Welfare Reform Bill

Wednesday 9th March 2011 Commons Chamber

[Relevant documents: The oral evidence taken on 26 January and 9 February 2011 by the Work and Pensions Committee on the White Paper on Universal Credit, and the written evidence received, HC 743.]

Second Reading.

[Mr Speaker]

I have selected the amendment in the name of the Leader of the Opposition.

12:52

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I beg to move, That the Bill be now read a Second time.

The Bill before us today covers a number of areas, but I hope that it sets a new course for the welfare state. I believe it will enable us to reach out to some of the groups of people who have become detached from the rest of society—trapped, too often, in a permanent state of worklessness and dependency. For the sake of the House, I will go through the relevant clauses of the Bill. I am sure that colleagues on both sides of the House will want to intervene. I hope they will recognise that we shall get to most of the clauses that they want to discuss, but I will take interventions as and when they come.

The problem is that although from 1992 to 2008 this country saw some 63 consecutive quarters of growth, and 4 million more people were in employment by the end of that period, before the recession had even started we still had some 4 million-plus people on out-of-work benefits. The question is: where did all those jobs go? Under the previous Government, over half of the jobs created went to foreign nationals. This is not an immigration point; it is a point about supply and demand. There were a group of people in this country completely unable, it appears, to take advantage of that long period of growth and job creation. In essence, the key point about the Welfare Reform Bill is that it is intended to help that group.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am grateful to the right hon. Gentleman for giving way so early. I wondered whether, at the outset, he would like to comment on the reports in today’s Telegraph that the cancer charities are warning that his proposals for employment and support allowance will penalise those who do not recover soon enough. How could anyone think that that is a fair approach, in a Bill like this?

[Mr Duncan Smith]

I think the report was in The Guardian. I do not know whether it is in The Daily Telegraph.

[Steve McCabe]

The Telegraph too—you’re famous.

[Mr Duncan Smith]

I read The Guardian; he reads the Telegraph. What can I say? Times really are changing.

I have read the report, and I think that a number of elements in it are simply not altogether correct. I say that rather carefully because the point about the cancer aspect is that, as the hon. Gentleman knows, we inherited from the previous Government a process of reform and change to the employment and support allowance, which included the work capability assessment. We supported that, with the previous Government, because it was the right thing to do—to look at the 1.5 million people on incapacity benefit and check them over. We did not inherit any real allowance for cancer sufferers. It is important to make this clear. The Employment Minister, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), immediately accepted the internal reviews, but went further. He asked Professor Harrington to conduct a review of what we did regarding cancer patients and others, and the hon. Gentleman, being a generous individual, will know that we then incorporated a big change, so that a person in cancer treatment—chemotherapy—who is between treatments will go straight on to the support element. Thus the contributory aspect will not affect them, because while they are on the support element they will continue to be supported when they are out of work.

[Sheila Gilmore (Edinburgh East) (Lab)]

rose—

[Mr Duncan Smith]

One second. Would the hon. Lady forgive me? I have been asked to answer a question and I shall try to answer it. We have already made some very substantial change to support people in cancer treatment. The concerns of Macmillan and others relate to oral chemotherapy. I understand that. We have already asked Professor Harrington, in his second review, to undertake to give some advice on that. We have a slight problem with that from the start, because it is a fairly new form of treatment and a limited number of people are on it. So far, much of the medical evidence suggests that it does not affect people in the way that intravenous chemotherapy does; it is not as debilitating. We remain open to that evidence.

Although there is no provision for oral chemotherapy right now, my right hon. Friend the Employment Minister has made it clear that Professor Harrington will review the subject and take evidence, and we have asked the cancer groups to offer up their thoughts and advice, in addition to the medical fraternity. We will take account of what Professor Harrington says. As the hon. Member for Birmingham, Selly Oak (Steve McCabe) knows, last time we adopted all the recommendations in the professor’s report in their totality. So we are not in the business of trying to harm or affect cancer patients; quite the contrary. We made some very serious changes to what we inherited from the previous Government—I would like to think that they would have done the same—and we will continue to do so. I hope that answers the hon. Gentleman’s question. If he will let me get on with the rest of the Bill, I will.

[Naomi Long (Belfast East) (Alliance)]

Will the right hon. Gentleman give way on that point?

[Mr Duncan Smith]

I would like to make a bit of progress, if the hon. Lady does not mind. I think I have been pretty generous on that aspect. I will return to it.

The key is that I hope the Bill in general—we shall get to the more specific elements later—represents a whole new concept: a contract with people who are in need of support. For those who are able to work, work should pay, and for the most vulnerable in society we will continue to provide the support that that they need. I think it is our duty to do so. We can debate the levels of that support, but it is our duty none the less.

The Bill says to the taxpayer, “Your hard-earned money must be spent responsibly.” We sometimes forget, in our debates on welfare, that the taxpayer is also a player in this, because taxpayers—many of them on low and marginal incomes—are constantly being asked to pay in taxes towards support for others. That is fair, but we have a responsibility to ensure that taxpayers too are properly supported. I shall now outline some of the principles of the Bill, and then I will try to get through the various clauses.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

Forgive me; I want to make progress before I take more interventions, but I certainly will not shy away from interventions.

I note the comments by my opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), that his party agrees with more than

“three quarters of the principled and burden-sharing”

changes that the Government are making. Obviously, in his interventions he will make clear what he does not agree with. I have read his amendment and there will be some questions about some of that; I am sure we will get to that in a minute.

I intend to take the House through the Bill stage by stage. Let me start with universal credit. I shall begin with an overview, and then consider some of its detailed aspects. The universal credit obviously sits at the heart of this welfare reform. I do not think I would want to embark on this process if that were not the case. I believe it is a commitment to the public that work will always and must always be made to pay, particularly critically for that group of people who are probably the most affected—the bottom two deciles of society—who have too often found it really difficult to establish that work does pay.

I am pleased to say that those principles seem to have received support from a number of stakeholders, including Citizens Advice and the Institute for Fiscal Studies. The IFS said that by and large the measure was a progressive change. We anticipate that the universal credit will make some 2.7 million households better off. Over 1 million households will be better off by more than £25 a week—clearly, those will be down in the bottom deciles—and 85% of that increase will go to households in the bottom 40% of the income distribution.

We have agreed a package of transitional protection which will ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. The universal credit should also start making inroads into the couple penalty. Members on both sides of the House agree that that is necessary. I know that the right hon. Member for Birkenhead (Mr Field), who is in his place, has made great play of that over the years, and many of us have agreed with him.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I am listening with great interest to my right hon. Friend’s speech. Can he give me some further detail on how the benefit cap will be introduced?

[Mr Duncan Smith]

I was coming to that, but I shall touch on it now; I may make some further comments later. The principle is that people who are unemployed and on benefits should not be receiving more than average earnings. It is a matter of fairness, so that those who are working hard and paying their taxes do not feel that someone else will benefit more by not playing a full part in society. We recognise that there must be transitional arrangements. We will work intensively with the families affected once the cap comes in. We will help them move into work, to change their circumstances so that they are not affected. We will make sure that families who need transitional support will receive it. We will make more detailed statements about that later.

The idea is that we should encourage people back into work, and most of all that people who are in work and paying their taxes should feel that it is fair that while they earn and they work hard, others realise that the best way to increase their income is through work, not through benefits. That is a great principle.

[Mr Slaughter]

According to the right hon. Gentleman’s Department, 70% of those affected by the benefit cap live in social housing. The Housing Minister is building only unaffordable housing, because of the rent levels set. Is not the cap just a crude piece of social engineering, forcing people not to live in expensive areas, such as the constituency that I represent? Is it not directed at vulnerable people and the poorest in society, making it possible for them to live only where the Secretary of State chooses for them to live?

[Mr Duncan Smith]

With respect to the hon. Gentleman, it is not about where I choose for them to live. As with everybody else, it is about where their income and their ability to earn allow them to live. There are many people in London, for example, who work hard and who commute well over an hour to get to jobs because they cannot afford to live in parts of central London. We may argue that the cost of living in London is too high. One of the arguments that I would make is that the way that the previous Government’s local housing allowance was set drove up rents in both the private and the social housing sector. The hon. Gentleman should consider that what we are doing is reasonable. What we are trying to do is not to damage people, but to get them in locations where they can afford both to live and to work. I will return to that.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I shall make a little more progress.

May I confirm that we shall move from the universal credit making inroads into the couple penalty to a subject on which I am sure many right hon. and hon. Members will want to speak—child care costs in universal credit? I can confirm that support for child care costs will be provided by an additional element paid as part of the universal credit award. We will invest at least the same amount of money in child care as in the current system, and we will aim to provide some support for those making their first moves into work, so that the support available is not restricted to those working more than 16 hours.

This is an important point. Although there is a debate about it, we must remember that working tax credit gives that child care support to those in the relevant band. Universal credit will allow claimants to adjust their hours of work to suit their child care responsibilities. It will allow people to set their hours of work more in line with their caring responsibilities. It will cover all the hours that people are planning to work. We will be much more flexible, and we intend to work closely with relevant groups to take further advice about the rates that we will set. By the time the Bill reaches its Committee stage, we will be able to be more specific.

[Kate Green (Stretford and Urmston) (Lab)]

Can the right hon. Gentleman confirm that as a result of that further consideration, there will be no circumstances in which, as a result of child care costs, a parent could be faced with a marginal deduction rate of more than 100%, as some models prepared for us by Family Action have suggested?

[Mr Duncan Smith]

That is not our intention, and it is why we were are proceeding carefully and consulting about our proposals. The purpose is to maintain incentives to go to work. Universal credit is designed to encourage lone parents to go to work, but it recognises their need to meet their child care responsibilities. We can debate the various elements, but the principle is that the measure should be more than helpful to them. We will move on to the finer detail as we get to Committee stage.

As we increase support to make work pay, it is right to ensure that claimants do everything they reasonably can to find or prepare for work. As the House knows, we will tailor conditionality to individual circumstances, and require all claimants to accept what I call a claimant commitment. From the outset they will be asked to sign up to the idea that we will provide them with the necessary support and access to universal credit, but we will also expect them to recognise that the sanctions regime is applicable. It is easy to understand. If they do not comply with that as they go further through the process, they are likely to encounter that sanctions regime at key moments.

The toughest sanctions will apply to those who are expected to be seeking work but fail to meet important conditions. They should understand that if they keep on crossing a series of lines, they will invoke the sanctions regime. The problem at present is that the regime is often confusing. I have visited jobcentres a number of times—and I see on the Opposition Benches one of the Members who used to be a Minister in the Department. As he knows, if one talks to jobcentre staff, they will say that the problem is that when claimants reach the point where they are about to hit sanctions, it comes as a big surprise to many of them that sanctions will be imposed and that the situation is real and serious.

By letting claimants know much earlier and by introducing a regime that is easy to understand, with a simple tripwire process, they will know from the word go. That should disincentivise people from taking the wrong turns. Benefits will be taken away for three months after a first failure, six months after a second, and three years after a third. That will apply to those at the top level—in other words, those who are fully able to search actively for work and to take it. There are, however, other categories. The same conditions would not apply to lone parents, for example.

[Hywel Williams (Arfon) (PC)]

The rate of worklessness and the availability of jobs vary from area to area. What account will the sanctions regime take of that variation?

[Mr Duncan Smith]

The sanctions regime is about work being available. If work is not available, people cannot be expected to take jobs, so I give the hon. Gentleman the assurance that no one will be told that they are on sanctions if there is no work available. The sanctions apply only if a job is available, the claimant has been offered it and for one reason or another has not taken it, or if they are not complying with the details of what they are meant to be doing to seek work. That is only fair. People who pay their taxes want to know that everybody out there is seeking work. If they are seeking work sanctions should hardly ever apply, and in most cases they will not apply.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The right hon. Gentleman is making a thoughtful speech, and I know him to be a thoughtful and caring politician. I will give careful consideration to much of the Bill and I will not vote against Second Reading. Is it not spoilt, however, by what is happening to the mobility component of disability living allowance? I visited a residential home in Huddersfield, in Edgerton, only last week. The Bill will destroy the lives of most of those people, 60% of whom are in wheelchairs.

[Mr Duncan Smith]

I thank the right hon. Gentleman—although I am not sure: is he a right hon. Gentleman? [Interruption.] An hon. Gentleman—okay. That is something that his party should do—it is not for me—given his record of service.

Yes, I accept that there were issues. In fact, when we looked at the decisions taken at the time of the spending review, I reviewed the matter, after discussing it with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), who is the Minister responsible for these matters. We visited lots of care homes—my hon. Friend went out to see people and talk to them—and we realised that there was a lot of chaos out there about what should be given to people in care homes, what care homes themselves provide, and what local authorities believe it is their statutory responsibility to provide. Some of them say that they do not have any such responsibility to provide mobility services, but others say that they do, and provide access to such services.

We have therefore changed the provisions in the Bill, as the hon. Member for Huddersfield (Mr Sheerman) has probably noticed. That will be incorporated in the review of disability living allowance. Our objective is to get rid of the overlaps, genuinely to find out what can be provided at local level, and to figure out what the amount should be to support someone in a care home, bearing in mind that mobility needs in a care home are likely to be variable, and different from the needs of someone living in the community completely independently. Adjustments will be necessary, but my hon. Friend and I give the hon. Gentleman and the House an undertaking that we are going to try to figure out what the right answer is. We will work out a set of figures, and how they can be applied. That is the purpose of the review; I guarantee that.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Reflecting on what the Secretary of State has just said, does he recall that on several occasions, the Prime Minister has been given the opportunity to say that he has listened to the evidence and accepts that there is virtually no support for withdrawing the mobility component of disability living allowance for people living in residential accommodation? To what extent does the Secretary of State’s position differ from the position taken again and again by the Prime Minister?

[Mr Duncan Smith]

We are as one. I say that immediately, before I explain the position.

The reality, for the Prime Minister and for me, is that when we understand that certain facts are slightly different from what we thought they might have been, we always modify what we are doing to make sure that the effect of what we are trying to do is reasonable and produces the best results. All I can say to the right hon. Gentleman is that the Bill is not the same as the one that he would have seen some weeks ago. We are not knocking out the mobility component from care homes, and we have included it in the review of what mobility provisions are necessary and required for people in care homes. That is the real principle behind the measure. My previous comments were about finding the overlaps, and how we made sure that they did not cost people money in one area, but found those costs in other areas. That is the main point of the review, and I have asked my hon. Friend the Under-Secretary to make sure that that is the case. The Bill covers that, and I hope that most people will see that it is quite reasonable to try to recognise what that figure is.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I shall try to make progress, if hon. Members do not mind, because I have given way quite a lot on that subject.

Before the introduction of the universal credit we will introduce many of the changes to conditionality and sanctions that I discussed. Claimants, I hope, on that principle will accept the claimant commitment, as they will be subject to tougher regimes that are fair and reasonable. Turning to other benefit changes, we are making changes to the income support regime for lone parents before the introduction of universal credit. Lone parents who can work will be expected to claim jobseeker’s allowance when their youngest child reaches the age of five. We want as many people as possible to get help to engage with the labour market, and we know that about 80% of all lone parents are working or would like to work.

There will continue to be safeguards to allow parents to fit their job-search requirements with their caring responsibilities and child care availability. There are other relevant changes, too, and I accept that there have been concerns about them. I would be interested to learn the Opposition’s position on that. We are making changes to contributory employment and support allowance, time-limiting receipt to one year for those in the work-related activity group. There will be no change for those in the support group, as we have made clear, and people claiming income-related employment and support allowance will be unaffected.

I note the comments that have been made by the right hon. Member for Birmingham, Hodge Hill, who accepted, in his speech to the Institute for Public Policy Research, that time-limiting ESA is the right thing to do, but disagreed about the period—in this case, a year, whereas he was talking about two years. However, that is not clear in the amendment to the motion, so I wonder whether he could clarify the position. The amendment opposes the limit altogether, rather than the number of years. I would happy to accept an intervention from the right hon. Gentleman if he wished to clarify the position. [Interruption.] He will cover it in his speech—very good. I hope that we will understand that, as principles and practicalities need to come together.

I would point out to the right hon. Gentleman and to everyone else that the one-year limit is twice as long as that currently in place for jobseeker’s allowance. There has been discussion of people undergoing cancer treatment and others. That is best dealt with under the ESA regime and reviews, so that we can decide which groups are relevant, and which not, as we have done with some cancer patients undergoing chemotherapy. They have been taken out of that provision because they are in the support group. Professor Harrington’s review is the best way of doing that. We have established the principle of receipt for a year, and the rest is about the details of the conditions that best apply, and that can be dealt with in the Harrington review.

That best reflects the different nature of ESA and the different needs of those who claim it. However, we simply cannot pay those benefits indefinitely. I wonder whether that would have been the previous Government’s position if they had undertaken further reviews. For limited contributions under ESA, it would have been feasible for someone to receive ESA for their rest of their life. That was one of the big issues that we had to tackle.

[Sheila Gilmore]

rose—

[Mr Duncan Smith]

I will give way to the hon. Lady, because she has been persistent.

[Sheila Gilmore]

I thank the Secretary of State for giving way. ESA is not given indefinitely, because there are constant assessments and reassessments. I have constituents who have been reassessed twice in the past two years and who are due for another assessment. It is not true that someone who receives contributory ESA will receive it for ever without assessment. The assessment process should cover that, without an arbitrary cut-off date.

[Mr Duncan Smith]

I remind the hon. Lady that in the support group, the contributory element does not apply. It applies to people with finances that take them above the line. The income-based measure continues—that is not the issue. The issue is whether we think that people who have contributed for a certain time have the right to contribution-based benefit, regardless of their income, for a period of time. That is the debate. The income-based measure is exactly the same—it is not going to change, so that meets the hon. Lady’s concerns.

[Sheila Gilmore]

rose—

[Mr Duncan Smith]

I think that I have dealt with that.

There are other changes, including the consumer prices index uprating, in the Bill. We must get to grips with the housing benefit system, which ran out of control under the previous Government. I have a deep suspicion that they knew that before they called the election, and I sense that there were big differences about whether they would do something about this. Over the past 10 years, overall spending on housing benefit has almost doubled from £11 billion to £21 billion, which is a huge increase. I accept some of the arguments about the reasons for that—the fact, for example, that house building fell to a record low, and more and more people had to be moved into the social rented sector—but the reality under the local housing allowance regime was that we lost control of spending. We have therefore introduced a number of changes to the local housing allowance, including a move to annual uprating in line with CPI. Restricting uprating should enable us to keep downward pressure on rents. Only if an increase in local market rents exceeds the annual rate of CPI will the restriction apply. That will also be an important step towards the integration of housing support with the universal credit.

We accept that those changes will not be easy for some people, which is why we want to provide a great deal of transitional protection. Essentially, we have put up a total of about £190 million to smooth the transition to those measures for those who are most likely to be deeply affected. That includes £130 million in discretionary housing payments, £50 million to assist people with housing advice and removal costs and £10 million for homelessness prevention, particularly in London. That, coupled with the other changes that we have already made through regulations, where we are looking at making direct payments to those who are able to lower their rents and at delaying the point at which the measure comes in by some nine months, was a product of listening to people’s main concerns and trying to ensure that what we bring in is doable and manageable by councils.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

On the right hon. Gentleman’s point about housing benefits, what discussions has his Department had with housing associations and their lenders about the disaggregation of housing benefit under the universal credit and the direct payment to housing associations? They are deeply worried that, without that direct payment capacity across the piece, arrears will rise and lenders will become more nervous.

[Mr Duncan Smith]

We have had, and continue to have, those discussions, and I understand the concern. There is a debate, on both sides of the argument, about whether we basically continue with the principle that we should pay people and deal with certain elements of what they receive because they are not capable of doing so themselves, or whether we try to get people to the point where they are capable of managing their own money more and more. I recognise from the hon. Lady’s intervention that, on this matter, there is no absolute, but there is at least a debate on both sides, and that is simply where we are at the moment—trying to discuss the issue with those who feel that they would be most affected.

[Mr Stewart Jackson (Peterborough) (Con)]

Was it not a moral catastrophe and economic madness when, under the previous Labour Government, registered social landlords had no incentive to tackle welfare dependency, because their main funding stream was housing benefit? Under this Bill, registered providers will have an opportunity to tackle welfare dependency among their tenants.

[Mr Duncan Smith]

What we want from the Bill is to encourage people to get involved in the process—to help people to use it as part of the incentive of trying to make the right decisions about taking work and providing for their families.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Will the right hon. Gentleman consider the example of a married couple who are at work and have five children from previous marriages, but then lose their jobs because, for instance, they work for the local council? Because they have five children, they would get almost £500 of personal allowance and £200 of housing benefit, taking them over the £500 cap. Rationally, they might choose, because of the £500 cap, to split up their family so that there are three children and two children in two houses, each with £250 of personal allowance and £200 of housing benefit, making a global total of £900, when it would have been £700. Surely his policies of breaking up families and making demands for more and more social housing, alongside making people unemployed, do not add up to fairness or competence.

[Mr Duncan Smith]

I understand the hon. Gentleman’s point and can, I hope, assure him that as the Bill progresses, and as he will see as we reach Committee, our objective is to recognise that unemployment, for those who fall unemployed, is probably a temporary condition. He will understand that point more as we get into the detail, but trying to find some way of protecting such people through that process is critical to us, as the vast majority will be back in work within a set period: 90% of people will be back in work within a year. Most people will get through that process, and it is for us to ensure that the transition is met and dealt with, but I think that he will be very happy in due course to hear what we propose.

[Charlie Elphicke (Dover) (Con)]

Will my right hon. Friend give way?

[Mr Duncan Smith]

I am going to make a little progress, because I am conscious that we have a limit. Mr Speaker is looking at me benignly, but he might not look so benignly shortly.

It is time for fundamental reform of the social fund, which is poorly targeted and open to abuse. Some 17,000 people have received 10 or more crisis loans in the past 12 months, and we have already taken steps to limit the number of crisis loans for living expenses to three in a 12-month period. Those are important steps, because the fund has been somewhat out of control and is complex. The Bill will then pave the way for local authorities in England to deliver a system of assistance that should replace the community care grants and some crisis loan provision. This is a complex area, and many will know more about it than I do, but the key point is that we are trying—

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

In a second. I think that the hon. Member for Bolton South East (Yasmin Qureshi) was slightly before the hon. Lady.

The key thing that we are trying to do is to give local authorities an element of control over some of the process, including in particular what I call the crisis loans short-term element—the hiatus moment in the payments,—and some of the community care grants. The point is that, when the fund became only distantly linked to the Department, the telephone concept behind it allowed people to push up the number of claims, because they were not seen or understood, so their cases were not properly known and it was very difficult to decide whether they were true or false. Local areas will be far better able to recognise who such people are, what conditions they are in and what circumstances apply to them. Therefore, localising the process will be very important. Of course, huge swathes of it will remain centralised, but we feel that those two elements in particular will most respond to localisation.

[Yasmin Qureshi (Bolton South East) (Lab)]

I understand the Minister’s explanation of the social fund, but a linked point is that thousands of young children currently receive a free school meal, the only hot meal that most of them get, and that some people also receive free prescriptions. Can the Secretary of State assure us that those who receive free prescriptions and free school meals will continue to do so?

[Mr Duncan Smith]

That is exactly what we plan to do, but, because of the universal credit, we will have to be a little more specific, and we will be so in Committee. We are still looking at the best approach to take, but that is exactly what we plan to do. We do not want—the purpose is not—to disadvantage anybody who receives such support, but, because of the way the universal credit works, we will have to think through carefully how we achieve that. The principle behind the measure will remain that we want to support those who are in difficulty and receive support as it stands.

[Mr Slaughter]

Will the Secretary of State give way?

[Mr Duncan Smith]

I think that the hon. Member for Banff and Buchan (Dr Whiteford) was before the hon. Gentleman, and he has had a shot.

[Dr Whiteford]

Returning to crisis loans, my greatest concern is that people who go for them will not be able to buy essential items such as cookers and beds. That will push them straight into the arms of loan sharks and other high-cost lenders, and that issue has been overlooked. I also question the view that the increase in the uptake of such loans has not been down to the recession and the hardship that people have faced.

[Mr Duncan Smith]

The answer to the hon. Lady’s question is that budgeting loans will still be available for those cases. On the second question that she raises about crisis loans being down to the recession, the trend of upward claiming was on track and had started long before the recession.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

With the telephones.

[Mr Duncan Smith]

My hon. Friend has made that point to me again and again. The key problem resulted from the changes that were made to dislocate much of the process from people—face to face—who knew what was going on in their communities. I think—I hope—this Bill will change that, because local communities will now be able to determine how best to deliver that critical service, and they will be closer, I hope, to people who need it. That is the principle behind it, and I hope the House recognises that.

The remaining discretionary elements of the social fund, as I indicated earlier, will stay in the wider benefit system, and we will introduce payments on account to replace alignment payments and the interim payments of benefit when crisis loans are abolished, a point that my hon. Friend the Minister has also made on several occasions. We will extend the provision of budgeting loans so that they are available to help people, as I said to the hon. Lady just now.

On disability living allowance, the personal independence payment and the changes to and reforms of them, I believe—and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke, in her consultations, has by and large obtained widespread agreement—that we need to start reforming disability living allowance. I think most people accept that the system we inherited does not deliver for some of those in genuine need, particularly given its confusing nature. Disabled people often tell us that the claims process is incredibly complicated and decisions are not consistent. We need to sort that out.

Many people—a significant number—still wrongly believe that DLA is an out-of-work benefit, so, as people said on several occasions during the consultation, “Being in receipt of DLA is a reason why you wouldn’t want to be getting involved with work; you might lose your DLA.” Such confusion is absurd, because that is not the case, so we need to sort the issue out, and I hope people recognise that it is important.

About 50% of those currently receiving DLA did not have to provide any additional evidence to support their original claim, and more than two thirds of current recipients have an indefinite award. That means basically that no one is ever going to see them again, yet their condition may change; it may worsen or it may get better. That is why we propose to replace DLA with a new system—the personal independence payment, or PIP. This benefit will be awarded on the basis of a more objective assessment of individual need; that assessment is vital. The money will continue to be paid to people in and out of work, and it will not be means-tested. I want to be clear that we do not intend to take away the mobility of people in residential care. As I explained earlier, this is about overlapping payments. The review will cover all that. The key thing is reform.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

There is a great deal of uncertainty about how children might be affected by the reforms to DLA. Is the Secretary of State proposing further consultation? Is there any information that he can give about future processes regarding children?

[Mr Duncan Smith]

We are consulting on that. However, this is going to be done later on, so we will have plenty of time to hear many more representations concerning children before we make any decisions. My hon. Friend the Under-Secretary is already talking to various groups about this particular issue.

[Jim Shannon (Strangford) (DUP)]

In relation to the indefinite awards, there is already a system in Northern Ireland whereby people have periodic checks, and I am sure that Northern Ireland is no different from the rest of the United Kingdom. If there is already a system of regular checks in place, why change that?

[Mr Duncan Smith]

Because it does not apply to everybody; it is very patchy. The honest truth is that no award we make should say to people, as has happened too often in the past: “You are in receipt of a particular benefit and we don’t want ever to see you again.” If the hon. Gentleman is arguing, as I think he is, that it is right to see people, surely we should be arguing that it is right to see them all to ensure that when their condition changes, that is met. That is surely fair both to them and to the taxpayer.

[Mr Tom Clarke]

Despite the right hon. Gentleman’s assurances, I ask him to look again clause 83(2), which says:

“The condition is that the person is an in-patient of a hospital or similar institution, or a resident of a care home, in circumstances in which any of the costs of any qualifying services provided for the person are borne out of public or local funds by virtue of a specified enactment.”

That is absolutely clear, but, with great respect, it is not what he is telling us.

[Mr Duncan Smith]

I am afraid that I do not agree with the right hon. Gentleman, because that is exactly what I was saying. The provisions gives us the opportunity to do just that; it does not specify what we do, but it tells us that this is what we are going to be doing. We are looking at all this because, in our view, we need to come forward with an amount that is relevant to the mobility that is necessary for people in care homes.

[Mrs Anne McGuire (Stirling) (Lab)]

The Secretary of State is playing with words. The hon. Member for Strangford (Jim Shannon) is right. Although reference is made to an indefinite award, these awards have always been liable to review. If someone has an irrecoverable disability such as permanent blindness, what is the value in regular reviews to assess whether they are still entitled to DLA or the PIP?

[Mr Duncan Smith]

As I said to the hon. Member for Strangford (Jim Shannon), it is assumed straight away that this is a terribly intrusive process, but in reality what goes on is patchy. For many people, their condition may well have worsened. Do we simply want to say that we should not speak to them or see them, and that it is therefore left up to the vagaries of the system? It is not built into the system that they will be seen.

[Mrs McGuire]

rose—

[Mr Duncan Smith]

Wait a minute. The right hon. Lady has made a point and I am trying to respond to it. As this is not built into the present system, it is left to decision making, which can be very ad hoc, about who someone sees and when they see them. All I am saying is that if we believe it is right to see people, we may then be seeing somebody whose condition has worsened, and surely that is an advantage.

[Mrs McGuire]

rose—

[Mr Duncan Smith]

I am going to press on, because I think that I have dealt with the right hon. Lady’s point. She may not agree with me, but I think that this is the right position for us to take.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

This is an extremely important point. Is the Secretary of State saying that someone who is deaf-blind will be recalled for regular checks under the regime that he is aspiring to put in place—yes or no?

[Mr Duncan Smith]

The detail of how that works will be looked at during the passage of the Bill. My point is that built into this should be the requirement that it is necessary to see people. There is the question of who and what conditions we can look at specifically, but it should be right that it is bound into the system that we are going to look at people. In some cases, it may be entirely self-evident that the individual’s condition has not changed and there is not much to be done; in other cases, an assessment may be required because their condition has changed quite fundamentally. I do not understand why the need to see somebody who may be in receipt of a benefit should be such an issue for people. It should not be worrying; it is part of a process. [Interruption.] Before right hon. and hon. Members object to that change, they need to ask themselves what they would say to those people whose conditions have changed for the worse and who are confused and never make it back to make a proper claim. This is a debate that we can and will have.

