Universal Credit and Welfare Reform

Denis MacShane Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Byrne]

It is unclear how I might respond to that. I hope I will be able to set out for the hon. Gentleman this afternoon what I think will be a shared set of concerns about how to get this vital project back on track. I hope we have a degree of clarity, honesty and openness from those on the Treasury Bench.

[Mr Denis MacShane (Rotherham) (Lab)]

My right hon. Friend is starting at a macro level, but last Friday I had meetings with the people who have to apply the universal credit scheme in Rotherham. I also met the voluntary groups that deal with the people who rely on it and there are genuine fears. People want reform and they are not necessarily anti the Government for political reasons, but they do not think that the scheme will work as it is devised. The computer crashes for which our Governments are so famous—both those of whom he was a member and this Government—are a legend in the computer industry.

[Mr Byrne]

Let me start with precisely that risk. We were told when universal credit was first proposed that the IT costs would be in the order of £2 billion. Some £200 million was taken off for subsidies for another problem with child care created by the Secretary of State’s friend, the Chancellor. The former Minister responsible for unemployment, the right hon. Member for Epsom and Ewell (Chris Grayling), before he departed for the Ministry of Justice, said that the cost had spiralled to £2.1 billion. Already, two years in, the project is £100 million over budget and we learned yesterday that universal credit, when it is introduced and fully rolled out in 2017, will demand an extra £3.1 billion in welfare payments each year. That was the figure that the Department for Work and Pensions gave to the Office for Budget Responsibility in July last year.

Yesterday, however, the Secretary of State told the House that he had agreed to a Treasury target of £2.5 billion, wiping £600 million off tax credits by so-called policy designs. Where on earth is that money going to come from? It is, I am afraid, a mystery. It is a mystery shrouded in further questions about whether people will be better off in work when universal credit is introduced. What on earth is going to happen to free school meals, which are worth £410 million a year to families in many of our constituencies and are a vital lifeline every week? The Children’s Society says that if universal credit integrates free school meals in the wrong way, that will wipe out incentives to work for 120,000 families. What is going to happen to that budget?

Then there is the question of council tax benefit, which is worth £5 billion for 6 million households in Britain. As it turns out, we are going to get not a national scheme but a local scheme, because the Secretary of State lost his battle with the Secretary of State for Communities and Local Government. He was sat on by the right hon. Member for Brentwood and Ongar (Mr Pickles), which is a fate we would not wish on anyone. The result is that whether someone is better off in work or on benefits will depend on where they live. The Institute for Fiscal Studies says that universal credit “severely undermines” the simplification.

Then there is the question of how universal credit will interact with increases in personal allowances, which were introduced with such a great fanfare over the past year or two. Last week, Gingerbread said that because universal credit is calculated on post-tax income, the lowest paid would see most of the increase in personal allowances wiped out. In fact, when universal credit is introduced, the low paid will lose two thirds of the increase in personal allowances. Somehow the Chancellor of the Exchequer forgot to tell us that when he unveiled the proposal in his last Budget.

Then there is the question of how universal credit will lock in the cuts to tax credits that hit so many of our constituents this April. Those cuts now mean, according to answers given to my hon. Friend the Member for Stockport (Ann Coffey), that a couple with kids working part time—and goodness me, there are more people working part time these days—will now be more than £700 better off on benefits than in work. How on earth can that send the right signal?

Unemployment

Denis MacShane Excerpts

Wednesday 14th December 2011 Commons Chamber

[Mr Denis MacShane (Rotherham) (Lab)]

I am disappointed by the previous speech, because it repeated the yah-boo exchanges on what is, frankly, a generalised crisis that has touched us all. The notion that it is all the fault of either the previous Government, or of everything that has happened since May 2010, is simply not valid. In 2008, I wrote in The Daily Telegraph a letter to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) stating that we should cut spending and taxes, and he ignored me, but the year before the right hon. Member for Tatton (Mr Osborne), then the shadow Chancellor, wrote in The Times that the model Britain should emulate was that of Ireland. I think that I was right, and I hope that Government Members think that the Chancellor was completely and utterly wrong.

In Rotherham we received news today that 597 more people are unemployed than there were this time last year, which is an increase of about 15%. This is profoundly serious, with families now facing a miserable Christmas.

I do not blame all those problems on this Government—it is absurd to do so. Around the world, we are facing a generalised crisis of the market economics—or, if one prefers, capitalist—model. There is Government debt but, as the remarkable graph put up on last night’s “Newsnight” by Miss Vicky Pryce, the distinguished economist, showed, there is far greater private debt. Everybody is going through the detoxification problem of getting out of debt, and we do not know how to handle it. Niall Ferguson—a distinguished conservative, right-wing historian—writes in Newsweek:

“In normal times it would be legitimate to worry about the consequences of money printing and outsize debts. But history”—

he is writing about how people handled the 1929 Wall street crash and the 1931 Credit-Anstalt crash; there was not one general crash but two—

“tells us these are anything but normal times.”

