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House of Commons

Monday 20 March 1995

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]

Oral Answers to Questions


Housing Benefit

1. Mr. Simon Hughes: To ask the Secretary of State for Social Security what steps have been taken by his Department to ensure that up-to- date information is supplied by his Department's local offices to local authorities and to claimants, with particular respect to housing benefit claimants.     [12988]

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): We have introduced agreements between local authorities and Benefits Agency offices setting out the service to be delivered. Such agreements now exist in all Benefits Agency offices. Additionally, as part of a special exercise, seven local authorities now have direct computer access to income support information via a Benefits Agency operator. The results of this have been very encouraging.

Mr. Hughes: I am sure that that is helpful progress. Does the Minister agree that it is unhelpful when inaccurate or outdated information is either held by the DSS or sent by it to local authorities because such information often prejudices the rights of tenants who may be shown as being in arrears and thus prevented from

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having a transfer or disadvantaged in other ways? Will the Minister look at that to make sure that the incidence of such happenings is reduced as far as possible or eliminated altogether?

Mr. Evans: Clearly, the issuing of outdated or otherwise inaccurate information is a serious matter which can indeed prejudice claimants and we always bear in mind the need to prevent it as far as possible.

Mr. John Marshall: Will my hon. Friend confirm that housing benefit currently costs the taxpayer £10 billion and that it is one of the most rapidly growing social security benefits? Will he also confirm that in the London borough of Barnet people can receive £250 a week or £13,000 a year in housing benefit? That distorts the housing market, is a disincentive for people to work and may well be given to tenants who pay no rent at all, thus denying the landlord that benefit.

Mr. Evans: The answer to my hon. Friend's first proposition is yes. He gives the example of rents in Barnet being met by the taxpayer at the rate of £250 per week in housing benefit. That is why we seek to introduce a reasonable limit in the case of above-average rents.

Mr. Campbell-Savours: Does the Minister not realise that it is the landlord and not the tenant who gets all this money? The Minister might ask himself why rents have gone up to such an extent that we have to pay so much housing benefit.

Mr. Evans: Of course it is the landlord who gets the money. No doubt the hon. Gentleman would agree that the right to what is, in effect, an open-ended commitment to private landlords--

Mr. Campbell-Savours: You did it.

Mr. Evans: The system has been extremely successful in promoting the private sector, but there must be some limit to it. That is why we are introducing these proposals.

3. Mr. Jim Cunningham: To ask the Secretary of State for Social Security how many people are eligible for housing benefit.      [12990]

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The Secretary of State for Social Security (Mr. Peter Lilley): Some 4,667,000 people were receiving housing benefit in August 1994. The latest estimate of take-up was in 1992 when, of those who from the family expenditure survey data appeared to be entitled to claim housing benefit, between 88 and 93 per cent. were doing so.

Mr. Cunningham: Is the Minister aware that he has not given the most up-to-date estimate of people taking up housing benefit? Is he aware that in Coventry a combination of reductions in housing benefit and the jobseeker's allowance can cost many people up to £100 a week in lost income?

Mr. Lilley: I am not quite sure what point the hon. Gentleman is making. I have given the most recent figure--the figure at the middle of last year--for the number of people receiving housing benefit. Large numbers receive it, but a few do not claim it although they appear to have entitlement and are able to do so if they wish. None of the changes that we are making would prevent them from doing that. We are ensuring that those who choose to occupy properties with above-average rents for such properties in a particular area make some contribution to the rent or, alternatively, occupy less expensive property or negotiate a lower rent with the landlord.

Mr. Brazier: What steps is my right hon. Friend taking to ensure that councils weed out illegal immigrants from among those to whom they pay housing benefit? Has he seen the recent story in Private Eye about Hackney council and the supposed allocation of many council properties to illegal immigrants to whom, if the story is true, the taxpayer is presumably paying housing benefit?

