|Previous Section||Home Page|
Column 881Secretary of State for Social Security acknowledged that fact when he spoke in Northern Ireland a few months ago. He talked about the gap between the rich and poor and about the unemployed. He linked it to a rise in crime. It will have a knock-on effect for the taxpayer--through higher prices not only for the police and the prison service but for insurance premiums, as crime rates go up. The most recent report from the Joseph Rowntree Foundation said that the tax and benefits system does not bolster the married state. The Government talk about the family all the time. I firmly believe, as I am sure do hon. Members on both sides of the House, that a stable family--and I mean a stable family--is the best way to bring up children, but the Government are letting the family down. One has only to look at that report to know that that is true. There will be a tremendous knock-on effect for the stability of the country in the future.
Ms Lynne: I really wish that I had not given way to such a stupid remark. We are talking about social security uprating. Perhaps if the hon. Gentleman is called, he can make his points in his own way. The Secretary of State should be addressing all aspects of benefits and should not just talk about benefit tourists, scroungers and fraud, although I want to get rid of fraud as much as he probably does. He must examine the more difficult arguments as well. It is all very fine for him to get a standing ovation at the Conservative party conference when he talks about wiping out fraud. I would like to see him get a standing ovation at that conference by talking about investment in people. I doubt very much whether he would get one, or indeed whether he would even talk about it.
I welcome the chance that the orders have given us to debate benefits. We must use the benefits system to lift people out of poverty. They are usually there through no fault of their own. We must ensure that they can make a worthwhile contribution to society in future. But that requires bold planning. We need to bring in some bold measures. I would like to see a proper, full benefit transfer scheme to get people back into work. I would like to see a low-income benefit. I make no apology for mentioning it again, but I would like to merge income support and family credit so that people are always better off in work and do not lose benefits pound for pound. I would like to see a top-up element to the basic state pension--it has gone down in real terms since the Government came into power--in line with income support, and for that top-up element to be linked to earnings.
Mr. Heald: The hon. Lady--like the Rowntree report--seems to advocate raising the level of benefits above that of price inflation. Will she cost that? What is the Liberal policy, and by what amount should the benefits be uprated?
Ms Lynne: If the hon. Gentleman had been listening, he would know that I was proposing the restructuring of the benefits system and the introduction of a benefit transfer scheme. I was proposing the merging of benefits. I cannot talk about the possibility of uprating income
Column 882support and family credit, for instance, given that we want to merge the two schemes into a single low-income benefit. That is the way in which we can return people to work.
The debate gives us a great opportunity to examine the Government's strategy. In fact, I do not believe that they have a strategy to improve the benefits system. Although I welcome the introduction of a measure on statutory sick pay to remove the burden from small businesses, its effect is very small in comparison with the impact of the Statutory Sick Pay Act 1994 on small businesses throughout the country. I doubt whether many small businesses are currently congratulating the Government.
The Government are trying to pretend that they are giving more than they are. Similarly, they stated that under the Act small employers would be given a rebate if an employee was off sick for more than four weeks; they failed to add that the majority of employees return to work before the four weeks are up. Nevertheless, the order that we are discussing will help small businesses if, for instance, a large number of employees are off work with flu. I welcome that, but it should have been in the Act.
Employees have suffered discrimination under the current statutory sick pay arrangements. Now that firms must pay 100 per cent. of the bill, employers are looking for people with better sickness records. That is understandable, but it is not acceptable. Employers have dismissed staff who have worked for them for under two years because of their sickness records; citizens' advice bureaux have a list of problems connected with the Statutory Sick Pay Act, but the order contains no proposals to help the people concerned.
As I have said, I welcome the small amount of help that has been given, but I feel that we should consider wider issues. I was sad to note that maternity benefit and the funeral grant have been left out of the uprating of the social fund; I was particularly sad about the funeral grant.
In 1986, the right hon. Member for Huntingdon (Mr. Major)--who has already been quoted--said that the habitual residence test would be an administrative nightmare. I entirely agree: indeed, it is already beginning to be an administrative nightmare. The Secretary of State mentioned benefits to tourists in his speech at the Conservative party conference, and that is why the order was laid. The right hon. Gentleman even acted against the advice of the Social Security Advisory Committee.
