Compulsory Jobs Guarantee

Alan Reid Excerpts

Wednesday 11th February 2015 Commons Chamber

[Stephen Timms]

My hon. Friend is absolutely right about the ambition, and of course this scheme will be an enormous step towards tackling the scourge of long-term unemployment. To build a strong and stable recovery, and a fairer and more united country, we need to make sure, as he says, that everyone gets to play their part, that we harness its talents and fulfil the potential of all, and that everybody knows they have a stake in our country’s future.

We have seen some welcome recent falls in the headline rate of unemployment, from the peaks reached after this Government choked off the recovery they had inherited in 2010. More people in work is always good news, which is why we repeatedly urged the Government to do more to stop the soaring unemployment they presided over after the general election.

[Mr Alan Reid (Argyll and Bute) (LD)]

I draw the right hon. Gentleman’s attention to the fact that in my constituency unemployment rose by 385 under his Government, whereas it has fallen under this Government by 763. His Government failed, not this one.

[Stephen Timms]

But long-term unemployment is higher in the hon. Gentleman’s constituency now than it was at the time of the last election. That is the legacy of the three years of almost no growth in the economy following the general election, which we now need to address. Let me say to him and to other Government Members that self-congratulation on what has happened in recent months is dangerously complacent about underlying problems in the labour market and utterly out of touch with the impact such problems have on people who are desperate to work and to earn their way out of the cost of living crisis they are facing. People are deeply concerned about the prospects for their children and the grandchildren. Those are the points we now need to address.

Post Office Card Account

Alan Reid Excerpts

Tuesday 16th December 2014 Commons Chamber

[Steve Webb]

As the hon. Gentleman knows, it is clearly already possible to access cash from a Post Office card account through the network of Post Office cash machines fee-free. As the number of Post Office card accounts drifts down and working-age people move to transactional banking accounts, one danger was that cash machines in rural and deprived urban areas would become unviable and be withdrawn from the network. One of the things we have specifically done through the new contract is to ask the Post Office—this is ensured as a term in the contract—to retain cash machines in rural and deprived urban areas.

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate my right hon. Friend on his announcement. It is good news for all the village post offices in my constituency and the pensioners who use them. It guarantees the long-term future of such post offices, and it is a contrast with the attitude of both the previous Government and the banks that are shutting rural branches. For the long-term survival of such post offices, the Post Office needs to develop its own basic bank account. Will my right hon. Friend encourage it to do so?

[Steve Webb]

I pay tribute to my hon. Friend as an officer of the all-party group on post offices and, indeed, as a persistent thorn in my side on this issue, which he recently raised at Business, Innovation and Skills questions. He has shown his commitment to post offices, and I know that his constituents will respect the work that he has done.

We have left Post Office Ltd, as a commercial organisation, the freedom to design bank accounts of the sort it feels appropriate. It has come up with a series of accounts; for example, some have a monthly charge, and others have different features. It is obviously testing the market, starting—if I remember rightly—in the east of England. That is clearly a commercial issue for it, but we are keen to make sure that a range of accounts are available to people to meet their needs.

Pensions and Benefits Uprating

Alan Reid Excerpts

Thursday 4th December 2014 Commons Chamber

[Steve Webb]

I am grateful to my right hon. Friend. He is right that our ability to afford the substantial increases in the state pension in particular depends on a sound economic strategy. He will know that what we have been seeking to do is make sure that we have both a strong economy and a fair society, as delivered through this statement today. In terms of what happens post-2015, my right hon. Friend the Prime Minister has indicated that he wants to see the triple lock continued and I certainly want to see it continued. Indeed, I would like to see it as the law of the land after the next election.

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate my right hon. Friend on his statement and on the tremendous work he has done over the past four and a half years after inheriting economic disaster from the Labour party. Will he confirm that the rise in the state pension next year will be more than double the rate of inflation as measured at the end of September as normal?

[Steve Webb]

Indeed. Those who follow our proceedings will note that we have had two consecutive questions from Government Members, because not a single Labour Back Bencher has any views on this subject. My hon. Friend is right. The increase of 2.5% is double the rate of inflation and quadruple our statutory duty to increase in line with earnings. Four times the statutory minimum seems like a fair deal to me.

Welfare Reform (Sick and Disabled People)

Alan Reid Excerpts

Thursday 27th February 2014 Commons Chamber

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate the War on Welfare campaign on its petition and on securing this debate. I also congratulate the hon. Member for Hayes and Harlington (John McDonnell) on introducing it today. Although I have not supported every detail of the Government’s welfare reform, I certainly support the overall thrust of what they are doing. Under Labour, the welfare budget had spiralled out of control and become unsustainable. Liberal Democrats in government are building a stronger economy and a fairer society so that everyone can get on in life. We are fully committed to enabling people with disabilities to have the same opportunities and choices in life as everyone else. It is important to note that disabled people are moving into jobs at the rate of more than 100 placements every working day.

[Liz Kendall]

Why does the hon. Gentleman support the bedroom tax, which has affected 2,300 people in Leicester? The council has overspent the discretionary fund by £100,000 this year because there has been such demand for it, and it had to increase it from £212,000 last year to £813,000 this year because of a tax that he supported. Why does he support it?

[Mr Reid]

The hon. Lady’s question is based on the wrong premise. I actually voted against the bedroom tax. As I said in my introduction, I did not support every detail of the Government’s proposals.

It is interesting to note all the opposition from Labour Members to everything the Government are doing. I look forward to hearing what the Opposition spokesperson says about this later, because I understand that Labour do not propose to spend any more on welfare payments than the Government are doing. It will therefore be interesting to hear what the official Labour line is, as opposed to all the complaints that we are hearing from its Back Benchers.

As well as tackling the economic mess that Labour left behind, Liberal Democrats in government have blocked the excesses that a Conservative-only Government would have implemented. For example, we prevented the Conservatives from freezing disability benefits. Instead, they are going up by 2.7% this year. Assessment of applications for disability benefits is an integral part of welfare reform, and this Government have improved on the system left behind by Labour. Thanks to Liberal Democrat amendments to Labour’s Welfare Reform Act 2007, the Government are required to conduct five annual independent reviews of the work capability assessment. In government, we are now acting on those reviews to improve the system. Professor Harrington completed the first three reviews, and found that our efforts to improve the WCA were making a difference.

[Sheila Gilmore]

For the purposes of putting the record straight, the requirement for independent assessments of employment and support allowance was in the original legislation, pre-2010.

