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Social Security

Volume 175: debated on Monday 2 July 1990

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Earnings Disregard


To ask the Secretary of State for Social Security if he has any plans to increase the disregard on earnings before income support is reduced.

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

We keep the level of the earnings disregards under review. The Government are committed to monitoring them, but we have no plans for change at present.

I thank my hon. Friend for her reply. Would she consider regarding as disregard the cost that a lone parent bears for child care if she decides to go back into the work force? Does my hon. Friend appreciate that many women who are left to be supported by the state because their menfolk have deserted them would like to go back to work? However, if they lose £1 for every £1 that they earn after the first £15, the incentive for them to be self-supporting is reduced. I know that my hon. Friend would not want to punish such women and I am sure that she would like to give them more of a helping hand.

I thank my hon. Friend, and in preparation for her question this afternoon I read her ten-minute Bill that, in part, dealt with that matter. My hon. Friend is right to say that many lone parents want to work, and about one third of family credit participants are lone parents.

The Government have built into the social security system several disregards and incentives especially for lone parents. For example, £15 of their earnings is disregarded in income support, they get the same adult credit in family credit as a couple and, from October, lone parents will have a £25 disregard in housing benefit. The major thrust of Government policy is to ensure that lone parents, 95 per cent. of whom are women, get adequate and proper maintenance from absent fathers.

If we are moving into the season of pre-election largesse—whether as suggested in the Minister's answer to the hon. Member for Billericay (Mrs. Gorman) or in the report in today's The Guardian—will the hon. Lady take into account the plight of my constituent Mr. Stewart, about whom she wrote to me last month and who came to see me at the weekend? Mr. Stewart has had no increase in his income since April 1988, when the Government removed his special payments; he is having to pay increased electricity charges, and he is having to pay 20 per cent. of his poll tax. Is there no limit to the extent to which the Government are prepared to inflict real hardship and misery on some of our poorest pensioners?

Transitional protection was introduced to help those who might lose out under the 1988 social security reforms. A small number of people are still covered by transitional protection and the overwhelming majority of them received an increase this April.

The hon. Gentleman will know that I cannot comment on an individual case. I am glad that he pointed out that I have already replied to him.

Claimants (Residential Backgrounds)


To ask the Secretary of State for Social Security if there are any limitations as to the residental background of recipients of attendance and other allowances; and if he will make a statement.

Attendance allowance is payable to people who live in independent residential care homes. It stops after four weeks for those living in other residential homes if the care costs are met from public funds. Limitations for other allowances vary.

Does my right hon. Friend accept that many elderly people who are of sound mind find it difficult and irksome to live with the confused elderly and those who are deeply ill?

The hon. Gentleman speaks for himself. He is somewhat confused and always has been.

Will my hon. Friend consider introducing changes to the allowance system so that people who are on attendance allowance can live not in nursing homes or in institutions but, for example, in private accommodation, where they could pay their way with the allowance?

Yes. I understand that my hon. Friend has a constituency case. He has quite properly written about it to the local office manager, who will be replying soon. Some quite complicated calculations have to be made to see whether people would be better off if they moved into private accommodation from residential homes of one sort or another. Individual judgments will have to be made. Within the private residential sector, there is a wide range of types of property and provision.

National Insurance


To ask the Secretary of State for Social Security how many standard rate tax payers would be affected by the removal of upper earnings limit for national insurance contributions.

If the upper earnings limit for employees' national insurance contributions were removed it is estimated that about 3·3 million people would pay more contributions, of whom about 2·1 million would be standard rate taxpayers. If the corresponding upper profits limit for self-employed people were also removed, it is estimated that about another half a million people would pay more contributions, of whom about 200,000 would be standard rate taxpayers.

I thank my right hon. Friend for that illuminating reply and I hope that it will be well covered by the media, because these are the Labour party's policies. As we have taken a great deal of time and trouble to remove Labour's tax on jobs—the national insurance surcharge—will we also look at the employers' national insurance contribution, which is running at roughly double the amount that it was in the days of the Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath)?

