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BUSINESS OF THE HOUSE
Ordered,
Ordered,
That the Speaker shall--
(1) at the sitting on Thursday 27th June, notwithstanding Standing Order No. 52 (Consideration of estimates), put the Questions necessary to dispose of proceedings on the Motions in the name of Mr. Michael Jack relating to Estimates, 1996-97 not later than Seven o'clock; and
(2) at any one sitting of the House, notwithstanding Standing Order No. 14A (Proceedings under an Act or on European Community documents), put the Questions on the Motions in the name of Mr. Secretary Gummer relating to Local Government (Structural Changes etc.) not later than three hours after the commencement of proceedings on the first such Motion; and the said Motions may be proceeded with, though opposed, after Ten o'clock.--[Mr. Brandreth.]
That, in respect of the Social Security (Overpayments) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.--[Mr. Brandreth.]
21 Jun 1996 : Column 1179Reduced Earnings Allowance
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Brandreth.]
2.30 pm
Mr. Michael Clapham (Barnsley, West and Penistone): I am grateful for the opportunity provided by this debate on the changes to reduced earnings allowance, because many of my constituents, and people across the country, have been affected greatly by this monstrous cut in benefit. The cut was introduced without any consultation and certainly without a debate in this Chamber.
I will give the background to reduced earnings allowance so that we can put the debate in context. As the Minister knows, reduced earnings allowance was introduced in October 1986. It replaced the special hardship allowance, which was similar, but, in terms of nomenclature, the name "reduced earnings allowance" better fitted it.
The allowance is an award that is made to claimants who have a loss of faculty as a result of an industrial injury. Those claimants have been awarded a life disablement assessment for the disability resulting from the loss of faculty if that loss of faculty prevents them from being able to carry out their regular occupation or an occupation of equal standing. It is, therefore, really an extension of disablement pension which helps to make up lost earnings. The maximum payment under the current benefit rates is £39.60. I point out to the Minister that, for 90 per cent. of the recipients, the benefit does not cover their lost wages.
In September 1990, the Government saw fit to withdraw the benefit altogether, despite a report from their own advisers, the Industrial Injuries Advisory Council, saying that the benefit should be retained. IIAC put the argument to the Government that the benefit enabled employees who were in the early days of a crippling disease to take lighter work in a better environment and so, in some degree, to prevent the effects of that disease.
An example would be coal face workers who were diagnosed as suffering from pneumoconiosis who could afford to leave the coal face and to come into a dust-free atmosphere where their health would be helped and where their loss of earnings would be to some degree cushioned by the benefit. That benefit is no longer available and coal face workers will not be able to take other work, because there is no incentive. Men who are diagnosed as suffering from pneumoconiosis will now continue to work at the coal face.
The Government estimated that the withdrawal of reduced earnings allowance would save £140 million by 2001. At the time, the Government said that that money would be used for a new package of benefits, but I have seen no evidence of a new package of benefits and certainly no benefit of the same type as the reduced earnings allowance. Perhaps the Minister will comment on that.
The real focus of the debate is the Social Security (Industrial Injuries and Diseases) (Miscellaneous Amendments) Regulations 1996, which were discussed by the Fourth Standing Committee on Delegated Legislation on 8 May 1996. The provisions of the regulations were
implemented on 24 March 1996. Under the regulations, men and women who reach retirement age lose their reduced earnings allowance and transfer to the retirement allowance, but the retirement allowance is paid at only25 per cent. of the rate of the reduced earnings allowance.
The average loss of earnings is about £30 a week and the impact on couples living on state pensions has been dramatic. I see people regularly at my surgeries who bitterly complain that, as a result of the transfer to retirement allowance, they find it difficult to make ends meet. Men and women have the same problem, because women who used to work in factories were disabled through tenosynovitis. They were on reduced earnings allowance, but have been changed over to retirement allowance and they find it enormously difficult to adjust. I calculate that the reduction is equivalent to a reduction of about £9,000 in the salary of a Member of Parliament. Imagine the outcry if Members of Parliament suddenly found that their earnings had been reduced by £9,000.
The reduction in reduced earnings allowance and its application raises four important questions. The first is the impact on the individual, the group and the community. I am sure that the Minister would accept that the reduction affects some communities more than others. According to the latest Butterworth law text, in 1992, prescribed diseases accounted for only 19 per cent. of the 204,000 pensions paid. That 19 per cent., or about 38,000, comprised 15,000 pneumoconiosis pensions, 14,000 industrial deafness pensions and 9,000 others. Those figures clearly show that mining communities will contain the largest proportion of the 18,000 claimants--the Minister gave the figure in a written answer on 18 June 1996--who have had their benefit reduced to the retirement allowance. The bulk of the claims will come from mining communities.
