§ 3.11 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor)
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill
Moved, That the House do now resolve itself into Committee.—(Viscount Astor.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Clause 1 [Incapacity benefit: entitlement]:
Lord Swinfen moved Amendment No. 1:
Page 2, line 14, leave out ("364") and insert ("196").
§ The noble Lord said: The purpose of the amendment is to make long-term incapacity benefit payable from 28 weeks, as is the present position with invalidity benefit. The Bill extends the period classed as "short-term incapacity" from 28 to 52 weeks. That means that benefit entitlement is delayed for a full year, resulting in a lower level of payment than is currently available under invalidity benefit.
§ Since 1971, long-term incapacity has been regarded as commencing after the 28th week. The payment of invalidity benefit—introduced by a Conservative government—after 28 weeks of sickness benefit has marked the beginning of the long-term period. Redefining "long-term incapacity" as beginning at 52 weeks represents a substantial reduction in benefit, even for those who pass the more stringent incapacity test; by definition, that is people genuinely incapable of work. It could mean many people subsisting on levels of income below income support level. Often the needs of a nearly-disabled person are greatest in the early stages.
§ Under this proposal, someone with a terminal illness, or deteriorating or long-term condition, will have to wait for a full year before full benefit is paid. Perhaps I may give an example. A man diagnosed as terminally ill, with a wife working part time and with three children, will not receive full benefit for himself or his children until 52 weeks have elapsed. Therefore, he will be supporting the family solely on the wife's income, and it must be borne in mind that she might be working part time.
§ The basic rate of benefit is awarded at too lower levels and not the full rate. No allowance is payable for children. No full allowance for a non-working partner can be paid. No allowance based on a claimant's age is possible. No disability premium, which is payable with means-tested benefits, is available.
§ From weeks 29 to 52, a basic rate is to be payable at £52.50, whereas the current basic rate of invalidity benefit is££57.60. There is a difference of £5.10 per week, which amounts to £122.40 by the end of the first year. The level of invalidity benefit includes 50 pence compensation for value added tax on fuel, which is not payable with sickness benefit or statutory sick pay. As the latter has not been uprated for four years, those two factors increase the differential between short-term and 96 long-term benefit. In future, the disparity could be larger than that. Awarding the full rate of benefit at 28 weeks will reduce the savings that the Government expect to make by £110 million now and £150 million in 1996-97.
§ Under the proposals in the Bill, no children's allowance will be payable. Dependants' allowances, now payable from the 28th week of incapacity, will be delayed until the end of the first year. The loss of the child's allowance amounts to £11 per week for an only child; that is £264 by 52 weeks. A married claimant with two children will lose £45.65 per week, which amounts to something in excess of £1,000 by the end of the first year. I am sure that Members of the Committee, who I hope will support the amendment, will come forward with other examples. I beg to move.
Baroness Darcy (de Knayth)
I warmly support the amendment so ably introduced by the noble Lord, Lord Swinfen. He spoke most comprehensively, and I am not sure how much I can add
If one delays the incapacity benefit for a full year there will be knock-on effects on other benefits. Entitlement to the disability premium, which is payable with means-tested benefits such as income support, housing benefit and council tax benefit, depends on receipt of long-term incapacity benefit. At present it is payable from the 196th day of incapacity, when at present the invalidity benefit becomes payable. However, after April 1995 entitlement to the premium will be delayed until the end of the first year of incapacity. Therefore, waiting an extra six months for full payment will mean a considerable loss; almost £19.45 a week for a single person under 60. Those with incomes above the level which entitles them to claim income support may have to pay more in rent and council tax and may have a lower disposable income. Therefore the knock-on effects are considerable.
§ Baroness Hollis of Heigham
We too warmly support the amendment so well introduced by the noble Lord, Lord Swinfen. On Second Reading there was widespread anxiety about two major issues. The first is that the Bill stiffens the medical test which people must pass in order to be eligible for benefit. The Committee will deal with that issue on Thursday. The second is that after passing a much tougher medical test, the benefits which people then receive will be reduced. A cluster of amendments tabled today deal with that second issue; that is the reduced level of benefits even for those who have passed the more stringent medical test to acquire incapacity benefit.
Of the savings which will result from the Bill—that is, about £1.5 billion in a full year—most will come from people who will be refused access to benefit. But a not inconsiderable portion of the savings will come from reducing the real level of the benefits. As was made clear by the noble Lord, Lord Swinfen, they will come from refusing access to the higher rate of benefit at 28 weeks and instead postponing access to the higher rate of benefit for another six months. In other words, after people have passed the medical test they will not go on to the higher rate of benefit at six months as is now the case but must wait for 12 months. The amendment 97 provides that after a person has passed the medical test they will receive the higher rate of benefit at 28 weeks, as is now the case. The amendment therefore seeks to reinstate the approach which currently shapes invalidity benefit.
The amendment will move people on to the long-term rate of benefit at 28 weeks instead of 52 weeks. That means, for example, that people will be eligible for the higher rate of benefit. They will be eligible for an age allowance, children's allowance and benefit for a dependent spouse. If we do not amend the Bill in that way, it means that a disabled man (they are usually men), his spouse and his three, or four, children would for six months receive no more benefit than if there were just the husband and wife. For six months his family would have to live as though there were no children in the household. At the moment that benefit comes into play after six months. If we do not amend the Bill, the benefit will not come into play for 12 months.
The Government have talked about targeting, but this aspect of the Bill cannot be about targeting because the disabled person will have passed the test at 28 weeks but will not enjoy the associated benefits for a further six months. It must therefore be simply about savings. It is designed to save £150 million in a full year out of a total bill of £1.5 billion.
Contributory benefits such as this are meant to be earnings replacements, yet they are being cut while we all know that earnings are rising at the very time that we all know that to be disabled one needs an increase in income because of the additional costsfor— heating, food, laundry and aids. If the Bill is not amended the benefits will be reduced. Why? Will the Government give any reason for reducing the benefit at 28 weeks? Can they give any reason except that of savings for allowing the full rate to be paid at 52 weeks rather than 28 weeks, as now?
It cannot be to encourage people back to work because the disabled person will have just passed the medical test which says that he or she needs to remain on disability benefit. It cannot be related to previous earnings because, on average, invalidity benefit now is worth less than one-half of what people earned previously. It cannot be related to their needs or costs, because by virtue of being disabled their needs, their costs, their daily living expenses, are increased. They need more heating, special diets and the like. It certainly cannot be related to their poverty, because, if we do not amend the Bill as the noble Lord, Lord Swinfen, proposes, those who are disabled will for six months (between 29 weeks and 52 weeks) be receiving a benefit to support disability that is lower than income support levels, which I am sure we all regard as the bare minimum upon which to live a decent life.
One of the virtues of invalidity benefit in the past was that it provided a benefit which lifted people just above income support level so that only 9 per cent. of those on it needed to turn to income support. If we do not amend the Bill, we shall send many more people (perhaps 25 per cent.) on benefit back onto income support to top up a benefit for their disability which the Government themselves recognise is not enough to live on, because it makes no allowances for children or age, and often no 98 allowance for a dependent spouse. It means that the disabled person will have to apply for a means-tested benefit to top up a contributory benefit which itself was meant to be an earnings replacement benefit.
What is the point of a contributory benefit, designed for incapacity, which produces a benefit which is below income support levels? If the noble Lord, Lord Swinfen, receives support today, which I hope that he will, and if, as a result, the Government are minded to change their position, that would allow the disabled to be no worse off than they are at present, which is to enjoy the full rate of benefit after 28 weeks, not after 52 weeks. But if the Committee is not minded to give that support, the Committee would be saying to disabled people at a point of pain, stress and costs in their lives that they are expected to live on a benefit which is lower than income support for six months longer. I suggest that that is not decent.
§ Earl Russell
This is an amendment of considerable importance. The noble Baroness, Lady Hollis, has pinpointed the key point about it. It is something where people are being asked to live at a level below income support. The noble Viscount may remember that I have had a longstanding argument with the department about the adequacy of the income support level itself. He may be relieved to know that I do not intend to reopen that argument now, but I think that he will allow that it is regarded in many quarters of this place as a very important principle that any level of support below income support level should prima facie be deemed to be inadequate. I can recall in the past dividing this place on that principle at 10 minutes to midnight, and I am not ashamed to have done so.
If people are going below a level upon which there is considerable evidence that they find it difficult to maintain an adequate diet, then what are they going to do? Putting people down to that sort of level of support is something that cannot be regarded as entirely without consequence. In another place, the Government talked about focusing the benefit. On these Benches, the word "focus" has a meaning. That is not what that meaning is. I do not rightly understand what the Government meant by "focusing" the benefit unless they meant arranging it more to their own administrative convenience. I cannot see how that argument can be related to real need.
Perhaps the Government supposed that people were going to live on savings during that period. The Government have, from time to time, a curious idea about what people on lower income levels can do on savings. That I think is the result of a misleading Treasury method of classifying the figures, because all the money that we use for pension contributions, all the money we use for mortgage repayments, is classified within the Treasury's categories as savings. Now that appears, if one looks at the figures in Whitehall, to be a fairly considerable sum, but it does not in fact bear any relationship to the amount of money we have in the bank, or under the mattress—whichever may he more appropriate—upon which we can actually call on a rainy day.
If the Government are relying on savings to get people through they may be making a miscalculation 99 based upon their own misleading method, at least for these purposes, of putting the figures together. Mr. Scott in another place also said that the purpose of the Bill here was to constrain costs. Of course cost needs watching. Of course costs are a matter of concern, but in something that is putting people below income support level the burden of proof upon those who would argue that the measure actually reduces costs is a heavy one, because it is to be hoped that people who are reduced to that level will not cease to exist. If they continue to exist, they may generate costs in a great many other ways. The most obvious one, if they are short of food, is that they may become ill. We were hearing only a few minutes ago about the pressure of costs on the health service. Beggar my neighbour is a regular Whitehall game. The Department of Social Security tends usually to be the loser in that game. I have a great deal of sympathy with it for that reason, but I wonder whether all that the DSS is doing is trying to pay back the rest of Whitehall in its own coin. That is a game in which this place has no need to join.
§ Lord Ewing of Kirkford
Before the Minister replies perhaps I may add my support for the amendment. I hope that the noble Lord, Lord Swinfen, intends to seek the views of the Committee in the Division Lobbies because this indeed is an important matter. We are dealing with two different groups of people. In this country over 60 per cent. of employees are not protected in any shape or form by continuous sickness payments from their employer when they are off work due to sickness. However, something under 40 per cent. of people have the privilege—for example, in the Civil Service, the Post Office and various other professions and industries—of six months' full pay and six months' half pay when they happen to be off work due to illness.
While I never like to give examples from personal experience, like many Members of the Committee I have had periods of fairly serious illness during my lifetime in three different sets of circumstances. One occurred while I worked in the engineering industry when there was absolutely no sickness pay. Perhaps I may be so bold as to tell the Minister that, although my family was not born at that time, the hardship endured by my wife and myself was, to put it mildly, a contributory factor to my inability to make a speedy recovery from the illness.
I then moved my employment to the Post Office, where I experienced another spell of lengthy illness. However, in the Post Office I enjoyed six months' full pay and six months' half pay during that time. It is interesting to note that I recovered remarkably quickly. That was because I did not have to cope with the pressure of receiving no income while I was ill.
Further, during my period in another place there was a year when I had to be away from my duties as a Member of Parliament because of another serious illness. I have to tell the Committee that if I were asked to choose where I wanted to be ill—working in the engineering industry or in the Post Office or being a Member of another place—I would choose being a 100 Member of the other place any time. Indeed, I never noticed a blind bit of difference in my income when I was off ill as a Member of another place. But here we are as legislators legislating for people and imposing conditions on them that we simply are not prepared to accept for ourselves. With great respect to the Minister, I suggest that that simply is not an acceptable principle upon which to legislate.
The legislation is undoubtedly Treasury led. As legislators we are inclined to see such proposals in terms of a global sum from the Exchequer's budget. But, of course, it is no such thing: it is individual cases, with people sometimes suffering untold hardship. We have no right to impose further hardship on that already being experienced by those families.
I have spoken only briefly. I shall conclude my remarks with a quote from Aneurin Bevan. At the time of the introduction of the National Health Service, on the one hand, and the social security legislation, on the other, Aneurin Bevan said that,at a time of sickness, wealth should be no advantage and poverty no disadvantage".My goodness, if the legislation before us is doing anything, it is imposing on people who have the disadvantage of being poor a hardship that we are not entitled to impose. I plead with Members of the Committee that when we divide we make it absolutely clear to the Government that we are not prepared on behalf of those people to accept such hardship.
§ 3.30 p.m.
I believe that we have listened to many most powerful and moving speeches. I grew up among the poor and I know that it is bad enough to be poor; but to be ill and poor is a terrible thing. For us here to feel—and, indeed, every one of us is comfortable—that we can say that the country is in such a bad way that it must take from those who are already at the bottom makes me feel ashamed. I am even ashamed that the proposition has been put forward.
I have but one brief point to make. I wish that the Chamber had been full to hear such powerful speeches. Then there would be no doubt about the result of the Division. We know that the decent thing will be for the Government to say that they have changed their mind.
We did, indeed, hear a powerful speech from the noble Viscount, Lord Tonypandy, and a most eloquent plea from the noble Lord, Lord Ewing of Kirkford. But what their speeches actually demonstrated was the importance of statutory sick pay, the importance of employees' occupational sick pay and, indeed, the importance of sickness benefit. Those are very important benefits for people in that situation. However, I return to the Bill. I agree with much of what the noble Lord, Lord Ewing, said, but I am not sure that it was entirely relevant to the amendment now before the Committee
The amendment seeks to limit the period for which short-term incapacity benefit could be payable to the first 28 weeks of sickness. We propose to introduce a new benefit payable at three rates; the longer the period of incapacity the higher the rate. Short-term benefit will consist of a lower rate payable for the first 28 weeks of 101 sickness equivalent to the current rate of sickness benefit (currently £43.45) and a higher rate payable after 28 weeks equivalent to the higher rate of statutory sick pay (currently £52.50). Long-term incapacity benefit will be payable after 52 weeks at a rate equivalent to the current basic rate of invalidity benefit (currently £57.60).
It is important to point out that those who do not have other resources are eligible for income support, housing benefit and council tax benefit. This restructuring will provide a basic income to those who cannot work and focus resources on those who are genuinely long-term sick. We believe that 52 weeks is a much more realistic definition of long-term sick than the current 28 weeks.
I should remind the Committee that benefit will continue for as long as a person remains incapable of work. Of course, as I said, it can be supplemented by private provision and, if necessary, income related benefits. Existing recipients will be protected. There will be no cash losers at the point of change. The most severely disabled will receive disability living allowance after 28 weeks and, as now, will qualify for disability premium, while the terminally ill will qualify straight away for DLA and, through it, disability premium immediately.
The noble Baroness, Lady Darcy (de Knayth), said that 52 weeks is too long a time to wait for disability premium. We consider that 52 weeks is a better definition of long-term incapacity. Long-term incapacity is only one of the many routes into the disability premium paid with income support and other income-related benefits. The premium is also awarded to people who are in receipt of DLA, AA and SDA and also to the registered blind. Those people will continue to qualify for the premium under the same rules and at the same time as now. The most severely disabled will not be affected. As I said, income support will be available for those with incomes below the income support level.
The noble Baroness, Lady Hollis, talked about the medical test. We shall discuss that later. However, it is important for me to point out that at present we feel that invalidity benefit is not focused on need. It is not means tested or taxed and continues for five years beyond pension age. It is one of the last pre-pension benefits to contain an earnings related element and is highest for those who have worked the longest and earned the most. It takes no account of the growth in occupational pension since it was introduced. It is difficult to defend continuing to pay the earnings related additional pension which goes to the vast majority of invalidity benefit recipients regardless of whether they have an occupational pension and regardless of whether they have contracted out of SERPS. The benefit needs reforming to ensure that resources are focused on those who need assistance the most.
The three different rates of benefit are intended to reflect the cost of short and longer-term periods of incapacity. They are not in any sense a reward for passing the medical test. The rate of benefit and the test are independent of each other. If a link was intended, then the Bill would provide that the long-term rate of benefit was dependent on satisfying the all-work test. It 102 does not, and if it did I expect that some Members of the Committee would resist it because it would mean that any claimants returning to incapacity benefit under the provisions of the two-year DWA linking rule would be subject to the all-work test. The Government's intention is that they would be subject, like all other claimants who had been working prior to a claim, to the own-occupation test but would receive the long-term rate of benefit immediately.
I shall deal with the point about the couple with children who, it is claimed, would receive no child allowance. They would have access to income support if they had no other resources and would qualify for additional support for each child. They would also qualify for child benefit for each child. Incapacity benefit will continue to be paid even to those who have other income or savings. The benefit can be topped up by occupational pensions or, as I have said, by income support for those who need it. The basic rate of incapacity benefit will be the same as the existing rate of invalidity benefit. Age additions will be payable to those whose incapacity begins early in their working life before they have been able to make their own private provision. Increases will continue to be paid to those who have a dependent spouse or dependent children.
Even after the changes about 70 per cent. of new long-term incapacity benefit recipients will have circumstances which take them above income support entitlement. I make no apology for saying that we must contain spending on sickness benefits. Invalidity benefit is the fastest growing contributory benefit. It is second in cost only to retirement pension. Spending on this benefit has doubled in real terms in the last 10 years, from £2.7 billion to £6.2 billion. No responsible government could let that growth go on unattended. If we did, spending would grow by a further. 50 per cent. or more in real terms by the end of the decade. This Government are determined to grasp the nettle and introduce a system which is affordable and which focuses benefit on those most in need. This amendment therefore is at odds with our strategy of providing a sustainable and well targeted system.
§ Baroness Hollis of Heigham
Before the Minister sits down, and as we are in Committee, I hope he will expand on the point that the Bill is meant to focus on "those most in need", to use his words. Will he tell us how the proposals in the Bill will focus on "those most in need" when they will apparently "air brush" children out of existence for a period between six and 12 months? Does the Minister accept that at the moment a married man of 40 on invalidity benefit with two children will for the period between six months and 12 months receive £125 a week whereas under the Government's proposal he will receive only £79 a week? Will he also confirm that that is still some £30 to £40 below what that same man would receive from income support. How can the Minister claim that the Bill focuses on need when it entirely ignores the needs of the most vulnerable—that is children?
§ 3.45 p.m.
I do not believe that is the case. Obviously, when one focuses a benefit on need, one focuses it on the most needy and some of those who would have received more money in the future—existing claimants are protected by transitional arrangements—will receive less under the proposed changes. However, the point I am making is that if anyone reaches a level below that of income support, he will receive income support if he qualifies for it. Therefore, no one who qualifies for income support will live on an amount which is below the level of income support.
§ Baroness Hollis of Heigham
Why then do the Government not bring the benefit up to income support level rather than require people who are fragile, in pain, distressed and disabled to be subjected to the procedures involved with two separate kinds of benefit in order to obtain a bare minimum living?
I can only repeat that we think it is wrong to pay higher amounts of benefit to people who have occupational pensions and savings, for example. I would point out that the most vulnerable people are protected. The noble Baroness wishes to give a much larger range of people much more money. We feel, however, that it is important to protect the most vulnerable. There is a difference of opinion between us on the matter. We believe that we must focus benefit. The noble Baroness must accept that explanation although I realise that she may not agree with it. That is the Government's strategy.
§ Earl Russell
I am not sure the Minister is really at home in a farmyard. He said that he was going to grasp the nettle but what I think he has done instead is impale himself on a fork. The Minister brought income support into the discussion. He is on a fork here because if he does not include income support he is applying a short-term benefit to a period altogether too long for it to be appropriate. If he brings income support into the discussion, then I would have thought that he is wiping out a large proportion of the putative saving. If we are to give people the necessary amount of money for subsistence through a mixed package made up of bits of two benefits, rather than in one, we are introducing a lot of unnecessary administration. I should have thought we are increasing the costs, and increasing the proportion of the costs that are spent on administration and not on meeting real need. I would have thought that that is not the way we needed to go.
I would say to the noble Earl that I do not believe I used the term "grasping the nettle"; nor do I believe that I am impaled on a fork. I shall continue, like a cockerel, to crow the policy of the Government; that is until I lose my voice. I accept the important point made by the noble Earl that administration is expensive. I accept that administration costs a degree of money. The difference between a universal benefit and one that is means-tested is that it takes a certain amount of resources to means test a benefit. I do not disagree with 104 the noble Earl on that point. However, if one is to ensure that the benefit is focused, one must ensure it is going to the people one wants it to go to.
§ Lord Swinfen:
My noble friend says that like a cockerel he will crow. Let us not forget that cockerels often stand on dung heaps to crow. The arguments he has used today are like the contents of a dung heap. I cannot say that I am at all satisfied with what he said. The noble Lord, Lord Ewing, said that the Bill was Treasury led. I would say rather that it is Treasury drafted and that it is not drafted by my noble friend's department, the Department of Social Security, at all. The brief that my noble friend used to answer the amendment was, I suspect, also drafted for him by the Treasury.
It is said that there were three rates of incapacity benefit that increased over time. Surely my noble friend realises that the moment someone becomes incapable of work is the time when that person has been accustomed to the greatest income and therefore has engendered the greatest expense, for example on mortgages, hire-purchase and commitments of one form or another. It is also the time when that person may need to make substantial alterations to his home to make it suitable for habitation by the person who has become incapacitated. That is a time of considerable expense.