[Mr Reid]

I did not catch the year that the hon. Lady mentioned. The WCA was introduced by the Labour Government, and this Government have improved on it.

Following Professor Harrington’s reviews, the Government gave Department for Work and Pensions decision makers more flexibility to request additional evidence, such as a letter from an applicant’s consultant. The fourth independent review was completed in December 2013 by Dr Litchfield. He found that the DWP had made good progress on implementing recommendations from the previous reviews, which have made notable improvements. However, despite all the improvements to the system, and having a system that looks fine in theory, we all know from our constituency work that, in practice, Atos has failed miserably to carry out the assessment contract. Appeals have been upheld for 40% of the original decisions. That shows that there is something wrong with the initial assessments and that more improvements to the assessment system must be made.

We are all aware from our constituency case load of people waiting for many months for their assessment to be carried out. That applies to assessments for personal independence payments as well as for work capability assessments. The limit for PIP assessments is supposed to be 30 working days, but Atos is clearly failing miserably to meet that target. I was contacted recently by the Bute Advice Centre in my constituency. It pointed out that it, and the client, have three weeks from the initial phone call in which to complete and return the application form. The centre and the client have met the deadline on every occasion, but then the long wait begins. One client who has been waiting since 2 July 2013 has heard nothing from Atos. Two other clients on Bute have been waiting since early October. The advice centre tells me that phone calls to the Department for Work and Pensions get a helpful response, but the DWP puts the blame on Atos, and from Atos there is complete silence. That is utterly unacceptable.

Another constituent has e-mailed me to say that her current employment and support allowance claim started last May and she submitted her medical questionnaire in July. After many months of waiting, she was eventually told by Atos that her work capability assessment would be conducted two days after her contribution-based ESA ends if she is placed in the work-related activity group. Such delays make complete nonsense of the system.

It is true that any benefit awarded will be backdated but, as my constituent points out, a claimant may have been eligible for the support group at the time of their application. If their health improves over the year, they may be placed in the work-related activity group backdated to the time of their application, yet if the assessment had been conducted quickly, they may have been placed in the support group. If the person has savings, their ESA will stop after a year, and that may well be before it has even started to be paid. That just makes nonsense of the system.

The long delays are very unfair to claimants, putting them under increased financial pressure and stress. Their suitability for work could be wrongly assessed as the assessment is completed such a long time after the application was made.

As I have said, the system looks fine in theory, and the Government have made improvements, but Atos has clearly completely failed. As we all know, it has announced that it wants to throw in the towel. The Government must get the mess created by Atos’s abject failure sorted out as a matter of urgency, appoint a company that can do the job properly and get the backlog cleared as quickly as possible. People applying for disability benefits deserve their application to be assessed speedily and accurately.

[Simon Danczuk (Rochdale) (Lab)]

Does the hon. Gentleman take any responsibility for the Government whom he supports?

[Mr Reid]

The hon. Gentleman should remember that Atos was appointed by the Labour Government. It was an appalling decision by the previous Labour Government, and this Government inherited the contract.

I support most of the Government’s welfare reforms. They are fine in theory, but in practice, there is a huge number of problems. Atos has failed completely. The Government must get the mess sorted out urgently, and I hope that the Minister will be able to reassure us on that point today.

--- Later in debate ---

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I, too, congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell), my hon. Friend the Member for Easington (Grahame M. Morris) and all those responsible for securing this debate, which deals with the concerns of real people out there in the real world. I should clarify, for the benefit of the Opposition Whip—his knuckles are about to explode in anticipation—that I intend to join my hon. Friends in the Lobby this afternoon.

Life experiences and events change and influence our lives. I want to talk about two events in my life that influenced my political thinking significantly. The first was being unemployed for three years, through no fault of my own, simply because I had been blacklisted as a result of my trade union activities. I was not a shirker, because I wanted to work and support my young family, but I could not get employment.

The second experience was talking with a former Remploy worker who was about to lose his job. I remember him telling me that he was fit to work but that his face was so badly disfigured that he could not go out in public without getting a terrible reaction. I remember him saying, “Mr Sheridan, where can I work? Where can I go? If I get on a bus, people will get off. If I go into a restaurant, people will walk out. So where do I go?” The only enjoyment that man had was going out in his disabled person’s car to get some privacy. That was taken away from him. This is about treating people with respect and dignity. The people who conduct the Atos assessments do not take those things into consideration.

When I was unemployed and trying to look after my young family, I was not a shirker, as some Conservative Members might have portrayed me. This debate shows how putting workers against the unemployed and public against private is a sinister but typical policy of the coalition Government.

[Mr Reid]

The hon. Gentleman will recall that it was a former shadow spokesperson from his party who used the word “shirker.”

[Jim Sheridan]

Well, whoever said it, I was certainly not a shirker, because I was desperate for work but could not get it.

I look at the Minister and must say that—I sincerely hope this will not damage his career, or indeed my reputation—as Conservatives go, he is quite a decent man. I hazard a guess—it is no more than that—that he would not mind being shifted to another portfolio. Those on benefits are demonised, and no consideration is given to the circumstances behind why they are claiming. There are some in this place and in the popular press who are obsessed with demonising people on welfare or disability benefits, which I think is unfortunate.

--- Later in debate ---

[Kate Green]

It is so often the way that organisations which have a specialised knowledge and understanding of the labour market barriers that confront disabled people, and can identify with those people, are themselves shut out and deprived of the opportunity to set up post-Remploy work settings or provide support through the Work programme.

Damaging changes in the benefits system have also had a devastating effect. As was pointed out by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), that applies both to cuts in benefits provided specifically for disabled people and to other cuts that affect them disproportionately. Employment and support allowance is in trouble—decisions are taking longer—and problems with the work capability assessment persist. About one in 10 decisions are appealed against successfully. The hon. Member for Meon Valley (George Hollingbery), who is no longer in the Chamber, appeared to think that the fact that people could appeal was a sign of the success of the system, but surely it would be better to get the decisions right in the first place.

It is clear that Atos cannot cope. I know that the Minister will say that Labour made the contract, but four years and four independent reviews later—independent reviews which, I should tell the hon. Member for Argyll and Bute (Mr Reid), are required under Labour’s legislation—things are going from bad to worse.

[Mr Reid]

Will the hon. Lady give way?

[Kate Green]

No I will not.

