Examination of witnesses (Questions 60
- 68)
TUESDAY 20 JULY 1999
RT HON
ALISTAIR DARLING,
DR STEPHEN
HICKEY and MR
NEIL COULING
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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