Oral Answers to Questions

Douglas Alexander Excerpts

Monday 10th January 2011 Commons Chamber

[Mr Duncan Smith]

My hon. Friend is right. Over the past nine months, we have seen a huge increase in part-time work with more than 400,000 new jobs. [Interruption.] The answer to Labour Members is that jobs are being created even though we are coming out of a recession, which was brought on by their policies.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

The Secretary of State’s colleague, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), has said of the Government’s plans for the long-term unemployed:

“You have been unemployed for 12 months, you are passing the actively seeking work test…we are/the Government is saying that your housing benefit will be cut by 10% just because you have been unemployed for 12 months. I don’t understand why. You are on the breadline, you’ve been trying to look for work, you’re passing all the Government tests and you’re suddenly going to have your rent, which is your highest cost—your help with that—taken down by 10%. No logic behind that whatsoever.”

Can the right hon. Gentleman tell the House with which part of that statement he disagrees?

[Mr Duncan Smith]

The reality is that the coalition—I emphasise coalition—position is that we will withdraw some of that money, 10%, before the 12 month point. The point about the 12-month stage is that more than 90% of all those seeking work will be in work by that point. That gives us an opportunity to make sure that those who are having the greatest difficulty can be properly reassessed, and if there are particular problems, they can be dealt with. It also acts as a spur and incentive to others who are not exactly playing the game in line with the question asked by the hon. Member for Swansea East (Mrs James). On balance, I think the coalition will find that the policy will work very well.

[Mr Alexander]

I listened with care to that answer, but given that the number of people who have been unemployed for more than 12 months, on the broader measure, went up by 41,000 in the most recent figures, can the right hon. Gentleman tell us whether the Business Minister is the only member of the coalition who thinks that the present proposals are “unsupportable”?

[Mr Duncan Smith]

That is like my asking whether the right hon. Gentleman’s leader and his shadow Chancellor agree on everything, which I do not think they do. The coalition has a clear statement of policy and that policy exists. The reality of that policy is exactly as he has been debating and I would not trouble him to find out exactly what he agrees with his leader about after this morning’s statement that his side apparently now agree with most of the changes we are making.

--- Later in debate ---

[Mr Duncan Smith]

As my hon. Friend will know, the Government are increasing the number of additional apprenticeships from 50,000 to 75,000 over the period of this Parliament. We are also bringing forward the Work programme. It is interesting to note that young people who have been out of work for a long time, as that is defined, will be entering the Work programme a month earlier than they would have done under the new deal for young people, which will be very good for them. Prior to that, jobcentres will work very closely with young people to make sure that they get the right choices and opportunities. It is worth noting that we are also doing an awful lot in trying to get those who are still at school set ready for the world of work when they leave school.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

On the subject of unemployment, the Government are meeting businesses in Downing street today and asking them to create jobs, but in its latest forecast published since the last DWP questions, the Office for Budget Responsibility revised upwards its unemployment forecasts for 2011, 2012, 2013 and 2014. Does this not confirm that it is as a direct result of the Government’s macro-economic judgments that the unemployment queue is now forecast to be longer and the unemployment bill to be higher?

[Mr Duncan Smith]

The right hon. Gentleman seems to forget the financial situation that we inherited from his Government. I know that it is an uncomfortable fact, but the reality is that we had a major recession and we are taking the decisions that are necessary to get this economy back on track. If the hon. Gentleman looks at the OBR forecast, he will see that we are going to create many more new jobs and that unemployment will be falling all the way through the rest of this Parliament.

Oral Answers to Questions

Douglas Alexander Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Duncan Smith]

The PAYE system is ultimately the responsibility of my colleagues at HMRC, although we will obviously require an element of that to implement the change. That change will make life considerably easier for us in delivering those benefits without the normal mistakes that are made—mistakes that have caused overpayments to people, followed by attempts to claw them back that cause hardship for many people on low incomes. I believe that in due course the change will deliver a net benefit to everybody.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

Under the Secretary of State’s proposals, councils are to use the real-time data to calculate entitlement to council tax benefit, although the entitlements will vary according to each local authority. What is his estimate of the cost to the Department for Work and Pensions of supporting councils in creating their own mini-benefits system in each locality?

[Mr Duncan Smith]

I will give those details soon. I will not give them today, but I can say that we have already been working on the issue. We believe that, as things stand right now, we will manage the cost within our present budgets—it will not require anything extra for us. Of course, as the right hon. Gentleman said, it forms a challenge to us—I accept that—but localising elements of benefits is important to local people, and councils have very much wanted to do this. I will definitely give him the figures for that in due course, but we believe that we will be able to manage it, and I am more than happy to discuss that with him.

--- Later in debate ---

[Mr Duncan Smith]

My hon. Friend is absolutely right. The difference between this Government and the previous Government will be that the Work programme—the most comprehensive, integrated work programme in existence, certainly, since the war—will make a huge effort to get those who have been out of work for the longest periods ready for work so that they actually get to work. As the economy grows, those jobs will be greater in number. A key point that I made earlier is vital to her question: for all the growth under the previous Government, prior to the mistakes they made that brought us the recession, most of those jobs went to people from overseas because British people simply were not capable of doing that work. That has to change.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

May I take the Secretary of State back to his claim that job creation will be vital and ask him specifically about what the Office for Budget Responsibility has stated will be the estimated saving from threatening the long-term unemployed, about whom he has just spoken, with the 10% figure? Do the OBR’s estimates on how much that policy will save include an expectation that it will move more people into work, or is no significant saving in terms of work incentives expected? Do the calculations simply show OBR figures for the number of people who are going to continue with no job but less money? What do the OBR figures indicate?

[Mr Duncan Smith]

The OBR figures show two things: significant growth during the course of this Parliament and significant growth in private sector employment. Our changes in housing benefit will get rid of a disincentive to taking those jobs, which a significant number of people failed to take under the previous Government, who failed to do anything about it.

Welfare Reform

Douglas Alexander Excerpts

Thursday 11th November 2010 Commons Chamber

[Mr Duncan Smith]

For ever.

A far simpler system, which operates on the basis of real-time earnings, will also reduce the scope for underpayments or overpayments. We all know from our experience as constituency MPs that that can create anxiety and disruption, and can prove very difficult to correct. Our simplification and reform will help to end that particular problem. As well as reducing official error, these changes will also make life far more difficult for those who set out to defraud the system. They are a very small group of people, but they are there none the less.

The system will be simpler, safer, more secure, fairer and more effective, but it will require investment. Some £2.1 billion has been set aside to fund the implementation of the universal credit over this spending review period, and I have been assisted in that work by my right hon. Friend the Chancellor, who has agreed to and guaranteed the investment programme.

This is not just expenditure; it is also investment. We are investing in breaking a cycle of welfare dependency, which I believe is a price worth paying. The universal credit will provide a huge boost to individuals who are stuck in the benefit trap, reducing the risk involved in taking work and lifting 850,000 people out of poverty in the process. That investment will produce a flow of savings, as a simpler system will help to drive out more than £1 billion of losses due to fraud, error and overpayments each year. On the wider economic considerations, dynamic labour supply effects will produce net benefits to this country, as greater flexibility helps businesses and fuels growth, particularly in the high street. We will invest the £2.1 billion provided in the spending review 2010, seeking a multi-billion pound return.

That is how we will make work pay, but as I said earlier, and as our document states, it simply will not be enough. We also have to support people as they make their move back to work, and the two issues cannot be separated. That is why we are moving ahead with our new Work programme, which will provide integrated back-to-work support. It will pick up and bring together many of the programmes that were in place before, and add to them to create a comprehensive system of support. That is why we have already started a three-year programme to reassess the 1.5 million people who have been abandoned for years on incapacity benefit. The Opposition started that process before the election for the flow of new claims, and we are now trialling it in two cities.

Essentially, this is our contract: we will make work pay and support people to find a job through the Work programme, but in return we expect co-operation from those who are seeking work. That is why we are developing a regime of sanctions for those who refuse to play by the rules, as well as targeted work activity for those who need to get used to the habits of work. That will be a selective process, targeted at those who need to do it, not at everybody. It will be targeted as required, using the understanding and knowledge of those based in jobcentres.

Furthermore, evidence from the already existing work capability assessment, which the last Government started, shows that 36% of people withdrew their applications before reaching the stage of being assessed. The knowledge that they are likely to be assessed has a stark effect on those who may be trying to defraud the system. That underlines the effect that the system could have on those who are currently working while claiming benefits.

