HL Deb 23 February 1998 vol 586 cc477-91

7.50 p.m.

Lord Haskel

rose to move, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move the four draft orders and regulations standing in my name on the Order Paper en bloc. I understand that that is acceptable to those of your Lordships who take part in such debates. The orders we discuss today are to give effect to new rates of social security benefits from April. They also include the consequential re-rating of national insurance contributions, the amendment of levels concerning guaranteed minimum pensions and an increase in the level of therapeutic earnings allowed in incapacity benefits.

The orders that are the subject of this debate are part of the normal business of this House and the Department of Social Security. We are required annually to review the rates of benefit and the rates of contributions. These orders would bring the revised rates into effect. It has also been the convention at this time to look more widely at social security, especially focusing on expenditure. After all, the uprating, which this year will cost nearly £2.5 billion, is the most significant feature of the department's spending plans.

As noble Lords know, a recurring theme of these debates, and one which has troubled many people, is that, despite growing prosperity, spending on social security has also continued to grow. While an effective social welfare system is the bedrock of an inclusive society, the evidence shows that our system has increasingly failed to match the needs of our people.

Spending on social security has increased dramatically in real terms. It is now nudging £100 billion, an increase of £43 billion over the period 1979–1996—an annual growth rate of 4 per cent.

And yet society is less equal. One in five people lives on less than half average income today, compared with one in 10 in 1979. The proportion of households where no one is working, now just under 20 per cent; has doubled since 1979. And the system has failed those who want to help themselves.

There are over 1 million sick or disabled people of working age living in workless households. Yet more than a quarter of the people on sickness and disability benefits are either looking for work or have aspirations to work. It is clear that if we are going to meet the needs of the people we must re-cast welfare. We need to use it as an investment to empower people so they can help themselves.

Our New Deal strategy, with its emphasis on caseworking, with supporting people to make the best of the labour market, has been an immediate and powerful response. Helping people to get the best out of themselves is a great challenge for this Government. The welfare reform that is needed to achieve this is more than the New Deal. It is a recognition that the system itself is a barrier to empowerment. Its complexity, especially the overlays of work and non-work benefits, of tax and national insurance, means that many people who should be in work cannot see the clear financial advantages of doing so. This particular area has been of concern for many years. The frustration is that the perversities of the system are plain to see, but oh so difficult to overcome.

We now have a manifesto commitment: to examine the interaction between the tax and benefit systems so that they can he streamlined and modernised so as to fulfil the objectives of promoting work incentives. reducing poverty and welfare dependency, and strengthening community and family life. The Chancellor in his pre-Budget Statement announced that the Government propose moving towards a more integrated tax and benefit regime. A lop starting rate of income tax and a reform of benefit tapers will be introduced when it is prudent to do so. The Government will also consider the scope for bringing national insurance payments for the low paid more closely into line with income tax to raise their income from work. And a working families' tax credit is planned, with cash paid through the wage packet to families on low incomes.

The important work of Martin Taylor should ensure that the "drag factors" of unemployment traps and of swingeing deduction rates which form poverty traps are fully exposed. The conclusions that emerge from the Taylor review will inform the judgments made in the Chancellor's Budget next month.

This emphasis on people of working age is not to ignore older citizens. I will come to that later. But getting people back to work is a pressing need. Work is the only sustainable route out of poverty for most people. But there is more to it than that. The concentration of unemployment in certain areas, plus the marked differences between working families and non-working families, has led to inter-generational dependency and social exclusion.

For that group there is little of the dignity of belonging to mainstream society; the disciplines of work which especially for young people can mark their way in life are missing; the opportunities for advancement, career progression and the learning experiences of work are not there; and also missing is the example that work gives—the example of providing an order for children to follow their parents and youngsters to follow their peers.

For all those reasons it is right that the major investment in welfare to work is our number one priority. A working and busy society is an inclusive society. It can support the right level of investment that the great public assets of the health service and education greatly need. Equally important, a working society provides the wherewithal to support those who cannot support themselves. For all our hopes of releasing people to fulfil their potential, there will always be those who will not be able to manage, and I can assure noble Lords we have no plans to abandon that group.

