Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Julian Smith (Skipton and Ripon) (Con)
1. What contribution his Department has made to the cross-government review of employment law.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
As part of the cross-government review of employment-related law we have implemented a number of easements for employers’ automatic enrolment following independent review, which will save small employers about £90 million a year, including increasing the earnings level at which automatic enrolment applies, introducing a simpler way for employers to check their existing pension schemes meet the required standards and introducing an optional waiting period of up to three months.
Julian Smith
The Secretary of State’s Department is responsible for a huge amount of employment law. May I urge him to work closely with the Department for Business, Innovation and Skills on its review to ensure that the Government make a cross-departmental effort to free small businesses up to take on staff?
Mr Duncan Smith
My hon. Friend definitely may. We are working closely with BIS in all it tries to do and my Department is doing quite a lot to help small employers. We listened carefully on auto-enrolment, we made a change to give a little more time and that helped small businesses enormously.
Richard Graham (Gloucester) (Con)
2. What steps he is taking to address incentivised transfers out of defined-benefit pension schemes.
Jessica Morden (Newport East) (Lab)
12. When he plans to publish proposals for supporting childcare through universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I made a commitment to provide more detail during the passage of the Welfare Reform Bill and am still on track to do so in time for its scrutiny in the Lords. We are considering the advice and suggestions raised in productive discussions held with MPs, peers and lobby groups, along with recent written responses submitted by attendees. It is going very well and we are learning a lot from those responses.
Jessica Morden
Will the Minister guarantee that the Government’s stated aim that universal credit will always pay will be in place for all families where child care costs are taken into account?
Mr Duncan Smith
That is absolutely our intention. That is why we are listening carefully to what people have proposed. The whole point about child care is that it should be there to support particularly women going into work who have caring responsibilities. We are reviewing this to make sure that that continues to be the case under universal credit. That is the whole point about the consultation. In other words, where we may be wrong, we can get that corrected and make sure that we come forward with a really good package in time for the debates in the other place.
Stephen Timms (East Ham) (Lab)
What is now the Government’s policy on the benefit cap in universal credit? The Secretary of State has told us that the policy is not changing, but press reports from Liberal Democrat sources contradict that by saying that the issue is far from settled and that the cap might not apply to existing benefit recipients. Then, last week, the Minister with responsibility for employment confirmed in a letter to me that “easements” are indeed being considered for existing recipients. So was the Secretary of State mistaken, and is the policy changing or not?
Mr Duncan Smith
The policy is not changing. The right hon. Gentleman should have written to me and my colleague at the same time, and we would both have given exactly the same answer. We have always said that in the course of the cap, we will look at any difficult cases. [Hon. Members: “Ah!”] We have always said that. One would always do that in a transition, just as we are doing with housing benefit. I remind the right hon. Gentleman and his colleagues that the cap will come in at a gross level of £35,000 a year. I would very much like to know what their position is on the cap, because so far we have heard absolutely nothing about whether they support it or are opposed to it. Perhaps they will tell us now. Most people out there are in favour of it.
Peter Aldous (Waveney) (Con)
13. Whether the mobility component of the personal independence payment will be available to people living in residential care.
Annette Brooke (Mid Dorset and North Poole) (LD)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I wish to take this opportunity to thank the hon. Member for Nottingham North (Mr Allen) for the tremendous work on early intervention that he has delivered to us. The report highlights the vital importance of early intervention for the prospects of today’s children as well as outlining recommendations for making early intervention happen through growth on the social investment market.
Annette Brooke
What assistance should Jobcentre Plus staff be giving to people with dyslexia, and what monitoring does the Department carry out to ensure that such people are not discriminated against?
Mr Byrne
This was a piece of analysis with enormous implications for the way in which the policy was implemented. This piece of work was so important that it was sent to the Prime Minister, the Chancellor of the Exchequer, the Deputy Prime Minister, the Chief Secretary to the Treasury and the Secretary of State. What was it that was so important about that analysis that it was not given to the Minister actually putting the legislation through this House? Will he now ensure that the analysis is produced before the House of Lords reaches the relevant debate?
Mr Duncan Smith
The right hon. Gentleman has written to me about this point and I have written back—but there is nothing like re-exercising the exchange—so he will know that the figures to which he refers were internal, not verified and out of date. Since then, as I have said to him, the DCLG and my Department agreed the impact assessment that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) stood on at the time of the Welfare Reform Bill and which we still stand on today. We should bear in mind the fact that—I do not know whether the right hon. Gentleman is aware of this—there are huge behavioural changes involved. The whole idea behind the cap—we still have no idea whether the Opposition support it or are against it—is that we believe that capping those benefits at gross £35,000 a year is reasonable. Instead of trying to dance on the head of a pin, perhaps he would like to give some leadership and tell us whether his side actually supports the cap.
Iain Stewart (Milton Keynes South) (Con)
T2. Following the decision by the Payments Council not to phase out personal cheques, may I ask my hon. Friend whether he intends to change his Department’s plan to phase out payments of benefits and pensions by cheques, which is causing concern to blind and visually impaired people?
Mr William Bain (Glasgow North East) (Lab)
T6. Does the Secretary of State accept the analysis of the Joseph Rowntree Foundation that, with child benefit being frozen and child care support through the tax credit system being cut by 10%, families with children will need to earn 20% more this year than last to meet the soaring costs of child care? What will he do about universal credit to ensure that lone parents, in particular, do not face an unacceptable financial burden because of his changes?
Mr Duncan Smith
The whole purpose is to ensure that lone parents have an opportunity to get back to work and to support themselves through work. The hon. Gentleman referred to the work of the Joseph Rowntree Foundation. We do not always accept everything that comes forward; there are often analyses that we do not accept. He will understand that from his time in government. As far as we are concerned, reducing to five the age of a lone parent’s child at which the lone parent goes back to work—following the Labour party’s age reduction to seven—is the right thing to do. Getting lone parents to take control of their lives through work has to be good for them.
Mr Rob Wilson (Reading East) (Con)
T5. In April I held a successful jobs fair in Reading, with nearly 2,000 people in attendance and 40 companies offering 1,500 jobs. I will be repeating it in September. What specific improvements in the service offered to them will my unemployed constituents get from the Work programme?
Mr John Leech (Manchester, Withington) (LD)
T8. The overall cap on benefit will result in some larger families living in expensive rented accommodation through no fault of their own being expected to live on £100 a week. May I suggest to the Secretary of State that the solution to that problem is to have two completely separate caps—one for housing benefit and one for the rest of benefits—so that families will not be left in poverty simply because of which part of the country they live in?
Mr Duncan Smith
The purpose of the cap is not to make people homeless or put them in difficult situations; the purpose is to try to restore the balance, so that when people enter work they do not suddenly have to lose their house because, owing to the withdrawal of housing benefit, they can no longer afford to pay for it. It is not a kindness to leave somebody in a house that they cannot afford and then put them through all that difficulty when they go to work. We are certainly looking at all those transition issues, and we will discuss them further with my hon. Friend.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
During his last outing at DWP questions the Pensions Minister undertook to respond to me imminently about Sure Start maternity grant for parents of multiples. Can he tell me how imminent is “imminent”?
Youth Unemployment (Walsall)
Iain Duncan Smith Excerpts(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Winnick (Walsall North) (Lab)
Thank you, Mr Speaker.
I applied for this debate in view of the serious youth unemployment in the Walsall area and particularly in my constituency. The latest figures show that, in my constituency, just under 16% of people in the 18 to 24 age group are claiming jobseeker’s allowance. I am pleased to see the Secretary of State for Work and Pensions on the Front Bench tonight, as well as the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). I should point out to them that that rate of just under 16% is the third highest in England. The situation in the other parts of the borough is not much different, and it is certainly still higher than the national average.
Let me state what should be obvious: unemployment is a curse to all those seeking work, and no less so to young people who want to get started in life. I emphasise again, as I have done in this House over the years, that we ourselves do not wish to become unemployed through losing our seats at any stage, and that we are always anxious to find work, and the same applies to the overwhelming majority of those who are registered unemployed.
Mr Winnick
I am glad to see the Secretary of State nodding in agreement. There is understandably considerable concern over the position locally. I fear a return to the situation in the 1980s, when two major recessions had a devastating effect not only on the borough but on the black country and on the west midlands in general.
Let me give the House an illustration of the situation nearly 26 years ago. In September 1985, more than one fifth of the age group that I am referring to were on unemployment benefit in the borough of Walsall. The situation improved over a period of time, and it certainly did so in the first years of this century. In May 2004, the youth unemployment percentage in Walsall was down to 7%. Even then, however, it was higher than the national average. I ask the Ministers to tell the House when we are likely to see the percentage go down to that figure that pertained seven years ago. Last year, youth unemployment rose in the three constituencies of Walsall North, Walsall South and Aldridge-Brownhills.
I do not challenge the fact that as the global recession took effect from 2008 onwards, unemployment grew. It is clear; the figures show it. I am not going to dispute what is, after all, quite obvious. There are bound to be continuing debates about how to deal with the recession and, indeed, about how it came about. My purpose tonight, however, is not to engage in that wider debate—there will be many opportunities in which I am sure I will participate—but to concentrate on the borough and the particular constituency of Walsall North that I represent and on what can be done to provide more opportunities for those without employment. That is the purpose of tonight’s Adjournment debate.
The sharp decline in manufacturing—what is sometimes referred to as metal-bashing—is clearly an important factor, not only for Walsall, but for what are usually described as the four black country boroughs. Walsall council’s latest review, looking at the overall employment situation in the borough, noted that in 2009, quite a number of new enterprises arose. That was very good. Unfortunately, however, there were quite a significant number of job losses. The net loss in 2009 was somewhere in the region of 285 jobs. Yes, jobs come in, but too many also go out.
As for vacancies, the figures show that 10.8 people—I use the exact figure—go after every job. I hope that there will be no disagreement about the fiction that there are jobs here and jobs there, so that those registered as unemployed—whether in the 18 to 24 age group or older—are not particularly keen to get work and are not willing to try to get it. All that is absolute fiction. I have seen reports in the paper on many occasions that when a vacancy occurs, there are sometimes as many as 40, 50 or even 100 people applying for it. As I said at the start, if we take the view, with which Ministers agreed, that those who are unemployed are keen and want to work, it is not surprising that people chase after vacancies and take every opportunity to try either to get into work for the first time or to get back into work.
What I want to find out tonight is what steps the Government intend to take, particularly in boroughs like mine. Let me point out again that this borough is the third highest in England for youth unemployment. What measures are the Government going to take? What feeling can people in my constituency and in the borough have for the fact that the Government recognise the urgency of the position and are willing to act on it?
I know that a number of measures have been publicised. Insofar as they are positive and will bring work and bring down unemployment, I will obviously welcome them. It would be strange otherwise. However, I ask Ministers when these measures that have been mentioned and published are going to come into effect. Have any of the measures on youth unemployment yet come into effect? Moreover, what priority will the Minister give in his reply to areas of high youth unemployment? It is important for him to answer that question.
There is no doubt that we need more apprentices. It is unfortunate that, more in my part of the country than in other areas, too many leave school at the first opportunity. Here we are talking about the under-18s. In a debate on education maintenance allowance that I initiated in January, I demonstrated that the percentage who received the allowance in the borough and in my constituency was very high indeed.
As the House knows, EMA is paid to those who stay at school after the age of 16 when the income of their households is relatively low. Unfortunately, the Government took measures to undermine the allowance. I do not know whether that is a controversial thing for me to say in a debate in which I have tried to avoid controversy, but I do know that the steps taken by the last Government through EMA to encourage 16-year-olds to stay at school were very useful. It is clear that more training opportunities are needed, so that those who leave school at 16 or 17—which I think we all agree is too early—can obtain the necessary skills and need not spend years, perhaps the rest of their working lives, in unskilled work with all the insecurities that that involves.
I said that I had applied for the debate because of the seriousness of the situation, and it is indeed a serious situation. As a constituency Member, I have a duty to do what I can to highlight the difficulties and bring them to the attention of the House of Commons, which, after all, is one of the responsibilities of a Member of Parliament. I have done that in the past, and I shall continue to do it for as long as I sit in the House. I hope that the Minister will be able to satisfy me that the measures announced by the Government will be effective, and will come into operation soon.
Pensions Bill [Lords]
Iain Duncan Smith Excerpts(13 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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.
May I first say something that might help the House? Hon. Members might not realise that there are a number of different things in the Bill, and I plan to go through those elements. I will obviously take interventions, and it would be helpful if interventions were made on those sections in due course; otherwise, it will take a long time, and I know colleagues want to speak.
The Bill is designed to secure this country’s retirement system, putting it on a stable and sustainable footing for the future. I remind the House that our first priority on coming into government was to secure the position of today’s pensioners. We acted immediately to introduce the triple guarantee, meaning that someone retiring today on a full basic state pension will receive £15,000 more over their retirement by way of the basic state pension than they would have under the old prices link. For 10 years, the previous Government talked about this, but we acted in our first year.
The backdrop to the Bill is that we have taken action, and we have committed to a permanent increase in the cold weather payments to £25—an increase the previous Government had planned to be temporary. The old rate, I remind colleagues, was £8.50. Last winter alone we paid out some £430 million to support vulnerable families. At the same time, winter fuel payments will remain exactly as budgeted for by the previous Government: at £200, and £300 for those over 80.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Will that be inflation-linked?
Mr Duncan Smith
With respect, it never was under the previous Government, and we are not going to change that policy. We have had plenty of discussions on this, and I remind the hon. Gentleman that, although the previous Government uprated it, the Red Book for that time shows that absolutely no money was allowed thereafter, so it was going to settle back. Let us be absolutely clear about that.
Mr Duncan Smith
Let me make a little more progress and then I will give way.
We have protected other key areas of support for pensioners, including free eye tests, free prescription charges and free TV licences for those aged over 75. Having quickly put incomes on a firmer footing, we have moved to secure older people’s right to work by taking decisive action to phase out the default retirement age, thereby sending a message that age discrimination has no place in modern British society and that older workers have a huge contribution to make.
Those were absolutely the right steps to take as a backdrop to the Bill, but they are just the beginning as we set about reforming our broken retirement system. At its heart, the Bill is about dealing with the challenge that faces the next generation, who will have to pay for their parents’ retirement while footing the bill for a crippling national debt, even before they start thinking about their own pension arrangements. I remind the House that 7 million people currently are not saving enough to have the income they want or expect in retirement. We need to look at the steps we can take to secure their future.
Mr Dave Watts (St Helens North) (Lab)
Is it not clear to the Secretary of State and the Government that although everyone accepts that there have to be changes, some of the proposals in the Bill are, for 500,000 women, unfair and unjustified? He should do a U-turn on those proposals as soon as he can.
Mr Duncan Smith
As I said at the outset, I will happily take an intervention on that part of the Bill when I come to it. Of course, that requires the hon. Gentleman’s staying for the whole debate, but that is up to him.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Many of us agree with the Secretary of State that it was about time that someone grappled with this particularly difficult issue of reforming our pension system, so I congratulate him on that, but we need to know very early in the debate whether that group of women will be fairly treated and whether the Government will think again, because those of us who feel positive about many of the reforms would find that a sticking point.
Mr Duncan Smith
I guarantee the hon. Gentleman that I will discuss the issue, and I hope he will still be here then—no doubt we can have an exchange on it.
The Bill addresses important issues, not just that of pension age. It is key that we get this generation saving and make sure that savings count and are not frittered away by the means test. We also have to find a way of sharing the cost of the retirement system between generations, ensuring a fair settlement for both young and old. I know that people think that retirement is all about just the group who are retiring, but as we look down the road ahead it is also very much about the generation who will have to pick up many of the bills. These are not easy decisions, but I want to make sure that the House recognises that we have to take decisions about the next generation; otherwise we will be guilty of falling into the same slot as the previous Government, who left us with the deficit.
Let me address auto-enrolment. The Bill takes forward the previous Government’s plans for automatic enrolment, which were debated and widely supported during the passing of the Pensions Act 2008 and to which we remain absolutely committed. The Bill refines some of the policy’s parameters to ensure that automatic enrolment works as effectively as possible, following the recommendations of the “Making automatic enrolment work” review that we initiated. First, we propose an increase in the earnings threshold at which automatic enrolment is triggered from an expected £5,800 under the previous Government’s plans—I say expected because the figure involves assumptions about changes as a result of inflation—to £7,475. That will protect those on the lowest incomes and will reduce the risk of the lowest earners saving for a pension when they do not earn enough to make it worth making all that effort and sacrifice. It will also simplify administration for employers by aligning the earnings trigger with the existing personal tax threshold.
Jonathan Evans (Cardiff North) (Con)
My right hon. Friend refers specifically to the linkage of the personal allowance but, as he knows, our Government are committed to increasing the allowance significantly. What impact is that likely to have on auto-enrolment?
Mr Duncan Smith
We are committed to reviewing that year by year, so I can assure my hon. Friend that we will constantly take it forward and not leave it static.
Introducing a waiting period of up to three months, which has been widely discussed and debated, will ease the regulatory burden on employers. We had many representations from employers. In view of the present circumstances and the difficulties that many of them face, it is important to recognise the key considerations that we had to take into account in framing the Bill.
Workers will retain the right to opt into the system if they consider it to be in their best interests to do so. That is important. Although we are allowing a let-out, if workers want to enter they will retain the right to do so. The Bill also amends legislation to enable employers with defined contribution schemes to self-certify their scheme. That is simple and straightforward. It makes it easier for employers with an existing scheme to try to align that. If it is aligned closely enough, the scheme can go ahead, saving employers the complication of having to change and engage in a new scheme. That is fairer and more reasonable.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Given that the vast majority of the 600,000 people who will be excluded from getting a pension under the raised threshold are women, is the Secretary of State at all worried that the Bill is beginning to look as if it discriminates against women?
Mr Duncan Smith
I recognise the hon. Gentleman’s concern. We are not blind to the issue, but we have decided to strike a balance between making the scheme work from the beginning and avoiding driving people on very low incomes into sacrificing too much and therefore not seeing the rewards. It is important to make the point that in the Green Paper, as the hon. Gentleman will have noticed, we talk about the single-tier pension, from which there will be very significant benefits to women. We hope that in due course that will achieve a balance.
I do not dismiss the hon. Gentleman’s considerations. We keep the issue constantly under review and will watch carefully to see what happens. It is important that we get auto-enrolment off the ground in a stable manner. I hope hon. Members on both sides of the House recognise that these are balanced decisions—sometimes nuanced decisions—that we have to take, but we will make sure that we review them.
Mr Tom Watson (West Bromwich East) (Lab)
Will the Secretary of State give way?
Mr Watson
The right hon. Gentleman knows that I have always admired his ambition, but is he familiar with the Burkean maxim that change always brings certain loss and only possible gain? What appears to sit within the proposals he is outlining today is certain loss for many thousands of women facing retirement. Will he sketch out a little more how he intends to give them security, given that many trade unions—the Public and Commercial Services Union, Unite, GMB and Unison—have just voted for strike action? I strongly contend that fear about insecurity in retirement is fuelling that.
Mr Duncan Smith
It is always nice to be accused of having ambition. I thought I was supposed to have given that up a few years ago, but I will be tempted by the hon. Gentleman. Workers can still opt in. They must be told that they can opt in, and if they feel it is the right thing to do, auto-enrolment will still be open to them. I will not be tempted just yet on the other subject to which the hon. Gentleman refers, which is the pensions age. I will take an intervention from him, if he wishes, when we get to that. For the moment I want to stay on auto-enrolment. As I said earlier, I recognise that these are not absolutes. In other words, to get the scheme going we have taken some of these decisions, but we will see where that goes. If there is a very big drive for more to go into it, we will take that into consideration.
Amendments made in the other place will ensure that the strength of the certification test is maintained by requiring that I and subsequent Secretaries of State ensure that at least 90% of jobholders receive at least the same level of contributions under the certification test as they would have received based on the relevant quality requirement for automatic enrolment. Employers told us in discussions that the certification test will significantly ease the process of automatic enrolment.
