Amendment of the Law
Iain Duncan Smith Excerpts(14 years, 8 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In concluding the Budget debate, and recognising what you have just said, Mr Speaker, I will take interventions. However, I will try to make some progress, as many Members wish to get in and many of the points have probably already been made.
I think that it has been an excellent Budget, given the circumstances we find ourselves in. The Chancellor is to be congratulated on focusing on his priorities, which he stated clearly, for rebuilding the shattered economy that we inherited. Let me remind the House that when Labour came to power in 1997 they received a golden economic inheritance, the like of which few Governments since the war have received, which gave them money to spend. Despite that, the painful scar of youth unemployment hardly changed, some 4.5 million were stuck on out-of-work benefits, 1.4 million had never worked at all and we had the largest structural deficit of any G7 economy. Intriguingly, the worst thing is that that point was reached even before the recession had started.
After that, things just got a whole lot worse: 5 million on out-of-work benefits; working-age poverty up; youth unemployment at a record high; more children in workless households than the rest of the European Union; and the largest budget deficit in the UK’s post-war history, of more than £150 billion. That deficit is for one year, piling on top of the outstanding debt mountain, and £120 million is spent on interest payments alone—every single day. There was even talk of an International Monetary Fund bail-out, bringing alive memories of the dark years of the late 1970s—and, of course, the House knows who was in power then.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the right hon. Gentleman not agree that two thirds of the deficit—£84 billion—was due to the financial crisis, and that the Budget’s overall fiscal tightening is £98 billion? Does he not agree that he is going too far, too fast, savaging whole communities, choking growth with cuts and stoking up inflation with VAT? Is that not completely wrong? That is why so many people marched against it.
Mr Duncan Smith
That gives me an opportunity to put the shadow Chancellor right. He said in one of the Budget debates last week that the structural deficit was low as we entered the recession. We had the highest structural deficit in the whole developed world, and intriguingly he is in denial about that, so whether he talks about debt or deficits, in reality as we entered the recession, the economy had been badly run, leaving us with a record structural deficit.
Importantly, what has been Labour’s response as a result of that? Acceptance that it had lost control; perhaps even a little humility? Not a bit of it. Instead, we have seen a desperate scramble to find almost anybody else to blame for the problems, and it appears, even today, no attempt to make any amends publicly. In the Labour playbook, the previous Government were just innocent bystanders in somebody else’s evil game. Poor old Britain. Apparently, we were just minding our own business when along came some nasty industrialists and bankers who ganged up on us in some international capitalist conspiracy. It is like some ghastly, poor script. It really does read like some really poor script from an Austin Powers movie, and I am pretty sure that any minute now the shadow Chancellor is going to try to blame Dr Evil and bring him into the script as well.
Hazel Blears (Salford and Eccles) (Lab)
Is the right hon. Gentleman suffering from some kind of amnesia? Has he forgotten that, after some 20 years of the previous Conservative Government, we had almost 3 million people unemployed? In two of my inner-city wards, I had 50% male unemployment and 75% youth unemployment. Is the right hon. Gentleman about to embark on the same mistakes that caused such massive unemployment after 20 years of the previous Tory Government?
Mr Duncan Smith
It is always a pleasure to give way to the right hon. Lady, because if anything she is always honest with her own side. I understand that quite recently she said that her own party had been pretty much unrealistic about the situation, and I seem to recall that she even said that it should be more specific about what reductions it would make. She was a part of a governing party that left this country with the worst recession, the worst deficit and massive debts, so I do not need to explain where we were in ’97; she needs to explain why we got to where we were at the last election.
Mr Oliver Heald (North East Hertfordshire) (Con)
Does my right hon. Friend think that it is actually the right hon. Lady who is something of an amnesiac? She seems to have forgotten the £5 billion a year taken out of pensions, and the fact that Labour sold the gold.
Emma Reynolds (Wolverhampton North East) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
No. I am going to make some progress, because Mr Speaker has already told us that we need to let others speak.
Let me remind Labour Members that they were the ones who let the bankers rip as they pleased, leading to a 10-year spending spree that sent personal debt to the record level of £1.3 trillion. They let public spending rip, too, but Members should not take my word for it; strangely, Tony Blair—not now spoken about much on the Labour Benches—said that
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
Insufficiently vigorous? That is possibly the biggest understatement that I have ever read. The reality is that they did nothing at all about controlling the deficit, so it is small wonder that the No. 1 priority for this coalition Government was to get the finances straightened out, and my right hon. Friends the Chancellor and the Chief Secretary are doing just that.
Mr Duncan Smith
I will give way to the hon. Lady, and then I am going to make some progress.
Emma Reynolds
Why, then, did the right hon. Gentleman’s party pledge to match our spending plans right up until the start of the financial crisis?
Mr Duncan Smith
What we are dealing with here—[Hon. Members: “Ah!”] I will tell Labour Members what the big “Ah!” is. It is “Ah, who were in government for the past 12 years?”, it is “Ah, who left us with the worst structural deficit?”, and it is “Ah, who left us with massive debts, rising youth unemployment and a total shambles from which we are going to have to pick up the pieces?”
One of our biggest challenges was getting to grips with the welfare system, which many Members on both sides of the House will recall. Spending on working-age welfare increased by some 50% under Labour, from £48 billion to £73 billion in real terms. People talk about the problems of increasing welfare spending in difficult times, but let me remind the House that that increase took place during a period of growth. Notwithstanding that extra spending, improvements were quite poor. The universal credit is about getting the incentives right. That is the sort of reform that we have to bring through, recognising that people have to see the financial benefits from taking up employment, and simplifying the byzantine benefits system that we inherited. Alongside it, the Work programme is about supporting people to be work-ready so that British business no longer has to look abroad when it wants to commit to bringing in employees.
We are finally getting to grips with a housing benefit system that has been allowed to run out of control. The failure to reform housing benefit has left us in the absurd situation whereby some benefit claimants can claim up to £100,000 a year to live in large houses in expensive areas. The local housing allowance formula was behind all this madness. I remind Labour Members that it was their Government who introduced the local housing allowance, which pumped fuel into that growth. The difference between the average award under the LHA and under the older schemes for private deregulated tenants that it replaced was an additional £10 per week, or about 10%. As a result, the costs of housing benefit rocketed from £14 billion in 2005-06 to £21 billion in 2010-11. Left unreformed, the housing benefit budget was projected to reach £24 billion in 2014-15. That is, frankly, unsustainable and unacceptable to hard-working British taxpayers.
Housing benefit is an issue on which Labour Members have shown themselves at their very worst. First, we got ludicrous claims about social cleansing from central London, whipping up fury and fear. [Hon. Members: “That started with you.”] No, it started with them, and I know exactly who it was. Then, on top of that, we were told that the real reason was that we are a Government bent on some kind of plan for ethnic cleansing. Labour Members are not averse to a bit of dog-whistle politics when it suits them, scaring some of the most vulnerable people in society and leading them to fear what is coming next.
The problem is that the Labour Government had over 10 years to get to grips with the welfare system, and literally nothing was done about it—it was fiddle, more fiddle, and more expense. The Office for Budget Responsibility has confirmed that as a result of the changes to expenditure that we brought through, we remain on track to eradicate our structural deficit over the course of this Parliament.
It is important, too, to reflect on how the Budget for growth has gone down with people. Sir Martin Sorrell says:
“The coalition from the very beginning had said it was crucially important that Britain had a competitive tax landscape. They've gone further than I expected on corporate”
tax
“and also on personal taxation.”
He went on to say that
“it looks as though we will make that recommendation”
to return his company’s headquarters to the United Kingdom. That is a real endorsement.
A letter in The Daily Telegraph yesterday from 39 leading venture capitalists stated:
“These changes are a shot in the arm for enterprise. Thanks to them Britain is being positioned as a world-class place to launch new businesses. Now British entrepreneurs and those relocating to Britain will find it easier to raise the funds they need to do what they do best: create and expand world-beating businesses.”
John Cridland, the CBI director general, said:
“This Budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”
David Rutley (Macclesfield) (Con)
I wonder whether my right hon. Friend has seen the latest statement from the Institute of Directors, which says that 58% of company executives are now more confident about the long-term economic outlook, and that just 9% are less optimistic.
Mr Duncan Smith
I am bowled over by that—what can I say? That was a timely intervention by my hon. Friend. I apologise for not producing that point myself. It is yet more evidence that this Budget, which was shaped by my right hon. Friends the Chancellor of the Exchequer and the Chief Secretary to ensure that Britain is open for business, has opened it for business. That is what business men are saying.
I want to bring one more person to the attention of the House. This tribute is perhaps more difficult for the Opposition to cope with. It is from none other than Duncan Bannatyne—a great name. He said:
“This Budget has convinced me that George Osborne is serious about growth and enterprise.”
I remind the Opposition that he was a huge and strong supporter of the previous Government. Even when almost every other business man had deserted them, he still supported them. To use his own wise words, he has said, “I’m in!” I think that the rest of the country is too.
Getting to grips with the public finances is just the starting point, not the destination. Of course we have to balance the Budget, but this Government are about much more than that. Our ambition is to make the next decade the most dynamic and entrepreneurial in Britain’s history. That is why we have set out plans to create the most competitive tax system in the G20. That is why we are reducing the rate of corporation tax yet further from 28% to 26% in 2011-12, and crucially, all the way down to 23% from 2014-15. That will give the UK the lowest rate of corporation tax in the G7. I thought that I would hear a cheer from the Opposition for that, because they must surely want that to happen. Perhaps they do not.
That ambition is why we are making the UK the best place in Europe to start, finance and grow a business. We are supporting small firms with a moratorium on domestic regulation, which will give them a real chance to plan and to get going. We are investing £100 million in science capital development. That ambition is also why we are encouraging investment and exports as a route to a more balanced economy. We are setting up 21 new enterprise zones with superfast broadband, lower taxes and low levels of regulation and planning controls.
From our perspective, we can see that even as the economy grew under the previous Government, too many people in this country missed out. More than half the additional jobs that were created went to foreign nationals. It is therefore hardly surprising that youth unemployment was higher when we came into office than when Labour took power. As growth picks up again, we have to ensure that this group does not miss out once more. Some 900,000 additional jobs will be created over the course of this Parliament, and our welfare reforms are about ensuring that our people are ready and able to take them.
The previous Prime Minister spoke about British jobs for British workers, but the reality is that most of the jobs did not go to British workers. That point is not about immigration, but about supply and demand. We have to ensure that British workers are ready and able to take the jobs. That is why this Budget introduces new and hugely welcome measures to provide extra support for young people. They will be helped to find sustainable jobs in the private and voluntary sector. We will fund an additional 50,000 apprenticeship places over the lifetime of this Parliament, and importantly, 40,000 of them will be targeted at the young unemployed. That is on top of the 75,000 places announced last year.
Overall, with the new measures in the Budget, the Government will deliver at least 250,000 more apprenticeships over the next four years compared with the previous Government’s plans. Those apprenticeships will be very valuable, because they will give young people in particular, but others as well, real training, real skills and a proper job at the end of it.
Alongside that, we are aiming to assist in the process of getting apprenticeships by providing up to 100,000 work experience places over the next two years. Those placements will last a minimum of eight weeks, rather than the two weeks made available under the previous Government. We will also offer employers an extra linking month when it will provide a route into an apprenticeship. If an employer says after the eight weeks that they will put a young person into an apprenticeship, or even into work, we will be prepared to give the young person an extra month of work experience so that the employer can sort out whatever is necessary without having to let them drop out of the company.
That work experience will be a crucial head start for young people. As David Frost of the British Chambers of Commerce said in January:
“Employers will be key to getting young people into work. This programme is a way of not only providing quality work experience but also of introducing individuals to the modern world of work.”
The programme has also got the backing of Hayley Taylor, star of Channel 4’s “The Fairy Jobmother” series, whom I saw the other day—a great woman. She has said:
“It’s hard to get a job with no experience, and you can’t get experience without a job. That’s why this work experience scheme is a really good idea.”
However, this Budget is not just about securing the position of workers today; it is also about securing their position in the future, as they enter retirement. We have done a great deal for current pensioners. We have restored the earnings link and given a triple guarantee that the basic state pension will rise by the highest of the growth in average earnings, the prices increase or 2.5%.
