House of Commons Hansard Debates for 22 Jan 1990

Ms. Short : The level of economic growth in our country since the second world war has been 2.5 per cent. or more continuously. In fact, there was continuous growth throughout the lifetime of the last Labour Government. We then saw a dip in the early years of the Tory Government and then a continuation to exactly the same slope. Therefore, we can project that the future is likely to be like the past. Obviously if there is a collapse and a crisis, that transforms everything, but we can expect 2.5 per cent. plus economic growth every year into the foreseeable future-- [Interruption.] Of course, we can.

Mr. Smith : That illustrates the fallacious assumption upon which much of Labour party policy is based. Indeed, the last Labour Government's approch to spending was, "Spend now, and worry about where the money is going to come from later." It was that approach that led to the arrival in this country of the International Monetary Fund in November 1976.

Page 37 of the report of the Occupational Pensions Board that was published in February 1989 contains two revealing tables. They illustrate the absurdity of the statement of the hon. Member for Oldham, West (Mr. Meacher). Indeed, it has been the most remarkable feature of the debate because the hon. Gentleman made a revealing statement about Labour party policy. I suppose that he has been told that in future he should not make any further commitments that would increase public spending, so he has decided to direct himself to private pension schemes and to imposing a huge additional cost on them.

The two tables show the key factors that affect the performance of pension funds. The first column of each relates to average earnings growth each year and the other column to dividend flows each year. One table covers the period 1975-81 and the other covers 1982-87. Although the pattern is irregular, the net result is that in the period of the Labour Government the increase in average earnings was well in excess of the increase in dividend flows. That is why the OPB stated in 1981 :

"The picture was discouraging as far as pension scheme finance was concerned, and it is easy to understand why the Board did not suggest a course which would place once-for-all past service burdens on schemes."

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The next paragraph is headed "Finance now" and states : "The growth in dividend flows has greatly outstripped the growth in average earnings. We think it unlikely that many schemes are hard -pressed as far as their general finances are concerned, and we therefore consider that they should be able to shoulder the modest costs involved in our proposal."

Those two tables show the transformation in the finances of pension schemes over the past decade. In the 1970s, I was a trustee of a private occupational pension scheme. It was a constant struggle to keep it solvent. When there was a deficit, one could not ask--one would not expect to ask-- the employees to make up the difference, so when there was a deficit the employer had to increase his contributions. It follows that, when there is a surplus, it is not unreasonable for the employer to say that he will reduce his contributions.

I am sure that you, Mr. Speaker, are aware that we had a debate in the House only last week on our pension scheme when it was agreed that the contributions of the employer, which in this case is the Treasury or the taxpayer, should be reduced from 18 per cent. to 4.4 per cent., while our own contributions were to remain at 9 per cent. That is right when there is a pension scheme surplus. However, the hon. Member for Oldham, West (Mr. Meacher) assumes that that position will continue come hell or high water. He is hoping that hell will come soon because he is hoping for another Labour Government. If that happens, there will be an immediate collapse in investor confidence and the escape clause that he described will be called into play. He has announced a policy which amounts to fraud and which, if it were persisted with for long, would cripple most private sector pension schemes. Everybody should understand the implications of that policy.

I welcome the proposal for a pensions ombudsman. That is a better idea than the tribunal suggested by the Occupational Pensions Board. Like the other ombudsmen posts in the financial services industry, it should be financed by the industry rather than the taxpayer. My right hon. Friend said something along those lines. There are quite a number of ombudsmen in the financial services sector, and I wonder whether the new post could be combined with one of those. There is a proliferation of them. I agree with my hon. Friend the Member for Ealing, Acton (Sir G. Young) that the ombudsman should publish reports. That would be helpful.

The Bill proposes a pensions scheme register. That will be helpful because of the proliferation of schemes and because many people change their jobs many times. They may have difficulty discovering who is responsible for paying their pension. I hope that it will not be necessary to place the cost burden on the taxpayer. Perhaps the register could be operated by Companies house, which has great experience of registering companies. Many of the companies that register with Companies house also run pension schemes. It might be possible to operate along those lines, but the cost should be paid by the pension schemes, perhaps through an annual registration fee. We have already discussed at some length the question of early leavers. I am glad that, because of the improvement in the financial position, it is now possible for the Government to accept something that was not acceptable only five years ago in 1985, which is substantially to improve the lot of the early leaver. There must be a sensible balance. Employers set up occupational

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pension schemes to encourage employees to stay, not to leave. It is part of the remuneration package and employers hope that their employees will remain with them. However, it is important for the national interest that people do not feel that their pension scheme is such that they cannot afford to leave. Job mobility is important and early leavers should have a decent deal. The proposal strikes a sensible balance and should be welcomed.

