Welfare Reform Bill

Anne Begg Excerpts

Wednesday 15th June 2011 Commons Chamber

[Margaret Curran]

Indeed, and for those of us who have experience of how families struggle through family illness on lower incomes, we know how important that is. We do not want to have a society in which people who are struggling with major illnesses have to worry about how they will meet their family bills.

Cancer and stroke victims usually require help early in their conditions. As of August 2010, some 195,000 people were receiving DLA for a malignant disease or a stroke-related condition. Many in this group who are of working age may well be the very individuals who will be affected by clause 79 and the decision to lengthen the qualifying period to six months.

The extra costs will vary from individual to individual, but we can safely assume that they include key criteria such as extra fuel costs, costs associated with aids, adaptations and special diets, and extra costs of washing clothes and such like.

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

On the issue of extra fuel costs, one reason why the last Government—followed by this Government—said that they would not extend the winter fuel payment to those with disabilities was that it was already covered in the payments received under DLA. If the people who move on to PIP do not get those payments, they will be disadvantaged.

[Margaret Curran]

I thank my hon. Friend for that point, which reinforces why we should not accept the Government’s proposals and instead vote for this amendment. Simply to shrug aside the points that have been made or—as I suspect the Minister will argue—to pass on the obligation for meeting these costs to local authorities that are already feeling the strain of funding would be unfair and a great insult to many victims. Cancer patients are already the victims of the decision to time-limit the contributory employment and support allowance to just one year, as the Prime Minister now understands. Why should they be punished yet again at the hands of this Government when it comes to reforming DLA? We had controversy this morning about how cancer patients are being treated by this Government and now we have more concerns and more difficulties for cancer patients.

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[Jenny Willott]

That is exactly the position that I am putting forward. I am concerned, because clause 83 still leaves it open for Ministers to cut the mobility component for those in care homes. As a number of Members have made clear, the concern about that is considerable.

[Dame Anne Begg]

I appreciate that the hon. Lady is trying to get the Government off the hook by supporting this review, but the original proposal came forward in the coalition Government’s first Budget—almost a year ago. Is she not as surprised as I am—if not shocked—that the work that she now advocates was not done before the proposal was made in the first place?

[Jenny Willott]

To risk the wrath that has been incurred by some colleagues on my side, I have to confess that I was somewhat surprised about that, but I also think it should have been done by the previous Government as well. It is pretty shameful that we have no understanding of where the funding for these costs has come from.

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[Jenny Willott]

I am afraid that I will not, as I am aware that a lot of people want to speak.

I flagged up my concerns in Committee about whether there are some people for whom face-to-face assessments are not appropriate, and I was reassured by the Minister’s response, as she clearly accepted that they are not appropriate for everybody. She intends to allow Jobcentre Plus advisers discretion to consider individual cases and the Government seem to be thinking about taking the same approach to the need for ongoing face-to-face assessments. As long as there is discretion and an acceptance that such assessments are not appropriate for everybody, I hope that decisions will depend on the discretion and common sense of Jobcentre Plus advisers. Will the Minister reconfirm today that the Government are taking a slightly flexible approach?

The final issue that I want to flag up is that of sudden-onset conditions such as cancer, stroke or accidents, which the hon. Member for Glasgow East has mentioned. Such conditions are very different from conditions that gradually worsen. They do not give people time to adapt mentally, emotionally or financially to their new circumstances and in addition to the trauma of coping with diagnosis there are large up-front costs that start almost immediately. There might be a sudden loss of income and there is the cost of travel to and from hospital for regular treatments, as well as parking charges and new equipment that is needed. Such costs seem to be just the sort of thing that disability living allowance was designed to fund.

The change from three to six months before someone can apply for the new personal independence payment might hit those people the hardest, because they have to pay those costs so immediately up front. I understand that that group of people form a very small proportion of those who are currently on DLA—around 6%, I think—so it would not be expensive to treat them differently. There are knock-on implications for that group, as their carers will not be able to apply for carer’s allowance unless they have DLA, so both the claimant and the carer could lose income. I raised this issue in DWP questions on Monday and the Minister was kind enough to say that the Government are looking into the issue. I hope that they will look at what can be done to ameliorate the situation for that small and distinct group.

I welcome the Government’s moves to take into account concerns about the removal of the DLA mobility component, and although I welcome the decision not to push ahead with the original proposal to remove it entirely, I think the Bill leaves the door open for that to happen in future—perhaps not under this Government but under a future one—so I believe that any changes should pass through the House via affirmative resolution. I also believe that the situation needs to be monitored closely to ensure that we are protecting and enhancing the lives of some of the most vulnerable in society.

[Dame Anne Begg]

I suspect that many hon. Members will want to speak particularly about the removal of the higher-rate mobility allowance from residential care, so I shall not talk about that in any detail, but I think it is merely the top of a very pernicious iceberg, and the proposed amendments attempt to allay our concerns on that. This issue has captured the public imagination because it seems so grossly unfair and because people cannot understand what kind of Government would take away the independence of the, by definition, most disabled people in our community because they happen to live in a residential home or, for those whose families might lose access to an adapted vehicle, because they happen to go to a residential school.

I want to look more widely at the Government’s reasons for seeing fit to wipe away everything that was the DLA and bring in a new benefit called the personal independence payment. Let me address the Government’s analysis, or rather their argument—I should not have said analysis because part of the problem is that there has been no proper analysis and it is very difficult to get any data to suggest that some of what they have said is true; that might be the case for individual cases, but it is not widespread. The fact that the hon. Member for Cardiff Central (Jenny Willott) had to ask for some of those data may show that the Government lumbered into the whole area without knowing the details, and that their proposals were based on some perception of prejudice, or the need to save money, a point to which I shall return.

What were the criticisms that the Government laid at the door of DLA? They said there were no regular reassessments. That is easy to sort. We can put in regular reassessments for certain people. The Government said that too many people were getting DLA for life. Is that too much of a problem? If a person is quadriplegic after a cataclysmic accident, I am not sure they will get better. The reason many people who at present depend on DLA are so frightened by the changes is that they have an award for life; they do not have to worry about more reassessments. They have gone through assessments. They know they are profoundly disabled. Anybody looking at them can tell they are profoundly disabled, so why on earth do they yet again have to go through an assessment?

Another criticism of DLA was that some people were getting it automatically based on their condition. I challenge the Minister to tell us what it is about the condition of people who cannot feed themselves, cannot dress themselves, cannot move from one seated position to another, cannot walk or go to the toilet themselves that means they have to be assessed for their need for extra costs for care and mobility. I cannot think of a reason. Why should there not be an assumption that those individuals have their extra costs for care and mobility covered by DLA? That is what it was all about.

The Government’s main argument was that DLA was not well understood. That is not my experience from talking to people who receive DLA. It was one of the few benefits they did understand. DLA was for the extra mobility and care costs associated with disability. Compare that to the confusing rules for tax credits, or the in-work benefits or disability premiums associated with jobseeker’s allowance, employment and support allowance or incapacity benefit. We could look at contributory ESA as well. Those are confusing. The one benefit for disabled people that was clear—they knew what it was for—was disability living allowance. That is what they tell me and I am sure it is what they have told the Government. The vast majority of responses to the Government’s consultation made exactly that point: people valued DLA so greatly that they were frightened they might lose it.

Another criticism the Government have made of DLA is that the form was too long and complicated. That would be easy to sort. Make it shorter, make it less complicated and maybe put it online. There were solutions.

Those are the main criticisms of DLA that the Government have come up with, but none of them could not have been solved by some changes to the existing allowance. It did not require the sweeping away of DLA and its replacement with a new benefit, with new criteria. If the criteria were out of date, some of them could have been changed, but there was and is no need to change all of them. People who depend on DLA at present as a large part of their income are terrified, because they do not know what lies ahead. If the system is as bad as, according to the Government, it is at the moment, those people are worried that whatever the Government come up with will not be suitable for their needs. I have to tell the hon. Member for Cardiff Central that the previous Government did not collect data on double-funding mobility allowance in care homes, because they were not advocating the removal of DLA from that group of people.

The things that are particularly good but often forgotten about DLA include the fact that it is an in-work and out-of-work benefit. That element will become increasingly important as the Government proceed with their welfare reforms to put work obligations on people with profound disabilities. Anyone who is not assessed as being in the support group for ESA will have a work obligation. However, if those who end up in the work-related activity group find that they no longer qualify for DLA, it will be all the harder for them to find a job or to do the work-related activity that the Government expect them to do, because the extra financing to make that possible will have been removed.

The best thing about DLA was that we had for the first time in this country a benefit that followed the social model of disability, rather than the medical model. There is a worry that the clock will be turned back. The Government call their new benefit the personal independence payment, but DLA was a personal independence payment, so they did not need to change the benefit. DLA is personalised and represents what the Government say they want the benefit system to be because it is a dynamic benefit, which means that it helps people to lead an independent life by going out to work, visiting friends and doing all the things that everyone else takes for granted. Such independence includes the ability to live in the community, which can be achieved if a person can buy in care and get someone to come in to look after their care needs. All those things exist under DLA, so why is there a need to make a fundamental change to something that was not broken? Why fix something that was working reasonably well? No one would have complained if the Government had done a bit of tweaking, but such a fundamental change makes people especially worried.

The Red Book states that the Government want to cut 20% from the DLA budget. That means that the pot will be 20% smaller, but given the cost of reassessing everyone, about which we have heard today, the reduction in payments will be more than 20%, because some of the money that would have gone to disabled people so that they could live their lives will be invested into the private company that will carry out the reassessments. Given the difficulties of the ESA, there is suspicion about the accuracy of the reassessments. Even though Professor Harrington has made recommendations, there are still fears and worries about the way in which the work capability assessment is working, and disabled people’s experience of that assessment makes them especially worried about what will happen under PIP.

[Fiona O'Donnell]

Does my hon. Friend agree that anxiety is especially high among people with mental health problems? We have recently heard reports of a number of suicides, so we need to be able to offer people reassurance about the process.

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[Dame Anne Begg]

My hon. Friend is absolutely right. Perhaps I should now speak to amendments 76 and 77, which I tabled as an attempt to ensure that fluctuating conditions—mental health problems are often fluctuating conditions—are properly recognised.

Mental health organisations throughout the country are deeply concerned about clause 79, which makes provision about whether an individual will qualify for a personal independence payment. The Bill states that the question of qualification relates to whether during

“every time in the previous 6 months, it is likely that if the relevant ability had been assessed at that time that ability would have been determined to be limited”.

Mental health charities are worried that someone with a fluctuating condition would not qualify because they would have to be sufficiently ill for qualification at every point over those six months. Amendments 76 and 77 clarify that the condition would not have to be continuous throughout that time. The charities agree with the principle of monitoring a person’s condition over time rather than making a snapshot assessment—they have no problem with that. They say the latter would poorly serve individuals with fluctuating conditions. This has been especially apparent in the experience of people applying for employment and support allowance.

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[Dame Anne Begg]

That is exactly what I would like the Minister to clarify. I do not know whether there will be contributory ESA for those in the support group, whether it will be income related, or whether everyone will get it. If someone lives in a household with a working partner who earns £20,000 or £30,000 a year and then goes into the support group, having not worked before that and so having not made national insurance contributions in their own right, will they get any ESA? I am not sure they will, because ESA is an income replacement benefit, and of course to get such a benefit they need to have made national insurance contributions or have a low income.

[Stephen Timms]

My understanding is that, even though they are in the support group, if they have not met the contribution conditions they will not get the contributory benefit. Perhaps the Minister will confirm that when she responds.

[Dame Anne Begg]

That is my understanding also. There will be a group of people who will have paid the contributions in the two previous years and who will go straight into the support group and get to keep the benefit for life, but those with slowly degenerative diseases and those who come from better-off households will get nothing at all. It is that kind of unfairness and that sense of a two-tier system that frightens people.

[Maria Miller]

On a point of order, Mr Deputy Speaker. Although it is very interesting to hear about the ESA, it actually is relevant not to PIP, but to another section of the Bill.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am sure that there will be a conclusion in which the two points join together. I am not taking that as a point of order.

[Dame Anne Begg]

My point is that if the Government take contributory ESA away from this group of people and then change the criteria so that they no longer qualify for DLA or the new PIP, those people will end up with no independent income at all. That is the connection. We cannot look at the Government’s proposals to remove DLA and introduce PIP in isolation, because they are putting disabled people under all sorts of other obligations. If we look at the benefits in isolation, we will get into trouble, and that is what leads to the fears of disabled people, because many of them, particularly those with more profound disabilities who are trying to live independently in the community, have complex funding packages that they have put together to make things work for them. They are dependent on the personal care element of DLA for their care and on housing benefit to pay for their rent; they are dependent on local government facility grants to adapt their houses; and they are dependent on the mobility element of DLA to provide them with transport or, for many of them, with cars through the Motability scheme. These are complex packages, and if the Government interfere with some of them the whole edifice could collapse. That helps to explain why there is so much fear among people with disabilities about what the Government are doing. They feel that the Government are not seeing the whole picture—that they are seeing different pieces of the jigsaw but not putting it together or looking at the impact that those pieces will have on individuals.

Part of the problem with universal credit and with PIP is that we do not yet know the criteria, the payments or who will qualify for what, so it is impossible for individuals to sit down with all the new regulations, which nobody has seen because they have not been published, and work things out, saying, “Right, in my condition, I know I will get that, that and that, and I can add that together and that will then tell me whether I am going to be better off or worse off under the new proposals.” It is difficult to judge the situation, because we do not have that detail.

[Mr Nigel Dodds (Belfast North) (DUP)]

The hon. Lady is doing the House a great service in teasing out the complexities, and in illustrating just exactly what is and is not known. Is not that at the root of many problems? How can we proceed with these measures when our constituents have so many unanswered questions? They have asked me, but I am unable to relay with any certainty what is going to happen to them, so surely the issues that have been raised deserve full clarification. Certainly, what has been illustrated as definitely going to happen demands that the amendments be carried.

[Dame Anne Begg]

Much of Monday’s debate was about the fact that the regulations for PIP, for housing benefit and for universal credit do not exist, so it is difficult to judge exactly what will happen to individuals.

There is also a fear among disabled people, because the Government sometimes take a simplistic view of what a disability might be. Disability living allowance was quite clear, because it was to cover the extra costs of disability, but one worry is that, under the PIP proposals, aids will be taken into consideration. The implication is that, if someone has an aid, they do not have the extra costs associated with their disability—that somehow the aid will miraculously take away those costs.

It has been said—the Minister did so in front of the Work and Pensions Committee—that, if a wheelchair-using Olympic athlete has a university degree, it is reasonable to place some work obligations on them. That might be the case, but being an Olympic athlete who needs a wheelchair does not take away the need for an adapted car. They still need the car, the wider parking space, to build the ramps to get into their house, the adapted shower that the local authority’s facilities grant often does not pay for, and the adapted bathroom.

In many cases, therefore, aids and adaptations do not take away the need for extra money. In fact, people with disabilities sometimes need the extra money to run some of those aids, such as an electric wheelchair and the extra costs that that entails, or an electric buggy that gets them around the shops. Rarely are such aids supplied by the NHS or, indeed, by the local authority, and DLA was such a good benefit because people could choose how they used it in order to fulfil their needs and lead an independent life.

