House of Commons Hansard Debates for 24 Jan 1994

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Mr. Alan Howarth (Stratford-on-Avon) : I understand that the arrangements for passporting, for the purposes of the new incapacity benefit, people who are currently in receipt of invalidity benefit will mean, for example, that those on the higher-rate care component of disability living allowance will not be required to undergo a further medical test. Can my right hon. Friend say whether new claimants going straight on to incapacity benefit will be exempted similarly? That would be helpful to them. Such an assurance would be encouraging to the House and to people outside.

Mr. Lilley : I can give my hon. Friend that assurance. The move has been widely welcomed. It is obviously sensible, in that it removes the need of those people to undergo an unnecessary second test, and it will save the time of Benefits Agency medical staff.

As I have said, we expect that roughly half of all cases will involve an examination. The agency doctors will provide an assessment for the adjudication officer. Although the measure of incapacity given by the test will provide the main basis for the adjudication officer's decision, he will not be obliged to follow it mechanically if other evidence suggests a different conclusion.

Claimants will, of course, have a right of appeal against decisions. As at present, appeals will be heard by the Social Security Appeals Tribunal, but the Bill provides for a medical assessor to be present at any appeal where the degree of incapacity is in question.

Under the present, admittedly inadequate, system, existing recipients of invalidity benefit are subject to periodic review by Benefits Agency doctors. This may involve no more than review of the claimant's case notes. If the notes indicate a condition that is not likely to have changed, no further action may be taken ; if not, the claimant may be called in for examination.

Each year, under the present system, about 900,000 people have their cases reviewed, and more than 300,000 cases involve an examination by Benefits Agency doctors. As a result of this review action, invalidity benefit was withdrawn in about 100,000 cases each year. Last year, 5,350 appeals against refusal or withdrawal of invalidity benefit were heard, and 2,856-- a little over half--were upheld.

The hon. Member for Garscadden has claimed that the results of appeals show that few people are on this benefit who should not be. The fact that, even in the absence of a rigorous and objective test, 100,000 people have benefit withdrawn and that, of these, less than 3 per cent. are reinstated on appeal disproves the hon. Gentleman's point.

Naturally, when the new test is introduced, it will be used in the review of existing cases. To do otherwise would be inequitable. No existing recipient of invalidity benefit who is genuinely incapable of work need have any worry. The test is designed precisely to ensure that such people continue to receive this benefit. Indeed, we want to reduce as far as possible the number of claimants--particularly severely disabled claimants- -who will even have to complete the test questionnaire. I do not want to waste their time, any more than I want to waste the time of Benefits Agency officials.

So we have tried to identify the groups who we can tell a priori are clearly unable to work. None of these will undergo any review process at all in future. As I have just mentioned, they comprise : people who are receiving the highest-rate care component of disability living allowance ;

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people who are terminally ill ; and people who are suffering from any of a number of specified severe and chronic conditions. I can give the House an up-to-date list of conditions that we propose to exempt from any review at all in future. The proposed list of serious chronic, degenerative conditions is as follows : tetraplegia, paraplegia, persistent vegetative state, registererd blindness, severe learning difficulties, severe and progressive neurological or muscle- wasting diseases or disorders-- [Interruption.] Hon. Members find this humorous. [Interruption.] Of course they should be exempt. I am saying that they are exempt. I imagined that Opposition Members would want to reassure their constituents that people in these categories will not have to go through even a review procedure.

Examples of the severe and progressive neurological or muscle-wasting diseases or disorders that I have mentioned are the later stages of multiple sclerosis, Huntington's disease, Parkinson's disease and motor neurone disease. Then there are active and progressive forms of inflammatory polyarthritis, impairment of the cardio-respiratory function-- for example, as a result of a severe heart attack--dementia, dense paralysis of the upper limb, trunk and lower limb on one side of the body, such as occurs as the result of a severe stroke, and multiple effects of impairment of function of the brain and/or nervous system, such as a brain tumour. We are consulting leading disability organisations with a view to seeing whether the list can be extended.

In addition, people who are 58 or older at the time of the change and have been continuously receiving invalidity benefit since I announced these proposals on 1 December will not have to go through the new test. In total, some 850,000 people will not be bothered by a review. I hope that Opposition Members are thus reassured that I am not talking about just one or two cases.

