Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 14th October 2013 Commons Chamber

[Mr Duncan Smith]

The No. 1 thing we could do was to get rid of Labour—a great move to get more performance and not underperformance, and judging by the performance of its Front-Bench team, that is one of the areas where we ought to start straight away—but I must say to the hon. Lady that we are driving costs down and making savings in every programme. I would love to know this: out of the £80 billion plus we will save as a result of our welfare changes, which the Chancellor welcomes, which ones does she welcome?

[Mr Frank Field (Birkenhead) (Lab)]

How many permanent secretaries does the Secretary of State think he will get through before universal credit is rolled out nationally?

[Mr Duncan Smith]

Universal credit will roll out very well and it will be on time and within budget. We should consider the reality of the record of the right hon. Gentleman’s Government on Departments and the mess they got into. They left us with IT blunders of over £26 billion. With respect to him, as he was not always involved, but the others were, I therefore think they should apologise first.

Pensions Bill

Lord Field of Birkenhead Excerpts

Monday 17th June 2013 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

I am immensely pleased to be able to contribute to this debate, and I shall do so briefly.

The Bill marks a decisive change in the policies of Governments since the 1950s. It is a change I hoped the previous Labour Government would make, but they did not. This Government have made it, under the careful stewardship of the Minister of State, the hon. Member for Thornbury and Yate (Steve Webb), in particular. I congratulate him unreservedly on this success. The objective of having an insurance-based minimum pension that attempts to take people off means-testing is something that voters have long asked for but that Governments have long denied them. On that score alone, I congratulate him.

I also congratulate the pensions Minister on this being the one single move the Government could have made to make an honest man, woman or person out of the National Employment Savings Trust, as we were in real danger of having an auto-enrolment scheme that would automatically enrol people and mis-sell to them the pensions that they would thereby be buying. On those two scores, the Government are to be congratulated.

Let me now enter some caveats. Clearly, objectives are immensely important for any Government, as they give us the direction of travel, but they do not necessarily mean we will reach the desired destination. I wish to discuss those who will regard this scheme as unfair and the costs. First, it is clearly unfair to the group of women in respect of whom the pensions Minister was actively defending his stance: those born between 1951 and 1953. He said that they will not be worse off than they would have been, but of course they feel that they will be worse off than they would have been because the Secretary of State and the pensions Minister are changing the pensions that males born during that period will get. I seriously question whether the Government will be able to maintain their line on that issue. It was a good debating point in this House, but I do not think we can take an annual cost—the shadow Work and Pensions Secretary was talking of that—and equate it with the cost over decades. The annual saving the Government will get from cancelling the contracted-out rebate is £5 billion to £6 billion, and that comes in every year—the cost of doing justice to this group of women is a very small proportion of that.

The second area where injustice has been created is between the employers and employees of public and private pensions. Why have the Government allowed employers in the private sector to have the right to adjust the pension of their employees, given that less money will be going into those schemes and given that they will get a better state pension, but not allowed that for the public sector as a whole? If there are real problems in the health service—leaving aside other public services—the near £1 billion the NHS would have to pay in additional pension contributions will play its part. Unless one wants another period of contracting out of state schemes, what is the Government’s game plan behind the inequity they are creating?

Thirdly, I wish to congratulate the pensions Minister, because I have rarely seen such pork barrel politics in my 30-odd years here in Parliament. We know that at the cornerstone of the Liberal vote are the self-employed, and they will be cheering all the way to the bank because of what he has delivered them. He dresses it up in this language about putting aside unfairnesses, but the rest of the population will not think much of his definition of “fairness” because this is an unbelievable, God-given gift to the self-employed. [Interruption.] Conservative Members are saying, “Hear, hear”, but they have not realised what the electoral ploy is vis-à-vis the Tory vote and Lib Dem candidates. The pensions Minister is still blindly leading the coalition on this issue, even when what he is up to has been spelt out, and I congratulate him on that. I do not believe the settlement he proposes for the self-employed—as opposed to that for the employed, with their contributions and their employers’ contributions, which are part of the wages settlement after all—is sustainable.

My last point was touched on by the Chairman of the Select Committee, my hon. Friend the Member for Aberdeen South (Dame Anne Begg), and concerns the losers from the Bill. One might have thought that the Bill offered milk and honey for everyone and, indeed, when the Secretary of State was introducing it I could not but think that it was almost like Moses was leading us into the promised land of milk and honey for everybody. During that journey, however, quite a few people will drop out. We know that the Government’s own data show that 22% of contributors will be worse off and that the average income replacement ratio will be lower. It all comes back to the key point of the £5 billion to £6 billion that the Government are taking out of the scheme and the price that the pensions Minister paid to get this important reform past the Chancellor.

I give the Government credit for having the nerve to get up and criticise the previous Government for taking £5 million to £6 million out of the pension scheme every year and saying that that does not lead to better pensions when this Bill proposes to do exactly the same. This is the second whammy for pension schemes in this country and if people outside think they will get a better, sustainable deal with that sort of financing, they have another think coming.

Under-Occupancy Penalty (Birkenhead)

Lord Field of Birkenhead Excerpts

Tuesday 26th March 2013 Westminster Hall

[Mr Frank Field (Birkenhead) (Lab)]

Mr Benton, it is a pleasure to serve under your chairmanship, on not only a personal but a regional level, as I will explain. I am grateful to the Speaker for giving me the opportunity to debate this issue, which unfairly affects my constituency, yours and others in the north-west.

I have been in the House for more than three decades, and I have witnessed many so-called welfare reform measures, but I have never witnessed a measure as grossly unfair as this one. As the Minister well knows, under-occupancy is a supply-side issue, yet we are trying to control the demand side to make people on low incomes fit into the regimented holes into which the Government would like them to fit.

I know the Government have a fig leaf to parade around to cover their nakedness, and no doubt we will hear about it. They will say that there is a huge number of people in social housing properties who have too many bedrooms and a shortage of social housing. If only those damn people would move from their under-occupied properties to ones that fit, a major problem would be solved. We all know that it will not be, for reasons that I hope to explain.

I feel so strongly about what the Government are doing to my constituents and similarly placed constituents around the country that I call on both social housing and housing association landlords to defy the measures, not by not operating them, but by doing what landlords did after the nine years’ war, when a Government similarly stretched for money imposed a window tax. In many instances—we see it in older properties in our constituencies—landlords bricked up windows. I hope that landlords will brick up the doors to spare bedrooms and, where appropriate, knock down the walls, so that the properties can safely fit the tenants. I have never before asked for direct action. I do so now because I feel that the measures are grossly unfair. In more than three decades, I have never debated such a vicious cut. Even if most people wished to do what the Government want them to do, they would be unable to do it.

The background to the case is that the Government claim that there are 1 million spare bedrooms throughout the country, and that the subsidy for those spare bedrooms costs £500 million. If only they could get people to move around to fit into the accommodation that the Government would like them to have, £500 million in public expenditure would be saved. The means of doing so are as follows. From April this year, those who have one so-called spare bedroom will lose 14% of their housing benefit, and those who have two spare rooms will lose 25% of their housing benefit.