If disabled people have work obligations placed on them, they will need extra money for travel costs. I could be as fit as possible and have the best super-duper wheelchair in the world, but with the best will in the world I am still not going to be able to get on the underground. It just will not happen, so we need to ensure that we get PIP right, and to ensure that it enables disabled people and does not hinder them.

Disability living allowance, particularly the mobility element, acts not only as a passport but as a proxy for all sorts of other things. Local authorities and organisations such as railway companies and cinemas use an individual’s qualification for upper-rate mobility allowance as a proxy for the fact that they must be disabled and therefore qualify for a disabled railcard, a disabled cinema ticket or a blue badge—or, in my local authority, a green badge, for which we also have to pay 20 quid a year, so it is not as though we are getting it for nothing. That means that people do not have to be assessed time and again, which makes things much easier. For many people, the knowledge that they have been assessed and qualify for upper-rate mobility allowance is more valuable than the money. I would not say that the money is not important—of course it is—but access to a blue badge with reasonable ease is also incredibly valuable.

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[Maria Miller]

We are not producing a report to consult on. What we will do is make our position clear, and then there will be the opportunity for people to give us their views on that.

Finally, I would like to speak to amendment 60. I believe that the intention of the amendment is to ensure that the new assessment for PIP is working effectively before it is used to reassess the existing disability living allowance caseload. I can reassure the hon. Member for Glasgow East that it is our intention to do that. But I can go further than that—the Government are committed to ensuring that the new assessment is working effectively before it is used for any individuals, new claimants or not.

[Dame Anne Begg]

Related to that point, although it is slightly different, I wonder whether the Minister can allay the fears of people with Motability cars. Some of them could sign a new lease this month and be reassessed for PIP before the end of that lease, so they might lose the mobility element of DLA and therefore lose their car. What would happen in such cases?

[Maria Miller]

I had a meeting with Motability yesterday to talk about these issues, which was one of many meetings that I and officials have had with it. We will look at the issue in great detail. Motability provides a fabulous service to disabled people and we will ensure that the issues that the hon. Lady mentions are addressed.

Welfare Reform Bill

Anne Begg Excerpts

Monday 13th June 2011 Commons Chamber

[Chris Grayling]

I expect it for precisely the same reason that the right hon. Member for East Ham expected me to support his education measures 10 years ago. He asked me to take on trust many of the same kinds of thing that I am asking the House to accept today. We have been completely transparent in setting out the different stages of the formulation of universal credit, and about the consultation processes that we have been through to fill in the details. We have also been clear and transparent in setting out the principles that we are following in trying to fill in those details.

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

I went along to one of the meetings about the Government’s proposals for child care to which the Secretary of State was kind enough to invite people. We were presented with three options containing some very selective figures, and it was therefore impossible to tell exactly what the Government were proposing. I am still none the wiser. It is very difficult to vote on a principle when we do not know what the Government are going to do to implement it.

[Chris Grayling]

The point is that we do not write numbers on the face of a Bill. I will speak in detail about the right hon. Gentleman’s amendments in a moment, but the fact is that primary legislation sets out the framework for such things. We have worked with the hon. Lady and her Select Committee members, with other Members on both sides of the House and with people and representative groups outside the House working in child care and other areas. We started a discussion process to determine which was the best of a number of options to fit into the framework that we are creating.

[Dame Anne Begg]

The Minister is right that often things are not written into a Bill, but usually the regulations have been published before the Bill leaves the House of Commons. I remember Members who are now on the Government Benches criticising regulations for being late—not for not having been published, but merely for being late. Where are the regulations so that there can be parliamentary scrutiny of this important aspect of the Bill?

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[Chris Grayling]

The point is that we do not penalise parents, particularly lone parents. We do not require them to pursue work; that is out of keeping with the reality of their child care responsibilities. I am not describing school as a giant babysitting service; I am saying that for a goodly part of the year children of school age are at school, and therefore do not need additional child care. The requirements placed on parents by Jobcentre Plus in relation to their job search and whether they take up employment are designed to work around what it is reasonable and what it is not reasonable for them to do. For example, we do not expect lone parents of school-age kids to work night shifts. I can certainly assure the hon. Lady that it is not our intention, nor will it be, to seek to sanction parents in relation to a job requirement that is unreasonable and unrealistic given their child care responsibilities.

[Dame Anne Begg]

On a matter of principle, does the Minister believe that the regulations should be subject to parliamentary scrutiny in the same way as primary legislation?

[Chris Grayling]

Of course.

As the right hon. Member for East Ham will know, I have tabled several Government amendments to address the concerns that he and other Members raised in Committee. I will deal with those before I talk in detail about his amendments.

Government amendments 14 to 21 will make certain regulation-making provisions for universal credit, employment and support allowance, jobseeker’s allowance and pension credit subject to the affirmative resolution procedure when they are first used. I recognise the hon. Lady’s point, and it is a point that was made well by the right hon. Member for East Ham in Committee. I do not think that it would be sensible to make the provisions subject to the affirmative procedure year in, year out, but it is right and proper that the House should be able to debate them fully when they are first introduced.

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[Chris Grayling]

The technical response to that is, “You wish!” I remember many occasions on which we came to a debate and asked what the Labour Government were planning to do. Did we ever get an answer? Not at all. The right hon. Gentleman and I have different memories of the way things were.

It is important to remember that this Bill creates a structure for universal credit, and that the details will be set out in regulations. The Opposition amendments relate mainly to issues that will be dealt with in regulations, and which do not affect the structure of universal credit as set out in the Bill.

I have accepted certain recommendations from the Opposition. The Bill as introduced provided that the regulations will be subject to the negative procedure. In Committee it was suggested that that would not provide the right level of parliamentary scrutiny and control. The right hon. Member for East Ham identified a number of provisions that he thought should be subject to the affirmative procedure, and I gave a commitment in Committee on 28 April to consider those provisions carefully.

There are two provisions, in clauses 22 and 25, relating to conditionality, for which we do not think the affirmative procedure is appropriate, because they do not introduce new principles. Although we intend that regulations will be much less prescriptive than the current jobseeker’s allowance regulations, the powers in the Bill will be used to create a regime for jobseekers that is broadly similar to the current one. We have therefore formed the view that there is no necessity to subject those two to the affirmative resolution procedure. Of course, it always remains within the gift of Opposition Members to pray against regulations if they want a matter to be debated. They could, of course, do so anyway, but we are making their life a bit easier by providing for the affirmative procedure.

I have thought long and hard, and apart from those two specific provisions I agree with the right hon. Gentleman’s suggestion that regulations should be made under the affirmative procedure in the first instance. I say “in the first instance” because it does not seem sensible to repeat the process year in, year out when the regulations are regularly renewed.

As set out in amendment 14, that principle covers all the key regulation-making powers relating to the universal credit, including the rules on capital, the calculation of income, the treatment of self-employed people’s cases, and the amounts of the elements within an award, including those for disabled children, housing and child care. Opposition Members might say that that is not enough to allay the concerns that they have raised on specific issues, and I shall deal with some of those specific concerns in a moment. However, I made it clear in Committee that we recognised the importance of getting the details of universal credit right. We are working hard to do so in consultation with key stakeholders, and we are listening to their concerns.

The Opposition amendments would pre-empt our considerations and tie the hands of this and any future Government with regard to areas of policy in which it is important to retain flexibility. I believe that it is perfectly reasonable to say that as we reach a final conclusion on what is right, involving Members of all parties, the Work and Pensions Committee, organisations such as the Social Security Advisory Committee, and third-party groups, we will bring regulations to the House by the affirmative procedure. There can then be a full and proper debate in Committee and a vote on Floor of the House.

[Dame Anne Begg]

Clearly the Minister has moved on this issue, but there is still the problem that the affirmative procedure is “take it or leave it”. The Work and Pensions Committee and other Members have no ability to amend regulations, so it is not the same as the line-by-line scrutiny that primary legislation receives.

[Chris Grayling]

I accept that, but that is precisely why we have extended the hand of involvement to the hon. Lady and her Committee and to Opposition Members, so that they can help us shape the details. This is a big complex project and there are challenging issues to deal with, and we want to work on a bipartisan basis and take views from all parties on how best to shape the system. In the end we will have to take a final decision ourselves, but it is our goal and intention to involve all those who wish to be involved in the thought process.

That brings me on to child care, on which we have been seeking to do precisely that. New clause 2 raises important points about how we intend to support people with formal child care costs within universal credit. Hon. Members will be aware that we recently held two seminars on the topic. Members of both Houses attended, and there were interesting and fruitful discussions. There was a follow-up seminar with a group of key stakeholders. I am aware that Members raised particular queries, and we have undertaken to look into them and provide more information. The seminars were part of an ongoing dialogue about how best to structure child care support under universal credit.

For now, I reiterate the point that I made in Committee. The Bill already allows us to include an additional element for child care within universal credit, under clause 12. We have made a firm commitment to provide such an element, but I make no apology for taking time over the details. We must get them right, and to do so we must listen to those with experience and expertise and consider the options.

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[Chris Grayling]

That is precisely what we have asked the Social Security Advisory Committee to examine for us: how best we deal with that cliff edge. We accept that it is there. How do we tackle it to maximise the likelihood of people moving into work?

In most cases, health charges will be one-off or occasional costs that are unlikely to weigh heavily in people’s perception of the financial gains from working. However, for some disabled people in particular, there may be a more significant factor. The current passport from working tax credit together with the separate NHS scheme for people on low incomes should mean that health costs are not, in theory, a disincentive to work, but we know that the reality is often dictated by perceptions and issues about access. We will work to get that right for universal credit. However, we await the Social Security Advisory Committee’s recommendations with interest and we believe that it will be necessary to consider them with other Departments. We need to find a way in which to address the matter that maintains support without creating insuperable barriers to returning to work. It is a complex subject, which falls beyond simply decision making by our Department because we are not responsible for much of it.

New clause 5 would ensure that claimants understand how the amount of universal credit that they receive is calculated. I share that goal, but we do not need primary legislation to achieve it. We are designing universal credit to ensure from the outset that people have the information that they need in an accessible form that is clearly set out. We intend to provide a clear record of any award when it is first made and of subsequent changes, ensuring that claimants are always up to date with the latest position.

Universal credit will be a digital service by default that claimants will predominantly access online. However, we recognise that not all universal credit claimants have access to the internet and we will continue to provide notification through other channels. We are also working with the Government Digital Service—as well as other partners—to help people get and stay online by providing more reliable internet access and training in communities. Of course, we put in place some of the measures to increase digital access when we debated the appropriate regulations last week.

The hon. Member for Stretford and Urmston (Kate Green) was concerned that one part of the benefits system going wrong would bring down the whole deck of cards for a family. She is wrong in thinking that, simply because we have multiple channels, the system somehow works well at the moment and will be much more vulnerable under universal credit. The current system does not often provide that security. Outstanding questions can affect a wide range of existing benefits, particularly at key points of transition, such as moving into work. Many people do not even claim everything to which they are entitled. Rather than a patchwork of provision, with people thinking, “Have I got everything I’m entitled to? If I don’t know a particular answer, everything gets delayed”, a single point of entry, a single point of access and a single system of paying benefits makes it less likely that somebody will get into difficulties and not receive all the money to which they are entitled. I do not therefore believe that the hon. Lady has got that right. We are confident that universal credit will not have the effect that she suggests—it will make it easier to access benefits. Of course, we intend to introduce a system of payment on account, which will allow some payments to be made even if all the details of the claim cannot be sorted out straight away.

Amendment 26 on reporting would make it a legal requirement that we assess and report on access to welfare advice, including advice for those unable to use the internet, before we introduce universal credit. Universal credit will be a simpler system than we have today. It will be easier for potential and existing claimants to find out relevant information online, and easier for advisers to understand and advise.

Welfare advice is already provided by Jobcentre Plus, Her Majesty’s Revenue and Customs and local authorities through a variety of means—over the internet and via other routes.

[Dame Anne Begg]

Even if universal credit fulfils what the Minister describes—he says that it will be simpler, and although it will certainly be simpler superficially, in practice it may be more difficult—with any move from an old system, it takes time for people such as advisers to become familiar with the new system. Advice will be crucial at that pinch point. Will the Minister ensure that the organisations that provide advice are properly funded in that transitional period?

[Chris Grayling]

My view is that our partner organisations, such as Citizens Advice, need to be involved and informed of all the changes. We need to continue to be able to offer the valuable advice that they give to individuals. We provide quite substantial blocks of Government funding to Citizens Advice and similar organisations, and it will be for them to decide how best to use that financial support. In what are straitened financial times, I would hope that those organisations would see their priority as sending as much of that money as possible to front-line advice services, and spending as little as possible on central administration, central marketing activities and other head office functions. I would like those organisations to focus on providing every spare bit of cash that they can for front-line advice services—as well as finding ways of generating more spare cash for that purpose—because after all, that is where the money is most effectively and valuably spent.

We will seek to provide guidance, training and advice for advisers on the universal credit and the implications thereof. There is always a willingness on our part to talk to groups of advisers, including at some of the big conferences that Citizens Advice organises. I have not been able to do so yet—I have offered to do so on other matters—but we are always willing to provide such input to those organisations.

--- Later in debate ---

[Chris Grayling]

As I said to the right hon. Gentleman in Committee, we are looking at the best way of doing this. We cannot have a situation in which people who are receiving an entitlement to the universal credit while generating no income at all over long periods of time still say that they are self-employed. We must ensure that that does not happen, and we are looking for the best way of doing it. If we wrote the rules into primary legislation, we would not be able to take decisions and fine-tune on the basis of experience, as we would have to come back to primary legislation every time. That is why I think it inappropriate to accept the right hon. Gentleman’s amendments.

Let me make some further progress. Amendment 33 seeks to remove the restriction on eligibility for pension credit for couples where one member is below and the other is above the pension credit qualifying age. Suffice it to say that although someone over the retirement age should be able to receive benefits for the household under the pension credit system, someone under the retirement age being able to receive the benefits of a means-tested system without having to go out and look for a job is just plain wrong. I am afraid we disagree on that, and I am comfortable with the changes. They are set out in legislation, which is where one would expect them to be set out. I am disappointed at the right hon. Gentleman’s disappointment that we have not issued a press release on the subject, but I do not think that this is the kind of change that would command the front pages of any newspaper. It seems perfectly reasonable to set out proposed changes in legislation, given that it is legislation that is laid before the House with accompanying explanatory notes that Members can read and discuss and into which they have an input.

Amendment 68 would add additional provisions for carers to paragraph 4(4) of schedule 1. It is not necessary to set a minimum level of payments to carers. The risk is that the incentives for carers to get into work are blurred by the automatic payment of an amount that does not relate to their personal circumstances. We all agree that work, not benefits, is the best route out of poverty, and we must ensure that payment levels are not set so high as to undermine that.

Amendment 61 takes us back to an issue that was extensively debated in Committee in respect of the payment of universal credit. Opposition Members suggest that that default position should be that payments made in respect of children are routinely directed to the carer. The amendment would provide powers to specify other circumstances for paying a portion of the universal credit award to a particular individual.

