Oral Answers to Questions
Steve Webb Excerpts(11 years, 10 months ago)
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Dr Eilidh Whiteford (Banff and Buchan) (SNP)
1. What estimate he has made of the number of households in Scotland affected by the new under-occupancy rules for housing benefit.
The Minister of State, Department for Work and Pensions (Steve Webb)
The social sector size criteria, which will be introduced from April, will align housing benefit rules for those living in social sector accommodation with those already applied to claimants living in the private rented sector. We estimate that around 80,000 households in Scotland could be affected.
Dr Whiteford
The vast majority of tenants affected by this policy have no realistic prospect of finding a smaller, cheaper house. It also has many implications for devolved policy areas. Will the Minister ask the Secretary of State to show his respect for the Scottish Parliament by appearing in person before its Welfare Reform Committee?
Steve Webb
Obviously, the impact of housing benefit policy, which is a matter for the UK Parliament, will be different in different parts of the country. I have been to the Scottish Parliament and talked to the Deputy First Minister about welfare reform and we keep a dialogue open with our colleagues in Scotland.
Charlie Elphicke (Dover) (Con)
Is it not the case that in Scotland and England as a whole getting on for 2 million families are in overcrowded accommodation? Is it not important that we think about their needs?
Steve Webb
My hon. Friend is right to bring forward the voice of those in overcrowded accommodation, which is all too often not heard in this debate. At the same time as we are paying housing benefit for approaching a million spare bedrooms, a quarter of a million households in overcrowded accommodation would love the opportunity to live in a larger house.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
At the weekend, I spoke to one of my constituents in Scotland who has been a foster parent for 23 years and currently has four foster children, two of whom are in long-term placements. She fosters for one local authority and lives just over the border in another, which means that there is now considerable confusion about the discretionary payments. Would it not be much better if foster parents were exempted altogether?
Steve Webb
We recognise the special position of foster carers, which is why we allocated £5 million of discretionary housing payments so that local authorities can respond on a case-by-case basis to the needs of foster carers. We believe that that is a more flexible approach than a blanket exemption.
Ian Austin (Dudley North) (Lab)
At the same time as millionaires are getting a tax cut, hundreds of thousands of Britain’s poorest families, people with disabled children, the terminally ill and the bereaved will be made poorer or forced to move. That risks increasing the benefits bill, as most will go into the private rented sector where rents are higher. However, I want to ask for a clear assurance about the brave men and women serving in the forces. Will the Minister assure the House that they and their families will have their rent covered 100%, that they will not lose a penny while they are away from home and that they will not be affected at all? Yes or no?
Steve Webb
On the hon. Gentleman’s point about millionaires, I gather they are hankering after the halcyon days when they used to pay only 40% income tax and 18% capital gains tax. On his point about service personnel, let me make it absolutely clear that in the case of a couple with a young adult who is going off to serve with the forces, when that young person leaves the home to serve on the front-line we cease to assume that they are making a rent contribution. When that person goes off to serve, the housing benefit will, in general, go up.
Mr Tobias Ellwood (Bournemouth East) (Con)
2. What steps his Department is taking to support people who want to start their own business.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
4. How many people currently claiming a state pension will benefit from the new higher rate state pension under his proposals for a single tier scheme.
The Minister of State, Department for Work and Pensions (Steve Webb)
People who reach state pension age before single-tier implementation will receive a state pension in line with existing rules. Existing pensioners already receive the triple lock designed to ensure that the pension rises by at least 2.5% each year. The single-tier reforms are designed to respond to the challenges facing working people today.
Steve Webb
To be clear, today’s pensioners have benefited hugely from our decision to reverse 30 years of falling value of the state pension for those 12 million pensioners, to whom we are now paying a pension that is a bigger share of national average earnings than at any time in the past 20 years.
Amber Rudd (Hastings and Rye) (Con)
Women often take a few years off to look after children or elderly relatives. Will the Minister reassure me that women who do that will not be penalised and will also be eligible for the single-tier pension?
Steve Webb
My hon. Friend is right. For those who retire under the new regime, years spent some decades ago bringing up children, which were not properly protected for state pension rights, will be so under the single-tier arrangements.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
It has been a busy few weeks in pensions world. The Minister will be aware that the Office of Fair Trading has recently announced that it is to undertake an inquiry into the private pensions market. This follows a Labour campaign for just such an inquiry. The Minister’s response to our campaign was to accuse the Labour party of scaremongering on pension charges. Now that the OFT has decided to undertake this inquiry, may I encourage the Minister to heed another Labour campaign call and lift the restrictions on NEST as soon as possible so that it can provide low-cost, high-quality pensions to everyone who wishes to save with it?
Mr Speaker
We look forward, I am sure, to hearing about NEST, whatever that may be.
Steve Webb
Thank you Mr Speaker. It will be a house- hold name soon, I hope.
We worked very closely with the OFT in the run-up to its inquiry, which will look at whether there are problems in this area. It is very welcome, and we will be working very closely with the OFT as it carries it out. As the hon. Gentleman knows, Labour introduced constraints on NEST—the National Employment Savings Trust—and we are consulting on whether to lift them.
Miss Anne McIntosh (Thirsk and Malton) (Con)
11. When my hon. Friend presented these proposals last week, it was indicated that there would be a net cost to public sector workers in relation to the higher-rate state pension. Is he able to put a figure on that additional cost?