The problem with the test is that it does not define habitual residence for the purpose of the order, and there will therefore be appeals in many cases. Many such cases are being won, but in the mean time the people involved are denied benefit because the Government say that they will appeal again. I very much doubt that they will pay interest if the next appeal is won.
I have encountered several such cases in my constituency. One of my constituents has worked in this country for some time, but when his father became very ill in Pakistan he went off to look after him. It took just over a year for the father to die. The son returned to this country, began to work again and paid his national insurance and tax contributions. Then his mother was taken ill. As there were no other relatives to look after her, he had to return to Pakistan to nurse her and take care of all her affairs. She subsequently died. The man has just returned to this country. He came to my surgery last week in a terrible state, because he was receiving no money. He has nothing to live on. This is a
Column 883man who was working in this country, and paying tax and national insurance. Now he is living off friends: he is desperate. I am sure that, if the Secretary of State or the Minister had seen him in my surgery, they would have realised that he was a genuine case. He is a British citizen, and has worked in this country.
In the speech to which I referred earlier, the right hon. Member for Huntingdon said that people should be able to obtain money from the social fund if they were turned down for income support, housing benefit or a rebate for poll tax--which has now become council tax--or if they failed the habitual residence test. My constituent could not obtain money from the social fund; he has no money at all. The right hon. Member for Huntingdon-- who, of course, is now the Prime Minister--went on to say:
"What is clear from all our habits and history is that when people are in desperate need it has never been the fashion in this country--nor would it be the wish of my hon. Friends--not to provide assistance that is sorely needed."--[ Official Report, Standing Committee B , 27 February 1986; c. 537.]
Things may have changed; things may have moved on. But that is still an excellent argument against the test.
The main problems have been experienced by British nationals, although the order was designed to catch foreigners. I do not want people to come here and claim benefit to which they are not entitled, but the legislation is affecting British citizens who, having gone abroad to work on contract for perhaps a couple of years, return to find that they cannot claim anything.
Another example is the person who lives abroad with a spouse who subsequently dies. It is usually the wife who returns to be near the family; that wife is not allowed to claim benefit. She is refused under the habitual residence test. A constituent of mine is in that position. Her husband is dead, she has two children and she cannot claim any support.
In the first three months of the operation of the test, 2,086 British nationals were denied benefit. We are not talking about foreigners; we are talking about British nationals. The money is means tested, so the revocation of the order would not benefit those with considerable resources. It is those with nothing--those experiencing real hardship--who would benefit.
The Child Poverty Action Group has drawn attention to the case of a British woman who went to Spain. It was the usual story: she married, and then went to Spain to live with her husband. He left her, and she came back to this country with two children aged seven and 10. Her husband had left her with no money, and she had nowhere to live in Spain, so she returned to this country. She could not obtain income support, because she could not prove that she was habitually resident here. She, too, has no money. How on earth is she supposed to support her two children?
I do not see how the Government can fail to accept that a number of people have suffered acute hardship. That number does not run into many thousands now, but if we do not revoke the order it could increase dramatically. I only wish that the nice words of the right hon. Member for Huntingdon meant something today. Surely, now that he is Prime Minister, he should have more influence; he should read again what he said in his speech about the habitual residence test. The Secretary of State and the Minister should also take note of what the Prime Minister said then.
Column 884What savings will the Government make? I do not think that the savings could compare with the misery that the Government are creating for some British families. I hope that they will revoke the order, because it is targeting the wrong people. It must be scrapped because, otherwise, people will live in abject poverty. We must also consider restructuring the whole benefit system, otherwise we will have not only a two-tier health service, but a two-tier wealth service, which will tear the country apart.