My hon. Friend is quite right to draw attention to the figures that I have given. I note what he suggested about the employers' contribution, but there is no upper earnings limit on it, and because of the way in which the national insurance system works and the direct relationship between the contribution paid by employees and the benefits subsequently received, I am not sure that the arguments are on all fours.

When an individual pays both national insurance contributions and tax, to ensure that when he becomes unemployed or sick, the state gives him assistance, how can there be any justification for reducing or taking away unemployment benefit? There is speculation about that in the press. Will it also be mentioned in the Tory manifesto, because the people want to know the truth? If unemployment benefit is to be taken away, how long will it be before pensions are undermined and perhaps taken away by the Government?

I am grateful that the hon. Gentleman used the word "speculation". As far as I can see, the press reports to which he referred rest on one pamphlet from one body, the Adam Smith Institute. That is not a Government plan and there is no basis for the hon. Gentleman's suggestion.

Is not it true that, since the Conservative party came to power, most people who pay national insurance have saved over £3 a week on it, but under the Opposition's glorious plan, the people whom the Opposition laud as those whom they want to encourage—those earning between £15,000 and £20,000 a year—will pay £9 a week more? They would not pay that in national insurance; the fraud is that they would pay it in increased taxes. How does that encourage people to work?

The answer is that that does not encourage people to work and that it runs exactly contrary to what we have sought to do in reducing national insurance contributions for many, with the aim of encouraging employers to provide jobs and encouraging people to do them.

If the Secretary of State is so concerned about the extra tax on higher rate taxpayers, how does he explain why the Government have increased, for instance, national insurance contributions, which are a tax, by no less than 14 per cent. for those on average or low incomes?

In view of his earlier answer, is the Secretary of State—or is it only the Prime Minister—in favour of the latest crackpot, right-wing daftness of privatising the dole, but still making people pay national insurance contributions so that they are forced to pay twice for the same benefit? If people have paid national insurance contributions, are not they contractually entitled to benefit? If something in the private sector that had been fully paid for were taken away, would not he, or even the Prime Minister, call that stealing?

It is perhaps understandable, in view of the events of recent weeks, that the hon. Gentleman should go to such lengths to divert attention from the main point. He referred to higher rate taxpayers. The point is that Labour's plans, as is clear, and is clearer still from my answer, involve higher contributions from many basic rate taxpayers. That is the point that the Opposition have been seeking to disguise because they do not want to let on how many people will have to pay much more to finance the hon. Gentleman's ambition.

Personal Pensions


To ask the Secretary of State for Social Security what estimate he has as to the number of people who have now joined a personal pension scheme.


To ask the Secretary of State for Social Security how many people are taking out personal pensions; and if he will make a statement.

Just over 4 million people have so far taken out a personal pension.

Does my hon. Friend agree that the most encouraging aspect of that figure is that it represents people in all age groups who have provided for their retirement? Does he further agree that it is absolutely disgraceful that the hon. Member for Oldham, West (Mr. Meacher) should seek to penalise those 4 million people—or probably 10 million people, when one takes their families into consideration? Is not this what the Labour party is all about—muddled thinking, total misrepresentation and, worst of all, patronising people? In other words, we know best.

To borrow a recently expressed phrase, that is an example of the Opposition's crackpot, left-wing culture—

What is important about the Government's pension provision is that people now have a choice between remaining in the state earnings-related pension scheme, taking out a private pension and belonging to an occupational pension scheme. The Opposition have made it clear, through the hon. Member for Oldham, West (Mr. Meacher), that they are totally against that choice and independence in pension provision—

Order. The questions that were asked were in order, and if they were not I should rule them out of order.

Does my hon. Friend agree that the hon. Member for Birmingham, Ladywood (Ms. Short) is muddled, as this is not Prime Minister's Question Time? We are asking specific questions on specific matters. Does she agree that, to use the words of the hon. Member for Oldham, West (Mr. Meacher), the Opposition intend to steal private pensions from people?

