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Orders Of The Day

Volume 170: debated on Wednesday 28 March 1990

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Social Security Bill

Ist Allotted Day

As amended (in the Standing Committee), considered

New Clause 19

Annual Increase Of Certain Occupational Pensions

'.—(1) The following section shall be inserted alter section 58 of the Pensions Act—

" Annual increase in rate of pension, other than guaranteed minimum pension or money purchase benefit.

58A.—(1) This section applies in relation to any occupational pension scheme—

  • (a) which is neither a public service pension scheme nor a money purchase scheme; and
  • (b) whose rules do not require the annual rate of every pension which commences or has commenced under the scheme to be increased each year by at least an amount equal to the appropriate percentage of that rate.
  • (2) On and after the appointed day, Schedule 3A to this Act shall have effect for the purpose of providing annual increases in the annual rate of pensions under schemes to which this section applies.

    (3) In this section—

    "annual rate", in relation to a pension, means the annual rate of the pension, as previously increased under the rules of the scheme or under Schedule 3A to this Act;
    "the appointed day" means the day on which this section and Schedule 3A to this Act come into force;
    "the appropriate percentage", in relation to an increase in the annual rate of a pension, means the percentage specified in the last revaluation order made before the increase is to take effect as the revaluation percentage for the last revaluation period of twelve months;
    "money purchase scheme" means a pension scheme under which all the benefits that may be provided are money purchase benefits;
    "pension" does not include—
  • (a) a guaranteed minimum pension or any increase in such a pension under section 37A above; or
  • (b) any money purchase benefit;
  • "revaluation order", "revaluation percentage" and "revaluation period" shall be construed in accordance with section 52A above."
    (2) After Schedule 3 to the Pensions Act there shall be inserted the Schedule set out in Schedule [Insertion of Schedule 3A to the Pensions Act] to this Act.'.—[Mr. Newton.]

    Brought up, and read the First time.

    7.10 pm

    I beg to move, That the clause be read a Second time.

    With this, it will be convenient to discuss Government amendments Nos. 22 and 23.

    I hasten to assure the House that I shall not read the contents of the new clause, still less the two amendments linked with it. I shall seek to keep my speech brief, in line with anxieties expressed by the Opposition about whether they will have sufficient time to develop their arguments on these undoubtedly important issues. The House will recall the wide welcome that was given to an important part of our aim in the Bill—to give members of occupational pension schemes greater protection in various ways. Most of the proposals flowed from an important and valuable report by the Occupational Pensions Board and I wish to renew my thanks to the board for that. There were proposals to reduce the scale of self-investment in pension schemes to try to reduce the risk that members of schemes might otherwise face—a double risk to their jobs and to their pensions; and proposals for improved protection when a pension scheme was wound up, particularly to reduce the scope for such schemes being exploited by those who might be described as asset strippers. There was a range of measures designed to improve the advice, information and help available to members of occupational pension schemes with the creation of a pensions ombudsman, the strengthening of some of the aspects of the work of the occupational pensions advisory service and the creation of a tracing service to help people who might have pension rights in a wide variety of schemes to establish precisely where and what they are.

    In general, those aims have been welcomed by hon. Members on both sides of the House, by many people throughout the country and by the industry.

    Some reservations have been expressed about some aspects of our proposals on self-investment and we have modified those to meet what we thought were legitimate criticisms. We shall mount a survey of the scale and extent of self-investment before deciding precisely how to use the regulation-making powers in the Bill. That has also been thought to be sensible.

    The second main area of our proposals about which reservations were expressed, while the general principle was welcomed, was the proposal to require pension increases according to certain formulations when a scheme winds up. Some people—certainly the official Opposition —have said that I should have gone further and placed a similar requirement for pension increases on schemes that continued as well as those that were wound up. Other people have pointed out the possible consequences for some businesses of the original winding-up provisions in the Bill. They said that in certain cases at least the employer would have faced additional contingent liabilities for which they had had no opportunity to plan, and if they had to meet those requirements the viability of their businesses might be put at risk in certain circumstances.

    Having listened carefully to those arguments, having had a number of discussions with representatives of the industry, and having listened carefully to what Opposition Members said in Committee and to suggestions made in those quarters and the industry that there are other ways to achieve the basic objective, we came to the conclusion that we could strike a better balance between the different aims of pension policy.

    7.15 pm

    The principal element of that conclusion is that it is better to make general requirements about the payment of pension increases after members retire if the requirements that we are now proposing apply to schemes that continue as well as to schemes that wind up.

    The new requirements are set out in new clause 19 and the associated amendments. We will avoid forcing employers to put new money into schemes to fund commitments to past service. That was the issue in our original proposals which caused so much unease.

    The new clause makes two requirements. First, schemes will have to pay annual increases to members for pension rights which they build up after an appointed day. For those rights derived from future service, members should be guaranteed increases in line with the retail prices index up to a maximum of 5 per cent. a year. There is nothing in that proposal to prevent schemes from continuing to pay more than that or starting to if they wish to do so, and if they feel able to.

    That new provision for improving rights for future service is an important step forward which will give members of private sector schemes, in particular, increasing security in the future. It has been widely welcomed in the industry, by the press and in other quarters as a sensible step forward. However, on its own it does not go far enough, because it does nothing for existing pensioners who have rights derived from past service.

    The latest statistics from the Government Actuary suggest that about 80 per cent.—four fifths—of members of schemes are getting annual increases, mostly in the 3 to 5 per cent. range. That is obviously welcome, but it follows that some 20 per cent. —one fifth—are getting no increase. Frankly, that is not good enough, especially when the strong investment performance of pension funds in recent years has continued to yield large surpluses which could be used by many schemes to provide some measure of indexation.

    Therefore, we are proposing a second requirement in the new clause and associated amendments so that from an appointed day schemes will have to use surpluses to pay increases to members for pension rights which they have already built up. That should include pensions that are now in payment. The guaranteed rate of increase that each scheme will have to pay will depend on the surplus in the pension fund, but the target rate of increase for schemes will be the rise in RPI up to 5 per cent. a year, with the rate to be guaranteed by each scheme, depending on the amount of its surplus. In other words, schemes that have surpluses will have to use them to guarantee increases at target level before taking a contribution holiday or a refund. Schemes will be able to continue or to start to do more than the basic requirement if they wish.

    I expect that the appointed days in both cases—both in the first requirement and the latter requirement—for the use of surpluses will be no later than the end of December 1991, although the date that could turn out to be convenient and sensible is 1 January 1992.

    I have asked my officials to begin discussions with the actuarial profession to determine the appropriate methods and assumptions for calculating the size of scheme surpluses and the guaranteed increases that would flow from them.

    The proposal offers a sensible balanced and affordable measure of security to existing pensioners. For many in the private sector it will turn existing discretionary increases into rights. That can only be an advance in making such schemes even more attractive to their members.

    The new requirement will cover benefits paid to widows, widowers and dependants. It will apply to all retirement benefits paid by occupatonal pension schemes with two exceptions. The first is guaranteed minimum pensions and any increase in these pensions under section 37A of the Pensions Act. Those benefits are already protected through the contracting-out arrangements of the state earnings-related pension scheme.

    The second exception is money-purchased benefits, including personal pensions schemes to which I believe rather different considerations apply. Their members aready have an opportunity to use the proceeds of their investments to choose a pension that increases after retirement—or not, as the case may be. No doubt one could argue about whether that choice ought to be restricted, but, in my view, this is not the time to attempt to make any decision on that. The question of pension increases in those schemes would be best resolved as part of the review of the terms for contracting out of SERPS that is due to start next year.

    Under the new proposals, the position when a scheme winds up will match the general requirements for pension increases. In the event of a scheme winding up it will be a liability on the employer to provide increases at the prices up to 5 per cent. rate in respect of pensions accruing after the appointed day. For pension rights based on service before then, increases will depend on the extent of increases already guaranteed as a result of the new requirements and any additional surplus emerging when the scheme winds up.

    The new provisions will give members of occupational pension schemes growing certainty about the rate of pension increases that they will receive after retirement. Increases will be guaranteed for future service in line with prices up to 5 per cent. a year. For benefits already accrued—including pensions in payment—guaranteed increases will become the first call on scheme surpluses.

    It is well understood that the Government have placed considerable weight on people's own occupational and personal pension provision—building over and above the basic state retirement pension—as a central element in placing retirement provision on a secure foundation for the future. The gathering success of that policy is clear. As the House knows, by 1987, the average value of occupational pensions received by people over pension age had increased by 77 per cent. in real terms since 1979 when we took office. That means that for many pensioners their occupational pension is now their most important source of income. For pensioners receiving an occupational pension the average amount received in 1987 was £44·80, and that was nearly three years ago.

    The increasing importance of occupational pensions underlines the need to ensure that we have the right framework for the schemes. We have introduced a long series of measures to achieve just that. In 1985, we introduced the protection for early leavers so that pensions could no longer be frozen. We introduced the right to a transfer value when leaving the scheme and we passed legislation to enable scheme members to be provided with information about their scheme as of right. In 1986, we brought to an end compulsory membership of occupational schemes and extended the choice available to individuals planning for their retirement to include personal pensions, which have been an outstanding success.

    The Bill provides increased protection for scheme members. In future, early leavers will have all their preserved benefits revalued by prices up to 5 per cent. a year—and not just those rights built up since 1985. For members needing help and advice we are ensuring that the occupational pensions advisory service is put on a firm financial basis. We shall also put in place the pension ombudsman to give members a quicker, more effective means of seeking redress of grievances and we shall expand the range of tracing services that we already provide to cover occupational pension schemes. We are limiting the scope for self-investment. The requirement in the new clause for schemes to provide pension increases is a further major step forward and may prove in time to be among the most important that we have taken.

    I commend the new clause to the House.

    I welcome the fact that the Government have accepted our argument that a pensions scheme that does not guarantee reasonable increases in pensions is a bad scheme. But it is quite clear that the proposal to limit increases to only 5 per cent. a year still gives inadequate protection against inflation.

    I cannot understand how the hon. Gentleman can shake his head, given that inflation is now rising towards 9 per cent., but I do not wish to provoke him.

    We believe that it is both practical and desirable to give a higher level of protection—a point which I emphasised strongly on Second Reading. Frankly, the 5 per cent. limit is not high enough. The average employee can now expect to live 20 or more years into retirement and we need a measure that provides adequate protection over that sort of lifespan. It is a relevant consideration for the House that if someone who retired 20 years ago had had only increases on the basis that the Government now propose, his benefit would be worth only about 40 per cent. of its initial value. With inflation rapidly rising towards double figures, a measure that purports to protect the real value of members' benefits but allows them to fall to less than half their initial value is—not to put too fine a point on it—a fraud.

    If anything, pensioners' needs increase as they get older and the Government's proposal is a recipe for continued poverty for the very old. We are therefore opposed to the 5 per cent. limit. We consider that schemes should he required to increase pensions fully in line with the retail prices index.

    The argument that has always been advanced against such a measure is that it is too costly. It has been suggested that it would be too expensive to legislate for larger increases and that to do so would frighten employers away from providing pension schemes. We reject that argument, and I want to say why. Employers provide pension schemes because it is in their interests to do so. They need to attract and retain staff. They also need their staff to retire as they get older. It is therefore in their interests to provide attractive schemes with a competitive level of benefit.

    The big increases in the current cost of providing a pension scheme arise when a scheme that makes no provision—the Secretary of State said that about one fifth of schemes made no provision—

    I would not want to mislead the hon. Gentleman. My statistics related to the members of the scheme. Rather more than one fifth of schemes would be involved, I think, because, on the whole, the large schemes have been making the increases.

    The right hon. Gentleman simply strengthens my point. The big increases in the current costs of providing a pension scheme arise when a scheme that makes no provision for increases is improved to provide RPI increases limited to 5 per cent. It has been estimated that that could increase the cost of a scheme by up to one half. But most schemes do not start from that position; we all agree about that. Most employees belong to schemes that already guarantee or make provision for increases at or near the Government's proposals—3 to 5 per cent. is probably the norm. The relevant point is that the move from limited increases to full RPI increases without a limit is much less significant than the move from no increases at all. That is because in most cases the assumptions made by the actuaries that determine the contributions to be paid are in practice similar whether or not there is a limit. The key factor is the difference between the assumptions made about future investment returns and assumptions about future pension increases.

    I am the first to recognise that these are complex matters, but I am told that, although there are probably as many different sets of assumptions as there are actuaries, broadly speaking, the difference will be similar for schemes that guarantee increases, whether or not there is a 5 per cent. limit. Opposition Members therefore consider it reasonable to require schemes to provide full inflation-proofing for future benefits, for the reasons that I have given. In practice, many schemes, particularly the larger schemes, are already providing increases in line with what we propose. We are the first to recognise that. The current cost for those schemes will be even smaller; they may even be nil.

    As to past service benefits accrued before the appointed day, they should also be increased in line with the RPI, as far as surpluses permit. For as long as a scheme has a surplus, there is no reason why it should provide for employer refunds or contribution holidays before it is used to protect the real value of members' benefits. The money was paid into the scheme to provide pensions as part of the employee's contract of employment, so why should any of that money benefit the employer before being used to increase pensions in line with the RPI? I hope that that argument will commend itself for general support.

    7.30 pm

    The cost of our proposals should not prove to be a deterrent against good pension provision. Over the past five years, the pension schemes to which most people belong already adopt the practice that we propose. Watson's index of pension increases—Watson is a firm of actuarial consultants which I gather is quite famous—shows that, allowing for a lag in implementation, average pension increases have more or less kept in line with the RPI. Clearly there is no practical objection to making that practice a legal requirement of all schemes.

    The only opposition is likely to come from a minority of employers who want to take money away from their pensioners and use it for their own purposes. We reject entirely the suggestion that surpluses are in any sense the employer's money. Each year, the employer paid in an amount that was considered to be right at the time, and therefore it is a perversion of the language to refer to any surplus as overpaid employer contributions.

    This matter is not of a highly party political nature, so it should not be considered in a partisan way. I hope that the Government will see the sense in our argument. I agree entirely with the Secretary of State's concluding comment concerning the importance of these matters. They are far more significant than many of the issues that cause so much commotion in the House.

    If a surplus is not an employer's overpaid contribution, what is a deficit? Who would the hon. Gentleman expect to make up any deficit?

    Deficits do not exist except in a minority of cases. I cannot off the top of my head say what proportion of all schemes are in deficit. At present, total surpluses are estimated as being in excess of £50 billion, so it is difficult to believe that any schemes are in deficit. If there are, they must have evaded the requirement that pensions legislation of successive Governments placed on schemes to ensure an adequacy of contributions to meet the retirement pensions that they must honour.

    Deficits are not the real problem. The important questions are who owns the surplus, how should it be used, and who has first rights to it. Our view is that unquestionably the first rights to any surplus are with employees now in retirement. I repeat that as long as a surplus exists, we do not believe it right that there should be employer refunds or contribution holidays.

    The basis of the Bill is that members are entitled to adequate protection against inflation, and that that priority should have first call on any surplus. There is no dispute between us on that, so I hope that I carry Conservative Members with me in arguing that it makes no sense to impose a 5 per cent. limit while allowing employers to benefit from any surplus.

    The Secretary of State's announcement is something of an about-face, but I do not want to embarrass him—and I am glad to see him turning in our direction. Nevertheless, a large number of practical points remain to be clarified before a final judgment can be made. We are keen that new schemes should be obliged to pay increases along with the existing obligation to revalue deferred benefits, and there is a responsibility on the Government to ensure that schemes are adequately funded for that purpose. If employers are to commit themselves to paying benefits that meet legislative standards, members are entitled to more reassurance that adequate financial provision is being made.

    At present, pension scheme members can look only to the disclosure requirements, which entitle them to some important but essentially limited information about benefit provisions. That approach does not provide scheme members with the kind of yardstick by which they can readily judge whether a scheme has enough money to meet its liabilities and whether contributions are sufficiently high.

    The Secretary of State should take power to lay down standards on funding rates that schemes must meet. That has not been done up to now. Such a provision takes on particular significance as this country enters a recession and the risk of deficits mentioned by the hon. Member for Beaconsfield (Mr. Smith) arises.

    The Secretary of State will have powers to lay down the basis on which any surplus is calculated. That raises two questions. The first is whether there will be a surplus, and hence whether increases must be paid on past benefits. The second is whether there is sufficient surplus to entitle the employer to take a contribution holiday. In either case, it would be wrong if employers were able to manipulate the requirements of the legislation simply by making a choice between extreme financial assumptions or unreasonable valuation methods. We do not believe that it would be reasonable to leave that decision simply to actuarial judgment—just as actuaries are not left to their own devices in undertaking statutory valuations in life assurance companies. We envisage a period of consultation on the rules to be laid down. Ultimately, the Government will have a duty to ensure that the system that they propose cannot be used against the interests of scheme members.

    We welcome what we view as a Government U-turn as a consequence of the pressure that we put on them on Second Reading and in Committee. However, we remain critical of the Government's half-measures, which still fall far short of what is properly required. We shall continue to press our case until our proposals are fully implemented.

    I welcome the new clause and the amendments. Before going further, I must declare that I am a parliamentary adviser to BZW Investment Management, though it has not pursued the Bill with me. However, there are within my constituency a number of firms engaged in the provision of pension funds, some of which have contacted me about the Bill.

    It is important that a fair balance is struck between the possible liabilities placed on the employer and the benefits to be enjoyed by the employee or retired employee. The new clauses and amendments are an important step in the right direction. I agree with both my right hon. Friend the Secretary of State and the hon. Member for Oldham, West (Mr. Meacher) that, when there is a significant increase in inflation, the first call on any pension fund surplus should be to the benefit of employees or retired former employees.

    However, one must also be wary of discouraging employers from providing pension funds by presenting a vision of future liabilities. It is all very well for the hon. Member for Oldham, West to say that pension funds are currently in surplus, but I recall a period eight or 10 years ago when that was far from true. At that time, unfortunately, companies were not making satisfactory profits and producing for the pension funds that had invested in them sufficient income to provide adequate pensions, which caused serious problems to develop.

    One cannot assume that the current success in terms of profitable companies generating the necessary funds for pensions will continue, especially if there is a change of Government. That is one of the difficulties that actuaries face—they cannot predict with absolute accuracy who will be in power in the next 20, 30 or 40 years. We should like it to be the present Government, which would give actuaries more confidence in the future.

    I welcome the new clause and the protection that has been provided to ensure that surpluses are used to benefit the pensioner who has first call on the pension fund. It also recognises that placing excessive contingent liabilities on employers could cause some employers to decide not to provide pension funds on behalf of their employees. That would be totally unfortunate, so I welcome the steps that have been taken today.

    New clause 19 constitutes a major step forward for millions of occupational pensioners in the United Kingdom and I congratulate my right hon. Friend the Secretary of State on introducing it. It represents a sensible balance between the interests of the employers and of employees. What my right hon. Friend has done is the right way to proceed in legislation affecting occupational pension schemes. He gave us some figures on the present position.

    Of course, occupational pension schemes are voluntary arrangements. The hon. Member for Oldham, West (Mr. Meacher) said that employers provide occupational pensions for their own benefit because they want to attract or retain staff. I recognise that, but such schemes are voluntary arrangements, so it is sensible for legislation to reflect what is already best practice. Practice has improved over the years and the occupational pension schemes have changed out of all recognition in the past 20 years. By the new provisions, my right hon. Friend is reflecting what is already best practice and telling occupational pension schemes to bring themselves up to best practice.

    If we were to go as far as the hon. Member for Oldham, West wants, we would be in a different position, because we have to consider the trade-off between improving existing schemes, as the new clause will do, and extending the coverage of occupational pension schemes. Although millions of employees are members of occupational pension schemes, many employees are not. In an ideal world, everyone who had a job would belong to an occupational pension scheme, but if we were to impose upon occupational pension schemes the open-ended commitment that the hon. Gentleman has in mind it would be very difficult because we do not know what future rates of inflation are likely to be.

    It would be difficult to fund the schemes and would act as a major deterrent to any employers considering starting up an occupational pension scheme for the first time. Those employers are usually small employers, because most large employers already have such schemes. We are talking about what is a sensible burden to place on small businesses. I do not believe that what the hon. Gentleman has in mind would be sensible. It would be seen as a great burden by small businesses, so they would simply decline to introduce occupational pension arrangements for their employees, and very little would be achieved in the process.

    I hope that the hon. Gentleman has taken on board the essential point that I was making. Whether inflation is high or low, there tends to be the same ratio between investment yields and the retail prices index, which is the basis of pension increases. Even if the RPI rises, in the middle or longer term investment yields tend to rise roughly in the same proportion.

    The hon. Gentleman forgets what happened in the late 1970s when, it is no coincidence to report, we had the misfortune to have a Labour Government. On Second Reading, I referred to two interesting tables which appeared in the report of the Occupational Pensions Board which show the way in which the investment yield on occupational pension schemes has improved over the past 10 years, as a result of which we now have large surpluses. We are not entitled to assume that we will always have large surpluses on pension schemes.

    7.45 pm

    When we had the misfortune to have a Labour Government, pension schemes were regularly in deficit. Of course, the employees expected the employers to make up the deficits and that is exactly what they did. They sometimes had to transfer considerable additional sums to the pension schemes to ensure that they could meet the liability.

    We are now considering a further extension of those liabilities, and I accept that it is the right time to make that extension. However, if we were to go further and make the change that the hon. Gentleman has in mind, and if we were to return to those dark days of poor economic and investment performance, it would be extremely difficult for employers to meet the commitment that the hon. Gentleman has in mind. The past five years have been very different from the six years of Labour Government. There has been a great transformation and no comparison can be made. However, we are not entitled to assume that that will continue for ever.

    By definition, occupational pension schemes are instituted for the long term. We are talking about long-term commitments, long-term investments and long-term liabilities. That is why it is sensible to proceed cautiously. My right hon. Friend the Secretary of State, who has great expertise in these matters, has always taken a cautious approach.

    The new clause constitutes a sensible balance. I accept what the hon. Member for Oldham, West said about actuaries and how they always produce different figures and assumptions, but actuaries may say that, as a result of the new clause, which will involve an extra commitment for many schemes, it will be necessary to increase the funding of those schemes by increasing the employers' or the employees' contributions.

    I am sure that the hon. Member for Oldham, West realises that Members of Parliament have to pay such a large contribution to their pension scheme because we already have indexation. Our contribution is 9 per cent., which is very high.

    That is because we have so many early leavers.

    Early leavers are an occupational hazard here. I was an early leaver once and I do not wish to repeat the experience, and I am not expecting to do so. That may be a particular difficulty, but we pay 9 per cent. because of the generous indexation provision in the House of Commons pension scheme. It is the open-ended arrangement that the hon. Gentleman wants. A contribution of 9 per cent. is nearly double what most employees pay as members of occupational pension schemes, and during the recent debate on the matter there were complaints about the contribution which hon. Members make.

    I am not sure that such a high level of contribution would be welcomed by people in industry generally. We should understand that, if we were to introduce the change that the hon. Gentleman has in mind, employees or employers would have to pay such a rate. There would be a substantial increase in contributions and that would be a considerable additional burden on business, would make it particularly difficult for small businesses and would lead to a reduction in the number of members of occupational pension schemes. Presumably that is exactly the opposite of what the hon. Gentleman hopes to achieve.

    My right hon. Friend has found a sensible balance in the new clause. It will involve a major improvement for millions of members of occupational pension schemes, and the House should welcome it.

    I intervene briefly to ask only a couple of questions, because I am more interested in progressing to the later stages of the Bill.

    I welcome new clause 19, which is complicated. It enshrines a schedule and brings the benefits that have already been mentioned. Why did not the Government take the power to vary the 5 per cent. limit? The hon. Member for Oldham, West (Mr. Meacher) made a valid criticism of the new clause, because there may be circumstances in which the 5 per cent. ceiling is considered onerous and unfair. In the past, Social Security Ministers, in a variety of guises and on a variety of benefits, have resorted to the power of regulation to amend such things as child benefit, which the Government have the power to increase annually but have not exercised. The Secretary of State could use such devices to ensure that yearly returns on schemes are fair and in line with the retail prices index. No doubt there is a technical reason why that is not possible, but it is worth pursuing.

    The welcome changes made by new clause 19 may not take effect until 1 January 1992. The Government have had the report of the Occupational Pensions Board for several months, and Ministers have been considering the new clause for many months. Why might it be January 1992 before the benefits take effect? If it will take the Government that long to finish their homework, why did they not move the new clause during next year's Social Security Bill?

    I am sure that the Minister will deal with that, but subject to those qualifications I give the new provisions a warm and enthusiastic welcome.

    I welcome new clause 19. The improvements in private sector pension schemes under this Government are to be welcomed. The proposal for guaranteed minimum increases is extremely good.

    As an accountant, during the period of office of the previous Labour Government in the late 1970s, I had some experience of company audits. One of the major accounting tasks for the year was to examine a company's pension fund to ascertain the deficit and whether the company was capable of making available the financial resources to meet it. During the period of price and dividend restraint, deficits increased enormously as profits were curtailed. Deficits in pension funds often were not capable of being met within a year or two, and as auditors we had to take a strong view of whether a company could survive. Many companies did not and their auditors had to say that the directors were unable to continue in business. While the Labour Government were in office between 1974 and 1979, companies closed because of deficits on their pension funds. Dividend restraint had a severe effect, because 40 per cent. of all dividends are paid into pension funds and life insurance schemes. The significant amounts that are paid can contribute to whether a pension fund is in deficit or surplus.

    I further welcome new clause 19 because it will benefit about 10 million people. I am sorry that my right hon. Friend the Secretary of State did not say that it will benefit many women who have jobs for the first time as a result of the growth in employment under the Government. It will be good for women generally, who have taken the opportunities for equality provided by the Government, and as a result the pensions and economy will be fairer and more balanced. It is churlish for Labour Members to criticise the limiting of the increase to 5 per cent. During the late 1970s, they were unable to provide significant investment returns and much of British industry showed minus investment returns. They should not complain that the Government are trying to ensure increases in private pension plans. I do not know why they want to hark back to the late 1970s, when British industry showed negative returns and growing deficits in pension funds.

    There is a danger of getting trapped in the wording of the legislation. One moves into theoretical areas, whereby if the legislation says that there will be a 5 per cent. increase, one assumes that such an increase is possible. Legislation is not responsible for growth in the economy. Growth in the economy provides increases in pensions. Legislation provides only a best intention and a practice that might he followed. Without growth in the economy, which we have had under the Government, there will be no growth in pensions. Unless the economy continues to expand as it has under the Government, and unless we have another decade of Thatcherism—

    Unless we have another decade of Thatcherism, there will not be the increases in pensions that the hon. Member for Birmingham, Ladywood (Ms. Short) would like. I know that the hon. Lady sincerely wants increases in pensions, but she must accept that that will not happen under a Labour Government. She must accept that the pension increases under this legislation would not be possible under a Labour Government.

    The thought of another decade of Thatcherism is unbearable to me, to the rest of the nation and, if they are honest, to many Conservatives Members. We had economic growth before we had the present Prime Minister. I do not know whether the hon. Gentleman is aware of it, but he will find that since the second world war, and under different Governments, growth has increased by about 2·5 per cent. Pensions have been uprated and standards of living have increased. I am afraid that that was not invented by the present Prime Minister.

    I must disagree with the hon. Lady. The hon. Member for Oldham, West (Mr. Meacher) said that investment returns are the key. We have had economic growth since the second world war. The Conservative Government between 1951 and 1964 achieved phenomenal economic growth, which worked its way into investment returns. Under the Labour Governments of 1964–70 and 1974–79, not only was there a lower rate of economic growth than under Conservative Governments, but far more important was the effect of that on investment returns and on dividends paid into pension funds. I hope that the hon. Lady will accept that my accounting experience was that we had considerable deficits in pension funds between 1974 and 1979 and that much of British industry was technically insolvent because it could not meet its obligations to the pension funds that it had contracted to meet.

    Does my hon. Friend agree that one of the features of the period between 1974 and 1979 was that borrowers gained while those who relied on pension funds suffered because investments were losing out? Any growth that there might have been in the economy did not benefit pension funds.

    My hon. Friend makes a strong point. Any growth during the period of the previous Labour Government—few people have been able to measure growth under the Government—often benefited borrowers rather than savers. Because of the reduction in inflation and the increase in growth in the economy, which has started to filter through to savers, 16·5 million people are confident enough that savers will be rewarded that they are party to either private pension plans or life insurance savings schemes. We have increased people's confidence in saving. By encouraging people to save, we shall have a more responsible country. That is what the new clause is all about. Like the Budget, it provides great incentives for saving. People will not only save in their employers' pension plans but will feel more confident about saving generally in pension plans and about the rewards of saving.

