House of Commons Hansard Debates for 22 Jan 1990

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caring has been raised in the House on many occasions, and it should become one of the major disability issues of the next decade. The Government have done no more than to tinker with the cost of caring, and have failed to deal with the implications of the present unacceptable burden on voluntary carers. I think that carers are among the nation's most exploited people. The Government have failed to provide for them adequately. That failure means that millions of carers will feel embarrassed because they are doing a job without adequate financial provision. Millions of disabled people will also feel severely embarassed because they do not want to have relatives looking after them who are not being helped adequately. They are being given some help at present, but it is not enough. The relationship between millions of disabled people and their carers will be distorted. These are serious issues and the Government are doing nothing substantial about them. I hope that the Secretary of State will reconsider.

The flimsy nature of the Bill can also be seen in the omission of any help for the 4.2 million elderly disabled people. The growing number of elderly people will swell the total number of disabled people in the future.

Like the hon. Member for Ealing, Acton, I shall make a short speech because so many hon. Members want to speak. I conclude, therefore, by saying that I believe that this Bill is a failure because it does not deal adequately with the major problems of the severely disabled. The 1990s should bring major advances for disabled people, especially given the promises that the Government have made. This Bill makes no such advances. It is a midget of a Bill that takes very limited steps. Disabled people are furious with it. What we now need are gigantic steps to take disabled people, with fresh hope, into the 1990s. No such steps have been made and I regret that the Government have not risen to the occasion.

5.56 pm

Mrs. Marion Roe (Broxbourne) : I support the Bill. I congratulate the Government on introducing further measures that will help the sick and disabled people and improve the quality of life of older people. I fully agree with many of the points made by my hon. Friend the Member for Ealing, Acton (Sir G. Young) so I shall not waste the time of the House by repeating his arguments in support of the Bill. I particularly welcome clause 10, which will allow for grants to improve energy efficiency in low- income households. For many years, energy efficiency has been the Cinderella on the world political scene. Depending on the political and economic circumstances of the time, saving energy has been either at the top or at the bottom of the political agenda. Following the energy crisis of the early 1970s, Governments around the world became overnight converts to energy efficiency, spurred on by the fear that the West would be held to ransom by Arab oil sheiks and by somewhat apocalyptic forecasts of how long oil reserves would last. Energy-saving measures became the order of the day.

The collapse of the Organisation of Petroleum Exporting Countries and real falls in oil prices changed all that, but although the economic incentive for energy saving was not as strong in the 1980s as it was in the early

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1970s, Britain's energy-saving record in that decade was exemplary. As early as 1985, the International Energy Efficiency Office contrasted the vigour of Britain's efforts to conserve energy with stagnation elsewhere. For the past 10 years, our rate of improvement in energy efficiency has been more than twice the average for the European Community.

Much more remains to be done. Each year, Britain consumes about £40 billion worth of energy. That is equivalent to about one tenth of our national income. Potential savings of about £8 billion still exist, according to the Energy Efficiency Office of the Department of Energy. Such savings could add substantially to industrial competitiveness and significantly improve living standards. Energy efficiency is not just a matter of economics, however, crucial though savings may be. We are beginning to appreciate the environmental consequences of energy consumption. Although it would be naive to expect the industrialised world dramatically to cut back energy consumption overnight--however attractive such a notion may be to Green party supporters--energy consumption will have a heavy burden to bear over the next few years in the process of reducing environmental damage.

Energy efficiency not only makes economic sense but is an environmental imperative. I warmly welcome clause 10, for there could be no better time to introduce an insulation scheme to help low-income households. As my right hon. Friend the Secretary of State said, the Energy Efficiency Office's community insulation project has helped to insulate more than 700,000 homes, mostly those of pensioners. The new scheme should help to increase further take-up of basic insulation by lower-income households. I am glad to note that both tenants and owners in the public and private sector will be eligible.

Given the sustained and substantial fall in unemployment that we have seen over the past three years, reliance on the unemployed in implementing insulation schemes should be reduced. I hope that the new scheme will have as one of its aims the encouragement of smaller businesses providing insulation services. Such work could easily be undertaken by one or two-man or woman firms, which would offer the prospect of self-employment to the unemployed. The existence of local firms providing the required services could stimulate demand from households that are not eligible for Government assistance. When the details of the scheme are filled in over the coming months, I hope that consideration will be given to encouraging smaller firms.