I believe that these changes, taken together, will allow us to present individuals and businesses with a credible set of reforms that will bring much of the next generation into saving for the first time, which was Labour’s intention when in government, and one that we will pursue, thus beginning to improve the poor level of saving. There has been some talk, not necessarily by hon. Members here, about the possibilities of mis-selling. We have retained the powers to prevent excessive charging in automatic enrolment schemes and will use them as necessary and keep them constantly under review.
Part 3 of the Bill covers occupational pension measures, including a few relatively minor changes to the legislation governing the uprating of occupational pensions. The Bill amends existing legislation to set the indexation and revaluation of occupational pensions at the general level of prices. These changes are consequential amendments that follow the Government’s decision to use the consumer prices index as the most appropriate measure of inflation for benefits and pensions.
I remind the House that the key legislation for setting the statutory minimums for the revaluation and indexation of occupational pensions is not in the Bill, as we have already considered the issue in previous debates on the Social Security Benefits Up-rating Order 2010. This is not the time to revisit those debates, but no doubt someone will want to. Hon. Members might wish to note that all the Government will do is set out the minimum increases; if schemes want to pay more than the statutory minimums, that is a matter for them. I think that the move to CPI is supported, by and large, by Members on both sides of the House. That is certainly the indication I was given by the right hon. Member for East Ham (Stephen Timms) and his previous leader, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).
We must also consider judicial pensions, although I am not sure how long Members will want to spend on them. Part 4 introduces provisions to allow contributions to be taken from members of the salaried judiciary towards the cost of providing their personal pensions benefits. I know that the House will be very worried that this might be too tough on members of the judiciary, but I will resist any pressure to reduce this provision. Judges currently pay nothing towards the cost of their own pensions, while the taxpayer makes a contribution equivalent to about 32% of judges’ gross salaries, which we think is both unaffordable and unfair to the taxpayer. [Interruption.] I sense that the House is united at least on that.
Nick Boles (Grantham and Stamford) (Con)
Does my right hon. Friend agree that it is extraordinary that a party that professes a belief in equality failed to tackle this extraordinary unfairness in 13 years in office?
Mr Duncan Smith
I would like to be generous to Labour Members and say that they were thinking of the worst-off in society and hoped that they might be able to protect some members of the judiciary. We recognise that we cannot afford to do that, so we must make the system more responsible, fairer and more balanced for all, and these provisions will help us to do just that. It seems that the House is united at least on that.
That brings me to the area that I suspect most Members want to talk about—the state pension age. I believe that we will be able to secure a fairer and more balanced system only if we get to grips with the unprecedented demographic shifts of recent years. I will put the issue in context before moving on to some of the detail.
Back in 1926, when the state pension age was first set, there were nine people of working age for every pensioner. The ratio is now 3:1 and is set to fall closer to 2:1 by the latter half of the 21st century. Some of these changes can be put down to the retirement of the baby boomers, but it is also driven by consistent increases in life expectancy. The facts are stark: life expectancy at 65 has increased by more than 10 years since the 1920s, when the state pension age was first set. The first five of those years were added between 1920 and 1990. What is really interesting is that the next five were added in just 20 years, from 1990 to 2010.
Joan Walley (Stoke-on-Trent North) (Lab)
On mortality rates, life expectancy has risen, but is the Secretary of State not aware of the huge inequalities between different parts of the country? We have not yet been allowed to discuss the detail of the equalisation of pensions, the unfairness and injustice of which 55-year-old women in my constituency want to discuss. Surely we ought to be looking at the detail of that, which the Bill simply does not do.
Mr Duncan Smith
I recognise the hon. Lady’s concern, but life expectancy has risen among all groups. I recognise also that some groups in certain parts of the country have a lower life expectancy—in pockets of the country, definitely—given the type of work they have done. The point is that, in setting and looking at pensions as we have done historically, that is one thing; the other thing is to look at the people in those conditions and ask, “Why is that the case?”
Surely we need to deal with the issue through public health policy, through the way in which we educate people and through the work experience and training that they receive, rather than by trying to do so through differential pensions. Importantly, if we tried to deal with it through pensions, we would be in the invidious and almost terrible position of telling one group of people that they were retiring at a set age and another group, “You’re better than them, you retire at a later age.” That would be an inequality and would be unfair generally, so the hon. Lady is right that there is an issue, but it is not right to deal with it through the pensions age; it is right to deal with it through public health policy.
Mr Frank Field (Birkenhead) (Lab)
Given that the Secretary of State has told the House, and there is no reason to doubt him, that his proposals are based on fairness, it is reasonable to assume that before the Bill completes its passage we will see some changes to the way in which it treats women.
May I question the Secretary of State on a wider point, however? The Bill sets in motion measures not simply to equalise the state retirement pension age for men and women, but to increase it. Does he not accept, as my right hon. Friend the Member for Croydon North (Malcolm Wicks) has previously said, that people who enter the labour market early are usually those who live the shortest in retirement? Would it not be fairer for the Government to base eligibility for the state retirement pension not on a person’s age but on their contributory years?
Mr Duncan Smith
I know that the right hon. Gentleman and the right hon. Member for Croydon North (Malcolm Wicks) have raised the issue in the past. I recognise their background, great experience and genuine sense of a need to try to figure out a solution. I am always willing to listen to argument and debate that, but my concerns are twofold: first, I am not certain that we have the data going back far enough to be able to make the calculation, although I might be wrong; and, secondly, I return to the point that in the past we have not done things in that way, because it is very difficult to set out differential pension retirement ages for different groups. We are going to equalise provision for women and men, but now the debate is about breaking them apart, and that would lead us into all sorts of debates about unequal retirement ages.
Mr Duncan Smith
With respect, I recognise the right hon. Gentleman’s point, and I will take an intervention from his right hon. Friend the Member for Croydon North, but this is a complicated and fraught area that we should not necessarily deal with in the Bill. Beyond it, I am willing to hear more.
Malcolm Wicks
I am encouraged by the Secretary of State’s thoughtfulness on the matter, to which I hope we will return in Committee. According to the Office for National Statistics, almost one fifth, or 19%, of men in routine occupations—manual workers, labourers and van drivers—die before they receive their state pension. As my right hon. Friend the Member for Birkenhead (Mr Field) has implied, those people have probably worked since they were 14, 15 or 16 years old—very different from those of us who did not start in the labour market until our early 20s. Some sensitivity about when people who have worked for 49 or so years can draw their pension is a matter well worth pursuing.
Mr Duncan Smith
As I said to the right hon. Member for Birkenhead (Mr Field) and repeat to the right hon. Member for Croydon North, I am always willing to look and to think carefully about what proposals there are—not for the purposes of this Bill, obviously, but in the future. I know that he has written—
Mr Duncan Smith
May I just finish my answer to the right hon. Gentleman?
I am always happy to discuss the matter. There are complications, and there may be some issues about women, too, because contributions are an issue for many women at the moment, so we cannot take these things lightly. I recognise the work that the right hon. Gentleman has done, however, and I am very happy to discuss the issue beyond this Bill, as is the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb). For the purposes of the Bill, however, the right hon. Gentleman will forgive me if I stay to the point that we are going to equalise the retirement ages for men and women. The only question is, at what point?
Mr Duncan Smith
I am going to make some progress, but I give way to the hon. Member for St Helens North (Mr Watts).
Mr Watts
The Secretary of State seems to indicate that there is a potential practical problem. Is it not the case that when someone nears retirement age the Department looks at how many stamps they have paid and how many contributions they have made, which must mean that it keeps track of how long people have been working? That would resolve the problem mentioned by my right hon. Friend the Member for Croydon North (Malcolm Wicks).
Mr Duncan Smith
As I understand it, the pre-1975 data are very patchy and messy. I do not want to get sucked into this debate now, tempting as it is, and never to get on to the rest of the Bill; I do not think the hon. Gentleman’s colleagues would thank me for that. I recognise the issue and I am happy to discuss it post the Bill, but he will forgive me if I do not go down the road that Labour Members want by adding that in all of a sudden. I am not going to do that; we are going to stay with what we have. I am happy to listen to their concerns and to see whether we can make changes in future, but I do not give any guarantees.
Mr Duncan Smith
To be fair, I want to make a bit of progress, because a lot of people want to speak. If the hon. Gentleman wants to raise something else about the matter, I will give way to him later.
Pensions policy has not been updated accurately to reflect all the increases that I spoke about. I remind the House, however, that we are by no means alone in having to deal with this issue; others are making decisions about it. Ireland has already legislated for the pension age to be raised to 66 by 2014, and the Netherlands and Australia are increasing state pension age to 66 by 2020. The United States is already in that position, and Iceland and Norway are now at 67. Under existing legislation, the timetable for the increase to 66 in the UK was not due to be completed for another 15 years, yet the timetable was based on assumptions that are now out of date. The Pensions Act 2007 was based on ONS projections of average life expectancy from 2004. Those projections have subsequently increased by at least a year and a half for men and for women, so the situation is moving apace. That is why we are taking the necessary decision to look again at the timetable for increasing the state pension age. The Bill amends the current state pension age timetable to equalise men’s and women’s state pension ages at 65 in 2018 and then progressively to increase the state pension age to 66 by 2020. This new timetable will reduce pressures on public finances by about £30 billion between 2016-17 and 2025-26.
The impact of the changes on women has been debated enormously, focusing particularly on certain cohorts. All but 12% of those affected will see their state pension age increase by 18 months or less. I recognise that some 1% of those impacted will have a state pension age increase of two years, but it none the less remains the case that those reaching state pension age in 2020 will spend the same amount of time in retirement as expected when the 2007 Act timetable was being drawn up. That is an important factor. There will be no change to the amount of time that they will spend in retirement—some 24 years, on average. In fact, the women who are affected by the maximum increase will still, on average, receive their state pension for two and a half years longer than a man reaching state pension age in the same year.
Fiona Mactaggart (Slough) (Lab)
Which of the facts that the Secretary of State has cited was he unaware of 12 and a half months ago, when in the coalition agreement the Government signed up to not introducing these changes before 2020?
Mr Duncan Smith
As a coalition, we are, and continue to be, bound by the agreement. [Interruption.] The hon. Lady can shout at me in a second, but let me try to explain. There is a slight problem with that element of the coalition agreement. It was done in that way at the time, and that is fair enough, but we have since looked at it carefully and taken legal advice. The agreement talks about men’s pension age being accelerated to 66, which would breach our legal commitment to equalisation and then not to separating the ages again. There are reasons for needing to revisit that, and we have done so and made changes.
Rachel Reeves (Leeds West) (Lab)
The coalition agreement states that the parties agree to
“hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.'”
The Secretary of State’s provisions clearly breach the coalition agreement, so what has changed?
Mr Duncan Smith
With respect, I have just said that there are certain elements that would not be legal. That is all that I am saying. The hon. Lady can go on about this point as much as she likes, but I have answered her. She might not like my answer, but that is the one I have decided to give. The fact that the women who will be affected will remain on the same level of retirement but will be in retirement for two and a half years longer than men is an important feature. I stand by the need to equalise women’s state pension age in 2018.
Joan Walley
Will it not be 55-year-old women who pay the price? Will the Secretary of State give the House some indication that he will change his policy so as not to discriminate against that cohort of women?
Mrs Eleanor Laing (Epping Forest) (Con)
My right hon. Friend is absolutely right in all that he is doing. No one can object to the equalisation of pension ages for men and women when we are fighting so hard for other areas of equality. However, does he recognise that for a particular group of some 300,000 women born in 1954 the transition arrangements are rather more difficult than for any other group in society? Although he should not change his policy, will he look at other ways to help that particular group of women?
Mr Duncan Smith
As I have made clear and will make clear later, the parameters of the Bill are clear and it is my intention to stand by those parameters. The ages will therefore equalise in 2018 and rise together to 66 by 2020. Of course, I am always happy to discuss these issues with colleagues from either side of the House, including those in the coalition. However, I make it absolutely clear that our plan is to press ahead with the Bill as it stands. The ages will therefore rise together to 66 by 2020.
Alok Sharma (Reading West) (Con)
Does my right hon. Friend not think that the criticisms from the Opposition are rather rich? In September 2004, the then Secretary of State for Work and Pensions, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), told the TUC:
“This Government will not raise the state pension age”,
yet Labour’s Pensions Commission reported in 2005 that the pension age should go up, and in the Pensions Act 2007 the Labour party legislated to increase it for men and women.
Rachel Reeves
Is the Secretary of State honestly saying that the policy has been changed because of legal advice? If that is the case, will he publish that legal advice today before the winding-up speeches and before we vote? Will he also confirm that this is a breach of the coalition agreement?
Mr Duncan Smith
I do not publish legal advice, but if the hon. Lady reads the coalition agreement, she will see the reasons. I ask her to study it carefully.
I know that the hon. Lady is sincere in what she is saying, but I say one thing to her. She made it clear on the media earlier that it is the Opposition’s policy to move the rise to 66 to 2022 and for it not to start before 2020. That would cost £10 billion. She will presumably have worked that out. Where does she intend to get that £10 billion? We have heard nothing from the Opposition about debt reduction or the financing of future pensions. She should know that her policy would cost £10 billion, and she should consider that important issue.
Rachel Reeves
The Secretary of State rightly acknowledges that we have put forward proposals that would save £20 billion. [Interruption.] Has he looked at whether the increase to 67 could be brought forward, which would take us up to a saving of £30 billion? Can we find a compromise on those proposals, which would not cost women aged 56 and 57 so much money?
Mr Duncan Smith
We agree, then, that the hon. Lady’s proposals would cost us £10 billion. We are on Second Reading, and if she wants to raise the same point or table amendments in Committee, she can do so by all means. The Bill as it stands is exactly as we set out, with equalisation of the age in 2018 and the rise to 66. I have no plans to make any changes to that.
Mr Duncan Smith
I am going to make a little progress. We have more time, and I will give way to other Members later.
Mr Duncan Smith
I wish to make a few points, then I will give way to the right hon. Gentleman again. I think I have been reasonably generous, and I plan to continue to be.
As I said earlier, if we delayed the change as the hon. Member for Leeds West (Rachel Reeves) suggests, it would cost us something in the order of £10 billion. That would be an unfair financial burden, and it would be borne disproportionately by the next generation. In a country in which 11 million of us will live to be 100, we simply cannot go on paying the state pension at an age that was set early in the last century. We have to face up to that, and to the cost and affordability of state pensions, in all the changes that we make.
If the last Government had managed to get re-elected they would be facing much the same decisions. I recognise the need to implement the change fairly and manage the transition smoothly. I hear the specific concern about a relatively small number of women, and I have said that I will consider it. I say to my colleagues that I am willing to work to get the transition right, and we will. Some have called for us to delay the date of equalisation of the pension age, but I wish to be clear again that this matter is the challenge of our generation, and we must face it. That is why we are committed to the state pension age being equalised in 2018 and rising to 66 in 2020. That policy is enshrined in the Bill.
Mr James Gray (North Wiltshire) (Con)
My right hon. Friend is being fair and sensible in his approach, and we admire his determination in introducing the Bill. I accept the cost of widening the transition period for the 2.5 million women involved, but will he give particular consideration to the small group of 33,000 women born in March 1954, on whom the change will bear down disproportionately harshly? Surely there is a way of finding a transition method that takes account of that small group of women.
Mr Duncan Smith
I repeat that the Bill that we have presented on Second Reading will retain the dates that we announced, but as I said earlier, I will quite happily discuss transitional announcements with anyone who wants to do so. I do not rule out discussions, but we plan to press ahead with the dates that I set out at the beginning of the process.
Mr Frank Field
The Secretary of State keeps insisting that he wishes to be fair, but the country increasingly thinks that he is being unfair to a particular group of women. The Opposition are not saying that his Department should not deliver the savings set out, but we are suggesting that they could be delivered in a different way. If he wishes to treat men and women equally, so that they make an equal sacrifice for the contribution that he has to make to the Exchequer, would it not be fairer to raise the state retirement age for both and women more quickly rather than collect £2 billion from a particular group of women?
Mr Duncan Smith
I think I have already covered that ground. I recognise the right hon. Gentleman’s concern, but I will not repeat what I have already said, because I do not think the House would appreciate that.
Nic Dakin (Scunthorpe) (Lab)
I welcome the Secretary of State’s comments about his willingness to consider transitional arrangements. My constituents, the class that left Foxhills comprehensive school in 1970, who were all born in 1953-54, have written to me to ask why the pensions goalposts should be moved twice so close to their retirement. What would he say to those women?
Mr Duncan Smith
The only answer is that, so far, it is seven years away for women. I recognise the concerns, but I have had letters from the public stirred up by a number of people, and the facts have been simply incorrect. I am trying to set out the facts as we see them. The hon. Gentleman may disagree with us, but often people fear that something is going to happen overnight. There is some warning.
Jo Swinson (East Dunbartonshire) (LD)
I think there is general acceptance that with increased longevity the pension age needs to be considered, including the current unfair distinction between men and women. However, there is a particular group of women who will be badly affected. I welcome the Secretary of State’s saying that he will consider transitional arrangements. Is he willing to consider with an open mind amendments in Committee and on Report, or other solutions that might be brought forward, to help that particular group of women?
Mr Duncan Smith
My hon. Friend tempts me enormously, but she will forgive me if I do not give in to that temptation. Let me simply repeat what I said earlier—it is a bit like a recording, but I shall do it none the less: we have no plans to change equalisation in 2018, or the age of 66 for both men and women in 2020, but we will consider transitional arrangements.
Dame Anne Begg (Aberdeen South) (Lab)
Does the Secretary of State accept that some women in the group that we are discussing have already retired or signed early retirement arrangements in the belief that they would receive their state pension when they were 63 or 64? The original equalisation was announced 25 years in advance. For some women, the equalisation that we are considering is only five years ahead. Surely that cannot be right when we are asking people to plan long term for their retirement.
Mr Duncan Smith
I think that the hon. Lady refers to people who have retired early, at around 57, as far as I can tell from her calculations. Other than that, I do not think that there is a huge difference. I recognise what their due would have been, but the change is no different thereafter for all the others. I acknowledge her point—I am sure that we will deal with it when we get into Committee.
Mr Duncan Smith
I have given way a lot and I am not sure that we are going anywhere new on this. I have repeated myself several times. I will give way once more and leave it at that.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I want to emphasise the point that the hon. Member for Aberdeen South (Dame Anne Begg) made about people who have already retired. The latest health statistics show that healthy life expectancy for women and men does not necessarily keep pace with actual life expectancy. Many women in their 60s are trying to wind down their working hours because they are in poor health. The key point is not equalisation, but that people have not had time to plan for it. It is a great burden on people in the latter stages of their career who suffer ill health.
Mr Duncan Smith
I fully recognise the hon. Lady’s point. It applies to the whole debate. One could argue that even an extra year’s planning does not allow people time if they are not well. People living longer but being more ill is an issue for the health service—it is already having an impact on the health service. It is a reality—and a good thing—that people are living longer and are able to enjoy their retirement properly. For the most part, they can do that in good health, but I recognise that there are problems for those in poor health.
Mr Duncan Smith
Hon. Members will forgive me if I make some progress. I gave way to the hon. Member for West Bromwich East (Mr Watson) earlier, and, although I did not give way to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), others want to speak, and I must conclude.
All the changes should be put in the context of our recent Green Paper, which set out plans for fundamental reform of the state pension. They include the option for a single-tier state pension, set above the level of the means test, which would provide a decent foundation income in retirement for many of the next generation, who might otherwise be forced to live in poverty. Importantly, that includes many women and self-employed people who have tended to suffer poorer pension outcomes in the past, particularly women with caring responsibilities. The changes will be very beneficial for them. The Bill is therefore only part of the process, but it is critical as we take the necessary steps for the next generation. I believe that those are responsible choices for Britain, but responsible government is not always easy government. It involves commitment, tough decisions and a willingness to stay the course. We will not change from that—we will stay the course. We must try to secure our children’s future. The tough decisions are enshrined in the Bill, which I commend to the House.
