§ 3.38 p.m.
§ Lord Skelmersdale
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Skelmersdale.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Clauses 1 and 2 agreed to.
§ Clause 3 [Abolition of Treasury supplement to contributions]:
§ Baroness Turner of Camden moved Amendment No. 1:
Page 3, line 34, (numbered 18), at end insert—
("(2) A review shall take place on or about 31st March 1992; should it then seem necessary to reinstate the supplement in order to maintain or improve benefits, appropriate action shall be taken.".
§ The noble Baroness said: As the Committee will know, Clause 3 abolishes from April 1989 the existing provisions for a Treasury supplement to be paid to the National Insurance Fund. My amendment is to some extent probing because I want to know what the Government's intentions are about the system of social insurance that we have.
§ The scheme that we have had since the war, which was based on the Beveridge Report, is essentially tripartite, with contributions from employers, from employees and from the state. The intention was that there would be a basic system of insurance for everyone so that the hazards of working life could be effectively insured against on a social basis. Everyone would pay contributions. When unemployment, illness, death or other disasters occurred benefits would be received as of right because they had been paid for.
§ This Government have gradually eroded that scheme. The supplement from the Treasury has been reduced to 5 per cent., as it is now, from 18 per cent., which is what it was in 1979. The Bill proposes that it should go altogether. At the same time, benefits have been cut. The first to go was the earnings related unemployment pay. The industrial injuries scheme has been gradually eroded. There have been reductions in the number of people entitled to claim unemployment pay, and further steps in that direction are contemplated in the Bill. We shall no doubt be talking about those later in Committee.
§ There appear to have been two aims in that progressive disqualification process. First, there has been an attempt to save money; secondly, I am sure that it is intended to drive people into lower paid employment. We shall deal with that matter later when considering other clauses.
§ Now we have the proposal to do away altogether with the Treasury supplement on the ground that the fund is in surplus. I believe that it is in surplus 312 because there has been a cut-back on benefits. Of course, it would have been possible for the Government to deal with the surplus in another way. They could have reduced the contributions paid by employers and employees, or they could have increased benefits. However, according to the Bill, they have now decided to cut back on the Treasury supplement altogether.
§ My amendment envisages an opportunity for a review of that situation. In other words, I should like to know whether it is the Government's intention that there will never again be a Treasury supplement to the National Insurance Fund. Do they envisage a situation in which the system of social insurance will be gradually run down? I hope not, because we on these Benches favour a comprehensive system of social insurance. However, if that is the Government's ultimate aim, they should say so. If it is not, there should be support for the amendment because it envisages a review in 1992. Should it then appear necessary to reinstate the supplement in order to maintain or improve benefits, appropriate action will once again be taken to provide for a Treasury supplement. I beg to move.
§ Lord Renton
The amendment does not place a duty upon anyone to carry out the proposed review. The Treasury supplement which is to be abolished by Clause 3 would not be revived by the amendment because it makes no provision for that. Neither would the review revive the supplement. That would require primary legislation which we have before us. It is just as well that the noble Baroness said that her amendment is probing because I am sure she does not wish the Committee to divide on the issue.
Looking round at the Members of the Committee I appear to be the only one present who was a member of the Standing Committee of another place which considered the National Insurance Act 1946, the foundation of the Bill. It was then agreed by all concerned that in order to make the national insurance scheme effective and worthwhile, and to provide the kind of security that everyone wanted for the country as a whole, taxpayers would have to supplement the insurance contributions. They were made by people in their various capacities—employers, employees, self-employed and so forth—towards the cost of the scheme.
The reason for that Treasury supplement was perfectly clear. It was that after the war the economy was in a low state and people had a low standard of living. Even the best wages were quite modest. People could not afford to contribute enough from their earnings, nor could industry from its gross takings, in order to make the scheme worthwhile. We are glad to find that since then the economy has expanded and the standard of living has greatly improved. Dare I say that it has improved especially during the past 10 years?
Until 1980 the Treasury supplement remained at a constant 18 per cent. of the total amount which had to be found for the scheme. Since then it has been reduced annually and the present supplement is only 5 per cent. of the total. Therefore, the noble Baroness is not asking for a great deal, but we should not look at the matter in that way.
313 The National Insurance Fund is now solvent and the taxpayers have supplemented our general system in various helpful ways. For example, I agree that these matters are outside the scheme, although closely connected with it, and the two impinge upon each other. However, all income-related benefits —such as mobility allowances, attendance allowances and so forth—are now financed by the taxpayer. I do not know the total amount but it is considerable; I believe much more than the 5 per cent. Treasury supplement made on behalf of the taxpayer.
This is a natural part of the evolution of our social security system. The Treasury supplement towards the National Insurance Fund should be abolished, as provided for in the Bill. An attempt to revive it would not be sensible.
§ 3.45 p.m.
§ Lord Skelmersdale
Before responding to the two points which have been made in relation to the amendment I should like to welcome back to his place the noble Lord, Lord Banks. It would be very strange to talk on this subject without his presence and I am delighted that he is here at least to listen to us after his illness.
§ Lord Skelmersdale
I was grateful to hear the noble Baroness, Lady Turner, say that this is a probing amendment because I must confess that when I first saw it on the Marshalled List I was rather shocked. The clear intention behind it is that in March 1992 the government of the day should be bound to reconsider the decision embodied in Clause 3 to abolish the Treasury supplement.
I must point out that the proposed amendment is defective. It does not specify who will be responsible for the "review". It does not define what might make it "seem necessary" to reinstate the supplement and, as my noble friend so cogently pointed out, in passing Clause 3 there will be no supplement left to review. However, I understand the spirit in which the amendment is made.
I must confess to some surprise that Members should feel it necessary to insist that we review the state of the National Insurance Fund in, of all periods, 1992. The Government review the levels of national insurance contributions annually in accordance with the requirements of Sections 120 and 121 of the Social Security Act 1975. It does not need the inducement of an amendment to this Bill to lead us to take any action which we decide to be appropriate. Without stressing the point, I hope that the noble Baroness does not have her eyes on the next election.
I reject the suggestion that the Government have been responsible for an erosion of benefits. Social security spending now amounts to a massive £51 billion—10 per cent. of gross domestic product; one-third higher in real terms than the level we inherited ten years ago. The Bill, including our proposals to do away with the pensioners' earnings rule, bears witness to our commitment to make 314 improvements to social security where that is justified.
It might surprise the Committee to learn that at the end of the financial year 1989 the balance in the fund will be £10 billion, equivalent to about 37 per cent. of benefit expenditure. Therefore, even with the enormous expenditure from the National Insurance Fund as a result of passing Clause 1 of the Bill and reducing the income into the fund, as suggested by the noble Baroness, there will still be a sufficient amount in the fund to pay for the benefit expenditure going out of it.
I can also dispel any suggestion—I accept that no suggestion has yet been made, but no doubt it will be made during the course of today—that there are demographic pressures lurking round the corner a few years away waiting to throw the state of the fund into the red. The ratio of working age population to that over pension age is set to remain remarkably steady at around 3.3 or 3.4 workers to pensioners throughout the whole of the next decade. I hope that that gives the noble Baroness sufficient fuel for thought and that she will find that a satisfactory answer to her probing amendment.
§ Baroness Turner of Camden
I should like to thank the Minister for his reply, and also the noble Lord, Lord Renton, for his intervention. Of course, I am aware that the contribution to the fund now only stands at 5 per cent. It was concern lest the cessation of the contribution altogether could involve some designs upon the whole system of social insurance for the future that led me to table the amendment. I shall consider very carefully what the Minister said.
I accept that the wording of the amendment is defective, which is why I said at the beginning that this is a probing amendment—to try to find out what is at the back of the Government's mind in making a proposition in this Bill that the Treasury supplement should finish altogether. There was nothing very special about 1992 except that that is a date in everybody's mind at present. However, as I said earlier, this is a probing amendment and of course I shall withdraw it.
Before I do, perhaps I could add to what the Minister said and to say how pleased we are on these Benches to see the noble Lord, Lord Banks, back in the Chamber. We have always appreciated the great contribution he has made to social security debates in this Chamber and we are glad that he is now able to rejoin us for this debate. Having said that, I shall withdraw this amendment and look carefully at what the Minister said in Hansard to see whether there is any point in bringing something back on Report.
§ Baroness Phillips
Before my noble friend withdraws her amendment, perhaps I may ask the Minister whether there is any further hope for my Bill on age discrimination. He mentioned the possibility of earning money over the age of 60. Perhaps that means that he is going to encourage people back into the labour market, in which event, therefore, I hope that my Bill will receive his commendation.
§ Lord Skelmersdale
That was a very clever parliamentary fast ball, one which I hope I can hit back towards the noble Baroness by saying that I made the Government's views on her Bill perfectly plain on Second Reading and at present I have nothing further to add.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 3 shall stand part of the Bill?
§ Earl Russell
Before I discuss the matter of the clause, I should like to thank the Minister and the noble Baroness, Lady Turner of Camden, for their kind words about the noble Lord, Lord Banks. Of course, we too are quite delighted to see him here today.
On this clause, I concede a number of matters which were said by the Minister and by the noble Lord, Lord Renton. I concede that at present the fund is in surplus. What concerns me is that this clause has the effect of slamming doors. I concede that there is a certain superficial tidiness in the argument put before us. In Standing Committee in another place the Minister said:There is sense, logic and tidiness in having a system whereby the contributions that are made to the National Insurance Fund pay for the contributory benefits and then the taxpayer pays for the non-contributory and income-related benefits. I cannot say that demographic movements in future years will enable the principle to hold for all time".The Minister may not be surprised that I intend to begin with the Minister's last sentence. I concede what the Minister said, that a demographic crisis is not just around the corner, but it should be one of the advantages of the constitution of this Chamber that it is capable of thinking a little bit further than the next election.
It seems likely that the age ratio will deteriorate significantly sometime during the first quarter of the next century. When that happens, the possibility exists of a quite significant crisis in the financing of the fund. I am sensitive to that because I happened to be in the United States in 1980–81 when that country experienced a crisis in the financing of a strictly contributory social security scheme. That country would have been very glad indeed to have had this option available to them. I do not see why the Government need to rule that out and force their successors to sit through a hot summer day reversing this piece of legislation.
The Minister may say that in a sense this is a notional question as to who pays. He may say that it is a question of either we pay, or we pay. That is not quite the case. There are some people who contribute to taxation and not to national insurance. I have in mind the wealthy pensioners to whom the Secretary of State very recently drew our attention. Indeed, he was generous enough to say that modern pensioners have a good deal to contribute. There may be a certain scope for argument about whether there are quite as many wealthy pensioners as the Minister suggests, but there are certainly some. I do not see why they should not contribute to the financing of our social security system.
316 There is also a possibility that at some future stage we may be in a position to consider seriously the integration of tax and benefit schemes. That matter has been discussed before. It is the sort of measure which some people feel may be too good to be true but such measures have, in the end, come into being. If that were to happen this clause would be a very substantial obstacle to it and I do not wish to make that road any more difficult than it is already.
Another door that this clause slams is the door towards using the existing surplus for uprating existing benefits. Here, we have something very much equivalent to the overall surplus on the revenue account and to the question of whether we use that for public sector debt repayment or to provide more immediate benefits for those living on social security. Therefore, that is a fourth door which this clause slams.
I know that the Minister knows his Belloc and he will understand what I mean when I say that I am sorry that he should be given to this furious sport.
§ 4 p.m.
§ Lord Skelmersdale
I am not sure that slamming stable doors is a furious sport, but never mind. This clause embodies in legislation the contributory principle that the cost of benefits to which contributions give entitlement should be met from those same contributions.
Surprisingly I do not recall the noble Earl mentioning the scheme envisaged by Beveridge back in 1948. He envisaged taxation contributing about one-third of the income of the National Insurance Fund. But we have not heard about why Beveridge was forced to compromise this pure contributory principle by introducing this Treasury supplement to his scheme in the first place. Other aspects of the national insurance scheme have changed so much over the years that, happily, we need continue that compromise no longer.
Beveridge's scheme was based on a flat rate contribution. Once an employee earned above a minimum level, the level of those earnings made no difference to how much each employee paid. On the contributory side of the fund's income, therefore, better off employees contributed no more to the cost of benefits than those who were less well off. If it had been funded purely through flat-rate contributions the cost of such a contribution would have had to be set too high for many lower paid employees to manage. Given that all but those on the lowest incomes were to benefit from contributory benefits, the contribution to the fund from general taxation was the only solution. It provided an earnings-related element to the fund. Indeed, I am almost picking up what the noble Baroness, Lady Turner, said a few moments ago. But we now no longer have a flat-rate contribution system, and I pay tribute to the Labour Party for that.
Since 1975 liability for employee's contributions has depended on the level of earnings up to an annual limit. As the level of the fund increased it has become increasingly anomalous to have two earnings-related sources of income. The buoyant yield of contributions has permitted a progressive 317 reduction of the Treasury supplement. Last year it stood at a mere 5 per cent of fund income. It is now no longer required at all.
We are now reforming employees' contributions still further and Clause 1 of this Bill, to which the Committee has just agreed, will mean that the level of contribution for the most lowly paid employee entering the scheme will be a mere 86 pence a week. Above that, lower level contributions are to be levied as a percentage of earnings. They are, in a word, still earnings-related. I might observe at this point that the Opposition's desire to fund some part of the fund from income tax in addition to contributions seems at odds with their proposals for contributions themselves. Their policy review document, I believe misguidedly, proposes that contributions should be structured along the lines of income tax with a contribution-free allowance and no upper earnings limit. In that context their adherence to a Treasury supplement as well seems somewhat strange.
That is not, of course, to say that the taxpayer will no longer meet the cost of benefits. Non-contributory benefits are met entirely from general taxation and will continue to be so. Last year they accounted for a massive £20 billion. That compares handsomely with the £26 billion met from the National Insurance Fund.
It has been argued that the Treasury supplement ought to be retained so that we can build up an even larger balance in the fund to spend on improved benefits. The fact is that our expenditure on benefits is enormous—£51 billion on social security as a whole this year, which is a real terms increase of a third over the decade. The abolition of the pensioners' earnings rule will give further substantial help to pensioners. But the fact is that money from general taxation does not have to go through the National Insurance Fund to improve benefits for pensioners. I can confirm, in answer to an earlier question from the noble Baroness, Lady Turner, that we firmly believe in the contributory principle for that set of benefits which really ought to be contributory. Taxpayers will also be making a further very considerable contribution to assist pensioners who are less well off. General taxation will be footing the bill for the additional £200 million to be added to the pensioner premiums in income support from this October.
All pensioners are not liable to pay national insurance contributions. We believe that people of working age should pay their contributions and pay for the cost of benefits. Well-off pensioners pay towards the cost of non-contributory benefits through taxation—this is in answer to the noble Earl—because pensions have, of course, always been taxable in the same way as any other income.
The noble Earl also asked about the abolition of the supplement being a barrier to tax benefit integration. I should not like to speculate on what legislative changes would be necessary to bring about tax benefit integration—an objective with, I believe, as I have said on other occasions, some rather severe drawbacks. The presence or otherwise of a Treasury supplement strikes me as the least barrier to such a change. It would be necessary to re-vamp the entire National Insurance Fund and it would not be this 318 clause we would be debating but a completely new structure of paying for these benefits.
