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Lord Ashley of Stoke: I oppose Clause 57. It makes a major change that could devastate the lives of the many severely disabled people who would be affected. It could deny them £66 a week in incapacity benefit, for which they may have paid national insurance contributions for many years. Amazingly, the Government have produced no valid reason for the change. It is unjustified.

Severely disabled people currently get incapacity benefit if they have worked and paid the required amount of national insurance contributions for any--I repeat any--period of their working life. The clause says that the person needs to have done so in one of the past two years. The Government say that they are returning to the original intention of linking incapacity benefit to recent work. Where is the evidence that that was the original intention? The Government are merely proclaiming that it was. I doubt that there is a mention of it in the original debates. If there is a mention, I assume that the Government will quote it this evening. If that was the intention, why was it not mentioned in the legislation? Why were the conditions different from those now proposed?

My noble friend Lady Hollis is a superb advocate of government policy and we all greatly admire her. I look forward to her quoting chapter and verse in response to my invitation. What was said in the original debate? Why are the Government now proclaiming that incapacity is linked to recent work? Where is the evidence? Where is the justification?

When Ministers talk about linking incapacity benefit to work and original intentions, they should bear in mind the massive difference between now and Beveridge's time: the disparity between regional unemployment rates. The decline of heavy industry has led to high rates in some areas but not others. The Government have not answered and cannot answer the point made by the noble Earl, Lord Russell, on Second Reading that the clause is geographically discriminatory. For those who live in one place where they can get a job it is fine, but for those who live in another place where they cannot get a job it is just too bad. It is a lottery.

The Government are adopting a fairground lucky dip scheme for the payment of incapacity benefit. The clause gives a clear message to severely disabled people. It is metaphorically shouted from the rooftops, but it is never articulated by Ministers. The message is that those who are doubly unlucky--unlucky enough to become

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disabled and unlucky enough to have lived in a high unemployment area for the past two years and been unable to get a job--will lose their full incapacity benefit of £66. Ministers will say, "We are terribly sorry about this, but it is your bad luck, not ours. All that we can do is enforce the law passed by Parliament". That is a probable scenario for the future if this House and another place passively accept this deplorable clause.

Those who are unlucky enough to become so severely disabled that they are too incapacitated to work but who live in a prosperous area and have a job can have their incapacity benefit. Is that not a fantastic scenario? It is like the goats and the sheep. It has nothing to do with incapacity. Those people may be gravely incapacitated. In fact, by medical definition, they are too incapacitated to work. But some receive the benefit and some do not. Where is the rhyme, reason or justification?

The sad irony is that the people denied their incapacity benefit have been paying national insurance contributions for many years, trusting that they would benefit if disability or illness made them unable to work in the future. That trust will be betrayed if this clause stands part of the Bill.

That calculating of the moral contract between government and people cannot be justified. The Government have failed to justify it. Somehow, I believe that the Government know that it cannot be justified. Why else should my noble friend Lady Hollis produce ludicrous examples in an effort to excuse the proposal? For example, on Second Reading, my noble friend scorned a person's right to claim incapacity benefit if he had made a minimal contribution some 20 or 30 years previously. She somewhat mockingly, perhaps jokingly called it a "down payment", giving entitlement to national insurance benefits for life.

I am afraid that providing extreme examples is an easy game. Everyone can play that game. For example, how about a person paying contributions for 40 years who then becomes unemployed for a mere two years and then becomes severely disabled? That person will receive absolutely no incapacity benefit if this clause is agreed to. I cannot believe that there is any justification for that.

My noble friend also displayed her unease about the clause by saying that the period in which a disabled person should have worked could--not "would"--be three and a half years rather than two years if he was fortunate enough to have had the right mix of tax and social security years. That is fine. But we are back to the fairground lucky dip. It is a lottery rather than a rational, social policy. Why is it that the three and a half years does not apply to everybody or, better still, five or six years? Then we should have a fairer and more equitable system instead of the good-luck, bad-luck syndrome.

I conclude by saying that if the Government want to make fundamental changes to a well-established and accepted system, that is fine. But they need to put forward a fair system which is buttressed by arguments based on justice and logic. They also need to give disabled people far more time to absorb the changes and react appropriately, as they wish.

