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Lord St. John of Bletso: My Lords, I am grateful to the Minister for his detailed response. Obviously,

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I found it a little disappointing. He appears to have given me a bit of a stonewall response. I am encouraged to hear that the Minister will consider tabling amendments at a later stage. However, the Minister does not appear to have taken on board my key themes, which are: the separation of powers; the need for certainty in the parameters of those powers; and the need for consistency in the operation of those powers. I believe that there is no such thing as sector specific competition law. It is vital that there is only one uniform national competition law that must be adjudicated on the same basis by all. The Minister recognised the importance of that principle in debate on the first day of Report stage. There remains widespread concern that the mixing of regulatory objectives and those of the Bill is fundamentally flawed. I give notice that I intend to revert to this matter on Third Reading. I am grateful to the Minister for the assurances that he has given. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 167 and 168 not moved.]

Baroness Farrington of Ribbleton: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that we do not return to Report stage before 8.50 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Social Security (Incapacity for Work) (General) Amendment Regulations 1998

Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order 1998

Social Security Benefits Up-rating Order 1998

Guaranteed Minimum Pensions Increase Order 1998

7.50 p.m.

Lord Haskel rose to move, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move the four draft orders and regulations standing in my name on the Order Paper en bloc. I understand that that is acceptable to those of your Lordships who take part in such debates. The orders we discuss today are to give effect to new rates of social security benefits from April. They also include the consequential re-rating of national insurance contributions, the amendment of levels concerning guaranteed minimum pensions and an increase in the level of therapeutic earnings allowed in incapacity benefits.

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The orders that are the subject of this debate are part of the normal business of this House and the Department of Social Security. We are required annually to review the rates of benefit and the rates of contributions. These orders would bring the revised rates into effect. It has also been the convention at this time to look more widely at social security, especially focusing on expenditure. After all, the uprating, which this year will cost nearly £2.5 billion, is the most significant feature of the department's spending plans.

As noble Lords know, a recurring theme of these debates, and one which has troubled many people, is that, despite growing prosperity, spending on social security has also continued to grow. While an effective social welfare system is the bedrock of an inclusive society, the evidence shows that our system has increasingly failed to match the needs of our people.

Spending on social security has increased dramatically in real terms. It is now nudging £100 billion, an increase of £43 billion over the period 1979-1996--an annual growth rate of 4 per cent.

And yet society is less equal. One in five people lives on less than half average income today, compared with one in 10 in 1979. The proportion of households where no one is working, now just under 20 per cent; has doubled since 1979. And the system has failed those who want to help themselves.

There are over 1 million sick or disabled people of working age living in workless households. Yet more than a quarter of the people on sickness and disability benefits are either looking for work or have aspirations to work. It is clear that if we are going to meet the needs of the people we must re-cast welfare. We need to use it as an investment to empower people so they can help themselves.

Our New Deal strategy, with its emphasis on caseworking, with supporting people to make the best of the labour market, has been an immediate and powerful response. Helping people to get the best out of themselves is a great challenge for this Government. The welfare reform that is needed to achieve this is more than the New Deal. It is a recognition that the system itself is a barrier to empowerment. Its complexity, especially the overlays of work and non-work benefits, of tax and national insurance, means that many people who should be in work cannot see the clear financial advantages of doing so. This particular area has been of concern for many years. The frustration is that the perversities of the system are plain to see, but oh so difficult to overcome.

We now have a manifesto commitment:

    "to examine the interaction between the tax and benefit systems so that they can be streamlined and modernised so as to fulfil the objectives of promoting work incentives, reducing poverty and welfare dependency, and strengthening community and family life".

The Chancellor in his pre-Budget Statement announced that the Government propose moving towards a more integrated tax and benefit regime. A 10p starting rate of income tax and a reform of benefit tapers will be introduced when it is prudent to do so. The Government will also consider the scope for bringing national insurance payments for the low paid

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more closely into line with income tax to raise their income from work. And a working families' tax credit is planned, with cash paid through the wage packet to families on low incomes.

The important work of Martin Taylor should ensure that the "drag factors" of unemployment traps and of swingeing deduction rates which form poverty traps are fully exposed. The conclusions that emerge from the Taylor review will inform the judgments made in the Chancellor's Budget next month.

This emphasis on people of working age is not to ignore older citizens. I will come to that later. But getting people back to work is a pressing need. Work is the only sustainable route out of poverty for most people. But there is more to it than that. The concentration of unemployment in certain areas, plus the marked differences between working families and non-working families, has led to inter-generational dependency and social exclusion.