Dr. Godman : In my constituency, many home insulation schemes are effectively and efficiently implemented by community businesses and tenants associations, as well as by small firms.

Mr. Roe : When I was a Minister in the Department of the Environment, I saw a number of such schemes in operation, and I agree that they were most effective and that local input is extremely helpful. Nevertheless, there is always room to supplement them with the services of small firms.

I hope, together with my hon. Friend the Member for Ealing, Acton, that the Department of Energy will consult Neighbourhood Energy Action over the mechanics of the

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scheme. That organisation has an excellent record in energy conservation and its expertise should be brought to bear in designing the new scheme.

I hope that my right hon. Friend the Secretary of State can reassure the House that eligibility for the scheme will not be drawn too tightly. It would be a pity if, in trying to target help at those on the lowest incomes, the scheme missed householders who cannot afford the full cost of insulation. The savings to be made from the individual and for the nation from home insulation projects are rapid and proven. I believe that energy efficiency will prove to be the very best environmental investment. The scheme will also bring greater comfort and warmth to lower-income households.

Several Hon. Members rose

Mr. Speaker : Order. The opening speeches both from the Government Front Bench and the Opposition Front Bench were lengthy--no doubt because the Secretary of State and the hon. Member for Oldham, West (Mr. Meacher) were frequently interrupted. I appeal to Back Benchers in all parts of the House to continue making brief speeches so that as many other right hon. and hon. Members as possible can be called. If speeches are limited to 10 minutes, it will allow the Chair to call every right hon. and hon. Member who has indicated a wish to participate.

6.4

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : In following the speech of the hon. Member for Broxbourne (Mrs. Roe) I cannot resist the temptation to remark that, though I appreciate her interest in energy conservation and that home insulation is of prime importance to low-income families in particular, she will understand if I do not accept that home insulation is the most burning social security issue confronting the country. That point was also made most ably by the hon. Member for Oldham, West (Mr. Meacher).

I also remind the hon. Lady that, whereas housing construction statistics for 1986 show that 400,000 home insulation schemes were completed, the figures for the June 1989 quarter show that the number had fallen to 11,000. I could quote other statistics to illustrate even more forcefully that the trend is going in the wrong direction. Therefore, I hope that the hon. Lady's campaign among her own right hon. and hon. Friends to improve home insulation will meet with success.

I share the disappointment expressed by other Opposition Members about the Bill, which can best be described as a ragbag of different measures. As a former solicitor, albeit only a Scottish solicitor, I begin with a plaintive plea on behalf of people who will have to make some sense of the legislation. Social security schemes are already complicated enough, and the intention now is to introduce not only huge chunks of disability legislation--though even that is not as extensive as it should be--but also new measures embracing pensions and energy matters.

The Minister for Social Security has been a member of the Department long enough to be able to tell his officials that he refuses to use social security Bills as a vehicle every year to sweep up any bits and pieces of legislative proposals that may be lying around the Department at any given time. The Minister would be better advised to go

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along the road of introducing a disability statute, a pension statute, and so on. That would be a more orderly way to make progress.

As to the inevitable arguments over what is and what is not new money, although I take a close interest in social security matters, I was hoodwinked by the Secretary of State's statement on 10 January concerning the Government's new document, "The Way Ahead : Benefits for Disabled People". On that occasion, the right hon. Gentleman mentioned a figure of £300 million, but I did not understand at the time that it embraced £100 million already announced in his uprating statement. I do not say that the Secretary of State deliberately misled the House, but I was certainly temporarily hoodwinked, and care must be taken to avoid such confusion in future. It is not easy to make sense of expenditure levels, and it will be helpful if Ministers bear that in mind.

One bone of contention has for some time been whether any increased expenditure is the consequence of increased take-up or of improved rates of benefit. Agreement among hon. Members on both sides of the House on the true figures would place in context the real improvements that the Government have made. The Minister may take a different view, but I am not convinced that increased take-up, welcome though it is, is something that the Government can crow about, given that the benefits concerned are something to which claimants have a statutory right. Perhaps the Minister can say something about the balance between take-up and expenditure.

The Bill's provisions for the disabled appear to leave pensioners behind. As the hon. Member for Oldham, West said, there is an underlying implication in several recent changes that that is being done. While I appreciate the advice of the Social Security Advisory Committee that progress should be made in respect of the disabled who are still in work or who are of working age, there is genuine anxiety that we are ignoring the problems of people over retirement age. We tend to mention average pensioner incomes, but there are single women pensioners in my constituency who have not had an opportunity to build up a pension entitlement and they are paying for it now with real financial hardship. Their plight must not be forgotten.

