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Mr. Dewar : I was challenging the Government to say a word or two. I do not think that the hon. Member for Havant (Mr. Willetts) speaks for the Government.--
Thr Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe) : Yet
Mr. Dewar : The hon. Gentleman should be pleased that people are already speaking for him. His cause is being advanced with all the persuasive powers for which the Under-Secretary is famous. I am not sure whether that bodes ill or well for his career, but I will leave him to make up his mind about that.
If the hon. Gentleman aspires to the Front Bench--I suspect that he is a man not without ambition--some of the pamphlets that he has written recently will make doubly interesting reading on the day that I hear of his appointment. But at the moment I am asking the questions. We have given a fair amount of information about the areas that we would examine. That is why the
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Secretary of State's attacks were unfair and inaccurate. We have not been totally silent. Let us hear something similar from the Minister.I repeat that the phrase "areas of provision from which Government can withdraw altogether" will hang in the air. It will be analysed and will be the source of much speculation if the Government do not do something to help the problem of definition. Perhaps I could tempt the Minister by mentioning some of the matters which have been suggested not by Labour politicians but by journalists who say that they have received a hidden briefing from Government sources. We have been told that unemployment benefit and invalidity benefit will in future be largely a matter of private insurance cover. Those who cannot afford private insurance cover will be left with some sort of safety net provision, but the Government will basically withdraw from unemployment and invalidity benefit. It will be left to the private insurance market and those who can afford the premiums to take steps to cover against misfortune at some later stage. That is a specific suggestion. If that is all nonsense, if it is wide of the mark, if that is not the type of provision from which the Government intend to withdraw, the Minister will be able to make that clear. That would be of some help, at least in a negative sense, and would perhaps save many people scribing many columns on the basis that that is what is in the Secretary of State's mind.
Mr. Patrick Nicholls (Teignbridge) : The hon. Gentleman has always given way to me in these debates and I am grateful to him for his courtesy on this occasion. Will he tell me the difference, in principle at least, between the position which he asks my right hon. Friend the Secretary of State to clarify and the principle set out by the Leader of the Opposition, who said of benefits :
"There may be a case for many of them remaining universal, but it's only right we should be prepared to re-examine everything. I have not ruled anything out of court".
What did he mean?
Mr. Dewar : He meant what he said. The hon. Gentleman will be surprised to know that I am grateful to him for raising that point because it allows me to come to the subject of pensions. I intended to read out that passage. My right hon. and learned Friend pledged that the social justice commission would be prepared to look at areas of difficulty and consider what was the right balance between universal and targeted benefits. His following passage made it clear that there were strong arguments for the universal principle, but that has been translated with remarkable ingenuity and a good deal of brass neck into an alleged Labour party mission to means-test everything.
I am struggling to find the right parliamentary language. It seems that the hon. Member is showing a great deal of sophistry in that respect, and he well knows it. There is no way that the words that the hon. Member from a southern seat which I cannot remember all by myself--quoted can be construed to have the meaning that he seeks to place upon them for partisan but unjustified reasons.
The Secretary of State is being very careful and has said that there will still be a basic pension which will never be means-tested. Exactly what has he got in mind?
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I have no doubt that the Secretary of State remembers the report by Andrew Grice on the front page of The Sunday Times , which stated : "Plans under consideration include ending the automatic right to a state pension for people who can afford to make their own private provision for retirement. The state pension would become a safety net for those who could not do so."That is Mr. Grice's interpretation and he may be quite wrong, but later in the article the following words--allegedly those of the Secretary of State- -are printed in direct quotation marks : "We need to look for ways in which the state pension could better targeted and private provision harnessed We need to focus money on those who are in greatest need and open up greater opportunities for those who can provide for themselves."
It is easy to be misled by words. I do not object to such concepts in the right circumstances, but it is remarkable for the Secretary of State to use such words when he speciously accused us of being interested in means- testing the basic pension, and to say that there is no doubt about his position.
Mr. Lilley : Mr. Grice is a good journalist, but I did not give him an interview or say those words. Obviously, through some Chinese whispers, he got a mangled version. I did not utter those words and, when asked, he acknowledged that, he has no recording of me doing so.
