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Schedule 1

Volume 897: debated on Monday 4 August 1975

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Deferred Retirement

Lords amendment: No. 46, in page 57, line 6, leave out from "age" to second "the" in line 7.

I beg to move, That this House doth agree with the Lords in the said amendment.

These are not quite technical amendments, but they are almost technical amendments. The amendments remove unintended consequences of the original provision relating to increments in the Bill. They ensure that a de minimis rule operates in respect of increments, so that payments under increments are limited to pensions of at least 1 per cent. A person should have worked for a period of eight weeks on the one-eighth per cent. rule which we discussed in Committee.

Question put and agreed to.

Subsequent Lords amendments agreed to.

Lords amendment: No. 64, in page 71, line 33, leave out paragraph 50.

I beg to move, That this House doth disagree with the Lords in the said amendment.

The Lords amendment requires the Secretary of State, in each tax year, commencing with the tax year 1976–77, to consider whether the mobility allowance should be increased, having regard to the national economic situation, the general standard of living and any other matters he thinks relevant. Two Government amendments have been tabled in response to an amendment which was successfully moved against the Government in another place during the Report stage of the Bill.

The Lords amendment was one which seemed to be seen by its supporters primarily as a guarantee of annual reviews, but which would in fact have required annual upratings in line with earnings. Indeed, it is our purpose to ensure that the final legislation takes full account of what we believe was in the minds of their Lordships when they moved this amendment, though there may in fact be some dubiety. The purpose of this amendment is to remove that. If the relevant paragraph is left out, according to the amendment in another place, it omits the exemption of mobility allowances from automatic annual review and upratings. We are therefore concerned obviously to include the exemption which we believe was the original intention, at least as regards automatic uprating, but what we are seeking to do is to replace what we believe was the gist of the debate in another place by committing ourselves to a regular review, but not necessarily to an annual uprating.

The effect, therefore, of the two Government amendments together is to require an annual review of mobility allowance but to leave the decision on any uprating to be taken in the light of national economic circumstances at the time. This corresponds precisely to the position under the provisions which relate to child benefit. Clearly it would be very desirable if all benefits which were introduced by the Government irrespective of the kind of benefit were to be subject to an automatic uprating. No doubt in a world which was free of major expenditure constraints, that would be an ideal solution. But when there are very tight expenditure restrictions, it is not possible that this should apply to all benefits automatically. The Government have no alternative but to make it clear that we must remain free to decide whether it is possible at any time to commit scarce additional resources to this important extra item for the disabled.

This allowance will benefit many of the most severely disabled people who in the past have received no help with their mobility problems simply because they could not drive. The amount and the scope of the allowance are not as large and as wide as some would like. But the allowance is a major and important step forward. We are determined to ensure that it is not put on the shelf and that it does not lose any significant degree of its value over time.

Automatic upratings in line with earnings may be appropriate with regard to basic maintenance benefits, but clearly they are of a different order of importance from these benefits which will be paid on top of other benefits or on top of earnings. The simple effect of the amendment, therefore, takes account of the rather different nature of the mobility allowance from basic maintenance benefits.

In case there is any doubt about the position in respect of the Bill as it reaches this House, we seek to make it clear that we will commit ourselves to consider mobility allowance in the light of the national economic situation but that it is not possible to make the same guarantee in respect of this benefit as regards other maintenance benefits. I hope that that is broadly acceptable.

When the mobility allowance was first debated in this House, we pointed out the need for some kind of review procedure. That need has been made out by the very brief history of this allowance.

The allowance was announced in September 1974. At that stage it was set at £4. In June the Secretary of State announced that when it was to be introduced, which is not until the beginning of 1976, it would be put at £5. The House might expect the Government to have been apologetic about the rate of inflation which had caused this increase, but not a bit of it. The right hon. Lady told the House that the 25 per cent. increase was remarkable and was the first uprating of a benefit that had ever taken place to her knowledge before it had been introduced. In other words, rather than apologising for the horrific rise in inflation, the right hon. Lady was seeking our applause.

The right hon. Lady's script has changed, but there are still some questions which have to be asked. The House would do well to remember that this allowance, even now that it is put at £5, is unlikely when it is first paid at the beginning of next year to be worth £4 as it was announced originally. That is the price of inflation. That is what inflation has done to this allowance.

Let is also remember that the £5 a week is not by any definition a princely sum. We welcome the mobility allowance. But we also recognise its limitations.

