Supported Housing: Benefit

Marcus Jones Excerpts

Wednesday 20th July 2016 Commons Chamber

[Grahame M. Morris]

I thank the hon. Gentleman for his intervention and for the courteous way in which he met the delegation from Mencap. As a basic principle, however, surely we should compile the evidence and assess it before making a decision, but the Government have made an announcement, and that has introduced uncertainty. That is why schemes have been cancelled and why housing providers are giving notice of their intention to close facilities. A basic principle needs to be applied. The amount of time that the review has taken—I think it is of the order of 19 months or so—is another issue. Does it really have to take that long to have an impact study on which the Government can base their policy?

I will make progress because a lot of right hon. and hon. Members want to take part and I do not want to stifle their contributions. In my opening remarks, I said that these cuts make no financial sense. I remind Ministers that the Government’s own Home and Communities Agency has found that supported housing provision has a net positive financial benefit of about £640 million for the UK taxpayer every year. Rather than cutting provision for supported housing, the Government should now expand and improve it. The National Housing Federation has calculated that there is a current shortfall of 15,640 supported housing placements, so there is already considerable pressure on the sector. I have mentioned some of the reasons for that. Local authorities, housing associations, charities and other providers in this sector really want to deliver the supported housing that the people of this country need, but delivering this ambition is virtually impossible because the Government have made the operating environment so uncertain.

Incredibly, in last year’s autumn statement, the then Chancellor introduced the cap on housing benefit to local housing allowance levels without the Government actually knowing what its impact would be. My right hon. Friend the Member for Wentworth and Dearne highlighted this point when he spoke at this Dispatch Box in January. Before the debate, he had asked Ministers for evidence about the impact of the decision. Specifically, if memory serves, he asked the Minister—

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

Not me.

[Grahame M. Morris]

Perhaps I am mistaken and it was one of the Minister’s colleagues.

My right hon. Friend asked how many elderly people, how many women fleeing from domestic violence, how many people with mental health problems and how many young people leaving care would be affected, but, incredibly, the then Minister for Housing and Planning was not able to provide an answer. If the Government do not know how many people in supported housing are in receipt of housing benefit, how can we expect them to make a decision? It is absolutely vital to have such information to hand to make an informed decision. Ministers did not know what a profound impact their decision would have on providers and on the people who depend on these services, and it seems that they still do not know, unless they are just not answering questions on this.

To be fair, Ministers did commission an evidence review, but that was back in January 2015. Even though the review had not reported on its findings at the time of the last autumn statement, the then Chancellor still ploughed on regardless. Six months ago, my right hon. Friend was assured that the review would be ready later this year. The Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones), teased us in the Adjournment debate last week by suggesting that the review would be published imminently.

Did Ministers know what the impact would be when the Chancellor included this decision in his autumn statement? They did not know what the impact of their decision would be—that is for sure—when the issue was debated in this House six months ago. That raises the question: what is happening, and when will we know?

When it comes to making policy, Ministers are old hands at making policy in an evidence-free zone. The use of evidence to develop policy seems to be an alien concept to the Government, but I would have thought it was in the natural order of things. This is something of a travesty. Although the Government’s evidence review seems to have ground to a halt, Ministers cannot claim to be completely ignorant. After all, the providers of supported housing have made their feelings known. I am sure that Ministers—even those in the new ministerial team—have met housing associations, charities and providers. We have met them regularly, and they have made their views absolutely plain.

I have mentioned the views of David Orr. He has said that housing

“providers across the country will be forced to close schemes.”

He has described the difference between supported housing and general needs social housing and explained why rents in supported housing are higher. He has pointed out that

“the uncertainty about the future approach is already leading to supported housing under development being delayed or cancelled because of the long lead times involved in investment and development.”

Compulsory Jobs Guarantee

Marcus Jones Excerpts

Wednesday 11th February 2015 Commons Chamber

[Stephen Timms]

I am glad to join my hon. Friend in congratulating Councillor Kieran Quinn and Tameside’s council on what they have achieved. We are seeing this idea being introduced by Labour councils. We heard earlier this afternoon about the Edinburgh guarantee, and these ideas are now taking their place around the country. We now need the Government to be putting a national guarantee in place.

Unemployment is now, at long last, back on the downward path that the Labour Government set it on in 2010, although, of course, its level is yet to return to the lows under Labour before the global financial crash.