Mr. Lilley: Illegal immigrants are not entitled to benefits, in or out of Private Eye . We expect local authorities to investigate and to pursue vigorously cases of fraud and not to facilitate it. As of last year, persons from abroad, as they are known in the lugubrious language of my Department--that is, those who enter this country legally, but on condition that they are not a burden on public funds--are no longer entitled to claim housing benefit.

Mr. Corbyn: Does the Secretary of State agree that the best way to reduce the cost of housing benefit would be to bring back rent controls and to stop the millionaires making a killing out of housing benefit, misery and poverty?

Mr. Lilley: That would only transfer subsidy from people in need to bricks and mortar indiscriminately. At the same time, it would destroy the private rented sector because it costs money to have low rents in publicly funded housing. If one destroys the private rented sector, one does not have a private rented sector. One of the successes of our policy in recent years has been to reverse the long-term decline of the private rented sector, which was smaller in this country than in any of our European Community partner countries.

Family Benefits

4. Mr. Sims: To ask the Secretary of State for Social Security how many families receive family credit; and how many received family income supplement in 1978-79.     [12991]

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): In July 1994, som

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572,000 families were receiving family credit compared with some 78,000 receiving family income supplement in March 1979.

Mr. Sims: Are those figures not a striking demonstration of the success of the Government's policy of directing money to those most in need? My hon. Friend will be aware of my correspondence with his office about a recent decision by a social security commissioner which has had the effect of depriving certain school workers, who work limited hours, of family credit. My constituent was not entitled to income support either. Can my hon. Friend confirm that the Government intend to change the law to correct that anomaly? If so, how soon will the law be changed and will it be retrospective? Can he assure me that people like my constituent will not be out of pocket at the end of the day?

Mr. Burt: To answer the last part of the question first, the original policy intention was that school workers should have their pay averaged over a term rather than over 52 weeks, for obvious reasons. The commissioner's decision put that interpretation at risk. Accordingly, we have already laid regulations, which will take effect on 11 April, giving effect to the original policy intention so that school ancillary workers will not be disadvantaged. The law cannot be retrospective, so it will apply from that date, but the regulations should help my hon. Friend's constituent and others in the future. On my hon. Friend's first point, the figures are a vindication of our policy of trying to improve the situation for people getting back into work. That is most important and it is one of the reasons why this country has the most successful policies on getting back into work compared with all our European neighbours.

Dr. Godman: Family credit is a social welfare subsidy for those who are paid disgracefully low wages, often by unscrupulous employers. May I urge on the Minister the need to ensure that such credit is paid quickly when claimants make a successful application for it? Too many of my constituents have had to wait far too long for that credit to be paid to them.

Mr. Burt: On the latter point, the present fast-track family credit procedure helps about 75,000 claims a year to be processed very quickly. We are introducing a pilot project intended, over a period, to deal with some 400,000 cases a year in which we expect to see family credit claims cleared extremely quickly. That will help to cover the situation that the hon. Gentleman mentioned.

On the hon. Gentleman's first point, a report in January 1995 from the Institute for Employment Research said that the availability of family credit had no effect whatever on the wages being offered. Family credit is a supplement for those who need it and an encouragement for people to get back into work. I should have thought that the hon. Gentleman and I would share the view that that was an important objective for us all.

Mr. Rowe: Can my hon. Friend give us an idea how much has been spent in total on family credit? From the evidence of my postbag, the number of people who complain that it is not worth their while to get back to work has fallen off very sharply and I seldom receive such letters now. Will my hon. Friend continue to press policy

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in the direction of eradicating the differential between benefits which are too high and wages which encourage people to go back to work?

Mr. Burt: The total amount of money paid through the family credit policy since 1988 is some £4.5 billion. That reflects payment of some 5.7 million awards as time has gone on. It has been a successful policy. We have increased the number of hours people are able to work. By adding the child care disregard recently, we have further added to the policy.

On my hon. Friend's second question, the whole point is that the best relief of all for poverty is ensuring that people are in employment. Anything which can be done to encourage and support that should be done. The present Government have seen some 600,000 come off the unemployment register in the past two years and family credit has certainly played its part in that.

