(13 years, 6 months ago)
Commons ChamberIf that were the proposition, we would be happy to debate it and consider it, and perhaps work with the Government on it. Sadly, that proposition has not been made. The proposition before the House is that the change should be made for ever, and that is what I object to. It is not just me: the Civil Service Pensioners Alliance—
I had not planned to intervene, but I wanted to tease out the right hon. Gentleman’s meaning. He is being a little disingenuous, so I invite him to be a little clearer. He knows that commitments are made for a Parliament, at most, and that if there were to be a change of power, the next Government could do whatever they want. He talks about “for ever”, but decisions can be made at the next election. Can we tempt him to say on behalf of his party that during the lifetime of this Parliament—or perhaps for one year or two years—it supports the change to CPI? Or is he saying that his party utterly detests the change and will not support it?
The Secretary of State is putting a different gloss on this from the one that the Pensions Minister put on it. I asked the Minister directly whether this change was intended to be permanent, and he confirmed that. The Secretary of State suggests that it would be only for this Parliament—[Interruption.] Well, I am anxious to establish the Government’s position. We have had two contradictory positions set out now—
The right hon. Gentleman may have failed to understand my point. The Opposition are not in government, by definition, and they have to decide what they will do in this Parliament. What is his position in this Parliament? We have said that the change is permanent. Do they support that for this Parliament or not? Do they support it for a year, two years, three years or four years? What is their position on CPI? All we need to know is whether they support it for this Parliament.
Well, the Secretary of State has shifted back a little way towards the Minister by suggesting that the Government view the change as permanent. As for the view of my party, I simply refer the Secretary of State to what the leader of my party has said, which is that the suggestion that the change should be made for a period—perhaps up to three years—would be something that we could consider. If that proposition were on the table, we would be happy to consider it. But sadly it is not. As we have heard from the Minister—and as I think the Secretary of State has now reluctantly confirmed—the Government’s intention is that this arrangement should be permanent. That is what I strongly object to.
I was just about to refer to what the Civil Service Pensioners Alliance said. It
“firmly”
rejects
“the assertion that the CPI is a ‘better’ measure of inflation for pensioners.”
It urges the Government
“to take account of the advice of their own statisticians before embarking upon a change which will adversely affect the incomes of pensioners for the rest of their lives and not just for the term of the current financial crisis.”
Age UK has made a similar point.
All the main public service schemes are contracted out of the additional state pension. Of course, in the current climate we need restraint over public sector pay and pensions, but one group that the proposed permanent change will hit particularly hard is those who serve in the armed forces and their dependants, who rely on their pensions at an earlier age than almost anyone else. A permanent switch would, as I understand it, mean that somebody who had perhaps lost both legs in a bomb blast in Afghanistan could miss out on half a million pounds in benefit and benefit-related payments over the rest of their life. War widows, too, will lose out severely. For instance, if this change were made permanent, the 34-year-old wife of a staff sergeant killed in Afghanistan would be almost three quarters of a million pounds worse off over her lifetime.
If Ministers are going to pursue this policy, they need to explain why those serving in Afghanistan—already in some cases, as we have heard in the last few days, facing redundancy of which they were informed by e-mail—should see their pensions reduced for the rest of their lives compared with the expectations that they have had until now, and why—
(13 years, 6 months ago)
Commons Chamber6. What assessment he has made of the likely effect of the introduction of universal credit on the level of the couple penalty.
The couple penalty is often slightly misunderstood. It is normally created when a higher benefit rate for single people means that couples are materially disadvantaged by living together. It is generally recognised internationally that a saving is made when two people live together, and the figure given by the OECD and others is about 75% at most. In the UK, under the benefit system left by the last Government, workless couples received only 60% of the benefits received by two single workless people, which I believe put us in the bottom four OECD countries. Simultaneously, the proportion of people forming couples is at its lowest at all income levels, about 15% down against other countries. The Institute for Fiscal Studies recognises that the universal credit will start to make inroads into that problem.
I thank my right hon. Friend. Does he agree that it cannot be correct that two people who choose to live together as a couple should be penalised by £30 a week in benefits? Surely it is better for people to stay together as a family and be able to care for their family together.
From the figures that I have just given and those that we have looked at, there is no question but that the disparity between where the last Government left us and where it is generally accepted that couples should be is the real cause of the problem that is making people live apart, particularly those on lower incomes. I draw attention to the right hon. Member for Birkenhead (Mr Field) and his interesting “Panorama” programme. He is to be congratulated on his work in this area, and he has made the very good point that it is madness that the system drives people apart rather than keeping them together.
There is a welcome across the House for the universal credit, not least because of the impact it will have on low-paid couples in my constituency and across the country. Will my right hon. Friend, on this particular day, reaffirm his commitment to supporting and advocating fiscal incentives for the institution of marriage?
My hon. Friend knows very well that the issue of fiscal incentives is one for the Chancellor, and I will certainly pass his comments on to the Chancellor and the Prime Minister. When it comes to the benefits system, Members of all parties should recognise the invidious position that even though we know children and elderly people do better where families with two parents work together for them, the system is driving couples apart. That surely cannot be right, and I hope that the matter will unite Members on both sides of the House, as I am sure the right hon. Member for Birkenhead does.
Does the Secretary of State accept that perhaps the most significant social security reform that he could introduce, if we are concerned with the safe nurturing of children, would be the elimination of the penalty against couples?
I agree that that is an objective that we want to work towards. Clearly, any such change has financial implications, as the right hon. Gentleman knows. As I said, the good thing about universal credit is that it starts the process of eradicating the couple penalty, particularly for people on low incomes. I pay tribute to him, because he has gone on about this for longer than anybody else—perhaps everybody is now listening. He is absolutely right that we must surely not force couples apart, but help them to stay together.
Does the Minister accept the findings from the Institute for Fiscal Studies that the incentives for lone parents to work more than 16 hours per week will be reduced under the universal credit?
I welcome the IFS report, which was a fair one. The IFS was positive about the universal credit—most of all, it said that the universal credit is a progressive measure, because it helps the people who are worst off, many of whom, of course, are lone parents. The answer to the hon. Lady is that, yes, some further up the income scale will see a slight change in their marginal deduction rates, but those down in the lower deciles will see a net benefit to their take-home pay.
5. What support he plans to provide to help older people remain in or return to work.
People are living longer, healthier lives, which is good news. The state pension age, as the hon. Gentleman has heard, is set to increase over the coming years. I believe that older workers bring a wealth of talent and enterprise, which we should welcome. From April, jobcentres will have more flexibility to help older people, but the key thing is that in getting rid of the default retirement age, we will strike a blow for older people, which should be welcomed.
Notwithstanding the excellent work carried out by organisations such as the Shaw Trust in my constituency, which helps people with disabilities into the labour market, the Office for National Statistics has found that the number of retired people aged under 65 increased by 39,000 between September and November on the previous quarter. Does the Secretary of State share the concerns of Ros Altmann, the director-general of the Saga group, who said that the Government risk consigning older people to unemployment benefit by increasing the retirement age in such a tough jobs market?
I believe not that Ros Altmann is materially wrong, but that the jobs market will improve. That improvement will create greater incentives for people. People have a tendency to think that it is a simple fact that older people entering the work force somehow take jobs away from younger people, but there is no evidence internationally that that happens. The reality, in fact, is that older people staying in the work force increases work flexibility and improves the number of jobs that are available, and helps younger people. The Government have done a lot for pensioners, and we will do more, but ending the default retirement age is about giving older people the right to work for longer, and the responsibility to employers to deal with them as human beings and not just figures on a piece of paper.
As part of a back-to-work programme provided by A4e, one of my constituents, who was a senior building site manager, was asked to add £1 to £4.75, which he did not feel was particularly constructive in helping him to get back to work. When will we move away from that one-size-fits-all back-to-work programme?
My right hon. Friend the Minister of State is doing that just now. The Work programme will be tailored to people’s needs and not implemented flatly. If people have a problem, the programme will deal with them. Jobcentres will be given more flexibility to ensure that they match employment to the person as necessary. My hon. Friend should therefore welcome the changes that we are making.
7. What steps he is taking to reduce levels of pensioner poverty.
The objective of the universal credit is that work should definitely pay for the majority of people—as many as possible—but certainly it should pay most significantly at the highest levels for those on the lowest incomes.
The vast majority of people on benefits do not want to stay there for the rest of their lives. Will my right hon. Friend confirm that the universal credit, with support from the Work programme, will help people in Macclesfield to get back to work, and ensure that it pays for them to go on working?
Absolutely. The interaction between the universal credit and the Work programme is critical. In a sense, one without the other will not work as effectively. The purpose of the universal credit is to ensure that entering the world of work becomes much easier, because people will retain more of their own money: we will be lowering marginal deduction rates. In some cases, on average, those in the bottom two deciles will see an increase in their weekly pay of about £25 a week after they enter work—a significant increase. The Work programme, which my right hon. Friend the Minister of State was talking about, will help with those who are more difficult to place. For the first time, they will get a tailored programme that helps them to deal with their problems, and gets them into work and maintains them there for up to a year, and in some cases more.
Will the Secretary of State confirm that the Government intend to save £1.3 billion between now and 2015 by reducing the child care element of the tax credit? Will the universal credit be sufficiently resourced to ensure that no working parent out of the 488,000 households that stand to lose anything up to £30 a week will be any worse off than at present?
We are returning the levels on the child issue that the hon. Lady is talking about to the levels left by the previous Government in 2006. It is all very well for the Opposition to nit-pick and say that they are desperately in tune and on side with all those people who are going to feel the squeeze, but in reality the Labour party now has a leader who was responsible, with his colleagues, for spending money like there was no tomorrow. That has left us with a major deficit, and now we have to get that money back. If she does not like what we are doing, please can she tell us where she would intend the money to come from?
10. What recent discussions his Department has had with disability organisations on the removal of the mobility component of disability living allowance from those in residential care homes.
15. What plans he has for collaboration between jobcentres and voluntary organisations.
We were pleased last week to announce the new partnership between Jobcentre Plus and the voluntary sector generally, which will help people to get back to work. Prince’s Trust advisers and other local voluntary organisations will start to have a desk that they man in jobcentres in the next few weeks, and that provision should be available pretty much around the country in April. This will be enormously helpful in tying the voluntary sector in to some of the most difficult people.
Does the Secretary of State agree that voluntary groups can help jobcentres to help jobseekers? The Skipton and Ripon Enterprise Group, a group of leading business men in my constituency, is keen to help mentor jobseekers now. What advice can my right hon. Friend give to its members?
First, what we are doing will really open the door to the voluntary sector’s engagement in the whole process. As my hon. Friend knows, the Work programme that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) has been working on has the voluntary sector embedded at the heart of how it will deliver its work. The desks in jobcentres that will be manned by representatives of the Prince’s Trust should open up the door to such people being able to see jobseekers as they come in. My hon. Friend should advise people to look at using provisions such as the enterprise allowance and, if necessary, to come and see my right hon. Friend the Minister about any other advice they need.
While the benefit system is undergoing change and reform, what plans does the Secretary of State have to change the delivery mechanism for benefits? Will he ensure that it remains customer focused, local and accessible?
At the moment, the vast majority of people—about 98%, I think—receive their benefit payments directly into their bank accounts. There is a small number of people who are still, for various reasons, in receipt of cash payments. A proposal was left to us by the previous Government on how all this can be delivered in the next few years, but we have not made a final decision on it yet. We will announce our decision very shortly.
