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House of Commons

Monday 28 February 1994

The House met at half-past Two o'clock

PRAYERS

[ Madam Speaker-- -- in the Chair ]

CONTINGENCIES FUND 1992-93 --

Ordered ,

That there be laid before this House Accounts of the Contingencies Fund, 1992-93, showing :

(1) The Receipts and Payments in connection with the Fund in the year ended 31st March 1993.

(2) The Distribution of the Capital of the Fund at the commencement and close of the year ; with the Report of the Comptroller and Auditor General thereon.--[ Mr. Arbuthnot. ]

Oral Answers to Questions

SOCIAL SECURITY --

Maxwell Pensioners --

1. Mr. Dickens : To ask the Secretary of State for Social Security what steps the Government have taken to help Maxwell pensioners.

The Secretary of State for Social Security (Mr. Peter Lilley) : We have succeeded in ensuring that all Maxwell pensioners have continued to receive their pensions in full while asset recovery work has progressed.

Mr. Dickens : Will my right hon. Friend congratulate the liquidators and the Mirror Group trustees for recovering £84 million-worth of assets ? That is a marvellous help to all the people in their later years who could do without worry, stress and tension. It is a magnificent example of the way in which the Government have worked closely with those two parties to ensure that--as was said in an earlier statement, not what the Minister has just told the House--all existing Maxwell pensioners should now receive their total benefit. That is marvellous.

Madam Speaker : Order. This is Question Time, not statement time.

Mr. Lilley : I entirely endorse the point that my hon. Friend made and will certainly convey his congratulations. We are fully behind Sir Peter Webster, who is working on behalf of the Maxwell pensioners' trust to seek a global settlement of all outstanding issues. That will be very much in the interests of pensioners and we hope that he will succeed.

Mr. Ingram : On 7 June last year, the Under-Secretary of State, in reply to my hon. Friend the Member for Leeds, South (Mr. Gunnell), told the House :


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"The long-term gap between the Maxwell pension scheme's assets and liabilities"--[ Official Report , 7 June 1993 ; Vol. 226, c. 9.]

Madam Speaker : Order. The hon. Gentleman perhaps did not hear the statement that I made last Thursday. I do not want statements at the Dispatch Box or from the Back Benches. It is Question Time and, therefore, I am seeking brisk questions and brisk answers.

Mr. Ingram : I apologise. Does the Secretary of State agree that last June it was calculated that the gap between assets and liabilities would be less than £100 million ? In the light of recent out-of-court statements to the Maxwell pensioners' trust fund, is the Secretary of State now standing by that assessment or has it been readjusted ? In the light of the answer that he gave the hon. Member for Littleborough and Saddleworth (Mr. Dickens) is he now saying that all the thousands of Maxwell pensioners will receive their pensions in full as a result of the recent settlements ?

Mr. Lilley : I understand the important point that the hon. Member makes. Of course a lot of work remains to be done, especially if a global settlement is to be achieved, or even more if it is not achieved. I understand that the scheme trustees are cautiously optimistic--that can be no more than an assessment on their part--that there is a reasonable chance that all their long-term obligations will ultimately be met if the present progress continues.

Family Credit --

2. Mr. Hargreaves : To ask the Secretary of State for Social Security what recent modifications he has made to family credit.

12. Dr. Spink : To ask the Secretary of State for Social Security what is the number of families receiving family credit ; and how many families were receiving a family income supplement in 1979.

14. Mrs. Roe : To ask the Secretary of State for Social Security how many awards of family credit have been made since the introduction of the scheme.

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt) : Three for the price of one, for the sake of brevity

About £4.5 million of awards of family credit have now been made. In September 1993, 515,000 families were receiving family credit, compared with only 78,000 receiving family income supplement in March 1979. In April, we shall streamline the claims process for the self-employed, which will help 70,000 families, and extend the fast-track claims service to those people just starting self-employed work. From October, we are introducing a child care disregard in the in-work benefits, which will make 150,000 working families better off.

Mr. Hargreaves : Can my hon. Friend's reply be interpreted as meaning that we are working, we have worked and we shall continue to work to ensure that those in greatest need receive that benefit ?

Mr. Burt : Yes, and the benefit will continue to do its job very well.


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Dr. Spink : Will my hon. Friend confirm that the £40 child care disregard in family credit that is to be introduced in October will help 50,000 families back into work and will help 100,000 families who are already in work ?

Mr. Burt : Yes, the provision for the child care disregard has been widely welcomed and will indeed help the number of families that my hon. Friend mentioned.