Habitual Residence Test

5. Mr. Madden: To ask the Secretary of State for Social Security what reports he has received about British citizens being denied benefits under the habitual residence test.     [12992]

Mr. Lilley: I have received correspondence on this matter both from hon. Members and from other individuals and organisations.

Mr. Madden: Does the Secretary of State agree that when the test was introduced the House never envisaged that it would be applied to British citizens? Does he realise that many British citizens who originate from overseas perceive the test as part of this country's immigration controls? Will he address his reply to the question that I have asked about British citizens and not to Canadian backpackers with British citizens as grandparents?

Mr. Lilley: The regulation was always intended to apply to anyone who was not habitually resident in this country, who had severed his connections with this country and chosen to live elsewhere or who had been born and brought up elsewhere. That includes people who--technically--have British citizenship because they have British grandparents, but who may have been born and bred in Canada, who come here on working holidays, as the hon. Member kindly reminded us, and expect the British taxpayer to pay for their benefit. Surely the hon. Gentleman or, indeed, any hon. Member cannot believe that that is right. The extraordinary thing is that the Labour party opposes every measure that we introduce to stop abuse of the benefits system and then tries to get us to amend the measures in ways which are incompatible with the European Community law, to which it normally wishes to make us subservient.

Mrs. Roe: Will my right hon. Friend confirm that many of the so- called British citizens who are denied benefit under the habitual residence test have very little connection with the United Kingdom and that some have never visited this country before? Does he agree that we should limit benefits to those people who have demonstrated a commitment to this country?

Mr. Lilley: I am sure that my hon. Friend's view will be widely supported in the country. People believe that benefits should be available primarily for those who live

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and have their residence in this country and who contribute through the tax system directly and indirectly to the cost of welfare, and that benefit should not be available to those who have chosen to live elsewhere, to pay taxes to other people and to be dependent on benefits there.

Ms Lynne: Following the woefully inadequate reply to the question asked by the hon. Member for Bradford, West (Mr. Madden), does the Secretary of State accept that, although we all want to stamp out benefit tourism, British citizens are being caught in the net? Those who go away to work for a couple of years or who go to live abroad with their husbands and come back to this country because their marriages have broken down face destitution. Will the Secretary of State at least guarantee to look at the legislation again and take into account those particular British citizens who are suffering?

Mr. Lilley: On the hon. Lady's second point, as with all new measures, we are committed to keep this measure under close review to see how it works in practice. I assure her, however, that the vast majority of those affected are not British citizens. As for those who are technically British citizens, they are rarely in the circumstances that the hon. Lady described. Nevertheless, we shall of course keep the regulations under review.

Mr. Congdon: Will my right hon. Friend confirm that the changes simply bring us into line with other European countries where it is not possible for foreigners to claim benefits as of right? Is it not entirely right to put the interests of the British taxpayer before the interests of those people?

Mr. Lilley: My hon. Friend is right in that most continental countries have a residence system and only people with residence permits in those countries are entitled to the equivalent of income support there. No country in the European Community is entitled to discriminate on the basis of nationality, as the Opposition appear to wish us to do.

Mr. Bradley: When will the Secretary of State answer two simple questions which he has so far failed to answer on the Floor of the House or in parliamentary replies? How many British citizens have won their appeals against the decision to deny benefit under the habitual residence test and what reasons were given for their winning those appeals? If the Secretary of State is so sure that it is simply a matter of benefit tourism, will he give those answers today--or will the deafening silence continue, with many claimants being denied benefit and suffering severe hardship as a consequence?

Mr. Lilley: The hon. Member will know that I cannot, off the cuff, give the result of every appeal and the reasons for it, but I will respond to questions tabled by the hon. Gentleman as soon as the information becomes available. He would not expect me to do otherwise. There is an appeals system and it is right that there should be one. If people disagree with the judgment, they can take the matter to appeal. That would merely be a measure of how successful the appeal system is.

