Welfare Reform and Pensions Bill (Hansard, 20 July 1999)

HL Deb 20 July 1999 vol 604 cc816-85 816

§ 3.31 p.m.

§ The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

§ Moved, That the House do now again resolve itself into Committee.—(Baroness Hollis of Heigham.)

§ On Question, Motion agreed to.

§ House in Committee accordingly.

§ [The CHAIRMAN OF COMMITTEES in the Chair.]

§ Clause 60 [Abolition of severe disablement allowance]:

§ Lord Rix moved Amendment No. 124B:

§ Page 68, line 18, at end insert— ("() Those persons entitled to severe disablement allowance at the time this provision comes into force shall receive incapacity benefit in place of that allowance, and shall continue to receive incapacity benefit subject to the normal conditions other than contribution conditions.")

§ The noble Lord said: I am extremely grateful to the noble Baroness, Lady Miller of Hendon, for the fact that the mass exodus after Questions took place at the beginning of her Third Reading speech on the Genetically Modified Crops Bill rather than my speech on the first amendment.

§ The first time that I ever suffered the walking out of an audience was 56 years ago when I was with Sir Donald Wolfit on an ENSA tour of "Twelfth Night", which was singularly inappropriate at the time for the troops. We played in front of the first American soldiers over here in Tidworth. On the first night, no sooner had Orsino, the noble Duke of Illyria, spoken the opening lines, If music be the food of love, play on", than there was a noisy mass exodus by the American troops from the body of the hall. Only the officers were left in the front row.

817

§ Sir Donald Wolfit was deeply hurt by this and complained to the commanding officer. The following night, the house was again packed when we started the show. We played to utter silence—no laughs, no applause—from beginning to end. During the interval we wanted to know how the audience had been kept quiet and in the their place. We discovered that the military police were parading up and down the aisles of the theatre with revolvers drawn out of their holsters and the hammers cocked. I do not recommend that to the Whips in your Lordships' House, but it is food for thought.

§ I am well aware that Amendment No. 124B lacks subtlety. To achieve the result for which I am arguing would require rather more complex provisions, but at least what I want to do is clear. I can live with the endorsement on the Minister's brief, "technically deficient"—or something stronger—and the admonition that we shall shortly be debating whether Clause 60 should stand part of the Bill.

§ I am seeking to transfer those receiving severe disablement allowance to incapacity benefit when SDA is abolished. Quite a lot of those concerned will have been receiving non-contributory invalidity pension or its SDA successor since well before the age of 20 or 25, and if early recognition of incapacity is to be the prime badge of respectability under the new dispensation, they wear that badge and have worn it for many, many years. It seems unfair that they should lose out on the beneficial change that those with a shorter benefit history enjoy.

§ For those who secured SDA later in life as a result of time spent looking for work, bringing up a family, doing voluntary work overseas, doing very low paid work or some other reason that prevented them from acquiring a contribution record, I would argue that there is also a good reason for not perpetuating a dead benefit, but instead making a once-for-all transfer to the new all-purpose benefit.

§ We are not talking about people pretending to be sick or disabled and unable to work. We are talking about people who have satisfied and continue to satisfy the adjudicating authorities that they are incapable of work. For many, more incapacity benefit will mean less income support, but I have never followed the logic of the argument that anything that reduces income support payments is not worth doing. With that argument, we would have nothing but means-tested benefits and we would retreat 93 years in the history of welfare reform. For some, including some married women, there will be a substantial net gain; and I do not share the view of sick and disabled married women as at best reluctant workers who ought to rely on the earnings of their wealthy husbands. As far as I am aware, the prevalence rate for wealthy husbands among the population of disabled married women is startlingly low.

818

§ The amendment seems to provide a neat way of rounding off an important chapter in our welfare history and I hope that it might find favour with a government anxious to tidy up and move on. I beg to move.

§ Lord Ashley of Stoke
I oppose the proposal that Clause 60 stand part of the Bill.

§ Lord Hunt of Kings Heath
I can tell my noble friend that we are not debating that at the moment.

Lord Campbell of Croy
Perhaps I could speak on the amendment. It refers to, Those persons entitled to severe disablement allowance". I understand that Clause 60 will abolish severe disablement allowance, but only for new claimants. I hope that the Minister will be able to confirm that those who already receive it will continue to do so. I understand that the amendment applies to people who are entitled to SDA but have not yet claimed it.

§ Baroness Hollis of Heigham
I do not know whether the noble Lord, Lord Campbell of Croy, understands the intention of the amendment. My noble friend Lord Rix proposes that the entire current caseload of SDA should move over to IB. The Government's proposals are for those under the age of 20.

Lord Campbell of Croy
I was about to reach that point. The Government's proposal in Clause 60 is that SDA should disappear for new claimants. The noble Lord, Lord Rix, is suggesting a transfer. I understand that, but I wanted to be sure that I understood the Government's proposals. I find the amendment commendable and if it is accepted there would be a transfer.
The proposals would leave severely disabled people aged 25 and over who cannot work in a much worse position. Abolishing the allowance would have particularly bad effects on women, because 60 per cent or more of those who are eligible for it are women and many of them have not earned enough or been able to make sufficient national insurance contributions to be able to do without it and receive other benefits. I would be interested to hear what the Minister has to say about the amendment, which I support in principle.

§ Baroness Pitkeathley
I should like to make a specific point on the amendment. It is important to see the issue in the round. The changes proposed in the Bill must be viewed as part of the package of Government measures. The noble Lord, Lord Campbell of Croy, put particular emphasis on women. We must take into account all the other benefits for women that are being introduced. No doubt my noble friend the Minister will want to elaborate on them. Specifically, can the Minister assure us about the rules on IB which have been modified to include protection for former carers on invalid care allowance who are unable to pay 819 contributions in the two tax years before their claim? Some of those will be affected by the abolition of SDA. We ask for the Minister's assurance on that.