Work gives young people and families the freedom to invest in the future by building decent pension provision. If there is one area that can provide the best examples of how self-reliance can revolutionise people's lives it is the example of pensioners' income. In recent years pensioners as a group have on average enjoyed faster income growth than any other broad group of the population. Between 1979 and 1995/96 pensioners' income grew by 64 per cent. compared with a growth in average earnings of just under 40 per cent. But not everything is as rosy as might appear at first sight. While a third of pensioners have net income to place them in the top half of income distribution, around one in four in the bottom 20 per cent. of income distribution are pensioners. Even while a combination of state and private provision now means that millions of pensioners can enjoy a life in retirement on a decent income, some one in four pensioners have to rely on Income Support, or even worse fail to claim their entitlement.

To ensure that all pensioners in future will be able to retire with income security, one of our first tasks in government was to set in process the pensions review. It was clear to us, however, that immediate action was necessary to ensure that all pensioners had need of help with heating. A significant winter fuel bill is so unwelcome an event in some pensioner households that heating is rationed to the extent of prejudicing well being. Our strategy has been twofold. First, to reduce the costs of energy. We have made significant progress with this. We have reduced VAT on domestic fuel from 8 to 5 per cent.; reduced the gas levy, which should result in lower prices; encouraged competition in gas and electricity suppliers to the consumer; extended energy efficiency grants to include cavity wall insulation and the upgrading of heating system controls; and announced the setting up of the environmental task force, as part of our welfare to work programme. Furthermore, we have made a start by releasing almost £800 million to local authorities in England over the next two years to help meet pressing housing needs, which is expected to feature improved energy efficiency in many areas. Similar provisions have been made in Scotland, Wales and Northern Ireland.

Secondly, immediate and significant cash help has been made to pensioners dependent on income support; £50 to each household and £20 to other pensioner households. There is to be a comprehensive package of practical measures which will make a significant difference to the most vulnerable in our society.

There will be one group which will get £20 and should have got £50. These are the estimated near 1 million pensioners who do not claim the income support to which they are entitled. As with the assistance for winter fuel bills, the Government felt that early action was required to get help to this group. Research is being carried out to establish why pensioners are so resistant to taking up their entitlement. Shortly we will be issuing further details of the pilot initiatives announced by the Chancellor in November. Fifteen million pounds will be invested to test the best ways of identifying pensioners with apparent title and the best ways of getting them to claim.

These reforms that will give new hope to many of working age, and security to many in retirement are but one side of what we want from a modern welfare system. To achieve a modern welfare service, we must also reform our approach to managing social security. We need to provide better information. Rights and responsibilities will underpin welfare for the 21st century. If welfare develops as a mix of the best between what the state and the private sector can provide, it will become more and more critical that people understand their position in relation to the state. We need to link the services we provide. The system fails to recognise that our customers should be busy people. No need for them to be involved in the paper chases between systems and organisations, or for them to be victims of inflexible technology.

We need to support our staff better. Their's is a tough job. They have been at the sharp end of people frustrations over economic exclusion and of the changes in society. The success of welfare in the future depends on our staff providing effective interventions at the right time through caseworking.

Why are we in the process of such significant and major change? My right honourable friend the Minister for Welfare Reform suggested an answer in his thoughtful speech on a similar Motion to this on 18th February. He described the four stages of welfare. For some 400 years there has been a national programme to combat destitution; that is the first stage. For the most part of this century the focus has been on relieving poverty; that is the second stage of welfare. We are now in the third stage. This is where policies have been increasingly directed at the prevention of poverty. The fourth stage—and this is our ambition for welfare for the 21st century—is to deliver services and make opportunities so that individuals can live up to their potential.

A key to achieving this ambition to match the aspirations of people is to engage them in the process. We hope that the publication of the Green Paper on welfare reform will be the beginning of that engagement. I commend the orders and regulations to the House. I beg to move.

Moved, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].—(Lord Haskel.)

Lord Higgins

My Lords, in my short time in your Lordships' House, I have been impressed by the versatility of its Members. It would seem that the noble Lord, Lord Haskel, can transfer seamlessly from a debate on the Competition Bill, to this debate and, presumably, back to the Competition Bill. I fear that he may go to bed hungry and, if so, I regret that.

As the noble Lord rightly pointed out, this is a traditional debate. The four orders increase the level of various social security benefits either in line with the retail price index or the more relevant Rossi index. Correspondingly, they increase the contributions and have important indications for the operation of the Pension Schemes Act 1993, to which I shall return in my remarks.

