Welfare Benefits Up-rating Bill
Iain Duncan Smith Excerpts(13 years, 2 months ago)
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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, which stands in my name and that of my right hon. and hon. Friends, is about the renewal of what I believe is a principled welfare state based on affordability, integrity and fairness. For the convenience of the House, let me explain that I intend briefly to run through the features of the Bill, and I will then open up the debate to take interventions and deal with the amendment.
This Government inherited from the previous Government an unsustainable and costly system, and a welfare state that I believe delivered poor social outcomes, trapping people in dependency, as well as a poor deal for Britain’s taxpayers. My opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), needs no reminder of that as it was he who, when we arrived in government, told us that there was no money left. That was the result of a recession that was later discovered by the Office for Budget Responsibility to be deeper and sharper than anyone thought. The original estimate—
Mr Duncan Smith
I will give way in a moment. I am in the business of having the right hon. Gentleman justify his own position so I will be happy to give him a chance, but let me finish this point. The previous Government originally claimed that the shrinkage in the economy was 5.8%. In fact, as the OBR later pointed out, at 6.3% the shrinkage was deeper than we had ever seen before—the biggest shrinkage in the economy since world war two.
Mr Duncan Smith
I am glad that the right hon. Gentleman raises that point because a huge part of that is spending on pensions. He will know that we are spending more on pensions and provide a better deal for pensioners than his Government ever did. Until this Bill, the Government continued to raise welfare payments in line with inflation; this is the first time that we propose not to do so. That will take effect through the uprating order that should be laid before Parliament later this month. The Bill provides that discretionary working age benefits and tax credits will be uprated by 1% for a further two years in the tax years 2014-15 and 2015-16, if prices have risen by at least 1%. The schedule to the Bill sets out the benefit payments and tax credits in question, which are listed in full in the explanatory memorandum. By providing for those changes in legislation, we can provide certainty for taxpayers, the markets and claimants.
A number of exceptions to the Bill are not included, and a number of benefits remain outside the scope of the Bill. We are maintaining our commitment to the triple lock so that the basic state pension will rise by 2.5%. In April 2013, pensioners will see an increase of £2.70 on last year—far more than the derisory 75p that Labour gave them in 2000—and I stress again that we introduced the triple lock to guarantee that. Crucially, we are also protecting disabled people and carers. Benefits to cover the added costs faced by these groups will continue to be linked to price inflation.
Mr Duncan Smith
I will give way in a moment. That includes carer’s allowance, disability living allowance, and new personal independence payments, as well as premiums paid to disabled people receiving working age benefits such as the disability additions in tax credits, and the support group component of employment and support allowance.
Sheila Gilmore (Edinburgh East) (Lab)
The Secretary of State has stated that benefits have been raised in line with inflation, but he did not say that tax credits— 2,000 people who are affected by the Bill are in work and receiving benefits such as tax credits—have not been increased for the past two years. In fact, they have been frozen.
Mr Duncan Smith
It is interesting that the hon. Lady raises that point, because under the Labour Government, tax credits absolutely boomed. In 2005, there were increases of 58%. Overall, there were 340% increases in tax credits, 70% of which goes to child tax credits. The hon. Lady says that tax credits should continue to rise, but she can make that argument in due course.
Helen Goodman (Bishop Auckland) (Lab)
Will the Secretary of State admit that the social security budget is going up on his watch because unemployment is rising faster than his colleague expected?
Mr Duncan Smith
Never let a good fact get in the way of a good argument. Unemployment is falling, youth unemployment is falling, more women are in work than ever on her watch, and long-term unemployment is flattening out. The reality, therefore, is that we have better employment figures—there are 1 million new private sector jobs, which outweighs the public sector jobs we have had to get rid of. The reality is that the rate of unemployment, at 7.8%, is better than the EU average and better, almost for the first time, than the United States of America.
Mr Byrne
It is significant that the Secretary of State has just admitted for the first time that welfare spending on his watch is rising £14 billion higher than projected. Will he go a step further and confirm his understanding of the OBR figures that show that the claimant count is forecast to rise by a third of a million more than anticipated over the next few years? Will he admit that, yes or no?
Mr Duncan Smith
I should remind the right hon. Gentleman that the claimant count was forecast to rise but has fallen throughout all those forecasts. I know it is inconvenient for the Opposition, who would rather unemployment rose than fell, but unemployment is falling. Many countries in Europe would give their eye teeth for the employment figures in this country.
Derek Twigg (Halton) (Lab)
On disabled people, paragraph 24 of the Secretary of State’s impact assessment, which has just been published, states:
“Nevertheless, despite this protection…those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit, are more likely to be affected than those where there is not a person”
in that category.
Mr Duncan Smith
There are two good reasons for that. First, families in which there is some disability are often more likely to include people who have claims on other benefits. Some of those will be affected by the change.
Mr Duncan Smith
No. That is exactly the reasoning behind what the impact assessment says. The second reason is that, as part of employment and support allowance, the support group is protected. However, people who are described in the terms of the Bill as qualified under the Disability Discrimination Act 1995 and are not in the support group will find that they will be affected by the 1% increase. Therefore, by and large, the benefits for those who are disabled and qualified as disabled, and for those in receipt either of support payments in ESA, disability living allowance or the premiums in many other benefits, are being uprated in line with inflation—[Interruption.] May I finish? The only benefit that is not being uprated in line with inflation is ESA for those not in the work-related activity group. Some of those with disability will be affected because many in their households will be on other benefits. That is the reason.
Mr Duncan Smith
I think I have dealt with that particular point and will move on—[Hon. Members: “No!”] All right, I will give way to the hon. Gentleman again.
Derek Twigg
I thank the Secretary of State for giving way, but I am not clear about what he has just said. Will he confirm his impact assessment, which states that
“despite this protection …those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit”—
this is the crucial point—
“are more likely to be affected than those where there is not a person who describes themselves as disabled”?
Does he agree?
Mr Duncan Smith
I have just told the hon. Gentleman that the reality is that someone in those households is more likely to be on benefits, but particularly ESA. Let me remind him and the Labour party that they introduced the changes to the work capability assessment and ESA. The Government inherited, modified and improved those measures, but they are part of the reason why that is in the impact assessment.
Mr Duncan Smith
No. I have dealt with the hon. Gentleman’s point. The truth is that the Labour party is not only against the Bill but against what the Labour Government introduced just before the last election and the work capability assessment. Labour Members have opposed £80 billion of changes and reductions in every single vote and every single motion. I have dealt with his point. They must decide what they are in favour of when it comes to reducing the deficit; otherwise, they will be a laughing stock.
Charlie Elphicke (Dover) (Con)
Is not the bottom line that it is very difficult to justify 20% increases in benefits when earnings for hard-pressed families have gone up by only about 10%?
Mr Duncan Smith
It is worth pointing out to my hon. Friend that, when the Opposition originally heard about the Bill, the shadow Chancellor and my opposite number—the shadow Secretary of State—entertained the idea that what was wrong with the Bill was that it affected too many people who were in some kind of work through working tax credit. The speculation was that, somehow, they would be prepared to support, or not oppose, measures on those not receiving working tax credit. I notice that there is no mention of that position in the amendment, because they have been clobbered by their left and by the trade unions, their paymasters. Instead, there is a rag-bag amendment expressing opposition to a variety of things, which bears no relation to their previous position. There they go again, denying where they are.
The real question for the shadow Secretary of State and the shadow Chancellor, before they intervene again, is this: having opposed every single reduction to the deficit, what exactly would they do to cut it? They have not a single answer.
Andrew George (St Ives) (LD)
We have just heard that one justification for capping benefits at 1% is that, allegedly, benefits have risen significantly more than wages. In that case, would it not be wise for the Government to introduce a measure so that benefits do not increase by more than average wage inflation?
Mr Duncan Smith
As I have said, the Bill is about trying to bring that fairness back into the welfare payments process. As my hon. Friend the Member for Dover (Charlie Elphicke) has said, the reality is that in the period since the recession, payments for those in work have risen by about 10% and payments for those on benefits have risen by about 20%. We are trying to get a fair settlement back over the next few years. Eventually, benefits will go back on to inflation.
Andrew George
We do not know—the Secretary of State is probably more clairvoyant than I am—what food price inflation will be in, for example, 2016. We are being asked to predict what the circumstances will be in the context of the rather arbitrary figure of 1%. I simply urge my right hon. Friend to keep an open mind, and to have a means by which we will uprate that is fair to both benefit recipients and those in work.
Mr Duncan Smith
I accept the point about fairness—that was my point—but the reality is that the Bill is also about getting the overall welfare bill down and in kilter. As I have said on the radio and again today, the key is that we must reduce the deficit—that is at the heart of the measure. The Liberal Democrats joined us in the coalition. I should remind the hon. Gentleman that the No. 1 priority we face is reducing the deficit that Labour left us—the biggest deficit on record of any Government since the second world war. That is the reality, but Labour Members are in denial, so I will move on.
The reality is that affordability—
Mr Duncan Smith
I will give way in a minute—I want to make progress and I have been quite reasonable in giving way.
First and foremost, under Labour public spending spiralled out of control—[Interruption.] Yes, it did. That left behind the UK’s largest ever peacetime deficit, and interest payments running at £120 million a day—[Interruption.] It is interesting that as soon as I speak about what Labour Members left behind, they go into denial. They try and shout me down because they do not like the sound of it. The reality is—
Mr Duncan Smith
I will give way in a minute. The reality is that the shadow Chancellor and the former Chief Secretary deny that they left a problem. It was a nightmare, and they should apologise and tell us what they would do to put it right.
Mr Byrne
I am grateful to the Secretary of State for giving way again: he is being typically generous. No doubt he, like me, will have looked at the DWP benefit expenditure tables, which show that spending on out-of-work benefits between 1996-97 and 2009-10 did not rise, but fell by £7.5 billion. That is why Lord Freud said that Labour’s record in getting people back to work was “remarkable” and noted that Labour had tackled the long-term dependency on unemployment benefits that it had inherited from the Tories in 1997.
Mr Duncan Smith
I notice that the right hon. Gentleman is very careful to avoid telling the House how much Labour spent on tax credits as well. The important point that Labour Members need to realise is that of the total bill for tax credits, 70% had no involvement with work at all. Child tax credits had no work agreement on them whatever. The reality is that Labour spent 340% more on tax credits, 58% before the 2005 election and 29% before the last election, in the hope of buying votes to get it out of difficulty. The result was that the debt we had to pay off was costing us £30,000 every single minute. That is what we had to pay as a result of that expenditure—
Mr Duncan Smith
I am not giving way to the right hon. Gentleman again. I keep reminding him that he is the man who, when he left office, admitted that there was no more money left. He should apologise for that. Labour has opposed the £80 billion of savings that we have proposed. When he gets up again, he needs to tell the House what Labour would do to reduce the deficit and where it would find the savings. If he answers that question, I will give way to him.
Mr Byrne
My right hon. Friend the shadow Chancellor has set out far more about the difficult decisions that we would make than the Chancellor ever made. We have said that uprating of benefits should be slower; that there should be a two-year cap on contributory ESA; that there should be a reduction in disregards in tax credits; that there should be a benefit cap in different parts of the country; and that no one in this country should be allowed to live a life on welfare and languish for more than two years on JSA. The best way to bring the welfare bill down is to get people into work, not give them a failed Work programme.
Mr Duncan Smith
I remind the right hon. Gentleman again that we are getting people into work. Unemployment is lower than it was when we took office, youth unemployment is lower and we are getting more people into work. He said that he was in favour of the cap. That is very interesting, because he voted against the cap. He says that he is in favour of a number of issues, but he voted against the Welfare Reform Act 2012. He is against universal credit and the housing benefit changes. He has not agreed to any of the changes that we have made.
The overall bill for welfare rose by 60% between 1997 and 2010—
Robert Halfon (Harlow) (Con)
Is not the philosophical underpinning of this debate our wish to create a hand-back society, not a hand-out society? Is not cutting taxes on lower earners the best way to help those on low earnings, rather than recycling their hard-earned money through the benefits system?
Mr Duncan Smith
That is exactly the point. Labour Members think that helping people is about trapping more and more people in benefits. It is interesting that under the tax credits system, nine out of 10 families with children were eligible for tax credits, in some cases those with more than £70,000 in earnings. What a ridiculous nonsense they created.
Labour’s system was riddled with fraud and error. HMRC had to write off £4 billion in fraud and error payments and will probably have to write off another £4 billion, so £8 billion has been lost. This Bill is about finding savings of £1.9 billion, but as a result of tax credits Labour lost probably nearly £8 billion. That is the record of the last Government. They should apologise for the mess they left us in.
Ian Paisley (North Antrim) (DUP)
I appreciate the Secretary of State’s generosity in giving way.
I welcome the Secretary of State’s confirmation that pensions will not be detrimentally affected by the Bill. Can he confirm that in actual cash terms there will be an increase in benefits?
Mr Duncan Smith
That is correct. That is exactly what this Bill sets out. That will also be the case this year.
Andrew Gwynne (Denton and Reddish) (Lab)
I wish to take the Secretary of State back to the point made by my hon. Friend the Member for Halton (Derek Twigg) about disabled people. We have now gone from the Secretary of State saying that there is a blanket protection for disabled people to him acknowledging in the impact assessment that some disabled people will be affected by these changes. Given that recognition in the impact assessment, can he tell the House how many disabled people his Department estimates will be affected by these changes?
Mr Duncan Smith
I stand by what we said originally, and I say it again: in this Bill we have protected people on disability living allowance, as well as people in the support group on ESA. All the disabled premiums in JSA and so on are also protected. I do not know where Labour Members think they are going with all these points, because the reality is that they are basically opposed to absolutely everything. They would spend more money, they would tax more and they would borrow more, and the people who would suffer would be the British people who would have to pick up the bill. That is the reality.
I was making an important point about fraud and error. In essence, more than £10 billion was lost, and we do not even know how much was overspent, because Labour would not collect the figures. Writing off those debts wastes taxpayers’ money. To put this in perspective, the Bill sets out what we are doing at the moment to raise £1.9 billion, but that money could have been raised without difficulty had Labour’s system been better and more efficient.
It is also worth pointing out that, for many of the people Labour Members talk about, universal credit will improve their income dramatically. I have some very good examples of that. Under universal credit, a typical one-earner couple who have two children and rent their home will be £61 better off—including the changes today. A one-earner family with an income of £20,000 and two children will see a net gain of at least £34 a week. That will be a big boost for them and was not taken into consideration in the IFS figures.
The reality is that there is an issue about fairness, which we touched on just now. We should bear in mind that 70% of all households will not be affected by this legislation. Many of our constituents are taxpayers picking up the bill for all these costs, including the deficit and borrowing that the last Government left us. Over the last five years, following the recession, the gap has grown between what people in employment have been earning and what those on welfare have been getting. Those in work have seen their incomes rise half as quickly as those on out-of-work benefits—10% compared with 20%. That is not fair to taxpayers. Returning fairness to the system is critical, and it is one area that Labour refuses to acknowledge. Under the previous Government, taxes rose, borrowing rose and the deficit rose—and they left those bills for the next generation to pay. It is our job to get that under control. These are not decisions taken lightly or easily, but we have to take them and they are in denial.
The shadow Chancellor likes to sound off from a sedentary position. He likes to give it out but does not like to take it. I remember only a few weeks ago that he went around the studios complaining that we were too mean to him. If he does not like it, then he should stop making sedentary interventions.
Mr John Redwood (Wokingham) (Con)
Will the Secretary of State confirm that inflation can be particularly tough on people on low incomes who face small increases? Will he reassure people in the country that the Government and the future Governor of the Bank of England will be dedicated to getting inflation down, so that the value of benefits is not eroded more?
Mr Duncan Smith
Exactly. Mortgage rates are a critical component of what a household spends each year. Under Opposition plans, if interest rates had to rise because of their messy borrowing and spending, every 1% would cost another £1,000 on a typical mortgage. What have also done as a coalition, which we should be proud of and on which our coalition partners were very keen, is raise the tax threshold. That is taking more than 2 million people out of tax—people who were paying tax under the previous Government. That is serious help and an improvement of £165 a week for the average family.
Kate Green (Stretford and Urmston) (Lab)
I want to ask the Secretary of State about the people who are moving into low-paid work. Of the increase in employment in the past year, only 20% has been for full-time work, and so 80% has been for people who are by definition in part-time, and therefore probably low-paid, work. How will they benefit when he is capping the in-work benefits increase by just 1%?
Mr Duncan Smith
I will make two points to the hon. Lady. First, the vast majority of people who take part-time work choose to take part-time work. In all the studies we have—I am happy to let her have them; they are in the public domain—only 17% or 18% say that they did not want a part-time job, and wanted a full-time job, so she should not decry those who take part-time work. My second point is that that is why we are bringing in universal credit. Universal credit is about in-work and will be a huge support to those in part-time work, starting this year. The trouble with the tax credit system, which the Opposition are defending despite the fraud, the over-payments and the massive error, is that it lodged people into little silos where they could not move up, out of those hours. If a job moved from 16 hours to 17 or 18 hours, people did not do it because they could not afford to do it. Large numbers of lone parents, as she knows only too well, would rotate out of that and crash back out of work, because the job moved on and they could not stay with it.
The reality is that we are reforming the welfare system to make it better and easier for people who are in part-time work to have improved incomes. That is a part of this overall welfare programme that will deliver an efficient and even-handed system. It is right that the 1% applies across the board, including the tax credit system. As I said earlier about the overall numbers of people affected, of those working households, 20% of all households are affected by the Bill. If tax credits and child benefits were excluded, as the Opposition have prescribed, we would see a requirement to find a further £1.5 billion—yet another amount of money which they cannot say how it would be found. When in denial, like those on the other side of the House, one just votes against everything. A constructive Opposition would give us a proposal on how they would save that money.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Secretary of State has used the word “denial” twice. In previous Budgets and autumn statements, the Government talked about and acknowledged measured child poverty. However, in the most recent autumn statement and in the Bill, there is no mention of child poverty. Will he admit that under these plans child poverty in our country will go up and that that will come at a cost to us all?
Mr Duncan Smith
I will say two things about child poverty. First, we want to ensure that the figures published concern the years that this measure covers, and the year in which I will be introducing secondary legislation. The figures will be published next week in time for the debate—the Committee stage will be on the Floor of the House and everybody who is here today can take part.
Secondly, child poverty was calculated based on the median income line, and the previous Government lost control of it. Tax credits rocketed because they were chasing a moving line. As upper incomes rose, so did average earnings, and that is why they had to spend so much money. I remind the hon. Lady that they missed their targets in 2010 by 600,000 children in poverty. Since we have come in, the figures published this June show that child poverty fell by 300,000. I am not going to stand here today and try to claim credit for that fall. The figure fell because we saw the biggest fall in earnings for many years. Does that mean that because earnings fell child poverty has been solved? No, it does not. That is why we are consulting on a better way to measure child poverty.
Caroline Lucas (Brighton, Pavilion) (Green)
The Secretary of State brandishes the figure of a 20% increase in benefits in the past five years. In cash terms, jobseeker’s allowance has gone up from just £59.15 in 2007 to £71 in 2012. In other words, in each of those past years JSA has gone up by just £2.50. Is it not the truth that this is a mean and miserable piece of legislation from a mean and miserable Government?
Mr Duncan Smith
I hear the hon. Lady’s point; I have to say that I do not agree with her. Benefits have risen, but if she would like to talk to those who are in employment on lower incomes in her constituency she would find that many have seen absolutely no rise in their incomes at all, and some even less than that.
Jake Berry (Rossendale and Darwen) (Con)
On that point, I was approached by a member of Manchester constabulary in my advice surgery recently. He said, “How can you justify putting out-of-work benefits up by 5.2% last year, when I have had a pay freeze and I risk my life every day?” Is that not the nub of the argument? People who are in work have to be treated fairly.
