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T H EP A R L I A M E N T A R Y D E B A T E S
OFFICIAL REPORT
IN THE FIFTH SESSION OF THE FIFTIETH PARLIAMENT OF THE
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
[WHICH OPENED 25 JUNE 1987]
FORTIETH YEAR OF THE REIGN OF
HER MAJESTY QUEEN ELIZABETH II
SIXTH SERIES VOLUME 203
SIXTH VOLUME OF SESSION 1991-92
House of Commons
Monday 3 February 1992
The House met at half-past Two o'clock
PRAYERS
[ Mr. Speaker-- in the Chair ]
Oral Answers to Questions
SOCIAL SECURITY
National Insurance
1. Mr. Gwilym Jones : To ask the Secretary of State for Social Security what would be the weekly cost to someone on one and a half times male average earnings of abolition of the national insurance upper earnings limit.
The Secretary of State for Social Security (Mr. Tony Newton) : Someone earning £490 a week, which is about one and a half times average male earnings, would pay an extra £9 per week in national insurance contributions if the upper earnings limit was abolished.
Mr. Jones : Does my right hon. Friend agree that abolishing the upper earnings limit would hit well over 3 million people--for instance, policemen, health service workers and those in seasonal occupations--merely because overtime bonuses or profit-related pay would take their earnings over the average in any particular week? People in those categories certainly should not be described as rich.
Mr. Newton : It is absolutely true that a large number of people who could not remotely be described as rich would
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be hit by the proposal. What is more, they would receive absolutely nothing in return in the form of benefits : they need to be aware of that.Mr. Skinner : Is the Secretary of State aware that millions of people have been hit by the actions of his Department over the past 12 years? The Department has taken away the earnings-related supplement, and have got rid of death and maternity grant and income support for 16 and 17- year-olds who would not work on the Tory Government's slave labour schemes. Most of those measures were introduced by the present Prime Minister.
Mr. Speaker : Order. Is the hon. Gentleman's question about national insurance upper earnings limit?
Mr. Skinner : Absolutely--and it is the Secretary of State's Department that is guilty of taking benefits away from millions of people who would have benefited if the Labour Government's policies had been maintained over the past 12 years by this tawdry, rotten Tory Government.
Mr. Newton : I am aware of two things. First, all the groups to whom the hon. Gentleman has referred were hit much harder by the policies of high taxation and raging inflation over which the Labour Government presided. Secondly, all the groups who are considered to be priorities by both the Government and the Opposition--low-income pensioners, low-income families and disabled people--have benefited significantly from what the Government have done in recent years.
2. Mr. Tim Smith : To ask the Secretary of State for Social Security what would be the estimated cost to business if the lower earnings limit for employers' national insurance contributions were abolished.
The Parliamentary Under-Secretary of State for Social Security (Mr. Michael Jack) : We estimate that abolishing the lower earnings limitwould cost business around £175 million a year in extra national insurance contributions.
Mr. Smith : Does my hon. Friend agree that, given the substantial extra burden that will be placed on employers, well-meaning proposals to extend the benefits of the
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national insurance system to low-paid employees would have the opposite effect to the one intended, as most would lose their jobs?Mr. Jack : My hon. Friend, in his usual perceptive way, has put his finger precisely on the import of such proposals. It is interesting to note that they come from the same stable that brought us the national insurance surcharge. It is also interesting to note that, when Labour was last in power, the combined contribution to the national insurance scheme by an employee earning £52 a week and his employer was £10.40, while under the present Government it is £3.43.
Mr. Flynn : Will the Minister confirm that the present Government have introduced higher taxes than any other Government, and that they have increased national insurance contributions for those on average and low pay by a massive 40 per cent? Is it right that someone earning £200,000 a year should pay only 1 per cent. in national insurance? Should not such people bear their share of the burden?
Mr. Jack : It is amazing that the hon. Gentleman, who professes knowledge of social security matters, has not alluded to the fact that we restructured the national insurance scheme. I do not know where he has been for the past few years, but we have reduced the rates on lower earnings so that people now pay on average about £3 a week less in national insurance.
