Disabled People

Baroness Clark of Kilwinning Excerpts

Wednesday 10th July 2013 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

We have heard some excellent speeches outlining the cumulative impact that the Government’s policies will have on disabled people. Many Members’ concerns relate directly to decisions taken by this Government, but many such decisions will be taken by the Scottish Government, by the Welsh Government, or by local authorities, who are also having their funding cut. It is an incredibly complex issue given all the various factors that are leading to disabled people having their living standards cut.

In the area that I represent, of course, we have a devolved Administration—the Scottish Government—and they have carried out work on these issues. A committee has been set up in the Scottish Parliament to look at welfare reform in Scotland. It estimates that in my area, North Ayrshire, £51 million will be taken out of the economy in 2015 by the various changes that have already been put through this Parliament. In the two years leading up to the general election there will probably be a range of further attacks that will have further impacts on the area I represent. The figure of £51 million relates not just to those who are disabled, but to those who will be affected by the various changes in different ways.

The incredibly powerful emotions under discussion are being generated by campaigns outside this place. They have not been cobbled together by special advisers in a back room; they are being led by disabled people themselves, nationally and through various organisations. Some of those organisations have been criticised in this debate, but, to be frank, some hon. Members have spoken ill because they do not appreciate how difficult it is for disabled people to organise themselves to campaign on these issues or how many obstacles they face in getting involved in the political process. The campaigns have involved not only national organisations but many local organisations. In my constituency, for example, the Three Towns carers organisation, which supports carers, campaigns on many of these issues and brings their impact to the attention of politicians.

Whenever I hold events in my constituency on issues such as the bedroom tax and welfare changes, I am visited increasingly often by carers who care for people with disabilities who cannot look after themselves. On hearing their stories, I have absolutely no doubt that it makes no economic or social sense to target this group of people. Often they live in accommodation that has already received a great deal of state investment. Often they live in social housing properties on which a large amount of money has been spent to adapt them to meet the needs of people with disabilities. Putting such people in a situation whereby they may not be able to continue to live in their property makes no sense whatsoever, even on economic grounds.

I was exceptionally pleased to hear the speech of my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on the abolition of the independent living fund. The people who come to see me who care for people with some of the worst forms of disability have a massive fear of the threat to take away the ILF money that enables them to live independently.

The reality is that not all parts of the country will be affected equally. The changes will have a greater effect on certain parts, including deprived areas where people do not live as long as those in wealthier areas. The cumulative impact of an industrial past on such areas means that far more people there are reliant on the benefits under discussion and that, statistically, more of them suffer from illnesses and disabilities than people elsewhere. Members of those communities therefore have less resilience to be able to deal with these kinds of cuts.

[Cathy Jamieson]

My hon. Friend is speaking passionately and eloquently. Does she share my concern about the apparent inconsistencies in the application of discretionary housing payments? For some families it appears to be another layer of means-testing, rather than an assessment of their needs.

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[Katy Clark]

I am grateful to my hon. Friend, who represents a neighbouring constituency and whose constituents face similar issues to my own. We heard earlier that the discretionary fund is completely unable to deal with the scale of the problem. I think it was suggested that one in 10 people will be able to get proper compensation from the funds available. There may well be discrepancies throughout the country; geographically, different parts of the country will face different situations.

We know from various studies in Scotland that £1 billion is expected to be taken out of the pockets of those who currently receive disability benefits. Citizens Advice has said that across the UK up to half a million disabled people will lose out, just because of the change to universal credit. As we move towards those changes and the personal independence payment, a cumulative range of impacts will disproportionately affect those with disabilities.

Neither party in the coalition Government has any mandate for such an attack on working people or for targeting those with disabilities. I believe the British people have the right to know the truth, and we should not rely on charities and independent organisations to give us information. We know that the Government do not like impact assessments—we have seen in other areas of policy that they are completely unwilling to provide such assessments regarding what will happen to women or people from ethnic backgrounds. Today we must make it clear that we expect the Government to tell the truth about the impact of their policies on disabled people. If we do that, we will get the support of the British public.

Jobseekers (Back to Work Schemes) Bill

Baroness Clark of Kilwinning Excerpts

Tuesday 19th March 2013 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

Yet again, the Government have clearly shown whose side they are on. Yesterday, a great deal of sympathy was expressed by Members from all parts of the House for Cypriots who may have more than 5%—perhaps up to 10%—taken off their bank savings. I have a huge amount of sympathy for those people, but today, Conservative and Liberal Democrat MPs do not seem to have any sympathy for some people on the lowest incomes in this country.

Those people are entitled to that money—the Court of Appeal has made that clear—but the Government have made it clear today that their political priority is to make sure that they get that money back from those individuals. All of us have constituents who will be affected, and over the coming months they will come to see us. I hope that those who support the legislation can look them in the eye. We know from the court cases that have been described today that many of those people are hard-working individuals who want to work. They genuinely want that opportunity, but they have not been offered the kind of work experience by the Government, whether we call it training or work experience—whatever we call it—that they need. They have not been given the opportunities that will give them what they need if they are to be offered real employment.

In constituencies such as mine, there has been an increase in the number of people suffering long-term unemployment, but there is also a generational problem, as we have not recovered from the industrial decline that took place over many decades. In surgery after surgery in areas such as mine, more and more people are coming to talk about the sanctions imposed on them by the Department for Work and Pensions. That is not just in relation to workfare but in relation to all aspects of benefits. The Department has clearly been given a political lead by Ministers to do everything that it can to make it hard as possible for people to get the benefits to which they are entitled.

In my constituency, and in the constituencies of many hon. Members up and down the country, there are thousands and thousands of people who genuinely want to work. They want opportunities for education, training and work experience that will enable them to improve their lot. What we should be discussing today is what kind of work experience and training will give our country the skills that enable us to compete internationally. It is an absolute disgrace that the Government have introduced this legislation, and are trying to do everything that they can to take money away from some of the poorest communities and individuals in the country.

