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Lord Fraser of Carmyllie moved Amendments Nos. 180 to 182:

Page 89, line 37, leave out from ("48(1),") to ("of") in line 41 and insert ("definitions of "regulations" and").
Page 89, line 42, column 3, at end insert—
("Section 62(7).").
Page 90, line 11, column 3, leave out ("and 6") and insert (", 6 and 9(3)")

On Question, amendments agreed to.

Social Security (Income Support and Claims and Payments) Amendment Regulations (S.I. 1995/1613)

6.38 p.m.

Earl Russell rose to move, That a humble Address be presented to Her Majesty praying that the regulations be annulled.

The noble Earl said: My Lords, first, I should like to thank the noble Baroness, Lady Hollis of Heigham, for tabling the Motion. She pipped me to the post; on that I congratulate her. I am sorry that the noble Baroness is unable to be present. However, although she is unable to be present, it seems to me that the issue nevertheless deserves some debate. I am most grateful to the Minister for reacting like the real trouper he is to finding that, after all, he would not have the evening off. I am grateful to him and sorry to put him to the trouble.

Autumn is the season when Prime Ministers have visions. This Prime Minister has had one; but, unfortunately, it was bifocal. It is a characteristic of a bifocal vision that you can see only one half of it at a time. The Prime Minister has a vision of a home-owning world in which he hopes there may be 1·5 million more home owners. But at the same time he has a vision of trimming away some of the edges of the welfare state and increasing self reliance. As the Secretary of State put it in his memorandum to the Social Security Advisory Committee, people who buy houses must be able to sustain major commitments if unable to work. One can understand the sense of that, but it does not sit very easily with 1·5 million more home owners.

I can see the case either for reducing home ownership or for reducing dependence on the state. I find a great deal of difficulty in seeing both at once. I find even more difficulty in seeing the case for increasing home ownership sitting beside the case to which the Prime Minister is also committed for a deregulated and, as he sees it, more competitive labour market. Unless one is

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able to rely on the state in time of trouble, home ownership is essentially for those in stable, secure jobs. The deregulated labour market, as it develops, means more and more people who are not in stable, secure jobs, who are therefore in not at all a good position to be home owners unless they can rely on support through the benefits system when they cease to be in employment. I wish to know to which part of that vision the Prime Minister is committed. I cannot see that it can possibly be both. There is a natural incongruity in that.

I understand, of course, that there is a strong and genuine case for keeping down costs. No one wants to see costs growing unduly; but a desire to keep down costs is no excuse for wasting money. So we need to be clear, when we undertake a measure which is designed—as this is—to reduce costs, to be sure that it does so. I am surprised that the Government are not more concerned than they appear to be by the size of the gross mortgage debt in this country. When Mrs. Thatcher (as she then was) came into office, it was 26 per cent. of GNP. It is now 62 per cent. of GNP or £370 billion. That is a great deal bigger than the national debt. It is truly a potential avalanche waiting to descend on our heads. So if we have a massive wave of repossessions, we may get a succession of failures running through the economy, causing a great deal of dislocation which I would not wish to see—and nor, I hope, would the Government.

The costs of repossessions, both social and financial, are extremely heavy. It is the central effect of repossession that it is extremely hard for the person who has suffered it to obtain work. No employer likes taking on people who have no fixed address. At present, of all the people who draw income support to help with their mortgages, 50 per cent. return to work within a year. That is an important figure. I do not see how, under any of the alternative arrangements proposed, that figure can possibly be matched.

There is also an increasing volume of evidence—much collected through the Institute of Education in London—of severe difficulties in obtaining schooling suffered by children who are homeless, itinerant or on the move. It is something on which we would welcome interdepartmental consultation because there is the potential for the beginning of another cycle of deprivation and for all the costs to public funds that that may entail.

