Romanians and Bulgarians (Benefits)

Lord Field of Birkenhead Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on what actions the Government are planning to restrict welfare to newcomers from Bulgaria and Romania from 1 January next year.

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

May I congratulate the right hon. Gentleman on getting his urgent question on the second time of trying? He is a model of persistence and I, of course, was over the moon about his persistence.

The right hon. Gentleman has raised an important question and I want to deal with some aspects of it. First, however, I will set the scene as to what we are trying to deal with. I understand that Labour Front Benchers now admit that they fundamentally got it wrong on immigration, but the scope to which they got it wrong is why we have this issue. Between 1997 and 2010, net migration to the UK was some 2.2 million people—larger than the city of Birmingham. Interestingly, from 2004 to 2010, 1.1 million European economic area nationals registered to work in the UK. After the prediction of what was likely to happen, the scope of the problem is far greater than anything the Labour party wanted to tell the public. Most of all, I congratulate my right hon. Friend the Home Secretary and her team in the coalition for having begun the process of reducing net migration to Britain for the first time in a long time.

For the benefit of the House and in line with the right hon. Gentleman’s request—I know he particularly wanted me to answer that bit first, so having dealt with it I will get on with the rest of my answer—let me explain the current arrangement. A lot of nonsense is talked about what we are and are not capable of. First, people must pass the habitual residence test, introduced by the previous Government, before being entitled to claim income-related benefits. The current system was put in place in 2004 and has basically two elements—a legal right to reside and an assessment of factual evidence of habitual residence. As we know, EU citizens have the right to live in another member state as long as they are a qualified person, which basically means a worker, self-employed person, jobseeker, self-sufficient person or student. Tax credits have, I am afraid, been open to abuse outside that system from day one because the rules allow anybody from within the European economic area to claim self-employed status and receive full entitlement immediately. The Government are trying to wrestle with that problem, and I will return to it.

We are currently facing—not for the first time—a legal challenge from the European Commission because our habitual residence test states that people must prove they live in the UK habitually before they get access to benefits. It seems strange to me that anyone should be surprised that a habitual residence test requires that a person should live in the UK habitually, but we sometimes live in that George Orwellian political language world, which the Commission seems to foster with great alacrity.

Secondly, on exportability, under the EU co-ordination rules, benefits under the main categories of social security are exportable—that is, payable elsewhere in the European economic area. So that we clear up the confusion, let me say that that includes, notably, child benefit, for example, and has for a while. We therefore pay child benefit to children who live in other EU states when their parents are working here. That causes a lot of concern, and quite legitimately so. When both parents work but in different countries, the EU rules apparently determine who has primary responsibility for paying, but any difference in entitlement is netted off. So, for example, if someone comes from Poland and works over here, the child support that we pay here is netted out against what they might have received had they been paid in Poland, and the net amount is therefore paid across. That is the existing rule. The UK system is obviously more generous, and that is why it pays people in a sense to be here, getting those benefits.

I recognise there are some real issues here. We are in the midst of looking at those issues with other countries as well, and I want to mention which ones are on the schedule. The Government are concerned that, although some protections are in place, they are not enough. That is particularly worrying given the issue, which the right hon. Gentleman raises, of 1 January 2014. So we are trying to look carefully at where the system is falling down at the moment, and I am exploring a series of options. Today, for example, I have called for another meeting of a series of European nations that share our concerns. Some people might have noticed today that Germany has woken up at last to the reality that it might face a large net migration. We are due to meet its representatives and others from around the EU to try to ensure that we deal with this. I do not believe that it is acceptable that we go on with it—I have told the European Commission that—and we will resist it.

[Mr Duncan Smith]

I am answering the question. To be frank, the real question for the hon. Gentleman is why he sat with a Government who, for over 10 years, made such a shambles and a mess of this.

The reality is that we are trying, for example, to figure out the rules that allow us to prevent individuals from staying in the UK for only a short time before claiming benefits—a rule that existed under the last Government. We are looking at the tests about accommodation and the length of time people spend here. We want to look at things such the leasing arrangements they have for their housing and over what length of time, and even at challenging the narrow and short-term definition of “habitual” used by the European Court of Justice. In other words, we are trying to lock people out from coming here solely for the purpose of claiming benefits.

I have to tell Opposition Members, who were making a noise just a second ago, that one of the big problems is that the last Government did not collect any data on how many migrants actually claimed benefits here. We have changed that. We are now totalling up who is here and who will claim benefits, and we will be on top of those figures.

In conclusion—I know the right hon. Member for Birkenhead (Mr Field) wants to ask some further questions—there are a number of things we need to do. We need to tighten up immediately the rules about habitual residency. We need to tighten up the rules about accommodation and the leasing length of time. We need to tighten up and start the process of arguing hugely with the Commission that it is quite wrong to net out things such as child benefit and pay the higher level to people whose families do not even come with them into the country to work. Finally, many nations in Europe are just as angry as we are about this, and we have been meeting them since last summer and reaching a common purpose to deal with the Commission and force it to recognise that any further changes it wants to make, including by taking us to court over the British residency rules, are not acceptable. We will tighten up. I refuse to accept the Commission’s rules. I will not give way on the habitual residency test, and we will tighten up on net migration.

[Mr Field]

May I thank the Secretary of State for his answers, but might I now try to pin him down on four issues? Does he accept that, if the word “crisis” is used, it is a crisis that successive Governments have engendered by moving welfare from the basis that people had to make contributions to receive benefits to one where they receive them if their income proves needs? Is not his universal credit just one more move in that direction? When will the House know what further restrictions will be placed on universal credit to prevent it from being claimed immediately by people who arrive in this country? Does he not accept that the current situation—basically, a means-tested welfare state—is inconsistent with our European Union treaty obligations and is against the Prime Minister’s wish that we should be open for trade but not an easy touch? Are the Government now going to rescind the directions issued by primary care commissioning groups as Parliament rose for the summer last year, which instructed doctors that they had to take people on to their books if they had been here for 24 hours, including people here illegally? When will the Government act on that?

Will the Government use the powers they do have to instruct authorities that in allocating social housing, they must pay due attention to the length of time people have been waiting and to their good behaviour; and that they have a duty to publish data—on which the Government will insist—on whether social housing is being allocated to non-British citizens?

Finally, given that there are already 150,000 Romanians and Bulgarians here legally, and that they are arriving here at a rate of 25,000 a month, does he not accept that the answer he has just given us will prove ineffective against the movement that might well come after 1 January 2014? Will he therefore tell the House when he expects to report on what measures the Government will take? Will he ask for a whole day’s debate, so that the House can improve them before we rise for this summer’s recess?

[Mr Duncan Smith]

I have known the right hon. Gentleman for a considerable time and have huge respect for him that goes beyond party affiliation. I will deal with those four points, but I want to deal with a point he made right at the end.

I absolutely agree with the right hon. Gentleman that this is something of a crisis. For the past two years, I have been fighting a rearguard action against what was left to me by the previous Government. [Interruption.] Opposition Members can moan, but let us put the facts as they are: I inherited a habitual residency test that simply is not fit for purpose. We are trying to tighten that up dramatically and I am being infracted by the European Union for doing so. Before Opposition Members start lecturing us, let us remember what they left. The right hon. Gentleman is, however, absolutely right—I am with him on this—to describe this as a crisis.

