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Earl Russell : My Lords, majorities of over 150 do not happen very often in this place. Whatever they may say about the composition of this House or anything else, Ministers should think very carefully about what they may have done to contribute to that result. I say, not to the Minister, who is too good a scholar to need it, but through her to the Secretary of State and the Prime Minister: I pray you, in the bowels of the Lord, to think it possible you may be mistaken.

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I am afraid, however, that I have to make the same point to the noble Lord, Lord Ashley of Stoke, about his amendments that I had to make in the previous debate. I respect and honour the intention behind the amendments, but the principle of what is being attempted is not acceptable and therefore a compromise would not really be a compromise since it would involve accepting the Government's principle.

My objections to what the Government are doing are twofold. The first is the obvious commonsense one that it discourages saving. The second is the erosion of the contributory principle and therefore the taking away of what one might perhaps regard as a legitimate expectation. I am not, of course, going to adopt the tablets of stone principle that conditions for contributory benefits may never be changed under any circumstances whatever. We are not Medes and Persians and if we were we would not need a Parliament. But we do have to take account of the fact that in pension provision, with the changing age balance, the shortage of young people as well as the numbers of old ones, we really must be thinking about encouraging a climate of private provision. Occasionally I think people are going too fast in that direction, but I do think that discouraging private provision, in the present actuarial situation, is going rather against a change in culture which we need to see. I think it is a long way from joined-up government.

The argument about these people being wealthy, as the noble Lord, Lord Rix, hinted at very briefly, grossly fails to take account of the extra costs of disability and it gets more and more clear that we have underestimated those at every stage.

The other really interesting thing about this proposal is how it got here. Some of your Lordships will have read the article in the Guardian of 25th September which pointed out what some of us had previously suspected; namely, that the proposal is identical to one put forward, largely by the same civil servants, through Michael Portillo and offered to Peter Lilley in 1993. I am interested in the response that Mr. Lilley gave, and the quote is from the original documents. He said that the move would justifiably create “a source of resentment" among disabled people and raise difficult questions about the contributory principle.

Mr. Lilley went on to say--these are his exact words--

    “I do not favour this approach. Apart from the disincentives to make private provision it would introduce, I think it would raise some very difficult questions about the future of the contributory benefit system before we have fully thought through the direction we want to take".

Mr. Lilley said it all.

We heard earlier from the noble Lord, Lord Davies of Coity, who is no longer in his place, a variant of the “Mr. Jones will come back" argument directed against the Conservatives. But there are two points about that argument: first, it was never employed, except when those in charge were doing something rather wrong;

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and, secondly, if we take Mr. Lilley as the Mr. Jones on this occasion, he seems to me to have shown a good deal more sense that this Government.

The final point that I wish to make is that this direct carbon-copying of a proposal from the Treasury under Michael Portillo seems to me to cast some doubt on the general concept of welfare reform as employed by the Prime Minister. It tends to suggest that it is not some great, new, glorious brainchild of the Prime Minister's thinking: it is simply the Treasury doing business as usual. We are used to that.

Lord Morris of Manchester : My Lords, writing to me about this clause yesterday my friend for many years, Sir Peter Large, than whom no severely disabled person is more widely respected in all parts of both Houses, said:

    “The policy of redistributing resources from disabled people in need to others in greater need is abhorrent to me. Unfortunately, the policy is nowhere more clearly evident than in Clause 59, which introduces the dangerous precedent of means testing a contributory benefit".

Sir Peter went on to say that by no stretch of anyone's imagination can people with a personal pension of £51 a week be thought of as sufficiently well off to be an appropriate target for means testing. He added:

    “It is in stark contrast to the future upper earnings limit for the new Children's Tax Credit which will be approximately £38,500 a year".

Many disabled people fear that the worse is to come. Clause 59(3)(c) allows invalidity benefit to be reduced through,

    “a payment of any other specified description; and 'specified' means prescribed by or determined in accordance with regulations under this section".

There is widespread worry, notwithstanding all that has been said by Ministers so far, that the means testing of invalidity benefit that this clause proposes will lead logically to taking other benefits into account and means testing them also.

