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Mr. Bradley: If the hon. Gentleman will remain calm for a moment, I am sure that, by the end of my contribution, he will know what our position is.

The extra burden on offices is illustrated by the figures for interviews in one district office alone in the month of September; 934 people were interviewed, of whom 638 were refused benefit. The delays for appeal hearings are also in part a reflection of the numbers affected. It is commonplace for claimants to be forced to wait as long as six months before their cases are heard. For example, in the north Surrey area, appeals tribunals are now hearing cases that were appealed in August and September 1994.

I pay tribute to the invaluable work of the Child Poverty Action Group and the National Association of Citizens Advice Bureaux. Those organisations inform me that they understand that approximately two thirds of decisions to refuse benefit that are taken at local offices are overturned on appeal. That suggests that staff have not been properly trained, the guidance is faulty or it is simply bad law. Will the Secretary of State, or the Under- Secretary in winding up, comment on the position regarding refusals and appeals?

At the same time, claimants must wait a long time before a hearing without financial support, as in the example given by my hon. Friend the Member for Croydon, North-West (Mr. Wicks), and may not be entitled even to urgent case payments because of their discretionary nature.

When rejecting a presence test in 1986, the then Minister of State for Social Security, the current Prime Minister, questioned whether such a scheme would produce net savings for the Treasury. It would be useful to know today precisely what the savings are, if any, taking account of the cost of the additional staff time spent on habitual resident test work. From my visits to local Benefits Agency offices, I know that an enormous amount of staff time is involved in that work at the expense of other essential work that Benefits Agency staff undertake.


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There is not time this afternoon to go into all the legal complexities of the test. Suffice it to say that I understand that the validity of the legislation is being challenged under domestic and European law. We await the outcome of those considerations with interest. Nor is there time to go into the many case studies which have been presented to us, representing a range of problems that have been presented at hon. Members' advice bureaux.

Mr. Patrick Nicholls (Teignbridge): Is there time to tell us whether the hon. Gentleman would repeal the rule?

Mr. Bradley: I have been in the House long enough to have learnt not to give way to the hon. Gentleman, as he always makes rather limited interventions.

A range of complex cases that have been brought before us need careful consideration. However, it is clear from parliamentary answers that there is great uncertainty about who is being refused and for what reason, what the current situation on appeals is and precisely how much money is saved by that measure. We also know that great hardship is caused. In a reply dated 23 January 1995 to a letter from my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), the Secretary of State said:

"The Department is monitoring the effect of the habitual residents test on British Citizens. However, because habitual residence is assessed on the basis of a variety of factors, it is not possible to be categorical about the reasons for being turned down". We share that view. The test should be thoroughly reviewed in the light of--

Mr. Oliver Heald (Hertfordshire, North): Will the hon. Gentleman give way?

Mr. Bradley: No, I shall not give way. The hon. Gentleman can make his own speech.

Mr. Heald: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: I hope that it is a point of order for the Chair.

Mr. Heald: It is, Mr. Deputy Speaker. Motion No. 6 on the Order Paper says:

"That the Income-related Benefits Schemes (Miscellaneous Amendments) (No. 3) Regulations 1994 . . . be revoked."

Is it therefore in order for the hon. Gentleman, far from asking for the regulations to be revoked, simply to say that they should be reviewed?

Mr. Deputy Speaker: It is entirely in order for hon. Members to take any viewpoint that they choose. It depends on their view at the time. It is certainly not a matter for the Chair, and the hon. Gentleman knows that full well.

Mr. Heald: Further to that point of order, Mr. Deputy Speaker. In the case of Pepper v . Hart in the House of Lords--

Mr. Deputy Speaker: Order. I am not terribly interested in what took place in the House of Lords this afternoon. We have a debate before us and I should be grateful if the hon. Gentleman would resume his seat.

Mr. Bradley: The whole system should be thoroughly reviewed. The Government should take it away from the House and come back with a sensible system that does not involve all the contradictions and complexities that I have highlighted. That is why we shall vote against the orders.