The Minister has, of course, been commendably frank about his plans to replace Atos with other providers—that was called for initially by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne)—but we need root-and-branch re-purposing and reform of the work capability assessment, as well as improvements in the process. Those improvements should include systemising the collection of evidence in all cases, including evidence from GPs and other clinicians, providing suitable, accessible settings for assessments, and ensuring that recordings of interviews are always available to claimants.

Pensions and Benefits Uprating

Alan Reid Excerpts

Tuesday 25th February 2014 Commons Chamber

[Stephen Timms]

I think the hon. Gentleman is referring to the change made by Mrs Thatcher when she was Prime Minister, and he makes an entirely fair point. However, the point I am putting to him is that he and his party, particularly the Minister, frequently present the triple lock to us as somehow being extraordinarily generous, whereas in practice it has provided less than the formula he has just criticised—the one introduced by the former Conservative Prime Minister. If that formula had continued after the 2010 general election, the state pension amount we would be debating today would be more than £1 a week more than the figure in this order.

[Mr Alan Reid (Argyll and Bute) (LD)]

The right hon. Gentleman will accept that the formula introduced by Mrs Thatcher was continued throughout the whole term of the previous Labour Government. As the economy is recovering, thanks to the coalition’s successful economic policies, will he not accept that linking pensions to earnings will mean higher pensions for people in the long run?

[Stephen Timms]

I certainly hope that that is the case, but in the short run, in the period since the general election, we are seeing a lower value for the basic state pension than if Mrs Thatcher’s formula had stayed in place. That point is not widely understood. I am sure that the hon. Gentleman understands it, but I want to put it on the record so that people are aware of the fact that the method that is currently in place has in fact delivered a lower value for the basic state pension than if Mrs Thatcher’s formula had continued to be used.

[Mr Reid]

Had the right hon. Gentleman’s party been in power, would the pension increases over the past three years have been at CPI or RPI?

[Stephen Timms]

If the arrangements in place before the last election had been maintained, the increases would have been at RPI. If they had been at RPI, we would be debating today a higher value for the basic state pension than the one in the order in front of us.

--- Later in debate ---

[Stephen Timms]

Sadly, I am not in the happy position that the Minister describes. I hope that I will be before very long, in which case I will gladly give him the answer that he seeks. However, I am not in that position today.

[Mr Reid]

If the right hon. Gentleman hopes to be in power some time in the future, will he tell us the formula that he would use for the long term?

[Stephen Timms]

I can well understand why the hon. Gentleman wants to know the answer to that question. If, as we have heard, he and his party are to be involved in the next Government, it will be in coalition with a party other than the one that they are in coalition with at the moment. I am afraid that he will have to be a little patient to get an answer to his question. None the less, I well understand why he wants to know the answer.

The Chancellor proudly told us in his autumn statement last year that the increase formula for regulated train fares was changing from RPI plus 1% to RPI plus 0%, which means that regulated rail fares would increase by no more than July 2013’s RPI of 3.1% . What is not clear is why the Government apply RPI in that case and CPI in this. The answer, as far as one can make sense of all this, is that the Government use CPI when it is useful to have a small number and RPI when they want a big number. That appears to be the principle that has been adopted. The result is that pensioners will see their state pension increased in line with CPI, but their train fares by RPI.

Part 7 of the order in front of us relates to universal credit. As the House well knows, this is becoming an appalling fiasco. The Secretary of State told us yesterday that he expected 6,000 people to be in receipt of universal credit during the current pathfinder. It was not clear by what date he expected that figure to be achieved. Will the Minister let us know? He will recall that I have been warning since November 2010 that the time scale announced by Ministers for universal credit was unachievable. Unfortunately I have been proved right. Indeed, the position is now a good deal worse than I feared when I wrote to the Secretary of State in November 2010. There is now a real danger that the entire project could collapse.

As I pointed out at the time, the time scale for the IT was always unachievable. That goes back to the July 2010 Green Paper, which included the absurd claim that the IT for universal credit would not amount to a major IT system. Replacing the whole of the benefit information technology can hardly amount to anything other than a major IT system. Ministers have failed to deliver any IT system. It now appears that, while they continue to develop late the IT system they started out with, they are also going to develop a second universal credit IT system, in the hope that they can get it right second time around. Goodness knows how many hundreds of millions of pounds that is going to end up costing. It is clear that the next Government will have a major job on their hands to salvage universal credit after May next year if, as all of us must hope, it can be salvaged.

--- Later in debate ---

[Katy Clark]

Obviously the Minister is aware that the range of factors taken into account has been smaller every year since the change was brought in. I oppose the orders not necessarily because they do or do not include housing costs—I understand the point he makes; he has made it before and we have debated it previously—but because the method does not reflect the real cost of living that people who rely on these benefits experience.

Every year since 2010 RPI has been higher than CPI and the gap between those figures has made a real difference to pensions and benefits. The danger with the change is the cumulative impact over many years. In 2010 the RPI figure was 4.6%. That went up to 5.6% in 2011, down to 2.6% in 2012, and was 3.2% last year. But the equivalent CPI figures were 3.1%, 5.2%, 2.2% and 2.7%. Every year there has been a gap, which has meant that some of the poorest and most vulnerable in our society have ended up with less money in their pocket.

The Prime Minister has made much of his decision to introduce a triple lock guarantee for the basic state pension. He has already pledged to retain it throughout the next Parliament should he have any success at the next general election. The guarantee ensures that the basic state pension will always rise in line with whatever is the greatest as between inflation, wages or 2.5%. The uncomfortable truth, however, as the Minister must accept, is that the triple lock was introduced alongside the change from RPI to CPI, so the basic state pension increases in 2012 and 2013 were lower than they would have been if the previous system had been used. By 2015, the basic state pension will therefore be £1.11 a week lower than it would have been if it had risen in line with RPI, so pensioners will be £106.60 worse off as a result.

That is how just one group is affected. If we look at other groups, such as carers, the situation is even worse. Next year, carer’s allowance will be £1.69 per week lower than it would have been under RPI, with carers £255.84 worse off by April 2015 as a result. Those receiving both the higher rate mobility and care components of disability living allowance will be £571.48 worse off by the same date.

[Mr Reid]

Does the hon. Lady accept that, with the triple lock, pensioners will benefit from an economic recovery by their pension going up in line with earnings, whereas when the economy was doing well in the early years of the Labour Government, pensioners did not share in the increased benefits, because their pension only went up in line with inflation and not in line with earnings?

