Oral Answers to Questions

Stephen Timms Excerpts

Thursday 22nd November 2012 Commons Chamber

[Maria Miller]

The decommissioning of venues is already well under way, with the transference of temporary venues to new owners, whether it is the volleyball courts or the beach volleyball courts that were just round the corner from here, from which the sand has been taken and used to create tens of new volleyball courts throughout London, including one in Wimbledon park.

[Stephen Timms (East Ham) (Lab)]

T3. The Conservative party used to support a competitive telecommunications market. Why on earth are Ministers now establishing a new private sector monopoly in rural superfast broadband by simply handing all the Government subsidy over to BT?

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

I cannot keep on making this point, but I will. We are not handing the money to BT. It is a competitive tendering process, and if BT wins the contracts that local authorities put out, that is a matter for those local authorities.

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[Jo Swinson]

I agree with my hon. Friend that it is important that we help working mothers who wish to work to play a full role in the labour market. That is also about ensuring that fathers who want to play a full role in parenting can do so. The ability to share parental leave between mums and dads in the way they choose, rather than how the Government dictate, is an important step towards achieving that goal.

[Stephen Timms (East Ham) (Lab)]

The Minister will be alarmed, as we all are, by the big rise in long-term unemployment among women over 50—up from 50,000 to 62,000 since the election. The Work programme, which is designed to address that, does not seem to be delivering. What more can the Government do?

[Jo Swinson]

We are looking into this issue in detail, because we want to ensure that this group of women, as with all unemployed people, are supported. The Work programme provides tailored and targeted support to the individual, which is what is needed, and we will report back to the House about what more can be done.

Universal Credit and Welfare Reform

Stephen Timms Excerpts

Tuesday 11th September 2012 Commons Chamber

[Charlie Elphicke]

I thank my hon. Friend for making that important point. That is, indeed, the kernel of what universal credit is about: it gives a clear message that it pays to work and it is good to work. The Opposition call themselves the Labour party, yet too often when in office they gave the impression of being the non-labour party. This coalition is on the side of the working person—those who are working in a job in order to earn money and bring cash back to their families, and thereby to lift their children out of poverty.

It was often said in past times that the best cure for deprivation is a job. Many people in my constituency live in deprivation. It is important to get people back into work, to incentivise and encourage people to be in work and to make work pay; that is an important message to send. That is why I see universal credit as a message of optimism saying that we want everyone to play their role, and that everyone is expected to play their role and to be active in the workplace.

I support universal credit because it is a simpler system. It makes the situation easier to understand. There are not five different types of payments; there is just one simple payment. It is a fairer system, too. Rather than people losing 90p in the pound—thereby entirely disincentivising them from working harder to get a pay rise or from working longer hours—only 65p in the pound will be withdrawn, which incentivises them to work harder and for longer, and to bring more prosperity back to their families.

[Stephen Timms (East Ham) (Lab)]

Is the hon. Gentleman worried, as I am, about the proposals of some local authorities to add a 40p in the pound taper on council tax benefit on top of the 65p taper he has just talked about? Under that approach, people who earn more would get less because they would lose more benefit than they would gain in income.

[Charlie Elphicke]

The right hon. Gentleman knows, as I do, that the fine tuning of council tax is still under discussion and still under way, and I hope that that will come out in the wash. I represent a coastal constituency, so I watch that situation carefully, as I know my coastal MP colleagues have been doing. They, too, want to ensure that the low paid in our constituencies are not adversely hit. That is an important point, but it is a fine part of the detailing of the implementation of the policy rather than the overall purpose of the policy, which is to encourage work and to give people more money if they work harder, do better, skill up and get a better job. That is a really important thing.

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[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.

[Nia Griffith (Llanelli) (Lab)]

Does my right hon. Friend share my concern that the Federation of Small Businesses is saying that this will be a disincentive to people to get up off their backsides and start their own businesses and get going? That suggests that something is fundamentally wrong.

[Stephen Timms]

My hon. Friend is absolutely right, and that is because of the design that has been chosen. In July, the chair of the Low Incomes Tax Reform Group called for a rethink. He said:

“In many cases the income of self-employed earners will fall sharply making it, in some cases, uneconomic for them to continue to work.”

That is the opposite of what everybody in this debate has said universal credit is supposed to do, but that appears to be where we are heading. It is, I am afraid, a mess.

As you know, Madam Deputy Speaker, a great deal of care was taken over the design of tax credits to ensure that mothers receive cash support for their children. All those safeguards are deliberately being removed from universal credit, which will cause serious problems.

I very much welcome what the Secretary of State said yesterday about refuges. As we know, Refuge has been saying that it will have to shut all its domestic violence shelters. I am pleased that my hon. Friend the Member for Walthamstow (Stella Creasy) was able to secure a pledge from the new Home Office Minister, the hon. Member for Taunton Deane (Mr Browne), that he will lobby DWP Ministers on that point, but how are the costs of other kinds of supported housing to be met? The Government concluded a consultation on that in October last year. Another year has passed, and nothing definite has been announced, and in one more year this is all supposed to be up and running.

As has been said, we do not know anything about how in-work conditionality will operate. I have not even mentioned Her Majesty’s Revenue and Customs’ real-time information system for pay-as-you-earn. That is supposed to start from next April. Every company in the land is due to start reporting PAYE to HMRC not, as now, once a year after the end of the financial year, but every single month. The Government say it will all happen automatically through everybody’s computerised payroll systems, but what about small firms that do not have a computerised system? The Low Incomes Tax Reform Group says:

“Businesses will have to draw up two sets of accounts—one for HMRC, the other for DWP—and the latter will have to be done monthly, thereby massively increasing bureaucratic burdens.”

This is a mess. It has not been properly worked through. Key decisions have not yet been made. It is no wonder the Treasury and No. 10 are so worried. The House should be too, and should support our motion.

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[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.

[Stephen Timms]

What is the Department’s assessment of the effect of the introduction of universal credit on the number of hours worked in the UK economy?

[Steve Webb]

As the right hon. Gentleman well understands, the impact on every individual will be different, so we have not used a specific figure for the number of hours worked. However, what I have demonstrated is that the people who face the biggest barriers to working more hours will see cuts in their marginal rates and the people who face the biggest barriers to working at all will get more return for working. So this is good news for work incentives. The right hon. Member for Birkenhead referred to the people facing an increase in their marginal rate, but that increase is by four percentage points, from a median of 41 to 45. That is the trade-off. We give people an incentive to take work and we tackle the most severe marginal rates, while some people face a four percentage point increase. That seems to me to be a good trade-off.

Quite properly, a lot of hon. Members raised the issue of internet access. We want to make it absolutely clear that the proposition is digital by default, so if we can get people in on the internet and online, we will do so. However, as the Secretary of State said at the start, we fully recognise that not everybody is online and not everybody will be, so the core planning for the universal credit contains provision for people who will not be online.

Some of the figures we have heard grossly distort the extent to which people of working age in the benefit population are online these days. The evidence suggests that 74% of claimants—not of the whole population, but of claimants—have home broadband and that 41% of claimants do internet banking. To hear the speeches we have heard in this debate, one would not think that these people even knew what a computer looked like. It has been suggested in this debate that we have to avoid patronising people on benefits, and that is absolutely right. We want to support people who are not online—jobcentres will play a part in that and we are talking to local authorities about it—but let us see this as an opportunity to get more people to be internet savvy, online and more employable. Let us not condemn people; let us give them opportunities and training.

The impact of this measure is very important, and the hon. Member for Stretford and Urmston (Kate Green) asked about the equalities impact. We will publish an updated equalities impact assessment with the final regulations after the autumn statement.

The hon. Member for Glasgow North East (Mr Bain) gave some bizarre figures about the impact of this reform on lone parents, and I do not know where he got them from. Lone parents gain from universal credit: 400,000 lone parents who rent will gain, as opposed to 200,000 who will have lower entitlement; there will be twice as many gainers as losers in that category. This reform will reduce child poverty, because we are spending huge sums of additional money at a time when money is tight. We are doing so because of our priority of making work pay.

We have heard discussion of the real-time information system, the fact that people’s benefit will be based on their current situation and the impact on business. This approach has been assessed as saving businesses £300 million a year. Those figures are signed off not by us, but by the Regulatory Policy Committee, which is a business-led organisation; they have been validated by business. Businesses are doing a lot of these calculations anyway, with the software doing it for them in most cases, but the streamlining of the system will save businesses cost overall. We are working closely with our colleagues at Her Majesty’s Revenue and Customs; there has been close working between the two Departments. The Department for Work and Pensions is represented in the governance of HMRC’s real-time information programme at every level, and the DWP and HMRC have jointly presented to Parliament.

The right hon. Member for Birkenhead, in another bizarre, overstated allegation, said that there has been a mass exodus of senior civil servants on the programme. That is completely untrue. The senior responsible officer, Terry Moran, whom he will know from years gone by, has held that role since November 2010. The programme director has been in place since August 2011. At HMRC, the senior responsible officer for the real-time information service has retired—we still allow people to retire, even under our policies—but has been replaced by someone from the DWP. So the suggestion that people are just walking out the door is nonsense and is scaremongering.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 10th September 2012 Commons Chamber

[Mr Hoban]

I will be happy to meet my hon. Friend to discuss the situation that he has outlined.

[Stephen Timms (East Ham) (Lab)]

The Minister’s predecessor made sure that nobody could find out what was really happening on the Work programme, and he has had his reward.

I warmly welcome the new Minister to his position. He can now make a clean breast of all this. I hope that he will heed the CBI’s call, made in July—after the announcement to which he has just referred—for Work programme providers to be allowed to tell local authorities everything about how they are doing. The CBI is right: the Work programme will not fulfil its potential unless that happens.

[Mr Hoban]

First, I thank the right hon. Gentleman for his congratulations; he and I have worked together from different sides of the Dispatch Box before, during his previous incarnation at the Treasury.

We have said that we will publish information. The first official statistics on Work outcomes will be published in November this year. We are keen to see providers, local authorities and other partners working closely together and using the available data to develop the right response. We are seeing success stories—such as in Barking recently, where there has been that local collaboration.

[Mr Hoban]

The Secretary of State should pipe down. [Interruption.] The shadow Secretary of State should pipe down.

I say to the right hon. Member for East Ham (Stephen Timms) that there are success stories. We will publish the full data in November and he should wait for that.

[Stephen Timms]

I am grateful for what the Minister has said. I hope that he will pay very careful attention to what the CBI has called for. I am delighted to hear that we finally have a date for the publication of the first Work programme job outcome data, almost 18 months after the programme started. Will he, unlike his predecessor, accept that needless secrecy holds back public services such as the Work programme?

