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Lord Higgins: My Lords, what is the level of increase in contributions this year or is there none?

Baroness Hollis of Heigham: My Lords, we are not having a general debate on the Pre-Budget Statement. We are talking about the Statement issued today. We have not made an announcement on national insurance as the noble Lord is aware.

The noble Earl, Lord Russell, gave a welcome to the end of capital limits. I am glad he is pleased. It means in practice that if a single pensioner receives the full

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state pension he can have savings of up to #35,000 before running out of entitlement to pension credit. We can discuss the technicalities of how one reaches that figure, but it is a really generous response.

The noble Earl asked about disentitlement to Sure Start. He referred in particular to the Sure Start maternity grant of #500. I have the same concerns. We carried out what I call a quick and dirty piece of research. In about half-a-dozen benefit offices we checked the last 20 or so people who had been disentitled from the Sure Start maternity grant, which is currently #300, in order to find out what had happened to them. We tracked them. We found that almost all of them—about 95 per cent—returned to the system. The reason why they had become disentitled was because they had not filled in the forms correctly, they had applied too early, and so forth. We still need to follow through a couple of cases, but we are fairly confident about the outcome. I take seriously the point about religious preferences. We are pretty confident.

At the end of the day it is reasonable to attach this provision to ante-natal care for one very basic reason. We know that the best hope for children to thrive is that they are born at full weight and in decent health. They are likely to do so if the babies have been exposed in the womb to ante-natal care. It is particularly important for the children of the poorest families and some children in the poorest ethnic minorities that they have access to such care. Yes, we are bribing them with #500 to receive that care, but if it ensures that the child has the best possible Sure Start then I hope the noble Earl will agree that it is the decent thing to do.

The noble Lord, Lord Higgins, asked for the take-up figures on MIG. We have a total caseload on MIG of 1.7 million people. The campaign was launched in May 2000. We estimated that between 600,000 and 900,000 pensioners might have been entitled to the minimum income guarantee at that time but were not claiming, but we could not be sure. In fact, we had more than 985,000 inquiries. Therefore, we are reasonably confident that we reached those we needed to reach. Following that, we have processed 243,000 additional claims, of which half have been successful. Of those that were not successful, half were over the capital limits and half were over the income limits. That situation may now be revised as a result of the announcement we made today.

The noble Earl, Lord Russell, also referred to two further points. He questioned the adequacy of benefit levels and asked whether—this has been a longstanding argument between him and myself—we relate benefit levels to standards of budget assessment, particularly as regards the Family Budget Unit. There is much debate about what constitutes an adequate budget, what goes into it and the methodologies used. I throw two pieces of information at the noble Earl. In 1997, a child under 11 on income support rates—typically the child of a lone parent—would have received from income support #16.95. As of this October, a child under 11 on income support will receive benefit of #34. That benefit has more than doubled in cash terms and constitutes a 90 per cent

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increase in real terms. It is no mean accomplishment to achieve an increase from #16.95 to #34 for children under 11 on income support—the poorest in the country—and it should be acknowledged.

I follow that with a second offering to the noble Earl. In 1998, Jonathan Bradshaw estimated that for a lone parent with two children the gap between benefits and an FBU assessment was about #25. He says that as of last year that same gap fell to something between #5 and #6. That was before the increases of this April, before the increases in income support and child benefit and before the increases next April in the child maintenance premium. I am confident that together those increases will close the gap entirely even before we get to the changes that will be introduced by the integrated child credit. While I dispute much of the methodology of the FBU, I hope that no one in your Lordships' House will believe that we are not committed to, and do not care deeply and passionately about, the welfare of poor children because we do.

Finally, the noble Earl referred to an element of conscription. It is reasonable to expect people to take a job in return for benefit. We are offering measures such as intermediate labour markets which recognise that some people need more help than others. I believe that the introduction of the personal adviser threshold with the support that that provides will enable people to get back to work. I say bluntly that it is no kindness to let someone who is 24, 25 or 27 remain on benefit for half a century. They are entitled to come into the mainstream of life which they will achieve as adults only if they are in work. Of course, they must be available for work; they do not have small dependent children, for example. We have to ensure that we help them. That is what personal advisers do. That is why we are starting these schemes and will extend them if appropriate. It is not right and decent to allow people to languish in unemployment outside the mainstream if we can help them to a better life. I hope that the Statement contributes to doing exactly that.

4.33 p.m.

Baroness Wilkins: My Lords, the announcement of my noble friend the Minister that the earnings of severely disabled people and their partners will no longer be taken into account as regards the Independent Living Fund could not be more welcome. I am extremely grateful to her for the work she has put into that matter to ensure success. I assure her that many hundreds of severely disabled people will be delighted, especially those involved in the Let Us Work campaign and the National Centre for Independent Living. That, together with last week's guidance on local authority charging, which also means that earnings are disregarded in the assessment of income in relation to charges for local authority services, will ensure that work pays for severely disabled people. That is extremely welcome.

I am aware that the change to the ILF owes a great deal to the personal efforts of my noble friend the Minister. It gives me the confidence to ask her to ensure that the Government also heed the justice of the argument that winter fuel payments should be

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extended to disabled people. They are desperately in need of that help. Disabled people who are immobile feel the cold far more keenly than able-bodied people, as noble Lords who see me swathed in clothing will appreciate. The cold gets deep into one's bones and it is hard to get warm through one's own efforts. Disabled people are far more likely than able-bodied people to be at home using up their heating allowances and are far more likely to become ill due to cold. They are far more likely to be on restricted incomes. I hope that the Government will heed the justice of the argument that the heating allowance should be extended to disabled people. Once again I am most grateful to the Minister for her work on the ILF.

Baroness Hollis of Heigham: My Lords, I am delighted that my noble friend's persuasion and pressure have been rewarded. She has been a doughty campaigner for reform of the Independent Living Fund. She has rightly given us no peace on the issue. I am absolutely delighted that today her efforts are rewarded. Given that she suffered from a virus last week, I am delighted that she is able to be present for the Statement today. As regards winter fuel payments, I am afraid that I have to disappoint my noble friend. The matter was raised earlier in the House. I made the point then that one difference between pensioners and disabled people is that disabled people have access to the disability living allowance. DLA was designed to cover the extra costs associated with disability, including diet, laundry, care and heating. That is why we confine winter fuel payments to the elderly.

Lord Hodgson of Astley Abbotts: My Lords, I declare an interest as a chairman of an occupational pension scheme. In the light of the flurry of initiatives on pensions the Minister has now announced, does she believe that the Government made a mistake by removing the tax credit for pension funds in the early years of their regime which removed #3 or #4 billion worth of benefits from pensioners? The fund of which I am chairman lost some #250,000 which could otherwise have been paid out in increased benefits. It seems to me that we are recycling money which could have been made available in the first place.

Further, I have not had the benefit of reading the Statement but I believe that the Minister referred to an increase or to a sum of #6 million to be made available over two years to the rapid response unit. That is perfectly welcome in itself but we need to bear in mind, in the light of the huge loss of manufacturing jobs in this country and the two-speed economy as a result of the Government's valuation of the pound, that that is #60,000 per week across the entire country. While the Government may trumpet it as a huge initiative, it is in fact a trivial sum of money in terms of solving a severe problem in manufacturing industry.

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