§ Lord Higgins
We shall shortly discuss the question of whether the severe disablement allowance should be abolished when we reach the clause stand part debate. As I understand it, what the noble Lord is proposing in his amendment is that, in the same way as severe disablement allowance is a non-means-tested, non-contributory benefit, the same procedure should apply as for those who are entitled to it at the moment and they should receive incapacity benefit on the same basis as they receive severe disablement allowance at present. This is an ingenious amendment and we look forward with interest to the Minister's reply.

§ 3.45 p.m.

§ Baroness Hollis of Heigham
The implication of the noble Lord's amendment, as I tried to suggest when the noble Lord, Lord Campbell of Croy, allowed me to intervene, is that all those people currently claiming and receiving SDA—and I presume by implication all those in the future; it would otherwise be unfair—should in fact be eligible for IB. In other words, the amendment would scrap the non-contributory SDA and replace it with a contributory IB at much higher cost.
There are three main reasons behind our wish to reform SDA. I hope that noble Lords will forgive me if I repeat myself on the clause stand part debate. Perhaps it would have been sensible to group these matters.
The first reason is that SDA is failing to provide people disabled early in life with the full financial support that they need. SDA was designed for those who could not build up a contributions record for what became incapacity benefit or the old invalidity benefit, so there were always two parallel modes of support: the non-contributory one (for those unable to support themselves but who had no access to the labour market to build up a contributions record) and the contributory one. For those who fell through even that safety net, there was of course always income support. SDA is failing to help those people adequately. It is not giving them the financial support they need.
Secondly, SDA is certainly not helping those in greatest need. The rate of SDA (which was originally designed to be 60 per cent of IB, or the old IVB) means that 70 per cent of recipients have to claim income support on top.
Thirdly, in 1974 SDA was originality designed—as I say, the equivalent was the non-contributory invalidity pension—for those who were out of the labour market and who could never build up a contributions record. It was never designed to cover married women. That was made very clear. The 1974 document states: The benefit will not be designed to cover married women living with or maintained by their husbands". Married women were included in 1977. This point relates to the questions asked by the noble Lords, Lord Campbell of Croy and Lord Higgins, about the position of women. Since married women were included in what became SDA—they were never intended to be 820 included but that happened a few years later—there have been significant changes in the situation of women which the benefit has not recognised.
The first was that one year later the married women's reduced stamp was abolished. That reduced stamp had disqualified even those married women in work from building up an entitlement to contributory benefits. Thereafter, newly married women were required, if they were in work, to provide for themselves through paying the full stamp.
Secondly, in 1992 changes were made to the lower rate of disability living allowances. We have also this year had the changes to the lower earnings limit which, together with the minimum wage, has brought a further quarter of a million women into the contributory system. There are now as many women in work as men. Seven out of 10 married women work; eight out of 10 married men work. In terms of opportunities in the labour market, there are at least as many opportunities for women as for men.
The number of women who are acquiring a right to incapacity benefit in their own right has increased from 84,000 just 20 years ago to over half a million now. SDA was originally designed in 1974 for those who could never provide for themselves because their disability had for the most part occurred earlier in life. Married women were included in 1997.
That situation seems to have changed out of all recognition. The support that we give through SDA (at 60 per cent of IB rates) for those disabled from an early age is no longer adequate because it has to be regularly topped up by income support. The situation for married women, who are the other cohort going into SDA, has changed, with the abolition of the reduced married women's stamp, the introduction of lower levels of DLA, the increase in the number of those qualifying in their own right for incapacity benefit through the minimum wage, and the changes to the lower earnings limit.
Given that, I think that SDA no longer fulfils the purpose that it was designed to fulfil in the 1970s. Our reforms restore the principles behind it and focus on the priority—young people. I believe that women are as competent as men to earn their own rights to contributory benefits. However, we now need to protect those disabled from an early age, whether men or women, who have had no access to the labour market. Therefore, our reforms phase out SDA and allow young people disabled early in life to become entitled to IB, thus providing a significantly increased benefit rate for this group. In future, they will get IB at the same rate as people who qualify through contributory conditions and, as a result, they will gain by up to £26.40 a week. People aged under 20 who are receiving SDA when the changes are introduced will also gain as they will receive the long-term rate of IB a year later. Young people will gain substantially from our reforms, and I am glad that this has been welcomed.
However, the amendment moved by the noble Lord, Lord Rix, would result in all SDA recipients being transferred on to IB irrespective of age. Unlike young disabled people, many older people now receiving SDA, 821 including women, will have become disabled relatively late in life and they will have had the opportunity to work, the opportunity to contribute towards benefits, and the opportunity to insure themselves against those contingencies. In my view, awarding them all IB without requiring them to satisfy the contributory conditions is a serious breach of the contributory principle and is deeply unfair to those who have provided for themselves through the contributory condition and who are now in similar circumstances.
I should like to give the assurance for which I was asked by the noble Lord, Lord Campbell of Croy, that no one receiving SDA at the point of change will be worse off as a result of our reforms. We shall ensure that existing SDA recipients receive the benefit on the same basis as now. Of course, income support, HB and CTB will all continue to be available.
It would cost over £250 million to transfer all existing SDA cases on to IB and that is a cost which I do not believe we can justify. It would cost many more millions of pounds to transfer all future SDA cases on to IB. I believe that the time has come now to discriminate within the caseload of future claimants and to say that those who have an opportunity, as women now do in the same way as men, to build up a contributions record for themselves should come within the IB framework. If they are unable to do so, they can of course be eligible—this did not exist in 1977—for income support with a disability premium, if they have a financial need but no contributions record.