This is the last opportunity for the House to debate this wretched measure before it comes into effect in our constituencies. We know that about one third of social tenants will be affected, and that their average loss of benefit will be £14 a week. We know that 40,000 will lose their entitlement entirely, and, as I said, a higher percentage of tenants in the north-west will be affected than in London and the south-east.

In this debate, I will rely on figures supplied by Riverside, one of the larger housing associations offering accommodation to my constituents. Some 25% of its tenants will be affected by this vicious little measure, and 20% of tenants of Wirral Partnership Homes will be affected. Let us look at the facts that Riverside dug out. In the three years between 2008 and 2011, in one part of my constituency, Tranmere and Rock Ferry, 500 new tenancy allocations were made. Of those households, 302 needed one bedroom, yet only 126 one- bedroom flats were available. Even if those tenants wanted accommodation that fitted their needs as defined by the Government, they would not be able to meet the policy. Riverside sensibly asked those who would be affected by this vicious little measure what they intended to do to try to balance the books. Some 32% said that they would try to move to smaller properties, 11% said that they would ask people in their household to help them pay the rent, 16% said that they would ask people outside their household, 17% said that they would try to earn extra money, 9% said that they would take a lodger, and 42% said that they would probably fail to pay the rent.

I want to dwell on two aspects. One is the 17% who said that they would try to earn more money. One of the Merseyside police’s worries about the measure is that there has been a significant increase in the number of people being encouraged to use spare bedrooms to grow pot. One consequence of this Government action will be to enable those gangs who try to enrol vulnerable constituents to make extra money in that way. That will be a real first for the Government. They should be proud, shouldn’t they?

Let us then look at the 42% who will fail to pay their rent. They will face eviction due to significant reductions in their income. Of course, they will try for a time to cut down on other necessities, such as fuel. I can switch on the heating, but unlike me, many of my constituents do not switch it on during the day. They will now spend even less time with their heating on. Others will eat a far less healthy diet.

When push comes to shove, what will those with children do? They might let their rent fall into arrears, which the Government do not seem to realise is a far better option than not paying other bills, because other bills attract penal rates of interest if they are not paid, and as yet—although no doubt there will be a measure to help them—local authorities and housing associations cannot enforce this wretched little measure by charging interest on debts that accrue.

My plea to housing associations is not to evict. As a result, their revenue will be affected. All the housing associations in Birkenhead have gone down the route of going to the banks to pledge their future revenue against loans. Once the revenue is not forthcoming, what will the banks do? I would prefer the housing associations to go bankrupt rather than bankrupt my constituents. One of the not-so-hidden consequences of this vicious little measure is that housing associations will risk going bankrupt. What will the Government do then? They will not be able to allow them to remain bankrupt. I hope that a plan B that is slightly more effective than the plan B for the economy is on the stocks.

Let us suppose that the tenants could move. The housing stock is not available, but suppose they could. We know from those who have managed to find alternative accommodation that it actually costs more. For example, one-bedroom places in Birkenhead average £71 a week, but in the private sector they are £88 a week. If every wonderful tenant in Birkenhead affected by this vicious little measure did what the Government wanted, the savings would not be made and the housing bill would go up, defeating the measure; the Department for Work and Pensions, which wants people to move around to free up accommodation, would have to have a serious conversation with the Treasury about why the idea has failed to deliver the £500 million cut.

Housing associations should follow the example of the landlords who took action after the nine years’ war to ensure that they and their tenants did not pay an unfair tax. If tenants request such action, the doors to spare bedrooms should be blocked up, as the windows were, and their walls should be knocked through to make one larger room, where it is possible and safe to do so; that would apply only where no downsizing options were available. It would not solve the problem of a grossly unfair tax, but it would mitigate some of the worst results by freeing tenants from this poll tax.

The Government are of course unlikely to achieve the £500 million cut in housing benefit demanded by the Treasury, but their cover is blown anyway: for the reasons I set out, even if all the tenants could move to smaller accommodation, the Government would make no savings in public expenditure at all. Indeed, as suitable accommodation in the private sector is more expensive, the housing benefit bill will rise.

Why am I for the first time advocating direct action? I do so because this tax is so grossly unfair, and it is being levied on some of the most vulnerable people in our society. Wicked actions require a different response from us parliamentarians.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Good afternoon, Mr Benton. I congratulate the right hon. Member for Birkenhead (Mr Field) on securing a debate that is of considerable importance to his constituents. I entirely accept that the effect of this nationwide policy is different in different areas, and that a higher proportion of working-age households are affected in the north-west than in some other parts of the country.

[Mr Frank Field]

Will the Minister give way?

[Steve Webb]

I thought that that was fairly uncontentious, but I will give way.

[Mr Field]

While the Minister is washing his hands, can he tell us how many of his constituents will be affected?

[Steve Webb]

I am representing the Government rather than discussing my constituents, but clearly far fewer of mine are affected than the right hon. Gentleman’s, which is no great surprise to anyone.

The right hon. Gentleman’s speech was made in a vacuum, without mention of the fiscal context or how we treat other tenants. He used various lurid adjectives to describe the policy, as though it was some uniquely unfair concept that where benefits are paying someone’s rent, the level of benefits should have regard to the size of the household. He suggested that this is some unprecedented, evil thing, the like of which he has never come across in 30 years in Parliament—except that he was a Minister in my Department and, intermittently, a supporter of the previous Government, who introduced the local housing alliance. As I am sure he knows, with that allowance we say to private sector tenants on housing benefit that, broadly speaking, the rents we pay will reflect household size: generally, if not universally, someone can have private rent up to, now, the 30th percentile of rents for a household of the size it is. For some years, therefore, we have said to 1 million LHA private sector tenants, “We won’t pay benefit for an extra bedroom. If you want one, that’s fine, but you pay for it.”

If that policy is fair and appropriate for private sector tenants, why is it squalid, evil and unprecedented for social tenants? Surely consistency and fairness—a word the right hon. Gentleman used—mean that we should treat people the same way, whether they are private sector or social tenants. One might argue, indeed, that social tenants generally have the advantage of a subsidised rent, which private sector tenants do not have, and we treat private sector tenants unfairly in the sense that we do not give them an extra bedroom.

[Mr Field]

The Minister knows perfectly well that the local housing allowance level we set was above the average amount for those in social housing, so there is still a real difference in the rent levels for what someone can command in the private sector compared with the public sector.

[Steve Webb]

The right hon. Gentleman reinforces my point: people in the private sector were having to pay higher rents than those in the social sector, and they could not have a spare bedroom.

[Mr Field]

No, taxpayers were required to pay higher rents.

[Steve Webb]

People in the social rented sector still benefit from subsidised rents and, potentially, spare bedrooms. The figure used by the right hon. Gentleman was of more than 800,000 spare bedrooms in households where the rent is paid for by housing benefits.

To give a sense of scale, we are asking a household with one spare bedroom to contribute £2 a day on average for having the spare bedroom. I do not belittle the financial pressures that many households are under, because it would be entirely wrong of me to do so, but we know from experience of the private rented sector that some households will decide that, notwithstanding the financial pressures on them, £2 a day for the advantage of that extra bedroom is a price that they will pay. There will also be many other responses. The right hon. Gentleman mentioned taking in lodgers, and some housing associations and local authorities have given their tenants advice on how to do that. It is good use of a spare room, because it provides accommodation to someone, such as a young single person perhaps, as well as extra income to the household, and deals with the problem.

