Work and Pensions (CSR)

Kate Green Excerpts

Thursday 4th November 2010 Westminster Hall

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

I am delighted to have been given the opportunity, as Chair of the Select Committee on Work and Pensions, to open the debate, but I should thank the Backbench Business Committee, because this is one of the first Westminster Hall debates whose subjects have been chosen by that Committee. I pay particular tribute to the hon. Member for Colchester (Bob Russell) and to my hon. Friend the Member for Stretford and Urmston (Kate Green). They did not quite suggest the subject of this afternoon’s debate, but they put in suggestions relating to this subject, and I think that the Backbench Business Committee decided that the impact of the comprehensive spending review on the Department for Work and Pensions would be a worthy subject for debate. I agree, because that Department is to suffer some of the largest cuts of all the Departments, in terms of both the percentage of its budget to be cut and the money to be saved.

The Department is to face a budget cut of £18 billion per annum by 2014-15. That is made up of the £11 billion announced in the Budget and a further £7 billion announced as part of the CSR proposals. However, the Department for Work and Pensions is different from other Departments, as most of its budget is in the form of money paid straight to people who qualify for one benefit or another. It is not managing budgets or delivering services as other Departments are. Much of its money ends up in the hands of real people, who spend it in their communities. The Department’s annually managed expenditure depends on how much money is paid out in benefits, which is where the large cuts are to be made.

It is quite easy, if we say it quickly, to cut benefits. We just do not give people any money. That can be a tempting thing for Governments to do, but of course the people do not go away; they still need the money to live. By my reckoning, there are four ways in which it is possible for the Department to cut the annually managed expenditure. It can reduce the amount that is paid out for certain benefits. It can change the criteria to narrow the number of people who qualify for a particular benefit. It can time-limit how long a person can qualify for a benefit. It can abolish a benefit completely. If we look at the proposals in the Budget and in the CSR, we see that the Government are doing a bit of all four of those things.

It is worth remembering that the cuts are being made against a backdrop of rising unemployment as other cuts in the numbers of people employed in the public sector take effect, and it is during times of high unemployment that the Department for Work and Pensions spending goes up, as more people qualify for benefits—benefits that many feel they have already paid for through national insurance contributions.

More than half the benefit spending of the Department goes to people who are over retirement age. The basic state pension and pension credit, for instance, account for 50% or slightly more of the Department’s budget. Generally, the benefits received by retired people are not being cut, although there will be some cuts in the benefits that they receive, because of the proposed changes in housing benefit and the mobility element of disability living allowance for people in residential care, and possibly the changes in relation to council tax. Perhaps the Minister can explain what those mean in reality, because I have found that quite difficult to grasp.

While I am talking about the council tax proposals, I want to point out that they seem to fly in the face of other things that the Government are doing. I am referring to their plans for a universal credit to make the benefits system much simpler and more straightforward, which I would certainly welcome. To devolve payments in relation to council tax down to local authorities, which will all have their own criteria, seems to go against the principle that I understand the Government are trying to create for the benefits system.

Of course, I never let a chance go by to get in my own gripe with regard to people over 65. Someone who happens to be my age and is a woman may have started her working life assuming that she would receive her basic state pension at 60. Until a few weeks ago, I thought that I would receive my basic state pension at 65. That has now gone up to 66, and I cannot be alone in wondering whether, by the time I approach 66, the age will be 67 or higher and I will never get the chance to retire at all. However, my constituents might make the decision for me sooner than that.

The result of protecting the elderly from the worst of the spending cuts is that the vast bulk of the cuts will fall on those of working age, on families and on people who are disabled or ill. For those groups, the cuts are much harsher and deeper. Where are the Government planning to make those cuts? I said that they could consider four areas, so I shall go through those one by one. First, they could reduce the amount paid out for certain benefits. The clearest example of that is the proposed cap on housing benefit payments. However, all benefits that are currently uprated according to the retail prices index will be cut over time, because they are soon to be linked to the consumer prices index, which is usually below the RPI level. That means that the value of almost all benefits will diminish.

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

Does my hon. Friend agree that there is interesting research in that regard? Conducted for the Joseph Rowntree Foundation, it suggests that linking benefits to CPI will reduce by £1 a year the value of the incomes of families on safety-net benefits. For a person on jobseeker’s allowance, for example, that will mean a loss of £10 over 10 years, representing between 15 and 20% of their income.

[Miss Begg]

I thank my hon. Friend for her intervention. Certainly I recognise the 15% figure. We are not talking only about benefits for those of working age. I was briefed this morning that if occupational pensions—both private and public pensions—are to be linked to CPI, the figure of 15% is not unrealistic. In fact, people on an average occupational pension could lose the equivalent of three years’ worth of their pension if they were to live for the average time from retirement, which is 24 years.

The switch from RPI to CPI will, in the long term, mean that the amount of money that people on benefits receive is reduced. Let me explain what I find particularly perverse about the housing benefit changes. The difference between RPI and CPI is that CPI does not take account of housing costs. Again, perhaps the Minister can explain the rationale for why the CPI measure is being used for housing benefit when it does not take into account housing inflation, which runs at a higher level than consumer inflation.

As my hon. Friend the Member for Stretford and Urmston suggested, the change in uprating will also affect levels of child benefit, income support, jobseeker’s allowance and incapacity benefit, as well as the employment and support allowance and the carer’s allowance. The value of all the benefits in payment will diminish with the changing of the linking rules or the indexation to which they are subject.

There will also be reductions in what can be claimed in such things as the child care element of the working tax credits, as well as changes to the eligibility rules for the working tax credits. Some of those changes would also appear to fly in the face of the perfectly correct cause being espoused by the Government—to ensure that those who can work do work. However, some of the changes might put barriers in the way of getting people into work.

