EXTENSION OF INVALID CARE ALLOWANCE FOR BEREAVED) CARERS

HL Deb 13 October 1999 vol 605 cc386-439

(" . In section 70 of the Contributions and Benefits Act. at the end there shall be added— (11) The Secretary of State shall issue regulations in respect of persons who cease to be in receipt of Invalid Care Allowance as a result of the death of the person in respect of whose care the allowance has been claimed which shall set the condition for the award to be satisfied for a period of eight weeks from the date on which that person ceased to be in receipt of Invalid Care Allowance."").

The noble Baroness said: My Lords, I speak on this amendment in place of my noble friend Lady Pitkeathley, who has unfortunately been detained. She is in discussions with the Secretary of State in her role as chair of the New Opportunities Fund.

The purpose of the amendment is to extend the payment of invalid care allowance for eight weeks after the death of the person being cared for. At present ICA stops immediately on the death of the cared-for person. This amendment is, I believe, a relatively modest measure. The amendment provides the opportunity to recognise a small but vulnerable group of carers who are bereaved, carers who receive ICA and who look after children or parents who then die. The amendment could help to make the single work-focused gateway operate more sensitively.

If individuals are caring for a spouse who then dies, the new provisions contained within this Bill will mean that they may receive support to help them through their bereavement. However, in the case of carers looking after a child or parent who then dies, there is no such support through bereavement. The trauma is not necessarily any less, as we know. The loss of ICA underlines and emphasises their own personal loss.

There is already a precedent for this suggested addition to the Bill. Carer premium is paid to certain carers who receive income support and is paid for eight weeks following the death or the movement into permanent residential care of the person being cared for. This provides a valuable breathing space for those carers. Carer premium is not a benefit in itself but an extra amount of money, worth £13.95, which is paid to a carer receiving income support. In order to receive carer premium, a carer also has to be entitled to ICA or have underlying entitlement to ICA.

If ICA were extended under the similar but more generous rules of carer premium, it would cost around £5 million per year. Invalid care allowance is currently worth £39.95 per week. Although many carers feel that the benefit should far better reflect the amount of support given to relatives, it is, nevertheless, a very valuable benefit. It is the only benefit to recognise that caring has some value. It was introduced because it was recognised that caring had limited the opportunities of the individuals who do that caring; in other words, it is intended for people of working age who give up the opportunity of full-time employment because of their caring responsibilities.

This small but significant change to the rules governing ICA, together with the other measure that the Government have developed in the national carers' strategy, would, I believe, send a strong message to carers that they are both recognised and valued. I beg to move.

Earl Russell

My Lords, this is a good and useful amendment and we on these Benches are happy to support it. There is another precedent; namely, the linking rules on housing benefit introduced in 1993. That draws my attention to one snag which I hope will be avoided in the administration of this amendment. Under the linking rules, housing benefit has to be claimed within eight days, but people are often not told that they need to make a separate claim until the eight days have already elapsed. Therefore, if the amendment is accepted, I hope that the administration will take account of that point. Moreover, while we are about it, I hope that the Minister will look at this defect in the administration of housing benefit.

Baroness Hollis of Heigham

My Lords, Amendment No. 100 would extend the period of entitlement for all recipients of invalid care allowance to eight weeks after the death of the person being cared for and in respect of whose care ICA was being paid.

I have a great deal of sympathy with the intention behind this amendment, which is to provide an opportunity to recognise a small but vulnerable group of carers who receive ICA for looking after disabled children, parents or others who then die. I am grateful to my noble friend for drawing the attention of the House in this debate to this small but deserving group and equally grateful to my noble friend Lady Pitkeathley for doing so during the Committee stage. They have enabled me to make clear the Government's agenda in this area following publication of the national strategy for carers earlier this year.

In his preface to that report, my right honourable friend the Prime Minister said: Carers are among the unsung heroes of British life", and they, should be properly recognised and properly supported"— a view I wholeheartedly endorse. The national strategy put down a marker of the Government's intention to do this by stating that we would, keep under review how financial support for carers—Including Invalid Care Allowance—can best meet [Carers'] needs". The issue was then immediately underlined by the publication, a few days later, of the report of the Royal Commission on Long Term Care. The Royal Commission suggested that, the system could do more to offer support for carers". Clearly, therefore, the Government are committed to taking forward a review of the financial support available to carers. In turn, this work must link across to the proposals that we make in our response to the Royal Commission.

I know that the concern of my noble friend is to secure what is in the best interest of carers. So she will be looking to the Government to indicate that we have in hand specific plans to take forward this assessment of financial support for carers which the carers' strategy explicitly proposed, and the Royal Commission implicitly suggested. I am pleased to be able to give that assurance.

Our thinking is, as yet, at a very preliminary stage. I am not able to make any promises to my noble friend, or to your Lordships' House, about specific objectives and outcomes. I hope that she will be able to take on trust that we will indeed seek to reflect the best interests of carers. We will of course be consulting the Carers National Association, and other representative groups, about particular proposals. That would be the only appropriate way to ensure that we are promoting the best interests of carers.

I turn briefly to the amendment. I emphasise that the group of carers which it seeks to help is small, though none the less deserving of consideration for that. However, I should like to assure your Lordships that there is at least already protection for those whose need is greatest. Carers who receive income support and the carer premium, which is the increase paid specifically for people entitled to ICA, receive an increase to income support and continue to receive the benefit, including the carer premium, for eight weeks after their caring responsibility ends. In addition, during this eight-week period, they are also exempt from the need to be available for and actively seeking employment in order to qualify for income support.

Where the death is that of a spouse, bereavement benefits are normally paid within a few days of the claim being made. As such payments take precedence over ICA, a run-on would not be of material assistance to those carers. For those who are most vulnerable and in greatest need, therefore, their income is already protected despite the loss of ICA on the death of the disabled person for whom they have been caring. This is, however, by way of offering some reassurance to noble Lords on the specific point. It does not alter what I have already said; namely, that the Government are very strongly aware of the need for adequate financial support for carers and are now seeking to take forward their existing commitment in respect of that support, with a view to addressing the concerns of carers in the round. In the light of that, I suggest that it could be difficult to anticipate specific changes at this stage. Therefore, in view of what I have just said, I hope that my noble friend will feel able to withdraw her amendment.

Baroness Crawley

My Lords, I thank my noble friend the Minister for that response. Carers who have put a great deal of store by this amendment will obviously be disappointed, though I am sure my noble friend realises that. I know that we have had reassurances from my noble friend that there is a commitment to a future programme to meet the challenge of carers in the round in future government legislation. Therefore, on that basis, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 52 [Entitlement to Category B retirement pension by reference to new allowances]:

[Amendments Nos. 101 to 104 not moved.]

Clause 53 [Claim or full entitlement to certain benefits conditional on work focused interview]:

[Amendment No. 105 not moved.]

Baroness Hollis of Heigham moved Amendment No. 106: Page 59, line 24, leave out ("making") and insert ("who—(i) makes")

The noble Baroness said: My Lords, this group of government amendments makes two main sets of changes. First, the amendments implement the recommendations of the Select Committee on delegated powers, as they relate to Clause 53. Secondly, they clarify that all claimants have the right to launch an appeal against, or ask for a review of, a personal adviser's decision that they have failed to take part in an interview. The amendments also make a minor technical change to support joined-up government within the ONE programme.

Firstly, I should like to speak to Amendments Nos. 106 to 111, 258 and 259, which implement the recommendations of the Select Committee. I should like here to offer my thanks to the committee for its positive response to the department's memorandum and for its broad endorsement of our use of delegated powers. I am happy to say here that we have taken on board all the recommendations.

Amendments Nos. 106 to 111 are intended to exclude men and women aged 60 and over from having to take part in compulsory work-focused interviews, either as part of a training process or during the lifetime of an award. I assure your Lordships that it has never been the Government's intention to require this group of people to have work-focused interviews. Originally we had planned to exempt them through regulations, but we are happy to accept the committee's recommendations and to place this exemption on the face of the Bill.

As state retirement age gradually equalises over the next two decades, there is likely to be a need to amend the Bill to include all claimants below the age of 65. In the mean time, men and women aged 60 to 65 who do want help to stay in touch with the labour market will still be able to access support through the ONE service. However, this will be available on a purely voluntary basis.

We are also happy to accept the committee's recommendations for full parliamentary scrutiny of the first set of regulations under this clause, setting out the detail of how the mandatory phase of the ONE service will operate. Amendments Nos. 258 and 259 insert a new paragraph into Schedule 12 of the Bill, amending Section 190 of the Social Security Administration Act. This will ensure that the first set of regulations made under Clause 53 are subject to the affirmative resolution procedure.

Amendment No. 118 seeks to give clearer effect to our policy intention that all claimants should have a right to lodge an appeal against, or to ask for a review of, a personal adviser's decision that they have failed to take part in a work-focused interview. It has been made clear in this House and in another place that where personal advisers make the decision on non-participation the claimant should be able to challenge that decision in line with our new dispute resolution procedures. In other words, claimants should be able to contact the ONE service within one month to examine the reasons behind the personal adviser's decision.

If an error has been made, the personal adviser, in looking afresh at the case, should be able to correct it. In addition, we have always made clear that the claimant should also have a right of appeal against a personal adviser's decision. Subsection 2B of Clause 53 was intended to give all claimants a right of appeal to a tribunal under Section 12 of the Social Security Act.

However, the current drafting fails to achieve our stated policy intention. For example, a claimant who received a negative decision from a local authority personal adviser would not be able to access the dispute resolution procedures, and in some circumstances would also be denied a right of appeal. In addition, local authority personal advisers would not be able to revise their own or another decision, even where it was clearly incorrect. The amendment makes absolutely clear our stated intention that dispute resolution procedures and rights of appeal should apply in all cases.

Amendment No. 262 clarifies that a claimant has a right of appeal against a decision that they have failed to take part in an interview rather than a right of appeal against the consequences of that decision either terminating or reducing a benefit. This makes things simpler for claimants by giving them a single route of appeal which is focused on the key decision that caused the penalty to be imposed, even where it impacts across a number of benefits and follows a model adopted elsewhere in the benefit system.

Amendments Nos. 151 and 152 make necessary changes to support closer working. They give local authority staff working in the one service the same powers as those possessed by the Employment Service and the Benefits Agency to require JSA claimants to attend for interview. Amendments Nos. 156 and 208 are consequential. Amendments Nos. 274 and 280 provide consequential changes to the commencement and extent provisions of the Bill. I hope that, with this explanation of a large number of amendments we have grouped together for the convenience of your Lordships, your Lordships will accept them. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 107: Page 59, line 25, after ("applies,") insert ("and (ii) is under the age of 60 at the time of making the claim,")

On Question, amendment agreed to.

[Amendments Nos. 108 and 109 not moved.]

Baroness Hollis of Heigham moved Amendments Nos. 110 and 111: Page 59, line 27, leave out ("in a case where") and insert ("at a time when") Page 59, line 28, after ("is") insert ("under that age and")

On Question, amendments agreed to.

[Amendment No. 112 not moved.]

Baroness Turner of Camden moved Amendment No. 113: Page 59, leave out lines 38 to 40

The noble Baroness said: My Lords, although this amendment relates to widow's benefit, it also refers to a rather different aspect. I have given my noble friend the Minister an indication of what I intend to raise. My real purpose is to seek clarification.

Clause 53 sets out the arrangements for work-focused interviews. The recipients of certain listed benefits are to be asked to attend these interviews. Clearly, the intention of the interviews is to get claimants off benefit and into work, but they could result in a loss of benefit. Among the benefits included are widows' benefits, which I take to mean widows' benefits already in payment and not those which are to be put into operation under this Bill.

The inclusion of widows' benefits under this heading raises some quite serious issues. When proposals relating to widows were first made public a guarantee was given to the Widows Advisory Trust that women already receiving widows' benefits would not be affected. They would continue to receive their benefits for which contributions had been paid, as before, and they would not be affected by the new legislation. Indeed we have had that assurance repeated today.

However, as already indicated, widows' benefits under present legislation are paid as of right and on the basis of the contribution record. They are not dependent on means-testing or income received from elsewhere, either from a pension or a job. If existing recipients are being asked to attend for a work-focused interview on pain of losing benefits if they do not attend, this is an alteration in the conditions for receipt of their benefit and it undermines the assurances given by the Government that the benefits will not be affected.

What happens if a widow, believing that she had assurances that her benefit would not be affected, simply does not attend? She might then find that her benefit will disappear. I hope that such a thing could not be a result of what is said in the Bill. That would be unacceptable, and I would very much welcome the comments of my noble friend. I beg to move.

Baroness Hollis of Heigham

My Lords, as my noble friend has explained, this amendment seeks to exclude widows and widowers from the requirement to participate in a work-focused interview. As with other amendments—I do not think they have been moved and so I will not speak to them now—to exclude certain groups from the provisions of this clause, I have every sympathy with the proposal that has been made.

We must have regard to individual circumstances in which those who have recently been bereaved find themselves and we must treat them with appropriate respect and compassion.

However, the Government believe that the amendment is not the way to achieve this. A blanket exclusion of all those claiming bereavement benefits does nothing to address the needs of individual claimants. Again, it would deny many people the help and support they may need at a difficult time.

As I tried to make clear in Committee the ONE service is not just about jobs, although work for those who can is a central aim. It is about providing an holistic approach to the welfare needs of each claimant based upon their individual circumstances. If those needs are best met by helping individuals move towards the labour market, then that is what will be provided irrespective of the reason for their benefit claim. If they have different needs—such as help in stabilising their financial position or bereavement counseling—then we will provide that help, each person treated according to their personal needs, which is the philosophy behind ONE.

The amendment moved by my noble friend would perpetuate the failing of the current benefits system, which makes broad assumptions about people according to which benefit they claim. This approach does nothing to address the wider welfare needs of individuals or help them to realise their potential. The ONE approach treats people individually, including widows.

We must remember that many widows and widowers choose to work. Many widows and widowers were in work at the time of their bereavement and they will go back to work very quickly after their bereavement. Others may have given up work to provide care for their spouses and may wish to move back to work quite quickly. Others, particularly those with children, may wish to stay in touch with the labour market to improve their future employment prospects while not seeking to return to work straightaway. Those are three different possibilities. The ONE service will enable people—widows and widowers alike—to receive the help and advice they need by providing tailored assistance through their adviser.

Advisers will, of course, receive full training and guidance to ensure that they are sensitive to the needs of those recently bereaved and to help them deal with clients in an appropriate way. Of course, if an immediate interview is not appropriate in the individual circumstances of any particular claim, the requirement will be deferred and benefits put into payment in the normal way. It may frequently be the outcome where a bereaved client makes a claim to benefit that the interviews are deferred until a later and more appropriate time. I hope that my explanation reassures my noble friend and that, as a result, she will feel able to withdraw her amendment.

Baroness Turner of Camden

My Lords, I thank my noble friend for that comprehensive explanation. It allays some of the fears I had. I shall look very carefully at the explanation in Hansard tomorrow. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5 p.m.