There is no more fashionable a subject than that of welfare reform. Indeed, the Prime Minister has been in the forefront of it. There was a great fanfare in the press that he was to launch a national campaign and was to tour the country putting forward his views. There were two curious aspects about the campaign. First, almost every aspect of welfare in this country was under review and therefore it was not clear how the content of the great speeches would appear. Secondly, a great national campaign was announced in the first speech made on 15th January. However, the Prime Minister opened the second speech by saying that it was the second of his party meetings to debate the reform of the welfare state. If it is to be a national debate, it is far from clear why all the audiences are to be restricted to what one might call "the party faithful". At Question Time last week, I sought on two occasions to obtain from the noble Baroness, Lady Blackstone, an assurance that they would become public meetings, but, alas, I received no reply. Perhaps the noble Lord, Lord Haskel, can enlighten us tonight. We are debating important issues and if the Government put forward reasonable and sensible proposals we on these Benches will not oppose them.

However, we must note that at the meetings to which I referred there was a considerable air of dissent, even given the restricted nature of the audience. To a large extent, that reflects a widespread fear that the reforms are driven largely from the Treasury. Indeed, at times it seems as though the Treasury and the Chancellor have taken over the whole issue of welfare reform.

That is not surprising because the abolition of the ACT reliefs on pension funds, the rebates to which I shall refer later and in particular the issue of single parents, have rightly raised suspicions that this is likely to become a cost cutting exercise. Surely, that is not what it ought to be about. During the debate on the Statement on these orders I raised at length what can only be described as the Government's U-turn with regard to lone parents.

It seems that that decision was taken to reverse temporarily the line that the Government had taken in opposition. However, we have had no explanation whatever as to why that change took place. It is one of the reasons why there is considerable undermining of the Government's credibility on these issues. No doubt we can refer to those matters in the Committee stage of the Social Security Bill and I shall therefore not press the Minister on the point. However, we need an explanation—if fears about the change being Treasury-driven are to be allayed—of why the Government changed their mind on a matter on which they had clearly taken a position in opposition.

Perhaps I may pick up the point made by the Minister on heating allowances. Having represented for 33 years the constituency with the oldest population in the country I am well aware of the problem. However, one should put the record straight in one respect. While it is true that the previous government introduced VAT on fuel, they also introduced generous compensation arrangements for pensioners on low incomes. In the event, because of the success of the deregulation process, the price of fuel did not go up at all so people were compensated for an increase which did not happen.

I listened with great interest to the various points mentioned by the Minister in that context and many are welcome. However, I was puzzled by a remark he made with regard to the heating bonus and even more surprised at the inclusion of a reference to it in the Prime Minister's speech. In the second speech made in the course of his campaign, he said: We've already paid a fuel bonus to over a million pensioners". As I understand it, the statement which the Prime Minister made on 30th January is simply not true. The bonuses had not been paid. No doubt the Minister will be able to tell us whether that is so. Moreover, if I understand the position correctly, the bonuses are not being paid to all pensioners. Perhaps the Minister can confirm the point because it is important. If the bonus is not paid until the weather has improved—though, goodness knows, the weather has been good enough already this winter—it is a matter of concern. However, we may reasonably welcome the other measures to which he referred.

At the moment we have little idea what the outcome of the Government's various reviews will be. Some indication at least was given by Mr. Frank Field in opening the debate on the orders last week in another place. He made a similar reference in his distinguished and elegant Beveridge Memorial Lecture on 18th February. As I understand it, he said that the Government intend to reform and extend welfare but consensus now favours, a mixed economy of welfare … while we shall aim to increase welfare expenditure, we shall aim also to decrease the proportion of the budget that is covered by taxpayers through benefits guaranteed by the Government.—[Official Report, Commons, 18/2/98; col. 1102.] As regards pensions it seems clear that the Government's intention is that more private provision should be made rather than the normal social security budget bearing as heavy a load as it does at the moment. The pension budget is 40 per cent. of the total social security budget, which is, as noble Lords know, a very large item.

What is curious is that, having indicated that that is the way the Government's thoughts are going, the actions which have been taken seem inconsistent with the aims they declare. In particular, with regard to the limitations on PEPs and the move to ISAs, many people who have made pension provision through PEPs will find that they are no longer receiving the same reliefs as they expected and on which they made decisions with regard to pension relief.

