Column 187common standards in Europe, and it is undeniable that in the 1980s our record became much worse in comparison with that of the rest of Europe.
Take pensions. The latest figures from Eurolink Age suggest that, relative to earnings--and that is the right comparison--the basic state pension is only half that of other major EEC countries. On average, a single person in Britain now receives a pension that represents only 46 per cent. of his previous net earnings. A person in an equivalent position in Italy gets a pension that is 81 per cent. of his previous net earnings. In Germany the figure is 82 per cent., in France it is 92 per cent., and in the Netherlands it is 93 per cent.
Mr. Devlin rose --
Mr. Meacher : I may be anticipating what the hon. Gentleman is about to say, but perhaps he will just let me make this point. Of course, it is true that many pensioners in Britain have an occupational pension also, but it is equally true that for many people that pension is very small. The basic pension represents the safety net provision for older people throughout Europe, and Britain's low level of provision really does matter because we have the third largest number of elderly people in the EEC and one of the largest populations of old elderly, many of whom have no extra pension.
Mr. Devlin : I was interested to hear what the hon. Gentleman said about comparisons with pensions in Europe, because my constituents raise that point with me all the time. However, I wonder how the hon. Gentleman responds to this point. Britain is the only country in the European Community that offers all its pensioners a guaranteed state minimum pension. It is also the only country that gives all women a pension, regardless of whether they have worked. It is all very well to say that pensioners in France receive 80 per cent. of their previous net earnings, but that means that some people have extremely low incomes because, not having earned a great deal during their lives, they do not get a great deal of pension.
Mr. Meacher : The hon. Gentleman makes an interesting point, which is a surprising one to come from a Conservative Member. The guaranteed state minimum pension was, of course, put in place by the Labour Government in the 1970s. I remind him that not only SERPS, which is excellent and which I am convinced is the best pension scheme available as a top-up to the basic pension, but our guaranteed minimum pension for occupational pensions is underwritten by the state. It was a Labour Government who did that, and since 1979 the Conservative Government have been doing their best to unravel it. It was a Labour Government who ensured that women would be able to receive a full-rate SERPS pension on the basis of 20 years' work, so that women who had brought up a family and could work for only 20 years would not be disadvantaged in any way.
Column 188I entirely agree with the hon. Gentleman that those are very real advantages, but I should like him to address his remarks to his right hon. Friends on the Government Front Bench, who have been doing their best to undermine that part of their inheritance from the previous Labour Government.
The Secretary of State for Social Security (Mr. Tony Newton) rose--
Mr. Newton : Only briefly, to observe as mildly as I can that I do not think that the hon. Gentleman has addressed the point that my hon. Friend the Member for Stockton, South (Mr. Devlin) put to him, which was that, against the comparisons that the hon. Gentleman has sought to make with Europe, people in Europe who are low paid almost certainly do less well than their counterparts here, and married women in Europe, not being entitled to a pension on their husband's contributions as they are here, may well end up without any pension. The hon. Gentleman should take those points into account in his comparisons.
Mr. Meacher : I am the first to admit that it is difficult to make comparisons with Europe, not only on pensions, but on other aspects of social welfare, and any comparison must be significantly qualified. However, as the right hon. Gentleman regularly talks about "the average" in our debates--indeed, that is probably the fairest way of making comparisons --I remind him that I had been considering the pension that is available to a person on average earnings, and that that consideration leads to the picture that I presented.
Mr. Devlin rose--
Mr. Meacher : Well, I shall try to draw to a close now. I now turn to child care provision. Family benefits for a couple with three children under 12 now amount to £21.75 per week in Britain. In France they are double that, at £43.30 per week. British families are the worst off among the major EEC industrial nations, with only Portugal, Ireland, Spain and Greece paying less in family benefits.
I now take low wages as an example, because low pay is such a potent cause of poverty. The minimum rate set by the wages councils in Britain, which cover one tenth of the work force, is £338 per month. In Germany it is nearly double that, at £653 per month. Again, Britain is behind all the main EEC industrial nations and ranks firmly in the second league, along with Greece, Spain and Portugal. All those facts speak for themselves. It is clear in my mind that the Prime Minister's rooted objection to the European social charter stems much less from any belief that it will undermine economic efficiency than from her recognition that, if implemented, it would expose her deplorable and shameful social record.