Mr Duncan Smith
Yes, exactly. That will provide a really generous state pension that gives a firm financial foundation. Someone retiring today on a full basic state pension will receive £15,000 more over their retirement than they would have done under the old prices link. We have also permanently increased cold weather payments from £8.50 to £25.
Notwithstanding the prospects of today’s pensioners, the prospects for the next generation are very different. I hope that Members of all parties will recognise that those who are not near to receiving their pension, and who perhaps are just starting their career, face a very difficult time indeed.
Albert Owen (Ynys Môn) (Lab)
On the subject of pensioners, was the Secretary of State as disappointed as I was that the Chancellor did not have the guts to mention in his Budget statement that he was reducing the winter fuel allowance from £400 to £300? His decision not to continue with the £400 payments comes after he said they would be protected and permanent in future. Some 12 million pensioners will be upset by the Government’s policy not to continue with them at a time when bills are going up year on year.
Mr Duncan Smith
I am interested that the hon. Gentleman raises the matter, because it was originally mentioned in the comprehensive spending review. We have stuck to the last Government’s plans on the winter fuel payment. In fact, I was intrigued by the issue so I looked up what the right hon. Member for Edinburgh South West (Mr Darling), who is in his place, said when he was Chancellor. He said a lot of straightforward things, and I congratulate him on that. He said about the winter fuel payments that they
“were temporarily increased to £250, and £400 for the over-80s…I will guarantee this higher winter fuel payment for another year.”—[Official Report, 24 March 2010; Vol. 508, c. 263.]
When we look at the Red Book produced at the time, we find that there was no allocation for any more winter fuel payments. We stuck to the last Government’s plans. Perhaps the hon. Member for Ynys Môn (Albert Owen) should ask his right hon. Friend why he did not plan for more. We did exactly what we said we would do.
The real problem is that 7 million people are not saving enough for the retirement that they want, and few will be able to rely on a guaranteed income in retirement, because the numbers saving in defined benefit schemes in the private sector have more than halved in the last 20 years. In fact, less than half of the entire working-age population is currently saving in a pension at all.
Our plans automatically to enrol all workers in a pension scheme will make a real difference—we have continued the work started by the previous Government—but my hon. Friend the Minister and I do not think that auto-enrolment will work unless it pays people to save, which is why we have determined finally to get to grips with the state pension. As all hon. Members know, not only is the state pension extremely complex, leaving millions of people unsure as to what they will receive in retirement, but it completely fails to reward those who make the effort to save but who do not quite get there.
Too many people reach state pension age having scrimped and saved all their life to find that others, who have not saved or who have made no effort to save, get the same income as them through pension credit. The Budget is about rewarding those who do the right thing, which is why we will shortly publish a Green Paper on state pension reform, with an option for a single-tier state pension, which will provide a clear foundation for saving. We currently estimate that it will be set at around £140 a week, which is above the level of the means-tested guarantee credit, but we must send out the clear message across the welfare and the pension systems that people will be better off in work than on benefits, and better off in retirement if they save.
Glenda Jackson (Hampstead and Kilburn) (Lab)
If the change in the pension system is to benefit the whole country and all pensioners—current and future—why have the Secretary of State’s policies targeted specifically women born between ’53 and ’54? They expected to retire, but now discover that they must work at least four years longer. That does not strike me as a policy that benefits the entire population.
Mr Duncan Smith
The hon. Lady’s comment on working four years longer is simply incorrect, but I take what she says. The reality is that the Government are doing what we were asked to do—equalise the ages—and increasing the age to 66. I recognise the group she mentions, but they will be covered and supported in other ways anyway, so this is not a loss—
Mr Duncan Smith
It is not a specific group in the sense that they were targeted. That policy is part of trying to get the pensionable age up first to 65, and then to 66.
Mr Frank Field (Birkenhead) (Lab)
The House will be pleased that the Government want to move to a standard pension of about £140 a week, but how will that be paid for? Will it be by pooling the contributions of those who have already paid under the national insurance and state earnings-related pension schemes? If so, how many will lose out, and what sort of message would that send to people about saving?
Mr Duncan Smith
First, we will publish the Green Paper very shortly. We are finalising it, so I do not want to get into the full detail now, but I promise the right hon. Gentleman that we will answer all such questions. Less means-testing is the key. I leave him with that thought, but I will tantalise him not much longer: there is some really good stuff coming in the Green Paper, and I am sure he will find every reason to support it, given that he has been so positive about pensions for many years.
Alec Shelbrooke
Like many hon. Members, I have received representation from constituents who wonder why there is a two-year jump in the pensionable age. Will the Secretary of State outline why that must be done?
Mr Duncan Smith
That is to do with the process of equalising, which we are doing slightly faster. It is in the interest of the nation and individuals for us to do that. If we do not do it, there is a cost implication, which could be as high as £10 billion. I say simply to my hon. Friend that if the Opposition and others do not want to do that, they should please let us know where they think the money will come from.
We are making responsible choices for the British economy. I am particularly proud of the decision we took with my right hon. Friend the Chief Secretary to the Treasury on the potential for a single-tier pension. That is in stark contrast, I think, to the mess we saw from the previous Government. What is interesting is that the Labour party has been out of power for 10 months, but listening to what Labour Members say about the current situation, one would think that it has been more like 10 years and that they had nothing to do with it. They do not know whether they are coming or going. Interestingly, half of them seem to support the Darling plan, and the other half do not. For the shadow Chancellor, it rather depends on who asks him, when they ask him, and what time of day it is.
It seemed that the Labour party would not cut, but then we heard that theoretically it would. More frightening still, it has made it clear how it would spend more of our money. Notwithstanding the plan set to start on 1 April, in the past month or so, the Opposition have made some £12 billion of unfunded spending commitments, which actually makes their spending profile even worse. They will tell us that it would all be funded by an extra tax on the banks. Oh dear! I remember that they used to attack the Liberal Democrats for making a similar claim over the extra 1p on income tax. They said, “This is the longest p in history.” Well, this is now the biggest, longest tax in history. It would have to be raised at least six times to pay for the sort of commitments they have engaged in. However, we should not be surprised to discover that fiscal mathematics is not Labour Members’ strong point.
Now we see the Leader of the Opposition joining a march for an alternative solution. I personally hope he has found it, but I do not think he did on the podium the other day. Instead, we see that he is now linked with some of the great names of history: the suffragettes, the anti-apartheid movement and Dr King in America. I am pleased that the Leader of the Opposition also has a dream, but for us it is not having a dream that matters, but that soon enough he should wake up and smell the coffee. The reality is that this Government are sorting out the deficit; this Government are getting Britain back to work; this Government are dealing with the mess that Labour left; and meanwhile they are in denial.
Mr Duncan Smith
Now that the right hon. Gentleman is into the Darling plan, will he specify what those cuts are, what he supports right now, and therefore what the plan really is? After all, it was due to come into force three days from now.
Mr Byrne
I have just gone through them. They involved £57 billion-worth of discretionary action—[Interruption.] The difference between us—[Interruption.] Well, let us take the Secretary of State’s own Department. Regarding the £18 billion savings in annually managed expenditure, we said that where there is a temporary switch from RPI to CPI for the next three years, we will support that; where there is a need to reform the disability living allowance, we will support it; and where there is a need to introduce new limits on employment and support allowance, we will support that. We do not think, however, that the Government should introduce reform simply by cutting. They should couple some of those reforms with the need to look again at the support that working families actually need.
Mr Duncan Smith
Okay, now we are into this specifically. DLA reform has a line item in the Budget of about £1.4 billion in savings. Does the right hon. Gentleman consider that to be a reduction that he supports?
Mr Byrne
The Secretary of State put in place a programme to make the cut before he figured out what reform was actually needed. He is under such pressure from disability groups because he is not listening to the voices of disabled people in this country telling him what kind of support they need in order to live full and fulfilling lives. That is because he is locked into a programme that is putting more people on to the dole and sending benefits bills through the roof. He is beginning to fracture the bonds of support between the Government and the people in this country who need extra help. He should not be abolishing DLA; he should be reforming it. He should also start listening to the needs of disabled people.
Mr Duncan Smith
I am intrigued by this. The right hon. Gentleman now seems to be at odds with his shadow Chancellor, who in his opening speech in the Budget debate last week, in response to a specific question about what spending cuts he wanted in the coming year, said:
“We said…that we would go ahead with the disability living allowance gateway reforms.”—[Official Report, 24 March 2011; Vol. 525, c. 1142.]
That involves £1.43 billion. Does the right hon. Gentleman support that now?
Mr Byrne
No, because we have not specified—[Hon. Members: “Ah!”] We have not specified the level of cuts or savings that we think should come from DLA. The Secretary of State knows as well as I do that we believe that a gateway should be introduced for DLA—[Interruption.] He should listen to this, because it speaks to the concerns of millions of people with disabilities. He has said that he is going to cut £1.4 billion from DLA, and, in written answers to the House, he has said that 170,000 fewer people will receive that benefit in the future—[Interruption.] The Secretary of State might just want to listen to the implications of this. It is a bit late for him to be getting a briefing on his DLA reforms from his own Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller). If he is cutting DLA for 170,000 people and cutting £1.4 billion from that benefit, £8,500 will be cut from each of those 170,000 families. Will he intervene on me again and tell me whether he understands that that is the implication of his benefit cut?
Mr Duncan Smith
I have a very simple question. The shadow Chancellor said that he supported the reform, which has a very simple line item in the Red Book. The right hon. Gentleman now says that he does not support it. This is the problem: the Opposition have no idea what they are doing. No wonder the British public are fed up with them.
Mr Alistair Darling (Edinburgh South West) (Lab)
In the short time available, I shall not follow up on any points made by the right hon. Member for Hitchin and Harpenden (Mr Lilley), except to say that when he talks about any element of fairness in the Chancellor’s last Budget and this Budget as regards those on the top incomes, I think he will find that some of the things he talks about have more to do with measures that were announced by the previous Government than with those announced by this Government.
In many ways, the Budget is an annexe to last June’s Budget, which set the direction for this Government and the tone for this year’s Budget. I want briefly to consider how that will impact on this country as well as what is happening in other parts of the world. Although it does not quite fit the Tory story, what is happening to our economy will be very much influenced by what is happening in other parts of the world.
In some ways, it is quite remarkable that the global economy is growing at all. Three years ago, when the International Monetary Fund reported for the first time that it had stopped growing, it was possible that we were in for a serious downturn. It is now growing, but it is a two-speed recovery that is strong in Asia and far less so in the west. In Europe, we see strong growth in Germany and far less growth in southern Europe in particular. Here at home, manufacturing is doing well because the pound has depreciated, but the service and business sectors are not doing so well at all.
The recovery in this country and in Europe is fragile. We saw the economy grow more strongly than we expected in quarters two and three—the summer and autumn of last year—although again that had an awful lot more to do with measures that were implemented before rather than after the general election. We saw a sharp slow-down after that, which was largely brought about by people’s fear of what was to come. People are losing confidence—we saw the confidence survey published just after the Budget last week—and that should worry any Government. If we continue to get sluggish growth, the risk is that we will bump along the bottom and we will not get the jobs or growth on which this country depends.
Incidentally, I followed with interest what the Secretary of State said but one question that he failed to answer was that put by my hon. Friend the Member for Wolverhampton North East (Emma Reynolds): if our spending was so wrong, how come the Conservatives supported it right up until the end of 2008 and the Liberal Democrats supported it until a week after the general election, when they promptly changed their minds? The Secretary of State has revealed this afternoon that he is not quite the details man I remembered, but he might care to note that our structural deficit in 2006, according to his Government’s own measure, was 0.4%. It is simply not true to suggest that all our problems today are the result of spending. The main problem that we faced was an acute banking crisis that hit us and hit other countries in the world. That is why we are not the only country to have a very large deficit.
Mr Duncan Smith
I am listening to the right hon. Gentleman with great interest and respect, but I want to get this absolutely straight because one of his right hon. Friends said this the other day. The OECD measurement of the UK’s structural deficit in 2007 was 3.9% of GDP, the highest in the G7. Can he confirm that?