[Mr Hoban]

The right hon. Gentleman should remember that this is a two-year programme. Payments are made after six months of sustained work activity based on work outcomes. We need to build up the evidence to see how effective the Work programme is. I am confident that the statistics to be published later this year will demonstrate its effectiveness. It is a vital part of the work that we need to do make sure that we get more people into employment.

Atos Healthcare

Stephen Timms Excerpts

Tuesday 4th September 2012 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I, too, congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) on securing this debate about a matter of huge importance to hundreds of thousands of people, as well as on the work that he has done to highlight the problems that people face. I give the Minister my hearty congratulations on his appointment as Secretary of State for Justice and thank him for turning up to discharge his final responsibility in his old job. I am also very pleased that my right hon. Friend the Member for Stirling (Mrs McGuire) is in the Chamber because she and I have had a close interest in this issue for a long time.

The previous Government introduced the work capability assessment and employment and support allowance to provide support for people who are out of work for health reasons, but who are able to plan for a return to work. The current Government chose to take a drastic short cut by curtailing the bedding down period for the new benefit and rolling out the assessment without any improvement, even though by that stage improvements had been identified and proposed. The predictable result of that has been severe problems. Ministers are failing in their task of managing the contract with Atos, of ensuring that people who claim employment and support allowance are treated as they should be, and of reviewing and reforming the test so that it works as it should. The test needs major improvement. Two of Professor Malcolm Harrington’s reviews have reported so far—the hon. Member for Enfield North (Nick de Bois) was right—and while the Government say that they have accepted most of the recommendations, they simply have not implemented them, and that is the heart of the problem.

One simple example that shows the muddle that the Minister has got into has been raised several times in the debate. The year 1 Harrington review recommended that Atos should pilot the audio recording of work capability assessments, and a pilot of 500 claimants followed. Atos said that it was a good idea, but we have heard what has happened in practice from my hon. Friends the Members for Makerfield (Yvonne Fovargue), for Stoke-on-Trent North (Joan Walley) and for Airdrie and Shotts (Pamela Nash).

In a previous debate secured by my hon. Friend the Member for Rutherglen and Hamilton West, the Minister made a commitment that

“we will offer everyone who wants it the opportunity to have their session recorded”.—[Official Report, 1 February 2012; Vol. 539, c. 291WH.]

He has not delivered on that pledge, and it turns out that the problem is a shortage of tape recorders. I was contacted by someone who struggled for weeks to get her assessment recorded. Eventually, Atos wrote to tell her that she could not have a recording or a rescheduled appointment. I wrote to the Minister about that and reminded him of the commitment that he had made. He said that he thought it would be unreasonable to delay the assessment indefinitely for such a reason, but that was not the commitment he gave to the House in February. I am afraid that this mess and shambles shows all we need to know about the Minister’s management of this process. The Government need to get a grip on Atos. I wish the Minister great success in his new job, but I wish he had put a bit more effort into this aspect of his old one.

We have also had a series of mishaps. For example, the Minister made rather farcical efforts to suppress a YouTube video giving advice to people who were claiming against their work capability assessment. It turned out that the subversives who were responsible for this pernicious video were his colleagues at the Ministry of Justice.

Perhaps the most harmful thing to the credibility of the work capability assessment has been the delay in making the changes needed so that the test can work. Professor Harrington’s first review in 2010 asked Mind, Mencap and the National Autistic Society to propose better descriptors for people with mental health conditions. They produced recommendations in November 2010, and Professor Harrington commended them to the Department in April 2011. Further recommendations went to the Department in November 2011 about changes to the descriptors for fluctuating conditions.

[Mr Kevan Jones (North Durham) (Lab)]

Several announcements that have been made, including about having mental health champions, have not been rolled out to assessment centres. Atos is still being inconsistent about allowing support workers or friends to assist those with mental health illnesses who are going to assessments.

[Stephen Timms]

I agree that commitments have not been delivered, and my hon. Friend cites a good example.

The work capability assessment must not be a snapshot of someone’s condition on the day they attend the medical assessment. By definition, that is likely to be a good day, because otherwise they would not be able to show up. The assessment needs to take account of the frequency with which they can do work-related tasks and that with which they suffer the ill effects of their condition. The alternative descriptors proposed do just that. They are now in the public domain thanks to the Grass Roots disability blog, without which we would not have known what they were, and they look like a real step in the right direction.

The Department has had the recommendations on mental health descriptors for 17 months and those on fluctuating conditions descriptors for nine months, but hardly any progress has been made in that time. On 25 June, in a written answer, the Minister said that

“we have been carefully considering how to build an appropriate evidence base around the proposed new descriptors…Terms of reference have been agreed and we aim to publish a report of the Evidence Based Review in the spring of 2013.”—[Official Report, 25 June 2012; Vol. 19, c. 54W.]

The Minister’s successor will need to get a grip on this. If that ambiguous deadline is even met—and that would be a first—it will be two years after expert guidance was received on how to improve the assessment for people with mental health conditions, and a year following the other recommendations.

[Ann McKechin]

Does my right hon. Friend agree that if a person suffers from cancer but does not require chemotherapy, they should still be deemed to be not capable of working if they are in treatment? Why have the Government not changed that indicator when they could do so immediately?

[Stephen Timms]

My hon. Friend raises a good point that we discussed when we considered the Welfare Reform Act 2012. My understanding was that the Government had committed to make precisely that change, but it appears that that has not happened.

I want to ask the Minister two questions. First, on recording assessments—this might appear to be a minor issue, but it has been raised several times in the debate—will he stand by the commitment he made in Westminster Hall in February that people who want recordings will be able to have them? He seemed to renege on that commitment in the letter to me that was written by officials, but signed by him, about a case that I raised. Secondly, will he get these new descriptors evaluated quickly—he can urge his successor to get a move on—do so transparently, and make the changes quickly after the evaluation is completed?

--- Later in debate ---

[Chris Grayling]

It is a matter of record that since we implemented changes as a result of the Harrington process and the internal review that we inherited from the previous Government, the number of people going into the support group, including the number of people with mental health conditions, has increased. That is a good thing and I am pleased that we made those changes.

The issue of cancer has been raised. It has taken us longer than I expected to address that, because of various issues that arose in our discussions with Macmillan Cancer Support, but I believe that we are now in the right place. We will be making a formal announcement very shortly, but I have said before that I believe that we should extend to those receiving oral chemotherapy the access to the support group that is offered to people receiving intravenous chemotherapy.

[Stephen Timms]

Will the Minister give way?

[Chris Grayling]

I will give way very briefly, but this is the last intervention that I will take.

[Stephen Timms]

The Minister will acknowledge, however, that the new descriptors that have been proposed for mental health conditions and for fluctuating conditions are nowhere near being implemented. When does he expect that they will be implemented?

[Chris Grayling]

I will make just one more point and then I will answer that question.

It is really important to put it on record that Atos does not take decisions. In no circumstance does Atos take a decision about whether somebody receives a benefit or does not. A claimant will be asked to fill in a form that goes to Atos for consideration of whether they should be put to an assessment, or passported straight through to the benefit. Atos carries out the assessment, but the decision about benefits is taken by a Department for Work and Pensions decision maker in Jobcentre Plus. It is really important that people understand that Atos does not take decisions.

When we talk about Atos, we are talking about a team of perhaps 1,500 health care professionals, many of whom have trained in the NHS. Those professionals are carrying out an assessment that was designed by the DWP under the previous Government and that has been continued under the current Government. Atos does not take the decisions itself.

As a result of the Harrington recommendations, we have gone out of our way to address people much more directly. Rather than letters, they now receive phone calls, in which they are asked to bring forward additional evidence. A question was asked about the mandatory reconsideration phase. Effectively, that phase already happens. Every case in which the person says they are not happy will now involve a reconsideration within Jobcentre Plus. I am keen that we have that second opinion, because we will not always get things right and I want to try to see whether we can bring forward further evidence that would enable us to make the right decision before a case ever reached the tribunal service. Effort is being put in to make that happen.

The right hon. Member for East Ham (Stephen Timms) asked about recordings. Let me be clear that Harrington recommended that we carried out a pilot to test recordings. I was keen that we just did it, but Harrington said to me, “Actually, it may not work, so I really think that you should pilot it. It may prove to have a negative effect.” We therefore tested recording and found that there was little enthusiasm among those being assessed to have their assessment recorded. In the end, the conclusion was that we should make recording available on a voluntary basis, but it should not be something that we do across the board.

I do not rule out recording. If there was overwhelming evidence showing that it was necessary, I would make it available, but let me give some statistics. There are 300 claimants waiting for an audio-recorded assessment, while Atos is conducting 8,000 assessments a week. We are ordering additional audio-recording machines so that people can have their assessment recorded, if they want. They are perfectly entitled to bring their own recording equipment to an assessment as long as it can record two copies of an assessment, because they need to be able to take one copy with them and leave the other behind. That is why we have to buy what is fairly expensive equipment, and we have ordered additional equipment because there has been an increase in demand in the last few weeks.

I am perfectly relaxed about recorded assessments and perfectly happy to make recording facilities available. However, the advice that I received from Malcolm Harrington was that we should test recording. The result of the pilot was not only that there was not a need for recording, but that many people felt uncomfortable being assessed with a tape recorder running.

The right hon. Gentleman also asked about the new descriptors that were brought forward by the charities, but he is out of date. The charities have been working with us for the past few weeks on the assessment project of the package that they brought forward. The work was finished last week. The charities wanted more time to work with us because the process is complicated and we are trying to mesh mental health issues and fluctuating conditions. As I said in Westminster Hall about 12 months ago, the problem that I had with the recommendations that the charities made in the first place was that they came forward not simply with adjustments to the existing descriptors, but instead with a comprehensive reorganisation of the assessment, which would also have involved a redesign of the physical descriptors. Given that the right hon. Gentleman has carried out such projects in the DWP, he will know well that that would be a two or three-year project.

We have tried to take forward some of the suggestions that the charities made and embed them into elements such as the ESA50 form, and we are now working with the charities to road test all this work to see whether it really makes a difference. However, I am not going to embark on a major overhaul of the whole exercise based on recommendations that are not backed by evidence without our having tested them in the way in which the previous Government tested recommendations: by putting real cases against proposed descriptors and making a comparison between the outcomes of the theoretical new descriptors and the old descriptors. Such work is on track. We are pushing the charities to make progress, because I want to get the work done, and we are still on track to complete the gold standard review in the spring.

The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) referred to the National Audit Office report. I have had the benefit of having read that report, although I know that he has not. The reality is that the report highlights a number of what I regard as not particularly major areas of improvement. If he reads the report, he will see that it reflects a big and complicated contract. It makes some suggestions for improvement, but it is not as he portrays it.