Mr Duncan Smith
I agree with my hon. Friend. I want to make some progress because he is absolutely right. The reality that Labour will not face up to is that the programme it has put forward is hugely costly.
I want to deal with the programme that Labour put forward in the past week, which I think is in the amendment before the House. I looked at it and it seemed very familiar. I remembered something, looking back over the past 10 years. I went back and had a look at the programme that the shadow Chancellor and his then boss, the then Labour Prime Minister the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) came up with. [Interruption.] I seem to recall that they came up with a programme called StepUp. The right hon. Member for Morley and Outwood (Ed Balls) was an adviser at the time. [Interruption.] Well, he was certainly very close to him. Is he now denying—[Interruption.] Well, there we have it finally: he no longer wants to have the former Prime Minister as his friend. More than that, from his sedentary position, he will probably deny that, late in the hour while the then Prime Minister was troubled and in difficulty, he did not come by taxi or by car to consult him and help him out. A denial of a friend is pretty cheap, and I think we will remember that.
The reality is that the StepUp programme, on which the Opposition have clearly based this new programme, was piloted in 20 areas between 2002 and 2004. It was never rolled out nationally, and I want to quote from the evaluation report. The StepUp programme was all about giving paid employment to people who had been out of work for some two years. The report stated:
“StepUp produces a very modest improvement in job entries…but this is below the level of statistical significance.”
In fact, each of those jobs would have ended up costing £10,000—a massive cost for a very small regard. When they did it—[Interruption.] Wait a minute. When they did it—[Interruption.] They do not want to hear about it. They made a bogus announcement and now they do not want to hear how useless it is. The work prospects of under-25s in the pilot got worse as a result of this programme.
Here is what happened. The Opposition were in a hurry during the Christmas recess, worried about being attacked for having no proposals, so the shadow Chancellor said, “Oh, I remember something we did under the man who used to be my friend, but is no longer my friend. I remember we had this programme.” So they decided to put that out and propose raiding pensions savings yet again to pay for a bogus programme. If anyone thinks for one moment that it would help anybody at all, let me tell them that it is more than a joke—it is pathetic. And it is pathetic that they have done it to try to get themselves off the hook.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Has my right hon. Friend pondered this question? The Government are trying to ensure that the social security net works for people who need social security. When does he think that Labour decided that they were not interested in social security, only in bribing the electorate?
Mr Duncan Smith
It is in its DNA, so I am not sure when it started, to be honest. The tax credit system was out of control, as I said earlier on, because Labour was chasing a figure it could never reach, and as a result its spending was enormous.
In conclusion—
Mr Duncan Smith
No, I want to conclude. The right hon. Gentleman will have plenty of time to speak.
Mr Duncan Smith
Okay, I will give way in a second.
I want to remind the Opposition of what they have done. They have opposed £83 billion-worth of savings this Parliament. That is equivalent to adding another £5,000 of debt for every working family in the country. We hear much about taxing the rich, yet, in this Parliament, the richest will pay more in tax than in any single year of the previous Government—more tax on capital gains, more stamp duty—they will be less able to avoid and evade tax and they will pay more when they take out their pension policies.
We hear much about the bankers’ bonus tax, but Labour would have spent that money 10 times over. This is its great bankers’ bonus tax of £2.3 billion. Let us think about it very carefully. It would have overspent that to the sum of £25 billion—through reversing the VAT increase, more capital spending, reversing tax credit savings and reversing the child benefit savings. We are talking huge sums of money.
Mr Byrne
The Secretary of State has the temerity to criticise proposals we launched on Friday, when he is presiding over a Work programme that is literally worse than doing nothing. He stands before the House justifying the position of his Government, which is that it is possible to spend a life on welfare, but we say that is wrong. The way to bring welfare spending down is to get people into jobs, and when there are no jobs we invest in creating them.
Mr Duncan Smith
Our record on getting people into jobs is better than theirs. The difference is that Labour spent taxpayers’ money like drunks on a Friday night, with no care or concern for how effective it was. The work experience programme achieves what the future jobs fund did, but at a fraction of the cost. The Work programme is getting more people into work than the flexible new deal programme.
Mr Duncan Smith
No, I will not give way to the hon. Gentleman. I think he has a few apologies to make before I give way.
This was Labour’s legacy in government: 5 million on out-of-work benefits, one in five households with nobody working and 2 million children living in workless families—a higher proportion than in any other EU country. In opposition, they have learned nothing. Today’s amendment shows—if Members can be bothered to get to the end of it without falling asleep—that Labour would spend more, tax more and borrow more and let the next generation pick up the bill. The Bill is about picking up the pieces, sorting out the deficit and being a responsible Government.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House declines to give a Second Reading to the Welfare Benefits Uprating Bill because it fails to address the reasons why the cost of benefits is exceeding the Government’s plans; notes that the Resolution Foundation has calculated that 68 per cent of households affected by these measures are in work and that figures from the Institute for Fiscal Studies show that all the measures announced in the Autumn Statement, including those in the Bill, will mean a single-earner family with children on average will be £534 worse off by 2015; further notes that the Bill does not include anything to remedy the deficiencies in the Government’s work programme or the slipped timetable for universal credit; believes that a comprehensive plan to reduce the benefits bill must include measures to create economic growth and help the 129,400 adults over the age of 25 out of work for 24 months or more, but that the Bill does not do so; further believes that the Bill should introduce a compulsory jobs guarantee, which would give long-term unemployed adults a job they would have to take up or lose benefits, funded by limiting tax relief on pension contributions for people earning over £150,000 to 20 per cent; and further believes that the proposals in the Bill are unfair when the additional rate of income tax is being reduced, which will result in those earning over a million pounds per year receiving an average tax cut of over £100,000 a year.
It is good to see the Secretary of State fronting the Bill today and to see the Economic Secretary to the Treasury in his place. Where, however, is the Chancellor? It is a disgrace that he is not here in person. Where is he?
Mr Duncan Smith
The Chancellor told me earlier he was in Berlin making a speech—a long-term commitment —but he will be back in plenty of time for the winding-up speeches, and he is looking forward to hearing Labour make as much of a mess of it at the end as at the beginning.
Mr Byrne
I think it is surprising that the Chancellor is talking to people in Germany, rather than to MPs in the House about the disastrous consequences of his policies.
We know that the Chancellor and the Secretary of State do not see eye to eye on much, but they are jointly and severally liable for the mess and the haemorrhaging of the welfare budget that the Bill seeks to staunch. The Chancellor’s disappearance is a hallmark of the contempt that has been shown for the House today. The impact assessment for the Bill was published at noon. It makes radically different assumptions from the policy costings set out by the Chancellor last year. And now the Government propose to ram the Bill through the House in just one day of debate. They are terrified of scrutiny and exposure. It is turning into a hit and run on working families, and frankly we should not stand for it.
The Chancellor should have shown up, because the Bill is about clearing up the consequences of his failure. His reputation as a maker of recessions is now pretty well established. Every time he has come to the House, he has been forced to downgrade growth yet again, and since he took office he has battered the life out of the recovery that Labour left him in 2010. He is the first Chancellor for 35 years to preside over a double-dip recession. History will not judge him well.
But the Chancellor has a partner in crime: the Secretary of State, the man who has become the Comical Ali of the Government, the only man in the DWP who thinks that everything is fine and hunky-dory—a man who would put Dr Pangloss to shame. Every time he comes to the House, he comes with words of reassurance: everything on his watch is going according to plan. He blithely assures us that the Work programme is fine. We are told that universal credit is completely and utterly on track—not a hiccup to be heard—and that the benefit cap will definitely start in May. The only problem is that he is living in a fantasy land of his own, because everything is not okay, everything is not on time and everything is certainly not on budget. We were promised a Work programme bigger than any yet known to man. So big it could be seen from space. This is a programme that is so effective it is literally worse than doing nothing. It works so well that just three out of 100 people who passed through it passed into sustained jobs. It is a disaster.
Then, of course, we have universal credit—a policy that is now proceeding so smoothly that, it is fair to say, it has earned widespread support and praise from right the way across Government. Members of the Cabinet—perhaps even those sharing a building with the Economic Secretary—are now so impressed that they are telling anyone who will listen at the Daily Mail and elsewhere that it is a “disaster waiting to happen” and that the IT is “nowhere near ready.” The Secretary of State has so much grip on this project that the Prime Minister himself invited him to pack his bags and clear on out of the Department—a vote of confidence that I know rang around Caxton house, because senior officials are now leaving the Department as fast as they can.
Now, of course, we have the news that the benefit cap—which Lord Freud told the other place would absolutely, definitely, without question be introduced nationwide in April—will be introduced in just four London boroughs. This is a record of chaos, delay and impending disaster, and today the Government are inviting millions of working families in this country to pay to clean it up.
Mr Byrne
I would contrast that money with the £3 billion a year that the Chancellor is giving away to Britain’s richest citizens, in a tax cut that will kick in next year, at a time when the Government are cutting tax credits and when Britain’s working families are under pressure. How can the hon. Gentleman possibly justify that, either here or to his constituents?
Mr Duncan Smith
I would be grateful if the right hon. Gentleman will now acknowledge that all the OBR’s latest figures show that, under this Government, the wealthiest are paying more in tax than in any single year under his Government.
Mr Byrne
Like me, the Secretary of State will no doubt have seen table 2.1 of the Budget, published in March 2012, which clearly shows that in 2014-15, the cost of the tax giveaway will be £3.4 billion. How can he possibly justify that at a time when he is hitting Britain’s working families? Will he justify it now?
Mr Duncan Smith
I asked the right hon. Gentleman a simple question—[Interruption.] Actually, the shadow Chancellor should leave the right hon. Gentleman alone for a second; I think he has a brain in his head. Don’t listen to him; his advice to the last Prime Minister was hopeless. I want to ask the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) a simple question. Here are the figures: the wealthiest in Britain are paying more in tax under this Government than in any single year under the last Government. Does he agree with that?
Mr Byrne
We put the top rate of tax up. It is this Government who are cutting it, at a cost of £3.4 billion a year. How can the Secretary of State possibly justify the choices made by his right hon. Friend the Chancellor, a man who has supported him hilt and sword? How can the Secretary of State justify giving away £3.4 billion to Britain’s richest citizens in a tax giveaway when he is hurting Britain’s working families? Justify it now!
Mr Duncan Smith
Does the right hon. Gentleman agree or disagree that the OBR figures show that, under this Government, we are raising more in tax from wealthy people than in any single year under the last Government? Will he now admit that?
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
8. What his plans are for the future of housing benefit for people under 25 years old.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In June, the Prime Minister instigated a debate about the merits and risks of taxpayers continuing to meet the £2 billion bill that automatic entitlement to housing benefit for people aged under 25 brings. More work is required, and that discussion and debate is still going on.
Mrs Glindon
Last year, 10,000 young people became homeless because, through no fault of their own, they could no longer live with their parents. Will the Secretary of State give the House a categorical assurance that there will be no further plans in this Parliament to take away young people’s housing benefit?
Mr Duncan Smith
I repeat what I said in my first answer: there is a discussion and debate. The policy debates are likely to go ahead, but I have no plans as yet to implement any policy—there are further discussions to be had.
Meg Hillier
When the Secretary of State is having those further discussions, perhaps he will take account of experience in my constituency, where around a third of residents are under 24. Nationally, an estimated 400,000 households are headed by someone under 25 who claims housing benefit, half of whom have dependent children. When he is having those discussions, will he consider the impact on children of his policy proposal?
Mr Duncan Smith
That would go without saying—all impacts on various groups will be taken into consideration. The main point I would make is that, no matter what else, if we were to implement such a policy, we would have to take into consideration categories of people who might find it incredibly difficult, such as those described by the hon. Lady. There would not necessarily be carte blanche—there would be nuances and changes. However, as I have said, discussions are ongoing, and as she can see, no policy exists at the moment.
Andrew Bridgen (North West Leicestershire) (Con)
Does my right hon. Friend share my concern that less than 16% of the 204,300 young people under 25 with children who claimed housing benefit are in a couple?
Mr Duncan Smith
That is obviously a matter for concern, but also for wider change. We want to ensure that couples stay together, and our plans and changes with universal credit will help with that enormously. It is worth reminding ourselves of the situation left by the previous Government. Labour Members go on about our policy, but in the past decade the housing benefit bill doubled from £11 billion to £21 billion. We are reducing the overall rise, but housing benefit under this Government will still rise by around £2 billion, as opposed to the huge sum the previous Government would have instigated.
Hywel Williams (Arfon) (PC)
What would the Secretary of State say to the GISDA organisation in my constituency, which works with homeless and vulnerable people in marginal and rural areas uniquely through the medium of Welsh? It depends on housing benefit to move those young people into housing, employment and training.
Mr Duncan Smith
Up until now, many people have been trapped on benefits, as they will continue to be without change. The point has been made in this discussion and debate that many who are not on housing benefit but on low incomes find that they must make difficult decisions on where to live—on whether to stay at home or share. My point is simply that we are looking at how we bring those who fall under the benefit bill into line with others, thus giving them a greater opportunity to take work and profit by doing well from an early age. That is all the debate is about. It should surely be welcomed as a right debate to hold.
Ian Austin (Dudley North) (Lab)
It is interesting that, despite the Liberal Democrat campaign, the Secretary of State is not ruling the proposal out. Young people have been coming to London to get on in life since Dick Whittington. What does the Secretary of State say to the youngster who took the advice of his predecessor, Lord Tebbit, and got on his bike, moved to London, worked hard and paid taxes, but was made redundant? Should he lose his home and have to move hundreds of miles to live with his parents, where there might not be any jobs? All hon. Members want housing benefit to come down, but how would that promote aspiration?
Mr Duncan Smith
This Government are doing more to help unemployed young people back to work than was ever done by the previous one. I remind him that his Government left us with rising youth unemployment. They took all those who were unemployed for over 10 months and put them on a course. When those who were unemployed came off the course, they went back to zero, and therefore were never registered. We have a better record than they had.
Stephen Mosley (City of Chester) (Con)
2. What steps he is taking to prevent fraudulent universal credit claims.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We are investing £400 million in the next four years to reduce fraud and error as part of a joint operation with Her Majesty’s Revenue and Customs and the Cabinet Office. We are already making progress, and universal credit will enable even greater strides to be made. At the autumn statement, the inclusion of universal credit in the baseline—a critical moment—means we now anticipate savings from fraud, error and overpayments to be roughly £2.2 billion per year.
Stephen Mosley
I welcome my right hon. Friend’s response. Any money defrauded from the taxpayer is money taken from those who are most in need. Does he agree that universal credit is one way in which the Government are cracking down on those who are abusing the system?
Mr Duncan Smith
That is absolutely true. We were left with a series of benefits that too often were riddled with fraud and error. Not all of this is about fraud. Many people are receiving overpayments or underpayments when they should be receiving the correct amount. Too often with tax credits, people are chased at the end of the year, without their realising that they had received the wrong money in the first place. Universal credit will be kinder in the sense that it will be adjusted each month. It will help us save huge sums—some studies state £2.2 billion per year.
Dame Anne Begg (Aberdeen South) (Lab)
The Government’s decision to go digital by default—in other words, people will be able to receive universal credit only if they apply online—surely creates a greater chance of fraudulent activity. We all remember what happened with the online form for child tax credits. What guarantees do the Government have that universal credit will not be susceptible to online fraud and that the necessary checks will not take such a long time that they will delay payment? All of a family’s income will come through universal credit.
Mr Duncan Smith
We have taken account of that. I have had the opportunity to discuss this with the hon. Lady, and I am sure I will again. The reality is that digital by default does not mean that that is the end of it for people who are not online. On the contrary, we allow for those who are not online. We will help and support them as they make their claim, and it will be taken through the system. They will receive their money on time. For those in doubt, we will make payments anyway. We fully recognise the reality of the need for money and for it be sorted out afterwards—that has been taken into account.
Paul Uppal (Wolverhampton South West) (Con)
3. What steps he is taking to increase take-up of workplace pensions.
Nick de Bois (Enfield North) (Con)
11. What evaluation of the implementation of universal credit he plans to undertake.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today we are publishing a high-level framework for evaluating universal credit. A full programme of evaluation is being developed. This will include studies of implementation, covering themes such as claimant, staff and stakeholder experience. This, along with other analysis, will form part of a continuous programme of evaluation on the roll-out of universal credit.
Nick de Bois
Will my right hon. Friend reassure me that he will resist the last Government’s temptation always to launch things with a big-bang announcement, often followed by failure? In this case, will he carefully learn the lessons of the pilots he is launching in April?
Mr Duncan Smith
The process we are engaged in—by the way, I have fully briefed the Opposition Front-Bench team, so there are no secrets here—involves a pathfinder starting in April, and by the beginning of October we will start the national roll-out. The whole idea is to roll it out progressively throughout the UK, making sure that we learn the lessons as we roll it out. Whatever changes need to be made can be made at that point. It seems to me that that is the reasonable and right way to do these things, but I remind my hon. Friend that we are not only below budget, but on time—and it will be completed on time.
Mr Clive Betts (Sheffield South East) (Lab)
No doubt the Secretary of State will confirm that, following the introduction of universal credit, when people’s incomes change they will have to go to the local council to sort out their council tax benefit changes, and to the DWP to sort out their housing benefit changes. Two visits, or two contacts, will be required as a result of one change of income. What progress is the Department making in discussing with councils the need to provide a joined-up service so that, in future, people will need make only one contact when their incomes change?
Mr Duncan Smith
The hon. Gentleman is right to raise that issue. We are currently engaging in discussions with local authorities with the aim of ensuring that people receive a proper and comprehensive service, and I assure the hon. Gentleman that that is exactly what they will receive as and when the time comes to roll out universal credit. The point of universal credit is that all the other benefits, including housing benefit, will be combined in a single payment, which will simplify matters enormously for claimants and recipients; and councils will, through council tax benefit, have the opportunity to provide the best possible service for their tenants.
Sarah Newton (Truro and Falmouth) (Con)
12. What assessment he has made of Professor Harrington's third review of the work capability assessment.
Damian Hinds (East Hampshire) (Con)
17. What assessment he has made of the potential utility of jamjar budgeting accounts in (a) smoothing the transition to universal credit and (b) increasing financial inclusion.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Budgeting accounts will be a useful help for some claimants both in supporting transition to universal credit and in terms of broader financial inclusion, in particular for those claimants who have not managed their money monthly before—that is an important category—or who have not been responsible for their own housing costs.
Damian Hinds
I am grateful for that answer. The demonstration projects have shown the value of jamjar accounts, and commercially they could have much wider application. In the tendering process, will my right hon. Friend pay particular attention to the unique possibilities of credit unions, given their local base and links with housing associations?
Mr Duncan Smith
I will indeed. We are doing our level best; we are giving credit unions extra money and backing them enormously to get going. I think that they will develop hugely, and I hope that they will eventually replace the payday lenders—it is really important that we all agree about that. On the jamjar accounts and the way we are making these payments, everyone warned us that there would be problems if we paid housing benefit direct. We have trialled that in one of the demonstration projects and, importantly, only 3% of those who receive their housing benefit payments direct are having to revert to indirect payments because they have been unable to cope. That is a major advance from the existing local housing allowance.
Mr Clive Betts (Sheffield South East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I welcome the announcement made in the autumn statement last week that housing support for those living in supported exempt accommodation will be disregarded from the benefit cap. We have listened to the concerns of organisations including Refuge, Women’s Aid, the National Housing Federation and others. That announcement addresses their concerns, meaning that individuals in very vulnerable circumstances, including those fleeing domestic violence, will be protected.