I am certain that the Minister is just about to tell me that all those fears are groundless because we can entirely rely on insurance to take up the slack. That faith is misplaced because, after all, insurance is a private business. It is designed to achieve profit, though I know it does not always succeed. Insurance is not a social science and cannot function efficiently if it attempts to be one. I wish to refer to some of the disadvantages and I rely on evidence presented largely by the Social Security Advisory Committee. It draws attention to anecdotal evidence of people applying for mortgage protection insurance who are refused it on the grounds that if they ask for it they must be about to lose their jobs and are therefore bad risks. In fact, if you want it, you must need it, so you cannot have it.

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From the commercial point of view of the insurance company, there may be a good deal of logic in that position. Cherry-picking is the very nature of insurance, but in social security it is not the cherries that we need to pick. So the people who are most likely to need help will be those who are least likely to get it through the insurance system. For example, many people have been told that under their policies they cannot have any help from their insurance company if they become unemployed within six months of taking out the policy. That is the crack between the insurance system and the welfare system into which a great many people may fall. I do not know what will happen to them when they do.

The Minister will remember an amendment moved by the noble Lord, Lord Swinfen, during the disability Bill, drawing attention to the difficulty suffered with insurance by those with an inheritance of genetic disorders, people perhaps with a grandparent who suffered from Huntington's chorea. Many of them are perfectly able to work and pay taxes. I do not see that their prospects of becoming home owners are particularly good and that causes me concern.

It is also normal in insurance policies that people in temporary jobs—contract jobs, self-employed or undergoing training—tend to be excluded. The Government have often gloried in the increase in self-employment, they have gloried in all forms of deregulated employment. However, a great many such people will not be able to obtain insurance so they would not be able in future to become home owners. For example, in my own field let us take the contract scientific researchers who are now the underclass of the academic world. It will be even harder to keep them in universities than it is now, if they have no hope of stable housing.

There is a real doubt whether that is in the public interest. There is a strong case for arguing that since deregulation will mean frequent short-term experience of unemployment, it necessarily implies a strong welfare state. It is a world in which people often fall over. If you fall over, you must be able to get up again. Often you cannot do that without help, otherwise you are pushed into a position where you may not be able to get back into employment for the rest of your life. That is no more in the interests of public funds than it is for the person who suffers it.

There has been a good deal of argument between the Government and the committee about insurance cover for repairs. The Government have gone some way to meet the committee on it, but at the same time they argue that there is not really a public interest in repairs. I believe that they are wrong on that. It is of the nature of a market that if we diminish the supply without diminishing the demand, the price must increase. If we diminish the housing stock, the price of housing in general must go up.

I also found the attempt in the regulations to deal with this an example of the disadvantages of the total enumeration method of legislation. I do not think that I need explain to the Minister what I am getting at; I think he knows well enough. In fact, it is not a bad attempt to set out all the things for which one might need help with repairs. However, I should much have preferred the

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general phrase used by the Secretary of State in his reply to the committee: namely, help for any repairs "which are required to maintain fitness for occupation".

The Government have gone a long way towards total enumeration of those repairs. However, they have left out, for example, repair to broken locks. Anyone who lives in a rough neighbourhood knows what will happen to the house if you cannot afford to repair the locks. That is an example of what the noble Lord, Lord Renton, always says: the draftsman cannot foresee everything.

The Social Security Advisory Committee quotes the insurance ombudsman:

    "The experience of the Bureau is that this kind of insurance generates enough problems as it is. These problems will only be compounded if this kind of insurance is presented, incorrectly, as being the equivalent in all material respects to the state benefit it is intended to replace".

The committee recommended that the Government should defer the introduction of this until they are convinced that the insurance upon which they intend to rely is in place. That is a sensible recommendation. If the Government are as confident as they say that the insurance will appear, it should not cost them very long.

While we are on the subject of the committee, I should like to congratulate Sir Thomas Boyd-Carpenter on his appointment to the chairmanship. He will find, as I remember Sir Peter Barclay telling me he had found, that it is a steep learning curve. I am sure that, like Sir Peter, he will climb it successfully, and indeed with distinction. I wish him better luck than his predecessor in getting the attention of the Government for the reports that he produces. I beg to move.

Moved, That a Humble Address be presented to Her Majesty praying that the regulations be annulled.—(Earl Russell.)

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