Pensions and Social Security
Iain Duncan Smith Excerpts(11 years, 6 months ago)
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Gregg McClymont
The Minister is determined to tease out from the Opposition what will be in our next manifesto. Our position is clear, and he is obviously trying to deflect attention from this real-terms cut in the pension.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Come on, Greg, you can do it. Just tell us!
Gregg McClymont
The Secretary of State must be less exuberant from a sedentary position.
I shall move rapidly on to the strivers tax. It is clear that strivers have been hit by a tax to pay the cost of the Government’s economic failure, while at the same time millionaires have received a £107,000 tax cut.
Universal Credit
Iain Duncan Smith Excerpts(11 years, 6 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am pleased to announce that later today the Government will publish the Command Paper: “Government’s response to the House of Commons Work and Pensions Select Committee’s third report of Session 2012-13—Universal Credit implementation: meeting the needs of vulnerable claimants”.
On 22 November 2012 the Work and Pension Select Committee published its third report of Session 2012-13, following its enquiry into the implementation of universal credit and plans for meeting the needs of vulnerable claimants.
The Government welcome the ongoing interest of the Work and Pensions Select Committee in this fundamental reform of welfare provision and delivery. Although the report was not received until after the principal universal credit regulations were near to being finalised, we have carefully monitored the progress of the inquiry and considered the evidence presented to the Committee alongside the policy development and service design for universal credit and will continue to do so.
By removing the barriers and disincentives to work that exist within the current system, universal credit will make sure work pays—especially for those on the lowest incomes, helping people to live independent lives. This will reduce worklessness, and encourage people to take personal responsibility. Work can transform individual lives and society for the better and should be encouraged. It is therefore important that we allow claimants to make the same sorts of decisions as those in work and support people to move towards greater independence.
The Government however recognise the Committee’s concerns about the impact changes to the existing welfare system may have on claimants with complex needs. From the very start of the development of the policy, we have been absolutely clear that we must and will protect the interests of those who are in vulnerable circumstances or will face challenges in dealing with the new system.
The Government’s response to the Select Committee’s report details how we will provide support for vulnerable claimants, including helping with access to the online system and offering alternative channels for those who need it; ensuring personal budgeting support is in place to enable claimants to take financial responsibility and having alternative payment arrangements for those who need them. We have also confirmed our commitment to continuing work with Government Departments and devolved Administrations on how they operate passported benefits both in the short and longer term.
A copy of the Government’s response will also be available later today on the Department for Work and Pensions website at:
www.dwp.gov.uk/publications/policy-publications/.
Welfare Spending
Iain Duncan Smith Excerpts(11 years, 6 months ago)
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Mel Stride
I congratulate my right hon. Friend on the progress that he has made in controlling welfare expenditure, particularly given that under the previous Government, the costs rose by no less than 60%. However, there is always more to do. Will he outline what we are doing to clamp down on welfare fraud?
Mr Duncan Smith
My hon. Friend is right about the situation that we were left. We are already bearing down on the problem. The figures show that we are making inroads into welfare fraud. Universal credit will have a much better record in this area, because we will be able to use real-time information to check up on who is in work and what they are earning on a monthly basis, rather than having to wait until the end of somebody’s time on tax credits at the end of a year and reconcile the figures over a long period. Under the current tax credits system, £5 billion has been written off as a result of fraud and error, and it looks like another £5 billion will also be written off.
[Official Report, 28 January 2013, Vol. 557, c. 658.]
Letter of correction from Iain Duncan Smith:
An error has been identified in the oral answer given to the hon. Member for Central Devon (Mel Stride).
The correct answer should have been:
Mr Duncan Smith
My hon. Friend is right about the situation that we were left. We are already bearing down on the problem. The figures show that we are making inroads into welfare fraud. Universal credit will have a much better record in this area, because we will be able to use real-time information to check up on who is in work and what they are earning on a monthly basis, rather than having to wait until the end of somebody’s time on tax credits at the end of a year and reconcile the figures over a long period. Under the current tax credits system, £4 billion has been written off as a result of fraud and error, and it looks like another £4 billion will also be written off.
Universal Credit
Iain Duncan Smith Excerpts(11 years, 6 months ago)
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Mr Duncan Smith
It will—I can give the hon. Gentleman that reassurance. We are discussing this at every level with the local authorities concerned. The process will start at a jobcentre in each of the areas I have mentioned on 29 April, and that will start bringing in childless couples to claim universal credit, rather than jobseeker’s allowance. Over that period, once people are captured into the universal credit system, they will not go back on to jobseeker’s allowance, so a lot of tax-credit people who fall unemployed will move on to universal credit. We are in deep discussions with the regions.
[Official Report, 28 January 2013, Vol. 557, c. 656.]
Letter of correction from Iain Duncan Smith:
An error has been identified in the answer given to the hon. Member for Stalybridge and Hyde (Jonathan Reynolds).
The correct answer should have been:
Mr Duncan Smith
It will—I can give the hon. Gentleman that reassurance. We are discussing this at every level with the local authorities concerned. The process will start at a jobcentre in each of the areas I have mentioned on 29 April, and that will start bringing in childless single people to claim universal credit, rather than jobseeker’s allowance. Over that period, once people are captured into the universal credit system, they will not go back on to jobseeker’s allowance, so a lot of tax-credit people who fall unemployed will move on to universal credit. We are in deep discussions with the regions.
Oral Answers to Questions
Iain Duncan Smith Excerpts(11 years, 6 months ago)
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Jackie Doyle-Price (Thurrock) (Con)
3. Whether he plans to phase the introduction of the benefit cap.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The benefit cap will be implemented from 15 April 2013 in Bromley, Croydon, Enfield and Haringey local authority areas. This will be a phased roll-out, with the remaining local authorities implementing the cap by the summer. This is in keeping with the way that the culture has changed in DWP. All the programmes that we are implementing are being rolled out on a staged basis. That includes changes to the Child Maintenance and Enforcement Commission, universal credit, personal independence payment and universal job match.
Jackie Doyle-Price
Can my right hon. Friend give me some reassurance that vulnerable people will not be affected by the cap? Can he also assure me that every effort is being made to support people back into work?
Mr Duncan Smith
Clearly, the cap and the principles behind the cap are supported by Government Members—that is, that people who are on benefits should not be earning more than those, for example, on average earnings. Those who are exempted are those who are entitled to working tax credit—because this is about getting people back to work, not stopping them doing that—war widows, widowers, those in receipt of disability living allowance/personal independence payment, attendance allowance, industrial injuries benefits, those on war disablement pension and compensation scheme and the support component of employment support allowance. There is also a 39-week grace period for those who fall unemployed so that they can get back to work without having to change their arrangements.
Sheila Gilmore (Edinburgh East) (Lab)
Despite what the Secretary of State has just said, it is clear that he sees the need now to delay an implementation that was previously seen as so important. What about those households where there is an adult receiving DLA and where there are parents who act as the carers? They are two separate units for benefit purposes. Will the Secretary of State undertake to ensure that those households are not penalised?
Mr Duncan Smith
First, I must say to the hon. Lady that she is talking complete nonsense. I would much rather implement a programme learning the lessons as we implement it, than follow the practice of the previous Government, who had a period of collapsing programmes because they rushed them. This is the right way to do it and it is a shift in culture. On the second part of her question, under the Government that she supported—and it is still the case today—when someone becomes an adult, they effectively form their own household. We have discussed and are discussing those matters continuously, but households are formed when someone becomes an adult, and the previous Government never saw any reason to change that in all the years that they were in power.
Gavin Barwell (Croydon Central) (Con)
As the Secretary of State confirmed, Croydon will be one of the first places where this policy is rolled out. May I thank Lord Freud, who is the Minister responsible for welfare reform, and the housing Minister for meeting me to discuss this? Will my right hon. Friend confirm that his Department will work closely with my local authority to ensure that this important policy is implemented smoothly?
Mr Duncan Smith
I say to my hon. Friend and to all hon. Members and hon. Friends whose areas are affected by the roll-out that we are in deep discussions with all those councils. Jobcentre Plus will be working hugely with each of them, advising, helping and supporting them—in many senses, giving them more support than is necessarily likely to be the case when the national roll-out follows the pilot programmes.
Fiona Mactaggart (Slough) (Lab)
But as the roll-out happens, some of the areas that will be most affected are not the pilot areas—the first areas—but places such as my constituency, where people are already being moved out of London housing into Slough because there is relatively cheap housing there. Will the Secretary of State undertake that during the period when, as he said, he is taking time to introduce this, he will make revisions and talk to those authorities that are not the pilot authorities and are affected, as mine will be?
Mr Duncan Smith
I am glad to see that the hon. Lady realises the point of this whole process—to learn the lessons and to understand how best to implement the pilot programmes properly. Of course we will be talking to all local authorities, particularly those that are directly affected, and all other local authorities will listen to what they say. Despite the massive protestations of collapse and doom and gloom that we heard when we announced these proposals—we should remember that all local authorities have known about them for over a year—we now see statistics showing that there has not been the mass migration that was predicted. As for access to housing, housing benefit caseloads in London have risen by 5%, not fallen.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
4. How many people currently claiming a state pension will benefit from the new higher rate state pension under his proposals for a single tier scheme.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Early roll-out of universal credit begins with a pathfinder in April 2013 in the Greater Manchester and Cheshire region, including the jobcentre in Ashton-under-Lyne. I am aware that a number of the hon. Gentleman’s constituents will be involved as a result, as will other Members’ constituents, and my Department will write to all of them to invite them to discuss the roll-out.
Jonathan Reynolds
The Secretary of State is right to say that my local authority of Tameside is one of the pathfinder areas. Conversations that I have had with officers from that authority and the wider public infrastructure show that there is a lot of concern about the lack of detail and support from the Department of Work and Pensions with regard to the implementation. Given that this is just a few months away and is a cause of serious concern, will the Secretary of State reassure me and people in my local area that the Government are on top of this and that implementation will take place as planned?
Mr Duncan Smith
It will—I can give the hon. Gentleman that reassurance. We are discussing this at every level with the local authorities concerned. The process will start at a jobcentre in each of the areas I have mentioned on 29 April, and that will start bringing in childless couples to claim universal credit, rather than jobseeker’s allowance. Over that period, once people are captured into the universal credit system, they will not go back on to jobseeker’s allowance, so a lot of tax-credit people who fall unemployed will move on to universal credit. We are in deep discussions with the regions.[Official Report, 31 January 2013, Vol. 557, c. 6MC.]
Jesse Norman (Hereford and South Herefordshire) (Con)
The previous Government’s record in commissioning and managing large IT projects was a catalogue of failure. Have my right hon. Friend and his colleagues been able to learn anything from that in how they have designed universal credit?
Mr Duncan Smith
All such programmes under Governments of any hue have always carried risk, because they are about change. The DWP benefits systems, including tax credits, are very complicated and often contradictory. Of course what we are doing involves risk, but we are trying to manage that risk. The best way to do so is to ensure that we introduce it stage by stage, so that we can recognise where we need to learn lessons, correct what is difficult or going wrong and ensure that we roll out the system properly.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
On Friday, I visited a housing association in my constituency that is greatly concerned about the introduction of universal credit, as well as the bedroom tax and the benefits cap. What assessment has the Secretary of State made of the impact on the finances of housing associations from the possible increases in rent arrears as a result of his Government’s policies?
Mr Duncan Smith
I do not believe that there will be an impact. [Interruption.] The Opposition should look to their own record and the housing benefit mess that they left us. They left a rising bill that had doubled in nearly 10 years, so it would be better to have a little less from them. We are trying to ensure that those who are paying this money are not allowed to slip into debt for any great length of time. That matter is being discussed with housing associations and we are making good progress on it. I believe that this approach will help people who are trying to get back into work enormously, rather than their being treated as though they are children who have to have all their bills paid for them.
Ian Swales (Redcar) (LD)
A constituent of mine who did a few extra hours at Tesco before Christmas faces losing her income support and carer’s allowance for a whole month and will be much worse off. Does the Secretary of State agree that that shows the injustice of the system left by the previous Government, and that universal credit is desperately needed?
Mr Duncan Smith
That is exactly the point. My hon. Friend hits the nail on the head. The mess of all the chaotic benefits left by the last Government, many of which contradicted each other, meant that people were not incentivised to go to work for anything more than 16 hours in some cases. Many people who could have got themselves out of poverty by working did not do so because they were penalised by the system. That is the shame of what the last Government left behind.
Kate Green (Stretford and Urmston) (Lab)
Will the Secretary of State say what resources are being allocated to in-work conditionality for part-time workers under universal credit, given that the Department has acknowledged that there is no evidence nationally or internationally of what works to sustain people in employment and enable them to progress?
Mr Duncan Smith
The Department is looking closely at how we can assist people to take more work while on universal credit. We do not have the final results of that, but I am happy to sit down with the hon. Lady at any time and discuss her concerns. She is right about one thing: rather than parking people on a specific number of hours, universal credit will allow people to work more hours and get more money, rather than losing it, thereby getting themselves and their children, if they have any, out of poverty.
Mel Stride (Central Devon) (Con)
8. What steps he is taking to control welfare spending.
Ben Gummer (Ipswich) (Con)
20. What steps he is taking to control welfare spending.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Government have undertaken major reforms to limit Britain’s welfare spending, which over successive years ran out of control. Under the last Government, welfare bills had increased by 60% by 2010, costing every household in Britain an extra £3,000 a year. Last week, the Welfare Benefits Up-rating Bill was passed by this House. It will save £1.9 billion, restoring fairness for taxpayers in the process.
Mel Stride
I congratulate my right hon. Friend on the progress that he has made in controlling welfare expenditure, particularly given that under the previous Government, the costs rose by no less than 60%. However, there is always more to do. Will he outline what we are doing to clamp down on welfare fraud?