Baroness Buscombe moved Amendment No. 114: Page 60, line 7, at end insert— ("( ) for determining the training to be provided to persons by whom interviews are to be conducted, which shall include training in the principles of personnel management and job placement, in types and incidence of mental and physical disability and in recent developments in coping with time;")

The noble Baroness said: My Lords, as we stated very clearly in Committee, we on these Benches welcome the principle of ONE, the single-focus gateway to work. However, we have been talking about the principle. The problem lies in the detail. The amendment therefore again specifically refers to the training of the personal advisers who will conduct the interviews.

As we understand it, the recipients of benefits must turn up to ONE interviews. The interview is extremely important and therefore it is important that those attending the interview fully understand what they are in for and that the interviewer is able to cope with a broad spectrum of recipients. The interviewers' job will be extremely tough. They have a tough timeframe within which to carry out the interview, sometimes as little as an hour. It is important that the personal advisers involved in the interviews really understand some of the sensitivities with which they will be faced in the broadest sense, particularly with regard to the disabled and others who will feel very upset and disturbed by the fact that the interviews are compulsory.

I am grateful to the Minister for forwarding to me a copy of the learning assessment framework; I have read it in detail. It presumes a considerable amount of expertise and knowledge. I appreciate that. In the framework, the accent appears to be—quite rightly in many senses—upon benefits. I understand—the Minister made it absolutely clear in Committee—that the interview is not only about work but also about opportunities for benefits. I am grateful to her for sending me that information. However, we feel strongly that the level of expertise which the advisers will need to retain and develop in a very short space of time is crucial in terms of the ways in which the advisers will be trained. We accept that many of them will not be starting from a nil base; that many of them are already trained to some extent. However, the amendment makes particular reference to those people with mental and physical disabilities; they will need very special treatment and attention during the interviews.

It is important that I give an example. Multiple sclerosis is often completely invisible in a person. If a person with multiple sclerosis is in remission but is put under stress by fear of the compulsory interview, the consequence could be that the stress will trigger off another serious illness. We feel that the more pressure we can apply from this side of the House with regard to the level of expertise and training which is to be carried out, the better.

In Committee, the Minister made clear that during interviews the advisers will be able to call upon other areas of expertise. However, if personal advisers will have ready access to a wide range of support services—the Minister stated that the advisers would not themselves need to be experts but would need to know when to bring them in—and the interview is really one interview, how will the adviser know what kind of expertise to call upon until the interview is taking place? Surely it will be too late then to call in the experts. Perhaps the Minister will be able to advise me in regard to that matter.

Although I have some sympathy with the principle behind Amendment No. 115, which is very similar to Amendment No. 114, it is important that we question the wording of it. It states that the training of personal advisers is, to be conducted by people with direct personal experience of mental illness". I have a legal background. I have read the amendment time and again. Surely, it is saying that the training is to be conducted by people who have themselves a history of mental illness. I therefore cannot support Amendment No. 115; I do not think it is accurately worded. I am sure that it does not reflect the intention of those who tabled it.

Lord Addington

My Lords, I have been told by the noble Baroness, who is legally qualified, that my amendment is defective. I will, of course, defer to her if that is the case.

Baroness Hollis of Heigham

I cannot believe it!

Lord Addington

My noble friends will undoubtedly form an opinion about whether it is appropriate. There is a direct thrust to this amendment rather than the broad-brush approach taken by the noble Baroness.

As the noble Baroness said, the best one can realistically hope for from a general person conducting a ONE interview, especially where no warning is given beforehand, is that that person is expert enough to know the limitations of his knowledge. I believe that that is what the noble Baroness was driving at. One of the most difficult tasks in assessing disability is realising what you do not know and backing off. I hope that those who will conduct the interviews will have more success in that field than people have in virtually every other field—medicine, teaching, and so on. I have heard of an enormous number of cases where people have been struggling and have not known whether they should become involved or pass the case on.

In sport, knowing when to keep the ball and when to get rid of it generally marks out the great player from the average. That is equally true of those who give advice. It is important to know when not to give advice and to defer rather than give bad advice. That is the crucial thrust behind the noble Baroness's amendment and underlies everyone's concerns about the interview. In Committee, the noble Baroness gave a considerable amount of assurance about the amount of training that would be available. I doubt whether she will ever be able to provide enough training to be able to handle these matters.

A point was raised as to whether the ONE interviews could be extended. I assumed that they could be. I assumed that the one-stop interview was merely a starting-point—and, it is to be hoped, the finish in the majority of cases. The option of an interview is in the structure and I hope that it can be used.

Those who have mental health problems, almost by definition, have the greatest degree of difficulty as regards their perception of their own case. All the problems that we have previously referred to are magnified. Someone who suffers, for example, from severe depression is incapable of taking a clear look at his or her situation, even when confronted with the necessary information. Surely, it must be necessary to involve someone with expertise. That is why I have added my name to Amendment No. 115. If the wording is not correct, I am happy to accept that. The point is that some real expertise should be found.

I know that the noble Baroness wants this provision to work well, as do we all. But the road to hell is paved with good intentions. In certain pieces of government legislation such wishes have led us at least as far as purgatory.

Lord Williamson of Horton

My Lords, we are dealing with matters for which the regulations "may" make provision, that is to say, the draftsmen have an element of discretion. However, it is reasonable to indicate on the face of the Bill the issues which, as legislators, we regard as important. That is why I support Amendment No. 114. The role of the person who conducts the interview is extremely important. If the interview goes wrong, there could be serious difficulties. It would be wise to refer to that element of training in the Bill.

It should be particularly borne in mind that the percentage of those with mental illness who are in work is substantially less than it is for those with other forms of disablement. I believe it is about 12 per cent of those with severe mental problems. The present reforms may make possible an improvement in that figure. So the present reforms are a move in the right direction. However, we need properly qualified interviewers in order to maximise the chances of a good result. Therefore, I support the amendment proposed by the noble Lord, Lord Higgins.

5.15 p.m.

Baroness Hollis of Heigham

My Lords, we discussed the first of these amendments at an earlier stage. I was then able to offer some assurances to the noble Baroness, Lady Buscombe. I have subsequently provided her with additional information.

The aim of the training, as I made clear in Committee, is to create a group of people able to support and advise clients with a very wide range of needs. An extensive training programme is therefore essential. However, this programme needs to recognise both the skills that many staff will bring to their new posts and the range of additional, specialist support to which personal advisers can have access where that is appropriate.

Although we recognise that the quality of the training is crucial to making the ONE pilots work, we cannot accept this amendment. Identifying only three or four, albeit important, subjects in legislation, and requiring all personal advisers to be trained in those areas, would reduce the flexibility we need to give every member of staff appropriate training. In addition, we consider it essential that all ONE staff, not merely the personal advisers, are allowed access to the same high-quality training packages.

I appreciate that this is, in part, a probing amendment on what is clearly a very important subject. I should therefore like to reassure the noble Baroness as to the importance that we place on providing suitable training for ONE staff. As I made clear in Committee, the average member of staff working for ONE will carry out well over 200 hours of learning before taking up his or her post. That equates to nearly seven weeks. In addition, all advisers will be required to work towards a professional qualification in advice and guidance, at least to NVQ standards.

Some of the training will focus on enabling staff to provide good-quality benefit advice; other aspects will cover the administrative processes that staff need to undertake. However, we have recognised the clear need to ensure that staff are given adequate training and support in handling a wider range of clients than they currently see and for a wider range of work and welfare related issues. That means appropriate learning opportunities for staff to ensure that they can give client groups with special needs a high-quality, sensitive service.

The help that key voluntary organisations have given to our officials has been invaluable in that respect. As I mentioned in Committee, we have developed training in the needs of special client groups in association with organisations such as MIND, the National Schizophrenic Fellowship, Scope, Mencap, Gingerbread and the Carers' National Association. I had intended to give further details of what we are doing to help to take account of the needs of people with mental illnesses. As that amendment, which I thought was important, was not moved, I have not been able to set out our proposals. All of the organisations involved have spoken to ONE staff at training events and have provided extremely useful background information on the needs of the groups they represent and what the ONE service needs to give them if it is to prove effective. That knowledge has been incorporated into an on-line information system, which all personal advisers will be able to use in the course of their work.

All ONE staff without thorough knowledge of disability issues are being required to undertake a disability awareness course as an essential part of their training. The course is now being thoroughly updated, both to take on board the additional information that has been made available to us and to build on the best of the existing training material used by the Employment Service to train disability employment advisers. Again, we will ask organisations that represent people with disabilities and mental health problems for their views, to ensure that we are providing staff with appropriate and helpful material.

I hope that that has reassured your Lordships that we are treating the issue of training extremely seriously. We are investing considerable money and effort to offer training that will enable ONE staff to provide a high-quality service, focusing on both the employment and the welfare needs of clients.

I do not believe that these amendments will allow us the flexibility to respond to individual training needs. In the light of that, I hope that the noble Baroness, Lady Buscombe, will not pursue her amendment.

The noble Lord, Lord Addington, was right when he said that, however much we invest in training, disability, particularly mental health disability, can be such a complex area that we cannot hope to achieve the necessary skills, even with the extensive training that is proposed. In particular, staff may not know the range of problems until the ONE interview takes place, and by then those with appropriate skills—including those who can offer advocacy help—may not be at hand.

There will, in fact, be two interviews. There will be the start-up interview, in which basic information is taken. It is hoped that the major ONE interview will then be arranged within a couple of days of that. If the disability emerges, as it should normally do— I accept that it will not do so in all circumstances—at the startup interview, staff will ensure that those with the most appropriate skills will be available at the second interview. If such people are not available, the interview can be deferred either at the convenience of the person being interviewed or in order to make sure that appropriate help is available. I fully accept that only a consultant in certain areas of medicine could have the full range of knowledge. But we are doing our best to ensure the opportunity, first, to train and provide skills to staff and, secondly, to ensure that those trained and skilled staff are available to help those with particular disabilities and special needs.

I shall be happy to write to noble Lords on the issue because I have not had the opportunity to give much of the information I was going to give the House and I am sure that noble Lords would wish to have it.

Lord Addington

My Lords, before the noble Baroness sits down, the point I was trying to make is that I appreciate that the Minister is trying to deal with this through regulation. However, the problem is that we may not know what we are dealing with at any point in the process. Do the staff have the power or the authority to be able to stop the process dead if they feel they do not have the expertise? That is important.

I did not move the amendment standing in my name because I thought that this amendment would cover the matter. I did not want to go over the same ground twice. However, if the noble Baroness will write to me with the information, I shall pass it on to those whom I shall consult on the issue.

Baroness Hollis of Heigham

My Lords, if the interview is inappropriate because of mental health or learning or language difficulties, the full interview can be postponed. That is on the assumption that the problems emerge quickly. In the normal course of events I would expect most of the issues to emerge at the start-up interview. If someone has severe learning difficulties and cannot write or read, if they have language problems or are from an ethnic minority, that also would emerge. If they have other disabilities, it will become clear. At the major follow-up interview, those resources would be available.

If that was not the case and it was clear that the interview needed to be postponed, deferred or taken in two stages, that is possible. It would include having an interview in the person's home and whatever else is most appropriate. We wish to ensure that all people coming through the ONE service have the opportunity to engage with a skilled and appropriate personal adviser who can take them through the range of options, not only in terms of work but also benefits, financial counselling and the like, to ensure that they have the best opportunities in their lives.

Baroness Buscombe

My Lords, I thank the Minister, I appreciate her explanation and will be grateful to receive her letter before Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 115 and 116 not moved.]

Baroness Buscombe moved Amendment No. 117: Page 62, line 8, at end insert (", conducted at a location appropriate to the person")

The noble Baroness said: My Lords, following this discussion, can the Minister clarify one point? We talked at great length about the location of the interview at Committee stage and I do not wish to be repetitive this afternoon. However, I wish to confirm a point with the noble Baroness.

In relation to location, we said at Committee stage that in cases of severe disability or mental illness, home is not necessarily the place for the interview, although we appreciate that the Minister and others seek to be as flexible as possible over the location. We stress that we believe that for many the home can be invasive and make people feel awkward when the so-called experts are at hand.

In relation to the start-up interview and the major interview, can the Minister reassure us that if the adviser decides at the start-up interview stage that the personal adviser would value additional skills and expertise at the major interview, the personal adviser would explain carefully to the recipient that they could have a choice of either having the second interview in the home or at an alternative location. While the home might be the better alternative for the disabled at the first stage, with one person visiting them in the home, if it is decided thereafter that several people should visit them and therefore there would be a crowd going into the home, it might be better if it is held elsewhere. The adviser could suggest alternative locations. I would appreciate the Minister's comments on that. I beg to move.

Lord Addington

My Lords, this is a sensible point and I hope the Minister will consider it.

Baroness Hollis of Heigham

My Lords, the noble Baroness has identified a problem. If one is trying to make a home visit to suit the convenience of the client because that client may have a range of disabilities, and if as a result a whole range of skills is needed, there may be many people going to one house, as opposed to one person going there. There are considerations of convenience such as administrative arrangements, costs and the like.

I have tried to emphasise that we seek to ensure that the ONE delivery sites would be relaxed and friendly environments where all clients would feel at ease. They will also meet the needs of disabled people on access and facilities. In addition, sites currently in use in the pilot areas were selected to minimise the likelihood of ONE clients having to travel further than 45 minutes to their local office. On the whole I would expect the ONE delivery site or office to be seen as the most appropriate place for an interview.

If that is not the case—and we recognise that in certain circumstances it will not be—there will be other options such as phoning, mobile facilities or providing a home visit. So, for example, where a person's mobility problems prevent them getting to a ONE office, the personal adviser may visit the claimant and conduct the interview in their home. There has never been any suggestion otherwise.

I understand that noble Lords have concerns that personal advisers carrying out home visits might not have the benefit of the combined expertise of the rest of the ONE team. It is a dilemma for us. I agree that it is important to see the ONE service as a team effort, particularly to ensure that advisers consult colleagues when it is clear that a situation calls for knowledge outside their sphere of experience.

Having said that, I think it is equally important to emphasise the ability of trained personal advisers to provide for most, if not all, the immediate needs of clients during a home visit. The information given during the start-up interview should provide the basis for determining which personal adviser is best qualified to deal with the needs of a specific client who requires a home visit. Equally, we should not see the initial personal adviser interview in isolation. It should be viewed as part of an ongoing relationship between adviser and client. I believe it is acceptable for a personal adviser, during the course of a home visit or an on-site interview, to take away unresolved issues with a view to dealing with them more thoroughly, after consultation with colleagues and then come back.

We are trying to ascertain how best to negotiate the issue that the noble Baroness identified. On the one hand, we do not want the house full of a range of possible people, but on the other we wish to ensure that we can offer the facility, where appropriate, in the client's home. I hope that with that description noble Lords are reassured by what I have said and will feel able to withdraw the amendment.

Baroness Buscombe

My Lords, I appreciate the Minister's response to my question. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendment No. 118: Page 62, leave out lines 24 to 41 and insert— ("(1) Chapter II of Part 1 of the Social Security Act 1998 (social security decisions and appeals) shall have effect in relation to relevant decisions subject to and in accordance with subsections (1 B) to (2B) below (and in those subsections "the 1998 Act" means that Act). (1A) For the purposes of this section a "relevant decision" is a decision made under regulations under section 2A above that a person—

1. (a) has failed to comply with a requirement to take part in an interview which applied to him by virtue of the regulations, or
2. (b) has not shown, within the prescribed period mentioned in section 2A(3)(e)(ii) above, that he had good cause for such a failure.

