Welfare Reform Bill

Iain Duncan Smith Excerpts

Wednesday 9th March 2011 Commons Chamber

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

I beg to move, That the Bill be now read a Second time.

The Bill before us today covers a number of areas, but I hope that it sets a new course for the welfare state. I believe it will enable us to reach out to some of the groups of people who have become detached from the rest of society—trapped, too often, in a permanent state of worklessness and dependency. For the sake of the House, I will go through the relevant clauses of the Bill. I am sure that colleagues on both sides of the House will want to intervene. I hope they will recognise that we shall get to most of the clauses that they want to discuss, but I will take interventions as and when they come.

The problem is that although from 1992 to 2008 this country saw some 63 consecutive quarters of growth, and 4 million more people were in employment by the end of that period, before the recession had even started we still had some 4 million-plus people on out-of-work benefits. The question is: where did all those jobs go? Under the previous Government, over half of the jobs created went to foreign nationals. This is not an immigration point; it is a point about supply and demand. There were a group of people in this country completely unable, it appears, to take advantage of that long period of growth and job creation. In essence, the key point about the Welfare Reform Bill is that it is intended to help that group.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am grateful to the right hon. Gentleman for giving way so early. I wondered whether, at the outset, he would like to comment on the reports in today’s Telegraph that the cancer charities are warning that his proposals for employment and support allowance will penalise those who do not recover soon enough. How could anyone think that that is a fair approach, in a Bill like this?

[Mr Duncan Smith]

I think the report was in The Guardian. I do not know whether it is in The Daily Telegraph.

[Steve McCabe]

The Telegraph too—you’re famous.

[Mr Duncan Smith]

I read The Guardian; he reads the Telegraph. What can I say? Times really are changing.

I have read the report, and I think that a number of elements in it are simply not altogether correct. I say that rather carefully because the point about the cancer aspect is that, as the hon. Gentleman knows, we inherited from the previous Government a process of reform and change to the employment and support allowance, which included the work capability assessment. We supported that, with the previous Government, because it was the right thing to do—to look at the 1.5 million people on incapacity benefit and check them over. We did not inherit any real allowance for cancer sufferers. It is important to make this clear. The Employment Minister, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), immediately accepted the internal reviews, but went further. He asked Professor Harrington to conduct a review of what we did regarding cancer patients and others, and the hon. Gentleman, being a generous individual, will know that we then incorporated a big change, so that a person in cancer treatment—chemotherapy—who is between treatments will go straight on to the support element. Thus the contributory aspect will not affect them, because while they are on the support element they will continue to be supported when they are out of work.

[Sheila Gilmore (Edinburgh East) (Lab)]

rose—

[Mr Duncan Smith]

One second. Would the hon. Lady forgive me? I have been asked to answer a question and I shall try to answer it. We have already made some very substantial change to support people in cancer treatment. The concerns of Macmillan and others relate to oral chemotherapy. I understand that. We have already asked Professor Harrington, in his second review, to undertake to give some advice on that. We have a slight problem with that from the start, because it is a fairly new form of treatment and a limited number of people are on it. So far, much of the medical evidence suggests that it does not affect people in the way that intravenous chemotherapy does; it is not as debilitating. We remain open to that evidence.

Although there is no provision for oral chemotherapy right now, my right hon. Friend the Employment Minister has made it clear that Professor Harrington will review the subject and take evidence, and we have asked the cancer groups to offer up their thoughts and advice, in addition to the medical fraternity. We will take account of what Professor Harrington says. As the hon. Member for Birmingham, Selly Oak (Steve McCabe) knows, last time we adopted all the recommendations in the professor’s report in their totality. So we are not in the business of trying to harm or affect cancer patients; quite the contrary. We made some very serious changes to what we inherited from the previous Government—I would like to think that they would have done the same—and we will continue to do so. I hope that answers the hon. Gentleman’s question. If he will let me get on with the rest of the Bill, I will.

[Naomi Long (Belfast East) (Alliance)]

Will the right hon. Gentleman give way on that point?

[Mr Duncan Smith]

I would like to make a bit of progress, if the hon. Lady does not mind. I think I have been pretty generous on that aspect. I will return to it.

The key is that I hope the Bill in general—we shall get to the more specific elements later—represents a whole new concept: a contract with people who are in need of support. For those who are able to work, work should pay, and for the most vulnerable in society we will continue to provide the support that that they need. I think it is our duty to do so. We can debate the levels of that support, but it is our duty none the less.

The Bill says to the taxpayer, “Your hard-earned money must be spent responsibly.” We sometimes forget, in our debates on welfare, that the taxpayer is also a player in this, because taxpayers—many of them on low and marginal incomes—are constantly being asked to pay in taxes towards support for others. That is fair, but we have a responsibility to ensure that taxpayers too are properly supported. I shall now outline some of the principles of the Bill, and then I will try to get through the various clauses.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

Forgive me; I want to make progress before I take more interventions, but I certainly will not shy away from interventions.

I note the comments by my opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), that his party agrees with more than

“three quarters of the principled and burden-sharing”

changes that the Government are making. Obviously, in his interventions he will make clear what he does not agree with. I have read his amendment and there will be some questions about some of that; I am sure we will get to that in a minute.

I intend to take the House through the Bill stage by stage. Let me start with universal credit. I shall begin with an overview, and then consider some of its detailed aspects. The universal credit obviously sits at the heart of this welfare reform. I do not think I would want to embark on this process if that were not the case. I believe it is a commitment to the public that work will always and must always be made to pay, particularly critically for that group of people who are probably the most affected—the bottom two deciles of society—who have too often found it really difficult to establish that work does pay.

I am pleased to say that those principles seem to have received support from a number of stakeholders, including Citizens Advice and the Institute for Fiscal Studies. The IFS said that by and large the measure was a progressive change. We anticipate that the universal credit will make some 2.7 million households better off. Over 1 million households will be better off by more than £25 a week—clearly, those will be down in the bottom deciles—and 85% of that increase will go to households in the bottom 40% of the income distribution.