It is recognised on both sides of the House that there is a real need for a review procedure. One way would be by means of an annual review linked to prices or to earnings. The Minister has rejected that. The implication of the Lords amendment is that the other place supported that. The other way is that now proposed by the Government in their amendment. We welcome the fact that the Government have at least—again after a defeat in the Lords—moved some way on this point. But there are two vital questions which will have to be answered by the Minister before we can accept this compromise.

The amendment proposed by the Government is that the Secretary of State shall consider whether the rate of mobility allowance should be increased having regard to the national economic situation as a whole, the general standard of living, and such other matters as he thinks relevant. Is not that what the Government would do in any event? Would not any Secretary of State worth his salt do just that? Therefore, I ask the Minister how this amendment alters the real position.

Why did not the hon. Gentleman and his Government look at this between 1970 and 1973?

I am glad that we have at last had the first back-bench intervention from a Government supporter—

It was quite a good one. However, the Secretary of State, whom we are pleased to see in her place, must come to the conclusion that it is her legislation that we are debating. If she wishes to debate what happened between 1970 and 1974, doubtless that can be arranged. But we are not discussing that at the moment.

I repeat my question. How has the Government's amendment altered the position as it affects the Government? I ask the question to elicit information. I do not intend to try to establish the fact that concern about these matters is the monopoly of one side of the House or the other.

The second question concerns the criteria which the Secretary of State will use. The amendment refers to taking into account the general standard of living. Does that mean that there is a requirement on the Secretary of State to consider prices and the level of prices and earnings and the level of earnings over the 12–month period after which she will review this benefit? I think that that is the case, but I should like the Under-Secretary's confirmation that it is. We want to be sure that this amendment is not just a matter of words but that it actually means something real and right to the people we are all seeking to help.

I should have pointed out that privilege is involved in this amendment.

I hope that my hon. Friend the Under-Secretary has tabled this amendment to save me embarrassment. Had the amendment not appeared on the Notice Paper, I fear that I might have had to vote against the Government on this one.

I like the idea of an annual review. However, this amendment is a nice one in the sense that the Secretary of State has not adopted a low profile. She is a duck in a position where she can be shot at in the future. We now have an amendment which gives my right hon. Friend a fair amount of power to intervene. At the same time, it gives us the opportunity from time to time to fire at her if we feel that the allowance is not as great as it should be. It is not unknown for me to vote against the Government on such issues. I look forward to my right hon. Friend's review. I hope that she will consider the matter carefully.

In view of the amendment, which I support wholeheartedly, I am at long last in a position to tell my Government "I am on your side on this."

6.0 p.m.

I support the Lords amendment, rather than the Government amendments, because the Lords are saying that there should be an annual review, and the Government do not say that. With the Lords amendment, we know what would happen.

Their Lordships felt that there was a strong case for an annual review, as petrol has just about doubled in price in the past year. I do not altogether blame the Government for that, although they must bear some of the blame, because of the increased tax. Moreover, rail fares have increased by 50 per cent. in the past 18 months, and may very well go up again before long.

In those circumstances the Lords were saying clearly that they were not merely paying lip service to the aim of encouraging mobility among severely disabled people, but that those facts must be taken into consideration. How can the disabled be mobile in the face of sharply increasing costs if we do not permit an annual review?

I do not understand what the result of the Government amendments will be, but I understand what the Lords amendment will do. It is much clearer and fairer, and, therefore, I support it.

I support the annual review, not necessarily because of the level of benefit but because it gives the House an opportunity to consider the structure of the new benefit. We want to examine the structure, including the age limits, frequently. For example, the age limit of 65 is an important and disliked limit on the allowance. If the Government amendments meant longer intervals between examinations of the structure of the new allowance, I should strongly deprecate that. When it has been working for a year we want to have a jolly good look at it.

I support the Lords amendment, though I prefer the amendment which was not pressed at the Committee stage in another place to the one which the Government are resisting now. I do not know whether this is what you meant by privilege, Mr. Deputy Speaker, but I think that their Lordships got it wrong in not pressing what they asked for earlier, rather than pressing the amendment that we are discussing. At an earlier stage their Lordships wanted the allowance to be specifically related annually to the rise in travel and motoring costs, rather than being on the same basis as pensions, which are related to earnings. That makes a great deal of sense.

