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Death Grant

Volume 78: debated on Monday 29 April 1985

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Archie Hamilton.]

10.15 pm

Hon. Members are not accustomed to leaving the House at this early hour. Perhaps they will stay and listen to what we have to say.

I wish to discuss a matter that affects my constituents and those of hon. Members on both sides of the House—the failure of the death grant to provide realistic help to people who have to pay inevitably large and sometimes unexpected funeral bills.

The death grant was introduced in 1949, when it stood at £20. That sum was then sufficient to cover the cost of a basic funeral. It was intended that the grant would save the elderly the worry of having to find the money to give themselves a decent burial and remove the spectre of a pauper's funeral from those who had no savings. Thirty-six years later, funerals cost on average 20 times as much as in 1949 and yet the death grant has increased by only £10, now standing at a meagre £30. It was increased to £25 in the 1950s and to £30 in 1967. The sum represents negligible help with the funeral bill, and the original intention of the grant is no longer being met.

Elderly people still feel that they must go without food, heat and other necessities to put aside enough money to pay for their funerals. Paupers', or contract, funerals still exist and a growing number of bereaved relatives are forced to turn to the social security system for extra help. In 1983, 13,000 recently bereaved people had to undergo the distressing and undignified process of being means-tested for a single payment to cover funeral costs.

The Government's 1982 consultation paper conceded that a major reform of the death grant was needed as the present system did little for those needing help. There is widespread support in the country for the Government's belief that the system needs urgent reform. We have now waited nearly two and a half years for the Government to bring their deliberations to a conclusion. In the meantime, the real value of the grant has been further eroded. More and more of the costs of the funeral have to be met from other sources. Thousands of people continue to go without, in order to pay for the funeral that they believe is their own responsibility. I am sure that hon. Members will know of many old people who worry needlessly and endlessly about how they will be buried and whether there will be enough money in their estate when they die to give them a decent funeral.

The death grant has failed to meet its original objective. I am sure that the Government will not disagree with the view that self-reliance is a good thing and is to be encouraged among those whose resources are adequate. However, a growing number of people are unable to pay for their own funeral both because funeral costs are rising and because people live longer in retirement, using up their savings.

As the number of people unable to provide for their own funeral grows, so the onus of responsibility for footing the bill has fallen more and more on the shoulders of the bereaved, who are increasingly subjected to distress over how to find the money. Those who qualify for supplementary benefit payments have to endure the upsetting and undignified means test at a time of bereavement. The procedure is unacceptably harsh, but they have to go through it in order to obtain extra help through the single payment system. The means-testing of the bereaved cannot be allowed to continue. It was the main reason for the overwhelming rejection of the Government's 1982 dual means test proposals. I do not want to pre-empt discussion of the Government's forthcoming proposals for reforming the death grant, which I understand may form part of the plans for reforming the social security system. However, it may be opportune to consider possible outcomes of their deliberations on the matter.

Of all the solutions that might emerge, a grant which lays the burden of responsibility firmly on the shoulders of the bereaved while not at the same time covering the full cost of the funeral would be the worst possible. The deceased, the state and the bereaved should all bear some responsibility for funeral costs—the deceased and the bereaved because they want a dignified funeral and the state because it requires funerals to be in accord with legal and public health requirements.

In an ideal world, the obvious and complete solution, which would ensure that the standards of funerals required by the state, the deceased and the bereaved are met would be a universal death grant which covered the costs of a funeral. That view is sponsored by the Dignity in Death Alliance, represents the views of nearly 50 charities and pensioners' groups throughout the country and reflects the obvious fact that death is universal and comes only once and that national insurance contributions are nearly universal. I am aware that we do not live in an ideal world and that money is limited. Judgments have to be made by any Government about priorities of need and entitlement. I do not underestimate the difficulties that a Government have in devising a system which assists all those in need with funeral charges at minimal cost to themselves.

Perhaps I might help the Government by reminding them of their 1982 proposal to means-test the estate of the deceased. The deceased's estate, as valued through probate, is already used in assessing applications for single payments. The Welsh Consumer Council said in its 1984 submission to the Government that it is not unreasonable to use the deceased's estate as a means of determining eligibility for grant. I agree with that principle and believe that a full death grant should be paid immediately and that, if the deceased's estate is worth more than, for example, £5,000, some repayment of the grant should be made. Such a procedure would allay the worry of the bereaved in many cases and of the deceased before death. They would be certain of dignity in death. I look forward to discovering whether the Government's proposals, when they come, will reflect the serious consideration that that option deserves.