The hon. Member for Oldham, West has already made clear his party's intentions for personal pensions. Fortunately, the Government intend to continue the policy of choice within pension provision between SERPS, a personal pension and an occupational pension scheme. Clearly, the Opposition wish to threaten that choice.

On a point of order, Mr. Speaker. Is not it an abuse of the House that Question Time is used in regard to Opposition policies, which we shall certainly defend and promote when we have a chance? Is not the purpose of Question Time to hold Government policies to account?

This is not Prime Minister's Question Time and these are not open questions. It is the function of questions on the Floor of the Chamber to expound on policies, and that is what we are here to do.

To return to the question, does not the Minister feel a sense of guilt that she is aiding and abetting what is becoming the fraud of the century now that 4 million people have been bribed by dodgy advertising into taking out pensions? Does not she recognise that they are not pensions—they are risky savings schemes that are about as personal as a can of baked beans? When will the Government respond to the independent voices that are saying that more than 1 million people have been defrauded by such schemes and that most of their future benefits and pensions have already been eaten up by commission charges, administrative costs and the profits of the pension companies? Can it be possible that the Government are about to replicate that calamity by abolishing the dole? Will they give us a categorical denial, other than the arguments that have been presented today, and tell us that it is a product of midsummer madness by the loony right and that none of the Ministers will have any part in that crazy scheme to abolish the dole?

I was under the impression, although much noise was being made by Opposition Members, that my right hon. Friend the Secretary of State gave absolute assurances about the Adam Smith Institute pamphlet. The hon. Member for Newport, West (Mr. Flynn) repeated the comments made by the hon. Member for Oldham, West to try to scaremonger and to terrify perfectly normal, ordinary people who wish to take advantage of the excellent pension choices that have been made available by the Government. It is a disgrace.

Community Care Grants


To ask the Secretary of State for Social Security what was the budget for community care grants in the latest financial year for which figures are available.

Community care grants are essential to integrate people back into the community. How will cuts in grant affect that integration? How will the grants enable people to obtain suitable housing in order to allow them to return to the community? What is the Minister's view about the role of housing providers? Will they be an essential partner in community care schemes and planning or merely an afterthought?

The budget for community care grant has not been cut but increased for the current year. I hope that as we develop our policies for care in the community, which we aim to introduce in 1991, there will be increased co-operation between social services departments, which will be involved increasingly in the provision of community care, and local housing departments so that proper arrangements can be made for those leaving institutions.

My right hon. Friend will know that community care grants are available only to those on income support. Many who would benefit from them receive invalidity benefit or other benefit and are therefore disqualified. Will he sympathetically consider extending the grants to other members of the community who would benefit from them?

I shall consider my hon. Friend's suggestion. There are administrative advantages in limiting community care grants to those who are on income support, and there are resource implications, but I have noted my hon. Friend's point.

If the social fund is so successful, why are so many disabled people now trapped in the jaws of loan sharks? Would not it much reduce dependence on community care grants if the Government quickly accepted the social security commissioners' decision, which was reported last week, in the important test case for severe disability premium of Simon Crompton, of Greater Manchester, which is estimated to benefit 30,000 other disabled people? What action is the Minister taking to identify them?

We are considering the implications of that judgment. The fact that loans under the social fund are interest free is likely to remove people from rather than hand them over to the loan sharks.

Pensioners (Income)


To ask the Secretary of State for Social Security by how much pensioners' total incomes have risen (a) since 1979 and (b) between 1974 to 1979.

I am pleased to be able to tell my hon. Friend that while pensioners' total net incomes rose by only 3 per cent. in real terms between 1974 and 1979, they rose on average by more than that in each year between 1979 and 1987. In total, they rose by over 31 per cent. in real terms in this Government's first eight years of office.

