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Mr. Corbyn : Before my hon. Friend leaves the question of personal pension schemes, is he aware that such schemes are heavily subsidised by the loss of income from the national insurance fund? We do not have a free market choice--we have a subsidy for private enterprise to set up personal pension schemes, many of which have proved to be less valuable than SERPS. Many people would have been well advised to remain in SERPS and not accepted the bribes to which my hon. Friend rightly referred.

Mr. Flynn rose --


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Madam Deputy Speaker : Order. Before the hon. Gentleman continues, I suggest that he returns to the measures before the House. I do not mind passing references to other matters, but he must now return to the major themes of the measures.

Mr. Flynn : I am grateful for that, Madam Deputy Speaker. The other measures affect the uprating of various benefits. This has been an uncertain story over the years. When we want to know whether benefits can be uprated, we look at the health of the national insurance scheme. Certain benefits have not been uprated over the years. The child dependency allowance, which represented 11 per cent. of the average wage in 1979, now represents 6 per cent. That allowance is paid to the sick, the disabled, war widows and their children. It is surprising to realise how many child dependency allowances are paid, and the reason is the health of the national insurance scheme.

Something like £8 billion has been looted from the national insurance scheme to pay the bribes on personal pensions. That money has gone directly into the pension industry, which is fundamentally wasteful because of the number of people operating in the industry and the amount of money that goes in commission and administration charges. The national insurance scheme is, above all else, efficient because at the most only 5 per cent. of the money is taken out in administration charges. The amount can be as much as 50 per cent., as happened under Beveridge. That is the reason why we have the national insurance scheme, which was introduced by Lloyd George and improved by Beveridge.

Perhaps the Minister could tell us whether the new incapacity benefit will be uprated on a statutory basis every year and whether that will be part of the Government's policy. The reason given for the new incapacity benefit-- it has been trumpeted aloud--is that many people who receive benefit are malingerers or scroungers who take money from the public purse when they are not entitled to it. It does happen. There are many cases of that and no one defends them. We should start with people who take money from the public purse on a large scale and who ask for some equality of treatment.

One family in the country has five houses paid for by housing benefit out of the public purse, and the family already owns two houses. The daughter- in-law of the head of the household has announced that she is not going to do any more work. As far as I know, she is still to be paid out of the public purse, but she has not been subjected to the actively seeking employment test.

Mr. Corbyn : Why not?

Mr. Flynn : I would like an explanation for that and perhaps the Minister can tell us tonight. The members of that family receive huge amounts of money out of the public purse, but they are not treated as scroungers or as people who are living off the state. If the Minister wishes to write to that family, he will find that the address is Buckingham palace, London.

A result of the one order that we are debating is that the basic pension will be uprated. The Labour party increased the real value of the basic pension by 20 per cent. That Labour Government are often accused of many things, but we did allow the basic pension to increase by a reasonable rate over the years. We could not maintain the full promise,


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as Government Members constantly remind us, but we honoured our pledge to increase the pension by a substantial amount.

This Government have constantly pared away the basic pension with their salami cuts. I do not think that any debate on social security goes by without a Government Member repeating the familiar mantra that the Labour party could not pay the Christmas bonus for two years. That is something to which they return every time they are desperate.

Dr. Spink : I will not repeat the mantra, but will the hon. Gentleman comment on the fact that the average pensioner is now 42 per cent. better off in real terms than in 1979, when we took over the levers of power from the socialist Government? Does not that show the Government's commitment to pensioners and will the hon. Gentleman support the current uprating?

Mr. Flynn : The statement proves the gullibility of the hon. Gentleman, who used the word "average" in his question. One must remember that, for instance, the Queen Mother is a pensioner. The hon. Gentleman must understand and study the figures carefully and he should also read the writings of thinking people in the Government--there are such people. It is a controversial and dangerous thing to say, but there are Conservative Members who write with knowledge on the subject. They never take part in debates such as this, nor do they sit on Committees. During the past 24 hours, I have copied three pages of a book written by a Government Member for Members of the Committee dealing with incapacity legislation. Yes, the average income of pensioners has gone up because the rich pensioners have become immensely richer and the poor pensioners have become relatively much poorer. There has been a redistribution of poverty among pensioners.

Dr. Spink : Is it not a fact that, during the last decade or so, poor pensioners have improved their wealth? A greater number of pensioners now have refrigerators, central heating, cars, telephones, videos and television sets. Have not pensioners been increasing their wealth in real terms and their material value during the last decade?

