House of Commons Hansard Written Answers for 26 Nov 1996 (pt 19)

SOCIAL SECURITY

European Union

Mr. MacShane: To ask the Secretary of State for Social Security what percentage of his Department's time and resources are spent dealing with administrative and policy matters connected with British membership of the European Union. [4959]

Mr. Burt: The information is not available and could be provided only at disproportionate cost. While some staff in this Department work solely on matters connected with UK membership of the European Union and are identifiable as such, others are engaged in EU-related work only from time to time as part of their normal duties.

Compensation Recovery Scheme

Mr. Wigley: To ask the Secretary of State for Social Security what is his timetable for the implementation of his amendments to the compensation recovery scheme; and if he will backdate these provisions. [5361]

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Mr. Roger Evans: I refer the hon. Member to the reply, that I gave the hon. Member for Wakefield (Mr. Hinchliffe) on 7 November, Official Report, columns 681-82.

Mental Health Needs

Mr. Alan Howarth: To ask the Secretary of State for Social Security what plans he has to undertake research into the take up of incapacity and other disability benefits by persons with mental health needs. [6053]

Mr. Burt: The Department has no plans for research specifically on the take-up of disability or incapacity benefits by persons with mental health needs, but we will be seeking to use data from the disability survey now in progress to estimate take-up of disability living allowance and attendance allowance.

Severe Disablement Allowance

Mr. Tipping: To ask the Secretary of State for Social Security what plans he has to alter the payment of severe disablement allowance. [5708]

Mr. Andrew Mitchell: We are proposing simplifications to the current arrangements which will cut down on the requirement for some claimants to undergo two separate medical tests, and better target resources on the severely disabled. These proposals are currently the subject of a Social Security Advisory Committee consultation exercise.

Departmental Expenditure

Mr. Faber: To ask the Secretary of State for Social Security what proposals he has for constraining growth in his Department's expenditure, simplifying the benefit system and combating fraud; and if he will set out the financial effect of these changes. [6582]

Mr. Lilley: I intend to introduce a range of measures which will:

simplify the administration of the benefit system;
place a greater onus of responsibility on benefit claimants;
equalise the treatment of one and two parent families;
better target the housing benefit and council tax benefit schemes;
and continue the drive to combat fraud.
Simplification and increased responsibility
I propose the following measures which will simplify the operation of the benefit system and encourage more responsibility on the part of claimants:
a rationalisation and simplification of the rules governing backdated claims for benefit and reviews of awards. These changes will be phased in from April 1997;
an increase in the waiting days which will apply to claims for jobseeker's allowance from three days to seven. This change will take effect from April 1999;
a simplification of the rules governing claims to war pensions will be referred to the Central Advisory Committee on war pensions on 5 December;
the establishment of a clearer boundary between the entitlement condition for disability living allowance and attendance allowance, providing that those over 65 should receive support through attendance allowance rather than disability living allowance. This change will take effect from October 1997.

These measures will produce savings of some £260 million a year once fully in place.

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Lone parents and families

I propose to take further steps towards making the benefit system fairer to families by bringing the benefits available to lone parents further into line with those available to couples.

From April 1997, the structure of benefits for lone parents will be brought into line with that for couples. The lone parent premium will be combined with the family premium. One-parent benefit will be integrated with child benefit. Existing lone parents will continue to receive the current higher levels of benefit in future. But new lone parents will from April 1998 be paid the same rate of family premium and child benefits as couples.

Housing benefit

I also propose measures which will better target the housing and council tax benefit schemes.

In housing benefit I intend to restrict the amount of benefit that can be paid to private deregulated tenants to the general level of local rents for a suitably sized home. I also intend to limit benefit for single people under 60 living in the private deregulated sector to the average rent for a single, non self-contained room.

These measures will take effect from October 1997 and will save some £130 million per year in the long term.

Under both of these housing benefit changes local authorities will retain the discretion to pay up to the full value of eligible rents to prevent severe hardship, and the discretionary funds available to authorities will be adjusted to take account of the changes.

Council tax benefit

The proposed change to council tax benefit will restrict the amount of benefit payable to claimants living in more expensive properties.

I propose to restrict the maximum amount of council tax benefit payable to the level of a band E property. This change will take effect from April 1998 and will save around £15 million per year in the long term.

Combating fraud

As part of my major drive against fraud I am today announcing additional funding for a new spend-to-save anti-fraud and evasion package. This is in addition to the substantial sums we already spend on anti-fraud activity.

Over the next three years, I shall be investing an extra £470 million, in addition to an existing investment in fraud and security activities of some £900 million. Even excluding the impact of any prevention and deterrence the total investment is expected to save the taxpayer nearly £7 billion by 1999-2000 ¹ . However I expect the new powers I am taking in the Fraud Bill and the increase in anti-fraud work to produce substantial additional savings as fraud is prevented and deterred.

