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House of Commons

Monday 23 January 1995

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]

Oral Answers to Questions


Occupational Pension Funds

1. Mr. Redmond: To ask the Secretary of State for Social Security what is his estimate of the total value of occupational pension funds in the United Kingdom.

The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): In 1992, the estimated total value of occupationapension funds in the United Kingdom was well in excess of £400,000 million.

Mr. Redmond: Will the Minister confirm that the occupational pension scheme is the key pillar of pension schemes in Britain today? Is he aware, however, that half a million people will lose a total of £1 million as a direct result of Government advice to invest in the private sector? Will he give a guarantee that those who are affected will be notified so that they can claim the money due to them?

Mr. Arbuthnot: I do not know where the hon. Gentleman gets his figures from. I had hoped that he would welcome my answer, which shows that the UK's funded personal pension provision is better than that of any other country in the European Union, but as he did

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not do so I shall say only that the basic pillar of our pension provision is the state retirement pension, which we shall continue to uprate in line with prices. This country's occupational pension provision is very good indeed.

Sir Donald Thompson: I warmly welcome my hon. Friend's first answer, but I remind him that occupational and private pensions have a sting in their tail. Often, having paid in for a generation, people have found that those pensions do not come up to expectations. Will he, therefore, regularly and rigorously review occupational and private pension schemes?

Mr. Arbuthnot: My hon. Friend will be aware of the Pensions Bill, the Second Reading of which the House of Lords will debate tomorrow and which will make pension provision more secure and more flexible. It offers more choice and greater opportunity to provide for equality in pensions. All that will be good news for pension provision in this country.

Mr. Ingram: Further to the question asked by my hon. Friend the Member for Don Valley (Mr. Redmond), does the Minister share the views expressed by the Independent Financial Advisers Association, as set out in today's edition of The Independent , which has taken court action to seek to avoid its duties and responsibilities to the 500,000 people who purchased personal pensions? Will the Minister give a guarantee, for which my hon. Friend asked, that all persons who have lost out due to the mis- selling of private pension schemes will be contacted and their schemes protected?

Mr. Arbuthnot: This is a matter for the Securities and Investments Board. The Government have made it plain throughout that their view is that those who have suffered loss through the mis-selling of personal pensions should have redress, and that remains our position.

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Child Support

2. Mr. Simon Coombs: To ask the Secretary of State for Social Security when he expects to respond to the Social Security Select Committee's fifth report of Session 1993-94 on the operation of the Child Support Act 1991.

5. Mr. Mullin: To ask the Secretary of State for Social Security what plans he has for further reform of the Child Support Agency; and if he will make a statement.

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): The Government have kept the operation of the ChildSupport Act 1991 under review for some considerable time. We have considered very carefully the recent report of the Social Security Select Committee and representations from many sources. I am sure that the House will be delighted to hear that the Government have now decided what changes are necessary, on which my right hon. Friend the Secretary of State will make a statement to the House within the hour.

Mr. Coombs: I am grateful to my hon. Friend for that answer. I appreciate his difficulties in providing me with the information that I should like before our right hon. Friend's statement at 3.30 pm, but will he assure me that the Government have taken due notice of the fact that, too often under the present system, neither the parent with care nor the absent parent is satisfied? In particular, will he reassure me that the Government have carefully considered the need to reflect the importance of clean-break settlements and travel-to-work costs in any decision that the House may take?

Mr. Burt: It is not possible, for reasons that, I suspect, my hon. Friend knows well, to go as far as he would like. I imagine, however, that quite a lot of my right hon. Friend's statement will meet his concerns.

The House should be under no illusion: the Child Support Act 1991 and the agency operate in a very difficult area between former partners and their children. It was never possible for the courts to satisfy all parties. We must all doubt whether it would be possible for any legislation to do that because of the circumstances involved. The Government and the House should seek to achieve a fair and balanced settlement of maintenance between the parties and a fair settlement for the taxpayer. I sincerely believe that my right hon. Friend's statement will reassure the House on those matters.

Incapacity Benefit

3. Dr. Goodson-Wickes: To ask the Secretary of State for Social Security what progress has been made in instituting medical tests for incapacity benefit.