This new contract, in which we do our best to help people find work, to make them work-ready, to make work pay and to say that they will always be better off in work than on benefits, is a fair deal for the taxpayer and a fair deal for those who need our help. I commend the reforms in the White Paper to the House.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the Secretary of State for his statement, for advance sight of it and for his personal helpfulness and co-operation preceding it.

I will deal directly with the principles underlying the universal credit. Both our parties want a simplified benefit system in which less money is clawed back as people move into work. That is why I have been very clear since I started in my position that if the Government get the approach right, we will support them. Pension reform was the subject of significant cross-party working in the last Parliament, and I sincerely hope that welfare reform can be in this Parliament. The right hon. Gentleman can count on Labour’s support when he is pursuing laudable aims, even when it appears that he cannot count on the support of his own Chancellor.

In office, we introduced the working tax credit, which substantially reduced the marginal deduction rates. It halved the number of people facing marginal deduction rates of 90% or more. The Secretary of State has just mentioned that matter. From reading his work in opposition, one cannot fail to see some of his ideas as welcome steps. His dynamic welfare paper promised a 55% taper rate, lower marginal deduction rates for every family, £2 billion a year more going into the pockets of families and £500 million a year less being spent on administration.

The Secretary of State now appears to want to set a taper rate for the universal credit of 65%, 10 percentage points less generous than he advocated in his previous paper. The impact of that was described by his own Centre for Social Justice thus:

“Setting it higher than 55% would increase MTRs”—

marginal tax rates—

“for those working households in receipt of benefits other than Housing Benefit (even if their net income was higher than today). As a result, there would be a negative impact on earnings, and on the number of second earners in employment.”

From an initial inspection of what we have been offered today, it seems that in this Parliament we will get a higher taper rate, higher marginal deduction rates for some families, no additional money overall going into the pockets of families and a £2 billion increase in administration and start-up costs. Is that proof that there is no plan so worth while that the current Chancellor of the Exchequer cannot delay or damage it?

There is real concern that some of the measures imposed on the Secretary of State in return for allowing the universal credit to proceed are contradicting the policy aims that he has set out today. On the Government’s own figures, because of the June Budget 20,000 more people next year will face marginal tax rates of 90% and 30,000 more will face rates of over 70%. That is because of the Government’s plans to increase taper rates for tax credits. We must remember that phase 1 of the implementation plan for his dynamic benefits plan was to reduce tax credit taper rates from 38% to 32%. From this March, the Government are increasing the taper from 38% to 41%.

The small print of the Green Paper published in the summer read:

“The changes in the June 2010 Budget will increase the maximum Marginal Deduction Rate to 95.95 per cent.”

That is before even taking into account changes in the spending review, such as real-terms cuts in working tax credit and top-up low wages. Can the Secretary of State explain the approach that his Chancellor is adopting, and can he guarantee that as a result of these changes no one will have a higher marginal deduction rate? Will he tell the House whether anyone—for example, people who currently receive tax credits but not housing benefit—will face higher marginal deduction rates under his approach?

According to the IFS, of which the Secretary of State spoke approvingly in his statement, the tax credit and benefit changes announced in the June Budget mean that the poorest two deciles of the population will lose about 2% of their incomes over the coming Parliament, more proportionately than the rest of the population. Can he therefore inform the House whether all the analysis being bandied around today about out-of-work households moving into work and children being lifted out of poverty is relative to the position today, or only to the position after the substantial losses that people will face because of the Government’s already-announced cuts to benefits in this Parliament? Can the right hon. Gentleman simply provide the figures for this Parliament? Do the Government expect child poverty to have fallen or risen by the end of this Parliament? The Office for Budget Responsibility predicts that an extra £700 million will be spent on unemployment benefits because a longer dole queue following the June Budget has consequences for the welfare bill.

The right hon. Gentleman has allowed all this to happen in return for the Treasury allowing him to spend £2 billion on the new system. Can he give us today the breakdown of the £2 billion secured for the implementation of the universal credit—the IT breakdowns and the transitional costs for affected families? Can he pledge that he will not raid any other part of his departmental budget in this spending review for this purpose if it turns out that that money is insufficient? How does the right hon. Gentleman respond to reports in The Times today that he will need to secure another £2 billion on top of the £2.1 billion that he referred to in his statement to guarantee his pledge, which he repeated to the House today, that

“There will be no losers”?

Is the Treasury underwriting the promise that he has just given the House?

To conclude, securing headlines—I have to admit that my colleagues and I came to understand this over 13 years—is a lot easier than securing reforms. This morning, the Secretary of State said in an interview on the radio:

“This is about saying to people: if you try, if you co-operate, if we work with you and work pays and you still can’t get a job then our duty is to support you.”

How can he possibly reconcile those words with the plans his Government have announced to cut 10% of the housing benefit of anyone who cannot find work within a year, even if the jobcentre thinks that they are taking all the correct measures? When he gets to his feet, the Secretary of State can perhaps explain to the House how he justifies that measure, whether it is set to continue permanently within the planned universal credit and, frankly, how it fits with the principles that he set out on the radio this morning.

[Mr Duncan Smith]

I am glad that the right hon. Gentleman spent so much time saying how much he supported this measure—that is really helpful. He then dwelt on a lot of things that were not necessarily relevant to it, but I will come to those none the less.

I am sorry that the right hon. Gentleman seems to be less than positive. I had hoped that he would consider this to be a major change, which would benefit the very people he says he is in favour of supporting. There is absolutely no question but that this measure will support and improve the quality of life of those who are likely to be affected. When he gets to the White Paper, I would draw his attention to a chart on page 53, which shows that the bottom deciles—this is from the moment that he left office right the way to the moment set out in the chart—will actually improve their life quality dramatically, taking all matters into consideration and sweeping all the way up to the moment we implement this. The poorer will be better off, and I wish the right hon. Gentleman could have taken the opportunity to welcome that. That is the reality for him and his party, and if I were in his position, I would have been a little more positive.

We believe that child poverty will fall. Let me just deal with the story in The Times about the money, which the right hon. Gentleman mentioned. The fact is that the £2.1 billion is a full envelope for spending review 10; it is absolutely enough to get us to that point. I said to the right hon. Gentleman privately, and I say again publicly, that as we implement these measures over three years of this Parliament and a further two years of the next Parliament, more money will, of course, be required, and that is guaranteed, but we will come to that in the spending review for the next spending review period. [Interruption.] Yes, it will be guaranteed, because we have to implement this programme.

Within that £2.1 billion, we will also invest in setting up essential IT systems. The right hon. Gentleman knows, because we have spoken about this, that these are medium-level IT systems. Even in his time, the Department for Work and Pensions handled these systems very well, and there were no problems with them at all. The money will also be used to support the running of the new system and the migration of current benefit and tax credit recipients from today’s system. Within that, we will also guarantee, as I said, that nobody loses out.

On the IT challenge that we dealt with, I remind the right hon. Gentleman that, even in his time, we managed to implement some very similar projects and to operate them very well. This is by no means a monolithic system like the Rural Payments Agency or the National Offender Management Service. During his time, the DWP had a strong record of successful IT delivery on systems such as the employment support allowance system, which was roughly on the same scale, and the pension reform system. Both were similar IT systems and both were managed without any particular problems. We are determined that the IT situation will be managed very well, and that we will be able to complete the process.

The support that, as the right hon. Gentleman says, we will give to those who are transiting is covered in the £2.1 billion. I repeat that we will protect those people who, for particular reasons, find themselves on slightly lesser moneys for as long as they stay in that situation. As they move up, they will gain dramatically. Even if they were to fall back, relative to where they were, they will gain dramatically. The reality, I hope, for the Opposition, as they think this over carefully, is that even if they were to return to power, this system would benefit those people.

The right hon. Gentleman asked me about the taper rate. The taper rate that we talked about when I was at the Centre for Social Justice was an optimum taper rate with everything taken into consideration. The taper rate itself involves a decision, which a Government of any hue would take, about how to set the balance between what we can afford and how much we will be able to give people as they go back into work. The real issue here is not that the taper is 65%. Even with 65%, all those who go back into work will be better off as they work through the hours. If the right hon. Gentleman is saying to me that he would prefer a 55% rate if he were in power, that is fine. He just has to tell me where he intends to get the money from, and that is the issue I have not heard him or his colleagues say anything about since they left us with the worst budget deficit in living memory. I only ask the right hon. Gentleman and his colleagues to think of this as a positive measure. Even if they were in power right now, it would help the poorest in society absolutely dramatically.