This approach has been welcomed by the Disablement Income Group, which was particularly concerned that people on the higher rate of disability living allowance might have to undergo a second test. I believe that our approach demonstrates our determination to reassure severely ill and disabled people that they have nothing to fear from the sensible new procedures we are introducing. They certainly will not lose their benefit, and we want to cause them as little distress and bother as possible.

Mr. Frank Field (Birkenhead) : The Secretary of State is telling us that this measure will save the Exchequer a considerable amount of money. The saving will result from the fact that fewer people will be able to claim benefit. Will the right hon. Gentleman set for the Benefits Agency a target number of people who, although they qualified for benefit hitherto, will now have to be refused?

Mr. Lilley : Certainly not. If I were to do so, adjudication officers would, under the law, ignore my attempts. Adjudication officers are not allowed to work on that basis. They have to consider each person as an individual. That is what Parliament has rightly set down, and I would not try to interfere with it.

Mr. Field : The Secretary of State is telling the House, as, presumably, he tells his Treasury colleagues, that these savings will be made, but there is no guarantee that they will be made.

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Mr. Lilley : That is quite correct. We have no savings target, but it is our intention to ensure that benefit goes only to those who are entitled to it. We cannot be absolutely sure how many people will be excluded. Following a dry run to see how things might work out, we have made an estimate by means of a case study of people who have applied for the benefit. If the actual figure turns out to be lower than the estimate, we shall certainly not change the severity of the test, which will have an objective rather than a financial basis.

Mr. Field : So the Secretary of State has a target. Benefit will be targeted on those who are eligible, and those who are not eligible will have benefit withdrawn. The people working in the Benefits Agency know that there is a Chinese wall between what the Secretary of State says in the House about the potential savings and the actual delivery of those savings.

Mr. Lilley : I can give the hon. Gentleman that assurance. This is why we in the United Kingdom do not have cash-limited benefits and why, from time to time, I have to come to the House for supplementary provision for the amount by which demand has exceeded provision. We are of the opinion that benefit should be geared to the needs of the individual, and not cash-limited across the whole spectrum. It certainly will not be so cash-limited in this case.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : We have been provided with an explanatory memorandum giving a very strong indication of the savings that are expected. Can the right hon. Gentleman assure us that, if such savings are not achieved, he will not seek even further tightening of the capacity tests ?

Mr. Lilley : Of course, one is required to give the best possible estimate of the financial implications of the Bill. This we have done. However, estimates and forecasts are often out, one way or the other. None the less, I repeat that we are not in the business of basing the severity of tests on financial targets. The threshold will be set after we have involved experts to ensure that it will really measure whether people are able to work. If they are able to work, clearly they should not be receiving that benefit. If they are not able to work, clearly they should receive it. In that case, we want them to receive it. That is what it is for.

Mr. Frank Field : The heads of benefits agencies had their pay related to performance. Will the Secretary of State assure the House that the performance-related pay of the head of the Benefits Agency is not linked to delivering the savings announced in the Bill ?

Mr. Lilley : That is quite correct. [Interruption.] There is no question of there being any flexibility in applying or disapplying the benefit. It relates only to the efficiency of providing and completing forms.

Mr. Wigley : Will the Secretary of State give way ?

Mr. Lilley : No, I want to make progress, as I have already given way at least half a dozen times.

I want now to spell out the new benefits structure. The present invalidity benefit is not well focused on need. It is not means-tested or taxed. It continues five years after pension age, and it is earnings-related. We do not propose to means-test it, because that would reduce the incentive

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for employees and employers to provide additional provision for long-term sickness, and penalise those who do so.

However, it has always been our stated intention to bring invalidity benefit into tax, in the same way as all other benefits which replace earnings. My right hon. and learned Friend the Chancellor of the Exchequer stated in his Budget that new recipients will be liable to tax from April 1995 if they have sufficient other income to exceed their tax allowances.

The new incapacity benefit will also cease for those who reach state pension age after April. There will no longer be an earnings-related additional pension element for those who come on to incapacity benefit from its inception in April 1995. That additional pension is somewhat of an anomaly. It is the last remaining earnings-related element in pre-pension benefits. By removing it, we are going back to Beveridge, who believed in a system of flat rate benefits.