The second way that the Department can reduce spending on benefits is by changing the criteria, to prevent many people who would have previously qualified for the benefit from qualifying in future. We shall see people who have been on jobseeker’s allowance for a year losing 10% of their housing benefit, or people in residential homes no longer qualifying for the mobility component of the disability living allowance. I am glad that it is the Minister responsible for disabled people who will be winding up for the Government, because of a phrase in the CSR attached to the announcement about the mobility component of the DLA for people in residential homes being cut:

“where such costs are already met from public funds”.

Can the Minister explain what that means?

Does that phrase mean that some people in residential homes will keep the mobility DLA, if their costs of travel and transport, presumably, are not being met from public funds? However, I am not aware of any residential homes that have a travel budget. I am not aware that public funds are available. Some people in residential homes might get a taxi card, for instance, but like, I suspect, many others, my local authority is tightening its criteria: Aberdeen has decided that someone on the upper rate mobility DLA does not get a taxi card. Anything that I can think of that might be the provision of travel from public funds does not, I think, apply to people in residential care.

On the issue of residential care, it is worth remembering that, generally, people in residential care who are on the mobility DLA will be a younger cohort, because people do not qualify for a DLA once they are over 65. Many of them might be in work—their care needs might require them to be in a residential home, but they might have work or go out daily to day centres or whatever. Without the DLA, they would not be able to get out of the confines of the residential home. Sometimes there is a perception that someone who lives in a residential home is elderly and not able to lead a fulfilling life, but nothing could be further from the truth. I would welcome some clarification from the Minister on that point.

Probably the best example of the Government’s changing the criteria to exclude previous claimants is the move from incapacity benefit to employment and support allowance. This migration was always on the cards—it was introduced by the previous Government—but I get a sense that some of it is being accelerated. The other thing that is different is the numbers involved. The number of those whom the previous Government thought might lose out as a result of the migration appears to be quite different in reality, certainly in regard to the new benefits. At the moment, we do not know the actual figures for the number of people currently receiving IB who will no longer qualify for the new employment and support allowance. The first trials of the migration are taking place in Aberdeen and Burnley, and it will be at least a couple of months before we have any robust figures and find out how many people are not getting through the new gateway.

The Government expect somewhere between 30% and 40% of IB claimants will not qualify and will therefore end up on jobseeker’s allowance. For those individuals, that is a loss of £20 a week. What makes me doubt whether that is the final figure is that we know that the number of new claimants qualifying for employment and support allowance is much less than the previous Government were projecting. While they thought that 20% might end up on the support element of the ESA, the figure is much lower, at around 4 to 6%, and it looks as though around 60% will not be getting ESA at all, because either they have dropped out of the system or they have been awarded jobseeker’s allowance. As many as 60% of those who are currently on incapacity benefit might not qualify for the new ESA, therefore, but, as I said, the trials are going on in Aberdeen and Burnley, and we will have the figures in a couple of months’ time.

--- Later in debate ---

[Neil Carmichael (Stroud) (Con)]

rose—

[Kate Green]

rose—

[Miss Begg]

I give way to the hon. Member for Stroud (Neil Carmichael).

[Miss Begg]

I certainly hope so. I was not intending to go into the WCA and its faults, but the hon. Gentleman tempts me. I am looking forward to seeing the report by Professor Harrington. However, there is concern that by the time he reports, whether at the end of this month or the beginning of next month, the trial in Aberdeen and Burnley will be coming to an end, and there will not be a lot of time to change things. There might be time to change the procedure, but not to put in place any major changes in how the work capability assessments are carried out before the full roll-out begins in March or April next year. The volumes will be quite large and it will be interesting to find out, in Aberdeen in particular, whether Atos Healthcare can manage the volumes that will be coming through. It is a big process, but there are still some fundamental flaws in how the work capability assessment is in operation.

Does my hon. Friend the Member for Stretford and Urmston want to intervene?

[Kate Green]

No—the hon. Gentleman for Stroud asked the same question.

[Miss Begg]

That leads me to the third way in which the Government are planning to cut the benefits bill: limiting how long a person can be on a particular benefit. Even if a person is successful in being assessed as only partially fit for work, and qualifies for the work-related activity part of the employment support allowance or ESA—it gets no easier to say, but I do not know another way of doing it but to use acronyms or to give the full title—the CSR proposes that they will qualify for the contributory element for only a year. That means that people who have worked all their lives, and paid their national insurance contributions in the hope that they will act as an insurance against ill health, will get the benefit for only one year unless their household income is below the qualifying level for income support.

That poses the question of how much the Government want to continue with the contributory principle. Already, people receive unemployment benefit, or jobseeker’s allowance, for only six months, and the contributory element of ESA is to last only for a year, yet they will have worked all their lives thinking that was why they were paying national insurance.

Lone parents will qualify for income support only if they have a child under the age of five. After that, they will be moved to JSA. If they do not get a job within a year, they will lose 10% of their housing benefit. I have been told by several Ministers that the Work programme will result in people being helped back into work. However, the lone parent whose youngest child has turned five will not go into the Work programme for a year. That is when lone parents are to lose part of their housing benefit.

Here we have an individual who has done everything that the Government have asked of her, or him. Such people will have turned up to all the work-related activities and may have moved house to find somewhere cheaper so that they are at the 30th percentile in the housing benefit changes. They will have done everything that the Government have asked of them, but in these economic times they simply cannot find a job. It is not that they have not tried. They will have been to lots of interviews, but not managed to find a job. Even then, they will still lose their benefits.

That is a fundamental change to our welfare system. Sanctions and taking benefits from people has always been linked to negative behaviour—the individual not doing what the Government ask of them. The worrying message that the Government may be sending out is that even if people do the right thing they could still be in danger of losing part of their benefit.