The Minister for Social Security and Disabled People (Mr. William Hague): The detailed provisions of the new tests of incapacity for work are set out in the Social Security (Incapacity for Work) (General) Regulations, which were laid before Parliament on 24 November. The regulations are subject to affirmative resolution, and will be debated by both Houses of Parliament.

Dr. Goodson-Wickes: I thank my hon. Friend for that information. Will he confirm that the medical test for incapacity is the most sophisticated of its type in the world and that it is designed to identify reduced ability to

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perform activities and most certainly not reduced likelihood to obtain a job? Does he agree that that offers great reassurance to general practitioners, carers and, above all, disabled people themselves?

Mr. Hague: Yes, my hon. Friend is absolutely right. No one who is genuinely sick or disabled has anything to fear from the new test. Extensive development work and evaluations have shown that the test works as intended. Full preparations are now under way for its introduction later this year.

Ms Lynne: Is the Minister aware that a number of people have already been refused invalidity benefit and unemployment benefit? Will he reassure the House that, when incapacity benefit is introduced, those people will not fall through the net between the two benefits?

Mr. Hague: A decision that a person is capable of work applies to unemployment benefit or the jobseeker's allowance; one cannot have separate decisions for separate benefits. People who apply for unemployment benefit or the jobseeker's allowance must make themselves available for work and be actively seeking work, but within the limits of their physical or mental condition.

Mr. Alan Howarth: Is my hon. Friend aware of the welcome that has been given to the recognition in the arrangements for the transition to incapacity benefit that older people aged 58 and above deserve special consideration? May I therefore ask my hon. Friend to consider introducing a similarly sensitive recognition into the permanent arrangements for assessing eligibility? Will he consider whether it will really be necessary to put older claimants through the same hoops as younger claimants?

Mr. Hague: I welcome my hon. Friend's support for the transitional arrangements. He will understand that it will be very important to ensure that the new test is fairly applied, and is seen to be fairly applied, and that incapacity benefit is awarded fairly throughout the population. That must be uppermost in our minds.

Mr. Bradley: Can the Minister account for the huge discrepancy in the different estimates of the number of people likely to lose benefit because of the new incapacity medical test? In a written answer to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) in December 1994, it was estimated that 220,000 people would lose over the first two years. By January, according to the Secretary of State on Second Reading, the figure had risen to 285,000 over two years. Estimates in The Daily Telegraph and the Daily Mirror only last week showed that 200,000 would lose in the first year alone. Will the Minister come clean on how many people will fail the test and lose benefit? Is it not a hollow sham when the Minister claims that there will be no losers of benefit at the point of change between invalidity benefit and incapacity benefit?

Mr. Hague: No, the hon. Gentleman may have been confused by recent press comment, but that is because it is misinformed and certainly bears no relation to the figures published by the Government, which we stand by. In contrast to recent speculation, we expect that the majority of new applicants for the new benefit will be found to be incapable of work. However, we expect 55,000 additional cases a year out of 320,000 new claims to be found

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capable. In the next two years, we expect 220,000 existing recipients to be found to be capable of work. Those figures will remain estimates until we see what happens over the coming years, but they are the best estimates available to us, and we stand by them.

Mr. Evennett: I thank my hon. Friend for his original answer and for his work on this matter. Does he agree that it is absolutely essential to have standardised tests that are seen to be fair and consistent?

Mr. Hague: Yes, my hon. Friend puts the point well. The new system will ensure the continuation of benefits for people who are sick and disabled, and it will do so in a way that is sustainable, affordable and fair and can be justified to the taxpayers who finance the social security system. That is the purpose of our reforms.

Habitual Residence Test

4. Mr. Madden: To ask the Secretary of State for Social Security how many British citizens have to date been refused benefits because of the habitual residence test.

The Secretary of State for Social Security (Mr. Peter Lilley): One thousand six hundred and thirty-three British citizens have not satisfied the habitual residence test when claiming income support in the four months since 1 August.

Mr. Madden: Is it not extraordinary that, when the Secretary of State announced the scheme to the Conservative party conference, he did not admit that it would apply to British citizens, whereas Irish citizens are exempt from it? Is it not extraordinary--this has been admitted to me--that the Department made a mistake in applying the test to people seeking political asylum? An application for judicial review of the whole scheme has been made, so would it not be sensible to scrap the scheme before any more British citizens are denied benefits to which they are undoubtedly fully entitled?