The additional pension is very poorly targeted, since it is highest for those who earned most and worked longest, yet they are the most likely to have private occupational sickness or early retirement schemes. Indeed, about half those who receive additional pension, which can amount to an extra £70 per week, also have some other income.

Strangest of all, even though it is calculated on the basis of notional entitlement to the state earnings-related pension scheme, it goes to those who have opted out of SERPS. That can mean that some people who have opted out of SERPS can benefit three times over : they receive additional pension paid with invalidity benefit ; they pay lower national insurance contributions ; and they may also have an occupational pension as a result of opting out.

It is wrong to continue paying such high amounts without any regard to need. The financial burden that this was storing up for the future was not anticipated at the time ; nor was the growth in occupational pensions which has happily occurred. Additional pension alone would cost about £2 billion a year by the end of the decade, even after restrictions introduced in 1992. I shall listen with interest to hear whether Opposition Front- Bench spokesmen mount a rearguard action in defence of that somewhat anomalous element in the benefit structure. Of course, existing recipients of additional pension will continue to receive it, but, unlike the rest of their benefit, it will no longer be uprated for inflation. By contrast, there is a far better case for the age-related invalidity addition. That is the extra amount given to those who become incapacitated early in their careers, and therefore have less time to build up invalidity pension rights or savings.

I propose to simplify and bring forward the dates of entitlement to that element. Those incapacitated before the age of 35 will receive an extra £12.15 a week on top of the basic benefit as long as they remain on incapacity benefit. Those incapacitated between the ages of 35 and 44 will receive a supplement of £6.10.

The only other important change I propose in the structure of the long-term benefit is to restrict the allowance for dependent adults to those who are looking after children and therefore getting the child increment as well and to dependents over 60.

The new benefit will be payable at three rates--the longer the period of sickness, the higher the benefit. I am also simplifying statutory sick pay, replacing the two existing rates with a single rate set at the present higher rate. That is implemented by the Bill. That will be worth an extra £3.70 a week for the lowest paid employees.

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Most people receive statutory sick pay for the first 28 weeks of incapacity. For those who do not, incapacity benefit will be payable at the same rate as sickness benefit now. After 28 weeks, the middle rate of incapacity benefit will be payable at the same rate as statutory sick pay. At that point, the new benefit will be taxable. After a year of incapacity, the benefit will increase once again to the same rate as basic invalidity benefit. That restructuring will provide a basic income to those who cannot work. It will continue for as long as they remain incapable of work and can be supplemented by private provision and, if necessary, with income-related benefits. Existing recipients will be protected. There will be no cash losers when the scheme is introduced.

Many people who receive incapacity benefits would prefer to work. I have four proposals to provide tangible help for them to go back to work. They can already receive a wide range of help and advice from the Employment Service in finding employment or appropriate training. People with particular needs, including those with disabilities and the long-term unemployed, are rightly given priority.

First, my right hon. Friend the Secretary of State for Employment will be reviewing the measures necessary to help people who become unemployed after being disallowed incapacity benefit to get back to work. Secondly, I propose a change which has been sought and will be welcomed by many voluntary and charitable organisations. That is the proposal to allow people on incapacity benefit to carry out up to 16 hours voluntary work a week without losing their benefit. People will continue to be able to undertake therapeutic work, which is all they are allowed to do at present. That will also be subject to a limit of 16 hours. People who work for 16 hours or more can claim disability working allowance. In addition, I announced in my uprating statement that people who receive disability working allowance will automatically qualify for free prescriptions and free dental charges when incapacity benefit is introduced.

A further change sought by disability organisations is to allow people to undergo a period of employment training between their final payment of incapacity benefit and starting a job and still qualify for disability working allowance. We intend to introduce that. The Bill brings in sensible and well thought out reforms to tackle undeniable problems in this area, while protecting the position of the sick and disabled. However, what have we heard from the Opposition on this subject? The hon. Member for Glasgow, Garscadden (Mr. Dewar) dismissed the proposals as "a petty change" to make "minor savings". By contrast, his right hon. and learned Friend the Leader of the Opposition described them as a

"continued and vicious assault upon the welfare state".-- [Official Report, 30 November 1993 ; Vol. 233, c. 941.]