The right hon. Gentleman made an important point about the contributory issue on welfare. Tax credits took things faster in that direction, which is why self-employed people coming in to the country are immediately able to claim tax credits even if they are doing only a little bit of work—we talked about The Big Issue sellers and so on. That is one area we have to look at in relation to universal credit, but I take the opposite view from him. Universal credit gives us an opportunity to redefine the nature of that benefit by absorbing the tax credit issue, taking away the right of individuals coming in from overseas to claim on that basis, and redefining it as something much more in line with our obligations, while being able to lock out many migrants who would come and claim immediately. I am happy to discuss that with him further, but I believe we will be able to make that move, which I am looking at at the moment.

The right hon. Gentleman is right to say that GPs and the health service often overstate their responsibilities to migrants. I talked to the Secretary of State for Health about this issue about a week ago, and he is looking carefully at issuing clear instructions that they do not have to do this. It is my view and belief that that is the case, and it is about making it clear that they do not feel they will be challenged. It is a little like health and safety rules—people over-interpret the situation. In fact, things are never as tough as that, and we need to provide strong guidance.

The right hon. Gentleman is also right about being clear to local government. I am working with the Secretary of State for Communities and Local Government to ensure that we publish and are clear about the number of people from overseas who are taking social housing ahead of those who have waited a long time in the queue. This is part of what we are trying to change—I agree and I will do that.

I am very happy to meet the right hon. Gentleman and to work with any colleague, from either side of the House, to make common purpose to tighten up our arrangements so that we do not have a problem when 1 January 2014 arrives. However, a little humility is required from Opposition Front Benchers in recognising that they signed the accession treaty that left us with this problem. It was they who created the habitual residency test that left the door open, and I wish they would apologise and work with us, rather than complain the whole time.

Welfare Benefits Up-rating Bill

Lord Field of Birkenhead Excerpts

Monday 21st January 2013 Commons Chamber

[Kwasi Kwarteng]

That is absolutely right.

I shall try to keep my closing remarks brief. The 1% rise in the uprating is surely a temporary measure; I would not want to see this in perpetuity. My right hon. Friend the Member for Wokingham talked about the need to combat inflation. Clearly if inflation is sustained at 3% or 4% over years, that would be very punitive and would make the proposed measures even more difficult for people to bear. So the Government need to keep a firm handle and an eagle eye on the inflation rate. I am absolutely in favour of that, but on the general approach I would not want to see any amendments to this Bill. It is a difficult proposal that we are trying to push through, but many people up and down the country are supporting the Government on it because they feel that the measures we are introducing are encouraging people to get out to work. People also realise—I will close where I started my speech—the appalling fiscal legacy given to us, the incredibly difficult financial circumstances in which the Government found themselves, and the tough and courageous measures we are taking to get us out of the mess.

[Mr Frank Field (Birkenhead) (Lab)]

I rise to support the amendment because it is very clear: it seeks to tear the heart out of this Bill, and it should tear the heart out of the Bill, because it is a terrible Bill. By taking this stance, I am not saying that we should not, with all urgency, think about welfare reform, because that is a mega task which will face a succession of Governments. I am not saying that we do not recognise that there is a real problem in this country with incentives to work, because there is. I am not saying that there are not all sorts of other issues that we need to deal with and consider in relation to this measure. We have to consider what this measure is actually about.

I agree totally with the Government Members who said how serious the fiscal deficit is. I do not doubt that when Labour breaks the trend and has to clear up a mess—we have been hearing this afternoon about Tories clearing up our mess—we might well have to look at the size of the welfare bill. However, I do not believe that any Labour Government would get cuts through without presenting them in a context in which the cuts were thought to be fair. That goes to the heart of the current Government’s strategy. Despite the rhetoric in which they have tried to clothe themselves in respect of the changes they have been making, the country will have to make a judgment in the election on whether the Government have fulfilled the assurance they gave at the beginning of this journey that who had most would pay most and those who had least would be protected. It is no accident that we link the amendments being debated tonight with the tax cuts in the Budget for those who have most.

We will not have to face this issue tonight because, sadly, we know how the vote is likely to go, despite the presence of some brave Liberals—I hope that my saying that encourages even more to vote, knowing that it is safe to register their protest. In the end, it is those outside this House who will judge whether this measure is fair. Is it fair that, at time when we can find moneys to make tax cuts for the very richest, we cut living standards for the very poorest?

[Kwasi Kwarteng]

Will the right hon. Gentleman give way?

[Mr Field]

No, I am going to make a short speech. I am grateful for the hon. Gentleman’s interest and the way he is following my speech, but I do not want to extend it.

The country will make a judgment about how fair the collection of measures is. I think the Government must be extremely confident, given that we are seeing a record number of people who are hungry and are turning up at food banks operating in our constituencies. Thank God for food banks. I do not hold the view that food banks are terrible; it is great that we have them, because people are hungry. I think it is terrible that we live in society where people are hungry. That is where we should direct the anger; it should not be aimed at the people providing the food banks. We are thinking about cutting benefits at a time when we also know that people who probably have greater abilities than I do in managing on a low income—thank God, I have never had to do so—find that they fail. The Bill will crush some decent people, who find it impossible to live on the levels of income that we lay down.

That we should do this at a time when we can find the money for the richest to take more passes all my understanding. Perhaps the Opposition will lose the vote tonight, but I am not so sure that, on this argument, an indelible mark will not now be made against the coalition Government, who found money to cut taxes for the very rich while making life more and more difficult for the poor, some of whom do not have enough to eat. Should more people join that terrible queue of our fellow citizens? Lots of other arguments have been marvellously put, but for me it comes down, as I guess it will for the electorate, to whether this is fair. I think that they will say no.

[Several hon. Members]

rose—

State Pension Reform

Lord Field of Birkenhead Excerpts

Monday 14th January 2013 Commons Chamber

[Steve Webb]

The current position is that we are obliged by law to uprate by at least earnings, and our policy is to go further and have the triple lock, as is mirrored in the White Paper. The legal position in the draft Bill will be at least for earnings uprating, but all our illustrative estimates in the White Paper are indeed based on the triple lock.

[Mr Frank Field (Birkenhead) (Lab)]

I congratulate the pensions Minister and the Secretary of State on delivering the White Paper against the restriction the Treasury imposed on them—that the reform be delivered at no extra cost. So that the House and the country can understand how successful they have been in driving a coach and horses through the restriction, might the Minister tell us the largest increase in contribution that any worker will face under his scheme?

[Steve Webb]

I enjoyed the right hon. Gentleman’s column in The Guardian today. He imagined that we would make this pension reform work by not making it contributory, but I hope that I have clarified for him that people will still need 35 years of contributions or credits to draw the pension. The straight answer to his question is that the rebate is 1.4% and applies to a band of earnings from the lower earnings limit of about £5,500 to the upper earnings limit of about £40,000. It is 1.4% of that band.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 10th December 2012 Commons Chamber

[Steve Webb]

Through the creation of the National Employment Savings Trust we have ensured that there is a benchmark of low-cost, high-quality pension provision, which is driving down costs across the market. We need to go further and we are looking at whether the role of NEST can be expanded. We are also driving through transparency on charges, so that firms and employees can see what they are paying for and can pay less over time.