Mr. Patrick Nicholls (Teignbridge): This--and any--debate on public spending must start from the basic proposition: what can the country afford? After all, every penny that is paid in benefit ultimately comes out of the taxpayer's pocket. We have been able to uprate these benefits fully against inflation because the economy is being run properly. A large amount of money--£1.5 billion--is involved. In no shape or form is that a small or trifling sum; yet as the economy is being run properly, by the end of this century about £8.5 billion less than had been anticipated will be spent. That is the effect of the recovery which has resulted from the Government's policy. As my hon. Friend the Member for Worcester (Mr. Luff) said, the sums involved are so huge that one can hardly get a grip on them until one bears in mind that they represent £15 for every working person for every working day. The fact that the country can afford largesse on that scale, paid for by the taxpayer, is a remarkable achievement and it is due in no small measure to the Government's actions. Some people look across the channel--although I do not--harking to the European model and thinking that things might be better over there. It is significant that in the past two years Germany has had to restrict the uprating of benefits to 2 per cent. No pretension exists there that it would be possible to link benefits to the inflation level.
The Government's record speaks for itself. These uprating orders speak for themselves and they are a remarkable achievement. In a sense, the debate need go no further than that. One might honestly have wondered why the orders could not simply have gone through on the nod, perhaps with just a short speech or two to compliment the Government on their achievement. That would have been a waste of an opportunity. After about 14 years in the House, I still retain a complete lack of cynicism. I thought that we knew where the Government stood on this, but that it would be a useful and fair opportunity to hear what the Labour party would do to improve the position. The debate would even give it the opportunity to say, "Thank you and sorry". I thought that we could come along and hear what Labour's alternatives are.
It may be the passing of the years and defects in hearing, which can affect us all, but I did not hear anything from the hon. Member for Manchester, Withington (Mr. Bradley), the Labour Front-Bench spokesman, to give me the merest hint of what we might expect from a Labour Government. One must go back into history to the last Labour Government to get any clue about what might be in store. Let us consider what might be in store in terms of public expenditure and on the basis of the model of the last Labour Government. It was not a question of coming to the House in a calm and moderate way and saying, "These are the things that we can afford.
Column 885We can afford uprating in accordance with the level of inflation". Oh no, there was a telephone call from the International Monetary Fund calling the Chancellor of the Exchequer back from an airport. That is the way things were done in the old days.
Anyone who doubts that can refresh their memory by reading the Rowntree report which, as we heard again from my hon. Friend the Member for Worcester, is not particularly perfect but which reminds us that the wages of the lowest-paid men fell between 1975 and 1978 and that it was only under a Conservative Government that in due course their wages increased. That fall did not occur because of a defect of compassion among Labour members or because they were insouciant. They were simply incompetent: they could not run an economy capable of generating the tax revenue which turns compassion into something realistic and tangible.
The Labour party's policy on benefit is a bit like its policy on interest rates. That is the nearest that one can get to a definition of it. Whatever interest rates are at any given time, the Labour party says that they should be 2 per cent. lower. On benefits it says, "We are not quite sure what our policy is, but whatever it is it will be better than that of the Conservative party."
When the right hon. Member for Sedgefield (Mr. Blair) was given the opportunity to talk about this, he said in the New Statesman and Society of 15 July 1994:
"I do not think it is sensible for Labour to write tax and spending policies now."
Really? It might not be sensible to give them in detail, but perhaps just a little hint, a taster or an indication of what might be on offer should be given. The only indication that I have been able to find is an apparent commitment that the upper rate of tax might go up to 50 per cent. So far so good. Is that an aspect of compassion? Not really. The figures have been quoted time and again. The figures were revealed first by the hon. Member for Birkenhead (Mr. Field), who does know something about social security matters. In 1986, he was the first to table a parliamentary question which revealed that when tax rates are reduced the total amount of tax paid to the Exchequer by the richest people in the land increases. So if one is in the business of generating more tax income to spend on people who should benefit, one achieves that by lower and not higher tax rates. The one piece of policy that I have been able to glean from the Labour party--that the upper rate of tax might go up to 50 per cent.--will satisfy the neo- Stalinist tendency in the Labour party, but it will not produce any more money. An opportunity has been lost today to find out the Labour party's attitude to that.