Mrs. Roe : Will my hon. Friend confirm that the family credit case load is more than 500,000--the largest ever--and that the number of awards has increased each year since 1988 ? Does not that confirm the success of the Government's policy of introducing family credit ?

Mr. Burt : Yes, the Government's success in introducing that policy was welcomed only last week in a report from the Policy Studies Institute, which revealed that family credit was a benefit. The recent changes that we have announced in relation to child care will be popular and will help low- income families still further.

Ms Eagle : How can the Minister justify subsidising very low-paying, exploitative employers by using a benefit in that way ? Should not we be trying to increase the wages paid by such employers, rather than subsidising them with taxpayers' money ?

Mr. Burt : The biggest determinant of family credit is the age and number of children, not any variant in the wages paid.

Invalidity Benefit --

3. Mr. Campbell-Savours : To ask the Secretary of State for Social Security what representations he has received as to the impact of reductions of invalidity benefit on family incomes.

The Minister for Social Security and Disabled People (Mr. Nicholas Scott) : We have received a number of representations about our proposals to replace sickness and invalidity benefits with incapacity benefit from April 1995.

Mr. Campbell-Savours : Is not it true that, by the end of next year, the Government will be on course for saving £6 million in west Cumberland alone by the switch from invalidity benefit to incapacity benefit ? What measure of the effect on the economy has been made by the Government ?

Mr. Scott : In essence, the new arrangements are designed to produce a system to meet the needs of those who are incapable of work because of disability or long-term sickness and that is affordable and sensible, and sensitive to the needs of those who really need help.

Mr. Brandreth : Does my right hon. Friend share the frustration of a constituent of mine who is an invalid on invalidity benefit and who read in The Daily Telegraph today about someone who is also on invalidity benefit but is playing a game of squash three times a week and about someone else on invalidity benefit who plays two rounds of golf a week ? Does my right hon. Friend share my concern that the legitimate use of invalidity benefit is still being abused and needs to be examined and that we need not be frightened to acknowledge that fact ?

Mr. Scott : I am certain that since invalidity benefit was introduced, the conditions for being able to get it have been


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altered and made increasingly flexible. I believe that, with incapacity benefit, we are restoring the original intention of invalidity benefit. We are ensuring that general practitioners are not put under pressure to passport people on to this benefit and that there is an objective medical test of those who should receive it.

Dr. Godman : It is the Government, in the shape of the Department of Social Security, who are abusing the invalidity benefit system. Will the Department reconsider its decision not to pay invalidity benefit to women aged between 60 and 65 ? Only this morning, I received a letter from a woman who will lose almost £60 because of this harsh, rotten decision. Will the Department reconsider ?

Mr. Scott : If the hon. Gentleman will write to me about the particular case he will, as ever, receive an appropriate answer.

Pensioner Incomes --

5. Mr. Roger Evans : To ask the Secretary of State for Social Security what proportion of pensioners had incomes in the lowest fifth of the national income distribution in (a) 1979 and (b) the last year for which figures are available.

17. Mr. Legg : To ask the Secretary of State for Social Security what proportion of pensioners had incomes in the lowest fifth of the national income distribution in 1979 and in the last year for which figures are available.

Mr. Lilley : In 1979, it was estimated that half of all pensioners had incomes in the lowest fifth of the national income distribution. By 1990-91, the proportion had fallen to less than a third.

Mr. Evans : Do not those welcome statistics show a combination of the effects of low inflation in the 1980s, the spread of occupational pension schemes and the Government's direct action in favour of pensioners in keeping up benefit levels ?

Mr. Lilley : My hon. Friend is absolutely right. In 1979, only 77 per cent. of pensioners had additional income on top of state benefits but, in the most recent year for which figures are available, the proportion had risen to 85 per cent.

Mr. Frank Field : Will the Secretary of State now tell the House which poor people occupy the position at the bottom of the income scale once occupied by pensioners ?

Mr. Lilley : By and large, of course, the well-being of the population as a whole has increased. However, it is true that pensioners have done disproportionately well. Clearly, there has been a rise in the number of unemployed people, who therefore form a larger proportion of those on low income.

Maxwell Pensions Unit --

6. Mr. Lidington : To ask the Secretary of State for Social Security if he will make a further statement on the work of his Department's Maxwell pensions unit.

The Parliamentary Under-Secretary of State for Social Security (Mr. William Hague) : The Maxwell pensions unit continues to work in a variety of ways to


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encourage an early resolution to the Maxwell pensions dispute. A speedy settlement must be in everyone's best interests, especially those of the pensioners.