Mr. Lilley: The hon. Gentleman is mistaken in saying that Irish citizens have a privileged position over and above citizens of the United Kingdom. It is perfectly reasonable that those who have made their lives elsewhere in the world who were originally British citizens or who can claim patrial citizenship should be subject to the test. Why should someone who has come over here on a backpacking holiday from Canada and who has two British grandparents have the right to top up their income on holiday with income support? No hon. Member would think that that is right.

The Department works on the basis of advice from the adjudicating officer. It is possible that he is changing his advice on the need to apply the test to those who are seeking asylum. That would considerably ease administration of the test.

Dr. Spink: As the habitual residence test enables this country to prevent backpackers from coming here on holiday and living off our benefits system, and thereby removing money from our benefits system on which vulnerable people rely and need, is it not extraordinary that Labour Members appear to care more for foreigners than for our own vulnerable constituents?

Mr. Lilley: I am sure that my hon. Friend reflects the views of 99.9 per cent. of people in this country. I should

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make it clear that we welcome backpackers from all countries, but we do not think it necessary to entice them with the offer of income support.

Incapacity Benefit

6. Mr. Miller: To ask the Secretary of State for Social Security if his Department will withdraw the Social Security (Incapacity Benefit) (Transitional) Regulations 1974 and the Social Security (Incapacity for Work) General Regulations 1974.

Mr. Hague: No.

Mr. Miller: In the light of the criticism that the Department has received from the ombudsman in respect of the disability living allowance and the Child Support Agency, and in the light of concerns that have been expressed by several organisations representing people with disabilities, does not the Minister think that he should withdraw the regulations and reflect on them, or is the House expected to sit back and wait for a hat trick of disasters from the Department?

Mr. Hague: Great care has been taken to ensure that incapacity benefit is fairly and properly implemented. The training of Benefits Agency medical doctors is under way, departmental administrative procedures are being prepared carefully and I have every confidence that the necessary preparations are being made. The hon. Gentleman should reflect on the fact that great work went into the development of the medical test with an expert panel last year. The test was exhaustively tested on real cases by real doctors, and we are confident that it works as it was intended.

Mr. Waterson: Will my hon. Friend confirm that in the past 10 years, when the health of the nation generally has progressed steadily, the number of people in receipt of invalidity benefit has more than doubled to 1.5 million? Does not that show the absolute necessity of targeting payments on the people who really need them?

Mr. Hague: My hon. Friend is right. The number of invalidity benefit claimants has risen from 740,000 in 1983 to more than 1.6 million today. During that time, GPs have often been put in an invidious position. It is right to reform the benefit, and right to do so in the way that we have proposed.

Bronchitis and Emphysema

7. Mr. William O'Brien: To ask the Secretary of State for Social Security what plans he has to review the regulations on claims for benefit under the bronchitis and emphysema benefit scheme; and if he will make a statement.

Mr. Hague: I am advised on the prescription of occupational diseases under the industrial injuries scheme by the independent Industrial Injuries Advisory Council. The council announced last week that it is undertaking a review of the present terms of prescription.

Mr. O'Brien: Will the Minister join me in trying to influence the advisory body on two issues that involve the regulations on bronchitis and emphysema? The first is the X-ray, as a number of claimants who were rejected for benefit have, after death, been proved to have had pneumoconiosis. That system is unfair.

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The second issue is the forced expiratory volume test, under which a claimant must prove a loss of a litre of breath into his lungs per second. People who are finding it difficult to breathe are being rejected for benefit because of the test, and I consider that to be callous and unfair. Will the Minister join me in pressing for the abolition of the X-ray from the procedure, and for a revision of the FEV test to make it more fair and equitable to claimants?

Mr. Hague: The council has a difficult job in ensuring that it proposes qualifying conditions to Ministers that ensure that benefit is paid to miners and ex-miners whose disability can most confidently be attributed to coal dust, rather than to other causes such as smoking. The council has now initiated a review of the qualifying conditions and evidence can be given to that review until 14 April. I strongly encourage the hon. Gentleman to ensure that he passes his evidence--including evidence about his constituents, about whom he has written to me--to the council so that it can take it fully into account before giving advice to Ministers.


10. Mr. Flynn: To ask the Secretary of State for Social Security what plans he has to improve benefits to widows and the elderly.

