HL Deb 16 November 2000 vol 619 cc425-31

7.57 p.m.

Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 6th November be approved [31st Report from the Joint Committee].

The noble Baroness said: My Lords, following the Welfare Reform and Pensions Act, these regulations seek to amend the Social Security (Incapacity Benefit) Regulations 1994 and also make some minor amendments to the Social Security (Claims and Payments) Regulations, the Social Security (Credits) Regulations and the Social Security (Payments on Account, Overpayments and Recovery) Regulations. Amendments are being made to three principal areas: first, the amendment of the national insurance contribution conditions for new claims; secondly, the taking into account of occupational and personal pension income in excess of £85 a week for new claims from April 2001; and thirdly, the extension of incapacity benefit to long-term incapacitated young people aged 16 to 19 and in some circumstances those aged under 25. I must stress that all of our proposals apply only to new claims made after 6th April 2001 and that existing beneficiaries at the point of change will not be affected by the new measures.

I turn to contribution conditions. The Act amends the contribution conditions of IB so that only people who have paid contributions in one of the last three tax years prior to the claim will qualify. Nevertheless, we always recognised that there are situations where it is unreasonable to expect people to have worked and contributed in the last three tax years. The regulations therefore provide that carers who currently qualify for incapacity benefit after receiving invalid care allowance will be able to continue to do so on the same basis in the future as now; that is, through contributions paid in any tax year. I should emphasise that it will not be necessary for the person to have been working immediately before they started caring.

Special protection is being provided to people receiving disabled persons tax credit who earn below the lower earnings limit so that they can requalify for IB beyond the normal linking rules. People on DPTC already benefit from a special two year linking rule in IB which allows them to return to benefit at the same point as they left it. However, we recognise that such people could be disadvantaged if they stay in work for more than two years, and consequently the regulations provide that a person in this position will be able to qualify for IB, as now, on the basis of contributions paid in any tax year, rather than one of the last three.

We have also said 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. That last group already receives protection as a result of the 52-week linking rule that we introduced in October 1998. However, to ensure that people will not lose out under the new contributions test the regulations provide for the relaxation of the new contribution test where someone had been on IB in the previous tax year prior to the claim.

I move now to the occupational and pension payment proposals. These regulations exempt severely disabled people in receipt of the highest rate care component of Disability Living Allowance (DLA) from the abatement of incapacity benefit on account of pension payments.

We are also exempting from the abatement provisions three other forms of payment: individual permanent health insurance arranged by an employee; any permanent health insurance payment for which the employee has contributed more than 50 per cent to the premium; and any health insurance which is intended to cover treatment costs. We will take account of permanent health insurance only where an employer has arranged it and the contract of employment has ended with that employer—in other words, where it is, so to speak, in proxy for an occupational pension.

We also recognise that there will be circumstances in which it will not be appropriate for occupational and personal pensions to be taken into account. The regulations therefore provide for occupational and personal pensions not to be taken into account where the pension payments are in connection with the death of a member of a scheme or where an occupational pension scheme is in deficit or has insufficient resources to pay the full pension.

In earlier debates concerns were expressed that the notional income rules will force people to take their pension early. The notional income rule is intended to prevent a situation where someone deliberately chooses not to take up an income, or deprives himself of it, in order to gain access to or maximise an income-related benefit. I am pleased to announce that we shall not be taking notional income into account under the abatement provisions.

The regulations also provide details of how pension income cases are to be administered.

I turn next to the extension of 1B to persons incapacitated in youth. The Act extends I B to young people aged from 16 to 19 who were incapacitated in youth and are not able to meet the normal national insurance conditions because of illness or disability.

Following representations during the passage of the Act that our intention to extend the age cut off to 25 for people in higher education would not help certain young people with severe learning disability who are in mainstream education beyond age 20, we decided to widen the concession to include people in any form of education or work-based training. I know that that further concession was very good news to and welcomed by Mencap. These regulations set out how a person aged above 20 but below 25 can be permitted to receive IB above the normal age cut-off of 20 years.

The prescribed conditions are that a person must have been registered for and attended a course of full-time advanced or secondary education or vocational or work-based training for at least three months before he reached the age of 20. The course must have ended no earlier than in one of the last two complete tax years before the year in which benefit is claimed. To give an example, if a person's course ended in May 2002, he could still claim IB under the youth provisions as late as December 2004 provided he is still aged under 25.

We were also asked to help those who take up employment and earn below the LEL for a lengthy period before becoming incapable again of work. These are people who want to do what work they can but who would not be able to do enough work to benefit from DPTC or the therapeutic work rules.

