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Session 1999-2000
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Delegated Legislation Committee Debates

Social Security Regulations 2000

Fourth Standing Committee on Delegated Legislation

Wednesday 29 November 2000

[Mr. Roger Gale in the Chair]

Social Security Regulations 2000

4.30 pm

The Chairman: Before we start, I should say that I am advised that there will be a Division on the ten-minute Bill. As is custom and practice, I shall suspend the Committee for 15 minutes for hon. Members to take part in the Division. I should also say that hon. Members may remove their jackets if they wish.

Mrs. Jacqui Lait (Beckenham): I beg to move,

    That the Committee has considered the Social Security Amendment (Capital Limits and Earnings Disregards) Regulations 2000 (S.I. 2000, No. 2245).

As ever, it is a pleasure to serve under your chairmanship, Mr. Gale. I do not think that we shall finish before the Division, but I shall not detain the Committee for long. Although we welcome the increase in capital limits for pensioners, we need to explore some issues. Capital limits have not been decoupled for any group before. Until now, they have been at the same level for pensioners, disabled people, lone parents and those on income support. The statutory instrument ignores groups such as the disabled, so we want to hear about the thinking behind it.

In answers to parliamentary questions, we have been told that the Department of Social Security keeps the capital limits for disabled people under review, so they are considered regularly. It would therefore be useful to know the argument for not increasing the limit for disabled people under the regulations. Why do the regulations apply only to pensioners? Parliamentary answers have also given us the impression that few lone parents or unemployed people are affected by the capital limits rules, but one or two are, so it would again be useful to know why the Department has entirely focused on pensioners.

I understand from an answer given to my hon. Friend the Member for Havant (Mr. Willetts) on 19 April that the Department estimates that it would cost only £25 million to increase the capital limits for disabled people. Using that figure, we worked out that 100,000 disabled people could benefit from increased limits on the basis of the sum that will apply to pensioners.

4.33 pm

Sitting suspended for a Division in the House

4.48 pm

On resuming—

Mrs. Lait: Before we suspended for the vote, I said that approximately 100,000 disabled people could be affected if there were an increase in the capital limits for them. Could the Minister confirm that that is the number we are talking about, because it is a significant group? It is particularly sad that, in all the spinning before the Budget, disabled people were led to believe that they would benefit from changes in the capital rules. The Daily Telegraph on 8 February reported:

    Big increases in the amounts of capital that people on low incomes can accumulate while still claiming benefits are being considered by Gordon Brown in a Budget boost for savings...Ministers anticipate that Mr Brown will ease the rules in the Budget on March 21.

Even earlier, the Daily Mail stated:

    The Government is planning big increases in the amounts that people of working age can save while claiming means-tested benefits.

Instead of that, we have the decision—albeit a welcome one—that only pensioners should benefit.

It is not only the Conservative party that is concerned about disabled people. On 1 September, Agnes Fletcher, the head of communications at the Royal Association for Disability and Rehabilitation, said:

    Radar feel very strongly that the differential is wrong. We raised the matter at the Disability Benefits Consortium, but we had a very dismissive response from Jeff Rooker—

the Minister of State, Department of Social Security. She continued:

    We would be very, very happy to support any work on this issue.

Why are the disabled being left out? It was announced some time ago that the capital limits for disabled people would be increased. That would cost £25 million—given the Government's largesse in other areas, that is not a significant sum of money. Will the Minister reassure the Committee that, on the Government's present projection, the capital rules will remain in force only until the new pension credit is introduced in 2003? We shall have to wait and see, but the Secretary of State and other Ministers have said that they will be able to introduce the pensions credit by 2003.

The question must be asked: will the discrimination that is evident in the regulations be repeated for disabled people, or will they be able to take advantage of the same terms and conditions as pensioners? If so, can they look forward to the imputed income remaining payable after 2003? Will disabled people have the same longer benefit-credit payment period as pensioners? Will that system still be operating under the regulations? How will their capital be treated?