[Mr Byrne]

rose—

[Mr Duncan Smith]

I think, with respect to the right hon. Gentleman, that I have dealt with this point, and I am going to make some progress. [Interruption.] Oh, go on then.

[Mr Byrne]

I am genuinely trying to be helpful to the Secretary of State. He says that his Bill is incomplete and that he has not been able to furnish the House with full details on how the powers that he seeks from us will be put into practice. Will he consider exempting people with certain kinds of conditions from the need to go back to go through check after check?

[Mr Duncan Smith]

I say to the right hon. Gentleman, despite his best intentions, that the mess that the previous Government got into over incapacity benefit—[Interruption.] It is all very well for Labour Members to sit in opposition and pretend that nothing went wrong under the previous Government. We are picking up an incapacity benefit system in which they left people parked, never seen by anybody for years and years. All we are putting into the Bill is the requirement that people be seen to check on their condition. That has to be in their interests, and it is not in any way a problem that it should happen. Of course, if the right hon. Gentleman wants to try to make amendments as the Bill goes through Committee, we will always be happy to debate those and listen to him. My point is simply this: it is right to see people, and wrong to leave them parked for ever on set benefits. Seeing them is more humane than inhumane, and that balance is the way that we should go.

As we introduce our new welfare system, we will have to take steps to clamp down on benefit fraud, as Opposition Members know. The system that we have is inefficient and too often ineffective. Despite significant overlaps between benefit and tax credit frauds, fraudsters are subject to different treatment in their cases as they are handled by different groups—DWP, Her Majesty’s Revenue and Customs or even a local authority. The mess and overlap is enormous. The Bill introduces powers enabling a new single fraud investigation service to investigate and prosecute all cases of benefit and tax credit fraud. I hope that the House supports that process. We will ensure that anyone found committing lower-level fraud will face a tough minimum fine as an alternative to prosecution. For all other fraudsters, we will seek prosecution whenever we can. We need to ensure that fraudsters get the message that repeated criminal behaviour will not be tolerated, so those found to have committed fraud may face losing their benefit for certain periods; I have already dealt with the detail of the timings.

I simply say to the House, because this was raised in the Select Committee, that I am absolutely clear that not every problem with overpayment or difficulties with those payments was down to fraud. I fully accept that with the complexity of the system, officials made mistakes and that we were often too ready to badge people as fraudsters when in fact they were not necessarily fraudsters but caught up in a system that left them confused and perhaps not making the right or necessary level of statements to the authorities. This process is about separating those people out. A recent trial of a changed reconsideration process at Jobcentre Plus led to a fall of some 15% in the number of appeals being heard. The general view is that process will be sustainable and will work.

We are also changing child maintenance. Much of the current system is designed to drive people into acrimonious disputes during family breakdown. We should all agree that we want to take the heat out of such situations, as far as we can. That is why we are reforming the system and introducing a gateway to the statutory scheme so that parents consider making their own arrangements. We will offer parents a calculation-only service to make it easier for them to make their own arrangements. Of course, if they choose to take matters further, they can.

We are introducing measures to allow non-resident parents to pay through Maintenance Direct when the case is within a statutory scheme. That will provide further flexibility for parents. We need to keep the burden of the cost of collection under control. In 2009-10, the cost of collecting every pound was more than 40p. However, should the non-resident parent fail to pay in full or on time, we will move the case swiftly into the collection service and take enforcement action where necessary.

[Sheila Gilmore]

Why was it necessary to introduce provisions in the Bill before the consultation process has concluded? The consultation process on this matter is due to conclude on 3 April. Because the conditions have been published in the Bill, rather than being legislated on later, many people feel that the Government’s mind is set in stone.

[Mr Duncan Smith]

The measures in the Bill set the framework for the details. We will obviously work through the details in time for the Committee stage. It is reasonable to do that. The Bill does not set out the detailed prescriptions, as is right. I do not agree that the process is wrong.

In conclusion, the Bill is not just about balancing budgets, although that is part of the process. It is also about transforming lives and moving people—hopefully—from the entrapment and tyranny of doubt and dependency, to some kind of opportunity, enterprise and change to their lives that they can make themselves, through assistance and support. Surely it is our duty together to ensure that no one is written off, discarded or left behind. I believe that that is what the Bill will achieve. Notwithstanding criticisms and individual issues, I hope that the House will recognise that the purpose of the Bill is positive, and that it will transform the lives that we seek to transform.

13:42

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, whilst affirming its belief in the principle of simplifying the benefits system and good work incentives, declines to give a Second Reading to the Welfare Reform Bill because the proposal of the Universal Credit as it stands creates uncertainty for thousands of people in the United Kingdom; because the Bill fails to clarify what level of childcare support will be available for parents following the abolition of the tax credit system; because the Bill penalises savers who will be barred from the Universal Credit; because the Bill disadvantages people suffering from cancer or mental illness due to the withdrawal of contributory Employment Support Allowance; because the Bill contains no safeguards to mothers in receipt of childcare support; because it proposes to withdraw the mobility component of Disability Living Allowance from people in residential care and fails to provide sufficient safeguards for future and necessary reform; because it provides no safeguards for those losing Housing Benefit or appropriate checks on the Secretary of State’s powers; because it fails to clarify how Council Tax Benefit will be incorporated in the Universal Credit system; because it fails to determine how recipients of free school meals and beneficiaries of Social Fund loans will be treated; and because the proposals act as a disincentive for the self-employed who wish to start up a business; and is strongly of the opinion that the publication of such a Bill should have been preceded by both fuller consultation and pre-legislative scrutiny of a draft Bill.”

I start with a word of thanks to the Secretary of State for meeting me and my right hon. Friend the Member for East Ham (Stephen Timms) a week or so ago to discuss the Bill. As I said to him then, we genuinely want to approach the vital question of welfare reform in a spirit of national consensus. We believe that if we can forge such a consensus it will be good for our country, it will reduce the deficit and, crucially, as he said before he sat down, it will be good for the fight against poverty in this country. We have been forced to table the amendment to oppose the Bill because it fails such fundamental tests that we believe the Government should go away and bring back a better Bill that will deliver genuine and lasting welfare reform.

We could begin to forge that national consensus by drawing the right lessons from the past 13 years. The Secretary of State presented his view, but elided one or two prominent features of the past 13 years, such as the fact that the number of people on out-of-work benefits before the depression came down by 1 million and the fact that the claimant count halved. We did not once, let alone twice, see unemployment go through the 3 million mark. We can draw important lessons for this debate from that period, the first of which is that if the Secretary of State wants welfare to work to work, we need more jobs. Labour consistently put that approach in place.

The Secretary of State said to his spring conference at the weekend—

[Mr Duncan Smith]

You were listening?

[Mr Byrne]

I not only listened carefully, but checked the transcript because I could not believe what the Secretary of State said:

“It’s not the absence of jobs that’s the problem.”

Given that five people are chasing every vacancy in this country and that 120 Members of this House have more than 10 people chasing every vacancy in their constituencies, the absence of jobs is very much a problem at the heart of his welfare reform programme.

[Mr Duncan Smith]

Does the right hon. Gentleman recall that I also said that notwithstanding the period of growth and the number of jobs created, more than half the jobs created by the Government did not go to British nationals sitting on unemployment benefit?

[Mr Byrne]

The employment rate under the Labour Government reached a record high and there were 64 quarters of consistent economic growth. The idea that welfare to work can work when the number of jobs is not growing is frankly laughable. There is an important lesson that we must draw from the past to get welfare reform right.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

rose—

[Mr Byrne]

I want to move on to a second lesson before I give way.

When we brought laws to this House to set new obligations for people to work, we ensured that set alongside them were new opportunities to work. We also brought determination and care to the business of legislation. In the Bill, there is determined carelessness.

[Mr Heald]

Is the right hon. Gentleman seriously saying that at a time when it is more difficult on the jobs front we should not make the effort to help people off welfare and into work? If people are capable of working, they should get help. That is what this Bill does. Should we sit on our hands and say that all is hopeless?

[Mr Byrne]

That was an extraordinary contribution. Of course we believe that extra help—for example, the future jobs fund, which the hon. Gentleman’s party closed down—should be given to get people back to work.

In looking at this Bill over the past few weeks, I could not but remember Lord Birkenhead’s description of Baldwin’s method of Government:

“He takes a leap in the dark, looks around, and takes another.”

That is the approach that this ramshackle Bill proposes for millions of people in our country—a leap in the dark. I hope that we can begin to sort out, as is appropriate on Second Reading, where the Government have got their principles right—some of their principles are right—and where they have got them wrong. The Secretary of State says he wants to set a new course. The problem is that we are not quite sure where it will lead.

[Mr Slaughter]

Did my right hon. Friend notice that almost every time the Secretary of State was asked a question on free school meals, housing benefit or disability living allowance, his answer was, “I’ll get back to you.” There are no answers to those points. I have here a few of the letters from my worried constituents, just on disability living allowance. Thousands or millions of people are worried that they will not be able to make ends meet, and the Secretary of State has no answers.

[Mr Byrne]

The purpose of this House, when it gives new powers to the Executive, is to have at least some idea of what they will do with them. I hope that a bit of enlightenment will come from this debate, but we have not heard much yet.

[Charlie Elphicke]

I take issue with the right hon. Gentleman’s statement that the Bill is a leap in the dark. We know that 5 million people of working age could work but do not. We know from December’s labour market report by the Office for National Statistics that 1.2 million of the people who took the jobs that were created came from overseas. We need to get our 5 million countrymen who are out of work back into work. Surely that is the priority.

[Mr Byrne]

Will the hon. Gentleman intervene again and tell me how many of his constituents are chasing each vacancy?

[Charlie Elphicke]

Of course there are quite a few people chasing each vacancy. As the right hon. Gentleman knows, the issue is not with this Government but with the mess left by the previous Government. This Government are trying to grow the economy and make Britain great again.

[Mr Byrne]

I am grateful for that observation. I say gently that, with five people chasing every job in the economy, if we are serious about getting people back into work—I think that the Government do want to do the right thing—we have to do more to create more jobs. We can pass laws and put in place extra help for unemployed people, but there must also be an economic policy that creates more jobs to absorb the very deep public sector job cuts that we know are coming down the line.

[Geraint Davies]

Does my right hon. Friend accept that the deficit was the price paid to avoid a depression caused by the bankers, and that the best way to get rid of it is to focus on economic growth, make bankers pay their fair share and make sensible savings over time, not to make the poorest pay the most while the richest are lavished with massive bonuses, which is what the Bill is about?

[Mr Byrne]

I will avoid getting into an extended debate about macro-economic policy, although I would happily discuss it all afternoon, but my hon. Friend is right. Under our approach, despite the fact that we faced the worst global crash since the 1930s, unemployment did not go beyond 3 million, as it did not once but twice under the Conservative Administration.

[Mr Evennett]

We are listening to the right hon. Gentleman with great interest, but is he not ashamed that although his party was in power for 13 years it failed to make work pay and that the UK now has one of the EU’s highest rates of children living in workless households? Is that not a disgrace?

[Mr Byrne]

I would do no more than encourage the hon. Gentleman to look at the analysis of his noble Friend Lord Freud, who examined our work to get people back to work and remarked on how fast the number of people on out-of-work benefits had fallen. He examined the number of children lifted out of poverty and said that our record was truly remarkable.

[Mr Stewart Jackson]

I fear that the right hon. Gentleman is going through the motions. He was a gifted and talented Chief Secretary to the Treasury, and I do not think he truly believes what he is saying. Will he at least concede that people who are no friends of the Conservative party, such as the Scottish TUC, have said that worklessness was exacerbated by the decision to import millions of low-skilled, low-wage workers from eastern Europe, which drove down wages and conditions and made it much more difficult for indigenous British workers to secure jobs and get off welfare dependency?

[Mr Byrne]

I do not think I should veer into a debate about immigration this afternoon, because you, Mr Deputy Speaker, would quickly call me to order. I would, however, make the point that, after consistent economic growth, employment went up, the number of people on out-of-work benefits came down and the number of people lifted out of poverty, including pensioners and children, was at a record high. The Government can learn something from that record.

Of course, that has to be put alongside the right legislation to encourage people back to work, which is where I fear the Bill will fall short, for a very simple reason. It fails the basic tests of whether it fosters ambition and whether it reinforces and consolidates our obligations to each other. Fostering ambition and nurturing compassion are the basic tests of welfare reform, and I am afraid the Bill fails both.

[John McDonnell (Hayes and Harlington) (Lab)]

I oppose the Bill, and given any opportunity I will vote against it.

As my hon. Friend the Member for Hammersmith (Mr Slaughter) said, the Government’s response to every representation that has been made by external organisations or today in the House has been, “These matters will be dealt with in regulations”. Attached to the Bill is a quantity of regulations that we have not seen before with a Bill of such stature. May I suggest that my right hon. Friend link up with the Secretary of State to discuss the procedure to be followed after Committee and before Report, so that the bulk of the regulations are published in time for us and others to consider them before our final debates on the Bill?

[Mr Byrne]

That is an extremely sensible proposal, and perhaps the Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling), will reflect on it in his winding-up speech. It is important for the other place to be involved in discussions, too, to ensure that the Bill leaves this House in better shape.

[Mr David Lammy (Tottenham) (Lab)]

May I align myself with what my hon. Friend the Member for Hayes and Harlington (John McDonnell) just said?

Will my right hon. Friend put on record the fact that words that we used to use in the Chamber—equality and non-discrimination—must exist for people in the work force with disabilities and from ethnic minorities at a time when there are few vacancies? I think in particular of Haringey Phoenix Group, which represents blind people, whose representatives came to see me in my constituency.

[Mr Byrne]

That is a challenge that I know well, representing the constituency that I do. I will say a little more later about the challenges and the reforms that are needed on disability living allowance.

There are some principles in the Bill that we support. The principle of universal credit builds on the changes that we made to ensure that work pays, and we welcome some of the proposed reforms to the claimant commitment. We certainly welcome tougher and tougher measures on fraud, but the basic truth, which many hon. Members have rehearsed this afternoon, is that the Bill is not a pamphlet. It is not about theory; it is about practice. It is therefore important that we consider whether it will foster ambition and strengthen compassion in a number of important areas. I start with child care, with which the Secretary of State started.

For millions of families in this country, and especially for women, the truth is that extra help with child care is needed if they are to get back to work. Many families in our country receiving a combination of housing benefit, council tax benefit and child tax credit have up to 97% of their child care costs supported. The Secretary of State said today that he wants that budget to be frozen, which at least shows some progress, but he also confirmed that the number of people who will have a claim on that budget will grow. That of course means that some people will get less help with their child care than before. What we have not learned this afternoon is what that will really mean for people.

My hon. Friend the Member for Stockton North (Alex Cunningham) asked the Secretary of State a very straight question on 9 February: had he decided which child care option he would propose? “Not exactly, no,” said the Secretary of State.

“Can you give us a clue?”,

my hon. Friend persisted, gamely.

“I will give you a clue when we are a bit closer to the finalised detail”,

said the Secretary of State. Now, the right hon. Gentleman is asking for powers to end child tax credit. I am not sure how much more finality one could want, but there are still no answers other than the comment that the Government are still consulting. We hear rumours that for some people the cover for their child care costs will be reduced to 70%—a gigantic new bill for many families that could prevent people from getting back to work. Helen Dent, chief executive of Family Action, has said:

“The possible reduction in help with childcare costs could mean that many parents might end up being worse off under universal credit”.

I say today, on behalf of the 486,000 families who get child care help from the Government, that they need to know more.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I absolutely agree with my right hon. Friend, but is there not a further black hole in the Government’s proposals, which is the failure to acknowledge regional variations? The cost of child care in London, for example, is massively higher than it might be in another metropolitan area of the country. The Bill reflects that lack of definition and flexibility and a complete ignoring of regional variations.

[Mr Byrne]

My hon. Friend is right, and I am afraid it gets worse. The Secretary of State has made much of his effort to reduce the disincentive to work, which we genuinely welcome, but, like me, he will have noticed that earnings are now growing at about half the rate of prices. He will also doubtless have noticed that once people begin to earn £43,400, they will lose their child benefit, which is worth several thousand pounds a year. That all puts pressure on second earners to go out to work, so the question must therefore be what marginal deduction rates will confront those second earners. The answer is not easy to find, but it is buried away in paragraph 69 of the impact assessment. Having read it, I am not surprised that the Government did not put it up in spotlights, because it states that twice as many earners will see their marginal deduction rates go up than will see them go down. Who is most likely to be hit? It will be couples with children, whose median deduction rates will go up.

That is what we do know, but what is worse is what we do not know. We do not know what will happen to those entitled to free school meals; what will happen to free prescriptions; which working families will be exempt from the benefits cap; or how unearned income such as widow’s benefit or child maintenance will be treated. We do not know about sick pay or maternity pay, and we have no idea how on earth council tax benefit will work. As the House knows, the council tax benefit system is going local, but the rules on universal credit are to remain national. The Secretary of State for Communities and Local Government, who likes to be straightforward with the House, boldly asserted on 17 February that he was in charge of drawing up the new rules on council tax benefit, but surely the final word must come from the Work and Pensions Secretary. Once again, there is total confusion. The questions for families are stacking up, and there are no answers to any of them. That is the story for families.

[Grahame M. Morris (Easington) (Lab)]

Would my right hon. Friend care to comment on reports in today’s papers that representatives of 30 cancer charities have written to the Secretary of State expressing concern about people who are recovering from cancer? Specifically, they are likely to lose their employment and support allowance after a year, but 75% of them or not in a position to return to work after a year.

[Mr Byrne]

That is deeply concerning, and I will dwell on it in a moment.

[George Hollingbery (Meon Valley) (Con)]

The right hon. Gentleman makes a persuasive case on the detail—clearly a lot of it remains to be found, but this is a confusing and complex matter. Will he admit that the current system is unsustainably complicated? There are 8,600 pages of guidance on benefits administration at the DWP and 2,000 pages for local government, and there are 30 different benefits to administer. Change is required. If we have a framework and consult widely, we will have a better system.

[Mr Byrne]

The Opposition want welfare reform that sticks. When so many details are unclear, the danger is that the Bill will unravel progressively as it comes into effect.

We have discussed whether the Bill passes the test of fostering ambition for families and have shown that a great number of questions remain unanswered. Let us now consider savers. All hon. Members want to nurture the ambition to save. The amount that people must save for a deposit for a house is heaven knows how much, but now that tuition fees have been trebled, more families have to save harder to get their young people into college. One might have thought, therefore, that the Government would provide more incentives to foster the ambition to save, but the noble Lord Freud told the House of Lords that

“the £16,000 savings threshold would extend to all households eligible for universal credit.”—[Official Report, House of Lords, 15 December 2010; Vol. 723, c. WA204.]

There we have it. The Government are so keen to foster the ambition to save that once someone has £16,000 in the bank—the price of two and a half years at university—their tax and in-work benefits are taken away.

[Mr Duncan Smith]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will give way in a moment, but first I want to tell the House what James Browne of the Institute for Fiscal Studies said:

“This is a much harsher treatment of capital than we have in the tax credit system.”

Will the Secretary of State tell us how that measure rewards savers?

[Mr Duncan Smith]

May I remind the right hon. Gentleman that his system became completely absurd, because it allowed people with huge savings and income to claim benefits? The previous Government’s system supported not the bottom two or three deciles but people further up the income scale. That is one reason so few people from the bottom income deciles got back into work, and why poverty was so high.

[Mr Byrne]

Does the Secretary of State accept that, on current figures, taking away the in-work benefits of people who have £16,000 in the bank would mean 400,000 families with children losing benefits? Surely that is not a good way of fostering the ambition to save.

[Mr Duncan Smith]

The right hon. Gentleman’s figures are incorrect. When universal credit comes in, the figure is more than likely to be no higher than about 100,000—[Interruption.] Wait a minute. I know where the right hon. Gentleman gets his figures from. Those 100,000, of course, will be transitionally protected, so they will not lose.

[Mr Byrne]

The Secretary of State can say that only because he is taking tax credits from so many families over the next two or three years. He has not given a guarantee for future savers. What will happen to their incentive to save under his new system?

[Mr Duncan Smith]

Will the right hon. Gentleman give way, because he needs to answer my question?

[Mr Byrne]

The Secretary of State needs to answer my question. The Minister of State told my right hon. Friend the Member for East Ham that getting rid of the savings cap would cost only £70 million. Will the Secretary of State therefore look again? He must recognise, as I do, that he is currently not fostering the ambition to save for hundreds of thousands of people.

[Mr Duncan Smith]

I completely disagree with the right hon. Gentleman on that, but I want to challenge him to give an answer to taxpayers, who ask whether the welfare system is about supporting people who are most in need, or whether it is about casting money wider and wider to people who can support themselves in particular periods. How much more money does he really want to spend?

[Mr Byrne]

I am afraid that the Secretary of State has still not provided an answer to my question—he still cannot tell us how he will encourage people to save. Tuition fees have trebled, and people in my constituency are asking, “How on earth do we encourage our young people to go to college, and how on earth can we afford to get our young people into university?”—[Interruption.] I know the Secretary of State does not have those challenges to face, but thousands of people in our constituencies need to save to get their kids to university. The regime that he is proposing will strip in-work benefits from them, kicking the ladder away from aspiration in our country.

[Angie Bray (Ealing Central and Acton) (Con)]

Surely the right hon. Gentleman must recognise that tuition fees are not payable until such time as people come out of university and earn a salary of £21,000 or more. His argument is a red herring.

[Mr Byrne]

I do not know what the hon. Lady’s constituents are saying to her, but many in my constituency live in fear of debt—they want not to burden their children with debt, but for them to get a first-class education, so that they can contribute to the future of our country.

The wider point that is emerging is that we do not know enough about how the Bill affects families and savers, but there is also a question over how it will affect the self-employed. Over the last few weeks, we have heard a great deal of pitch-rolling from the Chancellor and the Prime Minister, who are now worried about the damage that their last Budget did to our economy. All of us hope that the Chancellor can upgrade his growth forecast at the forthcoming Budget after doing so well over the last year, and the Prime Minister is now promising that his next Budget will be the most pro-growth Budget in the universe. He told his spring conference:

“At its beating heart this is still a party of start-ups, go-getters, risk-takers…We’re the party of practical men and women, people with a passion and a mission to build a business and see it grow...We are the party of enterprise.”

No doubt, then, the Bill is part of that plan—no doubt the Bill will make it simpler, easier and more encouraging for people in this country to start a business and to make that entrepreneurial leap. Well, my hon. Friend the Member for Stretford and Urmston (Kate Green) asked the Secretary of State about the self-employed on 9 February. To be fair to him, I think he recognises the problem. Surveying the position of the self-employed, he told her that

“we are conscious that that area is the slight blip in the system.”

This is what the blips in the system at the Federation of Small Businesses told me yesterday. Mike Cherry, the FSB national policy chairman, said:

“We are concerned that the Government has assumed that entrepreneurs with a new business will be paying themselves…and will therefore lose all benefits under the Universal Credit system…A measure such as this simply creates yet another barrier towards self-employment which is particularly unhelpful at a time when we are relying on the small business sector to grow the economy”.

So much for the party of enterprise.

[Mr Duncan Smith]

rose—

[Rehman Chishti (Gillingham and Rainham) (Con)]

rose—

[Mr Byrne]

I will give way to the hon. Gentleman.

[Rehman Chishti]

Considering that the right hon. Gentleman agrees that it is absolutely right and proper to support families, does he concede that the Labour party got that wrong because couples were paid to live apart?

[Mr Byrne]

I do not know whether the hon. Gentleman was in the Chamber when my hon. Friend the Member for Swansea West (Geraint Davies) spoke of the disincentives for families to stay together under the new regime, but if he wants to pretend that the Bill ends the couple penalty in the welfare system once and for all, perfectly and immaculately, I look forward to him setting out his argument.

[Mr Duncan Smith]

rose—

[Mr Byrne]

I think the Secretary of State wanted to say a word about the encouragement that he will provide for small businesses.

[Mr Duncan Smith]

The right hon. Gentleman raises the issue of the self-employed. I made this point to him privately and I will now make it publicly: they will fall within the universal credit. The point that I was referring to was how complicated and counter-intuitive the current systems have become, as he knows very well. We are seeking the best way to ensure that the right reporting structures are in place for those people, who will be inside the universal credit.

[Mr Byrne]

Perhaps the Secretary of State can tell the House this afternoon when those proposals will be ready for us to look at. [Interruption.] “In time for Committee,” he says from a sedentary position. We all look forward to seeing that.

It is now clear that for the self-employed, savers and families, this Bill at the very best poses more questions than it answers. The other question that the House has to ask the Secretary of State this afternoon is not about how we foster ambition, but about how we nurture compassion. How do we strengthen and reinforce our obligations to each other? That is something that we will hear a lot more about, when we talk about the reform of disability living allowance. What we know about the detailed reforms is not good. I welcome what the Secretary of State has said about the mobility component of DLA. I think that he has confirmed that he is withdrawing the proposal to cut £135 million from the mobility component of DLA. If that is true, it is welcome, because we are talking about a measure that the chief executive of Scope pronounced as “callous” and an

“assault on the most vulnerable”.

The rationale presented by the Minister of State has this morning been taken apart by 39 charities. I am afraid that I have to agree with the words of those campaigners who have said that

“many of these people”

—those in residential care—

“will be prevented from enjoying the freedom of movement that is taken for granted by people who are not disabled.”

Those are, of course, the words of the motion at the Liberal Democrats’ spring conference this weekend. I hope that together we may be able to prevail and get this measure dead and buried.

[Mr Tom Clarke]

On the crucial issue of the mobility component for people in residential accommodation, when my right hon. Friend put his question to the Secretary of State, I understood the Minister of State to be indicating dissent. Will my right hon. Friend give the Minister another opportunity to clarify this important issue?

[Mr Byrne]

I am grateful for my right hon. Friend’s suggestion. The Secretary of State has £135 million scored against the saving. I now invite him to intervene and say whether that saving is off the table, or whether the measure is going forward.

[Mr Duncan Smith]

The right hon. Gentleman knows very well, because we had this conversation privately. As I assured him, and as I assure him now, what we have done is roll the proposal into the personal independence plan. We are reviewing what is necessary. I said to him then, as I have said to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that what we are looking for is the amount necessary for people who are in residential care. That is the commitment that I have given. That is the exact fact, that is how it remains, and all other things will fit around that.

[Mr Byrne]

The argument that the Secretary of State has rehearsed this afternoon is that the Bill will give him the flexibility either to withdraw or to reform the proposal, but what he has not set out for the House is whether he will reduce the savings target of £135 million that has been scored by the Chancellor against the measure.

[Mr Duncan Smith]

I have just given an answer.

[Mr Byrne]

I therefore look forward to the Government reflecting on this debate and perhaps giving slightly more clarity when the Minister winds up.

More alarming for many people is the lack of any safeguards on what the Government have in mind for the future of DLA, especially as we know that the Chancellor is determined to take £1 billion off the bill and then ask what kind of reform will be necessary to deliver his sums. Not for him the subtleties of asking what kind of reform might make sense. This is what the Multiple Sclerosis Society had to say about the measure: “We share serious concerns”—[Interruption.] It is incredible that when such organisations present their arguments, those on the Government Front Bench would rather talk among themselves than listen to what they have to say. This is what the Multiple Sclerosis Society said:

“We share serious concerns with a large number of other disability organisations that the Bill in its current form could lead to those most in need losing out on the support they rely on”.

The Secretary of State’s own equality assessment says that 13% of disabled households could be entitled to less help under the new system. He has simply not provided assurances on that point. When my hon. Friend the Member for Stretford and Urmston asked him about that, he said:

“I am sorry to be cagey about this. It is simply because this will become very clear when we publish the Bill.”

Well, here is the Bill, but where are the answers to the question?

[Mr Duncan Smith]

I am interested in what the right hon. Gentleman is saying. He is going on about the review and the issues around disability living allowance, but I notice that the Opposition make no mention of that in their amendment. I notice also that both he and his leader have said that they support the reforms to disability living allowance, so perhaps he would like to make it clear: is he in support of them or not?

[Mr Byrne]

Everybody is in support of reforming disability living allowance, but we have not said that £1 billion should come off the bill and that we should then work out what kind of reform would deliver those numbers. The Secretary of State must realise that this is why millions of people up and down the country are so alarmed about the reform proposals being put in place. Now he—or, indeed, his Minister—has a chance to say that he will listen to campaign groups that are worried about the proposals, that he will listen to amendments and that he will try to put in place safeguards to ensure that DLA reform is done in the right way. Yes, we should reform DLA, but we should not abolish it.

[Charlie Elphicke]

Would not one key reform be to ensure that those claiming the allowance are seen, to check that they are still in need of it? Some 140,000 people have not been seen by the Department for Work and Pensions in the last 20 years, going back to 1992. Surely that is unacceptable.

[Mr Byrne]

There is a strong case for reform of DLA. The lobby groups agree with that, as do we, but we do not agree with the way the Government have approached the issue. First, we had an announcement by the Chancellor of the Exchequer that DLA would be cut £1 billion, then we got a consultation, which has only just finished, and while all that was happening a Bill was published with no detail or safeguards dealing with how that reform would be conducted. The Secretary of State must realise that that is a serious concern for millions of people up and down this country.

That alarm is simply magnified by the proposals to set a one-year limit for those who can receive contributory employment and support allowance. I, too, think that there is a case for time limits—there is a good case for considering two years, for example—but this morning 30 cancer charities have written to the Secretary of State urging him to think again on that measure. His own Department’s statistics, they say, show that 75% of cancer patients still need ESA after a year. Their message is blunt:

“this proposal, rather than creating an incentive to work, will lead to many cancer patients losing their ESA simply because they have not recovered quickly enough.”

If this indifference is not addressed in Committee, the Secretary of State will have single-handedly dismantled any notion that compassionate conservatism is truly a reality. This simply cannot be right, and it needs to be looked at again.

