Oral Answers to Questions

Grahame Morris Excerpts

Monday 11th March 2013 Commons Chamber

[Mr Hoban]

I think the hon. Lady should raise issues about training in Scotland with the Scottish Government, who are responsible for it. They will not allow people on the Work programme to go on Scottish Government-funded courses, and I suspect that that is where the problem lies.

[Grahame M. Morris (Easington) (Lab)]

2. What steps he is taking to tackle the increased use of pension liberation schemes.

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

We take the issue of so-called pension liberation very seriously. The Pensions Regulator is currently investigating 21 cases, and scheme assets worth over £50 million have been protected as a result of regulatory action.

[Grahame M. Morris]

Many pension liberation schemes are skimming off thousands of pounds in charges and commissions, and leaving customers exposed to punitive tax penalties. In the wake of mis-selling scandals such as that involving payment protection insurance, what action is the Minister taking to ensure that future pensioners are protected?

[Steve Webb]

The hon. Gentleman is right. When people transfer money from a pension, they must fill in transfer forms. We have established a “scorpion sting in the tail” information campaign, producing very eye-catching literature which people wishing to transfer their money receive before signing on the dotted line. It is a “buyer beware” measure, and is one of a suite of measures that we are taking to crack down on such fraud.

Oral Answers to Questions

Grahame Morris Excerpts

Monday 28th January 2013 Commons Chamber

[Mr Duncan Smith]

I have lots of discussions with the Chancellor on a regular basis, all very amicable. Of course we have to discuss this in a wider context, but the hon. Gentleman and his party look at this in a very narrow context. They say, “Well, you withdraw this money from people on benefits and that immediately has an effect on the high street.” If that were all that we were doing, I would agree with him, but it is not. There is a major programme for investment in industry and a huge capital spending programme, not least as will be announced in a statement later today. These will have an even bigger effect, in a positive way, on spending in the high street.

[Grahame M. Morris (Easington) (Lab)]

9. What estimate he has made of trends in the number of people in Easington constituency claiming jobseeker’s allowance in 2013.

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

About 3,400 people in Easington are currently claiming jobseeker’s allowance, which is up 340 on the year, but last week we saw a fall in the number of people in the north-east claiming JSA. Since the general election, there has been an increase of 35,000 in the number of people in work in the north-east.

[Grahame M. Morris]

The Government have stopped publishing the number of unemployed people in each constituency chasing each vacancy. As I have impressed on Ministers before, and I will say it again, the issue for us in Easington, unlike in Lichfield, is joblessness—a lack of jobs. Will the Minister give consideration to publishing those data, which would be useful to potential employers and inward investors?

[Mr Hoban]

The hon. Gentleman makes an important point. I was born and brought up in his constituency, so I well understand the challenges that Easington faces. We do want to encourage more people to invest in the area, and that is why I am keen to commend the work that has been done with the East Durham area partnership to encourage more people into work in Easington. We will look at how we can recommence publication of vacancy statistics shortly.

Welfare Benefits Up-rating Bill

Grahame Morris Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Byrne]

I want incomes to rise faster than benefits. That is why I think it was wrong that the hon. Gentleman voted for a three-year freeze in tax credits, which has hit 7,700 of his constituents. He must answer to them after today’s debate. Why is he supporting a huge tax cut for millionaires when 7,500 people in his constituency are seeing a freeze on their tax credits and a squeeze on them in the years to come?

[Grahame M. Morris (Easington) (Lab)]

To respond to the issues raised by Government Members, I point out that a lady on £72 a week in jobseeker’s allowance came to my surgery on Friday. She is being expected to pay £9.60 because of a loss of housing benefit because of the imposition of the bedroom tax. What do Government Members have to say to her?

[Mr Byrne]

Once upon a time—back in 2004 and 2005—when the Secretary of State was making speeches about poverty, he said that the way to judge the Conservative party was on how its policies worked for the poorest communities in the country. What many people will be asking after today’s debate is: what happened to that man?

Welfare Reform (Disabled People and Carers)

Grahame Morris Excerpts

Tuesday 18th December 2012 Westminster Hall

[Grahame M. Morris (Easington) (Lab)]

This is the first time I have served under your chairmanship, Mr Chope. I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing this timely and important debate. The number of Opposition Members here is testament to the importance of this subject. It is excellent that they have come along to express concerns on behalf of their communities and of disabled people, who are up in arms.

I would like to challenge the hon. Member for South East Cornwall (Sheryll Murray), who suggested that Labour Members were somehow scaremongering about the scale and impact of the cuts. For the record, I have done a little research on my area, County Durham, and the impact is absolutely huge: changes to ESA will affect 26,000 people there. The Government’s 20% reduction in DLA funding and the predicted escalation in the case load will cost County Durham £12.83 million. In my constituency alone, £2.76 million of support for disabled people will be withdrawn as the migration to PIP occurs. Overall, County Durham is predicted to lose £11.59 million a year in income just from changes to tax credits. We could contrast that with what is happening in some of the more affluent parts of the country, such as the royal borough of Kensington and Chelsea, which is predicted to lose just £1.7 million. If we break the figures down according to population, we find that £77.22 is lost per working-age person in County Durham, compared with £17 in Kensington and Chelsea. That has huge implications for the local economy.

My hon. Friend the Member for Gateshead mentioned the Chancellor, who said:

“Too often, when countries undertake major consolidations of this kind, it is the poorest—those who had least to do with the cause of the economic misfortunes—who are hit hardest.”

He suggested that that was

“a mistake that our country has made in the past. This coalition Government will be different.”—[Official Report, 22 June 2010; Vol. 512, c. 180.]

However, if we examine what has happened since the emergency Budget in June 2010, we find that disabled people and their carers have experienced a major drop in their income of £500 million. There is a huge credibility gap between the Government’s rhetoric and the practical implications of their policy on the ground.

According to the Scope-Demos report “Destination Unknown”, Britain’s 3.6 million disabled people in receipt of disability benefits will have become £9 billion worse off between 2010 and the end of this Parliament.

[Mrs Hodgson]

I just want to add that Carers UK estimates that 10,000 carers could lose their carer’s allowance as a result of the changes to DLA. Does my hon. Friend think that that is a disgrace?

[Grahame M. Morris]

It is outrageous. Local authorities are struggling to balance their budgets. I thank Easington carers for the information they have provided to me. The number of carers’ centres across my county is going down from five to one, and carers report severe cuts in services, with many now being run using volunteers. So, yes, the issue is a huge concern, and carers are the unsung heroes of the community in many respects.

I will have to curtail my remarks, but there is absolutely no doubt that the Prime Minister’s rhetoric about being led by the views of disabled groups does not hold water. A number of surveys have been carried out, and a commission led by Paralympic gold medallist Baroness Tanni Grey-Thompson found that 450,000 disabled people and their families could lose up to £58 a week under the coalition’s universal credit reform—cuts so deep that one in 10 disabled households with children fear they may lose their homes, with many struggling to pay for basic essentials such as food and heating.

There is no doubt the cuts are taking money from people who are already struggling, and disabled people are twice as likely to live in poverty as other citizens. I call on the Government urgently to review the impact of their welfare reforms on those who are most in need.

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[Barbara Keeley (Worsley and Eccles South) (Lab)]

I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing this debate and on the way in which he opened it. In the little time I have, I want to focus on the carers of people with disabilities.

Carers’ organisations have told me that they fear that the welfare reform measures proposed by this Government will seriously undermine the ability of carers to care for people with disabilities and for older family members. On the reform of the disability living allowance, the Government’s original impact assessment said:

“We expect that the introduction of Personal Independence Payment will not affect the overall size of the Carer’s Allowance population”,

but analysis by Carers UK shows that there will undoubtedly be a knock-on effect on those who claim carer’s allowance. If the number of claimants of the allowance falls, as it moves to PIP, in line with the caseload for DLA, Carers UK estimate that 23,800 carers will be unable to claim carer’s allowance.

On the housing benefit cap, it seems clear that around 5,000 households that will be capped in 2013-14 are expected to contain a carer. Those carers will see an average reduction in income of £105 a week. That is quite clearly at odds with the Government’s stated policy for the cap.

