Pensions and Social Security

Ian Murray Excerpts

Wednesday 13th February 2013 Commons Chamber

[Stephen Timms]

The hon. Gentleman knows that we have demanded not only an inflation-level rise this year but a similar rise for both the two years covered by the Welfare Benefits Up-rating Bill. As to our policies for beyond the next election, he will have to await our manifesto, just as the whole country is eagerly awaiting it. It will tell him how we will put these problems right.

[Ian Murray (Edinburgh South) (Lab)]

Is my right hon. Friend as surprised as I am—I asked the Secretary of State for Scotland this question this morning—that it is a Liberal Democrat Minister who is about to give the biggest tax cut to millionaires the country has ever seen, while at the same time ensuring that people trying to do the right thing are worse off?

[Stephen Timms]

My hon. Friend is absolutely right. That does surprise me very much because in opposition the Minister’s party used to champion reducing child poverty. In government, however, it has surrendered and is cutting in real terms the incomes of the poorest in what is frankly a craven surrender to the Tory party at its worst. It is implementing policies that even Mrs Thatcher did not dare propose.

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[Ian Murray]

I think what the hon. Member for Eastbourne (Stephen Lloyd) is trying to say is that the 50p tax rate created £7 billion of tax avoidance, so rather than going after the tax avoidance the Government have reduced the rate.

[Stephen Timms]

My hon. Friend is right: if it is an avoidance problem, the Treasury should address that.

Strivers will pay the price for the Government’s economic failure. The most vulnerable are being hammered and the rich are getting a tax cut. The solution is to get Britain back to work. That is why we have argued for our compulsory jobs guarantee. It will cost about £1 billion a year. We will pay for it by restricting the tax relief on pensions saving for those earning over £150,000 per year. We will guarantee anyone over 25 who has been in receipt of jobseeker’s allowance for two years the offer of a choice of jobs or a training position, and after that the payment of jobseeker’s allowance will cease.

The case for our compulsory jobs guarantee received a welcome boost from the Minister’s Department when it published an evaluation of the last Government’s future jobs fund. I am grateful to both Ministers who are in their places on the Front Bench for the publication of this helpful and informative evaluation. The evaluation pointed out just how successful the future jobs fund was in getting young people back to work. It estimated that the net benefit to society as a whole was £7,500 for every participant in the future jobs fund, and that is after taking account of all the costs of the initiative. Of the gross cost of some £750 million for the future jobs fund, over half was recouped by the Treasury in additional tax payments and reduced benefit payments. Our compulsory jobs guarantee will repeat that success for the over-25s. We will get Britain back to work; we will end this punishing spiral of increasing struggle for strivers and for the most vulnerable in order to fund, as the Government find they have to do, the price of ever-increasing unemployment.

The proposals in this order for working-age benefits are a disgrace, although the Minister made a perfectly fair point in his speech earlier—that an increase is better than no increase at all. The proposals for pensions uprating are worth having—I put it no more strongly than that—but the proposals for working-age benefits are shameful and quite contrary to everything the Minister’s party argued for when in opposition. I hope that in the course of this evening’s debate we will be able fully to expose that.

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[Sheila Gilmore (Edinburgh East) (Lab)]

It is a shame that if we talk for as long as many of us would like to talk tonight, we will probably be slightly unpopular with some. However, people who will be affected by these changes will be watching these proceedings, and they will be dismayed to see that this important debate has been tacked on to the end of the parliamentary day and not a single Conservative Back Bencher is sufficiently interested to want to take part in it. When I was standing for election in 2010, the Liberal Democrats used to like to position themselves, at every hustings I was at, somewhere to the left of Labour, but it is their Back Benchers who are defending the Government’s choices—for they are choices. The public have to be well aware of that.