Mr Duncan Smith
My hon. Friend is right about the situation that we were left. We are already bearing down on the problem. The figures show that we are making inroads into welfare fraud. Universal credit will have a much better record in this area, because we will be able to use real-time information to check up on who is in work and what they are earning on a monthly basis, rather than having to wait until the end of somebody’s time on tax credits at the end of a year and reconcile the figures over a long period. Under the current tax credits system, £5 billion has been written off as a result of fraud and error, and it looks like another £5 billion will also be written off.[Official Report, 1 February 2013, Vol. 557, c. 8MC.]
Mr Wilson
As the Secretary of State has said, the previous Government increased welfare spending by 60%. There was not, however, a 60% increase in people getting jobs, or a 60% reduction in child poverty. Does the Secretary of State agree that we should not measure the success of our welfare system by how much we are spending on it?
Mr Duncan Smith
I agree with my hon. Friend: we should measure our welfare system by how soon it provides support to those who need it and how it supports those who can be moved into a more productive form of life. The previous system trapped people into dependency on welfare with rising bills and, ultimately, a very poor record on child poverty.
Alun Cairns
I strongly welcome the welfare reforms that the Government are introducing, and I pay tribute to the Secretary of State for the control he is bringing to expenditure. Does he agree, however, that the provision of some of the benefits, and the terms under which they will be received, may need to be reviewed? If the parent of a young child with a complicated medical condition needs to stay in hospital for longer than 84 days, they may fall foul of the carer’s allowance. Will the Secretary of State agree to look at that?
Mr Duncan Smith
I understand fully what my hon. Friend is saying and, of course, the parent who is caring for a child in hospital has 84 days in which that child may be in hospital. I also recognise what he is saying about broken-up periods in hospital should someone have a condition that takes them back to hospital again. I would be happy to sit down with him, and anybody else, to look at the issue and discuss whether there are ways to rectify it.
Ben Gummer
I congratulate my right hon. Friend on the reforms he is bringing in. Social mobility and poverty were manifestly not improved by 60% during the previous Government’s regime, although the bill went up by 60%. However, people such as my constituent, Mr Martin Wilsher, who is visually impaired, still have concerns about some of the reforms being introduced. What reassurances can my right hon. Friend provide to Mr Wilsher?
Mr Duncan Smith
First, as my hon. Friend knows, this is about the disability living allowance and the personal independence payment, and the reality is that DLA will not be included in the changes. More than that, it is important to note that through discussions over the introduction of PIP, a good and warm welcome has finally come from the Royal National Institute of Blind People. After recent discussions it said that the PIP criteria include a number of
“significant improvements for blind and partially sighted people.”
The changes we are making to PIP, after guidance from that organisation and others, will help people such as my hon. Friend’s constituent.
Jessica Morden (Newport East) (Lab)
Last week in Westminster Hall Ministers made great play of the savings that the Government might expect from the bedroom tax. In Wales there is a chronic shortage of smaller houses, so why will the Secretary of State not admit that those who are hit by this cruel policy in Wales will have to go into the insecure private sector where rents will be higher and local housing allowance rates will cost more?
Mr Duncan Smith
What the hon. Lady and her party presided over when they were in power was a complete mess in housing—[Interruption.] It is all very well for Opposition Members to shout like a bunch of discombobulated monkeys bouncing up and down on the Benches; the reality is that their housing benefit record left many thousands of families unable to find housing because they were in a queue, while others occupied housing that had far too many rooms. We have to put that right, and that is what we are doing. The Labour party never did that when it was in government.
Mr David Winnick (Walsall North) (Lab)
Although I am not a vindictive person—at least, I hope I am not—I would like to see the Secretary of State and his colleagues, plus the Prime Minister and the Chancellor of the Exchequer, try to live, just for six months, on the income of those who have been adversely affected as a result of the cuts carried out by the Government over the past two years. Try and live on that sort of income; see what it is like not having any recourse to private income.
Mr Duncan Smith
I have known the hon. Gentleman for a long time, and the reality is that none of these decisions is taken lightly by this Government—indeed, any Government. I remind him, however, about all those people who, because of the mess in which the previous Government left the finances, have found themselves out of work or with incomes falling. When he talks about vulnerable people, it is this Government who have increased the pension and made it better for some of the most vulnerable people in society.
Helen Goodman (Bishop Auckland) (Lab)
Under the current rules, citizens from some eastern European countries are entitled to housing benefit and working tax credit, but not to income-related jobseeker’s allowance. Will the Secretary of State set out for the House what the position of these people will be once universal credit, which will wrap all the benefits up together, has been introduced?
Mr Duncan Smith
It is our intention to try to ensure that under universal credit the loose access to benefits that has been enjoyed by far too many people coming into this country who have no right to them will actually be limited. I will be able to brief the House much better on that as and when we complete the rules on it.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Obviously the Secretary of State has made mention of the benefits uprating being capped at a 1% increase. Has he had any discussions with the Chancellor of the Exchequer about what that will do to growth or about the impact that it will have on the economy over the next three years?
Mr Duncan Smith
I have lots of discussions with the Chancellor on a regular basis, all very amicable. Of course we have to discuss this in a wider context, but the hon. Gentleman and his party look at this in a very narrow context. They say, “Well, you withdraw this money from people on benefits and that immediately has an effect on the high street.” If that were all that we were doing, I would agree with him, but it is not. There is a major programme for investment in industry and a huge capital spending programme, not least as will be announced in a statement later today. These will have an even bigger effect, in a positive way, on spending in the high street.
Grahame M. Morris (Easington) (Lab)
9. What estimate he has made of trends in the number of people in Easington constituency claiming jobseeker’s allowance in 2013.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today, I welcome the millionth jobseeker signed up to the universal jobmatch service, launched before Christmas, which is revolutionising how claimants look for work—with online job searching and matching through DWP on a scale never seen before. The system works 24/7 to find jobs that fit with people’s skills, location and working patterns, which means that their CV works for them even while they sleep. The service harnesses new technology to improve their prospects, and was launched on time and on budget.
Catherine McKinnell
It would appear that about 430,000 women born between 6 April 1952 and 6 July 1953 will not qualify for the new pension, while men of the same age will. What does the Minister have to say to the 1,700 women in Newcastle potentially affected by this unfair situation?
Mr Philip Hollobone (Kettering) (Con)
The winter fuel allowance is a non-contributory benefit, yet every year we spend tens of millions of pounds on winter fuel allowance for pensioners who live abroad in far pleasanter climates than our own. Is there nothing that the Government can do within the terms of the EU directive to ensure that such payments cease and that pensioners in this country benefit from that money?
Mr Duncan Smith
This is a matter that we are looking into. As my hon. Friend knows very well, it is caught under European law; however, the recent judgment that came out said that we had to make these payments. There might be other ways we may be able to limit that exposure, and I will be able to let my hon. Friend know later in the day.
Steve McCabe (Birmingham, Selly Oak) (Lab)
T5. Teacher Dawn Lewis in my constituency is one of 600 women who will lose out because of the perverse pension rule that my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) drew attention to earlier. Is the Minister at all worried that this looks like yet another coalition attack on working women?
Simon Hughes (Bermondsey and Old Southwark) (LD)
On the Government’s benefit changes for housing, foster carers have expressed their concern to me that they might be inhibited from doing their good work by the extra penalty for having a spare room. Can the Secretary of State or a Minister give me some reassurance that the amount of fostering that we currently have—and need—can continue without financial disadvantage?
Mr Duncan Smith
We are of course working closely with the Minister responsible at the Department for Education—the Under-Secretary of State, the hon. Member for Crewe and Nantwich (Mr Timpson)—whose record on this is unimpeachable, as my right hon. Friend knows. He also should recognise that we have laid aside £5 million specifically to help with foster carers in the situation he described. However, we are in discussions with local authorities, county councils and the Department for Education about how best the money can be used to ensure that it specifically helps foster carers in this area, so that they suffer no hardship whatever, but can continue, and we can encourage more people to become foster carers.
Teresa Pearce (Erith and Thamesmead) (Lab)
T9. Given the inability of Her Majesty’s Revenue and Customs to write to all parents affected by the recent child benefit changes, I have serious concerns about the real-time information that will need to be delivered if universal credit is going to work and succeed. In September, the Minister for Welfare Reform, Lord Freud, said that 99.8% of the data sent by employers had been matched, yet a parliamentary answer from the Exchequer Secretary on 17 December revealed data from the same month showing that only 71% had been matched. Which Minister has got it right?
Mr Duncan Smith
The hon. Lady is confusing two answers. The answer that she received from the Treasury—from Her Majesty’s Revenue and Customs—was to do with checking against the references of the accredited companies. That was a process that was looking for 80%, and it was achieving just over 75%. What my hon. Friend the Minister was saying was that the number of companies being brought on to the pilot was exactly in line with the number that is there. I can promise the hon. Lady that, if she really wants me to, I will give her a written answer to that question as well.
Mr John Redwood (Wokingham) (Con)
Is the Secretary of State looking favourably on the idea that workers coming here from Europe to earn a living should have to establish a contribution record over a reasonable period of time before becoming eligible to receive benefits?
Mr Duncan Smith
The Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban) and others are engaged on this matter with our European partners. We do not think it right that somebody who has made no contribution to this country should be able to walk in here on day one and take benefits, as is being proposed. I promise my right hon. Friend the Member for Wokingham (Mr Redwood) that I will not allow that to happen.
Mr William Bain (Glasgow North East) (Lab)
T10. The Minister has failed to justify to the 430,000 women in the rest of the country, or to the 500 women in my constituency, born between 5 April 1952 and 6 July 1953 why they will receive a state pension of up to £1,900 a year less than a man born on the same day as they were.
Mr Duncan Smith
We do not expect anybody to lose their homes as a result, but I must tell the hon. Gentleman that his Government sat for a large number of years without building any houses, watching housing benefit rise and people sitting on waiting lists to get houses, so crocodile tears from them now they are in opposition are a waste of time. We will sort the problem out, and I hope they will not be in government for a long time to come.
Mark Pritchard (The Wrekin) (Con)
Most EU migration has been of real benefit to Britain, but may I ask the Secretary of State what plans he is putting in place to stop Bulgarian and Romanian migrants claiming welfare benefits from 1 January 2014, thus driving up the welfare bill for UK taxpayers?
Mr Duncan Smith
We inherited a situation in which there were rules guarding against that happening to those who come in. To put the record straight, habitual residence tests and other rules require that those who come into this country are involved in some form of work. My hon. Friend also knows that European legislation is before us at the moment that tries to allow those coming in to claim benefits on day one. We are utterly opposed to that: we are fighting it, and it is not my intention to see it happen in any way.
Welfare Benefits Up-rating Bill
Iain Duncan Smith Excerpts(11 years, 7 months ago)
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Kwasi Kwarteng
I could not have put it better myself. My hon. Friend has made an important point about employment, which touches on a wider point about the division between Government and Opposition. The Labour attempt to create a socialist state by means of Government spending led to absolute disaster, as it always does. We will not be able to create jobs simply by expanding the public sector ad infinitum; logic tells us that that is not going to work.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am pleased to note that my hon. Friend ascribes efficiency and a real plan to the Labour Government, but that great plan of theirs to create a socialist state ended in the payment of tax credits to people earning more than £70,000 a year. Who were they helping in that regard?
Kwasi Kwarteng
This is anecdotal evidence, but I was reliably informed that a couple of Liberal Democrat Members of Parliament were claiming tax credits on the basis that they were entitled to them. That is the sort of barmy universe that was constructed under the last Administration, and it is something that we have had to redress. When we consider matters such as those that we are considering today, we must always bear in mind that, given a budget deficit of £170 billion—more than 12% of GDP—it is very difficult to curb public spending sufficiently to enable the country to pay its way on a sustainable basis.
Mr Duncan Smith
I beg to move, That the Bill be now read the Third time.
The Bill moves into its Third Reading with—I believe—its fundamental principles intact. I thought that my hon. Friend the Minister of State’s closing speech before the votes answered, in detail, many of the questions that remained after the debate on the amendments, but now, on Third Reading, I think it important to make further progress.
The arguments that we advanced when we presented the Bill were first and foremost about affordability. Our main argument concerned the need to reduce the historic deficit left by Labour. As I have said to my colleagues throughout the coalition, at no stage have we made our decisions lightly. This is not something that, at the start, we would have wanted to do, and I want to come back to that point in a moment. We were left a legacy of disaster and spending that was out of control, and our priority must be to get that back under control. If we do not do that, the poorest in society will fare the worst—that is the main point to make.
Let me give an illustration of the point I was making. Under the previous Government public spending ran to excess, while the cost of working age welfare increased by some 60% in real terms, as has been said on a number of occasions. Money was poured into what became an over-inflated system; as my hon. Friend the Minister of State, has said, for every £3 taken in tax £4 was actually borrowed, with the result that we had a growing deficit. It was one of the worst deficits in Europe, if not the worst in the western world. We spent £170 billion on tax credits alone between 2003 and 2010. For all the talk about this being absolutely about people in work, 70% of that money went on child tax credits, chasing a target that Labour never hit, and that was payable regardless of whether parents were in work or not.
Mr Duncan Smith
No, I am going to make a little progress now, although I will give way later. I recognise that some who did not get a chance to speak earlier may wish to say a few words, and I want to give them a little time to do so.
