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Lord Rix moved Amendment No. 124B:

Page 68, line 18, at end insert--
("( ) Those persons entitled to severe disablement allowance at the time this provision comes into force shall receive incapacity benefit in place of that allowance, and shall continue to receive incapacity benefit subject to the normal conditions other than contribution conditions.")

The noble Lord said: I am extremely grateful to the noble Baroness, Lady Miller of Hendon, for the fact that the mass exodus after Questions took place at the beginning of her Third Reading speech on the Genetically Modified Crops Bill rather than my speech on the first amendment.

The first time that I ever suffered the walking out of an audience was 56 years ago when I was with Sir Donald Wolfit on an ENSA tour of "Twelfth Night", which was singularly inappropriate at the time for the troops. We played in front of the first American soldiers over here in Tidworth. On the first night, no sooner had Orsino, the noble Duke of Illyria, spoken the opening lines,

than there was a noisy mass exodus by the American troops from the body of the hall. Only the officers were left in the front row.

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Sir Donald Wolfit was deeply hurt by this and complained to the commanding officer. The following night, the house was again packed when we started the show. We played to utter silence--no laughs, no applause--from beginning to end. During the interval we wanted to know how the audience had been kept quiet and in the their place. We discovered that the military police were parading up and down the aisles of the theatre with revolvers drawn out of their holsters and the hammers cocked. I do not recommend that to the Whips in your Lordships' House, but it is food for thought.

I am well aware that Amendment No. 124B lacks subtlety. To achieve the result for which I am arguing would require rather more complex provisions, but at least what I want to do is clear. I can live with the endorsement on the Minister's brief, "technically deficient"--or something stronger--and the admonition that we shall shortly be debating whether Clause 60 should stand part of the Bill.

I am seeking to transfer those receiving severe disablement allowance to incapacity benefit when SDA is abolished. Quite a lot of those concerned will have been receiving non-contributory invalidity pension or its SDA successor since well before the age of 20 or 25, and if early recognition of incapacity is to be the prime badge of respectability under the new dispensation, they wear that badge and have worn it for many, many years. It seems unfair that they should lose out on the beneficial change that those with a shorter benefit history enjoy.

For those who secured SDA later in life as a result of time spent looking for work, bringing up a family, doing voluntary work overseas, doing very low paid work or some other reason that prevented them from acquiring a contribution record, I would argue that there is also a good reason for not perpetuating a dead benefit, but instead making a once-for-all transfer to the new all-purpose benefit.

We are not talking about people pretending to be sick or disabled and unable to work. We are talking about people who have satisfied and continue to satisfy the adjudicating authorities that they are incapable of work. For many, more incapacity benefit will mean less income support, but I have never followed the logic of the argument that anything that reduces income support payments is not worth doing. With that argument, we would have nothing but means-tested benefits and we would retreat 93 years in the history of welfare reform. For some, including some married women, there will be a substantial net gain; and I do not share the view of sick and disabled married women as at best reluctant workers who ought to rely on the earnings of their wealthy husbands. As far as I am aware, the prevalence rate for wealthy husbands among the population of disabled married women is startlingly low.

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The amendment seems to provide a neat way of rounding off an important chapter in our welfare history and I hope that it might find favour with a government anxious to tidy up and move on. I beg to move.

Lord Ashley of Stoke: I oppose the proposal that Clause 60 stand part of the Bill.

Lord Hunt of Kings Heath: I can tell my noble friend that we are not debating that at the moment.

Lord Campbell of Croy: Perhaps I could speak on the amendment. It refers to,

    "Those persons entitled to severe disablement allowance".

I understand that Clause 60 will abolish severe disablement allowance, but only for new claimants. I hope that the Minister will be able to confirm that those who already receive it will continue to do so. I understand that the amendment applies to people who are entitled to SDA but have not yet claimed it.

Baroness Hollis of Heigham: I do not know whether the noble Lord, Lord Campbell of Croy, understands the intention of the amendment. My noble friend Lord Rix proposes that the entire current caseload of SDA should move over to IB. The Government's proposals are for those under the age of 20.

Lord Campbell of Croy: I was about to reach that point. The Government's proposal in Clause 60 is that SDA should disappear for new claimants. The noble Lord, Lord Rix, is suggesting a transfer. I understand that, but I wanted to be sure that I understood the Government's proposals. I find the amendment commendable and if it is accepted there would be a transfer.

The proposals would leave severely disabled people aged 25 and over who cannot work in a much worse position. Abolishing the allowance would have particularly bad effects on women, because 60 per cent or more of those who are eligible for it are women and many of them have not earned enough or been able to make sufficient national insurance contributions to be able to do without it and receive other benefits. I would be interested to hear what the Minister has to say about the amendment, which I support in principle.

Baroness Pitkeathley: I should like to make a specific point on the amendment. It is important to see the issue in the round. The changes proposed in the Bill must be viewed as part of the package of Government measures. The noble Lord, Lord Campbell of Croy, put particular emphasis on women. We must take into account all the other benefits for women that are being introduced. No doubt my noble friend the Minister will want to elaborate on them. Specifically, can the Minister assure us about the rules on IB which have been modified to include protection for former carers on invalid care allowance who are unable to pay

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contributions in the two tax years before their claim? Some of those will be affected by the abolition of SDA. We ask for the Minister's assurance on that.