The regulations therefore enable people who leave incapacity benefit under the youth provisions for paid employment or training to requalify and do so for periods beyond the normal linking rules. People on disabled persons tax credit can return to IB at the same level as they left it if they become incapable of work within two years, provided they get DPTC for the week in which their contract ended.

However, we recognise that people who have worked for more than two years and had earnings below the LEL would not be able to qualify for IB under this rule. The regulations modify the rules to allow people entitled to IB under the youth provisions and who are aged 20 or over (or, where the education rules apply, aged 25 or over) to requalify for IB outside the normal linking rules where they left benefit for work if they left IB to work and have paid or been credited with contributions in both the preceding tax years and who have received DPTC in at least one week in the preceding tax year; or, if they have not received DPTC, they (i) left IB to work (ii) earned less than the LEL in the past three tax years and (iii) make a fresh claim for benefit within 56 days of leaving employment.

The regulations also protect people who return from abroad who were in receipt of benefit in the last tax year prior to the new claim.

Finally, the regulations automatically transfer, a year after the changes are introduced, those aged under 20 who were entitled to SDA at the point of change on to long-term IB. This will give this group of people access to long-term IB at the same time as persons incapacitated in youth who became entitled to short-term IB under the new entitlement conditions.

These regulations make a number of consequential amendments to other social security regulations which are all of a minor nature. Amendments are being made to the claims and payments regulations, the credits regulations and the payments on account, overpayments and recovery regulations.

These regulations are entirely beneficial and enable a wide range of deserving groups to continue to receive incapacity benefit on the same grounds as now. I am sorry that they are so technical but to some extent they are amending existing regulations, which is why there is the elaborate insert. They ensure that special provision is made for those groups which the Government promised to help during the passage of the Act. I beg to move.

Moved, That the draft regulations laid before the House on 6th November be approved [31st Report from the Joint Committee].—(Baroness Hollis of Heigham.)

Lord Astor of Hever

My Lords, I thank the Minister for bringing these regulations to the House and for explaining them so fully this evening.

We, on these Benches, will not oppose them but I remind the Minister that these are part of what was a very controversial piece of legislation. We all—all five of us—remember the Welfare Reform and Pensions Act and I am sure that the Minister will not want to be reminded of the Back-Bench rebellion in both Houses.

This evening I give only one example of the controversial aspect of these regulations. They appear to be another attack on pensioners by increasing the means testing of those people who have saved hard for their retirement and they will simply discourage them from saving. The latest figures from the House of Commons Library show that under this Government's pensions policies, by 2003 between 55 per cent and 59 per cent of pensioners will be on means-tested benefits.

The Government claim that this is all part of their modernisation of welfare. Will the Minister confirm that before the regulations were finalised full consultation took place, particularly with the relevant interest charities? During the passage of the Welfare Reform and Pensions Bill, a number of my noble friends and I were contacted by a large number of charities with serious concerns about different aspects of the Bill. I have no doubt that the noble Earl was also contacted.

One organisation that we consulted widely during the passage of the Bill was the National Association of Citizens Advice Bureaux. I contacted that organisation this afternoon. Rather to its surprise, and to my surprise, it had received no contact from the Minister's department and has been given no opportunity to comment on the regulations. Does the Minister agree that that is just the sort of organisation which should have been consulted?

Earl Russell

My Lords, clearly, these regulations arise out of old battles. The Minister may be relieved to hear that I do not intend to revisit those old battles. She knows perfectly well what I think; I know perfectly well what she thinks. We need not go through that again. That is water under the bridge and there is quite enough water coming downstream, both politically and literally, for us not to need to go chasing what has gone under the bridge.

However, it strikes me that we are dealing here with concessions which were made during the process of negotiation to get that Bill through. I do not believe that we often realise quite how much value there is in the process of political negotiation, compromise and concession. What has come out of it here is, as the Minister said, entirely beneficial. It is small but so are raindrops. Put them together and they get to be quite a lot. It is really quite an important process and when we are engaging in it, I do not believe that we always remember how important it is.

I am as happy about the drafting of the regulations. They are the most difficult regulations to understand since the first regulations that I dealt with on this Front Bench. I absolutely tore my hair out in relation to those. This time I relied on the Minister to give a clear, comprehensible explanation, which she did. I thank her for that. I wish the draftsman would follow her example.

I take the Minister's point about the acrostic quality of much regulation on social security matters, but I ask the Minister, or someone in her department, to look at the speech made on the last amendment to the Sexual Offences (Amendment) Bill by the noble and learned Lord, Lord Brightman, in relation to the virtues of the Keeling schedule. That would make matters a great deal more intelligible for those who have to deal with them. Of course, the law is made for the public, who need to understand it as much as we do, and if we cannot understand it I wonder how on earth they can. If anything can be done to make the drafting of the regulations more intelligible it would help.