Steve Webb
Yes. Those who work in the public sector will pay the full rate of national insurance, which is an extra 1.4%, but they will build up state pension at the full rate. Crudely speaking, they will pay about a tenth extra in national insurance but build up, potentially, up to a third extra in state pension, which will be a very good deal.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
6. How many reassessments of claims for disability living allowance have taken place in the past six months.
Mr Stephen Hepburn (Jarrow) (Lab)
12. What assessment he has made of the potential effect on low-income families of planned changes to housing benefit eligibility in respect of under-occupancy in the social rented sector.
The Minister of State, Department for Work and Pensions (Steve Webb)
Our impact assessment shows that of the 3.4 million social sector tenants receiving housing benefit, up to 660,000 could potentially be affected by this measure.
Mr Hepburn
Do this Government ever get fed up with hammering the poor of this country? Punishing the poor seems to be the mandate that is running this Government. In my constituency, 2,000 households will lose anything up to 25% because of this bedroom tax. Will the Minister change this callous measure now, or will he wait until it becomes this Government’s poll tax and comes back to haunt them?
Steve Webb
If we leave aside the issue of people in his constituency who are living in over-crowded accommodation, who would very much like the opportunity to live in one of these houses, the hon. Gentleman will be aware that for many years under Labour, people who rented in the private rented sector were not allowed a spare bedroom. Why is it fair not to allow private renters a spare bedroom, but to allow social tenants a spare bedroom?
Philip Davies (Shipley) (Con)
Does the Minister agree that downsizing when people can no longer afford accommodation or when accommodation becomes too big is something that many people have had to do for many years? Would it not be perverse if the only people protected from what is a fact of life for many were those dependent on the state for their housing?
Steve Webb
My hon. Friend is right that ensuring that we make the best use of the scarce resource that is the social housing stock does involve people moving to smaller accommodation later on in life—although not pensioners, who we have exempted. Many of the best housing associations and councils are managing their housing stock better in response to this change.
David Wright (Telford) (Lab)
The bedroom tax will have an impact on thousands of people in Telford. Many might want to move to smaller accommodation, but it is not available and the Government know it is not available. The policy is designed to penalise people—it is nothing to do with the housing market.
Steve Webb
There is a danger that this is viewed in a very static way. Many of the best housing associations are looking at groups of constituents, some of whom are over-occupying and are overcrowded, and are moving people around to create space. In the longer term, we need a housing stock that better meets the needs of people on the waiting list, and it is time that successive Governments addressed that.
Mr John Leech (Manchester, Withington) (LD)
Because of the shameful under-investment in social housing by the previous Government, there are simply not enough properties for people to downsize to. What assessment has my hon. Friend made of the number of families who will end up moving to smaller, more expensive accommodation and end up receiving more in housing benefit?
Steve Webb
My hon. Friend is right: successive Governments have failed to build enough affordable housing. It is worth stressing that moving is one option, but only one option, for those in work. Just two or three extra hours on the minimum wage would cover this deduction. There are a range of options—going into work, taking in a lodger or sub-letting—and good housing associations are working with their tenants to achieve best outcomes.
Barbara Keeley (Worsley and Eccles South) (Lab)
13. What estimate she has made of the number of unpaid carers who will lose carer’s allowance as a result of the benefit cap.
Catherine McKinnell
It would appear that about 430,000 women born between 6 April 1952 and 6 July 1953 will not qualify for the new pension, while men of the same age will. What does the Minister have to say to the 1,700 women in Newcastle potentially affected by this unfair situation?
The Minister of State, Department for Work and Pensions (Steve Webb)
Those women will, of course, receive a state pension up to two years before a man born on the same day and have the option of being treated in the same way as a man—for example, they could defer their pension for two years and get an extra 20% for deferral. That is an option. We cannot bring the measure forward, however, because the occupational pension sector needs time. The only way we could treat men and women identically would be to delay until 2019, but if we did that many more women would be excluded.
Caroline Dinenage (Gosport) (Con)
T2. Given that one in six of the adult population is functionally illiterate, what training is provided to jobcentre staff to help identify and signpost adults with literacy issues?
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
The Minister will have read about the cases of Becky Bell raised by my hon. Friend the Member for Hartlepool (Mr Wright) and of Angel Hooper, the disabled child whose parents have been told that they will lose £20 a week because her specially adapted room will not be shared with another family member. They are two of the 660,000 families being told they will have to fork out extra or move under the bedroom tax. Will he confirm how many one-bedroom properties will be needed for people to downsize to as the bedroom tax kicks in?
Steve Webb
You will be aware, Mr Speaker, that discretionary housing payments are being made available with a specific focus on the needs of severely disabled people—for example, where a house has been adjusted to reflect the needs of a disabled person. We have allocated money to local authorities precisely to cater for those whom it would be inappropriate to expect to move.
Mr Byrne
The Minister knows that 600,000 people will now need a one-bedroom flat, yet the Department’s own assessment states that there are insufficient properties to enable tenants to move to accommodation of an appropriate size, even if they want to move. From the beginning of April, therefore, people in social housing will face a £14 a week extra bill, when those on £1 million a year face a £2,000 a week tax cut. How can the Minister justify this to hon. Members such as the hon. Member for Harlow (Robert Halfon), who said that benefit cuts at a time of tax cuts of this order would send the clearest signal that
“Conservatives were looking after vested interests: not so much a dog whistle—more a full blown trumpet.”?
