Universal Credit and Welfare Reform
Guto Bebb Excerpts(11 years, 10 months ago)
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Guto Bebb (Aberconwy) (Con)
It is a pleasure to contribute to this debate. I reject the claim by the right hon. Member for Birkenhead (Mr Field), who is no longer in his place, that there is a lack of interest among Government Members. Indeed, I spent my summer recess taking an interest: I visited my local jobcentre to see how it was dealing with the proposed changes; the two Work programme providers serving my constituency because I wanted to see how they were getting on; and a Tesco regeneration partnership store in Liverpool, which is an example of what can be done when large corporations work with the jobcentre system to get the long-term unemployed into jobs.
One clear message that came out of those visits was that the welfare changes were welcomed by jobcentre staff, who saw them as an opportunity to help people back into work, and by the Work programme providers, who understood the long-term issue at stake. The issue is not about getting people into six-month placements or getting them off the register for six months and then back on to it but about working with the unemployed to ensure their long-term capacity to work.
I represent a seaside resort in Llandudno, north Wales, which has seen a huge influx of people from eastern Europe to work in our hotels. They are wonderfully hard-working and welcome because of the level of service they offer. Nevertheless, it was of huge concern that although people were unemployed in my constituency, several hundred people from elsewhere in Europe were willing to work in the positions available. When I visited the Work programme providers serving my constituency, therefore, it was a pleasure to see a white board on the wall listing 28 jobs filled that August, several of which had been in local hotels and restaurants, because those businesses were engaging with the Work programme.
One message that came out clearly from those visits was that the Work programme providers were still having to sit down with people who wanted to take on a job and work out whether they would be better or worse off. I can tell the House that the Work programme providers and the clients I met were looking forward to the time when they would know for a fact that if they took a job, they would be better off.
The right hon. Member for Birkenhead made the strong point that if a 50p tax rate is problematic when it comes to incentives to work, then surely a 65p withdrawal rate is problematic too. I agree: a 65p withdrawal rate is problematic. It is an issue that we should expect the poorest in society to pay a 65% marginal tax rate, yet we acknowledge that a 50% rate was unacceptable. However, we have to put the issue in context. The fact is that we had—indeed, we still have—500,000 people facing withdrawal rates of 85% to 90%. If we can slowly move to a position where, regardless of the situation, people are better off when they work, we should not be carping about that. Hon. Members can of course make the arguments for a withdrawal rate of less than 65%—in due course I would support that—but this Government are taking difficult decisions at a difficult point in the economic cycle, in trying to change a system that has failed far too many of our fellow citizens. To argue that the change does not go far enough, when Labour sat on its hands for 13 years, is completely unacceptable.
The key point is this. I went to Liverpool and visited that Tesco store in Toxteth, which has the most wonderful views of the constituency of Birkenhead and north Wales. As a Conservative MP from Wales, I was slightly concerned about meeting Scousers who might not be the most welcoming of a Conservative politician. Under a partnership agreement with Jobcentre Plus, half the staff at the store had to have been unemployed for more than a year before being recruited and moving into a position. Visiting that store was a humbling experience. The retention rate in the first 18 months was 94%—that is, 94% of the staff who had been long-term unemployed were still in position. The pride that those people took in their jobs was something to behold, so when I hear people in this House saying, “Yes, the only jobs being created in this economy are in shelf stacking,” I just feel ashamed. The people in that store in Toxteth took pride in the fact that they were earning a salary, taking income home to their families and standing proud, knowing that they were making a difference.
However, there was one message that well and truly came out of that meeting. So many were saying, “I’m currently working 16 hours,”—or, “I’m currently working 24 hours”—“but if I go over that, I’ll be worse off.” If nothing else, the message from the universal credit to them must be: “Work 30 hours; work 40 hours—you will be better off.”
CPI/RPI Pensions Uprating
Guto Bebb Excerpts(12 years, 4 months ago)
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Richard Graham
My hon. and gallant Friend is absolutely right, and that is precisely what the new NEST pension is designed to achieve. I am sure that he will join me later this summer, when the NEST pension arrives at the same time as the Olympics, in hoping that many of our poorest constituents will indeed benefit from that new savings scheme.
Is the motion the right way forward? I believe that it is not, because above all else the change in the pension inflation index, from RPI to CPI, which this Government have seen through, is all about benefiting future workers, who are those who will pay for the pensions of current pensioners, about benefiting our children and about benefiting our grandchildren.
Governments are often accused of being short-term and of purely looking for votes in the next election, but Governments should be looking to future generations and to what we can pass on to them. The changes made will, in the longer term, benefit our country and our constituents hugely. I understand the emotion and the beliefs behind the motion in the name of the hon. Member for Hayes and Harlington, but I will be voting for future generations, our children, our grandchildren and their interests, and that is why I will be voting against the motion.
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.
Guto Bebb (Aberconwy) (Con)
I will be brief. It is a pleasure to speak in this debate and to follow the hon. Member for Easington (Grahame M. Morris). I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on ensuring that this issue is debated on the Floor of the House.
Detailed rebuttals of the arguments of Opposition Members have been provided by my hon. Friends the Members for West Worcestershire (Harriett Baldwin), for Gloucester (Richard Graham) and for Eastbourne (Stephen Lloyd), who said that we have to consider the changes in context. Part and parcel of that context is what is being done by the Department for Work and Pensions, which is getting to grips with the need to reform not only the welfare state, but our pensions system. By all measurements, our pensions system was one of the best in Europe in 1997, but was left to us in 2010 in a complete and utter mess.
I have heard it said time and again in this debate that people should have security when planning for the future. I could not agree more, but I worry that the 75% to 80% of people listening to this debate who are not in the public sector will be wondering about their security and pension provision, which were attacked by the previous Labour Government in a raid worth £5 billion a year, starting in 1997 and going on for year after year. That has reduced the value of private pension provision and made it more difficult for private companies to keep that provision in place. As a result, final salary benefits are now almost unheard of. That was not the case 13 years ago.
David T. C. Davies (Monmouth) (Con)
I am delighted that my hon. Friend has given way. I congratulate him on what he is saying. Does he share my concern that some unions are in the habit of lambasting shareholders, as though shareholders are people with top hats and canes from a previous century, whereas the majority of them are people in the private sector who are dependent on private sector pensions?
Guto Bebb
Indeed. When people say that HSBC’s £14 billion profit is indefensible, I make the case that for somebody with a private pension, that profit is impressive because the greater the profits, the better the pension provision for people who are saving for their retirement.
The proposed changes have to be looked at in context. The triple lock should be welcomed. It has been semi-dismissed by Opposition Members today. They talk about the importance of the RPI link, but under the previous Government, the RPI link resulted in a 75p increase in the state pension. Under this Government, with the triple lock in place, the increase will be £5.35 in the coming financial year. Anybody who says that that change is not worth while should talk to pensioners in my constituency who are grateful for the additional £5.35 that they will receive.
We have also heard about the impact of the change from RPI to CPI on people in the public sector who are planning for their retirement. I heard about that at first hand when I took part in a phone-in programme on Radio Cymru. I was contacted by the headmaster of a very good school in the constituency of the hon. Member for Arfon (Hywel Williams). He stated that the changes were completely and utterly unacceptable because he would lose almost £80,000. People who called in to respond to that were flabbergasted that somebody could lose £80,000 as a result of the change, because it brought home to them the difference between the provision that they were able to pay for through their own saving and what was available in the public sector. The average private sector pension pot is £30,000. To hear of somebody losing £80,000 as a result of one technical change was shocking to the majority of people.
Hywel Williams (Arfon) (PC)
How typical does the hon. Gentleman think that head teacher is of pensioners in my constituency, in which he lives, and of pensioners in his constituency, which is full of people on public sector pensions?
Guto Bebb
The hon. Gentleman makes a good point. Of course the individual in question is not typical, but I am afraid that the sense of entitlement he portrayed in that conversation is typical of a public sector that does not understand that the average wage is about £4,000 higher in the public sector than in the private sector, excluding pension provisions.
I am not attacking the public sector. I—and others—am trying to highlight the fact that public sector provision is significantly better than the provision for the majority of the population. In their changes to public sector provision, the Government are not attacking the concept of a defined benefit pension scheme. They are introducing proposals that will ensure the survival of defined benefit pensions. The truth is that we cannot carry on with a situation in which the majority of the population are expected to live in very difficult circumstances when they retire, yet their taxes are used to support unaffordable pension schemes.
By getting to grips with the need to change the retirement age and increase public sector workers’ contributions to their pension pots, the Government are putting their pensions on a more secure footing by ensuring that they will be available in the long term. They are also ensuring that the feeling of unfairness about the difference between private and public sector provision is reduced. Private sector workers will see that public sector workers are now making a greater contribution to their own pension provision. It will still be less than the taxpayer contribution, but it will be greater than before. In that context, I applaud what the Government are doing.