Mr. Flynn : The hon. Gentleman must learn that, under the Conservative Government, those who survive on the basic pension plus a little income support have had their income increased, not along with earnings--the way in which the prosperity of the general population is measured--but in line with prices. In that respect, they have fallen behind every year.

I will give a small example which may not strain the hon. Gentleman too much. The Christmas bonus is a nice, simple example, with easy figures to remember. What should the £10 Christmas bonus be worth now? I have already made the point that, for two years, the Labour Government did not pay the bonus. We failed, and we regret it greatly. The Government have cheated on that bonus on every one of the past 15 years. If the bonus had been increased in line with earnings, it would be £32--three times the value it was when the Labour Government were in power.

The Government have spread what is accepted as the truth by the gullible souls among Conservative Members. There are times when we must have deep sympathy for


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Government Members. There is a story that soon there will be a line-up of single Government Members with the Chief Whip pointing a shotgun at them. They will all be taken down to the Crypt to have arranged marriages with suitable women to avoid scandal. That seems to be going a little far, and it is a harsh price to pay for acting as accomplices to the Government's various crimes during the past few years. However, it is their choice, and there must be a time when all the scandals will come to an end.

So shall I come to end. The whole movement in social security benefits during the past 15 years has been one of deception by the Government. There has been a continuous period of cuts and the Government have tried to exaggerate a demographic change which will happen in the next century, but to nothing like the extent that they suggest.

My final point is that there was once a Committee which said that this country could not sustain the benefits system, or continue to pay pensions as it has done. It said that it was crucial that the age of retirement be increased to 63 for women and 68 for men. That was the Phillips committee, which reported in 1954. Its view then was that we could not afford the benefit system. It was as wrong as the view put forward by the Government now that we cannot afford a benefit system in the future. We can, and the will is there. A small amount of growth will allow us to pay for the benefit system, not dismantle it and hand the population over to the greed and waste of the insurance companies.

7.57 pm

Mr. Keith Bradley (Manchester, Withington) : In preparing for tonight's speech, I, like my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) re-read last year's debate. It was interesting that many of the issues of concern that have been raised tonight--as opposed to the general uprating principle with which the Government have complied--have flowed through the past 12 months until today. We are still waiting for the Government to respond effectively to the concerns and the gaps in policy which clearly still remain. In my winding-up speech last year, I said that the debate had been wide-ranging and thoughtful. Tonight, we have had relatively few speakers but quality has made up for lack of quantity. I welcome the speeches by my hon. Friends the Members for Newport, West (Mr. Flynn) and Strathkelvin and Bearsden (Mr. Galbraith). I welcome, as always, the thought-provoking speech by my hon. Friend the Member for Islington, North (Mr. Corbyn). I cannot promise that all his views will necessarily become party policy, but they will certainly be included in our continuing review and debate during the coming months.

I welcome the speech of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who raised some crucial points that were on record from last year's debate. The points are by no means diminished by that, and they need reinforcing year on year. I particularly welcome his comments about people in residential homes within the preserved rights category. That was raised in the debate last year, and I recommend to the hon. Gentleman the excellent report by the Local Government Information Unit on that group.

That problem clearly has not gone away. Thousands of cases were brought to our attention. The hon. Gentleman says that only a few have been brought to him recently, but I assure him that, throughout Britain, a worried and large group of people want to ensure that their homes will


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remain their homes and that income support will be paid because their savings have rapidly diminished over the years.

The hon. Member for Roxburgh and Berwickshire also mentioned carers and students. I link with that point the income of 16 and 17-year-olds, who are a forgotten group. Although the Government claim that all 16 and 17-year- olds are guaranteed some sort of training and, therefore, some income, by the Government's own admission, that is not the case. Significant numbers of 16 and 17-year-olds have no income and the Government have made no provision for them to have any income.

Although I welcomed the speech made by the hon. Member for Roxburgh and Berwickshire, I was disappointed with his disingenuous attack on the Labour party for its tactics in the House. It is never my intention to fight like with like and I would never wish to remind the hon. Gentleman that the Liberal Democrats have failed to put any Member on the Standing Committee that is considering the Social Security (Incapacity for Work) Bill to fight that legislation with the Labour party. I would not take that course because I do not believe in disingenuous attacks, but the hon. Gentleman should be more careful about the way in which he approaches such matters with regard to the Labour party.