(1B) Section 8(1)(c) of the 1998 Act (decisions falling to be made under or by virtue of certain enactments are to be made by the Secretary of State) shall have effect subject to any provisions of regulations under section 2A above by virtue of which relevant decisions fall to be made otherwise than by the Secretary of State. (1C) For the purposes of each of sections 9 and 10 of the 1998 Act (revision and supersession of decisions of Secretary of State) any relevant decision made otherwise than by the Secretary of State shall be treated as if it were such a decision made by the Secretary of State (and accordingly may be revised by him under section 9 or superseded by a decision made by him under section 10). (1D) Subject to any provisions of regulations under either section 9 or 10 of the 1998 Act, any relevant decision made, or (by virtue of subsection (IC) above) treated as made, by the Secretary of State may be—

1. (a) revised under section 9 by a person or authority exercising functions under regulations under section 2A above other than the Secretary of State, or
2. (b) superseded under section 10 by a decision made by such a person or authority,

as if that person or authority were the Secretary of State. (2) Regulations shall make provision for conferring (except in any prescribed circumstances) a right of appeal under section 12 of the 1998 Act (appeal to appeal tribunal) against—

1. (a) any relevant decision, and
2. (b) any decision under section 10 of that Act superseding any such decision,

whether made by the Secretary of State or otherwise. (2A) Subsections (1C) to (2) above apply whether—

1. (a) the relevant decision, or
2. (b) (in the case of subsection (2)(b)) the decision under section 10 of the 1998 Act,

is as originally made or has been revised (by the Secretary of State or otherwise) under section 9 of that Act; and regulations under subsection (2) above may make provision for treating, for the purposes of section 12 of that Act, any decision made or revised otherwise than by the Secretary of State as if it were a decision made or revised by him. (2B) Section 12 of the 1998 Act shall not apply to any decision falling within subsection (2) above except in accordance with regulations under that subsection.")

On Question, amendment agreed to.

[Amendment No.119 not moved.]

Schedule 7 [Joint Claims for Jobseeker's allowance]:

Baroness Hollis of Heigham moved Amendment No. 120: Page 111, line 12, after second ("couple") insert ("(other than a person to whom regulations under section 1(2C) apply)")

The noble Baroness said: My Lords, Clause 55 and Schedule 7 introduce joint claims for jobseeker's allowance. Couples without children who wish to claim income-based jobseeker's allowance will be required to make a joint claim. Joint claims will apply to couples where at least one partner is in the 18-to-24 age range when the provisions come into effect. These changes give those who are currently treated as dependent partners of JSA claimants—90 per cent of whom are women—equal rights and responsibilities on their claim.

Both members of the couple will have equal opportunities to receive help and support from the employment service to return to work. Both will be able to go on to employment programmes, including a new deal for young people, those aged 18 to 24.

Amendments Nos. 120 to 128 are a series of minor technical and drafting amendments in Schedule 7 which is made to the Jobseekers Act 1995. Amendment No. 120 on Section 1(2C) provides that regulations may prescribe circumstances where a person who is a member of a joint claim couple does not have to make a joint claim to jobseeker's allowance. It is a technical amendment to ensure that conditions for calculating entitlement to a joint claim JSA will not apply to members of a joint claim couple to whom Section 1(2C) applies.

Amendments Nos. 121 and 122 change references to "adjudication officer" to "Secretary of State" because the Social Security Act 1998 provisions relating to decision-making and appeals have come into force and the functions of adjudication officers have now passed to the Secretary of State.

Amendment No. 128 is consequential on Amendments Nos. 121 and 122 and deletes paragraph 17(3) of Schedule 7. This sub-paragraph was originally inserted because it was thought that the Bill might receive Royal Assent before the commencement of the decision-making and appeals provisions in the Social Security Act 1998. However, as this part of the Social Security Act 1998 has now commenced, sub-paragraph (3) will not be necessary.

Amendment No. 123 is a drafting amendment. Its purpose and effect is to refine the wording of page 116, line 13, to make sure that the meaning is clear. Amendment No. 124 is a technical amendment. Its purpose and effect is to take account of changes to Section 17 of the Jobseekers Act 1995 made by the coming into force of the Social Security Act 1998.

Amendments Nos. 125 and 126 correct an error by deleting the word "for". The effect is that a person "claims" JSA rather than claims "for" JSA. Amendment No. 127, which changes paragraph 17 of Schedule 7, is consequential on the other amendments relating to the Social Security Act 1998. We have grouped together a large number of amendments for the convenience of the House. They are technical, but I urge the House to support them. I beg to move.

On Question, amendment agreed to.

5.30 p.m.

Baroness Hollis of Heigham moved Amendments Nos. 121 to 128: Page 115, line 34, leave out ("adjudication officer") and insert ("Secretary of State") Page 116, line 6, leave out ("an adjudication officer") and insert ("the Secretary of State") Page 116, line 13, leave out ("referred to in subsection (2)(a) above") and insert ("to whom subsection (2)(a) above applies") Page 116, line 29, leave out ("he has failed to complete a course of training") and insert ("the condition in section 17(3)(b) or (c) is established") Page 118, line 48, leave out ("for") Page 119. line 9, leave out ("for") Page 119, line 17, leave out from beginning to ("(interpretation") in line 18 and insert ("In section 39(1) of the Social Security Act 1998") Page 119, line 23, leave out sub-paragraph (3)

On Question, amendments agreed to.

Clause 56 [Special schemes for claimants for jobseeker's allowance]:

Baroness Hollis of Heigham moved Amendment No. 129: Page 64, line 36, at end insert— ("(5A) For the purposes of, or in connection with, a scheme established for (or for an area which includes) Wales or a part of Wales, the National Assembly for Wales may, if it considers that facilities whose provision any person (including the Secretary of State) is undertaking under arrangements within subsection (5)(a) or (b) are capable of being supportive of the training of persons for employment, make such payments to that person as the Assembly considers appropriate; and any such payments—

1. (a) may be by way of fees, grants, loans or otherwise, and
2. (b) may, unless the Assembly otherwise specifies, be used by the person to whom they are made for the provision of any of the facilities provided under the arrangements.")

The noble Baroness said: My Lords, a key principle behind the creation of employment zones is to allow pooling of the various funding streams currently available to help long-term unemployed people. Obviously, that is the point of Amendments Nos. 129 and 130. These include funds for training, jobsearch and the equivalent of JSA. One effect of pooling these funding streams is that they cease to be separately identifiable and no longer need to be earmarked for a specific purpose. For example, money which was originally destined to support training can be used for any purpose within employment zones. It is straightforward to pool the funding in England. Training money is being set aside from the work-based learning for adults budget, which is already held by DfEE, and there will also be a transfer made from employment service programmes into the employment zone pot.

This is more difficult for employment zones in Wales. The clause in the Bill which establishes employment zones is a social security measure and social security is not a matter transferred to the National Assembly for Wales. Nor is it intended that the provision should change this principle. The power to fund training for work, however, is devolved to the National Assembly for Wales (concurrently with Ministers of the Crown) and it holds the funding for this in its block grant. We intend that this should continue to be the case. In the absence of a legislative provision the Assembly does not have the power to fund employment zones. Without this amendment, the money which it holds for training could not be used for employment zones in Wales.

Amendment No. 129 would ensure that the National Assembly for Wales could make payments to those running employment zones in Wales without changing the devolution arrangements for training for work, jobsearch and social security, and without restricting the use of such payments to the provision of training. It is not intended that this provision should broaden the Assembly's role in relation to jobsearch or other non-transferred matters. There is also a small consequential amendment involving some renumbering within Clause 56 as a result of Amendment No. 129. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 130: Page 64, line 37, leave out ("subsection (5)") and insert ("subsections (5) and (5A)")

On Question, amendment agreed to.

Clause 58 [Incapacity benefit: restriction to recent contributors]:

Lord Ashley of Stoke moved Amendment No. 131: Page 66, line 10, leave out ("two") and insert ("seven")

The noble Lord said: My Lords, in moving Amendment No. 131 I should like to speak also to Amendments Nos. 132 and 133. This Government have an outstanding record of help for disabled people, but this clause is one of the few blots on that record. I hope that this debate will help to remove that blot. I am strongly opposed to Clause 58 because it will create hardship and suffering to 170,000 future disabled people by depriving them of their incapacity benefit if they have been unable to work in the two years before claiming.

I speak not only of disabled people but of severely disabled people—not those with a sick note from a friendly GP but people who are certified by the strict Benefits Agency doctors as being too incapacitated to work. These people of working age are so severely disabled that they have no realistic prospects of enhancing their lifestyle. Most of them are poor which, in most cases, is a concomitant of severe disability.

The clause does not affect present claimants, but that is no comfort to the 170,000 who will be hit. Their crime is to commit the cardinal sin of being unable to get a job in the two years preceding their claim. The Government are barging ahead with this ham-fisted penalty as if we live in Shangri-La where everyone can get a job if they want one. Everyone else knows that that is hopelessly unrealistic. There are prosperous areas but there are also depressed areas where few, if any, jobs are available. Why should severely disabled people in those areas be treated unfavourably compared with their counterparts in better areas? Why should they lose the valuable £66 a week incapacity benefit through no fault of their own? Where is the justice in that? Disabled people who are poor will find this a stunning blow.

Just as serious, unreasonable and unfair is that the Government's proposal will deny incapacity benefit to people, no matter how severely disabled, who may have paid national insurance contributions for 20 or 30 years. This is a clear and unambiguous moral contract between the Government and people who are paying. They have paid trustingly and in good faith on the legitimate assumption that if they become disabled they will get what they have paid for. That is a very simple, honest and reasonable proposition. But now the Government tell them, without so much as a murmured apology, that they have moved the goalposts. They say it is too bad that these people could not get a job, too bad that they have paid contributions for all those years and that they now need the money. They are refusing even a penny of incapacity benefit if they have not worked in the preceding two years—end of discussion.

There are various theories about wanting to relate benefits to recent work and wanting to help very poor disabled people and modernise the system. They are all fine, high-sounding principles, and I agree with many of them. But none of them can justify the blatant unfairness, breach of moral contract and cheating of future disabled people of their right to incapacity benefit. The House should reject completely the implicit policy that poor disabled people should be forced to pay for very poor disabled people. That is the job of wealthy people or the general taxpayer.

I repeat. I am strongly opposed in principle to Clause 58. However, I recognise that the Government have a massive majority in another place and would seek to overturn any decision made by this House. They may or may not succeed, but it is likely that at some point, being politically realistic, a compromise would have to be reached if the Bill is to be saved.

In the hope of reaching an honourable and reasonable compromise sooner rather than later, I have put forward Amendments Nos. 131 and 132. I hope that the Government will accept them because the last thing we want is ping-pong between the two Houses, which would hardly be dignified or edifying—but it may come to that.

I have no doubt that the clause should be dropped, but in an effort to bridge the massive gap between the needs of disabled people and the Government, it is proposed in Amendment No. 131 that the period should be seven rather than two years. That figure is as arbitrary as the Government's figure, but it is much more reasonable and fairer. Although the Government believe that this benefit should be related to recent work, I believe that it should go to those who have shown a commitment to work. Therefore, I am proposing the additional provision in. Amendment No. 132 that people should qualify if they have worked and pa id contributions for ten years at any time in their working life. A commitment to the world of work and the national insurance principle for such people cannot be disputed. That commitment should be recognised by giving them entitlement to incapacity benefit should they become severely disabled.

I hope that the Government will accept the amendments because it is a reasonable, reasoned and honourable compromise; it is also a benchmark.

I should like to say, quite frankly, that if the Government do not accept those two reasonable compromise amendments, then I intend to divide the House on Amendment No. 133, which proposes that the clause should be deleted completely. I beg to move.

Lord Rix

My Lords, being in two minds is not a comfortable position to be in, and I am in two minds in relation to this clause. I have signed my name in full support of the amendment of the noble Lord, Lord Ashley which propose an extension of the contribution conditions for incapacity benefit to ensure that more people who have contributed during their working lives will be entitled to the benefit. I believe this to be a laudable approach that is consistent with the Government's overall strategy of reform, but which nonetheless offsets some of the harsher consequences of the change in policy.

However, I suspect, as we have just heard, that in the context of this debate there will be no third way. I believe we will be asked to vote for polar opposites: either support the clause as originally proposed, or support a wholesale rejection of it. If my suspicions turn out to be correct, then, with great reluctance, I would be unable to vote in favour of the clause.

Testing the opinion of the House in this manner seems to be something of a missed opportunity. It is unfortunate that the Government have failed to table a compromise amendment which could lend credence at this stage. I urge them to do so at the earliest opportunity, and in so doing to consider seriously t he suggestions of the noble Lord, Lord Ashley.

I fear that as the Bill progresses the political strategy may begin to overshadow the substantive concerns of the debate. I therefore urge all noble Lords and those in the other place to focus their minds on the impact of these changes on disabled people rather than on what transpires as political victory in the latter stages of this parliamentary timetable.

Earl Russell

My Lords, not for the first time the noble Lord, Lord Ashley of Stoke, has hit the nail on the head. Clause 58 is objectionable because it penalises people for things which are not their fault.

Between two people, both of whom have actively sought work with equal determination, one will be eligible for incapacity benefit having been successful and one will be ineligible as a result of being unsuccessful. The race is not always to the swift if they are not running over an equal course.

We on these Benches think that that is wrong, and that is why we agree so entirely with the noble Lord, Lord Ashley of Stoke, about the clause. We do not regard his amendments as being a satisfactory compromise. I agree with him that there always has to be compromise. Normally, it is true that half a loaf is better than no bread, but there are possible exceptions to that principle, as, for example, when the bread has ergot and is poisonous to eat. We think that that is the case here.

We are familiar in this House with the concept of salami-slicing. Were I the Treasury, I would be making contingency plans at this moment to accept the amendment of the noble Lord, Lord Ashley of Stoke, this year and then to take another salami slice off it next year and another salami slice the year after that and so on—I will not add the words "ad infinitum" because there is not an infinite amount of money to take, but for quite a long time.

For that reason I hope that the noble Lord, Lord Ashley of Stoke, will not press the amendments but will press the clause that should not stand part.

One of the ways in which the Bill penalises people for things which are not their fault is that it is geographically discriminatory. There are some areas where we are happily approaching full employment. In Newbury we have an unemployment rate of 1.1 per cent. My honourable friend Mr Rendel happens to be Member for Newbury, but he does know that Newbury is not the whole country. There are many other areas where the unemployment rate is 10 per cent, and sometimes more. In those areas the impact will be very much harsher. I do not see any good reason why it should be easier to get incapacity benefit in Newbury than in Newcastle, easier in Hampstead than in Hartlepool, and easier in Crawley than in Chorley. That seems to me to be an injustice.

It is not only geographical area which makes it harder for some people to get work than others. It is a very clear fact that it is much harder to get work if you are black. The rate of youth unemployment under 25 nationwide is 18 per cent. That is a Labour Force Survey measurement which I think is reasonably reliable. For black men under 25 nationwide the rate is 51 per cent; for black men under 25 in the Greater London area the rate is 62 per cent. So clearly the impact of this clause between black and white will be severely discriminatory. It will be discriminatory between those who have lost work, both under 45 and over 45.