Finally, I see no reason why we should increase benefit expenditure with the sole object of reducing the balance in the fund. I remind the Committee that the previous government left office running a balance in the fund at a comparable level, as a proportion of benefit expenditure, to the present one. Of course we have not, in anticipation of this clause being agreed to, put any extra money from the Treasury into the National Insurance Fund this year. The Treasury supplement is no longer needed in practice and is wrong in principle. As for slamming the stable door, it is not exactly that but more a gentle closing. If one subscribes to the zig-zag theory of politics, as I do, the noble Earl will appreciate that no government can bind their successor. I am sure that neither the noble Earl nor I would want to try.
Lord Campbell of Croy
I should like to add to a point on this clause which has only been touched upon. In debating the amendment the noble Baroness, Lady Turner, gave us a quick description of the origin of the national insurance scheme which is based on the Beveridge Report. My noble friend Lord Renton gave us the benefit of his experience on the Standing Committee in another place in 1946. Both drew attention to the fact that what Lord Beveridge and his colleagues were considering was everything to do with employment. The scheme was based on whether or not a person was in work. Only people who were in work or available for work were contributors. Benefits were mainly for people who lost work or had retired.
About 20 years after my noble friend was on the Standing Committee some of us in another place were going into the fact that there was no provision in the scheme for people who had been born with serious disabilities or who had suffered severe disabilities from early youth. It had not been realised that such people were not in the scheme because they were not available for work and did not have national insurance numbers. They simply did not exist. They were being coped with in the community, often by parents and friends, and that brought in the whole question of new benefits for the severely disabled.
My noble friend touched on attendance allowances and mobility allowances as examples of allowances which came in later and in which I was involved in one way or another for people who were not in the national insurance scheme. Those allowances were paid for by the taxpayer. That is a development of which I believe everyone in public and political life approves, but it has meant that the taxpayer plays a much larger part in those circumstances because the national insurance scheme did not cover them.
Therefore, it seems to me that the way in which the Government are proceeding through this clause is completely consistent with the fact that the taxpayers are covering an area which was not even thought of when the national insurance scheme was initiated.
The Viscount of Oxfuird
I should like to make one small comment on the demographic point made by the noble Earl. I understand—and I think my noble friend will agree—that the Government Actuary's recommended holding of benefit expenditure at about £4.4 billion represents about nine weeks. I assume that an actuary is a man who is accustomed to forecasting what we are to expect in the future. I assume that his view takes into account the demographic curves we expect. As we stand currently I understand that we have 20 weeks of benefit, which compares very readily with the benefit which existed in 1978–79 of about £4.1 billion whereas today's figure is £9–9 billion.
§ Lord Skelmersdale
My noble friend is right. The £4.4 billion is the Government Actuary's advised figure of nine weeks of benefit of, so to speak, extra insurance. This means that if there is a sudden rise in, for example, unemployment or a sudden rise in pensioners, there is enough money in the fund to pay the expenses which flow therefrom. There is way and above the nine weeks of benefit, as my noble friend points out; there is a surplus of around 20 weeks of benefit and that is another reason why we no longer need the Treasury supplement. However, as I pointed out earlier, we are also reducing the income to the fund by the operation of Clause 1. We are increasing the expenditure, or the expected expenditure, because of the abolition of the pensioner's earnings rule, which was widely welcomed in all parts of the Chamber.
§ Earl Russell
I thank the Minister for those very careful replies, to which I have listened with interest. I shall read them with interest. I wish to quickly reassure the Minister on a couple of points. First, I did not suggest that any parliament should bind its successors. I would not have dreamt of any such thing. All I was suggesting was that a parliament might possibly think of saving its successors the task of passing unnecessary legislation. Secondly, I also wish to reassure the Minister that I did not suggest increasing benefits simply in order to reduce the surplus in the fund. I am not that kind of an accountant. It seems that we are constantly being told that we cannot afford to do various good things. I wonder whether this might be an opportunity for saying that just once in a blue moon we can afford to do them. With those two caveats, for the time being I shall not oppose clause stand part of the Bill. I thank the Minister, and I shall read his reply with a great deal of care.
§ Clause 3 agreed to.
§ Clause 4 agreed to.
§ 4.15 p.m.
Baroness Faithfull moved Amendment No. 2:
After Clause 4, insert the following new clause:
§ ("Increase for child benefit.
In section 63(2) of the Social Security Act 1986, after paragraph (a) there shall be inserted the following paragraph—
(aa) which increases the sum specified by virtue of section 5(1) of the Child Benefit Act 1975 by a percentage not less than the percentage by which the sum prescribed for the purposes of section 21(6)(a) above in respect of a child aged less than 11 years is increased by the up-rating order; and" ").
§ The noble Baroness said: As the Committee knows, the uprating of child benefit has been frozen for two years. It stands now at £7.25 per child. Many people in this country are concerned that child benefit, if frozen every year, will eventually be eroded. Because of the freeze these past two years many people surmise that eventually child benefit will go. I am sure that my noble friend the Leader of the House will be able to reassure us on this matter.
§ The purpose of this new clause is to require the Secretary of State to increase child benefit each year from 1990—not this year, but 1990—by at least the same percentage as the under-11 child credit in the family credit scheme. I use the formula of under-11 because in family credit the child credit varies with age. For convenience we have chosen the under-11 rate. This formula would not tie child benefit to the index of prices or earnings but it would ensure that family credit was not allowed gradually to replace child benefit.
§ With all its virtues, family credit is not an acceptable substitute for child benefit. At present child benefit is of right and 98 per cent. of mothers with children receive it. In contrast, family credit is means-tested, and until very recently it had only a 50 per cent. takeup. The Government have spent £5 million on advertising family credit; this has raised the takeup percentage to possibly 60 per cent. But it has also left many thousands of families bitterly disappointed because, having filled in a very complicated claim form to prove their poverty, their claims have been turned down.
§ The advantage of child benefit is that it is given to the mother specifically for the children. Men are persuaded to take low-paid jobs supplemented by family credit. That is a good thing. Therefore the man regards the benefit as part of the family budget and not specifically for children. I concede that those in receipt of family credit—namely, those who are working—may not gain from an increase in child benefit because of the convention of the Department of Social Security that any increase in that benefit is knocked off the family credit rates.
§ I wish to make a plea to the Committee for those families who are just above the family credit level, in work, but managing with very great difficulty, as well as for the 40 per cent. of those entitled to family credit who have not obtained or claimed it. For instance, let us consider the young curate on a low stipend; the young teacher, married, and just out of college, and teaching; the young social worker and the young lecturer. I have visited all these categories of people. They tell me that they would not apply for family credit, even if they were eligible, as many of them are, because they would not want to be means-tested. I have to say that being means-tested is a very unhappy experience.
§ I know that £5 million has been spent on advertising family credit and that a proportion of those eligible have applied. Many will not apply and that is not hypothetical but factual. Tax allowances are being increased with inflation while child benefit is frozen, so that families without children are benefiting at the expense of families with them. Since 1979 the value of child benefit has fallen by 12 per 321 cent. in real terms. On the other hand, tax allowances have increased by 22 per cent. It may be argued that the rich should not receive child benefit as of right, though nobody argued about the child tax allowances which the child benefit replaced.
§ How this question may be dealt with I shall leave to the noble Lord, Lord Seebohm, who, as a banker and financier, can better explain how it can be done. He will also point out the effect of the rising cost of living on families with children, based on the Department of Employment's general index of retail prices.
§ I have given great thought and study and made practical grass roots inquiries before writing this speech. Since then my noble friend the Leader of the House, Lord Belstead, has seen me. That was after my lunch today but before his, I regret to say. In fairness, I wish to thank him for dealing with this amendment. I believe that underlines its very great importance. He has pointed out three things to me. In fairness and loyalty to the Leader of the House, to my party and also in fairness to the three Members of the Committee who are supporting this amendment, I should make to the Committee the points that he made to me. The first point concerns the unintentional effect of this amendment. He pointed out to me that if child benefit were tied to family credit, then it would be not only very costly, but it might stand against the very poor families because it might not be possible to raise family credit.
§ The second point concerns one that the noble Lord, Lord Seebohm, will speak about. It relates to the very wealthy drawing child benefit. That is not covered by this Bill. It is a finance matter and as such can be dealt with only in another place. Nevertheless, it was a point which my noble friend Lord Belstead made to me.
§ The three points made by my noble friend the Leader of the House concerned the wealthy being paid child benefit, the cost of the payment and the effect of the family credit scheme. It is right that I should put these points to the Committee. I am grateful to my noble friend Lord Belstead for also doing so. I think it is right that supporters of the amendment should know of these points. I beg to move.
§ Baroness Jeger
I am sure that noble Lords in all parts of the Committee have listed carefully to the noble Baroness and appreciate that she speaks with wisdom, experience, understanding and sincerity. I should like to thank her for passing on a message, if I may put it that way, from the noble Lord who failed to give her lunch.
§ Baroness Jeger
I was rather amused that the noble Lord seemed to think that we were unintentionally going to cost the Treasury a good deal of money. This follows the news that the Treasury supplement to the National Insurance Fund is to be abolished. I found that somewhat inconsistent. I am sure that we shall hear more about that later.
322 I cannot understand why the Government seem to be turning their back on views that have long been held by all parties on the issue of child benefit. I remind the Committee that it was only in 1985 that we had that enormous government social security review. It was supposed to put everything right for ever. In the review it was said:It is right that families with children of all income levels should receive some recognition for the additional cost of bringing up children".That is what child benefit is about. It is a recognition of the additional cost of bringing up children compared with the cost of living for people with no children. Now we have this strange upturn which puzzles many people.
Those involved at the beginning of the child benefit scheme did not look on it as a social security handout. It was part of the Government's overall fiscal policy which recognised that there must be some policy for families with children. Before the 1975 Act there were income tax reliefs for children: £305 for a child over 16 if in education; £275 for a child aged 11 to 16; £240 for a child under the age of 11. I cannot remember a single Conservative spokesman protesting that this tax handout was going to people who did not need it. This should be set side by side with the fact that people below the tax threshold were receiving only five shillings a week for a child. We decided to pull this all together. I do not know why the Government are now taking this carefully thought out scheme to pieces. I cannot see who it will help.
Unlike France and many other of our EC friends we in this country have no coherent government policy for the family. We have heard rumours that the Government think that we ought to do something about the family. I should like to give the Prime Minister, through the noble Lord opposite, my advice. She should start with uprating child benefit. That would do more for the family than more bureaucracy or any speech that she might wish to make. Child benefit is the only recognition in the tax and social security system of the extra cost of bringing up children. We have heard a good deal about targeting—how right it is to take from the rich and give to the poor. But that is not what happens. What is being proposed is that only people with children should help other people with children, and that people with no children should not share in this process.
The Government must accept this and save themselves £7 million—the noble Baroness gave the figure of £5 million—on advertising this targeted group of poor children. The British people do not like being targeted. They do not like their children being targeted. They do not like the setting aside of one group from another in their schools where they are playing, and earlier in their nurseries. Many people are suffering because child benefit has not been uprated in line with inflation. At the same time all this money is being spent on trying to find people who will fill in that enormous form and probably in the end be refused the benefit.
I do not want to sound patronising but a very respectable man came to see me the other night. He said that he could not possibly fill up that form 323 because on the last occasion he went to the social security office he was required to give details to a bit of a girl—I told him that that was very chauvinist of him—of his most private affairs to do with his marriage, his mortgage and so on. He said that with child benefit the old lady got it and she could spend it on the children. This is a severe difficulty for many people who need the help. I hope that the noble Lord can tell us how much money has been saved by not uprating child benefit in line with inflation, and how much of that has already gone to these targeted children.
I can only assume that the Government are bad at finding their targets. Most of us on this side of the Committee do not want them to continue trying. We want to see child benefit uprated, perhaps even above the cost of living. People will then feel that there is genuine public interest in the future of our children and that they will not be denied their share in the standard of living which for many people is rising. Support for the failure to uprate child benefit in line with inflation comes strangely indeed from noble Lords sitting in the Committee who may be receiving index linked pensions, tax concessions on mortgages and increases in personal income tax allowances. Not one voice has been raised to say that such handouts from the taxpayer are not needed. I must ask: is it only children that this Government want to penalise in their fiscal policies?
Those are but a few of the reasons why I support the noble Baroness opposite; I hope that we shall both be supported later this afternoon.
§ 4.30 p.m.
§ Earl Russell
Perhaps I may first express the hope that the noble Lord the Lord Privy Seal has now been able to have some lunch. It is, I think, the basic principle of the social security system that one must eat. It would be a great cause of regret to me if a social security debate deprived a Member of this Chamber of the chance to have his lunch.
I was much impressed by the speech made on Second Reading by the noble Lord, Lord Seebohm. I listened to his speech with care and, indeed, I read it with equal care. I must confess that I have been exercised by the Government's argument that some of this money may go to people who do not need it. I have never in my life protested at the rate of tax which I have paid and I do not mean to begin now. However, I think that the principle of graduated taxation—that is, that people on the same incomes pay the same tax—is of considerable importance. But, if we consider incomes per capita, as I think we should, the consequences are interesting.
I understand that the Government have a hostility towards tax allowances on the grounds that they distort the market. But, when we look at the per capita income of a couple with children and a couple without children, on the same salary, we may well ask just who is distorting the market. There is no doubt that a childless couple is much better off than a couple on the same income but with children. That fact is not merely true, but is indeed becoming truer.
324 The pattern of government policy is shifting the costs further towards falling on parents.
I shall give but two examples. One is the matter of income support for teenagers, and the other is that of the parental contribution towards student grants. Therefore, if we are not to have a child benefit regularly up-rated, there would then, I think, be an almost unanswerable case for a child tax allowance. That would be very much worse targeted than child benefit. The objections the Government make about the money going to the wrong place would apply a fortiori. Thus I think that the Government may get away more lightly if they accept our case in this connection.
I can see a certain obvious attraction to the concept of targeting. However, the trouble is that when we talk about the Secretary of State indulging in targeting, we find that he is like the young man of Madrid in the limerick: his aim is very bad. The young man of Madrid was told to practise awhile; but, in this case, the Secretary of State's hands have not improved. If your aim is bad, to hit a target you will need a shotgun and not a rifle. In other words, you need to achieve a very considerable scatter.
As regards the problem of targeting, there is a very real difficulty in communicating with the public. I do not think that we always face up to quite how difficult the problem is. The public now receives a vast flow of information. I am sure that all of us find that there is a point beyond which information comes to us at such a rate that we cannot continue to take it in; we reject it. That seems to be happening with much of the information which the public is receiving as regards means-tested benefits. That is perhaps not quite so surprising when we remember that a considerable proportion of the public believes, for example, that Mr. Nigel Lawson is a trade unionist.
There is a further difficulty. Where we are dealing with means-tested benefits, which are very rightly and necessarily uprated, potential claimants often have information which may be a year out of date or even, in some cases, two or three years out of date. In other words, you may pick up your figure after it ceases to apply. I think that that will always be a difficulty with regard to means-tested benefits.
However, there are further difficulties beyond that one. Reading the London labour market survey, I was quite shocked to notice that unprompted only 5 per cent. of the London unemployed knew that those on low earnings may sometimes be entitled to family credit. I appreciate that the Government have undertaken an advertising campaign to tackle the problem. I am glad that they have done so. However, I shall be even more glad when I see that principle applied to other benefits. But, such a campaign is expensive. Further, it is conveying complicated information, which takes time. We do not all instinctively remember financial limits; but we all know what a child is.
Child benefit is a comprehensible benefit. It meets the test of comprehensibility which the noble Lord, Lord Seebohm, enunciated on Second Reading. Moreover, it is paid to the mother, and that does matter. In some situations it may matter 325 considerably; for example, in situations such as a sudden matrimonial break-up or a failure to meet maintenance payments, a situation more common than perhaps we would wish. Further, because it comes immediately it may avoid quite alarming problems.