There will be some movement in the social rented sector. In the right hon. Gentleman’s area, 20 housing associations and local authorities have come together to form Propertypool Plus, doing exactly what they should be doing, which is pooling their stock and giving a much greater chance of having something to suit a particular family than an individual housing association would have. If we facilitate someone moving from under-occupied accommodation into a house that fits, someone else who is living in overcrowded accommodation can also move to a house that fits, which seems to be an entirely good thing, although the latter person’s voice was silent in the speech of the right hon. Gentleman.

I looked at the Wirral housing strategy for 2011 to 2026, and the council has realised that under-occupation is an issue. Before we invented our policy, the local authority stated:

“Research has identified that there are a number of people who are under occupying their home, regardless of tenure,”

going on to say that

“the Council will seek to help people by offering a range of services”

to help them live in more appropriate accommodation. There is therefore recognition in Wirral of a mismatch between the homes people are living in and the homes that they might need, perhaps particularly in the case of older people, although I stress that pensioners are exempt from our policy.

Creative things are being done in the right hon. Gentleman’s part of the world. For example, Wirral metropolitan borough council has obtained £2 million of Homes and Communities Agency funding to work on empty properties and plans to bring 765 empty properties back into use over a three-year period. He is right to say that supply is a crucial part of the story. We want to ensure that the supply is there for people, but that will not happen overnight. We also know that initiatives to deal with under-occupation have not really worked. Simply saying, “Would you like to move to somewhere smaller?” when there is no reason for anyone to do so, has not worked, and we have to regard the spare bedrooms in social housing in this country as a precious resource, because there is not enough housing.

The right hon. Gentleman colourfully described bricking up spare bedrooms, but I can save the landlords he is seeking to send down that track the trouble. If, for example, they want to designate a property with one bedroom occupied and a spare bedroom as a one-bedroom property, they can do so. They do not need to brick anything up or knock any walls down; they can simply designate it as a one-bedroom property. They will take the lower rent, but the tenant is not under-occupying. The reduction in the spare-room subsidy would not apply because there is not a spare room; it is the landlord who takes the financial hit in that situation. Knowsley local authority has, on occasion, followed such a policy. If landlords decide that that is the best solution, we have no problem with that. Obviously, we get the saving, because we are only paying the rent for a one-bedroom property and not a two-bedroom property, so if local authorities and other landlords can bear the financial impact, that might be a part of the mix. I do not think that many will be able to do so, but questions of bricking up rooms do not arise.

I have come across cases in which housing associations have designated a box room as a second bedroom and they have been gaily claiming the rent on a two-bedroom property. Then this measure comes in and it is quickly apparent that it is not really a bedroom; it is just a box room. Part of the answer is for landlords to be honest about the nature of their properties and say whether there really is a spare bedroom that someone could sleep in. They should then designate the property accordingly.

The right hon. Gentleman mentioned fairness. I have referred to fairness between social and private tenants, but what about fairness between overcrowded households, households on the waiting list and those who are in under-occupation? In Wirral, there are 21,280 households on the waiting list for a home. Where is their voice in this debate? I may be wrong, but I do not think the right hon. Gentleman mentioned the people on the waiting list or the people who are overcrowded. Fairness is surely about them as well as the people already in occupation.

We recognise that there are some people who should not be affected by this measure. That is why, for example, we have exempted pensioners. People living in their lifetime home, who have retired and have no prospect of working again, are exempt. We have also taken the view that local authorities need money to deal with what one might loosely call hard cases. In Wirral, in the year that is coming to an end—2012-13—roughly £500,000 of discretionary housing payments were available; next year it will be not far short of £1 million. For individuals whom it would be wrong or inhumane to expect to move, money is there to make up the shortfall. Nearly £1 million in that local authority and about £150 million nationwide is a huge sum of money, provided to make sure that where the room is not really spare and where it would be inappropriate to expect someone to move out or put someone else in the room, local authorities have got the resource to respond appropriately.

It is vital that local authorities spend the money, yet we have come across cases of local authorities underspending their discretionary housing payments. Hon. Members berate the Government and say how terrible the policy is, but their local authority is sitting on cash that it has not spent to help people who have a shortfall in their housing benefit.

[Mr Field]

Could the Minister give us examples of authorities that underspend?

[Steve Webb]

My understanding is that the right hon. Gentleman’s own local authority had a discretionary housing payment contribution of £464,000 for the current year, but has a carryover that takes it up to £522,000. I am happy to write to him with figures for the country. That is not a one-off example. It is surprisingly common. I have spoken to local authority leaders in the past few weeks who have said, “We are not spending the money we have got.” We and they need to make sure that the money that is specifically there for hardship is actually spent.

[Mr Field]

The carryover for Wirral is quite modest. One of the reasons for that is that the Government give an annual grant that has to be spent over 12 months, and the local authority is not sure how many will present themselves in the twelfth month.

[Steve Webb]

We expect local authorities to budget, but of course this measure comes into effect on a single day, and good landlords and good local authorities have already been looking at the existing stock of people. It is by definition a stock of people that does not turn over very much, so it is pretty predictable. My plea to local authorities is to use the money that we have given them.

We have given local authorities discretionary money, initially with two groups in mind. The first is people whose houses have been substantially adapted for disability. We accept that if there is a spare bedroom in a house that has been completely redone to reflect wheelchair access or whatever, it is not cost-effective, sensible or humane to say, “You’ve got to move,” and then either the public purse has to pay for another property to be done up or the people have to live somewhere inappropriate. We estimate that, nationwide, roughly £25 million of the potential saving from the measure would be related to properties of that sort. Our initial plan was to try to define that centrally in regulations: what is a substantially adapted property? We then took the view that it is better left to local discretion, so we made the money available locally.

We did the same for foster families who have a spare room because they are between foster children. Most people would accept that foster parents need to have a spare room. Initially, we thought that we would support that through £5 million of discretionary payments, but the message we got back was that foster families wanted to have a right to a room and not to be reliant on a discretionary payment from the council. We have now passed regulations, which will come into force next month, that give foster families the right to a spare bedroom, subject to certain constraints. We have also recently made it clear that where, for example, a child with a disability or health condition cannot sleep in the same bedroom as a sibling, the family can go to the local authority, which, having satisfied itself that it is a valid claim, can allocate an extra bedroom.

I stress that the measure is not a crude one-size-fits-all cut. We have to save money. The right hon. Gentleman knows that we have to save money and that housing benefit is one of the biggest working age benefits that we have. He knows that two thirds of the housing benefit bill is for social tenants and that we have already cut back on the housing benefit bill for private tenants. In the context of needing to save money on social tenants’ housing benefit bill, not paying for spare bedrooms seems to be a place where we can find savings, subject to the crucial proviso that we protect the most vulnerable.