Mr. Dewar : That is extremely interesting. In The Sunday Times it is a direct quote. It states :
"he told The Sunday Times."
I understood what the Minister is saying and I do not want to make too much of it as it is a matter for him and Mr. Grice, but I still want to know exactly what is contemplated.
I shall suggest what I think is contemplated. Perhaps there will be a safety net provision--called the basic retirement pension--but people will be invited to contract out of it and will be paid incentives to do so. I do not want to open a major debate and shall be brief, but I must state why that concerns me.
It would be dangerous if the better-off people in society were asked to contract out, not merely into an alternative to the state earnings-related pension scheme, but also out of basic pension provision and cover for illness and unemployment. A vast and important part of the population would be encouraged to see the welfare state as something for other people. Inevitably they would see it as an incubus from which they derived no benefit, and therefore as something unimportant to them. Once we achieve that, we will wreck something that is important and central to our values and our community.
Mr. Winnick : The Secretary of State seems to disagree with the prominent article in The Sunday Times last week and to deny what it says. Why did he not immediately issue a statement? That would have received a great deal of publicity and by Monday the papers could have made clear that the article was inaccurate. The Secretary of State's silence must be a sign that the article was basically correct.
Mr. Dewar : As my hon. Friend will understand, I cannot answer that. However, it is a fair question and the Minister may want to deal with it or to get his colleague to do so later.
I agree with my hon. Friend the Member for Birkenhead (Mr. Field). If we took at face value the
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Minister's assurances that pensions and other major benefits such as child benefit will not be touched, we would be left with a puzzle. However, the Secretary of State may be thinking of an extension of the contracting-out principle of the sort that I described. Perhaps he will confirm or deny that.I am not sure that such a system would be a good buy for the Treasury. As we know from the premiums for the private pension system, the Treasury has had to go without a substantial amount of national insurance contributions and has had to pay substantial sums because of the contracting-out payments and incentives over and above those, which have run to billions of pounds during the past five or six years. I suspect that the arithmetic may be a good deal less comfortable than the Secretary of State makes out.
Above all, my objections are social and philosophical. If one relegates the welfare state and the benefits system, which the Secretary of State is in charge of, to a safety net or fall-back provision, successful people who are assured of their position in society will think that the system has nothing to offer them. That would be a mistake and we would not be prepared to contemplate it. The Secretary of State's attempts to represent himself as generous to pensioners do not hold water. He says that the retirement pension is so important to him, but he has confirmed that it is his policy to freeze it in real terms, which means that it will drop substantially as a percentage of average earnings.
Dr. Godman : I have been listening carefully to my hon. Friend. Does he agree that the changes to certain elements of our welfare system proposed by the Secretary of State may not only constitute a mistake but be capable of being challenged in the European Court of Justice? The Government face certain challenges at the court on Department of Social Security matters. May I remind my hon. Friend that the European Court, in every sense of the word, is becoming an international supreme court for the 13 legal systems contained within the 12 member states.
Mr. Dewar : I agree, but I do not know whether the Secretary of State for Social Security is the best man to appeal to about the European Court of Justice. Judging by what he said in his Young Conservatives speech, I suspect that he is not particularly sympathetic. He may be more worried about the court of public opinion if he goes ahead with the schemes that I suspect that he has in mind.
Many other suggestions are swimming around. For example, the hon. Member for Havant has, among other things, recommended a retirement age of 67 for men and women. Government withdrawal from industrial injury benefits is on the agenda. It seems to me that the contracting-out principle--taking people out of the comprehensive welfare system--is writ large at the back of the Secretary of State's mind. I hope that he will be able to comment on that before we adjourn this evening.
