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House of Commons
Monday 22 July 1991
The House met at half-past Two o'clock
PRAYERS
[Mr. Speaker-- in the Chair ]
Oral Answers to Questions
SOCIAL SECURITY
Lone Parents
1. Mr. Squire : To ask the Secretary of State for Social Security what is the annual cost of income-related benefits paid to lone parents.
The Parliamentary Under-Secretary of State for Social Security (Mr. Michael Jack) : In 1990-91 the expenditure was approximately £3.4 billion.
Mr. Squire : I thank my hon. Friend for that answer. Will he confirm that less than one third of lone parents currently receive regular maintenance? If that is the case, both in equity and--given his answers--in the interests of the taxpayer, must not there be a greater effort to ensure that absent parents contribute and face their financial responsibilities?
Mr. Jack : In general terms, I can confirm that figure. I also confirm that only 23 per cent. of people on income support have their maintenance orders honoured. As my hon. Friend says, because absent parents do not honour their obligations to their children, the taxpayer has to make up the deficit, to the tune of £400 million a year. The Child Support Bill now in another place will deal with that problem.
Mr. McAllion : What is the annual cost of the tax cuts and other advantages that the Government have given to the rich? Does the Minister agree that the rich have received far more from the Government than ever the poor have, which has widened the gap between rich and poor during the lifetime of the Government? Does not that reflect the reality that this is a Government of the rich, for the rich, by the rich?
Mr. Jack : The hon. Gentleman will not tempt me into areas more appropriately covered by my right hon. and hon. Friends in the Treasury. However, to answer his question and to focus again on the subject of lone parents, in 1981-82--these figures are in 1990-91 prices--we spent £2.169 billion on benefits for lone parents, while by 1990-91 that sum had risen to £4.476 billion. That shows how high a priority we give to some of the people to whom the hon. Gentleman alluded.
Mr. Conway : Does my hon. Friend agree that this has nothing to do with a battle between rich and poor but is about the fact that families on lower incomes who fall
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within the income tax net have to subsidise fathers who abscond and leave their wives and children so that the state has to pick up the burden?Mr. Jack : My hon. Friend is entirely correct that people on low incomes make their contribution to the £400 million to which I referred. The Child Support Agency, to whose establishment the House agree last Thursday, will be able to attend to that matter.
Mr. Allen : For many lone parents the long-term answer has to be a job, with adequate child care. Does the Minister accept that he offers a choice between keeping women out of work on low benefits and subsidising low-paying employers through family credit? Why do he and the Government continue to refuse to support a national minimum wage of a measly £3.40 an hour? That would give many people on benefits the two things that they need--a decent job at a decent wage.
Mr. Jack : That question confirms that the Opposition see little point in continuing with family credit as a benefit. Indeed, the hon. Gentleman's words show that, in their view, withering on the vine has become total decay. The contempt with which the Opposition deal with the issue of the minimum wage is summed up by a quotation from their spokesman on employment, the hon. Member for sedgefield (Mr. Blair) :
"I have not accepted that the minimum wage will cost jobs ... I have simply accepted that the econometric models indicate a potential jobs impact."
Are the Opposition reducing people to econometric models? Is that the amount of care that they show? Our Child Support Bill will make access to family credit easier. Family credit is important, as the Opposition will know if they have eventually got round to reading examples 10 and 11 in the White Paper "Children Come First", which show precisely how child care costs can be met, to the advantage of the working parent.
Pensioners' Christmas Bonus
2. Mr. Atkinson : to ask the Secretary of State for Social Security if he will make a statement about the Christmas bonus for pensioners.
The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe) : The Christmas bonus has been paid by this Government every year since we took office in 1979. My hon. Friend will be pleased to know that it is paid to 12 million people each Christmas.
Mr. Atkinson : Will my hon. Friend confirm that the Christmas bonus will once again be paid this Christmas to every pensioner, by contrast with the performance of the previous Labour Government, who refused to pay it for two years running? Does she accept that keeping the payment level for some years raises the question of its viability due to increasing administrative costs? Will she review that level with a view to increasing it in due course?
