Departmental Expenditure Limits

Iain Duncan Smith Excerpts

Tuesday 23rd November 2010 Written Statements

[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 decrease by £35,781,000 to £8,730,218,000 and the Capital departmental expenditure limit will remain unchanged at £243,052,000. The Administration budget will decrease by £31,185,000 to £6,076,705,000.

Oral Answers to Questions

Iain Duncan Smith Excerpts

Monday 22nd November 2010 Commons Chamber

[Mrs Anne McGuire (Stirling) (Lab)]

2. What steps his Department plans to take to assist employers to provide real-time pay data for universal credit computations.

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

Her Majesty’s Revenue and Customs is continuing to consult with employers on how best to collect real-time pay information. I should stress that the information required for the universal credit is already being collected by HMRC as part of its reforms to the pay-as-you-earn system, which are on track. The adoption of the new real-time information system, for the benefit of employers, universal credit customers and taxpayers, is already well on track.

[Mrs McGuire]

Can the Secretary of State tell the House what proportion of the £2 billion allocated in the comprehensive spending review to implement the universal credit will go to support HMRC’s IT project, and what proportion will go as compensation, so as to avoid losers in the transition to the new universal benefit?

[Mr Duncan Smith]

The right hon. Lady will forgive me if I do not give her the absolute details. We will be publishing the details shortly—well, soon, anyway—but I can tell her now that she can expect to see a significant amount, as a proportion, for the computer change. All this is covered by the money already granted through the settlement in the spending review—more than £2 billion—which will go to protect those who would have nominally been losers and to implement all the necessary IT changes, and to cover every other detail too.

[Mr Julian Brazier (Canterbury) (Con)]

I welcome my right hon. Friend’s earlier answer. In the light of several terrible cases in my constituency, does he agree that it is extraordinary that the whole system of credits was introduced at all without a proper real-time information system?

[Mr Duncan Smith]

The PAYE system is ultimately the responsibility of my colleagues at HMRC, although we will obviously require an element of that to implement the change. That change will make life considerably easier for us in delivering those benefits without the normal mistakes that are made—mistakes that have caused overpayments to people, followed by attempts to claw them back that cause hardship for many people on low incomes. I believe that in due course the change will deliver a net benefit to everybody.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

Under the Secretary of State’s proposals, councils are to use the real-time data to calculate entitlement to council tax benefit, although the entitlements will vary according to each local authority. What is his estimate of the cost to the Department for Work and Pensions of supporting councils in creating their own mini-benefits system in each locality?

[Mr Duncan Smith]

I will give those details soon. I will not give them today, but I can say that we have already been working on the issue. We believe that, as things stand right now, we will manage the cost within our present budgets—it will not require anything extra for us. Of course, as the right hon. Gentleman said, it forms a challenge to us—I accept that—but localising elements of benefits is important to local people, and councils have very much wanted to do this. I will definitely give him the figures for that in due course, but we believe that we will be able to manage it, and I am more than happy to discuss that with him.

[Hazel Blears (Salford and Eccles) (Lab)]

3. What steps he is taking to encourage social enterprises to become providers under the Work programme.

--- Later in debate ---

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

We believe that universal credit will make work pay. We have done some assessment and we can announce that we believe we should reduce by 1.3 million the number of workless households facing a participation tax rate of more than 70%. We also believe that we will improve earnings incentives for some 700,000 people and that we could reduce the number of workless households by about 300,000.

[Karen Bradley]

I thank the Secretary of State for that response. Caudwell Children is a charity that has significant experience in helping the parents of disabled children back into work. Could he give some assurances as to how the universal credit will make that process easier?

[Mr Duncan Smith]

I hope and believe that if we implement universal credit correctly, it should allow people with caring responsibilities to meet those responsibilities with greater flexibility in the number of hours they can work. At the moment, it is very difficult for many of them to work the sort of hours they need to work without damaging their ability to fulfil their caring responsibilities. We think that flexibility would be most effective for them and, strangely enough, for lone parents.

[Ms Karen Buck (Westminster North) (Lab)]

The universal credit has the desirable and indeed the shared objective of reducing the rate at which tax and benefits are withdrawn as earnings rise. But for every pound that will go into the universal credit, £8 is being removed as a result of the June Budget and the comprehensive spending review. When the Secretary of State says that nobody will be worse off, is he making the comparison with the period before or the period after those cuts come into effect?

[Mr Duncan Smith]

What I said originally was that we believe that from the position we inherited, the implementation of the universal credit will have a net beneficial effect for the poorest people in this country who are trying to achieve work. So it is not just a case of people not being worse off; we believe that people will be far better off than they were when the hon. Lady’s Government left us.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

14. Whether his Department plans to publish a gender impact assessment of the changes to be made to the benefits regime as a result of the comprehensive spending review.

--- Later in debate ---

[Stephen Hammond (Wimbledon) (Con)]

16. What assessment he has made of the likely contribution of the proposed universal credit to his Department’s objective of encouraging people to work.

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

I refer my hon. Friend to the answer I just gave.

[Stephen Hammond]

I listened carefully to my right hon. Friend’s previous answer. Given the benefits for so many of the introduction of the universal credit, what chance is there that the Government might be able to accelerate its introduction beyond the 2017 time scale currently announced?

[Mr Duncan Smith]

I will resist the temptation to accelerate anything. I simply say to my hon. Friend that the plan we have put in place allows us to spend the right amount of time making sure that we are integrating those on the current benefits correctly and that we are not making any mistakes. We do not plan to accelerate that, but clearly we hope that this process will go smoothly—we believe it will. That is the most important thing.

[Graham Jones (Hyndburn) (Lab)]

Can the Secretary of State give an estimate as to how many parents with young children will return to work under his universal credit, and can he explain the incentives?

[Mr Duncan Smith]

We believe that we will lift some 350,000 people in that category out of the poverty that we inherited. I am not going to give any significant answer to the second part of the hon. Gentleman’s question, simply because I am happy to write to him in due course and give him the figures. His party says it accepts and supports this process, and the reality is that the universal credit has the biggest effect on the poorest people trying to get back into work. That surely has to be welcomed by him and the whole of his party.

[Jo Swinson (East Dunbartonshire) (LD)]

17. What assessment he has made of the likely effects of the Work programme on unemployed people who volunteer.

--- Later in debate ---

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

I repeat that the universal credit will benefit a large number of people, improving work incentives for some 700,000 people who will see their marginal deduction rates fall from about 96% to 76%. The specific group that the hon. Gentleman is talking about will have their withdrawal rates rise marginally, although that will be met by our guarantee that nobody will be a loser in the course of this.

[Simon Danczuk]

I genuinely welcome the Secretary of State’s attempts to get more people incentivised and back into jobs, but does he accept that his proposals are more likely to fail because the regional development agencies that created many jobs in Rochdale and other parts of the country are to be replaced by what Lord Heseltine has called a “high-risk” regional growth fund?

[Mr Duncan Smith]

I do not accept that point. We recognise that it is critical to create those jobs and we expect them to be created as the economy grows. The big problem with creating jobs under the previous Government was that 70% of all the jobs created in 15 years went to people from overseas and not from the UK. The big issue for us is getting people in the UK ready and able to do that work, which the Minister with responsibility for employment, the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is busy doing through the Work programme.

[Andrew Bridgen (North West Leicestershire) (Con)]

The Opposition seem convinced that the introduction of the universal credit will be dogged by IT difficulties. Does that not reflect their lamentable experience in this area? What reassurance can the Secretary of State give us that we will succeed where the previous Government failed so badly?

[Mr Duncan Smith]

The previous Government had problems with IT development, as did lots of Governments—both sides accept that. To be fair, I have spoken to the shadow Minister, the right hon. Member for East Ham (Stephen Timms), who has been very positive about general developments. In his time, the development of the employment and support allowance computer was a very positive development, for which I compliment him. That is a very good example of the scale of computer development that we can undertake with the universal credit.

[Nicky Morgan (Loughborough) (Con)]

T1. If he will make a statement on his departmental responsibilities.

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

We are busy working very hard on employment programmes. I draw my hon. Friend’s attention to the very positive employment figures from last week, which indicate that the Government’s direction of travel places employment growth at the heart of all we do.

[Nicky Morgan]

I thank the Secretary of State for his answer and I note the earlier comment by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), that economic growth should not be talked down and that jobs are being created. How are the providers of the Work programme going to work with employers to identify those jobs and make sure that people are placed in private sector jobs as we go forward?

[Mr Duncan Smith]

My hon. Friend is absolutely right. The difference between this Government and the previous Government will be that the Work programme—the most comprehensive, integrated work programme in existence, certainly, since the war—will make a huge effort to get those who have been out of work for the longest periods ready for work so that they actually get to work. As the economy grows, those jobs will be greater in number. A key point that I made earlier is vital to her question: for all the growth under the previous Government, prior to the mistakes they made that brought us the recession, most of those jobs went to people from overseas because British people simply were not capable of doing that work. That has to change.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

May I take the Secretary of State back to his claim that job creation will be vital and ask him specifically about what the Office for Budget Responsibility has stated will be the estimated saving from threatening the long-term unemployed, about whom he has just spoken, with the 10% figure? Do the OBR’s estimates on how much that policy will save include an expectation that it will move more people into work, or is no significant saving in terms of work incentives expected? Do the calculations simply show OBR figures for the number of people who are going to continue with no job but less money? What do the OBR figures indicate?

[Mr Duncan Smith]

The OBR figures show two things: significant growth during the course of this Parliament and significant growth in private sector employment. Our changes in housing benefit will get rid of a disincentive to taking those jobs, which a significant number of people failed to take under the previous Government, who failed to do anything about it.

[Mark Lancaster (Milton Keynes North) (Con)]

T2. My constituent Rachel Clark, who has learning difficulties, enjoys working as a volunteer at a coffee shop run by the charity MacIntyre. Until recently, she received a therapeutic allowance but unfortunately that practice has had to stop for fears that it is in breach of national minimum wage legislation. Given that all parties were happy with the arrangement and that Rachel is happy to carry on as an unpaid volunteer, can we look into this grey area of the law?

[Miss Anne Begg (Aberdeen South) (Lab)]

T4. May I ask Ministers to look again at the proposal to reduce housing benefit by 10% for people receiving jobseeker’s allowance for a year? The Minister for Housing and Local Government said this morning that people in social rented housing will be kicked out of their homes if they go into work, and under the proposal on housing benefit, people will be kicked out of their homes if they do not go into work.

[Mr Duncan Smith]

I always appreciate the hon. Lady’s advice. We certainly keep all that under review and intend to do so all the way through until we introduce the Bill. However, having said that, there is a lot of good evidence out there to show that we have to give people some sort of incentive not to decide to refuse that work. We believe that that is one of the areas where a lot of international evidence shows that such a spur actually helps people to do that.

[Karen Bradley (Staffordshire Moorlands) (Con)]

T5. What can the Secretary of State do to assure unemployed people in Staffordshire Moorlands that the Work programme will help them to find not just employment, but sustainable employment?

--- Later in debate ---

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I, like many other hon. Members, have been contacted by a number of constituents whose pension provision has been seriously affected by the collapse of the former Ford UK parts manufacturer, Visteon. Will the Secretary of State meet me to explore how we might best help those who have been most adversely affected?

[Mr Duncan Smith]

I will, indeed, and my hon. Friend must give me a date.

Welfare Reform

Iain Duncan Smith Excerpts

Thursday 11th November 2010 Commons Chamber

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

With permission, Mr Speaker, I should like to make a statement on welfare reform. Let me say in advance of that that I have tried to give the shadow Secretary of State, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), as much time on this as possible, and I am open to more questions. I thank him for his co-operation in that.

In this House in October, I set out our resolve to secure a welfare system that I said should be fit for the 21st century, where work always pays and is seen to pay by those who are engaged in it. Following consultation since then, a broad positive consensus has—I think—emerged. That consultation ranged very widely, from Citizens Advice to the Institute for Fiscal Studies, and across the political divide as far as we could go.

The White Paper that we are publishing today therefore sets out reforms that will, I hope, ensure that people will be consistently and transparently better off for each hour they work and for every pound they earn. We will cut through complexity to make it easier for people to access benefits. The intention is to cut costs, reduce error and do better at tackling fraud. The detail is published today, and the White Paper should be available in the Library. Let me take this opportunity to thank all those in the Department and beyond who have helped to build and write it, working very long hours to make sure that we could get it out today.

Perhaps I could take this opportunity to remind the House of exactly what problem we are trying to solve. It does not relate to any sort of party political point; we are dealing with a structural issue that has grown throughout successive Governments. Five million people of working age are on out-of-work benefits; 1.4 million people have been on out-of-work benefits for nine of the past 10 years; 2.6 million working-age people are claiming incapacity benefits, of whom about 1 million have been claiming for a decade; and almost 2 million children are growing up in workless households—one of the worst rates in Europe.

Some have said recently that it is not reform that is necessary or important, but jobs. Well, this is a long-standing problem in our country. We have a group of people who have been left behind, even in periods of high growth. That is the issue. Even as 4 million jobs were created over 63 quarters of consecutive growth from one Government to the next, millions of people in Britain remained detached from the labour market. Some 4.5 million people were on out-of-work benefits before this recession even started, notwithstanding the growth in jobs that I referred to. These reforms are about bringing them back in. I want them to be supported and ready to take up the 450,000 vacancies that even today, as we begin to emerge from recession, are available in the economy. It is also worth reminding the House that of all the jobs that were created, the vast majority, in terms of net take-up, were taken by people coming in from overseas, because businesses could not get people in this country to do the work and therefore had to seek people elsewhere.

The key to solving this problem is to solve the wider social problems associated with worklessness. The measures in the White Paper to get this process under way are the first key strand of our welfare reforms. By creating a simpler benefits system, we will make sure that work always pays more than being on benefits. By reducing complexity, we will reduce the opportunities for fraud and error, which currently cost the taxpayer approximately £5 billion a year.

I think that everybody in the House would accept that work is ultimately the best route out of poverty. At present, some of the poorest people who take modestly paid jobs can risk losing £9 or more out of every £10 extra they earn. The universal credit must put an end to some of the perverse disincentives that make it so risky for the poorest to move into work.

The highest marginal deduction rates for in-work households will fall from 95.8% to an absolute limit of 76.2%—that is with the conjunction of tax and the withdrawal—and there will be a single taper rate of about 65% before tax. That means that about 1.3 million households facing the choice of whether to move into work for 10 hours a week should see a virtual elimination of participation tax rates of over 70%. With single tapers and higher disregards, the system will be simpler and easier and people should be able to keep far more cash in their pockets when they move into work.

The guarantee will—I hope—be crystal clear: if people take a job, they will receive more income. Some 2.5 million households should get higher entitlements as a result of the move to the universal credit, and the new transparency in the system will produce a substantial increase in the take-up of benefits and tax credits. Taken together, we estimate that those effects will help lift as many as 350,000 children and 500,000 adults out of poverty. That is just our analysis of the static effects of reform. Analysing the dynamic effects is not always easy, and it is often best done in retrospect, but we estimate that the reforms could reduce the number of workless households by around 300,000.

Let me also provide assurances about the transition. We will financially protect those who move across to the universal credit system. There will be no losers.

[Mr Dennis Skinner (Bolsover) (Lab)]

For how long?

[Mr Duncan Smith]

For ever.

A far simpler system, which operates on the basis of real-time earnings, will also reduce the scope for underpayments or overpayments. We all know from our experience as constituency MPs that that can create anxiety and disruption, and can prove very difficult to correct. Our simplification and reform will help to end that particular problem. As well as reducing official error, these changes will also make life far more difficult for those who set out to defraud the system. They are a very small group of people, but they are there none the less.

The system will be simpler, safer, more secure, fairer and more effective, but it will require investment. Some £2.1 billion has been set aside to fund the implementation of the universal credit over this spending review period, and I have been assisted in that work by my right hon. Friend the Chancellor, who has agreed to and guaranteed the investment programme.

This is not just expenditure; it is also investment. We are investing in breaking a cycle of welfare dependency, which I believe is a price worth paying. The universal credit will provide a huge boost to individuals who are stuck in the benefit trap, reducing the risk involved in taking work and lifting 850,000 people out of poverty in the process. That investment will produce a flow of savings, as a simpler system will help to drive out more than £1 billion of losses due to fraud, error and overpayments each year. On the wider economic considerations, dynamic labour supply effects will produce net benefits to this country, as greater flexibility helps businesses and fuels growth, particularly in the high street. We will invest the £2.1 billion provided in the spending review 2010, seeking a multi-billion pound return.

That is how we will make work pay, but as I said earlier, and as our document states, it simply will not be enough. We also have to support people as they make their move back to work, and the two issues cannot be separated. That is why we are moving ahead with our new Work programme, which will provide integrated back-to-work support. It will pick up and bring together many of the programmes that were in place before, and add to them to create a comprehensive system of support. That is why we have already started a three-year programme to reassess the 1.5 million people who have been abandoned for years on incapacity benefit. The Opposition started that process before the election for the flow of new claims, and we are now trialling it in two cities.

Essentially, this is our contract: we will make work pay and support people to find a job through the Work programme, but in return we expect co-operation from those who are seeking work. That is why we are developing a regime of sanctions for those who refuse to play by the rules, as well as targeted work activity for those who need to get used to the habits of work. That will be a selective process, targeted at those who need to do it, not at everybody. It will be targeted as required, using the understanding and knowledge of those based in jobcentres.

Furthermore, evidence from the already existing work capability assessment, which the last Government started, shows that 36% of people withdrew their applications before reaching the stage of being assessed. The knowledge that they are likely to be assessed has a stark effect on those who may be trying to defraud the system. That underlines the effect that the system could have on those who are currently working while claiming benefits.

This new contract, in which we do our best to help people find work, to make them work-ready, to make work pay and to say that they will always be better off in work than on benefits, is a fair deal for the taxpayer and a fair deal for those who need our help. I commend the reforms in the White Paper to the House.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the Secretary of State for his statement, for advance sight of it and for his personal helpfulness and co-operation preceding it.

I will deal directly with the principles underlying the universal credit. Both our parties want a simplified benefit system in which less money is clawed back as people move into work. That is why I have been very clear since I started in my position that if the Government get the approach right, we will support them. Pension reform was the subject of significant cross-party working in the last Parliament, and I sincerely hope that welfare reform can be in this Parliament. The right hon. Gentleman can count on Labour’s support when he is pursuing laudable aims, even when it appears that he cannot count on the support of his own Chancellor.