§ Earl Russell
I should be grateful if the Minister could clarify one figure she has just given us. She referred to an extra cost of £250 million. Is that over and above the present figure or is it the figure envisaged once this Bill has become law?

§ Baroness Hollis of Heigham
It is the additional cost—if we accepted the amendment moved by the noble Lord, Lord Rix—of moving the existing caseload fully over to IB.
As I say, we believe it is right to focus help on those who cannot come within the contributory system and who cannot have access to work by virtue of the fact that their disability was incurred before they were of working age. Those are the groups we feel we should be helping. We believe that other people—women as well as men, equally—who have access to the labour market and who can build up contributions should be expected to do so and that the right path for them is IB. If IB is not appropriate—possibly because of their responsibility as a lone parent for caring for children—they are eligible for income support with a disability premium which can be more generous than IB.

§ Lord Higgins
On the point just made by the noble Baroness, and following the point made by the noble Earl, does the £250 million figure include any adjustment for income support?

§ Baroness Hollis of Heigham
I am not sure that it does. I think it is a gross figure that we would need to net down for income support.
822 My noble friend Lady Pitkeathley asked about carers. We recognise that people with caring responsibilities—people receiving ICA—might be unable to meet the new requirement, so carers who have been receiving ICA can use the credits that ICA brings to qualify for IB provided they have paid contributions at some point under the existing rules. Special provision will be made so that they can continue to qualify on this basis.
I hope the noble Lord, Lord Rix, will agree that the Government are focusing on meeting the financial needs of, and offering financial security to, those younger people who, because their disability was incurred at an early age, have never had access to the labour market. For the rest of the SDA cohort, we believe that the world has changed since 1974 when the non contributory invalidity benefit was introduced. We believe that, with all the changes I have enunciated, women are able to build up their own records. Therefore, while no one on the existing SDA will be affected, in future we expect them either to come through the IB network or, alternatively, in appropriate circumstances, through income support with disability premium, which is for the most part even more generous than IB, let alone IS itself. In the light of that, I hope that the noble Lord, Lord Rix, will feel able to withdraw the amendment.

§ Lord Rix
I am most grateful to the Minister for her very detailed response, which I shall read in tomorrow's Hansard. I am grateful to noble Lords who have asked questions or have supported me in this amendment. I should be very glad to receive an accurate net figure of the costs involved. I think that the same would apply to the noble Lord, Lord Higgins, and probably to the noble Lord, Lord Campbell of Croy. However, in view of the impending clause stand part debate on Clause 60, I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ On Question, Whether Clause 60 shall stand part of the Bill?

§ Lord Ashley of Stoke
It is a great shame that this debate has now become muddled and muddied. In some cases answers have been given by the Minister to points not yet raised, although we are grateful to her for the trouble she has taken in trying to respond.
The problem with Clause 60 is that it will abolish SDA, which is now available to all who are, or become, too incapacitated to work but are not entitled to incapacity benefit. It has been estimated that some 16,000 people a year—10,000 of them women—will be affected. There is no doubt whatever that severe disability allowance has been one of our most successful and innovative benefits. It stems from the marvellous work of Megan du Boisson, who initiated the housewives' non contributory benefit. That was the basis for this splendid benefit. Above all, it is a safety net. It recognises needs and human rights and human dignity and it provides an income without contributions to all those disabled people who are unable to work for a whole variety of reasons and have not been able to participate in the larger national scheme.
823 A major group of SDA beneficiaries are those whose disability has always prevented them from working. I warmly welcome the Government's proposals to give those people disabled at birth or in childhood the higher rate of incapacity benefit and to extend the age limit to 24. I commend the Government on that. But many would have benefited from the SDA had it been continued. Under the Government's proposals they will get nothing in the future. The safety net will be whisked away. After the age of 24, no disabled person will receive the non-means tested benefit for incapacity unless he fulfils the contributory conditions. Other parts of the Bill now make that even more difficult.
This clause puts a black ball over several vulnerable groups of people. Who are they? Who are these losers? Who are the people who looked so hopefully to a newly elected Government supported by the massed ranks of women MPs in Parliament? As we have already heard from some speakers, the vast majority of potential SDA recipients are women. True to disgraceful tradition and history, women will suffer most—and this under a Government supported in another place by a record number of women.
Women who look after children and become disabled will suffer. There is no doubt about that. They may have worked in the past. But under the proposed new rules only if they have worked and paid national insurance contributions in one of the previous two years will they receive incapacity benefit. Frequently, the women will have worked, or be working, at low rates of pay. That is the real problem. Women make up 80 per cent of the 2.5 million employees who earn below the lower earning limit. Therefore, they cannot build a contribution record. Clearly, SDA is crucial to those on low pay. Why are they suffering?
Carers are another major group. I am glad that the noble Baroness, Lady Pitkeathley, has already taken part in the debate and has spoken so cogently, as she always does. Carers will suffer under these proposals.

