Oral Answers to Questions
Debate between David Ruffley and Steve Webb(9 years, 11 months ago)
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Steve Webb
The hon. Lady will be aware that, in exceptional cases, housing benefit can be topped up, but she will also know that the same issue could arise under the shared accommodation rate for under-25s. However, if two single people choose accommodation together, the combined total of their shared accommodation rates is larger than one family’s standard rate for a two-bedroom flat, so two people coming together can rent a larger property than a family requiring two bedrooms.
Mr David Ruffley (Bury St Edmunds) (Con)
18. What steps he is taking to introduce stricter criteria on eligibility benefit for applications from foreign workers.
Oral Answers to Questions
Debate between David Ruffley and Steve Webb(10 years, 10 months ago)
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Steve Webb
Just to be clear, when we made reductions in housing benefit for 2012-13 we were told that the support was not enough, but the hon. Gentleman’s local authority, Edinburgh, returned to us £162,000 of help that it could not spend. We have increased the support to Edinburgh council this year compared with last year.
Mr David Ruffley (Bury St Edmunds) (Con)
Benefit tourism can be deterred if greater conditionality is introduced into the UK benefit system. Will the Secretary of State tell us whether or not our European partners will allow us to do that?
Pensions and Social Security
Debate between David Ruffley and Steve Webb(12 years, 3 months ago)
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Steve Webb
I am most grateful, although my initial oratory has already drawn one hon. Member into the Chamber. If I keep going for long enough, who knows? My hon. Friend is right to pay tribute to the coalition for finding the money to protect the most vulnerable households at a time of economic stringency. He can share in that credit.
On the principal order—the draft Social Security Benefits Up-rating Order 2012—despite that challenging economic landscape, the coalition is committed to protecting people who have worked hard all their lives, poorer pensioners, people who are not able to work through their disabilities, and people who, through no fault of their own, have lost their jobs and are trying to find work. Those are important aims for uprating 2012, which my right hon. Friend the Chancellor of the Exchequer made clear in his autumn statement on 29 November, Official Report, column 802.
Mr David Ruffley (Bury St Edmunds) (Con)
Has the Minister had any representations regarding the apparent iniquity of uprating by CPI on the basis of one month’s figures—those for September?
Steve Webb
My hon. Friend is right that when the uprating was considered, there was speculation that a different month, or a rolling average or something like that, might be used. It was decided to continue the practice of using the September CPI, but I would stress that that is not a one-month figure, but a figure published in one month about the past 12 months. Although as it happened 5.2% was the peak—I think I am right in saying that it was lower in the month before and the month after—each 12 months joins on to another 12 months, so in another year, the September figure could be the lowest. We took the view that that was the established practice, and that changing it could leave it open to manipulation. Although in a particular year it can stand out, when we take one year with the next, it will sometimes be lower and sometimes higher.
As hon. Members know, using the CPI measure of inflation was an important part of this Government’s plans for uprating pensions and benefits. I am delighted that we will have a debate on that very subject next Thursday afternoon—I look forward to being here at the same time and the same place next week. In addition to being the headline measure of inflation in the UK and the internationally recognised target measure of inflation used by the Bank of England, we believe the CPI is a superior measure of inflation when it comes to uprating benefits and pensions, first because the CPI basket of goods is a better match for the spending patterns of pensioners, and secondly because it takes better account of how households respond to price changes.
Last year, the High Court upheld the Government’s decision that the CPI can be used for pensions and benefits uprating and we have robustly defended our case in the Court of Appeal.
Steve Webb
I am grateful to all hon. Members who have taken part in this debate. The hon. Member for Banff and Buchan (Dr Whiteford) deserves particular credit for being here throughout and not making a speech, but we are grateful to her for her interventions. I shall respond to the key points that have been made. I was going to respond first to the right hon. Member for East Ham (Stephen Timms), but I shall do so at the end if he has time to come back and join us.
My hon. Friend the Member for Truro and Falmouth (Sarah Newton) has also been surprised by the timing of the winding-up speeches. I am grateful for her contribution and her important point about the significance of the take-up of these benefits. It is all very well our sitting here debating the rates, but if people do not claim the benefits, it is a slightly academic exercise. My hon. Friend was right to highlight the importance of our making sure that the benefits are taken up— [Interruption.] I am delighted that she is rejoining us. I was welcoming her comments about benefit take-up, and today we have published the latest take-up figures for income-related benefits in the final year of the previous Government. They demonstrate that in the benefits under discussion many billions of pounds go unclaimed, so she is absolutely right that we should do all we can to encourage people to claim them.