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5.23 pm

Sir Nicholas Scott (Chelsea): I stand before the House as an unreformed addict, having spent seven years hooked entirely on social security. I have had a bare seven months off the habit and feel constrained to come back today to congratulate my right hon. Friend the Secretary of State and his colleagues on the orders and regulations which he has placed before the House and which we are discussing. They enshrine a proper disciplined and constructive approach and a caring package for the future of social security for the coming years.

Social security is never an easy issue. Anyone who must come to grips with the conflicting measures within the social security system knows how difficult it is to reconcile those differing positions and pressures. It may be an easy matter for those who sit on the Opposition Benches, and I hope that Labour Members will continue to sit on them for a long time to come. I genuinely congratulate my right hon. Friend and his team on their work. I see that the hon. Member for Manchester, Withington (Mr. Bradley) is quitting the scene. I do not wish to detain him unnecessarily. I understand the dilemma that his team must face. I am sure that he and his hon. Friends have all sorts of genuine concerns that they would like to express and grievances that they want to redress, but the Leader of the Opposition and the shadow Chancellor will not allow them to say anything positive, or enter into a commitment, in terms of future social security expenditure.

Opposition Members can meet the devoted and hardworking group of people from the lobby outside the House, who have all sorts of genuine concerns in which they believe and who can come and discuss their concerns with Opposition Members. But Opposition Members can give them no commitments because the shadow Chancellor and Leader of the Opposition will not allow them to do so. They come before the House and laud and praise the work of the Commission for Social Justice, but cannot commit themselves to any of the ideas that it has put forward because the shadow Chancellor and Leader of the Opposition will not let them.

Mr. Donald Dewar (Glasgow, Garscadden): It is a pleasure to have the right hon. Gentleman in the Chamber agreeing with the Government, when he so manifestly did not agree with them for so long when he was in office. He properly points to the dilemmas that face any Opposition, and no doubt any Government over whom the Treasury looms so large. He mentioned unhappiness; is he entirely happy about the changes represented by the new incapacity benefit?

Sir Nicholas Scott: I shall deal with many of those matters, including incapacity benefit, in a moment or two.

I should have thought that, having been so long on that side of the House, the Opposition would by now have found some device whereby they could commit themselves to something when they discuss those matters, even though they are under the constraints that I mentioned. At present, however, the House and the country as a whole have no idea of the social security policies that Labour Members would pursue, were they by any mischance to find themselves in government. Nor have we any idea of the costs of pursuing the policies that they have in mind. In essence, they are hiding behind some sort of political yashmak, denying that the public,


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despite their entreaties and desires, would like to see what goods are hidden behind it. It is about time that they begin to reveal what is on offer to people before they spend much more time criticising the constructive way in which my right hon. Friend and his team have been tackling social security problems.

Let us imagine for a moment that the hon. Member for Garscadden were given his dream and were holding the reins of power over social security. Let us enjoy the fantasy for a moment and imagine what would happen if he took over responsibility for the largest policy centre in Government. Could he cast aside his party's opposition to our sustained and responsible policy of cost containment and affordability, thus dashing the hopes and expectations of many of those in the lobby outside whom, with a nod and a whisper, a wink here and a gesture there, he has been able to persuade how different life would be under a Labour Government? If the hon. Member for Garscadden were to bow to the articulate, intelligent, persuasive, highly motivated and genuine lobby outside--who would expect him to find extra money to spend on social security--we would end up with runaway expenditure and high rates of inflation. We would be broke and subject once more to the whims and the mercies of the International Monetary Fund.

The hon. Gentleman has a real problem. He is a Scotsman and perhaps his problem is set out more clearly in what I suppose we might refer to, even in this theatre, as the Scottish play. Macbeth is challenged by his wife who says:

"Art Thou afeared

To be the same in thine own act and valour As thou art in desire? Wouldst thou have that Which thou esteem'st the ornament of life,"-- the hon. Gentleman can tell us what that might be--

"And live a coward in thine own esteem,

Letting `I dare not' wait upon `I would'. Like the poor cat i' the adage?"

No one would accuse the hon. Gentleman or his team of cowardice, but I think that they should show the House and the country a little more nerve and candour in order to enable the electorate better to judge their intentions.

