Social Security Benefits: Means-testing (Hansard, 20 July 1998)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)
My Lords, I confess that I am somewhat baffled by the noble Lord's Question. Of course, my right honourable friend Mr. Frank Field always speaks for the Government, although there may be occasions when the thinking of the rest of us has not quite caught up with that of my right honourable friend.

§ Lord Higgins
My Lords, I thank the Minister for that courteous and somewhat ambiguous reply. Is it not extraordinary that, since the Minister for Welfare Reform gave his Jonathan Dimbleby LWT interview, his pensions Green Paper has been delayed yet again by the Chancellor and that last week the Chancellor himself pre-empted a major part of it by announcing changes in the national insurance pension scheme which must involve means-testing, something which the Government said they would not do? More important, is it not clear that, following the evasive answers given by Mr. Field in the interview, the Government have now completely reversed their declared policy of paying for increases in the health and education budgets by cuts in the social security budget? Is it not the case that all three budgets are now planned to increase, with very serious implications for the PSBR, for interest rates, for employment, for the exchange rate and for the economy generally?

§ Baroness Hollis of Heigham
My Lords, I think there were nine questions there; I shall try to deal with the two substantive ones. The first question the noble Lord raised was whether the changes on pensions announced by the Chancellor, repeated on Friday in the Statement by my right honourable friend Harriet Harman, represented a change in the national insurance pension system to a system that will be means-tested. No, that is not the case. The national insurance basic state pension remains, as our manifesto made clear, the basic building block of our pensions policy. However, we are saying that pensioners need a second pension. It is desirable that that second pension should be an occupational or personal pension, but pensioners would have needed to start building that many years earlier when they were young people. We have the problem now that the poorest pensioners, mainly women, did not have that opportunity to work. We are seeking to ensure that they receive an increase in the income support premium and that they are guaranteed access to it. That was the purpose of the Statement last week: to ensure that the poorest pensioners see an increase in their pensions of a minimum of £5 per week.
The noble Lord asked also whether that represented a U-turn on government policy and whether we were failing to cut social security expenditure and divert it to health and education as promised. Again, that is not true. If the Government look at their expenditure figures, in the last Parliament social security expenditure rose by 3.9 per cent. annually. This year and for the rest of this Parliament it will rise not by 3.9 per cent., but by 2 per cent. annually; in other words, the rate of increase that was exponential under the Conservatives has been capped under Labour. What is more, the percentage of social security expenditure is falling from 12 per cent. 577 to 11 per cent., falling also as a percentage of GDP. In relation to both questions asked by the noble Lord, he is incorrect.

§ Baroness Ludford
My Lords, another topic covered in Mr. Field's interview was benefits integrity in relation to, among other things, disability living allowance. Can the Minister confirm that in the Benefits Integrity Project, not a single case of fraud was found in relation to disability living allowance? Can she also give an assurance that the Government's action and rhetoric regarding benefits fraud will be matched by similar zeal in regard to tax fraud so that the poor do not feel that they are pursued while the rich are let off?

§ Baroness Hollis of Heigham
My Lords, the noble Baroness is broadly right about the BIP. The Benefits Integrity Project is designed to ensure that the right benefit goes to the right people. We know that with disability, fortunately, people sometimes get better and, unfortunately, sometimes get worse. The benefit therefore needs to be checked. We found that around 20 per cent. of all awards were incorrect; in other words, people got better and got worse.
The noble Baroness is right to say that virtually no deliberate fraud was found. Only 40 cases out of 95,000 were referred for consideration for possible prosecution. However, disability is not an either/or benefit; that is why we need continually to check entitlement. In relation to tax law, I share the view expressed by the noble Baroness that it is unreasonable for the state not to pursue those who evade, avoid or in any sense behave illegally towards their tax responsibilities while at the same time the state properly takes an interest in those who avoid, or improperly draw, social security benefits.

§ Lord Skelmersdale
My Lords, perhaps I may turn to pensions. At the moment there is the opportunity for the poorer pensioner to top up a pension income by bringing it up to income support levels, but few people do that. Now that the level for pensioners is to be increased, has the department made any estimate of what the take-up is likely to be?

§ Baroness Hollis of Heigham
My Lords, yes. Around 2.5 million pensioners are entitled to income support. The noble Lord is correct in that only 1.5 million take that up and 1 million—just over 40 per cent.—fail to claim the money that they should. As a result, on average they go without £17 a week. We know from our pilot scheme that we cannot wait for pensioners to initiate a take-up campaign; we must take the money to them. We are doing that primarily through data matching—for example, piggy-backing on the fact that they are often claiming housing or council tax benefit—and through personal advisers and the work of voluntary agencies. At the moment there is around 60 per cent. cash compliance. We hope to achieve 85 to 90 per cent. and that will be a reasonable success measure. Of course, if we can achieve higher than that, we shall be delighted.