He also said that they were odious and deplorable. Far be it from me to stir up discord between them, but it cannot be both a petty measure, making minor savings, and the end of civilisation and the welfare state as we know it.

Both the hon. Member for Garscadden and his right hon. and learned Friend are wrong. The proposal is a major change, but it is a major improvement. It tackles with sensitivity a major problem. However, apart from those sniping and contradictory remarks, we have heard very little from the Opposition on the whole subject. They have come up with no coherent or penetrating criticisms of our

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approach. They have offered no alternative of their own. Indeed, they seem to have given the subject no serious thought whatsoever. They just seem to have handed it to the Commission for Social Justice and dozed off.

An aggressive Opposition would oppose. A constructive Opposition would propose. However, this lethargic Opposition just repose. The test of commitment in this area is a willingness to give it serious constructive thought. Anyone who really believes in the welfare state must have the courage to take the decisions necessary to make it sustainable. Anyone who is really concerned about the sick and disabled must be prepared to tackle the abuse of benefits which were meant for them.

We believe in the welfare state. We are determined that it should survive and improve into the next century. We believe that everyone fortunate enough to be fit and able to work has a duty to help those who are incapable of working. That is why we have had the courage to undertake these reforms.

The Bill will ensure that those who are not able to work through sickness receive appropriate help through an affordable system ; that those who are able to work are helped to do so, and that resources are not diverted to those who are able to work but do not seek to do so. I commend it to the House.

5.9 pm

Mr. Donald Dewar (Glasgow, Garscadden) : The Secretary of State, at the end of his speech, tried to stir things a little. I am not sure whether his taunts were very effective, although I suspect that they worried some Conservative Members who will have to serve on the Committee, as they sounded like an invitation to lengthy and stern Committee proceedings.

Perhaps I should help the Secretary of State. I should at least admit my error in terms of the quotation that he gave from me. There is no doubt that, the more I have considered the measure, the more I have talked to people in the disability world, and the more I have considered the somewhat tardy trickle of information that has come from the Government, the less I like the measure. It has to be judged against the sweep of Government policy ; it should not be seen in isolation. It is certainly not a measure by a Minister with a tidy mind putting his house in order, and, to be fair, I do not think that the Secretary of State saw it in that light.

Everyone is conscious of the public anger about a Government who owe their office to specific promises not to raise taxes and who won the previous election not even by discreet silence about embarrassing facts but by deliberate misrepresentation.

Undoubtedly, hypocrisy and cynicism are at large, and it is not difficult to see why. The Prime Minister has been arguing that "back to basics" has nothing to do with personal morality. I must say that we are fascinated to know that we owe it all to Barbara Cartland, according to today's papers. It certainly explains quite a lot. The Secretary of State, who has remained remarkably silent--I congratulate him on his good sense--during the "back to basics" argument, has missed that lady's splendid interviews, in which she explained that she cooked the whole thing up with the Prime Minister over a cup of tea, I think at Downing street.

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In any event, if it is not personal morality, it is obviously public standards that the Prime Minister is stressing, and the public are entitled to ask what trust is to be put in an Administration whose own authority is built upon shaky and shabby foundations. I am coming to the specifics of the Bill because it fits very well into the general picture. It is not just the tax hike and the size of the tax hike--the £24 billion over three years ; the pay-now, pay-later, pay-more-and- more Government--it is also where the burden is distributed. Where the burden is distributed is worrying people in Britain as much as the size of the tax increases.

When we examine the measure as a whole--I include the taxation of incapacity benefit, the alteration in eligibility for the new benefit and the cuts in the new benefit as against invalidity benefit--we see a pretty vulnerable group by any standards--those who are struggling with the effects of long-term ill health and disability--being targeted with almost unerring accuracy by the Government. I do not think that it is a partisan point ; there will be uncomfortable consciences among Conservative Members also. Very many people do not like what they are seeing.

The charge is straightforward, and it is damaging. Eligibility for incapacity benefit is being artificially restricted. Payments for those who get over the hurdles, pass obstacles and pass the test at the end of the day are being significantly attacked. It is fair to say that it is a mean- minded measure and that it will be resented. It is right to protest that the Government's overriding priority has not been protection for the long- term sick, as has been suggested, but protection for the Treasury.