Housing Benefit

Douglas Alexander Excerpts

Tuesday 9th November 2010 Commons Chamber

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I beg to move,

That this House believes that, whilst housing benefit is in need of reform, the Government’s proposals will mean significant losses for hundreds of thousands of working families and pensioners and risk spending an additional £120 million on the cost of providing temporary accommodation; and calls on the Government to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months, and which ensure that any proposals are implemented on a revised timetable which allows councils, tenants and landlords to adjust, allows the impact on rents to be observed and understood, and avoids additional spending on temporary accommodation.

It is common ground across the House that the deficit needs to be cut and that, as the motion states, housing benefit needs to be reformed. The shadow Secretary of State for Communities and Local Government, my right hon. Friend the Member for Don Valley (Caroline Flint), will speak later and I am sure she will reflect the views of many in this House in recognising that the issue of housing benefit cannot, and should not, be detached from broader issues of housing provision. However, it is important to start the debate by setting out some of the facts that explain the real and rising concerns that have been expressed from both sides of the House about the impact of the Government’s proposed housing benefit changes. I will address first the reach of the changes, then the reason for them, and finally their potential impact.

If we were to believe everything we read in the newspapers, we would have thought in recent weeks that housing benefit reform is solely a London issue and that it matters only to people who have large houses and should be, but are not, working. Broadcasts and newspapers have suggested that the key issues are workshy families in Mayfair mansions, so let us start with some truths, however inconvenient they are for the Opposition Front Bench. Some 4.7 million people in the United Kingdom currently receive housing benefit, 2 million of whom are pensioners on pension credit guarantee of just about £132 a week, while 500,000 are people on jobseeker’s allowance and 700,000 are people in work in low-paying jobs. From just one measure of the Government’s proposed changes alone—the cut in local housing allowance from the 50th to the 30th percentile—700,000 of these, many of the poorest people in our country in and out of work, stand to lose on average £9 per week.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am looking forward to hearing the rest of what I know will be a very passionate and important speech. Does my right hon. Friend agree that many people—not only in my constituency, but throughout the country—who have disabilities or who are carers for people with disabilities are terrified that these proposals might affect them?

--- Later in debate ---

[Mr Alexander]

To illustrate my hon. Friend’s point, one of the depressing aspects of the changes is that we have not yet had a comprehensive impact assessment; I will discuss that during the course of my remarks. We have had figures about the proposed changes from the Department for Work and Pensions, which confirm that they will hit every part of Britain, and from the smallest flat upwards. A poor pensioner living in a single-bedroom flat in Glasgow will lose £7 a week, and a family in a two-bedroom flat in Liverpool will lose £10 a week. Housing benefit recipients in Yorkshire and Humberside are most likely to lose out from this 30th percentile measure, with 90% of local housing allowance recipients seeing a reduction in their housing benefit.

Little wonder that Shelter’s chief executive, Campbell Robb, explained only yesterday:

“The focus of debate so far has been the cap to housing benefit and the impact on London, but this analysis shows that these cuts will affect hundreds of thousands of people across the country.”

That is why the Church of Scotland, a body with a long and distinguished tradition of work and witness in deprived communities across Scotland, on Friday wrote to every Scottish Member of Parliament, raising concerns and questions in advance of today’s debate about the impact of the proposed measures on the communities it serves. Today, Shelter in Cornwall raised concerns about the Government’s proposals, saying:

“The reality is that we are going to be facing much more homelessness and more evictions because of this. Cornwall’s low incomes mean that lots of hard working people do have to claim housing benefit.”

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my right hon. Friend realise that many people not affected by the cuts are appalled that this Government sought out the poor and needy and attacked them with these cuts?

[Mr Alexander]

I am grateful to my hon. Friend for that question. I hope that the Secretary of State will take the opportunity to explain to the House and indeed to the country why, in the package of measures contained in the spending review, the Government decided to take more money from the nation’s families than the nation’s banks.

Calls for a rethink on these proposals have also come from the hon. Member for St Ives (Andrew George), whose constituency covers the Isles of Scilly. I hope that he will vote in support of the motion, as he has said:

“The impact on Cornwall is likely to be very severe indeed.”

He also said that the proposals

“will put a lot of families in extreme stress and ministers should think again.”

Concern is rising among those on both sides of the House and across the country, from Cornwall in the south to Shetland in the north. We have to recognise that when we talk about these rushed and ill-considered changes, we are talking about changes that will affect our constituents, no matter what part of the country we represent. The changes will affect many of our constituents, those in and out of work, as well as many of our poorest pensioners. This debate should be informed by that state of mind, rather than by the lurid headlines that Ministers have worked so hard and so shamefully to create in recent days.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I agree with the following statement:

“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 came from this year’s Labour manifesto. Does the right hon. Gentleman agree with it?

[Mr Alexander]

I do, which is why I wish those on the Government Benches would spend less time reading our manifesto and more time changing their proposals.

Let me deal with the substantive points. [Interruption.] Hon. Members should have just a little patience—one of the virtues that I wish the Secretary of State had learned in relation to these changes. Two arguments are being advanced in favour of the changes, the first being that the housing benefit bill is out of control and the second being that reform will lower the rent levels paid by the state for private sector accommodation available through housing benefit.

Let us start by examining the facts and the merits of those arguments. First, as the Building and Social Housing Foundation points out:

“Housing benefit has remained remarkably consistent at around 14% of the benefits bill for many years and most of the increase over the last 18 months has been down to an increase in the number of claimants, which is exactly what we would expect to happen in response to a recession.”

[Bob Russell (Colchester) (LD)]

rose—

[Mr Alexander]

I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession—that is undisputed—but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%. That was fuelled hugely by the Labour Government’s reform to local housing allowance. The figures show that today’s rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.

[Mr Alexander]

I am happy to come on to deal with exactly those points, which echo some that we have heard.

[Bob Russell]

rose—

[Mr Alexander]

I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills—

[Mr Duncan Smith]

Explain it.

[Mr Alexander]

I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department’s own statistics show that since 2000 more than half the increase in the housing benefit bill—54%—did not come from the few high claims. It came from poorer private tenants—those in low-paid work, and disabled or elderly people—claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I feel that I should give way first to the hon. Member for Colchester (Bob Russell).

[Bob Russell]

The right hon. Gentleman was a Minister in the last Government. He started his speech with a brief mention of “housing provision”, but he has not said anything about it since. Will he inform the House how many council houses were built and how many were sold by the last Labour Government?

[Mr Alexander]

The hon. Gentleman made that point in the debate in Westminster Hall. I will not pretend that our priority was council housing as distinct from social housing, because for Governments over many years there has been a move away from direct provision by local councils to broader social housing, principally provided by housing associations. We will happily stand comparison between the number of social houses that we built during our time in office and the number being trumpeted by those on the Government Front Bench. Incidentally, almost half of the 150,000 in the figure that is now being used by the Conservatives are houses that were initiated by the Labour party when it was still in office. Notwithstanding the fact that I do not think that that was a point worthy of the hon. Gentleman’s genuine concern, I hope that he will back up the words of the early-day motion with his actions this evening and join the Labour party in the Division Lobby.

[Mr Heald]

Does the right hon. Gentleman not agree, as all commentators have said, that since the introduction of the LHA the transparency of it has led to landlords putting up rent? Does he not think that there is a duty on Government in these difficult times to do something about it?

[Mr Alexander]

I have great respect for the hon. Gentleman, but there is a difference between having a duty to act—and we support the case for reform in housing benefit—[Hon. Members: “Ah!”] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the ’80s and ’90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.

The core of the Government’s policy is their belief that by cutting or capping housing benefit—this has been the substance of a couple of interventions—they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government’s regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.

In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?

[Mr Duncan Smith]

Bureaucratic nonsense.

[Mr Alexander]

I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.

Not only does the Government’s core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients—[Interruption.] From a sedentary position, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), says, “They would say that, wouldn’t they?” Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? “Yes,” I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.

[Christopher Pincher (Tamworth) (Con)]

The right hon. Gentleman is keen to use statistics. I wonder whether he is comfortable with the statistic that more than 50% of Labour supporters believe that housing benefit should be reformed. They support us. Is it not ironic that he is proposing such a motion today when his supporters support this Government?