Ms. Short : Perhaps the hon. Gentleman would appreciate my putting some figures on the record. Two thirds of pensioners are women, because women live longer, and three quarters of them depend on means-tested benefits. They are the poor pensioners.

Mr. Kirkwood : That is a helpful and succinct intervention. I pay tribute to the work of disability pressure groups which inform all our debates. They are most worried about the opportunities presented by the report of the Office of Population Censuses and Surveys being missed. This is a unique opportunity, but it seems that it is to be lost. Everybody has been reining in the temptation to make more strident and urgent representations about disability to the Government recently. Since 1986, and the announcement of the review which I supported, we have held ourselves back. Now we have a glossy document and precious little else. The opportunity for a full review with proper consultation over a long time looks as though it is slipping away.

I recognise that there has been a three-phase approach. First come the uprating improvements, which were

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welcome. Secondly, we have the improvements which are announced in this Bill in clauses 1 and 2. They, too, are welcome. Thirdly, with the move towards a disability allowance, unless it includes resources to meet the true costs of disability, it looks as though the opportunity will indeed be lost. If it is lost, the Minister will never be allowed to forget it. He should not be allowed to forget it.

There is scant regard in the Bill for the plight of carers. I know that there is to be a debate on that subject later this week. The part played by carers seems, by implication, to have been ignored by the Government in the Bill and in their long-term proposals as laid out in "The Way Ahead : Benefits for Disabled People".

I listened with interest to the exchange about surpluses in occupational pension schemes. I am worried about them, too. The Government will have to tackle them. I cannot for the life of me understand why the Bill is not an appropriate vehicle to do that. I agree also that index-linked pensions in occupational schemes are the way forward. I hope that we shall move in that direction. The Government cannot stand idly by and do nothing about the gross surpluses that are being built up in some schemes.

I am also worried about changes in the national insurance fund. I was unhappy to have my fears confirmed by an article in the Financial Times today. I should be obliged if the Minister would say something about that. The article reports that the Government originally budgeted for some 750,000 people to leave SERPS, but the latest estimate is that 4 million will have left by the end of April. That is only the beginning. According to some estimates, if the promotions continue, some 7 million people will eventually opt out. That is two thirds of the original SERPS membership.

The consequences of the move are proving extremely expensive to the national insurance fund. The cost of contribution rebates has risen, according to the Financial Times, from £792 million in 1987-88 to £1.5 billion in 1989-90. Incentive payments, the so-called bribes, have soared from £346 million to £615 million. The article reports : "Overall the fund will have lost nearly £5 billion in the three years to next April. Costs are likely to escalate because more people will leave SERPS and because contribution rebates and incentive payments are linked to earnings."

I remember saying, when they were introduced, that I was much more relaxed about personal pensions than the official Opposition, but I said with some vigour that the incentive payments, or bribes, were unnecessary. If the figures I have quoted are anything like true, that is certainly the case. They represent a substantial sum of money that could be used on disability or pension benefits, which would be a far better way in which to use them.

Mr. Tim Smith : Will the hon. Gentleman give way?

Mr. Kirkwood : No. I want to conclude my speech.

The revaluation of pensions on winding up schemes is something of a worry for the industry. I have received representations from the industry, and I require some satisfaction that revaluation will be done in a way which will not prove literally to be an incalculable burden on some pension schemes.

There have been exemptions on self-investment for small self-administered schemes, but I am told that some 20 per cent. of such schemes will nevertheless still be

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caught. I would like the Minister to find time to say something about that. Is it necessary to have the 20 per cent. director rule, the "nem con" vote, and for each director to be a member or trustee of the pension scheme? If so, dozens, if not hundreds, of small firms in knitwear and other industries in my constituency will be prevented from recycling pension funds when there are cash flow problems. That would be a severe curb on their business activity.

The Bill is disappointing both in the short term and in the long term. More than anything else, however, the Government's attitude towards consultation does not augur well for the future of the social security system.