    The new clause is dependent upon the growth in the economy, on employers succeeding and having good rates of return and on those good rates of return working through into dividends and pension schemes that can afford to pay the pension increases intended by the Government. It is for those reasons that I welcome the new clause.

    8 pm

    I, too, welcome the new clause, which requires the payment of annual increases to members guaranteed up to the retail prices index or 5 per cent. It will give greater security to members of private schemes. I listened with interest to what my right hon. Friend the Secretary of State said about four-fifths of scheme members already obtaining increases.

    The new clause is especially welcome because it runs alongside the many other welcome provisions in the Bill that we discussed at great length in Committee. There is encouragement and security for private pension schemes across the board. The Bill already provides for the establishment of an ombudsman to investigate disputes, the establishment of a tracing service to help track down pensions held with previous employers, further protection for members of schemes that are wound up, further protection for members of schemes when they leave early, and a provision to enable the Secretary of State to introduce a new ceiling on self-investment for pension schemes. The Bill does a great deal to look after those who, together with their employers, have invested in private pension schemes.

    In Committee I made much of the ITM/Head Wrightson Teesdale scheme, which illustrated the need for greater security for small investors in private pension schemes. I made one or two remarks which, having appeared in the record, might give a slightly incorrect impression. I wish to take a minute or two to place an accurate account on the record. I do not wish anyone to be misled by what I said in Committee.

    The Davy Corporation sold the business of Head Wrightson Teesdale to ITM, a company operating in my constituency. Part of the sale agreement was that pension benefits no worse than those enjoyed by employees under the Davy Corporation scheme would be provided by ITM. That obligation was accepted by ITM. The Davy Corporation transferred from its existing pension scheme a sum of money that had been re-negotiated between the actuaries of the two companies to meet the accrued benefits of those employees transferring to ITM. When ITM went into receivership, its employees found that the benefits under their pension scheme did not match the benefits that they had been promised.

    The problem was brought to the attention of the Davy Corporation, which contends that it fulfilled all its obligations to its previous employees—first, by ensuring that the new employer committed itself to maintain the benefits of the pension scheme for its new employees, and, secondly, by transferring the correct sum of money to the new scheme. That matter is still under debate.

    Since then, partly because I raised the matter in Committee and elsewhere, the Davy Corporation is voluntarily helping the investigation into why the benefits were short, because it recognises that the employees have no means of carrying out that investigation for themselves and because the trustees of the scheme—three individuals—do not have the financial resources necessary to investigate the position properly.

    In Committee, we discussed the security for employees in schemes that might collapse, and what could be done to remedy the position. In particular, arguments were advanced about the establishment of a pensions omudsman. I still contend that it is interesting that two individuals who were trustees of the ITM pension scheme were later taken into employment as directors by a subsidiary of the Davy Corporation, subsequent to the ITM receivership. They were employed by ITM at the time of the sale of Head Wrightson Teesdale and became employees of the Davy Corporation subsidiary only after the receivership years later.

    There is a major question about whether a psroper value for the pension scheme was transferred between the companies. Of course, the Davy Corperation has no legal or contractual obligation towards the pensioners of that pension scheme. It is a difficult and highly complicated case and a good illustration of the reason why the new measures in this Bill are needed to protect the rights of employees. I hope to raise this case again, as it illustrates what can go wrong in the pensions world.

    The new clause is a proper compromise between the interests of the employer and those of the employee. It is part of the Bill's much wider approach towards the whole question of private pension schemes. We need to encourage such schemes, but it is not the case that all schemes will always be in surplus. The scheme to which I have just referred and which I raised in Committee was significantly in deficit. I look forward to a report, at an early date, by the Davy Corporation actuaries detailing proposals to help those employees who lost when the company went into liquidation.

    In my fairly extensive experience as a Social Security Minister at every level it has been rare that such a universally warm welcome should be given to my proposals. I shall bask in that for a moment, in the sure expectation that that mood is unlikely to continue throughout the night. I am grateful for the support that has come from all quarters. I am deeply admiring, even more so than previously, of the assiduous way in which my hon. Friend the Member for Stockton, South (Mr. Devlin) has pursued the interests of a significant number of his constituents—

    I do not know to whom the hon. Gentleman is referring, but as it sounded offensive I shall not pursue his remark.

    I say gently to the hon. Member for Oldham, West (Mr. Meacher) that it is wrong to talk of a Government U-turn in what I have said and done to change the balance of what was already a very significant proposal for schemes that are wound up. I understood him to be claiming credit for the Opposition, but I must disappoint him: what I have proposed is a very long way away from what I can only describe as the half-baked and irresponsible proposal that he made on Second Reading.

    According to the hon. Gentleman's proposal, we should make schemes give away every scrap of their surpluses straight away, and if they could not then continue to pay the benefits to which that gave rise, they should be allowed to cut them again. That was his proposal.

    The Secretary of State's last comments were not worthy of him. He made a very silly knockabout comment which did not even begin to reflect what I said. However, instead of taking up time with another debate on what I said on Second Reading, I hope that the Secretary of State will read my Second Reading speech closely. If he then wants to talk about it, he will at least reflect accurately what I said.

    I will not go any further down what is obviously a sensitive path. However, taking the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) as an independent arbiter, as he was nodding, he is obviously on my side in this argument.

    It was suggested that we should have gone beyond the 5 per cent. ceiling of the legal requirement, as distinct from what we might like to see schemes do in certain circumstances. In the course of making points about that and asking whether the figure should be higher, the hon. Member for Oldham, West referred to inflation over the past 20 years and to the scale of investment surpluses that we have all seen in schemes over the past few years. The only comments that need to be made about that were eloquently made by my hon. Friend the Member for Dover (Mr. Shaw) in his excellent speech and by my hon. Friends the Members for Stevenage (Mr. Wood) and for Beaconsfield (Mr. Smith) in their equally eloquent speeches.

    By taking the last 20 years, the hon. Member for Oldham, West includes a period in which inflation rose to disastrous levels under the previous Labour Government. Partly as a consequence of that inflation, more and more schemes found themselves in great difficulty because the investment surpluses on which the hon. Member for Oldham, West would rely did not exist. If we were to go beyond the requirements that I am proposing, even if there was the remotest possibility of the hon. Member for Oldham, West being the Secretary of State for Social Security imposing these requirements, employers are afraid that they would go bankrupt and that they would not be able to pay pensions.

    I do not want to prolong the debate. However, we must be absolutely clear that the very high level of inflation in the mid-1970s occurred for two central reasons. The first was the quadrupling of the price of oil that fed through all western economies after 1972–73. The second cause was the enormous and irresponsible credit explosion which Lord Barber, the then Chancellor of the Exchequer, unleashed on the economy, the effects of which lasted for the next four years. That is exactly what the former Chancellor, the right hon. Member for Blaby (Mr. Lawson), did between 1985 and 1987. Those were the causes of the inflation. Perhaps the Secretary of State should recall that in 1981, when this Government had been in power for two years, inflation reached 22 per cent.

    That most certainly reflected the legacy of the Labour Government who had presided over the latter part of the 1970s.

    The serious point in the debate is that, in this area above all, it is necessary to strike a balance in the requirement that one imposes on schemes. If we overdo it and impose requirements that frighten off employers or which they believe in certain circumstances—some of which I speculated about already-would become unsustainable, some employers who are already running schemes would consider whether they should continue to do that, and others which might be considering setting up schemes might decide that the risk of doing that was too great.

    Of course the balance of considerations can be seen as changing from time to time. It is implicit in my proposals that we believe that, in present circumstances, the balance has moved decisively in favour of the additional requirements that I am now imposing. I also believe that, if we were to go much further—one or two in the industry have expressed doubts whether we may not have gone a fraction too far in our proposals—some people would be frightened off from having schemes or continuing the schemes that they have at present. We must strike a balance and I am sure that my hon. Friends believe that we have got it about right.

    As my hon. Friend the Member for Beaconsfield stated, a balance must be struck with surpluses. He put his point very well. As happened in the late 1970s, if a deficit emerges, the employer is expected to make it up. I do not believe that it would be reasonable to create a double bind for employers. If they get it wrong one way and their actuaries under-forecast the amount of contribution that is required, the employer is expected to make it up without limit. If the employer and the actuary get it wrong the other way and they over-contribute, there is no way in which they can get any of that back. I believe that we have the balance about right.

    8.15 pm

    The hon. Member for Roxburgh and Berwickshire queried whether we should vary the 5 per cent. limit from year to year. Inescapably, employers and those who advise them must be able to look ahead at their commitments and plan for the contributions or investment provisions required to meet them. It is not possible suddenly to impose from year to year, according to the rate of inflation in any particular year, a sudden increase in commitment because by definition the employers would not have been able to account for that.

    The hon. Member for Roxburgh and Berwickshire also referred to 1 January 1992. That is the likely date, although it is not certain. If I can bring it forward, I will. The reason for that date relates back to points made by the hon. Member for Oldham, West. In some cases, because of the new requirements that we are imposing, employers will have to look at the rate of contribution required in the scheme to ensure that they can meet those requirements. It is obviously right to give them some time to consider the scheme before imposing requirements on them. 1 t would be wrong to say that, as from tomorrow, a requirement which employers had heard about only a few weeks ago and for which they had not funded should suddenly have to be met. We must give schemes some time to adjust.

    I hope that I have covered most of the points raised in the debate. I am sorry if I inflamed the hon. Member for Oldham, West beyond what I had intended in what has in general been a very good-natured debate. I am very grateful to the hon. Member for Oldham, West for the supportive attitude that he has adopted, which I am sure will be continued throughout our debates this evening.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 21

    Liability To Maintain Dependants

    `(1) After section 24 of the 1986 Act (recovery of expenditure on benefit from person liable for maintenance) there shall be inserted—

    " Recovery of expenditure on income support: additional amounts and transfer of orders.

    24A.—(1) In any case where—

    (a) the claim for income support referred to in subsection (1) of section 24 above is made by the parent of one or more children in respect of both himself and those children, and
    (b) the other parent is liable to maintain those children but, by virtue of not being the claimant's husband or wife, is not liable to maintain the claimant,

    the sum which the court may order that other parent to pay under subsection (4) of that section may include an amount. determined in accordance with regulations, in respect of any income support paid to or for the claimant by virtue of such provisions as may be prescribed.

    (2) Where the sum which a court orders a person to pay under section 24(4) above includes by virtue of subsection (1) above an amount (in this section referred to as a "personal allowance element") in respect of income support by virtue of paragraph 1(2) of Schedule 2 to the Income Support (General) Regulations 1987 (personal allowance for lone parent) the order shall separately identify the amount of the personal allowance element.

    (3) In any case where—

    (a) an order under subsection (4) of section 24 above is made against a person ("the liable parent") who is the parent of one or more children, in respect of the other parent or the children, and
    (b) payments under the order fall to be made to the Secretary of State by virtue of subsection (6)(a) of that section, and
    (c) that other parent ("the dependent parent") ceases to claim income support,

    the Secretary of State may, by giving notice in writing to the court which made the order and to the liable parent and the dependent parent, transfer to the dependent parent the right to receive the payments under the order, exclusive of any

    personal allowance element, and to exercise the relevant rights in relation to the order, except so far as relating to that element.

    (4) Notice under subsection (3) above shall not be given (and if purportedly given, shall be of no effect) at a time when there is in force a maintenance order made against the liable parent—

    (a) in favour of the dependent parent or one or more of the children; or
    (b) in favour of some other person for the benefit of the dependent parent or one or more of the children;

    and if such a maintenance order is made at any time after notice under that subsection has been given, the order under section 24(4) above shall cease to have effect.

    (5) Except as provided by subsection (6) below, where the Secretary of State gives notice under subsection (3) above, he shall cease to be entitled—

    (a) to receive any payment under the order in respect of any personal allowance element, or
    (b) to exercise the relevant rights, so far as relating to any such element,

    notwithstanding that the dependent parent does not become entitled to receive any payment in respect of that element or to exercise the relevant rights so far as so relating.

    (6) If, in a case where the Secretary of State has given notice under subsection (3) above, the dependent parent makes a further claim for income support, then—

    (a) the Secretary of State may, by giving a further notice in writing to the court which made the order and to the liable parent and the dependent parent, transfer back from the dependent parent to himself the right to receive the payments and to exercise the relevant rights; and
    (b) that transfer shall revive the Secretary of State's right to receive payment under the order in respect of any personal allowance element and to exercise the relevant rights so far as relating to any such element.

    (7) Any notice required to be given to the liable parent under subsection (3) or (6) above shall be taken to have been given if it has been sent to his last known address.

    (8) In this section—

    "child" means a person under the age of 16, notwithstanding section 26(3)(d) below;
    "court" shall be construed in accordance with section 24 above;
    "maintenance order"—
    (a) in England and Wales, means—
  • (i) any order for the making of periodical payments or for the payment of a lump sum which is, or has at any time been, a maintenance order within the meaning of the Attachment of Earnings Act 1971;
  • (ii) any order under Part III of the Matrimonial and Family Proceedings Act 1984 (overseas divorce) for the making of periodical payments or for the payment of a lump sum;
  • (b) in Scotland, has the meaning given by section 106 of the Debtors (Scotland) Act 1987, but disregarding paragraph (h) (alimentary bond or agreement).
    "the relevant rights", in relation to an order under section 24(4) above, means the right to bring any proceedings, take any steps or do any other thing under or in relation to the order which the Secretary of State could have brought, taken or done apart any transfer under this section.

    Reduction of expenditure on income support: certain maintenance orders to be enforceable by the Secretary of State.

    24B.—(1) This section applies where—

    (a) a person ("the claimant") who is the parent of one or more children is in receipt of income support either in respect of those children or in respect of both himself and those children; and
    (b) there is in force a maintenance order made against the other parent ("the liable person")—
  • (i) in favour of the claimant or one or more of the children, or
  • (ii) in favour of some other person for the benefit of the claimant or one or more of the children;
  • and in this section "the primary recipient" means the person in whose favour that maintenance order was made.

    (2) If, in a case where this section applies, the liable person fails to comply with any of the terms of the maintenance order—

    (a) the Secretary of State may bring any proceedings or take any other steps to enforce the order that could have been brought or taken by or on behalf of the primary recepient; and
    (b) any court before which proceedings are brought by the Secretary of State by virtue of paragraph (a) above shall have the same powers in connection with those proceedings as it would have had if they had been brought by the primary recipient.

    (3) The Secretary of State's powers under this section are exercisable at his discretion and whether or not the primary recipient or any other person consents to their exercise; but any sums recovered by virtue of this section shall be payable to or for the primary recipient, as if the proceedings or steps in question had been brought or taken by him or on his behalf.

    (4) The powers conferred on the Secretary of State by subsection (2)(a) above include power—

    (a) to apply for the registration of the maintenance order under—
  • (i) section 20 of the Maintenance Orders Act 1950;
  • (ii) section 2 of the Maintenance Orders Act 1958; or
  • (iii) the Civil Jurisdiction and Judgements Act 1982; and
  • (b) to make an application under section 2 of the Maintenance Orders (Reciprocal Enforcement) Act 1972 (application for enforcement in reciprocating country).

    (5) Where this section applies, the prescribed person shall in prescribed circumstances give the Secretary of State notice of any application—

    (a) to alter, vary, suspend, discharge, revoke, revive, or enforce the maintenance order in question; or
    (b) to remit arrears under that maintenance order; and the Secretary of State shall be entitled to appear and be heard on the application.

    (6) Where this section applies, the Secretary of State shall be treated for the purposes of any enactment or instrument relating to maintenance orders as if he were a person entitled to payment under the maintenance order in question (but shall not thereby become entitled to any such payment).

    (7) In this section "maintenance order" has the same meaning as it has in section 24A above, but does not include any such order for the payment of a lump sum."

    (2) Until such time as there comes into force an amendment of Schedule 1 to the Attachment of Earnings Act 1971 (maintenance orders to which the Act applies) which has the effect of including among the orders specified in that Schedule any order for periodical or other payments made or having effect as if made under Schedule 1 to the Children Act 1989, the definition of "maintenance order" in subsection (8) of the section 24A of the 1986 Act inserted by subsection (1) above shall have effect as if, in paragraph (a), after subparagraph (ii) there were inserted—

    "(iii) any order under paragraph 1(2)(a), (b) or (c) of Schedule 1 to the Children Act 1989 (financial provision for children against their parents);".

    (3) In section 26 of that Act, in subsection (3) definitions for purposes of sections 24, 25 and 26) after the words "section 24" there shall be inserted "24A, 24B".'.— [Mr. Newton.]

    Brought up, and read the First time.

    I beg to move, That the clause be read a Second time.

    Before I launch—[Interruption.] The hon. Member for Birmingham, Ladywood (Ms. Short) looks puzzled. I am sure that she will accept that I have done the right thing.

    I am grateful.

    Before I say anything else about the new clause, which concerns lone parents, I simply want to say that I hope that I shall not be accused of being sexist if throughout I assume for practical purposes that lone parents are generally female and absent parents are generally male, simply to ease my sentences. Of course, as the House knows, there is a significant number—although small in proportion—of lone parents who are male and absent parents who are female.

    New clause 21 focuses on particular problems relating to maintenance for lone-parent families. As the House knows, the number of families in Britain headed by a lone parent has risen substantially in recent years. The proportion of those families that have to rely on supplementary benefit and now income support has also increased and stands at about two thirds.

    It is important to recognise, in view of the concern expressed about that, that those trends are not unique to the United Kingdom. Similar changes have happened in several other countries. Our social security system rightly provides help to lone-parent families who need it, as it does to others, but another valuable source of help for those families is maintenance. Regular payments of maintenance provide a basis of income that can help smooth the path from dependence on benefit to full-time work and independence. That is valuable to the family, but too often it is not paid. Absent parents have a clear legal responsibility to maintain their families as far as they can, but in far too many cases that responsibility has not been fulfilled or properly enforced.

    The number of lone-parent families dependent on income support in 1988 is more than double the number on supplementary benefit in 1979, but payment of maintenance has not kept pace. In 1979 maintenance was paid for about half of the lone-parent families on benefit, but in 1988 the equivalent figure was only a quarter.

    The Government have already announced that they are reviewing the maintenance system to see what changes need to be made to the way in which maintenance is awarded and operated. A survey of the work in a sample of courts and DSS local offices is under way to provide full, up-to-date information as a basis for deciding on the best way forward. We are examining the system that is in use in other countries to see what lessons can be learned from them. I am planning to visit the United States next month to see the approach that is taken there. We aim to bring forward proposals later this year. Radical changes, should they prove possible, will obviously take a little time to come into effect. That does not mean that we could or should stand still in the meantime. We have also been seeking to improve the effectiveness of the present system. The House will recall that I announced in the uprating debate a month or two ago that we are tightening the way in which we assess an absent parent's ability to pay maintenance for his family on income support.

    My right hon. Friend spoke about a review. Does he agree that this is a serious and urgent problem, and can he say whether the results will be announced in time for legislation to be introduced in the next Session? We should have as little delay as possible in bringing forward worthwhile changes.

    At this stage I cannot respond exactly and in detail, not least because, as my hon. Friend will be aware, it is not the practice for Ministers to comment on what may be in the Queen's Speech. We certainly hope to bring forward proposals this year at a time that would enable us to consider the possibilities that my hon. Friend has raised. I entirely accept what he says about the importance of the issue. I hope that he will agree that it is also a complex and difficult issue that needs to be properly considered.

    As I said, we are seeking in the meantime to make various changes in the present system. New clause 21 seeks to take us further in three ways. One of them is in relation to the realistic assessment of maintenance and the other two seek to help maintenance work more in the interests of lone parents than is often the case at present.

    The first step in the new clause brings social security law more into line with family law. We took a step in that direction last year when we extended liability for children beyond the 16th birthday to cover those children who remain dependent at 16, 17 and 18. Family law could already do that. In the new clause we are proposing to empower courts to consider the cost to the mother in caring for the absent parent's children, which will mean that Department of Social Security staff can do the same in seeking voluntary agreements on maintenance.

    The Department can currently seek its own order against an absent parent, which reflects that parent's liability under social security law. In brief, where the parents were divorced or were never married, it applies only to the benefit paid for the children. Under family law, courts can look wider and can consider the mother's costs as child carer in deciding what to award for children. Before we even consider going to court, the Department seeks to come to a voluntary arrangement with the absent parent on the basis of what the courts could award. The new section 24A in the new clause will provide a regulation-making power that will be used to specify that, once having looked at the allowances and premiums that are paid because there are children, the court should also have regard to the income support personal allowance paid for the mother. By increasing the scope of what the courts can award, we are increasing the scope of what voluntary agreements can cover and, therefore, what the Department can seek.

    I should like to put to my right hon. Friend two points that he may be about to cover in his speech. What will he do in cases where maintenance has been awarded to a mother and her children and the mother then moves in with another man whom she does not marry but by whom she is supported? Will the court or the legislation insist on the natural parent paying the maintenance? What happens when access to a child has been granted but the mother does not provide it? Will the legislation still insist on the maintenance payments being made?

    I shall deal first with my hon. Friend's second point. Over the years I have been child care Minister in my various welfare capacities and have dealt with that subject. Access to the children should be considered quite separately from whether maintenance should be paid for the children. It is not appropriate to tie the two together.

    The other matter which links with that and which focuses specifically on the question asked by my hon. Friend is perhaps not sufficiently appreciated. At the end of the day, the Department of Social Security on its own cannot enforce anything that the courts are not prepared to enforce. We cannot compel a lone parent to agree to something, although we can go to court if we want the court to impose something. Once a court has imposed something, it is open to the person on whom the maintenance order has been made to go back to the court for a variation.

    It is not for me to speculate on what someone would do in circumstances such as those referred to by my hon. Friend. However, I expect that in such cases the absent parent might well wish to go back to the court and argue that the circumstances in which a maintenance order was imposed in respect of the former partner as carer and the children should be varied. It would be for the parent to decide whether to pursue the matter and it would be for the court to decide on it.

    I shall put my second point again. If access has been granted and is denied by one parent, does my right hon. Friend think that it is right, fair and proper that the other parent should still be required to pay maintenance?

    They are separate issues. If access has been granted under a court order—I take it that that is what my hon. Friend is postulating—the denial of that access can be pursued in the court under that order. Equally, if maintenance has been granted under a court order, the failure to pay it can be pursued under that order. In considering a maintenance order, it would be for the court to decide whether to have regard to a sense of grievance about access.

    I understand that the hon. Lady wishes to take part in the debate.

    Even if my hon. Friend the Member for Northampton, North (Mr. Marlow) does not totally agree with what I have said, I hope that he will at least understand the points that I have sought to make.

    Yes, but I am conscious of the fact that Opposition Members wish to speak.

    Will my right hon. Friend confirm an important point that is frequently misunderstood by people when they talk about access? Access is a right that belongs to the child to see its parent. It is not a right that belongs to the parent to see the child. Will my right hon. Friend confirm that?

    I should need to take advice before saying whether that was the legal position. I rather doubt that it is. It is somewhat outside the scope of the main thrust of the debate and I should like to get on with my speech, if only in the interests of ensuring that the hon. Member for Ladywood can make her speech.

    I want to emphasise that when deciding what to award, the courts will continue to look at what the absent parent can afford to pay, as will DSS staff when negotiating voluntary agreements; but in a case in which an absent parent can afford more than the children's benefit, we shall look to obtain some or all of the caring parent's personal allowance. The courts will be able to order that a personal allowance be paid on top of the children's benefit, which means that in those cases the courts will have a flexibility similar to that under family law.

    8.30 pm

    The second change that we propose as part of new section 24A also concerns an order that the Department can obtain on its own behalf. It seeks to remove the need for a lone parent leaving benefit to go to court to obtain a separate private maintenance order. We propose that when a DSS order has been obtained, it should be possible to transfer it to a lone parent who is leaving benefit. That would apply in so far as the order relates to the costs of the children and when the lone parent does not already have a maintenance order of her own. The aim is that a transferred order should be consistent and fit in as nearly as possible with family law, so that a lone parent who leaves benefit and takes a DSS-obtained order with her is in the same position as someone who obtains her own maintenance order. We believe that that measure will make it easier for a lone parent without her own order to make the transition from benefit to work.

    By enabling a lone parent to take with her the maintenance for children obtained under a DSS order, we avoid the need for her to go to court for a new set of proceedings to get her own order, which is often argued to be a significant disincentive to taking the step of going back to work. She will have the same rights to enforce or vary the order afterwards as we in the DSS would have had. Both parents and the court will be informed of the transfer, and of course the absent parent—to pick up a point made by my hon. Friend the Member for Northampton, North—will still be able to go back to the court, as now, if his circumstances have changed or if he feels that other circumstances have.

    In our view, it would not be right or necessary to transfer a DSS order if a private maintenance order were already in existence. The private order would have priority, and the same principle would apply if a private maintenance order were obtained later. The existence of a private order would mean that a transferred DSS order would cease to have effect.

    Thirdly, new section 24B will enable the DSS to enforce a claimant's own maintenance order for her when payments are not being made in full, if the lone parent is claiming income support for herself and her family. Quite properly, the Department has a strong interest in ensuring that absent parents go on meeting their responsibilities for the family and that payments under any such order to the lone parent are made. The proposed new section gives practical effect to that interest when payments under a court order are not made in full and an absent parent, for whatever reason, is not minded to put that right.

    As things stand, the only remedy in such circumstances is for the lone parent herself to ask the court to enforce, and many such parents, for understandable reasons, do not want to do that. We propose to take power to do that on their behalf, with the aim of ensuring that prompt action is taken in all these cases, thus reducing the chance of the absent parent getting into the habit of non-payment. We also think it right that the DSS should be able, if necessary, to be heard on any proposal to reduce the amount to be paid.

    Not having served on the Committee, I have not followed all this, but in the event of a delay and of the mother not being able to obtain the maintenance to which she is entitled, while the Department is pursing the father to try to get the money, will it be able to make extra payments to the mother to compensate her until the money is forthcoming from him?

    One of the reasons for our concern about this matter is that, given that the basic purpose of income support is to make people's income up to a given level, the practical effect is precisely that unpaid maintenance is replaced by income support.

    The right hon. Gentleman is telling the House that he is seeking powers to enable maintenance orders to follow the mother when she starts work. Under the third part of the new clause, will the Department's power to collect money also continue when a mother is in work, or is the measure only to do with saving welfare payments while she is on benefit?

    No, I have already said that once an order has been transferred, under the second of the proposals, a lone parent will have the same rights to enforce it as the DSS. Under the current arrangements, once a lone parent was not on benefit and an order had been transferred to her, it would then be her responsibility to enforce it. The hon. Gentleman, with his close interest in this subject, will know that the issue that he has raised is one of those that we shall examine in the broader review of maintenance that we are undertaking—which will include experience from Australia, the United States and various other countries.

    I promise my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) that this will be my last intervention. Neither I nor mothers outside the House can understand why the Government have not sought powers in this measure to help women when they move back to work to take over responsibility for the collection of these funds. That would be quite feasible, but the Government have decided not to do it. Why?

    Because it raises much wider issues. Once a maintenance order has been transferred to someone who is not in receipt of social security benefits of the type that I am discussing—primarily income support—there seems no reason to treat it differently from a maintenance order in favour of someone who has never been on benefit. Many such orders exist. I am not saying that such a move could not be contemplated under any circumstances, but it could be considered only in the context of a much wider reform of the maintenance system.

    These three measures form a consistent and sensible package within the constraints of the current system. However, we are doing more than merely making the legal changes that I have announced. I should like to take this opportunity to mention some further steps that we are taking to improve the way in which all these arrangements work at local office level.

    First, we shall shortly issue revised guidance covering the need to do more to emphasise to lone parents the responsibility of the absent parent and the advantages of reflecting that responsibility in proper maintenance arrangements established at the outset. Those advantages will clearly be increased by the legal changes proposed in the new clause, not least by easing the way for the lone parent who wants to move back into employment. The guidance will make clearer the fact that the normal expectation should be that a lone parent will co-operate in establishing where responsibility lies and in obtaining maintenance, while continuing to recognise that there may be cases in which, for particular reasons, the lone parent still does not want to name the father.

    At the same time, when lone parents are unwilling to help in establishing the responsibility, we shall seek to build up a clearer picture of the reasons to help our further and wider consideration of the whole problem of maintenance.