I welcome the changes in self-investment that my right hon. Friend announced just before Christmas. The changes originally proposed went too far. It is sensible to omit from the proposal those who are self-employed directors because clearly they are in a different category. I understand the more general reservations about large amounts of pension fund money being invested in the company because employees then have too many eggs in one basket. The proposal is just right. I welcome that part of the Bill that deals with occupational pensions and also the proposals on social security.

6.53 pm

Mr. Eric Illsley (Barnsley, Central) : Like other hon. Members, I shall be brief.

Clause 1 deals with the six-month rule for attendance allowance but, unfortunately, it does not go far enough. I shall give one or two examples of the problems that I have encountered with the implementation of that rule.

Under the six-month rule the applicant who is diagnosed as being entitled to receive attendance allowance has to wait for six months, which gives rise to a number of problems. In particular, if the illness is serious the applicant and his family may need assistance quickly. That relative-- perhaps a husband or wife--might have to give up work to care for the applicant, which means an immediate loss of income to that family. The illness could involve certain expenses such as travel to hospital and special diets. When the applicant is elderly, there could be the expense of paying for extra nursing and other help.

The saddest problem with the rule is where the applicant dies after being diagnosed as qualifying for the allowance, but before the end of the six- month period when the benefit would be put into payment. Since 1987, I have dealt with three such tragic cases. It is extremely distressing to experience the tragic death, after serious illness, of a relative at a time when an application for attendance allowance has been granted, but before the end of the six-month period the applicant dies and a letter arrives from the Department of Social Security saying that the benefit is not payable.

I know of a tragic case of an elderly couple where the husband had to employ MacMillan nurses to look after his wife. She was not diagnosed as terminally ill, but she died before the end of the six-month period. He had been put to particular expense only to find that he did not qualify for receipt of the benefit because his wife had died. The only value of the six -month rule is to determine the seriousness of the condition of the person making the application, and to determine whether the illness is serious enough to warrant payment. A six-month period can be classed as too long to determine whether a person is sufficiently seriously ill to qualify for the benefit. Many applicants regard the rule as a Government device to save money on the attendance allowance. Failing the abolition of the six-month rule--which would perhaps be the best way to deal with the matter--any amendment to it should

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ensure that it takes into account genuinely seriously ill applicants rather than simply using the definition of terminally ill, which is too narrow a definition in this context.

There are problems in diagnosis. A person might be seriously ill, but not diagnosed as terminally ill. A diagnosis might be made at the time of the application and the terminality of the illness might occur later. It puts a responsibility on doctors, delegated medical practitioners and the attendance allowance board to determine what is or what is not terminal illness. I suggest that the criterion should be genuine serious illness rather than terminally ill.

In support of that, I refer the Secretary of State to a letter that I received in June 1988 from the attendance allowance unit of his Department in Norcross in Blackpool, which referred to a claim with which I was dealing. It states :

"Any system of short-term social security support--over and above the present State sickness benefit and statutory sick pay schemes--for people who might die before completing the six month qualifying period for attendance allowance would involve their classification as terminally ill. Quite apart from the practical difficulties, in some cases doctors can, for good reasons, withhold or delay telling patients and their relatives about the diagnosis of terminal illness. Again, given the many advances in medical science and knowing the spirit of some patients, doctors may be reluctant to commit themselves to such a firm prognosis."

The Secretary of State's Department is casting some doubt on the usefulness of the definition of terminally ill for the six-month qualifying period for attendance allowance. Although it is welcome as a step forward in alleviating the problems with the six-month rule, rather than using the definition of terminally ill, a definition of a genuine serious illness, whereby the attendance allowance board can determine that the illness is likely to extend beyond the six-month period, should be included in the Bill.

Clause 3 abolishes the reduced earnings allowance, which was formerly the special hardship allowance. It is interesting that the Department removed the emotive word "hardship" from the definition of the benefit and now it has decided to remove the benefit. That will have a major effect on certain industrial sectors, for example, the mining industry. For eight years I dealt with compensation claims for the industry--social security benefits and common law damages claims. Many serious injuries would automatically mean deployment of an injured miner to light work, with the inevitable consequence that he would be deployed to light wages as well. Reduced earnings allowance was a necessary benefit to enable an injured miner to maintain his income level during the period of his disability and on recovery. As the Secretary of State is probably aware, serious injuries that would qualify a miner for reduced earnings allowance and disability benefit extend over a long period. I have dealt with cases that extended over a number of years. If a case is contested, the period can be as long as 12 years. The mining industry has a long history of severe injuries and a large compensation sector. The British Coal Corporation and the union employ staff to deal with compensation claims. Although some 90 per cent. of cases have been settled amicably through negotiation, a proportion have had to be dealt with through tribunals and the courts.