Mr. Arbuthnot: Widows and pensioners will gain from the general uprating of benefits, in line with inflation, which will take effect in April.

Mr. Flynn: Will the Minister explain why the widow's payment, which was announced in 1985, has never been uprated by a single penny, despite the fact that it replaced a benefit that was increased in line with inflation every year? According to an answer that I received from the Minister, the widow's payment should now be £1,881, yet it is still only £1,000. It is despicable not to increase payments at any time, but why do the Government cheat widows at a time of bereavement?

Mr. Arbuthnot: Payment of the widow's payment is subject to a regular review by the Department. It must be borne in mind that we have finite resources, for which there are competing priorities. It is simply a question of concentrating help where it is most needed.

Mr. Hawkins: My hon. Friend will be aware that my constituency has the largest proportion of pensioners in the country. Will he confirm that, from April, the poorest pensioner couples will receive at least £100 a week and that, on top of that, their housing costs will be paid in full? Is not that a substantial measure of the Government's concern for the poorest of our elderly people?

Mr. Arbuthnot: My hon. Friend is right and he confirms what I said in my answer. Even the poorest pensioners--the bottom 20 per cent. of income groups--have seen significant real increases of more than 10 per cent. in their incomes since 1979.

Mr. Flynn: On a point of order, Madam Speaker. May I give notice that, because of that atrocious reply--even by the standards of this Government--I intend to raise the subject on the Adjournment?

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Habitual Residence Test

11. Mr. Purchase: To ask the Secretary of State for Social Security how many people have failed the habitual residence test since its introduction; how many of those decisions have been appealed against; and how many such appeals have been won.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): Provisional figures from the Benefits Agency show tha12,571 income support claimants have not satisfied the habitual residence test in the five months from 1 August 1994. Figures for housing benefit refusals are not available. Information on appeals is not collected centrally and could be obtained only at

disproportionate cost.

Mr. Purchase: Given the cheap answer that we heard earlier to a question from my hon. Friend the Member for Bradford, West (Mr. Madden), with the gallery playing and stereotyping of backpackers, and given the number of people affected by the regulations, is not it time that we were given an opportunity to debate the matter properly and thoroughly on the Floor of the House?

Mr. Evans: The hon. Gentleman should address that request to my right hon. Friend the Leader of the House. The Government are perfectly happy to defend the regulations at any opportunity.

Mr. Clifton-Brown: Will my hon. Friend confirm that the cost of housing benefit will be £10 billion this year and that, until he altered the regulations, rents of up to £350 a week had been claimed under housing benefit? May I therefore welcome the reforms that he has introduced?

Mr. Evans: Yes.

Mr. Corbyn: Before the Minister gets carried away with his verbosity, will his Department conduct an investigation into the plight of individuals and families, but particularly children, who have failed the habitual residence test? As a result of that failure, they lose housing benefit; as a result, some of them are evicted from housing; and, as a result, some of the children face being taken into care. Instead of considering the consequences of speeches made by the Secretary of State to the Tory party conference, as a way of playing to the gallery, will he consider the consequences of the test for the poor of this country?

Mr. Evans: The hon. Gentleman's indulgent rhetoric is a gross exaggeration. The Government obviously bear in mind and keep under review the operations of the test.

Mr. Nigel Evans: Does my hon. Friend agree that, without the habitual residence test, British benefits would be available to any foreign scroungers who came to this country to finance their holidays? Does he believe that that is now Labour party policy?

Mr. Roger Evans: The last part of my hon. Friend's question is not for me to answer, but, on the first part, the point is very clear: are British taxpayers to be expected to pay benefits at current levels to anybody and everybody who comes within the confines of the United Kingdom? The Government have taken the view that there must be some sensible and reasonable limit.

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Housing Benefit

12. Mr. Cohen: To ask the Secretary of State for Social Security what plans he has to place a cap on housing benefit for eligible tenants.

16. Mr. John Marshall: To ask the Secretary of State for Social Security if he will make a statement about spending on housing benefit.

Mr. Roger Evans: My right hon. Friend the Secretary of State announced measures to take effect from October 1995 in his uprating statement, which will limit housing benefit paid on private sector rents where they are above the average for the area.

