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Earl Russell: My Lords, we on these Benches would like to delete the clause altogether, for the perfectly good reason that it is the only non-contributory benefit for those suffering from disability.

Baroness Hollis of Heigham: My Lords, I do not wish to sound pedantic and I do not want to exasperate the House, but I think that the noble Earl might refer to DLA, which is a non-contributory benefit of major significance for disabled people.

Earl Russell: My Lords, I accept the Minister's correction and I apologise. It is the first amendment after dinner and the papers are not yet sorted. The point that it is non-contributory, however, is one which I think the Minister will not dispute.

The noble Lord, Lord Morris of Manchester, has hit the nail on the head here. If you do not have a contribution record, you become a non-person. I shall not deal again with the argument that it is much harder to establish a contribution record for some people than it is for others. I made that point on Clause 58 and I hope that I do not need to repeat it. But the prospect of remaining a non-person is for some people quite considerable. The noble Lord, Lord Morris of Manchester, referred to the speech by the Secretary of State at Newham. I think it was in that speech, though it may have been at the one in Wester Hailes, Edinburgh, in February, when he referred to families who have been without work for three generations in a row. That is not simply a matter of poverty of expectation.

Very often the people concerned come from mining or shipbuilding areas. That is why Frank Field, the honourable Member for Birkenhead, is so aware of the problem. For many of those people there simply is not the work to be got. I am reminded by a briefing from the ME Association that the problem is further exacerbated by the fact that those who become disabled at age 16 or 17 years do not have income support on which to fall back. Those who suffer from

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being estranged from their parents while aged 16 or 17 often find that it takes them years to struggle back, if, indeed, they ever do.

One of my son's closest friends, with whom he was drinking last night, was in this situation. It took him five or six years, and a very creditable achievement it is. Not all of them manage to make it. These may be people who, for over 10 or 20 years, do not get into a position where they are sufficiently engaged in the normal world to be able to build up a contribution. They were made non-persons early on and they remain so.

For those reasons, the amount of hardship at risk and the number of people who do not have a contribution record because they are on low pay--which I am glad was mentioned by the noble Lord, Lord Morris--we want this clause deleted. I hope, when it comes to the point, that that may be what happens.

9.15 p.m.

Lord Rowallan: My Lords, I, too, would like to apologise for not being in my place when the noble Lord, Lord Ashley, introduced the amendment. I was involved with the Food Standards Agency debate next door.

The issue raised by the noble Lord is important. Severe disability allowance only goes to those who have 80 per cent or more disability. That is a serious disability which leaves a person in the hands of someone else. That person will need help. We are talking about the blind, the terminally ill and those who simply cannot look after themselves. We must remember that two-thirds of such people are women, many of whom bring up children. If we do away with SDA, what will they be left with? They must rely on their spouse. If they do not have a spouse, they will be in a great deal of trouble. We must think about this very seriously indeed. I take the opportunity earnestly to ask the Minister to think about this carefully. I thank the noble Lord, Lord Ashley, for raising the issue.

Lord Higgins: My Lords, I agree with my noble friend who has just spoken. It is helpful to have this debate. The clause which we are discussing abolishes SDA for new claimants. As has been rightly pointed out, it is a non-means tested benefit for severely disabled people who are unable to work and have not paid sufficient national insurance contributions to claim incapacity benefit.

A feature of our debates on the Bill, as on other welfare matters, has always been the noble Baroness's enormous expertise and depth of knowledge. That is reflected in the answers she has given in many of our debates. I should like on this occasion to take as a text what she said on 20th July, referring to this benefit:

    “I believe that that is the right focusing of the benefit--not continuing to give it to people who have chosen not to build up a contributory record, as in the case of some married women, or who would not need access to means-tested benefit because they have sufficient finances coming into the household. I do not believe that they have the prior claim on disability benefits over young people".--[Official Report, 20/7/99; col.834.]

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I thought it right to give some thought to what she said and to analyse what was being proposed.

The first proposition made by the noble Baroness is that SDA provides additional money to people who do not need it, and that income support is there for those in financial need. However, the Government and the noble Baroness have not provided any evidence of the household incomes of those on SDA. She has not demonstrated that those are well off households. The Government appear to be saying that provided a family is above income support level, they are effectively well-off. I do not believe that that argument is acceptable.

Secondly, the noble Baroness seems to be saying that SDA makes no difference to 70 per cent of the recipients as they have to claim income support as a top up anyway. However, saying that income support is available if there is a financial need ignores the problem that comes with the means-tested benefits. For example, as we debated earlier this week, if someone has savings of over £3,000, it is reduced. If they have capital of over £8,000, they cannot claim at all. If the husband is working the family will not be eligible for income support. Thirdly, she seems to be arguing that the world has changed, that most women now go out to work and therefore build up eligibility for incapacity benefit, and that benefit should not go to women who have chosen not to build up a contributory record. In practice the sort of situation in which a married woman will claim SDA is where the husband has been working and the wife is looking after children. If she becomes disabled then, clearly, if the benefit is abolished, she will lose out.