The negligence issue raises the question whether common law compensation would do away with the need for reduced earnings allowance, and I suggest that it would

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not. There is always a litigation risk in a negligence claim and such claims are not aways successful. A compromise settlement might mean that the compensation awarded to an applicant is reduced by up to 50 per cent., even though he still needs the same treatment. It might not adequately cover future loss of earnings.

British Coal has a no-fault liability scheme, incorporating a loss of earnings allowance for miners who are diagnosed as suffering from pneumoconiosis. Unfortunately, the loss of earnings allowance under that scheme is restrictive, and it is not used often. Pneumoconiosis is a progressive disease. There are problems with diagnosis ; often the disease is not diagnosed until late in a workman's working life. To qualify for loss of earnings allowance under the pneumoconiosis compensation schemes, the workman has to work in a dust-free environment, which usually means on a colliery or unit surface, which again means light work and light wages.

A few weeks ago, the case was raised with me of a common law wife who, obviously, did not qualify for widow's benefits or widow's allowances. I ask the Secretary of State to consider the position of that young lady. She visited me, having lost her partner with whom she had been living for the previous 15 years. To all intents and purposes, the lady was in the same position as a married woman in all but the marriage certificate. The occupational pension was awarded to her as a partner. She did not qualify for widow's benefits. It seems hypocritical that, when she went to live with her partner and immediately declared that fact to the social security office, the couple was classed by the Department as, to all intents and purposes, a married couple, yet, when it comes to paying out money on the death of a long-term common law partner, there is no entitlement to benefit.

I welcome the clause on energy efficiency, on which, I presume, my hon. Friend the Member for Cardiff, West (Mr. Morgan) will touch. As a member of the Select Committee on Energy, I welcome this measure. It is good to see that at least one Department recognises the value of energy efficiency, especially as this follows the Energy Committee's report on the greenhouse effect.

7.5 pm

Mr. James Cran (Beverley) : I support the Social Security Bill--[ Hon. Members :-- "No."] Yes, of course. No doubt the Opposition will do the opposite. I intend to confine my remarks to that part of the Bill about which I know rather more, on the principle that I have listened to others speak about state benefits who clearly know more than I do. Such expertise as I have on this subject emanates from the fact that, before becoming a Member, I was--as an Opposition Member remarked during one of my interventions--the man from the CBI. It is equally true to say that, before that, I was the man from the National Association of Pension Funds. From that experience, I gathered some facts, none of which, regrettably, was reflected in the remarks of the hon. Member for Oldham, West (Mr. Meacher). The hon. Gentleman made a number of extravagant, insupportable statements. I assure the House that many Conservative Members will read his remarks carefully when they are printed tomorrow, because they were startling.

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The hon. Member for Oldham, West misunderstands the principle of an occupational pension scheme or, for that matter, a portable pension. That was illustrated by his dissertation-- "dissertation" is far too kind a word--on inflation proofing. He made promises without cost implications, saying that it could all be paid for out of surpluses. Anyone who knows anything about this subject realises that that is not how it is done. A pension fund must meet long-term obligations, which means financial discipline--about which I heard nothing from Labour Members.

I suspect that the occupational pension fund movement is not worried about the Government, who have produced single-figure inflation. I associate myself with the statement of my right hon. Friend the Secretary of State that inflation is too high at the moment. The occupational pension fund movement is worried about the return of a Labour Government--I know that we will not have a Labour Government, but let us postulate for a moment--and inflation of 27.5 per cent. I assure the House that the corollary of that would be bankruptcy for the occupational pension fund movement. If I am wrong, and if I am lucky enough to be on the Standing Committee, I shall be interested to hear what actuarial advice the hon. Member for Oldham, West received to lead him to make his statement. I will want to learn which bodies he has consulted and what detailed advice he has been given, because my view is that his remarks are insupportable. Labour Members may not wish to accept this point, but an occupational pension or a portable pension is a prized possession, as is easily seen by statistics. By 1986, about 70 per cent. of newly retired people had such a pension. Between 1979 and 1986, the incomes of occupational pensioners rose in real terms by 56 per cent.-- a staggering performance by any standard in terms not just of the investment managers but of increased returns to pensioners, as was pointed out by my hon. Friend the Member for Beaconsfield (Mr. Smith). That is a real benefit. I concede that the maximum benefits in occupational schemes accrue to those who stay in them. Not all workers stay in their occupational pension schemes. They move round. That is why the reform introduced by my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) was an epoch-making measure. The whole system was freed up in a way that many people in occupational pension schemes appreciated.