    Secondly, the House will be aware that as a result of action initiated last year the amount of maintenance recovered by the DSS in respect of lone parents on benefit rose from £155 million in 1988–89 to an expected £180 million in 1989–90. That improvement in part reflects the extent to which, over a number of years until recently., that work has been given a lower priority than most would think it deserves. In our objectives for the coming year, we shall underline even more strongly the fact that that work should be given proper priority and resources, and I expect a further increase in maintenance paid in this respect, to about £260 million in 1990–91.

    The proposals in the new clause together with the other actions that I have outlined make clear the Government's commitment to ensuring that absent parents do more to meet their responsibilities for their families. We are pressing ahead with work on the more radical options—I have noted the point made by the hon. Member for Birkenhead (Mr. Field)—but in the meantime we are doing what we can to improve the position because we believe that it is important for everyone involved, especially for lone parents and their children.

    What I have proposed will be widely welcomed, and I commend the new clause to the House.

    I am extremely angry. It is 8.40 pm and we have a guillotine at 9 pm. We have another whole group of Government new clauses and amendments to come. This is an enormously important matter. The new clause covers three and a half pages, yet we have so little time to discuss it. This could have been considered in depth in Committee. The Government say that they did not have time, but the previous Secretary of State for Social Security, the right hon. Member for Croydon, Central (Mr. Moore), said at the 1988 Tory party conference that there would be measures, and implied that they might be punitive, to get money back from fathers whose children were living on supplementary benefit. That is a long time ago.

    In January the Prime Minister made her speech and, according to the Library, the Secretary of State gave an unattributable briefing on the same day about the Government's intentions. The House is brought into disrepute. This is a serious and important matter and it is intolerable that it is being dealt with in this way. The Government should be ashamed of themselves.

    The Government's main motivation behind the package is to save the cost of social security benefits, not to assist lone-parent families to come off benefit and enjoy a free, independent life. The narrowness of the Government's objective is deplorable and sad. Only one of the three measures in the new clause will assist lone parents: when a mother comes off benefit she can take the order which has been obtained by the Department with her. We welcome that. It is entirely good and will help mothers to make the move off benefit and into work.

    The Secretary of State misleads the House when he says that the law of his Department is being brought into line with family law. That is disputed by the National Council for One Parent Families. The Library was surprised by his assertion. I know the one case to which he refers and I suspect that he is misleading the House. I do not suppose that he does it deliberately.

    If a mother is on income support it will be possible to claim the costs of the income support against the father. That is all that the Government are providing. The minute she comes off income support, if she has never been married to the father, she has no right to claim maintenance for herself, because she is caring for the family. The Government's motivation is entirely to save the costs of benefit. There is no intention to help women both to stop being dependent on benefit and to work, if that is what they want.

    The third provision is exactly the same. The Government intend to take action where fathers do not pay, if the mother is on benefit, in order to make him pay and to save benefit costs. Absent parents, who are usually fathers, should pay for their children, but we need to do something for the overwhelming number of lone parents who are living in poverty and caught in the poverty trap. The Government have not attended to that serious issue.

    I am deeply disappointed by the package. It is unworthy of the Secretary of State, who I thought had more to him. The figures are shocking. We have in Britain about 1 million lone parents, of whom about 722,000 are living on income support. The proportion who live on income support has increased considerably under the Government because of the erosion in the value of child benefit and other benefits, and the growth in the poverty trap. The Government's benefit changes have trapped increasing numbers of lone parents and their dependants on benefit. They have removed the right of a woman who lives on supplementary benefit and works part time to offset some of the costs of going to work and of child care against benefit. The Government have changed that and trapped more women in complete dependence on benefits. In 1961, one in six lone parents were on supplementary benefit whereas in 1987 two thirds were.

    The size of the trap is shocking. A lone parent with two children on benefit gets the enormous sum of £65·80 a week to spend on herself and her children. A lone parent on £150 a week wages, paying £55 a week for child care—that is a reasonable cost for two children as child care can cost more—would get £57·26 a week to live on and would be worse off. A lone parent with two children must get at least £172 a week to be better off than when she is living on benefits. That is the problem and the trap.

    The way out is non-means-tested benefits, such as child benefit which the Government have been busy eroding and which they seek to allow to shrivel away, better child care provision, training and access to jobs for women. That is the strategy of the Labour party policy review; our aim is to create pathways out of poverty—stepping stones to assist people who are forced to live in poverty. One such group is lone parents. When they choose and when their children are ready, they should be able to step into part-time work and training, and child care should be available.

    The Government are not concerned about that. They are not concerned that many women and children who have been badly treated by the man in their life, not always but often, are living in poverty. Nothing in this package seeks seriously to help. The Government are trying to claw back benefit costs. We cannot discuss the matter properly. The proposal is not good enough to deal with this serious problem. Because one part of the provision is positive, we shall not oppose it, but we are deeply disappointed. The Government have muffed an opportunity to assist lone parents.

    8.45 pm

    If it is true that there is great rejoicing in heaven over one sinner who repents, given the line that the Treasury Bench is taking, paradise must be breaking out in celebration this evening because the Government's stance has changed.

    Although the Secretary of State was too modest to mention it, in the past 11 years we have seen a collapse in the idea that wherever possible a male should be responsible for his offspring if the offspring are left to be dependent on welfare. It is to the Government's shame that they allowed that to develop. As my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) said, that has resulted in an increasing number of women being forced to be dependent on means-tested assistance. Nevertheless, the Government are turning and I am pleased about it, although I share my hon. Friend's reservations about the measure's limitations.

    I am not against the collection of maintenance to offset it against the cost of income support payments. That is proper. I am not against mothers being asked about the whereabouts of the father or who the father is.

    I was brief so that my hon. Friend and others could speak. As a result I neglected to mention that I believe that, under the guidance that the Secretary of State announced, women will be pressurised and harassed to name the absent father when, for good reasons, they do not wish to do so. That will be an ugly side of this package.

    I am not against those questions being asked, but, as my hon. Friend has said, this is a delicate area. Some women will not want to name the father for fear of being beaten up. They will look at the Government's package to see whether it is worth taking that risk. Their lives, like many people's lives, are full of risks and they must make those decisions. They will ask the very questions that my hon. Friend has asked. To what extent are the Government offering a new package?

    The Government are showing considerable interest in moving quickly at the Prime Minister's behest to save on the cost of welfare, while providing a limited bridge to the world of work, in that a maintenance order may remain with a woman when she goes back to work. The Secretary of State gave no explanation why at this stage he could not include in the new clause, which we are discussing for the first time and which looks like a new Bill, the idea that the Department would continue to be responsible for collecting the funds and paying them to the mother, whether or not she is on welfare. That would have changed the balance of the package to a mother who is making the crucial decision whether it is worth accepting it.

    There is a further stage. It is right to consider mothers who have never been on benefit and who might want the state at some stage to take over the responsibility of collecting. It is extraordinary for Ministers to argue that, because we cannot do everything, we cannot achieve tonight what is realisable.

    My brief comments are almost identical to those of my hon. Friend the Member for Ladywood. One part of the new clause is to be welcomed. Despite the Government's change of heart, this is a missed opportunity to strike out and to begin to offer a new deal to show that the Government are on the side of single mothers, of making parents responsible and of encouraging people, wherever possible, to take up work when it is available. The new clause will be viewed for the measure that it is: although the Government have some interest in these issues, their primary purpose is merely to save taxpayers' money. Although that is important, this is, sadly, a missed opportunity.

    I shall respond only briefly, although with some sadness, compared with my feelings during the previous debate, and with some surprise at the tone adopted by the hon. Member for Birkenhead (Mr. Field). He, of all people, should know that, in essence, we have a system of assessing and collecting maintenance that has proved increasingly unsatisfactory because of the unhappy increases in marriage breakdowns and, for a variety of other reasons, in the number of lone parents.

    My right hon. Friend the Prime Minister, other hon. Friends and I have consistently made it clear over some months that we see a need for much wider reform than could possibly be encompassed within the scope of an amendment tabled to the Bill. The matter is complex. In most of the countries that have introduced new systems, considerable preparation time and, because of the number of interests involved, considerable consultations have been required. The system has often had to be introduced by stages—first, by improving the arrangements for enforcement of existing orders and then, to take the Australian example, by coming forward with a new system of assessing maintenance for future cases. Much the same has happened in the United States.

    The hon. Member for Birkenhead implied that somehow, in two or three months, we could have reached the stage of tabling to the Bill amendments containing the kind of sweeping, overall reforms that we both agree would be desirable, if we can find the right basis for them.

    I was not trying to cause offence to the Minister. I am pleased that he has a grasp of how strongly I feel about this subject. If the Government had gone on to the next stage requested by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) and me and had introduced a separate measure, we probably would not have opposed it. We would have had a full debate and the provision would have been quickly dispatched to the other place and would have returned. It is a matter not of the constraints of the Bill but of the Government having chosen to link this provision to it. We should have welcomed a more comprehensive measure, separate from the Bill, so that we could have a proper debate. The debate would not have been held up. The matter would have been considered expeditiously. The Secretary of State has not made an adequate defence.

    There may simply be a misunderstanding between the hon. Gentleman and me. The Government are not at this moment in a position to bring forward a comprehensive proposal for reform. We have done a good deal of work. One of our senior officials has looked closely at the Australian system. We have set in hand a significant survey of courts and DSS offices to give us additional information about the way that the present system works. That is all intended to help us shape wider proposals which we hope to bring forward later this year.

    We do not think that it is right, simply because it will take time to bring forward more comprehensive proposals, not to take any steps to make what improvements can be made within the present system. That is what we are trying to do in these proposals. That approach would be widely welcomed outside the House and inside it, if not by those hon. Members who have spoken. It contains useful improvements in the portability of orders obtained by the DSS and in the capacity of the DSS to enforce orders that a lone parent has obtained while she remains on benefit.

    There is something in it for her. The maintenance will go on being paid in a form that at some stage can improve her position if she returns to work.

    That is precisely the point. If the DSS is prepared to enforce the maintenance order that has been made in favour of a lone parent, it is more likely that the absent father will continue to pay up.

    It is the exact opposite. If the DSS has problems in getting the money off the father, what chance will the mother have without the sanction of the DSS behind her?

    We are again talking at cross purposes. The hon. Member for Birmingham, Ladywood (Ms. Short) made a point about the third element in the proposal whereby if a lone parent is on income support but has a maintenance order that she has obtained, the DSS will enforce that order. The hon. Lady said that that did not do anything for the lone parent. I think that we would all agree that the position of a lone parent for whom maintenance is paid, for various reasons, is better in a general sense—not necessarily in the immediate monetary sense—than the position of a lone parent for whom maintenance is not paid. The DSS's capacity to ensure that a private maintenance order continues to be paid is therefore an improvement on the present position.

    I am glad that the hon. Member for Birkenhead at least agrees with me on that point.

    I wish that the Minister would be straightforward about what he is doing. The fact that the Department will claim for an absent father who does not pay only when the woman is on benefit shows that the Department wants to look after its money, not the woman. The fact that the Department will claim against the man for the time that the woman spends in maintaining the child only when she is on benefit shows that the Department wants to save its money. The only tiny provision in the package for the woman is that the order obtained by the DSS can go with her when she goes off benefit. The Department's overwhelming concern in this package is to save money for itself, not to assist low-income, lone parents to have a better life, more freedom and higher incomes. I wish that the Secretary of State would be honest about that.

    It would be thoroughly dishonest of me even to begin to suggest that I accept the hon. Lady's comments, which are ridiculous. Her suggestion that securing the more effective collection of maintenance under maintenance orders does not help the interests of lone parents is a piece of absolute nonsense of which she will be ashamed when she has had the opportunity to think about it.

    Clearly, the Opposition are anxious to make further progress, and I understand that. I welcome the fact that the hon. Member for Ladywood, even with her rather less than generous and less than understanding remarks, does not intend to oppose these proposals. I commend the new clause to the House.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 22

    Reirospective Effect Of Section I 65A Of The Principal Act

    '(1) The following section shall be inserted after section 165A of the principal Act—

    "Retrospective effect of section 165A.

    165AA.—(1) This section applies where a claim for benefit is made or treated as made at any time on or after 2nd September 1985 (the date on which section 165A above, as originally enacted, came into force) in respect of a period the whole or any part of which falls on or after that date.

    (2) Where this section applies, any question arising as to—

    (a) whether the claimant is or was at any time (whether before, on or after 2nd September 1985) entitled to the benefit in question, or to any other benefit on which his entitlement to that benefit depends, or
    (b) in a case where the claimant's entitlement to the benefit depends on the entitlement of another person to a benefit, whether that other person is or was so entitled,

    shall be determined as if section 165A above, as in force at the time of the claim referred to in subsection (1) above, and any regulations made under or referred to in that section as so in force, had also been in force, with any necessary modifications, at all times relevant for the purpose of determining the entitlement of the claimant, and, where applicable, of the other person, to the benefit or benefits in question (including the entitlement of any person to any benefit on which that entitlement depends, and so on).

    (3) In any case where—

    (a)a claim for benefit was made or treated as made (whether before, on or after 2nd September 1985, and whether by the same claimant as the claim referred to in subsection (1) above or not), and benefit was awarded on that claim, in respect of a period falling wholly or partly before that date, but
    (b) that award would not have been made had the current requirements applied in relation to claims for benefit, whenever made, in respect of periods before that date, and
    (c) entitlement to the benefit claimed as mentioned in subsection (1) above depends on whether the claimant or some other person was previously entitled or treated as entitled to that or some other benefit,

    then, in determining whether the conditions of entitlement to the benefit so claimed are satisfied, the person to whom benefit was awarded as mentioned in paragraphs (a) and (b) above shall be taken to have been entitled to the benefit so awarded, notwithstanding anything in subsection (2) above.

    (4) In subsection (3) above "the current requirements" means—

    (a) the provisions of section 165A above, as in force at the time of the claim referred to in subsection (1) above, and any regulations made under or referred to in that section as so in force, with any necessary modifications; and
    (b) subsection (1) (with the omission of the words following "at any time") and subsection (2) above.

    (5) Any reference in any enactment to section 165A of this Act (but not a reference to any specific provision of that section) shall be taken to include a reference to this section.

    (6) This section shall be taken to have come into force on 2nd September 1985."

    (2) In Schedule 20 to the principal Act (glossary of expressions) in the second column of the entry relating to "entitled" and cognate expressions, for the words "section 165A" there shall be substituted the words "sections 165A and 165AA".

    (3) Section 32(4) of the Social Security Act 1985 (which made similar provision to that made by subsection (3) of the section inserted by subsection (1) above) shall be deemed never to have been enacted.

    (4) In paragraph 48 of Schedule 10 to the 1986 Act (which applies sections 87 and 165A(1) of the principal Act to income-related benefits) in paragraph (b), for the words "section 165A(1)" there shall be substituted the words "sections 165A(1) and 165AA".

    (5) The amendments made by subsections (2) and (4) above shall be taken to have come into force on 2nd September 1985.'.— [Mrs. Gillian Shephard.]

    Brought up, and read the First time.

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

    I beg to move, That the clause be read a Second time.

    With this it will be convenient to discuss Government amendments Nos. 24, 25, 84, 67, 85 and 26.

    I shall have to be extremely brief if I am to give even the gist of the Government's intention in the new clause and the amendments.

    The new clause amends various provisions of the Social Security Acts 1975 and 1985 to re-establish the accepted policy that, generally speaking, a person shall not be regarded as entitled to benefit for any period unless a claim has been made within the prescribed time limits.

    Hon. Members will recall that it had always been our understanding that the law achieved that effect—until a judgment in the House of Lords in November 1984 in the case of a Miss Margaret McCaffrey, when their Lordships held that entitlement to benefit could exist even where no claim had been made.

    Although that judgment referred specifically to noncontributory invalidity pension, the decision had much wider implications across the social security front. It was decided that the effects of McCaffrey should be nullified, and section 165A was inserted in the Social Secrity Act 1975 to achieve that, with effect from 2 September 1985, or so we thought.

    In June of last year, a social security commissioner held, in the case of a Mr. Cartwright, that the word "entitled" where relating to an event before 2 September 1985 meant "entitled" in the McCaffrey sense—that is, without requiring that a claim must be made for the benefit.

    The effect is that, contrary to the policy intention, an understanding that has existed through Administrations of both parties at least back to the start of the national insurance scheme in 1948—

    It being Nine o'clock, MADAM DEPUTY SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Question already proposed from the Chair.

    Question agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 23

    Amendments Relating To The Social Fund

    `(1) In section 32 of the 1986 Act, after subsection (8D) there shall be inserted—

    "(8E) The Secretary of State may give general directions to social fund officers or groups of social fund officers, or to any class of social fund officers, with respect to the control and management by social fund officers or groups of social fund officers of the amounts allocated to them under subsections (8A) to (8D) above.".

    (2) In subsection (10) of that section (power to nominate a social fund officer to issue guidance to other officers in his area on specified matters) for the words "to issue" there shall be substituted the words "who shall issue".

    (3) In section 33 of that Act, after subsection (10) (questions to be determined in accordance with general directions) there shall be inserted—

    "(10ZA) Without prejudice to the generality of subsection (10) above, the Secretary of State may issue directions under that subsection for the purpose of securing that a social fund officer or group of social fund officers shall not in any specified period make awards of any specified description which in the aggregate exceed the amount, or a specified portion of the amount, allocated to that officer or group of officers under section 32(8A) to (8D) above for payments under awards of that description in that period."

    (4) In subsection (10A) of that section (which specifies certain matters with respect to which directions may be given) after paragraph (e) there shall be inserted—

    "(f) that a social fund payment such as is mentioned in section 32(2)(b) above shall only be awarded to a person if either—
  • (i) he is in receipt of a benefit under the benefit Acts which is specified in the direction and the circumstances are such as are so specified; or
  • (ii) in a case where the conditions specified in sub-paragraph (i) above are not satisfied, the circumstances are such as are specified in the direction;".
  • (5) At the end of that section there shall be added—

    "(13) The Secretary of State may by regulations—
  • (a) make provision with respect to the time at which an application for a social fund payment such as is mentioned in section 32(2)(b) above is to be treated as made;
  • (b) prescribe conditions that must be satisfied before any determination in connection with such an application may be made or any award of such a payment may be paid;
  • (c) prescribe circumstances in which such an award becomes extinguished.".'.—[Mr. Scott.]
  • >

    Brought up, and read the First time.

    With this it will be convenient also to discuss New clause 3—Social Fund

    'In section 33 of the 1986 Act,—
  • (a) subsection (9)(e) shall cease to have effect;
  • (b) at the end of subsection (10) there shall be added the words "but shall not refuse by reason of the amount of any allocation made under section 32(8A) above to award a payment which he would otherwise award".'.
  • Government amendments Nos. 86 and 87.

    During my statement to the House on 26 March I outlined our response to the judicial review judgments on the social fund. I explained that, although the court found that some of the guidance on budgets was too prescriptive, its judgment explicitly recognised that Parliament clearly intended that the scheme should be subject to strict monetary limits and that the Secretary of State needed to be able to give directions to achieve financial control.

    In the light of that, and so that there should be no doubt that it is the Government's intention that the social fund should be operated within a firm budgetary framework, we have introduced this amendment to make explicit the power of my right hon. Friend to give directions relating to the financial control of the fund. The amendment will similarly put beyond doubt my right hon. Friend's power to specify who might be eligible for payments from the fund.

    The clause also makes provision for regulations to clarify the date on which an application to the social fund is to be treated as having been made, and operational matters relating to applications and awards.

    I will explain in more detail the effect of the amendments that we are making under the clause. The subsection we are inserting after section 32(8) of the Social Security Act will make explicit the power of my right hon. Friend to give directions to social fund officers on control and management of the sums allocated to them for discretionary payments.

    The directions made under this power will, we envisage, cover the requirement to plan the expenditure from the local allocation through profiles of anticipated expenditure and recoveries and levels of priorities of needs that can be sustained from the allocation. They will require social fund officers to have regard to such factors in reaching decisions in individual cases.

    They will also require the area social fund officer normally the local office manager, as I said on Monday—to keep the profiles and levels of priorities under review and revise them in the light of changing circumstances. The directions will, therefore, clarify and reinforce the present position. That is, they will ensure that social fund officers manage the funds allocated to them responsibly and sensibly.

    At present, the area social fund officer—normally the local office manager—is responsible for controlling the local office budget. Under the existing section 32(10), he may issue guidance on matters which the Secretary of State specifies. This includes guidance on the level of priority that may be sustained from the budget. But the area social fund officer is not under a duty to issue such guidance. The amendment we are making to section 32(10) will require the area social fund officer to issue guidance on matters specified by the Secretary of State.

    As I said, it has always been our intention that the social fund should operate within a firm, financial framework. We do not believe that that is incompatible with the proper exercise of discretion by social fund officers. Consequently, it is essential to the successful operation of the fund that its resources are managed so as not to exceed the amounts allocated for payments. Under the present legislation, it would be possible to issue directions on matters relating to the control of the budget. I have already mentioned the power that we are taking in respect of directions for the management and control of local budgets. The additional power that we are taking under the new clause will reinforce the effect of those directions by giving the Secretary of State explicit power to issue directions requiring social fund officers to keep within their allocations.

    Such directions will, therefore, preclude a social fund officer, or a group of social fund officers, from making any award that would result in the sums allocated to that officer or group of officers being exceeded. This must be right if the scheme is to operate within the strict monetary limits, as Parliament originally intended, and as was recognised by the court. We cannot have a situation in which social fund officers may continue to make awards regardless of whether there is money available to fund such awards.

    The purpose is to concentrate help where it is most needed. It is important that the Secretary of State is able to specify who will be eligible for help and where the line is to be drawn. The amendment to section 33(10A) is intended to make explicit his power to do so. The provision is in two parts. The first part restricts eligibility to certain payments from the fund—community care grants and budgeting loans—to persons receiving the benefit or benefits specified in directions. Such payments are available only to persons receiving income support and, in the case of community care grants, to people shortly to leave institutional care who are likely to receive income support upon discharge.

    The second part of the amendment provides explicit direction-making powers governing eligibility to the fund, whether or not the applicant is receiving a specified benefit. This is intended to cover the position in respect of crisis loans, which are available to anyone, whether or not on benefit, who faces a crisis as the result of a disaster or an emergency. Given the Secretary of State's power to issue directions, it may be considered that an explicit power to issue directions on eligibility is overegging the pudding. However, as with the rest of the clause, we are concerned that the position on the fundamental principles of the scheme, like the budget and eligibility, should be absolutely clear to all concerned. This amendment achieves that. By making explicit the power to issue directions concerning applicants' eligibility for help from the fund, it confirms both the inherent flexibility of the fund and its ability to target help on those who need it.

    I turn to the regulation-making powers under the new clause. The principles by which the fund operates are now well known. Although there may be differences between the Government and the Opposition on what those principles are, I think that, in general, they are well understood. However, some matters may be less clear to hon. Members. We believe that it will be helpful to applicants, their advisers and local office staff if these matters are spelt out in regulations in the same way as they are for the procedures concerning applications to the fund and applications for review. In spelling these things out, we are also making the way in which the scheme operates more accountable to Parliament.

    The regulations will cover several procedural matters. The first is the date on which an application for help from the fund is to be treated as made. This will clarify that an application is to be treated as having been made on the day of its receipt in the local office. The second procedural matter that the regulations will cover is the conditions that must be satisfied before any application can be satisfied or any award made—for example, where a community care grant has been made in anticipation of the applicant's discharge from residential care, and where the applicant is not actually discharged. The third procedural matter is the point at which an award becomes extinguished. For example, an applicant might die after an award but before payment could be made, or an applicant might fail to cash a giro within 12 months of its issue.

    The new clause will come into effect with the granting of Royal Assent. The amendments that are being made here make it abundantly clear that, as I said to the House on Monday, it is the Government's firm intention that the social fund should continue to operate fairly and flexibly against the framework of a budget and eligibility focused on those who are most in need. On that basis, I commend the clause to the House.

    We have just listened to a desultory and depressing speech from the Minister which he read solidly, without an ounce of conviction. He continues to mouth words about flexibility and discretion, but everything the Government do and the new clauses that they bring to the House are a standing denial of everything that the Minister has just said.

    I admit at the outset that there is one advantage today over the position that existed two days ago when the Minister made a statement on the social fund. We have now got the Government amendment to the Bill in the light of the High Court judgment. However, we might as well not have had it, since it takes us not one iota further forward. It has taken the Minister five weeks to decide that his response to the High Court decision should be to pretend that it never happened. The court's judgment is being treated in the new clause as a minor distraction to which the proper response is to overturn it as soon as possible through more draconian legislation.

    Only one concern guides Government policy on the social fund—how to cut it. Nothing, including the law, will get in the way of that. That is why the social fund has been frozen since its introduction in 1988 and why the supposedly generous increase announced on Monday is actually a further cut in real terms, since the extra £10 million does not even cover inflation.

    Today's statement is not only cynical in its attitude to the law but it is dishonest. The Government know that they cannot issue directions to local offices to cash-limit funds until the Bill becomes law without risking legal challenge. So, instead, they issued guidance in such a way as to tell social fund officers with a nod and a wink to hold back the flood until the dam is in place. I have listened and thought carefully about the matter. I am open to challenge if I am wrong, but I believe that the message from the Government today is that it is business as usual but local offices should not shout about it until the Government have squared the courts. Why else does the Minister refuse to agree to contact claimants who have been illegally refused grants? Those people have to find their own way through bureaucracy to make their own claims. That is a wholly improper response by the Government. It is one thing for the Government, having been found to have been acting outside the law, to decide to change the law, but it is another for them to refuse to seek out and compensate those who have been deprived of their rights because current law has not been adhered to by the Government.

    The heart of the matter is that the Government still refuse to face up to the fundamental flaw in the social fund—that there is incompatibility in its two aims of flexibility in meeting needs and rigidity in limiting costs. The Minister referred to it again today. He seems to be able to say that black is white and that he is still preserving flexibility and discretion, when patently he is not.

    The new clause will go further in the other direction. The Government are still trying to have it both ways; they are softening the guidance to social fund officers and muddling through until the summer while cocking a snook in the meantime at the High Court decision by refusing any active review of past claims, even though many of them have been shown to have been improperly handled. When the Bill becomes law the Government will enforce new rules which will ensure that the budget is always the paramount consideration in assessing new claims. At that point any idea of flexibility or discretion will fly out of the window and the fundamental principle of the welfare state, which has prevailed under all Governments, including Tory Governments, since the war—that there is an ultimate safety net for meeting unconditionally the basic needs of citizens—will he finally eroded. That is the message of the new clause.

    I am sorry if I interrupt the hon. Gentleman at a comma in the speech that he is clearly reading to the House of Commons. He said that we were cocking a snook at the court but we are not. We accept the judgment of the court about the way that we were administering the intention of Parliament, which found that in one small regard we were at odds with that intention. We have issued guidance to ensure that in the interim period social fund officers interpret the law in the light of the court judgment, but Parliament has the right to change that and to reassert its original intention. That is what we are doing.

    9.15 pm

    That is exactly the point that I am making. The Government are determined that the paramountcy of the budget will prevail over all other considerations. They are changing the law in that respect, but, in the meantime, with the law as it stands, the Government have not properly handled claims that have been made on the social fund.

    If the Government believe in acting in accordance with the law, it is their duty—indeed, it is incumbent upon the Government—to contact past claimants who have been cheated of their rights and to ensure that under the existing law they get those rights until the law is changed.

    I thought that the hon. Gentleman was making a wider point about cocking a snook at the court, which we clearly are not because we have issued guidance to social fund officers. We are coming down to practicalities—that is far from cocking a snook at the court—and to the best way to ensure that people who may have been turned down in the past can be made aware of their rights. We are doing that by ensuring that our officers, the citizens advice bureaux and other welfare rights organisations are issued with leaflets which will clearly spell out people's right to ask for a review of their case.

    Frankly, I suspect that in the vast majority of cases the circumstances in which the original claim was made and rejected will have changed substantially by now and what the hon. Gentleman suggests would be a waste of time and effort. It would also arouse claimants' expectations and they would certainly be disappointed when they finally came to make their claim. That is not a sensible way to proceed.

    We have no wish to hide the fact that claimants have a right to come forward and ask for a review. Leaflets have been widely distributed and publicity has been accorded to the subject, not least by debates in the House and the appearances by the hon. Gentleman and myself on radio and television. I hope that anyone who feels that they may have been turned down unfairly will come forward to ask for a review. Reviews will be carried out promptly in the light of the instructions that we have issued and because of Justice Pill's judgment that the state of the budget when the original claim was made and the present state of the budget should be taken into account.