The previous Government appeared to have no care or concern for the fact that more than £10 billion was wasted and lost eventually through fraud, error and overpayments, nor that the rest of the money altogether failed to meet its aim. There was already a problem with fraud and error on tax credits, but, worse still, the previous Government did not even record overpayments, so we have no idea to what degree that system was damaged. However, we do know—
Mr Duncan Smith
I said that I would make a little progress and then give way. I wish to make one point, which is that £4 billion has had to be written off as a direct result of this inability to get the money back, with a further £4 billion likely to be written off directly as a result of Labour’s massive failure to control that budget.
The second part of our approach is important and it relates to the issue of fairness, which my hon. Friend the Minister of State addressed. We do not do these things lightly, but we do want to make sure that those paying the tax bill for those receiving it in welfare recognise that their taxes are well spent; we want to ensure that those in work paying their taxes do not see the rises for those on welfare outstripping their own. We have already discussed the increases, so this is fundamentally an issue of fairness.
Mr Duncan Smith
I said I would give way, so I will give way to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) now.
Mr Byrne
Over the past month or two, as the Secretary of State has warmed up the debate for tonight’s Bill, he has launched attack after attack on tax credits. Will he just accept the principle that tax credits are important in helping to make sure that people are better off in work and, indeed, that that is why he is not abolishing tax credits but incorporating them into the new system of universal credit? Will he just set that point straight for the House?
Mr Duncan Smith
I have said all along that I do not doubt that at the beginning the intention was to try to improve the lot of those working on low incomes; I have never attacked that as a principle. The point I am making tonight is that there seemed to be a loss of control. In 2005, the then Government stuck a 58% increase into tax credits just before an election—almost 70% of all the money in tax credits goes on child tax credits—and they were, in a way, bribing an electorate in the hope that these people would vote for them because they felt that there would be some reason why they would not get the money afterwards.
I wish to make one important point to the right hon. Gentleman on tax credits, because he has asked me about them. The reality was that the previous Government ended up, through tax credits and child tax credits, attempting to chase a target that, as the economy improved, ran away from them. This became spending for an arbitrary target, and the taxpayer was chasing a target that the previous Government never achieved.
Mr Duncan Smith
I will not give way. Progress on tackling child poverty stalled, and the previous Government missed their 2010 target by some 600,000 children.
Mr Duncan Smith
No, I will not give way yet. From 2004 until the last election the previous Government spent £171 billion trying to hit their target, and that was where the problem came from. They wrecked what might have been a good process because they turned it into a target-chasing process, which never succeeded finally.
Debbie Abrahams
Some 200,000 children will be pushed into poverty as a result of this uprating measure, according to the assessments, so how can the Government claim to have any commitment to reducing child poverty?
Mr Duncan Smith
Let me put the figures in the round within the period of spending review. My hon. Friend the Minister of State made a very good point, with which I agree and which I have made in the past—we do not trumpet our progress because we think the process of setting a target around 60% of the median income line was a recipe for nightmare problems and excess spending. We do not claim that that is the right way to measure the problem. The hon. Lady will have noticed that in answer to a parliamentary question last week, we said that we will go into full public consultation about a better way to measure real child poverty that the coalition Government will set and measure ourselves against—[Interruption.] Income will be part of it, but not the dominant part that her Government made it. If she and her party were honest—when I made this point on Second Reading, I noticed one of her Front Benchers nodding his head—they would admit that when they worked out the arbitrary target in 1997-98, they thought that they would not be in power that long and that they could achieve the targets along the way. What they ended up in doing was create a nightmare for themselves.
Some £170 billion were spent on tax credits but targets to halve child poverty by 2010 were missed by 600,000. Easier successes were found and then later the rate fell from 26% to 23%. It dropped further between 2002 and 2005 but that coincided with a 75% increase in spending on tax credits from £13.2 billion to £22.9 billion. Throughout that period, the amount of severe child poverty was absolutely static.
Simon Hughes (Bermondsey and Old Southwark) (LD)
The Secretary of State knows that the Liberal Democrats are not comfortable about this sort of Bill, but my hon. Friend the Minister of State argued that, in difficult circumstances, we must take difficult measures. Will the Secretary of State reaffirm the Government’s commitment to taking children out of poverty, to the basic principles of the welfare state and to go on seeking to ensure that all those who cannot work through no fault of their own—carers, unemployed people and pensioners—will continue to be supported? Will he reaffirm that we intend there to be a fairer society at the end of this Government than there was at the beginning?
Mr Duncan Smith
That is my genuine intention. My right hon. Friend will know that his hon. Friend the Minister of State and I have worked to ensure that what we do to get the deficit down through universal credit and the other reforms—even those for pensions—will improve the lot of the poorest in society. If we take the figures on that relative income point across the period covered by the spending review, we can see that some 350,000 children net will be lifted out of poverty, even if we take into account the effect of this Bill. I can tell my right hon. Friend that that is absolutely our purpose and one that I believe we can stand by.
Mr Duncan Smith
I want to make a little progress before I give way again.
We need to remind ourselves that although the Opposition spent the debate in Committee going on and on at my hon. Friends about taxes on the wealthy coming down, we are raising more in tax from the wealthiest than they ever planned to throughout the whole of their spending programme. Hon. Members should remember that Labour was the party that said early on that it was
“intensely relaxed about people getting filthy rich”.
We will take no lessons from the party that did not raise the upper rate to 50% until the last month or two before it lost the election.
Mr Duncan Smith
I shall give way in a second, but I want to make a little more progress.
Let me deal with the point about deficit reduction, which is really important. The Opposition did not answer a key question during our debates in Committee. They have voted against every single measure to reform and reduce the overall spending on welfare so that we can get the deficit under control. Let me quote somebody whom they might remember. The quote is this:
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
That was their former Prime Minister, Tony Blair. I agree with him. In 2005 the previous Government raised spending dramatically as a device for electoral success, as we said earlier. Time and again Labour has voted against our reforms.
Mr Duncan Smith
Before I give way, let me give some examples. The Opposition opposed the Welfare Reform Bill, and that would have cost £2.1 billion in extra spending. They rejected the benefit cap—a further £500,000. Reversing tax credit savings would cost £5.5 billion. Reversing the child benefit savings would cost £1.7 billion. Voting against this Bill would cost another £1.9 billion. That money would need to come from somewhere.
If I give way to the right hon. Gentleman now, I would like to hear him tell us how exactly he would reduce the overall spending. Please, nothing on the bankers bonus tax, which has been spent at least 10 times already. If he tells us that he would get long-term unemployed people back to work, he should remember that under his Government the long-term unemployed figures doubled.
Mr Byrne
I am grateful to the Secretary of State for giving way. We have said that contributory employment and support allowance should be limited to two years. We have said that there should be an independent gateway for disability living allowance. We have said that we should switch the way we uprate benefits from RPI to CPI. We have said that there should be a benefit cap which, yes, is different in London from the rest of the country, but a benefit cap none the less. We have said that disregards in tax credits should be reduced. Crucially, we have said that there should be a two-year limit on jobseeker’s allowance. That is a far bigger list than the current Chancellor of the Exchequer ever set out when he was in opposition. We think welfare spending should come down. We think getting people back into work is the way to do it. That is why we think the Secretary of State should have brought forward plans to sort out the Work programme, which is failing, and to fix universal credit, which is in disarray.
Mr Duncan Smith
I wonder why I bothered to give way to the right hon. Gentleman. Every one of those statements was a spending commitment. They were not reductions. Every one of them would still leave a Labour Government with a vast bill to pay. I remind the Opposition that what they have opposed remains the reality. They are stacking up spending commitments without one single observation about how they would make the savings necessary to cut the deficit that they left us—one of the worst deficits, as I said before. Their proposed raid on pensions, which they wanted to talk about, would not cover it. They have already spent several times over all their little gimmicks. Voting against the Bill is another spending commitment.
Mr Duncan Smith
I will give way to the hon. Gentleman, but first I want to deal with some of the claims that the right hon. Member for Birmingham, Hodge Hill made in the course of the debates on the Bill. The first claim that he made was that spending on out-of-work benefits was falling before 2010. That is not true. The figures published show that between 1997-98 and 2010-11 spending on out-of-work benefits rose by £2.6 billion. There we have it. Even the Opposition’s attempt to whitewash what was a very small idea is not true. Overall benefits and tax credit spending increased by £75 billion, from £122 billion to £197 billion, which is 60% in real terms.
The Opposition’s decision to vote against the Bill has financial implications equivalent to 48,000 nurses’ salaries or more than 500,000 primary school places. That is the kind of mess that they have got themselves into because they have taken the easy course in opposition, which is to oppose everything and to come up with no serious proposals.
Hugh Bayley
In York there is a particularly large gap between private sector rents and the levels of housing benefit because the broad rental market area for York includes a number of towns 20 miles away, such as Malton, Norton and Easingwold, where rents are about 40% lower. A new clause was tabled that suggested that the Department should analyse those gaps on an annual basis, but there was not time to discuss it. How would the Secretary of State respond to that proposal? Would he support such a proposal if it were made in another place?
Mr Duncan Smith
We are always analysing what we are doing with local housing allowance and housing benefit generally, so that is an ongoing process for us. We are also testing our proposals for universal credit when it comes to housing.
I know that I need to conclude, but I want to say something, as the hon. Gentleman touches on the subject. When we brought in the housing benefit changes, we heard all sorts of threats that those would lead to total disaster. One of the myths propagated by the Opposition was that 82,000 people across London would lose their homes. The reality is, so far, that the figure is up by just under 600. The myth was that 134,000 people would have to move or become homeless. The reality is that across the country, the numbers of those in temporary accommodation is up by only about 900.
In conclusion, the changes that we are putting forward are down to the first point that I made, the second point being that we need to carry them out in the fairest possible way. As my hon. Friend the Minister said earlier, we do not take this course of action lightly, but we know that if we were to go on borrowing at the rate that the last Government would have, we would punish the poorest.
I say to the Opposition that it is not good enough simply to take the easy course. When in government, they left us with the worst deficit and high borrowing that would have completely devastated those who pay their mortgages. They need to come to the Dispatch Box and tell us now how they would be fair to those who have to pay the highest tax bills.
Welfare Benefits Up-rating Bill
Iain Duncan Smith Excerpts(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I beg to move, That the Bill be now read a Second time.
The Bill, which stands in my name and that of my right hon. and hon. Friends, is about the renewal of what I believe is a principled welfare state based on affordability, integrity and fairness. For the convenience of the House, let me explain that I intend briefly to run through the features of the Bill, and I will then open up the debate to take interventions and deal with the amendment.
This Government inherited from the previous Government an unsustainable and costly system, and a welfare state that I believe delivered poor social outcomes, trapping people in dependency, as well as a poor deal for Britain’s taxpayers. My opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), needs no reminder of that as it was he who, when we arrived in government, told us that there was no money left. That was the result of a recession that was later discovered by the Office for Budget Responsibility to be deeper and sharper than anyone thought. The original estimate—
Mr Duncan Smith
I will give way in a moment. I am in the business of having the right hon. Gentleman justify his own position so I will be happy to give him a chance, but let me finish this point. The previous Government originally claimed that the shrinkage in the economy was 5.8%. In fact, as the OBR later pointed out, at 6.3% the shrinkage was deeper than we had ever seen before—the biggest shrinkage in the economy since world war two.
Mr Duncan Smith
I am glad that the right hon. Gentleman raises that point because a huge part of that is spending on pensions. He will know that we are spending more on pensions and provide a better deal for pensioners than his Government ever did. Until this Bill, the Government continued to raise welfare payments in line with inflation; this is the first time that we propose not to do so. That will take effect through the uprating order that should be laid before Parliament later this month. The Bill provides that discretionary working age benefits and tax credits will be uprated by 1% for a further two years in the tax years 2014-15 and 2015-16, if prices have risen by at least 1%. The schedule to the Bill sets out the benefit payments and tax credits in question, which are listed in full in the explanatory memorandum. By providing for those changes in legislation, we can provide certainty for taxpayers, the markets and claimants.
A number of exceptions to the Bill are not included, and a number of benefits remain outside the scope of the Bill. We are maintaining our commitment to the triple lock so that the basic state pension will rise by 2.5%. In April 2013, pensioners will see an increase of £2.70 on last year—far more than the derisory 75p that Labour gave them in 2000—and I stress again that we introduced the triple lock to guarantee that. Crucially, we are also protecting disabled people and carers. Benefits to cover the added costs faced by these groups will continue to be linked to price inflation.
Mr Duncan Smith
I will give way in a moment. That includes carer’s allowance, disability living allowance, and new personal independence payments, as well as premiums paid to disabled people receiving working age benefits such as the disability additions in tax credits, and the support group component of employment and support allowance.
Sheila Gilmore (Edinburgh East) (Lab)
The Secretary of State has stated that benefits have been raised in line with inflation, but he did not say that tax credits— 2,000 people who are affected by the Bill are in work and receiving benefits such as tax credits—have not been increased for the past two years. In fact, they have been frozen.
Mr Duncan Smith
It is interesting that the hon. Lady raises that point, because under the Labour Government, tax credits absolutely boomed. In 2005, there were increases of 58%. Overall, there were 340% increases in tax credits, 70% of which goes to child tax credits. The hon. Lady says that tax credits should continue to rise, but she can make that argument in due course.
Helen Goodman (Bishop Auckland) (Lab)
Will the Secretary of State admit that the social security budget is going up on his watch because unemployment is rising faster than his colleague expected?
Mr Duncan Smith
Never let a good fact get in the way of a good argument. Unemployment is falling, youth unemployment is falling, more women are in work than ever on her watch, and long-term unemployment is flattening out. The reality, therefore, is that we have better employment figures—there are 1 million new private sector jobs, which outweighs the public sector jobs we have had to get rid of. The reality is that the rate of unemployment, at 7.8%, is better than the EU average and better, almost for the first time, than the United States of America.