We have agreed a package of transitional protection which will ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. The universal credit should also start making inroads into the couple penalty. Members on both sides of the House agree that that is necessary. I know that the right hon. Member for Birkenhead (Mr Field), who is in his place, has made great play of that over the years, and many of us have agreed with him.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I am listening with great interest to my right hon. Friend’s speech. Can he give me some further detail on how the benefit cap will be introduced?

[Mr Duncan Smith]

I was coming to that, but I shall touch on it now; I may make some further comments later. The principle is that people who are unemployed and on benefits should not be receiving more than average earnings. It is a matter of fairness, so that those who are working hard and paying their taxes do not feel that someone else will benefit more by not playing a full part in society. We recognise that there must be transitional arrangements. We will work intensively with the families affected once the cap comes in. We will help them move into work, to change their circumstances so that they are not affected. We will make sure that families who need transitional support will receive it. We will make more detailed statements about that later.

The idea is that we should encourage people back into work, and most of all that people who are in work and paying their taxes should feel that it is fair that while they earn and they work hard, others realise that the best way to increase their income is through work, not through benefits. That is a great principle.

[Mr Slaughter]

According to the right hon. Gentleman’s Department, 70% of those affected by the benefit cap live in social housing. The Housing Minister is building only unaffordable housing, because of the rent levels set. Is not the cap just a crude piece of social engineering, forcing people not to live in expensive areas, such as the constituency that I represent? Is it not directed at vulnerable people and the poorest in society, making it possible for them to live only where the Secretary of State chooses for them to live?

[Mr Duncan Smith]

With respect to the hon. Gentleman, it is not about where I choose for them to live. As with everybody else, it is about where their income and their ability to earn allow them to live. There are many people in London, for example, who work hard and who commute well over an hour to get to jobs because they cannot afford to live in parts of central London. We may argue that the cost of living in London is too high. One of the arguments that I would make is that the way that the previous Government’s local housing allowance was set drove up rents in both the private and the social housing sector. The hon. Gentleman should consider that what we are doing is reasonable. What we are trying to do is not to damage people, but to get them in locations where they can afford both to live and to work. I will return to that.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I shall make a little more progress.

May I confirm that we shall move from the universal credit making inroads into the couple penalty to a subject on which I am sure many right hon. and hon. Members will want to speak—child care costs in universal credit? I can confirm that support for child care costs will be provided by an additional element paid as part of the universal credit award. We will invest at least the same amount of money in child care as in the current system, and we will aim to provide some support for those making their first moves into work, so that the support available is not restricted to those working more than 16 hours.

This is an important point. Although there is a debate about it, we must remember that working tax credit gives that child care support to those in the relevant band. Universal credit will allow claimants to adjust their hours of work to suit their child care responsibilities. It will allow people to set their hours of work more in line with their caring responsibilities. It will cover all the hours that people are planning to work. We will be much more flexible, and we intend to work closely with relevant groups to take further advice about the rates that we will set. By the time the Bill reaches its Committee stage, we will be able to be more specific.

[Kate Green (Stretford and Urmston) (Lab)]

Can the right hon. Gentleman confirm that as a result of that further consideration, there will be no circumstances in which, as a result of child care costs, a parent could be faced with a marginal deduction rate of more than 100%, as some models prepared for us by Family Action have suggested?

[Mr Duncan Smith]

That is not our intention, and it is why we were are proceeding carefully and consulting about our proposals. The purpose is to maintain incentives to go to work. Universal credit is designed to encourage lone parents to go to work, but it recognises their need to meet their child care responsibilities. We can debate the various elements, but the principle is that the measure should be more than helpful to them. We will move on to the finer detail as we get to Committee stage.

As we increase support to make work pay, it is right to ensure that claimants do everything they reasonably can to find or prepare for work. As the House knows, we will tailor conditionality to individual circumstances, and require all claimants to accept what I call a claimant commitment. From the outset they will be asked to sign up to the idea that we will provide them with the necessary support and access to universal credit, but we will also expect them to recognise that the sanctions regime is applicable. It is easy to understand. If they do not comply with that as they go further through the process, they are likely to encounter that sanctions regime at key moments.

The toughest sanctions will apply to those who are expected to be seeking work but fail to meet important conditions. They should understand that if they keep on crossing a series of lines, they will invoke the sanctions regime. The problem at present is that the regime is often confusing. I have visited jobcentres a number of times—and I see on the Opposition Benches one of the Members who used to be a Minister in the Department. As he knows, if one talks to jobcentre staff, they will say that the problem is that when claimants reach the point where they are about to hit sanctions, it comes as a big surprise to many of them that sanctions will be imposed and that the situation is real and serious.

By letting claimants know much earlier and by introducing a regime that is easy to understand, with a simple tripwire process, they will know from the word go. That should disincentivise people from taking the wrong turns. Benefits will be taken away for three months after a first failure, six months after a second, and three years after a third. That will apply to those at the top level—in other words, those who are fully able to search actively for work and to take it. There are, however, other categories. The same conditions would not apply to lone parents, for example.

[Hywel Williams (Arfon) (PC)]

The rate of worklessness and the availability of jobs vary from area to area. What account will the sanctions regime take of that variation?

--- Later in debate ---

[Mr Duncan Smith]

The sanctions regime is about work being available. If work is not available, people cannot be expected to take jobs, so I give the hon. Gentleman the assurance that no one will be told that they are on sanctions if there is no work available. The sanctions apply only if a job is available, the claimant has been offered it and for one reason or another has not taken it, or if they are not complying with the details of what they are meant to be doing to seek work. That is only fair. People who pay their taxes want to know that everybody out there is seeking work. If they are seeking work sanctions should hardly ever apply, and in most cases they will not apply.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The right hon. Gentleman is making a thoughtful speech, and I know him to be a thoughtful and caring politician. I will give careful consideration to much of the Bill and I will not vote against Second Reading. Is it not spoilt, however, by what is happening to the mobility component of disability living allowance? I visited a residential home in Huddersfield, in Edgerton, only last week. The Bill will destroy the lives of most of those people, 60% of whom are in wheelchairs.