Secondly, there is no transitional relief. The benefit cut has been introduced without any tapering. Many claimants have reduced pension rights because, after they suffered their injury or disease, they could not work or went on to light work. As a result, their contributions to any occupational pension scheme are much less than they would otherwise have been. It has to be understood that the majority of claimants would not have pursued a common law damages claim. The issue of pension rights has not been addressed. I contend that the reduced earnings allowance helped, in some way, to make up for reduced pension rights.
Thirdly, I refer to discrimination. For women, the cut-off point is 60 years of age; for men, it is 65. The Minister will be aware of several European Court cases that directly challenge this. As was pointed out by my hon. Friend the Member for Manchester, Withington(Mr. Bradley) when the regulations were discussed, one of the cases dealt with severe disablement allowance, which now ends at 65 for men and women. I accept that the Minister did not have a lot of time when he replied to that debate, but he did not address that issue. When he comes to the Dispatch Box today, will he tell us whether he intends to equalise the benefit cut-off at 65 for men and women? If that is not his intention, will he tell us why?
Fourthly, the regulation introduces a pernicious 12-months rule on retrospection, for which I believe there is no rationale. When I asked the Minister about this, he said that one does not backdate until the earnings capacity has been affected. We all accept that, but is the Minister aware of the way in which the good causes rule works?
I shall refer to that rule in a moment in relation to a case and show how it is used to scrutinise cases and how it can prevent reduced earnings allowance from being paid. There was already a restriction, and there is no need for the 12-months rule. In a written question, I asked the Minister about the thinking behind the rule, and he replied:
There is no logic in not allowing the claims to be backdated to the date of development. When tribunals decide whether there is to be backdating in industrial disease or injury cases, they always backdate to the date of development. In so far as we are talking about cases before 1990, the reduced earnings allowance should not be restricted by the 12-months rule.
I shall cite two examples from my constituency. First, I refer to Mr. Morris, who was a deputy at the time his injury occurred in 1985. He was struck by a rock that fell from the roof in a colliery and he was hospitalised for two weeks following the accident. He noticed the onset of a tremble, which was later diagnosed as Parkinson's disease. His common law claim was settled for £750. The chap never worked again, yet it took until 1994 for a new diagnosis to be made which persuaded the medical authorities that his condition related to his previous accident. In 1994, he was awarded a 70 per cent. disablement assessment backdated to the date of the accident.
Mr. Morris claimed backdated reduced earnings allowance, but unfortunately he was refused under the good causes rule. His wife was dealing with his affairs because the tremble had become so bad that he could no longer write. The form that she completed immediately after the accident, when my constituent had a closed final assessment, had an attachment advising her that she could apply for reduced earnings allowance. She did not fill in that form at the time. The wording of the form--as it was in 1985--was most ambiguous. As Mrs. Morris did not complete the form, the tribunal judged that she had not held good cause. We appealed to the commissioner, who upheld the tribunal's early decision.
That case is an example of the good causes rule scrutinising the backdating. As that applies in all such cases, there is no need for the 12-months restriction, nor can it be justified.
My second example relates to a constituent who suffers from an industrial disease--Ted Dudley, who operated a slusher machine during the 1950s and 1960s. You will know the purpose of those machines, Mr. Deputy Speaker; at the time, they had asbestos brake linings. Gradually, he developed a chest condition which
worsened over the years. Towards the end of last year,it was established that he had a disease caused by a combination of particles of asbestos in his lungs and coal dust. The tribunal awarded him a 60 per cent. disablement assessment backdated.
In Mr. Dudley's case, there is no claim for reduced earnings allowance, as, when he changed to lighter work, the Coal Board maintained his wages at the rate they would have been had he continued working at the coal face. That is one example of a good employer. However, many employers would not be so understanding in their treatment of employees. In that case, it took 40 years for my constituent's disease to be diagnosed as relating to his employment. That illustrates the need for the ability to backdate the reduced earnings allowance. Although my constituent did not have reduced earnings, he could well have done.
"reduced earnings allowance is designed to bring the allowance into line with other, non-industrial injuries, earnings replacement benefits . . . It is not justifiable to continue backdating payments in such claims indefinitely."--[Official Report, 6 June 1996; Vol. 278, c. 529.]
The Minister's response shows a lack of understanding of the matter. Some injuries have a long latency time, and diseases are the result of a development, not an event. I refer to diseases such as pneumoconiosis and asbestosis, which take years to develop. During that period, which can be as long as 20 or 30 years--in fact, I will refer to a case where it took 40 years--a man or a woman can have a reduced earnings capacity. For example, people may have to take a job paying a lower wage than they would have taken if the disease had not developed.
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