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Social Security

Volume 168: debated on Monday 5 March 1990

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Pensioners (Income)


To ask the Secretary of State for Social Security what was the increase in pensioners' average net incomes from (a) 1974 to 1979 and (b) 1979 to date.

Between 1974 and 1979, pensioners' average total net income rose by 3 per cent. in real terms. Newly available figures show that between 1979 and 1987 it rose by more than 30 per cent. in real terms.

Given the significant difference between those two figures, will my right hon. Friend take it from me that the substantial record of this Government is far more important than the rhetoric of the Opposition, especially as the figures show that the Labour party has a miserable record in this important area?

I am grateful for my hon. Friend's comments. Taking the picture as a whole, it is certainly striking how much better pensioners have done under this Government than under the previous Labour Government. We have sought, by using income-related benefits, to assist, in particular, pensioners who do not have savings income and occupational pensions.

Will not the Secretary of State admit that the removal of the transitional arrangements for housing benefit has meant that this year's increased pension for pensioners on income support has been wiped out? They are worse off this year—with the increase—than they were last year. Is not that the reality for many pensioners today?

I am not sure whether the hon. Gentleman is talking about the housing benefit transitional protection arrangements, but the change in those that is intended to take place in April represents a smaller proportion of the pension increase this year than last, so his point does not stand up to examination.

Although I congratulate my right hon. Friend on what has been achieved, will he look carefully at the position of the wartime generation of pensioners, many of whom were unable to save or to own their own homes, and many of whom have not shared fully in the increased standard of living of the vast majority of pensioners?

Let me make two points. First, the figures to which I referred show that the proportion of pensioners in the lowest fifth of income distribution fell sharply between 1979 and 1987. Secondly, as I said in answer to the first supplementary question, we have sought to direct extra help to those who do not have savings and occupational pensions income.

The Minister will realise that we are less impressed by the figure of 30 per cent. because we read yesterday that top people's incomes have increased by 28 per cent. in a single year. Does the right hon. Gentleman agree that under Labour basic pensions increased by 20 per cent., whereas under this Government they have increased by a miserly 2 per cent? Is not the truth that the rich are becoming richer on a prodigious scale while the poor are becoming poorer very rapidly? Is not the Minister filled with self-disgust at his role? Is not he tempted to leave office and do a runner or, as we say in Wales, do a Walker?

On the latter part of the hon. Gentleman's remarks, I congratulate him on his ingenuity in asking the question and return a firm no to it. As to the rest of his question, he cannot have been listening to what I said. The other point that emerges from the 30 per cent. figure is that pensioners' incomes have been rising faster than those of the population at large.

Income-Related Benefits


To ask the Secretary of State for Social Security what additional help is being provided for families in receipt of income-related benefits.

As a result of the reforms in April 1988, we provided an extra £200 million for low-income families with children. A further £70 million was provided under last April's uprating. From this coming April, we are providing additional help to less well-off families amounting to some £75 million in a full year, including help for families with disabled children and, through the social fund, maternity payment for expectant mothers. That brings the total amount of extra help provided for families with children in receipt of income-related benefits to over £350 million a year in real terms since April 1988.

My right hon. Friend gives some extremely welcome figures. As a general uprating of child benefit would not have helped those receiving income-related benefits and family credit, does my right hon. Friend agree that the specific targeted help under the family premium for those families is particularly important and more likely to hold them together, which is very important in this day and age?

I agree with my hon. Friend. The help that we shall introduce in April with the family premium, help within the family credit scheme over and above compensating for inflation, extra help with housing benefit, the lone-parent premium—which is being improved in housing benefit and community charge benefit—and the earnings disregard are all examples of how we seek to target help on those who need it most.

Will the Minister come clean and admit that many people are suffering since he abolished single payments and replaced them with the social fund? Will he explain why a woman with five children in my constituency, who is being rehoused because of domestic violence, has been refused money under the social fund to buy beds for her children? She would have received that money under the single payments scheme.

It is disgraceful, as my hon. Friend says. Why does not the Minister examine the failure of the social fund?

There are several questions later on the Order Paper about the social fund. The decisions are taken by independent social fund officers. Anyone who is dissatisfied with a decision can ask for the case to be reviewed and, if necessary, investigated by a social fund inspector.

Residential Care Homes


To ask the Secretary of State for Social Security what representations he has received regarding state support for pensioners in residential care homes.

We have received a significant number of representations. Part of our response has been to provide an extra £100 million to increase all the national income support limits for people in residential care and nursing homes from this April. Current spending on income support payments to people in homes is now well in excess of £1 billion a year.