Mr Betts
The Secretary of State will be aware of the direct payments pilot schemes, which are taking place before universal credit, before the bedroom tax and before the changes to council tax benefit. Is he aware that the pilots are showing an increase in rent arrears due to an increase in partial payments? If that remains the case at the end of the pilots, is he prepared to change policy to make it easier for rent payments to be made direct to the landlord?
Mr Duncan Smith
I disagree with the hon. Gentleman. The figure I gave in my response to the last of the questions showed that, in actual fact, the pilots are beginning to show categorically that if there is proper management by local authorities, the number of people defaulting is very low. That we can deal with. [Interruption.] Instead of playing games, paying this direct and treating housing benefit tenants as children, does he not think that part of the reason why they crash out of work early is that they cannot cope with the extra responsibility? By getting them ready for that responsibility before they go to work we are doing them a favour, and that figure shows we are supporting them.
Tracey Crouch (Chatham and Aylesford) (Con)
T2. Later this week, my constituent Danny Shingles will go into hospital to have a debilitating polycystic kidney removed. I am sure that the Secretary of State is aware that cysts on kidneys burst, poisoning the body and creating great discomfort. While preparing for his operation Mr Shingles is also having to appeal a decision to stop his disability living allowance and employment and support allowance, despite the fact that after his operation he will be entitled to have them again. This is causing my constituent much unnecessary stress, so will the Secretary of State review the guidance given to assessors to ensure that all factors, including the scheduling of operations, are taken into account when making decisions about whether someone is entitled to benefits?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
Will the Secretary of State set out for the House the projected rise in the dole bill as a result of the Budget?
Mr Duncan Smith
I do not believe that there will be a dole rise. The reality is that, under this Government, in the last year we have seen more people back into work; more private sector jobs than were ever created by the previous Government; and more women in work. Unemployment levels have fallen and youth unemployment levels have fallen. Perhaps the right hon. Gentleman would like to apologise for the total mess his Government left us.
Mr Byrne
The Secretary of State clearly does not know, so let me help him. The Office for Budget Responsibility says that the dole bill will rise by £6 billion as a result of his failure to get Britain back to work. To pay that price, he is proposing an uprating Bill which, I am afraid to say, sounds all wrong to me. It is wrong to take £4 billion from tax credits, it is wrong to take £300 million from maternity pay, and it is wrong that this strivers tax is going to hit 4,500 working families in his constituency. He should be fixing welfare reform, not flogging working families. Perhaps he would like to tell the House this afternoon just what share of the savings from this uprating Bill is going to come from working families.
Mr Duncan Smith
I must tell the right hon. Gentleman that our unemployment figures are better than those originally forecast by the OBR. I remind him—as if he needed reminding—that he left this Government with a 6% fall in GDP, an economy that was on the rack, and debt that was higher than that of any other country in northern Europe and rising every year, with £120 million a day being spent on the interest. Let me remind him of one other thing: he has voted against every single change and every cut we have made to deal with that debt. The Opposition are irresponsible and not fit for government.
Richard Graham (Gloucester) (Con)
T3. I welcome the introduction of universal credit next year. However, will the Secretary of State outline how my constituents without bank accounts will in practice be able to access universal credit? Does he agree with the suggestion made by Westgate ward Councillor Paul Toleman that Post Office accounts could be a useful alternative mechanism?
Mr Duncan Smith
It is correct that Post Office accounts would be a useful measure in ensuring that we can give people the right kind of choice and the right kind of places for their accounts. Under universal credit, people will be given an opportunity to begin to live their lives in the same way as they would live them if they were back in work. That is a critical and huge change that will allow them to get back into work rather than not have to make the changes that could change their whole outlook.
Jonathan Ashworth (Leicester South) (Lab)
T5. The Secretary of State failed to answer the substance of the question put to him by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) a few moments ago. Of those affected by the 1% uprating, 81% are women and 60% are in work. Is not the reality that this Government are clobbering the strivers?
Mr Duncan Smith
I remind the hon. Gentleman that in the autumn statement we yet again raised the threshold, which allow an extra £5 a week for families. Families on low incomes are better off and the average family is £125 better off as a result of the autumn statement.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
T4. Further to earlier questions on this matter, PATCH—Pembrokeshire Action to Combat Hardship—a charity that deals with poverty issues in west Wales, is concerned about the housing component of universal credit. Will the Secretary of State confirm how he intends to define “vulnerable tenants”?
Mr Duncan Smith
Vulnerable tenants will be defined as they always have been, as people who for various specific reasons are unable to cope. All those people will be considered carefully and all the mechanisms that we are putting in place—this is the point that makes universal credit different—mean that by ensuring that we identify those who have difficulties, we can get to them and sort out their problems rather than just dealing with the symptoms, such as their being unable to make their payments. We need to deal with why they are in debt, what is happening to their families and whether, say, the family is drug addicted and start to put those problems right before they crash out of work later on.
Dan Jarvis (Barnsley Central) (Lab)
T7. The DWP recently published an evaluation that confirmed a net benefit of £7,750 per participant from the future jobs fund, a scheme that originated in my constituency. That can be set alongside Barnsley college’s successful sector-based work academy, which is already demonstrating its effectiveness in getting long-term unemployed adults into work. Does the Minister understand why, when it comes to reducing long-term unemployment, my constituents have more faith in those schemes, which originated in Barnsley, than they do in the Work programme, which came from his Department?
Huw Irranca-Davies (Ogmore) (Lab)
In my constituency, organisations such as Yellow provide accommodation solutions for young people under 25 so that they can get into work. In his deliberations on the future of housing benefit for the under-25s, how will the Secretary of State identify those youngsters who have suffered traumatic family break-ups, dysfunctional families, and sexual and physical abuse and separate them from the others? It is a genuine practical question.
Mr Duncan Smith
I can assure the hon. Gentleman that we would make every effort to ensure that those most vulnerable people would not necessarily be included in a change like this. As I said earlier, this is not a policy at the moment; it is a consultation, and we are happy to listen to anybody about the groups they think ought not to be included in such a policy. I have an open door in that regard, and he is more than welcome to come and see me.
Andrea Leadsom (South Northamptonshire) (Con)
T9. Does my right hon. Friend agree that the best outcomes for children are where at least one parent is working? Does he also agree that all Government measures should try to support the best outcomes for children and families?
Mr Duncan Smith
I do agree with my hon. Friend. Universal credit should help that enormously through its disregard process, which I call the work allowance. The allowance of a couple with a child will be more than £6,000 when they go back into work; under the present system it is only £520, and under the Work programme it is a little more. The difference is enormous and will provide a real boost and a real income to families and support them at home.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Secretary of State will be aware of the ever-increasing number of workplace pensions that are wound up in mergers and takeovers, as happened at Whitbread where former employees have lost their pensions. Will he review the legislation in order properly to protect people’s pensions on mergers and takeovers?
Barbara Keeley (Worsley and Eccles South) (Lab)
Yesterday on the Directgov website, DWP job ID 438253 advertised for female presenters for Loaded TV working at home on internet babe chat. The advert has now been removed from the website, but does the Secretary of State think that DWP should be accepting and promoting jobs for internet babe chat? What does it say about this Government’s values on work?
Mr Duncan Smith
I remind the hon. Lady that it was this Government who changed the rules: under her Government, it would have been wholly acceptable, I suspect. The new system is in its national pathfinder and will, I hope, be rolled out before Christmas. We already have checks in place: more than 6,000 jobs, 60 attempted employer accounts and 27 bogus employers have been blocked so far, and we act swiftly if complaints are raised. I remind her that, on average, more than 5 million daily job searchers are working on this system. It will be a massive improvement and will benefit jobseekers, so the hon. Lady should not carp about the odd difficulty that arises. We get rid of the bogus jobs.
Stephen Lloyd (Eastbourne) (LD)
I congratulate the Government on extending Access to Work to disabled people on work experience and on removing the need for small companies who employ fewer than 49 people to pay for Access to Work. Will the Minister look seriously at extending Access to Work to disabled people on the Work programme because of the additional cost of their disabilities?
Welfare Reform Regulations
Iain Duncan Smith Excerpts(13 years, 3 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am pleased to announce that later today the Department intends to lay and publish the following draft affirmative regulations:
The Universal Credit Regulations 2013;
The Universal Credit (Transitional Provisions) Regulations 2013;
The Jobseeker's Allowance Regulations 2013;
The Employment and Support Allowance Regulations 2013;
The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013; and,
The Social Security (Payments on Account of Benefit) Regulations 2013.
Universal credit is the most significant reform of the welfare system for a generation. By removing the barriers and disincentives to work and making the system simpler. Universal credit will make sure work pays—especially for those on the lowest incomes, helping people to live independent lives. This will reduce worklessness, and encourage people to take personal responsibility. Universal credit will act as a “launch pad” for motivating people back into work, fostering confidence and self-esteem and helping to end the dependency culture; and significantly reduce the cost of fraud and error to the taxpayer.
Work can transform individual lives and society for the better and should be encouraged. Earning a wage is the best route out of poverty, but work also has many other benefits beyond an income; it promotes personal responsibility, boosts confidence, self-esteem, and motivation, provides a structure to everyday life, and gives people a sense of being part of a community. There will be continued financial support for individuals who cannot work. But for those who can work, no one should be consigned to living a life on benefits alone if they have the potential and capability to work.
These regulations are being laid to support the introduction of universal credit, following the passage of the Welfare Reform Act 2012. They reflect the financial information provided by my right hon. Friend, the Chancellor of the Exchequer, in his autumn statement on 5 December.
The Universal Credit Regulations 2013—set out provisions for universal credit, including entitlement, elements of the award, calculation of income and capital, and claimant responsibilities. The regulations also make provision for a benefit cap.
The Universal Credit (Transitional Provisions) Regulations 2013—reflect the Government’s decision to introduce universal credit from 29 April 2013 only for a small number of claimants in certain categories. This “pathfinder” will test the core proposition in a defined geographical area in Oldham, Warrington, Tameside and Wigan. The specific postcodes in which the pathfinder will operate will be set out in an order commencing the relevant provisions of the Act. The Government will only expand this scope via further regulations or a commencement order. The Government will bring forward further provisions to provide for periods beyond the pathfinder.
The Jobseeker’s Allowance Regulations 2013—remove income-related rules and provide for an award of jobseeker’s allowance based only on national insurance contributions. The 2013 regulations bring jobseeker’s allowance substantially into line with universal credit work-related requirements, and otherwise the provisions are very similar to the existing rules for contribution-based jobseeker’s allowance under the 1996 Regulations (SI 1996/207). A copy is available on the DWP website http://www.dwp. gov.uk/docs/a11-4001.pdf.
The Employment and Support Allowance Regulations 2013—remove income-related rules and provide for an award of employment and support allowance based only on national insurance contributions. The 2013 regulations bring employment and support allowance substantially into line with universal credit work-related requirements, and otherwise the provisions are very similar to the existing rules for contributory employment and support allowance under the 2008 Regulations (SI 2008/794). A copy is available on the DWP website
http://www.dwp.gov.uk/docs/a13-5101.pdf.
The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013—make provision in relation to the administration of these four benefits, in particular the making of decisions where there are disputes, changes in circumstances and doubts about awards; and in relation to rights of appeal. The regulations include a new requirement for claimants to apply to the Secretary of State for a decision to be revised before they can make an appeal. The regulations also make provision for electronic communications.
The Social Security (Payments on Account of Benefit) Regulations 2013—provide for the introduction both of universal credit advances and short-term benefit advances (for claimants of prescribed existing benefits), replacing existing interim payments and some crisis loans, and of budgeting advances replacing existing budgeting loans for some claimants.
The Government are publishing an updated impact assessment for universal credit. This also covers information concerning the Department’s obligations regarding its equality duty. A copy will be made available later today on the DWP website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/impact-assessments-and-equality/.
Under section 173(5) of the Social Security Administration Act 1992, the Universal Credit Regulations 2013 do not fall within the requirement to be referred to the Social Security Advisory Committee (SSAC). Nevertheless, given the scope and importance of these reforms, I invited the Committee to undertake a special exercise to scrutinise the regulations.
SSAC undertook a public consultation exercise in June 2012 as part of their review, and included consultation on the Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) and the Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013.
I also referred the Employment and Support Allowance Regulations 2013, the Jobseeker's Allowance Regulations 2013 and the Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013 to the Committee under section 172(1) of the Social Security Administration Act 1992. The Committee decided not to hold a formal consultation about these regulations but welcomed representations on any parts of those regulations insofar as they impact on the coherence of the overall legislative programme.
The Department will publish an Act Paper covering the Secretary of State’s response to the SSAC report on these regulations. A copy will be available later today on the Department’s website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
The Department has undertaken extensive stakeholder engagement throughout the development of the regulations. As a result the policies take account of the valued input we have received. This engagement is continuing as part of the development of delivery plans and guidance to support claimants and staff.
The draft regulations laid today and associated explanatory memorandum will be made available in the Vote Office and the Printed Paper Office and can be accessed from: www.legislation.gov.uk or from the DWP website: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
The Department will also publish today a policy briefing note on the final proposals for transitional protection for claimants moved from an existing benefit to universal credit during later stages of the migration process. A copy will be available later today on the Department’s website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
Jobs and Social Security
Iain Duncan Smith Excerpts(13 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Byrne
I know this is of great concern to my hon. Friend. There are more than six people chasing every job in his constituency. What his constituents need is a back-to-work programme that actually works, pulling out all the stops to get people into jobs, but I am afraid the story he has told from his constituency has become all too common across the country.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am sure the right hon. Gentleman wants to get the record straight. Will he now tell the House that in the last two years of his complacent Government, long-term unemployment rose by some 400,000?
Mr Byrne
I would be happy to trade arguments about our record with the Secretary of State, because while Labour was in office, the amount of money that we spent on out-of-work benefits fell by £7.5 billion. That is why his noble Friend Lord Freud described Labour’s record in getting people back to work as remarkable. It is a shame that he could not arrive at the same judgment about this Government’s programme, which is now in place.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Labour motion is one of the stupidest motions I have ever had to deal with. It says very little and nothing at all about what the Opposition would do if they were in office. It also lays yet more spending commitments on an Opposition whose programme is littered with huge cost increases.
I will take no lectures from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). I remind everyone again that he is the man who thought it was a joke to write a letter to the incoming Government saying there was no money left. [Interruption.] Opposition Members moan, but the reality is that the last Government bust this country, and we are having to pick up the mess. Furthermore, the right hon. Gentleman was hugely responsible for that mess, yet we have just got a lecture from him on the economy and on unemployment. The reality, however, is that unemployment is now lower than it was when he left office. We have higher employment. We have more women in work than ever before. We also have 1 million new private sector jobs. The reality is that he and his party left us with an utter mess, and we are having to take tough decisions to get ourselves out of it.
Mr Duncan Smith
I will take some interventions from the right hon. Gentleman after I have dealt with a few of the points that he made.
The right hon. Gentleman’s motion says that just
“two in every hundred people referred to the Work Programme in its first year have gone into work”.
That is complete nonsense. The Opposition have added, and then divided, the numbers in a very partial way, to come up with the worst possible figure, which is precisely what they wanted. They have added up all the total attachments, but taken into account only a small proportion of those for whom six-month job placements were found.
Mr Duncan Smith
As I have said, I will take some interventions after I have made a few rebuttal points.
If the Opposition had worked the figures out correctly, they would have noticed what my hon. Friend the Member for Enfield North (Nick de Bois) has pointed out: some 315,000 of the 837,000 people who were attached were not in a position to have a six-month outcome because they had not been on the programme for six months. The Opposition do not want to incorporate that fact into their figures, however. Those people will come through into the next set of figures that we produce.
Mr Duncan Smith
I will give way to the right hon. Gentleman after I have made this point. In fact, the total number in sustained job outcomes falls well within the target area that we were trying to achieve during the first year’s figures. If people want to gerrymander the figures, they should make sure that they gerrymander them all.
Mr Byrne
May I draw the Secretary of State’s attention back to the invitation to tender, which presumably he signed off? Under the heading of “Key Performance Measure”, which is in bold type and is the thing that we are interested in and debating, it says:
“Performance will be measured by comparing job outcomes…in the previous 12 months to referrals in the same period.”
The target for performance in the previous 12 months was 5%, and the Work programme statistics delivered yesterday showed that that target had been missed comprehensively.
Mr Duncan Smith
Yet again, the right hon. Gentleman has defeated the first point that he made. In other words, the figures that he has produced in the motion are wrong and he has just proved it. [Interruption.] If he wants to listen, he might learn something. No wonder he ended up as the man who told us there was no money left—with his kind of arithmetic, I am surprised that there was anything left at all. The reality is that in a year—if we want six-month referrals—a number of people will not have been in the programme for six months. So 315,000 people—[Interruption.] I am simply saying to him that the reality exists. This programme is on track; it is the best programme; and it will be putting some of the most difficult people back into work. Let me just deal with another point, which is the one about unemployment.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Member for Tottenham (Mr Lammy)knows that he cannot keep standing. I am sure that the Secretary of State has made a note and is going to give way shortly.
Mr Duncan Smith
I just want to pick up on one point and then I will happily give way to the right hon. Gentleman.
The same scant regard for general facts is apparent throughout the motion. The Opposition claim that long-term unemployment is now soaring, yet long-term unemployment nearly doubled in the two years before Labour left office, going from 396,000 to 783,000 in 2010. By the way, just so that the record is absolutely straight, the right hon. Member for Birmingham, Hodge Hill says that Labour had got spending down, but welfare spending rose by 60% under the previous Government.
Mr Duncan Smith
I will give way in a moment, but I said that I was going to make these points.
Labour’s policies then went on to try to hide the true scale of the problem, by automatically moving people off jobseeker’s allowance into training allowances or short-term jobs, thus breaking their claim just before they reached the 12-month point. The Opposition claim today that long-term unemployment is up by more than 200,000 since the Work programme began, but in actual fact, comparing like for like, which means counting all those who were previously hidden on training allowances and other support, the total number on jobseeker’s allowance is about the same as it was at the start of the Work programme, so that point is complete nonsense.
Mr Duncan Smith
No, the figures we stand by are those we published yesterday. The point that I was making today to the right hon. Member for Birmingham, Hodge Hill—[Interruption.] No, actually the figure would be more than 5%, but I am not claiming that. What I am saying is that we stand by the figures that we published yesterday, and I believe we are on track. The point I was making, legitimately, is that the right hon. Gentleman spent his time deducting some numbers from one bit and adding them into another to create some bogus figure that two in every 100 people were found sustainable jobs. That is complete nonsense.
Mr Duncan Smith
I will give way to the right hon. Member for Birmingham, Hodge Hill in a moment, but some of his colleagues behind him want to intervene.
Geraint Davies
Today, at that Dispatch Box, the Prime Minister said that 19,000 people out of 800,000 had gone into full-time work. I make that 2.3%, so the Secretary of State is saying that the Prime Minister is talking complete rubbish.
Mr Duncan Smith
I stand by the figures that we published yesterday—3.5% is exactly correct. The reality is that what I have said today is what we said yesterday. The point that I want to make is that the thing that has gone missing in all this is that, without the Work programme, some 207,000 people who had been long-term unemployed would not be in work today—they are. Now, we work with those 207,000 people, many of whom have serious problems and difficulties, to make them longer-term employed, which is the key. The Work programme is all about resolving that.
Mr Byrne
I am grateful to the Secretary of State, who is being characteristically generous in giving way. Broadly speaking, about 800,000 people were referred to the Work programme in the 14 months to which he extended the reporting period to flatter the figures, and 5% of 800,000 is 40,000. According to his figures, only just over 30,000 got into sustained jobs, so 10,000 more people would have got into jobs if the Government had done nothing. That cannot be a record of which he is proud; surely, he can admit that to the House.