Jobseekers (Back to Work Schemes) Bill

Baroness Clark of Kilwinning Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Brown]

I agree with my hon. Friend. I also want to come back to the point I made at the beginning. Staff are under so much pressure. I can tell both Ministers here that there will for ever be a question mark over targets. Let me assure them and the Secretary of State that if evidence ever comes my way that clearly indicates that there are targets that have been denied by Ministers, I will make the House fully aware. I hope that hon. Members on both sides would do likewise. If that evidence is to be found, if that is happening, then it is only right that we expose it.

[Katy Clark (North Ayrshire and Arran) (Lab)]

We all support high quality training and work experience, but the court case to which the Bill relates was about someone working at Poundland for an extended period. Does my hon. Friend agree that most ordinary people watching this debate will feel that it is outrageous that people are being asked to do such jobs without being paid?

[Mr Brown]

I can only wholeheartedly agree with my hon. Friend. Members of the public expect better from the shops, facilities and services we use. We expect people to be paid, and that point has been made this afternoon. All we are asking is for a real choice of a real job with a real wage. That is the decent thing to do, and there can be no doubt whatever about that.

Oral Answers to Questions

Baroness Clark of Kilwinning Excerpts

Monday 11th March 2013 Commons Chamber

[Mr Hoban]

That is absolutely at the heart of the roll-out of universal credit, which will mean that people know that they are better off in work, and better off working more hours and earning more than working fewer hours and earning less. That incentive to get paid work is at the heart of our welfare reforms.

[Katy Clark (North Ayrshire and Arran) (Lab)]

12. If he will reconsider the decision not to include residential properties owned by local authorities for temporary accommodation in the definition of temporary accommodation contained in the Housing Benefit (Amendment) Regulations 2012.

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

From 8 April, people living in temporary accommodation will, in most cases, be unaffected by the removal of the spare room subsidy in the social rented sector. However, where a local authority’s own temporary accommodation is used, the spare room subsidy will be removed if the tenant is placed in accommodation that is larger than they need.

[Katy Clark]

In North Ayrshire the council owns 63% of the accommodation used as temporary accommodation, and the bedroom tax will apply to approximately two thirds of those properties. Will the Minister look again at the definition of temporary accommodation, given that this policy will simply mean that local authorities end up spending a lot more on less suitable accommodation from the private sector?

[Steve Webb]

We think that local authorities using their own stock to discharge their homelessness function should, wherever possible, house people in appropriately sized accommodation. If there are short-term problems in matching families to accommodation size, discretionary payments are available and can be used to support any shortfall a local authority may experience.

Housing Benefit (Under-occupancy Penalty)

Baroness Clark of Kilwinning Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

The problem of under-occupation will not be solved by shuffling people around. That will do absolutely nothing to resolve the underlying problems, which I think we all know are related to the supply of affordable housing.

[Katy Clark (North Ayrshire and Arran) (Lab)]

I congratulate the hon. Lady and her colleagues on their choice of subject for this Opposition day debate. Does she agree that one of the problems is the complete mismatch between the stock that housing association and councils have and what people need, and that there are simply not enough properties for people to move to?

[Dr Whiteford]

The hon. Lady is absolutely right—her point is at the core of the debate. Before I turn to that point I want to say more about the issues facing disabled people.

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[Dr Whiteford]

I will give way once more and then I really must get on.

[Katy Clark]

Will the hon. Lady use her eloquence and influence with the Scottish Government to ensure that they have a no-evictions policy?

[Dr Whiteford]

Again, I will come to that and consider some of the structural issues in a moment. First, however, I want to mention pensioners who so far have been excluded from the under-occupancy rules. That is important because many older people who are technically under-occupying are extremely anxious about the bedroom tax and frightened that it will force them to move. We must make it clear that they will not have to do so at this stage. Once universal credit is introduced, however, people of pension age who have a younger partner of working age will be subject to the bedroom tax, and again, they will be forced to move into smaller, more expensive, and often less suitable homes. That is a false economy for the Government and will have a great human cost for older couples.

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[Mr Redwood]

It is a bit of both. I entirely agree with the hon. Lady if she is urging the Government to do even more than they are currently doing to make more mortgages available so that more people can afford to buy homes. Members on both sides of the House would welcome that. I happen to know that Ministers are desperate to ensure that more mortgages are available than were available during the last few Labour years, and are working away with the banks to try to make it happen. That is very much part of the solution to the housing problem. [Laughter.] It is all very well for Labour Members to go into fits of hysterics, but they really should try to take a serious interest in the problem. Believe it or not, quite a lot of us Conservatives want better housing solutions for many of our constituents, and for people in other parts of the country.

[Katy Clark]

Does the right hon. Gentleman not accept that there was a very different view of social housing in the past? Council housing used not to be seen as a precious resource. For example, at the time of the 1951 general election the Conservatives pledged to build 300,000 new homes. There was a view across the political divide that we should build council housing to improve social conditions. Is that not the vision that we should have now?

[Mr Redwood]

I seem to remember that the Conservative Government did indeed honour their pledge—and that was many more homes than the Labour Government were building each year—but, even in those days, why did they need to do it? They needed to do it because we were short of homes. It was the post-war period, the Germans had remodelled many of our housing estates, and trying to create the homes that people needed was a big problem.

I think that under-occupation is a problem, and I think that the Government have come up with one part of the answer, but I urge Ministers to listen carefully to all those who are saying that the positive way of proceeding is through incentive, encouragement, persuasion, and giving people a better answer than the one they currently have, which may be a larger property that may not be suitable.

The Government have excluded everyone of pension age from the proposals, and I welcome that. I think that it is smart politics, and very sensitive to the elderly population. However, in my constituency, where most people own their homes—elderly people tend to own them without mortgages, and younger people tend to own them with rather big and difficult mortgages—a good many elderly residents decide to sell the family home because it has become too big and unmanageable, and to buy a smaller property such as a flat or bungalow. Many then sell again when they are becoming more frail, and move to semi-sheltered or supported accommodation.

That is a natural process of trading down in the private sector, but there is sometimes too much of an obstacle for elderly people in social housing to be able to do the same. Perhaps not enough of the right properties are available; perhaps they are not offered in the right way; perhaps there should be some incentive. I think it perfectly acceptable to try to create an atmosphere in which there can be the same sensible mobility in public sector housing as occurs naturally in areas with rather more private sector housing, so that elderly people can have housing more suited to their needs.

