Social Security

HL Deb 29 November 1995 vol 567 cc593-608

4.30 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, with the leave of the House I should now like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:

"With permission, Madam Speaker, I would like to make a statement on social security following my right honourable and learned friend's Budget Statement.

"When I became Secretary of State for Social Security, expenditure on social security had been growing on average 5 per cent. a year faster than inflation since the welfare state was founded. As a result it has taken an ever-growing share of national income. So it has been the engine for rising taxes. Social security now costs the average working person £15 every working day. That is why, when I became Secretary of State for Social Security, I launched my programme of step-by-step reform. Those reforms are having an effect.

"Over the next three years, spending should grow by little over 1 per cent. per annum, well below the growth in the economy. So it will be a declining share of national income. It will leave scope for sustainable reductions in taxes. That in turn is the best of all ways to stimulate activity in the economy, to create employment and to reduce benefit dependency. Next year, planned spending on social security will be £90 billion. That is the figure I announced last year and is below the plans of two years ago. It includes nearly £3 billion to finance increased benefit rates. This is £600 million more than anticipated last year because it is based on the September inflation rate, which jumped to 3.9 per cent. and has since fallen back to 3.2 per cent. The measures I am announcing today will save nearly £500 million in 1996/97 and over £1 billion in 1998/99. Altogether, my reforms to date will save £3.5 billion next year. And by the turn of the century, they will save £5 billion a year.

"To be able to help those in need we have to stop fraud. Despite tough control on overall running costs I am channelling extra resources to the battle against fraud. Last year the Benefits Agency detected and stopped a record £700 million of fraud. And local authorities doubled their savings to £170 million. But prevention is better than detection. I am therefore pursuing an anti-fraud strategy based on prevention and deterrence. In total my anti-fraud measures across all benefits will save £2.5 billion by 1998/99.

"The Benefits Agency has just started deploying one of the most powerful data matching systems in the world to identify suspicious claims. The agency will investigate these and carry out over 1 million home visits and other checks. It will tackle employers who collude with people claiming unemployment benefits while working. And next year, we will start computerising post offices and launch the benefit payment card.

"Local authorities have responsibility for administering housing benefit. A recent study suggests housing benefit fraud costs almost £1 billion a year. So I will strengthen the financial incentives for local authorities to tackle fraud. I will invite local authorities to compete for challenge funding for innovative anti-fraud measures. And next year I will introduce a national computer record of housing benefit claimants. This will stop people claiming from more than one local authority.

"From October 1996 further changes in housing benefit will reduce abuse and waste. Some tenants abscond without making initial payments to landlords. So I shall enable local authorities to make the first giro payable to the landlord. Most other benefits are already paid in arrears. I shall align housing benefit with them. This will stop wrongful payments that can arise when housing benefit is paid in advance.

"In October, I announced proposals to limit asylum seekers' access to benefits; 70 per cent. of people claiming asylum do not arrive as refugees, but make a claim some while after entering the UK illegally or as tourists, students or visitors. From next year, I intend to allow benefit only for people who claim asylum as they enter the UK. But when a claimant is found not to be a refugee, benefit will cease. My proposals will save £160 million next year. My right honourable and learned friend the Home Secretary is speeding up asylum decisions, which will further reduce the benefit cost. We will offer refugees a sanctuary, but not be a soft touch for social security.

"The past two decades have seen a huge increase both in the number of lone parents and their cost to the taxpayer, expected to be £9.4 billion this year. This is equivalent to over £1,500 a year extra tax on each working family with children of its own. The right approach is neither to penalise nor to promote lone parenthood. The benefit system gives special assistance for lone parents which couples do not have. In particular, two components of benefit for lone parents have no equivalent for couples. These are one parent benefit and lone parent premium. They cost around £600 million a year. To start bringing treatment of one parent families and two parent families more into line I propose no increase in either benefit next April. My intention over time is to continue to narrow the gap between the benefits which go to lone parents and those which go to couples. At the same time I intend to build on our existing measures to help lone parents back to work.