[Mr Duncan Smith]

I thank the right hon. Gentleman—although I am not sure: is he a right hon. Gentleman? [Interruption.] An hon. Gentleman—okay. That is something that his party should do—it is not for me—given his record of service.

Yes, I accept that there were issues. In fact, when we looked at the decisions taken at the time of the spending review, I reviewed the matter, after discussing it with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), who is the Minister responsible for these matters. We visited lots of care homes—my hon. Friend went out to see people and talk to them—and we realised that there was a lot of chaos out there about what should be given to people in care homes, what care homes themselves provide, and what local authorities believe it is their statutory responsibility to provide. Some of them say that they do not have any such responsibility to provide mobility services, but others say that they do, and provide access to such services.

We have therefore changed the provisions in the Bill, as the hon. Member for Huddersfield (Mr Sheerman) has probably noticed. That will be incorporated in the review of disability living allowance. Our objective is to get rid of the overlaps, genuinely to find out what can be provided at local level, and to figure out what the amount should be to support someone in a care home, bearing in mind that mobility needs in a care home are likely to be variable, and different from the needs of someone living in the community completely independently. Adjustments will be necessary, but my hon. Friend and I give the hon. Gentleman and the House an undertaking that we are going to try to figure out what the right answer is. We will work out a set of figures, and how they can be applied. That is the purpose of the review; I guarantee that.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Reflecting on what the Secretary of State has just said, does he recall that on several occasions, the Prime Minister has been given the opportunity to say that he has listened to the evidence and accepts that there is virtually no support for withdrawing the mobility component of disability living allowance for people living in residential accommodation? To what extent does the Secretary of State’s position differ from the position taken again and again by the Prime Minister?

[Mr Duncan Smith]

We are as one. I say that immediately, before I explain the position.

The reality, for the Prime Minister and for me, is that when we understand that certain facts are slightly different from what we thought they might have been, we always modify what we are doing to make sure that the effect of what we are trying to do is reasonable and produces the best results. All I can say to the right hon. Gentleman is that the Bill is not the same as the one that he would have seen some weeks ago. We are not knocking out the mobility component from care homes, and we have included it in the review of what mobility provisions are necessary and required for people in care homes. That is the real principle behind the measure. My previous comments were about finding the overlaps, and how we made sure that they did not cost people money in one area, but found those costs in other areas. That is the main point of the review, and I have asked my hon. Friend the Under-Secretary to make sure that that is the case. The Bill covers that, and I hope that most people will see that it is quite reasonable to try to recognise what that figure is.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I shall try to make progress, if hon. Members do not mind, because I have given way quite a lot on that subject.

Before the introduction of the universal credit we will introduce many of the changes to conditionality and sanctions that I discussed. Claimants, I hope, on that principle will accept the claimant commitment, as they will be subject to tougher regimes that are fair and reasonable. Turning to other benefit changes, we are making changes to the income support regime for lone parents before the introduction of universal credit. Lone parents who can work will be expected to claim jobseeker’s allowance when their youngest child reaches the age of five. We want as many people as possible to get help to engage with the labour market, and we know that about 80% of all lone parents are working or would like to work.

There will continue to be safeguards to allow parents to fit their job-search requirements with their caring responsibilities and child care availability. There are other relevant changes, too, and I accept that there have been concerns about them. I would be interested to learn the Opposition’s position on that. We are making changes to contributory employment and support allowance, time-limiting receipt to one year for those in the work-related activity group. There will be no change for those in the support group, as we have made clear, and people claiming income-related employment and support allowance will be unaffected.

I note the comments that have been made by the right hon. Member for Birmingham, Hodge Hill, who accepted, in his speech to the Institute for Public Policy Research, that time-limiting ESA is the right thing to do, but disagreed about the period—in this case, a year, whereas he was talking about two years. However, that is not clear in the amendment to the motion, so I wonder whether he could clarify the position. The amendment opposes the limit altogether, rather than the number of years. I would happy to accept an intervention from the right hon. Gentleman if he wished to clarify the position. [Interruption.] He will cover it in his speech—very good. I hope that we will understand that, as principles and practicalities need to come together.

I would point out to the right hon. Gentleman and to everyone else that the one-year limit is twice as long as that currently in place for jobseeker’s allowance. There has been discussion of people undergoing cancer treatment and others. That is best dealt with under the ESA regime and reviews, so that we can decide which groups are relevant, and which not, as we have done with some cancer patients undergoing chemotherapy. They have been taken out of that provision because they are in the support group. Professor Harrington’s review is the best way of doing that. We have established the principle of receipt for a year, and the rest is about the details of the conditions that best apply, and that can be dealt with in the Harrington review.

That best reflects the different nature of ESA and the different needs of those who claim it. However, we simply cannot pay those benefits indefinitely. I wonder whether that would have been the previous Government’s position if they had undertaken further reviews. For limited contributions under ESA, it would have been feasible for someone to receive ESA for their rest of their life. That was one of the big issues that we had to tackle.

[Sheila Gilmore]

rose—

[Mr Duncan Smith]

I will give way to the hon. Lady, because she has been persistent.

[Sheila Gilmore]

I thank the Secretary of State for giving way. ESA is not given indefinitely, because there are constant assessments and reassessments. I have constituents who have been reassessed twice in the past two years and who are due for another assessment. It is not true that someone who receives contributory ESA will receive it for ever without assessment. The assessment process should cover that, without an arbitrary cut-off date.

[Mr Duncan Smith]

I remind the hon. Lady that in the support group, the contributory element does not apply. It applies to people with finances that take them above the line. The income-based measure continues—that is not the issue. The issue is whether we think that people who have contributed for a certain time have the right to contribution-based benefit, regardless of their income, for a period of time. That is the debate. The income-based measure is exactly the same—it is not going to change, so that meets the hon. Lady’s concerns.

[Sheila Gilmore]

rose—

[Mr Duncan Smith]

I think that I have dealt with that.