Mr Byrne
It is significant that the Secretary of State has just admitted for the first time that welfare spending on his watch is rising £14 billion higher than projected. Will he go a step further and confirm his understanding of the OBR figures that show that the claimant count is forecast to rise by a third of a million more than anticipated over the next few years? Will he admit that, yes or no?
Mr Duncan Smith
I should remind the right hon. Gentleman that the claimant count was forecast to rise but has fallen throughout all those forecasts. I know it is inconvenient for the Opposition, who would rather unemployment rose than fell, but unemployment is falling. Many countries in Europe would give their eye teeth for the employment figures in this country.
Derek Twigg (Halton) (Lab)
On disabled people, paragraph 24 of the Secretary of State’s impact assessment, which has just been published, states:
“Nevertheless, despite this protection…those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit, are more likely to be affected than those where there is not a person”
in that category.
Mr Duncan Smith
There are two good reasons for that. First, families in which there is some disability are often more likely to include people who have claims on other benefits. Some of those will be affected by the change.
Mr Duncan Smith
No. That is exactly the reasoning behind what the impact assessment says. The second reason is that, as part of employment and support allowance, the support group is protected. However, people who are described in the terms of the Bill as qualified under the Disability Discrimination Act 1995 and are not in the support group will find that they will be affected by the 1% increase. Therefore, by and large, the benefits for those who are disabled and qualified as disabled, and for those in receipt either of support payments in ESA, disability living allowance or the premiums in many other benefits, are being uprated in line with inflation—[Interruption.] May I finish? The only benefit that is not being uprated in line with inflation is ESA for those not in the work-related activity group. Some of those with disability will be affected because many in their households will be on other benefits. That is the reason.
Mr Duncan Smith
I think I have dealt with that particular point and will move on—[Hon. Members: “No!”] All right, I will give way to the hon. Gentleman again.
Derek Twigg
I thank the Secretary of State for giving way, but I am not clear about what he has just said. Will he confirm his impact assessment, which states that
“despite this protection …those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit”—
this is the crucial point—
“are more likely to be affected than those where there is not a person who describes themselves as disabled”?
Does he agree?
Mr Duncan Smith
I have just told the hon. Gentleman that the reality is that someone in those households is more likely to be on benefits, but particularly ESA. Let me remind him and the Labour party that they introduced the changes to the work capability assessment and ESA. The Government inherited, modified and improved those measures, but they are part of the reason why that is in the impact assessment.
Mr Duncan Smith
No. I have dealt with the hon. Gentleman’s point. The truth is that the Labour party is not only against the Bill but against what the Labour Government introduced just before the last election and the work capability assessment. Labour Members have opposed £80 billion of changes and reductions in every single vote and every single motion. I have dealt with his point. They must decide what they are in favour of when it comes to reducing the deficit; otherwise, they will be a laughing stock.
Charlie Elphicke (Dover) (Con)
Is not the bottom line that it is very difficult to justify 20% increases in benefits when earnings for hard-pressed families have gone up by only about 10%?
Mr Duncan Smith
It is worth pointing out to my hon. Friend that, when the Opposition originally heard about the Bill, the shadow Chancellor and my opposite number—the shadow Secretary of State—entertained the idea that what was wrong with the Bill was that it affected too many people who were in some kind of work through working tax credit. The speculation was that, somehow, they would be prepared to support, or not oppose, measures on those not receiving working tax credit. I notice that there is no mention of that position in the amendment, because they have been clobbered by their left and by the trade unions, their paymasters. Instead, there is a rag-bag amendment expressing opposition to a variety of things, which bears no relation to their previous position. There they go again, denying where they are.
The real question for the shadow Secretary of State and the shadow Chancellor, before they intervene again, is this: having opposed every single reduction to the deficit, what exactly would they do to cut it? They have not a single answer.
Andrew George (St Ives) (LD)
We have just heard that one justification for capping benefits at 1% is that, allegedly, benefits have risen significantly more than wages. In that case, would it not be wise for the Government to introduce a measure so that benefits do not increase by more than average wage inflation?
Mr Duncan Smith
As I have said, the Bill is about trying to bring that fairness back into the welfare payments process. As my hon. Friend the Member for Dover (Charlie Elphicke) has said, the reality is that in the period since the recession, payments for those in work have risen by about 10% and payments for those on benefits have risen by about 20%. We are trying to get a fair settlement back over the next few years. Eventually, benefits will go back on to inflation.
Andrew George
We do not know—the Secretary of State is probably more clairvoyant than I am—what food price inflation will be in, for example, 2016. We are being asked to predict what the circumstances will be in the context of the rather arbitrary figure of 1%. I simply urge my right hon. Friend to keep an open mind, and to have a means by which we will uprate that is fair to both benefit recipients and those in work.
Mr Duncan Smith
I accept the point about fairness—that was my point—but the reality is that the Bill is also about getting the overall welfare bill down and in kilter. As I have said on the radio and again today, the key is that we must reduce the deficit—that is at the heart of the measure. The Liberal Democrats joined us in the coalition. I should remind the hon. Gentleman that the No. 1 priority we face is reducing the deficit that Labour left us—the biggest deficit on record of any Government since the second world war. That is the reality, but Labour Members are in denial, so I will move on.
The reality is that affordability—
Mr Duncan Smith
I will give way in a minute—I want to make progress and I have been quite reasonable in giving way.
First and foremost, under Labour public spending spiralled out of control—[Interruption.] Yes, it did. That left behind the UK’s largest ever peacetime deficit, and interest payments running at £120 million a day—[Interruption.] It is interesting that as soon as I speak about what Labour Members left behind, they go into denial. They try and shout me down because they do not like the sound of it. The reality is—
Mr Duncan Smith
I will give way in a minute. The reality is that the shadow Chancellor and the former Chief Secretary deny that they left a problem. It was a nightmare, and they should apologise and tell us what they would do to put it right.
Mr Byrne
I am grateful to the Secretary of State for giving way again: he is being typically generous. No doubt he, like me, will have looked at the DWP benefit expenditure tables, which show that spending on out-of-work benefits between 1996-97 and 2009-10 did not rise, but fell by £7.5 billion. That is why Lord Freud said that Labour’s record in getting people back to work was “remarkable” and noted that Labour had tackled the long-term dependency on unemployment benefits that it had inherited from the Tories in 1997.
Mr Duncan Smith
I notice that the right hon. Gentleman is very careful to avoid telling the House how much Labour spent on tax credits as well. The important point that Labour Members need to realise is that of the total bill for tax credits, 70% had no involvement with work at all. Child tax credits had no work agreement on them whatever. The reality is that Labour spent 340% more on tax credits, 58% before the 2005 election and 29% before the last election, in the hope of buying votes to get it out of difficulty. The result was that the debt we had to pay off was costing us £30,000 every single minute. That is what we had to pay as a result of that expenditure—
Mr Duncan Smith
I am not giving way to the right hon. Gentleman again. I keep reminding him that he is the man who, when he left office, admitted that there was no more money left. He should apologise for that. Labour has opposed the £80 billion of savings that we have proposed. When he gets up again, he needs to tell the House what Labour would do to reduce the deficit and where it would find the savings. If he answers that question, I will give way to him.
Mr Byrne
My right hon. Friend the shadow Chancellor has set out far more about the difficult decisions that we would make than the Chancellor ever made. We have said that uprating of benefits should be slower; that there should be a two-year cap on contributory ESA; that there should be a reduction in disregards in tax credits; that there should be a benefit cap in different parts of the country; and that no one in this country should be allowed to live a life on welfare and languish for more than two years on JSA. The best way to bring the welfare bill down is to get people into work, not give them a failed Work programme.
Mr Duncan Smith
I remind the right hon. Gentleman again that we are getting people into work. Unemployment is lower than it was when we took office, youth unemployment is lower and we are getting more people into work. He said that he was in favour of the cap. That is very interesting, because he voted against the cap. He says that he is in favour of a number of issues, but he voted against the Welfare Reform Act 2012. He is against universal credit and the housing benefit changes. He has not agreed to any of the changes that we have made.
The overall bill for welfare rose by 60% between 1997 and 2010—
Robert Halfon (Harlow) (Con)
Is not the philosophical underpinning of this debate our wish to create a hand-back society, not a hand-out society? Is not cutting taxes on lower earners the best way to help those on low earnings, rather than recycling their hard-earned money through the benefits system?
Mr Duncan Smith
That is exactly the point. Labour Members think that helping people is about trapping more and more people in benefits. It is interesting that under the tax credits system, nine out of 10 families with children were eligible for tax credits, in some cases those with more than £70,000 in earnings. What a ridiculous nonsense they created.
Labour’s system was riddled with fraud and error. HMRC had to write off £4 billion in fraud and error payments and will probably have to write off another £4 billion, so £8 billion has been lost. This Bill is about finding savings of £1.9 billion, but as a result of tax credits Labour lost probably nearly £8 billion. That is the record of the last Government. They should apologise for the mess they left us in.
Ian Paisley (North Antrim) (DUP)
I appreciate the Secretary of State’s generosity in giving way.
I welcome the Secretary of State’s confirmation that pensions will not be detrimentally affected by the Bill. Can he confirm that in actual cash terms there will be an increase in benefits?
Mr Duncan Smith
That is correct. That is exactly what this Bill sets out. That will also be the case this year.
Andrew Gwynne (Denton and Reddish) (Lab)
I wish to take the Secretary of State back to the point made by my hon. Friend the Member for Halton (Derek Twigg) about disabled people. We have now gone from the Secretary of State saying that there is a blanket protection for disabled people to him acknowledging in the impact assessment that some disabled people will be affected by these changes. Given that recognition in the impact assessment, can he tell the House how many disabled people his Department estimates will be affected by these changes?
Mr Duncan Smith
I stand by what we said originally, and I say it again: in this Bill we have protected people on disability living allowance, as well as people in the support group on ESA. All the disabled premiums in JSA and so on are also protected. I do not know where Labour Members think they are going with all these points, because the reality is that they are basically opposed to absolutely everything. They would spend more money, they would tax more and they would borrow more, and the people who would suffer would be the British people who would have to pick up the bill. That is the reality.
I was making an important point about fraud and error. In essence, more than £10 billion was lost, and we do not even know how much was overspent, because Labour would not collect the figures. Writing off those debts wastes taxpayers’ money. To put this in perspective, the Bill sets out what we are doing at the moment to raise £1.9 billion, but that money could have been raised without difficulty had Labour’s system been better and more efficient.
It is also worth pointing out that, for many of the people Labour Members talk about, universal credit will improve their income dramatically. I have some very good examples of that. Under universal credit, a typical one-earner couple who have two children and rent their home will be £61 better off—including the changes today. A one-earner family with an income of £20,000 and two children will see a net gain of at least £34 a week. That will be a big boost for them and was not taken into consideration in the IFS figures.
The reality is that there is an issue about fairness, which we touched on just now. We should bear in mind that 70% of all households will not be affected by this legislation. Many of our constituents are taxpayers picking up the bill for all these costs, including the deficit and borrowing that the last Government left us. Over the last five years, following the recession, the gap has grown between what people in employment have been earning and what those on welfare have been getting. Those in work have seen their incomes rise half as quickly as those on out-of-work benefits—10% compared with 20%. That is not fair to taxpayers. Returning fairness to the system is critical, and it is one area that Labour refuses to acknowledge. Under the previous Government, taxes rose, borrowing rose and the deficit rose—and they left those bills for the next generation to pay. It is our job to get that under control. These are not decisions taken lightly or easily, but we have to take them and they are in denial.
The shadow Chancellor likes to sound off from a sedentary position. He likes to give it out but does not like to take it. I remember only a few weeks ago that he went around the studios complaining that we were too mean to him. If he does not like it, then he should stop making sedentary interventions.
Mr John Redwood (Wokingham) (Con)
Will the Secretary of State confirm that inflation can be particularly tough on people on low incomes who face small increases? Will he reassure people in the country that the Government and the future Governor of the Bank of England will be dedicated to getting inflation down, so that the value of benefits is not eroded more?
Mr Duncan Smith
Exactly. Mortgage rates are a critical component of what a household spends each year. Under Opposition plans, if interest rates had to rise because of their messy borrowing and spending, every 1% would cost another £1,000 on a typical mortgage. What have also done as a coalition, which we should be proud of and on which our coalition partners were very keen, is raise the tax threshold. That is taking more than 2 million people out of tax—people who were paying tax under the previous Government. That is serious help and an improvement of £165 a week for the average family.
Kate Green (Stretford and Urmston) (Lab)
I want to ask the Secretary of State about the people who are moving into low-paid work. Of the increase in employment in the past year, only 20% has been for full-time work, and so 80% has been for people who are by definition in part-time, and therefore probably low-paid, work. How will they benefit when he is capping the in-work benefits increase by just 1%?
Mr Duncan Smith
I will make two points to the hon. Lady. First, the vast majority of people who take part-time work choose to take part-time work. In all the studies we have—I am happy to let her have them; they are in the public domain—only 17% or 18% say that they did not want a part-time job, and wanted a full-time job, so she should not decry those who take part-time work. My second point is that that is why we are bringing in universal credit. Universal credit is about in-work and will be a huge support to those in part-time work, starting this year. The trouble with the tax credit system, which the Opposition are defending despite the fraud, the over-payments and the massive error, is that it lodged people into little silos where they could not move up, out of those hours. If a job moved from 16 hours to 17 or 18 hours, people did not do it because they could not afford to do it. Large numbers of lone parents, as she knows only too well, would rotate out of that and crash back out of work, because the job moved on and they could not stay with it.