We have published a policy briefing note setting out our intentions for payments. We have already said that couples will be able to choose which of them receives the award and they could direct it to a joint account for both to access. It is a core principle of our approach that individuals are best placed to make choices about what is best for their own circumstances. There will, of course, be some exceptional circumstances and there are powers within the Bill to amend the Social Security Administration Act 1992 to allow the Secretary of State to pay all or part of an award to another individual. We do not need this amendment to ensure that. However, the default position should be that we make payment to the person chosen by the couple, not by anyone else.

Many of the concerns raised in this debate are, of course, about the possibility that universal credit might be less generous to some people than the current system of benefits and tax credits. We propose a radical reform and a simplification of the welfare system. In that situation, it is not possible to replicate exactly every aspect of the current system. That is why we will introduce a system of transitional protection to ensure that there are no cash losers as a result of the move to universal credit.

[Dame Anne Begg]

Will the Minister tell us how much will be available for the transitional protection? The figure of £2 billion was mentioned, but that included all the changes, all the administration and IT as well as the transitional protection. What is the spending envelope? How much will cover the transitional arrangements?

[Chris Grayling]

The £2 billion contains sufficient money for us to be able to deliver the transitional protection and the various changes. I do not have the numbers in front of me, but I will happily write to the hon. Lady to give her the more detailed figures we have published so far. We have given a clear commitment to transitional protection. It costs what it costs, but we have made a sensible projection of what we believe it will cost, which is contained in the budget for the spending review period. It is important to ensure that there are no cash losers as a result of the transition, but it is impossible to make a big change of this kind without finding that people in subsequent years are in a different financial position from their counterparts in previous years. Inevitably, some will move one way; others will move another. The only fair and proper way of dealing with the situation is to ensure that everyone is protected in cash terms.

We think that we have put together a framework in part 1 that will give us the flexibility to introduce the universal credit and to fine-tune the proposals as necessary so that if we do not get everything quite right at the start, we can fine-tune as we go by, and that a future Government will have the flexibility to do that. We have made absolutely sure that we have the appropriate protections in place so that there is an element for child care, for parents, for those with disabilities, and so on and so forth.

We think we have created a sensible framework of the kind that in different areas of policy and in different ways were created through primary legislation by previous Governments, including the last Government. I do not believe for a second that it would be prudent to write into the Bill the sort of amendments that the Opposition have tabled. I have responded to their wish to see more measures brought forward on the affirmative rather than the negative procedure, which I think is right and proves that we will listen and make amendments where it is sensible to do so. I am afraid that the Opposition are seeking to write the sort of detail into the Bill that they would never have put in legislation when they were in government; they would never have followed that approach themselves. That is why I cannot possibly accept their amendments and why I ask the House to accept the Government new clauses and to reject the Opposition amendments.

--- Later in debate ---

[Ms Buck]

That is absolutely right; my hon. Friend makes a valid point. I am not going to say that just because someone is in a social tenancy they would not be able to have somebody else living in their home. People make that decision in the private sector; morally, it is not a completely absurd thing to do. However, I do not know whether it deals with the problem in any meaningful sense or what all the implications will be.

People with disabilities are, by definition, much more likely to have formal or informal care or to want the capacity to have friends and relatives coming in to provide them with care. Yet we know from the Government’s impact assessment that 66% of all those affected by the cut in benefit in the social housing sector are categorised as disabled—not all severely disabled; I understand that—and that between 101,000 and 108,000 of those properties, depending on which definition one accepts, are specifically adapted for their needs. In Committee, the Minister made some reassuring noises about the problem. She told us that the Government were prepared to

“look in detail at how we can ensure that there are exemptions for individuals who are disabled, where their homes may have been subject to extensive adaptations to accommodate that."

However, earlier in the debate she had told us:

“Providing an exemption for all adapted accommodation would not be the right approach”

and that exemptions should be applied only where making a fresh adaptation would cost more than

“allowing someone to stay where they are.”––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 685-716.]

That prompts several important questions about the sheer level of bureaucracy that will be necessary to send somebody into every single one of those 108,000 adapted properties to carry out an official survey to establish the extent of those adaptations and come up with a cost-benefit analysis to see whether a move to alternative property will produce a cost benefit, and if it does not to assess the margin of error. If an adaptation would cost £10,000, but it was deemed that the cost saving would be £9,500, would the person with the disability be expected to move from their flat? Would the difference be £1 or £20? This is one of those counter-arguments that sounds seductively simple until one starts picking away at it and finds that it does not sound very good at all.

[Dame Anne Begg]

Does my hon. Friend agree that the problem is not just the cost, but the upheaval and the incredible time it takes to adapt a house? I know about this because I have done it three times myself. It takes at least six months, and all that time, the person might not be able to get into their own home.

[Ms Buck]

My hon. Friend is absolutely right. I have been drawn into arguing with the Government on their own terms, which is a clinical, cash-led way of debating such things: if it will cost £5, someone may have to lose their home; that is the only measure. However, my hon. Friend is right, and we expressed such anxieties about the whole under-occupation policy in Committee. We could be talking about somebody in an adapted property, somebody who has been in their family home for 30 years, or somebody who has been in their home for 30 years but has recently been widowed or lost a child and is suddenly deemed to be under-occupying.

--- Later in debate ---

[Ms Buck]

Pensioners are excluded. As I have argued, the attempt to move people of working age in order to avoid the disability penalty is likely to stop registered social landlords from moving pensioners who want to downsize voluntarily, because there simply is not enough flexibility in the social rented sector to allow that to happen. The hon. Lady is making my point for me: there is no discretion. The 670,000 social housing tenants who will be subject to the housing benefit cut, and the 101,000 to 108,000 people in specifically adapted properties, will be subject to a benefit cap. There will not be any discretion. All that the Government can say, apart from mentioning the possibility of people taking in a lodger or moving to an alternative property in a few cases, is that the discretionary housing payment will sort it all out.

[Dame Anne Begg]

Grampian Housing Association, one of the social landlords in my area, has written to me and said:

“If this goes ahead it will increase demand for property sizes that we simply cannot supply and lead to a great deal of stress for the families involved.”

It knows its housing stock, and it knows that it does not have houses of the size required.

[Ms Buck]

My hon. Friend is absolutely right. We know from all the evidence that has been given to us by the experts who are running housing associations that they do not have flexibility in their stock. The one and two-bedroom properties that are needed for people downsizing from three and four-bedroom houses are not available. They simply do not exist. There is not a supply that will enable anything other than a tiny minority of people to avoid this punitive benefit cap, because people will not be able to move. The property is not there for them to move to.

Nor is the property there for people who need adapted properties. I think it was my hon. Friend who made the point that when the cost-benefit analysis tips in favour of someone being required to move because of the value of their adaptations, they then have to make adaptations to another property. I had someone in my surgery last week who had an occupational therapist from Westminster council visit them in November about adapting their property, and they had not heard another word. That person, a wheelchair user who is unable to use their own bathroom, has been waiting eight months for the process of adaptations to be even started. We can multiply that situation by 108,000.

--- Later in debate ---

[Maria Miller]

I would not want to incur the wrath of Mr Speaker by going into such issues, which are more to do with my colleagues in the Department for Communities and Local Government. Certainly, however, my Department has a responsibility to ensure that we apply that downward pressure on rents in order to ensure affordability for people across the board.

[Dame Anne Begg]

The housing associations in my area are saying that because they are likely to have people defaulting on their rents, such housing will no longer be a good investment, and for that very reason further building programmes are likely to be curtailed. That is the result of the Government’s policies.

Oral Answers to Questions

Anne Begg Excerpts

Monday 13th June 2011 Commons Chamber

[Chris Grayling]

I absolutely agree with my hon. Friend. One encouraging thing about the Work programme is the vast diversity of organisations taking part—from big international organisations to small businesses; and from some of our bigger more prestigious charities, such as the Prince’s Trust, down to individual charities—even a walled garden project is involved in Yorkshire—and many of our local colleges. Together, they can make a huge difference in what is a revolutionary approach to the problem of long-term unemployment in this country.

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

The Minister will remember an exchange of correspondence that he had with the Select Committee about TUPE cover. Now that the Work programme has gone live, the confusion over which posts will enjoy TUPE protection has continued. Of two contractors in the same area, one says that TUPE does apply and the other says that it does not—in some cases, to the same workers in some of the subcontracting companies. I urge the Minister to clarify this issue and ensure that his Department sets out clear advice about which positions have TUPE protection and the rules regarding people working in the Work programme.

[Chris Grayling]

The hon. Lady needs to remember that in many cases the programmes that we are replacing are very different to the Work programme. Pathways to work, for example, was simply six work-focused interviews. There will be cases in which TUPE does not apply. We have been very clear in saying to the providers that it is a matter between the providers themselves, the individuals and the former employers to resolve when and where it applies. It is not for the Department to offer legal advice to providers.

State Pension Reform

Anne Begg Excerpts

Monday 4th April 2011 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend, who brings his great knowledge of these issues to the House and to the Select Committee of which he is a member. As he says, we need a simpler system. He will appreciate that these things take time; we will need to consult and then respond. In due course, we hope to legislate to re-programme the computers and so forth. As the Chancellor said, we are talking about some years to implement the reforms, but we are clearly keen to move forward as fast as we possibly can.

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

I was listening hard to the Minister’s reply to the shadow Minister, my hon. Friend the Member for Leeds West (Rachel Reeves), and I noticed that he provided no examples, in response to her request, of those who would be worse off as a result of these changes. There must be some losers. Presumably, they will include the group who enjoy pension credit now, but have not paid enough contributions to justify the new flat-rate pension. What will happen to that group? As for women, surely if they have not made the contributions, they will not be any better off than they are now.

[Steve Webb]

I am grateful to the Select Committee Chair for her questions. To be clear on the role of pension credit, we envisage that there will have to be a safety net under any system, and the Green Paper provides for consultation about what exactly that might look like. There will still be a guaranteed credit type system—a floor below which people cannot fall. In a single-tier pension world, the savings credit would no longer be necessary for new pensioners. In other words, the savings credit was invented by the previous Government to deal with the fact that 100% marginal tax rates were paid on any saving. Because we are not doing that any more, we will not need the savings credit for new pensioners, which helps to pay for the reform. It is less means-testing, more universal pension.

The hon. Lady rightly mentions the position of women and my point is that women under the current system, who often did their child rearing before the state second pension was introduced, have no protection at all, whereas they have basic pension protection. Under a single-tier world, they get protection at the full rate, so they will benefit from the reforms we are introducing.

Amendment of the Law

Anne Begg Excerpts

Tuesday 29th March 2011 Commons Chamber

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

What does my hon. Friend make of today’s announcement that Statoil, a Norwegian company—from a country where tax is not exactly low—is to put on hold its £3 billion-plus North sea development as a result of the Budget increase in oil and gas tax?

[Ms Eagle]

This smash-and-grab raid on the oil companies to pay for the tax cut appears to be unravelling. Certainly, sudden changes to tax regimes without notice have big implications for investment. The Government need to pay particular attention to what the oil companies are saying, especially about their investment intentions. Having a North sea oil regime that can switch and is not set, because of the $75 a barrel oil price, which is going to change the regime again, may be particularly damaging. We will have to take a close look in Committee at how the Government intend to implement this mechanism.

[Dame Anne Begg]

The offshore oil and gas industry, which was a growing industry and could have been the driver that took the country out of recession, tells me that the one thing it needs to invest in this country is stability, but the fuel duty stabiliser will not give it that stability. Indeed, it will do the very opposite and make things even more volatile.

[Ms Eagle]

My hon. Friend makes a very important point. We will have to look at precisely how the stabiliser mechanism will work. How long will the oil price have to be at $75 a barrel to trigger it and how will that be measured? What will be the implication for future investment decisions? We know that there is a great deal of competition in the oil and gas industry for the use of very expensive infrastructure. My hon. Friend has made very important points and we will be watching like a hawk—to use a phrase that has already been used—to see about the practicalities of the announcement.

I note that the Government are reportedly urgently considering handing out hundreds of millions of pounds in tax breaks to compensate energy companies that are apparently considering shelving existing plans for further investment in UK gas fields or raising domestic prices still further to make up for profits lost. By

“squeezing the maximum amount of tax revenue from Britain’s oil and gas assets,”

the Chancellor

“is putting further offshore investment at risk…He’s more interested in cash today than investment tomorrow.”

That was the current Chancellor speaking in 2007, but now he is in Downing street he seems to be ignoring his own advice. The truth is that this policy was cobbled together at the last minute, the OBR did not have sight of it and now it is descending into chaos. I must issue a warning to the Chief Secretary to the Treasury, because I read over the weekend that he is being blamed for this incompetent piece of policy making on the hoof—apparently it was all his idea. I would be watching my back if I were him. We now see the reality that the fuel duty cut was a classic Tory con that really will not help anyone at all.

Meanwhile, the small print of the Tory-Lib Dem Budget shows that the NHS will be hit with a £1 billion cut in real terms, breaking the Prime Minister’s pre-election poster pledge that he would not cut it. The OBR’s new inflation forecasts reveal that spending on the NHS will fall for the next two years for the first time since records began—that is before the Government waste billions more on a reorganisation that nobody wants. The Tories drained the life out of the NHS in the 1980s and now they are back and are trying to do it all over again.

We were told that the Budget was all about growth and the Government promised to help Britain’s hard-pressed families with the cost-of-living crisis, but they have failed dismally on both counts and today the Bullingdon boys have sent along a Lib Dem whipping boy to defend it. If the Chancellor has “Je ne regrette rien” playing on his iPod, then the Chief Secretary has “Puppet on a String” playing on his. Just last year he promised his party’s Scottish conference:

“In our first year in government, we will invest to create new jobs and boost the recovery.”

Well, 10 months later and two Budgets in he has done precisely the opposite. The fact is that this Government’s extreme experiment with the British economy is failing and British people are suffering.

This Budget was a dodgy Conservative con that was signed off by the ever-compliant Liberal Democrats—the human shields of British politics. Far from making life easier for people, the Budget will make life tougher. The Government’s agenda of cuts, cuts, cuts is ruining lives and dividing the nation. It seeks to pit the private sector against the public sector, the young against the old, the north against the south, the weak against the strong, and the rich against the poor. We reject the politics of division. This is the wrong Budget in tough times. The Government should come back and have a second attempt which does not cut too far, too fast. That is why we will vote to reject the Budget tonight.

--- Later in debate ---

[Dame Anne Begg]

Which oil and gas companies said that they would enjoy a lower tax take as a result of the Budget?

[Danny Alexander]

I will mention the oil and gas sector in the course of my speech, but it is worth observing at this point that, as a result of the very high oil price, oil and gas companies are expected to make £24 billion in profits over the next 12 months. Even with the tax changes that we have announced in the Budget, it is expected that they will make more profit per barrel of oil over the next five years than they did in the past five years, when the previous Government last changed the supplementary charge regime.

We are also creating a competitive tax system in relation to personal taxation. We have of course confirmed that the national insurance increase that the previous Government announced will have to go ahead at least partially, but because we have increased the threshold we are making it cheaper to employ people on incomes of less than £21,000 a year. Anyone earning less than £35,000 a year will, as of next week, be better off because of our £1,000 increase in the personal allowance that was announced in last year’s Budget, the largest increase in the personal allowance in history. That means that in real terms 23 million taxpayers will be around £160 a year better off—£200 in cash terms.

