Oral Answers to Questions
Alun Cairns Excerpts(1 year, 7 months ago)
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Tom Pursglove
We take those matters incredibly seriously, which is why we have internal process reviews in the Department to look at them. We have serious case panels constituted by senior leaders from within the Department, and the independent case examiner, for example. Where there are issues and learning that must be taken on board, that must always happen. This is structured through that. We will look very carefully and closely at the Select Committee report, and we will, of course, respond appropriately in the normal way. The hon. Gentleman can be absolutely assured that these processes must always be looked at carefully, and that any learning is taken on board and acted on.
Alun Cairns (Vale of Glamorgan) (Con)
Guy Opperman
The apprenticeship levy has been a fantastic success, but as Employment Minister, I am conscious that there is widespread concern among small and medium-sized enterprises, particularly smaller businesses, that there should be greater flexibility going forward, building on what we are already doing. I am very happy to meet my right hon. Friend and Ministers in the Departments that control the policy to discuss any improvements.
Oral Answers to Questions
Alun Cairns Excerpts(10 years, 7 months ago)
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Nick de Bois (Enfield North) (Con)
8. What assessment he has made of recent trends in employment figures.
Alun Cairns (Vale of Glamorgan) (Con)
16. What assessment he has made of recent trends in employment figures.
The Minister of State, Department for Work and Pensions (Esther McVey)
We have record numbers of people in work, and the numbers are rising. Youth unemployment has fallen for six consecutive months. There are record rates of women in work and increasing numbers of people setting up in business. We are most definitely seeing a new enterprise generation.
Esther McVey
My hon. Friend makes a good point. The new enterprise allowance has been a huge success. The latest figures, which came out last week, show that 40,000 people have set up businesses in that way. It is now running at 2,000 new businesses a month. That is because we support those businesses financially, but it is also because we support them with strong mentoring. Equally, at the very beginning, they must have a good business plan. New enterprise allowances are here, and they are staying.
Alun Cairns
Unemployment in the Vale of Glamorgan has dropped by more than 27% since the general election. Does that not demonstrate that UK employment growth is happening in all nations and regions? We should be celebrating the fact that the economy is growing outside London and the south-east as well as growing in that region.
Esther McVey
I totally agree with my hon. Friend. He is right. As I have said, new enterprise generation stretches across the UK. Long-term youth unemployment in his constituency is down by 28%. I hope it will go down a little bit more and reach the national average—youth unemployment is down by 32% nationally—but a lot of good things are going on across the country.
Food Banks
Alun Cairns Excerpts(10 years, 11 months ago)
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Maria Eagle
That is shocking. I hope that right hon. and hon. Members on both sides of the House will appreciate that I want to leave the longest possible time for them to be able to highlight such experiences in this debate, so I will not take further interventions.
Although the rise of food banks is not something that anyone can be proud of, the huge volunteering effort to keep them going is something we should be very proud of. Communities are coming together in outrage and in sorrow at the growing poverty and hardship they see around them. Whether they are organised by churches, voluntary organisations or individuals, people have refused to stand by and watch their neighbours go without food. More than 30,000 volunteers are now giving their time. Others have donated, including more than 3,400 tonnes of food last year.
The rise of reliance on food banks has angered people around the country. That is why more than 141,000 people have signed the Daily Mirror petition demanding this debate—a debate the Government could have held in their own parliamentary time, but chose not to.
Let us be clear about who is now relying on food aid in this country. Although in the past it may well have been those who were homeless, or at least those without an income, that is increasingly not the case. In fact, just 4% of people turn to food banks due to homelessness, while 19% of referrals have been as a result of the Government’s changes to welfare and more than a third are down to the incompetence that has led to delays in payments to which people are legitimately entitled.
Maria Eagle
No, I will not give way.
Let us just take the weekly shop. It is the essentials that have gone up in price the most—food required for a balanced diet. Fruit: up 11.3%. Vegetables: up 6.9%. Meat: up 5.2%. Bread and cereals: up 4.3%—all up by more than inflation. We know from DEFRA’s own annual family food statistics, published last week, that families on the lowest incomes spent 22% more on food in 2012 than five years ago. Those families were already spending the largest share of their income on food. The consequence is that families have been forced to trade down, with a third switching to economy brands. A quarter of those on low incomes are now buying less fresh fruit, with one in five families buying fewer fresh vegetables, which means poorer nutrition for many children.