Miss Widdecombe : I have pleasure in confirming that the bonus will be paid this year as in past years. It was this Government who made it statutory, rather than concessionary, as one of their first acts in 1979. That was a worthy successor to their first act, which was to introduce the bonus in the first place in 1972.
In considering any increase we need to remember that merely increasing the bonus by £1 would cost £12 million
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and that to double it would cost £120 million. Bearing in mind the fact that the Christmas bonus goes to everyone who is entitled to it and is not a targeted benefit, we have to ask whether that is the wisest use of resources. At the moment we are targeting resources--for instance, in the recent packages worth about £280 million for poorer pensioners--and that seems a better use of this sort of money.Mr. Flynn : Does the Minister recall that a few moments ago the Under-Secretary of State referred to a benefit withering on the vine? If the Christmas bonus were paid allowing for inflation, it would now be worth £59.17.
Miss Widdecombe : And it would cost us £700 million to pay it at that level. We are trying to use money to target poorer pensioners. It ill becomes the Opposition to criticise us when for two years they did not pay the bonus at all. It is better to pay it regularly and by statute than to go for ambitious uprating programmes and then fail to deliver for two years running.
Disability Benefits
3. Mr. Hannam : To ask the Secretary of State for Social Security what steps he is taking to ensure that disabled people and their representatives are consulted on the details of the two new disability benefits being introduced next year.
The Minister for Social Security and Disabled People (Mr. Nicholas Scott) : Disabled people have already been involved in testing earlyversions of the claim forms for disability living allowance and disability working allowance, with very encouraging results. We have now issued these forms to a number of organisations for comment, together with the draft regulations for the benefits and the first draft of the disability handbook which will be used by officials working on DLA.
Mr. Hannam : I congratulate and thank my right hon. Friend for responding to the need for full consultation with disabled people. I also congratulate him on the Government's record level of spending on the disabled.
In the consultation process, will my right hon. Friend take account of the representations about the extra costs facing disabled people for special diets and clothing, laundry and communications? When considering the development of the living allowance, will he take those costs into account and try to arrange for their inclusion?
Mr. Scott : I am grateful for my hon. Friend's kind comments. We are determined to involve disabled people and the organisations that represent them as much as possible in developing the new benefits--we have already done that--and in the way that they are administered. That is working successfully.
I take the point about extra costs. I believe that in general our structure of benefits reflects the additional costs of disability. I should certainly be reluctant to go back to the complexities of the former additional requirements--but I note my hon. Friend's point.
Mrs. Roe : Does my right hon. Friend agree that no matter how good a benefit system is, it is important that it be accessible to those in need? What progress is being made on modernising social security offices and providing a much more sophisticated system for the future?
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Mr. Scott : We are certainly making a great deal of progress with the introduction of the Benefits Agency and with the new system of district offices, both of which will improve the efficiency of our delivery of benefits. If the system is to be accessible to people they need information about it. I was especially pleased recently to be able to launch the national benefits inquiry line, which will significantly help disabled people to understand the benefits to which they may be entitled and how to claim them.
State Earnings-related Pension Scheme
4. Mr. Knapman : To ask the Secretary of State for Social Security what is the forecast extra cost of SERPS into the year 2035.
The Secretary of State for Social Security (Mr. Tony Newton) : Expenditure on the state earnings-related pension scheme is estimated to rise from nearly £2 billion in 1991-92 to £16 billion in 2035-36, at 1990 prices.
Mr. Knapman : I am grateful to my right hon. Friend for that reply. Is not it crystal clear that any Government or party which sought to satisfy the funding of pensions at that level solely through state provision would literally be going for broke?
Mr. Newton : If to that prospective rise in costs were added the cost of some of the promises that the hon. Member for Oldham, West (Mr. Meacher) is fond of making, the costs would at least be doubled in 2035-36 and we should be moving into a pension system which I doubt would be sustainable for those to whom the promises were made.
