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Bereavement Benefits

3.31 pm

The Secretary of State for Social Security (Mr. Alistair Darling): With your permission, Madam Speaker, I shall make a statement on the next stage of our welfare reform programme.

We have already launched the new deal, the biggest ever investment by Government in jobs and training. We have begun to tackle child poverty, with the biggest ever rise in child benefit. We have introduced a national child care strategy. We are modernising our tax and benefits system to make work pay, with a new working families tax credit, which will benefit up to 1.5 million people, underpinned by the national minimum wage.

Three weeks ago, I set out wide-ranging reforms to disability benefits, giving more help for severely disabled people and those disabled early in life. We are modernising the system to ensure that benefits go to those for whom they were intended. All these reforms are driven by our central objective--work for those who can and security for those who cannot.

Today I am publishing a consultation paper on our proposals for the reform of bereavement benefits paid to people of working age. Copies of the consultation paper are available in the Vote Office. The reforms apply only to people of working age who lose their husbands or wives. Women already widowed, widows over state pension age, and war widows will continue to get the support that we give them now. They will not be affected by the reforms that I set out today.

My announcement is one in a series of long-term reforms that will form the basis of legislation at the earliest opportunity. However, today's proposals will not be introduced before April 2001, so as to allow time for implementation.

The system of bereavement benefits that we inherited is out of date. When it was introduced 50 years ago, most women did not work, certainly not after marriage. Today, seven out of 10 married women work--almost as many as the eight out of 10 married men who work. Today, 1.5 million women benefit from their late husband's pensions, compared with the 100,000 who did so 50 years ago. About 40 per cent. of the women currently getting widows benefit are in the top half of the income bracket. The world has changed, and the benefits system needs to reflect those changes.

The system also fails on four specific counts. First, it is unfair to men: 15,000 husbands bereaved each year get no help at all. That unfairness cannot continue, and it is already being challenged in the European Court of Human Rights--so doing nothing, as some urge, is not an option. Secondly, the system does not provide enough help with the immediate costs of bereavement, such as unpaid bills or funeral costs. Thirdly, money often goes to those who have the least need of it. Widows without children who have substantial incomes can get benefits for years, but a man--who may have growing children and modest means--gets nothing at all. Finally, the present system fails to support the poorest mothers on income support. Widows who have children to care for lose their benefit pound for pound, and so get no financial gain from their widows benefit.

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The reforms that I am announcing today will change all that. Our reforms will, for the first time, get help to men who lose their wives, and on an equal footing with widows. They will provide extra financial help with immediate needs, such as funeral expenses.

We will continue to help those older people without children during the period immediately after bereavement and, as with our other reforms, our priority is to provide security for families with children, and to get the greatest help to the poorest. Our proposals will ensure the security of families with children, and we will do more for the poorest families and their children.

First, I can announce today that men who lose their wives will get help on the same basis as women who lose their husbands. We will go further--once the reforms are introduced, they will apply not only to newly bereaved widowers, but to those husbands with children already widowed. For the first time, we will be providing security for around 20,000 men and their children.

Secondly, I wish to refer to immediate help on bereavement. The loss of a husband or wife is traumatic, and a time of great need and anxiety. We recognise the need for immediate financial help. Indeed, it is one of the strengths of the current system that, on bereavement, a widow gets a £1,000 lump sum within four days. In my view, that payment is no longer high enough--the amount has not changed in 10 years--so, today, I can announce that we are doubling the lump sum cash payment to £2,000. We want to give more help with a range of costs, such as bills or the cost of a funeral.

Thirdly, we want to ensure that we get help to those who need it most. Today, long-term widows benefits may go to many who do not need them because they do not have the extra costs of bringing up children, or because they have good incomes from jobs, pensions or insurance. Some argue that those are grounds for abolishing the benefit completely, but we do not believe that that would be right. We recognise that financial support is needed in the period immediately after bereavement, so we will continue to provide a financial breathing space for bereaved spouses--aged 45 and over--who do not have dependent children by paying a weekly benefit, worth up to £64.70. The new bereavement allowance will be paid for six months only--providing transitional support at a time of particular need.

We also recognise that, for the generation of widows and widowers aged 55 or over at the time when the changes are introduced, special arrangements will be needed because it could be difficult for them to make new plans. I can announce today that anyone from that generation who qualifies for income support and who is widowed in the five years after the changes are introduced will get support worth the same amount as the current widows pension.

Fourthly, we are determined to ensure that the greatest help goes to those with greatest needs. Our reforms will continue to provide long-term financial help to bereaved parents with children. I can confirm that bereaved husbands and wives will continue to get a weekly benefit--currently worth, on average, £85--payable until their youngest dependent child leaves full-time further education. As with our other proposals, that help goes to both men and women who lose their spouse. However, we want to go further. We are determined to do more to

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help people who need help most, and we will ensure that the system helps the poorest widows and widowers, and their children.

Today, I can announce that the poorest bereaved parents who are on income-related benefits and getting bereavement benefits will gain additional cash help worth up to an extra £10 a week--providing the greatest help to those with greatest needs. The reforms modernise the benefit, treat men and women equally, give immediate help where it is needed, give more help to the poorest and do not affect existing widows.