When the hon. Gentleman talks about the performance of Atos during the last two years, the key point he must remember is that the recommendations that Malcolm Harrington made, combined with some fluctuation in volumes coming through to Atos, which are certainly beyond its control, have caused significant operational difficulties. I can give him my word that I have sat in meetings with representatives of Atos and put them under intense pressure. Atos has brought in extra capacity at cost. We have made sure that we deliver at every stage. However, it is not possible to change the goalposts totally and then expect the subcontractor to take it on the chin with no consequences.

We have seen some consequences of the introduction of the Harrington recommendations, particularly the personalised statement. However, as I stand here today, we are on track to close the backlog time to where it should be later this autumn. The numbers that the hon. Gentleman gave are already well out of date. We have brought down the backlog in the number of appeals that we inherited two years ago, but it is a big task. We are dealing with a large number of people and this is a big challenge.

Let me be clear that we want to get this process right and we want to do the right thing. I want people who need long-term ongoing support to be in the support group. The Government have no interest in doing anything other than looking after those people who need that, but we will also give encouragement and support—and a bit of a push—to those who can get back into work, because I believe that that is the right thing for them.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 25th June 2012 Commons Chamber

[Chris Grayling]

I studied that model carefully. One reason why we have adopted various programmes requiring people to undertake full-time work is to create a sense of urgency for them in finding employment. I am not convinced, however, that government is good enough at managing data to manage, for long periods—many decades—at a time, the kind of systems set up in the United States.

[Stephen Timms (East Ham) (Lab)]

The Minister did not provide the data that my hon. Friend the Member for North East Derbyshire (Natascha Engel) asked for. He holds the parliamentary record for the abuse of statistics, having been rebuked for three separate offences by the UK Statistics Authority. Will he now sort out the shambles in his Department, do what he promised in January and lift the Work programme data ban?

[Chris Grayling]

The right hon. Gentleman does talk a lot of nonsense sometimes. First, he cannot add up—I have not been rebuked three times by the Statistics Authority. Secondly, the Work programme is progressing well, and I will publish further data on it soon.

[Stephen Timms]

Until today, the Government have told us that benefit reform plus the Work programme would sort out the welfare system, but this morning the Prime Minister said that they will not be enough. Will Ministers now sort out this chaos? Would not lifting the ban on data be a good place to start?

[Chris Grayling]

Let me give the right hon. Gentleman one piece of data: 80,000 fewer people are on out-of-work benefits today than when his party was in power.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 23rd April 2012 Commons Chamber

[Chris Grayling]

First, I pay tribute to the work being done in the Moorlands by the job clubs there, which is making a real difference to the prospects of the unemployed. What I say to my hon. Friend and to every hon. Member is that there is a real opportunity for each of us, individually, to approach local employers and encourage them to provide work experience opportunities. Tremendous work is already being done by colleagues in organising job fairs and organising different opportunities for young people who are looking for work. We can all play a part in this; it is a way in which this House can be a real activist centre in trying to help unemployed young people.

[Stephen Timms (East Ham) (Lab)]

It is a good thing that the youth contract has finally started. The Deputy Prime Minister says that he told the Cabinet in January last year that something needed to be done on youth unemployment. Why has it taken the Department for Work and Pensions 15 months to make something happen?

[Chris Grayling]

I have great respect for the right hon. Gentleman, but on this occasion he has plain got it wrong. Over the past 12 months, we have put in place support through the work experience scheme, and we have put in place the Work programme and sector-based work academies. We have also given greater flexibility to job centres to use funding that is available to them to provide tailored support for people in their community. We have been working hard to tackle a problem of youth unemployment that built up and was left behind as a dreadful legacy by the previous Government.

[Stephen Timms]

In the youth contract, the wage subsidies are in a national pot to be handed out on a first-come, first-served basis, so providers will be competing to hand them out as fast as possible, whether or not they are actually needed. Surely it would have been far better to target subsidies where they are needed. Why has the youth contract been so badly designed?

[Chris Grayling]

Once again, the right hon. Gentleman has just got it plain wrong. We are targeting this support at young people who are struggling to get into work—the long-term unemployed. I am talking mostly about those who have been out of work for more than nine months, but sometimes this will go to those who have come from the most difficult backgrounds and who have been out of work for three months. This money is targeted absolutely at where it is needed, and I believe that it will make a difference.

Work Experience

Stephen Timms Excerpts

Tuesday 13th March 2012 Westminster Hall

[Sheila Gilmore]

I shall explain the issue as far as this young woman was concerned, and I think that this is where it comes down to conditionality. She was certainly put under, as she explained it, considerable pressure—as part of a general conditionality point—to do the work experience or her benefits would be put at risk. That was how she perceived it.

[Stephen Timms (East Ham) (Lab)]

Is not part of the problem that, as the Minister has repeatedly said, and as others have said today, this is a voluntary scheme, but jobcentres sent out letters telling people that they would lose their benefit if they did not join the scheme? There is, at the very least, huge confusion in Jobcentre Plus about what the terms of this arrangement are.

[Sheila Gilmore]

That is the kind of information that I have been getting from constituents. I am referring to the rules on conditionality and the advice or information that they were getting from the local jobcentre. This point is different from the point about whether people are sanctioned when they leave the scheme; it is about the conditionality regime.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

I am grateful to you, Mr Crausby, for giving me this opportunity to speak. I also thank the hon. Member for Nuneaton (Mr Jones), who has done us a great service by securing a debate on this very important topic.

The Government have got themselves into an extraordinary muddle over work experience. Labour supports work experience. It can be invaluable in reconnecting people with the labour market; it has been a part of labour market intervention since the 1970s; and it was a key feature of the success of the new deal. Unfortunately, however, the Government have got themselves into a terrible mess.

On 29 February, the Minister—in an attempt to extricate himself from that mess—announced a U-turn and that the “Work Experience” scheme was to be fully voluntary. Previously, he had said that it was a voluntary scheme; I suppose that his announcement on 29 February means that it really will be voluntary. However, his problem is that the letters that Jobcentre Plus staff sent out to claimants said something quite different. He was memorably confronted on “Channel 4 News” with a letter that had been sent out to somebody who was being told about a placement on a “Work Experience” scheme; the hon. Member for Great Yarmouth (Brandon Lewis) quite rightly said that there are other schemes, but in this case the placement was part of a “Work Experience” scheme. The letter said:

“You have been referred to the following Opportunity: retail assistant…If you cannot attend for any reason or if you stop claiming Jobseekers Allowance please contact this Jobcentre immediately. If without a good reason you fail to start, fail to go when expected or stop going...any future payments of Jobseekers Allowance could cease to be payable or could be payable at a lower rate.”

There is no point in claiming that the scheme is voluntary if Jobcentre Plus staff—staff in the Minister’s job centres—are telling people precisely the opposite.

[Chris Grayling]

Has it crossed the right hon. Gentleman’s mind that nobody would receive a letter unless they had volunteered?

[Stephen Timms]

Let me tell the right hon. Gentleman what I suspect is the source of the confusion. It arises from the decision maker’s guide, which any Member of the House can read on the website for the Department for Work and Pensions. That guide says:

“JSA may not be payable or it may be payable at a reduced rate to claimants who are entitled to JSA and have...after being notified by an Employment Officer of a place on a Work Experience scheme, refused without good cause or failed to apply for it or to accept it when offered, or...neglected to avail themselves of a reasonable opportunity of a place on Work Experience.”

A Jobcentre Plus adviser who is doing their job and looking at the official guidance discovers that that is what the guidance is—a clear description of a mandatory scheme.

It is no wonder, therefore, that Jobcentre Plus staff have been so confused and have contradicted what the Minister has said. Of course, as we know, a number of businesses also lost confidence in the scheme. But the muddle goes even further, because the DWP’s provider guidance for the Work programme says:

“Where you are providing support for JSA participants, which is work experience, you must mandate participants to this activity. This is to avoid the National Minimum Wage Regulations, which will apply if JSA participants are not mandated”.

The DWP was saying that until a few weeks ago, but that particular statement has now been deleted from the guidance on the website.

Therefore I want to ask the Minister three specific questions. First, now that there are no sanctions in work experience other than for gross misconduct, will he amend the decision maker’s guide? Secondly, how will he ensure that the policy is now implemented in line with what he has announced? Thirdly, what has changed in the legal position so that work experience no longer has to be mandated to “avoid”—to quote the guidance that was on his Department’s website—the national minimum wage rules?

The Work Experience scheme is too valuable to let this muddle continue. And as we have already heard in the debate, there are other schemes apart from the “Work Experience” scheme. In fact, Inclusion says that there are seven different current work experience schemes, which may be part of the reason for the muddle. At the time that some claimants are starting on the “Work Experience” scheme, others start on mandatory work activity, which was the scheme referred to by the hon. Member for Great Yarmouth. That may well be another source of the confusion. As the name of the mandatory work activity scheme suggests, it is not voluntary. It is designed for people who are a long way from the labour market and who have no experience of work or the work ethic. Placements are for a similar period to those in the Work Experience scheme, and they are sourced through private welfare-to-work providers. The total value of the contracts for mandatory work activity is £32 million. I have repeatedly asked the Minister to tell the House what the average cost of such a placement is, and various other details. He has repeatedly refused to answer those questions, claiming that it is “Commercial in Confidence” although heaven knows why.

[Mr Marcus Jones]

The right hon. Gentleman has talked a lot about “confusion”, but from where I sit in Westminster Hall today I am extremely confused about the position of his party in relation to the Government’s work experience programme. On the one hand he says that he supports work experience, but on the other he seems to be coming up with all sorts of “confusion” in his argument to try to get away from supporting that programme. Does his party support the current Government’s work experience programme and will he commit to supporting those employers that are doing a fantastic job in giving our young people this type of opportunity?

[Stephen Timms]

I very strongly support work experience and I strongly support the contribution of employers. However, what I regret and deprecate is the extraordinary muddle and confusion that the Government’s handling of the Work Experience scheme and the six other similar schemes has created.

On mandatory—[Interruption.] Time is running out and I want to give the Minister every chance to respond to these points, so let me just tell the House about one of my constituents. She was put on to mandatory work activity. She was not a long way from the labour market; indeed, after I inquired about her, she received a phone call to say that she should never have been put on mandatory work activity in the first place. The letter that was sent to her initially was a classic of incomprehensibility; I sent a copy of it to the Minister. It instructed her, a resident of east London, to go to an obscure Sheffield postcode, and it said that if she had any queries she should ring telephone number 000. Her placement was at a charity shop. When she arrived, there were 14 other people on mandatory work activity who had also been sent to the same charity shop to help out. There was nowhere near enough work to go round, although presumably all 15 of those people attracted a payment to the provider from the Minister’s Department.