It has been an interesting and wide-ranging debate. It was relevant that the Secretary of State began by trumpeting and triumphantly stating the claims that he has made about the compensation package for VAT on fuel. The context of the whole debate is clearly the Government's economic problems-- the £50 billion public sector borrowing requirement. The Government had to impose VAT on fuel. It has to be remembered that the compensation package was introduced only because there was a massive public outcry against the imposition of VAT on fuel. It was not something which the Government intended to introduce as a natural consequence of their policy.

The compensation package bears a little closer scrutiny, as the hon. Member for Roxburgh and Berwickshire said. It is deeply flawed. The hon. Gentleman rightly mentioned the 2.7 million children who rely on income support. That group will be particularly sold short in this respect. As we know, the compensation package contains two main elements--advance compensation for the average rise in fuel costs reflected in the retail prices index and some recognition of the extra cost faced by pensioners and people with a disability. For a number of reasons, the package falls far short of adequately protecting people who live in or close to poverty. It is not a waste of the time of the House to identify the losers in the compensation arrangements. For example, the package provides no recognition of the particularly high costs of fuel for people living on low incomes or in poverty.

A study by the Child Poverty Action Group based on calculations from the family expenditure survey in 1992 showed that the poorest 20 per cent. of people spent 11 per cent. of their weekly budget on fuel. That is £10.23 on average a week. In comparison, the top 20 per cent. of earners spent only 3 per cent. of their weekly budget, or £16.28, on fuel. The average expenditure on fuel is 5 per cent. of the weekly budget or £13.02 a week. The regressive nature of VAT on fuel is clearly identified by the disproportionate burden of fuel costs on people on low incomes.


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The deeply flawed compensation package does not recognise that families with children have extra heating costs which result from both the heating needs of children and the fact that families with children are likely to spend more time at home. Most important, the compensation package provides no help for people on unemployment benefit. It provides no help to people on low incomes but just above the benefit level. They are on very low incomes, but they receive no compensation under the schemes.

No help whatever is provided for people who fall through the social security net and do not claim their entitlement to social security benefit. It can be argued that they should claim their entitlement, but the complexity of the scheme and people's changing circumstances mean that many people who are entitled to means-tested benefits do not claim. So, yet again, people lose out under the compensation package.

Let us examine what the comparison package means for families with children on income support. It amounts to merely 40p for a couple with one child under 11 per week and only 5p for each extra child. It amounts to only 30p a week for a lone parent with a child under 11 and only 5p for each extra child. Although the Secretary of State is prepared triumphantly to announce the package, those figures show that considerable groups of people will be particularly disadvantaged and will suffer as a consequence of the imposition of VAT on fuel and the compensation arrangements.

It is also worth examining the way in which the compensation package will affect disabled people. It is worth noting--the Secretary of State raised the point again today--that, in his review of the social security budget, one of the groups that the Secretary of State particularly targeted for savings was people with disabilities, in the widest context. He heralded that intention in his Mais lecture and it has been translated into policy initiatives that the Government have taken.

Sticking for the moment to VAT on fuel, it is worth noting that fuel is the most common item of expenditure for disabled people. They use it for heating, for hot water for daily baths and laundry. They use electricity for such items as recharging electric wheelchairs and powering stair lifts put into their homes to help them.

Figures for the average weekly increases in the fuel bills of people with disabilities have been produced by the Disability Alliance. I thank it for its help. The figures show that the extra charges amount to £1.30, rising to £2.80 when the full rate of VAT is payable. That is more than twice as much as the compensatory increases in some benefits. So disabled people, who need to use fuel extensively, will be particularly disadvantaged by the compensation package.

Dr. Spink : Does the hon. Gentleman accept that spending on disability benefits has trebled since 1979? How much more would he spend?

Mr. Bradley : I welcome the hon. Gentleman's assiduous consideration of the debate. If he will allow me to come to the wider point about disability benefits when I deal briefly with incapacity benefit, he will recognise our view on the way in which the Government are cutting the money available for people with disabilities. If he will bear with me, I shall happily give way to him later on that point.


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Compensation through the benefits system for the imposition of VAT on fuel will fail many disabled people. Some benefits for disabled people have not been increased. There is no compensatory increase in the disability living allowance. Although many people who receive DLA will receive some compensation through other benefits, those who do not receive other benefits will lose out altogether.