[Katy Clark]

As the hon. Gentleman will appreciate, I am focusing on the change from RPI to CPI. He will be aware that in the last Parliament I strongly advocated a return to the link with earnings. However the reality, as he well knows, was that even though Labour did not reinstate that link, the increases every year were far higher than they would have been if that reinstatement had taken place. Therefore, I frankly did not understand why my Front Bench at the time would not make that change.

I support the return to the link with earnings, but as I have said, the point I am making is about the change from RPI to CPI, which I understand is a long-term policy of this Government. Some of the poorest people in the hon. Gentleman’s constituency and mine will experience a cumulative long-term reduction in their incomes as a result of that change.

From April 2013, the coalition slashed the annual uplifts to a range of benefits to 1%; I appreciate that that issue is being dealt with in other legislation. Some of the disability benefits, such as carer’s allowance and disability living allowance, are exempt from that 1% cap, but employment and support allowance, which is the primary income replacement benefit for disabled people, is not. The Government have exempted from the cap the higher rate care component paid to the most severely disabled people, supposedly shielding the vulnerable from it. Unfortunately, however, this is a sleight of hand. ESA is paid in two parts—a basic rate, plus an additional component—and although the additional component of £35.75 is exempt from the 1% cap, the basic rate of £72.40 is not. Therefore, over-25s in receipt of the care component of ESA will receive £5.11 a week less than they would have received if it had increased in line with RPI. These cuts matter, because they are having a real impact on some of the poorest and most vulnerable people in our society.

Between 1997 and 2010, the Labour Government reduced the percentage of people living in absolute poverty from 28% of the population to 15%. During that time, 2.3 million children and 2 million pensioners were lifted out of poverty. Research from the Institute for Fiscal Studies suggests that investment in the social security system was the primary factor behind that reduction in poverty. By slashing social security benefits with these orders and the other legislation that we have considered previously, the Government risk putting some of the most vulnerable people in society back below the poverty line, and that is on top of the large number of people whose incomes have already been cut as a direct result of this Government’s policy. These orders are completely inadequate and the Government should come forward with something that protects the most vulnerable in our society.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I do not intend to detain the House for too long. I begin by thanking my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) for a powerful speech. The final point that she made is an important one, and it is worth the House’s reflecting on it, because often when we discuss these kinds of issues there is a tendency to caricature the record of the last Labour Government, but anyone who looks closely at their changes to and improvements in social security will see a record of quite substantial progress. Of course, social progress often comes slowly; it is measured in inches as well as feet, and in centimetres as well as metres. However, there was significant social progress and that is part of the context within which this debate should be understood.

[Mr Reid]

The hon. Gentleman referred to enormous social progress, but why did the last Labour Government not increase pensions in line with earnings, as will now happen over the long term thanks to the triple lock?

[Gregg McClymont]

I am pleased that the hon. Gentleman made that point, because to some degree it illuminates the difference between him and Labour; because what he discounts entirely by asking that question is the impact of pension credit. I do not know how aware he is of pension credit, but it took 1.3 million pensioners out of poverty. Is that not something that he welcomes? It reduced pensioner poverty in Scotland by two thirds, taking 200,000 pensioners out of poverty.

[Mr Reid]

rose—

[Gregg McClymont]

I will give way to the hon. Gentleman again, but I hope he will recognise that achievement.

[Mr Reid]

The defect of the pension credit arrangements, when compared with the new pension arrangements that my hon. Friend the Minister has introduced, was that people had to apply for pension credit, and a lot of people were unaware that they had to do that, whereas under the new pension arrangements everyone will get the single-tier pension.

[Gregg McClymont]

I am afraid to say to the hon. Gentleman that, although I understand where he is coming from, it is not the case that everyone will receive the single-tier pension; people must have made contributions for 35 years. He should speak to his colleague, the Minister, who everyone recognises is an expert on the state pension. There will be poor pensioners who will not receive the new pension, and they will depend on pension credit.

I asked the hon. Member for Argyll and Bute (Mr Reid) to reflect on the reality of the difference that pension credit made, particularly in a period after 1997 when there was genuine absolute pensioner poverty.

Oral Answers to Questions

Alan Reid Excerpts

Monday 18th November 2013 Commons Chamber

[Mr Duncan Smith]

Mr Speaker, you are not only on time, but you are always on budget.

That was a lot of sound and fury from the hon. Gentleman, signifying absolutely nothing. The reality is, as I have said quite categorically and publicly, the report could be written because of the actions I took over a year ago to ensure that universal credit will roll out and deliver exactly as we said it would. The hon. Gentleman served for I do not know how many years in a Government who allowed all these other programmes to fail, but not one person will be adversely affected by the change we have made. Universal credit will deliver maximum benefits to the British public, and the Opposition will remain out of government, because they have not a single clue.

[Mr Alan Reid (Argyll and Bute) (LD)]

12. What plans he has to introduce the payment of pensions and benefits and begin accepting applications for universal credit through the Post Office.

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

I assure my hon. Friend that all Department for Work and Pensions benefits and entitlements, including universal credit, are normally paid by direct payment into a mainstream bank account, the vast majority of which can now be accessed over the counter at post office branches.

[Mr Reid]

Millions of people have chosen to collect their pensions and benefits at a post office through a Post Office card account, but the contract is due to expire in 16 months’ time. Will the Government end the uncertainty and announce that POCA will continue after April 2015 with, I hope, improved banking facilities?

[Steve Webb]

We are in active discussions with Post Office Ltd and our colleagues at the Department for Business, Innovation and Skills. Indeed, I am meeting ministerial colleagues later this afternoon to discuss that issue. I can assure my hon. Friend that I share his commitment to the post office network.

--- Later in debate ---

[Mr Duncan Smith]

The first answer is that the hon. Member for Rhondda should keep quiet for longer. The real answer to the question on PIP is that the hon. Lady is completely wrong. As with every other programme, we are controlling the roll-out to ensure that it meets all our needs. There is nothing for the hon. Lady to concern herself about. This is working and it will work all the way through next year, exactly as planned. The truth is that the hon. Lady raises these questions because she does not want to come back to last week’s failed Opposition day debate, when her argument was so powerful that 47 Labour Members—including the shadow Chancellor, who I gather is a “nightmare”—decided to abstain.

[Mr Alan Reid (Argyll and Bute) (LD)]

T4. Will the Government use the Post Office to allow people without internet access to submit applications for universal credit and to give help with the application? Post offices are in the heart of communities, and for many of my constituents, this would avoid a long journey to the nearest jobcentre.