Around 1 million carers have either given up work or reduced their working hours in order to care. An average drop in income of £105 per week is a cruel way to treat carers who have given up their careers. It could also be counter-productive, in that it could make caring for a family member financially untenable and force more people into taking up the option of care homes or residential homes.

Many carers already face financial hardship. A survey of carers by Carers UK found that 45% of them were cutting back on essentials such as heating or food, and four in 10 were in debt as a result of caring. Carers are not choosing to give up work, but being forced into doing so by the crisis in social care. Carers UK found in a survey that 31% of working age carers gave up work or reduced their working hours to care because support services were not flexible enough, the person for whom they cared did not qualify for support, there were no suitable services in the area, or the services were too expensive or not reliable enough. There is not time now to go through how care charges have gone up.

In an earlier debate on social care, I talked about the impact of financial issues on the lives of carers. I have heard of one carer who had to take on a part-time cleaning job in the early evening because money was so tight. She puts her husband to bed at 4pm so that he is safe while she is at work. That is the reality.

[Grahame M. Morris]

Does my hon. Friend agree that it is a case not just of money—pounds and pence—but of the dignity of disabled people?

[Barbara Keeley]

Indeed it is. The House of Commons has received reports that criticise care agencies for putting people to bed at 6 o’clock or 8 o’clock. This carer has to put her husband to bed at 4 o’clock. How must that feel to her? I have had further evidence that shows that that is not an isolated example. It is very common for carers who can no longer afford respite care to have to leave a person, perhaps wearing an incontinence pad, and hope that they will be safe in a chair while the carer has a hospital appointment or goes to work.

I question whether anyone here believes that it is right or fair to hit carers with further cuts to their income when changes already made by this Government are clearly hitting them. The manager of my local carers centre in Salford told me that, this Christmas, the centre’s staff are collecting and distributing food parcels to carers. That is something that they have not had to do since the 1980s. She said, “This does not bode well.” It does not, and it should not be happening to carers, who already give so much. I call on the Minister for a rethink on welfare reform for carers.

Oral Answers to Questions

Grahame Morris Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Duncan Smith]

The hon. Gentleman is absolutely right. This is one of the big issues that we have to deal with. The reason why Louise Casey was asked to do this work was so that she, working with the local authorities, could start to map out where the most difficult families are in their areas. The key thing—I come back to this—is that it is ultimately local authorities that will and should know where these families are. There are some good examples. In Westminster the council has already hubbed up the issue and got organisations working with it; other local authorities are not so good. I am not here to name and blame, but I want local authorities to act with Louise Casey and the team to make sure we map those families, as the hon. Gentleman so rightly asks us to do.

[Grahame M. Morris (Easington) (Lab)]

The Secretary of State refers to Louise Casey, but my understanding is that Emma Harrison was paid £8.6 million in dividends last year from her company, A4e, which was appointed by the Prime Minister to head up that programme, but she has now resigned. Can the Secretary of State list her main achievements?

[Mr Duncan Smith]

Nice try, but the hon. Gentleman has got it wrong. Emma Harrison had nothing to do with the programme. Louise Casey has always been heading it up. I understand why he wants to elide the issues, but it is not true. Emma Harrison heads an organisation and was asked to give some advice, I understand, to 10 Downing street on other issues to do with families, but she has not controlled this issue at all. I hope the hon. Gentleman will try again some other time.

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[Chris Grayling]

I am sure we were all pleased to see the small fall in youth unemployment announced last week, but there is a long way to go in tackling what is a big challenge for this country. I hope that the employers of Thanet will respond to the wage subsidies in the youth contract by giving young unemployed British people their first step on to the ladder of employment. That is what we all want to happen.

[Grahame M. Morris (Easington) (Lab)]

T6. We have heard a lot of talk from the Government about creating an information revolution in Whitehall, but with the Secretary of State’s Department leading a charge by outsourcing many of its responsibilities, will the same measures of transparency apply to private sector companies such as A4e and Atos as currently apply to public sector bodies?

[Mr Duncan Smith]

First, with respect to the hon. Gentleman, I do not think that this Government, or this Department under its current management, need to take any lessons from one of the most secret Governments in history. If he would like to look on our website, he will see that we publish a huge amount of data on all the contracts that we let, down to a very low level. He can find out more information now, as a direct result of what we do. Obviously, private contracts are for private people.

CPI/RPI Pensions Uprating

Grahame Morris Excerpts

Thursday 1st March 2012 Commons Chamber

[Harriett Baldwin]

I do not think that either the CPI or the RPI basket accurately represents inflation as experienced by pensioners. Most of them will have paid off their mortgage by the time they retire. Also, the CPI basket does not include council tax. Following the 100% increase in council tax under the previous Government, many council taxes have been frozen for the past few years. That is helpful for pensioners, as council tax represents a substantial proportion of their outgoings.

Food also represents a significant element of pensioners’ costs, and food inflation has been very high recently. Over the past 20 or 30 years, however, it has been largely on a downward trend, and food now represents a smaller proportion of overall costs than it did in the past. The cost of fuel and of heating the home is also an important factor for pensioners. That has also been rising sharply. Neither CPI nor RPI accurately represent pensioners’ experience of inflation.

[Grahame M. Morris (Easington) (Lab)]

Does the hon. Lady therefore support the GMB proposal for a bespoke pensions index that more truly reflects the cost of living of pensioners? As my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, they are not generally active shoppers who can readily switch between electricity and gas supply companies, for instance.

[Harriett Baldwin]

I certainly accept the point that CPI implies that people are active shoppers. Most of the pensioners I have come across are extremely good active shoppers, however.

Every individual faces a unique rate of inflation. We have given the Bank of England the task of managing the CPI rate. It is therefore sensible to use that measure for assessing pension increases.

We have talked about the high proportion of Britons who do not have any pension savings for retirement, the fact that many private companies have closed down their pension schemes, and the fact that Britain has become woefully under-pensioned. Giving private sector companies the flexibility to shift their index and linking pensions to CPI are both wise policies. They serve to put the overall public sector pension liability on a more sustainable footing, which is important for all future public sector workers. They also make the bargain between those with no pension provision and those who enjoy final salary, inflation-linked pensions fairer.

The Chancellor and the pensions Minister have faced a series of difficult choices, and they have made the right decisions. I believe the new measures will lead to more people across the work force saving for a comfortable retirement, which is an objective we all want to achieve.

[Mr David Crausby (Bolton North East) (Lab)]

Despite all the detailed arguments about geometric or arithmetical calculations, the reality is that CPI will pay out less than RPI. Even the Treasury calculates that the difference between the two measures is 0.5% per annum, and my hon. Friend the Member for Hayes and Harlington (John McDonnell) revealed some even more disturbing figures. That difference explains why the Government have changed the measure without consultation or negotiation. They have done so to cut both their costs and the earnings of those who will be affected. This is not an efficiency measure that will benefit us all; it is simply transferring money from poor pensioners to the Government or to private pension schemes.

Although I abhor any reduction in the earnings of poorly paid workers, I accept that it is perfectly legitimate for an employer or the Government to argue that a change in their financial circumstances means they simply cannot afford to continue to pay the same levels of remuneration. In turn, the employee, either individually or through their trade union, is then entitled in any free society to make a decision on whether they are going to accept that reduction in pay or seek employment elsewhere—or look for a different pension scheme.

That is why I believe that this issue of changing the payment of pensions should be dealt with in two parts: the future should be dealt with differently from the past. It is one thing to say that any pension earned from now on will be dealt with by indexing it to CPI, but to say that the arrangement will cover the whole of someone’s pension life is another. It reminds me of the story of the young, inexperienced trade union representative who called his members to a meeting to announce that he had met their employer and had good news and bad news to report. He informed them that the bad news was that he had been forced to accept a pay cut on their behalf. When asked what the good news was, he said that he had managed to get it backdated.