Not only food prices but household bills have added to the cost of living crisis. Energy bills are up almost £300 for families since the election, while company profits have gone from £2 billion to £3.7 billion. More than 2 million homes in England and Wales, including more than half a million families with children, have been forced to spend more than 5% of their household income on the cost of water. Yet the regional water companies have made £1.9 billion in pre-tax profits, and paid out £1.8 billion to shareholders.
Paul Murphy
We know that in 2010, in Wales alone, 13% of those who went to food banks did so because of problems with the welfare and benefits system—and that has gone up to 20% today. That is the reality, but there are other reasons, too. It is, of course, also a matter of electricity, gas and water prices, and the price of food has gone up dramatically over recent years. What is to be done about it? The first thing we should do is properly tackle the issue of the cost of living.
Alun Cairns
When it comes to increases in the cost of living, what contribution does the right hon. Gentleman think is due to the increases in council tax in Wales? There has been a 9% increase over recent years in Wales, yet it has been broadly flat in England.
Paul Murphy
It is nothing like the effect of the cost of electricity and gas on people’s incomes, that is for sure. We have to abolish the bedroom tax, which is a huge issue affecting the need for food banks, and in the meantime I hope people will continue to donate and volunteer.
The truth is that food banks show the best and the worst in our society. Local people in my valley have stepped up to help—Jen Taylor and her excellent team of volunteers have offered their time to help feed people and to give them hope. Churches, charities, offices, shops and individuals have donated huge amounts of food to supply the food bank.
Alun Cairns (Vale of Glamorgan) (Con)
Thank you, Mr Speaker, for allowing me to contribute to this welcome debate, which provides the opportunity to analyse the role of food banks, their background, and why they are growing at the reported rate. I am extremely disappointed, however, at how the debate has been proposed, and the way political capital is being sought from some of the most vulnerable people who genuinely need support. We need to analyse, understand and get to grips with the longer-term issues that have led people to need to turn to food banks. The tone of the debate, and the motion, undermines the good work that food banks do, and the excellent support given by very many volunteers who work hard for some of the most vulnerable people in our constituencies.
Anas Sarwar (Glasgow Central) (Lab)
Does the hon. Gentleman share my regret that, sadly, the Minister chose to make out that we should be grateful that more people do not have to go to food banks, rather than recognising that this debate is not about economic statistics but about the fact that our fellow men and women in this country need to go to food banks to feed themselves? The tone of this debate is disgraceful and shameful.
Alun Cairns
I absolutely recognise that the tone of this debate is disgraceful, but the issues need to be analysed and addressed in an adult way so we can understand the longer-term issues that have got us to this position. That has not happened since 2010; the issue goes back well beyond that and must be addressed in a proper, adult, consensual way.
Mr Brooks Newmark (Braintree) (Con)
Does my hon. Friend support the volunteers, and particularly Church groups in Braintree and throughout the country, who are doing a tremendous job in supporting food banks? On the point he has just made, this is a long-term problem and the inconvenient truth the Opposition will not accept is that there was a tenfold increase in food banks from 2005 to 2010. The problem did not begin in 2010, and we need a long-term solution.
Alun Cairns
I am grateful to my hon. Friend for that powerful point, which gives me the opportunity to pay tribute to those who work and organise food banks in the Vale of Glamorgan: Coastlands Family church, Bethesda chapel in Dinas Powys, and Bethel Baptist church in Llantwit Major. For me, food banks play an extremely important role in bringing people back into the state system of support, or pointing them in the direction of the relevant charity that can help and support them to address an underlying long-term issue that has been missed, or the situation in which they find themselves.
We must recognise that food banks and the Trussell Trust, which facilitates those in my constituency that I mentioned, rightly limit the provision they make available. First, people must have a voucher that comes from a recognised body such as the social services, a GP, or a women’s aid or drug support group. People find themselves in terrible situations, often because of the breakdown of the family or changes that they simply have not been able to manage. We need to recognise that the food bank and the Trussell Trust give food provision for three days only. Food banks are not the soup kitchens that the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) has described. They rightly limit provision because they do not want to create that culture of dependency. They are about bringing those people back into the state support system and the charitable groups that need to address those problems.
