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Fuel Costs

Orders of the Day — STATUTORY INSTRUMENTS, &c. – in the House of Commons at 3:59 pm on 16th November 1979.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]

Photo of Mr Andrew Bowden Mr Andrew Bowden , Brighton, Kemptown 4:05 pm, 16th November 1979

I am glad to have this opportunity to initiate a short debate on assistance with fuel costs. I particularly welcome the fact that my right hon. Friend the Member for Daventry (Mr. Prentice) will reply on behalf of the Government. He is a man of compassion, as his record of public service proves.

Fuel bills are a major source of worry for many pensioners and we would be flying in the face of reality if we did not accept that many of them will face great difficulty during the coming winter. A severe winter will exacerbate the problem. According to estimates made by the organisation Help the Aged, a mild winter kills approximately 45,000 people over the age of 60. In a severe winter, that figure can be almost doubled.

The concern of the House for this problem has been shown by the number of signatures added to early-day motion No. 104. The topic has been discussed on a number of occasions by the all-party pensioners group, of which I am joint chairman with the hon. Member for St. Pancras, North (Mr. Stallard).

Last year the electricity discount scheme was in operation but it had many weaknesses. It gave no help to those pensioners who used paraffin, oil or gas. Many of those who were able to claim under the scheme received less than £10 in benefit. The Government's new scheme is an improvement in many ways. It means that some 110,000 pensioners who are not at present receiving any scaled heating allowance will benefit. The new scheme will be worth approximately £50 to them in a full year. It will also concentrate hep on the over-75s and those on supplementary benefit.

The new scheme, however, also has a major deficiency in that it does not include those over 75 who are in receipt of rent and rate rebates. I raised this matter during Prime Minister's Question Time approximately a week ago. The Prime Minister said that in the circumstances pensioners over 75 should check their entitlements to see whether they would be better off to remain with rent and rate rebates or whether they should move to supplementary benefit.

I have discussed this advice from the Prime Minister with the chief executive of Brighton council and with the manager of the Department of Health and Social Security office in Brighton. Brighton is a good example of the difficulties and problems we face in this context. In Brighton approximately 12,000 people receive rent and/or rate rebates. Ten thousand of them are pensioners. Of those 10,000 pensioners, it is estimated that approximately 4,000 are over 75 years of age and that 25 per cent. of them could be better off on supplementary benefit.

The chief executive of Brighton council pinpointed the difficulty in a letter to me. He said: We certainly would not welcome the prospect of a fresh flood of people all of whom would have to be dealt with at length if they were to go away feeling that they had had their just dues and it is difficult to see how this sort of exercise could be undertaken, whether by us or any other authority, or even Government Departments for that matter, without such a call on staff time and competent staff time at that, as would necessitate the ignoring of Mr. Michael Heseltine's exhortations that we are to reduce staff, not increase it. If a large number of pensioners on rent and rate rebates were to go to their local government offices or DHSS offices and ask for a check on their entitlement and on their position, a great deal of administrative work would be created.

When the local problem is scaled up to a national level, a difficulty of enormous proportions is apparent. I have made an estimate based on Brighton. About 750,000 pensioners over the age of 75 receive rent and rate rebates throughout the country. Of those, between 150,000 and 200,000 could be better off on supplementary benefit. Many hon. Members, including myself and the hon. Member for St. Pancras, North have frequently given advice to elderly constituents and, having weighed their income and position, recommended that they take rent and rate rebates instead of supplementary benefit.

We must now honestly say to constituents over the age of 75 who are in receipt of rent and rate rebates that, if they have any doubt about whether they would be better off on supplementary benefit, they should have their entitlement checked. That is endorsed by the advice given to me by the Prime Minister.

If a large number of pensioners do that, I have no doubt that local authority and DHSS officers will do their best to deal with the inquiries. I pay tribute to the many, particularly in my area, who work conscientiously and who do their utmost and help elderly people.

I hope that today I have proved to the House that the electricity discount scheme was far from perfect and that this present scheme has flaws. I urge the Minister to undertake to conduct a standing review of fuel assistance. I urge him to think long and hard and ensure that before next winter he comes up with a better scheme to protect Britain's pensioners.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North 4:13 pm, 16th November 1979

I shall be as brief as possible. I am grateful to the hon. Member for Brighton, Kemptown (Mr. Bowden), who is joint chairman with me on the all-party pensioners group. This is one of the rare occasions when Back Benchers from both sides of the Chamber can come together to draw the Minister's attention to a serious problem.