I hope that Ministers will consider the question of elderly under-occupation, which I think is very much part of the story, but will do so in a positive way that encourages, promotes and helps, rather than removing benefit or imposing a tax. I wish that the Opposition understood the meaning of the word “tax”. Imposing a tax means taking money from people who are earning it for themselves; it does not mean paying them less benefit. I hope that Ministers will work out an answer to that soundbite. I have heard soundbite arguments before, but I congratulate the Labour party on thinking up a brilliant and misleading one. I am afraid that it is better than the soundbites we have heard so far from this side of the House, and I urge my hon. Friends to come up with a soundbite that represents the truth. This is not a bedroom tax, but a reduction in the amount of benefit paid, which is very different.

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[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to have the opportunity to contribute to what has been a very interesting debate so far. We have heard a number of very powerful speeches from Members concerned about the bedroom tax and they have outlined very fully the implications that it will have for many of the groups who will be adversely affected.

I represent a constituency that will be strongly affected by this policy, and many of my constituents already know that. They are waiting to see how the local council and the Scottish Government react to what the coalition Government have done. We have about 2,700 tenants who are likely to be affected by the new under-occupancy rules on 1 April—over 51% of them are in receipt of housing benefit. That is because of the type of accommodation that we have in North Ayrshire. As in many parts of the country, there are very few one-bedroom properties. The Scottish Federation of Housing Associations recently commissioned a report that says:

“Across all tenants, 62% need one bedroom but only 34% have this.”

This point has been made across the political divide. There is a mismatch between the types of accommodation that are available and the people who are looking for those properties. We are therefore facing a crisis on 1 April. Irrespective of the strength of some of the points that might be made about people possibly living in properties that are too big for them, this mismatch means that on 1 April people will be looking for one-bedroom and two-bedroom properties that simply are not there, and they will pay the price of this Government’s moral and economic policies.

It was only in the past few days that this country lost its triple A rating from Moody’s credit rating agency. The response that we should have seen from the Government is an understanding that we need to invest to get growth. One of the most important things we should do, given this country’s housing crisis, is to put money into housing, particularly social housing and council houses. The nationalists and the Greens were right to choose this as the topic of today’s debate, because it affects so many of our constituents, but it is tragic that we are not having a debate about how to get growth in this country and about how to make sure that we invest so that our people have decent living standards.

Council housing was created in the first place to provide decent housing for those who did not have it. The whole ethos of council housing was to build properties that were of a higher standard than those that were available previously to ordinary working people. It was not about whether someone had a spare bedroom, because the idea of a bigger living room or more space was part of what the whole project was about. As I said in my intervention on the right hon. Member for Wokingham (Mr Redwood), that policy was supported across the political divide before the second world war and immediately after it. It is tragic that we have got ourselves into a position where the social housing needed by ordinary people has not been built in recent decades.

Many people will simply not be in a position to move on 1 April. As my hon. Friend the Member for Dundee West (Jim McGovern) has said, the discretionary funds available to councils are nowhere near big enough to implement the kind of discretion that the hon. Member for North East Somerset (Jacob Rees-Mogg) would like to see. The money simply is not there.

People in adapted properties in all of our constituencies will have money deducted from their housing benefit on 1 April. Foster parents have fluctuating needs, because they take children at short notice. They do not necessarily take one child—they might take a family—so they do not know how many bedrooms they will need. The whole idea is that their household is able to take those children.

We know from all the work that has been done that disabled people will be at the forefront of this policy. The hon. Member for Dundee East (Stewart Hosie) has already highlighted that 79% of those affected in Scotland will be in a household that contains a disabled person. The figure for the rest of the UK is 63% and even though the figure is more extreme in Scotland and other parts of the country, this will become a significant problem in Members’ surgeries in all parts of the country. Even wealthier parts include people who face the predicaments that many of us see on a more regular basis.

The Government’s policy will have a massive impact up and down the country and on local government in particular. If the policy works as the coalition Government expect it to work, it is estimated that it will take £50 million out of the Scottish economy. That will have implications, because it will be taking money out of the pockets of individuals and communities. We all know that there are communities in which significant numbers of people are reliant on the benefits system, whether they work or not. They work and live in areas with low-wage economies, such as North Ayrshire and Arran, which has a glorious industrial past. In the 1970s, 14,000 people were employed at ICI in Ardeer in my constituency. In the 1980s, 10,000 people were employed at the Killoch pit in south Ayrshire.

It is obvious that our communities have a proud industrial past, but those jobs have gone and well-paid jobs have not come in their place, and some communities are disproportionately reliant on the state. We need to do something about that; we do not want to be in that position. That is the challenge that we all face collectively. I say to the Government that taking money out of those communities and out of the pockets of individuals who live in them will simply grind down those communities even further.

We should be talking about economic and welfare policies that put money back into communities, about investing for growth and about putting job creation at the centre of all our policies. Instead, we are faced with a policy that will end in chaos and cause misery for hundreds of thousands of people up and down the country. I believe that it is a policy that the Ministers sitting on the Front Bench will wish they had never been involved in.

Atos Healthcare

Baroness Clark of Kilwinning Excerpts

Tuesday 4th September 2012 Westminster Hall

[Katy Clark (North Ayrshire and Arran) (Lab)]

I am delighted to have the opportunity to contribute to the debate, because many constituents have contacted me about this issue over the past few weeks. For a number of years many constituents have been in touch with my office with concerns about Atos. The publicity over recent weeks has meant that many people not directly connected with the process are now aware of the problems. I ask that the Minister listen not just to what is said today, but to the concerns raised over a long period.

I congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) on securing the debate and on all his work on the issue. It is not just MPs who are expressing concern. All those involved, whether in representing claimants—organisations such as Mind—or the professionals involved in the process, such as the PCS trade union or the British Medical Association, are expressing concerns and taking the view that the process is fundamentally flawed. I also ask the Minister to recognise the anger Atos caused by sponsoring the Paralympics. Many feel that is an insult to the people going through this process.

A year or more ago, many of the constituents contacting my constituency office were doing so about new employment and support allowance claims. The problems seemed to come largely from the Atos medical assessments. As has been said, constituents who get in touch with their MPs are almost invariably successful, either at the initial reconsideration or the appeal stage. When constituents approach MPs with a credible claim, invariably that person is successful at appeal. However, there has been a change and the constituents now getting in touch are mostly those transferring from incapacity benefit and being put on the work-related activity scheme. That basically means they get only contributions-based benefit for one year rather than the permanent help they would get if they were put in the support group.