In office, we introduced the working tax credit, which substantially reduced the marginal deduction rates. It halved the number of people facing marginal deduction rates of 90% or more. The Secretary of State has just mentioned that matter. From reading his work in opposition, one cannot fail to see some of his ideas as welcome steps. His dynamic welfare paper promised a 55% taper rate, lower marginal deduction rates for every family, £2 billion a year more going into the pockets of families and £500 million a year less being spent on administration.

The Secretary of State now appears to want to set a taper rate for the universal credit of 65%, 10 percentage points less generous than he advocated in his previous paper. The impact of that was described by his own Centre for Social Justice thus:

“Setting it higher than 55% would increase MTRs”—

marginal tax rates—

“for those working households in receipt of benefits other than Housing Benefit (even if their net income was higher than today). As a result, there would be a negative impact on earnings, and on the number of second earners in employment.”

From an initial inspection of what we have been offered today, it seems that in this Parliament we will get a higher taper rate, higher marginal deduction rates for some families, no additional money overall going into the pockets of families and a £2 billion increase in administration and start-up costs. Is that proof that there is no plan so worth while that the current Chancellor of the Exchequer cannot delay or damage it?

There is real concern that some of the measures imposed on the Secretary of State in return for allowing the universal credit to proceed are contradicting the policy aims that he has set out today. On the Government’s own figures, because of the June Budget 20,000 more people next year will face marginal tax rates of 90% and 30,000 more will face rates of over 70%. That is because of the Government’s plans to increase taper rates for tax credits. We must remember that phase 1 of the implementation plan for his dynamic benefits plan was to reduce tax credit taper rates from 38% to 32%. From this March, the Government are increasing the taper from 38% to 41%.

The small print of the Green Paper published in the summer read:

“The changes in the June 2010 Budget will increase the maximum Marginal Deduction Rate to 95.95 per cent.”

That is before even taking into account changes in the spending review, such as real-terms cuts in working tax credit and top-up low wages. Can the Secretary of State explain the approach that his Chancellor is adopting, and can he guarantee that as a result of these changes no one will have a higher marginal deduction rate? Will he tell the House whether anyone—for example, people who currently receive tax credits but not housing benefit—will face higher marginal deduction rates under his approach?

According to the IFS, of which the Secretary of State spoke approvingly in his statement, the tax credit and benefit changes announced in the June Budget mean that the poorest two deciles of the population will lose about 2% of their incomes over the coming Parliament, more proportionately than the rest of the population. Can he therefore inform the House whether all the analysis being bandied around today about out-of-work households moving into work and children being lifted out of poverty is relative to the position today, or only to the position after the substantial losses that people will face because of the Government’s already-announced cuts to benefits in this Parliament? Can the right hon. Gentleman simply provide the figures for this Parliament? Do the Government expect child poverty to have fallen or risen by the end of this Parliament? The Office for Budget Responsibility predicts that an extra £700 million will be spent on unemployment benefits because a longer dole queue following the June Budget has consequences for the welfare bill.

The right hon. Gentleman has allowed all this to happen in return for the Treasury allowing him to spend £2 billion on the new system. Can he give us today the breakdown of the £2 billion secured for the implementation of the universal credit—the IT breakdowns and the transitional costs for affected families? Can he pledge that he will not raid any other part of his departmental budget in this spending review for this purpose if it turns out that that money is insufficient? How does the right hon. Gentleman respond to reports in The Times today that he will need to secure another £2 billion on top of the £2.1 billion that he referred to in his statement to guarantee his pledge, which he repeated to the House today, that

“There will be no losers”?

Is the Treasury underwriting the promise that he has just given the House?

To conclude, securing headlines—I have to admit that my colleagues and I came to understand this over 13 years—is a lot easier than securing reforms. This morning, the Secretary of State said in an interview on the radio:

“This is about saying to people: if you try, if you co-operate, if we work with you and work pays and you still can’t get a job then our duty is to support you.”

How can he possibly reconcile those words with the plans his Government have announced to cut 10% of the housing benefit of anyone who cannot find work within a year, even if the jobcentre thinks that they are taking all the correct measures? When he gets to his feet, the Secretary of State can perhaps explain to the House how he justifies that measure, whether it is set to continue permanently within the planned universal credit and, frankly, how it fits with the principles that he set out on the radio this morning.

[Mr Duncan Smith]

I am glad that the right hon. Gentleman spent so much time saying how much he supported this measure—that is really helpful. He then dwelt on a lot of things that were not necessarily relevant to it, but I will come to those none the less.

I am sorry that the right hon. Gentleman seems to be less than positive. I had hoped that he would consider this to be a major change, which would benefit the very people he says he is in favour of supporting. There is absolutely no question but that this measure will support and improve the quality of life of those who are likely to be affected. When he gets to the White Paper, I would draw his attention to a chart on page 53, which shows that the bottom deciles—this is from the moment that he left office right the way to the moment set out in the chart—will actually improve their life quality dramatically, taking all matters into consideration and sweeping all the way up to the moment we implement this. The poorer will be better off, and I wish the right hon. Gentleman could have taken the opportunity to welcome that. That is the reality for him and his party, and if I were in his position, I would have been a little more positive.

We believe that child poverty will fall. Let me just deal with the story in The Times about the money, which the right hon. Gentleman mentioned. The fact is that the £2.1 billion is a full envelope for spending review 10; it is absolutely enough to get us to that point. I said to the right hon. Gentleman privately, and I say again publicly, that as we implement these measures over three years of this Parliament and a further two years of the next Parliament, more money will, of course, be required, and that is guaranteed, but we will come to that in the spending review for the next spending review period. [Interruption.] Yes, it will be guaranteed, because we have to implement this programme.

Within that £2.1 billion, we will also invest in setting up essential IT systems. The right hon. Gentleman knows, because we have spoken about this, that these are medium-level IT systems. Even in his time, the Department for Work and Pensions handled these systems very well, and there were no problems with them at all. The money will also be used to support the running of the new system and the migration of current benefit and tax credit recipients from today’s system. Within that, we will also guarantee, as I said, that nobody loses out.

On the IT challenge that we dealt with, I remind the right hon. Gentleman that, even in his time, we managed to implement some very similar projects and to operate them very well. This is by no means a monolithic system like the Rural Payments Agency or the National Offender Management Service. During his time, the DWP had a strong record of successful IT delivery on systems such as the employment support allowance system, which was roughly on the same scale, and the pension reform system. Both were similar IT systems and both were managed without any particular problems. We are determined that the IT situation will be managed very well, and that we will be able to complete the process.

The support that, as the right hon. Gentleman says, we will give to those who are transiting is covered in the £2.1 billion. I repeat that we will protect those people who, for particular reasons, find themselves on slightly lesser moneys for as long as they stay in that situation. As they move up, they will gain dramatically. Even if they were to fall back, relative to where they were, they will gain dramatically. The reality, I hope, for the Opposition, as they think this over carefully, is that even if they were to return to power, this system would benefit those people.

The right hon. Gentleman asked me about the taper rate. The taper rate that we talked about when I was at the Centre for Social Justice was an optimum taper rate with everything taken into consideration. The taper rate itself involves a decision, which a Government of any hue would take, about how to set the balance between what we can afford and how much we will be able to give people as they go back into work. The real issue here is not that the taper is 65%. Even with 65%, all those who go back into work will be better off as they work through the hours. If the right hon. Gentleman is saying to me that he would prefer a 55% rate if he were in power, that is fine. He just has to tell me where he intends to get the money from, and that is the issue I have not heard him or his colleagues say anything about since they left us with the worst budget deficit in living memory. I only ask the right hon. Gentleman and his colleagues to think of this as a positive measure. Even if they were in power right now, it would help the poorest in society absolutely dramatically.

[Several hon. Members]

rose—

[Mr Roger Gale (North Thanet) (Con)]

The introduction of workfare is about 25 years overdue. I congratulate my right hon. Friend on grasping that nettle and I hope that he will not let go of it. One aspect that he did not touch on was the operation of the jobcentres. Jobcentres are no longer jobcentres, but benefit-processing centres. Will he say just a little about how he intends to address that issue?

[Mr Duncan Smith]

I understand the point that my hon. Friend is making. The reality is that we will reform the whole jobcentre process to make sure that it dovetails with what we are trying to do. Yes, of course, there are areas where some of the advice that is given is not always necessarily of the highest quality, but most jobcentres, and most of the people who work in them, are determined to help the individuals they meet, to advise them properly and to get them back into work. Of course, the Work programme will include private and voluntary sector organisations, so we will tap into the very best qualities and skills that lie outside the jobcentres. My hon. Friend should rest assured that this will only get better.

[Miss Anne Begg (Aberdeen South) (Lab)]

The creation of a single working-age benefit is the holy grail of welfare reform, and the Government will need to be congratulated if they can pull this off, especially if they fulfil their promise that there will be no losers. I am sure that the Work and Pensions Committee, which I chair, will watch the issue carefully. However, I am still not clear as to where the tax credit system fits into the universal credit. The Secretary of State did not answer the questions from the shadow Secretary of State about where they will fit. Will there, for instance, be a single application form to cover the Treasury-delivered benefits and the DWP benefits?

[Mr Duncan Smith]

The problem right now is that when people make applications, they have to make at least two completely separate applications at the same time if they are going back to work. There is literally no communication between HMRC and the DWP about what they are sitting on and what they are making their calculations about. That is why the reconciliation at the end of the year is so gross and why we so often have major overpayments and then try to claw money back. The purpose of these proposals is to bring everything together so that we have one single point from which to take information. Therefore, the tax credit system and the DWP system will come together to create this single taper withdrawal. In future, as people’s circumstances change as they go into work—in the past, if they did not inform HMRC or the DWP, they might have been overpaid because they did fewer hours—the information will automatically cascade back to the centre, and we will know what people are doing, so they will be paid exactly what they are meant to be paid. There will be no chase for the money at the end of the year, which, as the hon. Lady and many others know, causes fear and worry among far too many constituents who find that they have been overpaid and have to pay the money back.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

May I congratulate my right hon. Friend on his ambitious programme of welfare reform? Among the most important components in it are the steps that he is taking to overcome one of the greatest problems in the system, which makes people reluctant to take work when it is available. Not only might people not earn much more in work than on benefits, but they fear that the job they take might be short-lived and that they might then find it difficult to get back on to benefits if they become unemployed again. Will my right hon. Friend spell out what that involves and, in particular, how he will tackle the problem of people fearing that they might lose housing benefit?

[Mr Duncan Smith]

My right hon. Friend is absolutely right. One of the great fears that people have, particularly in respect of housing benefit, is that it can take a month or so before they get their benefit back as they come out of work. Because that will be included at the point at which they make the application and because that is tapered into the benefit, there will be a seamless change or transfer. As they come out of work, they will do so with their gross amount exactly as it should be—the thing that will change is the level at which they taper. In other words, the amount will be what they are necessarily paid in benefits. They will not suddenly have to make a reapplication—there will be a seamless process—which should get rid of exactly the fear that my right hon. Friend talks about.

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

Like my hon. Friend the Member for Aberdeen South (Miss Begg), I congratulate the Government on their intentions to make work pay and simplify the system. I very much wish that project well.

The Secretary of State will be well aware of Labour Members’ concerns that spending announcements to date have hit women twice as hard as men. Will the universal credit be assessed on a household basis? If so, what assessment has he made of the impact of moving money from purse to wallet within that model and of the impact on women?

[Mr Duncan Smith]

The system will assess at household level, but of course, the beauty of that is that we will understand better what household needs are. Two things that will hugely benefit women will flow from that. First, in knowing what that household should have, we will have a much higher take-up rate. Therefore, the in-work poverty that has been terrible until now will hugely be resolved. The second aspect that is really good for women is that, as the hon. Lady knows, many women who have caring responsibilities do short-hours work. The proposal will hugely benefit them because they will retain more of their income as they go into work. They will be beneficiaries, which I hope helps her.

[Jenny Willott (Cardiff Central) (LD)]

I, too, welcome today’s announcement, particularly the expected effect on poverty and especially child poverty. This is a critical reform—as the hon. Member for Aberdeen South (Miss Begg) said, some of us on the Work and Pensions Committee have been pressing for it for a number of years.

Who will run the mandatory Work programme? Will that involve third sector partners? How will the Secretary of State ensure that the programme remains distinct from the community sentence programme?

[Mr Duncan Smith]

The Work programme will start well in advance of today’s proposal—we anticipate that it will start next summer. There will be a set of contracts on a regional scale that will involve the private and voluntary sectors. Organisations will run programmes against a set of outcomes, for which we will pay them, so that as they deliver and get more people back to work, they will be paid for those results. That will be carefully balanced so that we do not pay them for dead-weight costs that might otherwise have been in the system, but it will certainly be clear.

[Malcolm Wicks (Croydon North) (Lab)]

I welcome very strongly the strategic direction of the Secretary of State’s statement, but comparisons will inevitably be drawn with the 1940s. That should remind us of the importance of the work ethic and the fact that citizens have both rights and duties when it comes to benefits and work. It also reminds us of the importance of employment policy. I say that not in a partisan spirit, but because I think there is a real difficulty. Churchill’s coalition Government and Attlee’s Labour Government took measures to move towards full employment—with great success. When a Government take 1 million jobs out of the economy, both public and private sector, does the Secretary of State understand my concern about the chances of success of the good strategy announced today?

[Mr Duncan Smith]

I am grateful for the right hon. Gentleman’s words of welcome—I particularly value them because I am a huge admirer of his, as he knows. He is right to draw the parallel with the 1940s, not for anything to do with Beveridge, but simply because high withdrawal rates were possible in the system that was set up at that time because the people involved were mostly men who were either in work or out of work—there was very little part-time work in that sense, so withdrawal rates had no effect. Today, because of the nature of part-time work, withdrawal rates cause real problems for people, particularly as they go back to work.

On jobs, I simply say this: yes, as the economy grows, those jobs will be created, but let us not forget that in the past three months, over 1 million jobs went through my jobcentres, and 450,000 jobs rotate through them every week.

[Tracey Crouch (Chatham and Aylesford) (Con)]

Unfortunately, there has been much scaremongering about the impact of welfare reform on those who are disabled or who have mental health conditions. Will the Secretary of State assure the House that the most vulnerable members of society will still get the support that they need?

[Mr Duncan Smith]

Yes, I can give such an assurance to my hon. Friend. We have for some time needed to simplify and streamline the current disability payments and to target the support obviously and particularly on the most severely disabled people through the universal credit, which will happen, and through reform to disability living allowance. DLA will not be incorporated into the universal credit—it will continue as a separate allowance because it is non-work related. I can promise her that that is uppermost in our minds in the design of the system.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

The Government and employer organisations have confidently asserted that the expected huge rise in unemployment owing to job losses in the public sector can and will be ameliorated by the creation of jobs within the private sector, albeit neither can put a time scale or numbers on that assertion. Will the Secretary of State guarantee that the changes will not be used by employers in the private sector to drive down wage levels to at or below the national minimum wage?

[Mr Duncan Smith]

May I first of all say that I hope Labour Members do not simply continue to hope for the worst and preach? The reality is that even in the past few weeks and months, there have been more than 300,000 new private sector jobs. As I said, more than 1 million jobs went through the jobcentres in the last three months and were found for people. Today’s statement is about making people better off. If I were sitting where the hon. Lady is sitting, I would say, “How wonderful if the bottom three deciles improve their incomes.” The hon. Member for Bishop Auckland (Helen Goodman) may laugh, but in her time in the Government, they spent money and failed and left us with a deficit. Labour Members should apologise for that.

[Robert Halfon (Harlow) (Con)]

I congratulate my right hon. Friend on his statement, particularly as the previous Government’s approach to welfare reform was more Ethelred the Unready than Nixon in China. Is he aware that more than 8,000 people in my constituency are on out-of-work benefits? That is one in 10 people. Will the Minister assure them that the universal credit will protect the most vulnerable and give others a real incentive—more money, not less—as they find jobs?

[Mr Duncan Smith]

The universal credit is about what happens to people as they seek and go back to work. Benefit levels for disabled people—whatever their condition—will continue and be maintained. Those who need support will receive it, but the most beneficial thing for people in my hon. Friend’s constituency is simply this: we are at last going to try to get to that group who have been left behind. More than 5 million people were left behind without jobs in workless households during the high years, with children in poverty. That is what we hope to break. I hope that that is seen as a positive message.

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

I applaud the Secretary of State for his announcements today and for his efforts to incentivise work, but I still have an arithmetical problem despite his answers to previous questions. I am struggling to see how 450,000 job vacancies divide into the 5 million people that the reforms aim to help. I am hoping that he can explain.

[Mr Duncan Smith]

This universal credit comes in over a period of four or five years. In the time over which it is implemented, even under the hon. Lady’s most pessimistic forecasts, the British economy will grow and create more jobs. The Office for Budget Responsibility, which is independent, forecasts growth of some 2.5%, which will lead to much higher numbers of private sector jobs. The reality is that we must prepare the ground. The important thing is that people are better off as they go to work and take those jobs. The point of the proposals is to break the cycle of people saying, “It’s not worth me going to work and it is worth me staying on benefits, because work does not pay.” The proposal is about work paying.

[Mark Lancaster (Milton Keynes North) (Con)]

What specific measures will the Government introduce to help disabled people to get into work?

[Mr Duncan Smith]

As my hon. Friend knows, there is a slightly complex group of benefits and supplements with respect to disability. DLA is non-work related, but there are disability supplements for jobseeker’s allowance. Many of the disability organisations that we consulted said that the one thing they hoped for from the reforms is that the Government value disabled people, which we believe we do, and give them a chance to go back to work. Apart from the fact that we are creating work choice, the key thing is that the taper rate comes with a disregard. If we give disabled people on the universal credit a larger disregard on their income, we give them more money, which allows them a beneficial position as they go back to work.

[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State knows that work is good for people’s mental health, but he will also recognise that many people who have severe, long-term mental health problems find it difficult to keep permanent employment. What reassurance can he give that such people will not be discriminated against by the benefits system or by employers?

[Mr Duncan Smith]

I completely agree that such discrimination is unforgivable, and we have to change such attitudes if they exist. The real beauty of our proposals is that we will be able to adjust rates according to people’s incapacities. So individuals with particular problems or disabilities will be much more valuable in the workplace than they are now. That is the one thing that the organisations said to us—that those people want to be in the mainstream and in work like everyone else. Our proposals will help that more than anything we are doing at the moment.

[Mr Philip Hollobone (Kettering) (Con)]

May I congratulate my right hon. Friend on his statement? My constituents in Kettering will be right behind him. Often the difference between making more money in work and lounging around on benefits at home is the travel costs to and from work. How will they be taken into account in the calculations?