The new spend-to-save package will pay for: 1.3 million more visits to new benefit claimants than in 1996-97; an additional 300,000 a year checks on existing claimants; continuation of the "Spotlight on Benefit Cheats" campaigns; additional visiting activity in 1997-98 by local authorities, as well as a programme of benefit reviews of housing benefit; the extension of datamatching activities; increased activity on national insurance contribution compliance; and the setting up of the benefit-fraud inspectorate.

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The Fraud Bill together with the new spend-to-save package will build upon an already successful counter fraud strategy. The Fraud Bill will provide fraud investigators with the tools they need to do their jobs, and the spend-to-save investment, when added to existing commitments, will mean for every £1 spent, an estimated £5 return in detected fraud. Both aspects of the anti-fraud drive underline the Government's determination to crack down on benefit cheats.

Note:
1. The savings are expected to be £1,900 million in 1997-98, £2,400 million in 1998-99 and £2,500 million in 1999-2000. These are estimates to the nearest £100 million. They include some £300 million, over the three years, in respect of additional revenue from the collection of National Insurance contributions. In addition to excluding any allowance for prevention and deterrence the method of estimating the savings has been changed to align them more closely with the public expenditure process. Previously the savings were accounted for in the year in which the fraud was detected but will now be spread over the average period during which the fraud would otherwise have continued. While this affects the timing of the savings, it does not affect the amount in the long term.

Incapacity Benefit

Mr. Bernard Jenkin: To ask the Secretary of State for Social Security what plans he has to amend the regulations governing incapacity benefit. [6583]

Mr. Burt: I have laid before Parliament today a package of minor amendments to regulations concerning the application of the all work test for incapacity benefit which will improve the application of the test, drawing on operational experience since the introduction of the benefit in April 1995. The package will also amend the categories under which people who fail the test are treated as incapable of work in prescribed exceptional circumstances, following a recent decision by the High Court that the wording of the current provisions are unlawful.

National Insurance

Mr. Elletson: To ask the Secretary of State for Social Security if he has yet completed his review of national insurance contributions for 1997-98. [6584]

Mr. Lilley: I have completed the annual review under section 141 of the Social Security Administration Act 1992. My proposals will take effect from 6 April 1997. As I announced last year I intend to reduce the main rate of contributions for employers by 0.2 per cent. This will save employers as a whole over £500 million a year. The additional Treasury grant necessary to make up for the shortfall in income to the national insurance fund will be met from the landfill tax announced by my right hon. Friend the Chancellor of the Exchequer in last year's Budget. There will be no change to the standard rate of contributions for employees which will remain at 10 per cent.

Employers and employees

In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for class 1 contributions is to be raised to £62 a week. It is set at the level of the basic retirement pension rate for a single person from April 1997, rounded down to the nearest pound.

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The upper earnings limit is to be raised to £465 a week which is slightly less than 7½ times the new basic pension rate as provided by the Social Security Contributions and Benefits Act. These new earnings limits will replace the current ones of £61 and £455 respectively.

Employees whose earnings reach the lower earnings limit will continue to pay an initial contribution of 2 per cent. of that limit and standard rate contributions of 10 per cent. on that portion of their earnings which exceeds the lower but not the upper earnings limit.

For employers the three lower contribution rates remain unchanged at 3 per cent., 5 per cent. and 7 per cent., respectively. The earnings thresholds for these rates have tended to rise faster than inflation in recent years and will therefore also remain unchanged for the coming year.

Non-contracted-out employees and their employers

Neither employees nor employers will have to pay any contributions if earnings are less than £62 a week. Employees whose earnings do not exceed £455 (the former upper earnings limit) will pay 8p a week less in contributions than at present. This is because a further £1 of their weekly earnings will be subject to the 2 per cent. rate rather than 10 per cent. For employees with earnings above £455, the maximum possible increase will be 92p a week.

All employers will pay less where earnings are £210 a week or more. There will be no change for employers where earnings are between £62 and £210 a week.

Contracted-out employees and their employers

In March this year I announced the new levels for the rebate on class 1 national insurance contributions for people contracted-out of the state earnings-related pension scheme which will take effect from April 1997. The financial effect, combined with changes to the lower and upper earnings limits and the reduction in the main rate of contributions paid by employers, is as follows:

Employees with earnings between £62 and £95 will pay slightly less. Those with earnings between £95 and £455--the former upper earnings limit--will pay between one penny and 72p a week more. For those who earn more than £455 the maximum possible increase will be £1.56 a week.