Private Pension Funds

6. Mrs. Angela Knight: To ask the Secretary of State for Social Security what is the total amount of funds in

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private pension provision in the United Kingdom; and what is the equivalent figure for the two next largest European Union countries.     [12993]

The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): In 1992, the total amount of funds in private pension provision in the United Kingdom was around £500 billion. That is more than three times the amount in any other European Union country.

Mrs. Knight: I thank my hon. Friend for that reply. This is an area in which we appear to be doing much better than our European partners. Can my hon. Friend confirm that more than 65 per cent. of people retiring now have occupational pensions, and that the Pensions Bill will mean greater confidence in occupational schemes so that personal schemes will be more attractive to many people, thus improving financial security in old age?

Mr. Arbuthnot: I can indeed confirm that. My hon. Friend is quite right. This is an area in which European and other countries are looking to us to take the lead. My hon. Friend may be interested to know that recently retired pensioners have been retiring with an occupational pension of around £100 a week on top of their state retirement pension.

Mr. Fraser: Is there not something seriously wrong when the initial charge on a pension contribution is equivalent to the first two years' yield on that contribution and when, in addition, the annual management charges take a substantial part of the yield? Are not a few people making a lot of money out of millions of pensioners?

Mr. Arbuthnot: The Government have made it plain that people must be able to judge for themselves which pension to take out. That is why we introduced, from 1 January this year, the requirement that there should be full disclosure of the amount of charges so that people can make their own choices.

Mr. Anthony Coombs: Recognising the United Kingdom's excellent record in respect of occupational pensions compared with its European counterparts, does my hon. Friend agree that one reason why in the past 15 years pensioners in this country have seen their incomes rise on average by 50 per cent. compared with an average of 30 per cent. is precisely because so many of them have made provision for their retirement through an occupational pension?

Mr. Arbuthnot: Yes, my hon. Friend is right. The additional flexibility that we are providing, partly in the Pensions Bill, and which we have been providing over the years, has attracted people to providing for themselves in old age. That has never proved attractive to the Labour party.

Mr. Ingram: When Ministers talk about personal pensions, they sound like seedy street traders saying, "Never mind the quality, feel the width." Why do the Government continue to over-promote the benefits of personal pensions when it is known that an estimated 1.5 million people have been wrongly advised to leave their occupational pension scheme and up to 2.5 million low-paid workers have been wrongly advised to contract out of the state earnings-related pension scheme in favour of a personal pension plan? Given the nature and extent of the scandal, why have the Government introduced further

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measures in the Pensions Bill actively to encourage even more people into personal pensions and away from well-run and well-funded occupational schemes?

Mr. Arbuthnot: I did not realise that I sounded like a street trader. The Securities and Investments Board has identified a problem and has made sure that it will not recur. We believe that it is right that those who are found to have suffered from mis-selling should be given redress. Appropriate personal pensions are right for some people. In many cases, they are the only thing for people. That is one of the reasons why we want to give more people more flexibility and more choice.

Low-income Households

8. Mr. Jacques Arnold: To ask the Secretary of State for Social Security what percentage of the bottom decile of income distribution had (a) a fridge-freezer, (b) a car and (c) a video recorder in 1979; and how many have them currently.     [12995]

Mr. Burt: Ninety-eight per cent. of households in the bottom decile of income have a fridge or fridge-freezer now, compared with 88 per cent. in 1979; 53 per cent. now have a car, compared with 40 per cent. in 1979; and 65 per cent. have video recorders, which very few possessed in 1979.

Mr. Arnold: Does my hon. Friend agree that if the hon. Member for Greenwich (Mr. Raynsford), who was not here to ask Question 7, had been present in the Chamber he would have learnt a great deal from the answer that the Minister has just given, which spoke for itself about the average income of people in that decile? Will my hon. Friend inform the House what has happened to the average incomes of people in that decile and what proportion of that decile is made up of pensioners?