Jonathan Evans
The right hon. Gentleman and I have known each other for many years and he knows I have the highest respect for him. I certainly accept that we eventually ended up with that legislation, but it took a long time to get there. However, he was material in trying to achieve that.
Let me also say a word about the effects of auto-enrolment. I was staggered to hear the right hon. Member for Birmingham, Hodge Hill tell us that he does not like the proposals on auto-enrolment. I have to say that I am concerned about the impact of our continually increasing the personal allowance—as I understand it, that is going to be part of our policy—if we are just going to link the personal allowance figure to the level at which auto-enrolment kicks in. I am reassured by what my right hon. Friend the Secretary of State says about keeping this under review, but the movement from £5,000 to £7,000 is not, as described by the right hon. Member for Birmingham, Hodge Hill, an attack on poorer workers. The reality, on the information that we have, is that those people would be worse off if they were within the scheme.
Mr Duncan Smith
May I tempt my hon. Friend with a thought about why the right hon. Member for Birmingham, Hodge Hill made such an issue of this? I wondered whether he was searching for a reason to vote against the very policy that his Government, when in power, wanted to bring in, because there is nothing else in it with which Labour disagree.
Jonathan Evans
I am aware that the Forum of Private Business does not like the fact that the Government have not made more adjustments in this area, and of course the Government would like to have a situation in which all parties were on board at the end of the review, but the proposal of the right hon. Member for Birmingham, Hodge Hill has virtually no supporters, save perhaps for those within the union movement—surprise, surprise. The reality is that the proposals we are taking forward are overdue, but there has been too much misinformation about this change. Ultimately, I want to see a situation in which no woman has to wait more than a year longer than she had expected to wait, but the linking of that issue with a 25-year lead-in to the equalisation of pensions at 65 by those engaged in this campaign has been deliberately misleading and has not served the interests of all the people who have written to us.
Welfare Reform Bill
Iain Duncan Smith Excerpts(13 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Duncan Smith
Further to that point of order, Mr Deputy Speaker. It might be of assistance to the House to remind those who were not in the Committee that every single clause was debated there, and we have also had two days on Report, which is almost unprecedented.
Mr Deputy Speaker
This seems to be a continuation of the debate on the programme motion, which was decided on Monday. It was agreed by the House so this is not a matter for the Chair. Let us now move on, in the short time we have, to Third Reading.
Third Reading
Mr Duncan Smith
I beg to move, That the Bill be now read the Third time.
I am conscious that we have only half an hour, so I will try to make some progress. A great deal has been debated, but I am happy to take a couple of interventions. I recognise that some others on the Back Benches would like to say something because they did not get in earlier, and I think we ought to leave them some time.
The Bill allows us to start dealing once and for all with the welfare dependency we inherited. Just the other week we learned from the Office for National Statistics that there are now nearly twice as many households in the UK where no one has ever worked as there were in 1997, and today there are nearly 2 million children growing up in workless households—children with no positive role models who can teach them the benefits of work. This entrenched worklessness is the issue, and is the product of a broken welfare system that takes away up to 96p in every pound earned as people increase their hours in work. It is a system that shunts people from employment programme to employment programme, never looking at them as individuals but as collective groups. It is a system that provides disabled people with outdated and complex support that often fails them when they most need it. By the end of Labour’s term in office, that system left us with income inequality at its highest level since records began, despite the billions Labour spent. The backdrop to this social breakdown was the inheritance of an economy that was absolutely on its knees when we came into government.
Sarah Newton (Truro and Falmouth) (Con)
Given the shameless scaremongering in the Chamber today at Prime Minister’s Question Time and during this debate, can the Secretary of State assure us that people recovering from cancer will not have their benefits taken away from them?
Mr Duncan Smith
I was not going to pick up on that, but given that my hon. Friend has asked me, I will say that the reality, which is clear, is that the Government inherited the employment and support allowance reform from the previous Government. It was this Government who exempted cancer patients on chemotherapy in hospitals; they were not exempted by the previous Government. Our record on this is therefore quite good. As for the exchange at Prime Minister’s Question Time, it is also important to say that if somebody cannot take work, they will remain on the support group or be moved to the support group, where they will continue to receive full support indefinitely—and it will not be income-related.
Mr Duncan Smith
One moment, one moment. Let me finish, all right?
In reality, therefore, people on the work-related activity group will already have been seen to be able to do some work with some assistance—that is the key—and of course, as has long been the case, those benefits are income-related. It is also important to note that the figure that Macmillan produced today—of 7,000 people losing everything—is not altogether accurate, because—[Interruption.] No, no, because 60% of the people it was talking about will continue to receive some form of support; they will not be losing all their money. We will not be moving those on chemo. We are looking to review the situation under Professor Harrington to see how much further we can go, but the fact is that if someone is not capable of work and is too ill, they will be on the support group.
Stephen Timms
Can the Secretary of State confirm, however, that people receiving oral chemotherapy and oral radiotherapy are in the work-related activity group, and that if they are halfway through their treatment and it gets to a year, they will lose all their contributory benefit?
Mr Duncan Smith
Not if they are on income-related benefit. Of course they will absolutely continue to get the income-related support. The point is that this— [Interruption.] Wait a minute. The right hon. Gentleman knows very well—he should stop playing silly games—that we have asked—[Interruption.] No, no—[Interruption.] Grow up, for God’s sake! He has to recognise that we have asked Professor Harrington to review that, because that is a later form of chemotherapy, and he will report back. Whatever his recommendations are, we have said that we will accept that. The right hon. Gentleman knows that, and I suspect that he should have said it when he got up at the Dispatch Box. [Interruption.] I think I have done that; I just wish that the Opposition would not play politics with people’s fears and concerns. They made no arrangements at all for cancer patients on ESA, so we will take no lessons whatever from them.
We are now paying as a result of Labour’s mismanagement of the economy, which is causing all the problems and which is why, even in this Bill, we are having to find savings, with an eye-watering £120 million a day going to pay off the interest alone on the debt that the last Government left us. It is because of the deficit reduction plan that Britain has put in place that we have managed to keep our borrowing costs low and comparable to Germany’s rather than to those faced by Portugal, Ireland or Greece. These need to be seen in context, but I want to—
Frank Dobson (Holborn and St Pancras) (Lab)
On a point of order, Mr Speaker. To remain in order on Third Reading, is it not necessary to talk only about the content of the Bill, not things external to it?
Mr Speaker
That is correct. On Third Reading, all speakers must focus on what is in the Bill, not what is excluded from or outside it.
Mr Duncan Smith
I agree, Mr Speaker, which is why I have done nothing but refer to the reasons for the Bill, the rationale behind it and what is in it, hence the cancer point that we have talked about.
Let me proceed to the issue of the benefit cap, which I do not think the Opposition ever wanted to get to. Our reforms are fundamentally about fairness: fairness to recipients, but also—and too often forgotten—fairness to the hard-pressed taxpayers who have to pay for those on benefits. Across a range of areas, we have made changes designed to ensure that people on benefits cannot live a lifestyle that is unattainable to those who are in work. Let us take the benefit cap—an issue on which the Opposition have got themselves in a bit of a mess. Just two days ago, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who is now in his place, told the House:
“The cap on overall benefits…is an important part of the legislation”.—[Official Report, 13 June 2011; Vol. 529, c. 491.]
However, it is now clear that his own party is completely divided on the matter. Even late last night, the Opposition tabled an amendment that they knew they would not be allowed to vote on—a starred amendment—just so that they could posture and appease their Back Benchers, who are on the wrong side of the debate entirely. [Interruption.] No, no, the Opposition know very well that they had days to table that amendment, but they did not bother—I suppose that the right hon. Gentleman will say that he did know that there was a time limit on tabling amendments. The reality is that the Opposition are opposed to the cap. They should be honest and say that they do not want it. Indeed, even their amendment would have knocked out the entire effect of the cap.
Let me turn to conditionality, another issue in the Bill.
Simon Hughes
Before the Secretary of State leaves the benefit cap, let me say that I understand the reason for a national benefit cap. Does he accept, however, that colleagues across the House are concerned that in London, because of the cost of housing, there is a special issue that deserves further debate? I wonder whether he would be willing to meet colleagues from all parties, local government, the Mayor, housing providers and the Housing Minister so that we can get the problem sorted for all those with an interest in London.
Mr Duncan Smith
I have always said that the door is open to everybody to discuss the effects and how some of them can be ameliorated—or not, depending on what the issues are. The answer is therefore yes—as a London MP, I should join that delegation too—although I still believe that we have the right policy, because it is about balancing fairness for those hard-working people who pay their taxes who often feel that those beyond work are not working themselves.
Mr Duncan Smith
I will give way only once or twice more, and I give way now to my hon. Friend.
Steve Baker
I am most grateful to the Secretary of State. Will he join me in reminding the House that, by dint of great effort, in 2011-12—[Interruption]—I assure the hon. Member for Glasgow East (Margaret Curran) that this comes from the HMRC website, not the Whips—the pay-as-you-earn tax threshold will be just £7,475 a year? Will he also remind the House that the people paying tax—that is, paying tax to pay the benefits that others are in receipt of—are actually poorly paid and that a year’s pay on the national minimum wage is just £12,300? Will he join me in recognising that it is an issue of social justice that we should introduce the benefits cap?
Mr Speaker
Order. May I just remind Members that interventions should be brief? I know that the Secretary of State and others will be conscious that other people want to speak in the debate.
Mr Duncan Smith
I agree with my hon. Friend. That point is also powerfully made by the fact that nearly half of all those who are working and paying taxes fall below the level of the cap. It is important to achieve a balance of fairness. I recognise that there are issues, and we have looked at ways in which the process of change in housing benefit can be done more carefully, for example. This is not about punishing people; it is about establishing a principle that fairness runs through the whole of the benefit system.
Sheila Gilmore
The Secretary of State wishes to present the Bill as being about people who are workless or feckless, but hard-working taxpayers who suddenly fall ill and are unable to claim the personal independence payment for six months could well be excluded from benefits because they have been savers. Is that fair?
Mr Duncan Smith
If the hon. Lady had looked at what the cap covers, she would know that those on tax credit will be exempt, as will those on DLA, widows and others who are in difficulties. The cap is about those who we believe should be able to go to work but are not doing so. Of course, this would just be all stick if it were not for the fact that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) had recently introduced the biggest back-to-work programme this country has ever seen, to support those in greatest difficulty. Universal credit is about helping to improve people’s incomes when we get them back into work with a bigger incentive. We are striking a fair balance by doing all that while also placing some expectations on those who are waiting to go to work.
That is also the point of the next bit, which is about conditionality and sanctions. The Bill places a level of responsibility back into the system by strengthening our conditionality and sanctions regime and requiring all claimants to accept a claimant commitment setting out their individual responsibilities—a sort of contract that will enable them to understand that they have certain obligations and that there are certain things that we are obligated to do for them. That is fair. Many claimants I have spoken to out there are completely confused about what they should or should not be doing.
When those responsibilities are not met, we will have the power to apply a robust set of sanctions, which will be made clear to the claimant at the beginning. Opposition Front Bench who were in the previous Government will know from going round jobcentres that claimants often still profess, even at the last moment, to having no knowledge of the fact that they will face sanctions if they do not comply. So we are going to let them know early exactly what the sanctions will be. As with universal credit, they will then have a clearer understanding of what they are meant to be doing.
The next area, which we have dealt with in some detail, involves the personal independence payment. We are bringing more responsibility to the system, but I believe that we are also improving support for those who are able to work and for those who are not. Disability support is an issue. The Bill makes critical changes to the system, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) made a sterling effort to explain them in Committee and on Report.
The changes to the current system of disability support will ensure that disability living allowance is no longer awarded on the basis of subjective and inconsistent decisions. I hope that all hon. Members will recognise that this is a bold attempt to bring this area of benefit up to date and to ensure that those who are not getting what they should will do so, and that those, however many there are, who are getting too much or not the right amount will get that adjusted as well. The truth is that this will be based on their ability to live their lives. I agree with my hon. Friend the Minister about the checks involved. The DLA will be replaced in total by a personal independence payment, which will be based, for the first time, on regular and objective assessments of need.
This brings me to perhaps the biggest thing in the Bill: universal credit. This lies at the heart of all our reforms. It involves the principle that it should no longer be possible for people to be better off on benefits than in work, or for people to fear moving into work. I say “fear” because people are often concerned because they simply cannot tell whether they will be better off or worse off in work. No longer are we going to try to pick the number of hours that somebody should be working; rather, we will say to them, “You must make that choice, in line with work, relevant to your caring responsibilities and all the other issues that affect you.” This is a bold reform to help people to improve their chances and give them the assistance they need. That goes alongside the Work programme, as I said earlier, which will support all those people who are trying desperately to make the best of their difficult conditions and get back to work.
Frank Dobson
In view of the complexities encompassed in the universal credit, does the Secretary of State seriously believe that the Government are capable of producing a computer system that will work properly from the start?
Mr Duncan Smith
The right hon. Gentleman refers to complexities—he and I have discussed many issues before—and this present system is so complex that if he were in the situation of many of the people in his constituency, he would find it incredibly difficult to know whether or not they are better off. The principle behind the Bill is that we must try to achieve that. If he wants to know my honest opinion, I believe that we will be able to make it happen. We are working hard to make sure that this medium-level change to IT works out. I recognise it as such a change. I have had conversations about it with his Front-Bench colleague, the right hon. Member for East Ham (Stephen Timms). Our views may differ slightly, but the reality is that the process has to happen; IT development is part of the process. I give the right hon. Gentleman as much of a guarantee as I can that we will deliver it—right and on time.
Some 2.7 million households will be better off as a result of the universal credit and almost 85% of the gains—I hope that Opposition Members will support this aspect—will go ultimately to the bottom 40% of people in the income distribution. I would have thought that they wanted to support that. My concern throughout the debates—I now want to bring my comments rapidly to a conclusion—has been that it is not at all clear what exactly the Opposition support and what they do not support. By their actions and by what they say, there is no commonality.
The Opposition tabled more than 200 amendments in Committee, but voted on them only 16 times. They have complained that we did not allow enough time for consideration of issues on Report and then, on the day before yesterday, they proceeded to talk for more than an hour on amendments that they did not even push to a vote. If they had not done that, they would easily have had a chance to debate some of these other areas.
When it comes to spending commitments, the Opposition do not seem to know whether they are coming or going. They would have us believe that they would have taken responsible decisions on the economy, but if they had had their way in Committee, the amendments would have entailed extra spending commitments running into billions of pounds. Not once have they said that they approve of any of the changes or the savings within the scope of the Bill. It was all the more surprising when, the other day, the right hon. Member for Birmingham, Hodge Hill complained—irony of ironies—that the housing benefit bill is apparently set to increase in the course of this Parliament. Imagine that—the man who watched while housing benefit spending crashed through the roof, nearly doubling in 10 years, and was set under his Government to rise by a further £2.5 billion in this Parliament alone, has started to tell us that somehow we are not being harsh enough. What a contrast with his hon. Friend the Member for Westminster North (Ms Buck) in her place beside him, who claimed that our changes to housing benefit
“would lead to social cleansing on an unprecedented scale.”
Frankly, they need to get their act together, as they do not seem to know whether they are in favour or against cuts—or whether they simply do not agree with anything.
The right hon. Member for Birmingham, Hodge Hill wants to speak, so I shall finish. These measures have always been about welfare reform that forms a contract with the people of this country. It is a promise on our part to provide a simpler, fairer system that protects the most vulnerable and makes work pay; and a promise on the part of those who are claiming benefits to play their part, to look for work whenever they are able to do so, and to take some of the responsibility that the right hon. Member for Doncaster North (Edward Miliband)spoke of just two days ago—although half of his party does not agree with him. As I said before, this is about fairness to recipients and fairness to the hard-pressed taxpayer. On that basis, I ask all Members to get behind this Bill, and perhaps the Opposition will make up their minds about whether or not they are in favour of this reform.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I am grateful for the chance to speak on Third Reading this evening. I am glad that the Bill has finally come back to the House and I wish I could say that I thought the Bill’s passage through this place had improved it. I cannot with justice say that. We said from the outset that we wanted to approach this question in a spirit of national consensus.
The Opposition are proud of our record of delivering welfare reform in this country. I am glad that the Secretary of State referred to statistics from the Office for National Statistics that were published the other day because they were the same statistics that confirmed that by 2008 the claimant count was half the level we were left by the previous Government back in 1997. The number of people claiming unemployment benefit for more than 12 months in that year was down to a quarter of the level we inherited in 1997, so, no, it is not a surprise that his own welfare Minister, Lord Freud, said that our record of delivering welfare reform was remarkable.
On Monday night, I set out how I thought that further reforms should be made to toughen the responsibility to get back into work and to enshrine a culture of work in every community in this country. Throughout the passage of the Bill, we have sought to table amendments that would have improved it and allowed it to leave this place for the better. The Government have refused to listen and have refused to accept advice and amendments. The Bill presented to this House might have started with an instinct for compassionate Conservatism in action, but we have in front of us tonight a law that cuts benefits for people with cancer when the Minister says that they will not be ready to work by the time that cut hits them.
I said that we would not oppose the Bill on Second Reading to give the Government some space to improve it. We back welfare reform that gets people back to work and that simplifies the benefit system. We support the principle of universal credit and we support sanctions for those who are not trying hard enough to get a job. We support a cap on benefits if it saves public money, but this is where the agreement ends, not least because this Bill is so cold and so hard that it ends a tradition of compassion in the welfare state that we should conserve and not consign to history.
Once upon a time, this Secretary of State knew about compassion. In 2009, he said that the welfare state is a symbol of a compassionate and civilised society. I think that he has honourable intentions, but he has not presented us tonight with a Bill that is in an honourable state. It is, frankly, a disgrace that the Government have not found additional time to debate cuts to contributory ESA that would cut benefits to people with cancer before they are fully recovered. My right hon. Friend the Member for East Ham (Stephen Timms) asked for additional time from the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), on Monday, but he refused to give the House that time.
To single out for the proposed cuts benefits that would allow cancer patients to go on receiving the benefits they need is unacceptable. It is unacceptable because it is an attack on compassion. It is unacceptable because we cannot ask people who are still battling cancer to start filling out job applications. It is unacceptable because most of us in the Chamber tonight will either have personal experience or families with experience of the truth that it takes more than courage to beat cancer and finding a job is not part of any recovery programme I have heard doctors recommend. Worse, this is a benefit that people have actually paid in for. Now, when they need it most, it is being taken away.
Ciaran Devane, the chief executive of Macmillan Cancer Support, said:
“Many cancer patients will lose this crucial benefit simply because they have not recovered quickly enough…This proposal in the Welfare Reform Bill will have a devastating impact on many cancer patients. We are urging the government to change their plans to reform key disability benefits to ensure cancer patients and their families are not pushed into poverty.”
Even at this late stage, I ask the Secretary of State to speak to his friend the Prime Minister and to sit down with cancer charities, disability groups and other campaigners to try to get this sorted out. I ask him to take heed of what Owen Sharp, the chief executive of the Prostate Cancer Charity, has said this afternoon:
“The changes to disability benefits will mean that a significant number of people with cancer will be left without vital financial support at a time when they need it the most…The current proposals in the Welfare Reform Bill will discriminate against cancer patients and should be amended.”
Perhaps the Government would be on stronger ground if only a tiny minority of people were affected, so the House is right to ask how many people will be hurt. On 16 May, the Government told us: 77% of people in the work-related activity group will not have recovered from their condition after a year, yet that is when their benefit will be cut. How on earth can that be justified? The Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell gave us his answer in Committee when he said that
“this is a sensible measure”.––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 655.]