The House will be pleased to note the action already taken by the Government to close the gap between the cost of nursing homes—particularly following the welcome and substantial pay increase to nurses two years ago—and the cost to old people of living in those homes which is assisted by the Department of Social Security through income support.

Will my right hon. Friend acknowledge that the Government's proposed top-up arrangements do not apply to existing residents in nursing homes? Will he therefore join my hon. Friends and myself in lobbying the Department of Health to extend that help to existing residents of nursing homes, not just to new entrants?

I hope that my hon. Friend welcomes the fact that under the new arrangement people under and over pension age will be helped. With regard to the existing cases, we continue to have discussions with our colleagues in the Department of Health, but I cannot comment further than that today.

Will the Minister confirm that almost half the residents in residential care do not have their fees paid in full, even though they are on income support? Will we have to wait for evictions from those homes before the Government change their policy?

No, I do not think so. Our commitment to improvement in residential care has been proved by the way in which we have allowed expenditure to increase from £10 million when we came to office to £1·1 billion now, by the continued growth in the population of those in residential and nursing homes and by the something like 10 per cent. per annum increase in the number of homes providing such care.

Has my right hon. Friend had an opportunity to read the report of the Select Committee on Social Services which deals directly with the problem and makes a series of recommendations with which I will not detain the House now? Those recommendations require an early response before the Social Security Bill comes back to the Floor of the House.

We received the report only on Friday. I hope that my hon. Friend will recognise that we want to give it rather longer consideration than just the past few days. I recognise the concern and feeling about the subject, not least as a result of my two appearances before the Select Committee on Social Services, of which my hon. Friend is a member. We are considering the matter carefully, but I do not believe that the Government can simply write a blank cheque to meet any charges, however high.

Is the Minister aware of the increasing insistence of local authority leaders of all political persuasions that their lack of funds for community care is forcing more people into residential care who could live in the community with adequate local services and that the poll tax will compound their problems? Will he at least ensure that income support payments keep pace with the charges agreed by local authorities for new residents?

I am not sure whether I can agree that. We introduced the new arrangements for community care which are part of the legislation currently before the House precisely because we believed that there was a perverse incentive for people to go into residential care, even when it was not the most suitable place for them to be. Making extra sources available for local authorities to provide care in the community is the right way to ensure that judgments can be made in the interests of patients or clients.

Pensioners (Income)


To ask the Secretary of State for Social Security what are the most recent figures he has for the change in pensioners' incomes from savings.

Newly available figures show that between 1979 and 1987, pensioners' average income from savings more than doubled in real terms.

I am grateful to my right hon. Friend for that reply. What proportion of retired people receive income from occupational pensions?

The proportion of pensioners overall who have income from occupational pensions is just over half, but among more recently retired pensioners the figure is now nearly three quarters.

Instead of trying to defend the shabby way in which pensioners have been treated by the Government, will the Secretary of State explain why, time and again, pensioners are penalised because they have saved during their working lives? If they have accumulated a sum of money, even quite a modest one by present-day standards, they are penalised in receiving benefit and unable to get rebates. As the Secretary of State and the Minister are well known for being somewhat wet in the Tory party, why do not they have the guts to do what the Secretary of State for Wales has done?

Perhaps I may take the opportunity to remind the hon. Gentleman that, less than two years ago, the amount of capital that people could have and still receive supplementary benefit was only £3,000.

The hon. Lady should check her facts before making sedentary interventions.

There is now a taper from £3,000 to £6,000. The hon. Gentleman knows that the limit for housing benefit was raised to £8,000.

Is my right hon. Friend aware that many people who thought that they had made adequate provision for their retirement saw their savings devastated because of the rate of inflation under the Labour Government in the 1970s? Is he further aware that there is concern among Conservative Members about the savings threshold, particularly for community charge benefit? It appears to be a tax on thrift and prudence, because retired people may lose all claim to rebates if they have made efforts to save during their working lives.

I recognise that the level at which capital limits are set is a matter for judgment. Our judgment was to increase them about two years ago, especially in relation to housing benefit and rate rebates. I hope that my hon. Friend will acknowledge that the more generous arrangements for community charge benefit than for rate rebates, in that it has a lower taper, will significantly help many people.

Child Benefit


To ask the Secretary of State for Social Security what would be the cost of uprating child benefit to bring it to the same level in real terms as prevailed in 1984.