That group includes disabled adults with often small amounts of income from other sources such as occupational pensions. It also includes parents of disabled children who receive disability living allowance but no other benefit. One has to question why that particular group of people has been missed out of the compensation package.

There is no compensatory increase in the standard rate of statutory sick pay. Some benefits have been increased by less than the promised 50p for a single person and 70p for a couple. For example, a single carer receiving invalid care allowance will receive only 20p--35p for a couple--yet invalid care allowance amounts to only 60 per cent. of contributory benefits. Furthermore, there is no evidence that carers' fuel bills are less than those of households receiving other benefits.

The Government seem to have chosen to ignore that group when introducing the VAT compensation scheme and I urge the

Under-Secretary of State to reconsider them and find out whether they can be helped, because they will suffer especially from the imposition of VAT on fuel.

While we are talking about disabled people, it is interesting to note that, because of the imposition of VAT on fuel and the compensation package, three benefits--severe disablement allowance, invalid care allowance and severe disability premium--which were paid at the same rate, will now receive different treatment and be paid at different rates. For example, severe disablement allowance has been uprated by VAT compensation of 50p, so the new rate will be £34.80 per week ; invalid care allowance has been uprated by VAT compensation of 20p to £34.50 per week ; but there is no compensatory increase for severe disability premium, so the new amount is £34.30. There will therefore be three different rates of payment for benefits that were paid at the same rate. It would also be sensible if the Under-Secretary of State studied the compensation package to ensure that such weekly payments are treated in exactly the same way.

The Government's attempt to reduce social security benefits in the first round of the review of the social security budget has focused on the cost of people on invalidity benefit. The hon. Member for Castle Point (Dr. Spink) was right to say that the cost of invalidity benefit has increased considerably.

I shall not restate the arguments about the Government's previous decisions --notably before the 1987 election, when every Department was asked to find any mechanism possible to take people off the unemployment register. The social security team therefore pushed as many people as possible on to invalidity benefit, which reduced unemployment significantly so that the Government could go into that election saying that unemployment was falling. The then chairman of the Conservative party identified that factor as the crucial indicator to the public of the Tory Administration's competence. The Government set in train the consequences that they must deal with now. I am not denying that some people are in receipt of invalidity benefit who should not be. We have never


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questioned that fact. We question strongly, however, whether the new medical test is the right mechanism to assess more sensitively those who are genuinely unable to work. During the coming weeks, we shall argue our case strongly in the Standing Committee of the Social Security (Incapacity for Work) Bill. We strongly disagree with the Government about those disabled people who get through the hoop of the medical test, convince the Government that they are incapable of work but then hit the double whammy--the amount of money available to them is reduced.

If the Government are saying that invalidity benefit payments were reasonable, but that too many people were claiming, how can they say--after reducing the number of people eligible--that the benefit is costing too much money?

Two groups of people in identical circumstances and with identical disabilities can pass the incapacity test, but receive different benefits. As I said, I shall be happy to give way to the hon. Member for Castle Point if he can justify the fact that, under the present invalidity benefit scheme, one receives the full rate of payment after six months, but under the new scheme one will not do so until after 12 months ; that under the old scheme, one received additions for adult and child dependants, but under the new scheme, those are severely curtailed ; and that under the old scheme, one was entitled to additional pension, but under the new scheme, there is no additional pension. I shall give way to him if he can justify the fact that, although the numbers eligible have been reduced by the new medical test, the amount of money that they receive is also being reduced.

I think that we can understand hon. Members' failure to understand the Government's legislation. They are reducing the number of people eligible for benefit and reducing the amount paid to one of the most vulnerable groups of people. For many months and years--probably for life--such people will have to rely on the new incapacity benefit, but they will receive less money than they were previously entitled to on invalidity benefit. That represents a straight political choice and the Government are using disabled people as a scapegoat for their economic mismanagement and public sector problems.

As my hon. Friend the Member for Garscadden said so effectively, the consequence of that policy will be to reverse the trend that was set in motion before the 1987 election and to push people claiming disability benefit--the new incapacity benefit--back on to unemployment benefit. They have reversed the trend that was used to manipulate the electorate before that election. By the Government's own admission, during the next two years 200,000 of those people will claim unemployment benefit, at a tremendous cost to the social security budget.