[Mr Marcus Jones (Nuneaton) (Con)]

Will the right hon. Gentleman give way?

[Stephen Timms]

I will in a moment, but I wish to make a little more progress first.

There are serious causes for concern in the labour market and much more needs to be done to build a recovery that works for everyone. Long-term unemployment remains much too high. The long period—three years—after the general election when there was almost no growth in the economy has left too many people locked out of employment and now left behind even as overall employment is rising. The number of people claiming jobseeker’s allowance for more than two years is 224% of what it was in May 2010, and young people remain at high risk of unemployment. Strikingly, the relative position of young people has become steadily worse since 2010 The most recent figures show that the youth unemployment rate is almost three times the overall rate—it is 2.9 times that rate—and for the past three months, while overall unemployment has been falling, youth unemployment has been going up. The total is now back above three quarters of a million, and we just have to hope that that is not the new trend. Action needs to be taken now to make sure that it is not and that young people are able to share in the benefits of the recovery.

--- Later in debate ---

[Stephen Timms]

If the right hon. Gentleman looks at the previous paragraph, he will see that the evaluation said that half the cost of an intervention came back to the Exchequer within a three-year period and that the wholly inadequate replacement for it was the Work programme, which sends more people straight back to the jobcentre after two years than it places in sustained work. It also performs shockingly badly not just in Edinburgh, as we were hearing earlier on, but for those in need of support, such as older workers and people with health problems for whom it has so far recorded failure rates of 87% and 93% respectively. The Work programme has been a failure and we must replace it with something that works better.

On youth unemployment, the Deputy Prime Minister saw what was going on and had an attack of conscience. He announced the Youth Contract, which the Government promised would lead to 160,000 work subsidies for young jobseekers. It started in April 2012 and it was an utter flop. It was not promoted. That was undoubtedly because DWP Ministers, with the possible exception of the Minister for Pensions, did not have their heart in it. Employers knew nothing about it. Those who did hear of it were confused by it and had nothing to do with it. The Government’s own advisers on poverty and social mobility said that it was not working, so last summer it was unceremoniously shut down early, after it had achieved fewer than 10% of the promised placements that were budgeted for. Ever since then, unemployment among young people has been going up.

The latest proposal from the Government is time-limiting support for young people without giving them the opportunity to train, after which they will simply be required to do community service. That is not an employment policy, but a policy for punishing the victims of the negligence and ineffectiveness of this Government.

[Mr Marcus Jones]

For all the right hon. Gentleman’s bluster, does he not accept that youth unemployment has gone down under this Government? For all his criticism, does he not accept that youth unemployment under the Labour Government was steadily going up from 2004 to 2010? Labour does not have a good record.

[Stephen Timms]

Youth unemployment was affected by the worldwide economic crash. What is worrying—even the hon. Gentleman might, in the privacy of his own reflection, be worried about this—is that, at a time when overall unemployment is coming down, youth unemployment is going up. The rate of youth unemployment is nearly three times the overall rate of unemployment now, and that multiple has been going up progressively since the general election.

[Mr Jones]

My constituency is probably a good example of what is going on in the country, and its youth unemployment is down by 50% since the last general election.

[Stephen Timms]

The hon. Gentleman just needs to look at the figures published in January, which show that youth unemployment has been going up for the past three months. The figures that we saw last month cover the period from September to November.

--- Later in debate ---

[Mr Duncan Smith]

I do agree. I also remind my hon. Friend that my hon. Friend the Member for Nuneaton (Mr Jones) said that under the previous Government youth unemployment did not, as the right hon. Member for East Ham claimed, rise only because of the great global recession that somehow crept up on the previous Government, but was rising steadily from 2004 all the way through.

[Mr Marcus Jones]

Opposition Members often say that all the jobs being created are zero-hours contracts, as in the election literature they put through people’s doors. Can my right hon. Friend say what the prevalence is of zero-hours contracts in the workplace?