It is a decision that is, in his words, “not about recovery times”.
Perhaps I could understand that argument if I felt that the Department had its spending priorities straight, but the truth is that its message is so harsh that it has had to hire media trainers to teach the Minister with responsibility for disability, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), how to spin her lines. The Department has passed to me documents that detail the media training bill for her, which equals three and a half months’ worth of somebody’s employment and support allowance, which would be cut. It is a shame that her expensive eloquence was not more convincing this afternoon. Cutting benefits for people with disabilities and hiring media trainers instead—that tells us all we need to know about this Secretary of State’s priorities.
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Graham Jones (Hyndburn) (Lab)
2. Whether his plans for universal credit will ensure that people are better off in work after payment of child care costs.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We recognise the vital role that child care plays in supporting parents into work. As the hon. Gentleman is aware, we have set out a consultative process with some options for child care within universal credit, as I said we would. Alongside that, we have committed to spend all the money available in the current system for child care. It remains our intention that everyone moving into work will be better off when child care is included. People who transition into work will certainly be better off than under the current system.
Graham Jones
Will the Secretary of State ensure that parents who work more than 16 hours a week will continue to get child care support to allow them to continue in work?
Mr Duncan Smith
If the hon. Gentleman looks at our consultation, he will see that our plan is to spread the money to ensure that parents who choose to work for any number of hours—not just 16 hours, but across the board—can go into work and get the necessary support. I therefore think that the answer to the question is yes, and we are also keen to support parents who work fewer hours.
Charlie Elphicke (Dover) (Con)
Will the Secretary of State tell the House what effect universal credit will have on child poverty and wider forms of poverty?
Mr Duncan Smith
We estimate that universal credit as a static system, not even taking into account any dynamic effect, will lift 900,000 people out of poverty, about 350,000 of whom will be children. It is worth remembering that under the present child care systems that people have spoken about, at least 100,000 people do not get the child care for which they are eligible. Under universal credit, the take-up will be higher, so it will have a better effect.
Stephen Timms (East Ham) (Lab)
The Secretary of State is right to recognise that support for child care is key to whether parents are better off in work or out of work. However, he promised the Welfare Reform Public Bill Committee that the Government’s proposals on child care support would be available before the Bill left Committee. That promise has been broken; he has simply been able to provide only a discussion of the options. When will he get a grip and come up with a policy?
Mr Duncan Smith
I will get a grip the moment the right hon. Gentleman’s team decide whether they are in favour of the Bill or against it. I gather that the Leader of the Opposition has today moved like a wriggly worm and decided that he is both for and against it, which is really not surprising. The point of bringing forward our proposals is that the right hon. Gentleman and everybody else will have a chance to look at them and decide whether they agree with them. After the consultation, we will make it clear what our final proposals are. I think that that is fair. Last time, he complained that we did not consult him—he ought to make his mind up.
Ian Lavery (Wansbeck) (Lab)
4. What estimate the Health and Safety Executive has made of the annual cost to the economy of inadequate workplace health and safety.
Mr William Bain (Glasgow North East) (Lab)
5. What arrangements he plans to put in place for transitional payments for those who will be affected by the introduction of universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
A package of transitional protection is being developed to ensure that there will be no cash losers as a direct result of the move to universal credit where circumstances remain the same.
Mr Bain
I note the Secretary of State’s reply, but has he not taken into account the criticisms made of the policy by Family Action? They are, first, that it will not apply to new recipients; secondly, that changes in circumstances leading to the loss of cash protection have not been sufficiently defined; and most importantly, that the failure to give a commitment to uprating cash protection in line with inflation could mean up to 400,000 people losing out in real terms as a result of the policy.
Mr Duncan Smith
I hear what the hon. Gentleman says, but I would have thought he would welcome the idea that as we move to the new benefit, we are planning to cash-protect those who are already in receipt of other benefits. I do not think I really need to take too many lessons from his party, because when it scrapped the 10p tax band, it did not cash-protect anybody.
Matthew Hancock (West Suffolk) (Con)
Will the Secretary of State accept that in ensuring that the transition means that people are cash-protected, he is managing to introduce the universal benefit, which would otherwise be almost impossible to do? That universal benefit will be of benefit to the work incentives of people up and down the country.
Mr Duncan Smith
I am glad that my hon. Friend is more welcoming of the policy than the hon. Member for Glasgow North East (Mr Bain). Cash protection is there to protect those whose circumstances mean that they may have lost out slightly in the change to universal credit. They will not, because we will ensure that they are smoothed into the universal credit system unless there is a significant change in their circumstances. That is a positive gesture from the Government, and as I said, we do not need any lessons from Labour Members, who did not cash-protect people who were damaged when they scrapped the 10p starting rate.
Margaret Curran (Glasgow East) (Lab)
Notwithstanding the fact that, as we have heard, the Government intend to provide transitional protection, will the Secretary of State explain why, for new claimants, their plans to abolish the disability element of child tax credit and replace it with a disability addition will mean a cut of 50% for families with disabled children? According not to Labour Members but to Family Action, that means that families with one disabled child, who are people in great need, are in line to lose £1,400 per annum. Why are disabled children bearing the costs of the Government’s welfare reforms?
Mr Duncan Smith
I must say to the hon. Lady that they are not. Actually, our adjustments have been welcomed because they mean that more disabled people in difficult family circumstances will find themselves benefiting to a higher degree. Our changes will work well with universal credit. Also, the whole idea of bringing more disabled people into the work force has to be a good thing, or perhaps she disagrees with that.
Caroline Dinenage (Gosport) (Con)
6. What steps he is taking to improve the measurement of pensioner poverty.
Kate Green (Stretford and Urmston) (Lab)
9. What his policy is on the couple penalty in the benefit system.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Government are committed to reducing disincentives in the benefit system. The universal credit provides an enhanced earnings disregard for couples which, along with the taper, will help low-income couples to keep more of their earnings in work. Obviously, over time, it is our intention to work further to reduce the penalty.
Kate Green
A widow and a widower each with two children who form a new couple relationship and decide to live together could be £9,000 worse off as a result of the proposed benefits cap. Given reports over the weekend of confusion among Ministers on the fate of the benefits cap, will the Secretary of State assure us that such a couple would not face a couple penalty?
Mr Duncan Smith
Clearly, we do not, as the hon. Lady makes out, want to make anybody face any further induced couple penalties. Our plan is to ensure—over a period of time, but particularly in this Parliament—that we work to erode the couple penalty. However, it is worth reminding her specifically what happened under the previous Government, because the baseline that we have accepted is important. The OECD pointed out that a couple needed about 75% of the income of two single people, but the previous Government left them only 60% of those earnings. In other words, the previous Government took far more from couples than most other countries did. That is why we are in difficulty. She should reflect on that when she asks such questions.
Priti Patel (Witham) (Con)
10. What recent progress he has made on the contracting arrangements for the Work programme.
Rosie Cooper (West Lancashire) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Last week, we launched the Work programme—the biggest single such programme that the UK has ever had. It contrasts with the number of confusing and sometimes prescriptive provisions offered previously. We are adopting a personalised and flexible approach, which the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) spoke about earlier. It will involve paying providers by results, which we have explained, and will give them the freedom to innovate. The Work programme will deliver, we believe, effective and cost-effective support to help claimants into sustainable employment.
Neil Carmichael (Stroud) (Con)
T3. In the context of the big society and mindful of the need for a variety of provision, what evidence is there that bidders for the Work programme have come from the voluntary sector and social enterprises?
Mr Duncan Smith
There is a huge amount of evidence. Two of the main providers are voluntary sector based, and getting on for half of all the subcontractors in the programme will be from the voluntary sector. This will be the biggest boost to the idea of the big society. Now that we hear Labour Members are rethinking on welfare, we hope that they will have some good things to say about it.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
The cap on overall benefits in the Welfare Reform Bill is an important part of the legislation, but yesterday the noble Lord Freud said on television that there was going to be a significant U-turn, as there were going to be exemptions. Pressed on the detail, he said:
“Well, it’s where we think that, you know, there’s something happening that is undesirable.”
I do not wish to be pedantic, but that is not a clear plan for reform. The Third Reading of the Welfare Reform Bill is on Wednesday. Will the amendments for this new proposal be on the table by then?
Mr Duncan Smith
It is good to see the right hon. Gentleman again—long time, no see. I am glad that he has finally made it to the Dispatch Box. He should not believe everything he reads in the media. The reality is that this policy is not changing because it is a good policy. The reality is that nearly half of those of working age who are working earn less than £26,000 a year, and they pay taxes to see some people on benefits earning much more than that amount. As we proceed through Report and Third Reading, I look forward to seeing the right hon. Gentleman support and vote for the Bill because he believes that those on benefits should not earn more than those who are living and working hard.
Mr Byrne
The Secretary of State’s Welfare Reform Bill would be easier to support if we knew what difference it would make in the real world. We still do not know what it will mean for child care or for people with disabilities, and now we do not know what it will mean for the benefit cap either.
Since the Secretary of State took office, the Treasury has forecast that the housing benefit bill will rise by £1 billion. If he cannot tell us what his policy on exemptions is, will he tell us what Lord Freud’s current policy will cost taxpayers?
Mr Duncan Smith
As I have said, we are not changing the policy. What my noble Friend Lord Freud was referring to was what we are already doing: making discretionary payments to ensure that the policy is eased in properly. [Interruption.] Hang on a second. The right hon. Gentleman cannot have it both ways. He has just said that we are not cutting housing benefit enough. He ought to talk to those on his Front Bench who think that we are cutting it too much. That is the problem with the Opposition at the moment: they want to have it all ways. Today the Leader of the Opposition made a speech in which he said that Labour would be tough on benefit claimants and that those who were not in work would not receive social housing. I simply say to Labour Members that this whole idea of welfare and change is a lot of wriggly-worm U-turns from the Opposition.
Alison McGovern (Wirral South) (Lab)
The DWP’s own research on the future jobs fund published last month demonstrated the value of Government subsidy for the employment of young people during an economic crash. Does the Minister agree with his own Department’s research, and will he therefore reconsider the possibility of a work subsidy for young people if their employment levels do not improve in the coming year?
Mr Duncan Smith
The whole point of that research was to look at how we can get value for money—how many people we can get back to work, and what we can best do to support them. We inherited a terrible situation from the last Government, with youth unemployment having been rising for a number of years. The programmes we are introducing—such as the Work programme and special provision within that, and the innovation fund—will help them much more than lavishing huge amounts of money for very little return, such as through the future jobs fund.
Mark Menzies (Fylde) (Con)
T7. What are the Government doing to reduce conflict between parents in their dealings with the Child Support Agency?
Mr David Evennett (Bexleyheath and Crayford) (Con)
T8. I welcome my right hon. Friend the Secretary of State’s proposed reform of the benefit system, but how will universal credit help people who have been out of work take up part-time or flexible work if they are unable to take on a full-time job for any reason?
Mr Duncan Smith
I am glad that my hon. Friend has raised this matter. The reality about universal credit is that it is aimed at those who cannot take on full-time work, or those who are transiting back to full-time work having been out of work for a little while. It will help everybody take up work for a number of different hours that suit their own particular conditions. It is particularly good for lone parents, and they will benefit for each hour they take better than they do at present.
Mr Andy Slaughter (Hammersmith) (Lab)
The Government’s benefit cap will force many of my constituents to leave their home of many years, uprooting families, jobs, schools and communities. According to the right hon. Gentleman’s colleague, the hon. Member for Chelsea and Fulham (Greg Hands), on LBC just now, such people are making lifestyle choices. Is that the Government’s view?
Mr Duncan Smith
The position on the benefit cap is very straightforward and simple: those who are on benefit should not receive more money than those who are working and paying their taxes. There are exemptions, of course, such as for those who are making the right efforts to get back to work—those on working tax credit, for instance—and those who are disabled, as well as for widows and war widows. They are exempted from this, but for the rest of them the following simple principle holds: “If you can, you should be helped into trying to work”, and £26,000 a year seems a reasonable sum of money to me.
Graham Evans (Weaver Vale) (Con)
T9. Many people are being tricked out of money by being offered lump sums, which turn out to be woefully inadequate, instead of their pension scheme. What steps are the Government taking on these incentivised transfers out of defined benefit pension schemes?
Social Mobility and Child Poverty Commission
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)
Following amendment to the Welfare Reform Bill tabled in the Committee of the House to establish a Social Mobility and Child Poverty Commission, and to clarify accountabilities for social reform under this coalition Government, this statement confirms:
In reading in legislation Minister of the Crown as relates to Social Mobility refers to the Deputy Prime Minister or such other Minister as is appointed; and
In reading in legislation Minister of the Crown as relates to Child Poverty refers to the Secretary of State for Work and Pensions.
This reflects the coalition Government’s social reforms to enable Social Mobility and Social Justice and our collective commitment to tackle the causes of immobility, inequality and poverty.
Welfare Reform Bill (Universal Credit Contingency Fund Advance)
Iain Duncan Smith Excerpts(13 years, 4 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)
The Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £18 million to allow for the development of IT for universal credit before Royal Assent. This amount is part of the proposed investment in universal credit of £2 billion agreed at the time of the spending review.
Universal credit is to replace a range of existing means-tested benefits and tax credits for people of working age, rolling out in 2013. It will improve work incentives, simplify the benefits system and tackle administrative complexity.
The Department is using a flexible approach to IT development where the build of IT components is brought forward to allow for early customer testing. The advance from the Contingencies Fund will enable an earlier move to the new simplified benefit than could be achieved without it. This enables the Department to achieve better value for money by enabling a more rapid take-up of online claims with lower operational delivery costs. Parliamentary approval for additional resource and capital of £50 million for this new service will be sought in the main estimate for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £18 million will be met by repayable cash advances from the Contingencies Fund.
Amendment of the Law
Iain Duncan Smith Excerpts(13 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In concluding the Budget debate, and recognising what you have just said, Mr Speaker, I will take interventions. However, I will try to make some progress, as many Members wish to get in and many of the points have probably already been made.
I think that it has been an excellent Budget, given the circumstances we find ourselves in. The Chancellor is to be congratulated on focusing on his priorities, which he stated clearly, for rebuilding the shattered economy that we inherited. Let me remind the House that when Labour came to power in 1997 they received a golden economic inheritance, the like of which few Governments since the war have received, which gave them money to spend. Despite that, the painful scar of youth unemployment hardly changed, some 4.5 million were stuck on out-of-work benefits, 1.4 million had never worked at all and we had the largest structural deficit of any G7 economy. Intriguingly, the worst thing is that that point was reached even before the recession had started.
After that, things just got a whole lot worse: 5 million on out-of-work benefits; working-age poverty up; youth unemployment at a record high; more children in workless households than the rest of the European Union; and the largest budget deficit in the UK’s post-war history, of more than £150 billion. That deficit is for one year, piling on top of the outstanding debt mountain, and £120 million is spent on interest payments alone—every single day. There was even talk of an International Monetary Fund bail-out, bringing alive memories of the dark years of the late 1970s—and, of course, the House knows who was in power then.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the right hon. Gentleman not agree that two thirds of the deficit—£84 billion—was due to the financial crisis, and that the Budget’s overall fiscal tightening is £98 billion? Does he not agree that he is going too far, too fast, savaging whole communities, choking growth with cuts and stoking up inflation with VAT? Is that not completely wrong? That is why so many people marched against it.
Mr Duncan Smith
That gives me an opportunity to put the shadow Chancellor right. He said in one of the Budget debates last week that the structural deficit was low as we entered the recession. We had the highest structural deficit in the whole developed world, and intriguingly he is in denial about that, so whether he talks about debt or deficits, in reality as we entered the recession, the economy had been badly run, leaving us with a record structural deficit.
Importantly, what has been Labour’s response as a result of that? Acceptance that it had lost control; perhaps even a little humility? Not a bit of it. Instead, we have seen a desperate scramble to find almost anybody else to blame for the problems, and it appears, even today, no attempt to make any amends publicly. In the Labour playbook, the previous Government were just innocent bystanders in somebody else’s evil game. Poor old Britain. Apparently, we were just minding our own business when along came some nasty industrialists and bankers who ganged up on us in some international capitalist conspiracy. It is like some ghastly, poor script. It really does read like some really poor script from an Austin Powers movie, and I am pretty sure that any minute now the shadow Chancellor is going to try to blame Dr Evil and bring him into the script as well.
Hazel Blears (Salford and Eccles) (Lab)
Is the right hon. Gentleman suffering from some kind of amnesia? Has he forgotten that, after some 20 years of the previous Conservative Government, we had almost 3 million people unemployed? In two of my inner-city wards, I had 50% male unemployment and 75% youth unemployment. Is the right hon. Gentleman about to embark on the same mistakes that caused such massive unemployment after 20 years of the previous Tory Government?
Mr Duncan Smith
It is always a pleasure to give way to the right hon. Lady, because if anything she is always honest with her own side. I understand that quite recently she said that her own party had been pretty much unrealistic about the situation, and I seem to recall that she even said that it should be more specific about what reductions it would make. She was a part of a governing party that left this country with the worst recession, the worst deficit and massive debts, so I do not need to explain where we were in ’97; she needs to explain why we got to where we were at the last election.
Mr Oliver Heald (North East Hertfordshire) (Con)
Does my right hon. Friend think that it is actually the right hon. Lady who is something of an amnesiac? She seems to have forgotten the £5 billion a year taken out of pensions, and the fact that Labour sold the gold.
Emma Reynolds (Wolverhampton North East) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
No. I am going to make some progress, because Mr Speaker has already told us that we need to let others speak.
Let me remind Labour Members that they were the ones who let the bankers rip as they pleased, leading to a 10-year spending spree that sent personal debt to the record level of £1.3 trillion. They let public spending rip, too, but Members should not take my word for it; strangely, Tony Blair—not now spoken about much on the Labour Benches—said that
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
Insufficiently vigorous? That is possibly the biggest understatement that I have ever read. The reality is that they did nothing at all about controlling the deficit, so it is small wonder that the No. 1 priority for this coalition Government was to get the finances straightened out, and my right hon. Friends the Chancellor and the Chief Secretary are doing just that.
Mr Duncan Smith
I will give way to the hon. Lady, and then I am going to make some progress.
Emma Reynolds
Why, then, did the right hon. Gentleman’s party pledge to match our spending plans right up until the start of the financial crisis?
Mr Duncan Smith
What we are dealing with here—[Hon. Members: “Ah!”] I will tell Labour Members what the big “Ah!” is. It is “Ah, who were in government for the past 12 years?”, it is “Ah, who left us with the worst structural deficit?”, and it is “Ah, who left us with massive debts, rising youth unemployment and a total shambles from which we are going to have to pick up the pieces?”
One of our biggest challenges was getting to grips with the welfare system, which many Members on both sides of the House will recall. Spending on working-age welfare increased by some 50% under Labour, from £48 billion to £73 billion in real terms. People talk about the problems of increasing welfare spending in difficult times, but let me remind the House that that increase took place during a period of growth. Notwithstanding that extra spending, improvements were quite poor. The universal credit is about getting the incentives right. That is the sort of reform that we have to bring through, recognising that people have to see the financial benefits from taking up employment, and simplifying the byzantine benefits system that we inherited. Alongside it, the Work programme is about supporting people to be work-ready so that British business no longer has to look abroad when it wants to commit to bringing in employees.
We are finally getting to grips with a housing benefit system that has been allowed to run out of control. The failure to reform housing benefit has left us in the absurd situation whereby some benefit claimants can claim up to £100,000 a year to live in large houses in expensive areas. The local housing allowance formula was behind all this madness. I remind Labour Members that it was their Government who introduced the local housing allowance, which pumped fuel into that growth. The difference between the average award under the LHA and under the older schemes for private deregulated tenants that it replaced was an additional £10 per week, or about 10%. As a result, the costs of housing benefit rocketed from £14 billion in 2005-06 to £21 billion in 2010-11. Left unreformed, the housing benefit budget was projected to reach £24 billion in 2014-15. That is, frankly, unsustainable and unacceptable to hard-working British taxpayers.