[Mr Duncan Smith]

My hon. Friend is right about travel costs. The key point is that if someone going to work retains significantly more money, their travel-to-work costs become much more affordable. Therefore they are able, as other people in work do, to make decisions about travelling to a job over a slightly longer distance. That will be wholly beneficial to those who are out of work.

[Sheila Gilmore (Edinburgh East) (Lab)]

In his statement, the Secretary of State used the fact that 37% of ESA claimants did not proceed to full assessment to insinuate that people were withdrawing their claims because they were trying to cheat the system. Current ESA claimants are people who have newly fallen sick, and they are not long-term claimants. Most of them recover from their illnesses during the assessment period and get back into work, so I ask the Secretary of State to withdraw that assertion.

[Mr Duncan Smith]

I made no such assertion. What I was demonstrating was that if you put a check in place and ask people to demonstrate their situation, those who are bent on a different purpose will naturally fall out. I used the last Government’s work capability assessment programme to illustrate how that affects new entrants. I was by no means casting aspersions on anybody who is going through the programme, because they deserve what they get.

[Tony Baldry (Banbury) (Con)]

Many of those who are out of work will need to update existing skills or acquire new skills to help them get back into the world of work. What is my right hon. Friend’s Department doing to try to ensure that people who are out of work can access skills through the further education sector and other means?

[Mr Duncan Smith]

This comes back to the Work programme, because it will be about drawing in mentors from the private sector to advise people on setting up businesses and to give other support and advice. The mentoring programme will allow us not only to get people into work, but to mentor them until they get the work habit. That is the critical point. Once they get the work habit, they will be capable of looking after themselves.

[Mr David Crausby (Bolton North East) (Lab)]

The minimum wage plays an essential part in making work pay. Has the Secretary of State forgotten that he was completely opposed to the minimum wage and did all that he could to prevent its introduction? Will he ensure that he makes work pay not only by reducing benefits?

[Mr Duncan Smith]

There are several ways to make work pay beyond what I am doing. Making work pay by leaving people with more of their own money in the first instance will be a major step forward. The minimum wage is a good indication of how to set the base below which people should not fall. Another area in which the Government have also made a start is lifting the tax threshold for the poorest people. As we have said, we intend to move that all the way up to £10,000, and I hope that the hon. Gentleman will welcome that.

[Andrew George (St Ives) (LD)]

Will this targeted work activity effectively be a stick—a humiliating sanction—which will not work, or will it be a carrot and a golden opportunity that will build a bridge between joblessness and the workplace, which would be welcomed by unemployed people and the voluntary sector?

[Mr Duncan Smith]

I think that the hon. Gentleman is referring to the mandatory work placement. May I explain to him that there has been some over-excited commentary on this proposal? It will be available to jobcentre staff who will be able to use it for two categories of people. First, if someone has been out of work for a long time and comes in, clearly demoralised and with very little self worth, and does not feel that they can get up in the morning—as normal people do when they go to work—they can be put on one of these placements, which will give them a start time and a place of work to go to. All the interviews we have done with people on this scheme have said that they benefited hugely from it because it got them up and out. They will still be brought back in to the jobcentre to look for jobs.

The second group is those people who, we suspect, may actually be already working. Placing them on such a programme does something quite neat: it means that they cannot go off and do the work that they are doing and claim benefit. Instead, they have to make a choice.

[Mark Durkan (Foyle) (SDLP)]

I am sure that we all want to be assured by the Secretary of State’s best attempts at a “Somewhere Over the Rainbow” version of his reforms, but we have to test them for the people in the places we know where low employment is an enduring problem. Do the projections for the universal credit include Northern Ireland? In answer to the Chair of the Select Committee, the Secretary of State mentioned bringing the tax credit systems and the DWP systems together. Has he factored in the Social Security Agency in Northern Ireland and discussed the implications with the Minister responsible?

[Mr Duncan Smith]

As the hon. Gentleman knows, I have been over there and discussed these matters with my opposite number. I want the reforms to apply to Northern Ireland, and they will. The area has particular problems, as he knows, and we need other devices to overcome those. However, people are unemployed and without work for much the same reason as over here, and I therefore look forward to being able to implement these reforms in Northern Ireland.

[Mr Rob Wilson (Reading East) (Con)]

I welcome my right hon. Friend’s statement this afternoon. It will do an enormous amount to help people to get back into work. Does he agree that it is important that we have a well-informed debate about this and will he join me in rejecting the ill-informed comments by the Archbishop of Canterbury? Perhaps my right hon. Friend could invite the Archbishop on one of his frequent visits to an area where he could see first hand some of the problems that these communities face, so that he may be better informed in future.

--- Later in debate ---

[Mr Duncan Smith]

I am always happy to seek to inform people so that higher authorities may be informed in their turn.

[Mr Chuka Umunna (Streatham) (Lab)]

I have not had a chance to read the White Paper this morning, but my understanding is that the universal credit will be introduced from October 2013. The Secretary of State mentioned IT issues, and HMRC’s business plan says that the update of the PAYE system, which will be integral to the transition to the universal credit, will not be complete until April 2014. How will the Department reconcile the date for the introduction of the universal credit with the delayed completion of the update of the PAYE system the year after?

[Mr Duncan Smith]

I am grateful for that question because it allows me to get rid of a slight misunderstanding. HMRC’s programme is about upgrading the whole of the PAYE system. What we are dealing with comes before that and we do not need all that. We need two important things. As employers collect and collate the information about circumstances anyway, they will download it to the Department each month, instead of waiting until the end of the year. We need two data streams, one sending data through, the other sending data across. That needs a software programme, but it is well below what is being done to PAYE. We will be able to do that on a real-time basis and it will happen before the PAYE changes.

[Charlie Elphicke (Dover) (Con)]

Child poverty rose by 300,000 in the dying years of the previous Government. Can the Secretary of State tell the House more about how his radical reforms will undo that damage and lift more children out of poverty?

[Mr Duncan Smith]

The last Government spent more than £35 billion on child poverty, and they are to be applauded for making some changes and lifting 100,000 children out of poverty. We should be conscious of that and I will not say anything other than that that was the right direction of travel. However, that was a lot of money to spend to get what was quite a narrow effect, and child poverty rose relatively speaking after 2004. The best approach, we think, is the universal credit, because take-up rates will improve, allowing families who do not know what they are eligible for to take the money. That will automatically improve the quality of life for those families and have a huge effect on child poverty.

[Helen Goodman (Bishop Auckland) (Lab)]

As I understand it, the new contract that the Secretary of State will introduce will begin from day one of a person’s unemployment, so he will be tearing up the old contract and the entitlement to benefit of people who have paid national insurance. Furthermore—as the hon. Member for St Ives (Andrew George) pointed out—the sanctions regime will also be introduced at that very early stage. Does not the Secretary of State realise that it is an extremely inefficient way to run an economy to force people with high skills into jobs for which they are not suited? We do not want physics graduates on the checkout till.

--- Later in debate ---

[Mr Duncan Smith]

I am saddened by the hon. Lady’s question. She is wrong. First, the contributory principle still exists. The contributory benefits will run in parallel; we are not getting rid of those. Secondly, she said that we should only ever get people into jobs that their top qualification allows them to get. I think that getting people into work is the most important starting point, and from there they can move on. [Interruption.] Oh, quite the contrary! I have been unemployed, and I would have done anything to get a job.

[Julian Smith (Skipton and Ripon) (Con)]

My local jobcentre told me last week that many well-paid caring jobs are not being taken up by jobseekers. As well as addressing the disincentives in the current benefits system, do we not need to encourage jobseekers to be less picky about the jobs they go after? Every job is of value.

[Mr Duncan Smith]

I agree that all jobs have a value, and that we want people to get jobs, to move on and to be assisted in getting better and better pay and circumstances. Carers will benefit from this system because it allows them to balance their work and caring responsibilities by picking the hours that suit them. Carers organisations have told us that the critical point is that often carers are locked into one set of hours that do not suit them. This system will allow them to take the relevant hours while fulfilling their caring responsibilities.

[Clive Efford (Eltham) (Lab)]

The Secretary of State will be aware that jobcentre staff already have sanctions they can take out against people who they believe are avoiding going back to work. This morning, on the “Today” programme, as my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) pointed out, the Secretary of State suggested that, where people are working with jobcentre staff and searching for work in earnest, the Government’s duty is to work with those people to find them jobs. Does that mean that, where someone has been unemployed for a year, jobcentre staff will have some discretion in deciding whether they should continue to receive benefits, if they have been earnestly searching for work?

[Mr Duncan Smith]

The hon. Gentleman makes a legitimate point, which is that jobcentre staff still retain some discretion when they believe that somebody is making every effort. As he knows, the key is to deal with people who are simply making no effort to find work. The previous sanctions regime existed on that simple basis—in other words, if somebody is not trying, they will be sanctioned, but if they are trying, they will not be.

[Julian Sturdy (York Outer) (Con)]

I congratulate the Secretary of State on grasping the nettle on this difficult issue. May I ask him about part-time and seasonal workers? Will he outline in more detail the support that will be available to allow them to take jobs and help them back into work, while saving the taxpayer money?

[Mr Duncan Smith]

There is an important feature to the new system that will help people taking seasonal work. In the past, as they shifted their work patterns, the system took a while to catch up, and often overpaid them and caused them difficulties when it tried to withdraw the money. This will benefit them greatly.

[Julie Hilling (Bolton West) (Lab)]

I very much welcome any support for people to get back into work, but I am a little concerned. As always, the devil is in the detail. The document states that nobody will lose out under the reforms, but it also mentions capping housing benefit after 12 months and so on. Will the Secretary of State assure me that nobody will lose out under the reforms?

[Mr Duncan Smith]

They will not. We have given that commitment, and it can be found within the £2.1 billion.

[Mr Peter Bone (Wellingborough) (Con)]

It is a sad fact that in Wellingborough there is a subculture of young people who have never known a family where anyone has ever worked, and who have always lived off benefits and in social housing. They come to my surgery to try to get a bigger house. How do we break that cultural trend? It is not just about incentives; we have to break the culture.

[Mr Duncan Smith]

Alone, this would not be enough, but my point is that it will run in parallel with the Work programme, which will get to unemployed people, such as the young people going to my hon. Friend’s surgery, early and wrap around them a process that gets them away from that culture. Often they come from homes where there is no work. This programme will get them to see and work through the fact that being in work is the best and most important thing if they want to take control of their lives.

[Anas Sarwar (Glasgow Central) (Lab)]

Can the Secretary of State explain why areas of highest unemployment will suffer most in the transition to the new Work programme? In Glasgow, there will be a six-month gap between the current programme ending and the new Work programme starting. What will fill that gap? This transition will affect thousands of people in the city of Glasgow alone.

[Mr Duncan Smith]

We are introducing the Work programme as fast as we can, and the summer target for that is critical. It will make a huge difference. However, I must tell the hon. Gentleman that the biggest gap is the one left to us by the last Government, as a result of the major deficit and their failure to fund any of the programmes that they said they would.

[Matthew Hancock (West Suffolk) (Con)]

I warmly welcome today’s announcement, like Members on both sides of the House. I also welcome the rhetorical conversion of the Labour party to the importance of incentives and marginal withdrawal rates. It is a pity that they have not been a part of the discussion over the past decade. Once the programme is fully implemented, how many people will benefit from lower marginal withdrawal rates?

[Mr Duncan Smith]

I can give my hon. Friend the exact figures later. I can tell him now, however, that there will be a huge uptake, because the marginal withdrawal rates will be so much better for those going back to work. I hope he will forgive me if I cannot give the figures on the spot. However, they will be significant, and people going back to work will benefit enormously. That will be a real incentive for those going back to work. He talked about how the Labour party has been converted. Sometimes, listening to Labour Members’ questions, I wonder whether they have been converted or just hate the idea that somebody is doing something they should have done 10 years ago.

[Ian Mearns (Gateshead) (Lab)]

The Secretary of State has said that getting people into work is the most important thing, and I agree with him. He has also given an undertaking to continue to help people with disabilities to gain employment. However, his Department has cut access to work grants to assist employers in adapting work places to facilitate the employment of people with disabilities. These are particularly important for small and medium-sized enterprises, where jobs will be created. Does he think it is time to rectify that mistake?

[Mr Duncan Smith]

Actually, we are not cutting the access to work grants—[Interruption.] No, they are being refocused on larger employers. More people will get back to work as a result of what we are doing, so it will be of more benefit than the previous system.

[Bob Russell (Colchester) (LD)]

Let us be clear. I do not want a higher welfare bill, and I do not support those who cheat the benefit system, but I do encourage the Government to take equal measures against those who cheat on their tax. The statement of about 1,200 words mentioned children only twice, in acknowledging that more than 3.5 million children will still be left living below the official poverty line. Where does the statement:

“We are developing…sanctions for those who refuse to play by the rules”

place households with babies, infants and children of school age?

[Mr Duncan Smith]

A variety of programmes affect some of those groups, and the hon. Gentleman will know that extra money has been refocused on early years. The hon. Member for Nottingham North (Mr Allen) and the right hon. Member for Birkenhead (Mr Field) are producing reports on this. We are looking at dealing with those areas separately. If the take-up improves, which it will because it will be automatic, it will directly affect a significant number of people. We genuinely believe that even in a static state about 350,000 children will be lifted out of poverty. That has to be a pretty good start compared with what happened before.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

The Secretary of State said that carers will be able to adjust their working patterns according to their own time scales and choose their own flexible hours. How will he ensure that employers agree to that according to the carers’ needs, rather than the employers’ needs?

[Mr Duncan Smith]

The point about this system is that because it does not say that people can work for 16 hours—or whatever it is—they can go back into work. Because work pays in every hour they take, they will be able to look at 10 or 15-hour jobs—or whatever—that may be available. For each one, they can make an adjustment and say, “Well, that would suit me. I’d be able to take that,” whereas before—[Interruption.] Employers will have to advertise those jobs, because they will be available now and people can do the work. The point that I am making is that people can take those jobs now because they pay, whereas before it would not have paid them to work those hours.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Does the Secretary of State agree that one of the best ways to make work pay is to ensure that it pays not simply a minimum wage, but a living wage? What does he intend to do about that? Can he also give me an assurance that there will be some joined-up thinking and that those who are genuinely seeking work, even if they are out of work for more than a year, will not have their housing benefit cut?

[Mr Duncan Smith]

The policies on housing benefit stand as they are. On the hon. Lady’s point about a living wage, I genuinely believe that the reality is that what we are doing is the best way to ensure that households end up with a living wage. In the past, because the system was so difficult and complicated, the first person into work in a household would often not be able to earn enough money to support the household. Because it will pay more to be in work, the process that we are introducing will give the first person in a household who goes into work a greater opportunity to earn enough money to support the household, allowing the option for the second earner to be just that: an option, rather than an absolute must.

[Mr David Winnick (Walsall North) (Lab)]

In the real world, is it not the case that 18 unemployed people are chasing every vacancy and that two thirds of our unemployed people have each applied unsuccessfully for 11 positions? Let me also tell the Secretary of State that the sum of his recent utterances about the unemployed reminds one of his constituency predecessor, who at a time of mass unemployment in the 1980s told the unemployed to get on their bikes. Now, apparently, it is buses.

[Mr Duncan Smith]

The reality is that the hon. Gentleman should welcome the programme that I am introducing today, because it will improve the lives of the poorest in society. I am sorry that he chooses to cavil about this. My comment on buses was simply this: people on low incomes in London and many other cities recognise that it is sometimes necessary to travel to their places of work. That is the key point. Frankly, I do not need any lectures from him, and if he and his party—[Interruption.] No, they should be prepared to accept that the recession that he refers to is the recession that they left us.

[Fiona Mactaggart (Slough) (Lab)]

I am proud to represent a town that exists because it has work, and I am proud to have been part of a Government who, for the first time in nearly 20 years, reversed the increase in child poverty. However, I am concerned that the Secretary of State’s announcement will not achieve what I believe he intends to achieve. We know that the best way to tackle child poverty is to increase women’s income. In Slough, the average bus fare is about £3.50. His taper says that people will keep 35p in every £1 that they earn. If a woman is doing a job that she can get to while her children are at school—for four hours a day, say—she will have to work the whole time just to pay her bus fares, ending up with £4 more. Will he not take the advice of his hon. Friend the hon. Member for Kettering (Mr Hollobone) and do something about the cost of travel to work?

[Mr Duncan Smith]

The hon. Lady has to admit that the one group that will be hugely affected in a positive way will be women going into work, because so many are engaged in caring and work and in having to balance the two. They will be paid more for the hours that they work, because they will retain more of their money. Of course there might be disputes and debates about whether we need to support people with travel costs, but it is a bit rich for the Opposition to give us lectures about travel costs after they left us without having done anything about them at all.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

A few moments ago the Secretary of State said that if an unemployed person is trying to get a job, they will not have sanctions placed on them. Can he please explain how he reconciles that with the 10% cut in housing benefit for those who have been unemployed for more than a year?

[Mr Duncan Smith]

Very simply, that is a disincentive for people to go to work. The policy stands as it is, as I announced in the debate on Tuesday, and if the hon. Gentleman had any issues to raise, he should have raised them then.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

My hon. Friend the Member for Glasgow Central (Anas Sarwar) asked a reasonable question about the gap between the end of the current programmes and the start of the new programme. I am afraid that the Secretary of State departed from his general tone by giving him a fairly party political response. Will he take the point seriously? A gap of three to six months will be extremely significant, so if the new schemes are not ready, why can we not consider extending the current schemes in the meantime, to ensure that we do not leave people without the support that they need?

[Mr Duncan Smith]

I believe that the programme that we have set out and the timings that we have set for it—it starts next year in the summer—will help all those who need support to get back into work. We can debate or argue about the gap, but my general view is that as employment rises and as we start that process, we will see more people going back to work, and we will be able to support them in a better way than through the previous programmes, which we believe actually cost more money than they returned.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before we move on to the next statement, it might be convenient to remind the House that only those who are here for the statement can ask questions about it, and, just as before, I ask for single questions and pithy answers please.

Work and Pensions

Iain Duncan Smith Excerpts

Thursday 11th November 2010 Ministerial Corrections

The following is an extract from the oral statement on welfare reform given by the Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) on 11 October 2010.

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

We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million—have been claiming for an entire decade, and a system that has left Britain with the highest rate of jobless households in Europe.

[Official Report, 11 October 2010, Vol. 516, c. 34.]

Letter of correction from Mr Duncan Smith:

An error has been identified in the first sentence of the fifth paragraph of the oral statement of 11 October.