[Mr Duncan Smith]

I can tell my hon. Friend exactly—it is 2% of people and 4% of total contracts. Moreover, this Government are moving to get rid of the exclusivity that we think is an abuse in zero-hours contracts—something that Labour never did anything about when in office. The truth about zero-hours contracts, limited as they are, is that they give some people, such as many of those with caring responsibilities, the flexibility of picking work when they need it. We are closing down on the abuses, and they are reducing. By the way, the previous Government never did anything about that. I am reminded—I should have remembered—that the previous Government said they were perfectly at ease and happy with people getting filthy rich, so the point is that we should not expect too much from Labour Members.

Oral Answers to Questions

Marcus Jones Excerpts

Monday 26th January 2015 Commons Chamber

[Mr Marcus Jones (Nuneaton) (Con)]

Not all employers appreciate the social importance and value to the work force that employing disabled people can bring. What more are the Government doing to try to encourage employers to take on disabled people, and to help them into work?

[Mr Harper]

I think that our Disability Confident campaign has contributed to the fact that more than a quarter of a million extra disabled people have started work over the last year. I am also considering improvements that we can make to the Access to Work service, which plays an important role in helping people either to stay in work or to return to it.

Universal Credit

Marcus Jones Excerpts

Tuesday 25th November 2014 Commons Chamber

[Mr Duncan Smith]

That is exactly the point. On the first part of my hon. Friend’s question, the Opposition are in a kind of amnesia: they seem to forget that they crashed the economy in the biggest disaster it has ever had, with a fall of some 7% in GDP, and that many people lost their jobs. We have managed to get more people back to work and now have more people in work than ever before, with unemployment falling dramatically, youth unemployment falling and even more people with disabilities now going back to work. As it is rolled out, universal credit will deliver even more to those people—a better income, better support and a much simpler process that they can understand, rather than the chaotic system of tax credits that we have at the moment.

[Mr Marcus Jones (Nuneaton) (Con)]

Universal credit is a life-changing and positive policy. May I urge my right hon. Friend to take his time and make sure that we get this right? The impact of getting it wrong, as with tax credits, would be a complete disaster for many of the families whom I represent, and I hope he will not want to go down the path trodden by the Labour party.

[Mr Duncan Smith]

My hon. Friend is right. I set out to change the roll-out plan because I felt that we would just replicate all the problems of previous roll-outs, in which people tried to rush against an artificial deadline and ended up with a big crisis because they had not thought things through properly. The process of testing, learning and implementing is the way that I believe future programmes should be rolled out. It may not be delivered in the fastest way, which is what people want, but it is about securing people’s lives and, to my mind, that is more important than meeting artificial deadlines.

Jobs and Work

Marcus Jones Excerpts

Wednesday 11th June 2014 Commons Chamber

[Mr Umunna]

Just one moment. I will give way in a bit.

When I first arrived in this House—together with the hon. Member for City of Chester (Stephen Mosley), I think—I remember that all Government Members wanted to do was talk about the previous Government. This is now their fourth Queen’s Speech and fifth year in office, and it simply will not do to drone on about the last lot. They are in government; they have a record and we will hold them to account for it.

When this Government entered office the country was recovering from a recession that was caused by a global financial crash and precipitated by irresponsible behaviour in the banking sector. When they took office, a recovery was under way, unemployment was falling, growth was rising and stability was beginning to settle in. Those are the facts. However, the extreme fiscal consolidation that they attempted to embark on choked off growth for the best part of three years, causing the Business Secretary, the Work and Pensions Secretary and their ministerial colleagues to fail completely to meet their deficit reduction targets. That led to a huge amount of misery for the British people as unemployment soared beyond 2.5 million. Consequently, they borrowed more in three years than the last Labour Government did in 13—again, the facts.

During those three wasted years, the eurozone slumped almost as badly as Britain. Indeed, the Government frequently pointed to the impact of the crisis in the eurozone on our economy. Of course, that crisis hit our exports, and the Business Secretary, like others, referred to that and its impact in this House during previous Queen’s Speech debates. There are, however, a couple of important points. As the economist Lord Skidelsky put so well in his essay on this subject in March, we should have done so much better than the eurozone, given that we retain the pound and control of our exchange rate. The eurozone slump arose in part because European Finance Ministers were pursuing exactly the same kind of failed policies as the Business Secretary and his colleagues.

Things have thankfully moved on. I know the Prime Minister and Chancellor like to take the credit for the return to growth that we are seeing, but let us be clear: the fact that the recovery has kicked in is down to two things. First is the utter determination and hard work of our businesses and firms in weathering the storm, as well as their ingenuity and continuing capacity to innovate, and second is the hard work and compromises made by their employees.