[Mark Durkan (Foyle) (SDLP)]

I support the crucial points that my right hon. Friend is making, but has he noted that the impact assessment on the proposed changes to DLA makes no mention of the impact on carers? There clearly will be a consequential impact on carers, depending on what benefits the people for whom they care receive and which rates of the daily living component or the mobility component will entitle carers to claim carers allowances. There is no mention of that whatever. Is my right hon. Friend aware of whether the Government have even made an estimate of the number of carers affected, and if so, why it has not been published?

[Mr Byrne]

I am not aware of those estimates, and I hope that we will have a long and important debate about carers this afternoon and in Committee.

[Several hon. Members]

rose—

[Mr Byrne]

I will give way in a moment.

My final point is about the small question of whether the Bill will actually save any money in and of itself. The Bill would save money if it got people back to work, but it will not create a single job. By the time we get to Royal Assent, there will still be five people chasing every job in this country, and for 120 of us, there will still be 10 people chasing every job in our constituencies. The only way that this Government are going to save money through welfare reform is by cutting the benefits of working families. Indeed, once we take out the shift to a lower form of uprating, we see that half the benefit cuts hit working families, starting with 10 raids on the family budget, taking out £1.5 billion from this April. Two thirds of that bill would not be necessary if unemployment were not as high—in fact, if it where down it would have been under Labour. Nowhere is that muddle about whether the Bill saves money more confusing than when it comes to the housing measures.

[Several hon. Members]

rose—

[Mr Byrne]

I will give way in a moment, but I want to make this point first.

Clause 68 puts into the Secretary of State’s hands unprecedented powers to do whatever he wants with people’s rents. Normally, we would object to that kind of sweeping power because we would not know what a Minister was going to do with it. This time, however, we object because we know exactly what the Secretary of State is going to do. He has proposed a housing benefit cap, which he says will save money, but the Mayor of London has now said that the measure will cost more money because homelessness costs will rocket.

The Secretary of State says that his measures will bring rents down, but the Secretary of State for Communities and Local Government is putting rents up in the social housing sector to 80% of market value. The House of Commons Library says that that could cost up to £200 million. One half of the Conservative party does not know what the other half is doing, and taxpayers are picking up the tab. In fact, it was left to the Pensions Minister to tell the House on 3 February that, on his estimate, the housing bill would go up by £1 billion over the course of this Parliament. So how is this Bill going to save money on housing benefit?

[Alison Seabeck]

Before I ask my question, I need to draw the House’s attention to the entry in the Register of Members’ Financial Interests for my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), with whom I have an indirect interest: he is my partner. Now I can get on with my question.

My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) has mentioned the increase in costs resulting from the impact of rents going up to 80% of market value. The Localism Bill contains measures designed to put homeless people straight into the private rented sector. That will put further pressure on that sector, which is already being squeezed, and push rents up. There is no evidence that rents will come down. Does he agree that the Government’s left hand does not know what the right hand is doing?

[Mr Byrne]

That is the evidence from the Mayor of London and the Secretary of State for Communities and Local Government.

[Sajid Javid (Bromsgrove) (Con)]

At the last election, the Labour party manifesto contained a pledge to reform housing benefit to ensure that the people claiming it would not live in the kind of homes that ordinary working families could not afford. We believe in that policy. Is the right hon. Gentleman now renouncing it?

[Mr Byrne]

Not at all. The point that we are making is about the way in which this reform has been adopted and steamrollered through, and about the lack of consultation between the Department for Communities and Local Government and the Department for Work and Pensions. This has been so mismanaged that many people—the Mayor of London, Shelter, the Secretary of State for Communities and Local Government—are now saying that the cost of housing benefit could go up. Surely that is not the DWP’s intention. We need a bit more detail about a policy that might actually deliver the necessary savings on housing benefit.

[Angie Bray]

I was recently talking to some constituents in Acton, and I discovered that these proposals for changes to housing benefit are among the most popular proposals that the Government have introduced. My constituents like the idea that it pays to work, and that those on benefit will not be able to afford better houses than those in low-paid work can afford. They also wonder why it has taken so long for any Government to introduce a measure that is simply fair, regardless of the money it might save. They wonder why the Labour Government never did anything about this when they had the chance to do so.

[Mr Byrne]

I am sure that the hon. Lady will have set out, with equal eloquence, the view of the Mayor of London that the measures might actually cost more taxpayers’ money than they will save.

[Jim Shannon]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will take a couple more interventions in a moment.

I want to put on record my thanks to the scores of charities and campaign groups that have helped to brief us and offered to work with us to draw up amendments to improve the Bill in Committee. I am even more grateful to them for their commitment to mobilise their millions of members to help the Government understand why the Bill needs urgent reform. If the Government persist with the illusion that the Bill is immaculate, perfect and beyond improvement, and if they decline to hear the voices of those millions of members of charities and campaign groups that have worked with us, we will have no alternative but to vote against it on Third Reading.

In today’s debate, we will hear a lot of statistics; we will also hear about this record and that proposal. I just hope that the House will remember that behind every statistic is a person—one of our constituents. They are people like my constituent, Colin Hulme, who wrote to me at the end of last week. Mr Hulme suffers from Chiari malformation, a condition that affects about one in 1,000 people. It hit him in 2007, and he had to give up his job as an IT consultant and move home. He is a very brave man. He told me that his disability living allowance means that

“at least I can pay my household bills, my kids will have food on the table and clothes for school. More importantly, it means my wife can provide the care that I need.”

His view is that the Bill is about

“cutting costs and shifting responsibilities rather than improving the lives of sick and disabled people.”

It is a worry for him, and I think that the whole House will acknowledge that that worry is shared by millions of people up and down the country today.

My real point to the Secretary of State in this debate about principles is this: in the debate ahead, let us together put aside the politics of fear and division, and let us have the politics of hope—people’s hope for a job, the hope that they can get the help that they need, and the hope that they can get on and move up in work. That is what welfare reform should be about. That is the instinct expressed in our amendment, and I hope that the House will back it this afternoon.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. A lot of Members wish to participate in the debate, and we have introduced a six-minute time limit on Back-Bench speeches, with the usual amount of injury time for up to two interventions. Clearly, however, Members do not have to take interventions, and if they do not, that will allow more people to speak.

14:19

[Mr Oliver Heald (North East Hertfordshire) (Con)]

I welcome this opportunity to support the Bill, which will bring about probably the biggest change in the welfare state for 60 years. I disagree with the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) on certain points. The Bill is about helping people into work and establishing big principles for the future, and it really is not good enough to make a speech saying, “We want to help people into work,” but then to deny the means to do that. He is saying that the Bill should not go ahead. He is saying that the details—which should be debated, I agree with him on that—are sufficient to allow him to deny this major Bill a Second Reading. Well, he is wrong about that. He has issues that he rightly wants to discuss in Committee, and he has the support of numerous groups throughout the country that want those points of detail to be considered. Yes, he is right about that, but, my goodness, he is wrong to say that the Bill, which does such important things, should not go ahead.

Let us consider the idea of the universal credit. We will finally be able to say that a person will always be better off in work. That is a big principle; that is important. I venture to suggest that the right hon. Gentleman agrees with that in his heart of hearts, yet he is saying that we should not introduce those measures. I notice that he is not prepared to listen to this—

[Mr Byrne]

I am listening.

[Mr Heald]

At the moment, it takes 45 minutes in a jobcentre to work out whether someone will be better off in work or not. The Bill will change that at a stroke. People will know that they will always be better off in work. That is an important principle.

My second point involves helping people to get into work, giving them support through the “black box” approach. This is something that Labour agrees with; the right hon. Gentleman actually trialled it when he was in government, and it worked. It is recognised internationally—

[Mr Byrne]

It is not in the Bill.

[Mr Heald]

Yes, it is in the Bill. The sanctions are about making the Work programme work. It will not work without sanctions and without the measures in the Bill. To deny the Work programme to people all over the country who should have help into work would be a big mistake. The right hon. Gentleman should support the principle behind the Bill.

My third point is that it is essential to make proper training available so that people can avail themselves of those training opportunities and then get the jobs that are available in this country. There are 500,000 jobs advertised in the jobcentres every month, but many of them are jobs for which people do not have the necessary skills. To introduce a system, through the “black box”, that will enable people to acquire those skills and get into those jobs is something good, and it is something that the right hon. Gentleman should support.

As for whether jobs are available, when the right hon. Gentleman’s party were in government many jobs were created, as he said, but the problem is that many of them went to people who were not from this country and had not been languishing on benefits for years. Members of the Select Committee visited Burnley earlier this week and we met people who were being helped to move from benefits into work. We found that many of them did not like the work capability assessments, so I hope that it will be possible for the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) to make the Harrington changes before that scheme is rolled out nationally. I see him nodding. Some people there had not worked for 10 years, and said that they were pleased to have the opportunity to be trained and to look for a job.

Burnley is not an area where there are as many jobs as there are in Hertfordshire, which I represent, but even in areas where there are not many jobs, it is wrong to say to someone who could work, “No, we’re not going to do anything about it; we’re not going to train you; we’re not going to give you those chances; we’re not going to provide the Work programme.” By denying this Bill a Second Reading, the right hon. Member for Birmingham, Hodge Hill would be depriving people of all those things.

Let us take some of the other issues that the right hon. Gentleman raised, such as child care. The Secretary of State has said from the Dispatch Box that there will be child care; the black box works only if child care is available. Support for single parents to get into work is necessary, but it is to be provided. If the right hon. Gentleman wants to talk about the details in Committee, we would all fully understand that. I believe that it is a mistake for him to try to deny this Bill a Second Reading.

Time is whizzing by, but I would like to make two further points. Child support is an important issue in the Bill, and it has been troubling for a long time. If single parents are to get into work, it is important for them to be able to rely on child support payments coming in. America has a system whereby, once the figure is set, it is automatically deducted from the salary of the parent who has to pay it. In this country we have always denied that possibility, and said that we should not do that. However, if we are to say to many lone parents, “Look, we really want you to go to work”—and we shall be saying that to a lot more lone parents—we must find ways of ensuring that the essential payments from the other parent come through.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

This will provide my hon. Friend with an extra minute to conclude his remarks. We very much welcome the work of the Select Committee, and I assure him that the points that he and the Select Committee raise will help us to shape some of the outstanding issues and the Committee debates that lie ahead.

[Mr Heald]

I thank my right hon. Friend for that. One encouraging development is that many of the proposals in the recent Select Committee report on housing benefit change—proposals for improvements such as monitoring the changes as they are implemented—were accepted when the Government responded to it. It is particularly welcome that the original proposal for people to lose 10% of their benefits after 12 months has been abandoned. I see that the Chairman of the Select Committee is in her place, and she may catch the Deputy Speaker’s eye in a moment; we are all pleased that the Committee has been able to make a difference in that way.

Finally, let me say a few words about how the contracts for the Work programme are dealt with. It is important to have proper implementation.

[Charlie Elphicke]

With housing benefit rising 45% in recent years, does my hon. Friend agree that it is a matter for serious concern?

[Mr Heald]

Yes, absolutely right. It is important to bear down on that through the sort of changes now proposed.

To return to the Work programme contracts, it is important to monitor carefully the performance of the contractors and sub-contractors to ensure that there is an equal level across the country. The Select Committee looked at the issue in a previous report on a pilot scheme in Glasgow. We felt that there were differences between the performance of the different contractors. Clearly, if there are weaknesses, it is important to address them, for the sake of all the people who want to find work. I am grateful for the opportunity to support this great Bill.

14:35

[Dame Anne Begg (Aberdeen South) (Lab)]

This is a huge Bill with a huge amount in it, so it is impossible to cover it all in a six-minute speech. I always call my Select Committee colleagues my hon. Friends, and I shall point out that our report on housing benefit, which my hon. Friend the Member for North East Hertfordshire (Mr Heald) mentioned, will be debated in Westminster Hall tomorrow afternoon. I hope that many Members will come along so that we can go into greater detail than we can today. Other elements of the Bill include the abolition of the social fund, and the moving of responsibility for council tax benefit to local authorities and how that cuts across the universal benefit principle and the sanctions regime; I shall not have time to go into that, but perhaps others will.

The biggest fundamental change to the welfare system in the Bill is, of course, the proposal for the introduction of a universal credit. As has already been said, and as confirmed in almost all the briefing papers I have received, the idea of a universal credit has been accepted in principle. I have always said, however, that the devil is in the detail. That is where the problem lies for Labour Members, who are well aware that we do not yet have much of the detail.

Despite what the Secretary of State said today, we still do not have any detail on how child care will be incorporated into the universal credit. We know that housing costs will be included, but we do not know how they will be dealt with. We are not sure about the disability premium or about the issues that my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) raised about passported benefits, free school meals and all the other aspects of the present benefit system that put significant amounts of money into the hands of those who have the least. That often includes people in work, but low-paid work. As I say, we do not yet know from the Bill how all those matters will be dealt with; we will not know until the regulations come out.

We know that carer’s allowance will be outside the universal credit, but we do not know how kinship carers will be treated. Changes are proposed to the disability living allowance, which is the key benefit that allows carers to access their benefits, and a lot of questions remain to be answered.

Furthermore, we still do not know what the marginal deduction rates will be. We know that 65p in the pound is proposed, but when we look in detail at someone in low-paid work paying income tax, we find that the marginal deduction rate will go up—and in connection with child care costs, it could go up by more than 100%. Child care costs will, in any case, go up, simply because more people will need child care if the Government proceed with their proposals to start imposing obligations on lone parents to start looking for work when their youngest child reaches five. Extra expenses are therefore associated with the Bill, but we do not know how they are to be dealt with.

We do not yet know how some of the claims will be fulfilled—whether, for example, the Bill will succeed in making work pay. The previous Government did make work pay in almost every case—apart from where there were high housing costs and many children. What we did not do was make work pay enough.

[Harriett Baldwin (West Worcestershire) (Con)]

I thank the hon. Lady, who is such a marvellous Chair of the Select Committee, for giving way. Does she agree that it is disappointing that the Labour party is not supporting Second Reading of this Bill, because the points that she rightly raises are the sort of detailed issues that could addressed in Committee?

[Dame Anne Begg]

I hope that they will be addressed in Committee, but the problem is that there are still too many unknowns about the Bill. That makes it impossible at this stage to give that kind of support to it. That is the danger.

There are reasons for suspicion, particularly among disabled people, about the Bill’s intentions. The Bill was published two days before the consultation on what amounts to the abolition of disability living allowance was announced. Again, we do not know the details. I do not understand why the Government need to change the name of the disability living allowance. Yes, there might be a case for reform, but this is a wholesale replacement. That is what worries people, particularly when the evidence suggests that it is going to be based heavily on the test.

Discussion this afternoon has been about the test for disability living allowance—but our experience is of the work capability assessment. We know that that is discredited and not fit for purpose, and disabled people fear that that is what is going to be imposed. As soon as the Government announce a proposal to change or reform a measure in order to make a 20% budget saving, suspicions enter people’s minds. Given the Government’s proposal to remove the mobility element of disability living allowance from those in residential homes, it is no wonder that some people are now frightened.

I realise that most of the time allotted to me has gone, but I want to say something about the proposal to withdraw contributory employment and support allowance after only one year. I believe that the Government should reconsider. I have always said that it is easy to reduce welfare bills: all that is necessary is to stop giving people any money—and that is what the proposed withdrawal of the allowance would do.

[Glenda Jackson]

My hon. Friend, and other members of the Work and Pensions Committee, will be aware that one of the most shocking pieces of evidence presented to the Committee was that under the present system, in which people are tested by Atos, it is not unusual for an Atos centre to be completely inaccessible to the disabled. Furthermore, we have been hearing for some time that when people appeal against the denial of benefits, whatever those benefits may be, a staggering number of appeals are upheld. What is particularly frightening is the fact that there may be a long gap between refusal of an application and the upholding of an appeal—a problem that will inevitably increase in the absence of the detailed provisions that the Bill so markedly lacks.

[Dame Anne Begg]

Indeed. We heard on Monday, in Burnley, that the appeal process can take anything from a year to 18 months. There are real doubts about the ability of the tribunal system to cope.

[Chris Grayling]

At present, the appeal process takes 17 weeks on average. A year or more is absolutely not the norm. I would be happy to discuss the matter in the Select Committee, but I should grateful if the hon. Lady would note what I have said for the record.

[Dame Anne Begg]

Interestingly enough, a constituent of mine is having to wait for six months. I thought that that was ridiculous enough, but two or three weeks ago, when the Committee was taking evidence, we were told that someone was having to wait for between nine months and a year. Perhaps the Minister should talk to his officials, because it seems that in some areas, at least, the wait is much longer than 17 months.

I mentioned the withdrawal of contributory ESA after a year. Many of the people who will lose that benefit will not qualify for a means-tested benefit, particularly in my constituency, where there will probably be a partner or someone else in the household who has an income. Such people will lose all the money that they have.

We have heard today what has been said by cancer charities, but it is not just cancer sufferers who will be affected. Many other people may not have been given a diagnosis, or may have had a mental breakdown from which they have not recovered. It may take at least a year for those people to get anywhere near the Work programme, although they will be in the work activity group because their disabilities will not be severe enough for them to qualify for membership of the support group. They will be told to come back after another three months, because they will still not be fit for work. They may find that they have used up the whole year’s worth of contributory benefit before they are anywhere near even looking for a job. Many with other illnesses and disabilities will fall into the same category.

I was going to read out a letter from Heather Bennett that would have summed up the position far better than I have. Unfortunately I have no time to do so, but I ask the Government please to reconsider.

14:45

[Jenny Willott (Cardiff Central) (LD)]

I welcome the Bill, especially the introduction of the universal credit system. It is a huge improvement on the current over-complicated and burdensome benefit system, which has spiralled out of control under a number of previous Governments. I think that several elements of the Bill require further work, and I look forward to their being discussed today and during the Bill’s later stages, but I do not consider that a good enough reason not to give it a Second Reading.

I am glad that a couple of earlier proposals have already been reconsidered. Both have been mentioned by other Members. I am delighted that the Government listened to Liberal Democrats, the Select Committee and others throughout the United Kingdom who called for the proposal for a 10% cut in housing benefit for those who have received jobseeker’s allowance for a year to be dropped, because it was unfair. It is very good news that the proposal has indeed been dropped, and I am sure that Members on both sides of the House welcome that.

I am also glad that the Government are listening to those who are concerned about the removal of the mobility component of disability living allowance from those in residential care. A number of Members have mentioned that today, and I expect that it will be mentioned again before the end of the debate. I am pleased that the proposals have gone back to the drawing board, and I hope that the Government will take account of the serious concern that many Members have expressed and will, I am sure, express again during the Bill’s subsequent stages.

I welcome wholeheartedly some measures that are in the Bill, as well as the absence of some measures that are not. As I said earlier, those that I welcome include the introduction of universal credit, which will finally end the absurd circumstances in which people can be better off on benefits than in work. I am sure that many Members have met people who are frustrated and desperate because they know that although their lives would be better if they were in work, financially they would not be better off in work. I think that everyone should welcome the fact that universal credit will put right that wrong.

A number of Members have expressed concern about the changes in employment and support allowance. As the hon. Member for Aberdeen South (Dame Anne Begg) pointed out, and as the Secretary of State acknowledged earlier, there is particular concern about the decision to time-limit contributory ESA. I hope that during the Bill’s passage the Government will consider, for instance, whether the period before the cut-off should be longer than a year, whether it is appropriate to include the 13-week assessment period in the calculation, and whether those with certain conditions could either be entirely exempt from the cut-off or be allowed extensions at the discretion of Jobcentre Plus staff. A good many people will be affected by the limit, especially if, as is currently planned, it is applied retrospectively.

I mentioned the controversy surrounding disability living allowance. As I have said, I am delighted that the proposals affecting those in residential care are being reconsidered. However, concern remains about the increase from three months to six months of the period before people are eligible to apply for the allowance. I understand the logic of trying to ensure that it is given only to people with long-term conditions, but in the case of sudden-onset conditions such as cancer, strokes or accidents, the greatest financial need is at the start. I hope that thought will be given to whether people in those circumstances can be helped to deal with the serious financial implications of such conditions.

I agree with the hon. Member for Aberdeen South that a huge number of issues could be raised in relation to the Bill, but today I can focus on only a few of them. The last issue that I want to raise is the total cap on benefits. Again, I understand the rationale. Many working people with low incomes find it very difficult to see others receiving more money from the state than they themselves can earn, and I understand their frustration and resentment. However, we have yet not been given enough detail to establish the precise impact of the Government’s proposal.

Some people also resent the fact that families, particularly large families, are living on benefits, but the choices made by parents are not the fault of their children. By the time the Bill has completed its passage, we must ensure that any cap has been set at an appropriate level, that there is no prospect of children being pushed into poverty, and that families—especially in London, where housing costs are so high—will not be disproportionately hit. Given that the housing benefit cap is £400, a total benefits cap of £500 could leave a large family with just £100 a week to cover all their other living costs. I hope that the Government will consider excluding housing benefit from the calculation, or, preferably, excluding child benefit. Given that child benefit reflects the size of families, that could have an impact on child poverty. I am very concerned about the implications of that policy, and we will need to know the impact on children, in particular, before I can agree to support it.

Most of the Bill is well thought out with a strong sense of principle, and I wholeheartedly support the overwhelming majority of its measures. I welcome the moves to simplify the benefits system and to create a more individually tailored welfare system, but I also have concerns, and I hope the Government—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Time is up. I call Mr Tom Clarke.

14:50

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I should begin by declaring an interest: I am co-chair, with Lord Rix, of the all-party group on learning disability.

Members will not be surprised to learn that I intend to oppose the Bill and support the reasoned amendment. In the short time available to me, I shall speak in direct opposition to this Welfare Reform Bill, because if it is implemented it will devastate the lives of people who are sick, people with disabilities and many vulnerable people throughout Britain, not least in my constituency.

Since before I was elected to this House, I have firmly held to the principle that people with disabilities should have the same opportunities as everyone else, no less and no more, and I have to say that the election of this new coalition Government does not in the least diminish the need for a principled stand to be taken on behalf of people who require support. That is because of the highly punitive measures that are being proposed, and which have not been denied today, and I hope to have the time to address some of them later.

On Tuesday 30 November I secured a Westminster Hall Adjournment debate on Government plans to remove the mobility component of the disability living allowance for disabled people who live in a residential establishment. At the beginning of that debate, I said:

“To put that into context, it is important to establish which members of our society qualify for that benefit. The first, and by far the most common group, is where the claimant is unable—or virtually unable—to walk. The second group consists of people who are both blind and deaf. The third category comprises people with a severe mental impairment, and/or severe behavioural problems. In truth, we could not be discussing people who are more vulnerable or deserving in our communities.”—[Official Report, 30 November 2010; Vol. 519, c. 197WH.]

I also pointed out that of all the proposals on welfare reform, this is the most brutal and cruel. I have had no assurances on this issue during the course of the debate

[Chris Grayling]

It might be helpful to put on the record that we have been very clear that we intend mobility provision to continue for people in care homes. There is an overlap between a number of provisions however, and we have formed the view that it is better not to include a stand-alone clause in this Bill, but to include the issue as a whole as part of our review establishing exactly what needs to be done and through which channels.

[Mr Clarke]

So in place of the clear threats we had from no lesser a person than the Prime Minister and in the face of a lack of clarification today from the Secretary of State, we are expected to wait for a review. I am sorry to have to tell the Minister that, as my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) said in opening for the Opposition, organisations representing disabled people throughout the country are simply not prepared to accept what appear to be assurances at the 13th hour, given what is written in the Bill and given the opposition to my colleagues’ amendment.

I urge the Government to consider the opinions of voluntary organisations and of the independent Social Security Advisory Committee, which obviously took the same view as I did:

“We consider that the proposal to remove the mobility component from people in residential care should not go ahead.”

That remains our determination today. I trust that the Government will take on board the view expressed by such an influential and informed body.

[Dame Anne Begg]

It is, perhaps, worth putting the record straight on DLA. This afternoon, the impression has been given that there are no checks on people on DLA and that they are just left to languish, but everyone on DLA gets a letter every year saying they must report any changes to their condition.

[Mr Clarke]

I am grateful to my hon. Friend, who has considerable knowledge of these important matters.

Even today, we have heard much about the deficit, but the sick, the poor and the vulnerable in our society simply do not deserve to be punished for the financial greed and recklessness of the banking sector. That is what this Bill is proposing, and if anyone doubts that then let them address the planned 20% reduction in DLA. We are cutting a lifeline on the basis not of a necessity, but of a statistic plucked out of thin air.

I work closely with disability organisations that are at the forefront of supporting disabled people and their families at every stage of their lives. Today, I speak up on behalf of the many constituents who have been in touch with me on this subject. Indeed, I have had more representations on this Bill from both constituents and disability organisations than on any other Bill in my entire time in Parliament, and it is a bit too late for the Minister to make the intervention he has just made. Organisations working in this field have long been striving to achieve a balance between providing practical help and listening to those who need support, and that informs me in this debate. Incidentally, almost all the caring organisations, from Mencap to Scope to Enable in Scotland, are united in condemnation of what is on offer.

We are told the Government plan to simplify the benefit system for claimants and to remove financial disincentives to moving into work. I have no problem with those two objectives if that is what is really meant. As my hon. Friend the Member for Aberdeen South (Dame Anne Begg) said however, the devil remains in the detail. Where is the commitment to promoting social justice for disabled people? We have rising unemployment on the one hand and spending cuts on the other, with reduced access to social care services as a consequence of reductions in local government funding. The latter is hitting disabled people disproportionately hard all over the United Kingdom, further compounding the poverty and disadvantage they already face. There appears to be a lack of recognition that we are talking here not about people who are fraudulent or feckless or who fear work, but about people who are incapacitated and cannot work and therefore must be supported. While disabled people who live at home are to keep the mobility component of their benefits—which is as it should be—it cannot be right, it cannot be fair and it certainly cannot be equitable for disabled people living in residential homes to be hammered with a 69% cut in overall benefits.

For that reason and many others, I ask the House to consider very carefully the words printed in the Bill, because it is the Bill that we are considering today. We are being asked to give it a Second Reading, and on the basis of its contents and what has been said by Ministers, I cannot support the Government.

14:59

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I welcome the opportunity to contribute to this debate on a Bill that will radically reform our welfare system, and I congratulate my right hon. Friend the Secretary of State on proposing these much-needed and long overdue reforms to our benefits system. He is well known and respected for his work on social justice, and the Bill marks a genuine step forward. I also commend him on the thoughtful, moderate and constructive speech he gave this afternoon.

This measure is to be supported as it places individual responsibility at the heart of the benefits system. That approach will, in general, be welcomed across the country and certainly by the vast majority in my constituency.

The welfare system under the previous Labour Government became a welfare culture in which people claimed everything they could. People not only acted irresponsibly but were encouraged to do so; as a result, some people were better off claiming state handouts than their neighbours who were working. To have 5 million people living on out-of-work benefits and 2 million children growing up in households where no one works is a disgrace, and the Opposition ought to be ashamed of that record after 13 years in power.

There are many problems with the welfare system that the Government inherited. It is complex, bureaucratic and contains perverse incentives to keep claiming rather than work. We have heard the interventions—a 45% increase in housing benefit since 1999 is an incredible figure and such problems cost the taxpayer a fortune. The Labour party had 13 years to simplify the benefits system and to increase the incentive to work and it did nothing but make the problems worse. The Opposition amendment is merely a prescription for doing nothing.

Those who can work should work; that is the responsible thing to do and the best route out of poverty. Our aim should be to encourage people to take jobs, and I believe that most people want to work and to find a job. The Government’s role should be to help match people to the vacancies on offer, to ensure that they have the skills they need to take on jobs, and to provide individual support in the meantime to help people to get there. The Bill offers opportunities for change to enable people to do that.

It is right to place a 12-month limit on contributions-based employment and support allowance claims. That ensures that those who need support when they lose their job receive payment, and underlines the principle that they cannot claim for as long as they want. I hope that the introduction of a claimant contract will increase individual responsibility by ensuring that people turn up for their appointments and interviews. The inclusion of a personal pledge to take up reasonable offers of work, with financial penalties for those who do not keep their obligations, is also a necessary reform.

Placing a fixed limit on the maximum amount that any one household can claim in benefits, together with the new housing benefit cap, will mean that the financial barriers to employment will be removed, and that will be fairer for the taxpayer, who will no longer subsidise high rents for others. A regular complaint from my constituents is that, as workers and taxpayers, they pay for some people to have a better life than they do when they are in full-time work. I therefore welcome the introduction of the universal credit, which will mean that once the Government’s reforms have taken effect, people will be able to see for the first time that they are better off for each hour they spend working rather than being on benefits. The reforms will ensure that work pays.

Benefit fraud has also been a problem, costing the taxpayer about £1.5 billion every year. That is simply not acceptable. I hope that the measures in the Bill will send a clear signal that fraud and the abuse of the benefit system will not be tolerated.

Issues have been raised this afternoon that we will need to consider carefully, including the point about the disabled. I recognise—and I know that the Government recognise—the important role that cash benefits play in supporting the disabled in overcoming the daily problems that they face. Life is often more difficult and more expensive for those with a disability. I hope that the personal independence payment system that the Government plan to introduce will be fairer and simpler, allowing vulnerable people to lead active and independent lives. Changes must be made to ensure that those who do not need personal independence payments do not receive them. It is important that the assessment system is right and fair and takes into account genuine needs. Change over time should be noted to prevent abuse, as well as to help to ensure that those with growing and additional needs caused by disability get what they need and genuinely deserve. I am pleased that the payments will not be means-tested and will provide people with support when they are both in and out of work.

The disabled issue is emotive and I have received a considerable amount of correspondence from constituents about it. Some of the information that they have been given has unfortunately not been accurate, which is to be regretted.

[Fiona O'Donnell (East Lothian) (Lab)]

On the subject of inaccurate information, a duty press officer from the Department for Work and Pensions told the BBC last night that the Government were not going to reduce the qualifying period from three to six months. Can we have clarity on that issue?

[Mr Evennett]

I understand the hon. Lady’s point and we have had some clarity from the Secretary of State already this afternoon. It is important that we urge those on the Front Bench to take into account the needs of the disabled, and I believe that they will do that in the policies that they seek to implement.