The noble Lord, Lord Ewing, invited me to test the opinion of the Committee. I am tempted to do so but I do not believe sufficient Members of the Committee have listened to the arguments this afternoon. It would be useful for them to have the opportunity to read the debate and to see the weakness of my noble friend's position. I intend to withdraw the amendment but I warn my noble friend that I shall return to the matter on Report. If he tries to present similar arguments at that stage I shall find it difficult not to take the opinion of the Chamber on that occasion. I beg leave to withdraw the amendment.
§ The Chairman of Committees (Lord Ampthill)
Is it the Committee's pleasure that the amendment be withdrawn?
§ 3.49 p.m.
§ The Chairman of Committees
The Question is that Amendment No. 1 shall be agreed to. As many as are of that opinion will say, "Content". To the contrary, "Not-Content". I think the Not-Contents have it. Clear the Bar.
§ Division called.
§ The Chairman of Committees
Tellers for the Contents have not been appointed pursuant to Standing Order No. 51. A Division therefore cannot take place, and I declare that the Not-Contents have it.
§ Lord McColl of Dulwich moved Amendment No. 2:
§ Page 2, line 14, at end insert ("or, if he is terminally ill or suffers from a prescribed disease or disability or is in receipt of the higher rate of care component of disability living allowance, 196 days.").
§ The noble Lord said: In moving Amendment No. 2, I wish to speak also to Amendment No. 4. The purpose 105 of the amendment is to enable people who will not be required to pass the functional element of the all work test to be eligible for long-term incapacity benefit after 196 days instead of remaining on short-term benefit for the full 364 days.
§ It is entirely consistent with the Government's intention to fast-track claimants who are terminally ill or receiving the disability living allowance higher rate care component (or DLAHRCC for short) and those whose conditions are featured on the list which the Secretary of State read in the other place during the Second Reading debate. As presently devised, the list includes severely disabled people and chronically sick people. These, and the terminally ill and people receiving DLAHRCC, are likely to be the most severely disabled of all incapacity benefit applicants. They will by definition be the most seriously disadvantaged financially. There is ample evidence that the daily costs of living as a disabled person increase with the severity of the disability.
§ The Committee will be familiar with the document Short changed by disability which was researched and written by the Disablement Income Group in 1990 in response to the Government's own survey of disabled people conducted by OPCS. It revealed that the most severely disabled people in the sample interviewed were spending £87 a week on the extra costs of disability, excluding personal care costs. That exceeded by more than £27 a week the higher rate of attendance allowance and mobility allowance combined.
§ The author of the report, Pauline Thompson, observed that severely disabled people were supplementing their income maintenance benefit in order to meet their particular needs as disabled people. With incapacity benefit they will be even further adrift during the first year of incapacity because they will have to wait the full 364 days before moving on to the long-term rate of incapacity benefit.
§ The concept of fast-tracking certain applicants through to the highest rate of benefit is not new. There is already a useful precedent in the special rules arrangements for people who are terminally ill and claiming DLA, who go straight on to HRCC.
§ Since the Government have already decided on special treatment for a prescribed group of claimants in the context of assessment, with the explicit assumption that such people will not be expected to work again, it is logical to allow them to progress swiftly to the long-term rate. Otherwise the consequence for this vulnerable group may well be that severe financial hardship will threaten their early efforts to come to terms with life as disabled people.
§ During the debate in Standing Committee E on 8th February 1994 it became clear that any government opposition to this amendment was not based on cost. A pair of amendments had been tabled. This present amendment and a second fallback amendment to bring the same groups on to the higher short-term rate from day one of incapacity would, the Minister said, reduce public expenditure savings by approximately £10 million net per year. The reason he gave for not recommending the Committee's acceptance of the 106 amendments was that they ran counter to the Bill's overall strategy, which is to focus the provisions better. It is not exactly clear what the Minister meant by that.
§ Since the intention is that specific groups of applicants will be identified for fast-tracking in relation to the medical tests, which is in itself a precise form of focusing, it can be argued that providing for the same group of applicants to move to higher rates of incapacity benefit faster is entirely in keeping with that policy. Who better on whom to target resources than the very group which the Government have already identified as not being expected to work?
§ Government Amendment No. 4 provides for people with terminal illness to receive short-term incapacity benefit at 28 weeks at the value of the long-term rate. The drafting is somewhat unclear. However, I assume that it means that additions for age, partner, and children where applicable, will be payable at 28 weeks for this group of claimants. That is welcome but it does not go far enough. People in the other two categories who will be fast tracked through the assessment process (and who will not be expected to work) may be as severely disabled as someone with a terminal illness and suffering similar financial hardships as a result of their disability. Why have the Government decided not to include people in receipt of the higher rate care component and people on the prescribed list in the new amendment? It would be helpful if the Minister will clarify the point at which the death within six months consideration would apply. I beg to move.
Lord Campbell of Croy
I support what my noble friend said in moving the amendment. He has set out clearly the reasons and commented on the Government's previous reaction to the proposals. However, I emphasise that the amendment is not inconsistent with government policy. The Government have already decided that people with incapacities, including the terminally ill, should receive special treatment and should not need to go through the new medical test. I hope that the Government will consider again what is proposed in the amendment to enable people who are most unlikely to be able to work again and who are in bad physical conditions to be treated in the way proposed.
§ Lord Swinfen
I, too, support the amendment, ably moved by my noble friend Lord McColl. I have little to add to what he said except to suggest to my noble friend Lord Astor that when considering the amendment he should re-read his brief relating to Amendment No. 1. I believe that part of what he said was in support of this amendment.
§ Lord Carter
From these Benches, I am pleased that my name is attached to the amendment. The argument was expressed extremely ably by the noble Lord, Lord McColl. I wish to emphasise some points. First, the need for such a change has been clearly defined with regard to people who are the most severely disabled of all incapacity benefit applicants. All the evidence indicates that the provision will meet a real need.
Perhaps the Minister will explain the concept of fast tracking and focusing. It was said in another place that 107 the amendments run counter to the Bill's overall strategy which is to focus provision better. But surely the idea of fast tracking—the principle is contained in the Bill—is the best example of focusing. Perhaps the Minister will explain why the proposal is regarded as counter to the policy of focusing whereas the fast tracking of specific groups of applicants, in particular in relation to the medical tests, is in itself a precise form of focusing. There is some confusion in the Government's mind. It would help if the Minister will explain the position
If the Government reject the amendment, perhaps the Minister will make clear whether it is on the ground of the £10 million cost, to which reference was made in another place. It was not clear on reading the debate in another place that the opposition was not based on cost. At the same time the argument for focusing is, if I may say so, extremely unfocused. Perhaps the Government will clarify the matter. If the Government intend to reject the amendment because of cost, they should say SO.
We welcome Government Amendment No. 4. I assume that Amendments Nos. 16 and 17 are consequential. As has been said, we believe that the provision does not go far enough.
The amendment introduced by my noble friend Lord McColl concerns the bringing forward of the long-term rate of incapacity benefit in specific cases. As he carefully explained, his amendment brings forward the long-term rate of benefit from one year to the 29th week in cases of terminal illness, receipt of the highest care component of disability living allowance and the list of prescribed diseases.
As the noble Lord, Lord Carter, said, the issue was addressed when the Bill was debated in another place. It is an issue that we take seriously. We have sought to address the anxieties raised when the Bill was going through another place. Amendment No. 4, and the two consequential amendments, Amendments. No. 16 and 17, bring forward the long-term rate in cases of terminal illness so that it is payable from the 29th week of a claim for incapacity benefit.
On the previous amendment we had a debate about whether the long-term rate of benefit should be payable in all cases from the 29th week. I do not propose to set out again why the Government feel that 52 weeks is a more reasonable measure of long-term incapacity. During the passage of the Bill in another place, my right honourable friend the Minister for Social Security and Disabled People promised to consider whether there should be any exceptions to that general rule. I shall come to the detail of my amendment shortly. However, before doing so perhaps I may address the amendments of my noble friend.
The Committee has argued that my noble friend's amendment should be accepted for two reasons: first, because these being the groups so severely disabled that they are exempted from the medical test they should receive the long-term rate of benefit when the exemption comes into force; and secondly, because payment of the 108 higher rates of benefit after 28 weeks would protect the most severely disabled, compensating them for the extra costs of disability.
I am not entirely convinced by either of those arguments. There will be many people just as severely disabled as someone in the exempt category but not automatically exempt from the test. Those people—for example, someone who had a very severe form of arthritis—would easily satisfy the test. They may be more severely disabled even than someone in the exempt group. It is difficult to see why they should receive a lower rate of benefit than someone who is exempt from the test.
My noble friend Lord McColl spoke of those people referred to in the list of exemptions from the test as being likely to be the most severely disabled. The list of exemptions referred to by my noble friend was not devised to define serious disability. It was a list of conditions where incapacity for work was a key factor and in doubt. It would be inappropriate to use that list for other means.
The exemptions are not fast tracked to the higher benefit rates. Those people are exempt from the process of the medical test because their condition is such and there is no doubt about incapacity. Most medical conditions are variable and therefore some investigation of the extent of the incapacity is needed. I can confirm for the terminally ill that additions in respect of partners, children and age will be payable from 28 weeks. As I said in answering the previous amendment, the test and rates of benefit are not linked. The higher rates of benefit are not in any way a reward, as it were, for passing the test.
The amendments that I have tabled bring forward the long-term rate of benefit in a limited way for the terminally ill. I believe that those amendments can be justified. I have tabled three amendments to give effect to that intention. Amendment No. 4 provides that after 28 weeks on short-term incapacity benefit, in cases of terminal illness, the long-term rate of benefit is payable. Amendments Nos. 16 and 17 ensure that the long-term rate of benefit is payable straightaway to any claimant transferring to incapacity benefit after 28 weeks on statutory sick pay.
This is a sensitive area and I take very seriously the concerns that the Committee has addressed today. This Government were the first to introduce into the benefits system special provisions for the terminally ill in disability living allowance. The amendments that I have moved today build on this provision. I do not think there is a case for going further than my amendment and I hope that in the light of that explanation my noble friend will feel able to withdraw his amendments. I hope also that I have satisfied what I realise is a genuine anxiety of my noble friend.
§ Earl Russell
Before we reach a final resolution of the matter, perhaps the department could do something that I should have done before I came here but I did not have time; that is, to check the debates on the subject during the passage of the Social Security Bill 1990, especially the Government's response to three 109 amendments on the subject of terminal illness moved by my noble friend Lady Seear, the noble Duke, the Duke of Norfolk, and the noble Baroness, Lady Faithfull.
It emerged in the course of the debates that one of the regular problems with terminal illness was that people were dead before their benefit entitlement was determined. On that occasion, the Government responded extremely generously. Will the Minister be prepared to check those debates, to make sure that what he is doing does not contradict any assurance given then by the Government?
I cannot give the noble Earl any assurance that I can do anything. However, I can assure him that I shall read the earlier debates and consider them carefully. I hope that I gave the impression to the noble Earl that this is an area where we take the concerns that were raised then, and those raised today, very seriously. Of course, I shall look at the earlier debates.
§ Lord Carter
I wish to raise a point related to that made by the noble Earl and which I should have mentioned on Amendment No. 4, which we welcome. We went to some trouble—and the Government worked very hard on it—when we introduced the amendments to the DLA to deal with terminal illness, to make sure that the matter was handled carefully in the guidance notes. In other words, we wanted to ensure that it was not made clear to people that they were terminally ill just because their benefit had changed. It would be helpful if the Minister could say whether the Government have thought about the way in which they will do it and the administration of the change.
I do not have those details with me today, but I shall be happy to write to the noble Lord before Report stage so that he may have an opportunity to study how we intend to operate the change.
§ Lord Swinfen
When replying to the noble Earl, Lord Russell, my noble friend said that he would read the debates on terminal illness which took place earlier. However, he did not give an assurance that any undertakings which the Government gave at that time would still be honoured. If they do not propose to honour those undertakings now in this Bill, will my noble friend undertake, when we reach Report stage, to let us know that the undertakings are not to be honoured and why? Will he please also let us know what the undertakings were and those that are being honoured?
I realise that governments must be allowed to change their minds, but I feel that we should be advised that a change of mind has taken place and the reasons for the change.
I said that I would find out what the undertakings were. I cannot tell the Committee now because I did not deal with the Bill at that stage. Obviously, as my noble friend said, the Government can and do change their mind when they consider different issues. Circumstances change. I shall read the debate, as I said, but I cannot promise my noble friend that, having looked at it, I shall necessarily change my mind.
§ Lord McColl of Dulwich
I thank the noble Viscount for that reply. I listened carefully to it and I shall read the report in Hansard. I reserve the right to raise the matter at Report stage, but meanwhile I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 4.15 p.m.
§ Lord McColl of Dulwich moved Amendment No.3:
§ Page 2, line 14, at end insert ("or, if he is terminally ill, one day").
§ The noble Lord said: The amendment seeks to bring forward entitlement to long-term incapacity benefit after one day, which is a more favourable position than at present. Under invalidity benefit rules, someone with a terminal illness is not entitled to benefit with all the additions until the 28th week of incapacity for work. The Bill proposes to delay payment of long-term benefit until the 52nd week of incapacity. People with a terminal illness can claim disability living allowance for care and mobility needs immediately, without having to satisfy the three-month waiting period. They can automatically receive the higher rate of benefit.
§ People may qualify under the special rules if their death can reasonably be expected within the next six months. Although the provisions assist someone in a claim for DLA, there is no similar provision for immediate access to the full rate of invalidity benefit., nor under its successor incapacity benefit. It could be possible to use the same definition of "terminal illness" as under the DLA special rules to ensure early entitlement to long-term incapacity benefit in such circumstances, to ensure that people with terminal illness do not fail to receive full entitlement before their death. The numbers who could gain from that are likely to be small, but the gains to the individual could be very large indeed
§ The Government may argue that the existence of the special rules access to DLA renders any similar access to incapacity benefit unnecessary. However, DLA is designed to give assistance with care and mobility needs and not to provide for income replacement during the time of need. People with terminal illness incur additional costs which are not covered by DLA and they may have a partner and a child to support. Bringing forward entitlement to incapacity benefit would go some way towards alleviating the stress and deprivation associated with a low level of income during; that period. I beg to move.
§ Lord Swinfen
I hope that my noble friend will consider the amendment seriously and favourably. It is quite obvious that the strains upon a family where the breadwinner is terminally ill will be considerable. They will be not only emotional but, usually, also financial as the family endeavours to make the passing of the individual as comfortable and happy as possible and also to relieve the stress on other members of the family, particularly where the family may have one or more children. The additional stress, strains and discomfort from the loss of income at that time is something that no really civilised country should place on any family.
Baroness Darcy (de Knayth)
As I put my name to the amendment perhaps I may briefly add a word of support. I think that the case has been entirely made. We have the precedent of the disability living allowance and I remind the Minister of the words of the noble Earl, Lord Russell, on how the other amendments came about, when we realised that the terminally ill were actually dead before they could draw their benefits. I thoroughly support the amendment and hope that the Minister will consider it.
§ Baroness Hollis of Heigham
We on these Benches also support the amendment so clearly moved by the noble Lord, Lord McColl. Terminal illness is a special circumstance in which the family are in the most acute stress and trauma, as well as having even higher costs and greater needs in terms of day care support and the like. The Minister has accepted, through DLA, that such families can go immediately on to the higher rate allowance the moment a terminal illness has been diagnosed. That principle has been accepted for DLA. It has been accepted in so far as such people obviously do not need to go through a second medical test. We are saying: please make the basic incapacity benefit follow the same pattern as DLA and allow those who have a terminal illness, whose life expectancy is probably less than six months, to go immediately—not through stage one, the lower rate, and not through stage two, but immediately—onto stage three. If not, our fears are that they will die before they receive the higher rate. Otherwise, those who are less severely ill will enjoy better financial support than those who are terminally ill. We cannot believe that that is the Committee's intention.
§ Earl Russell
On behalf of these Benches I shall say only that we agree strongly with the case for the amendment, and I shall not gild the lily.
In replying to the amendment moved by my noble friend, first I remind the Committee —indeed my noble friend mentioned this point—that incapacity benefit is an income replacement benefit. It is not intended to reflect the extra cost of being severely disabled. The extra costs of disability in terms of care and mobility needs are reflected elsewhere in the benefits system through disability living allowance and the premia in the income-related benefits. Attempting to make incapacity benefit reflect those needs would duplicate existing provision.
The majority of people who fall sick—we estimate about 80 per cent. of the total—will not be on incapacity benefit but instead, for the first 28 weeks of incapacity, will be in receipt of statutory sick pay from their employer. This amendment would place them at an unfair disadvantage compared to a claimant of incapacity benefit.
As I said in response to the amendment that we dealt with previously, we think that we have the right view about the terminally ill. The Government, as I said, were the first to introduce into the benefits system a special provision for the terminally ill in disability living allowance. Under that provision terminally ill claimants do not have to serve the 28-week waiting period. Instead 112 they go straight onto the highest rate of benefit. For most people that will in fact be the result of the Government's amendment. Most people are on statutory sick pay for 28 weeks. When, after that period, they come onto IB they will get the highest rate immediately if they are terminally ill. The arrangements that we propose for IB take account of the structure of provision for incapacity; that is, state provision and SSP.
The amendments that I have tabled today introduce a new enhancement into the incapacity benefit for the terminally ill. I do not believe that it would be sensible or equitable to go further than my amendment suggests. The amendment of my noble friend would, in comparison with people who are in receipt of the short-term lower rate incapacity benefit, disadvantage people in the receipt of statutory sick pay.
I recognise that dealing with all the benefits that relate to this group of people creates a difficult and slightly complex problem, but I hope that the explanation that I have given my noble friend has given him some reassurance that we have addressed his concerns.
§ Lord McColl of Dulwich
I thank the noble Viscount for those explanations of this rather complex subject. I reserve the right to raise the matter at Report stage. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause I agreed to.
§ Clause 2 [Incapacity benefit: rate]:
Viscount Astor moved Amendment No. 4:
Page 3, line 5, at end insert:
("(3A) In the case of a person —
§ The noble Viscount said: I spoke to this amendment with Amendment No. 2. I beg to move.
§ On Question, amendment agreed to.
Baroness Turner of Camden moved Amendment No. 5:
Page 3, line 8, at end insert:
("(4A) An additional amount of benefit is payable where there are one or more surpluses in the claimant's earning factors for the relevant years; and for this purpose, "relevant year" means any tax year, being neither earlier than the tax year 1978—79 nor later than the tax year 1990—91, in the period which begins with the tax year in which the claimant attained the age of 16 and ends with the tax year immediately preceding the tax year which includes or included the 197th day of the period of incapacity for work in respect of which incapacity benefit is payable.").
§ The noble Baroness said: This amendment relates to the additional pension which has already been referred to briefly by the Minister in his response to Amendment No. 1.
§ The additional pension was introduced as a means of assisting people who had to leave work before retirement age for health reasons. It was intended to ensure that this group would be no worse off than people who had just a few more years to work to retirement.113
§ As I understand it, the Bill seeks to abolish that provision for new claimants for IVB, although existing claimants for IVB who are covered by the transitional arrangements will continue to receive their additional pension, but frozen at 1994–95 levels; that is, with no further up-rating. The estimated savings from abolishing the additional pension are said to be £20 million net in 1995–96, rising to £130 million in 1996–97; and £30 million has already been saved in stopping contributions after 1990 from counting towards the pension.
§ The Government have attempted to justify their proposal to freeze the additional pension for existing claimants and to deny it altogether to new claimants by saying, as I understand it, that the additional pension duplicates occupational or private schemes. Indeed, the Minister made that comment earlier today in response to Amendment No. 1. Would that that were so in some ways! Would that more people were covered by good occupational pension provision. Unfortunately that is not so. More people currently receive an additional pension with their invalidity benefit than receive occupational pensions. Anyone who paid national insurance contributions between 1978 and 1990 could be eligible for the additional pension, which could therefore be of more benefit to people who had the least time in which to make occupational or private pension provision.
§ There may well now be fewer people covered by good occupational schemes than there were before the changes in the labour market to which we have often referred in this Chamber; namely, increased part-time work, casualisation, and so on. In 1992, over 85 per cent. of claimants received an additional pension. Only 38 per cent. of those received occupational pensions, and some of those pensions could very well not have been very high. Not all schemes provide high benefit, particularly to employees who may have short or broken service. The DSS's own research indicates that 68 per cent. of all IVB recipients did not receive an occupational pension.
§ In practice, many vulnerable groups are not covered by occupational schemes. They include many people who are on low incomes, since often they cannot make the contributions that are necessary in order to be covered by such schemes. Moreover, private coverage is often hard to obtain by people with disabilities. I am advised that the average amount of the additional pension is £13.40 per week. The increased level of benefit which the additional pension represents can enable claimants to avoid a sudden drop in income after becoming incapable of work.
§ It has been clearly indicated by the Government, particularly by the Minister speaking in the other place, that the reason for this proposition is one of cost cutting. But we are talking, in the main, of very poor people. Most IVB claimants tend to be over 50 and often have very little in the way of skills. Those who have been manual workers may have had little opportunity, once they were disabled, to obtain any work that they could usefully do. The people who receive the additional pension do so because their condition renders them incapable of earning a living. As I indicated, it is not enormously generous. The Minister said at Second 114 Reading on 21st March (col. 525) that the average amount of IVB currently in payment was £90 a week. I have just said that the average amount of additional pension is £13.40 per week. Those two sums taken together clearly do not represent a very high living standard. Certainly, for someone living at that level the freezing of the additional pension could eventually represent a substantial loss. It is even worse, of course, for new claimants, who under these provisions would not get anything at all by way of additional pension.
