Sixth Standing Committee on Statutory Instruments &c.


First Sitting

Wednesday 9 December 1987



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The Committee consisted of the following Members:

Chairman: Sir John Stradling Thomas

Aitken, Mr. Jonathan (Thanet, South)

Amess, Mr. David (Basildon)

Beckett, Mrs. Margaret (Derby, South)

Bowden, Mr. Andrew (Brighton, Kemptown)

Bright, Mr. Graham (Luton, South)

Couchman, Mr. James (Gillingham)

Finsberg, Sir Geoffrey (Hampstead and Highgate)

Griffiths, Mr. Peter (Portsmouth, North)

Hannam, Mr. John (Exeter)

Kennedy, Mr. Charles (Ross, Cromarty and Skye)

Lightbown, Mr. David (Staffordshire, South-East)

Loyden, Mr. Eddie (Liverpool, Garston)

McKelvey, Mr. William (Kilmarnock and Loudoun)

Moate, Mr. Roger (Faversham)

Morley, Mr. Elliot (Glanford and Scunthorpe)

Portillo, Mr. Michael (Parliamentary Under-Secretary of State for Health and Social Security)

Radice, Mr. Giles (Durham, North)

Steinberg, Mr. Gerry (City of Durham)

Mr. J. Rose, Committee Clerk

3 Sixth Standing Committee on Statutory Instruments, &c. Wednesday 9 December 1987


Draft Supplementary Benefit (Requirements) Amendment Regulations 1987

10.30 am

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Michael Portillo): I beg to move, "That the Committee has considered the draft Supplementary Benefit (Requirements) Amendment Regulations 1987." This amendment introduces a small change in the supplementary benefit regulations governing help with the cost of water rates during the final weeks before those regulations cease to exist. Its effect is that in the last few weeks before the implementation of the social security reforms next April increases in water charges will not be taken into account in the assessment of supplementary benefit. I will explain why the change is necessary. One of the complications of the supplementary benefit scheme, which is to be removed under the social security reforms, is the inclusion in benefit assessments of individual amounts for water charges. Under the new income support scheme, water charges will be subsumed into the general applicable amounts. Separate individual amounts will not be included in the assessment. The need for these administratively costly reassessments which provide only small increases in benefit will no longer exist. At present, the entitlement of 3½ million supplementary benefit claimants includes an amount for their individual water charges liability. For two million of these, the money is paid under an administrative arrangement by local authorities. This administrative arrangement with local authorities will stop one week before the housing benefit reforms take effect, so local offices will pay the final week's payment in all cases. Every time there is a change in the amount of water charge, the entitlement of each claimant has to be reassessed to take account of that change and the benefit payments adjusted accordingly. Water charges are reviewed annually, usually in April. For about 1.5 per cent. of people there are two reviews. The water rate element is reviewed in January and the sewerage and environmental services in April, which means two separate assessments. Within two weeks of the start of income support, water charges are due to increase because of the main review of charges in April. Precise details of the April increases in water charges are not generally known until March. Without this amendment, local offices would need to reassess 3½ million cases, normally for just the last week or two of the present scheme. Trying to handle that at a time when all efforts will be directed at completing the change to income support would have a significantly disruptive effect on local 4 offices. Before income support can begin, more than 5 million supplementary benefit cases need to be converted from supplementary benefit to income support. A task of this size has to be spread over several months. That exercise, which has already started, will not finish until next April. To put the amendment into perspective, assuming that water charges increase by 6½ per cent., which was roughly the increase this year, the average increase overall for a supplementary benefit claimant will be less than 10p per week. For those whose water rate and environmental service charges increase together on 1 April, the average amount of total extra benefit payable if cases were reassessed would be 20p. Even for the small minority whose water rate increases in January, the average extra benefit would be a total of just over 85p spread over three months. Against that background, the proposed amendment is both logical and responsible. We do not think that it would be defensible to impose on local offices the additional burden of reassessing some 3½ million claims in the crucial last weeks before the implementation of major reforms and when the sums involved are so modest. It would not be in the interests of claimants, including those affected by this change, to risk unnecessary delays in the assessment of their income support.

10.34 am

Mrs. Margaret Beckett (Derby, South): I admit that until I heard the Minister's speech this morning I had wondered why the Government were bothering to make this change, although I had little doubt that they would be saving at least a small amount of money. It seemed a mean little measure, because the housing addition that people now receive to cover their water rates will remain the same, although the water rates will rise. People who under income support will continue to receive at least as much as they receive under supplementary benefit enjoy what the Government like to call transitional protection. That will be an important protection for many people, but it will not reflect all the costs that they face even in the brief period between December and April. Others for whom the contribution towards water rates is paid through housing benefit will not get transitional protection as housing benefit does not provide that. I understand what the Minister means about administrative complications, but it is unfortunate that people will lose in that way even though sometimes only small sums are involved. For the losers in the transition from supplementary benefit to income support, even small sums will be valuable. I followed the Minister's assessment of the numbers involved. As he says, the numbers are large, so I can see the Department's point, although I regret its attitude. The Minister said that some people whose first assessment increases were due in January would lose 85p. Does that mean 85p over the whole period?

Mr. Portillo indicated assent.

Mrs. Beckett: The Minister nods. That is good. Even so, for someone on supplementary benefit a sum 5 approaching a pound is quite a large amount of money and quite a high proportion of their income. We regret that the Government have found it necessary to make those minor economies. The Minister has told us how many people will be affected. Will he tell me how much the Government expects to save?