The social charter is not about a drain on market forces. It is about providing a launching pad so that people can participate in and contribute to the society around them.
Column 189It is the Prime Minister's wilful obstinacy which makes her demand compliance with the enterprise culture, and which refuses to acknowledge that her own policies block people, however willing, from participating fully in society.
I conclude with the story of Adrian Loveless, which has already been raised with the Secretary of State in correspondence by my hon. Friend the Member for Bristol, South (Ms. Primarolo). Adrian Loveless is an unemployed photographer whose wife Hilary had a bit of a windfall when her ex-business partner sent her $2,000 out of the blue. A condition of the enterprise allowance scheme is that the person concerned must put up £1,000 in capital himself or herself. They therefore decided to put that money into the enterprise allowance scheme.
To make ends meet, Adrian was told that he would receive £40 in enterprise allowance, and that he could claim family credit. He was also told that he would lose his children's entitlement to free school meals. However, he was not told that his housing benefit would also be lost or reduced because he would be claiming family credit. He applied for family credit on 7 August last year, but it was refused. Mr. Loveless appealed and a claimant adviser told him to withdrawn the appeal and to claim again. The new application was also turned down. Adrian asked for help from the social fund, but was refused because he had capital. His housing benefit was cut off because the local authority assumed that he was receiving £60 in family credit. At this stage, the free school meals were withdrawn. Adrian Loveless commented later :
"Since the summer I have lived in a Catch 22 situation My family credit was withdrawn.
I couldn't get income support because I was working for more than 24 hours. Things were impossibly tight, but I couldn't get a crisis loan because we were not destitute.
We have had to spend the 2,000 dollars to keep alive, so now I haven't got the money for the EAS.
On Tuesday 17 October, all our money had gone. All we had was the child allowance. It amounted to £29 for six of us."
So much for the Prime Minister's enterprise culture. It is because there are millions of people across the country like Adrian Loveless, who are frustrated, embittered and deprived, that we shall press our motion tonight.
"notes with approval the Government's plans to increase substantially spending on social security in the coming financial year bringing the total to an unprecedented £55.6 billion reflecting further growth on top of the 36 per cent. real terms increase which has taken place since 1978-79 ; and commends it for introducing a reformed structure of benefits enabling these massive resources to be targeted more effectively on those in need thereby ensuring that, from April this year some 1.5 million families with three million children will again have their income-related benefits increased in real terms bringing the amount of extra help provided for them to over £350 million in real terms since April 1988, for improving incentives by virtually eliminating marginal deduction rates in excess of 100 per cent., thus ensuring that working families keep more of the money they earn, and for providing an improved, more accurate and speedier service to the public."
I do not propose to comment on some of the anecdotal cases that the hon. Member for Oldham, West (Mr. Meacher) raised. Obviously we have had difficulty with some of the cases that have been raised by the National Association of Citizens Advice Bureaux, and where it is possible to identify the cases or where we have been given identifying details, I shall, of course, look at them. I shall
Column 190specifically look at the last case that the hon. Gentleman mentioned about which he said that one of his hon. Friends has written to me. I shall make sure that that case is fully and faithfully looked into with a view to seeing whether improvements could and should be made in the working of the benefit system. I can give the hon. Gentleman that undertaking, but beyond that I am sure that he will understand that it would be wrong for me to seek to make off-the-cuff comments about individual cases.
I had some difficulty in relating what the hon. Gentleman said about millions of people being in the position that he described to what most people would perceive as being the broad reality. I remind him that the real take-home pay of married men in this country has risen by about a third in nearly 10 years and that in the past year alone the real take-home pay of a man on average male earnings has increased by about £20 per week, including the effect of cuts in national insurance contributions. In addition, we have had the longest period of falling unemployment since the war. Employment is at the highest ever level and the work force in employment has risen for some six years and has increased by more than 2.25 million. I do not make those points simply to dismiss what the hon. Member for Oldham, West said.
Mr. Newton : If the hon. Gentleman will forgive me, we have been asked to make brief speeches, in view of the curtailment of the debate. While I do not rule out giving way, I should like to complete my point.