Mr. Donald Thompson : Will my right hon. Friend contemplate increasing the benefits for people who buy their own pensions? What would happen if by some misadventure we were not returned at the next general election?
Mr. Newton : I very much agree with the implication of my hon. Friend's question. The right course is exactly the one that we have been pursuing, which is to make sustainable promises about what the state will provide and to give maximum encouragement to people to build up their own occupational and personal provision. We have done that with huge success.
Mr. McAllion : Can we understand from the Minister's earlier replies on this issue that he is confirming that the Government will not implement SERPS and have changed the uprating of pensions purely to cut the social security budget because they are too mean to give workers in this country the kind of pensions that people receive everywhere else in Europe?
Mr. Newton : Before the hon. Gentleman puts too much weight on that point, he should reflect on the fact that if we followed the pension arrangements of virtually all other European countries, 2 million married women in this country would not have pensions in their own right. Our policies are to ensure real promises to pensioners that can be kept. We have done that and our record compares very well with that of the last Labour Government, which included the non-payment of the Christmas bonus for two years running.
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Disability Working Allowance
5. Mr. Watts : To ask the Secretary of State for Social Security what assessment has been made of the effect on incentives to work for disabled people of the introduction of the disability working allowance.
6. Mr. Gerald Bowden : To ask the Secretary of State for Social Security what assessment he has made of the effect on incentives to work for disabled people of the introduction of the disability working allowance.
Mr. Scott : The introduction of disability working allowance will provide a real opportunity to work for up to 50,000 disabled people who would like to do so, but whose earnings capacity is limited.
Mr. Watts : Does my right hon. Friend agree that the disability working allowance will provide an effective bridge for disabled people between total dependence on benefits and the world of work in a way that is rather similar to the job that family credit has done for families on low incomes?
Mr. Scott : I very much agree with my hon. Friend. Disability working allowance will remove a rigid distinction in the present benefit structure between ability and inability to work. As people become increasingly aware of the opportunities that are available to them, many will take those opportunities. One of the most important aspects of the allowance is that people who avail themselves of the opportunity to go into work will for two years retain underlying entitlement to whatever disability benefit they were drawing beforehand. That should give them confidence to try out work.
Mr. Gerald Bowden : I congratulate my right hon. Friend on this new and radical initiative, which offers the opportunity for independence and promotes integration of the disabled. Does he agree that it is far better to target resources on those who are in most need, in this case low-income families, than to make uncosted and fanciful promises, as the Opposition have done, which can never be fulfilled?
Mr. Scott : I certainly agree with my hon. Friend. The Government have a good record on incremental improvements in the benefits that are available to the long-term sick and disabled. We have made an increase in real terms of more than £7 billion a year to meet the needs of those groups and we have concentrated on those who need most help. I am sure that that is the right approach.
Mr. Tony Banks : Since we are talking about people with disabilities, may I raise a case that came my way this morning? It relates to a claim for attendance allowance in leaflet DS2(1990), which is straightforward. It is a good attendance allowance, but when trying to get hold of a DS1500 report from the local GP and from the hospital, my constituent encountered complete ignorance of DS1500 report writing. Has everyone been advised of the procedures, particularly those who will be approached by people asking for attendance allowance and for a DS1500 report?
Mr. Scott : I am surprised by what the hon. Gentleman has said and I should be grateful if he would send me details of the case so that I can follow it up. We are anxious that those who have to produce such reports are fully
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aware of the necessary forms and how to complete them. We are conscious that there have been some difficulties and that is why, when we introduce disability living allowance next year, we shall, to a considerable extent, rely on the claimant's assessment of the effect of the disability on his life, supported by a carer, a general practitioner or some other professional so that we can substantially de- medicalise the way in which we process a claim for benefit.Mr. Bellotti : Will the Minister consider the following? He will be aware that fewer people-- [Hon. Members :-- "Reading."] I can do it perfectly well without reading. He will be aware, as the House is, that over the past 12 months, fewer people with disabilities have gone into real jobs and that training and enterprise councils have recruited fewer people with disabilities for training courses than ever before. Will he now consider extending allowances to those who go on training courses so that eventually they can be encouraged to go into real jobs?