I have already referred to the serious effect amounting to something like £5.4 billion which the abolition of the ACT dividend credit will have on pension funds. Here I must declare an interest because for many years I have been a trustee of a company pension fund. But some of the Government's actions have been puzzling in that respect. The effect of the ACT change did not appear to be appreciated either by the Chancellor or by the Department of Social Security when the changes were announced.

The result of the change made in the Budget is to downrate the rebate which is given to occupational pension schemes. The Department of Social Security, as I understand it, asked the Government Actuary to produce some figures to show what will be needed to he done to adjust that. The Government Actuary duly replied. But, as I understand it—and no doubt the Minister can clarify the point—the Government did not do what the Government Actuary recommended. I do not understand why that should be so. What they have done seems clearly to be inconsistent with the aim which the Minister for Welfare Reform has clearly stated: namely, to move more towards private provision of pensions.

The effect of the decision not to implement the recommendations of the Government Actuary in full will, it seems, tend to push people from some company schemes into personal pensions or back into SERPS. Personal pensions which the Government have previously criticised seem to do rather well on the deal.

Therefore, I ask the Minister why is it, if the aim is to move towards more private provision and away from the taxpayer carrying the whole burden with regard to SERPS in particular, they appear to have taken the decision. It has an adverse effect on people's pensions, but the amounts of money do not seem so large—about £0.5 billion over the life of a Parliament. At the very moment the Government were saying that they would move in one direction, they took actions which seem to move in precisely the opposite direction. Perhaps the Minister can, in the context of the orders which are relevant, explain why that appears to have happened. Once again one is left with the impression that it is all driven by the Treasury who seek to get back money here, there and wherever they can without regard to the longer term objectives which the Department of Social Security has set up.

I turn to two other points. The first is the real fear over the National Insurance pension and whether it should be means tested. Just before Christmas we had the sudden introduction of the hitherto unknown expression "affluence testing". That seems to have been clobbered and, if so, it is welcome. I speak from many years of constituency experience. There is a real fear among pensioners that at some stage there will be a situation where the National Insurance pension will be subject to affluence testing, means testing, come what may. I hope that the Government will be able yet again to state the view that that is not their intention, although a statement by the Secretary of State for Health recently caused some doubt about it.

The second of my last two points is that we anxiously await a Green Paper on welfare reform. We were told that it would be published much earlier, at the turn of the year. Then, when the matter was debated last week in the House of Commons, the best Ministers could do was to say that it would be published before the next annual uprating. That seems to me to be a strange, almost contemptuous, way of putting it. Shadow Ministers and others in the other place reasonably said: "Are we going to have it before the Budget, on Budget day, or after the Budget?" To give a contemptuous answer that it would be some time before the next uprating does not seem to me to be satisfactory. It may be that the Minister can enlighten us further on that.

The Minister for Welfare Reform, in the recent distinguished speech to which I referred, suggested that it will be concerned largely with principle rather than detail. Nevertheless, in the context of the forthcoming Budget, that is something which we shall obviously await with great interest.

If the proposals in that are consistent and compatible, we shall welcome them if they are likely to improve the lot of people and also bring about the move to which the Minister has rightly referred, from welfare to work—always provided that the position of those who are unable or who do not wish to work is protected.

Having said that, I thank the Minister for his opening remarks and I shall look forward to his reply.

Earl Russell

My Lords, by long convention, this debate is treated as an occasion for a general discussion on the social security system. That has never been more appropriate than it is this year. The orders themselves, I am thankful to say, contain nothing particularly extraordinary. I assure the Minister that I shall not make another speech on single parents. I have made a good many; there are more to come; but this is not the occasion for another.

I shall touch on two points in relation to the orders. First, I am pleased to note the verdict of the Government Actuary that there is no need for a Treasury supplement for the National Insurance Fund this year. That does a little to dispel the atmosphere of crisis which is occasionally generated around that subject.

The other matter is that, not for the first time, I wish to deplore the failure to uprate the capital limits for eligibility for benefits. That failure is a disincentive to saving and I hope that that is not what the Government want.

It is possible that this may be the last statement that we have in this form, and that suspicion can only be increased by the Prime Minister's rather curiously-worded threat to "go the full Monty" on welfare reform. I wonder why the Prime Minister had the vanity to think that that would be a turn on.

There is always a need to review the social security system. On these Benches, we are well aware of that and we are in the middle of reviewing our policy. We are particularly concerned with the elimination of poverty traps. The Minister will remember that in an Unstarred Question on 3rd June, I wished the Taylor Committee a fair wind. That is without prejudice to any comments that I may make on its ultimate conclusions.