Steve Webb
Given that the right hon. Gentleman mentions taxation, I will risk straying on to it, but quite why today’s millionaires would rather have our 45p rate than his 40p rate, or our 28% capital gains tax, rather than his 18% rate is beyond me.
On the right hon. Gentleman’s specific point, households will respond in a range of ways to the measure on under-occupation: moving is simply one of them; taking in a lodger or boarder, sub-letting, working or working more hours are others, and there are discretionary payments for those in most need.
Penny Mordaunt (Portsmouth North) (Con)
T7. Is the Minister aware that the Conservatives in Wales have introduced the post of shadow Minister for older people? In the light of that, will he update the House on the work of the UK advisory forum on ageing in getting a co-ordinated approach to older people’s issues across Whitehall?
Steve Webb
I am grateful to the hon. Lady for flagging up the work of the UK advisory forum, which I jointly chair with the Minister for care services at the Department of Health. It enables us to bring Departments beyond those two together with older people’s organisations, and we are looking to expand the role of that group.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
T4. More than 2.3 million people with disabilities currently live in poverty. Given that fewer than half of all disabled people are in work, that we have a contracting economy and that at least £6.7 billion is being cut from disability benefits, how many more disabled people do the Government estimate will be living in poverty at the end of this Parliament?
Steve McCabe (Birmingham, Selly Oak) (Lab)
T5. Teacher Dawn Lewis in my constituency is one of 600 women who will lose out because of the perverse pension rule that my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) drew attention to earlier. Is the Minister at all worried that this looks like yet another coalition attack on working women?
Steve Webb
Just to be clear, we are talking about women who draw a pension significantly earlier than men born on the same day. The hon. Gentleman is shaking his head; that is a statement of fact. It is the case that present pensioners do not fall under the new system. I have explained why we cannot bring it forward, but I am delighted that the Opposition’s principal criticism is that we are not introducing our reform quickly enough.
Simon Hughes (Bermondsey and Old Southwark) (LD)
On the Government’s benefit changes for housing, foster carers have expressed their concern to me that they might be inhibited from doing their good work by the extra penalty for having a spare room. Can the Secretary of State or a Minister give me some reassurance that the amount of fostering that we currently have—and need—can continue without financial disadvantage?
Emma Reynolds (Wolverhampton North East) (Lab)
T6. Further to the questions from my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell) and for Birmingham, Selly Oak (Steve McCabe), I still do not understand why the Government are, in effect, targeting and discriminating against nearly 500,000 women, 500 of whom are in my constituency—one of them is my mother—or why they think this is fair, given that men of exactly the same age will get a higher pension. It is not fair, but is it legal and will the Government reconsider their proposals?
Steve Webb
Just to be clear, when the hon. Lady says that a man born on the same day will get a higher pension, that is simply not necessarily the case. People are wrongly comparing the £144 flat rate with the £107 basic pension, plus a variable SERPS—state earnings-related pension scheme—pension, so the figure might be higher, but it might be lower. The new system is not more generous overall than the one it replaces. All I would say, through the hon. Lady to her mother, is that a man born on the same day as her mother will draw his pension significantly later, so she will have the benefit of that pension for perhaps up to two years more than a man born on the same day.
Dr Phillip Lee (Bracknell) (Con)
Last Friday, I visited the A4e offices in Bracknell, and it was encouraging to hear the staff there giving support to my constituents who were seeking to set up their own business. In addition to providing that support, what are the Government doing to extend the availability of new enterprise allowances so that more people in my constituency can start their own business?
Lindsay Roy (Glenrothes) (Lab)
T8. As several of my hon. Friends have already said, almost 500,000 women aged between 59 and 60 will not qualify for the new state pension while men of the same age will do so. How does the Minister justify penalising 700 such women in my constituency in that way?
Steve Webb
Just to be clear, the women the hon. Gentleman is talking about will get exactly the pension that they thought they were going to get before we made our announcement, and they will get it on the day on which they thought they were going to get it. We have changed nothing at all. However, under the present system, if those women want to defer a pension for two years, they will get that on the current rules plus 20%, which is a generous rate of deferral.
Jane Ellison (Battersea) (Con)
Will the Minister confirm that, contrary to the comments made by some Labour Members, a record number of women are in work at the moment?
Mr William Bain (Glasgow North East) (Lab)
T10. The Minister has failed to justify to the 430,000 women in the rest of the country, or to the 500 women in my constituency, born between 5 April 1952 and 6 July 1953 why they will receive a state pension of up to £1,900 a year less than a man born on the same day as they were.
Steve Webb
To risk repetition, I say to the hon. Gentleman not only that those women will receive potentially up to two years more but that, on average, the new system is costing no more than the one it is replacing. So it is simply not the case that we are taking new pensioners and spending more money on them than we were in the system that we are replacing.
Defined Benefit Pension
Steve Webb Excerpts(11 years, 10 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Following the autumn statement, the Government will, this Friday, publish their call for evidence on two potential policy changes—whether to allow companies undergoing valuation in 2013 or later to smooth asset and liability values; and whether to provide the Pensions Regulator with a new statutory objective to consider the long-term affordability of deficit recovery plans to sponsoring employers.
The call for evidence document will be available on the Department’s website from 25 January 2013 (www.dwp.gov.uk/consultations) together with details on how to contribute.
