insurance Fund in balance by drawing as necessary on a new, limited Treasury grant. This grant will give us useful flexibility in managing the fund during a downturn in the economic cycle.

"I intend to introduce a Bill shortly to make provision for the grant. The Bill will also provide for the new age-related addition for personal pensions. Personal pensions have proved outstan-dingly popular. This addition will remove a potential distortion. It fulfils our manifesto commitment. It will ensure the continued success of personal pensions.

"Fuller details of the uprating, national insurance and other measures have been given in two written replies to my honourable friends the Members for Hertfordshire West and for Tiverton. These replies are available with the Autumn Statement briefing in the Vote Office and will be published in the Official Report. The Chancellor has set out a tough and realistic programme for public expenditure as a whole. Within that total I have sought to make savings, particularly by bearing down on operating costs and fraud. And I have sought to curb programmes which might otherwise pre-empt the resources needed to sustain recovery in the longer term.

"As a result we have been able to protect benefits for those hit by the chill wind of world recession; to channel increased support to the most needy; and to keep the pledges we made in April. I commend our plans to the House."

My Lords, that concludes the Statement.

5.32 p.m.

Baroness Hollis of Heigham

My Lords, we thank the noble Lord for repeating the Statement made in another place. We particularly thank him because the Statement is both shorter and less densely packed with statistics than was the experience of my noble friend Lord Carter, who occupied this slot this time last year.

Our first response is that we greet the Minister's Statement with relief—relief that all benefits will be up-rated in line with inflation. It is worth saying, however, that it might have been a little difficult perhaps to do otherwise, given that on the one hand both child benefit and pensions were protected by the Government's manifesto commitment just six months ago and on the other hand the national insurance benefits—unemployment benefit, widows' pensions, industrial injury, invalidity, maternity and sickness benefits—are all statute-based entitlements. They would therefore have required primary legislation to detach them from the rise in RPI. That legislation would have taken time and certainly would not have produced any immediate savings for the Government.

It is clear, therefore, that the Government, had they been seeking to make cuts in benefit, would effectively have been confined to the means-tested benefits of the very poorest; that is, those on income support, possibly family credit and the related housing benefit. It is with relief that we see that those benefits have not been cut but have been protected. It is clear that we may have the Minister opposite to thank for that rather than perhaps the Secretary of State if the reports in today's Independent are correct. It states that the Secretary of State, Mr. Lilley, was willing to offer more cuts in social security than his Cabinet colleagues thought decent, tolerable and acceptable.

I turn now to some detailed questions on the Statement. The first and obvious one is on the invalidity benefit, the only benefit signalled in the Statement as being subject to immediate and detailed review. The Minister proposes that reviewing invalidity benefit may raise £240 million. He suggests that the review will tighten up administrative and medical procedures. How, my Lords? Is the Minister seriously proposing to interfere with medical judgment as to the point at which someone on statutory sick pay may move on to invalidity benefit rather than be returned, say, to income support? Is he proposing to interfere with that medical judgment? Will he hound men and women who their doctors say should be on invalidity benefit on to income support? Does he plan to tax it in future? Will he come clean on this? May we have an assurance on the invalidity benefit that nothing will be done to tax it, freeze it or cut it until the DSS's own sponsored research due to be reported in April 1994 is before us so that we can debate it?

The second topic within the benefit range to which the noble Lord drew our attention was the Social Fund. He made much of the point that extra money —so far as I can see, about £25 million, or 12 per cent.—will come into the Social Fund. Will the noble Lord tell us how much of this is new money as opposed to recycled loans—that is, where people are simply repaying their loans faster?

We on this side of the House are not opposed to the principle of the loan option, in the sense that we accept it as a more favourable alternative to private loan sharks. What we are opposed to is the policy of loans rather than grants to the neediest, especially as the Government's own sponsored research at York University showed in July that those who receive loans are the people who are poorer, those who receive grants are the better off and those who receive nothing at all because they are not eligible under the income support rules are often the poorest of all. In other words, the Social Fund is not only poorly targeted; it does not meet need. When will the Government do what every academic adviser, every professional body and their own professional advice which they financed tell them to do; that is, to reform, restructure and reshape the Social Fund, even within its own budget, to meet people's needs more effectively?