Alun Cairns
I will give way in a moment. The limitations on the provision, which are rightly in place—
Alun Cairns
I will give way in a moment.
The limitations in provision, which are rightly in place for that very good reason, mean that only three parcels can be distributed—
Mr Speaker
Order. I fear the hon. Gentleman is not giving way. He has the floor.
Alun Cairns
Only three parcels can be distributed in a six-month period. The right hon. Member for Manchester, Gorton spoke of soup kitchens. If his suggestion was right, there would be no such limitations. Our focus must be on getting people the right support from the right place. That might be from their MP, a charitable organisation, a local authority or the state sector.
Mr MacNeil
Does the hon. Gentleman recognise that food banks and soup kitchens are symptoms of a structural problem, as the right hon. Member for Birkenhead (Mr Field) has said? From 1971 to 2011, productivity rose 80%, but workers shared only 10% of that. Income changed from labour to capital. The economist Paul Krugman has said that if that had not happened, workers would be better off by 30% or 40%. A fundamental, structural shift in society is causing those ills.
Alun Cairns
The hon. Gentleman makes a powerful point, but given the regrettable limit of four minutes on speeches, I cannot address the structural economic debate over that period.
I ask those who are responsible for food banks, who play an exceptionally important part that we should recognise, to refer information to their MP, first, because we might well be able to intervene if there is a benefit delay—we can help in some cases—and, secondly, because it is important information with which we can try to influence policy. However, when policy is debated and discussed in the way in which many Opposition Members have done, it undermines the credibility of the strong arguments that need to be addressed. Hon. Members might be in a positive position to intervene, and I am sorry the debate has progressed as it has.
The background is longer-term economic decline. Thankfully, today’s unemployment data show we are turning the corner. That will make a significant difference. Those who are pointing the finger the most need to recognise that that decline has taken place over many years.
Oral Answers to Questions
Alun Cairns Excerpts(11 years, 9 months ago)
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Mr Rob Wilson (Reading East) (Con)
17. What steps he is taking to control welfare spending.
Alun Cairns (Vale of Glamorgan) (Con)
18. What steps he is taking to control welfare spending.
Ben Gummer (Ipswich) (Con)
20. What steps he is taking to control welfare spending.
Mr Duncan Smith
I agree with my hon. Friend: we should measure our welfare system by how soon it provides support to those who need it and how it supports those who can be moved into a more productive form of life. The previous system trapped people into dependency on welfare with rising bills and, ultimately, a very poor record on child poverty.
Alun Cairns
I strongly welcome the welfare reforms that the Government are introducing, and I pay tribute to the Secretary of State for the control he is bringing to expenditure. Does he agree, however, that the provision of some of the benefits, and the terms under which they will be received, may need to be reviewed? If the parent of a young child with a complicated medical condition needs to stay in hospital for longer than 84 days, they may fall foul of the carer’s allowance. Will the Secretary of State agree to look at that?
Mr Duncan Smith
I understand fully what my hon. Friend is saying and, of course, the parent who is caring for a child in hospital has 84 days in which that child may be in hospital. I also recognise what he is saying about broken-up periods in hospital should someone have a condition that takes them back to hospital again. I would be happy to sit down with him, and anybody else, to look at the issue and discuss whether there are ways to rectify it.
Welfare Benefits Up-rating Bill
Alun Cairns Excerpts(11 years, 10 months ago)
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Mr Duncan Smith
That is my genuine intention. My right hon. Friend will know that his hon. Friend the Minister of State and I have worked to ensure that what we do to get the deficit down through universal credit and the other reforms—even those for pensions—will improve the lot of the poorest in society. If we take the figures on that relative income point across the period covered by the spending review, we can see that some 350,000 children net will be lifted out of poverty, even if we take into account the effect of this Bill. I can tell my right hon. Friend that that is absolutely our purpose and one that I believe we can stand by.
Mr Duncan Smith
I want to make a little progress before I give way again.
We need to remind ourselves that although the Opposition spent the debate in Committee going on and on at my hon. Friends about taxes on the wealthy coming down, we are raising more in tax from the wealthiest than they ever planned to throughout the whole of their spending programme. Hon. Members should remember that Labour was the party that said early on that it was
“intensely relaxed about people getting filthy rich”.