[Mr Frank Field (Birkenhead) (Lab)]

Would not one good test of who is on the side of the shirkers or the strivers be a state pension that guaranteed that people were taken off the means test, so it would be safe to save through companies? Will the pensions Minister give us a date for when we will see the White Paper?

[Steve Webb]

The right hon. Gentleman will have heard the Chancellor only last Thursday reaffirm our commitment to state pension reform, and to do exactly that—to ensure that people who work hard and save hard are clear of means testing. The White Paper is at an advanced stage.

Universal Credit and Welfare Reform

Lord Field of Birkenhead Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

I want to touch on three themes. First, the importance of this debate goes beyond universal credit, because it is the big test of whether an approach to welfare reform that has been increasingly based on means-testing is the correct strategy for us to follow. Secondly, I want to explain why I fear that this will be a disaster despite all the comforting words that we have heard. Thirdly, I want to suggest to my right hon. and hon. Friends that if that is the view that emerges in the country, we will need an alternative to strategies of the kind that we have been deploying for the past 50 or more years.

First, I have nothing but praise for the Secretary of State for how he has engaged with the debate. He has accomplished an extraordinary feat by getting into a new area, mastering it and introducing his own proposals; but the fact that he is so exceptional in that sense does not necessarily mean that his proposals will work or are desirable. Means tests rot the souls of individuals. We have heard lots of talk about how important this is and how people will be better off in work than out of work, but even if someone is a saint, means tests will corrupt them.

Let us assume that someone who wants to work is in the very small group of people whom we are paying more than 90%, which will be reduced to 65%. Under this reform, the number of people who will pay higher marginal tax rates will be higher than that under the previous proposal. What is being clawed back makes people question whether it would be worth taking on overtime, an extra job or getting qualifications. If those on the Treasury Bench think that the rich in this country will not get off their backsides and work harder if we tax them at 50% and that we therefore need to reduce the rate to 45%, why do they think that that stick of making people marginally better off will work for the poor?

There are two groups of people: those who are in work wondering whether they would be better off, and the 1.45 million people—which is the figure that the hon. Member for Dover (Charlie Elphicke) kept coming up with—who have never worked. If those on the Treasury Bench think that tweaking the marginal rates of tax will get a large number of those who have turned down jobs actually to work, they have another think coming. That is not to say that there are not huge armies of people who wish to work and who would jump at any job, but we delude ourselves and misrepresent our constituents if we believe that the whole body of people who are registered as having never worked since they left school are eager to get a job. They are not and they will certainly not be affected by universal credit.

My second point is on how the atmosphere has changed. For Third Reading of the Welfare Reform Bill, the Government Benches were full and Government Members were baying at us. Their tails were up and they were confident about the reform, but look at them now—they are going to run out of speakers unless the Whips get more into the Chamber. By contrast, a galaxy of Opposition Members want to contribute. [Interruption.] The seven-minute rule has been applied purely and simply because we will not otherwise fit in all the Opposition Members who wish to speak. The atmosphere is changing. The Secretary of State will not have seen how glum his supporters looked when he was making his contribution. It is a totally different situation from that during Second and Third Readings of the Bill. What some of us forecast is coming home to Government Members.

Let us put to one side all the IT schemes that we failed with and look at when we tinkered with tax credits back in 2005. That scheme was much narrower in scope than this one. The then Prime Minister had to come to the House to apologise for the chaos that we managed to create. Nearly 2 million people were being overpaid and there was little chance of getting the money back from them, and 750,000 people were being underpaid. The lessons for making the proposed changes, even if they are made in stages, are difficult. Although I wish the Government well, I doubt whether they will be that much better than we were when we implemented a reform that was far less ambitious than their scheme.

The disaster will not only come from the IT. Why the secrecy? Why has not the pilot on the operation of the scheme been released to the Department for Work and Pensions? The Secretary of State says that a member of the team is now in the Department, but I can tell him that, even if someone is a Minister in a Department, it is possible for people to make sure that departmental information cannot be accessed, never mind information that is shared by Departments. Why the secrecy over that? Why have the senior civil servants on this project been lost? Why cannot Opposition Members get more information about the real-time working? The crucial point is not whether Sainsbury’s or Marks and Spencer can fit into that—of course they will be able to. The problem is with the vast majority of employers from whom the Revenue already has difficulties getting an annual return, let alone a monthly return or an even more frequent one.

Perhaps understandably, the Government are secretive over their risk register. I hope that the National Audit Office will be more effective than Parliament has been in looking at that, so that we can be more aware of what the risks are and of how the Government have tried, or not tried, to counter them.

I do not have time to get on to my third theme. I will seek another occasion to discuss it. It is all very well for us to criticise what we fear is going to happen. Come the election, I hope that there will be an alternative proposal, based on real wage rates.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Will the right hon. Gentleman give way?

[Mr Field]

I will give way, because then I can have an extra minute.

[Mr Stuart]

I was intervening to be helpful, because the right hon. Gentleman is making such interesting points, on which I hope he will expand.

--- Later in debate ---

[Mr Field]

The alternative to the means-testing strategy that we have pursued with ever greater vigour over the past 50 years is to look at the distribution of incomes of people at work, to look at low wages and to ask how we can raise people’s real wages. Secondly, I believe that there must be a fundamental change in the welfare state from a means-tested system, in which we meet people’s needs, to the welfare state that was originally envisaged, in which people draw benefits because of the contributions that they make, either in work or in a wide sense to the community. I do not underestimate how fundamental that change would be, but when the system crashes, we will need an alternative.

I am immensely grateful to the Chairman of the Education Committee the hon. Member for Beverley and Holdeness (Mr Stuart) for allowing me the time to make that point.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

This has been a thoughtful debate which has covered a lot of important ground.

Let me begin by endorsing the concept of universal credit. It is a good idea to bring different benefits together. The last Government looked forward to a single working-age benefit, and the present Government are right to take that idea forward. It ought to make it possible to simplify the system, strengthen work incentives, and make those incentives clearer. It is in the task of translating those noble aspirations—which every Member in the Chamber has shared this afternoon—into reality that Ministers are struggling so badly. The Treasury is worried; the Prime Minister is worried, as we discovered from the reshuffle last week; and, as we have heard in the debate, people in the system are worried. The wheels are wobbling, and, as my right hon. Friend the Member for Birkenhead (Mr Field) pointed out, the public mood and, indeed, the mood on the Conservative Back Benches is becoming much chillier in regard to this initiative.

The first big thing that went wrong was the decision that the credit should not be universal after all. Council tax benefit, one of the most widely claimed benefits, has been left out. So we now face the prospect of a “not quite universal credit”. My right hon. Friend the Member for Southampton, Itchen (Mr Denham) rightly observed that that was not the fault of the Secretary of State, who wanted council tax benefit to be included. The Secretary of State for Communities and Local Government wanted it to be excluded, and unfortunately the Secretary of State for Communities and Local Government won. It is now becoming clear what a blunder that was.