Those people will probably fail the medical test by a small margin, but, because of changes to statutory sick pay--the burden is being placed on businesses, which will recruit more carefully--they are less likely to gain employment and more likely to become long-term unemployed. That trend is increasing, as we have seen from the unemployment figures, and Government policies will add to the increase.

I have spent a long time on the subject of disability, but disabled people are often a forgotten group in society and this sort of debate allows us to range widely over their needs. The Minister for Social Security and Disabled People said, quite honestly and openly--I commend him for it--that the number of people receiving disability working allowance had been a disappointment.


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From April 1995, people receiving disability working allowance will be eligible for help with their health charges. On 1 December, the Secretary of State said that people on that allowance "will automatically qualify" for such help. However, I understand that those people will have to undergo a savings test and only those with capital of less than £8,000 will qualify for help with the charges. Please could the Under-Secretary of State clarify whether all of them will qualify automatically--as the Secretary of State said--or whether the savings test will be applied and only those who pass it will qualify? Such clarification would be very welcome.

The independent living fund was another significant area of debate last year. One year has gone by and it is clear that many organisations for the disabled and people with disabilities are outraged at the failure of the new fund to meet effectively their real needs. Very few people have received a grant under the scheme and although the Minister with responsibility for the disabled said that the roll-over costs significantly outstrip the new fund's budget, all that proves is how inadequate the fund is.

When the extension fund and the new independent living fund were debated in the House, we highlighted the problem of administration and the fact that money comes from social services up to a cut-off point, at which it is topped up from the fund. That is causing administrative chaos. I urge the Government to look at that again, and particularly at the independent living fund so that it can make direct cash payments to disabled people, in conjunction with care packages drawn up by social services offices, to ensure that real care is provided, and the money can be used effectively, sensitively and imaginatively by recipients of the fund.

The situation is becoming intolerable. In many ways, the fund has no relevance to the way in which the National Health Service and Community Care Act 1990 is being implemented. We urge the Government to think again about the way that they have excluded people over 65, but particularly terminally ill people, from receiving money from the fund.

Under the old system, 34 per cent. of the case load of the independent living fund were people over 65. They have benefited greatly from its provisions. It is outrageous to exclude them and terminally ill people. That is quite unacceptable. I hope that the Government will reconsider the workings, operation and funding of the independent living fund.

It is always relevant to debate the social fund at this time of year, because it is absolutely clear and has been stated year on year since it has been in operation that people are treated differently depending on what day of the year they go through the revolving door to seek help from the fund. If one goes through it on 1 April, one stands some chance of receiving a grant or loan.

At this time of year, the situation is chaotic, and the people--in identical circumstances to those who went through at the beginning of the financial year--are told that there is no opportunity to receive help from the fund. I back up those statements with information that I received from various offices around the country. In Greater Manchester, for example, a note went out from the social fund officers saying :

"Please find enclosed a copy of your revised guidance on priorities for Social Fund Loans. You will note that, generally speaking, we are only in a position to consider payment for high priority items which avoid a risk to health. This situation is likely


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to continue to the end of this financial year unless more funds are forthcoming. Otherwise we would be heading for a large overspend." Revising the guideline is common in the operation of the social fund. As the year goes on, the money for care grants or loans is prioritised and continually limited. In Greater Manchester at the moment, one has not only to be in a high priority--many categories of people are-- but face a risk to one's health. It is almost impossible to get a crucial element, the replacement of the old supplementary payments, which were for essential items such as clothing and household goods to enable people to set up in new home and maintain a certain standard. That is no longer on the agenda. One must have a risk to health, but nothing else.

I have similar statements from other parts of the country. A note was sent to me from the Benefits Agency in Sheffield East. It says : "Following legal advice",

it had to review the situation on the social fund,

"but the criteria for which budgeting loans were to be awarded was as a result restricted to situations where there would be severe hardship or serious risk to the health and safety".

Again, that limits the priority category to a particular group. I received a memo from the East Nottinghamshire office of the agency--it could have come from anywhere in the country. It stated quite clearly that only high- priority cases would be considered, and at a later stage those high- priority cases were limited to certain groups within the high-priority category. The Government recognised that there were high priorities, but then limited them as the year went by. That guidance on how social fund officers should operate the scheme is up to date.