When Monsieur Hollande, the French Socialist candidate whom I wish to see elected President of France, says that we should be looking at spending more money and at job creation measures, he is shouted down, but I think he is right. Frankly, the Conservatives ought to be in their own little Euro-heaven. We have conservative Governments and conservative presidents of the Commission, the Council and the Parliament proposing fiscal austerity, balanced budgets, making the poor pay, and protecting bankers and the rich. I thought that that was classic liberal—in the Manchester sense of the word—Conservative policy. I do not know why the Conservatives are at odds with Europe, because Europe is doing exactly what they are trying to do with the policy that is having such disastrous consequences in this country.

We look to the BRICs—Brazil, Russia, India and China—but growth in them is slowing down. Today’s figures from the IMF show that Russia, South Africa and Brazil have 3% or 4% growth and China and India have below 10% growth. There is a generalised crisis of world market economics. The United States is in disarray. The United Kingdom is part of the problem as well. We are not the solution to the European crisis—we are intimately part of it. There is no growth, no demand, increasing unemployment and increasing debt.

I am not going to say that this is all the fault of decisions taken since May 2010. I wish we had a Chancellor of the Exchequer of the maturity of Nigel Lawson, Geoffrey Howe or Denis Healey; it is rather disappointing that we have a PPE graduate from Oxford who has just done a little bit of political research in his life. We are going to have to work these problems through internationally.

“No man is an island, entire of itself”,

as John Donne said; every man is a piece of the continent. We will have to find global and European solutions to this crisis or, believe me, we will all be sunk.

--- Later in debate ---

[Steve Webb]

Of course, I did not say that everything is going well, but the right hon. Gentleman cannot deny that in the last month, an extra 38,000 jobs, net, have been created. We can choose different time periods. As my right hon. Friend the Minister of State said, the claimant count rose by 3,000 in the last month, but that is more than offset by the fact that people who were previously on incapacity benefit have been reassessed on to JSA, and lone parents have been required to look for work and moved on to JSA. In fact, without those policy changes, JSA numbers would have fallen in the last month. That is why my right hon. Friend was absolutely right to talk about signs of stabilisation in the job market.

As a number of Members on both sides of the House said—my hon. Friend the Member for Salisbury (John Glen), the right hon. Member for Rother Valley (Mr Barron) and others—every single person on the unemployment roll is a person too many, but if we overstate the doom and gloom, we talk down confidence in the economy, which is to the detriment of all our constituents.

Let me respond to the claim made by the right hon. Member for Rother Valley and others that long-term youth unemployment is up—and I quote—“93%”. Labour Front Benchers have clearly supplied all their Back Benchers with figures for their constituencies. The only problem is that all of them are wrong. Labour Members might be interested to learn that what used to happen is that under measures such as the new deal, people had to move off JSA after a certain period and were paid something else—a training allowance—or they got a temporary job; then, when they went back on to JSA, as so many did, the clock started again. Hey presto—a long-term unemployed person had been converted into a short-term unemployed person. They had not got a job; they had just been taken out of the figures. We have stopped doing that. As a result, if all the factors are taken into account—the people who were excluded from the statistics because they were on training allowances or in temporary jobs—the number of long-term claimants aged 18 to 24 is about the same now as it was in 2010.

To hear Labour Members, one would think that the numbers had doubled. The right hon. Gentleman was very angry about that, and had they doubled he would be right to be so, but they have not doubled—in fact, they are roughly the same.

[Mr MacShane]

Yet.

[Steve Webb]

The right hon. Member for Rotherham (Mr MacShane) said that it was “absurd” to blame all the problems on this Government. That was gracious of him, although I take great offence at his attack on Oxford PPE graduates, but to hear Labour Members today, one would have thought there would have been no public sector job losses at all had they stayed in power. They were planning tens of billions of pounds of cuts. How many public sector jobs would have gone had they gone ahead with their tens of billions of pounds of cuts? They have no idea—no idea at all.

Several hon. Members mentioned interest rates. We were told that we inherited low interest rates, and the Bank of England base rate was indeed low. The question was what decisions did we, as a new Government, have to make to get the fiscal position under control. Because we took the difficult decisions early—pretty much every one of which has been opposed, item by item, in the course of this debate—the interest rates at which the British Government are borrowing have stayed low while other countries’ debt rates have soared. As a result, in this Parliament we have saved £22 billion in debt interest—money we can spend on services and on helping the unemployed which would not have been available had we listened to Labour.

Early in the debate, my hon. Friend the Member for Monmouth (David T. C. Davies) said that we need to tackle red tape. He is right, and we have the red tape challenge, which has already resulted in substantial deregulation in, for example, retail and hospitality, with much more to come. I am grateful to him for making that point.