I am grateful to the Government for allowing a pilot scheme for local jobcentres to give out food bank vouchers from the food bank charities. Will my right hon. Friend ensure that the scheme that emerges is as simple and unbureaucratic as possible, so that the jobcentres in Harlow can receive food bank vouchers as soon as possible?
I would not dare do otherwise, with my hon. Friend breathing down my neck on this one. It is due to his hard efforts and pressure that we have made this particular change, and I think that it is for the good. Of course, it is important that it does not become a substitute for anything else, but it will certainly be there if people feel that they need that extra assistance, and there is no reason why we should not do it.
Has the Secretary of State made any representations to his colleagues about the proposed closures of voluntary organisations that support and train people to return to work, such as the Diamond centre in my constituency?
We constantly discuss, in Cabinet and other forums, the idea of what we are doing with the voluntary sector and how we can best help and support it. We are putting a lot of money behind the voluntary sector right now, and the Work programme will make a significant amount of money available to the sector through back-to-work programmes. Of course there are difficulties in the sector, as some local councils choose to start with voluntary organisations when they make their reductions. Personally, I often wonder whether local councils too often see the voluntary sector as an add-on, rather than as an incredibly effective and integral way of delivering good services, and I hope that they will think again about some of those changes.
16. What account his Department takes of the effects of the level of the minimum wage in its business planning processes.
T1. If he will make a statement on his departmental responsibilities.
As I did not do so earlier, let me now welcome my shadow, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), to his post. I hope that we shall have engagements in the future, and I am sure that he will adopt a positive approach to measures that he believes will benefit the estate.
There will not be a hair of difference between us.
Indeed. I am glad to see that the right hon. Gentleman models himself very much on me, which is also very helpful.
I have had meetings today, and I have more meetings to come. I should also mention that we are getting rid of the default retirement age, which we consider to be a positive move overall for older people which should also help to boost the economy.
What advice or consideration has been given to small and medium-sized enterprises on how they should handle the removal of the statutory retirement age, and what advice can the Secretary of State give businesses on managing employees with physically demanding jobs?
The default retirement age is unlikely to have been used by many small and medium-sized enterprises; it tended to be used by larger businesses. Once it has been removed, employers should be able to dismiss staff, while obviously using the ordinary fair dismissal rules under the Employment Rights Act 1996. When employers can demonstrate that a retirement age is objectively justified, they can make a case for setting one. The key point, however, is that many large and many small companies have never used the default retirement age. They will argue that working with employees to secure a proper programme as they head towards their general retirement age is a positive move, and that employees should not be left lying there until the employer has to get rid of them.
T4. I recognise that the Secretary of State has made representations about the £1.5 million of bonuses paid to Remploy directors this year. Let me also say, before he mentions it, that that payment was originally agreed under the last Government. However, does he think it insensitive of directors to take £1.5 million in bonuses when in my part of the United Kingdom some 540 staff are potentially at risk of redundancy?
The honest truth is that I do not think it a good idea for people to do that in the present climate. There is currently a public sector pay freeze, we are imposing limits on bonuses, and I am asking staff in one of the lower-paid areas of Government to forgo some of their future pay rises. My simple answer to the right hon. Gentleman is this: I wish that those who are thinking about acting in that way would think again, and I also wish that I had not been left in such an invidious position by the last Government.
T2. Opposition Members have spent the past 50 minutes calling, in almost every question, for more Government spending, yet just nine months ago we famously heard the shadow Secretary of State say that there was no money left. Given the shadow Secretary of State’s willingness to offer honest advice, might my right hon. Friend reciprocate the favour and offer his own advice to his new opposite number?
Given my political career, I have given up giving advice to anybody, so the best thing the shadow Secretary of State can do is forge his own way and I will look to see how I can dismantle that.
T5. On Friday, I visited the Reeltime youth and music group in my constituency, where I met three young men who had got their jobs through the future jobs fund. They feel that the FJF is a great success for them, and so did the group. The Scottish Labour party agrees, and has today announced that it will create 10,000 places if it wins in May. Will the Government reconsider scrapping the FJF, or do they still believe youth unemployment is a price worth paying?
Of course I will be happy to receive any delegation that the hon. Gentleman wishes to bring forward. The Government are absolutely clear about their determination to help get young people back to work. When he made his statement he must have recalled that only a few months ago his Government left us with almost the worst youth unemployment since records began. It is remarkable that under his Government youth unemployment rose during a period of growth. That is not much of a record for him to crow about.
T8. I want to raise the issue of family breakdown. My constituents often tell me that family breakdown involves not only the emotional turmoil of dealing with it, but the complexities of sorting out the financial arrangements and the accompanying delays. I would be grateful if the Minister would set out for the House the steps that the Government are taking to create a structure to ensure that parents can take financial responsibility for their children.
In my advice surgery on Friday, a young couple came to see me in Darwen to say that they were £30 a week worse off for living together. It is a shameful legacy of the previous Government that people are worse off for living in couples and worse off when they go back to work. What this couple, and everyone else in Darwen, wants to know is: when will the universal credit end this situation?
My hon. Friend is right to say that this is one of the most invidious unintended effects of a benefits system, and this country found itself in a worse situation on the couple penalty that most others did because of the interplay and complexity of that benefits system. The universal credit will not immediately end all that, but it will make the situation much better for couples. When couples want to stay together, the Government should never be the thing that forces them apart. The right hon. Member for Birkenhead (Mr Field) has made that clear and I back him up on it completely.
Block contracts with care homes often leave individual care plans unclear on what mobility costs are to be met by the home. What guarantees can Ministers give that no disabled person in residential accommodation will find their ability to leave their own home reduced as a result of the removal of the mobility component of disability living allowance?
This morning I met the BBC—the business breakfast club—in Hastings, which is a group of local employers. It raised with me its concern that when offering additional work to part-time employees of 16 hours, those employees often do not want to take it up because they find themselves worse off. Will the Secretary of State advise what will be done to even that out and make sure that work does pay after 16 hours?
The objective of the universal credit is that, all the way up the part-time process, whatever the number of hours worked, work should pay. That is particularly so for those who take jobs with low hours and low pay, paying them extra. They will be the greatest beneficiaries of the system. It is invidious that there are only two points in the cycle at which people are able to take up work and make any money. In future, work should pay: that is the incentive and we should get people back to work by enduring that it does.
(13 years, 6 months ago)
Written StatementsSubject to Parliamentary approval of the necessary supplementary estimate, the Department for Work and Pensions Resource departmental expenditure limit will increase by £276,605,000 to £9,006,823,000 and the capital departmental expenditure limit will increase by £81,565,000 to £324,617,000. The administration budget will decrease by £233,105,000 to £5,843,600,000.
Voted | Non-voted | Total | Voted | Non-voted | Total | |
---|---|---|---|---|---|---|
Resource | 1,113,922 | -837,317 | 276,605 | 6,713,147 | 2,293,676 | 9,006,823 |
of which: | ||||||
Administration | 560,895 | -794,000 | -233,105 | 5,104,451 | 739,149 | 5,843,600 |
Near-cash | 1,113,891 | -837,286 | 276,605 | 6,455,236 | 2,292,873 | 8,748,109 |
Capital | 120,955 | -39,390 | 81,565 | 312,179 | 12,438 | 324,617 |
Depreciation* | 31 | -31 | 0 | 254,911 | 803 | 255,714 |
Total DEL | 1,234,846 | -876,676 | 358,170 | 6,770,415 | 2,305,311 | 9,075,726 |
*Depreciation, which forms part of resource Departmental Expenditure Limit, is excluded from the total Departmental Expenditure Limit since the capital Departmental Expenditure Limit includes capital spending and to include depreciation of those assets would lead to double counting. |
(13 years, 7 months ago)
Ministerial CorrectionsDoes the Secretary of State accept the Office for Budget Responsibility figures, revealed to my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), that an extra two thirds of a billion pounds will be spent on housing benefit as a result of rising unemployment over the next four years?
The OBR is independent and the Government of course accept what it publishes as independent figures. We go by what the OBR’s figures say. As the hon. Lady knows, we inherited a financial mess left by the previous Government. What we are doing is to make sure that we reduce the ballooning cost of, for example, housing benefit that she left behind—a bill that doubled in the past five years.
[Official Report, 10 January 2011, Vol. 521, c. 9.]
Letter of correction from Mr Iain Duncan Smith:
An error has been identified in the oral answer given on 10 January 2011.
The correct answer should have been:
The OBR is independent and the Government of course accept what it publishes as independent figures. We go by what the OBR's figures say. As the hon. Lady knows, we inherited a financial mess left by the previous Government. What we are doing is to make sure that we reduce the ballooning cost of, for example, housing benefit that she left behind—a bill that doubled in the past ten years.
(13 years, 7 months ago)
Commons Chamber3. What sanctions will be applied to jobseeker’s allowance claimants who fail to find work within the period set by his Department.
There is no time limit on entitlement to income-based jobseeker’s allowance. I remind the hon. Lady that the conditions that pertain to withdrawal of benefit are that individuals must be available for work and seeking work, and they have to sign up to an agreement. If they continually refuse to do any of that, that is when the sanctions come in.
I am aware that those sanctions will be applied after a decision by the independent decision maker. What reassurances can the Minister give me about the role of the independent decision maker and the criteria that will be used? I am particularly concerned about the appeal process, because, as one can imagine, mistakes can be made and there should be a right of appeal. I am keen that that right is open to anybody who is sanctioned in that way.
We will strengthen the role of the independent decision maker to ensure that decisions are made for the right reasons. The hon. Lady can rest assured that we will ensure that is the case. If she has any concerns, she should raise them with us, and if she has any thoughts, we are open to dispute.
Does the Secretary of State agree that one implication of this question is that jobs are not available in the marketplace? Just before Christmas, we conducted a survey in my constituency, where there were more than 700 job vacancies. People from Swansea are as welcome to take up those job vacancies as people from anywhere else in the country.
My hon. Friend is right. Over the past nine months, we have seen a huge increase in part-time work with more than 400,000 new jobs. [Interruption.] The answer to Labour Members is that jobs are being created even though we are coming out of a recession, which was brought on by their policies.
The Secretary of State’s colleague, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), has said of the Government’s plans for the long-term unemployed:
“You have been unemployed for 12 months, you are passing the actively seeking work test…we are/the Government is saying that your housing benefit will be cut by 10% just because you have been unemployed for 12 months. I don’t understand why. You are on the breadline, you’ve been trying to look for work, you’re passing all the Government tests and you’re suddenly going to have your rent, which is your highest cost—your help with that—taken down by 10%. No logic behind that whatsoever.”
Can the right hon. Gentleman tell the House with which part of that statement he disagrees?
The reality is that the coalition—I emphasise coalition—position is that we will withdraw some of that money, 10%, before the 12 month point. The point about the 12-month stage is that more than 90% of all those seeking work will be in work by that point. That gives us an opportunity to make sure that those who are having the greatest difficulty can be properly reassessed, and if there are particular problems, they can be dealt with. It also acts as a spur and incentive to others who are not exactly playing the game in line with the question asked by the hon. Member for Swansea East (Mrs James). On balance, I think the coalition will find that the policy will work very well.