I recall a case which occurred just recently in a social security office in the borough of Brent, where I live. A woman was applying for what I think must have been income support. She was told that it would take three days to process and post the cheque. She had absolutely nothing left and a young baby with her. Finally she exclaimed, "Well, you feed her then!" She plonked the baby on the counter and walked out of the office. That is the sort of situation from which up-rating child benefit may perhaps serve to relieve us.
I also think that there is a great deal of force in the argument which Lord Beveridge used as regards child benefit and the poverty trap. We want to achieve a situation where families with children have enough to eat and where there is also a substantial gap between the benefit level and wage levels. Lord Beveridge argued that unless there are substantial benefits for children paid both to families in work and those out of work, this objective cannot be achieved.
Finally, there is the argument of trust. I have read the Conservative Party manifesto on this issue many times. I appreciate that what has happened is within the plain and literal words of that document. However, it may possibly be misleading. When such a situation arises, I think that the resulting reactions rub off on all of us as a profession. On Second Reading I noticed that when the Minister spoke about Clause 22 he said that,Social Security benefits will continue to be paid as now".—[Official Report, 25/5/89; col. 566.]For a second I almost jumped out of my skin. However, I realised after a moment's thought that there was no need for any anxiety. But I should not have needed to have that moment of anxiety. I think that we shall all be in a great deal more comfort if we go ahead with this amendment and if the Government, after reflection, accept it.
§ Lord Skelmersdale
Before the noble Earl sits down, perhaps I may put the record straight. On the occasion referred to I said that child benefit will continue to be paid as now; I did not refer to social security benefits.
§ Lord Skelmersdale
In that case, I must put the record doubly straight. I did not intend to say that; I was talking about child benefit at that moment.
§ Lord Seebohm
I think that we are all now convinced, after what we have heard, that there is no doubt that families with children are financially considerably worse off than those who have no children. We cannot escape from that fact. However, by removing tax benefits—under the provisions of the 1975 Act—we relied from then on on child 326 benefit in order to give families with children some benefit.
I think that it has been accepted for many generations—if not for centuries—that there is justification in making some wealth redistribution between those who do not have children and those who do. I believe that that is absolutely true and has been accepted by all for a very long time. In the 1975 Bill there was no intention whatever that this should simply be to relieve poverty. It was a form of social justice to ensure that families with children received a little more help and that the children should not suffer.
It is worth recalling that when the Labour Government introduced the Bill in 1975, the Conservative Opposition introduced an amendment to raise child benefit every six months in line with inflation. I believe that the Labour Party turned the amendment down. The right honourable Kenneth Clarke, MP—noble Lords will have heard of him—said on 20th June 1975 (at col. 150 of Hansard) that he could not see how a reputable case could be raised against it. Surely, freezing the amount of child benefit is indefensible while 30 per cent. of children are in families on or below the poverty line.
What made the Conservative Government change their opinions between 1975 and now so completely, not only in what they are doing but in the basic policy and principle of the Child Benefit Act? Clearly in theory targeting help to those most in need makes economic and social sense. But when this help reaches only 50 per cent. of those in need, as we have heard, yet child benefit reaches 98 per cent. of all families with children, let us be practical and keep child benefit as it was always intended to be—un-means tested, untaxed, unfrozen and available to all families with children.
Why is it that 50 per cent., or perhaps as many as 60 per cent. of families receive family credit and yet two families in five are still without it? I know perfectly well why. There are two main reasons. One is simply that they do not understand it, it is a complicated matter. The other is, quite frankly, that many people find it humiliating to go with a begging bowl to talk to a clerk over a counter and stand naked in all their affairs, telling him or her what their earnings are, what is in the building society, if anything, what children there are, and with what special problems, handicaps and so on. A great many people feel intensely humiliated by this; they will not do it. What child benefit does is to give those people some income for the children.
I keep asking myself, "What do the Government have in mind? Why are they taking this line?" I find it very difficult to understand. The noble Baroness, Lady Faithfull, gave three reasons; first, that some people do not need it but they get it. What an awful thought. I have seen the figures given in Hansard in another place in answer to a Written Question. They were in a table showing that those with children who receive benefit but who earn £25,000 or more per year are only 10 per cent. of the whole. I can see the dead hand of the Treasury on this, or the Treasury breathing down the necks of the Government in order to save 10 per cent., just to overturn what I 327 consider to be one of the best policies we have ever had for children and families.
The second reason given is that it would cost a lot more money. In real terms we are not asking for it to cost any more. We are merely asking for it to keep pace with the family credit system. If the country feels generous enough to increase family credits in real terms, it is only fair that child benefit should also be increased on the same sort of basis. So I rule out both those arguments. I cannot remember the third reason. Perhaps the noble Baroness will remind me of it.
§ 4.45 p.m.
§ Baroness Faithfull
I thank the noble Lord for giving way. The third point was the unavoidable effect. If child benefit is tied to family credits, it is very costly. The Treasury feels that it must keep down family credits in order not to cost the country a great deal of money.
§ Lord Seebohm
I do not even need to argue about that. I believe that I have made the case, and I do not need to say a great deal more. It is absolutely tragic that one of the best Bills in the past for family life and children in this country will be overturned for reasons which I cannot understand. I hope that everyone will support the amendments.
§ Baroness Elliot of Harwood
I wish to speak very briefly since I originally supported the first Bill when it came through Parliament. As the noble Lord said, it was supported by the Conservative Party that there should be this child benefit scheme. I agree with every word which my noble friend Lady Faithfull said on the subject. She knows an enormous amount about it. I spent a great deal of my life as chairman of a children's committee dealing with these matters, and I am certain that this is one of the very best allowances we have ever put into legislation.
There are two reasons for that. One is that it goes to the woman, the mother. She can spend it on the children and she is the person responsible. Other benefits are not so well distributed. Therefore it is vital that it should continue. Secondly, I do not believe that we can say that it should never be increased because we all know that we suffer from inflation. If nothing is done about child benefit, its value will go down. Surely that is not what we want.
My last point is that I have received information and I have no doubt that many people have received the same information from various organisations. The last communication I had was a letter from a child benefit organisation. I believe that there are 80 voluntary organisations of every political and non-political aspect and they all want the child benefit scheme to remain as it is. I cannot believe that the Government wish to harm some 80 voluntary organisations which are all behind this scheme. I hope that they will realise that they are dealing at the moment with something which is vital and which must not be altered in any way to hamper the great benefits given to families.
§ Baroness Seear
I wish strongly to support the amendment. I should like to spend one moment on the argument which is superficially attractive to a great many people. It is, "We want the money to go to those who need it most". I am often told by people, "Isn't that sensible".
However, we, or rather the Government, are totally inconsistent in the principle of the application of targeting, if principle it is. What could be less targeted than mortgage interest relief, in which a higher percentage goes to the people who have the biggest incomes and the largest mortgages? If we could save something there we should have plenty of money left for updating the child benefit scheme.
Targeting is sometimes right, but I beg the Government not to treat targeting as a dogma. On this occasion I believe that targeting is totally wrong, for the reasons which many other people have given. It is wrong because—and I speak as a single woman—it is obvious to a great many of us and surely to the whole world that people with children have expenses which we single people do not have. We are taxpayers, and I think that if the Government asked most single people, they would wish for a redistribution from the people without children to the people with children.
Further, as regards the poverty trap, the fact that child benefit is not reduced as earnings go up means that it does not affect people's willingness to take employment. Surely that is something which should appeal to the Government.
Finally, one more word about the value of the benefit going to the mother. My noble friend Lord Russell referred to women not being able to get the money, to the cases where maintenance failed and cases of separation. It is not only in those cases that the women cannot get the money. I remember occasions on which men asked that the increases in their pay should not be made public because they did not want their wives to know that their money had gone up. These were seemingly happily married couples. The fact that it is the woman who receives the money and has it to spend on the children is enormously important, not just for deserted wives, important though they may be, but for very ordinary, happy wives whose husbands think they are doing fine by them when that is not the case. For all these reasons I beg the Chamber as other Members of the Committee have, to support this very sensible and very highly respected benefit, and to maintain it along the lines suggested in the amendment.
§ Baroness Carnegy of Lour
I have two questions for my noble friend on the Front Bench. We know all the facts which prove that child benefit is a very attractive way of helping people with children. However, we also know that circumstances have changed enormously since the scheme was initiated. One wonders whether the scheme can continue as it is, and be uprated in the way that is suggested. I should like my noble friend to help me on this matter. First, is it true, as I have read, that nowadays the taxpayer pays £1 billion a year in child benefit to families who are earning over £20,000 a year? That seems an extraordinary figure, but I have read that. Secondly, I hope that my noble friend will tell 329 us the cost of the implications of the amendment of my noble friend Lady Faithfull. She has told us that it would cost a lot of money, but we need to know how much it would cost. I know the amendment is designed to try to meet a very complicated problem, which is that, if benefit is uprated it would give very little help to better-off people in proportion to their income, and yet give no help at all to the poorest people. That is the problem. I know the amendment is designed to try and alleviate that situation, but we need some hard figures if we are to make a judgment on it. I hope that my noble friend can answer my two queries.
§ The Earl of Onslow
We know the answer to the £1.5 billion that goes to people earning over £20,000 a year because my noble friend Lord Skelmersdale sent all the Tory Back-Benchers a letter explaining that. Therefore, I do not quite understand why my noble friend wants that confirmed. Further, when child benefit was introduced, it replaced an allowance deducted from tax. That, needless to say, did not count as government expenditure; it counted as non-raised revenue. The present benefit counts as government expenditure for slightly odd Treasury reasons. If we think that this Government would not have been proud to have raised child allowance, had we still had it, by more than the rate of inflation, I should be very surprised. This benefit is by far the most efficient social security benefit that we have. I sincerely hope that this amendment is carried for those two very good reasons.
§ Lady Saltoun of Abernethy
I wish to reiterate strongly one point that has been made by the noble Baroness, Lady Faithfull, and, I believe, the noble Baroness, Lady Jeger, and others. It is that child benefit should go to the mother who is the person responsible for the children. Income support in a two-parent family goes to the father. Anything can happen to it. It can be spent at the pub, on the dogs, on the nags or on other women. In addition, a great many men just do not understand how much things like children's clothes and shoes cost. For that reason alone, I think that child benefit should be retained and uprated in line with inflation.
However, there is another point here. Families may get into financial difficulties, perhaps as a result of their income support not arriving. They may have temporary problems through being self-employed and running a business where the customers have not paid, so they are short of cash, or there may be a death in the family or some other problem. In the old days, many long years ago, people shopped for food and household necessities at shops where they were served by shopkeepers and other human beings. Those human beings knew their customers. If a mother was in difficulties, the shopkeepers would often let her have the necessities of life on tick. Nowadays, most of those little shops have gone and have been replaced by big, multiple supermarkets which do not follow such practices. Without money, one cannot obtain anything, short of shoplifting. For that reason, too, I think we should retain child benefit.
330 Finally, the Government were elected by the people of this country, a large number of whom are mothers with children. Mothers want to keep child benefit, and child benefit which is uprated every year in line with inflation. That is what the people want. If they do not get it, they will be very unhappy. I believe that the Government are hell bent on suicide as regards what they are doing with child benefit.
I rise to speak against this new clause. I recognise that I seem to be speaking against the tide of opinion as so far expressed. I get the impression that the Committee believes that if this new clause were adopted, the poorest people of whom they have spoken would get child benefit, and that the child benefit would, as child benefit does, get paid into the hands of the mothers. But that is an illusion. We know that any increase in child benefit would be deducted from family credit. I think that that is correct. Therefore, the condition of the people whom the Committee is most eager to help would not be improved one jot by this particular new clause.
I speak as one who is interested for many reasons in this whole subject. I was responsible for introducing family income supplement all those years ago. That was the predecessor of family credit which plays a large part in what we are now discussing. I speak also as one who is not altogether convinced that the system—that is the combination of the tax system, the insurance system and the income-related benefit system, the welfare system—takes enough account of the acknowledged difference between families with dependent children and families without dependent children. I am not convinced that enough distinction is made there. I was a little disturbed by a paragraph which appeared at the very end of the speech of my right honourable friend the Secretary of State for Social Security at col. 725 of the Official Report of another place. In that speech my right honourable friend measured, admittedly average figures, as indicating a gap of 3 per cent. on average between families with dependent children and families without dependent children.
That, I know, conceals a whole mass of different situations, but it is not convincing to me that 3 per cent. is a sufficient gap. So since I am not convinced on the total success of our systems in distinguishing between families with children and families without children, why do I rise to oppose my benign and noble friend Lady Faithfull? I think she would be at least equal top if there were a poll in your Lordships' House on benignity. Others might equal her, but I cannot imagine that anyone would exceed her. I rise because we have really created such a welfare archipelago.
Both parties when in government have added—I was one who added—to the welfare archipelago with massive good intentions. We all have good intentions. The elements of this welfare archipelago—involving the tax system, the income related benefit system and the insurance system—overlap; they interact, they sometimes leave unintended gaps and they sometimes do not leave 331 intended gaps. They have benign results and I think I can say that they also sometimes have perverse and unintended results. We must be very careful before we, as this new clause proposes, bind the hands of future Ministers. It would take more than a scholar, it would take a whole squadron of scholars, to decide what the result would be if we were to pass this new clause, taking into account the complexity of the well-intentioned archipelago that we have created.
I emphasise to the Committee again that, if we pass this new clause, we do not automatically benefit those whom noble Lords and noble Baronesses intend to benefit; not unless another whole range of changes are made. I emphasise also that Ministers in this House and in another place have surely been put on warning about the concern of noble Lords and of honourable Members in another place about the poorest families with dependent children. The Secretary of State concerned must realise that he has a weakness in his argument, the weakness that I faced when I introduced the family income supplement; that is, that the take-up—I have to hesitate to get the right phrase—of family credit, at least at this stage, means that he is not putting into the hands of all the poorest the benefits that they would get, which would, admittedly, be reduced if this new clause were passed to offset any increase that would come from child benefit.
In these circumstances, having warned the Government by the speeches being made today here and the speeches made in another place, we should really leave discretion in the hands of the Minister. I beg noble Lords and noble Baronesses to recognise the complexity of what we would do if we were to tie the hands of Ministers on one element in this archipelago.
§ 5 p.m.
§ Lord Seebohm
Before the noble Lord sits down, may I put one point to him? He said that the new clause would not help child benefit at all, because the total would come down. What he should have said, I suggest, is that the whole package would not alter. Certainly, the child benefit would increase and that goes to the mother. The problem about these families is budgeting and she will get these payments. That is terribly important.
§ Baroness Strange
May I rise briefly to speak through the archipelago of my noble friend's amendments and try to find some firm and sure rock like child benefit, which seems to me an absolutely firm and sure rock? Therefore I am supporting my noble friend Lady Faithfull. Child benefit would be paid direct to the mother or the person caring for the child, and that therefore means that the money would reach the child.
Of course it is quite clear that with this blanket benefit, as my noble friend the Leader of the House has pointed out, some parents and children will benefit who are quite able to provide for themselves without extra help from the Government. There is nothing in this clause to prevent those who consider themselves sufficiently well-off not claiming benefit. 332 At the moment, 98 per cent. of this benefit is claimed, but for family credit, where parents have to fill in forms with statements of income and so on, only 50 or 60 per cent. of those who should receive benefit take it up. This may be because they find it difficult to fill in forms—and most people do—or because of the very real social stigma attached to having to claim for these benefits.