My hon. Friend will have seen in these uprating orders that we are trying to shift the balance towards the benefits that people really do claim, such as the state pension, and even within pension credit we have loaded the balance towards the guarantee credit, which is more likely than the savings credit to be taken up. On today’s figures, for those who are entitled to savings credit only, the take-up rate is less than 50%, so it is vital that when we set benefit rates we ensure that people claim them. I was grateful to her for her insight on that point, on the certainty that the triple lock gives pensioners and on the fact that we have stuck to it despite difficult economic times, and I can assure her that we will continue to do so.
The hon. Member for North Ayrshire and Arran (Katy Clark) was entirely straight with the House, saying that she does not agree with the CPI measure or with her Front Benchers. On the issue of whether that is controversial, of course it is, but all I was saying is that I last joined the National Pensioners Convention at a time when no decision had been made, so it is worth winding the House back to that point.
In the press there was speculation that we might introduce a freeze—I shall return in a second to the points made by the hon. Member for Bury St Edmunds (Mr Ruffley)—or use a forecast, a moving average or anything to get the number down. At that point, I was staggered to go to an NPC event and be—“harangued” would be uncharitable—forcefully encouraged to deliver 5.2%. Having seen that delivered, I would, if I were the NPC, then demand 5.6%. I understand that, but it is worth reminding ourselves of the pressure that the Government were under to do less, so 5.2% was an entirely decent settlement in the current economic climate.
The hon. Member for North Ayrshire and Arran made an important point about the cumulative effect, which was her key theme. She made an important point also about working age, but to focus on pensioners I note that there are two cumulative effects going on at the same time: one is the triple lock and the other is CPI, which applies to additional pensions. The question is, which is the greater?
The hon. Lady mentioned someone with an occupational pension of £10,000 a year, but from memory—this is only from memory—the average occupational pension in payment is about £4,000 a year, so her example is more than double the typical sum, and our estimate, looking just at the cumulative impact over a retirement of the basic pension, is where the £13,000 figure comes from. Looking purely and cumulatively at the triple lock, because the earnings figure is normally more than RPI, we find that people will get more through that. CPI is on average less than RPI, so on the additional pension they will get less.
The cumulative effect of the two is beneficial to those with lower occupational pensions, but less beneficial—indeed, there are net losses—to those with higher occupational pensions. So the hon. Lady is probably right: someone on a £10,000 occupational pension will get smaller net increases and someone on a £3,000 occupational pension will get bigger net increases overall. That is taking account of the two policies. She is right that these policies have a cumulative effect. For example, on the CPI link for local housing allowance, the Government have said that they will continue with that for two years and review the position having done so. I am grateful to the hon. Lady for drawing the House’s attention to the Chair of the Select Committee’s unfortunate accident. I am sure that we all wish her our very best for a speedy recovery.
My hon. Friend the Member for Bury St Edmunds observed that the September 2011 figure was a peak. He said that by the time we get to April 2012 it will already be a bit out of date and that by the end of 2012-13 it will be 18 months out of date. This involves two separate questions: first, whether we should use forecasts or historical figures; and, secondly, what we should have done this year. The VAT increase in January 2011 was a significant driver of the 5.2% figure. Had we, for example, chosen to look at inflation only over certain months, or chosen to switch to the future just at the precise point when something quite big happened historically, people might have queried our sincerity. At times in the late 1970s and ’80s, some Governments switched to and fro between forecasts and historical figures, and there was a sense that that had nothing to do with compensating for inflation but was merely trying to find a low number. It is important that we have a system for compensating for inflation that we stick to and a separate system of judgments on what the country can afford, whereby if we cannot afford 5.2%, we should say so. We should not try to think of a period that will give us a lower number. My hon. Friend is right that if we had used a lower inflation measure we could have saved a lot of money, but that is the answer to a different question.
Mr Ruffley
The burden of my argument did not relate especially to last autumn’s figure but to the principle of whether, for a 12-month period in which one is seeking by an uprating to compensate benefit recipients for the cost of living, one should use a figure, whatever it is, that is six months prior—that is, the September figure.