My hon. Friend the Member for Cardiff Central (Jenny Willott) highlighted the fact that pension funds will now be asked to invest more in the long-term infrastructure of this country—and rightly so. It is shocking that, for so many years, the money in our pension funds was not invested in our long-term infrastructure. This coalition Government are taking action to tackle that.

The hon. Member for Stockton North (Alex Cunningham) referred to the regional growth fund money in his constituency, and I am grateful to him for acknowledging the good that it can do. He asked about incentives to take on the long-term unemployed and the young unemployed. The youth contract is being introduced so that when people take on 18 to 24-year-olds from the Work programme—so they are long-term unemployed—they will get an incentive worth £2,275. That is more than a year’s free national insurance, so it is a valuable incentive. Unlike point five of this fantastic five-point plan we have heard about, which would reward small firms that take on anybody—including someone they were going to take on anyway and who would have got a job—our incentive is targeted on the long-term unemployed. That is the crucial point. Only one person in this debate has mentioned cost-effectiveness—my hon. Friend the Member for Salisbury. The right hon. Member for East Ham (Stephen Timms) said that it was a scandal, or something, to have finished up the future jobs fund, but he should know that that fund was costing more than £6,500 per place, whereas our work experience programme costs a twentieth of that and delivers the same sort of outcomes. Cost-effectiveness simply is not on the Labour party’s radar.

In the few seconds available to me I shall not have the chance to go through all hon. Members’ contributions. My hon. Friend the Member for North East Hertfordshire (Oliver Heald) flagged up the record national debt that we were left and my hon. Friend the Member for St Albans (Mrs Main) talked about the collective amnesia of Labour Members and asked why they did not tackle bankers’ bonuses. Just before the election, they introduced a temporary bankers’ bonus tax—

Pensioners and Winter Fuel Payments

Denis MacShane Excerpts

Tuesday 22nd November 2011 Commons Chamber

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

I beg to move,

That this House is concerned about pressures on pensioner households this winter with high and rising fuel prices; notes that the Winter Fuel Payment will be £50 lower in the winter of 2011-12 than in each of the last three years for a pensioner aged 60 or over and £100 lower for those pensioners aged 80 or over; and calls on the Government to review the impact of its decisions on Winter Fuel Payments and VAT, and to announce in the Chancellor’s Autumn Statement urgent steps to ease the burden on pensioner households.

It is a pleasure to move the motion standing in my name and the names of my right hon. and hon. colleagues. This motion is about a life and death issue. Fuel poverty and the effects of cold winter weather on the elderly are a lethal combination. Only today, the Office for National Statistics has published figures for cold-related deaths for England and Wales. That report shows that in 2010-11 there were some 25,700 excess winter deaths among old people in England and Wales, which is roughly the same number as last year. However, last year’s figure represented a big increase on the previous year. More people are dying as a result of living in a cold house in the United Kingdom than are dying in road traffic accidents each year.

The figure for excess winter deaths is defined by the Office for National Statistics as the difference between the number of deaths during the four winter months and the average number of deaths during the preceding autumn and the following summer. In the Conservative party manifesto for the 2010 election, these figures were described as “a national disgrace”, and that is absolutely the correct description. This is nothing short of a national catastrophe that affects every region of the United Kingdom. The motion before the House therefore calls for the Chancellor to take

“urgent steps to ease the burden on pensioner households”

right across the United Kingdom.

I want to refer particularly to the situation in our own area of Northern Ireland as an example of the dire circumstances facing many of our senior citizens living in cold houses.

[Mr Denis MacShane (Rotherham) (Lab)]

I shall certainly support the right hon. Gentleman in the Lobby tonight. Surely, however, the problem is poor pensioner households. The difficulty with the winter fuel allowance is that everybody over 60 or 65 gets it, irrespective of their means, and as a result it has become a generalised payment that helps the rich but does not give enough to the poor.

[Mr Dodds]

I understand that argument entirely. Indeed, the Select Committee on Energy and Climate Change pointed to it in its report back in 2010, and I will come on to deal with the targeting of resources and tackling fuel poverty. As for cold weather payments, there is clear evidence that many pensioners do not claim all the benefits to which they are entitled. The benefit of having a universal system is that it reaches all those who need it. I will deal with the issue that the right hon. Gentleman has highlighted in more detail later.

Youth Unemployment

Denis MacShane Excerpts

Wednesday 9th November 2011 Commons Chamber

[Mr Byrne]

The hon. Gentleman’s constituents will want to know why he is living in the past, and what he is doing to take to his Front Benchers the argument about what more they are going to do in the autumn statement to get our young people back to work.

We have heard about the great success that is the flagship youth programme. Now let us turn to the Work programme.

[Mr Denis MacShane (Rotherham) (Lab)]

Will my right hon. Friend give way?