It is very difficult to accept the comments that Opposition Members make when we highlight the positive changes that the Government have made. Those who have spoken in the debate have said that the weaknesses that we point out in the Labour Government’s performance between 1997 and 2010 do not reflect their position. Clearly they do not reflect the position of the majority of Labour Members, because they are not here to defend their track record. I accept entirely that the Members who have spoken in the debate are genuine about wanting to protect RPI, but the majority of their fellow Labour Members are not here. For 13 years, when they could have done something about the decline of the UK pensions sector and private sector provision, they took no action.
One thing that really damages confidence is the fact that many people who saved in private sector pension funds remember being told that the raid on their pensions was to get young people back into work, yet we all know that youth unemployment was higher in 2010 than in 1997. Even the reason behind the raid on private sector provision was a failed policy of the Labour Government.
I wish to touch quickly on the unions’ decision to challenge the changes. I find it very difficult to understand why any changes to public sector provision are challenged in the High Court, yet people working for private companies have accepted changes as a necessary means of ensuring that they carry on getting the support that they want from their pension provision. For example, my best man works for HSBC. He left school to work there at 17 years old, and I told him he should not have done it. However, going to the bank was a job for life and he was happy to take the opportunity. He started off contributing nothing to his pension fund. Now, he contributes a significant percentage and carries on doing so because he values the fact that he will get a worthwhile pension. People working for a private company understand that they will have to contribute to the benefit that they will get. I do not understand why the unions cannot see that the same is true of public sector workers.
We should at least welcome the fact that the unions, in challenging the decision at the High Court, used their members’ funds for their proper purpose, which is to defend their members. They might have been mistaken, but at least they were using their members’ funds to try to change a policy that they perceived to be unfair. That is a big change, because most of the time they appear to use them to bankroll the Labour party.
It is important to point out that the Unite union, for example, which has been prominent in challenging the changes, contributed £5.2 million to the Labour party in 2010 and a further £2.6 million in the first three quarters of 2011. As Unite is such an influential funder of the Labour party, and as it was willing to take court action against the Government’s proposals to move from CPI to RPI, I wonder what influence it brought to bear on the Labour party when Labour decided to move its own staff’s pension provision from RPI to CPI. I would be delighted if Unite sent out a press release explaining how it fought against the Labour party’s internal decision to move from RPI to CPI, but I suspect that we will hear nothing.
Labour Members who signed the motion have been singularly unsuccessful in changing the Labour party’s position. That is a fundamental point. When it comes to the Labour party’s financial needs, we hear nothing, but when it comes to saying that the taxpayer should fund the difference, the Labour party is willing to protest and people are willing to sign motions.
I note that other parties support the motion, and that two Plaid Cymru Members have signed it. My understanding—I am happy to be corrected if I am wrong—is that the Labour party is moving towards defined pension provision based on CPI, not RPI, but that Plaid Cymru members of staff are in a money purchase scheme. Again, Plaid Cymru is happy to use taxpayers’ money to make a political point, but not willing to find the funding to protect its staff. That is the hypocrisy behind the motion, which I oppose.
Gregg McClymont
The hon. Lady’s desire to write the Labour party manifesto three years before a likely general election is admirable, but I cannot advance on the answer I gave to the hon. Member for Gloucester.
Whether CPI is an accurate measure of inflation is an issue—the hon. Lady made important points on heating and housing—but in the few minutes remaining, I want to raise some broader questions. We can talk about CPI or RPI pensions uprating in isolation. The uprating of the state pension using CPI, which happened for the first time this year, is one thing, but as was indicated in the debate, the flat-rate, single-tier state pension, to which the Minister is committed, is important to the debate, as is the future of NEST.
I do not want to misquote the hon. Member for West Worcestershire (Harriett Baldwin), but I believe she said that she was looking forward in the Queen’s Speech to legislation on a single-tier, flat-rate state pension. The Opposition are hopeful that the Minister can move in that direction quickly. I wonder whether the Treasury has a significant role in that. Perhaps negotiations must continue before we can get there. The Opposition will be keen to consider very closely such proposals when they come to the House.
NEST, which has been mentioned throughout the debate, has a huge role to play in moving towards a more sustainable pension system. The Opposition are disappointed at the delay in the staging dates for the move to auto-enrolment. It is not just a question of the companies: contributions from both the Treasury and employers will be lost for those saving into a pension for the first time.
Finally, the hon. Member for Aberconwy emphasised the private pension system. Both he and the hon. Member for West Worcestershire suggested that all the difficulties in the private pensions world have arrived since 1997.
Gregg McClymont
I think that is what the hon. Gentleman suggested, but it is far more complicated than that. There are significant issues with the private pension system, a significant number of which can be traced to other Governments and the shift from occupational pensions to group personal schemes—my hon. Friend the Member for Islington North (Jeremy Corbyn) mentioned 1986.
In the spirit of wanting to create a better pension system, I must be clear that we cannot support the switch to CPI as a permanent measure given the impact of that on so many pensioners and future pensioners. I thank my hon. Friend the Member for Hayes and Harlington for securing this debate.
Welfare Reform Bill
Guto Bebb Excerpts(12 years, 5 months ago)
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Mr Field
If my hon. Friend does not mind, I am going to be brief.
On the insurance principle, those on the Treasury Bench prayed in aid the public being behind them on the measure. Indeed, the public are behind them on that, but the public are against them on the first group of amendments, which we pushed through. Obviously, the Treasury gave a total that the Department for Work and Pensions had to save from the benefits bill. The truth is that we will never get past the stage of picking on weaker people until we are prepared also to look at stronger people. Why is it that, somehow, the benefits of people in my position—those who are part of the baby boom who have done really well out of this country over the years—are never looked at? Why are we frightened to look at the concessions that, for example, people over retirement age receive as universal benefits?
If we are not to go down this track again—the biggest growth in the budget over the past 20 years is in the transfer payments that we are, in effect, discussing today—we must be a little braver and much more open about those areas that we think should be questioned, rather than having a diet of the sort that has been served up to us today.
On the £26,000 a year cap, are there not lessons for Members on both sides of the House to learn? One is that the Government’s proposals are unbelievably crude. I hope that they will adopt our proposals before they go much further in this reform programme. To my own side, I say that I do not want people to think that it is only out in the sticks that people think £26,000 is a high cap. People in London who work think £26 k is high.
We should not make policy because odd people have talked to us in the street, but yesterday, a couple of blocks from here in Strutton Ground, a window cleaner said to me, “Frank, I start at 4 o’clock in the morning. I wish I could get a guaranteed £26,000 for my efforts.” There are lessons for both those on the Treasury Bench and the Opposition.
My final point has already been made by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who probably knew that I was going to make it and so has disappeared. We have had a nationwide housing benefit for more years than I can remember, and one lesson I have drawn is that landlords are very clever at turning whatever we think of as a cap into a floor. Obviously we want to meet people’s rents where possible, although they do not have a right in the long run to live somewhere irrespective of what the rent is, but can we run a housing benefit system while having a free market in rents? My suggestion, drawn from the decades I have been in this House, is that the two are incompatible if we are trying to protect taxpayers.
I hope that those three points have been useful. Given that in a year’s time those on the Treasury Bench will want some sympathy from us when they are operating these measures, it might be rather gracious if they looked more favourably on the amendments tabled by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), which would make their reforms better rather than worse.
Guto Bebb (Aberconwy) (Con)
It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who always provides the House with a thoughtful contribution. It is important to state that the number of newly elected Government Members shows that we were elected on a promise to get to grips with the welfare state. I represent a constituency where the average wage is very low, yet the jobs created there over the past few years have been taken predominantly by hard-working people from eastern Europe. I think that there is something completely wrong with the system if I can meet people on the streets in Llandudno and Llanddulas who tell me that they are better off not taking employment. There is a passion for these changes on the Government Benches, a passion for change that will allow people to do the right thing with their lives and take a job.
I am intrigued and disappointed to see that not a single Labour Member from Wales is in the Chamber to discuss this issue, and I think that I know why. It is because time and again Government Members have asked the shadow Secretary of State to tell us whether his proposed regional cap is for an increase in London, with no change in the rest of the country, or for a reduction in other parts of the country. I do not know a single Labour Assembly Member, councillor or MP who has advocated a lower cap in Wales than in the rest of the country, so it is pretty clear to me that the concept of a regional variation is based on increases in expensive parts of the country but no reductions elsewhere. The Labour party has provided no financial information on its proposal.