Mr Darling
The structural deficit was 0.4%. Throughout the past decade, we were spending money, but I must say, as a Minister in that Government, we were greeted with calls from the then Opposition not to spend less but to spend more on just about every occasion. They cannot have it both ways.
What worries me is that as we look forward, we face a number of pressures that are a threat to sustained recovery in this country. We, along with most other European countries, are following a deflationary policy and we are doing it together. This is not like Canada or Sweden 10 years ago, who reduced their deficit on the back of rapidly expanding neighbouring economies. That will have an effect. America, sooner or later, will have to deal with its very large debt problem that has been overhanging that country since the Bush years. That is not a recent phenomenon but it will have to be dealt with and it will have a knock-on effect on the rest of the world’s economies.
On inflation, for 10 years we in the west have lived off cheap goods coming from the far east. Now what is happening, as one would expect, is that those economies are growing and there are inflationary pressures. Commodity prices are increasing and wages are starting to go up, so those days are finished for us. It worries me that we are likely to face deflation as a result of Government policy with inflation as well. All that will result in lower growth, which is exactly what the Office for Budget Responsibility has said.
Oral Answers to Questions
Iain Duncan Smith Excerpts(14 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Claire Perry (Devizes) (Con)
1. What assessment he has made of the potential effects on gender equality of the implementation of his proposals for universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Before I answer this question, I would like to take the opportunity to offer my condolences—and those, I hope, of the House—to my hon. Friend the Member for South East Cornwall (Sheryll Murray), who had tabled a question for today, but whose husband tragically died last week.
As set out in the equality impact assessment published earlier this month, the effect of the universal credit measures and the Welfare Reform Bill on gender equality are approximately equal; and universal credit will see significant improvements in incentives for both men and women to work. We expect the new system will be particularly helpful to lone parents, including those who are looking for work that will fit in with their children’s schooling.
Claire Perry
Many working mothers in my constituency are concerned that the universal credit will mean the loss of their working tax credit and access to child care support. Will my right hon. Friend confirm that support for child care costs will be provided through an additional element as part of the universal credit?
Mr Duncan Smith
That is absolutely what we plan to do. We will bring forward our proposals shortly. The idea is that the available money will continue to be used for child care support. We recognise how important child care is in helping parents, particularly lone parents, to fit in their obligations to work and to look after their children.
Kate Green (Stretford and Urmston) (Lab)
Witnesses to the Welfare Reform Public Bill Committee stated last week that incentives for second earners to move into paid employment would be reduced in many cases under universal credit. Will the Secretary of State tell us what assessment has been made of the impact of the universal credit proposals on second earners and on women’s economic independence?
Mr Duncan Smith
Yes. The majority of existing and potential second earners will not, on the basis of the figures I have looked at, be affected by the reforms, because the household already has earnings that take them beyond the reach of the benefit system. Approximately—I stress this is an approximate figure—300,000 second earners may see a deterioration in the incentive to increase their hours, and it is possible that some second earners will choose—or may choose as a result of their home commitments—to reduce or rebalance their working hours or leave. However, universal credit will provide much better incentives for the first earner, giving a greater choice to the household about how it wishes to spread its income.
Stephen Timms (East Ham) (Lab)
The Secretary of State told us on Thursday that the Government have not yet decided how to support child care costs in universal credit. Is he yet in a position to assure women with children that in the new system they will be better off in work—after child care costs have been taken into account?
Mr Duncan Smith
We are going to bring forward our proposals. It is because we acknowledge the importance of this area that we want to get it right. We are going to consult and we want people to recognise their priorities and have the opportunity to decide with us what they think those are. It is our intention—this can be stated absolutely, because it is the purpose of universal credit—to ensure that people will always be better off in work than out of work.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
2. What estimate he has made of the number of people in Halifax who will be affected by planned changes to disability living allowance.
Nick de Bois (Enfield North) (Con)
8. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Welfare Reform Bill introduces a fundamental reform of the benefit system and should ensure that work always pays. The universal credit will improve earnings incentives for some 700,000 people and could reduce the number of workless households by about 300,000.
Damian Hinds
Casual work and temporary work are important routes into employment, but many people are put off them, not only by benefit loss but by the complexities they will face. How will my right hon. Friend’s welfare reform programme help to address that disincentive?
Mr Duncan Smith
One of the complexities that most people face is the fact that two Departments administer what are, in essence, benefits: the working tax credit and the Department’s own benefits system. One of the problems that occurs is that people in difficulty often find it difficult and stressful to figure out who they are supposed to notify of the changes taking place in their lives, their working hours and so on, and they have to go to two Departments to deal with two sets of figures. That will all be sorted out as we bring those together under one benefit. First, these people will not have to notify so many people, and secondly, universal credit will pick up a great deal of that through the real-time system.
Nick de Bois
Does the Secretary of State agree that in addition to the incentives in the Welfare Reform Bill, community initiatives such as the Enfield jobs club, which we launched this morning, play a vital role in securing employment, as does the support of a national charity such as GB Job Clubs?
Mr Duncan Smith
May I take this opportunity to congratulate my hon. Friend on his job club, whose launch I attended? This is a good example of an area where Members of Parliament can help enormously, because by working with their local jobcentres to set up these job clubs, which we now discover work incredibly well with those who are out of work, people can be given real enthusiasm and hope for the future.
Nic Dakin (Scunthorpe) (Lab)
Can the Secretary of State give a clear commitment that nobody will be worse off in work when child care and other costs, such as the cost of school meals, are taken into account?
Mr Duncan Smith
With respect, I think the hon. Gentleman will have to wait until I bring the proposals forward. As I said earlier, there is no point in introducing the universal credit unless we stick with our principle that work should always pay better than being out of work.
Ms Karen Buck (Westminster North) (Lab)
Work incentives are only effective where there is work. As we now know, unemployment is projected to be at or above 2 million for the life of this Parliament. Will the Secretary of State update us on whether the Treasury has provided him with additional funding to expand the Work programme so that it can take up the additional demand from the workless?
Mr Duncan Smith
The Work programme is well set to cope with all the ups and downs that might take place over the next few years. The reality is that the Opposition go on about there being no jobs, but even now, advertised through the jobcentres, nearly a million new jobs have been placed in the past three months—that is 10,000 a day and about half the total number of new jobs created in the outside world. I say to the hon. Lady, with respect, that we are making these reforms and changing this complex system because more than half those jobs are likely to go to those from overseas, which does not help at all unless we reform the system to ensure that British people get a shot at the jobs, too.
Mr David Burrowes (Enfield, Southgate) (Con)
9. What support his Department provides for mothers who wish to stay at home to care for their children.
Sajid Javid (Bromsgrove) (Con)
20. What estimate he has made of the likely effects on welfare expenditure of implementation of the provisions of the Welfare Reform Bill.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In real terms working age welfare spending climbed by 54% over the past decade from £48 billion in 1999-2000 to £74.7 billion in 2009-10. The explanatory notes to the Welfare Reform Bill report that there will be savings of some £960 million in 2012-13,rising to around £3.9 billion in 2014-15. We have also set aside £2 billion to cover the costs of implementing the universal credit.
Sajid Javid
This Government inherited a record Budget deficit, which rightly requires the re-examination of every Department’s spending. Instead of getting constructive suggestions from the Opposition, we too often get opportunism, including a demeaning comparison this weekend between protesters, civil rights marchers, people who fought for women’s rights and anti-apartheid campaigners. Does my right hon. Friend believe that the best way to bring down our welfare bill sustainably is to get people back into work by giving them the right work incentives?
Mr Duncan Smith
My hon. Friend is absolutely right. The key is to get people back into work, to reform the system so that it is simpler and to ensure that work always pays. As we approach April, when the Darling plan was meant to start, I have yet to hear one single figure for anything that the Opposition say they would have reduced, had they introduced it. Instead, apparently, the Leader of the Opposition now lines himself up with Pankhurst, Mandela and Martin Luther King. Miliband does not quite work, does it?
Hywel Williams (Arfon) (PC)
What account does the Secretary of State take of arguments by disability campaigners such as my constituent, Mr Rhydian James, who points out that much of the increased cost of the system is due to demographic matters and to reduced under-claiming?
Mr Duncan Smith
The hon. Gentleman will therefore be pleased with the design of the universal credit, because the one thing that it will tackle hugely, which is why there is an extra cost to it, is under-claiming, which will stop. Those who are eligible and who should have their money will be able to get it. Better still, that will improve the level of those coming out of poverty, as opposed to what happened under the previous Government.
Angie Bray (Ealing Central and Acton) (Con)
The Secretary of State may recall a row that broke out when a family on benefits was moved into a house in Acton worth well over £1 million, which people on average salaries would only dream of. Does he agree with those constituents who tell me that these reforms are fair not only to those in work, but to the taxpayer? Why has it taken so long for common sense to prevail?
Mr Duncan Smith
Most people who work hard and who are on marginal incomes will consider it reasonable that the benefits system does not pay more than average earnings, which turn out to be about £36,000 gross. Most people who are in work would consider that to be a reasonable level of income. Those who complain about that complain about something that they should have resolved anyway.
Margaret Curran (Glasgow East) (Lab)
Of course, the Secretary of State will have received many representations from carers’ organisations about the Welfare Reform Bill and its likely impact. In reply to a written question I tabled last week, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), who has responsibility for disabled people, stated that she did not yet know what impact the new personal independence payment will have on carers, yet the Bill is now in Committee and PIP will be decided in just a matter of weeks. Will the Secretary of State confirm that PIP will remain a passported benefit from carers’ allowance, how many carers will be affected by the change and how many carers will lose as a result of the changes being introduced by the Government?
Mr Duncan Smith
I can say to the hon. Lady, much as my hon. Friend the Under-Secretary has before, that we are reviewing all of this. The purpose is to ensure that those who are involved in caring will get greater and better support and that they will be better cared for themselves. The reality is that we chose for that reason not to take carer’s allowance into the universal credit, which the hon. Lady has not touched on, because that would have meant that some people might have lost out.
Mr Peter Bone (Wellingborough) (Con)
21. What plans he has for the future of disability living allowance; and if he will make a statement.
Laura Sandys (South Thanet) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
This Government inherited a youth unemployment crisis, and to tackle the problem the Chancellor’s Budget announced 100,000 new work experience places and funding for an additional 40,000 apprenticeships, on top of the 75,000 places that we announced last year. That is a far better way of helping young people into sustainable jobs and long-term careers than some of the rather expensive and ineffective programmes that we inherited.
Laura Sandys
I would like to associate myself and my local fishermen with the condolences that the Secretary of State paid to our hon. Friend the Member for South East Cornwall (Sheryll Murray).
I, like many other hon. Friends, am taking on an apprentice, and I wondered what the Department was doing to support apprenticeships and work placements, which are so crucial to giving young people that first step in the workplace.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
May I start by associating Opposition Members with the condolences expressed to the hon. Member for South East Cornwall (Sheryll Murray)? The circumstances that the Secretary of State outlined were extremely tragic.
May I return the Secretary of State to our debate this afternoon and ask about what the Prime Minister said to the House last week? He said that he had no plans to proceed with the removal of the mobility component of disability living allowance, and the Under-Secretary of State for Work and Pensions, his hon. Friend the Member for Basingstoke (Maria Miller) appeared to confirm that this afternoon. Yet, two hours after the Prime Minister sat down, his right hon. Friend the Chancellor said that he was ploughing ahead with making the savings. Whose side is the Secretary of State on? The Prime Minister’s or the Chancellor’s?
Mr Duncan Smith
I am on the side of both of them, to be quite frank. I make it my business to be so—although it is not always necessarily reported accordingly.
The situation, as I, the Prime Minister and even the Chancellor have outlined, is very simple. We have a requirement to look at the whole disability living allowance spectrum, of which the mobility and mobility in care homes components are part. As I said the last time I was asked about the issue, we are absolutely setting out to make sure that the current overlaps and deficiencies in an incredibly messy and complex system, whereby local authorities, care homes and the Department all tread on each other’s toes, are sorted out and do not exist, so that the mobility component that is required for people in care homes will exist after we have completed that work.