The Government have said loudly and clearly that they do not have the budget to meet the needs of people who may be in identical circumstances to those who previously received help from the social fund. I urge the Government to look at the funding through the social fund. They triumphantly announced that people would receive help to top up their meagre benefits through income support. It must be stressed that they are loans and that people must repay them. People are being given only a limited opportunity--an opportunity they may resist--to take out a loan, which is then taken out of their benefits to repay. Even that system is falling apart at the seams as we enter the last quarter of the financial year.

One or two other points are worth raising. We welcome any attempt by the Government to look at child care costs and the way that child care can be an essential element in trying to enable mothers, particularly, to get back into the workplace. The announcement in the Budget of the disregard in family credit for that purpose is obviously to be welcomed.

I press the Under-Secretary on exactly how much help will be given. On the cost of child care, the £40 disregard and the £28 net element is clearly not enough on a day-to-day basis. They may afford the opportunity for post-school help and perhaps offer some help on a day a week. But if one looks at the real child care costs, anywhere in the country, it is much more realistic to talk about £80, £90 or £100 a week to look after children.


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Although we welcome the step in the right direction, I urge the Government to look at the reality of their proposals to see whether more can be given.

Lowest-income families already receive maximum family credit. As the arrangements on child care are based on a disregard, if one is already on maximum family credit one clearly cannot receive any more. There is no help with child care costs for the lowest-income families receiving family credit. It seems rather perverse that one does not help those in greatest need.

As the scale increases, only a proportion of the £28 will be available. Will the Under-Secretary of State tell us how many people will receive no help? How many people who receive £28 will receive only £10? How many will receive £20? how many will receive the full £28? That will be an interesting spread within family credit. I hope that he is able to gain that information before he replies. If not, I hope that he will write to me with that information as soon as possible.

We have had a good deal of discussion on statutory sick pay. We have dealt with the amendment from the other place. My hon. Friend the Member for Garscadden asked how it will be dealt with when the Government have completed their consultation process. We raised that when we considered Lords amendments, but we continually seek reassurance on that point because the Government tend to operate by regulation and instrument rather than by primary legislation. We do not want the order to slip through without proper scrutiny and debate.

Dr. Spink : Will the hon. Gentleman give way?

Mr. Bradley : The hon. Gentleman failed to address the issue that I presented to him, so I am reluctant to give way, but since he has sat through my speech quietly, I will be generous.

Dr. Spink : I am grateful to the hon. Gentleman. We all want to help truly vulnerable people as much as we can and the hon. Gentleman has presented us with a wish list of many cost enhancements. Has he costed that list? Does he have authority from his colleagues to propose that additional spending?

Mr. Bradley : I do not believe that I did present a wish list ; I was commenting on Government policy. I do not need to cost the social fund, for example, because the Government say that it is self-financing, because it is based on a loan system. The money is paid back.

Dr. Spink : What about child care?

Mr. Bradley : I have cited the social fund as an example. The Government--not I--say that it is self-financing. I do not have to justify asking the Government to put more money into a fund that they claim to be self-financing. That seems reasonable to me. We do not have to make the obvious point about trying desperately not to put more people onto unemployment benefit, which costs an average £9,000 a year in tax and lost benefit per person on the unemployment register. We would try to set the economic conditions that would reduce unemployment and so free resources to fund other essential care and benefit packages.

This has been a worthwhile and interesting debate. We welcome any increases in benefit levels, however meagre they may be. We have expressed our doubts about some benefits that have fallen through the net this time and about


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the way in which the VAT compensation package has been introduced. We are concerned that some benefits have not been compensated for in the same way as others, which means that certain benefits are no longer in kilter with others. I hope that the Minister can give us some assurance about those benefits.

When we re-run the debate in 12 months' time, I hope that we will not have to raise, yet again, the incredibly important matters of the independent living fund, the social fund, carers, preserved income support for those in residential homes and all those other categories of people who seem to be forgotten continually by the Government. 8.41 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. William Hague) : This has been an interesting debate, as the hon. Member for Manchester, Withington (Mr. Bradley) has pointed out. It has covered a wide range of subjects, some of them even related to the orders before the House, which is always a great consolation. The hon. Member for Glasgow, Garscadden (Mr. Dewar) opened the debate for the Opposition by saying that the speech by my right hon. Friend the Secretary of State contained few surprises. I had intended to intervene then to say that there would be no surprises in the speech by the hon. Gentleman, but, as it turned out, it did contain one or two surprises.