[Kate Green]

My hon. Friend is absolutely correct to say that there is confusion, with people doing the right thing but still facing sanctions. Does she agree that it is illogical to sanction one benefit in respect of behaviours that are desired in connection with participation in the labour market but that are covered by other benefits—in this case, the jobseeker’s allowance—and with no suggestion that the individual will necessarily be facing a sanction?

[Miss Begg]

My hon. Friend is absolutely right; the issue seems to arise particularly with sanctions on housing benefit. When giving evidence to the Select Committee yesterday, Lord Freud suggested that sanctions on housing benefit would follow people wherever they went. The only way for them to get rid of the sanction would be to find a job, but some might simply not be able to do so. It could depend on where people live, as in some areas it is difficult to find a job.

--- Later in debate ---

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

I start by thanking you, Mr Turner, and hon. Members present for your tolerance in allowing me to resume my participation in the debate. I have been attending a Public Bill Committee sitting for the past hour. I am sorry to have missed the contributions of other Members and encourage them to intervene to repeat points that might already have been made that relate to my remarks.

I am pleased that the Backbench Business Committee selected the subject for debate this afternoon, not only because it was partly in response to representations I made to the Committee, but because this set of policy announcements is one of the most significant that the coalition Government have made. It will have far-reaching implications, not only financially for families now, but for the philosophy surrounding welfare provision. It is beginning to take us into new territory and challenges some of the assumptions and positions that have pertained for the past 60 or 70 years. The debate is an important opportunity to start to talk about that.

It is notable that we have had several debates in this Chamber and on the Floor of the House that speak to concerns right across the House about the implications of some of the Government’s proposals, particularly in relation to housing benefit reform. I want to address some of those points again this afternoon and, inevitably, speak much more widely about the broad range of financial support for families that is provided by the welfare system and by the benefits and support programmes that are the responsibility of the DWP.

One of the great difficulties when looking at financial support for households is that it is provided by a number of Departments. It is difficult to disentangle the implications of one benefit change in one Department’s area of responsibility and look at it in isolation when assessing the overall impact on low-income households. I hope that we will have some leeway this afternoon to look beyond the rigid parameters of the DWP. That was certainly already the case when I had to leave the debate earlier.

[Mr Heald]

Does the hon. Lady agree that the increase in child tax credit is a vital part of the overall picture?

[Kate Green]

That is the kind of point that it is important we recognise in debate. I recognise that the increase in child tax credit is one of a tiny number of measures, if not the only one, that we have seen so far from the Government that try to redress some of the reduction in or withdrawal of financial support elsewhere. Ministers have highlighted the fact that the increase is significant in ensuring that there is no rise in child poverty as a result of the measures that have been proposed overall. I regret such paucity of ambition, as the intention is simply not to see child poverty increase. Previous Labour Governments were criticised—rightly, I guess—for not achieving as much as they had set out to do. The proposed increase seems a poor and rather limited attempt to move forward, which I very much regret. I would welcome hearing from the Minister how the Government expect to catch up on the target to eradicate child poverty by 2020 when they expect to make no progress at all between now and 2012-13.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

I want to build on the hon. Lady’s point that the issues of child poverty that the Government are addressing go well beyond DWP and remind her of the £7 billion investment we have made in the fairness premium, which is being delivered through measures introduced by my right hon. and hon. Friends in the Department for Education. At the risk of incurring your wrath, Mr Turner, I remind the hon. Lady that when the Government came into office the figures on child poverty were deteriorating. What we have done in the emergency Budget and the initial spending review measures is to stop that deterioration and stabilise the situation. In March, we will be setting out a strategy to show how we will take things forward.

[Kate Green]

First, let us be absolutely clear about the alleged deterioration in child poverty performance. It deteriorated in two years, 2005-06 and 2006-07, and the measures that were introduced in the 2008 and 2009 Budgets were already turning that position around. It is welcome that the Government have not decided to reverse those measures. I am pleased that they have retained the progressive announcements made by the previous Chancellor, but it is a pity that the new measures that they have announced will tend to work against that progressiveness.

Secondly, I absolutely take the Minister’s point about the importance of the spending measures being rolled out by the Department for Education. I regret that some of that is moving money around, rather than bringing additional money into educational institutions and settings. None the less, there is considerable evidence, as she is well aware because we have discussed it on many occasions, that any spending on education, health or a range of other outcomes for children is hampered if they grow up in households with inadequate income. Income is a prerequisite of the success of other social programmes. That is why I am concerned about the long-term implications of some of the Government’s measures in relation to household income.

Let me list some of the Government measures that will reduce incomes across the piece. We have the freeze on child benefit, and its removal in cases where an individual in the household is in the higher tax band. We have the freezing of working tax credit. We have an increase in the number of hours that a couple are required to work in order to claim working tax credit. We have a reduction in the child care element of the tax credit. We have the linking of benefits to the consumer prices index. We have the time-limiting of contributory employment and support allowance to a period of 12 months.

We have the removal of the mobility element of disability living allowance for those in residential care. We have the promise of more testing before disability living allowance can be accessed.

We have many changes to rules for eligibility for housing benefit, including the room cap, the reduction to the 30th percentile, the removal of the £15 excess, the cut in housing benefit for those on jobseeker’s allowance for more than 12 months, changes to non-dependent deductions, which are now to be uprated in line with the CPI, and there will be an increase in the age at which people are able to come off the single room rent rate. We have changes to council tax benefit. We have the removal of the health and pregnancy grant, child trust funds and the saving gateway. We have the reduction in funds available for social housing and an overall cap on benefits.