That is quite different from the previous situation. Apart from the financial implications of being means-tested after a year, it involves reassessments, attending interviews and the requirement to look for a job. Most of us are aware of many constituents in extremely difficult medical situations who are being caused huge stress. I ask the Minister to listen to what is said today and make serious changes to the current position.

Oral Answers to Questions

Baroness Clark of Kilwinning Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Duncan Smith]

Nice try, but the hon. Gentleman has got it wrong. Emma Harrison had nothing to do with the programme. Louise Casey has always been heading it up. I understand why he wants to elide the issues, but it is not true. Emma Harrison heads an organisation and was asked to give some advice, I understand, to 10 Downing street on other issues to do with families, but she has not controlled this issue at all. I hope the hon. Gentleman will try again some other time.

[Katy Clark (North Ayrshire and Arran) (Lab)]

11. How many blind people had their contributory employment and support allowance withdrawn in the last month for which figures are available.

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

May I associate myself also with the remarks about Lord Ashley? He was one of my constituents. He and I worked together closely on the future of Epsom hospital. He was a great campaigner, as well as being a lovely man, and he will be much missed.

Assuming that the hon. Lady is talking about the changes in the Welfare Reform Act, the answer is that the change has not yet come into force so no one has had their benefit withdrawn yet.

[Katy Clark]

I thank the Minister for his answer and associate myself with the comments about Lord Ashley. A 56-year-old blind constituent came to my surgery a fortnight ago. He currently receives incapacity benefit but is very concerned about the Government’s proposals in relation to employment and support allowance. What can the Minister say to him and to the many other blind people who are worried that they will no longer be eligible for benefits under the Government’s proposals?

[Chris Grayling]

It is obviously difficult to be exact in an individual circumstance without knowing about the case, but my message to all those in receipt of benefits is that this change affects only those in the work-related activity group who have the potential to return to work and who have another means of income or who have savings in their household. It does not affect those who cannot work in the support group. It does not affect those who need the financial support through an income-based benefit. It affects only a minority of claimants who have the potential to return to work and have other means.

CPI/RPI Pensions Uprating

Baroness Clark of Kilwinning Excerpts

Thursday 1st March 2012 Commons Chamber

[John McDonnell]

That is why—[Interruption.] As the Minister says from a sedentary position, it is mortgage costs, not rents that are excluded. However, the range of other costs that pensioners have to meet are not included—housing-associated costs such as council tax, for example. That is one reason why Age UK undertook detailed research into the real spending patterns of pensioners and arrived at a more realistic assessment in its “silver retail prices index” of what price rises pensioners face. That showed that the impact of increases in basics such as fuel costs and food were hitting pensioners harder than both the RPI and the CPI calculated.

The weaknesses of CPI have been extensively acknowledged. The EUROSTAT—the European Commission’s statistics body, which came up with the original proposals on CPI—is working on a harmonised approach to including housing costs. The Minister acknowledged some of these criticisms in the Welfare Reform Bill Committee and informed us that the Consumer Prices Advisory Committee is undertaking a detailed programme of work to look at ways of including housing costs, but that this would not be concluded in the next “year or two”. In the meantime, pensioners will lose out—significantly.

Despite all the debate about the statistics, we know that the real reason for the move from RPI to CPI is to cut public expenditure. When this matter came before the courts, the Government argued that CPI

“provides a more appropriate measure of benefit and pension recipients’ inflation experiences than RPI and a better representation of the way consumers change their consumption patterns in response to price changes.”

They argued that that was the reason for the shift. Three High Court judges agreed that, on the basis of the facts before them, the Government’s move to CPI was really the result of their desire to force through budget cuts.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Does my hon. Friend agree that one concern about the shift, which will reduce people’s pensions, is that people might opt out of pension schemes? One impact that that might have is to put people even further into poverty, so they will have to apply for state benefits. The shift will therefore not end up as a money-making exercise for the Government.

[John McDonnell]

Yes, I will deal with that point now. The Government’s decision to move from RPI to CPI was taken at an early stage after the election. It was basically a decision to make pensioners in those pension schemes pay for the economic crisis. That was the policy decision that the Government made. Thus, the very people who made no contribution to causing the crisis will now have to pay for it by cuts in their pensions—the one thing they hoped was secure in their lives. I view that as unacceptable by any standards of fairness and equity. As my hon. Friend says, it is incredibly short-term.

We know from surveys of existing contributors to pension schemes that the combination of significantly increased contributions and cuts in pensions payments means that many people are now questioning whether to remain in their pension scheme, while others are wondering whether to join it at all.

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[Mr Crausby]

The previous Labour Government did decide to restore the link and were committed to doing so. The current Government have now restored the link at a time when wages are flatlining, and the reality is that the restoration has cost them not a penny. But the real issue is not the restoration of the link, but the many thousands of pounds that will have been lost by our pensioners until the day they die since Margaret Thatcher broke the link in the first place.

[Katy Clark]

I would have liked the Labour Government to have restored the link in 1997. I do not really understand why they did not do so, because the increases that were given were greater than they would have been had the link been restored. Does my hon. Friend accept that?

[Mr Crausby]

I completely accept that. I do not recall any of the political parties demanding that the Government of the day in 1997 restore the link. I am not making my argument on a party political basis; I am trying to make some principled arguments about how Governments should behave towards pensioners in the longer term. I completely accept that when I criticise how the Government deal with pensioners, that reflects on a series of Governments whose actions have resulted in many of my constituents not trusting in pensions at all.

That is why I make the point that the public cannot trust the Government on pensions in the long term any more than they can trust their employers. So many employers took large pension contribution holidays in the good times and then argued when more difficult times arrived that they just could not afford to pay the increased cost, and I am sorry to say that the Government—this Government are proving this—behave in exactly the same way, the only difference being that when the Government renege on a pension deal they call it legal. When Robert Maxwell absconded with the Daily Mirror pension fund he was, properly, castigated as a villain, but when compared with the behaviour of a series of Governments he was a paragon of virtue. Their behaviour is partly accounted for by the fact that, in the main, we have no accumulated pension funds, with one generation of taxpayers paying the previous generation of pensioners. Prime Ministers and Chancellors of the Exchequer find it difficult to resist the temptation to renege on the promises made by the politicians who went before them. Whatever the reason, they should be ashamed of themselves because when they do that they are no better than an employer who just runs off with the pension scheme.