The correct sentence should have been:

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

We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million—have been claiming for an entire decade, and a system that has left Britain with one of the highest rates of jobless households in Europe's major economies.

Housing Benefit

Iain Duncan Smith Excerpts

Tuesday 9th November 2010 Commons Chamber

[Mr Alexander]

I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession—that is undisputed—but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.

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

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%. That was fuelled hugely by the Labour Government’s reform to local housing allowance. The figures show that today’s rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.

[Mr Alexander]

I am happy to come on to deal with exactly those points, which echo some that we have heard.

[Mr Alexander]

I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills—

[Mr Duncan Smith]

Explain it.

[Mr Alexander]

I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department’s own statistics show that since 2000 more than half the increase in the housing benefit bill—54%—did not come from the few high claims. It came from poorer private tenants—those in low-paid work, and disabled or elderly people—claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.

--- Later in debate ---

[Mr Alexander]

I have great respect for the hon. Gentleman, but there is a difference between having a duty to act—and we support the case for reform in housing benefit—[Hon. Members: “Ah!”] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the ’80s and ’90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.

The core of the Government’s policy is their belief that by cutting or capping housing benefit—this has been the substance of a couple of interventions—they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government’s regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.

In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?

[Mr Duncan Smith]

Bureaucratic nonsense.

[Mr Alexander]

I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.

Not only does the Government’s core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients—[Interruption.] From a sedentary position, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), says, “They would say that, wouldn’t they?” Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? “Yes,” I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.

--- Later in debate ---

[Mr Alexander]

I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.

[Mr Duncan Smith]

I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who think that our measures will socially cleanse London? Will he please answer that question?

[Mr Alexander]

I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.

[Mr Duncan Smith]

rose—

[Mr Alexander]

I am happy to give way.

--- Later in debate ---

[Mr Duncan Smith]

I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?

[Mr Alexander]

I have said that I think London will look very different in the years ahead if the Government’s proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government’s policies, not about my words.

--- Later in debate ---

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

I rise to oppose for a number of reasons the motion moved by the Opposition. I will deal with it quickly, and then move on to the rest of the rationale behind the speech by the right hon. Member for Paisley and Renfrewshire South (Mr Alexander).

In the past two weeks—particularly, in the past two or three days—the right hon. Gentleman has started trying to reset the tone in the motion. None the less, the facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. There is no policy in this motion at all. Despite the major deficit that we have inherited, and despite the fact that housing benefit is running out of control, he did not say a thing about what he is planning to do. Opposition comes with responsibilities, and one of them is to have some policies before criticising, but the Labour party has none.

The right hon. Gentleman is basically a reasonable man, and I look forward to dealing with him—[Interruption.] That is very kind. Thank you. So we are all reasonable across the Dispatch Box. But what is not reasonable is what has gone on over the past two weeks. I am pleased that in the past few days he has suddenly entered the fray, because he was suspiciously silent when a lot of his colleagues were running up and down the place trying to frighten the public about the changes. In many senses that was quite disreputable. Two weeks ago, the hon. Member for Rhondda (Chris Bryant)—the right hon. Gentleman’s hon. Friend—accused us of deliberately trying to “socially cleanse” London, and that is in Hansard. Furthermore, in the other place, one of the right hon. Gentleman’s great friends, Baroness Hollis, talked of

“Weeping children, desperate mothers, defeated fathers …carnage”.—[Official Report, House of Lords, 4 November 2010; Vol. 721, c. 1743.]

This has gone too far. I should also say that, encouraged by a nod and a wink from his Front-Bench colleagues, one of their great supporters in one of the national papers—a columnist—talked about our “final solution” for the poor. What they have actually managed to do—

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way in a minute, but not right now, because I want the Opposition to chew on this for a little. The way in which they have behaved over the past two weeks has been atrocious and outrageous. They knowingly used terminology used to describe events such as the holocaust, making shrill allegations of bitter intent that they knew would frighten rather than inform. I say “rather than inform”, because until Saturday, when the right hon. Member for Paisley and Renfrewshire South gave his interview to The Guardian, the Opposition’s manic rabble-rousing had failed to tell the public a rather interesting point: that had Labour Members been re-elected, they knew that they would have had to take strong measures. I will read a few quotations that should explain to his Back-Bench colleagues just exactly what Labour was planning to do.

The first quotation that I want to give them is from somebody whom I hope they will identify: their right hon. Friend the Leader of the Opposition. He said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

In the run-up to the election, the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that Labour’s LHA—he was describing his own party’s reform—had discouraged employment and was unfair. He made it clear that the policy was set for a major change and that Labour was to blame.

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

Before I do, I want to finish this one off. My predecessor, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), went even further before the previous election, hinting strongly at a much bigger change. She said that

“it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford.”

I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour’s flagship LHA reform was in an expensive mess, she went on:

“We will publish further plans…to make the system fairer, and to make sure housing benefit encourages people into jobs.”

Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public—the electorate—what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.

[Mr Douglas Alexander]

Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?

[Mr Duncan Smith]

I agree with Boris Johnson. What he said is that there will be no “Kosovo-style cleansing” of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.

[Emily Thornberry]

Will the right hon. Gentleman help us now? Which Front Bencher has been scaring my constituents by saying that the policy will be worse than the highland clearances? Which shameful Front Bencher has been telling the press that?

[Mr Duncan Smith]

I think that that is the case on the Opposition side. The reality is that they have been scaring the public, and they know it. I detect just a little dog whistle blowing from those on the Labour Benches, freezing and frightening everybody out there in the socially rented sector.

[Toby Perkins (Chesterfield) (Lab)]

rose—

[Mr Duncan Smith]

I want to deal with some of the allegations. Opposition Members made the allegations, so let us get the record straight. The first was that London will somehow end up like Paris—socially cleansed so that people live only on the outer circle.

[Mr Lammy]

It is true.

[Mr Duncan Smith]

Oh, it is true? Okay. Let me remind the House about one simple point. The proposed changes to the local housing allowance concern the private rented sector. London has nearly 800,000 social homes—by the way, the Labour Government built far too few in their time—and the changes do not affect them. London has social housing embedded in its heart, and that will not change. So Labour Members must have known that they were scaring people with a complete pack of lies and nonsense. [Interruption.]

[Mr Speaker]

Order. I apologise to the Secretary of State. I accept that there are strong views on this matter, and that the atmosphere is highly charged, but there are many subscribers to this debate, and for the benefit of Back-Bench Members, the Chair would like to accommodate as many as possible. The more noise there is, the greater the delay, and the more difficult it will be to accommodate them. Perhaps we can calm down a little.

[Mr Duncan Smith]

I am grateful to you, Mr Speaker. In the calmer mood, I will give way to the hon. Member for Hampstead and Kilburn (Glenda Jackson).

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Is it not also part of the right hon. Gentleman’s housing policy to ensure that rents in the social housing sector will rise to 90% of the median, and that the Government are considering abolishing secure tenancies?

[Mr Duncan Smith]

The answer is no for existing tenants. Our policy will apply to new tenants and new build, so the hon. Lady should check her facts.

Let us not forget that the private rental market is dynamic. That is the point that the Opposition fail to mention.

[Angie Bray (Ealing Central and Acton) (Con)]

Will my right hon. Friend give way?

--- Later in debate ---

[Mr Duncan Smith]

I will give way in a moment.

Around 40% of private rental tenancies are less than a year old, and 70% are less than three years old. What effectively happens in the marketplace is that there is a huge amount of movement. Another nonsense that Opposition Members have peddled over the past two weeks is that the sector is made up of a static group of people who have mostly lived in the same place all their lives and that we are about to uproot people who have a reasonable and rational reason to live where they are. In the past year, more than 100,000 people in the sector moved naturally. The idea that we will go in and raid all those homes is utter nonsense and scaremongering.

[Mr Slaughter]

The report referred to earlier says that independent research shows that 134,000 households will be evicted or forced to move when the cuts come in next year, and those are just the first set of cuts. It is the Government’s policy to get rid of new social tenancies and to raise rents for new tenants to 80%. Over a period, the exact effect of that combination of measures will mean that no one on a low income can live in the inner city. Will the right hon. Gentleman have the courage to admit that that is his Government’s policy?

[Mr Duncan Smith]

The impact assessment does not say that, and it is typical of the Opposition to take a figure for those who will be affected and assume automatically that they will be driven out of their homes. That is shameful.

[Angie Bray]

The scaremongering is a disgrace, and I am sure that many of us have had scared constituents coming to us having been worried unnecessarily by stories that they have heard from Labour Members. I have been looking online at some of the properties on offer in the private rented sector in Ealing and Central Acton. There are some remarkably good offers around that are well within the proposed caps—for example, a four-bedroom house with a garden at under £400 a week, and a flat for about £250 a week with access to a swimming pool. The situation is really not as dire as the Opposition are suggesting.

[Mr Duncan Smith]

My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say “have to move” because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.

[Mr Clive Betts (Sheffield South East) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

[Mr Douglas Alexander]

rose—

[Mr Duncan Smith]

I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?

[Mr Alexander]

I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his fellow Minister Lord Freud said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government’s position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?

[Mr Duncan Smith]

We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better—he has an ex-housing Minister sitting next to him—and that they know full well that those definitions of “homeless” are simply not true. He should have disowned them early on, before we started this debate.

[Simon Hughes]

The Secretary of State is rightly trying to lower the temperature and to ensure that we deal in facts and not in hyperbole. Will he take this opportunity to deal with one other myth that has become common? Will he confirm that, if anyone in the private rented sector has to move because their property has become too expensive, it is not the Government’s policy that they should move to a far-off community with which they have no links, and that the intention will always be that they should ideally stay in the community or council area where they come from and where they have lived?

[Mr Duncan Smith]

That is exactly what we want and what we intend. That is what we believe, for the most part, will actually happen—and in smaller numbers than people think. In some cases, there will be short moves even within boroughs.

I was asked about impact assessments, and we are going to publish them. We are bound to do so by the legislation. I am not trying to hide from that. We published an impact assessment after the Budget, and we are going to publish them when the legislation is due. I have already said that we will do that.

[Sajid Javid (Bromsgrove) (Con)]

My right hon. Friend was right to point out that I was shocked to learn in the Select Committee that I had been homeless as a child. I believe, however, that the question is not so much one of the definition of homelessness as one of whether people living on housing benefit should be forced to make the same choices that other low-income working families are forced to make. Those low-income working families typically pay rent to the 30th percentile and their children are forced to share bedrooms, as they would be in any ordinary family. It should be no different for anyone on housing benefit.

[Mr Duncan Smith]

My hon. Friend’s exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.

[Mr Douglas Alexander]

The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

[Mr Duncan Smith]

The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute—here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I give way to the hon. Member for Colchester (Bob Russell).

[Bob Russell]

Will my right hon. Friend clarify a point? Is he saying that rents are too high in the private sector? If that is the case—I am sure that is what he said—should there not be, in the interests of fairness, other measures to deal with landlords whose rents are too high?

--- Later in debate ---

[Mr Duncan Smith]

Let me deal with that question. My Department pays for 40% of all rental housing in Britain—we pay 40% of the total bills—and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase—it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA to rocket to provide landlords with excess amounts of money for providing housing that would have cost less. How do we know that? [Interruption.] I am going to answer this really important question.

We know that for two good reasons. First, if we compare those who remained on what was there before—it did not change for them because it was new people who came on to LHA—we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made. That is the first thing. [Interruption.] Hold on a second. That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.

The second point is that there are many things we can do. 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%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.

[Andrea Leadsom (South Northamptonshire) (Con)]

I have an excellent researcher who earns £22,000 a year. Just before I came to attend this debate, he pointed out that he has to commute into London because he cannot afford a room in central London. He remarked that his best chance of getting a flat in central London was to resign from his job and make himself homeless.

[Several hon. Members]

rose—

[Mr Duncan Smith]

May I answer my hon. Friend’s point first before I give way? My hon. Friend’s real point is that there is no fairness in this particular system when people who have to make decisions about their housing have to commute distances to get to work. That is the reality for them. The idea that people can live exactly where there is work is simply not the case. That is the choice that people have to make.

[Several hon. Members]

rose—

[Mr Duncan Smith]

Many of the colleagues of the right hon. Member for Paisley and Renfrewshire South want me to give way to them. Does he really want to take their place? Okay—

--- Later in debate ---

[Mr Alexander]

I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker’s allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.

[Mr Duncan Smith]

We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures—

[Mr Alexander]

rose—

[Mr Duncan Smith]

I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.

[Mr Marsden]

The right hon. Gentleman is setting the cap and justifying the 10% cut for the long-term unemployed on the basis that people will be moved from welfare into work. Does he not realise that part of that process involves retraining and reskilling? If he does realise that, why has there been so little discussion between him and Ministers from the Department for Business, Innovation and Skills?

[Mr Duncan Smith]

I do not quite understand why the hon. Gentleman asks that question. I have been talking about the issue endlessly to Ministers from the Department for Business, Innovation and Skills. [Interruption.] The hon. Gentleman can take my word for it that I have spent a great deal of time talking to them, but if he would like to attend the next meeting, I should be more than happy to invite him.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way, but I want to make some progress first.

The fact is that we have heard a lot of this nonsense. We have put aside a large amount of money—some £140 million, and we have been keeping the position under review—so that we can deal with the hardest cases when we believe that it is necessary for anyone to be affected or moved. The Department for Communities and Local Government is assisting us with that.

Among the Opposition’s other charges was the charge that our changes were somehow not fair. The maximum rent following a cap—and the Opposition still have not said whether they agree with it—is £400, the weekly equivalent of more than £20,000 a year. Let me remind the House what someone who was out there earning would have to earn to pay that £20,000. That person would have to earn £80,000. The Government left us an LHA rate of £104,000 a year. Someone would have to earn £250,000 a year to pay that in rent. [Interruption.] I fully accept that we are dealing with the top end of the cases, who constitute by no means the largest number. The point is, however, that the previous Government were so slack with the system that they allowed abuses and excesses. Before the last election, even people on their own side were saying that they would have to change it. That is the reality.

[Toby Perkins]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will, but then I must make some more progress.

[Toby Perkins]

I think that the Secretary of State is focusing excessively on the cap. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) has already made it clear that that is not the main focus of our objections to the Government’s proposals. The Secretary of State dealt with myths earlier. Will he now deal with the myth that housing benefit recipients are out of work? Many of them are working, but they are low-paid. More than 350 of them in Chesterfield will be badly affected, when they are trying to work their way towards a better life. Why are they the people whom the Secretary of State is attacking with his policy?

[Mr Duncan Smith]

There are people in work who receive housing benefit, but the worst aspect of the changes with which the previous Government left us is that many of them are now trapped in short working hours. They dare not work for more hours, because they would lose too much of their housing benefit and would lose their homes as a consequence. Setting housing benefit at the levels at which the previous Government set it was no kindness to people who really do want to get on and work longer hours, because they are faced with the invidious choice of whether to move. That is one of the reasons more than 100,000 people moved in the rental market last year. Many people have to move to find a house that is suitable so that they can go and find better work. That is the reality. The hon. Gentleman’s party left us with that situation, and it is his party that he should now blame for the mess and chaos.

[Ms Karen Buck (Westminster North) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I must make a bit of progress. I will give way in a second.

Although that was not the largest number, the fact is that the top 5,000 of those cases of housing benefit cost the Exchequer £100 million a year. Unless Labour Members think that £100 million a year is not a lot of money, I should like to know why the shadow Secretary of State does not say that he agrees with the capping system that we want to introduce. Will he perhaps tell me whether he agrees with the capping system? No, he will not. Yet again we have heard no policy from the Opposition, but the fact is that we inherited a chaotic housing system.

[Mr Alexander]

I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?

[Mr Duncan Smith]

The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?

[Mr Alexander]

Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.

[Mr Duncan Smith]

At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.

[Ms Buck]

On that point, will the right hon. Gentleman confirm that the Mayor of London’s housing adviser has stated that, in London alone, the cost of temporary accommodation for homeless households, arising from the impact of the caps, could exceed the total savings by £13 million in one region alone? Will he also confirm that the figure for working households on local housing allowance is almost half the total case load, including those on JSA with the 90% annual turnover that he has just confirmed?

[Mr Duncan Smith]

The reality is that the adviser said that before he even knew how much we were using for the discretionary allowance. [Interruption.] Hold on a second. He said “could”. The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, no; I am already answering the question. I do not agree and we do not agree with the statement that the adviser made. I have explained the issue to him personally, and he has accepted that.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, I am not going to give way. I also want to say to the hon. Lady that she includes in her figures those who are in work with those on jobseeker’s allowance. She must not confuse two different positions, yet again trying to merge figures that are not right.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I am going to make progress. Labour Members continue to try to accelerate the figures to the worst level and then make ludicrous assumptions. That is what is going on. The fact is that we inherited 5 million people on out-of-work benefits from the Labour Government—the hon. Lady was in the Government—which they did nothing about at all. Two million people of working age are claiming incapacity benefit, of whom 900,000 have been claiming it for an entire decade.

The figures that lie behind this issue are astonishing. Today we spend £1 in £3 on British welfare, which that Government left us, yet youth unemployment is higher, inequality is greater and there are 800,000 more working-age adults in poverty than in 1998-99. That is the great record of the last Government.

[Andrew Griffiths (Burton) (Con)]

rose—

[Mr Duncan Smith]

The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to the right hon. Member for Don Valley (Caroline Flint), who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.

If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair—

[Mr Alexander]

rose—

[Mr Duncan Smith]

No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, “We think it’s fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work.”

[Andrew Griffiths]

I thank the Secretary of State for giving way. He will know that one of the myths put about by the Opposition was that councils in London were already booking bed and breakfasts across the city to cope with the consequences of this policy. I draw the Secretary of State’s attention to a website called FullFact.org, which has made some freedom of information requests to local authorities in London. I shall pick just a few. In Kensington and Chelsea, no such bookings have been made; in Wandsworth, no bookings have been made in bed and breakfasts; Lewisham council confirms that it has not made any bookings—

[Madam Deputy Speaker]

Order. That was supposed to be an intervention, not an opportunity to read statistics on to the record. I am sure the Secretary of State is perfectly capable of doing that himself.

[Mr Duncan Smith]

My hon. Friend the Member for Burton (Andrew Griffiths) is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, “This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast”—another scare story put about by Labour. It is absurd.

[Mr Alexander]

rose—

[Mr Duncan Smith]

If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.

[Mr Alexander]

I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?

[Mr Duncan Smith]

There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended—[Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.

We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure—which they used to argue was too low—achieved by the previous Conservative Government, which was 39,000 a year.