I congratulate my right hon. Friend the Secretary of State and his colleagues on their notable achievement this year in sustaining the Government's commitment to uprate all the main benefits in line with inflation; yet the growth in expenditure on social security has been reduced substantially this year, and that trend will continue for the next three years.

I think that we all understand the two main reasons for that reduction. The first concerns the Government's achievements in producing low inflation and lower unemployment. Inflation is now at an historically low level that we have not seen since the early 1960s. I believe that the Government deserve immense credit for that achievement. Unemployment has been reduced by 555,000 since its peak in 1992 and it is still decreasing. Those two factors, in themselves, are good for people and for the health of society, but they also provide a background against which we can examine our social security needs.

Secondly, I believe that my right hon. Friend would acknowledge that he has built on the foundation which was laid by his predecessor, who adopted a sensible, sustained and rigorous approach to social security expenditure. I remember that when I arrived back from


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Northern Ireland I was told by a senior officer of the then Department of Health and Social Security that I had a privilege unique in Government except for Treasury Ministers: I could introduce a Bill every single year. I must admit that that blessing was somewhat mixed in its application.

Over the years, billions of pounds of taxpayers' money has been saved while the Government have retained a defensible, compassionate and caring social security system. Nothing stands still in social security: if social security changes, society adapts and changes also, and the social security system must then adapt to meet those changed habits and needs. We can never say that we have the answer to meet the plethora of needs that exist in any advanced industrialised society.

As a Minister with responsibilities in the social security area, I witnessed the growth in certain aspects of social security, such as housing benefit and invalidity benefit, for quite inexplicable reasons which could not be justified by any real change in people's circumstances. It simply became fashionable to apply for certain benefits and, inevitably, it became necessary for Government to draw back and tighten the criteria of eligibility for entitlement to those benefits. That is a never-ending challenge for those who are responsible for social security in this country. We must keep provision up to date: we must meet new needs while ensuring that we continue to meet the needs of those who are in genuine distress. I am disappointed at the low take-up of the disability working allowance. It was introduced at the same time as the disability living allowance, which has been a conspicuous success. I believe that DWA has failed to be successful in part because many disabled people who would like to work and who wish to give work a chance believe that, if they try it and fail, they will not be able to go back on to their pre-existing benefits.

My right hon. Friend the Secretary of State and the Under-Secretary of State, my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot), know that that is not so. However, if we could present a cast-iron, copper- bottomed guarantee that people will be able to return to their pre-existing benefits, we might be able to encourage them to take up the opportunities that are proffered by the disability working allowance.

My right hon. Friend addressed the issue of pensions very carefully in his Mais lecture. He pointed out that half the benefit expenditure is spent on the elderly in our community and that in the next century the imbalance will become even greater. As the population balance alters, there will be problems not only with the public provision of state pensions but with private provision of pensions.

We must look at other ways of encouraging the growth of personal pensions. Their growth to date has been welcome and has proved useful. We should not make a rush judgment, but it would be sensible to consider the possibility of compulsory private pension provision in the future. That may sound like a strange concept, but I believe that many people who have made proper provision for their own retirement are resentful that they must pay, through their taxation, for those who have made no such provision. That resentment will grow among the elderly and those of working age as the pressures on the cost of


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retirement income increase as we move into the next century. We must consider that dilemma and begin to address it.

The price of success and responsibility in social security in any advanced country is eternal vigilance. Without it, demand can become unsustainable. A number of advanced countries have been faced with unsustainable demand and, panic stricken, have had to resile from the commitments into which they entered. It is correct for my right hon. Friend and his team to look ahead and plan for the future of social security in the next century. As I have said, society is not static; it is dynamic and volatile.

It is very easy for particular areas of expenditure to escalate out of control, and we must ensure that that does not occur. The old special payments scheme was replaced by the social fund, which proved to be a much better controlled system of meeting exceptional need. The housing benefit and invalidity benefit have had many problems. Although the new incapacity benefit will have the teething problems that are associated with any change to the system, I believe that it is a much more sensible and responsible way of tackling the needs of incapacity in our society. Mortgage interest must be examined also. Those of us who are in charge of events should continue to proceed one step at a time. We must continue to seek a more affordable, sustainable and a better social security system than we have even now. Today's orders and regulations represent a very important step in that direction.

