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Earl Russell: My Lords, I should like to thank the noble Lord, Lord Higgins, for drawing our attention to the case of people in nursing homes receiving jobseeker's allowance. It reminds me of the conditions imposed when women were first allowed to join the Northern Irish Civil Service: they were allowed three children, but were not allowed to be married.

I strongly agree with the overall thrust of these amendments. In fact, it is a point that I have been making on uprating statements since long before either of the other two noble Lords who have spoken were Members of this House. However, the noble Lord, Lord Higgins, made one point with which I disagree. He said that Amendments Nos. 47 and 48 were not

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particularly urgent at the moment because the present rate of inflation is low. I agree with the maxim that the time to mend the roof is when the sun is shining. If we are to introduce regular uprates--and that is what I am after here--the sensible moment to do so is when there is a low rate of inflation and the immediate first step upwards is not as expensive as it might otherwise be.

When you get a long delay in uprating any particular benefit, you face the danger of the worth of the thing in effect becoming nugatory. The Minister will remember what happened in the Parliament before last to child benefit. So that it is clear I am not making a purely party point, I refer also to the prime ministership of Harold Wilson and to what happened to dog licences. They had not been uprated for so long that the cost of uprating them reached a level which would have been absolutely prohibitory. The only thing that they could do then was to abolish them.

These capital limits may or may not have been rightly fixed in 1988. They were perhaps a little ungenerous even in 1988. But what was a little ungenerous in 1988 is extremely ungenerous now. We have been going 11 years without any uprating of these capital limits. Every year that it is put off the change becomes more expensive when it is introduced. I hope that in this window of low inflation the Minister will grasp the nettle while the stings are not particularly painful. It will only be worse afterwards!

11 p.m.

Baroness Hollis of Heigham: My Lords, I have heard some compelling arguments that the measure will only be worse afterwards as it comes near the top of the tree!

As we have heard, these amendments would have the effect of increasing the capital limits in income support. The current lower limit of £3,000 below which all is ignored for benefit purposes would become £8,000, and the upper limit, the cut off, would become £16,000. The noble Lord goes still further by proposing that these new rates should be increased each year to match inflation. I have every sympathy with the noble Lord's desire, belated as it may be, to tackle the problems outlined in our Green Paper Partnerships in Pensions published in December 1998.

As noble Lords have said tonight, and as government certainly recognise, the way that the rules of benefit work can be unfair to those who have saved. As the Green Paper made clear, people resent the fact that savings can disqualify them from benefit while non-savers get support. The noble Lord, Lord Higgins, was concerned about the taper of £3,000 to £8,000 and the putative rate of return, the £1 for every £2.50. It is perhaps worth mentioning that as far as we can tell, approximately two-thirds of pensioner households have capital of £8,000 or less, although usually pensioners do not like to tell us these things. But certainly most pensioners come within the existing rules. It is clear too that they are out of date.

We had some fun as regards the entitlement to JSA. Like the noble Lord, I was trying to think under what circumstances it might apply. People under pension

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age would be entitled to residential care and nursing home allowances where, for example, they were receiving drug rehabilitation treatment. However, that is fairly uncommon and it did not occur to any Members of your Lordships' House even in the wildest flight of imagination that that might be the explanation. Someone in a nursing home is much more likely to receive IB or IS on grounds of sickness or disability, as the noble Lord thought.

As I say, the Government share the view that the present rules of benefit seem unfair to those who have saved. It is particularly difficult for people who are on the margins; that is, the £3,000 or £8,000 figures. Wherever the line is drawn that will be a problem. As regards income other than from capital, we have already taken action. Our minimum income guarantee paid through income support is set to rise over time with earnings. Therefore I believe that that matter has been addressed. But the same is not true of capital. To restore the value of the capital limits in today's terms--we should remember that the lower figure was introduced in 1988 and the upper figure in 1990--would cost around £100 million. Revalued rates would produce a lower band of around £4,500, with an upper band of £11,000. I refer to the RPI in this connection. To go a step further, the cost of these amendments would be double that--around £200 million, to apply between the £8,000 to £16,000 figure.

Our priority is to maintain the minimum income guarantee. However, our research on pensioner take-up which we publish this week shows that the reasons pensioners do not take up their entitlement to income support are complex. They include a reluctance to go inside a benefits office. Some pensioners do not realise that they do not have to go inside a benefits office at all; that it can all be done by post and phone. We need to get the message across that the minimum income guarantee is an entitlement by right and not by some kind of default. As I said, some pensioners have very modest savings but are, none the less, reluctant to draw on them and keep them for their funeral. They therefore live on an income which is below MIG by virtue of the capital rules.

Like Members opposite and my noble friends behind me, we favour increases to the capital limits. Processing these matters is not easy. We welcome the Opposition's belated conversion to this policy, they having done nothing for seven years. I am intrigued that the noble Lord opposite is now a convert. Indeed, I am even more intrigued since Mr Willetts made his speech at the Conservative Party conference entirely on the basis that he would cut social security expenditure. So far noble Lords opposite are adding multi-millions to social security expenditure. I am happy to see that he reasserts his traditional independence from the other place on behalf of the poor, the sick and the elderly.