The coalition agreement also commits the Government to real increases in the personal allowance in each and every year of this Parliament. It also sets us the goal that no one earning less than £10,000 a year will be caught in the income tax net. I am happy to be able to tell the House that the £630 increase in the personal allowance announced for next year puts us on track to meet that goal in this Parliament. This is about rewarding work.

We are also reforming the welfare system, and I know that a number of comments were made in the debate on the disability living allowance regime. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) should look at page 55 of the Red Book for the answer to his question.

Oral Answers to Questions

Anne Begg Excerpts

Monday 28th March 2011 Commons Chamber

[Chris Grayling]

I can absolutely give that assurance. We want to get this right, and we have introduced these changes because we think they improve the process. For example, we expect more mental health patients to end up in the support group as a result of the changes we have introduced. I have made it very clear to everyone involved that if there are further ways of improving the process, as a result either of recommendations from Professor Harrington or of the experience of the national roll-out, we will move quickly to make the necessary changes.

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

I want to be clear on what the Minister is saying will be in place by June in respect of Professor Harrington’s recommendations, and whether that will include the new descriptors—I understand that they will be another year away. I ask about this because my constituents have already been through the system as they are the first to be migrated from incapacity benefit to employment and support allowance. It is important to ensure that they have been assessed properly, because they will also be the first cohort whose contributory ESA will be removed from them after they have been on it for a year—there is an unfairness in that process too.

[Chris Grayling]

We will take all necessary steps to ensure that the decision-making process is correct. Professor Harrington did not recommend changes to the descriptors ahead of the national roll-out; he recommended that they should be part of the second year review process. I invited him to accelerate that work, and if and when he makes further recommendations, either before or as part of the second year review, we will move quickly to implement them.

--- Later in debate ---

[Steve Webb]

We recognise that payments do not always get through to landlords. There is a provision that allows direct payment when there are eight weeks of arrears, and we have added a provision under our new rules so that direct payment can be made to a landlord when it will secure or maintain a tenancy.

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

I was contacted last week by a constituent who is in her 50s, has advanced multiple sclerosis and lives in a residential home. Her elderly mother has moved into a nursing home on the other side of Aberdeen. The taxi that allows my constituent to visit her mother costs £50 there and back—exactly the amount she gets from the mobility component of disability living allowance. Will the Minister guarantee that my constituent will continue to have access to those funds after the changes to DLA, and that she will not have to go through a reassessment to make sure that she really deserves it?

[Maria Miller]

As we have said before from the Dispatch Box, the intention of our measures to reform the personal independence payment is not to remove the ability of people such as her constituent to get out and about. We will now include the needs of people in care homes in the overall PIP reassessment.

Housing Benefit

Anne Begg Excerpts

Thursday 10th March 2011 Westminster Hall

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

On behalf of the Work and Pensions Committee, it is a pleasure to open the first debate that we have held in Westminster Hall. We have published two full reports up to this point in time. One is “Youth Unemployment and the Future Jobs Fund” and the other is the report that we are discussing today, “Changes to Housing Benefit announced in the June 2010 Budget”.

We had hoped that the Government response would have been with us a bit earlier, but it arrived a bit close to the wire. We were able to agree it in our Committee meeting yesterday morning, just after we had grilled the Minister, who is here today, on his pensions policy and thrown him out. The members of the Committee now have copies of the Government response. Obviously, part of the reason for the debate today is to discuss the report in general and the Government response.

I will give a bit of history about the genesis of the report that we are debating today. We decided that it was important to produce the report after the announcement about housing benefit in the Budget last June. However, as soon as we announced the inquiry and published our terms of reference, the debate about housing benefit and local housing allowance moved on. So this report is quite narrow, in that it looks almost exclusively at the LHA and the situation in the private rented sector. That is because at the time that the report was produced, it had not been recognised that there might be implications for the public rented sector, and particularly for local councils, due to the changes to housing benefit. That became clearer as we carried out our inquiry, but by that time we were already tied in to the terms of reference that we had sought evidence on, and we were not in a position to change those terms of reference. However, I am fairly sure that the debate about housing benefit and the LHA will continue, and hopefully this afternoon we can tease out some of the additional issues that we were unable to cover in the report.

We need to begin with the items in the Government response that we welcome. We made a number of recommendations in our report about the need for robust data and robust independent research. That was because when we took evidence, we found that charities working in the homeless sector often said that the changes to housing benefit would lead to mass homelessness and were unlikely to lead to private landlords reducing their rent, whereas the Government said, “No, they won’t. There might be a bit of homelessness, but not really that much, and yes, the whole point of this policy is to force private landlords to reduce their rent.” Until the policy is in place and has been working, it is impossible to test which of those two diametrically opposed views is the right one. That is why we are pleased that the Government have recognised the need for good, solid, independent research, because that will be the only way in which we can tell whether the policy has had the intended consequences and ensure that it does what it says on the tin.

I do not know whether this was a success for our Select Committee, but many people were delighted that the Government decided to drop the 10% sanction on housing benefit for people who have been on jobseeker’s allowance for more than a year. That proposal caused a huge amount of angst among a large number of the people from whom we took evidence, and the issue was raised on the Floor of the House and in debates in Westminster Hall. It seemed grossly unfair, and it certainly would not have done what the Government alleged it would do, which was to act as a work incentive—if anything, it would have acted as a work disincentive.

That proposal woke up the public rented sector—particularly the housing associations—to the full implications of some of the proposals that the Government were coming up with, because a large number of housing association residents are on JSA. The housing associations faced the prospect of losing 10% of their income at a stroke as their residents were sanctioned. The residents might have done everything that the Government asked them but have been unable to get a job, because the labour market in their area was such that they could not find one, yet they would still lose 10% of their housing benefit. It seemed strange to us that housing benefit would be sanctioned for actions in relation to a completely different benefit. I am pleased that the Government have seen fit to drop that proposal, which is incredibly important.

Much of the debate about housing benefit has focused on the caps or on the situation in London, which has helped to obscure what could happen elsewhere in the country, and some of the knock-on effects for the public rented sector. That was because it was much easier for the tabloid newspapers to latch on to stories about “£1,000-a-week housing benefit claims”, when in fact such claims were a small minority of all claims. It is often the case that it is not good practice to introduce policy based on the few rogue examples rather than on the position that most people find themselves in.

Despite that, and despite the fact that the LHA was increasing and in general covered rents, there were already shortfalls for some residents. Many claimants were already making up the shortfall between what they qualified for with regard to what they could get in the broad rental market area and what their actual rent was. As part of our inquiry, we visited a citizens advice bureau where we met an elderly gentleman who was already having to supplement his housing benefit to the tune of about 10% of his very limited pension. He was a prime example of someone who had found it very difficult to get a tenancy in the private rented sector, because as soon as landlords heard that he was on housing benefit they turned him away. “Lying” might not be quite the right word to use, but he “failed to inform” his landlord that he was actually an LHA recipient when he signed the lease on the accommodation that he was in at that time. He knows that he probably would not have been able to get that lease if he had told his landlord that he was an LHA recipient.

That is one likely problem with the Government’s approach. The assumption is that people will be able to move and that they will be able to find accommodation within the bands that they can claim for, but that is not necessarily the case. Although the Government response says that landlords will reduce rents in many areas, it is definitely the case that in large numbers of areas—my area, for example—demand already outstrips supply, and landlords will quite easily be able to get tenants who are not dependent on housing benefit to live in their properties. Therefore, the choices of those who are dependent on housing benefit will be squeezed and become ever narrower. They do not have the choice to go into the public rented sector, because there is already a shortage of supply there.

The Government’s response is a bit complacent in saying that landlords will reduce their rents. Even if they do so in one or two areas, I suspect that in the majority of the UK they will not, and it will be very difficult for people to find anything to rent. In places where there is very little choice anyway, such as rural areas, choice will be further narrowed, and it might be impossible for people who are on housing benefit or local housing allowance to get anything with a rental price anywhere near what they can claim in benefit.

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

I have received a briefing from the Residential Landlords Association on that precise point. It says that in relation to a survey it conducted:

“71% of respondents said that they would not decrease their rents. A recent study for the British Property Federation put this figure at 88%. Although the Government’s whole case is based on the assumption that this will happen our survey evidence (along with that carried out by the Local Government Association in London) contradicts this.”

[Dame Anne Begg]

That is why it is important that the research is carried out. In his evidence to the Committee, the Minister, the noble Lord Freud, said:

“They would say that, wouldn’t they?”

It is not until the proposal is market-tested that we will know whether what we are talking about will be the case.

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

Does my hon. Friend agree that we can already market-test to some degree? In my borough of Trafford, for example, we already know that two-bedroom properties in the private rented sector are heavily oversubscribed. The market is unlikely to reduce rents when it can readily let to people who are not in receipt of local housing allowance.

[Dame Anne Begg]

Indeed, and there is the same situation in my constituency, where there is a housing shortage. Even people who work in the oil industry—a fluid population that comes temporarily to work in the offshore sector—have great difficulty in finding housing. There are jobs in certain areas and people flock to them, but those people often cannot take up the employment, because they cannot find accommodation. Those people are in the private rented sector and can afford fairly high rents, and their situation probably has more to do with rent inflation in Aberdeen than with anything that has happened as a result of local housing allowance. The Government have sometimes given the existence of the local housing allowance as a reason for rent inflation in the private rented sector, but in certain areas it has nothing to do with the allowance, simply because there are not enough LHA claimants to have that kind of market effect.

One aspect of the housing benefit reforms that we congratulated the Government on is the fact that disabled people who need a non-familial person to stay overnight will be able to claim housing benefit to cover the extra room required for that carer, which is, in itself, a good measure. It was a recommendation made by the Select Committee in the previous Parliament, and I have to say that the then Labour Government did not agree to implement it. However—there is often an “however” in all this—as a Committee we realised that even if the person looking after a disabled person is a relative who does not need space in the house, there might, for example, be a need for more space for wheelchairs, or an extra room for dialysis machinery. Disabled people need large houses, for which they would not qualify on the basis of their family size, for all sorts of reasons.

I was disappointed by the Government’s response on that issue:

“Housing Benefit is not designed to meet every individual circumstance and it would be complex to introduce different rules for the situations such as those described by the Committee”.

That is poor, because council tax benefit and the tax itself can take account of people who need extra room. If someone can prove that they are in a bigger house than they would otherwise occupy because they need extra room for a wheelchair, the local authority places the house in a lower council tax band. That is quite simple and straightforward, and it is not particularly difficult. I am disappointed that the Government have not recognised that such extra space might be imperative for disabled people. It is doubly imperative that the Government recognise that, because the proposals also introduce an under-occupancy rule, of which disabled people could fall foul simply because they occupy a house that is bigger than the one that they would need on the basis of the number of people in their family.

The Government also completely miss the point of the Committee’s recommendations regarding the possibility that someone with a disability who has had their house adapted has to move because they do not qualify for a house of that size, or because the house is too expensive. Their house, whether in the private rented or social rented sector, will no longer be covered by housing benefit. The Government’s response is, “Well, we’ve got the nine-month transitional protection,” or “There might be something in the discretionary housing payment that can be used.” The Government’s response suggests that disabled people will be able to move just like everyone else. Well, the answer is, “No they will not.” It is incredibly difficult, as it is, to get accommodation; it is almost impossible to get accommodation that is already adapted; and it is very difficult to get accommodation that can easily be adapted. For someone who has already spent a lot of money—out of their own pocket or through facilities grants—not only on making their home accessible, but on adapting the bathroom and kitchen and doing all the other things that need to be done, the Government are saying that it will somehow be okay, because if housing benefit is changed such people will be able to move and replicate those facilities somewhere else, but only in a smaller house or a cheaper area. That is not possible, and a lot of disabled people will be distressed by what I see as complacency by the Government.

I know that the Government say that all that will be covered by the discretionary housing payment. In fact, their response to our report seems to say that the payment will be a panacea. I came across mentions of the payment so often that I counted them, and it appears 20 times in a relatively short document. The discretionary housing payment will be the solution 20 times—it is mentioned three times on page 11 alone. So, £190 million is going to go an awfully long way and do an awful lot, and I am fairly sure that the Minister himself recognises that it is not elastic and will not cover all that the response says that it will.

[Kate Green]

I, too, noted the many references to the discretionary housing payment as the solution to the hardship and risk of homelessness identified in our report. Does my hon. Friend agree that it is not only about whether that payment can possibly be adequate, which looks unlikely, but about the fact that it is discretionary? That introduces further uncertainty for families and households about the stability of their home.

[Dame Anne Begg]

That is the problem. As well as the discretionary element, council tax benefit will be devolved to local authorities, although only 90% of it, and that as well will be discretionary to the local authority. The discretionary element must cover not only older people but disabled people, young people, large families and multi-generational families, perhaps from ethnic minorities, yet it will be up to the local authority to decide who receives it. I suspect that most local authorities will have a pecking order of groups that they think are worthy of support, leaving the groups that they do not think are worthy of support at the bottom of the heap.

[Glenda Jackson]

There is another dimension to the problem that my local authority has raised with me. This is a period in which local authorities are strapped for cash and reducing staff, yet the changes will place greater burdens on them, which might extend the length of time required to make the discretionary decisions, making the people waiting for those decisions even more anxious and concerned.

[Dame Anne Begg]

Governments and local authorities are often accused of making people suffer a postcode lottery. The fact that yet another matter will be open to the discretion of local authorities with tight budgets could create a strong postcode lottery dependent on area, not just in different parts of the country but in neighbouring areas. That will lead to uncertainty among claimants, who will not know when they sign a lease whether they will receive discretionary housing payment or not. There will be new claimants, and those sitting in houses in the hope of receiving discretionary housing benefit might have months of worry—perhaps will have even started to look for other housing—before knowing whether they will be covered by their council’s discretion and receive the money.

I suspect that in many areas, because the money will not go far enough, the discretionary housing payment might cover some but not all of the gap between people’s rent and their housing benefit and local housing allowance, so the anxiety about whether they will have to move will continue even after they are awarded the discretionary housing payment.

The other panaceas that the Government seem to think will solve a lot are the nine months’ transitional protection, which was mentioned only four times in their response rather than 20, and the independent review, which is mentioned throughout the document, although I did not count how many times. Phrases such as “the independent review will be comprehensive” and “it will cover” crop up throughout the report, as though we will have to wait for the review before some of the questions are answered. That is particularly worrying.

Another issue that we considered was the shared room rate, which the Government say in their response will be renamed the shared accommodation rate. It is meant for younger people, who are expected not necessarily to have single tenancy of a complete property but to share with others. It is proposed to raise the age limit for the shared accommodation rate from 25 to 35.

I am not sure that the Government have thought through the implications. I held a housing summit in Aberdeen to which a lot of people from the public rented sector came along, particularly from housing associations, and they were greatly exercised. Do the Government know how many houses in multiple occupation exist? Is there enough accommodation for that group of people? In my area, there are virtually no HMOs, because it is quite complicated and bureaucratic to register as one. A number of people who fall into the category will not be able to access a room in shared accommodation. Have the Government considered changing the rules to make it easier to share? It is illegal for tenants on housing benefit to sub-let, and there are all sorts of other barriers in the rules that make it difficult for people on housing benefit to share housing.