I listened with care to that answer, but given that the number of people who have been unemployed for more than 12 months, on the broader measure, went up by 41,000 in the most recent figures, can the right hon. Gentleman tell us whether the Business Minister is the only member of the coalition who thinks that the present proposals are “unsupportable”?
That is like my asking whether the right hon. Gentleman’s leader and his shadow Chancellor agree on everything, which I do not think they do. The coalition has a clear statement of policy and that policy exists. The reality of that policy is exactly as he has been debating and I would not trouble him to find out exactly what he agrees with his leader about after this morning’s statement that his side apparently now agree with most of the changes we are making.
4. What recent representations he has received on his plans to help disabled jobseekers into work.
8. What information his Department holds on the average cost to the public purse of an additional person being on jobseeker’s allowance in 2010-11.
Today, the JSA rate for a person over 25 is, as the hon. Lady knows, £65.45, and that will rise in April to £67.50. In 2010-11, the average weekly JSA rate was about £63.00. In addition, there are housing benefit, council tax benefit and employment support costs. However, the vast majority of jobseekers spend only a very short time in that situation; over half are back in work within 3 months.
According to the New Economics Foundation, there is a jobs gap in the north-east of 447,000 jobs, and PricewaterhouseCoopers estimates that we will lose an additional 4.1% of our total jobs base as a result of this Government’s cuts. Ministers have spoken about help for the longer-term unemployed, which I welcome, but what assurances can the Secretary of State provide that those additional job losses will not simply represent additional benefit payments, as well as lives wasted?
The question that the hon. Lady asks is a pertinent one. The Work programme that my right hon. Friend the Minister of State was just speaking about is to make sure that those who go beyond a certain point at differing levels are swept up because they have particular problems. We need to deal intensively with them and use the private and voluntary sector. But to help earlier, Jobcentre Plus has been pretty successful at getting people matched up with the work that they need to be in and getting them back into work. When it comes to skills, the Government are increasing the number of apprenticeships—50,000 rising to 75,000 extra—which will help hugely with skilling, and the mentoring and work for yourself programme, which are part of the Work programme, will have a huge impact, by advising young people and enabling them to take the right jobs and get the right skills. The hon. Lady is right. Skilling up is important, but we think we will be on the right track to do that. Overall, the Office for Budget Responsibility said that employment will rise over the period.
Does the Secretary of State accept the Office for Budget Responsibility figures, revealed to my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), that an extra two thirds of a billion pounds will be spent on housing benefit as a result of rising unemployment over the next four years?
The OBR is independent and the Government of course accept what it publishes as independent figures. We go by what the OBR’s figures say. As the hon. Lady knows, we inherited a financial mess left by the previous Government. What we are doing is to make sure that we reduce the ballooning cost of, for example, housing benefit that she left behind—a bill that doubled in the past five years.[Official Report, 12 January 2011, Vol. 521, c. 6MC.]
17. When he plans to bring forward proposals to prevent unfair dismissal of staff on grounds of age.
We are moving in that direction. Our changes will abolish the default retirement age, and we will make sure that people can no longer be kicked out of work because they have reached a certain age. By getting rid of that, we will improve the economy and help older people find work for a longer period, which is beneficial to the economy and beneficial for those people.
In the recession redundancies have been higher among the over-50s than any other age group, including in Harlow. Many people, like my constituent, Kevin Forbes, who applied for more than 4,500 jobs, are worried that employment law is biased against older people. What are the Government doing, apart from what my right hon. Friend has just described, to make work fairer for the over-50s?
The reality for companies and for those who are seeking work is that, because of the need for employment over the next few years, we will need more and more of the skills that are present in the age group to which my hon. Friend refers. Therefore, companies have to reach the sensible solution, which is that people who have those skills and ways of doing their jobs can stay in work much longer. The Work programme will be set up so that they can be helped back into work if they become unemployed. My concern is that companies should recognise that older workers have huge value, well beyond the cost of paying their wages.
Constituents in Northampton have raised with me the fact that they have been forced to retire because of their age before they were ready to do so. As I know my right hon. Friend accepts, older people offer a wealth of experience and skill. What progress have the Government made on the consultation on the default retirement age?
The consultation has gone very well. We are sifting through the responses. There have been more responses than we anticipated. The vast majority have been positive, although there are some, in some areas of business, that were not as positive as we had hoped. We will publish those results and press on. I can guarantee to my hon. Friend and the rest of the House that we will press on with the issue.
I am glad to hear that the Secretary of State is keen to extend fairness to workers. It is important that people are not discriminated against, regardless of their age. Does he agree that unfair dismissal is unfair dismissal whenever it takes place, and that any steps that the Government take that make it easier for unscrupulous employers to sack people without the right of appeal will be a retrograde step?
I am not aware of any plans to change that. I agree that it is important that older workers in particular are recognised for the skills and benefits that they bring to the company concerned. Whatever changes are made, we must recognise that it should not be easier to get rid of somebody for the wrong reasons. If an employer has the right reason for getting rid of somebody, that is one thing, but people who are working hard should not lose their jobs just because they are older.
Will the Secretary of State assure older people that he will not make it more difficult for them to pursue unfair dismissal claims by lengthening the qualification period for claims?
With respect to the hon. Gentleman, he asks a question that is a direct concern of the Department for Business, Innovation and Skills. However, from our point of view I have no such plans. It is a matter that he might wish to raise with the relevant Department.
12. What assistance his Department provides to pensioners who rely on fixed-interest income bonds.
14. What recent assessment he has made of the likely effects of his welfare reform proposals on families with multiple births.
The changes that we have proposed for welfare reform are intended to make work pay for everyone and to tailor specific back-to-work help to meet individual circumstances. Approximately 10,000 births in the UK are multiple births, from a total number of 800,000 births.
Reforms to the Sure Start maternity grant have protected cases where the first birth is a multiple birth; the Sure Start maternity grant will be payable for all children when the first birth is a multiple. I would welcome any further views or thoughts from anybody about what they feel we ought to be doing about this issue.
I thank the Secretary of State for that reply and declare an interest, as the father of one-year-old twins.
Although having twins is a very rewarding privilege, it is, as has been remarked before, often a case of two for the price of three. Research undertaken by the New Policy Institute on behalf of the Twins and Multiple Births Association, or TAMBA, shows that multiple-birth families will suffer more than most under the proposed reforms. May I ask the Secretary of State whether he or one of his Ministers will meet me and representatives of TAMBA to discuss some of the perhaps unintended consequences of their reform proposals for families with multiple births?
I congratulate the hon. Gentleman on his twins; I have four children, and one at a time was quite enough. I hope that he benefits greatly from that double-up. We will definitely see him and any group that he wishes to lead to discuss the matter further.
I welcome the Government’s decision to pay a maternity grant for each child when the first birth is a multiple birth, but does the Secretary of State not accept that parents can face exceptional costs when a multiple birth follows an earlier, single birth? Could he not apply the same rationale and pay the maternity grant in those circumstances?
The issue that my hon. Friend has raised is complicated. We are looking at it and discussing it, and I am happy to take it further with him if he wishes. However, it does add complications to an already complicated system.
16. What his most recent forecast is of the claimant count in (a) Wellingborough and (b) the UK in 2011-12.
T1. If he will make a statement on his departmental responsibilities.
I am concerned that the figures show that some 600,000 16 to 24-year-olds in the UK have never held regular work since leaving education. While this is a tragedy for them, it is part of a much longer-term problem that is not just to do with the recession. Unemployment among 16 to 24-year-olds stood at about the same level in 2008 as it had in 1997, despite some £3 billion spent on young people via the new deal and other programmes. That is why we are planning to phase out the old schemes with the new enterprise allowance scheme and the new Work programme and provide for 75,000 more apprenticeships as part of our package to improve the situation.
I am particularly concerned about the 820 young people in my constituency who are starting the year without a job. I spent some time in my local jobcentre in Ilkeston before Christmas, and I am very impressed with the efforts being made by staff there to help young people. However, can my right hon. Friend assist the House by setting out what efforts the Government are making at this time to help young people to access apprenticeships and skills training?
As my hon. Friend will know, the Government are increasing the number of additional apprenticeships from 50,000 to 75,000 over the period of this Parliament. We are also bringing forward the Work programme. It is interesting to note that young people who have been out of work for a long time, as that is defined, will be entering the Work programme a month earlier than they would have done under the new deal for young people, which will be very good for them. Prior to that, jobcentres will work very closely with young people to make sure that they get the right choices and opportunities. It is worth noting that we are also doing an awful lot in trying to get those who are still at school set ready for the world of work when they leave school.
On the subject of unemployment, the Government are meeting businesses in Downing street today and asking them to create jobs, but in its latest forecast published since the last DWP questions, the Office for Budget Responsibility revised upwards its unemployment forecasts for 2011, 2012, 2013 and 2014. Does this not confirm that it is as a direct result of the Government’s macro-economic judgments that the unemployment queue is now forecast to be longer and the unemployment bill to be higher?
The right hon. Gentleman seems to forget the financial situation that we inherited from his Government. I know that it is an uncomfortable fact, but the reality is that we had a major recession and we are taking the decisions that are necessary to get this economy back on track. If the hon. Gentleman looks at the OBR forecast, he will see that we are going to create many more new jobs and that unemployment will be falling all the way through the rest of this Parliament.
I have recently received a number of complaints that jobcentres are sending applicants for jobs to which they are not at all suited. Can my right hon. Friend give an assurance that with the introduction of the integrated Work programme, there will be new checks and balances to ensure that applicants are not sent for jobs for which they are totally unsuitable?
T4. Further to the Secretary of State’s previous answer, will he confirm that unemployment will return to pre-recession levels by the end of the Parliament?
We stand by the OBR forecast that unemployment will rise slightly in the coming year and, thereafter, will fall year on year.
T5. My constituent William Pender approached me to say that the removal of the mobility component of disability living allowance from his son, who resides in a state-funded care home, will leave his son more isolated, because the care home can provide only limited trips out. I invite the Minister to confirm that the full and true nature of my constituent’s mobility needs will be properly catered for under the new system after the reforms.
Given the importance of tackling social security fraud, which depends in part on promoting a sense of responsibility and honesty across the whole of society, does the Secretary of State agree that that is undermined by the widespread tax evasion by rich individuals and companies? If honesty is good enough for the poor, surely it is good enough for the rich.
Of course if one defines tax evasion as doing something utterly illegal, it is quite wrong and we should bear down hard on it. That is the reality for everybody—if they do something that is beyond the law, that is wrong and we should bear down on them no matter how wealthy they are. That should be a rule for everybody, not just for the poor.
The Secretary of State may be aware that in my constituency, we have enlisted the support of companies and the voluntary sector to host a jobs fair on 21 January, to create local jobs for local people. That could not have been done without the support of the jobcentre agencies. Will he encourage other jobcentre agencies, as a matter of policy, to support the idea?
I congratulate my neighbour on his role in that idea, which reflects the fact that as the Minister of State, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), has made clear, Jobcentre Plus has worked really well in various constituencies to try to get work clubs going. In fact, the level of work club start-ups so far has been beyond what we expected at this point. Jobcentre Plus and my hon. Friend need to be congratulated, and I look forward to coming to see him in his constituency this Friday.
The Demos report “Counting the Cost”, funded by Scope, shows that the number of disabled people who currently live in poverty is far higher than official estimates show, as their lower incomes and higher living costs are not taken into consideration. What action will the Secretary of State take to rectify that anomaly?