We are obviously not going to vote against the uprating assessment. Although it is a standstill and a legal minimum, we have made it clear that it is welcome, as far as it goes. The Secretary of State mentioned some figures. A single person over 25 will get £44 in income support after housing costs, but someone between the ages of 18 and 24 will get £34.80, although many of their expenses wold be the same as if they were over 25. That difference is sometimes difficult to defend. The pension of £56.10 and
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even the married person's pension are not generous. I do not believe that the Government could be proud of those figures, and they will be greeted with muted enthusiasm by those people who have to struggle to make ends meet on incomes on which I should not like to live. I suspect that the Secretary of State would not like to live on them either.8.29 pm
Mr. David Willetts (Havant) : I very much welcome the uprating of all social security benefits by 3.6 per cent. in the orders before us today. Not only are we expecting an uprating of 3.6 per cent., but it comes when inflation has been reduced to 2.6 per cent., so people on benefit will enjoy an increase in the value of their benefits in April above the current rate of inflation. As inflation is low and falling, we can also be confident that the real value of benefits will be maintained during the year. One of the hidden costs of high inflation rates is the damage done to the value of social security benefits, so that by the 11th or 12th month of the year, benefits can be 15 or 20 per cent. lower in real terms than they were at the start of the year. Thank heavens the present low inflation means that that problem, which made it difficult for people on modest incomes to budget carefully, has largely disappeared.
Today's debate also covers the review of social security expenditure announced by my right hon. Friend the Chief Secretary to the Treasury on Monday. This year's uprating puts some of the scare stories that we have heard into perspective. We have not only an extra £2.5 billion spending on social security due to inflation, but a further £1 billion spending on social security due to the increases in the real value of benefits to the poorest members of our society. There have been increases in the value of income support and extra help has been provided with the new council tax as there is no reduction in income support to take account of the disappearance of the old requirement to contribute to the community charge. That is good news for people on low incomes.
The Labour party is trying to make hay with the review announced by my right hon. Friend the Chief Secretary, but it has its own review under way. It seems odd that the Labour party is allowed to have a review of social security while, according to the Labour party, the Government--who have the responsibility of taking important decisions on the long-term future of social security and do not merely indulge in political speculation--are not allowed to have a review. If the Labour party has a review, it makes it infinitely more important that the Government should have one.
The hon. Member for Birkenhead (Mr. Field)--who is sadly not in his place at present--is Chairman of the Select Committee on Social Security, on which I am honoured to serve. Speaking about the review, he urged his Labour colleagues :
"if we do not think very radically, we will drift into our fifth election defeat, and we will deserve that."--[ Official Report, 30 November 1992 ; Vol. 215, c. 84.]
The Conservative party should also think radically. Radical thinking has won us four election victories and will be the basis for our fifth.
I shall outline some of the ideas that I hope will be considered in the Government's review. One of the themes must undoubtedly be targeting. It is striking that we have a budget which now runs at more than £70,000 million a year, but which is not so well targeted at helping people on low incomes as it should be. The Government's figures on
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households on below average income show that 7 per cent. of recipients of income support live in households with incomes above the national average.I hope that I may be allowed to refer to a pamphlet entitled, "The Age of Entitlement", published by the Social Market Foundation earlier this week. The author's name temporarily escapes me-- [Interruption.] I am being asked to identify the author. The pamphlet happens to have been written by David Willetts, Member of Parliament.
The pamphlet contains figures from a parliamentary answer on pensioner incomes and shows that pensioners in the top two quintiles of pensioner incomes--the fourth and fifth quintiles--receive a higher income in absolute terms from social security benefit than pensioners in the bottom quintile. It seems difficult to defend a social security system under which pensioners at the top of the income range do better out of the state than pensioners in the poorest 20 per cent. That is why the improved targeting of social security benefits must be placed high on the agenda of any social security review. It is important to make a distinction--one which is often overlooked. The hon. Member for Glasgow, Garscadden (Mr. Dewar) overlooked the fact that targeting does not necessarily mean means testing. Means testing is one way of targeting, but there are other ways. One of the insights contained in the original report of William Beveridge was that if one defines the category of benefit recipient carefully enough, one can produce a benefit that is well targeted on poverty without having to use means testing.
In preparing his report, Beveridge surveyed the social conditions of England at the time and identified the groups of people on low income--such as unemployed people and pensioners--and saw that benefits going to them would be well targeted on poverty. Patterns of income and social conditions in this country have changed, so it seems reasonable for the Government to investigate whether there are different categories of recipients who should receive benefits, and to ensure that the benefits are well targeted on them.