Mr. Lidington : Although I welcome the recent out-of-court settlements, what practical difference are they likely to make to the thousands of pensioners in, for example, staff and works schemes, who are still desperately anxious about their future ?

Mr. Hague : The drip-feed funding from the Maxwell pensioners trust will last longer if some of the schemes are able to reduce their calls on the trust. To date, 60 per cent. of trust funding has gone to the Maxwell Communication Corporation works scheme. I hope that, in the light of the settlements, the scheme's trustees will be able to make a substantial reduction in their calls on the trust.

Social Fund --

7. Mrs. Roche : To ask the Secretary of State for Social Security what plans he has to review the position regarding grants and loans from the social fund.

Mr. Scott : Our routine monitoring arrangements for the discretionary social fund already allow us to keep its operation under regular scrutiny.

Mrs. Roche : Will the Minister consider extending the provision for people such as two of my constituents ? After many months of unemployment, they have recently managed to obtain casual work, but they cannot afford the fare to travel across London to take up that employment, and they have found that a loan from the social fund is not available.

Mr. Scott : The social fund was not introduced to provide help with travel to work. The Department of Employment has a variety of schemes, including schemes to pay for travel for those who are being interviewed for jobs. It is right that once people are in work--unless they are entitled to family credit in certain circumstances--the responsibility for travel is theirs.

Mr. Willetts : Can my right hon. Friend confirm that every social fund loan repaid is money that is then available to help someone else on income support ?

Mr. Scott : It has been a feature of the success of the social fund that the resources can be recycled to help many more people than were helped under any previous scheme.

Mr. Bradley : Does the Minister not realise that his monitoring has led to a crisis in social fund loans ? Department of Social Security offices throughout the country report that they can give loans only to people who are in the highest risk category. When will the Minister put more money into the system so that people can be treated fairly, whether they walk through the door at the beginning of the financial year or at the end of it ?

Mr. Scott : There has been a substantial increase in the social fund --by 15 per cent. over the past 12 months and by 50 per cent. since April 1991. We have responded to the increased needs of the social fund over that period.


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Nursing Homes (Top-up Payments) --

8. Mr. William O'Brien : To ask the Secretary of State for Social Security what representations he has received from voluntary organisations with regard to top-up payments for old people living in private nursing homes ; and if he will make a statement.

Mr. Burt : Income support is now given to 281,000 people in residential care and nursing homes at a cost of £2.5 billion, compared with support for just 12,000 at a cost of £10 million in 1979. We have regular contact with voluntary organisations and others on all aspects of the system, including the income support limits, but I have to say that we have received very few recently in relation to top-up payments.

Mr. O'Brien : Obviously, the Minister neglects to answer the question. Is he aware of the fears and anxieties of carers who have been looking after elderly people and who find that their homes could be sold over their heads because of the inhuman approach by his Department to the top-up procedure ? When will he accept that hardships will be caused to many of the carers ? What does he intend to do about that ?

Mr. Burt : With respect, I did answer the hon. Gentleman's question. He asked what representations I had received and I said that we had received very few, especially in relation to the top-up payments. Practically all the limits have increased in real terms since 1985. The limit for people in residential care homes increased by 13 per cent. in real terms and that for those in nursing homes by 36 per cent. between April 1985 and April 1993. We shall, of course, keep the limits very much under review. I shall be happy to receive representations in the manner that the hon. Gentleman mentions at any time.

Mr. Kirkwood : Will the Minister accept that I am surprised that he has had few representations on the matter of top-up, against the background of local authorities now negotiating fees that are higher than nationally set income support levels ? Will the Minister agree to see a small delegation, perhaps consisting of the hon. Member for Normanton (Mr. O'Brien), myself and representatives of some voluntary groups associated with the problem, in order further to discuss the matter ?

Mr. Burt : I would, without any problems, but I repeat to the hon. Member for Normanton (Mr. O'Brien) and to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) that I saw a group not too long ago. We discussed a range of items, but, since the increase that we have made, we have not received many expressions of concern about that matter. That is because we do not believe that the gap between income support limits and costs is widening.

Mr. John Marshall : Will my hon. Friend confirm that the payments have increased 250 times in cash terms ? Does not that underline the commitment of the Government and the hypocrisy of the Opposition ?

Mr. Burt : My hon. Friend is absolutely right. He is talking about the £2.5 billion income support expenditure during the currency of the Government, compared with just £10 million in 1979--true evidence of commitment to people properly in need.