Mr Byrne
I am grateful for that answer, which is familiar to many in the House. If the proposal were to be dropped, however, the Red Book would show that from 2013 the savings would be returned. In fact, it shows no such thing. Indeed, page 44 of the Budget states that up to £500 million more will be removed from the residential care component than originally planned; and, in a parliamentary answer to me, the Secretary of State says that 100,000 fewer people will be in receipt of DLA by the end of the Parliament. Can he see now why people with disabilities are so worried about his plans?
Mr Duncan Smith
The letter I sent to the right hon. Gentleman and, I think, to others is quite clear. The point I am making, and I make again, is that the purpose of what we are doing—what the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) is engaged in—is to review a complex system, which does not work very well. Many people who need disability living allowance often do not get it; people, when they go back to work, are confused about whether they will still receive it; and people often feel that they should not take work because they think that the allowance is work-related, which we know it is not. So, that complex system, which the previous Government left to us, has to be reviewed. Many have welcomed the review, and at the end of it we will make decisions that benefit those who need DLA.
Mark Menzies (Fylde) (Con)
T3. I should like to ask the Secretary of State what advantage he sees in placing young people on to apprenticeship schemes as opposed to a six-month placement on the Work programme.
Neil Carmichael (Stroud) (Con)
T4. In my constituency, a large number of individuals come to my surgeries worried about being passed from pillar to post in the complicated welfare system that we have. Can the Minister give me some reassurance that the reforms are going to make it much simpler, especially in connection with people wanting to establish businesses?
Mr Duncan Smith
I can give that assurance to my hon. Friend. We have inherited a system that has huge in-built disincentives and perverse incentives for people to do the wrong thing. The idea of this reform—the universal credit, alongside the Work programme—is that people have a clear understanding of what they will earn when they go to work. They will not need to have the brains of a professor in mathematics to figure it out; they will find it out themselves, and that will incentivise them to stay in work and not be put off by having to report to 50 different people.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T5. In his earlier response, the Minister implied that levels of winter fuel payment under Labour were based on the electoral timetable. In fact, the UK has the highest level of excess winter deaths, according to National Energy Action. Can he explain why pensioners in my constituency will be receiving less this winter than last?
Karl MᶜCartney (Lincoln) (Con)
T7. My right hon. Friend is no doubt aware that my constituents in Lincoln help to fund welfare spending in this country. Welfare spending has increased from £132 billion 10 years ago to £192 billion at present—an estimated real-terms increase of 45%. Will he assure me that even in these difficult economic times, this Government, unlike the last Labour Administration, will do all they can to help people in Lincoln who are genuinely able to move from welfare into work?
Mr Duncan Smith
I can give my hon. Friend that reassurance. He should be reassured by the fact that this Government are doing more to reform the archaic benefits system, which is full of all the traps to which he referred. That will benefit those who are in work. One big reason why they have to pay more tax is that the last Government left us with a nightmare system that prefers to keep people out of work than in work.
Alison McGovern (Wirral South) (Lab)
Having work experience and money reserved for apprenticeships will not automatically equal a reduction in unemployment among young people. When will the Minister report to the House on the unemployment that is faced by young people, and what will he do if the numbers do not fall?
Mrs Mary Glindon (North Tyneside) (Lab)
By insisting that widows’ pensions should be treated as unearned income under the universal credit, widows will lose a large slice of their pension. How can the Secretary of State justify that?
Mr Duncan Smith
The hon. Lady knows that we are looking at all these matters. I am happy to discuss that matter with her if she wants to talk to me.
Stuart Andrew (Pudsey) (Con)
T10. I have been approached by a number of constituents who are private landlords, who are concerned that they have not received payments that have been made to their tenants. What measures are the Government considering to alleviate that problem?
Welfare Reform Bill
Iain Duncan Smith Excerpts(14 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I beg to move, That the Bill be now read a Second time.
The Bill before us today covers a number of areas, but I hope that it sets a new course for the welfare state. I believe it will enable us to reach out to some of the groups of people who have become detached from the rest of society—trapped, too often, in a permanent state of worklessness and dependency. For the sake of the House, I will go through the relevant clauses of the Bill. I am sure that colleagues on both sides of the House will want to intervene. I hope they will recognise that we shall get to most of the clauses that they want to discuss, but I will take interventions as and when they come.
The problem is that although from 1992 to 2008 this country saw some 63 consecutive quarters of growth, and 4 million more people were in employment by the end of that period, before the recession had even started we still had some 4 million-plus people on out-of-work benefits. The question is: where did all those jobs go? Under the previous Government, over half of the jobs created went to foreign nationals. This is not an immigration point; it is a point about supply and demand. There were a group of people in this country completely unable, it appears, to take advantage of that long period of growth and job creation. In essence, the key point about the Welfare Reform Bill is that it is intended to help that group.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I am grateful to the right hon. Gentleman for giving way so early. I wondered whether, at the outset, he would like to comment on the reports in today’s Telegraph that the cancer charities are warning that his proposals for employment and support allowance will penalise those who do not recover soon enough. How could anyone think that that is a fair approach, in a Bill like this?
Mr Duncan Smith
I think the report was in The Guardian. I do not know whether it is in The Daily Telegraph.
Mr Duncan Smith
I read The Guardian; he reads the Telegraph. What can I say? Times really are changing.
I have read the report, and I think that a number of elements in it are simply not altogether correct. I say that rather carefully because the point about the cancer aspect is that, as the hon. Gentleman knows, we inherited from the previous Government a process of reform and change to the employment and support allowance, which included the work capability assessment. We supported that, with the previous Government, because it was the right thing to do—to look at the 1.5 million people on incapacity benefit and check them over. We did not inherit any real allowance for cancer sufferers. It is important to make this clear. The Employment Minister, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), immediately accepted the internal reviews, but went further. He asked Professor Harrington to conduct a review of what we did regarding cancer patients and others, and the hon. Gentleman, being a generous individual, will know that we then incorporated a big change, so that a person in cancer treatment—chemotherapy—who is between treatments will go straight on to the support element. Thus the contributory aspect will not affect them, because while they are on the support element they will continue to be supported when they are out of work.
Mr Duncan Smith
One second. Would the hon. Lady forgive me? I have been asked to answer a question and I shall try to answer it. We have already made some very substantial change to support people in cancer treatment. The concerns of Macmillan and others relate to oral chemotherapy. I understand that. We have already asked Professor Harrington, in his second review, to undertake to give some advice on that. We have a slight problem with that from the start, because it is a fairly new form of treatment and a limited number of people are on it. So far, much of the medical evidence suggests that it does not affect people in the way that intravenous chemotherapy does; it is not as debilitating. We remain open to that evidence.
Although there is no provision for oral chemotherapy right now, my right hon. Friend the Employment Minister has made it clear that Professor Harrington will review the subject and take evidence, and we have asked the cancer groups to offer up their thoughts and advice, in addition to the medical fraternity. We will take account of what Professor Harrington says. As the hon. Member for Birmingham, Selly Oak (Steve McCabe) knows, last time we adopted all the recommendations in the professor’s report in their totality. So we are not in the business of trying to harm or affect cancer patients; quite the contrary. We made some very serious changes to what we inherited from the previous Government—I would like to think that they would have done the same—and we will continue to do so. I hope that answers the hon. Gentleman’s question. If he will let me get on with the rest of the Bill, I will.
Naomi Long (Belfast East) (Alliance)
Will the right hon. Gentleman give way on that point?
Mr Duncan Smith
I would like to make a bit of progress, if the hon. Lady does not mind. I think I have been pretty generous on that aspect. I will return to it.
The key is that I hope the Bill in general—we shall get to the more specific elements later—represents a whole new concept: a contract with people who are in need of support. For those who are able to work, work should pay, and for the most vulnerable in society we will continue to provide the support that that they need. I think it is our duty to do so. We can debate the levels of that support, but it is our duty none the less.
The Bill says to the taxpayer, “Your hard-earned money must be spent responsibly.” We sometimes forget, in our debates on welfare, that the taxpayer is also a player in this, because taxpayers—many of them on low and marginal incomes—are constantly being asked to pay in taxes towards support for others. That is fair, but we have a responsibility to ensure that taxpayers too are properly supported. I shall now outline some of the principles of the Bill, and then I will try to get through the various clauses.
Mr Andy Slaughter (Hammersmith) (Lab)
Will the right hon. Gentleman give way?
Mr Duncan Smith
Forgive me; I want to make progress before I take more interventions, but I certainly will not shy away from interventions.
I note the comments by my opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), that his party agrees with more than
“three quarters of the principled and burden-sharing”
changes that the Government are making. Obviously, in his interventions he will make clear what he does not agree with. I have read his amendment and there will be some questions about some of that; I am sure we will get to that in a minute.
I intend to take the House through the Bill stage by stage. Let me start with universal credit. I shall begin with an overview, and then consider some of its detailed aspects. The universal credit obviously sits at the heart of this welfare reform. I do not think I would want to embark on this process if that were not the case. I believe it is a commitment to the public that work will always and must always be made to pay, particularly critically for that group of people who are probably the most affected—the bottom two deciles of society—who have too often found it really difficult to establish that work does pay.
I am pleased to say that those principles seem to have received support from a number of stakeholders, including Citizens Advice and the Institute for Fiscal Studies. The IFS said that by and large the measure was a progressive change. We anticipate that the universal credit will make some 2.7 million households better off. Over 1 million households will be better off by more than £25 a week—clearly, those will be down in the bottom deciles—and 85% of that increase will go to households in the bottom 40% of the income distribution.
We have agreed a package of transitional protection which will ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. The universal credit should also start making inroads into the couple penalty. Members on both sides of the House agree that that is necessary. I know that the right hon. Member for Birkenhead (Mr Field), who is in his place, has made great play of that over the years, and many of us have agreed with him.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I am listening with great interest to my right hon. Friend’s speech. Can he give me some further detail on how the benefit cap will be introduced?
Mr Duncan Smith
I was coming to that, but I shall touch on it now; I may make some further comments later. The principle is that people who are unemployed and on benefits should not be receiving more than average earnings. It is a matter of fairness, so that those who are working hard and paying their taxes do not feel that someone else will benefit more by not playing a full part in society. We recognise that there must be transitional arrangements. We will work intensively with the families affected once the cap comes in. We will help them move into work, to change their circumstances so that they are not affected. We will make sure that families who need transitional support will receive it. We will make more detailed statements about that later.
The idea is that we should encourage people back into work, and most of all that people who are in work and paying their taxes should feel that it is fair that while they earn and they work hard, others realise that the best way to increase their income is through work, not through benefits. That is a great principle.
Mr Slaughter
According to the right hon. Gentleman’s Department, 70% of those affected by the benefit cap live in social housing. The Housing Minister is building only unaffordable housing, because of the rent levels set. Is not the cap just a crude piece of social engineering, forcing people not to live in expensive areas, such as the constituency that I represent? Is it not directed at vulnerable people and the poorest in society, making it possible for them to live only where the Secretary of State chooses for them to live?
Mr Duncan Smith
With respect to the hon. Gentleman, it is not about where I choose for them to live. As with everybody else, it is about where their income and their ability to earn allow them to live. There are many people in London, for example, who work hard and who commute well over an hour to get to jobs because they cannot afford to live in parts of central London. We may argue that the cost of living in London is too high. One of the arguments that I would make is that the way that the previous Government’s local housing allowance was set drove up rents in both the private and the social housing sector. The hon. Gentleman should consider that what we are doing is reasonable. What we are trying to do is not to damage people, but to get them in locations where they can afford both to live and to work. I will return to that.
Mr Duncan Smith
I shall make a little more progress.
May I confirm that we shall move from the universal credit making inroads into the couple penalty to a subject on which I am sure many right hon. and hon. Members will want to speak—child care costs in universal credit? I can confirm that support for child care costs will be provided by an additional element paid as part of the universal credit award. We will invest at least the same amount of money in child care as in the current system, and we will aim to provide some support for those making their first moves into work, so that the support available is not restricted to those working more than 16 hours.