My conviction and the conviction of my right hon. Friend is that, if possible, we must induce people through occupational schemes, portable schemes and other devices to make provision while they work for the time when they will not work.

Ms. Short : I presume that the hon. Gentleman has read the report of the Occupational Pensions Board which laid the basis for the reforms in the Bill. Many individual pensioners who have lost out and who are increasingly impoverished gave evidence. I accept the hon. Gentleman's average performance figures. Does he agree that we must protect everyone from being conned into disastrous pension schemes that will impoverish them in old age? We need a system of regulation so that that will not happen.

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Mr. Cran : When the hon. Lady bandies about words such as "disastrous schemes", she must come forward with evidence.

Ms. Short : It is in this report.

Mr. Cran : I mean evidence from individual schemes. I was a member of a fairly good scheme for several years, but a few years later I moved to another scheme. Difficulties occurred about the transfer payment and all the rest. That is where the problem occurs in the occupational pension fund movement. It is perfectly clear that the hon. Lady does not understand the basis of the occupational pension fund movement. I look forward to hearing her evidence in Committee, and we shall consider that evidence when it is presented to us.

Ms. Short : The hon. Gentleman has not read the report. If he had, he would have seen the evidence laid out in a table. Several individuals wrote in to say that their pensions had been eroded in value over time and that they were angry about it. They believe that Government regulation is needed. The report also makes it clear that money purchase schemes depend on cashing in the moment that someone retires. If that coincides with a drop in the stock market, the members lose out. The hon. Gentleman must be aware of those examples, and I could give more. The question is whether the Government should regulate to protect people from falling into schemes that provide glossy brochures suggesting that they will be fine in old age only to find that they are impoverished. Regulation is needed to protect everyone to a minimum standard.

Mr. Cran : To clear up one anomaly, I have read the report. The problem with reports is the construction that one puts on them. I fear that the Opposition have put the worst possible construction on that report. One must go beyond the report and consider individual schemes. When the hon. Lady makes such allegations, we must see the detailed evidence for them.

If I am lucky enough to be chosen to serve on the Committee, I shall return to the problem of inflation-proofing. The problem will not be solved by a dictum of the Secretary of State that inflation is 11 per cent. so members of all schemes must be indemnified for it. We live with occupational schemes which are funded, and obligations can be paid only from the earnings that the scheme makes. That is why I believe that, rightly or wrongly, Opposition Members profoundly misunderstand what occupational pensions are all about.

It does not elevate the argument to bandy about extravagant words. Of all the schemes that I have known in my lifetime--I am no longer associated with the occupational pension fund movement--some have been good and some bad, but none has been disreputable--or whatever word the hon. Lady used.

I am in favour of occupational and portable pensions because we should make provision while we work for the time when we do not work. The great advantage of such schemes is that they take the burden off the state--the taxpayer--and release moneys for the social security budget, which is currently about £56 billion. Resources are freed for the people who need them rather than being spent on those who do not. That is absolutely correct, and my right hon. Friend the Secretary of State has my support in that.

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My right hon. Friend the Secretary of State is absolutely right to introduce a pensions ombudsman. Such a provision is long overdue. I remember such an initiative being discussed in my days in the National Association of Pension Funds. It is a pity that that great industry did not have the courage to set up an ombudsman to consider matters on which individual pensioners disagree with those who run the schemes. I am therefore delighted that we shall legislate to provide an ombudsman.

The great problem, however, is deciding what constitutes a dispute between a scheme and an individual. My experience tells me that all members are in dispute at some time with their schemes. I have had such a dispute. The last time that I wanted to transfer a pension I thought that the transfer payment was too low. Is that a dispute? It might be. I remind the House that in this business, dissatisfaction emanates from unfulfilled expectations, which are endless in the pension fund movement and, from what I have heard, on the Opposition Benches.

My right hon. Friend the Secretary of State is right to set up a tracing service. Again, it is long overdue. From my time with the NAPF, I remember people sitting round board room tables saying that it would be a good idea, but they did not have the courage, foresight or ability to go ahead and set it up. Indubitably, they should have done. I am heartened to hear that my right hon. Friend intends to set up the service with the co-operation of the industry, and I expect that that co-operation will be forthcoming. He may rely on some of us to put our weight behind some bodies in the movement to help him. I understand what the Government are trying to do about asset deficiency in winding up schemes and the consequential obligation to revalue benefits. That is correct, even though the Opposition would like to do more. All Oppositions want to do more and to spend more of everyone's money. That is entirely understandable. My right hon. Friend is advancing the conditions of pensioners a little further. His gradualist approach is correct. But I do not understand why the Government have decided to adopt the view that when a scheme is wound up a debt should be imposed on the employer. The OPB suggested that improved preserved rights should be a first charge on the surplus of a wind-up. That is a more appealing solution than the one that my right hon. Friend the Secretary of State has chosen. I hope that he will be prepared to listen to some of us, as we are prepared to listen to the justification for his proposal.