Housing benefit is an issue on which Labour Members have shown themselves at their very worst. First, we got ludicrous claims about social cleansing from central London, whipping up fury and fear. [Hon. Members: “That started with you.”] No, it started with them, and I know exactly who it was. Then, on top of that, we were told that the real reason was that we are a Government bent on some kind of plan for ethnic cleansing. Labour Members are not averse to a bit of dog-whistle politics when it suits them, scaring some of the most vulnerable people in society and leading them to fear what is coming next.
The problem is that the Labour Government had over 10 years to get to grips with the welfare system, and literally nothing was done about it—it was fiddle, more fiddle, and more expense. The Office for Budget Responsibility has confirmed that as a result of the changes to expenditure that we brought through, we remain on track to eradicate our structural deficit over the course of this Parliament.
It is important, too, to reflect on how the Budget for growth has gone down with people. Sir Martin Sorrell says:
“The coalition from the very beginning had said it was crucially important that Britain had a competitive tax landscape. They've gone further than I expected on corporate”
tax
“and also on personal taxation.”
He went on to say that
“it looks as though we will make that recommendation”
to return his company’s headquarters to the United Kingdom. That is a real endorsement.
A letter in The Daily Telegraph yesterday from 39 leading venture capitalists stated:
“These changes are a shot in the arm for enterprise. Thanks to them Britain is being positioned as a world-class place to launch new businesses. Now British entrepreneurs and those relocating to Britain will find it easier to raise the funds they need to do what they do best: create and expand world-beating businesses.”
John Cridland, the CBI director general, said:
“This Budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”
David Rutley (Macclesfield) (Con)
I wonder whether my right hon. Friend has seen the latest statement from the Institute of Directors, which says that 58% of company executives are now more confident about the long-term economic outlook, and that just 9% are less optimistic.
Mr Duncan Smith
I am bowled over by that—what can I say? That was a timely intervention by my hon. Friend. I apologise for not producing that point myself. It is yet more evidence that this Budget, which was shaped by my right hon. Friends the Chancellor of the Exchequer and the Chief Secretary to ensure that Britain is open for business, has opened it for business. That is what business men are saying.
I want to bring one more person to the attention of the House. This tribute is perhaps more difficult for the Opposition to cope with. It is from none other than Duncan Bannatyne—a great name. He said:
“This Budget has convinced me that George Osborne is serious about growth and enterprise.”
I remind the Opposition that he was a huge and strong supporter of the previous Government. Even when almost every other business man had deserted them, he still supported them. To use his own wise words, he has said, “I’m in!” I think that the rest of the country is too.
Getting to grips with the public finances is just the starting point, not the destination. Of course we have to balance the Budget, but this Government are about much more than that. Our ambition is to make the next decade the most dynamic and entrepreneurial in Britain’s history. That is why we have set out plans to create the most competitive tax system in the G20. That is why we are reducing the rate of corporation tax yet further from 28% to 26% in 2011-12, and crucially, all the way down to 23% from 2014-15. That will give the UK the lowest rate of corporation tax in the G7. I thought that I would hear a cheer from the Opposition for that, because they must surely want that to happen. Perhaps they do not.
That ambition is why we are making the UK the best place in Europe to start, finance and grow a business. We are supporting small firms with a moratorium on domestic regulation, which will give them a real chance to plan and to get going. We are investing £100 million in science capital development. That ambition is also why we are encouraging investment and exports as a route to a more balanced economy. We are setting up 21 new enterprise zones with superfast broadband, lower taxes and low levels of regulation and planning controls.
From our perspective, we can see that even as the economy grew under the previous Government, too many people in this country missed out. More than half the additional jobs that were created went to foreign nationals. It is therefore hardly surprising that youth unemployment was higher when we came into office than when Labour took power. As growth picks up again, we have to ensure that this group does not miss out once more. Some 900,000 additional jobs will be created over the course of this Parliament, and our welfare reforms are about ensuring that our people are ready and able to take them.
The previous Prime Minister spoke about British jobs for British workers, but the reality is that most of the jobs did not go to British workers. That point is not about immigration, but about supply and demand. We have to ensure that British workers are ready and able to take the jobs. That is why this Budget introduces new and hugely welcome measures to provide extra support for young people. They will be helped to find sustainable jobs in the private and voluntary sector. We will fund an additional 50,000 apprenticeship places over the lifetime of this Parliament, and importantly, 40,000 of them will be targeted at the young unemployed. That is on top of the 75,000 places announced last year.
Overall, with the new measures in the Budget, the Government will deliver at least 250,000 more apprenticeships over the next four years compared with the previous Government’s plans. Those apprenticeships will be very valuable, because they will give young people in particular, but others as well, real training, real skills and a proper job at the end of it.
Alongside that, we are aiming to assist in the process of getting apprenticeships by providing up to 100,000 work experience places over the next two years. Those placements will last a minimum of eight weeks, rather than the two weeks made available under the previous Government. We will also offer employers an extra linking month when it will provide a route into an apprenticeship. If an employer says after the eight weeks that they will put a young person into an apprenticeship, or even into work, we will be prepared to give the young person an extra month of work experience so that the employer can sort out whatever is necessary without having to let them drop out of the company.
That work experience will be a crucial head start for young people. As David Frost of the British Chambers of Commerce said in January:
“Employers will be key to getting young people into work. This programme is a way of not only providing quality work experience but also of introducing individuals to the modern world of work.”
The programme has also got the backing of Hayley Taylor, star of Channel 4’s “The Fairy Jobmother” series, whom I saw the other day—a great woman. She has said:
“It’s hard to get a job with no experience, and you can’t get experience without a job. That’s why this work experience scheme is a really good idea.”
However, this Budget is not just about securing the position of workers today; it is also about securing their position in the future, as they enter retirement. We have done a great deal for current pensioners. We have restored the earnings link and given a triple guarantee that the basic state pension will rise by the highest of the growth in average earnings, the prices increase or 2.5%.
Mr Duncan Smith
Yes, exactly. That will provide a really generous state pension that gives a firm financial foundation. Someone retiring today on a full basic state pension will receive £15,000 more over their retirement than they would have done under the old prices link. We have also permanently increased cold weather payments from £8.50 to £25.
Notwithstanding the prospects of today’s pensioners, the prospects for the next generation are very different. I hope that Members of all parties will recognise that those who are not near to receiving their pension, and who perhaps are just starting their career, face a very difficult time indeed.
Albert Owen (Ynys Môn) (Lab)
On the subject of pensioners, was the Secretary of State as disappointed as I was that the Chancellor did not have the guts to mention in his Budget statement that he was reducing the winter fuel allowance from £400 to £300? His decision not to continue with the £400 payments comes after he said they would be protected and permanent in future. Some 12 million pensioners will be upset by the Government’s policy not to continue with them at a time when bills are going up year on year.
Mr Duncan Smith
I am interested that the hon. Gentleman raises the matter, because it was originally mentioned in the comprehensive spending review. We have stuck to the last Government’s plans on the winter fuel payment. In fact, I was intrigued by the issue so I looked up what the right hon. Member for Edinburgh South West (Mr Darling), who is in his place, said when he was Chancellor. He said a lot of straightforward things, and I congratulate him on that. He said about the winter fuel payments that they
“were temporarily increased to £250, and £400 for the over-80s…I will guarantee this higher winter fuel payment for another year.”—[Official Report, 24 March 2010; Vol. 508, c. 263.]
When we look at the Red Book produced at the time, we find that there was no allocation for any more winter fuel payments. We stuck to the last Government’s plans. Perhaps the hon. Member for Ynys Môn (Albert Owen) should ask his right hon. Friend why he did not plan for more. We did exactly what we said we would do.
The real problem is that 7 million people are not saving enough for the retirement that they want, and few will be able to rely on a guaranteed income in retirement, because the numbers saving in defined benefit schemes in the private sector have more than halved in the last 20 years. In fact, less than half of the entire working-age population is currently saving in a pension at all.
Our plans automatically to enrol all workers in a pension scheme will make a real difference—we have continued the work started by the previous Government—but my hon. Friend the Minister and I do not think that auto-enrolment will work unless it pays people to save, which is why we have determined finally to get to grips with the state pension. As all hon. Members know, not only is the state pension extremely complex, leaving millions of people unsure as to what they will receive in retirement, but it completely fails to reward those who make the effort to save but who do not quite get there.
Too many people reach state pension age having scrimped and saved all their life to find that others, who have not saved or who have made no effort to save, get the same income as them through pension credit. The Budget is about rewarding those who do the right thing, which is why we will shortly publish a Green Paper on state pension reform, with an option for a single-tier state pension, which will provide a clear foundation for saving. We currently estimate that it will be set at around £140 a week, which is above the level of the means-tested guarantee credit, but we must send out the clear message across the welfare and the pension systems that people will be better off in work than on benefits, and better off in retirement if they save.
Glenda Jackson (Hampstead and Kilburn) (Lab)
If the change in the pension system is to benefit the whole country and all pensioners—current and future—why have the Secretary of State’s policies targeted specifically women born between ’53 and ’54? They expected to retire, but now discover that they must work at least four years longer. That does not strike me as a policy that benefits the entire population.
Mr Duncan Smith
The hon. Lady’s comment on working four years longer is simply incorrect, but I take what she says. The reality is that the Government are doing what we were asked to do—equalise the ages—and increasing the age to 66. I recognise the group she mentions, but they will be covered and supported in other ways anyway, so this is not a loss—
Mr Duncan Smith
It is not a specific group in the sense that they were targeted. That policy is part of trying to get the pensionable age up first to 65, and then to 66.
Mr Frank Field (Birkenhead) (Lab)
The House will be pleased that the Government want to move to a standard pension of about £140 a week, but how will that be paid for? Will it be by pooling the contributions of those who have already paid under the national insurance and state earnings-related pension schemes? If so, how many will lose out, and what sort of message would that send to people about saving?
Mr Duncan Smith
First, we will publish the Green Paper very shortly. We are finalising it, so I do not want to get into the full detail now, but I promise the right hon. Gentleman that we will answer all such questions. Less means-testing is the key. I leave him with that thought, but I will tantalise him not much longer: there is some really good stuff coming in the Green Paper, and I am sure he will find every reason to support it, given that he has been so positive about pensions for many years.
Alec Shelbrooke
Like many hon. Members, I have received representation from constituents who wonder why there is a two-year jump in the pensionable age. Will the Secretary of State outline why that must be done?
Mr Duncan Smith
That is to do with the process of equalising, which we are doing slightly faster. It is in the interest of the nation and individuals for us to do that. If we do not do it, there is a cost implication, which could be as high as £10 billion. I say simply to my hon. Friend that if the Opposition and others do not want to do that, they should please let us know where they think the money will come from.
We are making responsible choices for the British economy. I am particularly proud of the decision we took with my right hon. Friend the Chief Secretary to the Treasury on the potential for a single-tier pension. That is in stark contrast, I think, to the mess we saw from the previous Government. What is interesting is that the Labour party has been out of power for 10 months, but listening to what Labour Members say about the current situation, one would think that it has been more like 10 years and that they had nothing to do with it. They do not know whether they are coming or going. Interestingly, half of them seem to support the Darling plan, and the other half do not. For the shadow Chancellor, it rather depends on who asks him, when they ask him, and what time of day it is.
It seemed that the Labour party would not cut, but then we heard that theoretically it would. More frightening still, it has made it clear how it would spend more of our money. Notwithstanding the plan set to start on 1 April, in the past month or so, the Opposition have made some £12 billion of unfunded spending commitments, which actually makes their spending profile even worse. They will tell us that it would all be funded by an extra tax on the banks. Oh dear! I remember that they used to attack the Liberal Democrats for making a similar claim over the extra 1p on income tax. They said, “This is the longest p in history.” Well, this is now the biggest, longest tax in history. It would have to be raised at least six times to pay for the sort of commitments they have engaged in. However, we should not be surprised to discover that fiscal mathematics is not Labour Members’ strong point.
Now we see the Leader of the Opposition joining a march for an alternative solution. I personally hope he has found it, but I do not think he did on the podium the other day. Instead, we see that he is now linked with some of the great names of history: the suffragettes, the anti-apartheid movement and Dr King in America. I am pleased that the Leader of the Opposition also has a dream, but for us it is not having a dream that matters, but that soon enough he should wake up and smell the coffee. The reality is that this Government are sorting out the deficit; this Government are getting Britain back to work; this Government are dealing with the mess that Labour left; and meanwhile they are in denial.
Mr Duncan Smith
Now that the right hon. Gentleman is into the Darling plan, will he specify what those cuts are, what he supports right now, and therefore what the plan really is? After all, it was due to come into force three days from now.
Mr Byrne
I have just gone through them. They involved £57 billion-worth of discretionary action—[Interruption.] The difference between us—[Interruption.] Well, let us take the Secretary of State’s own Department. Regarding the £18 billion savings in annually managed expenditure, we said that where there is a temporary switch from RPI to CPI for the next three years, we will support that; where there is a need to reform the disability living allowance, we will support it; and where there is a need to introduce new limits on employment and support allowance, we will support that. We do not think, however, that the Government should introduce reform simply by cutting. They should couple some of those reforms with the need to look again at the support that working families actually need.
Mr Duncan Smith
Okay, now we are into this specifically. DLA reform has a line item in the Budget of about £1.4 billion in savings. Does the right hon. Gentleman consider that to be a reduction that he supports?
Mr Byrne
The Secretary of State put in place a programme to make the cut before he figured out what reform was actually needed. He is under such pressure from disability groups because he is not listening to the voices of disabled people in this country telling him what kind of support they need in order to live full and fulfilling lives. That is because he is locked into a programme that is putting more people on to the dole and sending benefits bills through the roof. He is beginning to fracture the bonds of support between the Government and the people in this country who need extra help. He should not be abolishing DLA; he should be reforming it. He should also start listening to the needs of disabled people.
Mr Duncan Smith
I am intrigued by this. The right hon. Gentleman now seems to be at odds with his shadow Chancellor, who in his opening speech in the Budget debate last week, in response to a specific question about what spending cuts he wanted in the coming year, said:
“We said…that we would go ahead with the disability living allowance gateway reforms.”—[Official Report, 24 March 2011; Vol. 525, c. 1142.]
That involves £1.43 billion. Does the right hon. Gentleman support that now?
Mr Byrne
No, because we have not specified—[Hon. Members: “Ah!”] We have not specified the level of cuts or savings that we think should come from DLA. The Secretary of State knows as well as I do that we believe that a gateway should be introduced for DLA—[Interruption.] He should listen to this, because it speaks to the concerns of millions of people with disabilities. He has said that he is going to cut £1.4 billion from DLA, and, in written answers to the House, he has said that 170,000 fewer people will receive that benefit in the future—[Interruption.] The Secretary of State might just want to listen to the implications of this. It is a bit late for him to be getting a briefing on his DLA reforms from his own Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller). If he is cutting DLA for 170,000 people and cutting £1.4 billion from that benefit, £8,500 will be cut from each of those 170,000 families. Will he intervene on me again and tell me whether he understands that that is the implication of his benefit cut?
Mr Duncan Smith
I have a very simple question. The shadow Chancellor said that he supported the reform, which has a very simple line item in the Red Book. The right hon. Gentleman now says that he does not support it. This is the problem: the Opposition have no idea what they are doing. No wonder the British public are fed up with them.
Mr Alistair Darling (Edinburgh South West) (Lab)
In the short time available, I shall not follow up on any points made by the right hon. Member for Hitchin and Harpenden (Mr Lilley), except to say that when he talks about any element of fairness in the Chancellor’s last Budget and this Budget as regards those on the top incomes, I think he will find that some of the things he talks about have more to do with measures that were announced by the previous Government than with those announced by this Government.
In many ways, the Budget is an annexe to last June’s Budget, which set the direction for this Government and the tone for this year’s Budget. I want briefly to consider how that will impact on this country as well as what is happening in other parts of the world. Although it does not quite fit the Tory story, what is happening to our economy will be very much influenced by what is happening in other parts of the world.
In some ways, it is quite remarkable that the global economy is growing at all. Three years ago, when the International Monetary Fund reported for the first time that it had stopped growing, it was possible that we were in for a serious downturn. It is now growing, but it is a two-speed recovery that is strong in Asia and far less so in the west. In Europe, we see strong growth in Germany and far less growth in southern Europe in particular. Here at home, manufacturing is doing well because the pound has depreciated, but the service and business sectors are not doing so well at all.
The recovery in this country and in Europe is fragile. We saw the economy grow more strongly than we expected in quarters two and three—the summer and autumn of last year—although again that had an awful lot more to do with measures that were implemented before rather than after the general election. We saw a sharp slow-down after that, which was largely brought about by people’s fear of what was to come. People are losing confidence—we saw the confidence survey published just after the Budget last week—and that should worry any Government. If we continue to get sluggish growth, the risk is that we will bump along the bottom and we will not get the jobs or growth on which this country depends.
Incidentally, I followed with interest what the Secretary of State said but one question that he failed to answer was that put by my hon. Friend the Member for Wolverhampton North East (Emma Reynolds): if our spending was so wrong, how come the Conservatives supported it right up until the end of 2008 and the Liberal Democrats supported it until a week after the general election, when they promptly changed their minds? The Secretary of State has revealed this afternoon that he is not quite the details man I remembered, but he might care to note that our structural deficit in 2006, according to his Government’s own measure, was 0.4%. It is simply not true to suggest that all our problems today are the result of spending. The main problem that we faced was an acute banking crisis that hit us and hit other countries in the world. That is why we are not the only country to have a very large deficit.
Mr Duncan Smith
I am listening to the right hon. Gentleman with great interest and respect, but I want to get this absolutely straight because one of his right hon. Friends said this the other day. The OECD measurement of the UK’s structural deficit in 2007 was 3.9% of GDP, the highest in the G7. Can he confirm that?
Mr Darling
The structural deficit was 0.4%. Throughout the past decade, we were spending money, but I must say, as a Minister in that Government, we were greeted with calls from the then Opposition not to spend less but to spend more on just about every occasion. They cannot have it both ways.
What worries me is that as we look forward, we face a number of pressures that are a threat to sustained recovery in this country. We, along with most other European countries, are following a deflationary policy and we are doing it together. This is not like Canada or Sweden 10 years ago, who reduced their deficit on the back of rapidly expanding neighbouring economies. That will have an effect. America, sooner or later, will have to deal with its very large debt problem that has been overhanging that country since the Bush years. That is not a recent phenomenon but it will have to be dealt with and it will have a knock-on effect on the rest of the world’s economies.
On inflation, for 10 years we in the west have lived off cheap goods coming from the far east. Now what is happening, as one would expect, is that those economies are growing and there are inflationary pressures. Commodity prices are increasing and wages are starting to go up, so those days are finished for us. It worries me that we are likely to face deflation as a result of Government policy with inflation as well. All that will result in lower growth, which is exactly what the Office for Budget Responsibility has said.
Oral Answers to Questions
Iain Duncan Smith Excerpts(13 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Claire Perry (Devizes) (Con)
1. What assessment he has made of the potential effects on gender equality of the implementation of his proposals for universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Before I answer this question, I would like to take the opportunity to offer my condolences—and those, I hope, of the House—to my hon. Friend the Member for South East Cornwall (Sheryll Murray), who had tabled a question for today, but whose husband tragically died last week.
As set out in the equality impact assessment published earlier this month, the effect of the universal credit measures and the Welfare Reform Bill on gender equality are approximately equal; and universal credit will see significant improvements in incentives for both men and women to work. We expect the new system will be particularly helpful to lone parents, including those who are looking for work that will fit in with their children’s schooling.
Claire Perry
Many working mothers in my constituency are concerned that the universal credit will mean the loss of their working tax credit and access to child care support. Will my right hon. Friend confirm that support for child care costs will be provided through an additional element as part of the universal credit?