One regrettable thing about what has been happening for nearly three years now is the constant pitting of one group against another: older people against younger people, and people in work against those not in work. That is not helpful because it provides no analysis of the real roots of the problems facing us. The hon. Member for Eastbourne (Stephen Lloyd) has been doing a good job of defending the Government. He made the point about how out-of-work benefits have risen by more than earnings in the past five years, using it to justify the 1% rise. However, he knows that if we look at a different time period, we come up with a very different figure. Since 1979, unemployment benefit and its successor benefit, jobseeker’s allowance, has fallen from 22% of average earnings to 11% of average earnings. We are starting from a very low base indeed, and it is not right or fair therefore to say that 1% is adequate for people who are struggling.

Why are we in some of these spending positions? The irony of all this is that so many of the policies we are facing will drive up spending, be it on some of the benefits under discussion today or on the related benefits—the ones that would come under the tax system at the moment, such as tax credits. Some 90% of new housing benefit claimants in the past couple of years have been people in work, and that has been because of the level of wages and because these people are in part-time work. That has been driving up the housing benefit totals, which the Government are very concerned about, as I am. I am not comfortable with the fact that, as we are told repeatedly, the housing benefit bill has risen so much in the past 10 years, but we need to examine the reasons for that. The major reason is that so many people on low incomes are finding themselves with no other housing choice but the private rented sector, the cost of which in housing benefit is very high. If we do not tackle that underlying issue, in one way or another, be it by creating more affordable housing or by dealing with the issue of private sector rents, the housing benefit bill will still creep up and up, and in a couple of years’ time we will not have made any progress in reducing it.

In the meantime, many of our constituents living in low rent housing are about to have their income cut substantially. I have a constituent in her 50s who lives in a house that is not grand—it is a two-bedroom house, where the second bedroom is small and the kitchen opens off the living room. That removes the notion that she could have someone in to share—one of the Minister’s fondest examples. At her age and stage of life, why should she be expected to live in that way? She will be losing £50 a month in April, and I can assure the Minister that in my city the choices of where to move to are very limited, even if she wanted to move or should move.

When we are looking at a figure of 1%, we have to consider what is happening in the wider sphere. If just one thing—one change—were happening, it would not be quite so painful for a lot of families, but these things are happening to the same people. I give the example of a lady who is on employment and support allowance in the work-related activity group. She will be suffering from the 1% rise as well as from the £50 knocked off her housing benefit. People such as her have to deal with the cumulative effect of what is happening. She did not want to be claiming benefit. She did not want to fall ill in her 50s, but it is something that, after a working life, has happened to her and to thousands and thousands of people like her up and down this country.

Instead of dealing with the issue in this rather rushed way, perhaps the Government could do as some organisations have asked and make a cumulative impact assessment of the effects of the change on disability. Why do we not have that, and why do we not make time available for a proper debate? We need to see what is happening. Some people may see the change as relatively small, but a whole package of measures is coming in.

I am seeing a big change. A couple of years back, people would say that the Government’s welfare reforms were all about “those terrible scroungers—it’s not me and mine, it’s somebody else.” Now, people come to my surgeries and ask, “Why is this happening to me? I’m not a scrounger. How come this is happening? I’ve worked hard all my life, so why is it happening to me?” People are not inherently either workless or working. People move in and out of work, particularly at the lower-paid end of the spectrum.

We know why the measure had to be brought in this year. It was because the Government’s economic policies had failed. I am glad the hon. Member for Eastbourne decided to raise the question of jobs. It is frequently said in this place that 1 million private sector jobs have been created, and therefore our economic policy is working. The Prime Minister says it all the time. In January 2011, within a short time of coming into office, the Government told us that half a million new private sector jobs had been created. Presumably that was the true figure at the time. Many of us think that one of the reasons for the increase in jobs was the economic stimulus applied by the previous Government; it was certainly very soon for the coalition Government’s policies to have taken effect. If that figure was correct and the figure of 1 million is correct, since then—two years ago—apparently only half a million jobs have been created. But—it is a big but—in that period, 170,000 jobs in colleges were reclassified from the public to the private sector, and 100,000 jobs appear to be unpaid work placements. At the last Department for Work and Pensions questions, the employment Minister, the hon. Member for Fareham (Mr Hoban) admitted that unpaid jobs were being counted in the total. Apparently, the Prime Minister does not know, because he still talks about his million jobs and how wonderful it all is.

