HL Deb 30 April 1996 vol 571 cc1470-3

2.52 p.m.

Earl Russell asked Her Majesty's Government:

In the light of the reply given by Lord Mackay of Ardbrecknish on 28th March (WA 149) that "While every attempt is made to identify direct implications for other departments arising from public expenditure decisions, it is not feasible to take account of every potential second-order effect, still less to quantify it", what weight should be placed on the Department of Social Security's estimates of the public expenditure consequences of the measures it proposes.

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

My Lords, the Department of Social Security, like all other departments when considering policy changes, consults widely within government to ensure that the full implications of any such changes are properly considered. The nature of such consultation will depend on the policy change in question. Her Majesty's Treasury is fully involved in that process.

Earl Russell

My Lords, I am grateful to the Minister for those remarks. I appreciate that he has difficulty in giving exact figures. But when the Department of Social Security says that a measure will save, for instance, £65 million, we need to understand what that means. In the Minister's Written Answer, when he said that it was not possible to quantify every potential second-order effect, was he telling me that the department takes account of some second-order effects or that it takes account of no second-order effects?

Lord Mackay of Ardbrecknish

My Lords, as I have explained to the noble Earl on a number of occasions, the Department of Social Security works inside the Government and, along with our colleagues in other departments, we try to take into account those effects which may come from decisions that we are proposing to take. Sometimes those are easily quantified but on other occasions they are not, perhaps because they are behavioural and therefore difficult to work out. But we do our best and over time the noble Earl will find that on some occasions we overestimate the amount of savings that we make and on other occasions, I am happy to say, we underestimate the amount of savings we make.

Baroness Hayman

My Lords, is it not clear that the savings in one department's budget can cause increased expenditure in others? Is it not important that the Minister looks at his own department—for example, in the area of social security benefits available for pregnant women to provide an adequate diet during pregnancy? Refugee women are of particular concern in that regard at the moment. Is it not clear that savings in social security benefit may increase the incidence of low birthweight babies and the highly expensive care to the NHS for neo-natal intensive care for those children? Is it not important that the overall costs are taken into account?

Lord Mackay of Ardbrecknish

My Lords, that is exactly what I said when I said that we consider with other government departments what the overall implications will be. We aim, and I believe we succeed, to make sure that all our policies result in a net saving to the Government overall. Even though there may be some expenditure to another department, that expenditure will be less than the savings gained by us. Controlling the social security budget is an important issue. In relation to the incidence of low birthweight, as I explained on a previous occasion at this Dispatch Box, giving up smoking is perhaps the single most important thing mothers can do to help the birthweight of their children.

Lord Barnett

My Lords, how does the Minister's department manage to keep within the limits set down by the Chief Secretary to the Treasury if another department does not underspend when his department overspends?

Lord Mackay of Ardbrecknish

My Lords, I am but a boy when it comes to answering a question like that from the noble Lord, Lord Barnett, who knows jolly well how the Treasury keeps government departments under control from the five difficult years he spent doing it in the last Labour Government. The important thing is that government departments are aware of each other's policies. They attempt to quantify any implications that fall to them. When the Government agree on a policy, all the various aspects—the pluses and minuses—are taken into account. As the noble Lord will expect me to say, the Treasury usually expects to come out on the plus side.

Baroness Seear

My Lords, the noble Lord's replies to this Question suggest that the only things that count are those that can be counted. How does the Minister arrive at the social security costs? Is research taking place to find out the costs of the changes being made? Otherwise, we are just relying on figures which have no research base behind them at all.

Lord Mackay of Ardbrecknish

My Lords, I do not agree with the noble Baroness, Lady Seear, that we should not take into account the cost to the general taxpayer of social security. We must take that into account; any responsible government must take it into account, although I appreciate that members of the party to which the noble Baroness belongs do not have to worry too much about the increased cost to the taxpayer. When we look at the different decisions we must face in order to control our budget, we look carefully at the consequences of those decisions and at the various research papers on those issues that come out of universities before we arrive at our final conclusions.

Baroness Seear

My Lords, the noble Lord cannot get away with simply sneering at my party, but we will leave that on one side for the moment. He may learn some day that we have rather more say in matters than he predicts. The noble Lord did not answer my question. How do the Government find out systematically what the real costs are? The noble Lord has not yet told us that. To refer to odd papers coming from universities not commissioned for the purpose is no answer at all.

Lord Mackay of Ardbrecknish

My Lords, I suggest that the noble Baroness looks at the report from the Department of Social Security which is published annually concerning the research we fund. She will see a fair body of expensive research funded directly by us in order to address the policy questions we are considering.

Lord Avebury

My Lords, what research was conducted by the department on the second-order effects of disallowment from benefit into crime rates and the catastrophic increase in the number of people in our prisons? If the noble Lord says that no such research exists, how can we make an estimate of the net results of any changes in the benefits when those increases in crime and the huge cost of building new prisons is set off against the reductions in expenditure?

Lord Mackay of Ardbrecknish

My Lords, as I said, we look at all aspects of government expenditure. If the Home Office felt that something we were doing would impinge on its department, it would include the Home Office being involved in any discussions about possible repercussions on public spending. In relation to the rise in crime, I am fairly old-fashioned and take the view that badness has a lot to do with it.

Baroness Hollis of Heigham

My Lords, the Question asks about the cost of DSS activities for other government departments. Perhaps I may ask the Government a question about the cost of DSS activities for the DSS itself. In recent years the Government have cut DSS staff and have stopped home visits, and are now threatening to close the free benefit helpline. Does the Minister agree that at the very same time accuracy in delivering income support has deteriorated very badly indeed; from almost 95 per cent. accuracy three years ago to 78 per cent. accuracy today, an error figure of £750 million? Do the Government see any connection at all between DSS cuts in staff and the increased DSS error in paying income support?

Lord Mackay of Ardbrecknish

My Lords, I think the noble Baroness is a little confused between the past and the future. We have announced that we are looking carefully at a change programme which will bring considerable savings to the Department of Social Security and result in fewer staff. Through that change programme we hope, by making the systems more efficient, to reduce mistakes, to reduce the time that is taken and to make sure that benefit goes to the people who deserve it. It is a change programme first attacked by the party opposite in the person of Mr. Chris Smith, its social security spokesman, and then approved of in a leaked letter from the Shadow Chief Secretary to the Treasury, who said that all these possible savings were perfectly feasible.

Baroness Hollis of Heigham

My Lords, will the Minister explain to the House why the error rate for income support has risen by nearly 20 per cent. in three years?

Lord Mackay of Ardbrecknish

My Lords, I shall have to look that up to make sure that the noble Baroness is giving me a correct and accurate figure. One of the problems with income support is that it is complicated and one is very dependent on accurate information coming from the claimant. We hope to simplify the system, improve the way information comes from the claimant, and in that way reduce the number of errors. I hope I have the noble Baroness's support.