§ I repeat what we said on Second Reading. If the Government want to save money they should not seek to do so at the expense of the poor, the disabled and the sick. I beg to move.
§ 4.30 p.m.
§ Earl Russell
When the noble Baroness, Lady Turner of Camden, referred to additional pension being frozen, the verb may have been even more appropriate than the noble Baroness intended. This Government have made a great deal of noise about their virtue in payment of compensation for the cost of VAT on fuel. But it emerged in a Written Answer given to my honourable friend Mr. Rednal on 28th of last month, that those who for any reason do not receive the full pension, also do not receive the full compensation for the cost of VAT on fuel. So they will be hit twice and not just once. And in this world one should perhaps think twice about shortage of heat for those on low incomes.
We have here part of a much larger problem. It is the inevitable price of basing pensions on a contributory system that there will always be people who, whether because of illness, absence from the country or for some other reason, have gaps in their contribution records. Those account for a large proportion of the pensioners who depend on income support and are usually among the poorest of those on pensions. The additional pension was designed to plug at least one small part of the gap. If one becomes disabled and ceases to be able to work, one ceases to be able to make one's contribution and without a device of this sort, may become very short on pension.
If I may say so, we are going to have a second trip round the track of reliance on income support on lo which the Minister put us on Amendment No. 1. He will say that the poverty alleged will be less than alleged because people will rely on income support. That will provoke the obvious reply: if that is so, are not the savings which the Government will achieve a good deal less than they imagine? In fact, I am interested to know on what assumptions in regard to income support the costings have been done. The savings we are being shown are extremely small for the considerable amount of hardship which will be caused.
Once again we must ask the question: are the Government taking their savings gross or net? If they are taking their savings gross, then the figures are credible but not significant; if they are taking them net, then the figures are significant but not credible. Care of the old is one of the most expensive aspects of medicine. We have heard a little about that over the past week. It is a considerable burden on the cost of the health 115 service. Care in the community is also a considerable burden on the cost of the health service and on the cost of social services. The Government should stop to ask whether, by making old people poorer, they are really saving money. If they are not saving money—I do not see how they can be sure whether or not, in net terms, they are—then why are they doing what they are doing? Is it not once again the mistake of looking at savings simply in terms of departmental budgets when what we should be asking is what is the system which involves the lowest cost to public funds as a whole? If that question has not even been asked, then it should be asked before any final resolution of this matter is reached.
As the noble Baroness, Lady Turner, said, the effect of this amendment is to introduce into incapacity benefit an additional pension component similar to that which exists for IVB.
We calculate that by the end of the century additional pension will be costing some £2 billion. Additional pension has consistently grown by an average of over 20 per cent. per year since the early 1980s and would continue to grow at an estimated rate of 10 per cent. per year under present arrangements. The Government are committed to making provision that is affordable. The amendment as drafted would cost the taxpayer £20 million in 1995–96 and £130 million in 1996–97.
One of our guiding principles in the development of incapacity benefit was to consider the relevance of the additional pension to a reformed system of benefits. Additional pension is poorly targeted, as it is earnings related. Unlike SERPS, there is no deduction made in respect of opting out. In effect one can opt out, paying reduced national insurance contributions as a consequence, build up an occupational or private pension and also receive the additional pension. Indeed, around half of existing male recipients already receive occupational pensions averaging £70 per week in addition to IVB. That figure is growing.
For those reasons we are abolishing additional pension for new claimants. Present recipients will continue to receive additional pension. However, to continue uprating additional pension for existing claimants would increase the disparity between old and new claims. That would be inequitable, so their entitlements will not be uprated. It is important, however, to remember that there will be no cash losers. Existing recipients will continue to receive additional pension as long as their entitlement to benefit continues.
Members of the Committee focused on the effects of abolishing additional pension on benefit entitlement. A significant proportion of IVB recipients do have other resources. Since additional pension is earnings related, it is likely that those who receive a high amount of additional pension are those who have other incomes and savings. They are thus unlikely to fall into a category of those on whom we would most like to focus benefit spending.
Additional pension is based on earnings and those who have had the least time to build up occupational or private provision will also have the least time to build up 116 additional pension. As your Lordships are aware, that is why we have a provision for those people who come on to benefit at a young age. The new benefit will pay additions to reflect the young's inability to build up private pension provision. It will be £12.50 a week if incapacitated before the age of 35 and £6.10 if they are between the ages of 35 and 45.
IVB recipients now and incapacity benefit recipients in the future will have their contribution record credited for the period in which they are incapable of work. Additional pension is based on earnings and therefore does not plug the gap referred to by the noble Earl, Lord Russell, in the national insurance contributions record. We believe that the additional pension is poor targeting. It is an outdated arrangement and no longer relevant to people's needs or affordable in the long term. Therefore I hope that, with that explanation of why we feel it necessary to change the arrangements, the noble Baroness will feel able to withdraw her amendment.
§ Earl Russell
Before the noble Viscount sits down, can he say whether he calculated his savings gross or net? The point is essential for judging the validity of his argument.
The gross savings in the memorandum—£550 million in 1995–96 and £1,450 million in 1996–97—show the effects of the Bill on the new —control total expenditure. They take account of offsetting costs and expenditure on benefits which come under the heading of NCT expenditure. They include retirement pension, housing benefit, council tax benefit, family credit, DWA and income support for the over-60s. The memorandum then shows offsetting costs on cyclical social security expenditure, income support and unemployment benefit, which in the future will be job seekers' allowance.
§ Earl Russell
I am sorry to ask the Minister for clarification. Was I right in understanding that he was dealing with public expenditure consequences of the Bill as a whole and not with the freezing of the additional pension, which is what we need to know?
I was dealing with it as a whole. In my original response to the amendment I gave the noble Earl the figures.
§ Earl Russell
Perhaps I may pursue the point further because it is of importance. Has the department made any assumptions about the effects on the health of old people of increased poverty and also about the possible cost of any such effects; and if so, what assumptions? The point may not be important but I should like it to be considered so that we can tell whether it is or not.
The noble Earl asks whether there is an effect on spending on community care. That is what he seems to be implying. What is important is that we get the targeting for incapacity benefit right. There may be some further effect on various people. For example, there may be people in the future who would now collect income support. That could be an effect. There may be the effect that we discussed earlier. I do not think I can give the noble Earl quantifiable figures. What I am saying is that we have to get every benefit focused 117 on the most needy, whether it be a benefit that comes from the Department of Social Security or any other department. That is what is important.
§ Lord Swinfen
I do not think my noble friend gave the noble Earl, Lord Russell, an answer to the question that he actually asked. He was not asking about community care. He was asking about the effects on the health of elderly individuals who are living in poverty and whether, should there be a deterioration in their health through money worries, it would increase their living costs because they would need more medicines and would have to pay greater prescription charges, and so on. That needs to be taken into account. If it is possible to give a little more to those people so that that financial worry is removed and therefore the effect of ill health is reduced, it would benefit not only the nation's health as a whole but the Treasury as well. I am sure that the Treasury is behind all this.
I do not think my noble friend should infer that the responsibility for incapacity benefit has somehow transferred to my right honourable friend the Chancellor of the Exchequer. It has not. It remains with the Department of Social Security. We want to have a better benefit which is more focused. As we go on through the Bill I hope to explain to the Committee the improvements we shall make, so that there will be improvements to recipients; and not only improvements so that the taxpayer can afford to pay the new benefit.
My noble friend makes a point which is not answerable. He compares two things that are not the same. The Bill will not affect the health of anyone. The National Health Service deals with the health of the nation and pensioners do not pay prescription charges. It is not proper that we should get into a health debate. I think that the noble Earl was referring to community care. I go back to what. I said earlier. This Bill is about incapacity benefit. That is what we are trying to get right. That is what is important.
§ Baroness Turner of Camden
I am sure the Minister will not be surprised to learn that we on this side of the Committee are not at all satisfied with his response to the amendment. I do not believe that he has in any way effectively answered the very important questions asked by the noble Earl, Lord Russell. The fact that many people receive a benefit is not necessarily a good reason for abolishing it. Just because a lot of people claim it, why does it suddenly have to be abolished? Nor do I think there is any reason for abolishing it simply because it is held that a small minority—I emphasise the words "small minority"—could possibly gain some advantage. As many Members of the Committee have said, we are dealing with people who are poor anyway.
I challenge the Minister's assertion that there will be no cash losers. Some people will have their benefit frozen anyway, so presumably they will be cash losers. Then there are people who might have had it but for the Bill. They will not get it at all, so presumably they are cash losers as well. If it is claimed that one can always fill in with income support and so on, I think that is very unsatisfactory. When people receive a pension it is something they feel they are entitled to. When, however, 118 they have to apply for means-tested benefits, it is an entirely different story. We all know that there is a relatively low take-up of means-tested benefits compared with pensions or anything to which people feel they are entitled.
I shall not press the amendment to a vote today because we have a rather thinly attended Chamber. However, I shall certainly return to it on Report because we have had a very unsatisfactory response from the Government. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 4.45 p.m.
Lord Carter moved Amendment No. 6:
Page 3, line 11, leave out ("such age as may be prescribed") and insert ("the age of 60").
§ The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 7 arid 8, which are related. The debate on these amendment; will tend to overlap with the debate on the previous amendment. I make no apology for repeating the arguments because they are extremely powerful and we have not had a satisfactory answer from the Minister.
§ Amendment No. 6 seeks to extend eligibility for the age allowance payable on top of the basic rate of invalidity benefit for men and women up to the age of 60. At present men up to the age of 60 aid women up to the age of 55 can qualify for this increase. The new age allowances are to comprise the highest allowance for people who become incapable of work under the age of 35 and a lower allowance for people who become incapable of work between the ages of 35 and 45. The new allowances replace the three age bands which were for people under 40, a middle rate for people under 50, and a lower rate for people aged between 50 and 55 for women and 60 for men.
§ The proposed new structure for the age allowances will mean that people aged between 50 and 55 or 60 no longer be entitled to an age allowance. This could cost them around £3.80 a week. In the debate in another place we were told that the estimated net savings resulting from the abolition of age allowances for the over-45s is less than £5 million in 1995–96 and around £15 million in 1996–97.
§ The reason for introducing age allowances was to give most assistance to people who became incapable of work at an early stage in their lives. There was a logic to that. However, some assistance has been available to people in the older age groups who in the future will receive nothing extra at all. The existence of a lower rate up to the ages of 55 for women and 60 for men was to recognise that someone becoming incapable of work at that age had also lost several years of work and therefore had lost opportunities to accumulate assets for retirement or as a cushion against loss of earnings due to incapacity for work. With the state of the jobs market at the moment for people of that age, we can understand the importance of the amendment.
§ Under the existing system the age allowance is offset against payments of the additional pension. We heard about that during discussion of the previous amendment. With the abolition of the additional pension, the 119 age allowance will assume a greater importance in protecting people's incomes. The changes amount to a double problem for people over 45, who will lose any age allowance and would have been more likely to have an additional pension entitlement.
§ The arguments given in another place against the amendment seem a little muddled. The Minister, Mr. Burt, said that the purpose of limiting age additions to people whose incapacity began before age 45 was to focus help—we again get the word "focus"—on people who became disabled early in life, as was the original intention with age allowances. It means that people who are over the age of 45 are not just out of focus—they are out of the system altogether for this extra payment. It was further argued that people in the older age groups —we have heard this a number of times from the Minister this afternoon—have occupational pensions and other resources. I shall deal with that point at greater length when I speak to Amendments Nos. 7 and 8.
§ I turn now to those amendments. They are designed to restore the payment of age allowances at the 28th week of incapacity, when the long-term IVB now begins. Under incapacity benefit, only the short-term benefit will be payable at this stage, which excludes other allowances such as increases for age. By redefining the period of short-term incapacity from 28 weeks to 52 weeks, age allowances will only be payable from the end of the first year of incapacity.
§ The extension of the period of short-term incapacity means that most people could lose considerable sums of money at a time when they need it most; namely, in the early stages of sickness or disability. With regard to those who become incapable of work after April 1995, younger people under the age of 35 will lose £6.10 per week (which is about £150 in the six months period) and people between 35 and 45 years will lose £12.15 a week (which is about £300 for that period). As I said, the estimated savings resulting from the delay in paying the age allowances are £10 million a year. Reinstating the status quo and allowing the payment at 28 weeks would therefore not reduce to any considerable extent the estimated £550 million gross savings for 1995–96 only.
§ The argument against the amendments in another place were that reinstating age allowances at 28 weeks would fly in the face of the new definition of "short-term" incapacity and that at the 28 week stage there would still be an increase in the basic rate. We have not heard the logic behind the reason for the new definition of "short-term" incapacity. When speaking to an earlier amendment, the Minister said that he would give that information but he merely stated the fact. It would be interesting to know the logic and the rationale behind the decision to redefine "short-term" incapacity.
I now turn to occupational pensions, relied on heavily by Ministers in this Chamber and in the other place. At Committee stage in the other place, Mr. Burt, the Minister, said:
People over 45 will have had plenty of opportunities to build financial resources, contribute towards an occupational pension, and they might even have private provision for sickness".— [Official Report, Commons, Standing Committee E, 15/2/94; col. 154.]
In reading such statements one begins to wonder what kind of a world Ministers live in. The Minister had earlier said that a change was being made from three bands to two bands, because,
it became clearer as time went by that many people in higher age groups have occupational pensions and other resources. We feel it right to concentrate more help and effort on the younger groups".—[col. 145.]
§ To some extent the Minister was right, but not when he said "many". There are some people in higher age groups who have occupational pensions and other resources. There are plenty of company directors, senior managers and senior executives who have been told to pile money into their pensions in the last five years of service to make sure that they have a very substantial pension when they retire. We also know about the very substantial pension packages which are available for company executives who have been made redundant because of the failure of their company.
§ A number of figures were given in the other place and are available elsewhere about the proportion of claimants who in fact receive anything from an occupational pension. The reply given in the other place was that only 38 per cent. of claimants receive payments from an occupational pension. The department's research study, referred to earlier by my noble friend Lady Turner, shows that 68 per cent. of invalidity benefit recipients did not receive an occupational pension. Only 30 per cent. of men and 41 per cent. of claimants aged over 50 received an occupational pension.
§ For the Government to rely on those figures as the reason for what they are doing is a very thin argument. I suggest that they think again on that point. These are important amendments which go to the heart of the changes that the Government are making. We have shown that they disadvantage those people who are affected by them and that there is a genuine cash loss compared with what they would otherwise have received. I hope that the Chamber will accept the amendments when they are moved. I beg to move.
As the noble Lord, Lord Carter, explained, these amendments would increase the rate of long-term incapacity benefit for people whose incapacity began before they reached the age of 60. In addition, they would bring forward payments of the addition to the 29th week of incapacity.
The purpose of an age addition is, and has always been, to focus help on people who become incapable of work early in life. By limiting age additions to people whose incapacity begins before they are 45, the Bill achieves that aim. Someone aged 45 may well have worked for at least 25 years and will have had an opportunity to build up financial resources and contribute towards an occupational pension and may even have private provision for sickness.
Let me take the reforms as a whole and explain to the Committee that we have set ourselves the twin objectives of making benefits for those incapable of work affordable and better targeted. An age addition paid to the age of 60 would meet neither of those criteria; nor would bringing forward payment of an age addition to the 29th week of incapacity meet them.
121 We are determined to introduce a system which is affordable and well targeted. The new benefit will provide a basic income for those who cannot work and, as I said, would focus resources on the genuinely long-term sick. Existing recipients will be protected. There will he no cash losers at the point of change.
When dealing with earlier amendments, the Committee debated the extension of the qualifying period for the highest rate of incapacity benefit to 52 weeks. I believe that 52 weeks is a more reasonable definition of long-term incapacity. That is also the point from which I believe that the highest rates of benefit, including age additions, should be paid. Members opposite have drawn attention to cuts in entitlement. However, I am not convinced by their arguments. I have already made clear that no one will see a cut in his benefit as a result of the changes that this Bill brings about. Claimants who receive incapacity benefit from the beginning of their claim will get an increase in benefit at the six months point. Indeed, many will have additional, private resources. In addition they will receive another increase after a year of incapacity for work.
§ Earl Russell
Before the noble Viscount sits down, perhaps I may point out that he said that "many" of those involved will have substantial private resources. Does he know how many?
I said, and I shall repeat it for the benefit of the noble Earl, that they may even have private provision for sickness. They also will have had an opportunity to build up financial resources and contribute towards an occupational pension. I did not attempt to qualify the amount.
§ Lord Carter
It is quite clear that the Minister does not understand the difference between evidence and unverified assertion. He has continued to say throughout every amendment, without producing any rationale or evidence, that people over 45 have the resources and are able to meet the changes that the Government intend to make. I gave the evidence on occupational pensions. I quoted the figures from the DSS report. I shall willingly give way to the Minister if he will now produce the evidence for the statement which he has repeated, and which was also made in another place when this issue was debated there, that people over 45 have had a chance to build up additional resources which will enable them to deal with the problem that we have described. The very people who will have to deal with the problem are those who are the least able to build up the resources to which the Minister refers.
Before I decide what to do with the amendment, will the Minister say what evidence he has for his statement?
The evidence is in various places. The point that I tried to make was that someone who has been working for a period of time has had the opportunity that I mentioned. That is the point I made. I can give the noble Lord some figures that he might find helpful. As an estimated proportion of invalidity benefit recipients receiving occupational pensions: for those 122 under 45 it was 5 per cent., for those aged 45 to 54 it was 30 per cent. and for those of 55 years and over it was 55 per cent.
For those under 45 the figure is 5 per cent; from 45 to 54 years it is 30 per cent; and for 55 years and over it is 55 per cent. Those figures may or may not help the noble Lord in his deliberations. I cannot tell. The point that I have been making is that his amendment, which moves the age to 60, goes rather further than we consider reasonable.
§ Lord Carter
The percentages do not mean much unless one knows how much the extra resources amount to. On a previous amendment, my noble friend Lady Turner referred to the amount of occupational pensions. I would argue that for most of the people who will be hit by the change, the amounts are not substantial and are not sufficient reason for the Government to make the changes proposed in the Bill.
When I moved the amendment, I asked about the rationale behind the change in the definition to 52 weeks. The Minister keeps saying that, but he does not give the reasoning behind it. Of course, we all know the answer—and I shall give it. It comes down to cost. It is being done to save money. If the Minister were to stand up and say that instead of pretending that there is a greater rationale behind it, we would all understand his argument a lot more clearly.
It is obvious that we have been unable to change the Minister's mind—I am not sure that I expected to—but we shall certainly wish to return to this amendment with some strength at Report stage. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 7 and 8 not moved.]
§ 5 p.m.
Lord Swinfen moved Amendment No. 9:
Page 3, leave out lines 38 to 40 and insert ("incapacity benefits after 196 days").
§ The noble Lord said: In moving Amendment No. 9, I should like to speak also to Amendment No. 10. Amendment No. 9 seeks to reintroduce child dependant additions for the 29 to 52-week period, as is the present position with invalidity benefit. Payment of increases for dependent children for 52 weeks, rather than for 28 weeks as at present, will produce significant savings far the Government —that point has come up previously, but we have not really acknowledged that this is a Treasury matter—but will cause considerable financial hardship for those families affected by the change. There will be a loss of £9.80 per week at current rates for the eldest or only child and of £11 per week for each subsequent child. That will place increased pressure on families at a particularly vulnerable time in their lives.
§ For some claimants, those reduced levels of benefit will bring them for the first time on to means-tested income support. The removal of child dependant additions in the 29 to 52-week period (and the non-payment of adult dependant addition in respect of 123 those under 60 with no dependent children across the board) reduces the value of this non-means-tested income maintenance benefit to below that of the "safety net" benefit. I shall say that again: it reduces the value of the non-means-tested income maintenance benefit to below that of the "safety net" benefit. Many claimants are unlikely to qualify for any additional or top-up help from the means-tested system due to having savings over the fixed capital limit or through having excess income, for example, a small occupational pension. I understand that last year's leaked documents suggested that only 40 per cent. of those who will lose out will be eligible for income support.
§ When the matter was raised in the Commons during the debate in Standing Committee E on 15th February this year, the Minister said that the new arrangement simply followed the long-standing rule that increases for children are not payable with short-term benefit unless the beneficiary is over pensionable age. Because the payment of the long-term rate of incapacity benefit is being moved back to after 52 weeks, it follows that child dependency increases will move back with it. Between the 29th and 52nd weeks of incapacity, a family will lose some £235 for one child, £498 for two children and £760 for three children.
§ Amendment No. 10 seeks to restore the present position of making adult dependency increases payable at 28 weeks. As the Bill delays entitlement to full benefit until the end of the first year of incapacity, increases of benefit to adult dependants are not to be payable until the long-term benefit is reached, after 52 weeks. That would represent a loss of £26.90 per week at current rates for weeks 28 to 52, with a total amount of £645.60 for the period.
§ The savings to the Government arising from delaying entitlement to adult dependency increases to 52 weeks have been estimated at £5 million per year. That comes from the House of Commons Hansard of 25th January this year, at col. No. 189. It is a net figure, offsetting increased payments of benefits such as income support.
§ Increases for dependants are payable only if the spouse or partner is not earning more than £44.65 per week and is not receiving a benefit in his or her own right. I understand that just over 30 per cent. of claimants receive an increase for an adult dependant.