Thirdly, we notice in the Statement that the Government believe that huge savings—£1 billion—are to come from ending fraud. Needless to say, we on this side accept that money should not go to the fraudulent because if it does it is at the cost of those who are entitled to the money. However, I think we could ask questions. Over what timescale is it proposed to claw back this £1 billion? Can we be sure, for example, that it will not lead to increased harassment and prurience in the lives, particularly, of women? May we ask about the passing reference to New Age travellers? While few of us would necessarily countenance their lifestyle, can we be sure that the Government's proposals will not end up bringing children into care and increasing public expenditure as well as family misery?

I am sure that we all genuinely welcome the modest improvements and protections offered in the Statement: for example, the increase to the protected payments to those currently in residential care; the increase in earnings ceilings for carers up from £40 to £50 for the invalidity care allowance; or the earnings disregard for carers under housing benefit. We all welcome the fact that if non-dependant deductions are to increase, then at least the poorest families get some degree of protection. These are small but worthwhile gains and we are happy to acknowledge them.

We are also pleased that the Minister has not reneged on his commitment to embed full relief for the council tax. However, before the Minister makes much of the implications of that for income support and for families on income support, it is worth reminding him and the House that much of it will be paid for by those also on benefit. They will see the taper worsened, instead of 15p in the pound, by 20p in the pound, so that those who continue to receive full benefit will have that benefit partly paid for by families only a little better off whose benefit is worsened. As ever, the poor are helping the very poor and the taxpayer is not making a proper contribution. Those are detailed points.

Finally, I think our response is yes, indeed, relief but not gratitude. Gratitude we would not offer. Why should the poorest not have their benefits fully protected? After all, under this Government they have failed to enjoy any trickle down of wealth. We have already pressed the Minister on this at Question Time.

The bottom one-tenth have, if they are a couple with two children, seen their after-housing income fall in real terms by 6 per cent., or £7. We have seen those on the second to bottom one-tenth of income have their income increased by only 2 per cent. at a time when the national average has increased by 30 per cent. All research shows that the absolute level of benefits remains inadequate, whether that is DSS research, Rowntree research, the research of the National Children's Home, that of the National Consumer Council or that of the National Audit Office. Every one of those bodies of research continues to emphasise that the absolute levels of benefit produce inadequate feeding and diet, inadequate clothing and inadequate warmth. That has happened because in the past 13 years we have seen some benefits cut. There have been 13 cuts to unemployment benefit since 1979.

We have seen some benefits frozen; for example, child benefit and pensions. We have seen other benefits abolished such as the right of students to vacation benefit and the right of 16 and 17 year-olds to benefit. We have seen the eating out allowance for families in bed-and-breakfast accommodation ab-olished. We have seen a social fund, following the 1988 reforms, that signally fails to meet emergency need. We are still left with the problems of a poverty trap in which members of our society will still find that for every £1 they earn they will lose 95p in benefit. That is a perverse incentive to work if ever there was one. We see a benefit system that remains complex, stigmatised and hazardous.

It is true that after today the poorest are no worse off in real terms than they were yesterday. For that we are relieved, but given the economic strategy of this Government as outlined in the previous Statement unemployment will continue to rise and therefore more and more people will continue to join the ranks of the very poor where they will find the benefits as outlined by the Minister to be inadequate, grudging, complex and stigmatised. They will find themselves worse off than they would have been just 10 years ago because poverty, like wealth, is unmerited, inherited and unearned. But what it is not is accidental. It has been engineered by this Government's policies on unemployment and their failure to trickle down wealth so that those at the bottom of our society can enjoy the prosperity to which they are entitled.

Earl Russell

My Lords, I thank my noble kinsman for repeating the Statement. I feel I should offer gratitude—it has been a difficult public spending round—but I will admit that it is for small mercies. However if one is not grateful for small mercies in Opposition, one does not get them.