This is an important point. Although there is a debate about it, we must remember that working tax credit gives that child care support to those in the relevant band. Universal credit will allow claimants to adjust their hours of work to suit their child care responsibilities. It will allow people to set their hours of work more in line with their caring responsibilities. It will cover all the hours that people are planning to work. We will be much more flexible, and we intend to work closely with relevant groups to take further advice about the rates that we will set. By the time the Bill reaches its Committee stage, we will be able to be more specific.
Kate Green (Stretford and Urmston) (Lab)
Can the right hon. Gentleman confirm that as a result of that further consideration, there will be no circumstances in which, as a result of child care costs, a parent could be faced with a marginal deduction rate of more than 100%, as some models prepared for us by Family Action have suggested?
Mr Duncan Smith
That is not our intention, and it is why we were are proceeding carefully and consulting about our proposals. The purpose is to maintain incentives to go to work. Universal credit is designed to encourage lone parents to go to work, but it recognises their need to meet their child care responsibilities. We can debate the various elements, but the principle is that the measure should be more than helpful to them. We will move on to the finer detail as we get to Committee stage.
As we increase support to make work pay, it is right to ensure that claimants do everything they reasonably can to find or prepare for work. As the House knows, we will tailor conditionality to individual circumstances, and require all claimants to accept what I call a claimant commitment. From the outset they will be asked to sign up to the idea that we will provide them with the necessary support and access to universal credit, but we will also expect them to recognise that the sanctions regime is applicable. It is easy to understand. If they do not comply with that as they go further through the process, they are likely to encounter that sanctions regime at key moments.
The toughest sanctions will apply to those who are expected to be seeking work but fail to meet important conditions. They should understand that if they keep on crossing a series of lines, they will invoke the sanctions regime. The problem at present is that the regime is often confusing. I have visited jobcentres a number of times—and I see on the Opposition Benches one of the Members who used to be a Minister in the Department. As he knows, if one talks to jobcentre staff, they will say that the problem is that when claimants reach the point where they are about to hit sanctions, it comes as a big surprise to many of them that sanctions will be imposed and that the situation is real and serious.
By letting claimants know much earlier and by introducing a regime that is easy to understand, with a simple tripwire process, they will know from the word go. That should disincentivise people from taking the wrong turns. Benefits will be taken away for three months after a first failure, six months after a second, and three years after a third. That will apply to those at the top level—in other words, those who are fully able to search actively for work and to take it. There are, however, other categories. The same conditions would not apply to lone parents, for example.
Hywel Williams (Arfon) (PC)
The rate of worklessness and the availability of jobs vary from area to area. What account will the sanctions regime take of that variation?
Mr Duncan Smith
The sanctions regime is about work being available. If work is not available, people cannot be expected to take jobs, so I give the hon. Gentleman the assurance that no one will be told that they are on sanctions if there is no work available. The sanctions apply only if a job is available, the claimant has been offered it and for one reason or another has not taken it, or if they are not complying with the details of what they are meant to be doing to seek work. That is only fair. People who pay their taxes want to know that everybody out there is seeking work. If they are seeking work sanctions should hardly ever apply, and in most cases they will not apply.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The right hon. Gentleman is making a thoughtful speech, and I know him to be a thoughtful and caring politician. I will give careful consideration to much of the Bill and I will not vote against Second Reading. Is it not spoilt, however, by what is happening to the mobility component of disability living allowance? I visited a residential home in Huddersfield, in Edgerton, only last week. The Bill will destroy the lives of most of those people, 60% of whom are in wheelchairs.
Mr Duncan Smith
I thank the right hon. Gentleman—although I am not sure: is he a right hon. Gentleman? [Interruption.] An hon. Gentleman—okay. That is something that his party should do—it is not for me—given his record of service.
Yes, I accept that there were issues. In fact, when we looked at the decisions taken at the time of the spending review, I reviewed the matter, after discussing it with the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), who is the Minister responsible for these matters. We visited lots of care homes—my hon. Friend went out to see people and talk to them—and we realised that there was a lot of chaos out there about what should be given to people in care homes, what care homes themselves provide, and what local authorities believe it is their statutory responsibility to provide. Some of them say that they do not have any such responsibility to provide mobility services, but others say that they do, and provide access to such services.
We have therefore changed the provisions in the Bill, as the hon. Member for Huddersfield (Mr Sheerman) has probably noticed. That will be incorporated in the review of disability living allowance. Our objective is to get rid of the overlaps, genuinely to find out what can be provided at local level, and to figure out what the amount should be to support someone in a care home, bearing in mind that mobility needs in a care home are likely to be variable, and different from the needs of someone living in the community completely independently. Adjustments will be necessary, but my hon. Friend and I give the hon. Gentleman and the House an undertaking that we are going to try to figure out what the right answer is. We will work out a set of figures, and how they can be applied. That is the purpose of the review; I guarantee that.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Reflecting on what the Secretary of State has just said, does he recall that on several occasions, the Prime Minister has been given the opportunity to say that he has listened to the evidence and accepts that there is virtually no support for withdrawing the mobility component of disability living allowance for people living in residential accommodation? To what extent does the Secretary of State’s position differ from the position taken again and again by the Prime Minister?
Mr Duncan Smith
We are as one. I say that immediately, before I explain the position.
The reality, for the Prime Minister and for me, is that when we understand that certain facts are slightly different from what we thought they might have been, we always modify what we are doing to make sure that the effect of what we are trying to do is reasonable and produces the best results. All I can say to the right hon. Gentleman is that the Bill is not the same as the one that he would have seen some weeks ago. We are not knocking out the mobility component from care homes, and we have included it in the review of what mobility provisions are necessary and required for people in care homes. That is the real principle behind the measure. My previous comments were about finding the overlaps, and how we made sure that they did not cost people money in one area, but found those costs in other areas. That is the main point of the review, and I have asked my hon. Friend the Under-Secretary to make sure that that is the case. The Bill covers that, and I hope that most people will see that it is quite reasonable to try to recognise what that figure is.
Mr Duncan Smith
I shall try to make progress, if hon. Members do not mind, because I have given way quite a lot on that subject.
Before the introduction of the universal credit we will introduce many of the changes to conditionality and sanctions that I discussed. Claimants, I hope, on that principle will accept the claimant commitment, as they will be subject to tougher regimes that are fair and reasonable. Turning to other benefit changes, we are making changes to the income support regime for lone parents before the introduction of universal credit. Lone parents who can work will be expected to claim jobseeker’s allowance when their youngest child reaches the age of five. We want as many people as possible to get help to engage with the labour market, and we know that about 80% of all lone parents are working or would like to work.
There will continue to be safeguards to allow parents to fit their job-search requirements with their caring responsibilities and child care availability. There are other relevant changes, too, and I accept that there have been concerns about them. I would be interested to learn the Opposition’s position on that. We are making changes to contributory employment and support allowance, time-limiting receipt to one year for those in the work-related activity group. There will be no change for those in the support group, as we have made clear, and people claiming income-related employment and support allowance will be unaffected.
I note the comments that have been made by the right hon. Member for Birmingham, Hodge Hill, who accepted, in his speech to the Institute for Public Policy Research, that time-limiting ESA is the right thing to do, but disagreed about the period—in this case, a year, whereas he was talking about two years. However, that is not clear in the amendment to the motion, so I wonder whether he could clarify the position. The amendment opposes the limit altogether, rather than the number of years. I would happy to accept an intervention from the right hon. Gentleman if he wished to clarify the position. [Interruption.] He will cover it in his speech—very good. I hope that we will understand that, as principles and practicalities need to come together.
I would point out to the right hon. Gentleman and to everyone else that the one-year limit is twice as long as that currently in place for jobseeker’s allowance. There has been discussion of people undergoing cancer treatment and others. That is best dealt with under the ESA regime and reviews, so that we can decide which groups are relevant, and which not, as we have done with some cancer patients undergoing chemotherapy. They have been taken out of that provision because they are in the support group. Professor Harrington’s review is the best way of doing that. We have established the principle of receipt for a year, and the rest is about the details of the conditions that best apply, and that can be dealt with in the Harrington review.
That best reflects the different nature of ESA and the different needs of those who claim it. However, we simply cannot pay those benefits indefinitely. I wonder whether that would have been the previous Government’s position if they had undertaken further reviews. For limited contributions under ESA, it would have been feasible for someone to receive ESA for their rest of their life. That was one of the big issues that we had to tackle.
Sheila Gilmore
I thank the Secretary of State for giving way. ESA is not given indefinitely, because there are constant assessments and reassessments. I have constituents who have been reassessed twice in the past two years and who are due for another assessment. It is not true that someone who receives contributory ESA will receive it for ever without assessment. The assessment process should cover that, without an arbitrary cut-off date.
Mr Duncan Smith
I remind the hon. Lady that in the support group, the contributory element does not apply. It applies to people with finances that take them above the line. The income-based measure continues—that is not the issue. The issue is whether we think that people who have contributed for a certain time have the right to contribution-based benefit, regardless of their income, for a period of time. That is the debate. The income-based measure is exactly the same—it is not going to change, so that meets the hon. Lady’s concerns.
Mr Duncan Smith
I think that I have dealt with that.
There are other changes, including the consumer prices index uprating, in the Bill. We must get to grips with the housing benefit system, which ran out of control under the previous Government. I have a deep suspicion that they knew that before they called the election, and I sense that there were big differences about whether they would do something about this. Over the past 10 years, overall spending on housing benefit has almost doubled from £11 billion to £21 billion, which is a huge increase. I accept some of the arguments about the reasons for that—the fact, for example, that house building fell to a record low, and more and more people had to be moved into the social rented sector—but the reality under the local housing allowance regime was that we lost control of spending. We have therefore introduced a number of changes to the local housing allowance, including a move to annual uprating in line with CPI. Restricting uprating should enable us to keep downward pressure on rents. Only if an increase in local market rents exceeds the annual rate of CPI will the restriction apply. That will also be an important step towards the integration of housing support with the universal credit.
We accept that those changes will not be easy for some people, which is why we want to provide a great deal of transitional protection. Essentially, we have put up a total of about £190 million to smooth the transition to those measures for those who are most likely to be deeply affected. That includes £130 million in discretionary housing payments, £50 million to assist people with housing advice and removal costs and £10 million for homelessness prevention, particularly in London. That, coupled with the other changes that we have already made through regulations, where we are looking at making direct payments to those who are able to lower their rents and at delaying the point at which the measure comes in by some nine months, was a product of listening to people’s main concerns and trying to ensure that what we bring in is doable and manageable by councils.
Alison Seabeck (Plymouth, Moor View) (Lab)
On the right hon. Gentleman’s point about housing benefits, what discussions has his Department had with housing associations and their lenders about the disaggregation of housing benefit under the universal credit and the direct payment to housing associations? They are deeply worried that, without that direct payment capacity across the piece, arrears will rise and lenders will become more nervous.
Mr Duncan Smith
We have had, and continue to have, those discussions, and I understand the concern. There is a debate, on both sides of the argument, about whether we basically continue with the principle that we should pay people and deal with certain elements of what they receive because they are not capable of doing so themselves, or whether we try to get people to the point where they are capable of managing their own money more and more. I recognise from the hon. Lady’s intervention that, on this matter, there is no absolute, but there is at least a debate on both sides, and that is simply where we are at the moment—trying to discuss the issue with those who feel that they would be most affected.
Mr Stewart Jackson (Peterborough) (Con)
Was it not a moral catastrophe and economic madness when, under the previous Labour Government, registered social landlords had no incentive to tackle welfare dependency, because their main funding stream was housing benefit? Under this Bill, registered providers will have an opportunity to tackle welfare dependency among their tenants.
Mr Duncan Smith
What we want from the Bill is to encourage people to get involved in the process—to help people to use it as part of the incentive of trying to make the right decisions about taking work and providing for their families.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the right hon. Gentleman consider the example of a married couple who are at work and have five children from previous marriages, but then lose their jobs because, for instance, they work for the local council? Because they have five children, they would get almost £500 of personal allowance and £200 of housing benefit, taking them over the £500 cap. Rationally, they might choose, because of the £500 cap, to split up their family so that there are three children and two children in two houses, each with £250 of personal allowance and £200 of housing benefit, making a global total of £900, when it would have been £700. Surely his policies of breaking up families and making demands for more and more social housing, alongside making people unemployed, do not add up to fairness or competence.