§ Baroness Hollis of Heigham
Perhaps I may—

§ Lord Ashley of Stoke
My noble friend can reply to me in a moment. There is a welcome exemption for some carers who claim ICA. But my noble friend knows quite well that many women do not receive ICA. They are the people who will suffer. They are the last people whom this Government should be hitting.
Another major group that will lose out are severely disabled people who have an interrupted employment pattern and hence cannot meet the new contribution conditions for incapacity benefit. At present, all these vulnerable people can fall back on SDA. In future, they will be left without an income in their own right. The Government claim that people receiving SDA can top it up with income support, so why should not everyone be put through the means test as many will end up on the same level of benefit? In effect, the Government are saying that women who have been in low paid jobs or who have been carers can have their husband or their partner provide for them. That is what the Government's policy will generally mean. There is no IS if the family income is adequate and, if the husband or partner works, 824 it generally will be. We are moving forward to an era where individual human rights are more recognised, but the Government are moving backwards towards a dependency status for disabled women. I cannot believe that my noble friend can justify that before the Committee.
This Committee stage presents us with the opportunity to explain our deep reservations. I am glad that my noble friend Lady Hollis is listening and will respond to the debate. We all respect and admire her, but the Government's policy is not infallible; nor is it set in stone. It needs to be responsive to the genuine problems of disabled people and to the views widely held in this House.
I do not propose to divide the Committee on this occasion as I want the Government to consider what has been said on all sides and to think again. But, as with earlier amendments, I shall table the same amendments at Report stage. If the Government are then unable to respond satisfactorily, I propose to divide the House.

§ 4 p.m.

§ Lord Morris of Manchester
I am grateful to the noble Lord, Lord Higgins, and the noble Earl, Lord Russell, for making it possible for me to speak this early in the debate. They are aware that I am hosting this afternoon a reception in the House of Commons to mark the 25th anniversary of the Crossroads Care Attendant Scheme, which some 400 Members of Parliament and Peers are expected to attend. My noble friend Lady Hollis, with her customary understanding, also appreciates my difficulty of timing. If I have to leave the Chamber before the debate concludes I shall, of course, return as soon as possible.
When official rhetoric about it was in full flood, the boldest claim for this Bill was that, more than 50 years on, it revised and modernised Beveridge. But in truth, if Clause 60 remains in the Bill, we shall see a reversion to one of the worst features of Beveridge; namely, the denial to disabled married women, among others, of any entitlement to an income support benefit in their own right.
The fact is that Beveridge was revised and modernised by an historic decision of the last Labour government to provide a non-contributory income support benefit as of right for people who, because of severe disability, had never been able to work and pay national insurance contributions. Before that decision they were non-people in terms of statutory income support and it was the depth of public feeling about this—as my noble friend Lord Ashley recalled—that led the late Megan du Boisson and Befit Thornbury to found the Disablement Income Group in the 1960s.
In a letter, Sir Peter Large, who was DIG's parliamentary spokesman for many years, tells me today: Berit Thornbury is as appalled as I am by the Government's proposal in Clause 60 to abolish the Severe Disablement Allowance (SDA), which now incorporates the Housewives' Non-Contributory Invalidity Pension you introduced in 1977 when you were Minister for Disabled People". 825 He goes on to recall that prior to that date, if they had insufficient income to pay for help, husbands had to give up work to look after their disabled wives and any children they had. He predicts this will happen again if Clause 60 stays in the Bill—that a great many people will be forced from work on to welfare—and he adds: I had thought the Government's aim was to provide work for those who can and security for those who cannot. You and I know what a financial disaster an accident or crippling disease can be for a family. Abolishing SDA will mean that the married woman and her husband and any children they have are reduced to poverty before the welfare state will help them. It is a weird and cruel 'reform' that turns the clock back to 1977 and consigns disabled married women once again to being nonentities in the social security system". Thus Sir Peter Large sees Clause 60 not as reform of Beveridge but a return to one of the ugliest features of the system that his report informed. I have seen no more withering criticism of this clause.
My noble friend Lady Hollis has spoken of those who will benefit from the changes this Bill proposes, as I too have done in previous debates. More especially I welcomed the help envisaged for 20 to 24 year-olds in full-time education. But what of the losers? Some 30 per cent of SDA claimants who are not eligible for income support will be the main losers. They include every severely disabled person whose partner works on average more than 24 hours a week.
If their partners work fewer than 24 hours, the first £15 of income will be disregarded. Any earnings above £15 will be deducted pound for pound. Also ineligible are severely disabled people if they and their partners have savings of more than £8,000. Anton Obholzer of the Citizens Advice Bureaux has been most helpful in documenting the effects of Clause 60 by reference to the cases of individual disabled people known to the CAB. I want briefly to mention just two.
A London bureau reports the case of a married woman suffering from Guillan Barrie Syndrome, multiple sclerosis and epilepsy. She is a wheelchair user and now receives £52.70 a week in severe disablement allowance. Her husband works 40 hours a week. She will thus not be entitled to income support when she loses her SDA. Nor, it appears, will she be able to claim earnings replacement benefit in her own right.
The second case, reported by a bureau in Kent, is that of a man in his early 40s who was made redundant after working and paying national insurance contributions since leaving school. To gain better qualifications he went to university for three years, took a degree and got a job. Tragically, before he could take up his appointment, he suffered severe head injuries in an accident. His years at university mean that he does not have a recent record of NI contributions. So under the proposals in the Bill he will be ineligible for incapacity benefit. Nor will he qualify for SDA because of his wife's hours of work. The CAB comments: The Government have stated that they want disabled people to lead a fulfilling life with dignity. The CAB believes that abolishing SDA moves away from rather than towards this goal". 826 My right honourable friend Alistair Darling, Secretary of State for Social Security, said in his "moral crusade" speech at Newham two days ago: Failing to embrace radical reform would let down people who look to Labour to represent their needs". But headlong retreat from the radical reform that created a non-contributory income benefit as of right for severely disabled housewives in the 1970s will be the consequence of keeping Clause 60 in this Bill.
What kind of radical reform is it that inflicts gratuitous and unmerited further hardship in the very sad cases drawn to my attention by the CAB? And what kind of moral crusade is it that hurts them at a time when so many more fortunate people in society have never had it so good?
I support the deletion from the Bill of Clause 60.