What are people looking for in the orders? First, they are looking for a sense of fairness. The point about the habitual residence qualification has been referred to on a number of occasions. I listened carefully to the hon. Member for Withington and responded to him in the most charming way. I asked whether he would revoke the order. When I saw that he was running out of time, I thought that I had to help him and that he should not run of time without answering that question. In my usual kind-hearted way, I stood up and reminded the hon. Gentleman that time was running short and that he would have to answer that question--but he did not do so. In the
Column 886end, the closest he could get to an answer was to say that he was very unhappy about the definition of the order, but he was not quite sure whether he would revoke it or not.
For a legislator to complain about a lack of definition to get out of answering a straight question is intellectually dishonest. We can always change the definitions in the House. We needed to hear from the Labour party today whether it had a contribution to make to changing the definition, which preserves the principle of a habitual residence qualification.
I know the vice at which the order is being aimed, and so do my constituents. I find it bizarre to hear Opposition Members say that the present definition is so unfair. I will tell hon. Members some of the criteria that are brought into play in deciding whether a person has a habitual residence qualification. I will cite just three. The criteria include showing a genuine commitment to living and working in the United Kingdom, a previous record of work or contributions to the UK, and answering questions such as why they came to the UK, whether they have a home elsewhere, and what their intentions are as to residence.
There does not seem to be anything too draconian in those criteria. There is ample opportunity to say, "I was born in this country and I was working here. Then I went abroad, but I had a family crisis over there and the job fell through, so here I am back in this country."
The possibility exists within those definitions to produce a sense of fairness. If something else is necessary in the light of experience of Conservative and perhaps Labour members, let the definition be considered again. But the concerns of my constituents about benefit tourism will not be answered by the Labour party turning around and saying either, "We simply do not agree with the concept" or, "We cannot quite bring ourselves to do that, so we shall carp endlessly about the definition without saying whether we intend to revoke the order or not."
Any system of benefits and the acceptance of these orders rely on the support of and acceptance by the taxpayer that the Government are properly disbursing the money that the taxpayer contributes. It is directly relevant to consider cases such as the one mentioned in the House some two weeks ago involving the famous Watters family with five children and receiving the equivalent in benefits of £25,000 in pre-tax income. That has done incredible damage to acceptance of the social security system. It is difficult to exaggerate the effect that that has on traditional family views. People in the neighbourhood say to themselves, "I could not begin to earn half that amount, but if I was on benefit I could." That causes outrage among the public and must be dealt with.
If any Members are in doubt about the way in which the benefits system is sometimes seen by ordinary members of the public, they could do no better than consider a letter that I have received today from a pensioner in Plympton, which is not in my constituency-- [Interruption.] Interestingly, the person concerned wrote to me with this debate in mind. I shall not quote the whole letter, although it would certainly bear quotation. It says:
"It is very disturbing that whilst extra charges and taxes can be imposed on us so easily, there is no . . . correction made to the reckless and unjustifiable distribution of taxpayers' money. The
Column 887various agencies are given more and more, flout the principles of the guidelines under which they are supposed to work, take more and more for their own benefit and look for bizarre ways of spending--such as six `helpers' taking one offender on holiday, sending criminals on safari trips--again with an adequate number of minders. Every day one can read in the papers about the squandering of money on legal aid. Politicians agree it is wrong, taxpayers are appalled but nothing is done to stop it." [Interruption.]
Madam Deputy Speaker (Dame Janet Fookes): Order. There are too many seated interventions. If the hon. Member for Islington, North (Mr. Corbyn) is hoping to catch my eye later, I hope that he will bear in mind my dislike of such interventions.
Mr. Nicholls: We must address the fact that people in this country feel that those are considerations which sometimes influence our debate a great deal more than they should. In the end, whether we like it or not, the benefits of which the House disposes are paid for by people who overwhelmingly are basic rate taxpayers. The money has to come from their pockets. If the benefits system is to be credible, the middle classes must believe that it is running properly and that it is looking after those who cannot look after themselves. We can compare the contributions that we have heard today from Opposition Members with the measured way in which my right hon. Friend the Secretary of State was able to introduce these upratings. If the middle classes want to know that they have a Government capable of working out what the country can afford and focusing funds on those on whom they should be focused, there is no doubt that they should hope for the continuation of a Conservative regime and not what has been represented from the Opposition Benches.