For that group there is little of the dignity of belonging to mainstream society; the disciplines of work which especially for young people can mark their way in life are missing; the opportunities for advancement, career progression and the learning experiences of work are not there; and also missing is the example that work gives--the example of providing an order for children to follow their parents and youngsters to follow their peers.

For all those reasons it is right that the major investment in welfare to work is our number one priority. A working and busy society is an inclusive society. It can support the right level of investment that the great public assets of the health service and education greatly need. Equally important, a working society provides the wherewithal to support those who cannot support themselves. For all our hopes of releasing people to fulfil their potential, there will always be those who will not be able to manage, and I can assure noble Lords we have no plans to abandon that group.

Work gives young people and families the freedom to invest in the future by building decent pension provision. If there is one area that can provide the best examples of how self-reliance can revolutionise people's lives it is the example of pensioners' income. In recent years pensioners as a group have on average enjoyed faster income growth than any other broad group of the population. Between 1979 and 1995/96 pensioners' income grew by 64 per cent. compared with a growth in average earnings of just under 40 per cent. But not everything is as rosy as might appear at first sight. While a third of pensioners have net income to place them in the top half of income distribution, around one in four in the bottom 20 per cent. of income distribution are pensioners. Even while a combination of state and private provision now means that millions of pensioners can enjoy a life in retirement on a decent income, some one in four pensioners have to rely on Income Support, or even worse fail to claim their entitlement.

To ensure that all pensioners in future will be able to retire with income security, one of our first tasks in government was to set in process the pensions review.

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It was clear to us, however, that immediate action was necessary to ensure that all pensioners had need of help with heating. A significant winter fuel bill is so unwelcome an event in some pensioner households that heating is rationed to the extent of prejudicing well being. Our strategy has been twofold. First, to reduce the costs of energy. We have made significant progress with this. We have reduced VAT on domestic fuel from 8 to 5 per cent.; reduced the gas levy, which should result in lower prices; encouraged competition in gas and electricity suppliers to the consumer; extended energy efficiency grants to include cavity wall insulation and the upgrading of heating system controls; and announced the setting up of the environmental task force, as part of our welfare to work programme. Furthermore, we have made a start by releasing almost £800 million to local authorities in England over the next two years to help meet pressing housing needs, which is expected to feature improved energy efficiency in many areas. Similar provisions have been made in Scotland, Wales and Northern Ireland.

Secondly, immediate and significant cash help has been made to pensioners dependent on income support; £50 to each household and £20 to other pensioner households. There is to be a comprehensive package of practical measures which will make a significant difference to the most vulnerable in our society.

There will be one group which will get £20 and should have got £50. These are the estimated near 1 million pensioners who do not claim the income support to which they are entitled. As with the assistance for winter fuel bills, the Government felt that early action was required to get help to this group. Research is being carried out to establish why pensioners are so resistant to taking up their entitlement. Shortly we will be issuing further details of the pilot initiatives announced by the Chancellor in November. Fifteen million pounds will be invested to test the best ways of identifying pensioners with apparent title and the best ways of getting them to claim.

These reforms that will give new hope to many of working age, and security to many in retirement are but one side of what we want from a modern welfare system. To achieve a modern welfare service, we must also reform our approach to managing social security. We need to provide better information. Rights and responsibilities will underpin welfare for the 21st century. If welfare develops as a mix of the best between what the state and the private sector can provide, it will become more and more critical that people understand their position in relation to the state. We need to link the services we provide. The system fails to recognise that our customers should be busy people. No need for them to be involved in the paper chases between systems and organisations, or for them to be victims of inflexible technology.

We need to support our staff better. Their's is a tough job. They have been at the sharp end of people frustrations over economic exclusion and of the changes in society. The success of welfare in the future depends on our staff providing effective interventions at the right time through caseworking.

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Why are we in the process of such significant and major change? My right honourable friend the Minister for Welfare Reform suggested an answer in his thoughtful speech on a similar Motion to this on 18th February. He described the four stages of welfare. For some 400 years there has been a national programme to combat destitution; that is the first stage. For the most part of this century the focus has been on relieving poverty; that is the second stage of welfare. We are now in the third stage. This is where policies have been increasingly directed at the prevention of poverty. The fourth stage--and this is our ambition for welfare for the 21st century--is to deliver services and make opportunities so that individuals can live up to their potential.

A key to achieving this ambition to match the aspirations of people is to engage them in the process. We hope that the publication of the Green Paper on welfare reform will be the beginning of that engagement. I commend the orders and regulations to the House. I beg to move.

Moved, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].--(Lord Haskel.)

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