As I mentioned earlier in an intervention, Welwyn and Hatfield district council is consulting on a 40% taper rate for council tax benefit, on top of the 65% taper rate for universal credit. If the council proceeds with that proposal, for every extra pound that people earn they will lose more than £1 of universal credit. That is precisely the kind of lunacy that universal credit was supposed to abolish. The idea was supposed to be that work should always pay. I think that that was supported by every Member who spoke today, and it was mentioned specifically by my hon. Friend the Member for West Dunbartonshire (Gemma Doyle). However, thanks to the success of the Secretary of State for Communities and Local Government in winning a row with the Secretary of State for Work and Pensions, it will not now happen. Every council in the country will have its own council tax benefit scheme and its own taper, so people’s work incentives will depend on their postcode. So much, sadly, for simplicity.

[Mr Frank Field]

Is my right hon. Friend not being too kind to Treasury Ministers? The moneys for the rebates will be limited, and it will be up to local authorities to meet existing need, let alone new need.

[Stephen Timms]

My right hon. Friend is absolutely right. The money is being cut by 10%, so councils must somehow come up with a scheme that will save 10% and will be introduced on a local basis. It will be chaotic. Many councils are saying that they will not be able to do it in time, and it will certainly mean that there will be no national taper that everyone can understand.

However, that is just the start of the problems. The project is not on schedule, despite what the Secretary of State said earlier. According to paragraph 21 on page 37 of his White Paper of November 2010, between October 2013 and April 2014

“All new claims for out-of-work support are treated as claims to Universal Credit. No new Jobseeker’s Allowance, Employment and Support Allowance, Income Support and Housing Benefit claims will be accepted.”

I believe that that is what my right hon. Friend the Member for Wentworth and Dearne (John Healey) was told. It is absolutely clear, but it is no longer true. A newsletter appeared on the Department for Work and Pensions website over the summer announcing that, in fact, that timetable will apply in only one Jobcentre Plus district per region. In all the other districts, the change will take place some time after October 2013 and by summer 2014. The timetable has slipped; it has been delayed from what was stated in the White Paper—I am delighted that the Secretary of State is back in his place. On the budget, to the end of the last financial year the project was due to spend £400 million. In fact, it spent £500 million. So it is already over budget, too.

I welcome what the Secretary of State said about online claims: he told us that the Department expects that at the beginning only about half of claims will be submitted online. That is a very significant change from what has been said until now in respect of the digital-by-default proposal. It would be helpful to know what will happen to the 50% who do not apply online. How will things work for them? When people have problems, who is going to help them? As my hon. Friends the Members for Denton and Reddish (Andrew Gwynne) and for Makerfield (Yvonne Fovargue) rightly pointed out, the introduction of universal credit will coincide with a drastic reduction in the availability of advice, just when people are supposed to be grappling with these new processes.

What about people’s documents? At the moment, people applying for housing benefit present their documents to the local authority. Where will they present them in future? Will people start turning up at jobcentres with their documents or will they be expected to post them somewhere—or will we no longer have the fraud checks that are currently built into the system?

This is supposed to be all about work incentives, but large numbers of people will find that their work incentives are worse. The Government apparently plan a simple income cut-off for free school meals. If people earn less than X, their children will be entitled to free school meals, but if they earn more than X, they will not. That is a disastrous new cliff edge—far worse than anything in the current system. It means that someone with three children who earns less than X will suddenly have to start paying out over £3,000 in school meal charges per year if their income increases above X by just a pound or two. That is a massive disincentive to people to increase their income.

We have been asking how Ministers are going to tackle this issue since March last year. We asked the Secretary of State when he would make up his mind when he gave evidence to the Welfare Reform Bill Committee. He said that

“during the Committee stage we should be in a much stronger position to make it much clearer how we will do that.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 155, Q299.]

Some 18 months have now passed, and today the Secretary of State told us he is talking to various people about it. All this is supposed to be in place within 12 months from now and Ministers still cannot tell us what they will do, but it does appear that that very damaging feature will be part of the system.

I have asked about the publication of the business case. I believe that Ministers will not publish it because it projects that there will be no increase at all in the total number of hours worked as a result of the introduction of universal credit. In other words, the whole basis on which this project is being taken forward is flawed. That is partly because of the situation for second earners, which has been mentioned. My right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) asked the Secretary of State what would happen to hours worked. He did not answer, and I think I have just explained the reason why. As my hon. Friend the Member for Stretford and Urmston (Kate Green) pointed out, second earners in a couple face sharply worse work incentives than in the current system. We are going back to an outdated male breadwinner model, where the second person in the couple is not expected to work.

As my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out, incentives for self-employment are terrible, too. Tax credits have encouraged self-employment, but, under universal credit, the DWP will assume after the first year that people are earning at least the minimum wage for every single hour they are working in self-employment.

--- Later in debate ---

[Steve Webb]

I am grateful to the hon. Gentleman for bringing me to the issue of work incentives. It was central to this debate, so let me address the point directly. Two separate work incentives have been muddled together in this debate, including, I regret, by the right hon. Member for Birkenhead (Mr Field). The first is the incentive to take a job and the second is the incentive for those in work to work more hours. My right hon. Friend the Secretary of State, in introducing this debate, identified the fact that universal credit significantly improves the incentive to take a job. That is fundamental in order to move from a situation where, as we have heard, millions of people are in workless households where nobody is working. Of course the incentives for the second earner are important, but those for the first earner are even more important. We make no apology for prioritising them; we want far more households to have someone in work, which is why we have structured this as we have. We are therefore putting £2.5 billion extra per year, at a time when we are having to save on welfare, into in-work benefits, thereby improving the return to work. It must be the case that if we are spending more on in-work benefits, we are improving the incentive to work.

[Mr Frank Field]

Either the hon. Gentleman misrepresents me or I did not make myself clear. I said that, crudely, we are talking about three groups. The first is those who are unemployed and desperate to get back to work. The idea about incentives does not occur to them, as work is part of their DNA. We do not need to have reforms for them; we need jobs for them. The second group is those who regard their benefit as a pension, and no marginal increase in income is going to get them back to work. The third group is those in work who are deciding whether they will work longer, whether they will work harder and whether they will get new jobs. Will a scheme that puts their marginal tax rate up, as this one does for many people, actually be a work inducement?

[Steve Webb]

Let me deal with that point directly. Under the current system, people who are below the tax and national insurance threshold and get tax credits and housing benefit lose 79p in the pound—that will fall to 65p. Under the current system, people who are above the tax and NI threshold and get tax credits and housing benefit lose 91p in the pound—that will fall to 76p. Under the new system, there will be almost no one who loses more than 80p in the pound, compared with 500,000 people who do so now. What is not to like about that? This is good news for work incentives.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 25th June 2012 Commons Chamber

[Steve Webb]

I do appreciate that point. It is often not well understood that pensioners coming down the track—tomorrow’s pensioners—are due to receive substantially higher pensions on average without our reform because the state system has been maturing. Our reforms are not doing that—it is in the system anyway—but our reforms do take the money and simplify so that today’s workers have a simpler system into which to retire.