[Ian Murray]

I am delighted that my hon. Friend has allowed me to intervene to point out that the other big contributors to the million new jobs total are people on short and zero hours contracts. They are classified as employed when they are not being paid.

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[Mr Brown]

I do not know whether it will be £40 billion, because I have not seen the figures, but I trust what my hon. Friend says. There is no doubt that it will have a severe and adverse impact on the economy.

I come now to the point that my hon. Friend the Member for Hayes and Harlington made about families and children. If we do not give the next generation the right start in life when they are children, we give them the wrong start. I must say to the Minister that even now we see across our country the struggle that my party had in government to undo some of the damage from the previous 18 years. The damage can be done in a short period, but it takes an awful lot longer to recover from. We struggled in government to try to get things back on track. What the Minister is doing today is not what he said he would do when he was in opposition.

When he leaves this place tonight, I implore the Minister to pick up a copy of a documentary called “Poor Kids”. I have seen it a couple of times and it is heart-breaking, to say the least. As a father and grandfather, I say to the Minister that what the documentary shows is not beyond belief, because it does happen. It happens in many towns and cities across this country where families are living on basically nothing. Children as young as eight, nine or 10 years old have become worldly wise: they know about not having money and what debt is, and they understand how trying to put a meal on the table can result in other elements of poverty. That is not how children in this country should be spending their early years. They survive on hand-me-down clothes, not necessarily from older brothers or sisters but from other family members. Despite what many people think, charity shops on our high streets are an absolute godsend for such families, because sometimes they are the only way children can be clothed.

Parents sometimes sacrifice their own meals to feed their children. Perhaps I have led a sheltered life, but it was only when it was drawn to my attention that some mothers will prepare a meal for their children and tell them, “I’ll get something to eat later,” that I realised—I take no pleasure in saying this—that I witnessed that as a child in my household. I was part of a family of five and I know only too well now—perhaps I was naive when I was younger—that that was going on in my household. I witnessed my mother having nothing to eat while the rest of the family sat waiting for my father to come home from work.

[Ian Murray]

My hon. Friend is making an incredibly impassioned speech. The stories from the documentary and those that we all hear in our constituency advice sessions—one family in my constituency has been living off the cheapest white bread and jam for the past few months—are happening now, before the impact of any of these changes is felt, and the inflation of energy and food prices, the bedroom tax and the 1% uprating will make the situation not just worse but much worse.

[Mr Brown]

My hon. Friend is spot on. It is very difficult for families at the moment and it is about to get worse. The Minister mentioned the housing benefit changes. Some places are under-occupied and we all have families coming to us regularly—almost weekly—saying that they need an extra bedroom. Surely the Minister and other Government Members know, however, that to marry up families who are under-occupying and those who are overcrowding is a mammoth task.

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[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.

[Ian Murray]

Does my hon. Friend share my deep concern that this does not really have anything to do with economic policy or the deficit, but is driven by ideology?

[Gregg McClymont]

My hon. Friend makes a good point. The Chancellor thought that he could play clever politics and draw dividing lines between different sections of society, but he did not take it into account that this would hit those in work above all else. I am afraid that he has been too clever by half.

Let us be clear. One of the groups that will be particularly hard hit will be women. House of Commons Library analysis is clear that two thirds of those hit overall by the real-terms cut in benefits and tax credits are women.

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[Steve Webb]

In fact, the IFS figures are based on the percentage increases and, as we have been reminded repeatedly in the debate, the cash amounts for the very highest income earners are far higher for any given percentage figure. So, even taking percentages instead of cash amounts, the highest earners have, in the IFS’s words, been “hit the hardest”.

[Ian Murray]

Will the Minister give way?

[Steve Webb]

No, I want to make some progress.