I strongly commend the work done in the Bill and the further consultation that will be undertaken by Ministers to ensure that all the needs of the disabled are considered when we bring in the new annual assessment. I welcome the fact that there will be an annual assessment for those who are disabled so that their real needs can be reassessed if necessary to ensure that they get what they need and what they deserve.

I am running out of time and, as other hon. Members have said, it is very difficult to cover all the aspects of such a complex Bill in such a short time, but I want to commend the work being done in further education by my hon. Friend the Minister for Further Education, Skills and Lifelong Learning to ensure that people get the necessary training to take up the jobs on offer.

I believe that the Bill will deliver real progress from a coalition Government who are determined to reform a system that is unwieldy, unfair and unacceptable. The Bill should be commended and supported this evening.

15:06

[Julie Elliott (Sunderland Central) (Lab)]

There have already been some excellent speeches in this debate on one of the most important issues that we have discussed so far in this Parliament. Before I talk about the issues, I want to align myself with the comments made by my hon. Friend the Member for Aberdeen South (Dame Anne Begg) about the problems with the Bill.

I support any attempt to reform the welfare system for the better, to make it easier to access and understand and to make people claim and receive the benefits to which they are entitled, and some measures in the Bill attempt to do that. For example, if universal credit can be made to work, that will be a good thing, but, as yet, I am not convinced that that will be the case. I await with interest the details of how the proposals will work. The jury is out for me on that point.

In the run-up to Second Reading, I have been contacted by many people who are extremely worried about the proposed changes and who are worried and frightened about the impact that those changes will have on their lives. The lack of detail about some of the proposals is one of the problems. The people contacting me have been, in the main, among the most vulnerable in our society. That was why I felt that I had to speak in this debate; I believe that, as an MP, I should speak up for the most vulnerable people I represent.

There are many reasons why I cannot support the Bill as it stands, many of which are set out in the reasoned amendment. The uncertainty about how the universal credit will work is creating fear for those people for whom benefits form all or part of their income. The Bill seems to contain disincentives to work, and that surely cannot be the intention.

I come from an area with long-standing high unemployment and I firmly believe that we need to incentivise work and to give people the opportunity to be aspirational about their lives and the chance to make things better for themselves. Although there is high unemployment in Sunderland and the north-east, there is also a strong work ethic. I was brought up in a family and community that believed that people should work hard and do their best, and I do not believe that that has changed over the years in the majority of families. Sometimes, people need help to do that. Such help includes the tax credit system, but there has been no clarification on what level of support parents will get for child care. The disincentives for people who save, who will be barred from the universal credit, seem unbelievable.

As the Bill disadvantages people suffering from cancer or mental illness through the withdrawal of the contributory employment support allowance, it is hitting hardest those whose needs are probably the highest.

[Stephen Lloyd (Eastbourne) (LD)]

Will the hon. Lady give way?

[Julie Elliott]

No, not at the moment, although I might in a minute.

As I said earlier, I want to focus my remarks on the most vulnerable. Many of the extremely vulnerable people who have contacted me are suffering from mental health issues and autistic spectrum disorders. Autism is a spectrum condition, which means that, despite some common characteristics, it affects sufferers in different ways and to differing extents. ASDs, as they are commonly known, are largely “hidden” disorders that affect a sufferer’s ability to communicate with others, which means that the annual review will be a real problem. ASD sufferers span the whole disability spectrum. Some are able to live relatively independent lives; others need a lifetime of care or receipt of specialist support.

Approximately one in 100 children and 350,000 adults of working age suffer from ASDs. Of the latter group, only 15% are in full-time employment in the UK. The disability living allowance has been a key benefit, providing for these people the help and support that the additional costs of their disability require. The £1 billion cut over the next three years, when the DLA is replaced by the personal independence payment—

[Jim Shannon]

At the beginning of her remarks the hon. Lady said that reform is necessary, which we all accept. However, does she share my concern that a target to reduce by 20% the number of people in receipt of DLA is the wrong approach, and that the issue should be dealt with through reform alone?

[Julie Elliott]

I totally agree with the hon. Gentleman. Reform is about making the benefit fit the individual need. If the benefit needs to be paid and if it fits the need, it would not be wrong if it went up by 20%.

It is vital that the Bill does not disproportionately hit those with autism and other disabilities, who are all too often overlooked despite being among the most vulnerable in our society. The goal surely must be to support people with autism who cannot work, so that they can live a full and happy life. However, for those who are able to work, DLA has been crucial in helping them into the workplace. Without the DLA, people with autism would be socially isolated and more likely to suffer from poor mental health. The reform of DLA may lead to people with mental health problems missing out, which could have huge knock-on cost impacts on health and social care services. Surely this cannot be this Bill’s motivation—to give less support to people with autism and to increase the knock-on costs to other Government Departments. As it stands, that is what the Bill is in danger of doing. Its implications for people with autism could lead to confusion and frustration, which in turn could lead to more serious health problems. The Government must ensure that the needs of those with ASDs are taken into account.

The proposals for face-to-face assessments are in themselves creating great anxiety among people with autism and with mental health issues. ASDs are a very specialist area of medicine, and the doctors who deal with such disorders are the people who understand them and their implications. Many of the doctors undertaking the assessments will not have a full understanding of ASDs and the specific needs of the people who suffer from them. When a detailed assessment by a specialist has already been undertaken, what is the need for a further assessment, for benefit purposes, to be carried out by someone without that expertise?

As I said at the beginning of my speech, for a welfare reform Bill to work, it must be, as it says, a “reform” Bill that makes benefits easier to access and to understand.

15:09

[Tracey Crouch (Chatham and Aylesford) (Con)]

May I begin by congratulating the Government on introducing the Bill? I firmly believe that its proposals have the potential radically to reform our welfare system for the better, and we are in dire need of such reform. Those trapped within the system, and the millions of taxpayers who pay for it, will note that Labour intends to vote against such reform later today.

It is vital that we assess the broken welfare system that this Government inherited, to put the need for reform into perspective. Under Labour, we saw ballooning welfare expenditure, an increase in workless households and the absurdity of some housing benefit awards dwarfing the average family income. The Government simply must urgently address that appalling legacy by establishing fairness and an ethos of individual responsibility as cornerstones of our welfare system.

I welcome the notion of a universal credit and the merging of a number of working-age benefits. By replacing housing benefit, the child tax credit, the working tax credit, income support and the employment and support allowance with one single benefit, we replace a tired, confusing welfare system with a simpler, more transparent one. This simplification will help to combat the serious issue of benefit fraud, which is estimated to cost the taxpayer £1.5 billion per year—another reason why the Bill ought to be welcomed on both sides of the House.

Undoubtedly the most progressive aspect of the universal credit is its potential to incentivise those who are unemployed back into work, with no one left worse off by entering employment. The previous Government created a welfare system that discouraged people from working. As a result, there is a troubling number of cases of people languishing on benefits who have become accustomed to that way of life. I see that in my own constituency.

I am proud that this Government recognise that more must be done to help get these people back into employment, either through personalised support for those who are seeking work or through tough sanctions for those who are not. Although the universal credit will act first and foremost as a safety net for those out of work, it has motivation and conditionality at its heart, which, coupled with the Government’s Work programme, which focuses on the long-term unemployed, ought to be welcomed.

I visited Canada a few years ago to study its rehabilitation programmes for those who had suffered some kind of personal injury, and I was struck by the completely different mentality. The programmes, which were often as much about psychological as physical rehabilitation, were entirely designed to get people back into work. Canada’s insurance system simply does not encourage a sit-at-home attitude; our current welfare system does precisely the opposite.

Although I am in no doubt about the positive impact the universal credit will have on our welfare system, there are areas that I believe we must be particularly careful in addressing. By creating an overarching single benefit, we have to take this opportunity to make sure that the flaws in the system are remedied. Although I congratulate the Government on addressing the way in which people with mental health conditions were treated under the previous Government, I would like a reassurance that, where necessary, carers will be able to accompany those with particular conditions to their work capability assessment. Assessments of the needs and suitability for work of those with mental health conditions must be more comprehensive, compassionate and consistent. I welcome the Government’s broad acceptance of Professor Harrington’s review of these issues.

The Bill presents the opportunity to restore faith in a broken system. Undoubtedly, we must provide the means for those who are out of work to re-enter employment, while supporting those in genuine need. A system based on conditionality, with strict requirements for out-of-work benefits, will also be fairer for the taxpayer. Most importantly, we must shift the emphasis from what claimants cannot do to what they can do.

These bold welfare reforms must be carefully implemented, and people will be understandably anxious about how they will affect their lives, but I share the Government’s belief that they are necessary and for the better, and I am confident that, in time, this will be proven.

15:18

[Mark Tami (Alyn and Deeside) (Lab)]

I recognise that a lot of Members want to take part in the debate, and I want to make just a few points about the possible effects of changing the disability living allowance and the impact on young people with cancer and their families.

Receiving a diagnosis of cancer for your child is devastating. Each day, 10 families get that terrible news. For my family, that news came on 31 July 2007, when what we thought was a viral issue with our son was in fact leukaemia. Your life and that of your family changes at that moment: you are scared, frightened, terrified—you do not know what is going to happen next—and when the treatment starts, it is quite an aggressive process. It is a long, helter-skelter journey; there is no quick fix. For girls the protocol is two years, and for boys it is three. Children will respond very differently to chemotherapy. Some will respond relatively well, whereas others will get quite ill, but few get through it without any side effects. There will be times when things will be fairly stable, with periods at home and out of hospital, but there will be other times when you are back in and out of the hospital with an infection or some other problem, which affects the family as a whole.

The financial impact of this illness on your family is probably the last thing you think about when you are told the devastating news, but it must be taken into account because, like the treatment period, it goes on for years, rather than days, weeks or months. We were fortunate because I have a well-paid job and an understanding employer. In my case, two parents can share the care, we have the use of a car, and we have a supportive family and friends. Many people I have met and know were not in that position, which is why disability living allowance is a very important, if limited, support, on which many people rely.

I ask the House to consider what it is like being in a hospital almost full time, day and night, perhaps with another child at home who cannot really grasp what is going on. Some people in this position are single parents. Some cannot drive or do not own a car, so the very task of getting to and from hospital becomes a nightmare. Some do not have any family network or friends on whom they can rely. Perhaps their employer, who at first was very understanding, later requires them to come back to work, but as they are not sure what the next day will bring they are not sure whether they can commit to doing that. They start to use up their paid leave, then start to take unpaid leave, and then perhaps they give up their job altogether.

A 2007 survey found that 83% of families incur significant extra costs associated with their child’s cancer and 68% get into actual financial difficulties. I think that the survey is wrong, because I believe that about 100% of people in this position find themselves incurring extra costs—I do not see how they can fail to do so. The current qualifying period for DLA already creates problems, as it takes no account of the sudden onset of many cancers—that point was made earlier. Families need help at the earliest possible time, and doubling the qualifying period will only make matters far worse. I ask the Government to look at that again, and I hope they do so.

I also ask the Government to recognise that cancer treatment is not a nice, smooth process; there are ups and downs, and a failure of the treatment or a relapse will result in a different protocol being used, which again can cause a number of problems. My son went down the transplant route, and a lot of issues arise there. Families may need just as much support a year or two years down the line as they did when they received the first news. There is no one-size-fits-all solution and any assessment criteria must take account of that. The Government need to rethink and to listen to charities such as CLIC Sargent, which deal with the families day in, day out and provide a very high level of care. They are the experts. Please listen to the experts and take their views on board.

15:24

[Chris Skidmore (Kingswood) (Con)]

I welcome the Bill, which marks a point at which we can send out this message: we cannot continue to spend on welfare as we have previously. Instead, we need to understand that there is no such thing as Government money, free to be given out; there is only hard-earned taxpayers’ money, which in these difficult times needs to be spent with caution and care.

Over the past 13 years, we saw no evidence of that caution, as the total annual expenditure on benefits mushroomed to £152 billion. Every year, £5.2 billion was lost in overpayments, of which £1.5 billion was lost to fraud. Some £3.5 billion was spent annually on administration costs and paperwork alone. As we have heard from the Minister, other benefits rose, with the cost of housing benefit having increased from £11 billion to £20 billion since 1997. That is simply unsustainable and we must act.

I wish to refer to the words of one commentator, who once said that

“we have reached the limits of the public’s willingness simply to fund an unreformed welfare system through ever higher taxes and spending”.—[Official Report, 14 May 1997; Vol. 294, c. 65.]

Those words could have been spoken today by the Minister, but they were spoken by Tony Blair in 1997. In opposition, Blair understood the problem. He understood, even 14 long years ago, that our welfare system prevents people from living independent and fulfilling lives. He understood that it creates a segregated society, which he stated was a “moral and economic evil.” In 1997, Labour’s manifesto promised:

“we will face up to the…issues that confront us. We will be the party of welfare reform.”

I see very little evidence of that, and, tied down by Members on the left, the party did nothing.

In this debate, we are having to deal with the tragedy that that inaction has left us. Millions of people of working age are locked in dependency on state benefits, with little incentive to get off them. They can exploit a system that provides hand-downs, rather than a hand up—a system that has become the engine of social failure and has driven a culture of “work does not pay”. That, in turn, has driven the importation of cheap labour, exacerbating the immigration problem.

I hope that this Bill can mark the turn of the tide and that it will usher in a new era—one that we were promised in 1997 but that was never delivered. I hope this will be an era of reform that will transform this nation. The stakes might be high, but we cannot afford to waver on welfare reform. We must deliver for the health of the nation, and I urge every Member to give the Bill their full support.

15:27

[Malcolm Wicks (Croydon North) (Lab)]

It is a pleasure to follow my Blairite colleague on the Government Benches. May I say, by way of introduction, that I judge, as many of us would, that wise social security policy seeks to relate the issues of benefits to the issue of employment? I would argue that we should start the discussion with work. I wish to analyse the Bill and some of its proposals in that important context, because surely for those able to work the best social security policy is a job—things start from there.

I often quote William Beveridge at this stage, partly because it reminds us that there was once an era of great Liberal reform. In his famous 1942 report, he talked about the giants of want, disease, ignorance, squalor and idleness standing in the way of social reconstruction once peace had come. He said that the giant of idleness, by which he meant unemployment, was the largest and fiercest of the giants and that if we did not overcome it all the other social goals of peacetime reconstruction would be out of reach. If one thinks about the implications for health and education, one sees exactly and empirically what he meant, so that is my starting point.

Skipping forward 65 years from the great Attlee reforms that implemented the Beveridge recommendations and many others to the present day, it seems to me that there are three issues or obstacles that we must address or overcome if we are to get right the balance and relationship between what I still prefer to call social security—I find the term “welfare” pejorative—and work.

The first issue is employment policy. Where is the Government’s full employment policy? Is it their ambition to move back towards full employment? In my Croydon constituency, literally hundreds of job losses have just been announced at the Home Office’s Border and Immigration Agency. In addition, the council will contribute hundreds of job losses and there will be job losses in the health service with the reform of primary care trusts. That is just the start in an area that is very dependent on public sector work. What we are seeing is not ambition for full employment but a move towards further unemployment, which concerns me greatly.

One of the great tragedies is that many of our fine young people leaving school and getting vocational qualifications and degrees are finding that no jobs are available. We must all think long and hard in the short, medium and longer term about whether we can somehow move towards a job guarantee for our young people, many of whom do so well in education and skills. We will betray a generation if we cannot soon offer them work that suits their skills, creativity and qualifications.

On the contentious issue of immigration, it is clear to me, from a London perspective, that eastern European immigration has made it more difficult for people on the margins of the labour market to get jobs. It is a simple matter: if an employer is presented with a British person of whatever ethnic group who is not job-ready, as opposed to someone from Lithuania or Poland who is clearly eager to work and will probably turn up on time, who will they employ? How, in those circumstances, can we enable British people to get the work that our country owes them?

[Stephen Lloyd]

That is an important point. Does the right hon. Gentleman agree that a key area in the Bill—within the black box that was discussed earlier—is the fact that the Department will pay providers upwards of £14,000 to help into work people who have been away from work for a while and to sustain them in work over a couple of years? Does he agree that that is a positive step?

[Malcolm Wicks]

Of course, which is why the Labour Government, under the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), established such policies with Jobcentre Plus. Of course that is the right thing to do.

The second of the three issues I mentioned is wage levels. I recall from my history that the Speenhamland system was created in the late 18th century. As far as historians can judge, that was the first direct wage subsidy in Britain. Since then, we have had a number of policies, starting with family income supplement, tax credits and so on that could be said to subsidise low wages. I am proud that a Labour Government introduced the minimum wage, but Conservative Members will not be so proud that their party vehemently opposed it. As we move back towards economic growth and greater affluence, should we be talking about not just a minimum wage but a living, or adequate, wage, not least for people who are employed by multinationals that make large profits? Otherwise, the social security system will continue to subsidise low and sometimes exploitative wages.

The third issue is the work ethic, on which my hon. Friend the Member for Sunderland Central (Julie Elliott) touched. I believe the work ethic is alive and well in many parts of Britain. I also recognise that because of the de-industrialisation during the Thatcher years the work ethic among some individuals in some communities had the stuffing knocked out of it, and there are now communities where three generations of people have been nowhere near a job for a very long time. We need to think through the implications of that.

Where people can work and where jobs are available, working-class people on our estates are angered by spongers and shirkers. Those people do exist and we should not ignore that fact, but in a culture in which bankers can stick two fingers up to democracy, to Parliament and to the Government and in which multinationals brag about avoiding paying tax, we have become an amoral, if not sometimes an immoral, economy. If we are to preach honesty and responsibility to the poor, as I think we must, although it can be difficult at times, then responsibility is also good enough for the rich and powerful.

15:34

[Paul Uppal (Wolverhampton South West) (Con)]

It is an honour to follow the right hon. Member for Croydon North (Malcolm Wicks). I very much shared some of the sentiments that he expressed. His speech contained a good deal of common sense. I would not expect anything else from a fellow Wolverhampton Wanderers fan; that is the least I would expect from him. I do not think I am the third Blairite in a row to speak, but I will endeavour to add some thoughts, particularly from a personal perspective. Six minutes is not long enough to do justice to my full thoughts on the Bill, but I shall be brief. Hon. Members may be happy to hear that I do not intend to use all of my allowance.

This piece of legislation is a seminal Bill. It is one of the reasons that I hold the politics that I do. I am a Wolverhampton Member and Wolverhampton South West is a no-nonsense constituency, full of decent, hard-working folk who say it as it is and always wear their heart on their sleeve. The sentiment that has been repeatedly expressed to me is that the Bill has been a long time coming. Its central ethos is that work always pays. I shall sum it up by recalling my personal experience of my father.

My father came to this country with less than £5 in his pocket and no idea where he would sleep that night. He took that risk not only because he wanted to live in a country that had choice, freedom and opportunity, but because he wanted to work. Within 48 hours of his arrival, someone tapped him on the shoulder and said, “Do you know you can actually claim benefits?” That was anathema to him; it was not even in his mind. He came with the ethos of working, and working is what he has always done. That story has been replicated by those of scores of my relatives, who came over to work and had the ethos of working hard at their core.

I have actually been poor. I was brought up in poverty. I say this to Opposition Members—to all Members, actually: there is no nobility in poverty. It is something one strives to escape from. I went to a state school. My friends divided into two camps: those who had the ambition to move on, and those who, even then, in the late ’70s and early ’80s, would tell me to my face that they envisaged that the rest of their life would be on benefits, and that they were quite happy to live that way. The Bill, through its ethos of making work pay, tackles that problem head-on.

The right hon. Member for Croydon North said that a lot of people had the stuffing knocked out of them in the 1980s. I will use a personal example. Many of the uncles that I referred to earlier lost their jobs because they worked in industries in the midlands in that period, but almost all went on to establish their own businesses. They were driven by ambition and the ethos of trying to better their lives.

I have spoken a lot from an historical perspective, but I want to bring my remarks up to date with a personal story that I heard from one of my closest friends just after Christmas. He had run a motor salvage firm, which, through a bit of bad luck and for other reasons, had gone downhill and eventually folded. People said to him, “How about claiming? You’ve contributed enough in your life,” but he said, “No. I’ve worked for myself and that’s what I’m going to do.” He set up a new business—a cleaning business. He has worked hard, but whenever he tries to employ staff—this frequently comes up—people approach him and say, “I’m happy to work for you if you give me a bit of cash on the side.” What they are saying is that work does not pay in those circumstances.

I am glad, and absolutely proud, to be part of the Government who are introducing the Bill. To make a non-partisan point, this has been a long time coming. It should have been done, not just in the past 13 years, but very many years ago. I shall sum up briefly by paraphrasing a saying that was used by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen): there is never a wrong time to do the right thing. As the Chinese always say, the first step of any journey is a long journey, and the most difficult step. I am happy to put my shoulder to the wheel and support the Bill, and push it through its very important journey.

15:39

[Teresa Pearce (Erith and Thamesmead) (Lab)]

All Members agree that the welfare system needs reform, and I welcome attempts to simplify the benefits system and make work pay. We need a welfare system that helps those who can work to do so, by supporting people into good, well-paid, meaningful work, and properly supports those who cannot work. However, I have serious doubts about the Bill’s effectiveness, and I am worried about the impact that some of its provisions will have on vulnerable people in my constituency.

I shall first raise some concerns that I have about how the Bill has been drafted and presented. Almost all the charities and organisations that I have been in touch with have raised legitimate concerns about the speed of the legislation and particularly the lack of detail. There is a heavy reliance on regulations and secondary legislation that makes it difficult for Members and others to scrutinise how the welfare reform agenda will work in practice. Clause 11 on housing costs, for example, is only 30 lines long. There is little detail or analysis of how child care costs, free school meals and council tax benefit will be covered under universal credit.

One of the most concerning aspects of the Bill is that some of its provisions are still under consultation. For example, clauses 69 to 72 propose the abolition of the social fund, yet the Department for Work and Pensions consultation on its proposed replacement is still open and does not close until 15 April. Abolishing the central fund and handing the emergency money to local authorities without ring-fencing is likely to create a postcode lottery. It is not right that this provision is included when we do not know its full impact and people have not had a chance to submit their views. I strongly urge the Secretary of State to withdraw any clauses on which consultation is still open.

One of the reforms in the Bill that will affect my constituency most is the changes to housing benefit. Capping local housing allowance rates and setting them at the 30th percentile of local rents rather than the median from April will create affordability problems. Many people will see a shortfall between their benefit and their rent. Plans to introduce regulations to uprate LHA rates based on the consumer prices index will make the problem worse. The DWP’s own impact assessment states that CPI is expected to rise by 2% each year, but rental costs will rise by 4%. This will break the link between housing benefits and actual rent costs, and means that many families will struggle.

The change will push many LHA claimants in London further out to areas like my constituency, Erith and Thamesmead, which has some of the cheapest housing in Greater London. This will place a great strain on our already overstretched housing and local services. The other possibility is that people will simply be unable to find any affordable accommodation, and will be at risk of debt and homelessness. Everyone should be entitled to a secure home. I urge the Secretary of State to think again.

Another of my concerns about is the proposal in clause 111 to apply a £50 civil penalty for claimant error. The proposal will affect the most vulnerable claimants—those who have difficulty filling out forms, those whose first language is not English and whose literacy skills are poor—and people who inadvertently miss out information. More importantly, it appears to link error with fraud, something that Ministers have done far too often recently and this afternoon, the most obvious case being the Chancellor’s announcement in the comprehensive spending review statement that over £5 billion was lost to benefit fraud. As we heard today from the hon. Member for Kingswood (Chris Skidmore), the figure is £1.5 billion. The DWP’s latest central estimates of total fraud and error across the Department shows that roughly the same amount of money was lost in claimant error as through official error by the Department, but we do not talk about departmental fraud. I urge the Secretary of State to reconsider the proposal to introduce a £50 civil penalty for claimant error, as well as the heavy sanctions in other clauses.

I was pleased that the Secretary of State decided not to proceed with plans to impose a 10% housing benefit cut on anyone who had been out of work for a year. That sanction did not make sense, and similar provisions in the Bill need to be reconsidered. A sanction-led approach does not make sense when we are facing huge public sector redundancies, a knock-on effect in the private sector and a weak growth rate which means that jobs simply are not available. There are 2.5 million people unemployed and fewer than 500,000 vacancies in the economy. I am already receiving a significant number of letters from constituents, many of whom were recently made redundant late in their careers, who are desperate to work but cannot find employment.

I have visited local colleges, where highly motivated young people are gaining qualifications in the hope of getting an apprenticeship or a job, but they are fearful because they know that the ratio of claimants to Jobcentre Plus vacancies is 12 claimants to every three vacancies. People need help overcoming barriers to work. They need personalised support, and a Government with a growth strategy to create jobs. A sanction-based approach will only cause severe hardship for the people who need the most support and further stigmatise people on benefits, setting neighbour against neighbour. I also fear that it will mean a significant increase in child poverty rates in this country.

Finally, I dispute the assertion by the Secretary of State that the welfare state is only for the most vulnerable. It is not: it is for each and every one of us. It is in effect a national insurance system into which people pay when they do not need it so that it is there when they do. It is a system in which contributions have just gone up by 1% for everyone in employment, but all they can expect is a cut in pensions and benefits. Overall, I support the principle of universal credit, and I am in favour of simplifying the benefits system and creating work incentives, but in the context of £18 billion of welfare cuts—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

15:45

[George Hollingbery (Meon Valley) (Con)]

I pay tribute to my hon. Friend the Member for Wolverhampton South West (Paul Uppal), who made a compelling speech. My contribution is likely to be more technocratic, but I pay tribute to his eloquence.

I pay tribute, too, to the Opposition, who have a real passion for this subject and, Government Members will all acknowledge, are more likely to represent constituents who are subject to the vagaries and whims of the benefits system. We must encourage them, however, to accept that our ministerial team cares equally deeply about this complex, difficult and challenging issue. It has introduced a broad skeleton of proposals on which to hang the detail. In my conversations with Ministers, it has been quite clear that they know that that detail is missing at this stage. Indeed, the Secretary of State has made it plain that there is more work to be done on particular areas, but change is certainly required.

There are more than 30 different benefits out there that can be claimed. There are 14 manuals in the Department for Work and Pensions, with 8,690 pages of instructions for officials. There is a separate set of four volumes for local government, with 1,200 pages covering housing and council tax benefits alone. That is an astonishingly byzantine system. One of my constituents, Nigel Oakland, wrote to me:

“Nobody at the Jobcentre Plus can explain if it is beneficial if I continue to sign on. The last advice I was given is that I should Google the question.”

In such a situation, where even the experts at Jobcentre Plus cannot answer the questions that arise, we are clearly in difficulty.

It is confusing for clients. There is a 30-page form for housing and council tax benefit, including three pages of declarations. Employment and support allowance requires a 52-page form; jobseeker’s allowance, 12 online sections, each of five to 10 pages long; and disability living allowance, a 60-page form. Is it any wonder that people become confused and fill in the forms incorrectly and make mistakes? The system is extraordinarily expensive to administer. The DWP spent £2 billion last year administering working-age benefits, and local authorities a further £l billion administering housing benefit and council tax benefit. Even the tiny citizens advice bureau in Bishop’s Waltham, a town of 5,000 people in a rural and relatively affluent part of Hampshire, processed 2,176 queries about benefits in 2009-10, advising people how to claim them.

As we have heard from my hon. Friend the Member for Kingswood (Chris Skidmore), overpayments are rife, and I do not intend to rehearse the clear disincentives to finding work imposed by the benefits system, as that has been covered in some detail by the Secretary of State and my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett). There is absolutely no doubt that with some work having a marginal rate of tax of 95%, there are powerful disincentives that prevent people from going out to work. The taper in the universal credit of 65% at least allows some certainty, so that every time someone goes out to work they can be sure that they will earn a reasonable amount and get a reasonable amount in their pocket.

The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) discussed the difficulties for self-employed people in the new system. Only yesterday, I asked my right hon. Friend the Minister of State how that would be administered outside the PAYE system. He had a clear answer, and said that there would be mechanisms in place. In the present situation, my constituent Zehra Peermohamed wrote:

“For every £50 extra per week my new business may generate”—

a business that she started up herself—

“I would only gain an extra £4.81 of it to add to my overall income…It seems that there is little incentive for people in my situation who want to better themselves and not to rely on the benefit system.”

Whatever objections the shadow Secretary of State might have now, the existing situation is certainly no better.

Gemma Sword, a single mother with a child who has turned seven, says:

“In March…I started working part time 4 hours weekly over 3 days earning £96 monthly of which I was allowed to retain £80.”

From 15 November, she earned up to £150. Ms Sword continues:

“I was then transferred to Job Seekers allowance as my son turned 7 and was told that I can now only keep £20 of my monthly earnings”,

which did not even make it worth travelling to work. She was then told that she had to look for full-time employment but, to do so, had to leave her part-time employment. Those rules make no sense to anybody who looks at them carefully, and there is no doubt in my mind that there are powerful disincentives in the system to stop people going out and bettering themselves by finding work.

I do not want to spend a large amount of time examining the issue now, but we need sticks as well as carrots. There needs to be an understanding in the system that if someone does not perform as the system requires them to do in looking for work, they will pay a penalty in terms of the benefits to which they are entitled. Without that part of the mix, the new universal credit will not work.

I would love to examine in more detail the Work programme and its localisation, because the Communities and Local Government Committee has heard evidence that localisation will be peripheral. I would like to hear about the migration from disability living allowance to the personal independence payment, and in particular about the mobility component. I have talked to the Under-Secretary about that at some length and received considerable reassurances, for which I thank her. I would like more on the work capability assessment, the Harrington review of it and the ongoing review continually to refine that system and make it fairer and more equitable; and I also want to hear a little more at some stage and, particularly, in Committee about the appeals process and the proposed changes to it.

On the whole, however, this is a thorny, knotty problem, which the Government are grasping with some alacrity, and I for one will certainly vote for the Bill’s Second Reading.

15:49

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

These debates about our welfare system or, as I should say, heeding the comments of my right hon. Friend the Member for Croydon North (Malcolm Wicks), our social security system—whether in the House, the media or the pubs and living rooms of our constituencies—often become a magnet for two opposing arguments. The first is that everyone on welfare is somehow undeserving and all the money is spent incorrectly; the second is that every penny spent is 100% effective and should be beyond question. We have heard those views today, but both are extreme and neither is true.