[Mr Byrne]

In a moment. I shall just tell the House a little about the Work programme.

We have debated before the virtues of the Work programme, and I understand that young people can now be referred to it early. I shall put aside for one moment the Work and Pensions Committee’s conclusion that it is one third smaller than previous programmes, because the Minister has strong views about that, and I shall put aside also the Social Market Foundation’s analysis that the DWP offers providers of successful outcomes a maximum amount of money that is 25% less than the flexible new deal, because those facts are not the worst of it. The worst of it is that the Department itself expects three quarters of people to flow straight through the programme and straight back on to the dole, so I ask the House, how is that going to make a difference?

[Mr MacShane]

Do we not have to nail one lie—that there is some magic deregulation out there which solves the problem? European countries such as the Nordic countries, the Netherlands and Germany—the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) is aware of this—all have stronger regulation and active labour markets, so it is a huge lie to say that the poorer young workers are and the worse they are treated, the more jobs there will be.

[Mr Byrne]

I know that my right hon. Friend will agree that it is curious that while unemployment is going down in America, the eurozone and Japan, it is going up in this country.

Pensions Bill [Lords]

Denis MacShane Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Denis MacShane (Rotherham) (Lab)]

I was shocked when a constituent of mine, Mrs G. E. Smith, came in to see my at my last surgery. She will be 60 next month, and she was hoping to retire. She works in an exhausting cleaning job in a sawmill. I think Ministers have no idea what life in hard manual work is. She is shattered and wants to retire, but she has been told that she now has to go on another year, which will be injurious to her health. The Government have no idea of how what we used to call the working class suffer.

[Malcolm Wicks]

I imagine that that woman might have been categorised by the Office for National Statistics, rather inelegantly, as being part of the social class of “routine occupations”. That includes many women who are cleaners, and men who are manual labourers, van drivers or packers—heavily demanding work. Can they all look forward to living to 80 or, as the Minister likes to remind us periodically, to 100? Actually, they cannot.

The class differences are most pronounced for men, but they also exist for women. Here are the ONS statistics. Almost one fifth of men from the lowest social class—19%—die before reaching the existing pension age of 65. We talk about pension ages, but sadly a lot of these guys are already dead by that point. That 19% figure compares with just 7% from social class 1. For women, the respective figures are not so stark, but 10% in routine occupations die before the current pension age of 60—not like my right hon. Friend’s constituent, I hope, but with that type of job—while the figure is just 4% for those from the professional classes.

Oral Answers to Questions

Denis MacShane Excerpts

Monday 10th January 2011 Commons Chamber

[Chris Grayling]

I would very much like to improve the support that we provide, but obviously we have to do that in the context of the finances that we have inherited from the Opposition. The big difference that the new scheme will make is that it will also take advantage of the expertise of existing business people. I hope that my hon. Friend, who has a strong track record in business, will look to become a mentor for one of the new business people. That is an important difference from the previous scheme; the new scheme offers both financial and practical support, and not just financial support.

[Mr Denis MacShane (Rotherham) (Lab)]

Enterprise allowance will work all the better if young people are educated into the idea of creating their own businesses, yet thousands of people from Rotherham and other parts of south Yorkshire who go into work experience via the education business partnership scheme do not know whether the scheme will be continued. It is funded by the Department for Education, but we do not know whether it will be cut or continued. Could the Minister’s Department talk to the Department for Education and get a bit of joined-up government on this?

[Chris Grayling]

One of the things that we are doing is introducing changes to the guidelines to ensure that young people who find themselves unemployed have a much greater opportunity to get work experience in enterprises while they are on benefits. We have also announced tens of thousands of extra apprenticeships to give young people the chance to get involved in, and understand, business. Young people will be among those who are eligible to take advantage of the new enterprise allowance, if they are unfortunate enough to find themselves unemployed.

Oral Answers to Questions

Denis MacShane Excerpts

Monday 19th July 2010 Commons Chamber

[Mr Duncan Smith]

We are fully aware that there might be peculiar circumstances in London and we have already trebled the discretionary allowance. We are still considering all these matters and making allowances, so I guarantee that we will continue to watch this matter. My hon. Friend is right that this has been a real issue—working people on low incomes have had to pay the bill for local housing allowance without being able to live in the sort of houses that those who are on local housing allowance and who are unemployed can live in. There is a real disparity and unfairness and we need to sort that out.

[Mr Denis MacShane (Rotherham) (Lab)]

Does anyone on the Government Front Bench believe that we can effectively tackle poverty without also reducing inequality in wealth and income? Any one of them is welcome to reply.

[Mr Duncan Smith]

Yes, the right hon. Gentleman is right that we must do both. Under the previous Government—the Government of whom he was a member—inequality was at its worst since 1961. Clearly, they did not think that we must do both, but we do.