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[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to speak in this debate. I listened carefully to what the hon. Member for Eastbourne (Stephen Lloyd) was saying and, in particular, to his question at the end about the basic state pension. Of course, the increase in the basic state pension might offset the loss for some people as a result of this change from RPI to CPI, but my understanding is that for the vast majority of people the amounts of money that are being talked for the basic state pension will not help individuals such as the firefighter to whom we have already referred. That firefighter is due to retire and planned his finances on the basis of a pension he was expecting to get, but now understands that he is likely to be in the region of £25,000 worse off if he lives the average length of time of someone in that situation.

Some very important principles are involved in this debate. I have always been surprised by pension law in this country and the fact that there is so much discretion. Within our system there is no guaranteed pension and there has always been a legal set-up within which it has been possible for employers to take pension holidays when the stock market has been doing well. There seems to have been a collective belief that things would stay the same and a failure to understand the very turbulent nature of the financial system. That is particularly important when we talk about pensions because people pay up and make decisions about their pension over many decades. They make decisions at the beginning, one hopes, of their working life that are going to affect what they receive 40 years later.

I believe that the Government’s decision to move from the retail prices index to the consumer prices index has been made on financial grounds—to save money. However, as I said earlier, I am not convinced that it will save the amounts the Government hope for in the long term unless there are going to be absolutely savage cuts in welfare benefits, although that might well come from this Government.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

May I endorse my hon. Friend’s approach to this issue? It causes serious concern to my constituents. Age Sector Platform has highlighted that a pensioner with a £10,000 annual pension will receive more than £36,000 less—those figures are in direct contrast to some of those given by the hon. Member for Eastbourne (Stephen Lloyd). These changes are a serious threat in my constituency, where pensioners spend their money in the retail sector; our retail shops and other outlets are taking a hammering, with many closing. Does my hon. Friend agree that although the primary problem here is a pensions problem, there will be a bigger impact on local micro-economies?

[Katy Clark]

I fully agree with the hon. Gentleman about the wider economic impacts the changes are likely to have. Indeed, that was one of the points I was trying to make in last Thursday’s debate on the uprating of social security benefits and pensions. If the collective effect of some of these changes is that some of those on the lowest incomes and on modest incomes have less money in their pockets, that will have ramifications for the economies of constituencies such as his and mine. Unfortunately, my constituency is extremely reliant on the public sector because we still have not recovered from the decades of industrial decline and the closure of traditional industries in areas such as North Ayrshire. We are therefore over-reliant on the public sector and nothing that the Government are currently proposing looks likely to reverse that trend.

I believe the proposal is about cutting public expenditure and I do not accept that it is about the deficit. The Government’s position is that the policy will be a long-term one, not a short-term one for four years or so. At the beginning of this Parliament, the Government’s policy was that they would pay off the deficit within the Parliament, but if we look at the progress that has been made to date and the economic impact that their policies are having, we see that the growth and unemployment figures suggest that we will still be left with that deficit at the end of the Parliament.

I intervened on my hon. Friend the Member for Hayes and Harlington (John McDonnell) regarding opt-outs from public sector schemes. This is an important issue, particularly for those on low incomes. I have been provided with figures by the trade union Unison, as I believe have other Members, about the impact some of the changes will have on its members. These figures have been quoted in the House before and as far as I am aware they are accurate. Unison says that a woman receiving the average local government pension scheme pension for women of £2,600 a year would be £37 worse off this year and that a member—a man or a woman—receiving the average local government pension scheme pension of approximately £4,100 a year would be £58 worse off this year. It gives a further example of a woman on a median woman’s pension in the NHS pension scheme of approximately £3,500, who would be £49 worse off this year. As the hon. Member for Eastbourne indicated, there might be an element of offset so that if there are increases in the basic state pension and in other forms of benefit, some of those people might recover that money in other ways. However, going back to the example that the Member for Belfast South (Dr McDonnell) gave, of someone on a public sector pension in the region of £10,000, I understand from what the Minister said in last week’s debate that such an individual would be unlikely to obtain equivalent sums in other ways and would be worse off as a result of the changes.

I am concerned about opt-outs and I would be grateful if the Minister addressed this issue today or on a later occasion, because there will be long-term consequences of these changes, particularly for public sector schemes. There is great concern, particularly regarding those on low incomes, that we might see far higher levels of people opting out of public sector schemes as a result of this policy. That will be compounded by people’s experiences over recent years with the financial crisis. As we know, there is a complete crisis of confidence in the financial institutions and in the ability of vehicles such as pensions adequately to provide for people or to provide any certainty for future years. That is one reason why changes such as this RPI/CPI change are so unhelpful: it contributes to the erosion of that confidence when people do not know what they are going to end up with. They think, “If they make this change now, perhaps they’ll come back again and try to erode the scheme further in future years.” For people on low incomes, particularly women, this is a big issue, and I would be grateful if the Minister responded to my points. I know that some figures were provided more than a year ago about the likely impact of these policies on opt-out rates and there was great concern that those figures might have been over-enthusiastic.

[John McDonnell]

There have been other surveys since then. The Fire Brigades Union surveyed its members and the results showed there was potential for 30% to opt out of the scheme, which would threaten its viability.

[Katy Clark]

Of course, firefighters are a relatively well-paid group compared with some of the other groups we are talking about. It might well be that 30% of firefighters do not opt out of the scheme but that they are thinking about it at the moment because they are so concerned about some of the changes being proposed. One point to consider with firefighters and others who work in occupations that rely heavily on physical exertion is that they may not have the choice of working for longer. Paramedics and firefighters have very physical jobs and for them working extra years to pay more into their pension pot is often not a realistic option.