Housing Benefit Entitlement
Steve Webb Excerpts(11 years, 10 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Ian Lucas (Wrexham) (Lab)
This is the third debate I have attended on this issue in the past two days, which gives an indication of its seriousness. The Minister replied to one of those debates yesterday so he should be increasingly aware of the concern about it. I shall focus on the occupancy provisions as they affect disabled people, because we have heard much from other hon. Members about other issues.
I shall refer to two cases, having been approached by parents of adults with disabilities who will be profoundly and specifically affected by the changes. One, Mrs Rosemary Burslem, asked me to specify the particulars of her son’s case. She is in her 60s and has an adult child, David, who has severe disabilities. He has autism and needs overnight sleep-in staff, as well as one-to-one staff support during the day and two-to-one support when he goes out in the community.
In the view of David’s mother, who has looked after him for many years, it would be inappropriate for him to share a house with anyone with a learning disability because his behaviour is very challenging. He regularly takes food out of the fridge, as well as cutlery and crockery to bedrooms for no apparent reason. He flushes the toilet regularly, and switches electrical items on and off. His behaviour is regularly obsessional, which makes it virtually impossible for him to share accommodation with anyone. David has what Mrs Burslem describes as mega-tantrums. She says they are like the tantrums of the terrible twos, but 30 times worse because he is in his 30s. He is angry, frustrated and feels unwell, and is unable to work or live easily with other people. He then acts for no apparent reason, and all that makes it extremely difficult for him to live with anyone else.
The difficulty with the proposals is that they do not recognise or take account of such circumstances. I know that there are discretionary housing payments, but the reality is that that family is coping now with the uncertainty arising from the proposal.
The Minister of State, Department for Work and Pensions (Steve Webb)
Without full details of the case it is difficult to discuss it, but the hon. Gentleman said that the lady is in her 60s. Will he clarify whether she is above or below state pension age?
Ian Lucas
She does not live with David, so I am not sure whether that is relevant.
The problem is that the proposal is causing uncertainty to the family now, and there is no certainty about whether discretionary housing payments will be for an extended period or affect them permanently. I will forward full details of the case to the Minister. I do not expect a specific answer now.
I have been contacted about another case of adult parents who share a house with an individual who suffers from spina bifida and hydrocephalus. An additional room in their house is used for the storage of oxygen and other disability aids, and a separate room is used as a living room by the individual concerned, who has specific and profound additional needs. Under these proposals, none of the particular circumstances for those individuals is taken into account, and they are some of the people who we all think—and I am sure the Minister thinks—should have our support, but they have no guarantee that they will continue to receive it. The fact is that this set of proposals is creating enormous worry for people who have huge burdens in caring for people whom they care profoundly about. They have contributed enormously to society by helping to look after those people for very many years, and we are letting them down badly.
I implore the Minister to look at the particular applications of the rules in those cases to ensure that those people can be looked after. When they came to me and said, “Look into these matters,” I could not believe for one moment that the system would not include discretion to cover individual cases such as those. The proposals are ill-conceived and are causing enormous distress up and down the country. The Government, and I am sure the Minister, did not intend to create such situations. He needs to look at the proposals again.
I heard the Minister’s response yesterday, and in it, he referred to the deficit, but the reality is that the Government, at the same time as they are letting those people down, have chosen to give a tax cut to the richest people in the country. That is the type of political choice that we all have to make, and the reality is that the Minister has supported that choice. He needs to get his act together to change his approach and support the people who need support, and not the people who have most.
The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. This is indeed an important issue. This is the second debate on it this week to which I have responded. It is good to have the opportunity to put on record the response to a number of the issues that have been raised and to deal with the myths that are growing up around service personnel, but it is worth briefly setting this debate in context. Most of my remarks will be about the specific matter in hand, but it is almost being implied that the Government woke up one morning and thought, “Wouldn’t it be great if we could take some housing benefit off people?” It is important to understand why this is being done.
In the final year of the last Labour Government, every time the Government raised £3, they spent £4. The word “morality” has been used extensively in this debate. Borrowing money that we expect our children to pay back is not a progressive thing to do. Parents who go out and blow money on their credit card and say to the kids, “When you grow up, you can pay it off” would be regarded as irresponsible. That is what we have to deal with now. Whichever party had taken control in 2010—
Steve Webb
No, I will not give way. Both parties set out deficit reduction plans, which involved spending cuts worth tens of billions of pounds. Public spending consists fundamentally of public sector pay and social security and tax credits—those are the two big areas. Both sides agree that public sector pay has to be held back, but benefits and tax credits also have to be part of the mix. Within the benefits budget, where could we have looked? Where is the low-hanging fruit? Where are the easy things to cut? Of course there is precious little of that. Housing benefit is a large part of the benefits budget and it has been rising fast, so is there an area in the housing benefit budget—
Steve Webb
No, I will not give way. Is there an area in the housing benefit budget where we can save money and tackle some of our housing problems?
Steve Webb
I have said that I am not giving way. This is an area of the housing benefit budget where we can better manage the housing stock. Let me give a specific example. It has been said in this debate that for housing benefit not to cover a spare room is immoral; that is the tenor of what has been said. When Labour introduced the local housing allowance, private sector tenants did not get housing benefit for a spare bedroom. Where is the morality in saying to private tenants that they cannot have a spare room, when social tenants, who are paying a subsidised rent, can? They could be living next door to each other, and we are favouring the social tenant over the private tenant. Why should housing benefit not cover spare rooms for private tenants when it does for social tenants? It is simply not fair.