On the ceiling on self-investment, one is tempted to ask why, in heaven's name, it has not been done before. I do not say that about large self- administered schemes. I used to hear stories of some large and medium-sized self-administered schemes that were unhealthily self-invested. Clearly, for all the reasons that my right hon. Friend gave, it is wrong that pensioners should rely unduly on the fortunes of one company. He is correct to incorporate a provision to deal with that. With his usual perspicacity, he recognises that there is a problem with small businesses. There is no doubt of that. We cannot proceed at the speed at which some would like, so I welcome the concession that he has made.

However, perhaps on another occasion in the House or in Committee my right hon. Friend will explain the problem of small

self-administered schemes where the benefits are for people who may not be 20 per cent. directors but less than that and who do not operate the

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scheme for anybody but themselves. I should be grateful if my right hon. Friend could address that deceptively important point. In conclusion, the past four years has seen a stream of legislation and regulations on the occupational pension fund movement and portable pensions. I support most of it. It was forced on the Government, although many of the problems could have been solved by the movement years ago if it had tackled the problems of early leavers. It did not and the Government stepped in. But a balance must be struck in these matters. I suspect that many employers are beginning to say to themselves that occupational pensions are becoming administratively complex and therefore costly. My right hon. Friend will be well aware that the time may come when many employers will ask themselves whether the establishment of occupational pension schemes solves more problems than it creates. I put that thought into my right hon. Friend's mind for him to consider.

Apart from the few small caveats that I have mentioned, these pension provisions are absolutely right, and my right hon. Friend has my support.

7.22 pm

Mr. John McFall (Dumbarton) : I associate myself with the comments of my hon. Friends, particularly those of my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley). The £300 million for the disabled is a drop in the ocean when considered against total social security expenditure of over £50 billion.

It is said that one can judge a society by how it treats old people. If we look at how the Government have treated our old people in the past 10 years, our judgment is, indeed, harsh. The social security changes resulted in £4.5 billion being lopped off the budget, while Ministers gave us platitudes about how they cared for people in a non-existent society.

My right hon. Friend said that he had spoken to disabled groups. Last week I spoke to senior citizens in my constituency and they gave me the same message for the Secretary of State. This is an inconsequential Bill. It is turning the ratchet and making people poorer by the day, the month, the year. If that were done through neglect, it would be shameful enough, but it is being done by design. The source of that is the Social Security Act 1986. What did the Government do? They broke the link between pensions and average earnings. It has been said before, but needs repeating, that if that link, which the Labour Government introduced, had been maintained, the single pension would be £12 a week more and the married pension £18 a week more.

The Institute of Fiscal Studies investigated pensions. If pensions and benefits had been linked only to prices from 1948 onwards, the single pension today would be, not £41.40, but only £17.37--only 42 per cent. of what it is now. If we project that 20 or 30 years forward, we can see how much money the Government will save in the long term and their disregard for keeping pensioners' benefits at a decent level.

It is no use just linking pensions to prices or to inflation. That is inadequate. For low income groups the inflation rate is greater than that of the retail prices index. Another study was carried out into the poorest and richest 10 per

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cent. of the population. Between 1974 and 1982 the retail prices index for poor people was 17 per cent. greater than it was for rich people simply because people on lower income must spend a higher proportion of their incomes on basics, such as food, housing and fuel. Age Concern compared the amount of fuel needed to heat a home in Glasgow and Aberdeen with that for a home in Bristol and found that it took 20 per cent. more in Glasgow and 30 per cent. more in Aberdeen than in Bristol. Yet the Government ignore that evidence. In the past few years insult has been added to injury. In May 1988 the Prime Minister emphasised that "everyone" had benefited from increased prosperity. The right hon. Member for Blaby (Mr. Lawson) said that only a "tiny minority" of pensioners were disadvantaged. Those right hon. Members escaped relatively unscathed from their callous, indifferent comments. Not so the right hon. Member for Croydon, Central (Mr. Moore) who, when he was Secretary of State, tried to get the Government off the hook, but came unstuck when he said that poverty no longer existed. For him, poverty must mean death through malnutrition, if he was serious in claiming that there was no poverty.

Those unfortunate comments must be seen against the comments of Tory guru, Adam Smith, who stated that necessities were

"not only the commodities which are indispensably necessary for support of life, but also whatever the custom of the country renders it decent for creditable people, even of the lowest order, not to be without."