Experiences such as that will not help anybody into work. I ask the Minister: what checks is he making on placements to mandatory work activity? In fact, does he know if his Department is being ripped off on a large scale, as the example that I just gave suggests? Also, why does he insist on secrecy about all of this, when the openness that is being promoted by the Cabinet Office would help to resolve all these problems? This Minister has some form on this. He has been officially rebuked for misusing statistics—I think more than any other Member of the House—including on three separate occasions since he has been a Minister. That is a pretty extraordinary record.

[Chris Grayling]

On a point of order, Mr Crausby. Is it in order to make allegations about another Member without giving details? I am certainly not aware of the issues that the right hon. Gentleman has just raised. He has made quite a serious comment about another Member. I have no knowledge of any such occasions since I have become a Minister.

[Stephen Timms]

I can tell the right hon. Gentleman that the three occasions are all on the UK Statistics Authority’s website: first, data relating to the flexible new deal; secondly, data relating to worklessness statistics; and thirdly, data about benefit claims on the part of immigrants. The first and third of those were widely publicised at the time. I have the letter on the second in front of me. The Minister publishes statistics that he thinks advance his partisan case, but he refuses to publish straightforward, routine data that certainly should be in the public domain.

[Chris Grayling]

Further to that point of order, Mr Crausby. Since becoming a Minister I have not received, to the best of my knowledge, any communication from the UK Statistics Authority questioning any statistics that I have published. I want to place that on the record and ask whether it is in order for a shadow Minister to make an allegation of that kind.

--- Later in debate ---

[Stephen Timms]

I will gladly copy the letter from the UK Statistics Authority website for the Minister.

Work experience should have been straightforward and uncontroversial. It is valuable and we need more of it. Instead, we have had U-turns, public relations fiascos and even street protests. The Minister needs to clear up the confusion at Jobcentre Plus, level with us about mandatory work activity and embrace at last the open data initiative that was conceived by the Minister for the Cabinet Office and Paymaster General so that everybody can judge for themselves the effectiveness of the schemes.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

We have just heard a clear example of why the Opposition have yet to adapt to opposition. In long years of opposition, we learned that there are times when one should simply accept that what the Government are doing is right. I am sorry to hear the right hon. Member for East Ham (Stephen Timms), for whom I normally have a high regard, misrepresenting the situation around any letters or communications that the Department has received from the UK Statistics Authority. I am also sorry that he is dancing on a sixpence to try to oppose something that he should support.

Mr Crausby, if you had told me three months ago that we would be dealing with protests against the work experience scheme, given all the difficult decisions that we are taking in the Department for Work and Pensions, I would have thought you were mad. Among all those difficult decisions, this is a positive programme that is designed to help. It is innocuous. It does what it says on the tin. It started as a result of a complaint that I personally received from the mother of a young woman who said, “My daughter has arranged a month’s work experience for herself and been told she will lose her benefits if she carries out that experience.” I regarded that as unacceptable, so we started to use the teams of people we have in Jobcentre Plus to look for opportunities for young people to do work experience, precisely because of the issues raised by my hon. Friend the Member for Great Yarmouth (Brandon Lewis). It is all well and good if someone comes from a prosperous background, but not everyone does. Helping young people find work experience opportunities is enormously important.

I will deal straight away with the issue raised by the hon. Member for Edinburgh East (Sheila Gilmore). I am afraid she needs to look in the mirror and ask the question about being a job snob. The row came about because of a computer error, which published an internal bulletin about a work experience placement at Tesco. Had it been Airbus, this would never have been a story, and the hon. Lady would not be complaining today. I commend Airbus for joining our scheme, along with many other manufacturers.

About 12 months ago, I met an older, former unemployed worker at an Asda store in Birmingham. He said: “I came here after years of unemployment. I got a job at the bottom level of the scale. A few months later, I was running a department with a staff of 20.” The job of running a high street retail branch—a big supermarket—can be a job that oversees a large staff in a business turning over tens of millions of pounds a year. In a large company such as Tesco, there are a vast range of opportunities in IT, HR, logistics, or community outreach. There was magnificent community work at Asda in my own constituency. There are all kinds of opportunities for someone to go in at the bottom and work their way up.

Let me explain to the hon. Member for Edinburgh East how the scheme works. Our advisers sit down with young people and talk about different career options. They ask them about the sectors that interest them, and find them—if we can—a placement in one of their preferred sectors. It is their choice. We listen to them and try to find the opportunity. Unfortunately, we cannot find opportunities for all the young people, because the scheme is over-subscribed. That is the nature of what we are trying to do. We expect them to turn up, if they have taken a placement from someone else; we expect them to fulfil the placement if they stay beyond the first week’s grace; and we expect them to behave themselves. It is the lightest-touch conditionality anywhere in the welfare system. We have listened to the employers—given all the brouhaha—and accepted that we would remove the attendance requirement. We still have sanctions in place for things such as racism in the workplace, theft in the workplace and abusive behaviour towards customers or fellow co-workers. Only about 200 out of 34,000 participants have been sanctioned.

The scheme was and will continue to be a voluntary scheme that is positive and beneficial. Some of the coverage—particularly the BBC’s—and wilful attempts to mislead were disgraceful. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) is absolutely right. The way in which this was covered was nothing short of disgraceful. The scheme is aimed at the under-24s. Putting people in their 40s on the TV was nonsensical and extremely poor-quality journalism. However, a small number of older people do get work experience placements: for example, long-term carers and people who have been out of the workplace for long periods for whom such experience is beneficial.

The right hon. Member for East Ham raised a variety of questions about letters and so forth. Of course, someone does not get a letter about the scheme unless they have volunteered to be on it. It is as simple and straightforward as that. I will tell the House a simple story, which was fed back to me by one of our Jobcentre Plus teams a couple of weeks ago. They were briefing a group of young people about the work experience scheme and opportunities. One of them—a young woman—said, “I don’t wanna do that. It’s slave labour.” Our staff said that they did not have to do or say anything at all, because the rest of the group turned on her and told her in no uncertain terms how important the opportunity was to them and how important it was that they all took part. By the time they had finished discussing it as a group, she was going to take part, too. There was no mandation from us, but mandation from her peers.

The scheme is positive. It is not about retailing. The tragic aspect to the debate is the absurd discussion about whether we should be helping young people get work experience places—of course we should. There should be no doubt about that. We are still not hearing, especially from the right hon. Member for East Ham, “This is a good scheme that we will back publicly. It is the right thing to do. We will continue it if we get back into Government.” All we hear is cavilling about this and that detail. Let us stand up and say, “We have a problem with youth unemployment. We need to do something about it. We will do something. We will all work together.” Every single one of us in this House, whether it is the right hon. Gentleman, me or any other Member here, could do a power of good for this scheme, Mr Crausby. Indeed, you could yourself, sir, in your constituency. We can talk to local employers and say, “Get involved.” This is a real way to help young people. It makes a difference. It is great. They go on into employment and many of them look back and say that it is the best thing that ever happened to them.

We do have mandatory programmes. The mandatory work activity programme gives our Jobcentre Plus advisers the discretion to refer someone whom they believe is struggling, not pulling their weight or having real difficulty in their work search to a month’s full-time activity. We do not mandate to go and work for private companies—they would not take it even if we did. The same is true of the Work programme. We cannot send people against their wishes to work for a big retailer.

[Stephen Timms]

Will the Minister give way?

[Chris Grayling]

I will not, because I have very little time.

Mandation in our system will apply to community benefit schemes and to nothing else. We are absolutely clear about that. It is the same for the Work programme. The work experience scheme is a good scheme, which must and will continue. It will now grow, because more people are coming forward to help—after all the publicity, ironically. The protesters are plain wrong. They are misguided. It is a tragedy that they are supported by the unions and Labour MPs, but we will not listen to them. We will listen to the young people who say, “This is the best thing that could happen to us.”

Oral Answers to Questions

Stephen Timms Excerpts

Monday 5th March 2012 Commons Chamber

[Mr Duncan Smith]

I accept the hon. Gentleman’s positive involvement. I simply say to him that the scheme as it stands is incredibly positive. More than 50% of those who enter the work experience scheme go into work, many with the employers who took them on for work experience. The reason we set up the scheme is what young people said, and they told us, “Our problem is that when we go to an interview, employers ask us, ‘What experience have you got?' We say, ‘We don’t have experience.' They say, ‘We can’t employ you.' But without employment we can't get work experience.” I genuinely believe from our discussions with employers that the scheme is a positive move, but I will certainly look at the scheme that the hon. Gentleman talks about.

[Stephen Timms (East Ham) (Lab)]

I echo the Secretary of State’s good wishes to the Chair of the Work and Pensions Committee.

Work experience is a very good thing. The Minister of State has emphasised that the scheme is voluntary—his U-turn last week underlined that—but jobcentre letters say the opposite. They say:

“If, without good reason, you fail to start, fail to go when expected or stop going…Jobseekers Allowance could cease to be payable”.

The Department for Work and Pensions website says the same. Until recently the website also said that the minimum wage applied unless work experience was compulsory. That point has mysteriously disappeared from the site. Will the Secretary of State get a grip, clear up this extraordinary muddle and end the confusion in his Department?

[Mr Duncan Smith]

I will do a little deal with the right hon. Gentleman: I will ensure that any little discrepancies are sorted out, providing that he and his party step forward and publicly welcome the whole idea of the work experience programme and condemn the many unions, such as Unite, GMB, Unison and others, that are backing this ludicrous Right to Work programme. Will the Opposition state that the unions should withdraw their backing? Last week, we held discussions with employers, and they asked that no sanctions be taken unless they say that something has happened to damage the business or cause a problem. We have agreed that in essence, and that is how it will stand.

Pensions and Social Security

Stephen Timms Excerpts

Thursday 23rd February 2012 Commons Chamber

[Steve Webb]

My hon. Friend is right that when the uprating was considered, there was speculation that a different month, or a rolling average or something like that, might be used. It was decided to continue the practice of using the September CPI, but I would stress that that is not a one-month figure, but a figure published in one month about the past 12 months. Although as it happened 5.2% was the peak—I think I am right in saying that it was lower in the month before and the month after—each 12 months joins on to another 12 months, so in another year, the September figure could be the lowest. We took the view that that was the established practice, and that changing it could leave it open to manipulation. Although in a particular year it can stand out, when we take one year with the next, it will sometimes be lower and sometimes higher.