I hope that I have not forgotten anything, because that sounds bad enough. Not all of those policies will have an impact on every household, but none the less together they will put many low-income households under great financial pressure, and I am very concerned about that.

[Maria Miller]

Will the hon. Lady give way?

[Kate Green]

No, I will not. I also want to highlight the fact that when we look at which households will particularly feel the brunt of those changes, we see that women will bear much of the pain. Women are hit twice as hard as men as a result of the reduction in income that will result from those changes.

Women receive 70% of tax credits, 60% of housing benefit and 94% of child benefit—perhaps unsurprisingly, because that payment is particularly well targeted at mothers—and 65% will be affected by the changes in the rules for savings credit as part of pension credit.

The disabled are suffering several reductions to their benefits: the removal of higher rate disability living allowance for those in residential care; the changes to eligibility for employment and support allowance, which my hon. Friend the Member for Aberdeen South (Miss Begg) highlighted earlier; the impact of the work capability assessment, which seems to be proving harsher than was acknowledged earlier and harsher than the previous or present Governments might have expected; and the loss of contributory ESA after a year.

Families with children in every income decile are being hit hard by the changes—harder than households without kids. I am concerned about the differential impact of the changes on different kinds of household structures, and I would be interested to hear the Minister’s comments on that.

Another area that I would like to open up for debate and would be interested to hear the Minister’s comments on is how the measures will work against the Government’s absolutely correct wish to incentivise people to move into increased hours of paid work. The first prerequisite of being able to look for work is a stable income. It is hard for people to motivate themselves to go out and look for a job if they are struggling to hold things together day to day, and worrying about creditors banging on the door, or whether they can afford to pay the bills, keep healthy food in the fridge, keep the house in a decent state of repair and keep their clothes clean and laundered. With all those basic needs proving a barrier, it is difficult to think about going out to look for work.

The second thing that is crucial for people looking for paid employment—we hear this again and again from homeless charities—is a stable address. Many of us are concerned that the impact of the housing benefit changes will be to force people to move, perhaps more than once or twice, as the changes are introduced in waves. In some cases, lack of a stable address is likely to prove a barrier to moving into paid work. Clearly, a third important prerequisite for parents being able to move into paid work is having child care in place.

Changes to housing benefit will not only disrupt the stability of a family’s accommodation but may move them further from areas where jobs can actually be found, and from the support networks on which they rely. I am concerned that reducing the element of working tax credit support that is available to help meet child care costs will make it more difficult for parents to afford those costs.

A number of the measures that the Government have already announced will actually worsen marginal deduction rates. The cuts to working tax credit will worsen the return that people get from paid employment, and the loss of free school meals for some families who were expecting to receive them from this September, and the increases in VAT and travel costs, will make the decision to return to work much more economically unattractive than the Government might wish. I would be interested to hear the Minister’s comments on that.

Another thing I would like to consider is the support the Government will put in place to enable people to move into paid work. We look forward to receiving details about the single Work programme, which I believe Members across the House are keen to welcome. Labour Members in particular see many elements of the single Work programme, in so far as we know about it, drawing on the new deal and the recent flexible new deal. In fact, I have been struggling to identify the philosophical differences between the single Work programme and the flexible new deal. I would be interested to hear the Minister’s comments on that.

There is potential for more risk being put on providers, who will be required to perform over the longer term. That may make it more difficult for some smaller providers and, in particular, voluntary sector providers to join in with provision of the single Work programme. I know that Ministers are concerned about that, and I look forward to hearing the Minister’s comments on it.

There is perhaps even more alliance than we saw with the flexible new deal on the so-called black box approach. My worry about such an approach is whether the most vulnerable will transparently receive appropriate support and be properly advocated for in a system where there are conditions, requirements and obligations on them. Who will negotiate for them if the requirements that are imposed are unreasonably onerous? The black box approach has some merits, obviously, in that it offers flexibility to good providers, but how we will ensure that the actions of providers who may put inappropriate pressure on clients to take up unsuitable employment, or to take up unsuitable programmes to prepare them for employment, will be transparent and exposed in the single Work programme that Ministers intend to introduce?

My final point is about the universal credit, which I think many Members on the Government Benches have suggested will provide a solution to concerns about the measures that are being introduced more immediately. First, even if the universal credit proves to be the panacea that we are assured it will be, I am concerned about the hardship that will be experienced by households now, before it is actually in place. I am not setting out today to oppose the universal credit by any means, but it might be helpful, as we are clearly at an early stage in the Government’s thinking on what it might look like, if I highlight some concerns about where care will need to be taken in its design.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I apologise for being here for only part of the debate. On the universal credit, does my hon. Friend have any insight into the logic of how the Government’s announcement on, for example, the localisation of council tax benefit—and, by the way, the 10% cut—fits with the DWP’s approach of trying to design a universal credit, but apparently without that element in it?

[Kate Green]

I absolutely agree with my hon. Friend. Points raised in favour of the universal credit were that it would remove administrative complexity and clarify people’s entitlements in and out of work. Clearly, where there is variance across the country in terms of entitlement to help with council tax, we have lost all the advantage of administrative simplicity, and transparency and clarity. That is one of the anomalies that I would be interested in hearing the Minister address.

I would be interested to hear the Minister’s comments on some of the risks of putting all our eggs in one basket. That may have the virtue of simplicity, but as we know, administrative systems and Government are not famous for smooth running in favour of low-income claimants. If the universal credit should happen to fall over, perhaps because of IT difficulty or for other reasons, there will be absolutely nothing else coming into households to carry them through. I very much hope that the IT will perform smoothly and that there will be no such administrative difficulties, but there are risks. It is important that we hear from Ministers what the contingency plan is, because both DWP and Her Majesty’s Revenue and Customs have been quite slow to compensate for difficulties in getting payments through quickly; for example, emergency payments and social fund payments have not been particularly easy to access when things have gone wrong.