Lord Higgins: We shall shortly discuss the question of whether the severe disablement allowance should be abolished when we reach the clause stand part debate. As I understand it, what the noble Lord is proposing in his amendment is that, in the same way as severe disablement allowance is a non-means-tested, non-contributory benefit, the same procedure should apply as for those who are entitled to it at the moment and they should receive incapacity benefit on the same basis as they receive severe disablement allowance at present. This is an ingenious amendment and we look forward with interest to the Minister's reply.

3.45 p.m.

Baroness Hollis of Heigham: The implication of the noble Lord's amendment, as I tried to suggest when the noble Lord, Lord Campbell of Croy, allowed me to intervene, is that all those people currently claiming and receiving SDA--and I presume by implication all those in the future; it would otherwise be unfair--should in fact be eligible for IB. In other words, the amendment would scrap the non-contributory SDA and replace it with a contributory IB at much higher cost.

There are three main reasons behind our wish to reform SDA. I hope that noble Lords will forgive me if I repeat myself on the clause stand part debate. Perhaps it would have been sensible to group these matters.

The first reason is that SDA is failing to provide people disabled early in life with the full financial support that they need. SDA was designed for those who could not build up a contributions record for what became incapacity benefit or the old invalidity benefit, so there were always two parallel modes of support: the non-contributory one (for those unable to support themselves but who had no access to the labour market to build up a contributions record) and the contributory one. For those who fell through even that safety net, there was of course always income support. SDA is failing to help those people adequately. It is not giving them the financial support they need.

Secondly, SDA is certainly not helping those in greatest need. The rate of SDA (which was originally designed to be 60 per cent of IB, or the old IVB) means that 70 per cent of recipients have to claim income support on top.

Thirdly, in 1974 SDA was originally designed--as I say, the equivalent was the non-contributory invalidity pension--for those who were out of the labour market and who could never build up a contributions record. It was never designed to cover married women. That was made very clear. The 1974 document states:

    "The benefit will not be designed to cover married women living with or maintained by their husbands".

Married women were included in 1977. This point relates to the questions asked by the noble Lords, Lord Campbell of Croy and Lord Higgins, about the position of women. Since married women were included in what became SDA--they were never intended to be

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included but that happened a few years later--there have been significant changes in the situation of women which the benefit has not recognised.

The first was that one year later the married women's reduced stamp was abolished. That reduced stamp had disqualified even those married women in work from building up an entitlement to contributory benefits. Thereafter, newly married women were required, if they were in work, to provide for themselves through paying the full stamp.

Secondly, in 1992 changes were made to the lower rate of disability living allowances. We have also this year had the changes to the lower earnings limit which, together with the minimum wage, has brought a further quarter of a million women into the contributory system. There are now as many women in work as men. Seven out of 10 married women work; eight out of 10 married men work. In terms of opportunities in the labour market, there are at least as many opportunities for women as for men.

The number of women who are acquiring a right to incapacity benefit in their own right has increased from 84,000 just 20 years ago to over half a million now. SDA was originally designed in 1974 for those who could never provide for themselves because their disability had for the most part occurred earlier in life. Married women were included in 1997.

That situation seems to have changed out of all recognition. The support that we give through SDA (at 60 per cent of IB rates) for those disabled from an early age is no longer adequate because it has to be regularly topped up by income support. The situation for married women, who are the other cohort going into SDA, has changed, with the abolition of the reduced married women's stamp, the introduction of lower levels of DLA, the increase in the number of those qualifying in their own right for incapacity benefit through the minimum wage, and the changes to the lower earnings limit.

Given that, I think that SDA no longer fulfils the purpose that it was designed to fulfil in the 1970s. Our reforms restore the principles behind it and focus on the priority--young people. I believe that women are as competent as men to earn their own rights to contributory benefits. However, we now need to protect those disabled from an early age, whether men or women, who have had no access to the labour market. Therefore, our reforms phase out SDA and allow young people disabled early in life to become entitled to IB, thus providing a significantly increased benefit rate for this group. In future, they will get IB at the same rate as people who qualify through contributory conditions and, as a result, they will gain by up to £26.40 a week. People aged under 20 who are receiving SDA when the changes are introduced will also gain as they will receive the long-term rate of IB a year later. Young people will gain substantially from our reforms, and I am glad that this has been welcomed.

However, the amendment moved by the noble Lord, Lord Rix, would result in all SDA recipients being transferred on to IB irrespective of age. Unlike young disabled people, many older people now receiving SDA,

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including women, will have become disabled relatively late in life and they will have had the opportunity to work, the opportunity to contribute towards benefits, and the opportunity to insure themselves against those contingencies. In my view, awarding them all IB without requiring them to satisfy the contributory conditions is a serious breach of the contributory principle and is deeply unfair to those who have provided for themselves through the contributory condition and who are now in similar circumstances.

I should like to give the assurance for which I was asked by the noble Lord, Lord Campbell of Croy, that no one receiving SDA at the point of change will be worse off as a result of our reforms. We shall ensure that existing SDA recipients receive the benefit on the same basis as now. Of course, income support, HB and CTB will all continue to be available.

It would cost over £250 million to transfer all existing SDA cases on to IB and that is a cost which I do not believe we can justify. It would cost many more millions of pounds to transfer all future SDA cases on to IB. I believe that the time has come now to discriminate within the caseload of future claimants and to say that those who have an opportunity, as women now do in the same way as men, to build up a contributions record for themselves should come within the IB framework. If they are unable to do so, they can of course be eligible--this did not exist in 1977--for income support with a disability premium, if they have a financial need but no contributions record.

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