Have the Government considered the divorced or separated dad who is 34 years old and has access to his children at the weekend? What will it mean to bring children into a house in which other people live? Have the Government considered the child protection issues involved? Will the single room rate apply to the divorced father under 35 who looks after his children one or two nights a week?

What research have the Government done to ensure that accommodation for that group exists at all? In some rural areas, there are no HMOs. Will young people all be expected to flock into cities and more populated areas if the accommodation for which they qualify does not exist in their area?

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Lady agree that it is particularly unreasonable to require expectant mothers to share accommodation up until they give birth? The last thing I can imagine wanting to do, having just given birth, is suddenly to find somewhere new to live and move house. That is completely unacceptable.

--- Later in debate ---

[Dame Anne Begg]

Indeed. I know from the homelessness legislation that that problem already exists. Lots of young pregnant women come to my constituency surgery who are living in mum’s spare bedroom or on her couch, but the homeless section will not see or deal with them until the day the baby is born. Usually the homeless section is sympathetic and will try to find them somewhere, but I suspect that that might happen only in Aberdeen, where there is not as much pressure on the social rented sector as in London. Such young women are often in a state of anxiety because they do not know what they will be taking their baby home to. They worry that it might be a damp room in a shared house somewhere.

[Glenda Jackson]

My hon. Friend lays her finger precisely on a constituency case that I had. The mother involved gave birth to her baby in the local hospital, the baby was ill and my constituent’s medical team would not allow her to take the baby back to where she had come from, as it was overcrowded, seriously damp and totally unsuited to a sick child. As a result, additional costs were laid on the national health service due to the complete unacceptability of her living arrangements at the time.

[Dame Anne Begg]

I suspect that most hon. Members will have similar examples in their constituency.

The Government’s response lists the various groups to which the shared accommodation rate—I have got so used to calling it the single room rate that I am finding it difficult to change—will not apply, but it is not clear how all the housing benefit changes will affect those living in supported accommodation, especially those who receive a mixture of Supporting People money and housing benefits, which is often a complex package of benefits, to allow them to live with support in their own home or shared accommodation. Will the Minister say a bit more about that?

Our report also considered work incentives, which were the main rationale for the Government’s changes—well, I suppose that the main rationale was to save on the housing benefit budget, but the second was to improve work incentives to ensure that work always pays.

[Jonathan Lord (Woking) (Con)]

I congratulate the Select Committee on its excellent work, and the hon. Lady on a very good exposition of some of the worries and potential issues with regard to the reforms.

As a non-member of the Select Committee, I would be interested to know where the Opposition parties are coming from on the overall thrust of the reforms. The Labour manifesto in the 2010 election said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

It is my understanding that that is a major thrust in the thinking behind some of the reforms. Does the hon. Lady agree with the manifesto of 2010? I would find that helpful to know, as background to the more detailed debate.

[Dame Anne Begg]

As we are speaking, perhaps the hon. Gentleman could read the report, where he will discover that the Select Committee recognised that housing benefit needed to be changed, and that the costs of housing benefit should be under control and affordable. There is no dissent from that. In terms of the Government’s response, the Government agree with the Committee, even within the ambit of the importance of getting the right amount of money to the right person to ensure that those who are on housing benefit are not experiencing a luxurious lifestyle, though I have to say they are not. That is where much of the problem in the debate came: the often overblown claims in some of the tabloid papers. One must remember that local housing allowance was set at broad rental market area level. Although the overall cap is £400, in a lot of areas it was already not possible to get that level of housing benefit or local housing allowance anyway.

[Kate Green]

If the hon. Member for Woking (Jonathan Lord) has now had the opportunity to consider the Government’s response, I wonder whether he was as struck as I was by the recognition that, after the introduction of local housing allowance, it was found that most low-income working households do pay a rent slightly lower than the local housing allowance rate for the property they occupy. It was only slightly lower—that rent was usually 90% or more of the local housing allowance rate. The differential between those who were in work and those not, in terms of rent paid, was relatively low. The make-up of the two groups often accounted for quite a lot of that difference. Those who were in work and having to pay rent were often young professionals, for whom occupying rented property would be a transitional step through to property ownership.

[Dame Anne Begg]

Very often, partly because of the publicity and the tabloid headlines, the assumption is that people on housing benefit are always out of work, when that is certainly not the case. In fact, in London it is particularly important that if low-paid people are to get work and to have work incentives, housing benefit must be set at the right level. The danger is that the gap between what they can get in housing benefit and what they can afford is too great; they end up not being able to get accommodation in the area in which they are working, which is even more important.

[Jenny Willott (Cardiff Central) (LD)]

Is one of the problems not the fact that local housing allowances have driven up rents for everybody in the private rented sector, including people who are working? That has had a knock-on impact on both those who are receiving the LHA and on those paying all their rent. Even where the difference between those who are not receiving LHA and are paying the rent themselves is 90% of LHA rates, that is higher than it would have been had the rents not been driven up in the first place. It has a much broader knock-on impact across society.

[Dame Anne Begg]

Earlier in my contribution, I said that I do not believe that is the case in Aberdeen. Wherever the housing supply is less than the housing demand, it is the lack of supply and the ability of those in work to pay higher rents that drives up rents, not the level set for the local housing allowance. It is a chicken and egg situation. Why was the local housing allowance set at that level for that broad rental market area? It was because of the average house rental price in that area.

The hon. Member for Cardiff Central (Jenny Willott) will have constituents in the private rented sector who will already, without any changes, be supplementing the local housing allowance out of their other benefits, in order to be able to afford the house. If rents were being driven up to local housing allowance levels, we would have seen a much smoother curve in the cost of all housing. All housing would cost the local housing allowance, but very often it still costs a lot more. That has been the problem that many are facing. It may be true in some areas, but that is what one hopes the research will find: that in the odd area a large number of people in the private rented sector are also on housing benefit. I understand that Blackpool is one of those areas. In such areas it may be the case that private rents have gone up to the LHA.

However, I do not believe that would be the case in more affluent areas. Unfortunately, in areas where that has happened, unless landlords reduce rents, we are still in a cycle of people not being able to afford the housing or to get other housing that they can afford, because of the changes. I have not said anything about the changes from the 50th to the 30th percentile: that also comes into play in a different area.

I was going to say something about the importance of housing benefit to work incentives. Perhaps that is something the Minister could answer. We know that housing benefit is to be in the universal credit, but we do not know the details of how it will be treated. One fear is that if housing benefit comes in as a flat level rather than the actual cost of the housing occupied, there might be a disconnect between what someone has to pay out and the effective withdrawal rates, so universal credit would not operate as it is meant to and ensure that works pays in all cases.

I am coming to the end of my comments, and I appreciate that I have not covered everything in the document. I mentioned that I held a housing summit—predominantly for housing associations but including those in the social rented sector in my constituency. The reason for that was that it became apparent that not only were there knock-on effects from the private rented sector that would result in higher demand for their properties, but there are also Government proposals that would affect them directly.

The biggest one that worried housing associations and the social rented sector is the under-occupancy rule, as it will affect all social rented housing as well as the private rented sector. The fear is that there will not be enough accommodation of the appropriate size for people to move. Consider the case of parents in their late-50s occupying a three-bedroom house, because it was the family home in which the family grew up before leaving. They have fallen out of work, which might be exacerbated by the increase in the state retirement age to 66. In their late 50s or early 60s, for the first time in their lives, they are now dependent on housing benefit in order to pay the rent, but they will only get housing benefit for a one-bedroom property, because that is all they will qualify for. Can the Minister say how the amount they get will be calculated? It could be, in an area such as Aberdeen, that what they pay for their three-bedroom council house is less than they would get in local housing allowance, even after the changes, for a one-bedroom flat in the private rented sector. There is a false economy if they are being forced to move into something more expensive, which they will get because it is in the private rented sector.

I could be flippant and say that there will be plenty of one-bedroom flats available because all the 25 to 35-year-olds will have had to move out of them to go into shared accommodation. However, I do not think that the 60-year-old mum and dad are going to move into the equivalent of a one-bedroom student flat, which a younger person has moved out of. This will cause great anxiety and worry. A lot of people will probably stay where they are, but they will be very short on the rent.

I know that the Minister is particularly concerned about pensioner poverty, but a large group of people who have fallen out of work towards the end of their working lives and who cannot get their state pensions until they are 66 will get caught up in this issue; it will not affect people who are over pension age, but it will affect those who are just below it, whose last years before they get the state pension will be spent living in poverty. They could become the group with the highest levels of poverty. The issue really must be considered. The social rented sector is particularly worried, because a lot of those people are already in the sector, and there is simply not enough stock to allow people to be moved around and housed according to the new occupancy rules.

When Labour was in government, many Opposition Members said it would be unfair for older people to have to sell their houses to pay for their care. They also said that it would be unreasonable for them to have to sell their houses because the council tax was too expensive. However, the Conservative coalition Government are saying that it is perfectly acceptable for those living in the social rented sector to have to move at a time in their lives when they should be settling down and moving towards retirement. The issue is a great concern, and people are very exercised by it. In rural areas, of course, there may not be houses of the appropriate size because they do not exist. People will therefore face an enormous shortfall between their rent and what they can get under the occupancy rules because of where they live.

I could say a lot more, but I am conscious that I have taken up a lot of time.

[Jonathan Lord]

On under-occupancy, my local council has a terrific record on providing social and affordable housing. Like other hon. Members, however, I have many constituents who need larger houses. Sometimes, they are on a waiting list for years to get one. Across the country—I have asked about this on the Floor of the House—hundreds of thousands of people are taking up space that they no longer need. Does it really make sense to have all those people waiting for appropriately sized accommodation, while others are being subsidised in the social and affordable sector and sitting on properties that are far too large for their current needs?

[Dame Anne Begg]

I hazard a guess that the group of constituents the hon. Gentleman is talking about—we all have them—are not sitting in one-bedroom properties, but two-bedroom properties, and they will be looking for three or four-bedroom properties as their families grow. However, the people who are over-occupying will qualify only for a one-bedroom property, and in places such as Glasgow, there are simply not enough one-bedroom properties in the social rented sector to cover the number of people who qualify only for a single-bedroom property.

[Glenda Jackson]

On that very point, I have a briefing from the National Housing Federation, which states:

“There is a very limited supply of one bed properties into which people will be able to move. In 2009, just 38,700 one bed housing association properties were let to people of all ages in England. By contrast, the DWP’s impact assessment identifies 240,000 households who fit the size criteria…Most of these people will see a cut in their benefit with no prospect of being able to move to a smaller social home.”

[Dame Anne Begg]

That gives some of the figures. The problem is the mismatch between what people will now get housing benefit for and the actual housing supply. We also have to remember that housing associations and councils are no longer building houses. In fact, the housing summit that I hosted made it clear that housing associations, in particular, are afraid that they might not be in a position to build any more new houses. At the moment, banks regard them as a fairly low investment risk, because they know that housing associations will be paid housing benefit directly for residents who are on it. Under the move to universal credit, housing benefit will no longer be paid directly to the landlord, which will undermine housing associations’ ability to borrow, because they will no longer be seen as low risk.

Alternatively, housing associations might have a large number of tenants in properties that are over-occupied, so they will see a shortfall in housing benefit. On a number of different fronts, therefore, housing associations could see arrears build up, because people can no longer afford rents as a result of the changes to housing benefit. If housing associations are then seen as no longer being a safe investment bet, they will not be in a position to build the new houses that are required. Some housing associations have gone down the route of shared equity and all sorts of other things, but all that is under threat because of the housing benefit changes. That was outwith the scope of the Committee’s report, but it certainly needs to be considered, and I hope that we will return to it at some time in the future.

I know that I have not covered everything and that I have covered only bits and pieces, but I have talked for a long time, so I hope that hon. Members will have a flavour of some of the issues. Yes, we welcome some of the things the Government have said, but we are generally quite disappointed by their response and by their view that £190 million of discretionary housing benefit will somehow magic away a lot of the problems resulting from the changes. I hope that the Government are listening and that the Minister can answer at least some of our questions—if he cannot do so, I am sure that he can write to us.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

I am pleased to have an opportunity to contribute to the debate. I congratulate my hon. Friend the Member for Aberdeen South (Dame Anne Begg) who chairs the Committee. This is the Committee’s first report and she has led us well to some excellent conclusions. I will concentrate my comments on evictions and homelessness, which I believe will affect many people in my Stockton North constituency, as well as across the north-east of England and beyond. The Government’s proposed cuts will, of course, have that result.

It is worth remembering some of the things that we heard while taking evidence. The Committee took extensive evidence from many organisations and interested parties on the subject. We took much evidence from Shelter, which—among other things—told us that 147,000 families with 250,000 children and 20,000 households with people over 60 would be put in serious difficulty by the proposals, and that is not just financially. The Mayor of London estimated that there would be a 50% increase in homelessness in London, costing £78 million for the 5,000 households in the city that could be placed in temporary accommodation.

There is more—much more. Nearly 3,000 people in the small borough of Stockton-on-Tees will lose out by at least £7 a week thanks to the changes. Most of those people are in my Stockton North constituency rather than in Stockton South, which is represented by a Conservative Member. To some people, £7 is not a lot of money. However, that can represent food on the table for a family for two or three days. Large families are particularly vulnerable to the changes proposed by the Government and could face temporary homelessness, especially in central London. There will also potentially be an increase in poverty, including child poverty.

I make no apology for referring time and again to Shelter, which is one of the most credible organisations that I know. It, along with other organisations, has expressed concern that the number of households living in overcrowded properties will increase as a consequence of the reforms. According to Shelter’s written evidence, 1 million children are living in overcrowded conditions across the country, which is not only a problem for large families. Shelter also estimates that 72,000 families with 129,000 children may be forced to move out of their existing homes and that children will be uprooted from schools, which impacts on their education and social development.

It is likely that the reforms will lead to a significant movement of local housing allowance claimants from higher to lower rent areas. Those areas are likely to be relatively deprived and lacking in job or training opportunities, transport links, good schools and so on. The reforms have other wide-reaching effects, which can only add to the considerable burden on already stretched local authorities and on resources such as schools and doctors at a time when local authority spending is being decimated by the Tory-led Government. In the Stockton borough, there is a 28% cut in grant over the next two or three years, most of which is front-loaded.

My hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) mentioned that it is important we do not detach housing benefit from the broader issue of affordable housing provision and the difficulties for first-time buyers, especially in London and the south-east—although it is a problem across the country. The Government say that they will build 150,000 new affordable homes over the next five years, but that is less than a third of what the country actually needs. I recognise that Labour could have done much more in government to secure more adequate provision of social housing, but it is important to recall that, when we came to power in 1997, we were left with a £19 billion maintenance backlog by the previous Tory Government. I often wonder what the picture would be today if we had been able to spend that £19 billion on building new homes.

The Tory failure to fund the upkeep of social housing meant that hundreds of thousands of families were living in substandard and even dangerous conditions. Through our decent homes programme, council-owned homes have been fitted with more than 700,000 new kitchens, more than 500,000 new bathrooms and more than 1 million new central heating systems. More than £33 billion—£21 billion of it from central Government—has been invested in social housing, and we have reduced the number of non-decent social homes by 1.5 million. Yes, that created tens of thousands of jobs, but those jobs have now gone, forcing more people out of work and making them dependent on the kind of allowances we are debating today.