From the point of view of low-income households, there is some merit in having payments coming in at different times through the month. It assists household budgeting if people know that another chunk of money will be arriving in the next few days.

I hope that the design of the universal credit will recognise that there is an issue not just of distribution of income to poorer households but of its distribution within those households. I want to be sure that we design a credit that does not disadvantage women in the household in particular by assessing and paying a credit at household level that in practice may not reach her and, therefore, may not be particularly effective in reaching her children.

The intention to introduce real-time calculation of entitlement to the universal credit will also mean real-time clawing back of benefit overpayments. It would be exceptionally difficult for low-income families to plan for that, and I would welcome the Minister’s comments.

In conclusion, the Secretary of State and the Department have an ambitious vision, and an extensive range of changes will be introduced in the near term in somewhat indecent haste, without the implications being clearly thought through. I am grateful that we have had an opportunity to raise some of our concerns. As my hon. Friend the Member for Aberdeen South said earlier, there are real concerns about the devastating impact that the loss of even a few pounds can have on low-income households, and I look forward to the Minister’s response.

[Mary Macleod (Brentford and Isleworth) (Con)]

I thank the hon. Member for Aberdeen South (Miss Begg) for starting our debate today. She has talked about retiring, and my hon. Friend the Member for North East Hertfordshire (Mr Heald) has mentioned the contribution that she has made on the Select Committee—a contribution that I heartily admire. I hope that she does not mind my saying that I hope that she does not need to retire, because across the country she is a role model for and an inspiration to disabled people. If, however, she does feel the need, I am sure that I could find an excellent Conservative candidate in Aberdeen to fill her spot. The Conservatives do, of course, need more Members of Parliament from Scotland.

I welcome the proposals in the comprehensive spending review for the Department for Work and Pensions and, in particular, I welcome the Secretary of State’s radical and strategic look at the support that is given to 20 million customers, including those who receive benefits and state pensions, those who need help to get work, and disabled and older people. The CSR is courageous in what it has presented, and it is transformational because it is about giving people who can work a way to transform their lives, build their confidence, feel worth while and contribute to their family and to society as a whole. It is about giving them hope for the future, because the reality is stark. After I deal with this point, I shall move on to a more positive note. Britain today has 5 million people claiming out-of-work benefits, one in five households entirely dependent on benefits, with no one working, and nearly 1 million people who have never worked. We cannot leave people to languish on benefits with no opportunities to change their lives for the better, and I believe that all of us in this House, no matter which side we are on, are trying to change lives for the better.

The hon. Member for Aberdeen South talked about the gap between rich and poor, and I sometimes feel frustrated by how we approach that. We have to help the people at the lower end of the spectrum to get back into work, and to support the people who cannot work. However, it is not about penalising people who have achieved something in life. There is something about the British culture that means that when we talk about people who have achieved something we have to try to find fault. To anyone who has gone out there, worked hard, tried to find work and achieved something for themselves and their family, I say, “Well done,” and I hope that everyone else does too.

I would particularly like to focus on the issue of getting people back to work and on how the Work programme can support that. There is no doubt that we need to improve the way in which we help people get back into work. According to International Labour Organisation figures, we have nearly 2.5 million people unemployed, which is 7.7% of the economically active population. That is below the G7 unemployment rate of 8.3%, but some of those 2.5 million people are not contributing economically to our society and are being held back from reaching their full potential. In a YouGov poll in July this year, 43% of people who had visited a jobcentre in the previous 12 months said that they were treated as a statistic, with no focus on their individual needs. That figure rises to 59% for those in the 55-plus category, and that is something that we must change.

In my constituency of Brentford and Isleworth in west London, the latest figures from September showed that 2,315 people were claiming jobseeker’s allowance. That figure was down 10% on the previous year’s, but the number of people who have been claiming jobseeker’s allowance for more than a year had increased by 47%. Being out of work long term is damaging for all concerned. It is damaging for the taxpayer, because we lose out on the potential economic contribution of that individual and, more importantly, it is damaging for that individual themselves because of what it does to them and to their families.

Some 60% of people claiming jobseeker’s allowance in my constituency are aged between 25 and 49, and it is that age group that particularly needs help to get back into work. Currently, there is a confusing array of programmes out there. People who have been claiming jobseeker’s allowance for 12 months must take part in the flexible new deal, which is delivered through Jobcentre Plus by private providers. Some people who do not receive a job through the FND will possibly move back on to jobseeker’s allowance. Recent figures provided by the Department for Work and Pensions show that since the scheme was implemented in 2001, more than 500,000 of the 2.7 million people leaving the scheme have returned to jobseeker’s allowance. We need to simplify things, to improve the accountability and to focus on results, and I really believe that the Work programme can do that.

The Work programme is one of the biggest employment and back-to-work programmes in the world, and will offer targeted, personalised help for people who need it most, sooner rather than later. The programme will be delivered by experienced organisations in the private and voluntary sectors, which will be given the freedom to design the right programmes for claimants. However, those organisations will be paid by results, and the Government will pay them only when they get welfare claimants back into work, and keep them there. Are there people out there who can deliver that? I believe that the answer is yes, and I want to give a couple of examples of how things are currently working, and can work in the future.

The first example is Reed in Partnership, which I recently visited in Hounslow. The organisation states that it seeks to

“break down barriers to work by giving people the confidence, skills, and experience they need to find lasting employment; using the most creative and innovative methods in our sector.”

Since 1998, Reed in Partnership has helped 100,000 people move from welfare into employment, and has focused not only on building the skills and confidence of individuals to get back into work, but also on building partnerships with local businesses that offer the work opportunities. The organisation has many strong partnerships across the business sector. The view of the chief executive, Chris Melvin, is that the

“development of a single, integrated Work Programme represents a dramatic shift in policy and an opportunity for everyone working in the employment and skills sector.”