Mr Duncan Smith
That is absolutely what we plan to do. We will bring forward our proposals shortly. The idea is that the available money will continue to be used for child care support. We recognise how important child care is in helping parents, particularly lone parents, to fit in their obligations to work and to look after their children.
Kate Green (Stretford and Urmston) (Lab)
Witnesses to the Welfare Reform Public Bill Committee stated last week that incentives for second earners to move into paid employment would be reduced in many cases under universal credit. Will the Secretary of State tell us what assessment has been made of the impact of the universal credit proposals on second earners and on women’s economic independence?
Mr Duncan Smith
Yes. The majority of existing and potential second earners will not, on the basis of the figures I have looked at, be affected by the reforms, because the household already has earnings that take them beyond the reach of the benefit system. Approximately—I stress this is an approximate figure—300,000 second earners may see a deterioration in the incentive to increase their hours, and it is possible that some second earners will choose—or may choose as a result of their home commitments—to reduce or rebalance their working hours or leave. However, universal credit will provide much better incentives for the first earner, giving a greater choice to the household about how it wishes to spread its income.
Stephen Timms (East Ham) (Lab)
The Secretary of State told us on Thursday that the Government have not yet decided how to support child care costs in universal credit. Is he yet in a position to assure women with children that in the new system they will be better off in work—after child care costs have been taken into account?
Mr Duncan Smith
We are going to bring forward our proposals. It is because we acknowledge the importance of this area that we want to get it right. We are going to consult and we want people to recognise their priorities and have the opportunity to decide with us what they think those are. It is our intention—this can be stated absolutely, because it is the purpose of universal credit—to ensure that people will always be better off in work than out of work.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
2. What estimate he has made of the number of people in Halifax who will be affected by planned changes to disability living allowance.
Nick de Bois (Enfield North) (Con)
8. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Welfare Reform Bill introduces a fundamental reform of the benefit system and should ensure that work always pays. The universal credit will improve earnings incentives for some 700,000 people and could reduce the number of workless households by about 300,000.
Damian Hinds
Casual work and temporary work are important routes into employment, but many people are put off them, not only by benefit loss but by the complexities they will face. How will my right hon. Friend’s welfare reform programme help to address that disincentive?
Mr Duncan Smith
One of the complexities that most people face is the fact that two Departments administer what are, in essence, benefits: the working tax credit and the Department’s own benefits system. One of the problems that occurs is that people in difficulty often find it difficult and stressful to figure out who they are supposed to notify of the changes taking place in their lives, their working hours and so on, and they have to go to two Departments to deal with two sets of figures. That will all be sorted out as we bring those together under one benefit. First, these people will not have to notify so many people, and secondly, universal credit will pick up a great deal of that through the real-time system.
Nick de Bois
Does the Secretary of State agree that in addition to the incentives in the Welfare Reform Bill, community initiatives such as the Enfield jobs club, which we launched this morning, play a vital role in securing employment, as does the support of a national charity such as GB Job Clubs?
Mr Duncan Smith
May I take this opportunity to congratulate my hon. Friend on his job club, whose launch I attended? This is a good example of an area where Members of Parliament can help enormously, because by working with their local jobcentres to set up these job clubs, which we now discover work incredibly well with those who are out of work, people can be given real enthusiasm and hope for the future.
Nic Dakin (Scunthorpe) (Lab)
Can the Secretary of State give a clear commitment that nobody will be worse off in work when child care and other costs, such as the cost of school meals, are taken into account?
Mr Duncan Smith
With respect, I think the hon. Gentleman will have to wait until I bring the proposals forward. As I said earlier, there is no point in introducing the universal credit unless we stick with our principle that work should always pay better than being out of work.
Ms Karen Buck (Westminster North) (Lab)
Work incentives are only effective where there is work. As we now know, unemployment is projected to be at or above 2 million for the life of this Parliament. Will the Secretary of State update us on whether the Treasury has provided him with additional funding to expand the Work programme so that it can take up the additional demand from the workless?
Mr Duncan Smith
The Work programme is well set to cope with all the ups and downs that might take place over the next few years. The reality is that the Opposition go on about there being no jobs, but even now, advertised through the jobcentres, nearly a million new jobs have been placed in the past three months—that is 10,000 a day and about half the total number of new jobs created in the outside world. I say to the hon. Lady, with respect, that we are making these reforms and changing this complex system because more than half those jobs are likely to go to those from overseas, which does not help at all unless we reform the system to ensure that British people get a shot at the jobs, too.
Mr David Burrowes (Enfield, Southgate) (Con)
9. What support his Department provides for mothers who wish to stay at home to care for their children.
Sajid Javid (Bromsgrove) (Con)
20. What estimate he has made of the likely effects on welfare expenditure of implementation of the provisions of the Welfare Reform Bill.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In real terms working age welfare spending climbed by 54% over the past decade from £48 billion in 1999-2000 to £74.7 billion in 2009-10. The explanatory notes to the Welfare Reform Bill report that there will be savings of some £960 million in 2012-13,rising to around £3.9 billion in 2014-15. We have also set aside £2 billion to cover the costs of implementing the universal credit.
Sajid Javid
This Government inherited a record Budget deficit, which rightly requires the re-examination of every Department’s spending. Instead of getting constructive suggestions from the Opposition, we too often get opportunism, including a demeaning comparison this weekend between protesters, civil rights marchers, people who fought for women’s rights and anti-apartheid campaigners. Does my right hon. Friend believe that the best way to bring down our welfare bill sustainably is to get people back into work by giving them the right work incentives?
Mr Duncan Smith
My hon. Friend is absolutely right. The key is to get people back into work, to reform the system so that it is simpler and to ensure that work always pays. As we approach April, when the Darling plan was meant to start, I have yet to hear one single figure for anything that the Opposition say they would have reduced, had they introduced it. Instead, apparently, the Leader of the Opposition now lines himself up with Pankhurst, Mandela and Martin Luther King. Miliband does not quite work, does it?
Hywel Williams (Arfon) (PC)
What account does the Secretary of State take of arguments by disability campaigners such as my constituent, Mr Rhydian James, who points out that much of the increased cost of the system is due to demographic matters and to reduced under-claiming?
Mr Duncan Smith
The hon. Gentleman will therefore be pleased with the design of the universal credit, because the one thing that it will tackle hugely, which is why there is an extra cost to it, is under-claiming, which will stop. Those who are eligible and who should have their money will be able to get it. Better still, that will improve the level of those coming out of poverty, as opposed to what happened under the previous Government.
Angie Bray (Ealing Central and Acton) (Con)
The Secretary of State may recall a row that broke out when a family on benefits was moved into a house in Acton worth well over £1 million, which people on average salaries would only dream of. Does he agree with those constituents who tell me that these reforms are fair not only to those in work, but to the taxpayer? Why has it taken so long for common sense to prevail?
Mr Duncan Smith
Most people who work hard and who are on marginal incomes will consider it reasonable that the benefits system does not pay more than average earnings, which turn out to be about £36,000 gross. Most people who are in work would consider that to be a reasonable level of income. Those who complain about that complain about something that they should have resolved anyway.
Margaret Curran (Glasgow East) (Lab)
Of course, the Secretary of State will have received many representations from carers’ organisations about the Welfare Reform Bill and its likely impact. In reply to a written question I tabled last week, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), who has responsibility for disabled people, stated that she did not yet know what impact the new personal independence payment will have on carers, yet the Bill is now in Committee and PIP will be decided in just a matter of weeks. Will the Secretary of State confirm that PIP will remain a passported benefit from carers’ allowance, how many carers will be affected by the change and how many carers will lose as a result of the changes being introduced by the Government?
Mr Duncan Smith
I can say to the hon. Lady, much as my hon. Friend the Under-Secretary has before, that we are reviewing all of this. The purpose is to ensure that those who are involved in caring will get greater and better support and that they will be better cared for themselves. The reality is that we chose for that reason not to take carer’s allowance into the universal credit, which the hon. Lady has not touched on, because that would have meant that some people might have lost out.
Mr Peter Bone (Wellingborough) (Con)
21. What plans he has for the future of disability living allowance; and if he will make a statement.
Laura Sandys (South Thanet) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
This Government inherited a youth unemployment crisis, and to tackle the problem the Chancellor’s Budget announced 100,000 new work experience places and funding for an additional 40,000 apprenticeships, on top of the 75,000 places that we announced last year. That is a far better way of helping young people into sustainable jobs and long-term careers than some of the rather expensive and ineffective programmes that we inherited.
Laura Sandys
I would like to associate myself and my local fishermen with the condolences that the Secretary of State paid to our hon. Friend the Member for South East Cornwall (Sheryll Murray).
I, like many other hon. Friends, am taking on an apprentice, and I wondered what the Department was doing to support apprenticeships and work placements, which are so crucial to giving young people that first step in the workplace.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I start by associating Opposition Members with the condolences expressed to the hon. Member for South East Cornwall (Sheryll Murray)? The circumstances that the Secretary of State outlined were extremely tragic.
May I return the Secretary of State to our debate this afternoon and ask about what the Prime Minister said to the House last week? He said that he had no plans to proceed with the removal of the mobility component of disability living allowance, and the Under-Secretary of State for Work and Pensions, his hon. Friend the Member for Basingstoke (Maria Miller) appeared to confirm that this afternoon. Yet, two hours after the Prime Minister sat down, his right hon. Friend the Chancellor said that he was ploughing ahead with making the savings. Whose side is the Secretary of State on? The Prime Minister’s or the Chancellor’s?
Mr Duncan Smith
I am on the side of both of them, to be quite frank. I make it my business to be so—although it is not always necessarily reported accordingly.
The situation, as I, the Prime Minister and even the Chancellor have outlined, is very simple. We have a requirement to look at the whole disability living allowance spectrum, of which the mobility and mobility in care homes components are part. As I said the last time I was asked about the issue, we are absolutely setting out to make sure that the current overlaps and deficiencies in an incredibly messy and complex system, whereby local authorities, care homes and the Department all tread on each other’s toes, are sorted out and do not exist, so that the mobility component that is required for people in care homes will exist after we have completed that work.
Mr Byrne
I am grateful for that answer, which is familiar to many in the House. If the proposal were to be dropped, however, the Red Book would show that from 2013 the savings would be returned. In fact, it shows no such thing. Indeed, page 44 of the Budget states that up to £500 million more will be removed from the residential care component than originally planned; and, in a parliamentary answer to me, the Secretary of State says that 100,000 fewer people will be in receipt of DLA by the end of the Parliament. Can he see now why people with disabilities are so worried about his plans?
Mr Duncan Smith
The letter I sent to the right hon. Gentleman and, I think, to others is quite clear. The point I am making, and I make again, is that the purpose of what we are doing—what the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) is engaged in—is to review a complex system, which does not work very well. Many people who need disability living allowance often do not get it; people, when they go back to work, are confused about whether they will still receive it; and people often feel that they should not take work because they think that the allowance is work-related, which we know it is not. So, that complex system, which the previous Government left to us, has to be reviewed. Many have welcomed the review, and at the end of it we will make decisions that benefit those who need DLA.
Mark Menzies (Fylde) (Con)
T3. I should like to ask the Secretary of State what advantage he sees in placing young people on to apprenticeship schemes as opposed to a six-month placement on the Work programme.
Neil Carmichael (Stroud) (Con)
T4. In my constituency, a large number of individuals come to my surgeries worried about being passed from pillar to post in the complicated welfare system that we have. Can the Minister give me some reassurance that the reforms are going to make it much simpler, especially in connection with people wanting to establish businesses?
Mr Duncan Smith
I can give that assurance to my hon. Friend. We have inherited a system that has huge in-built disincentives and perverse incentives for people to do the wrong thing. The idea of this reform—the universal credit, alongside the Work programme—is that people have a clear understanding of what they will earn when they go to work. They will not need to have the brains of a professor in mathematics to figure it out; they will find it out themselves, and that will incentivise them to stay in work and not be put off by having to report to 50 different people.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T5. In his earlier response, the Minister implied that levels of winter fuel payment under Labour were based on the electoral timetable. In fact, the UK has the highest level of excess winter deaths, according to National Energy Action. Can he explain why pensioners in my constituency will be receiving less this winter than last?
Karl MᶜCartney (Lincoln) (Con)
T7. My right hon. Friend is no doubt aware that my constituents in Lincoln help to fund welfare spending in this country. Welfare spending has increased from £132 billion 10 years ago to £192 billion at present—an estimated real-terms increase of 45%. Will he assure me that even in these difficult economic times, this Government, unlike the last Labour Administration, will do all they can to help people in Lincoln who are genuinely able to move from welfare into work?
Mr Duncan Smith
I can give my hon. Friend that reassurance. He should be reassured by the fact that this Government are doing more to reform the archaic benefits system, which is full of all the traps to which he referred. That will benefit those who are in work. One big reason why they have to pay more tax is that the last Government left us with a nightmare system that prefers to keep people out of work than in work.
Alison McGovern (Wirral South) (Lab)
Having work experience and money reserved for apprenticeships will not automatically equal a reduction in unemployment among young people. When will the Minister report to the House on the unemployment that is faced by young people, and what will he do if the numbers do not fall?
Mrs Mary Glindon (North Tyneside) (Lab)
By insisting that widows’ pensions should be treated as unearned income under the universal credit, widows will lose a large slice of their pension. How can the Secretary of State justify that?
Mr Duncan Smith
The hon. Lady knows that we are looking at all these matters. I am happy to discuss that matter with her if she wants to talk to me.
Stuart Andrew (Pudsey) (Con)
T10. I have been approached by a number of constituents who are private landlords, who are concerned that they have not received payments that have been made to their tenants. What measures are the Government considering to alleviate that problem?
Welfare Reform Bill
Iain Duncan Smith Excerpts(13 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I beg to move, That the Bill be now read a Second time.
The Bill before us today covers a number of areas, but I hope that it sets a new course for the welfare state. I believe it will enable us to reach out to some of the groups of people who have become detached from the rest of society—trapped, too often, in a permanent state of worklessness and dependency. For the sake of the House, I will go through the relevant clauses of the Bill. I am sure that colleagues on both sides of the House will want to intervene. I hope they will recognise that we shall get to most of the clauses that they want to discuss, but I will take interventions as and when they come.
The problem is that although from 1992 to 2008 this country saw some 63 consecutive quarters of growth, and 4 million more people were in employment by the end of that period, before the recession had even started we still had some 4 million-plus people on out-of-work benefits. The question is: where did all those jobs go? Under the previous Government, over half of the jobs created went to foreign nationals. This is not an immigration point; it is a point about supply and demand. There were a group of people in this country completely unable, it appears, to take advantage of that long period of growth and job creation. In essence, the key point about the Welfare Reform Bill is that it is intended to help that group.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I am grateful to the right hon. Gentleman for giving way so early. I wondered whether, at the outset, he would like to comment on the reports in today’s Telegraph that the cancer charities are warning that his proposals for employment and support allowance will penalise those who do not recover soon enough. How could anyone think that that is a fair approach, in a Bill like this?
Mr Duncan Smith
I think the report was in The Guardian. I do not know whether it is in The Daily Telegraph.
Mr Duncan Smith
I read The Guardian; he reads the Telegraph. What can I say? Times really are changing.
I have read the report, and I think that a number of elements in it are simply not altogether correct. I say that rather carefully because the point about the cancer aspect is that, as the hon. Gentleman knows, we inherited from the previous Government a process of reform and change to the employment and support allowance, which included the work capability assessment. We supported that, with the previous Government, because it was the right thing to do—to look at the 1.5 million people on incapacity benefit and check them over. We did not inherit any real allowance for cancer sufferers. It is important to make this clear. The Employment Minister, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), immediately accepted the internal reviews, but went further. He asked Professor Harrington to conduct a review of what we did regarding cancer patients and others, and the hon. Gentleman, being a generous individual, will know that we then incorporated a big change, so that a person in cancer treatment—chemotherapy—who is between treatments will go straight on to the support element. Thus the contributory aspect will not affect them, because while they are on the support element they will continue to be supported when they are out of work.
Mr Duncan Smith
One second. Would the hon. Lady forgive me? I have been asked to answer a question and I shall try to answer it. We have already made some very substantial change to support people in cancer treatment. The concerns of Macmillan and others relate to oral chemotherapy. I understand that. We have already asked Professor Harrington, in his second review, to undertake to give some advice on that. We have a slight problem with that from the start, because it is a fairly new form of treatment and a limited number of people are on it. So far, much of the medical evidence suggests that it does not affect people in the way that intravenous chemotherapy does; it is not as debilitating. We remain open to that evidence.
Although there is no provision for oral chemotherapy right now, my right hon. Friend the Employment Minister has made it clear that Professor Harrington will review the subject and take evidence, and we have asked the cancer groups to offer up their thoughts and advice, in addition to the medical fraternity. We will take account of what Professor Harrington says. As the hon. Member for Birmingham, Selly Oak (Steve McCabe) knows, last time we adopted all the recommendations in the professor’s report in their totality. So we are not in the business of trying to harm or affect cancer patients; quite the contrary. We made some very serious changes to what we inherited from the previous Government—I would like to think that they would have done the same—and we will continue to do so. I hope that answers the hon. Gentleman’s question. If he will let me get on with the rest of the Bill, I will.
Naomi Long (Belfast East) (Alliance)
Will the right hon. Gentleman give way on that point?
Mr Duncan Smith
I would like to make a bit of progress, if the hon. Lady does not mind. I think I have been pretty generous on that aspect. I will return to it.
The key is that I hope the Bill in general—we shall get to the more specific elements later—represents a whole new concept: a contract with people who are in need of support. For those who are able to work, work should pay, and for the most vulnerable in society we will continue to provide the support that that they need. I think it is our duty to do so. We can debate the levels of that support, but it is our duty none the less.
The Bill says to the taxpayer, “Your hard-earned money must be spent responsibly.” We sometimes forget, in our debates on welfare, that the taxpayer is also a player in this, because taxpayers—many of them on low and marginal incomes—are constantly being asked to pay in taxes towards support for others. That is fair, but we have a responsibility to ensure that taxpayers too are properly supported. I shall now outline some of the principles of the Bill, and then I will try to get through the various clauses.
Mr Andy Slaughter (Hammersmith) (Lab)
Will the right hon. Gentleman give way?
Mr Duncan Smith
Forgive me; I want to make progress before I take more interventions, but I certainly will not shy away from interventions.
I note the comments by my opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), that his party agrees with more than
“three quarters of the principled and burden-sharing”
changes that the Government are making. Obviously, in his interventions he will make clear what he does not agree with. I have read his amendment and there will be some questions about some of that; I am sure we will get to that in a minute.
I intend to take the House through the Bill stage by stage. Let me start with universal credit. I shall begin with an overview, and then consider some of its detailed aspects. The universal credit obviously sits at the heart of this welfare reform. I do not think I would want to embark on this process if that were not the case. I believe it is a commitment to the public that work will always and must always be made to pay, particularly critically for that group of people who are probably the most affected—the bottom two deciles of society—who have too often found it really difficult to establish that work does pay.
I am pleased to say that those principles seem to have received support from a number of stakeholders, including Citizens Advice and the Institute for Fiscal Studies. The IFS said that by and large the measure was a progressive change. We anticipate that the universal credit will make some 2.7 million households better off. Over 1 million households will be better off by more than £25 a week—clearly, those will be down in the bottom deciles—and 85% of that increase will go to households in the bottom 40% of the income distribution.
We have agreed a package of transitional protection which will ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. The universal credit should also start making inroads into the couple penalty. Members on both sides of the House agree that that is necessary. I know that the right hon. Member for Birkenhead (Mr Field), who is in his place, has made great play of that over the years, and many of us have agreed with him.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I am listening with great interest to my right hon. Friend’s speech. Can he give me some further detail on how the benefit cap will be introduced?