Adam Smith talks about the lowest order, but the Government do not even mention it because they treat everyone as being of the lowest order. If the Government cannot be persuaded by that high Tory pantheon, Adam Smith, they will surely be persuaded by what the right hon. Member for Wallasey (Mrs. Chalker), now the Minister for Overseas Development, said in 1979 :

"it is not sufficient to assess poverty by absolute standards ; nowadays it must be judged on relative criteria by comparison with the standard of living of other groups in the community." If the Secretary of State should learn anything from the debate, it is that he should look into the issue of poverty. He and the Cabinet have studiously avoided it. Let him define what poverty is and what a man or woman needs to get by in life. Then he can start to convince people that the Government are concerned about people's needs and how they live.

Elderly folk, including disabled people, come to my surgery and tell me time and again that they cannot live on the state pension. They know that their visits are futile, but they say, "I am here only to talk to someone. I want to tell you how hard it is to get by, but I know you cannot do anything for us." Tonight the Government could do something for those people if they gave a commitment to study the incidence of poverty and if they realised that there was a relative condition of poverty. If that definition was returned to the political agenda, it would do a lot to improve the Government's credibility and to improve the welfare of our people.

We are all aware of the Government's lack of concern for the day-to-day needs of honest people, but I cannot believe that they are unaware of the inadequacy of the state pension. That pension does not allow pensioners to participate in society. To prepare for this debate, I studied a report produced by Eric Midwinter, of the Centre for Policy on Aging, concerning pensioners in London. He

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analysed the involvement of pensioners in society and found that 2 per cent. of pensioners participate in adult education classes and 1 per cent. go to the cinema. One could argue that those percentages are low because many pensioners are infirm, but infirmity affects 4 per cent. only of those aged between 65 and 74 years. Pensioners' participation in adult education classes and their attendance at the cinema is low as they have been excluded from a social life because of poverty. The statistics are there for the Secretary of State to study.

Last week Age Concern told me of an elderly gentleman who buys items such as toilet rolls or washing up liquid every week as he must plan his budget on that basis. The Secretary of State fails to realise that to take a few pounds from such people represents a dramatic loss.

The Secretary of State has discussed occupational pensions. He should remember those individuals who receive an extremely small occupational pension. Some people who come to my surgery receive a pension of £20 a month, but, because of that, they are disregarded for other benefits. They find that they are worse off after a miserly rise in their benefits due to receiving a small occupational pension for which they have worked all their lives.

The statistics prove that pensioners spend less on fuel and housing, not because they can cope better, but simply because they cannot cope. In the past 12 years in Scotland 3,000 people have died from hypothermia. That is on their death certificates, but the figure may be even greater as doctors are reluctant to put hypothermia on the official forms. Nevertheless, 3,000 people have been officially recognised as having died from hypothermia, and surely that is enough for the Secretary of State to realise that there is a great problem. We should not concern ourselves with any academic debate initiated by the right hon. Member for Croydon, Central. We should be determining the appropriate pension level on which people can live. We should face up to the reality that our pensioners die younger than elsewhere in Europe or in the United States because they receive insufficient money on which to live every week. There is no doubt where the blame lies.

The King's Fund Research Institute looked at statistics produced by the World Health Organisation and its conclusion was clear enough when it spoke of

"severe poverty and disadvantage among a substantial minority" of British pensioners. The Government have studiously ignored that substantial minority.

The Government should consider why 50 per cent. of our pensioners must depend on means-tested benefits. In a comparison of present pension levels as a proportion of average earnings, Britain is bottom of the European league. We spend less on social security--on which 50 per cent. of old people depend--relative to gross domestic product than any other country. The proportion is getting smaller month by month.

Pensioners are also dependent upon key services which are under attack from the Government--the Health Service, housing and transport. Pensioners have seen cut not only their living standards but the link between average earnings and pensions. Is that miserliness or mendacity? Who knows?

If pensioners cannot get what they need, they must go to the social fund. The recent changes in that fund show that the number of social fund payments represents a third

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of what was paid out under the single payment regime which operated before the Social Security Act 1986. I have spoken to the staff in social fund offices in Scotland. When people approach the officers for help, they are asked, "Can you pay it back?" If it is judged that they cannot pay back the money, help is refused. They also consider whether applicants will be dependent on the state in future or whether they will go into an institution. If a person is institutionalised, the money will be paid out, but if that person plans to stay in the community the money will not be given as such people are considered a burden on society. That is the reality behind the social fund in Scotland ; and the same is true in other regions. The Government cannot escape their responsibilities because social fund officers deny that money in the Government's name. The number of claimants has reduced, but there has been no corresponding reduction in the needs of society ; rather those needs have increased. The Government talk about targeting, but that is yet another euphemism for cuts. Pensioners in Scotland already face difficulties with the poll tax, which has yet to come into operation in England and Wales. A Scottish pensioner couple on income support will be worse off in any area where the poll tax is more than £299. The Government have made transitional arrangements to pay £3 per week in assistance, but that arrangement is based on a notional tax figure ; it is not based on actual tax. Such arrangements will result in increased hardship.