[Mr Alexander]

First, I respectfully suggest that the hon. Gentleman reads the motion. Secondly, I suggest that he recognises that we introduced the LHA, which has already been the subject of an exchange across the Floor of the House. He might also want to go back and read the statement of the former Chancellor at the March Budget, when we suggested further measures for reform of housing benefit.

That is commonplace. There is a difference between the right reforms that will save the public money, and the wrong reforms that will potentially cost the public money and lead to higher homelessness, as we have seen so often in the past.

[Matthew Hancock (West Suffolk) (Con)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I am keen to make a little progress.

According to a study commissioned by Shelter from the Cambridge Centre for Housing and Planning Research—I wonder if the Government will dispute the integrity of that body—more than four in 10, or 42%, of landlords currently letting to LHA claimants planned to scale back. Shelter estimates that that will equate to 100,000 landlords. Liz Peace, the chief executive of the British Property Federation, said:

“Landlords might decide to abandon the social sector.”

The Conservative Mayor of London—I wonder what the Government will say in relation to this evidence—says that the Government’s proposals will lead to

“the loss of the private rented sector as a major safety net for London boroughs”.

He continued:

“We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term.”

Those are the words not of the Labour Front Bench, but of Boris Johnson.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Has my right hon. Friend seen the Daily Mail today? Under the headline “Archbishop is wrong about…welfare…says Iain Duncan Smith”, the opening paragraph states:

“Iain Duncan Smith has attacked the Archbishop of Canterbury’s claims that housing benefit cuts will lead to a cycle of despair that will socially cleanse the poor from Britain’s cities.”

The article goes on to quote the Secretary of State as saying of the Opposition and special interest groups:

“‘They have even tried to suggest that our real purpose is not just to cut the budget deficit but to remove poor people from the heart of our cities.’”

If that is not the purpose of the Government’s intentions, surely that will be the net effect.

[Mr Alexander]

I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.

[Mr Duncan Smith]

I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who think that our measures will socially cleanse London? Will he please answer that question?

[Mr Alexander]

I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.

[Mr Duncan Smith]

rose—

[Mr Alexander]

I am happy to give way.

[Mr Duncan Smith]

I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?

[Mr Alexander]

I have said that I think London will look very different in the years ahead if the Government’s proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government’s policies, not about my words.

[Mr Dennis Skinner (Bolsover) (Lab)]

Will my right hon. Friend compare the current position to the days when Lady Porter decided to take measures in this part of London to shift people out of certain areas for political reasons? Is not the Government’s current idea one that Lady Porter could only have dreamed of, because it is 10, 20, 30 times worse?

[Mr Alexander]

The cumulative impact of Lady Porter’s measures was in the hundreds or the few thousands. The impact on people being removed from their homes if the current proposals pass unchecked will extend significantly beyond that.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Has my right hon. Friend discovered which Conservative Minister described the measures as having such a high social impact in terms of moving people out of London that it would be greater than the highland clearances?

[Mr Alexander]

Alas, I cannot answer that question, but I hope the Secretary of State for Work and Pensions will do so.

[Several hon. Members]

rose—

[Mr Alexander]

No, I have been generous and I will make a little progress, although I will be happy to take further interventions. Given that the subject has moved on to the highland clearances, let us move from London to Edinburgh and take the example of Edinburgh to prove that the issue is not exclusively a London one.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I will give way in a few moments, because I am interested to hear what the hon. Gentleman intends to do later this evening.

Let us take the example of Edinburgh. About 20% of all households live in the private rented sector, and about 18% of housing in the private rented sector is occupied by people who receive some housing benefit. If landlords no longer wish to have tenants on housing benefit because of the lower local housing allowance, they will have ample scope to find other tenants in that city.

Perhaps we should move on from Edinburgh to the east midlands. In the other place, the Bishop of Leicester said:

“The present belief that cutting housing benefit will depress the market and reduce private sector rents might just work if there were more houses to meet the demand. As it is, all the risk is being born by the vulnerable, not the comfortable.”—[Official Report, House of Lords, 1 November 2010; Vol. 721, c. 1446.]

[Simon Hughes]

The right hon. Gentleman and his colleagues are perfectly right to raise this important issue, which is of concern across the House, but will he be his usual self and use careful language? There is no evidence to suggest that the implication of the policy is what his hon. Friend the Member for Rhondda (Chris Bryant) and his hon. Friend the Member for Bolsover (Mr Skinner) have suggested—or, indeed, what the Mayor of London has implied. Yes, there are issues, but the idea that people will be moved forcibly from where they are to somewhere else is neither necessarily the case nor evidentially the case.

[Mr Alexander]

I can assure the hon. Gentleman that I will be characteristically careful in my language. I hope that he will be characteristically careful in aligning his words with his actions. We will be watching carefully this evening to see whether this is another instance of the Liberals either being able to prove that they are willing to match their words with actions or, alas, not.

[Mr Clive Betts (Sheffield South East) (Lab)]

rose—

[Mr Andy Slaughter (Hammersmith) (Lab)]

rose—

[Mr Alexander]

I am going to make a little more progress.

There is a substantive question, and that is: on what evidential basis do the Government assert that rents will fall? In the debate involving the Bishop of Leicester last week in the other place, the Under-Secretary of State for Communities and Local Government, Baroness Hanham, in response to being challenged directly on the evidence that the Government could adduce for a fall in rents as a result of the changes, said that it was a “suggestion”.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I think that the shadow Secretary of State is a measured and reasonable man who will not want to be hysterical but will want to look at the facts. Since November 2008 private rents have fallen by 5% and local housing allowance rents have risen by 3%. LHA is pushing rents up. Does he accept that?

[Mr Alexander]

I have already covered the point that LHA is calculated in relation to rent in the private rented sector. The Minister generously characterises me as a reasonable fellow, but the fact is that this is the second time in as many days that a coalition Minister has accused the Government’s critics of being hysterical. I think that it was the Secretary of State for Communities and Local Government who yesterday told London councils, when perfectly reasonable questions were being asked, to “grow up”. I hope that when the Secretary of State for Work and Pensions speaks in this debate we will have a more measured and reasonable account of why the policies have been decided on and of whether the Government are willing to reflect on the points being raised, and in turn change their mind.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Does my right hon. Friend recall the answer that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) gave less than one month ago, when he indicated that at the last count 48% of local housing allowance recipients received a sum less than the rent that they were due to pay? The idea that half of all local housing allowance recipients are forcing up rents, when they are not actually getting enough housing allowance to pay the rent, is an extraordinary proposition.

[Mr Alexander]

My right hon. Friend’s expertise is well revealed in his question. I have been told to avoid hysteria and be careful and measured, but any of us who recollect the impact of the community charge, when a number of poor people started with a small but rapidly accumulating debt and ended up owing significant arrears to local authorities—which ultimately had to write off those debts—have reason to be very cautious before endorsing these proposals.

[Matthew Hancock]

Will the right hon. Gentleman give way?

[Mr Alexander]

No. I am keen to make a little progress, by looking at the individual measures that the Government are advancing.

When the Secretary of State speaks, will he explain why the Department for Work and Pensions is not producing an impact assessment on the whole package of changes to housing benefit before the House? An assessment has been made of the introduction of the LHA measures during 2011-12, as the Social Security Advisory Commission requires, but that is partial, and of course does not take account of the effect of the consumer prices index cap on LHA rates from 2013.

We would also expect a separate impact assessment of the jobseeker’s allowance measure and social sector size limits to follow once the secondary legislation is published. At this stage, however, it is unclear whether an assessment will be made of the CPI changes. The fact that no comprehensive impact assessment has been completed before the announcement does nothing to reduce the widespread anxiety about this package of reforms. I therefore hope that the Secretary of State will now accept the concerns of his colleagues and undertake to publish an assessment of the whole package.

[Mr David Lammy (Tottenham) (Lab)]

Will my right hon. Friend confirm that it is a statutory duty of the Secretary of State to undertake to give an impact assessment, on the basis that this greatly affects London’s ethnic minorities—and if there is a disproportionate effect, to do something to alleviate it? It is extraordinary that that impact assessment has not yet been published.

[Mr Alexander]

That is an outstanding point made by a tireless fighter for the people of Tottenham. I know that my right hon. Friend has already taken the opportunity to raise this matter directly with the Secretary of State, who I hope will be able to find an opportunity to respond to it.

[Mr Slaughter]

My right hon. Friend is right to analyse and dismantle the individual points made, but there is also a cumulative effect. The cumulative effect on my borough after these changes are introduced, if they are, is that 6% of neighbourhoods—seven out of 111—will be affordable to people in receipt of housing benefit. Mine is by no means the worst affected borough in London: all the central London boroughs are affected. If that is not forcing people out of London and making it impossible for people on low incomes to live in London, I do not know what is.

