Work and Pensions (CSR)

Debate between Damian Hinds and Alison Seabeck

Thursday 4th November 2010 Westminster Hall

[Damian Hinds (East Hampshire) (Con)]

I congratulate the Backbench Business Committee on a continuing series of important debates. I congratulate, too, the hon. Member for Stretford and Urmston (Kate Green) and the hon. Member for Colchester (Bob Russell) on their role in securing it, as well as the hon. Member for Aberdeen South (Miss Begg) on laying out the issues as she did. As she said, behind the statistics are real people and real lives, and there are concerns about many of the issues. Many hon. Members will have had correspondence about, for example, the mobility component of disability living allowance. It will be interesting to hear the Minister’s comments, and I hope we shall receive reassurance about some of those things.

Although the debate is about the effect of the CSR on the Department for Work and Pensions, I suggest that, given the bold programme of reform that is being undertaken, it is not practical fully to separate the impact of the spending review and the deficit from what I accept is theoretically a different question—that of reforming benefits for the long term. There is also a distinction to be drawn between the direct and indirect impacts of the CSR on the DWP.

Among the things that strike those of us who are new to the public sector are the crazy names that get bandied about. One is “annually managed expenditure”. It is crazy because that is precisely the expenditure that cannot be managed on an annual basis—at least not from within Departments. The key focus of the CSR, ultimately, is to build a sustainable recovery, and then steady growth, keeping interest rates low, which encourages investment and in turn creates the right atmosphere for job creation. That focus on growth could ultimately deliver the biggest single impact of the CSR on the bills that the DWP must foot; because as the hon. Member for Aberdeen South said, the best way to bring welfare bills down is for fewer people to be out of work.

The deficit that the new Government inherited requires economies. I know that the Opposition would like the running up of the deficit to be yesterday’s story, and the debate to move on to the cuts and how terrible they are; but they are not different stories. They are two sides of the same coin. If the Opposition do not like the cuts that must be made, fine, but they should tell us the alternative—not “Oh, maybe we could do it a little more slowly, or the bankers could pay a bit more” or talk of 10 or 20%. Let us see the 100%. Where are their £44 billion of cuts?

That is the last party political thing I intend to say. From now on I want to strike a more consensual tone. There are four key issues on which the Conservatives and Liberals in the coalition, and Labour—or at least new Labour—find considerable common cause. First, with an ageing population, and relatively low levels of retirement savings, too many citizens in our country have been facing old age without the security that they should be able to look forward to. Secondly, certain working age benefits have gone out of control—particularly housing benefit, the cost of which has risen from £14 billion to £21 billion in a decade.

Thirdly, a lazy approach from the state has abandoned too many people, who get reclassified as being unable to work and therefore—coincidentally, of course—are removed from the headline unemployment statistics, leaving them without practical help, support or encouragement.

Finally in my list of four factors, as a nation we have allowed a benefits system to build up that overall simply does not do enough to incentivise work. Along with other factors, that leads to pockets of multigenerational unemployment and homes where children grow up never seeing an adult go out to do a day’s work. Too easily, of course, those children can then slip into what we used to call “youth unemployment” but now, thanks to another fantastic rebranding exercise, they are called NEETS—those “not in education, employment or training”.

All of that is happening at a time when policy makers and business men bemoan their inability to find people to fill their existing vacancies, not only at the highly skilled end but at the low-skilled end. Instead, they have been looking and continue to look for people from abroad to fill those vacancies.

These issues are truly pressing because they are long-term structural issues which are quite apart from the structural deficit, although they have of course contributed to that deficit.

I am pleased to say that there is less of a partisan divide on these issues than one might imagine from reading The Guardian’s Society section since May. As I said earlier, I want to strike a bipartisan note in this debate and I am sure that Opposition Members will want to follow that approach. I know that they will want to join me in paying tribute to the spiritual fathers of these welfare reforms. Of course, I refer to the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), alongside the Opposition Members’ own erstwhile colleagues, Mr John Hutton and Mr James Purnell.

On pensions, it was the Turner report, which was commissioned by Labour, that was indeed the turning point in the debate. Automatic enrolment, increasing the rate of growth of the state pension and raising the retirement age are all changes whose origins came on the watch of the last Government and, of course, enjoyed support across the House. The new Government are moving faster and I welcome that.

Then there is the case of the retirement age. Sadly but necessarily, given that there is still increasing life expectancy—to be clear, increasing life expectancy is itself a good thing, of course—and the triple hurdle for the formula for the uprating of the state pension, the coalition is now finally starting us on what will be a long road to providing a basic state pension, with less reliance on means-testing.

On housing benefit, the 2010 Labour manifesto read:

“Housing benefit will be reformed so we do not subsidise people to live in private sector accommodation on rents that working families could not afford.”

As I do not think that I can improve on that sentence, I will not try to do so.

Of course, there will be some hard cases and that fact is recognised; indeed, it would be foolish to pretend otherwise. No one welcomes the difficult situations that some families will find themselves in, and I am also glad the Government have made extra money available in discretionary housing payments.

However, we must also recognise—even if the most extreme projections about what will happen fail to materialise —that with a change to housing benefit as extensive as this one, all the economic logic suggests that there will be downward pressure on rents.

[Alison Seabeck]

I just want to know exactly where the hon. Gentleman gets his evidence from, because the National Landlords Association, residential landlords and London Councils, which is not a Labour body, all say that there is no evidence of such a downward pressure, partly because the private rented sector is already being squeezed on account of would-be young home owners who would like to own homes but who cannot afford them moving into that sector. There is not the evidence that the Government would hope for.

[Damian Hinds]

I am grateful to the hon. Lady for that intervention and for the opportunity to comment on it. I did not talk about evidence from various bodies or organisations. I said that “all the economic logic” suggests that with a change this extensive, there will be downward pressure on rents—it does suggest that.