Column 745The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked how long I spend reading letters and when I last read any. I spent about four or five hours yesterday reading letters because I receive many of them. They were not all about transitional payments ; in fact such letters were in a minority. However, I read them. As the hon. Gentleman suggested, many of them make hard and painful reading, but no more so than many of the other letters I receive. I reflect upon the letters that my predecessor would have been reading before the changes were introduced last April and I am convinced that many of the individuals who wrote those letters will have been helped by the changes. It is necessary to see the changes that occurred last April in that balanced way. There are difficult cases and I do not seek to dismiss them or push them to one side. However, the social security system is designed to tackle many difficulties and transitional payments and those in receipt of them are not always the most difficult cases.
The hon. Member for Livingston (Mr. Cook) quoted some cases. He said that if one makes an assessment of the inflation rate it seems that on present estimates about 200,000 people will still be on transitional payments after the uprating. He ased me to consider the position of the disabled who will have no increase to look forward to for some years. The hon. Gentleman forgets that in October there will be an increase in income support rates for disabled persons over 60 years of age. As I said during social security questions last week, we shall keep all the premiums under review and act if pressure on a particular group of claimants becomes manifest.
The hon. Member for Walsall, North (Mr. Winnick) complained about the absence of Conservative Members. It is worth putting on record that when he made those observations four Labour Back Benchers were present, of whom he was one. The hon. Member for Newham, North-West (Mr. Banks) was open enough to acknowledge that, so I acknowledge his honesty.
Mr. Kirkwood : I have just finished digesting the Minister's earlier remark that the Government can review the levels of flat-rate premiums if the need arises. Is the Department actively trying to identify categories that are suffering particular hardship? If so, will he be prepared to make a statement at a later stage?
Mr. Lloyd : We review the categories from statistical information and information about individuals. All the examples that we are given, which we read, form a picture. The fact that we shall be improving premiums in two cases this October shows that monitoring has an effect. We shall continue to consider the information available to us, and where it is evident that there is pressure on a particular group we shall act accordingly.
The hon. Member for Walsall, North referred to price increases, especially fuel price increases. Over the past five years, electricity and gas charges have fallen in real terms, which has benefited those on supplementary benefit and income support. I remind him that in the years after 1979 supplementary benefit increased by 5 per cent. above the rate of inflation. It was a more generous benefit than when the Labour party left office. The total amount paid in supplementary benefit was redirected to income support last April. I am grateful to the hon. Member for Newham, North-West for saying that I listened courteously to the
Column 746small delegation that he brought to see me. I took full note of what was said, and he will find that the arguments that were put will be reflected in the guidance that is issued to local benefit officers. I confirm what I said to the hon. Member for Roxburgh and Berwickshire that we shall take note of the pressure points that have been mentioned this evening by hon. Members.
Mr. Winnick : Does the Minister intend to comment on the four cases that I brought to the House's attention, in three of which there was no increase and in the other an increase of only 23p for reasons explained by the local DSS office? Will the Minister comment on information from the Library that if the pension had been increased in line with earnings since 1979 a married person would be £17.55 and a single person £11.10p a week better off?
Mr. Lloyd : That set of figures is frequently produced at Question Time and the Opposition repeatedly make the point that state retirement pensions increased faster under the Labour Government. This Government respond, more convincingly, by saying that, overall, pensioners' incomes have increased much faster than under the Labour Government. It is total incomes that are of interest, not any special part of income.
Mr. Battle : How many pensioners have to live solely on state pensions? That factor obviously affects the hon. Gentleman's statement. Does he suggest that the pensioners with supplementary incomes other than the state pension, the richer pensioners, get richer? The poorer pensioners are obviously worse off.
Mr. Lloyd : From memory, about 1.7 million pensioners are on income support. I have been asked how many of those are getting their full increase this year. The answer is 1.2 million. To do the sum for the hon. Gentleman, that leaves 300,000 pensioners who will get an increase in part and 200,000 who will get no increase this year.
Mr. Lloyd : They will not be the poorest. That is where the hon. Gentleman misapprehends what the changes do. Pensioners with transitional additions will have had incomes from income support above the incomes of those coming on to income support since last April.