Disability Working Allowance
3. Mr. Madel : To ask the Secretary of State for Social Security what alterations he is considering to the disability working allowance scheme before it is introduced ; and if he will make a statement.
The Minister for Social Security and Disabled People (Mr. Nicholas Scott) : None, Sir. The disability working allowance scheme, which will come into effect from April, will provide a radical new opportunity for disabled people who can and wish to work.
Mr. Madel : Can my right hon. Friend confirm that this very welcome new allowance will be extensively publicised and that the allowance itself is not taxable?
Mr. Scott : Yes. The disability working allowance--like its companion benefit, the disability living allowance--will be tax free. It will be extensively publicised on television and in the press through mail shots and other methods of communication. Incidentally, we shall introduce into our advertising campaign efforts to ensure that the information available can be well interpreted by those with sensory disabilities.
Mr. Alfred Morris : What is the Government's response to the increasingly strong feeling among disabled people that this measure is not an appropriate one for tackling their now, by common consent, quite shocking employment disadvantages? Is the right hon. Gentleman aware that the DWA, with its very high marginal tax rates--as high as 94 per cent., leaving disabled people with only 6p in the pound of their additional income as workers--simply substitutes a new poverty trap for the employment trap, making some disabled people actually worse off for earning more?
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Mr. Scott : Hardly anyone will be worse off if they are on disability working allowance. For example, a couple with two children aged six and 11 would still be entitled to DWA if they had a net income of £189 a week. I believe that this is an important benefit. It has been widely welcomed by the organisations of and for disabled people outside the House. One of its most important aspects is that people who go on to DWA will retain their underlying entitlement to any benefit which they may have had before they went on to DWA and that they will not have to requalify, if they fail in their efforts to work.
Unemployment Benefit
4. Mr. Gregory : To ask the Secretary of State for Social Security how many unemployment benefit claimants there were in York in June 1987 and currently ; and if he will make a statement.
Mr. Jack : In June 1987, unemployment in York was 5,542. In December 1991 it was down to 3,816.
Mr. Gregory : I thank my hon. Friend for those figures. Does he agree that, if my calculation is correct, that is a reduction of 31 per cent. and that the reverse would be the case if we were to move from our free enterprise and initiative policy to a policy whereby state nationalisation took over Northern Electric in York, Yorkshire Water, British Telecom and other similar companies? Is it not right that there would be a reversal of the excellent figures that my hon. Friend gave?
Mr. Jack : As somebody who, as a child, was brought up in the city of York, I have nothing but praise for the excellent way in which my hon. Friend has represented his constituents. I can confirm that a 31 per cent. reduction in unemployment is the correct figure. My hon. Friend has done much to boost the employment opportunities in York by championing the railways, tourism and other industries from which the city draws its economic well-being. The people of York will have noticed the mocking smiles on the faces of Opposition Members when I referred to my hon. Friend's record.
Community Care Grants
5. Mr. Cousins : To ask the Secretary of State for Social Security what was the number and size of community care grants in Newcastle upon Tyne in the six months April to October 1991.
Mr. Scott : Between April and October 1991, Newcastle upon Tyne district office awarded 1,250 community care grants, worth over £290, 000.
Mr. Cousins : Will the Minister confirm that the office in Newcastle upon Tyne is in the habit of pricing its community care grants in two well- known catalogue shops and that unfortunately it failed to spot in April 1991 that the Government had increased value added tax? The result was that a constituent of mine--and no doubt many hundreds of others who have just been referred to by the Minister as being included in the 1,200 people who received grants--was short changed and not given the full amount. A disabled constituent of mine was short changed by more than £2 in his community care grant for an orthopaedic bed. Will the Minister investigate the matter
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urgently and ensure that the Department of Social Security office in Newcastle upon Tyne is made aware of the fact that the Government increased VAT last April?Mr. Scott : Of course I shall examine the matter urgently and refer it to the Benefits Agency. Given its urgency, I am surprised that the hon. Gentleman did not write to me about such a detailed case, which would have enabled me to deal with it earlier.
