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Earl Russell: My Lords, has the noble Lord forgotten that these proposals were turned down by the Conservatives when they were in office?

Lord Davies of Coity: My Lords, it is true that they were turned down. It was put forward by Mr. Portillo and turned down by Mr Lilley. I am wondering whether it was with an eye on the general election that they were turned down at that time.

As I said at the outset, the Government have been driven to play hard ball. In the circumstances, no one could blame this Government, if their proposed

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legislation on welfare reform and pensions is further frustrated, for being less than forgiving in the wake of such destruction.

Baroness Masham of Ilton: My Lords, I take this opportunity to pay tribute to the noble Duke, the Duke of Buccleuch and Queensberry, for all the support he has given disabled people within and without Parliament. For years the noble Duke has been president of RADAR (the Royal Association of Disability and Rehabilitation). Many people thank him for all he has done.

Many people are becoming concerned about the meanness of spirit of the Government towards unfortunate people who have to struggle to survive. I should like the Minister to say how much it will cost to administer the means test to these severely disabled people. They will feel let down unless the House supports them tonight in asking the Government to try and understand their needs more closely than they have so far been able to do.

5.45 p.m.

Lord Swinfen: My Lords, the noble Lord, Lord Davies of Coity, suggested that, in what we may be proposing to do this evening, this House could be exceeding its constitutional duty. I take issue with him on that point. The House in fact is performing its constitutional duty. If this House feels that the other place should think again, it has a duty to ask it to think again. The noble Lord has not been in this House as long as I have. I can remember that when this party was in government, the House asked the government of that day--the Members in the other place--to think again.

It may be unwise; it may be inadvisable to try and delay matters. I do not know how difficult it is to arrange government business--I have never been in the position of trying to do so. But as far as I am aware there is no constitutional reason why Prorogation, which I gather is planned for Thursday, could not be postponed. I am sure that the Government will want to get their Bill through and I for one do not want to stop them, but it may be necessary for this Bill to be amended yet again. If the noble Lord, Lord Ashley, takes this matter to a Division, I am strongly inclined this evening to vote with him in his Lobby.

I have one question for the Minister. Why, when the Government are attempting to get people to produce their own private pension arrangements to back up what is acknowledged to be a rather low state pension, are they means-testing disabled people for incapacity benefit which is exactly the same sum as the state pension?

Baroness Darcy de Knayth: My Lords, I shall be extremely brief. I support these amendments. It is important that there is some method of uprating, as the noble Earl, Lord Russell, clearly demonstrated.

I reiterate something that the noble Lord, Lord Ashley, said when he so persuasively introduced these amendments; that is, the other place has not been

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asked its opinion on the compromise amendments. In any case, the Bill has to go back to the other place because of the successful amendment of my noble friend Lady Strange.

Lord Rowallan: My Lords, I apologise for taking up the time of the House after one and a quarter hours on this debate. However, I want strongly to speak on it.

When I was eight I had polio and was paralysed for 18 months. Luckily, I recovered. So I know what it is like to be disabled. Many more, 8.5 million people, as the noble Lord, Lord Rix, pointed out, certainly know what it is like to be disabled. The National Health Service looks after everybody equally. So should the social security system. That is the problem with which we are dealing today.

My father was a double amputee. As a result, I have worked for the past 10 years for all those who suffer from various disabilities. I am a life member of the Limbless Association; I am a director of SANE, the mental health charity; I am a patron of Depression Alliance, which deals with people who suffer from depression. Sadly, I shall not be able to do that too much longer from within your Lordships' House, but I shall continue my work outside.

The disabled did not choose to be disabled. Unfortunately, they are disabled. They must be treated fairly in all ways. Because I have lost my franchise to be here, I shall not become a hooligan; I shall not vote against this Government willy-nilly until Wednesday or Thursday. But in this case I feel it is the duty of this House to ask the other place to look seriously at this problem, which has not been debated there. It is the duty of this House to revise extreme measures of any government. We have done that successfully for many years. I urge your Lordships, if this matter comes to a vote--I feel sure it will--to support the noble Lord, Lord Ashley, so that it can be seriously examined again.

Lord Higgins: My Lords, anyone speaking in your Lordships' House in a debate on the disabled, which has had as participants those who have already spoken this afternoon, must do so with great diffidence. I speak not only of the noble Lords, Lord Ashley, Lord Rix, Lord Morris, and my noble friend the Duke of Buccleuch, but also of the noble Baronesses, Lady Masham and Lady Darcy. They have devoted their lives, in large measure, to helping the disabled. Therefore on this occasion I speak with great diffidence.