§ In addition, there are often care needs resulting from sickness or disability. Where those needs are sufficiently great to qualify for the two higher levels of the care component of disability living allowance, the carer may be able to claim invalid care allowance in his or her own right if he or she is spending 35 hours per week in caring for the disabled person. Where there are care needs which do not qualify for assistance through disability living allowance, a partner may nevertheless provide considerable assistance to the claimant or be unable to consider taking up employment without additional cost to the family or to the social services department. I beg to move.
§ Baroness Hollis of Heigham
We on these Benches very much support Amendment No. 9, which has just been moved by the noble Lord, Lord Swinfen, and 124 Amendment No. 10, to which he also spoke. Amendment No. 9 focuses on the issue of child poverty, which has been highlighted by the Bill. We believe that some of the worst sufferers in disabled families are children living with disabled parents. The children encounter stress within the family as a result of having a parent who is disabled. That parent is usually a father, who is unable to go out with the children, to play football with them or to do any of the things which one would hope that, in good families, parents and children do together. Such children not only have a disabled parent who is often in considerable pain and is therefore unable to spend the time with the children that they would wish; they not only have a parent who is very poor (because half of all disabled people have savings of less than £1,000); but they also live in a family with parents whose income has been deliberately designed, through the structure of these benefits, to be below income support levels.
In other words, we are saying that disabled families (who at the moment receive an allowance after six months that recognises that they have children living with them) will not, if the Bill goes through unamended, receive that allowance for 12 months. For the period between six months and 12 months, whether a family has one child or two or three or four will make no difference to the benefit received. For the period between six months and 12 months, a family of two adults and a small toddler, for example, will receive the same income as a family with three teenage children. That is the structure of the benefit. That means not only that the person who was previously in work will receive much less than he or she would have received on invalidity benefit, but that that person will have an income that is below the income support level. Perhaps I may remind the Committee of the figures. A man of, say, 40 with a wife and two children aged 12 and 14 receives £125 per week on invalidity benefit, plus child benefit, giving an income of £143 per week. That is now.
That same family on income support where child benefit is deducted receives £109 a week; but on the new incapacity benefit it will receive £79, plus child benefit: £97 in total. So having a level playing field, with child benefit being taken into account in all three cases: invalidity benefit £143; income support, the barest minimum upon which to live, £109; and this benefit £97. That is £22 less than we deem necessary for minimum living standards on income support. It is built up because all that the man will receive if he is 40, with a wife and two children between the ages of 12 and 14, is £52.50 for himself and £26.90 for his spouse, with no additional payment for the children except child benefit. That comes to £97.50.
What is more, the more children that family has, and the greater the financial need, the larger the gap that opens up between what that family receives on income support and what in future it will receive from the new incapacity benefit. The gap for two children is something like £22. The gap for three children is nearer £30. For each child there is a gap of between £10 and £15 between what would be received on income support and the much lower level of benefit received for 125 disability; in other words, a family with children will be worse off than on income support for a period between six and 12 months.
It is a family in which a child is already suffering because the parents are disabled, in pain and under stress. On top of that, we double the financial burden. It is rather shocking that we cannot structure a benefit which at the minimum brings disability benefit and incapacity benefit into line with income support. No one in this place would say that income support is generous. What are we doing constructing a benefit which is below income support where there are children in the family?
If the performance in the other place is anything to go by, the Minister will probably make three points in reply: first, that child dependency rate comes with the higher rate. As the higher rate is 52 weeks, so must be the child dependency addition. So tough luck on kids! My response to that is that the Government have chosen to bring in the higher rate at 52 weeks and have it made it part of the higher rate, and only then can the children's addition be paid; in other words, it is a problem of the Government's own making because the Government are saying that the words mean what they choose them to mean. The Government could do differently. They could construct the Bill differently so that children were not exposed to such poverty.
The second argument that the Minister may put forward is that child support is meant to be carried by child benefit, which families on incapacity benefit would still enjoy. That would be reasonable were child benefit to be at the same level as the child premium in income support, let alone the child premium calculated by the CSA for family maintenance. But is it? If one is disabled and has a child it appears that one is expected to keep it on child benefit alone of £11 a week for the first child or £8 to £9 for the rest, irrespective of their age. If one is on income support it is assumed that one has £15 a week for a child under 11 and between £23 and £27 a week for teenage children. If one is seeking maintenance from the CSA, it is likely to calculate that one needs £45 a week upon which to keep that child. Most of us would regard that as a much more realistic sum.
We always know that children should choose their parents with care, but it is clear here that under the Bill a child should choose a parent who is a lone parent with a father paying maintenance rather than choose a father who is unemployed but fit; but if he must, he should choose a parent who is unemployed and fit and looking for work rather than a father who is unemployed. A father on income support will receive for his children half of what he would receive in child maintenance through the CSA. He would receive only a quarter if he is disabled, and we do not believe that that is reasonable.
Of course, because such families will be in such dire poverty, they will have to be topped up with income support. The Government's own estimate is that about 20,000 to 30,000 people, or a quarter of those on incapacity benefit, especially those with children, will have to go to income support and go through the trauma and problems of means testing, the stigma and the like, which come with the second benefit. There are also the administrative costs. I ask the Minister again: what is 126 the point of a benefit for a family with children that is structured to be below the poverty level deemed necessary for which income support is provided?
A similar argument applies to Amendment No. 10. Under the Bill there is an adult dependency allowance between the six-month and the 12-month period, but only if there are dependent children for whom there is no separate income and the partner (usually a woman) is under 60. No one expects that a partner or spouse should have an allowance made automatically in the benefit when he or she has an income of his or her own; in other words, when in work. But even under the long-term rate, as the noble Lord, Lord Swinfen, has said, such people received it only if they were earning less than £45 a week, and at the moment only 30 per cent. of claimants receive it.
What will now happen is that between six months and 12 months, if there are no dependent children, the only income in that household will be £57 a week. It is £57 a week for a disabled man and his wife to live on. Again, that is below income support rates. Where does that situation apply? Usually when we are talking about an older couple—a man, let us say over 50 whose children have grown up and may have left home—all the evidence shows that once a man hits 50 his health becomes increasingly poor; he has multiple health problems; and is likely to be increasingly dependent upon incapacity benefit, with little chance of returning to work.
In such a situation, with poor health, worsening health and multiple health problems—research shows that to be the case over 50—they will need increasingly the help of the spouse or partner as an informal carer. Where the health condition is continuous but intermittent or variable according to the nature of the illness, such as asthma, ME or MS, the partner, even if she were able to, could not reasonably go out to work because she would not know when she would need to care for her partner. Yet such people will receive no help reflected in the allowance.
We are not asking that the benefit should contain a payment for a spouse as such. What we are saying is that the benefit should include recognition for a spouse who is caring for a partner but who is not caring for the partner for 35 hours a week, at which point ICA would be received, and should have that reflected in the household's total income; otherwise they are back on income support because two thirds of men and women on invalidity benefit do not have, contrary to the Minister's suggestion, an occupational pension.
Both the amendments seek to build into the period between six months and 12 months, first, a recognition that children cost money and need care and therefore there should be an income for them; arid, secondly, that for a dependent spouse (dependent because she is caring for her sick, frail, dependent husband) there should be a recognition built into the allowance. At the moment neither of those things is true, and so in both cases the benefit, as structured, will depress families with children and families with a caring spouse well below income support levels. A benefit, as I say, which takes people below income support levels is not a decent benefit.
§ Earl Russell
We too support the amendments, to both of which I have put my name. We are dealing with the Government's attempt to make very small savings. In the case of the adult dependency allowance, which is covered by Amendment No. 10, the saving is £5 million —or so we are told. I am getting more and more anxious about the basis of costings on the subject.
The noble Lord, Lord Swinfen, mentioned that we are back on the income support merry-go-round. As the benefit is lower there will be a need to rely on income support; so as the benefit goes down, income support goes up.
I admit freely that some of the questions I have asked the Minister today about costings are difficult. I am sorry for that, but, if we are to reach any realistic conclusion about the cost of what is done, those are the questions to which we need to know the answers. However, I shall ask one question which the Minister should be able to answer. When the Government calculated the £5 million saving on the adult dependency allowance, which is dealt with in Amendment No. 10, did that saving allow for an increase in expenditure on income support as a result of this measure? If it did not, the figure is unrealistic. If it did, I am a little surprised. I would like to know the answer.
Perhaps I may deal first with the point about savings made by the noble Earl, Lord Russell. I draw his attention to a Written PQ asked in another place about the total amount of savings from incapacity benefit. It is PQ No. 868; I shall send the noble Earl a copy in case he has not seen it. As regards the specific point that he made about public expenditure savings, the figures are net of income-related offsets; that is income support, housing benefit and so forth.
The purpose of the amendment is to make child dependency increases of incapacity benefit payable after 28 weeks of incapacity and to pay adult dependency increases of incapacity benefit at the long-term rate from the same point. I shall deal first with child dependency increases. I can confirm that it is the Government's intention that these increases should not be paid with incapacity benefit until 52 weeks of incapacity have elapsed, except in cases where the person is over pensionable age and still in the 52-week period. After that incapacity benefit ceases and retirement pension is payable.
Our approach is consistent with the long-standing arrangement whereby increases for children are only paid with short-term benefits if the beneficiary is over pensionable age. Currently, these increases become generally available after 28 weeks incapacity when invalidity benefit becomes payable. For the new benefit, we believe that the long-term rate should become payable after a period of incapacity which has lasted 52 weeks. Accordingly, child dependency increases for people under pensionable age will be available from that point.
I should like to point out why these increases are not usually payable with short-term benefits. Prior to 1984, child dependency increases of short-term benefits were payable at a significantly lower level than with 128 long-term benefits. Child dependency increases are designed to supplement child benefit, which is the main benefit for families with children. Consequently, increases in the rate of child benefit at upratings influence the new rate of the child dependency increase. The result of that over a number of years was to reduce the rate of child dependency increases payable with short-term benefits. In fact, increases in child benefit had led to a reduction in the value of these increases to only 15p a week by 1983 and they were therefore abolished in the following year.
I should add that the linkage between child dependency increases and child benefit is not a new policy. Neither is it one that has been operated by this Government alone; it was operated by a Labour government.
It has proved unnecessary to pay child dependency increases with short-term benefits and we consider that it is right to maintain that principle for incapacity benefit. We do not believe that this will cause hardship. Many people, between weeks 28 and 52 of incapacity, will be receiving additional income such as occupational pensions or sick pay from their employers. But if family income is insufficient the income-related benefits will of course be available. We believe that the income-related benefits provide a much more effective means of helping families who are in financial need as a result of short-term incapacity than would child dependency increases. This is supported by the fact that we have used the income-related benefits very successfully to target additional resources on families in need in recent years. Since 1988 significant extra help has been made available for this group, now amounting to some £1 billion a year.
My noble friend explained that the amendments also mean that the highest rate of adult dependency increase would become payable after only 28 weeks incapacity. We have explained that in the context of incapacity benefit it is reasonable to make payment at the long-term rate after a period of incapacity lasting 52 weeks. It follows that the highest rate of adult dependency increase will become payable at that point. As I have made clear, many families will have additional sources of income on which to draw between weeks 28 to 52. For those who are not in that position, a comprehensive system of income-related benefits exists. To pay the highest rate of adult dependency increase after 28 weeks would not represent a sensible use of available resources. In the light of our plans it would also be wholly illogical to make the long-term rate of personal incapacity benefit payable after 52 weeks.
I am afraid that I cannot accept my noble friend's amendment. I hope that with that explanation of the Government's policy he will feel able to withdraw it.
§ Baroness Hollis of Heigham
I wish to press the Minister on two points. He said that those on income support will receive an allowance for children. A family in receipt of income support receives £23 per week child benefit to support a child of, say, 11 or 15. Therefore, people in receipt of income support are expected to need £23 per week to support a child and as a result they do not receive child benefit. Child benefit is deducted from 129 that income. However, a person in receipt of the new incapacity benefit will receive no allowance for their children and only child benefit, which is half that sum. Is that appropriate? In other words, is the Minister aware that a disabled person will receive £11 per week to support his child but a person who is not disabled during the same period will receive £23? Is the Minister comfortable with that?
Secondly, why does the Minister say that the longer-term addition should be paid only at 52 weeks? If there is a recognition of child and family poverty at 52 weeks, why does that not apply at 26 or 28 weeks? It is no use the Minister saying that people have occupational pensions because the figures that he has given to the Committee suggest that only 38 per cent. of men have occupational pensions to lift them above the poverty line. They certainly do not have savings; only half have savings of less than £1,000. Therefore, why does the Minister believe that it is acceptable to need £23 per week if you are on income support, £45 per week if you are on the CSA and only £11 in child benefit allowance if you are in receipt of incapacity benefit?
I should explain to the noble Baroness, Lady Hollis, that the important aspect is that income support is available for those who qualify. She talked about recognising child poverty at 52 weeks. I do not believe that that has anything to do with this—
No, it has not. We have always said that if someone's income falls below a certain level they could qualify for income support. Of course, it is available to the disabled and to the able-bodied. The invalidity benefit review gave us the opportunity to look afresh at the concept of dependency. The current arrangements came into force nearly half a century ago. I am sure that the Committee will agree that social changes have occurred in that period; for example, when it was introduced, few married women worked but today over 70 per cent. of married women under 60 who do not have dependent children do so. The Government's view is that it would be wrong and illogical to leave unchanged the scope of dependency increases, regardless of social change. These increases are intended to meet a real need. Therefore, it is right that they are properly targeted.
§ 5.30 p.m.
§ Baroness Hollis of Heigham
Will the Minister tell us why we have incapacity benefit at all? Why do we not merely put everyone on income support and be done with it?
We are trying to produce a benefit which is targeted at those in real need. I hope that the noble Baroness will address those issues and concentrate her remarks in this Committee on that important point. It would be disappointing if she did not do so.
§ Lord Swinfen
My noble friend said that he would send a copy of the Parliamentary Question from the 130 other place to the noble Earl, Lord Russell. Perhaps he will be kind enough to send a copy also to the noble Baroness, Lady Hollis, and to me.
I am becoming increasingly concerned for my noble friend. He is an honourable man trying to do a dirty job. He is wearing a nice elegant pair of shoes; he should have worn his gumboots, because he is paddling around in the mire, at any rate up to his ankles, with this Bill.
He gave a long and complicated answer which I should like the opportunity to read. But from what I understood, I have a very strong suspicion that I shall return on Report with another or a similar amendment. I must warn my noble friend that I shall find it difficult not to test the opinion of the House on that occasion. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 10 not moved.]
§ Clause 2, as amended, agreed to.
§ Clause 3 [Incapacity benefit: supplementary provisions]:
Lord Campbell of Croy moved Amendment No.
Page 4, line 40, leave out ("8 weeks") and insert ("2 years")
§ The noble Lord said: The purpose of the amendment is to introduce an incentive for recipients to encourage them to attempt suitable employment and so to move off benefit. It would allow for spells of incapacity for work not separated by a period of more than two years to be treated as one period of incapacity for work.
§ I was not able to make a contribution on Second Reading of the Bill because I had obligations in Scotland on that day, but, in general, I support the Government's intention to rationalise and improve the present system and practice. Within that area, changes are proposed in the Bill. But what I, and I am sure other Members of the Committee, wish to do is to see whether there are any anomalies or gaps which arise in the process.
§ I am in favour of the principle of encouraging recipients to return to employment and I am sure that the Government subscribe also to that principle. The report (No.19) commissioned by the Department of Social Security called Invalidity Benefit; a Survey of Recipients showed that the increases in volume were the result of people spending longer on invalidity benefit rather than an increase in numbers claiming it for the first time.
§ Over three-quarters of long term recipients who were surveyed no longer saw themselves as attached to the labour market in the sense that they were looking for work or thinking that they were fit to look for work. This amendment is directed at long-term recipients. It should remove the apprehensions of those who might be deterred from seeking work or from seeking to return to work.
§ Individuals are wary of moving away from invalidity. benefit and into employment. They are concerned that they may not be able to cope with the work which they are starting and consequently have to try to requalify for long-term benefit with considerable financial loss.
§ The new incapacity benefit proposed in this Bill, with its long qualifying period for long-term benefit, could act as a greater disincentive to those who were considering attempting going into or returning to 131 employment. If the principle behind the amendment is adopted it could lead to savings by enabling individuals to come off benefit and to become economically active once more. I beg to move.
§ Lord Dean of Harptree
I rise to support the amendment moved by my noble friend Lord Campbell of Croy. As he has rightly emphasised, it is a very brave person who will come off invalidity benefit and endeavour to return to work, particularly if he has been an invalid for a long time. Therefore, such people need every encouragement because if they feel that they wish to return to work it is only right and proper that the correct arrangements are in place to encourage them to do so.
It is inevitably a gamble for people in that position. They cannot tell whether or not they will be able to manage the work. Equally, relapses are wholly unpredictable. A person may find that he is able to manage the work for a few weeks —even eight weeks —but he may suffer a relapse after that period. Therefore, it is important that there should be some assurance for people who unfortunately find themselves in that position when they have made the effort to return to work.
As I understand my noble friend's amendment, it would also bring the linking period into line with the linking period for the disability working allowance and for people who undertake training courses before returning to work. Therefore, it seems to me that the amendment has a logical, as well as humanitarian, aspect. The longer period of two years would make it more likely that people would try to return to work because they would know that if they suffered a relapse and could no longer manage the work within two years their incapacity benefit would not be placed at risk.
I received the impression that the Minister in another place was somewhat sympathetic to the points which my noble friend has raised, and I hope that my noble friend Lord Astor will be equally sympathetic today.
§ Lord Swinfen
I support the amendment which stands also in my name. When considering it, my noble friend should take account of the fact that in most jobs there is a probationary period and that for the vast majority eight weeks is far too short a time. Therefore, I suggest that six months is better. A period of two years would allow people who are incapacitated in one way or another to acclimatise themselves to working. It would provide for them a safety net if things did not work out.
At present there seems to me to be every disincentive for people to try to get themselves back into work. My noble friend will be able to work out for himself that by getting people back into work they will cease to be paid by the state—in other words, the taxpayer—and will be paid by their employer, thus relieving the burden on the state. I strongly support everything that my noble friend Lord Campbell of Croy said in moving the amendment. If the Government are not prepared to accept the amendment, I honestly feel that they should bring forward something similar at the next stage of the Bill's proceedings.
§ Lord Carter
I, too, was glad to add my name to the amendment. The argument behind it has already been expressed extremely well by those who have spoken. Therefore, I shall not repeat the arguments. I shall just ask the Minister to deal with a few points that have been made.
One involves the inconsistency between the new benefit and the DWA—that is, the arrangements in the disability working allowance. That was referred to by the noble Lord, Lord Dean. We know that a disabled person can give up his or her incapacity benefit, take a low paid job, receive a top-up payment of DWA and be involved in a trial period of up to two years without the risk of losing the opportunity to claim DWA. It would be interesting to know the logic behind the Government's reasoning in seeing a difference with the benefit.
As I understand it, the Government have accepted that it is almost certainly a no-cost amendment; indeed, there could even be savings involved. Perhaps the Minister can confirm that the Government's main concern, having accepted the principle, is with the burden on employers as regards the administrative costs of introducing the provision. I should like to know what consultations the Government have had on that point with employers. When we dealt with the Statutory Sick Pay legislation there was a great deal of consultation with the institute of payroll managers, the National Federation of Self-Employed and Small Businesses and others. Have the DSS researched that point to ascertain what the burden on employers would be? I understand that that is the main reason for the Government's concern and that they wish to have a longer period with the DWA to see how it works in practice.
Perhaps I may put a practical question to the Minister. I am an employer. I am involved with two companies, one with a payroll of 25 people and the other with a payroll of 40. As an employer what would I have to do that would be burdensome and mean that the provision would be hard to introduce? As I said, I believe that the Government accept the logic behind the amendment, but the administration of it concerns them. If that is the case, it would be interesting to know the basis of their reasoning.
§ 5.45 p.m.
The Bill as drafted provides for an eight-week linking rule between spells of incapacity. There are two reasons for such a linking rule: first, it allows those recipients of incapacity benefit who want to try to return to work to do so safe in the knowledge that they can return to their previous rate of benefit if that attempt should fail; secondly, those people suffering from bouts of incapacity resulting from a serious illness such as chronic bronchitis can link their periods of incapacity in order to establish entitlement to the higher rates of benefit.
Perhaps I should also point out to the Committee that linking rules play an important part in many areas of the social security system, not just in incapacity benefit. The interaction between those areas is very complex. We need to be sure that by changing rules in one area of the benefit system anomalies are not created elsewhere.
133 As Members of the Committee have pointed out, a similar amendment to the Bill was tabled during the proceedings in another place. At that time my right honourable friend the Minister of State for Social Security said:In the long term I shall look carefully at the whole question of linking rules".—[Official Report, Commons, Standing Committee E, 17.2.94; col. 227.]We shall do so.
We consider that eight weeks is a reasonable length of time in which a person can test their ability to work and, should that attempt fail because of their incapacity, make a further claim to incapacity benefit. Of course, DWA is available to help with attempts to try paid work for those with a continuing disability of some kind. Moreover, rules on therapeutic earnings and voluntary work enable people to ease themselves back into employment. As my noble friend acknowledged, the most vulnerable are protected through the disability working allowance. Indeed, DWA is available to people who have been on long-term incapacity benefit, who have a continuing disability and who work for low wages. If people receive DWA and reclaim IB within two years of leaving incapacity benefit, they can go back on to the rate applicable on the day that they left.
