Departmental Expenditure (Hansard, 26 November 1996)

§ Mr. Lilley

I intend to introduce a range of measures which will:

simplify the administration of the benefit system;
place a greater onus of responsibility on benefit claimants;
equalise the treatment of one and two parent families;
better target the housing benefit and council tax benefit schemes;
and continue the drive to combat fraud.

Simplification and increased responsibility

I propose the following measures which will simplify the operation of the benefit system and encourage more responsibility on the part of claimants: a rationalisation and simplification of the rules governing backdated claims for benefit and reviews of awards. These changes will be phased in from April 1997; an increase in the waiting days which will apply to claims for jobseeker's allowance from three days to seven. This change will take effect from April 1999; a simplification of the rules governing claims to war pensions will be referred to the Central Advisory Committee on war pensions on 5 December; the establishment of a clearer boundary between the entitlement condition for disability living allowance and attendance allowance, providing that those over 65 should receive support through attendance allowance rather than disability living allowance. This change will take effect from October 1997.

These measures will produce savings of some £260 million a year once fully in place.

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Lone parents and families

I propose to take further steps towards making the benefit system fairer to families by bringing the benefits available to lone parents further into line with those available to couples.

From April 1997, the structure of benefits for lone parents will be brought into line with that for couples. The lone parent premium will be combined with the family premium. One-parent benefit will be integrated with child benefit. Existing lone parents will continue to receive the current higher levels of benefit in future. But new lone parents will from April 1998 be paid the same rate of family premium and child benefits as couples.

Housing benefit

I also propose measures which will better target the housing and council tax benefit schemes.

In housing benefit I intend to restrict the amount of benefit that can be paid to private deregulated tenants to the general level of local rents for a suitably sized home. I also intend to limit benefit for single people under 60 living in the private deregulated sector to the average rent for a single, non self-contained room.

These measures will take effect from October 1997 and will save some £130 million per year in the long term.

Under both of these housing benefit changes local authorities will retain the discretion to pay up to the full value of eligible rents to prevent severe hardship, and the discretionary funds available to authorities will be adjusted to take account of the changes.

Council tax benefit

The proposed change to council tax benefit will restrict the amount of benefit payable to claimants living in more expensive properties.

I propose to restrict the maximum amount of council tax benefit payable to the level of a band E property. This change will take effect from April 1998 and will save around £15 million per year in the long term.

Combating fraud

As part of my major drive against fraud I am today announcing additional funding for a new spend-to-save anti-fraud and evasion package. This is in addition to the substantial sums we already spend on anti-fraud activity.

Over the next three years, I shall be investing an extra £470 million, in addition to an existing investment in fraud and security activities of some £900 million. Even excluding the impact of any prevention and deterrence the total investment is expected to save the taxpayer nearly £7 billion by 1999–2000¹. However I expect the new powers I am taking in the Fraud Bill and the increase in anti-fraud work to produce substantial additional savings as fraud is prevented and deterred.

The new spend-to-save package will pay for: 1.3 million more visits to new benefit claimants than in 1996–97; an additional 300,000 a year checks on existing claimants; continuation of the "Spotlight on Benefit Cheats" campaigns; additional visiting activity in 1997–98 by local authorities, as well as a programme of benefit reviews of housing benefit; the extension of datamatching activities; increased activity on national insurance contribution compliance; and the setting up of the benefit-fraud inspectorate.

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The Fraud Bill together with the new spend-to-save package will build upon an already successful counter fraud strategy. The Fraud Bill will provide fraud investigators with the tools they need to do their jobs, and the spend-to-save investment, when added to existing commitments, will mean for every £1 spent, an estimated £5 return in detected fraud. Both aspects of the anti-fraud drive underline the Government's determination to crack down on benefit cheats.

Note: 1. The savings are expected to be £1,900 million in 1997–98, £2,400 million in 1998–99 and £2,500 million in 1999–2000. These are estimates to the nearest £100 million. They include some £300 million, over the three years, in respect of additional revenue from the collection of National Insurance contributions. In addition to excluding any allowance for prevention and deterrence the method of estimating the savings has been changed to align them more closely with the public expenditure process. Previously the savings were accounted for in the year in which the fraud was detected but will now be spread over the average period during which the fraud would otherwise have continued. While this affects the timing of the savings, it does not affect the amount in the long term.