Mr. Bradley : The Minister clearly has no understanding of the damage that the social fund is inflicting on thousands of the poorest people in cities such as Newcastle and Manchester. In 1991, 68 per cent. of applicants were refused community care grant and just over 50 per cent. were given a budgetary loan, which they had to repay from their meagre benefits. When will the Department publish the review of the social fund, which we have long awaited, and when will he restore the right of the poorest in our society to a grant for essential items such as clothing, furniture and cookers, which have been denied them under the current system?
Mr. Scott : I contest the hon. Gentleman's assertions at the end of his supplementary question. The social fund has given extensive help to people in real need. Some 60 per cent. of applicants are refused community care grant because they do not meet the basic criteria. We have not received the report of the social policy research unit at York, but when we do we will publish it urgently.
Pensioners (Incomes)
6. Mr. Burns : To ask the Secretary of State for Social Security what proportion of pensioners are in the top half of the income distribution ; and what was the comparable figure for 1979.
Mr. Newton : Twenty eight per cent. of pensioners were in the top half of the income distribution in 1987 compared with 24 per cent. in 1979.
Mr. Burns : I thank my right hon. Friend for that answer. Will he confirm that pensioners are worried about a return to the rampant inflation of the mid-1970s and, although it does not directly affect people who have reached state retirement age, a 9 per cent. tax being put on the savings of people who are saving for retirement? People considering retiring early would be caught by that punitive tax.
Mr. Newton : Pensioners were among those who were hardest hit by the rates of taxation and inflation of the 1970s. I am grateful for my hon. Friend's second point, because it is not yet widely understood by the three quarters of people who go into retirement with savings of their own that, as they approach retirement, their ability to build up those savings would be subject to a 9 per cent. tax as a result of one of the Opposition's proposals.
Mr. Frank Field : If a higher proportion of pensioners are now in the top half of the distribution, who has taken their place in the lower half, and why? What part have the Government's unemployment policies played in that?
Mr. Newton : I do not think that there is any question of the Government pursuing a policy of unemployment, as the hon. Gentleman well knows. The increased number of pensioners in the top half of the income distribution is the
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result of pensioners' average net incomes rising by a third or more in real terms because of the policies of the Government.Mrs. Roe : Does my right hon. Friend agree that many people confuse the level of the state pension with the amount of money that pensioners have available to pay all their weekly bills ? Is not it true that the majority of pensioners have extra income from savings, from an occupational pension or from other benefits such as income support ?
Mr. Newton : Yes, indeed. As I said earlier, more than three quarters of recently retiring pensioners now have income from savings, and more than 60 per cent. of them also have income from occupational pensions. In both cases, the incomes have risen substantially.
Mr. Allen : Will the Secretary of State concede that many people are doing better, which we welcome, because of the state earnings-related pension scheme which was introduced by the Labour Government ? The people who are not doing well are those without additional income on lower incomes, such as single pensioners, who have lost the equivalent of £15 a week, and married couple pensioners, who have lost the equivalent of £25 a week. Will the Secretary of State take this chance --one of his last--to apologise to pensioners for what he has done ?
Mr. Newton : I make two points : first, the incomes of pensioners in the lowest quintile have risen by 15 per cent. in real terms over this period, and those pensioners will have benefited further since those statistics were compiled by the increases amounting to a third of a billion pounds that have been made in income support premiums in the past three years. Secondly, it is not SERPS that is the major factor in this increase but the increased income from savings and occupational pensions.
Mr. Harris : Do not the figures given by my hon. Friend underline the point that many pensioners are well off--and we welcome that--and that that is a justification of the Government's policy of targeting extra help on those who really need it ? When will the Opposition grasp that simple fact ?
Mr. Newton : Certainly one of the satisfactory developments of recent years is that, taken as a whole and on average, pensioners' living standards have been rising. As I have said repeatedly, there remain a number of people for whom we think it is right to do more, and we have been doing more through the income support premiums.