"Family credit has been of particular benefit to lone parents and I have greatly improved it. I have extended family credit to people working part-time. I have given an extra £10 a week to people working full-time. I have introduced a £40 a week allowance for the cost of childcare. And I now propose to increase the allowance to £60 a week. This will be of particular benefit to those who wish to return to full-time work and those with more than one child.

"The provision of nursery vouchers will be an additional help to parents of pre-school children. Maintenance is also an important stepping stone to work. Even absent parents on benefit should contribute to their child's support. So I propose to double the minimum payment of child maintenance to £4.80 a week from April 1996. In addition, from April 1997, I shall pilot a major new scheme. It will provide individual help for up to 25,000 lone parents to find jobs or training opportunities. Finally, my right honourable friend the Secretary of State for Education and Employment will extend the very successful scheme which has already created places to care for 50,000 children out of school hours, creating a further 18,000 places over the next three years.

"As a result of the reforms already implemented, the proportion of lone parents in work has increased. I believe the four measures I have announced today will help more lone parents be self-supporting.

"Most young people starting out in work either stay with their parents, share a flat or find a bedsit. But those who are without a job can claim housing benefit and can then choose to occupy better properties than they could afford in work. So for single people under 25 who are renting privately, I propose to limit housing benefit to the average cost of local shared accommodation. That will reduce disincentives to work; discourage young people from leaving home before they can afford to do so; and reduce the attraction of moving to seaside resorts. The changes will apply from next October.

"Couples, people with children and those exempted from the January housing benefit changes will not be affected. Local authorities will be given funds to prevent hardship in exceptional cases. The new scheme will save more than £100 million over three years. Last year, I announced a scheme to continue maximum help with housing benefit during the first four weeks of work. I am now extending it to people who have been on a government training course. In a separate measure I intend to increase non-dependant deductions for housing costs.

"The state system of social security provides decent help for those who need it. The voluntary and charitable sectors provide extra help to cope with unusual circumstances. Voluntary bodies and charities can already pay £10 a week without the recipient losing benefits. I propose to double that limit to £20 a week. I believe this change will be widely welcomed.

"I propose some smaller measures to remove anomalies. I shall amend the industrial injuries benefit scheme so that those who receive reduced earnings allowance to compensate for loss of earnings should normally transfer to retirement allowance when they reach pension age.

"Separately, I shall align the mobility component of disability living allowance more closely with similar benefits that are withdrawn during hospital stays. And I shall improve the information-gathering used to make assessments for disability living allowance.

"Britain already has one of the lowest non-wage labour costs in Europe. I intend to reduce them further. From April 1996, employers will qualify for one year's remission from employers' National Insurance contributions for each person they take on who has been out of work for two years or more. I am cutting National Insurance Class 4 contributions for self-employed people by 1.3 per cent. from April 1996. This outweighs the loss of tax relief on these contributions announced by my right honourable and learned friend the Chancellor. And, finally, I intend to cut the main rate of employers' National Insurance contributions by 0.2 per cent. from April 1997.

"One of the main financial concerns facing elderly people is the prospect of long-term care. Providing for their needs in old age is, of course, one of the reasons why people save. But Age Concern and others have argued that the capital limits applying to people in residential and nursing care are tougher than the rules for people who stay in their own homes. They have urged us to raise the capital limits for residential and nursing care to those applying to housing benefit. We have gone further than that, not just doubling the upper limit to £16,000 but more than tripling the lower limit.

"Under our proposals, people with up to £16,000 of assets will qualify for state help. And people with capital of less than £10,000 will not be required to make any contribution from their capital towards the cost of residential care. The new limits will apply from April 1996 at the latest to all people in long-term residential care or nursing homes. Around 50,000 people should benefit in the first year. We want to ensure that in future more people can afford care.

"One of this country's major successes has been encouraging more private pension provision than any other European country. The challenge facing us is to be equally successful in enabling people to make decent provision for long-term care. We are announcing three important proposals to stimulate the development of attractive savings and insurance schemes.

"First, benefits from long-term care insurance will be tax free. Secondly, my right honourable and learned friend the Chancellor is consulting on how occupational pension schemes can enable pensioners to defer some income early in retirement so that they have more income to help with the cost of long-term care. Thirdly, we will consult on partnership schemes. These would enable people to retain even more of their own assets in return for providing for a corresponding amount of their long-term care costs. This would encourage more people to make provision for themselves. It would help the insurance market develop new products, since their risks would be limited.