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Income Support --

9. Mr. Hinchliffe : To ask the Secretary of State for Social Security when he last met representatives of Age Concern to discuss income support payments to older people.

Mr. Hague : My right hon. Friend the Secretary of State for Social Security met representatives of Age Concern last February. I also met Age Concern representatives in July last year.

Mr. Hinchliffe : Is the Minister aware that several voluntary organisations concerned with older people are worried that a number of income support claimants are wrongly placed in residential care and nursing homes ? In view of the ombudsman's recent report on Leeds healthcare, what steps are being taken by the Department to review cases independently of people in residential and nursing care homes, to ensure that they actually need that form of care when they receive payments from the Department-- people with preserved status ?

Mr. Hague : The hon. Gentleman raises an important point. We will certainly study the report that he mentions and other reports on the matter.

Mr. Streeter : Is my hon. Friend aware that what my elderly and retired constituents really want is certainty of income, particularly in these days of very low interest rates ? When will the guaranteed income bonds be available, so that my constituents can have the benefit of the granny bonds to which they are looking forward ?

Mr. Hague : My hon. Friend raises a matter on which my colleagues in the Treasury are expert--whether the bonds are available shortly or available already.

Pensioner Incomes --

10. Mrs. Angela Knight : To ask the Secretary of State for Social Security what proportion of pensioners now have some other incomes from occupational pensions, savings and state earnings-related pension scheme in addition to basic state pension.

Mr. Lilley : An estimated 84 per cent. of pensioners receive income from savings or an occupational pension, in addition to basic retirement pension. Thirty nine per cent. receive state earnings-related pension in addition to basic retirement pension.

Mrs. Knight : Is my right hon. Friend aware that, although Britain is increasing pensions in accordance with the rate of inflation, the Governments of France, Germany, Italy and Portugal are reducing benefits ? Will my right hon. Friend confirm that earnings-related schemes in other European countries mean that low earners receive low pensions, but without the comprehensive network of support that only Britain provides ?

Mr. Lilley : My hon. Friend makes a very good point. We have taken care to ensure that pensioners are protected against inflation. This year, of course, we are increasing pensions faster than inflation, to allow people some extra to cope with VAT on fuel, even though the Opposition voted against that measure and that increase. Not one of them voted for it. We in this country are far better off than those in many continental countries, where people face


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pensions that are being cut or that are entirely earnings-related and therefore significantly lower than ours for those who were low-earners during their working lives.

Mr. Tony Banks : Is not it a scandal that a large number of people have come out of occupational pension schemes and gone into private pension schemes as a result of the encouragement of, and inducements from, the Government, and have found themselves with pension terms that are much worse than before ? What will the Government do about that ? The Government are responsible for those people being deceived.

Mr. Lilley : As the hon. Gentleman may know, the Securities and Investments Board issued a statement today on its progress so far in investigating people who have opted out of occupational funds and gone into private pension funds. It has the Government's support in looking at that matter thoroughly and making sure that remedies are applied where they are found to be necessary.

Mr. Ian Taylor : Does my right hon. Friend agree that although the important decision on SERPS was taken some years ago, it will start to apply only at the beginning of the next century? That is why the country needs to think carefully about long-term pension provision--not for people who are about to move to pensions but certainly for people under 40 ? Is not that exactly what is happening on the continent ?

Mr. Lilley : We have improved the position for those over 30 by boosting the rebate for over-30s since April last year. That ensures that it should be attractive for people, even if they are over 30, to opt out of SERPS into private pensions. In accordance with our manifesto commitment, we are considering introducing age-related rebates which will make it equally attractive for people of all ages to opt for private pensions.

Mr. Dewar : Is not the Minister concerned about the atmosphere of scandal that now surrounds the sale of private pensions ? Has he studied the figures featured in the Financial Times today which suggest that 60 per cent. of the 5 million people who have taken out private pension cover since 1988 are contributing only the basic SERPS opt-out figure and many of them therefore are likely to be very inadequately provided for on retirement ? If he wishes to protect people in private pensions, what does he intend to do about the estimate that, since 1988, between £400 million and £1.3 billion of the money contributed by the taxpayer to encourage the pension provision of those people has been taken in commission ? Should not he be acting on that now ?