Is not the Secretary of State ashamed that child benefit, the most efficient way of getting money to families, is worth 19 per cent. less than it was in 1984? As the Government are notorious for leaks, will the Secretary of State confirm the rumour that the Government are to abolish child benefit, and will he make a statement on the matter, either before the Mid-Staffordshire by-election or before the next general election?

We have no plans to do anything other than what we are committed to do and have been doing, which it to review the rate of child benefit each year in the light of all the circumstances and, of course, to devote considerable resources to assisting the least well-off families, as we have done on a large scale.

Does my right hon. Friend agree that it would not be sensible to use the enormous sum that he mentioned—two thirds of £1 billion—to assist not only the poorest families but some of the wealthiest in the country through child benefit uprating? If he wished to help the poorest families, would not it be wiser to make some modest change in the tax rules on benefits in kind to assist members of families who wish to get back to work?

My hon. Friend, with her characteristic ingenuity, makes a point which I shall need to transmit to my right hon. Friend the Chancellor of the Exchequer. I shall ensure that it is drawn to his attention. In response to the first part of her question, over £1 billion of expenditure on child benefit goes to 1·75 million families whose incomes are over £20,000 a year.

Is not it time that the Government came clean with mothers in Britain about their plans for the future of child benefit—a popular benefit with mothers at all income levels? Will the Secretary of State confirm that the Government's failure to uprate child benefit in line with inflation is depriving every child in Britain of £1·35 per week? Will he admit that the Government have breached their promise to the nation in the previous election manifesto? Does he agree that it would be hypocritical for a Government who have massively cut taxes for the rich to argue that child benefit should be means-tested when the effect of means-testing would be to deepen the poverty trap for women on low incomes wishing to return to work?

The answer to every part of the hon. Lady's question is no. We have faithfully maintained the commitment in the 1987 manifesto and at the same time directed substantial additional resources to helping the least well-off families with children. As a result of what will happen next month, about 1·5 million families, with one quarter of the nation's children, will do better than if we had uprated child benefit.

Does my right hon. Friend agree that the extra £70 million that will become available in income-related benefits to a quarter of children will give them substantially more than if there had been a general increase in child benefit, which is surely inequitable now?

Social Fund


To ask the Secretary of State for Social Security what is the total social fund allocation by grant and loan for the current financial year; and what was the equivalent figure for the last year of the single payments scheme.

Expenditure on single payments in 1987–88 was £214 million with an average award of £77. The total social fund allocation to local offices for 1989–90 is £204 million with an average award of £203 for budgeting loans and £260 for community care grants.

Last week, the High Court ruled that the administration of the social fund was illegal. What plans do the Government have to ensure that sufficient social fund money in local social security offices is available to meet the needs of people in every community, and that there will be equity in decision-making throughout the country? Does he agree that the present system of administration of the social fund is blatantly unfair, has resulted in a great deal of misery and represents an enormous cut in social security expenditure? Will he revert to the previous system of statutory single payments so that people in genuine and desperate need can get the help that they require and need not rely on the discretion of a local office which is cash-limited?

I do not recognise the hon. Gentleman's description of the social fund. If he took the trouble to look at the figures that I gave to the House—indeed if he had listened to them—he would see that what he said was manifestly out of order. Nor do I recognise his description of the High Court decision. The court simply said that some guidance had been drawn in too prescriptive a manner. Nothing in the judgment undermined the fundamental principles of the social fund. The judge said that he understood that Parliament expected the social fund to be run under strict monetary limits. I see no need to respond in any positive way to the hon. Gentleman's questions.

Am I correct in thinking that about £3 million of additional resources have been directed to the social security offices under greatest pressure from claims under the social fund? Can my right hon. Friend confirm that, irrespective of where one lives or the period of the fiscal year in which a claim is made, it means that, subject to all the conditions being satisfied, there should be no difficulty meeting the claims?

I warmly welcome my hon. Friend back to the House and confirm that what he says is true. We undertook to monitor the operation of the social fund when it was introduced and found £3 million extra to help 106 local offices that were under particular pressure. I cannot completely agree with the latter part of my hon. Friend's statement. Discretion, flexibility and targeting help on those who need it most may mean that different decisions will be taken in different parts of the country. However, our new procedures and the social fund inspectors seek to combine that discretion and flexibility with fairness.

Having been found guilty by the High Court nearly a fortnight ago of operating the social fund illegally, why has the Secretary of State still not issued any revised guidance to end the illegality? Is he aware that contrary to what the Minister of State just said, Lord Justice Woolf declared that the Secretary of State has imposed budget restraints in mandatory terms that were inconsistent with the intended flexible nature of the scheme? When will the right hon. Gentleman remove those budget restraints on the relief of poverty which should never have been imposed in the first place?