Let us consider the stages in the life cycle. It is clear that, by and large, poor families are one-earner families, which generally have young children. Nowadays, when children reach school age, most mothers go out to work. If we want to target a benefit on families on particularly low incomes, we should focus any increase in child benefit expenditure on children under the age of five. In that way, we shall be targeting the benefits on poverty among families. I have seen the mischievous suggestion that I am keen on the idea as I have two children aged under five, but my argument is not entirely autobiographical.
I accept that the direct costs of young children are lower than the costs of teenagers, but if one also includes in the equation the income that the family sacrifices because mothers with young children tend not to work, then the overall picture is different. There is clear evidence that the poorer families tend to be those with young children.
The analysis can also be applied to the other end of the life cycle. When we consider poverty among pensioners, it becomes clear that the pensioners who find it most difficult to make ends meet are the older ones--those over 80, particularly widows. That is why it would be absurd to
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spend any social security resources on extending pensions to men aged 60 to 65. I do not know of one social policy expert who says that the real target for extra social security spending should be men aged 60 to 65. They all say that the target should be to help alleviate poverty among older pensioners over the age of 80, particularly widows.It is for those reasons that I hope that the Government's current review of the pension age will raise the female pension age to 65. Once that process has begun, there is no reason why it should not go further. Some of the savings reaped by that measure could be put towards increasing the value of the pension for those aged over 80. That would be a considerable improvement in targeting and could be achieved without means testing.
Mr. Frank Field : The hon. Gentleman used the phrase, "some of the savings". Is his speech on reforming the welfare state purely about targeting, or about targeting and cutting the size of the social security budget?
Mr. Willetts : Our social security budget is heading towards 13 per cent. of the entire national income, so it is important to save money on that budget as it will be difficult to sustain. However, it is possible both to save money on social security and to target the remaining expenditure more effectively. There is no reason why a responsible Government should not achieve both aims.
The scope for shifting from state provision to private provision through insurance should also be considered in the review of social security. I should like to identify some areas where progress could be made. The hon. Member for Garscadden referred to industrial injuries benefit. I agree with him on that point. It seems absurd that companies do not themselves take responsibility for compensating employees who suffer industrial injuries and that compensation is provided through a state scheme with a standard contribution. That means safe employers subsidising dangerous employers. It sends out the wrong signals.
Employers in dangerous industries where there are high rates of industrial injuries should be forced to contemplate the improvement of their working practices, not because of cumbersome interventions from Brussels but because their insurance premiums are high and they recognise that they can reduce them by reducing the number of injuries. That would be sensible privatisation of a social security benefit, which would also contribute to the important objective of ensuring that workplaces are safe.
Another area is the expenditure, now running at nearly £1,000 million a year, on mortgages for people who are on income support. There is no reason why the state should act as the guarantor of last resort for commercial loans entered into by building societies. Why should it not be possible for people to take out insurance so that their mortgage payments could be maintained if they suffered the misfortune of losing their jobs?
Unemployment benefit has also been talked about. I must confess to some scepticism there. If any progress can be made in that regard, I would welcome it, but we have to acknowledge that many unemployed are young. They have either no earnings record or only an intermittent record on low pay. For them to accumulate the record of paying insurance premiums which would be the basis for sustaining them while unemployed seems difficult. That is a practical problem which would need to be addressed.
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Finally, there is the pension itself. As we have heard several speculative quotations from newspapers, some of which we have established were not accurate, I will quote from a newspaper article of 40 years ago. The heading is "Social Security Under Review". Almost exactly 40 years ago, the Conservative Government launched a review of the social security budget.Lord Beveridge contributed an article to The Times, identifying the options which he thought should be examined. He made it clear that he already thought that his system of national insurance benefits had suffered as a result of the extra costs imposed by the Labour Government. He set out an agenda for the issues which should be considered when contemplating the future of the pension and it may be a good guide to the issues that the present Government might wish to address in the years ahead. He said that the Phillips Committee, the body set up then,
"should examine any methods by which the prospective burden on the general taxpayer for pensions to those past work can be lightened. The methods possible in theory include encouraging voluntary delay of retirement ; raising the minimum age for pensions ; exclusion from social insurance pensions and contribution for them of persons adequately covered by superannuation schemes in their particular employments ; increase of insurance contributions."