"Today's measures continue my step-by-step reforms of social security. I have protected the most vulnerable. And I am creating a fairer and more modern benefit system. But our aim is to help more people off benefit altogether. We are succeeding. We have fewer people out of work than in any other major European country. And more people in jobs. My reforms make a double contribution to this. They strengthen work incentives and encourage more people off welfare and into work. By controlling spending, they are easing the burden of taxes and helping to create a vibrant, free enterprise economy. This gives people a chance to find a job and provide for themselves, which is the best help we can give them. And it means that we can afford fair provision for those unable to work. My reforms give them a greater chance. I commend them to the House".

My Lords, that concludes the Statement.

4.44 p.m.

Baroness Hollis of Heigham

My Lords, I thank the Minister for repeating the Statement made to another place. The Statement was wide-ranging and, obviously, I, on behalf of these Benches, will be able to pick up only some of the points that were raised. Perhaps we may revisit others during Questions and debates at a later stage.

We are discussing the Social Security Uprating Statement in the context of yesterday's Budget. The basic question is, running the two together, who pays and who gains? Looking at the Budget benefit package, any concept of fairness would ensure not only that such a package was progressive—that the rich paid more of their incomes—but that it was also appropriately redistributative—that the poor gained more.

What do we see? According to Social Trends, in 1979 local and central taxes took 31 per cent. of the incomes of the poorest one-fifth but 37 per cent. of the incomes of the richest one-fifth. One might think that that is fair. By 1993 the situation had been reversed. The poorest one-fifth were paying 39 per cent. of their income in taxes and the richest one-fifth were paying just 23 per cent. The consequence has been a widening of poverty and inequality and a divided Britain. The Budget confirms those trends.

As today's Financial Times showed, following yesterday's Budget the bottom 10 per cent. are worse off in real terms by about 50 pence per week, whereas the top 10 per cent. are better off in real terms by about £6.50 per week. Therefore, not only has the Budget failed to narrow the poverty and inequality gaps but it has actually widened them. Not only are the poor worse off as a result of the Budget but at each and every uprating Statement we are seeing their benefits being chiselled away, which is to the shame of us all.

A couple of years ago the uprating Statement chiselled away the benefits of the unemployed by taking them off insurance-related unemployment benefit and putting them speedily on to the means-tested JSA. It also took the sick and disabled off the more generous invalidity benefit and put them on to incapacity benefit. So those two groups were hit.

At last year's uprating Statement we heard an attack on those home owners who were trying to sustain their homes while being unemployed and on income support. They too have lost their benefits. At this uprating Statement, whom did the Minister single out a few minutes ago? It was those who are asylum seekers, those who are receiving housing benefit and those who are lone parents. That is where the cuts in social security will fall in order to achieve the tax handouts and the widening of inheritance privileges for the better off.

Perhaps I may deal first with asylum-seekers. The regulations to which the Minister referred will be introduced during the Christmas period, taking effect on 10th January. I hope that we shall have an opportunity to debate them in this House. They mean that approximately 70 per cent. of all asylum seekers—those who seek asylum once they are already in this country—will be denied income support. Between them they have approximately 5,000 children. If the parents of those children have no income, on what will the children live? The cost of giving Social Security at the reduced rate to an asylum family of four is something like £100 per week. To put one of those children into care costs something like £870 per week. Is that humane; is it decent; is it cost effective?

The reason why benefits for asylum seekers have risen is not because there are more bogus claims but because it takes the Home Office longer and longer to process them—in some cases up to seven years. Of course, as Andrew Lansley, the Conservative's director of research, was reported as saying in the Observer on 3rd September 1995, which is a couple of months ago: Immigration, an issue we raised successfully in 1992 and again in the 1994 Euro-election, played particularly well in the tabloids".

I invite the Minister in his reply to dissociate himself from that view. It gives the impression that attacking the benefits of asylum seekers is an activity of the racist Right. I invite the Minister in his reply to dissociate himself from that impression and I am sure that he will want to.