I am all in favour of debate on this issue. My right hon. Friend the Member for Wokingham (Mr Redwood) made the point extremely well that there is an argument to be had about the regional variation in pay and benefits, but it is completely unacceptable for the Opposition to turn up with a proposal that is uncosted, untested and, in my view, intended to get the Labour party off the hook rather than contribute to any change. I do not consider myself to be a cynic on this matter, but I wonder why, when the Chancellor highlighted in the autumn statement the possibility of looking at regional pay, the Labour party attacked the proposal, yet it is now looking at proposals for a regional cap, as logically a regional benefit system must follow. I can only conclude that the difference is that benefit recipients are not union members, but public sector workers are.
Mr Byrne
I am sorry that the hon. Gentleman felt the need to add that rejoinder. There is already a very localised dimension to the benefits system: housing benefit. We have had a localised housing benefits system for about 70 years, and that is why the amendment states that, if we are to have a different solution for London, compared with the rest of the country, it is housing benefit differences that should be taken into account if an independent commission is appointed to set the cap levels. We already have that in place in this country.
Guto Bebb
That is an interesting comment. The right hon. Gentleman almost implies that there are no differences between housing costs in other parts of the country. In Wales there are certainly huge differences, for example between Cardiff and north Wales. In my constituency, there has been growth in the population of young people in villages such as Penmaenmawr and Penmachno, and it has been driven by young people who are working but cannot afford to live in the most prosperous areas. They have moved into areas where it is cheaper to buy because that is what they can afford. Why are people who do work and do take responsibility expected to commute to own a house, while that is not the case for somebody who is in receipt of housing benefit? That is another challenge to which we need to respond.
Guto Bebb
I reiterate the point that my Front Benchers have made: there are not many people in my constituency earning £35,000 a year before tax who are in receipt of housing benefit. That is the crucial difference. The average wage in my constituency is £23,000.
People say, “Are we in touch with the general public?” When I was appointed to the Bill Committee on this proposal, I held three public meetings in my constituency, and one message came through loud and clear: “Why on earth are you going to put in a cap of £26,000?” I think that the cap can be justified, because the Government are taking into account the needs of people throughout the country, not just those in my constituency and those in a low-wage economy such as Wales—a low-wage economy, dare I say it, that has suffered badly from continued Labour party rule for the past 80 years.
The big issue is that we are bringing forward a proposal. If the Opposition were serious, they would also bring forward costed proposals, but we do not have that. We have platitudes and excuses to try for tactical purposes to defend the party position. Ultimately, in this measure, we are proposing a benefits cap, trying to ensure that people see that work does pay and protecting the disabled and people who are in work, and this proposal, in the absence of anything else from the Opposition, is a proposal that we should support.
John McDonnell (Hayes and Harlington) (Lab)
May I just make it clear that I oppose a benefit cap in principle? This policy has been borne out of prejudice and political expediency, rather than reason. In every recession there are scapegoats, and it is usually the poor, who become a political football for political game-playing and advantage. I am not morally willing to involve myself in that debasing political game.
We all have to bring our own experiences of our constituents to this debate, which has exposed differences in their lifestyles, and at times it has been apparent that we do live in different worlds. I do not begrudge Members and their constituents who are in good, well-paid employment, a secure home that they can afford and a decent environment, but that is not the experience of many of my constituents, or of many constituents throughout the country.
I have lived in my constituency for about 35 years, and I live in statistically the most deprived ward in the borough. The vast majority of people whom I see around me desperately want to do what is needed to ensure that their families have a good quality of life. They pay back into the community in many ways, they work long hours often in insecure employment and their pay, in many instances, is low and often below the London living wage.
The risk is unemployment, which over recent years in my constituency has increased by 52%, and over the past year by 7%, so there will be times when many of my constituents will not be able to find work. They struggle, above all else, just to provide a decent roof over their family’s heads, and that is because we face the worst housing crisis since the second world war. Housing supply has not kept up with housing demand, council houses that were sold off in the 1980s and ’90s have not been replaced by successive Governments, and there has been an expansion in buy-to-let, higher-rent-charging landlords, who provide many of my constituents with squalid housing conditions and overcrowding—Rachmanite landlords, who are building up lucrative property empires.
Maria Miller
My hon. Friend and I have spoken about these matters and I understand the very individual problems that his constituency faces. It is because of those very individual situations that we have put in place significant support so that local authorities can consider different ways to support families living in rural areas some distance from other communities and make sure that they are not dislocated from their support networks.
Guto Bebb
This issue has been of real concern to me. In a recent letter that I received, Community Housing Wales argued that more than 40,000 individual tenants in Wales would be affected by the issue of under-occupancy. What it failed to say is that, according to Welsh Assembly statistics, more than 50,000 tenants in Wales are over-occupying. There is a need for social housing providers to look creatively at how they move tenants within housing stock.
Maria Miller
It is important that that part of the debate is recognised by the House. For every family in a situation of under-occupying, many have considerable problems with over-occupation.
The hon. Member for Vauxhall (Kate Hoey) talked about her real concern for some of her constituents. I remind her, although she will know this already, that the measures that we are talking about are for working-age people only—not for pensioners. I encourage all hon. Members to ensure that the tone of our debate is based on fact and not fictional evidence.
Living Standards
Guto Bebb Excerpts(12 years, 7 months ago)
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Guto Bebb (Aberconwy) (Con)
I am pleased to follow the hon. Member for Erith and Thamesmead (Teresa Pearce) because it is important that we challenge some of the myths we have just heard. Before I was elected as Member for Aberconwy, I remember going out in the constituency with the police, and we came across people who were living rough. That was before this coalition Government came to power. From listening to Labour Members, however, one would think that poverty did not exist until May 2010. Their rewriting of history is completely unacceptable.
Mr Byrne
Is the hon. Gentleman as concerned as I am about the Institute for Fiscal Studies estimate that a further 600,000 children will be plunged into absolute poverty over the course of this Parliament, and is he worried about the Treasury’s own analysis published yesterday showing that 100,000 children may fall into child poverty over the next year or two?
Guto Bebb
There is not a single Member of this House who will not be concerned about the fact that there are people who are facing real difficulties, but this Government are trying to make sure we tackle the real poverty we have in this country. In Wales, for example, in many instances what we have is a poverty of ambition, which was fostered by 13 years of Labour Government. For 13 years the economic performance of Wales was worse than that of the rest of the United Kingdom. For 13 years, Labour Members happily threw money at an issue in order to salve their consciences—they threw money at the issue and felt they could then forget the communities that I am proud to represent.
I am part of a coalition Government who are aiming to ensure that if people are willing to work and take part in this economy, they will be better off by doing so. The Government are tackling a long-term problem with long-term solutions. It is unacceptable that the Labour party is attacking a Government who are willing to have a long-term strategy by trying to make short-term points about the past 18 months. This Government are brave enough to look not to the next electoral cycle but to the future.
I was astounded when I read the motion, which refers to the need to look after hard-pressed families. It does not read very well if one is a Welsh MP, because the Labour Assembly Government have completely forgotten about hard-pressed families. What has happened with the council tax in Wales, compared with that in England? The Westminster Government have made money available to allow council tax to be frozen, but the Labour Administration in Wales have decided that supporting hard-working families is not a priority. Some Labour Members have said to me, “The council tax saving is £12 a month. What’s £12 a month?” For people in my constituency, where the average wage is £23,000 a year, £12 a month is a lot.
Mr Byrne
The hon. Gentleman is making his argument with passion and force, as he always does. He will be worried, I am sure, that the cuts made over the past 18 months mean that in his constituency 700 families are losing help with child care, and the tax credits of nearly 6,000 people are being cut. He must surely accept that that is contributing to the squeeze his constituents are feeling.
Guto Bebb
Indeed. The problem is that the Labour party believes that the Government should be responsible for ensuring that families have money in their back pockets. I believe that my constituents want to take that responsibility for themselves. Hon. Members should be proud of the fact that this Government are trying to ensure that those who work are better off. My constituents will be able to keep more of their earnings because we are moving to higher personal allowance rates, and I welcome that.
Guto Bebb
I have already taken two interventions.
It is disingenuous of Labour Members to say that they are concerned about the incomes of hard-working families when the Labour party in Wales is unwilling to pass on council tax savings that would be appreciated by people in my constituency and across Wales. They have the cheek to say that the VAT increase implemented by the Government—made necessary by the financial situation that the previous Government left—should be reversed without explaining where the money will come from. Even more bizarre, Labour spokespeople explain in the media that the VAT reduction they propose would save the average family £450. I have no idea where that figure comes from. Such a saving would mean that an average family had £18,000 of disposable income to spend on “VAT-able” goods. I will not come across a family in my constituency with £18,000 of disposable income, let alone one with £18,000 of disposable income to spend on “VAT-able” goods and services.
The inflation figures show that families are being squeezed by increasing food prices. What should the Government do about such increases? Food is subject to VAT at 0%. As a result of high street competition, the prices of goods and services subject to VAT are going down.