It should be a fundamental principle that employees should be aware of what their pension will pay when they qualify for it, because they will, thus, be able to make an objective decision about whether they should pay in and be part of the scheme. Pensions, once earned, are like earnings: they are the property of the individual and not the property of the employer or the Government. The employer and the Government should just be custodians of the pensioners’ invested money, and they should look after it prudently and honestly. Pensions are deferred wages, and backdating a pension cut is like backdating a wage cut—it is ridiculously unfair. In these circumstances, it is little wonder that working people are suspicious about saving up for their pension.

[Grahame M. Morris]

Does my hon. Friend acknowledge that if we attempt to balance the books on the backs of future pensions payouts, as the Government are proposing to do, there is a danger that people will simply opt out of pensions provision, particularly in the private sector, and therefore the cost that falls on the state and the taxpayer in the long run might actually be more? So this measure is a false economy.

[Mr Crausby]

I have always believed that this is principally a matter of trust between employees and employers, be they private employers or the Government, and so I agree with my hon. Friend.

I have represented poorly paid working people all my life, and my sympathy lies with those who come to my surgery to tell me, “I’ve worked hard all my life and saved what I could, but now I am retired I wonder why I bothered because I am no better off than those who didn’t work and saved nothing.” I rarely agree with that argument, because the truth is that they are nearly always better off than they think they are as a result of their prudence, and their neighbours who live on benefits are usually worse off than they are perceived to be, although I must say that sometimes it is very close to the margin. The Government’s decision to cut pensions arbitrarily by linking them to the inferior CPI encourages that prejudice, and it will persuade poorly paid people to save their money in a different and less sensible way.

--- Later in debate ---

[Stephen Lloyd (Eastbourne) (LD)]

I welcome the fact that the hon. Member for Hayes and Harlington (John McDonnell) has secured this debate and I agree with the tens of thousand of people who signed the petition—this issue is a concern for many people around the UK, so it is good that we are able to debate it. There has been a tremendous amount of frustration and anger and, to be honest, a certain amount of misinformation. I have given a lot of thought to the CPI versus RPI issue, and I hope that at the end of the debate we will be much clearer on a couple of key issues and that the members of the public who signed the petition will also be much clearer about some of the facts of the case.

For me, the subject is a challenge for three key reasons. First, as I have said, there is a lot of misinformation. Secondly, we are all, thankfully, living much longer, which is a challenge, as all parties understand. The previous Government appreciated that fact, which is why they began to raise the retirement age, and so did the Hutton report. We all know that although the fact we are living for so much longer has tremendous pluses, it is a financial challenge. Thirdly, I want the coalition to be as fair on this issue—and others—as humanly possible.

Let me give a little bit of context, as I think it is important to do so. This April, the coalition will be increasing the basic state pension by 5.2%, which equates to £5.30 a week and is the highest ever rise to the basic state pension. In the current economic climate, I do not suppose it would surprise anybody on either side of the House to hear that a number of siren voices gave strong economic reasons why we did not have to raise it by such an amount as the economic crisis was so profound.

[Grahame M. Morris]

In the interests of pursuing the point about clarity and greater understanding in this talk about percentages, triple locks and so on, does the hon. Gentleman agree with the representations that I have received from a firefighter in my constituency who says that in absolute terms, as a consequence of the switch to CPI, he will lose between £25,000 and £50,000 over 20 years?

--- Later in debate ---

[Katy Clark]

Of course, firefighters are a relatively well-paid group compared with some of the other groups we are talking about. It might well be that 30% of firefighters do not opt out of the scheme but that they are thinking about it at the moment because they are so concerned about some of the changes being proposed. One point to consider with firefighters and others who work in occupations that rely heavily on physical exertion is that they may not have the choice of working for longer. Paramedics and firefighters have very physical jobs and for them working extra years to pay more into their pension pot is often not a realistic option.

Finally, we need to address the issue in a broader context. I was very interested to hear the comments of the hon. Member for West Worcestershire (Harriett Baldwin). I thought she was absolutely correct when she talked about the serious situation, with so few people having decent pensions to rely on. That is appalling. Her points about the retail prices index and the consumer prices index in relation to pensioners in particular were incredibly important. We know that housing costs are an issue, but council tax is also an issue for pensioners because they spend a far greater proportion of their income on council tax than others in the community. There is merit, then, in the GMB trade union’s suggestion that we consider what it calls a bespoke pensions index. We should perhaps explore that possibility more to compensate accurately and ensure that people enjoy pensions increases that mean that their living standards are not affected in real terms.

I want to make a broader political point about pensions. Many Government Members support this and speak about it regularly: we should be encouraging people to save for their retirement. We should not be encouraging people to have to rely on the state when they retire because their levels of income are so low that they are eligible for welfare benefits. Although we need a decent basic state pension that everybody can afford to live on, we should live in a society in which people are encouraged to save through occupational pension schemes, regardless of whether they work in the private or public sectors.

I was extremely relieved, therefore, that the Government decided to continue with Labour’s legislation on auto-enrolment, which sets out the framework for doing something about the chronic levels of under-pensioning, particularly in the private sector. However, if we keep changing the basis on which people think they are paying into pensions, we will erode faith in the pensions system. Those thinking about auto-enrolment may take that into account when making their decision.

[Grahame M. Morris]

As usual, my hon. Friend is making some excellent and pertinent points, but will she comment on the arguments made by Government Members about this being a more sustainable package? Is not the issue the sustainability of the pensioners themselves—their income and ability to pay their way—and the need to offer them security in retirement? In truth, is there not an alternative—for example, taxing the likes of Vodafone and Barclays, and closing loopholes—if we want to make the public purse more sustainable?

[Katy Clark]

I agree with what my hon. Friend says about tax avoidance and evasion. We should be focusing on that much more. He will be aware that at the moment, while the living standards of those on low and modest incomes are falling in real terms—because pay has been frozen or cut in the public and private sectors and because the cost of food, energy and other commodities on which we all rely is rising so much—those at the top of society are also becoming wealthier. That gap between rich and poor has been escalating over the past two years, which, as a matter of public policy, is to be deeply regretted.

I am concerned that cumulatively the decision to move from RPI to CPI will have a substantial impact on the living standards of many thousands and millions of pensioners in the country. I do not believe that these decisions should be taken for short-term reasons—to balance the books over a short period—and as I have said, I am not convinced that they will work like that. We should be aiming to get cross-party agreement on the need to put in place a framework of financial incentives for people to save and to pay into public and private pension schemes. We need a safety net for those unable to do that, but we must also provide incentives to ensure that we have decent public and private sector pension provision in the future.

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[Richard Graham]

I am grateful to the hon. Gentleman for his intervention. He is correct, as I had just pointed out, that it was not then intended to apply to pensions, but it set the train in motion.

I want to address one technical issue. As I said earlier, I do not want the debate to descend too rapidly into every technicality on this very technical issue, but there is one issue that I have flagged up for the Minister: a relatively recent study by the Office for National Statistics on the differences between CPI and RPI. That raises the question of whether one of my assumptions about the differences is correct. I had assumed in a previous life that the major difference between the two indices was the absence of any provision for mortgage costs in CPI, but the recent ONS study puts a question mark over that and ascribes much greater impact to the difference between CPI and RPI in the formula reached. The Minister might wish to comment on that later if he has had a chance to study it, or reply at a later stage.

To return to the question, “Why the change?”, I have touched on the growing cost of public sector pensions, as laid out in the Hutton report, on the move from RPI to CPI as a better measure of inflation under the previous Government and on the recent ONS analysis of the differences between the two indices, but there is a further aspect to consider: the heavy cost of maintaining the RPI link over time. The hon. Member for Hayes and Harlington suggested that the benefits of these changes to the Government were short term, but it is worth mentioning that the Hutton commission’s conclusion was precisely the opposite. It concluded that

“gross expenditure on unfunded public service pensions will remain close to current levels as a proportion of GDP over the next decade.”

Lord Hutton anticipated—the Minister might care to update us if he has further figures—that the financial benefits of the changes being made would be seen over a much longer time period. He estimated that some £20 billion would be saved by 2060, but that is in the very long term—long after the hon. Member for Hayes and Harlington has formed his Government and retired from this place, I suspect. The benefits were not intended or calculated to be short term; they were precisely the opposite.

