Below is the text of Mr Major’s Parliamentary statement on the Social Fund Bill, made on 5th February 1987.
The Minister for Social Security (Mr. John Major) I beg to move, That the Bill be now read a Second time.
Mr. Speaker I must tell the House that I have not selected the amendment in the name of the right hon. Member for Plymouth, Devonport (Dr. Owen).
Mr. Major The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) will no doubt endeavour to raise some of the matters in the amendment notwithstanding the fact that you have not selected it, Mr. Speaker.
The purpose of this Bill is simply stated. It is to correct a technical defect which recent legal advice has identified in the Social Security Act 1986.
The essence of the advice that we received is that the Act does not give the power we believed existed for the Secretary of State to prescribe in regulations the amount to be paid in maternity and funeral payments. The other prescriptive powers necessary for this policy -
As the House knows, the 1986 Act encompassed the most substantial set of reforms to the social security system for 40 years. Today's Bill, by contrast, fits on to one sheet of paper. That, at least, should commend it to the House. Nevertheless, despite its brevity, the Bill is essential if we are to direct effective help with maternity and funeral costs where it is most needed.
I am in no doubt that the present arrangements for help with maternity and funeral costs are inefficient and in need of reform. It might be helpful if I set out why that is so together with our proposals for the future.
On maternity payments, the social security system has long recognised the self-
For funeral expenses the picture is similar. Here, too, there is a universal grant -
I think that there is almost general agreement -
The detail of our proposals for maternity and funeral payments was developed as we moved on from the Green Paper to the White Paper and then to the very extensive debates on the passage of the Social Security Bill both in Committee and on the Floor of the House last year. But throughout that the essence of our proposals has been well known from the outset.
In respect of maternity assistance, we are proposing a flat rate amount which will make a reasonable contribution to the cost of providing for a baby. Shortly before Christmas I announced that the amount would be £80, being slightly more than three times as much as the current maternity grant. The criteria for payment of that will be straightforward. Those on supplementary benefit or family income supplement will be eligible, subject to the usual rules on capital. From April 1988, recipients of income support or family credit will be eligible in the same way, thus enabling us to avoid the need for a separate income test, and I think that will be generally welcomed. We intend that the payments will be publicised and applications can be handled simply by post where that is desired.
We have aimed specifically at relatively simple arrangements, picking out the best of supplementary benefit or maternity grant rules, as the case may he. It might be useful to illustrate that point. For example, people will be able to get maternity payments from 11 weeks before the expected birth to three months afterwards -
There are two further points I would wish to stress about these maternity payments. First, they will be grants and not loans. Secondly, the payments will not be constrained by the budget of the social fund. If someone meets the criteria, she will get help. I stress these points because, despite the fact that we have made them very clear over the last year or so, there seemed to be some misunderstanding in the mind of the hon. Member for Oldham, West (Mr. Meacher) when I announced a few days ago that we would be introducing this Bill. The hon. Gentleman on that occasion still referred to Loans for maternity and funeral expenses and to "cash limiting".
I say to the hon. Gentleman that that is wholly wrong in terms of our proposals and I am surprised that he should have made that comment after the extensive debates we had on the subject last year. Perhaps the hon. Gentleman will explain that lapse when he speaks.
Mr. Frank Field (Birkenhead) I am grateful to the Minister because I think it is now clear that maternity and funeral expenses will be grants but it appears that other payments from the social fund will be loans. I hope the Minister will be able to answer this question before he concludes his speech. We know the fund will be cash limited. Let us say the sum is X million pounds a year cash limit. Will that be paid into the fund each year? If it is, given that most of the payments from the fund will be loans, is it right to assume that the fund will grow considerably in size each year?
Mr. Major We shall be making announcements about the size and operation of the fund when we finish further consultation work that is still continuing. Insofar as earlier points about grants are concerned, the maternity and funeral payments will be paid in the fashion I have set out. In terms of much of the rest of the social fund, it will be loans, although there is also the community care aspect within the social fund which will be grants and not loans. One can foresee circumstances where people such as those we shall be concerned with this afternoon may find themselves qualifying for grants under that aspect of the social fund as well. We have a great deal to debate, no doubt at a fairly early stage, on matters of that kind.