    That was a small speech in itself and I shall reply to a number of the points raised in it—[Interruption.] The right hon. Gentleman spoke for several minutes.

    The Minister is saying that his reason for not contacting past claimants who have been deprived of their rights is that their circumstances may have changed in the meantime. Yet he is encouraging them to claim. He is sending out leaflets explaining how they can do so. If they had rights at the time that they made the original claim, those should be met now. They should be adhered to, because that is the law.

    Merely putting leaflets into citizens advice bureau offices and social security offices means—let us be perfectly straight about this—that the Government are washing their hands of the business. The Minister knows perfectly well that the kind of people who are normally claimants of the social fund are not avid readers of the Government's leaflets. They need to be contacted, if the Government are seriously concerned that they should get their rights.

    I believe that the Government are cocking a snook at the High Court judgment. That is exactly what they are doing. All that they have done is to send out guidance to social fund officers. That guidance is less prescriptive than it was before.

    The High Court judgment said that consideration of budget was not the only essential factor. There should also be a test of reasonableness and a test of commonsense application in the assessment of those needs. Those were the other two considerations in the High Court judgment and the Government have totally ignored them.

    The Government have acted in a high-handed manner over the High Court decision. They take the view that the claims can no longer be afforded and that is fundamental to the whole argument. The Minister looks puzzled, but he constantly talks about the need for strict cash limiting of the budget—presumably because he believes that the open-ended and unconditional meeting of need that has always existed in the past—even under Conservative Governments—can now no longer be afforded. The Government can afford open-ended mortgage interest tax relief, which has increased sevenfold in the past decade, to about £7 billion. They can afford open-ended subsidies to private residential and nursing homes, which have increased hundredfold over the past decade, from about £10 million in the early 1980s to more than £1 billion now. The Government can afford open-ended subsidies for personal pensions, now costing some £2 billion, to bribe people into ideologically approved but highly speculative pension arrangements. The only thing that the Government cannot afford is to provide open-ended support—at a fraction of those other costs—for those at the very bottom of society whose needs are manifest and intractable.

    Do I take it from the hon. Gentleman's remarks that the Labour party is against mortgage interest relief and against giving help with the costs of residential care?

    If the hon. Lady cannot follow my line of argument, she will have to listen a great deal more carefully.

    If the hon. Lady had been listening, she would have heard me say to the Government that if they can afford £7 billion in mortgage interest tax relief and £1 billion to subsidise residential and private nursing homes, one might have thought that they could afford a little more than £200 milliona penn'orth in terms of the overall social security budget—to meet the needs of people at the very bottom of society. If there is anyone deeply in need in our society it is those whom we are discussing now.

    The new clause would intensify the two most odious and objectionable features of the social fund. One is the cash limiting of the relief of poverty—something that even Conservative Governments have never done in the past—so that thousands of destitute families, however searing their need, will be denied help because the money has not been made available. That has never happened before.

    The other consideration is the fixing of that budget cap at an aggressively low level, which is only slightly over half of the budget that existed before. That is bound to multiply the numbers who are forced to do without. That is why refusal rates today are soaring at 60 to 70 per cent. Of the other 30 or 40 per cent. who manage to get loans, more than 400,000—nearly 10 per cent. of all claimants—are having to repay social fund loans out of their basic income support, which is meant to provide their basic daily subsistence costs.

    Is not it a matter of public record that the Government are paying out £1 billion a week, which I work out at roughly £145 million per day, on benefits to help the very people to whom the hon. Gentleman referred? We all meet such people in our everyday work; I certainly do in my part of the world. But there is more help than there has ever been, and that is a matter of fact.

    The hon. Lady is not quite right. For the reasons that I have given, the £1 billion a week of the social security budget is not being directed at social fund claimants. It is being directed at the increasing number of people who are dependent on social security. Their numbers are growing. There are about 500,000 more pensioners than there were at the start of the decade. That is not the responsibility of the Government; the need has to be met. But the increase has come about not because benefits are more generous or because the Government have focused more closely on the need; it is simply that there are more people in the categories that have a right to those benefits. The number of unemployed is still about 60 to 70 per cent. higher than it was at the start of the decade, and the number on income support has almost doubled since then. Those are the reasons for the high figure—not that assistance is being given to the people who really need it.

    The Government's new clause does not even begin to address the ocean of hardship, poverty and debt that is undoubtedly washing over the social fund. I cannot believe that the Minister is unaware of that. The Government's hard line in the new clause, in changing the rules to make budget capping even more pronounced, as a reason for rejecting claims will intensify hardship. We take the opposite view, expressed in new clause 3, that social fund officers should be prevented from refusing payments on the ground that there is not enough money in the local office budget and revert to the system that always operated since 1945. Because we totally repudiate the Government's social fund's strategy, we seek to vote down their new clause.

    Question put, That the clause be read a Second time:—

    The House divided: Ayes 288, Noes 197.

    Division No. 144]

    [9.25 pm


    Adley, RobertBoyson, Rt Hon Dr Sir Rhodes
    Aitken, JonathanBraine, Rt Hon Sir Bernard
    Alexander, RichardBrandon-Bravo, Martin
    Alison, Rt Hon MichaelBrazier, Julian
    Allason, RupertBright, Graham
    Amess, DavidBrown, Michael (Brigg & Cl't's)
    Amos, AlanBruce, Ian (Dorset South)
    Arbuthnot, JamesBuchanan-Smith, Rt Hon Alick
    Arnold, Jacques (Gravesham)Burns, Simon
    Arnold, Tom (Hazel Grove)Burt, Alistair
    Ashby, DavidButler, Chris
    Aspinwall, JackButterfill, John
    Atkins, RobertCarlisle, John, (Luton N)
    Atkinson, DavidCarlisle, Kenneth (Lincoln)
    Baker, Nicholas (Dorset N)Carttiss, Michael
    Baldry, TonyCash, William
    Banks, Robert (Harrogate)Chalker, Rt Hon Mrs Lynda
    Batiste, SpencerChapman, Sydney
    Bellingham, HenryChope, Christopher
    Bennett, Nicholas (Pembroke)Clark, Hon Alan (Plym'th S'n)
    Bevan, David GilroyClark, Sir W. (Croydon S)
    Biffen, Rt Hon JohnClarke, Rt Hon K. (Rushcliffe)
    Body, Sir RichardColvin, Michael
    Bonsor, Sir NicholasConway, Derek
    Boscawen, Hon RobertCoombs, Anthony (Wyre F'rest)
    Boswell, TimCoombs, Simon (Swindon)
    Bottomley, PeterCope, Rt Hon John
    Bottomley, Mrs VirginiaCouchman, James
    Bowden, A (Brighton K'pto'n)Cran, James
    Bowden, Gerald (Dulwich)Critchley, Julian
    Bowis, JohnCurrie, Mrs Edwina

    Davies, Q. (Stamf'd & Spald'g)Key, Robert
    Davis, David (Boothferry)King, Roger (B'ham N'thfield)
    Day, StephenKing, Rt Hon Tom (Bridgwater)
    Devlin, TimKirkhope, Timothy
    Dorrell, StephenKnapman, Roger
    Douglas-Hamilton, Lord JamesKnight, Greg (Derby North)
    Dover, DenKnight, Dame Jill (Edgbaston)
    Dunn, BobKnowles, Michael
    Dykes, HughLamont, Rt Hon Norman
    Eggar, TimLatham, Michael
    Evans, David (Welwyn Hatf'd)Lawrence, Ivan
    Evennett, DavidLee, John (Pendle)
    Fallon, MichaelLeigh, Edward (Gainsbor'gh)
    Favell, TonyLightbown, David

    Field, Barry (Isle of Wight)Lloyd, Sir Ian (Havant)
    Fookes, Dame JanetLloyd, Peter (Fareham)
    Forman, NigelLord, Michael
    Forsyth, Michael (Stirling)Luce, Rt Hon Richard
    Forth, EricMacfarlane, Sir Neil
    Fowler, Rt Hon Sir NormanMacGregor, Rt Hon John
    Franks, CecilMacKay, Andrew (E Berkshire)
    Freeman, RogerMaclean, David
    French, DouglasMcLoughlin, Patrick
    Fry, PeterMcNair-Wilson, Sir Michael
    Gale, RogerMcNair-Wilson, Sir Patrick
    Gardiner, GeorgeMadel, David
    Garel-Jones, TristanMajor, Rt Hon John
    Gill, ChristopherMalins, Humfrey
    Gilmour, Rt Hon Sir IanMans, Keith
    Glyn, Dr Sir AlanMarland, Paul
    Goodhart, Sir PhilipMarlow, Tony
    Goodson-Wickes, Dr CharlesMarshall, John (Hendon S)
    Gorman, Mrs TeresaMarshall, Michael (Arundel)
    Gorst, JohnMates, Michael
    Grant, Sir Anthony (CambsSW)Mawhinney, Dr Brian
    Greenway, Harry (Ealing N)Maxwell-Hyslop, Robin
    Greenway, John (Ryedale)Mayhew, Rt Hon Sir Patrick
    Griffiths, Peter (Portsmouth N)Mellor, David
    Grist, IanMeyer, Sir Anthony
    Ground, PatrickMiller, Sir Hal
    Grylls, MichaelMiscampbell, Norman
    Hague, WilliamMitchell, Andrew (Gedling)
    Hamilton, Neil (Tatton)Mitchell, Sir David
    Hampson, Dr KeithMoate, Roger
    Hanley, JeremyMontgomery, Sir Fergus
    Hannam, JohnMoore, Rt Hon John
    Hargreaves, A. (B'ham H'll Gr')Morris, M (N'hampton S)
    Hargreaves, Ken (Hyndburn)Morrison, Sir Charles
    Harris, DavidMorrison, Rt Hon P (Chester)
    Haselhurst, AlanMoss, Malcolm
    Hawkins, ChristopherMoynihan, Hon Colin
    Hayes, JerryMudd, David
    Hayhoe, Rt Hon Sir BarneyNeale, Gerrard
    Hayward, RobertNeedham, Richard
    Heathcoat-Amory, DavidNelson, Anthony
    Hicks, Mrs Maureen (Wolv' NE)Neubert, Michael
    Hicks, Robert (Cornwall SE)Newton, Rt Hon Tony
    Higgins, Rt Hon Terence L.Nicholls, Patrick
    Hind, KennethNicholson, David (Taunton)
    Hogg, Hon Douglas (Gr'th'm)Norris, Steve
    Holt, RichardOnslow, Rt Hon Cranley
    Hordern, Sir PeterPage, Richard
    Howard, Rt Hon MichaelPatnick, Irvine
    Howarth, Alan (Strat'd-on-A)Patten, Rt Hon John
    Howarth, G. (Cannock & B'wd)Pawsey, James
    Howell, Rt Hon David (G'dford)Peacock, Mrs Elizabeth
    Howell, Ralph (North Norfolk)Porter, Barry (Wirral S)
    Hughes, Robert G. (Harrow W)Porter, David (Waveney)
    Hunt, David (Wirral W)Portillo, Michael
    Hunter, AndrewPowell, William (Corby)
    Irvine, MichaelPrice, Sir David
    Irving, Sir CharlesRaffan, Keith
    Jack, MichaelRaison, Rt Hon Timothy
    Jackson, RobertRedwood, John
    Janman, TimRenton, Rt Hon Tim
    Jessel, TobyRhodes James, Robert
    Johnson Smith, Sir GeoffreyRiddick, Graham
    Jones, Gwilym (Cardiff N)Rifkind, Rt Hon Malcolm
    Jones, Robert B (Herts W)Roberts, Wyn (Conwy)
    Kellett-Bowman, Dame ElaineRoe, Mrs Marion

    Rossi, Sir HughTaylor, John M (Solihull)
    Rost, PeterTaylor, Teddy (S'end E)
    Rowe, AndrewTebbit, Rt Hon Norman
    Rumbold, Mrs AngelaThompson, D. (Calder Valley)
    Ryder, RichardThompson, Patrick (Norwich N)
    Sackville, Hon TomThurnham, Peter
    Sayeed, JonathanTownend, John (Bridlington)
    Scott, Rt Hon NicholasTownsend, Cyril D. B'heath)
    Shaw, David (Dover)Tracey, Richard
    Shaw, Sir Giles (Pudsey)Tredinnick, David
    Shaw, Sir Michael (Scarb')Trotter, Neville
    Shelton, Sir WilliamTwinn, Dr Ian
    Shephard, Mrs G. (Norfolk SW)Vaughan, Sir Gerard
    Shepherd, Colin (Hereford)Viggers, Peter
    Shersby, MichaelWaddington, Rt Hon David
    Sims, RogerWakeham, Rt Hon John
    Skeet, Sir TrevorWalden, George
    Smith, Tim (Beaconsfield)Walker, Bill (T'side North)
    Speed, KeithWaller, Gary
    Spicer, Sir Jim (Dorset W)Ward, John
    Spicer, Michael (S Worcs)Wardle, Charles (Bexhill)
    Squire, RobinWarren, Kenneth
    Stanbrook, IvorWatts, John
    Stanley, Rt Hon Sir JohnWells, Bowen
    Stern, MichaelWheeler, Sir John
    Stevens, LewisWiddecombe, Ann
    Stewart, Allan (Eastwood)Wilkinson, John
    Stewart, Andy (Sherwood)Wolfson, Mark
    Stewart, Rt Hon Ian (Herts N)Wood, Timothy
    Stokes, Sir JohnWoodcock, Dr. Mike
    Stradling Thomas, Sir JohnYoung, Sir George (Acton)
    Sumberg, David
    Summerson, HugoTellers for the Ayes:
    Tapsell, Sir PeterMr. Alastair Goodlad and
    Taylor, Ian (Esher)Mr. Tony Durant.


    Abbott, Ms DianeCrowther, Stan
    Adams, Allen (Paisley N)Cryer, Bob
    Allen, GrahamCummings, John
    Alton, DavidCunliffe, Lawrence
    Archer, Rt Hon PeterCunningham, Dr John
    Armstrong, HilaryDalyell, Tam
    Ashdown, Rt Hon PaddyDarling, Alistair
    Ashley, Rt Hon JackDavies, Rt Hon Denzil (Llanelli)
    Ashton, JoeDavies, Ron (Caerphilly)
    Barnes, Harry (Derbyshire NE)Davis, Terry (B'ham Hodge H'L)
    Barnes, Mrs Rosie (Greenwich)Dewar, Donald
    Barron, KevinDixon, Don
    Battle, JohnDobson, Frank
    Beckett, MargaretDoran, Frank
    Beggs, RoyDouglas, Dick
    Beith, A. J.Duffy, A. E. P.
    Benn, Rt Hon TonyDunnachie, Jimmy
    Bennett, A. F. (D'nt'n & R'dish)Dunwoody, Hon Mrs Gwyneth
    Bermingham, GeraldEadie, Alexander
    Blair, TonyEastham, Ken
    Blunkett, DavidEvans, John (St Helens N)
    Boyes, RolandEwing, Mrs Margaret (Moray)
    Bradley, KeithFatchett, Derek
    Bray, Dr JeremyFaulds, Andrew
    Brown, Gordon (D'mline E)Field, Frank (Birkenhead)
    Brown, Nicholas (Newcastle E)Fields, Terry (L'pool B G'n)
    Brown, Ron (Edinburgh Leith)Fisher, Mark
    Buckley, George J.Flannery, Martin
    Callaghan, JimFlynn, Paul
    Campbell, Menzies (Fife NE)Foot, Rt Hon Michael
    Campbell, Ron (Blyth Valley)Forsythe, Clifford (Antrim S)
    Campbell-Savours, D. N.Foster, Derek
    Carlile, Alex (Mont'g)Fraser, John
    Cartwright, JohnFyfe, Maria
    Clarke, Tom (Monklands W)Garrett, John (Norwich South)
    Clay, BobGeorge, Bruce
    Clelland, DavidGodman, Dr Norman A.
    Clwyd, Mrs AnnGolding, Mrs Llin
    Cohen, HarryGordon, Mildred
    Cook, Robin (Livingston)Griffiths, Nigel (Edinburgh S)
    Corbett, RobinGriffiths, Win (Bridgend)
    Corbyn, JeremyGrocott, Bruce
    Cousins, JimHarman, Ms Harriet

    Haynes, FrankPendry, Tom
    Heal, Mrs SylviaPike, Peter L.
    Henderson, DougPrescott, John
    Hinchliffe, DavidPrimarolo, Dawn
    Hoey, Ms Kate (Vauxhall)Quin, Ms Joyce
    Hogg, N. (C'nauld & Kilsyth)Randall, Stuart
    Home Robertson, JohnRedmond, Martin
    Hood, JimmyRees, Rt Hon Merlyn
    Howell, Rt Hon D. (S'heath)Richardson, Jo
    Hughes, John (Coventry NE)Robertson, George
    Hughes, Robert (Aberdeen N)Rooker, Jeff
    Hughes, Roy (Newport E)Ross, Ernie (Dundee W)
    Illsley, EricRoss, William (Londonderry E)
    Jones, Barry (Alyn & Deeside)Rowlands, Ted
    Kaufman, Rt Hon GeraldRuddock, Joan
    Kilfedder, JamesSalmond, Alex
    Kirkwood, ArchySedgemore, Brian
    Lamond, JamesSheerman, Barry
    Leighton, RonSheldon, Rt Hon Robert
    Litherland, RobertShore, Rt Hon Peter
    Livsey, RichardShort, Clare
    Lloyd, Tony (Stretford)Sillars, Jim
    Lofthouse, GeoffreySkinner, Dennis
    Loyden, EddieSmith, Andrew (Oxford E)
    McAllion, JohnSmith, C. (Isl'ton & F'bury)
    McAvoy, ThomasSmith, Rt Hon J. (Monk'ds E)
    McCartney, IanSmyth, Rev Martin (Belfast S)
    Macdonald, Calum A.Snape, Peter
    McFall, JohnSoley, Clive
    McGrady, EddieSpearing, Nigel
    McKay, Allen (Barnsley West)Steel, Rt Hon Sir David
    McKelvey, WilliamSteinberg, Gerry
    McNamara, KevinStott, Roger
    McWilliam, JohnStraw, Jack
    Madden, MaxTaylor, Mrs Ann (Dewsbury)
    Maginnis, KenTaylor, Rt Hon J. D. (S'ford)
    Mahon, Mrs AliceThompson, Jack (Wansbeck)
    Marek, Dr JohnTurner, Dennis
    Marshall, Jim (Leicester S)Vaz, Keith
    Martin, Michael J. (Springburn)Wall, Pat
    Martlew, EricWallace, James
    Maxton, JohnWalley, Joan
    Meacher, MichaelWardell, Gareth (Gower)
    Meale, AlanWareing, Robert N.
    Michie, Bill (Sheffield Heeley)Welsh, Michael (Doncaster N)
    Michie, Mrs Ray (Arg'L & Bute)Wigley, Dafydd
    Molyneaux, Rt Hon JamesWilliams, Rt Hon Alan
    Morgan, RhodriWilson, Brian
    Morley, ElliotWinnick, David
    Morris, Rt Hon A. (W'shawe)Wise, Mrs Audrey
    Mullin, ChrisWorthington, Tony
    Murphy, PaulWray, Jimmy
    Nellist, DaveYoung, David (Bolton SE)
    Oakes, Rt Hon Gordon
    O'Brien, WilliamTellers for the Noes:
    Orme, Rt Hon StanleyMr. Martyn Jones and
    Owen, Rt Hon Dr DavidMr. Ray Powell.
    Patchett, Terry

    Question accordingly agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 26

    Income Support In Respect Of Accommodation Charges For Certain Persons In Residential Care And Nursing Homes

    'In section 22 of the 1986 Act (calculation of income-related benefits) after subsection (2) there shall be inserted

    "(2A) In prescribing, for the purposes of income support, amounts under subsection (1) above in respect of accommodation in any area for qualifying persons in cases where prescribed conditions are fulfilled, the Secretary of State shall take into account information provided by local authorities or other prescribed bodies or persons with respect to the amounts which they have agreed to pay for the provision of accommodation in relevant premises in that area.

    (2B) In subsection (2A) above—

    "accommodation" includes any board or care;
    "local authority" has the same meaning as it has in Part III of the National Assistance Act 1948;
    "qualifying person" means any person such as is mentioned in subsection (1) of section 26A of that Act (which is inserted by the National Health Service and Community Care Act 1990 and relates to persons ordinarily resident in residential care or nursing homes immediately before the commencement of that section);
    "relevant premises" has the meaning given by subsection (2) of that section.".'

    Brought up, and read the First time.—[Mr. Newton.]

    With this, it will be convenient to consider new clause 14—Persons in residential care and nursing homes—

    '(1) The Secretary of State shall review the amounts specified in paragraphs 6 and 7 of Part I of Schedule 4 to the Income Support (General) Regulations as soon as practicable, in order to determine whether they are adequate, having regard to the reasonable cost of providing suitable accommodation, board and suitable personal care for the persons concerned, and shall lay before Parliament a report on his conclusions and the evidence on which they are based.
    (2) If it appears to the Secretary of State that any of those amounts are not adequate, he shall lay before Parliament the draft of an up-rating order substituting such amounts as he considers adequate, which may include different amounts for different areas, and, if the draft order is approved by a resolution of each House, he shall make the order in the form of the draft.
    (3) The provisions of an order under this section shall come into force on the day on which the order is made.
    (4) Subject to subsection (5) below, if a claimant to whom regulation 19(1) of the Income Support (General) Regulations 1987 applies or, on his behalf, the proprietor of the home in which he lives applies to an adjudication officer for a review of the appropriate amount determined in his case for the purposes of paragraph 5 of Part I of Schedule 4 to those regulations on the grounds that that amount is not sufficient to enable him to pay a reasonable charge for suitable accommodation, board and suitable personal care provided in that home, the adjudication officer shall refer the questions whether that amount is sufficient for that purpose and, if not, what higher amount would be sufficient to a social security appeal tribunal for determination.
    (5) If an adjudication officer to whom an application has been made under subsection (4) above is of the opinion that he can determine the questions mentioned in that subsection by reference to—
  • (a) a determination made by a tribunal under that subsection in the case of another claimant living in the same home, or
  • (b) the advice of a local authority with knowledge of the home in question, he may determine those questions instead of referring them to a tribunal.
  • (6) If a tribunal to which a question has been referred under subsection (4) above determines that the amount determined by the adjudication officer is not sufficient, or an adjudication officer so determines under subsection (5) above, the adjudication officer shall review his determination of the appropriate amount, substituting the higher amount determined by the tribunal or by him.'.

    During my speech I shall comment on the three strands of the Government's response to some of the concerns expressed during the debate on the National Health Service and Community Care Bill two weeks ago, and also on a particular point made in the report of the Select Committee on Social Services on the need for greater information about the costs and charges of residential care homes.

    As the House is aware, under the National Health Service and Community Care Bill, the Government's intention is that, from 1 April 1991, local authorities will negotiate prices with voluntary organisations and home owners before making a contract for places in residential care and nursing homes for new cases arising after that time. Obviously, to make a contract, both parties to the agreement—the local authorities and the voluntary organisations or home owners—will have to be satisfied that the prices are fair.

    During an extensive debate on the anxieties about the position that might arise between those whose care would be organised under the new arrangements and those whose support would continue to be made under the preserved income support entitlement under the existing regime, a number of hon. Members—including, not least, my hon. Friend the Member for Ealing, Acton (Sir G. Young)—suggested that those prices resulting from a contractual arrangement should be used by the Department in setting the appropriate income support limits for those with preserved rights to income support.

    I shall not attempt to repeat everything that' I said during that debate, other than that I could envisage some difficulties in simply taking any price that any local authority negotiated for any person in any home and making that the automatic setting of the level for income support in that home. I think that I carried many of my hon. Friends with me on that and also in my criticisms of the Opposition's new clause that we were then debating.

    As I promised when replying to that debate, since then I have carefully considered the suggestions made. In particular, I gave my hon. Friend the Member for Acton an assurance that if, on examination, it appeared that an amendment to social security law was required to ensure that I could respond properly in taking account of what emerged from local authority negotiations, I would table an amendment to this Bill, as it is the last practicable opportunity to introduce such a power before the community care charges take effect in April 1991. That is why I have tabled the new clause, which ensures that I can act along the lines urged in taking account of what emerges from local authority negotiations with voluntary organisations and home owners in setting the income support rates.

    The power that I am taking in the new clause is designed to help me to set up a system of local limits, if need be. In setting such limits, I want to have regard to both the charges being met by local authorities in homes and also, perhaps, the charges being met by other bodies such as the voluntary sector. In fairness to my hon. Friends, whose concern I understand and respect, I am not saying that it would necessarily be possible to make use of those powers at the absolute starting point in April 1991.

    It is clear that we shall need to gain experience of what local authorities are negotiating. For a long time, there may be many homes in which local authorities have not negotiated and have not placed people. It would be foolish of me to suggest that we can suddenly produce a wholesale change in the system at the point of changeover. However, once we have adequate information on the scale required, the new clause will give me the power to respond in the way suggested by many of my hon. Friends. We shall be talking to local authority associations, as soon as possible, about how local authorities can help us in that respect.

    I will be brief in relation to my next point, because our time for debate is limited and many hon. Members want to speak. I want now to consider a need that goes beyond the need for information about what local authorities actually do. I want to consider the need, which I accept, for more and better information about the true costs of running residential care and nursing homes. In particular, the Select Committee on Social Services has recommended that we should commission an early study into that. As I said in our debate on 13 March, I fully accept the force of that request; I hope to approve the commissioning of the necessary research in the near future, and I will let the Select Committee and the House have further details as soon as I can.

    9.45 pm

    My comments so far have responded to the overt purpose of the new clause in the National Health Service and Community Care Bill that was debated two weeks ago. I have responded to suggestions made then about the social security regime in the wake of the community care changes being introduced in April 1991 and also to the request made by the Select Committee on Social Services.

    One of the striking things about the debate on that new clause two weeks ago was that much of what was said, especially—but not only—by my hon. Friends, was not directed to the overt purpose of that new clause, which was concerned with the post-1991 regime. Comments then reflected a wide measure of concern about the income support limits in the present year, quite apart from what the position might be after April 1991.

    As the House knows, the income support limits are due to be increased in virtually all cases by £10 a week in a fortnight's time. For example, that will take the basic residential care home limit to £173 a week in Greater London and £150 a week elsewhere. It will take the basic nursing home limit to £223 in Greater London and £200 a week elsewhere.

    In all, this year's increases will be the biggest since November 1985, at a cost of £100 million. They take the expected total of income support in such cases in 1990–91 to well over £1,100 million. That is a substantial rise, which will undoubtedly help to ease some of the pressures reflected in our debates. However, I have carefully considered whether there is more that I can appropriately do when, as I said to the House in the earlier debate, the information currently available does not provide a sufficiently secure base for more detailed geographical or local variation or for further fine tuning between different categories of case or home.

    It is clear from all the information available, whether anecdotal or from representations that we have received, that the pressure on nursing homes is greater than that on residential care homes. That is understandable, in view of the scale of the increases in nursing pay which have taken place as a result of the Government's actions over the past two years.

    Following on from the uprating that is about to take place, I propose to make a further increase in the limits in mid-August—the earliest time consistent with sensible handling of the case load in the Department of Social Security offices. At that time, all residential care home limits will be increased by a further £5 a week, making a total of £15 a week more than at present and taking the figure to £178 a week in Greater London and £155 a week elsewhere.

    All nursing home limits, with one exception, will be increased by a further £10 a week, making a total of £20 a week more than at present. That will take the figure to £233 a week in Greater London and £210 a week elsewhere. The one exception is that, for hospices and other cases covered by the limit relating to people who are terminally ill, the increase will be a further £15 a week, making a total of £25 a week more than now. That will take that very important limit to £283 in Greater London and £260 a week elsewhere.

    That will mean that the cost of increased limits next year will be £45 million more than the £100 million announced in my October uprating statement, giving a total increase of about £150 million compared with 1989–90. In a full year, the total cost of the impending uprating, the one due in a fortnight's time, together with the further increase that I have announced, will be about £170 million.

    No, not at this stage.

    The additions that I have announced can be accommodated in the existing DSS programme of over £50 billion, apart from an addition of just over £20 million from the reserve which my right hon. Friend the Chief Secretary to the Treasury has agreed for 1990–91. What I have been able to say on this clause properly responds to concerns that have been legitimately and responsibly expressed in the House. I commend the new clause to the House.