[Grahame M. Morris]

The hon. Gentleman refers to the Hutton report and predictions about the call on the public purse, but my understanding is that, as a consequence of the negotiated settlement reached between the previous Labour Government and the public sector trade unions, the costs were projected to fall from 2% of GDP to 1.4% by 2060. Does he agree?

[Richard Graham]

To be honest, I have no insights on the talks between the previous Labour Government and the unions at the time. However, with regard to what the previous Government said they could or would do, I am reminded of the earlier comments of the hon. Member for Bolton North East (Mr Crausby) about the Labour party’s commitment to reforming or restoring the link between pensions and earnings. I have to ask him and the hon. Member for Easington (Grahame M. Morris) how long a party can have a commitment to doing something without doing it and retaining any credibility. If my wife asked me to do something and I say that I am committed to doing it but some 13 years later I had done nothing about it, it would be hard for her to believe a word I said.

The hon. Member for Hayes and Harlington rightly talked about the importance of trust in the long-term provision of pensions and of sticking to promises, but he was silent on this issue. I suspect that he agrees with me and would have preferred his party to have done something about its commitment rather than just talk about it.

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[Madam Deputy Speaker (Dawn Primarolo)]

Order. I do have to remind hon. Members that, having indicated that they want to speak, they have to carry on standing—not looking at their phones.

[Grahame M. Morris]

rose—

[Madam Deputy Speaker]

I call Grahame M. Morris.

[Grahame M. Morris (Easington) (Lab)]

I am grateful, Madam Deputy Speaker. Thank you very much, indeed.

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this important debate and thank the Backbench Business Committee for granting us this opportunity, which has arisen out of an e-petition signed by in excess of 100,000 people.

I have also received many representations from constituents, in letter, in person and by e-mail petition, so I should like to make some points in the debate, and I am grateful for the opportunity to do so. I shall try not to repeat those points that Members on both sides of the House have already made.

There has been a decision to change the index that is used to increase state pensions, public sector pensions and, indeed, large aspects of private sector pensions. In an earlier intervention, the Minister said that the change would not affect private pensions that already have RPI in their terms, but certain private pensions that have a statutory link will be affected, so perhaps he will clarify that point in his final remarks.

My concern—this is based anecdotally on evidence that constituents have presented to me in letter form and in person—is that some members of public service pension schemes might lose up to 25% of their pensions. It is difficult, as the hon. Member for Gloucester (Richard Graham) said, to understand the complexities of RPI against CPI, but my fairly simplistic view is based on what is the bottom line for the people who are affected. I am concerned that many of my constituents, who are not well-paid public sector pensioners, will be adversely affected by the change.

To reinforce the point that the hon. Gentleman made from the Conservative Benches, I note that it seems that the Office for Budget Responsibility underestimated the gap between RPI and CPI by about 100%. When the OBR made its forecast, it said that the difference would be about 0.7%, but it has turned out to be nearer 1.4%. In other words, the switch could cost pensioners in Easington and, indeed, throughout the country, many thousands or even tens of thousands of pounds over their retirement.

I do not believe that it is disputed that the change will save the Treasury and employers with private sector pension schemes billions of pounds, at the expense of those saving for their retirement. In an earlier intervention, I raised an issue that was raised with me by the GMB trade union, which suggests that we look at a bespoke pensions index that might more accurately reflect the cost of living faced by pensioners. When I read the suggestion, I thought that we should look at it a little further, given the controversy raging about which is the correct measure, but in response to an earlier point I must say that the previous Government used CPI as a comparator. I stand to be corrected if need be, but the traditional index that we have used in this country since the 1940s has always been RPI. The previous Government introduced CPI not for pensions but because the measure was used in the European Union and was more readily understood when used as a comparator across other EU states. I would never advocate applying it for the purposes of pension calculation.

[Katy Clark]

I am listening to my hon. Friend with great interest. Does he agree that the British economy and, particularly, British housing costs have traditionally operated in a different way from those of many other parts of Europe? That is one reason why the retail prices index might be a better way of doing things—as other European economies work in a different way.

[Grahame M. Morris]

Absolutely; that is a very good point well made. I am certainly aware, from visits to Germany and elsewhere, that there is a much larger private rental sector in Europe, so it is quite right that we retain RPI, as it takes account of mortgage costs, which are a significant factor for many people.

I support the motion because the change from RPI to CPI means that many people, both those already retired and those yet to retire, will receive less than they were led to expect. As my hon. Friend said in her speech, many of those people have made long-term decisions about their income in retirement, such as to pay off mortgages and other commitments, based on the fact that they would receive a pension that was linked to RPI. Retrospection is unfair, and the House should call on the Government to reintroduce the RPI measure immediately. For a typical firefighter on a full pension this year, the actual cost over 20 years of retirement is between £25,000 and £52,000—that was confirmed in a survey that was carried out by the Fire Brigades Union—and that is because the Government have imposed this measure. I emphasise that these changes have been imposed without any consultation.

The argument that CPI is a more appropriate measure for how pensions should be paid is false. Indeed, all three of the judges in a test case brought by the FBU stated that the move to CPI was merely to do with the desire to force through budget cuts. To pretend otherwise is ridiculous. Government Members are suggesting that it is not about deficit reduction, but it is certainly about budget cuts and placing the burden of those cuts unfairly and unjustly on to pensioners.

[Katy Clark]

On my hon. Friend’s point about the effect on individuals, he will be aware that one of the other changes proposed for many public sector pension schemes is to increase the contribution—the payment—that the individual makes while reducing the percentage that the employer pays. Does he agree that that, combined with the RPI/CPI change, means that employers will be paying less as their part of the contribution towards the pension while the employee is paying more?

[Grahame M. Morris]

That is an excellent point. It is a double whammy.

Research that I have seen shows that between 1989 and 2011, RPI was on average about 0.7% higher than CPI inflation.

[Steve Webb]

I would not usually interrupt the hon. Gentleman but, to set the record straight, he is grossly misrepresenting what the judges in the court case said. I have a copy of the judgment with me. He said that the judges found that the CPI shift was about forcing through budget cuts. Can he point to where in the judgment they said that?

[Grahame M. Morris]

I was alluding to the FBU’s response to the judgment. I apologise if I have misled the Minister in that regard.

It is worth noting that significant changes to public sector pensions were negotiated with the trade union side by the previous Labour Government. Those changes recognised some of the issues that have been highlighted about people living longer, which is genuinely a good thing, and about affordability. The trade unions demonstrated a genuine desire to reach an accommodation that was fair and just. The response to the switch to CPI that I am hearing says that it is an enforced settlement that is not fair or just.

[John McDonnell]

In order that nobody misleads the House whatsoever, let me quote from the judgment. Judge Elias said:

“There can be no doubt that the immediate driving force behind the change from RPI to CPI was the need to secure cuts in the welfare budget.”

[Grahame M. Morris]

I am grateful for my hon. Friend’s intervention, as I did not have the judgment to hand. I am sure that the Minister will have taken note. [Hon. Members: “That was a dissenting judge.”] Even so, it is a fairly radical criticism of the justification for this change, and the Government would do well to take note of it from such a learned source.

The TUC’s general secretary, Brendan Barber, has said of the general pensions crisis:

“The real pension crisis in the UK is the retreat by employers from providing pensions in the private sector”—

that point has been acknowledged by Government Members—

“and the big unexpected looming bill for tax-payers is the cost of means-tested benefits for the millions let down by their employers.”

That is another reference to the issue of false economy, which the whole House should take into consideration. There are risks in implementing this strategy. If we try to balance the books now on the basis of future payouts to pensioners, we may well be storing up costs for the future as people decide to opt out of pensions altogether. That would mean that when they retired they qualified for means-tested benefits, so the cost to the Exchequer would be higher.

In the private sector, large numbers of pensioners are already starting to feel the pinch from these moves.

[John McDonnell]

I am sorry to interrupt my hon. Friend again, but as hon. Members said from a sedentary position, “That was a dissenting judge”, let me quote a second judge, who said that he accepted the submission of Mr Beloff QC for the Police Negotiating Board claimants on the basis that, on any fair reading of the evidence, the need for deficit reduction was the driver and that the other merits of CPI were essentially deployed in order publicly to justify the switch.