Mr. Scott : I believe that the allowances that are paid-- [Hon. Members :-- "Reading."] Certainly not. The allowances should be attractive to disabled people. We are anxious that they take part in training schemes and avail themselves of opportunities for employment. I am also conscious that new technology will make it possible for more disabled people either to take jobs in places of work, or, increasingly, to work from home.
Mr. Dunn : Will my right hon. Friend confirm that it is the aim of the Government's policy to improve work incentives, to get people into work and to eliminate poverty? Bearing in mind those three points, would not it be extraordinarily stupid to introduce a minimum wage?
Mr. Scott : That matter has been dealt with effectively in the House on a number of occasions in recent days. I understand why those who analyse these matters are convinced that the introduction of a minimum wage would destroy, not create, jobs. Our approach is much better. When I meet disability organisations or disabled people, I find that the vast majority are keen to take the opportunity of employment. The Government have, for the first time, moved to a proper partial capacity benefit.
Mr. Alfred Morris : Has the Minister seen the all-party disablement group's briefing on these questions, with its strong criticism of the punitively high marginal tax rates that DWA involves for disabled people, leaving them with as little as 6p in the £1 of increased earnings? Is this not a fierce new poverty trap? The Government plan to save millions of pounds, as they have told me, by introducing the new allowance. Instead, why cannot they allow disabled people to keep more of their own earnings?
Mr. Scott : The right hon. Gentleman knows very well that when one introduces benefits that relate to people's earnings, there is a balance to be struck between having too steep or too shallow a rate of withdrawal of benefits as earnings increase. Under the system for DWA, if earnings increase, the income of disabled people will also increase. We have moved away from the over 100 per cent. withdrawal of benefit that operated under the Labour Government.
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Pensioners (Income)
7. Mr. Sims : To ask the Secretary of State for Social Security what proportion of pensioners have income from occupational pensions or savings ; and what was the comparable position in 1979.
Mr. Newton : We estimate that in 1988, 82 per cent. of pensioners had income from either savings or from an occupational pension, compared with only 73 per cent. in 1979.
Mr. Sims : Does not that figure give added weight to the point made by my hon. Friend the Under-Secretary of State a few moments ago--that the best interests of pensioners are served by directing additional resources to those who rely entirely on the state pension, rather than on a general increase in pension benefits? Does not it also suggest that the best interests of pensioners as a whole are served by maintaining a stable economic climate and a low rate of inflation?
Mr. Newton : I entirely agree with the second point. As for the first, it is to assist those who are least well-off that we have focused additional resources on increasing pensioners' income support premiums in the past two or three years.
Mr. Allen McKay : Does the Secretary of State agree that there is a difference between the pension arrangements for Members of Parliament and directors of privatised industries, who give themselves vast pay increases on which their pensions will be based, and those for people who have only just entered schemes and will therefore receive very little?
Will the right hon. Gentleman assure the House that all this talk of income from savings and pension schemes will not interefere with state benefits or with the annual increase in those benefits?
Mr. Newton : We have made it absolutely clear that, having fully and faithfully--a phrase which I have used before--uprated the basic state retirement pension throughout our period in office, we intend to continue to do so. I have always acknowledged that, although a growing number of pensioners have extra income of various kinds, a good many still have no such income. That is why we have increased income support premiums : we want to direct additional help to those people.
Mr. Squire : Will my right hon. Friend confirm, in the light of his answer, that now that more than 80 per cent. of pensioners receive additional income it is essential at times to talk of average earnings, rather than only of state pensions, as Opposition Members often do? That applies particularly to comparisons with other European countries.
Mr. Newton : I agree, but I know that my hon. Friend will accept that we should always remember that averages are averages and that they conceal the fact that some people receive less than the average. We should bear those people in mind.