We have protected the most vulnerable through discretionary housing payments. Of course, although local authorities can use such payments for substantially adapted properties, the clue is in the title: they are “discretionary” payments. Local authorities have the payments for this purpose and for other changes. They have core discretionary housing payments that they had anyway, before any of the measures came in. Local authorities have that pot of money, which is of course not limitless and does not cover everybody, but at least it gives them the flexibility to respond to people as they come to them. The crucial thing for anybody listening to our proceedings who is concerned about the impact of the measure is that if people genuinely need the additional room, and if the options that some would take up, such as swapping, taking in a lodger or working extra hours, are not options for them, they should approach the local authority.

The right hon. Gentleman said that if people move into the private sector, it will cost money, but that is a very static way of looking at things. When somebody moves out of the social sector and into the private sector, a social sector property will be freed up that someone perhaps paying a high rent in the private sector will move into. It is not self-evident that in cases where someone moves from the social sector to the private sector, it costs money overall. Yes, we are trying to save money, and half a billion pounds will be saved by the measure, but let me set that in context: in the final year of the previous Labour Government, we were trying to fill a hole not of half a billion pounds, but of £150 billion a year. The right hon. Gentleman objects to the measure, but it illustrates the scale of the task we have been faced with. Even a measure such as this, which has been controversial and difficult, saves only half a billion pounds, and we have had to take many more such decisions to deal with the fiscal deficit.

Good things are going on in local authority areas such as that of the right hon. Gentleman. I welcome the fact that housing associations and councils are pooling their stock to enable people to exchange. My local housing association and others have had what they call “speed-dating” events—I am not being flippant; that is what they call them. They try to bring together people from among their tenants, some of whom have a spare room and some of whom are desperate for a family home. I think of a constituent of mine who contacted me after receiving a letter about this. She said, “I am living on my own in a three-bedroom house. What are my options? Actually, could my brother and sister-in-law move in?” I said, “Absolutely. Talk to the landlord.” That was an ideal outcome: it meant that the housing stock was better used and someone else had suitable housing.

To summarise, the way in which people respond to the measure will be individual and varied. Some will be able to exchange with someone else. Some will stay where they are, regarding £2 a day, on average, as worth paying for that spare bedroom. Some will fill the spare bedroom with a lodger. As the right hon. Gentleman colourfully suggests, some landlords will redesignate properties, so that in effect there is not a spare bedroom, and the landlord will take the cost. Some people will go to the local authority, and we have put money into the pockets of local authorities such as his—nearly £1 million in the Wirral—so that the most vulnerable people can go to their local authority and make their case and be heard.

Again, I urge the local authorities to spend the money that they have been given to help people, because we have sought to protect the most vulnerable. We have sought to protect families with disabled children, fosterers, and people with service personnel living at home. We have given local authorities the ability to respond on a case-by-case basis. None of these decisions is easy, but they are necessary decisions that we have sought to mitigate where possible. We are trying to bring about a beneficial effect: to make better use of scarce social housing stock and to create fairness between private and social tenants, which, I have to say, in the past, we have not had.

Question put and agreed to.

Jobseekers (Back to Work Schemes) Bill

Lord Field of Birkenhead Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

I would like to congratulate the Government on their incompetence with the Bill. I would like to say that these are measures that a future Labour Government would support, but differently. We would have a human face to our approach, unlike this Administration.

First, let me deal with the point about incompetence. These are fairly simple regulations compared with what the Secretary of State is preparing for the nation with his universal credit. If the Department cannot get these regulations right, what hope for universal credit?

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

I am listening to what the right hon. Gentleman has to say, but it sounds a little rich coming from him. From his time in government, he and others well know that sometimes the view of judges is very different from a lot of other legal advice. The reality is that by saying that this is incompetence he must be claiming that his own Government were deeply incompetent throughout their time in office.

[Mr Field]

Well, if that is true, this Government have learnt nothing from our experience, so it is doubly worrying. Universal credit, which the Government are going to deliver, is an immensely complicated reform and if they feel that— [Interruption.] The Secretary of State says not true. Should the day ever arrive when universal credit began to be delivered, we would all be in a position to judge. However, these are arguments for another day. Let us congratulate the Government on their incompetence and their need to come here and seek out support to rectify the errors made in the Department.

The second issue is important. We are dealing with an attitude of mind whereby there is a feeling that, even without ever making a contribution, a person has a right to benefits and to a pension from other taxpayers. That attitude is now deeply ingrained in our culture, and the Secretary of State’s welfare reforms and universal credit will encourage it. Under his scheme, more people will think they have a right to benefits than do now. Many of us, even those in areas with high unemployment, know that there are people, particularly young people, who feel that unless they will be offered jobs at three times their benefit level, it is not in their interest to work. That is why it is so important to change—[Interruption.] The Secretary of State is making faces, but I am trying to support him in the case that he is making.

We are trying to move from unconditional welfare to welfare that attaches conditions to drawing benefits. The last Government started those important reforms, and we continue to support them. The big divide has been between a welfare state based on contributions, in which people are eligible for benefit only if they have paid the requisite number of contributions, and one in which people think that they should get benefits because they are citizens. The Secretary of State may continue his conversation, but he knows full well that as he tries to limit the entry of Bulgarians and Romanians into our welfare system, the weakness of his hand is that they will be able to claim benefit here, because large numbers of other people do, and we will be discriminating unless we give them benefit on the same terms.

The lesson that I hope we will draw is that the Opposition will go into the election with a clear mandate to move from a means-tested welfare system, in which people think that they have a right to benefits, to one in which people gain entrance to welfare because they have paid contributions. The difference is in job offers and job guarantees. The most crucial welfare reform that the last Labour Government made was the future jobs fund, which was destroyed by this Government when they came into office. If we are to build up a medley of worthwhile alternatives for people who cannot find jobs, we the Opposition and the Government must play some part in creating those opportunities.

There is debate on both sides of the House about the best routes back to full employment, but no certainty about what they are. In the immediate future, therefore, we will have to rely on an even more severely tightened future jobs fund than the Labour Government did. We know from our constituencies that the real test of whether people want to work is to have jobs to offer them. Without those, we are in difficulties. That is not to say that we would not sanction without them. London, for example, has the second highest youth unemployment, but in 10 years of Labour government, 1 million immigrants came to London to work. There is clearly some problem in people’s thinking about what is suitable for them to do versus what is suitable for immigrants.

In my short contribution, first, I congratulate the Government on their incompetence and on having to rely on the House to rescue them from it. Secondly, like them, we are moving away from an unconditional welfare state to one that attaches conditions, but unlike them, we believe firmly that they need to engage actively in trying to build up something like the future jobs fund, so our constituents are offered real opportunities to work. I hope that those of us who have Labour authorities or even decent Tory or Liberal authorities, despite their current budget difficulties, will seek to implement that approach so that over the years, we will be able to offer more people proper, dignified alternatives to sitting on their backsides on the dole.

Romanians and Bulgarians (Benefits)

Lord Field of Birkenhead Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on what actions the Government are planning to restrict welfare to newcomers from Bulgaria and Romania from 1 January next year.

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

May I congratulate the right hon. Gentleman on getting his urgent question on the second time of trying? He is a model of persistence and I, of course, was over the moon about his persistence.