So often we have sat in this House and had to listen to Government Members, week after week, smearing and denigrating our trade unions. I will be most surprised if we get through this debate without that happening again. The agreements that so many workplace convenors reached with firms and businesses in this country—taking pay cuts; accepting reduced hours—helped keep those firms afloat during these difficult times. That is why I am proud to be a member of the GMB and Unite.

We are certainly not out of the woods. The fact that the Bank of England still has the pedal on the floor with a 0.5% interest rate illustrates how fragile the economy still is, and how far the recovery has to go. More than three quarters of a million young people are still out of work. On average, people are still earning £1,600 a year less than they were when this Government came to office. In fact, just before I came into the Chamber, I was speaking to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) who told me that she has a 42% rate of poverty among the children in her constituency, so we still have a lot more to do.

The 2008-09 crash exposed long-standing, big structural problems in our economy that go back decades, admittedly under Governments of different persuasions, and have to be dealt with. This is in spite of the progress made by the previous Government and the stronger supply-side conditions we achieved. What we have now is an economy unbalanced by sector and region, short-termism in our corporate culture leading to low levels of business investment and low productivity, a dysfunctional finance system, and a stubborn and increasing trade deficit.

[Mr Marcus Jones (Nuneaton) (Con)]

Does the hon. Gentleman think it was a measure of the success of the previous Labour Government when our country lost 1.7 million manufacturing jobs?

Oral Answers to Questions

Marcus Jones Excerpts

Thursday 30th January 2014 Commons Chamber

[Mrs Grant]

That sounds a very interesting model and, of course, it is for football authorities to agree what works best. I think there is a place for all types of ownership, and supporters will always have the best interests of their clubs at heart. I am delighted that AFC Wimbledon, Brentford and Exeter City are now owned fully or partly by supporters. I have had recent meetings with Supporters Direct and the Football Supporters Federation, and I look forward to working with them closely on a number of projects.

[Mr Marcus Jones (Nuneaton) (Con)]

7. What steps she is taking to protect football referees from inappropriate and abusive behaviour.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

I continue to work with the football authorities to press for improvements. I deplore all forms of bad behaviour on the football pitch, including that directed towards referees. I welcome the FA’s recent work on respect within the game, including reducing assaults against referees by 21% since 2011.

[Mr Jones]

In recent months, two referees officiating the Nuneaton and district Sunday league have been badly assaulted by players. Because those incidents take place on the pitch, the authorities do not apply the same gravity to them as they would if they happened elsewhere. What more can the Minister do to protect referees in the amateur game?

Oral Answers to Questions

Marcus Jones Excerpts

Monday 13th January 2014 Commons Chamber

[Mr Duncan Smith]

Of course, the key point is that all contracts must be clear from the beginning and every employee must know what contract they are on. A very small percentage of the population are on zero hours and great care is needed, as some jobs and some individuals prefer such contracts—as the hon. Gentleman’s Government found out when they were in power.

[Mr Marcus Jones (Nuneaton) (Con)]

T8. Will the Minister update the House on the progress in providing support for mesothelioma sufferers?

[The Minister of State, Department for Work and Pensions (Mike Penning)]

Legislation on compensation for mesothelioma sufferers went through the House last week, and I was pleased to see the Bill receive its Third Reading. As I said at the time, it is not perfect but it will help as a fund of last resort for those who have had nothing from the system because they could not trace their employers or insurers. I hope that Her Majesty will grant it Royal Assent at the earliest opportunity.

Oral Answers to Questions

Marcus Jones Excerpts

Monday 1st July 2013 Commons Chamber

[Mr Marcus Jones (Nuneaton) (Con)]

15. What progress his Department has made on improving feedback from social security tribunal decisions.

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

From 10 June, judges in four social security and child support tribunals are providing the Department for Work and Pensions with more in-depth information on why they overturn employment and support allowance decisions. That builds on the drop-down list of primary reasons for overturning decisions that was introduced last July.

[Mr Jones]

I congratulate the Minister on the work that she has done with Her Majesty’s Courts and Tribunals Service to secure this new approach. Does she agree that the information from the tribunals will allow the Department greatly to improve its decision-making process?