The Government are determined to reward thrift, particularly in those who save for old age. The capital limits on income support have been in place since 1988 and 1990 and have not been increased since then. We recognise that those rules appear to be unfair to those who have saved. They are unfair. There is a range of

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options for reform, from increasing the amount of savings that people can hold before entitlement is reduced or extinguished to introducing some kind of disregard on pensioners' income. We are listening to views and we will bring forward proposals later in this parliament. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Higgins: My Lords, I thank the Minister for that reply. In particular it was helpful to have the figures for the cost of simply uprating the capital limits from the last time that a change was made. As I understand it, the cost is £100 million a year. If the amendments that I have tabled were accepted, the figure would be £200 million a year. In comparison with many of the other figures that we have debated on this Bill and on the Working Families' Tax Credit Bill, I hesitate to say that the figures are not as large as I expected them to be. It is helpful to have that information.

I note what the Minister said about action. The question is whether one should delay for as long as was stated. Her words were a little imprecise; if I understood her correctly she said “during the course of this Parliament". She did not advance any particular reason why, since we are all agreed, it could not be done comparatively rapidly. I fully accept that there was a delay under the previous Government and a further delay under this Government. There ought to be some change made. I am grateful to the Minister for her informative reply. We shall consider whether we should return to the matter at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 46 to 50 not moved.]

Baroness Strange moved Amendment No. 51:

After Clause 18, insert the following new clause--


(“ .--(1) A widow in receipt of a widow's pension under any of the enactments mentioned in subsection (2) (“the DSS pension"), and in receipt of a pension paid under the Armed Forces Pension scheme shall on remarriage or when living together as husband and wife with a member of the opposite sex, only relinquish the DSS pension if the Forces Family Pension (attributable) is retained.
(2) The enactments referred to in subsection (1) are--
(a) the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983, and any order re-enacting the provisions of that order,
(b) the Personal Injuries (Civilians) Scheme 1983, and any subsequent scheme made under the Personal Injuries (Emergency Provisions Act) 1939,
(c) any scheme made under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939 or the Polish Resettlement Act 1947 applying the provisions of any such order as is referred to in paragraph (a),
(d) the order made under section 1(5) of the Ulster Defence Regiment Act 1969 concerning pensions and other grants in respect of disablement or death due to service in the Ulster Defence Regiment.").

The noble Baroness said: My Lords, having read the splendid way in which the noble Baroness, Lady Fookes, moved a similar amendment in Committee,

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and the massive and eloquent support she had from my noble kinsman Lord Russell, from the noble Lords, Lord Morris of Manchester, Lord Campbell of Croy and Lord Higgins, the noble Baroness, Lady Dean, and, indeed, from the Minister, it might be better if I were not here today. Such flattering, lovely--though possibly not very true--and delightful to read things were said about me that I felt I had to reply in person.

It is also possible that this is the last chance I may have of righting a very considerable injustice to the post-1973 war widows. Therefore I have to speak.

As I stated before, on the death of her husband a post-1973 war widow receives two pensions; one from the DSS and a second one, the attributable forces pension, from the MoD. It is called an attributable pension, not because the husband has contributed towards it--although of course he has--but because his death is directly attributable to his service life either through fighting for his country in a theatre of war, or through his work as a peacekeeper, or indeed his training to fulfil those roles. All over the world our Armed Forces are at risk even today. In July a British officer and a Gurkha sergeant were killed in Kosovo. Our forces are still involved in East Timor. They are at risk in Northern Ireland. We are still carrying out sorties against Iraq and we are training in Sierra Leone. They must have the emotional security when going on dangerous operations of knowing that their loved ones will be provided for if they do not return. Without that security, it will become even more difficult to recruit or to retain highly trained personnel.

There is nothing new about this amendment. The War Widows Association has been campaigning ever since I have had the good fortune to be associated with them. The attributable forces family pension should be for life regardless of future marital status. We believe that this pension, an occupational pension to which the husband contributed, should be the wife's for life. There are no more than 2,700 post-1973 war widows to whom this could apply. We all hope that there will not be any more. The amendment seeks to keep the attributable forces family pension for life for all those 2,700 post-1973 widows who have not so far remarried, and for any subsequent war widows. It is not retrospective and it does not seek to provide pensions for any post-1973 war widows who have in fact remarried. However, after speaking to friends of mine, I wish that it would. Even some of those who do not remarry can be penalised. I know of at least one lady who has had a mortgage application turned down on the grounds that her pension is not secure for life and could disappear if she changed her marital status.

Less than 1 per cent of these ladies have remarried. It may be that few will, but many of them are young, with young children who grow and eat and always seem to need new shoes. To lose a secure income is rather like shutting your eyes and jumping out of the window. They are thinking very carefully about remarrying or indeed forming a permanent relationship. They cannot afford to lose their pension. On the other hand, with pension splitting on divorce, which is also in the Bill, a divorced person will get a

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share of the pension for life regardless of future marital status. It does not seem fair that war widows should receive less favourable treatment than divorcees. Both the Goode and the Bett Reports recommend that the attributable forces family pension should be for life regardless of future marital status.

Perhaps I could make a small plea on economic grounds. No government wants to spend money, certainly not new money. This amendment would not cause the expenditure of any more money at all. The Government are already paying the DSS pension and the MoD pension to post-1973 war widows. If the attributable pension could be for life and could be retained on a second marriage, some ladies might remarry, thus giving up the DSS pension. The Treasury would then save on one whole pension. I am sure that the Minister will find that an attractive idea. I am sure that the Treasury would too, if they thought about it. I beg to move.

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