I will always support our welfare state, and I want to live in a country where we accept collective responsibility for the people who are most in need. We would all be much poorer if we did not enable the most vulnerable members of our society to live with dignity, and it would be a far more daunting society without the support that we currently offer to people who are searching for work. I admit, however, that our system is not without its shortcomings, and it could benefit from some reforms. Unfortunately, those are not the reforms suggested in this Bill.

Our welfare system can be daunting and is too complex, and universal credit could be a positive step forward if it simplifies the system, but simplicity and transparency, welcome objectives that they are, are not enough on their own; the welfare system must also be fair and effective and, above all, enable the transition from welfare to work. The proposals in the Bill fall short of those measures, and as a result, despite being a supporter in principle of welfare reform, I cannot support them today.

The Government need to realise that we can support the welfare system and make it stronger only if we are also willing to support the labour market. Helping the transition from welfare to work will be successful only if there is work to take up, yet the scale and pace of the cuts that we currently see threaten to send unemployment soaring, just as happened under the previous Conservative Government, when it topped 3 million on two separate occasions.

Government Members tell us that the welfare bill is expensive, but so is mass unemployment. I believe enormously in the power of work. Employment brings dignity, respect and decency to life, and getting more people into work should always be one of the prime objectives of the Government. In my constituency there are 16 people chasing every advertised job, and, with some of our major employers, such as the council and the police force, axing hundreds of jobs, that will only become worse. Residents are concerned about their jobs, and with youth unemployment at record levels they are worried that there will be no work for their children.

The Labour Government took deliberate and positive steps to reduce youth unemployment by introducing measures such as the future jobs fund. By September, almost 700 young people in my borough had completed placements funded by the scheme. The scheme was an opportunity for participants to learn new skills, to develop confidence, and to learn about the things that might be holding them back in the jobs market. Many of the people who completed it went on to further education or training. Where was the sense in axing such a scheme, which was already proving successful in stemming the increase in youth unemployment?

It seems to me that schemes such as the future jobs fund were cancelled not for economic reasons but for political ones. The Government appear intent on spinning the myth—

[Stephen Lloyd]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will, because I believe that I could not give way to the hon. Gentleman on Second Reading of the Health and Social Care Bill, and I do not want to be discourteous a second time.

[Stephen Lloyd]

I thank the hon. Gentleman. On the future jobs fund, does he agree that the percentage of people who went into paid work afterwards was incredibly low? One of the reasons why the Government have decided to focus more on apprenticeships, where they have invested much more money, is that with apprenticeships the jobs that people get tend to stick.

[Jonathan Reynolds]

When I looked into this, anticipating such an intervention, I found that it is difficult to get precise figures on a constituency basis, but the information that my local authority could give me shows that two thirds of the people who were employed through the future jobs fund in my borough went on to paid employment or training. I appreciate that that is not quite the answer to the hon. Gentleman’s question, but it is the best one I can give him.

The Government seem to want to create a year zero and pretend that no reform went on over the past 13 years, in order to create a benchmark by which they can measure their own progress. However, it is a false benchmark because it fails to recognise the progress that was made. Returning people to employment was an integral part of the last Labour Government’s policy, and many advances were made. The Benefits Agency-Jobcentre Plus merger, which is always identified as best practice, allowed people to look for work at the same time as claiming as benefits. We launched the new deal, under which, for the first time, people were told that they could not refuse help to find work, and it was the Labour Government who toughened sanctions against those who could work but refused to do so. Some of the measures now being proposed dilute the sanctions imposed by the last Labour Government.

[Mel Stride (Central Devon) (Con)]

Will the hon. Gentleman explain what progress was made under the last Government, given that the numbers claiming incapacity benefits increased from 700,000 to over 2.5 million?

[Jonathan Reynolds]

The benefits changed, so I am afraid that the hon. Gentleman is not comparing like with like. If he goes to the Library, he will see that the overwhelming rise in sickness benefits occurred in the 1980s, when take-up doubled. That is because when we went through the process of deindustrialisation the Conservative Government threw people on to the scrapheap, encouraged them to take that benefit until they retired, and did not care one bit about them. That is where he should look if he wants to find a reason behind these figures.

[Ian Paisley (North Antrim) (DUP)]

Does the hon. Gentleman acknowledge that in Northern Ireland there is over £700 million in unclaimed benefit that people should be claiming and have not claimed? If that is the case in Northern Ireland, the same must be true across the rest of the United Kingdom.

[Jonathan Reynolds]

I thank the hon. Gentleman for his point; I am pleased that he has been able to put it on the record.

I am proud of the Labour Government’s record on welfare reform, which stands in stark contrast to what occurred in the 1980s and 1990s, when there was no such reform at all until the end of the Conservative Government. Only now are the Conservatives coming back to it, but against the backdrop of public sector cuts and deficit reduction. The question that people will ask is whether the Bill is really aimed at getting people back into work or, once again, merely pursues the Government’s ideological goal of reducing the size of the state.

In principle, I welcome the move towards a single, simplified universal credit; few would not do so. That has the potential to ensure that people are clear about the income they will have if their circumstances change, and in principle I wish that we had done it. However, only through scrutiny of the detail of the Bill will we determine whether the reality of these reforms matches the promise, or whether they are really a cruel camouflage to hide savage cuts targeted at the most needy members of our communities. The measures in the Bill will penalise savers. Estimates suggest that nearly half a million families could lose all eligibility for financial support. Some reforms, such as the removal of the mobility element of DLA, are simply cruel and unfair. The Bill leaves many questions unanswered, such as how some benefits—crisis loans and council tax benefit, for example—will maintain any consistency if eligibility is decided locally.

Furthermore, we still know far too little about the Government’s plans for the most important area of all—child care. For all the good that any reform might do, unless the Government continue to provide support for childcare, we will not make anything like the progress that could be made.

I believe that the principles behind the Bill are right, but there is too much in the proposals that is ill thought through, and will be detrimental to many vulnerable people. The Bill is not ready in its present form, and the Government should recognise that. Welfare reform has a great many supporters in all parts of this House. The Government should have built on that consensus in creating the Bill, but they did not. That is why I will not support the Bill today, but will vote for the reasoned amendment moved by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne).

16:00

[Sajid Javid (Bromsgrove) (Con)]

I welcome the Bill, and the excellent and thoughtful contributions that we have heard from all parts of the House. This Bill is important for many reasons, and it goes to the heart of the kind of society that we want to be. Do we want to be an opportunity society that rewards people for hard work, believes in equality of opportunity rather than equality of outcome, and believes that we should have a welfare state that stands behind people to cushion them if they fall, not one that stands in front of people and stops them progressing and reaching their ambitions and aspirations? That is the essence of the Bill. If one believes in an opportunity society, one believes in this Bill.

Some 1.4 million people have claimed out-of-work benefits for nine of the last 10 years. In that time, 600,000 people have gone straight on to the welfare register on leaving school and have never worked since. In short, many people have come to see welfare as a career option. I have seen that as an MP when meeting my constituents. In particular, I met a local farmer some months ago who employs 52 people on the national minimum wage for unskilled work. Of those 52 people, 40 are foreign workers from eastern Europe. When I asked him why that was the case, he said that our young people lacked a work ethic. In many cases, he had interviewed people but when they had considered the job and checked the numbers, they realised that they would be worse off if they took the job as opposed to staying on welfare.

Our welfare budgets have rocketed in such a way that today, 2 million children are growing up in households where no one works. Incredibly, the proportion of working-age adults living in poverty is the highest since records began. Worklessness and benefit dependency is costing our country a fortune. This entrenched poverty and worklessness throughout Britain is bad for benefit recipients and bad for society, and often leads to higher levels of debt, family breakdown, and alcohol and drug abuse.

At the heart of the problem is the lack of work incentives. We have a proliferation of benefits that makes the system so complex that people do not know whether they would be better off in work than out of work. I went to my local jobcentre a few months ago and asked the staff how long it would take them to tell somebody if they would be better off in work if they came in and said that they could get a part-time job tomorrow for 10 hours a week on the minimum wage. The answer was that it would take 90 minutes on average. They added that even when they give an answer and it happens to be yes—in many cases it is no—because it takes so long, many people have so little faith in the answer that they decide not to work in any case. That has to change.

We cannot address only the symptoms of poverty and worklessness; we have to address the causes, such as welfare dependency, educational failure, addiction, debt and family breakdown.

I will highlight three areas of the Bill that I believe represent the right way forward. The universal credit is the most important part of the Bill, because it will ensure that everyone is better off in work than out of work. The taper relief, at 65%, strikes a good balance between budgetary pressures and giving the right incentive to work. However, I hope that in the longer term, Ministers will look again at that rate with a view to reducing it. I caution that in implementing the universal credit, Ministers should look carefully at the IT systems, because they will have to work with other agencies, including Her Majesty’s Revenue and Customs. Many previous Governments have bungled new IT systems in terms of time or cost. This therefore has to be considered carefully. So does the passporting of benefits, to ensure that the nature of the taper relief is maintained and there are no cliff edges.

I also wish to highlight the changes to housing benefit, which are welcome because for the first time, they will ensure that people on housing benefit cannot live in properties that ordinary working people would have no prospect of being able to afford. That was a commitment in the Labour party’s manifesto, and I hope that all Members wholeheartedly endorse it.

The change to the consumer prices index for the uprating of housing benefit is also welcome, partly because it will save £300 million a year and we have to find savings given the budgetary pressures. Also, as such a huge proportion of people in social housing receive housing benefit, it may lead to a change in the rents demanded. Finally, I wish to highlight the welfare cap, which will be £500 a week for couples, meaning that no family can earn more than £26,000 a year in benefits net, or £35,000 gross, which happens to be equal to the national average household wage.

In summary, the Bill is a huge step forward in creating an opportunity society. It restores the dignity of labour and ensures that the Government will be standing behind people in case they fall, to help cushion that fall, but will not be in front of them to prevent them from progressing and meeting their ambitions and aspirations.

16:06

[Yvonne Fovargue (Makerfield) (Lab)]

Like many other Members, I welcome the concept of simplicity in the welfare system—of which I have experience, having worked in it. I also welcome the aim of ensuring that work is a route out of poverty. However, I do not believe that the Bill demonstrates fully how that will be achieved. Among two groups in particular, it could actually increase the number of people falling into poverty and debt. Like others, I am seriously concerned that people who are ill or have an accident, and have to take prolonged time off work, will suddenly be negatively affected by the plans to replace disability living allowance with the personal independence payment and by the changes to employment and support allowance, and will get less help from the universal credit, particularly during the first six months of their illness or disability.

People in that situation are coping with significant stress and coming to terms with a fundamental change in circumstances, as well as a sudden and dramatic drop in income. I had worked out some examples, but I shall not have time to give them. Suffice it to say that in months three to six, a single person who has worked all their life but has had a stroke and can no longer work is likely to be more than £130 a week worse off unless the qualifying period for the personal independence payment is brought forward to three months.

The importance of the severe disability premium cannot be overstated. It is a source of extra help for people who do not have a carer and have higher costs because of that. If it is not included in the Bill, the drop in income for hard-working people who suffer a life-changing illness or disability will be catastrophic. If they have a mortgage, the position will be even worse. Almost 20% of the people who attended an advice desk run by the citizens advice bureau at the county court said that an illness was the major factor in their falling into mortgage arrears, putting them at risk of losing their home. No fewer than three measures in the Bill will substantially reduce the amount of financial support available to people in that situation.

I now turn to families, particularly those paying for formal child care. If, as has been suggested, only 70% of child care costs are covered, many second earners on a low income will not have a realistic option of returning to work until their children are older and need less care. In some cases it could cost people money to return to work, which was not the intention behind the Bill at all. In fact, somebody’s problems might start not when their baby is born, as is usual, but when statutory maternity pay or maternity allowance is paid, because it is unclear in the Bill whether that will be treated as “income other than earnings” and lost pound for pound.

Clarification is also needed on other issues, such as whether benefit will be paid to the household rather than to the main carer. That is a big issue for many families.

[Ian Paisley]

Does the hon. Lady accept that there is a huge policy contradiction? The Government claim that they want to eliminate child poverty, yet at the same time they want to cut the social security payments that go right to the heart of benefiting children from low-income households.

[Yvonne Fovargue]

I totally agree with the hon. Gentleman, and I have evidence that some lone parents will not be able to work their way out of poverty.

To return to the question of to whom benefits are paid, I have seen mothers whose only source of stable, reliable income is child benefit, and many more mothers who do not know what their partners earn and who are given an allowance every week. That problem will be exacerbated if benefit is paid to main wage earner, which is usually the man.

Finally, if there is a query about one element of a claim there is often a delay, particularly when housing benefit and private landlords are involved. I can only hope that the other elements of the universal credit will be paid while such matters are investigated, and that the benefit is not so universal as to be “all or nothing” in such cases.

On sanctions, it is quite right that people refusing reasonable work should be penalised, as indeed they are under the current system. However, I urge the Government to ensure that great care is taken when sanctioning vulnerable claimants. For example, I dealt with a client who was sanctioned for not turning up for an interview to discuss his claim. Hon. Members might think that that is perfectly reasonable, but that client was in a secure institution—a secure mental health unit—and the letter requiring him to turn up for interview was sent there.

The £50 civil penalty for claimant error should be withdrawn. I am sure that, like me, many hon. Members deal almost daily with constituents who have been the victims of official error. The focus on claimant error is out of proportion. People who claim those benefits include the most vulnerable people in our society. They are the most likely to make errors, particularly with official forms, and the least likely to be able to afford the penalties. We should not simplify the benefit alone; the claiming process should also be simplified.

I hope that the amendment will be supported, because the Bill lacks clarity and detail. In fact, it will have the opposite effect of what is intended in terms of the Government’s stated broader goals and obligations, such as making work pay, reducing child poverty and protecting vulnerable groups.

16:09

[Harriett Baldwin (West Worcestershire) (Con)]

This is a profoundly important Bill. It is born out of the Secretary of State’s deep passion for helping people to get out of poverty—he has spent the last decade looking at that. There are few ways in which people who are born and grow up in poverty can find a way out. I can think of some, but winning the lottery does not happen very often and it is unlikely that someone will get a surprise inheritance from a relative whom they did not know existed. Marrying a top footballer is rare, and it would probably be quite hard work. The hon. Member for Makerfield (Yvonne Fovargue) spoke of work as “a” route out of poverty, but it is “the” route out. If Opposition Members have alternatives to work as a route out of poverty, I would be interested to hear of them.

The Bill removes the barriers that the welfare system puts in the way of people working their way out of poverty, which is important. We must recognise—this is why I am so disappointed that Opposition Members will not support Second Reading—that there are many barriers in the system’s construction that prevent people from getting the important message that they need to go out to find a job and to work, and that that is how they will improve their economic circumstances.

[Ian Paisley]

I appreciate what the hon. Lady says about people who are able-bodied and who can work working their way out of poverty, but how do people find their way out of poverty if their impoverishment is a result of disability?

[Harriett Baldwin]

As the hon. Gentleman knows, there are many provisions in our welfare system for exactly that sort of situation. I do not think that anyone is suggesting that people with no capacity for work should get out and work. We should have a generous safety net, as we do for people in those situations.

However, the system as currently constructed has many barriers that send the message that taking on full-time work is not worth while. With single parents facing a withdrawal rate of 96%, what kind of message does that send to people about the sense in going to work? We have all met people who work 16 hours a week. As we know, the way that working tax credits work gives people an incentive to find a job working 16 hours a week. At the moment, those working 15 or 17 hours a week find themselves financially worse off. That is why it is so important that the Bill tackles those cliff edges, ensuring a much smoother process and a linear relationship between the time that people work and the amount that they take home. At the end of the day, we all respond to the financial incentives that are inherent in the system.

As we heard earlier, the current benefits system also pays couples more to live apart than to stay together. I believe that I am right in saying that 2 million people in this country would identify themselves as being in a relationship but living apart. No one can deny that, in large part, that is down to the messages and the financial incentives sent through the welfare system, which will be reformed by this Bill.

I am sure that Opposition Members will welcome the fact that the distributional analysis of the universal credit shows that the vast proportion of additional money in the system will go to those in the lowest income deciles, with 85% going to those in the four lowest-paid deciles.

I should point out, however, to the Secretary of State that it was still a shock to realise that even under the changes that we are discussing today, the benefit withdrawal rates for those going into work will still be 65p in the pound. That is still a shockingly high marginal deduction rate, when our higher-rate taxpayers are on 51% or 52%. The Child Poverty Action Group, the Centre for Social Justice and Family Action have all argued for a withdrawal rate of 55%, with Save the Children arguing for a 50% withdrawal rate. I hope that everyone in the House will welcome the fact that the Bill gives the Chancellor in future the ability to stand at the Dispatch Box and say that he is making a change in the marginal withdrawal rate, because we would all like it to be reduced over time.

[Naomi Long]

I acknowledge what the hon. Lady says about the Bill giving the Chancellor the freedom to do that, but it does not require him to do it. Would it not provide people with more certainty if the Government indicated that that were the intention?

[Harriett Baldwin]

I think that we have heard the Secretary of State put that on the record on a number of occasions.

There are a few debating points that have arisen in this debate, particularly from the Opposition, that I would like to address in my few remaining minutes. On savers, we can have a debate about whether someone with £16,000 in savings ought to be in the benefits system, but we should all recognise that the welfare system should focus on those on the lowest incomes and with the lowest savings. That is one of the difficult decisions that it is worth tackling, and the Bill does that.

[Stephen Timms (East Ham) (Lab)]

That feature of the proposals will mean that, as a fine simply for having £16,000 in the bank, people will lose all their tax credits, which could amount to £5,000 a year. Surely that is not right.

[Harriett Baldwin]

The right hon. Gentleman probably also supports the proposition that I should continue to receive child benefit. We need to make these decisions, and they need to focus on certain levels of savings.

Passported benefits, on the other hand, are something that we will need to discuss in great detail. I hope that the Committee will do that, because things such as free school meals, which at the moment are passported in with other benefits, are also a trigger for early years payments for schools and the pupil premium. It will therefore be particularly important to have clarity about how free school meals are going to work in the future. Personally, I would favour putting that in with the universal credit, where it would be affected by the same withdrawal rates.

Another good point that has been raised in the debate was about entrepreneurs. We must ensure that people do not hear from the benefits system a message against entrepreneurial behaviour. The Committee needs to look closely at how the imputed income of new business start-ups will be treated for benefit purposes.

We have heard allegations that the Bill has been rushed. I disagree. We are talking today about changes that will not even come into effect until 2013. However, I agree with my hon. Friend the Member for Wolverhampton South West (Paul Uppal) that they cannot come soon enough, although I know that a major computer system needs to be changed. I welcome the measures in the Bill and I look forward to supporting its Second Reading.

16:21

[Mrs Anne McGuire (Stirling) (Lab)]

I am delighted to follow the hon. Member for West Worcestershire (Harriett Baldwin). In June last year, I made a contribution to a debate in the House on welfare reform, in which I congratulated the Secretary of State, then new to his post, on the sentiments that he had expressed on reforming the welfare system in this country. At that time, I said that he had used a broad brush, and that we had not yet seen any details. Frankly, we still find ourselves in that situation today.

Like other Labour Members, I welcome some aspects of the Bill. The introduction of the universal credit and the moves towards simplification are certainly proposals that we can endorse. Most of us, and most of the organisations that we communicate with, welcome those developments, but there is still serious concern about significant aspects of the Bill. In the time available to me, I want to concentrate on just a couple of those aspects.

First, the Bill is skeletal in the extreme. The clauses have definitely been drafted with a broad brush, declaring an intent rather than giving details of what will happen. For example, what exactly does

“benefit rates for people not in work will generally be the same as under the current system”

mean? How will “generally” impact on the specific? How will individuals know, when deciding whether to support the Bill, what is actually going to happen if work is not a realistic option for them? I have rarely seen a Bill in which so much depends on regulations that “may” happen—[Interruption.] I do not know which hon. Gentleman is chuntering over there, but I can give the House an example from clause 4 on entitlement. Subsection (2) contains the words “Regulations may provide”, and subsection (3) states that “regulations may specify”. Subsection (7) states that “regulations may specify circumstances”. And so it goes on.

We are not being asked to deal with a major piece of welfare reform here; we are being asked to buy a pig in a poke. We do not know the details. The Secretary of State made great play of the fact that this will form a contract. Well, in all contracts, the devil is in the detail. I welcome the comment of my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) today that he is not prepared to sign up to the Second Reading of the Bill until we have seen the details. We have so many unanswered questions. What will happen when council tax benefit is abolished? Is it going to be replaced by a grant? How will that be assessed? How is it going to be managed?

I must point out to Conservative Members that it is not only in Labour constituencies that the Bill will have an impact. It will do so in the constituencies of Members across the Floor of the House, and individuals in those constituencies are now worrying about whether they will be able to maintain themselves in their own homes. What will happen to those who fall off the edge when their employment and support allowance runs out? Surely it is the right of any disabled individual in a civilised society to be supported if they are unable to work. Frankly, the Secretary of State’s comment about reviewing people whose impairment will not change throughout their lifetime was absolutely astonishing, and I think it did him no great credit. I would not like to explain to the parent of a deaf-blind child that they needed to bring their child for a review every so often—just to make sure that the child was still deaf and still blind.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like my right hon. Friend, I have received representations from many constituents who have a similar concern. Does she agree that, regrettably, those parents who have heard the Secretary of State today are likely to be even more worried than they were at the start of the debate by his very refusal to rule out the type of continued reassessment about which we are so concerned?

[Mrs McGuire]

I agree wholeheartedly with my hon. Friend. I believe that this is one of the issues causing the greatest concern among individuals and families.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

rose—

[Mrs McGuire]

If the Minister is going to clarify what the Secretary of State said earlier, I would be delighted to give way to her.

[Maria Miller]

I just wanted to clarify that these measures do not affect children.

[Mrs McGuire]

In that case, we can take the age forward and talk about a deaf-blind adult. Our case about people whose impairments or disabilities will not change and who can be assessed as such is not at all diminished, as they will still have to go through this review.

The type of review is also an important issue. For a long time, disabled people in this country have fought hard to be recognised as part of a social model of disability. What we are seeing now is the introduction of an assessment by a medical professional. Is it any wonder that disabled people out there are beginning to think that all those things for which they fought so long and so hard—the achievements they have made over the last 15 years, with cross-party support—are going to be thrown on the scrapheap? That, I think, is the danger posed by this Bill, and I have highlighted the questions that disabled people are asking.

The Minister might well be thinking that all this is a matter of hyperbole. I do not think it is, and I know that many of my hon. Friends would agree, because we are hearing daily quite tragic stories about people who are terrified about what is going to happen. They are worried not necessarily because the Government have bad intent, but because the Government are not explaining exactly what is in the Bill. I do not think that the Minister has bad intent and I certainly do not think that the Secretary of State has, but given that they are embarking on something that will radically affect individual people and families, we must have a better Bill than the one before us.

The Secretary of State is often cited as saying that this Bill amounts to the greatest change in the welfare system since Beveridge. The reason why Beveridge worked and was sustained for so long was that it was about engagement with the whole of society. It was about a contract that people recognised, knowing that if they put something into society, they could occasionally get something back—not just a cushion, but something that gave them a participatory role in that social contract. What we have now is a deconstruction of those Beveridge proposals. What we have is a system that effectively tells people that they cannot have welfare unless they meet all the criteria, which are not even known, in a Bill that is far more skeletal than many of—indeed, any of—the welfare Bills brought before this House.

We should not give the Bill its Second Reading today. If the Minister can tell us in her summing up that all those issues will be dealt with in Committee, we might be able to give the Government the benefit of the doubt later in the process. I welcome, however, the view of my right hon. Friend the Member for Birmingham, Hodge Hill, the shadow Secretary of State, that if the Bill is not radically changed and if its contents are not confirmed, we should not support it even on Third Reading.

16:29

[Mr John Leech (Manchester, Withington) (LD)]

I am delighted to have the opportunity to contribute to this important debate on the future of the benefits system.

I think that the whole House would agree that the way in which a Government treat the most vulnerable will always be a good measure of whether they can claim to have been fair. When the last Labour Government failed to restore the link between pensions and earnings during their 13 years in power and introduced the infamously derisory 75p pension increase, people rightly saw that as unfair. Similarly, their cut in benefits for single parents—described by one former Labour Member of Parliament for Halifax as “punitive and cruel”—was vindictive and unfair.

If the coalition Government are to be able to make that claim of fairness, we must ensure that we protect the most vulnerable. We have made a good start by restoring the link between pensions and earnings with the triple lock and committing ourselves to raising the personal allowance to take hundreds of thousands of the most poorly paid out of tax altogether. However, changes in the benefits system present a real challenge. If the Bill is not amended during its passage, it will certainly not receive my support.

I want to concentrate on housing benefit and possible changes in disability living allowance. Let me begin with the positives. Ministers in the Department for Work and Pensions have certainly been listening. I have had the opportunity to meet all of them to discuss the proposed changes and am pleased that the plans to restrict housing benefit to 90% of the full award after 12 months for claimants on jobseeker’s allowance have been abandoned. That terrible idea would have resulted in numerous people who were actively seeking work being worse off through no fault of their own. Many people and organisations inside and outside the House have worked hard to ensure that that does not happen, and I am glad that Ministers have recognised that it would have caused real hardship for many vulnerable people.

A great deal of attention has been paid to the proposal to remove the mobility component of disability living allowance from people in residential care. Last month, in an interview in The Guardian, the Minister sought to reassure disabled people in care homes and their families that the Government would not remove their ability to get out and about. I have no doubt that that is the Government’s intention and welcome their commitment to reconsider the proposal. Unfortunately, I do not share the Minister’s optimism that the mobility needs of those in care homes will be met if disability living allowance or its replacement is taken away, and I urge her to abandon any such plans.

The proposal has caused concern to organisations such as the Muscular Dystrophy Campaign, whose petition I submitted to Parliament only last night. The petition stated that the mobility component

“helps to meet the higher costs of accessible public transport”.

It also stated that

“without DLA mobility component, thousands of adults of all ages with severe disabilities who are supported by the state to live in residential care will be unable to retain voluntary employment or simply to visit family and friends”.

I urge the Minister to ensure that that does not happen.

[Ian Paisley]

I agree with much of what the hon. Gentleman has said. Does he believe that linking benefits to the lower consumer prices index rather than the retail prices index is “punitive” and “unfair” to those who have to claim benefit?

[Mr Leech]

I was just coming to that. Yes, I do think it is unfair.

The Bill proposes that from April 2013 the local housing allowance should be uprated in line with the consumer prices index rather than real rent increases. I shall avoid the temptation to reopen the debate about whether RPI or CPI is a better measure to use. I merely point out that the Government do themselves no favours by picking and choosing which measure to use. If CPI is a better measure of inflation, we should not allow train operating companies to increase train fares in line with RPI, but that is a debate for another time. I recognise that the current arrangements do little to keep rents low, but there is a real danger that rents will increase at a much faster rate than CPI. The Government must be prepared to keep a watching brief on increases in rent and to take further action if the changes fail to keep housing benefit in line with rent increases.

I do not think that any Member has raised the issue of under-occupation so far. The decision to restrict housing benefit in social rented homes when tenants are under-occupying properties is ill thought out, and will cause significant hardship to many families who are existing tenants. I recognise that this is designed to bring housing benefit for social-rented property into line with the private-rented sector, but it does not take into consideration local circumstances. In Manchester, for example, under existing rules a family with one child is entitled to queue for a two or three-bedroom property. That is intended to allow for the possible growth of young families and reduce the need for future moves caused by overcrowding. Similarly, in low or no-demand areas where there are a lot of two-bedroom flats, property has been provided to single people or childless couples either to allow children who live elsewhere to visit, or simply to fill the vacancies in hard-to-let properties. As a result, a significant number of families on housing benefit could face a reduction in benefit through no fault of their own. We need to look at this again and recognise that a one-size-fits-all approach will not work. I suggest at the very least applying a gross under-occupation test whereby restrictions to housing benefit could be applied if more than two rooms were unoccupied.

[Mark Lazarowicz]

Another possible circumstance could arise where people who have been in work all their lives and have never had to claim any benefit suddenly find that after 20 or 30 years they have to apply for housing benefit and face the prospect of having to leave the house that they have lived in for decades. Would that not be extremely inhumane as well?

[Mr Leech]

Yes, that is true, and it might lead to people being forced to go into private rented accommodation and not having a protected tenancy.

I want to comment on the proposals to cap benefit at £500 a week for families and £350 for a single person with no children. I recognise that a cap on benefit is justifiable to make work pay, but the cap should exclude housing benefit costs, which can vary dramatically in different parts of the country. Given that the cap on housing benefit for four-bedroom houses will be £400 a week, large families might be expected to survive on as little as £100 per week if total benefit is capped at £500 a week. Under other proposed changes, homeless families will receive only one reasonable offer, which might be of a private rented property that could swallow up the vast majority of their total benefit entitlement. The answer to this problem is to calculate a maximum benefit excluding housing benefit to ensure that families in receipt of benefit have enough to live on, regardless of the cost of housing locally. That is the only way to guarantee that they will have enough to live on.

Finally, although this point is not directly related to the Bill’s contents, I suggest to Ministers that the best way to tackle escalating housing benefit would be to invest properly in affordable social housing and bring more empty homes back into use. That would not only massively boost the construction industry but help reduce rents in the private sector, which is holding tenants to ransom. There would be a short-term cost, but it would give a major boost to the economy and there would be a long-term reduction in housing benefit costs.

16:38

[Geraint Davies (Swansea West) (Lab/Co-op)]

This is a mean-minded, ill-thought-out Bill that is not designed to promote fairness or help people into work. Rather, its purpose is to punish the poor, the disabled, those with children, those trying to save and those starting a small business for the cost of the greed and recklessness of City bankers, who created our deficit. That is laid at the door of the poor, while those responsible indulge in sharing £8 billion of banker bonuses under a system propped up by the taxpayer, whereby if risks go wrong the public pay and if they go right the bankers profit.