The right hon. Gentleman has raised an important question and I want to deal with some aspects of it. First, however, I will set the scene as to what we are trying to deal with. I understand that Labour Front Benchers now admit that they fundamentally got it wrong on immigration, but the scope to which they got it wrong is why we have this issue. Between 1997 and 2010, net migration to the UK was some 2.2 million people—larger than the city of Birmingham. Interestingly, from 2004 to 2010, 1.1 million European economic area nationals registered to work in the UK. After the prediction of what was likely to happen, the scope of the problem is far greater than anything the Labour party wanted to tell the public. Most of all, I congratulate my right hon. Friend the Home Secretary and her team in the coalition for having begun the process of reducing net migration to Britain for the first time in a long time.

For the benefit of the House and in line with the right hon. Gentleman’s request—I know he particularly wanted me to answer that bit first, so having dealt with it I will get on with the rest of my answer—let me explain the current arrangement. A lot of nonsense is talked about what we are and are not capable of. First, people must pass the habitual residence test, introduced by the previous Government, before being entitled to claim income-related benefits. The current system was put in place in 2004 and has basically two elements—a legal right to reside and an assessment of factual evidence of habitual residence. As we know, EU citizens have the right to live in another member state as long as they are a qualified person, which basically means a worker, self-employed person, jobseeker, self-sufficient person or student. Tax credits have, I am afraid, been open to abuse outside that system from day one because the rules allow anybody from within the European economic area to claim self-employed status and receive full entitlement immediately. The Government are trying to wrestle with that problem, and I will return to it.

We are currently facing—not for the first time—a legal challenge from the European Commission because our habitual residence test states that people must prove they live in the UK habitually before they get access to benefits. It seems strange to me that anyone should be surprised that a habitual residence test requires that a person should live in the UK habitually, but we sometimes live in that George Orwellian political language world, which the Commission seems to foster with great alacrity.

Secondly, on exportability, under the EU co-ordination rules, benefits under the main categories of social security are exportable—that is, payable elsewhere in the European economic area. So that we clear up the confusion, let me say that that includes, notably, child benefit, for example, and has for a while. We therefore pay child benefit to children who live in other EU states when their parents are working here. That causes a lot of concern, and quite legitimately so. When both parents work but in different countries, the EU rules apparently determine who has primary responsibility for paying, but any difference in entitlement is netted off. So, for example, if someone comes from Poland and works over here, the child support that we pay here is netted out against what they might have received had they been paid in Poland, and the net amount is therefore paid across. That is the existing rule. The UK system is obviously more generous, and that is why it pays people in a sense to be here, getting those benefits.

I recognise there are some real issues here. We are in the midst of looking at those issues with other countries as well, and I want to mention which ones are on the schedule. The Government are concerned that, although some protections are in place, they are not enough. That is particularly worrying given the issue, which the right hon. Gentleman raises, of 1 January 2014. So we are trying to look carefully at where the system is falling down at the moment, and I am exploring a series of options. Today, for example, I have called for another meeting of a series of European nations that share our concerns. Some people might have noticed today that Germany has woken up at last to the reality that it might face a large net migration. We are due to meet its representatives and others from around the EU to try to ensure that we deal with this. I do not believe that it is acceptable that we go on with it—I have told the European Commission that—and we will resist it.

[Mr Duncan Smith]

I am answering the question. To be frank, the real question for the hon. Gentleman is why he sat with a Government who, for over 10 years, made such a shambles and a mess of this.

The reality is that we are trying, for example, to figure out the rules that allow us to prevent individuals from staying in the UK for only a short time before claiming benefits—a rule that existed under the last Government. We are looking at the tests about accommodation and the length of time people spend here. We want to look at things such the leasing arrangements they have for their housing and over what length of time, and even at challenging the narrow and short-term definition of “habitual” used by the European Court of Justice. In other words, we are trying to lock people out from coming here solely for the purpose of claiming benefits.

I have to tell Opposition Members, who were making a noise just a second ago, that one of the big problems is that the last Government did not collect any data on how many migrants actually claimed benefits here. We have changed that. We are now totalling up who is here and who will claim benefits, and we will be on top of those figures.

In conclusion—I know the right hon. Member for Birkenhead (Mr Field) wants to ask some further questions—there are a number of things we need to do. We need to tighten up immediately the rules about habitual residency. We need to tighten up the rules about accommodation and the leasing length of time. We need to tighten up and start the process of arguing hugely with the Commission that it is quite wrong to net out things such as child benefit and pay the higher level to people whose families do not even come with them into the country to work. Finally, many nations in Europe are just as angry as we are about this, and we have been meeting them since last summer and reaching a common purpose to deal with the Commission and force it to recognise that any further changes it wants to make, including by taking us to court over the British residency rules, are not acceptable. We will tighten up. I refuse to accept the Commission’s rules. I will not give way on the habitual residency test, and we will tighten up on net migration.

[Mr Field]

May I thank the Secretary of State for his answers, but might I now try to pin him down on four issues? Does he accept that, if the word “crisis” is used, it is a crisis that successive Governments have engendered by moving welfare from the basis that people had to make contributions to receive benefits to one where they receive them if their income proves needs? Is not his universal credit just one more move in that direction? When will the House know what further restrictions will be placed on universal credit to prevent it from being claimed immediately by people who arrive in this country? Does he not accept that the current situation—basically, a means-tested welfare state—is inconsistent with our European Union treaty obligations and is against the Prime Minister’s wish that we should be open for trade but not an easy touch? Are the Government now going to rescind the directions issued by primary care commissioning groups as Parliament rose for the summer last year, which instructed doctors that they had to take people on to their books if they had been here for 24 hours, including people here illegally? When will the Government act on that?

Will the Government use the powers they do have to instruct authorities that in allocating social housing, they must pay due attention to the length of time people have been waiting and to their good behaviour; and that they have a duty to publish data—on which the Government will insist—on whether social housing is being allocated to non-British citizens?

Finally, given that there are already 150,000 Romanians and Bulgarians here legally, and that they are arriving here at a rate of 25,000 a month, does he not accept that the answer he has just given us will prove ineffective against the movement that might well come after 1 January 2014? Will he therefore tell the House when he expects to report on what measures the Government will take? Will he ask for a whole day’s debate, so that the House can improve them before we rise for this summer’s recess?

[Mr Duncan Smith]

I have known the right hon. Gentleman for a considerable time and have huge respect for him that goes beyond party affiliation. I will deal with those four points, but I want to deal with a point he made right at the end.

I absolutely agree with the right hon. Gentleman that this is something of a crisis. For the past two years, I have been fighting a rearguard action against what was left to me by the previous Government. [Interruption.] Opposition Members can moan, but let us put the facts as they are: I inherited a habitual residency test that simply is not fit for purpose. We are trying to tighten that up dramatically and I am being infracted by the European Union for doing so. Before Opposition Members start lecturing us, let us remember what they left. The right hon. Gentleman is, however, absolutely right—I am with him on this—to describe this as a crisis.

The right hon. Gentleman made an important point about the contributory issue on welfare. Tax credits took things faster in that direction, which is why self-employed people coming in to the country are immediately able to claim tax credits even if they are doing only a little bit of work—we talked about The Big Issue sellers and so on. That is one area we have to look at in relation to universal credit, but I take the opposite view from him. Universal credit gives us an opportunity to redefine the nature of that benefit by absorbing the tax credit issue, taking away the right of individuals coming in from overseas to claim on that basis, and redefining it as something much more in line with our obligations, while being able to lock out many migrants who would come and claim immediately. I am happy to discuss that with him further, but I believe we will be able to make that move, which I am looking at at the moment.