There are other changes, including the consumer prices index uprating, in the Bill. We must get to grips with the housing benefit system, which ran out of control under the previous Government. I have a deep suspicion that they knew that before they called the election, and I sense that there were big differences about whether they would do something about this. Over the past 10 years, overall spending on housing benefit has almost doubled from £11 billion to £21 billion, which is a huge increase. I accept some of the arguments about the reasons for that—the fact, for example, that house building fell to a record low, and more and more people had to be moved into the social rented sector—but the reality under the local housing allowance regime was that we lost control of spending. We have therefore introduced a number of changes to the local housing allowance, including a move to annual uprating in line with CPI. Restricting uprating should enable us to keep downward pressure on rents. Only if an increase in local market rents exceeds the annual rate of CPI will the restriction apply. That will also be an important step towards the integration of housing support with the universal credit.

We accept that those changes will not be easy for some people, which is why we want to provide a great deal of transitional protection. Essentially, we have put up a total of about £190 million to smooth the transition to those measures for those who are most likely to be deeply affected. That includes £130 million in discretionary housing payments, £50 million to assist people with housing advice and removal costs and £10 million for homelessness prevention, particularly in London. That, coupled with the other changes that we have already made through regulations, where we are looking at making direct payments to those who are able to lower their rents and at delaying the point at which the measure comes in by some nine months, was a product of listening to people’s main concerns and trying to ensure that what we bring in is doable and manageable by councils.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

On the right hon. Gentleman’s point about housing benefits, what discussions has his Department had with housing associations and their lenders about the disaggregation of housing benefit under the universal credit and the direct payment to housing associations? They are deeply worried that, without that direct payment capacity across the piece, arrears will rise and lenders will become more nervous.

[Mr Duncan Smith]

We have had, and continue to have, those discussions, and I understand the concern. There is a debate, on both sides of the argument, about whether we basically continue with the principle that we should pay people and deal with certain elements of what they receive because they are not capable of doing so themselves, or whether we try to get people to the point where they are capable of managing their own money more and more. I recognise from the hon. Lady’s intervention that, on this matter, there is no absolute, but there is at least a debate on both sides, and that is simply where we are at the moment—trying to discuss the issue with those who feel that they would be most affected.

[Mr Stewart Jackson (Peterborough) (Con)]

Was it not a moral catastrophe and economic madness when, under the previous Labour Government, registered social landlords had no incentive to tackle welfare dependency, because their main funding stream was housing benefit? Under this Bill, registered providers will have an opportunity to tackle welfare dependency among their tenants.

[Mr Duncan Smith]

What we want from the Bill is to encourage people to get involved in the process—to help people to use it as part of the incentive of trying to make the right decisions about taking work and providing for their families.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Will the right hon. Gentleman consider the example of a married couple who are at work and have five children from previous marriages, but then lose their jobs because, for instance, they work for the local council? Because they have five children, they would get almost £500 of personal allowance and £200 of housing benefit, taking them over the £500 cap. Rationally, they might choose, because of the £500 cap, to split up their family so that there are three children and two children in two houses, each with £250 of personal allowance and £200 of housing benefit, making a global total of £900, when it would have been £700. Surely his policies of breaking up families and making demands for more and more social housing, alongside making people unemployed, do not add up to fairness or competence.

[Mr Duncan Smith]

I understand the hon. Gentleman’s point and can, I hope, assure him that as the Bill progresses, and as he will see as we reach Committee, our objective is to recognise that unemployment, for those who fall unemployed, is probably a temporary condition. He will understand that point more as we get into the detail, but trying to find some way of protecting such people through that process is critical to us, as the vast majority will be back in work within a set period: 90% of people will be back in work within a year. Most people will get through that process, and it is for us to ensure that the transition is met and dealt with, but I think that he will be very happy in due course to hear what we propose.

[Charlie Elphicke (Dover) (Con)]

Will my right hon. Friend give way?

[Mr Duncan Smith]

I am going to make a little progress, because I am conscious that we have a limit. Mr Speaker is looking at me benignly, but he might not look so benignly shortly.

It is time for fundamental reform of the social fund, which is poorly targeted and open to abuse. Some 17,000 people have received 10 or more crisis loans in the past 12 months, and we have already taken steps to limit the number of crisis loans for living expenses to three in a 12-month period. Those are important steps, because the fund has been somewhat out of control and is complex. The Bill will then pave the way for local authorities in England to deliver a system of assistance that should replace the community care grants and some crisis loan provision. This is a complex area, and many will know more about it than I do, but the key point is that we are trying—

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Will the right hon. Gentleman give way?

--- Later in debate ---

[Mr Duncan Smith]

In a second. I think that the hon. Member for Bolton South East (Yasmin Qureshi) was slightly before the hon. Lady.

The key thing that we are trying to do is to give local authorities an element of control over some of the process, including in particular what I call the crisis loans short-term element—the hiatus moment in the payments,—and some of the community care grants. The point is that, when the fund became only distantly linked to the Department, the telephone concept behind it allowed people to push up the number of claims, because they were not seen or understood, so their cases were not properly known and it was very difficult to decide whether they were true or false. Local areas will be far better able to recognise who such people are, what conditions they are in and what circumstances apply to them. Therefore, localising the process will be very important. Of course, huge swathes of it will remain centralised, but we feel that those two elements in particular will most respond to localisation.

[Yasmin Qureshi (Bolton South East) (Lab)]

I understand the Minister’s explanation of the social fund, but a linked point is that thousands of young children currently receive a free school meal, the only hot meal that most of them get, and that some people also receive free prescriptions. Can the Secretary of State assure us that those who receive free prescriptions and free school meals will continue to do so?

[Mr Duncan Smith]

That is exactly what we plan to do, but, because of the universal credit, we will have to be a little more specific, and we will be so in Committee. We are still looking at the best approach to take, but that is exactly what we plan to do. We do not want—the purpose is not—to disadvantage anybody who receives such support, but, because of the way the universal credit works, we will have to think through carefully how we achieve that. The principle behind the measure will remain that we want to support those who are in difficulty and receive support as it stands.

[Mr Slaughter]

Will the Secretary of State give way?

[Mr Duncan Smith]

I think that the hon. Member for Banff and Buchan (Dr Whiteford) was before the hon. Gentleman, and he has had a shot.