Mr Duncan Smith
I was coming to that, but I shall touch on it now; I may make some further comments later. The principle is that people who are unemployed and on benefits should not be receiving more than average earnings. It is a matter of fairness, so that those who are working hard and paying their taxes do not feel that someone else will benefit more by not playing a full part in society. We recognise that there must be transitional arrangements. We will work intensively with the families affected once the cap comes in. We will help them move into work, to change their circumstances so that they are not affected. We will make sure that families who need transitional support will receive it. We will make more detailed statements about that later.
The idea is that we should encourage people back into work, and most of all that people who are in work and paying their taxes should feel that it is fair that while they earn and they work hard, others realise that the best way to increase their income is through work, not through benefits. That is a great principle.
Mr Slaughter
According to the right hon. Gentleman’s Department, 70% of those affected by the benefit cap live in social housing. The Housing Minister is building only unaffordable housing, because of the rent levels set. Is not the cap just a crude piece of social engineering, forcing people not to live in expensive areas, such as the constituency that I represent? Is it not directed at vulnerable people and the poorest in society, making it possible for them to live only where the Secretary of State chooses for them to live?
Mr Duncan Smith
With respect to the hon. Gentleman, it is not about where I choose for them to live. As with everybody else, it is about where their income and their ability to earn allow them to live. There are many people in London, for example, who work hard and who commute well over an hour to get to jobs because they cannot afford to live in parts of central London. We may argue that the cost of living in London is too high. One of the arguments that I would make is that the way that the previous Government’s local housing allowance was set drove up rents in both the private and the social housing sector. The hon. Gentleman should consider that what we are doing is reasonable. What we are trying to do is not to damage people, but to get them in locations where they can afford both to live and to work. I will return to that.
Mr Duncan Smith
I shall make a little more progress.
May I confirm that we shall move from the universal credit making inroads into the couple penalty to a subject on which I am sure many right hon. and hon. Members will want to speak—child care costs in universal credit? I can confirm that support for child care costs will be provided by an additional element paid as part of the universal credit award. We will invest at least the same amount of money in child care as in the current system, and we will aim to provide some support for those making their first moves into work, so that the support available is not restricted to those working more than 16 hours.
This is an important point. Although there is a debate about it, we must remember that working tax credit gives that child care support to those in the relevant band. Universal credit will allow claimants to adjust their hours of work to suit their child care responsibilities. It will allow people to set their hours of work more in line with their caring responsibilities. It will cover all the hours that people are planning to work. We will be much more flexible, and we intend to work closely with relevant groups to take further advice about the rates that we will set. By the time the Bill reaches its Committee stage, we will be able to be more specific.
Kate Green (Stretford and Urmston) (Lab)
Can the right hon. Gentleman confirm that as a result of that further consideration, there will be no circumstances in which, as a result of child care costs, a parent could be faced with a marginal deduction rate of more than 100%, as some models prepared for us by Family Action have suggested?
Mr Duncan Smith
That is not our intention, and it is why we were are proceeding carefully and consulting about our proposals. The purpose is to maintain incentives to go to work. Universal credit is designed to encourage lone parents to go to work, but it recognises their need to meet their child care responsibilities. We can debate the various elements, but the principle is that the measure should be more than helpful to them. We will move on to the finer detail as we get to Committee stage.
As we increase support to make work pay, it is right to ensure that claimants do everything they reasonably can to find or prepare for work. As the House knows, we will tailor conditionality to individual circumstances, and require all claimants to accept what I call a claimant commitment. From the outset they will be asked to sign up to the idea that we will provide them with the necessary support and access to universal credit, but we will also expect them to recognise that the sanctions regime is applicable. It is easy to understand. If they do not comply with that as they go further through the process, they are likely to encounter that sanctions regime at key moments.
The toughest sanctions will apply to those who are expected to be seeking work but fail to meet important conditions. They should understand that if they keep on crossing a series of lines, they will invoke the sanctions regime. The problem at present is that the regime is often confusing. I have visited jobcentres a number of times—and I see on the Opposition Benches one of the Members who used to be a Minister in the Department. As he knows, if one talks to jobcentre staff, they will say that the problem is that when claimants reach the point where they are about to hit sanctions, it comes as a big surprise to many of them that sanctions will be imposed and that the situation is real and serious.
By letting claimants know much earlier and by introducing a regime that is easy to understand, with a simple tripwire process, they will know from the word go. That should disincentivise people from taking the wrong turns. Benefits will be taken away for three months after a first failure, six months after a second, and three years after a third. That will apply to those at the top level—in other words, those who are fully able to search actively for work and to take it. There are, however, other categories. The same conditions would not apply to lone parents, for example.
Hywel Williams (Arfon) (PC)
The rate of worklessness and the availability of jobs vary from area to area. What account will the sanctions regime take of that variation?
Mr Duncan Smith
The sanctions regime is about work being available. If work is not available, people cannot be expected to take jobs, so I give the hon. Gentleman the assurance that no one will be told that they are on sanctions if there is no work available. The sanctions apply only if a job is available, the claimant has been offered it and for one reason or another has not taken it, or if they are not complying with the details of what they are meant to be doing to seek work. That is only fair. People who pay their taxes want to know that everybody out there is seeking work. If they are seeking work sanctions should hardly ever apply, and in most cases they will not apply.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The right hon. Gentleman is making a thoughtful speech, and I know him to be a thoughtful and caring politician. I will give careful consideration to much of the Bill and I will not vote against Second Reading. Is it not spoilt, however, by what is happening to the mobility component of disability living allowance? I visited a residential home in Huddersfield, in Edgerton, only last week. The Bill will destroy the lives of most of those people, 60% of whom are in wheelchairs.
Mr Duncan Smith
I thank the right hon. Gentleman—although I am not sure: is he a right hon. Gentleman? [Interruption.] An hon. Gentleman—okay. That is something that his party should do—it is not for me—given his record of service.
Yes, I accept that there were issues. In fact, when we looked at the decisions taken at the time of the spending review, I reviewed the matter, after discussing it with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), who is the Minister responsible for these matters. We visited lots of care homes—my hon. Friend went out to see people and talk to them—and we realised that there was a lot of chaos out there about what should be given to people in care homes, what care homes themselves provide, and what local authorities believe it is their statutory responsibility to provide. Some of them say that they do not have any such responsibility to provide mobility services, but others say that they do, and provide access to such services.
We have therefore changed the provisions in the Bill, as the hon. Member for Huddersfield (Mr Sheerman) has probably noticed. That will be incorporated in the review of disability living allowance. Our objective is to get rid of the overlaps, genuinely to find out what can be provided at local level, and to figure out what the amount should be to support someone in a care home, bearing in mind that mobility needs in a care home are likely to be variable, and different from the needs of someone living in the community completely independently. Adjustments will be necessary, but my hon. Friend and I give the hon. Gentleman and the House an undertaking that we are going to try to figure out what the right answer is. We will work out a set of figures, and how they can be applied. That is the purpose of the review; I guarantee that.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Reflecting on what the Secretary of State has just said, does he recall that on several occasions, the Prime Minister has been given the opportunity to say that he has listened to the evidence and accepts that there is virtually no support for withdrawing the mobility component of disability living allowance for people living in residential accommodation? To what extent does the Secretary of State’s position differ from the position taken again and again by the Prime Minister?
Mr Duncan Smith
We are as one. I say that immediately, before I explain the position.
The reality, for the Prime Minister and for me, is that when we understand that certain facts are slightly different from what we thought they might have been, we always modify what we are doing to make sure that the effect of what we are trying to do is reasonable and produces the best results. All I can say to the right hon. Gentleman is that the Bill is not the same as the one that he would have seen some weeks ago. We are not knocking out the mobility component from care homes, and we have included it in the review of what mobility provisions are necessary and required for people in care homes. That is the real principle behind the measure. My previous comments were about finding the overlaps, and how we made sure that they did not cost people money in one area, but found those costs in other areas. That is the main point of the review, and I have asked my hon. Friend the Under-Secretary to make sure that that is the case. The Bill covers that, and I hope that most people will see that it is quite reasonable to try to recognise what that figure is.
Mr Duncan Smith
I shall try to make progress, if hon. Members do not mind, because I have given way quite a lot on that subject.
Before the introduction of the universal credit we will introduce many of the changes to conditionality and sanctions that I discussed. Claimants, I hope, on that principle will accept the claimant commitment, as they will be subject to tougher regimes that are fair and reasonable. Turning to other benefit changes, we are making changes to the income support regime for lone parents before the introduction of universal credit. Lone parents who can work will be expected to claim jobseeker’s allowance when their youngest child reaches the age of five. We want as many people as possible to get help to engage with the labour market, and we know that about 80% of all lone parents are working or would like to work.
There will continue to be safeguards to allow parents to fit their job-search requirements with their caring responsibilities and child care availability. There are other relevant changes, too, and I accept that there have been concerns about them. I would be interested to learn the Opposition’s position on that. We are making changes to contributory employment and support allowance, time-limiting receipt to one year for those in the work-related activity group. There will be no change for those in the support group, as we have made clear, and people claiming income-related employment and support allowance will be unaffected.
I note the comments that have been made by the right hon. Member for Birmingham, Hodge Hill, who accepted, in his speech to the Institute for Public Policy Research, that time-limiting ESA is the right thing to do, but disagreed about the period—in this case, a year, whereas he was talking about two years. However, that is not clear in the amendment to the motion, so I wonder whether he could clarify the position. The amendment opposes the limit altogether, rather than the number of years. I would happy to accept an intervention from the right hon. Gentleman if he wished to clarify the position. [Interruption.] He will cover it in his speech—very good. I hope that we will understand that, as principles and practicalities need to come together.
I would point out to the right hon. Gentleman and to everyone else that the one-year limit is twice as long as that currently in place for jobseeker’s allowance. There has been discussion of people undergoing cancer treatment and others. That is best dealt with under the ESA regime and reviews, so that we can decide which groups are relevant, and which not, as we have done with some cancer patients undergoing chemotherapy. They have been taken out of that provision because they are in the support group. Professor Harrington’s review is the best way of doing that. We have established the principle of receipt for a year, and the rest is about the details of the conditions that best apply, and that can be dealt with in the Harrington review.
That best reflects the different nature of ESA and the different needs of those who claim it. However, we simply cannot pay those benefits indefinitely. I wonder whether that would have been the previous Government’s position if they had undertaken further reviews. For limited contributions under ESA, it would have been feasible for someone to receive ESA for their rest of their life. That was one of the big issues that we had to tackle.
Sheila Gilmore
I thank the Secretary of State for giving way. ESA is not given indefinitely, because there are constant assessments and reassessments. I have constituents who have been reassessed twice in the past two years and who are due for another assessment. It is not true that someone who receives contributory ESA will receive it for ever without assessment. The assessment process should cover that, without an arbitrary cut-off date.
Mr Duncan Smith
I remind the hon. Lady that in the support group, the contributory element does not apply. It applies to people with finances that take them above the line. The income-based measure continues—that is not the issue. The issue is whether we think that people who have contributed for a certain time have the right to contribution-based benefit, regardless of their income, for a period of time. That is the debate. The income-based measure is exactly the same—it is not going to change, so that meets the hon. Lady’s concerns.
Mr Duncan Smith
I think that I have dealt with that.
There are other changes, including the consumer prices index uprating, in the Bill. We must get to grips with the housing benefit system, which ran out of control under the previous Government. I have a deep suspicion that they knew that before they called the election, and I sense that there were big differences about whether they would do something about this. Over the past 10 years, overall spending on housing benefit has almost doubled from £11 billion to £21 billion, which is a huge increase. I accept some of the arguments about the reasons for that—the fact, for example, that house building fell to a record low, and more and more people had to be moved into the social rented sector—but the reality under the local housing allowance regime was that we lost control of spending. We have therefore introduced a number of changes to the local housing allowance, including a move to annual uprating in line with CPI. Restricting uprating should enable us to keep downward pressure on rents. Only if an increase in local market rents exceeds the annual rate of CPI will the restriction apply. That will also be an important step towards the integration of housing support with the universal credit.
We accept that those changes will not be easy for some people, which is why we want to provide a great deal of transitional protection. Essentially, we have put up a total of about £190 million to smooth the transition to those measures for those who are most likely to be deeply affected. That includes £130 million in discretionary housing payments, £50 million to assist people with housing advice and removal costs and £10 million for homelessness prevention, particularly in London. That, coupled with the other changes that we have already made through regulations, where we are looking at making direct payments to those who are able to lower their rents and at delaying the point at which the measure comes in by some nine months, was a product of listening to people’s main concerns and trying to ensure that what we bring in is doable and manageable by councils.
Alison Seabeck (Plymouth, Moor View) (Lab)
On the right hon. Gentleman’s point about housing benefits, what discussions has his Department had with housing associations and their lenders about the disaggregation of housing benefit under the universal credit and the direct payment to housing associations? They are deeply worried that, without that direct payment capacity across the piece, arrears will rise and lenders will become more nervous.
Mr Duncan Smith
We have had, and continue to have, those discussions, and I understand the concern. There is a debate, on both sides of the argument, about whether we basically continue with the principle that we should pay people and deal with certain elements of what they receive because they are not capable of doing so themselves, or whether we try to get people to the point where they are capable of managing their own money more and more. I recognise from the hon. Lady’s intervention that, on this matter, there is no absolute, but there is at least a debate on both sides, and that is simply where we are at the moment—trying to discuss the issue with those who feel that they would be most affected.
Mr Stewart Jackson (Peterborough) (Con)
Was it not a moral catastrophe and economic madness when, under the previous Labour Government, registered social landlords had no incentive to tackle welfare dependency, because their main funding stream was housing benefit? Under this Bill, registered providers will have an opportunity to tackle welfare dependency among their tenants.
Mr Duncan Smith
What we want from the Bill is to encourage people to get involved in the process—to help people to use it as part of the incentive of trying to make the right decisions about taking work and providing for their families.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the right hon. Gentleman consider the example of a married couple who are at work and have five children from previous marriages, but then lose their jobs because, for instance, they work for the local council? Because they have five children, they would get almost £500 of personal allowance and £200 of housing benefit, taking them over the £500 cap. Rationally, they might choose, because of the £500 cap, to split up their family so that there are three children and two children in two houses, each with £250 of personal allowance and £200 of housing benefit, making a global total of £900, when it would have been £700. Surely his policies of breaking up families and making demands for more and more social housing, alongside making people unemployed, do not add up to fairness or competence.
Mr Duncan Smith
I understand the hon. Gentleman’s point and can, I hope, assure him that as the Bill progresses, and as he will see as we reach Committee, our objective is to recognise that unemployment, for those who fall unemployed, is probably a temporary condition. He will understand that point more as we get into the detail, but trying to find some way of protecting such people through that process is critical to us, as the vast majority will be back in work within a set period: 90% of people will be back in work within a year. Most people will get through that process, and it is for us to ensure that the transition is met and dealt with, but I think that he will be very happy in due course to hear what we propose.
Mr Duncan Smith
I am going to make a little progress, because I am conscious that we have a limit. Mr Speaker is looking at me benignly, but he might not look so benignly shortly.
It is time for fundamental reform of the social fund, which is poorly targeted and open to abuse. Some 17,000 people have received 10 or more crisis loans in the past 12 months, and we have already taken steps to limit the number of crisis loans for living expenses to three in a 12-month period. Those are important steps, because the fund has been somewhat out of control and is complex. The Bill will then pave the way for local authorities in England to deliver a system of assistance that should replace the community care grants and some crisis loan provision. This is a complex area, and many will know more about it than I do, but the key point is that we are trying—
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Will the right hon. Gentleman give way?
Mr Duncan Smith
In a second. I think that the hon. Member for Bolton South East (Yasmin Qureshi) was slightly before the hon. Lady.
The key thing that we are trying to do is to give local authorities an element of control over some of the process, including in particular what I call the crisis loans short-term element—the hiatus moment in the payments,—and some of the community care grants. The point is that, when the fund became only distantly linked to the Department, the telephone concept behind it allowed people to push up the number of claims, because they were not seen or understood, so their cases were not properly known and it was very difficult to decide whether they were true or false. Local areas will be far better able to recognise who such people are, what conditions they are in and what circumstances apply to them. Therefore, localising the process will be very important. Of course, huge swathes of it will remain centralised, but we feel that those two elements in particular will most respond to localisation.
Yasmin Qureshi (Bolton South East) (Lab)
I understand the Minister’s explanation of the social fund, but a linked point is that thousands of young children currently receive a free school meal, the only hot meal that most of them get, and that some people also receive free prescriptions. Can the Secretary of State assure us that those who receive free prescriptions and free school meals will continue to do so?
Mr Duncan Smith
That is exactly what we plan to do, but, because of the universal credit, we will have to be a little more specific, and we will be so in Committee. We are still looking at the best approach to take, but that is exactly what we plan to do. We do not want—the purpose is not—to disadvantage anybody who receives such support, but, because of the way the universal credit works, we will have to think through carefully how we achieve that. The principle behind the measure will remain that we want to support those who are in difficulty and receive support as it stands.
Mr Duncan Smith
I think that the hon. Member for Banff and Buchan (Dr Whiteford) was before the hon. Gentleman, and he has had a shot.
Dr Whiteford
Returning to crisis loans, my greatest concern is that people who go for them will not be able to buy essential items such as cookers and beds. That will push them straight into the arms of loan sharks and other high-cost lenders, and that issue has been overlooked. I also question the view that the increase in the uptake of such loans has not been down to the recession and the hardship that people have faced.
Mr Duncan Smith
The answer to the hon. Lady’s question is that budgeting loans will still be available for those cases. On the second question that she raises about crisis loans being down to the recession, the trend of upward claiming was on track and had started long before the recession.
The Minister of State, Department for Work and Pensions (Steve Webb)
With the telephones.
Mr Duncan Smith
My hon. Friend has made that point to me again and again. The key problem resulted from the changes that were made to dislocate much of the process from people—face to face—who knew what was going on in their communities. I think—I hope—this Bill will change that, because local communities will now be able to determine how best to deliver that critical service, and they will be closer, I hope, to people who need it. That is the principle behind it, and I hope the House recognises that.
The remaining discretionary elements of the social fund, as I indicated earlier, will stay in the wider benefit system, and we will introduce payments on account to replace alignment payments and the interim payments of benefit when crisis loans are abolished, a point that my hon. Friend the Minister has also made on several occasions. We will extend the provision of budgeting loans so that they are available to help people, as I said to the hon. Lady just now.
On disability living allowance, the personal independence payment and the changes to and reforms of them, I believe—and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke, in her consultations, has by and large obtained widespread agreement—that we need to start reforming disability living allowance. I think most people accept that the system we inherited does not deliver for some of those in genuine need, particularly given its confusing nature. Disabled people often tell us that the claims process is incredibly complicated and decisions are not consistent. We need to sort that out.
Many people—a significant number—still wrongly believe that DLA is an out-of-work benefit, so, as people said on several occasions during the consultation, “Being in receipt of DLA is a reason why you wouldn’t want to be getting involved with work; you might lose your DLA.” Such confusion is absurd, because that is not the case, so we need to sort the issue out, and I hope people recognise that it is important.
About 50% of those currently receiving DLA did not have to provide any additional evidence to support their original claim, and more than two thirds of current recipients have an indefinite award. That means basically that no one is ever going to see them again, yet their condition may change; it may worsen or it may get better. That is why we propose to replace DLA with a new system—the personal independence payment, or PIP. This benefit will be awarded on the basis of a more objective assessment of individual need; that assessment is vital. The money will continue to be paid to people in and out of work, and it will not be means-tested. I want to be clear that we do not intend to take away the mobility of people in residential care. As I explained earlier, this is about overlapping payments. The review will cover all that. The key thing is reform.
Annette Brooke (Mid Dorset and North Poole) (LD)
There is a great deal of uncertainty about how children might be affected by the reforms to DLA. Is the Secretary of State proposing further consultation? Is there any information that he can give about future processes regarding children?