[Mr Duncan Smith]

May I say to my hon. Friend that that is exactly what we want to do? We want to make sure that those claiming universal credit can claim it in a number of different places—for example, we are setting up the facility to claim in libraries, in local government offices and also in jobcentres. We will work and are working with post offices to ensure that if people need to make claims from them, particularly in very rural constituencies such as my hon. Friend’s, that facility will be made available as well.

Housing Benefit

Alan Reid Excerpts

Tuesday 12th November 2013 Commons Chamber

[Steve Webb]

I am grateful, Mr Deputy Speaker, but my hon. Friend raises an important point on the responsibility of social landlords to build housing stock to meet the needs of local people. For too long under the previous Government, that did not happen.

My hon. Friend made the point that some social landlords have worked the system. One or two hon. Members have shouted, “No, that cannot be the case,” but I want to refer to the oral evidence given by Fife council to the Scottish Affairs Committee. Fife council saw the arrangements as a nice little earner. Apropos of two-bedroom properties occupied by a single person, Fife council said:

“we have under-occupied them to maintain an income from them”.

It also stated that the

“progress that we had made in maintaining our income by allocating properties with perhaps a spare bedroom is under risk now.”

I do not apologise for that. The purpose of housing benefit is not to subsidise social landlords who are using the system; it is to help people who are in need.

[Mr Alan Reid (Argyll and Bute) (LD)]

The extra money that the Government have given to sparsely populated councils for discretionary housing payments has been welcome. It has helped Argyll and Bute in particular and other sparsely populated councils. Can my hon. Friend give me reassurances that it will continue in future years?

[Steve Webb]

My hon. Friend has been a doughty campaigner for his rural constituency. I cannot commit the Government to a further £5 million—that is the amount allocated this year for remote rural areas—but I am aware that the Chief Secretary to the Treasury tends to be quite sensitive to the needs of remote Scottish constituencies.

Let me address the amendment, because the shadow Secretary of State did not mention the state of the nation’s finances—she used to be an economist, so I am surprised she did not mention the subject. The context of the debate is a deficit in 2009-10 in excess of £150 billion a year. The previous Government were spending £4 for every £3 they raised in taxes—that was not investment for the long term, but borrowing money to pay today’s bills. There is nothing progressive or fair about asking our children to pay the costs of current spending to benefit ourselves. That is why the context needed to be addressed.

Housing Benefit (Under-occupancy Penalty)

Alan Reid Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

My hon. Friend makes the most fundamental point in the debate. I am pleased that so many Scottish MPs are in the Chamber to contribute to the debate, but 82% of Scottish MPs did not vote for the measure, and we should stand in resolute opposition to it.

[Mr Alan Reid (Argyll and Bute) (LD)]

Will the hon. Lady give way?

[Dr Whiteford]

I am delighted to give way to one of the small minority of Scottish MPs who did vote for—

[Mr Reid]

Yes, the hon. Lady is correct. I did vote against the measure. She makes an eloquent speech, but I am puzzled by one thing. Why was she unable to persuade half of Scottish National party Members, including her party leader, to turn up on a Wednesday afternoon to vote against the measure?

[Dr Whiteford]

The hon. Gentleman makes a really spurious point. Given the impact that the measure will have on his constituents, he would be better sticking to the real issue, which is the fact that the measure will not work and will harm people across Scotland.

--- Later in debate ---

[Angus Robertson (Moray) (SNP)]

The hon. Member for Argyll and Bute (Mr Reid) voted for the measure.

[Mr Reid]

On a point of order, Mr Speaker.

[Mr Speaker]

Order. I hope this is a point of order and not a point of frustration.

[Mr Reid]

The hon. Member for Moray (Angus Robertson) shouted across the Chamber that I voted for the regulations. Is it in order for me to put the record straight? I voted against the regulations, unlike him—he did not turn up.

[Mr Speaker]

Whether putting the record straight is in order or not, the hon. Gentleman has just done it.

--- Later in debate ---

[Steve Webb]

Jolly good. That was helpful. We cannot research the impact of a policy that has not happened. We are implementing a change that is designed to save £500 million a year, and we have heard nothing about where others would find that money from. We have said that, as the policy is implemented, we will research and look into its implementation, because there are things that we can change as we go along, one of which is the allocation of discretionary housing payments.

[Mr Reid]

I believe that the policy could be made to work if people were offered smaller alternative accommodation before a penalty was imposed. As my hon. Friend knows, however, the nearest alternative for people living on the islands in my constituency could be on the mainland, and it could be 20 or 30 miles away for people living in the remote villages in Argyll. Will he look at the formula for allocating discretionary housing payments to councils, so that those in the highlands and islands could add in the rural factor and get more funding owing to the problems of the remoteness and the islands?

[Steve Webb]

My hon. Friend is very welcome to join the conversation between my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and me, which I am looking forward to. He raises an important point. My hon. Friends have credibility in this argument because they have been willing to take difficult decisions on public spending, whereas Labour has just said no to everything, disowning its responsibility for the deficit and any willingness to say where the money would come from.

Pensions and Social Security

Alan Reid Excerpts

Wednesday 13th February 2013 Commons Chamber

[Steve Webb]

The guaranteed minimum pensions order is a routine and technical order which provides for contracted-out defined benefits schemes to increase their members’ GMPs that accrued between 1988 and 1997 by 2.2%, in line with inflation. I assume that this will be uncontentious. The order paired with this is the Social Security Benefits Up-rating Order 2013.

I shall begin with the basic state pension. Despite the tough fiscal context, the Government remain committed to protecting those who have worked hard all their lives, which is why we have stood by our triple lock commitment to uprate the basic state pension by the highest of earnings, prices or 2.5%. This year the third element of our triple lock comes into play for the first time—our 2.5% minimum commitment. That means that we shall be increasing the basic state pension by more than inflation for millions of pensioners.

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate my hon. Friend on the work he has done as pensions Minister to drive through the triple lock, which means that pensioners will get an above-inflation increase this year. The days of 75p increases, which happened under the previous Government, are long gone.

[Steve Webb]

I am grateful to my hon. Friend for pointing that out. He will know that we have set a minimum increase of 2.5%, which is what we are having this year. Under that policy, it would now be impossible for us ever to go back to the days of 75p increases.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

I thank the Minister for his explanation of the measures, albeit that it was brief. He reminded us, correctly, that this is the third year since the announcement of the triple lock for the basic state pension. There is absolutely no doubt that the triple lock has been a great success as a rhetorical device. The term has entered the lexicon, and I note that the Minister’s right hon. Friend the Secretary of State for Culture, Media and Sport has gone one better and announced a quadruple lock for the Bill that she recently placed before the House.