I met the Hounslow branch manager, Shirley Allen, who talked to me about the organisation’s work with people on health-related benefits, and about some of the opportunities it sees for the future. I also talked to some of the individuals who were going though its programme and who really did want to find work. They felt that organisations such as Reed were helping them to build their confidence so that they could go out there and change their lives for the better.

The second example is in the voluntary sector. I recently met an organisation called Helxx5, which is committed to building a mechanism that brings together business and the community for the benefit of all. The Bridge UK is the charitable arm of Helxx5, and that is the part of the organisation that I visited. The Bridge UK has so far focused on using a cross-section of unemployed people to renovate disused buildings and transform them into a multi-media hub that will bring business to the area. It has employed locally, in Brentford, some 100 unemployed people, who have cleared yards and decorated buildings, learning a whole host of skills along the way. Some of those people come from second and third-generation benefit households. It was pretty hard initially to persuade some of them that there was a good reason to get out of bed in the morning, but The Bridge UK has done that successfully, and real results are being achieved.

The ultimate goal for The Bridge UK is to continue to work with unemployed people from Jobcentre Plus, taking them through training modules with a view to them finding a way to stabilise their life, and providing the skills base that will allow them to secure future work. In effect, it is helping people to cross the bridge from welfare dependency to future employability. What makes this work are the leaders of the organisations—in this case Cain Gerrod. He brings knowledge of coaching, business experience and local contacts, and his former tough-guy ex-Chicago life probably enables him to communicate with the individuals in the programme. When I visited it last week, I found a group with energy and creativity in abundance. Its approach works and, in my view, totally fits with what we are looking for as a successful part of the Work programme. I also visited National Grid’s programme with offenders in prisons. It works with more than 100 organisations and businesses to create opportunities for offenders and support them to find work. It gets them into work, then supports and mentors them for two years.

The common theme running through the coalition Government’s proposals is that they cannot do all this on their own. Getting people back to work is an example of that; we need businesses, charities, the Government, neighbourhoods, families and individuals all to play a part in helping people to get back to work.

There are two areas that I would like to mention: work experience and mentoring. Gaining employment in this country is dependent on having experience, which many people who have been unemployed for some time do not necessarily have. Without experience, they cannot get a job and, without a job, they cannot get experience. We need to break that cycle by persuading more companies to give people work experience.

[Kate Green]

The hon. Lady is right about the importance of workplace experience. Employers look for it, and it is important in giving confidence to individuals in applying for jobs. Therefore, is it not regrettable that the future jobs fund, which gave people a sensible amount of work experience—a minimum of six months—and, crucially, paid them a wage, which is one of the most important features of feeling that it is a genuine work experience, has been abandoned by the coalition Government?

[Mary Macleod]

We need to find people sustainable, long-term employment that they can do in future and will support them. We can work with businesses in our local areas. I will be encouraging all the businesses in my constituency to give more people the work experience that will help them to gain future employment. All Members can do that in their constituencies.

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[Richard Graham (Gloucester) (Con)]

Thank you, Mr Turner, I shall try to be brief and build on the points made by other hon. Members, including, most recently, my hon. Friend the Member for Brentford and Isleworth (Mary Macleod). I am grateful to the hon. Member for Aberdeen South (Miss Begg) for securing the debate on a topic that is crucial to dealing with our old, weak and vulnerable, and for all of us who work. The debate is on a subject responsible for a third of all Government spending and, therefore, crucial in that sense as well.

We have been debating the impact of the CSR on the work of the Department for Work and Pensions. What the CSR did, above all, was endorse a radical change of direction in that most crucial of Departments. We have effectively seen a signal to the end of accepting ever more people with very little motivation to work, people who are not working living in properties that they would not be able to afford if they did work, Britain’s ever-increasing number of people on incapacity benefits—there are 2.9 million people on a category of benefit that does not exist anywhere else in Europe—and an ever-increasing proliferation of an array of benefits that no one, not even the distinguished hon. Member for Streatham (Mr Umunna), can understand.

[Kate Green]

Will the hon. Gentleman give way?

[Richard Graham]

I regret that there is no time to give way.

It will also mean an end to the continuation of the trend for increasing numbers of young people with illnesses and disabilities who do not wish to follow the stirring examples of the hon. Member for Aberdeen South and my hon. Friends the Members for Blackpool North and Cleveleys (Paul Maynard) and for Harlow (Robert Halfon), who set strong examples. I do not believe that the hon. Member for Aberdeen South wishes us to continue to accept those things.

The radical new approach endorsed by the CSR is a philosophy for a 21st-century welfare state and a complete restructure of benefits, which I describe as getting “back to Beveridge”, under a single universal benefit, a single larger basic state pension, which should have been introduced by the previous Government years ago, and the principle that work always pays and benefits should not exceed the average salary. That amounts to an ambitious programme that many of us endorse; indeed, all the voluntary organisations that gave evidence to the Select Committee explicitly embraced the goals, if not the details, of the implementation. As Opposition Members have said, we are close to consensus on the aims—whatever the shadow Secretary of State may have said on television recently—which is appropriate given the sector with which we are dealing.

What differentiates us is simply how much money should go to whom, when and where. Those who believe, as some hon. Members have indicated today they do, that no benefit should ever change, let alone decrease, are missing the point. If we accept the principle behind the goals of the direction of the Department for Work and Pensions, we much also accept that, to get rid of the disincentives to work and to make work worth while, the principle means significant changes to how benefits are delivered.

