Select Committee on Social Security Minutes of Evidence

Examination of witnesses (Questions 60 - 68)



  60. I did not say only!
  (Mr Darling) The difficulty is in aggregate they amount to rather a lot and clearly we have to make choices from time to time as to where we spend public money. We are spending quite a lot of money with the Working Families Tax Credit which is putting an awful lot of money into the hands of the sort of people that you are referring to, people who up until now would have found that work did not pay. We have lifted a lot of people out of tax with the ten pence starting rate, the reduction in the basic rate of tax as well as the Working Families Tax Credit and other help and so on. Clearly the Government does have to make choices as to where it puts it. It can either generally help people or it can help people in particular. In my experience there is no shortage of people coming up with schemes for spending little bits of money here, there and everywhere, but they do mount up and we have to take a view as to where we best spend money.

  61. Point taken, but the Government has come up with the idea that parental leave is a good one and the evidence from the US is that there is clear evidence that lack of payment is a real obstacle for low pay parents taking it up.
  (Mr Darling) From America.

  62. Yes. Is it something that the Government should be looking at very closely for that group?
  (Mr Darling) As in all these things, the Government keeps these matters under review and I say that without wishing to whet your appetite or to encourage you to believe that it is a matter of hours away before we make some great announcement. We do look at all these things, but if you look at the social security system, I spend most of my day looking at deficiencies in the system and where it might be better. You mentioned £250 million: I can give you 20 other examples of where we could probably usefully spend £250 million. If you look at what we are doing here for people of working age, we are enabling more money to get into the hands of people who are low paid more than any other government has done probably this century, although I stand to be corrected on that. We are introducing reforms in employment law which would have been unspeakable seven or eight years ago. Clearly no one is ever going to say that is it, nothing else needs to be done, but I do think so far we have done a great deal.

  63. The DSS sent us a very helpful memorandum on the social security implications of parental leave. We also got a very complicated one by one of our expert witnesses, Carolyn George. Do you think that the current rules of entitlements to benefit for people who take parental leave need clarification and may need to be amended? Do you think that needs to be looked into?
  (Mr Darling) There is hardly an aspect of the benefits system that does not need to be looked at. I never tire of saying that I look at every benefit line by line, item by item. We need to try to ensure that we remove obstacles to work, we need to ensure that we eradicate child poverty, making sure that we give some right so that it has some substance to it. There is always going to be a balance as to how much people are willing to pay through the social security system which they have then got to finance. There is always going to be a judgment as to how much it is. You mentioned the 15 per cent take up that you expect. If you say that it will not work without lots of money and you got 100 per cent take up you are talking about costs of £2 billion and I think even the most enthusiastic advocate of the cause might think that is quite a lot of money. I think it is a business mistake to plan something on the basis that nobody will take it up.

Mr Pond

  64. Could I just ask Debra's last question in a different way, not wishing to whet your appetite for not spending money. Has the Department looked at whether or not there might be consequential changes in the social security system necessary as a result of the introduction of this new right? In other words, having given that right to people, for instance those who will be receiving Working Families Tax Credit, they will be defined as employees but they will not be paid during that period. That would imply that unless you make some change in regulations or even primary legislation you might be conferring a right to claim the social security benefit on those people. Is that something the Department has looked at?
  (Mr Darling) Yes, we look at these things all the time. What I am saying to you is that I am not in a position to say that we are about to make an immediate announcement about it. The benefits system is rather like the Forth Bridge only much bigger, i.e. no sooner do you reach one end than it is time to start going back on your tracks to look at it all over again.

Mr Dismore

  65. I want to talk to you about means tested benefits and capital limits. As I understand the position on Income Support, for example, the bottom limit is £3,000 and the upper limit is £8,000 and they have not changed since April 1988. Let us just say for the sake of argument you applied the retail price index to the bottom limit, instead of £3,000 that would now be almost £4,700 and the upper limit would now be almost £12,500. I would like to ask you the question in the context of Income Support and in particular the minimum income guarantee for pensioners because it seems to me that one of the problems we have is that, on the one hand we say we want to operate the basic pension in line with prices and we want to try, where possible, to apply the minimum income guarantee in line with earnings, but if we are not at the same time uprating the capital limits at least in line with prices we are effectively, despite what we are saying, potentially excluding people who might otherwise have qualified.
  (Mr Darling) You will recall that in the Green Paper which we published last September we acknowledged the problem you set out and the risk of penalising thrift, which is something the Government does not want to do and we said we are examining those limits. Beyond that you will appreciate I cannot really go at the moment.

  66. Stephen Timms said a couple of weeks ago that the intention was to introduce some proposals during the lifetime of the current Parliament. I see from the Departmental Report, paragraph 1.62 on page 21, that there is research going on into why pensioners do not claim Income Support. I think it is self-evident that that could well be one of the reasons. Can you give us some indication of when it is likely there is going to be some action on this because if we are penalising thrift and at the same time we want to give a message that the Government wants to encourage savings is this something we should be trying to tackle rather more promptly?
  (Mr Darling) We did not put that passage into the Green Paper idly. We did it because we are very aware there is a problem. It is for me and my Department and for the Chancellor in his overall control of public spending to judge when you can make changes to these things. I cannot give you a date, not because I am not telling you the date but because I do not have a particular date in mind. The underlying premise in your question is something that I would not disagree with because that is the Government's position, we want to encourage people to save. You correctly said what the Income Support limits are. They have got different limits for different benefits so it is quite complicated. Clearly it is something the Government is thinking about, but I cannot tell you the date on which we might be making any announcement.

  67. I think the biggest single problem that seems to come across to me talking to pensioners on the doorstep is the people whose savings or incomes are just above the limits feel that somehow they have been left out of the equation and what I hear time and again is, "I have saved all my life and this is what happens to me as a result," or, "I have got a small occupational pension which is just a few pounds over the limit and therefore I lose the lot." This is something that does seem to come across continually as the main complaint from pensioners.
  (Mr Darling) It is probably the biggest single complaint you get from pensioners. All of us have got that experience and that is why we said in the Green Paper that we needed to look at that. I understand perfectly well what you are getting at and I do not disagree with the points which you are making, but I still cannot give you a date or make an announcement this afternoon no matter how tempting it might be.

Mr Pond

  68. Thank you very much, Secretary of State. I think we have covered a huge range of issues this afternoon and you have been very generous with your time and answered in detail many of those. We notice, although we would love to have heard from both Neil and Stephen, that you did not need to call on your officials at any stage and although Archy Kirkwood said that this is not Mastermind, I think we could fairly say that you would be going on to the next round had it been that! Thanks very much for your time. It has been very helpful.
  (Mr Darling) Thank you very much.

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