In regard to the minimum pension age, I might point out that he later advocated that a full pension should not be payable until the age of 67. There is no reason why the Government should be reluctant to embark on an examination of the options which Lord Beveridge raised 40 years ago.
8.43 pm
Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I feel slightly left out in these debates. I have always felt left out in the past because people were never nasty about me. I do not know why that is. What I have said is never quoted or questioned. That is bad. I am beginning to develop a complex. I am also feeling left out because I am not having a review. Everybody else seems to be having reviews, so I might as well announce a review, just by myself. I will do a deal with the Secretary of State ; I will submit evidence to his review if he will submit evidence to mine.
I want to speak for a few minutes in this important debate. Sometimes such debates degenerate into ritual. I hope that hon. Members will not take the wrong meaning from that. The debate is an annual event in the social security calendar and it becomes ritualistic. Nevertheless it is an important opportunity to discuss aspects of social security generally.
Although it is not related directly to the uprating statement, the Secretary of State commented on fraud and the need to examine the administrative procedures to be used by his Department. I am as keen as every other hon. Member to make savings on fraud, and to try to root out housing benefit fraud particularly with the assistance of local authorities. However, I am concerned about some claims that the Secretary of State seemed to be making about the amount that he could save on the fraud provisions which he announced in the uprating statement.
I would be reassured if in the reply to the debate, or in a letter subsequently, the Secretary of State could flesh out what further thought had been given to the issue. I understand that the Department had to put up a strong case to the Treasury to get the grant, which I support, but
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I am nervous that the Secretary of State's claim about the amount which he could save on fraud, £1 billion a year, may be a bridge too far. I would be reassured by more of the detail behind that statement.In that connection, I have had interesting correspondence from people who work in the Department and who are concerned about administrative changes. I understand that floating around the Department there is a document called the Mayhew report, if I have the name right. I should like to see that report. Responsible staff who are conscientious about their duties are concerned about some administrative changes that have been made. In a time of citizens charters, open government and all the rest of it, perhaps all I have to do is ask for the report, which I have just done. If I cannot get a copy of it, perhaps in the letter which the Secretary of State will send me about fraud he will tell me precisely why.
I too think that 3.6 per cent. may be par for the course in terms of the legal requirements. However, I have to draw attention to a point which is made with monotonous regularity in these debates ; benefit recipients are falling further and further behind those who are earning more than the increase in the retail price index. I accept that the RPI is 3.6 per cent. I accept what the hon. Member for Havant (Mr. Willetts) said about what that will mean in real terms, having regard to inflation, this spring, but year in, year out, pensioners and other benefit recipients fall further behind in the wealth stakes in comparison to those who are lucky enough to be in employment.
The average male earnings figure equivalent to the 3.6 per cent. RPI increase is 4.7 per cent. It may be true that the difference does not add up to a big row of beans in one year, but year by year that inexorably puts people in receipt of benefit at a chronic disadvantage. We must never forget that in the social security uprating debates.
I was not particularly taken with the Secretary of State's comments about statutory sick pay. That is to be frozen, saving some £20 million. I do not understand why statutory sick pay was singled out. Maternity pay has also been frozen at £100. I am worried about future increases. The capital limits and earnings disregards should be considered carefully in the Government review, because there is real scope for progress. The 21- hour study limit and the 24-hour employment limit for those engaged in voluntary activity could be changed to try to encourage people to do part- time work to assist themselves when they are on benefit.
The reduction in invalidity benefit of £240 million is premature. A research project that is currently under way, which is expected to report towards the end of 1993, would provide a valuable insight into what could be done with invalidity benefit. I understand what the Government have done in that direction and I welcome the fact that a great deal more money is being spent, but it is wrong to use this uprating statement to make a change in advance of those research findings.
It is becoming obvious from my case work and from talking to other Members of Parliament that insufficient account is being taken of the increases in water charges. I hope that the Government will monitor their effect on the benefit system. I welcome the fact that the Government have not adopted the proposal to claw back funds relating to the community charge.