(13 years, 8 months ago)
Written StatementsIn June 2010, the Government announced a number of measures that will contain housing benefit expenditure and create a fairer system of support by taking steps to ensure that people on benefit are not living in accommodation that would be out of reach of most people in work. In its first step to reform housing benefit, the Government are amending legislation in relation to customers living in the private rented sector, primarily affecting customers whose housing benefit is assessed according to local housing allowance rules.
I have today laid the Housing Benefit (Amendment) Regulations 2010 and amendments to the Rent Officers (Housing Benefit Functions) Order 1997 that will bring into effect measures to:
i. remove the five-bedroom local housing allowance rate so that the maximum level is for a four-bedroom property.
ii. introduce absolute caps so that local housing allowance weekly rates cannot exceed £250 for a one-bedroom property; £290 for a two-bedroom property; £340 for a three-bedroom property; £400 for a four-bedroom property.
iii. remove the up to £15 weekly housing benefit excess that some customers can receive under the local housing allowance arrangements.
iv. include an additional bedroom within the size criteria used to assess housing benefit claims in the private rented sector where a disabled person, or someone with a long-term health condition, has a proven need for overnight care and this is provided by a non-resident carer.
v. set local housing allowance rates at the 30th percentile of rents in each broad rental market area rather than the median.
The Government are convinced it is absolutely necessary to take urgent steps to manage housing benefit expenditure, and to ensure that people who make new claims for housing benefit in the private rented sector are prevented from claiming the higher rates of local housing allowance. The Government have listened to advice from the Social Security Advisory Committee and from key stakeholders in relation to the implementation of these measures and, clearly, it is essential that existing customers have sufficient time to adjust to their new circumstances. In order to ensure a smooth transition for the changes in 2011, the measures will come into force as follows:
The measure to provide an additional bedroom within the size criteria for some customers with a non-resident carer will proceed in April 2011. All claimants who meet the criteria will be entitled immediately from April.
All changes that will adjust the way local housing allowance rates are calculated will come into force from April 2011 for new claims to ensure the measures are fiscally neutral over the spending review period. Existing claimants affected by the changes to local housing allowance rules will continue at their current rate of benefit until their claim is reviewed by their local authority; they will then have a further period of transitional protection at their current local housing allowance rate of up to nine months if there has not been a relevant change of circumstances. No one will be able to receive more in benefit than they pay out in rent once their claim has been reviewed.
In addition to the funding announced to increase the discretionary housing payment fund, the Government have allocated a further £50 million over the spending review period to support the implementation of these measures. This will provide targeted support to help meet the housing needs of claimants who are affected by the changes, and we will work with local government on its allocation.
The Government intend that the measures they are introducing to adjust local housing allowance rates will act to reduce rents in the private rented sector. To support this, the Government are temporarily widening the discretion of local authorities to make direct payments to the landlord in some circumstances where it will support tenants in retaining or securing a tenancy. The Government will work closely with local authorities to ensure this provision is used only in very specific circumstances where landlords are reducing rents to a level that is affordable for claimants.
(13 years, 9 months ago)
Written StatementsIn the course of the Opposition day debate on housing benefit, 9 November 2010, I stated that:
“We now know that, according to the Office for National Statistics, the private marketplace in housing—Labour Members are completely wrong about this—fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%”.— [Official Report, 9 November 2010; Vol. 518, c. 167].
The correct answer should have been:
“We now know that, according to national statistics, the private marketplace in housing—Labour Members are completely wrong about this—fell by around 5% between November 2008 and February 2010. At the same time, national LHA rates, the system the previous Government left us, had risen by 3%”.
The source of this statistic, as published in DWP’s analytical supplement to the Work and Pensions Select Committee inquiry of 3 November, is the Find a Property private rental index. This source for rental data has been used by the Department and wider Government since 2008 when the Department for Communities and Local Government stopped producing their own private rental index. The Find A Property index is the biggest national private rental property website with an extensive amount of nationwide data.
“For where problems do arise, we have tripled the discretionary housing payment to £140 million".—[Official Report, 9 November 2010; Vol. 518 c. 174].
I am happy to clarify that discretionary housing payment funding will be £130 million and that £10 million will be available from Communities and Local Government funding for homelessness prevention, hence totalling £140 million over the spending review period. Funding on discretionary housing payments will indeed triple in year from 2012-13.
“Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%”.—[Official Report, 9 November 2010; Vol. 518, c. 149].
I can confirm that housing benefit expenditure has increased by 50% in real terms from £14 billion in 2000-01 to a forecast £21.5 billion in 2010-11.
(13 years, 9 months ago)
Written StatementsSubject to parliamentary approval of the necessary supplementary estimate, the Department for Work and Pensions Resource departmental expenditure limit will decrease by £35,781,000 to £8,730,218,000 and the Capital departmental expenditure limit will remain unchanged at £243,052,000. The Administration budget will decrease by £31,185,000 to £6,076,705,000.
Voted | Non-voted | Total | Voted | Non-voted | Total | |
---|---|---|---|---|---|---|
Resource | -58,183 | 22,402 | -35,781 | 5,599,225 | 3,130,993 | 8,730,218 |
of which: | ||||||
Administration | -31,185 | 0 | -31,185 | 4,543,556 | 1,533,149 | 6,076,705 |
Capital | 18,496 | -18,496 | 0 | 191,224 | 51,828 | 243,052 |
Depreciation1 | 919 | -1,018 | -99 | -254,880 | -834 | -255,714 |
Total DEL | -40,606 | 4,924 | -35,682 | 5,535,569 | 3,181,987 | 8,717,556 |
1Depreciation, which forms part of the resource Departmental Expenditure Limit, is excluded from the total Departmental Expenditure Limit since the capital Departmental Expenditure Limit includes capital spending and to include depreciation of those assets would lead to double counting. |
(13 years, 9 months ago)
Commons Chamber2. What steps his Department plans to take to assist employers to provide real-time pay data for universal credit computations.
Her Majesty’s Revenue and Customs is continuing to consult with employers on how best to collect real-time pay information. I should stress that the information required for the universal credit is already being collected by HMRC as part of its reforms to the pay-as-you-earn system, which are on track. The adoption of the new real-time information system, for the benefit of employers, universal credit customers and taxpayers, is already well on track.
Can the Secretary of State tell the House what proportion of the £2 billion allocated in the comprehensive spending review to implement the universal credit will go to support HMRC’s IT project, and what proportion will go as compensation, so as to avoid losers in the transition to the new universal benefit?
The right hon. Lady will forgive me if I do not give her the absolute details. We will be publishing the details shortly—well, soon, anyway—but I can tell her now that she can expect to see a significant amount, as a proportion, for the computer change. All this is covered by the money already granted through the settlement in the spending review—more than £2 billion—which will go to protect those who would have nominally been losers and to implement all the necessary IT changes, and to cover every other detail too.
I welcome my right hon. Friend’s earlier answer. In the light of several terrible cases in my constituency, does he agree that it is extraordinary that the whole system of credits was introduced at all without a proper real-time information system?
The PAYE system is ultimately the responsibility of my colleagues at HMRC, although we will obviously require an element of that to implement the change. That change will make life considerably easier for us in delivering those benefits without the normal mistakes that are made—mistakes that have caused overpayments to people, followed by attempts to claw them back that cause hardship for many people on low incomes. I believe that in due course the change will deliver a net benefit to everybody.
Under the Secretary of State’s proposals, councils are to use the real-time data to calculate entitlement to council tax benefit, although the entitlements will vary according to each local authority. What is his estimate of the cost to the Department for Work and Pensions of supporting councils in creating their own mini-benefits system in each locality?
I will give those details soon. I will not give them today, but I can say that we have already been working on the issue. We believe that, as things stand right now, we will manage the cost within our present budgets—it will not require anything extra for us. Of course, as the right hon. Gentleman said, it forms a challenge to us—I accept that—but localising elements of benefits is important to local people, and councils have very much wanted to do this. I will definitely give him the figures for that in due course, but we believe that we will be able to manage it, and I am more than happy to discuss that with him.
3. What steps he is taking to encourage social enterprises to become providers under the Work programme.
We believe that universal credit will make work pay. We have done some assessment and we can announce that we believe we should reduce by 1.3 million the number of workless households facing a participation tax rate of more than 70%. We also believe that we will improve earnings incentives for some 700,000 people and that we could reduce the number of workless households by about 300,000.
I thank the Secretary of State for that response. Caudwell Children is a charity that has significant experience in helping the parents of disabled children back into work. Could he give some assurances as to how the universal credit will make that process easier?
I hope and believe that if we implement universal credit correctly, it should allow people with caring responsibilities to meet those responsibilities with greater flexibility in the number of hours they can work. At the moment, it is very difficult for many of them to work the sort of hours they need to work without damaging their ability to fulfil their caring responsibilities. We think that flexibility would be most effective for them and, strangely enough, for lone parents.
The universal credit has the desirable and indeed the shared objective of reducing the rate at which tax and benefits are withdrawn as earnings rise. But for every pound that will go into the universal credit, £8 is being removed as a result of the June Budget and the comprehensive spending review. When the Secretary of State says that nobody will be worse off, is he making the comparison with the period before or the period after those cuts come into effect?
What I said originally was that we believe that from the position we inherited, the implementation of the universal credit will have a net beneficial effect for the poorest people in this country who are trying to achieve work. So it is not just a case of people not being worse off; we believe that people will be far better off than they were when the hon. Lady’s Government left us.
14. Whether his Department plans to publish a gender impact assessment of the changes to be made to the benefits regime as a result of the comprehensive spending review.
16. What assessment he has made of the likely contribution of the proposed universal credit to his Department’s objective of encouraging people to work.
I refer my hon. Friend to the answer I just gave.
I listened carefully to my right hon. Friend’s previous answer. Given the benefits for so many of the introduction of the universal credit, what chance is there that the Government might be able to accelerate its introduction beyond the 2017 time scale currently announced?
I will resist the temptation to accelerate anything. I simply say to my hon. Friend that the plan we have put in place allows us to spend the right amount of time making sure that we are integrating those on the current benefits correctly and that we are not making any mistakes. We do not plan to accelerate that, but clearly we hope that this process will go smoothly—we believe it will. That is the most important thing.
Can the Secretary of State give an estimate as to how many parents with young children will return to work under his universal credit, and can he explain the incentives?
We believe that we will lift some 350,000 people in that category out of the poverty that we inherited. I am not going to give any significant answer to the second part of the hon. Gentleman’s question, simply because I am happy to write to him in due course and give him the figures. His party says it accepts and supports this process, and the reality is that the universal credit has the biggest effect on the poorest people trying to get back into work. That surely has to be welcomed by him and the whole of his party.
17. What assessment he has made of the likely effects of the Work programme on unemployed people who volunteer.
I repeat that the universal credit will benefit a large number of people, improving work incentives for some 700,000 people who will see their marginal deduction rates fall from about 96% to 76%. The specific group that the hon. Gentleman is talking about will have their withdrawal rates rise marginally, although that will be met by our guarantee that nobody will be a loser in the course of this.
I genuinely welcome the Secretary of State’s attempts to get more people incentivised and back into jobs, but does he accept that his proposals are more likely to fail because the regional development agencies that created many jobs in Rochdale and other parts of the country are to be replaced by what Lord Heseltine has called a “high-risk” regional growth fund?
