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Invalidity Benefit

Volume 983: debated on Tuesday 29 April 1980

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5.

asked the Secretary of State for Social Services what is the number of claimants for invalidity benefit at the most recent convenient date.

8.

asked the Secretary of State for Social Services what would be the cost of raising invalidity pension by the same percentage as retirement pension.

12.

asked the Secretary of State for Social Services what representations he has received from disablement organisations concerning the level of up-rating of invalidity benefits.

In mid-1978, the latest date for which statistics are available, 557,200 people were receiving invalidity benefit. The extra cost of raising invalidity pension by the same percentage as retirement pension would be £50 million in a full year.

I have received a letter from the Disablement Income Group expressing disastisfaction with the proposal to apply the 5 per cent. abatement to invalidity benefit.

Will the Secretary of State confirm that the majority of those claimants are severely disabled people, who can generally expect to be out of work for several years? As their annual income from invalidity pension is well below the tax threshold, what possible justification is there for saving a beggarly £50 million by docking their benefit by 5 per cent. in lieu of taxation?

I must correct the hon. Gentleman. Only a minority of invalidity beneficiaries would not be subject to taxation, and not the majority. It is also fair to point out that, even with the lowest rate of invalidity allowance and after the 5 per cent. abatement, an invalidity pensioner will still have a higher benefit than a retirement pensioner, whose pension is, at after all, taxed, whereas at present the invalidity pension and allowance are not.

Will the right hon. Gentleman explain why the Government, having accepted the principle of increasing the retirement pension to attempt to keep pace with the cost of living, have not extended the same principle to this vulnerable section of the population, which must come within the category of those in greatest need, referred to by the Under-Secretary of State a few minutes ago?

I understand the right hon. Gentleman's point, but the invalidity pension has not been taxed, although it is common ground on both sides of the House that it should be, whereas the retirement pension is taxed—

I accept the correction. The pension is taxable.

Perhaps I can give the right hon. Gentleman this assurance. Unlike the other benefits affected by the 5 per cent. abatement this November, invalidity benefit is a long-term benefit. I also give the House this assurance about invalidity benefit. When it comes to tax, subject to the availability of resources, we shall put it back to what it would have been had it stayed in step with the retirement pension this November.

My right hon. Friend has answered the point that I wanted to make. I had intended to ask for an assurance—which he has given—that he will seek to restore the link with retirement pensions. Does he accept that most disabled people are concerned about the breaking of the link with the retirement pension?

I understand my hon. Friend's point, and I am grateful to him for the representations that he has made. I hope that the assurance that I have just given to the House, that subject to the availability of resources we shall restore the level of the invalidity pension—when it comes into taxation—to the level of the retirement pension will go a long way to reassure those who have expressed anxiety about the Government's proposals.

Is the right hon. Gentleman aware that this proposal is shabby and shoddy? Is he further aware that I hope that the Minister will implement the assurance that he has given, because under this Government invalidity pensioners suffer by comparison with other pensioners. I fail to see how a Minister with responsibility for the disabled can serve in a Government whose Secretary of State treats invalidity pensioners in this way. Does he realise that we shall watch for the implementation of his assurance?

I have no doubt that the right hon. Gentleman will watch carefully the question of the implementation of the assurance that I have given. It has been given after careful thought, and, of course, it has to be subject to the avail ability of resources, as I made clear. I cannot accept the remainder of the right hon. Gentleman's criticisms. Many countries are facing the difficulty of maintaining the level of and the increase in their social security budgets. We have made limited reductions, which still leave our social security budget growing at 2 per cent. a year on average over the next few years. I cannot accept that this is mean-minded or mean-spirited.

While I accept what my right hon. Friend has said, is he aware that I am disappointed that he said that people who enjoy invalidity benefits are in a minority? It makes no difference whether they are in a minority or a majority. Those people most require aid and we should therefore consider their requirements. While it is fair to say that people who receive retirement pensions have an additional benefit, may I ask the Minister to reconsider the proposals?

I understand my hon. Friend's anxiety, and I assure him that these matters are being vigorously debated in Standing Committee B. The Government have accepted, in line with their predecessors, that this, and a number of other benefits which have not hitherto been taxable, should be taxable, and that some time after 1982 it will be brought into taxation. The Government also take the view that it is right that there should be this interim scheme in lieu of taxation. Even if the Government confine themselves to the invalidity benefit, the amount of expenditure that will be saved by the 5 per cent. abatement is significantly less than the amount of additional revenue that would be raised if the benefit were brought into proper taxation this year.

With inflation running at well over 20 per cent., with very much more in the pipeline, does the Secretary of State have any confidence in the figures that he prophesied—and which will be the basis for the uprating—of 16½ per cent. on the retail price index by November? If that is the case, will he still punish invalidity pensioners, as he is now proposing to do?

The right hon. Gentleman has faced these difficult decisions, and he knows perfectly well that it would be entirely inappropriate for me now to attempt to forecast what we might do if the events which he forecasts transpire by November. We shall have to deal with that position if and when it arises. The estimate on which the uprating has been based—a 16½ per cent. increase between the two uprating dates—is the best estimate we have, and we must stick to it.

Is the right hon. Gentleman aware that his remarks about 1982 will do nothing to diminish the suf- fering of some of the most hard-pressed people in Britain over the next two years? Is he not concerned, even ashamed, that the Disablement Income Group has described his policy not only as appalling but as cruelly unfair? It is the stock answer of this Government that the British people are now getting what they voted for 12 months ago. Where, in their manifesto did it say that the Conservative Government would cut the standard of living of people who, through sickness and disability, have had their working lives cut short?

I understand that the right hon. Gentleman and many other hon. Members are anxious about the Government's proposals. He will know that the pressures of the public sector borrowing requirement—[Interruption.] If we do not restore a better balance in our economy and reduce the amounts that the Government have to borrow, there is no hope whatsoever of our being able to restore the prosperity on which the welfare of those people about whom the right hon. Gentleman is concerned depends.