My hon. Friend the Member for Birkenhead (Mr. Field) said that under the Labour Government the value of pensions rose by 20 per cent. in real terms. The Secretary of State had no adequate answer to that. If pensions had continued to rise by a similar amount under the Government a single pensioner would be £12 better off and a married couple would have received £18 a week more.

The Secretary of State should take up the issue of poverty. The Government should recognise what elderly people require not only to live on but to participate fully in society. They need that money to heat their homes, to have a healthy, varied diet and to afford decent clothing. We are witnessing the erosion of their living standards. The Bill is a nonentity as it does not address poverty. It takes us further along the path set in 1986 and, as such, it deserves to be thrown out.

7.38 pm

Mr. Peter Thurnham (Bolton, North-East) : The hon. Member for Oldham, West (Mr. Meacher) made an extraordinary speech, which contained many promises. He attacked the Bill for being incoherent, but his speech was guilty of that.

The hon. Gentleman must have had his beady eyes on the £50 billion accumulated in private pension schemes and I assume that he saw that as a source of money for providing the comprehensive disability scheme that he described. He did not quantify the money involved and it is significant that when the Labour party was in power it failed to introduce such a scheme.

This is an important week for the disabled in Parliament. We have today's debate and another one on Wednesday. Tomorrow the Autumn Statement debate will indicate the public funds available for the next three years. The Bill covers both pensions and disability benefits, as well as the insulation grants scheme. The Opposition say

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that the Bill does not go far enough, but it already overlaps the important National Health Services and Community Care Bill which is being discussed in Committee.

I wish to speak mainly about the aspects of this Bill dealing with the disabled, but I shall first touch on some other aspects. The insulation grant scheme allows for advice to be provided. Will that advice extend to cover problems of dampness? I have seen far too many council houses in my constituency with severe damp problems. The council is far too quick to condemn tenants for their lack of housekeeping and blames condensation and fuel poverty as the cause of the dampness. In many cases, the causes are much more fundamental : lack of damp proof courses, leaking roofs and gutters or, worse still, major structural defects. There are even cases in which houses have been built over water courses. The tenants should have a good source of independent advice.

The Bill's long title suggests that it covers a host of social security matters. Only yesterday, I did an early morning radio broadcast. I was asked by the Salvation Army in Bolton to raise the issue of social security payments for hostel tenants. I do not know whether my right hon. Friend the Secretary of State is aware of the large £7 million deficit which is being run up by the Salvation Army. I should be grateful for any suggestions of help he can offer. Anyone responsible for running a pension scheme would be terrified by some of the points made by Opposition Members, especially by the hon. Member for Oldham, West. The thought that someone can grab the £50 billion accumulated savings in the pension schemes and use them for other purposes and the assumption that employees can have something for nothing--a pension without having to pay anything in--are ridiculous. We must remember that every pension has a price. The Confederation of British Industry has rightly said that extra costs and less flexibility for pension funds could well mean a loss of jobs. I should like to pick up the point made by my hon. Friend the Member for Beverley (Mr. Cran) about the need for small self-administered pension schemes to have full flexibility. Opposition Members have called for a lot more on disability issues than exists in the Bill. The hon. Member for Oldham, West promised an unspecified amount for a comprehensive disability benefit. Why did not his own party do that when it was in power? Why does he not specify the amount that he has in mind? The right hon. Member for Stoke-on-Trent, South (Mr. Ashley), who has done so much for disabled causes, says that he wants gigantic steps to take the disabled into the 1990s.

Opposition Members have condemned the Bill for not going far enough, but the Government have gone much further than did the Labour party when it was in power. Total spending on the long-term sick and disabled is now £8.3 billion--100 per cent. above the real level of Labour spending-- and there is an increase each year of 75 per cent. more than the increase provided when the Labour party was in power. I, too, should like there to be more spending for the disabled, but the Bill's measures should be welcomed and not criticised. Surely Age Concern was wrong to say in a letter dated 19 January which I received today from Jane Clarkson, parliamentary officer :

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"we believe that these measures should not be introduced until a comprehensive review of benefits and proper consultation have taken place."