Mr. Jeremy Corbyn (Islington, North): There is an air of unreality about the debate. The hon. Member for Teignbridge (Mr. Nicholls) was carrying on as though those living on benefits were living the life of Riley. He totally ignored the fact that he has been loyally, if not slavishly, supporting a Government who for the past 15 years have presided over an increase in the wealth of the richest 10 per cent. by about 62 per cent., a decrease in the living standards of the poorest 10 per cent. by at least 17 per cent., an increase in homelessness, an increase in the number living on below average earnings from 5 million to 14 million, an increase in the number of children living in poverty households from 1.4 million to more than 4 million while at the same time the Government have been selling off all our publicly owned utilities at knock-down prices--giving them away --encouraging shareholders to make a great deal of money out of them initially and allowing chief executives to have take-home pay of hundreds of thousands of pounds per year. The Government have created the misery, divisions and horrors that exist in our society today. These orders simply confirm the trend that has gone on for the past 15 years. The Government talk as if they are handing out gifts to the poorest people in our society. In fact, they have presided over a reduction in wage levels for the poorest and an increase in salaries for the very richest. They talk as though pensions were the greatest burden on our society. They should take a look around and meet those struggling to survive on the state pension and any other state benefits to which they are entitled, particularly older women pensioners who have no access
Column 888to an occupational pension scheme, no access to any savings and who rely on the pension, income support and housing benefit to get by. The hon. Member for Worcester (Mr. Luff) has, gladly, left us. He said that we should take into account all the other benefits to which people are entitled, such as the public transport subsidy. The very poorest cannot even afford the subsidised bus fares that are on offer. Before Conservative Members start to talk, as they do, about the use of the national health service and other things, they should study the reports and see who gains the most from the NHS and who gains the most from the state education system. It tends to be the most articulate middle classes in our community rather than the very poorest who do best out of those services. Those issues need to be addressed.
Conservative Members talk about the need to curtail and control housing benefit expenditure. I can provide a simple answer as to why housing benefit expenditure has increased. There are two reasons: first, unemployment has increased, so eligibility for housing benefit has gone up; secondly, rents have gone sky high, encouraged by a Government hell bent on deregulation. The housing benefit helps not the individual but the landlord, whether it be a private landlord, a housing association or a local authority.
The Government say that there is the option of private rented accommodation. Last week I was talking to an unemployed man of no fixed abode. He moves from friend to friend and relative to relative, getting a night's kip here and a night's kip there. He cannot get a council house because he is a single person with no dependants. He asked me for advice. I asked him what he had tried and he told me that he had tried everywhere. I said, "What about private rented accommodation? You will get housing benefit to pay for a bedsit or a small flat." He said, "That may be so, but find me a landlord who will let me move in without putting down a deposit of at least a month's rent, if not three month's rent, and who will give me the money for that?" That is the reality of the housing benefit rules. Conservative Members decry anyone who looks seriously into the issues of poverty in our society. They decry the Rowntree report and anyone who talks about poverty.
The Government decry anyone who tries seriously to examine poverty in Britain. The Government have presided over a massive growth in poverty. They are encouraging and creating poverty in our society. Then they claim that unemployment is falling and that everyone is better off. It is true that the unemployment figures indicate that it is falling, but it is also true that the number of people denied benefit is increasing and the number of people living with no real support is increasing very rapidly.
The debate should be much longer because this is an important and serious subject. The central thrust of the Government's intentions is to reduce the overall cost of social security. They are trying to do it by privatisation and by decreasing the level of the state pension so that people in middle age are forced to take out a portable private pension scheme, however insecure that might be,
Column 889so as to provide something for themselves when they reach retirement age. To create that false market for the private pension scheme--the Secretary of State admitted it to the Select Committee- -they are subsidising the national insurance fund. The Government are prepared to back up private investment and to create this false market while doing nothing about the serious problems of the waste of human resources, human life and human expectations as a result of the increase in poverty in Britain.