Mr Duncan Smith
We are consulting on that. However, this is going to be done later on, so we will have plenty of time to hear many more representations concerning children before we make any decisions. My hon. Friend the Under-Secretary is already talking to various groups about this particular issue.
Jim Shannon (Strangford) (DUP)
In relation to the indefinite awards, there is already a system in Northern Ireland whereby people have periodic checks, and I am sure that Northern Ireland is no different from the rest of the United Kingdom. If there is already a system of regular checks in place, why change that?
Mr Duncan Smith
Because it does not apply to everybody; it is very patchy. The honest truth is that no award we make should say to people, as has happened too often in the past: “You are in receipt of a particular benefit and we don’t want ever to see you again.” If the hon. Gentleman is arguing, as I think he is, that it is right to see people, surely we should be arguing that it is right to see them all to ensure that when their condition changes, that is met. That is surely fair both to them and to the taxpayer.
Mr Tom Clarke
Despite the right hon. Gentleman’s assurances, I ask him to look again clause 83(2), which says:
“The condition is that the person is an in-patient of a hospital or similar institution, or a resident of a care home, in circumstances in which any of the costs of any qualifying services provided for the person are borne out of public or local funds by virtue of a specified enactment.”
That is absolutely clear, but, with great respect, it is not what he is telling us.
Mr Duncan Smith
I am afraid that I do not agree with the right hon. Gentleman, because that is exactly what I was saying. The provisions gives us the opportunity to do just that; it does not specify what we do, but it tells us that this is what we are going to be doing. We are looking at all this because, in our view, we need to come forward with an amount that is relevant to the mobility that is necessary for people in care homes.
Mrs Anne McGuire (Stirling) (Lab)
The Secretary of State is playing with words. The hon. Member for Strangford (Jim Shannon) is right. Although reference is made to an indefinite award, these awards have always been liable to review. If someone has an irrecoverable disability such as permanent blindness, what is the value in regular reviews to assess whether they are still entitled to DLA or the PIP?
Mr Duncan Smith
As I said to the hon. Member for Strangford (Jim Shannon), it is assumed straight away that this is a terribly intrusive process, but in reality what goes on is patchy. For many people, their condition may well have worsened. Do we simply want to say that we should not speak to them or see them, and that it is therefore left up to the vagaries of the system? It is not built into the system that they will be seen.
Mr Duncan Smith
Wait a minute. The right hon. Lady has made a point and I am trying to respond to it. As this is not built into the present system, it is left to decision making, which can be very ad hoc, about who someone sees and when they see them. All I am saying is that if we believe it is right to see people, we may then be seeing somebody whose condition has worsened, and surely that is an advantage.
Mr Duncan Smith
I am going to press on, because I think that I have dealt with the right hon. Lady’s point. She may not agree with me, but I think that this is the right position for us to take.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
This is an extremely important point. Is the Secretary of State saying that someone who is deaf-blind will be recalled for regular checks under the regime that he is aspiring to put in place—yes or no?
Mr Duncan Smith
The detail of how that works will be looked at during the passage of the Bill. My point is that built into this should be the requirement that it is necessary to see people. There is the question of who and what conditions we can look at specifically, but it should be right that it is bound into the system that we are going to look at people. In some cases, it may be entirely self-evident that the individual’s condition has not changed and there is not much to be done; in other cases, an assessment may be required because their condition has changed quite fundamentally. I do not understand why the need to see somebody who may be in receipt of a benefit should be such an issue for people. It should not be worrying; it is part of a process. [Interruption.] Before right hon. and hon. Members object to that change, they need to ask themselves what they would say to those people whose conditions have changed for the worse and who are confused and never make it back to make a proper claim. This is a debate that we can and will have.
Mr Duncan Smith
I think, with respect to the right hon. Gentleman, that I have dealt with this point, and I am going to make some progress. [Interruption.] Oh, go on then.
Mr Byrne
I am genuinely trying to be helpful to the Secretary of State. He says that his Bill is incomplete and that he has not been able to furnish the House with full details on how the powers that he seeks from us will be put into practice. Will he consider exempting people with certain kinds of conditions from the need to go back to go through check after check?
Mr Duncan Smith
I say to the right hon. Gentleman, despite his best intentions, that the mess that the previous Government got into over incapacity benefit—[Interruption.] It is all very well for Labour Members to sit in opposition and pretend that nothing went wrong under the previous Government. We are picking up an incapacity benefit system in which they left people parked, never seen by anybody for years and years. All we are putting into the Bill is the requirement that people be seen to check on their condition. That has to be in their interests, and it is not in any way a problem that it should happen. Of course, if the right hon. Gentleman wants to try to make amendments as the Bill goes through Committee, we will always be happy to debate those and listen to him. My point is simply this: it is right to see people, and wrong to leave them parked for ever on set benefits. Seeing them is more humane than inhumane, and that balance is the way that we should go.
As we introduce our new welfare system, we will have to take steps to clamp down on benefit fraud, as Opposition Members know. The system that we have is inefficient and too often ineffective. Despite significant overlaps between benefit and tax credit frauds, fraudsters are subject to different treatment in their cases as they are handled by different groups—DWP, Her Majesty’s Revenue and Customs or even a local authority. The mess and overlap is enormous. The Bill introduces powers enabling a new single fraud investigation service to investigate and prosecute all cases of benefit and tax credit fraud. I hope that the House supports that process. We will ensure that anyone found committing lower-level fraud will face a tough minimum fine as an alternative to prosecution. For all other fraudsters, we will seek prosecution whenever we can. We need to ensure that fraudsters get the message that repeated criminal behaviour will not be tolerated, so those found to have committed fraud may face losing their benefit for certain periods; I have already dealt with the detail of the timings.
I simply say to the House, because this was raised in the Select Committee, that I am absolutely clear that not every problem with overpayment or difficulties with those payments was down to fraud. I fully accept that with the complexity of the system, officials made mistakes and that we were often too ready to badge people as fraudsters when in fact they were not necessarily fraudsters but caught up in a system that left them confused and perhaps not making the right or necessary level of statements to the authorities. This process is about separating those people out. A recent trial of a changed reconsideration process at Jobcentre Plus led to a fall of some 15% in the number of appeals being heard. The general view is that process will be sustainable and will work.
We are also changing child maintenance. Much of the current system is designed to drive people into acrimonious disputes during family breakdown. We should all agree that we want to take the heat out of such situations, as far as we can. That is why we are reforming the system and introducing a gateway to the statutory scheme so that parents consider making their own arrangements. We will offer parents a calculation-only service to make it easier for them to make their own arrangements. Of course, if they choose to take matters further, they can.
We are introducing measures to allow non-resident parents to pay through Maintenance Direct when the case is within a statutory scheme. That will provide further flexibility for parents. We need to keep the burden of the cost of collection under control. In 2009-10, the cost of collecting every pound was more than 40p. However, should the non-resident parent fail to pay in full or on time, we will move the case swiftly into the collection service and take enforcement action where necessary.
Sheila Gilmore
Why was it necessary to introduce provisions in the Bill before the consultation process has concluded? The consultation process on this matter is due to conclude on 3 April. Because the conditions have been published in the Bill, rather than being legislated on later, many people feel that the Government’s mind is set in stone.
Mr Duncan Smith
The measures in the Bill set the framework for the details. We will obviously work through the details in time for the Committee stage. It is reasonable to do that. The Bill does not set out the detailed prescriptions, as is right. I do not agree that the process is wrong.
In conclusion, the Bill is not just about balancing budgets, although that is part of the process. It is also about transforming lives and moving people—hopefully—from the entrapment and tyranny of doubt and dependency, to some kind of opportunity, enterprise and change to their lives that they can make themselves, through assistance and support. Surely it is our duty together to ensure that no one is written off, discarded or left behind. I believe that that is what the Bill will achieve. Notwithstanding criticisms and individual issues, I hope that the House will recognise that the purpose of the Bill is positive, and that it will transform the lives that we seek to transform.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, whilst affirming its belief in the principle of simplifying the benefits system and good work incentives, declines to give a Second Reading to the Welfare Reform Bill because the proposal of the Universal Credit as it stands creates uncertainty for thousands of people in the United Kingdom; because the Bill fails to clarify what level of childcare support will be available for parents following the abolition of the tax credit system; because the Bill penalises savers who will be barred from the Universal Credit; because the Bill disadvantages people suffering from cancer or mental illness due to the withdrawal of contributory Employment Support Allowance; because the Bill contains no safeguards to mothers in receipt of childcare support; because it proposes to withdraw the mobility component of Disability Living Allowance from people in residential care and fails to provide sufficient safeguards for future and necessary reform; because it provides no safeguards for those losing Housing Benefit or appropriate checks on the Secretary of State’s powers; because it fails to clarify how Council Tax Benefit will be incorporated in the Universal Credit system; because it fails to determine how recipients of free school meals and beneficiaries of Social Fund loans will be treated; and because the proposals act as a disincentive for the self-employed who wish to start up a business; and is strongly of the opinion that the publication of such a Bill should have been preceded by both fuller consultation and pre-legislative scrutiny of a draft Bill.”
I start with a word of thanks to the Secretary of State for meeting me and my right hon. Friend the Member for East Ham (Stephen Timms) a week or so ago to discuss the Bill. As I said to him then, we genuinely want to approach the vital question of welfare reform in a spirit of national consensus. We believe that if we can forge such a consensus it will be good for our country, it will reduce the deficit and, crucially, as he said before he sat down, it will be good for the fight against poverty in this country. We have been forced to table the amendment to oppose the Bill because it fails such fundamental tests that we believe the Government should go away and bring back a better Bill that will deliver genuine and lasting welfare reform.
We could begin to forge that national consensus by drawing the right lessons from the past 13 years. The Secretary of State presented his view, but elided one or two prominent features of the past 13 years, such as the fact that the number of people on out-of-work benefits before the depression came down by 1 million and the fact that the claimant count halved. We did not once, let alone twice, see unemployment go through the 3 million mark. We can draw important lessons for this debate from that period, the first of which is that if the Secretary of State wants welfare to work to work, we need more jobs. Labour consistently put that approach in place.
The Secretary of State said to his spring conference at the weekend—
Mr Byrne
I not only listened carefully, but checked the transcript because I could not believe what the Secretary of State said:
“It’s not the absence of jobs that’s the problem.”
Given that five people are chasing every vacancy in this country and that 120 Members of this House have more than 10 people chasing every vacancy in their constituencies, the absence of jobs is very much a problem at the heart of his welfare reform programme.
Mr Duncan Smith
Does the right hon. Gentleman recall that I also said that notwithstanding the period of growth and the number of jobs created, more than half the jobs created by the Government did not go to British nationals sitting on unemployment benefit?
Mr Byrne
The employment rate under the Labour Government reached a record high and there were 64 quarters of consistent economic growth. The idea that welfare to work can work when the number of jobs is not growing is frankly laughable. There is an important lesson that we must draw from the past to get welfare reform right.
Mr Byrne
The Opposition want welfare reform that sticks. When so many details are unclear, the danger is that the Bill will unravel progressively as it comes into effect.
We have discussed whether the Bill passes the test of fostering ambition for families and have shown that a great number of questions remain unanswered. Let us now consider savers. All hon. Members want to nurture the ambition to save. The amount that people must save for a deposit for a house is heaven knows how much, but now that tuition fees have been trebled, more families have to save harder to get their young people into college. One might have thought, therefore, that the Government would provide more incentives to foster the ambition to save, but the noble Lord Freud told the House of Lords that
“the £16,000 savings threshold would extend to all households eligible for universal credit.”—[Official Report, House of Lords, 15 December 2010; Vol. 723, c. WA204.]
There we have it. The Government are so keen to foster the ambition to save that once someone has £16,000 in the bank—the price of two and a half years at university—their tax and in-work benefits are taken away.
Mr Byrne
I will give way in a moment, but first I want to tell the House what James Browne of the Institute for Fiscal Studies said:
“This is a much harsher treatment of capital than we have in the tax credit system.”
Will the Secretary of State tell us how that measure rewards savers?
Mr Duncan Smith
May I remind the right hon. Gentleman that his system became completely absurd, because it allowed people with huge savings and income to claim benefits? The previous Government’s system supported not the bottom two or three deciles but people further up the income scale. That is one reason so few people from the bottom income deciles got back into work, and why poverty was so high.
Mr Duncan Smith
The right hon. Gentleman’s figures are incorrect. When universal credit comes in, the figure is more than likely to be no higher than about 100,000—[Interruption.] Wait a minute. I know where the right hon. Gentleman gets his figures from. Those 100,000, of course, will be transitionally protected, so they will not lose.
Mr Duncan Smith
Will the right hon. Gentleman give way, because he needs to answer my question?
Mr Byrne
The Secretary of State needs to answer my question. The Minister of State told my right hon. Friend the Member for East Ham that getting rid of the savings cap would cost only £70 million. Will the Secretary of State therefore look again? He must recognise, as I do, that he is currently not fostering the ambition to save for hundreds of thousands of people.
Mr Duncan Smith
I completely disagree with the right hon. Gentleman on that, but I want to challenge him to give an answer to taxpayers, who ask whether the welfare system is about supporting people who are most in need, or whether it is about casting money wider and wider to people who can support themselves in particular periods. How much more money does he really want to spend?
Mr Byrne
I am afraid that the Secretary of State has still not provided an answer to my question—he still cannot tell us how he will encourage people to save. Tuition fees have trebled, and people in my constituency are asking, “How on earth do we encourage our young people to go to college, and how on earth can we afford to get our young people into university?”—[Interruption.] I know the Secretary of State does not have those challenges to face, but thousands of people in our constituencies need to save to get their kids to university. The regime that he is proposing will strip in-work benefits from them, kicking the ladder away from aspiration in our country.
Mr Byrne
I do not know what the hon. Lady’s constituents are saying to her, but many in my constituency live in fear of debt—they want not to burden their children with debt, but for them to get a first-class education, so that they can contribute to the future of our country.
The wider point that is emerging is that we do not know enough about how the Bill affects families and savers, but there is also a question over how it will affect the self-employed. Over the last few weeks, we have heard a great deal of pitch-rolling from the Chancellor and the Prime Minister, who are now worried about the damage that their last Budget did to our economy. All of us hope that the Chancellor can upgrade his growth forecast at the forthcoming Budget after doing so well over the last year, and the Prime Minister is now promising that his next Budget will be the most pro-growth Budget in the universe. He told his spring conference:
“At its beating heart this is still a party of start-ups, go-getters, risk-takers…We’re the party of practical men and women, people with a passion and a mission to build a business and see it grow...We are the party of enterprise.”
No doubt, then, the Bill is part of that plan—no doubt the Bill will make it simpler, easier and more encouraging for people in this country to start a business and to make that entrepreneurial leap. Well, my hon. Friend the Member for Stretford and Urmston (Kate Green) asked the Secretary of State about the self-employed on 9 February. To be fair to him, I think he recognises the problem. Surveying the position of the self-employed, he told her that
“we are conscious that that area is the slight blip in the system.”
This is what the blips in the system at the Federation of Small Businesses told me yesterday. Mike Cherry, the FSB national policy chairman, said:
“We are concerned that the Government has assumed that entrepreneurs with a new business will be paying themselves…and will therefore lose all benefits under the Universal Credit system…A measure such as this simply creates yet another barrier towards self-employment which is particularly unhelpful at a time when we are relying on the small business sector to grow the economy”.
So much for the party of enterprise.
Mr Byrne
I do not know whether the hon. Gentleman was in the Chamber when my hon. Friend the Member for Swansea West (Geraint Davies) spoke of the disincentives for families to stay together under the new regime, but if he wants to pretend that the Bill ends the couple penalty in the welfare system once and for all, perfectly and immaculately, I look forward to him setting out his argument.
Mr Duncan Smith
The right hon. Gentleman raises the issue of the self-employed. I made this point to him privately and I will now make it publicly: they will fall within the universal credit. The point that I was referring to was how complicated and counter-intuitive the current systems have become, as he knows very well. We are seeking the best way to ensure that the right reporting structures are in place for those people, who will be inside the universal credit.
Mr Byrne
Perhaps the Secretary of State can tell the House this afternoon when those proposals will be ready for us to look at. [Interruption.] “In time for Committee,” he says from a sedentary position. We all look forward to seeing that.
It is now clear that for the self-employed, savers and families, this Bill at the very best poses more questions than it answers. The other question that the House has to ask the Secretary of State this afternoon is not about how we foster ambition, but about how we nurture compassion. How do we strengthen and reinforce our obligations to each other? That is something that we will hear a lot more about, when we talk about the reform of disability living allowance. What we know about the detailed reforms is not good. I welcome what the Secretary of State has said about the mobility component of DLA. I think that he has confirmed that he is withdrawing the proposal to cut £135 million from the mobility component of DLA. If that is true, it is welcome, because we are talking about a measure that the chief executive of Scope pronounced as “callous” and an
“assault on the most vulnerable”.
The rationale presented by the Minister of State has this morning been taken apart by 39 charities. I am afraid that I have to agree with the words of those campaigners who have said that
“many of these people”
—those in residential care—
“will be prevented from enjoying the freedom of movement that is taken for granted by people who are not disabled.”
Those are, of course, the words of the motion at the Liberal Democrats’ spring conference this weekend. I hope that together we may be able to prevail and get this measure dead and buried.
Mr Duncan Smith
The right hon. Gentleman knows very well, because we had this conversation privately. As I assured him, and as I assure him now, what we have done is roll the proposal into the personal independence plan. We are reviewing what is necessary. I said to him then, as I have said to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that what we are looking for is the amount necessary for people who are in residential care. That is the commitment that I have given. That is the exact fact, that is how it remains, and all other things will fit around that.
Mr Byrne
The argument that the Secretary of State has rehearsed this afternoon is that the Bill will give him the flexibility either to withdraw or to reform the proposal, but what he has not set out for the House is whether he will reduce the savings target of £135 million that has been scored by the Chancellor against the measure.
Mr Byrne
I therefore look forward to the Government reflecting on this debate and perhaps giving slightly more clarity when the Minister winds up.
More alarming for many people is the lack of any safeguards on what the Government have in mind for the future of DLA, especially as we know that the Chancellor is determined to take £1 billion off the bill and then ask what kind of reform will be necessary to deliver his sums. Not for him the subtleties of asking what kind of reform might make sense. This is what the Multiple Sclerosis Society had to say about the measure: “We share serious concerns”—[Interruption.] It is incredible that when such organisations present their arguments, those on the Government Front Bench would rather talk among themselves than listen to what they have to say. This is what the Multiple Sclerosis Society said:
“We share serious concerns with a large number of other disability organisations that the Bill in its current form could lead to those most in need losing out on the support they rely on”.
The Secretary of State’s own equality assessment says that 13% of disabled households could be entitled to less help under the new system. He has simply not provided assurances on that point. When my hon. Friend the Member for Stretford and Urmston asked him about that, he said:
“I am sorry to be cagey about this. It is simply because this will become very clear when we publish the Bill.”
Well, here is the Bill, but where are the answers to the question?
Mr Duncan Smith
I am interested in what the right hon. Gentleman is saying. He is going on about the review and the issues around disability living allowance, but I notice that the Opposition make no mention of that in their amendment. I notice also that both he and his leader have said that they support the reforms to disability living allowance, so perhaps he would like to make it clear: is he in support of them or not?
Mr Byrne
Everybody is in support of reforming disability living allowance, but we have not said that £1 billion should come off the bill and that we should then work out what kind of reform would deliver those numbers. The Secretary of State must realise that this is why millions of people up and down the country are so alarmed about the reform proposals being put in place. Now he—or, indeed, his Minister—has a chance to say that he will listen to campaign groups that are worried about the proposals, that he will listen to amendments and that he will try to put in place safeguards to ensure that DLA reform is done in the right way. Yes, we should reform DLA, but we should not abolish it.