I endorse what the hon. Member said about rent and rate rebates and the problems that we shall have explaining to people who are already in a state of confusion about the multifarious benefits and schemes. At Question Time earlier in the week I mentioned the possibility of confusion at local level because of the absence of any specific instructions about the mechanics of administering the new scheme. I have not done any major research, but Age Concern has already expressed anxiety about the possible confusion.

It is widely understood that no instructions will be given to local offices. Local offices are overworked and understaffed. I endorse the remarks of the hon. Member for Kemptown concerning the dedication of Department of Health and Social Security staff. They will find it difficult to do anything until the current books have expired, and that might not be for another six months if a book has just been issued. However, the allowance will be brought in retrospectively and a refund will be made.

It is all very well to say to an old lady who is over 75 years old "Do not worry about it, darling. Next June you will get a refund, but I do not know what you can do about it now". Old people and their advisers will be confused about the absence of instructions. I hope that the Minister will look at that again and see if it is possible to improve the implementation of the scheme, whatever its defects.

It is inevitable that there are differences of emphasis amongst the all-party group. The hon. Member for Kemptown has made a strong point. I shall put another. The scheme will not benefit as many people as is claimed. This year, the electricity discount scheme benefited an estimated 2½ million people aged over 65. The average payment was £7·50. However, many people received much more than that.

It was also estimated that 650,000 pensioners aged over 75 who receive supplementary benefit have already received the heating allowance. Therefore, the new arrangement will benefit only a small minority of those aged over 75. The current estimate is that 110,000 pensioners will benefit. Those pensioners would have been eligible under the old discretionary scheme for some heating allowance. The alleged benefits of this scheme are therefore not as extensive as we have been led to believe, given the existence of discretionary schemes for heating, the amounts that were awarded, and the criteria that were used. Six million people would have been eligible in many areas for some assistance under the electricity discount scheme, even if they were not pensioners, although the take-up might have been less.

We need a comprehensive scheme covering not just electricity but all fuels, and it should be applied on a much wider scale. The confusion at local level must be investigated. Perhaps it would be possible immediately to reduce the age limit from 75 to 65.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry 4:18 pm, 16th November 1979

My hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) has done a service to the House by raising the matter and giving hon. Members a further opportunity to discuss such an important question. It is characteristic of my hon. Friend's concern and expertise where the elderly are concerned. The speech of the hon. Member for St. Pancras, North (Mr. Stallard) illustrates that it is a concern that crosses the Floor.

The new Government scheme was announced by the Secretary of State on 22 October and some aspects of the scheme were debated on 31 October. It is a good scheme utilising limited resources to give maximum help to those in greatest need. I am glad to have the opportunity to pay tribute to my colleagues in the Government who worked out the scheme against a background of the outgoing Government having made no provision for this at all. I pay particular tribute to the work that was done by my hon. Friend the Under-Secretary of State for Health and Social Security.

The electricity discount scheme which this scheme replaces was not good. It was the brainchild of the right hon. Member for Bristol, South-East (Mr. Benn) and was accepted by a rather bemused Cabinet in a fit of aberration. I was a member of that Cabinet and I am the only one who is likely to apologise for that fact. I apologise to the House for that scheme, because it was unsatisfactory, inflexible, and applied only to electricity. It conferred benefit on those not really in need of it, for example unemployed school leavers living at home. The scheme's spread was so vast—the figure that I have is 4¼ million people as against the 6 million quoted by the hon. Member for St. Pancras, North—that those who received it received only about £7·50 a year. That was not much more than the weekly increase in basic rates of retirement benefit which was implemented this week. Anyone is glad to have £7·50, but it does rather strain credulity to believe that it was worth while having a scheme of that kind, incurring some £4 million in administrative costs, to achieve so very little.

Nevertheless, we face a serious problem. Fuel costs have risen considerably in recent years because of international factors. These costs bear very heavily on those with low incomes, and the results are extremely serious, particularly in a severe winter. Against that background, the Government framed their present measures particularly with the intention of providing help for poor families with children and those over 75. Hence the help to supplementary benefit households with children under 5 and supplementary benefit recipients where the claimant or his dependant is over 75. Hence also the extra £1 a week on the family income supplement for poor families in work. This affects about 345,000 households which will get the extra benefit of about £50 a year, a considerable advance on the £7·50 average payment under the old scheme.

Photo of Frank Dobson Frank Dobson , Camden Holborn and St Pancras South

Will the right hon. Gentleman tell us the expected take-up rate if the number eligible is 345,000?

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I hope that the take-up rate will be as near as possible to 100 per cent. Every one of us who can influence people in any doubt as to whether they are eligible should do so.