Nothing in the judgment does anything to nullify the fact that social fund officers should have regard to the budget when making their decisions. The judgment stated that the guidance was an overriding priority when making those decisions. We have notified our local offices that for the time being the budget should continue to be taken into account but that it should not have an overriding impact. We are further considering what other action we may need to take in that area.

The Government must take more concrete and positive action as a result of the High Court decision and I hope that the right hon. Gentleman will do that with some urgency. It must be incompatible on the one hand to expect adjudication officers to use their discretion while on the other hand they run up against cash-limited budgets. Does not the right hon. Gentleman understand that it is a double indignity to be given approval for a social fund payment in principle and then to be told that its payment is impossible because the budget has been exhausted? That will simply lead to people being discouraged from making social fund applications in the future.

We wish to ensure that the Government come forward with proposals and we shall want to consider whether they will be purely administrative or will need some legislative underpinning. In essence, I want to combine budgetary limits with flexibility. I do not believe that they are incompatible. They can operate in the interests of the taxpayer and of claimants.

Has my right hon. Friend heard a clear statement from any Opposition party that the implied suggestion that there should be no limit on the social fund is its policy?

The Labour party has suggested that it wants to return to the old system of single payments, under which 80 per cent. of the money went to fewer than 20 per cent. of the claimants, and where we had an open-ended budget that rocketed up. All hon. Members know from constituency experience that the single payment system was open to widespread abuse.

Family Incomes


To ask the Secretary of State for Social Security how many people live in families with incomes which are on, or within 40 per cent. above, the benefit level appropriate to their circumstances.

The Parliamentary Under-Secretary of State for Social Security
(Mrs. Gillian Shephard)

The information requested used to be published in the low-income families tables, but these are no longer published because of technical shortcomings and methodological deficiencies. This was explained in the report of the technical review of low-income statistics. The last figures covering the period up to 1985 were published in May 1988 and are available in the Library.

Is not it true that the Government have ceased to collect statistics because they are so embarrassed about the number of people now in poverty? I understand that such figures have not been produced since 1985. How much has poverty increased under the Government? We understand that it has increased by 100 per cent. since 1979 and we believe that 10 million people now live in poverty. What is the truth? Does the Minister know? Should not the Minister be ashamed that this country's biggest growth industry appears to be the number of people in poverty?

As I have said, the Government ceased to use the low-income family tables because of technical shortcomings and methodological deficiencies. We did so because the same measure was used for defining poverty and for the means of relieving it. The obvious concurrence of that was a cut in benefits, leading to a reduction in the number of those in poverty. That was a ludicrous approach.

In response to the second part of the hon. Gentleman's supplementary question, all groups in the population have experienced an increase in their living standard over the past 10 years. Between 1981 and 1985, couples with children in the bottom decile had an increase of 8 per cent. There was an increase of 6 per cent. for those in the second bottom decile.

Does my hon. Friend agree that the plain truth is that under the Conservative Government those with the lowest incomes have done extraordinarily well and far better than under the Labour Government, when they saw their real incomes hardly move? It has been realised throughout the world that the creation of wealth comes first and that its distribution comes second. Unless we get it in that order, we shall never help the poor.

The increase in the size of the social security budget is the direct result of the Government's successful economic policies. More than £1 billion a week is spent on social security benefits. That amounts to £20 per week for every man, woman and child.

Is it the Government's intention that the 7 million to 8 million adult claimants on income support will have to pay a sizeable chunk of poll tax? Is the Minister aware that the Government's 20 per cent. personal allowance applies only to their laughable guideline poll tax figure of £278, so that those on the poverty line will have to pay poll tax on at least a further £100? The Prime Minister said that the poorest would be protected from the poll tax. Is that yet another promise broken, like the right hon. Lady's promise 10 years ago that prescription charges would not be increased?

Those on income support will be expected to pay 20 per cent. towards the cost of their community charge, for which an allowance is made within income support rates. Any increases during this year will be taken into account during next year's exercise.

Does my hon. Friend agree that an important sector of the benefit population—those living on benefit—is single parents, primarily single mothers, where the father has abdicated any responsibility for the family? Will she ensure that the Government bring forward proposals as soon as possible to make sure that fathers do not get away with it, and that if necessary there will be an attachment of earnings or a deduction from benefit?