5.39 pm

Ms Glenda Jackson (Hampstead and Highgate): There is a strong theatrical tradition that it is desperately unlucky to quote from the Scottish play in any theatre where that play is not actually being performed. However, the right hon. Member for Chelsea (Sir N. Scott) is in a better position than I am to know what is really going on in the Cabinet, so perhaps, in his case, lightening will not strike twice.

Let me return the Secretary of State briefly to housing benefit. He was most courteous in allowing my intervention and I took on board his point about providing citizens with choice, but many of my more elderly constituents are being denied the only choice--indeed, right--that they value, and that is the certainty that they will be allowed to live out their days in what has been their home for a considerable number of years. They are consistently concerned about year-on-year rent increases and they are in no position to look for an alternative place to live. They have no possibility of arguing the rent down with their landlords and it causes them real distress.

Mr. Lilley: Let me make it clear to the hon. Lady--I hope that it will be reassurance for her obvious concerns for her

constituents--that there is no intention of applying the measure retrospectively to people already established and claiming housing benefit. It applies to new claims for housing benefit. It is obviously much easier for someone newly claiming housing benefit and having to choose where to live to decide between different premises. Those who are already retired and on housing benefit will not suddenly be deprived of a portion of their housing benefit and be required to move elsewhere.

Ms Jackson: Will the Secretary of State clarify that a little further? Does he mean that if the landlord of those


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who are, and have been, in receipt of housing benefit for a number of years chooses to raise their rent year-on- year, their housing benefit will still be met in full?

Mr. Lilley: Subject to the rent not being in excess of a reasonable market rent, yes, it will.

Ms Jackson: With respect to the Secretary of State, that is absolutely the nub of the problem and precisely the reason why so many of my constituents are justifiably afraid.

There has been an increase in the number of people who buy up properties and wish their sitting tenants to leave. They want to turn them out. They wish perhaps to modernise the properties that they have bought and they believe that there will be a higher return on their investment if they can reduce the number of flats in a house of comparatively multiple occupation. Therefore, an increasing number of my constituents who are elderly and who have lived in the same properties for a considerable number of years are undoubtedly being pressured by their landlords. In many instances, a landlord can evict tenants who have lived in a property for many years only when they can no longer pay the rent.

Will the Secretary of State discuss with the Secretary of State for the Environment the possibility of reintroducing some fair rents scheme? I understand that there has been no positive response to the idea, but the problem is causing real hardship and I believe that it will affect an even larger number of people.

At the moment, people are having to choose between taking a job or losing their homes and I cannot believe that the Government actually wish that to happen. In the light of the year-on-year increases in rent over the past few years, the issue really should be examined again and I would be grateful if the Secretary of State could do that.

I am grateful to have been called in the debate and I am even more grateful that the habitual residence test is part of our deliberations tonight, not least on the level of obtaining some information, as I hope that we shall. Whenever I have tabled a written question to the Department of Social Security--for example, on the number of British citizens who are awaiting the results of their appeals under the test, the number of citizens of former Commonwealth countries who have applied for the test, the number of British families who are affected by the habitual residence test, the ages of children within those families and the ages of individuals who have been asked to undertake the test--the reply that I have consistently received is that no such figures are kept centrally and the cost of providing them would be prohibitive.

I find that an absolutely extraordinary response, given that, when the Secretary of State introduced what I believe to be genuinely nasty legislation in what I would also argue was an singularly nasty little speech, we were told that the habitual residence test was being introduced to close a loophole against benefits tourists attempting to perpetrate fraud against British taxpayers. However, a detailed letter that the Secretary of State sent in response to an inquiry from my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), contained the following sentence:

"Although immigration status has always been relevant to Income Support entitlement, the nationality of claimants from European Economic Area (EEA) states is not recorded, hence the absence of hard data."