It would be remiss of me not to mention an issue that is often raised at my constituency surgeries—the relationship between funeral costs and the death grant. Death grant should be set at a level that covers the total cost of the funeral. Although the cost varies from one part of the country or another, I estimate that a reasonable and proper funeral without any excess costs about £500. If, in our less than ideal world, we cannot provide that by way of grant—I suspect that that will be the Minister's answer—we should at least cover the cost of discharging the minimal responsibilities of the deceased and the community.

Funeral directors and local authorities have a part to play in keeping costs down, but we must acknowledge the fact that funerals are expensive in Britain because public health standards and proper disposal procedures have to be maintained, burial grounds have to be sited away from other activities, religious requirements have to be fulfilled and we expect to maintain the identity of the deceased. Those are standards set by a civilised society and are not luxuries to which only the affluent are entitled. The least that we should expect to pay to discharge the community's and the deceased's minimal responsibilities is about £300 at 1984 prices. The full amount should be made available to eligible estates and the grant should be reviewed regularly—and preferably be index-linked—to ensure that it remains adequate.

10.23 pm

It is conventional to congratulate an hon. Member on having the good fortune to gain the opportunity of an Adjournment debate and on his choice of subject. I readily congratulate the hon. Member for Wrexham (Dr. Marek) on his good fortune, but he will realise that the subject puts me in a singularly difficult position because we are in the middle of a social security review. I know that he will understand if I cannot say as much as I should like or what I hope will be possible.

I recognise that the subject raised by the hon. Gentleman is one of very great concern to many people, especially pensioners, and that that itself has been reflected in the interest shown by other hon. Members. There has been one early-day motion, No. 128, on the Order Paper since last November; another one, No. 635, was tabled fairly recently; and I see that hon. Members were even ingenious enough to import the death grant into yet another early-day motion, No. 531, which purports to be about value added tax on newspaper advertising. The exercise of that ingenuity is some reflection of hon. Members' interest in the subject.

I can assure the hon. Member without qualification that Ministers—and not just me as a Minister responsible for social security—recognise that there is a good deal of concern about this matter. If we did not, in any event it would be drawn to our attention by the considerable volume of correspondence which we receive, by early-day motions, and by the number of occasions that the matter is mentioned when we meet groups concerned especially with pensioners, as I did for example when recently I met a deputation from the Dignity in Death Alliance.

In seeking to respond to the speech of the hon. Member for Wrexham, I need just to make the point that in looking at where we should go from where we are now there is some merit in considering how we got to where we are now and in going briefly over the history of the death grant.

Prior to the introduction of the welfare state, or the set of institutions and policies collectively described today as the welfare state, most people had policies with industrial life offices to help meet funeral expenses. But that provision was subject to a good deal of criticism, for a variety of reasons. One was that there were very high administrative costs. I am told by the experts in my Department—for all I know they may have been there between 1937 and 1940—that in those years just before the war about 37·2 per cent. of premiums to industrial life offices were going in administration costs. I am also told that it often proved that policies had lapsed through nonpayment, which obviously caused difficulties when the eventuality arose, and that in other cases the companies which provided the policies were wound up.

When the then Sir William Beveridge was looking at all these issues in the course of his work during the war, he came to see state provision as a cheaper and more efficient alternative to the industrial life office and other non-state provision which had existed before the war. He envisaged a grant sufficient to meet funeral costs, with different rates for adults and children.

There was to be no grant for people who were past retirement age when the scheme was introduced. As the hon. Member for Wrexham acknowledged, it is a national insurance benefit. There was to be a half rate for those within 10 years of retirement. It is those provisions that explain why even now—this is not always easily understood—men aged 102 or more and women who are now aged 97 or more are not entitled to any death grant because they were not covered by the scheme when it came into effect in 1948. It also explains why people who are 10 years younger—down to 92 in the case of men and 87 in the case of women—only get £15 instead of the ordinary rate of £30.

