CPI/RPI Pensions Uprating

Hywel Williams Excerpts

Thursday 1st March 2012 Commons Chamber

[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.

Work Capability Assessments

Hywel Williams Excerpts

Wednesday 1st February 2012 Westminster Hall

[Huw Irranca-Davies (Ogmore) (Lab)]

I thank my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) for introducing the debate and I thank other hon. Members for the way they have spoken on behalf of their constituents on an issue of genuine national interest. We could all, across parties, cite chapter and verse on the people who come to our surgeries and citizens advice bureaux who have been made desperate by the system’s failings. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) made the point that if the same situation occurred under a Labour Administration—the Minister has inherited some of this, but the national roll-out before we have solved the problems is a significant issue—we would say the same thing to a Labour Minister: how do we change this to make it work?

I have not only seen constituents, but have regularly been to appeals and seen Atos do assessments as well. I have seen the process first hand all the way through, not only when the constituent arrives in my office and says, “What is happening? Why is my life being destroyed for months while my benefits are suspended? I’m taken off benefits and then seven months later, my appeal goes through successfully, along with a huge proportion of others.” I have seen the process, and as a former Minister who was previously employed in private industry looking at systems management, I can tell the Minister that this is not working. There is a genuine issue and the process and procedures are not fit for purpose—it is so damn obvious when there is this number of successful appeals.

The underlying principle that the Minister must work with is compassion, and we would support him in that, but the system lacks compassion. It has to be fair to both taxpayers—a point made earlier—and those who are going through the process. There are people who are unable to elucidate their circumstances fully when they fill in a form and who are not going to give 101% when they sit in front of somebody tapping into a computer keyboard without making eye contact. There are doctors who will not spend 15 minutes filling in the long narrative history of a medical condition that would lead to the right decision in the first place. Therefore, when people fill in the form for the first time, the vast majority do not fill it in in the detail needed. It is a tick-box exercise, and people have a lot of fear and misunderstanding over that. They tend to come to us, as MPs, after they have failed and are going in for the interview. We say to them, “Take someone in with you, because at least then they can give you some support and guidance.”

The system must be based on compassion, and at the moment, it is not. I say that because I have seen the Atos procedure and the interview, and interestingly, even though I went into the office in Bridgend to see it, I was not allowed to sit and watch an interview, even if somebody was willing, but I could see the appeals. The staff were very kind and as informative as they could be. I was allowed to watch an abbreviated recording of a mock-up interview, in which we saw minimal eye contact, because there cannot be eye contact when someone is tapping away at a keyboard and asking, “How did you get here today? Oh, so you did that,” and then goes on to the next question and the next. It is completely different from the panel. I was allowed to sit and watch it taking place for three hours, with four people—lay people, someone from a medical background and someone from a legal or judicial background—genuinely dealing with individuals with compassion.

I shall give the Minister an illustration of what should be happening to cut the cost for the taxpayer further downstream. A young chap walked in and sat down looking completely healthy. He was in his early 20s. He had someone with him, as one should have at an appeal. The panel started asking him questions. He looked completely fit. “Do you go out with your friends?” “Yeah, I go out with my friends.” “Do you socialise regularly?” “Yeah, I tend to go out every Friday night.” Based on those kinds of questions and the fact that he could walk a certain distance, that guy had been declared completely fit for work. When a gentleman on the appeal panel asked him where he lived, he replied, “Merthyr.” The panel just happened to know Merthyr. “Where do you go out in Merthyr?” “Town centre.” “When you go out socialising with your friends on a Friday night, where do you go? Do you go to clubs?” “No, we don’t do that. We just mooch around town.” “Where do you go?” “We get off the bus and walk right to the centre of town.” “How far is that?” “From the bus to the town centre is about 50 yards.” “I know Merthyr quite well, so do you then go to the rugby field?” “No, I don’t.” “Why not?” “Because if I walk more then 50 yards, I not only get out of breath, but collapse with the condition I have.” None of that detail comes out in the initial stages. I am not saying that we have to flip the process round completely, but its lack of compassion, tick-box nature, lack of fairness to the taxpayer in allowing costs to escalate down the chain and to the individual, and the concerns over good decision making and managerial process mean that it simply is not working.