The natural corollary to the strategy that we all—or most of us—accept is the plan for implementation. We now have the plans for changes to housing benefit, testing people on incapacity benefit, new ways of handling people on jobseeker’s allowance, the introduction of the Work programme and the introduction of the single universal benefit, which, in a sense, is the most important. Those changes are under way. The Minister and her colleagues are aware of the sensitivity of individual issues that will come up as this great programme is put into place, and I believe that they will respond with contingency plans and funding if difficulties come up. We must trust the Minister to do that.

Let me give an example of what can be inspiring from a new approach to work. In Parliament, I employ a woman who is a registered epileptic. She does a fantastic job, and there is no reason why many others like her should not be able to do the same thing. As the programme unfolds, I believe that we will see many inspiring examples coming forth. Therefore, I urge hon. Members from all parties to embrace the strategy and work to make it a success.

There is much that we can do as individual MPs. For example, I will be doing three things. First, I will hold a seminar so that disabled jobseekers can meet employers, and employers can hear from those who work successfully, such as my friends the blind receptionist and the deaf warehouseman. Secondly, I will continue to encourage my jobcentre to experiment with new ways of helping people on jobseeker’s allowance to find jobs. One new experiment in Gloucestershire has halved the number of people on the waiting list over the past few weeks. Thirdly, I am holding an apprenticeship fair for young people, and a seminar on engineering for women.

I would like to hear other ideas from hon. Members from all parties, so that we can go out and do our bit in our constituencies to help people into work. There is an alternative approach, which I would summarise as that of continuing to snipe from the sidelines, saying that things cannot work, complaining that funding has decreased, and effectively letting down young and working-age people in our constituencies. I believe that we should embrace the strategy, hold the Department to account on the scheme’s implementation as it unravels, and make it a success so that we get our country working again.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

It is a great pleasure to serve under your chairmanship, Mr Turner; it is the first time that I have done so, and you helped to ensure a most productive debate. I also thank the hon. Member for Colchester (Bob Russell), who is absent, and the hon. Member for Stretford and Urmston (Kate Green), for enabling the debate to take place.

The quality of debate showed how important these matters are, and how important it is for them to be discussed. To a certain extent, it has allowed us to put some facts on the table. With the exception of the most economically illiterate, or a few ostriches that might still exist, few serious commentators doubt the urgent need to tackle the financial mess left by the previous Administration.

I have a slight divergence of opinion with the hon. Member for Glasgow East (Margaret Curran), who spoke for the Opposition. She cannot ignore the fact that we are dealing with a major structural deficit, and unless we get that under control, we will continue to have to pay the most astronomical levels of interest and run the risk of seeing rates rise and the consequent economic chaos that we have seen in some European countries.

We should not forget that we are paying £43 billion in interest payments; that is £120 million a day. To put it another way, it is the equivalent of the annual budget for the Department for Education. These are not small amounts of money. It is a structural problem. We have to deal with the fiscal mess that we inherited from the previous Government. After years of throwing public money at a bloated welfare system, the previous Administration also left us with a legacy of dependency, which was mentioned in many contributions to the debate.

The facts tell their own story. Nearly 5 million people live in households in which someone is on an out-of-work benefit, despite record levels of spending; it was £35 billion in 2008-09. We still have 2.8 million children living in poverty.

[Kate Green]

Will the Minister give way?

[Maria Miller]

I cannot accept interventions, Mr Turner, as we are short of time and I know that you want a short wind-up at the end of the debate. I want as much time as possible to answer the points raised during the debate, including by the hon. Member for Stretford and Urmston.

We still have 1.9 million children living in workless households. Instead of burying our heads in the sand, which has been the approach of too many Opposition Members, and potentially leaving our children to pick up the bill—that is the legacy of this huge debt—the Government are taking action now, and making tough choices. We are tackling the root causes of poverty, not just treating the symptoms.

The failure of the last Government is the reason why we need the toughest round of spending since 1976. Inevitably, the Department for Work and Pensions will have to shoulder its share of the burden, along with other Departments. I believe that we successfully secured the third best settlement in Whitehall. As a result the Department will see a modest rise in spending in real terms, although we do not underestimate the challenge that lies ahead.

The Government will not cheese-pare or salami-slice the budgets that we have in place; we are taking the opportunity to rethink not only what we do but how we do it. That is why we are introducing universal credit. It will beat the benefit trap, and it will make work pay for the poorest. We are launching the new Work programme to help those who can to escape a life on long-term benefit. That is why we are working hard to support families, especially children, with an above-indexation increase for the child element of tax credits; launching the £7 billion fairness premium, which will give some of the poorest children a better start at school; and giving most disadvantaged two-year-olds access to 15 hours a week of pre-school education. Those and many other support measures will make a real difference to families and to poverty levels.

In my role as Minister for disabled people, I shall ensure that we have in place more support than ever for disabled people to help them get back into employment, and continuing, unconditional support for those who are unable to work.

Many important points were made this afternoon, and I shall try to answer them all. Those that I am unable to answer today I shall answer in writing; I shall write to hon. Members individually.

I welcome the tone of the contribution of the hon. Member for Glasgow East; it was important, and I welcome her emphasis on working together and her understanding of our desire to put in place real and genuine reforms. I reassure her that we are working closely with disabled people and disabled people’s charities in reforming those programmes. The hon. Lady mentioned equality impact assessments. I assure her that all the measures in the Budget and the spending review will have equality impact assessments in place; they will be published at the same time as the welfare reform Bill, and will accompany any uprating order.

Thoughtful contributions were made by my hon. Friends the Members for East Hampshire (Damian Hinds) and for Bermondsey and Old Southwark (Simon Hughes). They included comments about housing. I might roll together my responses, given the time constraint. Changes to do with people’s homes will obviously cause a great deal of concern.