As the hon. Member acknowledged, since 1948 the grant has been increased only twice from the figure then set—once in 1958 under a Conservative Government, and once in 1967 under a Labour Government. It is clear that under Administrations of both political colours the idea of a generalised increase in the death grant has never really been afforded very high priority, and it is now nearly 20 years since any Government made an increase. It must be acknowledged—in view of the fair way in which the hon. Member put his points, I think that he would do so—that the world has changed a great deal since Beveridge was writing in the 1940s. Social conditions have generally improved or, at the very least, changed—I would say that they have improved, and I hope that I would carry the hon. Gentleman with me—and that has been reflected in, among other things, a large increase in personal wealth throughout the community including pensioners. More people own their own homes, have the benefit of life assurance policies or have built up savings in other ways. I do not intend to imply that that is universal, but the scale of personal assets is larger than it was 30 or 40 years ago when this system came into effect.

In 1974, the Department conducted research which showed that only 7 per cent. of those responsible for paying for funerals said that they had any difficulty in finding money to meet funeral costs. That appeared to be because of the availability of insurance and other assets and because a much smaller proportion of people, compared with the late 1930s and 1940s, died leaving no assets.

It is important to make those points because, as with any other problem of social security or politics, it is necessary to see one need and one set of concerns in perspective and in relation to others. It seems clear that the great majority of people do not have any great difficulty in meeting funeral costs.

I must place on the record, if only for the completeness of the debate, some of the figures detailing what would be required to meet claims that are sometimes made in relation to death grant. Using the March 1985 retail price index, to restore the grant to its 1967 value, when it was last increased, it would have to be increased from £30 to £175, which would cost about £85 million a year extra in 1984–85 if the other conditions for giving the grant remained unchanged. To extend such a grant to cover all deaths—to remove that residual contributory element to which I have referred—where at present no grant or only a reduced rate is paid would cost a further £10 million. That would leave us with a total cost, including administration, of about £130 million.

Using the March 1985 RPI, to restore the death grant to its value at introduction in 1949, it would have to be increased to about £225, which would cost about £110 million a year extra in 1984–85. To remove the residual effects of the contributory basis on which the grant was introduced would cost a further £20 million. The total cost of paying the grant would be about £160 million.

I turn to the point raised by the hon. Member towards the end of his speech about covering reasonable funeral costs. The figures that I have before me relate to a cost of about £350, rather than £500, although I do not wish to argue about what is a reasonable figure. The estimates that I shall cite are lower than would be required to meet the figures suggested by the hon. Gentleman. On 1984–85 figures, to pay a death grant at the rate of £350 would cost about £185 million a year, with another £30 million being required to pick up the reduced rate cases, giving a total cost of about £240 million.

I would say only—I would not wish to labour this point too much—that, even against the background of the huge social security budget, the additional sums involved in any of these proposals, which range from a little under £100 million to more than £200 million, are substantial when compared with the costs of many other requirements.

I was not asking for a grant without some form of clawback, perhaps related to the sum of £5,000 where it would be necessary to have a grant of probate, so that costs would come down considerably.

I accept that. I do not suggest that the hon. Gentleman made an unreasonable or strident speech, but I thought it sensible for me to put on record the sort of sums that we could be talking about for some of the suggestions that have been made and to stress the point of which I, as the Minister with responsibilities for the needs of disabled people, am particularly conscious, which is that the costs have to be judged against the many other claims for improvements in benefits. They may be desirable, but they have to compete for available resources.

The hon. Member noted that for the relatively small number of people who find difficulty in meeting the cost of a funeral, there is the possibility of help through the supplementary benefits system. In 1982, about 12,500 families received single payments, in addition to death grant, averaging about £210, to help with funeral costs.

I noted carefully what the hon. Gentleman said about people's feelings about supplementary benefits means-testing at the time of bereavement. I shall not dismiss that.

As the hon. Gentleman said, the Government put forward for consultation nearly three years ago a variety of proposals for changes in the system which it was felt would lead to better targeting of available resources and give greater help to those who needed it. I shall not go through all the options in the appendix to the consultation paper—the hon. Gentleman will have read them—but there were three major options for paying a much larger grant, ranging from £150 to £250, to those most in need.

No clear public consensus about any of the options emerged from the consultation process and, as a result, the Government have continued to consider the matter and are carrying forward that consideration in the current review of social security as a whole. The hon. Gentleman will understand that I cannot make any promises about the future of social security or about the vexed question of the death grant.

However, we have noted what the hon. Gentleman has said and the concern that he expressed on behalf of his constituents. I hope that it will not be too long before we can make proposals that, whether or not he finds them to his liking, will carry forward the public debate on the subject and produce a more acceptable position. I am grateful to the hon. Gentleman for the trouble that he has taken to enable me to put that point on record.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes to Eleven o' clock.