We must be honest in this debate. In very difficult circumstances, the Government have attempted to look after the weakest in society. I was proud of the fact that yesterday, despite the changes to the Government’s finances, the triple-lock guarantee on pensions was kept. Average ages in my constituency are the highest among constituencies in Wales, and the Government’s decision will go down very well, compared with the previous Government’s 75p insult to pensioners. We should also be proud of the fact that we are increasing child credits by £390.
More crucial is the fact that, unlike the previous Government, this Government recognise the real threat to family incomes—the increase in fuel prices. I welcome the fact that the Chancellor listened and that, in extremely difficult circumstances, the previous Administration’s proposed 3p increase in fuel duty, scheduled for January, is to be postponed. Fuel prices are high—again, owing to circumstances beyond the control of the Government—but time and again the Government have listened. We had the 1p reduction, and the 5p increase was cancelled.
Guto Bebb
The VAT rise is a fair point. That is possibly 2p, but we have seen duty frozen—11p, in effect, off the price, and frozen for 19 months. When the previous Administration were in power, we saw fuel duty increase by 20p and I did not see any Labour Members express any concern for those living in a rural area such as mine, where people have to travel 20 miles to get to the supermarket. This Government listen. They listen to the concerns of the elderly and of people in rural communities.
Guto Bebb
I have already taken two interventions.
More importantly, this Government know that the way out of the situation that we inherited is to champion self-reliance and enterprise, and to say to people in Wales, “Back in the 1980s we were creating more businesses than any other part of the United Kingdom. We had more new VAT-registered businesses than any other part of the United Kingdom.” I have confidence in the people of Wales. Unfortunately, the past 13 years have been wasted, but with this coalition Government, we will see change and we will see growth.
Youth Unemployment
Guto Bebb Excerpts(12 years, 8 months ago)
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Guto Bebb (Aberconwy) (Con)
My hon. Friend the Minister said that he believes strongly in localism, and so do I. However, having suffered under a Labour-led or Labour Administration in Cardiff for the past 12 years, it is sometimes difficult to keep supporting the idea of localism.
Since 2000, the level of Welsh GDP in comparison with the European average has fallen from 68.6% to 64.4%. At the same time, between 2000 and 2010, the proportion of young people aged 16 to 24 in Wales who are unemployed increased from 15.8% to 21.5%. The sad fact about this debate is that Opposition Members simply do not recognise that a failing economic performance is related to a failure to create jobs for young people.
Wales has had support from Europe on a regular basis because of the failure of the policies adopted by the Labour party in Wales. Such is the failure of the Labour Government in Wales to put together policies that make a difference that Wales is one of only eight regions out of 66 in Europe that have qualified for objective 1 funding to see its prosperity decline. To put that in context, over the past 10 years under Labour, Wales has gone backwards while even the Greeks have gone forward. That is the reality of living under Labour. I support localism, but in Wales we suffer for it.
We cannot divorce this debate from education, skills and training for young people. Recently, there was evidence from the largest inward investor in the south Wales valleys over the past five years that less than 20% of the young people who were referred for job interviews—not for high-level jobs, but for comparatively low-level jobs—had adequate skills in reading, writing and arithmetic, and, more importantly, adequate social skills. Is that a surprise when the Labour Government in Cardiff have deliberately decided to spend £600 per head less than England on educating young people? That is the reality of Labour.
We must take on board the need to create economic growth and prosperity. Jobs for young people will not appear in isolation. Opportunities for young people will come as a result of economic growth and success—something we desperately need. That is why it is crucial that we pay tribute to this Government for taking the issue seriously. The Work programme, which has been mocked by Opposition Members, will ensure that payments are made on the basis of performance. That is a move in the right direction. It means that people will have to be in position for 12, 18 or 24 months before payments are made. That is a sign of confidence in the ability of the programme to get people into private employment.
Guto Bebb
The shadow Secretary of State again makes the mistake of making a short-term point about unemployment in my constituency, without reference to the fact that the biggest employer in my constituency is the tourism industry, which is seasonal. As he wants to make an issue of youth unemployment in my constituency, it is worth pointing out that we have literally hundreds of people working in hotels, guesthouses and other tourism-related businesses there who are hard-working, successful and moving on. The sad fact is that a huge number of them are from eastern Europe. Those people have grasped their opportunity, but that opportunity has not been available to young people from my constituency because of the welfare state created by the Labour party, which is more interested in throwing money at a problem than solving it.
Guto Bebb
I will not take another intervention, because it would be unfair to my colleagues.
The Labour party has created a dependency culture, rather than a culture of can-do and change. As my hon. Friend the Member for Selby and Ainsty (Nigel Adams) made clear, young people should have the opportunity to take a job and to develop in that position. The Labour party’s policies have ensured that those jobs are not available. Many young people in my constituency have families and responsibilities, but because of the welfare system developed by the Labour party over 13 years, they are often better off not taking a job. The biggest change that the coalition Government are making is to ensure that when people take employment, they are better off. It is unacceptable that the Labour party believes that throwing money at people and allowing them to do nothing is more effective than changing the way we live and giving people the opportunity to make something of themselves in employment.
Worklessness (Wales)
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Hywel Williams
I agree with the hon. Lady. The changes in welfare are being brought forward too quickly, but I am also concerned that the work on the other side of the coin—creating jobs for people who will hopefully be leaving the benefits system or unfortunately be moving to lower levels of benefit—is not being prosecuted sufficiently.
Figures were released in the report today, and the situation in Wales is particularly worrying. I hope that referring to only some of them will mean that I am not tediously repetitive, but they make for interesting reading. The total number of jobseeker’s allowance claimants in my constituency is 1,245, and there were 364 jobs available at the jobcentre in the month in which the figures were collected, which is 3.42 claimants per job. If one adds in everyone who is on Department for Work and Pensions benefits, the total figure goes up to 5,590. I share the Government’s ambition of moving people who have been long-term sick or disabled back towards work. I agree entirely with that, because work is good for everyone, but it is a huge challenge just in my constituency.
In the most dire example in Wales—Rhondda—there are 2,315 claimants, which is 28.23 claimants per job, so there are 28 or 29 people chasing every job. I accept that some jobs are not advertised, but are available elsewhere. [Interruption.] The hon. Member for Aberconwy (Guto Bebb) is smiling. Hopefully, I have drawn one of his teeth. I accept that statistics can be misleading, but there are 12,540 DWP benefit recipients, which means 152.93 claimants per job. The challenge is enormous. Incidentally, if, Mr Weir, you were sad enough to have looked at the debate on my ten-minute rule Bill about three weeks ago, you would have seen that the hon. Member for Rhondda (Chris Bryant) claimed that the figure is 84 per job. Presumably, he knows his constituency better than I do, and possibly the official statistician, but he says 84 and I say 152.93. The challenge is enormous.
I am afraid that the situation is the same throughout the valleys. For example, Cynon Valley has 122 DWP benefit recipients per job. Interestingly, when one looks at the other side of the coin—where the jobs are—Alyn and Deeside has more than 1,000 jobs posted, so the figure there is 1.55 claimants per job, which is almost a job for everyone who is claiming JSA. That is a good situation to be in, but it stands out in Wales as the exception rather than the rule.
Guto Bebb (Aberconwy) (Con)
I congratulate the hon. Gentleman on securing the debate. Does he agree that the situation in Deeside, for example, is indicative of the fact that the manufacturing base there is extremely strong? The Government will emphasise developing the manufacturing sector rather than depending on state-created jobs, as the previous Administration did.
Hywel Williams
I agree with the first part of the hon. Gentleman’s intervention. I have long been a supporter of manufacturing, although it is not a prominent sector in large parts of rural Wales. The situation in Alyn and Deeside is helped by the fact that it is immediately adjacent to the Cheshire plain, where there are many jobs, and the huge investment in Airbus. There are lots of reasons, but it is a situation to which some people in the valleys might aspire. Alyn and Deeside has had a lot of Government help to reach that position.
The final column of figures is striking. It shows that there are nearly 72,000 JSA claimants, which is nearly 4.5 claimants per job, and more than 350,000 people on DWP benefits, which is nearly 22 claimants per job. The figures are breathtakingly difficult to cope with for any Government, either here or in Cardiff. The total Jobcentre Plus jobs available in June was a little over 16,000. We are talking about an enormous problem, and I do not envy the Minister or the Welsh Assembly Government, who are of a different political stripe but who have the same sort of aim, their jobs.
Some groups are hit particularly hard, and there is an issue of gender. There are now more women claiming JSA than at any point since the previous Conservative Government were in power in 1996. Across the UK, the number of women claiming JSA rose by 9,300 last month to a 15-year high of 493,000. That shows that there is an issue for women. The figures are expected to worsen, because the coming cuts are to the public sector, where there is a preponderance female employment, so women will be hit harder again. About two thirds of people employed in the public sector in the UK are women, so there is a differential effect.