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In the speech that introduced the habitual residence test, which the Secretary of State delivered at the Conservative party conference in 1993, he depicted a crooks' tour, and the nationals whom he proceeded to insult were the citizens of Germany, France and Italy, yet it would seem that there is actually no hard evidence to support what I regard as an extremely damaging piece of legislation. Setting aside the issues of European Union nationals who are being caught by the habitual residence tests and looking instead at benefit tourism, which was my understanding of why the test was introduced in the first place, I would be grateful to know, as I am sure would every right hon. and hon. Member, how a young British citizen, who, regrettably, at the age of 19 moved from education to the dole queue was denied any claim upon the benefits system because she was deemed to have to undergo the habitual residence test. To regard a move from education to unemployment as a tour or a journey seems absurd in the extreme.

Another example is one of my constituents, a woman in her late 40s who is a freelance journalist. She found it impossible to obtain employment in Britain, the country of her birth, so at the age of 30 she moved to Greece, where for 13 years she was successful in obtaining employment as a freelance journalist. Due to her own ill health and that of an elderly relative, she found it necessary to return to Britain. In the interim, her elderly relative died. She had already sold such property as she had in Greece--it was very small in quantity--and she arrived in Britain with no living relatives, admittedly not having lived here for 13 years, and had to undergo the habitual residence test. She was left with absolutely no means of support, given that it is taking the Benefits Agency offices in my part of north London anything up to three months to process an application and an appeal. In one absolutely shocking case involving a young pregnant woman, it took five months before any answer came. We are denying British citizens any rights whatsoever. It is not simply the right to obtain sustenance from the benefits system; it is a denial of the most basic civil rights and liberties that people can be born British citizens, attempt--as the Government are always urging our citizens to do--to maintain themselves by employment, find that employment abroad and yet, when they return to Britain, be denied their rightful places as British citizens.

I shall deal briefly with another case in my constituency involving a citizen of the European Union who has lived and worked in this country for at least five years. Because of a downturn in his employment, he applied to the Benefits Agency. Not only did the agency insist that he undergo the habitual residence test but it asked him to produce his passport. That seems to be a gross abuse of the agency's responsibilities, and I urge the Secretary of State to re-examine what the test is supposedly doing for the citizens of this country.

I should be grateful to see the hard evidence that proves that the taxpayer is being saved money and equally grateful to see that which proves that the particular group of people that the test is seemingly targeting are exercising gross fraud on the citizens of this country.

I realise that time is short so I shall conclude by giving details of two further cases in my constituency, both involving young women. Indeed, the test impacts especially harshly on women, and that is certainly so in the two instances that I shall outline now. Both cases involve women who, for a variety of reasons, which are


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no business of the House and into which we have no right to inquire, ended up abroad but in failing marriages. In one case, the woman, who is a British citizen and has a small child, had to return to this country because of the severe domestic violence that she was suffering at the hands of her now estranged husband. The other woman had to return because of a breakdown of relations between her in-laws.

In both instances, the women returned to their own country: one returned with a very small child and one was five months pregnant. They both had to undergo the habitual residence test and were denied any support for a considerable time. It was only the generosity and kindliness of friends that sustained them until the appeals found for them.

I do not know whether it was at the same Conservative party conference that the Secretary of State delivered the speech to which I referred, but I distinctly remember the Prime Minister speaking of his desire for people to be able to hand on what was their own to their own. I believe that he was referring to property rather than to citizens' rights but I think that British parents would find it deeply shocking--I know I do--if, via this nasty little test, the great gift of British citizenship and all that it entails were to be denied to their children and grandchildren.

5.52 pm

Mr. Peter Luff (Worcester): I begin by apologising to you, Mr. Deputy Speaker, and the House for the fact that I shall not be able to stay long after I have made my speech as I have a long-standing engagement elsewhere. I pay tribute to the speech of my right hon. Friend the Member for Chelsea (Sir N. Scott) which he made with the elegance and compassion that are characteristic of his whole political career.

Let me put my remarks in context. The House is aware that it is estimated that the social security system will cost some £84 billion for the current year which, I am told, works out at about £15 per working person per day. That is a huge sum of money. Even after the reforms that my right hon. Friend the Secretary of State has put in place, it is planned that in real terms the social security budget should grow by some 2.1 per cent. a year in future. That is a huge rate of growth on a huge sum of money, and it is important that we bear that in mind as we consider all the many difficult choices that Ministers have to make.

