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1979-1987 - Mr Major’s Parliamentary Statement on the Social Fund Bill

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 - notably to determine the circumstances of entitlement to payment - seem clear and undoubted. This deficiency came to light following scrutiny of regulations under the Act by the Joint Committee on Statutory Instruments.

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-evident truth that a baby leads to extra expense. But the current system is clearly unsatisfactory. On the one hand, there is the universal maternity grant of £25. That is expensive in global terms because it is available to everyone, irrespective of their income. But equally it is inadequate because it does not give sufficient help to people on very low incomes. Successive Governments have given the grant such low priority that it has not been increased in value for nearly 20 years. The result of that is that it is now worth a fraction of its original value and it is also disproportionately expensive to administer a very large number of small grants. On the other hand, there are supplementary benefit single payments - based on the practice of totting up the need for each item down to nappies and a plastic bottle. Those payments can be considerably higher but they are restricted to people on supplementary benefit. Those in work on low incomes cannot get any such help at all and rarely have been able to do so in the past, although the Supplementary Benefit, Commission in the 1970s may occasionally have made available discretionary payments.

For funeral expenses the picture is similar. Here, too, there is a universal grant - the death grant - paid irrespective of income. But that grant is only £30, and has been frozen at its present rate even longer than the maternity grant. That speaks volumes for its relevance today. When the death grant was originally introduced. it was intended to pay for a simple funeral, but clearly £30 is quite inadequate for that today. The vast majority of people pay for funerals largely on their own, and for them the death grant is an ineffective irrelevance. Despite its individual irrelevance, it is in global terms an expensive irrelevance simply because it is paid to so many people. As with the maternity grants, it is disproportionately expensive to administer in relation to the benefit actually paid out to individuals. It also gives far too little help to those who genuinely have difficulty paying for a funeral and whom we wish to assist more generously. The only people who can get help with the full cost of a funeral ate, again, those on supplementary benefit. People on low incomes in full-time work, or pensioners just above supplementary benefit levels, are excluded. The death grant has in its present form, therefore, almost every imaginable disadvantage.

I think that there is almost general agreement - I never expect full agreement - that the arrangements I have just outlined are satisfactory. We recognised that in the Green Paper on reform of social security in mid-1985 and decided to replace those arrangements with a more rational system. The solution that we proposed was to concentrate help with maternity and funeral costs on people with low incomes, whether in or out of work, and to pitch that help at a reasonable level.

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 - like the maternity grant but rather more generous than the supplementary benefit limits. On the other hand, people will get maternity benefits for adopted babies - unlike maternity grants but like supplementary benefit. I hope that, whatever other differences may emerge this afternoon, the House will acknowledge the logic and fairness of that approach.

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 - [Interruption.] The hon. Gentleman has just indicated it again - there may be some misunderstanding on those points and I wish to see those misunderstandings removed.

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-repayable nature of those particular payments.

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 - that is to say, specifically, to people arranging funerals who are on family income supplement or housing benefit as well as those on supplementary benefit. From April 1988, similar arrangements will apply to those receiving income support or family credit. I hope it will be generally recognised that that is a very significant increase in the amount of effective help which will be made available. I hope that the House in general and the Opposition Front Bench in particular will be inclined to acknowledge that, although I appreciate that they will have other points of difference with us this afternoon.

Mr. George Park (Coventry, North-East) Would the Minister care to comment on a constituency case brought to me concerning a widow on supplementary benefit who had borrowed £375 from her son and needed repayment of it, but because the funeral bill had been paid she was refused a funeral grant?

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 - I emphasise the word cover - for the cost of a reasonable funeral, assuming they have no other resources to meet the cost, will be increased from about 4.5 million to about 8 million. That is why I felt that the hon. Member for Oldham, West, who is engaging in a seminar with the hon. Member for Birkenhead, was mistaken when he spoke the other day about me insisting on taking powers to cut funeral payments to pensioners and others and forcing more and more of them to build up savings for their funerals." - [Official Report, 22 January 1987; Vol. 108, c. 1043.] In fact, we are doing precisely the opposite and our proposals will greatly help many people on low incomes. Once again, because of the misunderstanding in the House and beyond - [Interruption.]