I have already mentioned the lack of any satisfactory legislation against age discrimination and employment. In many areas and in many fields of work, if you lose a job over the age of 45 you have very little chance of getting another. If you thereafter fall ill, as has been known to happen, your chances of getting incapacity benefit drop by the year. I do not see any reason for saying that is fair. It works harshly against those whose disabling condition was weakening their capacity to work before they were diagnosed as eligible for incapacity benefit. Back pain and depression are two very common conditions to which that applies. It is not only that it is discriminatory; it is also that those against whom it is discriminatory are most likely to suffer limiting longterm illness and need to apply for incapacity benefit.

I take my evidence from a source that I am sure is familiar to the Minister, DSS Research Report No. 94. It shows that the incidence of severe disability varies very much indeed across the country. Indeed, the rate in Wales is as much as twice the rate in the south-east. There is a clear correlation between the poverty and disadvantage of an area and the amount of illness and disability which is found in it. For example, in Glasgow Easterhouse 18.3 per cent of the population have a limiting long term illness which hinders their capacity to work.

The interesting argument is this. Which is the hen and which is the egg? Government—I say "government" because it is equally true of the last government in 1993–94 and of this—assume that people claiming incapacity benefit after unemployment use it as a form of early retirement. I have never seen one shred of evidence for that assumption. But there is a large amount of evidence. some of it very powerful and not simply resting on correlation, that unemployment has a negative medical effect and leads to illness.

The most persuasive presentation of this view that I have seen was in a book by Jane Mattinson published by the Tavistock Institute for Marital Studies. It demonstrated bit by bit in individual case studies the deterioration of the state of mind, followed by limited resistance, followed by mild illness, followed by serious illness.

I refer to another specific case: the closure of the Harris bacon factory in Calne. That led to a massive increase in illness in Calne. It came immediately after the closure and was documented in each individual case and often consisted of physical symptoms about which there could be no argument. We still have to answer this question: why are so many more people found to be disabled than used to be? The DSS Research Report No. 94 found that a great many more people were found disabled than in its previous survey. But it concluded that almost all of them would have been found disabled by the criteria of previous surveys. So it is not that the criteria are being used more loosely. It is more a matter of disability coming out of the closet: being prepared to avow itself; not hiding away and refusing to admit. It is also probably the result of the highest levels of unemployment we have seen in this country since the 1930s. When we ask, "Which is cart and which is horse?", I believe that it is the unemployment that leads to the disability.

The people concerned are being doubly punished by this clause. Its philosophy is this: "To him that hath shall be given and from him that hath not shall be taken away even that that he has". It is not the policy of this party. I did not think that it was the policy of the Labour Party either.

Lord Morris of Manchester

My Lords, I pay tribute to my noble friend Lord Ashley for again having let your Lordships hear the authentic voice of disabled people on this clause which, as he said, is strongly opposed by every major disability organisation in Britain.

My noble friend describes himself as a lifelong Labour loyalist. I ask anyone who questions the truth of that to point to the last occasion in my noble friend's 33 years in Parliament on which he voted against a legislative proposal by a Labour Government. Friendship is one of the great tests of loyalty and, by that test, I know of no one more loyal than him. He is my very close and longstanding friend and like him— in my case after 35 years in Parliament—I am deeply saddened to find myself unable to accept what the Government are proposing in Clause 58.

I hope that we and other Labour Peers who cannot accept the clause without radical change will today be spared any homilies on the iniquity of disloyalty. In truth we feel more sinned against than sinning. For where in our general election manifesto was there even the vaguest suggestion that 170,000 people who now qualify for invalidity benefit would be denied it altogether? Who among us even hinted to the electorate that vulnerable people with a progressive illness like multiple sclerosis would lose their invalidity benefit even though they had contributed for it from their earnings week by week for 30 years? And how do I reply to the woman who wrote to me last Thursday from Huntingdon to say: Should this proposal pass into law it will bring further distress to those whose lives are already seriously restricted by disability and illness". What shall I tell her?

No wonder my good and right honourable friend Torn Clarke, who led for Labour in explaining our policy for disabled people at the general election, felt bound to speak and vote against this clause in the Commons. His speech kept faith impeccably with what he told the electorate on our behalf.

No convincing case has been made for the proposal since it was unveiled last October. Labour Ministers rightly condemned the Major government for their encouragement of unjustified invalidity benefit claims from unemployed people to cut their ever-lengthening dole queue. But the proposals now before Parliament do not dispossess those who allegedly ought not to have the benefit.

Instead they pile handicap upon handicap for many thousands of severely disabled people who, having paid national insurance for a contributory benefit in good faith over many years while in work, will lose the help for which they insured themselves.

Their resentment is compounded by media suggestions that the proposals are justified by massive fraud in the disability benefits system. Those suggestions persist and are repeated in public debate notwithstanding the conclusive proof of their dishonesty given to your Lordships' House—with all her customary candour and decency—by my noble friend Lady Hollis. As long ago as 15th January 1998, she made it crystal clear that suggestions of massive fraud were, based on old information from the previous government", and that after over 40,000 cases had been reviewed by DSS investigators in home visits to disabled people they had not found, a single case of confirmed fraud".—[Official Report, 15/1/98; col. 1142.] What my noble friend's statement to this House demonstrates is that to accuse disabled people of abusing the benefits system is to bark not just up the wrong tree but in the wrong forest. The real story is not that disabled people are abusing the system, but that the system is abusing them. For while the cruise missile can now be successfully targeted at a telephone booth in another country, we still seem unable to deliver their statutory entitlements to disabled people in this country. And without them they are left doubly disabled and often in double despair. Yet between £5 billion and £6 billion a year in benefits go unclaimed by the disabled people entitled to them.

A reason often given by disabled people for not claiming their entitlements is fear of being branded as what some commentators call one of the "somethingfor-nothing merchants". The same reason is given by frail elderly people, more especially single women living alone, for underclaiming £2 billion a year in income support.

Like those who speak for them in this House, disabled people want the Government to be tough on fraud and tough on the causes of fraud, not least when it is caused by administrative incompetence and corrupt private landlords. They point out that failure to tackle low take-up of benefits frustrates the will of Parliament. They are not resistant to change. For there are many reforms disabled people want to see. They are deeply appreciative, as I am, of the helpful new steps the Government have taken and will be taking and want the Government to succeed. But for that to happen Whitehall and Westminster must get the facts straight. And benefits for disabled people should be commended to the taxpayer not as acts of compassion but of enlightened self-interest and moral right. Our preoccupation should be with value as well as cost. And disabled people should be seen as givers, not only as receivers. For there are marked cost savings in humanely assisting them to achieve their potential as full and fully participating members of British society.

6 p.m.

Lord Higgins

My Lords, anyone who participates in a debate on the disabled opened by the noble Lord, Lord Ashley, supported by the noble Lord, Lord Rix, the noble Earl, Lord Russell and the noble Lord, Lord Morris, must do so with very considerable diffidence. But the measure which the Government have included in this clause is fundamentally wrong in principle. In particular it is a further step in the undermining of the contributory principle. If this clause is not amended it seeks to restrict incapacity benefit for those who have only recently been in work and paying contributions. But all the evidence that one receives from outside bodies shows that vulnerable people such as the unemployed, people with progressive illness such as multiple sclerosis and so forth, would lose benefit even though they may have contributed for 30 years. Therefore, I believe that this clause is completely wrong and that it is right to oppose it. It is entirely understandable that it should have been opposed in all parts of the House.

There are those who will say that there are reasons for taking action on incapacity benefit. There was the argument that under the previous government people received incapacity benefit more than was justified in order to take early retirement. That argument is invalid on two grounds. The first is that they were subject to severe inspection as to entitlement. In any event, the clause will only affect future claimants who have contributed and therefore it cannot have anything to do with what has happened in the past.

The reality is that the clause should be opposed in toto. The noble Lord, Lord Ashley, has tabled other amendments by way of compromise. I do not take the view that this is a matter on which there can be reasonable compromise. The noble Earl, Lord Russell, referred to half a loaf being better than no bread. But the people who have contributed to the benefit will not receive half a loaf. Unless they have contributed in the previous two years, under these restrictions they will get nothing whatever. That is quite wrong.

Many of the points that I wished to make have already been made. There is one other point. This matter is set against a background of events a couple of weeks ago when there was a large publicity campaign as to what the Government are doing on welfare issues. However, the reality of what they are doing now is contained in this clause, the one which follows and in Clause 61. All three severely endanger disabled people. It is wrong.

Therefore, I cannot go along with the compromise amendments which have been put forward. I very much hope that the House will ask the Commons to think again on this issue and accept the amendment which asks that the clause be deleted. In principle I believe that that is the right thing to do on this occasion.

Lord Campbell of Croy

My Lords, the three amendments are grouped together including Amendment No. 133, which is to leave out the whole clause. I shall address my remarks to Amendment No. 133. The debate was begun with clarity by the noble Lord, Lord Ashley, as one would expect. When this matter arose in Committee the Government claimed that the Beveridge proposals were linked to recent work and that that was the reason why they were now making it difficult for people who have been unable to make contributions to national insurance for two years.

The noble Baroness, Lady Hollis, did not give a full answer to the noble Lord, Lord Ashley, at that stage or answer the question as to where in the election manifesto the proposals appeared.

There is a geographical consideration to which the noble Earl, Lord Russell, made reference; namely, that there are parts of the country where it is exceedingly difficult to find work, particularly for a disabled person. Of course, it is much easier to find work in other parts of the country. That situation makes the clause objectionable.

There are two other considerations. As they grow older, some disabled people become more infirm but they try to stay in work. They should be congratulated on that. But it has to be part-time or low paid work. That means that when they retire altogether they will not have made recent contributions to national insurance and not enough to meet the requirements contained in this clause.

The other point is fraud. The noble Lord, Lord Morris, touched on that. It is clear that there is very little fraud in the disabled sector. Most of the fraud connected with benefits is concerned with able-bodied people, employment and housing benefit. It is not concerned with the disabled. That has been confirmed by the noble Baroness, Lady Hollis, in this House on previous occasions.

One of the troubles was a misunderstanding caused by an article in The Times of 15th January last year by the Prime Minister. It has been quoted by the noble Lord, Lord Morris, and I shall point it out again. There were two consecutive sentences in the article. The first was, We spend more on disability and incapacity benefit than we do on the entire schools system". The next sentence was, Benefit fraud, estimated at £4 billion a year, is enough to build 100 new hospitals". That is a non sequitur. The first sentence refers to disability benefits whereas the second refers to all welfare benefits put together. The noble Baroness knows that we on this side of the House are in favour of trying to reform the system. However, there is not much to reform as regards fraud and the disabled.

When the noble Baroness replied at Committee stage she referred to "recent work" being envisaged in the Beveridge proposals. That did not completely answer the noble Lord, Lord Ashley, concerning the intentions of the 1948 legislation. I remember that time very well. I was working in Whitehall from 1946 to 1949. I remember the legislation being prepared on the Beveridge Report which mainly introduced the new national insurance system. I was not in the department in Whitehall which was primarily involved, but friends and contemporaries of mine were. Whitehall was very small at that time and most of us had been in the Armed Forces during the war. We were in touch with each other and we were interested in what was being done.

From that experience I disagree with the noble Baroness who said in Committee on 13th July of this year, at col. 313 of Hansard, that Beveridge did not anticipate long-term unemployment. Of course he hoped that his national insurance system would prevent it. However, the whole basis and purpose of his proposals were to avoid the severe unemployment of the 1920s and 1930s. That was what inspired him to come forward with his proposals. The benefits then proposed anticipated loss of work and being able to help people when that happened. But the proposals were not hidebound as has been suggested. I trust that the Government will reconsider Clause 58 very seriously. If not, I shall oppose it.

Lord Davies of Coity

My Lords, I do not doubt for one minute the sincerity expressed by both my noble friends Lord Ashley and Lord Morris on this matter. I do not doubt the sincerity expressed by the noble Lord, Lord Rix, and the noble Earl, Lord Russell, but I do want to test the depth of sincerity of the noble Lord, Lord Higgins, and that of Members on his Benches.

Only last week in Blackpool David Willetts, the Opposition spokesman for social security, said, Labour's failure on welfare is first and foremost a catastrophic failure of financial control. That is why the first Conservative pledge I give this conference is that we will cut social security spending as a proportion of our national income. We did it before; we can do it again; we will do it again". But the facts are these. The Tory Government increased welfare spending by 90 per cent in real terms when they were in office, despite making cuts in benefit entitlement. The reason for the increase is that mass unemployment resulted during their period in office. The noble Lord, Lord Higgins, might say, as he did, that it is a question of entitlement because of contribution; but that did not seem to be the philosophy in 1986 when the Conservatives were cutting SERPS for widows—which would have occurred next year if we had not altered the situation on Monday this week.

If David Willetts is right—and he is the Conservative Party's official spokesperson—I ask the party opposite how it justifies the enormous cost which will result, contrary to his view, from the amendments which it is tabling to the Bill.

The Earl of Longford

My Lords, I do not propose to become involved in a discussion about the hypothetical views of Sir William Beveridge, although I worked with him for three years as his personal assistant when he was drawing up the main report some years before our much esteemed Prime Minister was born.

For over half a century, I voted loyally for the Labour Party whether they were in government or opposition, with a few exceptions. I often have to come along nowadays and ask, "which is the Labour Lobby"? I usually follow along obsequiously. But this time I am afraid that is not quite the case. In my eyes, my noble friend Lord Morris is unlikely to be wrong. Nor for that matter is the noble Lord. Lord Ashley, whom I of course much admire. I had the honour of carrying Alf Morris's famous Bill through this House nearly 30 years ago, and I have never yet found him to be wrong. If anyone should ask me whether I believe he knows more than the present Government, or any government, about the disabled, the answer is yes, I believe that he does. So I am afraid that I shall vote for the amendment of my noble friend Lord Morris.

The Duke of Buccleuch

My Lords, I should first declare an interest inasmuch as I am a recipient of disablement allowances of various kinds. I am also president of RADAR. and previously its chairman, and so I have been much involved in what has been going on behind the scenes in negotiations. I am saddened that the Minister in the other place in charge of the Bill is the Member of Parliament for my former constituency—what was Edinburgh North. Had I produced a measure such as this in my day I would have been literally savaged by my constituents.

We have gone so far down this road, and now, looking at these three amendments, I have great sympathy for the first two of them: to try to find a compromise, if it is possible to do so, on the very practical grounds that when the Bill goes back to the other place, if we simply delete this clause it will be reinstated; whereas if it goes back amended, there is some possibility that those sensible people in the other House will agree that those changes are better than nothing. Therefore I greatly hope that it will be possible to test the opinion of the House on the first two amendments before deleting the clause altogether.

6.15 p.m.

Baroness Hollis of Heigham

My Lords, the proposals contained in this clause have been debated thoroughly and I understand the issues expressed so eloquently by my noble friends—and they are my noble friends; it is not just a formality, but sincerely meant—Lord Ashley and Lord Morris. NI y right honourable friend the Secretary of State and I respond to the spirit of co-operation in which my noble friend has put forward various amendments.