[Mr Frank Field (Birkenhead) (Lab)]

Will the Minister give an undertaking that those coming down the track—[Interruption.] I am already there; I am one of those pensioners being discriminated against. Will he give an undertaking that those who would be entitled to a higher pension than his flat-rate pension would provide will get the entitlement that they have paid for and not his lower flat-rate pension?

[Steve Webb]

I can reassure the right hon. Gentleman that the next generation of pensioners will be well looked after and specifically that the starting point for our calculation will be what people have in the bank—that is to say, rights already accrued—and specifically, therefore, if people are heading for a pension of more than £140 at the point we change it and have got that in the bank, it will be respected.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 23rd April 2012 Commons Chamber

[Steve Webb]

My hon. Friend is right. At present, the level of the basic state pension is so far below that of the means test that the first slice of savings is largely offset by means-tested benefits. My right hon. Friend the Chancellor has confirmed that whatever detailed proposition we present, the level of the single-tier pension will be clear of basic means-testing, and will therefore reward those who have saved rather than penalising them.

[Mr Frank Field (Birkenhead) (Lab)]

How long does the Minister think he will get away with these proposals? If a private company decided to do what he proposes to do—take contributions away from people who have paid over the years and give additional pensions to people who have not paid anything—the House would be jumping around with anger. Why does he think he can do that to people who have paid for a second state pension?

[Steve Webb]

If we were doing what the right hon. Gentleman says we are doing, I should be as outraged as he is. However, we are not doing that. Part of our proposition is that all contributions paid to date will be recognised in the new system. At the point of transition, if someone was heading for a pension of £150, £160 or £170 a week, that is what we would pay that person. [Interruption.] The right hon. Gentleman asks, from a sedentary position, where the money is coming from. We will present our costings in the White Paper, and he will see then that we will find it through less means-testing, among other things.

As for bringing people into the system, successive Governments have, for example, credited women who have spent a period at home with children. Although they have not paid cash, they have contributed, and that should be recognised. I think that that is right, and we are doing the same.

Welfare Reform Bill

Lord Field of Birkenhead Excerpts

Tuesday 21st February 2012 Commons Chamber

[Andrew Percy]

We need to address the failure to provide adequate housing stock in this country. However, I say to my hon. Friend and near neighbour that the Government’s proposal is not a way to do so. It is not a simple problem to solve.

The crux of the amendment is that if there is suitable accommodation to go into, people should go into it, but just as there is an insufficient number of bigger homes for families, there is an insufficient number of smaller, one-bedroom properties for those groups of people to go into. If we apply the argument that there is no suitable housing for one group of people and we must therefore do something about them, we should also argue that we should not penalise people who are under-occupying if there is no suitable accommodation for them.

The sensible element of the Lords amendment is that the penalty kicks in only if people refuse a suitable property. That is eminently fair. Hon. Members must come to their own conclusions, but I will vote accordingly. I look forward to hearing other contributions to the debate.

[Mr Frank Field (Birkenhead) (Lab)]

As the House may know, I agree with the Government on many aspects of the Bill and I have not always shared the sentiments of Opposition Front Benchers. I regret that, but I have made my position clear. However, I today wish to speak against the Government on their stance and to support my right hon. Friend the Member for East Ham (Stephen Timms).

I do so because the change that the Government are making is shameful. Anyone who has sat through debates on the Bill will know that the Government’s body language is totally different to that in respect of other measures. They have been forced to take this measure by the Treasury. It goes against all that the Bill tries to achieve, which is to work with the grain of human nature. This proposal, which has been forced on the Department for Work and Pensions, works against that grain.

There are four reasons why Government Members should today save their favourite Front Benchers from the course that the Treasury is making them go down. First, let us imagine that places are available—that we could wave them into existence with a magic wand—and that all the people whom the Government condemn as under-occupying could move. That is the last thing the Government want, because to satisfy the Treasury requirements, the Department has had to enter into the accounts that it will make a substantial saving. If it were possible for people to move—all hon. Members know that it is not—the measure would fail, because it is being introduced not to even out housing, but to deliver a major saving in public expenditure to the Treasury by singling out the group who under-occupy. Therefore, the first reason why I hope Government supporters reject the measure is that it makes no sense.

Secondly, as we have heard, even if people move into the private sector, the total bill to taxpayers will be greater than if they stayed in social housing and were not penalised. The Government risk making the achieving of cuts in public expenditure that much more difficult than it is.

Thirdly, the Government’s proposal strikes against other major Government objectives with which I agree. The Government say that the reform is aimed at strengthening families and building stronger communities, but this move sticks a dagger into both those objectives. It will affect parents in families that have broken up and wish children to come and stay, and people who have carers rather than entering permanent care. Furthermore, as the hon. Member for Brigg and Goole (Andrew Percy) said in his fine speech, people might snore. How many marriages have been saved because one partner who snored could move into another bedroom? These details do not appear in public accounts details but they appear in real life. If this measure passes, far from strengthening families and enabling them to relate to and visit one another more easily, it will make it more difficult, and it might well drive out of the community upstanding citizens who play a much wider role, in the most difficult circumstances, in trying to beat the yob culture that engulfs them.

There is a fourth reason I speak and wish Members, particularly on the Government Benches, to vote against the Government and save their own Front Benchers. The Government know that I do not accept all their poverty data, but they do not have the courage to come out, as I want them to do, and declare on that—perhaps one day they will find that courage. I do not think that the poverty data properly measure whether people are benefiting from the general rise in living standards that has occurred for generation upon generation in this country. Harold Macmillan said that the poor should benefit from rising living standards. One way of ensuring that they do so is to give them the freedoms that I and other hon. Members have—those small differences in life that so improve its quality. Having a spare bedroom with which to offer hospitality to family and friends can make such a difference to the quality of one’s life.

The Government know that they are going against a valuable tradition dating back to the Macmillan era. This is not a welfare reform measure. It will be a recruiting sergeant for the money lenders and will be looked on as an eviction measure. Given that the DWP cannot save itself from this terrible measure, forced on it by the Treasury, I hope that Government Members will save the Department from pushing through this nasty, mean little measure. I hope that the House will send a clear message to the House of Lords that, even if we do not win tonight, they should keep up the fight and send it back until there are enough Government Back Benchers to save the Department from this shabby little folly.

[Stephen Lloyd (Eastbourne) (LD)]

It is a privilege to follow the right hon. Member for Birkenhead (Mr Field) on this issue and the issue of welfare reform generally. I have read what he has written for many years. I have some sympathy with what he and other colleagues have said, and with the amendment, and I have some specific concerns that I would like to put to the Government and on which I look forward to receiving clarification from the Minister.

First, however, I want to welcome the fact that the coalition Government have already put aside funds in the comprehensive spending review for severely disabled people who need carers either for 24 hours or overnight. I am glad of that. It was in the Lib Dem manifesto, and I am glad that it is being delivered by the coalition Government.