Before I get down to the detail I wish to ask my noble kinsman a couple of questions of which I have given him notice. One is about the system of new constant totals for public spending beyond which it will not be allowed to rise. I wish to know whether it has been yet decided which social security benefits will be subject to the new constant totals and which will be exempt. That is, I think, a question of quite considerable importance when we consider where we are going to be next year.

My other question is a rather technical one. It is about monetary compensation amounts under EC rules. I understand those compensation amounts are to be abolished on 1st January. It has been suggested in the papers that that would mean that the effect of devaluation would feed through into food prices in one fell swoop. The noble Earl, Lord Howe, in a Written Answer which reached me only a few minutes ago, tells me that the rise will not be as great as that. I am very relieved to hear it. However, if there is this sudden one-off jump in food prices in January, even if it is less than 14 per cent., has that been taken into account in calculating benefit levels? Is this a question to which we may legitimately return when we find out how much that rise is, because it could cause a considerable problem in the future and 14 months is quite a long time to wait for something like that to be put right?

I thanked my noble kinsman for mercies. I said they were small ones. He knows my view that benefit levels are at present inadequate. I shall not go into a large body of material that I have with me on that subject. I will merely remind my noble kinsman that since we last exchanged views on this subject, on 29th October, two major reports have been published arguing that view. There is the National Consumer Council's report entitled Deep in Debt that was published a week ago today and the York Family Budget Unit report by Professor Jonathan Bradshaw published yesterday, of which so far I have seen only press reports and therefore I shall not say more about it. However, my understanding is that both of those reports argue the view that it is not possible to afford an adequate diet on present benefit levels.

However, I do not wish to give my noble kinsman an opportunity to repeat the memorable line once used by the noble Lord, Lord Healey, who said that offering defence cuts to the Left was like throwing herrings to a sea lion. Therefore, I shall defer my temptation to play Oliver Twist, but I shall give my noble kinsman notice now that unless there have been some very substantial changes within the coming year, when we return to this subject I shall be looking for an increase in real terms in benefit levels. I shall also be looking for a fairly careful review of the pressure of deductions on the incomes of social security beneficiaries.

My noble kinsman always says that how people spend their benefit is a matter of choice. That is fair enough, but when there are legally enforceable deductions for loans, gas and electricity, and other such charges, and where there is a legally enforceable debt, choice stops. I know my noble kinsman will repeat that he always monitors these things with great care. I hope that during the next year he will direct his monitoring to that point. I also hope that over the next year he will look again at the justification for the lower rates of benefit for people under 25. That is causing a great deal of hardship. With all respect, having heard explanations many times, I still cannot understand them.

As regards the search for savings, I shall not pretend that I welcome everything that has been done in that regard. I entirely see why, having achieved the victory it has on benefit levels, the department had to look in that direction. Some of those measures, however, I welcome quite warmly. The power to pay benefits into bank accounts is something which I have asked my noble kinsman to do in the past. I conveyed that request on behalf of a party member in a wheelchair who found getting to the bank extremely difficult. He will be very grateful for that measure and so am I.

On the question of fraud, of course all of us are against that. I would say to my noble kinsman that I hope the Government are as determined to combat fraud in other spheres as they are in this sphere. In other spheres fraud may cost the state rather more money. People are capable of fraud but I see no reason to believe that those on benefit are more capable of fraud than anyone else. Therefore, I have some hesitation in believing the investigations will yield quite as big a saving as has been suggested. Where fraud exists, it ought to be stamped out. I think we are all on common ground there.

On the question of invalidity benefit, will my noble kinsman say whether it is true that those who have been conducting Restart interviews have been asking people to see whether there is perhaps a more appropriate benefit for which they should apply rather than the one they are on? Has that led to a good deal of official encouragement to people to apply for invalidity benefit? Is it the case that the department has not let its left hand know what its right hand is doing?

I also wish to touch on the point made by the noble Baroness, Lady Hollis, about tightening up medical procedures. We all want a just result to be reached. However, we do not want a situation where the medical examiners are briefed to look for one result rather than another. We do not want them to be asked, in effect, to find that people are not eligible rather than that they are. I hope that a certain judicial caution will be applied to that tightening up of procedures. With that proviso, we share the desire to achieve an accurate result.