[Steve Baker (Wycombe) (Con)]

I share the hon. Gentleman’s sense that the banking system is responsible for the greatest injustices in our society, which I fight often, but, as has been pointed out, these reforms long predate the banking crisis.

[Geraint Davies]

I shall come on to the reforms.

The deficit was the price paid to avoid a depression, and the Government had a clear choice: they could halve the deficit in four years by focusing on economic growth and making the bankers pay their fair share while also making savings over time that are fair and do not harm economic growth. The alternative, which the Government have chosen, was to cut the deficit at twice that pace, clearing it in half the time—in four years. That is a “formidable” challenge, according to the Institute for Fiscal Studies, which says that the Government need a plan B.

There is an over-reliance on savage cuts, particularly to public sector jobs and the welfare benefits we are considering today. That will throw whole communities into poverty, with a third of a million public sector redundancies triggering a further 1 million private sector job losses, which will cost an extra £7 billion a year in benefit costs and lost tax. The benefits of those thrown on to the dole will be cut, forcing them, in the worst instances, into community projects like criminals when they cannot find work. Why is this happening? It is happening because the Government have thrown a bucket of water over the embers of economic growth that Labour had kindled.

[Mr Heald]

That is a nice soundbite, but the policy will cost the taxpayer money. The hon. Gentleman seems to think that it is not giving money to people at the bottom of the pile, but we are talking about £2.6 billion to help poor people into work.

[Geraint Davies]

The Bill will cost around £4 billion to implement, and save some £18 billion by taking from the poorest families. The Government’s plans are incompetent, unfair and counter-productive. The fact is that the cuts are choking growth and VAT is stoking inflation, and both are pushing the deficit up, not down. In Germany the focus is on growth, not cuts, and growth continues apace. In Britain, of course, growth is negative—and it is not just the snow. Alongside the £4 billion cost of the Bill is the £4 billion cost of dismantling the health service and the £7 billion lost through the unemployment created by the job cuts, and so it goes on.

What is the impact on people in Swansea? Some 40% of its workers are employed in the public sector. We face the second highest level of job cuts and very large benefit cuts. Some 65% of people employed in the public sector are women, and the combination of cuts in jobs and welfare payments will impact on families in particular as they pay their share of the £18 billion in savings that will be made.

The Bill will hurt children, the disabled and enterprise. Let us consider a Swansea woman with children who works for the council and is made redundant. She has savings of £18,000 and, being an enterprising person, wants to start her own business. She will get no benefits, of course, because she has saved more than £16,000 in good faith. She will have no wage, but she will be assumed to be getting the minimum wage as she is starting a business. Her business will face various start-up costs, such as a computer, setting up a website and promotional literature. She will be penalised for being a worker, penalised for being a saver and penalised for being an entrepreneur.

Let us assume for a moment that the woman is successful, despite those barriers. She will be threatened with the loss of her council house if she earns too much—hardly an incentive for people on council estates to start their own businesses. Let us say that she is in her second marriage and she and her husband have five children. Her husband was also employed by the council—they met working there—and both were made redundant. They have five children, so they have nearly £500 of personal benefits in addition to £200 in housing benefit, which means they get £700 in total. The £500 cap is imposed on them, so they are forced to split up. They now live in separate council houses, each drawing £200 in housing benefit, with one parent looking after three children and the other looking after the other two. This is a recipe not just for destroying jobs and crushing entrepreneurial activity, but for splitting up homes and increasing the cost to the Exchequer to £900 when it was £700.

The Government’s approach in Swansea and elsewhere in Britain will make people jobless, make them poorer, break up families, crush enterprise, punish saving and harm children and the disabled. This is a Bill born not out of fair-mindedness and enlightenment, but an unnecessary and unwise economic strategy of cutting too far too fast and punishing the poor for the reckless greed of the bankers. It should be opposed so that we can go back to the drawing board and think again.

16:44

[Julian Sturdy (York Outer) (Con)]

It is a privilege to speak in this debate, and I strongly suspect that our exchanges in the House are being replicated across our country, such is the importance of this matter. People rightly care passionately about Britain’s welfare system, as has been evident from hon. Members’ contributions, but I cannot quite agree with the most recent comments made by the hon. Member for Swansea West (Geraint Davies).

A society’s willingness and ability to help its most vulnerable individuals is a measure of its compassion and its economic and social well-being. Ensuring that Britain has an efficient, fair and caring welfare system is key. We do not necessarily have that at the moment, which is why radical and bold change is badly required. I am delighted to support the Bill, as it is radical and bold.

To accept the need for such reform, we must wake up to the facts. Over the past 10 years the welfare budget has grown disproportionately, by more than £56 billion. Despite that huge increase, almost 1.5 million people have been on out-of-work benefits for nine of those 10 years. Despite years of economic growth, job creation and increases in the welfare budget, a whole group of people have never worked at all. It is therefore time to review this broken system. After all, the simple truth is that Britain’s welfare arteries are clogged up. Too little support is reaching those truly in need and too much is being lost in bureaucratic incompetence—even more worryingly, it is being lost on people who should not be in receipt of such support at all.

In essence, the whole culture of our welfare system is wrong; the cost of maintaining it is out of control and the decision-making processes within it are woefully inefficient. The Bill is therefore right to focus on incentivising pathways back to work by ensuring that employment always pays more than benefits. That is fundamental to the Bill and, as a simple Yorkshire man, I feel that it is basic common sense.

[Chris Williamson (Derby North) (Lab)]

Would the hon. Gentleman care to comment on the fact that his Government are cutting 1 million jobs in our economy—500,000 in the public sector, with a further 500,000 to go in the private sector as a consequence? If he genuinely believes that work is a pathway out of poverty, why does he support measures that will cause greater unemployment rather than enable people to get back into work? He has expressed concern about people who have been out of work for a long time, but they would be more likely to get an opportunity of employment in the public sector if his Government were not forcing through so many cuts.

[Julian Sturdy]

I agree that this Bill offers an important pathway back to work. We have to get more jobs in the private sector and restore the balance between public and private sector jobs, which was skewed by the previous Government—certainly in my region and in the north especially. The measures that this Government are introducing—I hope we will see more of them in the Budget—will incentivise private sector growth and job creation which, alongside the Bill, will get more people back into work.

It is a sad but well-known fact that the current system discourages those in low-paid jobs from increasing their hours, as rates of tax and benefit reductions often leave them worse off. This ridiculous situation helps only to dampen aspiration while increasing dependency in the benefits system as a whole. In addition, hard-working, taxpaying families, who are feeling the squeeze in these difficult economic times, should not subsidise the small but still significant number of people in our society who see the welfare system as a career choice. That must stop. By annually capping benefits, withdrawing support from those who refuse to work and increasing the financial incentives for those who do work, the Bill includes specific measures that will make work pay.

[Naomi Long]

I agree with the hon. Gentleman on the need to change the system to ensure that people do not aspire to live on benefits, but is that not more about changing people’s aspirations and their pathways to opportunity, rather than simply setting caps and putting difficulties in the way of those claiming benefit when they are in difficulty?

[Julian Sturdy]

It is about changing aspiration, which is what the Bill does. As my hon. Friend the Member for Meon Valley (George Hollingbery) said, it is about taking a carrot-and-stick approach. It is important to have certain caps on benefits, but we must also encourage aspiration to get people back into work. The current system did not do that. Instead, it dampened aspiration, which is why it is fundamentally important that we change the system. As many hon. Members have said, it is a case of now or never—we must grasp the nettle. The DWP estimates that the reforms could reduce the number of workless households by as many as 300,000 and that about 700,000 low-earning workers will be better off as they keep more of their earnings.

Administrative reform to our welfare system is long overdue; it is simply wrong that taxpayers’ money should be squandered recklessly as often happened under the previous Government. The creation of the universal credit, which will bring together various and often overlapping elements, such as jobseeker’s allowance, income support and housing benefit, and pay them in a single lump sum will cut administrative costs and reduce the risk of fraud. It is predicted that, as a result of the universal credit, just over 2.5 million households will receive higher entitlements, with more than 350,000 children and 500,000 working-age adults being lifted out of poverty altogether, as the shadow Secretary of State acknowledged earlier. That was the only thing he said that I agreed with, but it is important to mention that acknowledgement.

Lastly, and returning to my initial comments, the overriding objective of the Bill must be better to protect, equip and support the most vulnerable in our society. Too many of this country’s welfare resources have been diluted and too little has been directed at those in most need. To maintain the status quo would be to champion the cycle of dependency and despair that Britain’s welfare culture, as constructed by the Labour party, currently promotes. I know that many welfare claimants are apprehensive about the Government’s changes, but let the message go out loud and clear that those who are truly in need will receive more support, better targeted assistance and higher standards of care. I truly believe that is the motivation underlying the reforms and I strongly urge all Members to support this important Bill.

16:52

[John McDonnell (Hayes and Harlington) (Lab)]

I have sat through the debate and listened to the contributions and I will try to address some of the points raised. First, let me say that no one in the House doubts the integrity of the Secretary of State. I commend him for the work he did in opposition in setting up various working parties, touring around and meeting various agencies. He met a particularly influential person in Scotland, Bob Holman—a comrade of ours who knows a lot about poverty and who has expressed his disquiet about the proposals. Also, a number of us have been campaigners for the citizen’s income, which I think the universal credit is a step towards, so I do not doubt the Secretary of State’s good intentions.

However, as we have debated at length over the years, if the universal credit is to work, three conditions need to be met. First, it needs to be set at a level that will lift people out of poverty; otherwise it will inflict universal misery. Secondly, there have to be jobs to go into. Thirdly, those jobs must have decent pay. The problem with the Bill is that it does not ensure that any of those conditions will be met. In that respect, it discredits the whole concept of the universal credit, which I find worrying.

On the first condition, I am worried about the amount being taken out of the social security system. In the comprehensive spending review in October, and before that in the emergency Budget, the Chancellor identified £18 billion that was being taken out of the system. When the Prime Minister was challenged about that, he said:

“We face a choice—make cuts in welfare or cuts elsewhere”.

I believe that is happening—that we are witnessing cuts in welfare. When the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), was asked specifically about the disability living allowance cuts, we were told that the figure of £1 billion of cuts—or savings, depending on how one wants to describe them—had been set before any policy description had been laid out as to how they would be achieved. I think the Prime Minister and the Government did make that choice, because at the same time as the Government were taking £18 billion out of welfare they were reducing corporation taxes by £24 billion. Businesses are now taxed at the lowest level in 40 years, at the expense of the poor.

The debate then starts to degenerate, as it has in the House today, into attacking unemployed claimants as a justification for cuts. I remember the Deputy Prime Minister’s statements about alarm clock Britain, and today we have heard references to shirkers and so on. I have come to the view, and all the Government research under past Governments has demonstrated, that people are desperate to get back to work. Sanctions do exist already, and are implemented if people fail to comply.

Reference has been made to fraud. Let us get it on the record again: £1.5 billion of fraud, £16 billion of benefits unclaimed. Who is ripping off the system? It is not the poor. As was said earlier, £120 billion of tax has not been paid as a result of tax evasion and avoidance.

On the second condition—the existence of jobs to go to—with 2.5 million unemployed, including 1 million youngsters, even if we filled all the 500,000 vacancies, there would still be one in four chasing every vacancy, and it is going to be made worse, as was also said earlier. Another 1.2 million will be put on the dole queue as a result of the cuts.

On decent pay, I have asked others what is happening in their constituencies, but the jobs offered at the moment in my constituency are increasingly casual and increasingly low-paid, and large numbers of my constituents are now working on zero hours contracts, in which they are simply paid for the hours that they are brought in to do, on an irregular basis. According to the most recent survey, published only a month ago and based on Government figures, 1.7 million people are now in involuntary part-time and temporary work, and wages are so low that half the children living in poverty are in families that are in work. Even in the boom period, wages actually fell as a percentage of GDP. Last month, RPI was at 5.1% and wages were at 2.3%, and many in my constituency and elsewhere, especially in the public sector, are facing a pay freeze over the next two years. The reasons for the low pay are fairly straightforward. We now have less than a third of workers in this country covered by collective bargaining agreements, as a result of the weakening of trade union rights.

My fear is that, under these proposals, universal credit will fail, because none of the elements are in place to make it a success—a decent level of universal credit, the existence of jobs, or decent pay in those jobs. I think we will be left with the harsh residue of all the complaints and problems that have been described today: the sanctions—the loss of benefit for up to three years if a person refuses to co-operate in seeking work; cuts in housing benefit; the linkage of the housing allowance to CPI, which will inevitably result in cuts; the housing benefit caps; and the room unoccupied scheme, which I think is scandalous. All those factors will discredit a decent proposal, and that is why the Bill is not supportable today.

I want to use my last few seconds to say how appalled I am by the brutalisation of claimants by the privatised companies that have taken over the assessments and the administration of benefits. The brutal treatment of my constituents is a harshness that denigrates the entirety of the work of the House and the Government.

16:58

[Jackie Doyle-Price (Thurrock) (Con)]

I am very proud of the measures before us. The Bill is one of the most important pieces of legislation that the Government have brought forward to date. It has the opportunity to have a revolutionary impact, not only on the welfare system but on society more generally. It will contribute to building a fairer society—fairer for the millions of taxpayers, many of them on modest incomes, whose taxes are inflated by having to support the current welfare system, and fairer to claimants. It is fair that we target support to those most in need and fair that we give those who are fit and able to work every encouragement to do so.

I shall focus most of my comments on the universal credit and the impact that it will have on incentives to work. There are too many people in our society for whom work does not pay. In those circumstances, who can blame them for choosing not to work? It is a rational economic choice. If they can get as much income from sitting at home as they would from doing a day’s work, where is the incentive?

We must all have seen examples of that in our surgeries—the lone parent who wants to provide for herself and her family, but finds that the cost of child care and the loss of housing benefit make it more costly to go to work than to stay at home; someone who finds a job, then discovers that the rate at which they lose their housing benefit makes work punitive; someone on incapacity benefit trying to work part time around their disability, who finds their benefits withdrawn or clawed back, so that they are better off doing nothing; someone who has had a substantial career, finds they are no longer able to do that and wants to retrain, but who has their benefits withdrawn as they are judged not to be seeking work. All that must stop, and the Work programme will give incentives to those who want to get back into work, and the support and opportunity to do so.

We must repair decades of damage. It is easy for us on the Government Benches to blame the Opposition, but the problem goes back decades. The system has grown incrementally and the damage is there for all to see. In some households, generation after generation have failed to engage in the world of work. This has encouraged ongoing low aspiration and poor lifestyle choices. Some of my hon. Friends gave examples of that. My hon. Friend the Member for Wolverhampton South West (Paul Uppal) described how, when he was at school, there were two distinct camps—those who aspired to better themselves, and those who aspired just to live on benefits. I see the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) in his place. As someone who grew up on a council estate in his constituency, I had that experience too. We need to build aspiration, and we have policies in place to achieve that. The reform to welfare is crucial to getting our society working again. The reforms will set people free from dependency and set them free to take advantage of the opportunities that we will give them.

I want to say something about an end to the complex system of tax credits. I appreciate that the introduction of tax credits was well intentioned as a way of alleviating poverty for people in work, but they have had the opposite effect. That is because the system is retrospective, so people apply for tax credits in good faith, only to be faced with a whopping tax bill the following year because of a slight change in circumstances. That problem will be eradicated by the universal credit because it will be assessed on a pay-as-you-go basis, and for that reason must be welcomed.

I firmly endorse the benefit cap. Far too many of my constituents work hard and pay taxes, only to see their near neighbours enjoy a comfortable lifestyle living on benefits. I also welcome the obligations placed on claimants. As a condition of receiving benefit, people should surely do everything they reasonably can to find work. For many people that will be empowering. For someone who has been in the same job for many years and suddenly finds themselves workless, the loss of confidence can be considerable. The support that they will get from the Work programme to gain new skills will help them and give them the confidence to go back into the world of work. That will be empowering.

That is equally true of incapacity benefit claimants. Because a claimant is no longer able to do the job that they were doing before does not mean that they cannot retrain and do a different job. The support they will get from the Work programme will enable them to do that, and it will be empowering.

The Bill is radical. It is brave, and it is necessary if we are to tackle the endemic culture of benefit dependency that exists in our country. It has become more and more entrenched over the years, at the expense of the workless and the taxpayer. I am pleased to support the Bill.

17:04

[Naomi Long (Belfast East) (Alliance)]

I welcome the opportunity to participate in the debate, because this issue will have profound implications for the welfare and benefit system, and will impact on all our constituents.

Time is limited, and the scope of the Bill is extensive, so I shall focus on a few key issues, the first of which is the proposed changes to disability living allowance, particularly the work capability assessment. The Government appear to place more emphasis on the independence of those who judge someone’s fitness for work, rather than on their expertise, which is of concern to many people, particularly those who suffer from hidden, complex and often poorly understood conditions with variable symptoms, including autistic spectrum disorders, mental health issues and multiple sclerosis.

A medically qualified assessor may be independent, but not necessarily an expert in a particular condition. The single point assessment is unlikely to give a comprehensive view of an individual’s fitness to work that is more reliable than that provided by an expert in the field who has treated and monitored the patient over a long period. The clinician will also follow professional ethics in making judgments about a patient, which provides a safeguard for the Government. If expert written evidence is available, it should be used and should carry more weight than the opinion of a benefits assessor, who may not have detailed expertise in dealing with those matters.

[Dr Whiteford]

As someone who represents a constituency that was part of the work capability assessment pilot, one of the biggest concerns was that the evidence of I know that someone’s GP or consultant was not taken seriously by the medical assessors. Will the hon. Lady comment on that?

[Naomi Long]

That is a fundamental concern. One of my constituents recently came to Parliament, on behalf of the mental health charities Rethink and MindWise, to give evidence to the Select Committee on Work and Pensions about the impact of the assessment proposals on people with mental health problems. Members who met her at the round-table session would agree that she presented her evidence in a professional, competent and effective manner, as one would expect of someone with a medical degree. However, her evidence carried weight not because of her degree, but because she receives disability living allowance. She is not fit for work, and is not permitted to practise as a GP as a result of serious mental health issues, which developed in her final year of study.

If a benefits assessor, even a medically qualified one, witnessed her performance in Committee, they would doubtless assume that she was fully fit to work. However, her condition is unstable, and in periods of ill health, she is unable to leave her home or interact with people at all. Even when well, she is reluctant to take on additional stressful responsibilities because of her history of instability.

[Chris Grayling]

It is important, as people are listening to this debate, that the actual situation is placed on the record. Will the hon. Lady confirm that the system that she is describing is the one that we inherited from the Labour Government, which we have taken steps to change through the Harrington review? In cases where we have made changes to the assessment, the work was done by the previous Government, whose recommendations we accepted. Finally, does she accept that, at the end of all this, there is a collective desire to make sure that the system works as well as possible and that there is a commitment to continue to improve it where possible?

[Naomi Long]

I would like to confirm, on the first issue, that I am not making these points as a member of the Labour party or of the previous Government but as a member of the Alliance party, reflecting the concerns of my constituents. Furthermore, I would hope that there is a collective will to ensure that people are dealt with fairly in the system. However, the doubts that I am expressing to the Minister have been expressed to me by my constituents.

A problem with single point assessment needs to be taken into consideration, and I urge the Minister to look carefully at the issue. The young lady in question, for example, had a dual point assessment by the British Medical Association on her fitness to practise. One doctor said that she was fit to practise, and the other said that she was not, because of the complex nature of her condition. Neither of them was wrong when they dealt with the person in front of them, but her complex mental health condition prevented them from seeing the same individual in the same way.

I do not believe that the problem arises solely with mental health issues, but with many other conditions. People can have good days and bad days, and they may need additional support. As the Bill progresses through the House, it is hugely important that we address that issue.

Much has been said about the removal of the mobility component of the disability living allowance for those in residential care, so I will not rehearse the arguments, but I have corresponded at length on it with the Under-Secretary, and from her most recent correspondence I am aware that there is a valid concern about the inconsistent way in which the needs of some of the most vulnerable people in society are being met.

There is ambiguity and considerable variation in the way in which local authorities take the DLA mobility component into account when making financial assessments, and organisations such as Disability Alliance acknowledge that point, but having identified the problem it is incumbent on the Government to ensure that the solution does not end up disadvantaging the benefit’s recipient, who did not create the difficulty in the first place. Independent mobility is crucial to well-being and to social cohesion, and it must be protected more clearly than it is in the current proposals.

Finally on DLA, I am concerned about the change to the qualifying period, and its move from six months to three months, which could have profound consequences for those who develop sudden onset conditions, such as stroke, or experience the debilitating effects of treatment for an illness, such as cancer. It could also affect those who give birth to a child with a severe disability.

At a time when people are genuinely in need, when their energy rightly needs to be focused elsewhere on coping with diagnosis, treatment and recovery, and when additional stress should be avoided, the financial pressure of dramatically increased outgoings to cover expenses, such as travel to hospital and so on, could push them into poverty if that issue is not adequately addressed. I urge the Government to look again at that unintended consequence of reform, and to take action to ensure that the personal independence payment is available to support people at a time of genuine need.

I welcome the Secretary of State’s assurance on employment and support allowance for those taking oral chemotherapy. I trust, however, that he will also consider those who receive radiotherapy, which, although not as debilitating as chemotherapy, can nevertheless be exhausting and preclude people from holding down work.

Another concern that I want to touch on briefly is the abolition of some discretionary aspects of the social fund. Often, families who are trying to make ends meet on a day-to-day basis find themselves pushed into financial stress or even crisis by significant, unexpected and unavoidable expenditure. The replacement of a heating boiler, a cooker or a fridge, or the need to purchase a school uniform, for example, will often leave low-income families in a situation where only those discretionary elements of the social fund, such as interest-free crisis loans, stand between them and being forced to engage with alternative high-interest and often unscrupulous money lenders. There is an ongoing consultation on that and I urge Ministers to await its conclusion before proceeding to legislate to remove those discretionary elements.

In conclusion, and as I said at the outset, these are far-reaching reforms with far-reaching consequences. The Bill is arguably the biggest change to the welfare state since its inception, and it warrants careful and detailed parliamentary scrutiny. Despite that imperative, much of what is intended remains poorly defined and will be ultimately defined not in this Bill or in any subordinate legislation, but in regulations that the Minister will lay, which in turn will reduce the parliamentary scrutiny of their effects. That extensive reliance on unpublished regulations will make it incredibly difficult for people to make a detailed assessment of the cumulative impact of these broad and sweeping changes. The Secretary of State was clearly frustrated, too, because he felt that at times people had misunderstood the thrust of his proposals. Were there more substance to the Bill, that would be less likely.

Furthermore, the inclusion of clauses relating to child maintenance, when that matter is still the subject of public consultation, and the as yet undefined provisions on child care costs, creates uncertainty in an area—the employability of lone parents and second earners in households—that strikes at the very heart of the Government’s objective to make work pay.

One of the most remarkable yet disappointing things that struck me on reading through the briefings that Members received in the run-up to the debate is that, almost without exception, those organisations that actively support and lobby in this area support the principle of the Bill. Disappointingly, however, we have not had the detail that would give people the confidence to commit to the Bill itself.

17:15

[Andrew Bridgen (North West Leicestershire) (Con)]

I welcome not only the Bill but the fact that the coalition Government have recognised the importance of dealing with the huge financial and social failures of the current welfare system. Within 10 months of being in government, we are introducing a Bill that Labour Members and the previous Government shirked for 13 years. Because of the Opposition’s lack of will, we have the lamentable situation whereby welfare spending, which was £64 billion in 1997, is projected to be £109 billion this year, and 1.5 million people have spent most of the past decade on out-of-work benefits.

I have to say that I agree with the former Prime Minister, Tony Blair, who stated in 1997:

“We have reached the limits of the public’s willingness simply to fund an unreformed welfare system through ever higher taxes”.

If that was true in 1997, with the golden economic legacy that the previous Labour Government were bequeathed but went on to squander, one can only surmise that, 13 years later, we are well over the limit of the public’s acceptance of welfare spending. We all know what, or rather who, were the roadblocks to reform: the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), together with his protégés, the current leader of the Labour party and the current shadow Chancellor. How do we know this? Again, Mr Blair provides the answer in his memoirs when he states, with regard to welfare reform:

“I kept saying to Gordon, quite apart from the fact that both sets of proposals are manifestly right in themselves, if we don't do them, a future Tory government will”.

So here we are, as a Conservative-led coalition Government announcing the biggest and most overdue shake-up of the welfare system since the 1940s. We are replacing the previous Prime Minister’s micro-managed, command, dirigiste benefits system, which has created a benefits culture that is expensive, inefficient and bureaucratic—and, perversely, provides a major disincentive to work—with a system that will ensure that work pays and no one is better off remaining on benefits when offered a job. The universal credit will provide a more logical, efficient, secure and fair benefits system that will demonstrate and reinforce the value of being in work. All Members, and our constituents, should be aware that because of the transitional arrangements no one on benefits will be worse off as a result of the introduction of the universal credit.

Having supported the aims of the Bill, let me move on to the some of the specifics. I have been contacted by a number of constituents regarding the replacement of the mobility aspect of the disability living allowance with the personal independence payment. I am reassured by the Secretary of State’s remarks on this part of the Bill, when he said that DLA and its mobility component will continue and will be reviewed at a future time. However, the Government need to do as much as possible to reassure those who are severely disabled and unable to work that they will be protected and not lose their entitlement. I have had constituents saying that they fear they will lose their social interaction and effectively become prisoners in their own home. Those genuinely disabled people must be informed that these changes will be to their advantage.

[Mark Lazarowicz]

The fact that such an obviously ultra-loyal Government Member has been getting such messages from his constituents suggests that things are not all right on the Government Benches. Does he agree that that is another reason why a bit more consultation and time to consider the proposals would be better than the rushed way in which they are being brought forward?

[Andrew Bridgen]

The Labour party had 13 years to do something. Thirteen years ago, the right hon. Member for Birkenhead (Mr Field) was asked to think the unthinkable; he did so, and then was promptly removed from office. That shows Labour’s commitment to welfare reform. There will be plenty of time for consultation, and I can promise that plenty of Government Members will be fighting for the rights of these vulnerable constituents.

The detection of fraudulent claimants is key to the success of this Bill. It is inexcusable that the current system is costing the taxpayer in excess of £5.2 billion a year because of welfare error and welfare fraud. There could be a role for credit rating firms in helping to identify households where there is reasonable evidence that a fraudulent claim is perhaps being made. This can be achieved with greater data sharing across Government Departments, and with the credit rating agencies, to ensure that the widest possible range of data are available. We also need to ensure that fraud is indentified at the earliest point of the process; again, the credit rating agencies can play a role. I welcome the development of the single investigation service and the three-strike rule in the Bill. We will see a reduction in fraud only if false claimants have a serious fear of being caught, and of facing a penalty if they are caught.

In conclusion, the Bill gives our country the chance to reverse a benefits culture that has become a huge black hole sucking in large numbers of people and huge amounts of taxpayers’ money. The Bill will release millions of people from the misery of welfare dependency and break the intergenerational cycle of worklessness, which costs this country so much not only financially but socially. The Secretary of State deserves great credit for his relentless work over many years on this issue. The successful passage of the Bill will make welfare a floor on which people can build, rather than a ceiling that it is impossible for them to break through.

17:20

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

This has been an interesting and instructive four and a half hours. There have been some excellent contributions, including from some Government Members, although not from the hon. Member for North West Leicestershire (Andrew Bridgen), who has just spoken.

I say to the hon. Members for Bexleyheath and Crayford (Mr Evennett) and for Kingswood (Chris Skidmore) that we should not reinvent history but learn from it. Having been the Secretary of State for Education and Employment for four years and later briefly the Secretary of State for Work and Pensions, I think that there are real lessons to be learned from our efforts to change the system. Unless those lessons are learned, we will reinvent the wheel all over again and there will be disappointment for those who believe that this Bill is the bee’s knees. Unfortunately, it is not. In 1998, when we set about reducing the unemployment claimant count to under 1 million for the first time in a quarter of a century and the labour force survey figures to below 1.5 million for the first time in 30 years, we did so not just because the economy was expanding and there was growth, but because we were helping people from welfare into work.

Work is the best form of welfare; making work pay is the right thing to do; promoting independence is sensible and logical; encouraging people to be self-reliant, including through thrift and savings, really does make a difference; and honesty in the benefits system is something that we should all aim at. The only problem is that the Bill does not achieve those things. If it did, I would be wholeheartedly in favour of it. I ask Ministers to take another look at the Centre for Social Justice report and to compare it with what is on offer this afternoon in this Bill.

I will use the example of disability living allowance, purely because I know more about issues relating to sight loss than about most other aspects of disability and welfare, despite my ministerial experience. Both with the universal credit and DLA, we are in danger of moving in the opposite direction from that which the Government say is their policy. The introduction of the personal independence payment removes automatic entitlement for certain defined groups with specific challenges, including blind people. I do not speak about these issues very often in the House, but if we remove the care component we also remove the mobility component, which is about to be expanded in April, as was agreed to by Members in all parts of the House and hard fought for by those responsible over a considerable period. To do that will have a perverse effect, and the opposite effect to that which was intended. Instead of promoting a can-do approach that makes it possible for people to get out of a position of dependence, the proposal will trap people in that position.

The perversity is best demonstrated on page 16 of “Disability Living Allowance reform”, which was published in December. It gives examples of what the system will mean and talks about testing whether someone is capable of

“planning and making a journey, and understanding and communicating with others.”

However, the whole purpose of disability living allowance was that because they received it people were able to do those things, not that it trapped people by doing those things for them. Whereas the work capability assessment is about what someone can do, the new test for disability living allowance, under its new title, will be about what they cannot do. That leads to dishonesty, with people presenting what they cannot do in their worst circumstances, not in their best. With the new universal credit, people will be encouraged to save but then penalised when they do.