I do not accept that point. We recognise that it is critical to create those jobs and we expect them to be created as the economy grows. The big problem with creating jobs under the previous Government was that 70% of all the jobs created in 15 years went to people from overseas and not from the UK. The big issue for us is getting people in the UK ready and able to do that work, which the Minister with responsibility for employment, the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is busy doing through the Work programme.
The Opposition seem convinced that the introduction of the universal credit will be dogged by IT difficulties. Does that not reflect their lamentable experience in this area? What reassurance can the Secretary of State give us that we will succeed where the previous Government failed so badly?
The previous Government had problems with IT development, as did lots of Governments—both sides accept that. To be fair, I have spoken to the shadow Minister, the right hon. Member for East Ham (Stephen Timms), who has been very positive about general developments. In his time, the development of the employment and support allowance computer was a very positive development, for which I compliment him. That is a very good example of the scale of computer development that we can undertake with the universal credit.
T1. If he will make a statement on his departmental responsibilities.
We are busy working very hard on employment programmes. I draw my hon. Friend’s attention to the very positive employment figures from last week, which indicate that the Government’s direction of travel places employment growth at the heart of all we do.
I thank the Secretary of State for his answer and I note the earlier comment by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), that economic growth should not be talked down and that jobs are being created. How are the providers of the Work programme going to work with employers to identify those jobs and make sure that people are placed in private sector jobs as we go forward?
My hon. Friend is absolutely right. The difference between this Government and the previous Government will be that the Work programme—the most comprehensive, integrated work programme in existence, certainly, since the war—will make a huge effort to get those who have been out of work for the longest periods ready for work so that they actually get to work. As the economy grows, those jobs will be greater in number. A key point that I made earlier is vital to her question: for all the growth under the previous Government, prior to the mistakes they made that brought us the recession, most of those jobs went to people from overseas because British people simply were not capable of doing that work. That has to change.
May I take the Secretary of State back to his claim that job creation will be vital and ask him specifically about what the Office for Budget Responsibility has stated will be the estimated saving from threatening the long-term unemployed, about whom he has just spoken, with the 10% figure? Do the OBR’s estimates on how much that policy will save include an expectation that it will move more people into work, or is no significant saving in terms of work incentives expected? Do the calculations simply show OBR figures for the number of people who are going to continue with no job but less money? What do the OBR figures indicate?
The OBR figures show two things: significant growth during the course of this Parliament and significant growth in private sector employment. Our changes in housing benefit will get rid of a disincentive to taking those jobs, which a significant number of people failed to take under the previous Government, who failed to do anything about it.
T2. My constituent Rachel Clark, who has learning difficulties, enjoys working as a volunteer at a coffee shop run by the charity MacIntyre. Until recently, she received a therapeutic allowance but unfortunately that practice has had to stop for fears that it is in breach of national minimum wage legislation. Given that all parties were happy with the arrangement and that Rachel is happy to carry on as an unpaid volunteer, can we look into this grey area of the law?
T4. May I ask Ministers to look again at the proposal to reduce housing benefit by 10% for people receiving jobseeker’s allowance for a year? The Minister for Housing and Local Government said this morning that people in social rented housing will be kicked out of their homes if they go into work, and under the proposal on housing benefit, people will be kicked out of their homes if they do not go into work.
I always appreciate the hon. Lady’s advice. We certainly keep all that under review and intend to do so all the way through until we introduce the Bill. However, having said that, there is a lot of good evidence out there to show that we have to give people some sort of incentive not to decide to refuse that work. We believe that that is one of the areas where a lot of international evidence shows that such a spur actually helps people to do that.
T5. What can the Secretary of State do to assure unemployed people in Staffordshire Moorlands that the Work programme will help them to find not just employment, but sustainable employment?
I, like many other hon. Members, have been contacted by a number of constituents whose pension provision has been seriously affected by the collapse of the former Ford UK parts manufacturer, Visteon. Will the Secretary of State meet me to explore how we might best help those who have been most adversely affected?
(13 years, 9 months ago)
Commons ChamberWith permission, Mr Speaker, I should like to make a statement on welfare reform. Let me say in advance of that that I have tried to give the shadow Secretary of State, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), as much time on this as possible, and I am open to more questions. I thank him for his co-operation in that.
In this House in October, I set out our resolve to secure a welfare system that I said should be fit for the 21st century, where work always pays and is seen to pay by those who are engaged in it. Following consultation since then, a broad positive consensus has—I think—emerged. That consultation ranged very widely, from Citizens Advice to the Institute for Fiscal Studies, and across the political divide as far as we could go.
The White Paper that we are publishing today therefore sets out reforms that will, I hope, ensure that people will be consistently and transparently better off for each hour they work and for every pound they earn. We will cut through complexity to make it easier for people to access benefits. The intention is to cut costs, reduce error and do better at tackling fraud. The detail is published today, and the White Paper should be available in the Library. Let me take this opportunity to thank all those in the Department and beyond who have helped to build and write it, working very long hours to make sure that we could get it out today.
Perhaps I could take this opportunity to remind the House of exactly what problem we are trying to solve. It does not relate to any sort of party political point; we are dealing with a structural issue that has grown throughout successive Governments. Five million people of working age are on out-of-work benefits; 1.4 million people have been on out-of-work benefits for nine of the past 10 years; 2.6 million working-age people are claiming incapacity benefits, of whom about 1 million have been claiming for a decade; and almost 2 million children are growing up in workless households—one of the worst rates in Europe.
Some have said recently that it is not reform that is necessary or important, but jobs. Well, this is a long-standing problem in our country. We have a group of people who have been left behind, even in periods of high growth. That is the issue. Even as 4 million jobs were created over 63 quarters of consecutive growth from one Government to the next, millions of people in Britain remained detached from the labour market. Some 4.5 million people were on out-of-work benefits before this recession even started, notwithstanding the growth in jobs that I referred to. These reforms are about bringing them back in. I want them to be supported and ready to take up the 450,000 vacancies that even today, as we begin to emerge from recession, are available in the economy. It is also worth reminding the House that of all the jobs that were created, the vast majority, in terms of net take-up, were taken by people coming in from overseas, because businesses could not get people in this country to do the work and therefore had to seek people elsewhere.
The key to solving this problem is to solve the wider social problems associated with worklessness. The measures in the White Paper to get this process under way are the first key strand of our welfare reforms. By creating a simpler benefits system, we will make sure that work always pays more than being on benefits. By reducing complexity, we will reduce the opportunities for fraud and error, which currently cost the taxpayer approximately £5 billion a year.
I think that everybody in the House would accept that work is ultimately the best route out of poverty. At present, some of the poorest people who take modestly paid jobs can risk losing £9 or more out of every £10 extra they earn. The universal credit must put an end to some of the perverse disincentives that make it so risky for the poorest to move into work.
The highest marginal deduction rates for in-work households will fall from 95.8% to an absolute limit of 76.2%—that is with the conjunction of tax and the withdrawal—and there will be a single taper rate of about 65% before tax. That means that about 1.3 million households facing the choice of whether to move into work for 10 hours a week should see a virtual elimination of participation tax rates of over 70%. With single tapers and higher disregards, the system will be simpler and easier and people should be able to keep far more cash in their pockets when they move into work.
The guarantee will—I hope—be crystal clear: if people take a job, they will receive more income. Some 2.5 million households should get higher entitlements as a result of the move to the universal credit, and the new transparency in the system will produce a substantial increase in the take-up of benefits and tax credits. Taken together, we estimate that those effects will help lift as many as 350,000 children and 500,000 adults out of poverty. That is just our analysis of the static effects of reform. Analysing the dynamic effects is not always easy, and it is often best done in retrospect, but we estimate that the reforms could reduce the number of workless households by around 300,000.
Let me also provide assurances about the transition. We will financially protect those who move across to the universal credit system. There will be no losers.
For ever.
A far simpler system, which operates on the basis of real-time earnings, will also reduce the scope for underpayments or overpayments. We all know from our experience as constituency MPs that that can create anxiety and disruption, and can prove very difficult to correct. Our simplification and reform will help to end that particular problem. As well as reducing official error, these changes will also make life far more difficult for those who set out to defraud the system. They are a very small group of people, but they are there none the less.
The system will be simpler, safer, more secure, fairer and more effective, but it will require investment. Some £2.1 billion has been set aside to fund the implementation of the universal credit over this spending review period, and I have been assisted in that work by my right hon. Friend the Chancellor, who has agreed to and guaranteed the investment programme.
This is not just expenditure; it is also investment. We are investing in breaking a cycle of welfare dependency, which I believe is a price worth paying. The universal credit will provide a huge boost to individuals who are stuck in the benefit trap, reducing the risk involved in taking work and lifting 850,000 people out of poverty in the process. That investment will produce a flow of savings, as a simpler system will help to drive out more than £1 billion of losses due to fraud, error and overpayments each year. On the wider economic considerations, dynamic labour supply effects will produce net benefits to this country, as greater flexibility helps businesses and fuels growth, particularly in the high street. We will invest the £2.1 billion provided in the spending review 2010, seeking a multi-billion pound return.
That is how we will make work pay, but as I said earlier, and as our document states, it simply will not be enough. We also have to support people as they make their move back to work, and the two issues cannot be separated. That is why we are moving ahead with our new Work programme, which will provide integrated back-to-work support. It will pick up and bring together many of the programmes that were in place before, and add to them to create a comprehensive system of support. That is why we have already started a three-year programme to reassess the 1.5 million people who have been abandoned for years on incapacity benefit. The Opposition started that process before the election for the flow of new claims, and we are now trialling it in two cities.
Essentially, this is our contract: we will make work pay and support people to find a job through the Work programme, but in return we expect co-operation from those who are seeking work. That is why we are developing a regime of sanctions for those who refuse to play by the rules, as well as targeted work activity for those who need to get used to the habits of work. That will be a selective process, targeted at those who need to do it, not at everybody. It will be targeted as required, using the understanding and knowledge of those based in jobcentres.
Furthermore, evidence from the already existing work capability assessment, which the last Government started, shows that 36% of people withdrew their applications before reaching the stage of being assessed. The knowledge that they are likely to be assessed has a stark effect on those who may be trying to defraud the system. That underlines the effect that the system could have on those who are currently working while claiming benefits.
This new contract, in which we do our best to help people find work, to make them work-ready, to make work pay and to say that they will always be better off in work than on benefits, is a fair deal for the taxpayer and a fair deal for those who need our help. I commend the reforms in the White Paper to the House.
I thank the Secretary of State for his statement, for advance sight of it and for his personal helpfulness and co-operation preceding it.
I will deal directly with the principles underlying the universal credit. Both our parties want a simplified benefit system in which less money is clawed back as people move into work. That is why I have been very clear since I started in my position that if the Government get the approach right, we will support them. Pension reform was the subject of significant cross-party working in the last Parliament, and I sincerely hope that welfare reform can be in this Parliament. The right hon. Gentleman can count on Labour’s support when he is pursuing laudable aims, even when it appears that he cannot count on the support of his own Chancellor.