The central question is whether it is right that the bulk of social security benefits should be uplifted only by price inflation, not linked to earnings, as the recent report of the Joseph Rowntree Foundation sought to suggest. It might help the House if I quoted the JRF summary. It states:

"More people became dependent on benefits like Income Support as a result of both higher unemployment and demographic factors." I think that we can accept that. It continued:

"The income gap widened between those dependent on benefits and those with earnings."

We can also accept that as a factual statement. It then went on to state:

"Since the early 1980s, benefit levels have generally been linked to prices, so that the incomes of those dependent on benefits have fallen behind the working population."


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It now becomes more tendentious by stating:

"Those remaining dependent on price-linked benefits have little or no stake in the prosperity of the country, since rising real incomes in general have no effect on their own standard of living." Here, I believe, the foundation is straying into dangerous territory. It concludes:

"While the priority has to be to ensure that, where possible, people do not remain dependent on benefits, there will remain groups who do so. In such cases, indefinite price indexation is not adequate, and their benefits should increase by more than inflation at times when living standards in general are rising."

Superficially, that seems a plausible analysis, but the foundation's inquiry has missed one crucial point, which is that the incomes of the poorest members of our society depend not only on cash benefits from the state but on a range of benefits in kind that they receive from the state. In this respect, the poorest members of society do disproportionately well.

What are these benefits in kind, these social transfers funded by the taxpayer? I am thinking of things such as the national health service, education, housing and public transport subsidies, welfare milk and free school meals. All these must be taken into account when working out the real net incomes of every member of society. There have been huge increases in benefits in kind during the lifetime of this Government. When judging whether price indexation is the appropriate measure for setting social security benefits, we must take them all into account.

I am glad that the Social Market Foundation has studied the matter in detail. A recent report by Andrew Cooper and Roderick Nye sheds a great deal of light on the subject. They conclude that

"in 1993 the poorest fifth of UK households gained an estimated £3,610 from state benefits in kind, £1,530 more than the wealthiest fifth . . . By ignoring benefits in kind the Inquiry"--

the JRF study--

"paints an incomplete picture about the way Britain's poorest are faring. By confining itself to cash benefits and income the Report's conclusion is little more than a function of the linkage of benefits to prices instead of earnings, a change offset by the increase in real spending of public services represented by benefits in kind." They state that the inquiry's failure to include this in its calculations

"can only be sustained by ignoring what is currently 48.3 per cent. of the final income of Britain's poorest households." Nearly half their income is from benefits in kind. They continue: "the Inquiry is borne out of a consensus which regards maintaining and increasing expenditure on public services like education and the NHS as vital to preserving living standards, yet when the most comprehensive study of its kind into Income and Wealth is conducted these figures are excluded."

By excluding such important considerations, the central finding of the JRF inquiry--that benefits should be linked to earnings rather than prices--has been invalidated.

Health expenditure has risen from 4.7 per cent. of gross domestic product when the Conservatives came to power to 6 per cent. of GDP now. That is a huge increase which disproportionately benefits the poorest members of society. Education expenditure, which is at present the subject of much controversy, has risen by 50 per cent. per pupil in real terms since the Government took office. These factors must be weighed in the balance when we consider the Social Security Benefits Up-rating Order 1995.


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I accept that there are problems with poverty, as the JRF report said. They are often heavily localised and, I believe, best addressed by local regeneration measures. The work of English Partnerships, for example, is crucial in this respect. I accept that inequality in our society has increased, but, unlike the JRF inquiry, I do not accept that that is automatically a bad thing. Some measure of inequality is essential as an engine of economic growth and enterprise. I believe that, theoretically, indexation to prices alone might have an adverse impact on the incomes of the poorest, but, looking at the broader picture, that is clearly not the case. The problem of growing inequality in our society and the problems of the poorest 10 per cent. about which the pessimistic talk a great deal are in reality nothing like as great as has been suggested, which is why I believe that it is absolutely right for the Government to stick to the principle of price indexation for the vast range of social security benefits.