Nobody likes admitting that they have less money than other people. It happens to us all at some time in our lives and it is very unpleasant. I can only tell your Lordships from personal experience that it was very nice to have child benefit and to be able to buy oranges and extra shoes for the winter. I enjoyed claiming it very much indeed.
What I am saying is that child benefit is received by all, like the rain, raining on the just and the unjust; those who need it and those who do not. We pride ourselves on being a caring society. Let us therefore support my noble friend and vote for continued child benefit, which, like that well-advertised lager, reaches the parts that other benefits cannot reach.
§ Lord Trafford
I have some amusement in one sense in following the noble Lord, Lord Joseph, who preceded my noble friend, because 18 years ago I think I made his speech in another place and he got up and rejected it. He may not recall the occasion but at that time—and subsequently I have not seen any reason to change my point of view—the failure to tie together the insurance scheme, the taxation system and the benefits system led to these complications where there are so many winners and losers when benefits are changed. He described the welfare archipelago which arises. One gets into a tangle. It may look like a perfectly straightforward system, but when one increases something like child benefit, in the end you have to reduce another benefit under the family credit scheme by the same amount, as the noble Lord pointed out.
During the course of this debate what we have heard are two things. First, there have been a number of self-evident truths, such as that childless couples are better off than couples with children. One could go further and say that single people are better off than married people. So they are on the whole. Those are self-evident truths.
The noble Baroness, Lady Seear, commented that we have targeted tax relief on mortgages and said how wrong it was. I am not arguing with her that that is not a targeted relief. I accept that. But the fact that, as she sees it, that is one wrong does not prove that another wrong, as she sees it, is right. So it seems, in some ways, an argument mostly about the question of means testing and targeting. It is not an argument, and I have not heard anybody suggest, that support for children or general support for families should be reduced. I have heard many comments that this should be concentrated. I believe that the noble Baroness on the opposite Front Bench made a comment about the necessity for a more comprehensive programme of support for the family, and I do not think anybody would disagree with that.
333 What concerns me greatly is not just the point made by the noble Lord, Lord Joseph, but also that there is a feeling that, if one in any sense tries to target or to means test, in some way you are demeaning either the person or the population. We have had examples given by a number of noble Lords about how awful it is to have to state what your mortgage is, what your wife earns and what allowances you have, although in practice many of us spend much of our time filling up incomprehensible income tax forms and so on giving exactly the same sort of information.
We are always giving this sort of information to people from whom we require mortgages or insurance, and we give even more information when we require loans and so on. I agree that many people who might be involved in making claims for family credit are less competent in some respects than those who fill in income tax forms. I accept that.
I also accept that the form on which the claim is made in the family credit system is far too complicated, far too long, far to difficult and takes far too long a time to process. But those are not defects of the scheme; they are defects of the operation of the scheme. In the same way, to propose that one targets with benefits those whom one wishes is not in itself wrong; but a valid argument could be put forward regarding the method by which we try to achieve that and which involves the complicated forms, the delays, the difficulties, and the fact that people have to go to specific places at specific times.
So it is not that we have the targeting wrong; it is that the system by which we try to operate it is ineffective because people do not know about it—that is part of the question of take-up—because it is too complicated and they cannot be bothered; because they find out that, one way or another, they lose nearly as much as they gain; and finally, as I said, because many of the people are not in many respects in a position—as many of us are with regard to other forms—to deal with the matter. That point also needs to be taken into account.
I started by commenting, at the expense of my noble friend Lord Joseph, on the negative income tax sheme. That problem would not arise under such a scheme. Provision would be virtually automatic, but I am assured by the powers that be, not least by my noble friend the Minister, that that is much too expensive, and could not possibly be introduced at the present time. I shall not therefore pursue that point, but I should make the point that it is that type of situation that we should criticise, not the aim to target or to use the family credit system or to give money to those in work as well as those out of work. There are many respects in which the operation of the amendment—I believe that one example has already been demonstrated and I shall not go into it again—could be somewhat defective. I emphasise that the fact that one happens not to agree with the amendment has nothing to do with whether or not one wishes to support the general benefit to the family, the child or the mother. I believe that most of us would concede that it was a useful move to give it to the mother.
334 I believe with some reservations that the amendment might lead us into further trouble. The archipelago to which my noble friend referred would be enhanced and increased. It could therefore be damaging to the very objectives—laudable objectives—that my noble friend Lady Faithfull seeks to promote.
§ 5.15 p.m.
§ Lord Renton
This amendment gives rise to a fundamental problem which I cannot believe has been considered by those noble Lords who have so far supported it. It is a point that has not yet been mentioned, and it is this; namely, that, if we pass the amendment, we shall create a statutory contradiction or conflict.
Perhaps I may explain. It is a very simple point. Under Section 5 of the Child Benefit Act 1975, the Secretary of State has complete discretion. He has an obligation to consider annually whether there should be an increase and what the increase should be. But, apart from that one obligation, he has free discretion to consider what the rates of child benefit should be in the following 12 months,having regard to the economic situation as a whole, the general standard of living and such other matters as he thinks relevant".The amendment acknowledges that discretion on his part; it even mentions Section 5(1) of the 1975 Act. But the amendment would require him to increase all child benefits annually by a percentage not less than the amount by which provision is made for a child under 11 years old under the family credit scheme.
We therefore have—or would have, if the amendment were passed—a very strange situation if noble Lords were, to put it bluntly, so misguided as to support it. It would mean that a statutory discretion given to the Secretary of Stare and allowed to remain on the statute book would be fettered by a statutory obligation created by the amendment. It is a strange situation.
We must not blow hot and cold or make a legislative contradiction. I hope that, with that fundamental difficulty in mind, those noble Lords who have thought of supporting the amendment, will realise what they are doing.
§ Lord Coleraine
I have listened with great interest to what my noble friend Lord Renton has just said; but I propose to support my noble friend's amendment this afternoon as a means of giving the other place another chance to look at the problem which was before them a few months ago. I agree that the amendments are defective, but there will be another chance for them to be put right elsewhere.
I want to touch for a moment and target the "punchy" statistic that has been bandied about in the press and elsewhere that those in receipt of £20,000 a year income receive a billion pounds' worth of child benefit. I am sure that that is correct and I find no embarrassment in it. My noble friend Lord Trafford told us that it was commonplace and self-evident that those with families would have lower net incomes after all their expenses had been taken into account than those without families. However, he did not take that point any further.
335 I go along with what the noble Baroness, Lady Seear, says: it has always been recognised that there should be some measure of redistribution at all levels of income between those with families and those without. If I look again at the £20,000 a year family and at my own Benches, I should point out that some of those people earning £20,000 a year will be trying to educate their children at independent schools and will have considerable expenses which I think should be recognised as an example of relative deprivation.
I am not sure that what we are doing is redistributing. When someone earns £20,000 a year, he pays £4,000 a year in income tax. What he gets back from that, as he would have done before under child's tax allowance, is about £375 a year per child. I do not think that anything is being redistributed to him. I think that he is just paying a little bit less tax than he would otherwise pay. I think that that fact makes all the difference.
Another point that we have not yet touched on arises from the fact that, in my opinion, the Government, with the best will in the world, have determined that child benefit is to wither and die on the vine. Reference has been made—I shall listen carefully to what my noble friend says when he comes to wind up—to the statutory up-rating that must be made each year and to the thought that the Secretary of State must put into the matter. We are left with the impression that child benefit might possibly be up-rated this year.
However, I think that one must look again, as did my noble friend Lord Renton, at the words in the statute and at what happened last year. If one compares the failure to up-rate last year with the words in the statute, one sees that the Government have, as it were, devised a Catch 22 situation from which there is no escape for child benefit. The words that I am now looking at in Section 63 of the Social Security Act 1986 oblige the Secretary of State to see whether there has been a rise in the cost of living. Then,if he considers it appropriate, having regard to the national economic situation and any other matters which he considers relevant",he will either up-rate it or not.
I look at the words "national economic situation" and take them as meaning that if the country is in a hard way maybe it is child benefit that will suffer. Then I look back at what happened last year and see that people were told that because of the prosperity of the country and the drop in the standard rate of income tax by 2p in the pound, families were doing very well and the benefit did not need up-rating.
It seems quite clear that whatever happens, win or lose, child benefit will not be up-rated. I hope that the Committee will think about that very carefully and listen closely when my noble friend comes to wind up to what he says about the Government's intentions with regard to up-rating generally.
§ Lord Belstead
I recognise the commitment to the cause of family life of noble Lords who have spoken this afternoon in this debate. However, 336 I should like to make the point that it is a cause shared on this side of the House equally by the Government. On these Benches we agree absolutely about the importance of improving help available to families. But I have to say that we disagree about the way in which this amendment seeks to achieve it.
Perhaps I may illustrate briefly how I believe the Government have shown their commitment to the family. It is a fact that during the past 10 years there has been a very great improvement in the prosperity of people in work. Quite rightly that has benefited families. The prosperity has been due not only to increases in take-home pay—£20 a week for a man on average earnings last year—but lower tax rates and higher tax thresholds. The reforms in national insurance contributions, which incidentally will benefit around 70 per cent. of families with children from next October, have also played their part.
What I find contradictory is that this amendment would require child benefit to be up-rated across the board, regardless of incomes each year, by at least the same percentage as the increase in the family credit under age 11 rate. The difficulty about that is that, despite what has been said from the Benches opposite, the law—which has been exactly the same under both Labour and Conservative governments since child benefit was introduced in 1977—requires something very different. The law requires that the Secretary of State should review the level of child benefit each year, taking account of all relevant factors.
The reason for that requirement was made crystal clear when the Child Benefit Bill was debated in the House of Commons in 1975. The then Labour Secretary of State said:There is a difference between routine National Insurance benefits and this new benefit. Indexation of the child benefit is inappropriate. National Insurance benefits are a major means of support when earning capacity is interrupted, but the child benefit is a tax-free supplement to families whose major source of income is earnings".On the assumption that what was said on that occasion was correct, perhaps I may point out that this amendment would not enable the Secretary of State to take account of all relevant factors when considering a child benefit increase. Under this amendment the Secretary of State would have to give an automatic increase to child benefit. That would be most unfair in that it would give no help at all to the least well off families—those on income support—because the child benefit increase in effect would be totally taken into account and offset against that benefit. The Secretary of State would indeed have to ignore the fact that, among families who stand to gain from an increase in child benefit, around 70 per cent. have incomes above average earnings. Yes, the question of my noble friend Lady Carnegy was correct: there would have to be an ignoring of the fact that of the £4.5 billion spent on child benefit each year about £1 billion goes to 1.25 million families each earning over £20,000 a year.
As I have already said, this amendment requires that child benefit should be up-rated by at least the same percentage increase in the family credit under age 11 rate, which, it so happens, was increased this year—and I take pride in that—by over 20 per cent.
337 If this amendment had been in force this year, expenditure on child benefit would have had to have been increased by some £675 million, which is well over three times the amount needed had child benefit uprating been linked to the retail price index. I ask the Committee to bear in mind what I am putting to it. A vast sum of money is involved in this amendment which would have gone to families with the highest incomes, middle incomes and slightly lower incomes. But those on the very bottom of the income scale would have been denied that benefit because of it having to be taken into account in setting the level of their income support. I for one cannot see the fairness in that. It is because of the ability given to us by the law, which was enacted by the Benches opposite in 1977, to look at the full picture that this year we were able to give additional resources to the neediest families who would have gained nothing from a blanket increase in child benefit.
So from this April we have spent £200 million more than was spent in the previous year to the very great benefit of some 3 million children in the least well off families; in other words, those on income-related benefits. That is made up of £135 million to maintain the real value of the income-related child allowances and, in addition, £70 million which was put in on top. So almost all families on these income-related benefits are getting the amount needed to maintain the real value of benefits and an extra 50p a week for each child on top of that—an addition that they would not have got from increasing child benefit.
Therefore I say that we are genuinely and, I think, honestly trying to see that help goes to those families who need it most—incidentally, none more so than those who are in receipt these days of family credit, which is the successor to the wonderful brainchild of my noble friend Lord Joseph who introduced the original family income supplement. This family credit benefit provides a great deal of extra help and is available to people surprisingly far up the income scale. For example, a family with two teenage children can obtain family credit these days with gross earnings of up to £10,500 a year.
It is perfectly true that some noble Lords, including some of my noble friends, have expressed concern about the take up of that benefit. I shall give an absolutely straight answer. Family credit take up by expenditure was about 65 per cent. last year but it was only about 50 per cent. of eligible familes who were receiving it. Obviously this indicates that those who need the benefit most are, in considerable part, getting it. But we must try to improve the general take up. That is why recently we have had a major publicity campaign, which I am very glad to say has been very successful, more than doubling the number of claims for family credit received each week.
I begin to draw to a close. Speaking from this side of the Chamber, I believe that we can take pride in the fact that we have been able to hold the real value of child benefit—or its equivalent before the tax allowances went—for families with young children to a level which, if noble Lords opposite will forgive me for saying so, has been better than the levels that 338 they achieved during the time they were in office in the 1970s until just one month before they left office.
That said, I should like to reply to my noble friend Lady Faithful. I want to make it absolutely clear that the decisions made on child benefit in the past two years do not pre-empt the review which the Secretary of State is required statutorily to make later this year as to the level of child benefit from April 1990. The rate of child benefit will be reviewed along with the other social security benefits when the time comes and decisions will be made in the light of circumstances at the time. That is what has been done since child benefit was introduced.
Why am I so against this amendment? It lies in what my noble friend Lord Renton said. He rose at the end of our debate to point out that under this amendment a mandatory increase in child benefit is being made compulsorily attaching it to a discretionary up-rating of family credit. My noble friend wondered where this would lead us. It would lead us into three very serious problems which my noble friend Lady Faithfull most fairly set out to the Committee at the beginning of the debate.
First, the amendment would prevent the Secretary of State from using family credit a s a means of directing extra help to those families who most need it. That is something we did this year. The reason that would happen is because any extra family credit help given to the neediest families in the country under this amendment would have automatically to be matched by a corresponding universal increase in child benefit. Secondly, it would mean huge extra costs. I quoted the sum of £675 million to Members of the Committee earlier on. Before any noble Lords jump down my throat and say that I am being niggardly, the third and most serious reason is that the extra money under this amendment would go in increased child benefit to the wealthy, the not so wealthy, those with middle incomes and to those a little below that, but those who are on income support—the very poorest in the land—would be denied any increase because their increases would be offset against their benefit.
I question the propriety of compulsorily increasing child benefit by tying it to family credit. It would be a disincentive to improving family credit. It would be denied to the very poorest people in the country. Although I much respect the motives that lie behind what has been said this afternoon, honestly, I think that we should not accept this amendment.
§ 5.30 p.m.
§ The Earl of Onslow
Before my noble friend sits down, I should like to ask this. With regard to the review that will take place at the end of the year, can he give an indication that child benefit will be increased at least in line with inflation? If that were the case, I should have no hesitation in voting for my noble friend. If he cannot say that, I shall have to abstain.
§ Lord Belstead
If my noble friend will forgive my saying so, for a moment perhaps he ceased to listen with his customary attention. I said earlier that the law is that the Secretary of State must review the 339 level of child benefit each year taking account of all relevant factors.
One of the matters that has been very interesting to me in researching the matter is consideration of the history of help to children and families. During the period from the war to the 1970s we had tax allowances and family allowances. In a period of 25 years, family allowances were up-rated only five times, and child tax allowances only four times. It is not therefore an area where governments of all parties have always every year put up the allowances.