Mr Duncan Smith
I understand the hon. Gentleman’s point and can, I hope, assure him that as the Bill progresses, and as he will see as we reach Committee, our objective is to recognise that unemployment, for those who fall unemployed, is probably a temporary condition. He will understand that point more as we get into the detail, but trying to find some way of protecting such people through that process is critical to us, as the vast majority will be back in work within a set period: 90% of people will be back in work within a year. Most people will get through that process, and it is for us to ensure that the transition is met and dealt with, but I think that he will be very happy in due course to hear what we propose.
Mr Duncan Smith
I am going to make a little progress, because I am conscious that we have a limit. Mr Speaker is looking at me benignly, but he might not look so benignly shortly.
It is time for fundamental reform of the social fund, which is poorly targeted and open to abuse. Some 17,000 people have received 10 or more crisis loans in the past 12 months, and we have already taken steps to limit the number of crisis loans for living expenses to three in a 12-month period. Those are important steps, because the fund has been somewhat out of control and is complex. The Bill will then pave the way for local authorities in England to deliver a system of assistance that should replace the community care grants and some crisis loan provision. This is a complex area, and many will know more about it than I do, but the key point is that we are trying—
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Will the right hon. Gentleman give way?
Mr Duncan Smith
In a second. I think that the hon. Member for Bolton South East (Yasmin Qureshi) was slightly before the hon. Lady.
The key thing that we are trying to do is to give local authorities an element of control over some of the process, including in particular what I call the crisis loans short-term element—the hiatus moment in the payments,—and some of the community care grants. The point is that, when the fund became only distantly linked to the Department, the telephone concept behind it allowed people to push up the number of claims, because they were not seen or understood, so their cases were not properly known and it was very difficult to decide whether they were true or false. Local areas will be far better able to recognise who such people are, what conditions they are in and what circumstances apply to them. Therefore, localising the process will be very important. Of course, huge swathes of it will remain centralised, but we feel that those two elements in particular will most respond to localisation.
Yasmin Qureshi (Bolton South East) (Lab)
I understand the Minister’s explanation of the social fund, but a linked point is that thousands of young children currently receive a free school meal, the only hot meal that most of them get, and that some people also receive free prescriptions. Can the Secretary of State assure us that those who receive free prescriptions and free school meals will continue to do so?
Mr Duncan Smith
That is exactly what we plan to do, but, because of the universal credit, we will have to be a little more specific, and we will be so in Committee. We are still looking at the best approach to take, but that is exactly what we plan to do. We do not want—the purpose is not—to disadvantage anybody who receives such support, but, because of the way the universal credit works, we will have to think through carefully how we achieve that. The principle behind the measure will remain that we want to support those who are in difficulty and receive support as it stands.
Mr Duncan Smith
I think that the hon. Member for Banff and Buchan (Dr Whiteford) was before the hon. Gentleman, and he has had a shot.
Dr Whiteford
Returning to crisis loans, my greatest concern is that people who go for them will not be able to buy essential items such as cookers and beds. That will push them straight into the arms of loan sharks and other high-cost lenders, and that issue has been overlooked. I also question the view that the increase in the uptake of such loans has not been down to the recession and the hardship that people have faced.
Mr Duncan Smith
The answer to the hon. Lady’s question is that budgeting loans will still be available for those cases. On the second question that she raises about crisis loans being down to the recession, the trend of upward claiming was on track and had started long before the recession.
The Minister of State, Department for Work and Pensions (Steve Webb)
With the telephones.
Mr Duncan Smith
My hon. Friend has made that point to me again and again. The key problem resulted from the changes that were made to dislocate much of the process from people—face to face—who knew what was going on in their communities. I think—I hope—this Bill will change that, because local communities will now be able to determine how best to deliver that critical service, and they will be closer, I hope, to people who need it. That is the principle behind it, and I hope the House recognises that.
The remaining discretionary elements of the social fund, as I indicated earlier, will stay in the wider benefit system, and we will introduce payments on account to replace alignment payments and the interim payments of benefit when crisis loans are abolished, a point that my hon. Friend the Minister has also made on several occasions. We will extend the provision of budgeting loans so that they are available to help people, as I said to the hon. Lady just now.
On disability living allowance, the personal independence payment and the changes to and reforms of them, I believe—and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke, in her consultations, has by and large obtained widespread agreement—that we need to start reforming disability living allowance. I think most people accept that the system we inherited does not deliver for some of those in genuine need, particularly given its confusing nature. Disabled people often tell us that the claims process is incredibly complicated and decisions are not consistent. We need to sort that out.
Many people—a significant number—still wrongly believe that DLA is an out-of-work benefit, so, as people said on several occasions during the consultation, “Being in receipt of DLA is a reason why you wouldn’t want to be getting involved with work; you might lose your DLA.” Such confusion is absurd, because that is not the case, so we need to sort the issue out, and I hope people recognise that it is important.
About 50% of those currently receiving DLA did not have to provide any additional evidence to support their original claim, and more than two thirds of current recipients have an indefinite award. That means basically that no one is ever going to see them again, yet their condition may change; it may worsen or it may get better. That is why we propose to replace DLA with a new system—the personal independence payment, or PIP. This benefit will be awarded on the basis of a more objective assessment of individual need; that assessment is vital. The money will continue to be paid to people in and out of work, and it will not be means-tested. I want to be clear that we do not intend to take away the mobility of people in residential care. As I explained earlier, this is about overlapping payments. The review will cover all that. The key thing is reform.
Annette Brooke (Mid Dorset and North Poole) (LD)
There is a great deal of uncertainty about how children might be affected by the reforms to DLA. Is the Secretary of State proposing further consultation? Is there any information that he can give about future processes regarding children?
Mr Duncan Smith
We are consulting on that. However, this is going to be done later on, so we will have plenty of time to hear many more representations concerning children before we make any decisions. My hon. Friend the Under-Secretary is already talking to various groups about this particular issue.
Jim Shannon (Strangford) (DUP)
In relation to the indefinite awards, there is already a system in Northern Ireland whereby people have periodic checks, and I am sure that Northern Ireland is no different from the rest of the United Kingdom. If there is already a system of regular checks in place, why change that?
Mr Duncan Smith
Because it does not apply to everybody; it is very patchy. The honest truth is that no award we make should say to people, as has happened too often in the past: “You are in receipt of a particular benefit and we don’t want ever to see you again.” If the hon. Gentleman is arguing, as I think he is, that it is right to see people, surely we should be arguing that it is right to see them all to ensure that when their condition changes, that is met. That is surely fair both to them and to the taxpayer.
Mr Tom Clarke
Despite the right hon. Gentleman’s assurances, I ask him to look again clause 83(2), which says:
“The condition is that the person is an in-patient of a hospital or similar institution, or a resident of a care home, in circumstances in which any of the costs of any qualifying services provided for the person are borne out of public or local funds by virtue of a specified enactment.”
That is absolutely clear, but, with great respect, it is not what he is telling us.
Mr Duncan Smith
I am afraid that I do not agree with the right hon. Gentleman, because that is exactly what I was saying. The provisions gives us the opportunity to do just that; it does not specify what we do, but it tells us that this is what we are going to be doing. We are looking at all this because, in our view, we need to come forward with an amount that is relevant to the mobility that is necessary for people in care homes.
Mrs Anne McGuire (Stirling) (Lab)
The Secretary of State is playing with words. The hon. Member for Strangford (Jim Shannon) is right. Although reference is made to an indefinite award, these awards have always been liable to review. If someone has an irrecoverable disability such as permanent blindness, what is the value in regular reviews to assess whether they are still entitled to DLA or the PIP?
Mr Duncan Smith
As I said to the hon. Member for Strangford (Jim Shannon), it is assumed straight away that this is a terribly intrusive process, but in reality what goes on is patchy. For many people, their condition may well have worsened. Do we simply want to say that we should not speak to them or see them, and that it is therefore left up to the vagaries of the system? It is not built into the system that they will be seen.
Mr Duncan Smith
Wait a minute. The right hon. Lady has made a point and I am trying to respond to it. As this is not built into the present system, it is left to decision making, which can be very ad hoc, about who someone sees and when they see them. All I am saying is that if we believe it is right to see people, we may then be seeing somebody whose condition has worsened, and surely that is an advantage.
Mr Duncan Smith
I am going to press on, because I think that I have dealt with the right hon. Lady’s point. She may not agree with me, but I think that this is the right position for us to take.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
This is an extremely important point. Is the Secretary of State saying that someone who is deaf-blind will be recalled for regular checks under the regime that he is aspiring to put in place—yes or no?
Mr Duncan Smith
The detail of how that works will be looked at during the passage of the Bill. My point is that built into this should be the requirement that it is necessary to see people. There is the question of who and what conditions we can look at specifically, but it should be right that it is bound into the system that we are going to look at people. In some cases, it may be entirely self-evident that the individual’s condition has not changed and there is not much to be done; in other cases, an assessment may be required because their condition has changed quite fundamentally. I do not understand why the need to see somebody who may be in receipt of a benefit should be such an issue for people. It should not be worrying; it is part of a process. [Interruption.] Before right hon. and hon. Members object to that change, they need to ask themselves what they would say to those people whose conditions have changed for the worse and who are confused and never make it back to make a proper claim. This is a debate that we can and will have.
Mr Duncan Smith
I think, with respect to the right hon. Gentleman, that I have dealt with this point, and I am going to make some progress. [Interruption.] Oh, go on then.
Mr Byrne
I am genuinely trying to be helpful to the Secretary of State. He says that his Bill is incomplete and that he has not been able to furnish the House with full details on how the powers that he seeks from us will be put into practice. Will he consider exempting people with certain kinds of conditions from the need to go back to go through check after check?
Mr Duncan Smith
I say to the right hon. Gentleman, despite his best intentions, that the mess that the previous Government got into over incapacity benefit—[Interruption.] It is all very well for Labour Members to sit in opposition and pretend that nothing went wrong under the previous Government. We are picking up an incapacity benefit system in which they left people parked, never seen by anybody for years and years. All we are putting into the Bill is the requirement that people be seen to check on their condition. That has to be in their interests, and it is not in any way a problem that it should happen. Of course, if the right hon. Gentleman wants to try to make amendments as the Bill goes through Committee, we will always be happy to debate those and listen to him. My point is simply this: it is right to see people, and wrong to leave them parked for ever on set benefits. Seeing them is more humane than inhumane, and that balance is the way that we should go.
As we introduce our new welfare system, we will have to take steps to clamp down on benefit fraud, as Opposition Members know. The system that we have is inefficient and too often ineffective. Despite significant overlaps between benefit and tax credit frauds, fraudsters are subject to different treatment in their cases as they are handled by different groups—DWP, Her Majesty’s Revenue and Customs or even a local authority. The mess and overlap is enormous. The Bill introduces powers enabling a new single fraud investigation service to investigate and prosecute all cases of benefit and tax credit fraud. I hope that the House supports that process. We will ensure that anyone found committing lower-level fraud will face a tough minimum fine as an alternative to prosecution. For all other fraudsters, we will seek prosecution whenever we can. We need to ensure that fraudsters get the message that repeated criminal behaviour will not be tolerated, so those found to have committed fraud may face losing their benefit for certain periods; I have already dealt with the detail of the timings.
I simply say to the House, because this was raised in the Select Committee, that I am absolutely clear that not every problem with overpayment or difficulties with those payments was down to fraud. I fully accept that with the complexity of the system, officials made mistakes and that we were often too ready to badge people as fraudsters when in fact they were not necessarily fraudsters but caught up in a system that left them confused and perhaps not making the right or necessary level of statements to the authorities. This process is about separating those people out. A recent trial of a changed reconsideration process at Jobcentre Plus led to a fall of some 15% in the number of appeals being heard. The general view is that process will be sustainable and will work.
We are also changing child maintenance. Much of the current system is designed to drive people into acrimonious disputes during family breakdown. We should all agree that we want to take the heat out of such situations, as far as we can. That is why we are reforming the system and introducing a gateway to the statutory scheme so that parents consider making their own arrangements. We will offer parents a calculation-only service to make it easier for them to make their own arrangements. Of course, if they choose to take matters further, they can.