The reality is that we are reforming the welfare system to make it better and easier for people who are in part-time work to have improved incomes. That is a part of this overall welfare programme that will deliver an efficient and even-handed system. It is right that the 1% applies across the board, including the tax credit system. As I said earlier about the overall numbers of people affected, of those working households, 20% of all households are affected by the Bill. If tax credits and child benefits were excluded, as the Opposition have prescribed, we would see a requirement to find a further £1.5 billion—yet another amount of money which they cannot say how it would be found. When in denial, like those on the other side of the House, one just votes against everything. A constructive Opposition would give us a proposal on how they would save that money.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Secretary of State has used the word “denial” twice. In previous Budgets and autumn statements, the Government talked about and acknowledged measured child poverty. However, in the most recent autumn statement and in the Bill, there is no mention of child poverty. Will he admit that under these plans child poverty in our country will go up and that that will come at a cost to us all?
Mr Duncan Smith
I will say two things about child poverty. First, we want to ensure that the figures published concern the years that this measure covers, and the year in which I will be introducing secondary legislation. The figures will be published next week in time for the debate—the Committee stage will be on the Floor of the House and everybody who is here today can take part.
Secondly, child poverty was calculated based on the median income line, and the previous Government lost control of it. Tax credits rocketed because they were chasing a moving line. As upper incomes rose, so did average earnings, and that is why they had to spend so much money. I remind the hon. Lady that they missed their targets in 2010 by 600,000 children in poverty. Since we have come in, the figures published this June show that child poverty fell by 300,000. I am not going to stand here today and try to claim credit for that fall. The figure fell because we saw the biggest fall in earnings for many years. Does that mean that because earnings fell child poverty has been solved? No, it does not. That is why we are consulting on a better way to measure child poverty.
Caroline Lucas (Brighton, Pavilion) (Green)
The Secretary of State brandishes the figure of a 20% increase in benefits in the past five years. In cash terms, jobseeker’s allowance has gone up from just £59.15 in 2007 to £71 in 2012. In other words, in each of those past years JSA has gone up by just £2.50. Is it not the truth that this is a mean and miserable piece of legislation from a mean and miserable Government?
Mr Duncan Smith
I hear the hon. Lady’s point; I have to say that I do not agree with her. Benefits have risen, but if she would like to talk to those who are in employment on lower incomes in her constituency she would find that many have seen absolutely no rise in their incomes at all, and some even less than that.
Jake Berry (Rossendale and Darwen) (Con)
On that point, I was approached by a member of Manchester constabulary in my advice surgery recently. He said, “How can you justify putting out-of-work benefits up by 5.2% last year, when I have had a pay freeze and I risk my life every day?” Is that not the nub of the argument? People who are in work have to be treated fairly.
Mr Duncan Smith
I agree with my hon. Friend. I want to make some progress because he is absolutely right. The reality that Labour will not face up to is that the programme it has put forward is hugely costly.
I want to deal with the programme that Labour put forward in the past week, which I think is in the amendment before the House. I looked at it and it seemed very familiar. I remembered something, looking back over the past 10 years. I went back and had a look at the programme that the shadow Chancellor and his then boss, the then Labour Prime Minister the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) came up with. [Interruption.] I seem to recall that they came up with a programme called StepUp. The right hon. Member for Morley and Outwood (Ed Balls) was an adviser at the time. [Interruption.] Well, he was certainly very close to him. Is he now denying—[Interruption.] Well, there we have it finally: he no longer wants to have the former Prime Minister as his friend. More than that, from his sedentary position, he will probably deny that, late in the hour while the then Prime Minister was troubled and in difficulty, he did not come by taxi or by car to consult him and help him out. A denial of a friend is pretty cheap, and I think we will remember that.
The reality is that the StepUp programme, on which the Opposition have clearly based this new programme, was piloted in 20 areas between 2002 and 2004. It was never rolled out nationally, and I want to quote from the evaluation report. The StepUp programme was all about giving paid employment to people who had been out of work for some two years. The report stated:
“StepUp produces a very modest improvement in job entries…but this is below the level of statistical significance.”
In fact, each of those jobs would have ended up costing £10,000—a massive cost for a very small regard. When they did it—[Interruption.] Wait a minute. When they did it—[Interruption.] They do not want to hear about it. They made a bogus announcement and now they do not want to hear how useless it is. The work prospects of under-25s in the pilot got worse as a result of this programme.
Here is what happened. The Opposition were in a hurry during the Christmas recess, worried about being attacked for having no proposals, so the shadow Chancellor said, “Oh, I remember something we did under the man who used to be my friend, but is no longer my friend. I remember we had this programme.” So they decided to put that out and propose raiding pensions savings yet again to pay for a bogus programme. If anyone thinks for one moment that it would help anybody at all, let me tell them that it is more than a joke—it is pathetic. And it is pathetic that they have done it to try to get themselves off the hook.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Has my right hon. Friend pondered this question? The Government are trying to ensure that the social security net works for people who need social security. When does he think that Labour decided that they were not interested in social security, only in bribing the electorate?
Mr Duncan Smith
It is in its DNA, so I am not sure when it started, to be honest. The tax credit system was out of control, as I said earlier on, because Labour was chasing a figure it could never reach, and as a result its spending was enormous.
In conclusion—
Mr Duncan Smith
No, I want to conclude. The right hon. Gentleman will have plenty of time to speak.
Mr Duncan Smith
Okay, I will give way in a second.
I want to remind the Opposition of what they have done. They have opposed £83 billion-worth of savings this Parliament. That is equivalent to adding another £5,000 of debt for every working family in the country. We hear much about taxing the rich, yet, in this Parliament, the richest will pay more in tax than in any single year of the previous Government—more tax on capital gains, more stamp duty—they will be less able to avoid and evade tax and they will pay more when they take out their pension policies.
We hear much about the bankers’ bonus tax, but Labour would have spent that money 10 times over. This is its great bankers’ bonus tax of £2.3 billion. Let us think about it very carefully. It would have overspent that to the sum of £25 billion—through reversing the VAT increase, more capital spending, reversing tax credit savings and reversing the child benefit savings. We are talking huge sums of money.
Mr Byrne
The Secretary of State has the temerity to criticise proposals we launched on Friday, when he is presiding over a Work programme that is literally worse than doing nothing. He stands before the House justifying the position of his Government, which is that it is possible to spend a life on welfare, but we say that is wrong. The way to bring welfare spending down is to get people into jobs, and when there are no jobs we invest in creating them.
Mr Duncan Smith
Our record on getting people into jobs is better than theirs. The difference is that Labour spent taxpayers’ money like drunks on a Friday night, with no care or concern for how effective it was. The work experience programme achieves what the future jobs fund did, but at a fraction of the cost. The Work programme is getting more people into work than the flexible new deal programme.
Mr Duncan Smith
No, I will not give way to the hon. Gentleman. I think he has a few apologies to make before I give way.
This was Labour’s legacy in government: 5 million on out-of-work benefits, one in five households with nobody working and 2 million children living in workless families—a higher proportion than in any other EU country. In opposition, they have learned nothing. Today’s amendment shows—if Members can be bothered to get to the end of it without falling asleep—that Labour would spend more, tax more and borrow more and let the next generation pick up the bill. The Bill is about picking up the pieces, sorting out the deficit and being a responsible Government.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House declines to give a Second Reading to the Welfare Benefits Uprating Bill because it fails to address the reasons why the cost of benefits is exceeding the Government’s plans; notes that the Resolution Foundation has calculated that 68 per cent of households affected by these measures are in work and that figures from the Institute for Fiscal Studies show that all the measures announced in the Autumn Statement, including those in the Bill, will mean a single-earner family with children on average will be £534 worse off by 2015; further notes that the Bill does not include anything to remedy the deficiencies in the Government’s work programme or the slipped timetable for universal credit; believes that a comprehensive plan to reduce the benefits bill must include measures to create economic growth and help the 129,400 adults over the age of 25 out of work for 24 months or more, but that the Bill does not do so; further believes that the Bill should introduce a compulsory jobs guarantee, which would give long-term unemployed adults a job they would have to take up or lose benefits, funded by limiting tax relief on pension contributions for people earning over £150,000 to 20 per cent; and further believes that the proposals in the Bill are unfair when the additional rate of income tax is being reduced, which will result in those earning over a million pounds per year receiving an average tax cut of over £100,000 a year.
It is good to see the Secretary of State fronting the Bill today and to see the Economic Secretary to the Treasury in his place. Where, however, is the Chancellor? It is a disgrace that he is not here in person. Where is he?
Mr Duncan Smith
The Chancellor told me earlier he was in Berlin making a speech—a long-term commitment —but he will be back in plenty of time for the winding-up speeches, and he is looking forward to hearing Labour make as much of a mess of it at the end as at the beginning.
Mr Byrne
I think it is surprising that the Chancellor is talking to people in Germany, rather than to MPs in the House about the disastrous consequences of his policies.
We know that the Chancellor and the Secretary of State do not see eye to eye on much, but they are jointly and severally liable for the mess and the haemorrhaging of the welfare budget that the Bill seeks to staunch. The Chancellor’s disappearance is a hallmark of the contempt that has been shown for the House today. The impact assessment for the Bill was published at noon. It makes radically different assumptions from the policy costings set out by the Chancellor last year. And now the Government propose to ram the Bill through the House in just one day of debate. They are terrified of scrutiny and exposure. It is turning into a hit and run on working families, and frankly we should not stand for it.
The Chancellor should have shown up, because the Bill is about clearing up the consequences of his failure. His reputation as a maker of recessions is now pretty well established. Every time he has come to the House, he has been forced to downgrade growth yet again, and since he took office he has battered the life out of the recovery that Labour left him in 2010. He is the first Chancellor for 35 years to preside over a double-dip recession. History will not judge him well.
But the Chancellor has a partner in crime: the Secretary of State, the man who has become the Comical Ali of the Government, the only man in the DWP who thinks that everything is fine and hunky-dory—a man who would put Dr Pangloss to shame. Every time he comes to the House, he comes with words of reassurance: everything on his watch is going according to plan. He blithely assures us that the Work programme is fine. We are told that universal credit is completely and utterly on track—not a hiccup to be heard—and that the benefit cap will definitely start in May. The only problem is that he is living in a fantasy land of his own, because everything is not okay, everything is not on time and everything is certainly not on budget. We were promised a Work programme bigger than any yet known to man. So big it could be seen from space. This is a programme that is so effective it is literally worse than doing nothing. It works so well that just three out of 100 people who passed through it passed into sustained jobs. It is a disaster.
Then, of course, we have universal credit—a policy that is now proceeding so smoothly that, it is fair to say, it has earned widespread support and praise from right the way across Government. Members of the Cabinet—perhaps even those sharing a building with the Economic Secretary—are now so impressed that they are telling anyone who will listen at the Daily Mail and elsewhere that it is a “disaster waiting to happen” and that the IT is “nowhere near ready.” The Secretary of State has so much grip on this project that the Prime Minister himself invited him to pack his bags and clear on out of the Department—a vote of confidence that I know rang around Caxton house, because senior officials are now leaving the Department as fast as they can.
Now, of course, we have the news that the benefit cap—which Lord Freud told the other place would absolutely, definitely, without question be introduced nationwide in April—will be introduced in just four London boroughs. This is a record of chaos, delay and impending disaster, and today the Government are inviting millions of working families in this country to pay to clean it up.
Mr Byrne
I would contrast that money with the £3 billion a year that the Chancellor is giving away to Britain’s richest citizens, in a tax cut that will kick in next year, at a time when the Government are cutting tax credits and when Britain’s working families are under pressure. How can the hon. Gentleman possibly justify that, either here or to his constituents?
Mr Duncan Smith
I would be grateful if the right hon. Gentleman will now acknowledge that all the OBR’s latest figures show that, under this Government, the wealthiest are paying more in tax than in any single year under his Government.
Mr Byrne
Like me, the Secretary of State will no doubt have seen table 2.1 of the Budget, published in March 2012, which clearly shows that in 2014-15, the cost of the tax giveaway will be £3.4 billion. How can he possibly justify that at a time when he is hitting Britain’s working families? Will he justify it now?
Mr Duncan Smith
I asked the right hon. Gentleman a simple question—[Interruption.] Actually, the shadow Chancellor should leave the right hon. Gentleman alone for a second; I think he has a brain in his head. Don’t listen to him; his advice to the last Prime Minister was hopeless. I want to ask the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) a simple question. Here are the figures: the wealthiest in Britain are paying more in tax under this Government than in any single year under the last Government. Does he agree with that?
Mr Byrne
We put the top rate of tax up. It is this Government who are cutting it, at a cost of £3.4 billion a year. How can the Secretary of State possibly justify the choices made by his right hon. Friend the Chancellor, a man who has supported him hilt and sword? How can the Secretary of State justify giving away £3.4 billion to Britain’s richest citizens in a tax giveaway when he is hurting Britain’s working families? Justify it now!
Mr Duncan Smith
Does the right hon. Gentleman agree or disagree that the OBR figures show that, under this Government, we are raising more in tax from wealthy people than in any single year under the last Government? Will he now admit that?
Oral Answers to Questions
Iain Duncan Smith Excerpts(11 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
8. What his plans are for the future of housing benefit for people under 25 years old.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In June, the Prime Minister instigated a debate about the merits and risks of taxpayers continuing to meet the £2 billion bill that automatic entitlement to housing benefit for people aged under 25 brings. More work is required, and that discussion and debate is still going on.
Mrs Glindon
Last year, 10,000 young people became homeless because, through no fault of their own, they could no longer live with their parents. Will the Secretary of State give the House a categorical assurance that there will be no further plans in this Parliament to take away young people’s housing benefit?
Mr Duncan Smith
I repeat what I said in my first answer: there is a discussion and debate. The policy debates are likely to go ahead, but I have no plans as yet to implement any policy—there are further discussions to be had.