Perhaps I may refer to the beginning of my speech. No less a person than the Labour Secretary of State of the day pointed out that when child benefit was introduced the government of the day needed to look at all the relevant factors. That is what we shall do next October.
§ Lady Saltoun of Abernethy
Before the noble Lord sits down again, can he comment on the point made by so many of us that child benefit goes to the mother, whereas family credit goes to the father?
§ Lord Belstead
With great respect to the noble Lady, I thought the same before this debate. However, family credit—unless there are exceptional circumstances—has to go to the mother.
§ Baroness Faithfull
I thank all Members of the Committee who have spoken in this debate. In particular, I thank my noble friend the Leader of the House. Nine Peers have spoken for the amendment. Although my noble friend Lady Carnegy asked two questions, she spoke against the amendment. Therefore five noble Peers have spoken against it.
I support all that was said in favour of the amendment. Therefore I shall not go through the list of people who have spoken for it because clearly I believed what they said. Perhaps I may say something to those who disagree with the amendment.
Perhaps I may say this to the noble Lord, Lord Joseph, and to my noble friend the Leader of the House. They maintained that the poorest families would be less well off. I find that difficult to understand. I have trundled to supplementary benefit offices with parents. Factually, the noble Lord, Lord Joseph, was right—but only because of the convention of the Department of Health and Social Security—when he said that those families in receipt of family credit would not benefit because their family credit would be adjusted in relation to family credit and family income support. I cannot find such a provision written in the Bill. It is a convention of the department which could, without difficulty, be altered.
I have great sympathy with my noble friend the Leader of the House. Why should the wealthy draw so much family benefit when they least need it? I know some very wealthy men who do not give their wives the amount that they should give them. They certainly do not let them know what they earn. My noble friend Lord Alexander has drawn to my attention that at one time the miners wished to be 340 paid in cash so that their wives did not know what they earned. I am very fond of men, but there are some who do not do the right thing either by their wives or their families.
On the question of the wealthy drawing the benefit, surely it is not beyond the bounds of possibility for the other place to consider this matter. We cannot do so because it is a finance matter. However, if Members of the Committee feel strongly that the wealthy should not draw family benefit, two things can happen. Either the wealthy can voluntarily not draw it, or some arrangements can be made for a cut-off point. I know that my noble friend the Leader of the House considers that a cut-off point presents difficulties, but everything presents some difficulty at some time.
My noble friend surely meant child benefit, not family benefit. The better off are not entitled to family benefit. I think that for once my noble friend made a mistake.
My noble friend referred to another place, if it so wished, being able to withdraw the power of the more prosperous to draw family benefit. However, the more prosperous are not entitled to family credit. My noble friend was surely referring to child benefit.
§ Baroness Faithfull
I beg your Lordships' pardon. If I said family benefit, I meant child benefit. I am grateful to the noble Lord, Lord Joseph, for putting me right—not for the first time.
My noble friend the Leader of the House stated that child benefit is reviewed every year. It has been frozen for two years, and none of us knows why it was frozen. I have tried to find out the reasons for child benefit being frozen. I have been unable to find any. I find it odd that it was frozen because, in the general index of retail prices produced by the Department of Employment, fuel and light have gone up by 5.7 per cent.; non-seasonal food by 5.8 per cent.; clothing and footwear by 5.4 per cent.—a pair of shoes for a small child costs £20—fares and other travel costs have gone by 7.4 per cent. What has not gone up is the cost of television. I expect that that will go up shortly.
My noble friend Lord Coleraine said that he realised that there might be difficulties in the amendment, and asked why not consider it and let the other place think again. A house divided is a house that falls. I really feel like falling, because on the one hand it is against one's instincts and against one's feelings to be disloyal to the Leader of the House—a Leader whom we much admire—and to our party. I belong to the Conservative Party and support the Prime Minister.
On the other hand, it has been my work throughout life to support and work for the children of this country. Equally, I believe that politically it would be a disaster not to deal with the child benefit along the lines of this amendment. I realise that it needs to be reconsidered in the other place, and also that something must be done for the poor of this country.
341 I know that some people say that damage will be done to the poor, but I know from personal experience that there are many in this country who are doing a wonderful job of work and who would not apply for family credit or family income support. I will not say that they are dependent on child benefit but it makes a world of difference for them. With very great regret I feel that I must ask the opinion of the Committee.
§ 5.42 p.m.
§ On Question, Whether the said amendment (No. 2) shall be agreed to?
§ Their Lordships divided: Contents, 115; Not-Contents, 94.
|DIVISION NO. 1|
|Addington, L.||Kilbracken, L.|
|Adrian, L.||Kilmarnock, L.|
|Airedale, L.||Kirkhill, L.|
|Allen of Abbeydale, L.||Lawrence, L.|
|Amherst, E.||Llewelyn-Davies of Hastoe, B.|
|Aylestone, L.||Lloyd of Kilgerran, L.|
|Baldwin of Bewdley, E.||Longford, E.|
|Banks, L.||Lovell-Davis, L.|
|Birk, B.||McGregor of Durris, L.|
|Blackstone, B.||McIntosh of Haringey, L.|
|Blyth, L.||McNair, L.|
|Boston of Faversham, L.||Mayhew, L.|
|Bottomley, L.||Meston, L.|
|Briginshaw, L.||Milner of Leeds, L.|
|Bruce of Donington, L.||Molloy, L.|
|Burton of Coventry, B.||Monson, L.|
|Campbell of Eskan, L.||Moyne, L.|
|Carmichael of Kelvingrove, L.||Murray of Epping Forest, L|
|Carter, L.||Nicol, B.|
|Cledwyn of Penrhos, L.||Northfield, L.|
|Coleraine, L.||Ogmore, L.|
|David, B.||Perry of Walton, L.|
|Dean of Beswick, L.||Peston, L.|
|Donaldson of Kingsbridge, L.||Phillips, B.|
|Dormand of Easington, L.||Pitt of Hampstead, L.|
|Elliot of Harwood, B.||Ponsonby of Shulbrede, L.|
|Elwyn-Jones, L.||Prys-Davies, L.|
|Ennals, L.||Ritchie of Dundee, L.|
|Ewart-Biggs, B.||Robson of Kiddington, B.|
|Ezra, L.||Rochester, L.|
|Faithfull, B. [Teller.]||Rugby, L.|
|Falkender, B.||Russell, E.|
|Falkland, V.||Sainsbury, L.|
|Fitt, L.||Saltoun of Abernethy, Ly.|
|Gallacher, L.||Seear, B.|
|Galpern, L.||Seebohm, L. [Teller.]|
|Gibson, L.||Sefton of Garston, L.|
|Gladwyn, L.||Serota, B.|
|Glenamara, L.||Shackleton, L.|
|Graham of Edmonton, L.||Shannon, E.|
|Grey, E.||Shaughnessy, L.|
|Grimond, L.||Simon, V.|
|Guildford, Bp.||Stedman, B.|
|Halsbury, E.||Stoddart of Swindon, L.|
|Hampton, L.||Strabolgi, L.|
|Hanworth, V.||Strange, B.|
|Henderson of Brompton, L.||Tordoff, L.|
|Hirshfield, L.||Turner of Camden, B.|
|Hooson, L.||Underhill, L.|
|Houghton of Sowerby, L.||Vernon, L.|
|Hunt, L.||Wallace of Coslany, L.|
|Hylton, L.||Walston, L.|
|Hylton-Foster, B.||White, B.|
|Ilchester, E.||Williams of Elvel, L.|
|Jeger, B.||Willis, L.|
|Jenkins of Putney, L.||Winchilsea and Nottingham, E.|
|Abinger, L.||Joseph, L.|
|Alexander of Tunis, E.||Killearn, L.|
|Alexander of Weedon, L.||Lauderdale, E.|
|Allenby of Megiddo, V.||Layton, L.|
|Ampthill, L.||Lindsey and Abingdon, E.|
|Arran, E.||Long, V.|
|Beloff, L.||Lucas of Chilworth, L.|
|Belstead, L.||Luke, L.|
|Blatch, B.||Macleod of Borve, B.|
|Brabazon of Tara, L.||Marley, L.|
|Braye, B.||Merrivale, L.|
|Brougham and Vaux, L.||Mersey, V.|
|Caithness, E.||Milne, L.|
|Camoys, L.||Milverton, L.|
|Campbell of Alloway, L.||Monk Bretton, L.|
|Campbell of Croy, L.||Montgomery of Alamein, V.|
|Carnegy of Lour, B.||Mottistone, L.|
|Carnock, L.||Munster, E.|
|Clitheroe, L.||Nelson, E.|
|Colnbrook, L.||Norfolk, D.|
|Colville of Culross, V.||Norrie, L.|
|Colwyn, L.||Nugent of Guildford, L.|
|Cornwallis, L.||Orkney, E.|
|Craigavon, V.||Oxfuird, V.|
|Davidson, V. [Teller.]||Penrhyn, L.|
|Denham, L. [Teller.]||Reay, L.|
|Dilhorne, V.||Redesdale, L.|
|Dundee, E.||Renton, L.|
|Eden of Winton, L.||Rippon of Hexham, L.|
|Elles, B.||Saint Albans, D.|
|Elton, L.||St. Davids, V.|
|Erne, E.||Sanderson of Bowden, L.|
|Ferrers, E.||Selborne, E.|
|Fraser of Carmyllie, L.||Sempill, Ly.|
|Gardner of Parkes, B.||Skelmersdale, L.|
|Glenarthur, L.||Somers, L.|
|Hailsham of Saint Marylebone, L.||Strathclyde, L.|
|Harmar-Nicholls, L.||Thomas of Gwydir, L.|
|Havers, L.||Trafford, L.|
|Hemphill, L.||Trefgarne, L.|
|Henley, L.||Trumpington, B.|
|Hesketh, L.||Tryon, L.|
|Hives, L.||Vaux of Harrowden, L.|
|Holderness, L.||Windlesham, L.|
|Home of the Hirsel, L.||Wolfson, L.|
|Hood, V.||Yarborough, E.|
§ Resolved in the affirmative, and amendment agreed to accordingly.
§ 5.51 p.m.
§ Clauses 5 to 7 agreed to.
§ Clause 8 [Mobility allowance: increase of age limit to 80 years]:
§ Lord Carter moved Amendment No. 3:
Page 8, line 42, at beginning insert —
("( ) In section 37A of the principal Act (mobility allowance) at the end of subsection (I) insert "or is deaf and blind or is suffering from severe mental handicap such that he is either unable to walk or virtually unable to do so without physical control by another person".
( ) In subsection (2) of that section leave out "physical".").
§ The noble Lord said: The amendment has support from all parts of the Committee. It is intended to correct an anomaly in the operation of the mobility allowance for which a small number of people with severe mobility problems are unable to claim or are refused payment. Such people are physically able to walk but they cannot make use of that ability because they are deaf/blind or they suffer from a mental handicap and need continuous and physical control 343 by another person. Section 37A of the Social Security Act 1975 provides that mobility difficulties must be as a result of a physical disablement: such that the person is either unable to walk, is virtually unable to walk, or the exertion of walking would endanger their life or lead to a serious deterioration in health.
§ The term "virtually unable to walk" has caused considerable difficulties in interpretation, especially for mentally handicapped and deaf/blind people. A commissioner's decision taken in 1984 restricted the interpretation of "walking" in relation to the mobility allowance to the physical ability to move the legs and put one foot in front of the other. However, further commissioners' decisions —notably in 1986—interpreted the phrase "virtually unable to walk" as covering problems of balance and behavioural interruptions and the need for physical support or control from another person.
§ The decisions remain inconsistent and many are later reversed on appeal. The claimants and their carers are confused and adjudicating authorities find it hard to interpret and apply the regulations. There is a general belief that a system which can award a mobility allowance one year and take it away the next, or award it to one person but refuse it to another with identical problems, is unjust and must be changed.
§ The allowance is intended to help severely disabled people by making a contribution towards the additional cost incurred just to get out and about. I refer to the problems of the deaf/blind. Many such claimants have difficulty in qualifying for the allowance even though they are incapable of independent mobility. They may require a skilled guide at all times when walking out of doors, or they may have severe problems of orientation which are aggravated by difficulties in communicating other than by using the deaf/blind and manual alphabet. That means that they must take taxis for all but the simplest of journeys, and because they can physically put one foot in front of the other they receive no assistance towards the extra costs.
§ A number of mentally handicapped children face similar difficulties. They may be able to make the physical movement of walking hut, because of the behavioural problems associated with their condition their mobility is severely restricted. They can run away, have tantrums and refuse to walk. It is found that public transport is impossible, and for the parents a car is essential. The same problems also affect a number of mentally handicapped adults.
§ The disability organisations and the All-Party Disablement Group have been discussing the problem with the Government for a considerable time. In 1987 the All-Party Disablement Group met the then Minister, Mr. John Major. He was sympathetic and appeared to imply that the problem was largely one of definition. He agreed to conduct a survey into the number of people involved.
§ A few weeks ago the group met the present Minister, Mr. Nicholas Scott. I was a member of the delegation. To our dismay we found that the survey which had been promised by the previous Minister, although completed, had not been written up. The 344 present stance seems to be one of sympathetic inertia and a decision to wait for the OPCS surveys to be completed and published by the end of July.
§ I expect that in reply the Minister will produce the argument of having to wait for the OPCS, but that will not stand up. If the surveys are produced by the end of July there must then be consultations with all the interested organisations followed by legislation. All that could take years. We can only compare the time that it has taken to implement the Disabled Persons Act 1986 in full, referred to in Question Time today, and the Government's response or lack of it to the Griffiths Report.
§ Further, the OPCS surveys are not relevant because the numbers and the cost are known. The latest report of MENCAP reveals that the number of people involved would be less than 8,000, at a cost of about £8 million. That would be less than 2 per cent. of the half-million people now receiving the mobility allowance. The cost of £8 million is about 1.5 per cent. of the total cost of the allowance of £650 million.
§ We do not propose a new allowance or a new category of disabled people. We describe the people who should receive the allowance and who the Government agree should receive it through the regulations. The Bill gives us the chance to put the matter right.
§ All Members know of harrowing examples of the effect of the problem I have described. I propose to quote only three. The first is of a child with Down's Syndrome. His walking is totally unpredictable and he is a danger to himself. His parents applied for the mobility allowance and were turned down by the DSS doctor. On appeal the application was accepted by a DSS medical board.The DSS then appealed to the Medical Appeal Tribunal, which granted it and refused the mobility allowance. The parents are now appealing to the Social Security Commissioners. I believe that the parents of a child with such problems should not be put through that agony.
§ The second example is of a woman aged 23 diagnosed as having a mental handicap, probably due to brain damage at birth. She has a mental age of between five and six years, poor balance and little speech. Her mobility problems require continual physical assistance while walking, with the support of pulling or pushing. She trips and stumbles as a result of poor balance and because she does not lift her feet high enough she is unable to co-ordinate her mental processes with her foot movements. I could go on to describe her condition in even more detail. If there is an attempt to force her to move she struggles, kicks and bursts into tears. Yet, her mobility allowance claim was disallowed by the tribunal. It agreed that she had a physical disability but that she should make conscious decisions to stop that behaviour. However, there is no evidence that she is capable of making a conscious decision about anything.
§ The other case is of a man aged 28 who has a profound mental handicap, no speech, abnormal and unco-ordinated vision and suffers from epilepsy. He has mobility problems and needs constant physical asistance while walking due to his lack of 345 co-ordination, poor balance and so on. Even with continual physical assistance he throws frequent tantrums when he screams stamps and lashes out. He applied for a mobility allowance but was turned clown on appeal to the tribunal.