We are introducing measures to allow non-resident parents to pay through Maintenance Direct when the case is within a statutory scheme. That will provide further flexibility for parents. We need to keep the burden of the cost of collection under control. In 2009-10, the cost of collecting every pound was more than 40p. However, should the non-resident parent fail to pay in full or on time, we will move the case swiftly into the collection service and take enforcement action where necessary.
Sheila Gilmore
Why was it necessary to introduce provisions in the Bill before the consultation process has concluded? The consultation process on this matter is due to conclude on 3 April. Because the conditions have been published in the Bill, rather than being legislated on later, many people feel that the Government’s mind is set in stone.
Mr Duncan Smith
The measures in the Bill set the framework for the details. We will obviously work through the details in time for the Committee stage. It is reasonable to do that. The Bill does not set out the detailed prescriptions, as is right. I do not agree that the process is wrong.
In conclusion, the Bill is not just about balancing budgets, although that is part of the process. It is also about transforming lives and moving people—hopefully—from the entrapment and tyranny of doubt and dependency, to some kind of opportunity, enterprise and change to their lives that they can make themselves, through assistance and support. Surely it is our duty together to ensure that no one is written off, discarded or left behind. I believe that that is what the Bill will achieve. Notwithstanding criticisms and individual issues, I hope that the House will recognise that the purpose of the Bill is positive, and that it will transform the lives that we seek to transform.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, whilst affirming its belief in the principle of simplifying the benefits system and good work incentives, declines to give a Second Reading to the Welfare Reform Bill because the proposal of the Universal Credit as it stands creates uncertainty for thousands of people in the United Kingdom; because the Bill fails to clarify what level of childcare support will be available for parents following the abolition of the tax credit system; because the Bill penalises savers who will be barred from the Universal Credit; because the Bill disadvantages people suffering from cancer or mental illness due to the withdrawal of contributory Employment Support Allowance; because the Bill contains no safeguards to mothers in receipt of childcare support; because it proposes to withdraw the mobility component of Disability Living Allowance from people in residential care and fails to provide sufficient safeguards for future and necessary reform; because it provides no safeguards for those losing Housing Benefit or appropriate checks on the Secretary of State’s powers; because it fails to clarify how Council Tax Benefit will be incorporated in the Universal Credit system; because it fails to determine how recipients of free school meals and beneficiaries of Social Fund loans will be treated; and because the proposals act as a disincentive for the self-employed who wish to start up a business; and is strongly of the opinion that the publication of such a Bill should have been preceded by both fuller consultation and pre-legislative scrutiny of a draft Bill.”
I start with a word of thanks to the Secretary of State for meeting me and my right hon. Friend the Member for East Ham (Stephen Timms) a week or so ago to discuss the Bill. As I said to him then, we genuinely want to approach the vital question of welfare reform in a spirit of national consensus. We believe that if we can forge such a consensus it will be good for our country, it will reduce the deficit and, crucially, as he said before he sat down, it will be good for the fight against poverty in this country. We have been forced to table the amendment to oppose the Bill because it fails such fundamental tests that we believe the Government should go away and bring back a better Bill that will deliver genuine and lasting welfare reform.
We could begin to forge that national consensus by drawing the right lessons from the past 13 years. The Secretary of State presented his view, but elided one or two prominent features of the past 13 years, such as the fact that the number of people on out-of-work benefits before the depression came down by 1 million and the fact that the claimant count halved. We did not once, let alone twice, see unemployment go through the 3 million mark. We can draw important lessons for this debate from that period, the first of which is that if the Secretary of State wants welfare to work to work, we need more jobs. Labour consistently put that approach in place.
The Secretary of State said to his spring conference at the weekend—
Mr Byrne
I not only listened carefully, but checked the transcript because I could not believe what the Secretary of State said:
“It’s not the absence of jobs that’s the problem.”
Given that five people are chasing every vacancy in this country and that 120 Members of this House have more than 10 people chasing every vacancy in their constituencies, the absence of jobs is very much a problem at the heart of his welfare reform programme.
Mr Duncan Smith
Does the right hon. Gentleman recall that I also said that notwithstanding the period of growth and the number of jobs created, more than half the jobs created by the Government did not go to British nationals sitting on unemployment benefit?
Mr Byrne
The employment rate under the Labour Government reached a record high and there were 64 quarters of consistent economic growth. The idea that welfare to work can work when the number of jobs is not growing is frankly laughable. There is an important lesson that we must draw from the past to get welfare reform right.
Mr Byrne
The Opposition want welfare reform that sticks. When so many details are unclear, the danger is that the Bill will unravel progressively as it comes into effect.
We have discussed whether the Bill passes the test of fostering ambition for families and have shown that a great number of questions remain unanswered. Let us now consider savers. All hon. Members want to nurture the ambition to save. The amount that people must save for a deposit for a house is heaven knows how much, but now that tuition fees have been trebled, more families have to save harder to get their young people into college. One might have thought, therefore, that the Government would provide more incentives to foster the ambition to save, but the noble Lord Freud told the House of Lords that
“the £16,000 savings threshold would extend to all households eligible for universal credit.”—[Official Report, House of Lords, 15 December 2010; Vol. 723, c. WA204.]
There we have it. The Government are so keen to foster the ambition to save that once someone has £16,000 in the bank—the price of two and a half years at university—their tax and in-work benefits are taken away.
Mr Byrne
I will give way in a moment, but first I want to tell the House what James Browne of the Institute for Fiscal Studies said:
“This is a much harsher treatment of capital than we have in the tax credit system.”
Will the Secretary of State tell us how that measure rewards savers?
Mr Duncan Smith
May I remind the right hon. Gentleman that his system became completely absurd, because it allowed people with huge savings and income to claim benefits? The previous Government’s system supported not the bottom two or three deciles but people further up the income scale. That is one reason so few people from the bottom income deciles got back into work, and why poverty was so high.
Mr Duncan Smith
The right hon. Gentleman’s figures are incorrect. When universal credit comes in, the figure is more than likely to be no higher than about 100,000—[Interruption.] Wait a minute. I know where the right hon. Gentleman gets his figures from. Those 100,000, of course, will be transitionally protected, so they will not lose.
Mr Duncan Smith
Will the right hon. Gentleman give way, because he needs to answer my question?
Mr Byrne
The Secretary of State needs to answer my question. The Minister of State told my right hon. Friend the Member for East Ham that getting rid of the savings cap would cost only £70 million. Will the Secretary of State therefore look again? He must recognise, as I do, that he is currently not fostering the ambition to save for hundreds of thousands of people.
Mr Duncan Smith
I completely disagree with the right hon. Gentleman on that, but I want to challenge him to give an answer to taxpayers, who ask whether the welfare system is about supporting people who are most in need, or whether it is about casting money wider and wider to people who can support themselves in particular periods. How much more money does he really want to spend?
Mr Byrne
I am afraid that the Secretary of State has still not provided an answer to my question—he still cannot tell us how he will encourage people to save. Tuition fees have trebled, and people in my constituency are asking, “How on earth do we encourage our young people to go to college, and how on earth can we afford to get our young people into university?”—[Interruption.] I know the Secretary of State does not have those challenges to face, but thousands of people in our constituencies need to save to get their kids to university. The regime that he is proposing will strip in-work benefits from them, kicking the ladder away from aspiration in our country.
Mr Byrne
I do not know what the hon. Lady’s constituents are saying to her, but many in my constituency live in fear of debt—they want not to burden their children with debt, but for them to get a first-class education, so that they can contribute to the future of our country.
The wider point that is emerging is that we do not know enough about how the Bill affects families and savers, but there is also a question over how it will affect the self-employed. Over the last few weeks, we have heard a great deal of pitch-rolling from the Chancellor and the Prime Minister, who are now worried about the damage that their last Budget did to our economy. All of us hope that the Chancellor can upgrade his growth forecast at the forthcoming Budget after doing so well over the last year, and the Prime Minister is now promising that his next Budget will be the most pro-growth Budget in the universe. He told his spring conference:
“At its beating heart this is still a party of start-ups, go-getters, risk-takers…We’re the party of practical men and women, people with a passion and a mission to build a business and see it grow...We are the party of enterprise.”
No doubt, then, the Bill is part of that plan—no doubt the Bill will make it simpler, easier and more encouraging for people in this country to start a business and to make that entrepreneurial leap. Well, my hon. Friend the Member for Stretford and Urmston (Kate Green) asked the Secretary of State about the self-employed on 9 February. To be fair to him, I think he recognises the problem. Surveying the position of the self-employed, he told her that
“we are conscious that that area is the slight blip in the system.”
This is what the blips in the system at the Federation of Small Businesses told me yesterday. Mike Cherry, the FSB national policy chairman, said:
“We are concerned that the Government has assumed that entrepreneurs with a new business will be paying themselves…and will therefore lose all benefits under the Universal Credit system…A measure such as this simply creates yet another barrier towards self-employment which is particularly unhelpful at a time when we are relying on the small business sector to grow the economy”.
So much for the party of enterprise.
Mr Byrne
I do not know whether the hon. Gentleman was in the Chamber when my hon. Friend the Member for Swansea West (Geraint Davies) spoke of the disincentives for families to stay together under the new regime, but if he wants to pretend that the Bill ends the couple penalty in the welfare system once and for all, perfectly and immaculately, I look forward to him setting out his argument.
Mr Duncan Smith
The right hon. Gentleman raises the issue of the self-employed. I made this point to him privately and I will now make it publicly: they will fall within the universal credit. The point that I was referring to was how complicated and counter-intuitive the current systems have become, as he knows very well. We are seeking the best way to ensure that the right reporting structures are in place for those people, who will be inside the universal credit.
Mr Byrne
Perhaps the Secretary of State can tell the House this afternoon when those proposals will be ready for us to look at. [Interruption.] “In time for Committee,” he says from a sedentary position. We all look forward to seeing that.
It is now clear that for the self-employed, savers and families, this Bill at the very best poses more questions than it answers. The other question that the House has to ask the Secretary of State this afternoon is not about how we foster ambition, but about how we nurture compassion. How do we strengthen and reinforce our obligations to each other? That is something that we will hear a lot more about, when we talk about the reform of disability living allowance. What we know about the detailed reforms is not good. I welcome what the Secretary of State has said about the mobility component of DLA. I think that he has confirmed that he is withdrawing the proposal to cut £135 million from the mobility component of DLA. If that is true, it is welcome, because we are talking about a measure that the chief executive of Scope pronounced as “callous” and an
“assault on the most vulnerable”.
The rationale presented by the Minister of State has this morning been taken apart by 39 charities. I am afraid that I have to agree with the words of those campaigners who have said that
“many of these people”
—those in residential care—
“will be prevented from enjoying the freedom of movement that is taken for granted by people who are not disabled.”
Those are, of course, the words of the motion at the Liberal Democrats’ spring conference this weekend. I hope that together we may be able to prevail and get this measure dead and buried.
Mr Duncan Smith
The right hon. Gentleman knows very well, because we had this conversation privately. As I assured him, and as I assure him now, what we have done is roll the proposal into the personal independence plan. We are reviewing what is necessary. I said to him then, as I have said to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that what we are looking for is the amount necessary for people who are in residential care. That is the commitment that I have given. That is the exact fact, that is how it remains, and all other things will fit around that.
Mr Byrne
The argument that the Secretary of State has rehearsed this afternoon is that the Bill will give him the flexibility either to withdraw or to reform the proposal, but what he has not set out for the House is whether he will reduce the savings target of £135 million that has been scored by the Chancellor against the measure.
Mr Byrne
I therefore look forward to the Government reflecting on this debate and perhaps giving slightly more clarity when the Minister winds up.