Meg Hillier
When the Secretary of State is having those further discussions, perhaps he will take account of experience in my constituency, where around a third of residents are under 24. Nationally, an estimated 400,000 households are headed by someone under 25 who claims housing benefit, half of whom have dependent children. When he is having those discussions, will he consider the impact on children of his policy proposal?
Mr Duncan Smith
That would go without saying—all impacts on various groups will be taken into consideration. The main point I would make is that, no matter what else, if we were to implement such a policy, we would have to take into consideration categories of people who might find it incredibly difficult, such as those described by the hon. Lady. There would not necessarily be carte blanche—there would be nuances and changes. However, as I have said, discussions are ongoing, and as she can see, no policy exists at the moment.
Andrew Bridgen (North West Leicestershire) (Con)
Does my right hon. Friend share my concern that less than 16% of the 204,300 young people under 25 with children who claimed housing benefit are in a couple?
Mr Duncan Smith
That is obviously a matter for concern, but also for wider change. We want to ensure that couples stay together, and our plans and changes with universal credit will help with that enormously. It is worth reminding ourselves of the situation left by the previous Government. Labour Members go on about our policy, but in the past decade the housing benefit bill doubled from £11 billion to £21 billion. We are reducing the overall rise, but housing benefit under this Government will still rise by around £2 billion, as opposed to the huge sum the previous Government would have instigated.
Hywel Williams (Arfon) (PC)
What would the Secretary of State say to the GISDA organisation in my constituency, which works with homeless and vulnerable people in marginal and rural areas uniquely through the medium of Welsh? It depends on housing benefit to move those young people into housing, employment and training.
Mr Duncan Smith
Up until now, many people have been trapped on benefits, as they will continue to be without change. The point has been made in this discussion and debate that many who are not on housing benefit but on low incomes find that they must make difficult decisions on where to live—on whether to stay at home or share. My point is simply that we are looking at how we bring those who fall under the benefit bill into line with others, thus giving them a greater opportunity to take work and profit by doing well from an early age. That is all the debate is about. It should surely be welcomed as a right debate to hold.
Ian Austin (Dudley North) (Lab)
It is interesting that, despite the Liberal Democrat campaign, the Secretary of State is not ruling the proposal out. Young people have been coming to London to get on in life since Dick Whittington. What does the Secretary of State say to the youngster who took the advice of his predecessor, Lord Tebbit, and got on his bike, moved to London, worked hard and paid taxes, but was made redundant? Should he lose his home and have to move hundreds of miles to live with his parents, where there might not be any jobs? All hon. Members want housing benefit to come down, but how would that promote aspiration?
Mr Duncan Smith
This Government are doing more to help unemployed young people back to work than was ever done by the previous one. I remind him that his Government left us with rising youth unemployment. They took all those who were unemployed for over 10 months and put them on a course. When those who were unemployed came off the course, they went back to zero, and therefore were never registered. We have a better record than they had.
Stephen Mosley (City of Chester) (Con)
2. What steps he is taking to prevent fraudulent universal credit claims.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We are investing £400 million in the next four years to reduce fraud and error as part of a joint operation with Her Majesty’s Revenue and Customs and the Cabinet Office. We are already making progress, and universal credit will enable even greater strides to be made. At the autumn statement, the inclusion of universal credit in the baseline—a critical moment—means we now anticipate savings from fraud, error and overpayments to be roughly £2.2 billion per year.
Stephen Mosley
I welcome my right hon. Friend’s response. Any money defrauded from the taxpayer is money taken from those who are most in need. Does he agree that universal credit is one way in which the Government are cracking down on those who are abusing the system?
Mr Duncan Smith
That is absolutely true. We were left with a series of benefits that too often were riddled with fraud and error. Not all of this is about fraud. Many people are receiving overpayments or underpayments when they should be receiving the correct amount. Too often with tax credits, people are chased at the end of the year, without their realising that they had received the wrong money in the first place. Universal credit will be kinder in the sense that it will be adjusted each month. It will help us save huge sums—some studies state £2.2 billion per year.
Dame Anne Begg (Aberdeen South) (Lab)
The Government’s decision to go digital by default—in other words, people will be able to receive universal credit only if they apply online—surely creates a greater chance of fraudulent activity. We all remember what happened with the online form for child tax credits. What guarantees do the Government have that universal credit will not be susceptible to online fraud and that the necessary checks will not take such a long time that they will delay payment? All of a family’s income will come through universal credit.
Mr Duncan Smith
We have taken account of that. I have had the opportunity to discuss this with the hon. Lady, and I am sure I will again. The reality is that digital by default does not mean that that is the end of it for people who are not online. On the contrary, we allow for those who are not online. We will help and support them as they make their claim, and it will be taken through the system. They will receive their money on time. For those in doubt, we will make payments anyway. We fully recognise the reality of the need for money and for it be sorted out afterwards—that has been taken into account.
Paul Uppal (Wolverhampton South West) (Con)
3. What steps he is taking to increase take-up of workplace pensions.
Nick de Bois (Enfield North) (Con)
11. What evaluation of the implementation of universal credit he plans to undertake.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today we are publishing a high-level framework for evaluating universal credit. A full programme of evaluation is being developed. This will include studies of implementation, covering themes such as claimant, staff and stakeholder experience. This, along with other analysis, will form part of a continuous programme of evaluation on the roll-out of universal credit.
Nick de Bois
Will my right hon. Friend reassure me that he will resist the last Government’s temptation always to launch things with a big-bang announcement, often followed by failure? In this case, will he carefully learn the lessons of the pilots he is launching in April?
Mr Duncan Smith
The process we are engaged in—by the way, I have fully briefed the Opposition Front-Bench team, so there are no secrets here—involves a pathfinder starting in April, and by the beginning of October we will start the national roll-out. The whole idea is to roll it out progressively throughout the UK, making sure that we learn the lessons as we roll it out. Whatever changes need to be made can be made at that point. It seems to me that that is the reasonable and right way to do these things, but I remind my hon. Friend that we are not only below budget, but on time—and it will be completed on time.
Mr Clive Betts (Sheffield South East) (Lab)
No doubt the Secretary of State will confirm that, following the introduction of universal credit, when people’s incomes change they will have to go to the local council to sort out their council tax benefit changes, and to the DWP to sort out their housing benefit changes. Two visits, or two contacts, will be required as a result of one change of income. What progress is the Department making in discussing with councils the need to provide a joined-up service so that, in future, people will need make only one contact when their incomes change?
Mr Duncan Smith
The hon. Gentleman is right to raise that issue. We are currently engaging in discussions with local authorities with the aim of ensuring that people receive a proper and comprehensive service, and I assure the hon. Gentleman that that is exactly what they will receive as and when the time comes to roll out universal credit. The point of universal credit is that all the other benefits, including housing benefit, will be combined in a single payment, which will simplify matters enormously for claimants and recipients; and councils will, through council tax benefit, have the opportunity to provide the best possible service for their tenants.
Sarah Newton (Truro and Falmouth) (Con)
12. What assessment he has made of Professor Harrington's third review of the work capability assessment.
Damian Hinds (East Hampshire) (Con)
17. What assessment he has made of the potential utility of jamjar budgeting accounts in (a) smoothing the transition to universal credit and (b) increasing financial inclusion.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Budgeting accounts will be a useful help for some claimants both in supporting transition to universal credit and in terms of broader financial inclusion, in particular for those claimants who have not managed their money monthly before—that is an important category—or who have not been responsible for their own housing costs.
Damian Hinds
I am grateful for that answer. The demonstration projects have shown the value of jamjar accounts, and commercially they could have much wider application. In the tendering process, will my right hon. Friend pay particular attention to the unique possibilities of credit unions, given their local base and links with housing associations?
Mr Duncan Smith
I will indeed. We are doing our level best; we are giving credit unions extra money and backing them enormously to get going. I think that they will develop hugely, and I hope that they will eventually replace the payday lenders—it is really important that we all agree about that. On the jamjar accounts and the way we are making these payments, everyone warned us that there would be problems if we paid housing benefit direct. We have trialled that in one of the demonstration projects and, importantly, only 3% of those who receive their housing benefit payments direct are having to revert to indirect payments because they have been unable to cope. That is a major advance from the existing local housing allowance.
Mr Clive Betts (Sheffield South East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I welcome the announcement made in the autumn statement last week that housing support for those living in supported exempt accommodation will be disregarded from the benefit cap. We have listened to the concerns of organisations including Refuge, Women’s Aid, the National Housing Federation and others. That announcement addresses their concerns, meaning that individuals in very vulnerable circumstances, including those fleeing domestic violence, will be protected.
Mr Betts
The Secretary of State will be aware of the direct payments pilot schemes, which are taking place before universal credit, before the bedroom tax and before the changes to council tax benefit. Is he aware that the pilots are showing an increase in rent arrears due to an increase in partial payments? If that remains the case at the end of the pilots, is he prepared to change policy to make it easier for rent payments to be made direct to the landlord?
Mr Duncan Smith
I disagree with the hon. Gentleman. The figure I gave in my response to the last of the questions showed that, in actual fact, the pilots are beginning to show categorically that if there is proper management by local authorities, the number of people defaulting is very low. That we can deal with. [Interruption.] Instead of playing games, paying this direct and treating housing benefit tenants as children, does he not think that part of the reason why they crash out of work early is that they cannot cope with the extra responsibility? By getting them ready for that responsibility before they go to work we are doing them a favour, and that figure shows we are supporting them.
Tracey Crouch (Chatham and Aylesford) (Con)
T2. Later this week, my constituent Danny Shingles will go into hospital to have a debilitating polycystic kidney removed. I am sure that the Secretary of State is aware that cysts on kidneys burst, poisoning the body and creating great discomfort. While preparing for his operation Mr Shingles is also having to appeal a decision to stop his disability living allowance and employment and support allowance, despite the fact that after his operation he will be entitled to have them again. This is causing my constituent much unnecessary stress, so will the Secretary of State review the guidance given to assessors to ensure that all factors, including the scheduling of operations, are taken into account when making decisions about whether someone is entitled to benefits?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
Will the Secretary of State set out for the House the projected rise in the dole bill as a result of the Budget?
Mr Duncan Smith
I do not believe that there will be a dole rise. The reality is that, under this Government, in the last year we have seen more people back into work; more private sector jobs than were ever created by the previous Government; and more women in work. Unemployment levels have fallen and youth unemployment levels have fallen. Perhaps the right hon. Gentleman would like to apologise for the total mess his Government left us.
Mr Byrne
The Secretary of State clearly does not know, so let me help him. The Office for Budget Responsibility says that the dole bill will rise by £6 billion as a result of his failure to get Britain back to work. To pay that price, he is proposing an uprating Bill which, I am afraid to say, sounds all wrong to me. It is wrong to take £4 billion from tax credits, it is wrong to take £300 million from maternity pay, and it is wrong that this strivers tax is going to hit 4,500 working families in his constituency. He should be fixing welfare reform, not flogging working families. Perhaps he would like to tell the House this afternoon just what share of the savings from this uprating Bill is going to come from working families.
Mr Duncan Smith
I must tell the right hon. Gentleman that our unemployment figures are better than those originally forecast by the OBR. I remind him—as if he needed reminding—that he left this Government with a 6% fall in GDP, an economy that was on the rack, and debt that was higher than that of any other country in northern Europe and rising every year, with £120 million a day being spent on the interest. Let me remind him of one other thing: he has voted against every single change and every cut we have made to deal with that debt. The Opposition are irresponsible and not fit for government.
Richard Graham (Gloucester) (Con)
T3. I welcome the introduction of universal credit next year. However, will the Secretary of State outline how my constituents without bank accounts will in practice be able to access universal credit? Does he agree with the suggestion made by Westgate ward Councillor Paul Toleman that Post Office accounts could be a useful alternative mechanism?
Mr Duncan Smith
It is correct that Post Office accounts would be a useful measure in ensuring that we can give people the right kind of choice and the right kind of places for their accounts. Under universal credit, people will be given an opportunity to begin to live their lives in the same way as they would live them if they were back in work. That is a critical and huge change that will allow them to get back into work rather than not have to make the changes that could change their whole outlook.
Jonathan Ashworth (Leicester South) (Lab)
T5. The Secretary of State failed to answer the substance of the question put to him by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) a few moments ago. Of those affected by the 1% uprating, 81% are women and 60% are in work. Is not the reality that this Government are clobbering the strivers?
Mr Duncan Smith
I remind the hon. Gentleman that in the autumn statement we yet again raised the threshold, which allow an extra £5 a week for families. Families on low incomes are better off and the average family is £125 better off as a result of the autumn statement.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
T4. Further to earlier questions on this matter, PATCH—Pembrokeshire Action to Combat Hardship—a charity that deals with poverty issues in west Wales, is concerned about the housing component of universal credit. Will the Secretary of State confirm how he intends to define “vulnerable tenants”?
Mr Duncan Smith
Vulnerable tenants will be defined as they always have been, as people who for various specific reasons are unable to cope. All those people will be considered carefully and all the mechanisms that we are putting in place—this is the point that makes universal credit different—mean that by ensuring that we identify those who have difficulties, we can get to them and sort out their problems rather than just dealing with the symptoms, such as their being unable to make their payments. We need to deal with why they are in debt, what is happening to their families and whether, say, the family is drug addicted and start to put those problems right before they crash out of work later on.
Dan Jarvis (Barnsley Central) (Lab)
T7. The DWP recently published an evaluation that confirmed a net benefit of £7,750 per participant from the future jobs fund, a scheme that originated in my constituency. That can be set alongside Barnsley college’s successful sector-based work academy, which is already demonstrating its effectiveness in getting long-term unemployed adults into work. Does the Minister understand why, when it comes to reducing long-term unemployment, my constituents have more faith in those schemes, which originated in Barnsley, than they do in the Work programme, which came from his Department?