The figures are impressive. I accept that they are estimates and not targets. The Secretary of State has given an assurance, and I will not challenge it, certainly at this stage. But, according to the best estimates, as he called them, in the financial memorandum, in 1995-96, the Government will save £550 million gross, and in 1996-97, they will save £1,450 million. That point might come out quite usefully in respect of the money resolution.

The offsetting figure is £265 million in the second year. I cannot remember what it was in the first year. Anyway, the offsetting figure for income support increases is very low. I am slightly puzzled by that, as I would expect there to be quite an impact in terms of a knock-on to income support as a result of the measures. However, the gross figures are formidable. The savings--it is an important point--will escalate very substantially subsequently.

We are talking about £1,450 million in the second year. However, as many people will still be on invalidity benefit and will be coming up for review--presumably they will then have to face the test for the new incapacity benefit--it is expected that a large number of them will fall out at that stage and, presumably, there will be additional savings to be added on to that. It will be interesting to see the projection continued from 1996-97 to 2000-01, as I suspect that the figure will be very much more substantial. I underline that point, because it emphasises the importance of what is being done and the number of people who are likely to be affected by it.

There is an interesting comparison to make. I recognise that the Secretary of State will not want to comment on it. However, the right hon. Gentleman will remember that a document came into the public domain in June last year, which revealed with remarkable accuracy the discussions that were going on between the Treasury, the Prime

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Minister's office and the right hon. Gentleman's office. They had an objective test written in, they had cuts in benefit, and they also took into account the savings in taxing invalidity benefit. They came up with expected savings of £180 million in 1995- 96, £495 million in 1996-97, and £1.3 billion by the end of the century.

I ask my hon. Friends to consider that escalation of cost and to start with the very much higher base that has been projected for this package of changes. They will see that, by the end of the century, it will be a very substantial sum indeed. I hope that we will have more information about that either in Committee or in the House when we debate the money resolution. I am concerned because those expected savings included an objective test, but one that seemed to us, when we read the papers which reached us, to be very tough indeed. I do not need to remind the Minister of the well-known example of the 55-year-old builder with angina, who gets chest pains after excessive bending, heavy lifting and carrying. He is unable to walk on the flat for more than 200 yd before he has to stop because of chest pains, and he has to climb stairs slowly. That is an example of someone who, under that package, which would save a substantially smaller sum than the present package, would be excluded from invalidity benefit. That suggests to me that the Government anticipate that the impact will be very considerable. That is certainly a matter of concern.

I shall say a word or two about the so-called objective test. I do not want to have a long, convoluted argument with the Secretary of State about the view of the groups who represent people with disabilities. The other day, I had a meeting with about a dozen representative and well-known organisations, some of whom--I certainly do not want to particularise the reasons ; I am sure that the Secretary of State will recognise why--are involved in the consultative process. Not one of them rested content. Not one of them was happy with the test. Everyone who spoke at length challenged the basis of the league table on which we are now building.

Those organisations responsibly took the view that they had a duty to their members, to the people whom they represent and to their colleagues at least to take part in the consultative process and to try to bring about improvements. It would be an abuse of that responsibility--I say this seriously to the Secretary of State--if the right hon. Gentleman represented to the public that, because they are taking part, they are happy with what they are consulting about. My impression is that they would like to advise that the Secretary of State should go back to the drawing board and start again, but they know that that advice would not be heeded ; therefore, they are reduced to arguments about important points--I do not belittle them--about whether a certain measure of disability should be worth three, five or seven points on the scale. I would be the last to mock that, but it would be interesting to hear from the Minister whether there are terms of reference within which working parties are operating.

I will draw an analogy--perhaps one that is slightly far away--and I will do so quickly. There has been the most extraordinarily full consultation process on paper over trust hospital status in my area of Scotland. The trouble was that when one wrote to say that one wanted to make a representation against the concept of trust hospitals, one

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received a smart reply saying that that was not open to consultation and that it was a fait accompli. One could merely make representations about minor details.