Mr. Charles Kennedy (Ross, Cromarty and Skye) I am grateful to the Minister. I appreciate that there is further discussion to go on and we wish him well with the Treasury in that discussion. Following on the point of principle raised by the hon. Member for Birkenhead (Mr. Field), what about the practical impact on people on supplementary benefit or other forms of state benefit under the social fund? If they are given loans, how will they pay them back? It is a practical question that has never been adequately answered.
Mr. Major We had extensive debates on the social fund during the Committee period in which it was made clear that the loans would be recoverable from future benefits paid to those who take the loans. That is not a novel proposition but was set out in great detail during the passage of the Bill upstairs. That principle is well understood in the House. We still have to debate, no doubt at a further stage, the detailed operations of the social fund when the size of the budgets and related matters are determined.
I concede that that was the point underlying the observations made by the hon. Member for Birkenhead (Mr. Field), but the basic principles of what is determined and how it will be repaid has been known for some time. Of course, to an extent it will depend on the underlying weekly income benefit rates, which will be set in the autumn of this year, to take effect from April 1988. The hon. Gentleman is well aware that until we reach the normal uprating period no one can be entirely certain what the income support and the other relevant rates will be. I acknowledge the point raised by the hon. Gentleman. The levels of those rates will be important and on that point I need no instruction from anyone. In any event, I again stress that we are talking of grants, not loans, because I know that even now -
I am grateful to both hon. Gentlemen for letting me reiterate the precise circumstances in which the maternity and funeral payments will be made, the nature of those payments, and in particular the non-
It might be useful to turn to our proposals for help on funeral costs. These proposals will allow everyone on low incomes to pay for a funeral if they do not have the resources to do so, which is something that the present arrangements patently fail to do. We are proposing to pay the full cost of a reasonable funeral. The arrangements will be not unlike those which now operate for some people on supplementary benefit. The big difference is that we are extending such arrangements to other low income groups -
Mr. George Park (Coventry, North-
Mr. Major Under the arrangements that we propose, the lady in those circumstances would be able to have assistance from the fund and would not have been required to borrow that money in the first instance. That illustrates one of the improvements in this system and I think that will be generally helpful. The problem raised by the hon. Gentleman may have other ramifications. Insofar as they affect supplementary benefit matters, if the hon. Gentleman cares to give me their details I will have them examined for him as speedily as possible.
This proposal means that the number of people who will have cover -
Mr. Frank Field The seminar my hon. Friend the Member for Birkenhead was giving me was on this very point. Surely it would make a difference to poor old people being scared about dying only if the grant is paid to other people outside the range of categories that the Minister has spoken about, people who are not on benefit. As I understand the arrangement, people will qualify only if the person who is being buried is poor, not if they are in the other categories. Am I wrong on that?
Mr. Major Yes, the hon. Gentleman is wrong. It is the benefit position of the person responsible for arranging the funeral that is relevant.
Mr. Field If the widow referred to by my hon. Friend the Member for Coventry, North-
Mr. Major I would wish to look at the precise details of the difficulties faced by the constituent of the hon. Member for Coventry, North-
Mr. Field With regard to the figure of 4 million, most of those who will lose the entitlement are old people, most of whom will die fairly soon and will therefore be eligible for the grant. The figure of 8 million is based on those on specific benefits, many of whom are not old and are unlikely to die in the near future. So it is misleading to give those two figures.
Mr. Major I think not. The only people who will find themselves at a practical disadvantage are those who do not fall into the qualifying groups, who will lose the £30 flat rate grant.
Mr. Field Widows.
Mr. Major That may or may not be. If widows are in poor circumstances we wish to help them. Our proposition will offer them more substantial help than before. The £1,000 widow's payment which comes into effect in 1988 is entirely disregarded for capital purposes. The principal loss for a person will simply be the £30 flat rate grant. The gain will be for those on low incomes, who will find that the full cost of a funeral will be met. These days, in any part of the country, that would rarely be less than £350 and would probably average £550. To the many people who worry deeply about meeting that cost, the practical effect of what we are doing will offer considerable comfort. I think that the hon. Gentleman will welcome that.
Mr. Field I accept that.