6.18 pm

Mr. William Hague (Richmond, Yorks) : I am grateful for the opportunity to speak so early in the debate, and, like other hon. Members who have spoken, I undertake to be relatively brief. Like my hon. Friends, I have enjoyed all the contributions that we have heard so far, but I think that we were all particularly fascinated by the speech of the hon. Member for Oldham, West (Mr. Meacher). As my hon. Friend the Member for Beverley (Mr. Cran) pointed out, some of the promises made in that speech may prove somewhat rash. I noted the get-out clause that it contained--that those promises would not have to be implemented in the event of an economic crisis--and I suspect that if Opposition Members were ever returned to office that clause would be implemented fairly early on.

Ms. Short : In Labour's policy review--I suggest that the hon. Gentleman goes away and reads it--we promised that we would re-establish SERPS, making it as good as it was before and adding the possibility of top -ups. We shall then require any opting-out pension scheme to match SERPS : one of the reasons for the improvement in occupational pension schemes is that they have had to match SERPS. That is the framework of our commitment, and the way in which it will be implemented.

Mr. Hague : I am grateful to the hon. Lady, and I am sure that I shall read the policy review many times during the next few weeks, although I think that Labour may have to look again at what its proposals mean for pension fund surpluses.

I listened with care and respect to the speech of the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), but I hope that we shall not fall into the trap of comparing increases in benefits with reductions in tax rates over an extended period, as if there were a simple choice between the two. One of the reasons for the current record tax revenues is the reduction in tax rates, including those paid by top earners, who are also supplying record tax revenues. I am sure that the right hon. Gentleman will understand that, rather than a choice being presented between the one and the other, one is required to supply the other.

The Government have a solid record of improving and expanding social security provision and targeting it more effectively--

Mr. Ashley : I am sorry to interrupt the hon. Gentleman, but is he disputing my figures?

Mr. Hague : I was not disputing any figures supplied by the right hon. Gentleman. I was disputing the case for

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comparing tax reductions with increases in benefit as though there were a choice between the two. Nevertheless, I am sure that hon. Members on both sides of the House will want to check the figures given by all hon. Members in the debate, as is customary. The Government have received far too little political credit for their achievements in social security provision, and the debate provides Conservative Members with an opportunity to put that right. The improved benefits for widows, the sick and disabled and the terminally ill for which the Bill provides represent the latest example of the Government's effective and prudent spending of increased resources. Over the past 10 years total expenditure on cash benefits for the sick and disabled has increased by more than 100 per cent., even after allowing for inflation.

Although there is and always will be scope for more provision for the needy, the average annual real increase in spending has been dramatically higher in the 1980s than it was in the 1970s : it now accounts for more than 15 per cent. of total social security spending. That is good news, in keeping with what the nation has most wanted the welfare state to provide-- help for those who are unable to help themselves. Opposition Members who complain, even now, about the level of benefits were utterly unable to do better when they were in office ; indeed, they could not even contemplate being able to give so much assistance to the least fortunate members of society.

Mr. Ian McCartney (Makerfield) : Will the hon. Gentleman give way?

Mr. Hague : I will not give way for the moment, as I have already done so twice. I may do so again later.

Of course we recognise that there are always cases for increases in benefits, but we might be forgiven for thinking that, while requesting so many increases in specific benefits, the Opposition could have had the good grace at least to congratulate the Government on their overall record.

The package announced by the Secretary of State last October is an important part of the background to the Bill. At that time much righteous indignation was being devoted to the subject of child benefit and the Government's refusal to increase it. Such an increase, however, would have constituted an indiscriminate use of the nation's resources, with much of the additional provision going to people who were already better off than many of the taxpayers called on to pay for it. I congratulate the Government on having had the courage to resist the hysteria and to use the money where it might win fewer headlines, but would be of more genuine use.

Half a million disabled people and their carers will benefit from the improvements announced last October. The premiums for disabled children provided through income support have been more than doubled ; the help provided by attendance and mobility allowance has been extended to new specific groups ; and the benefit structure for those on employment rehabilitation courses has been improved so that they can, for instance, continue to receive invalidity benefit. More support has been given to those who care for disabled people, and the new carers' premium in income support and housing benefit for those receiving care allowance is particularly welcome. I am sure that the Government have not yet reached the limit of the improvements that they can make, but a warm welcome should be given to what they have done so far.