The Committee made a series of recommendations around the issues aimed at getting a balanced approach to change, and the Government responded just over 24 hours ago. Apart from the stark statement that the Government consider the estimates made by witnesses to have been exaggerated and that, in any event, the extra £190 million of funding will meet the challenges, however great, the response offers limited consolation to the people who will be most affected by the changes. Like others, I am not sure that the £190 million will go anywhere near to meeting the transition costs and other challenges. Paragraph 30 of the response states:

“If landlords reduced rents by £10 a week there would be a significant reduction in the number of customers in receipt of Housing Benefit under the Local Housing Allowance Scheme that would face a shortfall.”

There are two problems with that. First, I remain to be convinced that the claimed downward pressure on rents will happen, regardless of the number of people in receipt of that benefit. Secondly, why should families and individuals who have so little to start with have to face cuts in their weekly income for some politically motivated reason that I fail to understand?

Yes, I have heard the arguments, such as those made by the hon. Member for Woking (Jonathan Lord), who has left the Chamber, about it being unfair for people on benefits to live in the same or even better homes as people in employment. However, we surely do not accept the Daily Mail-type rhetoric that suggests the bulk of families on benefits are wasters and scroungers. They are not, and it is time we saw evidence of the care that the Government claim to have for our most needy. The Daily Mail line is disproved best by Shelter’s evidence that 0.01% of the entire local housing allowance caseload is represented by households claiming the maximum rent available.

Apart from the welcome decision to see sense and abandon the punishment of people on jobseeker’s allowance by fining them 10% of their housing benefit for being unable to find a job within 12 months, I am disappointed by the Government’s response to the report, which contains a set of recommendations put forward with the full agreement of the Select Committee. We have had a very thin response, indeed. As the Government’s programme is rolled out and the experts who gave us evidence are proven to have had well founded fears, I hope that the Government will take corrective action quickly and not allow a new underclass to be left deeper in poverty and struggling to find a home.

[Dame Anne Begg]

I wonder whether, with my hon. Friend’s experience as a local councillor, he has been able to quantify how much extra it may cost local councils to deal with the homelessness that will arise as a result of the Government’s proposals, and, indeed, the increase—perhaps return—of the bed and breakfast, which will be the only alternative that many people will have, as a result of being forced out of their homes?

[Alex Cunningham]

I do not currently have the specific details relating to Stockton-on-Tees, but I know that there are anxieties about everything, from how the council will deal with housing benefit in the future, to how it will deal with the people who are going to lose their jobs, as its responsibility is removed. It expects a considerable influx of people into the housing department seeking accommodation and further help. Whether that will be available, I do not know, and that is all the more reason why, as the Government have been proved to have been wrong on this issue, they will need to take quick action and correct it.

--- Later in debate ---

[Dame Anne Begg]

I agree wholeheartedly with what the hon. Lady is saying, but it is actually much harder for those who are dependent on housing benefit to lead the kind of shared life that I think the Government envisage. Students sharing flats are not dependent on housing benefit and are therefore not hidebound by the rules of housing benefit and what can be rented as a result of housing benefit, and neither are groups of young professionals who might be sharing a house or a flat. They are not hidebound by the rules of tenancy agreements and what is legal and what is not illegal. Part of the problem is the lack of houses in multiple occupancy to which people on housing benefit can have access.

[Jenny Willott]

The hon. Lady makes a valid point. In areas of my constituency, a large number of students live in shared accommodation. If they are in a house in multiple occupancy, most students are not going to want to share with somebody who is on housing benefit, partly because it makes it difficult for council tax exemption and things like that. As soon as there are different people with different exemptions and different rules, as the hon. Lady has said, the financial arrangements for a household may become complicated.

Finally, the other issue about which I have some concerns is the move to uprating rents in line with the consumer prices index, rather than with average rents. The issue is a difficult one to resolve, and I completely understand why the Government have decided to propose the change. Increasing the local housing allowance in line with rents has, in large parts of the country, driven up rents significantly. As the hon. Lady has mentioned, if we set the LHA at the median rent, and if all the landlords currently charging less than that bring their rent up to the median, then the median rises. Rents inevitably go on an upward bend, which has happened in significant parts of the country.

I appreciate that the Government are tackling that issue to ensure that it does not happen and that people have a fair crack of the whip. No only are there implications for the vast amount of money that the Government are spending through the LHA, but there is a knock-on impact on those who are not receiving the LHA in a local area and are renting privately. It can make it even more difficult for those on low incomes to afford appropriate accommodation.

I have some concerns, however, about uprating rents in line with the CPI. The index reflects inflationary increases, but it is not designed to reflect changes in the housing market. I am glad that the Government will be reviewing the decision in a couple of years—2014, I think—after seeing the impact. If the LHA is not keeping track with what is happening in the rental market, we could end up with a big gap separating those on the housing allowance and those paying rent. That might have a serious impact on those people’s ability to get into work, as well as all the other positive things the Government are driving forward.

A number of hon. Members have mentioned that the whole situation is driven by our not having enough social housing in the UK. It is crucial that we build more social housing, if we are to tackle any of the issues.

To get in my party political pop for the afternoon, both the previous Labour and Tory Governments sold off more than they built, which is why we are in such a mess in the first place. After the Thatcher-Major Government, by 1997 there were 1.1 million fewer social homes, which is a huge number. Then, after 13 years of Labour in power in this country, there was still a drop of another 250,000 in social housing. By the time Labour left power last year, there were 1.7 million families on housing waiting lists, which is such a vast number that it will take much greater changes than those to the housing benefit rules if we are to do anything about it.

I am glad that the Lib-Dems in government are ensuring that something will happen. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), announced that more than 150,000 affordable homes will be built over the next four years. That is a start, although clearly not enough when we have such a massive deficit of social housing in this country. At least it is progress in the right direction, rather than going backwards. I hope that, whatever we think about the changes, people will fall in behind the building programme to ensure that it happens, so that we can make some progress and people can afford homes to live in.

--- Later in debate ---

[Steve Webb]

The phrase “lose their homes” is rather evocative and misleading. When people say that they have lost their home, they are usually describing repossession—their home; their loss. What the hon. Lady describes is someone who has presumably managed to sustain a very high rent—if the shortfall is £5,000 in three months, the rent must be enormous.

The suggestion that the taxpayer should keep paying a vast rent while the claimant decides whether to stay in the property brings me back to my fundamental concern about the tone of the debate, which relates to balancing the responsibilities of the individual and of the Government. It was evident to some extent in the remarks made by the hon. Member for Aberdeen South, and particularly in other contributions, that almost every combination of circumstances, every possible need and every possible variation was deemed to be responsibility of the Government.

The hon. Member for Hampstead and Kilburn (Glenda Jackson) mentioned our response to the Committee’s report and some specific needs. For instance, she said that people living in a larger house might need somewhere to put a wheelchair and questioned whether it should be included in statute. The implication of what Committee members were saying is that they did not want it decided on a discretionary basis, but wanted it written into law. The point about our allowing an extra bedroom for carers is that we have legislated for it; after deciding on a category of clearly identified people and clearly specified needs, we wrote it into legislation, and it has become a right. However, there is a dividing line between identifiable, clearly categorised groups with particular needs and the much broader group listed in the Committee’s recommendations that may need a room for a wheelchair or something else.

The question is not, “Do we give a damn?”—I am sorry; I mean, “Do we care?” The hon. Lady implied that the Government do not care and that we are telling people to get lost. No; as my hon. Friend the Member for Cardiff Central (Jenny Willott) said, the Government believe that some needs should be written into statute, which we have done in cases where previous Governments did not act. However, other needs are so diverse that we should have the local flexibility to respond when the need arises. That is better than sitting down in Whitehall, trying to think of all possible circumstances and writing primary legislation to deal with them, which is not a sensible way to proceed.

[Dame Anne Begg]

That is not what I or others were asking for. In other areas, we use proxies or other measures to help passport people into getting greater help. For instance, there is a good chance that someone on the highest rate of the disability living allowance care element will need extra housing. That factor would give them the right to apply for more housing benefit. It works with the council tax system, under which those who need more space as a result of a disability can get the council tax reduced to a lower band. It is straightforward and simple. The problem with discretionary payments is that not everyone gets them, because they can be refused.

[Steve Webb]

The hon. Lady has said that proxies can be used, which means that we can identify categories of people to whom additional concessions should be made. That is what we did with the extra bedroom for the carer. The report specifically mentions people who need an extra room for a wheelchair. People on certain rates of disability benefit will almost certainly have a wheelchair but live in a house that can accommodate it; others will live in houses that need another room for the wheelchair. Rather than trying to categorise everyone in the same way, the flexibility of the discretionary system allows us to cater for those differences.

I was pleased to hear the hon. Member for Westminster North say that we have to work within our resources. That was a heartening comment, because every pound spent on another recipient or on further delays and concessions—on everything that has been asked for today—comes either from someone else covered by the housing benefit system or from our contribution to tackling the deficit, which is one reason for the reforms.

The hon. Member for Stockton North (Alex Cunningham) said that it is a difficult time for local government, implying that the Government just fancied cutting council budgets by 25% because of what he called an evil Tory-led, or Liberal Democrat-Conservative coalition plot. We all knew that this would happen, because substantial cuts in local government were coming down the track anyway. It is important to acknowledge that that is the backdrop against which we are operating. This is not an environment in which there is money kicking around. It is not as if we can resolve all these problems and delay tackling the remorseless rise in the housing benefit budget. Every £1 billion that goes on housing benefit every year is £1 billion that the low-paid, hard-working taxpayers, who are our constituents, will have to find.

--- Later in debate ---

[Steve Webb]

That is where I fundamentally disagree with the hon. Lady. The flaw in her analysis is this static view of the world: housing stock and the private sector is as it is and nothing can ever change. The figures that she quoted from the impact assessment assume that nothing changes. The losses she quoted assume nothing changes. Nobody can find somewhere cheaper to live; they just stay where they are and lose the money. Rents do not go down; they stay exactly as they are. The impact assessment from which she quoted is the worst-case scenario.

However, what actually happens is different. Let me give an example. If we were able to reduce rents by £10, that would wipe out nearly 500,000 people with shortfalls. One of the questions that was asked in the debate was: how will landlords respond? Guess what? When landlords were surveyed, they said, “Oh, we won’t cut our rent.” Well, there is a shock. Of course they would. They do not want these cuts because they are the ones who will be most affected. I was very surprised by the hon. Member for Brighton, Pavilion (Caroline Lucas) for whom I have a lot of respect—sadly, her contribution was 90% polemic and 10% substance—because she seemed to be defending private landlords. They are the people who get this money. They are the people who have got the £21 billion that used to be £11 billion 10 years ago. I did not know that they were her best friends. That is where the money is going.

The question is: if we go to direct payment in cases in which it will secure a tenancy, will landlords bite? We have 1 million private sector tenants on housing benefit. We have all seen adverts that say, “No housing benefit” but there are also 1 million people with private sector landlords getting housing benefit. Therefore, someone out there is renting to people on housing benefit. If a private sector landlord is renting to someone whose housing benefit gets squeezed and they or the council says to them, “You can have a guaranteed rental stream straight into your bank account month after month if you will reduce your rent to a level that will enable the tenancy to carry on” that is hugely attractive. It is turning a tenant into a triple A credit-rated tenant rather than someone who may or may not pass on the rent.

[Dame Anne Begg]

rose—

[Glenda Jackson]

rose—

[Steve Webb]

I will give way in a moment. Landlords are quite clear that that is hugely attractive to them. It is worth shaving the rent for, and that is often all that it would take.

[Dame Anne Begg]

It is actually possible to accept the Minister’s argument. The problem is the Government are about to introduce universal credit, which will make direct payments impossible, unless he has a different idea.

[Steve Webb]

We are focusing specifically on the roll-out of these changes over the next two years. Over that period, before universal credit comes in, this mechanism will be in place. Clearly, there is plenty of time to work out ways of underwriting the rent to the landlords combined with the universal credit. The crucial point is that this is a transitional issue, although there are longer-term aspects as well. It is in this transition—the crucial period in which the housing market adjusts—that the mechanism will be most effective.

[Dame Anne Begg]

May I make a suggestion to the Minister? It is that very point that concerns the housing associations, which already have direct payments. They are terrified that under universal credit, there will be no direct payment, which could undermine their whole ability to get us out of this mess by building more houses because they are not able to borrow the money. That is a serious concern.

--- Later in debate ---

[Steve Webb]

As such a wide range of issues were raised during the debate and a number of hon. Members have contributed to it, I will make a bit more headway and then I will be happy to give way again.

I was about to describe the evaluation and assessments that we will be carrying out, because a lot of the points that were raised during the debate were about particular groups of people. I want to identify the facets of the research that we will be undertaking.

To ensure that we gather the evidence required on key areas of concern, such as the behavioural and market responses of claimants, landlords and external organisations, we will commission primary fieldwork that will cover a number of issues, which I will now take the House through. They are: homelessness and moves; the single shared accommodation rent, which I will come back to later because there were a lot of misconceptions about that during the debate; the impact on Greater London, which is explicitly in the terms of reference for the research; the impact on rural communities, which I think has been mentioned in the debate; the impact on black and minority ethnic households, which has been mentioned; large families, family life and children’s education, and schools, for example, were mentioned in the debate; older people, who were mentioned in the debate; people with disabilities; working claimants; landlords, and housing and labour markets. There will be comprehensive evaluation that will start imminently and that will run over a two-year period. We will be watching—very carefully—what goes on and we will be reforming the system, with measures such as the allocation of discretionary housing payments.

Discretionary housing payments are quite important. Although the allocation of those payments for 2011-12 has been determined, the allocation has not been determined beyond that time. The total budget has been determined and it will treble. This year, it will be £20 million and then it will be £60 million a year for the next three years. We will treble the total budget. However, where the money goes will be informed by the early roll-out and by the research. We will base the policy on the evidence about the impact on the ground. If there are particular areas—hot spots—where there is particular pressure, we will be able to gear the discretionary housing payments money to those areas.

I enjoyed the observations of the hon. Member for Aberdeen South, who is the chair of the Work and Pensions Committee, about how often we refer to discretionary housing payments. I take her point. I read the Government response myself and I noticed the same thing. However, there is a reason for it. It is that the Select Committee’s report quite properly identified specific sets of circumstances that need to be addressed and they will be addressed by a response that is tailored to the local situation. If there are particular geographical areas where there are particular local pressures—we heard about a number of such areas during the debate—the DHP system will be tailored to those areas. It is almost a circular argument. That is the reason why the DHP system is our answer to most of the questions put to us, because it is the best way to respond to different but equally significant local issues of the type that have been raised during the debate.

I now come to the issue of the shared accommodation rate. Technically, I know that the title of the Committee’s report is, “Changes to Housing Benefit announced in the June 2010 Budget”, but as the shared accommodation rate was covered in the report I will address it.