We will take no lessons from the party that did not raise the upper rate to 50% until the last month or two before it lost the election.
Mr Byrne
My hon. Friend is absolutely right that it would make sense to uprate in line with inflation for the rest of this Parliament, but frankly we do not know what kind of mess will be inherited in the next Parliament, which is why my right hon. Friend the shadow Chancellor is right to say that a zero-based review will be needed.
In the seven minutes that remain, I want to make two more points. One is about disabled people, who the Chancellor and Secretary of State said would be protected under the Bill. The Chancellor said that he would “support the vulnerable” and that disability benefits would be
“increased in line with inflation”—[Official Report, 5 December 2012; Vol. 554, c. 879.]
Then we learned the truth: 3.4 million disabled households will be hit by the Bill, admitted the Pensions Minister in a written answer. On average, they will be £156 a year worse off. Hundreds of thousands of people on employment and support allowance—people who the Department says have a disability—will be £87.50 a year worse off.
Mr Byrne
No. Given the hon. Gentleman’s support for a programme motion that has given me six minutes to respond to a Bill that takes hundreds of pounds off thousands of his constituents, he will forgive me for carrying on.
Some 206,000 disabled people will be £62 a year worse off as a result of this Bill. The Government have been caught red-handed trying to keep the truth from this House.
I am glad that today we have had an extensive debate on child poverty, because we were told nothing about how many children and how many working parents would be hurt by this Bill. Only in the past couple of weeks has the truth finally emerged. I want to put on record Labour Members’ gratitude to the Child Poverty Action Group for ruthlessly exposing the impact of the Bill and the cumulative impact of other measures.
The Secretary of State spent some time casting doubt on the strategy for tackling child poverty, which I seem to remember he voted for when he supported the Child Poverty Act 2010. On 24 November 2004, the Prime Minister said:
“I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms… That’s not enough. We need to think of poverty in relative terms.”
The Chancellor was even blunter when he said to the News of the World: “We’re all in this together. I’m not going to balance the Budget on the backs of the poor.” That encouraged the Secretary of State to wade in on “Sky News” in June 2010, when he said that “you have” to make savings
“but protect the poorest and that’s my absolute priority.”
How hollow those words ring tonight.
The truth is now before us: 200,000 children will be pushed into poverty as a result of this Bill. According to the Child Poverty Action Group, the measures in this Bill, alongside other measures that have been introduced, mean that 1 million children will be pushed into poverty by this Government. That will be the Secretary of State’s legacy. He spent all those years trying to persuade us that the Conservative party was finally a party that cared about poverty, and now, because the Chancellor needed a new year’s dividing line on welfare, he is accountable for putting 1 million children into poverty. It is well and truly clear that the nasty party is back.
This is about not just children but their mothers. A fortnight ago, my hon. Friend the Member for West Bromwich East (Mr Watson) published a list of 106 battle- ground constituencies. In those seats, there are 150,000 mothers who will be hurt by this Bill, losing £180 a year. In fact, as a result of measures put through by this Government, they are now losing £1,400, and tonight Members on the Treasury Bench voted to allow that to continue. They were given the chance to protect those 150,000 mothers and they chose not to. Over the next few months, we will be getting in touch with mothers in those constituencies and making it very clear that their Member of Parliament had a chance to protect their maternity pay and chose not to. Right now, the price of children’s clothing is rising by 4.5% and food prices are rising by 3.6%. Working mothers going on to statutory maternity pay are losing £180 a year at a time when someone on £1 million a year is getting a £2,000 tax cut. How are Government Members going to justify that to people in their constituencies?
Welfare Benefits Up-rating Bill
Alun Cairns Excerpts(11 years, 10 months ago)
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Alun Cairns (Vale of Glamorgan) (Con)
This is obviously a difficult debate. Any debate that discusses cuts or limits to payments is difficult, and no one should take any pleasure in it. However, two fundamental elements need consideration. The first is the tax credit system as a whole and its purpose, and the second is how benefits in general relate to income. I will briefly take each in turn.
It is hard to believe that until the last general election, anyone earning up to £60,000 a year could still qualify for tax credits. That was nonsensical and crazy. At the time, £60,000 was nearly two and a half times the average salary, but the Government of the day still chose to issue those privileged people with welfare payments.