In respect of war pensions I welcome the decision to abolish the differential between officers and other ranks. The reference to today's world was well taken and I was very glad to hear it.

On the question of non-dependant deductions, before reaching judgment I should like to hear a little more of what my noble kinsman proposes.

On the subject of national insurance, I do not know whether my noble kinsman recalls the debates on the Social Security Bill in 1989. There used to be a Treasury supplement to national insurance. That was removed because the fund was then in surplus. The noble Baroness, Lady Jeger, and I both said that it might be a good thing for the Treasury to hang on to that in case of a rainy day. Here we have a rainy day and I am extremely glad that the Treasury has taken the point.

I welcome the increase in relation to the costs of residential homes. I welcome the increase in the earnings limit for carers, and I should be glad to know how much that is. In spite of the kind efforts of the department I only received the Written Answer five minutes ago so I have not managed to finish reading it, for which I apologise. I welcome warmly the £1 million for hospices. I also welcome the help for severely disabled drivers and should be glad to hear a little more about it.

On the subject of the Social Fund, like the noble Baroness, Lady Hollis, I should be glad of a clearer distinction between what is new money and what is recycled loans. I should like to ask my noble kinsman, when he is looking at the question of deductions, to look very carefully indeed at the repayment rates which are being requested from the Social Fund because that is one of the factors which has brought spending on food under unacceptably severe pressure. I should like him to look at the section in the National Children's Home report which we discussed two weeks ago and which argues that there is no adequate provision for capital needs among those on benefit.

Overall, this Statement could have been a great deal worse and I should like to thank my noble kinsman and, through him, to thank the department.

Lord Henley

My Lords, it is a somewhat unusual experience to receive quite so many thanks and quite so much gratitude, both from the noble Baroness and my noble kinsman. I join the noble Baroness in saying how grateful I am that the Statement was considerably shorter than it has been in the past. As the noble Baroness will know and as my noble kinsman complained, all the detail will be found in two Written Answers. I am sorry that my noble kinsman only received them five minutes ago. My understanding is that they were available in the Treasury briefing pack, which would have been available to all Members of the House from the moment my right honourable friend the Chancellor sat down. May I also say to the noble Baroness that I am grateful for her personal praise, however deserved or undeserved it may be.

Perhaps I may first turn to invalidity benefit and the various remarks made by both the noble Baroness and my noble kinsman. I have to say first of all on the question of taxation—the noble Baroness asked what our policy is—that it has long been our policy to bring invalidity benefit into taxation. If the noble Baroness looks at the claim forms for invalidity benefit, which have not been changed for some time, it says that quite clearly on those claim forms. In correspondence with Members of this House and another place, for some time we have made it quite clear that that has long been our intention and that we shall do so when the time is right. The other changes which I announced —and I shall come back to the medical and administrative changes shortly—will require consider-able research. Certainly that research will require consideration as and when it comes in. As to whether that report will be published, the noble Baroness will have to wait and see.

I should also like to deal with one point made by my noble kinsman about Restart interviewers actively encouraging people to claim invalidity benefit when they were not necessarily entitled to it. I have not heard allegations of that kind before but certainly I shall be prepared to take a look at them. The problem as it relates to invalidity benefit is that there has been, as we made clear in the Statement, a significant increase in the numbers on invalidity benefit and, therefore, significant increases in expenditure when one would have expected the general health of the nation to have been steadily increasing.

It is clear that some of the medical and administrative procedures are over-lax. That was made quite clear in the National Audit Office report of December 1989. I must say that the changes we are proposing certainly will not interfere in any way with medical judgment. Rather, we intend that medical resources are better applied by limiting the occasions on which claimants fail to attend for examination and by providing more useful reports for our adjudication officers to consider.