As hon. Members know, using the CPI measure of inflation was an important part of this Government’s plans for uprating pensions and benefits. I am delighted that we will have a debate on that very subject next Thursday afternoon—I look forward to being here at the same time and the same place next week. In addition to being the headline measure of inflation in the UK and the internationally recognised target measure of inflation used by the Bank of England, we believe the CPI is a superior measure of inflation when it comes to uprating benefits and pensions, first because the CPI basket of goods is a better match for the spending patterns of pensioners, and secondly because it takes better account of how households respond to price changes.

Last year, the High Court upheld the Government’s decision that the CPI can be used for pensions and benefits uprating and we have robustly defended our case in the Court of Appeal.

[Stephen Timms (East Ham) (Lab)]

As the Minister knows, the UK Statistics Authority has said that CPI should be used for that purpose only if it incorporates a measure of housing costs. I know some work is being done to incorporate such costs in the CPI measure, but is it the Government’s intention to use that modified measure when it is available?

--- Later in debate ---

[Steve Webb]

The hon. Lady may not have been in the Chamber when I referred to next week’s debate, when we will debate such issues at greater length. I was not aware that it was Labour party policy to revert to RPI—its view for now is that CPI is appropriate. She might want to raise that with the right hon. Member for East Ham (Stephen Timms), who is on the Opposition Front Bench. For the reasons I have given, our judgment is that the CPI basket of goods matches the spending patterns of pensioners. The Institute for Fiscal Studies has confirmed that modelling and people’s response to price changes is better with CPI than in RPI. No index is perfect, but there is a good case for using CPI.

Funnily enough, when I attended a National Pensioners Convention event in the House a few months ago, the people there all demanded CPI, which shows how the debate has moved on. I am sure the hon. Lady has a press release saying that more is being demanded, but the tenor of the debate was that there was speculation that we would not honour our triple-lock promise. They said: “Minister, will you guarantee us the triple lock—prices, earnings or 2.5%? Will it be the 5.2% that we have just seen?” That was commendable realism on the part of the National Pensioners Convention—that is its role in life—but things may have moved on now it has banked the 5.2% in the current environment. In fact, 5.2% is the biggest cash increase ever and one of the biggest real-terms increases in a long time. I am proud to stand by that figure.

Restoring the earnings link for the basic state pension was an early action by this coalition Government, putting an end to 30 years of deterioration in the value of the foundation of retirement income relative to average earnings. Better than that, we went one further with our triple guarantee to pay the highest of the growth in earnings, prices or 2.5%, so that even in times of slow earnings growth, we will not see a repeat of the small rises, such as the 75p rise in 2000, presided over by the Labour party.

In line with the triple guarantee, the new rate for the basic state pension, received by more than 11 million people in this country, will be £107.45 a week for a single person, an increase of £5.30 a week. My hon. Friends in the coalition may be interested to know that that means that from April 2012, the basic state pension is forecast to be 17.1% of average earnings, which is a higher share of average earnings than in any year of the previous Labour Government from 1997.

[Stephen Timms]

A minute or two ago, the Minister said that this was the highest ever real-terms increase to the state pension.

[Steve Webb]

No.

[Stephen Timms]

I thought that was what the Minister said. Perhaps he can clarify that point, because by definition it cannot be a real-terms increase.

[Steve Webb]

It is the highest cash increase ever and the highest real-terms increase for about 10 years.

[Stephen Timms]

Given that the increase is purely in line with inflation, how can the Minister describe it as a real-terms increase?

[Steve Webb]

Because the point at which the money is paid is not the point at which inflation is measured, so when people actually get the money it will be substantially more than the inflation since the last increase.

[Stephen Timms]

This takes us back to the point raised by the hon. Member for Bury St Edmunds (Mr Ruffley). The Minister is making a virtue out of a timing point rather than a substantial point. He is a modest man, and I am sure he will accept that the Government cannot claim credit for inflation being slightly lower now than it was last September.

[Steve Webb]

On the contrary, let us bear in mind what the Government have done: the Chancellor has taken action on the taxation of petrol, resulting in inflation being lower than it would have been, and we have successively frozen council tax in many parts of the country, which is of huge benefit to many pensioners. There are many things that Governments do that influence inflation. Some factors are global, which is one reason inflation peaked at 5.2%, but measures that the Government have taken have also been one reason prices have been falling. That is entirely to the Government’s credit.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

The Minister has helpfully explained that we are dealing with three separate orders, aspects of which are welcome but others of which are decidedly unwelcome. I shall make it clear where we do not support the Government.

The Pensions Act 2008 (Amendment) Order—to give it a rather briefer title than the one the Minister used—makes minor amendments to protected rights over payments of defined contributions contracted-out pension schemes. As he said, the underpinning legislation is the Pensions Act 2008. I accept that the order is necessary to clarify a following order, and I have no objection to it.

The most substantial of the orders—the one that I am sure this debate will focus on—is the Social Security Benefits Up-rating Order 2012, which, as the Minister said, uprates most out-of-work benefits and the basic state pension in line with the consumer prices index. For most out-of-work benefits, this will be the second year that CPI has been used rather than RPI, but for the basic state pension it is the first year. Members might recall that, like this year, last year the Government trumpeted their triple lock on the basic state pension.

I recall that in the debate last year the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who unfortunately is not with us today, congratulated his hon. Friend the Minister on his success in introducing the triple lock—only, the Government did not, in fact, apply it last year. Under the triple lock, the basic state pension would have been uprated by CPI, which was a long way below RPI last year, so the Minister—prudently, I think—decided to overrule his triple lock on its first outing and instead operate the old mechanism, uprating the basic state pension by the higher rate, RPI. In doing so, he exposed to public view the weakness of his triple lock. He had to override it in the first year it was due to be applied. Advertised as a safeguard for pensioners, the triple lock in fact undermines pensions uprating.

The Government have told us that the switch from RPI to CPI is not simply a deficit reduction measure. Instead, the justification for the switch is that, as the Minister said again today, CPI is a more accurate measure of changes in the cost of living for pensioners. Last year the Minister told us that he viewed CPI as

“the most appropriate measure of price inflation for this purpose,”

and that he saw

“no reason to change it in the future.”—[Official Report, 17 February 2011; Vol. 523, c. 1174-77.]

However, the view that RPI, let alone CPI, is an adequate measure of pensioner inflation is one on which many pensioners would take issue with him, as the hon. Member for Banff and Buchan (Dr Whiteford) suggested a few minutes ago. I was interested in the Minister’s view that the National Pensioners Convention is happy with CPI uprating. However, as the Civil Service Pensioners Alliance, among others, has pointed out in its briefing:

“The Royal Statistical Society…has said that CPI fails to reflect the spending patterns of pensioners and the rising costs they face. The Institute for Fiscal Studies”—

to which the Minister referred—

“has shown that most pensioner households are not shielded from many of the costs excluded from CPI. The UK Statistics Authority…has said that they do not believe the CPI should become the primary measure of data inflation until housing costs are included,”

which is a point that he touched on in response to my intervention.

The Minister has tried to paint the change as simply a sensible bureaucratic change, not one that is ideologically motivated or that represents a cut in the income of pensioners, but in reality that is not the case. As the UK Statistics Authority put it last year:

“Questions about compensation, who to compensate and what for, are straightforwardly political questions, not for statisticians.”

In other words, this is a matter for political decision. Let us be frank with people: the Government have chosen to uprate benefits and pensions permanently in a way that, in the case of benefits, will usually be meaner than the method used before and, in the case of pensions, was meaner this year and last year, which is why the Government overrode it last year and used the old method instead.

[George Hollingbery (Meon Valley) (Con)]

I seem to recall some embarrassment in the Labour party back in 2000 when the low rate of 1.1% was used to uprate pensions, the result of which was a 75p increase. Does the right hon. Gentleman agree that, under this Government, the triple lock will ensure that 2.5% is the minimum that can be paid?

[Stephen Timms]

Of course, that is indeed the effect of the mechanism that the Government have chosen. I would simply point out to the hon. Gentleman that if the previous method was still in place, there would be a higher increase in the basic state pension than the Minister has announced today.

[Ian Paisley]

The right hon. Gentleman has mentioned the triple lock, which interests me and which applies only to the basic state pension. A number of charities, such as Age Concern and others, have contacted me about this issue. They argue that the Government should apply the triple guarantee to other elements of the state pension, including the additional pension allowance. Does he agree that that would make good sense?

[Stephen Timms]

That is a matter that the Minister may well want to comment on in his response to this debate. In my view, the triple lock is certainly not the wonderful device that the Government maintain it is. As I have said, it is leading to a lower uprating of the basic state pension in the year ahead than if the RPI mechanism was still being used.

[Oliver Heald]

Does the right hon. Gentleman agree that we need to exercise judgment about what the increase should be? One of the faults of the last Government was to be too rigid. My hon. Friend the Member for Meon Valley (George Hollingbery) has already mentioned the 75p increase, but there was also the freezing of the additional pension, which, again, was considered a mean act. Is it not right for the Government to take a judgment and—on pension credit, for example—to make increases well above the rate that they have to use, which is earnings, and instead use a higher measure, in order to be fair?

[Stephen Timms]

The hon. Gentleman’s argument is a different one from the Minister’s. The Minister says that because of the triple lock, pensioners are safeguarded and need not worry about what future judgments Ministers will make. In a way, I am rather more with the hon. Gentleman on this than with the application of the formula. Again, however, I would point out that last year—the first year that this supposedly wonderful mechanism was in place—the Government overrode it. I am therefore not quite sure what certainty pensioners would have for the future about whether, in the event of siren voices being heard—we heard about those earlier—the triple lock might be overrode in the other direction, if someone judges that to be appropriate.

[Steve Webb]

Will the right hon. Gentleman confirm that the statutory position that his Government left—and which was the basis of the spending plans for 2012 that they published for us—was based not on the higher of either prices or earnings but on earnings alone, and that the pension rise that his party pencilled in for 2012 was not five-and-a-bit per cent., but more like 2.5%?

[Stephen Timms]

As the Minister well knows, the basic state pension was uprated over a long period in line with RPI. My point is simply that if that mechanism was still in place, there would be a greater increase in the current year than the Minister has incorporated in the order before us today.

[Steve Webb]

But if the right hon. Gentleman thought that in the event of prices being higher than earnings he would choose prices, why did he make it the statutory position that just earnings would be used, therefore pencilling in an earnings-only increase for 2012, which meant that we had to find extra money to do better than just earnings this year?

[Stephen Timms]

It is probably the case that the Government’s poor performance on inflation—to go back to a point the Minister made earlier—and the resulting high level of inflation have been a surprise. I do not think anyone expected inflation to rise so rapidly. However, I want to underline the point, which the Minister has not acknowledged yet, that if RPI was still in place for the coming year, the increase for pensioners would be higher than the order in question sets out.