[Grahame M. Morris]

I am grateful for that point of clarification. By my arithmetic, that makes two judges out of three, which is a majority.

That strengthens the argument that the Government should at least be honest that this measure is not designed around fairness but is placing the cost of deficit reduction, or cuts in public expenditure—whatever terminology one uses—on to public sector pensioners instead of looking for an alternative. As my hon. Friends have said, there is a simple alternative. The case for more cuts to pensions and public services has now been lost on the back of evidence that growth in our economy has been falling for two years and unemployment continues to rise. The Chancellor himself has indicated that we are borrowing £158 billion more than he originally anticipated. We need to offer people security in their jobs and in their retirement.

The case put forward by Conservative Members, in particular—notably yesterday in a Westminster Hall debate—for rolling back workers’ rights, as well as slashing pensions, was this week shown the red card by the Bank of England in an evidence session in a House Committee. No less a person than Sir Mervyn King said that making it easier for companies to sack staff would make no difference to his economic forecasts. Instead, we need to get the economy growing. We should be creating jobs to boost the economy, giving people job and pension security. From the perspective of the economy, the bonus—I am not referring to bankers’ bonuses, because I do not think that those should be paid—is that that is more likely to cut the deficit. As my hon. Friend the Member for Bolton North East (Mr Crausby) indicated, many pensioners use that money directly in the local economy. Reducing pensions has an immediate negative effect in local economies and the national economy. To argue otherwise is disingenuous and, indeed, nonsense. Cutting jobs and pensions will damage the economy now and in the future. What is worse, it will increase the deficit.

Like elsewhere in national policy, my view is that the Government have it wrong on this issue. We should be investing in housing and public transport. We should be looking at the issues that Labour has set out in its five-point plan for jobs and growth. Given the news this week about tax avoidance and evasion, I think that we should be taking measures on that issue. I welcome the fact that the Government have closed one particular loophole, so that Barclays and others will have to pay their fair share of tax and not be able to dodge it. However, the Government are penalising pensioners before even asking about the millions that Vodafone is refusing to pay in taxes on the profits that it made from activities in this country. That is an absolute disgrace.

In conclusion, the House should support the motion and send the message to the Government that their priorities are at best mixed up and at worst explicitly wrong. We should value the pensions that take care of our ageing population, and we should not put people off saving for their future.

Oral Answers to Questions

Grahame Morris Excerpts

Monday 23rd January 2012 Commons Chamber

[Mr Duncan Smith]

From the word go, we have not needed the full system of real-time information to be ready for universal credit. We get our information from essentially two feeds, which we have already been working on with HMRC, long before any further timetables. The reality is that RTI will dovetail nicely with universal credit, but we do not need it for that, and we are not expecting it to be ready at the start of universal credit. We were never expecting that, and we have been working on that basis. However, RTI will come in—it is “on timetable”—and those involved will be working hard to produce it.

[Grahame M. Morris (Easington) (Lab)]

11. What recent progress he has made on the introduction of the workfare scheme.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

We do not operate a workfare scheme. I think the hon. Gentleman might be referring to mandatory activity; in which case, I can confirm that we have schemes in place as part of people’s job search. They include mandatory work activity and the community action programme, which is being tested as part of supporting the very long-term unemployed.

[Grahame M. Morris]

May I press the Minister to give a fuller answer to the question that my hon. Friend the Member for Barrow and Furness (John Woodcock) asked a little earlier? Profits at Poundland soared by 34% in 2011, with people on workfare forced to work for free in Poundland stores and being told at the beginning of their placement that there is no prospect of permanent employment, while they carry out the same duties as paid employees. Who is the real beneficiary of workfare: the taxpayer or the shareholder?

[Chris Grayling]

The hon. Gentleman is telling a lot of complete nonsense to the House. The reality is that Poundland is one of many major retailers taking part in our work experience scheme, which is providing young people who are out of work with their first opportunity to get into the workplace so that they can show a potential employer what they can do. More than 50% of young people who go through the scheme move quickly into employment afterwards, including, in some places, with Poundland.

Unemployment

Grahame Morris Excerpts

Wednesday 14th December 2011 Commons Chamber

[David T. C. Davies]

The hon. Gentleman ought to know that I will always support any kind of tax cut if it is affordable and I welcome his conversion to that idea. I recall him talking about what happened when Labour got in, but he forgot one or two important facts. He forgot to tell us that when Labour got in in 1997, the national debt was some £350 billion. By 2007, before the economic crash, the national debt had risen to £650 billion. Yes, the Labour Government had been paying off the national debt for two years but when the election started to loom, all of a sudden off went the spending taps and they were spending at a rate of £30 billion or so on average more than they were earning. That meant that by 2007 they already had a problem, yet they let the spending rip and we ended up with a national debt of £1 trillion and a deficit of £160 billion. Their response was to say up until October that we should borrow even more money—now, they suggest we borrow even less.

What the hon. Ladies and Gentlemen on the Opposition Benches do not understand is that it is very easy to create a little employment in the short-term by borrowing money that one does not actually have, but the problem is that that will always lead to greater unemployment in the longer term because at some point—they do not realise this—that money must be paid back. In the meantime, the interest on it, which is about £30 billion a year at the moment, has to be paid. The only way that money can be paid back is by raising taxes, which destroys jobs, or cutting public spending. That is a basic economic fact that Labour Governments throughout history have failed to comprehend.

Of course, there are more things that this Government can do. We have taken the brave decision as a coalition to get rid of the deficit as quickly as we can. It might take until 2017—[Interruption.] Yes, I accept it is not going to be an easy task, given what we have inherited. It will take a number of years, but we will stay the course and do it, and we will do more, besides.

We must consider immigration. It cannot possibly be right that 250,000 people are coming into this country at a time of recession if we have to find them all jobs, too. My wife is one of them and my sister-in-law, who is from Asia, is another. I am not in any way against those who come here; I welcome the fact that people have come here and are making a contribution, but we must consider whether that is sustainable in the long term.

We must also consider the attitude of some British people—that has to be said. Neither of my sister-in-laws had problems coming over here from Asia and eastern Europe and getting jobs, but there is unfortunately a small minority of younger British people who would prefer to stay on the dole than go out and get a job. It is a harsh fact but it needs saying and it is something that this Government will actively tackle.

We need to look at the attitudes and training of those who come out of our schools, ensuring that they can add up and have basic English and social skills, as it is often people’s attitude that gets them a job. We must consider what our universities are teaching people, because it is no good if everybody comes out with a degree in media studies. There will always be some jobs for some people in the media, but not for all those who want them.

I have spoken to a number of people working in companies that are contributing a lot to this country—gas and oil companies and so on—and they say that they have had to go abroad to find people because there are not enough with the necessary practical skills in this country. By that I mean people who do not mind getting their hands a bit dirty. I spent four or five years getting my hands a bit dirty, as did many people on the Opposition Benches. I have no problem with that whatsoever. Unfortunately, some young people in this country at the moment do.

[Grahame M. Morris (Easington) (Lab)]

I am grateful to the hon. Gentleman for giving way, but may I urge him to focus on the issue of joblessness rather than worklessness? I think that was an offensive remark, although I am sure that he made it unintentionally. We have Office for National Statistics data giving the numbers of vacancies and the numbers of people who are unemployed, particularly young people. In neighbouring constituencies, such as Hartlepool, which is just to the south of me—

[Madam Deputy Speaker (Dawn Primarolo)]

Briefly.

--- Later in debate ---

[Alec Shelbrooke]

I apologise, Madam Deputy Speaker, but for 13 years, the Labour party bought jobs and did not lay a foundation for moving forward. It was left to this coalition Government—two of the major parties of this country coming together—to try to put in place the proper foundations.

The smiles of glee cannot be wiped off the faces of Opposition Front Benchers when there is bad economic news. That is reprehensible. Jobs cannot be bought by borrowing; economic stability that will last must be put in place. The difference between Government Members and Opposition Members is that we try to govern for the future of this country. Whether or not we are in power, we mean to ensure that we do what is right for this country. All the Labour party did was try to hang on to power, which is why we today face one of the biggest economic crises and the fastest growing level of unemployment in decades.

