HL Deb 13 January 1998 vol 584 cc934-8

2.58 p.m.

Earl Russell asked Her Majesty's Government:

Whether social security spending is more likely to be reduced by measures taken inside the Department of Social Security than by measures taken outside it.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, it is true that, as the noble Earl said, much DSS expenditure is demand-led, but that does not mean that government overall have no control over the level of that spending. This Government intend to focus their policies on reducing the need for social security, so that social security no longer pays the bill for social and economic failure. That is why we are investing in the New Deals for the unemployed, lone parents and sick and disabled people, to help them to make the most of their abilities. For such initiatives to be successful—I know that the noble Earl has previously been concerned about the point—they require co-ordinated initiatives across Government; in other words, joined-up policy, which we shall seek to deliver.

Earl Russell

My Lords, I thank the Minister for what she said about meeting needs. Does she agree that as governments cannot substantially reduce the number of people with disabilities, nor the rate of relationship breakdown, and as no government are ever likely to set out to reduce the expectation of life, the only way in which governments can significantly reduce the need for social security is by increasing the amount of employment, which is not the responsibility of the Department of Social Security and which cannot be achieved by reforming the welfare state?

Dealing specifically with welfare-to-work, am I right in believing that entitlement lasts for only six months? If at the end of that period the person cannot find a job, does he recover the right to benefit, does he get more welfare-to-work or is he handed over to the Salvation Army?

Baroness Hollis of Heigham

My Lords, the noble Earl makes several points and I shall do my best to answer them. He said that the Government could not affect the need for pensions, the level of disability or the relationship background. He is absolutely right, but that does not mean that the Government do not have the ability to help people meet those issues. For example, although pensioners are living longer, over a million of them fail to claim the income support to which they are entitled. We can help them to do that. We also know that inequality among pensioners is widening, which is why we seek to help more future pensioners go on to a new secure funded second pension.

Equally, it is true that society has become more sensitive to disability issues. But it is also the case that the number of people who claim incapacity benefit has trebled since 1979, not so much because people have gone on to benefit but because they are not coming off benefit since they do not have the opportunity to return to the labour market as they would wish. They can be helped in that regard by welfare-to-work.

Similarly, in the case of relationship breakdowns we can help by making the Child Support Agency deliver financial support and ensuring that society produces the child care that lone parents need. It is not black and white. We can take initiatives to ensure that marginalised groups return to the mainstream of society. I agree with the noble Earl that all these initiatives depend on the Chancellor of the Exchequer and the country delivering a sound and prosperous economy. We shall work to those ends.

Lord Higgins

My Lords, referring to external reductions in social security spending mentioned in the original Question, can the Minister clarify the position with regard to the so-called affluence test which received widespread publicity earlier in the week? If it was not simply a sound bite on the part of the Secretary of State, can the Minister tell the House what level of income the Government regard as "affluent"? Will that be dealt with in the Green Paper for which we have been waiting for a very long time? When does the Minister expect that document to be published?

Noble Lords

Short answer!

Baroness Hollis of Heigham

My Lords, a call has been made for a short answer. It would help not to have five questions to answer. However, I shall do my best. What we seek to do by affluence testing is to resolve the problem, which I am sure the whole House recognises, of how to target benefits without getting into some of the traps associated with means testing. I am sure that all noble Lords recognise that that is a problem. Affluence testing will allow us to reduce benefits to those who already have high incomes and are well able to support themselves. For example, it could be based upon an individual's tax position.

Lord Morris of Manchester

My Lords, in a recent interview on the Government's review of disability benefits, the Prime Minister spoke of fraud in the system now totalling £5 billion. How has that figure been computed? Is it based upon evidence from the DSS or a guestimate by the Treasury?