Her fourth proposition is that money is better spent on increasing benefit for young disabled people who have never had the chance to work. The cuts to SDA are therefore needed to pay for the increased benefits of 16 to 19 year-olds. This has been a feature of the Bill. It is the same as the proposals on bereavement benefits where, having lost in the Court of Human Rights, the Government decided on a cut-back for widows in order to pay for the widowers. It is much the same in this case. The Minister seems to be saying that there is a fixed amount of money involved and if we spend it on this we cannot spend it on that and the priorities are wrong. That seems to be the essence of her argument.

It is very difficult to think of priorities which would justify eliminating the benefit we are discussing for the reasons set out clearly by the noble Lord, Lord Ashley, and others. If the Government are not prepared to abandon this proposal I hope that the House will take the view that they ought to.

Baroness Hollis of Heigham: My Lords, this extensive group of amendments includes one proposed by the Government, to which I should like to speak if your Lordships agree. The amendments, under the new rules in Clause 60, extend entitlement to incapacity benefit to additional groups of disabled people and retain SDA for all other groups. The extensive nature of the amendments indicates to me that perhaps we ought to go back to say, "Why reform the SDA?" I am sorry that so many of our comments

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were perhaps misunderstood or even misrepresented by the noble Lord, Lord Higgins, in an authentic effort to engage with the Government's argument. If I am repeating what was said in Committee, forgive me. But given that those proceedings were quoted back at me, it is perhaps right that I should do so.

We have strong reasons for reforming SDA and we do not want anyone to doubt why we think that reform is necessary. Our core belief is that SDA is now failing. The one group who are prevented from building up entitlement to help from the national insurance system, those who become disabled before they can enter work, are likely to face a lifetime on benefit. Yet currently we only award them as of right a benefit, SDA. I am talking about people who may have had Down's syndrome, with severe learning difficulties as a consequence, cerebral palsy or the like and receiving a benefit which is so low that in almost all cases it has to be topped up by income support.

There has been a broad welcome, I believe, for the Government's proposed reform of SDA. As a result, there will be a future hike in income for young disabled claimants. SDA recipients aged under 20 will receive £26.40 a week more than they do now. That is almost £1,400 a year extra. We estimate that around 175,000 people will gain in the long term, over half of whom will be women. The notion that we are not including women, with the hands in the air that we had from the noble Lord, Lord Higgins, is not true. This beneficial change, however, cannot be achieved without substantial additional cost. In the long run we estimate that cost will be about £180 million net. And, of course, people who are receiving SDA at the point of change will continue to receive the benefit on the same basis as now, which means that 350,000 disabled people receiving SDA will be unaffected.

As noble Lords are now aware, following further consideration we have introduced an amendment which will ensure that young disabled people who become entitled to IB under these rules, but then leave benefit, for example to try work, will be able to re-qualify. The amendment will apply to those who return to benefit beyond the age limit and who are not covered by the normal linking provisions should they have to reclaim benefit after a period abroad or after earning below the lower earnings limit. As I announced when we debated the last amendment, we are extending the protection for people under the age of 25 in education. Young people in any form of education or work-based training will now have access to invalidity benefit under the new rules.

I firmly believe that our reform of severe disability allowance (SDA) is right in itself. As I said in Committee, I do not believe it right to continue to direct benefit at people--and here the noble Lord certainly quoted me correctly--who have chosen not to build up a contributory record, as is the case with some married women. Perhaps I may make a confession: I would be one of those. I joined the labour market in 1967 and chose, quite deliberately, to pay the reduced married woman's stamp. I am grateful that my noble friend Lady Castle actually abolished that

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choice in 1978. I think that it was a misguided choice for most people. However, I chose it. I calculated just the other day that I have probably saved, out of my pocket, an extra £30,000, or more, by paying the married woman's stamp.

Why, then, because I chose not to build up a contribution record and make myself eligible for invalidity benefit were disability to hit me, should I go on, after pocketing £30,000, to be eligible, as of right, to SDA? I have no necessary financial need and I made a choice to save money all the way through. In my case, as I said, it was a matter of £30,000. Is the noble Lord, Lord Higgins, really saying that I should be able to save such a sum, courtesy of taxpayers, and have a benefit on top, irrespective of my financial need and irrespective of the cost of my disability because, of course, those are covered by DLA? Is that the noble Lord's proposal? I believe that that day has gone. Indeed, we are reforming SDA because of the changing position of women more broadly.

Disability living allowance, which was much less widely available when SDA was introduced, is now paid to the vast majority, indeed, 80 per cent of people. I give way to the noble Lord.

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