[Dr Whiteford]

Returning to crisis loans, my greatest concern is that people who go for them will not be able to buy essential items such as cookers and beds. That will push them straight into the arms of loan sharks and other high-cost lenders, and that issue has been overlooked. I also question the view that the increase in the uptake of such loans has not been down to the recession and the hardship that people have faced.

[Mr Duncan Smith]

The answer to the hon. Lady’s question is that budgeting loans will still be available for those cases. On the second question that she raises about crisis loans being down to the recession, the trend of upward claiming was on track and had started long before the recession.

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

With the telephones.

--- Later in debate ---

[Mr Duncan Smith]

My hon. Friend has made that point to me again and again. The key problem resulted from the changes that were made to dislocate much of the process from people—face to face—who knew what was going on in their communities. I think—I hope—this Bill will change that, because local communities will now be able to determine how best to deliver that critical service, and they will be closer, I hope, to people who need it. That is the principle behind it, and I hope the House recognises that.

The remaining discretionary elements of the social fund, as I indicated earlier, will stay in the wider benefit system, and we will introduce payments on account to replace alignment payments and the interim payments of benefit when crisis loans are abolished, a point that my hon. Friend the Minister has also made on several occasions. We will extend the provision of budgeting loans so that they are available to help people, as I said to the hon. Lady just now.

On disability living allowance, the personal independence payment and the changes to and reforms of them, I believe—and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke, in her consultations, has by and large obtained widespread agreement—that we need to start reforming disability living allowance. I think most people accept that the system we inherited does not deliver for some of those in genuine need, particularly given its confusing nature. Disabled people often tell us that the claims process is incredibly complicated and decisions are not consistent. We need to sort that out.

Many people—a significant number—still wrongly believe that DLA is an out-of-work benefit, so, as people said on several occasions during the consultation, “Being in receipt of DLA is a reason why you wouldn’t want to be getting involved with work; you might lose your DLA.” Such confusion is absurd, because that is not the case, so we need to sort the issue out, and I hope people recognise that it is important.

About 50% of those currently receiving DLA did not have to provide any additional evidence to support their original claim, and more than two thirds of current recipients have an indefinite award. That means basically that no one is ever going to see them again, yet their condition may change; it may worsen or it may get better. That is why we propose to replace DLA with a new system—the personal independence payment, or PIP. This benefit will be awarded on the basis of a more objective assessment of individual need; that assessment is vital. The money will continue to be paid to people in and out of work, and it will not be means-tested. I want to be clear that we do not intend to take away the mobility of people in residential care. As I explained earlier, this is about overlapping payments. The review will cover all that. The key thing is reform.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

There is a great deal of uncertainty about how children might be affected by the reforms to DLA. Is the Secretary of State proposing further consultation? Is there any information that he can give about future processes regarding children?

[Mr Duncan Smith]

We are consulting on that. However, this is going to be done later on, so we will have plenty of time to hear many more representations concerning children before we make any decisions. My hon. Friend the Under-Secretary is already talking to various groups about this particular issue.

[Jim Shannon (Strangford) (DUP)]

In relation to the indefinite awards, there is already a system in Northern Ireland whereby people have periodic checks, and I am sure that Northern Ireland is no different from the rest of the United Kingdom. If there is already a system of regular checks in place, why change that?

[Mr Duncan Smith]

Because it does not apply to everybody; it is very patchy. The honest truth is that no award we make should say to people, as has happened too often in the past: “You are in receipt of a particular benefit and we don’t want ever to see you again.” If the hon. Gentleman is arguing, as I think he is, that it is right to see people, surely we should be arguing that it is right to see them all to ensure that when their condition changes, that is met. That is surely fair both to them and to the taxpayer.

[Mr Tom Clarke]

Despite the right hon. Gentleman’s assurances, I ask him to look again clause 83(2), which says:

“The condition is that the person is an in-patient of a hospital or similar institution, or a resident of a care home, in circumstances in which any of the costs of any qualifying services provided for the person are borne out of public or local funds by virtue of a specified enactment.”

That is absolutely clear, but, with great respect, it is not what he is telling us.

[Mr Duncan Smith]

I am afraid that I do not agree with the right hon. Gentleman, because that is exactly what I was saying. The provisions gives us the opportunity to do just that; it does not specify what we do, but it tells us that this is what we are going to be doing. We are looking at all this because, in our view, we need to come forward with an amount that is relevant to the mobility that is necessary for people in care homes.

[Mrs Anne McGuire (Stirling) (Lab)]

The Secretary of State is playing with words. The hon. Member for Strangford (Jim Shannon) is right. Although reference is made to an indefinite award, these awards have always been liable to review. If someone has an irrecoverable disability such as permanent blindness, what is the value in regular reviews to assess whether they are still entitled to DLA or the PIP?

[Mr Duncan Smith]

As I said to the hon. Member for Strangford (Jim Shannon), it is assumed straight away that this is a terribly intrusive process, but in reality what goes on is patchy. For many people, their condition may well have worsened. Do we simply want to say that we should not speak to them or see them, and that it is therefore left up to the vagaries of the system? It is not built into the system that they will be seen.

[Mrs McGuire]

rose—

[Mr Duncan Smith]

Wait a minute. The right hon. Lady has made a point and I am trying to respond to it. As this is not built into the present system, it is left to decision making, which can be very ad hoc, about who someone sees and when they see them. All I am saying is that if we believe it is right to see people, we may then be seeing somebody whose condition has worsened, and surely that is an advantage.

[Mrs McGuire]

rose—

[Mr Duncan Smith]

I am going to press on, because I think that I have dealt with the right hon. Lady’s point. She may not agree with me, but I think that this is the right position for us to take.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

This is an extremely important point. Is the Secretary of State saying that someone who is deaf-blind will be recalled for regular checks under the regime that he is aspiring to put in place—yes or no?