Mr. Burt: There are a couple of important things about the bottom decile of income. It is always there: there is always a bottom 10 per cent. of income, no matter when or where we are. What matters is its composition. Since 1979, pensioners as a group have tended to come out of that decile, partly due to the increased amount of benefit from pensions and what has been achieved in that respect. For the bottom decile as a whole, housing costs have been at a standstill in relation to income. As we all know, the bottom decile is not always the same people. The Rowntree report showed that a third of those in the bottom decile in 1990 had moved up to the next decile or even the decile above that within two years.

Mr. Battle: It is tempting to ask the Minister to spell out how many fridge-freezers, cars and videos the top 10 per cent. have each. Is not the truth of the matter that under the Government the incomes of the bottom decile have fallen by 17 per cent. while those of the top 10 per cent. have increased by 63 per cent.? Where is the social justice in that? Would it not be better to give people real job opportunities rather than leave them to waste?

Mr. Burt: I do not think that there is any argument between the two of us or within the House on the last point. The importance of having jobs in the economy and the fact that jobs help those in poverty is paramount. I wish that, instead of just saying that, the hon. Gentleman and his hon. Friends would support some of the measures

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that we have taken over the years to increase the opportunity of jobs for everyone rather than carping about them, as they have so often done.

Mr. Thurnham: Is my hon. Friend aware that more than half of those who declare no income at all spend above the average for all other income groups? Does that not prove that there is a lot of nonsense in some of the low income statistics?

Mr. Burt: My hon. Friend is perfectly right. Some 750,000 of the bottom income decile group report nil or negative incomes; yet half of them spend more than the average for the population as a whole. The whole set of statistics is capable of a variety of

interpretations. The important point for the House is that there is no fixed group which always stays in the same place. People move throughout the income deciles according to what is happening in their lives. For the Government, the important thing is to make sure that the work that we do to increase the availability of jobs is successful. The fact that Britain has the most successful record in the European Community in terms of getting people back into work in the past couple of years is one that we should all welcome.


9. Mr. Janner: To ask the Secretary of State for Social Security if he will make a statement on his Department's assistance by way of benefits for the homeless.     [12996]

The Minister for Social Security and Disabled People (Mr. William Hague): A wide range of benefits, including income support, is available to homeless people, and housing benefit is available to help meet reasonable rents when accommodation has been found.

Mr. Janner: Is the Minister aware that changes in housing benefit due to come into effect in October are a source of worry to people involved with the needs of homeless people in Leicester and, I am sure, the rest of the country? Is he aware that the changes are regarded as inadequate and likely to make it more difficult for people to come into affordable housing, and that they will increase the already awful of burden of homelessness in this country? Will the Minister therefore reconsider those changes?

Mr. Hague: No. The changes to housing benefit concern above-average rents for an area, and are most unlikely to have an impact on the homeless. Homeless people are assisted by a wide range of benefits, including income support, and housing benefit will continue to be available to help meet reasonable rents. Community care grants and loans from the discretionary social fund are also available to help meet specific expenses, and the jobseeker's allowance is available to unemployed people--including the homeless--who satisfy the entitlement conditions.

Mr. David Nicholson: Does my hon. Friend accept that the number of people who are seen begging in the streets causes not only distress but great offence? Will he continue to work with other Departments to deal with the problem, which is often caused by drugs and alcoholism as well as by genuine homelessness? Does my hon. Friend agree that parents have a role to play? Does he further agree that if the rackets that my right hon. Friend the

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Secretary of State mentioned earlier were dealt with effectively, more money would be available to deal with those who are genuinely homeless?

Mr. Hague: My hon. Friend is quite right to refer to the important role which can be played by parents. He is also right to draw attention to the initiatives of other Departments. My colleagues at the Departments of the Environment and of Health have introduced initiatives to reduce the number of rough sleepers which have met with considerable success. The good news is that the third quarter of last year--the last for which figures are available--showed the tenth successive quarterly reduction in the number of homeless acceptances by local authorities, and the eighth successive quarterly reduction in the number of households in temporary accommodation.