We cannot prejudge the welfare reform. Government policy on social security seems to be still in the period of "Let 100 flowers bloom", and they even have a field to grown them in. We shall have to judge what they are doing when they ultimately do it.

What is increasingly concerning—and concerned me more as I listened to the Minister this evening—is the fear that they are setting out on the operation starting from a mistaken diagnosis. Mistaken diagnosis does not always lead to mistaken treatment. Were it so, it is likely that none of us would be here now. Our ancestors would have died long ago before our previous ancestors were born. But when I listened to the Minister, he gives the number of people in poverty as an indication of the failure of the welfare state. I do not see how that can be so unless he is proposing to increase benefit levels, and I do not believe that he is.

He gave the number of people and the number of households who are workless as an indication of the failure of the welfare state. It simply passes my understanding how the Government can suppose that that is so. I should have thought that that was rather a failure in the general economy—a failure to generate a sufficient number of jobs. Blaming the welfare state for that is simply a case of shooting the messenger.

I share the suspicions of the noble Lord Higgins, that the exercise may be Treasury-driven, especially having noticed, well before the election, the number of occasions on which the Prime Minister expressed the hope that he could spend more on health and education by reducing the social security budget.

We can reform the welfare state or we can cut costs but there is a potential conflict between those two objectives. While we should all like to cut costs, we should be careful of portraying an atmosphere of crisis. If the Minister cares to look at the current Social Trends, he will see that in the Eurostat figures for the spending on social protection in the EU—if he wishes, he may point out that that is not quite the same as social security but the pattern does not differ very widely—we come ninth out of 11 countries listed. The four missing are Luxembourg, the Republic of Ireland, Greece and Spain. While I believe Greece and Spain come below us. Luxembourg comes above us, and with the Republic of Ireland it depends precisely which method of measurement is used. Therefore, we are certainly not at the top.

The increase in social security spending has been a global trend over the past 20 years or so. Because it is a global trend, it is most mistaken to put it down to a particular failure of the British welfare state. It is a regular rule of explanation that the explanation must be as wide as the phenomenon it explains. The Minster's speech failed to pass that test.

Also, if we look at what the Government Actuary said in his Politeia Lecture of 27th January, when he was talking about the actuarial basis for pension reform, he said: The fact that future costs of social security in the UK look much more manageable than in most other countries reflects relatively low benefits which can he expected from the public system". He pointed out—and the point bears repeating—that the financing method will not alter the way in which the population ages or obviate the need to transfer resources from the working population to the retired population. Transferring costs to the private sector is not a cost-free option.

If we look at what is causing all that, it is fairly obvious what are the main global causes: ageing, which the Government Actuary reminds us is a matter of reduced fertility as well as reduced mortality, relationship breakdown and the flexible labour market. I remind the Government that we live in a global market in which there is free movement of capital but not free movement of labour. That is something which must tend to reduce the value of labour and therefore must tend globally to increase the costs of social security.

We live in a world with a cult of what is nowadays misleadingly known as efficiency. That means that the costs of, if I may so put it, the warehousing of labour are shifted regularly from employers on to the state. Those costs must fall somewhere. I am not necessarily arguing that the state is always the right place to put them but, when the Prime Minister describes the flexible labour market as the real world, he should be prepared to foot the bill which results.

If one wants to try to tackle any of that, one should, as far as one can, tackle the global trends, which are involved. If the causes of the increase in social security spending are outside the social security system, then many of the cures should be also.

Let us take, for example, spending on disability, which is causing concern. I wonder whether increasing the enforcement powers of the Health and Safety Executive would do more to reduce the costs of disability to the social security system than any welfare reform you could imagine. At least that is a point worth considering and it is worth costing.

It seems to be a problem that the economy is not generating enough jobs for the people who want them, and this is particularly true in individual pockets of high unemployment. The Scottish Select Committee has recently reported that a third of all young unemployed in Scotland are in the City of Glasgow. One wonders whether repairing the west coast main line, which needs doing anyway, might do more to reduce the social security budget than any measures brought in through welfare-to-work.