Baroness Hollis of Heigham

My Lords, I believe that the £5 billion was a combination of suspected fraud and possible confirmed fraud in respect of some of the earlier benefits, together with error. That figure emerged from a project undertaken by the previous government. At the moment we are in the middle of a benefit integrity project which has already received about 30,000 replies from disabled people. Thus far we have seen no cases of confirmed fraud. However, we have discovered that in about 20 per cent. of cases there are errors in payment—sometimes too much and sometimes too little. There is a problem to be addressed, but I am happy to confirm that the benefit integrity project has revealed no cases of confirmed fraud.

Lord Garel-Jones

My Lords, has the Minister's department been able to locate a single lady in the United Kingdom whose income is sufficiently high to generate the savings in benefit suggested by the Secretary of State? Can the Minister explain to the House the difference between affluence testing and means testing?

Baroness Hollis of Heigham

My Lords, the difference between affluence testing and means testing could be the difference between means testing and taxation. I am sure that noble Lords understand the difference between the two. As to maternity payments, your Lordships will be aware that there are one or two high flyers in this country who would be entitled, given the reported levels of earnings and salaries, to draw that level of maternity benefit. But there is a problem. Maternity benefit is paid in conjunction with earnings. However, insurance contributions are not concomitant with earnings. That was the difficulty upon which the Secretary of State quite properly focused.

Baroness Ludford

My Lords, can the Minister explain why the Government do not believe that the way to deal with affluent people receiving benefits is to raise the top rate of tax since at the moment people who earn £1 million a year pay the same top rate of tax as those who earn £27,000 to £30,000 a year?

Baroness Hollis of Heigham

My Lords, the Government are determined to abide by the manifesto commitments on which they were elected. One of those commitments was not to raise the personal levels of income tax.

Baroness Turner of Camden

My Lords, does my noble friend agree that the important point is not to save money in the social security budget but to ensure that people who really need money—in particular pensioners—get it when they require it? Can she explain what is being done in that connection?

Baroness Hollis of Heigham

My Lords, my noble friend is absolutely right to draw attention to the particular problems of pensioners. We know that, while on average pensioners have grown more prosperous over the past decade, the wealth of the top 20 per cent. has grown twice as much proportionately as that of the bottom 20 per cent. That is why we need to extend access to a secure, funded flexible pension to all pensioners, including those who may be carers and unable to work in the labour market. My noble friend is absolutely right. If we are to address the pensioner poverty of the future, we must ensure that all pensioners have access to a secure old age.

Lord Marlesford

My Lords, does the Minister realise that some of us on this side of the House believe that the Government are taking the right line in attempting to focus the limited available resources by way of benefit on those who need help? Indeed, some of us would regard it as immoral to give benefit to people who do not need it when that means not giving adequate benefit to those who do. Does the Minister agree that the following are two small steps in the right direct: first, that child benefit should be taxed; and, secondly, to end the nonsense whereby all pensioners in many cities, particularly London, have free public transport, and to do that by deeming it to be a taxable benefit?

Baroness Hollis of Heigham

My Lords, such questions as these land on the Minister's table and are continually under review.

Earl Russell

My Lords, I am sure that the Minister is aware that publicity from government sources has drawn attention to the fact that disability living allowance in some cases goes to people on above average income. Will the Minister bear in mind that without disability living allowance many of these people would never have earned the income, and that disabled persons and the Exchequer would equally be the losers?

Baroness Hollis of Heigham

My Lords, I well take that point. It was the previous government who introduced DLA, with our full support. I am well aware that DLA has transformed the lives and opportunities of many disabled people. I am sure the House agrees that we must ensure that the money goes to those who most need it in order that they can enter the mainstream.

Lord Stoddart of Swindon

My Lords, is my noble friend aware that many of the 9 million pensioners have been extremely concerned by recent newspaper reports that the state pension, which they believe they have paid for during their working lives, will be removed? Can the Minister give an absolute assurance—I hope that she will be able to—that existing pensioners in particular will not be affluence tested and will continue to draw the state pension, dynamised each year by the cost of living, for which they believe they have paid?

Baroness Hollis of Heigham

My Lords, yes, that was our manifesto commitment. We shall continue to be committed to it.