§ There are mutiple examples and it is clear from them that the mobility allowance is not operating as it should. This amendment seeks to ensure that the people who should receive the mobility allowance under existing regulations actually receive it. It was revealed in Committee in another place by the Minister that three out of four claimants qualify on appeal to the medical tribunal. If that is the case, the legislation should be amended to reflect that and to save the parents and carers of severely disabled people the harrowing and lengthy task of going through the appeal procedure. This amendment has all-party support in this Chamber; there were over 100 signatures from all parties on an Early Day Motion in another place; and all the disability organisations involved in this matter support the amendment. I repeat that we are only referring to a very small number of people, under 8,000, at a minuscule cost in terms of the cost of the mobility allowance. I urge the Minister to accept this amendment. I beg to move.
§ 6 p.m.
§ Lord Allen of Abbeydale
I was very glad to add my name to this amendment and I should like to say a few words in support of the proposal put forward by the noble Lord, Lord Carter.
I was one of those who went on this rather disappointing deputation to the Minister of State for Social Security and the Disabled, which I believe is his proper title. The Minister claimed that over the years case law had met many of the difficulties surrounding this allowance in this particular area. However, I fear that significant gaps remain and such improvements as have been achieved have been at the cost of a large number of appeals, with all the expense, delays and frustrations involved. I believe that of the 2,000 deaf and blind people who already receive this allowance for one reason or another, the majority had to make at least two appeals.
The Minister argued that if the rules were changed, there would still be difficult cases open to argument. However, no one expects to attain perfection and there is no doubt that the position would be greatly improved if this amendment were accepted.
In particular, the Minister raised questions about the numbers who might be involved, especially the mentally handicapped and, therefore, the expense which might be incurred. Earlier estimates put to the department suggested that a total of some 10,000 to 12,000 might be included in the two groups covered by the amendment. We thought, in our innocence, that that figure had been accepted by the department but, as the noble Lord, Lord Carter, explained, the main argument was about wording. When we arrived, we found the Minister talking about mentally handicapped people perhaps running into figures of over 100,000 people.
346 Therefore, we thought that we should have another go at making a calculation ourselves. We calculate that those who are both deaf and blind and do not already receive the allowance cannot exceed more than 3,200. The numbers of those with in the relevant age groups are known with considerable accuracy. We also calculate that the numbers of mentally handicapped covered by the restrictive terms of the amendment would not greatly exceed the same figure.
Originally, some calculations were based on the MENCAP project for the profoundly retarded and multiply handicapped, but on looking at the matter again we thought it better to take some official figures as our working hypothesis. In 1971 a White Paper entitled Better Services for the Mentally Handicapped, Cmnd. No. 4683, gave the results of surveys carried out in three areas and divided the numbers up among different degrees of incapacity. If one extrapolates the figures for the severely mentally handicapped with behaviour difficulties requiring constant supervision, there is a total of about 4,400 for the country. Some of those could be ruled out on grounds of age and some will already be receiving the allowance for other reasons. Therefore, it is not unreasonable to suggest that the two groups together, that is the two groups covered by the amendment, would not be likely in sum to exceed 7,600 and could be less.
I appreciate that I am taking figures relating to 1971 but the position cannot have altered very much since then. As the noble Lord, Lord Carter, explained, the cost of all this would come out at less than £10 million compared to the total cost of this allowance of some £550 million.
In the past Ministers have expressed sympathy for these two particular groups but they have suggested that it would be wrong to tinker with the allowance pending a full review in the light of the forthcoming report of the OPCS survey, to which the noble Lord, Lord Carter, referred. However, Clause 8 already tinkers with the scheme and if that particular piece of tinkering is justified as an interim measure, I for one should be quite content that those covered by the amendment should be dealt with as an interim measure for, as has been pointed out, they do not involve any startling departure from the types of case already covered.
If that is not done now and we have to wait for the OPCS survey, for the report to be digested, for the consultations to take place and then for the results to be translated into statutory form, it would mean that those unfortunate people will have to go on waiting for yet more years. They have waited long enough.
The changes proposed would do much to ease despair and frustration. They would save many appeals and much expense, and the cost of the appeals must run into hundreds of thousands of pounds. They would simplify the task of the adjudicators and would show that Parliament cares. If the words which we have selected in the amendment will not do, let the Government produce their own but let us somehow do justice to these poor people.
§ Earl Russell
As Mary Holland of MENCAP said:At present the law is discriminating between groups with equal disabilities, which is quite wrong".That puts the case for this amendment in a nutshell. The tendency—and I shall put it no higher than that—has been to restrict mobility allowance to those whose inability to move is purely physical, and not merely physical but confined to the legs.
There are many parts of our anatomy, other than our legs, in which we may suffer a disability which restrains us from moving around. To start with, I mention balance. There is also the possibility of mental disorders causing severe difficulties; indeed, making it unsafe to move about. I add only one more to the cases mentioned. A case was reported last week in my local paper, the Kilburn and Willesden Recorder. This concerns a boy who suffers so badly from autism that he is unable to understand a word that is said. He has extreme hyperactive fits which make it quite unsafe to take him anywhere near traffic because he runs out into the middle of it. He was found to be "too naughty" to receive mobility allowance. That is a concept of original sin which I think right reverend Prelates might tell us would have been regarded as extreme even by John Calvin in his prime. In fact, there is a theological concept which is rather more appropriate to the case—that of invincible ignorance. Such cases have as much claim to mobility allowance as those who suffer disability in their legs.
I am concerned also about the Scrooge-like spirit in which appeals are conducted in this area and which were described in a moving article by Michael Daly in the Independent on 13th June. I give only one fact from that article. In the quarter ending September 1988, out of 359 appeals only seven were successful. I wonder whether the very small saving achieved from this great exercise is really worth it. In pure Benthamite terms, can one really claim that balancing the pleasure against the pain is worth this very small saving? I very much doubt whether we can. I know that the Minister will say that we must wait for the OPCS survey, but do we really need the OPCS to tell us that we should treat like equally with like?
§ Lord Renton
I must declare an interest. I am happy to say that I am a past president of MENCAP. Also, I have a daughter, and in the words of the amendment I have to describe her as suffering from,severe mental handicap such that [she] is … unable to walk…without physical control by another person".I hope that my recollection is right when I say that she receives constant attendance allowance all the time that she is at the home where she is cared for, at the Ravenswood Foundation; but when she comes home and stays with me the constant attendance allowance is dropped, and she then receives a mobility allowance. I think that is the position.
The case for this amendment, or something to the same effect, has been strongly made out. It surprised me to find that the person who is both deaf and blind is not able to obtain mobility allowance because such people are in a helpless state. I hope that the Government will not wait for perhaps many months or a year before there is a review based on some 348 statistical abstract, before at any rate those people who are deaf and blind can receive what obviously they need.
I must endorse what has been said by the noble Lord, Lord Allen of Abbeydale, about the mentally handicapped. Therefore, I hope that the Government will be very sympathetic to this amendment.
§ 6.15 p.m.
§ Lord Skelmersdale
No one in this Committee who has experience of people who are both blind and deaf or suffering from mental handicap can fail to be moved by the eloquent way in which noble Lords have spoken. I do not have any such experience but I can certainly say that I have been very clearly moved by what has been said, as many Members of the Committee will have been. I am also very much aware of the fact that there is considerable support on an all-party basis for the groups which the amendment is intended to assist.
In listening to the speech of the noble Lord, Lord Carter, I am surprised that there is no amendment on the Marshalled List about the rights and wrongs of the mobility allowance. That allowance has been of great and growing concern for several years. Indeed, to do the noble Lord credit, he made a big point of that in his speech on this amendment.
At this point I think I should say that the difference between Clause 8 and this amendment is that Clause 8 is to prevent existing recipients from losing their allowance. The amendment, as the noble Lord and others have said, changes the eligibility criteria to help more people to claim.There is nothing wrong in that, but it is a fact. Therefore, let us look at this amendment. The fact is that when the mobility allowance scheme was introduced in 1976, the eligibility criteria built on those which were already in existence for the invalid vehicle scheme. Although help became available to people who were unable to drive, the criteria were still very much linked to the physical ability to walk.
Over the years, since the allowance was introduced, the criteria have remained essentially the same but the case law—a point made by the noble Lord, Lord Allen—has been widened considerably. Although the legislation refers to physical disablement, it has been held that a person who has a mental handicap—stemming, for example, from a physical cause such as brain damage—can qualify for the allowance if unable or virtually unable to walk. Furthermore, there is guidance available for the independent adjudicating authorities, based on judicial and commissioner decisions, on how to assess walking ability where it is interrupted by behavioural problems associated with mental handicap. It is also now clear that people who need physical support to walk because of balance problems, which are often associated with deafness and blindness, can qualify for the allowance. In other words, it is possible for many people who either have a mental handicap, or who are deaf and blind, to qualify for the allowance under the current rules; but not all of them, as the noble Lord, Lord Carter, will recognise.
349 I put it to the Committee that there is another important benefit which is available, on occasions, to those people. To assist Members of the Committee who are not fully familiar with the complexities of the current system I should add that many of the people the amendment is intended to help may qualify for attendance allowance. However, I emphasise that there is nothing to prevent the two benefits from being paid at the same time; and I thank my noble friend Lord Renton for his reference to that.
I sometimes have the impression that this is considered a mean and uncaring government, particularly in regard to social security allowances. Perhaps I should therefore, at this point, give an indication of how mobility allowance has grown over the years. Over the past 10 years, the number of recipients of the allowance has risen from 95,000 to a current figure of 575,000. Expenditure on the allowance is now running at about £¾ billion a year, which is an increase of over 5½ times in real terms over the same period.
What we therefore have to decide, when we look at all the OPCS findings—which will not be available until towards the end of July—is whether this substantial allocation of resources is responding to needs of people with mobility problems, and whether there are better ways of providing help within the disability benefit provision to those who need it most. As mobility allowance has always been aimed at an effect of disability—namely, difficulty in getting out and about—I really do not think that this is the right time for making provision for particular diagnostic groups. If we decide to change this criterion, then it will be perfectly right. But we have to consider other factors; namely, the whole range of social security benefits on which we spend in the order of £48.5 billion per year. That is £24 billion for the National Insurance Fund that we discussed earlier, and £24 billion for all the non-contributory benefits, of which the mobility allowance is but one. We should consider all those issues on their merits.
I am aware of the representations made on behalf of people with disabilities who fail to qualify for the allowance. But whether a person does or does not qualify, whatever the criteria, it is ultimately a matter of medical opinion. The amendment will not provide the consistency that the noble Lord, Lord Carter, said he was seeking. We shall never be able to eliminate altogether the sense of disappointment which is felt by people who fall on the wrong side of the threshold to qualify for the allowance wherever that threshold is drawn. We are certainly well aware of the sense of disappointment that people feel under the current system.
I doubt whether this will be the only occasion on which I shall stress the importance of the biggest survey ever undertaken by the Government of the social and economic consequences of disability, handicap and impairment. This is leading, as I have indicated earlier, to an examination of all the social security benefits for such people. But this cannot be completed until we have studied and learnt the relevant lessons from the reports already published, and from the two which have not yet been published. 350 As I said just now, we shall be getting these reports by the end of July.
The needs of disabled people are serious and complex matters; I am sure that all Members of the Committee will accept that. The opportunity will shortly present itself to consider them all, to identify the most effective ways of meeting them and to ensure that help goes to those who need it most. With this in mind I believe it is premature to seek a solution to the difficulties arising with the mobility allowance. I know, because it has been made very clear in the debate that has taken place, that noble Lords who have supported this amendment will feel a sense of disappointment at what I have said. But I must emphasise, as I have made clear on previous occasions, that we are totally committed to using this unprecedented volume of information to help judge how the current system responds to the needs of people with disabilities. In doing so, we shall have very much in mind the representations that have been made to us on behalf of people who are deaf, blind or mentally handicapped.
The noble Lord, Lord Allen, said—and this I recognise—that Members of the Committee are pressing for action today rather than after the publication of the OPCS findings. I can assure them that we are anxious to consider the findings and to reach conclusions as quickly as possible, allowing time of course for public discussion. The noble Lord, Lord Allen, was not very kind about that because he tried to compare the speed of the track of the Disabled Persons Act—was it not the noble Lord? I apologise, It was a noble Lord.
§ Lord Skelmersdale
I apologise. It was not the noble Lord, Lord Allen. I know that he is such an enthusiast for the Disabled Persons Act and I was surprised. I understand it was the noble Lord, Lord Carter, who made that point. I am glad I have now got that right.
The question was about the cost of implementation. The Government have learnt a great many lessons from that experience and Members of the Committee would have expected us to do so. When the reports are out and we have considered them, we expect to have to make needs at that point for the monetary provision to implement what the Government want to do. So the situation is quite different, as opposed to the Disabled Persons Act, where there has to be a colloquy that goes on and on between the local authorities and central government.
§ Lord Allen of Abbeydale
The Minister is surely using an argument which tells against himself. We discussed Section 7 of the Act that was passed three years ago. That went into new territory. What we are talking about now is not some new innovation but simply an extension of the existing categories. We ask, why should they have to wait until there has been the survey, it has been considered and there has been legislation? We are talking in terms of two or three years' hence, even if it is implemented immediately.
§ Lord Skelmersdale
No, I do not believe I was arguing against myself. I was trying to make the point that we shall be getting on because the giving of the money is totally in our own hands. We shall be getting on with, first, the review, and then, secondly, our implementation of it as quickly as we conceivably can. That is very different from the situation as regards the disabled persons Act, where we made it very clear at the very beginning—even at Second Reading in your Lordships' House, if my memory serves me right—that we could not implement it until we had agreed the resources between central government and local authorities. There is a very distinct difference. With respect, I do not believe I am arguing against myself.
§ Lord Allen of Abbeydale
Perhaps I may interrupt the Minister once again. Immediate action will be taken but you still need statutory powers. That is years ahead unless the present opportunity is taken. That is the point of the amendment.
§ Lord Skelmersdale
If Members of the Committee would like to cast their minds back over the past 10 years, I shall be very surprised if they can remember a parliamentary year when there was not a social security Bill. I cannot of course pre-empt the Queen's Speech. I believe that noble Lords will be perfectly reasonable in drawing the same lesson from the past as I have and applying it to the future.
The noble Lord, Lord Carter, again argued that the reports are not relevant. I believe that he overstates the point. They are relevant because they provide evidence of the actual extra cost incurred by different disabled people, though I accept that the rarity of deaf-blindness means that there are very few in the survey sample. The reports will also lead to conclusions about the overall structure of disability benefits of which this is a specialised aspect.
It is surely better at this stage to consider the overall benefit provision for people who are disabled in a comprehensive way rather than to try to plug gaps in a way which could only add complexities when we bring forward our long-term proposals. I therefore commend to the Committee that we await the full findings of the OPCS survey, which are now imminent, and our overall proposals based on them before we amend the mobility allowance criteria. I can again assure the Committee that we are well aware of the representations which are made on behalf of the groups covered by the amendment.
§ Lord Renton
Before Members of the Committee opposite intervene, let me ask my noble friend to clarify one or two points that were not quite clear to me though they may have been clear to some others. In the early part of his speech he seemed to be suggesting that even under the present law the mobility allowance, as a matter of discretion and circumstances, can be granted to people who are deaf-blind. As I mentioned in the case of my own family, it can be granted to those suffering from severe mental handicap if they cannot walk or if they have to be held up too long. That is already the case under the present law.