Of course, it is possible that savings could be generated. But, on the other hand, there could be costs involved as the higher rate would be payable immediately. Therefore, as regards the point made by my noble friend Lord Campbell of Croy, I do not believe that one can necessarily say that such a change would necessarily lead to savings.
However, we feel that it is illogical that indefinite spells of unemployment should help build up entitlement to higher rates of benefit. That is why we have removed the indefinite link through spells of registered unemployment. That will better focus the higher rates of benefit on those who are genuinely long-term sick rather than long-term unemployed. Indeed, we are considering the matter very carefully on a long-term basis, in particular, as I said before, the implications for other social security benefits. As we have always made clear, linking rules spread far wider than incapacity benefit. We must maintain a coherent approach. We must be sure that we do not, by amending the linking rules in one benefit, adversely affect people's entitlement to other benefits.
The noble Lord, Lord Carter, asked me about the burden on employers. Of course, employers need to maintain records to check whether a link is appropriate and, therefore, whether SSP or incapacity benefit is payable. Computer payrolls have to be amended and operated to take account of those complexities. That is quite burdensome on small employers. The noble Lord also asked why there are different rules as between DWA and incapacity benefit. One, of course, is an in-work benefit—namely, DWA—and the other represents an income replacement whereby benefit is paid when someone is not working. Therefore, their respective arrangements are not really comparable.
I am not sure we shall be able to reach any conclusions before the current legislation completes its passage through Parliament. I cannot give my noble 134 friend Lord Campbell of Croy any commitment that I shall be able to deal with the points that he raised. However, if he feels able to withdraw the amendment today I shall look again at the issue most carefully. Indeed, I shall read very carefully what he said and what other Members of the Committee have said in today's debate. Moreover, I shall certainly write to 'my noble friend before the next stage of the Bill.
I should point out to the Committee that we are looking most carefully at the area as part of the long-term review of social security being conducted by my right honourable friend the Secretary of State. It is very complicated to change linking rules without having a knock-on effect. I am not sure that the Bill is the right place to attempt to start changing such rules. It is possible that we should perhaps have another vehicle to change the linking rules whereby we can change them in such a way that we do so coherently as regards the way that they affect all benefits. With that commitment, I hope that my noble friend will feel able to withdraw the amendment.
§ Lord Carter
As regards statutory sick pay, can the Minister just confirm that in the review, which we all welcome, the Government will actually consult the employers' associations? We heard the argument about small businesses. In fact, when the Government consulted the National Federation of Self-Employed and Small Businesses, it actually produced the answer to the Government's problem which is now enshrined in that Act of Parliament. Therefore, perhaps the Minister can confirm that when considering the burden on employers the Government will actually ask employers for their opinion.
We shall certainly consider all the representations made. The passage of the statutory sick pay legislation showed that, when representations are made to us and they are ones which improve the system for small employers, we do consider such matters; indeed, we looked most carefully at the representations made and acted upon them. As the noble Lord knows, we shall be bringing our conclusions about statutory sick pay to Parliament later this year.
Lord Campbell of Croy
I am grateful to my noble friend Lord Astor for his reply which seems, in short, to say, "We will be looking at the whole question but we will not produce a result now". I understand and agree with him that it is necessary to make sure that any changes are comprehensive and that they are not inconsistent with other systems of benefits. It was disappointing to hear that it is unlikely that a change can be made during the course of this Bill. However, I am glad that my noble friend says that he will look at the whole subject again. I promise him that I shall return to it at Question Time from time to time to jog his memory and that of other members of the Government should we appear not to be making progress.
I am glad that my noble friend did not produce, as a major objection, the claim that the provision would provide a burden on employers at a tune when we are trying to do away with red tape and bureaucracy. I can assure him that my contacts with industry, and 135 particularly with the bodies which industry has set up to deal with the problems of disabled people, have always indicated that once employers know what the situation is and what the problems are, they are on the whole prepared to take on the extra work. One hopes that with the technological advantages provided by computers and other such machinery, the work will not be as great as it would have been even 10 years ago. I am glad that that point has not been raised as an objection. I repeat that I am grateful to my noble friend for his response. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Viscount Astormoved Amendment No. 12:
Page 5, leave out lines 11 to 14 and insert ("the reference there to 4 consecutive days were to such lesser number of days, whether consecutive or not, within such period of consecutive days, as may be prescribed;").
§ The noble Viscount said: In moving Amendment No. 12 I wish to speak also to Amendments Nos. 15, 35 and 73. These amendments are of a technical nature and provide both correction and clarification of existing provisions. Amendment No. 15 is probably the most straightforward; it introduces a definition of "week" into new Section 30C in Clause 3 which had inadvertently been missed. This is to make clear that where there is a reference to "week" in this section it refers to a period of seven days.
§ The Bill incorporates two concepts, a spell of incapacity for work and a period of incapacity for work. The spell of incapacity is used to determine when the "all work" test should be applied, normally after 196 days (28 weeks) of incapacity. The period of incapacity for work is used to determine the point at which the higher rates of benefit apply; that is, after 196 days on the short-term lower rate the higher rate becomes payable, and after 364 days on short-term benefit the long-term rate becomes payable.
§ Both the spell and the period of incapacity would normally only arise where there are four or more consecutive days of incapacity for work. However, a regulation-making power exists to allow less than four days in each week to count. This provides in particular for those people who have regular treatment which renders them incapable of work. However, the wording of these powers as currently drafted is confusing and Amendments Nos. 12, 35 and 73 serve to clarify the intention that for both spells and periods of incapacity, less than four days will count and they need not be four consecutive days.
§ We are also introducing a power to extend the eight week linking rule in specified circumstances in calculating a spell of incapacity. I realise that these amendments are particularly detailed but should point out that they are beneficial provisions. I beg to move.
§ Baroness Hollis of Heigham
I hope the Minister can provide a little more clarification about Amendment No. 35, to which he has spoken, which states,for the reference to 8 weeks there were substituted a reference to such larger number of weeks as may be prescribed".The Minister said this concerned the linking rule. Am I to understand that the Government are taking powers to themselves, having rejected the previous amendment to 136 extend the linking rule up to two years, nonetheless to extend the linking period from eight weeks to any subsequent number of weeks they may think appropriate? Is that what the amendment seeks to do? If so, we could have no objection, although obviously we would like to see a firmer period built into the Bill.
In answer to the noble Baroness, Lady Hollis, I would say that this is an existing power that has never been exercised. All we are doing is clarifying existing circumstances.
§ Baroness Hollis of Heigham
Does that mean that if there is an existing power which the Minister seeks to continue in the new legislation, it might mean that if he were persuaded by the arguments put earlier on the linking rule the Government would have the power, by amendment presumably, to extend the linking period from eight weeks to a much longer period and would not therefore need primary legislation for it?
I believe that what the noble Baroness says is correct. However, I will check and if that is not the case I shall write to the noble Baroness.
§ On Question, amendment agreed
Lord Carter moved Amendment No. 13:
Page 5, line 50, leave out ("56") and insert ("156").
§ The noble Lord said: In moving Amendment No. 13, which is a paving amendment, I wish to speak also to Amendments Nos. 65 to 72, which are amendments to Clause 10 and deal with the disability working allowance. The purpose of this group of amendments is to improve the take-up of DWA by extending entitlement to persons who demonstrate that they have been seeking work and are also disabled. Improvements —if we can make them—to the DWA will ensure, or help to ensure, that a large proportion of people who may be deemed incapable of work can become able to work.
§ Many of us remember the Bill which introduced the DWA in 1992 to help disabled people into employment through the topping up of low earnings in recognition of the extra costs faced by disabled people in employment. Like the DLA, it was an attempt to meet the demand, made over a long period by various organisations of, and for, disabled people for a disability costs allowance. It is means tested and therefore it is not the disability costs allowance that the organisations would have liked to see. Entitlement is dependent upon receipt of a qualifying benefit prior to the date of claim, and the claimant has to show that he or she is disadvantaged in the workplace by a disability. I am sure the Government are as concerned as we at the low take-up of DWA. Perhaps, when the Minister replies, he can give us the latest figures for the take-up.
§ It is clear that any amendments aimed at improving the disability working allowance would ensure that the benefit becomes the source of assistance for disabled people who are capable of work, as opposed to the new incapacity benefit. It is obvious that any costs incurred in introducing improvements to DWA would be offset by the savings made through encouraging a substantial number of disabled people claiming non-means tested invalidity benefit, severe disablement allowance and 137 incapacity benefit to take up employment opportunities. Disabled people in employment would therefore contribute to the Exchequer in the form of taxes and national insurance contributions. That is one of the trade-offs which I know the department looks for when introducing benefits.
§ I shall discuss the amendments in their groups and then each amendment individually. Amendments Nos. 13, 66 and 70 are intended to improve access to DWA. At present a person has to have been in receipt of an incapacity benefit for at least one out of 56 days before the date of claim. The amendments would increase that period from eight weeks to six months and would therefore open up DWA to a new group of claimants, for example, partially incapacitated people or those who have recently become incapable of work but are still disadvantaged in employment as a result of their disability.
§ The second group comprises Amendments Nos. 65 and 72. They would extend DWA to disabled people who are capable of and available for work but are unable to claim DWA at present. Amendment No. 69 seeks to enable people on incapacity benefit up to two years previously to requalify for benefit automatically if they become incapable of work. As this is a large and complicated group of amendments I hope it will help the Committee if I discuss the amendments individually and explain their import.
§ Amendments Nos. 66 and 67, as I said, aim to improve access to DWA. They enable people who have been on incapacity benefit up to six months (or to be more precise 156 days) before starting work or a training course to requalify. They replace the eight-week linking period, which we regard as inadequate—we have discussed the matter previously —proposed in the Bill with a more realistic period and would help people who have recently become incapable of work but who still suffer disadvantage in employment, or those who are partially incapable of work. The amendments help to open up DWA to those who are neither fully capable nor totally incapable of work.
§ Amendment No. 68 enables people who have been on incapacity benefit for up to one year previously to requalify. That is a substantial improvement on the 13ill's proposal of an eight week linking period, which would not bring incapacity benefit linking rules into line with those for DWA, which has a two year linking period.
§ Amendment No. 69 enables people who have been on incapacity benefit up to two years previously to requalify. It brings the linking period for incapacity benefit into line with that now used for the disability working allowance.
§ I should emphasise that these are probing amendments covering the whole subject. Some are fallback amendments relating to other amendments. The intention is to promote debate. I can tell the Minister now that I do not intend to divide the Committee, whatever he says in his reply. I shall need a great deal of persuading to divide the Committee because these are highly technical amendments. I believe that we should 138 have the debate now. That is the purpose of the Committee stage. However, I warn the Minister that I shall certainly return to the subject at Report stage.
§ Amendment No. 69 brings the linking period for incapacity benefit into line with that now used for DWA. It is important as part of the Government's approach to encourage people back into work. We can all agree with that. As we heard in relation to previous amendments, 56 days does not give people a realistic period of time to try out work without losing their link with benefit. Evidence shows that many people will not try to return to work if it means that they lose their linking entitlement.
§ We feel that the problem will be exacerbated under the Bill as the full entitlement to incapacity benefit will not be reached until after one year. That means that a person who works for 57 days will have to return to the beginning in counting days towards the entitlement to receive benefit. I appreciate that there has to be a cut-off point somewhere, but we believe that 56 days is too short. Two years brings the linking period into line with DWA and provides a realistic opportunity to try out work.
§ I understand that the Government expressed interest in the subject during the debate in the other place and we feel that acceptance of the amendment would go a long way towards the rehabilitation of people who work.
§ Amendments Nos. 70 and 71 march together. They amend subsection 3(b) to enable people who have been on incapacity benefit up to six months previously to requalify. Like the amendments proposing extension of the linking period for requalifying for incapacity benefit to one or two years, these amendments also aim to improve access to DWA. At present a person must be in receipt of an incapacity benefit for at least one out of 56 days before the date of claim. The amendments would increase that period from eight weeks to six months. The extension is important to allow people a realistic period of time in which to find work. Figures show that it can take at least six months or up to 18 months to find work, and a longer linking period would be more realistic in encouraging people back to work.
§ Finally, Amendment No. 72 is extremely important. It removes the restriction of entitlement to DWA to those with a qualifying benefit and enables people to qualify for DWA on the basis that they are registered unemployed and also disabled. The two have to be taken together. It is argued that the restriction to entitlement to DWA to receipt of a qualifying benefit, which is in the rules, has been a major factor in the low take-up of DWA. This is intended to provide an addition to the qualifying benefit condition by way of a simple test of disadvantage in the workplace as a result of disability. That would increase the take-up of DWA by people who are determined to work but are not in receipt of the benefits which are currently required to become eligible. I hope that when he replies the Minister will be able to tell us that the Government have some sympathy with that approach even if they cannot go all the way.
§ The National Association of Citizens Advice Bureaux has reported a number of cases. For example, a widower who is epileptic, registered disabled arid works full-time in a sheltered workshop cannot claim 139 DWA because he is not in receipt of a disability benefit. He earns just over £108 a week and receives no help with his rent or council tax. A CAB in Portsmouth has a client aged 40 with asthma, heart disease and ulcers who works full time and takes home £120 a week. He has a mortgage of £460 a month. He is unable to claim DWA without leaving work and claiming disability benefit. We believe that Amendments Nos. 65 and 72 are necessary to improve the take-up of DWA.
§ I believe that the Government acknowledge that under the new medical test, which we shall deal with on Thursday, fewer people will qualify for incapacity benefit. Statistics show that 25 per cent. of disallowances for DWA so far were due to a lack of qualifying benefit. If people consider themselves to suffer disadvantage in seeking work it will be fair and sensible for them to be eligible for DWA. When we debated DWA in the Social Security Bill in 1992 we were all as anxious as the Government to see that there was good take-up. We are all disappointed by the low level of take-up. It would be helpful if the Minister could give the Government's view as to why there has been such a low take-up.
§ The tightening of the invalidity benefit adjudication has shown that some people may be partially capable of work. We feel that the DWA could be adapted to do more to help that group through changes to the qualifying benefit criteria.
§ This is a large and complicated group of amendments. It is intended to probe as best we can the provisions in Clause 10 relating to DWA. We shall listen with interest to the Minister's reply. I beg to move.
§ 6 p.m.
§ Lord Dean of Harptree
I am very glad that the noble Lord, Lord Carter, has raised this very important matter of the disability working allowance. I am glad, too, that although he has put forward a series of amendments he is not necessarily going to go to the stake on any of them but regards them as probing amendments.
This is a new benefit. It is understandable that it should have teething troubles. It takes time for any new benefit to work itself into the system and for possible claimants and their advisers to get to know how the benefit is likely to work. Nonetheless, as the noble Lord said, so far the take-up has been disappointing. I understand that so far there have been just over 3,000 successful claims, whereas I understand that the original estimate by the Government was that there would be 50,000 claimants. However, it is early days and one cannot expect everybody who might benefit to apply at once.
It seems clear from the considerable amount of work which has been done by various disablement organisations, particularly by the Multiple Sclerosis Society and the Citizens Advice Bureaux, that the main reason for the low take-up so far is the qualifying benefit conditions and the loss of other benefits such as housing benefit and council tax concessions. They therefore believe that instead of having the present qualifying 140 benefit conditions it would be better to have a simple test of disadvantage in the work place caused by disability. The organisations which have put forward the proposals are experienced bodies. I feel sure that my noble friend will give serious attention to them.
I welcome the fact that the Government are evaluating this new benefit and have commissioned independent research. I believe that that research is to be completed in 1996. I hope that if a clear case is made out before then for a change in the working of the benefit to improve take-up the Government will be able to give an assurance that they will introduce changes as soon as they can see an effective way of improving the benefit.
§ Earl Russell
The noble Lord, Lord Dean of Harptree, has given a particularly lucid summary of the basic issues relating to these amendments. I agree with practically every word he said.
When it was introduced, the disability working allowance was one of the most imaginative and constructive measures which this Government have introduced. However, we are all agreed —and I do not think that the Minister will dispute it—that to date the take-up has been disappointing. The Government regularly promise to monitor the effects of any measures they bring in. We have here a case to which that monitoring ought to be applied. We ought to be thinking as far as we can in a constructive spirit about what needs to be done next. It is fairly clear that something needs to be done.
We are concentrating first on the issue of the linking period. A linking period is a procedure which allows two episodes of disability separated by a short period, perhaps in work, to be counted together for entitlement. There are some illnesses where that is particularly important; for example, an episodic illness such as schizophrenia. I have known schizophrenics who in between episodes were quite as fit to carry on with normal work as you or I, but because they could never be certain when they would have another episode they could not work with confidence. That is one area in which the linking period is important.
As those of us who have had a temporarily incapacitating physical injury know, there is a considerable problem of confidence with getting back to regular movement and regular life. That was the basic point, after all, of the old RAF rule: if one had had a crash the first thing the RAF did was to send one up again. With illness one cannot do that instantly. But hospitals dealing, for example, with people recovering from leg operations go to some trouble to get patients walking as soon as possible. However, they can do so only if the patient knows that there is someone there to catch him if he falls; and that if on that occasion he is not quite ready he will not suffer for it.
In these situations, the notion that benefit is lost if, having gone back to work and after eight weeks and one day one finds the effort too much and collapses, can be somewhat of a deterrent. Therefore, I hope the linking period will be reconsidered.
The other basic issue relates to the qualifying benefit. The benefit has been passported on another, as has been done with the new disregard for child care which was 141 introduced in the Autumn. Statement. There is likely to be a problem in the new situation as well as the old. Passporting one benefit on another does not always succeed in capturing all the cases that it ought. The noble Lord, Lord Carter, quoted the example of someone who was disabled but in work. There are people who are disabled who work. We do not wish to discourage but rather to encourage that. To offer a benefit for which one has to go out of work in order to qualify for it, not knowing whether one will get back into work again afterwards, sounds rather a revolving door procedure. I hope that that issue may be considered.
Finally, we are left with the problem to which we return over and again: I refer to poverty traps created by the operation of passported benefits. This is not the occasion to do so, but I believe that we shall need to have a full debate on the operation of the system of passported benefits.
I have referred to some areas in which I hope the Government will consider seriously what should be done next. I shall listen with great interest to the Minister's reply.
§ Lord Swinfen
I support the general gist underlying the amendments. I have put my name to two of them. I shall not speak for long because others have already said most of what I wish to say.
I hope that the Government will consider carefully the linking of benefits, of qualifying and passporting benefits and the poverty squeeze. This may not be the place to say it, but I shall say it all the same. I have never yet understood why there should be a set cut-off point in benefits. There comes a time when people are able and want to work but cannot necessarily afford to work because they will lose their benefit if they do so. It should be quite possible for a scheme to be drawn up where for every pound —preferably after tax—that someone earns when they go back to work they lose only 50 pence of their benefit. That may be the wrong proportion; perhaps it should be every 30 pence of a pound. People can then slide into work and start to pull their weight within the country again instead of being supported but yet not have that dreadful feeling that if anything goes wrong they and their families are in a mess. Most of the time it is not just themselves about whom they are worried but their families. I believe that the Government should consider that issue. Today may not be the time for my noble friend to give an answer but I should be grateful if the matter can be considered.
§ Lord Wise
I have put down my name to a couple of amendments. I support them. I agree with the noble Earl, Lord Russell, that the Government should be congratulated on the disability working allowance. It is a wholly admirable concept. However, since the take-up rate is so low, it is clearly not working as satisfactorily as we had hoped. This group of amendments is an attempt to improve the situation. The amendments aim to improve the take-up rate by increasing access to the DWA both by extending the linking period of requalification for the incapacity benefit necessary and by extending the DWA to additional groups, especially those who are capable of and available for work but are 142 unable to claim DWA at present because they are not entitled to the necessary qualifying benefits. Those issues must be considered. I hope that the Minister will give us some favourable replies.
§ 6.15 p.m.
We have had a slightly wide-ranging debate on the subject which the noble Lord, Lord Carter, said is a large and complicated subject; and indeed it is. I shall seek to address the issues on the amendments that he raised today and hope to satisfy a number of his concerns.
The Government believe in the importance of in-work benefit as a way of getting rid of the poverty trap. After all, we have DWA and although I fully accept what noble Lords have said about the low take-up rate —I shall come to that issue later—we also have family credit and in-work benefit which is a benefit now taken up by nearly half a million people.
Perhaps I may turn to the individual amendments. The first amendment moved by the noble Lord, Lord Carter, relates to the new long-linking rule through periods of training which forms part of the new incapacity benefit. It would extend the period allowed between last receiving incapacity benefit and starting a training course in order to qualify for the two year training linking rule. The period would increase from 56 days to 156 days.
The long linking rule is designed to allow a person who undertakes a period of training for work, in connection with arrangements under Section 2(1) of the Employment and Training Act 1973, to return to their previous rate of incapacity benefit if during, or on termination of, their training they find that because of their incapacity, their attempt is not successful. It aims to remove any disincentive for a person who, in spite of continuing incapacity, wishes to take part in training that will help their rehabilitation back into work.
We believe that 56 days (eight weeks) provides ample time for a person to start a period of training. A person who is incapable of work can continue receiving incapacity benefit while arranging a course of training. Only when they begin their training and receive a training allowance do they have to leave incapacity benefit. Therefore, a period of eight weeks provides adequate time in which to leave benefit and begin training. Indeed, for most people the training is likely to begin on the day immediately following their last day of benefit.