My message to the Minister is straightforward. The worst thing in the debate would be for him to go into denial or to say that the system is bedding in or just needs a bit of tweaking. There are fundamental issues with the design of the process, and the number of appeals that are successful when the right information is in place and the sheer superficiality of the initial contact with Atos show that the system is not working. I note the earlier comments about whether Atos follows procedures correctly. Whether the problems are inherited or caused by the new work capability assessment or by the national roll-out, the procedures at the Atos end are simply wholly inadequate.

The Minister could save the taxpayer a lot of money if he got this right. He could save a lot of angst and worry, not only for those with fluctuating conditions, sensory impairment or other needs, but for those who are genuinely trying to be honest and fair about their condition and those who want to work if they are fairly assessed. At the moment there is a terror of going through the process. When people come to my office now, I cannot give them a lot of hope, as an MP, about fairness in the system.

My hon. Friends have mentioned the statistics and the national analysis by Citizens Advice and others. As much as the press loves to scaremonger and paint pictures that vilify some of these people and their “scrounger mentality”—“Get them back into work!”—there are many people who want to get back to work and many others who are being unfairly put through pain and anguish when they should not be, such as those suffering from long-term conditions.

Redesign the system, so that it has compassion and is expert-led at the gateway, and improve communication between the Departments. Do not go into denial. This is not a matter of blame. We do not blame the Minister, but we will if he does not solve the problem, because it is now on his watch. We will applaud him if he can turn this round, because we also want people back in work. The great innovation was to turn the system round to take the emphasis away from incapacity and towards capacity—what can people do? There is cross-party support for that, but the changes must be driven with compassion and fairness all the way through. At the moment, the system is wasteful, inexpert and, in terms of processes and management, shot full of holes. Please make it fit for purpose and we will be here in six months applauding you.

[Hywel Williams (in the Chair)]

Order. I have no power whatsoever to make it fit for purpose. The hon. Gentleman’s remarks should be directed to the Minister.

Oral Answers to Questions

Hywel Williams Excerpts

Monday 23rd January 2012 Commons Chamber

[Steve Webb]

I know that the hon. Gentleman had written his question before he heard the answer, but the social fund is not being abolished. The new system under universal credit of payments on account will actually be more flexible, allowing people to draw down their universal credit ahead of time. That will be more efficient than the current rigid system of crisis loans.

[Hywel Williams (Arfon) (PC)]

What discussions has the Minister had with the Welsh and Scottish Governments about the transfer of some responsibilities to local authorities and with what result?

[Steve Webb]

We are localising to English local authorities and, as the hon. Gentleman says, to the Scottish Government and the Welsh Assembly. We take the view—we have had a positive response on this from the Welsh Assembly—that the ability to shape a system for Wales is welcomed. Whether the Welsh Assembly chooses to do that through Welsh local authorities or at a national level in Wales will be a matter for it.

Benefits Uprating

Hywel Williams Excerpts

Tuesday 6th December 2011 Commons Chamber

[Steve Webb]

My hon. Friend is quite right. Not only does the pensions boost help women, but the pension credit boost helps women. Reflecting on the Opposition’s question about the combined effect of our measures, it is worth saying that the one measure excluded from that question was the VAT rise. They excluded that because men, on average, have higher incomes and higher spending. In particular, they have higher spending on VATables, so the impact of the VAT rise hits men more than women. For some reason, the Opposition did not count that measure.

[Hywel Williams (Arfon) (PC)]

May I welcome the Government’s decision on the mobility component? That is vindication of the wide campaign on this issue, which included my early-day motion and the 88-odd Members who signed it. On a slightly more incredulous note, would the Minister claim that the move to CPI and the large savings to Government expenditure are entirely coincidental?

Pensions Bill [Lords] (Programme) (No. 2)

Hywel Williams Excerpts

Tuesday 18th October 2011 Commons Chamber

[Hywel Williams (Arfon) (PC)]

Hon. Members will have noted that in his very brief speech the Pensions Minister did not mention my new clause 8. Debate on the first group of amendments is due to end at 7.45 pm. As a consequence, we will regrettably have only one hour and 15 minutes allocated to three further matters, including six Government new clauses and three Opposition amendments on automatic enrolment, and five Government new clauses and one Government amendment on money purchase benefits, before we reach my new clause. I do not know whether we will reach new clause 8, but I am, perhaps uncharacteristically, pessimistic. If we do not do so, the issue will, under the current proposals, come back to haunt us as we see the full cumulative effect of the change from the retail prices index to the consumer prices index basis.