That is absurd. Why should 58,000 terminally ill people have to wait for consultation when the Government are offering them £35 million now? They will not be alive to know the results of further consultations if the Government have to wait instead of acting now. The hon. Member for Bradford, West (Mr. Madden) criticised the Bill because it benefited only 1 million people instead of the 6 million people who suffer from some sort of disability. Surely it is far better to provide some benefit now and then consult further in the future. The Disability Benefit Consortium says that it is angered by the White Paper. I am sorry to hear that comment. Surely the Government have been right to commission the Office of Population Censuses and Surveys' survey as the bedrock of future intelligent discussion about the further development of the benefit structure. The White Paper calls for comments from the disability groups, but I am sure that my right hon. Friend and his colleagues intend to go further than hearing comments. I hope that they will want full consultation and that my right hon. Friend will confirm to Mencap and other organisations that full consultation with disabled persons and their organisations will take place to determine the development of new benefits.

The OPCS surveys cast light on our ignorance of the disabled. The number of severely handicapped children in institutional care because their families cannot care for them was provisionally estimated at 2, 500. The survey shows that there are more than 5,000 children in institutional care. The first OPCS survey shows that there are more than 200,000 people in the most severely disabled category--category 1O--but that half of them are living at home and being looked after by their families. If my right hon. Friend and his colleagues would like to visit Bolton, they could see just one of my constituents, a severely disabled young adult called David Cummings, being looked after by his family and would appreciate the need for more benefits and services. The OPCS survey showed that 70 per cent. of disabled people live on 75 per cent. or less of average incomes, but their living costs are above average.

Public opinion will not allow a two-tier benefit structure to continue. Under such a system those with legal claims or industrial injury benefits have a relatively high income, while many of those whose disabilities arise as an accident at birth or who cannot make claims for compensation have to exist on a standard of living which is far too low, by any reckoning.

The Bill is right to bring in some benefits without delay. I look forward to further steps being taken in full consultation with disability organisations to provide the further benefits which are so desperately needed. Voluntary unpaid care in the community has been valued at about £12 billion per annum. Much more of that should be paid by the taxpayer. The challenge facing us all, especially the disability groups, is to accept each step as a positive development, while working with the Government to gain full public acceptance for further increases in disability benefits within the limits of the increasing expenditure which a successful economy can afford. I support the Bill and welcome its provisions.

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7.47 pm

Mr. Max Madden (Bradford, West) : Anyone wanting to know the views of disabled people and others on the Government's record and the Bill should have been with my hon. Friend the Member for Leeds, West (Mr. Battle) and I outside the luxurious offices of the Department of Social Security earlier today. I was strolling towards my office when I saw a large group of people. I subsequently learnt that many of them were from the National Federation of the Blind, the Disability Alliance and other disabled groups. They were with guide dogs and in wheelchairs, and were extremely angry. They were handing in a petition to the Department.

I remind all taxpayers that we have spent about £50 million building luxurious offices in which Ministers of the Department of Social Security preside over this country's social security system. The Government spent £400,000 on paving stones around the offices, and the expenditure that caught my eye was the £40,000 for pot plants and other adornments for the offices.

This morning the petitioners were handing in a petition headed, "The way ahead for disabled people? Or a way out for the Government?" It stated :

"The Government has failed to understand the needs of disabled people.

The Government has failed to respond to the gross inadequacies in current benefit and service provision for disabled people. The Government has failed to accept that the way to eliminate poverty amongst disabled people is by the introduction of a comprehensive disability income scheme."

They handed in the petition and spoke to a small group of journalists who were there to record its presentation.

Next, a group of 20 or 30 people started walking across Whitehall, and in the middle they decided to stop. For 15 minutes they held up the flow of traffic from Trafalgar square to Whitehall, protesting about the Government's record on helping the disabled, protesting against the inadequacy of this Bill, and affirming their rights. I spoke to a number of people who told me that this was the only effective action that they could take, and that nobody would listen to them unless they took it. Newspapers and television and radio, they said, rarely report anything that they do-- unless they take this sort of action--and Ministers take no notice either.

As other hon. Members have said, this is a miserable failure of a Bill ; in no way does it meet the challenge that the Government face after 10 years in office. In 1979 the Government's election manifesto said that they wanted to

"move towards a coherent system of disability benefits as rapidly as the strength of the economy would allow".

Since then, billions upon billions of pounds have been given to the richest in the land, to people who do not need the extra money. Billions have been spent on arms, and in the past 12 months we have seen that that expenditure was wholly unjustified--as the vast majority of people now recognise. They want the resources spent on those who are most in need--those whom we are discussing tonight. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) complained about ministerial sleight of hand and about being hoodwinked by figures given to the House about new money which, on investigation, turned out to be old money. He had every justification for complaining. I shall point out three measures that the Government have slipped through by stealth, with no approval--still less discussion--by the House. They will hit many of our constituents hard in the coming weeks and months.

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