[Mr Duncan Smith]

The detail of how that works will be looked at during the passage of the Bill. My point is that built into this should be the requirement that it is necessary to see people. There is the question of who and what conditions we can look at specifically, but it should be right that it is bound into the system that we are going to look at people. In some cases, it may be entirely self-evident that the individual’s condition has not changed and there is not much to be done; in other cases, an assessment may be required because their condition has changed quite fundamentally. I do not understand why the need to see somebody who may be in receipt of a benefit should be such an issue for people. It should not be worrying; it is part of a process. [Interruption.] Before right hon. and hon. Members object to that change, they need to ask themselves what they would say to those people whose conditions have changed for the worse and who are confused and never make it back to make a proper claim. This is a debate that we can and will have.

[Mr Byrne]

rose—

[Mr Duncan Smith]

I think, with respect to the right hon. Gentleman, that I have dealt with this point, and I am going to make some progress. [Interruption.] Oh, go on then.

[Mr Byrne]

I am genuinely trying to be helpful to the Secretary of State. He says that his Bill is incomplete and that he has not been able to furnish the House with full details on how the powers that he seeks from us will be put into practice. Will he consider exempting people with certain kinds of conditions from the need to go back to go through check after check?

[Mr Duncan Smith]

I say to the right hon. Gentleman, despite his best intentions, that the mess that the previous Government got into over incapacity benefit—[Interruption.] It is all very well for Labour Members to sit in opposition and pretend that nothing went wrong under the previous Government. We are picking up an incapacity benefit system in which they left people parked, never seen by anybody for years and years. All we are putting into the Bill is the requirement that people be seen to check on their condition. That has to be in their interests, and it is not in any way a problem that it should happen. Of course, if the right hon. Gentleman wants to try to make amendments as the Bill goes through Committee, we will always be happy to debate those and listen to him. My point is simply this: it is right to see people, and wrong to leave them parked for ever on set benefits. Seeing them is more humane than inhumane, and that balance is the way that we should go.

As we introduce our new welfare system, we will have to take steps to clamp down on benefit fraud, as Opposition Members know. The system that we have is inefficient and too often ineffective. Despite significant overlaps between benefit and tax credit frauds, fraudsters are subject to different treatment in their cases as they are handled by different groups—DWP, Her Majesty’s Revenue and Customs or even a local authority. The mess and overlap is enormous. The Bill introduces powers enabling a new single fraud investigation service to investigate and prosecute all cases of benefit and tax credit fraud. I hope that the House supports that process. We will ensure that anyone found committing lower-level fraud will face a tough minimum fine as an alternative to prosecution. For all other fraudsters, we will seek prosecution whenever we can. We need to ensure that fraudsters get the message that repeated criminal behaviour will not be tolerated, so those found to have committed fraud may face losing their benefit for certain periods; I have already dealt with the detail of the timings.

I simply say to the House, because this was raised in the Select Committee, that I am absolutely clear that not every problem with overpayment or difficulties with those payments was down to fraud. I fully accept that with the complexity of the system, officials made mistakes and that we were often too ready to badge people as fraudsters when in fact they were not necessarily fraudsters but caught up in a system that left them confused and perhaps not making the right or necessary level of statements to the authorities. This process is about separating those people out. A recent trial of a changed reconsideration process at Jobcentre Plus led to a fall of some 15% in the number of appeals being heard. The general view is that process will be sustainable and will work.

We are also changing child maintenance. Much of the current system is designed to drive people into acrimonious disputes during family breakdown. We should all agree that we want to take the heat out of such situations, as far as we can. That is why we are reforming the system and introducing a gateway to the statutory scheme so that parents consider making their own arrangements. We will offer parents a calculation-only service to make it easier for them to make their own arrangements. Of course, if they choose to take matters further, they can.

We are introducing measures to allow non-resident parents to pay through Maintenance Direct when the case is within a statutory scheme. That will provide further flexibility for parents. We need to keep the burden of the cost of collection under control. In 2009-10, the cost of collecting every pound was more than 40p. However, should the non-resident parent fail to pay in full or on time, we will move the case swiftly into the collection service and take enforcement action where necessary.

[Sheila Gilmore]

Why was it necessary to introduce provisions in the Bill before the consultation process has concluded? The consultation process on this matter is due to conclude on 3 April. Because the conditions have been published in the Bill, rather than being legislated on later, many people feel that the Government’s mind is set in stone.

[Mr Duncan Smith]

The measures in the Bill set the framework for the details. We will obviously work through the details in time for the Committee stage. It is reasonable to do that. The Bill does not set out the detailed prescriptions, as is right. I do not agree that the process is wrong.

In conclusion, the Bill is not just about balancing budgets, although that is part of the process. It is also about transforming lives and moving people—hopefully—from the entrapment and tyranny of doubt and dependency, to some kind of opportunity, enterprise and change to their lives that they can make themselves, through assistance and support. Surely it is our duty together to ensure that no one is written off, discarded or left behind. I believe that that is what the Bill will achieve. Notwithstanding criticisms and individual issues, I hope that the House will recognise that the purpose of the Bill is positive, and that it will transform the lives that we seek to transform.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, whilst affirming its belief in the principle of simplifying the benefits system and good work incentives, declines to give a Second Reading to the Welfare Reform Bill because the proposal of the Universal Credit as it stands creates uncertainty for thousands of people in the United Kingdom; because the Bill fails to clarify what level of childcare support will be available for parents following the abolition of the tax credit system; because the Bill penalises savers who will be barred from the Universal Credit; because the Bill disadvantages people suffering from cancer or mental illness due to the withdrawal of contributory Employment Support Allowance; because the Bill contains no safeguards to mothers in receipt of childcare support; because it proposes to withdraw the mobility component of Disability Living Allowance from people in residential care and fails to provide sufficient safeguards for future and necessary reform; because it provides no safeguards for those losing Housing Benefit or appropriate checks on the Secretary of State’s powers; because it fails to clarify how Council Tax Benefit will be incorporated in the Universal Credit system; because it fails to determine how recipients of free school meals and beneficiaries of Social Fund loans will be treated; and because the proposals act as a disincentive for the self-employed who wish to start up a business; and is strongly of the opinion that the publication of such a Bill should have been preceded by both fuller consultation and pre-legislative scrutiny of a draft Bill.”