I thank my hon. Friend for that reply. As it is fashionable to quote the hon. Member for Oldham, West (Mr. Meacher) today, I am sure that she is aware of his comments in the Chamber on 30 January, when he said that the important consideration is the increase in pensioners' average income over the course of a Government. If my calculations are correct, we have done six times as well as the previous Labour Government. Does my hon. Friend therefore agree that a strong and proper pensions policy depends on two pillars—first, the strength of the economy, which enables us to pay proper state pensions and, secondly, a healthy economy giving a proper return on pensioners' savings? On both counts we outperform the poor performance of the previous Labour Government and the poor promises of a would-be Labour Government.

I agree with my hon. Friend. It is clear that the successful economic policies pursued by the Government have enabled us to spend £55 billion a year in real terms on social security and spending on pensioners and the elderly to increase by a quarter. To pursue anti-inflationary policies is particularly important for pensioners.

I accept the accuracy of the Government's figures although, of course, they have not yet been checked by the Select Committee. Will the hon. Lady confirm that for the poorest pensioners the most important thing to look for is a real increase in national insurance benefits? Will she confirm that, under the Labour Government, pensions for that group rose by 20 per cent. and under this Government they are yet to rise by 3 per cent?

The incomes of the poorest pensioners increased by 19 per cent. in that same period. As the hon. Gentleman will know, the numbers in the lowest quintile decreased from 38 to 24 per cent.

Is not it important to look carefully at the differences in income and support between the younger pensioners and other older pensioners, aged over 75? Have not younger pensioners in particular done extremely well with regard not only to income but to home ownership and personal and occupational pensions? Is not it necessary to look carefully at the incomes and the support given to older pensioners who have not done so well with regard to home ownership and occupational pensions?

My hon. Friend is right. Seventy per cent. of recently retired pensioners have occupational pensions, half own their own homes and 85 per cent. have income from savings. The Government have taken action to help the older, poorer pensioners through the package of measures announced last October, which helped 2.6 million individuals.

No one seeks to deny the important improvements in the standards of living that pensioners with occupational pensions and savings have enjoyed over the past few years. Does the hon. Lady accept, however, that it is a great mistake for Government policy to be predicated on the basis of gross public expenditure increases or average pensioners' incomes? Does she further accept that, over the past year, the erosion in pensioners' standards of living because of the difference between the retail prices index and earnings levels has been a constant source of concern for poor pensioners? If the package of measures last October was so successful, why will not the hon. Lady repeat it this October?

I am glad that the hon. Gentleman implicitly accepts that the October package was a success. Its aim was to target help towards older and poorer pensioners. I am sure that those who are responsible for dealing with those matters will listen to the hon. Gentleman's points when he asks for them to be considered next October.

Is my hon. Friend really telling the House and the country that pensioners' living standards have risen faster in each of the past 11 years of the Conservative Government than in the six years of the previous Labour Government?

Perhaps the hon. Member for Eastbourne (Mr. Gow) would like to think about the fact that, by comparing five years and 11 years, one gets rather different outcomes. This is another attempt by the Government to manipulate and misuse the agenda of the House. I hope that you will reconsider your earlier ruling, Mr. Speaker, or any democratic procedure for holding the Government accountable will break down. I put it to the Minister—I am sure that she knows this to be true—that, according to the Library, 20 per cent. of pensioners rely entirely on state benefits. The Government have cut state pensions by £13.20 for a single pensioner and £20.70 for a couple. Labour takes great pride in the improvement in many pensioners' incomes due to the introduction of SERPS, which the Government have now cut, resulting in a reduction in the incomes of future pensioners. Labour is proud of the improvements for some but is worried about those who are finding life increasingly hard, many of whom are women. The poorest pensioners are women, and the Government are doing nothing for them.

The average income of pensioners who receive all their income from state benefits has increased by over 27 per cent. during the life of this Government. If the hon. Lady and her hon. Friends go on threatening and scaremongering about the choice, independence and diversity that the Government have introduced into pensions, they will live to rue the day.