352 If this amendment were accepted would there be any extra cost to public funds bearing in mind that the mobility allowance can be awarded already to the people covered by the amendment? I shall be grateful if the Minister can clarify those points. The next point is this, and I refer to the intervention of the noble Lord, Lord Allen of Abbeydale. Can the Minister confirm that if nothing needs to be done as regards this amendment, we shall have to wait until this time next year when the OPCS statistics have been considered, public opinion has been sounded, decisions have been made on it, and another social security Bill has been drafted and enacted by both Houses of Parliament? That would mean waiting a year, would it not?
§ 6.30 p.m.
§ Lord Skelmersdale
The answer to my noble friend's last question is yes. That is what it would mean. My second point is that the amendment, as I read it—I am sure the noble Lord, Lord Carter, will confirm this—is intended to help people who do not qualify now. Some people do qualify, so clearly there would not be double provision for those if we passed the amendment. Nonetheless, there will be a cost but it is an unspecified cost. I have not been able to ascertain from my advisers what the cost will be. I do not know whether the noble Lord has been able to make an estimate of it.
§ Lord Ennals
My intervention will be brief because my noble friend Lord Carter and the noble Lord, Lord Allen of Abbeydale, stated the case. I intervene because it was my responsibility as Secretary of State to introduce the benefit. I give absolute credit to all those who since that time have ensured that the number of people receiving mobility allowance, which when we introduced it was a pioneering new benefit—many people knew that it ought to be provided but it had not been provided—has expanded. That has happened during the past 10 years, and credit should go to the Government for that.
It has been said that case law would enable some of those in these two groups to receive a benefit. That is true. The fact that case law has said so is an argument for putting it into legislation. All too often a different decision is taken by different tribunals. There is no certainty. When the original application is made the applicant is not certain what the terms are. It is important that the law should be clear. I was glad that in the Minister's speech the question of cost was not a central issue. My noble friend Lord Carter said that we are talking about a relatively small sum. He gave a figure of £.10 million at the most. This change would involve a small proportion of the people concerned and of the money concerned.
We are not talking about a cost factor. We are talking about two groups of people whose needs are fundamentally very great indeed. This is recognised by those who have worked with the mentally handicapped and with the deaf and blind. I have done so through my son Paul Ennals who works for SENSE. This organisation has been deeply involved in the campaign. An enormous amount of work has been done over the years. The case has been made 353 and in some courts has been accepted. The argument the Minister makes for a further delay is one which, as the noble Lord, Lord Renton, said, is not justified. It would not be just one year; it would be two or three years. Next year we would be told again that the survey had just been carried out and that it was too early to make the change.
For this sum, and for people whose needs are so great, it is right that noble Lords should act now. A great deal of work and knowledge has gone into this and a good deal of preparation has been made by those whose daily work involves working with people covered by the amendment. I hope that the Committee will decide to act tonight.
§ Lord Carter
I am extremely grateful to all noble Lords who have spoken. I understand that the Minister is personally sympathetic to the problems that we have described. However, I find the Government's attitude extremely hard to understand. The cost would be virtually nothing in terms of the total cost of mobility allowance. It would be of the order of £8 million to £9 million. It would help 7,600 severely disabled people. We know the numbers. We do not need the OPCS to tell us. The Government are not able to answer the argument and have to hide behind the survey, which has no relevance. We know the numbers. We are not proposing a new allowance or a new category of people.
If the amendment were accepted it would not in any way upset the thrust of whatever the Government decide to do as a result of the survey and the proposed review of benefits, which, I was a little alarmed to learn the other day, is not to be independent but is to be conducted within the department as an internal review. The Minister referred to the fact that we did not attempt to deal with the rights and wrongs of the legislation as it is currently drafted. In fact we drafted an amendment on those lines. I know that if I had brought it forward the noble Lord would have said that we were trying to write regulations into the Bill and he would have rejected it. We have tried to draft the amendment extremely tightly to enable a group of people, whom we feel the Government want to receive the mobility allowance, to receive it.
The guidance is just not working. The people who should qualify are not doing so. That is why we have tried to be specific. The noble Lord referred to the problem of balance, of which account is now taken in guidance. There are problems with autistic children. For no reason at all they will dash into the road or will stop and refuse to move. They can be assisted only by this continual and physical control. The noble Lord almost said that the time is not ripe, a phrase I have heard from the Government in other connections. We have referred to the numbers—fewer than 8,000 out of a total of 575,000, the noble Lord's own figure. The cost would be £8 million to £9 million out of a total cost of £750 million. We have had to wait a long time for a response to the Disabled Persons (Services, Consultation and Representation) Act 1986. We have had to wait a long time for the response to the Griffiths Report. The Minister and the Committee 354 will understand our reluctance to wait even longer perhaps for the results of the survey.
The noble Lord referred to those who will always be on the wrong side of the threshold. Of course there will always be some. Let us reduce the number on the wrong side to a very small figure indeed. I have heard the arguments and I have heard what the Minister had to say. The best thing to do is to read again what he has said and try to see if we can get some idea of the timetable if the Government intend to press ahead and deal with the problems I have described. Therefore, with the agreement of my noble friends, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ The Deputy Chairman of Committees (Lord Nugent of Guildford)
I should explain that Amendment No. 4 pre-empts Amendment No. 6.
§ Baroness Jeger moved Amendment No. 4:
§ Page 8, line 42, leave out from ("allowance)"), to end of line 44 and insert—
- ("(a) in subsection (5)(a), the words "or over the age of 75" shall cease to have effect;
- (b) in subsection (5)(aa), the words "but under the age of 75" shall cease to have effect.").
§ The noble Baroness said: This is a probing amendment. We very much welcome the fact that the Government have increased the age for mobility allowance from 75 to 80. We think that is so generous that we cannot understand why there is a limit of 80. Some of us should perhaps declare an interest. We would be distressed to know that we were about to lose our mobility allowance. I put this as a fair question. Let us suppose that an old gentleman of 79 is in receipt of mobility allowance and is enjoying it. He wakes up on his 80th birthday and goes through his birthday cards. Among those cards he finds a brown envelope from the Government which says that as from the next day his mobility allowance is stopped. No one should open a brown envelope on his birthday, least of all his 80th birthday. In all seriousness we wondered whether in raising the age from 75 to 80 the Government had in mind a moving upwards of the age from year to year.
§ We cannot see anything very special about being 80. I did not put down an amendment to raise the age to 90 or 100 because I did not want to appear dogmatic. We should like to know the Government's thinking behind this. Perhaps they can tell us whether they have it in mind to take away this arbitrary age limit. I beg to move.
§ Lord Skelmersdale
With all her knowledge, I am rather surprised that the noble Baroness is not aware that the first people to feel the effect of the existing cut-off at the age of 75 will only do so as from next November. Therefore this Bill is designed to ensure that the brown envelope—about which she is so worried—arriving on the 75th birthday, will not in fact arrive, and that attendance allowance will continue to be paid under the provisions of the Bill until the person reaches the age of 80.
§ Lord Skelmersdale
I must apologise to Members of the Committee; I meant to say mobility allowance. The noble Baroness made me so confused when she talked about the ages of 75, 80, 90 and 100 that I subsequently confused the Committee. Nonetheless, it is a fact that the first people to feel the effect of the existing cut-off at the age of 75 will not do so until next November.
The Government have made no secret of the fact that the new cut-off at the age of 80 is simply an interim measure, pending any further far-reaching changes which may affect mobility allowance in general, and especially its age limits. However, taking up the point made on the previous amendment, we have a five-year period before we need to make a further change. Surely, with the best will in the world, every Member of the Committee will accept that we can carry this out within five years. I hope that we shall be able to do so very much more quickly than that.
§ Earl Russell
I rise to speak to Amendments Nos. 6 and 7 tabled in my name and that of my noble friend Lady Seear. I also wish to support Amendments Nos. 4, 5 and 8.
§ The Deputy Chairman of Committees
The noble Earl must recognise that we are at present discussing Amendment No. 4. It seems that noble Lords on the Front Bench were under the impression that these amendments were grouped. The grouping is unofficial. However, if they are to be grouped, then it is for a noble Lord to say so.
§ Lord Skelmersdale
With leave of the Committee, I should be most happy if the amendments were so grouped.
§ Earl Russell
These amendments attempt to achieve the same effect by slightly different routes. We on these Benches are not particularly wedded to one form of words or another. We left the words to stand in the hope that the Minister might possibly have a slight preference for one form of words over another.
The Minister has made what I can only describe as a speech of Damocles. He has held back the threat of the brown envelope but keeps it suspended over the heads of those concerned for another five years. Would it perhaps be unkind to suggest that the Minister hopes that another government may be left with the task of dropping it? I think that we might be just a little more generous than that.
I was much taken on Second Reading by the speech made by the noble Lord, Lord Boyd-Carpenter. He produced the delightful image of reaching the age of 80 when a sudden rejuvenation takes place, mobility returns and the spring comes back to the step. It was great fun. But, alas! it is not always like that. The problem does not always go away—so why should the solution go away if the problem does not? I cannot believe that the cost of the proposals contained in these amendments would be very great. I cannot see that they would fatally threaten the integrity of our public finances. I put the case in 356 favour of these amendments finally in two words: why not?
§ Lord Skelmersdale
Clearly, I must apologise to the Committee because I rather jumped the gun in my eagerness to answer the point made by the noble Baroness, Lady Jeger. However, I must say to the noble Earl that even more difficult issues of principle arise in relation to Amendment No. 5. What is proposed not only removes the new interim cut-off at the age of 80 for payment of the allowance, as in the first amendment, but it also removes the other upper age limit whereby the allowance must be claimed before the age of 66 and only in respect of disability existing before the age of 65.
Amendment No. 6, tabled in the name of the noble Baroness Lady Seear, appears to be broadly similar in intention, except that by completely deleting the existing legislation on age limits she has also removed the lower age limit at the age of five. I do not know whether that was her intention; but obviously this has difficulties in relation to very young children for whom restricted mobility, and the need for assistance in getting about, is a normal fact of life—not a consequence of disability.
We estimate that the cost of removing all age limits for the allowance, so that it can be claimed at any age, would have an eventual cost in excess of £1 billion. That is a prodigious sum of money—so large that I feel it is necessary for me to persuade Members of the Committee that it is no exaggeration. Why should it cost so much to allow people to claim mobility allowance for disability occurring after the age of 65? The answer is not too hard to find in the twin facts that locomotion disabilities are by far the most common of all disabilities. Indeed, we have already discovered that fact by examination of the OPCS reports which show that between the ages of 16 and 59 the prevalance is 31 per 1,000; between the ages of 60 to 74, the prevalance is 195 per 1,000; and at the age of 75, or over, it is an enormous 464 per 1,000. I could dilate for some time on this subject, but I shall merely repeat what I said to the noble Baroness, Lady Jeger. As it stands, Clause 8 now gives us a breathing space of five years. That is ample time in which to resolve and implement whatever changes may be needed generally concerning the allowance.
Having said that, the noble Earl and the noble Baroness have made some valuable points in this connection. We shall most certainly take such points into consideration when we finally decide upon what happens to mobility allowance.
§ 6.45 p.m.
§ Baroness Jeger
I thank the noble Lord for that slight touch of encouragement. In view of what he said, I beg leave to withdraw the amendment. However, I assure the Minister that we shall return to the point at a later stage.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 5 to 8 not moved.]
§ Clause 8 agreed to.357
Baroness Faithfull moved Amendment No. 9:
After Clause 8, insert the following new clause:
§ ("Attendance allowance.
§ In section 35(2) of the Social Security Act 1975, after the words "Attendance Allowance Board", there shall be inserted the words "as being a peiod of not less than 6 months or for the length of a person's life throughout which he is likely to satisfy the condition mentioned in-subsection (1)(a) above or that mentioned in (1)(b), or both, or".").
§ The noble Baroness said: This amendment concerns people who are terminally ill. Attendance allowance is an important Department of Social Security benefit of £23, or £34.90 per week. It is paid to people who need a lot of help from another person because of mental or physical disability. Further, it is tax free and non-means tested. It is a vital benefit which helps people with disabilities. It helps those who are in a hospice or in a hospital and also—I am sure the noble Baroness, Lady Seear, will support me on this—carers who are looking after such people in their own homes.
§ However, the law lays down that such people cannot apply for this benefit for six months. If such people are terminally ill, they need much more care. In fact, they very often need continuous care both night and day. Therefore the amendment seeks to allow people who need an attendance allowance to apply for it without waiting for the relevant period to expire.
§ It is impossible to put a group of people into a category and say, "These people can go against the provisions of the Bill because they are dying." First, there is just the outside possibility that they may not die; and, secondly, when people are dying their relatives sometimes feel that they cannot tell them this, or in some cases such people just do not want to know. Therefore I move the amendment with the hope that my noble friend the Minister will give it consideration. I beg to move.
§ Baroness Seear
I support the amendment. As the noble Baroness, Lady Faithfull, pointed out, it applies not just to people going to hospices but to the large number of people who are being looked after in their own homes. There is a special reason why it is valuable for such cases; that is that the invalid care allowance is dependent upon the attendance allowance. If a person has had to give up work because he or she is looking after someone who is terminally ill, he or she can get the invalid care allowance only if the attendance allowance has been awarded. That means, as the law stands, that they cannot obtain the allowance until the six-month period is up. That is a difficult period of time to span in those circumstances and in some cases it means that, by the time such people are eligible for the allowance, they are dead and the invalid care allowance is never given. I hope that the Government will find a way to accept the amendment.
§ Lord Mottistone
I too support my noble friend. I have a 91 year-old sister who is going through the six-month waiting period at the moment. Happily, she has the resources to pay and we arranged for ladies to help her in her own home so that she did not have to go into a home, which is so destructive for people of that age. I have seen some of them die 358 because they have been taken away from their own surroundings and put into a home.
I do not know about the costs, but if my sister had not had the resources we should have had to do something else. If there are those good places and those splendid people who will help, that is something which everyone should have the opportunity to use. As I understand it, the payment, when it comes is retrospective and so it is not as if the Government will save money only if people die in the interim. It seems to me to be rather cruel. If I am wrong about retrospective payment that puts a different complexion on it. Before we finish the debate, perhaps my noble friend will be able to clarify that point. I hope that great sympathy will be shown to the amendment or something similar.
§ The Duke of Norfolk
I understand that my Amendments Nos. 35 and 61 are grouped with Amendment No. 9, and I shall speak to them. The noble Baronesses, Lady Faithfull and Lady Seear, have covered some of the fundamental ground and detail of the attendance allowances. I want to call the Committee's attention to patients who have reached the terminal phase of cancer, AIDS and similar illnesses. The vast majority of those patients survive for nothing like six months and so they can never qualify for the benefit. St. Joseph's Hospice in Hackney operates an extensive medical and nursing service for patients dying at home. The average period of care by the home care service from referral to death is just nine weeks. This most valuable benefit for the chronic sick can rarely be paid to those whose sickness is mortal.
My amendment is a simple one. It introduces a new subsection to Sections 35 of the main Act. It will exempt dying patients from the six-month rule. The amendment draws a tight definition of those who will benefit. They must be suffering from severe and progressive incurable disease. They must be receiving palliative care. Palliative care is a euphemism for terminal care. It is a speciality of medicine recognised by the professional Royal Colleges. When curative treatments are no longer possible or practical against a disease which is progressive and ultimately fatal, palliative care is appropriate. It relieves pain and other distressing symptoms while accepting the terminal nature of the disease.
We use the term "palliative" rather than "terminal" because many doctors are reluctant to write the word "terminal" on a certificate which the patient might see. Although many patients are aware of their disease, the word "terminal" is too harsh and brutal. We have therefore drawn a tight definition to ensure that my amendment will apply only to patients in the last weeks or months of life, and who are so severely ill that they will never make the six-month gateway. We have drawn that tight definition because I am well aware of the Government's reluctance to see a change in the attendance allowance regulations which would open the floodgates to new claimants.