Sheila Gilmore
The Bill is not about restructuring the tax credit system but about placing a limit on an uprate. Much restructuring has already happened: has not £14 billion already been taken out of the tax credit system? The hon. Gentleman should address the issue of uprating.
Alun Cairns
I wish that the hon. Lady would at least allow me to create a context and develop an argument, and that she would focus on the real issue and allow me to develop arguments on that. To me, someone who earns £60,000 a year is quite privileged and should not be receiving those payments. Nevertheless, that was the position inherited by the Government.
David Rutley (Macclesfield) (Con)
Will my hon. Friend remind the House what steps the Labour party took to bring benefit increases closer to the world of work when it was in office?
Alun Cairns
I am grateful to my hon. Friend for that useful reminder that the Labour party did nothing on the issue. Few individuals—if any—would reject a benefit payment, even if in their hearts they were confused about why they were receiving it or uncomfortable with that. The then Chancellor knew well what he was doing and that withdrawing a payment after issuing it in the first place would create a difficult and almost impossible situation—the situation we are in now. Dependency on the state became more widespread, and with that came a significant political shift to the left. The centre ground of politics moved at that moment. It is, therefore, little wonder that £90 billion is now spent on welfare for people of working age.
During the seven years before the last general election, tax credit spend increased by a staggering 258%—that is the context I wished to create in response to the hon. Member for Edinburgh East (Sheila Gilmore). Adding insult to taxpayers’ injury, the tax credit regime was one of the most inefficient benefit systems ever devised, leading to £2 billion of fraud each and every year. Today’s Bill will lead to savings of £1.9 billion over two years, with the pain shared by those recipients whose increases in benefits will be limited. Although £1.9 billion is a significant sum, it does not go anywhere near the increases in spending introduced by the previous Government, particularly leading up to the 2010 general election.
Alun Cairns
I will in a moment but I want to develop my argument a little further. Presumably in an effort to drive the landscape even further to the left, tax credits increased dramatically—strangely—in the run-up to the 2005 general election, and, by coincidence, in the run-up to the 2010 general election.
Mr Marcus Jones (Nuneaton) (Con)
Given the political manoeuvring and increases in tax credits that my hon. Friend describes, which took place under the previous Government, is there a direct correlation between the time that tax credits started, the start of the financial crisis, and the substantial rise in the deficit created by the Labour party?
Alun Cairns
My hon. Friend makes an excellent point. The previous Prime Minister knew exactly what he was doing and he did it for party political ends rather than to support and help families who needed tax credits.
Ian Austin
If the hon. Gentleman is so worried about helping people further down the income scale, why does he support a tax cut for people who earn more than £150,000 and a reduction in the living standards of the poorest people in Britain?
Alun Cairns
That is right on cue because I remember the 50% tax rate as being temporary. Is the hon. Gentleman saying that he is committed to that rate leading up to and beyond the next general election?
Ian Austin
I would rather see people who earn more than £150,000 make a contribution than take money off the poorest people in Britain, which is what the hon. Gentleman is arguing for today.
Alun Cairns
I would have much more respect for the hon. Gentleman if he told the House that that will be his commitment at the next general election.
Ian Austin
We will announce our policies for the next election but they will not be to give tax cuts to the wealthiest people in Britain while hammering the poorest. That is what the hon. Gentleman and his colleagues are supporting today.
Alun Cairns
It is obvious that there are two options. Either that will not be a commitment going into the next general election, or the Labour Government introduced the only temporary tax rate that would last almost 10 years. I hope the hon. Gentleman will allow me, in the minute I have left, to develop my second point.
On benefits and incomes, it is difficult to believe that out-of-work benefits have increased by 20% since 2007 and that earnings have increased by half that amount. What is the incentive to work? The Labour Government left a marginal rate of tax of 80% for some of the lowest earners and those on benefits. What sort of incentive was that to get people into work? They continue with the same principle in this debate. That inequality must be resolved, particularly given the nation’s debt, the need to encourage people into work and the demand for structural changes in the economy to deliver growth. It is Labour’s policy to increase spending, taxes and benefits and to take us into a further spiral of increased borrowing, spending and taxes. The people will not stand for it.