The question is, “Why do we pay a shared accommodation rate to the under-25s only, because many young people are sharing and is it fair”—to come back to the point about fairness made by my hon. Friend the Member for Ealing Central and Acton (Angie Bray)—“that someone in their early 20s on housing benefit can, in principle, get a flat to themselves but someone in their early 20s who is in work and beyond the reach of the housing benefit system has to share, because they cannot afford a flat of their own?” That is the thinking and in fact that was why the shared accommodation rate was introduced. I think that it was introduced about 15 years ago, if I remember correctly. It has certainly been a feature of the system for many years.

When we have looked at the 25 to 35 age group, we have found it striking that a very high proportion of individuals who are not on housing benefit in that age group are also sharing accommodation. The number of people sharing accommodation does not tail off dramatically at the age of 25. More than 40% of non-students—single people—in this age range are sharing accommodation in a range of situations.

Various questions were asked about shared accommodation during the debate. For example, “Is any of this sort of accommodation available?” One of the notable things is that about 50% of those being paid the shared accommodation rate now are over 25. We have to think about that for a moment. The shared accommodation rate is only imposed on the under-25s, but if someone applies for housing benefit from shared accommodation and they are over 25 they receive the shared accommodation rate, even though they could receive housing benefit for a one-bedroom flat. There is a set of people over the age of 25, therefore, who could receive housing benefit for a one-bedroom flat but who are living in shared accommodation. That suggests, first, that some of those people have chosen to do so and, secondly, that the properties of that type exist. That helps to counter the suggestion that those properties simply do not exist.

Of course, there will be local variations. I accept that point and I will come back later to the point about houses in multiple occupation. However, I think that the hon. Member for Aberdeen South, the Chair of the Select Committee, wants to intervene.

[Dame Anne Begg]

Again, I suspect that the group of people that the Minister is talking about were already in that shared accommodation, which illustrates that people do not like to move house because of the upheaval involved. It also illustrates that not everybody is out to milk the system and receive the maximum amount of housing benefit. It does not illustrate at all what the Minister said it illustrated.

[Steve Webb]

I do not think that I have ever said that everybody is out to milk the system. Moreover, the hon. Lady is guessing what the figures tell us. Clearly, the information demonstrates that such properties exist. It was asserted during the debate that, “You just can’t find these properties”.

--- Later in debate ---

[Steve Webb]

I will give way to the hon. Member for Aberdeen South, the Chair of the Committee, and then I will give way to the hon. Member for Hampstead and Kilburn.

[Dame Anne Begg]

I am sorry, but I have now forgotten what my point was.

[Steve Webb]

Okay, I shall give way to the other hon. Lady.

--- Later in debate ---

[Dame Anne Begg]

With the leave of this Chamber, I will make a few closing remarks. We have heard that only one in four housing benefit claimants is unemployed. The proposed changes will therefore affect many people who are working hard to make ends meet, and they could force many of them further into poverty. At the extreme end, we could return to homeless hostels and large numbers of families living in bed and breakfast accommodation. That would be a tragedy after the previous Labour Government’s success in almost eliminating such accommodation and dramatically reducing the number of rough sleepers.

Even if we accept the Government’s intention that people should not be over-housed or living in accommodation that they cannot afford, the proposals will force many people and families to move house. We know that moving house can be very stressful: indeed, it is said to be the most stressful event in a person’s life after the death of a loved one and divorce. Even if we accept the Government’s assurances that people will not be made homeless and will be able to find accommodation of the right size at an affordable rent, all of which is questionable, large numbers of people will be unable to avoid the stress of moving house as a result of the proposals.

I am glad to have had the chance to debate this important issue. I am sure that hon. Members will want to return to it on many occasions in the coming months as the proposals are rolled out and begin to affect all our constituents.

Question put and agreed to.

Welfare Reform Bill

Anne Begg Excerpts

Wednesday 9th March 2011 Commons Chamber

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

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

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

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

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

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

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

[Harriett Baldwin (West Worcestershire) (Con)]

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

[Dame Anne Begg]

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

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

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

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

[Glenda Jackson]

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

[Dame Anne Begg]

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

[Chris Grayling]

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

[Dame Anne Begg]

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

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

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

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

--- Later in debate ---

[Mr Clarke]

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

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

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

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

[Dame Anne Begg]

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

[Mr Clarke]

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

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

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

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

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

--- Later in debate ---

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

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

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

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

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

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

[Dame Anne Begg]

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

Social Security

Anne Begg Excerpts

Thursday 17th February 2011 Commons Chamber

[Steve Webb]

The hon. Lady is absolutely right that home insulation is an important part of this: it is not just about helping people to pay their fuel bills, but about improving the insulation standards of their homes. Our colleagues at the Department of Energy and Climate Change are working on the issue and will shortly introduce proposals that will build on the energy rebate scheme, which took place in 2010, whereby low-income pensioners and others—the most vulnerable households—received direct payments. I understand that a further scheme will shortly be brought forward that will benefit exactly the people she talks about.

Despite the pressure on public expenditure, the coalition, through these orders, will spend an extra £4.3 billion in 2011-12 to ensure that people are protected against cost of living increases, and, of that, fully £3.4 billion will be spent on pensioners.

Let me move on to the second landmark change—the move to the consumer prices index. At one stage, the House thought that it might have a jolly three hours on price indices after an all-night sitting, so we are probably all relieved that we got a bit more sleep before entering this territory. The purpose of the annual uprating exercise is to ensure that the purchasing power of social security benefits is protected against inflation. We view the CPI as the most appropriate measure of price inflation for this purpose, although we would acknowledge no single index is perfect. The CPI is

“more reliable because, taking account of spending by all consumers, this consumer prices index gives a better measure than the old RPIX measure of spending patterns. It is more precise because, as in America and the euro area, it takes better account of consumers substituting cheaper for more expensive goods.”—[Official Report, 10 December 2003; Vol. 415, c. 1063.]

They are not my words, but those of the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). I could not agree more. Increases in line with the growth in the CPI maintain benefit and pension value. The CPI is the country’s headline measure of inflation, forming the target for the Bank of England’s Monetary Policy Committee. I remind the House that the legislation under which this order is made requires that we reflect the “general level of prices”.

It would be remiss of me not to thank the Leader of the Opposition for his support for our position on this issue. When Laura Kuenssberg of the BBC challenged him at a press conference on 11 January, saying,

“You’ve said time and time again that you will not oppose every cut; but four months into the job, the list of cuts that you will support remains pretty short,”

the Leader of the Opposition said:

“Let me just say on the cuts, I listed four cuts that we had not opposed, but it’s not just four cuts...from Employment Support Allowance to some of the changes to Disability Living Allowance, to the changes to the Consumer Price Index and RPI, to a range of other measures, we’re not opposing all the cuts.”

I am very grateful to him for his support.

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

Would the hon. Gentleman like to quote the Leader of the Opposition further, where he said that if there were a case to be made for shifting to the CPI, it would be a temporary move, not a permanent one?

[Steve Webb]

I am grateful to the hon. Lady. I have heard it intimated that the Opposition support using a temporary measure of inflation before using a different one in the future. I can see the politics of that, but not its coherence. The duty on my right hon. Friend the Secretary of State is to measure the general increase in price levels in an appropriate way, and it would be very odd if he were to decide one year that the CPI, with its method of calculating on a basket of goods, was the right answer, and then four years later, because there was a bit more money, that there was a different answer. That is not the legal duty on my right hon. Friend.

[Dame Anne Begg]

Will the hon. Gentleman clarify whether the move from RPI to CPI has anything to do with deficit reduction, which would be a reasonable argument as to why it might be temporary?

[Steve Webb]

The hon. Lady asks an important question. I will deal specifically with the budget deficit. However, when we looked at this issue as a new Government, we were prompted particularly by the context of a year in which the RPI had been negative. We arrived in May 2010. In April 2010, uprating had been nil for the state earnings-related pension scheme, public sector pensions and all the connected pensions. That is not because inflation for pensioners had been nil—I have never met a pensioner who thought they had negative inflation in the year to September 2009—but because that is what the RPI said. The RPI was clearly not doing its job then, and that focused our mind on whether it was the right thing. It is true that, on average, the CPI tends to be lower—not always, but generally. I have looked at the past 20 years, and in five of those the RPI has been lower than the CPI. That improves the situation in a difficult financial position; I would not pretend that it does not. However, our job is to have an appropriate, stable measure of inflation, and that is what the CPI achieves. [Interruption.] Indeed, it is much less volatile.

I sometimes think—perhaps this makes me sound a bit sad—that if the CPI were a person, it would be taking people to court for slander and libel for some of the things that have been said about it over the past few weeks and months. It is almost as if it is a stray number that we found on the back of a fag packet and decided to use to up-rate benefits. In fact, it is a careful calculation by the Office for National Statistics, with excruciating amounts of thorough methodological detail about the general increase in consumer prices. It is not the only measure, but it is an entirely decent and proper one.

I want to respond to some of the myths that have grown up about CPI, and to stress that this is not a choice between a good index and a bad index, but about trying to find the most appropriate measure for the purpose. The first argument that is made is that CPI is always lower. As I have pointed out, that is not true, although it is lower on average over the long term. People criticise the methodology that is used. I will explain what the difference is and why we think it is appropriate. Somewhat more than half the difference between RPI and CPI is to do with the way in which CPI assumes that people change their behaviour when prices change. CPI uses a substitution method, which assumes that people substitute for cheaper goods. Interestingly, the Institute for Fiscal Studies, which has looked at this issue, has said that that difference is a

“sound rationale for the switch”

that we are making today. RPI does not do that. Even the Royal Statistical Society, which has been critical of aspects of our proposals, states that RPI arguably overstates inflation as a result. I stress that we are trying to find not a high number or a low number, but an appropriate number with an appropriate method. Particularly for those on benefits, the substitution approach is important.

It is worth adding in parenthesis that people who say that RPI is the only possible way in which we can uprate pensions, because it is appropriate for pensioners, seem to be oblivious to the fact that RPI excludes the poorest fifth of pensioners from its consumption patterns. Their spending patterns are deliberately excluded in the construction of RPI. It seems odd that people are so wedded to RPI on purity grounds when it excludes the most vulnerable pensioners, about whom we should be most concerned.

The second myth is that the UK Statistics Authority does not think that CPI is a proper measure of inflation. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) says that she has not said that, but I assure her that I have seen it in plenty of letters. The UK Statistics Authority oversees the Office for National Statistics, so it would be very odd if it thought that the ONS was producing dodgy figures. CPI is the headline measure and it is the target for the Bank of England, so it is hard to see how it is not a proper measure of inflation.

Thirdly, some say that the Royal Statistical Society does not like CPI. It has certainly criticised some aspects of the change, but it takes a more balanced view and sees limitations in CPI and RPI. As I have said, no single measure is perfect. The Royal Statistical Society has highlighted the issue of housing costs, and I will come on to that because it is clearly important.

The fourth thing that people say is that this is a real cut to the value of benefits. [Interruption.] The hon. Member for Glasgow East (Margaret Curran) says that it is, but it is not. What we are doing is measuring inflation in an entirely proper manner and increasing benefits—revaluing and reflating them—every year in line with inflation, measured in an appropriate way. That is what indexation is meant to do. There is no argument for saying that it is a cut when we are increasing benefits and pensions by inflation. Only a couple of nights ago, the lead story on the BBC news was “Inflation hits 4%”. Indeed, CPI inflation had hit 4%. That was the headline, that is inflation, and that is what we are uprating benefits by.

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[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.[Official Report, 7 March 2011, Vol. 524, c. 3MC.]

Finally, I will touch on occupational pensions. Such pensions are not directly the subject of the orders. The changes that relate to the revaluation and indexation of most occupational pensions were the subject of the revaluation order that was tabled before Christmas. However, because of the close link in all pensions matters—everything is connected to everything else—I ought to say a word about this matter. CPI is being used for all social security benefits and additional state pensions, and through statutory linkage, CPI applies to public sector pensions. We had to decide what to do for private sector pensions. I stress that the role of Government is to set the floor for increases to private sector pensions and we had to make a judgment on that. We took the view that the Secretary of State could not decide that inflation was CPI for things that we pay out, but RPI for things that other people pay out. As far as we are concerned, inflation is inflation and we have to be consistent. CPI is therefore the right floor for occupational pensions. However, I stress the word “floor”. Schemes are entirely at liberty to make more generous increases if they wish. This statutory requirement increases only in respect of service after 1997, whereas some schemes index service before that.

[Dame Anne Begg]

Will the Minister quantify the number of private occupational pensions that will not adopt the floor? When the initial announcement was made, the impression was that all private occupational pensions would move to CPI rather than use RPI. I understand a number of them have RPI in their schemes and therefore will not move to the new index. Can the Minister say anything about the volume of such occupational pensions?

[Steve Webb]

When we produced the initial impact assessment on the changes, we divided schemes into four groups according to whether they revalued by RPI or CPI and whether they indexed by RPI or CPI. We found that a good deal of revaluation was done in terms of the revaluation order and hence would go to CPI, but that a lot of the indexation was in terms of RPI. We have gone out into the field and talked to those administrating schemes, and we are revising our estimates of the proportion that will respond to this change.

The hon. Lady brings me on to the point that I wanted to make: some schemes have RPI hard-wired—for want of a better phrase—into them. We faced the difficult decision of whether to override that and put CPI in or whether to say, “Rules are rules, scheme promises are scheme promises,” and keep it how it was. We announced at the start of December that we felt that people’s confidence in pensions is important, and therefore that we would not override scheme rules. If someone has joined a private sector occupational scheme that has RPI in the scheme rules, we will not override it. Obviously, each scheme will make its own decision on how to respond if they have the flexibility to do so, but many schemes do not have that, and therefore will not make the change. We will publish updated estimates of the proportions.

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

It is nice to see such a large crowd of Members in the Chamber for this debate. I have attended benefits uprating debates for a number of years, and there are usually three people, possibly including one who really likes statistics, sitting somewhere on the Back Benches. As the Minister has suggested, the greater attendance this afternoon is probably a result of the fact that the entire basic indexation of the benefit system is about to change from RPI to CPI.

Benefits uprating orders are all or nothing orders; we cannot pick and choose what we want to be in them. There are bits that Labour Members are not particularly happy about, but we are happy with other bits, and if these orders do not get passed today no uprating will take place, which is the dilemma facing those of us who have concerns, particularly about the move from RPI to CPI for public sector pensions. I think I can speak on behalf of my party colleagues in saying that we will not vote against the motion, but neither will we necessarily vote for it. If the order does not pass, nobody gets anything, and we would not want that to happen.

The Minister is a very clever man, and I found his analysis fascinating. He gave a very clear and logical explanation of why CPI should be used as the inflation measure for indexation; everything fell into place, as we would expect from him. He said it is such a good measure that we are going to use it for public sector pensions, and, if we can get away with it, possibly for private sector pensions and occupational pensions. Apparently, it is so good that we are going to use it for everything except the basic state pension. I have no problem with the fact that the Government are increasing the basic state pension by more than the triple lock would have given, but this undermines the Minister’s logical argument as to why CPI is so good. My right hon. Friend the Member for East Ham (Stephen Timms) picked up on this and I would like the Minister to explain his position. Why is the basic state pension going up by RPI, or 4.6%? CPI stood at 3.1% during the period; we are talking about last year’s inflation figures here.