While in rhetorical terms the triple lock has undoubtedly been successful, I am afraid that the reality has been rather different, because once again the increase in the state pension is less this year than it would have been if the uprating method previously used was still in place. In retail prices index terms, for the second year this is a real-terms cut in the value of the basic state pension, as well as—I made this point earlier—a real-terms cut in today’s consumer prices index rate.

[Mr Reid]

Will the right hon. Gentleman clarify what his party’s current policy is on uprating? Should it be CPI or RPI?

[Stephen Timms]

We have made it plain, in all the three uprating debates since the election, that in our view there would have been a case for a temporary move from RPI to CPI uprating, as a contribution to reducing the deficit. Unfortunately, the Government decided that this should not be a temporary move, but a permanent move—or so we thought. Now it turns out that they are not even uprating in line with CPI for a large part of the benefits, but the position is the one that I have set out.

--- Later in debate ---

[Stephen Timms]

The hon. Gentleman is absolutely right, but what was clear from that contributor was the despair at the prospect of a rise of only 70p a week. At a time when inflation is running at more than 2% and is likely to increase, according to the Bank of England inflation report published today, that is a very alarming prospect indeed.

[Mr Reid]

The right hon. Gentleman is being generous in taking interventions. I have been sitting listening and wondering what the Labour party’s policy is. If my memory is correct, he said earlier that CPI was currently 2.7%. Will he tell the House by how much all these benefits would have been increased if a Labour Government were in power?

[Stephen Timms]

I answered that point earlier. I was hoping the hon. Gentleman was going to tell us why, after he attacked us a few moments ago for the 75p pension rise of many years ago, he is this evening supporting a 70p increase for people such as those who are dependent on employment and support allowance in the work-related activity group. If he explained the conflict between the two positions he has taken, I would be very grateful to him.

[Mr Reid]

I am sure the right hon. Gentleman will recall that I spoke in debate in support of an amendment to the Welfare Benefits Up-rating Bill to increase benefits in line with average earnings, and that is still my view. As he knows, the order is not amendable, so either we vote for the whole thing, including the triple lock for pensioners, or we vote against it, but my views are on the record.

[Stephen Timms]

I am grateful to the hon. Gentleman for clarifying that he opposes what the Government are doing in this order.

I was talking about the impact on child poverty. We are expecting the revised projections from the Institute for Fiscal Studies ahead of the Budget. On the basis of the numbers that Ministers have reluctantly given us for the impact of this measure on child poverty, we will see a projected increase in child poverty of more than 500,000 by the expected date of the next election and 1 million by 2010. That is a shameful record indeed, undoing so many years of progress made in reducing child poverty by the previous Government, as my hon. Friend the Member for Walsall North (Mr Winnick) pointed out.

[Mr Reid]

I have put my views on the record, but the right hon. Gentleman has not answered the question I asked in my second intervention. What percentage increase does he think should be in the order this evening?

[Stephen Timms]

I will give the hon. Gentleman the answer I gave a few moments ago. We think there would have been a reasonable case for the Government to make a temporary change to the uprating methodology, from RPI—the previous methodology—to CPI, but unfortunately they did not do that. They came up with a proposal for a permanent change to the methodology, using CPI only, but now they are not even sticking to that and have reduced the figure further to 1%.

What if inflation rises sharply in the next few years? The Governor-designate of the Bank of England has suggested that there should be greater flexibility in the inflation target used by the Monetary Policy Committee. If inflation rises sharply, the consequences for working families—for strivers, struggling to get by at the moment and lumbered with a 1% rise hard-wired into law for next year and the following two years—do not bear thinking about. The Bank of England inflation report published today places a probability of 39% on inflation being over 3% before the end of this year. The fan chart shows possible figures of 5%. What would the consequences be for people who will see a 1% rise in their incomes for the next three years if inflation rose in that way?

Why are the Government doing this? Why have the siren voices won this year? It is because the Government’s economic policy has failed. Let us look at the three years covered by this order and the Welfare Benefits Up-rating Bill. Compare the spending on unemployment benefits over those three years, which was predicted in the Budget last year, with the spending predicted in the autumn statement, just a few months later. The forecast spending on unemployment benefits over those three years went up, just between the Budget and the autumn statement, by the same amount that this order and the Bill will save over those three years. That is what is happening—the Government are clawing back the increase in unemployment benefits resulting from the failure of their policies from those who receive those benefits.

--- Later in debate ---

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

There are two major issues at hand in these orders. The second order is uncontroversial, as the Minister explained at the outset, but inside the controversial order on social security benefits uprating are two issues in particular. First, there is the nature and extent of the uprating of pensioner incomes; and, secondly, there is the Government’s decision to cut in-work and out-of-work benefits. It would be better if those two things had been separated to allow for a proper debate on both, but the Government have taken the decision to place one inside the other.

The debate began with the Minister taking the Floor, and he was followed by my right hon. Friend the Member for East Ham (Stephen Timms), who forensically dissected the impact of the Government’s policy on hard-working families, strivers and the most vulnerable. Further contributions came from only one side of the House—the Opposition side. We heard from my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Edinburgh East (Sheila Gilmore), the hon. Member for Banff and Buchan (Dr Whiteford), and my hon. Friend the Member for Dumfries and Galloway (Mr Brown). All their contributions were characterised by an emphasis on and an interest in how the Government’s decision to cut in-work and out-of-work benefits will affect families—not only families in what we might call the squeezed middle but families who are looking for work. I will return to the issue of what we might call the strivers tax, but let me first deal with the nature and extent of the uprating of pensioner incomes.

We have heard much from the Minister about the triple lock. I do not know if he is aware, but the original triple lock was a handgun produced by Smith & Wesson in 1908. Like the Minister, it had such high hopes for its triple lock. It claimed it was the best gun it had ever made and yet, just eight years later, the triple lock was redundant: it was a triumph of rhetoric over reality. The same might be said of the Government’s triple lock. This is the third year it has been in operation, and we know that the increase in the state pension is less than it would have been if the uprating method used by the previous Government was still in place. My right hon. Friend the Member for East Ham eloquently dissected that aspect of the case.