My hon. Friend the Member for Kemptown is not quarrelling with the general principles that I have just outlined. He is concerned about the fact that under these proposals those who receive rent and rate rebates will not receive the benefit available to supplementary beneficiaries. He argues that this is unfair because many pensioners have been advised to take rent and rate rebates rather than apply for supplementary benefits. My hon. Friend is undoubtedly correct in pointing out that some people who currently receive rent and rate rebates would now be better off claiming supplementary benefit instead. Those who are over 75 or those who have children under 5 and who are currently better off on rebates by less than 95p a week should now find that it pays them to switch to supplementary benefits. People affected in this way should now consider it to their advantage to switch.

But it is important not to get this out of proportion or to mislead people. It is only families with incomes somewhat above their basic supplementary benefit scale rate who can be placed in the dilemma of having to choose which benefit is more to their advantage. The precise calculation depends on the level of income, the family's housing cost, and the number of dependants, but the advantage is normally clear cut. Of course, that cannot be so in relation to the discretionary additions which can be made under the supplementary benefits scheme, but it is fair to point out that of 1·5 million supplementary pensioners, 1·2 million already receive heating additions at one level or another. In short, all that has changed for pensioners is that those over 75 and with incomes somewhat above the supplementary benefit scale can now be certain of a heating addition; previously it was only a strong probability.

My hon. Friend obtained figures relating to Brighton. I listened to them with great interest. A few days ago I instructed my officials to try to quantify the number affected nationally through a computer-assisted scrutiny of the 1977 family expenditure survey. We estimate that there are about 720,000 people over the age of 75 receiving rent and rate rebates, of whom about 240,000 are estimated to have an advantage of no more than £1 over what they would get on supplementary benefit.

This illustrates a significant problem, but to provide those over 75 and receiving rent and rate rebates with an extra £1 a week across the board would cost a total of approaching £40 million a year, and we simply cannot afford that in present circumstances.

I should like to stress that the officers of my Department and in local government are fully aware of the problem facing people in deciding which way they will be better off. It is a problem that is constantly being dealt with and discussed by them, and it will continue to be so. Local offices of the Department try so far as they can to offer advice to individual claimants who may be better off on rebate than on supplementary benefits. Of course, many other people, including hon. Members, try to advise people about the problem.

The existence of the problem of overlap should not lead us to forgo the possibility of improvements as resources permit. The extension of the availability of supplementary benefit heating additions represents a desirable increase of income for the two needy groups that we are discussing.

Meanwhile, also this week, there has been the introduction into the rebate schemes of the £5 a week disregard in respect of the earnings of the head of a household. That is worth while in that it gives extra rebate help to people who work, either full time or part time, but on low incomes.

Each of these improvements alters the balance of choice for some people who qualify for similar entitlements under both schemes. But this is not a reason for refraining from making improvements in one scheme or the other as and when they can be afforded, or for insisting that the two schemes always keep exactly in step in all their detailed provisions.

Local offices will continue to advise people which benefit appears to be the more advantageous, though the final decision and choice must necessarily rest with the claimant. In the longer term, we are looking at possibilities for change which would mean that people do not have to make this kind of choice. But this is a difficult area, given the large variations in individual families' circumstances, and I would not wish to mislead the House by implying that there is a solution to the problem round the corner.

Photo of Mr Jock Stallard Mr Jock Stallard , Camden St Pancras North

In the short time left, can the Minister deal with the implementation of the existing scheme at local level?

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I was about to deal with that question. For supplementary beneficiaries, what we shall be doing is to alter people's weekly payments at the first occasion when their order books would have to be changed. That will be either when a book runs out or on a change of circumstances, such as a rent change, if that happens sooner. Order books normally last for 26 weeks.

The new heating additions are payable from the date of the uprating, at the beginning of this week. Sums due in respect of weeks between now and the date from which the book is adjusted will be paid as a lump sum. Similar arrangements will apply to unemployed claimants who are not paid by means of an order book. Therefore, someone whose benefit is not adjusted until the week commencing 21 January will get a lump sum of £9·50. Similarly, a large number of FIS beneficiaries will get a lump sum of £1 for every week that their current order books have to run—and FIS books last for 52 weeks.

Local offices will start making the necessary changes to supplementary benefit assessments from now on, as they complete work on the uprating, and the FIS changes are already under way.

To sum up, I have not been able to meet the proposals put forward by my hon. Friend the Member for Kemptown and supported by the hon. Member for St. Pancras, North, but we shall certainly keep the matter under review.

I repeat that I believe that our scheme is better than the old electricity discount scheme. It gives much more help to those with the greatest need. As and when the country can afford it, I hope that we shall do better still.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes to Five o'clock.