§ Lord Higgins
Perhaps I may intervene at this stage. It is appropriate to defer to the noble Lord, Lord Ashley, whose name appears at the top of the list of those noble Lords who oppose Clause 60 stand part, and also the noble Lord, Lord Morris, who, for the reasons he explained, will not be able to be here later in our proceedings today.
The effect of Clause 60 is to abolish the severe disablement allowance which is a non-means-tested and non-contributory benefit payable to people who are unable to work due to sickness or disability but who do not have the contributions necessary to claim incapacity benefit. Neither of the noble Lords to whom I have just referred is given to hyperbole, but when they use words like "disgraceful" or "weird and cruel reform" it is right that, given their record over the years in defending the interests of disabled people, we should take account of their views. However, even if that were not so, we on these Benches believe that what the Government propose here is a serious error of judgment. Indeed, it goes together with the two previous clauses which were debated very late at night the other day which restrict incapacity benefit to those who have made only recent, not long term, contributions and those who have not made their own pension provision.
It is difficult to avoid the conclusion that all three of these clauses are driven by the desire to reduce expenditure on social security. It is well known that both before and after the election the Prime Minister pointed out very clearly that it was the intention of the Government to reduce expenditure on social security. They have totally failed to do so. That expenditure is scheduled to rise by some £35 billion over the next three years.
The noble Baroness and the noble Lords who have also spoken in the debate have constantly stressed that it was only the intention to reduce the proportion spent on social security. That did not appear in the speeches made before the election and subsequently by the Prime Minister. But it is difficult to avoid the conclusion that these three clauses are effectively cost saving exercises. In reply, perhaps the Minister can tell us how much is expected to be saved from the social security bill if Clause 60 remains.
827 I understand from the figures quoted—no doubt the Minister can confirm them—that about 16,000 people a year, 10,000 of whom will be women, will be excluded from benefit as a result of the abolition of SDA. The noble Lord, Lord Morris, gave a number of case examples provided by the CAB of the kind of people who will lose out. It will have a particularly harsh impact on severely disabled women because 61 per cent of SDA recipients are women; and that rises to 70 per cent for older women. A number of other groups will lose severely as a result of the proposed change. Instead of entitlement as at present to a non-means-tested benefit, they will be pushed on to a means-tested benefit. This has been a constant theme of the Government since they came to office, and certainly so far as concerns this Bill. There is a move more and more towards means-tested benefit. This clause is another move in that direction.
The proposals are opposed by a number of outside bodies which are concerned about the impact that they will have. I refer to MIND, MENCAP, the Disabled Benefits Consortium, the Disability Alliance, and so on. Such a change is not in line with the broad thrust of the way in which society is developing. it seems to us a mistake. I find the arguments put forward by the Minister unconvincing.
The Government may argue that these people can end up on income support. But we all know the problems of that. We have stressed a number of times that if an individual has capital of £3,000—it is a small amount—his benefits will be reduced; and they will be eliminated if he has capital of £6,000. So we do not consider that a good argument.
Alternatively, the Government may argue that such benefit may go to households which already have adequate resources. That does not seem a reasonable argument against the background of the people who are at present entitled to severe disablement allowance.
The argument is put forward that most women now go out to work; they will be eligible for IB instead. That does not prevent the people whom I have listed, on the scale which I have enumerated, from losing out as a result of the clause.
We believe that it is a bad clause. The noble Lord, Lord Ashley, is right to stress that it should not be in the Bill. It is a view that we share.

§ 4.15 p.m.

§ Earl Russell
We on these Benches support the Motion of the noble Lord, Lord Ashley of Stoke, for deletion of this clause. The Minister precisely and correctly said that severe disablement allowance was a safety net. Those who propose the removal of safety nets are either optimists or sadists. The Minister is an optimist. I like optimists, but I do not always believe what they tell me.
I shall not speculate into which of those categories the Secretary of States falls. However, I confess that I found the Secretary of State's Newham speech in this context just a little curious. There seemed a painful disjunction between the Secretary of State's rhetoric and the measures he set out to defend. He produced, as 828 government Ministers always do, a great deal of rhetoric about the creation of opportunity and getting people into work. I know that some disabled people can do all sorts of things that people would not have expected. But I do not think that the number of people on severe disablement allowance who will go into regular work is likely to be statistically significant. I shall be glad for those who do, but I doubt whether it is a principal motive of the clause.
I do not understand what opportunity is being created. especially since, as I understand it, the savings—I join with the noble Lord, Lord Higgins, in wanting to know the figure—are being ploughed back into the Treasury. The Secretary of State said a great deal about children growing up in poverty. Again, I do not see what help is given to children growing up in poverty by cutting severe disablement allowance. I cannot help suspecting that the Secretary of State is crusading up the wrong tree.
I turn to the Minister's optimism. We have here the same debate as we had between the Minister and her noble friend Lady Turner of Camden on the bereavement allowance. I am glad to see the Minister nod. I understand perfectly well the sort of pride which the Minister brings into her belief in equality. It does her a great deal of credit. But I also agree with the noble Baroness, Lady Turner of Camden, that the Minister overrates the extent to which the world has changed. She believes that the degree of equality between the two genders is greater than yet it is. I have occasionally expressed in particularly sanguine moments similar optimism in political debates inside my own party, and a great many women in the party, with very good experience behind them, have told me that it is not true yet. They convince me that that is so.
The Minister might also bear this point in mind. I regret to say that she very easily thinks in the category of "they". That is a deceptive category. People are not "they". They are a miscellaneous and utterly different collection of people. That is truer in this context than in almost any other. When we consider the use that women make of the opportunities put in front of them—and I think that men equally will make use of the choices that will be put in front of them as the pattern of division of work between the genders shifts—some seize opportunities with both hands, and some have a preference to remain the traditional wife and mother. Both are their right. It is not our business to lay down one as the normal pattern and apply "they" to it.
I shall not run through the traditional list of categories of those who are disadvantaged by the contributory principle. The noble Lord, Lord Ashley of Stoke, covered the ground pretty thoroughly. One should perhaps say a word about those who have several part-time jobs, each of them below the lower earnings limit. That creates a great deal of difficulty.
One should say something about how much Me Government's new proposals will disadvantage students. We on these Benches are extremely grateful for the change in the kick-in date from 20 10 25. It makes a lot of difference, but not enough. People are coming to university later and later because they need 829 to save the necessary money to cover their maintenance, which their loans will not do, and in many cases to pay their tuition fees. So we quite regularly have people coming up to university without adequate contribution records at the age of 23. These 25 year-olds will not have the contribution records necessary to qualify for IB. There will be a good deal of hardship in this area. Some further thought on this is needed.
For those, and for a great many other reasons, we think that the noble Lord, Lord Ashley of Stoke, is right; and whenever it comes to the issue we shall be with him.