The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.

--- Later in debate ---

[Mr Raynsford]

rose—

[Mr Duncan Smith]

I will give way in a minute.

Nine tenths of the rise in housing benefit in the past 10 years is down to increased rents. To put that into context, if that increased spend in rents going to private landlords had instead been used to invest in social housing, we would have had 80,000 social homes being built per year. I therefore wonder who Labour Members think has squandered the money they had flowing into the Exchequer. Political short-termism was the reason for that.

[Mr Raynsford]

rose—

[Mr Duncan Smith]

Okay, I will give way to the right hon. Gentleman as he was one of those responsible.

[Mr Raynsford]

Will the Secretary of State please now put the record straight and say that the increase in housing benefit attributable to rent increase covers both the social and the private sectors, and that the increase in housing association rents contributed to building the homes that were built? Will he now put the record straight and say it is completely wrong to imply that this is entirely going to private landlords when it is not?

[Mr Duncan Smith]

When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.

We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.

[Mr Betts]

rose—

[Mr Duncan Smith]

Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.

Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year—Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.

Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords’ charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.

I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure—I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I have said that I have given way enough, so I am going to complete this. For where problems do arise, we have tripled the discretionary housing payment to £140 million. We will keep that under review; I am prepared, where necessary, even to add to that. We will not shy away from the duty of care to provide housing for those who cannot house themselves. A safety net will not just remain; it will be improved for the most vulnerable. That will be done through an increase in discretionary housing payments and an additional bedroom for non-resident carers—the previous Government should have provided that, but never did. If we are prepared to pay, as we are, some £20,000, there is no reason anyone should be left without a home. Our choices are tough but right, and we are weeks from regulations to fix the broken system.

We are in touching distance of changing things, including through producing, later this week, a welfare Bill that will put all this into context and that could change the whole prospect for the next generation as we improve work incentives, secure fairness, and protect the vulnerable. We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.

May I remind the House of something that the Opposition did when they were in government? They made changes when they sorted out the pathway back in 2005. At that time, they made an assumption that those who were renting could cope with an £18 increase in their rent, which they duly did. It is not as if it was we who were hammering people in difficulty; the Labour Government were already doing it and then they took their eye off the ball. That is why, over the last week, we have witnessed Labour’s confusion. Some Labour Members, although not the right hon. Member for Paisley and Renfrewshire South, to be fair to him, but a number of his colleagues—he knows this, and I am looking him in the eye—started to blow very faintly and then louder on the dog whistle, just trying to scare people outside, winding things up until they became ludicrous and he finally had to try to draw the tone back down to a reasonable level. I believe that the right hon. Gentleman is a reasonable man and that what we need is constructive dialogue—I am ready for that. He should say to his colleagues that if they want to show what it is really like to be in opposition preparing for government, they need to put the dog whistle away, change what they are doing and behave as though they have a credible plan.

[Several hon. Members]

rose—

--- Later in debate ---

[Caroline Flint]

The hon. Gentleman was not here for the debate, so I will not give way.

Reducing people’s housing benefit when they have been out of work for a year does not help them to get a job. It punishes them for not having one, and we reject that entirely. The Government say that reducing housing benefit will bring rents down. Landlords themselves tell us otherwise, however, with 90% saying that they will be less likely to take on people on housing benefit. That means that there will be more people chasing fewer homes, which will drive rents up, not bring them down.

[Mr Duncan Smith]

They would say that.

[Caroline Flint]

The Secretary of State might say that, but I find it difficult to understand, given the question marks over the impact on rents of the Government’s plans, why they are not doing a more thorough job of getting the evidence to prove that their policies are right. I have heard the Minister for Housing—who is not here tonight; he obviously does not think it worth while—say on a number of occasions that he has evidence to back up his idea that rents will go down, but he has refused to provide that evidence. We have seen no sign of it.

My right hon. Friend the Member for Greenwich and Woolwich and my hon. Friend the Member for Sedgefield made strong points about the rented sector. They said that the Government’s policies on housing benefit reform and their lack of a plan for housing supply would do nothing to tackle the issue of rents. Let us be honest about this: the Government have completely rejected the findings of the Rugg review, which we initiated to tackle some of the problems in the private rented sector.

Much has been said about our record on housing, so let me say something about that. Two million more homes were built, there are now 500,000 more affordable homes and 1 million more homeowners, and 1.5 million homes have been brought up to a decent standard. Homelessness was cut by 75%, and no family spends longer than six weeks in a bed and breakfast. In the face of the global financial crisis, the worst of its kind for 70 years, Labour did not walk by on the other side. We took action and supported families to stay in their homes. We prevented 300,000 families who might otherwise have lost their homes—and who would have lost their homes had the Tories been in power—from doing so. That is the reality. That is our record, and it stands in contrast to the mess the Tories left us.

Many thought that bringing so many homes up to a decent standard in such a short space of time would prove impossible. It did not. However, it did come at the cost of not building as many homes as we would have wanted. I agree with the hon. Member for Colchester and some of my hon. Friends who have referenced that tonight. Let us not forget that the reason why we had to focus on decent homes and bring them up to standard was the desperate situation we inherited from the last Conservative Government in 1997.

--- Later in debate ---

[Caroline Flint]

The hon. Gentleman should look at Hansard. I said quite clearly that we are not against looking at caps, and we are prepared to look at regional variations as well, but that would have to be planned and done properly over time.

Let me tell the Housing Minister that last year, in the teeth of recession, we built more homes in one year than the Government will build in any of the next five years. Since this Government came to power, local councils have ditched plans for new homes at the rate of 1,300 every single day. In the comprehensive spending review, the housing budget was demolished by devastating cuts of more than 50%. As a result, according to the independent National Housing Federation, once the homes Labour started building are completed, no new social homes at all will be built in the next five years.

[Mr Duncan Smith]

In response to the right hon. Lady and the hon. Member for Perth and North Perthshire (Pete Wishart), she has said for the first time in this debate—her right hon. Friend the shadow Secretary of State has also said it—that Labour Members are in favour of a cap. Will they please explain something to us? We have put our proposals forward. What level of cap do they now favour?

[Caroline Flint]

We have said quite clearly—not just today, but in a speech my right hon. Friend the Member for Paisley and Renfrewshire South made last Friday and in an article that I wrote last week—that we will look at the issue of caps. What we have said is that whatever cap is chosen on whatever basis, it must be planned, phased in and must ensure that people are not turfed out of their homes, put into bed-and-breakfast accommodation or made homeless. The Tories have not been able to answer any of those questions.

The fact is that one part of Government is working on one track for housing benefit reform, but there is no joined-up thinking with the Department for Communities and Local Government on housing supply. That is not a plan of action for housing, but a recipe for chaos and it does nothing to help cut the housing benefit bill. It is not only Labour Members who say that; dozens of Tory MPs have been to see the Secretary of State to tell him why these plans will not work. We have heard about the Conservative Mayor of London and we know that Tory council leaders across the south-east have warned that the dispersal of people that these policies will create will place an unbearable burden on services that are already stretched to breaking point.

There is a better way of doing this. We want to reform housing benefit, but in a way that is fair and that does not end up costing us more than it saves. I urge Liberal Democrat Members and perhaps a few on the Tory Benches to join us in the Lobby and speak up for their constituents.

Oral Answers to Questions

Iain Duncan Smith Excerpts

Monday 18th October 2010 Commons Chamber

[Andrea Leadsom (South Northamptonshire) (Con)]

8. What recent assessment he has made of the adequacy of the support provided to jobseekers by Jobcentre Plus.

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

I am aware that my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) has a huge interest in job clubs and has done a lot in her local area. I know that is appreciated.

There are 741 jobcentres, 35 contact centres and 78 main benefit delivery centres that process claims, investigate fraud and deal with inquiries. A full assessment of Jobcentre Plus services for 2009-10 was included in the annual report and accounts published on 26 July 2010. It was generally very positive. Jobcentre Plus has gone through a lot of difficulties over the past year and a half, but has done so really well. It is worth reminding ourselves that Jobcentre Plus helps 75% of claimants leave jobseeker’s allowance within approximately six months.

[Rehman Chishti]

A carpenter from my constituency, Mr Pay, was told by Jobcentre Plus that delivering thousands of leaflets and advertising his services in the local media did not constitute actively seeking work and his jobseeker’s allowance was withheld. What assurances can my right hon. Friend give me that that will not happen again?

[Mr Duncan Smith]

I understand that the Minister of State, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), has intervened in the case and is busy sorting it out with the jobcentre to make sure that the rules change so that we never see a repeat of it.

[Andrea Leadsom]

My right hon. Friend kindly mentioned the job clubs that I started in South Northamptonshire. They do excellent work, largely through volunteers, with a bit of support from the local council. I should be grateful if my right hon. Friend told us what plans he has to support the work of those job clubs as they make the transition to work clubs.

[Mr Duncan Smith]

As my right hon. Friend the Minister has made clear endlessly, it is critical in the whole Work programme process, which includes the element of work clubs, that we work on the basis of our understanding of previous information to bring people together and make sure that their shared experience can help them overcome some of the barriers. That is a critical component. That shared experience, as my hon. Friend and many other hon. Friends in the Chamber will know, can help people through the difficulties, so that they do not repeat the same mistakes. It will be an essential part of their work experience.

[Miss Anne Begg (Aberdeen South) (Lab)]

The Secretary of State is already aware that there will be a lot of pressure on Jobcentre Plus in Aberdeen and Aberdeenshire over coming months, because the Work programme—even with the best will in the world—will not be in place until next summer, and in the meantime there will be the migration from incapacity benefit to the employment and support allowance. On the Government’s figures, at least 200 people will end up back on jobseeker’s allowance, with perhaps another 400 needing the work-related activity element. The Minister has already announced £50,000, but, apart from that, what extra resources will be put into Aberdeen and Aberdeenshire to make sure that the excellent workers in Jobcentre Plus are able to give the specialist help that my constituents and others round about so richly deserve?

[Mr Duncan Smith]

We are, of course, aware of that, and the hon. Lady has, I think, discussed the matter with my right hon. Friend the Minister of State. As things stand, we think that the money that has been made available will be sufficient to cover the gap period, of which we are fully aware, so that nobody suffers a loss until they have gone through the system and had a chance to get on to the Work programme. We will, of course, keep the matter under review, and if there is an issue I guarantee the hon. Lady that we will make sure that it will not mean that people are penalised.

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

In the same vein, may I ask the Secretary of State what he is doing to measure the adequacy and effectiveness of private job agencies such as FourstaR Employment and Skills Ltd, which has a Government contract to help unemployed people in my constituency to find work?

[Mr Duncan Smith]

The greatest form of measurement that we can use is that which will apply to the Work programme, whereby bodies will essentially be paid by results. In other words, if they do not get people back to work, they will not receive the money that will allow them to make any kind of profit at all. The best way of measuring them is to pay them when they are successful, and not, as happened with one scheme under the last Government, before they are successful.

[Tony Baldry (Banbury) (Con)]

4. What support his Department plans to make available to people on incapacity benefit to enable them to take up employment.

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

7. What steps he is taking to increase the proportion of benefit fraud detected.

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

Total fraud—benefits and tax credits, involving my Department and the Treasury—stands at £5.2 billion. Total welfare fraud stands at £1.5 billion, involving £1 billion in benefits and about £500 million on tax credits. My Department performs about 500,000 data matches per year, and under the new strategy we will use more private sector data matching to try to catch fraudsters and to stop errors. We will recruit more than 200 new anti-fraud officers to sanction about 10,000 fraudsters every year, and there will be a new three strikes regime to ensure that the worst cases, of criminal gangs and larger-scale identity fraudsters are robustly dealt with. It is worth reminding the House that the universal credit system reform will go a very long way to helping to resolve some of the problems concerning errors, which amount to a huge and significant sum each year.

[Mr Jones]

I thank my right hon. Friend for his response. Many of my constituents will be horrified to learn that during the last year of the Labour Government, prosecutions for false benefit claims slumped by 11%. I should therefore be grateful if he confirmed what action he intends to take to reverse that worrying trend.

[Mr Duncan Smith]

As I said earlier, we will undertake a major drive on that issue. We think that, taking on board what the previous Government did, we need to take further action. There have been reports about the issue, and I can clarify some matters. The three strikes policy to which I referred consists of, first, essentially the loss of benefit, sanctioned for four weeks, going up to 13 weeks; secondly, the loss of benefit from 12 weeks to 26 weeks; and, on third conviction, the loss of benefit sanctioned for about three years. We will look further at the penalties, particularly when we detect criminal activity by a consortium trying to defraud the state. The reality is that we have to undertake that drive, and to those who moan about it and say that it is wrong, I must say that the main problem that we face is that taxpayers, who are often on low earnings, pay their taxes to support people in difficulty, and they do not want to see their money wasted, going to people who, frankly, set out to defraud the system. I hope that Members on both sides of the House can agree on that.

[Several hon. Members]

rose—

--- Later in debate ---

[Mr Frank Field (Birkenhead) (Lab)]

When Members of Parliament hand on to their local offices allegations of fraud made by their constituents, will the Secretary of State arrange for the MPs concerned to read the fraud report to ensure that the job has been properly done?

[Mr Duncan Smith]

That is very tempting. I am happy to discuss that with the right hon. Gentleman, and I am definitely tempted in his direction.

[Jo Swinson (East Dunbartonshire) (LD)]

10. What steps his Department is taking to enforce payment of child support by parents who refuse to pay.

--- Later in debate ---

[Karl Turner (Kingston upon Hull East) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

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

I draw the House’s attention to the fact that today, as I referenced earlier, the Department for Work and Pensions and Her Majesty’s Revenue and Customs published a joint strategy to tackle fraud and error in the benefits system, which we believe should save £5 billion each year. The proposals in the fraud and error strategy, which together represent an additional £425 million of funding over the next four years, will, we believe, deliver a £1.4 billion reduction in fraud and error by 2014-15.

[Karl Turner]

Can the Secretary of State explain to a large number of my constituents why he reduced the support for mortgage interest payments before his Department ensured that mortgage lenders would average out rates? Why did he communicate this only a few days before it was reduced, and is it not true that lenders are fighting this reform tooth and nail?

[Mr Duncan Smith]

I do not know whether the hon. Gentleman was listening to the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb), when he pointed out that the last Government left plans to slash that support. It is we who have actually brought it to the average, which means that people will do better under us than they ever would have done under the last Government—so an apology would do very nicely thank you.

[Amber Rudd (Hastings and Rye) (Con)]

T2. I know that the Secretary of State is aware of conversations I have been having in my constituency with youth leaders about how we can communicate changes in the welfare programme to young people who do not watch the Parliament Channel and sometimes do not read the papers. Do we have a campaign plan to try to communicate the changes to them, perhaps through texting or facebooking and the internet?

[Mr Duncan Smith]

We do indeed. My hon. Friend is right to draw the matter to the House’s attention. Using new media, it is important that we ensure that young people are brought fully into the net, particularly through voluntary sector organisations, which are much better at using the new media. However, I must also draw her attention to the Department’s commitment—a commitment that I have made—to ensure that older people approaching retirement should not retire without the ability to use the net and the web. That is a big commitment but one that we will stand by.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

Last week, PricewaterhouseCoopers suggested that 1 million jobs could be lost over the next year. Given the answer we just heard from the Secretary of State and the present uncertainty in the labour market, will he confirm again that people affected by the change he just discussed will do very nicely—as he said—and assure the House that the reduction in the interest rate used for the support for mortgage interest programme will not lead to a rise in the number of repossessions among the approximately 255,000 people affected?

[Mr Duncan Smith]

I welcome the right hon. Gentleman to his position, although it would have been nice if he had risen at the Dispatch Box and first apologised for being part of a Government who left plans to cut the support to mortgage holders—[Interruption.] Yes, as the Minister of State, my hon. Friend the Member for Thornbury and Yate implies, they planned to slash the rate. So when the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) next gets to the Dispatch Box, perhaps he will tell the world that he was going to do that, and apologise. We will give the support necessary and reform the system. As he knows, organisations and individuals, including a lot of very senior businessmen today, have said that our economy will grow, that they will provide the jobs and that therefore this Government will be right.

[Graham Evans (Weaver Vale) (Con)]

T3. Building business will create employment opportunities in my constituency of Weaver Vale. What support will the Government provide to help unemployed people into self-employment?

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

T4. Following a succession of soundbites from the previous Government, who promised to be tough on benefit fraud but delivered, as usual, very little, can my right hon. Friend the Secretary of State explain to the House why he thinks the new initiatives that he has proposed today will succeed where those of other Governments have failed?

[Mr Duncan Smith]

Yes, I can. One thing that it is important for everybody to understand is that not only will we have the three-strikes policy, but we will try to disincentivise people in what I call the low-level area of fraud, which is when they knowingly fail to report changes in their circumstances. In those cases, there will be the ability to fine them £50 on the spot, which will have a big effect on people saying, “Well, I forgot and I didn’t do it.” Providing that we think they knew, it is time they realised that they have, in fact, defrauded the state as well.

[Alun Michael (Cardiff South and Penarth) (Lab/Co-op)]

T6. Does the Secretary of State accept that the result of changing indexation from the retail prices index to the consumer prices index is that pension increases in 2012 will be cut from 4.6 to 3.1%? Is that what he regards as fairness?

--- Later in debate ---

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

T7. Before the election, one of the policies that resonated most with my constituents was the Conservative plan to eliminate the couple penalty—the absurdity whereby people can be better off splitting up as a family than staying together. Can my right hon. Friend assure me that that penalty will be erased completely in the next few years, and that there will be no unintended consequences of any other policies that we might be putting forward?

[Mr Duncan Smith]

I must say that this remains a target for us, which is—[Interruption.] It is all very well for the Opposition to laugh: they are the ones who created the couple penalty. They could not care less whether people had to split up because of their benefits bills; the disincentives were all there and they created them. We will do our level best to eradicate them.

[Natascha Engel (North East Derbyshire) (Lab)]

On the Secretary of State’s announced crackdown on people fraudulently claiming benefits, the latest figures from his Department for fraud and error in the benefits system show that £1 billion is due to fraud, but that another £1 billion is due to official error. How will he ensure that his campaign against fraud is as high profile as any campaign against official error in his Department?

[Mr Duncan Smith]

I thank the hon. Lady for her question. The reality is that going after error—and not just fraud—is a critical component. As I said earlier, one of the big changes that we are making is the reform of the benefits system, which is so incredibly complex that many of my officials say that often they simply cannot quite figure it out until 45 minutes or an hour of serious study for each case. Simplifying the system will reduce the scope for error, which will be in the interests of all her constituents and members of my Department.