Finally, we need to address the issue in a broader context. I was very interested to hear the comments of the hon. Member for West Worcestershire (Harriett Baldwin). I thought she was absolutely correct when she talked about the serious situation, with so few people having decent pensions to rely on. That is appalling. Her points about the retail prices index and the consumer prices index in relation to pensioners in particular were incredibly important. We know that housing costs are an issue, but council tax is also an issue for pensioners because they spend a far greater proportion of their income on council tax than others in the community. There is merit, then, in the GMB trade union’s suggestion that we consider what it calls a bespoke pensions index. We should perhaps explore that possibility more to compensate accurately and ensure that people enjoy pensions increases that mean that their living standards are not affected in real terms.

I want to make a broader political point about pensions. Many Government Members support this and speak about it regularly: we should be encouraging people to save for their retirement. We should not be encouraging people to have to rely on the state when they retire because their levels of income are so low that they are eligible for welfare benefits. Although we need a decent basic state pension that everybody can afford to live on, we should live in a society in which people are encouraged to save through occupational pension schemes, regardless of whether they work in the private or public sectors.

I was extremely relieved, therefore, that the Government decided to continue with Labour’s legislation on auto-enrolment, which sets out the framework for doing something about the chronic levels of under-pensioning, particularly in the private sector. However, if we keep changing the basis on which people think they are paying into pensions, we will erode faith in the pensions system. Those thinking about auto-enrolment may take that into account when making their decision.

[Grahame M. Morris]

As usual, my hon. Friend is making some excellent and pertinent points, but will she comment on the arguments made by Government Members about this being a more sustainable package? Is not the issue the sustainability of the pensioners themselves—their income and ability to pay their way—and the need to offer them security in retirement? In truth, is there not an alternative—for example, taxing the likes of Vodafone and Barclays, and closing loopholes—if we want to make the public purse more sustainable?

[Katy Clark]

I agree with what my hon. Friend says about tax avoidance and evasion. We should be focusing on that much more. He will be aware that at the moment, while the living standards of those on low and modest incomes are falling in real terms—because pay has been frozen or cut in the public and private sectors and because the cost of food, energy and other commodities on which we all rely is rising so much—those at the top of society are also becoming wealthier. That gap between rich and poor has been escalating over the past two years, which, as a matter of public policy, is to be deeply regretted.

I am concerned that cumulatively the decision to move from RPI to CPI will have a substantial impact on the living standards of many thousands and millions of pensioners in the country. I do not believe that these decisions should be taken for short-term reasons—to balance the books over a short period—and as I have said, I am not convinced that they will work like that. We should be aiming to get cross-party agreement on the need to put in place a framework of financial incentives for people to save and to pay into public and private pension schemes. We need a safety net for those unable to do that, but we must also provide incentives to ensure that we have decent public and private sector pension provision in the future.

--- Later in debate ---

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

I am grateful, Madam Deputy Speaker. Thank you very much, indeed.

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this important debate and thank the Backbench Business Committee for granting us this opportunity, which has arisen out of an e-petition signed by in excess of 100,000 people.

I have also received many representations from constituents, in letter, in person and by e-mail petition, so I should like to make some points in the debate, and I am grateful for the opportunity to do so. I shall try not to repeat those points that Members on both sides of the House have already made.

There has been a decision to change the index that is used to increase state pensions, public sector pensions and, indeed, large aspects of private sector pensions. In an earlier intervention, the Minister said that the change would not affect private pensions that already have RPI in their terms, but certain private pensions that have a statutory link will be affected, so perhaps he will clarify that point in his final remarks.

My concern—this is based anecdotally on evidence that constituents have presented to me in letter form and in person—is that some members of public service pension schemes might lose up to 25% of their pensions. It is difficult, as the hon. Member for Gloucester (Richard Graham) said, to understand the complexities of RPI against CPI, but my fairly simplistic view is based on what is the bottom line for the people who are affected. I am concerned that many of my constituents, who are not well-paid public sector pensioners, will be adversely affected by the change.

To reinforce the point that the hon. Gentleman made from the Conservative Benches, I note that it seems that the Office for Budget Responsibility underestimated the gap between RPI and CPI by about 100%. When the OBR made its forecast, it said that the difference would be about 0.7%, but it has turned out to be nearer 1.4%. In other words, the switch could cost pensioners in Easington and, indeed, throughout the country, many thousands or even tens of thousands of pounds over their retirement.

I do not believe that it is disputed that the change will save the Treasury and employers with private sector pension schemes billions of pounds, at the expense of those saving for their retirement. In an earlier intervention, I raised an issue that was raised with me by the GMB trade union, which suggests that we look at a bespoke pensions index that might more accurately reflect the cost of living faced by pensioners. When I read the suggestion, I thought that we should look at it a little further, given the controversy raging about which is the correct measure, but in response to an earlier point I must say that the previous Government used CPI as a comparator. I stand to be corrected if need be, but the traditional index that we have used in this country since the 1940s has always been RPI. The previous Government introduced CPI not for pensions but because the measure was used in the European Union and was more readily understood when used as a comparator across other EU states. I would never advocate applying it for the purposes of pension calculation.

[Katy Clark]

I am listening to my hon. Friend with great interest. Does he agree that the British economy and, particularly, British housing costs have traditionally operated in a different way from those of many other parts of Europe? That is one reason why the retail prices index might be a better way of doing things—as other European economies work in a different way.

[Grahame M. Morris]

Absolutely; that is a very good point well made. I am certainly aware, from visits to Germany and elsewhere, that there is a much larger private rental sector in Europe, so it is quite right that we retain RPI, as it takes account of mortgage costs, which are a significant factor for many people.

I support the motion because the change from RPI to CPI means that many people, both those already retired and those yet to retire, will receive less than they were led to expect. As my hon. Friend said in her speech, many of those people have made long-term decisions about their income in retirement, such as to pay off mortgages and other commitments, based on the fact that they would receive a pension that was linked to RPI. Retrospection is unfair, and the House should call on the Government to reintroduce the RPI measure immediately. For a typical firefighter on a full pension this year, the actual cost over 20 years of retirement is between £25,000 and £52,000—that was confirmed in a survey that was carried out by the Fire Brigades Union—and that is because the Government have imposed this measure. I emphasise that these changes have been imposed without any consultation.