Lord Campbell of Croy
I am glad that the noble Lord, Lord Morris of Manchester, was able to make his speech earlier than some of us contrived to do, because he is now hosting a function for carers in another part of the building. I would have been one of those attending had it not been for this Committee stage. The noble Lord, Lord Ashley of Stoke, has made a good case and I support it in general. He went over the ground and I shall not go over it again, but I shall point to some of the main aspects of the argument.
SDA has been for people who have not been able to build up the required national insurance contribution record. Recipients are generally either people who have been disabled all their lives and have never been in the labour market or people who have become severely disabled later in life and do not have a recent national insurance contribution record. Those people, I understand, are mainly married women, and if such people were to claim in the future they would not be entitled to SDA.
Other provisions in the Bill tighten the contribution conditions for incapacity benefit—IB—so that in future severely disabled people who have been in and out of work or unemployed will be unable to qualify for IB. At present. people in that position can claim SDA, but in future SDA will not be available and that group will have only means-tested income support to fall back on, provided they do not have savings and their partner or spouse is not in work.
I am glad that the noble Lord, Lord Ashley of Stoke, mentioned Mrs Megan du Boisson. I referred to her in my Second Reading speech on this Bill. I helped her to create, in the mid 1960s, the organisation known as DIG—the Disablement Income Group—at a time when there were virtually no benefits for anybody except war disabled or those suffering industrial injuries. She was, until her untimely death, an inspiration, especially for this benefit. I am glad to be able to support the noble Lord, Lord Ashley of Stoke, in general and I hope that the Government will listen carefully to what has been said in this debate.

§ Lord Rix
Like the noble Lord, Lord Campbell of Croy, I shall not go over the ground covered so effectively by the noble Lord, Lord Ashley of Stoke, and other noble Lords. However, it is worth remembering that people who are over the age of 20 when they claim SDA have to demonstrate that they are 80 per cent disabled to qualify. It is difficult to prove that one is 80 per cent disabled and, as a rule, people do 830 not slip through the net in a test of that kind. If the Government really believe that the best way to help the more severely disabled people is by abolishing the severe disablement allowance, something must replace it. That something should be more than means-tested income support.