Huw Irranca-Davies (Ogmore) (Lab)
In my constituency, organisations such as Yellow provide accommodation solutions for young people under 25 so that they can get into work. In his deliberations on the future of housing benefit for the under-25s, how will the Secretary of State identify those youngsters who have suffered traumatic family break-ups, dysfunctional families, and sexual and physical abuse and separate them from the others? It is a genuine practical question.
Mr Duncan Smith
I can assure the hon. Gentleman that we would make every effort to ensure that those most vulnerable people would not necessarily be included in a change like this. As I said earlier, this is not a policy at the moment; it is a consultation, and we are happy to listen to anybody about the groups they think ought not to be included in such a policy. I have an open door in that regard, and he is more than welcome to come and see me.
Andrea Leadsom (South Northamptonshire) (Con)
T9. Does my right hon. Friend agree that the best outcomes for children are where at least one parent is working? Does he also agree that all Government measures should try to support the best outcomes for children and families?
Mr Duncan Smith
I do agree with my hon. Friend. Universal credit should help that enormously through its disregard process, which I call the work allowance. The allowance of a couple with a child will be more than £6,000 when they go back into work; under the present system it is only £520, and under the Work programme it is a little more. The difference is enormous and will provide a real boost and a real income to families and support them at home.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Secretary of State will be aware of the ever-increasing number of workplace pensions that are wound up in mergers and takeovers, as happened at Whitbread where former employees have lost their pensions. Will he review the legislation in order properly to protect people’s pensions on mergers and takeovers?
Barbara Keeley (Worsley and Eccles South) (Lab)
Yesterday on the Directgov website, DWP job ID 438253 advertised for female presenters for Loaded TV working at home on internet babe chat. The advert has now been removed from the website, but does the Secretary of State think that DWP should be accepting and promoting jobs for internet babe chat? What does it say about this Government’s values on work?
Mr Duncan Smith
I remind the hon. Lady that it was this Government who changed the rules: under her Government, it would have been wholly acceptable, I suspect. The new system is in its national pathfinder and will, I hope, be rolled out before Christmas. We already have checks in place: more than 6,000 jobs, 60 attempted employer accounts and 27 bogus employers have been blocked so far, and we act swiftly if complaints are raised. I remind her that, on average, more than 5 million daily job searchers are working on this system. It will be a massive improvement and will benefit jobseekers, so the hon. Lady should not carp about the odd difficulty that arises. We get rid of the bogus jobs.
Stephen Lloyd (Eastbourne) (LD)
I congratulate the Government on extending Access to Work to disabled people on work experience and on removing the need for small companies who employ fewer than 49 people to pay for Access to Work. Will the Minister look seriously at extending Access to Work to disabled people on the Work programme because of the additional cost of their disabilities?
Welfare Reform Regulations
Iain Duncan Smith Excerpts(11 years, 8 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am pleased to announce that later today the Department intends to lay and publish the following draft affirmative regulations:
The Universal Credit Regulations 2013;
The Universal Credit (Transitional Provisions) Regulations 2013;
The Jobseeker's Allowance Regulations 2013;
The Employment and Support Allowance Regulations 2013;
The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013; and,
The Social Security (Payments on Account of Benefit) Regulations 2013.
Universal credit is the most significant reform of the welfare system for a generation. By removing the barriers and disincentives to work and making the system simpler. Universal credit will make sure work pays—especially for those on the lowest incomes, helping people to live independent lives. This will reduce worklessness, and encourage people to take personal responsibility. Universal credit will act as a “launch pad” for motivating people back into work, fostering confidence and self-esteem and helping to end the dependency culture; and significantly reduce the cost of fraud and error to the taxpayer.
Work can transform individual lives and society for the better and should be encouraged. Earning a wage is the best route out of poverty, but work also has many other benefits beyond an income; it promotes personal responsibility, boosts confidence, self-esteem, and motivation, provides a structure to everyday life, and gives people a sense of being part of a community. There will be continued financial support for individuals who cannot work. But for those who can work, no one should be consigned to living a life on benefits alone if they have the potential and capability to work.
These regulations are being laid to support the introduction of universal credit, following the passage of the Welfare Reform Act 2012. They reflect the financial information provided by my right hon. Friend, the Chancellor of the Exchequer, in his autumn statement on 5 December.
The Universal Credit Regulations 2013—set out provisions for universal credit, including entitlement, elements of the award, calculation of income and capital, and claimant responsibilities. The regulations also make provision for a benefit cap.
The Universal Credit (Transitional Provisions) Regulations 2013—reflect the Government’s decision to introduce universal credit from 29 April 2013 only for a small number of claimants in certain categories. This “pathfinder” will test the core proposition in a defined geographical area in Oldham, Warrington, Tameside and Wigan. The specific postcodes in which the pathfinder will operate will be set out in an order commencing the relevant provisions of the Act. The Government will only expand this scope via further regulations or a commencement order. The Government will bring forward further provisions to provide for periods beyond the pathfinder.
The Jobseeker’s Allowance Regulations 2013—remove income-related rules and provide for an award of jobseeker’s allowance based only on national insurance contributions. The 2013 regulations bring jobseeker’s allowance substantially into line with universal credit work-related requirements, and otherwise the provisions are very similar to the existing rules for contribution-based jobseeker’s allowance under the 1996 Regulations (SI 1996/207). A copy is available on the DWP website http://www.dwp. gov.uk/docs/a11-4001.pdf.
The Employment and Support Allowance Regulations 2013—remove income-related rules and provide for an award of employment and support allowance based only on national insurance contributions. The 2013 regulations bring employment and support allowance substantially into line with universal credit work-related requirements, and otherwise the provisions are very similar to the existing rules for contributory employment and support allowance under the 2008 Regulations (SI 2008/794). A copy is available on the DWP website
http://www.dwp.gov.uk/docs/a13-5101.pdf.
The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013—make provision in relation to the administration of these four benefits, in particular the making of decisions where there are disputes, changes in circumstances and doubts about awards; and in relation to rights of appeal. The regulations include a new requirement for claimants to apply to the Secretary of State for a decision to be revised before they can make an appeal. The regulations also make provision for electronic communications.
The Social Security (Payments on Account of Benefit) Regulations 2013—provide for the introduction both of universal credit advances and short-term benefit advances (for claimants of prescribed existing benefits), replacing existing interim payments and some crisis loans, and of budgeting advances replacing existing budgeting loans for some claimants.
The Government are publishing an updated impact assessment for universal credit. This also covers information concerning the Department’s obligations regarding its equality duty. A copy will be made available later today on the DWP website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/impact-assessments-and-equality/.
Under section 173(5) of the Social Security Administration Act 1992, the Universal Credit Regulations 2013 do not fall within the requirement to be referred to the Social Security Advisory Committee (SSAC). Nevertheless, given the scope and importance of these reforms, I invited the Committee to undertake a special exercise to scrutinise the regulations.
SSAC undertook a public consultation exercise in June 2012 as part of their review, and included consultation on the Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) and the Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013.
I also referred the Employment and Support Allowance Regulations 2013, the Jobseeker's Allowance Regulations 2013 and the Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013 to the Committee under section 172(1) of the Social Security Administration Act 1992. The Committee decided not to hold a formal consultation about these regulations but welcomed representations on any parts of those regulations insofar as they impact on the coherence of the overall legislative programme.
The Department will publish an Act Paper covering the Secretary of State’s response to the SSAC report on these regulations. A copy will be available later today on the Department’s website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
The Department has undertaken extensive stakeholder engagement throughout the development of the regulations. As a result the policies take account of the valued input we have received. This engagement is continuing as part of the development of delivery plans and guidance to support claimants and staff.
The draft regulations laid today and associated explanatory memorandum will be made available in the Vote Office and the Printed Paper Office and can be accessed from: www.legislation.gov.uk or from the DWP website: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
The Department will also publish today a policy briefing note on the final proposals for transitional protection for claimants moved from an existing benefit to universal credit during later stages of the migration process. A copy will be available later today on the Department’s website at: http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-act-2012/welfare-reform-regulations/.
Jobs and Social Security
Iain Duncan Smith Excerpts(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Byrne
I know this is of great concern to my hon. Friend. There are more than six people chasing every job in his constituency. What his constituents need is a back-to-work programme that actually works, pulling out all the stops to get people into jobs, but I am afraid the story he has told from his constituency has become all too common across the country.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am sure the right hon. Gentleman wants to get the record straight. Will he now tell the House that in the last two years of his complacent Government, long-term unemployment rose by some 400,000?
Mr Byrne
I would be happy to trade arguments about our record with the Secretary of State, because while Labour was in office, the amount of money that we spent on out-of-work benefits fell by £7.5 billion. That is why his noble Friend Lord Freud described Labour’s record in getting people back to work as remarkable. It is a shame that he could not arrive at the same judgment about this Government’s programme, which is now in place.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Labour motion is one of the stupidest motions I have ever had to deal with. It says very little and nothing at all about what the Opposition would do if they were in office. It also lays yet more spending commitments on an Opposition whose programme is littered with huge cost increases.
I will take no lectures from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). I remind everyone again that he is the man who thought it was a joke to write a letter to the incoming Government saying there was no money left. [Interruption.] Opposition Members moan, but the reality is that the last Government bust this country, and we are having to pick up the mess. Furthermore, the right hon. Gentleman was hugely responsible for that mess, yet we have just got a lecture from him on the economy and on unemployment. The reality, however, is that unemployment is now lower than it was when he left office. We have higher employment. We have more women in work than ever before. We also have 1 million new private sector jobs. The reality is that he and his party left us with an utter mess, and we are having to take tough decisions to get ourselves out of it.
Mr Duncan Smith
I will take some interventions from the right hon. Gentleman after I have dealt with a few of the points that he made.
The right hon. Gentleman’s motion says that just
“two in every hundred people referred to the Work Programme in its first year have gone into work”.
That is complete nonsense. The Opposition have added, and then divided, the numbers in a very partial way, to come up with the worst possible figure, which is precisely what they wanted. They have added up all the total attachments, but taken into account only a small proportion of those for whom six-month job placements were found.
Mr Duncan Smith
As I have said, I will take some interventions after I have made a few rebuttal points.
If the Opposition had worked the figures out correctly, they would have noticed what my hon. Friend the Member for Enfield North (Nick de Bois) has pointed out: some 315,000 of the 837,000 people who were attached were not in a position to have a six-month outcome because they had not been on the programme for six months. The Opposition do not want to incorporate that fact into their figures, however. Those people will come through into the next set of figures that we produce.
Mr Duncan Smith
I will give way to the right hon. Gentleman after I have made this point. In fact, the total number in sustained job outcomes falls well within the target area that we were trying to achieve during the first year’s figures. If people want to gerrymander the figures, they should make sure that they gerrymander them all.
Mr Byrne
May I draw the Secretary of State’s attention back to the invitation to tender, which presumably he signed off? Under the heading of “Key Performance Measure”, which is in bold type and is the thing that we are interested in and debating, it says:
“Performance will be measured by comparing job outcomes…in the previous 12 months to referrals in the same period.”
The target for performance in the previous 12 months was 5%, and the Work programme statistics delivered yesterday showed that that target had been missed comprehensively.
Mr Duncan Smith
Yet again, the right hon. Gentleman has defeated the first point that he made. In other words, the figures that he has produced in the motion are wrong and he has just proved it. [Interruption.] If he wants to listen, he might learn something. No wonder he ended up as the man who told us there was no money left—with his kind of arithmetic, I am surprised that there was anything left at all. The reality is that in a year—if we want six-month referrals—a number of people will not have been in the programme for six months. So 315,000 people—[Interruption.] I am simply saying to him that the reality exists. This programme is on track; it is the best programme; and it will be putting some of the most difficult people back into work. Let me just deal with another point, which is the one about unemployment.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Member for Tottenham (Mr Lammy)knows that he cannot keep standing. I am sure that the Secretary of State has made a note and is going to give way shortly.
Mr Duncan Smith
I just want to pick up on one point and then I will happily give way to the right hon. Gentleman.
The same scant regard for general facts is apparent throughout the motion. The Opposition claim that long-term unemployment is now soaring, yet long-term unemployment nearly doubled in the two years before Labour left office, going from 396,000 to 783,000 in 2010. By the way, just so that the record is absolutely straight, the right hon. Member for Birmingham, Hodge Hill says that Labour had got spending down, but welfare spending rose by 60% under the previous Government.
Mr Duncan Smith
I will give way in a moment, but I said that I was going to make these points.
Labour’s policies then went on to try to hide the true scale of the problem, by automatically moving people off jobseeker’s allowance into training allowances or short-term jobs, thus breaking their claim just before they reached the 12-month point. The Opposition claim today that long-term unemployment is up by more than 200,000 since the Work programme began, but in actual fact, comparing like for like, which means counting all those who were previously hidden on training allowances and other support, the total number on jobseeker’s allowance is about the same as it was at the start of the Work programme, so that point is complete nonsense.
Mr Duncan Smith
No, the figures we stand by are those we published yesterday. The point that I was making today to the right hon. Member for Birmingham, Hodge Hill—[Interruption.] No, actually the figure would be more than 5%, but I am not claiming that. What I am saying is that we stand by the figures that we published yesterday, and I believe we are on track. The point I was making, legitimately, is that the right hon. Gentleman spent his time deducting some numbers from one bit and adding them into another to create some bogus figure that two in every 100 people were found sustainable jobs. That is complete nonsense.
Mr Duncan Smith
I will give way to the right hon. Member for Birmingham, Hodge Hill in a moment, but some of his colleagues behind him want to intervene.