In another place, the Minister of State for Social Security said that to abolish the six-month rule altogether would cost the Exchequer £225 million in 359 a full year. My amendment, by contrast, is meagre. Dr. R. J. Donaldson of the Social Security Advisory Committee estimates that my amendment would cost £18 million in a full year. Moreover, the measure has potential savings. Such patients often need constant care and have to be admitted to a hospital or hospice if they cannot receive that constant care at home. The cost of maintaining a patient in a hospital bed is many hundreds of pounds a week. The cost of keeping a patient in a voluntary or NHS hospice is £600 a week. It is common sense and good value to care for dying patients at home.
The Social Security Advisory Committee has called for this change. Many members of the Committee did the same on Second Reading and on many other occasions before that. The amendment has the support of the Help the Hospice movement, the Hospice social workers and, unanimously, the many hospice doctors who have been consulted. Amendment No. 61 is consequential upon Amendment No. 35.
§ Baroness Jeger
From these Benches we should like to associate ourselves with the amendments which are now before the Committee. When estimating the costs and benefits, there are not just the savings which can be effected by keeping people at home but the unquantifiable gain in comfort and serenity at a difficult time. Hospitals can be horrible places for people when they are very ill.
We should not want to feel that the change was concerned only with people who had no prospect of living for six months. I know from experience as the wife of a doctor with a practice in the East End, that very ill people often live longer than six months. Unless we change the regulations, they will still have to wait six months before they receive any help. I know one case of a young man who had severe head injuries and brain damage as a result of a motor cycle crash. His parents were anxious to keep him at home, but they did not receive anything for the first six months. A good case can be made out for a change in the rule. I look forward to hearing positively from the Minister tonight.
§ Lord Kilmarnock
I support mainly the amendment tabled by the noble Duke. As some Members of the Committee will be aware, for the past two or three years I have had some connection with the problems caused by the AIDS epidemic. It is particularly in that connection that I wish to speak briefly.
There are two main points here. First, the six-month delay for attendance allowance, as has already been said, has the effect that the award of the benefit sometimes comes in on the very day on which the person concerned has died. Secondly, as my noble friend Lady Seear said, it also acts as a passport to certain other benefits. The one which in my mind is particularly relevant in the case of AIDS sufferers is the disability allowance. It is of great importance in supplementing the diet and extra expense with which people with the HIV are faced when they live alone or even at home with their families.
360 The effect of the noble Duke's amendment, if accepted by the Government—as I very much hope it will be—will be to speed up the process of opening up the further disability allowance. I hope that I may use this occasion for saying to the Committee that the lower disability allowance of only £13.70 a week is extremely inadequate for the category of people about whom I am talking. In many cases they need special diets, ranging in cost from something like £20 to £34 a week. The real effect is only brought about by the higher level of the disability allowance, for which the attendance allowance is one of the passports, but various other passports are required.
This is a complicated area of social security law, as the noble Lord himself will know better than many. In the process of supporting the noble Duke, I wish to ask one question of the Minister. I asked him some questions for Written Answer on both the disability premium and the attendance allowance. In his reply he said:My honourable friend the Minister of State for Social Security and the Disabled has promised to consider the detail of this premium structure in the light of his monitoring of the Income Support scheme and all the reports of the Office of Population Censuses and Surveys on disabilities in Great Britain".—[Official Report, 11/4/89; col. 240.]In that reply the Minister spoke of the premium structure, which embraces both the attendance allowance and the disability allowance, as they are so intimately related.
I wish to take this opportunity of asking the Minister whether his honourable friend has proceeded any further in the review of the complex of benefits as they relate to the problems of people suffering from AIDS and living at home. As has already been said, when that is the case, there is a considerable saving made for public funds as opposed to hospital stays. I shall not continue on the AIDS point because it is not the specific subject of the amendment. If the noble Lord can give me some hope on this complex of amendments in that area I should be grateful.
§ 7 p.m.
§ Lord Skelmersdale
I agree with my noble friend Lord Mottistone that anyone with more than a drop of sympathy in their veins must be moved by the intention behind these amendments: to give help to people who suffer disability in the course of a terminal illness. Members on all sides of the Committee have spoken persuasively about the grim situation of those people whose illness progresses to the point where they satisfy the disablement criteria which govern the entitlement to attendance allowance but then die before they have completed the six-month qualifying period.
At this point I am afraid I must get slightly technical in order to answer some of the points as regards the circumstances under which the attendance allowance is paid. If I got her words right, I believe that my noble friend Lady Faithfull said that one cannot apply for an attendance allowance before there has been six months of disability. I can reassure her that that is not so, if she meant "apply". A claimant can apply before six months of disability but will not be awarded the attendance allowance until the disablement criteria have been satisfied for 361 the six-month period. But the earlier application will ensure that the benefit is paid as promptly as possible.
My noble friend Lord Mottistone asked about retrospectivity. As I said, the attendance allowance cannot be paid before the date of the claim unless an earlier supplementary benefit, or in these days an income support claim, was treated as an attendance allowance claim, which the rules say it can be. But if at the time of the claim the attendance allowance board or its delegated doctor decide that the disablement criteria have already been satisfied for six months, the benefit can be awarded immediately.
I shall come to the noble Baroness, Lady Jeger, in a minute. I am sure that those Members of the Committee who have spoken in support of these amendments will freely acknowledge that they are not the first to raise the issue with us. A little while ago the Duchess of Norfolk came to see me, with colleagues from the Help the Hospices movement. This was the latest of a number of occasions in recent months on which Ministers or officials have met people concerned about the problem. From the outset we have shared that concern and have therefore been thinking deeply and hard about a specific exemption for terminally ill people who would be eligible for the allowance, but for the qualifying period. That point was made by the noble Baroness, Lady Jeger.
I am the first to admit that it is an attractive prospect for solving the problem affecting terminally ill people in one fell swoop. However, abolishing the qualifying period for all people eligible for attendance allowance would cost £200 million. I am not sure that that would be right, bearing in mind that the attendance allowance has always been intended as a benefit for the long-term sick and disabled.
Making the money available for what we want to do rather than for what we do not want to do within the social security budget for this specific exemption is obviously an essential precursor, and our estimate of the costs, including consequences for income support and the invalid care allowance, is that they could be as much as £30 million. But securing the necessary money has been a minor consideration beside our concern as to whether a specific exemption would work in practice humanely and effectively.
The concern which we originally had for some long time was that there was no satisfactory definition of terminal illness around which an exemption could be constructed. But it has been put to us, and we now accept, that there is a consensus about what constitutes terminal illness. In broad terms that consensus is conveyed by the amendment and the new clause in the name of my noble friend the Duke of Norfolk. For that reason, I have to confess—and I hope that my noble friend Lady Faithfull will understand this—that I prefer the amendments of my noble friend the Duke of Norfolk to that of my noble friend Lady Faithfull.
However, even if the definition exists and can be applied in the clinical selection of patients for hospice care, it is a different matter to apply it in 362 a benefit system based on principles of universal entitlement. Selection for hospice care is almost always accompanied by open recognition of the prospect of death and provides access to special services for the relief of distress—emotional as well as physical. But only a small minority of terminally ill patients receive hospice care each year.
What we need to do is to make sure that we reach all terminally ill people for whom open recognition of death and the support needed cannot be assumed. We have to consider whether it is the patient himself, his personal representative or his doctor who should initiate action inevitably involving difficult and sensitive judgments, more especially so when it entails an unequivocal statement that the patient is dying. We must also be careful to see that what my noble friend the Duke of Norfolk is seeking to achieve in his amendment is achieved in practice. We also wish to avoid what could be the distressing misunderstandings of specific exemptions.
Let me emphasise in mentioning these difficulties that I am not seeking to delay action on this important measure. But it is important to deal 'with the detail and the practical arrangements as well as the principle. The Committee will be relieved to hear that I shall not mention the OPCS report, except in answer to a question from the noble Lord, Lord Kilmarnock. He was asking about the OPCS report and how my now right honourable friend the Minister for the Disabled is getting on with his review. The answer is that he is getting on very well. However, that review cannot be complete until we have received the final two OPCS reports. However, I assure the noble Lord, as I assured the noble Lord, Lord Allen of Abbeydale, earlier, that this is on a very fast track indeed.
I shall now return to the amendment of my noble friend. Because we are not yet clear exactly how best to direct help to the people concerned, we think it would be premature to accept this particular amendment tonight. However, I can assure the Committee without equivocation that the Government have now resolved at the very highest level that the problems must be overcome, and that help must be given soon to the people specified in the amendment. I therefore give a clear declaration of intent that the necessary legislation will be laid in the next Social Security Bill, and that it will be implemented speedily thereafter. With this assurance, I hope not only that my noble friend, heeding my earlier words, will be able to withdraw this amendment, but also that my noble friend the Duke of Norfolk will feel it is not necessary now to move his amendments when we get to them.
§ Baroness Faithfull
I thank all Members of the Committee who have spoken. I wish to ask my noble friend the Minister two questions. First, he said that anyone can claim the allowance, but it cannot be awarded for six months. Is that correct? I must say that if a patient is being cared for in his own home, and the person caring for him—I am sure the noble Baroness, Lady Seear, will agree with me here—has a very low income, that person has no option but to run into debt or, as my noble friend the Duke of Norfolk said, have the patient admitted to hospital.
363 That being the case, would it not be possible for a relative to apply for the attendance allowance, and for it to be handed over before the six-month period had elapsed?
Secondly, we were all very grateful to hear my noble friend say that the Government were sympathetic to those in this very difficult situation. We were also grateful to hear my noble friend give an absolute assurance that the problem will be dealt with in the next Social Security Bill, though I am simply appalled at that thought. The thought of dealing with this Bill is bad enough, and to have yet another one seems to me simply dreadful. However, there it is. When will the next Social Security Bill be introduced? I think my noble friend the Duke of Norfolk will admit that this problem exists now. If the next Social Security Bill is not introduced for two or three years, the situation will become extraordinarily difficult. Before we make a final decision as regards what to do with the amendment, I hope my noble friend the Minister will answer those points.
§ Lord Skelmersdale
I think it would be easier if I answered the final point first. I am not sure whether my noble friend Lady Faithful] was present when I said earlier that I had no doubt that the Committee could draw lessons from the past 10 years. My noble friend will remember that in the past 10 years, to the best of my knowledge and belief—no Member of the Committee contradicted this—there has not been a year when a Social Security Bill has not been introduced. While I cannot, of course, pre-empt the Queen's Speech, I cannot see why we cannot draw the lessons of the past into the future. I hope that that will help my noble friend.
§ 7.15 p.m.
§ Lord Ennals
I hope the Minister is not saying that he hopes there will be a Social Security Bill every year. That is a terrible thought.
§ Lord Skelmersdale
I have said what I have said. I think the Committee is in quite a strong position to accept my assurances. If that is not the case, I am sure that all Members of the Committee will leap down my throat like—perhaps I had better not mention any dogs at the moment, as they are a rather difficult subject on various fronts. However, I see the noble Lord the Leader of the Opposition is in the Committee.
The other question asked by my noble friend Lady Faithfull concerned the attendance allowance being claimed by a relative. That is ingenious, and we shall consider it in considering this whole matter. However, at the moment, even under these amendments, the attendance allowance rules will still state that the attendance allowance is to be awarded to the disabled person, and not to a relative. I hope that that helps my noble friend.
§ Lord Kilmarnock
Has the noble Lord considered that even if a Social Security Bill is introduced next year, which, on past performance, as the noble Lord has said, is extremely likely, a whole year will have 364 passed and that consideration will be of very little comfort to people who are terminally ill or their relatives at this present point in time, or indeed for the next twelve months? This is a relatively simple matter. Is there any reason, therefore, why, whatever substitute the Government have in mind for the amendment of the noble Duke, it should not be introduced at the Report stage of this Bill while we have it before us in this House?
§ Lord Skelmersdale
As I said earlier, I appreciate the feelings of all Members of the Committee, and especially the point that the noble Lord, Lord Kilmarnock, has just made. However, I explained earlier that there are very real difficulties in the attendance allowance approach. I referred for example, to the difficulties of doctors outside the hospice situation telling a patient that he was getting palliative care. I know that is a euphemism for death within a very short period, but I do not believe that the great British public is stupid. I believe the real meaning of that phrase would get around very quickly. I want to do something, and quickly, but I want to get it right. That is the final message I wish to leave with the Committee.
§ Baroness Cox
I must declare an interest because I am on the council of management of St. Christopher's Hospice. I must say that this matter is regarded as one of the utmost urgency. What my noble friend the Minister has just said could be regarded with great dismay, given the fact that it will indicate a continuing period of quite appalling suffering for many people who are caught in this situation at the moment.
I wish to put a question to my noble friend. This question has been put to me by people who are very concerned about these matters. It relates to the principle of means testing. I should greatly value clarification and perhaps reassurance on this matter. I understand that at present the principle operates that one needs to have less than £500 savings in order to qualify for the allowance. Many people will realise that elderly people, and particularly those who understand that they are terminally ill, will want, for the sake of dignity and self-respect, to put a certain amount aside towards the cost of a funeral. Funerals cost, on average, about £700. Will people who wish to anticipate events and who, for the sake of self-respect, for the sake of dignity and for the sake of their families, put aside a certain amount for their funeral, disqualify themselves from help in this area? Many people would value clarification on that point.
§ The Earl of Onslow
I wish to ask one question for elucidation. There are absolutely understandable difficulties as regards someone wishing to know whether he is terminally ill. That is a very real and major difficulty. However, I cannot quite understand why this provision is any more difficult at the initial discovery than it is six months afterwards. If we are going to say that people can obtain this allowance after six months—that is absolutely right—why can 365 they not have it immediately? I cannot understand why all the difficulties, which my noble friend rightly points out, should be any more difficult after six months than they are initially.
§ Lord Skelmersdale
The answer to that is that short-term sickness benefits are available in the social security system. Attendance allowance is always intended to be a special allowance for those who have proved to be long-term sick and disabled. I am sure that the noble Lord, Lord Ennals, with his great experience, can confirm that. The Committee is asking me in this special case—I have accepted that it is a very special case—to remove that long-term criterion. I am quite prepared to do that but, as I have said over and over again, I wish to get it absolutely right.
§ The Duke of Norfolk
Having put down my amendment, I received an immense groundswell of support from all sides of the Committee and also from many people outside who knew that it was down. We also had very sympathetic meetings with the Minister, and I fully understand now that the Government are looking at the hospice movement with great care and with a comprehensive force about its future.
I personally am very happy with the detailed assurances given by the Minister. I have been promised that there will be a social security Bill almost certainly next year and I gamble that there will be one. If there is, I am quite convinced that the Minister will put something in to my satisfaction. So I beg leave to withdraw the amendment.
§ Baroness Faithfull
While absolutely agreeing with the amendment of my noble friend the Duke of Norfolk, I am dealing exclusively and only at this moment with Amendment No. 9, which is my amendment. Despite the fact that my noble friend has taken on board my ingenious suggestion of a relative, and in view of the fact that he has shown very great sympathy with this amendment at this stage, I will read in Hansard what he has said and think again and perhaps bring it forward at the next stage of the Bill. Therefore, at the moment I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Henley
I wonder whether this might be a suitable moment to adjourn our discussion on the Committee stage of this Bill. I suggest that we resume at twenty past eight. I beg to move that the House do now resume.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.