Income Support


To ask the Secretary of State for Social Security what is the amount within an income support payment which is imputed to cover the 20 per cent. liability for poll tax; and if he will make a statement.

On average, income support beneficiaries receive the equivalent of 20 per cent. of a community charge of £340.

As the average poll tax is £100 higher than was envisaged when the Government introduced the £1.30 payment per person on income support to cover that notional 20 per cent., why have not the Government increased the figure to 20 per cent. of the actual average poll tax? In Tory-controlled Windsor and Maidenhead, for example, the poll tax is £449 and 20 per cent. of that is £1.72; the odd 40p may not mean much to a Minister on nearly £1,000 a week, but to someone on income support it means a loaf of bread.

The level of community charge varies from place to place. The amount that people have to pay reflects the decisions of their local council, and there is an element of that in respect of income support. I hope that the hon. Gentleman will accept the figure that I gave in my original answer. The weighted average amount included in income support payments across Great Britain is equivalent to 20 per cent. of what has turned out to be the average community charge across Great Britain after allowing for transitional relief.

Is it not a fact that all people on income support receive the full maximum 80 per cent. rebate on their community charge? Do not those on income support also benefit from transitional relief, which cost the Government £350 million in England alone and which benefits 7.5 million people? Does not that show that we are the Government who care for the disadvantaged?

I can confirm that those on income support pay only 20 per cent. of their community charge—the other 80 per cent. is met directly—and that many income support beneficiaries will have benefited from the transitional relief scheme.

Is the Secretary of State aware that in my constituency of Workington, and throughout the north-west, there is a disturbing incidence of young people leaving home because of changes in social security legislation and also because their parents will not help out with payment of the poll tax? Was it really the Government's intention to drive young people out of their family homes? If it was not, will they reconsider the legislative provisions which are having that effect?

The hon. Gentleman will know that we have made a number of changes in the way in which the benefit rules operate, in an endeavour—I pay tribute to my hon. Friend the Parliamentary Under-Secretary of State for Social Security for the work that she has done in this regard—to ensure that the rules, which are sensible, work as well as we should like them to. I ask the hon. Gentleman to recall the history of social security and young people, especially under the old board and lodging regime. The attempt to solve the problems by social security means has aggravated rather than diminished them.

To revert to my right hon. Friend's original answer, does he agree that his reference to the Government's taking into account an average community charge of £340 underlines the sheer cruelty and lack of concern for the poorest people implicit in the attempt—shortly to be frustrated, I hope—by Bristol city council and Avon county council to levy a community charge of £493?

I agree with my hon. Friend that the core of such problems as are faced not only by those on benefit but by many others whose incomes may be quite modest reflects the irresponsible decisions of many councils throughout the country.



To ask the Secretary of State for Social Security what further measures his Department is planning to take to reduce the problems of the homeless.

My hon. Friend the Minister for Housing and Planning announced a substantial package of measures on Friday 22 June to deal with this problem. We believe that this is the best way to tackle the issue, rather than through benefit changes.

Is the Minister prepared to concede that the Government's legislation, especially in relation to the withdrawal or reduction of social security benefits for young people and the imposition of the poll tax, compounded by their refusal to allow local authorities to build houses for rent, have created the appalling homelessness which exists in Great Britain today? Does she agree that renting a few church halls will not solve the problem?

The hon. Gentleman will be aware that the problem of homelessness spans a number of Government Departments and a number of countries throughout the world. He referred specifically to young people, however, and I remind him that there is no need for any 16 or 17-year-olds to be without an income. They can have a job, remain in education or take a YTS place. We have made a number of administrative changes and we raised the benefit level last July to help that particular group. I fully accept that there were some problems with the interaction between the Department of Social Security and the operation of youth training schemes, but we have done everything possible to put that right. It is surely better for young people to start their adult lives in school, in a job or in training rather than trying to live on benefit.