The judgment to adopt this approach of using a permanently meaner version of uprating than was in place before is one that we oppose. Of course there is a pressing need to reduce the deficit. We know, as does the International Monetary Fund—and, it would seem, the credit rating agencies and, this week, the former Defence Secretary—that reducing the deficit requires economic growth, which is strikingly absent at the moment. With the economy not creating enough new jobs and so many people out of work, not paying taxes but instead claiming benefits, targets for reducing the deficit will just keep being pushed back further and further. We heard in the autumn statement that we will be borrowing £158 billion more over the lifetime of this Parliament than on the last estimate, because the Government’s economic policy has failed to deliver growth and the economy has flatlined. If, instead of the permanent switch to CPI uprating, a temporary switch had been proposed—with the aim of contributing to deficit reduction over a short period—that might, in our view, have been justified, but we do not support the Government’s policy of a permanent switch to meaner uprating.

In the debate last year, the Minister attempted to make something of the fact that, for five of the past 20 years, RPI had been lower than CPI. Well, it was not lower last year, and it is not lower this year. RPI has generally been higher. Since 1989, the gap between RPI and RPI minus X and the CPI measure has been 0.7% on average. The Office for Budget Responsibility’s November economic and fiscal outlook suggests that the long-run difference between RPI and CPI is likely to be a good deal more, at about 1.4 percentage points. That is twice as much as that historic average, so the OBR thinks that the gap between RPI uprating and the CPI uprating that the Government want to apply in perpetuity is going to get bigger, not narrower.

[George Hollingbery]

I think I understood the right hon. Gentleman to say that he has made a commitment that, had a Labour Government been in power now, they would have uprated pensions using RPI. Has he calculated how much that might cost, and is that a spending commitment that he is prepared to make here today? Secondly, if he is arguing for RPI uprating in future, does he have any idea of the long-term commitment that that might involve for the Government?

[Stephen Timms]

I shall deal with the last point immediately. I have said that if this Government had proposed a temporary switch to CPI uprating in order to contribute to deficit reduction, we would have looked seriously at that argument. It is the permanent downgrading of the uprating method for pensions and all other benefits that we think is wrong.

The DWP impact assessment from July last year told us that the impact on occupational pensions over the next 15 years would be more than £70 billion, and I think the Minister has said that it would be more than £80 billion. It will certainly involve a very large figure indeed. In this coming year, the gap between CPI and RPI—the figure that has been used refers back to last September—is relatively small, at 0.4%. I think the Minister is hoping that pensioners will not notice that his triple lock, which sounds so generous, is in fact delivering a lower increase than the long-established formula used by all Governments until this one. High inflation makes this a substantial cash increase, but, given what the Minister has said about the importance of keeping inflation low, it is not greatly to this Government’s credit that the cash increase is so large.

[Stephen Lloyd]

Does the right hon. Gentleman agree, however, that if the Labour Government had used the triple lock, there would never have been the scandalous scenario of a few years ago when Labour gave pensioners an increase of 75p?

[Stephen Timms]

The point I am making is that if the RPI method were in place for the coming year, the increase would be larger than the one in the order before us today.

[Sarah Newton (Truro and Falmouth) (Con)]

I acknowledge the right hon. Gentleman’s deep knowledge of this subject, but he is not giving the House an entirely accurate picture. For the longest period, the state pension was linked to average earnings, but it suits his argument today to make a comparison with RPI. The huge benefit of the triple lock is that it provides a choice. Average earnings could be taken into account, for example, and if they grew between 6% and 7%, so would pensions. Also, there is always the floor of 2.5%, which would prevent a repeat of the disgrace of giving pensioners 75p, as happened under the last Government.

[Stephen Timms]

I thank the hon. Lady for her generous remark. There is some merit in having an earnings underpin to the system, but I say again that, for the year ahead, RPI would give a higher increase than the triple lock has delivered. That was the case last year as well, which is why the Government set the triple lock aside in the first year it was supposed to be in place. This year, the difference is much smaller, at 0.4%, and the Government must be hoping that people will not notice that the triple lock is delivering less than an RPI uprating would have done. However, in principle, having an earnings underpin as well is entirely helpful.

[Sarah Newton]

But does the right hon. Gentleman not see the benefit for pensioners and the wider economy of the certainty provided by the triple lock? People can now plan for their retirement, and the Exchequer can plan for the economy.

[Stephen Timms]

It is not clear what the degree of certainty is. As I have said, the triple lock was overridden last year because it would have given such a low rate of uprating. This year, it has been applied because there is not much difference between RPI and the triple lock. So no, I do not think that any kind of rock-solid certainty has been introduced; the triple lock was waived the first time it was supposed to be put in place.

[Andrew Bingham (High Peak) (Con)]

The right hon. Gentleman talks about certainty, but will he acknowledge that the triple lock will give pensioners the certainty that they will no longer get the derisory 75p they got when his party was in government?

[Stephen Timms]

As I have said, in the first year that the triple lock was due to be put in place, it was overridden, so I am not sure about the certainty to which the hon. Gentleman refers.

[Oliver Heald]

The right hon. Gentleman is being a bit naughty. It is a general provision in many pension schemes that there is a method of indexation, and it is often permissible to exceed it. To exceed the triple lock is not to break it; it is simply to be more generous. I do not think that “overridden” is the right word to use.

[Stephen Timms]

I deny being naughty. I am simply making the point that the Government have been telling pensioners that they are now in a wonderful new era, thanks to the triple lock, yet it had to be overridden in the first year it was supposed to be in place because it was not delivering an adequate increase. I am not persuaded that the degree of confidence that Conservative Members believe to have been bestowed on pensioners is a reality.

[Ian Paisley]

Far be it from me to encourage the right hon. Gentleman to be naughty, but is there not a certainty that pensioners—those over 80 in particular—are now going to be £50 a year worse off because of the loss of the winter fuel allowance additional payment?

--- Later in debate ---

[Stephen Timms]

The hon. Gentleman is absolutely right. People will feel that loss to a significant extent.

Those big figures, £70 billion or £80 billion, are a direct hit on the incomes of pensioners. They have paid into a pension, in many cases throughout their entire working lives, on the understanding that it would be indexed in a particular way. The Civil Service Pensioners Alliance notes that many of them will have

“entered into particular financial arrangements such as the purchase of added years, the conversion of lump sums into pensions and acceptance of moves to other employers on TUPE terms on the basis that future indexation will be linked to RPI”.

That contributory deal, understood and signed up to by pensioners, is being broken for good—permanently. KPMG has estimated that the total cost of the move to CPI uprating across the pensions system to public sector and private sector pensioners over the next 40 years will be £250 billion. The Government tell us—Conservative Members have just attempted to make this point as well—that pensioners will appreciate the stability. I have to say that they would appreciate even more having an income that kept pace with their costs.

I want to ask the Minister one specific question. The UK Statistics Authority has made the case that

“CPI should become the primary measure of consumer price inflation, but only when the inclusion in the index of owner occupiers’ housing costs has been achieved.”

I am grateful to the Minister for explaining the timetable he envisages for a change to the CPI mechanism possibly being introduced. He has not committed the Government to introducing such a change, but he has indicated when they expect to be in a position to do so. However, does he acknowledge the UK Statistics Authority’s point that, as things stand, the CPI is not an adequate measure, because of the exclusion from it of important elements of housing costs?

[Dr Whiteford]

The right hon. Gentleman has advocated a temporary use of CPI, but will he clarify whether he is advocating a return to the use of RPI at some future date? If so, when that would be?

[Stephen Timms]

I am simply making the point that if the Government had proposed a temporary switch to CPI uprating, perhaps for three years, that would have been a reasonable proposition for us to consider. As it is, we have this permanent switch, which we oppose. As to what we will do when elected to government, I will have to ask the hon. Lady to wait until the publication of our manifesto ahead of the next election, which she and many others will be eagerly awaiting.

Will the Minister say more about what will happen once this revised formula for CPI has been drawn up and published by the UK Statistics Authority? Can he provide any encouragement that the Government will in fact use what will almost certainly be a higher rate resulting from that, or will they wish to stick with the current, lower CPI figure—the one being used for the coming year?

This order also provides for an increase in the standard minimum guarantee element of the pension credit—3.9%, as the Minister said, which is above the increase in earnings to which it would be statutorily tied. It is not clear to me how the 3.9% figure has been arrived at; can the Minister shed some light on that? I do not intend to object to it. As the Minister also said, to pay for the increase, the threshold for the savings credit element, which rewards those who have made their own provision for retirement, has been increased by 8.4%—quite a large amount. The maximum savings credit payable has been reduced by about £2 a week. The reduction in eligibility was made clear when this policy was announced, but the reduction in the maximum amount was not announced at that time.

How many people does the Minister expect to be affected by those changes, and what financial savings will each of them realise for the Exchequer towards the cost of the slightly higher uprating of the minimum guarantee element of the pension credit? We need to recognise that what is happening here is that money is being taken away from slightly better-off pensioners who are still receiving pension credit in order to give to those who are dependent on the guarantee element.

Let me press the Minister on one specific question about CPI uprating. The Government are freezing local housing allowance rates from April in preparation for the linking of the benefit to CPI. To put it politely, that has not been well publicised. One might almost think that the Government would prefer it if people were not made aware of it. When the policy was originally announced, the impact assessment said:

“Some savings are assumed in 2012/13, on the assumption that LHA rates will be fixed at some point ahead of the first uprating.”

It did not say that it would be fixed for the entire year, which is what the Government are now saying. What is the Minister’s justification for doing that?

Local housing allowance rates will be calculated annually as either the lower of the rent at the 30th percentile of local rents or the previous year’s allowance uprated by CPI. That is my understanding; perhaps the Minister will confirm whether I am right. What that means, of course, is that LHA rates will fall over time below the 30th percentile of local rents. Surely Ministers should commit to ensuring, as they seem to have indicated, that at least 30% of local rented housing supply will be affordable to tenants on LHA; otherwise, there is no clear definition of what Ministers expect the LHA to deliver in each local area. Let me ask the Minister directly: what proportion of the local housing market do Ministers think should be affordable for tenants on housing benefit? When will they step in, and how far does the proportion have to fall before they will step in to uprate the LHA level back up to, hopefully, the 30th percentile point?

I have another query about housing benefit. In paragraph 4 of part 20 on page 14 of the order, the maximum deductions from benefit in respect of heating, cooking, hot water and lighting, when those costs are included in the rent and paid to the landlord, are being raised substantially by 18%. Will the Minister say a few words about why those deductions from benefit have been increased so much?