It is worse than that, however. The triple lock this year has produced a real-terms cut in the value of the basic state pension. The Minister shakes his head, but listening to his exchange with my right hon. Friend, one could only feel that the Minister wants to have his proverbial cake and eat it. Last year, the Minister trumpeted that he had delivered the highest real-terms increase in the state pension for about 10 years. Having in all seriousness claimed that credit, it is difficult for him now to avoid the blame for the very same mechanism that is producing a real-terms cut in the state pension.

I took a look at the Minister’s website this evening, just to see whether there was any further evidence of his liking to have his cake and eat it. What did I find? The Minister is calling and campaigning for his local citizens advice bureau to be protected from council cuts. Earlier in the debate, however, he defended strongly the council tax freeze as an important contribution to improving family income. I will let the House make its mind up on this second case of having cake and eating it.

[Mr Reid]

The pension increase is higher than both the rate of inflation and the increase in earnings. The hon. Gentleman seems to disagree with the 2.5% figure that the Government are putting forward. Will he tell us what the percentage increase in the pension would be if Labour were in power?

[Gregg McClymont]

Is the hon. Gentleman aware that inflation is now 2.7%, and that the pension is to be uprated by 2.5%? I do not have my abacus with me—maybe the hon. Gentleman should have one—but that seems like a real-terms cut to me.

--- Later in debate ---

[Mr Reid]

I am grateful to the hon. Gentleman for being generous in giving way. He knows perfectly well that under the previous Government and under this Government the rate of inflation in the previous September is used to calculate the pension increase for the following year. That has not changed, and this pension increase is higher than the rate of inflation at the standard time at which it is calculated.

[Gregg McClymont]

As far as I could take from that further intervention, the hon. Gentleman still maintains that inflation is less than 2.5%, when in fact it is 2.7%. [Interruption.] The Minister makes a comment from a sedentary position. If he wants to intervene I will be happy to let him, but before he does so let me deal with the hon. Member for Argyll and Bute (Mr Reid). It is clear that CPI inflation is currently 2.7%. The basic state pension is to be uprated by 2.5%. Is that, or is that not, a real-terms cut? It obviously is. Would the hon. Gentleman like to intervene again?

[Mr Reid]

I still have not got the answer to the question I asked the right hon. Member for East Ham (Stephen Timms), and I am now asking the hon. Gentleman. If Labour was in power, what would the pension increase be?

[Gregg McClymont]

I am still waiting for the hon. Gentleman to confess that he was absolutely wrong to suggest that this is an above-inflation increase. That leads to some questions about the ability of the Liberal Democrats to devise economic and financial policy when they do not know the current rate of inflation and how it relates to the basic state pension.

Welfare Benefits Up-rating Bill

Alan Reid Excerpts

Monday 21st January 2013 Commons Chamber

[Andrew George]

The hon. Gentleman is right that it is for two years—it is from 2014 to 2016, which is beyond the next general election.

[Mr Alan Reid (Argyll and Bute) (LD)]

The Bill covers only two years, but the Government have already announced in the autumn statement their intention to introduce a statutory instrument so that the 1% also applies next year, so it will cover three years in total.

[Andrew George]

The combined effect of both the statutory instrument and the Bill will, indeed, be for three years. I have no clairvoyant skills whatsoever and would never follow my forecasts on the future of the economy or prices, but the Bill is asking us to forecast what is likely to happen, particularly in relation to prices. In the context of food price volatility, which we know takes place, and of tremendous uncertainty in the energy market and, indeed, other markets, we are being asked to predict what the circumstances are likely to be in 2016, beyond the next general election.

In his opening remarks, the hon. Member for Gateshead (Ian Mearns) said that large swathes of people are out of work in some parts of the country and in work in other parts. There are also many places, including my own in west Cornwall and the Isles of Scilly, where a lot of people spend their lives going in and out of work because of the seasonality of the area’s economy. Not only are such people moving in and out of work—not of their own choice, but because of their circumstances—but there is also a plethora of zero-hours contracts and of people who exist on the basis of putting together part-time work.

I congratulate the Government on their achievement in rolling out apprenticeships, but the fact is that those apprentices are being paid £2.65 an hour for their apprenticeship and have to do bar work, waitressing and other work at the weekend in order to get themselves up to a living wage. An apprenticeship offers a good opportunity, but we have to acknowledge that, among working people and those who are moving in and out of wages, there is a class or group who are, in effect, on the very margins of survival. They will be significantly affected by the proposal to peg benefits at 1%. Some argue that the Bill is about ensuring that we make work pay and that clause 1 is entirely about out-of-work benefits, but the fact is that a significant number of people—many thousands—who are in work or, indeed, in and out of work will be affected by it. That is the most difficult position.

--- Later in debate ---

[Helen Goodman]

Yes, but the hon. Gentleman knows that his own impact assessment demonstrates that the Government’s claim that they would protect all people with disabilities is not accurate. I am disappointed that he did not answer my question about child poverty. I do not know whether that is because he does not know the answer or because he is ashamed of it. Perhaps he can explain when he winds up the debate.

[Mr Reid]

I want to speak in support of amendment 10, to which I am a signatory. It is important to set the debate in context. In 2010, the Government inherited an economic mess from the previous Government, including a huge budget deficit, which is why difficult decisions have to be taken. It is important to remind the Committee that just before the previous Government left office, for every £3 they raised, they were spending £4, so borrowing was going up and up. It was interesting to listen to the opening remarks of the right hon. Member for East Ham (Stephen Timms). There was a lot of sound and fury, but little actual policy. In fact, Labour’s amendment would replace the 1% in the Bill with a blank space. Labour does not seem to have any policy at all. His remarks seemed to indicate that the policy, whatever it is, would cost a lot. I think that Labour’s policy of borrow and spend is still in place.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the hon. Gentleman give way?

[Mr Reid]

I am happy to give way to any Labour Member who can tell me what their policy actually is.

[Sheila Gilmore]

I ask the hon. Gentleman to consider, in terms of what is or is not happening, that this measure is not part of what the Government came into office to do. This measure has been made necessary because they have not managed to reach the position they had anticipated they would reach, and that is because their policies have failed. Had they reached the position they had anticipated reaching, these further reductions in benefits would not be necessary.

--- Later in debate ---

[Mr Reid]

Well, we did not hear any policy from the hon. Lady. I can only assume that she still follows the previous Government’s borrow-and-spend policies.

I support amendment 10, rather than the Labour party’s “empty space” policy. Amendment 10 would have benefits increase in line with the increase in average earnings.