[Mr Alexander]

My hon. Friend speaks with force and knowledge about the impact of these changes in his own constituency. I hope that when Government Front Benchers reflect on the range of points that have been made about the impact on our communities and constituencies across London, they will take the opportunity to think again.

[Mr Rob Wilson (Reading East) (Con)]

It takes the entire income tax paid by seven average earners in my constituency, and by nine average earners in the right hon. Gentleman’s constituency, to pay one family’s housing benefit bill. Does he think that is fair?

[Mr Alexander]

I will come to the issue of the cap. The hon. Gentleman does a disservice to the importance and seriousness of this debate by simply reading out the questions the Whips have given him. In terms of the cumulative effect, which is what we were talking about, this package involves £1.8 billion-worth of cuts. The measure that he identifies accounts for £65 million of that £1.8 billion. One of the many attributes missing on the Government Benches is a sense of proportion.

Let us look at some of the individual measures. Labour Members do not have any objection in principle to asking younger single adults to live in a shared house or flat—after all, that is what has happened a great deal in the private sector. Yet it is revealing that the Chancellor, in his spending review statement to the House, described this as a chance to limit the ability to live on housing benefit as a lifestyle choice. So why have the Government not produced an impact assessment for these proposals? How can we be reassured that there will be sufficient supply to accommodate additional people and that the specific needs of young people in special circumstances, such as the disabled, will be addressed before this measure is introduced?

On the social sector, even the Government themselves seem to be struggling to understand some of the proposals. The June Budget promised to change housing entitlements for people of working age in the social sector. Can the Secretary of State explain what that means, and whether it will mean forcing people to move out of their council homes when their children turn 18? The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate, who has already contributed to the debate, recently said in an answer to a written question:

“The detailed policy design of this change is still being developed.”—[Official Report, 1 November 2010; Vol. 517, c. 565W.]

In that case, why are the Government so confident that it will save £490 million?

Let us move on to the issue of the CPI. The shadow Chancellor has made it clear that we would support changing the uprating of benefits for a time-limited period, but this is not what the Government propose in relation to housing benefit. Index-linking local housing allowance to the CPI, which does not in any way reflect housing costs, means that the LHA’s value will drop substantially against rising rent levels, and households will increasingly find themselves priced out of all but the poorest-quality accommodation.

The impact is clear if we view the decade from 1997 to 2007 and then project forward. During those 10 years rents increased by 70%, while the CPI—the new inflation index that the Government have chosen—increased by only 20%. On that projection, by 2020 housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10% of the available property. In Manchester it would cover only 5% of available two-bedroom flats, and in parts of Winchester, within 10 to 12 years not a single two-bedroom home would be affordable on housing benefit.

I ask Ministers in all seriousness whether it is coincidental that in evidence to the Select Committee on Work and Pensions last week, Lord Freud suggested that the coalition Government now saw it as

“quite valuable to rewrite the homelessness legislation”

Can the Secretary of State confirm whether that is indeed the case, and can he further assure the House that the Government are not simply seeking to rewrite the rules for those threatened by homelessness as they rewrote the rules for the unemployed in the 1980s and ’90s, parking a generation of people in the unemployment figures?

[Matthew Hancock]

The right hon. Gentleman is being careful not to set out the Labour party’s position on the cap. Does he agree with his leader, the right hon. Member for Doncaster North (Edward Miliband), or does he agree with the shadow Health Secretary, who said nine days ago:

“Those top level benefits do need to be capped”?

[Mr Alexander]

I will answer the hon. Gentleman’s question directly. The former Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh South West (Mr Darling), introduced an option for dealing with extreme cases in the March budget—excluding a proportion of the highest rents from the calculation of the median. I am sure that given his past employment, the hon. Member for West Suffolk (Matthew Hancock) will be aware of that change. As I have previously stated, I have no objection in principle to a cap, if it is introduced on a staged timetable. I commend to him the speech that I gave at the Institute for Public Policy Research as recently as Friday. However, we have to ask whether a national cap is the most appropriate plan, or whether a regional cap would target the very highest claims in all regions.

[Guy Opperman (Hexham) (Con)]

rose—

[Mr Alexander]

I am keen to make a little progress.

I rather fear and suspect that the focus on the cap in some interventions owes more to Andy Coulson than to the Secretary of State. As I have already made clear, despite the fact that it will yield £65 million, it is only one part of a package of more than £1.8 billion-worth of proposed housing benefit changes resulting from the cumulative impact of the June Budget and the spending review.

Perhaps the Secretary of State will be able to answer some specific questions. Why is it necessary to introduce a cap on rent levels from April next year, and the change in the maximum rate to the 30th percentile in October? Is there not a real risk that some households will be displaced twice within a short period, with all the costs and individual traumas that that would entail?

Let us look at the reality of the matter for a moment. Many households will be making their housing arrangements now without full knowledge of what the proposals will mean. They may be arranging for their children to go to a local school, to sign up for child care support or to buy a season ticket for travel to work. It must be right to give individuals enough notice and clarity about what the first tranche of measures will mean for them to be able to ascertain whether they will be able to avail themselves of the discretionary housing payments that the Government claim will be available.

What estimate has the Department made of the impact of the changes on homelessness? Does the Secretary of State accept the figures provided by London Councils, which expects that 82,000 households will be forced from their homes? What estimate has he made of the cost of the changes to local government? Shelter has said that the costs of introducing all the rushed changes will be as much as £120 million. Does he have an alternative figure that he would like to share with the House?

The Mayor of London’s own director of housing has stated that the introduction of the cap in London alone will lead to a 48% rise in homelessness acceptances, which will mean £78 million being spent in London on temporary accommodation. Yet the Budget Red Book estimates savings of only £65 million a year. Given those figures, why would the Government introduce a policy that could end up costing the taxpayer more than it is intended to save?

I now move from the cap, about which people have been so keen to talk in the newspapers for so many days, to the change to the 30th percentile, which is perhaps more deserving of that level of publicity. Liz Phelps of Citizens Advice UK has remarked that the change

“will potentially affect people across the country. It will mean lower rates…It is very crude, short-term thinking. It will cut the DWP budget but it will explode the homelessness budget. We will see a lot more rent arrears, a lot more debt and acute poverty, and then more homelessness.”

[Mr Gordon Marsden (Blackpool South) (Lab)]

I wish to put on record that however important the change is in London and the south-east, it is not simply an issue for that area. Does my right hon. Friend agree that the Department’s own figures, which show that some 5,500 local housing allowance recipients in Blackpool will lose up to £25 a month, are not acceptable in such areas, which have some of the highest rates of deprivation in the country?

[Mr Alexander]

My hon. Friend speaks with authority about not just Blackpool but a number of seaside towns where there are real communities that are suffering and afflicted by deprivation. That is why it is incumbent on the Secretary of State and the Minister, who is winding up this debate, to offer a clear and unequivocal answer to my hon. Friend. Why is it acceptable that people in Blackpool who are in work but low-paid, and who bear no responsibility for the global financial crisis, are now being asked to bear the burden?

[Mr Betts]

That is precisely the issue that affects cities such as Sheffield as well. The Deputy Prime Minister has objected to the word “cleansing” and other Members have objected to the word “clearance”. In a disparate housing market such as Sheffield, the effect will be to disperse families from the affluent part, the Sheffield, Hallam constituency—the Deputy Prime Minister’s constituency—to the rest of the city. That will lead to a more segregated city, and it is that sort of effect that the Government should address.

[Mr Douglas Alexander]

I shall resist the temptation of suggesting that the one person who should be dispatched from Sheffield is the Deputy Prime Minister. I acknowledge the fact that in communities such as Sheffield, and in cities across the whole of Britain, there is deep anxiety and concern about the impact of these changes. That is why the Local Government Group agreed that the move to the 30th percentile is

“ likely to increase homelessness costs,”

since it will diminish

“the willingness of private rented sector landlords to let to housing benefit customers. This will have hugely variable and disproportionate effects on different parts of the country.”

The Government’s impact assessment of the 30th percentile change goes into great detail to demonstrate that at least 30% of the market is available in every area. However, is it not the case that the inevitable consequence of the LHA cap and the CPI cap is that, over time, the proportion of the available market will shrink below 30%?