I start with a word of thanks to the Secretary of State for meeting me and my right hon. Friend the Member for East Ham (Stephen Timms) a week or so ago to discuss the Bill. As I said to him then, we genuinely want to approach the vital question of welfare reform in a spirit of national consensus. We believe that if we can forge such a consensus it will be good for our country, it will reduce the deficit and, crucially, as he said before he sat down, it will be good for the fight against poverty in this country. We have been forced to table the amendment to oppose the Bill because it fails such fundamental tests that we believe the Government should go away and bring back a better Bill that will deliver genuine and lasting welfare reform.

We could begin to forge that national consensus by drawing the right lessons from the past 13 years. The Secretary of State presented his view, but elided one or two prominent features of the past 13 years, such as the fact that the number of people on out-of-work benefits before the depression came down by 1 million and the fact that the claimant count halved. We did not once, let alone twice, see unemployment go through the 3 million mark. We can draw important lessons for this debate from that period, the first of which is that if the Secretary of State wants welfare to work to work, we need more jobs. Labour consistently put that approach in place.

The Secretary of State said to his spring conference at the weekend—

[Mr Duncan Smith]

You were listening?

[Mr Byrne]

I not only listened carefully, but checked the transcript because I could not believe what the Secretary of State said:

“It’s not the absence of jobs that’s the problem.”

Given that five people are chasing every vacancy in this country and that 120 Members of this House have more than 10 people chasing every vacancy in their constituencies, the absence of jobs is very much a problem at the heart of his welfare reform programme.

[Mr Duncan Smith]

Does the right hon. Gentleman recall that I also said that notwithstanding the period of growth and the number of jobs created, more than half the jobs created by the Government did not go to British nationals sitting on unemployment benefit?

[Mr Byrne]

The employment rate under the Labour Government reached a record high and there were 64 quarters of consistent economic growth. The idea that welfare to work can work when the number of jobs is not growing is frankly laughable. There is an important lesson that we must draw from the past to get welfare reform right.

--- Later in debate ---

[Mr Byrne]

The Opposition want welfare reform that sticks. When so many details are unclear, the danger is that the Bill will unravel progressively as it comes into effect.

We have discussed whether the Bill passes the test of fostering ambition for families and have shown that a great number of questions remain unanswered. Let us now consider savers. All hon. Members want to nurture the ambition to save. The amount that people must save for a deposit for a house is heaven knows how much, but now that tuition fees have been trebled, more families have to save harder to get their young people into college. One might have thought, therefore, that the Government would provide more incentives to foster the ambition to save, but the noble Lord Freud told the House of Lords that

“the £16,000 savings threshold would extend to all households eligible for universal credit.”—[Official Report, House of Lords, 15 December 2010; Vol. 723, c. WA204.]

There we have it. The Government are so keen to foster the ambition to save that once someone has £16,000 in the bank—the price of two and a half years at university—their tax and in-work benefits are taken away.

[Mr Duncan Smith]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will give way in a moment, but first I want to tell the House what James Browne of the Institute for Fiscal Studies said:

“This is a much harsher treatment of capital than we have in the tax credit system.”

Will the Secretary of State tell us how that measure rewards savers?

[Mr Duncan Smith]

May I remind the right hon. Gentleman that his system became completely absurd, because it allowed people with huge savings and income to claim benefits? The previous Government’s system supported not the bottom two or three deciles but people further up the income scale. That is one reason so few people from the bottom income deciles got back into work, and why poverty was so high.

[Mr Byrne]

Does the Secretary of State accept that, on current figures, taking away the in-work benefits of people who have £16,000 in the bank would mean 400,000 families with children losing benefits? Surely that is not a good way of fostering the ambition to save.

[Mr Duncan Smith]

The right hon. Gentleman’s figures are incorrect. When universal credit comes in, the figure is more than likely to be no higher than about 100,000—[Interruption.] Wait a minute. I know where the right hon. Gentleman gets his figures from. Those 100,000, of course, will be transitionally protected, so they will not lose.

[Mr Byrne]

The Secretary of State can say that only because he is taking tax credits from so many families over the next two or three years. He has not given a guarantee for future savers. What will happen to their incentive to save under his new system?

[Mr Duncan Smith]

Will the right hon. Gentleman give way, because he needs to answer my question?

[Mr Byrne]

The Secretary of State needs to answer my question. The Minister of State told my right hon. Friend the Member for East Ham that getting rid of the savings cap would cost only £70 million. Will the Secretary of State therefore look again? He must recognise, as I do, that he is currently not fostering the ambition to save for hundreds of thousands of people.

[Mr Duncan Smith]

I completely disagree with the right hon. Gentleman on that, but I want to challenge him to give an answer to taxpayers, who ask whether the welfare system is about supporting people who are most in need, or whether it is about casting money wider and wider to people who can support themselves in particular periods. How much more money does he really want to spend?

[Mr Byrne]

I am afraid that the Secretary of State has still not provided an answer to my question—he still cannot tell us how he will encourage people to save. Tuition fees have trebled, and people in my constituency are asking, “How on earth do we encourage our young people to go to college, and how on earth can we afford to get our young people into university?”—[Interruption.] I know the Secretary of State does not have those challenges to face, but thousands of people in our constituencies need to save to get their kids to university. The regime that he is proposing will strip in-work benefits from them, kicking the ladder away from aspiration in our country.

[Mr Byrne]

I do not know what the hon. Lady’s constituents are saying to her, but many in my constituency live in fear of debt—they want not to burden their children with debt, but for them to get a first-class education, so that they can contribute to the future of our country.

The wider point that is emerging is that we do not know enough about how the Bill affects families and savers, but there is also a question over how it will affect the self-employed. Over the last few weeks, we have heard a great deal of pitch-rolling from the Chancellor and the Prime Minister, who are now worried about the damage that their last Budget did to our economy. All of us hope that the Chancellor can upgrade his growth forecast at the forthcoming Budget after doing so well over the last year, and the Prime Minister is now promising that his next Budget will be the most pro-growth Budget in the universe. He told his spring conference:

“At its beating heart this is still a party of start-ups, go-getters, risk-takers…We’re the party of practical men and women, people with a passion and a mission to build a business and see it grow...We are the party of enterprise.”