    Before we continue the debate, I must tell the House that I have selected a manuscript amendment in the name of the hon. Member for Oldham, West (Mr. Meacher). It has been available for some time, and for the convenience of the House I shall read it out. It is: to leave out "take into account" and insert

    "determine the amounts required to meet the costs of providing such accommodation of a suitable standard by reference to".

    This new clause was tabled at the last possible moment, late last night, a full fortnight after the matter was debated in the House. Clearly, there has been agonising over exactly what should go into it. With the exception of the extra money, which is certainly welcome and with which I will deal in more detail later, the new clause takes us very little further than the last time the issue was debated.

    What safeguards does the new clause offer? That is the key point. Of course, the Government will consider the information that is provided by local authorities on the charges that they consider acceptable, but they do not need a new clause to do that. The measure does not do anything for those who are facing shortfalls and possible eviction in the immediate future. The Secretary of State, who is always a fair man on such issues, was good enough to make that clear.

    The new clause will not come into effect until April 1991 and that will be too late to help people either this April or next April. The question that was asked on Second Reading continues to be relevant and it is about who will meet the shortfall in the meantime. Above all, the new clause does not give any guarantees that it will meet the level of payment agreed between local authorities and homes. It says that the Secretary of State will take the information into account. We certainly wish him to do that, but above all the House wishes him to act on it and there is no specific commitment in the new clause that makes it clear that he will.

    For those reasons the new clause does not give security to the 176,000 sick and elderly people who could face eviction because the Secretary of State is not guaranteeing that they will not be evicted. That is the crucial criterion. It was the criterion on Second Reading and it remains the criterion on which each hon. Member should base his judgment. It does nothing to stop homes charging more for residents not covered by agreements with local authorities, which is another point.

    As I have said, we welcome the extra money. That is certainly important. The Secretary of State has said that the residential care limits rise by £5 over and above what he stated before and the amount for nursing homes will rise by £10 and for hospices by £15. While that is welcome, he must be aware that the gap that has to be filled is often about £30, £40 or even £60.

    What matters is not whether assistance is given to make up the shortfall but whether it is enough to prevent the eviction of the elderly person. Although the money is welcome, I suspect that it will not serve that purpose in many cases.

    New clause 14 requires the Secretary of State to review the income support limits for residential and nursing homes and to enable adjudicating officers and appeal tribunals to decide that the limits should be exceeded, when necessary, to meet reasonable charges for suitable accommodation. To some extent, the Government are following our lead, but the crucial difference is that they are holding back from a commitment to solving the problem.

    There are two elements in our new clause: first, the Secretary of State's review of the limits could and should be done straight away. Both sides of the House agree that there is no need to wait until 1991. We also believe that the Government have a duty to review the limits, for two reasons. The explosion in the number of people in those homes is the result of Government policy. In the early 1980s the Government did not provide the cash for local authorities that was needed for community care, and they encouraged people to go into private care on the understanding that the costs would be covered by social security. Moreover, since 1985 the income support limits have been uprated by less than is required to cover increasing costs. This April's £10 increase, now raised to £15, is still less than inflation requires.

    During the community care debate the Secretary of State said that we need more and better information, and he undertook to present proposals to the Select Committee. We welcome that; it is obviously needed. But we do not believe that the collection of information should be used to stall. There is enough information already to show that some safeguards should be provided. The Government have admitted to the Social Services Select Committee that no fewer than 42 per cent. of people in care and in receipt of income support live in homes that charge more than the income support limits. So tonight we are discussing the fact that two in five of these people face a shortfall. I shall not repeat this at length, because we have already discussed it, but that is not a matter of unreasonable charges. The National Federation of Housing Associations found that most of the homes that it surveyed, which were not profit-making, had shortfalls of £30 or more, and one in five had a shortfall of £60. Those figures should be taken carefully into account alongside those that the Minister gave earlier.

    The second part of our new clause ensures that an adjudicating officer or tribunal will have the power to exceed income support limits. The Government say that adjudication officers do not have the capacity to determine reasonable charges, on the ground that when they had that job in 1985 they came up with wildly differing levels in various parts of the country. Surely, however, the answer lies in guidelines and assistance from local authorities. The problem will apply only for this year, because as from April 1991—we are agreed on this—officers and tribunals will have the local authority-agreed charges as a guideline. The Government new clause says that the Secretary of State will take those levels into account, but what is wrong with adjudicating officers and tribunals doing the same?

    While we welcome the Secretary of State's statement, having reviewed the matter with extreme care, we do not believe that it goes far enough—a view that may be widely shared. For all those reasons we intend to press new clause 14 to a Division when the time comes, because it alone guarantees protection against eviction for 176,000 elderly people in residential and nursing homes. We should prefer to press our manuscript amendment to a Division. I sought to achieve the same purpose by tabling it, because it advances protection for elderly residents in a way that I believe commands majority support in the House. Our preference is to vote on that. If for any reason we cannot do so, we shall press Government new clause 26 to a Division because it does not go far enough. It is far too late to say that the Secretary of State shall take into account relevant information. That ignores the spirit and intention of the Division in the House a fortnight ago. Above all, it does not provide security against eviction, which it is unforgivable for any civilised Government to withhold from frail and needy elderly people.

    10 pm

    Two weeks ago, it was with great regret that I found myself in the unusual position of being unable to support the Government. I was deeply distressed that, in my constituency, nursing home proprietors were subsidising unfortunate elderly people. I was even more appalled that, if nothing was done, those old people could be evicted. That was the reason for my speech and vote.

    I am delighted that my right hon. Friend the Secretary of State has come to the House with a solution. We should recognise the struggle that he has had. We all know that, at the end of the day, one must do battle with the Treasury. I give complete credit to my right hon. Friend for responding to the views expressed on both sides, doing battle with the Treasury and winning that battle. For that reason, we should respond appropriately.

    Unlike the hon. Member for Oldham, West (Mr. Meacher), I am not worried that the Minister
    "shall take into account information provided by local authorities".
    That is precisely what I wanted him to do in the previous debate. Those words fulfil my wishes. I understand that there is to be a gap until April 1991, but we now know that more money will be available and that it is a sensible amount, so appropriate arrangements can be made. I hope and believe that nursing homes and residential homes in my constituency can tide over the gap if necessary, as 1 hope, with some assistance from the county council. In any event, they can inform the Minister of that.

    Costs are high in London, but let us not disregard the fact that in some parts of East Anglia, as my right hon. Friend will know, particularly Cambridgeshire, costs are high and obtaining nursing staff is difficult. Therefore, I ask him to consider the geographical position carefully.

    The problem has been going on for some time. I have a file of correspondence going back a long time. It is not a new problem. It is only right that we should recognise the Secretary of State's efforts. This is the House at its best. The will of the House has been expressed, and the Minister has responded to it. In those circumstances, I can best respond by saying that I shall support the Government tonight. I hope that my right hon. and hon. Friends will do likewise.

    We are interested to know precisely how the Secretary of State reached the present figure, other than by emergency pressure. 1 wish to put to him some details which may seem to be a side issue, but which are crucial for working out the figure.

    On 24 January, during a debate on residential homes instigated by the hon. Member for Romsey and Waterside (Mr. Colvin), the Under-Secretary of State for Social Security pointed out:
    "The national limits are not rates, but maximum allowances towards fees. In addition, we provide an allowance for personal expenses or pocket money … I must emphasise that it has never been the policy of this Government—nor could it be the policy of any Government—to undertake to meet all fees charged by homes, however high they may be. We set the limits with due regard not only to the interests of the residents and the homes concerned, but also to the interests of the taxpayer."—[Official Report, 24 January 1990; Vol. 165, c. 1028-9.]
    I remind the Secretary of State that he may like to have a conversation with the Secretary of State for the Environment. In precisely that context, the housing benefit legislation means that there is no limit on the rents that private landlords can charge people on income support and housing benefit and the amounts that must be repaid to those private landlords.

    This is about the third time that the lion. Gentleman has made that point. He is wrong. There are powers to restrict the payment of housing benefit where the rent officer judges that it is an excessive rent—I do not wish to be held to the exact words, but no doubt I can get further advice—and they are often used.

    The Secretary of State identifies the exact problem, because the words are crucial. If he checks the legislation, he will see that the words are not "excessive rents" but "market rents". I accept that this point is somewhat to the side of this debate, but we put this question during the housing debate. The amount depends on what the capital values are, because that may blow the budget of the Department of Social Security sky high. I hope that the right hon. Gentleman accepts that fact.

    I shall try to avoid intervening again, because I do not wish to interrupt the hon. Gentleman. Frankly, this is a slight side-step to the debate. I am told by that process of curious osmosis by which information reaches Ministers in these circumstances that the words used are rents "which are unreasonably high".

    We shall watch with interest what happens in the private rented sector and how much housing benefit is paid out by the DSS for rents that are excessive in the terms that the Government have laid out in their legislation to remove controls on rents. Without the controls, obviously the Government are in some difficulty.

    I tabled a question to the Secretary of State asking "what regulations govern the administration and use of the pocket money element in the board-and-lodging allowance". The reply stated:
    "Applicable amounts payable for persons in independent residential care and nursing homes are prescribed by Income Support (General) Regulations 1987, as amended. They include an amount in respect of personal expenses which is at present £10·05 each week. The regulations do not prescribe how that allowance is to be used, as this is a matter for the claimant."—{Official Report, 30 January 1990; Vol. 166, c. 123.]
    The difficulty is that the money never gets to the claimants because the allowance is deducted by the costs of the place at which they reside.

    I received a letter from a Leeds constituent, who said that she wanted to write about
    "the case of my Mother-in-law, who will be ninety-seven in May, and is living in a Residential Home in … Leeds.
    It was the only Home available, at the time she needed to be taken care of, and there are only three ladies residing there as the person in charge cannot accommodate any more, but it is registered.
    The two other ladies residing there do get a little pocket money, as they share a room, but when Mother went there, there was only a single room, and was more expensive, so therefore she was not entitled to any pocket money. The fee then was £140-00 per week. Last year at the pension rise, we thought she would be entitled to a bit of money then—but no —the fee went up to £150-00—therefore Mother was entitled to no pocket money again. This year I expect will be the same…
    We have to provide Mother with Pocket Money and clothing, which has to include hairdressing and chiropody."

    Page 19 of chapter 14 of "The Government's Expenditure Plans" for the Department of Social Security, under the heading "Proposals for changes to benefits to long-term sick and disabled people", states:
    "the hospital personal expenses allowance for single people receiving income-related benefits will increase from £8·70 to £11·75. This will benefit pensioners and other single people as well as sick and disabled people."
    Why has the pocket allowance for those in residential homes not been increased? More seriously, what guarantee do we have that the pocket money will not become part of the cost of board and lodging, so that in practice the money is never recieved?

    It is for the Secretary of State to say clearly that the money that his Department has earmarked for pocket money will not be absorbed in fees. If that were to happen, it would mask hidden costs. I accept that the Department says in good faith that the money is for the use of clients, to be used as they wish. That is why it should not be salted away to cover the cost of fees. May we have an assurance that the money allocated for personal pocket expenses will be used for that purpose and not for board and lodging costs, thereby appearing to reduce those costs?

    I thank the Secretary of State for listening to the clearly expressed view of the House two weeks ago. It could not be right to cover the costs of people who will in future enter residential care and nursing homes and not cover the costs of those already in such homes. I am glad that my right hon. Friend recognised the anomaly and corrected it. I agree with what my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) said and I say to my right hon. Friend: well done, you fought a good battle and you won.

    Welcome though the provisions in the new clause are, they do not go far enough, for the reasons that have been stated. The people operating residential homes, certainly in my area, face a difficult problem in trying to bridge the gap between a shortage of funds now and the time when tonight's announcement will bear fruit.

    The Secretary of State was candid enough to say that it will take time before the assessments are studied and the results work through to local authorities. In terms of the solution that the right hon. Gentleman has introduced, that is bound to be so, but he should be more forthcoming by saying how long it will take him to act, should he find that the evidence reaching him is not to his liking. Should the evidence show that a need exists, will it take weeks, months or years before he will be able to remedy the situation?

    It could be a year or 18 months before the Government get round to taking action. Should that be the case, many residential homes in my area might go out of business. It would not be a question of evicting some elderly residents already in homes. That would be bad enough. Some residential homes are unable to make ends meet now.

    I am thinking of homes in my constituency which look after the needs of the demented elderly, a difficult group for whom to care. Some nursing homes do an excellent job in looking after their needs, and considering that they are already finding it difficult to make ends meet, one wonders how long it will take for the extra assistance to work its way through. They already say that it will take time before the community care provisions, through local authorities, come on stream. The help to come from the Government's new proposals, if there is any, may take 18 months or two years to appear, and that gap is worrying nursing homes.

    I would be more sanguine about the new clause and the prospects of the help that we are told it will bring if the Secretary of State could be more reassuring in that respect. I accept that it is a move forward. If the new clause is to mean anything, the Government will find themselves being forced to use it heftily if we are to meet the difficulties that are being faced by many residents and home operators.

    10.15 pm

    I did not speak on the new clause last week, for the very simple reason that the Select Committee on Social Services, of which I am a member, had produced a short report, which I hope assisted the House in coming to the conclusion that it came to. As to the gap between what people receive in income support and the costs that they have to meet, we know that there are quite substantial regional variations. This was identified by the Committee, and in this regard we are completely at one with my right hon. Friend. There can be variations even within a region, depending on whether a home is owned outright or is being paid for through a mortgage.

    We welcome my right hon. Friend's response. However as has been said by several hon. Members, there will still be a shortfall. In this regard, I am particularly concerned about nursing homes. As one or two hon. Members have pointed out, nursing home costs have gone up rather more substantially because of the improved pay for nurses. It seems to me that there is a very simple solution. This suggestion was not in the Committee's report— simply offer it personally. Where this difficulty arises, especially in the intervening months—before implementation of my right hon. Friend's proposals—the district health authority should be allowed to top up. Often we are talking about £30 or £40 a week. My understanding is that, under Treasury rules, the district health authority could take over total responsibility and pay the lot, but is not allowed to top up. In the past, I had correspondence with the Department of Health and Social Security about this matter. As the DHSS has now been split into two Departments, what I am suggesting should not give rise to any ill feeling. The difference between the amount of the top-up and what it would cost the district health authority to take a person into a geriatric ward is very substantial indeed. I shall not detain the House by giving figures to demonstrate cost variations, as I can see that my right hon. Friend and my right hon. and learned Friend are both very aware of them.

    Perhaps I should observe wryly that, whereas two weeks ago, as the Social Security Secretary, I got drawn somewhat unexpectedly into the debate on a health Bill, my hon. Friend is now seeking to draw my right hon. and learned Friend the Secretary of State for Health into a social security Bill. I am happy to leave my right hon. and learned Friend to consider my hon. Friend's proposal.

    My right hon. Friend will know that, whatever happens in Whitehall, health care in the real world is a continuum. I defended the Government's decision to deal with care in the community and the National Health Service in the same Bill. So we are on the same side. Of course, the common enemy is Treasury rules. I refer not to the best use of public resources, but simply to the fact that the Treasury operates on the basis of its own liturgical rules, rather than on the basis of cost-effectiveness. In terms of cost-effectiveness, we could avoid difficulties over individual cases where the district health authority is willing to take up the difference. Under the existing nursing homes legislation, the district health authority is responsible for inspecting homes, so it knows them. Therefore, the fears of some of us about excessive charges and about care being inadequate are dealt with already because homes are registered and inspected by the DHA.

    I leave that thought with my right hon. Friend. I am delighted that he accepted the Select Committee's proposal that there should be detailed studies of the variations in costs, with a view to producing a more coherent formula. The Committee identified the problem, and I thank my right hon. Friend for his response. But the problem will not go away; it is with us for keeps. The higher the rate of inflation, the more urgent is the problem. While I am thankful for my right hon. Friend's immediate response, I have to say—though I do not want to sound depressing —that this is not the end of the story.

    I want to ask the Minister two specific questions about the announcement that he made on the new clause. He may remember that I raised with him on Second Reading the plight of war widows in nursing homes and residential homes. Although a constituent of mine had received the extra £40 from the Government, and although a promise had been made in the Chamber that it would be untouched by any decisions about income support, she lost all the £40 increase in her war widows' pension because of the regulations on income support. I am pleased to tell the Minister that the Department agreed to disregard the £40 and to increase her income support to match her nursing home fee. I do not know how that happened, but is it now a general rule? From now on, will the £40 given to war widows be disregarded in calculations for income support?

    The point is so specific that it is probably sensible for me to respond to it immediately. I am a little puzzled by what the hon. Lady has said. The increase of £40 is not to be paid to pre-1973 war widows until next month. Certainly her constituent could not have it in January. I can assure the hon. Lady that, as my right hon. Friend the Secretary of State for Defence said at the time, and as I have subsequently carried into regulations, the whole of the £40 is to be disregarded for the purposes of all income-related benefits. It will not apply to housing benefit, income support or family credit, although probably that will not apply to war widows.

    I am grateful to the Minister for his intervention. I am sure that he appreciates that many nursing homes notify in advance increases in charges and that the increases normally take effect in April to coincide with increases in benefit. I agree that war widows' pensions should be protected. I want to know how the shortfall in fees will be made up to ensure that the increase in pension will not be incorporated in the fee.

    My second point relates to the fact that people are on income support because they have no other income. I see the Minister shaking his head. Income support is paid to top up income to make payments to nursing homes. In many instances the top-up of income support does not equal the cost of the nursing home fees. That point has been made frequently in the House.

    Even taking into account the Minister's announcement, in Avon there will still be a shortfall of £15, £20, £25, or £30, depending on the location of the home. Will the Minister explain the position to the House so that we may tell our constituents who still have a shortfall what they should do about it? If the welfare state cannot act as a safety net for the most vulnerable and needy in society, what does it exist for? Perhaps the Minister will tell us how his Department intends the shortfall to be made up in the interim, because many people will still not have enough money to pay their nursing home fees.

    I listened carefully to what my right hon. Friend the Minister said. Two weeks ago, like many of my colleagues, I went into the Opposition Lobby on an amendment. I greatly appreciate what my right hon. Friend said. Obviously, he listened carefully to many of his Back-Bench colleagues on that occasion.

    I have one or two worries. Some hon. Members may have never seen anyone suffering from Alzheimer's disease. I think that it is the most frightening thing that could happen to an individual. Sufferers need special care and their families cannot cope. It is not a matter of them putting Grannie or Grandpa away. It is impossible to cope with someone in that state. In Yorkshire there are some specialised homes that can care for such people. Nursing homes send people out and say, "We can't cope," and we know that there have been examples of that. The specialised homes are residential care homes, not nursing homes. Because they provide 24-hour specialised care, their costs are high. A young family living in my constituency have such a problem. The husband, who is a bus driver, is working all the hours God sends to raise an extra £35 per week to pay for his mother-in-law, who needs to be cared for, and they have three young children. We spend so much money on benefits that it cannot be right that such a family should be excluded and have to find the amount somehow or another. Will the Minister consider that carefully? I fear that that old lady will end up out on the street when her family cannot provide £35 or that they will have to make their children do without shoes to provide it. Residential care and nursing homes do not incur such huge costs.

    There is also a problem when pensioners, who are often in their early 60s, and on their own, have to try to provide for one or two parents who are in their 90s and live in residential care homes. Those pensioners do not have the money to pay. One lady brought her bank statement to me, and she had 22p left in the bank. She needs to find £45 to pay for her father, who is 92.

    There must be provision in the system to help such people this week and next week, but we have not found it yet. I appreciate that the increases in August were a tremendous help, and that the rules that come into effect next April will help, but the families that I have described are at their wits' end. That may result in nervous breakdowns caused by worry about their parents.

    Given the amount of money that we spend, we should be able to help such people in the interim period. I plead with the Minister to consider specific cases or to give an idea of what hon. Members could do to help those who are waiting to see what he says tonight.

    I appreciate the announcement tonight, and I think that it is a major step forward. I cannot imagine why Conservative Members, who came into the Opposition Lobby to vote a couple of weeks ago and who find that they have something to be thankful for tonight, do not come into our Lobby more often. It seems to have been a worthwhile exercise.

    Like other hon. Members who represent coastal constituencies, I became aware a few years ago of the extraordinary proliferation of nursing homes. Out of curiosity, I tabled a written question 18 months ago asking how levels of income support had increased. As far as I know, that was the first time that it emerged that residential care had become a billion-pound industry—it had gone from £82 million in 1979 to £1 billion 10 years later. That spiral cannot simply go on indefinitely. We must bear in mind that it was public policy to create that new industry—private residential homes—and to concentrate so many resources in that kind of accommodation, and into income support payments for people in them.

    The tragedy was that, having created that huge expenditure, the Government took fright. The pace of increase in income support has not been sufficient to keep up with the costs of the homes which were created during the great boom period. The Minister has to live with that reality now, as future Ministers will have to.

    The Minister would do well to listen to his hon. Friend the Member for Eastleigh (Sir D. Price), who seemed to speak a lot of sense on the subject. The new clause still has a blanket approach, although it is now within local authority areas. The problem is that we are talking not about problems arising out of what is charged in a town or a district health board area, but about individuals and specific homes. I am sure that Conservative Members will find out as they go along that the wonder of the poll tax is that one discovers that one is not dealing with categories of 1 million people or 100,000 people; every case throws up different circumstances and different individual problems to be dealt with.

    10.30 pm

    Let me describe the kind of problems that I have come across in my constituency. An elderly person is living quite happily in a home until it is taken over by another company, which decides that it does not want to operate a run-of-the-mill home on basic charges but, rather, an up-market de luxe nursing home. The prices go shooting up. The elderly person, who has previously been able to meet the cost of his care, suddenly finds that there has been a large increase in the amount for which he is being asked. Would the new clause meet that happenstance? The new cost of the home might be out of the normal order of things in that particular area and the general rate that the local authority applied in the area might not cover the case of a person caught by such a change of ownership.

    Similarly, as the hon. Member for Batley and Spen (Mrs. Peacock) said, there are exceptional cases in which costs are higher because the level of nursing care is higher. Within one area—whether it is a local authority area or a district health authority area—a great range of circumstances may pertain.

    That takes us back to what my hon. Friend the Member for Oldham, West (Mr. Meacher) said. The owners of the homes identify an average shortfall of about £40 per person per week. At the most generous estimate, what the Minister proposes will go perhaps halfway towards meeting that shortfall. But everything is relative. For a poor person—a person who does not have extraneous income—it does not really matter whether the figure is £20 or £40 a week. It is a substantial shortfall, and if the person has no means to fill the gap, the problem remains the same.

    I welcome the proposals that the Minister has announced—I am not being churlish about them—but the problem remains that people will set a level of charge and many of the clients will not be able to meet it. On the other hand, a blanket approach does not meet the problem either. It takes us back to the initial dilemma to which I referred—that the global sum just goes on increasing and in some cases all that one is doing is encouraging homes to increase charges, for a quality of service that is not necessarily provided.

    Putting those two arguments together, it seems to me that there is a case for the flexibility for which the hon. Member for Eastleigh argued. That may be a big task; such a system may be difficult to administer. But it will mean that there will be an officer in each area looking at specific cases and the genuine human problems and trying to solve them case by case.

    I am grateful for the money that has been awarded, which will come as a relief to many people. The new clause is a step in the right direction and a response to what the whole House voted for a fortnight ago. But the Minister will have to go further—and future Ministers will have to go further—to meet the specific cases to which the problem gives rise.

    I shall be brief, because there are other Conservative Members who deserve to be heard—not least my hon. Friend the Member for Maidstone (Miss Widdecombe), who spoke with such emotion on the subject only two weeks ago. Like other Conservative Members, two weeks ago I voted against the Government and for the all-party amendment. I did so reluctantly, although I make no apology for it, because unless we used the most powerful means available to Back Benchers—voting—there could be no guarantee that we should get a response.

    Having said that, I am delighted that my right hon. Friend the Secretary of State has listened to the arguments and responded to the debate. In two weeks, which is a very short time scale for Whitehall, he has responded with the new clause before us today. He had to do that against a very difficult economic background. We have had a restrictive Budget, with the downward pressure on expenditure to which my right hon. Friend the Chancellor referred. Against such an economic background, to negotiate this sum of money from the Treasury in such a short time was a genuine achievement, for which my right hon. Friend deserves full credit.

    I am delighted with new clause 26, because it embraces the principle for which many of us spoke two weeks ago —using local authority contracts as the basis for income support. The new clause gives the Department the power to validate the price negotiated between the local authority and the home as the basis for income support, which is the right long-term solution.

    There is no advantage in Opposition new clause 14, which is wholly bureaucratic—involving tribunals and adjudicating officers—by comparison with the Government's solution. My right hon. Friend mentioned the time scale. If a local authority makes good progress this year and negotiates a series of contracts to come into effect in 1991, will my right hon. Friend's Department be able to use those contracts in setting the income support level in that local authority's area—or does he propose waiting until the system is nationally tested before allowing progress at a local level?

    In the debate of two weeks ago, it was no part of the proposed new clause to insist on extra help being provided this year. Certainly I did not make that demand in my own speech. I regard as a bonus the additional assistance that my right hon. Friend announced tonight for nursing and residential care homes from August, which will help in cases where the shoe is pinching.

    New clause 26 is an honourable response from an honourable man, and I hope that the House will support it.

    I ask the Secretary of State a straight question, and I hope that he will give a straight answer. Who pays? Although we are grateful for the right hon. Gentleman's announcement tonight, it must be seen as an exercise in damage limitation, being the minimum action required to satisfy the Secretary of State's right hon. and hon. Friends.

    The problem remains this year, as it will next year, that there is a gap between the amount charged and what can be claimed. Who will pay the difference? In some cases, it will be the relatives of the individual concerned—but often they themselves will be pensioners. Increasing life expectancy means that many residents of nursing and residential homes are aged 85 or 90, and have relatives who are themselves pensioners and unable to meet any additional costs. In other cases, relatives have moved from the area—which may be the reason why an individual was placed in a home in the first place.

    In both the Local Government and Housing Bill and the National Health Service and Community Care Bill, responsibility is ultimately placed in the hands of the local authority, which will have to undertake a case study and determine, through the officer concerned, what form of care is to be provided—care in the community or care in the home. So in many cases the local authority will have to pay the difference if the Department refuses to do so. I hope that Conservative Members will think about that when they vote tonight.

    There is little use taking a local authority to task or placing limitations on its level of poll tax if at the same time the Government deliberately load it with the responsibility for meeting the gap between charges and the money available from central Government. Will the Secretary of State or the Minister for Social Security undertake to hold consultations with local authorities, and confirm that funding will be available for them to make up any difference?

    The Government have brought the problem upon themselves. When they came to power, they decided to encourage private nursing and residential care homes, which was fair enough. But the bill has to be paid, and instead of ducking, weaving, dodging and bobbing we should be honest and above board. Let us ensure that payment stops finally with the Government of the day.

    We must care for those who find themselves in homes, so let us eradicate the problems, worries and concerns that face those who are in homes and their relatives. So many families are bending over backwards to try to find the charges. I believe that we can pull together within a proper system. It is right and proper that responsibility should rest with local government, but central Government should ensure that adequate funding is available.

    The new clause comes as a great reassurance and considerable relief to those who have been campaigning for such a provision for the past year. The question asked by hon. Members on both sides of the House is, "What happens to the existing shortfall?" I was concerned that strong pressure to evict would be the prospect if action were not taken. If those who run the homes had been faced with a long-term problem and had felt that no endeavour was being made to match the level of benefits to the level of reasonable charges, they would have had every incentive to evict quickly. Immediate relief means that they are receiving more money than hitherto, and that should help.

    The homes that face the difficult problem of servicing a large capital investment will be assisted if, in addition to the generous interim measures, there is a fall in interest rates. I feel that there is some hope for home owners. I feel also that proprietors will be much less pushed to evict than they would have been if the measures in the new clause had not been brought forward. The shortfall is of less significance than it was. A perpetual bleakness has been removed.

    Does the new clause provide a sufficient guarantee? I am reassured, first, because account is taken of both nursing and residential homes. There was much speculation that we would be confronted with action only in the nursing home sector. Secondly, the new clause provides that the Secretary of State shall, not may, take into account reasonable levels of charges. There is now, or will be, a clear obligation on the Secretary of State.

    Two questions remain, however, for my right hon. Friend the Secretary of State. Does he accept that the new clause will be a cause for future action and that it is not merely an adornment of the statute book? Secondly, does he accept that future action must commence as quickly as possible after April 1991 if we are not to find, once more, that there is pressure to evict?