However, the Government believe that their proposals are right. We remain convinced that a proposal for a contribution test based broadly on the two most recent tax years is largely right, although obviously—this has been made clear—my right honourable friend the Secretary of State in the other House is reflecting, both in the light of your Lordships' discussion and that elsewhere, on whether the two most recent tax years is the most appropriate figure. My noble friend's suggestion of a test which requires either contributions in one of the last seven years or 10 years' contributions in total would largely perpetuate the current position whereby incapacity benefit goes disproportionately to people who were previously unemployed.

As has been said tonight, and it is perhaps worth repeating, no one currently on incapacity benefit is affected. We are talking about future claimants only. It would be wrong to take away benefit from existing claimants, where they satisfy the other entitlement conditions, but we do not believe it right that incapacity benefit should become a means of alleviating the effects of long-term unemployment. The right way to tackle unemployment is through our welfare-to-work programme, not through incapacity benefit.

As my noble friend Lord Davies of Coity pointed out, the previous government were content to let thousands of people, men in particular, drift from unemployment to incapacity benefit and stay there until they retired. Not surprisingly—and I do not blame those people at all—many older people turned to IB as a more generous benefit, and perhaps somehow as a more "respectable" benefit than unemployment benefit. The then government colluded in order to massage their unemployment figures by switching people onto "the sick". We all know it. Never again. In many parts of the country a whole generation was written off by the previous government.

The Chancellor has made a statement to which I believe Beveridge would certainly have responded. He said that he is expecting and hoping for the prospect of a return to full employment and that that it is within our grasp. But if we are going to help people realise their full potential, as well as giving them support through the New Deal and the ONE service, it is essential that we are clear about the role of benefits such as incapacity benefit.

My noble friend Lord Morris raised the point about fraud. I say that this is not about fraud at all. I entirely accept his statements. I have never said that this provision was about fraud and I have never said that BIP was about fraud. He has been generous on many occasions to acknowledge that. The exercise of BIP (the benefit integrity project) showed that there was no confirmed evidence of fraud. I was delighted to be able to tell the House so on several occasions. However, it showed that quite a significant percentage of people—between 15 and 20 per cent or thereabouts —were actually on the wrong level of benefit. That was usually, I am glad to say, because they had got better, but they continued to claim an incapacity benefit.

Those are precisely the people whom the Government seek to help; those on, say, incapacity benefit who have got better, or those on DLA who want to, are entitled to and able to work. We want to encourage those people into the labour market, not to ask them to hold onto a benefit when the need for that benefit and the basis for their entitlement to it has passed.

What is the function of incapacity benefit? Incapacity benefit is supposed to provide a measure of earnings replacement for people who have had to stop work because of sickness or disability. It replaces to a degree the wages lost from work. That was the original intention. I know that many noble Lords may not accept that point, but it is long standing. I defer on this to the experience of the noble Lord, Lord Campbell of Croy, and to that of my noble friend Lord Longford. But we have had this checked and it is clear when one looks at what Beveridge was doing, from the start of the National Insurance Fund in 1948, the conditions of entitlement to sickness benefit included a requirement that contributions had been paid or credited in the most recent year. That was Beveridge's stipulation in 1948.

But the purpose of the original sickness benefit, which in time became invalidity benefit, which in time became incapacity benefit, was to require that contributions had been paid or credited in the most recent year. In other words, it was a benefit for those in work who had lost their work through sickness and disability in that year or the year before and, as a result, needed a benefit of support to replace their earnings. That was introduced by Beveridge. That requirement evolved over the years until in 1988 the previous Conservative government introduced the current second contribution condition for both sickness and unemployment benefit, which requires contributions or credits in both the last two years. That condition was carried forward unchanged by the previous government when sickness benefit was replaced by incapacity benefit in 1995.

I might add that when the second contribution condition was debated in 1987 the then junior Minister, Mr Portillo, said unequivocally about sickness and unemployment benefit: Both benefits are designed for people who have been in work and they have been so designed since 1948". Therefore, there has always been an understanding, an acceptance and an intention that IB was an earnings-replacement benefit for people recently in work who fell out of work through sickness or disability.

There is, therefore, a continuous history of a link between entitlement to incapacity benefit—or its predecessor, sickness benefit—and recent work. It has never been enough, as some noble Lords might suggest, for someone to have paid a minimal amount of contribution in just one year—a sort of "on account"—in order to receive incapacity benefit at any point thereafter; that is, 20 or 30 years after and so on. Equally, it has always been possible for people to have paid contributions over a number of years and fail to qualify. The entitlement conditions have always involved looking at what the person has been doing recently. In practice, people whose circumstances do not attract credits will currently need to have been working and paying contributions in both the last two years in order to qualify. It is an insurance scheme. If one has not paid that insurance, there must be questions about one's entitlement.

At the same time, however, the second contribution condition can be satisfied by credits alone. The current rules mean that someone who has been unemployed and who has signed on for many years qualifies. The result is that half of the people receiving incapacity benefit today came not from work, because they had become sick or disabled, but from unemployment—often many years of unemployment. Incapacity benefit was never intended to be an alternative unemployment benefit or, indeed, a top-up to early retirement benefit. It was intended to replace the earnings of someone who became ill or disabled while in work and fell out of work.

Therefore, the current situation with regard to IB is not consistent with the role of the benefit as a replacement for wages. Indeed, it would not have been even conceived of in the late 1940s by Beveridge when the national insurance system was created.

The Government's proposals for reforming the contribution test are intended to remedy the situation and establish a firm link between benefit entitlement and recent work. That link would not be achieved through the suggestion of my noble friend Lord Ashley of a test of contributions in one of the last seven tax years or 10 years in total. That is what he calls his compromise amendment. The one-in-seven test would allow people to qualify for as long as 8 years after they last worked and paid contributions. The 10-year alternative would extend that period even further. In practice, there would be so little difference from the current situation under the so-called "compromise benefits" as would make virtually no difference. At the moment approximately 300,000 people claim incapacity benefit after the six-month period. Under my noble friend's amendment, only 5,000 people would find themselves in a different situation from the one in which they are now. It is not a compromise. Effectively it continues the status quo.

However, the Government's proposals do recognise the need for some exceptions to the requirement to pay recent contributions. We are providing exceptions and exemptions for a number of vulnerable groups. Who are those vulnerable groups? In my view, the most vulnerable group is those young people who are long-term sick and who have become long-term disabled before they have the opportunity to work and contribute. They may have been born with cerebral palsy. They may have severe learning difficulties. However, they will never have been able to enter the labour market nor to build contributions. They are among the poorest and most severely disabled in our society. As a result of the measures which we propose in Clause 60, those people will be in a far better position than ever before. Those measures will enable them to claim incapacity benefit, rather than the much lower severe disablement allowance, without having to satisfy the contribution conditions. Therefore, the poorest and most disabled, those born with a disability virtually from birth or acquired in their youth, will be protected. They will receive IB without contribution conditions.

Another vulnerable group is carers. We have made it clear all along that there will be regulations to maintain the status quo for former recipients of ICA—invalid care allowance. They will continue to be able to qualify in the same way as now on the basis of contributions paid in any tax year and credits in the last two.

We have also said all along that there will be safeguards for people who leave IB and have to return to it before they have had sufficient time to rebuild their contribution record. Those are people on IB who have taken the risk of entering the labour market. We seek to lay that risk not on them but on the Government so that such people can return to IB if their health or their job, so to speak, collapses. We have achieved that through the protection of the one-year linking rule, which we introduced last year. We want to be able to provide a complete assurance that people will not lose out under the new contributions test if they try to return to work in that situation.

I am pleased to announce today a further initiative. We are providing protection for another particularly vulnerable group who might otherwise lose out through trying to work; that is, people receiving disabled person's tax credit and earning below the lower earnings limit. I believe that may refer to a point made by the noble Lord, Lord Campbell of Croy. I believe it was a legitimate concern and we are addressing it.

People on DPTC already benefit from a special two-year linking rule in IB. However, after careful consideration of the representations made by disability organisations, we agree that further safeguards are needed for low-paid workers who remain on DPTC for more than two years. Therefore, I am pleased to announce that we intend to provide that people who no longer receive DPTC—perhaps because a deteriorating condition such as multiple sclerosis, which has been mentioned this evening, means that they can no longer work—will be able to qualify for IB as they do now on the basis of contributions paid in any tax year rather than one of the last two. An amendment will be needed to ensure that our regulation-making powers are wide enough to do that. I hope to bring forward such an amendment at Third Reading.

I believe that those safeguards, and in particular the further protection that I have announced today, show very clearly that the Government are not inflexible. We recognise that there are particular circumstances in which it would be wrong to require contributions to have been paid in one of the last two tax years, and we are dealing with those. By using regulation-making powers, it also means that we have the scope to modify the protection for the groups which we have identified, should that be found to be necessary, and to provide for other people in comparable situations that may arise in the future. Flexibility is built into our approach.

For those who do not qualify for IB in future, income support will be available. Income support already goes to many people who satisfy the medical conditions for IB but not the contribution conditions. As your Lordships will know—

Earl Russell

My Lords, I am very glad to hear what the Minister says about disabled person's tax credit, but can she tell us the number of people affected by that concession?

6.30 p.m.

Baroness Hollis of Heigham

My Lords, we expect some 20,000 people to come onto DPTC. That is the broadbrush figure. Within that, I would not be able to tell the noble Earl who would qualify automatically—because even on DPTC there will not be a lower earnings limit—and those who might. However, we are expecting a figure of that order, although we hope to bring it up to 30,000. That is the best advice I can give to noble Lords at the moment.

To return to the point. If people are not receiving IB, where do they go? If someone is unemployed and becomes disabled, there is an alternative benefit which is in fact more generous than IB; that is, income support with a disability premium. Income support with the disability premium is worth £73 per week compared to £66 or £67 for IB. There is no question of hardship arising as a result of the change to the contribution conditions. That is the alternative benefit for someone who becomes unemployed and then after some years becomes entitled to help because they have become disabled. The benefit, according to household circumstances, is actually more generous than IB. Certainly, anyone who is unemployed—which comprises more than half of those coming on to IB—would normally have been receiving as their basic benefit the means-tested JSA. If someone qualifies for JSA and then becomes disabled, that person will qualify for IS with the disability premium and therefore will be better off.

Our approach recognises that where someone has been unemployed for an extended period and has not paid contributions, income support with the disability premium is the right benefit rather than incapacity benefit. We are not stripping away benefits and thus leaving people in hardship. We are trying to ensure that IB returns to the function for which it was always intended; namely, to be a replacement for those who become sick and disabled at work rather than those who have been long-term unemployed, who are currently on JSA and who would qualify for IS.

The Government believe that their approach is the right one. Of course, on top of all those benefits, people will qualify for DLA. Some noble Lords have tried to argue today that it is wrong to change the rules at all. However, in reality the rules for contributory benefits have changed numerous times over the years, and that is probably understandable.

Finally, I would remind your Lordships that the new contribution conditions are not difficult to satisfy. As now, contributions on earnings equivalent to 25 times the lower earnings limit, currently £66 a week, will suffice. To qualify, this is equivalent to just four weeks' earnings for someone on average male full-time earnings, or 12 weeks for someone on the national minimum wage. That period of 12 weeks' work on the national minimum wage to build up the qualification for a national insurance IB need not be continuous. The conditions can be satisfied by people with broken work records and intermittent health problems.

It has been suggested again tonight that the rules will create particular difficulties for people with deteriorating conditions like MS, for whom incapacity is preceded by a period of unemployment. But there is no question of people losing eligibility for IB after short periods of unemployment. Contributions need only to have been paid in one of the last two years. As I say, my right honourable friend in the other place is reflecting on that two-year rule. If the rules applied now, someone claiming benefit in 1999 following a period of unemployment would have been able to qualify on the basis of contributions paid as long ago as April 1996. I believe that that would normally be expected to cover a wide variety of the kind of circumstances your Lordships have properly raised tonight.

I said at the beginning that the Government fully understood the concerns that have been raised about the proposed changes to the contribution conditions for IB. Safeguards need to be provided—noble Lords raised some of those concerns at Committee stage—and I am glad to be able to announce that low earners on DPTC will be protected, as well as carers and former IB recipients, and indeed those who currently are on SDA and who are the poorest and most disabled who have never had the chance to enter the labour market.

But the Government also believe that there is a principle at stake here, and that it would be wrong to allow the current situation to continue where IB goes to many thousands of people who have no recent record of working and paying contributions. I hope that I have responded to the very real worries that noble Lords have addressed. We are reflecting on the two-year rule, and we have made important announcements tonight. However, at the end of the day, my noble friend's compromise is not a compromise. The Government cannot accept it and therefore I must say to my noble friend that the Government cannot support him.

Lord Ashley of Stoke

My Lords, my noble friend has treated the House to a first-class contribution which is typical of her eloquence. She is a marvellous government spokesman. Nevertheless, it may not have escaped her attention that in this House she was in a minority of one in advocating those policies. The noble Lord made a very ambiguous speech. I did not hear any strong advocacy of the Government's policy other than in the contribution of my noble friend.

The point I wish to make is this. The noble Baroness has spoken of what has gone wrong in the past, and no doubt she was, as usual, accurate. However, Clause 58 does not deal with the past. It deals only with the future. My noble friend was unable to contradict my allegation that 170,000 severely disabled people will lose their £66 incapacity benefit. She was unable to contradict my assertion that those people may have paid their contributions in good faith for 20 or 30 years, and then in the future they will be denied this crucial benefit. She failed to deny the fact that this will cause immense suffering to those people. When you are poor, £66 is a fortune. Valiantly though she tried, my noble friend has failed to deal with these problems.

When the Minister mentioned income support, she must know of—she is an experienced Minister—its shortcomings. There is no excuse for saying, "Income support is available", because you lose your savings beyond a certain amount. My noble friend knows that people's pride is involved here and the take-up is poor.

I do not wish to speak at length. However, I repeat: this Government have an outstanding record of helping disabled people. This clause is one of the few blots on their record. I hope that it will now be removed. At the beginning I said that if the Government do not accept my compromise amendments, I would withdraw Amendments Nos. 131 and 132. I said that I would press to a vote Amendment No. 133 to delete the clause.

I beg leave to withdraw Amendment No. 131 and to test the opinion of the House on Amendment No. 133.

Amendment, by leave, withdrawn.

[Amendment No. 132 not moved.]

Lord Ashley of Stoke moved Amendment No. 133: Leave out Clause 58

The noble Lord said: I beg to move.

6.53 p.m.

On question, Whether the said amendment (No. 133) shall be agreed to?

Their Lordships division: Contents, 251; Not-Contents, 95.