Those people who are found capable of work have a period of two months in which to start on a training course. That should allow sufficient time in which to arrange the appropriate course through their local Training and Enterprise Council and start their training. They would then qualify under this two year linking rule if at some stage their condition deteriorated and they were unable to continue with their training. A claim to incapacity benefit would allow them access back to their previous rate of benefit.
The second group of amendments, Amendments Nos. 65 to 72, seeks to extend the qualifying period from the present 56 days to 156 days or two years, or 365 days for people who have been undergoing training 143 for work, and to extend the qualifying period from the present 56 days to 156 days for people who have previously been in receipt of a qualifying benefit (invalidity benefit or severe disablement allowance).
Any extension of the 56-day qualifying period and the benefit rule would be contrary to the normal 56 days linking of periods of incapacity and periods of unemployment. We have to consider every implication of extending the qualifying period and the benefit rule for DWA to ensure that we maintain a coherent approach in many areas of the social security benefits system, not just DWA. To extend the qualifying period as suggested would raise fundamental questions about the definition of disability and access to benefit. We are awaiting the outcome of extensive research undertaken by the Policy Studies Institute as part of the evaluation of DWA and consider that it would be premature to make major changes at this stage.
My right honourable friend the Minister of State made a commitment "in the long term" to,look carefully at the whole question of linking rules".—[Official Report, Commons, Standing Committee E, 17/2/94; col. 227.]We intend to carry out further investigation on the operation of the existing qualifying period and the benefit rule.
To obtain DWA, claimants must satisfy the qualifying benefit test. This means that they must either be receiving disability living allowance or a similar benefit; or, within 56 days before they claimed DWA, they must have been getting invalidity benefit, severe disablement allowance or a disability premium with income support, housing benefit or council tax benefit. This ensures that they need only confirm that their disability places them at a disadvantage in getting a job when they apply for DWA.
If the "qualifying benefit" test is amended to include employment service clients who do not receive DLA or a long-term incapacity benefit, we will need some other way of confirming that those claimants are disabled. Extending DWA to people who are registered as disabled does not seem to be an effective way of doing this. The Department of Employment is keen to help disabled people into work, whether or not they are registered. DWA is not at the moment restricted to people who are registered and I do not see Amendment No. 72 as representing a helpful way of making progress.
The noble Lord, Lord Carter, asked about the six months between the last payment of incapacity benefit and the first payment of DWA. If there is a six-month gap between receiving the last payment of the incapacity benefit and the finding of a job, the question is whether they should qualify for DWA. DWA is intended for people with a continuing disability.
We are already committed to evaluating the disability working allowance and, as I said, we have commissioned research which will help support our evaluation. We shall consider options for change sooner if the case is made. For example, from April 1995 disability working allowance recipients with savings of £8,000 or less will automatically qualify for free prescriptions and free dental charges. That proposal 144 brings the disability working allowance recipients into line with those on income support and family credit. We remain convinced that the disability working allowance fills a gap and provides an important opportunity for some disabled people to work if that is what they want to do.
The noble Lord asked me about low take-up. We have always said that the caseload would take time to build up; new benefits can be expected to take a period of time to become established. Of course, the caseload is dependent on whether people choose to move into work, and there is no compulsion. I believe that the take-up now is over 3,600.
On the question about the qualifying benefit rule, one of the main purposes of DWA is to help people on long-term incapacity benefits who wish to make the transition into work. The qualifying benefit rule ensures that the resources available are directed to helping those people in particular. We believe that help should be targeted towards those whose need is greatest. The qualifying benefit rule also ensures that all claimants satisfy or have recently satisfied a medical test for long-term disability or incapacity benefit. Because we can use that as supporting evidence, we do not have to apply an additional medical test for DWA.
We are committed to evaluating DWA, and we have also received representations about improving the take-up of DWA, which I recognise has been disappointing. I am considering these issues separately and will report to your Lordships on the conclusions.
The noble Lord, Lord Carter, raised some quite detailed points. If he will allow me, I should like to respond at Report stage to some of those points because I believe that I shall then be able to offer proposals that might help the problems. I cannot go into the details now of what the proposals might be or details of which amendment they might affect. However, perhaps the noble Lord will accept the assurance from me that I shall come back at Report stage on a number of the issues that he has raised today.
I think that that would depend on the benefits that that person was receiving at the time. I cannot go further in my answer to my noble friend at the moment, but perhaps he will allow me to write to him with an explanation.
§ Lord Carter
I am extremely grateful to the Minister, I did not think that my friendly warning that I would wish to come back at Report stage would be quite so effective, nor that the Minister would agree to bring something back. So we are all pleased about that.
I should like to make a number of points but I shall deal with them only briefly. The availability of training was not mentioned but it is something which we might have to consider in the ease of the working of the linking rule. It would be helpful if the Minister could write to me on that or reply at Report stage. We should be 145 interested to know when the evaluation is likely to be concluded on the DWA and when the department thinks it will have the results. Will it be one, two, three years or what?
On the low take-up, I rely entirely on my memory because I was working on the Bill when the DLA and DWA came in in 1992. I remember that at the time the Government expected a take-up of 50,000. I am sure that the figures are in Hansard but I think that we were advised and expected a lower take-up than the Government's estimate of 50,000. From memory, I believe we said 16,000 but now it is only 3,000 so obviously we were all under-calling the numbers. It would be interesting to know why, I do not think that anyone is clear about it. There is obviously no single reason: it is a combination of reasons but I hope that the research which the department is undertaking will help on that.
The final point is that what we are describing is the need for a partial incapacity benefit. The Minister will be aware of the debates on the subject which have taken place over time and I am sure that they will have to come into our thinking in the evaluation of the department's undertaking. I am grateful to the Minister and to all Members of the Committee who took part in the debate. This was intended to be a probing group of amendments to enable this important subject to be discussed in Committee and I think that we have been successful in that. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Campbell of Croy moved Amendment No. 14:
Page 6, line 14, at end insert ("or a prescribed scheme of training or employment preparation open to recipients of any benefit paid in respect of incapacity for work, or with money provided under the European Social Fund.").
§ The noble Lord said: I beg to move this amendment, which stands in my name and the names of two other Members of the Committee. The purpose of the amendment is to ensure that a wide range of training schemes are counted as periods of incapacity for work. The Bill allows for a period of attendance on a Training for Work scheme to be counted as a period of incapacity for work. This should help people to re-qualify for their previous incapacity benefit, if they remain incapable of work following a training course.
§ My amendment seeks to extend the scope of that provision to other employment and training schemes —that is to say, courses which are additional to the British Training for Work scheme. The European Social Fund is mentioned in the amendment and I remind the Committee that the fund supports a number of government training schemes such as Training for Work and Youth Training. It also assists other non government-funded training and employment programmes provided by voluntary sector organisations, further education colleges, local authorities, training and enterprise councils and local enterprise companies. As the European Social Fund training schemes are not covered by legal regulations, the benefit entitlement of trainees is not protected in the same way as trainees on directly supported government programmes; neither is the £l0 allowance payable.146
§ In contrast to practice in government schemes, disabled trainees on European funded schemes can find their incapacity for work and eligibility for benefit being challenged simply because they are on a course. At present, when a person has been receiving invalidity benefit or severe disablement allowance and starts on a government Training for Work scheme, the benefit award is informally terminated but can be reinstated at the end of the course if the claimant remains incapable of work.
§ The problem for trainees on the European fund schemes is that their incapacity for work can be challenged at any time, not just at the end of the course, Time spent on the European fund programme does not count towards a period of interruption of employment Therefore, if training lasts more than eight weeks the person concerned would have to requalify for benefit from the very beginning.
§ Unless changes are made on the lines of this amendment, there will be considerable confusion among disabled people about their financial position. It will depend on the particular type of training course and the vagaries of the funding for the various courses. Those individuals will have to bear all the risk of trying out training with the possibility that they could lose benefit entitlement should they need it in the future. That must be a considerable disincentive to training and rehabilitation. I hope that the Government will take that into account and, if this amendment is not suitable, consider some other proposal to try to deal with the situation that I have described. I beg to move.
§ 6.30 p.m.
§ Lord Swinfen
My name is attached to this amendment, and I strongly support it. I understand that such organisations as the RNIB also support it. The amendment will broaden the range of training schemes that can be undertaken by disabled people without jeopardising their entitlement to claim incapacity benefit after the training programme finishes and prior to employment. The passing of the amendment would secure that the widest possible range of training and rehabilitation schemes could be undertaken by people on incapacity benefit in the hope that, through training, more people would be helped off benefit and into employment. As my noble friend said, we should remember that a number of training schemes last more than eight weeks. For some types of jobs eight weeks would be a remarkably short period and would be thoroughly impractical.
Passing the amendment may be considered to place an undue burden on the adjudication officers. I do not believe that that is the case at all. If they are capable of being adjudication officers, they should be well qualified to deal with this small improvement to the lives of disabled people. We should do whatever we can to help disabled people get into employment of one sort or another. It is very worrying that a number of such people feel that they are left on the shelf and are rather useless. There are an awful lot of things that they can do if they are given the opportunities and the encouragement. I feel that the amendment is just a small step in the right direction.
§ Baroness Turner of Camden
I too put my name to the amendment. It is a very worthy amendment, and it has the support, as the noble Lord, Lord Swinfen, said, of a number of organisations, including the Royal National Institute for the Blind, which is active on behalf of disabled people. In fact, in a letter to me today the RNIB points out that it runs training schemes for which it has had the support of the European Social Fund. It would be a great pity if people who participated in such schemes were to find their financial position at risk as a result.
Quite frankly, we are happy that Clause 3 is there. Attendance on a training scheme does not mean that someone is not capable of work. CABs and welfare rights agencies report that people have been told that if they are fit to train they are fit to work. To some degree Clause 3 is clearly meant to deal with that problem. But if only certain schemes are covered, disabled people, as we know, will be very uncertain about their financial future. I therefore urge the Government to give a smooth run and a sympathetic hearing to this amendment. My impression is that when this point was raised in the other place the Minister seemed quite sympathetic and undertook, at col. 250 on 17th February, to consider the matter between now and further proceedings to see whether a more sensible arrangement could be devised. I look forward to hearing from the Minister this evening that this amendment at least will have the support of the Government.
§ Baroness Robson of Kiddington
On behalf of these Benches and on behalf of my noble friend Lord Russell, I support this amendment very much indeed. We welcome the fact that training under the Bill is now counted as a period of incapacity for work.
It is well-known that people with disabilities are finding it increasingly difficult to get a place in a TEC. The TECs and training providers tend to focus on arranging training provision to maximise their own funding rather than always addressing the needs of the trainees.
In the Training for Work schemes it is also sometimes difficult for an incapacitated person to get a place. That is not necessarily because the scheme itself will not take such people, but because the person with disability lacks a certain confidence in his ability to profit from the training. There are a great number of training schemes run by voluntary organisations which are meant purely to give trainees a belief in themselves so that they can go forward after a period into a Training for Work scheme. It is very important that people with disability should have that opportunity through joining such schemes, which are usually funded from the European Social Fund—or are partially funded in that way—to give such people a belief in themselves and a greater opportunity to find training possibilities.
As my noble friend described, the effect of his amendment would be to extend the scope of the long linking rule which is applied to incapacity benefit recipients who then undertake a period of training. The long linking rule would then apply to all training courses funded in part by the European Social Fund and any other training that is prescribed.
148 The long linking rule is intended to provide reassurances for those people who choose to try and return to work in spite of their continuing incapacity. Of course, the uncertainty over whether a scheme may or may not qualify for European Social Fund funding year by year is likely to act as a disincentive to move on to training. Those long-term incapable require rehabilitation in addition to retraining to get them back to work. The European Social Fund does not focus specifically on the needs of the long-term incapable in making the transition back into work. The rehabilitative effect would depend very much on the individual needs and limitations of a person undertaking the training or education.
I take the point in regard to the confusion. As my right honourable friend said in another place, there is a real problem with defining training courses and we are considering all the implications carefully. As my noble friend Lord Campbell of Croy is aware, it is a complex issue and we need to consider the implications of the amendment carefully to see what may be workable. I am not yet in a position to report back on our deliberations. I also assure the Committee that I hope to do so at Report stage. I also assure my noble friend that we are taking the matter seriously. With that assurance and the earlier assurance given in another place, I hope that my noble friend will feel able to withdraw the amendment this evening.
Lord Campbell of Croy
I am grateful to my noble friend on the Front Bench for that reply. I knew from the previous observations of his colleagues that there was sympathy for what is proposed, though I understand that it is a wide-ranging subject. I look forward to hearing more at the Report stage and hope that something can be done to help those who are about to choose whether or not to embark on training courses to know where they stand financially before they are committed. At this stage I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Viscount Astormoved Amendments Nos. 15 to 17:
Page 6, line 14, at end insert:
("( ) For the purposes of this section "week" means any period of 7 days.").
Page 6, line 18, leave out ("and").
Page 6, line 21, at end insert:
(c) section 30B(3A) above (period after which incapacity benefit is payable at long-term rate in case of terminal illness),").
§ The noble Viscount said: If the Committee will permit me, I shall move Amendments Nos. 15 to 17 en bloc. I spoke to them with Amendments Nos. 2 and 12. I beg to move.
§ On Question, amendments agreed to.
Viscount Astor moved Amendment No. 18:
Page 6, line 32, at end insert:
("(4) There shall be excluded any days in respect of which a person was disqualified for receiving incapacity benefit.")
§ The noble Viscount said: In moving Amendment No. 18, with the leave of the Committee I shall speak also to Amendments Nos. 27, 28, 39, 46, 48, 50, 51, 56, 57, 59, 76 and 79.149
These amendments are of a technical nature and deal with the action to be taken where a person falls into one of three categories; namely,
(a) he has become incapable of work through his own misconduct;
(b) he fails without good cause to attend for or submit himself to such medical or other treatment as may be required … or
(c) he fails without good cause to observe any prescribed rules of behaviour".
§ In any of those circumstances a financial penalty would be imposed by stopping payment of benefit for a period of up to six weeks. At the end of that period benefit should be re-instated without requiring a further claim to benefit.
§ As the Bill is currently drafted, subsections 171A(4) and (6) would make provision to treat a person as capable of work in those circumstances. Their entitlement to benefit would cease for the six-week period. As a result, a further claim would be required at the end of that period. That is not what was intended. This group of amendments replaces the current provisions with a new Section 171DA which provides that a person be disqualified for receiving benefit during the six-week period rather than disentitled.
§ The main points to highlight to the Committee are that by introducing this disqualification provision, entitlement would continue throughout the period and no claim is required to start paying benefit once disqualification is ended. The provision applies both to incapacity benefit and to severe disablement allowance. The provision is particularly beneficial in severe disablement allowance where a person could lose entitlement to benefit if there were a break in their claim; that is, a person who has been passported through the disability test because they are under age 20 would only retain that passport for as long as entitlement continues. If there was a break in their claim they would be required to satisfy the 80 per cent. disability test afresh. By continuing entitlement through the period of disqualification the "under 20" passport will be protected.
§ For consistency, it is also intended that there should be a financial penalty for those receiving income related benefits (income support, housing benefit, council tax benefit) on grounds of incapacity. Rather than disqualification there will be loss of the disability premium when that is paid on grounds of incapacity. The penalty will not affect exemption from the requirement to be available for work in income support while incapacity remains.
§ I hope that that slightly complex explanation to this large group of amendments will persuade the Committee that it is a sensible change in this area. I beg to move.
§ 6.45 p.m.
Lord Campbell of Croy
I wish to make just a brief comment. I accept that the amendments involve technical matters, but I draw attention to Amendment No. 46 which introduces a whole new clause into the 1992 Act. Three sections of that simply provide for regulations to be made by the Minister. Although it is a technical subject, we have no way of knowing what those regulations will contain and what they are about.
150 I simply register that point and in passing mention that the introduction of an amendment of this kind, with those powers of subordinate legislation, came after the report by the Delegated Powers Scrutiny Committee was circulated to us. I had the privilege of being a member of that new Select Committee. Its fifth report was devoted entirely to this Bill. It was not able to take into account the powers contained in the new clause because the clause has only now been introduced and will go into the Bill after we consider it.
§ Earl Russell
The noble Lord, Lord Campbell of Croy, makes an important point. We do not at present have any procedure for the Delegated Powers Scrutiny Committee to look at amendments introducing delegated powers which are introduced during the progress of a Bill. It would be useful to the Committee if we could find a procedure by which such amendments could be shown, perhaps in a provisional form, to the scrutiny committee a little while before the Committee considers them.
I too want to probe Amendment No. 46 and ask a few questions—there is doubtless case law on the matter —about how some of these general phrases are likely to be interpreted; for example, the words,has become incapable of work through his own misconduct".Clearly one must accept the spirit of what is intended. I just want to know what case law exists in regard to what is meant by "misconduct" in that context. In particular. I should like to have a little more information in regard to subsection (c), which states,he fails without good cause to observe any prescribed rules: behaviour".That is a rather blank cheque. Before it all goes through I should like to know a little more about what that blank cheque means.
As the noble Viscount is aware, I have been concerned for some time about what happens to people who are disqualified or disentitled from benefit. What do they live on in the meantime? Are the people concerned entitled to income support during the interim?
I should like to draw attention to what is a very general problem in relation to misconduct by people on benefit to which I do not think we have any generally satisfactory answers. Clearly one cannot say that they should be allowed to misbehave or indulge in fraudulent practice and go absolutely scot-free. At the same time, it is an unacceptable penalty to put people in a position where they cannot eat. Starvation is a penalty rather more severe than is proper to impose by law. But if' benefit is somewhere near subsistence level—as, when the Treasury has anything to do with it, it is likely to be —then even the partial disentitlement to benefit may cause rather more severe hardship than we would really like to see.
I do not pretend to have the answers to those problems. I can only ask the questions. If anybody else has the answers I shall be extremely interested to hear them.
The noble Earl said that he did not have the answers. I have to tell him that, as yet, neither do I. Perhaps I may deal with a point first raised by my noble friend Lord Campbell about regulations and the 151 Select Committee. I should point out that these regulations were looked at by the committee when it produced its report. My amendment, Amendment No. 46, produces the regulations in new Section 171DA. Those regulations are the same as the regulations currently in the Bill—in new Section 171A(4) to (6). If my noble friend looks at that he will see that the committee has looked at the powers proposed by the regulations.
§ Lord Swinfen
I have not quite understood what my noble friend has just said. He said that the regulations were the regulations in the Bill under new Section 171A. Subsection (4) states:Regulations may provide that a person shall be treated as capable of work".Subsection (5) states:Regulations may prescribe".They are not the actual regulations. There are powers to make regulations, but they are not the regulations, as I understand the drafting of the Bill.
My noble friend has misunderstood me. The point I was making to my noble friend Lord Campbell of Croy was that the Select Committee looked at the power in the Bill for making the regulations and did not adversely comment on the way those regulations have been put into the Bill.
Perhaps I may answer some of the points raised by the noble Earl, Lord Russell. Regulations have been made under existing provisions in the same form. Those regulations provide that claimants must not do anything which retards their recovery, or be absent from their place of residence without saying where they are, or do paid work. Those are the issues which the regulations cover at the moment and those are the areas that we shall look at when we bring forward regulations under my amendment.
Lord Campbell of Croy
While my noble friend is preparing himself for that, perhaps I may help by saying that I am grateful to him for his reply to me. I would have given him notice but I did not have time to do so. I was able to examine this government amendment only earlier this afternoon, and because the debate was at such short notice I did not give my noble friend very much time to get a reply. I congratulate him and his noble friend on having produced that reply very quickly.
My point concerning the Select Committee was that, if an amendment was made at any stage in the passage of the Bill through the House after the Select Committee's report, it would be too late for the Select Committee unless it thought it was worth while going back to produce another report. In this case I have not had the opportunity to compare the text with what was earlier in the Bill. It is quite clear now that the same text appears twice in the Bill because as part of the editing the 1992 Act is being altered. I recognise that in going through the regulation-making powers the Select Committee was considering the same text which appears now a second time in the Bill.
152 For the benefit of my noble friend I was talking about the delegation of powers. I made reference to the fact that when regulations are prescribed in a Bill, which enable Ministers to produce them, one does not know unless one is told by the Minister and given a description of what is likely to be in them. My main point—the Select Committee one—concerned the powers to make regulations rather than what was eventually going to be in them. In that regard I have received an answer. I am grateful to my noble friend, who I hope has now had time to be ready for the other point.
I am grateful to my noble friend for accepting my assurance that the power to make these regulations had been looked at before.
Perhaps I may deal with the point raised by the noble Baroness, Lady Hollis. Amendment No. 18 in this group ensures that days of disqualification do not count for the purpose of determining the rate of incapacity benefit. Amendments Nos. 50 and 51 give effect to a parallel arrangement on income-related benefits. In order to give effect to the disqualification provision in the income related benefits where the disability premium will be withdrawn for the same period, it is necessary to treat the person as being capable of work for that period.
§ On Question, amendment agreed to.
§ 7 p.m.
Lord Zouche of Haryngworth moved Amendment No. 19:
Page 7, line 16, at end insert:
("(4) Regulations may provide for the comparable treatment of any allowance to which a person is entitled by virtue of his membership of any body prescribed by regulations made under section 171E(5) of this Act.").
§ The noble Lord said: In moving this amendment I shall speak also to Amendment No. 47. I should like to start by saying how much the voluntary organisations and disabled people generally welcomed the Government's announcement during the Second Reading of the Bill that existing claimants on invalidity benefit will soon be able to do up to 16 hours a week voluntary work without affecting their entitlement to benefits. That is a welcome step forward. I understand that this will come into effect in the summer and I urge my noble friend to do all he can to assist it along its passage as soon as possible.