Because of the scale of improvements in treatment achieved by the medical profession, I foresee more disabled people living a fulfilling life, and they may acquire access to large amounts of capital. Are they never to benefit from the improvements in capital rules that are being allowed pensioners? Will they be able to take advantage of the amounts of compensation that the courts are increasingly awarding? Will the grants made to disabled people by the Independent Living Foundation be treated as capital or income, or will those payments be ignored? At present, those who benefit from such grants find themselves in difficulties because of the capital rules.

The Government need to reassure disabled people that they are looking closely at the capital rules. We need to know why they think that disabled people do not need to benefit from the increases in capital limits. We need to know whether the legislation governing the capital rules for disabled people will stand in the longer run, or whether they will experience the significant changes that we are told will benefit pensioners as we approach 2003.

4.54 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): I shall be brief; all Committee members will appreciate that. I am grateful to those right hon. and hon. Members who decided to pray against the regulations, because it enables the Government to explain what we are doing. Significantly, we are increasing the capital disregard for many pensioners to ensure that more of them gain the minimum income guarantee. That has been widely canvassed and requested.

The Government are pleased to be able to respond to that request, particularly as it has been a long time since the capital limits for income-related benefit have been increased. They were last increased in 1990—10 years ago. I need not remind Committee members that the party not currently in government was in government for seven of those 10 years. The Conservative Government did not increase the capital limits, even though inflation was running at a much higher rate in those seven years than it has been in the past three years under the Labour Government.

We are also increasing the earnings disregards for some particularly vulnerable people on income-related benefits. That will enable them to earn more without suffering a reduction in their entitlement to benefit. The Government want to encourage more people of working age to work, and we have been extremely successful with the new deal and our macro-economic policies, which have enabled many more people to work. More than 1 million new jobs have been created since the general election three and a half years ago.

Full-time work is not an immediate possibility for people such as the disabled, lone parents and others, but we want to encourage them to keep in touch with the labour market. By increasing their opportunity to earn while retaining their income-related benefits, such as income support, housing benefit and council tax benefit, we will enable more people to keep in touch with the labour market. If and when their circumstances change, they will be able to benefit from the buoyant economy created by the Labour Government and to increase their hours or get back into full-time work.

When we came to power, our first priority on pensions was substantially to increase the incomes of the poorest pensioners. In April 1999, we introduced the minimum income guarantee for pensioners, which has made a large difference to their quality of life.

However, pensioners who had been prudent enough to save complained that they were not being adequately rewarded for putting money aside during their working lives to provide for their retirement. We acknowledge that they were right to complain and that more should be done for prudent pensioners. In the longer term, we will do a great deal for those pensioners through the pension credit, which my right hon. Friend the Member for Edinburgh, Central (Mr. Darling) announced some weeks ago.

To legislate anew for the pension credit will take time, because we need to consult, put the legislation before Parliament and introduce new administrative systems. We need to do something now for pensioners who have saved but do not receive the benefit of the minimum income guarantee, especially those just on the margin whose savings are too high to be eligible. The regulations will come into operation in April next year to spread the benefits of the minimum income guarantee to more pensioners.

As I said, the regulations deal with the earnings disregard. About half a million pensioners will benefit as a result. Seventy thousand pensioners will no longer suffer any abatement to their minimum income guarantee, because they will be lifted above the point at which their savings are taken into account. Overall, 500,000 pensioners will benefit through one or other, or often more than one, of the income-related benefits. People who gain under the minimum income guarantee will gain on average £10 per week.

We propose to increase by a third the earnings disregard for some particularly vulnerable groups from the current rate of £15 a week to £20 a week. About 55,000 people on income support and jobseeker's allowance will gain on average £5 a week; about 20,000 gainers on housing benefit will gain on average £3 week and some 30,000 on council tax benefit who will gain on average £1 a week.

The hon. Member for Beckenham (Mrs. Lait), who appears not to be arguing against the improvement in the capital limits for retired people, asked how many disabled people would benefit if the changes in capital limits that we propose for pensioners were made in respect of those on income support and other income-related benefits. The answer is 15,000 on income support, 30,000 on housing benefit, and 45,000 on council tax benefit. The hon. Lady said that her party would provide an extra £25 million.


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Prepared 29 November 2000