[Esther McVey]

My hon. Friend is correct, and that information is key, because decisions are overturned for many reasons. Most of the time, it is because new information comes into play at the appeal. We need to find out why decisions are overturned, not just for the claimant but for the DWP and everybody involved.

Welfare Benefits Up-rating Bill

Marcus Jones Excerpts

Monday 21st January 2013 Commons Chamber

[Caroline Lucas]

If the hon. Gentleman made a distinction between the overall benefits bill and pensions, he might find that he had a rather different set of figures before him.

It is not true that the Government are doing this to be fair. The measure is an unnecessary, spiteful and counter-productive attack on the poor. It is unnecessary because it is ludicrous to blame the unemployed and the low-paid for the deficit and to elicit from them the highest price for paying it off when high earners are receiving tax breaks. As the Government well know but conveniently forget, the culprits behind the entire financial crisis were the bankers on their very high incomes, many of whom do very well from over-generous tax relief on pension contributions and will benefit from the tax cut that is being granted to the highest earners with the abolition of the 50p rate. I welcome the Opposition’s amendment on the latter point.

The measure is spiteful because the Government insist on suggesting that it is somehow unfair that benefits have gone up by 20% when they know very well that 20% of very little is very little, and that in cash terms the average annual increase for those on jobseeker’s allowance over the past five years has been just £2.37—that is hardly the life of Riley that Ministers are pretending. Again and again they frame the debate around misleading percentages instead of the reality of hard cash increases that are far lower for people on benefits than for those in work.

[Mr Marcus Jones (Nuneaton) (Con)]

The hon. Lady talks about reality. The reality that the country faces is that we are running a huge deficit year on year and have been doing so for some years. Will she say a little about that? Can she say how she proposes to pay for the policy she advocates and how much it would cost?

[Caroline Lucas]

I am grateful for the hon. Gentleman’s intervention, and yes, I can tell him how much it would cost: about £7.3 billion, according to the Library.

[Mr Jones]

rose—

[Caroline Lucas]

The hon. Gentleman has asked me a question, so he should let me answer it; I am very happy to do so. We face a number of choices, and the key thing is where we decide that the axe is going to fall. His Government would like the axe to fall on the poorest and most vulnerable; I would prefer that it fell on those with the broadest shoulders. That is the difference between us. It is also important to say that his Government’s policies are draining demand out of the economy and making the deficit worse. If I were in his shoes, I would be looking to see why my own Government’s policies are exacerbating the deficit, not making it better. If we looked for some alternatives, we might find a more positive way forward.

[Mr Jones]

rose—

[Caroline Lucas]

I have let the hon. Gentleman intervene once, and I think that is probably enough.

The policy is also counter-productive. [Interruption.] Perhaps the hon. Member for Nuneaton (Mr Jones) would like to listen to this, because it addresses his point. Such a measure is counter-productive because, first, if money is taken from people who are only just surviving, they will experience more crises that the state will then have to step and pay for; and secondly, if money is put into the pockets of the poorest, they will spend it into the economy and thus address the deficit that we are trying to deal with.

--- Later in debate ---

[Toby Perkins]

Let me make more progress before I let hon. Members intervene again.

One issue I have raised previously in the context of the Bill is housing benefit changes. Last week, I met Chesterfield borough council officials to discuss the impact of the bedroom tax, which will hit people across Chesterfield in April. The council knows it faces a time bomb as people who cannot afford to pay their rents are told that there is a shortage of smaller properties for them to move to. Many of those people are at the back end of their working careers, and are either not working or in part-time employment. The council is budgeting for a situation in which around a third of them will fall into arrears—their housing-related benefits will be reduced and they will no longer have enough to pay their rents—and the Government are increasing the discretionary payment to allow councils to meet the costs of some who fall into that situation, which is a totally illogical policy. People who have been council house tenants for many years will fall behind, and the Government will give money to councils to bail them out. At the same time, the Government will hit them on housing and council tax benefit, and on tax credits. They are saying, “Those payments have already been cut, but they will now be increased by less than the rate of inflation.”

[Mr Marcus Jones]

A thread running through the hon. Gentleman’s speech is how we help the lowest paid. Does he agree that the coalition Government are helping the lowest paid in his constituency, because in April 3,880 of his constituents will be lifted out of income tax altogether, like 3,168 people in my constituency?