I have four concerns about the amendment, however, on which I seek reassurance from the Minister. The first is straightforward and concerns foster carers and social housing, about which one of my colleagues talked earlier. I would like the Minister to clarify exactly how the Government will manage the periods during which foster carers have one spare bedroom. Clearly the children of foster carers sometimes move on and there will be a gap before the next child arrives. I would therefore welcome some clarification from the Government of how that will be managed.

Secondly, a number of my disabled constituents, such as wheelchair users, have had extensive adaptations in their homes—I am thinking of one particular individual, in Langney—which have made a considerable difference to their lives. It took probably two or three years to get the work done in that case, and it would frankly be daft to move that individual out of her home because of the one-bedroom rule; the local authority has already spent £10,000 on those adaptations.

--- Later in debate ---

[Chris Grayling]

I will probably not be able to cover all the questions that have been raised, but I shall pick out some of the key points.

The right hon. Member for Birkenhead (Mr Field) made a passionate defence of the spare room, referring back to the days of Macmillan and to the principles of the welfare state. I know that he is often a champion of welfare reform, and I listen carefully to what he says, but I find it difficult to justify maintaining 1 million spare rooms in the social rented sector when large numbers of families are living in temporary accommodation and in accommodation that is too small for them. I do not believe that the spare room is a luxury that the social rented sector can afford at the expense of children living in temporary rented accommodation. Fundamentally, that is what this change is about.

[Mr Field]

But it is not about that, is it? If the Government are going to deliver to the Treasury the moneys that they say they are going to save, that will depend on people not being able to react in the way that the Minister is describing.

[Chris Grayling]

As I keep saying, that is not the case. At the moment, local authorities up and down the country are paying out large amounts of money; the right hon. Gentleman should talk to his own local authority about the challenges and costs of providing temporary accommodation. We depend so heavily on temporary accommodation partly because of the failings of the previous Government, going back 10 or 15 years, in the construction of social rented housing. I remember looking at the figures in the early part of the last decade. Had the Blair Government continued to build social housing at the same rate as the Major Government, we would have seen something like 300,000 more families in social rented accommodation. The fact is, however, that they did not. This was not a priority for them when they took office in 1997, and they cut back on construction. Today, we are living in extraordinarily difficult times, financially, and we are dealing with the consequences of the decisions that were made 15 years ago.

[Mr Field]

We are not interested in the Blair Government or the Brown Government; the electorate decided that they should come to an end. We are interested in what this Government are doing. Does the Minister not accept that if people followed his advice and moved into the private sector, far from saving the amount spent on housing benefit, such a move would actually increase it?

[Chris Grayling]

I simply do not accept that. The right hon. Gentleman is making assumptions about people’s behaviour and about the cost of temporary accommodation. We as a nation are housing in extremely expensive temporary accommodation large numbers of people who can and should be housed properly. At the same time, we are supporting 1 million empty bedrooms in the social rented sector. My colleagues and I believe that we simply cannot afford to do that at this moment in time. This is not the world of 15 years ago. We have come into government with empty coffers, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) always reminds us. We are having to take tough decisions, some of which we might wish that we did not have to take, and we are trying to take them in as fair a way as possible.

My hon. Friend the Member for Eastbourne (Stephen Lloyd) asked about foster carers. The foster carers of this nation are to be enormously admired for the work that they do, and I appreciate that this is a sensitive issue. In putting in place discretionary funding, we have focused specifically on those people. On the status of a foster child, the approach that we are taking is not to treat foster children as members of the foster carer’s household in the calculation of the appropriate amount of housing benefit. That is because we are treating them in a different way. It is consistent with the current treatment of foster children in housing benefit assessments for those living in the private rented sector, but we disregard the whole of the foster carer allowance that is given to the foster parents when assessing eligibility for all income-related benefits. That leaves the majority of households who foster substantially better off, so the payment is made through the foster care support system in order to ensure that the family has sufficient resource to make money available for support to cover the costs of those children.

The whole point of making discretionary money available is, as my hon. Friend the Member for Crewe and Nantwich (Mr Timpson) said, that there are of course situations where there is a gap in a foster child’s presence in a household. When the money is not coming in, we need to use discretionary funding to ensure that the family is appropriately and properly supported. We do not want to see foster carers forced out for the very good work they do; it is really important that we provide them with support.

In the last few seconds available to me, let me say again that a spare bedroom is a valuable asset. Taxpayers’ money is already being used to provide accommodation at social sector rents, averaging £79 a week in England compared with £160 in the private rented sector. Asking the taxpayer to find a further half a billion pounds to enable—

Welfare Reform Bill

Lord Field of Birkenhead Excerpts

Wednesday 1st February 2012 Commons Chamber

[Chris Grayling]

I will talk in more detail about cancer, which is one of the measures we are addressing. I accept that there are anxieties in respect of cancer, but the approach that we are taking to all our reforms, and particularly those relating to sickness and disability, is that we should not write off automatically any individual with a particular condition. Applying a one-size-fits-all measure to any one condition is the wrong thing to do.

[Mr Frank Field (Birkenhead) (Lab)]

The Minister initially said that the Government are introducing their measures because they need to save money on the welfare Bill, but he also said—I hope there is great support in the House for this—that their measures will shape behaviour. Are the national insurance measures designed to shape and change behaviour, and in what way will they do so, or are they merely just to save money? In other words, is the Minister doing what the Treasury has required him to do on national insurance?

[Chris Grayling]

The important thing about that measure is that we must have a welfare system in which people have confidence. The principle of our proposal reflects the principle used in the jobseeker’s allowance system—people should get something back for what they have contributed, but not indefinitely. The Government’s measures simply seek to extend that principle to the group on ESA.

[Mr Field]

I do not think there is any agreement on that. Is it not possible to honour national insurance contributions and attach “seeking work” requirements?

[Chris Grayling]

The principle I described is a long-standing one that has been applied to other benefits, such as jobseeker’s allowance. It is important to state that the Government are not taking benefits away from people who have no other form of income, or from people in the support group who need long-term, unconditional help. The measure simply affects those in the work-related activity group. It applies to them the same principle that exists in jobseeker’s allowance.

--- Later in debate ---

[Chris Grayling]

Of course it is not. We are saying that somebody should not be able to claim a benefit for the first time having not lived in the United Kingdom for many years. That is the argument that we put to the European Court, and it is a principle that we stand by. I emphasise that that is one of the reasons, but by no means the only reason, why we are taking this measure.

[Mr Frank Field]

Has the Minister talked to the Secretary of State about this? Would a more logical position not be that we get exemptions from the European Court ruling, and not distort our social security system to fit the European Court’s decisions?

[Chris Grayling]

I would love to secure a more pragmatic and sensible approach to the regulation of social security in Europe. I have been working on it for the past 18 months with my counterparts in other member states, and I hope that we will make progress as soon as possible. Right now, however, we must obey European case law as delivered to us by the European Court—much as it sometimes might be frustrating to do so.