The second area upon which the Minister focused was housing benefit. Back in 1988, the Government deregulated private sector rents, promising, in the words of Sir George Young, that housing benefit would "take the strain". The DoE cut its costs and the DSS picked up the bill—a further additional £8 billion in housing benefit since then. The Government insisted, as the Minister repeated only a couple of days ago, that it was better to subsidise the individual than bricks and mortar. Having said that, the Government then look very surprised that, in the process, they create what they like to call a "dependency culture", in which people find it hard to move out of benefit into work because they face a penal tax rate of something like 90 pence in the pound.

The Government have already made one set of changes to housing benefit which will come in in January. In today's uprating Statement, they are attacking a particular group; namely, young people. First, I should like to ask the Minister the following question. As I understand the Statement, in future all housing benefit recipients will only receive benefit four weeks in arrears. How then will people on income support find the money to pay the month's rent in advance which is now virtually a requirement in the private sector? Secondly, the Minster announced that, in future, young people would get housing benefit which would only cover the cost of shared accommodation—not for a self-contained flat, only shared accommodation. What will be the consequences? I put it to the Minister that four possible options may follow, all of which, I suggest, are highly undesirable.

I start with the first option. If the young person concerned is "go-getting", he or she will leave the self-contained flat and share a larger property with two or three people. Those young people will pool their income and rent a family sized house. In consequence, many families will find themselves squeezed out of renting that family home. That is already the case in university towns. The Government are structuring the benefit to extend the problem more widely. I am sure that that is undesirable.

Secondly, if the young person concerned is less energetic, he or she may get someone to share the accommodation, thus illegally overcrowding their small flat. As we know, that will have implications as regards health, fire and safety. Thirdly, if such a young person is less able to hold his or her own in the housing game, he or she may end up homeless. The Government may say that such young people should go home to their families, but what they know from their own research—and what they conveniently forget—is that many of those young people have come out of care, have been abused at home and have no safe home to return to. The Government are refusing them the ability to afford an appropriate rent. Without a safe home, they may end up on the streets and, as we all know too well, in a vulnerable situation. Of course, a few of those young people may return to their families. But what do we find? We find that in the very same uprating Statement the Government have substantially increased what is called adult "non-dependant deductions", which means that the parents of such a young person will lose an increased amount of their own housing benefit if their son or daughter of 22 or 23 returns home to live with them. They will not want him or her back—and this from the Government who claim to be the party of the family.

None of those outcomes is acceptable. The bill for housing benefit will only be cut when there is enough socially rented and cheaper property available on the one hand, and, on the other, rising incomes based on full employment. Until then, all we are seeing is a merry-go-round of government departments ducking responsibility for the social consequences of their budget cuts in the desperate hope that they can pass them on to someone else. Indeed, anyone else will do.

Finally, the Government's uprating Statement targets a third group. After asylum seekers and housing benefit recipients, it targets lone parents. The other day, when we were discussing earnings top-up, we congratulated the Government on using research. Why do they not do the same with lone parents? Let us remind ourselves that, despite what the Government suggest, lone parents are not idle like, unfortunately, some unemployed young men have to be. They are in work; indeed, rather important work. However, because it is unwaged, it is not visible. It is called bringing up children. I am not sure that it is wise social policy that the children, having lost one parent—usually the father—should now be expected to lose the other parent in order to cut the social security bill, especially when the mother is on poverty level income.

Let us also remind ourselves that the single parents who have been targeted are not feckless teenagers. The latter amount to something like 44,000 out of 1.3 million lone parents. The average age of a lone parent is 33. Most of them have come from broken marriages or separated partnerships. The average length of time that they spend on income support is less than three years. They are on income support and not in the labour market when their children are under five years of age. Only one-sixth of them with children under the age of five are attached to the labour market, but over half of them are in work when their youngest child reaches the age of five.