The cuts come at the same time as a report from the Chartered Institute of Personnel and Development notes that unemployment will remain high across the UK until 2015. The report was produced by crystal-ball gazers, so one has to take the figures with a pinch of salt, but that is their prediction. A real fact, which I think the hon. Member for Aberconwy has referred to, is that we know that 77,000 Welsh people have been claiming out-of-work benefits for 10 years or more. That is a startling and unhappy fact.
The Government’s welfare reforms are predicated on the assumption that jobs will be there for those who move off higher benefits. Welfare reform was originally partly introduced to encourage more people into work during a period of high unemployment, but it is now one of the more controversial aspects of the Government’s policies. The figures show clearly that the jobs are not available. I will not stray too far down this road but, in passing, there is a real danger that the net effect of job cuts, welfare reform and so on will be to force many people not into work but on to lower benefits.
Of course, the Government hope that the private sector will grow and take up the slack, but unfortunately growth is weak in the Welsh economy. In Wales, the private sector is weak and previous jobs growth in Wales was mainly in the public sector. I do not know whether there is a causal relationship and whether growth in the public sector leads to a weak private sector or the other way around—the private sector is weak and so public sector jobs take up the slack. We are talking about a complicated relationship.
We all agree that we must aim for jobs growth in the private sector. I do not blame the private sector in Wales, because we have to accept that the economy in Wales has been dealt successive blows for many years with the closure of heavy industry and the legacy of long-term illness and disability. As someone who belongs to a party that was in government until recently, I say that we must accept that economic policy in Wales, as conducted by Governments of every party, has not been as successful as we all hoped that it would be.
I hardly need to say therefore that I am in favour of developing the private sector. However, the private sector in Wales is intertwined closely with the public sector, and cuts in the public sector might endanger or even hamper growth in the private sector. The picture is complicated. The Sheffield Hallam university report states:
“The loss of public sector jobs will exacerbate the situation.”
We are looking at a complicated picture. Employment in the public sector is important but, of course, those sorts of jobs are going in the cuts. There might be a double blow to the Welsh economy of fewer public sector jobs and less business for the Welsh private sector.
I have long believed that we need to have better integration between job finding, job placements provided through Jobcentre Plus and the Work programme, and those Welsh Assembly Government Departments that can have a profound effect on people’s ability to take up jobs. I refer hon. Members to my ten-minute rule Bill, which I introduced a few weeks ago but did not get a Second Reading. I do not want to repeat the arguments that I made then, except to say that the Welsh Assembly Government have responsibility for services such as education and training, further and higher education, skills development, health and social services and child care—I could go on—and that a certain synergy could be achieved by better co-ordination with Jobcentre Plus and the Work programme. I have no doubt that those services could be better combined and co-ordinated to enhance jobseekers’ hopes of finding work.
The crux of my argument today is that we need not only to equip and motivate jobseekers better, but to introduce a variety of other policies that will provide jobs. We need a concerted effort at job creation and to provide long-term jobs rather than stop-gap placements that disappear after the target has been reached. That has been a feature of job creation in Wales over the past few years.
Guto Bebb
I could not agree more on the issue of creating long-term jobs. One of the sad facts of the situation in Wales is, in the 1990s, we were consistently at the top—or very close to the top—of the United Kingdom regional league table in terms of creating self-employment. In the past five years, we have consistently been in the bottom part of that league table and have, in fact, been in last position. The fact that the Government are introducing the enterprise allowance scheme again is a positive development, because a significant number of businesses in north-west Wales that were founded under the old enterprise allowance scheme still survive.
Hywel Williams
The hon. Gentleman makes a good and pertinent point. As I said, I am very much in favour of encouraging self-employers, and there are steps that we can take to do so. My entry into self-employment could not have been more disastrous. I left university and tried to claim a bit of benefit, as someone who supposedly knew something about the system, only to find that when I was down in Cardiff job hunting, I should have been at home signing on. I was therefore denied a bit of money that I might have claimed because I was not idle at home; I was out searching for that illusive job.
Other measures for which we in Plaid have argued in the past include a temporary cut in VAT to kick-start the economy. Of course, we recently had a vote on that. The Government parties voted against the proposals and I am afraid to say that the Labour party abstained. Some hon. Members will know that, since 2008, we have campaigned alongside the Federation of Master Builders and others for a specific cut in VAT on repair and renovation. Following last year’s ECOFIN decision, VAT on repair and renovation could go down to 5%. Other countries have followed that path by reducing VAT on labour-intensive industries, and they have had effective results. Many pre-1919 houses are in a particularly dire state and need fixing. That is peculiar to some parts of Wales, particularly the valleys. The work is available and there are, of course, the workers. What we need is a more favourable tax regime to encourage those workers to do the work. The Federation of Master Builders estimates that we could create about 100,000 jobs.
Hywel Williams
I will give way once more, but I am anxious to hear what the Minister has to say.
Guto Bebb
I am extremely grateful to the hon. Gentleman. May I concur with the comments that have been made? As a Member for an area that is very dependent on tourism, I have also heard the argument for a reduction in VAT for the tourism sector. Any Government who want to create enterprise and employment should look carefully at using the tax system to do that although, obviously, that has to be put in place once we have the public finances in order.
Hywel Williams
That is a moot point. I do not have the figures at my fingertips, but when VAT on construction services was reduced in Italy, a large number of people who were working cash in hand realised that becoming legal and paying a lower rate of VAT was worth while. Allegedly, the tax take went up, so given the Government’s current situation, it might be useful to consider that. I have not seen the operation of the famous Laffer curve being proven in such a way before but, allegedly, that was the case in Italy at least.
The 100,000 jobs that it is estimated that such an approach could create would be local, but there is also a strong equality case in favour of the policy. I put this question rhetorically rather than to the Minister: why should a young couple pay more for renovating their terraced house when a banker who retired early with a big pension pot does not pay VAT on his newly built ranch-style property in the south-east? I had to get that one in. There is an equality issue, and lots of young people are trying to renovate their houses, so the proposal would be a great help to them.
Lastly, as I realise that time is moving on, we also need to boost self-employment. I agree with the FSB, which estimates that the self-employed contribute £21 billion to the UK economy every year. It argues persuasively that self-employment is a key driver to achieving economic growth. That is particularly the case in Wales, as self-employment is a feature of much of rural Wales.
I agree with the hon. Member for Aberconwy when he argues for enterprise zones, particularly enterprise zones themed around certain types of activity. The only thing I worry about is that if we have enterprise zones throughout the UK—not just in Wales—they will not act as an incentive hub for a wider economic picture. In some places in the early 1980s, jobs were poached from other areas and the net effect was less than one had hoped for because, rather than creating new jobs, companies moved in to benefit from the improved climate within the enterprise zones. That is a particular worry. I understand that the Government intend to have such an enterprise zone somewhere in the north-west. I am not sure what is going to happen, but I will certainly keep an interest in the matter.
Irrespective of welfare reform, we need in Wales to boost the private sector, to equip our workers and workless people better, and to improve the integration of services to ensure that there are jobs for our people and prosperity for our country. We need a work creation programme—that is the missing part of the jigsaw. If that sounds a bit like the case for a future jobs funds 2, so be it, particularly if that is aimed at those who are inevitably at the end of the queue when jobs are being handed out—the long-term unemployed, and those incapacitated by illness or long-term disability.
Welfare Reform Bill
Guto Bebb Excerpts(13 years, 1 month ago)
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Guto Bebb (Aberconwy) (Con)
The question of the income levels of the self-employed is not as simple as the right hon. Gentleman makes out. Under the current capital allowance system, a self-employed individual can invest £25,000 in a piece of machinery and immediately wipe off their profits, and it causes deep resentment when they are then able to claim family tax credit. The Government are trying to create a system that supports the self-employed but is fair to other taxpayers.
Stephen Timms
The problem is that the proposed system does not support the self-employed in the way that the tax credit system supports them, because it treats the self-employed as if they are earning at least the minimum wage for every hour they put into their business. I know that the hon. Gentleman is genuinely interested in the position of the self-employed and I think he is supportive of self-employment, but he will know that it is absurd to suggest that a person who starts up in self-employment will be earning at least the minimum wage from day one. That will not be the case, of course; there may be weeks, or perhaps months, in which they earn nothing at all. The current tax rate system reflects that, but the new system will not.
Guto Bebb
Obviously I support the self-employed and want the universal credit system to support them, but we need to recognise that there are situations such as the following: somebody sets up in business to breed angora rabbits for their wool and manages to make £80 in sales in the year. I have not made that up, and it is absurd that that type of business should be supported by the taxpayer.