Perhaps I may remind your Lordships that we are now dealing with two sets of amendments, which have been grouped together. One group relates to the effect on the disabled if the restrictions on contribution requirements imposed by the Government are carried through, and the second group deals with the question of whether the disabled should have their benefits reduced because they happen to have occupational pensions. I believe that the grouping of the amendments is appropriate but, none the less, it is important for us to bear in mind the fact that we are discussing two issues here. Although they may be

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related they are, to some extent, separate. Therefore, I hope that noble Lords will feel that it is right to oppose both sets of amendments, as proposed by the noble Lord, Lord, Ashley.

We have before us some amendments on which the House of Commons has got to support the noble Lord, Lord Ashley--

Noble Lords: Oh!

Lord Higgins: My Lords, I beg the noble Lord's pardon. Let there be no doubt on the matter: we will certainly support the noble Lord, Lord Ashley.

I want to stress most strongly a point which has been made by a number of noble Lords, not least the proposer of the amendments himself; namely, that the House of Commons has not yet had an opportunity to vote on these amendments. When we discussed the matter during earlier stages of the Bill, we voted on and carried amendments to remove these two clauses, which I believe to be fundamentally wrong in principle. The matter then went to the other place and the Government came forward with totally inadequate amendments as a form of compromise. It is that on which the House of Commons has so far voted. The noble Lord, Lord Davies of Coity, seemed completely unaware of the fact that the other place has not yet had an opportunity to vote on these specific issues.

Although I continue to take the view that these clauses are wrong in principle, I recognise the fact that there is a case for compromise. I certainly believe that the compromise put forward by the Government is totally inadequate and that that put forward by the noble Lord, Lord Ashley, is one which the House as a whole should support. It is an entirely reasonable basis on which the House may proceed. Therefore, it does not seem to me that the issue of the constitutional position of the House, or whatever, actually comes into question at this point. Indeed, it is something quite separate.

Nevertheless, at the end of the day--and this is important--I feel bound to say that the matter rests with the House of Commons. We should give Members in the other place the opportunity to vote on these amendments. I do not take the view that it would then be right constantly to reject them. Indeed, as the noble Lord, Lord Ashley, pointed out, it is not his intention to kill the Bill. Similarly, it is not our intention to kill the Bill. Although there are a number of objectionable features in the legislation, I believe that, overall, it does things which ought to have support. Our task is to remove these particular clauses from the Bill.

I do not think that these clauses can conceivably be regarded as reform. They are fundamentally flawed. In addition, it has been said that this is a matter upon which there will be a conspiracy of hereditary Peers, and so on. However, one has only to look at the results of the voting on the last occasion when the matter was before the House. If no hereditary Peers had voted against these clauses, the amendments against the

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Government and in favour of knocking out the clauses would still have been carried by a substantial majority. I believe that there is great opposition throughout the House as regards what the Government are doing; indeed, it is all-party opposition.

My next point is equally important. It has been reported, not least in some press articles, that this is a measure to increase expenditure on the disabled. It is not so. These clauses do not represent a measure to increase expenditure on the disabled; they represent cuts in what has already been previously agreed for the disabled. That is the crucial difference between the two positions. In effect, we have been told by the Government, "Oh well, we have made a concession". But what has actually happened is that the Government have come forward with these proposals, which propose to take away benefits from the disabled. They have then said, "You can hang on to a little bit of what remains". That is not a reasonable deal. However, the proposition put forward by the noble Lord, Lord Ashley, would strike a reasonable balance between the two sides of the House.

I should like to say a few words on the substance of the matters now before the House. The first set of amendments is concerned with a contribution condition. It has been the hallmark of the Government's so-called "reforms" that, as an overall effect of policy, they have undermined time and again the contributory principle. Indeed, they have extended the question of means testing time after time. What we object to most strongly in the first clause that we are discussing and which the noble Lord seeks to amend is the proposition that people who have contributed for many years but have not done so recently--very often for good reasons--should suddenly find that they lose their disability allowance. We believe that to be wrong in principle. At any rate, one should go for the compromise which the noble Lord, Lord Ashley, has proposed; namely, that it should at least be a question of whether such people have contributed over a seven-year period.

The second set of issues relates to the question of incapacity benefit and pension contributions. I do not wish to burden the House by repeating the excellent exposition made by the proposer of these amendments as regards the way in which this will operate. It will do so by applying a ludicrously high, effective marginal rate of tax to people who cannot conceivably be regarded as well off. But there is an even stranger situation here. Under this clause, and at this very high rate of marginal tax, incapacity benefit will be taken away from people because they have an occupational pension. The whole thrust of the rest of the Bill is to say that people should make provision by way of pension. But what do we find? If you are disabled and have been fortunate enough to find a pension, you will suddenly find that you are penalised for so doing. The clause is totally inconsistent with what remains in the rest of the Bill.

However, there is something even more curious about this proposal. If you have an occupational pension at a relatively low level, your incapacity benefit will begin to be withdrawn. Indeed, after not

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very large increases in the level of income at which this happens, it will then be withdrawn altogether. If another individual on incapacity benefit had an income from stocks and shares of, say, £2 million a year, his incapacity benefit would not be affected at all. It is a truly lunatic situation. I really do not understand why it should be so.