It is no good Opposition Members harking back to the ’80s and ’90s. We should not forget the very different circumstances, especially of the 1980s. The fact is that this Government have been dealt a terrible economic hand. I make the point again: it is not a Tory Government, as was said earlier, but a coalition Government of the two main parties of this country, which came together to sort this mess out. We have been mocked this afternoon. I have listened carefully and although the hon. Member for Bolton West (Julie Hilling) made a good speech, the most impassioned was by the right hon. Member for Rother Valley (Mr Barron)—he was the one who meant what he said. Other than that, unemployment has been used as a political football.

[Grahame M. Morris]

If the hon. Gentleman is advocating a particular course, he might give his opinion on this question: would he pay his 15-year mortgage off in five years if it meant sending his children to school hungry and without shoes?

[Alec Shelbrooke]

My response to that rather strange analogy is that if we were to follow the route taken by the Labour party, interest rates in this country would rise, hard-working families up and down the country would be paying another £1,000 a month on their mortgages and their children would go to school hungry, because of the folly of Labour’s policies.

We have only to look at events around Europe. A 40% cut in public sector wages was proposed in Greece, but Ireland cut public sector wages by 15% to get on top of things, and yet all the Opposition say is that we should spend more money and buy jobs. That does not lay the foundations to move this country forward.

--- Later in debate ---

[Grahame M. Morris (Easington) (Lab)]

I rise to support the motion in the name of my hon. and right hon. Friends on the Front Bench. We are aware of the national figures, so in the limited time that I have I will concentrate on the picture as it affects Easington and the north-east region.

As Opposition Members are aware, the north-east has suffered more than perhaps any other region. Unemployment currently stands at 11.7%. In both the public and private sectors, unemployment is rising unabated as a direct consequence of the Government’s policies.

As we already know, the public sector is losing jobs more than 13 times faster than the private sector can create them. We were promised a private sector-led recovery. We were told that the public sector jobs that have been lost in the north-east—we have lost more than 32,000 so far—would be replaced by a growing private sector. That clearly has not happened over the past 12 months.

The latest job figures show that the north-east has lost a larger proportion of jobs than anywhere else in the country. We have 6,000 fewer jobs in the construction sector compared with the same period last year. Clearly, Government policy has had a direct impact on the private sector. Cutting infrastructure projects and the Building Schools for the Future programme has hit construction jobs. The figures produced by the northern TUC show that the public sector is losing 2,000 jobs a month.

As my hon. Friend the Member for Stockton North (Alex Cunningham) mentioned, the Conservative Government of the 1980s and early 1990s bear a heavy responsibility for the worklessness that exists in areas such as mine. When the traditional industries were still operating—in my case it was coal mining—the numbers of people who were employed were high and the numbers on benefit were relatively low. It was not until the pits closed that we saw significant increases in unemployment and incapacity claims. As hon. Members have already said, there is a human cost to unemployment. After closing the pits in Easington and in the north-east, the Conservatives left villages, towns and entire communities without work.

[Ian Lavery (Wansbeck) (Lab)]

Does my hon. Friend agree that the unemployment statistics in Easington are very similar to those in Wansbeck? In my constituency, there is in excess of 30 people applying for each job vacancy and that is intolerable. The Prime Minister has kept one of his promises: before the election, he said that the north-east would be hit the first and hit the hardest.

[Grahame M. Morris]

Indeed. I share my hon. Friend’s concerns, and that has certainly been the case. We are facing a worsening of the north-south divide. It is also the case that the north-east has faced some of the worst increases in unemployment across the UK. The hon. Member for Salisbury (John Glen) said that there were 1,000 people out of work in his constituency. There is more than three times that number in my constituency. The number of 18 to 24-year-olds out of work in Easington has increased by 65%. For the over-50s, the figure is up 58%, which is just as concerning. The situation for those out of work in the north-east is much bleaker than in many other regions.

Unemployment and worklessness are not evenly spread across the country. Indeed, they are concentrated in particular pockets, largely the older industrial areas of the north-east, Merseyside, Scotland and Wales, and that makes unemployment far harder to deal with. I should like to commend the excellent work carried out by Professor Steve Fothergill and his colleagues at Sheffield Hallam university in identifying some possible solutions. I know that time is short, so I will bring my speech to a close.

There are real concerns about the Government’s intentions in relation to workfare. If jobs exist, why are they not being offered as real jobs with real wages? We need a plan from the Government for jobs and growth. Our Front-Bench team has a five-point plan to kick-start the economy, but the Government could go further. There are some helpful suggestions from the Institute for Public Policy Research for supporting employment, and I raised them with the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), in a recent Adjournment debate. I would point out, however, that the Government’s promises on jobs and growth are as hollow as a chocolate Father Christmas.

Oral Answers to Questions

Grahame Morris Excerpts

Monday 28th November 2011 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

The Department itself recognises that many people will simply flow through the Government’s Work programme without securing a proper job at the end of it. How many people does the Minister estimate will end up on his mandatory workfare placement scheme after the Work programme? Does he have an estimate of the numbers?

[Chris Grayling]

The whole point about the Work programme is that it is uncapped; we have not set specific targets for it. The community action programme, which was announced a couple of weeks ago, is designed to help those who do not find a role through the Work programme. I would be delighted if it achieves 100% outcomes, but it probably will not. We have been determined to ensure that we do not simply send those who do not find a job in the first two years back home so that they end up sitting on benefits doing nothing. They will be asked to take part in a constructive and positive programme of useful work in our community that will, I hope, build their skills and give them a better opportunity to go back into the process, and to get a job the second time around.

Incapacity Benefit (North-East)

Grahame Morris Excerpts

Tuesday 22nd November 2011 Westminster Hall

[Grahame M. Morris (Easington) (Lab)]

It is a pleasure, Mrs Brooke, to serve under your chairmanship for the first time. There has been tremendous interest in the economic effects in the north-east of changes to incapacity benefit. I was hoping for a much longer debate—a number of right hon. and hon. Members have indicated that they would be interested in participating in such a debate—but I will try to be brief.

I am pleased to have secured this debate, which gives me the opportunity to raise some important issues that affect communities throughout the north-east of England. As the title suggests, I want to focus on the economic effects of one specific coalition policy: the impact of welfare reform and changes to incapacity benefit. I shall refer specifically to a recent research report by Sheffield Hallam university on “Incapacity Benefit Reform: the local, regional and national impact”, and a report from the Institute for Public Policy Research North, the “Northern Economic Summary: October 2011”. I commend the latter report, which is the first of its kind, but IPPR North will produce it quarterly. It will be a useful way of tracking the impact of the Government’s policies on the north-eastern economy.

Before going into my main argument, I want to set the scene and to provide some context for the debate. The IPPR North report indicates that unemployment in the north-east is accelerating and is being driven by a weak northern economy being pushed into recession by public sector spending cuts, which are threatening to increase the north-south divide. The north-east, with Yorkshire and the Humber region, has faced the worst increases in unemployment in the UK. The figure for the north-east now exceeds 11%. Gross domestic product nationally suggests that the UK economy is avoiding a strictly defined technical recession at the moment, but it can be best described as flat-lining. Labour has a five-point plan to stimulate jobs and growth, but I do not want to go into that because of shortage of time. Perhaps it is a subject for another debate.

The situation for workers and those seeking work in the north-east is much bleaker than in many other regions. The northern economy could already be contracting, as the index of production figures produced by the Office for National Statistics show UK manufacturing contracting by 0.6% in the three months from June to August. Contraction in manufacturing affects the north-east disproportionately. It affects the economy in the whole of the north, but particularly the north-east because, despite the need to rebalance the economy—I am a great supporter of manufacturing—the north-east has a relatively high proportion of employees in manufacturing.