Mr Duncan Smith
That is simply not true. I do not want to spend any longer on this, but the point that I made earlier about the right hon. Gentleman’s figures was that, when he concocted the figure of 200,000, he stripped out of his achievement figures the numbers for those who had been on employment and support allowance and so on and divided the total that was left, but those figures were in the other total. The Opposition have made a mistake and need to reckon that their adding up is wrong. The truth is that we have a programme that is helping people who are long-term unemployed.
Margot James (Stourbridge) (Con)
I visited EOS, our local provider in the black country, which gave me data to show far in excess of 5% getting back into work. Those data were more recent than the statistics that are being publicised, and I am very encouraged by what the Work programme is doing for people in the black country. Before 2009, the number of people on JSA in my constituency rose by 205%, which was a scandal. That figure is much reduced now.
Mr Duncan Smith
The truth is that the previous Government did next to nothing for the seriously long-term unemployed, and as I have said, we saw the figure rise by nearly 400,000. I want to come to that point in a second, but let me first deal with another comment made by the right hon. Member for Birmingham, Hodge Hill during his speech. He said that Labour’s unemployment scheme was a roaring success. I noticed that in Prime Minister’s questions today—I do not know whether I have got this wrong—the Opposition quoted a report that they said had been done by the DWP.
Let us deal with that point now: both the future jobs fund and the flexible new deal were rushed through just before the election. After all the years for which Labour had been in government, it suddenly discovered an urgent need to start to spend money on some programmes. Let us deal with them one at a time, and with the future jobs fund first. The Leader of the Opposition quoted a DWP report earlier and said that that scheme had a net benefit to society of £7,750. What he did not say—I suspect that he needs to speak to the right hon. Member for Birmingham, Hodge Hill next time he gives him something to say at Prime Minister’s questions—was that the report goes on to state that
“these estimates exclude the cost of administering the programme and the cost of hiring and training participants.”
I wonder why he did not quote that.
Using any one of the more conservative estimates, as used in the report in table 5.3 on page 62, puts the benefits at £4,650, less than the £6,500 that it cost to place people in those jobs. So the right hon. Member for Birmingham, Hodge Hill and the Leader of the Opposition unwittingly misled the House and the future jobs fund lost money, rather than rescuing the situation. The report goes on to state that
“it is notable that under all of the scenarios considered in this analysis, the programme is estimated to result in a net cost to the Exchequer”
and
“depending on the rate of decay there might never be an estimated net benefit to the Exchequer.”
What the Opposition are saying is fundamentally wrong: their scheme cost money and did not as a net benefit get anything back to constituents.
Bill Esterson
The Secretary of State is talking about a completely different world that is divorced from the reality for my constituents. My constituents who were on the future jobs fund had real jobs at the end because the programme worked. They are now missing a programme that works, because the Work programme is designed wrong and because the jobs are not being created. He needs to talk to his friend the Chancellor and get the jobs created, as well as getting the Work programme right. Is that not the reality of what is needed?
Mr Duncan Smith
Of course it was a different world—it was a world in which the previous Government thought that every problem could be solved by chucking shed-loads of taxpayers’ money at it without caring what the outcomes were. That is exactly the point I am making. We have had to clear that mess up.
Mr Duncan Smith
I will give way, but I ought to deal with the other programme first, as the right hon. Gentleman might want to ask some questions about that, too. The other programme that the Opposition cited was the flexible new deal. If that was such a brilliant programme, surely it would have been rolled out nationally; it never was. When Labour left office, it was only just up to running across half of the UK.
Over an equivalent period and claimant cohort, the Work programme has got more people into work for six months or more—19,000—compared with 15,000 under FND, and it delivers better value for money. The £14,000 per outcome figure thrown around by Labour ignores the start-up costs of the Work programme, which covers five to seven years. An independent cost comparison by the Employment Related Services Association shows a figure of £2,000 per job under the Work programme, compared with £7,500 under FND which, just like other programmes, ultimately cost money and did not succeed in helping to get people into work.
Mr Byrne
This is an important point for us to debate. I do not know whether the Secretary of State has seen the analysis that was published yesterday by Inclusion, but it is pretty clear on this question. The proportion of people flowing into sustained jobs from the flexible new deal was 5%, which is much higher than the figures for the Work programme. The flexible new deal was more expensive. Inclusion calculates that the cost per job outcome under the Work programme is £14,000. The flexible new deal was 9.5% more expensive, but the Secretary of State is failing to be level with the House about the fact that doing nothing costs his Department less, but it costs the country more, because the welfare bill goes up. A payment-by-results programme is cheaper if there are no results. That is the problem that we have to fix, and that is why the Chancellor is so cross.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Many Members wish to speak in the debate, so we must have shorter interventions and replies.
Mr Duncan Smith
Guided by you, Mr Deputy Speaker, I shall simply tell the right hon. Member for Birmingham, Hodge Hill that he is wrong. I do not agree with his figures, and anyway, he served in government while the bill for welfare rose by 60% in real terms over the lifetime of that Government. Enough said: we took on a massive problem, and we have to deal with it.
Mr Duncan Smith
I shall make some progress, but I promise to give way to the hon. Lady.
Let us deal with the final point made by the right hon. Gentleman in the motion: that somehow all this could be solved if only we did not cut, change or reform anything and implemented a bank bonus tax to fund a real jobs guarantee. Such a one-off tax would be worth £3.5 million. However, we have introduced an annual bank levy, which raises much more money over the period. The Opposition did not introduce such a levy when they were in power.
Let us look at the bank bonus tax that they propose. I love the fact that that tax is wheeled out whenever they are in a corner. It has already been used to cover the spending of £13.5 billion that they committed to make when reversing the VAT increase. It has been used for more capital spending—£5.8 billion—and again to reverse tax credit savings of £5.5 billion. It was used to build 25,000 extra homes—£1.2 billion. It was used again to reverse child benefit savings of £1.7 billion, and more and more.
It is a joke to keep wheeling out that ridiculous programme as an excuse for what the Opposition should be doing, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said earlier, is telling us what they would do instead, where they would make the necessary savings and how they would reform welfare. That is the main issue.
Kate Green
The debate has moved on, but I wanted to say that the rise in social security spending under the Labour Administration was not all in relation to out-of-work benefits. A large proportion related to better payments for children and working tax credit, which subsidised low pay.
Mr Duncan Smith
I agree. The only way to look at these things is to consider the overall state of welfare spending. That is exactly how I look at it. As for the point about tax credit, much of it had nothing to do with going back to work, but it supported families for other reasons. The Opposition cannot separate what suits them from the other bits. We have a welfare budget, and they must own up to the fact that it rose by 60%.
Let me deal with what the Work programme really is. It supports 800,000 people—more than any previous programme—and data published yesterday show that it is successfully moving claimants off welfare rolls into jobs, so generating savings in the process. More than half those referred to the programme in June 2011 have since come off benefits, and about a third have spent the past three months off benefit, and a fifth have spent six months off benefit. Independent statistics published on Monday show that 207,000 people, as I have said, have been in work—a fifth of everyone on the programme. What is more, job entries are rising month on month. The figures that we published yesterday showed that in the past two months there was a 40% increase in attachments lasting six months.
We have rejected the old tendency that the right hon. Member for Birmingham, Hodge Hill keeps coming back to—chucking money at programmes in the hope that people will say we are doing something because we are spending money. With the FND, Labour paid out 40% of the fee up front just for signing up someone. Firms never had to do much at all. Under the flexible new deal, the average up-front attachment fee was more than £1,500. More than £500 million was paid out in total, without any assurance of success at all.
Mr Bain
In my constituency, just 70 people have been placed through the Work programme into sustainable employment, but the Employment Related Services Association says that providers of the Work programme have received £436 million in public money already, as at September 2012. Can the Secretary of State update the House with the most recent figures? Does he really believe that constitutes value for money?
Mr Duncan Smith
The figures have been published. This is about start-up costs and the money that is paid for every job. If the hon. Gentleman wants to do the mathematics, he will find that it adds up quite well.
Under the Work programme, companies are paid only if they keep people in work for six months for the most part, and for some 13 weeks. Under Labour’s programme, 40% of the total budget or about £500 million, as I said earlier, was paid just to sign up people. That is the difference. We save the taxpayer the money, and we will produce a programme that gets people into work. It transfers the risk. In future, we should be able to shift market share from those who do not succeed to those who succeed.
Many of the same companies are used as were used under the previous Government, but the difference is that they are now being examined to show how successful their programmes are. Whereas under the previous Government they could simply sign up people, now they have to get them into work and sustain them in work, or they do not get paid.
Steve McCabe (Birmingham, Selly Oak) (Lab)
If I accept the Secretary of State’s proposition and that of the Minister of State, the hon. Member for Fareham (Mr Hoban) in his letter yesterday that it is a bit early to judge the programme, when is it reasonable to judge it? Can we expect to see a substantial improvement in the figures next year? If we do not, will the Secretary of State admit then that he has failed?
Mr Duncan Smith
I happen to believe that the people who will admit that they failed are the Opposition. I hope that within a few months they will be eating their words over all this. Over many years, while the hon. Gentleman’s party was in government, we saw welfare bills soaring. By the time that Labour left office, there were 5 million on out-of-work benefits, one in every five households had no one working, 2 million or so children were living in those workless households with no chance that they would ever see anyone go back to work, and youth unemployment was up by 40%. Unemployment was at 7.9% and inactivity at 23.5%.
What a contrast with the situation now. In recent months, there have been more women and more people overall in work than ever before, up 734,000 since the election. There are 1 million more jobs in the private sector. We have seen four consecutive quarters of rising jobs growth and three consecutive quarters of falling unemployment. Not one word about that from the Opposition; not one congratulation to those who have found jobs. Excluding students, youth unemployment is down 65,000 on the latest quarter and 15,000 since May 2010. There are now 190,000 fewer people claiming the main out-of-work benefit and the inactivity rate is close to the lowest in a generation.
Thirteen months after coming into office, this Government introduced the biggest payment-by-results programme that the UK has ever seen. It is succeeding. It will succeed. We have heard nothing from the Opposition today. It is a pathetic motion from a pathetic Front Bench team and I will oppose it tonight.
Mr Sheerman
My hon. Friend will forgive me for knowing less about the situation in Scotland than I do about the situation in Yorkshire and England, but I am sure that she is right. There are many local differences, as I am finding in my area.
That is why I asked for the Freudian analysis earlier. Lord Freud, before he became a Member of the upper House, was asked by Tony Blair to evaluate which programmes worldwide had actually worked and addressed the structural problem of how to get people into work so that they can be full citizens. He looked right across the piece to identify which programmes had been successful. By requesting the Freudian analysis, I was asking whether it was good information. It was the whole basis of the policy that influenced our Labour Government’s policy and also that of the Conservative party. Freud is very important to these discussions, however he has been interpreted, and we should not forget that he was trying to look at that central problem we all face.
Mr Duncan Smith
Given that the hon. Gentleman has asked about my noble friend, who is an excellent addition to our team—whichever party he represented previously, he is a very good man and is doing very well—I may say that the Australian system, which is the basis of the Work programme, has shown some of the best results, which occur once companies are geared up and focused on getting people back into long-term, sustained employment. The system is working very well and says that it is on track.
Mr Sheerman
I thank the Secretary of State for that intervention, and I accept what he says. He knows that what I am getting at in this short contribution is that we play this game of blaming each other all the time, but the problem is international and global and we will have to sometimes forget party differences and work together on it. I want to make a couple of suggestions as to how we might do that.
Let us face it: all Governments throughout Europe, the United States and beyond have a long history of failure. Modern industrial democracies have this problem of skilling the work force. Indeed, I have never heard such castigation of our country’s further education system as that in yesterday’s annual report by the chief inspector of Ofsted, who said how poorly further education was performing in our country. All the evidence shows that further education is where young people get skills for the good life. It is where they get high skills to get good jobs to be the full citizens that I am after.
I have never heard of the chief inspector picking on one town in particular. I do not know what he has against Hastings, but he said that early years and primary schools are a failure for the children of Hastings and that they also fail when they go on to secondary school and further education. I was astonished. Thank God he was not talking about Huddersfield. It comes down to the fact that a significant percentage of people in our country have inadequate training and skills, and we need to work across parties to do something about that.
I want to share some of my experiences. One of my last reports when I chaired the Children, Schools and Families Committee looked at the problem of those not in education, employment or training. We found that intelligent programmes on the ground which represented a positive response from local authorities that understood their local communities, and which also had good local skills training and good employers, could make a significant difference to the number of people gaining skills and getting into work. There are good exemplars in this country, but some towns are more fortunate than others in retaining their manufacturing and employment base.
Measuring Child Poverty (Consultation)
Iain Duncan Smith Excerpts(13 years, 4 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
On Thursday 15 November the Government laid before Parliament and published “Measuring Child Poverty: A consultation on better measures of child poverty”. The Command Paper is available online at:
www.education.gov.uk/aboutdfe/departmentalinformation/consultations/a00216896/measuring-child-poverty
The consultation will run until 15 February 2013.
The consultation is in three parts. It reaffirms the Government’s commitment to ending child poverty and makes the case for a better measure, examines what the dimensions of a new measure might be and explores a number of design questions.
The most recent statistics showed 300,000 children moved out of relative income poverty. However, this was largely due to a fall in the median income nationally that pushed the poverty line down; absolute poverty remained unchanged and children who were “moved out” of poverty were no better off than before.
Family income remains an important part of how we consider child poverty, but income alone is not enough. The intention is to design a multi-dimensional measure that includes but goes beyond income.
The consultation proposes eight dimensions; worklessness, unmanageable debt, poor housing, parental skills, access to quality education, family stability and parental health.
Once the consultation has closed, the Government will consider how to take forward multi-dimensional measurement of child poverty and will respond to the consultation in due course.
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 4 months ago)
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Robert Halfon (Harlow) (Con)
5. What recent assessment he has made of the barriers that prevent jobseekers getting back into work.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Jobseekers can face a number of barriers to work, about which my hon. Friend has spoken to me on a number of occasions. Those include a lack of work experience, a lack of essential computer skills, an incomplete education, which leaves them ill qualified, or coming from a family where worklessness is entrenched across generations. We are taking cross-Government action to tackle all those barriers, and reforming the benefit system so that it more closely resembles life in work, rather than people having to face those huge barriers.
Robert Halfon
Since 2011, the Department has through procurement encouraged its private suppliers to hire apprentices, and 2,000 apprenticeships have been created as a result. Will the Secretary of State share his success with other Departments, so that we can roll out this programme across Whitehall and remove barriers to work?
Mr Duncan Smith
I take this opportunity to congratulate my hon. Friend on the huge work that he has done in encouraging apprenticeship starts. I know that he is particularly keen on that and I take a real steer from him. I also remind him and the House that, since we brought in our changes, over the past two academic years more than 950,000 apprenticeships have been offered by over 100,000 different employers. On top of that, the youth contract offers 160,000 wage incentives for those who wish to start apprenticeships. Therefore, the scheme has been a major success for this Government. The coalition has done far more than the previous Government.
Hywel Williams (Arfon) (PC)
Will the Secretary of State concede that the greatest barrier to returning to work is the lack of jobs locally and that that is particularly the case for people with long-term sickness and disability?
Mr Duncan Smith
The hon. Gentleman is right—those people face particular difficulties. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wirral West (Esther McVey), referred to those earlier. Our job is to ensure that we help all those people to overcome those difficulties. Organisations such as Work Choice and Remploy, which are helping to get people back to work, are hugely important. We are making big strides in that regard. The simple answer is that still not enough people with disabilities are back in work, although the situation is improving. I take the hon. Gentleman’s point. We all want to ensure that disabled people join mainstream work and get a full life out of it.
Mr Julian Brazier (Canterbury) (Con)
In welcoming my right hon. Friend's last answer, may I particularly urge him to look at organisations such as the Shaw Trust when trying to assist disabled people into work, rather than having focus desks in jobcentres?
Mr Duncan Smith
I absolutely agree. It is important to extend the net as widely as possible. My hon. Friend is a huge campaigner for public sector organisations and he is right about the Shaw Trust, which I have visited. It is a phenomenal organisation. We will use the trust and every other organisation we can. In fact we set up desks in jobcentres, which were manned by the Prince's Trust on behalf of all other charities, so that we could extend that net to enable anyone who needed it to get support, not just from the Government but from other organisations.
Mrs Mary Glindon (North Tyneside) (Lab)
The unemployed former Remploy workers in my constituency have seen little or no help from the DWP or Remploy since they lost their jobs. What will the Secretary of State do about that?
Mr Duncan Smith
I am very happy to take any particulars from the hon. Lady and to hear more detail from her, but the really successful part of Remploy is the part of the organisation that works to get people back to work. It has had a very successful record. We have put extra money into that organisation. We have made more money and more support available to try to get people who were working in the factories at Remploy back to work. However, I must say that during the period that the Government she supported were in office, next to no support was given to people who left Remploy when it closed up to 29 factories.
Joan Walley (Stoke-on-Trent North) (Lab)
6. What assessment he has made of the recommendations in the Harrington report that have not been implemented; and which such recommendations he plans to implement.
Diana Johnson (Kingston upon Hull North) (Lab)
11. When he plans to announce the recipients of universal credit whose children will be eligible for free school meals.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We are working closely with all the Departments that administer the staggering number of passported benefits—some 25 benefits in England, as well as about 20 in Scotland and Wales. The administration of passported benefits and determining who will receive them is the responsibility of various Departments—in the case of free school meals, it is the Department for Education. With different eligibility criteria all over the place giving rise to the massive complexity that has built up over the past few years, we are looking to simplify the system under universal credit while ensuring that those benefits continue to be available to the families who need them most.
Diana Johnson
Does the Secretary of State agree with the Church of England’s Children’s Society, which states that all children in families receiving universal credit should be eligible for free school meals? If he does not, why not?
Mr Duncan Smith
I do not agree, because that would mean a huge increase even on the numbers with which the previous Government left us. If we did that, it would include an extra 2.5 million children and an estimated cost of up to £1 billion. I wonder whether the hon. Lady has talked to her hon. Friends on the Front Bench about whether that is another spending commitment they would like to make.
Sir Bob Russell (Colchester) (LD)
The previous Labour Government left some 3.9 million children living below the official poverty line, about half of whom did not qualify for free school meals. Is it not time that the children who are most in need got the free school meals that they did not get under the Labour Government?
Mr Duncan Smith
The introduction of universal credit will hugely help families with the lowest incomes. Something like 80% of the money is transferred to the bottom 40% on the income scale, so that helps hugely straight away. Secondly, it is very important that we have an opportunity for Departments—they will do this in discussion with us—to consider how best they can ensure that those most in need get the money and support they require.
Julie Hilling (Bolton West) (Lab)
13. If he will make it his policy to begin monitoring the number of people who die as a result of (a) illness and (b) suicide whilst awaiting the result of employment and support allowance appeals.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
20. What steps he is taking to tackle the causes of social breakdown.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Last week we published the social justice outcomes framework, which has a set of indicators that highlight our priorities: to eradicate family breakdown, educational failure, worklessness, addiction and crime, and to grow the social investment market—a big area for us. The framework will measure our progress towards achieving these aims, shifting the policy focus and spending towards outcomes rather than inputs.
Stephen Metcalfe
Can my right hon. Friend tell the House how projects supported by the innovation fund will tackle social breakdown?
Mr Duncan Smith
Indeed I can. The innovation fund was set up by me when I came into the Department. It consists of approximately £30 million of seedcorn funding to enable voluntary groups, charities and organisations—beyond the normal organisations that one comes across in the work process—to show that their programmes, which help people to deal with drug addiction, family breakdown or gang violence, actually work, to prove that concept, and to set them up to be able to run those programmes. At least 11 social impact bonds have come out of this and we have just launched a second round.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Secretary of State agree that much social breakdown stems from intergenerational worklessness? Is he as enthusiastic as many Opposition Members are about the Heseltine review, “No Stone Unturned”? Will he ensure that he takes a positive role in bringing some—indeed, most—of those recommendations to fruition?