Benefits (Greater London)
7. Mr. Tony Banks : To ask the Secretary of State for Social Security what was the total number of people in the Greater London area receiving social security benefits in 1978-79 and the total in 1990-91.
The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe) : Statistics for the number of recipients of all benefits are not collected on a regional basis.
Mr. Banks : It does not surprise me that the Minister does not want to know the facts. She must know that, by any standards, the number of people in London who have been impoverished since 1979 has more than doubled. She
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knows that and the statistics are at least available from the Library but not with the precision that she could have given if she had chosen to give them to the House. I have never seen so many unemployed and homeless people begging on the streets of London. Thanks to the Prime Minister, 16 and 17-year-olds cannot claim social security. I suggest that, instead of choosing the mad scene from Lucia di Lammermoor for his desert island disc, the Prime Minister would have done better to have chosen something from the Beggar's Opera because there is a whole chorus on the London streets which could join in.Miss Widdecombe : May I suggest that, for sheer consistency in the way in which the Opposition present their numbers, they should perhaps choose the Grand Old Duke of York as their theme. The hon. Gentleman can no more claim that poverty has doubled in London than he can claim that for Great Britain as a whole. Because we have taken more people into the net by raising income support and making other improvements, more are now assisted through the benefits system.
Mr. Bowis : Is it not a fact that more and more generous benefits covering many different needs are available to people in London and elsewhere? Does my hon. Friend agree that one statistic that needs to be found is that of the number of Londoners who would lose if the upper earnings limit on national insurance contributions were to be removed?
Miss Widdecombe : Indeed. Given the average salary in London, I imagine that there would be an extensive loss if, as my hon. Friend says, that policy were to be implemented. What is more--as my right hon. Friend the Secretary of State said earlier--no compensating benefit would be received by those who would be hit by the abolition of the upper limit. In fact, it would turn Beveridge on its head and use the national insurance system as a tax system.
Retirement Pension
8. Mr. Winnick : To ask the Secretary of State for Social Security what recent representations he has received over the level of the retirement pension.
Mr. Newton : We regularly receive representations and inquiries from a wide range of interested organisations and individuals about the level of the retirement pension.
Mr. Winnick : Will the Secretary of State take this opportunity to confirm an answer recently given to me by a junior Minister--it is in Hansard, of course--to the effect that a large number of pensioners--nearly 40 per cent.--have incomes of £70 or less out of which they pay about £10 to £15 in rent? Is it not a fact that if the link with earnings had not been broken by his Government 10 years ago--indeed, nearly 12 years ago--a married pensioner would be £28 a week better off this April? That is what the country is concerned about, not the lies, smears and distortions organised by Tory central office and the Tory press against the Labour party.
Mr. Newton : Such calculations take absolutely no account of the increased taxation and inflation which would have resulted from the pursuit of the policy that the hon. Gentleman is advocating. I leave with him the thought, especially as Labour is apparently committed to
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adding another £9 a week to national insurance contributions for 3 million or more people, that if such a policy had been pursued, contributions for an employee on average earnings and his employer would now be about £9 a week more than they are.Mr. Ashby : My right hon. Friend referred to the increase in the incomes of pensioners as a result of savings and of occupational pensions. Can he give any idea of what the level of occupational pensions will be by the turn of the century?
Mr. Newton : I will not attempt to predict what will happen on that front between now and the end of the century because that will depend on many factors. I can tell my hon. Friend that pensioners' incomes from occupational pensions--for those who have them--rose on average from £13.90 a week in 1979 to £27.70 in 1988. That is a virtual doubling of the income from occupational pensions over that period. I expect to see the trend continue if sensible policies continue to be pursued.
Mr. Meacher : Will the right hon. Gentleman tell us what representations he has received from the employees and pensioners of the Maxwell Communication Corporation and AGB companies about the level of their pensions? Is he aware that, due to his culpable negligence in sitting for 19 months on regulations under the Social Security Act 1990, which would have protected pensioners in the event of a company wind-up, thousands of pensioners now stand to lose most or all of their pensions for which they have contributed for up to 35 years? Does not he think it right that all such pensioners should receive compensation when they have lost so much pension due to his complacency and reprehensible laxity?