Mrs. Virginia Bottomley (Surrey, South-
Mr. Major Yes, I can offer that reassurance to my hon. Friend.
Mr. Sydney Bidwell (Ealing, Southall) The Minister is kind to give way so often. The move away from insurance may give rise to many anomalies. How will the Department know what insurance moneys are available, either as a result of the death or from insuring other people?
Mr. Major It may be that the estate of the deceased, when it is realised, will have the resources to pay for the funeral. As at present, the cost of the funeral will be a first charge on the estate and will be recovered. But it will not, under any circumstances whatever, be recovered from the person who had the loan to carry out the responsibility of arranging and paying for the funeral. Under no circumstances would it be recovered from the person who paid for the funeral upon receiving a loan, but it could be recovered from the estate at a much later date when the estate is proved, if it had the resources in it. I emphasise that the person borrowing the money may be sure that he or she will not be required to repay the money. I think that that was the underlying anxiety in the hon. Gentleman's mind.
Once again, I must point out that we are not seeking to cash-
Secondly, we have said that if the estate of the deceased -
Mr. Lewis Stevens (Nuneaton) I am grateful to my hon. Friend for giving way again. If someone is eligible for supplementary benefit and housing benefit but does not receive them, perhaps because he has not applied, would he still be eligible for funeral expenses?
Mr. Major The logic of our proposals is that such a person would be eligible, but I shall check that important point and write to my hon. Friend if what I have said is not accurate.
The new arrangements for help with funerals will be handled as sensitively as possible and with the minimum of detailed questioning. By using income-
Those then are our proposals and they represent a substantial improvement on the present situation. However, as I set out in my statement last week, it is clear that a few vital words necessary to implement the policy were omitted from the 1986 Act and that is why we have introduced the Bill.
The Bill has only two clauses. The first seeks to amend the 1986 Act to remedy the defect I have described. It simply enables regulations to be made, not only to prescribe who should get help with maternity and funeral costs, but how much that help should be -
The second clause contains the short title -
That is it, as far as the Bill is concerned. It is as brief and as straightforward as that. We shall also -
The purpose of the Bill is to enable the much-
To sum up, there is no doubt that reform is urgently needed. There is no doubt that the proposals I have outlined again today mean that we shall direct effective help to those who really need it. Those most in need will get most help. That must be the right policy and this Bill will enable us to achieve it. I commend it to the House.
Mr. Michael Meacher (Oldham, West) This is a little Bill, almost incomprehensible in its drafting. However, it raises two fundamental issues. One is the abolition of the contributory principle which, before this Government came to office, was always a foundation of the welfare state. The other issue is the operation of the social fund, which remains the most objectionable element of that thoroughly objectionable piece of legislation passed last year, the Social Security Act.
For the last 40 years, the contributory principle has been central to the social security system. It was the cornerstone of the Beveridge plan in 1942 when he wrote: It is, first and foremost, a plan of insurance -
That correspondent raises a serious point which the Minister did not begin to answer. How can the Government justify unilaterally terminating a right to benefit for which contributions have been made in good faith throughout an entire working life of more than 40 years? The rejection of any such notion and support for the principle of a right to benefit based on contribution irrespective of other circumstances has hitherto been agreed in almost all parts of the House.
I shall quote one right hon. Member who in Committee moved an amendment to the National Insurance Bill to provide all widows aged 32 or over with a minimum pension of 30 shillings a week. That dates it a bit. The right hon. Member was taxed about widows with large unearned incomes from an inherited estate. The right hon. Member replied: I am dealing with anomalies within the National Insurance Scheme, because under the scheme one gets certain benefits in return for certain contributions. I do not think anyone would say, in dealing with an insurance scheme which gives certain benefits in return for certain contributions -
In case any hon. Member thinks that the right hon. Lady's views have changed over the last 23 years, I shall give one more quotation -
If Ministers are felons for depriving people of monetary benefits that they have earned, at least they are consistent felons because this is not the first time that they have done that. They have been at it for years. No fewer than six national insurance benefits for which people have contributed have been abolished in the last four years, without so much as an apology. The earnings-
It would not be quite so bad if, having cut the benefits, the Government also cut the premiums, but they have increased national insurance contributions by half as much again -
Mr. Major Since the hon. Gentleman is so concerned about the insurance principle and has just listed a number of benefits that he claims will be reduced, would he care to speculate on how much national insurance contributions would have to rise in order to meet all the commitments that he believes should be met and in recent weeks has promised will be met?