Hywel Williams (Arfon) (PC)
Today, we are debating an uprating Bill that will result in a real-terms cut in support for people working and contributing to the economy. That paradox will not be lost on those hard-working families so beloved of spin doctors. I do not see how the Bill will promote the work ethic so beloved of those on both sides of the House, and I do not see how it will enable working people to contribute more effectively in the savings culture.
As a Welsh MP, I have to say that Wales will be hit particularly hard. Incomes in Wales are substantially lower than elsewhere. Gross value added per head in Wales is £15,696, whereas in the UK it is £21,368—a difference of more than £5,500 per person.
Alun Cairns
Given what the hon. Gentleman has said, is he comfortable that welfare payments are rising at twice the rate of earnings?
Hywel Williams
This point has been done to death this afternoon. It says a lot about the quality of the hon. Gentleman’s argument that he repeats it continually. I do not think I will bother with it any further.
Some 6.8% of households in the south-east of England, for example, claim working tax credits. In Wales, that figure is 7.1%. In Gwynedd—my own area—9,200 families are on tax credits of some form out of 53,000 households. That is 17.5% of the population—nearly three times the Welsh rate. The point is that any cuts to in-work benefits for the low-paid will hit Wales and my constituency particularly hard.
Oral Answers to Questions
Alun Cairns Excerpts(12 years ago)
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Maria Miller
On the final part of the hon. Gentleman’s question, we believe that there is a need for more evidence on the impact of gambling within society. We are collecting that evidence now and are looking carefully at all the issues that he raised.
Alun Cairns (Vale of Glamorgan) (Con)
I pay tribute to the Secretary of State, the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Wantage (Mr Vaizey) and Ofcom for the auction arrangements, which satisfy all the mobile phone operators. However, will Ministers reassure the House that planning guidance will be put in place to enable mobile operators to introduce higher masts and bring about 4G roll-out much more quickly?
Oral Answers to Questions
Alun Cairns Excerpts(12 years, 8 months ago)
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Chris Grayling
I am pleased to be able to reassure my hon. Friend on this. I was in his county of Cornwall last week to meet Work programme providers in both the private and voluntary sectors, and what I saw was very encouraging. The progress they are making is similar to that being made elsewhere in the country, and there is no obvious sign of the regional variation he describes. I wish to pay tribute to the voluntary sector organisations I met, which are very involved in the Work programme. I pay particular tribute to Groundwork, which is running one of the most innovative motivational programmes for some of the hardest to help I have yet seen in the Work programme. That is, of course, helping his constituents and will do the right thing to help them into work.
Alun Cairns (Vale of Glamorgan) (Con)
18. What progress has been made on the implementation of the recommendations in Professor Harrington’s review of work capability assessments.
The Minister of State, Department for Work and Pensions (Chris Grayling)
We are continuing to implement the reforms recommended to us by Professor Malcolm Harrington. He argued for a number of changes in his first report, all of which have been implemented, and we are in the process of implementing the changes recommended in his second report.
Alun Cairns
I thank the Minister for his response. One third of employment and support allowance claimants have mental health conditions and a significant number of initial work capability assessment decisions are overturned on appeal when further evidence becomes available about their condition. What action is the Minister taking to ensure that medical evidence is taken on board at a very early stage in order to prevent a number of appeals?
Chris Grayling
This is one area where we have worked very hard to secure a change. A large amount of new evidence was indeed appearing only at the appeal stage and that was one of the key things that Professor Harrington suggested we address. We are now bringing in medical evidence much earlier—at the start of the process, when the decisions are taken or when a reconsideration is taking place in Jobcentre Plus. There are now few circumstances in which new evidence appears at the appeal stage, and that is really important.
Pension Protection Fund
Alun Cairns Excerpts(12 years, 12 months ago)
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Steve Webb
Let me come on to the CPI point, which is what I assume the hon. Gentleman is referring to. Clearly, the Government took a view in summer 2010 as to the measure of inflation that they would use to uprate benefits and tax credits. There is no perfect measure of inflation; clearly, each has its strengths and weaknesses. However, as a new Pensions Minister in 2010, I received angry letters from people asking why their state earnings-related pension scheme had been frozen. Obviously, “It wasn’t me, guv”, as it were, but their SERPS pension had been frozen because “inflation” in the year to September 2009, as measured by the retail prices index, was negative.