Division No. 3
CONTENTS
Ackner, L.	Dixon-Smith, L.
Addington, L.	Donegall, M.
Addison, V.	Downshire, M.
Alexander of Tunis, E.	Dunleath, L.
Allenby of Megiddo, V.	Dunrossil, V.
Anelay of St. Johns, B.	Eccles, V.
Ashley of Stoke, L.	Eden of Winton, L.
Astor of Hever, L.	Effingham, E.
Attlee, E.	Ellenborough, L.
Avebury, L.	Elton, L.
Baker of Dorking, L.	Ezra, L.
Barker, B.	Falkland, V.
Barnett, L.	Feldman, L
Bath and Wells, Bp.	Fitt, L.
Bathurst, E.	Flather, B.
Belhaven and Stenton, L.	Fookes, B.
Bell, L	Fraser of Carmyllie, L.
Berners, B.	Freyberg, L.
Biddulph, L.	Gage, V.
Birdwood, L.	Gainsborough, E.
Blatch, B.	Garel-Jones, L.
Blease, L.	Geddes, L.
Blyth, L.	Geraint, L.
Bowness, L.	Gilmour of Craigmillar, L.
Brabazon of Tara, L.	Gisborough, L.
Bradford, Bp.	Glanusk, L.
Bradshaw, L.	Glenarthur, L.
Brentford, V.	Glentoran, L.
Bridgeman, V.	Goodhart, L.
Brookeborough, V.	Gray, L.
Brougham and Vaux, L.	Hambro, L.
Buccleuch and Queensberry, D.	Hamwee, B.
Burnham, L.	Hanningfield, L.
Buscombe, B.	Harding of Petherton, L.
Byford, B.	Harmsworth, L.
Cadman, L.	Harris of Greenwich, L.
Caithness, E.	Harris of Peckham, L.
Campbell of Croy, L.	Hayhoe, L.
Carlile of Berriew, L.	Henley,[Teller ]
Carnegy of Lour, B.	Higgins, L.
Carnock, L.	Hogg, B.
Carr of Hadley, L.	Holderness, L.
Castle of Blackburn, B.	Holme of Cheltenham, L.
Cathcart, E.	HolmPatrick, L.
Charteris of Amisfield, L.	Hooper, B.
Clanwilliam, E.	Hunt of Wirral, L.
Clark of Kempston, L.	Hutchinson o f Lullington, L.
Clement-Jones, L.	Hylton-Foster, B.
Clwyd, L.	Inchyra, L.
Cocks of Hartcliffe, L.	James of Holland Park, B.
Courtown, E.	Jenkin of Roding, L.
Cox, B.	Jenkins of Hillhead, L.
Cranbrook, E.	Jenkins of Putney, L.
Crathorne, L.	Jopling, L.
Crickhowell, L.	Kimball, L.
Cross, V.	Kintore, E.
Darcy de Knayth, B.[Teller ]	Kirkhill, L.
Davidson, V.	Knutsford, V.
De L'Isle, V.	Laing of Dunphail, L.
Dean of Harptree, L.	Lane of Horsell, L.
Denbigh. E.	Leigh, L.
Denham. L.	Lester of Herne Hill, L
Dholakia, L.	Lindsey and Abingdon, E.
Dixon, L.	Linklater of Butterstone, B.

Liverpool, E.	Renton, L.
Lofthouse of Pontefract, L.	Rix, L.
Long, V.	Roberts of Conwy, L.
Longford, E.	Rogan, L.
Lucas of Chilworth, L.	Rodgers of Quarry Bank, L.
Luke, L.	Rotherwick, L.
Lyell, L	Rowallan, L.
Mackay of Ardbrecknish, L.	Russell, E.
Mackay of Drumadoon, L.	St. John of Fawsley, L.
McNair, L.	Saltoun of Abernethy, Ly.
McNally, L.	Seaford, L.
Maddock, B.	Seccombe, B.
Mancroft, L.	Selsdon, L.
Mar and Kellie, E.	Sempill, L.
Marlesford, L.	Sharp of Guildford, B.
Marsh, L.	Sharples, B.
Masham of Ilton, B.	Shaughnessy, L.
Mayhew of Twysden, L.	Shaw of Northstead, L.
Merrivale, L.	Shore of Stepney, L.
Methuen, L.	Skelmersdale, L.
Miller of Chilthorne Domer, B.	Slim, V.
Miller of Hendon, B.	Smith of Clifton, L.
Molyneaux of Killead, L.	Soulsby of Swaffham Prior, L
Monk Bretton, L.	Stewartby, L.
Monro of Langholm, L.	Stodart of Leaston, L.
Montagu of Beaulieu, L.	Stoddart of Swindon, L.
Monteagle of Brandon, L.	Strange, B.
Montrose, D.	Strathcarron, L
Morris, L.	Strathclyde, L.
Morris of Manchester, L.	Swansea, L
Mountevans, L.	Swinfen, L
Mowbray and Stourton, L.	Taverne, L.
Moynihan, L.	Taylor of Gryfe, L.
Munster, E.	Tebbit, L.
Murton of Lindisfarne, L.	Tenby, V.
Napier and Ettrick, L.	Teviot, L.
Nathan, L.	Teynham, L.
Nelson, E.	Thomas of Gresford, L.
Newby L.	Thomas of Gwydir, L.
	Thomas of Walliswood, B.
Newton of Braintree, L.	Thomson of Monifieth, L
Northbrook, L.	Thurso, V.
Northesk, E.	Tope, L.
Norton of Louth, L.	Tordoff, L.
Nunburnholme, L.	Torrington, V.
O'Cathain, B.	Townshend, M.
Ogmore, L.	Trefgarne, L.
Onslow, E.	Turner of Camden, B.
Oppenheim-Barnes, B.	Ullswater, V.
Orme, L.	Vivian, L.
Oxfuird, V.	Wallace of Saltaire, L.
Palmer, L.	Walpole, L.
Park of Monmouth, B.	Waterford, M.
Patten, L.	Watson of Richmond, L.
Pender, L.	Weatherill, L.
Phillips of Sudbury, L.	Wharton, B.
Prentice, L.	Wigoder, L.
Radnor, E.	Wilcox, B.
Rawlings, B.	Williams of Crosby, B.
Razzall, L.	Williams of Elvel, L.
Redesdale, L.	Wise, L.
Rennard, L	Young, B.

NOT-CONTENTS
Acton, L.	Brooke of Alverthorpe, L.
Ahmed, L.	Brooks of Tremorfa, L.
Alli, L.	Burlison, L.
Amos, B.	Carter, L.[Teller]
Bach, L.	Christopher, L.
Bassam of Brighton, L.	Clarke of Hampstead, L.
Berkeley, L.	Cledwyn of Penrhos, L.
Blackstone, B.	Clinton-Davis, L.
Bledisloe, V.	Crawley, B.
Borrie, L.	David, B.
Brett, L.	Davies of Coity, L.

Davies of Oldham, L.	Jay of Paddington, B.(Lord
Dean of Thornton-le-Fylde, B.	Privy Seat)
Diamond, L.	Kennedy of The Shaws, B.
Donoughue, L.	King of West Bromwich, L.
Dormand of Easington, L.	Lea of Crondall, L.
Dubs, L.	Lipsey, L.
Eatwell, L.	Lockwood, B.
Elder, L.	Macdonald of Tradeston, L.
Evans of Watford, L.	McIntosh of Haringey, L.
Falconer of Thoroton, L.	[Teller]
Farrington of Ribbleton, B.	Mackenzie of Framwellgate, L.
Faulkner of Worcester, L.	Mason of Barnsley, L.
Filkin, L.	Merlyn-Rees, L.
Gilbert, L.	Milner of Leeds, L.
Gladwin of Clee, L.	Molloy, L.
Gladwyn, L.	Monkswell, L.
Gordon of Strathblane, L.	Montague of Oxford, L.
Goudie, B.	Pitkeathley.B.
Gould of Potternewton, B.	Ponsonby of Shulbrede, L.
Graham of Edmonton, L.	Prys-Davies, L.
Grantchester, L.	Ramsay of Cartvale, B.
Grenfell, L.	Rea, L.
Hacking, L.	Rendell of Babergh, B.
Hanworth, V.	Richard, L.
Hardy of Wath, L.	Rogers of Riverside, L.
Harris of Haringey, L.	Sawyer, L.
Haskel, L.	Scodand of Asthal, B.
Hayman, B.	Smith of Gilmorehill, B.
Hilton of Eggardon, B.	Strabolgi, L.
Hogg of Cumbernauld, L.	Symons of Vernham Dean, B.
Hollis of Heigham, B.	Taylor of Blackburn, L.
Howie of Troon, L.	Thornton, B.
Hoyle, L.	Thurlow, L.
Hughes of Woodside, L.	Varley.L.
Hunt of Kings Heath, L.	Warner, L.
Irvine of Lairg, L.(Lord	Warwick of Undercliffe, B.
chancellor )	Whitty, L.
Janner of Braunstone, L.	Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.

Clause 59 [Incapacity benefit: reduction for pension payments]:

6.53 p.m

Lord Ashley of Stoke moved Amendment No. 134: Page 66, line 37, after ("payment") insert ("exceeding the level of the Disability Income Guarantee")

The noble Lord said: My Lords, the position regarding my amendments to Clause 59 is the same as for Clause 58. I am strongly opposed in principle to the clause because its provisions would devastate many severely disabled people who have saved via an occupational pension.

The Government are making an extraordinary proposal which provides, for the first time, means testing for a major long-term contributory benefit. The importance of that should never be underestimated. It raises questions about the future of contributory benefits. Are the Government moving away from them? The same arguments for hitting disabled people claiming incapacity benefit and having an occupational pension can also be used against the retirement pension. What will happen in future if this principle is accepted?

Means testing breaches the moral contract between the Government and the people. None of those people who have paid national insurance contributions, perhaps for 20 or 30 years, will have had any idea that if they became disabled, they would be hit as hard as they will be under this clause.

The clause provides that anyone claiming incapacity benefit who has an occupational pension of over £50 shall lose a stunning 50 pence in every pound for every additional pound over £50. That is a stunning figure by any standards. To start penalising severely disabled people so drastically because they have such a small pension would be remarkable for any government. For a Labour Government, historically committed to helping the poor, that is amazing. I know that the figure of £50 is not in the Bill. The specific figure will be in regulations. However, the Government's thinking was clearly betrayed when they put the figure in the Explanatory Notes to the Bill.

Ministers have indicated that they will reconsider that figure. However, I must tell them that any paltry increase would not be acceptable to me nor, I believe, to the House as a whole. It certainly would not be acceptable to the 500 disability organisations which have unanimously condemned the proposal.

It is bad enough to start cutting incapacity benefit at this low level of pension. It is equally unfair that the cut should be at the penal rate of 50 pence in every pound. As incapacity benefit is already taxed at 23 per cent, this new imposition would mean that the incapacity benefit of many future disabled people would be at the marginal rate of 73 per cent. The top rate for millionaires is 40 per cent. Where is the sense in that? Where is the justice and the reason?

Ministers are implying that incapacity benefit recipients are well off. I do not like using figures because I am not good at them, but I must impose a few on the House. The Government intend to start cutting IB for someone with an occupational pension as low as £51 per week. Severely disabled people, with an incapacity benefit and a £51 pension would have a total income of just £117.75 per week, or £6,123 per annum. That is only 37 per cent of average income and just 28 per cent of average male earnings. These people are not, by any stretch of the imagination, well off. They are also too severely disabled to work to improve their income. They are nailed to poverty. By definition, they are incapacitated, and too incapacitated to work.

The Government's proposal is that all incapacity benefits should be withdrawn when a person has a pension of £181.77 per week; that is £9,452 per annum. That is 58 per cent of average income and 43 per cent of average earnings. All I can say is that an income of £9,500 is not a wealthy one.

The Government seek to justify their proposals by claiming that there is double provision of pension and incapacity benefit; that very few people used to have occupational pensions, whereas now many people have them. That is the Government's case, or part of it. However, that has already been taken account of by the previous Tory government who removed the earnings-related element of the former invalidity benefit when it became incapacity benefit. The Tory Government did that precisely because of double provision, so it is already dealt with. The deduction is already made. This Government are going on with a further deduction as if the previous government had done nothing about it. It is a duplication of effort. In fact it is double jeopardy for disabled people and I cannot see for the life of me how that can be justified.

If the Government wish to remove incapacity benefit from those who make their own provision with savings and pension, then they should also remove the requirement to pay the portion of contributions that pays for incapacity benefit. That is logical common sense. Not only is the principle wrong; so is the practice proposed by the Government.

In the spirit of compromise which I mentioned a moment ago, I want to propose some fairer figures. Instead of the Government's proposal of penalising people with a £51 pension, I suggest in my amendment that the reduction in incapacity benefit should not begin until a person has a pension of £128 a week. That is the level of the disability income guarantee and that is an amount fixed by the Government. It is a realistic figure. By relating the level to the guarantee and placing this in the Bill it indexes the level and ensures that it will not decline in real terms over time, and that is very important. I hope the Government will be able to accept that.

The 50p in the pound rate of deduction is far too high. I know that there are all sorts of social security tapers, but the significant factor about incapacity benefit is that people have contributed in order to receive it should the need arise. It is not a means-tested benefit which, by definition, has to be related to overall income. I believe, and I invite the House to believe, that two types of payments—national insurance and occupational pension—should mean two benefits. Again, those are straightforward, reasonable, honest propositions. But, again, if Clause 59 is accepted, the moral concept is totally removed.

If we must have the taper then this figure of 23p in the pound, which is the standard rate of income tax, is a reasonable one. I recognise that if all the provisions of my amendment were accepted the incapacity benefit would riot be totally withdrawn until the disabled person had an income of £21,747 per annum. The Government would no doubt object to that and claim that these people would be wealthy. I disagree. They would not be paying the higher rate of tax, which is the usual measure of wealth.

There are two vital points to take into consideration. First of all, most people affected by the Government's proposals will have nothing like this income and most of them will be poor. They are the people that we are concerned about tonight with these amendments.

Secondly, regardless of how high the income of the few may be, all of them have paid their national insurance contributions, in some cases for decades, and they are entitled to the benefit when the need arises. I am labouring that point. I make no apology for it, because it must be fair. If people pay you must keep faith with them and give them what they have earned. In an effort to build some kind of bridge, I commend this amendment to the Government. If it is not accepted by my noble friends and the Government, as I have said, in my second amendment I shall invite the House to reject the clause completely. I beg to move.

7.00 p.m.

Lord Rix

My Lords, I regret the extension of means testing to a non means-tested benefit, and I should like to see the Government accept the substantial easement of the new means test proposed by the noble Lord, Lord Ashley—seconded, as it were, by me—but that, I fear, is wishful thinking.

The Government deserve credit for the improvements they have made through this Bill for severely disabled people, and I for one accord that credit. However, beneficial changes inevitably have a price tag attached, and the savings contained in this clause certainly provide the necessary financial leverage.

Noble Lords may wonder why I am taking such an interest in this clause, particularly as the majority of people with severe learning disabilities do not have pensions and therefore will not be adversely affected. The reason for my profound discomfort with the principle that an advance for one group of disabled people must be paid for by a reduction in benefits for another group of disabled people must be quite clear.

The Government seem to have couched this distinction in terms of the deserving and the undeserving disabled, characterising the undeserving—the losers in this clause—as those who are using incapacity benefit to finance early retirement. This I believe is misleading. All those who have passed the all work test for incapacity benefit should be judged to be incapable of work, albeit with a measure of assessment of their future capabilities.

I have heard enough said by Ministers to convince me that some further change is in mind to the means test formula. But once again detail has not been forthcoming. I, like a number of other noble Lords present today, would be satisfied with a change which includes substantially raising the level of the existing disregard and protecting its value over time.

I am therefore led to express my disappointment at the Government's continual procrastination over this clause. If there is a Division on Clause 59, as I believe there will be, I feel unable to lend this clause my wholehearted support. I cannot in all conscience represent the concerns of disabled people generally unless I vote against the clause as it currently stands. Nevertheless, I look forward to hearing more detail on any progress in government thinking from the noble Baroness, Lady Hollis, and I urge her and the Government not to defer such detail to another place.