Has my hon. Friend noticed that young people who sleep rough almost always seem to come from the indigenous population and rarely from the immigrant population, who always seem to find somewhere to live? How can that be so? Would not it be unreasonable to provide expensive council house accommodation and flats for young people who merely leave home when others have to save, often for years, to find the accommodation that suits them?

I have already stated in reply to an earlier question that the Government believe that the best possible start for young people is to take training places, of which there are plenty—even a surplus—available and if possible to live at home. There are special benefit arrangements for those who have to live away from home.

Does the Minister not understand the difference between the roofless and the homeless? While the announcement of a recent package of measures involving opening up a few chuch halls put a roof over some young people's heads, those measures do nothing to solve the underlying problem that thousands of teenagers are being driven out of their homes by the conditions created by the Government, not least through the stealing of YTS allowances and the general cut in benefits?

I totally rebut the hon. Member's accusations. If larger numbers of young people are leaving home than in previous years, that is also a matter of concern for their parents.



To ask the Secretary of State for Social Security when he expects to announce proposals resulting from his review of the maintenance system; and if he will make a statement.

We are pressing ahead with the review of maintenance, which is wide ranging, and are examining all areas of the current system to see where reform is required. We hope to make proposals later this year. Meanwhile, there are measures in the present Social Security Bill which address some of the problems that lone parents have experienced with the current system. My right hon. Friend the Minister of State, Home Office, has recently announced proposals to reinforce payment arrangements.

I thank my right hon. Friend for that reply and I wish him well with the proposals that he is bringing forward. They are long overdue.

I shall ask a real question. Is the right hon. Gentleman aware that the Government's first effort in that direction—the enforcement of payment through attachment of earnings—is merely a pathetic re-statement of existing law? Why is there nothing about the real issues such as the level of awards, which in general is far too low? What incentive is there for mothers to claim maintenance if the Department of Social Security simply claws it back in reduced income support? Do not the proposals have all the makings of yet another Tory ramp of reducing public expenditure instead of giving extra help to those in real need?

I really think that the hon. Gentleman might tone down some of the overheated language that he so persistently uses. First, the proposals of my right hon. Friend the Minister of State, Home Office, involve legislation and thus can scarcely be simply a re-statement of existing law—[Interruption.] Having asked three questions, perhaps the hon. Gentleman will allow me to answer them.

Secondly, as we announced to the House earlier this year, we have already taken action to strengthen the way in which maintenance is assessed and the amount that is expected under the current DSS rules.

Thirdly, the advantage to lone parents is that their position is much better if they are getting maintenance, especially when they enter work, than if they are wholly dependent on DSS benefits.

Will my right hon. Friend consider the position of single mothers bringing up children on their own without any assistance from the fathers, particularly when the fathers are known? Does he agree that it would be appropriate to ask those mothers to make applications to the courts for maintenance so that the fathers face up to their duty to support their children rather than leaving the whole burden to the taxpayer?

Yes, and indeed we do. Lone mothers in those circumstances can face a number of practical problems. We are seeking to address those problems in the Social Security Bill—for example, by legislating to make it possible for the Department's own maintenance orders to be transferred to claimants when they leave income support, and by taking powers to enforce a claimant's own maintenance order if it falls into arrears.

Retirement Age


To ask the Secretary of State for Social Security what are his current plans for introducing a common retirement age for men and women in relation to the state pension.

The Government's position remains as described in the response, published in April, to the report of the Select Committee in another place.

Now that we are beginning to see signs of the Government's programme for the coming year and what the Prime Minister would like in their manifesto for the next election, and as the Prime Minister will be 65 this autumn, may we at last have a clear commitment from the Government to a common retirement age for women and men?

I have referred to our response to the Select Committee in another place, and I have no doubt that the hon. Gentleman will have read it. The hon. Gentleman will be aware that the Government are committed to the principle of equal treatment, but there are a range of difficult, complex practical issues and I really cannot give the hon. Gentleman the off-the-cuff undertaking that he seeks.