I do not seek to dismiss out of hand every point that the hon. Member for Oldham, West made. He put his case in what I regard as a characteristically overheated and exaggerated way which did not give a true picture of the social and economic realities of Britain. One of the important and encouraging developments of the past 10 years, which have been marked by a rapid rise in prosperity brought about by economic growth and productivity, is that prosperity is increasingly more widespread. There is a better regional spread of prosperity. There has also been an encouraging resurgence of many inner-city areas. That was acknowledged by the church men who produced their report yesterday. All those improvements rest on a significantly better economic performance in the past decade than in the two previous decades.
Several Hon. Members rose--
Mr. Newton : I have already said that I shall be hesitant about giving way. The House knows that I usually give way readily. In these circumstances, I shall give way to my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) and then to the hon. Member for Islington, North (Mr. Corbyn).
Dame Elaine Kellett-Bowman : Will my right hon. Friend add to his catalogue of ways in which we have done exceptionally well the fact that separate taxation for women, from April, will be of enormous benefit to pensioners? Women will be able to receive tax relief on their pension, which they cannot do at present.
Column 191West vilifies--to use a strong word--are by no means confined to helping those whom he chooses to describe as rich.
Mr. Corbyn : Will the Secretary of State take his mind back to his remarks about unemployment levels? He claims that the Government have presided over the longest continuous period of falling unemployment. I remind him that 1.2 million people were unemployed in 1979, that the Government managed to increase the number of registered unemployed to 3.3 million and that, on their own adulterated figures, there are still almost 2 million unemployed. That is still far higher than when the Government came into office in 1979, and it is one of the highest figures for industrial countries in Western Europe. Is he proud of that?
Mr. Newton : I am proud that the Government have tackled some of Britain's long-running, underlying economic problems, in particular our relatively low rates of growth of productivity and of the economy as a whole, in comparison with other countries. We have tackled those problems far more effectively than many of our predecessors. As a consequence, we probably have the best record in Europe for creating new jobs and for the number of jobs that we provide for our work force. Our improved economic performance and the wealth that it has created for the whole country has enabled us to put steadily increasing amounts into many important forms of social provision, not least social security.
One fact that should be firmly registered in this debate is that expenditure on social security will exceed £55 billion next year. That is £1 billion a week, or more than £20 every week for every man, woman and child. It is almost £40 billion more than in 1979 and, as the public expenditure White Paper published today states, will be further increased to over £63 billion in 1992-93.
The plans that we published in more detail today imply a growth rate in spending on social security of an average of 4 per cent. a year for the next three years over and above the assumed increase in prices. That is on top of a 36 per cent.--more than a third--increase in real terms since 1978 -79. That record and those plans are not those of a Government who, as the hon. Gentleman seeks to suggest, seek to undermine the welfare state. It is the record of a Government who recognise that a growing economy is the prerequisite for improved social provision.
Mr. Battle : The Secretary of State referred earlier to average wages. Does he accept that one of the primary causes of poverty in our society is low pay, often for temporary or part-time work? Many people in inner-city areas and in my constituency earn less than half of the average take-home pay of £258 a week. Why do the Government consistently refuse to accept the Council of Europe decency threshold as a means of taking people on low pay out of poverty? That would provide an accurate assessment of poverty in our society.
Mr. Newton : I make two points in response to the hon. Gentleman. First, any assessment would require a national minimum wage. Some people, including perhaps the hon. Gentleman, support that, but most people accept that one of the first results would be fewer jobs. That would not benefit the people that he seeks to help.
Secondly, the problem of people who find that they would be only a little better off by working usually arises primarily, not solely, out of family responsibilities. The hon. Gentleman and, to be fair, the hon. Member for Oldham, West are rightly worried about that problem. Family responsibilities are taken into account in the social security system, particularly through family credit, but they are not taken into account in the wage system. In any society it would be difficult to achieve--this is more than a debating point--a wage system that avoided the need for the type of help that we seek to give to low-income families through family credit.
Mr Newton : A national minimum wage would not overcome that problem. It is difficult to see how it could do so. If a national minimum wage were set, for example, at the level required to overcome the need for family credit--
Mr. Newton : I will give way because the hon. Lady is a Front-Bench spokesman. However, I hope that you will understand, Mr. Deputy Speaker, if I seek henceforth to respond to Mr. Speaker's plea for brief speeches.