Earl Russell

My Lords, majorities of over 150 do not happen very often in this place. Whatever they may say about the composition of this House or anything else, Ministers should think very carefully about what they may have done to contribute to that result. I say, not to the Minister, who is too good a scholar to need it, but through her to the Secretary of Slate arid the Prime Minister: I pray you, in the bowels of the Lord, to think it possible you may be mistaken.

I am afraid, however, that I have to make the same point to the noble Lord, Lord Ashley of Stoke, about his amendments that I had to make in the previous debate. I respect and honour the intention behind the amendments, but the principle of what is being attempted is not acceptable and therefore a compromise would not really be a compromise since it would involve accepting the Government's principle.

My objections to what the Government are doing are twofold. The first is the obvious commonsense one that it discourages saving. The second is the erosion of the contributory principle and therefore the taking away of what one might perhaps regard as a legitimate expectation. I am not, of course, going to adopt the tablets of stone principle that conditions for contributory benefits may never be changed under any circumstances whatever. We are not Medes and Persians and if we were we would not need a Parliament. But we do have to take account of the fact that in pension provision, with the changing age balance, the shortage of young people as well as the numbers of old ones, we really must be thinking about encouraging a climate of private provision. Occasionally I think people are going too fast in that direction, but I do think that discouraging private provision, in the present actuarial situation, is going rather against a change in culture which we need to see. I think it is a long way from joined-up government.

The argument about these people being wealthy, as the noble Lord, Lord Rix, hinted at very briefly, grossly fails to take account of the extra costs of disability and it gets more and more clear that we have underestimated those at every stage.

The other really interesting thing about this proposal is how it got here. Some of your Lordships will have read the article in the Guardian of 25th September which pointed out what some of us had previously suspected; namely, that the proposal is identical to one put forward, largely by the same civil servants, through Michael Portillo and offered to Peter Lilley in 1993. I am interested in the response that Mr. Lilley gave, and the quote is from the original documents. He said that the move would justifiably create "a source of resentment" among disabled people and raise difficult questions about the contributory principle.

Mr. Lilley went on to say—these are his exact words— I do not favour this approach. Apart from the disincentives to make private provision it would introduce, I think it would raise some very difficult questions about the future of the contributory benefit system before we have fully thought through the direction we want to take". Mr. Lilley said it all.

We heard earlier from the noble Lord, Lord Davies of Coity, who is no longer in his place, a variant of the "Mr. Jones will come back" argument directed against the Conservatives. But there are two points about that argument: first, it was never employed, except when those in charge were doing something rather wrong; and, secondly, if we take Mr. Lilley as the Mr. Jones on this occasion, he seems to me to have shown a good deal more sense that this Government.

The final point that I wish to make is that this direct carbon-copying of a proposal from the Treasury under Michael Portillo seems to me to cast some doubt on the general concept of welfare reform as employed by the Prime Minister. It tends to suggest that it is not some great, new, glorious brainchild of the Prime Minister's thinking: it is simply the Treasury doing business as usual. We are used to that.

Lord Morris of Manchester

My Lords, writing to me about this clause yesterday my friend for many years, Sir Peter Large, than whom no severely disabled person is more widely respected in all parts of both Houses, said: The policy of redistributing resources from disabled people in need to others in greater need is abhorrent to me. Unfortunately, the policy is nowhere more clearly evident than in Clause 59, which introduces the dangerous precedent of means testing a contributory benefit". Sir Peter went on to say that by no stretch of anyone's imagination can people with a personal pension of £51 a week be thought of as sufficiently well off to be an appropriate target for means testing. He added: It is in stark contrast to the future upper earnings limit for the new Children's Tax Credit which will be approximately £38.500 a year". Many disabled people fear that the worse is to come. Clause 59(3)(c) allows invalidity benefit to be reduced through, a payment of any other specified description; and 'specified' means prescribed by or determined in accordance with regulations under this section". There is widespread worry, notwithstanding all that has been said by Ministers so far, that the means testing of invalidity benefit that this clause proposes will lead logically to taking other benefits into account and means testing them also.

Where in our general election manifesto was there any hint that disabled people would be forced to take a cut in benefit of 50 per cent of any personal pension worth over £50 a week so that, for example, someone who has saved for years to provide a weekly pension of £75 will have her or his benefit cut by a punishing £12.50 a week? What possible justification can there be for doing this when between 1980 and 1998 disability benefits were frozen, while average earnings in Britain rose by £115 a week in the same period?

Clause 59 confuses reform with retreat. "What justice is there", I am asked by disabled people, "in penalising those who forgo pleasure today in order to pay for safeguarding their future?" Many say that the Government's top priority ought to be improving the take-up of disability benefits.

I most strongly urge my colleagues in government to think again about this clause which they know, as well as I do, is deeply resented by everyone aware of its implications for many of the most vulnerable people in Britain today. Speaking from ministerial experience of, I think, twice the length of any present Minister in your Lordships' House, I know the consequences for individual Ministers of the deceit that government is seamless. The reality is that every Minister in all governments must fight his or her corner for available resources. I have no doubt whatever that my noble friend Lady Hollis has fought her corner and that her commitment to making life better for disabled people is every bit as strong now as it was before she became a Minister.

I profoundly hope that we shall hear when she speaks that this clause will now be withdrawn.

7.15 p.m.

Lord Campbell of Croy

My Lords, I shall speak to Amendment No. 136, which would leave out the whole of Clause 59 and which is grouped with the other two amendments that we are discussing. The clause would extend means testing within the system of contributory benefits, as noble Lords have already pointed out, but it would penalise people who have saved for the future with the encouragement of successive governments.

I spoke on this point in Committee, so I shall be brief in what I have to say tonight. However, I draw your Lordships' attention to this anomaly. It appears that pension income only is involved in the means testing. This seems unfair as between pensioners with pension income and pensioners with other private income. I should be grateful for confirmation from the noble Baroness that this is so and perhaps she could explain why it is so. I shall join the noble Lord, Lord Ashley, in opposing this clause for the reasons which I gave in Committee.

Lord Higgins

My Lords, as has rightly been pointed out, this is means testing of a major, long-term contributory benefit and, as such, must give grave cause for concern. The case against the clause and in favour of the amendment has already been made strongly, but what is extraordinary about it is not merely that it is means testing a major benefit but the way in which it proposes to do so.

The noble Earl, Lord Russell, suggested that this was something put forward by the previous government, turned down by them but accepted now by this Government—a kind of "Yes, Prime Minister" television show scenario. If any Sir Humphrey had put this before Jim Hacker in the programme, he would have had no difficulty at all in turning it down. He would have pointed out clearly that the people who would be means tested are those who happen to have pensions. He might have added that the entire purport of most of this Bill, which we have been debating day after day, is to encourage people to take out pensions. If they happen to be disabled, and no doubt had greater difficulty in procuring a pension in the first place, they are now to be told, "Well, you are not going to get the full amount of your disability benefit because you have been prudent enough to take out a pension".

The noble Lord, Lord Rix, suggested that the Government are distinguishing between the deserving and the undeserving disabled. He is right: in my view, we must make no such distinction. But the people who are regarded by the Government as the undeserving disabled are those who have been prudent enough to provide themselves with a pension.

This clause verges on the bizarre and I really do not think one needs a very long speech to point that out. The reality is that there are estimated to be some 45,000 people—prudent, disabled people—who will lose in the first year, rising to 335,000 after 10 years. I have had a very large number of letters from people. One example concerned a. lady who had previously worked as a nurse and had had a stroke. She managed to get a pension and long disability benefit, but she now writes to me saying, "If this goes through I will probably have to sell my house".

There are many such cases. It is very easy, in this atmosphere, to look at it all in a rather academic way, but the reality is that there are people concerned who are disabled, who have been prudent, and they are being penalised by the Government. I think I am right in saying, if I may just pick up the point made by my noble friend Lord Campbell of Croy just now, that if someone has a disability benefit—the Minister will correct me if I am wrong—and has an income from, let us say, shares, of £2 million a year, they will still continue to get their disability benefit.

This clause, as it stands, is quite absurd. The noble Lord, Lord Ashley, has rightly considered the matter and he has put down amendments which would effectively contain a degree of compromise. I think the principle behind this clause is doubly wrong, and we really must totally oppose it.

Baroness Masham of Ilton

My Lords, I would just like to say: was not the cause of the downfall of the Conservative government that they did not listen to their friends? It would be very advisable tonight to listen to their friends, the noble Lords, Lord Ashley and Lord Morris, who know so much. As a disabled person myself for about 42 years, I can assure your Lordships that whatever a person's income, disability is exceedingly expensive. I do hope that the Government will listen.

Baroness Hollis of Heigham

My Lords, in proposing to take some account of pension income and incapacity benefit, perhaps I could pick up some of the points that have recently been made tonight. We are not of course means testing in any conventional sense. We are not taking into account in these proposals other income, such as a spouse's income; nor, despite the suggestion of the noble Earl, Lord Russell, are we taking into account savings and the thrift associated with them. We are talking about pensions.

As the noble Lord, Lord Higgins, knows, incapacity benefit is designed for people who lose their work through sickness or disability. If they become sick or disabled after normal retirement age they do not qualify for IB. They qualify for a retirement pension and possibly for attendance allowance, but the state retirement pension is paid basically at the same level as IB. Therefore if someone retires early and has a pension, as an alternative to their earnings as opposed to a normal retirement, at that point they simultaneously receive IB as well as their earning pension. That means a double coverage for the same contingency.

In the same way, perhaps I may take the example of travel insurance and also insurance of household goods. If I lose a suitcase on holiday I do not get reimbursed from both sources. You do not get double coverage for the same contingency. That is why we are taking pension income into account: not savings, not income, not a spouse's income and so on.

Lord Swinfen

My Lords, I wonder if the noble Baroness will allow me to intervene? Is she not aware that if you have to give up work and take a pension early, particularly early by a number of years, you are taking a pension at a very much reduced rate and you are not getting the amount every week or every month that you would have been getting if you had reached the normal retirement age. The pension is cut down. Therefore, the Government are giving a double-whammy to disabled people who are forced to retire early.

Baroness Hollis of Heigham

My Lords, I am afraid that I would not accept that. In the first place, from my own experience, when people do retire there is often a package in the round of added years and so on, if retirement is on medical grounds. Secondly, if the disability is of sufficient severity they will almost certainly be entitled to some level of disability living allowance which tops up their income in addition to IB. I accept that in some circumstances what the noble Lord has said may be right, but I would certainly not accept that it applies to the majority of people about whom we are talking here. There are other sources of income, like DLA, which I think he has overlooked tonight.

As I explained before, benefit for incapacity and similar allowances were introduced when very few people had occupational pensions. If someone needed to retire early through sickness or disability, there was nowhere else for them to go but on to sickness benefit. They could very seldom draw down an occupational pension, whether reduced, as the noble Lord said, or in full. In either case, three-quarters of the population would not have had that sort of access.

Now, the vast majority of people do: about 85 or 86 per cent of men, for example, have an occupational pension. Incapacity benefit, IB and its predecessor, sickness benefit, were designed to replace wages. They were never designed as a top-up to generous white-collar pensions, offered for early retirement. In the public sector, for example, there can be ill-health retirement on £25,000 a year, and such pensions cost us £1 billion a year. The Audit Commission found that in some local authorities 50 per cent of retirements are on ill-health grounds.

Overall, 22 per cent of civil servants, 25 per cent of teachers and 39 per cent of local government staff—I say nothing about the police—who retired over a five-year period did so on medical grounds. Normally they would also be eligible for IB; yet they have generous occupational pensions and in most professions their pensions are made up in full. That is what we are talking about. We are talking about IB which for many people who have generous white-collar pensions has become a top-up for early retirement.

My noble friend, in his usual courteous and impeccably careful way, has put forward amendments which at least accept the principle that there should be a partnership between the state provision and what people themselves provide, by way of pension. I very much appreciate the careful and considered way in which he has sought to move the debate on, but I hope I may yet persuade my noble friend that he should not insist on seeking the support of the House for his amendments.

The Government are currently spending over £24 billion a year on benefits for disabled people: that is about a quarter of the Government's total social security expenditure. We believe it is right that the money should go to those who most need it, to those disabled people on low or modest incomes and to those whose disability needs are most severe. In other words, we are talking about those who are most likely to be in financial need and those with the most acute disabilities. Those are our priorities.

Perhaps I may just remind your Lordships that no one on IB at the present time will be affected. For the future, assuming the same proportion of IB recipients with pensions, the number of new cases who are unaffected will still be around 80 per cent. Therefore, under the Government's proposals everyone now on IB will be unaffected and in future 80 per cent will be unaffected. The 20 per cent who would be affected are for the most part retiring early with generous white-collar, often public sector financed pensions, paid for by us all, which were designed to cover the same contingency as IB is being asked to pay for: that is early retirement on grounds of sickness. That is, where the Government stand. They do not believe that that is the right or the best use of public money.

Lord Barnett

My Lords, would my noble friend allow me to intervene? She has raised the question of cost: £24 billion. If cost is the issue, could she tell us what would be the cost of allowing this amendment?

Baroness Hollis of Heigham

My Lords, I wonder whether my noble friend would allow me to go on, because I will come back to that in detail later regarding my noble friend's proposal about the number of people who will be affected. We are talking about those in financial need and those who have the most acute disability, the most financial need, those who are currently on SDA and the client group so movingly spoken to by the noble Lord, Lord Rix, on many previous occasions in your Lordships' House who are now bumping along on income support; they have SDA but they have to be means-tested for income support and they still live, in my view, a very limited life in terms of the income available to them.

What we are doing with our proposals is ensuring that those people go on to IB. In other words, those who have been born with a disability or acquire a disability before going into the labour market—the poorest of the poor—will see an increase in their benefits of nearly £30 a week. That is what we are doing; we are seeking to bring money to those who most need it. Not to the early retirement teachers, civil servants, university lecturers or who you will, but to those who most need it. People such as those who have learning difficulties or cerebral palsy will receive an extra £30 a week. We are seeking to help those who are the poorest among the groups of disability.

Secondly, we want also to concentrate help on those who are the most severely disabled as well as on the poorest. I hope to offer some good news to the House. Many of the concerns about the Government's proposal to take pension income into account in IB have focused on the impact on severely disabled people with progressive, degenerate diseases, or perhaps on people who have had a traumatic injury which has left them in need of care by day and night and unable to work until retirement or early retirement. I am delighted to tell your Lordships that in recognition of the special circumstances and particular needs of this group, the Government have decided that there should be no reduction of incapacity benefit at all in the case of people who are the most severely disabled; that is, those 'who are entitled to the highest rate of the care component of disability living allowance.

This recognises that the most severely disabled people who work and have to plan in the expectation of early retirement—because of MS or whatever—and a reduced pension are in a very different position from the school teacher, the university teacher, and so on, who retires early—perhaps on grounds of stress, depression, a lower back injury or arthritis. They are very different from the people we are talking about, such as the person who has a broken back or who has been born with cerebral palsy; they are the people who really need our help. We are therefore focusing on the poorest and most severely disabled.