§ Baroness Hollis of Heigham
This clause and Part IV of Schedule 13 phase out severe disablement allowance. That will mean that from the point of change, no new claims for SDA will be accepted.
I regret that the previous amendment and this clause stand part debate were not grouped together. We have already spent some time discussing our proposals for SDA, so I will not extend this debate unnecessarily. I simply want to remind the House that SDA has failed. It does not help the one group of people who cannot build up a national insurance entitlement because they become disabled before they can enter work. SDA does not protect those people properly. It does not help the poorest, it is out of date and it gives additional money to people who we no longer believe need it.
The Government propose to reform SDA. Nobody now receiving SDA will lose out, but in future younger people will gain through access to incapacity benefit—worth up to £26.40 a week more. Some 175,000 people will gain in the long term. Because of the points of concern expressed by the noble Earl, Lord Russell, we shall ensure—by raising the age cut-off point to 25 for young people who enter higher education or training—that we give them entitlement to the new IB. I hope that we have met his points, but if he feels that we have not I shall be happy to follow it up in correspondence. The disability pressure groups asked us to raise the cut-off age from 20 to 25 for that reason.
People with the lowest incomes who will no longer qualify for SDA will see no difference in their income because, as the House knows, SDA makes no difference to 70 per cent of recipients, because they have to top it up with income support. People who will be in that situation in future will also be eligible for income support.
We should also remember that our reform of SDA is part of our wider package for disabled people. We are introducing the disabled person's tax credit, which will be much more generous and accessible than disability working allowance; doubling the child premium in the working families tax credit for a disabled child; and creating the new disability income guarantee. worth at least £128 a week for most severely disabled people under 60 receiving income support.
Overall, we are spending £2 billion more by the end of this Parliament on benefits for disabled people. As the House saw in the debate last night, we are also building on our commitment to comprehensive civil rights with the disability rights commission. We are also doing more to help people into work—because all those currently on IB were once in a job. We are investing £195 million in the new deal for disabled people; investing a further £80m in the "one" pilots; and replacing the all work test with the new personal 831 capability assessment to end the assumption that everyone on incapacity benefit can do no work whatever their skills and their human capital.
All those reforms are an essential part of our approach, but if we want to do more for the people who need help most, we have to ask how best to use our resources. That is why we are modernising disability benefits—so that they provide more help for disabled people in greatest need, as well as providing help and opportunities for disabled people who 'want to work.
I was asked about the savings that the proposals would generate. We expect from Clause 60 that the savings by year three will be £5 million a year, rising in the long term to some £60 million a year. I am assured that in the £250 million figure I gave in response to the earlier amendment moved by the noble Lord, Lord Rix, income support was taken into account in the calculation of the cost of that amendment and, therefore, it was a net figure, not a gross figure.
Most of the Committee's concerns this evening have focused on the position of married women. Some 35 per cent of the existing SDA caseload are married women who were passported across from the old housewives' non-contributory invalidity benefit, introduced in 1977. The same cohort of people were taken across into SDA.
My noble friend Lord Ashley of Stoke said that we were whisking away the safety net from those married women in the future, but that is not true. A safety net will exist that did not exist in 1977 or in 1984, when SDA. was introduced. The addition in 1988 of the disability premium to income support is now the true safety net for people with relatively severe disability who are in financial need.
The noble Earl, Lord Russell, was right. It is a generational issue, and the same arguments came up in relation to widows' benefit, incapacity benefit and SDA. The world has changed since those benefits were shaped in the early 1970s.
I repeat that the housewife's contributory benefit was introduced one year before the abolition of the reduced stamp for married women. That meant that women such as me were allowed to coast through on a reduced stamp and never build up an entitlement to JIB. That has not been the case for the past 20-odd years.
In 1988, when income support replaced supplementary benefit, a new disability premium was introduced. Seventy per cent of those on SDA already receive income support. I pay tribute to the previous administration for introducing in 1992 new lower rates for disability living allowance.
In discussing married women with a disability who have no access to any income, the missing words are disability living allowance. Eighty per cent of people on SDA access and claim disability living allowance if they have extra costs of caring which need to be financed.
Furthermore, as a result of the changes to the minimum wage and LEA, approximately 90 per cent of women who work more than 16 hours a week and 60 to 70 per cent of women who work fewer than 16 hours a week will now qualify for incapacity benefit by building up their benefit entitlement.
832 I believe that the world has changed. Perhaps I may give an example of a woman I know. She is Australian by birth and is married. She has never worked in this country and therefore has never built up a contribution record. She has no extra cost needs by virtue of her disability and therefore is not receiving DLA. Her illness is one of fatigue rather than an extra-cost illness. Her husband is a highly paid local government officer. That woman has not contributed; she has no extra costs; and a generous household income is going into the family. Why is she receiving a benefit when the money could be more appropriately spent on helping young people? I refer to young people perhaps known to the noble Lord, Lord Rix, through Mencap who, by virtue of cerebral palsy, spina bifida or the like, will never have the chance to join a labour market, will always be poor and for whom most of these savings are being recycled to help lift them.
These are choices. If money were endless, all right. None the less, in seeking to determine who needs help most we are looking at a degree of disability matched by the financial capacity to cope. We believe that people who cannot cope are those unable to build up any means of a contributory benefit by access to the labour market and who have no access to other forms of capital. In future, that group will be passported from SDA to IB. I believe that that is the right focusing of the benefit—not continuing to give it to people who have chosen not to build up a contributory record, as in the case of some married women, or who do not need access to means-tested benefit because they have sufficient finances coming into the household. I do not believe that they have the prior claim on disability benefits over young people who were disabled in their childhood and have no such access. That is the reason for Clause 60. I realise that this is a generational matter, but I hope that in the light of my explanation Members of the Committee will be able to support the Government's position.

§ 4.30 p.m.

§ Lord Higgins
The Minister said that the benefit would go to people who had chosen not to build up a contribution record. Is she saying that all the people who will lose out as a result of the clause chose not to build up a contribution record; that is to say, they had a choice?
More particularly, the Minister did not refer to a government estimate showing that 116,000 people, 10,000 of them women, would be excluded from benefit as a result of the abolition of SDA. Is she saying that all those 16,000 people will receive benefit in some other way, or not?
The Minister said that the Government believe that those people have adequate resources. What is their evidence that that is the case? Presumably, the evidence is based on a statistical foundation. That statement implies that no personal benefits shall be paid to anyone without a health or means test.

§ Baroness Hollis of Heigham
People such as myself chose to pay the reduced married women's stamp or we chose not to go to work. In some comfortably-off 833 families, the women chose not to work. That is their choice. However, if there is a choice not to work, and therefore not to build up a contribution record, unless there is financial need the state has no obligation to make good the choice from taxpayers' money. It is not necessarily right that taxpayers on a modest income of £10,000 or £12,000 a year should contribute to a non-means-tested benefit for someone whose household income may be four or five times that.
If a person has additional costs by virtue of his disability, yes, there is a commitment by society. That is precisely why 80 per cent of those on SDA are entitled to disability living allowance. However, as an income replacement—that is SDA—it is not necessarily right that society should replace an income where a household is comfortably off as opposed to the extra costs of disability, which is generated by DLA.
The point is that women have a choice now and they make good use of it. In fact, seven out of 10 married women and eight out of 10 married men work. More widows than widowers are in work. The number of women going into the labour market is the same as the number of men. Given that, if a woman chooses not to work and therefore not to build up entitlement to contributory benefit, presumably by reason of the relative affluence within the family, that is her choice. However, it is not necessary that other taxpayers on lower incomes should support that choice. If she has extra needs by virtue of her disability, DLA should meet it. Alternatively, if she is in financial need, there is income support with disability premium.

§ Lord Higgins
In seeking to understand the point that the Minister makes, perhaps I may put it precisely. Is she saying that all 16,000 people who are expected to be excluded from benefit will have the opportunity of building up a contribution record which will be adequate at the point where they would normally draw it and ensure that they are provided for?