Mr. Newton : It may have something to do with the fact that we have had such a successful record in generating new employment. The hon. Lady will find that we have a good record in generating new jobs and, for example, on the level of employment among married women. Another reason may be that we have not set a national minimum wage. I hope that I have made it clear that I do not suggest that some people do not have needs for which we wish to do more. I simply wish to bring some balance to the framework of the debate after the hon. Gentleman's speech. If I were in a more aggressive frame of mind--I rarely am--I might say that I saw little reason to accept lectures from a former social security Minister in a Government who twice failed to pay the Christmas bonus to the pensioners. [Interruption.] I appreciate that the Opposition Front-Bench team do not like being reminded of these facts, but I am entitled to point them out, as I have done on a number of occasions, and to remind the hon. Member for Oldham, West--he is always good natured when I do so--that it is not so many years since he, as a
Column 193social security Minister, was shouted down by a trade-union organised pensioners' rally when he tried to defend the Government's record.
Mr. Meacher rose--
Mr. Meacher : The important consideration--and the right hon. Gentleman, given his profound knowledge of the social security system, knows this perfectly well--is the percentage real increase in pensioners' income during the lifetime of the Labour Government. The basic pension increased by 20 per cent., even after taking account of the failure to pay the two Christmas bonuses. Under the Conservative Government, the safety net provision has increased by 1 or 2 per cent. only. The basic pension provision was 10 times better under Labour.
Mr. Newton : I am not prepared to accept the hon. Gentleman's strictures, especially as he seems unable to remember that the Government of which he was a member failed twice, not once, to pay the Christmas bonus. He also conveniently forgets the manipulation of the uprating technique in the mid-1970s. That technique took about £1 billion in today's money from pensioners.
I am led to remind the hon. Gentleman of what must be uncomfortable and displeasing facts because of what underlay the events of that time. I know the hon. Gentleman well enough to know that he would have been unwilling to go into Government with the aim of not paying the Christmas bonus or of undertaking the various other measures adopted by the then Labour Government. We know why it happened. The Labour Government's spending ambitions and promises so far outran the capacity of the economy to produce the necessary resources that the International Monetary Fund stepped in. In effect, it told the Labour Government not to pay the Christmas bonus and to get on with cutting expenditure in various ways. Against the background of that record, it is legitimate for me to say that I am at least sceptical about the receipt of the type of lecture the hon. Gentleman sought to give us this afternoon.
The hon. Member for Oldham, West is aware--he has not sought to dispute the fact seriously--that we have faithfully adhered to our obligation and commitment to maintain the value of the retirement pension in line with the increase in prices. As I have already emphasised endlessly, we have sought successfully to pursue policies to create a stable and increasingly prosperous economic environment in which the value of pensioners' income from other sources can grow. Although the hon. Gentleman may believe that I am repeating a point he has heard before, in the context of what he said about state pensions I must remind him forcefully that of particular importance is what has happened to pensioners' incomes as a whole, from all sources. One should not focus on one particular source. The hon. Gentleman is aware of the facts as they have been adverted to in the House on a number of occasions.
Between 1979 and 1986, the average total net income of pensioners increased by 22 per cent. in real terms. The proportion of pensioners in the lowest fifth of national income distribution fell from 38 per cent. to 24 per cent. To hear the hon. Gentleman talk, one would think it had risen. The proportion of pensioners whose only income is from state benefits fell from 24 per cent. to under 20 per cent., but those pensioners whose only income is still from state benefits have enjoyed a 25 per cent. increase in their income.
The hon. Members for Oldham, West and for Birmingham, Ladywood (Ms. Short) know that the critical ingredients in that improvement are--
Mr. Newton : No. It is the growth in occupational pensions and, above all, the fall in the rate of inflation. That has meant that pensioners' incomes from their savings and the returns from them have doubled.
Between 1979 and 1986, pensioners saw a 64 per cent. real increase in their incomes from savings. That compared with the position under the Labour Government when their income from savings fell by 16 per cent.