[Julian Smith (Skipton and Ripon) (Con)]

T8. A constituent with bowel cancer has been found fit for work, despite having his colostomy bag changed 16 times a day. He is now going through appeal. How will my right hon. Friend ensure that those who are genuinely and obviously not fit for work are dealt with more humanely?

--- Later in debate ---

[Mr Duncan Smith]

We are not responsible for aircraft carriers, so I apologise for that!

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T9. My right hon. Friend would no doubt agree with me that the last Labour Administration presided over a system of welfare that trapped people in poverty and ignored devastatingly high levels of workless families in our country. Will he tell the House what he is going to do about it?

[Mr Duncan Smith]

My hon. Friend will know that we are planning to bring forward a White Paper on reform of the benefits system soon. As I alluded to earlier, one of the biggest problems is that the existing benefit system has become so complex, with so many different withdrawal rates and different tapers—some at gross, some at net levels—done through different Departments. By bringing all that together and simplifying the system by giving people basically one withdrawal rate, we should be able to allow them to understand what they will retain, while also ensuring that work always pays. That, I think, is in the interest of everyone in the House.

[Toby Perkins (Chesterfield) (Lab)]

I welcome what the Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling), said previously about looking into the work capability assessment. I met a delegation from Chesterfield and north Derbyshire on Thursday, although they were due to have a meeting with him. One in the group was told that she was fit to work four days before a cancer operation, while another who had a plaster cast the whole length of his arm was told that he was fit to work. Unfortunately, the Minister cancelled his appointment to see them on the day before they came down to London. Will he commit to seeing them? If he really wants to learn about the work capability assessment, he should meet some of the people who have been affected by it.

[Harriett Baldwin (West Worcestershire) (Con)]

T10. The auditors of the Department have not signed off the accounts for many years. Will the Secretary of State’s announcement today keep the auditors happier in future?

[Mr Duncan Smith]

It is always very difficult to know what keeps auditors happy—or if they are among that breed of people who are never happy—but the reality is that we are in discussions with them about the need to be a little more realistic between the two groups to make sure that the accounts are signed off in future. After all, this Department has made huge strides—both under the last Government and this one—to be more efficient. That has been acknowledged by the auditors, so perhaps it is time for us to come to a conclusion.

[Yvonne Fovargue (Makerfield) (Lab)]

The Government have said that the June Budget will have no impact on child poverty up to 2012. Will the Minister confirm that the new benefits cap will not change that fact? Will he publish the figures to demonstrate the effect of the cap on all categories?

--- Later in debate ---

[Mr Duncan Smith]

We have no such strategy, but of course, if those people want a job change, that is up to them.

[Nicky Morgan (Loughborough) (Con)]

I welcome the earlier remarks of the Under-Secretary on achieving equality for disabled people by helping them back into work. Does she recognise the excellent work done by the RNIB college in my constituency to help those who are blind or visually impaired back into work? Will she visit the college with me at some point?

Benefits System (Fraud and Error)

Iain Duncan Smith Excerpts

Monday 18th October 2010 Written Statements

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

I am today publishing “Tackling fraud and error in the benefit and tax credits systems” a new joint DWP and HMRC strategy. This will be followed by a wider cross-government approach to tackling fraud, error and debt collection across the rest of the public sector being led by the Minister for the Cabinet Office. This strategy contains proposals to reduce significantly the level of fraud and error in the welfare system. It contains measures to prevent fraud and error from the outset of any claim; root out and correct mistakes where they do happen; deliver tough punishments for those who defraud the system; and deter those who would try to abuse the system in future.

Copies of the report will be deposited in the Libraries of both Houses.

Welfare Reform

Iain Duncan Smith Excerpts

Monday 11th October 2010 Commons Chamber

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

With permission, Mr Speaker, I should like to make a statement on welfare reform.

Let me start by welcoming the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) to his new post as shadow Secretary of State for Work and Pensions. We have already had a conversation in the last week. I extend that welcome to all members of his new shadow Front-Bench team.

The statement today is in three parts. First and foremost, today—as everyone in the House may well now know—we launched an approach to those on incapacity benefit under the work capability assessment, and it is necessary for the House to hear this directly from us so that Members can question me. Secondly, I want to use this opportunity to set out more detail on the new Work programme, which is very much related to the work capability assessment. Thirdly, the House has a right to know more about our plans for wider benefit reform as we look ahead to a White Paper and welfare reform Bill, although I would add the caveat that greater detail will be contained in that statement.

The economic backdrop is severe. We have the largest deficit in the G20 at £155 billion—the largest in peacetime history—with debt interest of £120 million a day, or £43 billion in 2010-11. Under the previous Government’s deficit reduction plan, which the Opposition now seem not to favour—although I might be wrong on that point—annual debt interest spending would have risen in only five years to almost £70 billion. Let me put that in context: that would have meant spending more on interest than we spent on policing, defence and transport combined. So, there is an urgent requirement to make these changes and reforms.

[Official Report, 11 November 2010, Vol. 518, c. 1-2MC.]We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million —have been claiming for an entire decade, and a system that has left Britain with the highest rate of jobless households in Europe. Those statistics reveal the human cost of leaving our welfare system unreformed, and with that comes an ever-increasing financial cost. The working age welfare budget rose by 40% in real terms from £63 billion in 1996-97 to £87 billion in 2009-10. A staggering £133 billion was spent on incapacity benefits in the past 10 years, and benefit spending is forecast to be more than £152 billion in 2010-11, which is about 10% of gross domestic product.

Today we spend £1 in every £3 on welfare in this country, yet youth unemployment is higher and inequality greater, and there are 800,000 more working age adults in poverty than there were in 1998-99. In that context, we also announced the reform of child benefit last week. I personally do not think that it is right, if we have to make changes and reductions, to tax the poorest to fund the receipt of child benefits by those with the highest levels of income. If we do this correctly, we can save about £1 billion, protect some 85% of families and secure fairness as we support people. I know that that is tough—we are in tough times—but I believe that it is fair, and that is the key. The important thing as we come through these spending reviews is that we should have a progressive change, not a regressive change.

At the same time, we announced procedures to set a cap on benefits for workless households to average earnings, which are about £26,000. However, we ought to set that in context. The cap will be net of income tax and national insurance, so if someone was working to receive that amount of money it would equate to gross earnings of some £35,000 a year—not a very narrow cap. Equally, we will exempt the disabled and those on working tax credit so that we encourage work incentives and do not penalise those who find it difficult to be in work. That is fair, and we will announce more details in the spending review, which means that I shall do my level best to answer some of the questions that I expect Members want to ask.

In the last week we have also announced a new enterprise allowance, which is there to help unemployed people who would like to try to set up their own business. We will be able to give them up to £2,000 in various forms, as well as the advice and mentoring of those who have started their own businesses. Today, the most important step is that we are launching two trials for those on the old-style incapacity benefit under the work capability assessment. The Minister of State, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is travelling to Aberdeen and Burnley today to see both those trials get under way. They are about giving many thousands of people the opportunity to move from the margins of society into mainstream employment. I remind the House that we inherited the programme, and that I supported it while we were in opposition. We have had to make a few changes, and we will make more as necessary.

Under the new system we will assess people on the basis of what they can do, not what they cannot, and thereby support people to meet their aspirations for work. We are determined to get it right, which is why we will learn from the trials and why we have set up an independent experts group to scrutinise the assessment. That group includes, for example, the chief executive of Mind, so as the programme is trialled we will listen to and deal with concerns about those who are mentally ill, such as those expressed on the radio today. Through those measures and through the Work programme, we are committed to supporting everyone who goes through the assessment.

We will ensure that those deemed unable to work continue to receive the support that they need, and that those deemed able to work are fully supported to do so. People who are found fit for work will move directly on to our new Work programme rather than have their jobseeker’s allowance stopped in the normal way. They will receive an integrated package of support, and in due course so will those who have been out of work for a longer period. It will provide personalised help based on individual needs, not on the benefit that somebody receives. Using the best of the private and voluntary sectors, that will help get people into work as quickly as possible.

The systems that I have described are what we call black-box systems, and I shall explain what that really means. Put simply, we will not lay down prescriptive criteria about how they should be run. We want those running them to do whatever is necessary to help people into work—that is the key. They will be operated on a payment-by-results system that ensures that providers do not simply go through the motions. They will receive their real money only for getting someone into work and ultimately keeping them there, and they will find rewards further up the chain as they do so. We have received more than 790 expressions of interest in joining the programme from providers, and in December we will invite bids for contracts, ready for national roll-out next year.

Finally, the work capability assessment and the Work programme are of course critical to getting more of the 5 million or 5.5 million people who are currently on benefits back into work, but they will not be enough. Underpinning that support must be a benefits system that incentivises work, and we have to ensure that work always pays. That is why the coalition Government aim to bring forward a White Paper soon and a welfare reform Bill in the new year.

The introduction of what I call the universal credit will restore fairness and simplicity to an overly complex, outdated and now wildly expensive benefits system that simply prevents people from getting back to work. As we get the benefits system working, we can get Britain working. The best way to get the deficit down, drive the recovery and get the economy moving is to ensure that more and more of the British people who can work do so. Welfare reform is critical, and I give a guarantee that people moving on to the universal credit will not be any worse off at any stage. In fact, they will be better off as they find work.

Everyone in the House should unite around, and try to achieve, the cause of moving people into work and creating a pathway out of poverty for the 5 million people on out-of-work benefits. I understand that the new leader of the Labour party has said that he will not be in opposition for opposition’s sake, so I hope that he and his shadow Cabinet colleagues will do the right thing and support us in delivering a welfare system that is fit for the 21st century. I commend these reforms to the House.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the Secretary of State for his statement and for advance sight of it. I thank him also for his gracious welcome to myself and my team. Members of all parties will acknowledge and recognise the work that he has done both inside and outside Parliament over recent years on the crucial issues for which he now bears a heavy responsibility.

As befits a responsible Opposition, my team and I will work constructively with the Government when there is common ground between us, on issues such as increasing opportunities and support for people to get into work. However, I must also be clear that when the Government propose measures that we judge arbitrary and unfair, we will oppose them robustly.

The Secretary of State began his statement with a rehearsal of the case for reform. While, of course, I disagree with the rather partial and partisan account of the economic situation that he inherited, let me be clear about the fact that I recognise the need to continue the reform of the welfare system. I believe in a welfare state that ensures that there are more people in work and fewer in poverty. That empowers people and contributes to a fairer and more equal society.

Let me also acknowledge, on this first outing at the Dispatch Box, that conditionality does have a role to play, as we recognised in government, first, because we know that it works in helping people to turn around their lives and, secondly, because it is the foundation for ensuring the public support on which the welfare state is based. Accordingly, I will carefully scrutinise each of the Government’s specific proposals on the welfare system.

The Secretary of State spoke about his plan to remove child benefit from higher rate taxpayers and, from the Dispatch Box, described that change as “fair”. How does that change meet the fairness test when it will result in one family, with a collective household income of £80,000, getting child benefit and the family next door, with an income of £44,000, getting none? There have been a variety of claims as to what the threshold in fact is. Can he confirm at this time that the change will affect only parents earning more than £44,000?

Since the shambles of the announcement last week, the Prime Minister and others have suggested that marriage tax breaks might be introduced in the near future to compensate for the removal of child benefit. Does the Secretary of State accept that there is no coalition agreement to implement the Conservatives’ marriage tax allowance proposals, that to date such proposals have applied only to basic rate taxpayers, and that even if his coalition partners were to accept those proposals, they would cost more than the savings made from the child benefit reform he proposes?

On incapacity benefit reassessment, which the Secretary of State touched on, despite its omission from the briefing in this morning’s newspapers, I welcome his acknowledgement that he is continuing the previous Government’s proposals on the trialling and roll-out of the work capability assessment. I note that those proposals this morning appeared to be attached to a specific target of removing 500,000 people from benefits. If a system of assessment is to be truly fair and objective, will he clarify whether that figure is a hard target, merely an assumption or a headline-grabbing claim?

I was also concerned to see reports in The Times today that those judged too sick or disabled to work could nevertheless have their benefits time limited to six months or a year. Will the Secretary of State confirm whether that is the case? If it is not, will he clarify what actual plans he has for reassessing those who are initially found to be unable to work?

The Secretary of State has also told us today that people found fit for work will move directly to the Work programme. His colleague the Employment Minister—the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling)—has previously told the House that the new single Work programme will not be introduced until the first half of 2011. How can that timetable be reconciled with the trials now under way, which were announced in Burnley and Aberdeen?

I welcome the comments made on the radio this morning by the Employment Minister, who said that he would be prepared to modify the test if it were not working properly. Indeed, I welcome the gracious acknowledgement of the Secretary of State’s confirmation of that point today. However, he concluded his statement by describing welfare reform as an historic opportunity. It is, none the less, an historic error to fail to realise that effective welfare reform requires economic recovery. He seems to be in denial of the fact that getting people back to work requires there to be jobs for them to take up.

That insight explains why the previous Government took measures to ensure that unemployment was kept at about half the level of that in previous recessions, that the unemployed were supported and that, at the same time, those who could move from benefits into work were doing so. In contrast, the Government’s own Office for Budget Responsibility revised forecast predictions that public sector jobs would be cut by 750,000 and that unemployment would increase to nearly 3 million people. Over the next few years, the Treasury’s own papers indicate half a million more jobs lost in the public sector, half a million jobs lost in the private sector and half a million fewer jobs and opportunities for the unemployed.

Labour Members will continue to make the case for backing our economy, fighting for jobs and standing up for fairness while reforming our welfare system.

[Mr Duncan Smith]

I thank the shadow Secretary of State. May I answer a few of his particular questions? First, I thank him for his general support for the aims of what we are trying to do. I am sure that we will work together to achieve those. I think that is the best thing to do. I recognise fully that, of course, there are things that he will not agree with. That is reasonable, and it is exactly what I would say were I sitting in his place. In fact, I did exactly that some 10 years ago. How time goes on.

I also welcome the shadow Secretary of State’s acceptance of the need for conditionality in the system; we will need to discuss that with him further. There is absolutely a need for conditionality, which can properly be introduced only once we have created what I call the contract—that is, when we can genuinely say that we have improved the programmes to get people back to work, and have made the benefit system simpler, having made sure that there are no blocks to people going back to work. If we fulfil that bit of the contract, those out of work and looking for work need to fulfil their bit of the contract—they need to take the work when it is available. That is the key to conditionality.

The shadow Secretary of State asked about the level at which child benefit will be removed. It is simple—it will be removed at the higher-rate threshold. At the moment it is £43,875, but of course I cannot predict what it will be. It is a matter for the Chancellor; no one should read anything into what I said. It is not my job to set the rate, but the benefit will be removed at the higher-rate threshold.

The shadow Secretary of State went on to say that the change is not fair. He describes the tax system when he says it is not fair, although I am not sure what he is trying to describe. The reality is we think, fairly, that it is wrong for someone on lower income to have to pay tax so that someone on higher income can receive an element of benefit to look after their children. If he thinks that it is unfair to make the changes through the tax system, I would like to know what he did in the past 10 years to reform the tax system that he now thinks is unfair. The very same tax system actually penalises those who have one single high earner in the family as against a household with two lower earners who together could be earning £80,000, so he is condemning the tax system that he has given to us. We can only use the system that we have, but he may now think that that is unfair.

The measures will help enormously to meet what I call a progressive form of reduction in costs. I think that the process will be ultimately welcomed—it has been welcomed by the general public.

The shadow Secretary of State made the point that he did not think there were enough jobs. Of course, we could do with many more jobs. We have inherited an economy that has been stuttering. In the past month or so there have been just under 500,000 jobs in the jobcentres. Those are not static jobs. Those are jobs that are available—they rotate; some are taken and new ones come on. We know that in the informal economy there are many more jobs being taken. That is evidenced by the fact that some 280,000 people went into work in the past quarter, which is the highest number of people back to work since modern records began in ’89. The reality is that there are some jobs.

The shadow Secretary of State talked about growth. As he knows, over the period of the spending review, the independent Office for Budget Responsibility, the IFS—sorry, the IMF—and others have made forecasts; the IFS may yet make the same forecast as them. The IMF has forecast that growth levels will be between 2% and, in the medium term, 2.5% and that there will be a net increase in employment over that period. We can jostle over the figures, but I do not agree that there are no jobs available. As the economy begins to grow we will see even more jobs, but if we do not get people ready for those jobs, we will be in the same situation as he found himself in with 5.5 million people on out-of-work benefits doing nothing and languishing in households that had no work at all.

The shadow Secretary of State talked about the work capability assessment and he said that there were concerns. He is right. The figures that we were talking about were estimates of where we believe we could and should be. They are not hard targets. We cannot and will not set hard targets for a simple reason. As I explained earlier, this is a process. As we look at what happens in Aberdeen and Burnley, I hope—I am prepared to share this with him—that we will figure out whether there are things that we are doing right or wrong, so I am not saying that there are targets. It would be wrong to set targets.

As for the idea of reviewing the measures, the shadow Secretary of State said that he welcomed the Employment Minister’s views. We will modify all the measures as necessary. The key thing is that nearly 1 million people have sat on incapacity benefit without anyone seeing them over the past 10 years. We have to change that. The Labour Government started that programme; we must finish it. I hope that we will receive his support. The right hon. Gentleman commented on the way that we do these things. We will consult where necessary and make sure that the Opposition get the evidence that they require to decide whether to oppose our measures.

I conclude by saying to the right hon. Gentleman and all Opposition Members that we inherited a major deficit from him and his team. That deficit is the largest in the G20. If we do not get that down, the interest payments on the loans alone will dwarf everything we do. What we are doing in the spending review is looking for ways to do that. At the same time, it is important to make sure that when we act to reduce the deficit, we share the burden across the income scale and we do not achieve savings on the backs of the poorest in society. I am here to make sure that that does not happen. I hope I will have the right hon. Gentleman’s support in that when he sees how progressive the review turns out to be.

[Several hon. Members]

rose—

[Harriett Baldwin (West Worcestershire) (Con)]

As a Back-Bench MP, I receive child benefit. Prior to entering the House, I was even better paid and received child benefit. Was the Secretary of State as surprised as I was to learn that the new Leader of the Opposition would like to restore child benefit to people like me?

[Mr Duncan Smith]

He may be after my hon. Friend’s vote, in which case we will have to do some quiet talking. It is a ludicrous position to take. We now have a Labour party in opposition which prefers to defend the very wealthiest, and a coalition that wants to defend the worst off.