Mr Duncan Smith
When one of the big beasts from the past roars, it is always difficult not to be incredibly enthusiastic about what they are roaring about, so I accept the hon. Gentleman’s invitation to express my interest and support for the report. Obviously there are details in it, but he makes the vital point that in too many communities there are families of two and three generations that have been beyond the work cycle. This is about getting them back into the idea of work not just for the money but because their whole lives disintegrate without it. I agree with him and will certainly make sure I tell Lord Heseltine how supported he is.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
21. What assessment he has made of the effectiveness of the youth contract; and if he will make a statement.
Bob Blackman (Harrow East) (Con)
23. What assessment he has made of results of the housing benefit demonstration projects.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The demonstration projects are testing direct payment of housing benefit to social rented sector tenants in six areas across England, Scotland and Wales. Their purpose is primarily to help people manage their rent in advance of a move into work and the introduction of universal credit. We have commissioned an independent action research-based evaluation of the projects, and the results of initial research will be published in early December.
Bob Blackman
I thank my right hon. Friend for his answer. Will he elucidate on some early learning that has come from the second learning report, which was recently published via the learning network?
Mr Duncan Smith
That is a lot of learnings, but I will do my level best to help my hon. Friend. I shall tell him what we know so far. Some of these are early figures, but interestingly, after all the scaremongering about how people would be unable to cope, which, as we know from the local housing allowance, is not the case, the centre at Sheffield Hallam university has found so far that only 2%—less than people thought—of claimants moved because of eviction or a landlord refusing housing to housing benefit tenants, and few claimants gave financial reasons for actually moving. So we are making some good discoveries. We are on the right track and heading in the right direction.
Teresa Pearce (Erith and Thamesmead) (Lab)
24. What discussions his Department has had with Baroness Grey-Thompson following the publication of her report on the effect on disabled people of the introduction of universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
My right hon. Friend the Chancellor of the Exchequer will announce the Government’s expenditure plans in the autumn statement in a few weeks. Until then all discussion about further reform remains, as it always will do, somewhat speculative.
Yvonne Fovargue
Would not removing entitlement to housing benefit from people aged under 25 increase youth homelessness and youth unemployment?
Mr Duncan Smith
As I said, we are happy to look at all these proposals. We are discussing them right now, as has been made clear by my right hon. Friend the Prime Minister and by the Chancellor. But it is worth putting a few features in the public domain. The key issue is that young people who are not eligible for benefits do all sorts of things such as sharing flats and working hard. They use much of their expenditure, on low pay sometimes, to get themselves accommodation. What we are looking to do is make sure there is parity—fairness—in the system so that those who are in a slightly different situation do not get an advantage which is not necessary. It is worth telling the hon. Lady something about that group. About 400,000 claimants who are under 25 are receiving around £2 billion a year, and shared accommodation rates extend to under-35s. That is a lot of money and it is worth looking at.
Greg Mulholland (Leeds North West) (LD)
The Department’s own family resources survey shows that only 10% of under-25s live independently. When we take out all the essential exemptions for people who cannot live with family, the number covered would be very small, so why are we talking about a policy that does not add up economically?
Mr Duncan Smith
As I said previously, we are looking at all this. Anyway, entitlement would never be removed from those who are already on housing benefit. The review is about flow and about re-establishing fairness in a system which many think has become unfair and does not help those who are not eligible for such benefits. I accept that there would be people who would be ineligible. That is the point of examining the system and figuring out how the policy would go, but like all policy reports, it is worth looking at. It deals with an element of unfairness and the thing about the benefits system is that if it is unfair, people who should support it will not support it, such as taxpayers.
Lilian Greenwood (Nottingham South) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We have been rolling out the innovation fund, which has so far been very successful, as I said in answer to an earlier question. About 11 social impact bonds have now been launched. The successful bidders in the second round, Prevista, Social Finance and 3SC, will deliver support for our most disadvantaged 14 and 15-year-olds, restoring hope and aspiration to young people in care who are disengaged from school and involved in gangs, crime and drugs. It is a very, very good project.
Lilian Greenwood
Dr Sue Atkinson, a mental health professional in my constituency, recently told me about the appalling misjudgments that she and her colleagues have witnessed, when their clients’ needs and capabilities have been completely ignored in the work capability assessment process. Why will the Secretary of State not act now to review and revise a system which is clearly failing?
Mr Duncan Smith
There is an awful lot of lost memory among Opposition Members. It was they, when they were in government, who set the process up. It is this Government who have made all the alterations, thanks to Professor Harrington, that have improved the situation. We are doing exactly what the hon. Lady requests. I wish she would speak to members of her Front-Bench team and avail them of that information.
Andrew George (St Ives) (LD)
T2. Disability Cornwall has expressed concern to me that its good name has been used by the company Atos when bidding to undertake the personal independence payment assessments, when in fact no such discussion regarding a potential local partnership has ever taken place between Atos and Disability Cornwall. Does the Minister agree that this may have resulted in Ministers being misled? Will the matter, therefore, please be investigated?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I first associate everyone on the Opposition Benches with the words of commemoration for our much treasured colleague, Malcolm Wicks, who is sorely missed?
Will the Secretary of State confirm that the introduction of universal credit is proceeding according to its original timetable?
Mr Duncan Smith
I can indeed. As we have said, we will start the process nationwide in October, although we have introduced an earlier start for a pilot programme, as the right hon. Gentleman is aware, because he came into the office to talk to me about it. He knows very well that, as I explained then, the four-year process will be completed exactly as we have intended, on time and on budget.
Mr Byrne
That is curious, because last year the Secretary of State told us that every new claim for out-of-work support would be treated as a claim for universal credit from next October, but the Minister of State, the hon. Member for Fareham (Mr Hoban), told Parliament on 26 October that the rules for universal credit from 2013 onward are still “under development.” What on earth is going on? On Atos, on caps on pension charges and now on universal credit, it does not appear that the Secretary of State has got a grip.
Mr Duncan Smith
If the right hon. Gentleman does not mind, I must say that that is a rather pathetic question. The reality, as he knows very well—he came into my office to discuss these matters and we showed him exactly what we are doing—is that there is no change. The reality is that over the four years we will bring universal credit completely online—it will be completed by 2017. I wish he would spend more time working on his brief, rather than writing books on China.
Julian Sturdy (York Outer) (Con)
T3. Like all hard-working taxpayers, I support the Government’s attempts to reduce benefit fraud. However, I have recently received correspondence from a terminally ill constituent whose support has been wrongly withdrawn. Will the Minister assure me that those who truly deserve support, such as my constituent, will benefit from our introduction of a fairer welfare system?
Mr Duncan Smith
My hon. Friend raises a very important issue. We are already in discussions with such groups and have made it clear that anybody suffering domestic violence will immediately be taken through the system and the money will be paid directly. The refuges, as we have already said, will get their money and there will be no hesitation. That is an absolutely critical area and it will be provided for completely by universal credit.
Mr Stephen Hepburn (Jarrow) (Lab)
T9. My local citizens advice bureau is getting 30 new work capability assessment cases every week, and 80% of them are won on appeal. That is because the Government are forcing sick people who have cancer or brain damage or who are dying back into work. It is a disgrace. When will this barbarity end?
George Freeman (Mid Norfolk) (Con)
T8. The scandalously high rate of youth unemployment was perhaps one of the previous Government’s worst legacies, and my constituents warmly welcome the creation of 1 million new jobs and 600,000 apprenticeships. Does the Secretary of State agree that in rural areas young jobseekers face particular challenges in accessing small, fast-growing companies in the rural economy, and will he join me in supporting the local voluntary big society initiative launched by The Norfolk Way—it started a work club and enterprise bursary in which local entrepreneurs support jobseekers—in Mid Norfolk last week?
Mr Duncan Smith
I pay tribute to the work that my hon. Friend does in his area. I absolutely agree with and support what he says. It is really interesting that youth unemployment was rising in the previous Government’s last six years, even in a time of growth. They fiddled with the figures so that anybody who was unemployed for more than 10 months went on a course; most of them ended up returning to unemployment, where they started from zero again. The then Government deliberately and falsely capped the figure. We are honest about it and tell the truth.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
We have been told that Professor Harrington’s recommendations on the introduction of mental health champions to improve work capability assessments have been implemented, yet only two mental health champions cover the whole of Scotland and both of them are based in the central belt. What steps have Ministers put in place to measure the effectiveness of mental health champions?
Damian Hinds (East Hampshire) (Con)
On the housing benefit demonstration projects, what assessment has been made of potential budgeting accounts—so-called jam-jar accounts—to help people manage all their finances and build up a savings pot?
Mr Duncan Smith
My noble friend Lord Freud has already discussed with all the financial institutions how to construct systems that support people who may have budgeting issues. The phrase “jam-jar accounts” is an unsophisticated term for such systems, but by and large they help people apportion the money necessary for their rent, food and so on, so that they can see that money flow in and then take it out. On housing benefit, a key area of the local housing allowance will be that we will not allow people to build up arrears of debt. We will intervene early to make sure that that does not happen, which should help landlords understand that we will support them.
Kate Green (Stretford and Urmston) (Lab)
Ministers assured us that the flexibilities introduced for lone parents on jobseeker’s allowance under Labour would continue, yet the number of lone parents who have been sanctioned has risen dramatically. In a written answer on 24 October the Minister said that the reasons for sanctions were exactly the same as those for other jobseekers. Can the Secretary of State explain exactly how those flexibilities are being properly applied and what training is being delivered to personal advisers in Jobcentre Plus?
Mr Edward Leigh (Gainsborough) (Con)
What, hitherto, has been the fraud and error rate in child benefit?
Mr Duncan Smith
It would be pretty negligible because it is paid to everybody, and it would therefore be impossible to figure it out. Across the board in the Department for Work and Pensions, we are beginning to see a downward pressure on fraud and error. My hon. Friend will be pleased to see that over the next few years we will be saving considerable amounts of money.
David Wright (Telford) (Lab)
How many people who have been medically retired from their jobs with severe conditions are being put through the work capability assessment and having their benefits attacked?
Jake Berry (Rossendale and Darwen) (Con)
With 70% of social housing tenants having no access to the internet, will the Secretary of State update the House on what progress he is making for a low or no-cost social housing tariff to be overlaid on the existing BT Basic package to enable social housing tenants to access universal credit online?
Mr Duncan Smith
In fact, many more people access the internet daily than a lot of people think. Some 78% of all benefit recipients access the internet, and about 48% do so on a daily basis. Obviously it is our job to try to get that figure up, because if people cannot access the internet that affects their employment prospects given that 92% of all jobs require some computer skills. This is an opportunity and, yes, we are looking at that passported benefit to make sure that those who need the money get the money directly.
Angela Smith (Penistone and Stocksbridge) (Lab)
Universal credit is due to be up and running in less than a year. Surely by now the Secretary of State should be able to give us some detail about who will be eligible for free school meals.
Mr Duncan Smith
We are talking to the Departments involved about how best they want to make this work. They will make it work, and we will come forward very soon with some very clear indication of how it is going to work. The hon. Lady should rest assured that the purpose of this is to make sure that those who need and deserve the money get the money, and I can guarantee that that will be the case.
Universal Credit and Welfare Reform
Iain Duncan Smith Excerpts(13 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Byrne
It absolutely does. Our chief concern is that that open and fair system of assessment will not fall into place for universal credit, with enormous consequences for our constituents.
The final point about the basic principle of whether people will be better off in work or on benefit is the evidence published by the Secretary of State’s own Department in the impact assessment that he signed earlier in the Parliament. The evidence shows that the marginal deduction rates will not go down for many people but will go up—2.1 million people will see their marginal deduction rates go up when universal credit is introduced. The incentive for them to work does not increase with universal credit; it goes into reverse. We have problems with free school meals and with council tax benefit, a short-changed personal allowance, the lock-in of cuts to tax credits and a worse incentive to work. That raises fundamental questions about a system that is about to go live in 150 days. That is why in this debate we want some answers on how these problems will be solved.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I will just give the right hon. Gentleman some answers on the marginal deduction rates. The fact is that 1.2 million people will receive a reduced marginal deduction rate as a result of what we are doing with universal credit. At the moment, 500,000 families see marginal deduction rates of well over 80%. Virtually nobody will see that once universal credit comes in. Some 2.8 million households will gain and 80% of those gains will go to the bottom 40%, improving their life chances dramatically.
Mr Byrne
But the Secretary of State refuses to admit that the marginal deduction rates will get worse for 2.1 million people. Until he answers the question about what will happen to free school meals and to council tax benefit, he cannot give us the assurance that that number of people will be better off in every single part of this country. He has to come clean about a system that is about to go live in 150 days. He is cutting it too fine, which is why No. 10 is worried, why the Treasury is worried and why his old friend the Minister for the Cabinet Office is worried.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
This debate cannot take place in a vacuum, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would wish. Let me start by saying that he is wrong: we are not over budget on the programme and we are not out of time. Both are proceeding much according to the plans that we laid. He referred to a report or note that mentioned £3.1 billion. That was considered as a possible end position and the Office for Budget Responsibility, which is independent, looked at it well before Members of both Houses had completed their scrutiny of the legislation. It was done in July of last year. Since then we have had a series of discussions with the OBR. It has looked at the modelling in detail, and continues to do so.
Mr Duncan Smith
Wait a minute.
As far as the OBR is concerned, we are progressing in the right direction and the modelling seems to be about right. We are committed to the £2.5 billion a year and the £2 billion of investment in our IT programmes.
Mr Byrne
I am grateful to the Secretary of State for being characteristically generous in giving way so early in his remarks. Will he explain what policy designs resulted in the £3.1 billion estimate, made by his own Department, dropping down to £2.5 billion? Will he also confirm to the House that everybody affected will be on universal credit by 2017, as initially planned?
Mr Duncan Smith
First, I will answer the second question. That is exactly what we intend and we believe that we are on track to do just that. The right hon. Gentleman and the House should realise that this is not, as has been the case with previous IT programmes, a “waterfall” approach whereby everything explodes and is launched on one date, which I think the previous Government used to realise was probably not a good idea. This will be a progression over four years, so that, as we bring in different groups, such as jobseeker’s allowance recipients, and first address the flow, then the stock, and then look at tax credits and how they fit in, we can make sure that we get this absolutely right at every stage. We know that there are important things to consider so that people do not suffer as a result of universal credit. We want to get this right, even as we do it.
We agreed on the £2.5 billion figure. That is our position. As we look at all these things, including the disregards, we see that we can realise better ways of doing them. It is a work in progress. That is how we are able to achieve these things, just as when we looked at them originally.
The right hon. Member for East Ham (Stephen Timms) has peppered us with freedom of information requests, which is exactly what an Opposition Member should do. However, it does him and the shadow Secretary of State ill to lecture us about releasing business cases. When they developed employment and support allowance, a system about as large and complicated as this one—I think that the right hon. Member for East Ham was a Minister in the Department at the time—at no stage, despite the request, did they ever release their business plan to us.
Kate Green
I wonder whether the Secretary of State will clarify something that he said in response to my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne). He said that the change would be implemented in stages, with first the flow, then the stock and then tax credits. Surely the tax credits for the first claimants to receive universal credit will have to be brought in on the first day of universal credit.
Mr Duncan Smith
No; it has always been part of the process that jobseeker’s allowance will be the first to move across. I am happy to discuss that further. Universal credit will run in parallel with the other systems until we shut them down and move them across. That is the way it will work. That has always been clear. I think that the Chair of the Work and Pensions Committee knows that, because I have been open with her about it from the word go.
Mr Duncan Smith
I have explained the plan that we have and I want to make some progress, but I will give way.
John Healey
The Secretary of State maintains that the project is on track, when everybody else seems to think that it is in serious trouble and way off track. Rotherham Jobcentre Plus staff have told me that he has told the public that jobseeker’s allowance and new claims for out-of-work support will be treated as new claims for universal credit from October 2013. Is that still the case?
Mr Duncan Smith
I thought that I had been pretty clear about that. The plan is that, starting in October 2013, we will move through the different groups of benefits and tax credits progressively over the four years, bringing in different groups at different stages. That is how it will work. We will be giving a big presentation next week for members of the media.
Mr Duncan Smith
The timetable is not slipping at all. We are on target. The right hon. Gentleman needs to be happy about that.
It is all very well for the Opposition to carp, while saying that they support universal credit, but let me be absolutely clear why I believe that we have to do this. First, we inherited a complex mess of 30 different benefits. There are seven additions relating to disability alone, which are complicated for people who are disabled. They are often confused about what to do. Some payments are available when a person works for 16 hours, some at 24 hours and some at 30. Some are withdrawn at 40%, some at 65% and some even at 100%. Some are net and some are gross. One needs to be a mathematician to figure them out.
My previous permanent secretary admitted that one day, when he was listening to a lone parent who had come in for guidance on what benefit she would receive and how it would work if she took extra hours beyond the 16 hours at which she was already being supported. It took the adviser about 40 minutes to figure out whether she would be better off, marginally in the same position or marginally worse off because of the dramatic rise in the deduction rates. How can we expect every lone parent who is worried about authority and may not come in for help to understand what these things mean? The complexity and confusion are a problem. The decision whether to go to work is often a marginal one, and many people do not feel that it is worth while.
It is small wonder, therefore, that even before the recession there were over 4 million people on out-of-work benefits and 1.4 million people who had never worked at all. Things then got a lot worse because of the recession. The inheritance that we received included 5 million people on out-of-work benefits, youth unemployment already high and more children in workless households in this country than in the rest of the EU—that is a staggering thought. And that came after years of growth and plenty, which the previous Government wasted.
Ending that failure is a monumental task, and we have undertaken it because it has to be done, whether there is a Labour Government, a Conservative one, a coalition one or even a Liberal one. Universal credit is one of the most fundamental reforms to the welfare system, and it deserves to be supported and helped.
Mr Duncan Smith
I have given way quite a bit. If the hon. Lady will give me a little leeway I will give way again later, but I want to make some progress.
A single payment, withdrawn at a clear and consistent rate when people move into work, will make work pay at each and every hour and remove the stumbling block in the current system whereby, as I said earlier, some people lose out dramatically. They lose 96p in every pound that they earn, which cannot be an incentive to go to work. Nobody here would take work at that rate, and trying to get the deduction rate down has to be a good reason for our reform.
The Opposition say that they are concerned about work incentives under universal credit. I reassure them that, as I said earlier, the flat 65% withdrawal rate will mean reduced marginal deduction rates for 1.2 million households. What is more, 80% of those gainers are in the bottom 40% of the income distribution. Why am I, as a Conservative, having to stand here and tell the Opposition that that is positive? Surely they should have ensured that it happened during all the years when they were in power.
Stephen Lloyd (Eastbourne) (LD)
The Opposition have mentioned the Work and Pensions Committee a few times. I am a member of that Committee, and although the Opposition are absolutely right to say that there were some concerns about universal credit, the Secretary of State might be interested to know that the Committee universally supported the concept of universal credit to make work pay.
Luciana Berger
I listened closely to what the Secretary of State said about 1.2 million people having better marginal deduction rates, but his Department’s own impact assessment shows that 2.1 million people will be worse off in work as a result of universal credit.