I have a couple of technical points to make before I finish. As a result of providing for the new category of entitlement, in respect of claimants whose health has deteriorated to such a degree that they are placed in the support group—I referred to this earlier in response to the hon. Member for Aberdeen South (Dame Anne Begg)—it has been necessary to remove the substance of the ESA youth time-limiting measure from the original clause 52 and to insert it in clause 51 via a new subsection in section 1 of the Welfare Reform Act 2007. The Opposition amended that new subsection by changing the period of the time limit from 365 days to a period to be prescribed of at least 730 days. That is Lords amendment 19. As a result, the House will need to agree to amendment 19 but with an amendment consequential upon the rejection of the other amendments providing for entitlement to ESA to be for 730 days rather than 365 days. This will restore the Government’s intention.

A similar complexity surrounds amendment 22, which was voted for in the other place and which ensures that no new claims can be made under the youth provisions in the future—in effect, from whenever that provision is commenced by order. This amendment would amend clause 52 by removing the substance of ESA youth time limiting, which is now included in clause 51, but would retain the key provision in clause 52 preventing new ESA youth claims from being made.

I am afraid that this position is further complicated by the fact that also in the other place amendment 23 was not pushed to a vote and therefore also stands part of the Bill. Amendment 23 effectively allows claims to be made to contributory ESA under the youth provisions for those that are placed in the support group. We therefore now have two conflicting clauses for conditions relating to youth. Finally, if amendment 23 were to be accepted, it would reduce the expected cumulative benefit savings by around £17 million by 2016-17—savings that would need to be found elsewhere in the benefits system.

In the light of these arguments—the urgent need to address the fiscal deficit we have inherited and the need to deliver principled reform to our welfare state—I hope that hon. Members will feel able to support the Government.

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right. Ministers say that there is no need to worry because means-tested ESA will still be there, but if a partner is earning £7,500 a year, no means-tested support will be provided at all.

In the other place, Baroness Hayter quoted a letter from a 59-year-old man currently on contributory ESA who has worked and paid into the system since he was 15—that is, for 44 years. Now, when his health is failing, he will be left on the poverty line. He draws the obvious conclusion—this picks up on the point that my right hon. Friend the Member for Birkenhead (Mr Field) made earlier—saying:

“It would be better if my wife stopped working then perhaps I could claim income-related ESA—just like any person who has never worked”.

That is the position that this change is putting people in. The Government say they want to reward work; with this measure, they are scrapping the reward for work.

[Mr Frank Field]

Before my right hon. Friend moves on, perhaps he could dwell on that point. The Government rightly say that this Bill is about changing and shaping behaviour, and for all of us in this House, it is important to know that this year we will probably crash through the £200 billion mark. Anybody who thinks that that does not affect people’s behaviour is living in cloud cuckoo land. However, what message is this Bill sending out, when those who have provided and paid their contributions will get no benefits if there is any other income in their house, whereas those who have not played by the rules—who have decided that they will coast it on the back of taxpayers—get rewards?

[Stephen Timms]

My right hon. Friend is absolutely right. I am afraid that the message that this measure is sending to people in that situation is, “You’ve wasted your time.” Indeed, that is the case not only if they have a partner with an income, but if they have any savings. If they have more than £16,000 saved, there will be no means-tested support at all.

Members need to be clear about what the Government will be doing if they get their way. Under this measure, people who are in the middle of a health crisis will be plunged into a financial catastrophe. People who have worked and paid into the system all their lives—people who have, as my right hon. Friend says, done the right thing—will find that the system is not there to help them when they need it.

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right.

The impact assessment states that the provision

“puts those previously eligible for ESA ‘youth’ on an equal footing with others who have to satisfy the relevant National Insurance conditions before they qualify for contributory ESA, which will create a simpler system”.

It will not put them on an equal footing. They have been unable to work since before they had a chance to work, or at least to build up two years of contributions, as my hon. Friend points out. They have had no chance to build up their contributions, and they are therefore at a disadvantage, compared with everybody else. Attempting to justify the proposal—in frankly Orwellian terms—as a simplification really takes the biscuit. We are talking about a small group—15,000 people—who have never had a chance to build up a contribution record. It is right that they should be treated differently. A little complexity is necessary for fairness.

It is worth looking at how much money the Government will save by overturning this amendment. It involves a fair amount of contributory ESA —Ministers in the other place said £70 million. However, many of those young people—the Minister said it would be 90%—will be entitled to income-related benefit if they lose their contributory benefit. Furthermore, the amendment from the other place is very narrow. It applies only to the support group—that is, those who the Government accept should be protected from ESA time-limiting. The net annual saving from this spiteful cut will be about a quarter of the amount that the state-owned Royal Bank of Scotland will hand out in executive bonuses this year. It will be less than £10 million a year.

[Mr Frank Field]

When my hon. Friend the Member for Aberdeen South (Dame Anne Begg) asked a question about a 20-year-old living at home, we did not get an answer. I was just wondering whether my right hon. Friend was trying to find out the answer by osmosis. At what point will disabled young people qualify in their own right for means-tested support, as opposed to having a household means test applied to them?

[Stephen Timms]

I also noted that the Minister did not give my hon. Friend the Member for Aberdeen South the assurance that she was seeking. My understanding is that any other income in the household, from any source, contributes to the household income, and the benefit for the disabled young person is therefore removed, pound for pound. My hon. Friend was seeking an assurance that some other provision would be put in place to safeguard the young person, but the Minister was unable to give her such an assurance, because I do not think that that is the Government’s intention. No such provision appears in the Bill at the moment.

--- Later in debate ---

[Chris Grayling]

When their child benefit stops.

[Mr Frank Field]

It is at 19.

[Stephen Timms]

My right hon. Friend is prompting the Minister with the answer. We will look carefully at the detail of the proposals. Presumably, they are going to appear in regulations; they are certainly not in the Bill. It is helpful that the Minister has told us that, however.

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right. The number of people who have a million pounds can be counted on the fingers of one hand.

[Mr Frank Field]

Are not Government Members mistaken on this? We are talking about the existing rules, which encourage parents to put away money—they might have found it difficult to do so—for an endowment for a very disabled child. They will now find that their carefulness in not playing the system but trying to seek independence for their offspring will be penalised by the rules, which they could never have foreseen.

[Stephen Timms]

That is absolutely right; that is how the Government are changing the system. Disabled young people, in recognition of their particular circumstances, have been assured since the 1970s—under Governments of both parties—of an independent income from the state. This Government are taking it away from them. As a result of this change, they will lose that security in exchange for very little saving at all to the Exchequer. The Child Poverty Action Group points out that the current arrangement helps

“young disabled people who may be vulnerable to forming unsuitable relationships, or may avoid forming a suitable relationship due to fears about losing an independent income”,

as my right hon. Friend the Member for Birkenhead (Mr Field) correctly said. The current arrangements give the chance of a more secure and independent life to people who would, through absolutely no fault of their own, find that very difficult otherwise. At less than £10 million a year, that is a price worth paying for the independence of severely disabled young people. I urge the House to reject the Government motion.

--- Later in debate ---

[Mr Frank Field]

If I may, I shall make one comment on the previous contribution. I thought that the right hon. Member for Wokingham (Mr Redwood) was going to go a stage further: might there not be a connection between the number of newcomers coming here to work and the extraordinary rise in rents in some parts of the country? That also needs to be introduced to our debate today: we cannot run a welfare policy if we have an open-door policy as well.