In the Bill we are helping the most severely disabled with the exemption for those on the highest rate of DLA; and we are helping the poorest by ensuring that those who would otherwise be on income support and SDA—MENCAP clients and those with CP, for example—will get a £30 lift in their benefit. That is consistent with our strategy of concentrating resources on the most severely disabled people and the poorest people, those with greatest need. We will bring back an amendment to put this into effect.

We estimate that approximately 20,000 people on IB will benefit in the long run in the future. None of these pension proposals, the tapering or whatever, will affect those people with the most acute need and whose disability generates the highest rate of care—they may have MS, spinal injury or be bed ridden—and qualify for the highest of the DLA; they will be exempt. This will recognise the high cost of disability, as the noble Baroness, Lady Darcy de Knayth, said. I am sure that this will be welcome news to your Lordships. It is a direct consequence of the views expressed in your Lordships' House and urged on the Government.

It also has a direct bearing on my noble friend's amendment linking the disregard to the disability income guarantee. The Government's guarantee that he quoted applies only to people on the highest rate of DLA. My noble friend would apply it to all people. irrespective of the degree of disability. My noble friend is offering a disregard of the same value for all disabled people, whether they are suffering from stress or mild arthritis or have been paralysed by a major injury. My noble friend's amendment treats the ex-bank manager with a good pension, who has taken early retirement and who 10 years on develops depression and qualifies for IB in the same way as the King's Cross fireman with a broken back. The Government do not. I am not for a moment denying that depression is not real; I am saying that the ex-bank manager is in no financial need. His depression need generate no additional financial costs—if it does, he may go to DLA—unlike the fireman, who needs constant care and attendance. The fireman is the person we are seeking to help.

I would also remind the House that the Government have not yet confirmed the level at which pension income is to be taken into account in other cases. My right honourable friend the Secretary of State has said all along that he will review the proposal in last year's consultation document to reduce IB at the rate of 50p in the pound for every pound of pension income over £50. In seeking to specify the value of the disregard and the taper on the face of the Bill, my noble friend's amendment would pre-empt the Secretary of State's consideration of these issues and prevent him from bringing forward his own proposals. I rather suspect that is my noble friend's intention. The Secretary of State has made it clear that his figures are not set in tablets of stone. He has listened and consulted and he is reflecting on the issue. He will come back in due course with his proposed figures.

My noble friend said that he is offering a compromise. In linking the taper to the basic rate of income tax and starting the disregard at the disability income guarantee of £128, my noble friend has more than halved the taper and more than doubled the disregard. Some compromise! My noble friend's idea of a compromise is to accept the principle in theory and then to move an amendment to exclude almost everyone affected from its impact. While the Secretary of State is thinking carefully about these figures, your Lordships will appreciate that my noble friend is expecting the Secretary of State to move a very long way if there is to be any meeting of minds.

What does my noble friend's amendment mean? Take together a taper linked at the basic rate of income tax and his disregard, and what would it mean? My noble friend quoted a figure of £23,000 for a single man; only at that point would he lose his entitlement to IB. If someone was getting IB for a partner and two children, they would continue to be eligible for IB until the pension income was £39,000. My noble friend would protect the situation of someone with previous earnings of £70,000 to £80,000 and the possibility of decent savings which would generate a pension of nearly £40,000. Only at that point would my noble friend's amendment extinguish the right to IB.

I ask your Lordships, is it really our priority that people at that generous level of income, with pensions nearing £40,000 a year, should still retain, if they have children and a spouse, an entitlement to incapacity benefit? Should they receive a level of support when we have people with very modest incomes living on income support—people with learning difficulties and the like—not getting the help and support that they should? It is about priorities—and I am asking your Lordships to judge those priorities tonight. Under no circumstances can the people protected by my noble friend's amendment be regarded as modest or in need.

In setting the level of the disregard we have to be fair to all, including people on IB who do not have the advantage of pensions and people in work who are often earning less than the level of pension that would be protected by my noble friend's formula. I should remind the House that nearly half of those on IB are in the top 40 per cent of income in this country, whether or not DLA is calculated. Many disabled people are not poor if they retire early with generous pensions.

My noble friend and I disagree. I hope that your Lordships will accept that the Government's approach is based on principle and a careful assessment of the issues. The important exemption that I have announced for people on the highest rate of DLA care will go a long way to meet many of the concerns raised by your Lordships and disability organisations. It will do far more for the most severely disabled than my noble friend's amendment. On his proposal the taper will still kick in; on ours they will be exempt altogether.

The Government's proposals are more generous to the most severely disabled people than my noble friend's compromise amendment. My noble friend, however, is more generous than the Government think right to those who have earned £70,000 to £80,000 in the past and who now have white-collar pensions of £30,000 to £40,000.

Lord Goodhart

My Lords, does the Minister accept that, under her proposals, if the disabled person does not have a pension but an investment income of £39,000, £50,000 or £100,000, they will lose none of their incapacity benefit?

Baroness Hollis of Heigham

Yes, my Lords. But if one looks at the profile of savings and wealth compared to the profile of pensions, one will find that people protected by that are a tiny handful compared to the number of people who will be protected under the amendment of my noble friend Lord Ashley. His amendment protects pension income; an occupational pension is the big source of income for white-collar people. We think it not unreasonable, if they are not in financial need, to consider the interlocking of that pension with disability benefits.

I was asked by my noble friend Lord Barnett what would be the cost of accepting my noble friend's amendment removing the clause. It would remove savings of £45 million in year one, £190 million in year three, and £550 million in year 10 as provided for in the Government's original proposals. That money would not then be available to help the poorest, those on income support and those born with a disability or who acquired it in their youth. There are choices to be made.

The gap between us is large. The Government are giving most help to the poorest—those on severe disablement allowance topped up by income support. We are also protecting the most severely disabled, those on the highest rate of DLA. My noble friend's proposals would mean that much less could be done for both those groups and instead protect people with generous white-collar pensions and less severe disability. The Secretary of State will consider all the factors. However, I hope that noble Lords will accept that the Government's case is not only principled but also fair and decent and one that deserves support.

Lord Ashley of Stoke

My Lords, I congratulate my noble friend again on a splendid presentation of the Government's case. My noble friend and I have crossed swords on the detail of this issue for many months. It would be remiss of me to bore the House with a repetition of the details set out in our debates at Second Reading and in Committee.

My noble friend has not justified the Government's proposal for hitting people who have a pension income of over £50 a week at the extraordinary rate of 50p in the pound. Nor has she persuaded me that this is not a case of disabled people who are poor being forced to pay for those who are very poor. That is not a philosophy I can accept.

My noble friend seemed proud of the number of people who will not be affected by the provision. But we are concerned with those who will be affected. That is the whole point of the debate. My noble friend spoke of people on "generous white-collar pensions". I visualised millionaires driving up by the million in Rolls-Royces to draw their incapacity benefit. But we are not concerned with millionaires. We are concerned with people on a pension of £50 or just above being robbed of 50p in every pound over that amount. This is an extraordinary proposal. One speaker in this splendid debate described it as bizarre. How true that is.

At the beginning of the debate I said that if the Government were unable to accept my reasoned, honourable amendments—despite the scorn poured on them by my noble friend, they are a genuine attempt to reach a compromise sooner rather than later and there must be a compromise at some time—I would not press Amendments Nos. 134 and 135 but would seek a Division on Amendment No. 136. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 135 not moved.]

Lord Ashley of Stoke moved Amendment No. 136:

Leave out Clause 59

The noble Lord said: My Lords, I should like to test the opinion of the House on Amendment No. 136, which seeks to delete the clause.

7.43 p.m.

On Question, Whether the said amendment (No. 136) shall be agreed to?

Their Lordships divided: Contents, 198; Not-Contents, 90.

Division No. 4
CONTENTS
Ackner, L.	Fookes, B.
Addington, L.	Geddes, L.
Allenby of Megiddo, V.	Geraint, L.
Anelay of St. Johns, B.	Glanusk, L.
Ashley of Stoke, L.	Glenarthur, L.
Astor of Hever, L.	Glentoran, L
Attlee, E.	Goodhart, L.
Avebury, L.	Goschen, V.
Barker, B.	Gray, L.
Barnett, L.	Greenway, L.
Bathurst, E.	Hambro, L.
Bell, L.	Hamwee, B.
Berners, B.	Harding of Petherton, L.
Biddulph, L.	Harmsworth, L.
Blatch, B.	Harris of Greenwich, L.
Blease, L	Harris of Peckham, L.
Bowness, L.	Hayhoe, L.
Brabazon of Tara, L.	Henley, L.[Teller]
Bradford, Bp.	Higgins, L.
Bradshaw, L.	Hogg, B.
Brentford, V.	Holme of Cheltenham, L.
Bridgeman, V.	HolmPatrick, L.
Brookeborough, V.	Hooper, B.
Brougham and Vaux, L.	Inchyra, L.
Buccleuch and Queensberry, D.	James of Holland Park, B.
Buchan, E.	Jenkin of Roding, L.
Burnham, L.	Jenkins of Hillhead, L.
Buscombe, B.	Kintore, E.
Byford, B.	Knutsford, V.
Cadman, L.	Lane of Horsell, L.
Caithness, E.	Lawrence, L.
Campbell of Croy, L.	Leigh, L.
Carlile of Berriew, L.	Lester of Herne Hill, L.
Carnarvon, E.	Lindsey and Abingdon, E.
Carnegy of Lour, B.	Linklater of Butterstone, B.
Carnock, L.	Liverpool, E.
Carr of Hadley, L.	Lofthouse of Pontefract, L.
Cathcart, E.	Longford, E.
Clanwilliam, E.	Lucas of Chilworth, L.
Clark of Kempston, L.	Luke, L.
Clement - Jones, L.	Lyell, L.
Colwyn, L.	Mackay of Ardbrecknish, L.
Cox, B.	Mackay of Drumadoon, L.
Cranbrook, E.	McNair, L.
Crickhowell, L.	McNally, L.
Cross, V.	Maddock, B.
Darcy de Knayth, B.	Mancroft, L.
De L'Isle, V.	Mar and Kellie, E.
De Ramsey, L.	Marlesford, L.
Dean of Harptree, L.	Masham of Ilton, B.
Denbigh, E.	Mason of Barnsley, L.
Denham, L.	Mayhew of Twysden, L.
Devonport, V.	Methuen, L.
Dholakia, L.	Miller of Chilthorne Domer, B.
Dixon, L.	Miller of Hendon, B.
Dixon-Smith, L.	Monk Bretton, L.
Donegall, M.	Monro of Langholm, L.
Downshire, M.	Montgomery of Alamein, V.
Dunleath, L.	Montrose, D.
Eccles, V.	Morris, L.
Eden of Winton, L.	Morris of Manchester, L.
Ezra, L.	Mountevans, L.
Falkland, V.	Mowbray and Stourton, L.
Flather, B.	Moyne, L.

Moynihan, L.	Slim, V.
Munster, E.	Smith of Clifton, L.
Napier and Ettrick, L.	Soulsby of Swaffham Prior, L.
Nathan, L.	Stodart of Leaston, L.
Newby, L.	Stoddart of Swindon, L.
Newton of Braintree, L.	Strange, B.
Norrie, L.	Strathclyde, L.
Northbrook, L.	Swinfen, L.
Northesk, E.	Taverne, L.
Norton of Louth, L.	Taylor of Gryfe, L.
Ogmore, L.	Tebbit, L.
Onslow, E.	Tenby, V.
Orme, L.	Teviot, L.
Park of Monmouth, B.	Teynham, L.
Patten, L.	Thomas of Gresford, L.
Phillips of Sudbury, L.	Thomas of Gwydir, L.
Rathcavan, L.	Thomas of Walliswood, B.
Rawlings, B.	Thomson of Monifieth L.
Razzall, L.	Thurso, V.
Redesdale, L.	Tope, L.
Rennard, L	Tordoff, L.
Renton, L.	Torrington, V.
Rix, L.	Townshend, M.
Roberts of Conwy, L.	Trefgarne, L.
Rodgers of Quarry Bank, L.	Tryon, L.
Rotherwick, L.	Turner of Camden, B.
Rowallan, L.	Vivian, L.
Russell, E.[Teller]	Wallace of Saltaire, L.
St. John of Fawsley, L.	Watson of Richmond, L.
Seaford, L.	Waverley, V.
Seecombe, B.	Weatherill, L.
Selsdon, L.	Wilcox, B.
Sharp of Guildford, B.	Williams of Crosby, B.
Shaw of Northstead, L.	Wise, L.
Shore of Stepney, L.	Young, B.

NOT-CONTENTS
Acton, L.	Grantchester, L.
Ahmed, L.	Grenfell, L.
Alli, L.	Hacking, L.
Amos, B.	Hanworth, V.
Bach, L.	Hardy of Wath, L.
Bassam of Brighton, L.	Harris of Haringey, L.
Berkeley, L.	Haskel, L.
Blackstone, B.	Hayman, B.
Borrie, L.	Hilton of Eggardon, B.
Brett, L.	Hollis of Heigham, B.
Brooke of Alverthorpe, L.	Howie of Troon, L.
Brooks of Tremorfa, L.	Hoyle, L.
Burlison, L.	Hughes of Woodside, L.
Carter, L.[Teller]	Hunt of Kings Heath, L
Chandos, V.	Irvine of Lairg, L. (Lord
Christopher, L.	Chancellor)
Clarke of Hampstead, L.	Janner of Braunstone, L.
Clinton-Davis, L.	Jay of Paddington, B.(Lord
Cocks of Hartcliffe, L	Privy Seal)
Crawley, B.	Kennedy of The Shaws, B
David, B.	Kennet, L.
Davies of Coity, L.	King of West Bromwich, L.
Davies of Oldham, L.	Kirkhill, L.
Donoughue, L.	Lea of Crondall, L.
Dormand of Easington, L.	Lipsey, L.
Dubs, L.	Macdonald of Tradeston, L.
Eatwell, L.	McIntosh of Haringey, L.
Elder, L.	[Teller]
Evans of Watford, L.	Mackenzie of Framwellgate, L.
Falconer of Thoroton, L.	Merlyn-Rees, L.
Farrington of Ribbleton, B.	Milner of Leeds, L.
Faulkner of Worcester, L.	Molloy, L.
Filkin, L.	Monkswell, L.
Gilbert, L.	Montague of Oxford, L.
Gordon of Strathblane, L.	Nicol, B.
Goudie, B.	O'Neill of Bengarve, B.
Gould of Potternewton, B.	Pitkeathley, B.
Graham of Edmonton, L.	Ponsonby of Shulbrede, L.

Ramsay of Cartvale, B.	Smith of Gilmorehill, B.
Rea, L.	Strabolgi, L.
Rendell of Babergh, B.	Symons of Vernham Dean, B.
Richard, L.	Taylor of Blackburn, L.
	Thornton, B.
Rogers of Riverside, L.	Warner, L.
Sawyer, L.	Warwick of Undercliffe, B.
Scotland of Asthal, B.	Whitty, L.
Simon, V.	Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.

7.54 p.m.

The Lord Chancellor

My Lords, in Division No. 2 this afternoon the number of votes was announced as follows: Contents, 164; Not-Contents, 185. It has been agreed by the Tellers that the figures should have been: Contents, 163; Not-Contents, 184.

Baroness Amos

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begin again not before 8.55 p.m.

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