The latest job figures show that the north has lost a large proportion of public sector jobs in the last year. The figures produced by the northern TUC show that we are losing them at a rate of 2,000 a month, with almost no increase in the number of private sector jobs. In the north-east, the number of private sector jobs is declining. It has lost more than 32,000 public sector jobs, but more than 8,000 public sector jobs have been created in London, and 24,000 in the south-east. That is clear evidence of the Government’s failing regional policy.

I want to concentrate on the impact of the Government’s welfare reform policies on the economic situation in the north-east. Sheffield Hallam university’s report, “Incapacity Benefit Reform: the local, regional and national impact”, shows that 60,000 people in the north-east face being moved off incapacity benefits, 35,000 of whom will be pushed out of the benefits system altogether due to the time limits. More than 20,000 will be added to the unemployment figures.

My constituency has the highest rate of working-age adults claiming incapacity benefits in England and will be one of the most affected. In my constituency alone, 4,200 people will be moved off incapacity benefit, of whom 2,000 will lose their benefits altogether. That will have a huge adverse impact on those individuals and households, but I want to focus on what it means for the north-east economy as a whole.

If 35,000 people are taken off incapacity benefit altogether, as the pilot study indicates, that will effectively remove more than £170 million every year from the north-east’s economy.

[James Wharton (Stockton South) (Con)]

Will the hon. Gentleman give way?

[Grahame M. Morris]

I would like to make a little more progress, but I will give way when I have made my point.

That money would be in the hands of the poorest in society and would be spent in local communities, neighbourhood shops and local businesses. The clear economic argument is that unemployment would increase if benefits were cut in the region, owing to a reverse multiplier effect of credit withdrawal, because less money would be spent in the local economy. It is staggering that as the north-east seems to be heading into a regional recession, the Government are set to take another £170 million from our regional economy every year. It is even more staggering that, as employment is falling in the private sector owing to the Government’s lack of a credible policy for jobs and growth, they are simultaneously moving 60,000 people off incapacity benefit and adding more than 20,000 to the unemployment count.

The legacy of incapacity benefit is felt most in older industrial areas. The number of people claiming incapacity benefit is not evenly spread. The communities that I represent are mainly former coal-mining areas where long-term ill health is a consequence of years spent working in damp, cramped and physically arduous conditions underground. A recent review of coalfield areas by the former Member for the then constituency of Barnsley West and Penistone, Mick Clapham, reported two significant problems. He identified that incapacity benefit claims are not confined to the older generation, whose ill health was caused by working conditions. Ill health in the younger generation is due mainly to poor employment opportunities and the low expectations resulting from their marginalisation in the active labour market and has given rise to a lost generation.

[James Wharton]

I congratulate the hon. Gentleman on securing this debate. The topic is extremely important to him and to many of his constituents. I am a little concerned that he seems to believe that being on incapacity benefit when able to work is an acceptable end in itself. Does he agree in principle that those who are able to work should be encouraged to do so and should be taken off incapacity benefit and helped back into work? Does he also agree that, although incapacity benefit must be available for those who need it, the Government have a duty to review the system and to address some of the problems that have arisen as the system became out of control in recent years?

[Grahame M. Morris]

I will come to that. My fundamental point in response to the hon. Gentleman is that the big issue for us is not just worklessness; it is joblessness. We want the Government to invest in creating jobs in the private sector and generally to get the local economy moving. There seems to be little point in inflicting penury and misery on large sections of already impoverished communities when there are no jobs for them to go into. The two should go hand in glove, and I have some suggestions for achieving that.

[Mr David Anderson (Blaydon) (Lab)]

I agree with my colleague. The figure of 32,000 that the report spoke about was released about a month ago. That figure has not been challenged by the Government. We have 32,000 job losses across the public sector in the north-east. If my hon. Friend is correct, another 35,000 will be taken off incapacity benefit, which will put up the unemployment figures. There will be a 70,000 increase in those two groups alone. There is also the failure of the private sector to move into the void. Does that not make the jobs situation even more serious than it already is?

[Grahame M. Morris]

I am grateful for that intervention, which reinforces the point that I was trying to make. It is absolutely essential that we tackle joblessness; the Government have a responsibility to do that. I am concerned about the complete failure of regional policy; I am not convinced that we have an effective regional policy. We lost our regional development agency, One North East, and our regional Minister. It cost nothing to have an advocate at the top table of government, arguing the case for business, as well as for the regeneration of the whole region. It seems perverse that the coalition should abandon that, particularly when the region is doing so badly.

[Ian Swales (Redcar) (LD)]

I congratulate the hon. Gentleman on securing a debate that is very important for the region. Does he agree that the current process of checking who should claim incapacity benefit follows a system—work capability assessment—introduced by the previous Government? Does he further agree that that system is flawed and broken? Will he congratulate this Government on trying to do something about it?

[Grahame M. Morris]

I certainly would not like to do any of those things. However, there are some positive things that the Government could do to address a dire and worsening situation that many people are not aware is going to hit them in the next 12 or 24 months. There are things that the Government could and should do. Sheffield Hallam’s recommendations were clear:

“government should resist penalising the older generation, who, not unexpectedly, are suffering from ill-health.”

Instead, efforts should be concentrated on

“creating opportunities for work”

for this younger generation, this lost generation, which could prevent the problem that we have experienced with young people

“falling into a cycle of ”

dependency and

“economic inactivity”.

That often relates to mental health issues, a lack of self-esteem and a lack of aspiration, which eventually leads to

“disability and incapacity.”

We should have an early intervention to tackle this huge problem. There are lessons for Government to apply not only in the north-east, but for other former industrial areas. This is a big issue in the north-west, in parts of Scotland, in Merseyside and in the former mining communities of Wales. Claimants of incapacity benefit are usually concentrated in the same disadvantaged communities that have weak local economies with little chance of finding work. The Government must recognise that.

The authors of the Sheffield Hallam report, Christina Beatty and Steve Fothergill, are also damning of the reforms, saying that there is little reason to suppose that changes will lead to significant increases in employment. Without creating the jobs first, it seems like a double punishment on the thousands of people who will be adversely affected: 35,000 in our region and more than 4,000 in my constituency.

I want to give the Minister an opportunity to respond, but first I want to say a few words about the Government’s workfare programme, which seems like cynical exploitation by a Government that have already put thousands of people out of work. I want to place on the record my opposition to an extension of workfare. Where will the jobs for the long-term unemployed come from? If such jobs exist, why are they not being offered as real jobs with real wages, as opposed to benefits that carry the threat of withdrawal of benefit if individuals are unable or unwilling to take up offers?

The effects of such changes will not hurt the affluent south, but will be a body blow to the poorest areas, particularly in the north-east. At the same time as the Government are retrenching on any support for jobs and growth in the north-east, they are quick to pull the rug from underneath the sick, disabled and worst-off in society. I want to focus on the loss that that represents to the north-east regional economy and what the Government could do to limit the damaging effects.

I want to pose some specific questions, and I look forward to the Minister’s response. Can the Minister confirm that the north-east has seen a decline in private sector employment over the last year? Does he have an estimate of what the financial loss will be to the north-east economy owing to changes in incapacity benefit? Can he confirm the figure of £170 million? Will he consider how money lost to the north-east could be ring-fenced and reinvested in the region to support job creation?

I will give the Minister a few helpful suggestions from the IPPR:

“The government should offer a guaranteed job, paid at the minimum wage or above to anyone who has been unemployed and claiming JSA for more than 12 consecutive months. The guarantee should be matched by an obligation”

because there are rights and responsibilities. If the Government give somebody a right to a guaranteed job, the individual should be obliged to take up the offer of employment

“or to find an alternative that does not involve claiming JSA.”

Will the Minister look at this proposal and whether it could be targeted as a jobs guarantee for the north-east? A jobs guarantee could be implemented in areas of the north-east where long-term unemployment meets a certain critical level or where the job density ratio falls below an agreed threshold.

The IPPR believes that these recommendations could be afforded if the proposed reduction in corporation tax was abandoned. All the evidence suggests that the reduction in corporation tax is unlikely to increase employment and it significantly benefits large finance companies, particularly banks, and companies employing fewer staff. If the Government are serious about getting people back to work—I will conclude on this point, so that the Minister has a chance to respond—they should commit to supporting our regional economy and reinvesting any money saved from changes to incapacity benefit back into the north-east directly, to support jobs and create growth.