We need an attack on poverty in Britain. We need a real welfare state. Our welfare state is not safe in the hands of the ideological monsters on the Government Benches who are hell bent on destroying it.
Mr. David Lidington (Aylesbury): I take up a point raised by the hon. Member for Islington, North (Mr. Corbyn). Nobody would wish to quarrel with the objective of seeking policies that are designed to tackle problems of poverty. The important difference between us is that Conservatives believe that such policies need to be based on a thorough analysis of where those problems derive from, how they can be tackled effectively and at what cost and from whom such costs should be met.
I want to raise a point of detail as well as some more general points of principle. That point is the cash limit placed on funeral expenses, which was referred to by the hon. Member for Manchester, Withington (Mr. Bradley). I understand and support the reasons behind the change in the Government's policy, but I bring to the attention of my right hon. and hon. Friends the concern of some funeral directors that increased church fees for ecclesiastical funerals may, in some circumstances, make it difficult for them to meet the cap imposed by the Department of Social Security. There are always difficulties in deciding whether a system should be discretionary or based on a formula, but I hope that my right hon. and hon. Friends will bear that point in mind.
My right hon. Friend the Member for Chelsea (Sir N. Scott) and my hon. Friend the Member for Worcester (Mr. Luff) talked in some detail about the demographic and social changes that will shape the debate about social security over the next couple of decades. My hon. Friend the Member for Worcester alluded to the continuing cost of social security. We are talking about a system where expenditure has increased sevenfold since the initiation of the welfare state in the late 1940s and early 1950s. If one tracks through recent Treasury Red Books the underlying pattern of non- cyclical social security expenditure, one sees a continuing upward pattern- -£49 billion in 1989-90, just over £70 billion in the current financial year and an estimate of £79.5 billion in 1997-98.
I welcome the news from my right hon. Friend the Secretary of State that the projected growth in non-cyclical underlying spending is to be reduced, but, as my hon. Friend the Member for Worcester pointed out, underlying growth of 2.1 per cent. year on year rests on the ability of our economy to generate the wealth which is needed to pay for that increase. It is in that context that we have to take account of the demographic changes--the growing number of elderly people relative to a shrinking
Column 890population at working age and the changes in family structure--which affect levels of income support, family credit, housing benefit and council tax benefit.
Obviously, the most important way in which to cut social security spending is to encourage employment. I am less cynical than the hon. Member for Islington, North about progress in that direction. I particularly welcome the elements in my right hon. Friend's package of measures which are designed to encourage people to go back to work, such as the back-to-work bonus, cuts in employers' national insurance contributions and changes to the regulations which make it easier for an unemployed person to try a new form of employment without necessarily putting at risk his future entitlement to benefit if that trial employment does not work out. I welcome those measures and would like such efforts to continue.
The relationship between family policy and the social security system is worth several days' debate in its own right. All I would say is that it is not a problem that we alone confront. The Germans, for example, require adult children to contribute towards the upkeep of very elderly relatives who require residential care. The Government cannot be indifferent to the costs which broken relationships and broken families force on the benefit system. In their differing ways, the most recent report of the Rowntree trust, the Institute of Economic Affairs and the Archbishop of York have all said that we must look carefully at the impact of tax and the benefit system on family life. As a country, we must get the balance right between family responsibility and state responsibility. That objective admirably suits the political approach of my right hon. Friend the Secretary of State.
Mr. Thomas Graham (Renfrew, West and Inverclyde): I am once again appalled that further poverty is being inflicted on our folk, although I welcome the meagre increases that the Minister has announced. Those increases do not, however, go far enough and do not deal with the tragic poverty and suffering in Britain. I was amazed that the Minister capped the funeral benefit at £875, when the professionals are clearly telling him that £1,200 is needed for a poverty funeral. Let us be honest. We will be talking about bin-bag burials in Britain if the Government continue their policy. They are not listening to the people who perform the burials. What a tragic situation we have in Britain when people in poverty cannot bury their folk with dignity. A wee bit of support from the Government should be encouraged. Yes, Minister, I believe that you are creating a bin- bag burial policy--
The hon. Member for Worcester (Mr. Luff) mentioned housing benefit. Yes, it has trebled--but why? It has trebled because rents have increased in Britain and in Scotland, especially under the quango Scottish Homes run by this Government, which has constantly increased its rent every year by 10 per cent. or four times the rate of inflation. Indeed, it has increased its rent by three times the rate of inflation this year. Housing benefit has gone through the roof because the Government do not have a
Column 891decent housing policy that gives folk with low incomes the right to a reasonable living standard, a home and a roof. Housing benefit has tripled because of the Government's bad housing policy.