I am also delighted that the Government have recognised the importance of pension credit, which was introduced by a Labour Government, and of keeping that increase in line with inflation. Under the Labour Government, it was the pension credit element, rather than the basic state pension, that went up by the higher rate of indexation, because the Government wanted to narrow the gap between rich and poor pensioners and that was the easiest way to make sure the poorest pensioners got the most. Under this new uprating, however, pension credit is not going up by the 4.6% under RPI that the basic state pension is going up by. It is going up by only 3.6%, which is in line with neither CPI nor the triple lock. I am not quite sure where that figure has come from. I am not complaining that the uprating is not more than it should be, but perhaps it is less than the Minister was led to believe.

We can see from last year’s figures and the indexation that we are looking at a CPI of 3.1% and an RPI of 4.6%. That is one third less. Many people are concerned about the compounding effect of CPI over the years on their take-home pension.

[Stephen Lloyd (Eastbourne) (LD)]

Does the hon. Lady agree that even under CPI, because the coalition Government are linking it with earnings, that would be the equivalent over a full term of an additional £15,000 to someone’s pension pot?

[Dame Anne Begg]

But that is assuming that the only income that pensioners have is the basic state pension, which is not the case. Most pensioners supplement the basic state pension with an occupational pension or, if they worked in the public sector, with a public sector pension. That is where the Government have sometimes missed a trick. In obsessing about the triple lock and the basic state pension, they have taken their eye off the ball with regard to all other pension income.

Because other pension income will be reduced as a result of the link with CPI, many pensioners will find themselves worse off, or certainly not as well off as they expected or as the rhetoric from the Government would suggest. To listen to the Government, one would think they are doing everything that pensioners ever wanted, whereas they have taken action only on the narrow area of the basic state pension.

We already know that inflation is going up. VAT went up, thanks to the Chancellor. The Opposition expect inflation to go up much further because we do not think the Chancellor has the right policies. We know from the most recent inflation figures for January this year that CPI is now up to 4%—good news, one would think, for pensioners—but RPI is up to 5%. It is that differential that will cause problems.

We are considering not just pensions, but uprating for the whole benefits system. Even the Minister must recognise that there is an enormous irony in using CPI to uprate housing benefit—CPI being the one inflation measure that does not include housing costs, notwithstanding the point that the hon. Member for Cardiff Central (Jenny Willott) made about the poorest people being in social housing. That is not the case in cities such as London, and it is not the case because of the shortage of housing.

We know that large numbers of people are dependent on housing benefit—or, more accurately, local housing allowance—and they will be hit. When the Select Committee on Work and Pensions looked into the matter, we thought there were some figures to show that within a very short time nobody on housing benefit would be able to afford houses in the private rented sector that fit into the 30th percentile.

[Steve Webb]

For the avoidance of doubt—this has been said incorrectly twice in the debate—the CPI includes rent, so it is owner-occupiers’ housing costs that are not included. As rent is included in CPI, it is entirely appropriate to index housing benefit by it.

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[Dame Anne Begg]

CPI is still much less. Perhaps the average is taken from rent overall, not only in the private rented sector. That is where some of the differential might come from.

[Jeremy Corbyn (Islington North) (Lab)]

My hon. Friend has made an important argument about the level of rent increases, particularly in the private sector in London, where rent increases and demand go up by far more than any rate of inflation or any other measurement. The Government’s cap on housing benefit has the perverse effect of driving many of the poorest people out of central London because they will not be able to meet the rent demands and normal costs of living within the global cap on benefits.

[Dame Anne Begg]

My hon. Friend is right. There is a triple whammy on people who live in London in high rent areas: the local housing allowance is to be capped, possibly below the level of the rents; they will have access only to houses within the 30th percentile; and they will not see the inflationary increases in the indexation of their housing benefit to meet those conditions. They will be hit more than once with regard to the affordability of their rents. That certainly came over loud and clear when the Select Committee looked at what was happening to local housing allowance.

The effects of the Welfare Reform Bill have been mentioned. The universal credit will make it difficult to project benefit uprating into the future to work out what percentage of their incomes people are likely to loose. There will be no straight line from the current benefits to the universal benefit, because they will be mixed up. It is difficult to see what will happen. The compounding effect will probably be seen in pensions, particularly for those in receipt of the state pension, and the level of pension will be less.

In reply to my hon. Friend the Member for Eastbourne (Stephen Lloyd)—I am sorry, Madam Deputy Speaker; I always refer to fellow Committee members as hon. Friends—I said that the assumption is that the largest part of a pensioner’s income is the basic state pension, but we know that for many people that is not the case. Even if the state pension makes up a large part of their pension, it is often not all of it. Many people on the lower pension are dependent on SERPS, which of course will now be moving up in line with CPI, rather than RPI.

On the basic state pension, I accept the Minister’s figures indicating that it will rise from £97.65 to £102.15, an increase of around £4.50 a week. No one would say that that is wrong, because we all agree that £234 a year is great. However, the average public sector pension of £7,800 will be reduced by around £117 because of the difference between RPI and CPI. I am not very good at the arithmetic, but that means that instead of getting a rise in income of 4.6%, the people affected will get a rise of less than 2%. It is a rise, but it is not as much as they were expecting, and we must remember that we are living in a time when inflation is increasing.

A woman who receives the average local government pension of £2,600 will be £40 worse off than if her pension had been linked to RPI. If she has paid the small stamp, she might get no extra money through the basic state pension anyway, not even the compensatory increase in it. She might not have made full contributions and so will get some of it, but not all. The Government’s proposal is unfair to pensioners, and it is particularly unfair to women.

My right hon. Friend the Member for East Ham has already mentioned the particular unfairness of raising the state pension age to 66 by 2020. To be clear on the Opposition’s position, we have no qualms about raising the state pension age to 66 in principle, but we are concerned about the speed with which the Government are doing so. That overrides what was already in place for women who were born in the 1950s, who were going to see their pension age rise to 65 by 2020 anyway.

Women who began their working lives expecting to get a state pension at 60—that happens to include me—will now have to wait another six years for it. On a quick calculation, that will save the Government £32,000 on today’s basic state pension. It will come out of the pockets of women who are roughly my age and will stay with the Government. We will have to increase the indexation an awful lot more to make up for the £32,000 that those women will lose as a result of the increase in the state pension age by six years.

I appreciate that the measure whereby women born in 1955 would have to wait until 2020, when they were 65, to receive their income was already in train, but what about the women born between 6 October 1953 and 5 April 1955, who had already made all their financial plans but will now have to work for more than one further year before they can receive their basic state pension? The Minister has said on numerous occasions that that measure alone will save the Government £10 billion. All that is a win-win for the Government: the Government win, because they do not have to pay the money out, and because they have changed the indexation. The people who lose are those who expected to receive their pensions at a certain point, and in this case those people are women.

I would understand the Government’s rationale if the measure was part of their deficit reduction plan, but they have already said that they intend to get the deficit off the books in four years’ time, and none of this stuff comes in until after the deficit is meant to have been reduced, so it cannot be part of a deficit reduction plan. The Government should be more honest. We have heard that the change to CPI is going to be permanent, so they should say, “We’re doing this as a long-term measure, because we want to save money.” That is part and parcel of what the Government are about: saving money.

[Steve Webb]

The hon. Lady is a thoughtful person who will know that there is an issue of short-term deficit reduction and an issue of the long-term sustainability of the public finances. Leaving aside the £1.3 trillion of public debt, which will still exist and need to be dealt with even when the deficit is no longer adding to it, does she not accept that the Office for Budget Responsibility has challenged the Government to do something the previous Government did not do and get a grip on the long-term sustainability of spending, particularly on older people?

[Dame Anne Begg]

My right hon. Friend the Member for East Ham claimed that there might be a case for deficit reduction in the short term. We are considering women and the accelerated increase in the state retirement age to 66, however, and, in terms of the 50-year pension policy and the long term, why could not the Government have waited another year or even two before equalising the state pension age at 66? The Minister keeps bandying about the £10 billion figure, but in terms of equity and fairness it would have been much more sensible if the Government had taken a long-term view. Theirs is a very short-term view, meaning that a large number of women—half a million—will lose out.

The Government could have introduced a measure that people considered fair, rational and part of a long-term decision to ensure that pensions are affordable, and it is ironic that, while they have made the decision on equalisation, they have forgotten about the long-term sustainability of the basic state pension. They have done so because the Liberal Democrats had an election promise—the one they seem to have kept to, when they have managed to ditch all the others—that was all to do with the triple lock. The Minister will not accept this point in the Chamber, although he might do privately, but the triple lock debate has skewed the Government’s entire pension policy. We are not looking at the issue in the round or over the long term, when perhaps we should be.

We do not know what inflation will be in years to come, so in the private and public occupational pensions sectors in particular it is difficult to work out exactly how much people will lose compared with what they expected to receive. Lord Hutton, in his interim report, thought that on average they would lose up to 15% of their pension’s worth, but I have seen lots of other figures for, and various calculations of, what a pensioner would have expected if their pension had been linked to RPI as opposed to CPI.

This measure cannot just be about paying off the deficit, because we know that the big-time savings kick in well after the Government propose to have paid off the deficit. The Government will win, but the people who will lose are, unfortunately, the pensioners of this country.

Youth Unemployment

Anne Begg Excerpts

Wednesday 16th February 2011 Commons Chamber

[Mr Byrne]

My hon. Friend makes an excellent point. In a recession private sector jobs are thin on the ground. Anything that keeps young people closer to the labour market, closer to the habits of work and closer to the disciplines of having a job must be a good thing. The lesson from the 1980s, when youth unemployment spiralled to 26%, is that if we let young people get too far away from the habits of work, they are scarred for generations to come.

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

When we looked into the future jobs fund in the Select Committee, it became clear that everyone who had experience of it, as a young person in a placement or as an employer, viewed it as a real job that lasted for six months, with a real wage, and was closer to the workplace than anything that could be offered by work experience. That is why it was successful. None of the providers had a bad word to say about it. They thought it was a very good scheme.

[Mr Byrne]

My hon. Friend, who chairs the Work and Pensions Committee, makes an important intervention. I hope her comments allow us to strike a note of consensus.

My final point is about the long-term costs. In all recessions and in all recoveries, it is our young people who face the toughest challenge. That is especially true of the fight that young women in our country now confront. Overwhelmingly, they are working in the public sector. Overwhelmingly, it is they who are exposed to the cuts and the redundancies that have been announced, which now number around 156,000. We must remember the lesson of the 1980s. When youth unemployment was allowed to soar, and allowed to fester for years, communities were damaged for generations. As the Cabinet Office’s former chief economist put it this week:

“If the Government doesn’t act it will not only damage the employment prospects of young people now but hurt them for the rest of their lives”.

The motion that we have tabled asks that the Government look again at the lessons of the future jobs fund, be ambitious about the programme that they put in place, and ensure that they learn the lessons from the 1980s. We fear that a generation is being lost to the clumsy behaviour of the present Administration, so I call on the Government this afternoon to think again, to preserve the promise that this country should make to its young people, to reconsider the action that they are taking to ensure that our children will do better and better than us, and to think again before we confront once again a lost generation.

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[Chris Grayling]

Does the hon. Gentleman honestly think that businesses in his constituency would have been better off with a 1 percentage point jobs tax rise, as the previous Administration planned? That would have caused more of an increase in unemployment than anything else the Government could have done.

The right hon. Member made one point, however, which is absolutely right and with which we absolutely agree. Youth unemployment is a major problem for our society and one that absolutely must be tackled. The failure to tackle youth unemployment with schemes that work contributes so much to many other issues that we have to deal with on streets and in neighbourhoods throughout the country.

Endemic worklessness is underpinned by an ever more complex benefits system that traps people in unemployment. Inter-generational poverty is fuelled by welfare dependency, involving generation after generation of people who have not worked. There is a lack of aspiration, especially among young people who lack role models in a country where almost 2 million children are growing up in workless households. Worst of all, the young people who escape welfare dependency and poverty will still carry the economic scars of unemployment for years afterwards, in terms of lower wages and future employment gaps. That is the harsh reality of Labour’s legacy for our young people.

[Dame Anne Begg]

I worry about the either/or in the Minister’s equation. He says that the answer is either apprenticeships or the future jobs fund, but it should be both, because the young people who go into apprenticeships are not the same cohort who suffer the inter-generational worklessness to which he refers. They need extra support, and that is where the future jobs fund has been very, very effective.

[Chris Grayling]

I accept the principle but do not agree with the detail of what the hon. Lady says. I shall come on to discuss the Work programme and how I aim to use it to deal with the problem that she rightly highlights.

Opposition Members should remember that over the years they made lots of promises about apprenticeships but consistently under-performed on them. Our job is to make sure we do not do that.

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[Mr Marcus Jones (Nuneaton) (Con)]

I welcome the opportunity to contribute to this debate on youth unemployment. As I am sure all hon. Members know, youth unemployment is a huge problem that needs to be tackled. We should try to avoid playing politics on such an issue, but, sadly, the motion serves to make a party political point.

The future jobs fund is currently part of the policy, but the hon. Member for Stoke-on-Trent Central (Tristram Hunt) seems to think that it is the be-all and end-all, and a utopian solution to the problem of youth unemployment. He does not take into account the fact that it is part of an overall policy to tackle the huge problem of getting our young people into the labour market on a sustainable footing—I emphasise the word “sustainable”.

In proposing the motion, the Labour party is creating a smokescreen—it is a red herring—to disguise the many years of failure to tackle youth unemployment. One in five young people is out of work, nearly 1 million are unemployed, and 600,000 who left education under the previous Government are yet to find work. That record of abject failure and that legacy leave little room for the Labour party to lecture the Government who are trying to sort those problems out, having taken on the worst public finances in living memory.

The future jobs fund was, I am sure, beneficial to some young people, but was it cost-effective and sustainable? Did it lead to permanent and sustainable employment for our young people? The evidence tells us that it did not.

[Dame Anne Begg]

As an employer, would the hon. Gentleman employ the person with two weeks’ work experience on their CV or the person with six months’ of work?

[Mr Jones]

It is incumbent on the Government to offer not short-term help but long-term sustainable help for young people. It is important for this Government to make sure that we create a culture in which our young people are ready for work, not force them into short-term work to try to prove themselves to employers. Our youngsters must be ready for work.

The evidence tells us that the future jobs fund was twice as expensive as an apprenticeship. In some places, particularly Birmingham, only 3% of jobs were in the private sector and in most instances very few permanent jobs were created. Most young people, however, are looking for permanent jobs. A grandmother who came to my surgery a few weeks ago wanted her grandson to have a sustainable, long-term future.

I would also like to explore the job market and the culture behind it, which is very important. Throughout Government policy, we must promote the idea of getting our young people into employment and it must be a priority across Departments to reduce the barriers that prevent young people from getting work and take down the barriers that prevent employers from taking young people on, because such barriers do exist.

We also need to look at aspiration, which is acknowledged, particularly by head teachers, as a problem in my constituency. On a number of recent visits to schools, I was told that many of their young people have two aspirations: one is to become a footballer and the other is to become a pop star. My lifelong knowledge of my constituency tells me that during my lifetime we have probably bred three or four people who have become professional footballers and made a living from the sport.