The hon. Member for Walsall, North asked me to comment on particular cases. I do not have the details of all of them, and it would be wrong to comment on them individually. The hon. Gentleman made an observation about the special addition for the diabetic diet. We would in any case have had to review--as would a Labour Government--those special additions that were failing to reach all the people who might have qualified for them. They were complex, and considerable knowledge was needed to know what to apply for. Medical opinion makes it clear that a diet suitable for diabetics is no more expensive than a sensible, healthy diet for someone who is not a diabetic. It would therefore have been right to look again at those additions.
It is essential to keep the whole issue and the particular cases which have been raised in proportion and context, real though they are. The majority of income support claimants will gain and have gained at uprating. We estimate that 73 per cent.--nearly 3.25 million--will receive their full increase and that about 610,000, or 14 per cent., will receive a partial increase. That will leave about
Column 747600,000 whose benefit will stay the same. After the uprating in 1990, we estimate that rather fewer than 200,000 claimants will still need this protection--a tiny minority of the millions of social security benefit recipients who will get increases.
There are important reasons for reducing transitional protection at the annual uprating. There is the question of resources. As hon. Members are well aware, our aim is to target help on those groups identified as having the greatest need. Transitional protection is expected to have cost some £200 million in its first year. By its nature, it is poorly targeted as it reflects the inequities of the old scheme. To continue to pay protection indefinitely would not be a good use of resources.
I shall also say, as the hon. Member for Livingston (Mr. Cook) expected me to do, that there is a question of fairness. Claimants with protection are necessarily better off than those in similar circumstances who claimed after the start of the new scheme and who do not have access to protection. It would be wrong to perpetuate that inequality between different groups of claimants.
That is not to say that important improvements should not be made in particular circumstances. I have already emphasised that on a couple of occasions and we have shown our readiness to listen to particular problems by, for example, providing special protection rules for severely disabled people going into certain types of respite care. This autumn's improvements for older and disabled pensioners who are entitled to income support will be welcomed. We believe that they are in special need of extra help and they will be exempted from the normal transitional protection rules. Although I am unable to accept this general relaxation to the transitional protection rules, we are looking carefully at the different categories and how they are affected. What I have said shows that we are prepared to act.
I am also pleased to be able to announce a specific improvement for a certain group of people who try to become independent of public funds. Hon. Members, especially those who served on the Committee, will be aware of an amendment to the Bill, brought forward in Committee, to remove a disincentive to work for a trial period by amending the transitional protection provisions. The Government consider it crucial that people who want to work should not be discouraged from doing so. We have, therefore, introduced some special rules to enable certain people to take a job for a trial period without incurring the risk of benefit sanctions if they leave their job voluntarily within a specified period. The new rules do not extend to transitional protection. We promised to look at this limitation and I can now tell the House that steps will be taken, through regulations, to ensure that the people to whom these work easements apply will not lose their transitional protection. As I said at the outset, I appreciate that there are some hard cases and hon. Members have understandably and properly raised them this evening. I do not want to make light of them or to dismiss them. However, it must be said that all those who have transitional protection are, by definition, receiving more than those in the same general circumstances. Erosion of this protection does no more than move them towards the same level.
Column 748It would not have been possible to make the radical changes to our benefit system, which were so badly needed, without there being losers as well as gainers. We should not lose sight of the fact that in the changeover from supplementary benefit to income support, the number of gainers exceeded the number of losers. Of the 60 per cent. estimated to have gained in cash terms, the average gain was £3.85, not counting the sum that was built in for compensation for 20 per cent. of rates. Some 600,000 are expected to have gained more than £5 and another 1 million are expected to have gained between £2 and £5. The new system is simpler, making it easier to administer and, more importantly, easier to claim. It is better targeted to groups whose need is greatest, such as the sick, the disabled and families with young children. It is also fairer between individuals in similar circumstances. We always recognised that the transition from the old system to the new would be uncomfortable and sometimes painful for the minority who lost. Such a choppy period, as the hon. Member for Birkenhead (Mr. Field) said, would be inevitable if the changes he seeks were made. That is why we introduced transitional protection, which cushions reductions at the point of change. But it is an essential part of the much needed improvement to our system that those transitional additions should be reduced as personal circumstances change and as benefits are generally uprated. I ask the House to reject the new clause.