Stephen Timms
I am sorry to hear the hon. Gentleman belittling self-employment. For many people, including people who have lost their jobs, a move into self-employment can be absolutely the right thing to do, and, over time, they might find that they are able to develop a serious business—not breed rabbits—and earn a living from it. We should be valuing, not ridiculing, such contributions to the economy. I am afraid that there are many problems with the Bill, and one of them is that it so badly weakens and undermines the support that is currently available for self-employment.
Stephen Timms
My hon. Friend is absolutely right to say that self-employment is a crucial element of our economy for many people, including those with caring responsibilities; others who, for other reasons, are not necessarily able to commit to a full-time job; and, indeed, those who simply want the opportunity to build up a business for themselves—it is crucial that the system supports them. Tax credits have done so, but I am afraid that universal credit will not. That is a real worry and the approach being taken flies in the face of Government statements of support for self-employment.
Stephen Timms
I will gladly give way, and I hope that the hon. Gentleman will support self-employment this time.
Guto Bebb
I am surprised to hear those comments. I understand that the right hon. Gentleman is talking about supporting businesses and self-employed people perhaps working a day a week or two days a week. How does that fit in with his proposals on supporting child care in respect of micro-jobs and part-time jobs?
Stephen Timms
I have made it clear that the priority should be to maintain child care support for those who are currently receiving it. There is a case, with which perhaps the hon. Gentleman agrees, for extending that support to others. If that is to be done—and I can well see the case for it—the funding needs to be provided for it. What we cannot do is take support away from one group, making work impossible for them, in order to support another group. If we only knew the Government’s policy on child care support, we could have a proper debate about it, but that appears to be where they are heading. They simply have not had the ability to put a policy together and tell us what it is. The hon. Gentleman has suggested that perhaps too many self-employed people are either earning a negligible amount or are under-declaring their profits.
Guto Bebb
It is important to correct the record. I did not state that self-employed people were under-declaring their profits; I simply stated that the capital allowance system allows the self-employed, completely legally, to reduce their profits to nothing by purchasing an asset. That was the simple point that I was making.
Stephen Timms
That is a long-standing feature of the tax system for businesses generally, and we should be encouraging investment. I see it as a strength of the current system that such necessary investment is supported. The hon. Gentleman is right in the sense that universal credit will remove all that completely. I am afraid that, as the Chartered Institute of Taxation has pointed out, it will be a far less supportive system for self-employment than the current one.
Guto Bebb
Again, I need to clarify the record. It is important to understand that the capital allowance system has been changed fundamentally in the past two years as a response to the economic crisis that we are facing. Someone could not previously claim 100% allowances, but they can at this point in time. A 100% allowance on the purchase of an asset worth £25,000 results in the net profits of a small business reducing to nothing and therefore they are supported by the tax credits system. It is important that this Government support the self-employed, but not in a way that encourages them to make investment decisions for the purpose of universal credit rather than for the purpose and benefit of their own business.
Stephen Timms
I am not clear whether the hon. Gentleman supports the fact that we have had 100% capital allowances recently, although I hope he does. When the downturn hit, they were introduced for a very good reason, which was to encourage enterprise and investment, particularly on the part of small businesses.
One of the problems with the Bill is that in many cases self-employed people will be strongly pressured to lie about the hours they have worked. They are not going to admit to having worked 18 hours a day, as some are doing, because they will then lose pound for pound from their universal credit, as it will be assumed that for every one of those 18 hours they have earned at least the minimum wage. This is a bad policy and it needs to be changed.
Amendment 33 may cause some puzzlement. Many people will not know that the Government intend to remove pension credit from people over pensionable age who have a spouse under pensionable age. That has not been announced anywhere and the Pensions Minister has not stood up to tell us about it. We find it buried in, of all places, the middle of schedule 2, on page 114 of this Bill. If the older person were living alone, they would receive pension credit. Those people will in future be penalised because they have a younger spouse. This is a new couples penalty, but we have been assured that the Conservative party wanted to stamp out such penalties. Indeed, the Secretary of State said, once again, in DWP questions earlier that he wanted to remove couples penalties from the system—but here he is inventing a new one. That will change the pension entitlements for some couples with very little notice and, in some cases, by a substantial sum. If Ministers want to change the arrangements for pension credit, they should set that out openly, the provisions should be made in the Pensions Bill and there should be full discussion of the change. They should certainly not try to sneak it past us in the second schedule to this Bill.
We have now established that of the 610,000 recipients of pension credit with a partner, almost 100,000 have a partner aged under 60. The difference between the couple rate for jobseeker’s allowance and the pension credit rate is more than £100 a week, so for each year that a couple is in receipt of JSA rather than pension credit, those couples stand to lose more than £5,000.
Sheila Gilmore
I am not convinced that the new clause does away with the entire principle of the mini-job, although I would certainly have liked—preferably before we embarked on the Bill—a debate about what was, for me, a new idea, possibly good and possibly bad. I do not think we have fleshed out exactly what we are doing in this regard.
As I said in an intervention earlier, if the idea is to encourage people to undertake work involving all hours of employment—given that they are able to obtain such work—I am not sure where the so-called mini-jobs will be found or what their quality will be. Are we talking about six or eight hours a week, as some people seem to be? Where will the jobs be, to what extent will they increase earnings, and will the necessary child care be available?
Guto Bebb
I am surprised that the hon. Lady refers to micro-jobs as if they were not important. I should have expected a Scottish Member to be delighted by the Government’s attempts to make work pay. Shockingly, the number of people who have never been employed in Scotland increased from 37,000 in 2000 to 40,000 in 2005, and to 45,000 in 2010. I think that, rather than being disparaging about micro-jobs, the hon. Lady should welcome the fact that the Government are serious about showing that work pays and gives people self-respect in our society.
Kate Green
I am prepared to accept that life is changing, albeit rather more slowly than the hon. Gentleman suggests, but let us not forget that the partnered mothers who work do so largely in part-time jobs and that their incomes usually make the smaller contribution to family budgets. Let us not forget the extensive evidence that continues to show that women fulfil the bulk of child care responsibilities. Let us not take the risk that by removing money from the main carers of children, whether that is the fundamental intention or not, children become the losers in the drive to achieve the glowing future that the hon. Gentleman seeks to describe. All the evidence suggests that money is most likely to be spent on children when it is paid to their main carers, so I am concerned that that should be built into our system as a default to ensure that that is where the money goes.
Other colleagues wish to contribute to the debate and we have had a full discussion on a number of issues raised by the proposed amendments, so I do not need to go into further detail on many of those points, other than to offer my strong support for amendment 26. As we move towards this fundamental change to our social security system, which Ministers themselves have described as the most far reaching since the introduction of the welfare state after the second world war, it is absolutely imperative that, if anything, more welfare advice is available, at least during the transitional period, as my hon. Friend the Member for Aberdeen South (Dame Anne Begg) has pointed out, because it will surely be needed. Today’s debate is reaffirming the fact that this will not be a simple benefit to administer in practice. If we are to maximise take-up and ensure that people receive their entitlements, which I know from our discussions in Committee is the goal of Ministers, it is vital that proper advice is in place to support people as they navigate their way through the introduction of the new system under the Bill.
Guto Bebb
It is a great privilege to be called to speak in the debate. Having been here all afternoon, I feel as though I am back in the Bill Committee. My hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) must again send my apologies to Downing street, because I have decided not to attend a party there in order to be here this evening.
I wish to speak about four specific issues and to new clauses 3 and 4 and amendments 23, 24, 27, 28 and 29. Before doing so, it is important to set today’s good and wide-ranging discussions in context. It is a privilege to follow the hon. Member for Stretford and Urmston (Kate Green), who spoke with great knowledge and understanding on these matters in Committee and in her contribution to the House today, but an important point that we must bear in mind is this: the reason we need to look at changing the current welfare system is that it has not worked.
I challenged the hon. Member for Edinburgh East (Sheila Gilmore) on the figures for the number of people in the United Kingdom who have never worked, which worsened from 2000 to 2010, and the figures I quoted for Scotland were supplied by the Office for National Statistics. The figures for the United Kingdom are absolutely deplorable. The number of people who have never worked increased from 572,000 in 2000 to 841,000 in 2010, when the previous Government left office. As a Member who represents a Welsh constituency, it is disappointing to state that the figures in Wales also show a deterioration. The context for the welfare reform package, therefore, is the fact that the current system is not working.
Sarah Newton
Does my hon. Friend share my utter frustration that over the past 10 years, under the Labour Administration, so many of the new jobs that were created in the economy went to people immigrating into this country, rather than to those who were abandoned by Labour in long-term unemployment without the skills and support to get back into work?
Madam Deputy Speaker (Dawn Primarolo)
Order. I say to the hon. Lady, and remind all hon. Members, that any interventions or contributions in the Chamber are supposed to address the whole House and that she should keep an eye on the Chair. Otherwise, she will not know when I am trying to get her to sit down.