The Guaranteed Minimum Pensions Increase Order requires occupational pension schemes to uprate their guaranteed minimum pensions by their 3% share of CPI, with the state meeting the remainder of the costs. These provide an important floor to defined benefit schemes so that individuals do not get less than they would if they had remained on the state second pension. The 3% increase would have occurred under either CPI or RPI uprating, so it is not objectionable in itself.

This year we are debating these orders as proceedings on the Welfare Reform Bill seem to be drawing to a close.

[Stephen Lloyd]

I have enjoyed listening to the right hon. Gentleman. In my time in Parliament, I have always appreciated his fairness when he debates various issues. I would like to press him on one matter. He said at the beginning of his speech that he agreed with the Government on some aspects of the uprating. Thus far, however, I have mainly heard about where he disagrees with the Government about the uprating, so I would be grateful if he clarified what he thinks is good about it.

[Stephen Timms]

I am grateful to the hon. Gentleman for not accusing me of being naughty—indeed, rather the reverse. I have drawn attention to a number of points of agreement with the Government. For example, I do not object at all to the Guaranteed Minimum Pensions Increase Order. On its own, the increase in the pension credit guarantee level is welcome. We need to know a little more about how it is going to be funded, but it is a good thing in principle, as I said. I also made it clear that I had no objection to the first order I commented on. I thus hope that I will manage to maintain my reputation for fairness—at least in the hon. Gentleman’s mind.

As the debates on the Welfare Reform Bill come to an end, it is important to place this measure in the context of the Government’s wider changes, which will penalise pensioners and in some cases make it impossible for people of working age to save. Couples with one member drawing near to the state pension age are unaware that, as a result of the Welfare Reform Bill, if the other member is younger they will not qualify for pension credit, so the household will not benefit from the increase in the pension credit guarantee level to which the Minister drew attention—I understand why he did so. Couples who live in council or housing association accommodation and claim housing benefit will face the under-occupation penalty; if one of them is below the age of entitlement for pension credit, it will be applied to them as well.

Families on tax credits do not yet know that they will be punished for saving. If they are trying to save up for a deposit on a house or for a child’s university education, and have managed to save more than £16,000—such people have been and are currently entitled to tax credits—they will not get any universal credit at all. For some, universal credit will make it impossible to save. The Minister made a virtue—again, I understand why he did so—of the 5.2% increase in the level of contributory employment and support allowance in the order. What he did not mention was that 100,000 people will lose out when the time limit on contributory employment support allowance comes into effect. If, against all our efforts, the Welfare Reform Bill achieves Royal Assent in time, those 100,000 people will lose out at the beginning of April and another 100,000 will lose out in the following year as they hit the one-year limit. That is the world that the Welfare Reform Bill is ushering in.

We recognise that there are elements in these orders that are acceptable—some, let me say again for the hon. Member for Eastbourne (Stephen Lloyd), are even welcome. Other elements, however, and in particular the permanent adoption of a lower rate of inflation uprating for pensions and other benefits, we cannot support. For that reason, we will be unable to support the Government in the Lobby.

--- Later in debate ---

[Steve Webb]

Indeed. If one could obtain pretty robust and independently accepted forecasts—although that prompts at least two questions—there would have to be a decision about whether one used “forecast, forecast, forecast” or “history, history, history”. In terms of the orders, I am concerned with the decision that we had to make about this year. Had we switched from history to forecast just at the point when forecast was helping us, I think that we would have been criticised. With an historian sitting opposite me, I hesitate to say that no one can argue about history, but at least there is some certainty in the past. We now have the Office for Budget Responsibility, and we have the Bank of England, so we could get an objective future figure. However, if we did that and the future started to turn out differently, there would be a lot of pressure with people saying, “You forecast this figure but it is turning out to be more”. There would also be pressure to make in-year corrections, whereas nobody can argue about history, and that gives us a certain amount of certainty. Having said that, I understand my hon. Friend’s comment about the point of indexation being to match the inflation experience.

My hon. Friend talked about in-work and out-of-work benefits and the relative position of pensioners, as did my hon. Friend the Member for Eastbourne (Stephen Lloyd). I remind him that we have different approaches for pensioners and for non-pensioners. The statutory position for non-pensioners is generally CPI or, in some cases, discretionary, while our policy for pensioners is triple lock. We are in very strange times, with CPI, RPI and earnings going all over the place. In more normal times, when earnings rise faster than prices, pensioners will generally get bigger increases.

I entirely agree with my hon. Friend about the burdens on the low-paid. That is why we are keen to raise the tax-free personal allowance, among other measures. Nobody would say that being in a low-paid job is a comfortable place to be, especially with pay freezes. On average, people affected by the tax credits changes are on incomes of some £17,000 a year, but someone who is drawing employment and support allowance is on an income of about £3,500 a year. It is a question of how much scope the person has to accommodate and absorb these inflation shocks, and that was the judgment that we made. Most of the time, earnings rise faster than prices, and the gap between jobseeker’s allowance and low-paid people’s wages is increasing year after year. In the past 20 years, it has probably increased 17 or 18 times. In general, that will be the sort of outcome that we get. Of course, as soon as we introduce universal credit, that will institutionalise the gap between out-of-work and in-work benefits in the way that I think he wants to see.

My hon. Friend the Member for Eastbourne welcomed the 5.2% increase, particularly for working-age disabled people. I am grateful for his representations on that. He is right that we need to protect people who are not able to work. He asked about the evolution of CPI and RPI. Just to be clear, the £13,000 figure was reached by comparing our triple lock, based on OBR-type assumptions, with the RPI policy of the past 30 years. We asked what somebody retiring on a full pension this year would have got had RPI been rolled forward and what they would get under the triple lock according to realistic assumptions about earnings and prices. The difference between the two is a cumulative £13,000. That figure has changed. I used to say that it was £15,000, then the OBR changed its numbers and I said that it was £10,000. We now say that it is £13,000. The figure will change, but over time earnings tend to grow faster than RPI, so the basic pension will tend to grow faster than it would have done. That is something that we need to communicate over the coming years.

I wrote down a bizarre phrase that was used by the right hon. Member for East Ham (Stephen Timms). He said that the triple lock “undermines pensions uprating”. People can check his speech, but that is what I thought he said. That is nonsense. The triple lock reinforces pensions uprating because it always gives pensioners the best deal between CPI, earnings and 2.5%.

[Stephen Timms]

Will the Minister give way?

[Steve Webb]

I will in a second. Clearly, those numbers all fluctuate relative to each other. Perhaps the right hon. Gentleman can confirm whether he disputes the fact that £13,000 extra compared with the policy that his Government adopted for 13 years is the result of the triple lock?

[Stephen Timms]

I want to focus on the year ahead. Will the Minister confirm that the triple lock will deliver a lower uprating than would RPI?

[Steve Webb]

It is interesting that the Labour party has said that it does not support the orders, which include a CPI increase, and yet is not going to vote against them. I assume that it will not vote against them as there are only about four Labour Members here.

It is unclear what the right hon. Gentleman is saying. He does not think that there should be an RPI increase. Whether RPI is higher than CPI this year could be a debating point. Of course RPI is higher, as he well knows and as we all know. However, he is not in favour of using RPI this year, but favours a temporary move to CPI. I am not sure what debating point he is trying to make.

The right hon. Gentleman and the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) asked about CPIH, which is CPI including the housing costs of owner-occupiers. We are entirely open to looking at that. We are not going to say that we will definitely use it, because we do not know what it is, what it will include or what its properties will be. It would be premature of us to sign up to a prices index that we have not seen and that has not even been invented yet. We are entirely open to considering whether that is the right measure to use when the Secretary of State decides the general increase in the cost of living for September 2013, which is when it will presumably happen. I have said that consistently.

The right hon. Member for East Ham asked why we had increased the standard minimum guarantee by 3.9%. That is the cash pass-through. We have given the basic state pension £5.30. We wanted people on the minimum guarantee to get at least £5.30. It turns out that it will be £5.35. That is 3.9%.

The right hon. Gentleman asked about the savings from the savings credit change. We over-indexed the guarantee credit compared with statute, so it is 3.9% rather than 2.8%. That cost us £200 million, which we have to find by cutting back the savings credit. There is therefore no net saving on pension credit as a whole, but rather redistribution from the savings credit to the guarantee credit. I hope that that answers his question.

The right hon. Gentleman said that the Government had been secretive about the link between the local housing allowance and CPI, and about the freeze in April 2012. I accept that not many people listen to our debates in the House, but I announced that measure from the Dispatch Box on 6 December 2011. I think that he might even have been here. I said:

“As part of the preparation for this change, we need to fix LHA rates, to establish a baseline… As the new cycle for uprating LHA will be annual, we have decided that the baseline should be one year ahead of the first uprating event. Therefore, LHA rates will be fixed from April 2012.”—[Official Report, 6 December 2011; Vol. 537, c. 164.]

The measure was therefore announced before Christmas. Perhaps the right hon. Gentleman had his mind on other things at the time.

The right hon. Gentleman asked why the deductions from heating and so on in the social security order are relatively high. The deductions are linked to the component indices of CPI. Those things have gone up by more than inflation. Each year, we link them to what has actually happened to the cost of those items. Therefore, had the costs been lower, we would have used a lower figure. That is just for consistency.

I stand before the House having just announced £6.6 billion of spending. With due respect to the hon. Members who have attended the debate, it has not received a huge amount of scrutiny, but as was said during the debate, that is because people overwhelmingly think we have done the right thing. We have recognised that pensioners, who will get two thirds of the money, should benefit from the triple lock, that the poorest pensioners should be protected, that disabled people should be protected from inflation and that people who are out of work through no fault of their own should not suffer a cut in their real living standards. It is therefore my great pleasure to commend the orders to the House.

Question put and agreed to.

Resolved,

That the draft Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) (Amendment) Order 2012, which was laid before this House on 30 January, be approved.

Pensions

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2012, which was laid before this House on 30 January, be approved.—(Steve Webb.)

Social Security

Resolved,

That the draft Social Security Benefits Up-rating Order 2012, which was laid before this House on 30 January, be approved.—(Steve Webb.)

Welfare Reform Bill

Stephen Timms Excerpts

Tuesday 21st February 2012 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I hope that Government Members think long and hard before simply voting down Lords amendments 3B and 26B, but at the outset let me comment on the other amendments, as the Minister did.

I want in particular to welcome the Government’s concession on time-limiting contributory employment and support allowance for people in the work-related activity group. Amendments 17B to 17D and 19B provide in circumstances prescribed in regulations for a longer time limit than one year. That is a very welcome change, and I am grateful to Ministers for permitting it. The Government have made it clear that they have no intention of bringing forward such regulations, but the Bill will now at least allow a future, more fair-minded Government to do so, and I welcome that change very much.