The argument that CPI is a more appropriate measure for how pensions should be paid is false. Indeed, all three of the judges in a test case brought by the FBU stated that the move to CPI was merely to do with the desire to force through budget cuts. To pretend otherwise is ridiculous. Government Members are suggesting that it is not about deficit reduction, but it is certainly about budget cuts and placing the burden of those cuts unfairly and unjustly on to pensioners.

[Katy Clark]

On my hon. Friend’s point about the effect on individuals, he will be aware that one of the other changes proposed for many public sector pension schemes is to increase the contribution—the payment—that the individual makes while reducing the percentage that the employer pays. Does he agree that that, combined with the RPI/CPI change, means that employers will be paying less as their part of the contribution towards the pension while the employee is paying more?

[Grahame M. Morris]

That is an excellent point. It is a double whammy.

Research that I have seen shows that between 1989 and 2011, RPI was on average about 0.7% higher than CPI inflation.

Pensions and Social Security

Baroness Clark of Kilwinning Excerpts

Thursday 23rd February 2012 Commons Chamber

[Steve Webb]

The volume of my ministerial correspondence on this issue has been very light. Almost all of it was with people who were afraid because they had seen speculation that we might water down our promises. I have been able to write reassuring letters to them to say that we will honour our promises in full.

[Katy Clark (North Ayrshire and Arran) (Lab)]

I apologise for missing the beginning of the Minister’s opening remarks. Will not the change mean a reduction from 5.6%, which would have been the uprating had we used RPI? Is the Minister aware that we have a Back-Bench debate on the matter because more than 100,000 people have signed a petition against the changes, particularly as they affect pensions? It therefore surely cannot be the case that people are happy about the changes.

[Steve Webb]

The hon. Lady may not have been in the Chamber when I referred to next week’s debate, when we will debate such issues at greater length. I was not aware that it was Labour party policy to revert to RPI—its view for now is that CPI is appropriate. She might want to raise that with the right hon. Member for East Ham (Stephen Timms), who is on the Opposition Front Bench. For the reasons I have given, our judgment is that the CPI basket of goods matches the spending patterns of pensioners. The Institute for Fiscal Studies has confirmed that modelling and people’s response to price changes is better with CPI than in RPI. No index is perfect, but there is a good case for using CPI.

Funnily enough, when I attended a National Pensioners Convention event in the House a few months ago, the people there all demanded CPI, which shows how the debate has moved on. I am sure the hon. Lady has a press release saying that more is being demanded, but the tenor of the debate was that there was speculation that we would not honour our triple-lock promise. They said: “Minister, will you guarantee us the triple lock—prices, earnings or 2.5%? Will it be the 5.2% that we have just seen?” That was commendable realism on the part of the National Pensioners Convention—that is its role in life—but things may have moved on now it has banked the 5.2% in the current environment. In fact, 5.2% is the biggest cash increase ever and one of the biggest real-terms increases in a long time. I am proud to stand by that figure.

Restoring the earnings link for the basic state pension was an early action by this coalition Government, putting an end to 30 years of deterioration in the value of the foundation of retirement income relative to average earnings. Better than that, we went one further with our triple guarantee to pay the highest of the growth in earnings, prices or 2.5%, so that even in times of slow earnings growth, we will not see a repeat of the small rises, such as the 75p rise in 2000, presided over by the Labour party.

In line with the triple guarantee, the new rate for the basic state pension, received by more than 11 million people in this country, will be £107.45 a week for a single person, an increase of £5.30 a week. My hon. Friends in the coalition may be interested to know that that means that from April 2012, the basic state pension is forecast to be 17.1% of average earnings, which is a higher share of average earnings than in any year of the previous Labour Government from 1997.

--- Later in debate ---

[Katy Clark (North Ayrshire and Arran) (Lab)]

I apologise for not being in the Chamber at the start of the Minister’s speech. I always find his comments most informative, as he is very knowledgeable about the issues under discussion—although I do not agree with many aspects of Government policy in this area. I had not intended to speak in the debate, but have been spurred to do so by the assertion that these proposals are uncontroversial, particularly in relation to the retail prices index and consumer prices index change. That is certainly not uncontroversial.

I shall restrict what I say to the issue of RPI and CPI. We have already had the biggest public sector strikes—indeed, the biggest strikes—for generations because of the change from RPI to CPI. I believe the Minister is shaking his head, but union members are very concerned about the cumulative impact of this change over many years.

Today’s debate has focused more on pensioners than on social security benefits. It is unfortunate that the Chair of the Work and Pensions Committee, my hon. Friend the Member for Aberdeen South (Dame Anne Begg), is unable to be present as she had a fall earlier this week. She has a huge amount of expertise in these subjects and her contribution will be greatly missed. I am sure all Members will want to send her best wishes for a speedy recovery.

The social security ramifications of these changes are less spoken about because there is less lobbying on social security issues. Although those in receipt of benefits contact their MPs about the issues affecting them, there are not many well-funded organisations representing them and lobbying MPs. There are more pensioner organisations and the National Pensioners Convention has been mentioned. It and other organisations, including Age UK, have contacted MPs about the issues under discussion today. They are calling on Members to vote against the proposals and, in particular, against the social security benefits uprating order, especially because of the RPI and CPI change. That highlights how controversial this issue is, and we will return to it again next Thursday when we debate the petition.

There is much controversy because the change will result in pensioners and those in receipt of social security benefits receiving smaller increases in most years. The switch from RPI to CPI will greatly affect the living standards of both pensioners and those in receipt of benefits cumulatively over a long period of time. CPI inflation is usually about 0.7% lower than RPI inflation. That is because of how the rates are calculated. As a result, the increase in public sector pensions this year will be 5.2%, whereas under RPI it would have been 5.6%. I am sure the Minister will challenge that finding if he disputes it.

The Labour party does not necessarily oppose the change in the short term—over a period of four years. However, I do not support that position. This change is dangerous because of the impact it will have year on year. Organisations including Age UK say that someone who retired on 1 April 2009 with a £10,000 state pension or public service pension will now have a pension of £10,846, whereas if the RPI link had been retained the sum would have been £11,046. The cumulative loss to such people is already £350, therefore.