So what is the problem? The problem is not that such people are scrounging or that they are idle when they should be working: it has arisen because, for example, the lone parent is the mother who has been divorced late in life, perhaps in her fifties and, therefore, not regarded by prospective employers as an attractive proposition for employment, just as is the case with middle-aged men. Alternatively, such women may be ill-educated, untrained and have few skills for the labour market— and we should help them to gain them—or, and this is increasingly the case, the lone parent or the child may be disabled and therefore in need of full-time care.

I wish that the Government would use some of the energy that they expend in moral panics in reading their own research. The real problem with social security is not lone parents: it is disinherited young men. Of course we must help lone parents with education, training, and childcare, working with the grain of choices that they want to make. However, in today's Statement, the Government propose to freeze and ultimately remove two benefits—that is, the lone parent premium on income support and the single parent benefit—and deliberately make those families poorer.

What such changes will not do is send single parents back into marriage. Similarly, they will not send those parents back into the labour market. What they will do is ensure that the 2.5 million children who live in single parent families will be poorer. Is the Government's line really that to make marriage stronger they must make those children poorer? That seems to be the implication. Those children are already living in poverty. Therefore, to make them poorer still so that they inherit deprivation in exactly the same way that other more fortunate children inherit wealth is vindictive, punitive and utterly wrong—and all to save just £13 million of benefits in the first year.

Over and beyond the issue of fraud—and we entirely agree on this side of the House that it is not to be tolerated—the Government are spending too much on social security. That is evidence not of abuse but of the Government's economic failure, because they are spending on the wrong things. Social security expenditure is driven by unemployment. We do not want to spend so much on unemployment, but that is because we intend to ensure that people are back in work. We do not think that we should spend so much on housing benefit, but that is because we do not believe that rents should be deregulated in the way that they have been. We do not want to spend so much on in-work benefits like family credit, but that is because we would establish a minimum wage to ensure that that was not necessary.

We want to cut social security spending, but we know that in a humane society it can only be done by investing in the employment and education of our people and not by chiselling away at benefits in order to hand tax cuts to the better off. We remain a divided Britain, and this Budget benefit package is yet another wasted opportunity.

5 p.m.

Earl Russell

My Lords, I think we understand that there is no such thing as a free tax cut, so we need to make some attempt to balance the cost of having tax cuts against the cost of not having them. Getting the information for that exercise out of the Department of Social Security is sometimes like getting blood out of a stone, but we have to try.

I heard the Minister's figure of £15 a day. I have heard it before. I should like to ask how exactly that figure is arrived at. Does it, for example, include pensions, and, if so, is it perhaps rather cheap at the price? I understand that the social security budget is high but we must attempt international comparisons. I know those are extremely tricky because of the difficulty of getting a constant basis of comparison, but the National Association of Citizens Advice Bureaux has recently estimated that our social security bill is the lowest in Europe. No doubt the Minister has a different method of calculation and perhaps he will tell us about it.

I take, first, the case of under-25s and housing benefit—under-25s, as the Chancellor put it, not leaving home earlier than they should. I shall let the Minister into a secret. He will not win any votes from among the parents of those under-25s. Those under-25s are up to seven years past the age of majority. When one brings up children, one imagines that a time will come when they will launch themselves: they will leave home and be self-supporting. Most parents understand when their children do not have jobs that more blame rests on the state of the economy than on their children. It does not mean that they necessarily want to have them back at home for ever. They may find that the cost of doing so is a great deal higher than what they are receiving in their tax cuts—yet another case of there being no such thing as a free tax cut.

The Minister may by now be familiar with the MORI report on 16 and 17 year-olds published by his department. It found that a large number of parents who had thrown out 16 and 17 year-olds had done so because they could not afford to keep them, being themselves on benefit and because they could not keep the child unless the child was also on benefit. The measure we are discussing is likely to extend that pattern to those from 18 to 25. I cannot regard that as a great advance. I cannot regard it either—considering that the Government themselves are concerned about the cost of homelessness—as a great advantage to public saving. It will carry costs of its own.

Let us consider also the effect of people being induced to stay at home when they live in a remote place. There is not much work to be found in Woolfardisworthy, Devon. Therefore if one makes people from there stay at home, one will be keeping them out of the labour market and keeping them on benefit for a great deal longer than would otherwise have been the case. If they find work in such places it is likely to be work at rather lower wages than they might have found in a big city. Restricting the mobility of labour in some ways interferes with the operation of a free market. I take it that the Government have now finally thrown away and dismantled the bike of the noble Lord, Lord Tebbit. That is a pity because it was useful on occasion.