The right hon. Member for East Ham referred to the triple lock and the increase of 2.5% over inflation, compared with 2.2%, as derisory. I remind him that the extra 0.3% cost the taxpayer £150 million. I remember the funny-money days of Labour when £150 million was considered a mere rounding error. He dismisses it as derisory. When his party was in office, it was borrowing £150 billion a year, so I appreciate that for him £150 million is small change, but I still have the naive feeling that that amount is a lot of money. He and others derided our triple lock as though it were a trifle and of no consequence, but had Labour implemented the triple lock between 1997 and now, we would be spending an additional £3 billion on the state pension. So if Labour had applied the triple lock that he derides as inconsequential throughout their term in office, we would be spending £3 billion a year more on pensions. But perhaps he thinks that that sum is derisory, and a frippery, as well.

We have also been hearing about strivers. This is the classic dog-whistle politics of the Opposition. They accuse us of trying to divide people, yet they suddenly divide people—[Interruption.] It is not our side that has used that language.

[Steve Webb]

The Opposition have tried to divide people into “strivers” and “somebody else”. I am not sure who the “somebody else” is—a non-striver, perhaps. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) is shouting out, but he is the man who said in his conference speech that Labour was on the side of the strivers, not the shirkers. We know who uses that language.

Why is it necessary to have the fiscal consolidation? It is because of the Labour party’s debts. There was £150 billion of borrowing in the final year of the last Labour Government. Labour takes no responsibility for that but, had the previous Chancellor’s plans been put into operation, it would have had to implement substantial spending cuts on public sector pay—which it has finally now agreed—and on benefits. Have we heard a single suggestion from the Opposition today on how they would make savings? They simply oppose every cut, pretend to be on the side of the poor, and never accept responsibility for how we got into this mess in the first place.

[Ian Murray]

Will the Minister give way?

[Steve Webb]

No.

A number of people have said that we are the seventh richest country in the world, in terms of our gross national product per head, but we are of course also the country that was brought to the brink of bankruptcy by the last Labour Government. That is what we have had to deal with.

The hon. Member for Dumfries and Galloway mentioned people having their disability-related benefit reassessed. I would gently remind him that reassessing the millions of people on incapacity benefit, many of whom had been parked on benefit for a decade or more, was begun, rightly, by the last Labour Government. That process has been carried on. That is why people are being reassessed. We think it right not to park people on incapacity benefit for decades, only for them to retire and find that they have no pension either. So the reassessments are right. I entirely accept the point that they have to be done well, but they were begun under the last Government and they continue under this one.

[Steve Webb]

The Government fully accept that Labour’s work capability assessment was not working when we came into office, which is why we commissioned Professor Harrington to undertake a series of reviews. We have implemented his recommendations to make the test better, and that will continue under a new assessor.

[Ian Murray]

rose—

[Steve Webb]

No. We have heard a lot of handwringing from the Opposition Front Bench, but no alternative proposition. We have been told that this measure will be devastating and cost the poorest people in the land billions of pounds, so surely we can have a commitment from the Labour party to reverse it. I think the hon. Member for Stretford and Urmston (Kate Green) said this measure was “egregious”, and we have heard how evil and unkind it is, so the Labour party is clearly committed to reversing it. However, those on the Front Bench know that they will weep crocodile tears and try to persuade people that they actually care about this stuff, but they will not find a penny to reverse any of it. That is the truth.

[Ian Murray]

rose—

[Steve Webb]

No, I am reaching a conclusion.

We are bringing forward regulations that will increase the pension by more than the rate of inflation, taking it to the highest share of average earnings for more than 20 years. We are uprating key disability benefits by the rate of inflation, and ensuring that even in these straitened times we are able to increase benefits for people of working age. I commend the order to the House.

Question put and agreed to.

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2013, which was laid before this House on 28 January, be approved.

Resolved,

That this House takes note of and approves the draft Social Security Benefits Up-rating Order 2013, which was laid before this House on 28 January.—(Steve Webb.)