§ Baroness Hollis of Heigham
In a way, that is a hypothetical question because everyone currently on benefit will be protected. I hope that one of the consequences of this and other changes will be to encourage women to build up their entitlement record. Most of them do. That is why the Chancellor, with the combination of the minimum wage and keeping the LEA floor low at £66 and beginning the contribution during the next two years at the personal tax rate of £88, is ensuring that low-paid women can continue to enjoy the kind of protection which contributory benefits offer.
The Government's policy is that, through work, people should be able to contribute to building up their national insurance record. If they cannot do that, if they cannot enter the labour market and if they have financial need, we are trying a non-means-tested benefit. However, if they have financial need and can join the labour market but are no longer so doing, they are entitled to income support with a disability premium which is at least as generous as IB.

§ Lord Higgins
I thought that I had put the question precisely. Let me try again. Is the Minister saying that 834 all 16,000 people—and perhaps she will confirm the figure—who will be excluded from benefit will have the choice of building up a contribution record? We understand that the benefit will not stop for people in receipt of SDA, but in future will those who are able to contribute build up an adequate contribution record in the time? Will they all have a choice, or is it the case that because of personal circumstances some people will not?

§ Baroness Hollis of Heigham
I do not know whom the noble Lord envisages. It is true that we expect that the 16,000 people who currently qualify for SDA would not, in future, so qualify. I hope that the statistics quoted by the noble Lord are correct. Everyone has the choice, as the noble Lord has had in the past, as I have had in the past and as every member of your Lordships' House has had in the past to build up contributions.
Those people who in the future will be disqualified from SDA will have had the same choice as others, no more and no less, to build up a contributions record. I misled the noble Lord. The figure is 14,000 rather than 16,000. None the less, we all have the choice to build up a contributions record.
However, I do not understand the point made by the noble Lord. That choice has remained. In the past some women have chosen not to take advantage of that choice. They have gone into work, or have not gone into work, but have not built up a contributions record and they have had a non-means-tested benefit at the expense of the rest of us. That is fine. That will continue for that cohort, but in future everyone will have the choice to build up a contributions record. If the noble Lord has some examples in mind, I may be able to help him, but at the moment I do not understand his question.

§ Lord Higgins
One example is a carers who is looking after someone. Will he or she have that choice?

§ Baroness Hollis of Heigham
Yes. I made it clear in answer to my noble friend that a carer who cares for more than 35 hours a week—for example, a full-time carer—and who would otherwise be passported from SDA, will be eligible for incapacity benefit on the existing conditions of IB. I gave that assurance to my noble friend in reply to the last question, as I am sure the noble Lord heard.

§ Lord Rix
Before the Minister sits down, in an earlier answer to a question from the noble Lord, Lord Higgins, she said that women with wealthy husbands should not be supported by people on incomes of £10,000 a year. I would have thought that income close to the minimum level of pay in this country. What amount of tax would a person on that low level of income pay that would eventually filter through to the wife of the wealthy husband?

§ Baroness Hollis of Heigham
I shall try to do the calculations. I do not believe it would be advisable for me to do so on my feet without knowing the circumstances of that particular family.
835 My point is this. If we were considering afresh, in today's society, how to build a structure of disability benefits, would the Committee advocate a benefit to be received by people who have chosen not to build up a contributions record—apart from those who have not had the opportunity to exercise a choice by virtue of the age at which the disability was incurred? Would noble Lords invent a benefit to be received by people who had chosen not to build up a contributions record and whose financial means were sufficiently generous within the family that they would not need a means-tested benefit? I am not sure that the Committee would consider that the first priority. I was seeking to establish that point.

§ Earl Russell
Perhaps I may seek to answer the Minister's question roughly in the terms in which she posed it. One needs to give a little background. First, I have much enjoyed listening to the Minister on the subject of equality. I do not mean only because she speaks extremely well, but also because her conviction that the world has changed is itself both evidence of change and a force for future change. So long as the Minister is expressing only a personal opinion, I am extremely happy to listen to her.
I become a little more uncomfortable when prescriptions are made for what will happen to other people. There are many possible choices. On the issue of choice the Minister and the noble Lord, Lord Higgins, are both right. They are talking about different points. The noble Lord, Lord Higgins, is concerned directly about people who are in no position to obtain any work from. which they can build up a contributions record. I agree with him on that.
However, the issue here concerns the situation where one person in a couple not necessarily the woman—chooses to stay at home and accepts the domestic responsibilities. One cannot get away from the fact—as I was rudely reminded when the water started coming through my ceiling at two o'clock this morning—that someone has to deal with the matter!
I do not believe it is the business of the state to decide how those responsibilities inside a family should be apportioned. The state does not have the knowledge; it does not have the competence; and it does not have the authority. I believe, with some passion, that diversity is itself a good. I agree with the remark that my honourable friend Mr Rendel once made to me that there is no one right way to live.
When the Minister asks whether the state should support that choice, I hear what she says. I understand the reasons for her doubt, but supporting the principle of diversity is of sufficient importance to justify an answer "yes" to the question of the Minister. That "yes" is of a great deal more importance to running a state in a free country than we often stop to consider.

§ Baroness Hollis of Heigham
In no sense do I dispute the virtues of pluralism, diversity or choice. If resources are Ii rite it is not necessarily right that taxpayers' money should be used to support that choice rather than making 836 life more comfortable and secure for people who have never been able to exercise choice because their disability was incurred at birth.

§ Earl Russell
I hear, understand and respect what the Minister says. However, if the power of the state, and especially its financial power, is exercised to discourage diversity, granted the fact that most of us are wrong most of the time, in all quarters of the Committee, that is the greater evil.

§ Lord Ashley of Stoke
I do not propose to press to a Division, the Question whether Clause 60 shall stand part although I may come to a different conclusion on Report. I am grateful to my noble friend for the enormous trouble that she has taken to answer all the points that have been made.

§ Clause 60 agreed to.

§ 4.45 p.m.

§ Lord Higgins moved Amendment No. 124C: After Clause 60, insert the following new clause—

cc836-9