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May I make a specific point about the earnings limit on care allowance? I have already written to the Department about this. Many carers manage to work on a part-time or occasional basis, but are often able to do so only in a rather irregular way. Sometimes they can work for only a few weeks of the year, when other members of the family take over the task of looking after their dependants. As a result, the carers may lose care allowance for some weeks of the year, while their total annual earnings are still substantially less than the weekly earnings limit multiplied by 52. Would it not be better to calculate entitlement on the basis of annual earnings, or provide the option to do so? I hope that Ministers will consider that possibility in the coming year.

The Government, then, can point to a strong record on social spending, which I believe should be drawn to the country's attention. The Bill will bolster that record. Let me mention three aspects in particular.

First, the Bill makes further improvements in the assistance provided for sick and disabled people. I know that some of the key features of the package of improvements announced earlier this month are not included--for instance, the new disability allowance, and disability employment credit-- but we can look forward to their implementation in the future. Other measures for the sick and disabled are included and are very welcome, particularly the removal of the six-month qualifying period for receipt of attendance allowance by the terminally ill, which has long been a source of discontent. Equally encouraging is the Government's declared aim of dealing with applications in a matter of two weeks. Let us hope that they can deliver on that.

The age-related addition to the severe disablement allowance is also very welcome. It will help many families, including some in my constituency, who are unable to work as much as they might because of the need to take care of young disabled people. The improvement in widows' benefits is also welcome. It is possible that only a small number of widows will be affected by clause 5, which will help those who make a late claim owing to a delay in determining the death of their husbands ; even so, the action was worth taking, and the clause is a good piece of tidying up.

The part of the Bill that deals with occupational and personal pension schemes will be good news for millions of people. More than 70 per cent. of newly retired pensioners now have an occupational pension. The new ombudsman service will be of great practical value, and will provide a reassuring presence for many pensioners. I am pleased to note that the ombudsman will have statutory powers of enforcement.

The tracing service established by clause 8 is another important measure : it enables the Government to keep up with the times, and to remove any remaining disincentives and obstacles to the taking out of occupational pensions. Confidence that pensions with previous employers can be tracked down is essential in a world where occupational pensions are more common and the mobility of labour is increasing.

The strengthening of protection for members of pension schemes is another improvement. It is right to strengthen the protection for early leavers of occupational pension schemes, and to give more help to married women and widows by granting the right to a guaranteed minimum pension to those who have contracted out of SERPS. I am sure that the new restrictions on

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self-investment are right, and I am pleased that Ministers have reversed their initial position on restrictions on small self-administered pension schemes. Members of such schemes generally have sufficient control over their funds not to need such protection.

In general, I consider the Bill to be a very positive measure, and part of a continuing positive record. Most of those who complain about its provisions could never have imagined a few years ago that the nation would be devoting such a level of resources to social security, let alone providing such an increase in funding for the sick and disabled. In the face of all the cynicism, the Government continue to spend more, to spend it in the right places, and to do so without bankrupting the nation. That is the proper way in which to improve and expand the welfare state.

6.30 pm

Mr. John Battle (Leeds, West) : Despite the attempts of Government to find positive reforms in this Bill and to sell it in the context of the Government's economic approach, I hope that the House will agree that the Bill is a disappointment and a wasted opportunity--not only because it fails to address significantly some key issues, such as the basic retirement pension on which people in the constituencies of some of us have to live, but because it fails to recognise that child benefit has been frozen and does not put before the House the comprehensive benefit for disabled people for which some of us have been pressing for a very long time. In fact, the Bill will implement few of the proposals that were announced in the Secretary of State's recently published report "The Way Ahead : Benefits for Disabled People". It even sidelines that long-awaited report.

In his introduction to the report the Secretary of State wrote : "When completed, this programme will build on the many improvements already made in recent years to give us a more comprehensive and coherent system of disability benefits than ever before." That statement seems to hinge on a future promise--one based on the fact that many claimants are experiencing a dismantling of social security and a reduction in their incomes. There are 6.5 million disabled people in Britain, but it is estimated that, in practice, the Bill will affect only 850,000 people, including carers. We are entitled to ask whether this is the Government's best response to the surveys that they have commissioned over the years, the results of which they have now gathered together.