Finally, let me come to one measure that has absolutely nothing to do with welfare reform and everything to do with a welfare cut. The Government propose that someone who is doing everything that we would ask of a person on benefits—applying for jobs, going to interviews, and even getting on the Secretary of State’s famous bus from Merthyr Tydfil—will still lose 10% of their housing benefit if they cannot find a job within a year.

Let me unpick the statistics in two communities. Wolverhampton has six claimants for every job. If they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10% of their benefit. To take Norfolk, a very different community from Wolverhampton, the figures say that there are 5,000 jobs, mainly casual, and 15,600 claimants—and that under these rules, 1,254 families would be sanctioned tomorrow. How can such an approach be fair when there are five claimants chasing every vacancy in the British labour market?

On Sunday, the Secretary of State’s colleague, the Chief Secretary to the Treasury, stated:

“Sanctions in the welfare system only apply when people don’t take advantage of the help and support that is on offer.”

Such a statement is irreconcilable with the policy that the Treasury has now imposed on the Department for Work and Pensions. I have to say to the Secretary of State, for whom I feel great respect, that he is losing even old and dear friends as he tries to defend the measures that he has signed his Department up to. Indeed, when Bob Holman, the man who brought the right hon. Gentleman to Easterhouse in 2002, was asked why the Secretary of State had changed track, he said:

“It is hard to say. I think he has come very much under the influence of George Osborne, who is very much more aggressive, who is much more anti-working class and I think that Iain probably is looking at it—if I am to get my big reform through, the universal credit system, I’ve got to go along some way with the attitude of Osborne.”

Indeed, how does the right hon. Gentleman want the unemployed to answer the question originally asked by Norman Tebbit? The truth is that homes are cheaper where there are fewer jobs. Should the jobless from Middlesbrough move to London where there may be jobs but fewer homes, or should the homeless from London move to Middlesbrough where there are homes but fewer jobs? I hope that the Secretary of State will take the opportunity to answer that question in the course of his remarks.

The right hon. Gentleman once styled himself as “the quiet man”. I simply cannot believe why, given all the work he has done over recent years, he stayed silent in his conversations with the Chancellor when the latter told him that this was a progressive move to help people into work. It is the very opposite of a progressive move. The party that once said that unemployment was a price worth paying now wants to fine the unemployed if they cannot find a job. We were guaranteeing work for the long-term unemployed, but the Conservative party seems to be threatening them with homelessness.

[Steve Webb]

My eyes may deceive me, but I sense that the shadow Secretary of State is on the final page of his speech. He must have dropped a very long section in which he was to set out Labour’s alternative. Perhaps he will do that now.

[Mr Alexander]

It might help the hon. Gentleman if he recognised that as he has chosen to align himself with the Conservative party in government, it is now his responsibility to answer the questions. I know that, as a former professor of social policy at the university of Bath, he is a man of great erudition and deep thinking. May I commend to him the speech I made on Friday in which I went through each of the measures and set out our thinking, as I have done on a range of them today?

We disagree fundamentally about the balance between the cuts that have to be borne by the poor and the vulnerable relative to the contribution that should be made by the banks. So we disagree about the deficit. We also disagree with measures such as the 10% cut in housing benefit relative to jobseeker’s allowance—[Interruption.] What do we support? In the March Budget we made it clear that we wanted to take the top rental—forgive me, Mr Speaker. I should not get into a debate with someone who is sitting down. I shall address you, Mr Speaker. We have made it clear that we could support a phased approach to caps, and that we want to look into regional caps. We have made it clear that we are willing to consider the proposal—once we receive an impact assessment—on the deductions available for non-dependent individuals living in households that receive housing benefit. We have also made it clear that we regard the 10% cut in housing benefit for those who have been unemployed for a year as completely unacceptable—and in his previous persona, I fear, the Minister would have found them unacceptable as well.

I need to draw my remarks to a conclusion, as was kindly anticipated by the Minister. Let us be honest: this package of rushed, ill-considered and potentially devastating cuts has raised concerns beyond the debates in this Chamber in communities across the country. In the 1980s, the previous Conservative Government showed that higher homelessness, like longer dole queues, ends up costing the taxpayer more, not less. These ill-thought-through proposals have already led a number of MPs of conscience and concern, on both sides of the House, to register their disquiet. I do not claim a monopoly of concern about the proposals for any one party. Perhaps that is why the Government have run scared of putting an amendment to the House today endorsing explicitly each of the present proposals on housing benefit that they continue to advocate. Fortunately, however, there is still time for the Government to think again about these proposals. I urge Members on both sides of the House to take the opportunity this evening to reflect on these changes, and I commend the motion to the House.

--- Later in debate ---

[Mr Duncan Smith]

Before I do, I want to finish this one off. My predecessor, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), went even further before the previous election, hinting strongly at a much bigger change. She said that

“it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford.”

I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour’s flagship LHA reform was in an expensive mess, she went on:

“We will publish further plans…to make the system fairer, and to make sure housing benefit encourages people into jobs.”

Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public—the electorate—what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.

[Mr Douglas Alexander]

Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?

[Mr Duncan Smith]

I agree with Boris Johnson. What he said is that there will be no “Kosovo-style cleansing” of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.

--- Later in debate ---

[Mr Duncan Smith]

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

[Mr Douglas Alexander]

rose—

[Mr Duncan Smith]

I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?

[Mr Alexander]

I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his fellow Minister Lord Freud said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government’s position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?

[Mr Duncan Smith]

We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better—he has an ex-housing Minister sitting next to him—and that they know full well that those definitions of “homeless” are simply not true. He should have disowned them early on, before we started this debate.

--- Later in debate ---

[Mr Duncan Smith]

My hon. Friend’s exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.

[Mr Douglas Alexander]

The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

[Mr Duncan Smith]

The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute—here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

--- Later in debate ---

[Mr Douglas Alexander]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Members should not be constantly standing on their feet. The Secretary of State is indicating to whom he intends to give way. I would be grateful if Members resumed their seats.

[Mr Alexander]

I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker’s allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.

[Mr Duncan Smith]

We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures—

[Mr Alexander]

rose—

[Mr Duncan Smith]

I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.

--- Later in debate ---

[Mr Alexander]

I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?

[Mr Duncan Smith]

The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?

[Mr Alexander]

Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.

[Mr Duncan Smith]

At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.

--- Later in debate ---

[Mr Duncan Smith]

The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to the right hon. Member for Don Valley (Caroline Flint), who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.

If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair—

[Mr Alexander]

rose—

[Mr Duncan Smith]

No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, “We think it’s fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work.”

--- Later in debate ---

[Mr Duncan Smith]

My hon. Friend the Member for Burton (Andrew Griffiths) is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, “This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast”—another scare story put about by Labour. It is absurd.

[Mr Alexander]

rose—

[Mr Duncan Smith]

If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.

[Mr Alexander]

I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?

[Mr Duncan Smith]

There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended—[Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.

We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure—which they used to argue was too low—achieved by the previous Conservative Government, which was 39,000 a year.

The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.

--- Later in debate ---

[Steve Webb]

When there are specific instances of vulnerable people about whom local authorities have concerns, those local authorities have discretion to do something about the situation. But when people might reasonably be expected to move, that, of course, is part of the equation. If everybody went on staying exactly where they were at the same rent, there would have been no point to the policy.

On the basis of the debate so far, Mr Speaker, you would imagine that this year’s £21.5 billion housing benefit budget was about to be slashed. [Interruption.] Labour Front Benchers are saying that it is.

[Mr Douglas Alexander]

indicated dissent.

[Steve Webb]

Sorry; the shadow Secretary of State is disowning the right hon. Member for Greenwich and Woolwich (Mr Raynsford), who got it wrong. In 2014-15 the housing benefit budget will have been “slashed” from £21.5 billion to £22 billion. We are not slashing. We are making changes.

It has been said that we are being too hasty. The Labour party has decided that after 13 years of making the problem worse, doing something about it is “hasty”. Labour was so unhasty that it never got round to doing anything about the problem before it lost office. We are getting a grip.

First, we have established that the impact of the changes has been grossly exaggerated. Secondly, we have established that rents will not stay as they are. During the debate it has been suggested that the fact that the British taxpayer is putting more than £20 billion a year into housing benefit has no impact on the market. We, the taxpayers, pay housing benefit towards 40% of private rented tenancies. It is a long time since I studied economics, but I reckon if we pay for 40% of the tenancies and we put £20 billion a year into the market, we might just be having some impact.