§ I wish to probe my noble friend the Minister on two areas of activity which the Government quite rightly wish to encourage; that is, disabled people carrying out voluntary work and disabled people representing their own interests on committees, boards of management and other bodies of many different kinds. The aim of the amendment is to extend the position given to councillors under the provisions of the Bill to volunteers and people working on committees and public bodies. The first amendment, to Clause 3, is necessary to ensure that any allowance paid to someone working on a committee or public body is treated in the same way as it is for councillors. The second amendment, to Clause 6, provides for regulations to be introduced which will 153 disregard voluntary work and work as a member of a committee and the assessment of a person's capacity for work.
§ Voluntary work is something that many disabled people are able and want to do. It does not imply an ability to work, as the nature of it is that they do not have to be committed as one has to be for paid employment. If one is able to turn up once a week or can manage only a day or two, that is acceptable. That situation would be quite unacceptable to an employer and makes a difference between being capable of paid work and not being capable of paid work. As I have stated before, this Government are encouraging disabled people to do voluntary work and to represent their interests on user bodies and committees. My amendment would make further improvements and continue that good progress. Under the provisions of the Bill disabled people will be able to carry out work as councillors without it affecting their entitlement to incapacity benefit. My amendment would ensure that they are also able to carry out voluntary work, without limiting it to 16 hours only, and to work on public bodies and committees without affecting their entitlement to benefit.
§ With regard to the 16-hour restriction, I have already said how it does not relate to somebody's capacity to work. It is an arbitrary limit which does not reflect the reality of disability. I should like to dwell on that point a little longer. I must declare an interest as I have been involved with the Multiple Sclerosis Society as a volunteer going back for over 20 years. My experience shows me that volunteers are the very heart of charitable organisations, most particularly the disabled volunteers. They are the ambassadors of their charities. Everything must be done to support and encourage them.
§ They must not be frightened away, as was the case with a local branch of the Multiple Sclerosis Society a few months ago. Several committee members in one branch heard of an incident in their area in which a local man who was receiving IVB and did a couple of hours' work each week voluntarily escorting people to hospital appointments was investigated by the DSS and had his benefit stopped. A member of the same committee then saw a local television programme which reported that the DSS was investigating people whom it suspected of undertaking voluntary work while on IVB. The DSS was trying to obtain incriminating evidence through talking to the neighbours of those individuals under suspicion.
§ That report caused the committee members to panic. None of them could risk losing his benefits. Consequently the chairman and two welfare workers took a joint decision to resign from the committee. That left the branch, which consisted of some 200 members, without vital people of the committee to continue its support.
§ The proposed legislation is causing great distress to disabled people. Sir Peter Large, who is a parliamentary representative on the Association of Disabled Professionals, was kind enough to brief me on the case of one of his members. It is about those disabled people who are able and wish to work for more than 16 hours 154 a week on a voluntary basis. Unless my amendments are accepted, those needy people risk losing their invalidity benefit.
§ Perhaps I may give the Committee one case history which Sir Peter passed on to me. It is very relevant. It concerns a blind person. A 63 year-old electrician, whose last paid job was as a computer programmer with a large state owned corporation, became blind after the gradual loss of his sight 10 years ago. He lives in a village. He said: "Not only was it becoming increasingly difficult for me to work, but the journey to and from the office was so daunting that I agreed without ill will to my employer's suggestion that we should part. There was no work for me locally. It seemed that to try to help a charity concerned with blindness would be a way of keeping my mind busy and of being useful to the human race. I took on more and more jobs, all unpaid of course, and now I do 40 hours in an average week. A lot of it is of course on the telephone. I could not manage without my wife. She reads the considerable correspondence that I have to deal with, keeps my papers in order, does the filing and accompanies me to meetings. Invalidity benefit for me makes the difference between a plain but tolerable life and a harsh constraint."
§ I could tell the Committee of numerous other case histories but we do not have the time. However, we must not and cannot allow this proposed legislation to pass without fully understanding its implications for disabled persons. It is difficult fully to understand the frustrations, loss of dignity and depths of despair that must occur when one is struck down with blindness, multiple sclerosis, rheumatoid arthritis or other such frightful diseases. Some people have the guts and fortitude to get on with life rather than staying at home and feeling sorry for themselves. They take on a useful and fulfilling voluntary job, which gives them the chance to regain some of their dignity. I have described such people in the case histories. Then someone who knows better comes along and says: "By the way, chaps, if you work more than 16 hours a week, sit on boards of management or receive allowances you will be ineligible for the benefits."
§ I ask Members of the Committee: how would you feel? What would your reaction be? I should be utterly disgusted. It will cost the Government nothing to remove the 16-hour limit. It imposes an unnecessary restriction on disabled people who are carrying out useful and fulfilling work. I beg my noble friend the Minister to look at this restriction again and remove it.
§ Before I sit down I should like to say a few words about user representation, which the Government do so much to encourage. There are many public bodies and committees to which disabled people are able and wish to make a useful contribution but which require their representation. To list but a few: the National Health Service and Community Care Act of 1990 provides for local consultation of disabled people and other users; the Disabled Persons Transport Advisory Committee, set up under the Transport Act of 1985, requires that 50 per cent. of its members be disabled or representative of disabled organisations. There are quite a few other bodies, but I shall not list them all. They include 155 housing advisory committees, the Social Security Advisory Committee, the Industrial Injuries Advisory Council and the committees associated with the utilities, among others.
§ During the passage of the Bill in another place the Minister made the welcome announcement that the disregard allowance to members of the disability appeal tribunals would be extended to members of the advisory board dealing with the disability allowance. Those are all steps in the right direction. My amendment will ensure that the principle, which is rightly accepted by the Government, is applied to all bodies and committees on which disabled persons may wish to serve. I have already said that it is a nil cost measure. It will go a long way toward encouraging disabled people to participate in and contribute to society as fully as they are able. I urge the Government to accept my amendments. I beg to move.
§ Lord Swinfen
I strongly support the amendment so well moved by my noble friend Lord Zouche. He mentioned user representation. In this Chamber we have some excellent user representation. I do not believe that any of us sees those Members of this place in this building for fewer than 16 hours when we are sitting —and sitting very late at night. I must admit that they are here later than I normally am.
There are many disabled people on all kinds of organisations who use not only their special skills from occupations and training that they had possibly before they became disabled and now are able to give help in a voluntary capacity to other people. Also, they have knowledge and expertise in disability itself. They know how it affects the organisations which they are trying to help and the people whom those organisations help.
The Committee will be well aware that I work for a charity. Volunteers very often go on courses, and disabled volunteers can quite easily go on such courses. It is not at all uncommon for courses to last over a two-day period and possibly for three or four days, stretching well over 16 hours a week. To limit the hours to just that number is wrong. Voluntary work is very often the route back to full employment. It builds up confidence. It gives people skills that they may not have had before. It is a tool that we should use to help those who are trying to get back to work. We should remember that once they are back at work, that is an investment into the community; it is not a payment by the community to those people. I am afraid that once again the Treasury has stuck its ugly paw into the Bill. It has got hold of its pistol and is shooting itself in the foot.
§ Lady Kinloss
I should like to support the amendments. As the noble Lord, Lord Zouche, has already said, it is welcome that disabled people are able to work for up to 16 hours on voluntary work without that affecting their entitlement to benefit. But what happens if they wish to work for longer? An outstanding issue for disabled people is acting as a member of a public body or committee. If the amendments are accepted, disabled people will be able to work on public 156 bodies and committees without that affecting their entitlement to benefit. They would be put in the same position as councillors.
The Chronically Sick and Disabled Persons Act 1970 lists a number of bodies on which it is desirable to have someone who has a knowledge of disability or who is disabled. They include housing advisory committees and the transport users consultative committee. The latter is very important. The Disabled Persons (Services, Consultation and Representation) Act 1986 reinforces the need to include the experiences of disabled people on councils, committees and other bodies. Therefore, I hope that the Government will accept the amendments.
Baroness Darcy (de Knayth)
I should like to add my warmest support to the amendments that were so clearly and so ably moved by the noble Lord, Lord Zouche. I hope that the Minister will accept them. Councillors are already disregarded in the Bill and I, too, welcome the fact that members of the DLA advisory board will also be disregarded. As the noble Lord, Lord Zouche, said, the Government have long encouraged the membership of disabled people on committees. They are to be applauded for that. As my noble friend Lady Kinloss said, that started with the Chronically Sick and Disabled Persons Act 1970. I remember that particularly well because it contains the first amendment I ever moved. It happened entirely by mistake. It was the first amendment after dinner. I believe that it stood in the name of the noble Earl, Lord Longford. All other noble Lords who had put their names to it were at dinner and I, the mug, was the one who moved it, so I remember it very well indeed. It was accepted. The Government wanted it.
As the noble Lord, Lord Swinfen, said, work as a volunteer is important. People with disabilities can bring much to the job and, in many cases, it may do a lot for them as well. It is a two-way thing. I should like to give a very short quotation from a volunteer. It is a case history from the Association of Disabled Professionals. It comes from someone who has made a spectacular contribution. She is a 51 year-old whose last paid job was as an air-hostess:I had had a marvellous life until my eyesight went; I had travelled the world, driven cars in rallies, played fair tennis, married, and had two children. At 32 and blind, with my background, offers of employment were nil. I decided to raise money for research into the disease that had blinded me. My husband left me, and my nerve nearly failed but I set up a charity, found like-minded souls to help me, started branches all over the country, and now have the satisfaction of seeing the research we have sponsored beginning to produce results. How many hours a week did I work? About 60 to start with, I should guess, fewer now, say 40; I travel less.I've been on IVB since I had to stop work. I don't know if what I do would be called therapeutic for me, but a lot of other people have benefited from it, I think".Disabled people cannot risk losing their benefit, because it is too precious. Therefore, I very much hope that the Minister will accept the amendments or at least come back with something of his own to ensure that people with disabilities can continue to make a contribution to life either in decision-making or by giving practical help to others.
§ 7.15 p.m.
§ Baroness Hollis of Heigham
We are all extremely grateful to the noble Lord, Lord Zouche, for moving these amendments so persuasively. They would provide that entitlement to incapacity benefit is not jeopardised if any disabled individual is able to undertake work of more than 16 hours a week for bodies other than local government. Obviously, if there is any such fear, they will not undertake such work. I hope and believe that the ground between those moving and supporting the amendments and the Government is not very wide.
We all recognise that it is highly desirable for at least three reasons that disabled people should be freely able to offer a voluntary service. The first is that it is attractive and good for them, if they so choose. It makes a life that can be rather isolated that much more rich and fulfilling. It is also true, as the noble Lord, Lord Swinfen, rightly reminded us, that it can have a therapeutic effect. We all know that a disabled person's re-entry into the labour market can be determined by the fact that he or she remains attached to the labour market. Therefore, any activity in voluntary work which brings disabled people into regular contact into the world of work and with a focused work environment—with paperwork, 'phones ringing all the time, businesslike methods, an office environment, handling accounts and minuting committees—will help to familiarise them with the world of work as well as, in some cases, giving them information about possible jobs for the future. We have all heard from the research that what most inhibits disabled people from moving back into the world of work is not the attitudes of employers, but the fact that they will need to work flexible hours, need to work close to home and need a supportive environment in which to build up confidence. Working with voluntary organisations can provide that route to re-entry.
The second reason why it is valuable and important for disabled people to take part in voluntary work is not just that it is good for them if that is what they choose to do, but because it is extremely important that their voice be heard on such bodies. Given that I had disabled parents, I thought that I was reasonably "up to speed", so to speak, with some of the issues of being disabled —until I hurt my leg in a relay race and found myself in a wheelchair for six months. It was a very different experience. I learnt at first hand the implication of cambers on the road, of dog shit, and of the location of road crossings. At university, I found that ramps were too steep to be used safely by someone in a wheelchair without another person being present. I found that I could not get into telephone boxes and that lift doors closed too quickly. I found that the deep freezes in supermarkets were too high to look into, but that the supermarket aisles were too narrow to take a wheelchair. I learnt about house design for those in wheelchairs and that, once in a wheelchair, I could not manage to open a window because I was too far away and because the type of window was inappropriate. I picked up some of that just from six months in a wheelchair when I was otherwise fit and able to work.
The input of disabled people is needed not only in relation to house design and public services; their voice 158 should be heard also in the role of school governors. Take the new fashion for competitive team sports: that does not necessarily take into account the particular contribution that a disabled person can make through individualised decathlon competitions, for instance. One needs to hear a disabled person's voice on that. We need to hear their voice in industrial injuries tribunals and social security advisory committees. We need it on CHCs. The noble Lord, Lord Zouche, quoted experiences that had been brought to his attention by Sir Peter Large. We have heard evidence quoted that a disabled woman, a 55 year-old wheelchair user, was contributing to the work of CHC until she was told that her capacity to attend CHC meetings meant that she was fit for work and she was threatened with the loss of her invalidity benefit because she was doing exactly what the 1980 and 1986 Acts asked her to do: that is, to bring her relevant experience to bear on a user body. We need to hear the voice of disabled people on such user bodies. That voice is sometimes threatened and imperilled by the current state of law.
The third reason in addition to the fact that such work is good for the individuals and also for the bodies on which they serve is that the participation of disabled people is good for the community. This group of amendments focuses on the capacity, not the incapacity; on the ability, not the disability, of individuals to contribute to their community. Those practical skills will be valued and, in the process, the "do-gooder line" is blurred—the line between those who do good and those to whom it is done; between those who give help and those who receive it; between those who are independent and those who are dependent; between those who are able and those who are disabled. That sense of contribution reconstructs our notion of mutuality and interdependence. There is no tidy line between the fit and the disabled. We are all fit in some ways and all disabled in others.
Therefore, this is an important pair of amendments. The precedent was established by the Prime Minister himself back in 1987 when, as a Minister at the DSS, he said that experience showed that people with long-term sickness or disability could give valuable service as. councillors even though they could not undertake: normal employment, and that it would be wrong if they were deterred by the rules of the benefit system from contributing to local democracy as elected representatives. He was right when he spoke about the contribution that disabled people could make to local government services. If the Minister is minded to accept. the amendments we could bring that same set of assumptions to bear on the whole range of voluntary work user bodies and thus enrich ourselves accordingly.
§ Earl Russell
It falls to me to say that support for the noble Lord, Lord Zouche of Haryngworth, and admiration for the way that he moved the amendment, comes from every quarter of the Committee. Almost every person in the Chamber at one time or another has spoken for an amendment saying that, "In making appointments to this body, the Secretary of State should have regard to the desirability of appointing persons with disabilities". Those are good amendments, but I am 159 sure that none of us ever thought, in speaking to such amendments, that we should be disentitling people to their benefits.
Many public bodies are priority places, located in buildings which receive priority attention and where special efforts are made, and rightly made, about such things as access. Because such trouble is taken, and because it will be a while before such trouble is taken everywhere, the fact that people can attend those public bodies and make vital contributions, often for much more than 16 hours a week—I take the point made by the noble Lord, Lord Swinfen—does not mean that they will be able to do the sort of ordinary work that they might be offered at the job centre. This is a good amendment. I hope that it will be accepted.
It may be helpful if I set out our proposals to allow incapacity claimants to undertake voluntary work. The Government recognise the importance of voluntary work, both to individual claimants and to the organisations to which they offer their skills and experience. We have recognised that in a number of ways. First, there is the new provision to allow claimants to work up to 16 hours' voluntary work per week. That has been widely welcomed. In fact, we received requests to introduce the provision into the current scheme, and that is what we have done.
On Second Reading, I announced that the voluntary work concessions would be brought forward. The necessary regulations will come into effect on 16th May this year. I hope that many claimants will be able to take advantage of the new situation.
Secondly, we are carrying over into the new scheme the current provisions on local authority councillors and members of disability appeal tribunals. The work undertaken by claimants who are local authority councillors does not affect their current entitlement to benefit and will not do so in the future. There are special arrangements for the treatment of the expenses they receive and those will also continue. That gives claimants the chance to participate in the running of their local affairs, if they wish to do so.
Claimants who are members of a disability appeal tribunal do not have their entitlement to benefit called into question provided that they do not sit as a member on more than one day per week. That arrangement was introduced because we needed the help of people who had direct experience of the effect of disabling conditions. Again, we are replicating those arrangements for incapacity benefit and extending them by making a similar arrangement for members of the Disability Living Allowance Advisory Board.
At the Bill's Third Reading in another place, my right honourable friend the Minister for Social Security and Disabled People promised to consider further whether those arrangements should be extended to other specified bodies and organisations. That consideration is still being carried out. Any changes which arise could be made by regulations under the proposed new Section 171D(2). As now, claimants will be able to earn up to £42 per week if their doctor considers that the work they undertake is therapeutic.
160 The two amendments seek to extend the provisions further. Amendment No. 47 would extend the current provision to disregard the work undertaken by local authority councillors to all volunteers or to members of prescribed tribunals, committees and other bodies. Amendment No. 19 would introduce for such claimants arrangements for the treatment of expenses similar to those that apply to councillors.
I believe that these amendments are unnecessary. The arrangements I have outlined give incapacity benefit claimants the opportunity to undertake a wide range of voluntary work and we are now considering whether those arrangements should be extended. I must stress the word "voluntary". I remind the Committee that incapacity benefit is to support people who cannot work. If someone can work for any organisation and receive remuneration, then the question of their continued incapacity must arise. The arrangements that we have for local authority councillors recognise the particular importance of their work and the need to ensure that claimants can undertake such duties if they wish to do so. We have undertaken to consider whether the rules permitting voluntary work should be extended, and I hope to be in a position to announce the result of our considerations on Report. With that explanation, I hope that my noble friend will feel able to withdraw his amendment. I hope that I have explained why we believe the amendment is unnecessary. We believe that we are achieving the objectives that my noble friend laudably seeks by the various things we are doing. As I said, I hope to announce on Report the result of our further considerations.
§ Lord Swinfen
When continuing his considerations, will my noble friend take into account what many of those who have taken part in this short debate have said about the 16-hour limit, because it does not seem reasonable? That is so when a great deal of voluntary work on committees, in particular, takes place outside normal working hours. A good, hard look should be taken at the 16-hour limit. To my mind, it does not seem right.
I am not sure that I understand the point made by my noble friend. He says that much of the work takes place outside normal working hours, but these are people who would not be working in normal working hours. If they were, they would not be receiving incapacity benefit. We have made a change in the 16-hour rule. It has been welcomed widely. Although I can give my noble friend no assurance that we will do anything about the hours rule, I undertake that we will study carefully everything that has been said this evening.
§ Lord Zouche of Haryngworth
I thank all Members of the Committee who supported my amendment. I felt that there was support from all parts of the Committee. I am struck almost dumb by my noble friend the Minister saying that he felt the amendments were unnecessary. That can only be his interpretation of them. I am disappointed that his attitude is not more positive, but I should like to read carefully what he said. I can assure him that I shall be coming back on Report 161 to hat again on this issue, because I feel strongly about it, and I believe that I have support from all parts of the Committee on the issue. Therefore, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 3, as amended, agreed to.
§ Clause 4 [Power to provide for the transition to incapacity benefit]:
Baroness Hollis of Heigham moved Amendment No. 20:
Page 8, line 13, leave out ("the age of the person") and insert ("whether the person was aged 50 or over").
§ The noble Baroness said: I should like to speak at the same time to Amendment No. 21. The amendments relate to transitional arrangements. On Second Reading, we recognised that if one were automatically to require all those who might be eligible for incapacity benefit to be re-tested at 28 weeks, that would be worrying, costly and unnecessary for those who would clearly be unable to work in the future.
§ The Secretary of State proposed three grounds on which someone at 28 weeks would not have to be re-examined to acquire eligibility for incapacity benefit. First are those already on the higher care component of IDLA, which is the subject of a subsequent amendment, that will serve as a passport. Second are those with terminal or specified illnesses, such as those registered blind or paraplegic. The third are those aged 58 or over who had been continuously on invalidity benefit since 1st December 1993. That is the subject of the amendment. Some 850,000 of the 1.5 million people in receipt of IVB would not, to use the Secretary of State's phrase, be bothered by a review.
§ Amendments Nos. 20 and 21 press the Minister on the 58-year old rule and the continuous receipt of benefit from 1st December 1993 as opposed to those coming on to the benefit from April 1995 when the changes come into effect. We suggest that those up to 1st December 1993 and those coming on to invalidity benefit between 1st December 1993 and April 1995, when there is a switch over to the new benefit, should be treated similarly. That is the purpose of Amendment No. 21.
§ Amendment No. 20 seeks to replace the watershed age of 58 as exempting people from subsequent tests with the age of 50. The Minister in another place accepted that age was a relevant factor in incapacity, otherwise he would not have an age rule. What is the sensible age? Why is it 58? When pressed in another place the Minister suggests that the age was somewhat random; it was suitably below the retirement age of women but suitably close to the retirement age of men and therefore it would not serve as an early retirement route. He gave the impression that one year was almost as good as any other and that he happened to choose this one. However, helpfully and importantly he conceded that the motivating and driving force was not cost but something quite different; that is, the quest to seek a convenient cut-off age. The Minister implied that there was no obvious choice of age; any age was as good as another and 58 was a suitable compromise.