If the Minister goes about Britain, he will see car boot sales and thank God for them because they provide many goods at low cost which the Government's policies do not allow folk to purchase in the shops. Car boot sales provide one of the best social benefits that this country has seen for many years. Who would have believed that? That is the economy that the Government are forcing on the people of Great Britain.
An article in the Evening Times describes Britain as
"A land fit for Dinkies".
When I was a kid, dinkies were motor cars but, in this case, they are people who survive only if they have a double income and no kids. The article also says that even Spain is no longer taking people from Britain who have a basic pension because they are too poor. The article points out the social benefit protection per head in Luxembourg, Germany, Netherlands, Denmark, France, Belgium, Italy, the United Kingdom, Ireland, Spain, Portugal and Greece. Does the Minister know where we come on that list? We come seventh. It is unbelievable that the great, wealthy nation of Great Britain has lowered its people to a basic income that is seven times lower than that in many other countries. Let us take the highest figure. Benefits in Luxembourg are £5,000 per head. What does Britain provide? Its figure is £3,163.
The Government are pathetic. In no way are they looking after the needs of the people whom they have made poor. They have done nothing to help the low -paid climb to the upper echelons of living standards--a rightly deserved move. They have allowed themselves to be driven by a low-wage economy. It is time that the Government supported the social chapter in Europe. That is the way forward to ensure that our folk have a decent, basic, minimum wage, with which they can hold their heads up high and pay for their purchases, as we are all entitled to do. Once again, the Minister has got it wrong. He is well-known as the Minister of misery.
Mr. Bradley: It has been a thoughtful and, at times, fiery debate, if all too short. I shall be brief because I spoke for a considerable time when I opened the debate and I want to give as much time as possible to the Minister so that he may respond to the many questions raised.
I commend one or two speeches, especially the thoughtful--as always--speech made by the right hon. Member for Chelsea (Sir N. Scott). I was disappointed with his conclusion on the introduction of incapacity benefit. In Committee, I thought that he was moving the Social Security (Incapacity for Work) Bill through the House with a heavy heart. Clearly, I misinterpreted that--the right hon. Gentleman is now fully signed up to its implications. I shall watch with interest when those implications come to fruition.
I hope that the Minister will consider in some detail the many cases of genuine concern that hon. Members have brought to the attention of the House, which cannot be
Column 892described as benefit tourism, to ensure that, as there is no definition of the habitual residence test, the interpretation of the criteria does not in any way undermine claimants.
The hon. Member for Teignbridge (Mr. Nicholls) made his usual interesting speech. I thought that it was a bit rich for him to commend the Government on efficiency when, in one day, they spent more than £7 billion on the debacle of the exchange rate mechanism. The Labour party will clearly be voting to revoke the habitual residence test.
Will the Minister specifically consider the issues that I raised on uprating, especially the compensation recovery unit, and the concerns that have been expressed by hon. Members from all parties about the social fund and funeral costs? Most importantly, I hope that the Minister will give us all the details that we are seeking about how the habitual residence test is operating in practice. How many people have been refused? How many of those who have been refused have appealed? How many appeals have been successful? What has been the administration cost of the habitual residence test? What has been the net saving through the denial of income support as compared with the cost of administration of the habitual residence test?
Until we have those assurances, that information and the information that we seek consistently through parliamentary questions, so as to discover what is happening in the real world, from which in many ways the Secretary of State's contribution today seemed remote, we shall continue to vote against the orders on the habitual residence test.
The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): I am afraid that several questions will remain unanswered this evening because I do not have much time to respond to the debate. I shall try to write to hon. Members in respect of any questions that remain outstanding.