We have always recognised that those trends that are helpful to and welcomed by pensioners as a whole do not mean that all pensioners have enjoyed the same increase. I do not seek to minimise that fact in any way. Not all pensioners have occupational pensions or savings ; increasingly, younger pensioners have such savings. We have, however, concentrated additional resources on raising the income support premiums, as we did in October. We have also increased the help given through housing benefit to the older or more disabled pensioner who is less likely to have the advantage of an occupational pension or a savings income, which help so many others. In all, those measures and other improvements have led to a real increase of 22 per cent. in spending on benefits for the elderly since 1979. I do not believe that anyone can suggest other than that that represents a strong commitment to help those who need help.
The hon. Member for Oldham, West also spoke about the disabled. Since they were debated at some length in the House less than a week ago, I shall make only a brief reference to them. I must remind the House that social security expenditure on the long-term sick and disabled has virtually doubled since 1979, to a total of more than £8 billion a year. That represents a huge increase in the coverage of all the main disability benefits. In 1979, fewer than 100,000 people were in receipt of mobility allowance, but now more than 600,000 people are in receipt of it.
Mr. Newton : I am afraid that I must remind the hon. Lady of something else of which she is obviously unaware. In 1979, we inherited from the Labour Government a snail's-pace implementation of the mobility allowance. We specifically speeded up the implementation of that allowance and we have contributed to the growth in the number of those in receipt of it.
Column 195Ms. Short : Surely the increased spending on people with disabilities is due to an enormous increase in the take-up of rights created by the Labour Government and not because of new rights created by the Conservative Government.
I accept that mobility allowance was introduced by the Labour Government, but it was implemented at a slow pace and, from 1979, we accelerated its implementation. The numbers in receipt of attendance allowance have risen from about 250,000 to 800,000 people. In the past 10 years take-up of that allowance has trebled. That benefit was not introduced by the Labour Government ; it was introduced by a former right hon. Friend of mine, Lord Joseph, in the 1970s. Similarly, when the hon. Lady makes that point, she should remember that invalid care allowance--which has risen in coverage from only 5, 000 in 1979 to 110,000 now--was confined by the Labour Government so that married women could not have it. Its extension to married women--which has mostly caused the huge increase in coverage--was carried through and paid for by this Government. That was against a restriction specifically imposed by the previous Government. I am sure that the House is well aware that we have recently come forward with another wide range of plans of various kinds to improve still further benefits for disabled people, give additional help especially to those who are disabled at birth or early in life, improve the coverage of help with the costs of disability and do more to help those disabled people who can and wish to work.
I shall touch on some of the matters raised by the hon. Member for Oldham, West, including low-income families with children. As the House knows, last April we used the flexibility of the new social security system to give more help to low-income families, over and above what was needed to keep pace with inflation. In October, I announced that from April 1990 we shall do so again to help the families who most need it. We shall give increases in the family premium, income support and other benefits, and a particular increase for those working families on family credit. As a result of those policies, 1.5 million families, with 3 million children--roughly a quarter of the nation's children--will have their income-related benefits increased in real terms, bringing the amount of extra help provided for them to more than £350 million in real terms since April 1988.
Our efforts have been directed not only at improving the help that we give to those who clearly need it, but helping those who wish to reduce or end their dependence on the benefits system. The hon. Member for Oldham, West focused on this. We are tackling some of the traps and disincentives which undoubtedly exist. That has been done in a variety of ways within the basic structure--most notably in recent months by abolishing the pensioners earnings rule. The proposals which I included in my uprating statement also increase the amount of earnings that people can have without losing their invalid care allowance, increase the amount of earnings which people can have in certain circumstances--the so-called therapeutic earnings limit for those disabled people getting
Column 196invalidity benefit or severe disablement allowance. They also contain measures to encourage and help disabled people seeking to take employment rehabilitation courses.
The hon. Gentleman touched on the fact that I have proposed a substantial improvement in the earnings disregard for lone parents in respect of housing benefit. That will particularly help lone parents who are working but do not receive income support.
Mr. Latham : When my right hon. talks about thresholds, will he bear in mind the capital threshold disregard? That is particularly important for pensioners with small occupational pensions who will not receive community charge rebates because of the capital figure.