Guto Bebb
My hon. Friend makes an important point. It is something that was reflected in the comments of the hon. Member for Edinburgh East, who, in relation to the aim of our welfare proposals to support people into micro-jobs, was quite disparaging of that type of job. Indeed, she stated on more than one occasion that we should consider the “type” of job that people will be able to take up as part of our reforms. I think that that is a symptom of the problem.
In my constituency of Aberconwy we have worked extremely hard to try to turn the tourism industry from something that is seasonal to something that is year-round. We have put a lot of emphasis on trying to ensure that the seaside resort of Llandudno is no longer somewhere that attracts people only for three months in the summer. By investing in conference facilities and so forth, we have tried to ensure that the hotel and service industries supporting tourism in the town work throughout the year. We have seen a huge growth in employment in the tourism sector in Llandudno over the past 10 years, yet that growth has been filled largely by people from eastern Europe who are willing to work hard.
From my point of view, the incredible sadness is that those individuals who have gone into what some Opposition Members would call “poor jobs” have ended up working themselves into positions of responsibility and management. I despair when I go out knocking on doors during election campaigns and meet people in the town who have lived there all their lives but have not grasped those opportunities. They live in a system that has allowed Opposition Members to forget their consciences because they have been able to say that they are providing money. There is more to the welfare state than providing money: we have to provide aspiration and a concept of self-reliance. We have to send out a message not just as a Government, but as a society, that work not only has to pay, but that it is the route to better oneself and one’s family. That seems to have been missing from the Opposition’s contributions to the whole debate.
Finally, it is also worth making quick reference to the comments made by the hon. Member for Bridgend (Mrs Moon), who is no longer in her place. She said that she was sincerely of the view that the Department for Work and Pensions should make no effort to hassle and harass people who are unable to take up opportunities to work because of child care issues and so forth. I was intrigued by the use of the word “harass” in relation to trying to support people back into employment. One aspect of the Bill that we must understand is that it is not happening in isolation, but hand in hand with investment in the Work programme, which will try to ensure that people are not left to fester on benefits or have an existence on welfare. The Government are trying to reform the welfare state, but we are doing so in a way that tries to support people back into employment, and that aspiration should be shared by all Members of the House.
New clause 3 makes an important point. I disagree with it as it has been tabled, but I think that we will need to look very carefully at how we deal with free school meals in the system, because it is an issue of real concern to parents. Yes, of course they want to take the opportunity to have a job, and of course they are reassured by the fact that the reforms we are putting in place will make work pay, but as part of that, if they have three or four children, how we deal with free school meals is clearly appropriate and does not work against the proposals to ensure that work pays.
I fail to understand why the Government are being castigated for not providing enough detail in the legislation. The reason that we have not yet done so is that this is an incredibly difficult proposition to get right, as Members on both sides of the House have agreed. I see nothing wrong with saying that we will endeavour to get it right and that we are going to ask the experts to look at the issue on our behalf. I am reassured by the Minister’s comments in Committee, when he stated categorically that our aim was not to make any family currently in receipt of free school meals worse off.
Ms Buck
The hon. Gentleman is arguing that the Bill will make work pay and that we should accept it without these crucial details. Does he accept that key child care charities, when making their submissions to the Government following the seminar, pointed out that 250,000 families would see their entitlements cut by £30 to £35 a week, that some would face a marginal rate of deduction of 100%, and that a lone parent on the minimum wage working for more than 24 hours a week would have a marginal rate of deduction of 94%? If we are being asked to believe that the Bill will always make work pay, we should be able to understand what its impact will be and have a chance to interrogate the Government properly.
Guto Bebb
That is an interesting contribution, but in truth I fail to see how those charities can make those calculations when we have not yet brought any proposals to the table. It is difficult to understand how those calculations were made, unless they were based on hearsay or assumptions.
Asking the experts to look at this on our behalf will enable us to introduce a set of proposals that will work. Also, hon. Members should be reassured by the fact that we will allow Parliament to look again at the proposals before they are enacted. That will allow scrutiny once they have been developed in detail. I agree with Opposition Members who have stated that the free school meals policy needs to work. Ultimately, there is no point in creating a reform to the welfare state to make work pay if it does not take into account the impact of the free school meals entitlement.
We need to be careful about new clause 4, because it fails to take into account the complexities that I have discussed with colleagues in the Department for Work and Pensions relating to the different arrangements for prescription charges in the various parts of the United Kingdom. Of course universal credit must take into account the need for some kind of support for prescription charges in England, but the situation is different in Wales and Scotland, where, for reasons best known to the Governments in Cardiff and Edinburgh, people do not need to pay for their prescriptions. I find that policy very odd. I can walk into a chemist in Llandudno and get a free prescription, whereas I would have to pay for it in London. Personally, I would be happy to pay a small contribution rather than getting support in that way.
The issue of passported benefits relating to prescriptions is an important one that needs to be looked at. We cannot end up with a system that builds compensation for prescriptions into a universal benefit for the whole United Kingdom without taking into account the complexity that I have just described. I applaud the fact that we are looking at this in detail and trying to introduce a policy that will be fair to all. I am surprised that the Opposition see the fact that we are giving these matters a great deal of care and attention as something to belittle, rather than something to celebrate.
As a Conservative Member, I would find it difficult to argue against the presumption of people saving for a rainy day. I find surprising some Opposition Members’ arguments that people who fall on hard times should not use their savings. If that had always been the argument in relation to every possible hard time, there might be some merit to it. However, we heard the bizarre argument from the hon. Member for Edinburgh East against someone who had had their working hours reduced having to use their savings rather than rely on universal credit, even though I suspect that she would be willing to continue with the current situation, in which someone who becomes unemployed, which is much worse, is expected to use their savings before being able to claim anything from the state.
Employment and Support Allowance
Guto Bebb Excerpts(13 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Chris Grayling)
I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate. It is a useful opportunity to put on the record, once again, the things that we are doing to make sure that this is a proper, fair and appropriate process.
I should like to correct the hon. Lady on a number of things that she has mentioned where she has not got her facts right or is a little out of date. First, however, I pay tribute to her for referring to the fact that it was the previous Government who introduced this system. She has set out in detail the context for the changes that we are putting in place. I agree with her that the system that we inherited was not adequate. It did not do the job properly and in many cases led to wrong decisions about individuals. I and my colleagues in the Department for Work and Pensions have spent the past year trying to sort all that out, so that we were ready for the start of the migration process. I shall explain to the hon. Lady in some detail how that was done.
I shall begin by picking up on some of the points made about Atos, the contractors. The hon. Lady mentioned that Atos was contracted, but, as she knows, it was contracted originally by the previous Government. We have not sought to change the contracting arrangements because, frankly, it would be massively disruptive to do so in the middle of the process. What we have sought to do is address the issues surrounding Atos that have led to concerns being raised. Let me be clear—Atos has no financial targets. A myth has been circulating for some time that our contractors are incentivised to find people fit for work. That is absolutely not the case and I am happy to put that on the record.
It is also not the case that there is a target of seeing 10 people a day. The only indicators and targets that Atos has relate to the quality of the work that it does for us. We have been careful to make sure that that is the case. It would be absolutely inappropriate to have a situation in which a third-party contractor was incentivised to reach a particular outcome in an area as sensitive as this. The hon. Lady can be reassured that that is not the case.
Before moving on to the details of the Harrington review, I shall address the hon. Lady’s query about the internal review, which was carried out by the previous Government, which made a number of recommendations to us, and with which we have decided, after much thought, to proceed. The internal review was carried out over the last 12 to 18 months of the previous Government. It looked at how the assessment was working and made a number of recommendations about changes. It did a number of things in particular, and there are two or three reasons why I decided to accept the recommendations of the previous Government and to implement that set of changes—they were introduced at the start of last month—to the assessment. The first of them related to mental health. The hon. Lady is not right on the mental health issue. This is a matter of great concern to me. I am acutely aware that mental health problems and fluctuating conditions are crucial, as she rightly said. Getting them right is fundamentally important. They are the most difficult areas of health challenge to deal with as we go through the assessment process.
We looked carefully at the impact that changes to the assessment recommended by the internal review would have on people with mental health conditions. The assessment we have carried out shows, in fact, that more people with mental health conditions will find themselves in the support group with long-term unconditional support than would have previously been the case. The set of changes we have just introduced should increase the number of people who receive ongoing unconditional support for mental health conditions. That seemed the right thing to do.
The second thing we did was to address the fact that people in between periods of chemotherapy could, theoretically, be found fit for work. We did not think that that was right and therefore we have excluded people who are in between courses of chemotherapy from any kind of return-to-work process, as well as those involved in chemotherapy at a particular moment in time. Again, that seemed the right thing to do.