The second unfairness that we have to tackle is overcrowding. A quarter of a million households in England are overcrowded, and they have had no voice in this debate. They are trying to get family homes, and homes that they need. They are living in overcrowded accommodation—
Steve Webb
I should like to point out that the shortage of affordable social housing did not start in 2010. Somebody had 13 years to sort that out, and it needs to be tackled now.
Hugh Bayley (in the Chair)
Order. May I ask Members not to make remarks from a sedentary position? The Minister has quite a lot of points to respond to, and he has made it clear that he does not want to give way.
Steve Webb
Thank you, Mr Bayley. The second unfairness that we must tackle is the needs of people who live in overcrowded accommodation. A quarter of a million of them need to have a voice in this debate, because all too often they do not, and we must tackle that.
People have rightly said that these are family homes. They are not just houses; people have lived their lives in them. I accept that, which is why we have exempted people over state pension credit age. Essentially, someone who is a pensioner is not affected by these changes; we are talking about people of working age.
How will people respond to the change? There are a range of responses. It has been mentioned that housing benefit is an in-work benefit in some cases. Nationally, the average loss from this policy is £14 a week. For someone who is in work on a minimum wage, that is the equivalent of about two and half hours of additional work; it is not quite that because of tapers and so on, but we are talking about a few hours of extra work as one option—
Steve Webb
Again, the hon. Lady is talking from a sedentary position. She cannot control herself. On the day that we have published yet another set of figures showing another fall in unemployment and record growth in employment, she asks, “Where is the work?” The myth that there are no jobs available when we have more people in employment than ever before needs to be countered.
For some people, taking a job or working extra hours is an important part of the solution. It has been mentioned that taking in a lodger or a sub-tenant is not an option for some people, but for many it will be. The hon. Member for Banff and Buchan (Dr Whiteford) said that that might be an issue. In general, housing associations and social landlords should allow orderly sub-tenancies—a person cannot just take someone in and tell the landlord after the event. There has to be a strong reason to refuse such an option. The presumption is that it can be done, so it is part of the mix.
I had a constituent who was a single person living in a three-bedroom social housing accommodation. She had a letter about under-occupation, so she phoned me up. She said that she had a brother and sister-in-law who could live with her. That is a better use of the housing stock; it meets their housing need and covers the shortfall. Such improved use of the housing stock benefits us all.
I want to address discretionary housing payments, which were raised by the hon. Member for Stockport (Ann Coffey) in her thoughtful contribution. The hon. Member for Wrexham (Ian Lucas) also mentioned discretion. We are being asked to do contradictory things here. Where people have identified groups such as foster carers or people with major disability adaptations to their property, rather than central Government defining exactly what that means in every case, we have allocated the money that we think is needed to deal with the problem and given it to local authorities to respond on a case-by-case basis.
We think that such local discretion is right, but we have been asked to give local discretion, except in every such case also to have an absolute right to make a discretionary housing payment or to exempt people. That is the tension. There are all sorts of individuals whom we might think should be exempt. Trying to sit down and write a regulation or a statutory instrument to define exactly who all those people are does not work, which is why we have allocated discretionary housing payments—this year of £60 million and next year of £155 million—to local authorities. Let me take as an example Durham’s local authority. Last year, it had £177,000 of DHPs. Next year, it will be £880,000 of DHPs to respond to the sorts of people whom hon. Members have mentioned.
I want to respond to the issue about service personnel. I assume that the things that have been said are based on ignorance, rather than on an intent to mislead. Let us take the example of a married serviceman or woman. If one goes away, it does not matter, because there is still a one-bedroom need, so married service personnel are not an issue. Service personnel who live in service accommodation are also not an issue, because they are not social tenants on housing benefit.
We are talking here about service personnel who live in social rented accommodation with their parents and who are on housing benefit, so we are getting to narrower and narrower groups. If a member of the armed forces who is on a wage is living at home with his mum and dad, the benefit system says, “Ah, there is somebody in the house on a wage.” We expect that person to pay up to £70 a week towards the rent—it is called a non-dependant reduction. When the serviceman or woman goes to the front line, and if they are away for a long period, we no longer treat them as a non-dependant in the household, so we no longer deduct £70 from the housing benefit. When a young person goes away to fight for a long period, the parents’ housing benefit will in general go up. That is not the story that the Labour party has been putting out today.
We have been asked about foster carers. We think that the discretionary housing money that we have made available will assist around 5,000 foster carers. Let us bear in mind, though, that this is not all foster carers. I am talking about foster carers who might be in social rented accommodation, on housing benefit and in need of a spare bedroom, so a subset of all fosterers. Of course the fostering organisations would prefer a total exemption; I accept that. Failing that, their estimate is that these are about the right numbers of people, and we have had meetings and discussions with the fostering organisations.
The important issue of children was raised. The majority of people who are affected by this measure do not have dependent children. We are generally talking about older people. None the less, the position of families with children is important. It was suggested that two teenagers of the same gender should not be expected to share a bedroom. I do not follow that argument. I shared a bedroom with my brother until we were 18, and I do not think that it did us any harm. At a time when we have a great shortage of affordable accommodation, I cannot see what the problem is with older teenagers of the same gender sharing a bedroom.