10.37 am

Mr. Andrew Bowden (Brighton, Kemptown): My hon. Friend the Minister has made a convincing case for supporting the statutory instrument. The costs of administration would be high in the event of changes in water charges before the new scheme starts. But will he tell us what the measure will mean in the slightly longer term? Assistance with water rates now comes through housing benefit, as we all know. The scheme will be replaced by income support in April. The Government's illustrative figures show that about half a million pensioners will be worse off in April because they now receive help such as heating additions and extra benefit for special diet and laundry charges. Help with amenity charges is to be phased out, too. What will be the implications of the statutory instrument for the new sums to be paid under the income support scheme to that group of pensioners? If they have fallen behind because of increases in water charges in the early part of next year, they will then be further penalised. I cannot believe that the Government wish that to happen, especially as nearly half a million pensioners are already to have their overall income reduced. I hope that the Minister will be able to give a satisfactory answer to that question.

10.38 am

Mr. Peter Griffiths (Portsmouth, North): Does the Department of Health and Social Security know whether any of the water authorities and companies that may raise their charges in January intend to make increases considerably larger than those that he cited as a national average? If increases are really to be only a few pennies it would be irresponsible of the Government to set in train a process of reassessment of millions of cases. Although we are talking about a small sum of less than £1, if increases in water charges were greater than the figure of 6·5 per cent. which the Minister gave in passing the effect on people in the area would be greater. Is the Department aware of any circumstances—for example, the recent storm damage—in which an increase in charges may be significantly greater than the national average?

10.40 am

Mr. Portillo: It may be for the convenience of the Committee if I respond to questions in the order in which they have arisen. The hon. Member for Derby, South (Mrs. Beckett) asked about savings. I emphasise that we have not come up with the measure to achieve savings. She will readily recognise that what I say is true when I tell her that the savings involved are £500,000. In the general scheme of transition from supplementary benefit to incme support, that is a small amount. The hon. Lady also asked about transitional 6 protection. I think that she thought that there was some sort of unfairness is not using the 1988–89 water rates as the basis for transitional protection. If the hon. Lady reflects, she will realise that all transitional protection for whatever reason is based on what a claimant receives in the current year of 1987–88, so it is consistent that transitional protection should be applied to water charges as they exist this year. Without the Committee's consideration of the amendment regulations, we should have to undertake uprating to protect or pay claimants for a period of one or two weeks until supplementary benefit comes to an end on 11 April and is replaced by income support, which does not specifically compensate people for water charges in a differentiated amount. I may have misunderstood the hon. Lady, but I wish to make it clear that even when a claimant's supplementary benefit payment for water charges is paid with his housing benefit he will still be transitionally protected for the amount that he has been receiving for water charges. Although water charges are paid with housing benefit, the fact that they are made under supplementary benefit will be taken into account when transitional protection arrangements are worked out. If a claimant was worse off on income support, the amount that he had been paying for water charges would be brought into account when any transitional protection due was worked out. I must point out to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) that, as I told the hon. Lady, income support will not provide for water charges in a specific differentiated amount. The regulations are limited and provide that during the period in which we continue to compensate people after 1 April, but before 11 April, when income support comes into being, we shall compensate them for water charges not on the basis of water charges in 1988–89 but on the basis of charges in 1987–88. The regulations will not make the position of pensioners, to whom my hon. Friend referred, significantly worse. We are talking about the payment of only one or perhaps two weeks' benefit and the amounts involved are on average about 10p. In reply to my hon. Friend the Member for Portsmouth, North (Mr. Griffiths), I know nothing about water charge increases for next year. Indeed, it is the difficulty of knowing much in advance of March 1988 that makes it necessary for us to introduce the regulations. If we had the information now, during the conversion we could consider including the increased charges in the benefit payable between 1 April and 11 April, but we do not have the information. The figures that I gave were not a guess about next year. They were simply based on the average increases last year. However great increases may be in an individual area, we are only talking about the increase which would have been payable for one or two weeks between 1 and 11 April 1988. Therefore, I reassure the hon. Gentleman that it is quite a small matter.

10.44 am

Mrs. Beckett: In effect, the Minister is saying that people who will already be major losers will remain 7 major losers, and that the instrument will not make much difference to that. He said that income support will not specifically compensate people for their water rate bills. I think that it would be accurate to say that it will not compensate them at all. However, given the overall figures for the money which the Government expect to raise, it would appear that for individuals there may not be substantial losses. I am grateful for the Minister's reassurance about transitional protection for that element, because that was not my understanding. 8 Although I understand the administrative argument, I still think that it is unfortunate that people will receive heavier bills but will not obtain the full amount to meet them. The Opposition continue to regret that.

Question put and agreed to.

Resolved, "That the Committee has considered the draft Supplementary Benefit (Requirements) Amendment Regulations 1987."

Committee rose at fifteen minutes to Eleven o'clock.


Sir John Stadling Thomas (Chairman)

Aitken, Mr

Amess, Mr.

Beckett, Mrs.

Bowden, Mr. Andrew

Bright, Mr.

Couchman, Mr.

Griffiths, Mr. Peter

Hannam, Mr.

Lightbown, Mr.

Moate, Mr.

Morley, Mr.

Portillo, Mr.