Mr. Lilley : If we had not allowed people the opportunity to opt for private pensions when their firm did not have occupational pensions, many of those 40 per cent. who are making greater provision than they would have had if they had stayed in SERPS would not have done so. I want to see more and more people make additional pension provision over and above the minimum level laid down by SERPS and therefore laid down for those who opt out of SERPS. I am glad to see that one of the leading pension providers, Prudential, believes that 70 per cent. of those taking out personal pensions with that company are now making extra provision over and above the minimum laid down by the state. If the Labour party is against


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private, personal and occupational pensions and wants to re-nationalise them, it should tell the pensioners of this country before the next election.

Child Support Agency --

11. Mr. Lord : To ask the Secretary of State for Social Security what further changes he plans in the Child Support Agency rules.

Mr. Burt : We have no current plans for further changes to the scheme. It is important that the recent changes are allowed time to take effect. However, we have always said that we will keep the operation of the Child Support Act 1991 under close scrutiny, and we shall continue to do so.

Mr. Lord : Everyone agrees that fathers should contribute to the upkeep of their children, but there is great dissatisfaction with some aspects of the Child Support Agency. May I ask my hon. Friend to look, as a matter of the greatest urgency, at those cases where fathers have taken on binding legal agreements with their former wives to contribute to their children's upkeep ? They have maintained those payments throughout and are now being asked, because of the changes in the rules, to contribute amounts of money that they either simply cannot afford or that, in many cases, will deeply damage their new family arrangements.

Mr. Burt : The impact of the recent changes should be a help in terms of phasing and also reducing some payments made by absent parents. It should not be forgotten that any decrease in payment from an absent parent will have a short or long-term effect on the receipt of money by the parent with care. It was always an intention that levels of maintenance might be raised and previous settlements were looked at very carefully both in the setting up of the Act and more recently by the Select Committee. Indeed, we will keep the operation of the Act under review, as we have made very clear to my hon. Friend, but we want to give the recent changes that we have made some time to have an impact.

Mr. Olner : Is the Minister aware of the double standards of the Child Support Agency ? It seems to be chasing responsible fathers who have court orders and are doing everything properly, but it is also saying that it will dispose of such court orders and when there is another low court order for a woman, it will not take action or follow the case through until 1996. Is not that the CSA adopting double standards ?

Mr. Burt : No, I do not think so. The Act set out a take-on strategy which means that by law some cases cannot be taken on until 1996. Just before Christmas, I announced that where it was possible to take on some cases before 1996 by application from a parent with care, we would look sympathetically at that--that had not previously been the case and it would be a help.

As to whether we are going after the right people, about half of the cases taken on by the CSA at present involve those who have not paid maintenance before. By the end of this year, we hope that the figure will be up to about two thirds. Some 15,000 people who have been difficult to trace in the past and who might have escaped paying any maintenance altogether have been found by a specialist tracing unit. We are conscious of that particular criticism and we are doing our very best to meet it.


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Mr. Matthew Banks : My hon. Friend rightly has drawn attention to the many changes and concessions which have been made, and they have been widely welcomed by hon. Members of all parties. Will he give the House an assurance that he will continue to take a close interest in the operation of the CSA ? Unless we stop tinkering and take firm action quickly, many of my constituents and those of other hon. Members--honest, decent and hard- working people--will go bankrupt.

Mr. Burt : I recognise the force with which my hon. Friend speaks. Of course, I keep a careful eye on the cases and the correspondence brought to me. The system carries a great deal of good will because of the change from the previous discretionary system, under which the amount of maintenance paid to women with children was falling to extremely low levels.

We have made a series of changes that should improve the system and we will keep it under review. However, it is important to remember that we do not want to go back to a system that failed to obtain maintenance for women in the past. That meant repeated returns to courts and sometimes the avoidance of responsibility. When we make further changes--if they are needed--they must be carefully considered.

Mr. Barnes : The Minister's initial reply was disappointing. The CSA will be like the poll tax ; in that case, one bit of transitional relief was followed by another, before the poll tax was finally scrapped. Should not responsible and respectable parents in second families have their interests taken into account by a further alteration in the measure ?

Mr. Burt : I take the hon. Gentleman's point, but my earlier reply suggested how seriously we take the issue and how determined we are to make sure that the system is right. We have made some changes, and we want to make sure that they have an impact, but we will keep the matter under careful review. We all have a vested interest in making sure that there is a good system of child maintenance throughout the UK, and that is not a point at issue between the parties.

Pensioner Households (Assets) --

13. Mr. Heald : To ask the Secretary of State for Social Security what representations he has received about the current value of the assets held by the average pensioner household ; and what was the comparable position in real terms in 1978-79.


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