Those on the Treasury Bench are having, they think, a good day, but if they look behind them they will see that all their supporters are newcomers to the House returned at the last election, except for two Members. There is no reason why those supporters, who have been enjoying themselves so much today, should know where we will be this time next year, or a little later. Some time next year, the Bill and, we are told, universal credit will come into operation. It might be that when those two things hit the tarmac Government Members will hope that Opposition Members show a little more foresight and consideration for those on the Treasury Bench than Government Members have shown this afternoon. My guess is that there will be two God-almighty catastrophes hitting this country. The constituents of Government Members will be at their surgeries and Government Members will be baying for blood. The tables turn in this game.

I want to make three quick points, if I may. I say to those on the Treasury Bench that I do not have their confidence that these measures will be implemented smoothly, neither universal credit nor the proposals before us. A lot of people will be in transition. Whatever the arrangements, there will be hurt, and they will make that hurt felt in the constituencies of Government Members, as well as in our constituencies.

[Bill Esterson (Sefton Central) (Lab)]

Will my right hon. Friend give way?

[Mr Field]

If my hon. Friend does not mind, I am going to be brief.

On the insurance principle, those on the Treasury Bench prayed in aid the public being behind them on the measure. Indeed, the public are behind them on that, but the public are against them on the first group of amendments, which we pushed through. Obviously, the Treasury gave a total that the Department for Work and Pensions had to save from the benefits bill. The truth is that we will never get past the stage of picking on weaker people until we are prepared also to look at stronger people. Why is it that, somehow, the benefits of people in my position—those who are part of the baby boom who have done really well out of this country over the years—are never looked at? Why are we frightened to look at the concessions that, for example, people over retirement age receive as universal benefits?

If we are not to go down this track again—the biggest growth in the budget over the past 20 years is in the transfer payments that we are, in effect, discussing today—we must be a little braver and much more open about those areas that we think should be questioned, rather than having a diet of the sort that has been served up to us today.

On the £26,000 a year cap, are there not lessons for Members on both sides of the House to learn? One is that the Government’s proposals are unbelievably crude. I hope that they will adopt our proposals before they go much further in this reform programme. To my own side, I say that I do not want people to think that it is only out in the sticks that people think £26,000 is a high cap. People in London who work think £26 k is high.

We should not make policy because odd people have talked to us in the street, but yesterday, a couple of blocks from here in Strutton Ground, a window cleaner said to me, “Frank, I start at 4 o’clock in the morning. I wish I could get a guaranteed £26,000 for my efforts.” There are lessons for both those on the Treasury Bench and the Opposition.

My final point has already been made by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who probably knew that I was going to make it and so has disappeared. We have had a nationwide housing benefit for more years than I can remember, and one lesson I have drawn is that landlords are very clever at turning whatever we think of as a cap into a floor. Obviously we want to meet people’s rents where possible, although they do not have a right in the long run to live somewhere irrespective of what the rent is, but can we run a housing benefit system while having a free market in rents? My suggestion, drawn from the decades I have been in this House, is that the two are incompatible if we are trying to protect taxpayers.

I hope that those three points have been useful. Given that in a year’s time those on the Treasury Bench will want some sympathy from us when they are operating these measures, it might be rather gracious if they looked more favourably on the amendments tabled by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), which would make their reforms better rather than worse.

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who always provides the House with a thoughtful contribution. It is important to state that the number of newly elected Government Members shows that we were elected on a promise to get to grips with the welfare state. I represent a constituency where the average wage is very low, yet the jobs created there over the past few years have been taken predominantly by hard-working people from eastern Europe. I think that there is something completely wrong with the system if I can meet people on the streets in Llandudno and Llanddulas who tell me that they are better off not taking employment. There is a passion for these changes on the Government Benches, a passion for change that will allow people to do the right thing with their lives and take a job.

I am intrigued and disappointed to see that not a single Labour Member from Wales is in the Chamber to discuss this issue, and I think that I know why. It is because time and again Government Members have asked the shadow Secretary of State to tell us whether his proposed regional cap is for an increase in London, with no change in the rest of the country, or for a reduction in other parts of the country. I do not know a single Labour Assembly Member, councillor or MP who has advocated a lower cap in Wales than in the rest of the country, so it is pretty clear to me that the concept of a regional variation is based on increases in expensive parts of the country but no reductions elsewhere. The Labour party has provided no financial information on its proposal.

I am all in favour of debate on this issue. My right hon. Friend the Member for Wokingham (Mr Redwood) made the point extremely well that there is an argument to be had about the regional variation in pay and benefits, but it is completely unacceptable for the Opposition to turn up with a proposal that is uncosted, untested and, in my view, intended to get the Labour party off the hook rather than contribute to any change. I do not consider myself to be a cynic on this matter, but I wonder why, when the Chancellor highlighted in the autumn statement the possibility of looking at regional pay, the Labour party attacked the proposal, yet it is now looking at proposals for a regional cap, as logically a regional benefit system must follow. I can only conclude that the difference is that benefit recipients are not union members, but public sector workers are.

--- Later in debate ---

[Maria Miller]

I thank my hon. Friend for the opportunity to clarify an important aspect of the current situation. More than half of parents within the CMEC system would like to make their own arrangements—they positively want to do that—if they had the right support in place, but they do not have that support. They see the CMEC and the Child Support Agency as the only option open to them, and that cannot be right. It cannot be right that we are not doing more to support families so that they can take responsibility and do the right thing.

[Mr Frank Field]

Is not the really big change that we are discussing the fact that when the CSA was first established, the maintenance moneys went to the Treasury to offset what taxpayers were putting up because, generally speaking, fathers were not prepared to do so, whereas now that money remains with the family? Is it not reasonable, in such circumstances, if people are going to get a top-up to their benefit that they should contribute to the cost of gaining that extra money? On the timing, should we not charge people once they are getting the money, not before?

[Maria Miller]

I thank the right hon. Gentleman for making that point. He is absolutely right. Indeed, back in 1991 when the Child Support Agency was initially put in place, some £400 million of savings were attached to it because there was a pound-for-pound withdrawal of maintenance and the welfare benefits that an individual received.

Benefits Uprating

Lord Field of Birkenhead Excerpts

Tuesday 6th December 2011 Commons Chamber

[Steve Webb]

I can assure my hon. Friend that my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), the employment Minister, has quite categorically stated that Britain does not believe in benefit tourism, and that we will do all we can to prevent it.

[Mr Frank Field (Birkenhead) (Lab)]

Is it not true that the Minister’s partial statement today will in the next couple of years result in decreasing the incentive to work? If the Treasury believed in localism and had given the £6.6 billion to the Department to spend on uprating as it wished to, would not the Minister have made a statement today that increased work incentives rather than decreased them?

[Steve Webb]

The right hon. Gentleman, for whom I have a great deal of respect, will be aware that the reward for working comes from a combination of factors, one of which is the tax burden on the low-paid, and that this Government have twice increased the personal tax allowance by about £1,500. That is worth more than £300 a year for a standard rate taxpayer and, for two members of a couple in low-paid work, is a £600 gain with more to come. That is a real reward for working which all too often they have not had in the past.