My hon. Friend will be aware that there have been increases in premiums in housing benefit and in community charge benefit for lone parents, and that there is to be a much more generous disregard for housing benefit with effect from October. He is right in saying, however, that much closer attention needs to be given to the amount of maintenance that is paid by fathers for the upkeep of their children. That is precisely what the Government's study and review are intended to achieve.



To ask the Secretary of State for Social Security how many people live on incomes below the appropriate benefit level for their circumstances.

Estimates of eligible non-recipients of income-related benefits are contained in the technical notes on take-up, copies of which are available in the Library. These notes contain analyses for 1985, the latest year for which information is available.

Is not the Minister's answer that, in effect, the relevant figures indicative of the Government's attitude to poorer people have been phased out? As the Minister said, the latest figures available are those for 1985. Does she think that by abolishing the figures that reflect poverty, she is abolishing poverty?

No. In reply to earlier questions, I said that the series of income analyses, based on the households with below average income, are designed to provide an appropriate and accurate measure of people's differing living standards. They are the result of a technical review conducted by officials in the Department. They will focus on the incidence of incomes below the average, and we believe that they will give a more realistic picture.

Of those living just above benefit level, many are pensioners, a high proportion of whom are living on fixed incomes. All these people are hit hard by increases in standard charges, whether for heating, electricity or the community charge. Should not we keep material evidence on that group, to assess how those in it are coping? Will my hon. Friend look at that problem again?

I understand my hon. Friend's concern. One of the problems with a social security system is that one has to draw lines somewhere. As I have already said, those lines, and levels, will be reviewed as part of this year's exercise.

Family Incomes


To ask the Secretary of State for Social Security how many children live in families with income on, or within 40 per cent. above, the appropriate benefit level for their circumstances.

I refer the hon. Gentleman to the answer that I gave to question No. 11.

When will the Minister accept that the poorest section of the community suffers worst as a result of the freezing of child benefits, the forcing up of council house rents because of ring-fencing, and mortgage interest increases? Does she intend to increase the number of people at or just above poverty level? Is it not time that the Government gave more help to those most in need?

I remind the hon. Gentleman of the considerable improvements aimed at helping poorer families. Since April 1988, some 1·5 million families with 3 million children have had what I hope the hon. Gentleman will agree are quite substantial increases in their income-related benefits, amounting to £350 million in all. That includes increases in premiums, an extra £1 a week above inflation in the pocket of the mother, lower-paid working families getting family credit and additional help in housing benefit. The Government's social security system targets help.

Is not the European Community definition of poverty, on which the Opposition make so much play, bogus, because it depends on a standard of benefit that is so ridiculous that it would mean that the more that we increased benefit, the more poor people there would be?

I agree with my hon. Friend. We have a network of proper income support, which is not to be found in the countries of our European Community partners.

Does the Minister accept that the problem is not caused by technical deficiencies or deficiencies in methodology? Is she aware that every time she or any of her colleagues are challenged about the refusal of one benefit or another, they say that the appeals system will take care of that? However, the appeals system is clogged up because of the directions that she and other Ministers have given that payments should be reduced.

I accept that the work load of the appeals system fluctuates from time to time. I remind the hon. Gentleman that while some people are worse off than others, one thing is certain—no Government have ever accepted the proposition that one can draw a single poverty line with some on one side and some on the other. I remind him that the social security system, with its total budget of £55 billion a year, gives more extensive and better coverage than any other social security system that we have had.

Staff Relocation


To ask the Secretary of State for Social Security what progress has been made in relocating his Department's staff away from the London area.

I refer my hon. Friend to the reply given on 14 November 1989 to my hon. Friend the Member for Colne Valley (Mr. Riddick), in which my right hon. Friend the Secretary of State announced that a substantial amount of the Department's work in London was to be relocated to Leeds. A site for the new headquarters building in Leeds has been identified, and I expect that the relocation of posts from London will begin from the end of 1991.

I give cautious thanks for that reply, for two reasons. First, is not my hon. Friend concerned that the hon. Gentleman who leads for the Opposition on this topic, the hon. Member for Oldham, West (Mr. Meacher), seems to be in total opposition to the move from London to the midlands and the north, which represents a much-needed improvement of the economy and employment? Secondly, I should have hoped that any reasonable person would consider that the city of Nottingham was a much better place to go than the city of Leeds.

Nottingham was included among the possible locations for the move of the Department of Social Security. Leeds was decided upon after the most careful consideration of its advantages, which are many. Indeed, it was the first choice among the staff who had an interest in relocating.