What about pensioners, who make up the majority of disabled people? There are 4.2 million disabled pensioners in Britain, yet the Bill contains no measures to improve their financial position. Conservative Members boast about the improvement in incomes and living standards achieved by the Government. Recently I received from a 74-year-old widow a letter setting out in clear detail a table of her income every year since November 1987, taking account of the changes in the system and of reductions in housing benefit. Her income, at £48.35 a week, is exactly the same now as it was in November 1987. She writes :

"Every time something is reviewed or reformed by this Government we either finish up with less money or worse services I am now having to find an extra £5.25 to pay for

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the cut in housing benefit, 20 per cent. of my rates and all my water rates each week. This is on top of all the other increases in gas, electricity, telephone and food."

That letter is from a lady who gave up her job 10 years before her retirement date to look after her sick husband so that he would not have to be in and out of hospital. Is it fair that this Bill will do nothing to improve her position?

Of course, it could be argued that it would be churlish not to say that clause 1, which extends attendance allowance to the terminally ill without a waiting period of six months, is an improvement, but the benefit should be paid as soon as need is established. Clause 2 proposes an addition to the severe disability allowance related to the age at which the claimant became disabled. But of the 263,000 people in receipt of severe disability allowance, 140,000 get income support, too, and others receive means-tested housing benefit. They will see no difference as a result of this clause. The discriminatory 80 per cent. disability test will remain. Perhaps the Secretary of State, who claims that there have been increases, will tell the House why the Government will not increase the severe disability allowance to the same level as the state retirement pension. That would be a start.

Furthermore, the abolition of the earnings-related allowance, which is proposed in clause 3, will decimate an already reduced benefit. The Government claim that this benefit will overlap with invalidity benefit. The point is that invalidity benefit represents income maintenance, whereas the reduced earnings allowance is compulsory. In practice this is another reduction in benefit.

Mr. McCartney : It is vital that we explain to people what is happening in respect of reduced earnings allowance, which is paid to people who are maimed or injured during their work. Many of those people will never return to the type of work in which they were engaged, or to the workplace at all. The Government have steadily reduced the ability of working people to claim this benefit. We have reached the stage where a worker who has had two fingers amputated can fail to qualify for that benefit. That is the sort of thing that the present Government have been doing to people injured in the workplace.

Mr. Battle : I am grateful to my hon. Friend, who has spelt out in detail the implications of the cuts for people whom we have been trying to represent for months, if not years.

Clause 4 will remove entitlement to the earnings-related element of invalidity benefit after the 1990-91 tax year. Even that measure flies in the face of the proposals set out in "The Way Ahead". The Bill offers a bit of piecemeal tinkering, with no signs of a comprehensive scheme. Worse, it manifestly ignores the main findings in "The Way Ahead", which spelt out in detail the huge gaps in income between disabled people and non-disabled people. Where in this Bill, we are entitled to ask, are the proposals to cover extra costs, such as those involved in diet, heating and laundry, that many disabled people incur as a consequence of their disability? We are no further forward than we were when the special additions were withdrawn as a result of the so-called Fowler review.

The Bill proposes abolition of the invalid pension allowance by April 1991 to encourage occupational pension schemes. In his statement on 10 January the Secretary of State said :

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"the forthcoming Social Security Bill will contain measures to enhance the benefits of severely disabled who were never able to work, or who were disabled early in life, while at the same time ensuring a better balanced and more sustainable overall structure of income replacement benefits for incapacity, taking account of the encouraging growth of occupational provision in this field."--[ Official Report, 10 January 1990 ; Vol. 164, c. 942.]

What lies behind those words about a more sustainable overall structure is a clear attempt to reduce social security costs again--and that amounts to a reduction in benefits. Occupational pension schemes are least likely to exist for those most at risk, and this proposal will only undermine the security that SERPS provided. The result will be a saving of £350 million for the Department of Social Security by 1991 and, in practice, a further erosion of disability benefits.

We welcome the introduction of a pensions ombudsman, but can the Secretary of State assure us that that person will have power to look into the current duping of the taxpayer in the pensions section of the Department of Social Security?

Today's Financial Times informs us :

"After running a healthy surplus for years, the National Insurance fund has plunged into deficit. I would be the last to object if this reflected a more generous policy on benefits. Needless to say, it does not. The basic pension, which continues to decline against earnings, is a meagre £43.60 a week--rather less than the cost of a meal for two in a typical City restaurant."