I continue to be worried about the take-up rates for some means-tested benefits, especially family credit and income support. The evidence from research projects is
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equivocal. The Government may say that it is still early days, that the changes only came in in 1988 and that such matters take a little time to take effect ; I am aware of that. Nevertheless the Government should pay careful attention to how the take-up rates develop. I am also a little disappointed that something more progressive and beneficial was not done with the social fund. If the Minister has the opportunity when he replies, I hope that he will say something about the comments made by the Social Services Advisory Committee and the Social Policy Research Unit about the social fund.I have been making some desultory overtures to the Department about the needs of share fishermen in Scotland. A real problem is beginning to emerge. I do not complain that the Government have not dealt with it, because it is a new problem. Share fishermen are having their earning capacity statutorily reduced by the provision for tie-up days in the Sea Fish (Conservation) Act 1992. I think that they are the only earning group in the British economy with statutory restrictions placed on the amount of money that they are entitled to earn. The fishermen are self-employed and there are some problems with how help could be administered. I have been casting around, trying to find some way of getting them access to additional support while statutory restrictions apply to their right to go to sea to earn a living. I accept that it is a complicated matter, but I hope that the Government recognise the problem and will carefully monitor what is happening The number of people involved is not large, but some families are dependent on crew members of boats that are now tied up for long stretches. They are suffering badly.
Mr. Frank Field : Does the hon. Gentleman agree that there is inconsistency in the Government's attitude? They say that one reason why they do not want the House to adopt the Maastricht social chapter is that it lays down foolish rules, such as limiting the amount of work that people can do. They want people to be able to work for as long as they want to work. On the other hand, the Government are limiting the amount of work that can be done by the fishermen to whom the hon. Gentleman referred.
Mr. Kirkwood : The experience of the Chairman of the Social Services Select Committee is all-knowing and all-embracing. He even speaks effectively on behalf of share fishermen. I shall report that with some pleasure to the fishermen at the quayside market in Eyemouth on Friday afternoon.
Dr. Godman : Is it not true that at one time those fishermen were allowed to draw unemployment benefit when they could not put to sea because of circumstances beyond their control--for example, heavy weather or the boat being out of the water for repair? Because of the statutory limit on days at sea, those fishermen are now in precisely the same position.
Mr. Kirkwood : The change in the weekly earnings rule had a severe impact on share fishermen, some of whom were denied access to unemployment benefit. That blow hit them some years ago. I represent a fishing constituency and my experience is that something is wrong and action needs to be taken.
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I want to voice two more gripes before I sit down. The first refers to war pensions and the changes in the provisions for noise-induced hearing loss. I understand and accept that we are discussing a package deal, so the rank differentials that have been eroded or abolished are acceptable. However, although it is right to have stringent conditions when ensuring that there is a direct link between hearing loss and active service, having established that link I do not understand how it can be fair not to base the award on the degree of disability. I have always understood that war pensions were a legal entitlement, but that entitlement is being summarily withdrawn.I understand the Government's case that the package, in the round, will benefit people in other directions. That is welcome. However, former service men who have suffered that disability are right to feel slightly let down and to hold the Government to account. They want further explanations of exactly why the change was made. Secondly, I am concerned about the demise of the independent living fund. I noticed some interesting exchanges in written questions and answers between the hon. Member for Glasgow, Garscadden (Mr. Dewar) and the Minister. The hon. Member for Garscadden is looking surprised. He asked how much it would cost to extend the successor to the independent living fund to those who had gone beyond retirement age. The answer is interesting. Only a £2 million increase in the successor fund would be needed to extend it to people beyond retirement age. The figure would increase to £6 million next year and £9 million the year after. Those are not insignificant sums, but I hope that the Government will seriously consider providing them. That is food for thought for the Department.
I want to say a few words about carers. The increase in the invalid care allowance and the carer premium of 3.6 per cent. to £33.70 and £11.95 respectively are all very well as far as they go. The Government have estimated that the changes will benefit 189,000 recipients of invalid care allowance and 70,000 recipients of carer premium. However, carers are the main providers of community care and they save the country almost £24 billion a year, according to figures produced by some pressure groups.