Oral Answers to Questions

Douglas Alexander Excerpts

Monday 18th October 2010 Commons Chamber

[Steve Webb]

My hon. Friend is right. Excess winter deaths are a scandal. That requires work across Departments, as well as our commitment to the winter fuel payment and the cold weather payment system. We are working with our colleagues not just in the Department of Health, but the Department of Energy and Climate Change, because proper home insulation is a key to tackling excess winter deaths.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

Last week the Prime Minister said he stood by the pledge that he made during the election about retaining the winter fuel allowance. I note with interest the answer given by the Minister. Will he confirm, for the avoidance of doubt, that everyone who is today entitled to the winter fuel allowance will still be entitled to it on Thursday?

[Steve Webb]

I cannot pre-empt the outcome of the comprehensive spending review, but I refer the right hon. Gentleman to the wording of the coalition agreement, where we say that we are committed to protecting the winter fuel payment.

--- Later in debate ---

[Mr Duncan Smith]

We do indeed. My hon. Friend is right to draw the matter to the House’s attention. Using new media, it is important that we ensure that young people are brought fully into the net, particularly through voluntary sector organisations, which are much better at using the new media. However, I must also draw her attention to the Department’s commitment—a commitment that I have made—to ensure that older people approaching retirement should not retire without the ability to use the net and the web. That is a big commitment but one that we will stand by.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

Last week, PricewaterhouseCoopers suggested that 1 million jobs could be lost over the next year. Given the answer we just heard from the Secretary of State and the present uncertainty in the labour market, will he confirm again that people affected by the change he just discussed will do very nicely—as he said—and assure the House that the reduction in the interest rate used for the support for mortgage interest programme will not lead to a rise in the number of repossessions among the approximately 255,000 people affected?

[Mr Duncan Smith]

I welcome the right hon. Gentleman to his position, although it would have been nice if he had risen at the Dispatch Box and first apologised for being part of a Government who left plans to cut the support to mortgage holders—[Interruption.] Yes, as the Minister of State, my hon. Friend the Member for Thornbury and Yate implies, they planned to slash the rate. So when the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) next gets to the Dispatch Box, perhaps he will tell the world that he was going to do that, and apologise. We will give the support necessary and reform the system. As he knows, organisations and individuals, including a lot of very senior businessmen today, have said that our economy will grow, that they will provide the jobs and that therefore this Government will be right.

Welfare Reform

Douglas Alexander Excerpts

Monday 11th October 2010 Commons Chamber

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

With permission, Mr Speaker, I should like to make a statement on welfare reform.

Let me start by welcoming the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) to his new post as shadow Secretary of State for Work and Pensions. We have already had a conversation in the last week. I extend that welcome to all members of his new shadow Front-Bench team.

The statement today is in three parts. First and foremost, today—as everyone in the House may well now know—we launched an approach to those on incapacity benefit under the work capability assessment, and it is necessary for the House to hear this directly from us so that Members can question me. Secondly, I want to use this opportunity to set out more detail on the new Work programme, which is very much related to the work capability assessment. Thirdly, the House has a right to know more about our plans for wider benefit reform as we look ahead to a White Paper and welfare reform Bill, although I would add the caveat that greater detail will be contained in that statement.

The economic backdrop is severe. We have the largest deficit in the G20 at £155 billion—the largest in peacetime history—with debt interest of £120 million a day, or £43 billion in 2010-11. Under the previous Government’s deficit reduction plan, which the Opposition now seem not to favour—although I might be wrong on that point—annual debt interest spending would have risen in only five years to almost £70 billion. Let me put that in context: that would have meant spending more on interest than we spent on policing, defence and transport combined. So, there is an urgent requirement to make these changes and reforms.

[Official Report, 11 November 2010, Vol. 518, c. 1-2MC.]We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million —have been claiming for an entire decade, and a system that has left Britain with the highest rate of jobless households in Europe. Those statistics reveal the human cost of leaving our welfare system unreformed, and with that comes an ever-increasing financial cost. The working age welfare budget rose by 40% in real terms from £63 billion in 1996-97 to £87 billion in 2009-10. A staggering £133 billion was spent on incapacity benefits in the past 10 years, and benefit spending is forecast to be more than £152 billion in 2010-11, which is about 10% of gross domestic product.

Today we spend £1 in every £3 on welfare in this country, yet youth unemployment is higher and inequality greater, and there are 800,000 more working age adults in poverty than there were in 1998-99. In that context, we also announced the reform of child benefit last week. I personally do not think that it is right, if we have to make changes and reductions, to tax the poorest to fund the receipt of child benefits by those with the highest levels of income. If we do this correctly, we can save about £1 billion, protect some 85% of families and secure fairness as we support people. I know that that is tough—we are in tough times—but I believe that it is fair, and that is the key. The important thing as we come through these spending reviews is that we should have a progressive change, not a regressive change.

At the same time, we announced procedures to set a cap on benefits for workless households to average earnings, which are about £26,000. However, we ought to set that in context. The cap will be net of income tax and national insurance, so if someone was working to receive that amount of money it would equate to gross earnings of some £35,000 a year—not a very narrow cap. Equally, we will exempt the disabled and those on working tax credit so that we encourage work incentives and do not penalise those who find it difficult to be in work. That is fair, and we will announce more details in the spending review, which means that I shall do my level best to answer some of the questions that I expect Members want to ask.

In the last week we have also announced a new enterprise allowance, which is there to help unemployed people who would like to try to set up their own business. We will be able to give them up to £2,000 in various forms, as well as the advice and mentoring of those who have started their own businesses. Today, the most important step is that we are launching two trials for those on the old-style incapacity benefit under the work capability assessment. The Minister of State, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is travelling to Aberdeen and Burnley today to see both those trials get under way. They are about giving many thousands of people the opportunity to move from the margins of society into mainstream employment. I remind the House that we inherited the programme, and that I supported it while we were in opposition. We have had to make a few changes, and we will make more as necessary.

Under the new system we will assess people on the basis of what they can do, not what they cannot, and thereby support people to meet their aspirations for work. We are determined to get it right, which is why we will learn from the trials and why we have set up an independent experts group to scrutinise the assessment. That group includes, for example, the chief executive of Mind, so as the programme is trialled we will listen to and deal with concerns about those who are mentally ill, such as those expressed on the radio today. Through those measures and through the Work programme, we are committed to supporting everyone who goes through the assessment.

We will ensure that those deemed unable to work continue to receive the support that they need, and that those deemed able to work are fully supported to do so. People who are found fit for work will move directly on to our new Work programme rather than have their jobseeker’s allowance stopped in the normal way. They will receive an integrated package of support, and in due course so will those who have been out of work for a longer period. It will provide personalised help based on individual needs, not on the benefit that somebody receives. Using the best of the private and voluntary sectors, that will help get people into work as quickly as possible.

The systems that I have described are what we call black-box systems, and I shall explain what that really means. Put simply, we will not lay down prescriptive criteria about how they should be run. We want those running them to do whatever is necessary to help people into work—that is the key. They will be operated on a payment-by-results system that ensures that providers do not simply go through the motions. They will receive their real money only for getting someone into work and ultimately keeping them there, and they will find rewards further up the chain as they do so. We have received more than 790 expressions of interest in joining the programme from providers, and in December we will invite bids for contracts, ready for national roll-out next year.

Finally, the work capability assessment and the Work programme are of course critical to getting more of the 5 million or 5.5 million people who are currently on benefits back into work, but they will not be enough. Underpinning that support must be a benefits system that incentivises work, and we have to ensure that work always pays. That is why the coalition Government aim to bring forward a White Paper soon and a welfare reform Bill in the new year.

The introduction of what I call the universal credit will restore fairness and simplicity to an overly complex, outdated and now wildly expensive benefits system that simply prevents people from getting back to work. As we get the benefits system working, we can get Britain working. The best way to get the deficit down, drive the recovery and get the economy moving is to ensure that more and more of the British people who can work do so. Welfare reform is critical, and I give a guarantee that people moving on to the universal credit will not be any worse off at any stage. In fact, they will be better off as they find work.

Everyone in the House should unite around, and try to achieve, the cause of moving people into work and creating a pathway out of poverty for the 5 million people on out-of-work benefits. I understand that the new leader of the Labour party has said that he will not be in opposition for opposition’s sake, so I hope that he and his shadow Cabinet colleagues will do the right thing and support us in delivering a welfare system that is fit for the 21st century. I commend these reforms to the House.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the Secretary of State for his statement and for advance sight of it. I thank him also for his gracious welcome to myself and my team. Members of all parties will acknowledge and recognise the work that he has done both inside and outside Parliament over recent years on the crucial issues for which he now bears a heavy responsibility.