Mr. Robin Cook : By leave of the House, I want to respond briefly to the Minister. I begin by welcoming the fact that he complimented hon. Members on a serious and moving debate five times in his reply, appearing vaguely embarrassed about what he had to read to the House.
In the light of our debate, I regret that the Minister should again have taken refuge in quoting the numbers on who came out better on the cash transfer from the old system to the new. As he will know, that has been utterly discredited as a way of measuring the change. He should be measuring those who came out better in real terms and those who came out worse off in real terms.
Perhaps it is worth stressing that point because the immense irony of the figures claimed by Ministers last April is that every single one of the cases described in this debate would be corralled in the 88 per cent. who Ministers told us last year would be no worse off or would be better off as a result of the changes. I defy Ministers to explain to those who have written to me and my hon. Friends that they are no worse off as a result of last year's changes.
The Minister challenged the statement by my hon. Friends that we are talking about people who are among the poorest. He said that they receive rather more in income support than others. That is true. They have a marginally higher income than others on income support, but they have a higher income because they have higher costs. They still have the costs ; they now no longer have the income to meet those costs.
The Minister's observation that there is no extra cost in suffering from diabetes suggests to me that some damage has been done by the separation of the Departments of Health and Social Security. Perhaps it is possible to cope with a diet for a diabetic with the same amount that one would pay for a sensible healthy diet for an average person, but the trouble is that income support payments do not provide for a sensible healthy diet for an average person, and certainly not for a diet for a diabetic.
Column 749The Minister has enlightened us in one respect. He has confirmed that next April 200,000 pensioners and other claimants can expect no uprating in their benefits. Their incomes will be frozen at exactly the same level as the claimants first received in April 1987 and half those claimants can expect their benefits to be frozen again in 1991. That cannot be acceptable. I regret that the Minister chose to make resources one of his defences. It would cost a beggarly £30 million to extend uprating to that category. Only last month in the Budget the Government confirmed that they are sitting on a record surplus of £14,000 million. If Ministers tell us that they cannot find £30 million to assist this group, although they recognise that the cases make hard and painful reading, their arguments deserve to be treated with contempt, and we shall vote against them.
Question put, That the clause be read a Second time :
The House divided : Ayes 171, Noes 299.
Division No. 172] [9.21 pm
Abbott, Ms Diane
Adams, Allen (Paisley N)
Archer, Rt Hon Peter
Ashley, Rt Hon Jack
Banks, Tony (Newham NW)
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Beith, A. J.
Benn, Rt Hon Tony
Bennett, A. F. (D'nt'n & R'dish)
Bray, Dr Jeremy
Brown, Gordon (D'mline E)
Brown, Ron (Edinburgh Leith)
Buckley, George J.
Campbell, Menzies (Fife NE)
Campbell, Ron (Blyth Valley)
Campbell-Savours, D. N.
Carlile, Alex (Mont'g)
Clark, Dr David (S Shields)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Cook, Robin (Livingston)
Davies, Rt Hon Denzil (Llanelli)
Davis, Terry (B'ham Hodge H'l)
Duffy, A. E. P.
Dunwoody, Hon Mrs Gwyneth
Evans, John (St Helens N)
Ewing, Mrs Margaret (Moray)
Fields, Terry (L'pool B G'n)
Foot, Rt Hon Michael
Garrett, John (Norwich South)
Garrett, Ted (Wallsend)
Golding, Mrs Llin
Griffiths, Nigel (Edinburgh S)
Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John
Howell, Rt Hon D. (S'heath)
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport E)
Hughes, Sean (Knowsley S)
Kaufman, Rt Hon Gerald
Kinnock, Rt Hon Neil
Lestor, Joan (Eccles)
Macdonald, Calum A.
Mahon, Mrs Alice
Marek, Dr John
Marshall, David (Shettleston)