We had a bizarre situation. I have yet to meet a pensioner who felt that inflation was negative in the year to September 2009, but, because mortgage rates were falling dramatically, headline RPI inflation was negative and, therefore, people’s pensions were frozen in 2010. CPI would have given them an increase then.
The further paradox was that, at a time of falling interest rates when savings returns were falling—low interest rates are, on the whole, bad news for pensioners, who tend to be savers rather than borrowers—we were using a negative or a low measure of inflation. That did not seem a good fit to us, particularly for pensioners, so the Government took the view that they would measure inflation using the CPI for benefits, tax credits, state earnings-related pensions, the underpin for occupational pensions and, thereby, via SERPS, public-sector pensions, and the PPF. Having decided that that was what inflation was across whole swathes of the what the Government do, it would be odd to have an island where we measured inflation differently.
I fully accept that that reduces the value of the financial assistance scheme pensions—I cannot dispute that—but that was not the purpose of the exercise, and the effect was well down the track from the decision on the CPI. It would, however, have been incoherent to have said that inflation was something different for the financial assistance scheme.
I have met Pensions Action Group campaigners on a number of occasions over many years, as my hon. Friend the Member for Cardiff North said, and I have great respect for what he described as their dignity and for their perseverance in campaigning, which has got the financial assistance scheme to where it is. The switch to using the CPI has reduced the cost of the financial assistance scheme in the longer term—it has had no impact in the first couple of years because we are above the cap on either measure of inflation—but other factors have led us to spend more on the financial assistance scheme than we were budgeting for. Rather than looking at a budget line that allows me some slack, I am having to explain why I am overspending relative to the budget that I inherited. The reason for that is that new schemes come into the financial assistance scheme, or we get data for schemes that we knew were coming in but for which we did not know the details, and we tend to find out that we have greater liabilities, in particular in the short term, than we had thought.
Working out what we will spend on the financial assistance scheme is not a precise science, although it is getting more so. However, it would be wrong to think that somehow the budget line has some slack in it and that we can decide what to spend it on. On the contrary, I am having to make the case in Government that we have made promises to the financial assistance scheme that we need to keep. Therefore, we have to find extra money compared with what we budgeted for.
Steve Webb
If my hon. Friend will forgive me, I will not, out of respect for my hon. Friend the Member for Cardiff North, who secured the debate, but only because I want to respond to his comments.
To be clear, it is not the case, therefore, that some financial slack is available for the financial assistance scheme.
My hon. Friend also mentioned deemed buy-back, which is complex, so I will not say, “Here is one I prepared earlier.” Essentially, deemed buy-back is treating the scheme as if it had not contracted out of SERPS. On the face of it, we would assume that that is better, but it turns out that the situation is rather more complicated than that. At the moment, people in the financial assistance scheme have a level of certainty: they know what the rules are and they know what 90% is and is not. I entirely accept my own point from a few years ago that we have to be careful when we say, “It’s 90%,” because clearly the matter is much more sophisticated than that and there are limits, as he rightly said. However, those people have the certainty of knowing what the scheme rules are. Under deemed buy-back, they would not have that certainty while some people would get more than 100% of their scheme pension and some people less.
Oral Answers to Questions
Alun Cairns Excerpts(13 years, 5 months ago)
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Steve Webb
The hon. Lady is right: there is often an interaction between the rules governing benefits such as JSA, occupational pensions and state pension ages. However, in cases in which people’s state pension age has risen, the rules governing working-age benefits are exactly as they have always been. Provision will be made, whether through employment support allowance, JSA or, in the example given by the hon. Lady, an occupational pension. We are not talking about leaving people with nothing to live on.
Alun Cairns (Vale of Glamorgan) (Con)
T4. The mental health charity Mind has suggested changes in the work capability assessment to capture better the complexity of the conditions of those suffering from mental illness. What reassurance can the Minister give about how the process can be enhanced to reflect those needs better?
The Minister of State, Department for Work and Pensions (Chris Grayling)
We have already introduced mental health champions to the network of health care professionals who carry out the assessments, and we believe that the changes introduced at the beginning of April will bring more people with mental health conditions into the support group. However, we now have on our desks a new set of proposals from the charities which we asked them to supply to us. We are considering them carefully, and hope to respond in the very near future.