My hon. Friend the Member for Bermondsey and Old Southwark rightly said that it is about ensuring that we have secure and stable communities. We believe that the local housing rates in place at the moment are simply too high, and not sustainable. We have seen them outstrip earnings since local housing measures were put in place in 2008, and we want to phase in the overall package of measures to give people the time to adjust to a different regime and a different way of dealing with matters. However, we still need to legislate for the changes through secondary legislation, so there will be an opportunity to debate the measures further. Indeed, I am sure that we shall do so.

What is important is that the Government have an important role in the private rental sector. Some 40% of people in that sector are in receipt of housing benefits, so we are part of the market-making, and we must recognise that. We cannot stand back and let the market control the sector, as the Opposition did when they were in government. We must take action and, at the same time, protect the sort of people in the constituency of my hon. Friend the Member for Nuneaton (Mr Jones) who he mentioned. That is why we have put in place £140 million transitional relief to ensure that the support is there if it is needed. That problem was anticipated by the previous Government and it was in Labour’s manifesto. I find it astonishing that Labour—at least some Members of its Back Bench—now seem to be trying to row back from that. I sense that the hon. Member for Glasgow East has a deeper understanding of the need for reform in this area, and I hope that we can work together on this matter.

My other hon. Friends made some stirring contributions, particularly my hon. Friend the Member for Gloucester (Richard Graham), and I welcome his support for the Government’s policy. He is right to say that this is a radical and ambitious new approach. We cannot simply stand back and let the welfare system continue to fail so many thousands of people, as it has done for the past 10 years.

My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked eloquently about the work that is going on in her constituency. Helping people fulfil their potential is exactly what we want to do with the Work programme. People are not statistics; they are individuals and need individual programmes of support. Her idea of encouraging local organisations to be involved in such work is absolutely right.

All hon. Members will agree that my hon. Friend the Member for North East Hertfordshire (Mr Heald) made an extremely important contribution. As for the timing of universal credit, we will have a White Paper coming out shortly, and the transition to universal credit will start in 18 months’ time. Such a move will happen soon and not way into the future. Some 50% of people will be transferred on to universal credit by the end of the spending review period. We will give priority to the people who need the help the most and ensure that there will be no losers when the transfer takes place, which reflects the importance of making this change.

My hon. Friend is right to say that in the past, employment programmes have been fragmented. We will use Jobcentre Plus as a lynchpin to ensure that we smooth out the transition process between old programmes and the new Work programme.

My hon. Friend the Member for Stroud (Neil Carmichael) provided us with a great insight into the matter today, particularly by raising the issue of the Harrington report. He made it clear that there will be annual reviews of the work capability assessment for the next five years.

Let me clear up the point about the appeals processes. The ESA has a 5% appeal rate, so 5% of the total number of applications have had their decision overturned on appeal. That is not a massive problem and it does not indicate that there is an unacceptable level of inaccuracy, so we must keep such things in proportion. Of course all of us want to see a 0% appeal rate, but that would be difficult to achieve.

My hon. Friend the Member for Nuneaton was very much the voice of reason in this debate. I cannot agree with him more that it did feel like we were inheriting an economic car crash when we came into Government in May. He talked about those who spend prolonged periods on benefits, the negative effect that that can have and inter-generational worklessness.

Picking up on the point about variable conditions, let me say that that is exactly the sort of thing that Professor Harrington will be considering, and concern over the matter has been voiced to us.

The Chairman of the Select Committee raised a number of points today. I am sure that I will not do justice to the questions that she asked, but I will have a quick go in the two minutes that I have left. We have made the changes to the council tax because the present system is complex, and it has rigid rules in place. The changes that we have proposed are in line with the overall theme of this Government, which is of localism and of giving local people more flexibility to react to the circumstances in their community. It is that local flexibility that will help us to deliver more value for the amount of money that we are investing in measures such as the council tax and council tax relief.

The hon. Lady asked why we are raising housing benefits by the consumer prices index. Let me remind her that housing awards have grown faster than earnings since 2008 when the new measures were introduced to support those on private rentals. We want to take control of the amount of money that is going into housing benefits, which is in line with out strategy to integrate housing support with the rest of the benefit system that will also be uprated by CPI.

The hon. Lady raised some issues about care homes. In particular, she mentioned the measure that we are taking with regards to mobility. Just to be clear, local authority contracts with care homes mean that care homes are providing services to meet all the needs of their residents, and that includes those with mobility needs. Our commitment to increase the uptake of personal benefits through personalisation will give people more choice and more control over the money that is available to them. The local authority duty exists to meet the needs of people who are living in residential homes and to provide the services. We have removed an overlapping benefit and tried to ensure that the money can be used effectively elsewhere.

The hon. Lady also raised another matter with regard to lone parents, but time will escape me, so I will have to write to her on that. The hon. Member for Streatham (Mr Umunna) asked about the success of the future jobs fund. I want to make it clear that that fund is one of the most expensive employment programmes in place at the moment. We have honoured the offers of places on the future jobs fund that were made before we came into Government, but it is not good value for money and it does not provide the long-term employment that we know that people need. That is why we are not rolling that forward, and it is a really good and valid reason for not doing so.

The hon. Member for Stretford and Urmston raised a number of issues, but I will pick up on just one of them—the benefit cap. I do not accept that such a measure will increase child poverty. Putting in place a cap will effectively stop anybody receiving benefits that would translate into a salary of £35,000 a year. That will not increase child poverty. What it will do is ensure that work will pay for more families. We know that enabling families to get into work by, for example, not creating a disincentive is one of the most important things that we can do to alleviate poverty in the long term.

I draw to a close now, and apologise if I have not addressed all the points that hon. Members have raised. I will try to do so later.