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42Clause 57, leave out Clause 57.
The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill--
42APage 66, line 4, leave out ("two") and insert ("three").
42BPage 66, line 23, leave out ("For this purpose") and insert--
("(9) In sub-paragraph (8)--
"benefit" includes (in addition to any benefit under Parts II to V of this Act)--
(a) any benefit under Parts VII to XII of this Act, and
(b) credits under regulations under section 22(5) above;").

Lord Ashley of Stoke rose to move, That this House do not insist on their Amendment No. 42 to which the Commons have disagreed, do agree with the Commons in their Amendment No. 42B to the words so restored to the Bill, butdo disagree with the Commons in their Amendment No. 42A to the words so restored to the Bill and do propose Amendment No. 42D in lieu thereof to the words so restored to the Bill--

42DClause 57, page 66, line 4, leave out ("two") and insert ("seven").

The noble Lord said: My Lords, in moving the Motion, I shall speak also to my Motion No. 43D. I

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shall seek to explain that in a moment. Under the Government's proposals in the Bill no fewer than 310,000 future disabled people will lose their disability and incapacity benefits either in whole or in part. That cannot be justified under any circumstances. The purpose of this debate is to protect disabled people from these unfair impositions, especially as most of them are very severely disabled and poor. Today I do not propose the deletion of the offending clauses dealing with incapacity benefit as I did at Report stage. I do not seek to wreck the Bill. My wish is to reach an honourable compromise with the Government. It is that compromise, and that alone, that we are debating and voting upon today.

The Government have a long list of achievements in relation to disabled people. Those achievements are impressive and the Government deserve congratulations. But they are absolutely irrelevant to this debate. It is no comfort to a disabled person who is denied his benefit, or sees it slashed, to be told about government generosity in helping some other disabled people. As always, it is the individual who counts. Many new invaluable measures have been initiated by Alistair Darling who is an outstanding Minister and one of the great successes of this Government. But I have no doubt that with these clauses dealing with incapacity benefit he has made a major political miscalculation. I understand that. We all make mistakes. However, the consequences of this miscalculation will damage hundreds of thousands of disabled people in future. Despite all the talk about constitutional propriety and the rights of each House of Parliament--some of it loose talk--I believe that it is our right and duty to try to persuade the Government to be more reasonable.

My compromise proposals are modest but important. They seek to change from three to seven the number of preceding years during which claimants need to have paid the appropriate amount of national insurance contributions to qualify for incapacity benefit. They seek to change the disregard from £85 to £128, which is the level of the disability income guarantee, and to change the taper from 50p to 23p--the same as the standard rate of income tax. My proposals would reduce the number of disabled people affected by the Government's original proposal by two-thirds and halve their original intended savings. The proposals do not neuter the effect of the clause, as claimed by the Secretary of State. I believe that to halve the savings which the Government intended to make at the expense of disabled people is a reasonable compromise. The Government would still be able to recoup money from the better off but the poor would be protected.

The question of the starting point of income for the purposes of means-testing--the disregard--is very important. The Government claim that they have made big concessions by changing the disregard from £50 to £85. I am glad that they have backed away from their original figure of £50, but it is incredible that they suggested it. It would have meant reducing incapacity benefit to someone with an income of as little as £6,123 per annum, which is way below the official poverty

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line. Although Ministers are fond of quoting the figure at which all incapacity benefit is deducted, the crucial matter for most recipients is where means testing begins. That is the matter on which we should focus.

The concession by the Government to change the disregard to £85 is inadequate. It means that a disabled person will start to lose his incapacity benefit when his total weekly income is an £85 pension, plus £67 incapacity benefit, giving an annual income of £7,943. That level of income--approximately £8,000 a year--is below the official poverty figure. That is the Government's latest concession for someone who is below the official poverty level. Some people say that as the Government have now made a concession we should be satisfied. These minor concessions are hopelessly inadequate. Any government who penalise people with an income of £8,000 deserve the opposition that they get.