It is the custom to say that a debate has been interesting. In this case, that is perfectly true. We have been sitting on the edges of our seats waiting to hear what the Labour party would propose instead of the uprating orders. Sadly, we were deafened by silence. In that regard, my hon. Friend the Member for Teignbridge (Mr. Nicholls) made a telling point. My right hon. Friend the Member for Chelsea (Sir N. Scott), in a deeply considered and compassionate analysis of the problems that we face, also made the point in a way that left the Labour party more silent than it normally is. Would Labour reverse our mortgage interest provisions? The answer was silence. Would Labour reverse our changes to housing benefit? The answer was more silence.
For such a talkative Opposition, they have very little to say when it really matters. The hon. Member for Manchester, Withington (Mr. Bradley) asked me about uprating, and referred to statutory maternity pay. He was right to say that it is not being uprated in April; that is because it was uprated last October by 7.5 per cent. However, he was silent about what he would do about it. He was asked whether, if he were in power, he would have uprated those payments. We shall never know the answer.
The hon. Member for Withington made several other points, one of which was about non-dependant deductions. He suggested that they were too high. It is reasonable to
Column 893expect the highest earning adult non- dependants to make a significant contribution towards their housing costs. Even so, the highest non-dependant deduction of £30 is a lot less than the average market rent and the council tax that he or she could expect to pay if living as a tenant elsewhere.
There were other interesting contributions to the debate. The hon. Member for Rochdale (Ms Lynne) made several points. She said that pensions had not kept pace with inflation. They have. She said that there should not be a reduction in the Treasury top-up to the national insurance fund. However, the point is that national insurance contributions are not going up this year, contrary to what the hon. Lady said. Employers' contributions are going down and the economy is improving. That is why more people are in work and earning more. That means more income to the fund from national insurance contributions.
We are here today to ratify the orders which will give effect to another full benefits uprating. Our approach is to use the taxpayers' money in the most effective way. That means targeting on the people who need most help; for example, the extra £1.2 billion a year since 1988 to poorer pensioners. That gave rise to the very important point raised by my right hon. Friend the Member for Chelsea and by my hon. Friend the Member for Worcester (Mr. Luff)--that targeting can be resented by those who have just missed being in the target group. That problem is inherent in any benefit system unless we pay benefits to everyone. The key point is to improve pensioners' income overall, and that is happening dramatically under this Government. My hon. Friend the Member for Aylesbury (Mr. Lidington) made a very good point about the size of social security spending which takes up one eighth of gross domestic product. As a result of our reforms, we expect that to reduce over the longer term and that is being achieved in large part by the reduction that we have already seen through tighter control of abuse in the benefits system, by bearing down on fraud in respect of incapacity and sickness benefits.
I want now to deal with the Opposition motion to revoke the habitual residence test. Britain's reputation among young Europeans is one of a good place to spend a summer holiday. How right they are. We welcome each and every one of them, but we ask that they pay their way. The Department's postbag from the British public was sending a very strong message indeed. The public are simply not prepared to support people who have no connection with, or commitment to, this country.
In that regard, I am thinking of the 36-year-old German woman who, in her first visit to this country, arrived in the United Kingdom on 16 January to look for work. She says that she was told in Germany that she should be able to claim benefits. Opposition Members have made great play of the plight of British citizens denied benefit because they could not fulfil the conditions of the test. The reality is rather different. In reality, they are strangers to the United Kingdom and certainly strangers to pay-as-you- earn.
Take, for example, the 28-year-old woman, who has lived in Nigeria for the past 20 years and had a job there until leaving for the United Kingdom. She has an eight-month-old child. She has left her husband who remains in Nigeria. Or one can take the 22-year-old
Column 894Canadian-born woman, of British parentage, visiting Edinburgh with the intention of then backpacking around Europe--
They are very welcome, but not at our expense. The hon. Members for Withington and for Rochdale made play of the fact that a different test was rejected by the Prime Minister in 1986. That test applied after only 12 months and it was a test which would have been in breach of European Community law.