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-East (Mr. Park) was not on housing or supplementary benefit, she would still be stuck with the bill.

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-East (Mr. Park). We are extending the availability of substantial practical assistance with the funeral costs of someone for which a person has responsibility from a cover of 4.5 million people to a potential cover of 8 million people. No doubt the hon. Gentleman will seek to develop his argument on Monday, but that is the practical underlying effect of the Bill.

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-West) Will my hon. Friend confirm that after April the £1,000 to which any widow would be entitled will be disregarded? Will he further confirm that, with regard to the constituent of the hon. Member for Coventry, North-East (Mr. Park), any house that the widow may have been left by her deceased spouse will also be disregarded when assessing funeral costs?

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-limit the funeral payments. They, too, will be made to those who meet the criteria without regard to any budget. The payments will not be loans to be recovered from the applicant's own resources. In order to direct effective help where it is most needed we shall, first, take account of sums to be put towards the cost of the funeral and the capital disregard limit. That is in line with current traditional arrangements. We have also made it clear that the lump sum payment of £1,000 proposed for widows will be disregarded in full. I hope that that is beyond doubt.

Secondly, we have said that if the estate of the deceased - the point referred to by the hon. Member for Ealing, South (Mr. Bidwell) - when it is settled, turns out to have money in it to pay for the funeral, the payment will be recovered from that. That is, of course, a long-standing principle that funeral costs are the first call upon the estate of a deceased. However, that is a substantial improvement on the present supplementary benefit arrangements whereby help is not given in the first place if there is sufficient money in the estate. I suspect that that is the point that prompted the hon. Gentleman's question. We have eased that and are giving people without sufficient resources of their own the confidence that a payment for funeral costs will be made when needed, with recoveries from the estate, if appropriate, taking place later. I emphasise again that the recoveries will be only from the estate. There is no question whatever of the funeral payments being loans to be recovered from the present or future income of the applicant.

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-related benefits as "passports" we shall avoid a separate income test. That will be generally welcome and helpful. Moreover, we are also cutting some of the detailed rules now existing in the supplementary benefit arrangements which concern the relationship of the person arranging the funeral to the deceased and which "deem" contributions to the cost from other family members. Such unnecessary difficulties will go and I for one will be glad to see the back of them. In future, people will be able to apply for help by post or in person as they wish.

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 - whether in relation to particular times of expenditure or otherwise.

The second clause contains the short title - the Social Fund (Maternity and Funeral Expenses) Act 1987. It also contains a wholly standard provision - similar to that in the 1986 Act - relating to Northern Ireland. This would enable an Order in Council to be made, subject to the negative resolution procedure, for purposes corresponding to this Act.

That is it, as far as the Bill is concerned. It is as brief and as straightforward as that. We shall also - as I told the House the other day - revoke the regulations which were queried by the Joint Committee on Statutory Instruments on grounds of vires. Subject to Parliament's agreement, we intend to lay a fresh set of regulations along similar lines in due course under the powers which this Bill is designed to provide.

The purpose of the Bill is to enable the much-needed reform of help with maternity and funeral costs to go ahead as intended from April this year. I do not believe that it would be right to abandon that reform simply because of a technical error, unfortunate though that error may be. The right answer to a problem like this is to find a straightforward solution. That is what we have done with this Bill.

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 - of giving in return for contributions benefits up to subsistence level, as of right and without a means test, so that individuals may build freely upon it. It is this which the abolition of the death grant and the maternity grant under this Bill will destroy. This point was made rather forcefully to me a few weeks ago by a former constituent. He wrote to me an entirely unsolicited and aggrieved and angry letter from which I shall quote: Before I retired I was manager of Oldham DHSS and in that capacity I often corresponded with you. You may, therefore, be concerned at the moral and legal implications of the proposed abolition of the contributory death grant. I paid for death grant from 1948 until I retired and then had no more liability for such contributions. The fund, however, still had a liability to pay out on my death. In commercial terms I had a paid-up policy and had it been with a friendly society, the money would be safe. It is this policy that the Government unilaterally intends to abolish. Any private company doing this would be taken to court and convicted of fraud. Previously when a benefit has been abolished it has still been paid to those already qualified. What will happen to my money and that of millions of other pensioners? It is now in the fund awaiting payment. If you cannot obtain a satisfactory answer for me, I am eager to appeal to the Parliamentary Commissioner. I shall certainly raise that case with the Minister in an effort to get a reply which satisfies my constituent. I shall pursue the matter if the Minister does not wish to give an answer now.