In office, we introduced the working tax credit, which substantially reduced the marginal deduction rates. It halved the number of people facing marginal deduction rates of 90% or more. The Secretary of State has just mentioned that matter. From reading his work in opposition, one cannot fail to see some of his ideas as welcome steps. His dynamic welfare paper promised a 55% taper rate, lower marginal deduction rates for every family, £2 billion a year more going into the pockets of families and £500 million a year less being spent on administration.
The Secretary of State now appears to want to set a taper rate for the universal credit of 65%, 10 percentage points less generous than he advocated in his previous paper. The impact of that was described by his own Centre for Social Justice thus:
“Setting it higher than 55% would increase MTRs”—
marginal tax rates—
“for those working households in receipt of benefits other than Housing Benefit (even if their net income was higher than today). As a result, there would be a negative impact on earnings, and on the number of second earners in employment.”
From an initial inspection of what we have been offered today, it seems that in this Parliament we will get a higher taper rate, higher marginal deduction rates for some families, no additional money overall going into the pockets of families and a £2 billion increase in administration and start-up costs. Is that proof that there is no plan so worth while that the current Chancellor of the Exchequer cannot delay or damage it?
There is real concern that some of the measures imposed on the Secretary of State in return for allowing the universal credit to proceed are contradicting the policy aims that he has set out today. On the Government’s own figures, because of the June Budget 20,000 more people next year will face marginal tax rates of 90% and 30,000 more will face rates of over 70%. That is because of the Government’s plans to increase taper rates for tax credits. We must remember that phase 1 of the implementation plan for his dynamic benefits plan was to reduce tax credit taper rates from 38% to 32%. From this March, the Government are increasing the taper from 38% to 41%.
The small print of the Green Paper published in the summer read:
“The changes in the June 2010 Budget will increase the maximum Marginal Deduction Rate to 95.95 per cent.”
That is before even taking into account changes in the spending review, such as real-terms cuts in working tax credit and top-up low wages. Can the Secretary of State explain the approach that his Chancellor is adopting, and can he guarantee that as a result of these changes no one will have a higher marginal deduction rate? Will he tell the House whether anyone—for example, people who currently receive tax credits but not housing benefit—will face higher marginal deduction rates under his approach?
According to the IFS, of which the Secretary of State spoke approvingly in his statement, the tax credit and benefit changes announced in the June Budget mean that the poorest two deciles of the population will lose about 2% of their incomes over the coming Parliament, more proportionately than the rest of the population. Can he therefore inform the House whether all the analysis being bandied around today about out-of-work households moving into work and children being lifted out of poverty is relative to the position today, or only to the position after the substantial losses that people will face because of the Government’s already-announced cuts to benefits in this Parliament? Can the right hon. Gentleman simply provide the figures for this Parliament? Do the Government expect child poverty to have fallen or risen by the end of this Parliament? The Office for Budget Responsibility predicts that an extra £700 million will be spent on unemployment benefits because a longer dole queue following the June Budget has consequences for the welfare bill.
The right hon. Gentleman has allowed all this to happen in return for the Treasury allowing him to spend £2 billion on the new system. Can he give us today the breakdown of the £2 billion secured for the implementation of the universal credit—the IT breakdowns and the transitional costs for affected families? Can he pledge that he will not raid any other part of his departmental budget in this spending review for this purpose if it turns out that that money is insufficient? How does the right hon. Gentleman respond to reports in The Times today that he will need to secure another £2 billion on top of the £2.1 billion that he referred to in his statement to guarantee his pledge, which he repeated to the House today, that
“There will be no losers”?
Is the Treasury underwriting the promise that he has just given the House?
To conclude, securing headlines—I have to admit that my colleagues and I came to understand this over 13 years—is a lot easier than securing reforms. This morning, the Secretary of State said in an interview on the radio:
“This is about saying to people: if you try, if you co-operate, if we work with you and work pays and you still can’t get a job then our duty is to support you.”
How can he possibly reconcile those words with the plans his Government have announced to cut 10% of the housing benefit of anyone who cannot find work within a year, even if the jobcentre thinks that they are taking all the correct measures? When he gets to his feet, the Secretary of State can perhaps explain to the House how he justifies that measure, whether it is set to continue permanently within the planned universal credit and, frankly, how it fits with the principles that he set out on the radio this morning.
I am glad that the right hon. Gentleman spent so much time saying how much he supported this measure—that is really helpful. He then dwelt on a lot of things that were not necessarily relevant to it, but I will come to those none the less.
I am sorry that the right hon. Gentleman seems to be less than positive. I had hoped that he would consider this to be a major change, which would benefit the very people he says he is in favour of supporting. There is absolutely no question but that this measure will support and improve the quality of life of those who are likely to be affected. When he gets to the White Paper, I would draw his attention to a chart on page 53, which shows that the bottom deciles—this is from the moment that he left office right the way to the moment set out in the chart—will actually improve their life quality dramatically, taking all matters into consideration and sweeping all the way up to the moment we implement this. The poorer will be better off, and I wish the right hon. Gentleman could have taken the opportunity to welcome that. That is the reality for him and his party, and if I were in his position, I would have been a little more positive.
We believe that child poverty will fall. Let me just deal with the story in The Times about the money, which the right hon. Gentleman mentioned. The fact is that the £2.1 billion is a full envelope for spending review 10; it is absolutely enough to get us to that point. I said to the right hon. Gentleman privately, and I say again publicly, that as we implement these measures over three years of this Parliament and a further two years of the next Parliament, more money will, of course, be required, and that is guaranteed, but we will come to that in the spending review for the next spending review period. [Interruption.] Yes, it will be guaranteed, because we have to implement this programme.
Within that £2.1 billion, we will also invest in setting up essential IT systems. The right hon. Gentleman knows, because we have spoken about this, that these are medium-level IT systems. Even in his time, the Department for Work and Pensions handled these systems very well, and there were no problems with them at all. The money will also be used to support the running of the new system and the migration of current benefit and tax credit recipients from today’s system. Within that, we will also guarantee, as I said, that nobody loses out.
On the IT challenge that we dealt with, I remind the right hon. Gentleman that, even in his time, we managed to implement some very similar projects and to operate them very well. This is by no means a monolithic system like the Rural Payments Agency or the National Offender Management Service. During his time, the DWP had a strong record of successful IT delivery on systems such as the employment support allowance system, which was roughly on the same scale, and the pension reform system. Both were similar IT systems and both were managed without any particular problems. We are determined that the IT situation will be managed very well, and that we will be able to complete the process.
The support that, as the right hon. Gentleman says, we will give to those who are transiting is covered in the £2.1 billion. I repeat that we will protect those people who, for particular reasons, find themselves on slightly lesser moneys for as long as they stay in that situation. As they move up, they will gain dramatically. Even if they were to fall back, relative to where they were, they will gain dramatically. The reality, I hope, for the Opposition, as they think this over carefully, is that even if they were to return to power, this system would benefit those people.
The right hon. Gentleman asked me about the taper rate. The taper rate that we talked about when I was at the Centre for Social Justice was an optimum taper rate with everything taken into consideration. The taper rate itself involves a decision, which a Government of any hue would take, about how to set the balance between what we can afford and how much we will be able to give people as they go back into work. The real issue here is not that the taper is 65%. Even with 65%, all those who go back into work will be better off as they work through the hours. If the right hon. Gentleman is saying to me that he would prefer a 55% rate if he were in power, that is fine. He just has to tell me where he intends to get the money from, and that is the issue I have not heard him or his colleagues say anything about since they left us with the worst budget deficit in living memory. I only ask the right hon. Gentleman and his colleagues to think of this as a positive measure. Even if they were in power right now, it would help the poorest in society absolutely dramatically.
The introduction of workfare is about 25 years overdue. I congratulate my right hon. Friend on grasping that nettle and I hope that he will not let go of it. One aspect that he did not touch on was the operation of the jobcentres. Jobcentres are no longer jobcentres, but benefit-processing centres. Will he say just a little about how he intends to address that issue?
I understand the point that my hon. Friend is making. The reality is that we will reform the whole jobcentre process to make sure that it dovetails with what we are trying to do. Yes, of course, there are areas where some of the advice that is given is not always necessarily of the highest quality, but most jobcentres, and most of the people who work in them, are determined to help the individuals they meet, to advise them properly and to get them back into work. Of course, the Work programme will include private and voluntary sector organisations, so we will tap into the very best qualities and skills that lie outside the jobcentres. My hon. Friend should rest assured that this will only get better.
The creation of a single working-age benefit is the holy grail of welfare reform, and the Government will need to be congratulated if they can pull this off, especially if they fulfil their promise that there will be no losers. I am sure that the Work and Pensions Committee, which I chair, will watch the issue carefully. However, I am still not clear as to where the tax credit system fits into the universal credit. The Secretary of State did not answer the questions from the shadow Secretary of State about where they will fit. Will there, for instance, be a single application form to cover the Treasury-delivered benefits and the DWP benefits?
The problem right now is that when people make applications, they have to make at least two completely separate applications at the same time if they are going back to work. There is literally no communication between HMRC and the DWP about what they are sitting on and what they are making their calculations about. That is why the reconciliation at the end of the year is so gross and why we so often have major overpayments and then try to claw money back. The purpose of these proposals is to bring everything together so that we have one single point from which to take information. Therefore, the tax credit system and the DWP system will come together to create this single taper withdrawal. In future, as people’s circumstances change as they go into work—in the past, if they did not inform HMRC or the DWP, they might have been overpaid because they did fewer hours—the information will automatically cascade back to the centre, and we will know what people are doing, so they will be paid exactly what they are meant to be paid. There will be no chase for the money at the end of the year, which, as the hon. Lady and many others know, causes fear and worry among far too many constituents who find that they have been overpaid and have to pay the money back.
May I congratulate my right hon. Friend on his ambitious programme of welfare reform? Among the most important components in it are the steps that he is taking to overcome one of the greatest problems in the system, which makes people reluctant to take work when it is available. Not only might people not earn much more in work than on benefits, but they fear that the job they take might be short-lived and that they might then find it difficult to get back on to benefits if they become unemployed again. Will my right hon. Friend spell out what that involves and, in particular, how he will tackle the problem of people fearing that they might lose housing benefit?
My right hon. Friend is absolutely right. One of the great fears that people have, particularly in respect of housing benefit, is that it can take a month or so before they get their benefit back as they come out of work. Because that will be included at the point at which they make the application and because that is tapered into the benefit, there will be a seamless change or transfer. As they come out of work, they will do so with their gross amount exactly as it should be—the thing that will change is the level at which they taper. In other words, the amount will be what they are necessarily paid in benefits. They will not suddenly have to make a reapplication—there will be a seamless process—which should get rid of exactly the fear that my right hon. Friend talks about.
Like my hon. Friend the Member for Aberdeen South (Miss Begg), I congratulate the Government on their intentions to make work pay and simplify the system. I very much wish that project well.
The Secretary of State will be well aware of Labour Members’ concerns that spending announcements to date have hit women twice as hard as men. Will the universal credit be assessed on a household basis? If so, what assessment has he made of the impact of moving money from purse to wallet within that model and of the impact on women?
The system will assess at household level, but of course, the beauty of that is that we will understand better what household needs are. Two things that will hugely benefit women will flow from that. First, in knowing what that household should have, we will have a much higher take-up rate. Therefore, the in-work poverty that has been terrible until now will hugely be resolved. The second aspect that is really good for women is that, as the hon. Lady knows, many women who have caring responsibilities do short-hours work. The proposal will hugely benefit them because they will retain more of their income as they go into work. They will be beneficiaries, which I hope helps her.