Mr. Cohen: Is not Government policy on housing benefit a shambles, for which the Government look like making private tenants pay? The Government rely on the private sector for housing and have deregulated many private tenancies, but the Department of Social Security does not want to pick up the cost implications of that policy. If the Government are to change housing benefit, will they ensure that protection from eviction for tenants is included?

Mr. Evans: The hon. Gentleman's point is a gross exaggeration and, indeed, is simply untrue. To expect the British taxpayer to subsidise rents of several hundred pounds a week is simply unreasonable and would rightly cause public outrage. Even in the Greater London area, 95 per cent. of private sector rents are lower than £85 a week. The Government say that there must be some fair reciprocity between the burdens on taxpayers and the recipients. That is why there must be some cap based on the average rent for the area in which a person lives.

Mr. Marshall: Does my hon. Friend agree that housing benefit distorts the marketplace? Is he aware that, in my constituency, people may receive as much as £250 a week or £13,000 a year in benefits? Does not that cost taxpayers a lot of money and force up all rents in the private sector?

Mr. Evans: My hon. Friend is absolutely right. There is no doubt whatever that there is an incentive to distort the market. That is why housing benefit has doubled in cost since 1988 and will cost £10 billion in 1994-95. It is fair and reasonable that the rents that my hon. Friend mentioned should not be wholly subsidised by taxpayers when they are out of line with average rents for the area.

Mr. Frank Field: To what extent is the escalating housing benefit budget caused by landlords pushing up rents or making fraudulent claims?

Mr. Evans: The hon. Gentleman will appreciate that such an estimate is extremely difficult to make. On the first of his two causations, when taxpayers write an open blank cheque, which is the danger with the existing system, there is obviously an incentive for some people to take advantage of it. The policy has been successful in terms of stimulating the private rented sector, which had been in the doldrums since 1919, when the Labour party interfered with the free market in private rents, but there must be some control for the benefit of the taxpayer, which is why we are limiting benefit to the average rent for the area.

Mr. Congdon: Despite my hon. Friend's figures for average rents in London, does he agree that housing

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benefit has been used to subsidise rents to the tune of up to £350 week? Does he agree that taxpayers will welcome the decision to cap housing benefit as it will represent better value for taxpayers and ensure that they do not subsidise luxury rents?

Mr. Evans: My hon. Friend is right. The figures that he mentioned are generally believed to be far too high.

Ms Eagle: Will the Minister admit that that position has been caused by deregulation of the private rented sector, which his Government inaugurated in the first place? Private tenants are already being ripped off for below-standard accommodation in many instances. Instead of making them pay by possible eviction, why will not the Government regulate the private rented sector to save money for taxpayers, or, better still, have a proper housing policy so that we can house our people in affordable, decent homes?

Mr. Evans: The hon. Lady gives the game away if she really suggests that it is Labour party policy to re-impose some form of rent control in the private sector. [Interruption.] There is all the difference in the world between limiting a public subsidy and interfering with the free workings of the market. What the Government propose--

Mr. Battle: It is called subsidising landlords.

Mr. Evans: The elementary economic ignorance of Opposition Front- Bench spokesmen is palpable.

Income Support

14. Mr. Dunn: To ask the Secretary of State for Social Security how many persons were in receipt of income support (a) on 1 December 1992 and (b) on 1 December 1994; and if he will make a statement.

Mr. Roger Evans: The information requested is not available in the precise form requested. However, the total number of claimants as at November 1992 was 5.5 million and, as at February 1994, 5.8 million.

Mr. Dunn: Family credit benefits more than half a million working families by making it worth their while to work. Will my hon. Friend compare it with the minimum wage, which destroys jobs?

Mr. Evans: My hon. Friend makes two forceful points, and I respectfully agree with him.

Mr. Pike: If the Government accept and believe that income support is the absolute minimum that people need to live on, why is it that when people on income support need assistance from the social fund, they are given loans which the Government tell them that they have to pay back out of income support?

Mr. Evans: The hon. Gentleman has asked me questions on that topic before. He has not appreciated the basic point that income may be regular week after week under income support, whereas people's actual needs may vary from week to week, depending on their circumstances or needs. The system of loans offered under the social fund has been strikingly successful; it has helped five times as many people with loans, which are almost entirely repaid. That is more than we could hope for if we made simple grants.

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