For reasons that I have explained in Finance Bill debates, I am generally in favour of the indexing of such allowances. In considering the mobility allowance we are dealing with a group of people who no hon. Member would wish to suffer cuts in their standard of living, even at a difficult time. We all agree that we are talking about a priority group, and we want to protect them from the ravages of inflation, even if we cannot protect everyone.

We are also dealing with a sector of inflationary costs, travel costs, which, partly because they arise in industries which are so labour-intensive, have been rising even faster than the general rise in prices, and may continue to do so over the next few years. That is especially true of motoring costs, in view of possible oil price increases. Therefore, it would be right to index the allowance to travel costs rather than anything else, certainly rather than the almost meaningless formula for which the Government try to obtain credit.

It is also important—and this is why I shall not vote against the Government's amendments—that the allowance should be reviewed fairly soon. It has been made taxable, something against which I have argued strongly in Finance Bill debates. I suspect that for that reason it is not worth as much in travel terms to some people who receive the old private car allowance as that allowance was when it was introduced, and that, therefore, we are debating a proposal which reduces the amount of mobility available to some disabled people who happen to be paying tax. Figures from the Disablement Income Group suggest that some disabled people changing from the old private car allowance will be worse off. Treasury Ministers have been unable to quarrel with me about that. It is another good reason for examining the allowance annually.

I acknowledge the step that the Government have taken, but I wish that they had gone further. The Secretary of State is to consider the matter every year. May we have an undertaking that the result of that consideration will be explicitly set out at the time of the annual review when the announcement is made at Budget time? It is not good enough for it to be swallowed up in Whitehall somewhere, so than when questions are asked later Ministers can just say "We considered this, but we decided to do nothing about it". We want a formal paragraph in the statement of annual review saying that the matter has been considered and that all the factors have been taken into account, and stating the conclusion, so that Parliament has a proper opportunity to discuss it. If we may have that undertaking, we shall be much happier with the formula than we are now.

I very much agree with the points made by my hon. Friend the Member for Braintree (Mr. Newton), because the disabled face an extra increase above the normal motoring costs that the rest of us who are able-bodied face. I would have preferred the annual review.

During the past few months, because of the debates here and in another place, many misunderstandings have arisen about the effect and meaning of the mobility allowance. We are talking about a periodic review, not an annual review as with other benefits, but a review which it should be within the province of any Secretary of State to make of all allowances. Will the Government undertake this evening to publish a clear and unequivocal statement about the exact effects of the mobility allowance when it comes in, and will they take up the points made by my hon. Friend? Many people are asking "Can we go on working past the age of 65, because we may lose our vehicle or not receive the allowance?" The muddle in the minds of the disabled is very worrying and is causing a great deal of unhappiness.

There was an innuendo in the speech of the hon. Member for Sutton Coldfield (Mr. Fowler) that what the Government proposed was nothing more than they were obliged to do anyway. I am glad to say that several of the hon. Gentleman's hon. Friends did not take his line, but saw great merit in our proposal. For his sake, but less for theirs, I shall spell it out.

We are committing ourselves to a review. The difference between what we propose here and what, for example, was done in the case of the family allowances under successive Conservative administrations is that then there was no review—annual or any other kind. In the case of family allowances, for example, there has been no increase by any Conservative administration since 1956. If there had been a commitment to a review, I should be surprised if no increase would have resulted. That indicates the value and importance of what is being proposed. I am glad to see that my hon. Friend the Member for Eccles (Mr. Carter-Jones), who has played such an important rôle in so many of these matters, also believes that this is an important innovation. I am convinced that it is.

I was also asked by the hon. Member for Sutton Coldfield what we would take into account when we made an examination of the mobility allowance, and whether it was merely a matter of prices and earnings. Obviously prices and earnings are prime economic indicators, and we are bound to take account of them. However, we are also bound to take account of other economic issues at the time. I therefore cannot give the hon. Member the kind of comprehensive answer he might want, because it is left open-ended. The reason we cannot commit ourselves to a Section 125-type of uprating is that we have to take into account all the economic indicators at the time.

The hon. Member for Birmingham, Edgbaston (Mrs. Knight) and her hon. Friend the Member for Braintree (Mr. Newton) referred to the fact that petrol had doubled in price. That is a somewhat irrelevant comparison, because the whole point of the mobility allowance is that it shall go to those persons who have either no mobility or scarcely any mobility. That does not necessarily mean that the allowance will not go to those who have a private car allowance, but it is not primarily for that type of person—it is for a different type of person. Therefore, the allegation that petrol has sharply increased in price and has a direct implication for the mobility allowance is somewhat misplaced.