I, too, welcome today’s announcement, particularly the expected effect on poverty and especially child poverty. This is a critical reform—as the hon. Member for Aberdeen South (Miss Begg) said, some of us on the Work and Pensions Committee have been pressing for it for a number of years.
Who will run the mandatory Work programme? Will that involve third sector partners? How will the Secretary of State ensure that the programme remains distinct from the community sentence programme?
The Work programme will start well in advance of today’s proposal—we anticipate that it will start next summer. There will be a set of contracts on a regional scale that will involve the private and voluntary sectors. Organisations will run programmes against a set of outcomes, for which we will pay them, so that as they deliver and get more people back to work, they will be paid for those results. That will be carefully balanced so that we do not pay them for dead-weight costs that might otherwise have been in the system, but it will certainly be clear.
I welcome very strongly the strategic direction of the Secretary of State’s statement, but comparisons will inevitably be drawn with the 1940s. That should remind us of the importance of the work ethic and the fact that citizens have both rights and duties when it comes to benefits and work. It also reminds us of the importance of employment policy. I say that not in a partisan spirit, but because I think there is a real difficulty. Churchill’s coalition Government and Attlee’s Labour Government took measures to move towards full employment—with great success. When a Government take 1 million jobs out of the economy, both public and private sector, does the Secretary of State understand my concern about the chances of success of the good strategy announced today?
I am grateful for the right hon. Gentleman’s words of welcome—I particularly value them because I am a huge admirer of his, as he knows. He is right to draw the parallel with the 1940s, not for anything to do with Beveridge, but simply because high withdrawal rates were possible in the system that was set up at that time because the people involved were mostly men who were either in work or out of work—there was very little part-time work in that sense, so withdrawal rates had no effect. Today, because of the nature of part-time work, withdrawal rates cause real problems for people, particularly as they go back to work.
On jobs, I simply say this: yes, as the economy grows, those jobs will be created, but let us not forget that in the past three months, over 1 million jobs went through my jobcentres, and 450,000 jobs rotate through them every week.
Unfortunately, there has been much scaremongering about the impact of welfare reform on those who are disabled or who have mental health conditions. Will the Secretary of State assure the House that the most vulnerable members of society will still get the support that they need?
Yes, I can give such an assurance to my hon. Friend. We have for some time needed to simplify and streamline the current disability payments and to target the support obviously and particularly on the most severely disabled people through the universal credit, which will happen, and through reform to disability living allowance. DLA will not be incorporated into the universal credit—it will continue as a separate allowance because it is non-work related. I can promise her that that is uppermost in our minds in the design of the system.
The Government and employer organisations have confidently asserted that the expected huge rise in unemployment owing to job losses in the public sector can and will be ameliorated by the creation of jobs within the private sector, albeit neither can put a time scale or numbers on that assertion. Will the Secretary of State guarantee that the changes will not be used by employers in the private sector to drive down wage levels to at or below the national minimum wage?
May I first of all say that I hope Labour Members do not simply continue to hope for the worst and preach? The reality is that even in the past few weeks and months, there have been more than 300,000 new private sector jobs. As I said, more than 1 million jobs went through the jobcentres in the last three months and were found for people. Today’s statement is about making people better off. If I were sitting where the hon. Lady is sitting, I would say, “How wonderful if the bottom three deciles improve their incomes.” The hon. Member for Bishop Auckland (Helen Goodman) may laugh, but in her time in the Government, they spent money and failed and left us with a deficit. Labour Members should apologise for that.
I congratulate my right hon. Friend on his statement, particularly as the previous Government’s approach to welfare reform was more Ethelred the Unready than Nixon in China. Is he aware that more than 8,000 people in my constituency are on out-of-work benefits? That is one in 10 people. Will the Minister assure them that the universal credit will protect the most vulnerable and give others a real incentive—more money, not less—as they find jobs?
The universal credit is about what happens to people as they seek and go back to work. Benefit levels for disabled people—whatever their condition—will continue and be maintained. Those who need support will receive it, but the most beneficial thing for people in my hon. Friend’s constituency is simply this: we are at last going to try to get to that group who have been left behind. More than 5 million people were left behind without jobs in workless households during the high years, with children in poverty. That is what we hope to break. I hope that that is seen as a positive message.
I applaud the Secretary of State for his announcements today and for his efforts to incentivise work, but I still have an arithmetical problem despite his answers to previous questions. I am struggling to see how 450,000 job vacancies divide into the 5 million people that the reforms aim to help. I am hoping that he can explain.
This universal credit comes in over a period of four or five years. In the time over which it is implemented, even under the hon. Lady’s most pessimistic forecasts, the British economy will grow and create more jobs. The Office for Budget Responsibility, which is independent, forecasts growth of some 2.5%, which will lead to much higher numbers of private sector jobs. The reality is that we must prepare the ground. The important thing is that people are better off as they go to work and take those jobs. The point of the proposals is to break the cycle of people saying, “It’s not worth me going to work and it is worth me staying on benefits, because work does not pay.” The proposal is about work paying.
What specific measures will the Government introduce to help disabled people to get into work?
As my hon. Friend knows, there is a slightly complex group of benefits and supplements with respect to disability. DLA is non-work related, but there are disability supplements for jobseeker’s allowance. Many of the disability organisations that we consulted said that the one thing they hoped for from the reforms is that the Government value disabled people, which we believe we do, and give them a chance to go back to work. Apart from the fact that we are creating work choice, the key thing is that the taper rate comes with a disregard. If we give disabled people on the universal credit a larger disregard on their income, we give them more money, which allows them a beneficial position as they go back to work.
The Secretary of State knows that work is good for people’s mental health, but he will also recognise that many people who have severe, long-term mental health problems find it difficult to keep permanent employment. What reassurance can he give that such people will not be discriminated against by the benefits system or by employers?
I completely agree that such discrimination is unforgivable, and we have to change such attitudes if they exist. The real beauty of our proposals is that we will be able to adjust rates according to people’s incapacities. So individuals with particular problems or disabilities will be much more valuable in the workplace than they are now. That is the one thing that the organisations said to us—that those people want to be in the mainstream and in work like everyone else. Our proposals will help that more than anything we are doing at the moment.
May I congratulate my right hon. Friend on his statement? My constituents in Kettering will be right behind him. Often the difference between making more money in work and lounging around on benefits at home is the travel costs to and from work. How will they be taken into account in the calculations?
My hon. Friend is right about travel costs. The key point is that if someone going to work retains significantly more money, their travel-to-work costs become much more affordable. Therefore they are able, as other people in work do, to make decisions about travelling to a job over a slightly longer distance. That will be wholly beneficial to those who are out of work.
In his statement, the Secretary of State used the fact that 37% of ESA claimants did not proceed to full assessment to insinuate that people were withdrawing their claims because they were trying to cheat the system. Current ESA claimants are people who have newly fallen sick, and they are not long-term claimants. Most of them recover from their illnesses during the assessment period and get back into work, so I ask the Secretary of State to withdraw that assertion.
I made no such assertion. What I was demonstrating was that if you put a check in place and ask people to demonstrate their situation, those who are bent on a different purpose will naturally fall out. I used the last Government’s work capability assessment programme to illustrate how that affects new entrants. I was by no means casting aspersions on anybody who is going through the programme, because they deserve what they get.
Many of those who are out of work will need to update existing skills or acquire new skills to help them get back into the world of work. What is my right hon. Friend’s Department doing to try to ensure that people who are out of work can access skills through the further education sector and other means?
This comes back to the Work programme, because it will be about drawing in mentors from the private sector to advise people on setting up businesses and to give other support and advice. The mentoring programme will allow us not only to get people into work, but to mentor them until they get the work habit. That is the critical point. Once they get the work habit, they will be capable of looking after themselves.
The minimum wage plays an essential part in making work pay. Has the Secretary of State forgotten that he was completely opposed to the minimum wage and did all that he could to prevent its introduction? Will he ensure that he makes work pay not only by reducing benefits?
There are several ways to make work pay beyond what I am doing. Making work pay by leaving people with more of their own money in the first instance will be a major step forward. The minimum wage is a good indication of how to set the base below which people should not fall. Another area in which the Government have also made a start is lifting the tax threshold for the poorest people. As we have said, we intend to move that all the way up to £10,000, and I hope that the hon. Gentleman will welcome that.
Will this targeted work activity effectively be a stick—a humiliating sanction—which will not work, or will it be a carrot and a golden opportunity that will build a bridge between joblessness and the workplace, which would be welcomed by unemployed people and the voluntary sector?
I think that the hon. Gentleman is referring to the mandatory work placement. May I explain to him that there has been some over-excited commentary on this proposal? It will be available to jobcentre staff who will be able to use it for two categories of people. First, if someone has been out of work for a long time and comes in, clearly demoralised and with very little self worth, and does not feel that they can get up in the morning—as normal people do when they go to work—they can be put on one of these placements, which will give them a start time and a place of work to go to. All the interviews we have done with people on this scheme have said that they benefited hugely from it because it got them up and out. They will still be brought back in to the jobcentre to look for jobs.
The second group is those people who, we suspect, may actually be already working. Placing them on such a programme does something quite neat: it means that they cannot go off and do the work that they are doing and claim benefit. Instead, they have to make a choice.
I am sure that we all want to be assured by the Secretary of State’s best attempts at a “Somewhere Over the Rainbow” version of his reforms, but we have to test them for the people in the places we know where low employment is an enduring problem. Do the projections for the universal credit include Northern Ireland? In answer to the Chair of the Select Committee, the Secretary of State mentioned bringing the tax credit systems and the DWP systems together. Has he factored in the Social Security Agency in Northern Ireland and discussed the implications with the Minister responsible?
As the hon. Gentleman knows, I have been over there and discussed these matters with my opposite number. I want the reforms to apply to Northern Ireland, and they will. The area has particular problems, as he knows, and we need other devices to overcome those. However, people are unemployed and without work for much the same reason as over here, and I therefore look forward to being able to implement these reforms in Northern Ireland.
I welcome my right hon. Friend’s statement this afternoon. It will do an enormous amount to help people to get back into work. Does he agree that it is important that we have a well-informed debate about this and will he join me in rejecting the ill-informed comments by the Archbishop of Canterbury? Perhaps my right hon. Friend could invite the Archbishop on one of his frequent visits to an area where he could see first hand some of the problems that these communities face, so that he may be better informed in future.
I am always happy to seek to inform people so that higher authorities may be informed in their turn.
I have not had a chance to read the White Paper this morning, but my understanding is that the universal credit will be introduced from October 2013. The Secretary of State mentioned IT issues, and HMRC’s business plan says that the update of the PAYE system, which will be integral to the transition to the universal credit, will not be complete until April 2014. How will the Department reconcile the date for the introduction of the universal credit with the delayed completion of the update of the PAYE system the year after?
I am grateful for that question because it allows me to get rid of a slight misunderstanding. HMRC’s programme is about upgrading the whole of the PAYE system. What we are dealing with comes before that and we do not need all that. We need two important things. As employers collect and collate the information about circumstances anyway, they will download it to the Department each month, instead of waiting until the end of the year. We need two data streams, one sending data through, the other sending data across. That needs a software programme, but it is well below what is being done to PAYE. We will be able to do that on a real-time basis and it will happen before the PAYE changes.