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

Universal child benefit is the most effective benefit for reaching the poorest children, more effective than means-tested benefits which are designed for them. Can the Secretary of State enlarge on the implications of his comments last week that child benefit will, in due course, be subsumed into his new universal credit? Should I therefore assume that there is no prospect, regrettably, of a universal payment being reinstated when the economy recovers?

[Mr Duncan Smith]

The hon. Lady is right that child benefit has been and will continue to be a very effective mechanism to get money to the poorest families. We are not eradicating the universal benefit in the case of child benefit. We are capping it off at the higher rate. The rest—[Interruption.] Well, 85% of the public will get their child benefit. The hon. Lady asked specifically about the universal credit. I did not say that it would subsume child benefit. I said that as we reform the benefit system, and as the PAYE system is reformed, we should be able to look at these things long after the spending review and look for ways of getting rid of anomalies. Right now, in the spending review, there are no plans to make any such changes. We will do exactly as I said. Child benefit will be removed from families where there is at least one earner above the threshold.

[Mr Edward Leigh (Gainsborough) (Con)]

For years my right hon. Friend and I argued in opposition that marriage should not be discriminated against in the tax and benefits system, and in particular that mothers who chose to look after their children at home should not be discriminated against. Can my right hon. Friend assure me that he has not changed his view, and that through mechanisms such as transferable allowances he will ensure that women are entitled to make their own choices and are not influenced by the tax and benefits system?

--- Later in debate ---

[Mr Duncan Smith]

I agree with my hon. Friend. I make a point of agreeing with him on many things. The changes to child benefit are exactly what they are—to help us to reduce the terrible deficit that we have and to save the poorest families in the land from suffering a terrible burden that they would have to bear in due course. As my right hon. Friend the Prime Minister made clear last week—these are not matters directly for me, but he and the Chancellor will bring forward measures in due course—the very best way to ensure that couples do not face that penalty is to ensure that they are not unfairly taxed from the outset. This is about child benefit, and we will support families who make the choices that they make.

[Malcolm Wicks (Croydon North) (Lab)]

When, in the mid-1970s, the decision was taken to merge the child tax allowance, which broadly benefited the wallet, with the family allowance, which broadly benefited the purse, the then Labour Government, after a bit of a kerfuffle, decided that it should become a child benefit for the mothers, for reasons which, I think, both sides of the House recognise. Does the Secretary of State realise the dismay of many people in all parts of the House and the public that he is now running a coach and horses through the principle that it is very often the mother who has to juggle the family budgets, that certainly in the south of England, salaries at the level at which he is withdrawing benefit are not extravagant, and that that is a blow to the concept that mothers are at the heart of our families in Britain?

[Mr Duncan Smith]

I respect the right hon. Gentleman enormously, and he knows that, but I am afraid that he is living in a time warp. The reality is that we have walked into government to find facing us the single biggest deficit on record. This country is close to being broke, thanks to his Government and how they ran the economy. So, yes, in a perfect world we might have wanted to continue with everything as it was, but in reality we cannot afford to. We make such changes on the basis of ensuring that we do not make them on the backs of the poorest people. Had we done it any other way, he would have complained quite rightly, and I must say to him that, if he does not like the proposal, and it sounds like he does not, perhaps he or his Front-Bench colleagues will tell us where they think they are going to get the money from as an alternative.

[Stephen Lloyd (Eastbourne) (LD)]

I appreciate the Secretary of State’s commitment, through the work capability assessment, to include the chief executive of Mind on the independent panel, because it is recognised that some disabilities go into remission. Can he give any further reassurance that other disabilities, such as ME or MS, in which there are quite profound ups and downs and cycles, will be recognised in the new assessment?

[Mr Duncan Smith]

I can give the undertaking to my hon. Friend that all those issues will be reviewed with that team. If there is an issue about that, and if it affects anybody, we will want to try to bind that into the whole assessment. The assessment’s objective is not to penalise people. The truth is that when we undertook the flow—putting people through a process that the Opposition undertook when in government—we learned a lot. We found that a large number of people who went through it have come out the better for going into work. No one ever saw them, cared about them or discussed anything with them, so we are trying to ensure that we give them help and support, not to penalise them.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

Is it fair and reasonable to impose a fixed arbitrary limit on the total level of benefits that a family can receive, irrespective of the level of rents in inner-city areas, when that rent could well constitute 70% of the £500 per week ceiling? A family cannot possibly live on the remaining 30% alone.

[Mr Duncan Smith]

The right hon. Gentleman refers to the benefit cap, as announced last week. I think that it is fair. It is fair for us to offer an explanation to the public, most of whom work for low incomes and pay their taxes. They do not want to see somebody on benefits disincentivised from work because of the very level of money that they receive. I repeat what I said in the statement: to net-out £26,000, somebody in employment would have to earn about £35,000. So, I do not think that the measure is effective, in the sense that we are bearing down too hard. It is fair.

On housing, over the next few years we will manage the process with the changes to housing benefit. After all, over the last five years of the right hon. Gentleman’s Government, housing benefit costs ballooned by £5 billion a year, and they were set to balloon to £20 billion a year. I have one last point for him: his Government had the lowest number of houses built at any time since the 1920s. I wonder whom he blames for local authorities having had to place people in those expensive houses.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

For a generation, disability campaigners have pressed for more jobs for people with disabilities, yet the employment rate of those people has remained pitifully low. Does my right hon. Friend agree that what his pilots aim to achieve, taken with the universal credit, is a situation in which people with disabilities get a fair break and a chance of a job, and that if they have a fluctuating condition there is a benefit system that supports them?

[Mr Duncan Smith]

Yes, I agree. That is exactly the point of all the changes that we are making, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) is bound with that to review all that we do for disabled people in order to ensure that we do not write them off at any stage but give them an opportunity to go to work, if they can. We will absolutely support those who are not able to go to work. It is their right, and we will ensure that that is the case.

[Jeremy Corbyn (Islington North) (Lab)]

I want to take the Secretary of State back to the point raised by my right hon. Friend the Member for Oldham West and Royton (Mr Meacher). The universal cap of £500 a week will have a devastating impact on people living in inner-London areas such as mine, where private sector rents—paid for by housing benefit—are exorbitant, to put it mildly. The cap will result in desperate poverty for those people who try to remain living where their children go to school and near their families and community. The effect will be one of social cleansing over a vast area of inner-city Britain. Is that what the Secretary of State really wants to achieve?

--- Later in debate ---

[Mr Duncan Smith]

I do not agree with the hon. Gentleman’s reading of this.

[Jeremy Corbyn]

Look at the figures.

[Mr Duncan Smith]

I have been doing the figures, actually. The hon. Gentleman should remember that the measure is not being brought in until towards the end of the Parliament in 2013. In the meantime, we have already instigated some changes to how housing benefit is paid. The hon. Gentleman knows as well as I do that in some parts of London there has been complicity among private landlords to push the rents up much higher than they should have done. That was because the Labour Government never sorted out housing benefit.

The reality is that we will manage the process. The numbers will be far smaller than the hon. Gentleman talks about. We will make sure that what we do as we go forward is give the taxpayer and those in receipt of benefit a fair deal. I do not think that a person needs £35,000 a year gross to live a reasonable life.

[Mr Peter Bone (Wellingborough) (Con)]

I thank the Secretary of State for his statement today. I do not think that anyone in the House is more able to deal with the welfare problem than him.

With hindsight, does my right hon. Friend think that it was a mistake to announce the change in child benefit policy in a television studio last week rather than waiting to announce it in the House today? Was a written statement given to the other place, which was sitting last week?

[Mr Duncan Smith]

The Chancellor made a statement in a television studio, but he made a statement to the country and my hon. Friend at the same time. All I can say is that the policy has been discussed by me, the Prime Minister and the Chancellor. As far as I am concerned, come the spending review my hon. Friend will see even more details about other changes. There will be full statements on those as well.

[Mark Durkan (Foyle) (SDLP)]

Does the Secretary of State recognise that many of us represent places where the problem is a lack of work rather than a lack of work ethic? Is he hearing any concerns from the relevant Northern Ireland Ministers about some of the proposals on which he is still working? On the Work programme, the right hon. Gentleman has referred to the black box discretion that will be given to operators there. How will he ensure that there will be no black arts, in manipulating the statistics purely to gain payment by results and the other incentives that he says will be available further up the chain?

[Mr Duncan Smith]

As the hon. Gentleman may know, I have already visited Northern Ireland to discuss these matters with his colleagues. There may be some differences of opinion about where we are going, but most of that is because they have not quite arrived at the detail of it. I think that by and large these proposals, particularly the universal credit, will in general benefit Northern Ireland dramatically. The numbers of unemployed there are very high and we need to get those numbers down and get Northern Ireland working again. That is important. We have had the discussions.

[Margot James (Stourbridge) (Con)]

My question pertains to the upper limit of £26,000 on welfare payments. My right hon. Friend stated that that equated to a gross income of £36,000. Many in my constituency work long hours, sometimes putting in overtime, but bring in considerably less than that. I remind Labour Members that those people have housing costs to pay as well. Can we make sure that people understand that the £26,000 is very much an upper limit, and that we should not ever see the welfare equivalent of £36,000 gross income as the norm?

[Mr Duncan Smith]

I made the point that we also have to balance taxpayers’ requirements alongside those of people on benefit. By the way, when seen in the context of the total number of people on benefits at the moment, the numbers that we are dealing with are much smaller than people make out.

Most of all, I should say that we will not be doing this for people on disability living allowance. Those in receipt of working tax credit, for example—those in work—will also not be caught. We are simply looking to those families who have become static and immobile. There is a disincentive against their going to work; the amount of money that they receive is such that they could never get it if they went to work. Therefore their incentive to work is non-existent. That is the benefits system that we inherited; that is the benefits system that we will change.

[Tony Lloyd (Manchester Central) (Lab)]

If the Secretary of State recognises that this period of uncertainty is very stressful for people on incapacity benefit, does he also recognise that drip-feeding information through the media is not the right way of giving people any confidence that the system is fair? In particular, I understand that 40% of people who were originally refused incapacity benefit had that overturned on appeal. What does he intend to do about that, because it is frankly unacceptable?

[Mr Duncan Smith]

If the hon. Gentleman is worried about the drip, drip, drip on the 20th of this month, I should tell him that there will not be a drip at all; we will get it out all in one go, so he should steady himself for that. None the less, the issue generally will be resolved, and I promise him that if there are any direct questions, I will answer them. He should remember that the figure that he refers to is 40% of all those who appealed. In total, 5% of those who have migrated have had their appeals upheld.

[John Hemming (Birmingham, Yardley) (LD)]

I congratulate the Secretary of State on the proposals for the universal credit, which will make it worth being in work. As well as trying to fit people to jobs, will he consider trying to fit jobs to people by using the Government’s contracting power to require that there be some jobs for the long-term unemployed and some jobs for people with disabilities?

[Mr Duncan Smith]

We will certainly ensure that we look at that suggestion.

[Natascha Engel (North East Derbyshire) (Lab)]

There has been a huge increase in the number of people coming to my surgeries and saying that, having been on incapacity benefit, they have been reassessed as capable of working but on appeal that decision has been overturned. That applies to the vast majority of people, certainly in Derbyshire. Does the Secretary of State have figures available for the whole country? I hope so, because if he is planning on rolling this out nationwide, we need to ensure not only that people who are wrongly assessed as capable of working are not left destitute but that the tribunal system is prepared for the huge number of appeals coming its way.

[Mr Duncan Smith]

Let me repeat the figures that I gave. Of all those who have been migrated through the system, about 5% have been successful in the sense that they have had their appeals upheld. There may be a slight change to that figure, because there is a backlog at the moment; we could probably make it up to 7% or 8%, but I do not think that it will get any higher than that. We should remember that all the people the hon. Lady is talking about represent the flow—that is, people who have not been in receipt of incapacity benefit until now but have been applying to come on to incapacity benefit and are being migrated through the process on to employment and support allowance or jobseeker’s allowance. The figure for those appeals is 5%, and that was part of the process that was started by the previous Government.

[Richard Fuller (Bedford) (Con)]

Many of us welcome the Secretary of State’s efforts to tackle the scourge of worklessness and to end the era in this country of indiscriminate and too often counter-productive welfare. On work capability assessment, he will know that these macro benefits are built on a series of individual assessments by a particular doctor on a particular day of a particular condition. May I press my right hon. Friend to take a personal interest to ensure that assessments of neurological disorders and mental health issues in particular are done fairly?

[Mr Duncan Smith]

My hon. Friend raises a very important point. I can guarantee to him that we have already been doing that, but we will continue to do so. That is why the independent panel, which includes somebody from Mind, will review it. Mr Farmer has been tasked with reviewing that generally, as well. We will constantly keep this under review and ensure that that is the case. We do not want to use this to punish people; it is about helping people, not punishing them.

[Sheila Gilmore (Edinburgh East) (Lab)]

Given the large number of my constituents and many others who had problems with the work capability test under the previous system, can the Secretary of State assure us that he has already reviewed the test prior to rolling out the new pilots, rather than leaving it as it is and piloting yet again? What full report is there on the outcomes of the system thus far? In Scotland, the Scottish Association of Citizens Advice Bureaux published a report that was highly critical of the system that was in place. Although a lot of us agree with it in principle, we know that when it comes to individual people the situation is very different.

[Mr Duncan Smith]

I guarantee that we have already reviewed the matter. Indeed, we inherited a review process, which the previous Government initiated. We will bind in the results of that—we are doing that at the moment. Having said that, we have subsequently set up the panel and asked somebody to investigate to ensure that we are covering all the necessary matters. The two pilots will help us understand better the way that the system works. I am not sure what else we can do at this stage. As I said to the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), we intend to use what we are discussing as a process—it is not an end point, but a process that allows us to get the best out of how we deal with those who have been on incapacity benefit and need our support and help to get back to work. I give that guarantee.

[Jake Berry (Rossendale and Darwen) (Con)]

Is my right hon. Friend aware that many responsible employers, including those in my constituency, ask their staff to attend annual health assessments? Does he agree that it is fair and reasonable for those deemed not fit to work to attend similar assessments rather than wait 10 years on incapacity benefit without seeing a doctor?

[Mr Duncan Smith]

My hon. Friend makes exactly the right point: for too long, Governments of both colours were content to see people parked on incapacity benefit. The subject should unite the House; the previous Government started the process and we want to complete it. It is no longer feasible for people to languish on incapacity benefit. My hon. Friend is right; in some cases, people have not been seen for six or seven years and in others, people self-referred and have never been seen by anybody to find out what is going on. It is high time we resolved that.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Will the Secretary of State please explain why a large swathe of Scotland is being used for the Con-Dem social experiment, especially when it involves some claimants travelling for up to 90 minutes to be interviewed? He will remember that the last time the Conservatives used Scotland as a testing ground was when they introduced the hated poll tax a year early. What safeguards and guarantees have the people of Scotland this time round?

[Mr Duncan Smith]

I am not sure what the hon. Gentleman is moaning about. Two cities are in the pilot, one in England and one in Scotland—he forgot that. The cities are different in character—they have quite different populations in terms of income. The hon. Gentleman made the point that some people travel long distances, and it is important for us to understand the exact effect of that. Sometimes I wish that he was not quite so parochial.

[Sajid Javid (Bromsgrove) (Con)]

I paid a visit to my local jobcentre in Bromsgrove earlier this month, and I learned from the advisers that, in many cases, it takes them more than an hour to determine whether a jobseeker would be better or worse off by taking just six hours of employment in a week. Does my right hon. Friend agree that the introduction of the universal credit and the taper relief system will make a dramatic difference to job incentives for jobseekers, and also increase their life chances?

[Mr Duncan Smith]

I am glad that my hon. Friend sees it like that, because that is exactly how I see it. Of course, the devil will be in the detail, but we want a process that is easy to understand for those who are trying to get back to work, so that they do not need a maths degree to figure out exactly how much money they will retain if they do seven, eight, nine, 15 or 20 hours’ work a week. We want it to be easy for them to understand that there is an incentive for every hour that they work, and for those in jobcentres to figure it out, so that they can give proper advice. We want incentives, not disincentives, to go back to work.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Will the Secretary of State give us some assurance about the future of the independent living fund? The Government trickled out the information that it was one of the quangos to be abolished. That report has caused my constituent, Mrs Seckerson, and her husband and carer, Barry Seckerson, real concern because if they lose that fund, her chance of living a meaningful life will be severely inhibited. Rather than leaving them fearful of the future, can the Secretary of State give them some sense of security today?

[Mr Duncan Smith]

The ILF, which we inherited, had been underfunded and was consequently overspent—literally on the day we walked through the door of government. The hon. Gentleman might therefore want to take up the reasons for such bad mismanagement with his Front-Bench colleagues. However, we want to ensure that we deal with people in those circumstances fairly and reasonably. We are reviewing the whole process now and, as and when we complete the review, I shall ensure that the hon. Gentleman hears the details of it.

[Richard Harrington (Watford) (Con)]

I and most of my unemployed constituents to whom I have spoken favour what my right hon. Friend has said. I am sure that many of them are pleased to have the chance to go back to work if they can find a job and, of course, benefit from the extra income. However, after speaking to many people, I am convinced that several people simply expect a whole lot of new schemes, about which they will find out in order to find ways of avoiding them and of continuing what they quite enjoy: a life on benefits, albeit on a low income. I would be interested to know my right hon. Friend’s views on that.

[Mr Duncan Smith]

The vast majority of people who are on benefits are not seeking to stay on benefits for the rest of their lives. Most of them are seeking help to get off benefits and we want to provide that help. Most of all, I want to simplify the number of benefits so that people understand what they will receive and how, but to link that to a process of getting back to work. I repeat that those who genuinely cannot work, because they have disabilities that make it impossible, must receive the best support possible. That is the sign of a civilised society.

[John Mann (Bassetlaw) (Lab)]

The Office for Budget Responsibility has projected a net increase of 700,000 EU migrant workers during this Parliament, and that point was confirmed by Treasury officials to the Treasury Committee. Does the Secretary of State agree—and as the previous Government found to their cost—that an employer is more likely to prefer a new, young EU migrant worker to someone who has been on benefits for 10 years?

[Mr Duncan Smith]

The hon. Gentleman makes an interesting point. The only answer I can give is that during the past 10 years we have had between 4 million and 5 million people permanently parked on some form of out-of-work benefit. The reality is that it became easier and cheaper for most employers to employ people who were not on benefits than to go to the pool of people who were on benefits. I hope that our reforms will make work pay for those who are on benefits and thus release that pool of talent, so that demand can be met from here in the UK, and that only those who are really skilled and necessary will have to come from overseas.