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I hope that the Government will think again about this clause between now and Report stage. If they do not, I shall table the Motion again and seek the opinion of the House on the matter.

Lord Higgins: I deferred to the noble Lord, Lord Ashley, because he has such a long-standing record in these areas of disability, incapacity benefit and so on. But that should not in any way suggest that on this side of the Committee we do not entirely share his views which we believe, on the merits of the case, suggest that the clause should be withdrawn.

First, it is extremely unfortunate that this debate and the one which is to follow on whether Clause 58 shall stand part should take place at this hour of the night. In another place, ahead of the rebellion which took place there on these issues, the Government sought to time the matter so that it did not arise at prime time. That is why we have Clause 70 in this Bill. The Government totally failed in that. This evening, the Government have succeeded. There is widespread interest in these particular issues and it does not seem to me appropriate that we should be debating them now.

I have argued on many previous occasions that, to a large extent, the Department of Social Security has been taken over by the Chancellor and the Treasury. The reality is that before the election, and indeed afterwards, the Prime Minister made statements which said very clearly that they would reduce the cost of the welfare budget and were to use the money on education and health. There are a number of quotations from the now Prime Minister to that effect. Meanwhile, the social security bill is expected to rise by some £38 billion over a period of three years.

The reality of the situation is that the Government, the Treasury and the Department of Social Security now have three clauses in the Bill designed to claw back some of that money by measures which we, on this side of the Chamber and I think in all parts of the Chamber, regard as wrong. The Minister can, no doubt, tell us to what extent the Government expect to save money as a result of Clause 57. They have advanced various arguments, but the effect is to prevent long-term unemployed people claiming incapacity benefit. Even if it is true that in the past, as pointed out by the Disability Benefits Consortium, too many unemployed people had wrongly claimed incapacity benefit, the problem would be among the existing claimants. The provisions in the Bill apply only to future claimants. If the Government believe that there are people on IB who should not be, the proper way to deal with that is to introduce an appropriate test.

I have already indicated, and I make no apology for it, that it seems to me that the all-work test is not appropriate. We have to do better than that. However, at all events, that is the way to deal with this problem as regards the future, and not by penalising those who have contributed in the past. They may have contributed for many years and have only in the past couple of years not been in a position to do so. The Government will now withdraw benefit from them at the very moment they may find it important.

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I shall not delay the Committee further. The noble Lord, Lord Ashley, spelt out the basic arguments. We believe that this is wrong. I do not think it is possible to amend the clause in a way which is satisfactory. I think that it should be dropped from the Bill. I believe that there is a general feeling across the entire Chamber, that that is the appropriate thing to do. I support the noble Lord's comments. I believe it is a bad clause and that it should be rejected.

11.15 p.m.

Lord Morris of Manchester: I am grateful to my good and noble friend Lord Ashley and his co-signatories for facilitating this important debate.

Like my noble friend, I acknowledge the Bill's many good features about which I have spoken in previous debates; but also like my noble friend, I believe that the Bill would be much improved by the deletion of Clause 57.

All that governments do in office is compared with what they told the electorate in seeking office. But where in Labour's general election manifesto was there the vaguest suggestion that 170,000 people who now qualify would lose their entitlement to incapacity benefit?

No wonder my right honourable friend Tom Clarke, who led for Labour in explaining our policies for disabled people at the election, felt bound to speak and vote against the clause in another place. His speech kept faith impeccably with what he told the electorate on our behalf.

No convincing case has been made for what this clause proposes. Labour Ministers rightly condemn their predecessors for encouraging unjustified IB claims from unemployed people to cut an ever-lengthening dole queue. But the Bill's proposals on IB do not dispossess those who allegedly ought not to have the benefit.

Instead they pile handicap on handicap for many thousands of severely disabled people who, having paid national insurance for a contributory benefit, in good faith and over many years while in work, will lose the help for which they insured themselves.

Currently a person must have paid either Class 1 (employed) or Class 2 (self-employed) national insurance contributions, or a combination of both, on earnings equal to at least 25 times the lower earnings limit (currently £66) in any one tax year prior to the benefit claim. Under this clause a person will need to have made such a contribution in one of the last two tax years before the benefit year in which a claim is made. The result is that someone who has been unemployed for two years but who had paid contributions for 30 years before then will not qualify. However, someone unemployed for 30 years who has worked for one of the last two years will qualify for the benefit. This must be unjust.