I am interested to note that there is an exemption here for marriage, which of course has created a colossal new incentive for marriage in this group. That means that sooner or later in the course of administering his drive against fraud the Minister will have to introduce a new primary purpose rule, with all the costs and administrative strains involved in administering that.

I entirely agree with what the noble Baroness said about health, fire and safety. In that context I ask the Minister—I hope to get an answer and I shall ask again if I do not—when he applied the Treasury guidelines as regards the policy and resource implications for other departments, what resource implications for other departments were identified, and how did the department decide that they were less than the amounts being saved? We need an answer to that question.

I ask him that question also as regards the costs of the changes for single parents. I am also interested in the assumption clearly made in the Statement that single parents should be assimilated to the same benefit base as married couples, because in the 1985 White Paper which introduced the current premium system that was introduced because of the extra costs of being a single parent. I ask the Minister whether the department was wrong in 1985; or has something changed since then, and, if so, what and when? There are extra costs in being a single parent. A great many of them remain on benefit a year or two years and often up till the time the child is two.

Those of your Lordships who remember the experiment by Mr. Matthew Parris of living on benefit may recall that he reported that one could do it all right for a week but as one went on doing it longer, one found that as one's shoes and coat wore out one ran up big expenses which made things much more burdensome. That is something which particularly affects single parents. In that context I must ask the Minister how much new money is going into the Social Fund this year. Is there any increase on the previous year and, if so, how much?

As the Edwards case—the sex discrimination case involving London Transport, reported in this morning's paper—illustrates, single parents have to face extra costs through having to be in several places at once. Any of us who have had a spouse ill for even as much as a day or two know perfectly well that that is true. There are extra costs and some account ought to be taken of them. I am glad about the extension of the disregard on family credit. In other circumstances I would have welcomed it warmly but here it is simply paying Peter for having robbed Paul. It simply gets us back to where we were before.

I am glad that there is some concession on savings limits for the cost of care, but as most people's houses are worth more than £16,000, the effect will, I think, be extremely limited. It is possible more could have been done. We are told about fraud every year. Of course we must combat fraud. What I want to hear is that the combating of fraud will be subject to proper legal standards of proof, because I strongly suspect a mentality that says that if fraud does not exist it is necessary to invent it. It always seems to come up when there is a tight public spending round.

In that context I am a little worried about the proposal for incentives for local authorities to find fraud. That seems like something which could possibly create a conflict of interest. I hope care will be taken with the administration of that provision.

I am also a little worried about the extension of home visits. There may be some people here who were unfortunate enough to face the noble Baroness, Lady Castle of Blackburn, holding forth about the old cohabiting rule. I say "unfortunate" only with reference to those who were on the other side of the House at the time. There is a danger here of abuse. It also gives me considerable anxiety that when the Benefits Agency in its review published totals of fraud, those totals were divided roughly 50:50 between confirmed fraud and suspected fraud. It is a little like the way they used to treat Roman Catholics in the 17th century. They said that they were vehemently suspected and slung them into prison. I do not regard that as compatible with the rule of law. There is a care to be taken here.

In the context of the increased deduction from income support for maintenance under the Child Support Act, I remind the Minister that this is directly a cut in income support levels. He knows the recent evidence from the National Consumer Council that those are not generous. It is difficult to have an adequate diet on full income support. Taking a further £2.50 out of it is taking out something that is not there. Medical costs may be attached to that provision, and I hope that in the use of the guidelines those were identified and calculated.

I am extremely dismayed that the youth training allowance has not been uprated. I am also dismayed that for the second time in two years it has taken me pretty well two full days to find anybody who knew whether it had been uprated. It does not seem to be the highest point in the attention of the Department for Education and Employment on Budget Day.

Costs are also identified for the Department of Social Security, which has to top up levels from income support. The Department for Education and Employment, which had a comparatively if not absolutely generous settlement, seems to be exporting its costs to the Department of Social Security. I hope that the Department of Social Security was consulted, and I hope that it minds.