    I find new clause 14 unacceptable because it places emphasis on adjudication officers. My right hon. Friend has persuaded me that that is not the right approach. As for the manuscript amendment, of which I have had sound if not sight, it provides the blank cheque that we have tried to aviod. If my right hon. Friend will give the assurance that he regards the new clause as a programme for action and not merely a reassuring sop, I think that we may trust him. I urge my right hon. and hon. Friends to go with him tonight.

    10.45 pm

    I welcome what the Government have done. My concern about shortfall and future action was expressed clearly by the hon. Member for Maidstone (Miss Widdecombe).

    I do not believe that the new clause is sufficient to deal with the problems that have been brought to my notice. Half the constituency of the hon. Member for Batley and Spen (Mrs. Peacock) was joined with half of my constituency for a long time—Batley and Morley—and, therefore, we share the problems with former mill towns in the west riding. I should like to express the concern of my constituents.

    The new clause refers to "prescribed" bodies. I declare an interest because I am on the governing board of a Salvation Army home not far from the House. My mother was there for a long time. She was a war widow and received war widows' pension and attendance allowance but not income support.

    Over the years, I have learned about the expertise of the Salvation Army. It does marvellous work for down and outs—it will do such work tonight in London—and it has built homes and altered old buildings. Before being on the governing board, I was not aware of the expertise and professionalism of its staff.

    Whatever information the Department of Social Security receives from local authorities, the Salvation Army could provide, within weeks, a detailed report on the problems experienced in its homes. Such a report would cover a good cross-section, because the people in its homes come from a variety of backgrounds.

    The letters that I have received and the people who have come to see me cause me to worry that the sums being offered by the Government are not sufficient. I have received letters from people on low incomes whose aged parents are in homes. They are concerned that their parents will be evicted because they cannot afford to make the payments. I want to check in the next few weeks what difference the money the Government have offered will make to them. Will there still be a problem of eviction because my constituents cannot afford to pay?

    I have a constituent—a former nurse—who runs an old people's home with her husband. They are devoted to their patients and make only enough money to cover their incomes. I want to check that next year they will not lose money.

    As my hon. Friend the Member for Bristol, South (Ms. Primarolo) said, we are debating not structures or statistics but the dignity of people living in old people's homes. If in the next few weeks the Minister is told by hon. Members or the Salvation Army that his figures are wrong, will he be able to act on that information in advance of 1991?

    I suspect that we are all in for a surprise. Hon. Members will receive letters and their constituents will say to them, "Thank you for what you have done. We are not looking a gift horse in the mouth, but frankly it is not enough."

    I shall be extremely brief.

    I welcome new clause 26 and the comments made by my right hon. Friend the Secretary of State, but I suggest that the success of the arrangements between now and April 1991 will depend not only on the generosity of the Department but on the restraint and tolerance of the owners of residential care homes. It would be helpful if my right hon. Friend said that we can look forward to such success.

    The advantage of new clause 26 is that after April 1991 it will not leave the cost of residential care open ended. Although two weeks ago and tonight our attention has been directed to residents who depend on income support, those who manage to pay their own fees must meet the increased costs that inevitably follow when income support is raised.

    New clause 26 meets the objections that I raised two weeks ago. We should be grateful for the tolerance of home owners who will now have a better opportunity to care for our constituents.

    I wish to make two crisp points. First, I am grateful to hon. Members for their response to my proposals. Secondly, such is my mellow frame of mind that I shall even co-operate with the Opposition, who wish me to sit down a little early so that they may vote on their amendment rather than on the new clause. I shall respond as best I can to some of the points raised during the debate.

    I say to all hon. Members, but especially to the hon. Members for Oldham, West (Mr. Meacher) and for Bristol, South (Ms. Primarolo), that I do not think that the complexities of the position have been fully recognised in the debate. I want to explain the difficulty that I or any other Minister would face in coming forward with what would be regarded as a complete solution. As I said in our previous debate on this matter, there are two categories of shortfall with these homes. One is involuntary—where people cannot meet the charge being levied. That is the case that concerns my hon. Friend the Member for Maidstone (Miss Widdecombe) and others. The other category—there was a case in my constituency only last week—is where relatives use their freedom to top up what income support will buy because they wish to pay for more than the state can be expected to provide.

    Indeed, many of the charitable bodies have said that they do not expect the full difference between income support and their costs to be met. It is important that that is understood. I am not suggesting that they have expressed satisfaction with the present limits, but they do not demand that the full gap should be met because it is specifically part of their policy to provide a standard of amenity and the like higher than they think it reasonable for the state to be expected to pay for. They view that as a legitimate use of their charitable funds.

    I make that point only to illustrate the difficulties of pitching the figures at the right level. I am not in any way discounting the anxiety felt about the present level, to which I have sought to respond. Indeed, the increases are substantial. The debate has focused on what I shall do in August, but that should be linked with what I have already done, which will take effect next month—that is, £20 on nursing homes, £15 on residential care homes and, at the extreme,£25 for terminal illness limits.

    The right hon. Member for Morley and Leeds, South (Mr. Rees) mentioned the Salvation Army. I am prepared to take into account evidence from that body or any other reputable source, as I sought to do in making my judgments today. I shall be looking for more and better evidence when I have to make a judgment next October about the uprating from next April.

    I can tell my hon. Friend the Member for Ealing, Acton (Sir G. Young) that, even when not on the scale envisaged by the new clause, when information is available in advance of April 1991, I shall use it in making, my judgments at that time.

    The only point that I need to make in response to my hon. Friend the Member for Maidstone is that it will be some time—I cannot give an exact time—after April 1991 before we have comprehensive information covering a range of local authorities and a range of homes and circumstances that would make it possible to activate the new clause. I assure her that I tabled it not as a cosmetic adornment, but as a sign of the way in which I hope to move in the future when the information is available to enable me to act in that way.

    The Secretary of State says that his new clause is not intended to be cosmetic. What guarantee can he give us that as a result of his new clause there will be no evictions after April 1991? What action does he propose to take to prevent evictions before April 1991? He has not answered either of those questions.

    The answer was given in the sensible remarks by my hon. Friend the Member for Maidstone when she referred to the background to some of the anxieties about the future and about the present limits. As my hon. Friend acknowledged very fairly, on both those fronts my actions respond to the concerns expressed by the hon. Member for Oldham, West.

    I owe it to the hon. Member for Leeds, West (Mr. Battle) to respond to his comment about pocket money. I have undertaken to eschew the phrase "pocket money". It is really personal expenses allowance.

    The point about pocket money is not widely understood. The Department of Social Security cannot dictate how people use their pocket money. There is no question of the DSS allocating the personal expenses allowance to pay for residential home or nursing home charges. Some home owners set their charges at the expenses level above the income support rate. If I raised the income support rate, some owners—perhaps not many —would raise their charges to the same amount above the new income support rate. If I set it at £200 and the personal expenses element was £10, some owners would set the charge at £210. I cannot prevent that without controlling charges for homes or taking away an individual's right to spend personal expenses money as he or she wishes.

    My colleagues who organise the business of the House have told me that, in order to fulfil my undertaking about voting that I gave at the outset of my speech, I should curtail my remarks now. I shall do that after expressing my gratitude for the support that my hon. Friends and some Opposition Members have expressed in a very reasonable and constructive way and for the outcome that we have achieved.

    Question put and agreed to.

    Clause read a Second time.

    Amendment proposed to the new clause: to leave out "take into account" and insert

    "determine the amounts required to meet the costs of providing such accommodation of a suitable standard by reference to".—[Mr. Meacher.]

    Question put, That the amendment be made:—

    The House divided: Ayes 221, Noes 326.

    Division No. 145]

    [10.57 pm


    Abbott, Ms DianeBanks, Tony (Newham NW)
    Adams, Allen (Paisley N)Barnes, Harry (Derbyshire NE)
    Allen, GrahamBarnes, Mrs Rosie (Greenwich)
    Alton, DavidBarron, Kevin
    Anderson, DonaldBattle, John
    Archer, Rt Hon PeterBeckett, Margaret
    Armstrong, HilaryBeggs, Roy
    Ashdown, Rt Hon PaddyBeith, A. J.
    Ashley, Rt Hon JackBell, Stuart
    Ashton, JoeBenn, Rt Hon Tony

    Bennett, A. F. (D'nt'n & R'dish)Home Robertson, John
    Bermingham, GeraldHood, Jimmy
    Blair, TonyHowell, Rt Hon D. (S'heath)
    Blunkett, DavidHoyle, Doug
    Boyes, RolandHughes, John (Coventry NE)
    Bradley, KeithHughes, Robert (Aberdeen N)
    Bray, Dr JeremyHughes, Roy (Newport E)
    Brown, Gordon (D'mline E)Hughes, Simon (Southwark)
    Brown, Nicholas (Newcastle E)Hume, John
    Brown, Ron (Edinburgh Leith)Illsley, Eric
    Buckley, George J.Janner, Greville
    Caborn, RichardJones, Barry (Alyn & Deeside)
    Callaghan, JimJones, Martyn (Clwyd S W)
    Campbell, Menzies (Fife NE)Kaufman, Rt Hon Gerald
    Campbell, Ron (Blyth Valley)Kennedy, Charles
    Campbell-Savours, D. N.Kilfedder, James
    Carlile, Alex (Mont'g)Kirkwood, Archy
    Cartwright, JohnLamond, James
    Clark, Dr David (S Shields)Leighton, Ron
    Clarke, Tom (Monklands W)Lestor, Joan (Eccles)
    Clay, BobLewis, Terry
    Clelland, DavidLitherland, Robert
    Clwyd, Mrs AnnLivingstone, Ken
    Cohen, HarryLivsey, Richard
    Cook, Frank (Stockton N)Lloyd, Tony (Stretford)
    Cook, Robin (Livingston)Lofthouse, Geoffrey
    Corbett, RobinLoyden, Eddie
    Corbyn, JeremyMcAllion, John
    Cousins, JimMcAvoy, Thomas
    Crowther, StanMcCartney, Ian
    Cryer, BobMacdonald, Calum A.
    Cummings, JohnMcfall, John
    Cunliffe, LawrenceMcGrady, Eddie
    Cunningham, Dr JohnMckay, Allen (Barnsley West)
    Dalyell, TamMcKelvey, William
    Darling, AlistairMaclennan, Robert
    Davies, Rt Hon Denzil (Llanelli)McNamara, Kevin
    Davies, Ron (Caerphilly)Mcwilliam, John
    Davis, Terry (B'ham Hodge H'I)Madden, Max
    Dewar, DonaldMahon, Mrs Alice
    Dixon, DonMarek, Dr John
    Dobson, FrankMarshall, Jim (Leicester S)
    Doran, FrankMartin, Michael J. (Springburn)
    Duffy, A. E. P.Martlew, Eric
    Dunnachie, JimmyMaxton, John
    Dunwoody, Hon Mrs GwynethMeacher, Michael
    Eadie, AlexanderMeale, Alan
    Eastham, KenMichie, Bill (Sheffield Heeley)
    Evans, John (St Helens N)Michie, Mrs Ray (Arg'L & Bute)
    Ewing, Mrs Margaret (Moray)Molyneaux, Rt Hon James
    Fatchett, DerekMoonie, Dr Lewis
    Faulds, AndrewMorgan, Rhodri
    Field, Frank (Birkenhead)Morley, Elliot
    Fields, Terry (L'pool B G'n)Mooris, Rt Hon A. (W'shawe)
    Fisher, MarkMorris, Rt Hon J. (Aberavon)
    Flannery, MartinMowlam, Marjorie
    Flynn, PaulMullin, Chris
    Foot, Rt Hon MichaelMurphy, Paul
    Forsythe, Clifford (Antrim S)Oakes, Rt Hon Gordon
    Foster, DerekO'Brien, William
    Fraser, JohnOrme, Rt Hon Stanley
    Fyfe, MariaOwen, Rt Hon Dr David
    Galloway, GeorgePatchett, Terry
    Garrett, John (Norwich South)Pendry, Tom
    George, BrucePike, Peter L.
    God man, Dr Norman A.Prescott, John
    Gordon, MildredPrimarolo, Dawn
    Gould, BryanQuin, Ms Joyce
    Grant, Bernie (Tottenham)Radice, Giles
    Griffiths, Nigel (Edinburgh S)Randall, Stuart
    Griffiths, Win (Bridgend)Redmond, Martin
    Grocott, BruceRees, Rt Hon Merlyn
    Harman, Ms HarrietRichardson, Jo
    Haynes, FrankRobertson, George
    Heal, Mrs SylviaRooker, Jeff
    Healey, Rt Hon DenisRoss, Ernie (Dundee W)
    Henderson, DougRoss, William (Londonderry E)
    Hinchliffe, DavidRowlands, Ted
    Hoey, Ms Kate (Vauxhall)Ruddock, Joan
    Hogg, N. (C'nauld & Kilsyth)Salmond, Alex

    Sedgemore, BrianTurner, Dennis
    Sheerman, BarryVaz, Keith
    Sheldon, Rt Hon RobertWalker, A. Cecil (Belfast N)
    Shore, Rt Hon PeterWallace, James
    Short, ClareWalley, Joan
    Sillars, JimWardell, Gareth (Gower)
    Skinner, DennisWareing, Robert N.
    Smith, Andrew (Oxford E)Watson, Mike (Glasgow, C)
    Smith, C. (Isl'ton & F'bury)Welsh, Michael (Doncaster N)
    Smith, Rt Hon J. (Monk'ds E)Wigley, Dafydd
    Smith, J. P. (Vale of Glam)Williams, Rt Hon Alan
    Smyth, Rev Martin (Belfast S)Williams, Alan W. (Carm'then)
    Snape, PeterWilson, Brian
    Soley, CliveWinnick, David
    Spearing, NigelWise, Mrs Audrey
    Steel, Rt Hon Sir DavidWorthington, Tony
    Steinberg, GerryWray, Jimmy
    Stott, RogerYoung, David (Bolton SE)
    Straw, Jack
    Taylor, Mrs Ann (Dewsbury)Tellers for the Ayes:
    Taylor, Rt Hon J. D. (S'ford)Mrs. Llin Golding and
    Taylor, Matthew (Truro)Mr. Ray Powell.
    Thompson, Jack (Wansbeck)


    Adley, RobertChannon, Rt Hon Paul
    Aitken, JonathanChapman, Sydney
    Alexander, RichardChope, Christopher
    Alison, Rt Hon MichaelClark, Hon Alan (Plym'th S'n)
    Allason, RupertClark, Dr Michael (Rochford)
    Amery, Rt Hon JulianClark, Sir W. (Croydon S)
    Amess, DavidClarke, Rt Hon K. (Rushcliffe)
    Amos, AlanColvin, Michael
    Arbuthnot, JamesConway, Derek
    Arnold, Jacques (Gravesham)Coombs, Anthony (Wyre F'rest)
    Arnold, Tom (Hazel Grove)Coombs, Simon (Swindon)
    Ashby, DavidCope, Rt Hon John
    Aspinwall, JackCouchman, James
    Atkins, RobertCran, James
    Atkinson, DavidCurrie, Mrs Edwina
    Baker, Rt Hon K. (Mole Valley)Curry, David
    Baker, Nicholas (Dorset N)Davies, Q. (Stamf'd & Spald'g)
    Baldry, TonyDavis, David (Boothferry)
    Banks, Robert (Harrogate)Day, Stephen
    Batiste, SpencerDevlin, Tim
    Beaumont-Dark, AnthonyDorrell, Stephen
    Bellingham, HenryDouglas-Hamilton, Lord James
    Bendall, VivianDover, Den
    Bennett, Nicholas (Pembroke)Dunn, Bob
    Benyon, W.Dykes, Hugh
    Bevan, David GilroyEggar, Tim
    Biffen, Rt Hon JohnEmery, Sir Peter
    Body, Sir RichardEvans, David (Welwyn Hatf'd)
    Bonsor, Sir NicholasEvennett, David
    Boscawen, Hon RobertFairbairn, Sir Nicholas
    Boswell, TimFallon, Michael
    Bottomley, PeterFavell, Tony
    Bottomley, Mrs VirginiaField, Barry (Isle of Wight)
    Bowden, A (Brighton K'pto'n)Fishburn, John Dudley
    Bowden, Gerald (Dulwich)Fookes, Dame Janet
    Bowis, JohnForman, Nigel
    Boyson, Rt Hon Dr Sir RhodesForsyth, Michael (Stirling)
    Braine, Rt Hon Sir BernardForth, Eric
    Brandon-Bravo, MartinFowler, Rt Hon Sir Norman
    Brazier, JulianFox, Sir Marcus
    Bright, GrahamFranks, Cecil
    Brooke, Rt Hon PeterFreeman, Roger
    Brown, Michael (Brigg & Cl't's)French, Douglas
    Bruce, Ian (Dorset South)Fry, Peter
    Burns, SimonGale, Roger
    Burt, AlistairGardiner, George
    Butcher, JohnGarel-Jones, Tristan
    Butler, ChrisGill, Christopher
    Butterfill, JohnGilmour, Rt Hon Sir Ian
    Carlisle, John, (Luton N)Glyn, Dr Sir Alan
    Carlisle, Kenneth (Lincoln)Goodhart, Sir Philip
    Carrington, MatthewGoodson-Wickes, Dr Charles
    Carttiss, MichaelGorman, Mrs Teresa
    Cash, WilliamGorst, John
    Chalker, Rt Hon Mrs LyndaGow, Ian

    Grant, Sir Anthony (CambsSW)Major, Rt Hon John
    Greenway, Harry (Ealing N)Malins, Humfrey
    Greenway, John (Ryedale)Mans, Keith
    Gregory, ConalMaples, John
    Griffiths, Peter (Portsmouth N)Marland, Paul
    Grist, IanMarlow Tony
    Ground, PatrickMarshall, John (Hendon S)
    Grylls, MichaelMarshall, Michael (Arundel)
    Hague, WilliamMates, Michael
    Hamilton, Hon Archie (Epsom)Maude, Hon Francis
    Hamilton, Neil (Tatton)Mawhinney, Dr Brian
    Hampson, Dr KeithMaxwell-Hyslop, Robin
    Hannam, JohnMayhew, Rt Hon Sir Patrick
    Hargreaves, A. (B'ham H'll Gr')Mellor, David
    Hargreaves, Ken (Hyndburn)Meyer, Sir Antony
    Harris, DavidMiller, Sir Hal
    Haselhurst, AlanMills, Iain
    Hawkins, ChristopherMiscampbell, Norman
    Hayes, JerryMitchell, Andrew (Gedling)
    Hayhoe, Rt Hon Sir BarneyMitchell, Sir David
    Hayward, RobertMoate, Roger
    Heathcoat-Amory, DavidMontgomery, Sir Fergus
    Heseltine, Rt Hon MichaelMoore, Rt Hon John
    Hicks, Mrs Maureen (Wolv' NE)Mooris, M (N'hampton S)
    Hicks, Robert (Cornwall SE)Morrison, Sir Charles
    Higgins, Rt Hon Terence L.Morrison, Rt Hon P (Chester)
    Hind, KennethMoss, Malcolm
    Hogg, Hon Douglas (Gr'th'm)Moynihan, Hon Colin
    Holt, RichardMudd, David
    Hordern, Sir PeterNeale, Gerrard
    Howard, Rt Hon MichaelNelson, Antony
    Howarth, Alan (Strat'd-on-A)Neubert, Michael
    Howarth, G. (Cannock & B'wd)Newton, Rt Hon Tony
    Howe, Rt Hon Sir GeoffreyNicholls, Patrick
    Howell, Rt Hon David (G'dford)Nicholson, David (Taunton)
    Howell, Ralph (North Norfolk)Nicholson, Emma (Devon West)
    Hughes, Robert G. (Harrow W)Norris, Steve
    Hunt, David (Wirral W)Onslow, Rt Hon Cranley
    Hunter, AndrewOppenheim, Phillip
    Hurd, Rt Hon DouglasPage, Richard
    Irvine, MichaelParkinson, Rt Hon Cecil
    Irving, Sir CharlesPatnick, Irvine
    Jack, MichaelPatten, Rt Hon Chris (Bath)
    Jackson, RobertPatten, Rt Hon John
    Janman, TimPawsey, James
    Jessel, TobyPeacock, Mrs Elizabeth
    Johnson Smith, Sir GeoffreyPorter, Barry (Wirral S)
    Jones, Gwilym (Cardiff N)Porter, David (Waveney)
    Jones, Robert B (Herts W)Portillo, Michael
    Jopling, Rt Hon MichaelPowell, William (Corby)
    Kellett-Bowman, Dame ElainePrice, Sir David
    Key, RobertRaffan, Keith
    King, Roger (B'ham N'thfield)Raison, Rt Hon Timothy
    King, Rt Hon Tom (Bridgwater)Redwood, John
    Kirkhope, TimothyRenton, Rt Hon Tim
    Knapman, RogerRhodes James, Robert
    Knight, Greg (Derby North)Riddick, Graham
    Knight, Dame Jill (Edgbaston)Ridley, Rt Hon Nicholas
    Knowles, MichaelRifkind, Rt Hon Malcolm
    Lamont, Rt Hon NormanRoberts, Wyn (Conwy)
    Latham, MichaelRossi, Sir Hugh
    Lawrence, IvanRost, Peter
    Lawson, Rt Hon NigelRowe, Andrew
    Lee, John (Pendle)Rumbold, Mrs Angela
    Leigh, Edward (Gainsbor'gh)Ryder, Richard
    Lennox-Boyd, Hon MarkSackville, Hon Tom
    Lightbown, DavidSayeed, Jonathan
    Lloyd, Sir Ian (Havant)Scott, Rt Hon Nicholas
    Lloyd, Peter (Fareham)Shaw, David (Dover)
    Lord, MichaelShaw, Sir Giles (Pudsey)
    Luce, Rt Hon RichardShaw, Sir Micheal (Scarb')
    Lyell, Rt Hon Sir NicholasShelton, Sir William
    Macfarlane, Sir NeilShephard, Mrs G. (Norfolk SW)
    MacGregor, Rt Hon JohnShepherd, Colin (Hereford)
    MacKay, Andrew (E Berkshire)Shersby, Michael
    Maclean, DavidSims, Roger
    McLoughlin, PatrickSkeet, Sir Trevor
    McNair-Wilson, Sir MichaelSmith, Tim (Beaconsfield)
    McNair-Wilson, Sir PatrickSoames, Hon Nicholas
    Madel, DavidSpicer, Sir Jim (Dorset W)

    Spicer, Michael (S Worcs)Trotter, Neville
    Squire, RobinTwinn, Dr Ian
    Stanbrook, IvorVaughan, Sir Gerard
    Stanley, Rt Hon Sir JohnViggers, Peter
    Steen, AnthonyWaddington, Rt Hon David
    Stern, MichaelWakeham, Rt Hon John
    Stevens, LewisWalden, George
    Stewart, Allan (Eastwood)Walker, Bill (T'side North)
    Stewart, Andy (Sherwood)Waller, Gary
    Stewart, Rt Hon Ian (Herts N)Ward, John
    Stokes, Sir JohnWardle, Charles (Bexhill)
    Stradling Thomas, Sir JohnWarren, Kenneth
    Sumberg, DavidWatts, John
    Summerson, HugoWells, Bowen
    Tapsell, Sir PeterWheeler, Sir John
    Taylor, Ian (Esher)Whitney, Ray
    Taylor, John M (Solihull)Widdecombe, Ann
    Taylor, Teddy (S'end E)Wiggin, Jerry
    Tebbit, Rt Hon NormanWilkinson, John
    Temple-Morris, PeterWinterton, Mrs Ann
    Thatcher, Rt Hon MargaretWinterton, Nicholas
    Thompson, D. (Calder Valley)Wolfson, Mark
    Thompson, Patrick (Norwich N)Wood, Timothy
    Thorne, NeilWoodcock, Dr. Mike
    Thurnham, PeterYeo, Tim
    Townend, John (Bridlington)Young, Sir George (Acton)
    Townsend, Cyril D. (B'heath)
    Tracey, RichardTellers for the Noes:
    Tredinnick, DavidMr. Alastair Goodlad and
    Trippier, DavidMr. Tony Durant.

    Question accordingly negatived.

    Clause added to the Bill.

    New Clause 1

    Community Charge Benefit

    'In section 22A of the 1986 Act,

    (a) at the beginning of subsection (1) there shall be inserted the words "Subject to the provisions of subsection (IA) below,";
    (b) after subsection (1) there shall be inserted the following subsection—
    "(1A) For the purpose of determining such entitlement or such amount in any such case, the amounts of capital prescribed under section 22(6) and (7) above shall be doubled.".'.—[Mr. Meacher.]

    Brought up, and read the First time.

    With this it will be convenient to take the following amendments: (b), at the beginning insert—

    '(1) In section 22 of the 1986 Act, after subsection (6) there shall be inserted the following subsection—
    "(6A) Regulations shall make provision for entitling any person to housing benefit in the form of a community charge rebate for any period in respect of which he would have been so entitled if the amount prescribed under subsection (6) above during that period had been £16,000.
    (a), in new subsection (IA), leave out '22(6) and (7)' and insert '22(7)'.

    It speaks for itself that, since 3.30 pm, we have had seven and a half hours under a Government guillotine, yet only now do we reach the first Opposition new clause. The full absurdity of the Government's guillotine is shown by the fact that we have been allocated the next 47 minutes to debate seven Opposition new clauses and amendments.

    The first concerns the poll tax, and I have little doubt that it will take the full time until 12 o'clock—indeed, the debate could have gone considerably beyond that time. Everyone realises that the Chancellor's proposed concession in the Budget to alleviate poll tax bills has turned out rather less of a sweetener and more of a confidence trick, for two main reasons. The first is that the proposed formula will mean that most pensioners and others will get little or nothing extra in relief. The other is that the Chancellor simply forgot about Scotland and its right to equivalent relief over the past year. The first objection is fully redressed by new clause 1 and I invite support for it from hon. Members on both sides of the House who agree with the statement yesterday by the right hon. Member for Shropshire, North (Mr. Biffen):
    referring to the poll tax—
    "needs to be reconsidered in respect of the abatements made and the effectiveness of the transitional arrangements".— [Official Report, 27 March 1990; Vol. 170, c. 243.]
    On the first point, I submit that we propose precisely the kind of reconsideration for which the right hon. Gentleman asked.

    11.15 pm

    Under the Government's proposal, most people will find when they come to claim that they will get little or nothing extra. The reason is the rule on tariff income: for every £250 in savings over £3,000, they are deemed, however unrealistically, to receive an income of £1 a week, and that reduces their poll tax rebate by 15p a week. Let me give an example of a pensioner who has just less than £16,000 in savings—presumably, the type of person that this "concession" was designed to assist. The net effect of all the deductions is that his or her poll tax rebate is reduced by £7·65 a week. I am sure that hon. Members will not closely follow these figures, but I assure them that they have been carefully checked and I am certain that they are correct. As benefit is calculated on a maximum 80 per cent. of the poll tax, this equates with a poll tax bill of £497 a year. In other words, that pensioner, who is clearly intended to be a main beneficiary of the great poll tax concession, will not get a penny unless he or she lives in one of four local authority areas in England and Wales —those with a poll tax above £497 a year. So much for the Budget special offer!

    Hon. Members will agree that many pensioners will be bitterly disappointed when they realise that the increase in the capital cut-off allows them merely to fill in a form and then have a zero rebate calculated. It is disgraceful for the Government to raise hopes as they did in the Budget and then dash them when people discover that they will get only tiny amounts of aid to offset their massive poll tax bills.

    The Government's error has been in raising the upper capital limit but not the lower limit. If the lower threshold at which deductions start had been doubled to £6,000—which is what one might expect—the value of the concession would have been greatly increased. That is precisely why my right hon. and hon. Friends and I have tabled the new clause. It effects exactly that purpose.

    Only a few days ago, in Committee, the Minister declared that a limit of £16,000 for couples was on the high side. I am glad that, after a presumably deafening outcry from the Tory heartlands, he has decided to recant. For the Government to raise the upper limit but not the lower one can only reflect one of two things—either it shows incompetence in that they intended pensioners to get a much bigger gain from this concession, but they bungled the operation, or it shows cynicism, in that they knew well that most of the concession would be diminished or even extinguished in practice, but they wanted the political credit of at least the appearance of making a generous offer.

    I leave it to the Minister to say which of the two motivations applied. I do not know, but whichever it was, it is now in the interest of equity and reasonableness to change the formula, and on those grounds I seek support for the new clause.