More alarming for many people is the lack of any safeguards on what the Government have in mind for the future of DLA, especially as we know that the Chancellor is determined to take £1 billion off the bill and then ask what kind of reform will be necessary to deliver his sums. Not for him the subtleties of asking what kind of reform might make sense. This is what the Multiple Sclerosis Society had to say about the measure: “We share serious concerns”—[Interruption.] It is incredible that when such organisations present their arguments, those on the Government Front Bench would rather talk among themselves than listen to what they have to say. This is what the Multiple Sclerosis Society said:
“We share serious concerns with a large number of other disability organisations that the Bill in its current form could lead to those most in need losing out on the support they rely on”.
The Secretary of State’s own equality assessment says that 13% of disabled households could be entitled to less help under the new system. He has simply not provided assurances on that point. When my hon. Friend the Member for Stretford and Urmston asked him about that, he said:
“I am sorry to be cagey about this. It is simply because this will become very clear when we publish the Bill.”
Well, here is the Bill, but where are the answers to the question?
Mr Duncan Smith
I am interested in what the right hon. Gentleman is saying. He is going on about the review and the issues around disability living allowance, but I notice that the Opposition make no mention of that in their amendment. I notice also that both he and his leader have said that they support the reforms to disability living allowance, so perhaps he would like to make it clear: is he in support of them or not?
Mr Byrne
Everybody is in support of reforming disability living allowance, but we have not said that £1 billion should come off the bill and that we should then work out what kind of reform would deliver those numbers. The Secretary of State must realise that this is why millions of people up and down the country are so alarmed about the reform proposals being put in place. Now he—or, indeed, his Minister—has a chance to say that he will listen to campaign groups that are worried about the proposals, that he will listen to amendments and that he will try to put in place safeguards to ensure that DLA reform is done in the right way. Yes, we should reform DLA, but we should not abolish it.
Social Security
Iain Duncan Smith Excerpts(14 years, 9 months ago)
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Stephen Timms
If 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—
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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?
Stephen Timms
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—
Mr Duncan Smith
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.
Stephen Timms
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—
Oral Answers to Questions
Iain Duncan Smith Excerpts(14 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Stewart Jackson (Peterborough) (Con)
6. What assessment he has made of the likely effect of the introduction of universal credit on the level of the couple penalty.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Bob Blackman
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.
Mr Duncan Smith
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.
Mr Stewart Jackson
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?
Mr Duncan Smith
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.
Mr Frank Field (Birkenhead) (Lab)
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?
Mr Duncan Smith
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.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
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?
Mr Duncan Smith
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.
Grahame M. Morris (Easington) (Lab)
5. What support he plans to provide to help older people remain in or return to work.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Grahame M. Morris
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?
Mr Duncan Smith
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.
Mark Lancaster (Milton Keynes North) (Con)
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?
Mr Duncan Smith
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.
John Howell (Henley) (Con)
7. What steps he is taking to reduce levels of pensioner poverty.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
David Rutley
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?
Mr Duncan Smith
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.
Ms Karen Buck (Westminster North) (Lab)
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?
Mr Duncan Smith
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?
Pamela Nash (Airdrie and Shotts) (Lab)
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.
Julian Smith (Skipton and Ripon) (Con)
15. What plans he has for collaboration between jobcentres and voluntary organisations.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Julian Smith
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?
Mr Duncan Smith
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.
Ian Paisley (North Antrim) (DUP)
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?
Mr Duncan Smith
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.
Robert Halfon (Harlow) (Con)
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?
Mr Duncan Smith
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.
Gloria De Piero (Ashfield) (Lab)
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?
Mr Duncan Smith
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.
Mr Christopher Chope (Christchurch) (Con)
16. What account his Department takes of the effects of the level of the minimum wage in its business planning processes.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
There will not be a hair of difference between us.
Mr Duncan Smith
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.
Stephen Metcalfe
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?
Mr Duncan Smith
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.
Mr David Hanson (Delyn) (Lab)
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?
Mr Duncan Smith
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.
Stephen Mosley (City of Chester) (Con)
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?
Mr Duncan Smith
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.
Pamela Nash (Airdrie and Shotts) (Lab)
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?
Mr Duncan Smith
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.
Jessica Lee (Erewash) (Con)
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.
Jake Berry (Rossendale and Darwen) (Con)
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?
Mr Duncan Smith
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.
Kate Green (Stretford and Urmston) (Lab)
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?
Amber Rudd (Hastings and Rye) (Con)
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?
Mr Duncan Smith
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.
Departmental Expenditure Limit (2010-11)
Iain Duncan Smith Excerpts(14 years, 9 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Subject 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. |
Resource Departmental Expenditure Limit
The change in the resource element of the departmental expenditure limit arises from:
Request for Resources 1
i. A decrease in resource of £5,000,000 (administration) offset by an increase in Capital.
Request for Resources 2
ii. A reserve claim of £74,000,000 (Other Current) to support expenditure incurred on measures set out in the 2008 Pre Budget Report.
iii. A reserve claim of £14,349,000 (£6,069,000 administration and £8,280,000 Other Current) to support expenditure on Spend to Save measures,
iv. A reserve claim of £19,000,000 (Administration) from the Department’s Modernisation Fund.
v. £2,100,000 (administration) received from the Department for Communities and
Local Government to reflect a reduction in European Social Fund programme activity by the Government Office Network.
Request for Resources 3
vi. A reserve claim of £6,000,000 (administration) from the Department’s Modernisation Fund.
vii. A reserve claim of £7,602,000 (administration) to support expenditure on Spend to Save measures.
viii. A reserve claim of £1,000,000 (Other Current) to support expenditure incurred on measures focussing on delivering savings through reduced overpayments within Disability Living Allowance claims as set out in the Pre Budget Report 2009.
Request for Resources 5
ix. A reserve claim of £58,000,000 (administration) from the Department’s Modernisation Fund.
x. A reserve claim of £3,749,000 (administration) to support expenditure on Spend to Save measures.
xi. A reserve claim of £99,000,000 (Other Current) to support expenditure on Staff Exits.
xii. An increase in resource of £5,000,000 (administration) offset by a decrease in Capital.
Movements between Voted and Non-Voted Budgets
xiii. An increase in voted funding offset by a decrease in non-voted funding of, for RfR2 £591,600,000 (£303,670,000 administration and £287,930,000 Other Current) and for RfR5 £78,000 (administration) resulting from accessing funds held in the Departmental Unallocated Provision which were provided in the 2009 Budget.
xiv. An increase in voted funding offset by a decrease in non-voted funding of £85,805,000 (£46,305,000 Administration and £39,500,000 Other Current) as a result of accessing funds held in the Departmental Unallocated Provision which were provided in the Welfare Reform White Paper.
xv. A decrease in non-voted funding of £3,687,000 offset by an increase in voted funding of £3,687,000 relating to decreased expenditure by Working Ventures (UK) Limited.
xvi. A decrease in non-voted funding of £67,000 offset by an increase in voted funding of £67,000 relating to decreased expenditure by the Independent Living Fund.
xvii. An increase in non-voted funding of £739,000 offset by a decrease in voted funding of £739,000 relating to increase expenditure by the Financial Assistance Scheme.
xviii. A decrease in non-voted funding of £1,730,000 offset by an increase in voted funding of £1,730,000 relating to decreased expenditure by The Pensions Regulator.
xix. A decrease in non-voted funding of £38,521,000 offset by an increase in voted funding of £38,521,000 relating to decreased expenditure by The Personal Accounts Delivery Authority.
xx. A decrease in non-voted funding of £51,000 offset by an increase in voted funding of £51,000 relating to decreased expenditure by The Office of the Pensions Ombudsman.
xxi. An increase in voted funding offset by a decrease in non-voted funding of £30,400,000 (administration) as a result of accessing funds held in the Departmental Unallocated Provision which were not allocated to a specific work programme at the time of the SR07 Settlement.
Capital Departmental Expenditure Limit
The change in the capital element of the Departmental Expenditure Limit arises from:
Request for Resources 1
xxii. An increase in Capital of £5,000,000 offset by a decrease in Resource.
Request for Resources 2
xxiii. A reserve claim of £3,300,000 to support expenditure on Spend to Save measures.
Request for Resources 5
xxiv. A reserve claim of £72,000,000 from the Department's Modernisation Fund.
xxv. A decrease in Capital of £5,000,000 offset by an increase in Resource.
xxvi. A budget transfer of £1,470,000 to the Department for Communities and Local Government in respect of the Government Connect Project.
xxvii. A budget transfer of £460,000 to the Department for Education in respect of the Government Connect Project.
Movements between Voted and Non-Voted Budgets
xxviii. An increase in voted capital funding of £8,195,000 offset by a decrease in non-voted resource funding of £8,195,000 as a result of accessing funds held in the Departmental Unallocated Provision which were provided in the Welfare Reform White Paper.
xxix. A decrease in non-voted capital funding of £9,000 offset by an increase in voted capital funding of £9,000 relating to decreased expenditure by The Pensions Regulator.
xxxi. A decrease in non-voted capital funding of £39,181,000 offset by an increase in voted capital funding of £39,181,000 relating to decreased expenditure by The Personal Accounts Delivery Authority.
xxxi. A decrease in non-voted capital funding of £200,000 offset by an increase in voted capital funding of £200,000 relating to decreased expenditure by The Office of the Pensions Ombudsman.
Administration Costs
The movement in the Administration Cost limit arises from the changes to the Resource Departmental Expenditure Limit as noted in items i, iii, iv, v, vi, vii, ix, x, xii, xiii, xiv, xxi, and xxviii above.
Work and Pensions
Iain Duncan Smith Excerpts(14 years, 10 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Karen Buck (Westminster North) (Lab)
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?
Mr Duncan Smith
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:
Mr Duncan Smith
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.
Oral Answers to Questions
Iain Duncan Smith Excerpts(14 years, 10 months ago)
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Mrs Siân C. James (Swansea East) (Lab)
3. What sanctions will be applied to jobseeker’s allowance claimants who fail to find work within the period set by his Department.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Mrs James
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.
Mr Duncan Smith
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.
Tony Baldry (Banbury) (Con)
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.
Mr Duncan Smith
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.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
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?
Mr Duncan Smith
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.
Mr Alexander
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”?
Mr Duncan Smith
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.
Jane Ellison (Battersea) (Con)
4. What recent representations he has received on his plans to help disabled jobseekers into work.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
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.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Chi Onwurah
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?
Mr Duncan Smith
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.
Ms Karen Buck (Westminster North) (Lab)
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?
Mr Duncan Smith
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.]
Michael Ellis (Northampton North) (Con)
17. When he plans to bring forward proposals to prevent unfair dismissal of staff on grounds of age.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Robert Halfon
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?
Mr Duncan Smith
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.
Michael Ellis
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?
Mr Duncan Smith
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.
Toby Perkins (Chesterfield) (Lab)
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?
Mr Duncan Smith
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.
Ian Lucas (Wrexham) (Lab)
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?
Mr Duncan Smith
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.
Bob Stewart (Beckenham) (Con)
12. What assistance his Department provides to pensioners who rely on fixed-interest income bonds.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
14. What recent assessment he has made of the likely effects of his welfare reform proposals on families with multiple births.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Tom Greatrex
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?
Mr Duncan Smith
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.
Duncan Hames (Chippenham) (LD)
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?
Mr Duncan Smith
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.
Mr Peter Bone (Wellingborough) (Con)
16. What his most recent forecast is of the claimant count in (a) Wellingborough and (b) the UK in 2011-12.
Jessica Lee (Erewash) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
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.
Jessica Lee
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?
Mr Duncan Smith
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.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
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?
Mr Duncan Smith
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.
David Tredinnick (Bosworth) (Con)
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?
Bridget Phillipson (Houghton and Sunderland South) (Lab)
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?
Mr Duncan Smith
We stand by the OBR forecast that unemployment will rise slightly in the coming year and, thereafter, will fall year on year.
John Glen (Salisbury) (Con)
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.
Malcolm Wicks (Croydon North) (Lab)
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.
Mr Duncan Smith
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.
Nick de Bois (Enfield North) (Con)
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?
Mr Duncan Smith
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.
Alex Cunningham (Stockton North) (Lab)
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?
Housing Benefit Reform (Private Rented Sector)
Iain Duncan Smith Excerpts(14 years, 11 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In 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.
Opposition Day Debate Clarification (Housing Benefit)
Iain Duncan Smith Excerpts(15 years ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In 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.