On the change the hon. Lady referred to in relation to people who are blind, partially sighted or in wheelchairs, we had a situation that was inappropriate and wrong. Let us think of the motivation behind these changes. Fundamentally, we are trying to help people with the potential to work to get into work and not end up spending the rest of their lives on benefits. The internal review highlighted that, under the previous system, if someone was a Paralympic athlete with a university degree, there was no obligation for them to look for a job. That is not right. Some people who are blind or partially sighted and are out of work have long since adapted to that condition and have worked before. They should be looking for another job and it is wrong to say that that should not be the case simply because they are blind or partially sighted. I am not suggesting that that is what the hon. Lady was saying, but that is what the previous system provided for. We have introduced an adaptation factor into the assessment, so that a judgment is made about how well somebody has or has not adapted to their condition. That factor will have to be considered.
I want to give the hon. Lady more detailed context on the way in which that consideration now takes place. Over the past few months, we have made big changes to the whole process precisely because of the kind of issues she has rightly identified. I have no interest whatsoever in putting anybody who is not fit for work into a position whereby they are being pushed towards trying to find work. That is not in our interests as Ministers, as a Government, as individuals or as a society. Indeed, if somebody is not fit for work, an employer will not hire them, so we would achieve nothing from such an approach.
We inherited the internal review and looked at its conclusions, which we have implemented. We set up the Harrington review precisely because we had concerns of the kind that the hon. Lady has raised. She has rightly looked at the Harrington recommendations, of which there are 25. As we stand here today, all the recommendations bar, I think, two have already been implemented and the other two are due to be implemented by the end of this month. By the time we get to the point in June when the first big wave of people will be reassessed as part of the incapacity benefit-employment and support allowance migration, all of the Harrington recommendations will be in place. The ESA50 form has already been updated and the various other recommendations have all been put in place. I reassure her that there is no question of waiting for a point much later in the year before all that happens; it is happening now. When Harrington provided his recommendations, something I insisted on with officials is that we cracked on and delivered these changes, so that they are in place for the IB-ESA migration.
The most important of Professor Harrington’s key recommendations was about the decision-making process. We had a situation whereby, up until the past few months, the final decision about whether somebody was found fit for work was technically taken by a decision maker who was a senior member of staff within Jobcentre Plus. Those members of staff had tended to view the outcome of the Atos assessment—the work capability assessment—as gospel because it was carried out by a health care professional. They thought such assessments just had to be rubber-stamped.
We have changed that totally and have created a process through which the decision makers are told not only that it is their decision, but that they have to look at other evidence—for example, the hon. Lady referred to GPs’ evidence. Our decision makers are expected to look at other medical evidence submitted by the individual concerned and at the GP’s and consultant’s comments to form a rounded view. Indeed, if they believe that they do not have enough evidence, they have the freedom to go back and ask for more. That is a big change. We have effectively downgraded the role of the work capability assessment in the process. It is an important part of the decision, but it is no longer the only part of the decision. That will make a big difference.
Professor Harrington highlighted precisely the situation the hon. Lady identified surrounding mental health conditions. That issue is a hugely complex and sensitive area that needs to be dealt with carefully. Within the Atos health care professional network, Professor Harrington recommended that we introduce mental health champions to whom the assessors can turn for advice if they are uncertain about how to react to particular responses. Those champions are already in place. In fact, we have gone back to Atos and said, “We’d like some more of them please.” The numbers will be increased by the early summer. I am very keen to ensure that we provide a proper focus on and expertise in the mental health field.
Guto Bebb (Aberconwy) (Con)
On the decision makers and support for mental health, could the Minister provide some numbers and the geographical basis of those numbers, because it is an issue of real concern in north Wales?
Chris Grayling
In terms of the mental health champions, there are I think about 50 in the network. The number will rise further and is rising; they are being recruited all the time. By the time the process is finished, there will be one champion for about every two to two-and-a-half assessment centres. Someone will be constantly on call. In some cases, those champions will be present and, in other cases, they will be at the end of a phone line. The hon. Lady made reference to the Harrington recommendation on the individualised statement—the summary of the assessment. We want the champions to be involved when the individual concerned picks the phone up and says, “I’m not quite sure about this.” That view can be reflected in that statement, which will be introduced later this month. So that recommendation will have been dealt with as well.
Welfare Reform Bill (Instruction)
Guto Bebb Excerpts(13 years, 2 months ago)
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Jenny Willott (Cardiff Central) (LD)
I am not as cynical as the hon. Member for Stretford and Urmston (Kate Green)—I am sure that she does not mind my saying that—although I appreciate that the motion before us is limited and should not be broadened into a big debate about child poverty. There is a great deal of cross-party agreement that tackling child poverty and social mobility is extremely important. There is also cross-party agreement that child poverty levels in the UK are still worrying and that much work remains to be done to improve the situation. Those are areas about which I am sure we will have much more extended arguments in the Welfare Reform Bill Committee. I look forward to having those debates in the next few weeks.
We have learned that if we are really to tackle child poverty, we need to tackle social mobility at the same time. The two are so completely interrelated that working in silos will not be effective in the long term. It is not enough just to tackle the income coming into families; we also need to look much more broadly, including at the education and work opportunities available to the parents. The hon. Lady made the point about income levels in families, but we know that if children and their families really are to be lifted out of poverty, we need to talk about a lot more than that. I therefore welcome the fact that the Government plan to look at the issues in the round, combining the two areas together.
Guto Bebb (Aberconwy) (Con)
I agree entirely that bringing child poverty and social issues together is important. However, the Child Poverty Act 2010 does not apply in Wales, so we also need certainty that the social mobility elements will be looked at carefully in the Welsh context.
Jenny Willott
There are issues with child poverty in Wales. The hon. Gentleman and I represent Welsh constituencies. Child poverty levels in Wales are, I believe, higher than in other parts of the UK, just as incomes are much lower. If we are going to tackle the issue in Wales, just as in England and in Scotland, we need to look not just at welfare packages but more broadly at the opportunities available to children and young people, as well as their parents, so that they get the best opportunities. I hope that the Minister will say what she is doing with the Welsh Assembly Government and the Scottish Parliament. We need a lot of co-ordination with the devolved Administrations, because many issues affecting social mobility are devolved matters such as education. If we are to take the issue seriously, we need to ensure good communication and liaison between the devolved Administrations and Departments in Whitehall.
I look forward to debating the issue further in Committee, but I would be grateful if the Minister responded to a couple of issues this evening. First, can she let us know more about why she feels that combining the expansion of the commission with the proposed change in its remit will increase accountability or ensure that the Government achieve their objectives? For many years Governments have talked the talk, but they have not necessarily walked the walk. I would like the Minister to say more about why she thinks the change will make a difference by delivering good progress on tackling child poverty. I would also be grateful if she gave more detail about the timing of the child poverty and social mobility strategies, how they will interact with the establishment of the new commission and how the process will work.
I welcome today’s proposal and look forward to debating it in Committee in the coming weeks, in what I am sure will be significantly more depth.
Oral Answers to Questions
Guto Bebb Excerpts(13 years, 3 months ago)
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Steve Webb
I am very grateful to my hon. Friend. The issue, unfortunately, having dealt with the one-month cohort about whom I understand there is particular feeling, is that it is not only that group who face an increase of more than a year. When one looks at the neighbouring months, an obvious way of dealing with the problem is by delaying until 2020, but if we did that, we would soon rack up a £10 billion bill. That is the sort of difficult trade-off we have had to face.
Guto Bebb (Aberconwy) (Con)
16. What progress his Department has made on delivering new enterprise allowance support in Merseyside.
The Minister of State, Department for Work and Pensions (Chris Grayling)
I am pleased to inform my hon. Friend that the new enterprise allowance was launched in Merseyside on 31 January. We have a partner in place to deliver the mentoring support, which is being done through the local chambers of commerce, and we have appointed a provider for the NEA loans service. The early signs are promising: we have had nearly 400 referrals from Jobcentre Plus to the mentoring service, more than half of whom are now working with a business mentor, and some of the propositions for new businesses are close to fruition.
Guto Bebb
Certainly, in the 1980s and 1990s the enterprise allowance was a great success in north Wales and I look forward to a roll-out to our part of the world. If the enterprise allowance is rolled out throughout the rest of the United Kingdom, what proposals does his Department have to ensure that the universal credit will work in tandem with the enterprise allowance scheme in order to ensure that work pays, even for the self-employed?
Chris Grayling
It is important to say that we recognise the need to ensure that the universal credit works with self-employment. In the detailed design of the universal credit, we will ensure that it aligns with initiatives such as the new enterprise allowance, but more broadly we will make sure that self-employed people can also benefit from the support that the credit offers. They are a crucial part of our economic future.