Some 26 per cent. of all carers and 40 per cent. of all older carers are living in some poverty, often as a direct result of their caring responsibilities. The increases announced in the uprating statement will mean that the invalid care allowance will represent only 10.69 per cent. of national average earnings, which is not adequate recompense for the service to the community that those people perform. Older carers cannot claim ICA for the first time after the age of 65, and without entitlement to ICA the poorest older carers cannot claim the carer premium either.
There are also problems with claiming unemployment benefit when the individual returns to the employment market after he or she has finished caring. If that individual was looking after someone receiving the lower rate of care component, they cannot claim ICA. I appreciate that big sums of money are involved in making some of those changes, but I hope that the Government's review will consider carefully the support that carers are to receive in the longer term. I hope that the review is successful, and that it will be open and genuine. I hope also that we shall all have a chance to make submissions. I shall do so to the best of my ability. The uprating statement is acceptable and welcome
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as far as it goes, but the Government have missed another opportunity to be more progressive and imaginative in providing more support to those who need it most.8.59 pm
Mr. Patrick Nicholls (Teignbridge) : I like to think that not the disagreement between both sides of the House but the large degree of agreement will impress people who are watching this debate, or who rush out to buy copies of Hansard to read all about it. Ultimately, however, the chasm is narrow but deep--which means that there is a living for us to earn. One thing I noticed is that, since the hon. Member for Glasgow, Garscadden (Mr. Dewar) has been in charge of his present duties, the tone of these debates is much more reflective. That is something of a disadvantage. Sometimes it is easier to repel a polarised situation by indulging in coarse oratory. When the hon. Gentleman sets out his stall, he does so in such a persuasive way that one has to pinch oneself to think that he might be in error. Whatever other tricks one may produce in debates in which the hon. Gentleman participates, a knee jerk or an elbow to the solar plexus will not repel the hon. Gentleman.
In tonight's debate, as in some recent debates, it has become clear that there is common ground in the sense that it is acknowledged that some regard must be paid to where the money to pay the benefits one wants to pay is to come from. I do not say this in any partisan way, because there has been no trace of that tonight, or for some little while. Even in the 10 years that I have been in the House, I have heard vestigial voices saying that the way to achieve the pension system that we want for all our constituents in need is to raid that great pot of gold out there, if only the Government of the day would do that.
For a long time, it was thought that if one could only get one's hands on the money of the rich, one could improve the benefits system dramatically. That is a lovely idea, but it does not hang together. Around 89 per cent. of taxpayers pay only basic rate tax, so if one confiscated all the money earned above the basic rate level, it would still be a drop in the ocean in terms of improving the benefits system generally. It is common ground on both sides of the House that we must to a large extent have a benefits system that we can afford. It was clear from the experiences of the last Labour Government that, no matter how good one's intentions, at the end of the day one's finances can find one out. In a bygone age, one could swap remarks across the Chamber about Labour being the party that took away the Christmas bonus one year, or rigged its own pension arrangements so that, having awarded pensions linked to incomes, it then had to avoid them.
All that is true, but I do not say that it was done with dishonour. That Labour Government had the best of intentions. They produced a mechanism which, had the Government been able to fund it, would have brought substantial benefits to the pensioners concerned. Ultimately, that Labour Government's good intentions failed because the country could not generate the income necessary to realise them. The common ground between us now seems to be that the Government must be able to raise the money needed from the tax revenue produced.
The hon. Member for Garscadden said that, although he could accept the 3.6 per cent. uprating, it was not very much. One might ask him rhetorically, "Given the state of
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the economy, where would you get the money to produce a better level of pensions?" Quick as a flash, the hon. Gentleman would reply, "We would never be faced with that problem because we wouldn't get the economy in this state." If I sat on the other side of the House, I would defy the facts and make that reply as well. It remains true that, in any economy, one must see what can be afforded. I do not see what more could be done, and we must simply face up to that. We must consider some of the more sombre steps that we may yet have to take. Reference has been made, properly, to the amount of Government borrowing necessary to finance the present benefits system. I am not sure whether the hon. Gentleman was suggesting that we had gone too far, and should set about cutting benefits ; the fact is, however, that the Government have decided that they can fund benefits on current levels, through taxes and borrowing.That is an important point, which may yet be the basis for a significant difference between the two sides of the House. In the last public expenditure settlement, my right hon. Friend the Chancellor started on the basis of the amount that the country could afford, and then decided how that money could be allocated. It is clear that my right hon. Friend the Secretary of State for Social Security fought his corner with considerable skill : he managed to ensure that all benefits were uprated sufficiently, while at the same time operating within a budget that had been decided in the first place not on the basis of what we would like to spend, but on the basis of what was available. That was rather brave.