Mr Duncan Smith
The reality about marginal deduction rates, as I have just said, is that the massive majority of the money that we are investing will go to those in the lowest income groups, which has to benefit them. People who would otherwise not enter work because of the margins will now find that it is beneficial to do so. Despite what the hon. Lady and the right hon. Member for Birmingham, Hodge Hill, have said about marginal deduction rates, the median increase will be just about 4%. The truth is that there will be a massive improvement in the marginal deduction rate for vast numbers of households. As I said earlier, half a million people who struggled under the previous Government’s complicated taxes had marginal deduction rates of well over 80%. That will not happen under universal credit, which is a critical point.
Mr Duncan Smith
I am going to make some progress, and I will pick up on some of the points that have been made as I go through my speech. If the right hon. Gentleman will bear with me, I will certainly give way to him later.
I turn to the delivery of universal credit. As I said earlier, its implementation is on time and on budget. Of course, the process is challenging, and I have never said anything else. The right hon. Member for East Ham knows that I have a huge amount of time for him and believe that he was an effective Minister. When we have discussed universal credit I have always told him that all our programmes have challenges and risks to them, but the job of Ministers and our officials is to manage that risk. Life has risks, and we deal with them and manage them. The universal credit programme is challenging, but we are investing £2 billion—I say again to the right hon. Member for Birmingham, Hodge Hill, that the figure is £2 billion—to get the infrastructure and IT systems right.
Mr Byrne
But the Secretary of State must have seen the parliamentary answers that his ministerial colleagues have provided stating that the implementation costs for parts of the programme are now running at £103 million, £391 million, £600 million and £1 billion. By my maths, that adds up to £2.1 billion, which is £100 million more than the budget that he has set out. Is the programme on budget or over budget?
Mr Duncan Smith
I am never keen to rely on the right hon. Gentleman’s maths—that is what ran us into trouble in the first place. Maybe this is a confessional now, and I will take that as a confession from him. All I can say to him is that we are investing £2 billion, but I will drop him a note about any detail that he is concerned about.
As I said earlier, we are making progress. We completed our first testing stages in August and have already held two open sessions with MPs, peers and the media and intend to hold many more. We will demonstrate the IT front-end systems next week and will do so again afterwards for many hon. Members.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
Perhaps the hon. Lady will give me a little time. I think I have been reasonably generous—I am trying to be because I hope that we can discuss this issue in the right spirit. I will give way to the hon. Lady in due course, but first I would like to make a little progress.
We will be ready to roll out universal credit across the country in October 2013, and before that we will launch the pathfinder scheme in Greater Manchester in April 2013—perhaps some hon. Members do not know that yet, but that is the reality. As I have said, the phased transition from current benefits and tax credits is expected to be completed by 2017, and the safe delivery of universal credit will be my primary objective throughout. For what it is worth, I take absolute, direct and close interest in every single part of the IT development. I hold meetings every week and a full meeting every two weeks, and every weekend a full summary of the IT developments and everything to do with policy work is in my box and I am reading it. I take full responsibility and I believe that we are taking the right approach.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Will the Secretary of State give way?
Mr Duncan Smith
Perhaps I could make a little progress, and then I will give way because I know that hon. Members have questions.
I believe that we are taking the right approach; we have supported the scheme and our methods have received support elsewhere. Our use of the “agile” process has received good support from the independent Institute for Government, which in “Fixing the flaws in government IT” stated:
“The switch from traditional techniques—”
those used by the previous Government, and others—
“to a more Agile approach is not a case of abandoning structure for chaos. Agile projects”—
those used in the private sector—
“accept change and focus on the early delivery of a working solution.”
I do not underestimate the scale of the undertaking. Some 8 million households will be affected because they are in receipt, either wholly or in part, of some kind of support. I believe, however, that the Department is capable of implementing programmes of this kind. It has the best record, just as it did when the Labour party was in government, as Opposition Members will recall. The delivery of employment and support allowance was a good example of that, and the right hon. Member for Birmingham, Hodge Hill who was involved in that knows too well the quality of the Department for Work and Pensions. Although the scheme is not without risks, the Department understands that and we have brought in a huge number of people and bodies from outside the Government to help implement it.
Mr Duncan Smith
I will give way to two people, first to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) because she was first, and then to my hon. Friend the Member for Gainsborough (Mr Leigh).
Chi Onwurah
The Secretary of State was speaking about his pride in the investment in IT systems that his Department has undertaken, but is he concerned that by making universal credit available primarily—and eventually solely—online, he will be dependent on investment by other Departments in the broadband infrastructure in this country? By abandoning Labour’s universal promise of broadband availability, many vulnerable people will not have access to broadband, and will not be able to benefit from universal credit.
Mr Duncan Smith
I was coming to that point, but I will deal with it now because the hon. Lady has a legitimate interest and all hon. Members will want to know about this issue. Two things are important. First, we must understand that the Government and the benefits system must move alongside what is happening in work. Those in receipt of benefits—often long-term benefits—are often outside and excluded from the workplace because of their lack of ability to work with and manage IT systems. We want to help them to enter the world of online work.
Secondly, the vast majority of people claiming benefits today already use computers and the internet—around 80% of those who claim jobseeker’s allowance use computers. Importantly, however, not all of them use their computer for claiming benefits, which they often do on the telephone. Over each month we intend to move more of those people to an online process of claiming—already more than 30% of people have started on that, and we intend to increase that figure first to 50% and eventually to 80%. We know, however, that to do that we may need to help people enormously, so jobcentres will be fitted out—we are doing trials—with computers and telephones that connect people directly to contact centres. My plan is for contact centres to get people on to their computers and work through the process with them. One reason people are worried and do not want to go online is that the present online system is not good. It is notchy and difficult—I have used it myself—and difficult to get through. We are developing and designing with claimants, jobcentre staff and local authority staff a front-end system that will be much simpler and easier. I will demonstrate it to colleagues on both sides of the House when we have time—I will do so next week, but on other occasions, too.
The whole idea is to move people to the new system, but we will of course retain the scope to deal with those who have difficulty.
Mr Duncan Smith
I am dealing with those who have difficulty with the new system. I will give way twice more—first to the hon. Member for Banff and Buchan (Dr Whiteford) and then to my hon. Friend the Member for Gainsborough—and then get on.
Dr Whiteford
Will the Secretary of State address the question of implementation in the devolved Administrations? A wide range of policy areas is affected. UK Ministers have held informal discussions with the Scottish Parliament’s Welfare Reform Committee, but will he make a commitment that his new ministerial team will engage with the Committee, which has expressed concern in the past that such engagement has lacked substance?
Mr Duncan Smith
Absolutely—nothing makes me happier than getting out of London to visit the devolved Administrations, whether in Cardiff or Edinburgh. I shall spend a day in Edinburgh next week speaking to that Administration about this very subject, as I have done on a number of occasions. I am engaging in the same way in Wales, as are my colleagues. I can absolutely give the hon. Lady that guarantee.
Mr Duncan Smith
If the hon. Gentleman will forgive me, I said I would give way to my hon. Friend the Member for Gainsborough.
Mr Edward Leigh (Gainsborough) (Con)
The problem with IT systems in the public sector, rather than the private sector, is the sheer scale of numbers—8 million households will use the new system—the complexity of the issues and the lifestyle of the recipients. I saw more failed Government IT systems in my time on the Public Accounts Committee than I have had hot breakfasts. I beg the Secretary of State to be cautious, to test and re-test, to pilot and re-pilot, and not to believe a word spoken to him by IT companies or his civil servants.
Mr Duncan Smith
My hon. Friend was an excellent Chairman of the Public Accounts Committee—he is highly respected among Members on both sides of the House—and I absolutely agree with him. That is how I see my role. One thing I have done is brought into the system a red team, whose job is to go through and doubt everything I am told, and to ask questions. Being a sceptic and not believing are part of the process of delivering. I absolutely understand that. We are involving others in the process—that is our purpose.
Charlie Elphicke
Does my right hon. Friend share my concern that much of the Opposition case is based on the idea that people are basically thick—too thick to use the internet, too thick to budget monthly and too thick to pay the rent? A cornerstone of universal credit is that we trust people and believe in them. We want to encourage people to work and to manage their own affairs.
Mr Duncan Smith
I understand what my hon. Friend says. He refers to the fact that people need to be helped—that they are often more intelligent than we give them credit for, but that they lack local knowledge and instruction. A legitimate concern of Members on both sides of the House is to protect those who are the most vulnerable. I will always assume their best intents. It is our job to ensure that we meet those concerns—that is my purpose and I intend to meet it. He is right that we should assume that people are intelligent enough, but that we have to get them to the point at which they use the system.
Mr Duncan Smith
Let me make a bit of progress, because others might want to speak.
We have discussed finances. The Government have always made it clear that the £2.5 billion is additional and that that was how it would work. We have always agreed on that. The nature and design of universal credit means that this is an iterative process. The reality is that we learn as we do the developing. One thing that “agile” allows us to do is to rectify previous assumptions that things have improved because of changes. I can confirm to my hon. Friend the Member for Gainsborough that, as we proceed with the IT project, “agile” will allow us to ensure that we do not wait to the end moment to test it; we are testing stuff pretty much the whole time.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
May I make a little progress? I think I have been reasonably generous in giving way. I promise that I will try to get the hon. Gentleman in later.
On our engagement, it is clear from what I have just said that the independent OBR has open access. We have been in regular discussions. The right hon. Member for Birmingham, Hodge Hill described it yesterday as a think-tank, but it is not a think-tank. It accredits and decides whether the Government’s calculations and projections are correct. No one has a perfect view of the future, but at least it is independent of all political positions and positioning. It is working with us at the moment. I can assure hon. Members that the process is robust and will continue until the Government announce the final rates for universal credit and the OBR includes them in its forecasts. That is what we are working to.
Elsewhere, we are continually engaging with a host of organisations. The Work and Pensions Committee’s inquiry concluded, quite legitimately, that organisations have concerns. Of course, they will be concerned and will want answers, and we are working and talking with them. We are also dealing with local government, and have shared our draft regulations with the Social Security Advisory Committee and are carefully considering its advice. We are in regular contact with local authorities. We recently visited many local authorities and are informing them about policy work and regulations.
We are consulting on the future—this was raised in one or two questions—of the passported benefits and the interaction with universal credit. That is taking place right now, and we are discussing the matter with the regular and other Departments. They have to decide what they want to do, and we must decide how and whether to incorporate that into universal credit. That process is under way. Rather than constantly saying, “We can’t do these things, it’s impossible, so we won’t try”, it is worth trying to get the system right. One problem for many people is that they have to go to so many places for so many different things, they get confused and often do not get it right, and each time they feel a bit more worn down. If we can smooth out that process and make it easier and more accessible, in due course we will improve the lot of those in the greatest difficulty.
Dame Anne Begg (Aberdeen South) (Lab)
Does the Secretary of State now regret responsibility for administering council tax benefit being given to local authorities? That seems to fly in the face of the whole concept of universal credit and creates the very difficulties he claims he is trying to solve.
Mr Duncan Smith
I am a huge admirer of the Chairman of the Select Committee, but her inducements for me to express any personal opinion must be resisted. My general view is that localisation is a good thing, and I am sure that local authorities will robustly deliver a system that works brilliantly. Collectively, we are absolutely in favour of it.
Mr Duncan Smith
I am not one for discussing what goes on privately. I have been kicking around this game long enough to know that sometimes people like other people to move or be promoted, but some of us are not interested in careers. We reached a settlement and we are very happy—it was a happy discussion. We are a Government of friends, we get on enormously well and we do not need to worry about what everybody else says about us.
Jake Berry (Rossendale and Darwen) (Con)
I would like to take my right hon. Friend back to the online delivery of the universal credit. Although figures vary, he will be aware that the vast majority of people living in social housing have no access to the internet. BT does a social housing telephone tariff. Will he explore the possibility of a social housing broadband tariff to enable those who want to claim their benefits online to do so?
Mr Duncan Smith
Absolutely right. That is exactly what we are trying to do, and I will ensure that it is one of the areas we look at. That is the whole process we are engaged in. If we can get more people in social housing online, the net benefit will be phenomenal. We are all desperate for more broadband, but the people who will benefit the most—for shopping and so on—will be older people and others in difficulty on lower incomes. They will benefit massively, if we can begin to get them online. This is a crusade as much as anything else.
Dame Joan Ruddock
I am extremely grateful to the Secretary of State for giving way. He said earlier that he would not publish the business case, despite the request. I wonder, however, whether he can tell us something that we assume might be in the business case. How many more hours working in the economy does he expect to see as a consequence of introducing universal benefit next year?
Mr Duncan Smith
If the right hon. Lady will forgive me, I am not going to give her specific details now, although I am happy to talk to her at greater length later on. The point I would simply make is that universal credit is designed to get more people who are below work, as it were, to cross the line into work. When people ask, “What is universal credit really about?”, they always talk about the taper. That is really important: simplifying the taper allows people to move up the hours. In truth, however, universal credit’s key component is the disregards—the bit we call the participation tax rate. In other words, right now, unless someone goes straight to 16 hours as a lone parent, for example, the participation tax rate—the moment when they join work—is so high that there are households that need two earners in work just to have enough money to survive. The idea of universal credit is to break that down and improve their lot. I cannot give the right hon. Lady the detail, but I believe that more people will move up the hours, with more people moving into higher hours and longer-term work.
Mark Durkan
I thank the Secretary of State for giving way. He has said that he is taking a hands-on approach to the developing IT system. Will he assure us that the IT system, which will also cover Northern Ireland, will be formatted to allow both the continued weekly or fortnightly payment of benefits, if that is the policy of the Northern Ireland Assembly, and the direct payment of housing benefit to social landlords, which is the policy of the Assembly? Will the IT system also be able to cope with the problems of cross-border workers?
Mr Duncan Smith
I was going to deal with a lot of that in my speech, so the hon. Gentleman is helping me to speed up. Let me deal with monthly payments. I genuinely believe that we need to get people on to monthly payments, for a very good reason. Right now, about 75% of the work force are on monthly payments. We looked at this issue—as I am sure others have—when I was at the Centre for Social Justice. One of the biggest stumbling blocks we found is that when people are out of work, everything is paid directly to them every fortnight, but when they go back to work they really struggle—particularly those who have been out of work for a little time—to cope with the first few months in work. We are looking to get as many people as we possibly can on to a monthly payment, so that when they go into work they have already completed that process and it is not a big break for them.
Of course we will want to identify—working with councils and local groups, and so on—those in real difficulty. Now, here’s the thing. Until now, nobody has really bothered much about them, unless someone—maybe an MP—makes a specific effort to try to get something resolved for them. What we are doing will make us look at why those people cannot cope and then start to surround them with support. It might be about their ability to budget; it might be that the family has serious drug problems, in which case we will need to get to that. So, we start looking at the reason, then we can resolve that and move them into the process. We will allow for the ability to settle at two weeks where we think it vitally necessary, but the mainstream will go to monthly payments. However, I am happy to talk to the hon. Gentleman further about that and help him out.
Mr Marcus Jones (Nuneaton) (Con)
I thank my right hon. Friend for giving way and I wholeheartedly support the outcome he is seeking in implementing the policy. One of the greatest impediments to getting back into work, particularly for low earners, is child care. Will he outline what more the Government can do to support people with child care costs?
Mr Duncan Smith
The whole idea behind the universal credit is that it allows us not to cherry-pick child care. That is, we will support child care up the various hours, because at the moment the system is set so that people get it only at certain points. Universal credit allows us to do that, and we are putting another £300 million behind that. That is a major positive. Universal credit is also a major positive for lone parents seeking work, because of the increased ability of the first earner back into work to receive that money. That should benefit them enormously.
Let me try to address one other point that was made and then conclude. The Opposition have expressed some concerns about the universal credit and HMRC’s real-time information project, but the scheme will deliver a net reduction of £300 million in administrative burdens on employers. That is important, because the project will help enormously with the way we flow information, together with HMRC—and I stress “together”. The right hon. Member for Birmingham, Hodge Hill has made the point about that, both today and to me in the past, but I say to him simply: I am not letting this one go, as with some other Departments. We are locked into this. In fact, we have now placed one of the DWP people in the team working on real time information, which will report at the same time as the others. We believe that we are making good progress on getting RTI moving in the right direction.
The right hon. Gentleman asked what was to be done with the 20,000 housing benefit staff. We are dealing with this matter sensitively. We recognise that staff across the country will have concerns about the impact of the new benefit, which is why we are consulting local government right now. Although housing benefit will be absorbed into universal credit, we must not forget that that will not happen overnight. I am sure that any impact on job roles will be counterbalanced by, for example, changes to localised council tax benefit, which will require a number of staff. The administration of the social fund is also being moved down to local authorities, and there will be other work, too. This is a matter for us to discuss with the councils, but it can be dealt with sensitively. I do not think that we should get too concerned about it, but we need to deal with it. I think that there is scope for all of them.
I was asked earlier about the business case. We are constantly reshaping and remodelling it, and I do not think that we need to publish it. As I said to the right hon. Members for Birmingham, Hodge Hill and for East Ham, I am happy to discuss any issues surrounding it at any time. They are always invited in; it is always good to have a drink with them and discuss these matters.
Alison Seabeck
In Plymouth, we have more than 80% broadband coverage, but we do not have that level of broadband connection. A lot of my constituents are very poor and do not have internet access. They use their mobile phones to access the internet, but they cannot use them for downloading documents. There is therefore likely to be a surge of people going into jobcentres and elsewhere seeking support. My constituency also has quite a high level of illiteracy. Does the Secretary of State intend to bolster the number of staff in jobcentres to deal with that potential early surge, perhaps using some of the staff in housing benefit departments who could lose their jobs?
Mr Duncan Smith
The hon. Lady obviously would not expect me to make a commitment on that now. I can tell her what we are doing, however. I have visited a large number of jobcentres and talked to the managers and staff about what will happen when we move over to the new process. A number of jobcentres are already trialling ways of speeding up the online process of moving people to the new system. We are going to install computers and have staff ready to advise people. When they come in to make their claim, they will be shown to a computer, with a telephone or an adviser, and helped through the process. So, if they cannot do it at home, they should at least be able to do it at a jobcentre, with guidance and help.
I am also talking to my colleagues at the Department for Culture, Media and Sport, because we really need to get broadband to all areas, and we need to do it pretty fast. I accept that that is a matter for the Government. We are not just telling people that they have to do this, and then forgetting about them. We are going to ensure that those who have no internet access have another way to complete the process. We are also looking at different ways of using mobile telephones for making certain types of claim. There is a whole process taking place, and nothing is being left to chance. If the hon. Lady has any ideas, we would be pleased to hear them. I am sure that they will be brilliant.
Mr Duncan Smith
I was not going to give way again, because the Deputy Speaker is looking at me with the kind of look that says, “This boring bloke needs to shut up and sit down as soon as possible so that others can speak”, but if the hon. Member for North Antrim (Ian Paisley) is very quick, I will give way to him.
Ian Paisley
I thank the Secretary of State for his generosity, and I hope that I will not be too boring. What contingency plans is he working on to deal with a catastrophic failure of the new IT system? For eight weeks over the summer, the Ulster bank in Northern Ireland was effectively closed as a result of such a system failure. If it can happen to a bank, it will happen to the new system.
Mr Duncan Smith
As I have said, we are working through all of that. Of course we have to prepare for contingencies and for certain events, and we are looking at that right now. It is part of the process of developing the system.
No one has asked me about the security of the system, but I might as well be open about it. That is of course an area that we are working on. We are learning the lessons from what happened when the banks started operating online, and we are now engaged with various organisations, including GCHQ, and talking about those matters. A long, detailed, iterative process of work is taking place to try to cover every eventuality, and I promise the hon. Gentleman and the House that we shall leave no stone unturned.