An important question has been asked about whether DHPs are temporary or permanent. In the past, DHPs were a temporary fix. If someone had a short-term problem, they needed a bit of DHP to bail them out and then they moved or did something about it. Under the new system, DHPs can be for the long term, because some situations will not change. If someone lives in a house that has been substantially adapted, that will not change. Local authorities are getting revised guidance and will have to think about DHPs differently, because some people need longer-term certainty, as has been properly said.
The hon. Member for Banff and Buchan said that we had a size mismatch, and indeed we do. When a council is doing something about it—building houses to match the housing need—the hon. Lady asks how I can possibly think that that is a good thing.
Steve Webb
I have just 60 seconds to go. When councils build houses of the right size to match housing need, they should be applauded and not condemned.
The hon. Member for Dudley North (Ian Austin) said that we need to manage over-occupation and under-occupation. We have had decades to do something about that, but nothing has happened. Some housing associations have welcomed the opportunity to look at the housing allocations to make better use of the precious resource of social housing. I fully accept that there will be disruption as a result of this measure, which is why we have a two-year programme looking at all this work, evaluating the impact and publishing the research. If we need to make changes to the system as we go because there are perhaps groups or impacts that we have not thought of, we will be in a position to do that. The matter will be thoroughly researched, and we will publish the results. At a time when we need to save money, being fairer to people in the social sector and the private sector and tackling overcrowding as well as under-occupation is a fair way to reduce the spending deficit that we were handed by the Opposition.
Hugh Bayley (in the Chair)
I congratulate all Members—Back Benchers and Front Benchers—on sticking to the time limits, so everyone was able to get in.
Under-occupancy Penalty (Wales)
Steve Webb Excerpts(11 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate. It is good to see the number of hon. Members who have taken part. I will try to respond to the points that she has raised. In general, I will take interventions from her but not from other hon. Members, until we get near the end of the time.
Let me set the context. Obviously, we want to focus on the impact of the policy on Wales, and I want to respond to some of the particular points made by the hon. Member for Newport East, but for the record, the Government are seeking to take £18 billion a year of what we spend on social security and tax credits because of the vast amount of borrowing that we had to deal with. It is not that the Government woke up one morning and thought, “Wouldn’t it be nice to cut people’s housing benefit?” We have to stop a situation in which for every £3 the Government were raising in tax, they were spending £4. That is unsustainable. It is not fair to the children whom we are expecting to pay our debts. That is why the Government are looking to save money on social security.
Housing benefit is a vast and rapidly rising bill and inevitably had to be looked at, so within the housing benefit budget, what can be looked at? We have looked at private sector rent. We have looked at shared accommodation for younger people. Within the social sector, there are two reasons why spare bedrooms—where they are spare bedrooms—need to be looked at. The first is the unfairness between social tenants and private tenants. At present, a private tenant cannot have housing benefit for a property with spare bedrooms. They can have housing benefit only for a property of the size that they need. However, a social tenant living next door can have housing benefit for a bigger house. That is an unfairness. At a time when we are trying to take costs out of the system to deal with the deficit, being fairer to private tenants and not giving social tenants an advantage over and above the advantage that they already have through a subsidised rent is an issue of fairness.
There is also an issue of fairness in the system in relation to people who are overcrowded. There was absolutely no mention in the hon. Lady’s speech of people who are living in overcrowded accommodation. If we have a limited social housing stock—frankly, successive Governments have failed to build enough social houses; it is a finite stock and a social house, with a subsidised rent, is a very valuable thing—we owe it to those who are overcrowded to make maximum use of the housing stock.
Getting from here to there is a painful and difficult process. I accept that, but many housing associations and social landlords around Britain have been creative and imaginative—I accept that the position will be different from area to area—about moving people who were in overcrowded accommodation into family homes and finding places for people in under-occupied accommodation to move to. It is not a static case—on the register this week, there are only so many empty properties. Social landlords have to start getting to know their tenants much better than they have in the past. All too often, they have not done that. That process—I accept that it will be a difficult transition—should lead to better use of the social housing stock.
Jessica Morden
Will the Minister accept that it is possible to be creative without being cruel? It would be possible to work far more closely with housing associations in relation to asking them to do more about under-occupancy, but the broad-brush approach that will be taken in April will hurt many people.
Steve Webb
The right hon. Gentleman says that it is about saving money. I do not apologise for the fact that we have had to save money, because otherwise we would just pile up debts for our children, and that is not progressive, wherever someone is on the political spectrum.
On the hon. Lady’s specific point, yes of course, in theory, successive Governments have tried to work with housing associations and social landlords, and it has not worked, because we have the best part of 1 million empty bedrooms paid for by housing benefit at the same time as we have thousands of people in overcrowded accommodation. The challenge is therefore to use the need to save money to create fairness between private and social tenants and to create fairness between people who are living in overcrowded accommodation and those who have spare bedrooms.
Steve Webb
No, I want to respond to the hon. Lady. She said that these are the lifetime homes of some people, and I entirely accept that. That is why we have exempted pensioners as a group. A set of pensioners have spare rooms, living in the home that they have occupied all their lives, and we are not touching them for the reasons she gave.