Mr. Newton : I presume that the hon. Gentleman thought it right to return to the matter in the House having notably failed to achieve the result for which he hoped by an overheated press release to the same effect which he issued at the end of last week. He knows that he has deliberately raised unnecessary alarm among many thousands of pensioners by the way in which he has presented the matter. It is simply not the case that pensioners in such schemes will get nothing or will be left penniless, as the hon. Gentleman well knows. Under existing regulations, if there are not sufficient assets to secure the guaranteed minimum pensions--that is the equivalent of what the pensioners would have got under the state earnings- related pension scheme--the guaranteed minimum pensions can be and would be underwritten by the Government.
Mr. Ian Taylor : Will my right hon. Friend refuse the invitation from the Opposition to treat pensioners as a political underclass? Will he remember that more and more people reaching retirement age wish to have independence in their own hands, which means that they must be in receipt of policies that encourage that independence, including savings, during their working career?
Mr. Newton : That is absolutely right, and nothing has more clearly revealed the Opposition's attitude to people's wishes in the matter than their persistent hostility to the 4 million or more people who have taken out personal pensions for exactly that reason.
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Social Fund
9. Mr. Morgan : To ask the Secretary of State for Social Security what proposals he has to ensure a more equitable distribution of resources for the social fund.
Mr. Scott : Each annual allocation of funds to district budgets has been designed to redistribute resources in a progressively more equitable way. As part of our routine annual review of allocations, we shall continue to consider how best to ensure that funds are targeted where they are most needed.
Mr. Morgan : Does the Minister accept that the distribution of resources under the social fund is extremely inequitable and difficult to get right? Will he also accept the Opposition's view that, with the social fund, the Prime Minister first demonstrated on a national scale his dangerous incompetence? That incompetence later extended to the economy when he was promoted. Does the Minister agree that, in the present state of affairs, some parts of the country have too much money in the social fund and still have money over after meeting all claims, low and high priority, which are legitimate? Some areas can meet only high priority claims, whereas other areas can meet low and high priority claims but have no money over. Is not it an example of what is wrong with the country that the Prime Minister was promoted for trying to reinvent the Lady Bountiful in his first major act as Minister in 1988?
Mr. Scott : I do not claim--and I do not suppose that the Prime Minister would--that the social fund is perfect. I do claim that it is better than any of its predecessors in meeting exceptional need in exceptional circumstances. I recognise the local pressures which the hon. Gentleman perceives, but I reiterate that we endeavour to see that the resources allocated reflect the need in the localities. That is why South Glamorgan had an extra 10 per cent. allocated in August 1991 and another £50,000 in loans only a week or so ago. We try to ensure that any surplus resources are reallocated sensibly and flexibly.
Mr. Hind : Will my right hon. Friend confirm that if he were to convert all loans under the social fund to grants, as has been promised by the hon. Member for Oldham, West (Mr. Meacher), the cost would be about £130 million and would greatly prejudice the operation of the social fund as it now works?
Mr. Scott : I certainly understand my hon. Friend's point. I have heard suggestions that that will be Labour party policy, but I have not heard whether the shadow Chief Secretary to the Treasury agrees with such a policy.
Dr. Kumar : If the Minister genuinely believes in the equitable distribution of the social fund, may I invite him to review cold weather payments, because the senior citizens in my area of east Cleveland have lost out during the past week? In addition, how are cold weather benefits assessed in the first place?
Mr. Scott : I hope that the hon. Gentleman will take the trouble both to read my announcement about the improvements in cold weather payments this year and to go to the Library to see how those allocations are made. All the information is there for him to find. In one of our coldest winters for the past 20 years, the system has been operating successfully and flexibly. I believe that the
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linkages to the meteorological stations have operated more effectively than hitherto. If the hon. Gentleman wishes to make a particular point about his locality, he should write to me about it and I shall ensure that account is taken of his views.Disability Living Allowance
10. Sir David Price : To ask the Secretary of State for Social Security what arrangements he has made to ensure that existing recipients of attendance allowance and mobility allowance receive disability living allowance in April.