Not only do the Government begin to hit those at a low income level; they hit hard with an incredible deduction rate of 50 per cent. Incapacity benefit is already taxed at 23 per cent. If one combines that with the additional 50 per cent deduction it means that severely disabled people suffer a marginal tax rate of 73 per cent, while the top rate for a millionaire is 40 per cent. That does not make sense. The Government's provisions turn logic on its head. The position should be the reverse. Millionaires should be taxed at the 73 per cent rate and those on incapacity benefit at 40 per cent. That is the situation with which we are faced.

My proposal for a disregard of £128 means that incapacity benefit is reduced when income starts at £10,179 a year. That income is also low, but it is much more reasonable than the Government's figure and there is greater justification for it. The Government's figure of £85 is not index-linked and therefore would be eroded by inflation. My figure is linked to the disability income guarantee and would automatically rise with inflation.

In the House of Commons the Secretary of State promised an annual review of the figure but made no effort to put that commitment into the Bill. I know that he cannot bind future governments. However, he could make it more difficult for them to backtrack. He has failed to do so. I am pleased with the other concessions: the exemption of those with the severest disabilities--the 20,000 people who get the higher rate care component of the disability living allowance--and the estimated 22,000 people who will get the disabled person's tax credit. But although the concessions are welcome, those people are a tiny proportion of the 310,000 I mentioned earlier. So I suggest that too much should not be made of the concessions for this very small number of the most severely disabled people.

Regrettably, the Government are trailing red herrings to justify their proposals penalising disabled people. As recently as last Wednesday the Prime Minister complained:

    "Since 1979, the number of people claiming incapacity benefit has trebled".

He also said:

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    "As a result of our reforms, we will bring the system of incapacity benefit under control".--[Official Report, Commons, 3/11/99; col.289.]

Let us face those statements head on. I accept, as Ministers allege, that the Tory government encouraged many unemployed people to go off the unemployment register and on to invalidity benefit, as it was then called, before incapacity benefit, via friendly general practitioners who were sympathetic to the people who were disabled. So the figure shot up. I think that that is right; that is probably what happened. But the Tory government turned off the incapacity benefit tap in 1995 and the system changed dramatically.

Since then friendly general practitioners have had no role. Incapacity benefit claimants now have to be certified by two strict Benefits Agency doctors. Some disabled people complain that the tests are too stringent; even paraplegics, double amputees and blind people cannot qualify. That is a measure of how appallingly disabled those recipients are. They are the people we are discussing today.

In 1995, the Tory government also tightened the eligibility test and eliminated the earnings related supplement of £15 week. That was very tough action by the Tory government of that day. But today departmental statistics show clearly that the cost of incapacity benefit is falling. So much for the stories that it is rising out of control. It is not falling just by a small amount. The forecast decline is for as much as £750 million over the lifetime of this Parliament. So contrary to what the Prime Minister said, the system does not need to be brought under control. It is already under control mainly because of the Conservative 1995 Act.

Claims that the numbers of people and the costs of incapacity benefit would escalate without this Bill are therefore groundless. They form no excuse for the Government's proposals. I believe that penalising future disabled people for the alleged sins of the past is hardly a blueprint for welfare justice.

However, there are more examples of creating misleading impressions. By the careful use of selective figures, the Government seek to give the impression that vast numbers of incapacity benefit claimants have occupational pensions and are well off. They impel me to visualise thousands of them driving in their Rolls-Royces to pick up their incapacity benefit. But the Government's claim that nearly half of incapacity benefit claimants are in the top 40 per cent of income distribution makes it sound as though they are well off. It is one of the arguments used constantly by Ministers. But a household with average income is also in the top 40 per cent; so the Government's claim is meaningless.

The significant fact is that very few of the people on incapacity benefit are wealthy. Of those with occupational pensions, over 90 per cent have occupational pensions of less than £5,000, or £100 a week. And even with the addition of incapacity benefit of £3,000 a year, the vast majority hover around the poverty level. Those are the undisputed facts.