The right hon. Gentleman is right to say that GPs and the health service often overstate their responsibilities to migrants. I talked to the Secretary of State for Health about this issue about a week ago, and he is looking carefully at issuing clear instructions that they do not have to do this. It is my view and belief that that is the case, and it is about making it clear that they do not feel they will be challenged. It is a little like health and safety rules—people over-interpret the situation. In fact, things are never as tough as that, and we need to provide strong guidance.

The right hon. Gentleman is also right about being clear to local government. I am working with the Secretary of State for Communities and Local Government to ensure that we publish and are clear about the number of people from overseas who are taking social housing ahead of those who have waited a long time in the queue. This is part of what we are trying to change—I agree and I will do that.

I am very happy to meet the right hon. Gentleman and to work with any colleague, from either side of the House, to make common purpose to tighten up our arrangements so that we do not have a problem when 1 January 2014 arrives. However, a little humility is required from Opposition Front Benchers in recognising that they signed the accession treaty that left us with this problem. It was they who created the habitual residency test that left the door open, and I wish they would apologise and work with us, rather than complain the whole time.

Welfare Benefits Up-rating Bill

Lord Field of Birkenhead Excerpts

Monday 21st January 2013 Commons Chamber

[Kwasi Kwarteng]

That is absolutely right.

I shall try to keep my closing remarks brief. The 1% rise in the uprating is surely a temporary measure; I would not want to see this in perpetuity. My right hon. Friend the Member for Wokingham talked about the need to combat inflation. Clearly if inflation is sustained at 3% or 4% over years, that would be very punitive and would make the proposed measures even more difficult for people to bear. So the Government need to keep a firm handle and an eagle eye on the inflation rate. I am absolutely in favour of that, but on the general approach I would not want to see any amendments to this Bill. It is a difficult proposal that we are trying to push through, but many people up and down the country are supporting the Government on it because they feel that the measures we are introducing are encouraging people to get out to work. People also realise—I will close where I started my speech—the appalling fiscal legacy given to us, the incredibly difficult financial circumstances in which the Government found themselves, and the tough and courageous measures we are taking to get us out of the mess.

[Mr Frank Field (Birkenhead) (Lab)]

I rise to support the amendment because it is very clear: it seeks to tear the heart out of this Bill, and it should tear the heart out of the Bill, because it is a terrible Bill. By taking this stance, I am not saying that we should not, with all urgency, think about welfare reform, because that is a mega task which will face a succession of Governments. I am not saying that we do not recognise that there is a real problem in this country with incentives to work, because there is. I am not saying that there are not all sorts of other issues that we need to deal with and consider in relation to this measure. We have to consider what this measure is actually about.

I agree totally with the Government Members who said how serious the fiscal deficit is. I do not doubt that when Labour breaks the trend and has to clear up a mess—we have been hearing this afternoon about Tories clearing up our mess—we might well have to look at the size of the welfare bill. However, I do not believe that any Labour Government would get cuts through without presenting them in a context in which the cuts were thought to be fair. That goes to the heart of the current Government’s strategy. Despite the rhetoric in which they have tried to clothe themselves in respect of the changes they have been making, the country will have to make a judgment in the election on whether the Government have fulfilled the assurance they gave at the beginning of this journey that who had most would pay most and those who had least would be protected. It is no accident that we link the amendments being debated tonight with the tax cuts in the Budget for those who have most.

We will not have to face this issue tonight because, sadly, we know how the vote is likely to go, despite the presence of some brave Liberals—I hope that my saying that encourages even more to vote, knowing that it is safe to register their protest. In the end, it is those outside this House who will judge whether this measure is fair. Is it fair that, at time when we can find moneys to make tax cuts for the very richest, we cut living standards for the very poorest?

[Kwasi Kwarteng]

Will the right hon. Gentleman give way?

[Mr Field]

No, I am going to make a short speech. I am grateful for the hon. Gentleman’s interest and the way he is following my speech, but I do not want to extend it.

The country will make a judgment about how fair the collection of measures is. I think the Government must be extremely confident, given that we are seeing a record number of people who are hungry and are turning up at food banks operating in our constituencies. Thank God for food banks. I do not hold the view that food banks are terrible; it is great that we have them, because people are hungry. I think it is terrible that we live in society where people are hungry. That is where we should direct the anger; it should not be aimed at the people providing the food banks. We are thinking about cutting benefits at a time when we also know that people who probably have greater abilities than I do in managing on a low income—thank God, I have never had to do so—find that they fail. The Bill will crush some decent people, who find it impossible to live on the levels of income that we lay down.

That we should do this at a time when we can find the money for the richest to take more passes all my understanding. Perhaps the Opposition will lose the vote tonight, but I am not so sure that, on this argument, an indelible mark will not now be made against the coalition Government, who found money to cut taxes for the very rich while making life more and more difficult for the poor, some of whom do not have enough to eat. Should more people join that terrible queue of our fellow citizens? Lots of other arguments have been marvellously put, but for me it comes down, as I guess it will for the electorate, to whether this is fair. I think that they will say no.

[Several hon. Members]

rose—

State Pension Reform

Lord Field of Birkenhead Excerpts

Monday 14th January 2013 Commons Chamber

[Steve Webb]

The current position is that we are obliged by law to uprate by at least earnings, and our policy is to go further and have the triple lock, as is mirrored in the White Paper. The legal position in the draft Bill will be at least for earnings uprating, but all our illustrative estimates in the White Paper are indeed based on the triple lock.

[Mr Frank Field (Birkenhead) (Lab)]

I congratulate the pensions Minister and the Secretary of State on delivering the White Paper against the restriction the Treasury imposed on them—that the reform be delivered at no extra cost. So that the House and the country can understand how successful they have been in driving a coach and horses through the restriction, might the Minister tell us the largest increase in contribution that any worker will face under his scheme?

[Steve Webb]

I enjoyed the right hon. Gentleman’s column in The Guardian today. He imagined that we would make this pension reform work by not making it contributory, but I hope that I have clarified for him that people will still need 35 years of contributions or credits to draw the pension. The straight answer to his question is that the rebate is 1.4% and applies to a band of earnings from the lower earnings limit of about £5,500 to the upper earnings limit of about £40,000. It is 1.4% of that band.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 10th December 2012 Commons Chamber

[Steve Webb]

Through the creation of the National Employment Savings Trust we have ensured that there is a benchmark of low-cost, high-quality pension provision, which is driving down costs across the market. We need to go further and we are looking at whether the role of NEST can be expanded. We are also driving through transparency on charges, so that firms and employees can see what they are paying for and can pay less over time.

[Mr Frank Field (Birkenhead) (Lab)]

Would not one good test of who is on the side of the shirkers or the strivers be a state pension that guaranteed that people were taken off the means test, so it would be safe to save through companies? Will the pensions Minister give us a date for when we will see the White Paper?