§ But that is not the case. There is a clear choice for an age watershed, which is what the Bill introduces. It is a 162 choice that is produced by the Government's own DSS sponsored research. Not one but three pieces of DSS research confirm that the right cut-off age should be 50 and not 58. The research is that carried out by Ernes and Ghate on IVB longitudinal study (No. 20); the report of Lonsdale on IVB recipients (DSS report No. 19); and the report by Ritchie and Snape, a qualitative study of IVB recipients, which appears to be unnumbered and perhaps is not fully published. All three reports study the interconnection between age, health, work prospects and severity of illness. The three studies break down the situation of claimants under 40, between 40 and 50, between 50 and 55, between 55 and 60 and 60 plus. All three studies show that on almost every measurable item the watershed age is not 58 but 50.
§ What illnesses do people have that take them on to invalidity or incapacity benefit? I understand that there are three major sources of illness or disability. The first is muscular-skeletal, which can be back or legs and is often the result of an injury at work. The second disability is mental health, which is often a life-trauma experience. The third is circulatory or heart problems, which are a source of continuous illness.
§ The research shows that those under the age of 50 are generally ill with muscular-skeletal problems (32 per cent.) or with mental health problems (20 per cent.). But of those over 50, 19 per cent. are disabled with muscular-skeletal or back injuries; 23 per cent. now have arthritis problems, whereas only 9 per cent. of those under 50 have them; and 26 per cent. have heart or circulatory conditions, whereas that applies to only 9 per cent. of those under 50. As regards the illnesses from which people suffer, according to DSS research there is a clear cut-off point at the age of 50.
§ Secondly, the research shows that those with muscular-skeletal and mental health problems expect to get better and to return to work. They are younger and they are most likely to do so. However, those with arthritis and heart and circulation problems, which mostly affect those over 50, had conditions which do not often improve and often gel. worse. Those conditions often made it impossible to return to work and those people did not return to work.
§ The three research studies show that people under 50 with muscular-skeletal and mental health problems were more likely to have only one source of disability—one medical condition—and therefore were able to return to work as quickly as that condition improved. However, those over 50 with chronic and degenerative illnesses increasingly were more likely to suffer from multiple illnesses; that is, 68 per cent. compared with a much smaller figure for those under 50. Again, the watershed is 50. Of those expecting to improve, 12 per cent. under 50 thought that they would do so but there were only 2 per cent. aged between 50 and 55 and 1 per cent. aged between 55 and 60. Again, the watershed is 50. When the recipients of IVB were reinterviewed, it was found that 21 per cent. of those under 40 had improved, as had 11 per cent. of those between 40 and 50, but only 5 per cent. of those over 50 had improved. Again, the watershed is 50.
The DSS research states:
There was a strong correlation between age and whether or not people's health improved: as respondents increased with age, the likelihood of reporting worse health also increased … and this also varied according to the type of condition they had (itself related to age)".
§ Those who are able to return to the labour market are those with less severe conditions, those with a single condition, those with muscular-skeletal or mental health problems, both of which improve, women who return to lighter physical work and those who get better. Overwhelmingly, they are under 50. Over 50—not over 58—almost all of those things are untrue: they are unable to return to the labour market; they have more severe conditions; they have multiple conditions which are likely to get worse; and they do not return to the labour market.
§ I have deliberately not referred to their employment prospects because I do not think that that is necessary. I suggest to the Minister that if he has read three heavyweight pieces of DSS research he does not have to choose 58 or, as was suggested in another place, that the choosing of the age is done at random. The department's research makes it clear that there is a watershed year and that it is around 50. I am sure that the Minister has read those reports and I hope that he will be persuaded by these amendments. I beg to move.
§ Baroness Cumberlege
I believe that the purpose of the amendments is to seek to enlarge the groups of people who will not be subject to the new medical test. As the Committee is aware—and as the noble Baroness mentioned—we intend to exempt about 850,000 people from the new test.
As my right honourable friend the Secretary of State for Social Security said on Second Reading in another place, this covers people who are terminally ill, who suffer from one of a number of severe or chronic conditions, people who are receiving the highest rate care component of disability living allowance and people aged 58 and over when the new test is introduced who have received invalidity benefit continuously since 1st December last year. In forming our proposals on applying the new test to existing cases we wanted to be able to provide as many existing claimants as possible with a guarantee about their future entitlement.
It is clear that it would be both unwarranted and distressing to ask very ill people to undergo a medical examination. We have no desire to waste claimants' time and taxpayers' money in unnecessary testing and examinations. That applies to existing and new incapacity benefit claimants.
When we decided upon the age cut-off for existing claimants, we wanted to reassure those who were approaching pension age. But we also had to bear in mind the view that IVB is being paid to people for whom it was not intended. In particular, we believe that a number of people aged 50 and over have been receiving benefit as a form of early retirement support. I am sure the Committee will agree that that is not the purpose of incapacity benefit.
We had to draw the line somewhere. It would undoubtedly be unfair for us not to test any existing claimants under the new assessment of incapacity— 164 unfair on the taxpayer and unfair on new claimants. However, those approaching pension age are in a difficult position. The Government recognise that by introducing the provision that those aged 58 and over in April 1995, who are receiving benefit at the time of the announcement, will not be subject to the new test.
The noble Baroness, Lady Hollis, asked how we reached the age of 58. It is a question of judgment. There are competing concerns. On the one hand, there are the interests of the taxpayer that benefit should go only to the sick. And on the other, we have the needs of claimants who are approaching pension age. We looked first at providing the cut-off at two years from state pension age. That would impact unequally on men and women, and might be open to challenge in Europe. We then considered setting the cut-off at 60. However, that would offer little to women since it is their state pension age. We therefore concluded that the cut-off should be the same for men and women, set at 58, as a balance between the competing concerns of the taxpayer and the existing recipients.
Amendment No. 21 seeks to change the eligibility for those people excluded on age grounds from the date of the announcement to the date of the commencement of the new scheme. There is a very good reason why we set the date at announcement and not commencement. The reason is simple: we do not want to have a "closing down sale" on invalidity benefit. That is, we do not wish people to take advantage of the period between the announcement in December 1993 and commencement in April 1995 in order to get themselves into one of the exempted groups.
Amendment No. 20 proposes that no one over the age of 50 shall be tested under the new test. That is unacceptable. In April 1992, about 70 per cent. of IVB claimants (including those over pension age) were aged 50 and over. To exclude all these people would effectively be to exclude existing cases from the new test, which, as I have said, is unfair to the taxpayer and unfair to new claimants.
We think that the present system does not have a good enough test of incapacity. That is why we are introducing the new arrangements. If we accepted these amendments, we believe that we should be offering people the opportunity to avoid all future testing for incapacity benefit. I trust that Members of the Committee will see the common sense of our position and reject these amendments.
§ 7.45 p.m.
§ Earl Russell
Since the noble Baroness has widened the discussion a little to include the general question of exclusions from the tests, may I take this opportunity to ask her whether schizophrenics will be excluded from the new medical test?
§ Baroness Cumberlege
I believe that we shall be discussing those matters on Thursday when we resume our discussions in Committee. It is a question of degree and we shall go into that then because, as the noble Earl is aware, mental illness is a particularly difficult area.
§ Baroness Hollis of Heigham
Perhaps I may ask the Minister two questions. First, the Minister referred to 165 taxpayers' concern if we were to bring down from 58 to 50 the age after which no one need undergo a subsequent test. How much does she reckon that that would save the taxpayer? Secondly, given that the three research reports show clearly that the watershed age is 50 and not 58, does she disagree with the research findings of her own department?
§ Baroness Cumberlege
As regards expenditure, we believe that Amendments Nos. 20 and 21 would reduce public expenditure savings by £50 million in 1995–96 and by £220 million in 1996–97. I am sorry. I lost the second question.
§ Baroness Hollis of Heigham
Does the Minister accept the implications of the research findings of her own department; namely, that the watershed year is around 50 and not 58 in terms of the nature of the disability, the severity of the condition, the likelihood of improvement and the multiple nature of the illness?
§ Baroness Cumberlege
I believe that one must accept that research is there to inform and that, in the end, it is a judgment and a decision which has to be made. However, the department and Ministers believe that age itself is not a factor relevant to incapacity. Clearly, as one gets older, one is more likely to suffer from different kinds of incapacity but we know that, of itself, age is actually not a factor.
§ Baroness Hollis of Heigham
But the DSS research says that that the type of condition varied according to age. I do not understand the Minister's comments in the light of her own research findings, which show that age is related to the type of condition and, therefore, was a factor in the incapacity.
§ Baroness Cumberlege
Age is not a condition in itself. Clearly, if an elderly person has a number of different health problems, those will be taken into account when we come to do the tests. I must say that older people, when they go for the tests, are perhaps more likely to prove to have an incapacity for work. But to simply use age is not a relevant factor.
§ Earl Russell
Perhaps I may try to be helpful. I do not believe that the position of the two noble Baronesses is entirely incompatible. I do not believe that we are saving that age, in itself, is a disability. We are saying that age diminishes the likelihood of recovery.
§ Baroness Cumberlege
I believe that the test will actually prove whether or not that is the case in individual circumstances. But the other point that I should like to make is that just because people take the test does not mean that they will not receive the benefit.
§ Baroness Turner of Camden
Before the noble Baroness sits down, will she comment on the point that, by refusing Amendment No. 21, she is creating a situation in which it would be possible to have people of similar age or with similar disabilities being treated differently? It could lead to anomalies and differential treatment among people depending on the date of the 166 claim and whether they have been continuously in receipt of benefit since 1st December 1993. Would that not lead to an anomalous situation?
§ Baroness Cumberlege
Clearly, we shall have to take each case on its merits. I believe that a lot of this debate will take place when we look at the tests and the impact that they have on individual circumstances.
§ Baroness Hollis of Heigham
I should like to reflect on the situation before Report stage. I beg leave 'to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 21 not moved.]
Baroness Darcy (de Knayth)moved Amendment No. 22:
Page 8, line 16, at end insert ("or by reference to the middle or highest rate of the care component or the higher rate of the mobility component of disability living allowance on commencement").
§ The noble Baroness said: Again, we come to an amendment relating to transitional protection. At present, transitional arrangements will apply to people on invalidity benefit who receive the higher rate of care component of the DLA. The purpose of the amendment is to extend that transitional protection to those in receipt of a middle rate of care component or higher rate of mobility allowance or mobility component.
§ The former need help during night or day but not both; the latter are unable, or virtually unable, to walk. Receipt of the DLA at any of those levels is an indicator of severity of disability. Is it not reasonable to suggest that those claimants should also be eligible for fast-tracking through the assessment process?
§ I feel that we should learn from the experience of the former ILF. It was able to consider only applications from people on the higher rate of the care component of the DLA or attendance allowance. It found that that meant that some people did not have their care needs met by the fund because, although they managed to get through the night without assistance, that was very often only because of medication; for example, they might have been given sleeping pills or have had a self-turning bed. Their needs could well arise during the day and were, therefore, quite a different matter; indeed, it was found that they could be as great if not greater than the day needs of people who qualified for a higher rate.
§ Without the amendment, we shall exclude from transitional protection and subject to the hassle of the medical test and lengthy form filling people who may be as severely and, in some cases, even more severely disabled than the fast-tracking recipients of the higher rate of the care component of DLA. The numbers affected are likely to be small, but it is most important for those people who are affected.
§ I hope that the Minister will go into the matter. Her department should be able to find a way to identify from DLA records the level of severity scored for the test in an individual's case and find some way to relate the DLA assessment to the incapacity assessment. I very much hope that the Minister will explore the matter. With a little luck, we may find that computers can actually talk to one another. If that is so, then it will not be such a huge exercise in this day of technology.167
§ I should love to hear the Minister say that she will accept the amendments. However, to be realistic I hope that she will give serious thought to them and either return with something on Report or agree to discuss the issues and the possibility of some relationship between the assessments before the next stage. I beg to move.
§ Baroness Turner of Camden
I simply rise to express my support for the amendment. I really cannot add anything to the way in which the noble Baroness, Lady Darcy (de Knayth) introduced it. It seems to me to be an admirable amendment in every respect. There clearly is a case for fast tracking those people through the assessment process.
§ Baroness Cumberlege
As I understand the amendment, it seeks, like previous amendments, to extend further the exempted categories. The exempted categories are for those whose capacity is beyond doubt. Those who receive the highest rate of the care component of disability living allowance fall into that category because people who receive that element of benefit are clearly so far incapacitated that we need not question their capacity for work. The amendment seeks to widen the provision to include those who receive the middle rate care component of DLA and/or the higher mobility component of that benefit.
However, the other groups of people to which the amendments refer are not such extreme cases. While those people may well suffer disability—otherwise they would not receive their benefit—the effects of their medical conditions are not such that we can, in every case, be sure that they are incapable of any work. As Members of the Committee have made clear, they are well aware of the distinction between capacity to achieve domestic tasks and capacity for work. DLA is intended to meet the extra costs associated with personal care needs arising from an illness or disability.
We are introducing new arrangements to provide an improved test of incapacity. At present, we are not mindful to accept the amendment. But, bearing in mind what the noble Baroness, Lady Darcy (de Knayth), said about computers talking to one another, we shall look into the matter to see whether there is anything that we can do.
Baroness Darcy (de Knayth)
I should like, first, to thank the noble Baroness, Lady Turner, for her support. I am grateful to the Minister for the last part of her reply. However, I was extremely disappointed by the earlier part of it. I had hoped that I had made the case that many of the people on the middle rate of care and on the higher rate of mobility allowance are in fact just as disabled, if not more severely disabled. Of course, I accept that there may be some who are not.
However, the issue is really another debate and I shall not go into it now. You cannot have a test that shows with 100 per cent. certainty that someone is incapable of work. The proposed benefit is really a recognition of significant disability whether physical, intellectual or emotional. It is a recognition of a degree of disability that people in general would consider is sufficient reason for a person with such disability not to work. It 168 is not that such people necessarily cannot work; indeed, one has only to think of Dr. Stephen Hawking who is the greatest living expert on black holes and who is in a very severe state with motor neurone disease. You cannot devise a test that would show that Dr. Stephen Hawking can work, and the reverse is also true.
The point is that it would be unreasonable to expect people to work if they pass the test. In any event, I am glad that the Minister has some faith in computers. I would be most grateful if she would explore that area and find a relationship between the two. She may then at least be able to fast track the people who are as disabled as those on the higher rate of the care component. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Viscount Astor moved Amendment No. 23:
Page 9, line 12, leave out ("three") and insert ("four").
§ The noble Viscount said: In moving the above amendment, I think it may be for the convenience of Members of the Committee if I speak also to Amendments Nos. 24, 54, 55, 61, 62 and 77. The amendments arise as a consequence of the recommendations of the Select Committee on the scrutiny of delegated powers. I am sure that Members of the Committee are grateful for the work of the Select Committee. The Government are happy to accept its recommendations.
§ The Select Committee drew attention to two points. First, the period to which regulations are made under Clauses 4, 5, 6 and 7 will be subject to the affirmative procedure. Members of this Chamber, and the Select Committee in particular, pay close attention when considering Bills which contain powers to make secondary legislation, whether powers are subject to the affirmative or negative procedures. As Members of the Committee are aware, there are twin pressures: on the one hand, ensuring that the business of the House is not cluttered up with regulations which are of minor import; and, on the other, that major measures should be properly scrutinised on the floor of the House.
§ The Bill attempts to marry those concerns, with an approach of time-limiting the period to which regulations will be subject to the affirmative procedure. It is likely that the first few sets of regulations made under the provisions will attract a high level of interest and scrutiny. However, future regulations are likely to be non-controversial amending provisions. The Select Committee welcomed the approach of time-limiting the application of the affirmative procedure.
§ The Government felt that three years from Royal Assent would be a suitable period. The amendments of my noble friend Lord Campbell of Croy make regulations subject to the affirmative procedure for three years from commencement of the Act. In principle, I have no quarrel with the sentiment which extends the Bill by about a year. However, my noble friend's amendment would have the unintentional effect of making the first set of regulations, which we hope to make in the autumn, subject to the negative procedure. That is because regulations will be made before the full commencement of the Act. A commencement order will, in all probability, commence Clauses 4 and 7 of the 169 Act in full. It will, however, only commence Clauses 5 and 6 to the extent that regulations can be made. A later commencement order will fully commence Clauses 5 and 6 along with the rest of the Act in time for 13th April 1995.
§ The approach of commencing enabling powers to make regulations before the full commencement of an Act is preferred by the Joint Committee on Statutory Instruments in preference to the use of Section 13 of the Interpretation Act 1978. As Clauses 5 and 6 will not be commenced until April 1995, any regulations made under powers contained in those clauses would, under the amendment of my noble friend Lord Campbell, automatically revert to the negative procedure.
§ The amendments tabled in my name attempt to get round the problem and meet the spirit of my noble friend's amendments by extending the period after Royal Assent to which regulations will be subject to the affirmative procedure from three years to four. Amendment. No. 77 proposed by the noble Earl, Lord Russell, to which I have added my name, concerns the scrutiny of regulations made under Section 30B(5)—regulations setting out age additions—by the Social Security Advisory Committee.
§ As the Members of the Committee may be aware, most social security regulations are subject to the scrutiny of that committee. The two main exceptions are regulations made within six months of an Act and regulations which concern rates of benefit. We originally thought that regulations made under Section 30B(5) would only set out the rates of age additions. Accordingly, they would not fall to be scrutinised by the SSAC. Paragraph 52 was included in Schedule 1 to the Bill.
§ The regulations will be broader than just the rates of benefit. It is appropriate, therefore, that SSAC should consider the regulations. I am grateful to the Select Committee for bringing that to my attention. I am also grateful to the noble Earl, Lord Russell, for so quickly tabling the appropriate amendment and allowing me to add my name to it. I commend my amendment to the Committee. I beg to move.
§ 8 p.m.
Lord Campbell of Croy
I shall speak to my Amendment No. 24 and with it the similar Amendments Nos. 55 and 62. As my noble friend said, this matter arises from consideration by the new Select Committee on the scrutiny of delegated powers of which I am a Member, although I speak of course for myself in debates on Bills in this Chamber at various stages. These amendments of mine would apply to any Bill of this kind whatever the subject. Therefore, the subject is immaterial, but I think it is a matter of some constitutional interest.
The Select Committee in its fifth report—it is only its fifth report—devoted the whole of that report to this Bill and proposed what is suggested in my amendments. I should make clear that the Select Committee considered it a very sensible new arrangement in Bills to have a period of three or so years for the affirmative procedure to be required for delegated legislation after which the negative procedure could be applied. I agree with that. 170 However, we realised that in many Bills the Minister has the right, after Royal Assent, to decide on the date of commencement. This Bill, like many others, has separate dates which can be prescribed by the Minister for separate parts of the Bill. That could take out quite a lot of time from the three years. It might be a year or even two years before the part of the Bill concerning regulations commenced. That is the reason for the amendment.
I was able, I am glad to say, to table these amendments before the Easter Recess. So there was plenty of time for government departments and experts to consider them. I received a letter yesterday from my noble friend Lord Astor explaining the particular problems about this proposal for this Bill. He has just mentioned them, but the main point is that regulations can be made at different times and that some regulations are expected to be made before the commencement of the part of the Bill in question. Therefore, the literal interpretation of our amendment would be that those regulations—the very early ones—would be subject to the negative procedure, and the affirmative period of three years would not have started.
Therefore, in this Bill, for technical reasons, the amendment is not appropriate. However, I hope that the Government will continue to follow the principle and that in other Bills it should be possible for a period of three or four years to be inserted for the affirmative procedure, related to the date of commencement. I am thinking of circumstances where there: would be no difficulties over timing the making of various sets of regulations, which has not been possible in this Bill. Of course, I am glad to accept the Government's amendments which extend the three years in my amendments to four years, and I commend them to the Committee.
§ Lord Swinfen
I welcome the Government's proposal to extend the period from three to four years. There are, however, a number of Acts on the statute book far older than that, where various parts have not yet received the order for commencement. What happens if the order for commencement is not made within the four-year period?
Lord Campbell of Croy
I failed to mention one point, which is that we owe something to my noble friend Lord Skelmersdale. As mentioned in our Select Committee report, it was he who made the suggestion in his personal evidence when the Select Committee was first set up and when we were inviting evidence. I would like to make clear that he must receive some of the credit for this proposal.
§ Earl Russell
I give a warm welcome to this group of amendments, and in particular thank the Minister for putting his name to Amendment No. 77. I am entirely convinced by his reasons for preferring his Amendment No. 23 to our Amendment No. 24. I join with the noble Lord, Lord Campbell of Croy, in thanking the noble Lord, Lord Skelmersdale. I believe that the Select Committee on the scrutiny of delegated powers has once again proved how useful it is to the Chamber.
Perhaps I should answer the point raised by my noble friend Lord Swinfen. Incapacity benefit will be introduced from April 13th 1995 and of course all the regulations we have discussed will be subject to the affirmative procedure for the period that I explained.
§ Lord Swinfen
Before my noble friend sits down, I should say that the point I raised is not just pertinent to this Bill. It could be pertinent to other Bills as well. I understand that at the end of the four-year period the regulations stop being subject to affirmative but become subject to negative instrument which means that they are not even discussable. That is what I am thinking of. While I welcome the suggestion of the longer period, that is something that needs to be looked at.
I would say to my noble friend that we are dealing with this Bill and not other Bills and therefore we must contain ourselves. But of course negative resolutions can be discussed if a Motion is put down. That is up to Members when they consider any regulations as they come before the House.
§ On Question, amendment agreed to.
§ [Amendment No. 24 not moved.]
§ Clause 4, as amended, agreed to.
§ Viscount Goschen
I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.