The Minister in the other place also gave some assurances about people being treated for cancer, which has been an important issue in this debate. His assurances were, however, rather vague. They do not help people recovering from strokes or from severe mental health problems, or others who have no chance at all of getting back into work within a year, but the assurances in respect of cancer patients, in so far as they went, were helpful.

Amendment 73BA, which the Government tabled, would allow them to waive charges for the parent with care when accessing the child support system in specified circumstances. Again, we have no idea what those circumstances will be, but the amendment is nevertheless helpful rather than unhelpful.

There also needs to be movement on the policy addressed by amendments 3B and 26B, which the Minister before us still opposes. They have some perfectly reasonable aims, to which attention has been drawn in this debate. Under-occupancy of social housing is a problem; many people are stuck—overcrowded—on housing waiting lists; fewer people under-occupying would help; and a workable penalty for people who refuse an offer of smaller, more suitable accommodation could achieve that aim.

[Mr Tom Clarke]

I follow absolutely my right hon. Friend’s logic, but in the field of disability does he not recognise that in many cases the so-called extra room is there for a carer or for other physical reasons to help the disabled person? It is therefore pretty unacceptable to change that arrangement.

[Stephen Timms]

My right hon. Friend is absolutely right, and that is why the Lords propose in their amendment an exemption for people in receipt of disability living allowance, thereby addressing exactly that point.

Our original amendment would have penalised under-occupation in a workable way. If a tenant refused a suitable offer of a smaller home, they would suffer the penalty. If, however, no smaller home were available, they would not suffer that penalty. Unfortunately, that amendment was defeated in our previous debate, but I pay tribute to the 12 Liberal Democrat Members and two Conservative Members who supported it. I am glad to see some of them in their places this afternoon.

Legal challenge to the Government’s policy seems inevitable, because it penalises people for a situation that it is impossible for them to change. The amendment could not be reintroduced in the other place because the Government claimed financial privilege, so this afternoon we have in amendments 3B and 26B a much weaker proposal. It does, however, at least protect those, like the people to whom my right hon. Friend has just drawn attention, who will be hardest hit if the Government’s policy goes through.

The proposal would safeguard four tightly defined groups: first, people in the employment and support allowance support group—those who are too ill to be expected to return to work in the near future; secondly, adults and children who receive disability living allowance or its successor, the personal independence payment; thirdly, war widows; and fourthly, foster carers, because for the purposes of housing benefit calculations foster children do not count towards a bedroom need.

Let me underline how modest the proposal now is. Many Members will take the view, for example, that war widows should not be penalised for having a spare bedroom. The proposal, however, would not protect war widows in that way. It simply says that no war widow should be fined for under-occupying her home unless she has been offered appropriate smaller accommodation. If such an offer has been made to her and she has refused it, under the Lords amendments she would be penalised. The amendments would protect her position until such an offer was made. Only tenants in one of the four specific groups would have even that safeguard. Everybody else who was under-occupying their social tenancy would, under the amendments, be penalised even if it was impossible for them to move to somewhere smaller.

The Child Poverty Action Group has highlighted an example of how similar rules currently apply in the private rented sector, which highlights the point made by my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke). Let us consider a claimant who has two daughters, one of whom has severe and uncontrollable epilepsy with frequent fits during the night. Her social worker and occupational therapist agree that the two girls need separate bedrooms. The claimant currently rents a three-bedroom house, but housing benefit covers the cost of only a two-bedroom house. The Lords amendments would fix that situation for social housing because the daughter is in receipt of disability living allowance.

I will now consider the hypothetical example of a couple in which one person has terminal cancer, which puts them in the employment and support allowance support group for people who are not expected to work again. That is one of the four specific groups that the Lords amendments would protect. The couple have a spare bedroom in their two-bedroom council house because their child moved out recently. They would be happy to move to a one-bedroom council or housing association flat but none is available. Under the Minister’s policy, that couple will be penalised, on average by £12 a week. Under the amendments, because of the exceptional circumstances, they would not be penalised. That would be the modest and reasonable effect of the amendments that the Lords agreed.

The National Housing Federation tells us that 180,000 social tenants in England are under-occupying two-bedroom homes, but that only 68,000 one-bedroom social homes became available to let in the year 2009-10. The impact assessment from the Department for Work and Pensions, which is well worth reading, states:

“According to estimates from DCLG there is a surplus of 3 bedroom properties, based on the profile of existing working-age tenants in receipt of Housing Benefit, and a lack of 1 bedroom accommodation in the social sector. In many areas this mismatch”—

I am quoting the Department here—

“could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement.”

That is the reality in many places. There simply will not be a one-bedroom home to move to. That will be the case in the constituency of the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who intervened earlier, and in my constituency. Of course, the policy will not release a single one-bedroom home, because one cannot under-occupy a home with one bedroom.

The couple in the example, in which one person has terminal cancer, would see a cut of £12 a week or nearly £60 a month in their income. That is the average across the country. They would somehow have to make that up to their landlord from other income. The Department, no doubt trying to be helpful, gives some suggestions in the impact assessment of how they might do that:

“In these circumstances individuals may have to look further afield for appropriately sized accommodation or move to the private sector, otherwise they shall need to meet the shortfall through other means such as employment, using savings or by taking in a lodger or sub-tenant.”

I ask the House to reflect on each of those three suggestions in the case of somebody with terminal cancer. People in the ESA support group are, by definition, not in a position to work. That is why the Government have placed them in the support group. That suggestion therefore does not help. The DWP suggests instead that our terminally ill tenant in a two-bedroom flat should take in a lodger to help pay the rent. One has to ask whether the people promoting these policies have ever met anyone who will be affected by them. Of course, in many cases, the social landlord would not permit somebody to take in a lodger under the terms of their tenancy. The Department’s other suggestion is that they can use their savings. People in receipt of income-related ESA do not have very much saved—if they did, they would not receive income-related ESA.

Another alternative, as the impact assessment suggests, is that the tenant will have to move out of their council home into the private sector. In that case, their housing benefit will rise sharply. Where is the gain in forcing that to happen? The National Housing Federation, whose members are very worried about the change that the Government insist on making, makes the point that

“a couple with one child moving into the private sector from a three bed social flat in Crawley would be entitled to around £66 per week more in benefit to cover their additional housing costs.”

The key point is that it will be impossible for many of those affected to avoid the penalty. If suitable alternative accommodation can be offered to them, then fine, they can move and will no longer be under-occupying, and their benefit will continue to cover their full rent. The Lords amendments specifically allow for that. However, if there is no smaller flat available, our cancer patient will just have to take the £60 a month hit. How can that be justified?

The Minister will tell us, as he has before, that £30 million has been made available to councils in discretionary housing payments to avoid penalising a limited number of households. However, the Minister in the other place made it clear that, as the Minister of State hinted today, that money is to help foster carers and disabled people with adapted homes—so no help there for our terminally ill tenant.

Even for foster carers and disabled people in adapted homes, contrary to the impression that the Minister of State gave to the hon. Member for Crewe and Nantwich (Mr Timpson) and the right hon. Member for Bermondsey and Old Southwark, there will be no certainty. People wanting help will have to go to their local council and ask for it, because it will be discretionary—that is what the word means. It will up to each local council to decide what it does with the money. It could use it for that purpose, or it could use it for a different one. If other people have already taken all the discretionary funding that has been provided, that will be it. No further help will be available.

[Charlie Elphicke]

I understand that the policy in the Lords amendments would cost the Exchequer £150 million. How would it be funded?

[Stephen Timms]

The hon. Gentleman should reflect on the fact that, as I have described, the costs will be greater in a number of ways with the Government’s provisions in place than they would be if the Lords amendments were retained.

Before I leave the topic of discretionary housing payments, it is worth my noting how the extra £30 million has been found. Initially, the average penalty for under-occupying by one bedroom was going to be £11 a week, and now the Government have increased it to £12 a week. They have increased the penalty for everybody affected in order to scrape together the extra cash to increase discretionary payments.

The last time this policy was debated, we offered an effective alternative whereby a tenant would have their benefit cut as a penalty if they refused a suitable move. Unfortunately, Government Members threw it out. The Lords amendments would limit that safeguard to the four groups that I have mentioned—the sick, the disabled, war widows and foster carers.

Ministers have said that their policy will be a work incentive, but the support group comprises people who are not in a position to work. A work incentive will do them no good at all. Let us call a spade a spade: this is a spiteful cut in people’s income. Foster carers provide a service that saves the Exchequer billions. The Fostering Network has warned that people will be forced by the penalty to give up fostering, which will increase costs to the Exchequer. War widows and widowers have seen their loved ones die for their country. Their grieving barely over, they will be fined under the Government’s policy because they have one bedroom too many. I ask whether that is really what Government Members came into the House to do to their constituents. The Government’s policy, without the Lords amendments, will penalise everybody regardless of whether they could move.

Fourteen Government Members joined us in voting for the relevant Lords amendment last time. I thank them for that, and their constituents will do so as well, even if their Whips will not. As we were not successful, social landlords will have to take on extra staff to chase the resulting arrears that will start to accrue in every social landlord’s stock across the country. The current Lords amendments are much more modest than the previous ones, but they would at least protect those who stand to lose the most from what the Government want to do. I hope that hon. Members will support the Lords amendments and oppose the Minister’s motion.

[Andrew Percy (Brigg and Goole) (Con)]

When I spoke during our last consideration of the Lords amendments to the Bill, I expressed concerns about this policy, particularly about the changes to child maintenance payments. I am pleased that there has been some movement on that front, but I find myself once again in support of their lordships. I am sorry about that, because the ministerial team is one of my favourites. I will not tell you which is my least favourite, Mr Speaker, but people can guess.

--- Later in debate ---

[Stephen Timms]

I agree with the points that the hon. Gentleman is making. Just to take him back to foster children for a moment, as I understand it, they do not count towards the housing benefit bedroom entitlement, whether they are there are not. Therefore, not only is there a problem when there are no children; there is a problem when there are children.

[Stephen Lloyd]

I would welcome a response from the Minister on that issue.

To go back to disabled people and adjustments to their homes, I would like some detail from the Government as to exactly how they will meet that challenge, because clearly it makes no sense to move someone out after their home has been adapted to the tune of thousands of pounds.

Thirdly, what steps are the Government taking to ensure that there is enough housing stock when 2013 comes around? We have a year before that happens, so I would be interested to hear the Government’s plan. Last but not least, what plans are the coalition Government making, prior to implementation, to work with local authorities and housing associations in advance of April 2013 to ensure that the changes are made in a sensible and productive manner? I look forward to hearing the Minister’s reassurances in response to those four important questions.