Social Fund
9. Mr. Janner : To ask the Secretary of State for Social Security whether he will make a statement regarding the operation of the social fund.
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Mr. Scott : I refer the hon. and learned Gentleman to the 1991 annual report of my right hon. Friend the Secretary of State on the operation of the social fund, which was laid before Parliament on 17 July.
Mr. Janner : Does the Minister accept that some areas do not spend their allocations, while others, such as Leicester, do not have nearly as much as they need? As a result, people such as my constituent, Jayne Cooper, of north Braunston-- [Interruption.] Conservative Members do not understand. Question Time is the time when we protect our constituents from all the bureaucracy that the Government impose on them.
If I send him the details, will the Minister look into the case of Jayne Cooper and see what help can be given to this lady, who has been skewered by the fierce and narrow impositions placed on the use of the social fund?
Mr. Scott : Of course, I shall look at the case, if the hon. and learned Gentleman sends me the details. In both the north Leicester and south Leicester offices, all high-priority cases are being met and some medium-priority cases are being met in north Leicester. We are making arrangements to improve the method whereby funds are reallocated from offices with surplus resources to other offices that are under pressure.
Dame Elaine Kellett-Bowman : The Lancashire county council welfare rights sub-committee--of which my right hon. Friend may have heard--fears that, in future, now that Kendal and Barrow are linked with Lancaster in the same office, when the statistics go on to the mainframe computer it may be impossible to obtain those that relate to Lancaster. Will my right hon. Friend assure me that they can be singled out? Lancaster has been given an assurance this year, but it is wondering about the future.
Mr. Scott : I have no reason to believe that the introduction of a new system will in any way inhibit our ability to obtain such information.
Mr. Pike : Is not it regrettable that people who apply to the social fund are often refused a grant and are then refused a loan because their income is not sufficient for them to repay it? Are not many people in urgent need thus prevented from receiving the assistance that they need so much?
Mr. Scott : Very few people are refused a loan by the social fund because of inability to pay ; but, when someone clearly cannot pay, other procedures can be brought into play. Indeed, many thousands who apply for a loan in the first place end up with a grant instead.
Mr. Harris : The old system of single payments led to massive abuse and had to be changed, but will my right hon. Friend look carefully at the administrative cost of the social fund, as evidence to the Select Committee on Social Security showed clearly that the cost of handling individual applications was very high?
Mr. Scott : I agree with my hon. Friend about the old single payment scheme, and I seem to have the support of the shadow Chief Secretary to the Treasury who said recently that nobody liked the system of single payments, which was extremely complicated for both claimants and staff. Any system which depends on discretion rather than on an automatic formula and precise regulations for the
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delivery of benefit is bound to be more expensive administratively because of the discretionary element involved in the decision-making process.Mr. Meacher : What is the point of the Prime Minister unveiling a citizens charter today if, as last week's report of the social fund shows, 27,000 of the very poorest citizens in our society got no help because they were too poor to repay it? That is not a very small figure, as the right hon. Gentleman suggested. Will any of the 185, 000 people who were denied assistance from the social fund, because there was too little money in a cash-limited budget, get any redress today from the citizens charter? Is the right hon. Gentleman satisfied with the social fund, the administration costs of which last year, at £77 million, exceeded the total of all the grants paid throughout the year, which came to only £68 million?
Mr. Scott : The hon. Gentleman will not expect me to trespass on my right hon. Friend the Prime Minister's ground--the citizens charter--of later this afternoon. I can say, however, that the social fund, with its element of discretion, has proved to be a much more flexible and effective way of meeting exceptional need and exceptional circumstances than the old single payments scheme, or its predecessor schemes.
Widows' Payments
10. Mr. Flynn : To ask the Secretary of State for Social Security what is the current value in real terms of the £1,000 widow's payment announced in June 1985.
Miss Widdecombe : The widow's payment was introduced in April 1988. The current value of the payment at June 1991 prices is £789.