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 - there could be no justification for saying - 'You shall not get the benefits because you can afford to look after yourself.' If one has a fire insurance and pays certain premiums and then one suffers a fire, the insurance company does not turn round and say, 'You are not going to get benefit because you can afford to do the repairs yourself.' This is an insurance scheme". - [Official Report, 3 December 1964; Vol. 703, c.810.] It is not often that I quote that right hon. Member in support. The right hon. Member who said that is the right hon. Member for Finchley (Mrs. Thatcher), the Prime Minister.

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 - her reply as Prime Minister to her hon. Friend the Member for Norfolk, North (Mr. Howell). [Interruption.] Perhaps those Government Members who are chanting might like to listen to what their right hon. Friend the Prime Minister said a short time ago. She said: As my hon. Friend knows, the national insurance scheme is not a mere transfer of income. It is an insurance scheme and one's right to benefits from it depends on the contributions made throughout life. It is important to maintain that link. The proposal in this Bill and in the Social Security Act 1986 to abolish death and maternity grants is not compatible with insurance logic and proper commercial practice. It is totally inconsistent with what the Prime Minister said 23 years' ago and with what she still says today.

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-related supplement to unemployment, sickness and maternity benefit was abolished in January 1982. Industrial injury benefit was abolished and sickness benefit was replaced in April 1983. Child dependency additions to the short-term benefits were abolished in November 1984. The reduced rate unemployment sickness and maternity benefit and industrial disablement benefit below 14 per cent. were abolished in October 1986.

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 - from 6 per cent. to 9 per cent. Any private insurance agency would scarcely stay in business if it offered a deal like that. If that is not bad enough, the Government are now proposing unilaterally to abandon nine more national insurance benefits in the next year or so. Two of them, the death grant and the maternity grant, are the subject of this Bill, but there is a host of others. Children's special allowance is to be abolished and maternity allowance is to be replaced in April 1987. Industrial widows' benefit is to be abolished, widows' allowance is to be replaced, age-related widows' pension is to be abolished, the widows' fund is to be ended, and personal extension of the widowed mothers' allowance is to be abolished, all in April 1988.

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-looking bit but do it in a way that makes another rather more vital bit dangerous. They then call in the district surveyor, who sticks a dangerous structure notice on it and orders them to demolish it forthwith. In doing so, another bit becomes dangerous, so that must be demolished, and so it goes on. Not long afterwards, of course, the whole lot is a heap of rubble. That is what the Government dream of doing to the welfare state. It is not a frontal attack but a constant erosion, nibbling away, bit by bit, until one day the nation will wake up to find that there is little left of any substance.

Originally, the welfare state was envisaged as a redistributive mechanism between the classes. It was intended also to offer high-quality benefits and services, universally available almost as a badge of citizenship. These principles have been allowed to wither as a result of successive actions by the Government. Under the Government, the redistributive principle has been cut right back by constant reductions in the Treasury supplement, financed by all citizens out of general taxation, from 18 per cent. to as little as 7 per cent. That has thrown more and more of the funding of the welfare state on to working-class people because of the ceiling on national insurance contributions of one and a half times national average earnings, which minimises contributions from the higher paid groups within the middle class.

The principle of high-quality universal benefits is constantly undermined by the Government, partly by the regular elimination of universal benefits, as in the Bill, and, as I have described, partly by the Government's constant practice of making the beneficiaries of the welfare state pay more and more in contributions for a smaller and smaller range of benefits.

The Bill is a classic case in point. The death grant is to be replaced by means-tested help with funeral costs. It callously ignores the intense emotions that the issue generates in pensioners. The Dignity in Death Alliance has put the matter exactly as that age group feels about it. It states: members take the view that an insurance principle is at stake. People have paid for this benefit throughout their lives and, as with any other, they are entitled to claim it. It goes on: there is a total rejection of any form of means testing at the time of death. This is both personally cruel and grossly expensive. The cost of administering a small financial benefit may be higher than its worth.