    The hon. Gentleman is aware that I, too, am keen to sort out the anomalies on this issue. I am not sure why he wants to raise the amount of capital that is disregarded, because that would create further anomalies by making people with those amounts of capital have their benefit assessed on the basis of too low an income for them.

    At present, the problem is that people with high amounts of capital up to £16,000 have a notional income for DSS purposes which is way above their actual income because of attributing 20·8 per cent. interest to every extra £1,000 of savings above £3,000. That is the £1 per week per £250—being £52 a year per £250—which is £208 a year per £1,000, and that is 20·8 per cent. interest on every extra £1,000. The problem is—[HoN. MEMBERS: "Too long."] I hope I may be allowed to complete this, and I promise not to intervene later.

    The problem is that if one raises the lower limit, one is creating as big an anomaly at the bottom by assessing those people's benefit on an income which is lower than their real income. It would be better if the DSS scrapped the 20·8 per cent. interest on extra savings and stuck in annually, at uplift time, the actual interest available based on the best practice in the high street and by building societies, currently about 11 per cent. Putting it simply, if instead of the level being £1 per week per £250 it was 50p per week per £250, that would be available in every high street in Britain.

    The hon. Gentleman makes an extremely valid point. I have always thought that the tariff rate of income which suggests that one has a 20 per cent. yield on one's investments must mean that one is getting some extremely good stockbroker advice, and I doubt whether such advice is available to those on income support.

    The rate of 20 per cent. is absurd. I would not care to say what the rate should be, but I would have thought that it should be something less than half that rate, and then there would be the offsetting effect, and the damage in extinguishing the right to benefit would be that much less.

    That is a separate point and, while I do not dispute the validity of the hon. Gentleman's argument, I hope he will agree that until the DSS makes that change, it is important to raise the lower threshold. We cannot tonight change the tariff rate of income, but the way to ameliorate the effect would be to raise the lower threshold.

    Because of the shortness of time, I will not dwell on amendment (b) in the name of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). I understand, from what was said at Scottish Question Time today, that there is shortly to be a full statement on the matter from the Secretary of State for Scotland. My hon. Friends and I will he looking at that statement on three clear and explicit criteria: the adequacy or otherwise of the extra funds that are made available; the ex gratia nature of the scheme; and how it will be ensured that those entitled receive payments retrospectively on a strictly comparable basis to those now made available in England and Wales.

    The view that rebates to alleviate the full horrific force of the poll tax should be maximised is shared on both sides of the House. We do not know whether the formula enunciated by the Chancellor in his Budget was by accident or design, but we know that raising the upper capital limit and not the lower one has the counterproductive effect of extinguishing a large proportion of the relief that presumably was intended. On that basis, I hope that new clause 1, which corrects that error, will command approval in all parts of the House.

    I said a moment ago that I would not speak again, because I was conscious of the guillotine, but I had not realised that no one else wanted to speak.

    I greatly welcome the fact that the Chancellor responded to representations by raising the capital limit to almost £16,000. It is now important to get the DSS rule on the interest implied in the capital changed. Sympathetic as I am to what the hon. Member for Oldham, West (Mr. Meacher) is trying to achieve, I do not want to support the creation of another anomaly at the bottom end by assuming no interest on the first £3,000 or £6,000. That would be to underrate the income that those people with savings genuinely have. What I should like to see is a system that is neutral as between saving and not saving. The way to make the system neutral is to impute to savings the best-practice interest rate that a normal human being anywhere in Britain can earn on the high street.

    By doing that, one would, for benefit purposes, be using a person's actual income from savings, added to his actual income from other sources, and comparing the resulting figure with the benefit tables to see whether he qualified for a rebate. I have drawn to the attention of Ministers the situation of a person with savings who, before the Budget, may have had an income one third lower than that of someone who did not save. A couple could have an income of just £100 a week, made up of retirement pension and interest on savings, and fail to qualify for a rebate. Yet a couple in my area, where the poll tax is £400, could have an income of £150 a week and qualify for the rebate, so long as their income was not derived from savings. A couple with savings living on £100 a week fail to qualify, yet a couple who have not saved but whose income is 50 per cent. higher do qualify. That is a ridiculous anomaly. It is a massive penalty on savings—much too great to put right.

    While I support the Opposition's intentions, I have to point out that raising the lower limit would create anomalies similar to those that would arise from playing with the upper limit without changing the interest rate. I should like the Minister to consider a move to a neutral system—a system that would not impose a penalty on savers.

    Of course, I do not expect a considered response tonight. The way to achieve what I have in mind is to impute to capital the interest rate that can actually be achieved on the high street. Magically, at the moment, there is the lovely convenience in that, instead of being £1 a week per £250 of savings, which is the current rule, it should be 50p a week per £250 of savings. There is an over-estimate of precisely 100 per cent. What I am suggesting would put the whole matter to rights.

    I shall be very brief. It was strange that the Minister should indicate from a sedentary position his intention to speak at the end of the debate. Many hon. Members, including myself, would have liked to hear an immediate response to the case made by my hon. Friend the Member for Oldham, West (Mr. Meacher) in his opening speech. This is an important debate, and I am surprised at the course that the Minister is adopting.

    The case that the hon. Member for High Peak (Mr. Hawkins) has made has considerable merit, and is worthy of consideration. Of course, it is not relevant to this new clause. Many constituents have written to ask me where they might get the rate of interest that is used as the notional figure when the DSS is calculating benefit. The hon. Member's case should be pursued and hopefully it will be supported by hon. Members on both sides of the House.

    Having listened to the Chancellor's Budget statement last week, I think it would have benefited more people if he had increased the £3,000 limit to £6,000 rather than doubled the £000 to £16,000. There is considerable merit in the new clause. I hope that the Minister will respond positively and say that the Government are prepared to accept the new clause.

    11.30 pm

    I listened carefully to the points made by my hon. Friend the Member for High Peak (Mr. Hawkins) and by the hon. Member for Burnley (Mr. Pike). On examining the matter, I think that we should proceed on the basis of real figures in the market place.

    Shortly after the Chancellor's excellent concession in the Budget of the increase in the savings limit, I tabled a question to my right hon. Friend the Secretary of State for Social Security, asking what action he was taking to vary the tapers in calculating housing benefit and community charge concessions. The reply was that no change would be made in the tapers. That may be all right in regard to the community charge because the tapers are extremely low and one loses benefit slowly in relation to increases in income. But I believe that the tapers for housing benefit are much more fierce.

    Obviously the Government cannot deal with the matter in the debate, but in due course we should be given exemplification of the rebates that might be available in relation to various levels of income and capital so that we can pass the information to our constituents. I pay tribute to the Under-Secretary for the written answer last autumn, which set out the income levels on which rebates were available. I found the information extremely useful when replying to queries from constituents. All hon. Members want to help their constituents as much as possible to maximise the rebates that they may get in relation to the community charge, housing benefit and other benefits.

    I hope my right hon. Friend the Minister will pay serious attention to the point made by my hon. Friend the Member for High Peak (Mr. Hawkins). It would be a strange irony if, after a Budget which not only contained the concession of increasing the permitted amount of capital but which introduced specific savings schemes, we should persist with the notion that for every £ 250 of capital a person has he should lose £1 a week. We have seen the strengthening of the PEP scheme and the proposed introduction of the TESSA scheme. Those schemes are directed entirely towards the type of people whom we are talking about. We are trying to encourage those people to save. It is a cruel irony if people who have saved over the years find themselves taxed at a penal rate on their capital. I hope that my right hon. Friend will think seriously about the point.

    Those of us from Scotland are labouring under a great difficulty because we have not had any statement from the Secretary of State for Scotland on how he intends to disburse the £4 million ex gratia payment that was announced last week. It was not announced in the House. As I understand it, it was announced at a hastily called press conference. We are not sure whether it was a Lobby meeting or a formal press conference.

    In Scotland there has been a great deal of consternation ever since about the method of handling that announcement. But here we are tonight and the Secretary of State for Scotland is "semi-detached" from the rest of us. He is not sitting on the Front Bench, where he could respond to invitations to intervene and to put the record straight. He is developing a rather shy attitude.

    The chairman of the Tory party in Scotland, the Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), paid a fleeting visit to the Chamber and then beat it as fast as he could. That is not characteristic of him. He is normally up front, arguing vociferously for Government policy. I am now told that he is up the back somewhere, rather than on the Front Bench where he should be.

    Our other difficulty is that we do not really know what the Government's attitude is, because each time they touch the poll tax some sort of change or a semi-U turn takes place. They would be well-advised to take on board the message contained in new clause 1, moved by the hon. Member for Oldham, West (Mr. Meacher). The Government are only just beginning to understand many of the problems that are developing with the poll tax south of the border that people north of the border have understood for a considerable time. When the Chancellor made his statement about poll tax rebates in the Budget I thought that it was a very strange thing to do. That statement on the upper limit of savings for rebates had absolutely nothing to do with the Budget. It was not a Finance Bill measure, and it is interesting that the legislation will come as secondary legislation from the Department of Social Security. Therefore, one can only assume that he included the measure in the Budget speech to gain political benefit at a time that looked pretty bad for the Conservative party. The great problem, if one engages in a con trick without thinking it through, is that one has to live with the consequences. I shall tell the Minister for Social Security of some of the consequences.

    An old lady constituent of mine visited me at my office in Ibrox in Glasgow. She does not have any money in the bank, but with her pension and the pension that she obtains from her husband's work she is above the limit for any rebate on the poll tax and therefore pays the full amount. After a discussion with her family and her neighbours she came to me and said, "If they are going to give folk with £16,000 in the bank a rebate on the poll tax, then why don't I get a rebate, as I've got no money in the bank?" The logic was that she thought she must get a rebate. She was going to pay another instalment of the poll tax, but did not do so until she had had a chat with me because she was convinced that justice had to be done. She said, "I do not have £16,000. Why should I be paying the full tax? Surely I'm entitled to a rebate." She was astonished, scandalised and angry when I explained to her that it did not matter whether she had money in the bank; her income carried her above the line and there would be no rebate.

    Then I met someone else who assumed that because he has more than £8,000 in the bank—but not as much as £16,000 —he was automatically guaranteed the full rebate. When I explained the situation, there was even greater anger. Such folk read the Chancellor as they were meant to read him on that particular day. They understood that a massive concession was coming from the Government and that they should be applauding their television screens. Then the cold light of reality struck some days later and they found that there was not a penny piece of help in it for them.

    I am addressing my remarks to Conservative Back Benchers and not to the Government because, from the experience of recent weeks, it seems that the Government will respond only to pressure from them. Conservative Members might think that their crisis on the poll tax is over. I noticed in one Scottish newspaper that the Secretary of State for Scotland is alleged to have told his Cabinet colleagues that the main pressure will be put on them when people learn the level of the poll tax, and that once the bills start dropping through the letter box the anger will start dropping off. That is not true. If he told his Cabinet colleagues that, he has misled them once again. Our experience in Scotland is that it is when the bills rattle through the letter box and people are forced to decide whether to pay and how much to pay that the anger starts.

    The major problems for the Conservative party in England are yet to come. The sensible thing would be for Conservative Members to take a small step backwards, to listen carefully to what has been said on new clause 1 and to accept it as the first step towards a major reconstruction of local government finance in England and Scotland. No matter how much we tinker with the poll tax, it remains fundamentally flawed because it does not take account of people's ability to pay. I am sorry that the Prime Minister is not here. The message which was sent from Mid-Staffordshire, and which will be sent from Glasgow on Saturday —

    If the hon. Lady is telling me that the roof tax is a sensible alternative to the poll tax, she and I will have to differ.

    Surely the lesson of Mid-Staffordshire is that the only alternative to the present Government is a Labour Government.

    Believe it or not, if we cannot win independence at the next election, I look forward to the day when we shall have a Labour Government instead of a Tory Government in this place because I shall then have the pleasure of watching the Labour party trying to reconcile the contradictions in its policy —

    Whether I am here or watching it on television is immaterial. I recall a period when we had a Labour Government who were cutting the National Health Service, housing and education. How do Labour Members reconcile the policy of the shadow Chancellor of the Exchequer, who goes around the City of London telling all those in the boardrooms that fundamentally nothing will change under a Labour Government, with Back-Bench Labour Members simultaneously telling people in housing, education and the Health Service that they will be able to allocate the additional resources? I reckon that 12 to 18 months of a Labour Government in power here will advance the cause of Scottish independence by a fair number of years.

    I return to the message of Mid-Staffordshire. Of course, I accept that the hon. Member for Birmingham, Ladywood (Ms. Short) interprets it as she has. But I think that there is another important message for the Prime Minister from Mid-Staffordshire and from the great demonstration of non-payers of the poll tax in Glasgow this Saturday. It is quite simple: if the poll tax does not go, she will have to.

    Perhaps I should explain that it seemed unnecessary for me to intervene twice in the debate. I felt that it was better to listen to the bulk of the arguments and then to respond, perhaps leaving the Opposition Front-Bench spokesmen the last word in the debate. That seemed to be the most effective way in which to deal with the matter.

    I think that we can all agree on one thing—we welcome the announcement by my right hon. Friend the Chancellor of the Exchequer in his Budget statement that he intended to raise the upper capital limit for income support and family credit from £6,000 to £8,000 and the upper limits for community charge and housing benefit from £8,000 to £ 16,000 from April. It is worth reminding the House that the change means that 250,000 people will be helped at a cost, in all benefits, of £120 million. That cannot be regarded by anyone who takes a fair view of matters as anything other than a significant change.

    In essence, the change was introduced to ensure that many people who save conscientiously throughout their lives should not be prevented from claiming help with community charge or with their rents, particularly in retirement. In fact, about two thirds of those who will be helped by this very welcome change announced by my right hon. Friend the Chancellor will be pensioners.

    It was suggested that people having capital in excess of £10,000 will not benefit from those changes, but nothing could be further from the truth. We estimate that 70,000 extra benefit cases, affecting 100,000 individuals, will involve capital in excess of £10,000 and that the vast majority of them will concern pensioners. There are still gainers even among those having capital of between £14,000 and £16,000. We estimate that 15,000 people in that bracket, again mainly pensioners, will also gain. That should be the starting point for our consideration of new clause 1. 11.45 pm

    The Opposition's new clause. which doubles upper and lower limits for couples only, should be rejected. We extended the upper capital limit for all claimants, and right hon. and hon. Members should be aware that the Opposition's new clause contains a serious anomaly. 1 take the example of a couple having capital greater than £8,000 and being entitled to community charge benefit. Under the Opposition's proposals, if one of them were to die, the surviving partner would not be entitled to benefit because the upper capital limit of £ 8,000 would be relevant when her benefit was reassessed_ It follows that new Clause I might deprive people of community charge benefit at a very vulnerable moment in their lives.

    The Opposition make general points, but they should think through the practical effects of their proposals. In this case, a serious anomaly would result, with widows, for example, losing entitlement to community charge benefit in the circumstances I described.

    No. because I want to allow time for the hon. Member for Oldham, West (Mr. Meacher) to respond.

    My hon. Friend the Member for High Peak (Mr. Hawkins) suggested that imputed interest should be taken into account rather than tariff income. That proposal would cause problems, and it would be difficult to administer. However, I am happy to discuss the implications of my hon. Friend's proposal with him to see whether those practical difficulties can be tackled. Obviously we want to monitor the results of different—

    Will my hon. Friend allow me to intervene?

    I understand that, but the debate must end in 12 minutes. I said that I am perfectly prepared to discuss with my hon. Friend the Member for High Peak his proposals, but I assure him that they would present serious practical difficulties. If we can overcome them, I shall take his suggestions into account when we reconsider these matters in due course

    The hon. Member for Oldham, West suggested that pensioners having capital of £16,000 will not benefit unless the community charge is greater than £9·75 per week.

    The effect of tariff income depends on other income of which the claimant is in receipt.

    The Minister could not have been listening. I did not cite a figure of £9·75 but one of ·7·65.

    I am sorry if I misheard the hon. Gentleman. The fact remains that a pensioner aged over 75 with capital of £16,000 or other income of less than about £20 per week will still receive the maximum rebate. I repeat that about 15,000 pensioners having capital of between £14,000 and £16,.000 will still gain from the announcement made by my right hon. Friend the Chancellor of the Exchequer.

    My hon. Friend the Member for Taunton (Mr. Nicholson) asked for examples of benefit entitlement. I am only too willing to provide that information. If my hon. Friend will table a suitable question, I shall ensure that he receives examples of exemptions at different levels.

    There is still widespread misunderstanding about the precise way in which tariff income operates. It is not true that the tariff income rule reduces benefit entitlement by the same, equal amount. Where a person's income is greater than the set applicable amount only 15p per week is deducted from maximum benefit for every £1 of weekly excess income over the applicable amount.

    Hon Members have expressed concern about the interest applied by the tariff income. As I have said the benefit system has to be considered in totality. I shall give an example to the House. A person with tariff income of £25a week would not see benefit reduced by £25 a week_ The benefit would be reduced by 15 per cent. of £25 a which would be only £3·75 a week. That should be understood. It is being spread around the system that once a certain amount is exceeded there is a pound for pound reduction in benefit. That is not true. Only 15 per cent. is taken into account. I leave it to those on the Opposition Front Bench or Back Benches to speak.

    I am appalled by the Minister of State's approach. The debate is limited to 47 minutes and it is dear that as many Conservative Members as Opposition Members wish to question him. It would have been suitable and appropriate for him to respond immediately after my hon. Friend the Member for Oldham, West (Mr. Meacher) resumed his place. The Minister would then have had the time to allow his hon. Friends to intervene. I do not understand why he is so shy about being accountable to the House. He chose to intervene shortly before midnight to promise secret discussions —it seems that they are to take place behind closed doors — in an endeavour to shut up his right hon. and hon. Friends.

    Conservative Members have cottoned on to the con of the Chancellor of the Exchequer. Whether the percentages are 20·8, 20 or 15, those outside this place know that last week's Budget statement contained a con. Who are the 15,000 with £16,000 in the bank who will benefit? These people will have an ordinary income of less than £20 a week. Who is sitting on £16,000 with an income of less than £20 a week? We are talking of a total income of about £20 a week, not extra income.

    I shall follow with interest the questions that are tabled over the next few months to ascertain what the DSS knows about these people. Did those in the DSS know what the Chancellor of the Exchequer was to say, or the consequences of it? Did they understand the effect of not raising the lower limit, and especially the effect of his statement in Scotland? If they did know, did they tell the Chancellor before he made his speech? The Minister of State must know that his Department is the repository of expertise on these matters. His officials know what is happening. The problem is —this became dear during a sitting of the Public Accounts Committee last year—that they do not tell Ministers unless Ministers ask.

    We discovered that the effect of the housing benefit changes was known to all the officials. They said, "We never said anything about this, because the Ministers never asked us." The PAC took a dim view of the official who said that. The problem was that Ministers were not asking, What are the effects and the consequences of this change of policy?" In this instance—let us concentrate on the doubling for poll tax for the moment— did Ministers ask the departmental officials what would be the effects, pitfalls and anomalies that would result from the change in policy? If Ministers do not put that question to their officials, they are not fit to be Ministers. The House knows that officials will not provide information freely unless they are asked to do so. That is a great worry to all hon. Members, and especially to members of Select Committees. I shall give way if the Minister wants to answer those questions. The House should be aware of the views of Ministers.

    Before my right hon. Friend the Chancellor made his announcement, he discussed it with Ministers at the Department of Social Security. We welcome, as I believe does the whole House, his announcement on the increasing of the limits.

    I respond to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) by asking some other questions. Does the Labour party welcome the announcement made by my right hon. Friend the Chancellor to increase the limits? Does it accept that new clause 1 is incompetent and ineffective and contains anomalies? Does it accept that I am prepared to listen to my hon. Friends and to others who want to discuss this, to answer parliamentary questions and to give examples of exemptions? Does it accept that the rather superficial acceptance that 20·8 per cent. is assumed as income on capital is a misapprehension of the true position? When income from £3,000 to nought is averaged out, one gets nowhere near 20·8 per cent. When one takes account of the taper of 15 per cent. instead of 20 per cent., which operated under the rating system, it is even more beneficial. Does the Labour party, particularly the hon. Member for Perry Barr, accept those points?

    Before the Government took office, we had a much fairer system of taking account of people's savings than capital cut-off. The Government have sought to squeeze people who have few savings and a bit of extra pension to cut benefits, and that has led to this anomaly. The anomaly will continue with benefit after benefit unless there are major changes to the policy.

    The Minister knows that my right hon. Friend the Leader of the Opposition welcomed the doubling of the limit by the Chancellor, but we are entitled to attack the consequences of making that change but not changing the lower limit. The message that that gave to the British people was not the one that the Government intended to give. As the hon. Member for Glasgow, Govan (Mr. Sillars) said, the message was intended to make people think: "I am now entitled to a rebate, whereas previously I was turned down for being over the £8,000 limit. What will my rebate be?" I have had to give the same answer to my constituents as other hon. Members have had to give theirs—"The chances are that you will not get a penny piece. If you do, it will be a few bob rather than a few pounds."

    I know that the hon. Member would not want to mislead the House. He knows that I share his concern, but a couple under 75 with savings of £16,000 —a tariff income of £52 a week—can receive the state pension and still qualify for community charge rebate in any area where the community charge, or poll tax, is more than £300.

    The capital limit is exactly the same for a single person as for a couple.

    I am talking about an individual. I was asking how people with savings of £16,000 survive on such meagre incomes. The Secretary of State said that 15,000 people with savings of £16,000 would benefit. I want to know where they are, what their incomes are and how they survive on such low incomes.

    It is easy for Ministers to say, "We do not like new clause 1; it has a technical defect." What a defence for a Minister who has an army of civil servants and who will have a chance to correct any defect in the new clause in the other place. If he had the good grace of some other Ministers, he would have said, "We shall consider the new clause" and would not have nit-picked. I shall happily vote for new clause 1, because any technical defects can be corrected at a later stage.

    When we support the new clause, we shall do so soberly and with good sense. However, when the Chancellor made his announcement—which we have since discovered is worthless—during the Budget statement, Conservative Members waved their Order Papers as though it was Christmas and as though the Chancellor was dispensing millions of pounds to tens of thousands of pensioners. Conservative Members should have been a little more circumspect and found out what it was worth. Will not their embarrassment on the poll tax, as in so many other areas, be heightened when, once again, they return to their constituents and have to tell them that this so-called concession is a con?

    Conservative Members thought that they were waving goodbye to us, when what they did not know was that the Government were waving goodbye to the rebate—

    It being Twelve o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Question already proposed from the Chair.

    The House divided; Ayes 204, Noes 307.

    Division No. 143]

    [12 midnight


    Abbott, Ms DianeCallaghan, Jim
    Allen, GrahamCampbell, Menzies (Fife NE)
    Alton, DavidCampbell, Ron (Blyth Valley)
    Anderson, DonaldCampbell-Savours, D. N.
    Archer, Rt Hon PeterCarlile, Alex (Mont'g)
    Armstrong, HilaryCartwright, John
    Ashley, Rt Hon JackClark, Dr David (S Shields)
    Ashton, JoeClarke, Tom (Monklands W)
    Barnes, Harry (Derbyshire NE)Clay, Bob
    Barnes, Mrs Rosie (Greenwich)Clelland, David
    Barron, KevinClwyd, Mrs Ann
    Battle, JohnCohen, Harry
    Beckett, MargaretCook, Frank (Stockton N)
    Beith, A. J.Cook, Robin (Livingston)
    Bell, StuartCorbett, Robin
    Benn, Rt Hon TonyCorbyn, Jeremy
    Bennett, A. F. (D'nt'n & R'dish)Cousins, Jim
    Bermingham, GeraldCrowther, Stan
    Blair, TonyCryer, Bob
    Blunkett, DavidCummings, John
    Boyes, RolandCunliffe, Lawrence
    Bradley, KeithCunningham, Dr John
    Brown, Nicholas (Newcastle E)Dalyell, Tam
    Brown, Ron (Edinburgh Leith)Darling, Alistair
    Buckley, George J.Davies, Rt Hon Denzil (Llanelli)
    Caborn, RichardDavies, Ron (Caerphilly)

    Davis, Terry (B'ham Hodge H'I)Marek, Dr John
    Dewar, DonaldMarshall, Jim (Leicester S)
    Dixon, DonMartin, Michael J. (Springburn)
    Dobson, FrankMartlew, Eric
    Doran, FrankMaxton, John
    Duffy, A. E. P.Meacher, Michael
    Dunnachie, JimmyMeale, Alan
    Dunwoody, Hon Mrs GwynethMichie, Bill (Sheffield Heeley)
    Eadie, AlexanderMoonie, Dr Lewis
    Eastham, KenMorgan, Rhodri
    Evans, John (St Helens N)Morley, Elliot
    Ewing, Mrs Margaret (Moray)Morris, Rt Hon A. (W'Shawe)
    Faulds, AndrewMowlam, Marjorie
    Fearn, RonaldMullin, Chris
    Field, Frank (Birkenhead)Murphy, Paul
    Fields, Terry (L'pool B G'n)Nellist, Dave
    Fisher, MarkOakes, Rt Hon Gordon
    Flannery, MartinO'Brien, William
    Flynn, PaulO'Neill, Martin
    Foot, Rt Hon MichaelOrme, Rt Hon Stanley
    Foster, DerekOwen, Rt Hon Dr David
    Fraser, JohnPatchett, Terry
    Fyfe, MariaPendry, Tom
    Galloway, GeorgePike, Peter L.
    Garrett, John (Norwich South)Prescott, John
    George, BrucePrimarolo, Dawn
    Godman, Dr Norman A.Radice, Giles
    Gordon, MildredRandall, Stuart
    Gould, BryanRedmond, Martin
    Grant, Bernie (Tottenham)Rees, Rt Hon Merlyn
    Griffiths, Nigel (Edinburgh S)Richardson, Jo
    Griffiths, Win (Bridgend)Robertson, George
    Grocott, BruceRooker, Jeff
    Harman, Ms HarrietRoss, Ernie (Dundee W)
    Haynes, FrankRowlands, Ted
    Heal, Mrs SylviaRuddock, Joan
    Hinchliffe, DavidSalmond, Alex
    Hoey, Ms Kate (Vauxhall)Sedgemore, Brian
    Hogg, N. (C'nauld & Kilsyth)Sheerman, Barry
    Home Robertson, JohnSheldon, Rt Hon Robert
    Hood, JimmyShore, Rt Hon Peter
    Howell, Rt Hon D. (S'heath)Short, Clare
    Hoyle, DougSillars, Jim
    Hughes, John (Coventry NE)Skinner, Dennis
    Hughes, Robert (Aberdeen N)Smith, Andrew (Oxford E)
    Hughes, Roy (Newport E)Smith, C. (Isl'ton & F'bury)
    Hughes, Simon (Southwark)Smith, Rt Hon J. (Monk'ds E)
    Hume, JohnSmith, J. P. (Vale of Glam)
    Illsley, EricSnape, Peter
    Jones, Barry (Alyn & Deeside)Soley, Clive
    Jones, Martyn (Clwyd S W)Spearing, Nigel
    Kaufman, Rt Hon GeraldSteel, Rt Hon Sir David
    Kennedy, CharlesSteinberg, Gerry
    Kilfedder, JamesStott, Roger
    Kirkwood, ArchyStraw, Jack
    Lamond, JamesTaylor, Mrs Ann (Dewsbury)
    Leighton, RonTaylor, Rt Hon J. D. (S'ford)
    Lestor, Joan (Eccles)Thompson, Jack (Wansbeck)
    Lewis, TerryTurner, Dennis
    Litherland, RobertVaz, Keith
    Livingstone, KenWallace, James
    Livsey, RichardWalley, Joan
    Lloyd, Tony (Stretford)Wardell, Gareth (Gower)
    Lofthouse, GeoffreyWareing, Robert N.
    Loyden, EddieWatson, Mike (Glasgow, C)
    McAllion, JohnWeish, Michael (Doncaster N)
    McAvoy, ThomasWigley, Dafydd
    McCartney, IanWilliams, Rt Hon Alan
    Macdonald, Calum A.Williams, Alan W. (Carm'then)
    McFall, JohnWilson, Brian
    McKay, Allen (Barnsley West)Winnick, David
    McKelvey, WilliamWise, Mrs Audrey
    Maclennan, RobertWorthington, Tony
    McNamara, KevinYoung, David (Bolton SE)
    McWilliam, John
    Madden, MaxTellers for the Ayes:
    Maginnis, KenMrs. Llin Golding and
    Mahon, Mrs AliceMr. Ray Powell.