No doubt, then, the Bill is part of that plan—no doubt the Bill will make it simpler, easier and more encouraging for people in this country to start a business and to make that entrepreneurial leap. Well, my hon. Friend the Member for Stretford and Urmston (Kate Green) asked the Secretary of State about the self-employed on 9 February. To be fair to him, I think he recognises the problem. Surveying the position of the self-employed, he told her that

“we are conscious that that area is the slight blip in the system.”

This is what the blips in the system at the Federation of Small Businesses told me yesterday. Mike Cherry, the FSB national policy chairman, said:

“We are concerned that the Government has assumed that entrepreneurs with a new business will be paying themselves…and will therefore lose all benefits under the Universal Credit system…A measure such as this simply creates yet another barrier towards self-employment which is particularly unhelpful at a time when we are relying on the small business sector to grow the economy”.

So much for the party of enterprise.

[Mr Duncan Smith]

rose—

[Rehman Chishti (Gillingham and Rainham) (Con)]

rose—

--- Later in debate ---

[Mr Byrne]

I do not know whether the hon. Gentleman was in the Chamber when my hon. Friend the Member for Swansea West (Geraint Davies) spoke of the disincentives for families to stay together under the new regime, but if he wants to pretend that the Bill ends the couple penalty in the welfare system once and for all, perfectly and immaculately, I look forward to him setting out his argument.

[Mr Duncan Smith]

rose—

[Mr Byrne]

I think the Secretary of State wanted to say a word about the encouragement that he will provide for small businesses.

[Mr Duncan Smith]

The right hon. Gentleman raises the issue of the self-employed. I made this point to him privately and I will now make it publicly: they will fall within the universal credit. The point that I was referring to was how complicated and counter-intuitive the current systems have become, as he knows very well. We are seeking the best way to ensure that the right reporting structures are in place for those people, who will be inside the universal credit.

[Mr Byrne]

Perhaps the Secretary of State can tell the House this afternoon when those proposals will be ready for us to look at. [Interruption.] “In time for Committee,” he says from a sedentary position. We all look forward to seeing that.

It is now clear that for the self-employed, savers and families, this Bill at the very best poses more questions than it answers. The other question that the House has to ask the Secretary of State this afternoon is not about how we foster ambition, but about how we nurture compassion. How do we strengthen and reinforce our obligations to each other? That is something that we will hear a lot more about, when we talk about the reform of disability living allowance. What we know about the detailed reforms is not good. I welcome what the Secretary of State has said about the mobility component of DLA. I think that he has confirmed that he is withdrawing the proposal to cut £135 million from the mobility component of DLA. If that is true, it is welcome, because we are talking about a measure that the chief executive of Scope pronounced as “callous” and an

“assault on the most vulnerable”.

The rationale presented by the Minister of State has this morning been taken apart by 39 charities. I am afraid that I have to agree with the words of those campaigners who have said that

“many of these people”

—those in residential care—

“will be prevented from enjoying the freedom of movement that is taken for granted by people who are not disabled.”

Those are, of course, the words of the motion at the Liberal Democrats’ spring conference this weekend. I hope that together we may be able to prevail and get this measure dead and buried.

[Mr Byrne]

I am grateful for my right hon. Friend’s suggestion. The Secretary of State has £135 million scored against the saving. I now invite him to intervene and say whether that saving is off the table, or whether the measure is going forward.

[Mr Duncan Smith]

The right hon. Gentleman knows very well, because we had this conversation privately. As I assured him, and as I assure him now, what we have done is roll the proposal into the personal independence plan. We are reviewing what is necessary. I said to him then, as I have said to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that what we are looking for is the amount necessary for people who are in residential care. That is the commitment that I have given. That is the exact fact, that is how it remains, and all other things will fit around that.

[Mr Byrne]

The argument that the Secretary of State has rehearsed this afternoon is that the Bill will give him the flexibility either to withdraw or to reform the proposal, but what he has not set out for the House is whether he will reduce the savings target of £135 million that has been scored by the Chancellor against the measure.

[Mr Duncan Smith]

I have just given an answer.

[Mr Byrne]

I therefore look forward to the Government reflecting on this debate and perhaps giving slightly more clarity when the Minister winds up.

More alarming for many people is the lack of any safeguards on what the Government have in mind for the future of DLA, especially as we know that the Chancellor is determined to take £1 billion off the bill and then ask what kind of reform will be necessary to deliver his sums. Not for him the subtleties of asking what kind of reform might make sense. This is what the Multiple Sclerosis Society had to say about the measure: “We share serious concerns”—[Interruption.] It is incredible that when such organisations present their arguments, those on the Government Front Bench would rather talk among themselves than listen to what they have to say. This is what the Multiple Sclerosis Society said:

“We share serious concerns with a large number of other disability organisations that the Bill in its current form could lead to those most in need losing out on the support they rely on”.

The Secretary of State’s own equality assessment says that 13% of disabled households could be entitled to less help under the new system. He has simply not provided assurances on that point. When my hon. Friend the Member for Stretford and Urmston asked him about that, he said:

“I am sorry to be cagey about this. It is simply because this will become very clear when we publish the Bill.”

Well, here is the Bill, but where are the answers to the question?

[Mr Duncan Smith]

I am interested in what the right hon. Gentleman is saying. He is going on about the review and the issues around disability living allowance, but I notice that the Opposition make no mention of that in their amendment. I notice also that both he and his leader have said that they support the reforms to disability living allowance, so perhaps he would like to make it clear: is he in support of them or not?

[Mr Byrne]

Everybody is in support of reforming disability living allowance, but we have not said that £1 billion should come off the bill and that we should then work out what kind of reform would deliver those numbers. The Secretary of State must realise that this is why millions of people up and down the country are so alarmed about the reform proposals being put in place. Now he—or, indeed, his Minister—has a chance to say that he will listen to campaign groups that are worried about the proposals, that he will listen to amendments and that he will try to put in place safeguards to ensure that DLA reform is done in the right way. Yes, we should reform DLA, but we should not abolish it.