Mr. Meacher If the Government had not allowed unemployment to increase by between two and three times, the main reason for the overwhelming inflation in social security costs, it would have been perfectly possible to maintain all those benefits and to have had a lot over.
The Government's attitude to the welfare state is rather like those demolition contractors who are said to make a speciality of legally dismantling buildings on which there are preservation orders. They start by knocking down a fairly innocuous-
Originally, the welfare state was envisaged as a redistributive mechanism between the classes. It was intended also to offer high-
The principle of high-
The Bill is a classic case in point. The death grant is to be replaced by means-
The same principle applies to the maternity grant, which is also being abolished. It is somewhat ironic that -
The other fundamental issue raised by the Bill concerns the operation of the social fund. There are four major objections to the proposal that still are unresolved. The first is the right to independent appeal, to which the Minister, in one of those classic displays of weasel words for which he is becoming famous, referred in his statement in the House a fortnight ago in explaining why the Bill was necessary. On 22 January -
Mr. Major The direct analogy in the social security system is the chief adjudication officer and the adjudication officers, who over many years have determined all sorts of matters and have regularly been recognised to be independent, both during the time that the hon. Gentleman was a distinguished luminary of the Labour Government and today. It is rather unwise of him to cast doubt on the proposition in this fashion.
Mr. Meacher The Minister has not answered the point that I made. He should re-
It is still left open as to whether an appellant has a right to an oral hearing and representation. Apparently, that matter is to be left to the Secretary of State's directions or the social fund commissioners' guidelines, without parliamentary accountability. In our view, such a basic right as that should be decided by Parliament through regulations.
Another major unresolved issue concerns entitlement as opposed to discretion. Our view is clear. A discretionary system is undesirable because it leads to variations, it increases the stigma of claiming, especially among the elderly, it is highly complex and it is not even necessarily more flexible. In particular, there are certain benefits for which there should be a clear entitlement to a grant and not a loan. One example relates to exceptionally severe weather payments -
The third unresolved issue concerns the social fund itself, which is the final safety net in the social security system that Ministers notoriously have insisted must be cash-
Mr. Jeremy Corbyn (Islington, North) Will my hon. Friend try to interpret whether the decision of the Minister in respect of funeral and maternity grants means that such grants will have first call on the social fund? -
Mr. Meacher My hon. Friend has raised an interesting matter. It is for the Minister to reply to it, and I hope that he will do so. I agree with my hon. Friend. It appears that scarce funds could be pre-
The last matter concerns the vexed issue of loans as against grants. It seems that current DHSS thinking -
In a recent speech the Minister said -
As for the level of these two proposed means-
As for maternity grant replacement, the Government propose that the sum of £80 should be paid out of the social fund.
Mr. Frank Field Given that if the Bill is passed there will be machinery to claw back money from the estates of those with adequate funds, would it not be right for the Opposition to increase the sum that is to be paid out but to claw it back from estates with adequate funds?
Mr. Meacher I understand my hon. Friend's point, but it is contradicted by the eloquent testimony of the Prime Minister, for which I have a great deal of sympathy: that if people pay for something on an insurance basis, they are entitled to it, irrespective of their total resources. However, I think that we should look at that point again.
As for the maternity grant, in 1983 the average single payment for maternity items was £60, in addition to the £25 grant. A grant now of £80, therefore, represents a cut in assistance for the average mother on supplementary benefit, even at 1983 prices, let alone at 1987 prices. I hope that the Government will reconsider this sum so that at least there will be no loss. I hope that they will also reconsider their very regrettable decision that mothers who are under 16 years of age should no longer be entitled to assistance with maternity expenses in their own right.
We reject the Bill. Unilaterally, it abolishes benefits to which people have a right, having earned their entitlement by contributions that they have made throughout their working lives. We reject it, too, because it is designed to consolidate a cash-
This may be a minor measure but it has an ugly parentage in the Fowler Social Security Act of last year. For the sake of the people of this country, I pledge that we shall sweep away both this and its parent as soon as we come to power.