There are many other arguments to deploy but, as many have already been put forward this afternoon, I do not wish to burden your Lordships' House by repeating them. However, there is perhaps one that is worth mentioning. I have in mind the question of public expenditure. We have been told, "Well, we have to make these cuts on the people who are incapacitated"--who are certainly not among the richest members of the community--"in order to pay for some of the improvements which have been made elsewhere in the welfare system". Indeed, some of those improvements will affect people who are better off and less incapacitated, if incapacitated at all. That is not a reasonable way to assess priorities.

I conclude on this note. Like most noble Lords, I am genuinely puzzled as to why the Government should persist in retaining these two clauses. I find them completely incompatible with the overall approach which they seem to be adopting. They cannot conceivably be regarded as reform. However, as I say, while they are wrong in principle I recognise that a compromise should be agreed. I do not think that this is something which should go back and forth and endanger the Bill. However, it is tremendously important that this House should carry out its duty, which is to ensure that those in another place, who must at the end of the day have ultimate responsibility for these matters, should have an opportunity to vote on the amendments which have been put forward by the noble Lord, Lord Ashley. I very much hope that your Lordships will support them.

6 p.m.

Baroness Hollis of Heigham: My Lords, in supporting Amendments Nos. 42A and 42B to Lords Amendment No. 42, I shall speak also to Amendments Nos. 43A to C. Of course I am asking the House therefore to reject the amendments of my noble friend.

It always gives me great pleasure to reply to such a balanced debate with such a variety of views as we have heard tonight. There have been three main themes advanced tonight. First, that what is being offered by my noble friend Lord Ashley is a compromise; secondly, that what the Government are doing affects people below the poverty line and, thirdly, that the other House should have a chance to consider--which it has not yet done--the amendments of my noble friend.

My honourable friend Mr Rooker in the other place said that he was engaging with myths as much as with information. I am afraid that I am about to do the same thing tonight. First, although this measure has been alleged to be a compromise, it is not. Secondly, we have been told that it affects people below the poverty line, but it does not. The statistics are quite misleading.

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Thirdly, we are told that the Commons have not had a chance to consider this matter when they have and have made their position already clear. I shall return to that point.

The Government have made it clear all along that the incapacity benefit reforms are based on principle, helping the 1 million disabled people who say they want to work to do so while providing the right support for those who cannot. The Government are already spending more than £24 billion a year on benefits for long-term sick and disabled people. During the course of this Parliament we expect to spend nearly £2 billion more. I repeat that this is not a cuts agenda, even though that has been alleged by some, including the noble Lord, Lord Higgins, tonight. As I say, we are spending nearly £2 billion more on disabled people in the course of this Parliament. But we believe that in doing so the greatest resources should be spent on those with the greatest needs. If we are to meet that challenge, incapacity benefit needs to be reshaped and reformed.

I remind the House that despite some suggestions to the contrary--again from the noble Lord, Lord Higgins--no one who is currently disabled and on incapacity benefit will be affected by these changes. In response to my noble friend Lady Kennedy I also remind the House that in future 90 per cent. of those on incapacity benefit will not be affected by these changes. I say to my noble friend Lord Morris, who has alleged that incapacity benefit expenditure is not out of control because the numbers on it are falling, that that is simply a result of measures taken in 1995. When someone now reaches retirement age he or she comes off IB and goes onto old age pension. That is the reason for the fall in numbers. It has nothing at all to do with the actual caseload.

The Government clearly have not gone as far as my noble friend Lord Ashley would like. I accept that. My noble friend presents his amendments as a compromise. That word has been much used tonight. However, his amendments are not a compromise by any definition of that word. They neuter most of the effect of this Bill, as I do not doubt that my noble friend intended they would. IB was devised as an earnings replacement benefit for those who became sick and disabled while in work and who might otherwise have remained in work. As people have said tonight, incapacity benefit was never intended to massage the unemployment figures, although it was so used by the previous government. IB was never intended to be a top-up for early retirement, although it is now being used in that way too. We are bringing back IB to its original intent, an earnings replacement benefit for those disabled while in work and unable to continue to work.

My noble friend's proposals for the contribution conditions would allow someone to qualify for IB who did one year's work as long as 8½ years ago. That is not creating a link with recent work. That is not compensating someone who has had to leave work recently because of incapacity. Instead it makes incapacity benefit a latent unemployment benefit.

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My noble friend's proposals on occupational pensions would enable a single person to get IB with a pension--not an income--of up to £23,000 a year which would have been provided by earnings of £45,000 plus, or a couple with two children to get incapacity benefit with a pension of up to £39,000--I repeat that that is not income, wages or earnings but pension--implying preceding earnings of £60,000 to £80,000. No one in your Lordships' House--

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