I am sorry to dig the dagger in here, but the mobility allowance was intended to give mobility to about 100,000 extra people. Last week taxi fares rose substantially in the London area. The mobility allowance was intended to include that 100,000 people. Will my hon. Friend allow us to question him on this matter in 12 months' time?

I entirely accept the point about taxi fares. It is also true that the mobility allowance was introduced primarily to benefit many of the most severely disabled persons who, in the past, have received no help at all with their mobility problem, simply because they cannot drive. I do not wish to labour this point. I simply do not believe that its relationship to the increase in the price of petrol is very relevant.

The hon. Member for Wells (Mr. Boscawen) made a fair point when he said that our commitment to a review would give the House an opportunity to examine the structure flexibly and to consider the position on uprating. There will be a full opportunity for all hon. Members to question my right hon. Friend the Secretary of State on the operation of the mobility allowance, its application, and how it affects people. They will have that opportunity as a result of the commitment to the review.

If the hon. Gentleman does not agree that petrol costs have any effect on the mobility allowance, does he agree that increases in train fares have an effect?

6.15 p.m.

They have an effect for those who, despite their disablement, are able to use a train and a taxi. There are some persons whose disability is such that they are not able to use even those forms of transport. The mobility allowance is designed primarily to assist that group. However, I do not wish to pursue that point.

Many economic factors are relevant in considering the uprating. Certainly the rise in petrol costs is only one, and I should not consider it a prime one.

Will the Minister make it clear whether, so far, we have a undertaking that in the annual review statement, which is normally made around Budget time, there will be a specific reference to the question of the mobility allowance? Primarily, that is what I want to hear.

I am not necessarily making that commitment. I am saying that we are committed to a review. However, this is known because it has been publicly stated by Government spokesmen. Therefore, it will be open for any hon. Member to press my right hon. Friend the Secretary of State or any other Minister for the results of that review.

I hope that it will be accepted that this is a significant change, and one which might be expected to lead to significantly different results as compared with that other, so often shelved benefit, family allowance. There is no reason, because of what we are committed to doing—which is different from the situation when the Bill went through the other place—to suggest that this benefit will go the way of the family allowance. I am convinced that it will not, and on those grounds I hope that it is acceptable to all hon. Members.

I fear that the Under-Secretary is having a bad effect on me. Every time he puts forward his argument he makes me want to vote against him, and sometimes against my own better judgment and preconceived ideas. He has accused me of innuendo. All I said was that when the mobility allowance was announced in September 1974 it was set at £4. In June 1975 the right hon. Lady the Secretary of State increased it to £5, and it will be paid for the first time in January 1976. The point I am making is not innuendo; it is a fact that the allowance has to keep up with inflation. There is no big deal about that. Inflation has got out of control, and if the Under-Secretary does not know, he is the only member of the Government who does not. That is not innuendo. It is a fact that he had better come to terms with promptly.

It is a difficult choice. The annual review is clearly preferred by one or two of my hon. Friends. I am prepared to concede that the Government have taken a step—perhaps a faltering step—in the right direction. We shall want to see how this works. However, at this stage we are prepared to let it go, despite the Minister's arguments.

Question put and agreed to.

Amendments made to the Bill in lieu thereof: In page 13, line 29, at end insert—

'(3A) In the tax year 1976–77, and thereafter in each subsequent tax year, the Secretary of State shall consider whether the rate of mobility allowance should be increased having regard to the national economic situation as a whole, the general standard of living and such other matters as he thinks relevant'.

In page 71, line 33, leave out from 'Act' to end of line 35 and insert—'for paragraph ( a) there shall be substituted—

"(a) Parts I, IV and V of Schedule 4 to this Act and paragraphs 1 to 3, 4 and 5 of Part III; and"'.—[Mr. O'Malley.]

I should not like my generosity to go unnoticed. I did not require hon. Members to seek leave to speak again, because we are not in Committee.

Remaining Lords amendments agreed to.

Committee appointed to draw up a Reason to be assigned to the Lords for disagreeing to one of their Amendments to the Bill: Mrs. Barbara Castle, Mr. John Ellis, Mr. Norman Fowler, Mr. R. A. McCrindle and Mr. Brian O'Malley; Three to be the quorum.—[ Mr. O'Malley.]

To withdraw immediately.

Reason for disagreeing to one of the Lords Amendments reported, and agreed to: to be communicated to the Lords.