I recognise why the Opposition wanted this debate, and I know that people have read bits and snippets from the newspapers. People should not always believe everything they read in the newspapers, however. Personally, I do not read them often these days for that very simple reason! None the less, I say to the Opposition and to every Member that if we get universal credit right—I believe that we will, and we are working to achieve it—it will benefit all our constituents. It is a major plus and a key reform—one that will genuinely define us as a Parliament that cared enough to take on the risks and achieve this. Not to do so risks too much for people as they head into the modern world unable to cope, unready and believing that they and their families will never see the process of work, which will scar them for the rest of their lives.
Dame Anne Begg
If the group about whom I have been talking cannot access the system, there is very little chance that they will be able to return to work. That is why the support is needed.
Mr Duncan Smith
I had not intended to intervene, but I think that I ought to take up the point that the hon. Lady has raised. Our plans already take account of a number of people who will not be online. We want 50% of those receiving the benefit to be online when we launch the system in October 2013, and we want the proportion to rise to 80% by 2017. We have always had parallel arrangements for those who will not be online, and we will explain those key arrangements to the hon. Lady.
Dame Anne Begg
I thank the Secretary of State, and may I also make a plea for it to be easily accessible, high quality and free, which is very important, too?
The poorest in our society are already disadvantaged in the digital age. They have already fallen behind the rest of us. Universal credit and its reliance on digital claims could exacerbate that still further. Instead of giving people living in poverty the help and support, and the access to work, that raises them out of poverty, universal credit could plunge them further into poverty and disadvantage. That would be a disaster.
We will not know the full impact of universal credit until we know the level at which it is set. Despite what the Secretary of State has said today, only then will we know the real marginal reduction rates and who will be better and worse off—who will be up, and who will be down—and whether people genuinely will be better off in work. Only when we get the real figures for real families, rather than the scenario planning that has gone on thus far, will we be able to see whether universal credit will work and they will have more money. Until then, a lot of what we are discussing is just an academic exercise. We need to get those figures, and I hope they will come soon.
There is, however, a great deal to play for. I said on Second Reading of the Welfare Reform Bill that a single working-age benefit is the holy grail of welfare reform. It is now up to the Government to make sure it does not turn out to be a very expensive cracked clay pot.
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Gareth Johnson (Dartford) (Con)
16. What recent steps he has taken to prevent benefit tourism.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The European Commission wants to end the habitual residence test. As a result, we would have to pay benefits to EU migrants as and when they arrive and they would not have to prove that they have been here, are working and have a residence. I believe that that is fundamentally wrong, as do the Government. The habitual residence test is vital to protect our benefits system and to stop such benefit tourism. I also do not believe that the EU has any rights in that area, and we are working with other countries that feel much the same.
Angie Bray
I thank my right hon. Friend for that answer. Does he agree that any measures that encourage benefit tourism place an intolerable burden on counties, such as ours, that provide generous welfare provision and that we need an agreement across Europe to protect countries from that threat?
Mr Duncan Smith
Yes, I agree with my hon. Friend. I referred to working with other countries, and a large number of other member states also have real concerns about the move and believe that they, too, will be affected. Among them are 17 member states, including Germany, Netherlands, Sweden, Denmark and Finland, that attended a conference we held and they all expressed their concern. We are working with them on a set of agreed principles that we will present to the EU, which I hope will end this nonsense.
Mr Spencer
I am glad to hear that the Secretary of State will be robust in his dealings with the EU. What message does it send to hard-working taxpayers in Sherwood who, when they need the safety net of the state, find that it is being abused by those who simply step off a boat and who have not contributed to the system in the UK?
Mr Duncan Smith
My hon. Friend is of course right that we want to support people who, through no fault of their own, fall out of work, and we want to do that for our own citizens. We also accept that for those who have been here for a period of time—hence the habitual residence test—because it is important to support those who are genuinely resident in the UK and delivering something for the UK economy. His constituents will understand fully that it is right to do that. However, it is not right for us to end up with a system—other countries agree on this—in which someone can literally arrive here and, only days after, decide that they are not working and, therefore, they are eligible for benefits. That would be quite wrong for the British taxpayer.
Mr Jones
My constituents will be horrified with this proposal from the EU Commission but heartened by the robust stance my right hon. Friend is taking. Does he not agree that, in addition to a consensus across Europe on the issue, we need a firm and robust consensus across this House? Therefore, what representations has he received from the Labour party in this regard?
Mr Duncan Smith
I actually have not received any representations from the Labour party but, to be fair, I did not ask for any. I always look forward to seeing my opposite number over a drink, although we have not had one recently, and he is more than welcome to make representations. He should know that we have had good representations from other countries that were not part of this, including Portugal, Slovakia and Slovenia. I want to put it on the record that the costs of the proposal could be enormous. If we did not have the British residency test, it is estimated that right now the cost would be something in the order of £155 million, although that could change.
Gareth Johnson
I welcome the Secretary of State’s announcement on the habitual residence test. Does he agree that the test is vital in preventing abuse of our welfare state? Perhaps most of all, however, surely we should be deciding on such issues, not the European Union.
Mr Duncan Smith
Again, I agree with my hon. Friend. We already have an issue that should be dealt with beyond that, with people who declare themselves as self-employed on arrival here—some coming in as sellers on the street, and so on. There is a way in which they can claim benefits. We do not want to open that up to everybody; we would rather deal with that but not lose the habitual residence test, which is my plan.
Kate Green (Stretford and Urmston) (Lab)
Will the Secretary of State none the less acknowledge that, in fact, migrant workers are more likely to be in work and disproportionately less likely to be claiming benefits than non-migrants? Does he not think it important that we conduct the debate with the facts accurately and reliably portrayed?
Mr Duncan Smith
I agree that we want to ensure that the door is open to those who want to come and work here and benefit the UK. That is part of the agreements in the European Union. However, we have concerns, and we are not alone: 17 countries and others are beginning to ask why this is necessary. Freedom of movement exists; what the habitual residence test does is protect our understanding of that, not damage it. Indeed, we have no intention of damaging it, but we certainly want to protect British taxpayers from any kind of change.
Graham Evans (Weaver Vale) (Con)
9. What recent estimate he has made of the number of people in work not saving for a pension.
Jane Ellison (Battersea) (Con)
18. What steps he is taking to support people eligible for universal credit with budgeting.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We hope that most people will be able to manage their money successfully and we are working towards that, but we also recognise that, in the development of universal credit, there will always be some people who will need additional support. We are looking at and trialling that and making arrangements. There will be a range of budgeting support services available for those people to help them prepare for universal credit and to provide ongoing support. We are consulting on these matters at present.
Jane Ellison
I thank my right hon. Friend for his reply. I meet a local single mothers support group, the Women of Wandsworth, on a regular basis. Some of the mums have expressed concern about monthly budgeting and are worried that it will just be assumed that they can manage. Will my right hon. Friend confirm that, under universal credit, my constituents can be reassured that support is in place and that there will be no question of them just being left to their own devices?
Mr Duncan Smith
Absolutely—I can give that assurance. That is exactly what we are working and consulting on at the moment. Of course, people will be concerned about it, but there are positives to take from this. The most important thing is that, by trying to move people, eventually, on to a monthly payment, that will bring them much more into line with the world of work. One of the great problems we have had is that, when people who have been unemployed go into work, they find it very difficult to cope with having suddenly to take on and manage their arrangements. The key thing is that we want to get those who can do so to that point, and we will work with the others. For some, there may be interim two-weekly payments. At the moment, we are looking to trial a whole series of arrangements to make that much easier for them, and we will make sure that that happens.
Mr David Anderson (Blaydon) (Lab)
Is part of the Secretary of State’s strategy to help people move on to universal credit the expansion of food banks, which is seen as a disgrace and a condemnation of this Government across the country?
Mr Duncan Smith
Not at all. When we came to office, I was told by the Department that despite the constant requests from a variety of people who provide food banks, in particular the Trussell Trust, to put their leaflets in jobcentres to advertise what they were doing, the last Government said no, because they did not want the embarrassment of their involvement. We immediately allowed them to do so, which is one reason for the increase in the number of people seeking food banks.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
I congratulate my right hon. Friend on retaining his position. Given that eligibility for free school meals is a key factor in determining deprivation and a key indicator of a child’s educational life chances, what assurances can he give that the structure and income bands of universal credit will not undermine the ability to target educational improvement where it is most needed?
Mr Duncan Smith
May I say first that the work that my hon. Friend did at the Department for Education will stand the test of time and that people will thank him for it? The consultations and work we are doing on things such as passported benefits are critical to ensure that everybody’s position improves as a result of universal credit. I give him my personal guarantee that that is exactly what we will do.
Dame Anne Begg (Aberdeen South) (Lab)
Does the Secretary of State accept that somebody on jobseeker’s allowance with a disposable income of less than £70 a week who manages with fortnightly payments is actually very good at budgeting? The danger of monthly payments is not budgeting but the lack of money to buy everything that everybody else takes for granted and that a person should be able to buy with their benefit.
Mr Duncan Smith
Absolutely—I accept that we have to deal with those issues. We are seeking to move to monthly payments. When payments moved from being weekly to fortnightly, everyone said it would cause major problems, but very little happened. We are putting in place requirements so that people may receive their money on a two-weekly basis if they are unable to cope. We recognise that when we introduce this process, people will have to transition into it so that they are not left with a period without any money. All that is under consideration. We are trialling the programmes to ensure that we get this right. I give the hon. Lady my assurance that we will not move on this unless we are certain we can make it work.
Stephen Lloyd (Eastbourne) (LD)
I am a strong advocate of universal credit, as the Secretary of State knows, but I retain a couple of concerns. The plan for a single person within the family to receive all the universal credit could be detrimental to women in particular. Will he confirm that there will be enough flexibility to ensure that women do not lose out?
Mr Duncan Smith
That issue has been raised, so we have discussed it with a number of people and will allow for it. People will be able to nominate who should receive the payment. If there is a problem, in certain circumstances we will agree that an individual should receive the money. There is huge flexibility over where the payment should go and we are consulting on that at the moment. We will make any changes we need to make.
Tony Lloyd (Manchester Central) (Lab)
The Secretary of State will recognise that among the people who will need help with budgeting under universal credit are women and men in flight from domestic violence and seeking refuge. Will he give an absolute guarantee that they will not suffer from a lack of places and that refuges will not be penalised, causing a reduction in places for the women and men who need them?
Mr Duncan Smith
I can give the hon. Gentleman that guarantee. If he has any concerns that he thinks we might not have dealt with, my door is open for him to come and talk to me. I am talking to many organisations, including Refuge, to ensure that we cover those issues. This is a priority concern for us and I give my absolute guarantee that that will happen.
Andrew Griffiths (Burton) (Con)
19. What recent representations he has received on the setting of an annual benefit cap at £35,000.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We have received a number of representations on the benefit cap, which will be introduced from 2013 and be set at a maximum of £26,000 net a year. That is about restoring fairness to the system and ensuring that those on benefits no longer receive more in state support than the average earnings of a working family. We have worked hard to identify the households and families that will be affected by the cap well in advance of the April start date. There is additional funding of some £190 million to smooth the transition over the spending review period.
Andrew Griffiths (Burton) (Con)
I thank the Secretary of State for that answer and congratulate him on the work he has done on this issue.
The average salary in my constituency is £22,400, and people cannot understand why anybody would oppose a cap on benefits that is substantially more than they earn to feed their families. A week on Friday I am organising a jobs fair in Burton, which we expect 2,500 people to attend. Does the Secretary of State agree that it is important to tell jobseekers that they will always be better off in work than on benefits?
Mr Duncan Smith
This is one of the most popular programmes that this Government are introducing, and the public genuinely believe that it is the right thing to do. The only group, it seems, who do not think it is the right thing to do are those sitting on the Opposition Benches.
When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap. Some 88% are now up to date with their rent, and 1% have reported having to move.
Fiona Mactaggart (Slough) (Lab)
20. What discussions he has had with companies that manage contracts under the Work programme on collaborating to reduce unemployment in the area in which they work; and if he will make a statement.
Pauline Latham (Mid Derbyshire) (Con)
21. What steps he is taking to develop new measurements of child poverty?
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The latest figures show that despite the previous Government spending huge sums—more than £300 billion—on working age welfare and tax credits, during their latter stages the level of poverty actually rose, and it was clear that the figures for measurement do not work as well as they should.
The Government are committed to eradicating child poverty and to the targets that we set up, but we are also interested in developing better measures through a consultation that will be launched this autumn.
Pauline Latham
Does the Secretary of State agree that if we are going to tackle child poverty, we must tackle its root causes?
Mr Duncan Smith
My hon. Friend is absolutely right. One problem with some of the ways in which child poverty is measured is that not enough credence is given to the fact that we need to get beyond the simple point about money, and look into what causes some families to remain persistently in poverty. Although the latest figures show that relative poverty fell by 2% over the past year, I do not try to claim any point of success because levels of absolute poverty remained flat. The reason relative poverty fell is that during the major recession the overall economy fell as well, but that is no way to measure whether people are in poverty or not.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I am sure that in the recent past the Secretary of State has met non-governmental organisations such as Save the Children, the Children’s Society and Barnardo’s. Does he intend to meet those organisations during his consultation period to hear their genuine concerns about the change in the measurement of child poverty, and the difficulties it will cause that may distort outcomes at the end of the process?
Mr Duncan Smith
I agree with the hon. Gentleman. We are consulting widely with those organisations, and when we introduce the consultation process we want to hear from them all about how best to look at the issue of measurement so that the effect of what we do is felt by those who need it most. We are taking the recommended steps suggested by Save the Children, and we are committed to eradication. Universal credit is critical to the process of taking some 900,000 adults and children out of poverty, which we should all support.
Topical Questions
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I pay tribute, as my hon. Friend the Member for Wirral West (Esther McVey) has done, to our Paralympic athletes, whose feats we have watched over the past fortnight. They have impressed us all and excited us by the very idea of competition, as well as overcoming their major difficulties. Next week my Department will publish the responses of thousands of disabled people to the “Fulfilling Potential” consultation that was launched earlier this year. Changing perceptions is key to helping disabled people overcome the barriers they face, as is tackling discrimination wherever it occurs.
Mrs Riordan
Will the Minister explain why so many people with Parkinson’s disease, such as my constituent Ian Barraclough, face endless form filling and bureaucracy to get the money to which they are entitled? Are welfare reforms failing when such people are failed?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I associate myself and my hon. Friends with the Secretary of State’s words of congratulations to our extraordinary Paralympians, who have simply dazzled us over the past couple of weeks?
I am delighted to see that the Secretary of State has survived the enthusiastic support of his friends in the Treasury, but may I press him on the price of his survival? When universal credit is fully rolled out in 2017, the Office for Budget Responsibility says that the extra costs will be £3.1 billion. The Treasury in its budget says that the price must be no more than £2.5 billion. With whose estimate does the Secretary of State agree?
Mr Duncan Smith
The OBR agrees with me and I—strangely enough—agree with the Treasury. Our view is that we will roll this programme out at a cost of £2.5 billion per year. as originally estimated. I think the right hon. Gentleman is referring to a partial statement in a document produced before March by the OBR, and for the sake of the House I will read what it actually says. Although the OBR originally looked at this and wondered whether £3.1 billion would be reasonable, it has
“adjusted this down to £2.5 billion as the Government has stated in the Budget that final decisions on policy design”
are essentially now made.
Mr Byrne
I am afraid the Opposition simply cannot accept a think-tank set up by the Treasury putting the figure at £3.1 billion and the Treasury, in the March Budget, revising it down to £2.5 billion. The Secretary of State must accept, as I am sure many in the House do, that an extra £600 million will have a huge impact on whether people will be better off in work or on benefits. The Treasury clearly believes there is a state of chaos around universal credit, as do the Cabinet Office and No. 10. Surely it is time he tells the House exactly what is going on, and sets before us the business case that he is trying to keep secret from us. Is there something he is trying to hide?
Mr Duncan Smith
There is absolutely nothing to hide—[Interruption.] No, no. We are committed to the £2.5 billion all the way through and we will deliver universal credit on time, as it is and on budget. Any time he would like, he is welcome to come into the office and look through some of our business matters, as is his colleague, the right hon. Member for East Ham (Stephen Timms). I will show him how we are on time, on target and on budget.
The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) did rather jump the gun. He referred over the weekend to universal credit as a car crash in the making. I need no advice from the man who produced the biggest car crash in British economic history.
Gareth Johnson (Dartford) (Con)
T10. The Secretary of State will be aware that Bluewater shopping centre in my constituency recently announced a further 1,500 jobs to add to the jobs of 7,500 people who are employed there. Will he accept my invitation to visit Bluewater with me to see first hand the job creation that this Government have helped to make possible?
Mr Duncan Smith
I look forward to visiting my hon. Friend and shall definitely come. He gives us a great reminder—the Opposition do not like this very much—of the three-quarters improvement in employment, and of falling unemployment and benefit claimant numbers. More importantly, as a direct result of what the Government have done in our welfare reforms, there is a lower number of economically inactive people than at almost any time since those records began.
Alex Cunningham (Stockton North) (Lab)
T2. As other hon. Members have mentioned, the introduction of universal credit will mean that housing benefit will be paid not directly to landlords but to tenants, and that it will be paid monthly rather than fortnightly, causing tenants to go into substantial arrears. Does the Secretary of State agree that, when assessing whether a claimant is vulnerable enough to be exempted from monthly payments and receiving their housing element directly, it should be standard practice to consider the feedback of third parties such as social services and voluntary sector services as well as claimants?
Mr Duncan Smith
I do, yes. We want to pay people directly, and we already pay local housing allowance to such tenants directly, which the hon. Gentleman and all hon. Members should remember. The vast majority cope with that payment—they are very similar. The point is this: we do not intend to cause problems, but the more we continue to treat people in receipt of benefits like children, the less likely they will be able to cope when they go to work. Those who can absolutely must get on to that payment schedule, but we will obviously talk to all the bodies to which he referred to ensure that we identify those who cannot. If people cannot get on to that schedule, we want to surround them with help and support to find out why they cannot manage their payments, and to rectify that rather than just throw money at them.
Charlie Elphicke (Dover) (Con)
I thank the Minister for his assurances that the implementation of universal credit is on time. Will he confirm that it is on track to reduce child poverty by 350,000? As hon. Members will recall, child poverty rose sharply in the previous Parliament.
Mr Duncan Smith
It is good to see my hon. Friend—as usual, I absolutely agree with him. I can assure him that universal credit is on time and on budget. I want to stay to see it through and ensure that we deliver it on time.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T3. I am contacted every day by vulnerable constituents bruised, battered and sometimes made ill by the Secretary of State’s Department trying to force them off benefits that they desperately need. He knows that huge sums of benefits go unclaimed. What is he doing to ensure that those on benefits understand their full entitlement, particularly in respect of Warm Front payments, on which I understand there will be an underspend this year?
Mr Duncan Smith
I agree. The hon. Lady raises an important point about an area of work—I was just talking to my ministerial colleague about it—that universal credit should help to rectify and improve dramatically, because putting everything into one location will allow us to target it correctly on the intended recipients. One of the biggest problems is that the complexity of the system does not allow that to happen, meaning that lots of people fall through the cracks.
Sir Tony Baldry (Banbury) (Con)
Universal credit will be the greatest revolution in the benefits system for more than a generation. Will my right hon. Friend ensure that every Member has the opportunity, between now and the introduction of universal credit, to get to grips with its minutiae, so that we can be confident of ensuring that our constituents understand how it will work?
Mr Duncan Smith
I will follow through on that very good suggestion. We are already consulting. My hon. Friend might be aware that in July we had a series of consultations in the Committee Rooms with Members of the other place and of this House. We intend to continue that consultation and to set up demonstrations of how it works at the front end and of what they will need to do. We are determined to ensure that Members understand how to claim it—I hope that some of them may have to use it in due course.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
T4. We were told that universal credit would ensure that every additional hour that people worked would pay. Is the Secretary of State aware of concerns of the Children’s Society and others that many thousands of families face a cliff edge at the point when eligibility for free school meals kicks in? What is he doing to ensure that families do not lose out or find themselves better off working fewer hours?