Turning now to the Social Fund, I welcome what I took to be —but perhaps the noble Baroness will deny it—a partial conversion to the concept of loans by the noble Baroness. The noble Baroness shakes her head: obviously I misunderstood. I repeat that we see considerable advantages in loans. They allow the money to be recycled and therefore to achieve a great deal more. As I have said, loans have allowed an increase in the budget of some 50 per cent. in the last two years. The noble Baroness asked how much new money was coming in. In the net budget, as opposed to the gross budget, an extra £5 million is coming in. But, as I have said, through greater recycling of the money we will see yet more money available to those who wish to make use of the Social Fund.

The noble Baroness also asked about the SPRU report and comments from other bodies. I can assure the noble Baroness that we are actively considering the SPRU report and we shall respond to it in due course.

I turn to the question of fraud and the savings that we propose to make in that area. Obviously Her Majesty's Government are dedicated to, as my noble kinsman put it, uncovering fraud wherever it exists, whether it is in the social security system or elsewhere. I accept that the targets we are setting ourselves, of nearly £1 billion, are very difficult. The noble Baroness asked what period that figure would cover. It will be nearly £1 billion over one year. I did not say that we would simply abolish fraud, but our aim is to recover as much as we possibly can. I accept that these are difficult targets, but we are proposing, as was made quite clear in the Statement, yet further investment in this field and further administrative changes. We also propose changes to the way in which housing benefit subsidy is paid to the local authorities in order actively to encourage local authorities to further pursue fraud in that the local authorities will be allowed to retain certain amounts as and when they recover them.

Turning to the question put by my noble kinsman about control totals, the simple answer to what he asked, so far as I understood him, is that unemployment benefit plus income support to non-pensioners will be excluded from those control totals. Again, I should prefer to write to him to explain why Her Majesty's Treasury consider that this provides a perfectly satisfactory picture and a perfectly satisfactory forecast. I suspect that if I tried to explain from the Dispatch Box I might find myself more confused than I was when I started.

Turning to the question of monetary compensa-tion, as my noble kinsman said, he has now received a reply from my noble friend Lord Howe which partly answers my noble kinsman's question. The point he is really getting at is that if there is a sudden increase in prices, of whatever kind, during the year, what remedy is there to compensate those in receipt of benefits of one sort or another? Our position is that we uprate by means of the historic figure provided by the September on September RPI. We shall continue to do that and, therefore, any increases in January, or at some other time in the year, will be taken into account by the RPI figure for September on September next year.

Turning to the new methods of payment and the further encouragement of ACT—automated credit transfer—again I am grateful for the encouragement given by my noble kinsman. Certainly we should like to see ACT extended to those benefits for which it is not yet available. But we should also like to see further encouragement given to a large number of people who have bank accounts to use ACT wherever possible. It has great advantages in terms of preventing fraud and reducing costs in paying benefits. My noble kinsman and others would be the first to agree that payment by means of order books is somewhat antiquated.

Turning to the question of non-dependant deductions, my noble kinsman asked for further explanations of our intentions there. We propose to freeze the three lower rates and only increase the rate for those earning over £135 a week. Where a non-dependant lives with someone on benefit earning over £135 a week, we propose that in future the benefit recipient would be assumed to be receiving from the non-dependant £21 a week rather than £18 a week —a £3 increase. I believe that £21 is not an unjustifiable sum, bearing in mind the average costs of rent and other matters.

Lastly, I turn briefly, because I do not think that now is the time to discuss it, to the interpretation put by the noble Baroness on the results of the HBAI figures. I believe that her interpretation is misguided. I do not accept her arguments or those of my noble kinsman about the inadequacy of benefits. I certainly do not accept that the recent Rowntree Report, which I regret I have not yet seen, provides any further proof of the inadequacy of the benefits. I look forward to examining that report in due course. However, merely from the press reports that I have read, I do not seriously believe that it can be quite as silly as is made out. After all, it seems to imply that on an income well above average income, an income which the Labour Party throughout the last election thought sufficiently high to increase tax on, one can only enjoy a modest if adequate lifestyle. That has to be the view of what one would call "champagne socialists".

6.2 p.m.