Every step in the Bill that will have a positive outcome is trumped by an administrative complexity that will make the situation worse. We are all in favour of simplicity, but the problem is that simplicity does not usually lead to equity. That is why we have ended up with the complex system that Members have described this afternoon. If we could have produced a simpler system quickly and easily, we would already have it. We laid out principles in September 2005 that I believe have stood the test of time, but unless the Government listen, and unless they review and understand what has happened in the past, we will go through the same problems all over again.

17:26

[Sarah Newton (Truro and Falmouth) (Con)]

Thank you for calling me to speak this afternoon, Madam Deputy Speaker. It is a great pleasure and honour to follow the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), who spoke so well from his own experience, as did my hon. Friends the Members for Wolverhampton South West (Paul Uppal) and for Thurrock (Jackie Doyle-Price). The debate has been enlightening.

Those of us who have worked as either paid employees or volunteers on behalf of people who come into contact with the benefit system know that reform is overdue. The overhaul enabled by the Bill, and by other actions that the coalition is taking to integrate and localise services, is most welcome for people in our society who need help. The daily battles of trying to claim benefits, appeal against decisions and fight through expensive bureaucracy are draining on the human spirit, let alone the taxpayer’s purse.

The practical improvements and efficiency savings that will come with benefit simplification are important. However, I believe that the importance of the Bill goes well beyond that vital endeavour. The contract between people in our society is expressed, in part, in our provision of welfare. That is part of our expression of the responsibility that we have for each other. I like the conditionality in the Bill, which underscores the principle of the contract that people in our society have. It is built on the clear and settled view that as British people, we are all responsible for ourselves and our families. Just as importantly, it is also our responsibility to care for our neighbours and our communities to the extent that we can. We are each responsible for doing all we can to provide for our own needs and those of our family and community.

Our social contract is also built on an understanding that not all people are able to look after themselves at all times throughout their lives. Sometimes individuals and their families need emotional and practical support to meet their needs, including financial support.

That contract has made us a progressive society. However, over the course of my lifetime, as overall standards of living have risen considerably, I have seen well-intentioned but unwelcome consequences of the development of that fundamental social contract into a welfare state. For too many people it has created a culture of dependency and robbed them of a sense of worth, well-being and good health. It has also brought into question the fundamental principle of fairness that is so characteristic of Britishness.

[Dame Anne Begg]

Does the hon. Lady believe that anyone who receives any welfare benefit is by definition welfare-dependent?

[Sarah Newton]

I am very grateful for that question, and the answer is absolutely not at all. A great number of people in our country absolutely deserve support. In fact, I shall argue later that I believe they deserve more support.

Let me explain what I mean by giving some examples. Can it be fair to encourage a couple who would otherwise want to live together and raise a family to live apart because single parents have a better chance of securing social housing, or to encourage someone who wants to work more hours to work fewer for fear of losing benefits? Can it be fair to abandon people who have lost their jobs and need help to retrain and build their self-confidence to a life of poverty without support? None of those things are fair. The intention of the Bill is re-establish the contract between all in society, and to give a clear message that if people are able to work and to play their part in society, we will help them to do so and it will be worth their while, and that if people have a problem that prevents them from looking after themselves and their family, we will be there for them.

Many people would like more rather than less help for our elderly citizens and our disabled citizens who are unable to work, and for carers who do the incredibly important job of caring for their loved ones. I hope we can provide such help by taking the tough decisions now to establish a sustainable economy with less public and private debt and a more sustainable level of public expenditure, and by growing more sustainable enterprise that will enable people to earn a living wage and to look after themselves better.

I am a Conservative MP because I want to create a fair compassionate society, in which people of all backgrounds have the opportunity and hope to reach their potential. “Jack’s as good as his master” is a great Cornish expression. It is ingrained in me to value and treat all people equally. Any civilised society should be judged by how it takes care of its weakest members. By that measure the previous Government failed, despite years of increased public expenditure and huge national debt.

I am sure that not every word in the Bill is perfect, but there will plenty of opportunity to make improvements as the Bill passes through the House and we learn the lessons of the consultations currently being undertaken. I am proud to serve in a Parliament that will deliver the fundamental reform that our country needs. The measures in the Bill will be introduced over a number of years, even stretching into the next Parliament, so I believe that we will look back on today as the start of a fundamental process that rebuilds the contract between people in our society. I am delighted to support the Bill today.

17:32

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like many hon. Members on both sides of the House, many of my constituents and many organisations have contacted me about their concerns about the Bill. Given that many other hon. Members want to speak, I shall highlight only a few of those.

The changes in housing benefit will in due course feed into the housing element of the universal credit. Without going into all the details, there is no doubt that many people in my constituency will be seriously disadvantaged by those proposals. People will be driven into poverty, and in some cases, driven out of their current housing. The fact is that for all the press stories we read—they are sometimes repeated by Government Members—about people living in luxury housing benefit accommodation, any such cases are few and far between, if the ones we read about are genuine, which is doubtful. We should not allow the debate to be distorted by a few extreme examples that, if genuine, need to be tackled.

Hon. Members will recall that in his Budget statement last year, the Chancellor of the Exchequer referred to

“families receiving £104,000 a year in housing benefit.”—[Official Report, 22 June 2010; Vol. 512, c. 174.]

I pursued that with a number of written questions. I have still not had the exact figure from the DWP, which I suspect is because only a handful of families are in that situation. If we are to have a serious debate, we should talk about the realities on the ground, not fake figures that are designed to scare people and distort the real debate that we need to have.

There are precious few areas in which forcing down housing benefit costs will affect market rent. In most cases, the market rent will become further diverged from housing benefit. As I said, as a result, people will be driven out of their housing, and perhaps forced to leave their communities or forced to go to areas where they do not get support from family and friends either in or out of work.

It may be the case, as the hon. Member for Bromsgrove (Sajid Javid) said, that the Government’s changes will affect the market in cases where housing benefit tenants form a large proportion of the rented market. However, in constituencies such as mine, there are lots of student properties, holiday lets and those whom one might describe as young professionals. They are a major element in the rented housing sector, and they are certainly not going to go away, meaning that those on housing benefit will no longer be able to afford their existing housing. That is certainly a concern that has been expressed to me by housing associations in my constituency.

[Stephen Lloyd]

Does the hon. Gentleman see nothing untoward about more than 5,000 families in the UK receiving more than £25,000 a year in housing benefit, which is equivalent to earning a salary of £80,000 to £90,000 a year?

[Mark Lazarowicz]

In each case, we have to look at the circumstances of the individuals concerned. However, the idea put forward by the Government that at the top end of the scale there are large numbers of people receiving £104,000 a year illustrates the distortions that some people want to introduce into this debate.

Another concern that housing associations in my constituency have raised with me is about the over-accommodation rules, which were mentioned by the hon. Member for Manchester, Withington (Mr Leech). Those rules will have many consequences that will be detrimental to both housing providers and individual tenants. One of the housing associations in my area has made the point that it may have a perfectly reasonable policy of providing people with an extra room, so as to allow access visits by children from a relationship, but those people would then no longer be entitled to housing benefit to reflect that extra room.

Parents and carers for adults with autism have also raised concerns with me, although other hon. Members have also discussed those concerns today, so I shall not repeat them. There have also been concerns about child maintenance charges being imposed on those still required to use the child maintenance system.

I want briefly to refer to concerns about the changes to DLA. When I intervened on my right hon. Friend the Member for Stirling (Mrs McGuire), I mentioned the concerns raised with me by a number of parents of children with disabilities in my constituency. Of course I recognise that the children concerned will not be subject to regular reassessments while they remain children. However, those parents have raised with me their concerns that in years to come their children may no longer have their support and assistance in submitting applications for DLA or its successor. Those children will find themselves in a vulnerable position if they are forced to undergo regular reassessments for conditions that will quite patently not change.

Those parents are right to be concerned—indeed, it is not surprising that they are—given that the backdrop to the Government’s policies is a 20% cut in the DLA budget. The Government may say that some of the fears that have been expressed are unfounded. However, if that is the case, they have brought it on themselves by rushing the consultation on DLA, which closed only nine days before the Bill was published, and because so many of today’s measures depend on further regulations being introduced at a later stage. Unsurprisingly, that has led to suspicions on the part of those who are likely to be affected by the changes.

Perhaps the underlying reason for those concerns is that we know that today’s changes are being driven in two ways: by a wish to reform the system—I accept the Government’s good intentions in that—but also by a wish to cut spending. The fact is that the Government’s prime concern is cutting the budget as soon as possible—that is the driver for today’s proposals—not, I am afraid, reforming the welfare system, which is something on which we should all able to agree across the House, if we had the time to discuss and debate it, and if we had the time to consider the views of outside organisations that have real concerns about it.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Just before I call the next speaker, may I point out that 14 Members are trying to catch the Chair’s eye? I want to get everyone in, so if Members can take as little time as possible, that would be helpful.

17:39

[Brandon Lewis (Great Yarmouth) (Con)]

I should like to thank the Secretary of State for the assurances that he gave to cancer sufferers and their friends and families. Will the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) also assure us that he will examine how we can deal with the inequality that exists between cancer sufferers who have intravenous treatment and those who have oral treatment? There is an unfair disparity between them at the moment. Science and medicine have moved forward, but our system has not kept up with that progress. It would be good if we could do something for those sufferers.

I represent an area with above-average unemployment. That is one of the legacies of the Labour Government, who forgot about the problems experienced by some of the coastal towns and about their regeneration. They took away public sector workers, and disincentivised people from working and businesses from investing and from employing people, through their heavy regulatory system. There are people in my constituency who are second and even third generation unemployed. That presents a problem that has two sides. On the one side, we have residents who work hard and who air their frustration at what they perceive to be the injustice of people who do not work and who stay at home having a lifestyle that is similar to that of the people who work all those hours. We need a system that will change that. The Bill is courageous in introducing some great changes, and it could start to change that as well, so that people who work hard would realise that they are not simply subsidising people who do not want to work.

On the flipside of that coin are the people who want to work but who cannot find a job or who are not properly trained for work. I have constituents who are crying out for the right kind of support and training to enable them to apply for the jobs that are out there. There are jobs beyond those that they might hear about in the jobcentre. The local press and organisations such as Jobcentre Plus do a great job in advertising the wide variety of jobs available, and this can enable people in areas such as Great Yarmouth to understand that they could be well trained enough to have the option to find work, not only in Great Yarmouth but in the wider community, perhaps in Norwich or even beyond, where jobs exist that they could reasonably commute to.

What I applaud most about the Bill is that it will introduce a move to a simpler system, and the evidence presented to the Select Committee shows that that is universally what people want. They want a system that they can understand. Too many people have come to my surgeries who simply do not understand the system and cannot get the support that they need because of that. Even some of the experts working in the system do not understand it.

A single mother with two children came to see me recently. She had a job which paid her £15,000 a year for working three days a week. She wanted to work five days a week, and her company wanted her to do that as well. She phoned the tax office to ask what the implications of that would be, so that she could work out whether she could afford to do it. It is crazy that we live in a society in which someone has to make a phone call to see whether they can afford to take a job that will pay £25,000 a year.

The most worrying aspect of the story, however, was the fact that the tax office could not answer her question. There are 30 different kinds of benefit, and a tax system that is set out over thousands of pages, so it is no wonder that, when someone is offered a well-paid job, they cannot work out—even with the help of experts—whether they can afford to accept it. I congratulate that person, because she decided to take the job even though the experts told her that the tax calculation would be done in arrears and it would be a year before they could tell her what sums would be involved, and whether they would need to claw any money back. She took quite a risk, and I applaud her for doing it. That is the kind of spirit that the new system will help to encourage. It will also provide support through the use of the taper.

Labour clearly does not understand the disincentive to work that exists at the moment. In some cases, there is a 96% marginal deduction, and that is simply not sustainable if we want to encourage people to work. I applaud the Bill, because it could really help to motivate and support people in my constituency, and help them to get back into work. That is what matters: people getting back to work and employers wanting to employ them. That is what this entire package can give us, and that is why I applaud the Bill.

17:44

[Mark Durkan (Foyle) (SDLP)]

Unfortunately, unlike the hon. Member for Great Yarmouth (Brandon Lewis), I am not in a position to applaud the Bill, simply because there are not enough provisions in it to tell us whether it will provide a working model for a benefit system that will achieve what the Government say they want to achieve—namely, a simplified benefit system with improved incentives to work. We could all agree with those principles, but our problem on Second Reading is that the Bill lacks significant content to show how many of the detailed provisions will work in practice. We are told that the details of various schemes and measures will be provided later—as the hon. Member for Belfast East (Naomi Long) said, it will be by way of regulation. That makes it unreasonable, on the basis of so little detail, to expect Members lightly to endorse such a Bill, which is so pregnant with implications for so many people in our society.

If Governments are to be encouraged to support evidence-based policy, this House should deal only with substance-based legislation. I often hear the Government saying that they agree with the principle and stated objectives of a private Member’s Bill, but because they see serious difficulties in how it might work in practice and because many of the details have not been worked out, they do not accept it and vote the Bill down. Frankly, that is exactly how I feel about this Government Bill. Although many of us endorse the objectives and recognise the problems in the existing system, we are worried about the direction in which the Government will end up travelling.

Members have already referred to the change from disability living allowance to the personal independence payment. Some of us participated in a Westminster Hall debate about that this morning. One important point is that we do not yet know from the Government what the implications of those provisions will be for carers. They have told us that they want to create a new deal for carers, but they have not given us any estimate of how many carers will be affected as a result of the changeover to personal independence payments. The Government have a lot more to tell us; only after they have told us would some of us be in a position to accept their assurances.

The universal credit is proposed to replace quite a number of existing benefits: working tax credit, child tax credit, housing benefit, council tax benefit, income-based jobseeker’s allowance and income-related employment and support allowance. We know about the existing complexities and difficulties with many of those benefits, so we cannot just take it on assumption that there will be no problems bringing them all together. We cannot take it on assumption that there will not be any serious transitional difficulties; neither, on the basis of past experience, can we take it for granted that the administration system, the infrastructure for delivery and the information technology used for the new system will not have any problems.

We know the stated intentions for tax credits, but we also know about all the problems that resulted. We know the stated intentions for employment and support allowance, but we also know about the many difficulties surrounding its delivery. It would therefore be naive if the House simply said to the Government, “Carry on regardless; we like your stated intentions; we are not going to frisk you for any further details or caution you against any possible risks to our constituents.”

Issues in the Bill might have complicated effects in the context of Northern Ireland. When it comes to universal credit, the Bill makes presumptions about child care provision, but Northern Ireland, of course, is not covered by the Childcare Act 2006 and it does not have the same infrastructure for child care as elsewhere. That poses serious challenges about how the scenario painted by the Government will work out for Northern Ireland.

Further issues stem from the fact that Northern Ireland does not have council tax, which affects rate relief. We will have to see how that will be administered from Whitehall and what degree of discretion the Whitehall Government will allow the Northern Ireland Assembly and Executive to have in respect of delivering locally for Northern Ireland the framework created by the Bill.

As I have pointed out before, many people in Northern Ireland live and work on a cross-border basis. Many people on benefit who want to get jobs might find one across the border. The issue of providing tax credits for cross-border workers is fraught with all sorts of difficulties and frustrations. We do not yet know how the replacement scheme is going to work. There is a danger that cross-border workers—those who live and work on either side of the border—could find themselves in serious difficulties.

That is why many of us are not just suspicious about some of the Government’s intentions, which we fear may result in punitive measures for many people on benefits, but sceptical about whether enough work has been done in terms of the detail of the Bill and how it will affect our constituents. That is why many of us do not feel able to support the Bill’s Second Reading, and if others are prepared to oppose it, I am prepared to join them.

17:50

[Stephen Lloyd (Eastbourne) (LD)]

Given the breadth of the Bill, I intend to focus on the work aspects.

The right hon. Member for Croydon North (Malcolm Wicks) is no longer in the Chamber, but I trust that he will not mind if I, too, quote Beveridge, who famously said:

“Want is one only of five giants on the road of reconstruction; the others are Disease, Ignorance, Squalor, and Idleness.”

As we all know, those words were written at a time of real poverty for many people in the United Kingdom. How do they apply today, in the 21st century? Indeed, do they apply today? My supposition is that they do. Today, 10.4 million people of working age in the United Kingdom are not working, 5.9 million are claiming out-of-work benefits, and more than 2 million children live in households in which no one is working. It was the great Nye Bevan who said:

“There is no test for progress other than its impact on the individual.”

Yet, today 3.9 million children still live below the poverty line. Some progress! Surely it is time to do something different.

I support the Bill’s Second Reading because I believe that, in the main, it approaches this intransigent issue intelligently and constructively. The nation has got stuck, and it has got stuck because of the system. I do not think that anyone in the Government is particularly at fault, because the problem has built up over the past 40 years. A key part of breaking the system, which I believe the Bill is doing, is making work pay—a concept that the Secretary of State has championed for some time—and that means changing the tax and benefit system.

I will not go into all the details, because I am sure that everyone in the Chamber is well aware of them, but, as some Members have already pointed out, more often than not there is no point in people coming off benefit and going into work because they will be worse off as a result. A constituent of mine, a single mum with three kids who is on housing benefit and the rest, has not worked for 15 years. The rational option for her is to stay on benefit, and if I were her that is what I would do. It would be insane for her to come off benefit: she would probably lose out under the system that we have had for years, and what would happen if she lost her job in a few months’ time? The system is insane, and the Bill attempts to transform it.

[Naomi Long]

Another potential benefit of removing the limit on the number of hours that can be worked by claimants—currently about 16—is that employers would be more likely to take on people part-time, such as lone parents, because they would have more flexibility.

[Stephen Lloyd]

I agree with every word that the hon. Lady said.

How are we to help people back into work when they have been receiving incapacity benefit, jobseeker’s allowance or a similar benefit? As I said when I intervened on the right hon. Member for Croydon North, the Bill will provide much more money for training providers to give them an incentive to focus on people who have been on benefit for a long time, and make it worth their while to spend extra time and resources helping those people back into work. The right hon. Gentleman said that the Bill copies measures taken by the previous Government in that regard. That is true to an extent, but it does a great deal more than that.

In the past 24 hours, I have been in touch with the National Audit Office, according to which the average payment from the DWP to training providers for pathways to work was £1,003 per job. Under the current proposals, providers will be paid a minimum of £3,800 and a maximum of £13,700. What lies behind the Bill is our recognition of the fact that people have been “parked” for years, which is outrageous. Whichever side of the Chamber we are on, we know that if the many people who have been out of work for a long time are to be helped, they will need that extra effort, extra mentoring and extra time. The only way in which we shall persuade training providers to do that is by stuffing their mouths with gold, as Bevan said in the ’50s in respect of the British Medical Association. The Bill attempts to achieve that by making training providers feel it is worth their while expending the extra effort to get people back into work, which is tremendous.

The previous Government introduced the black box concept, and I am glad that we are building on that to start using subcontractors’ imaginative ideas. That is all good and very rational, and it is a simple solution, too. Members on both sides of the House know that, where possible, work is the best route out of poverty.

There are downsides, however. The economy is challenged—that is the best word I can use. I spoke to a senior disability spokesperson the day before yesterday. I said, “Well, it’s obviously very hard for us to get all these extra people into jobs when we’re faced with such a difficult economic situation.” She replied, “Stephen, you’re absolutely right, but at least if we start doing the spadework now it is just possible that when the economy turns in a couple of years the foundations will have been laid and a lot of people who might have seen themselves as never working again could, through the mentoring, be in a position to be able to be swept along with the upswing in the economy.” I certainly hope so, because it is very difficult to achieve such radical reforms now when we face an economic crisis.

I want to give a message to the Minister, and I am sorry that all his colleagues are not present, as this applies to the entire ministerial team. The Bill is tremendous; it is a glass-half-full Bill and it recognises that we have to spend money, which is why I appreciate the Secretary of State getting the £2.5 billion from the Treasury. We have to pour money into this problem to transform the situation, but we must change the language if we are to get people who for years have been on IB or other benefits back into work.

The Bill is clearly designed to do that, which is why it approaches the issue in such a constructive way. I was in Burnley with the Work and Pensions Committee a couple of days ago. A training provider who is very successful in getting people into work said, “If there’s one message to give to the Government it is this: respect. Use the right words, and treat people who have been on IB and on benefits for a long time with respect.” I therefore say that we must use the right words.

The Bill is fit for purpose. I think it will transform the situation, and I will support it on Second Reading.

17:57

[Mr William Bain (Glasgow North East) (Lab)]

It is a pleasure to be called to speak in this debate.

With more than 2.5 million people unemployed, youth unemployment soaring to 20% and persistent levels of intergenerational unemployment, it is clear that the status quo is not working. The hon. Member for Eastbourne (Stephen Lloyd) cited Beveridge, but Beveridge and the Labour Government of 1945 envisaged the welfare state as a system that would redistribute not just wealth but power and opportunity. It was a welfare state built on reciprocity, but we cannot characterise the package of reforms in the Bill as being built on sufficient reciprocity. This is a Government who are introducing a Work programme that will help 250,000 fewer people than the programmes it replaces.

[Chris Grayling]

It is very important to deal with this point head on. That is absolutely not the case: every single person on JSA or ESA who needs and wants support through the Work programme will get it, and the total numbers will be higher than under the previous Government.

[Mr Bain]

If Members look at the details of what is being spent on the Work programme, they will see it does not match up to the initiatives of the previous Government.

We also foresee huge problems for the losers under these reforms. Labour supports a simplification of the universal credit system, but it must be a fair simplification. Yes, about 1 million households will benefit, but it is absurd that that is being paid for by 1.7 million households with incomes of between £16,000 and £24,000 losing out. The squeezed middle will not only be defined; they will be heard loud and clear in respect of the money they will lose as a result of this Government’s policies.

The Government have shown a bizarre lack of clarity regarding whether self-employed people hoping to start a new business will be eligible for the universal credit. The transition for individuals to the universal credit lacks detail and could create disincentives. The credit does not deal with transport costs to and from work, and the cash protection for individuals’ incomes will apply only until their circumstances change, which could be only a few weeks after taking up a job if their hours of work are altered. Changes to crisis loan alignment payments are also likely to affect many claimants. No work has been done to identify the costs of transferring delivery to local authorities, or to identify the most affected groups.

Labour Members know that one of the best means of reducing child poverty is to encourage more second earners to take on part-time work around their family or care commitments. It is extraordinary that the proposals in the Bill will reduce the work incentives for up to 330,000 second earners. This is not a strategy that will reduce child poverty in the short or medium term. Despite the Secretary of State’s statement today, there is a shocking lack of clarity about the provision of child care, the cost of which presents a huge barrier, particularly for women returning to the labour market. Council tax benefit is being devolved to local authorities in a completely unspecified way that lacks clarity and threatens to create new disincentives to work.

The Institute for Fiscal Studies has concluded that, overall, under the universal credit the incentive to work for low earners will be stronger for single people and for those in couples where one partner does not work, but that it will weaken incentives for couples to have both partners in work, owing to a higher withdrawal rate than the current tax credit system. It has also concluded that lone parents will lose out in the long term.

This week, the Social Market Foundation established that 400,000 families with children that currently receive tax credits will lose their entire eligibility for financial support under the universal credit if they have savings of more than £16,000, and that a further 200,000 families with savings of between £6,000 and £16,000 will lose some of their entitlements. As Ian Mulheim, the director of the foundation, said,

“The Universal Credit will punish working families trying to save for the future, such as those trying to get a foot on the property ladder.”

We urge the Government to reconsider the shambolic way in which they have designed the credit, and to introduce a more adequate Bill that is fit for purpose.

On housing benefit, the hon. Member for Manchester, Withington (Mr Leech) mentioned the incredibly harmful effects of the proposal to extend the shared-room rate from people aged under 25 to those up to the age of 35. Some 88,000 people across the country will lose out, with an average loss of £47 a week. In Glasgow, my home city, the impact will be to move people from the social rented sector into the private rented sector, with a resulting increase in rents.

The Secretary of State has not been able to give the House sufficient assurances on the disability living allowance. Yes, we hear of a review, but he has not taken back, nor has he had permission from the Treasury to recoup, the amount he proposed to save by withdrawing the mobility component. His own Social Security Advisory Committee has referred to the terrible impact of the loss of independence that people who lose the mobility component will experience. We therefore urge the Government not just to review these proposals but to withdraw them.

On the move to personal independence payments, we think it unacceptable to require a disabled person to wait six months—double the length of time under the present system—before coming eligible. Richard Hamer, director of external affairs at Capability Scotland, has said:

“The welfare benefits system is the UK Government’s strongest tool to promote equality for disabled people. The changes announced in the Welfare Reform Bill will instead push disabled people and those who care for them further into poverty.”

I encourage Members throughout the House to seek a better Bill than the one the Government have proposed today. I urge Members to vote for the amendment and to seek a better Bill than the shoddy and shambolic effort the Government have proposed today.

18:07

[Damian Hinds (East Hampshire) (Con)]

As some hon. Members are still waiting to speak, I shall strive for brevity. We are, of course, debating the principle of the Bill, which I am very proud to support, and we will vote on whether we get the chance to discuss in Committee many of the important issues that hon. Members on both sides of the House have rightly raised. We will also vote on whether to progress with the Bill’s central reform: the universal credit, which is ambitious, bold and compassionate.

I am sure that we have all had discussions with our constituents in which they say, “Why can’t we just have a benefits system that means that you are always better off in work than out of work? Why can’t we have a system where everybody who can work does work and where we provide proper support to those who can’t? Why can’t we just simplify the whole system so that people understand it and we do not spend so much money on bureaucracy?” This Government answer those questions by saying, “Actually, we can.”

This welfare package contains many elements. Hon. Members have focused on different ones, but I wish to focus briefly on the social fund. It contains many diverse elements but, as the hon. Member for Belfast East (Naomi Long) identified, it is the crisis loans that have been growing most recently. In the past year, there were 2.7 million loans to 1.1 million people. Although the number of people taking crisis loans has grown rapidly—it has doubled over four years—the number of individual loans has grown even faster. That, in itself, has driven a big increase in the administration costs of the scheme, which have risen from £70 million in 2007 to £120 million last year. Of course it is right that we provide extra support for people in times of personal crisis, but it is also right to question those rates of growth.

There are many other problems with the social fund: a lack of awareness, particularly about community care grants; the long processing times that sometimes occur; and, on occasion, perverse incentives. One such incentive results in families applying for loans for cookers and beds because they are “priority items”, even if they are not actually the things that are most needed at the time.

It is right to devolve these programmes to a local level, where the authorities know their areas more and are better able to put families in touch with other local services that can help them. Work can be done with, for example, citizens advice bureaux on referrals, and with food banks and furniture recycling programmes, such as Furniture Helpline, in Bordon, in my constituency. Credit unions can also play an enhanced role, although we must recognise the limits to that, both in terms of geographical coverage and the client groups they are geared up to serve. I wish to thank the Department for Work and Pensions for another announcement last week on support for credit unions. An extra £73 million is being provided for capitalisation and for the development of something that many hon. Members on both sides of the House have requested for a long time: a robust back-office system that will enable credit unions to work more closely with post offices. That, combined with the imminent legislative reform order, which will allow credit unions to grow more, will mean that they will be able to fulfil an even more important role in providing responsible, affordable financial services to some of the poorest people in this country.

The reforms to the social fund are just one part of a large and radical package of measures. Some issues still need extra attention, as Ministers acknowledged today. The position of cancer sufferers is one such issue, as is the mobility component of disability living allowance, but I suspect that, deep in their hearts, many Opposition Members support the principles behind this ambitious, bold and compassionate Bill, and I urge them to vote with us to move forward on those central themes.

18:08

[Mr David Lammy (Tottenham) (Lab)]

I approached this debate hoping that all of us in this House recognise the importance of the dignity of work for our population and recognise the dignity of living in a society where we are concerned for the welfare of people who fall on hard times. That is the basis of our social security system and we are judged on how we deal with the most vulnerable. So the remarks that have been made about people living with disabilities are particularly pertinent to the kind of society we want to live in. We have heard remarks from Members on both sides of the House that cut to the heart of that kind of society.

I am not able to vote with the Government on the Bill. I say that coming from a working-class background in which my parents, both of whom are dead now, would literally run out of the door to work because they valued work so much. We survived on income support. For us, child benefit meant being able to buy school uniforms and books, and there was a period when I experienced free school meals. Speaking in this debate, I am thinking about the many people outside the Chamber who rely on the welfare state and social security who will be very anxious about what has been said at the Dispatch Box.

The first reason why I cannot vote for the Bill concerns worklessness. One has to acknowledge the progress of moving to a universal credit system, but the reforms are being made against a backdrop of huge worklessness in communities such as mine, and we have a residual memory of the past. When Labour came to office in 1997, unemployment in Tottenham was at 28%; it is currently the highest in London. We remember a similar programme to the workfare programme called the youth training scheme. We remember the Manpower Services Commission and the 58% of people on YTS who did not finish it and who certainly did not leave it with any qualifications or job opportunities, so we scrutinise what this workfare programme will mean, and it seems lacking when we look at what is replacing the current system. We know there will be less money in the kitty than there is now and we cannot understand how the Government can move to the new system while withdrawing £6.2 billion from the current credit schemes. That is £6.2 billion that will not be available to some of the poorest families in the country. The Bill will need a lot of scrutiny in Committee in the context of worklessness, particularly the situation facing the young, and I hope to play a role in that.

The second reason why I cannot vote for the Bill is because of where it will leave women and families. Much has been said about the situation regarding the second earner when there are two earners in the home. The Bill will hurt both families and marriage, and I am surprised to see the coalition Government, who say they value marriage, doing something that will clearly hurt families by taking this punitive approach to the second income.

Also, many of us are dealing with local authorities that are withdrawing support for services in our communities, such as after-school clubs. I agree with the single mothers in my constituency who say to me, “Listen, those activities that our children take part in when school finishes at 3.30 pm are not a luxury but a necessity because we go out to work and work finishes at about 5.30 pm, and then we have to get home and pick them up.” That money is being cut against the backdrop of the proposal in the Bill massively to reduce child care allowances. How can we do that to women up and down the country whom we encourage, and want, to work? That is another reason why we should not vote for the Bill.