The tax increases under this Government have quite rightly fallen most heavily on those with high incomes, who are paying a far higher proportion of their income in tax than under the previous Government—let us take, for example, the increase in capital gains tax. If there were a Liberal Democrat Government and not a coalition Government, the well-off would be paying far more tax—a mansion tax, for example. The Government have also helped people in low-paid jobs by increasing the personal allowance, which I hope will be raised to £10,000 before the end of this Parliament. The work done by the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on universal credit will also help people on low incomes. Pensioners have also been protected from the cuts, because of the triple-lock guarantee, and my hon. Friend is introducing the new single-tier pension—another major achievement.

The group of people we are discussing this evening, whose incomes would be cut by clause 1, are those in receipt of working-age benefits, but not disability benefits. Coalition is all about negotiations and reaching compromises. It is important to note what would be happening to welfare benefits if we had a Conservative Government and not a coalition. We know from statements in the public domain that a Conservative Government would propose a benefits freeze, not a 1% increase, and that the cuts would apply to all benefits, not just those listed this evening. Such a freeze would last for several years—not just three years, as under the coalition Government’s policy—and child benefit would be awarded only for the first two children in the household. These are all policies that a Conservative Government would introduce, but which the coalition is not. We also know, as was made evident earlier—certainly from the cheers on the Conservative Benches behind me—that a Conservative Government would reduce the top rate of tax to 40%, not leave it at 45%. Liberal Democrats in government have achieved a great deal in lessening the impact on welfare benefits uprating, compared with a purely Conservative Government.

However, my main concern about the measures in the Bill—this echoes concerns raised by the right hon. Member for Wokingham (Mr Redwood) and others who have spoken—is that committing the country to a 1% increase for three years now, before we know what inflation will be when the increase comes into effect, could end up being harmful to people on low incomes, because we have absolutely no idea how much world fuel and food prices will rise in those three years. I recognise the strength of the argument that benefits for people out of work should not rise at a higher rate than the earnings of those in work, which is why amendment 10 proposes to increase such benefits by the same percentage as the rise in average earnings over the previous year. Amendment 10 would be a fair compromise between the need to cut the deficit and the need to provide a safety net for those dependent on welfare benefits.

There has been a lot of talk about scroungers and curtains being drawn. I entirely reject such rhetoric. It is important to note that strong sanctions are available for those receiving jobseeker’s allowance. For example, people can lose their jobseeker’s allowance for up to three years if they do not apply for a job that their adviser tells them about, do not accept a suitable job offer, leave a job voluntarily, lose their job because of misconduct or do not take part in a compulsory Work programme. Therefore, sanctions are indeed available.

I represent a very rural constituency. It is important to point out that prices on islands or remote parts of the mainland are higher than in most of the rest of the country, and that people on jobseeker’s allowance in remote areas who are finding it difficult to get a job in the area in which they live are on very low incomes. We should not commit ourselves to only a 1% increase for the next three years, because we do not know what will happen to prices during that time.

[Mr Marcus Jones]

Would my hon. Friend acknowledge that if we had applied the logic that he is now advocating over the last five or six years and pegged benefits to wage rate inflation, the people he is talking about—the people he is trying to help—would be far worse off?

[Mr Reid]

A lot depends on where we start. If we are talking about rises matching prices or wages, it all depends on the starting point—if we pick a different starting point, we get a different result.

I was talking about the next three years. We know what the rise in average earnings was last year, so obviously we know what the rise in benefits would be in 2013-14. We do not know what it would be in 2014-15 or 2015-16, but setting the increase to the rise in average earnings, rather than a fixed rate of 1%, would mean that as the economy gradually grew, the level of growth in the economy would be paid to those on benefits, as well as those in work. That is a better approach than having a fixed rate of 1% for three years.

No Government have control over world food and energy prices. At Prime Minister’s questions last week I raised this potential problem when I asked the Prime Minister what contingency plans the Government had for benefit increases, should food and energy prices rise by more than expected. He answered by pointing to the good work being done by my right hon. Friend the Secretary of State for Energy and Climate Change to ensure that energy companies put people on the lowest available tariffs. That will indeed be a big help to people on low incomes, but if energy prices rise by more than expected, the lowest tariff will rise by more than expected too. After I heard the Prime Minister’s answer, I am afraid that I was left to form the conclusion that the Government have no contingency plans for a scenario in which prices rise by more than expected. I hope that when my hon. Friend the Minister replies to this debate, he will be able to reassure me on that point. I hope there is a plan B, in case world prices go up by more than expected.

Setting future increases to the increase in average earnings would address the legitimate argument that out-of-work benefits should not rise faster than earnings and would help to cut the deficit. For example, if the CPI figure were used for 2013-14, benefits would increase by 2.2%. If average earnings were used, they would increase by 1.6%, saving half the amount that a 1% increase would save. It is also important to point out that cutting public spending on its own will not eliminate the deficit. We need to grow the economy as well. All the economic research indicates that money put into the pockets of people on low incomes is far more likely to be spent straight away than it would be by those on higher incomes. Not increasing welfare benefits by the rate of inflation will have an impact on shops and other businesses, as well as the recipients themselves.

To sum up, linking benefit increases to average earnings is much fairer all round and avoids committing ourselves to a fixed figure unnecessarily far in advance. I hope that the Committee will support amendment 10, and I hope that you will allow it to be put to a vote, Mr Amess.

[Mr William Bain]

This evening’s debate on clause 1 and amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms), is important because it speaks to more than the £13 billion increase in the welfare budget caused by this Government’s failure on growth since 2010 or even the chronic lack of jobs, in a still depressed economy, faced by so many hundreds of thousands of people in our country. This debate speaks to the very values of our society.

Are we a country that is content to divide socially instead of coming together—jobless and workers, low-paid and middle earners—to defeat again the social evils of worklessness, low pay, slumping living standards and poverty? Are we a country that is content to see the doubling of food banks under this Government since May 2010, as 1.4 million people in work find themselves needing to resort to credit to help to pay the rent or the mortgage each month? Are we a country that will fall for the cynical “divide and rule” tactics of the Chancellor, which treat people as pawns in a squalid political game, amid a campaign of demonising the poor and turning neighbour against neighbour, when a responsible Government would seek to unite people rather than divide the country? This clause is rotten economics, ruinous for weak economic demand up and down the country and rank politics, from a Government who can relaunch as many times as they like, but who will never rediscover any sense of moral purpose while they engage in this basest of agendas of social division.