I suspect that that is the situation that we face with the Bill. If I am wrong, I shall be glad to be reassured. If I am wrong and the Secretary of State says that he is prepared to listen to fundamental changes, I think that he will find that quite a few will be forthcoming.

Mr. Lilley : Will the hon. Gentleman reveal whether he is going to propose any fundamental changes or just sniping criticisms? If he has an alternative to the idea of an objective medical test, the Government would be interested to hear it. However, so far we have not.

Mr. Dewar : I was dealing specifically with the right hon. Gentleman's claim that there was widespread support for the test among disability groups. That is something which he must recognise is open at least--I put it charitably--to serious doubt. My view is that the approach is too mechanical, and that measuring the loss of capacity in a rather absolute sense does not tell the whole story. I am sure that the Secretary of State will accept that there is no necessary correlation between disability and ability to work. There are many examples--we all have them in our personal circle of acquaintances--of people who would score a high total in the test, but who are able fortunately to hold down demanding and responsible jobs. There are real concerns that the cut-off will be too arbitrary and hard-nosed, and that many who need help will be left outside. It is difficult to comment in detail on some of the matters that will be settled later by regulation. The Secretary of State will say that he wanted to leave the matter open, so there could be a wide expression of opinion. It is difficult for the House and it will be difficult for the Committee. We do not know how the threshold will work or what the final form of the test will be. The general feeling is that it under values pain, for example. There are general conditions that are debilitating but which are difficult to fit in the test even on a non-snapshot basis. These would be difficult to take account of even if there were one or two moving pictures over a period.

I pointed out in an intervention that representations have been made from people who are interested in back pain, and also from who are concerned with arthritis. In those cases, people are often in a position to perform tasks, perhaps because of remission or because they can do the task on a one-off basis but are unable to repeat it for a period. It will be difficult to take account of that in the general range of the test. The remission point has been made to us by those who are interested in multiple sclerosis, for example. They are entitled to be concerned about the ability of the system to take account of special cases and circumstances.

I remind the House of the June 1993 memorandum which referred to discussion about a continuous qualifying period for invalidity benefit. The memorandum said that that would have some disadvantage, particularly for those

"who suffer from progressive diseases eg multiple sclerosis." The rather unfortunate conclusion that was drawn was that the principle of continuous and long-term sickness seemed right, and therefore it was suggested that the measure go ahead. Such an approach shows a certain lack of sensitivity. There are concerns about the way in which the whole thing has been envisaged.

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There are understandable worries about how one fits mental health into the pattern. From reading the section on mental health--apart from one rather startling misprint, for which I blame no one- -I find it difficult to envisage how some of the cases of which I have some personal contact would get the help that they need. The problem is that objectivity for one man may result in rough justice for others, particularly if the priorities are out of sync. I hope that there is progress on the monitoring panel, and we await keenly to hear whether the Minister of State has anything further to say about that. However, he must not take that as an endorsement of principle.

I understand why that has been done. We know, because the Prime Minister told us, that the growth in the number of people on invalidity benefit beggars belief. It is well documented that the number has gone up substantially, from 600,000 to 1.5 million, since 1979. The Secretary of State is entitled to consider that fact, and to be concerned about it. He must not, of course, make a simplistic analysis. There is a great deal of evidence about the complexity of the reasons for that phenomenon, and there is no simple answer for it.

With all respect to the Secretary of State, there is a tendency to suggest that the increase is due to malingerers, lead-swingers and people on the make ; there was a touch of that in the right hon. Gentleman's presentation. It is not like that. The right hon. Gentleman will be probably more familiar than I with the evidence if he has been as thoroughly briefed as normal by the Department. I refer for example to the Policy Studies Institute report, of which the Secretary of State will certainly know. The report pointed out that 29 per cent. of the increase was accounted for by pensioners who were staying on invalidity benefit-- presumably for the advantages of not being liable to tax. That 29 per cent. will not be an extra charge in terms of the public purse or in terms of the benefit paid by the Department, because those people will drop immediately to their retirement pension entitlement. In any event, that matter will come to an end as a result of the provisions of the Bill. I hope that we will not be told that there has been a substantial fall in the number of people in receipt of incapacity benefit as a result of the new test. That reduction will relate to the fact that a substantial part of the "problem"- -I use that term in inverted commas, as that is the way in which it is presented--comes from pensioners who have stayed on invalidity benefit.