Mr. Newton : My hon. Friend will know that the capital limits in respect of what will now be community charge rebate, but until now has been rate rebate, were improved shortly after April 1988. That was a welcome move. He may not know that we recently introduced a small improvement in the capital rules connected with people receiving help from the social fund. Both moves show our awareness of the point made by my hon. Friend.
In the wake of all the interventions in my speech, and in the interest of keeping my speech to a manageable length, I shall briefly make two further points. I have talked about the improvements in the earnings disregard and other rules which seek to help people who wish to work within the present system. A major strategic structural improvement has been made with considerable success which is directed at that very problem--the introduction of family credit. That takes about twice as much money to 50 per cent. more families than were being helped by its predecessor.
We also plan to build on our strategic aim of doing more to help those who would like to work with our recent proposal for a disability employment credit. We shall work that out in detail with a view to introducing it in April 1992. That is aimed at a matter that has long been the subject of discussion in British politics--the need for a partial incapacity benefit to reduce the number of disabled people who feel themselves, rightly or wrongly, trapped on benefit by the present system, but who can and would like to work, at least to some extent.
There is an issue which has had considerable discussion both inside and outside the House in recent months which is connected with lone parents. While the sort of improvements which I have mentioned in relation to both family credit and earnings disregard can undoubtedly make a useful contribution to easing some of the difficulties, it is common ground-- although the hon. Gentleman did not say a great deal about this--that we all wish significantly more to be done to collect maintenance from absent parents when it should be paid.
At present, for only a quarter of lone parent families on income support does the absent parent pay any maintenance. That is fairly widely regarded as unfair to the taxpayer. Just as important, it is clearly unfair to the children in the family and, not least, to the lone parent because maintenance income provides a good foundation on which to build for a lone parent seeking to move from claiming benefit to work. As the House knows, we are
Column 197working towards bringing forward later this year proposals related to this matter, taking into account recent overseas experience, for example, in Australia, the United States and New Zealand, where there have been significant improvements in the way in which maintenance is both assessed and collected.
The House will not expect me to predict now what those proposals will be but will wish me to confirm that to help us in carrying that work forward my Department, together with the Lord Chancellor's Department, the Home Office, the Scottish Office and the Lord Advocate's Department, has commissioned a survey from a sizeable sample of courts and local DSS offices. That will give us better information on the sums of maintenance which are awarded and collected by the courts and local offices and about the amounts of maintenance paid to those on benefit. It will also give us more information about the means of absent parents and, thus, assist us in determining what maintenance payments we can reasonably expect from a different system.
Mr. Barry Porter (Wirral, South) : Is my right hon. Friend aware that, despite the Prime Minister's statement and what he has said today, during the past 10 years the number of people involved in collecting money from absent parents has declined dramatically? Unless those people are replaced, the chances of getting money from absent parents will be nil.
Mr. Newton : My hon. Friend leads me to my concluding point. He may have slightly misunderstood what I sought to say. At present, there is a set of rules within the DSS for seeking to get maintenance for those on income support--which I am about to mention. They have not been as effectively used as they should have been during the past 10 years. I agree with my hon. Friend about that.
The issue which I raised a moment or two ago, which my right hon. Friend the Prime Minister raised a week or two ago and which led me to refer to experience in other countries including Australia, New Zealand and the United States, runs wider and is not simply concerned with DSS matters. That was why our work involves the Lord Chancellor's Department, the Home Office and others.
I agree entirely with my hon. Friend that there is clearly scope in the existing systems operated by the Department of Social Security for improving the way in which maintenance is collected. Steps have already been taken by my predecessor, as he made clear to the House a year or more ago, to improve things. Whereas in 1988-89 we recovered about £155 million from liable relatives, we are aiming in 1989-90 to increase that to £180 million, and it looks as though that aim will be achieved.
Next year we are changing our procedures in ways which we expect to take that figure to more than £200 million, including strengthening the basis on which an absent parent's ability to pay maintenance is assessed by our local officers. The present assessment rests on leaving a margin of 25 per cent. of net earnings over and above the appropriate income support level plus full housing costs. We propose to reduce that figure to 15 per cent., although, as always in our present system, any failure to reach a reasonable agreement would mean that a final decision would depend not on the DSS but on the courts.
The action that we are taking in that area, together with the help that I described earlier for pensioners, disabled