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

I congratulate the hon. Member for Easington (Grahame M. Morris) on securing an important debate. It is good to see other hon. Members from his region present for the debate today. I will speak primarily about incapacity benefit and the changes made by the Government—indeed, primarily by the previous Government. It is worth spending at least a moment on the context. Every night on the television news, we see stories of what happens in countries that did not get their deficits under control. We see fiascos, shambles, rioting in the streets and Governments being overturned.

It strikes me that two political parties working together in the national interest after the 2010 general election has meant that Britain is not seeing the extraordinary bond rates that Italy or Spain have faced. We are able to borrow at modest rates because of the fiscal credibility that we have. In the context of the north-east, low interest rates are one of the critical things in giving householders money to spend. If someone has a mortgage and the bank base rate is 0.5%, that gives them money in their pocket to spend in the regional economy.

[Grahame M. Morris]

Will the Minister give way?

[Steve Webb]

I will give way in a second. There are direct consequences of the difficult choices that we have made on the deficit that are specifically to the benefit of local economies such as the hon. Gentleman’s. I will give way to him, but he has not left me long to respond. If he wants to add additional points, I will have even less time.

[Grahame M. Morris]

I am grateful to the Minister, but it is important to challenge the point that is raised again and again that everything has to be sacrificed on the altar of deficit reduction. Is it not true that the Government’s plan is hurting but not working, and that the deficit is growing because there is no growth in the economy? The last figures I saw showed that we are borrowing an additional £46 billion.

[Steve Webb]

The hon. Gentleman mixes the structural deficit with the cyclical deficit. We have said that we will eliminate the country’s structural deficit. Although when the economy grows faster we get additional revenues and save money on benefit spending, we also have to tackle the structural deficit—something the previous Government failed to do. He referred to a five-point plan that simply adds more debt, and it is hard to see how the solution to a problem caused by excessive borrowing is more borrowing.

The hon. Gentleman referred to incapacity benefit, and his constituency has the highest concentration of people of working age on incapacity benefit in England. I have seen the Sheffield Hallam report to which he refers. It lists four changes that have been made, three of which—although he did not want to admit it—were introduced by the previous Government. My hon. Friend the Member for Redcar (Ian Swales) made that point. The replacement of the personal capability assessment by the work capability assessment was introduced by the previous Government; I am not sure whether the hon. Member for Easington supports that, or indeed the process of re-testing the stock of people on incapacity benefit, or the requirement to undertake work-related activities—all measures initiated by the previous Government. Those are three of the four measures in the Sheffield Hallam report, and it seems that each was a move in the right direction.

My hon. Friend the Member for Redcar was right to say that the system of work capability assessment that we inherited was broken, and a work capability assessment that focuses on whether people can work or not is a positive measure. We have proceeded with the Harrington review, and Professor Harrington’s second report will be published imminently. Significant changes have been made to the WCA process. For example, we will ensure that we garner more medical information initially rather than wait for it to emerge on appeal, and we will allow Department for Work and Pensions decision makers to more readily override the Atos assessment. A lot of positive changes to the WCA process have been recognised by those who campaign on such issues, and we have refined and improved the process to the benefit of the hon. Gentleman’s constituents, and others.

My hon. Friend the Member for Stockton South (James Wharton) asked the key question: what does the hon. Member for Easington want for his constituents who are on incapacity benefit? Even when private sector jobs are created, they do not go to those on incapacity benefit. There is a gap: folk on IB are stuck on IB and nothing gets them off it. We need to bridge that gap, which is where the reassessment process and, crucially, the Work programme come in, involving serious money that gets spent only when real jobs are created.

Let me give the hon. Gentleman a feel of how seriously the Government approach this issue. He referred to the ring-fencing of money, but suppose one of his constituents is on incapacity benefit but expected to be ready for work in about three months under the employment and support allowance process. If they find a job through the Work programme and that job is sustained, we will pay about £13,700 to the provider—double the £6,500 that we pay when someone comes off jobseeker’s allowance. That is a serious amount of public money going into the hon. Gentleman’s constituency, although only if those people about whom he is rightly worried get lasting jobs. The money does not get paid—via a small up-front fee—if the folk do not get a job. In many previous Government programmes and new deals, people got sent on schemes and the providers were paid whether those schemes were useless or not. Under this scheme, the providers will be paid only if they get people into lasting jobs. That will benefit the local area and is an entirely positive measure.

Time limiting of ESA was an important part of the deficit reduction strategy, and the hon. Gentleman referred to people being left “in penury.” It is, therefore, important to put on record two key features of that time limiting, which are that the sickest and poorest people will not be affected. The sickest people will be in the support group, which is not time limited, and they will continue to receive contributory ESA.

[Grahame M. Morris]

Will the Minister give way?

[Steve Webb]

Perhaps the hon. Gentleman will bear with me; I have six minutes left to respond to everything that he said. The people in the support group are not on time-limited ESA, and if they are regarded as inappropriate for work-related activity, they will continue to receive benefits indefinitely. The second category of people who are not affected by the time limiting are those on income-related ESA—in other words, even if someone else in the household has an income or substantial capital, they will not be affected. That means that 60% of those coming to the end of a period of time-limited contributory ESA will move to the income-related version. Those in the support group are not on time-limited ESA, and nor are those who move on to the income-related version. People not in those groups will be those who have other household income or substantial amounts of capital in the bank.

People may ask about the impact of such measures on the local economy, but we must also look at the impact of thousands of people who are stuck on incapacity benefit for years with nobody talking to them. Sometimes, people are stuck on IB for three, four or five years, with no contact at all. Nobody asks them, “What would it take? What are the barriers to work? What would help and support you?”, which shows the difference in approach taken by the new Government. We are not writing people off and leaving them on IB; we want to talk to them, identify those who could be active participants in the labour market with the right support, and have a Work programme that supports them into a job.

The hon. Gentleman mentioned regional policy, but my personal view is that having a regional Minister would feel a little tokenistic. We can have a Minister for this or for that, but will they be in the room when key decisions are made in the way that departmental Ministers will be? I am sceptical that a Minister for one region would get special treatment compared with a Minister for another region. We do, however, have a substantial regional growth fund that is worth £1.4 billion and has been popular and successful. We have now had two rounds of bidding—I could go through a long list of projects in the north-east that have been awarded funding. We recognise that additional support needs to be provided to areas that have experienced difficult economic times, and the regional growth fund is an important part of our response to that.

Many of the changes to incapacity benefit were rightly introduced by the previous Government, whether that is the work capability assessment, which, as my hon. Friend the Member for Redcar said, needed to be refined to ensure that we get decisions right, or the attempt to take an incredible number of people—1.5 million nationwide—off incapacity benefit. As the hon. Member for Easington noted, some of those people will be former miners who have claimed IB for a decade or more. Is it humane or economically rational to say, “Well, you’ve been on IB for a decade, you are seven years away from the state pension age so we will leave you alone, you can have IB until pension age, and then you will get a pretty lousy pension because your miner’s pension will have stopped years ago”? That is not good enough.

The hon. Gentleman asks why we cannot wait until there are more jobs, but even if we waited for a big increase in private sector jobs, those on IB would not be active participants in that labour market. Ex-miners who have received IB for seven years are far from that labour market and not competing in it. When jobs are available, who will the employer choose between someone who has received no contact with the system, and no encouragement, work-related activity or training, and someone who has just come from another job? Both I and the hon. Gentleman know who that employer will choose, and it will not be his constituent on IB. We must talk to people on IB and look at who could work with the right support and who needs to be in the support group. We must enable and support those who are able to work for when jobs become available. I accept that there is currently pressure on jobs, but there is churn every day and week as people leave old jobs and start new ones. When recruiting someone new, perhaps not net additional employment but as a replacement for someone who has left, the crucial question will be whether the person on IB is a credible participant in that labour market. We believe that our policies support the north-east by helping those on IB, supporting them and paying by results when people get lasting jobs. That is the long-term answer to the pressures faced by the hon. Gentleman’s constituents.