I should like to reinforce the points made by my right hon. Friend the Member for Chelsea about the impact of targeting, particularly on the thrifty elderly. It sounds very good and reassuring, as my right hon. Friend the Secretary of State said in his opening remarks, that we must focus help on the most needy, and I agree that we do, but we must recognise that the practical effect of focusing that help can all too often be to remove from benefit entitlement those who are only marginally better off than people in receipt of benefit. That leads to very real resentment, particularly among elderly people in my constituency who are not in receipt of benefits, who have made some modest provision for their old age, but who find that the couple next door, who have made no such provision, are the beneficiaries of all these state benefits. We cannot duck that issue for much longer and it is one to which I hope that my right hon. Friend will give greater attention.

On housing benefit, I believe that it is wrong to subsidise both bricks and mortar and people. If we subsidise people alone and allow rents for all forms of housing tenure to rise to something nearer market levels, it lets the market work. It will bring about the revival of the private rented sector, and that is happening thanks to the assured tenancy scheme, which all Conservative Members wish to see continue.

Housing benefit has trebled since 1979 to some £10 billion today, so it is fully understandable why the Treasury should be so concerned. I welcome the reforms that are part of the packages recently announced by my right hon. Friend. That we should have some limit on what rents in a particular area should be eligible for housing benefit seems entirely reasonable to me, as does the idea that in a household in which people are working the person in receipt of housing benefit should have a corresponding reduction in that benefit. If we cut the subsidy to the Housing Corporations and, more generally, housing benefit--which we are not currently doing--the result could be a loss of confidence in the financial institutions that go into partnership with the housing associations to fund housing, that money will be there in future to fund social housing for rent. I urge my right hon. Friend to look carefully at pressure from the Treasury for a more broad-based reduction in housing benefit if at the same time there are reductions in the subsidy to housing


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corporations, because that could have an unfortunate impact on the housing association movement in this country.

The broad issues being discussed by the House today are right and proper. The Government are right to insist on linkage only to prices, not earnings, and I commend the orders to the House.

6.1 pm

Ms Liz Lynne (Rochdale): There is a great deal for us to debate this evening. I feel that this is an awkward way to debate the orders. As my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) said at the same time last year, it is an inconvenient mix and match of orders. It is difficult to give proper consideration to them all, but it is even worse today, because there are six orders before us. The Government might be quite happy to stifle debate, particularly on the sensitive issue of the habitual residence test, and avoid debate when the order was laid before the House and became law, but we are here today to debate whether we should revoke that order. I believe that we should, as I shall explain later. The order dealing with habitual residence tests has been tacked on to the end of five other orders, and we must get through all of them by 7 o'clock tonight. I shall deal with one order in particular--the reduction of class 2 national insurance contributions for share fishermen. That is welcome, of course, but it will not compensate for all the problems that British fishermen currently have, not least with the Spanish fishermen being allowed to fish in the Irish box. It is right that we should debate the rise in benefits in line with inflation, but I believe that the debate should be widened. We should be talking about a fundamental review of the whole benefits system. We should be talking about trying to protect people from poverty and getting people back into work. The Government, under the reforms banner--I believe that it is a banner--are hacking away at benefit expenditure, which is storing up problems for us in the long term. All these measures should be looked at in the light of that fact. In the Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order, for instance, the amount paid into that fund in 1995-96 must not exceed 10 per cent. of the benefits expenditure. That is a reduction of £2 billion on what the Treasury was able to spend last year to top up national insurance contributions. That is partly due to the rise in national insurance contributions and the fact that benefit payments have decreased. I would welcome that if it was for the real reason of getting more people back into employment, but that is not the main issue here. The Government are trying to save money by cutting benefits. I believe that they excel in short-term planning--looking towards the next election and no further. What they are trying to do, as in all other departments, is cut benefit expenditure so that they can buy votes with tax cuts at the next election. I do not believe that the British electorate will be bought at the expense of the most vulnerable in society.

We must look at the report from the Joseph Rowntree Foundation about the gap between the rich and poor. Poverty damages people's health. It will increase the bill to the taxpayer; the more ill people are, the more the taxpayer must pay. The creation of an underclass costs money, through an increase in crime. I believe that the


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