Child poverty rose by 300,000 in the dying years of the previous Government. Can the Secretary of State tell the House more about how his radical reforms will undo that damage and lift more children out of poverty?
The last Government spent more than £35 billion on child poverty, and they are to be applauded for making some changes and lifting 100,000 children out of poverty. We should be conscious of that and I will not say anything other than that that was the right direction of travel. However, that was a lot of money to spend to get what was quite a narrow effect, and child poverty rose relatively speaking after 2004. The best approach, we think, is the universal credit, because take-up rates will improve, allowing families who do not know what they are eligible for to take the money. That will automatically improve the quality of life for those families and have a huge effect on child poverty.
As I understand it, the new contract that the Secretary of State will introduce will begin from day one of a person’s unemployment, so he will be tearing up the old contract and the entitlement to benefit of people who have paid national insurance. Furthermore—as the hon. Member for St Ives (Andrew George) pointed out—the sanctions regime will also be introduced at that very early stage. Does not the Secretary of State realise that it is an extremely inefficient way to run an economy to force people with high skills into jobs for which they are not suited? We do not want physics graduates on the checkout till.
I am saddened by the hon. Lady’s question. She is wrong. First, the contributory principle still exists. The contributory benefits will run in parallel; we are not getting rid of those. Secondly, she said that we should only ever get people into jobs that their top qualification allows them to get. I think that getting people into work is the most important starting point, and from there they can move on. [Interruption.] Oh, quite the contrary! I have been unemployed, and I would have done anything to get a job.
My local jobcentre told me last week that many well-paid caring jobs are not being taken up by jobseekers. As well as addressing the disincentives in the current benefits system, do we not need to encourage jobseekers to be less picky about the jobs they go after? Every job is of value.
I agree that all jobs have a value, and that we want people to get jobs, to move on and to be assisted in getting better and better pay and circumstances. Carers will benefit from this system because it allows them to balance their work and caring responsibilities by picking the hours that suit them. Carers organisations have told us that the critical point is that often carers are locked into one set of hours that do not suit them. This system will allow them to take the relevant hours while fulfilling their caring responsibilities.
The Secretary of State will be aware that jobcentre staff already have sanctions they can take out against people who they believe are avoiding going back to work. This morning, on the “Today” programme, as my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) pointed out, the Secretary of State suggested that, where people are working with jobcentre staff and searching for work in earnest, the Government’s duty is to work with those people to find them jobs. Does that mean that, where someone has been unemployed for a year, jobcentre staff will have some discretion in deciding whether they should continue to receive benefits, if they have been earnestly searching for work?
The hon. Gentleman makes a legitimate point, which is that jobcentre staff still retain some discretion when they believe that somebody is making every effort. As he knows, the key is to deal with people who are simply making no effort to find work. The previous sanctions regime existed on that simple basis—in other words, if somebody is not trying, they will be sanctioned, but if they are trying, they will not be.
I congratulate the Secretary of State on grasping the nettle on this difficult issue. May I ask him about part-time and seasonal workers? Will he outline in more detail the support that will be available to allow them to take jobs and help them back into work, while saving the taxpayer money?
There is an important feature to the new system that will help people taking seasonal work. In the past, as they shifted their work patterns, the system took a while to catch up, and often overpaid them and caused them difficulties when it tried to withdraw the money. This will benefit them greatly.
I very much welcome any support for people to get back into work, but I am a little concerned. As always, the devil is in the detail. The document states that nobody will lose out under the reforms, but it also mentions capping housing benefit after 12 months and so on. Will the Secretary of State assure me that nobody will lose out under the reforms?
They will not. We have given that commitment, and it can be found within the £2.1 billion.
It is a sad fact that in Wellingborough there is a subculture of young people who have never known a family where anyone has ever worked, and who have always lived off benefits and in social housing. They come to my surgery to try to get a bigger house. How do we break that cultural trend? It is not just about incentives; we have to break the culture.
Alone, this would not be enough, but my point is that it will run in parallel with the Work programme, which will get to unemployed people, such as the young people going to my hon. Friend’s surgery, early and wrap around them a process that gets them away from that culture. Often they come from homes where there is no work. This programme will get them to see and work through the fact that being in work is the best and most important thing if they want to take control of their lives.
Can the Secretary of State explain why areas of highest unemployment will suffer most in the transition to the new Work programme? In Glasgow, there will be a six-month gap between the current programme ending and the new Work programme starting. What will fill that gap? This transition will affect thousands of people in the city of Glasgow alone.
We are introducing the Work programme as fast as we can, and the summer target for that is critical. It will make a huge difference. However, I must tell the hon. Gentleman that the biggest gap is the one left to us by the last Government, as a result of the major deficit and their failure to fund any of the programmes that they said they would.
I warmly welcome today’s announcement, like Members on both sides of the House. I also welcome the rhetorical conversion of the Labour party to the importance of incentives and marginal withdrawal rates. It is a pity that they have not been a part of the discussion over the past decade. Once the programme is fully implemented, how many people will benefit from lower marginal withdrawal rates?
I can give my hon. Friend the exact figures later. I can tell him now, however, that there will be a huge uptake, because the marginal withdrawal rates will be so much better for those going back to work. I hope he will forgive me if I cannot give the figures on the spot. However, they will be significant, and people going back to work will benefit enormously. That will be a real incentive for those going back to work. He talked about how the Labour party has been converted. Sometimes, listening to Labour Members’ questions, I wonder whether they have been converted or just hate the idea that somebody is doing something they should have done 10 years ago.
The Secretary of State has said that getting people into work is the most important thing, and I agree with him. He has also given an undertaking to continue to help people with disabilities to gain employment. However, his Department has cut access to work grants to assist employers in adapting work places to facilitate the employment of people with disabilities. These are particularly important for small and medium-sized enterprises, where jobs will be created. Does he think it is time to rectify that mistake?
Actually, we are not cutting the access to work grants—[Interruption.] No, they are being refocused on larger employers. More people will get back to work as a result of what we are doing, so it will be of more benefit than the previous system.
Let us be clear. I do not want a higher welfare bill, and I do not support those who cheat the benefit system, but I do encourage the Government to take equal measures against those who cheat on their tax. The statement of about 1,200 words mentioned children only twice, in acknowledging that more than 3.5 million children will still be left living below the official poverty line. Where does the statement:
“We are developing…sanctions for those who refuse to play by the rules”
place households with babies, infants and children of school age?
A variety of programmes affect some of those groups, and the hon. Gentleman will know that extra money has been refocused on early years. The hon. Member for Nottingham North (Mr Allen) and the right hon. Member for Birkenhead (Mr Field) are producing reports on this. We are looking at dealing with those areas separately. If the take-up improves, which it will because it will be automatic, it will directly affect a significant number of people. We genuinely believe that even in a static state about 350,000 children will be lifted out of poverty. That has to be a pretty good start compared with what happened before.
The Secretary of State said that carers will be able to adjust their working patterns according to their own time scales and choose their own flexible hours. How will he ensure that employers agree to that according to the carers’ needs, rather than the employers’ needs?
The point about this system is that because it does not say that people can work for 16 hours—or whatever it is—they can go back into work. Because work pays in every hour they take, they will be able to look at 10 or 15-hour jobs—or whatever—that may be available. For each one, they can make an adjustment and say, “Well, that would suit me. I’d be able to take that,” whereas before—[Interruption.] Employers will have to advertise those jobs, because they will be available now and people can do the work. The point that I am making is that people can take those jobs now because they pay, whereas before it would not have paid them to work those hours.
Does the Secretary of State agree that one of the best ways to make work pay is to ensure that it pays not simply a minimum wage, but a living wage? What does he intend to do about that? Can he also give me an assurance that there will be some joined-up thinking and that those who are genuinely seeking work, even if they are out of work for more than a year, will not have their housing benefit cut?
The policies on housing benefit stand as they are. On the hon. Lady’s point about a living wage, I genuinely believe that the reality is that what we are doing is the best way to ensure that households end up with a living wage. In the past, because the system was so difficult and complicated, the first person into work in a household would often not be able to earn enough money to support the household. Because it will pay more to be in work, the process that we are introducing will give the first person in a household who goes into work a greater opportunity to earn enough money to support the household, allowing the option for the second earner to be just that: an option, rather than an absolute must.
In the real world, is it not the case that 18 unemployed people are chasing every vacancy and that two thirds of our unemployed people have each applied unsuccessfully for 11 positions? Let me also tell the Secretary of State that the sum of his recent utterances about the unemployed reminds one of his constituency predecessor, who at a time of mass unemployment in the 1980s told the unemployed to get on their bikes. Now, apparently, it is buses.
The reality is that the hon. Gentleman should welcome the programme that I am introducing today, because it will improve the lives of the poorest in society. I am sorry that he chooses to cavil about this. My comment on buses was simply this: people on low incomes in London and many other cities recognise that it is sometimes necessary to travel to their places of work. That is the key point. Frankly, I do not need any lectures from him, and if he and his party—[Interruption.] No, they should be prepared to accept that the recession that he refers to is the recession that they left us.
I am proud to represent a town that exists because it has work, and I am proud to have been part of a Government who, for the first time in nearly 20 years, reversed the increase in child poverty. However, I am concerned that the Secretary of State’s announcement will not achieve what I believe he intends to achieve. We know that the best way to tackle child poverty is to increase women’s income. In Slough, the average bus fare is about £3.50. His taper says that people will keep 35p in every £1 that they earn. If a woman is doing a job that she can get to while her children are at school—for four hours a day, say—she will have to work the whole time just to pay her bus fares, ending up with £4 more. Will he not take the advice of his hon. Friend the hon. Member for Kettering (Mr Hollobone) and do something about the cost of travel to work?
The hon. Lady has to admit that the one group that will be hugely affected in a positive way will be women going into work, because so many are engaged in caring and work and in having to balance the two. They will be paid more for the hours that they work, because they will retain more of their money. Of course there might be disputes and debates about whether we need to support people with travel costs, but it is a bit rich for the Opposition to give us lectures about travel costs after they left us without having done anything about them at all.
A few moments ago the Secretary of State said that if an unemployed person is trying to get a job, they will not have sanctions placed on them. Can he please explain how he reconciles that with the 10% cut in housing benefit for those who have been unemployed for more than a year?
Very simply, that is a disincentive for people to go to work. The policy stands as it is, as I announced in the debate on Tuesday, and if the hon. Gentleman had any issues to raise, he should have raised them then.
My hon. Friend the Member for Glasgow Central (Anas Sarwar) asked a reasonable question about the gap between the end of the current programmes and the start of the new programme. I am afraid that the Secretary of State departed from his general tone by giving him a fairly party political response. Will he take the point seriously? A gap of three to six months will be extremely significant, so if the new schemes are not ready, why can we not consider extending the current schemes in the meantime, to ensure that we do not leave people without the support that they need?
I believe that the programme that we have set out and the timings that we have set for it—it starts next year in the summer—will help all those who need support to get back into work. We can debate or argue about the gap, but my general view is that as employment rises and as we start that process, we will see more people going back to work, and we will be able to support them in a better way than through the previous programmes, which we believe actually cost more money than they returned.
Before we move on to the next statement, it might be convenient to remind the House that only those who are here for the statement can ask questions about it, and, just as before, I ask for single questions and pithy answers please.