Residential Care

10. Mr. Hinchliffe: To ask the Secretary of State for Social Security what representations he has received in the last 12 months regarding preserved income support payments to residents in care and nursing homes.     [12997]

Mr. Roger Evans: We have received some representations recently, both from individuals and from representative bodies, about the income support limits for people in residential care and nursing homes.

Mr. Hinchliffe: Is the Minister aware of the real difficulties facing many of the 80,000 mainly elderly people whose weekly incomes, including DSS benefits, do not enable them to meet the weekly fees of their care or nursing homes and that many of them end up in local authority care homes due to inability to meet their private care costs? Is it not disgraceful that the Government, having privatised the care of the elderly with such worrying human consequences, are now proposing to remove a vital safety net by taking away from local authorities the duty to provide their own direct part III accommodation for the care of the elderly?

Mr. Evans: The hon. Gentleman's last point does not follow at all. The private sector can provide the service better and more effectively. The 80,000 cases to which he referred are preserved rights cases.

Mr. Hinchliffe indicated assent .

Mr. Evans: I see that the hon. Gentleman nods. Those people were in residential care nursing homes as at 31 March 1993. Local authorities have the power to deal with the situation when such persons face eviction, or have their home closed. In the circumstances with which we are dealing, it is surely not reasonable to expect the public to pay fees at just any rate at all, as some can run to £1,000 a week or more.

Compensation Recovery Unit

11. Mr. O'Hara: To ask the Secretary of State for Social Security what representations he has had about the operation of the compensation recovery unit; and if he will make a statement.     [12998]

Mr. Roger Evans: A number of representations have been received.

Mr. O'Hara: Whether the Minister views the CRU from the conceptual, legal or moral point of view, he will

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find that its whole basis is fraudulent, that it represents a breach of the national insurance contract with the electorate and that it is one of the meanest contrivances of a mean-minded Government. Will he therefore give a commitment at least to review the many anomalies in a system which impacts so acutely on damaged lives?

Mr. Evans: That is a grossly over-exaggerated statement. The existing system was simply unacceptable and arbitrary and that is why the Public Accounts Committee condemned it. It was a subsidy out of public funds to the negligent and the partly negligent. In the case of disabled people in receipt of mobility or attendance allowance, it was also a system that allowed the whole sum to be deducted in full without any future limit whatsoever. The Government's proposals are an improvement on the existing system. Of course, we will consider the report by the Select Committee on Social Security in due time.

Lady Olga Maitland: Does my hon. Friend agree that negligent employers and their insurers should fulfil their responsibilities, rather than pass them on to the taxpayer?

Mr. Evans: Yes.

Mr. Dewar: Will the Minister confirm that the average sum recovered in the 60,821 cases dealt with between April 1994 and the end of February 1995 was more than £15,000? Even if there is a case for recovery where wage loss is included in the settlement, how can he defend a situation in which the compensation for pain, suffering and loss of facility is clawed back by the Treasury? Is that not indefensible?

Mr. Evans: No. The average sum recovered during the operation of the scheme is a modest £2,200 per case. On the disaggregation of the award or settlement, only a small fraction of the cases are ever fully and properly determined by a judge. That is highly desirable because it saves money for everyone involved and speeds up the settlement process. Any attempt to disaggregate a settlement that was entered into freely is impractical to organise without considerable expense and would not be as satisfactory as a trial in every case, which would be unthinkable.

Post Office Payment System

12. Mr. Ian Bruce: To ask the Secretary of State for Social Security if he will make a statement on the progress of introducing new technology for the delivery of benefits through the post office network.     [12999]

Mr. Lilley: Five companies have been selected by Post Office Counters Ltd. and my Department, as potential prime contractors to automate the payment of benefits. Discussions are now taking place with each of the suppliers. In the next few months, consultations will be held with sub- postmasters and organisations representing benefit customers. It is expected that phased installation of equipment in post offices will begin in the spring of next year.

Mr. Bruce: May I thank my right hon. Friend for that answer and the good news that the system is moving ahead rapidly, because it will be good for post office viability and the reduction of fraud? Can he assure the House that, before moving to wide-scale use of information technology, the initial installations will be

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