I also draw attention to one of my favourite drafting forms, the Humpty-Dumpty clause. Regulation 17(5) reads: A person who is 19 years of age or over shall not be treated for the purposes of Section 30A(2A)(e) of the Contributions and Benefits Act as receiving full-time education notwithstanding he is undergoing a full-time education". That is a good example of the genre. I believe the regulation refers to the problems of finding the correct status of people who remain at school at the age of 19. I must declare an interest in having had a son in that position through the combination of a change of country and dyslexia. Now is not the time to develop that point. Nor is it time to develop the issue of intercalation with students. I hope that the department will consider both those matters in future.

I shall not repeat everything that the Minister has said, but on the general summary of the regulations we have concessions on contribution conditions and we have concessions linking the regulations with the 1998 concession on linking rules, for which I believe the Minister herself deserves a good deal of credit. I thank her for that. There is also the concession, for which I believe the noble Lord, Lord Rix, deserves credit, for people disabled in youth and the extension to people—for example, students—who are in no position to make contributions, those who are disabled between the ages of 20 and 25. I believe that my honourable friend Mr Rendel deserves some credit for that. I thank both the Minister and him. When those regulations went through I seem to remember saying that I was being "Oliver Twist" in asking for more. Nevertheless, I am grateful for what we have. That is good.

On the disabled persons' tax credit, I am glad that the Minister grasped the mettle of the problem of contribution conditions for those who are below the lower earnings limit. Again, that is something for which I believe the House owes her some thanks. I have left the whole business of the Bill, but we should thank the Minister for small mercies, and there are quite a lot of them. I am glad to have them.

Baroness Hollis of Heigham

My Lords, I thank noble Lords for welcoming the regulations and for notifying me of two points that they wanted to raise so that I was able to check with officials that I understood them fully.

The noble Lord, Lord Astor, made a general point on means testing. That was part of the debate that we had in the summer and the summer before that. As a result of the Government's policy, both in terms of the minimum income guarantee and pensioners' credit but, above all, the state second pension, the number of pensioners who otherwise would need to rely on means testing will be reduced. However, as the noble Lord must surely accept, a problem arises in that overall pensioner incomes have increased by 64 per cent—the top 20 per cent by 80 per cent and the bottom 20 per cent only by about 27 per cent—and therefore there is an increase in inequality. So if the same amount of money is given to all pensioners the differentials of inequality will be preserved, but if one seeks to target, as the Government are doing, by definition people's financial needs and resources have to be taken into account. The answer is targeting but we all have to seek to overcome the old stigma associated with the words "means testing" to ensure that people take up their entitlement as is there right and as of right. I am sure that we do not disagree on that.

The noble Lord, Lord Astor, told me that he would raise the issue of consultation. Formally we do not have to consult because regulations issued within six months of the passing of the Bill do not need to go out to consultation, but as I believe I promised the House at the time, we consulted with the two leading organisations on disability involved in the regulations, Mencap and the Disability Alliance, the umbrella organisation for the full range of other disability organisations. Their concerns were of a technical and detailed nature and at no stage did they seek to challenge the principle of any of the regulations.

We also consulted ABI on pensions issues. I am not sure that NACAB would have been the appropriate body for these regulations. However, I believe that we would have taken heed if either Mencap or the Disability Alliance raised issues on which NACAB would have had an appropriate voice. As noble Lords have recognised, these are technical, detailed disability regulations and we consulted the leading disability organisations.

The noble Earl, Lord Russell, kindly gave me notice that he is concerned about what he pleasingly calls the "Humpty-Dumpty" quality of regulation 17(5). Normally if someone were in full time education they would not qualify for incapacity benefit. Therefore this regulation is needed to ensure that they can so qualify while in full-time education. As I say, full-time education is defined for the purpose of the regulation. It does not treat someone as being in full-time education if they are not, but it allows someone who is in full-time education to claim IB at the age of 19. Normally full-time education would exclude someone from incapacity benefit. That may cover a range of contingencies, so the noble Earl was correct. It is entirely a benefit provision. The fact that someone is in full-time education is not a bar to claiming IB, which otherwise would be the case.

Although many noble Lords were at odds as regards the main thrust of the Bill, I share with the noble Earl my appreciation for the constructive way in which we have been able to amend the original proposals in the Bill to ensure that small groups of people who, through no fault of their own, would otherwise fall through the cracks, have been given the protection to which they are entitled. I hope noble Lords will agree to accept the draft regulations so that they become substantive regulations.

On Question, Motion agreed to.

Baroness Amos

My Lords, I beg to move that the House do adjourn during pleasure until 8.55 p.m.

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

[The Sitting was suspended from 8.18 p.m. to 8.55 p.m.]