Mr Duncan Smith
We are discussing that with the Department for Education and others, and consulting the relevant bodies and interest groups outside. We are looking for the best way of integrating the process to eradicate such problems and cliff edges in order to create a seamless process that allows people smoothly to engage and improve the quality of their lives, rather than having to negotiate at the edges of those difficulties.
Philip Davies (Shipley) (Con)
The Secretary of State knows that I fully support his introduction of a benefits cap and his measures to ensure that people are always better off in work, but does he concede that some people are still better off on benefits than other people in work and that to tackle that issue we need to reduce the cap even further?
Mr Duncan Smith
It is interesting, of course, because I have had correspondence from people throughout the country saying that we should reduce the cap because it is too high. We have introduced the cap at this level because we think it is fairest—it ensures that average earnings are not exceeded by people who are out of work and that people who pay their taxes do not feel that they are paying them to people who do not work as hard as they do.
Chris Evans (Islwyn) (Lab/Co-op)
T5. A constituent has written to me stating that she has had terrible trouble finding work because she has a daughter under the age of six and has child care needs. She has visited Jobcentre Plus but has been told that jobs in term time are few and far between. She asks whether the Government have studied the situation in France, where 65% of women with children under the age of six are in work.
Paul Goggins (Wythenshawe and Sale East) (Lab)
In response to the question from my right hon. Friend the Member for Cynon Valley (Ann Clwyd) about the high tax being paid by sacked Remploy staff on their redundancy payments, the Minister gave an encouraging reply and said that the matter would be dealt with as soon as possible. Will the Secretary of State confirm that that means the money will be returned to those sacked staff in the current tax year?
Mr Duncan Smith
I fully support the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wirral West (Esther McVey), and I really welcome her arrival. She said that the matter was being looked into right now, and she will receive my full support while that happens.
Gavin Barwell (Croydon Central) (Con)
The Government are piloting a scheme in my constituency in which the young unemployed who have never worked will be required to do voluntary work in return for their benefits. Does my hon. Friend agree that that will be good for the long-term job prospects of the young people concerned, and good for confidence in the benefits system, in showing that people will not get something for nothing?
Miss Anne McIntosh (Thirsk and Malton) (Con)
I am delighted that the Secretary of State has announced that advice will be given to vulnerable claimants on how to spend universal credit. Who will provide such advice in deeply rural areas in which there are no jobcentres and no access to citizens advice bureaux?
Mr Duncan Smith
I can assure my hon. Friend that we will work closely with local councils—whom we are consulting right now—and all those involved, including those distributing the social fund, at local level. We will also talk to local groups involved in credit advice and local poverty groups, as well as ensuring, ourselves, through the jobcentres, that those claimants get that advice. They will get that advice. We will work with them, identify them and ensure that they improve the situation they are in.
Mr Dennis Skinner (Bolsover) (Lab)
Will the Secretary of State explain why, when disabled people are justifiably being applauded the length and breadth of this land, he has chosen this time to close Remploy factories that employ thousands of disabled people? Will he withdraw those closures and put an end to that hypocrisy?
Mr Duncan Smith
May I say to the hon. Gentleman that the process was started by his Government? It was they who closed 29 centres. The difference is that they never put in place any support measures for unemployed Remploy factory workers. We, however, are spending £320 million and adding another £15 million to that to ensure that, with the new programme, we try to get them back into mainstream work. It was the lobby groups that wanted us to do this, because they do not like segregated employment.
Personal Independence Payment
Iain Duncan Smith Excerpts(13 years, 6 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Disability living allowance (DLA) is being replaced by a new benefit called personal independence payment (PIP) for people aged 16-64 from April 2013.
On 2 August 2012 we announced details of the organisations that have been successful in the competition to provide the new independent assessment services for PIP.
This announcement concluded a commercial process that began earlier this year. On 30 April the Department for Work and Pensions (DWP) announced the 10 organisations which had been awarded a place on the framework to deliver health and disability assessments. This framework is made up of four regional lots plus a national lot, Lot 5.
On 2 May the DWP invited the organisations in Lots 1 to 4 to tender to deliver the PIP assessment service on behalf of DWP and the Northern Ireland Social Security Agency. The competition selected the following bidders for each of the three regional lots:
Lot 1 (Scotland, north-east and north-west England)—Atos IT Services UK Ltd
Lot 2 (Wales and central England)—Capita Business Services Ltd
Lot 3 (London and southern England)—Atos IT Services UK Ltd
The recommended supplier for Lot 4 is still to be confirmed through the Northern Ireland Social Security Agency approvals process and will be announced in due course.
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Angie Bray (Ealing Central and Acton) (Con)
19. What recent assessment he has made of the benefits for jobseekers of undertaking work experience.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Early analysis shows that approximately half of participants are off benefit within 21 weeks of starting a work experience placement. I am delighted that, despite a campaign run by anarchists and members of the Labour party, just like hon. Gentlemen on the Benches opposite me, to try to blight the chances of these young people, employers continue to come forward to join this excellent scheme. Young people have overwhelmingly shown that they want this valuable experience by continuing to volunteer to do their part.
Stephen Hammond
It is good news that young people and people on work experience schemes come off them within 21 weeks. How does that compare with the new deal set up by the previous Government?
Mr Duncan Smith
It compares very favourably. First, it is better. Secondly, it costs a lot less. Labour paid huge sums of money up front, whereas we pay the jobseeker’s allowance. The key point is that not once has any Opposition Front-Bench Member got up to defend this work experience programme, which many of their colleagues attack and try to destroy.
Stephen Metcalfe
Will my right hon. Friend remind us how long a young person can stay on the work experience scheme before they lose their benefit, and how that compares with the situation under the previous Government?
Mr Duncan Smith
This is the interesting bit, because the previous Government legislated for work experience before they left office and now attack it, but they allowed people only two weeks, which was not enough time for them to get the experience they needed. We have given people two months, and a third month if the employer offers them either an apprenticeship or a job.
Eric Ollerenshaw
Does the Secretary of State agree that, much like work experience for students in education, work experience for the unemployed plays a vital role in their securing the right habits in order to secure full-time employment eventually?
Mr Duncan Smith
Yes, and one interesting fact is that although the ex-Deputy Prime Minister, Lord Prescott, attacked the scheme that had some difficulties in relation to young people learning and training, it turns out that the vast majority of them wanted to do it. Moreover, they got an experience that has allowed them to go after jobs at the Olympic park paying over £9 an hour, which they would not have had an opportunity to do if the Opposition had had their way.
Jackie Doyle-Price
Clearly, young people in particular will benefit from being able to acquire and demonstrate skills that are of value in the workplace. Does my right hon. Friend agree that we should be doing everything we can to encourage employers to give similar placements?
Mr Duncan Smith
I agree with my hon. Friend. One of the big problems we had was that some people, including the Labour party and those anarchists, have tried to stop those companies from doing that. I sometimes get confused as to who the anarchists are and who the Labour party members are when I look at the Opposition line-up, but the reality is that this is good for the young people who do it; it is good in terms of their experience; and they actually ask for it in the first place.
Angie Bray
When travelling around my constituency, I have been very struck by how enthusiastic young people are to get work experience. Does my right hon. Friend agree that, despite what the cynics say, young people are very keen to get work experience because they know that it helps prepare them for a real job?
Mr Duncan Smith
I agree. Actually it is so good that they volunteer for it; I wonder whether we should run a work experience programme for those on the Opposition Front Bench.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
It is very difficult for Opposition Members to get a word in on this one. Is not the Secretary of State being rather silly, because most people know that if the work experience is of high quality and does not displace other people’s jobs, we are all in favour of it? Is it not about time that all of us on both sides of the House made sure that we had decent schemes for young people, which are of high quality and lead to jobs?
Mr Duncan Smith
I respect the hon. Gentleman and I am grateful for those comments; I wish that everybody else on his side of the House approached this issue with the same attitude. Work experience has resulted in about half those going on to it getting off the benefits roll. They want to do it—this is really important—and what they are getting from it is experience they cannot otherwise get. Employers say to people time and again, “We can’t employ you because you don’t have experience,” yet they could not get that experience. Surely this has got to be a good thing for them and a good thing for all of us.
Kate Green (Stretford and Urmston) (Lab)
I, too, support good quality work experience that genuinely enhances employability, but as the Secretary of State seeks to roll out this initiative, what steps are his Department taking to ensure that high quality is maintained and that such work experience does not become a way for employers to churn cheap labour at the bottom?
Mr Duncan Smith
Of course, the hon. Lady is absolutely right, and the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is absolutely focusing on this issue with Jobcentre Plus. If we hear of any programmes that are not in that category, we will not allow young people to go on them. However, the key thing to bear in mind here is that this gives young people a real chance to get something they can sell to an employer. We should all back that, and I wish that more people were like the hon. Members who have just spoken.
Sheila Gilmore (Edinburgh East) (Lab)
The questioners on the Government Benches asked about recent assessment of work experience, but the Secretary of State responded by talking about figures that he has been punting for several months now. Has he carried out any further assessment since the pilot project that produced those figures, which is nearly a year old now, given that the only other published assessment, of mandatory work experience, suggested that it did not work?
Mr Duncan Smith
We published these figures two months ago, but if the hon. Lady really wants to press me, I hear anecdotally from those in the Work programme that it is even better.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
The Secretary of State may be interested to hear that Birmingham Labour went into the local election campaign promising work experience, so it is wrong to say that the Opposition are against it. However, the purpose of all this is to get people into work, and that requires a skills base. Has he assessed how much of the extra training of some people within companies is merely replacing what they are already doing, and how much is genuinely new commitment by companies to the training of young people?
Mr Duncan Smith
We believe that the programmes brought forward to us, and which these young people are volunteering for, constitute genuine experience that they will gain and that the companies were not necessarily providing before. Of course, I fully accept that we want to ensure that those are high quality, and I congratulate the hon. Lady, not for the first time, on genuinely looking at this issue from the point of view of the problem and how we solve it. I wish there were more people doing that, but the trouble is that Opposition Front Benchers absolutely do not attack those who spend their time trying to destroy the work experience programme.
Ian Austin (Dudley North) (Lab)
We introduced mandatory work experience under the flexible new deal and we support, as we have heard from a number of my hon. Friends, proper work experience that leads to jobs. However, why did the Secretary of State scrap our scheme and instead pour millions into a mandatory work activity scheme that his own Department says has no impact? Should he not sort out this shambles before announcing his next set of half-baked changes?
Mr Duncan Smith
I see that the Opposition have discovered one word that they can now all say because it is not too long for them: shambles. The only shambles that we see is what is going on on their Front Bench. The reality is that we did not persist with the two-week work experience programme because all the young people told us that it did not work—they needed more time. That is what you do: when you hear the truth from people who need your support, you act on it, like we did, and give them that extra time.
Richard Graham (Gloucester) (Con)
7. What recent discussions he has had with his EU counterparts on the influence of the European Commission on UK social security policies.
Mr William Bain (Glasgow North East) (Lab)
21. If he will estimate the likely change in unemployment and housing benefit costs in 2015 compared with estimates made in the 2010 autumn statement.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In 2015-16, we expect to spend around £220 billion on benefits and personal tax credits. That includes an estimate of spending on jobseeker's allowance and housing benefit which, taking account of the latest assumptions from the Office for Budget Responsibility, is around £1.4 billion higher than was expected in 2010.
Mr Bain
Is not the truth that just one in eight of housing benefit recipients are unemployed and that 93% of new claimants are in households struggling in low-paid work, with falling real wages but paying soaring rents to largely private sector landlords? Instead of forcing 380,000 young people under 25 back in with their parents or onto the streets, should not the Government be dealing with surging rent rises, building social housing and introducing a proper living wage, to deal with the biggest squeeze on living standards for 90 years?
Mr Duncan Smith
Can I remind the hon. Gentleman which Government introduced the local housing allowance, as a direct result of which rents rocketed? As for our changes to housing benefit, the latest report, published about a week ago, shows that only about 1% of those affected have to move; a third have now said that they will seek work, which is a positive effect; and something near a half have not seen any rent rises or negotiated them downwards, so rents have been falling.
Philip Davies (Shipley) (Con)
I congratulate my right hon. Friend on introducing the benefits cap. Can he give more details of what has happened since housing benefit was capped? Also, in the light of the Prime Minister’s speech today, will he commit the Government to consider reducing the benefits cap from £26,000, which my constituents think is still far too high?
Mr Duncan Smith
I shall certainly relay my hon. Friend’s views to the Prime Minister as part of the overall review. When we made the changes to housing benefit, we were attacked by the Opposition for “social cleansing” and all those dangerous things we were supposed to be dealing in—[Interruption.] No, no, by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) and his team. On the one hand, his team accuse us of social cleansing; on the other, he accused me the other day of not cutting deep enough on housing benefit. The only shambles here is their position on housing benefit.
Jack Dromey (Birmingham, Erdington) (Lab)
A million young people are out of work. Now, the Prime Minister wants to deny housing benefit to under-25s, pushing thousands into becoming homeless and punishing workers on low pay or in an apprenticeship who need housing benefit to keep a roof over their head. Does the Secretary of State agree with the chief executive of the YMCA, who says it is
“difficult…to think in our 168-year history of a proposal more detrimental and having a negative impact”,
and the chief executive of Crisis, who says that the Government are being “irresponsible” and should concentrate instead on creating badly needed jobs and building badly needed affordable homes?
Mr Duncan Smith
We are doing all those things. The housing benefit changes are necessary to bring back under control a budget that was spiralling under the Government the hon. Gentleman supported. In almost 10 years, we saw that budget rise from about £11 billion to £21 billion. That was madness, and it was their lack of control and their creation of the local housing allowance that led to that problem, so we will take no lectures from him or his hon. Friends about what is right or wrong in relation to housing benefit.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
How many young people under 25 does the Secretary of State think will lose their jobs as a result of the measures that his Prime Minister is proposing?
Mr Duncan Smith
I am not aware that any would lose their jobs. I am aware that, as I said to my hon. Friend the Member for Shipley (Philip Davies), the housing benefit changes that we have introduced are already leading to a large number of those who were not in work now seeking work. That is the difference between us and the Opposition—we believe that these changes should be about helping people to become independent; they think welfare is about making people dependent on them.
Mr Marcus Jones (Nuneaton) (Con)
T2. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today I am announcing the Department’s plans better to support jobseekers allowance claimants who are members of Her Majesty’s reserve forces. We plan to amend the JSA regulations with effect from next month so that claimants who are in the military reserve can attend their required 15-day annual training camp without having to terminate their claim. This will mean that Jobcentre Plus can actively encourage claimants to join the Territorial Army without facing unnecessary and burdensome administration difficulties.
Mr Jones
I thank my right hon. Friend. In Nuneaton and the north of Warwickshire, unemployment has decreased since the last general election. Not being complacent, my hon. Friend the Member for North Warwickshire (Dan Byles) and I are running a jobs fair this Thursday, where a number of local and regional companies will be offering 220 jobs and 50 apprenticeship placements. Will my right hon. Friend welcome this and give a message of support and encouragement both to those companies and to the people in our constituencies looking for work?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
This morning the Secretary of State said on the “Today” programme that universal credit is on time and on budget. Can he confirm that to the House?
Mr Byrne
That is very interesting. The Minister with responsibility for unemployment told the House that all out-of-work benefits were supposed to be treated as universal credit applications from October 2013. The DWP newsletter from last month says that that now will not happen until mid-2014—nine months late. The project is supposed to cost £2 billion, but answers to my right hon. Friend the Member for East Ham (Stephen Timms) say that it is £100 million over budget. Universal credit is not on time and it is not on budget, and the Secretary of State does not know what is going on in his own Department, so is it any surprise that the Prime Minister had to announce another revolution in welfare reform this morning? The last one appears to be collapsing into chaos.
Mr Duncan Smith
Universal credit is on time and on budget. This is so typical of the right hon. Gentleman. He knows that universal credit is a programme that will be introduced over four years. He needs to go and check his figures again. There is something rather pathetic about the way he pauses on little figures and seems to think that that spells something. Universal credit will do more to get people back to work and it will rectify the mess that the previous Government left. It is on time and it is on budget.
Mr David Amess (Southend West) (Con)
T7. How many fewer benefits are there for people who are out of work than there were at the last general election?
Alison Seabeck (Plymouth, Moor View) (Lab)
The food bank in Plymouth has seen the number of people using it increase by 700 since April. It has clear evidence that the reason for this is the problem in the transition from contribution-based to income-based benefits, which in some cases lasts between four and eight weeks. Families are being left without money and are having to resort to the food bank, or in some cases, the skips behind supermarkets. What is the Secretary of State doing in his Department to ensure that that gap is reduced significantly?
Mr Duncan Smith
I accept the hon. Lady’s point and will look at the situation carefully to ensure that that does not happen. I will say that when we came into office food banks were not allowed to put their literature in jobcentres; the previous Government did not allow that and did not want them anywhere near jobcentres. We have since allowed them to put their literature in jobcentres. Jobcentre advisers are also telling people about that, so some of that expansion is due to the fact that people did not even know about this before we told them about it, which I think is fairly reasonable.
David Mowat (Warrington South) (Con)
Given the increasing evidence of market failure in the private pensions system and the Financial Services Authority’s recent estimate that between 30 % and 50% of private pension pots now go on charges, will the Government consider putting a cap on charges before auto-enrolment comes in?
Mrs Jenny Chapman (Darlington) (Lab)
In their efforts to get people back into work, will Ministers please make more of an effort to work with colleagues in the Treasury on tax credits? Constituents of mine are taking three-month contracts, ringing up to get the forms, which then take six or seven weeks to arrive, and when they are returned they are being refused the tax credit because there is only four weeks of the employment left. This is putting people off taking temporary work and really is—I use the word again—a shambles.
Mr Duncan Smith
The hon. Lady knows that we are not yet responsible for tax credits, although under universal credit they will eventually come in. I will certainly relay her comments to the Treasury and ensure that that does not happen. I agree with her that everything we do to promote work, even part-time work, is very important.
Harriett Baldwin (West Worcestershire) (Con)
Can the Minister confirm that over 800,000 new jobs have been created in the private sector since the election and that one of the fastest growing sectors in the sector is cyber-security, as it is in my constituency, where there is an insatiable desire to hire young people who have skills, particularly in ethical hacking?
Mr Duncan Smith
My hon. Friend is absolutely right. The point she should make, quite rightly, is that these are new and growing industries where there are real threats to computers and people using them, and that is why the industry is growing. More than that, in the past three months we have seen a fall in unemployment and a rise in private sector employment, even though we have been moving more people from incapacity benefit, ESA and lone parent benefits to jobseeker’s allowance, so it has been a success in difficult times and we should applaud that.
John Cryer (Leyton and Wanstead) (Lab)
Of the 54 existing Remploy factories, how many does the Minister expect still to be running at the end of this Parliament, whether they are called Remploy or go under another name?
George Freeman (Mid Norfolk) (Con)
The Labour party has been critical of the proposed regionalisation of benefits. Will the Secretary of State remind the House which senior politician first recommended the idea?
Mr Duncan Smith
I understand that it was the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who actually called for a debate, but as soon as we got a debate he told us that we were debating the wrong thing, which is rather strange.
Emma Reynolds (Wolverhampton North East) (Lab)
Many of my constituents have raised concerns with me about the forthcoming bedroom tax, especially given the lack of affordable alternative housing in Wolverhampton. Specifically, can the Secretary of State reassure me that individuals or families with disabilities who are in adapted housing, and who have waited some time to secure it, will not be subject to reductions in their housing benefit as of April next year?