The PSI suggests that 16 per cent. of the increase results from something that most of us would see as a hopeful phenomenon--the increase in the number of women in the labour market. Those women are now paying and running up a significant national insurance contribution record, and they are therefore entitled to invalidity benefit in a way in which they would not have been a few years ago. It may be embarrassing for the Secretary of State, but it seems to me that there is nothing to criticise there--that is something which we should broadly welcome.

Mr. Peter Thurnham (Bolton, North-East) : The hon. Gentleman has been speaking for about a quarter of an hour. I have been trying to make note of any positive proposals he has, but I have still not heard any. Does the hon. Gentleman agree that if an objective test were applied to the Opposition, all it would show would be an

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instinctive knee-jerk reaction? That test would not show any positive mental processes at all. What are the Opposition's policies?

Mr. Dewar : The hon. Gentleman is showing advanced symptoms of knee- jerk reaction. I do not think that that was a particularly helpful intervention.

The research has not just come from the PSI. Much has been commissioned by the Department, and has been published over recent times. That research makes it clear that there are complex reasons for the rise in numbers, and it must not be assumed that it has the sinister complexion which is sometimes put on it.

I remember the evidence given by the permanent secretary at the Department of Social Security to the Public Accounts Committee in 1990. He distinctly linked the increase in numbers to demographic factors, and particularly to the rise in unemployment and the knock-on effect from the stress and anxiety of unemployment. The Secretary of State will, I have no doubt, have discussed the Department's position at that time with the permanent secretary. The Disablement Income Group, the Disability Alliance, the National Association of Citizens Advice Bureaux and a range of organisations--I will not delay the House by quoting them in detail--have looked at the Department's research and the available evidence and have reached a different conclusion from that of the Secretary of State. I rather deplored the Secretary of State's saying with a little coolness that he did not believe in commenting on individual cases. I suppose he meant naming names, but he went on to deal in a direct way with a rather odd collection of individual javelin throwers and window cleaners. I do not think that that is a sound basis on which to launch a defence of the measure. I was interested in what my hon. Friend the Member for Workington (Mr. Campbell-Savours) was challenging, and no doubt we will pursue that later.

If about 90,000 people, rising to 195,000 in the second year, will be put on the unemployment register and there is an inevitable swing from invalidity benefit to incapacity benefit, shedding more and more people over the next three, four, five or six years, it will be interesting to see the estimates for beyond the first two years. It will be interesting to see how many more than 195,000 we reach. That will also be a matter of considerable interest to the Department of Employment and worried Conservative Back Benchers.

I accept that invalidity or incapacity benefit should not be an alternative to unemployment benefit in the long term. There may be a need to tighten up the arrangements and build in safeguards. The Minister has been doing that in the past year or so with the improvement of, as he put it, the medical control arrangements. He expects to save £240 million in the next two years.

I do not quarrel with the assertion that a Department is entitled to examine safeguards. If there is genuine abuse at the edges, it should undoubtedly be stamped out. However, I hope that the Minister will persuade his colleagues to pursue the black economy--which is what he was talking about--as rigorously and enthusiastically in other areas.

I do not accept what the Minister of State said on the radio this morning. I heard a brief snatch as he talked to Scotland--an uncharacteristic role for him. He said :

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"Invalidity benefit is not being used for the purpose it was intended for in the first place."

That was an overstatement. It may lie at the heart of some of the difficulties. If one believes that statement, one may well feel that there is a case for the changes that are being proposed. However, the statement cannot be substantiated on the evidence.

The test should be not simply a test of disability but a test of capacity for work. That means that some other factors must be relevant. It is not the doctor who takes the final decision : it is the adjudication officer in the Department. With the proper training and framework, he should be in a position to hold the balance and ensure that the benefit is sensitive and helps those who most need and deserve help. I want to cut the £6 billion or so bill that is run up every year, but we should concentrate heavily not only on safeguards and eradicating abuse but on the positive action that is needed to give people a chance to get back to work. I welcome anything that the Government do in that direction.