As befits a responsible Opposition, my team and I will work constructively with the Government when there is common ground between us, on issues such as increasing opportunities and support for people to get into work. However, I must also be clear that when the Government propose measures that we judge arbitrary and unfair, we will oppose them robustly.

The Secretary of State began his statement with a rehearsal of the case for reform. While, of course, I disagree with the rather partial and partisan account of the economic situation that he inherited, let me be clear about the fact that I recognise the need to continue the reform of the welfare system. I believe in a welfare state that ensures that there are more people in work and fewer in poverty. That empowers people and contributes to a fairer and more equal society.

Let me also acknowledge, on this first outing at the Dispatch Box, that conditionality does have a role to play, as we recognised in government, first, because we know that it works in helping people to turn around their lives and, secondly, because it is the foundation for ensuring the public support on which the welfare state is based. Accordingly, I will carefully scrutinise each of the Government’s specific proposals on the welfare system.

The Secretary of State spoke about his plan to remove child benefit from higher rate taxpayers and, from the Dispatch Box, described that change as “fair”. How does that change meet the fairness test when it will result in one family, with a collective household income of £80,000, getting child benefit and the family next door, with an income of £44,000, getting none? There have been a variety of claims as to what the threshold in fact is. Can he confirm at this time that the change will affect only parents earning more than £44,000?

Since the shambles of the announcement last week, the Prime Minister and others have suggested that marriage tax breaks might be introduced in the near future to compensate for the removal of child benefit. Does the Secretary of State accept that there is no coalition agreement to implement the Conservatives’ marriage tax allowance proposals, that to date such proposals have applied only to basic rate taxpayers, and that even if his coalition partners were to accept those proposals, they would cost more than the savings made from the child benefit reform he proposes?

On incapacity benefit reassessment, which the Secretary of State touched on, despite its omission from the briefing in this morning’s newspapers, I welcome his acknowledgement that he is continuing the previous Government’s proposals on the trialling and roll-out of the work capability assessment. I note that those proposals this morning appeared to be attached to a specific target of removing 500,000 people from benefits. If a system of assessment is to be truly fair and objective, will he clarify whether that figure is a hard target, merely an assumption or a headline-grabbing claim?

I was also concerned to see reports in The Times today that those judged too sick or disabled to work could nevertheless have their benefits time limited to six months or a year. Will the Secretary of State confirm whether that is the case? If it is not, will he clarify what actual plans he has for reassessing those who are initially found to be unable to work?

The Secretary of State has also told us today that people found fit for work will move directly to the Work programme. His colleague the Employment Minister—the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling)—has previously told the House that the new single Work programme will not be introduced until the first half of 2011. How can that timetable be reconciled with the trials now under way, which were announced in Burnley and Aberdeen?

I welcome the comments made on the radio this morning by the Employment Minister, who said that he would be prepared to modify the test if it were not working properly. Indeed, I welcome the gracious acknowledgement of the Secretary of State’s confirmation of that point today. However, he concluded his statement by describing welfare reform as an historic opportunity. It is, none the less, an historic error to fail to realise that effective welfare reform requires economic recovery. He seems to be in denial of the fact that getting people back to work requires there to be jobs for them to take up.

That insight explains why the previous Government took measures to ensure that unemployment was kept at about half the level of that in previous recessions, that the unemployed were supported and that, at the same time, those who could move from benefits into work were doing so. In contrast, the Government’s own Office for Budget Responsibility revised forecast predictions that public sector jobs would be cut by 750,000 and that unemployment would increase to nearly 3 million people. Over the next few years, the Treasury’s own papers indicate half a million more jobs lost in the public sector, half a million jobs lost in the private sector and half a million fewer jobs and opportunities for the unemployed.

Labour Members will continue to make the case for backing our economy, fighting for jobs and standing up for fairness while reforming our welfare system.

[Mr Duncan Smith]

I thank the shadow Secretary of State. May I answer a few of his particular questions? First, I thank him for his general support for the aims of what we are trying to do. I am sure that we will work together to achieve those. I think that is the best thing to do. I recognise fully that, of course, there are things that he will not agree with. That is reasonable, and it is exactly what I would say were I sitting in his place. In fact, I did exactly that some 10 years ago. How time goes on.

I also welcome the shadow Secretary of State’s acceptance of the need for conditionality in the system; we will need to discuss that with him further. There is absolutely a need for conditionality, which can properly be introduced only once we have created what I call the contract—that is, when we can genuinely say that we have improved the programmes to get people back to work, and have made the benefit system simpler, having made sure that there are no blocks to people going back to work. If we fulfil that bit of the contract, those out of work and looking for work need to fulfil their bit of the contract—they need to take the work when it is available. That is the key to conditionality.

The shadow Secretary of State asked about the level at which child benefit will be removed. It is simple—it will be removed at the higher-rate threshold. At the moment it is £43,875, but of course I cannot predict what it will be. It is a matter for the Chancellor; no one should read anything into what I said. It is not my job to set the rate, but the benefit will be removed at the higher-rate threshold.

The shadow Secretary of State went on to say that the change is not fair. He describes the tax system when he says it is not fair, although I am not sure what he is trying to describe. The reality is we think, fairly, that it is wrong for someone on lower income to have to pay tax so that someone on higher income can receive an element of benefit to look after their children. If he thinks that it is unfair to make the changes through the tax system, I would like to know what he did in the past 10 years to reform the tax system that he now thinks is unfair. The very same tax system actually penalises those who have one single high earner in the family as against a household with two lower earners who together could be earning £80,000, so he is condemning the tax system that he has given to us. We can only use the system that we have, but he may now think that that is unfair.

The measures will help enormously to meet what I call a progressive form of reduction in costs. I think that the process will be ultimately welcomed—it has been welcomed by the general public.

The shadow Secretary of State made the point that he did not think there were enough jobs. Of course, we could do with many more jobs. We have inherited an economy that has been stuttering. In the past month or so there have been just under 500,000 jobs in the jobcentres. Those are not static jobs. Those are jobs that are available—they rotate; some are taken and new ones come on. We know that in the informal economy there are many more jobs being taken. That is evidenced by the fact that some 280,000 people went into work in the past quarter, which is the highest number of people back to work since modern records began in ’89. The reality is that there are some jobs.

The shadow Secretary of State talked about growth. As he knows, over the period of the spending review, the independent Office for Budget Responsibility, the IFS—sorry, the IMF—and others have made forecasts; the IFS may yet make the same forecast as them. The IMF has forecast that growth levels will be between 2% and, in the medium term, 2.5% and that there will be a net increase in employment over that period. We can jostle over the figures, but I do not agree that there are no jobs available. As the economy begins to grow we will see even more jobs, but if we do not get people ready for those jobs, we will be in the same situation as he found himself in with 5.5 million people on out-of-work benefits doing nothing and languishing in households that had no work at all.

The shadow Secretary of State talked about the work capability assessment and he said that there were concerns. He is right. The figures that we were talking about were estimates of where we believe we could and should be. They are not hard targets. We cannot and will not set hard targets for a simple reason. As I explained earlier, this is a process. As we look at what happens in Aberdeen and Burnley, I hope—I am prepared to share this with him—that we will figure out whether there are things that we are doing right or wrong, so I am not saying that there are targets. It would be wrong to set targets.

As for the idea of reviewing the measures, the shadow Secretary of State said that he welcomed the Employment Minister’s views. We will modify all the measures as necessary. The key thing is that nearly 1 million people have sat on incapacity benefit without anyone seeing them over the past 10 years. We have to change that. The Labour Government started that programme; we must finish it. I hope that we will receive his support. The right hon. Gentleman commented on the way that we do these things. We will consult where necessary and make sure that the Opposition get the evidence that they require to decide whether to oppose our measures.

I conclude by saying to the right hon. Gentleman and all Opposition Members that we inherited a major deficit from him and his team. That deficit is the largest in the G20. If we do not get that down, the interest payments on the loans alone will dwarf everything we do. What we are doing in the spending review is looking for ways to do that. At the same time, it is important to make sure that when we act to reduce the deficit, we share the burden across the income scale and we do not achieve savings on the backs of the poorest in society. I am here to make sure that that does not happen. I hope I will have the right hon. Gentleman’s support in that when he sees how progressive the review turns out to be.