As with the reforms that I announced three weeks ago, the structural changes will deliver significant savings, of around £500 million in the long run. However, we will do so by ensuring that the greatest help goes to those with greatest needs, and, in the short term, we are spending £140 million more to meet real need. As society gets wealthier, the amount that we spend on the most vulnerable should increase--but benefits must go to those who need them most. We must give more help to those in greatest need. We are planning now for the needs of the future, to ensure that the system is affordable, fair and effective.

Some people will urge us to do nothing, and, yes, turning our backs on the failure of the current system would have been the easy option. However, the real scandal would be for a Government committed to social justice to ignore the unfairness, to ignore the needs of children and to do nothing to help those in greatest need.

These are fair reforms, which provide real security and real help at a time of real need for bereaved husbands and wives and their children. I commend the proposals to the House.

Mr. Iain Duncan Smith (Chingford and Woodford Green): I must thank the Secretary of State for giving me a copy of his statement in advance. It contains some good and some bad proposals, and I shall deal with those fairly quickly.

Obviously, it is the Government's right and responsibility to reform the benefit. They are right: things have changed. The way in which people live their lives is changing all the time. No benefit is fixed in concrete and should stay the same for ever--that is an agreed principle. Therefore, the Government are right to consider this benefit. There is no question about that.

Clearly, the question is how the Government go about it. Who will be the winners and the losers? What will be the long-term prospects for those who would, or should, be dependent on assistance and support as a result of national insurance contributions made, in many cases, by husbands but now, obviously, by wives?

When we introduced the lump sum concept in the mid-1980s, it was the right thing to do. By increasing it--that is welcome--the Secretary of State has agreed that that is the right principle. It goes to people at the moment when they most need it, and does not depend on their filling out huge forms and getting into difficulties. The right hon. Gentleman was therefore right to focus on that; it is welcome.

Clearly, the issue of men being dependent on the benefit was relevant because of the court case. It was a necessary change. The Government have taken the view that the case will be won, and whether they are being a

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little previous is not the point of this debate. The fact is that they have taken that view, and there is no point in discussing it further.

However, the Government must answer some other major questions. First, the Secretary of State talked about the average £85. Will he break that figure down? He said that the benefit was currently worth, on average, £85. Does that mean that the future commitment is to retain it at that purchasing power? How will he calculate that in future? Obviously, the £85 is a mix of what is there at the moment, but why not specify how it is broken down and the Government's commitment for the future?

I must criticise the Government on their handling of the second issue, as it concerns me that they have put the cart before the horse. Surely the issue is linked inextricably with pension reform. Everything that the Secretary of State has said puts the burden on those in work to provide not merely for their own retirement, but for their dependants and spouses. He is suggesting that that will, and should, happen; yet we have heard nothing in 18 months from the Government about pension reform, other than leaks and suggestions in the papers that they are eroding the pension. They have said a little about what they may do, but there has been no great focus on the subject. So many of them--[Interruption.]

It is all very well for those on the Treasury Bench to snigger. The fact is that many people outside this place who have listened to the statement will be concerned about what means testing means to them and how they can provide security for their families when they have no idea what framework the Government propose for pensions. The Government must accelerate that process; otherwise, people will remain in fear and will worry about what will happen to them.

The second part of the statement was the most critical. This Government seem to be unable to admit that they are about getting rid of the contributory principle. That is what this is all about. They do it by stealth. Each time the Secretary of State produces another proposal, the ending of the contributory principle lies at its heart.

The Secretary of State is being very clever in talking about widows pensions. He says that, after the six-month transitional period, those on income support will continue to receive the benefit for five years. However, those who are not on income support clearly will not receive it. Those on the margins, with small savings, will fall off.

The Secretary of State admits that he has an obligation to those who pay national insurance, but he limits that obligation to five years and to those who are on income support. He is saying that the contributory principle is no longer relevant and will be ended. People outside the House who hear that should remember that the Government are hellbent on completely changing their position.

If the Secretary of State and the Chancellor of the Exchequer intend to means-test the basic state pension after the next election, they should say so. They should say: "The contributory principle is over. We shall now have a means-tested set of benefits." That is what the statement suggests--it proposes taxed and means-tested transitional relief.

The proposals contain an absurdity. The Government will means-test those on upper incomes for this benefit, but the working families tax credit--which theUnder-Secretary of State for Social Security, the hon.

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Member for Wallasey (Angela Eagle), who is chirping away on the Treasury Bench, admitted would create no jobs--will be paid to people with incomes as high as £38,000 year. The Government seem to be unable to settle that conflict. They means-test to reduce some benefits, whereas they scatter money around and waste it on other benefits, increasing expenditure by £1.5 billion.

Reform of the benefit is necessary, but this reform is driven by a Government who are in desperate need of short-term savings. They are scraping away, saying, "We've got to find some way to save the money." The Secretary of State is, in no small measure, robbing Pauline to help Paul.

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