Mr. Scott : All attendance allowance beneficiaries aged under 65 and all mobility allowance beneficiaries will transfer automatically to the equivalent level of disability living allowance. We are writing to all existing claimants to let them know how the change will affect them. We are also inviting claimants who currently receive only one of the two existing benefits, and consequently will transfer to only one component of DLA to consider claiming the other component.
Sir David Price : Will those in the third category, who are claiming extra money to help with personal care and who do not currently receive attendance allowance, have their claims determined by an adjudication officer or a medical practitioner? Will social factors be given equal weight with medical factors when determining such claims?
Mr. Scott : My hon. Friend makes a valid point. We shall be substantially demedicalising--to use my word--the whole process for claiming both the disability living allowance and the disability working allowance, and moving to judgments made by adjudication officers. That, in itself, will be an important step forward, but perhaps even more important is the fact that, because of the change, there will for the first time be a proper appeals procedure for those who need help with care.
Mrs. Margaret Ewing : In attempting to ensure that people are made aware of the DLA, which is something that we all want, will the Minister ensure that there is effective and efficient management? Although I realise that he cannot know of a particular incident that has been drawn to my attention today, is he aware that information has been sent to deceased claimants, thus causing a great deal of distress to the families concerned? If that was an isolated incident I am sure that the Minister will join me in apologising for it, but will he look at distribution methods to ensure that such incidents do not happen on any scale?
Mr. Scott : I certainly apologise for distress caused by any such incident. We have sent out more than 1 million letters to individual customers to advise them of the change that we are making and the benefits inquiry line has provided back-up information for those who have received such letters. We are doing our best, but I suppose that when something of this scale is embarked upon, it is almost inevitable that the occasional mistake will be made. I repeat that I am sorry if any distress has been caused.
Mr. Thurnham : Will my right hon. Friend confirm that spending on disability benefits by this Government has
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increased by over 150 per cent., in contrast to the policies advocated by the Labour party, the priorities of which are pensions and child benefits?Mr. Scott : I believe that the Government can be proud of their record on benefits for disabled people over the past 12 years. My hon. Friend has rightly drawn attention to the progress that has already been made. The introduction of the two new benefits will help more than 300,000 people at a cost of about £300 million.
Disability Working Allowance
12. Sir Geoffrey Johnson Smith : To ask the Secretary of State for Social Security when the new disability working allowance will come into operation.
Mr. Scott : Disability working allowance will start on 7 April. The new benefit will be widely publicised from this week onwards. Claims can be made from 10 March 1992.
Sir Geoffrey Johnson Smith : Is my right hon. Friend aware that this new benefit will be widely welcomed ? Will he confirm that if we had adopted a scatter-gun approach to benefits, as the Labour Government did, the substantial improvements in help for the disabled since 1979 would not have been possible ? Can he say by how much the groups affected by the scheme will have benefited in those years ?
Mr. Scott : As an earlier supplementary question made clear, we have increased expenditure on long-term sick and disabled people by 150 per cent. during the period of this Government at an annual rate of about £550 million compared with about £350 million under the Labour Government, using real-terms figures. Therefore, we have made substantial progress. What is more, we have sought to identify areas of disability that in the past have not had the attention that they deserve, and to meet them with the new benefits.
Mr. Simon Hughes : What will the Minister say to people who will receive the new allowance from April when they learn that last Friday a Conservative Back Bencher talked out the Civil Rights (Disabled Persons) Bill ? Was that done with implied or expressed connivance of the Government ? In any event, will the Minister condemn it ?
Mr. Scott : If the hon. Gentleman took pains to read my speech on Friday and see my remarks, he would understand my approach to the matter. The Bill came on second, had less than two hours debate and, according to the normal customs and practices of this House, did not receive a Second Reading. We should see how well efforts to encourage and persuade employers to take note of the needs and the abilities of disabled people to contribute to their enterprises do, before we consider the need for further legislation.
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