Geraint Davies
Today, at that Dispatch Box, the Prime Minister said that 19,000 people out of 800,000 had gone into full-time work. I make that 2.3%, so the Secretary of State is saying that the Prime Minister is talking complete rubbish.
Mr Duncan Smith
I stand by the figures that we published yesterday—3.5% is exactly correct. The reality is that what I have said today is what we said yesterday. The point that I want to make is that the thing that has gone missing in all this is that, without the Work programme, some 207,000 people who had been long-term unemployed would not be in work today—they are. Now, we work with those 207,000 people, many of whom have serious problems and difficulties, to make them longer-term employed, which is the key. The Work programme is all about resolving that.
Mr Byrne
I am grateful to the Secretary of State, who is being characteristically generous in giving way. Broadly speaking, about 800,000 people were referred to the Work programme in the 14 months to which he extended the reporting period to flatter the figures, and 5% of 800,000 is 40,000. According to his figures, only just over 30,000 got into sustained jobs, so 10,000 more people would have got into jobs if the Government had done nothing. That cannot be a record of which he is proud; surely, he can admit that to the House.
Mr Duncan Smith
That is simply not true. I do not want to spend any longer on this, but the point that I made earlier about the right hon. Gentleman’s figures was that, when he concocted the figure of 200,000, he stripped out of his achievement figures the numbers for those who had been on employment and support allowance and so on and divided the total that was left, but those figures were in the other total. The Opposition have made a mistake and need to reckon that their adding up is wrong. The truth is that we have a programme that is helping people who are long-term unemployed.
Margot James (Stourbridge) (Con)
I visited EOS, our local provider in the black country, which gave me data to show far in excess of 5% getting back into work. Those data were more recent than the statistics that are being publicised, and I am very encouraged by what the Work programme is doing for people in the black country. Before 2009, the number of people on JSA in my constituency rose by 205%, which was a scandal. That figure is much reduced now.
Mr Duncan Smith
The truth is that the previous Government did next to nothing for the seriously long-term unemployed, and as I have said, we saw the figure rise by nearly 400,000. I want to come to that point in a second, but let me first deal with another comment made by the right hon. Member for Birmingham, Hodge Hill during his speech. He said that Labour’s unemployment scheme was a roaring success. I noticed that in Prime Minister’s questions today—I do not know whether I have got this wrong—the Opposition quoted a report that they said had been done by the DWP.
Let us deal with that point now: both the future jobs fund and the flexible new deal were rushed through just before the election. After all the years for which Labour had been in government, it suddenly discovered an urgent need to start to spend money on some programmes. Let us deal with them one at a time, and with the future jobs fund first. The Leader of the Opposition quoted a DWP report earlier and said that that scheme had a net benefit to society of £7,750. What he did not say—I suspect that he needs to speak to the right hon. Member for Birmingham, Hodge Hill next time he gives him something to say at Prime Minister’s questions—was that the report goes on to state that
“these estimates exclude the cost of administering the programme and the cost of hiring and training participants.”
I wonder why he did not quote that.
Using any one of the more conservative estimates, as used in the report in table 5.3 on page 62, puts the benefits at £4,650, less than the £6,500 that it cost to place people in those jobs. So the right hon. Member for Birmingham, Hodge Hill and the Leader of the Opposition unwittingly misled the House and the future jobs fund lost money, rather than rescuing the situation. The report goes on to state that
“it is notable that under all of the scenarios considered in this analysis, the programme is estimated to result in a net cost to the Exchequer”
and
“depending on the rate of decay there might never be an estimated net benefit to the Exchequer.”
What the Opposition are saying is fundamentally wrong: their scheme cost money and did not as a net benefit get anything back to constituents.
Bill Esterson
The Secretary of State is talking about a completely different world that is divorced from the reality for my constituents. My constituents who were on the future jobs fund had real jobs at the end because the programme worked. They are now missing a programme that works, because the Work programme is designed wrong and because the jobs are not being created. He needs to talk to his friend the Chancellor and get the jobs created, as well as getting the Work programme right. Is that not the reality of what is needed?
Mr Duncan Smith
Of course it was a different world—it was a world in which the previous Government thought that every problem could be solved by chucking shed-loads of taxpayers’ money at it without caring what the outcomes were. That is exactly the point I am making. We have had to clear that mess up.
Mr Duncan Smith
I will give way, but I ought to deal with the other programme first, as the right hon. Gentleman might want to ask some questions about that, too. The other programme that the Opposition cited was the flexible new deal. If that was such a brilliant programme, surely it would have been rolled out nationally; it never was. When Labour left office, it was only just up to running across half of the UK.
Over an equivalent period and claimant cohort, the Work programme has got more people into work for six months or more—19,000—compared with 15,000 under FND, and it delivers better value for money. The £14,000 per outcome figure thrown around by Labour ignores the start-up costs of the Work programme, which covers five to seven years. An independent cost comparison by the Employment Related Services Association shows a figure of £2,000 per job under the Work programme, compared with £7,500 under FND which, just like other programmes, ultimately cost money and did not succeed in helping to get people into work.
Mr Byrne
This is an important point for us to debate. I do not know whether the Secretary of State has seen the analysis that was published yesterday by Inclusion, but it is pretty clear on this question. The proportion of people flowing into sustained jobs from the flexible new deal was 5%, which is much higher than the figures for the Work programme. The flexible new deal was more expensive. Inclusion calculates that the cost per job outcome under the Work programme is £14,000. The flexible new deal was 9.5% more expensive, but the Secretary of State is failing to be level with the House about the fact that doing nothing costs his Department less, but it costs the country more, because the welfare bill goes up. A payment-by-results programme is cheaper if there are no results. That is the problem that we have to fix, and that is why the Chancellor is so cross.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Many Members wish to speak in the debate, so we must have shorter interventions and replies.
Mr Duncan Smith
Guided by you, Mr Deputy Speaker, I shall simply tell the right hon. Member for Birmingham, Hodge Hill that he is wrong. I do not agree with his figures, and anyway, he served in government while the bill for welfare rose by 60% in real terms over the lifetime of that Government. Enough said: we took on a massive problem, and we have to deal with it.
Mr Duncan Smith
I shall make some progress, but I promise to give way to the hon. Lady.
Let us deal with the final point made by the right hon. Gentleman in the motion: that somehow all this could be solved if only we did not cut, change or reform anything and implemented a bank bonus tax to fund a real jobs guarantee. Such a one-off tax would be worth £3.5 million. However, we have introduced an annual bank levy, which raises much more money over the period. The Opposition did not introduce such a levy when they were in power.
Let us look at the bank bonus tax that they propose. I love the fact that that tax is wheeled out whenever they are in a corner. It has already been used to cover the spending of £13.5 billion that they committed to make when reversing the VAT increase. It has been used for more capital spending—£5.8 billion—and again to reverse tax credit savings of £5.5 billion. It was used to build 25,000 extra homes—£1.2 billion. It was used again to reverse child benefit savings of £1.7 billion, and more and more.
It is a joke to keep wheeling out that ridiculous programme as an excuse for what the Opposition should be doing, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said earlier, is telling us what they would do instead, where they would make the necessary savings and how they would reform welfare. That is the main issue.
Kate Green
The debate has moved on, but I wanted to say that the rise in social security spending under the Labour Administration was not all in relation to out-of-work benefits. A large proportion related to better payments for children and working tax credit, which subsidised low pay.
Mr Duncan Smith
I agree. The only way to look at these things is to consider the overall state of welfare spending. That is exactly how I look at it. As for the point about tax credit, much of it had nothing to do with going back to work, but it supported families for other reasons. The Opposition cannot separate what suits them from the other bits. We have a welfare budget, and they must own up to the fact that it rose by 60%.
Let me deal with what the Work programme really is. It supports 800,000 people—more than any previous programme—and data published yesterday show that it is successfully moving claimants off welfare rolls into jobs, so generating savings in the process. More than half those referred to the programme in June 2011 have since come off benefits, and about a third have spent the past three months off benefit, and a fifth have spent six months off benefit. Independent statistics published on Monday show that 207,000 people, as I have said, have been in work—a fifth of everyone on the programme. What is more, job entries are rising month on month. The figures that we published yesterday showed that in the past two months there was a 40% increase in attachments lasting six months.
We have rejected the old tendency that the right hon. Member for Birmingham, Hodge Hill keeps coming back to—chucking money at programmes in the hope that people will say we are doing something because we are spending money. With the FND, Labour paid out 40% of the fee up front just for signing up someone. Firms never had to do much at all. Under the flexible new deal, the average up-front attachment fee was more than £1,500. More than £500 million was paid out in total, without any assurance of success at all.
Mr Bain
In my constituency, just 70 people have been placed through the Work programme into sustainable employment, but the Employment Related Services Association says that providers of the Work programme have received £436 million in public money already, as at September 2012. Can the Secretary of State update the House with the most recent figures? Does he really believe that constitutes value for money?
Mr Duncan Smith
The figures have been published. This is about start-up costs and the money that is paid for every job. If the hon. Gentleman wants to do the mathematics, he will find that it adds up quite well.
Under the Work programme, companies are paid only if they keep people in work for six months for the most part, and for some 13 weeks. Under Labour’s programme, 40% of the total budget or about £500 million, as I said earlier, was paid just to sign up people. That is the difference. We save the taxpayer the money, and we will produce a programme that gets people into work. It transfers the risk. In future, we should be able to shift market share from those who do not succeed to those who succeed.
Many of the same companies are used as were used under the previous Government, but the difference is that they are now being examined to show how successful their programmes are. Whereas under the previous Government they could simply sign up people, now they have to get them into work and sustain them in work, or they do not get paid.
Steve McCabe (Birmingham, Selly Oak) (Lab)
If I accept the Secretary of State’s proposition and that of the Minister of State, the hon. Member for Fareham (Mr Hoban) in his letter yesterday that it is a bit early to judge the programme, when is it reasonable to judge it? Can we expect to see a substantial improvement in the figures next year? If we do not, will the Secretary of State admit then that he has failed?
Mr Duncan Smith
I happen to believe that the people who will admit that they failed are the Opposition. I hope that within a few months they will be eating their words over all this. Over many years, while the hon. Gentleman’s party was in government, we saw welfare bills soaring. By the time that Labour left office, there were 5 million on out-of-work benefits, one in every five households had no one working, 2 million or so children were living in those workless households with no chance that they would ever see anyone go back to work, and youth unemployment was up by 40%. Unemployment was at 7.9% and inactivity at 23.5%.
What a contrast with the situation now. In recent months, there have been more women and more people overall in work than ever before, up 734,000 since the election. There are 1 million more jobs in the private sector. We have seen four consecutive quarters of rising jobs growth and three consecutive quarters of falling unemployment. Not one word about that from the Opposition; not one congratulation to those who have found jobs. Excluding students, youth unemployment is down 65,000 on the latest quarter and 15,000 since May 2010. There are now 190,000 fewer people claiming the main out-of-work benefit and the inactivity rate is close to the lowest in a generation.
Thirteen months after coming into office, this Government introduced the biggest payment-by-results programme that the UK has ever seen. It is succeeding. It will succeed. We have heard nothing from the Opposition today. It is a pathetic motion from a pathetic Front Bench team and I will oppose it tonight.
Mr Sheerman
My hon. Friend will forgive me for knowing less about the situation in Scotland than I do about the situation in Yorkshire and England, but I am sure that she is right. There are many local differences, as I am finding in my area.
That is why I asked for the Freudian analysis earlier. Lord Freud, before he became a Member of the upper House, was asked by Tony Blair to evaluate which programmes worldwide had actually worked and addressed the structural problem of how to get people into work so that they can be full citizens. He looked right across the piece to identify which programmes had been successful. By requesting the Freudian analysis, I was asking whether it was good information. It was the whole basis of the policy that influenced our Labour Government’s policy and also that of the Conservative party. Freud is very important to these discussions, however he has been interpreted, and we should not forget that he was trying to look at that central problem we all face.
Mr Duncan Smith
Given that the hon. Gentleman has asked about my noble friend, who is an excellent addition to our team—whichever party he represented previously, he is a very good man and is doing very well—I may say that the Australian system, which is the basis of the Work programme, has shown some of the best results, which occur once companies are geared up and focused on getting people back into long-term, sustained employment. The system is working very well and says that it is on track.
Mr Sheerman
I thank the Secretary of State for that intervention, and I accept what he says. He knows that what I am getting at in this short contribution is that we play this game of blaming each other all the time, but the problem is international and global and we will have to sometimes forget party differences and work together on it. I want to make a couple of suggestions as to how we might do that.
Let us face it: all Governments throughout Europe, the United States and beyond have a long history of failure. Modern industrial democracies have this problem of skilling the work force. Indeed, I have never heard such castigation of our country’s further education system as that in yesterday’s annual report by the chief inspector of Ofsted, who said how poorly further education was performing in our country. All the evidence shows that further education is where young people get skills for the good life. It is where they get high skills to get good jobs to be the full citizens that I am after.
I have never heard of the chief inspector picking on one town in particular. I do not know what he has against Hastings, but he said that early years and primary schools are a failure for the children of Hastings and that they also fail when they go on to secondary school and further education. I was astonished. Thank God he was not talking about Huddersfield. It comes down to the fact that a significant percentage of people in our country have inadequate training and skills, and we need to work across parties to do something about that.
I want to share some of my experiences. One of my last reports when I chaired the Children, Schools and Families Committee looked at the problem of those not in education, employment or training. We found that intelligent programmes on the ground which represented a positive response from local authorities that understood their local communities, and which also had good local skills training and good employers, could make a significant difference to the number of people gaining skills and getting into work. There are good exemplars in this country, but some towns are more fortunate than others in retaining their manufacturing and employment base.