Mr. Flynn : Does the hon. Lady agree that the widow's payment was announced six and not three years ago and that at that time the widow's allowance that it replaced was running at £50 a year, which would now be worth £72 a year, making the widow's payment not £1,000 but £1,450? Is it not a disgrace that the Government have allowed these almost invisible salami cuts against this most vulnerable group of people? Is it not about time that we had a widows' charter?
Miss Widdecombe : The reforms that we have already introduced and the changes that we have made to the widows' allowances effectively amount to a widows' charter. We have introduced reforms which direct benefits towards those widows who are older and who therefore do not have a work record and also towards those with dependent children. We keep the level of the widow's allowance regularly under review, but I say to the hon. Gentleman what I said in response to an earlier question. The allowance is payable to every widow. We have to consider the proper use of resources. It is better to direct them towards those in need, as we have done.
Sir Anthony Durant : Does my hon. Friend agree that this benefit, which has only recently been introduced, is much better than the death grant, which was laughable, and that its introduction is a credit to the Government?
Miss Widdecombe : Yes, indeed. The death grant had long ceased to be a realistic figure. Benefits which provide immediate relief, through immediate payments, are very much to be preferred. Everybody with the necessary
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contributions record will benefit from this payment. It is therefore designed to relieve immediate need in a way that the death grant did not manage to do.National Insurance Contributions
11. Sir Bernard Braine : To ask the Secretary of State for Social Security what representations he has received about the levying of employers' NI contributions on all earnings.
Mr. Jack : Employers' national insurance contributions are levied on all earnings except where an employee earns below the lower earnings limit. Following a consultation exercise, we have received representations from employers' organisations expressing opposition to proposals put forward by the European Commission which would result in contributions being levied on earnings below that limit.
Sir Bernard Braine : Does my hon. Friend agree that the cost of abolishing the upper earnings limit would be severe for many middle income earners, such as doctors, teachers and the like, who are absolutely essential to the proper running of our society?
Mr. Jack : My right hon. Friend alludes to a very important point. He is absolutely right that people such as teachers and members of the nursing profession would be included in a proposal to increase national insurance above the upper limit, but let nobody imagine that would be just those people. Anyone with a wage of, say, £250 per week who received a Christmas bonus of a similar amount would find part of that bonus taxed under the Opposition's proposals. We have flushed out a tax on Christmas.
Social Action Programme
12. Mr. Ian Taylor : To ask the Secretary of State for Social Security if he will make a statement on the progress of the social security policy initiatives in the social action programme.
Mr. Jack : Of the five proposals in the social action programme for which the Department of Social Security is responsible, one has already been dealt with and the Government are taking a positive line in negotiations on the other four. We expect to be able to respond positively to the proposals on convergence of schemes, minimum income guarantees, occupational pensions and the schedule of industrial diseases.
Mr. Taylor : I am grateful for my hon. Friend's warning that we are about to have the Christmas Adjournment, not the summer Adjournment. Will my hon. Friend continue to work hard on those programmes? It is important that Britain is not seen to be objecting in principle to social programmes being discussed in the European Community, which is sensible. We want to ensure that application of the programme is based on national guidelines and does not cut across what would normally be a fierce national political debate between parties. That is what my hon. Friend should be saying to the Commission in relation to the programme.
Mr. Jack : I am grateful for my hon. Friend's support for the general line that the Government are taking. We much applaud the principle of convergence of social security schemes and acknowledge the need for common provision for social security benefits, but we stick hard to
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the principle that the way in which the policies are worked out in each member country should be subject to the concept of subsidiarity. We adhere closely to that point of principle.State Pension
14. Mr. Andrew Bowden : To ask the Secretary of State for Social Security what recent representations he has received on the level of the state pension.
Miss Widdecombe : In recent months, we have received several representations on the level of the state pension from individual pensioners and from pensioners' organisations.
Mr. Bowden : Does my hon. Friend accept that although the state pension has more than kept pace with inflation, the great difficulty is that 750,000 pensioners receive only the basic old age pension and do not claim any income support? Will she see what steps can be taken to ensure that more of them accept their entitlement and claim income support?
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