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The Government are also trying to create an impression that these cuts to the benefits of poor people are essential for modernising the welfare state. Only the nai ve and the credulous could believe that. Regrettably, the Government's proposal for modernising incapacity benefit in the future is to go back to Michael Portillo's proposal of means testing incapacity benefit--a proposal rejected by his fellow Right-winger, Peter Lilley, as being too difficult for disabled people to stomach. These again are the facts. In looking to the future and in modernising, the Government are harking back to a past which was rejected on reasonable grounds.

It would be highly significant for the future of the welfare state if a means test, such as that to be applied to incapacity benefit, were to be extended to the retirement pension. Is it or is it not to be so extended? Ministers have made announcements. We are now informed officially that there will be no means test for retired pensioners. That is an important and welcome statement by Ministers. But in the light of that statement, perhaps Ministers can explain to the House why those people leaving the workforce because severe disability makes them incapable of work are to be treated so differently and so much more badly than those leaving because of age. What is the difference? Why should those who are leaving because of disability be treated so much more badly than those leaving because of age? I can see no difference. I am open to correction but to me it is a clear case of discrimination against disabled people. Perhaps Ministers can enlighten the House.

The other assurance that would be welcome is a commitment that the Government have no intention of getting rid of incapacity benefit altogether. Ministers say they want to relate incapacity benefit to recent work. So they intend to deny incapacity benefit, except for a tiny category, to all those who have had the misfortune to be unemployed for three years before claiming. They will not receive a single penny of incapacity benefit if they have been so unemployed. But there are various depressed areas in Britain where it has been virtually impossible to obtain a job for many years. I have spoken recently to MPs from Wales and elsewhere. They say that it is impossible to obtain any kind of job in their areas. It is the fate of many depressed areas in Britain. So why should disabled people who live in those areas be denied the benefit given to others in prosperous areas? It is what the noble Earl, Lord Russell, called the geographical lottery--except that in this lottery there are no winners, only losers. There is no "right" figure to provide. We can only make our best judgements. However, I believe that seven years is a more reasonable figure because in some areas people can easily be seeking work for that period.

To deny disabled people their incapacity benefit on those dubious grounds is bad enough. But the real injustice becomes clear when we consider that, in many cases, those claimants have paid their national insurance contributions for some 10, 20 or 30 years. They have paid in good faith and naturally they expect

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the benefits, but the Government shift the goalposts and now say that if you do not meet these conditions, you will not receive benefits. How can that be justified? That is a reasonable question and I do not believe there is quite such a reasonable answer.

I have no doubt that the Government have lost the moral argument and are now trying to turn the debate into one on the constitution. Some Members of this House who opposed my proposals complain that the House of Commons has already voted on them and that I put the whole Bill at risk. They should know that that is nonsense. The fact is that the other place voted only on my amendments to delete the damaging clauses and has not voted on the compromise proposals which we are debating today. The House of Commons will only be able to vote on the compromise proposals if this Motion is carried today. If we do not vote for these today, we deprive the House of Commons of the opportunity to vote on these proposals.

As for the allegation that I put the whole Bill at risk, there are precedents for this House returning Bills to the other place and for doing so time and time again. There is no question of the Bill being lost, at least not today, and it is right that the other place should be made fully aware of the cross-party views of this House.

The Government are saying that it is time for this Bill, including these deplorable proposals, to be put on the statute book. I suggest to the contrary. It is time for this House to assert its view; to challenge this unjustified attack on disabled people; to declare that the Government's comment, "No compromise - full stop" is a betrayal of the dialogue of democracy, and to urge the Government, even at this late stage, to think again. I commend the amendment to the House.

Moved, That this House do not insist on their Amendment No. 42 to which the Commons have disagreed, do agree with the Commons in their Amendment No. 42B to the words so restored to the Bill, but do disagree with the Commons in their Amendment No. 42A to the words so restored to the Bill and do propose Amendment No. 42D in lieu thereof to the words so restored to the Bill.--(Lord Ashley of Stoke.)

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