Lord Boyd-Carpenter

My Lords, like the noble Earl, Lord Russell, and unlike the noble Baroness, I should like to express my gratitude to my noble friend the Minister both for reporting the Statement and for his share in its admirable contents. So far not enough has been said of the very great achievement of the Government in maintaining our immensely expensive system of social security intact, developing and improving against the background of real economic difficulties. That has been a considerable achievement and one for which the Government are entitled to receive a great deal of credit.

I was particularly pleased to hear my noble friend's announcement on war pensions; namely, the equalising of officers' and other ranks' pensions in respect of the same injuries. Many years ago I was responsible for these matters and I always thought that it was utterly wrong and illogical that if an officer and an other rank sustained a similar wound or injury, the officer was given a larger pension. But in those days the number of war pensioners from both wars was very large and the cost of making the change, which has now been made, would have been very heavy indeed. It would not have been agreeable to some of my predecessors at the Treasury. So I am glad indeed that the Government have now taken that step.

It is absolutely right and will, I believe, be greatly pleasing both to the ex-service world and to those serving at present. It is just as bad to have a serious wound as a private as it is as a general and it is absolutely right that the quality and degree of the injury, not the rank of the man injured, should determine the pension.

With regard to the Statement as a whole, I am sure that the Government were right to maintain the general level of benefits with full allowance for inflation and seek to make the necessary economies on administration, details on the periphery and dealing with fraud. It is undoubtedly the case that a certain amount of fraud exists in respect of the immense sums of money which the national insurance fund and other social benefits involve. I am certain that quite considerable savings can be made by the determined action which I understand the Government intend to take.

It is a most interesting and important Statement. Obviously it is impossible within the limits of time to ask sufficient questions about it. I suggest to my noble friend, particularly as the Leader of the House is not present, to consider that this House could most usefully spend a day discussing it. There is no subject which matters more to the great bulk of our population and no subject on which this House could do a greater public service than to give it a full and detailed discussion, examining the arguments and criticism that have been made—for example, by the noble Baroness—and discovering whether there is any force or validity in them. To discuss all the issues that arise would be a most profitable use of the time of this House. I very much hope that my noble friend will convey that suggestion to the Minister, though he himself may have two views about it.

Lord Henley

My Lords, obviously I have two views about that, as my noble friend put it. I shall certainly convey his request or instruction to my noble friend the Leader of the House. He is certainly right that it would be useful to have at some stage a general debate on social security matters and policy. I am most grateful for the kind remarks of my noble friend and his praise for the general thrust of our Statement.

My noble friend was pleased, as I sense everyone in the House was pleased, about our announcement of equalisation of rank differentials in war pensions. They have been frozen for some time and it becomes easier as the years go by to dispense with them. People have argued for many years that their time has passed and I am pleased that we have now been able to find the means of removing them.

Secondly, I accept, as my noble friend said, that there is an immense amount of fraud taking place. We remain absolutely determined to tackle that fraud, recovering as much money as possible and preventing as much fraud as possible from taking place. It is difficult to know how much fraud there is. I do not believe that we shall ever find a means of adequately estimating the level of fraud suffered by social security or indeed any other body. Certainly we shall continue to examine the problem and seek to find improved methods of quantifying the level of fraud and tackling it both by prevention and cure.

Baroness Jeger

My Lords, perhaps I may start by briefly confessing a matter of personal interest which may be shared by many Members of this House. I did not hear whether the noble Lord referred to the 25p addition to the pensions of the over-80s. I am totally innumerate and could not work out what the 3.6 per cent. increase in April would mean on 25p a week. I should be very glad and I am sure many people would like to know what will happen to that 25p a week. In order that we might get this sum into perspective, perhaps the noble Lord could tell us how that 25p. plus 3.6 per cent. will relate to the value of the 25p when it was first introduced.

Is it not time, when we are having a very full Statement, which was most interesting to us all, to have what some might consider a very small matter looked at again? Some of us are approaching the final winter of our lives and will be looking forward to finding the difference between 25p a week now and 25p plus 3.6 per cent.