[Toby Perkins]

I welcome any measure that makes people better off, but the hon. Gentleman is entirely wrong if he thinks those being lifted out of tax are the lowest paid—they are not. Many who are earning less than them will get no benefit from the increase in the tax threshold. The people being lifted out of tax are not the lowest paid, although I recognise that they are on modest incomes.

--- Later in debate ---

[Helen Goodman]

No, I will not. The hon. Gentleman will have a chance to make his own speech. Many hon. Members have given way to him in the course of the debate.

The Chancellor of the Exchequer has broken another promise he made in 2011. He said:

“I also want to protect… those who, through no fault of their own, have lost jobs and are trying to find work”.—[Official Report, 29 November 2011; Vol. 536, c. 802.]

He is patently failing to protect those people. By definition, people on statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay are not going out to work, but they, too, are seeing their incomes fall, and that is at a time when they have new children coming into the family and need more support.

[Mr Marcus Jones]

The hon. Lady talks about the difficult decisions the Government are having to make, but she does not acknowledge the fact that from the time the Government came into office to 2016, the child element of working tax credit will actually go up by £470 in cash terms.

[Helen Goodman]

The hon. Gentleman is absolutely right, but the point I am trying to make is that we have to look at the cumulative impact of all the changes. If he looks at the tax and benefits micro-simulation model produced by Her Majesty’s Treasury, he will see that everybody in the bottom half of the distribution is a loser, but those people between 50% and 80% in the distribution are gainers. Therefore, he can understand that although the change to child tax credit—we will discuss it under the next group of amendments—might be very welcome, it is not doing the business because of the severity of the Government’s other reductions.

The hon. Gentleman has raised the issue of child poverty, and there is one specific question I wish to ask the Minister and that I hope—

--- Later in debate ---

[Mr Reid]

Well, we did not hear any policy from the hon. Lady. I can only assume that she still follows the previous Government’s borrow-and-spend policies.

I support amendment 10, rather than the Labour party’s “empty space” policy. Amendment 10 would have benefits increase in line with the increase in average earnings.

The tax increases under this Government have quite rightly fallen most heavily on those with high incomes, who are paying a far higher proportion of their income in tax than under the previous Government—let us take, for example, the increase in capital gains tax. If there were a Liberal Democrat Government and not a coalition Government, the well-off would be paying far more tax—a mansion tax, for example. The Government have also helped people in low-paid jobs by increasing the personal allowance, which I hope will be raised to £10,000 before the end of this Parliament. The work done by the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on universal credit will also help people on low incomes. Pensioners have also been protected from the cuts, because of the triple-lock guarantee, and my hon. Friend is introducing the new single-tier pension—another major achievement.

The group of people we are discussing this evening, whose incomes would be cut by clause 1, are those in receipt of working-age benefits, but not disability benefits. Coalition is all about negotiations and reaching compromises. It is important to note what would be happening to welfare benefits if we had a Conservative Government and not a coalition. We know from statements in the public domain that a Conservative Government would propose a benefits freeze, not a 1% increase, and that the cuts would apply to all benefits, not just those listed this evening. Such a freeze would last for several years—not just three years, as under the coalition Government’s policy—and child benefit would be awarded only for the first two children in the household. These are all policies that a Conservative Government would introduce, but which the coalition is not. We also know, as was made evident earlier—certainly from the cheers on the Conservative Benches behind me—that a Conservative Government would reduce the top rate of tax to 40%, not leave it at 45%. Liberal Democrats in government have achieved a great deal in lessening the impact on welfare benefits uprating, compared with a purely Conservative Government.

However, my main concern about the measures in the Bill—this echoes concerns raised by the right hon. Member for Wokingham (Mr Redwood) and others who have spoken—is that committing the country to a 1% increase for three years now, before we know what inflation will be when the increase comes into effect, could end up being harmful to people on low incomes, because we have absolutely no idea how much world fuel and food prices will rise in those three years. I recognise the strength of the argument that benefits for people out of work should not rise at a higher rate than the earnings of those in work, which is why amendment 10 proposes to increase such benefits by the same percentage as the rise in average earnings over the previous year. Amendment 10 would be a fair compromise between the need to cut the deficit and the need to provide a safety net for those dependent on welfare benefits.