Another reason why I will not vote for the Bill is the visit I had from the Haringey Phoenix Group in my constituency—a wonderful voluntary organisation that supports the blind. I am particularly concerned by what the Secretary of State has said. He was vague at best about his proposals and much has been kicked into a review. Many people will be left in huge uncertainty and it is unfair that someone who is blind, who is trying to live an independent lifestyle and who perhaps has a family, will not know what kind of assessment they will receive, how regularly they will receive it and the scale of their benefits afterwards, because the Secretary of State cannot provide those answers. I welcome the simplification of the system and the desire to see people in work and gaining the dignity that comes with that, but people outside will be very concerned, and the son of anyone who has received benefits in the past could not support the Bill as it stands.

18:14

[Steve Baker (Wycombe) (Con)]

I rise to speak in support of the Government, very conscious that a large number of people will have legitimate and sincere concerns about the Bill. For example, I asked one local activist, who leads the Zacchaeus 2000 Trust, to critique the Prime Minister’s recent speech, and his response ran to 23 pages. I regret that due to the time I will not be able to share his concerns, but I will forward them to the Government, as a matter of interest.

I do not think there can be any doubt that the system is currently failing the very people that it is intended to help. I want to share with the House two stories from my constituents—one that shows the imperative for change and one that has slightly broader applicability.

Miss Rachel Pepin came to see me in a state of some anguish. She is a struggling single mum who wants to work more. She is in employment and the work is there for her, but she cannot take it because of the benefits system. She has two sons whose father will not support them. It seems that every time the Child Support Agency catches up with him, he drops out on to jobseeker’s allowance. Her current housing benefit receipt makes it profitable to stay on income support and actively not to seek work. She has reached the conclusion that it simply does not pay her to stay in employment. She sees her neighbours—on benefits—better off than she is.

I am glad to say that that is not how Rachel Pepin wants to live. She wants to work, and she is struggling against the treacle of the present system. It is letting her down, and that must end. Not everyone will share her admirable work ethic. Many will make the wrong choice when faced with the choice between being better off and doing the right thing. We must ensure that work is better for everyone, or we will encourage the decivilising consequences of the state encouraging bad choices.

My constituent Mr David Laws—[Interruption.] I expected that response from the House; I believe that he is not related. Mr Laws is most concerned about the recent changes that will end home loan interest payments after two years. He wishes to protest most strongly about the “unfairness of this legislation”, as he puts it. He has been out of work for some time. He says he is not workshy. He has a law degree and has experience of both public and private sectors. At the age of 51, he finds that many employers do not think him suitable for the low-paid jobs that are available. He finds himself willing to do anything but unable to find work. He therefore faces the very real possibility of losing his home if he fails to secure a job before April 2012.

That puts me in mind of two points. First, I think Mr Laws has a legitimate concern, which must be addressed. Secondly, if we cannot create an economy in which Mr Laws can find a job within a year when he is highly qualified and at the peak of his productivity, we will have failed. I urge the Government to impress on the Chancellor the need to fulfil his pledge for an enterprise-driven Budget. We simply must deliver those private sector jobs.

Given the time and the fact that other Members wish to speak, I conclude by echoing the sentiments put succinctly in the Centre for Social Justice report, “Breakdown Britain”:

“The more we struggle to end poverty through the provision of benefits, the more we entrench it. By focusing on income transfers rather than employment, the system makes people dependent on benefits. Habituation to dependency destroys individuals and communities, as well as reducing the overall competitiveness of the UK.”

I listened to my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who made the case brilliantly that the moral and intellectual high ground is on the coalition side of the House, and I agree with her.

We have heard a range of Opposition speeches. I welcomed the speech by the right hon. Member for Stirling (Mrs McGuire), who accepted that the Government’s intent is good. I share her concern that the Bill, in a sense, is enabling, but unlike her I suspect that in a complex welfare system it is necessary to give the Government some flexibility.

[Mrs McGuire]

On flexibility, does the hon. Gentleman recognise that the 300-odd regulations defining what is meant by the Bill should be before us today?

[Steve Baker]

I hear the right hon. Lady, as have Ministers, but as I have so little time, I hope she will forgive me for finishing my contribution.

I was glad to listen to the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett). In an intervention, I agreed with another Member that the banking system is currently the source of great injustice, but some of the contributions from the Opposition seemed cynically opportunistic. There has previously been broad agreement across the House that there must be change. I urge Members in all parts of the House to get on board a welfare reform that is well intentioned and must be seen through.

18:20

[Kate Green (Stretford and Urmston) (Lab)]

Time is tight, so I shall mention a small number of issues which have not yet come up specifically in relation to the impact of the universal credit on women and children. My hon. Friend the Member for Glasgow North East (Mr Bain) alluded to the design of the universal credit as a breadwinner model benefit and the disincentive that that creates for second earners and households to work. That is important because women’s financial independence, whether in couples or on their own, is an objective that Ministers ought to be seeking, given their proclaimed wish to use the benefits system to help everyone stand on their own feet.

I am concerned, first, that the benefit will not deliver well for women. Half of women in poor households already do not have any money to spend on themselves. Money will now be paid only to one member in a couple. As the evidence of the pension credit shows us, where there is a choice as to which member of the couple is to receive the benefit—I understand that that is what Ministers intend for this benefit—77% of payments went to the man. I urge Ministers to examine closely the design of the benefit that they have created and its implications for women’s independence. That is important because women are more likely to spend money on children.

That leads me to my second concern: the impact of the benefits cap, particularly in relation to children. As other hon. Members have mentioned, the housing cap will force many families to go into arrears or to move. One of the important dimensions of forcing families to move is the disruption that that will create for children’s schooling, children’s social networks and child care arrangements. I urge Ministers to take careful note of the lessons to be learned from what happens to children who have been in temporary accommodation, and the damage that house moves can do to young children. I hope they will think again about the imposition across the board of that benefits cap.

The third thing that I ask Ministers to give attention to is payment of the universal credit on a monthly basis. I understand why they want to do that—to mimic the way in which many people receive their pay—but we know that one in four low-income families run out of money before the end of the month. Ministers must tell us what will be put in place to ensure that those families are not left struggling or destitute because of the design of a benefit payment that does not meet the needs of lower-income households.

The fourth aspect on which I would welcome clarification is an issue that has been highlighted to me. In some cases, because payment is made to one member of a couple in a household, benefit could be paid to a member of a household in relation to a cost borne not by them, but by another member of the household. That is the case particularly in relation to housing costs. One member of a couple could receive the universal credit, including the housing component; the other member of the household might be responsible for that rental obligation. I would welcome Ministers’ clarification on whether that is also to apply to mortgage interest assistance. That matters because it is likely to deter women from forming couple relationships, which Ministers are keen to promote, if women think they will be put in a position where money which is important for them to keep their home is to be paid to somebody else.

Finally, like other hon. Members, I am distressed that proposals are being introduced in the Bill so early on in the process of consultation on child support, when we are still waiting for the responses from the many experts in the field. I am concerned that we are moving to a system that will be almost entirely voluntary, with only a residual compulsory system. We all know that when voluntary arrangements are put in place—if they are put in place—it is women and therefore children who are most likely to lose out. Introducing the payment of a fee to access a voluntary child support system is highly likely to leave many women and children completely unprovided for, and I urge Ministers, on that point in particular, to think carefully and to think again.

18:25

[Charlie Elphicke (Dover) (Con)]

Government Members are all aware that behind the Bill stands the financial destiny and future of millions of people. There is a great human aspect to this. Only today, I spoke to my constituent, Kelly Banks, whose son Ben is 12 years old and has a serious heart condition. The allowances that he receives are going to be taken away because he can walk to school—never mind the fact that it takes him half an hour, and by the time that he gets there, he is out of breath. Those hard and difficult decisions must be taken, and we must make sure that the right balance is struck to ensure that people who need help receive it, and that those who do not, do not.

That is a particular concern, because the figures show that disability living allowance has gone up by 30% in eight years. Housing benefit has gone up by 45% in the past five years. In the past 13 years, the benefits bill for working-age people has increased from £52 billion to £74 billion. Those are the numbers in the years of plenty, but we have inherited a catastrophic economic situation and difficult decisions must be made. The Bill seeks to strike a balance between, on the one hand, the nation’s credit card having been maxed out and, on the other, the need to ensure that those who need help receive it. Most importantly, the universal credit will help people to be sure that work always pays.

We need to do more to crack down on fraud and error, which costs £5.2 billion in wasted benefits. We need to ensure that there is a proper cap on the number of people coming in to the country. We have 5 million people who could work but do not do so, yet we all know that in the past few years 1.2 million people who were born overseas came and took jobs. We should do more to ensure that those 5 million people who could work but do not do so receive help, support and encouragement to get into work. We have to do the right thing by our own countrymen and our neighbours. It is time to reform. It is time to make work pay, and it is time to bring the benefits bill under control and ensure that there is fairness for those in need and those who are paying taxes.

18:28

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I shall be brief, as I know that other Members still wish to speak. We have heard useful contributions from Members on both sides of the House. There is cross-party consensus that the welfare system needs to be reformed, and there is even common ground on the reasons for the reforms, such as making work pay, and on what we need to do about the problem, such as simplifying the benefits system.

I want to put on the record the fact that there have been some unhelpful and unhealthy remarks, particularly statements that equate the reforms on making work pay with, if not a kick up the backside for people who are deemed to be workshy, then its equivalent. I found that particularly objectionable. I began to make a list of the Members concerned, but I ran out of space.

I want to dispel some of the myths perpetrated about worklessness, which includes unemployment and incapacity, whether the result of illness or of disability, and to explain why the Bill not only fails to address key issues such as the taper of the universal credit but, in conjunction with the disasters of the Government’s economic and employment policies, risks increasing both child and pensioner poverty and inequalities, as well as creating a new underclass. We also know that there will be consequences for the health outcomes of the population as a whole.

On unemployment, constituents are coming to my surgeries having either had their jobs threatened or just lost their jobs, and it is insulting that we should consider some of them to be making lifestyle choices. Unemployment is not a lifestyle choice. There is clear evidence that unemployment has profound negative effects on the physical and mental health of not only the people who are directly affected, but their families. Studies suggest that there will be an increase in all-cause mortality as a result of unemployment, so we need to be very mindful of that.

Indeed, if we compare the level of incapacity benefits with health data, we find that it is a good indicator of population health. It is reliable, legitimate and not an indicator of malingering. There is overwhelming evidence that the driver that brings down worklessness is a high level of sustained economic growth, but the current fitful recovery will not help to get people back into work. Given the Government’s cuts, nothing will help those people.

In addition to the Bill’s appalling timing, it lacks an understanding of the importance of appropriate welfare to work programmes and fails to distinguish between job-ready and long-term claimants. That will again hinder people from getting back into work.

My final general point is about the Bill’s direction of travel. When we compare different international systems, we find that those with highly decommodifying state support packages—where state support ensures that a basic standard of living is maintained—have fewer income inequalities, a host of social benefits and no negative impact on health outcomes, as measured in particular by infant mortality.

Welfare systems also have an intergenerational effect. In the US we have seen that evidence, and I see patterns associated with what we have been introducing, and that effect also occurring here. Children inherit their parents’ poverty, and we cannot allow that, so I recommend that we look again at the detail of the Bill.

On the Bill’s specific measures, I have already mentioned concerns about the taper, and I hope that the Government will commit to an annual review of the rate and introduce it at 55% rather than at 65%. In addition, the payment of the universal credit needs to be more flexible, as many of my hon. Friends have said, so that we do not exacerbate child poverty any further.

I would also welcome some clarity about the earnings disregard—the amount a household can earn before they lose their entitlement—to ensure that work pays for all. Members have already mentioned the reduction in the child care costs that the working tax credit covers, and I hope that we can look again at that. Save the Children estimates that some families could lose more than £1,500.

Free school meals are another important source of support to low-income families, and I am concerned that the Bill does not describe how they will be maintained under the universal credit.

The withdrawal of employment support allowance after a year is absolutely disgraceful, and again we should learn from other countries. We have seen what has happened in the States, and the effect on families has been absolutely appalling.

Finally, the conditions, sanctions and penalties associated with the universal credit must be reasonable, take account of specific barriers to work and ensure that work does pay.

So, I will not be supporting the Bill—

[Mr Speaker]

Order. I am extremely grateful to the hon. Lady.

18:34

[Priti Patel (Witham) (Con)]

I congratulate my right hon. Friend the Secretary of State and his entire ministerial team on bringing forward this long overdue legislation, and I pay tribute to him for his passion and conviction in driving forward his policies to get people off dependency and back into work. It is imperative that the welfare and benefits system be reformed and improved, because helping people to get back into work, ending the culture of dependency on the state and restoring the British work ethic is absolutely the right thing to do. It is always easy for Labour Members to criticise from a position of opposition, but they are the ones who spent 13 years failing to get people into work and trapped yet another generation on benefits—and they opened the door to let 2.5 million people from overseas come into Britain and take British jobs.

I make no apologies for viewing the welfare system as a safety net. Welfare should be available to help those who have fallen on hard times and need support in getting through difficulties, illnesses or disabilities. However, this has not always been the case. Many Members who have spoken in the debate recognise that our constituents have gone through many bureaucratic processes, obstacles and hurdles in getting the support to which they are entitled. They face a lot of stress and anxiety in going through appeals processes and tribunals, and many go through terrible trauma, which is why they end up in our surgeries, when we have to intervene. The reforms outlined in the Bill must therefore ensure that such mistakes, bureaucracy, regulation and hurdles are reduced, and, importantly, that we restore confidence in the system to support those who are in need.

There must be three components in any programme of measures introduced by Government to get Britain working, take people away from benefits and get them back into employment. First, we need pro-business policies that promote growth, enterprise and wealth creation. Secondly, strong measures need to be in place to get people into work and to complement the measures in the Bill to reduce benefit dependency. I therefore welcome the introduction of the Work programme, which is long overdue. It is not covered by this Bill, but has to be viewed alongside it as a complementary measure. The Secretary of State should be congratulated on promoting the role of welfare-to-work providers in getting people into work, and recognising the opportunities that they will create for the unemployed. That is the best approach to take, and the sooner the Work programme is fully functional, the better. Finally, there must be a benefits system that is fair both to the taxpayer and to those who need benefits. I therefore welcome the measures in the Bill that will get people out of the benefits trap by making work pay and removing complexity with the introduction of the universal credit.

I press the Government to use the Bill to take strong action against those who are disregarding the traditional British value of fair play and have been using the benefits system as an alternative to work. We have heard a great deal about that during the debate. The House may be interested to know that more than 500 suspected benefit cheats have warrants issued for their arrest for failing to turn up in court. Despite the levels of suspected fraud, totalling over £50,000 in some cases, because of a ridiculous example of human rights law, defying common sense, the Secretary of State’s Department is unable to name these people to help to track them down and bring them to justice, because it would violate their right to privacy. I hope that the Secretary of State and Ministers will look to alter this ludicrous position, and use the Bill as an appropriate vehicle to do something about it. I would also like action to be taken to prevent Europe from ordering us to pay benefits to immigrants, including illegal immigrants, which causes bemusement to most people in this country.

This Bill is not about penalising the vulnerable but establishing a fair system that penalises those who flout rules, abuse the system and think it right that they should have a better life than those who go out to work. That is why I will support it.

18:38

[Sheila Gilmore (Edinburgh East) (Lab)]

Having sat here all afternoon listening to the debate, I see a substantial difference in attitude between the two sides of the House. We have heard the Secretary of State and many speakers talk about the distinction between taxpayers, on the one hand, and claimants, on the other, as though they were two completely different groups of people. They are not. At various times in our lives we may be either or both. It is unproductive to pit these people against each other. There are too many myths and exaggerations in this whole debate.

The Prime Minister launched this Bill by saying that the welfare system had put one in four people out of work. His figures were simply wrong. The figure for those of working age who are not working, and not students or carers, is only 14%, so why did he say that it was one in four? It was simply to try to build up a head of steam to justify what are in fact cuts in benefits. Before the universal credit and all the rest of it comes into force, there will have been two years of benefit cuts. That is why the Government are able to say that people will not be worse off. Most of the reductions in benefits will already have happened through housing benefit, and by taking people off incapacity benefit and putting them on much lower levels of benefit. That is why people will not be worse off, and it is quite unsatisfactory.

18:40

[Stephen Timms (East Ham) (Lab)]

We have had a good debate. The Bill contains one good idea and presents us with two serious problems. The good idea is the merger of out-of-work benefits with in-work benefits, such as the tax credits that we introduced, which make it much more worthwhile to be in a job. The creation of the universal credit has been widely welcomed across the Chamber in this debate, by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), as well as by the Chair of the Select Committee on Work and Pensions, and by the hon. Member for Cardiff Central (Jenny Willott), my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Stalybridge and Hyde (Jonathan Reynolds) and my right hon. Friend the Member for Stirling (Mrs McGuire), among others. It is a welcome change, and it is right that we should congratulate the Secretary of State, who has focused intently on this matter since the Conservative party sacked him as its leader. He went off and set up the Centre for Social Justice, which did the spadework, and he now brings the reform to the House.

That was the good idea, but unfortunately the bouquets end there, because the Bill is a mess. It was rumoured on good authority a few weeks ago that it would be delayed another month so that key decisions could be made—and now that we have the Bill, we can see why: fundamental points are missing. How will child care be supported? That is key to the Bill’s purpose of ensuring that people are better off in work. If the Government get this decision wrong, the Bill will fail. The Secretary of State told us that he would take further advice from relevant groups. However, the relevant groups have given him plenty of advice already; the trouble is that he has not taken it. The previous Government’s success on child care meant that the proportion of lone parents in work increased from 45% to 57%.

The decision on support for child care is crucial. The Secretary of State has told us that he wants to spread the same amount of money across many more people. People will therefore have to find not 3% of the cost of child care out of their own pocket—which is common at the moment—but perhaps 30%. That is a tenfold rise. It is therefore not surprising that lone parent organisations are reporting calls from their members saying that they will not be able to afford to carry on working.

At a time when benefits are being merged into a universal credit, the Government have, bizarrely, decided to do the opposite with council tax benefit and devolve it entirely to local councils. That appears to be the messy outcome of a dispute between the Secretary of State for Work and Pensions and the Secretary of State for Communities and Local Government, which unfortunately this Secretary of State has lost. Local authorities will apparently be free to design council tax benefit as they wish, except that it will have to cost 10% less than before. Again, that could completely scupper the advantages that the universal credit is supposed to deliver. Will the Department for Work and Pensions be able to step in if that happens? We simply do not know.

The Secretary of State was not able to tell us earlier who will receive free school meals in future. That is a crucial piece of information. How can we debate the new system without knowing that?

My hon. Friend the Member for Swansea West (Geraint Davies) made some telling points about the position of self-employed people. We have no idea how the self-employed will be handled under the new system. Employers will notify the DWP of the salary of people in pay-as-you-earn every month so that their universal credit can be calculated—that is, if the Government can get the IT to work. The Secretary of State knows that I am sceptical about his timetable for that. Self-employed people are not in PAYE, so how will their universal credit be worked out? We have no idea, and the Bill does not tell us.

Who will be entitled to free prescriptions? Who will be entitled to mortgage interest support? Which working families will be exempt from the benefit cap? How will unearned income such as child maintenance and widow’s benefit be treated? Will disability living allowance continue to be available indefinitely to children? My hon. Friend the Member for Alyn and Deeside (Mark Tami) made a powerful speech about that.

Those are enormous gaps in the Bill on crucial details, not minor matters. The whole purpose of reform, and the point that has been repeated over and over again in the debate, is that everybody wants a system that ensures that people are better off in work. Achieving that goal stands or falls by whether those questions are given the right answers, and at the moment we simply do not know.

The lack of answers is a serious problem with this unfinished Bill, but unfortunately it is not the worst problem. The things that we do not know are only the half of it: the things that we do know turn out to be even worse. Why on earth are Ministers launching an attack on saving? People who receive £80 or £100 a week in tax credits to supplement their earnings will in future receive absolutely nothing at all if they have £16,000 in the bank. They could lose perhaps £5,000 a year as a punishment for having £16,000 in savings. If they get rid of their savings, they will get their credits back. What is that about?

The Secretary of State told us earlier that child care support would be included in the universal credit. That would mean that those people, for the crime of having £16,000 in the bank, would lose all their child care support as well. Why are people on modest earnings to be punished for saving for a deposit to buy a home, or for the massively increased charges for higher education? The Secretary of State told us that 100,000 families would lose everything as a result. He said that he saw no problem with that, but he should go and talk to his colleagues in the Centre for Social Justice, who have made the point that the savings limit for out-of-work benefits is

“an unfair penalty to those who have saved”.

Instead of easing that limit, as the CSJ proposed, the Bill extends it to people in work.

The Secretary of State is wrong to say that the welfare system is only for the most vulnerable. My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) made a telling point about that. It is there for everybody when they need it; that is why we have national insurance. My right hon. Friend the Member for Croydon North (Malcolm Wicks) was right to emphasise that responsibility should be expected from the rich as well as the poor.

Contributory employment and support allowance is to be time-limited to a year. My hon. Friend the Member for Aberdeen South (Dame Anne Begg) made a telling intervention about that, and my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) also spoke about it. The data suggest that probably less than 20% of those in the work-related activity group returned to work within a year. There is no way that someone on oral chemotherapy or with a serious mental health problem can be expected to return to work in a year, so that is clearly wrong.

[Robert Flello (Stoke-on-Trent South) (Lab)]

Does my right hon. Friend accept that there is already a problem with contribution-based ESA, because people are not passported through to other benefits as somebody on income-related ESA might be? There are already difficulties for people in the circumstances that he describes.

[Stephen Timms]

There certainly are problems. The Government have made much of marginal deduction rates and the impact on work incentives, but it turns out from the small print of the Bill that the changes will increase the marginal deduction rates of many more people than will have them decreased. Again, the Secretary of State’s own think-tank has pointed out the problem with the high taper rate that the Government have chosen.

My hon. Friends the Members for Makerfield (Yvonne Fovargue) and for Stretford and Urmston (Kate Green) pointed out that in the tax credits system, benefit in respect of children can be paid to their mother. Sometimes, if all the money went to the father, the children would never see it. The Bill completely ignores that issue.

A lot has been said about disability living allowance, and my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) spelled out powerfully the dangers of what is being done. It is being scrapped and replaced with the personal independence payment—whatever that might eventually turn out to be. A lot of disabled people are frightened, and the Bill to abolish DLA was published before the consultation even finished. We should reform DLA not abolish it, and it is wrong for the Bill to proceed in that way.

As I said earlier, the Bill presents us with one good idea—the universal credit—and two very big problems. The first is all the things that the Bill does not tell us—the large gaps of great significance that have been left in it—and the second is all the things that it does tell us. It needs radical improvement before it reaches the statute book, so I commend the amendment to the House.

18:49

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I am sorry to follow such a highly negative speech from the Opposition spokesman on an occasion when the Government are bringing before the House an historic Bill that lies at the heart of an historic set of reforms that will reshape the relationship between the Government, the citizen and the welfare system. The Bill strikes a balance between fairness and responsibility, and crucially, it sets out the framework for creating a more effective welfare system that is fit for the 21st century. Above all, the Bill puts in place many more of the building blocks that we will need if we are to tackle the blight of deprivation that affects too many of our communities and too many of our citizens. In the past 13 years, millions of our citizens were left on the sidelines of society, trapped by a culture of dependency, facing financial barriers to a return to work, and with inadequate support to help them to make a return to the workplace, even if their financial position made it sensible for them to do so. All that must now change.

We have had a good and lively debate, and I congratulate all hon. Members who participated in it. Time does not permit me to refer to all the points raised, but I will happily answer questions or letters, and indeed, those who serve on the Public Bill Committee can raise many of the detailed issues in the days and weeks ahead.

Not least among those contributions was a particularly disappointing start by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), the shadow Secretary of State. He and the Leader of the Opposition have both openly backed the principles of the reforms, and they even put some of the Bill’s measures, such as the housing benefit reforms, in their party’s manifesto. Yet what did we hear today? They have done a U-turn. They have been captured by the left wing of their party, and are reverting to the politics of type. That is a real shame, because the shadow Secretary of State was right to say that the reforms would benefit from consensus. It is therefore unhelpful to hear Opposition Front Benchers spend so much time seeking dividing lines rather than working with the Government to deliver reforms that will transform this country. The shadow Secretary of State may not realise it, but there is a great degree of consensus about the reforms out there in the country, among people who believe that it is time that we sorted out the mess that has built up around our broken benefits system—a mess that has left millions trapped in dependency.

One of the other disappointments of the debate was that so many Opposition Members reverted to type in the language that they used. Too many couched this debate in the kind of language that I thought we had left behind 20 years ago. Let us be absolutely clear. The reforms are designed to help those in our society who are struggling. The universal credit will help to lift hundreds of thousands of adults and hundreds of thousands of children out of poverty. We are challenging for the first time in far too long the cycle of deprivation that incapacity benefit represents for too many of our fellow citizens. We are providing more individualised support to help people to move back into the workplace.

There are some tough decisions, but for what reason do hon. Members believe that we must take those decisions? It might have something to do with the fact that the Labour Government left us with the biggest deficit in our peacetime history and we must pick up the pieces. As the shadow Secretary of State so aptly reminded us, there was no money left when we took office.

I pay tribute to the right hon. Member for Croydon North (Malcolm Wicks) for saying that the best social security policy is a job. He is absolutely right, and that principle—that simple premise—lies at the heart of our reforms and the change that we are seeking to deliver.

Let me also address the point about the gaps in the Bill, which was raised many times this afternoon. I remember being up against the right hon. Member for East Ham (Stephen Timms), the shadow Minister, in Public Bill Committees when he was in government. Some of those Bills had virtually no substance at all to them. This is a bit like the poacher turning gamekeeper, but it is pretty ripe for him to turn round and say that not all the details have been included. What I would say to the House is this. As we work through the Bill in Committee, we will deliver detail to the Opposition at each stage on how we plan to put the measures into practice. We will answer questions and be as open as we possibly can, including in saying where work still needs to be done. The Committee will, I hope, be an exercise in discussion and debate, and we will inform it to the best of our abilities, because these reforms are vital. Making work pay will transform lives, especially for the poorest, through the universal credit, the single taper and getting rid of the complexity that has dogged our system. Members on both sides of the House will know about all the problems that we have had with tax credits over the years and all the constituency cases that have come to us. They should realise that this Bill sweeps all that away. A simpler system for our constituents and a simpler system for society—this is a better way of doing things.

Many of the clauses in the Bill are also vital to the conditionality changes that will underpin the delivery of the Work programme, helping to deliver much better back-to-work support for those struggling to get into work. We have always been clear that there needs to be a clear two-way contract between individuals and the state. We will provide much better back-to-work support and a system that makes work pay, but refusing that support cannot be an option for those with the potential to work. This Bill will place clear and firm responsibilities on their shoulders, and will bring clear consequences if they fail to live up to those responsibilities.

This Bill is about taking a step in the right direction towards a more common-sense welfare system that targets resources more effectively to the vulnerable, but also restores credibility in our welfare system. That is why we have tackled the insanity of a system that can pay housing benefit to people in quantities far beyond what those in work might expect to be able to afford when finding a house for themselves. That is also why we are introducing the benefit cap, so that we remove perverse disincentives to work. Last week I sat with an adviser in a Jobcentre Plus office who said to me, “The thing I find strange is this: why am I organising payouts to people who get far more money than I do, and I’m doing a job?” That is the kind of situation that we have to address.

That is also why we are getting to grips with reforming the disability living allowance, so that we can move away from an unsustainable welfare state and a system where we leave people for long periods, untouched, uncontacted and unchecked. We do not ask the question, “Is this still right for you?” That is what the changes are about, and they are necessary.

Despite the rhetoric, Opposition Members have said that they believe that it is time for reform, and this is why we are pressing ahead with it. We are also sorting out the mess that is child maintenance in this country. Finally, we are doing something that I am very proud of—something that Opposition Members called for, but which the previous Government did not do: putting an end to jobcentres having to accept adverts from sex clubs or lap-dancing clubs in a way that exploits the most vulnerable women in our society. In short, the Welfare Reform Bill is about putting responsibility, fairness and common sense back into the heart of the welfare system, while ensuring that we deliver value for money for hard-working taxpayers.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will the Minister give way?

[Chris Grayling]

No, I am not going to give way.

Before I conclude, let me briefly touch on a couple of points raised by hon. Members. The Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), raised the issue of contributory ESA. I want to make two points to her. The first is that all those who move off incapacity benefit who fit into the contributory bracket will be given access to the Work programme regardless of their status. That is important in ensuring that they receive back-to-work support. However, I would also remind her that the changes to ESA simply bring it into line with JSA. It is a simple principle that, if someone has financial means in their household, the state will not support them. The state will be there to provide a safety net for those who do not have the means to support themselves. That is a sensible principle. We have extended the period beyond six months, so that we can deliver support to people with health problems, but it is sensible to have an aligned system. I will be happy to talk further with the hon. Lady in Committee or in the Select Committee.

[Clive Efford (Eltham) (Lab)]

Will the Minister give way?

[Chris Grayling]

No.

This is an important set of reforms and I commend the Bill to the House.

Question put, That the amendment be made.

18:59

Division 219

Ayes: 244

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Labour: 232
Scottish National Party: 4
Plaid Cymru: 3
Democratic Unionist Party: 1
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1

Noes: 317

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Conservative: 265
Liberal Democrat: 47

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.

19:15

Division 220

Ayes: 308

---

Conservative: 260
Liberal Democrat: 47

Noes: 20

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Labour: 12
Scottish National Party: 4
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1

Bill read a Second time.

Welfare REform Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Welfare Reform Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 24 May 2011.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Norman Lamb.)

Question agreed to.

WELFARE REFORM BILL (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Welfare Reform Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of—

(a) sums paid by the Secretary of State by way of universal credit or personalindependence payment,

(b) any other expenditure incurred in consequence of this Act by a Minister of the Crown or the Commissioners for Her Majesty’s Revenue and Customs, and

(c) any increase attributable to the Act in the sums payable under any other Act out of money so provided, and

(2) the payment of sums into the Consolidated Fund.—(Norman Lamb.)

Question agreed to.