In one of these pockets where the local economy has in effect collapsed, it is no good blaming the unemployed and telling them that they ought to look harder for work. That is only telling the rats to run round the treadmill faster. It does not get them anywhere. In that kind of situation I cannot help feeling that the notion of welfare dependency, now so fashionable, is something of a mirage. We all depend on something, whether it is an employer, a pension, inherited wealth or the benefit system. If we say that someone suffers from welfare dependency, I think we are saying no more than that he has nothing else to depend on.

On one occasion I have seen my son submitting 100 job applications in one week. Not a single one of them got so much as an acknowledgment. In a situation like that you see the truth of the maxim that hope deferred maketh the heart grow sick. If people talk in a way which encourages people to think that they are feeding welfare dependency, they may be saying no more than the proverbial jolly miller, I care for nobody, no, not I, If nobody cares for me". The state is sometimes mistaken to take that sort of remark at its face value.

The Scottish Select Committee also found that 20 per cent. of the young unemployed were suffering from some form of handicap such as illiteracy, a criminal record, a physical disability or a drug addiction. In those cases, simply chasing people will not get us far. When we assess the kind of reviews we want and the kind of objectives we want, we must accept that there is a possibility of conflict between the objectives. The European Convention on Human Rights is a constant balancing of objectives which have to be weighed against each other. For example, if one thinks about poverty traps, one has to weigh the good objective of encouraging people into work against the good objective of reducing costs. The things that need to be done to remove poverty traps are extremely expensive, especially the lengthening of tapers on housing benefit, which is one of the most urgent things that needs to be done. I am not arguing for indiscriminate spending but am arguing for an attempt, difficult though it may be, at sensible cost benefit analysis.

In talking about encouraging people into work, I must say that I think it necessary to allow an exemption for people who have to care for young children, especially for children under five. I do not think it is the state's business to intervene in anything where the judgments that are needed are so personal. The Social Security Select Committee on a recent visit to Wisconsin reported on the requirement that in Wisconsin people must seek work when their youngest child reaches 12 weeks old. It stated, We regard that 12 week requirement as potentially damaging for both mother and child. It could he argued that this requirement is also inefficient, in that by making the mother work outside the home, the State has to pay for child care (possibly expensive and possibly low quality)". It is not the state's business to teach people how to live; it is the state's business to help them to make their own choice effectively. If anything like that should ever come into force here, it would be deeply regretted. I am pleased to see the Minister nodding in sympathy at what I have said.

One of the matters that we on these Benches are determined about is, in the words of our previous manifesto, that we should encourage people to work without compulsion. That is a view that has been forcefully supported recently by the Scottish Select Committee, on the ground of employers' reluctance to have a conscript workforce, on the ground of efficiency and on the ground of common humanity. Those words "without compulsion" are our policy and they will remain our policy for so long as I have the privilege to speak for this party on this subject.

Concern is expressed in government circles about the problem of consent for social security taxation. Mr. Field in his Beveridge lecture observed that, the poor no longer have enough votes to win an election. But Mr. Field out of date if he thinks those who need to think about their right to social security are only the poor. One needs only to look at the history of income support for mortgages to see that that is not so. We are told that between the previous two elections 8 million people suffered a spell of unemployment. We all know that that could happen to any of us. That is the basic reason for taxpayers to consent to the social security system. They pay their taxes for the same reason they buy lottery tickets; namely, "It could be you".

Lord Haskel

My Lords, I was advised by my noble friend the Minister to listen carefully to the remarks made by noble Lords this evening because these contributions would help stretch our understanding of the complex and difficult issues which will challenge us as we develop our approach to welfare. As usual, my noble friend the Minister was not wrong and I thank noble Lords for their contributions this evening.

I shall try to respond to some of the points. I thank noble Lords for having given me some notice of what their points might comprise. The noble Lord, Lord Higgins, asked about the road shows. They are by invitation because they debate the need for welfare reform. However, the press will be present to report what goes on. Welfare reform will, of course, be subject to the widest consultation and will not be debated only at these various road shows. The noble Lord asked who pays. It is certainly not the Government. The Labour Party pays for some of them and some are sponsored.

Noble Lords asked about lone parents. This is not a Treasury driven matter. In the past lone parents have not been given the opportunity to leave benefit and move into work. The Government's strategy is not to leave lone parents on benefit but to address the barriers they face in moving into work. A key to helping lone parents into work is to provide practical help with job search, with building their confidence and with motivation, with developing their skills and with finding the right childcare. The Government are already providing that through our new deal for lone parents and our national childcare strategy. Some lone parents will choose not to take a job immediately, perhaps because they have a young child. However, these measures will allow those parents to return to work sooner, reducing the duration of benefit receipt and reducing the hardship associated with lengthy spells of benefit.