[Mr Philip Hollobone (Kettering) (Con)]

My constituents will be horrified to hear from the Secretary of State that Britain has the highest rate of jobless households in Europe. Which country in Europe has the lowest rate, and what is it doing that we are not?

[Mr Duncan Smith]

Perhaps I should not say this, but I think that it is Holland—I read that in a note. Some 20% of all households in this country have nobody in work, which is a staggeringly high number. We also have the highest number of children born to workless households. By and large, every other country is Europe is doing it better than we do—and that is the shame of the previous Government.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

Has the Secretary of State considered the impact of the benefits cap on homelessness provision, including women’s refuges? What plans does he have for housing benefit for supported accommodation, where rents are understandably higher than in the private rented sector?

[Mr Duncan Smith]

We are looking at all that. I have made available some £60 million for transitional funding for local authorities and others, and we will keep that under review. We do not want to penalise households, because it may not be their fault that they are living in homes that they simply would not be able to afford. We need to ensure that the changes are made, and I hope that we will also be able to drive down some of the rents. A lot of change is coming in the next two years, and I hope that much of it will be very progressive.

Accounting for the Delivery of Welfare

Iain Duncan Smith Excerpts

Monday 26th July 2010 Written Statements

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

The Jobcentre Plus annual report and accounts 2009-10 will be laid before Parliament today. They will be published electronically on the Department’s website later today.

The annual report section provides a summary of Jobcentre Plus’s performance against the business priorities and targets stated in the 2009-10 published business plan. The accounts provide a summary of Jobcentre Plus’s administrative and employment programme expenditure for 2009-10.

Copies will be available in the Vote Office and the Printed Paper Office shortly.

Oral Answers to Questions

Iain Duncan Smith Excerpts

Monday 19th July 2010 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

6. What steps he plans to take to increase youth employment in 2010-11.

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

The Government are committed to tackling youth unemployment. Young people can access a comprehensive range of opportunities, support and advice that will help them find employment, as part of the Work programme. As we introduce that programme, it will offer integrated employment support to young people, regardless of the benefit that they claim. I recognise the work that my hon. Friend has done in her constituency among young people. The results there are good, because youth unemployment is lower than the national average and has fallen over the past year.

[Dr Wollaston]

In my constituency, at this time of year when there is seasonal work things are not so bad, but there are up to 470 young people under 24 claiming jobseeker’s allowance at other times of the year. Can the Secretary of State clarify what measures will be taken to boost apprenticeships to give young people better life chances?

[Mr Duncan Smith]

Yes, I can. As my hon. Friend knows, we made provision in the Budget for more than 50,000 new apprenticeships. It is also worth remembering that one thing that the last Government set in train, and would have introduced had they been returned, was a hike in national insurance, which would have damaged any prospect of young people in her constituency being in long-term viable jobs. There is a good story to tell, which could not have happened if we had not taken over and found savings within the budget in our first year.

[Mr Bain]

Given the gap that there will be between the prevention of the rolling out of the future jobs fund and the introduction of the Work programme next year, and as apprenticeships are a devolved matter, what practical help will the Secretary of State be able to provide for my constituents, particularly the 1,300 young people who are out of work in Glasgow North East at the moment? Do the Government not need to do more to prevent an autumn, winter and spring of discontent for young people in Glasgow?

[Mr Duncan Smith]

There will not be a gap, all existing programmes are being extended, and the Work programme will be applicable to all those young people in the hon. Gentleman’s constituency. Having only just gone into opposition, he might like to reflect on the past 14 years, and the fact that when his party left office it left us with more than 1.3 million 16 to 24-year-olds not in full-time education, employment or training. That is 200,000 more than were left to the Labour party in 1997. It is a shameful record, and we do not need lectures from Labour Members about youth unemployment.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

How does my right hon. Friend plan to break the cycle of intergenerational unemployment? In my constituency there are many families in which no one works. That has a devastating effect not only on those families but on their communities.

[Mr Duncan Smith]

My hon. Friend asks an important question. In the past 14 years huge sums of money have been narrowly focused on different groups, and we have forgotten that in households with families, far too many are out of work. That is one reason why child poverty has been so difficult to tackle, and why we must change the system. We want to consider how to make work pay for those on the lowest incomes, and how work can be distributed more among households and less just among individuals. Most particularly, we want people to recognise that it is more important and more viable for them to be back in work than on benefits. The complicated system that the previous Government introduced, with all its different taper rates and withdrawal rates, meant that people needed to be professors of maths to figure out whether they would be better off going to work or staying on benefits. Our job is to ensure that the system is simpler and easier to understand. Unlike the previous Government, we will value households that take a risk and try to go to work.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

The Secretary of State will know that many young people get fantastic help from the voluntary sector through, for example, the future jobs fund, the youth guarantee, the working neighbourhoods fund, and also through small contracts with the jobcentres to help people into work. As he is cutting those programmes by more than £1 billion, does he think that the funding from his Department for the voluntary sector to help young people and others into work will increase or decrease in the next 12 months?

[Mr Duncan Smith]

I would say to the Secretary of State—[Hon. Members: “Oh!”] I mean the shadow Secretary of State; I nearly made a mistake there. I would say to the right hon. Lady that we will provide sufficient funds as necessary for the voluntary sector. She should know from all our previous work that the voluntary sector is a vital part of finding people work and putting them in closer touch with their local communities. She goes on about the future jobs fund, and she must understand that we are continuing with the programmes that have already been let, but getting rid of those that have not yet been let. She knows that those programmes are incredibly expensive—far more expensive than the guarantee. We simply cannot afford them, because of the mess that the previous Government left, so she must understand that we will get people back into work through ensuring that the economy is back on track, providing apprenticeships, which offer real opportunity for young people, and ensuring that the national insurance hike that she was about to make will not happen.

[Yvette Cooper]

The right hon. Gentleman will know that the consequence of his party’s Budget is to cut, not increase, the number of jobs in the economy. He will also know that he is cutting 90,000 planned and funded jobs from the future jobs fund. He did not answer the question about whether he would increase or cut the support for the voluntary sector to help get people into work. As he well knows, the Minister in the Lords has told voluntary sector providers that they are too small to get contracts under the Work programme. The Government have quadrupled the size of the contracts, and are locking out the voluntary sector for up to seven years. Is not the truth that all the right hon. Gentleman’s talk about the big society is simply a big con, to hide cuts in jobs, in help for the unemployed and in support to get people back to work?

[Mr Duncan Smith]

It is ridiculous for the right hon. Lady to stand there, two and a half months after leaving government with the finances in a total shambles, and try to lecture us about youth unemployment. [Interruption.] I remind her that in the whole time for which Labour Members were in government, there were only three years in which they reduced unemployment for 16 to 17-year-olds. Youth unemployment rose throughout 10 years, and the Labour Government left it worse than they found it. No lectures from the right hon. Lady, please; only apologies will do.

[Mr Peter Bone (Wellingborough) (Con)]

Will the Secretary of State take no lectures from the Opposition on unemployment? In Wellingborough unemployment doubled under the Labour Government.

What would my right hon. Friend have said if he had been in my office on Friday, when a constituent came in and said, “My granddaughter works very hard. She’s a single mum and she’s just getting by, but she doesn’t have a council house. The other granddaughter has given up her job and is on benefits. She has a house and is better off”? Which granddaughter is doing the right thing?

[Mr Duncan Smith]

Those who take the risk and try to work and take jobs are the people whom we want to support in society. The trouble is that endlessly under the previous Government, the levels of support for those who did not take a risk or a chance were too high for them ever to take those risks. The answer is very simply this: we will value those who try, and make sure that things such as housing benefit and unemployment benefit are set at rates that do not discourage people from taking work.

[Jim McGovern (Dundee West) (Lab)]

7. What assessment his Department has made of the effect on levels of child poverty of ending the future jobs fund; and if he will make a statement.

--- Later in debate ---

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

All education leavers claiming jobseeker’s allowance receive help and support from a personal adviser, access to jobs and a range of employment and training opportunities. These include help with job search skills, which is very targeted and very personalised. Help is also available from partner organisations such as Connexions.

[Mr Burrowes]

Given the previous Government’s legacy of youth unemployment, is my right hon. Friend aware of the additional problem of education leavers with criminal records seeking employment through the route of rehabilitation? What is his Department doing to give young offenders a second chance to get on the employment ladder?

[Mr Duncan Smith]

I think my hon. Friend will find that the unified Work programme will be one of the better ways of tackling that issue, because it will be very narrowly focused. If we get it absolutely right, it will be narrowly focused on the needs and problems of those individuals. The previous set of programmes was too disparate; now we can focus, and we should be able to help. Another issue worth raising, although it does not come under the remit of our Department, is what remains on people’s records, and I hope that in due course we will be able to look carefully at that. People trying for that second chance sometimes find that employers say no to them simply because they have been inside, and a compassionate society should try to do something about that.

[Mr David Hanson (Delyn) (Lab)]

Does the Secretary of State recognise the figure of 120,000 young people who will be added to the dole queue because of cuts in Government programmes such as the future jobs fund and the long-term guarantee for jobs, as well as the cuts to university places taking place in a different Department? Does he believe that Jobcentre Plus will be able to cope with that increased Government-led demand?

[Mr Duncan Smith]

I do not recognise that. The right hon. Gentleman was in a Government who completely failed to deal with youth unemployment. They ended up leaving office with higher youth unemployment than they inherited. That is not something that we want to crow about, but it is the reality. We need to do better than that, but we also face the challenge of reducing the deficit that his party’s Government left us. I recognise his interest and his compassion, but unless we put the economy right, we will not be able to exercise either.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Will my right hon. Friend look this summer particularly at the 16-year-olds who are leaving school, to make sure that the jobcentre works not just with Connexions but with the relevant parts of the youth service to provide a much more integrated and much better informed set of opinions and advice than have been offered to young people in the past? There is an urgent need for 16-year-olds to have good advice between jobs and apprenticeships and further education.

[Mr Duncan Smith]

I absolutely guarantee to do that, and I will talk to my right hon. Friend the Minister of State about it. It is worth bearing in mind what a real challenge this is for us. I have to repeat that, over the past 14 years, that group particularly was most failed by the previous Government. Before they carry on giving us lectures about it, they should recognise that failure and probably apologise for it.

[Toby Perkins (Chesterfield) (Lab)]

Given that the Secretary of State says that the Labour Government failed young people and that his policies are going to be so much better, if youth unemployment goes up, will he resign?

[Mr Duncan Smith]

Unless we can get retrospective resignations from the whole pack of the last Cabinet, I do not think that I should answer that.

[Julian Smith (Skipton and Ripon) (Con)]

13. What recent representations he has received on his Department's proposed new Work programme.

--- Later in debate ---

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

The hon. Gentleman’s experience and knowledge of these issues is unrivalled in the Chamber, and he has sought to present them on a non-party-political basis so that we can continue to discuss them. I have had a number of discussions with my right hon. Friend the Chancellor of the Exchequer, and, as the hon. Gentleman knows, I continue to discuss the issues with him. I hope that we shall be able to make progress, preferably on a non-party-political basis.

[Mr Allen]

The Secretary of State will know that early intervention to help babies, children and young people to develop socially and emotionally so that they can make the best of themselves is one of the processes that depend heavily on the bolting together of small bits of funding, which are likely to suffer most in the current economic climate. Will he talk seriously to the Chancellor of the Exchequer about exploring other means of raising sustainable funds so that early intervention can continue for a generation, which will be necessary if we are to ensure that our young people get the best out of life?

[Mr Duncan Smith]

As the hon. Gentleman knows, the issue of early intervention is specifically lodged with another Department, but I take an interest in it, and guarantee that I will continue to do so. I can say without fear or favour that I think it has the greatest potential to change many of the lives that we talk about—lives of worklessness and poverty, including child poverty. It is arguably one of the most significant issues in the medium to long term, and I will do my level best to ensure that it is pursued.

[John Glen (Salisbury) (Con)]

18. What steps he is taking together with ministerial colleagues to tackle poverty.

--- Later in debate ---

[Chris Bryant (Rhondda) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

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

As a society, we are living longer and healthier lives, and we need to make sure that the state pension system is sustainable and affordable in the longer term. As such, I hope that the House will take note of the review that we are undertaking into increasing the state retirement age to 66, and I would like to take this opportunity to ask Members to add their contributions to the call for evidence as and when they can, because this is an important debate.

[Chris Bryant]

May I ask the Secretary of State about the issue of teenage pregnancy, which, as he knows, affects many constituencies around the land? We have a very high rate compared with other countries across the world and, unfortunately, research done by the Joseph Rowntree Foundation suggests that many young women effectively choose teenage pregnancy and having a baby as an alternative career. What is the Secretary of State’s Department going to do, in association with other Ministers, to make sure that girls have a proper sense of self-worth, and that when they do have a baby they have a chance of getting into work?

[Mr Duncan Smith]

The hon. Gentleman has, not for the first time, raised a very important issue. There is no magic wand to solve this, and crucially, as he knows from when he was in government, these are not stand-alone issues. Sometimes it is very easy simply to stigmatise a group of young women and say, “It’s all your fault,” when in fact they may well themselves come from broken families where they have only witnessed their own mothers going through the same circumstances and where men have not been involved. There is a much wider set of circumstances, therefore. Of course, making work pay for such women is important, as is recognising that, as the hon. Member for Nottingham North (Mr Allen) mentioned, we need to intervene very early. Most of all we need to make sure that people are ready, trained and able to take up work and that that work pays. That will help enormously in giving them an idea that there is a life beyond just having a child on their own and that sometimes they need support.

[Mark Lancaster (Milton Keynes North) (Con)]

T2. Last week I met a constituent who had been on incapacity benefit for many years. Apart from the initial medical examination, he had not received an examination in nine years. Does the Secretary of State share my concern about a system that seems to let people down so badly?

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

May I ask the Secretary of State particularly about the overall impact of the welfare changes announced in the Budget and since then, because he will know that, for instance, the value of carer’s allowance is being cut by about £135 a year over the next few years, which particularly hits women, and that the value of attendance allowance is being cut by about £185 a year over the next few years, again particularly hitting women? Has his Department done any assessment of the overall impact of the £11 billion of welfare cuts on women—yes or no?

[Mr Duncan Smith]

We are assessing all the impacts of every change we are making. As the right hon. Lady knows, we will be publishing those relating to housing benefit, and as and when we have the full details, I will quite happily let her know.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

T4. In my constituency, a large number of people—much larger than the national average—are pensioners, and in my region an amazing 22% of pensioners are in effective poverty. What will my hon. Friend be doing for the most vulnerable pensioners?

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[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

I welcome the review of housing benefit, but does the Minister accept that it perhaps does not go far enough, inasmuch as it does not examine the role of landlords? Many are milking the system while neither taking steps to control antisocial behaviour by their tenants, nor undertaking appropriate repairs to stop the house—and, indeed, the whole area—falling into decay.

[Mr Duncan Smith]

I agree, in part, with the hon. Gentleman, who raises an important issue, because housing benefit has been in need of a review. I know for a fact that the previous Government were reviewing it, so we are trying to complete that process. He is right to say that one of the biggest problems about housing benefit, and local housing allowance in particular, is that because it has been almost open-ended, landlords have pushed and pushed on rent levels which have then pulled up the amount of money that has flowed out; the increase has been £5 billion over five years. I will be discussing with the Department for Communities and Local Government whether there is a way in which we can rectify that, but he is right to raise it. I am glad that someone on the Labour Benches has made a positive statement about the need to sort it out.

[Malcolm Bruce (Gordon) (LD)]

T7. Further to the previous answer on disability living allowance, can the Minister say when these definitive objective tests will be produced? Does she accept that the budget has trebled because the allowance is so unclear? Does she also accept that objective criteria mean that some people who do not receive the allowance will qualify in future and that many who currently get it will lose out, so the sooner we have the clear criteria, the better for all concerned?

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[Margaret Curran (Glasgow East) (Lab)]

Given the Secretary of State’s commitment to my constituency, which includes Greater Easterhouse, and to children there, may I ask him directly to take the opportunity today to rule out the means-testing of child benefit?

[Mr Duncan Smith]

I am enormously fond of the hon. Lady’s constituency, but as she knows, that is not an area for my Department; it comes under the Treasury brief. I can give her a guarantee that I have had no discussions with the Treasury about that matter.

[Julian Smith (Skipton and Ripon) (Con)]

T9. At my surgery on Saturday, Liz Harlow, a benefits adviser, told me that it is taking weeks to process applications for crisis loans. Given that they are described as loans that can provide help in “an emergency or disaster”, can Ministers reassure me that they will be processed more quickly in future?

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[Mr Duncan Smith]

We are fully aware that there might be peculiar circumstances in London and we have already trebled the discretionary allowance. We are still considering all these matters and making allowances, so I guarantee that we will continue to watch this matter. My hon. Friend is right that this has been a real issue—working people on low incomes have had to pay the bill for local housing allowance without being able to live in the sort of houses that those who are on local housing allowance and who are unemployed can live in. There is a real disparity and unfairness and we need to sort that out.

[Mr Denis MacShane (Rotherham) (Lab)]

Does anyone on the Government Front Bench believe that we can effectively tackle poverty without also reducing inequality in wealth and income? Any one of them is welcome to reply.

[Mr Duncan Smith]

Yes, the right hon. Gentleman is right that we must do both. Under the previous Government—the Government of whom he was a member—inequality was at its worst since 1961. Clearly, they did not think that we must do both, but we do.

[Martin Horwood (Cheltenham) (LD)]

My constituent, Jackie Sallis, acquired her lifelong disability at birth, has tried but invariably failed to hold down a job and has been in receipt of disability living allowance. As regards the review that the Minister has already mentioned, will she reassure us that adults with lifelong conditions will not be subject to a regime of constant medical assessments that try to prove them fit for work, which will be stressful for them, ultimately pointless and, presumably, very expensive for the public purse?

[Huw Irranca-Davies (Ogmore) (Lab)]

The Minister will know that the Welsh Assembly Government have some of the most progressive policies on poverty alleviation. Will she—or any of the Front-Bench team—tell us what discussions they have had with Welsh Assembly Ministers and whether, should those Welsh Assembly Ministers express any reservations about the net impact of their policies on poverty in constituencies such as mine, they will take those reservations seriously?

[Mr Duncan Smith]

I have spoken to the Welsh Secretary on a number of occasions and I have accepted her invitation to go and visit the Assembly—[Interruption.] I have not yet gone, but I have had correspondence with various Ministers. I promise the hon. Gentleman that he will have our eagle eye over the course of the process just as others have.

[Several hon. Members]

rose—