For all our different reasons, we hope that my right hon. Friend's move will work this year. If it does, however, we must look into the future, and ask ourselves whether such action will always be possible. Will there come a time, sooner or later--perhaps sooner--when the Chancellor of the day decides what can be afforded, and then looks at the social security budget in its entirety? If so, that Chancellor may decide that it is simply not possible to maintain benefits along the lines that we would like.
It is curious that remarks such as this should be swapped across the Floor of the House--for instance, that it should be suggested that the Leader of the Opposition may be thinking of taxing or means-testing benefits, or, at least, not entirely ruling out such action--when the Government are having to conduct a review. I see nothing dishonourable in some of the remarks made by the Leader of the Opposition.
When I quoted some of those remarks to the hon. Member for Garscadden, he said that the words meant what they said : I think that he was accusing me of putting a gloss or spin on them. I did not need to, because the right hon. and learned Gentleman's words were perfectly plain. He said that there might be a case for many benefits to remain universal, but that it was only right to be prepared to re-examine anything ; he did not rule anything out of court. More recently, the right hon. and learned Gentleman spoke of "a strong case for maintaining universality, everyone having access to child benefit and retirement pensions to which they have contributed during their working lives. The commission is perfectly free to propose all sorts of subtractions and additions and alternatives".
A cynic might say that the right hon. and learned Gentleman really meant that, even if the commission made
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such a proposal, he would not adopt it ; but I do not think that that is a mark of this Leader of the Opposition. I believe that, if the right hon. and learned Gentleman is telling his own commission that it is"perfectly free to propose all sorts of subtractions and additions and alternatives",
he genuinely intends to consider them.
I see no great difference between that and the concept mentioned recently by my right hon. Friend the Chief Secretary to the Treasury. He suggested that people with sufficient means might wish to make their own arrangements rather than relying on the state system. Surely, we are talking about two ways of acknowledging the same truth--that it is not sufficient to say that we would like to do without dealing with how such action is to be funded.
The hon. Member for Garscadden countered that argument with great force and sincerity. He suggested that there would be something wrong with a system that allowed, indeed almost obliged, the prosperous middle classes--to coin a loose phrase--to contract out of the welfare state, and then simply to leave it there for those who would have to rely on it. I accept, in terms of argument and debate, that it would be wrong, unwelcome and thoroughly unhelpful if those who had been obliged to contract out entirely then regarded what was left as an incubus.
I cannot tell the hon. Gentleman that some mean-minded people would not see it in that way ; clearly they would. However, I do not think that that would be the predominant view in British society. I do not believe that those who educate their children privately have no regard for those who educate them in the state sector, and I know that no one would seriously make that bald statement in the House. Let me cite a more homely example. The level of owner-occupation is probably very high on both sides of the House, but I cannot imagine that those who own their own houses would have no regard for people who live in council houses on rents essentially subsidised by the Department of the Environment.
I understand the point that the hon. Member for Garscadden makes. If what he fears were to come to pass, it would be a powerful argument against going in that direction, but I do not believe that British society works in that way. If that seems too extravagant a proposition, let me put it another way. In the House of Commons, even in this new age of the middle ground, there is still a pretty wide descrepancy between those on the right of the Conservative party and those on the left of the Labour party. But those two groups have one thing in common : they are both prepared to come here and legislate in this way. I accept that the hon. Gentleman believes that there is a risk. I do not think so. What I see are different ways of reaching the conclusion that the Leader of the Opposition seems to be working towards.
A moment ago, I said that we might yet, in the not too distant future, have to face decisions that would make it simply impossible for us to spend and uprate across the board. It will be particularly difficult for the governing party to face up to such decisions, and particularly tempting for the party in opposition to exploit the situation. If the roles were reversed, the Conservative party would be subject to that temptation. One has only to
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