HL Deb 23 June 1993 vol 547 cc338-41

2.42 p.m.

Earl Russell asked Her Majesty's Government:

Whether before implementing any cuts in the social security budget they will attempt to calculate their effects on the budgets of other ministries, and therefore on the total level of public spending.

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

My Lords, social security expenditure has increased by 67 per cent. in real terms since 1979. In the annual Public Expenditure Survey, and in the current review of social security spending, the Government will take account of the impact of policy changes in one area of public spending on other areas of public spending.

Earl Russell

My Lords, I thank my noble kinsman for that Answer by which I am encouraged. Does he accept that if people have their benefit reduced or taken away, they do not disappear? They may do something else. That might include becoming homeless, becoming ill, or committing crime. Does he agree that any of those would make them a charge on the demand-led budget of another department.? Should those costs exceed savings in social security, the Government might risk finding that they were merely rearranging the deficit on the deck of the "Titanic".

Lord Henley

My Lords, as I made clear, we take account of the effects of any changes in expenditure between one department and another in any departmental budget. When my right honourable friend sets benefit levels, in particular levels of income support and unemployment benefit, he has to take account of a number of factors. Those include the burden that benefits place on the taxpayer, the effect that those benefit levels can have on the labour market, and the increased risk of greater benefit dependency which, in the long term, imposes even greater costs upon the economy and the taxpayer.

Lord Molloy

My Lords, bearing in mind the fact that the Minister's replies have been a little encouraging and that social security covers so many families and individuals, will the Government exert extreme caution in respect of those who in future may have to put up with less?

Lord Henley

My Lords, it is the noble Lord, and noble Lords opposite, who seem to be saying that people should have to put up with less. Expenditure on social security has reached £80 billion, which is a large sum. The expenditure has grown by a large amount over the past 12 years.

We are looking at expenditure on social security and we shall look at all expenditure on social security. We shall ensure that it continues to reach the most vulnerable people but we must see why it has grown at such a rate. In order to have a system which is sustainable for our children and grandchildren we must necessarily make difficult decisions in the future.

Lord Skelmersdale

My Lords, does my noble friend agree that in many areas social security schemes are over-generous and misdirected? Does he further agree that in correcting the situation it is essential to deal with new rather than existing claimants?

Lord Henley

My Lords, I should not like to comment on any specific benefit, but my noble friend has made a valid point. For various reasons expenditure on social security has grown by some 67 per cent. We cannot allow expenditure on social security to continue to grow at such a rate for the indefinite future because we shall create a system which is not affordable to ourselves, our children or our grandchildren.

Lord Ennals

My Lords, was the Minister able to attend yesterday's big rally for carers? They represented about 6 million carers who save the Government an enormous amount of expenditure by looking after disabled relatives. Is the Minister aware of the desperate anxiety felt by those people about what the Government might do to invalidity benefit—either by decreasing it, taxing it or introducing new criteria—which will reduce the ability of people who are invalids to receive it? Is the Minister aware of how much anxiety there is and can he not do something to relieve that?

Lord Henley

My Lords, as I said earlier, I shall not comment on specific benefits. I have no intention of commenting on invalidity care allowance or the benefits for carers. I should not wish to be drawn into what the noble Lord no doubt would like; that is, a degree of scaremongering about individual benefits. I am trying to make perfectly clear that expenditure on all benefits has grown by a very large amount. We in the Government must look at that growth in order to see where it occurs faster than it ought and how it can be restrained.

Lord Clark of Kempston

My Lords, does my noble friend agree that many people draw child allowance who do not need it? Is it not high time that that allowance was taxed?

Lord Henley

My Lords, my noble friend makes a valid point about child benefit but I have to say that we have a manifesto commitment to continue to make child benefit available to all. We also have a manifesto commitment to continue to increase child benefit in line with RPI.

Lord Ezra

My Lords, while the Minister's reply to my noble friend's Question was encouraging in the sense that the Government have said that they will consider the impact on the total budget of any cuts in social expenditure, does he agree that recent leaks about government intentions have created the impression of a somewhat spasmodic and arbitrary approach to the matter? When the Government finally decide what to do, will they put that in the total context of public expenditure?

Lord Henley

My Lords, I shall not comment on any particular leaks. I have been trying to make it clear that we have a review of the social security system. That is designed to ensure that the most vulnerable people in society are protected and that expenditure on social security—and for that matter in all other departments—does not outstrip the nation's ability to pay.

Lord Ewing of Kirkford

My Lords, when noble Lords opposite express the view that benefits are too generous and that families receive child allowance which they do not need, why does not the Minister tell his colleagues that during the 14 years of Conservative Government the gap between rich and poor in this country has widened enormously? Why does he not tell them that the poor are very poor, that they watch on television the examples of tax avoidance on a massive scale and that they have great difficulty understanding why they should be made to pay through cuts in their benefit as a result of the Government's mismanagement of the economy?

Lord Henley

My Lords, I do not accept the noble Lord's analysis of the figures which allege that the gap between the rich and the poor has widened during previous years. On average the incomes of all people have increased by over 30 per cent. during the 14 years since 1979.

Lord Richard

My Lords, is the Minister really endorsing the view expressed by his noble friend on the Back Benches that social security benefits in this country are over-generous and misdirected? Will the Minister take the opportunity to reject that as a criticism of our social security system? Are the Government not aware that the bottom 10 per cent. of the population of this country pay 46 per cent. of their income in tax while the top 10 per cent. pay only 32 per cent? Is that fair, misdirected and over-generous?

Lord Henley

My Lords, the noble Lord will know—if he does not I will tell him now—that we probably have the most generous safety net system for the less well-off of any country in Europe, in the form of income support and income related benefits. The noble Lord will know also that some benefits are universal and go to all classes. Therefore, it is possible to argue—I do not argue it but some of my noble friends have done so and I do not refute what they say—that some benefits are less well directed than others. That is a perfectly valid matter to consider.

Earl Russell

My Lords, when the Government consider the implications of the Question, will they consider that the best ways of reducing the social security budget are by reversing the trend towards wages that are below benefit levels and by generating a higher level of employment?

Lord Henley

My Lords, my noble kinsman always tries to argue that increasing expenditure on social security will in some way reduce the costs. I do not accept what he says on that matter. Increasing levels of the income related benefits in particular would have a major effect on the labour market, would increase the risk of benefit dependency and, as I said earlier, in the long run that would cost the country a great deal more than it does at present.

Lord Campbell of Alloway

My Lords, is the Minister prepared to draw a distinction, which I would draw, between the suggestion that the benefits are over-generous, which I do not accept, and the suggestion that they are misdirected in certain circumstances, which I do accept? Without dealing with specific benefits, which he quite rightly refuses to do, will he consider the general question of abuse, particularly as regards housing benefit?

Lord Henley

My Lords, I accept that there may be abuse throughout the social security system. I accept that there is an abuse of the housing and invalidity benefit systems. One could argue that some benefits are misdirected or partially misdirected as access to them has become somewhat lax. Whether some benefits are over-generous is another matter. As I said, I do not intend to be drawn as regards specific benefits. It is arguable that some elements of some benefits are over generous.

Lord Stoddart of Swindon

My Lords, will the noble Lord recall that when we discussed the abolition of wages councils during our recent debates on trade union legislation the noble Lords, Lord Campbell of Alloway and Lord Skidelsky, advocated the use of the social security system to subsidise low wages? Is that the Government's view?

Lord Henley

My Lords, that is not the Government's view, but there are various benefits which arc called in-work benefits—family credit and the disability working allowance—which are designed to assist those on low wages to have help in the labour market.