Progressive illnesses often mean that people struggle on in work for the sake of their mental health, even though they are not earning sufficient wages to maintain a contribution record. They often have many years of full-time employment, paying national insurance contributions, before illness strikes. As the illness

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progresses, they stay in work as long as they can but, with frequent absences, this may become part-time work.

A citizens' advice bureau in the Midlands reported on the case of a schoolteacher with multiple sclerosis. He eventually had to give up his job as his illness made it impossible for him to continue full-time work. He then worked part time marking exam papers. This disqualified him from claiming incapacity benefit since he was not considered to be undertaking therapeutic work and his earnings were below the level for paying national insurance contributions. The proposals in Clause 57 would mean that if, after two years, he had to give up his part-time work because of ill health he would not be eligible to re-claim incapacity benefit. This must be unacceptable to noble Lords in all parts of the Chamber.

The deep resentment felt by disabled people about Clause 57 is compounded by media suggestions that its proposals are justified by massive fraud in the disability benefits system. These suggestions persist, and are repeated in public debates, notwithstanding the findings of the benefit integrity project--BIP--inherited from the Major government, which involved DSS investigators in visits to the homes of more than 40,000 disabled people to check every detail of their entitlement to the benefits they were receiving. BIP's findings--about which my noble friend Lady Hollis has so helpfully reported to the House--are striking testimony to the honesty of disabled people in relation to the benefits system.

Frank Field, the then Minister for Welfare Reform, emphasising the Government's top priorities on 26th March 1998, told the House of Commons in a ringing declaration:

    "Our commitment to the vulnerable is not negotiable".--[Official Report, 26/3/98; col. 686].

But current reality is that disabled people and the elderly poor, among other vulnerable groups--not least IB recipients--have fared much worse than most others over recent years.

In fact, the incomes of people dependent on disability benefits were frozen for 18 years after 1979 when the link forged by the last Labour government between benefits and average earnings was broken by the Thatcher government. Had that link been kept, IB would now be £24.15 a week higher. By breaking the link, the Treasury saved £18 billion on this benefit between 1980 and 1997--a brutal switch of resources from vulnerable to more fortunate groups. That, too, helps to explain the depth of resentment felt by disabled people about this proposed cut in spending on IB. They see it as a still further redistribution of resources from the less well-off to the least well-off; from those in need to those in greater need. They say it confuses reform with retreat and they ask, "What justice is there in penalising people who save and forego pleasure today in order to pay for safeguarding their future?"

For their part, Ministers talk of their concern that the social security system has become unsustainable. But what are the facts?

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The UK is bumping along the bottom--in the relegation zone, as it were--of the league of 21 OECD member states in terms of the proportion of GDP spent on health, education and social security. And while it is true that social security costs more in Britain than health, education and law and order combined, the same is true also in most other developed countries.

Hype about social spending being out of control in Britain is contradicted also by highly expert recent advice from Christopher Daykin, the Government Actuary, that due to relatively low benefits here:

    "Future costs of social security in the UK look more manageable than in other European countries".

There is no one more familiar with the facts or more skilled in interpreting them than the Government Actuary. And to clinch the argument he goes on to say that such countries,

    "... also have a more significant problem of ageing than the UK, since we have already made significant changes which will keep future costs down".

Most disabled people want the Government to be tough on fraud and tough on the causes of fraud, not least when it is caused by administrative incompetence and corrupt private landlords. They say that failure to tackle low take-up frustrates the will of Parliament. They are not resistant to change. For there are many reforms disabled people want to see. They are appreciative, as I am, of helpful new steps that the Government have taken and will be taking and want them to succeed.

For them to succeed, they argue, Whitehall and Westminster must get the facts straight. And benefits for disabled people should be commended to the taxpayer, not as acts of compassion, but of enlightened self-interest and moral right. Ministerial preoccupation should be with value, as well as cost. And disabled people should be seen as givers, not only receivers. For there are marked cost savings in humanely assisting them to achieve their full potential as full and fully participating members of British society.

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