    Aitken, JonathanEvennett, David
    Alexander, RichardFairbairn, Sir Nicholas
    Alison, Rt Hon MichaelFallon, Michael
    Allason, RupertFavell, Tony
    Amery, Rt Hon JulianField, Barry (Isle of wight)
    Amess, DavidFishburn, John Dudley
    Amos, AlanFookes, Dame Janet
    Arbuthnot, JamesForman, Nigel
    Arnold, Jacques (Gravesham)Forsyth, Michael (Stirling)
    Arnold, Tom (Hazel Grove)Forth, Eric
    Ashby, DavidFowler, Rt Hon Sir Norman
    Aspinwall, JackFox, Sir Marcus
    Atkins, RobertFranks, Cecil
    Atkinson, DavidFreeman, Roger
    Baker, Rt Hon K. (Mole Valley)French, Douglas
    Baker, Nicholas (Dorset N)Fry, Peter
    Baldry, TonyGale, Roger
    Banks, Robert (Harrogate)Gardiner, George
    Batiste, SpencerGarel-Jones, Tristan
    Bellingham, HenryGill, Christopher
    Bendall, VivianGlyn, Dr Sir Alan
    Bennett, Nicholas (Pembroke)Goodson-Wickes, Dr Charles
    Bevan, David GilroyGorman, Mrs Teresa
    Biffen, Rt Hon JohnGorst, John
    Body, Sir RichardGow, Ian
    Bonsor, Sir NicholasGrant, Sir Antony (CambsSW)
    Boscawen, Hon RobertGreenway, Harry (Ealing N)
    Boswell, TimGreenway, John (Ryedale)
    Bottomley, PeterGregory, Conal
    Bottomley, Mrs VirginiaGriffiths, Peter (Portsmouth N)
    Bowden, A (Brighton K'pto'n)Grist, Ian
    Bowden, Gerald (Dulwich)Ground, Patrick
    Bowis, JohnGrylls, Michael
    Boyson, Rt Hon Dr Sir RhodesHague, William
    Braine, Rt Hon Sir BernardHamilton, Hon Archie (Epsom)
    Brandon-Bravo, MartinHamilton, Neil (Tatton)
    Brazier, JulianHampson, Dr Keith
    Bright, GrahamHanley, Jeremy
    Brooke, Rt Hon PeterHannam, John
    Brown, Michael (Brigg & Cl't's)Hargreaves, A. (B'ham H'Ll Gr')
    Bruce, Ian (Dorset South)Hargreaves, Ken (Hyndburn)
    Burns, SimonHarris, David
    Burt, AlistairHaselhurst, Alan
    Butcher, JohnHawkins, Christopher
    Butler, ChrisHayes, Jerry
    Butterfill, JohnHayward, Robert
    Carlisle, John, (Luton N)Heathcoat-Amory, David
    Carlisle, Kenneth (Lincoln)Hicks, Mrs. Maureen (Wolv' NE)
    Carrington, MatthewHicks, Robert (Cornwall SE)
    Carttiss, MichaelHiggins, Rt Hon Terence L.
    Cash, WilliamHolt, Richard
    Chalker, Rt Hon Mrs LyndaHordern, Sir Peter
    Channon, Rt Hon PaulHoward, Rt Hon Michael
    Chapman, SydneyHowarth, Alan (Strat'd-on-A)
    Chope, ChristopherHowarth, G. (Cannock & B'wd)
    Clark, Hon Alan (Plym'th S'n)Howe, Rt Hon Sir Geoffrey
    Clark, Dr Michael (Rochford)Howell, Rt Hon David (G'dford)
    Clark, Sir W. (Croydon S)Howell, Ralph (North Norfolk)
    Clarke, Rt Hon K. (Rushcliffe)Hughes, Robert G. (Harrow W)
    Colvin, MichaelHunt, David (Wirral W)
    Conway, DerekHunter, Andrew
    Coombs, Anthony (Wyre F'rest)Hurd, Rt Hon Douglas
    Coombs, Simon (Swindon)Irving, Sir Charles
    Cope, Rt Hon JohnJack, Michael
    Couchman, JamesJackson, Robert
    Cran, JamesJanman, Tim
    Currie, Mrs EdwinaJessel, Toby
    Davies, Q. (Stamf'd & Spald'g)Johnson Smith, Sir Geoffrey
    Davis, David (Boothferry)Jones, Gwilym (Cardiff N)
    Day, StephenJones, Robert B (Herts W)
    Devlin, TimJopling, Rt Hon Michael
    Dorrell, StephenKey, Robert
    Douglas-Hamilton, Lord JamesKing Roger (B'ham N'thfield)
    Dover, DenKing, Rt Hon Tom (Bridgewater)
    Dunn, BobKirkhope, Timothy
    Dykes, HughKnapman, Roger
    Eggar, TimKnight, Greg (Derby North)
    Emery, Sir PeterKnight, Dame Jill (Edgbaston)
    Evans, David (Welwyn Hatf'd)Knowles, Michael

    Latham, MichaelRowe, Andrew
    Lawrence, IvanRumbold, Mrs Angela
    Lee, John (Pendle)Ryder, Richard
    Leigh, Edward (Gainsbor'gh)Sackville, Hon Tom
    Lennox-Boyd, Hon MarkSayeed, Jonathan
    Lightbown, DavidScott, Rt Hon Nicholas
    Lloyd, Peter (Fareham)Shaw, David (Dover)
    Lord, MichaelShaw, Sir Giles (Pudsey)
    Luce, Rt Hon RichardShaw, Sir Michael (Scarb')
    Lyell, Rt Hon Sir NicholasShelton, Sir William
    MacGregor, Rt Hon JohnShephard, Mrs G. (Norfolk SW)
    MacKay, Andrew (E Berkshire)Shepherd, Colin (Hereford)
    Maclean, DavidShersby, Michael
    McLoughlin, PatrickSims, Roger
    McNair-Wilson, Sir MichaelSkeet, Sir Trevor
    McNair-Wilson, Sir PatrickSmith, Tim (Beaconsfield)
    Madel, DavidSoames, Hon Nicholas
    Major, Rt Hon JohnSpeller, Tony
    Malins, HumfreySpicer, Sir Jim (Dorset W)
    Mans, KeithSpicer, Michael (S Worcs)
    Maples, JohnSquire, Robin
    Marland, PaulStanbrook, Ivor
    Marlow, TonyStanley, Rt Hon Sir John
    Marshall, John (Hendon S)Steen, Anthony
    Marshall, Michael (Arundel)Stern, Michael
    Mates, MichaelStevens, Lewis
    Maude, Hon FrancisStewart, Allan (Eastwood)
    Mawhinney, Dr BrianStewart, Andy (Sherwood)
    Maxwell-Hyslop, RobinStewart, Rt Hon Ian (Herts N)
    Mayhew, Rt Hon Sir PatrickStokes, Sir John
    Mellor, DavidStradling Thomas, Sir John
    Meyer, Sir AnthonySumberg, David
    Miller, Sir HalSummerson, Hugo
    Mills, IainTapsell, Sir Peter
    Mitchell, Andrew (Gedling)Taylor, Ian (Esher)
    Mitchell, Sir DavidTaylor, John M (Solihull)
    Moate, RogerTaylor, Teddy (S'end E)
    Montgomery, Sir FergusTebbit, Rt Hon Norman
    Morris, M (N'hampton S)Temple-Morris, Peter
    Morrison, Sir CharlesThompson, D. (Calder Valley)
    Morrison, Rt Hon P (Chester)Thompson, Patrick (Norwich N)
    Moss, MalcolmThorne, Neil
    Moynihan, Hon ColinThurnham, Peter
    Mudd, DavidTownsend, Cyril D. (B'heath)
    Neale, GerrardTracey, Richard
    Needham, RichardTredinnick, David
    Nelson, AnthonyTrippier, David
    Neubert, MichaelTrotter, Neville
    Newton, Rt Hon TonyTwinn, Dr Ian
    Nicholls, PatrickVaughan, Sir Gerard
    Nicholson, David (Taunton)Viggers, Peter
    Nicholson, Emma (Devon West)Waddington, Rt Hon David
    Norris, SteveWalden, George
    Onslow, Rt Hon CranleyWalker, Bill (T'side North)
    Oppenheim, PhillipWaller, Gary
    Page, RichardWard, John
    Patnick, IrvineWardle, Charles (Bexhill)
    Patten, Rt Hon Chris (Bath)Warren, Kenneth
    Patten, Rt Hon JohnWatts, John
    Pawsey, JamesWells, Bowen
    Peacock, Mrs ElizabethWheeler, Sir John
    Porter, Barry (Wirral S)Whitney, Ray
    Porter, David (Waveney)Widdecombe, Ann
    Portillo, MichaelWiggin, Jerry
    Powell, William (Corby)Wilkinson, John
    Price, Sir DavidWinterton, Mrs Ann
    Raison, Rt Hon TimothyWinterton, Nicholas
    Redwood, JohnWolfson, Mark
    Renton, Rt Hon TimWood, Timothy
    Rhodes James, RobertWoodcock, Dr. Mike
    Riddick, GrahamYeo, Tim
    Ridley, Rt Hon NicholasYoung, Sir George (Acton)
    Rifkind, Rt Hon Malcolm
    Roberts, Wyn (Conwy)Tellers for the Noes:
    Roe, Mrs MarionMr. Alastair Goodlad and
    Rossi, Sir HughMr. Tony Durant.
    Rost, Peter

    Question accordingly negatived.

    New Clause 8

    Radiation Exposed Crown Employees

    `(1) In the principal Act, after section 78, there shall be inserted the following Chapter:—


    78A.—(1) Subject to the provisions of this Act, a person shall be entitled to a benefit or benefits, to be known as radiation exposure payments, payable at a prescribed rate or rates, if he is—

  • (a) a radiation exposed Crown employee who suffers from a relevant disease;
  • (b) the widow or widower of a radiation exposed Crown employee who suffered from a relevant disease; or
  • (c) a person entitled to child benefit in respect of a child of a deceased radiation exposed Crown employee who suffered from a relevant disease.
  • (2) Subsection (1) above shall come into force six months after the passing of the Social Security Act 1990.

    (3) In this Chapter—

    'a radiation exposed Crown employee' means a person who, while serving as a member of Her Majesty's forces or in any other prescribed employment under the Crown, was, or is deemed in accordance with regulations to have been, exposed to ionizing radiation as a result of his participation in activities connected with a prescribed test or series of tests of a nuclear device or devices;
    `a relevant disease' means a disease presumed to have been caused by service as a radiation exposed Crown employee.

    (4) For the purposes of this section, any disease specified in column 1 of Schedule 9A to this Act, which a radiation exposed Crown employee develops or has developed at any time after the last day on which he was, or is deemed in accordance with regulations to have been, exposed to ionizing radiation as a result of his participation in activities connected with a prescibed test or series of tests of a nuclear device or devices, but not longer after that day than the maximum period specified for that disease in column 2 of that Schedule, shall be presumed to have been caused by service as a radiation exposed Crown employee, and no other disease shall be presumed to have been so caused.

    (5) The Secretary of State may at any time make an Order amending Schedule 9A to this Act in such manner as he considers appropriate in the light of medical evidence.

    (6) Where, on the day before such an Order comes into force, a person is treated as suffering or having suffered from a relevant disease for the purposes of this section, or would have been so treated if his claim for benefit under this section had been determined, the provisions of Schedule 9A shall apply in his case as if the Order had not been made.

    (7) Regulations may prescribe circumstances in which a claim for benefit under this section is to be determined as if an Order under subsection (5) above which came into force after the date of the claim had been in force on that date.

    (8) Notwithstanding the provisions of subsection (2) above, the first regulations under subsections (1) and (3) above shall be made before subsection (1) comes into force.

    (9) Before making the first regulations under subsection (1) above, it shall be the duty of the Secretary of State to satisfy himself that the benefit or benefits payable under that subsection by virtue of those regulations will be on the whole as favourable as the benefits that would be payable under section 76 above to persons in similar circumstances if the relevant disease were prescribed for the purposes of that section and the other conditions of entitlement to benefit under that section were satisfied.

    (10) A claim for benefit under subsection (1) above made within 12 months after the day on which the Social Security Act 1990 was passed shall be treated as if the provisions of that subsection and of the first regulations under subsections (1) and (3) above had come into force on that day and as if the claim had been made on that day or on the first day on which the claimant satisfied or would have been satisfied the requirements for entitlement to the benefit, whichever is later."

    (2) In section 93(1) of the principal act, there shall be added at the end—

    "(f) a question whether a person is or was on any day a radiation exposed Crown employee for the purposes of Part II, Chapter VA."

    (3) In section 113(1) of the principal Act, for the words "Chapter V" there shall be substituted the words "Chapters V and VA".

    (4) In section 115(3) of the principal Act, for the words "those relating to industrial injuries benefit" there shall be substituted the words "Chapters IV to VA".

    (5) After Schedule 9 to the principal Act there shall be inserted the following Schedule—

    DiseaseMaximum period
    Leukaemia (other than chronic lymphocytic leukaemia)40 years
    Cancer of the thyroid40 years
    Cancer of the breast40 years
    Cancer of the pharynx40 years
    Cancer of the oesophagus40 years
    Cancer of the stomach40 years
    Cancer of the small intestine40 years
    Cancer of the pancreas40 years
    Multiple myeloma40 years
    Lymphomas (except Hodgkin's disease)40 years
    Cancer of the bile ducts40 years
    Cancer of the gall bladder40 years
    Primary liver cancer (except if caused by cirrhosis or hepatitis B)40 years"

    (6) In section 63 of the Social Security Act 1986 (annual up-rating of benefits)—

    (a) the following paragraph shall be inserted after subsection (1)(i)—
    "(j) specified in regulations under section 78A(1) of the Social Security Act 1975,"; and—
    (b) in subsection (3)(b), for the words "or (ee)" there shall be substituted the words "(ee) or (j)".'.—[Mr. Clay.]

    Brought up. and read the First time.

    12.15 am

    I beg to move, That the clause be read a Second time.

    The new clause stands in my name and in the names of hon. Members from both sides of the House. I thank my hon. Friend the Member for Coventry, South-East (Mr. Nellist) and other hon. Friends for not moving new clause 7, thus enabling this debate to take place. New clause 8 is about the 22,000 British service men and approximately 3,000 Crown employees who participated in the British nuclear weapons test programme between 1952 and 1958. Tragically, it is more about the dependants of those men, since the men are dying disproportionately from leukaemia, myeloma and many other cancers.

    For years, successive Governments have argued that those involved in the British nuclear testing programme were not exposed to danger from radiation and that there was no connection between the incidence of cancer that they have suffered and their participation in the tests. For years, too, increasing scientific, medical and statistical evidence has contradicted Governments' assertions.

    Many hon. Members on both sides of the House have interviewed many constituents who took part in these exercises at Christmas island, Maralinga or other test sites and have been told stories of how the men wore no protective clothing or dosimeter film badges to measure radiation. It is possible to believe that one or two of them were cranks, or that their memories had faded, or that one or two did not know what they were talking about. But when so many serious, sober people with clear recollections tell us that that was their experience, we cannot go on believing the claims of successive Governments that everyone was protected and wore radiation-measuring badges, and that there was no evidence that anything went wrong.

    Leaving aside anecdotal evidence of this kind, however, we can turn to a newly declassified document written before the test programme started, on 20 September 1951. It was sent by Rear Admiral Torlisse to Rear Admiral Brooking. The former was the military commander of the first British nuclear test. I do not have time to read the whole letter, but I want to quote two key passages from it:
    "Radiological safety must be one of the chief concerns of the naval commander, but equally evidently, some degree of risk must be run by some people if we are to achieve the full purpose of the trial. As naval commander I must expect to have to order or approve the acceptance of some degree of risk. This is a customary service obligation, but it is performed in the knowledge that the Admiralty accept liability for those killed or injured in duty … I believe that all Government servants are in fact entitled to compensation for injury on duty, but the particular points to be covered in Hurricane arise from the fact that
  • (a) the ill effects may be long delayed
  • (b) illness unconnected with the operation might have caused the same symptoms."
  • So before the test programme had even started the military commander recognised that, uniquely, the detrimental effects on men's health might be long delayed —precisely what has happened.

    The scientific and medical debate has dragged on for years. Eventually the National Radiological Protection Board was asked to commission a study, which was duly carried out, and the board reported to the Government. No doubt the Minister will tell us tonight that that report found that, with the exceptions of leukaemia and myeloma, there was no evidence that other cancers could have been linked with participation in the test programme. But that is not what the NRPB report says. It came up with two hypotheses: first, that leukaemia' and myeloma probably were caused by participation in the programme; secondly, that other cancers probably were not. The report said that neither hypothesis was proven and that more research and study were required.

    Tonight the House must face up to the issue of how much longer we shall go on studying and debating while men continue to die. I hope that the Government will finally accept this point: only a limited number of these service men are now receiving pensions; mostly, we are talking about widows receiving pensions because their husbands died from leukaemia or myeloma. They are receiving those pensions because the NRPB study finally decided, in 1988, that there probably was a connection.

    For any service man who died of leukaemia or myeloma before 1988, that deasion was too late. For any widows of the service men who died before 1988, that decision was too late, If, at the end of 1991, when the next NRPB report comes out—nearly two years from now—it finally concludes that, for example, cancer of the larynx was possibly caused by participation in the test programme, it will be too late for many more who will have died of that disease and for their widows.

    We cannot go on and on neglecting this closed universe of people. This is not happening any more. It happened in the 1950s. Time has moved on. The fact that it is a closed universe should make the Government say that on a no-fault, benefit-of-the-doubt basis they will compensate those who were affected by particular diseases.

    I do not say that this country should always follow everything that the United States does, but does the hon. Gentleman agree that if the Americans can pay compensation to their nuclear test veterans, surely we can too?

    I am grateful to the hon. Gentleman for making that point. He anticipates the next but one part of my speech.

    Many believe that the NRPB study is fundamentally flawed in several ways. There is not time to cite all the examples, so I shall give the most stunning point. It was discovered that the records of service supplied by the Ministry of Defence to the NRPB did not include all those who participated in the test. An important category was missing. All the files of those who had claims outstanding for pensions as a result of their participation in the test were not included. By definition, those who ware most likely to weight the statistics to show a high incidence of cancer were not included. It is claimed that the study was to some extent weighted to take account of that, but, again, without going into the most laborious statistical detail, it is difficult to deal with that in a brief speech. Many people have concluded that the study was flawed in many other ways and that the Government should not rely on it.

    The new clause is modelled, as nearly as possible in the terms of our legislative procedure, on existing legislation in the United States. It simply says that if one participated in the test and one of a list of cancers has manifested itself within 40 years of participation, it will be presumed that there is a service connection and one will benefit accordingly.

    There was some debate in the United States before the legislation was passed. In January when I went to Washington to research this and met the Bush Administration, I said, "We know that President Reagan faltered before signing the legislation passed by the House and Senate. How do you feel about it now?" They said that they were glad it happened and tha if it happened again President Bush could sign legislation happily. It has taken away the hassle of going to court, stopped an enormous sense of injustice and offence felt by veterans and is not costing large sums. The United States has 250,000 men involved whereas we have oly 25,000. Moreover, their men went into Nagasaki and Hiroshima. I asked whether I could convey their view to the British Government and they said that their advice to the British Government, in so far as it was their place to give such advice, would be to do the same. The message has already been conveyed to the Government, but I convey it again tonight.

    Progress is so far ahead in the United States because the research that has been conducted there is far ahead of any such research in this country. The existing American legislation is almost certainly due to be improved this year, with manifestation caps being lengthened and more diseases that are compensatable being added to the list. Report No. 5 of the National Research Council, "Biological Effects of Ionising Radiation", concluded that all the previous understandings about which low level, of radiation cause various diseases have been wrong. The Americans have exhaustively studied what happened in their nuclear test programme and have taken much evidence from many parts of the world. The report—which the Ministry of Defence had not bothered to obtain or study until a week or so ago—concluded that further legislation was needed in the United States. It is believed that it will pass through the House of Representatives and the Senate without much difficulty.

    In a sense, we do not need another report from, the NRPB if we assume two things—first, that the radiation yields from American nuclear explosions must have been much the same as British ones and, secondly, that American service men must be much the same physiologically as British service men. The Government must either say that the Americans have got it totally wrong and are compensating people for no reason or acknowledge that they have got it wrong themselves and face up to that.

    The new clause is a modest measure. It is carefully drafted to ensure that considerable scope is left to the Secretary of State to fix the compensation levels, to add to or to subtract from the list of prescribed diseases and to change the manifestation levels. I hope that the Minister will not say that some technical problem exists. The new clause has been carefully drafted with, I acknowledge, technical assistance from her Department. If the Government have any problem with the detail of the clause and how it is set out, they can easily amend it in another place.

    It may be argued that if we legislate for a service connection presumption, we will automatically compensate some people who are suffering, but not because of their participation in a test programme. There is nothing to be done about that. Those people will, after all, suffer and will be compensated only if they have one of these diseases. Better to have the generosity to compensate those who have leukaemia or cancer for some other reason than not to compensate those who have it because of service. For the sake of argument, take 10 people with cancer of the stomach who we know were all at Christmas island. I have been told that, whatever the records and even if there could be an action replay, any physician would say, "We may know that statistically of the 10, five had cancer from radiation at Christmas island and five had it for some other reason." No physician will ever establish which five were which. Better to compensate the five who did not get it because of being on Christmas island than deny justice to the five who got it because they were there. We are trying to establish that fundamental principle.

    It is disingenuous for the Government to argue that some of the evidence, anecdotal as it might be, could and should have been tested in the courts and that, if service men believed that they could prove that they got these terrible diseases as a result of the test programme, they should prove that in the courts and claim compensation in that way. That is a disingenuous argument, because, until recently, they could not get into the courts because of section 10 of the Crown Proceedings Act 1947. Even the abolition of that section was not retrospective. The Government having appealed all the way, Mr. Melvyn Pearce from Bristol won in the House of Lords the right to sue retrospectively. The first case will soon go into the courts, but by the time the Government have appealed that case all the way to the House of Lords, many more people will have died. We cannot have a situation in which this issue is eventually settled through the courts. It is a difficult issue to take to the courts and, in any event, by the time the courts have eventually settled the matter, it will be too late for far too many people.

    12.30 am

    These people believed that they were serving their country. This issue has nothing to do with one's view on nuclear weapons. If, like me, one is totally opposed to their possession, one obviously takes the view that it is horrific that people should have contracted these terrible diseases while participating in the testing of them. If, like many Conservative Members, one believes that nuclear weapons have kept the peace for many years, one should be all the more grateful to those service men who participated in the programme to test them. This is not a pro or anti-nuclear weapon issue. It is an issue of basic justice.

    Radiation kills just as a bullet kills. It is less obvious, it happens later and it is more difficult to prove. I urge the Minister to reflect on the words of President Reagan, who had great difficulty before deciding to sign the legislation that was passed in the United States. He said:
    "Enactment of this legislation does not represent a judgment that service-related exposure of veterans covered by the Act in fact caused any disease. Nor does it represent endorsement of a principle of permitting veterans to receive benefits funded through veterans' programmes which bear no relationship to their former military service. Instead, the Act gives due recognition to the unusual service rendered by Americans who participated in military activities involving exposure to radiation generated by the detonation of atomic explosives. The nation is grateful for their special service, and enactment of H.R. 1811 makes clear the nation's continuing concern for their welfare."

    If the British Government have any concern for the continuing welfare of those who are suffering and for the widows who have lost husbands as a result of those men participating in the test programme, they will end the statistical nit-picking tonight, say enough is enough and accept the new clause.

    I cannot match the eloquence of the hon. Member for Sunderland, North (Mr. Clay) on this subject. Nor can I match the depth of his knowledge. The consistent commitment that he has shown to the cause of justice for those who have exposed themselves in the service of the Crown to ionising radiation deserves the praise of the House and a favourable response from the Government.

    I was always aware, in a background sense, if that is the right analogy, that perhaps we were not doing justice to those who were exposed to such radiation in our test programmes in the 1950s and 1960s. It was brought home to me just how great the concern was when we had a particularly unedifying occasion here on the afternoon of Friday 2 March, when the hon. Gentleman sought a Second Reading for his admirable Radiation Exposed Crown Employees (Benefit) Bill. It is sad to recall that there was a filibuster, and the many members of the Royal British Legion and veterans who came to witness what they thought would be an important debate went home disappointed. This debate may be taking place late at night and we may not have much time to discuss the new clause, but it is all the more important in view of the fact that the matter did not get the attention that it deserved on 2 March.

    It can be clearly established that there is a pathological connection between exposure to ionising radiation and the list of diseases, mostly cancers of various types, in the schedule, which is taken from the United States legislation. Indeed, one could draw up an actuarial connection between the level of ionising radiation received and the likelihood of contracting a number of illnesses subsequently. That is well understood.

    Thus—I say in unparliamentary language—we need not nit-pick about the causes or consequences of exposure to ionising radiation. What we have to do is ensure that ex-service men who served the Crown well, and their dependants, receive the appropriate compensation. That would be achieved by acceptance of the proposed new clause. Under the present war pensions provisions, compensation can be achieved, but there is an element of doubt. The order says that, in deciding whether disablement or death is attributable to service, benefit will be given if there is reasonable doubt. But it is extremely difficult to establish what constitutes reasonable doubt.

    On 15 May 1989, my hon. Friend the Member for Fareham (Mr. Lloyd), the Parliamentary Under-Secretary of State for the Home Department, answering a question on this point, said:
    "One war disablement pension and six war widows' pensions have been awarded because servicemen who took part in nuclear tests contracted or died of leukaemia … or multiple myeloma."—[Official Report, 15 May 1989; Vol. 153, c. 73.]
    In other words, the precedent has been set. It has been established that the state has a duty to look after the welfare of those unfortunate people. We now have to put the appropriate legislative framework in place to guarantee that compensation is received as of right, and not by peradventure.

    I most earnestly beg right hon. and hon. Members to do the honourable thing—to vote on the new clause as their consciences dictate, to make sure that we do our duty by those who have done their duty by us.

    As there is a great deal of interest in this matter among hon. Members on both sides of the House, I shall be brief.

    I want to begin by paying tribute to the hon. Member for Sunderland, North (Mr. Clay), who has been so assiduous in his pursuit of this cause and in his research. I understand perfectly the concerns that have been expressed in the House and elsewhere about the nuclear weapons test programme conducted in the south Pacific in the 1950s, and the suggestion that that programme has bequeathed a legacy of illness to those who participated. The Government's view is that there is no evidence, either medical or scientific, to link participation in the nuclear weapons test programme with the ill health that some of the participants have suffered subsequently. [Interruption.] If hon. Members listen, I shall attempt to develop my argument.

    Most of those who took part in the tests were young. Indeed, many were doing their two years' national service. The scientists, too, were mostly young, and because the physical conditions were tough, those who took part had to be fit. Those young men of the 1950s are now, inevitably, middle-aged or elderly. Some of them have developed ill health, and, sadly, others have died. The new clause that we are debating is based on the presumption that exposure to radiation during participation in the nuclear weapons trials was responsible for these illnesses and these deaths. The Government believe that this presumption is not well founded.

    It is a sad fact, but a fact nevertheless, that in the western world, where we enjoy a relatively high standard of living, more than 20 per cent. of deaths are due to cancer.

    Can my hon. Friend explain why, in the legislation enacted by the United States Congress, compensation is extended to American service men who took part in the occupation of Nagasaki and Hiroshima even if there was doubt about the adverse consequences of doing duty in those cities?

    Obviously arrangements in the United States are a matter for that country, but I am coming to the provisions in war pensions which may go some way to give comfort to my hon. Friend.

    I was saying that, tragically, there are well over 100,000 cancer-related deaths a year in this country. Sadly, many of those who participated in the nuclear weapons test programme would by now be suffering from cancer or might have died, even if they had spent their national service in this country and had never gone anywhere near the south Pacific. Of course, it is understandable that some of them, knowing that radiation can cause cancer—

    Is the Minister aware that, despite the fact that documentary evidence exists on MOD files that there is no such thing as a harmless increase in radiation, some service men and women were given protective clothing but some were barred from having it and were asked to roll in the dust on the ground at ground zero? Is the Minister aware of that when she tells us that their health could have been the same if they had spent their national service in this country? It was a deliberate test. Does not the Minister accept that? Their health was deliberately put at risk to find out the results.