Those who are below pension age can clearly respond in a range of ways. It will be different for every person. For example, we are often told that some people in social housing or on housing benefit are in work, and the average £12 shortfall in Wales is the equivalent of two hours at the minimum wage, so for some people, as the hon. Lady said, it will be a matter of working a few extra hours. I accept that that is not an option for everyone, but it is for some. Others might have the opportunity to do a part-time job, if they are not currently. She said that some would not be able to take in a lodger or tenant, but some can. I had a constituent ring me up to say, “I am in a three-bedroom house, I live on my own and I have just had one of these letters. What shall I do?” We started talking and she said, “To be honest, my brother and sister-in-law would quite like to move in. Can we do that?” Yes, they can, and that would be using the house to much better effect. That will not be right for everyone, but there will be a range of responses. The system is geared so that if people have a boarder or sub-tenant—most social landlords should allow a sub-tenant, in an organised way—they get to keep at least the first £20 a week of the income. Those are all options, which will not work for everyone, but there is a range of them.
The hon. Lady mentioned Bron Afon and Duncan Forbes. I have looked at some of the case studies. One of them is just wrong. In the case she mentioned of the ex-serviceman with a teenager who might go off to university, provided she is not away for more than 13 weeks at a time, she can have the bedroom. That means that social landlords have to be good at communicating with their tenants. I have seen good examples, although I have also seen some bad ones. The other examples may well be true but I saw that case and it jumped out at me, and I thought, “That is not right”, although there is a description of how distressed the man was. Someone has a duty to know the rules—we have to communicate them effectively, but so do the social landlords. I have seen letters sent out by social landlords that are excellent, that explain the rules and what discretionary housing payments are, but I have seen others that do not even mention discretionary housing payments. We have to ensure that social landlords up their game.
I must respond to several points on discretionary housing payments, which are crucial. The right hon. Member for Torfaen (Paul Murphy) cited a figure of £50,000, £54,000 or something. The figure for that local authority for the year we are talking about, when the policy comes in, is not £50,000 but £193,000. That is when the policy comes in. Clearly, the point of discretionary housing payments is not to make up everyone’s shortfall, or we would not make any money out of the policy—we would not be saving any money—but it is for the hardest cases.
There is an issue to do with whether we try to prescribe in primary or secondary legislation the exact categories of people whom we want to help, of which one is people with major disabled adaptations. We could have done that, but the second that is done and we try to define a substantial adaptation, we get someone whom we did not think of just the wrong side of the line and someone whom we did not need to include on the right side of the line. For example, if someone has had stairlifts, extra rooms, widened doors and all the rest, it is pretty obvious, or if someone has had a handgrip, it is pretty obvious, but what about all those in the middle? Rather than us in Whitehall trying to define for every local authority, for every sort of adaptation, that this is in or this is out, we have trusted local authorities.
We have given the money specifically for people who have had disabled adaptations or, to give another example, for foster carers; for some of the other housing benefit changes as well, we have given the councils a pot of money and said, “You know your local people. You can meet people case by case.” Thus, a lone or separated parent who has the kids regularly and needs that room, and nothing else can be done, could go to the local authority for DHP. We were not going to try to prescribe for DHP, however; we were not going to legislate for such things as whether so many nights qualify or whether there are certain arrangements for the kids. The idea is that the local authority treats people as individual human beings and meets their individual needs. The pot is not unlimited—
Steve Webb
I really want to respond to the hon. Member for Newport East, because I have other things to say about the points she made.
We tried not to prescribe in a rigid, central, one-size-fits-all way, but to make substantial extra money available so that people could respond individually.
Jessica Morden
Does the Minister accept that the pot of money is very small compared with the number of people we are talking about? If the aim of the policy is to use the housing stock better and to save money, it will fail on both counts. As we have mentioned—it would be helpful if he could address this point—the pressures in Wales are because we have larger properties and few smaller properties, and because people will pay more in private rents.
Steve Webb
On whether people pay more in private rents, a lot depends on where the people who occupy the houses that have just been vacated come from. For example, if someone is in overcrowded private rented accommodation, on which they are claiming housing benefit, and they move in to reduced rent social housing property, that saves us money, so a lot depends on the dynamics. It is not a static situation. The hon. Lady said that this is not much money, but take her local authority of Newport: last year, in 2011-12, Newport got £47,000 towards DHPs, and next year, it will get more than a third of £1 million.
Steve Webb
Of course, it is not enough for everybody who will lose, because the policy is part of trying to reduce the deficit.
The hon. Lady made other points about the lack of suitable housing stock, and that is a long-term issue that needs to be addressed. Housing associations and local authorities, when looking at the future housing stock, need to consider unmet need. Of course, there is a lead time on that, but if we just sit and wait, it will never happen. Yes, this is a trigger to tackle the deficit, but it is also a trigger for a much more rational allocation of the houses we already have, and for a much more rational building policy, so that we build homes that meet the needs of the people we have. All too often in the past, that has not happened, and it is time that it did.
The hon. Lady asked about the impact on Wales, and she is right that we are talking about roughly 40,000 households. The average loss in Great Britain as a whole is about £14 a week. In Wales, because rents tend to be lower, it is about £12 a week.
My hon. Friend the Member for Ceredigion (Mr Williams) mentioned rural communities. We will evaluate the impact of the policy over a two-year period, but with interim reports that we will publish across England, Scotland and Wales, and across rural, urban and suburban constituencies. As a consequence of debates in the House of Lords on the Bill as it went through, we agreed—we were well on the way to doing this anyway—proper evaluation, so if there are particular issues in Wales or in rural areas, we will have the chance to respond, for example, by adjusting the allocation of discretionary housing payments. That allocation has been set for 2013-14 but not beyond, so if we learn things during the year, we can look at whether we need to change the allocation. We could change the rules of the scheme. Obviously, that is a more fundamental change, but we have a fairly flexible lever if we get early signs that there are problems in particular areas.