Where in our general election manifesto was there any hint that disabled people would be forced to take a cut in benefit of 50 per cent of any personal pension worth over £50 a week so that, for example, someone who has saved for years to provide a weekly pension of £75 will have her or his benefit cut by a punishing £12.50 a week? What possible justification can there be for doing this when between 1980 and 1998 disability benefits were frozen, while average earnings in Britain rose by £115 a week in the same period?

Clause 59 confuses reform with retreat. “What justice is there", I am asked by disabled people, “in penalising those who forgo pleasure today in order to pay for safeguarding their future?" Many say that the Government's top priority ought to be improving the take-up of disability benefits.

I most strongly urge my colleagues in government to think again about this clause which they know, as well as I do, is deeply resented by everyone aware of its implications for many of the most vulnerable people in Britain today. Speaking from ministerial experience of, I think, twice the length of any present Minister in your Lordships' House, I know the consequences for

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individual Ministers of the deceit that government is seamless. The reality is that every Minister in all governments must fight his or her corner for available resources. I have no doubt whatever that my noble friend Lady Hollis has fought her corner and that her commitment to making life better for disabled people is every bit as strong now as it was before she became a Minister.

I profoundly hope that we shall hear when she speaks that this clause will now be withdrawn.

7.15 p.m.

Lord Campbell of Croy: My Lords, I shall speak to Amendment No. 136, which would leave out the whole of Clause 59 and which is grouped with the other two amendments that we are discussing. The clause would extend means testing within the system of contributory benefits, as noble Lords have already pointed out, but it would penalise people who have saved for the future with the encouragement of successive governments.

I spoke on this point in Committee, so I shall be brief in what I have to say tonight. However, I draw your Lordships' attention to this anomaly. It appears that pension income only is involved in the means testing. This seems unfair as between pensioners with pension income and pensioners with other private income. I should be grateful for confirmation from the noble Baroness that this is so and perhaps she could explain why it is so. I shall join the noble Lord, Lord Ashley, in opposing this clause for the reasons which I gave in Committee.

Lord Higgins: My Lords, as has rightly been pointed out, this is means testing of a major, long-term contributory benefit and, as such, must give grave cause for concern. The case against the clause and in favour of the amendment has already been made strongly, but what is extraordinary about it is not merely that it is means testing a major benefit but the way in which it proposes to do so.

The noble Earl, Lord Russell, suggested that this was something put forward by the previous government, turned down by them but accepted now by this Government--a kind of “Yes, Prime Minister" television show scenario. If any Sir Humphrey had put this before Jim Hacker in the programme, he would have had no difficulty at all in turning it down. He would have pointed out clearly that the people who would be means tested are those who happen to have pensions. He might have added that the entire purport of most of this Bill, which we have been debating day after day, is to encourage people to take out pensions. If they happen to be disabled, and no doubt had greater difficulty in procuring a pension in the first place, they are now to be told, “Well, you are not going to get the full amount of your disability benefit because you have been prudent enough to take out a pension".

The noble Lord, Lord Rix, suggested that the Government are distinguishing between the deserving and the undeserving disabled. He is right: in my view, we must make no such distinction. But the people who

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are regarded by the Government as the undeserving disabled are those who have been prudent enough to provide themselves with a pension.

This clause verges on the bizarre and I really do not think one needs a very long speech to point that out. The reality is that there are estimated to be some 45,000 people--prudent, disabled people--who will lose in the first year, rising to 335,000 after 10 years. I have had a very large number of letters from people. One example concerned a lady who had previously worked as a nurse and had had a stroke. She managed to get a pension and long disability benefit, but she now writes to me saying, “If this goes through I will probably have to sell my house".

There are many such cases. It is very easy, in this atmosphere, to look at it all in a rather academic way, but the reality is that there are people concerned who are disabled, who have been prudent, and they are being penalised by the Government. I think I am right in saying, if I may just pick up the point made by my noble friend Lord Campbell of Croy just now, that if someone has a disability benefit--the Minister will correct me if I am wrong--and has an income from, let us say, shares, of £2 million a year, they will still continue to get their disability benefit.

This clause, as it stands, is quite absurd. The noble Lord, Lord Ashley, has rightly considered the matter and he has put down amendments which would effectively contain a degree of compromise. I think the principle behind this clause is doubly wrong, and we really must totally oppose it.

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