The noble Lord, Lord Higgins, also asked about heating payments to pensioners. Who is eligible? People receiving income support or income based jobseekers' allowance for at least one day in the week commencing 5th January 1998 and whose benefit includes a pensioner premium have received £50. People over state pension age (60 for women and 65 for men) receiving one of the many benefits during the week commencing 5th January will also receive a winter fuel payment. Those benefits are: attendance allowance; constant attendance allowance; disability living allowance; graduated retirement benefit; incapacity benefit; industrial death benefit; invalid care allowance; retirement pension; severe disablement allowance; unemployability supplement; war disablement pension; widow's benefit; war widow's pension. Those people, where there is only one eligible person in the household or that eligible person is of no fixed abode, will receive £20. Otherwise, each person will receive £10.

The Government want to have payments issued as quickly as possible. Payments of £50 to the 1½ million eligible pensioners receiving income support or income-based jobseeker's allowance have been made. The vast majority of payments to others will be made by the end of March.

The noble Lord also asked—

Lord Higgins

My Lords, I am extremely grateful to the noble Lord for giving way. Was the statement made by the Prime Minister, in the speech to which I referred, correct? That is to say, had all those payments been made at the time when he was speaking? In that context, what is the argument for the meetings not being public? I could not quite understand that.

Lord Haskel

My Lords, I do not have the Prime Minister's remarks in front of me so I would rather not comment on that. The position regarding the payments is as I have just said. The reason why the meetings are not public is that they are by invitation, to discuss the need for welfare reform. Those are discussions that take place as part of ordinary political activity.

The noble Lord also asked about pensions and the insurance rates. The measures in the July Budget are intended to ensure that the Government create and maintain the conditions for long-term investment and growth. They consider that that is the way to ensure that wealth is created to sustain pensions in the future and aid the companies that provide occupational schemes.

The noble Lord is quite right. John Denham did write to the Government Actuary asking him for advice on the effects changes to some of the factors might have had on the levels of the rebates. The Government Actuary concluded that in relation to the tax changes, in order for the rebates to continue to match the benefits forgone, an increase to all rebates is required. In the light of both that advice given by the Government Actuary and the impact of recent trends in the pensions industry on the resources available to the National Insurance Fund, my right honourable friend John Denham recently announced that. from April 1999—the first opportunity available—he proposed to increase age-related rebates for appropriate personal pensions and adjust the rebates for COMPS by replacing the current loading for expenses with the same as that contained within the rebate for the contracted out salary related schemes. Orders will be laid shortly and will be subject to debate in both Houses. That will give noble Lords an opportunity to debate the matter further.

The noble Earl, Lord Russell, spoke quite eloquently on a number of philosophical matters. He asked whether children living in poverty and the high number of workless are failures of the welfare state or failures of the economy. I am not sure which; one thing I am sure of is that they are in fact failures. That is why we are introducing a new deal for the unemployed and for the sick and disabled, and comprehensive spending reviews to examine every part of the social security system.

The noble Earl asked a similar question regarding the Government Actuary. I believe that the answer I gave to the noble Lord, Lord Higgins, covers his point.

If there is one clear message from today's debate, it is that people are not benefiting as they should from the unprecedented level of social security expenditure. Our task is to reform the system so that it is the engine that powers social policy, so that the money spent is used as a kind of investment—an investment in an active welfare system which seeks to influence people's behaviour and which encourages self-reliance where appropriate; an investment in customer focused service responding to people's needs.

We have made plain that welfare has a clearly defined role in supporting fully those who are unable to support themselves. The mark of an inclusive society is the extent to which people feel honour bound to pool their resources to help the needy. But we have also made clear that the importance of work, with its wage and non-wage values, is fundamental. The failure of welfare is in part due to the inability to distinguish between the needy and those who can support themselves. I am sure that today's debate has advanced our understanding of the tensions that arise when trying to place welfare in the context of a society that wants to move on from the past. I welcome the support that noble Lords have given to the general principles of the business in hand and commend the orders to the House.

On Question, Motion agreed to.

Lord Haskel

My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes before nine o'clock.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.47 to 8.50 p.m.]