The Minister knows that I do not believe in the current system of treating 16 and 17 year-olds, but I can think of better reasons for that system collapsing than simply that the Department for Education and Employment forgot to uprate the youth training allowance. If they continue to forget to uprate the youth training allowance it will very soon collapse. I hope not to have to make that point again in a year's time.

Finally—and I really mean finally—I want to touch on the regulations about asylum seekers. It has always been my rule that I am not prepared to use starvation as an instrument of policy. I am not prepared to use it here.

I want to raise two points. One is the exclusion of claims which are not made at the port of entry. That is like telling a drowning man who scrambles out of the sea on to a piece of land that you happen to own that he should have asked your permission before coming out of the sea and saving himself from drowning. It is not in the real world.

I also want to ask the Minister the precise interpretation of the words he used: When a claimant is found not to be a refugee, benefit will cease".

If that is an accurate use of language, that means that benefit will continue until an appeal is heard and the legal process has been determined. If it means that, I welcome it. If it does not mean that, it is a terminological inexactitude.

5.12 p.m.

Lord Mackay of Ardbrecknish

My Lords, I am conscious of the fact that speakers in the main debate today are limited to nine minutes. Therefore, I apologise to the noble Earl and the noble Baroness if I do not manage to cover all the points they raised, because I at least shall make sure that I do not exceed the nine minutes to which other speakers have to limit their speeches in the main debate.

I shall begin with the last point made by the noble Earl about asylum seekers. I should like to share with the House a few simple statistics which make my point more graphically than anything else I can say. In 1984 2,900 claims were received by the Home Office, and 24 per cent. of those were found to be valid. By 1994 there were 32,800 claims, plus 10,000 accompanying dependants. Only 4 per cent. of those claims were successful. In 1995 there have been 50,000 claims. If the same scoring rate applies as last year, your Lordships can easily see that a significant number of those claims will not be upheld.

I can tell the noble Earl that the position is that in the case of people who ask for refugee status at the port of entry, during the time their applications are being considered by the Home Office they will be eligible for benefit. If they are found not to fulfil the conditions for refugee status social security benefit will cease. That will put them on all fours with people in our country, who equally do not receive social security benefit while they are appealing. It is perfectly clear from any view of those figures that over 70 per cent. of people who come to this country as students, tourists or visitors, sometimes guaranteeing that they will ask for nothing from the British taxpayer, decide when their stay here comes to an end that they want asylum. We have to look seriously at the escalation in those numbers and the large number of people who apply for asylum who are found not to be genuine asylum seekers.

I turn now to the question of housing benefit for people under the age of 25. The noble Baroness asked about periodicity—if I can give it that rather longer name—in other words, housing benefit being paid in arrears. As I mentioned in the Statement, this is a way of countering fraud. People claim housing benefit and when they receive it they do not pass the money on to the landlord but disappear. We believe that one of the ways to stop that and to prevent overpayment, which is often very difficult to recover, is to pay in arrears.

The noble Baroness was anxious that landlords might tell people that if they cannot pay they cannot rent a property. I have made the point that we are going to make it possible for local authorities to pay benefit directly to the landlord. Therefore, a landlord will know that if he takes on somebody who is on housing benefit he will be guaranteed the payment at the end of the four weeks directly from the local authority. I hope that that goes some way to meet the anxieties of the noble Baroness.

On the general question of those under 25, most young people under 25 live in the parental home. A fair number—about a third—do not live in the parental home. Many are owner-occupiers, and many live in local authority accommodation. In particular, we are concerned with those who live in the private rented sector. It was suggested to me that I am making young people stay at home. I am not making them stay at home. I am ensuring that if they take accommodation while on benefit they can afford that selfsame accommodation when they find work. The benefit system has not acted as a barrier to their finding work.

As I mentioned in my original Statement, there will be a number of safeguards. Married and unmarried couples, people with the care of children and others who are exempt from the January changes will not be covered by this provision. In addition, local authorities will be given some resources for a hardship discretionary fund which they can use if they think that somebody is suffering hardship and needs help of a discretionary nature.