[Steve Webb]

The right hon. Gentleman will have heard the Chancellor only last Thursday reaffirm our commitment to state pension reform, and to do exactly that—to ensure that people who work hard and save hard are clear of means testing. The White Paper is at an advanced stage.

Universal Credit and Welfare Reform

Lord Field of Birkenhead Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

I want to touch on three themes. First, the importance of this debate goes beyond universal credit, because it is the big test of whether an approach to welfare reform that has been increasingly based on means-testing is the correct strategy for us to follow. Secondly, I want to explain why I fear that this will be a disaster despite all the comforting words that we have heard. Thirdly, I want to suggest to my right hon. and hon. Friends that if that is the view that emerges in the country, we will need an alternative to strategies of the kind that we have been deploying for the past 50 or more years.

First, I have nothing but praise for the Secretary of State for how he has engaged with the debate. He has accomplished an extraordinary feat by getting into a new area, mastering it and introducing his own proposals; but the fact that he is so exceptional in that sense does not necessarily mean that his proposals will work or are desirable. Means tests rot the souls of individuals. We have heard lots of talk about how important this is and how people will be better off in work than out of work, but even if someone is a saint, means tests will corrupt them.

Let us assume that someone who wants to work is in the very small group of people whom we are paying more than 90%, which will be reduced to 65%. Under this reform, the number of people who will pay higher marginal tax rates will be higher than that under the previous proposal. What is being clawed back makes people question whether it would be worth taking on overtime, an extra job or getting qualifications. If those on the Treasury Bench think that the rich in this country will not get off their backsides and work harder if we tax them at 50% and that we therefore need to reduce the rate to 45%, why do they think that that stick of making people marginally better off will work for the poor?

There are two groups of people: those who are in work wondering whether they would be better off, and the 1.45 million people—which is the figure that the hon. Member for Dover (Charlie Elphicke) kept coming up with—who have never worked. If those on the Treasury Bench think that tweaking the marginal rates of tax will get a large number of those who have turned down jobs actually to work, they have another think coming. That is not to say that there are not huge armies of people who wish to work and who would jump at any job, but we delude ourselves and misrepresent our constituents if we believe that the whole body of people who are registered as having never worked since they left school are eager to get a job. They are not and they will certainly not be affected by universal credit.

My second point is on how the atmosphere has changed. For Third Reading of the Welfare Reform Bill, the Government Benches were full and Government Members were baying at us. Their tails were up and they were confident about the reform, but look at them now—they are going to run out of speakers unless the Whips get more into the Chamber. By contrast, a galaxy of Opposition Members want to contribute. [Interruption.] The seven-minute rule has been applied purely and simply because we will not otherwise fit in all the Opposition Members who wish to speak. The atmosphere is changing. The Secretary of State will not have seen how glum his supporters looked when he was making his contribution. It is a totally different situation from that during Second and Third Readings of the Bill. What some of us forecast is coming home to Government Members.

Let us put to one side all the IT schemes that we failed with and look at when we tinkered with tax credits back in 2005. That scheme was much narrower in scope than this one. The then Prime Minister had to come to the House to apologise for the chaos that we managed to create. Nearly 2 million people were being overpaid and there was little chance of getting the money back from them, and 750,000 people were being underpaid. The lessons for making the proposed changes, even if they are made in stages, are difficult. Although I wish the Government well, I doubt whether they will be that much better than we were when we implemented a reform that was far less ambitious than their scheme.

The disaster will not only come from the IT. Why the secrecy? Why has not the pilot on the operation of the scheme been released to the Department for Work and Pensions? The Secretary of State says that a member of the team is now in the Department, but I can tell him that, even if someone is a Minister in a Department, it is possible for people to make sure that departmental information cannot be accessed, never mind information that is shared by Departments. Why the secrecy over that? Why have the senior civil servants on this project been lost? Why cannot Opposition Members get more information about the real-time working? The crucial point is not whether Sainsbury’s or Marks and Spencer can fit into that—of course they will be able to. The problem is with the vast majority of employers from whom the Revenue already has difficulties getting an annual return, let alone a monthly return or an even more frequent one.

Perhaps understandably, the Government are secretive over their risk register. I hope that the National Audit Office will be more effective than Parliament has been in looking at that, so that we can be more aware of what the risks are and of how the Government have tried, or not tried, to counter them.

I do not have time to get on to my third theme. I will seek another occasion to discuss it. It is all very well for us to criticise what we fear is going to happen. Come the election, I hope that there will be an alternative proposal, based on real wage rates.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Will the right hon. Gentleman give way?

[Mr Field]

I will give way, because then I can have an extra minute.

[Mr Stuart]

I was intervening to be helpful, because the right hon. Gentleman is making such interesting points, on which I hope he will expand.

--- Later in debate ---

[Mr Field]

The alternative to the means-testing strategy that we have pursued with ever greater vigour over the past 50 years is to look at the distribution of incomes of people at work, to look at low wages and to ask how we can raise people’s real wages. Secondly, I believe that there must be a fundamental change in the welfare state from a means-tested system, in which we meet people’s needs, to the welfare state that was originally envisaged, in which people draw benefits because of the contributions that they make, either in work or in a wide sense to the community. I do not underestimate how fundamental that change would be, but when the system crashes, we will need an alternative.

I am immensely grateful to the Chairman of the Education Committee the hon. Member for Beverley and Holdeness (Mr Stuart) for allowing me the time to make that point.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

This has been a thoughtful debate which has covered a lot of important ground.

Let me begin by endorsing the concept of universal credit. It is a good idea to bring different benefits together. The last Government looked forward to a single working-age benefit, and the present Government are right to take that idea forward. It ought to make it possible to simplify the system, strengthen work incentives, and make those incentives clearer. It is in the task of translating those noble aspirations—which every Member in the Chamber has shared this afternoon—into reality that Ministers are struggling so badly. The Treasury is worried; the Prime Minister is worried, as we discovered from the reshuffle last week; and, as we have heard in the debate, people in the system are worried. The wheels are wobbling, and, as my right hon. Friend the Member for Birkenhead (Mr Field) pointed out, the public mood and, indeed, the mood on the Conservative Back Benches is becoming much chillier in regard to this initiative.

The first big thing that went wrong was the decision that the credit should not be universal after all. Council tax benefit, one of the most widely claimed benefits, has been left out. So we now face the prospect of a “not quite universal credit”. My right hon. Friend the Member for Southampton, Itchen (Mr Denham) rightly observed that that was not the fault of the Secretary of State, who wanted council tax benefit to be included. The Secretary of State for Communities and Local Government wanted it to be excluded, and unfortunately the Secretary of State for Communities and Local Government won. It is now becoming clear what a blunder that was.

As I mentioned earlier in an intervention, Welwyn and Hatfield district council is consulting on a 40% taper rate for council tax benefit, on top of the 65% taper rate for universal credit. If the council proceeds with that proposal, for every extra pound that people earn they will lose more than £1 of universal credit. That is precisely the kind of lunacy that universal credit was supposed to abolish. The idea was supposed to be that work should always pay. I think that that was supported by every Member who spoke today, and it was mentioned specifically by my hon. Friend the Member for West Dunbartonshire (Gemma Doyle). However, thanks to the success of the Secretary of State for Communities and Local Government in winning a row with the Secretary of State for Work and Pensions, it will not now happen. Every council in the country will have its own council tax benefit scheme and its own taper, so people’s work incentives will depend on their postcode. So much, sadly, for simplicity.