I do not wish to open debate on my new clause now, but I want to put it on record, as I said on Second Reading, that the CPI has more often been lower than the RPI. The figures announced today show a small difference between the two measures, with RPI at 5.6% and CPI at 5.2%. That, of course, is no guarantee for the future. I will not detain the House further on this matter now, as I hope to able to speak to new clause 8. I just wanted to make those points at this juncture.

Question put and agreed to.

Pensions Bill [Lords]

Hywel Williams Excerpts

Tuesday 18th October 2011 Commons Chamber

[Gregg McClymont]

The hon. Lady makes a good point. That is an issue that my right hon. Friend the Member for Croydon North (Malcolm Wicks) often raises: averages can hide great disparities in social class as well as gender. That is a very important issue and I am sure the Minister is well aware of it.

The principle of reasonable notice is broken by the Bill. The Government’s concessions do not meet the fair and proper notice test, which is a principle of crucial importance. The second test we set for the Government was the proportionality test. They are unfairly and disproportionately singling out women aged 57 and 58 for harsher treatment. I do not suggest that they have singled them out deliberately—of course not—but I do say that they are not doing enough to compensate those women who have lost out in a birth date lottery that is not of their making. These women cannot, on the whole, afford the burden that the Government are placing on them, and they have certainly done nothing to deserve it. The Government should not make those women carry the heaviest burden of rising longevity—that is unfair and unjust. Some 500,000 women will still have to wait between a year and 18 months longer than they would have to reach state pension age. As I have previously stated, 330,000 women—one third of a million—will have to wait exactly 18 months longer, with the psychological and financial burdens that imposes.

[Hywel Williams (Arfon) (PC)]

There is a further, regional unfairness in relation to the availability of work. If people are to work for longer, where are the jobs to come from? That will affect the hon. Gentleman’s constituency and mine as well as those in the north-east of England and many other places. Also, if people are filling jobs at the ages of 65 and 66, the knock-on effects on youth unemployment will be substantial.

[Gregg McClymont]

The hon. Gentleman makes a very important point. If women and men are to work for longer, we have to look at the figures for employment. My understanding is that up to 38% of women aged between 56 and 60 are not in employment at the moment. That is a real issue, which I am sure the Minister is considering.

The Bill fails the two tests, in that it is unfair and there is an undue lack of notice. It also fails the proportionality test. Take the case of Laura Davis, who is 57, single and suffers from a heart condition and acute osteoarthritis, which hampers her mobility. She works full time but her commute is a struggle. She was hoping for a dramatic revision of the Pensions Bill’s terms. Laura, from Watford, Hertfordshire says:

“It is a shame the Government could not meet us half way and say that no one in my age group would be required to work longer than a further 12 months….That would have been a better compromise.”

That is a compromise that the Opposition suggest, and it is why we seek to amend the Bill through our amendments to part 1, which I shall now address.

Our amendments do meet the tests of due notice and fair treatment for those half million women, and would ensure that no women would wait more than an extra 12 months to reach their state pension age. Our amendments would also bring forward the uplift in state pension age to 66 for both men and women, from 2026 to 2022, because we recognise that, as the Minister and other Government Members have emphasised, this is a difficult issue. There are no simple answers, and tough decisions will have to be taken. Our amendments would balance the sustainability of the pension system with the need to treat all women fairly. They offer a substantial saving of £20 billion, but not at the expense of those women. As I emphasised earlier in response to some amendments, the difference in annual savings from our amendments versus the Government’s is equivalent to 0.1% of central Government spending in 2011-12, or 1.3% of the Government’s annual pensions budget. Given the undue, disproportionate and unfair burden being placed on such women, I do not think that is too high a price to pay.

--- Later in debate ---

[Jenny Willott]

I will make some progress first.

That problem makes it extremely difficult for small changes to be made. Given the financial circumstances, with the issues of debt and deficit that we have discussed, and the fact that other Departments are asking for money in the millions rather than the billions, convincing Treasury officials to be more generous cannot be easy. I hope that all hon. Members appreciate that the £1 billion going to these 500,000 people is a significant amount of money that has been found by the Government.

[Hywel Williams]

From the tenor of the hon. Lady’s remarks, it sounds as though she is satisfied with the concession that the Minister has achieved. I congratulate him on the distance that he has gone and I do not underestimate the difficulties. However, is the hon. Lady confident that the women in her constituency who will still be affected will be as easily persuaded as her?