The real concern is the cumulative effect that this change will have over a long time, particularly for someone who is retired for a lengthy period, and that is why I am speaking today. For example, someone who had a 25-year pension—of course not everybody will be lucky enough to have one of those—would lose £35,000 over the lifetime of that pension. The cumulative effect is substantial. Indeed, the Office for Budget Responsibility has recently spoken about the long-term difference between the two measures, and the significant change and reduction in living standards that will take place over time.

In the short term, this is the wrong measure. I say to Government Members that their policies of austerity are not working.

[Sarah Newton]

indicated dissent.

[Katy Clark]

The hon. Lady may shake her head, and she has spoken about many aspects of Government policy, but she must be aware that the cumulative effect of the policies that her Government are pursuing is to take money out of the pockets of some of the poorest and the most vulnerable in this country, and out of some of the most deprived communities. That is the wrong economic policy, it will not lead to growth and it clearly is not the policy we need for social justice. It is one reason why the gap between rich and poor is increasing so greatly at the moment.

The hon. Lady spoke about Labour manifesto policies, but the Conservative party gave assurances before the election that it had no plans to change the current index-linking of pensions. The Liberal Democrats also said that they regarded index-linking rights as protected. No doubt they will say, “We opened the books and everything was very different”, but the point I am making is that these measures will have long-term cumulative impacts that will hurt the poorest and most vulnerable in society.

[Sarah Newton]

I completely disagree with the suggestion that we are targeting the most vulnerable people, but my question to you is: can you remind the House what happened to the gap between the richest and poorest people in this society under Labour?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I would love to answer that question, but I am prevented from doing so. The hon. Lady knows that she is not supposed to address the Chair in that way. In responding to her point, I hope that the hon. Member for North Ayrshire and Arran (Katy Clark) will come back to discussion of the uprating order.

[Katy Clark]

I am very grateful for that, Madam Deputy Speaker.

The impact of the changes to benefits and pensions uprating will be similar to the impact on wages that is being seen at the moment, whereby the incomes of the lowest paid are decreasing in real terms; the change from RPI to CPI means, as I have said, that the rate of increase in the incomes of those on the lowest incomes will reduce. I am sure that many of the hon. Lady’s constituents will come to see her to discuss benefit issues over the forthcoming period, and the impact of all this will become clear over a long period of time. It will have an impact on the communities we represent.

[Nick de Bois (Enfield North) (Con)]

Has the hon. Lady considered putting this in context? People on low incomes are nevertheless receiving a relatively high increase here, whereas many who are working and are on low incomes are receiving no increases at all. Although I think she is very genuine, her appeals need to be put in context and she needs to consider the situation of those in work.

[Katy Clark]

I am grateful for the hon. Gentleman’s contribution, and I agree fully with what he is saying; we do need to take into account the public sector freezes and the fact that many on modest and low pay in the private sector have had their salaries reduced—they have definitely not received substantial increases. That is exactly the point I am making: measures such as this, which keep down and restrain the incomes of those on modest and low incomes, are not the policies that are needed. Of course, executive pay and the incomes of the highest paid are increasing at the same time, but I shall not dwell on that today because it is not the subject of this debate. However, I hope that we will continue to discuss it in the House and that action will be taken by the Government.

In conclusion, we will be focusing, yet again, on these issues next week, and of course court proceedings are taking place, but I felt that I had to put my deep concern about this change on the record. My concern arises not just because of the annual change this year, which will have a detrimental impact on people’s pockets now, but because of the cumulative effect that this policy will have over many generations. The impact will be an increase in the gap between rich and poor in this country, and I believe that that should not be the policy of this or any Government.

Work Capability Assessments

Baroness Clark of Kilwinning Excerpts

Wednesday 1st February 2012 Westminster Hall

[Chris Grayling]

A situation in which people are treated like that can never be acceptable. Of course, we have an issue with some people not turning up to appointments, and because it is an intensive programme, we do not want a health care professional sitting there without anything to do. Sometimes, we will get it wrong. We will try hard not to, but there is no such thing as a perfect system. That is true of all parts of the system. I openly accept that we will sometimes get it wrong, but we have done everything that we can to create a system that gets it right as often as possible. We have changed the nature of the work capability assessment in the process.

We make a much greater effort to ensure that we have proper medical evidence at each stage of the process from the consultants and specialists working with the people concerned. One reason why so many appeals were successful was that new evidence was emerging only at the appeal stage. We have worked hard to ensure that such evidence comes in much earlier in the process, so if we get it wrong in Jobcentre Plus, we will get new evidence there at a point of reconsideration. That is a crucial change. We are now ensuring that we seek out additional information in Jobcentre Plus before we take the first decision, but we have bolstered the reconsideration process to make it much quicker and more straightforward, so that if we get it wrong the first time, people can get a quick second opinion in Jobcentre Plus. That is crucial to getting the process right.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Will the Minister give way?

[Chris Grayling]

I will not take interventions, because I have only five minutes and must get through a lot.

We have also tried to make the process more humane. People now get phone calls instead of the generated, standard letters that I regard as impersonal and inhuman. All our measures are part of a process of change that I hope will make a real difference to individuals’ experiences—and it is. Indeed, in his second report, Professor Harrington praises those involved in the process for creating a system that he, as an independent figure, regards as much improved.

As constituency MPs, we will always have people coming to our doors saying, “I am being done wrong by,” because sometimes, in an imperfect system, we will not have got it right. Equally, however, some people will still think that we have done wrong by them, but three years later, when they are back in work, they will say that it was the best thing that ever happened to them.

About a month ago, I sat with a woman in a Work programme centre who said that she had been off work with chronic depression for 13 years. She told me that she had arrived on her first day in the Work programme and said, “I can’t possibly work. This is ridiculous. I don’t know why I am here. I am being traduced.” A month later, she was doing voluntary work in a charity shop, applying for jobs and beginning to say, “Actually, this is good.” We are taking people through a difficult period in their lives.

I said “rubbish” to the final comment made by the hon. Member for Rutherglen and Hamilton West not because he is not raising genuine issues—although I hope that I have explained their context—but because the system is not about forcing people into work. It is about finding the right number of people whom we can help into work. The alternative is to leave them on benefits for the rest of their lives, doing nothing. I do not believe that they benefit from that.