I turn now to lone parents. Interestingly enough, when one-parent benefit was introduced in 1975 it was introduced on a temporary basis. The noble Baroness, Lady Castle, who was then the Secretary of State, said in May 1975 that the benefit was purely a temporary one. Mr Michael Meacher said that they were making an exception for the reasons that this was an interim benefit. It would only be for one year. It has done rather well to survive all these years, and it ill-becomes the Opposition to start complaining when a benefit that they introduced temporarily for only one year is changed by us after 20 years.

I want to reiterate the point that I made in the Statement. We believe that it is right that children, whether they be in one-parent families or in the traditional two parent families, appear to be treated the same and that we do not appear to favour one group over the other. I believe that what we propose will signal that we neither condemn nor are making it more attractive for people to be single parents as opposed to living in the traditional arrangement of a couple, which almost everyone in this House and the other place believes is the best arrangement for the bringing up of children. I was going to say young children, but that applies to all children. I believe that it is a sensible reform which will remove the distortion regarding the current situation. At the same time it will protect those who already receive benefit. They will not suffer any loss.

The noble Earl asked me once again whether we had consulted with others about costs. At the risk of sounding like the Prime Minister, I refer him to the reply I gave him the other day. I made it perfectly clear that when proposals are made by one government department, all government departments are involved in the discussions.

Earl Russell

My Lords, with respect, the Minister is in trouble if he gives the same reply because it was not the same question. I asked what resource implications for other departments were identified.

Lord Mackay of Ardbrecknish

My Lords, I would need notice of that question if it relates to a specific benefit.

So far as I understand, the suggestions and proposals that we have made as regards housing have no read-across costs for other departments because we have taken into account the particularly difficult cases—I could list them—which were excluded from the January housing benefit changes, and any difficulties have been taken into consideration.

The noble Earl also asked me about the discretionary social fund budget. That is usually announced closer to the beginning of the next financial year, which will be in March, for the reason that the size of the budget relates to the performance in receiving back the social fund loans.

If I am to obey the strictures that I imposed on myself, I must now finish. However, what I found interesting about the statement of the noble Baroness is that it seemed to imply one extra expenditure piled on another.

Noble Lords

No, no!

Lord Mackay of Ardbrecknish

My Lords, as I understood the position of the party opposite, it does not want any increase in expenditure, I presume over the £90 billion that we are already spending on social security.

5.22 p.m.

Lord Dubs

My Lords, perhaps I may return to the question of asylum seekers. It was not clear whether the Minister had answered the questions put by the two noble Lords in reply to the Statement.

Will he explain what is to happen to an asylum seeker who does not claim asylum at Heathrow Airport or Dover but claims it some time later? As I understand it, the Minister answered that many of those claims were now being refused. However, that does not deal with whether an asylum seeker who is afraid of being sent into detention, and therefore does not claim asylum immediately but leaves it for some little while, should have any right to income support denied him. It is not just; and it does not make sense.

In the event of the Home Office refusing an asylum seeker, will the Minister explain whether or not the entitlement to income support will apply between that date and the date of an appeal before an adjudicator or an immigration appeal tribunal? It is a simple proposition. Will the Minister please answer?

Lord Mackay of Ardbrecknish

My Lords, the position is quite simply this. Those who enter the UK and apply for refugee status at the port of entry will be eligible for benefits until their position is decided. They will not be eligible for benefits during the appeal proceedings because that puts them on all fours with the way in which citizens of the UK are treated—no better and no worse.

As regards people who enter the UK as visitors, tourists or students with the normal immigration clearance—they have limited leave to remain on the understanding that they do not become a burden on public funds—they will no longer be entitled to benefit if they subsequently claim asylum. I hope that that makes the position clear.

Lord Harris of Greenwich

My Lords, perhaps I may ask the noble Lord one question on that. If those people succeed in their appeal, do they receive back payment of benefit?

Lord Mackay of Ardbrecknish

My Lords, if they succeed in their appeal—as do a very small percentage of the considerable numbers that I mentioned—they will be eligible for benefit, I think, from that point. However, I shall check that I am right and write to the noble Lord.