There has been a lot of talk about scroungers and curtains being drawn. I entirely reject such rhetoric. It is important to note that strong sanctions are available for those receiving jobseeker’s allowance. For example, people can lose their jobseeker’s allowance for up to three years if they do not apply for a job that their adviser tells them about, do not accept a suitable job offer, leave a job voluntarily, lose their job because of misconduct or do not take part in a compulsory Work programme. Therefore, sanctions are indeed available.

I represent a very rural constituency. It is important to point out that prices on islands or remote parts of the mainland are higher than in most of the rest of the country, and that people on jobseeker’s allowance in remote areas who are finding it difficult to get a job in the area in which they live are on very low incomes. We should not commit ourselves to only a 1% increase for the next three years, because we do not know what will happen to prices during that time.

[Mr Marcus Jones]

Would my hon. Friend acknowledge that if we had applied the logic that he is now advocating over the last five or six years and pegged benefits to wage rate inflation, the people he is talking about—the people he is trying to help—would be far worse off?

[Mr Reid]

A lot depends on where we start. If we are talking about rises matching prices or wages, it all depends on the starting point—if we pick a different starting point, we get a different result.

I was talking about the next three years. We know what the rise in average earnings was last year, so obviously we know what the rise in benefits would be in 2013-14. We do not know what it would be in 2014-15 or 2015-16, but setting the increase to the rise in average earnings, rather than a fixed rate of 1%, would mean that as the economy gradually grew, the level of growth in the economy would be paid to those on benefits, as well as those in work. That is a better approach than having a fixed rate of 1% for three years.

No Government have control over world food and energy prices. At Prime Minister’s questions last week I raised this potential problem when I asked the Prime Minister what contingency plans the Government had for benefit increases, should food and energy prices rise by more than expected. He answered by pointing to the good work being done by my right hon. Friend the Secretary of State for Energy and Climate Change to ensure that energy companies put people on the lowest available tariffs. That will indeed be a big help to people on low incomes, but if energy prices rise by more than expected, the lowest tariff will rise by more than expected too. After I heard the Prime Minister’s answer, I am afraid that I was left to form the conclusion that the Government have no contingency plans for a scenario in which prices rise by more than expected. I hope that when my hon. Friend the Minister replies to this debate, he will be able to reassure me on that point. I hope there is a plan B, in case world prices go up by more than expected.

Setting future increases to the increase in average earnings would address the legitimate argument that out-of-work benefits should not rise faster than earnings and would help to cut the deficit. For example, if the CPI figure were used for 2013-14, benefits would increase by 2.2%. If average earnings were used, they would increase by 1.6%, saving half the amount that a 1% increase would save. It is also important to point out that cutting public spending on its own will not eliminate the deficit. We need to grow the economy as well. All the economic research indicates that money put into the pockets of people on low incomes is far more likely to be spent straight away than it would be by those on higher incomes. Not increasing welfare benefits by the rate of inflation will have an impact on shops and other businesses, as well as the recipients themselves.

To sum up, linking benefit increases to average earnings is much fairer all round and avoids committing ourselves to a fixed figure unnecessarily far in advance. I hope that the Committee will support amendment 10, and I hope that you will allow it to be put to a vote, Mr Amess.

State Pension Reform

Marcus Jones Excerpts

Monday 14th January 2013 Commons Chamber

[Steve Webb]

I am grateful to the hon. Gentleman, because I understand the concern that any change creates for people. In 2017, I assure him, we will work out people’s pension rights under our new system— 35 years for the full £144, with deductions knocked off for past periods of contracting out—and if that figure amounts to less than the rights someone has already built up, they will start from the higher one. We will honour the past. People will not build up new rights under those sorts of arrangements, but those they already have will be honoured.

[Mr Marcus Jones (Nuneaton) (Con)]

I have been contacted by many of my constituents over the last few months who have been concerned about the investment that they have already made in SERPS and in the state second pension. Will the Minister confirm that contributions already made will be honoured and that pensions will not be rounded down as a result of this policy?

[Steve Webb]

Yes, I can give my hon. Friend the assurance that he seeks. If a pension document says, “You have already built up a pension of £160, £170 or whatever”, people will get at least that amount. Going forward, people will not be able to build up those sorts of pensions in the future, but when they have built them up already, we will recognise those contributions.