We all know, and certainly the Minister of State knows, that barriers to employment still exist for people with a disability or an illness record. We note the remarkable and persistent failure of the Government to give fair wind to anti-discrimination legislation, which is badly wanted by those who deal with people with disabilities. The decision that employers should pay up 50 per cent. of the equipment and services required for disabled people in employment after six months is deeply resented not only by the disability groups but by the Confederation of British Industry, the Institute of Directors and employers in general. It is seen as a direct disincentive and it puts in some perspective what the Minister has said.

As the Minister knows, the switch in who bears the cost of statutory sick pay may be another disincentive to employers to hire those who have a disability or people who, because of their previous record, may be thought to be liable to ill health. I accept entirely the point that the Minister of State makes about the enthusiasm and commitment to work of people with disabilities, which may result in a good attendance record. However, I am talking about perception and there is no doubt about the widespread perception of disabled people and the barriers that I fear may be built in.

I commend to the Minister "An Evaluation Supported Employment Initiatives for Disabled People", which has been commissioned by the Department of Employment and was published in October 1993. The Minister may have studied the document. I must confess that I had not done so until recently. It says :

"Supported Employment is the process of enabling a person with a disability to secure and maintain a paid job in a regular work environment, by supplying all appropriate training support to them in the workplace".

According to that substantial piece of research, the general outcome is that

"Agency clients are finding real jobs with real wages Job retention is excellent".

That is an encouraging report, although it is important to note that the number of people involved is still small.

The conclusions of the report are :

"overall agency provision is :

fragile in terms of the scale and scope of funding it receives. a long way from meeting the extent of need in the community." If the Minister turned his attention to the lack of funding for such projects and the apparent progress that has been made on the limited and occasional scale that has been possible until now, he would encourage people to look

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more hopefully to the future and to the provision of jobs. I hope that the Minister of State will say a few words about the projects that I have described, although I recognise that they are Department of Employment led.

Has any consideration been given to some form of partial incapacity benefit? I know that many people have argued strongly for an allowance not merely for 16 hours of voluntary work but for some sort of part-time work. Many people can manage perhaps one or two days a week. The trouble at present is that as soon as they do so, they sacrifice heavily on the benefits side.

There might be a case for introducing on a phased basis, obviously with a taper, a partial incapacity benefit to encourage people to take the first steps back to work. They could mirror in their employment pattern their gradually increasing capacity for work. That could perhaps be considered positively. I am not in a position to do the technical and financial assessments, but in principle it seems a sound concept and one which the Minister ought to consider. I should be interested to know whether it has been considered ; if it has been considered and rejected, on what grounds was the decision made? I noticed that, perhaps in unconscious humour or irony, the Secretary of State said that the changes were being made to protect the benefits of those who were entitled. An awful lot of recipients will think that that is an odd way of describing what is about to happen. We can argue about the objectivity of the test. I am sure that there will be subjective opinions about it. However, there is no doubt about the substantial cuts in benefit which will come with the transfer to incapacity benefit. I say that with some diffidence, because the arrangements are intensely complex. If the new benefit was intended to be a way of simplifying the position, it failed that test almost immediately.

Many of the provisions have still to be embodied in regulations, so it is difficult to follow them. I understand that details of the age allowance will be spelt out in regulations. I am not clear to what extent they will be an improvement or otherwise on the present provision in section 34 of the 1992 Act. We shall have to consider that.

I shall illustrate my fears with two examples. They are in the same area. Let us assume that a married man with two children has qualified for incapacity benefit and is within the 28-week and 52-week period. In other words, he is receiving the upper rate of the lower level--or is it the upper level of the lower rate? The Minister will follow what I mean.

That man will receive a basic incapacity benefit of £52.50 compared with £56.10, which he would have received under invalidity benefit. He loses £3.60 a week. The adult dependency allowance was £33.70. It will now be £26.40. So he loses £7.30. He received £10.95 for each of his two children under the invalidity benefit system. Between the 28th and 52nd week he will receive no children's allowance, so he loses £21.90 a week. [Interruption.]

Perhaps the hon. Member for Lancaster (Dame E. Kellett-Bowman) will pay some attention to my example. I know that she will have a warm and compassionate heart when it comes to the individual family. Leaving aside the additional pension, which normally averages about £13.40--I accept that that is a separate argument falling into a different category--that

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