Lord Henley

My Lords, it is obviously with some embarrassment that one has to rise to defend the 25p age addition. It has been frozen ever since it was introduced when I believe the state pension was at a level of £6 a week and 25p represented a quite reasonable percentage.

Lord Desai

My Lords, it is 4 per cent.

Lord Henley

My Lords, I am advised that it is 4 per cent. It was a useful addition.

It costs very little administratively to pay it. We have never found good reason to uprate it—that has been true of both Conservative and Labour government administrations —since its introduction in, I believe (the noble Baroness might remember better) 1971. As I said, there is no intention to uprate it by 3.6 per cent. I am saved the embarrassment of calculating what 3.6 per cent. of 25p is. We can possibly work that out afterwards.

We have maintained our commitment to increase the retirement pension by the retail prices index. More importantly, for the less well off pensioners we have increased income support levels well above inflation. If one remembers, there was the RPI increase last April; there was the mid-year increase this October; and there will be a further increase in line with the RPI of the premiums paid to all pensioners on income support next April. That represents our commitment to the less well off pensioner. I do not know whether or not the noble Baroness considers herself to be one. But certainly she will continue to receive her 25p.

Lord Ashley of Stoke

My Lords, I preface my question by warmly welcoming the change in the payments of war disablement pensions. I am always delighted to cross swords with the noble Lord, Lord Boyd-Carpenter. However, on this one issue I am happy to agree with him.

Perhaps I may ask the noble Lord this question. Is it not the case that there is no reason for a fanfare of trumpets for uprating benefits merely in line with inflation? That takes no account of the fall in living standards of the poorest in our society of about 6 per cent. between 1979 and 1989 compared with an increase in living standards of the wealthiest of about 46 per cent.

Although the noble Lord said that there had been an £8 million increase in payments in respect of the Social Fund, he omitted to say whether that means that there is an uprating in payments from the Social Fund in line with inflation. Has there been an uprating?

Lord Henley

My Lords, I welcome the noble Lord's praise for the war disablement pension changes. I am grateful that he felt able to agree with my noble friend Lord Boyd-Carpenter. I am sorry that the noble Lord felt that no fanfare of trumpets was due merely for an uprating. I remind the noble Lord that this has been what has been termed a very difficult public expenditure round and therefore I think that just a little fanfare of trumpets might possibly be welcome from the noble Lord.

The noble Lord also asked about increases in the Social Fund. What I tried to make clear was that by pumping in a small amount of extra money—about £5 million—and by increased recycling of money (by getting more money back), we have been able to increase the budget of the Social Fund by over 50 per cent. over the past two years. I think that that is no bad increase.

Lord Henderson of Brompton

My Lords, perhaps I may express my gratitude from the Cross Benches as well as my relief. The expressions of relief from the Opposition Benches may have been slightly churlish. I remind the noble Baroness of a famous line in Hamlet that relief comes with thanks. For this relief, much thanks". I feel that wholeheartedly.

I also agree with everything that the noble Lord, Lord Boyd-Carpenter, said, including his warm welcome for the war pensions provisions. Apart from anything else, it will relieve my sense of guilt or embarrassment which I have now felt for almost 50 years.

Finally, I welcome the wish of the noble Lord, Lord Boyd-Carpenter, for a full debate on the social services. I hope that it will be a full debate without a time limit because it is such an important problem. There are many aspects that need to be examined, not least the Social Fund. That has now been an experiment for about three years and needs examination. In particular perhaps the Government and the noble Lord might consider not being absolutely rigid about the loan bases of the fund. Could a system of loans and grants be devised which would indeed catch those in greatest need? Quite clearly in many cases at present the system does not.

Lord Henley

My Lords, I am most grateful for the relief of the noble Lord, which has been so kindly expressed. I am also most grateful for his remarks about the war pension changes that we propose.

I note what the noble Lord said about the Social Fund. Perhaps we could reserve discussion on that for a full debate if such can be arranged. However, I must point out that there are grants already available in the Social Fund structure. It is a system of both grants and loans. I shall certainly pass on the noble Lord's request—whether or not I like it to my noble friend the Leader of the House and the usual channels.