[Mr Frank Field]

Is my right hon. Friend not being too kind to Treasury Ministers? The moneys for the rebates will be limited, and it will be up to local authorities to meet existing need, let alone new need.

[Stephen Timms]

My right hon. Friend is absolutely right. The money is being cut by 10%, so councils must somehow come up with a scheme that will save 10% and will be introduced on a local basis. It will be chaotic. Many councils are saying that they will not be able to do it in time, and it will certainly mean that there will be no national taper that everyone can understand.

However, that is just the start of the problems. The project is not on schedule, despite what the Secretary of State said earlier. According to paragraph 21 on page 37 of his White Paper of November 2010, between October 2013 and April 2014

“All new claims for out-of-work support are treated as claims to Universal Credit. No new Jobseeker’s Allowance, Employment and Support Allowance, Income Support and Housing Benefit claims will be accepted.”

I believe that that is what my right hon. Friend the Member for Wentworth and Dearne (John Healey) was told. It is absolutely clear, but it is no longer true. A newsletter appeared on the Department for Work and Pensions website over the summer announcing that, in fact, that timetable will apply in only one Jobcentre Plus district per region. In all the other districts, the change will take place some time after October 2013 and by summer 2014. The timetable has slipped; it has been delayed from what was stated in the White Paper—I am delighted that the Secretary of State is back in his place. On the budget, to the end of the last financial year the project was due to spend £400 million. In fact, it spent £500 million. So it is already over budget, too.

I welcome what the Secretary of State said about online claims: he told us that the Department expects that at the beginning only about half of claims will be submitted online. That is a very significant change from what has been said until now in respect of the digital-by-default proposal. It would be helpful to know what will happen to the 50% who do not apply online. How will things work for them? When people have problems, who is going to help them? As my hon. Friends the Members for Denton and Reddish (Andrew Gwynne) and for Makerfield (Yvonne Fovargue) rightly pointed out, the introduction of universal credit will coincide with a drastic reduction in the availability of advice, just when people are supposed to be grappling with these new processes.

What about people’s documents? At the moment, people applying for housing benefit present their documents to the local authority. Where will they present them in future? Will people start turning up at jobcentres with their documents or will they be expected to post them somewhere—or will we no longer have the fraud checks that are currently built into the system?

This is supposed to be all about work incentives, but large numbers of people will find that their work incentives are worse. The Government apparently plan a simple income cut-off for free school meals. If people earn less than X, their children will be entitled to free school meals, but if they earn more than X, they will not. That is a disastrous new cliff edge—far worse than anything in the current system. It means that someone with three children who earns less than X will suddenly have to start paying out over £3,000 in school meal charges per year if their income increases above X by just a pound or two. That is a massive disincentive to people to increase their income.

We have been asking how Ministers are going to tackle this issue since March last year. We asked the Secretary of State when he would make up his mind when he gave evidence to the Welfare Reform Bill Committee. He said that

“during the Committee stage we should be in a much stronger position to make it much clearer how we will do that.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 155, Q299.]

Some 18 months have now passed, and today the Secretary of State told us he is talking to various people about it. All this is supposed to be in place within 12 months from now and Ministers still cannot tell us what they will do, but it does appear that that very damaging feature will be part of the system.

I have asked about the publication of the business case. I believe that Ministers will not publish it because it projects that there will be no increase at all in the total number of hours worked as a result of the introduction of universal credit. In other words, the whole basis on which this project is being taken forward is flawed. That is partly because of the situation for second earners, which has been mentioned. My right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) asked the Secretary of State what would happen to hours worked. He did not answer, and I think I have just explained the reason why. As my hon. Friend the Member for Stretford and Urmston (Kate Green) pointed out, second earners in a couple face sharply worse work incentives than in the current system. We are going back to an outdated male breadwinner model, where the second person in the couple is not expected to work.

As my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out, incentives for self-employment are terrible, too. Tax credits have encouraged self-employment, but, under universal credit, the DWP will assume after the first year that people are earning at least the minimum wage for every single hour they are working in self-employment.

--- Later in debate ---

[Steve Webb]

I am grateful to the hon. Gentleman for bringing me to the issue of work incentives. It was central to this debate, so let me address the point directly. Two separate work incentives have been muddled together in this debate, including, I regret, by the right hon. Member for Birkenhead (Mr Field). The first is the incentive to take a job and the second is the incentive for those in work to work more hours. My right hon. Friend the Secretary of State, in introducing this debate, identified the fact that universal credit significantly improves the incentive to take a job. That is fundamental in order to move from a situation where, as we have heard, millions of people are in workless households where nobody is working. Of course the incentives for the second earner are important, but those for the first earner are even more important. We make no apology for prioritising them; we want far more households to have someone in work, which is why we have structured this as we have. We are therefore putting £2.5 billion extra per year, at a time when we are having to save on welfare, into in-work benefits, thereby improving the return to work. It must be the case that if we are spending more on in-work benefits, we are improving the incentive to work.

[Mr Frank Field]

Either the hon. Gentleman misrepresents me or I did not make myself clear. I said that, crudely, we are talking about three groups. The first is those who are unemployed and desperate to get back to work. The idea about incentives does not occur to them, as work is part of their DNA. We do not need to have reforms for them; we need jobs for them. The second group is those who regard their benefit as a pension, and no marginal increase in income is going to get them back to work. The third group is those in work who are deciding whether they will work longer, whether they will work harder and whether they will get new jobs. Will a scheme that puts their marginal tax rate up, as this one does for many people, actually be a work inducement?

[Steve Webb]

Let me deal with that point directly. Under the current system, people who are below the tax and national insurance threshold and get tax credits and housing benefit lose 79p in the pound—that will fall to 65p. Under the current system, people who are above the tax and NI threshold and get tax credits and housing benefit lose 91p in the pound—that will fall to 76p. Under the new system, there will be almost no one who loses more than 80p in the pound, compared with 500,000 people who do so now. What is not to like about that? This is good news for work incentives.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 25th June 2012 Commons Chamber

[Steve Webb]

I do appreciate that point. It is often not well understood that pensioners coming down the track—tomorrow’s pensioners—are due to receive substantially higher pensions on average without our reform because the state system has been maturing. Our reforms are not doing that—it is in the system anyway—but our reforms do take the money and simplify so that today’s workers have a simpler system into which to retire.

[Mr Frank Field (Birkenhead) (Lab)]

Will the Minister give an undertaking that those coming down the track—[Interruption.] I am already there; I am one of those pensioners being discriminated against. Will he give an undertaking that those who would be entitled to a higher pension than his flat-rate pension would provide will get the entitlement that they have paid for and not his lower flat-rate pension?

[Steve Webb]

I can reassure the right hon. Gentleman that the next generation of pensioners will be well looked after and specifically that the starting point for our calculation will be what people have in the bank—that is to say, rights already accrued—and specifically, therefore, if people are heading for a pension of more than £140 at the point we change it and have got that in the bank, it will be respected.