The same principle applies to the maternity grant, which is also being abolished. It is somewhat ironic that - I presume that the Minister knows this - it was a Tory Minister who, in 1980, introduced the principle of a universal benefit on the ground that, otherwise, many young mothers would have inadequate contributions to qualify. In addition, a few months later in 1980, the Government published a consultative document called "A Fresh Look at Maternity Benefits" in which all three options that were canvassed involved the retention of a universal maternity grant. If it was right then, why is it not right now? To pose a similar question in a slightly different form, if universal death or maternity grants have always been supported, as they have, by public opinion and indeed by the same Government in an earlier, slightly more liberal reincarnation, why do the Government gratuitously insist on bringing the two benefits within the purview of the odious social fund when there is absolutely no necessity for them to do so?

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 - he repeated much the same today - he said: the error arose as a result of an attempt to reflect quickly the will of the other place." - [Official Report, 22 January 1987; Vol. 108, c. 1045.] The Minister referred to the right of independent appeal. As he probably knows, gratitude in the other place is rather less than gushing, and it is clear why that is so. As was said at the time, it is now proposed that an appeal should lie from the regional DHSS civil servant nominated by the Secretary of State to a senior civil servant, who will not be nominated by the Secretary of State, and that the civil servant should instead be appointed by a commissioner. The question that arises is: who appoints the commissioner? The answer is: the Secretary of State. The commissioner thus appointed by the DHSS will have power to appoint social fund inspectors. Who are they? They are none other than those made available to the commissioner by the Secretary of State. To call that an independent appeals mechanism is to stretch credulity beyond endurance. It is rather like Humpty Dumpty in the Alice-in-Wonderland world of the Minister - "Words mean what I say they mean." That is not convincing for a drafter of laws.

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-examine my words. He will find that it is all wheels within wheels. There is absolutely no independence in the appeals mechanism.

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 - if the Minister does not wince at the idea. It is bad enough at present, when payments are made as a grant, that, in the first week of the freeze when the country shivered, they were paid to only a handful of people in one of the 64 weather station areas, and in the third week, when the weather became much milder, the Government panicked and paid them to everybody indiscriminately. What would happen if it were a loan? Would pensioners be forced to pay back the money?

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-limited. But they have also said - if it is not a paradox - that the fund will not run out. It is still not clear what will happen if the normal day-to-day requests for aid from the fund exceed the budget allocated. Will applicants, however manifest their need, simply be refused assistance or be told that they will get less assistance as the year passes and as the budget dwindles?

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? - [Interruption.] I fail to see what is so funny about this matter. If they have first call on the social fund, in effect it will mean that all other payments from the social fund could be reduced proportionately because of payments of funeral and maternity benefit that are decided in advance.

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-empted, which means that everyone else will go without.

The last matter concerns the vexed issue of loans as against grants. It seems that current DHSS thinking - the Minister referred to this but did not answer the point that I am about to make - is that only community care needs will be met by grants; all other needs will be met by loans. If that is so, the question that must be answered is, what exactly is meant by community care? It is a vague phrase and it may mean different things to different people.

In a recent speech the Minister said - for the first time, I believe - that loans would not be available to claimants until they had been in receipt of income support for six months. That opens up a new and ominous prospect. During the first six months on benefit, claimants are often adjusting to a much lower standard of living, although they are still carrying unalterable expenditure commitments. Already, home owners are suffering the loss of a quarter to a half of their income because of the iniquitous regulation that cuts mortgage interest payments for those on the dole. The latest proposal is a harsh extension of what is becoming the all too frequent practice of this Government of gratuitously kicking a family when it is down.

As for the level of these two proposed means-tested benefits, the current £30 level, to which the Minister referred, for the death grant has been repeatedly dismissed by Tory Members of Parliament and by the Minister today as so insignificant as to justify its transfer into a limited means-tested category. We repudiate those values and attitudes. If a universal grant in such a sensitive area is too low, we believe that the right approach is not to abolish it but to raise it to a reasonable level. That is why we have pledged to increase it from £30 to £200.

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-limited social fund which, coming from this Government, is an insult on top of the injury of having allowed poverty to double in the first place.

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.