[Jenny Willott]

I was just going to move on to the fact that, although I am delighted by the changes, in an ideal world I would have liked us to go further. I would have liked to see the cap closer to 12 months than 18 months, but we are not in an ideal world and the cost associated with that would have been significant. I understand that the cost of capping at 12 months would have been close to £3 billion, which would have been a significant amount of money to find. That would have been an uphill struggle. We have to appreciate the scale of the money that has been found to make things better for the women who are worst affected.

There has been a broad coalition campaigning on this subject, including Age UK, Saga and Members of all parties. Some have been extremely constructive in their campaigning and in the pressure that they have put on the Government, whereas others have been slightly less constructive at times. Some of what the Labour party has proposed today is, I think, unrealistic. It is unhelpful to the attempt to make as much progress as we would like towards helping the women who are most affected.

The Labour amendments tabled in Committee and today on Report that would delay the entire increase by two years are not sensible or realistic. Regardless of what the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East says, £10 billion would be a huge black hole in the public finances, and it would be a significant amount that the Government would have to find. [Interruption.] I am told that it would be closer to £11 billion. I am not going to start the debt versus deficit debate again, but there would be a huge black hole if we accepted a Labour party proposal that would require an unfunded promise of £11 billion.

--- Later in debate ---

[Malcolm Wicks]

That is the concern. Ironically, we are having this debate while the spectre of mass unemployment—as Liberals will remember, William Beveridge called it the giant evil of idleness—rears its ugly head, yet we are accelerating the increase in the age at which people will get their retirement pension.

[Hywel Williams]

The geographical variation is extremely gross if one adds in people who are economically inactive. The proportion of people who are economically inactive varies from place to place. Merthyr Tydfil is an obvious example in Wales. Last time I looked, the constituency of Witney had three economically inactive people searching for each job, while in the Rhondda that number was 154. That is a gross variation, and is not something to be disregarded.

--- Later in debate ---

[Steve Webb]

As the hon. Lady knows, the coalition agreement referred to the possibility of raising the state pension age for men from 2016 and for women from 2020. Obviously, what we have done since that coalition agreement was produced is sought expert legal advice. We were advised that delaying the equalisation between men and women would have been illegal under European law. That comes to the heart of one of the questions that has rightly been asked, which is, why do the changes affect women more than men? The reason is that they are two separate changes brought together.

The first is the more rapid equalisation, and the second is the equal treatment of men and women from 65 to 66. The equal treatment of men and women from 65 to 66, not surprisingly, affects men and women equally, so the thing that affects women more is equalisation. That is what the Pensions Act 1995 does. It leaves men’s pension age at 65 and equalises women’s pension age, raising it from 60 to 65. Lo and behold, that Bill affected only women, because equalising the pension age so that women get the pension at the same age as men rather than earlier affects women. Not surprisingly, a change that was happening in any case, which we have speeded up and which affects only women, added to a change that affects men and women equally, produces the expected result.

[Hywel Williams]

The Minister is making a reasonable case, as ever. I am rather more interested in his justification for the acceleration of the change. I hope that he will come to that shortly.

[Steve Webb]

Let me address that directly. What is striking as soon as one looks at the evidence on longevity is just how far behind the curve we are. When the male state pension age was set at 65, it was not so much a case of Lord Hutton writing reports on pensions as a case of Len Hutton striding out at the Oval. That was the era that we were talking about. In that almost 100 years, there have been incredible increases in life expectancy, yet the male state pension age will still be 65 for another seven years. That shows how far behind the curve we are.

The views of Lord Turner were cited by the hon. Member for Cumbernauld and by others, with some suggestion that we are breaching the Turner consensus. However, Lord Turner has breached the Turner consensus, if I may say so. He said in a news interview a couple of years ago, and the world has moved on even since then:

“If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age.”

That is exactly what we are doing, in line with the Turner consensus.

Oral Answers to Questions

Hywel Williams Excerpts

Monday 18th July 2011 Commons Chamber

[Chris Grayling]

I absolutely can give my hon. Friend that assurance. There are about 500 organisations from the voluntary sector involved, large and small, ranging from the Prince’s Trust and similar-sized organisations through to local projects such as a walled garden project in Yorkshire. There is space for any organisation that delivers excellence in getting people back to work, and those that are really good at doing it have every reason to become involved in a payment by results approach.