One of the surprises was that the hon. Member for Garscadden was unable to be very specific in response to questions from my hon. Friends about what Opposition policy might be on certain matters. The hon. Gentleman was asked by my hon. Friend the Member for Colchester, North (Mr. Jenkin) whether the level of social security spending was enough. The answer was rather like a version of, "We wouldn't have started from here." The hon. Gentleman suggested that economic circumstances would be magically different in the future. He suggested that the economic cycle would be abolished and that there would not be unemployment under a Labour Government, so spending priorities could be different. That was not a credible answer. The hon. Member for Garscadden suggested that a great deal of money was being spent in the wrong way, but he did not go on to say where the sweeping reductions, which were presumably implied by that statement, might be made.

When my right hon. Friend asked the hon. Gentleman about the schemes for pensions proposed by the then Leader of the Opposition, the right hon. Member for Islwyn (Mr. Kinnock), it was surprising that the hon. Gentleman did not feel that he should rule out the means-testing of the pension, or whatever it was that his right hon. Friend proposed.

Mr. Dewar : The Minister has made my point by saying, "or whatever it was". The proposition that he is putting to me is that I should have ruled out my right hon. Friend's suggestion, but I made it clear that I had not had the opportunity to study it. The proposal had been verbally presented on a television programme which I had not seen. I suspect that the Minister is in the same position because he said that I should have ruled out that proposal "whatever it was". That seems an odd position to take up.


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Mr. Hague : The right hon. Member for Islwyn (Mr. Kinnock) clearly suggested that there would be some adjustment to the pension as people's incomes rose. To me that is equivalent to means testing, whatever the detail behind the right hon. Gentleman's proposition. We will await the time when the hon. Member for Garscadden receives advice from the Commission for Social Justice in order to clarify that matter.

The hon. Gentleman asked about the guaranteed minimum pension and what discussions may have taken place. The problem of the complexity of that pension and the way in which it interacts with SERPS was raised by the Goode committee as one of the areas in which the Government might seek to simplify arrangements for occupational pension schemes. The Government felt it right to issue a series of consultation papers to take forward discussions on the

recommendations of the Goode report.

The Government issued one of their consultation papers about the future of the guaranteed minimum pension, which raised the question of whether there should be an alternative test of how to contract out of SERPS. That alternative test would have to offer security for the rights of occupational pension scheme members. That is what the discussions were about. The Government are now analysing the results of that consultation exercise. If we have any proposals to bring forward as a result, we will do so in due course.

The hon. Member for Garscadden also asked about the guaranteed minimum pension and whether there was any equivalent in personal pensions. There is an equivalent, in that the contracted-out rebate is paid as a minimum contributions into a personal pension. It is then used when a personal pension is turned into an annuity with similar rights to a guaranteed minimum pension.

Mr. Dewar : The Minister is perhaps flattering me, because I said that there was no comparable mechanism in the private pensions sector. I also went on to ask him whether he was satisfied with the present level of regulation, given the problems that have emerged in recent times. Could he address that question?

Mr. Hague : There is an equivalent in that the minimum contributions are paid into personal pensions and personal pensions are turned into an annuity with similar rights in terms of inflation increases up to a certain level, widows' benefits and so on as a guaranteed minimum pension.

The question of regulation is a matter for my right hon. and learned Friend at the Treasury. The Securities and Investments Board is currently reviewing what has happened and the alleged mis-selling of personal pensions. It will produce its findings and thoughts on the matter later in the year.

The hon. Member for Garscadden asked what is happening to statutory sick pay. It is a pity that the hon. Gentleman does not appear to be listening to my answers, but no doubt the hon. Member for Withington will write it all down for him. The Government will consult industry, unions and other interested bodies now that the amendment on it, which was passed in the other place, has been agreed by the House. The hon. Member referred to the alternative of a two-week period rather than a four-week period for the reimbursement of small employers as costing "only £10 million". We occasionally get such references from the Opposition about things that will "only" cost


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£10 million. The trouble with tens of millions of pounds is that they add up to rather a lot. If the hon. Gentleman thought it through, I am not sure whether he would consider that alternative an appropriate use of an additional £10 million, especially when small employers and employers in general stand to gain from the changes to statutory sick pay, when the reductions in national insurance contributions are taken into account.

Small employers in particular stand to gain because they tend to have lower sickness rates and they tend to employ many people for whom they are paying the lower rates of employers' national insurance contributions.


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