The reason for that is that when people contract out of SERPS, not only does the fund lose contribution income, as the Secretary of State acknowledged earlier, but the Government are paying a 2 per cent. subsidy to people who switch to personal pension schemes. It is a bribe to undermine the SERPS scheme and to promote private pensions. Although, officially, the Government budgeted for 0.75 million people to leave SERPS, the latest estimate--it was echoed in the remarks of the Secretary of State earlier today--is that about 4 million people will have left the SERPS scheme by April this year. As the Secretary of State confirmed, by next April the fund overall will have lost nearly £5 billion in three years. Interestingly, the Financial Times concluded its article with the following : "It is surely the height of fiscal irresponsibility to undermine the National Insurance fund by spending £1.5 billion of taxpayers' money encouraging people to gamble their pensions. When so many of today's pensioners are obliged to live on so little, the policy looks more than a trifle callous."

Contrary to what the Secretary of State suggested, it is not a sum to be brushed aside lightly, yet the Government have embarked on a totally inefficient waste of significant financial resources that could be used to improve other social security benefits.

In 1979, the Conservative manifesto claimed that there would be a move towards a coherent system of disability benefits

"as swiftly as the strength of the economy allows."

The problem with that trickle-down approach is that it always begs the question whether the economy is strong enough to bring the poor, the elderly and the disabled in our society in from the margins. Worse, since 1984 the Government have regularly proclaimed that increasing economic prosperity has arrived, yet, in the words of the Minister for Social Security at the front of the report "The Way Ahead",

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"as a society, we have a long way to go before we accept disabled people as full members of our economic and social community." We certainly agree with that. Sadly, there is a long way to go and the Bill does not take us much further forward in ensuring that disabled and elderly people have adequate incomes to meet their needs, and incomes that ensure that they have a decent quality of life and retain their independence. This is a piecemeal, cost-cutting Bill. I urge the House to ask the Secretary of State to take the Bill back and to think again because it is just another missed opportunity. 6.41 pm

Mr. Tim Smith (Beaconsfield) : I suspect that the sentence that the hon. Member for Leeds, West (Mr. Battle) has just quoted from the document "The Way Ahead" had more to do with attitudes towards disabled people in society than with the cash that is provided to them to help them to overcome their disabilities. If that is the case, I agree with it. Although attitudes are improving, there is a long way to go until we get to the point where people treat disabled people as if they were not special cases but ordinary people with a disability that could be overcome with the help and co-operation of others. That help and co-operation is not just a question of financial help and co-operation--

Ms. Short : That is important.

Mr. Smith : Yes, it is important, but it is also important that through a process of education we try to improve people's attitudes to disabled people and persuade them that many disabled people could play a full role in society. There are apparently 6.5 million disabled people in our society, but I believe that many of those people have already overcome their disabilities and play a full role. Therefore, I believe that that is a misleading figure from which to start.

I support the Bill because it makes worthwhile improvements to both the system of social security and our occupational pension schemes. I very much support the Government's philosophy on social security, which is, as far as is possible, to devote what are necessarily finite resources to those people who are most in need. So, if it comes to a choice--

Ms. Short : What about tax cuts?

Mr. Smith : If the hon. Lady will allow me, I shall deal in a moment with her point about tax cuts.

The important point about social security is that it should be devoted to those who are most in need. Clearly child benefit does not achieve that objective. So, if it is a choice, which I think it must be, between an increase in child benefit and targeting improvements on specific groups, I think that the Government are right to choose the latter.

The hon. Member for Birmingham, Ladywood (Ms. Short) earlier described the sum of £16 million as "peanuts". That epitomises the Opposition's attitude. First, £16 million is a substantial sum of money in its own right in absolute terms ; and, secondly, if it is targeted on a specific group of people who are in need, it can result in substantial improvements in the weekly benefits of the individuals concerned. When my right hon. Friend made his statement in, I believe, October, he gave examples of

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some substantial improvements in the weekly benefits payable to individuals in need. I hope that the hon. Lady has taken that important point fully on board.

Ms. Short : Clearly £16 million for one, two or a few people is an enormous sum of money, but £16 million shared among all who are severely disabled is peanuts.

Mr. Smith : The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) described £300 million as minuscule. I do not see such sums in that way. We must recognise that they are large sums in absolute terms.

The hon. Member for Ladywood made a revealing intervention earlier when she said that we can assume that we shall have 2.5 per cent. economic growth for the foreseeable future and so we can plan to spend the money now. I advise her that, although we did not have such growth under the last Labour Government, we have certainly had it in the past decade so we have no right to make that assumption. We must have sensible and prudent economic policies because only then will we achieve economic growth.

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