[Hywel Williams (Arfon) (PC)]

What steps are the Government taking to respond to the local variability in job opportunities, so that people are not penalised in the benefits system merely because jobs are not available in their area?

[Chris Grayling]

One of the things that we expect the Work programme providers to do is match individuals to vacancies. Even in Wales, as we know from the debate that the hon. Gentleman and I had last week, there are a significant number of vacancies. There has been private sector growth in the past few months, and unemployment has fallen. We have to ensure, through the work of Jobcentre Plus and the Work programme providers, that people on benefits take advantage of opportunities when they arise.

Worklessness (Wales)

Hywel Williams Excerpts

Wednesday 13th July 2011 Westminster Hall

[Hywel Williams (Arfon) (PC)]

I am pleased to have secured a debate on a pressing issue at an opportune time. Unemployment in Wales, particularly unemployment among young people, is worrying. The valleys, for example, have the highest benefit claimant count not only in Wales, but in the United Kingdom. The report, “Tackling Worklessness in Wales”, by Sheffield Hallam university, is therefore timely, and I commend it to hon. Members. It is makes for interesting reading, and it is condensed in both the introduction and the conclusion for easy reading—for some hon. Members.

Unemployment is only one side of the coin, as the titles of the debate and of the report indicate. Unemployment is in some ways merely a consequence of the lack of a job. That sounds self-evident, of course, but I sometimes get the feeling that some commentators—not all, by any means, on the Government side—see unemployment only as an aspect of a personal failing. Reading the tabloid press, it is sometimes portrayed as an aspect of personal wickedness, but obviously people cannot work if the jobs are not there or if their personal circumstances make it difficult or impossible for them to set up on their own. I left a secure job at a university to set up on my own six years before I was elected as an MP and fell in with a bad lot here. Six years of self-employment taught me a great deal.

There are two themes to my contribution: first, I will discuss the dire unemployment and economic activity figures; and, secondly and significantly, I will examine the need to take robust steps to create work. Sheffield Hallam university estimates that we need 170,000 extra people in work in Wales to bring us up to the standard of the best parts of the UK. That is a huge challenge. I immediately accept that the previous Government took great steps to increase the number of people in work. I know that this Government have that aim, but it is a huge number to reach.

[Jessica Morden (Newport East) (Lab)]

In the Select Committee on Welsh Affairs, which just met upstairs, the Secretary of State for Wales could not answer the question posed by the Sheffield Hallam report of where the private sector jobs will come from for the thousands of people coming off incapacity benefit due to the Government’s welfare changes. Does the hon. Gentleman agree that the Government should slow down and look at the dire consequences of what they are doing?

[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.

[Guto Bebb]

rose—

[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.

Pensions Bill [Lords]

Hywel Williams Excerpts

Monday 20th June 2011 Commons Chamber

[Hywel Williams (Arfon) (PC)]

The upshot of the Bill is that many people will have to work longer than they expected, and at short notice. That is the point. People will have made their plans, but they will no doubt have to be changed if the Bill goes through.

I am sure the Minister knows better than I that pension planning is a long-term business, and that is why there is such value in cross-party consensus, in stability, in fairness and in any change being slow and clear. Those are, I think, the Pensions Minister’s own views, and that is one reason why there have been constant problems since a previous Conservative Government broke the consensus on pensions almost 30 years ago—a consensus that the Turner changes in the 2007 Act re-established to an extent.

I, too, have received a lot of correspondence, with constituents and others expressing lots of concern at what they see arising from the Bill as a sudden change, which, they also contend, does not have broad support across the parties or among people throughout the UK. Some see the change as a fundamental break in the social contract between government and people, while others accept that as life expectancy lengthens so too must the length of the working life, but all object to the change in the implementation time scale that the Bill proposes.

Hon. Members have already said that an estimated 5 million people born between 1953 and 1960 will have to wait longer to reach state pension age. Although the wait for the majority of people will increase by less than one year, about 500,000 women born between October 1953 and April 1955 will have to wait more than an additional year and 126,000 women born between December 1953 and October 1954 will have to wait up to two years, losing about £10,000 in pension. Those are the facts as we understand them.

Men and women on low incomes who are reliant on pension credit and have no private pension savings will be most affected by the changes, and we have many such people in Wales. A great deal has been spoken about the gender effects of the potential changes, and women will be hit hardest, but there are also effects on disabled people and potential effects on ethnic groups.

We have also heard about class effects. I, too, have looked at the Age UK briefing, and it states for example that a higher percentage of people in social classes D and E are unable to work on, with one third of such women, at least, being in ill-health. Age UK also points out that awareness of the changes among people in classes D and E is very much lower.

There are also national and regional effects, which have had less attention. The changes will hit some sectors of society harder than others, and we in Wales, as in Scotland, have more people in those sectors than other parts of the UK. In Scotland, life expectancy is four years below the European average at 76 for men and 80 for women. Glasgow has the lowest life expectancy in the UK—71.1 years for men and 77.5 for women. These people will be severely hit.

[Jonathan Evans]

The hon. Gentleman is right about life expectancy numbers. Somebody with a fund who has a poor health record will get a bigger annuity than somebody who has a healthy record. How would he resolve that in terms of the state pension situation? He seems to be saying that he would not change the current arrangements.

[Hywel Williams]

A large number of people are unable to get an annuity in the first place because they do not have that sort of pension. Nobody is arguing against the fact that life expectancy is extending—of course, that should be welcomed. However, the fact that the change is being brought in quickly will particularly affect certain groups in relation to class, gender and where they come from.

The effects in Wales will be much more pronounced. That is demonstrated by figures for July 2009-10 on the composition of the work force taken from the ONS publication “Regional Trends”. The average proportion of the population in the UK who are managers and senior officials is 15.6%, the figure for the south-east is 18.3%, and the figure for Wales is 13%. Managers and senior officials will not be hit as hard by the changes, because they have other sources of pension income and live longer. In Wales, we have fewer such people who are able to depend on a decent pension and expect to live longer; unsurprisingly, the south-east has many more. Likewise, in the case of process, plant and machine operatives, the UK average is 6.7%, the figure for the south-east is 5%, and the figure for Wales is 7.3%. As regards people in elementary occupations, the UK average is 11.1%, the figure for the south-east is 9.7%, and the figure for Wales is 11.8%. Workers and future pensioners will be disadvantaged in Wales, as in the rest of the UK, but the effects there and in Scotland will be more pronounced.

Plaid Cymru Members welcome the continuation of automatic enrolment in pension schemes. Given the increases in short-term employment, casualisation and multiple part-time jobs, we share Age UK’s concern about the earnings threshold, particularly the possible negative impact of the three-month waiting period and its effect on staff who might not stay in the job for long enough. We have the same concern about those who have multiple low-paid jobs and therefore may not reach the threshold and be excluded.

In a speech I made some months ago, I expressed reservations about the indexation process, so I will not labour that aspect. My final point is about the Pension Protection Fund, which was raised by the hon. Member for Cardiff North (Jonathan Evans) and is referred to in part 3 of the Bill. The PPF came about partly as a result of pressure put on the former Labour Government by Members in all parts of the House arising out of the ASW steelworkers scandal: a very difficult situation in which the Government had to be persuaded—I use that word advisedly—to act. Unfortunately, the ASW campaign is still ongoing. I recently met some of the workers, and I have tabled early-day motions and attended meetings on the subject, as has the hon. Member for Cardiff North. In November 2010, the pensions specialist Dr Ros Altmann suggested possible ways in which the coalition Government could assist the ASW workers. Will the Minister tell us what progress is being made in that case? That would go a long way towards responding to the campaign by those workers.

Oral Answers to Questions

Hywel Williams Excerpts

Monday 13th June 2011 Commons Chamber

[Steve Webb]

I can assure my hon. Friend that certain disabled groups have a blanket exemption: those who qualify for the severe disablement premium are automatically exempted from these proposals.

[Hywel Williams (Arfon) (PC)]

There is a particular problem in rural areas, where the housing stock is inflexible and where it is difficult to provide rooms for under-25s, let alone under-35s, as the North Wales Housing Association pointed out to me recently. It fears the drift to HMOs—houses in multiple occupation—particularly in seaside towns and urban areas. Can the Government introduce any flexibility on this issue?

[Steve Webb]

Although HMOs are one response to the problem, young people will have a range of alternatives, which will differ from individual to individual. For example, one third of single people aged 25 to 34 live with their parents. I recognise that this is not an option for some, but it may be an option that others will take up. Some will use the Government’s “Rent a room” scheme—whereby an owner-occupier will rent out a room, from which they can get more than £4,000 tax free—and some may be able to rent a room from a social landlord, which is something that we are looking to explore more.