We are trying to support social landlords, so we have worked with the Chartered Institute of Housing to produce a toolkit for landlords called “Making it Fit”, which provides an overview of how different social landlords are responding. The last thing I want to convey is that the change will be easy for people, that there will not be people who find it difficult, and that it will not be disruptive. However, there is a difference when social landlords engage, get in there early and get to know their tenants—for example, those who sit with their tenants and say, “Are you claiming all the benefits you are entitled to? Could you be getting disability living allowance, for example, which would top up the household income?” There is chance to have a constructive engagement with tenants to find out their needs and what is happening. Many social landlords do not know whether their tenants are even there, or whether they are sub-letting. A lot of beneficial things that need to happen could happen as a result.
Jessica Morden
Does the Minister accept that with the report, that is precisely what Bron Afon has done? It has spoken individually to every single person who is affected, and in the report, there are the harrowing personal stories that people have told.
Steve Webb
I accept that Bron Afon has been out and talked to its tenants, and if that has triggered the process, it is a good thing. As I said, I have some doubts about at least one of the case studies, and in terms of some of the other case studies, I hope that the housing association has explained what discretionary housing payments are, because I think, from memory, another one had a disabled adaptation, or something like that, and that is what DHPs are for. It certainly was not a criticism of Bron Afon, but there are social landlords who are upping their game, engaging, and trying to generate extra revenue through benefit take-up. They are being creative, looking at the private market, and they are moving people around. They accept that the change is coming and are not simply saying, “Oh, this is terrible”, but doing something constructive. I welcome any housing association or social landlord that does that, and they deserve credit.
I have mentioned the discretionary housing payment money. The particular people we had in mind are those with disabled adaptations and foster carers, but the local authority has discretion to use it in individual cases. I do not belittle the impact that this significant change will have. We need to save money, but we have the potential to make better use of our social housing stock to deal with not only under-occupation, but overcrowding, and to be fair between social and private tenants. At a time when we are trying to take very large sums of money out of the housing benefit bill to deal with the vast, yawning deficit that was not dealt with, we need to look at this area but manage the process, and that is what our research and use of DHPs is designed to achieve.
Welfare Benefits Up-rating Bill
Steve Webb Excerpts(11 years, 11 months ago)
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Stephen Timms
The right hon. Gentleman should ask the Institute for Fiscal Studies, where the Minister served with considerable distinction in the 1980s. It has been a reliable guide in the past and will be in the future. The assumption is that the existing policies will continue.
This is a terrible Bill that is being rushed through in a disgraceful manner. It will hit very hard those people who are already struggling to make ends meet. It will hit women disproportionately hard. It will hit disabled people, including everyone in the support group for employment and support allowance. It will hit children, pushing 200,000 below the poverty line.
At a time when the coalition Government are—
The Minister of State, Department for Work and Pensions (Steve Webb)
What the right hon. Gentleman is saying sounds like a peroration, so I think that he might have accidentally dropped the page on which he was going to say where, if not from these measures, he would find the £3.5 billion. Where would he find the money?
Helen Goodman
Let me ask the question before trying to answer it. We have heard that the IFS has estimated that by 2015 the number of children in relative poverty will increase by 400,000. Furthermore, the Bill will push another 200,000 children into relative poverty. The Minister knows that we had four measures in the Child Poverty Act 2010. What will be the increase over the life of this Parliament in the number of children living in absolute poverty?
Steve Webb
I will respond very fully on the issue of child poverty, which a number of hon. Members have raised. I wanted to ask the hon. Lady about the point she made about incapacity benefit. She said that if we look across Britain, we will see that incapacity benefit is highest in all the industrial heartlands. I hesitate to bring her back to the Bill, but is she aware that we are actually proposing to increase the main rate of incapacity benefit fully in line with inflation?
Helen Goodman
Yes, but the hon. Gentleman knows that his own impact assessment demonstrates that the Government’s claim that they would protect all people with disabilities is not accurate. I am disappointed that he did not answer my question about child poverty. I do not know whether that is because he does not know the answer or because he is ashamed of it. Perhaps he can explain when he winds up the debate.
Steve Webb
This has been a wide-ranging debate of nearly four hours. Although it has technically been about amendments to clause 1, the generosity of the Chair has meant that we have essentially covered the whole Bill and the issues raised by it.
First, I want to respond to the point about the language in which the debate is constructed. My right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) and a number of other Members said that we should avoid divisive language, and I entirely agree. I seem to recall that it was the Labour party that used the phrase “strivers’ tax” about this debate—indeed, a year or so ago, the shadow Secretary of State used his party conference speech to create the very divisions that his hon. Friends are criticising. He said:
“Let’s face the tough truth—that many people on the doorstep at the last election felt that too often we were for shirkers not workers.”
The right hon. Gentleman has form on this issue. In 2012, he was at it again. During a speech at the London School of Economics, to what I imagine was a packed house, he said:
“Labour is the party of hard workers not free-riders. The clue is in the name. We are the Labour party. The party that said that idleness is an evil. The party of workers, not shirkers.”
Mr Byrne
The Minister will remember that it was Sir William Beveridge who used the phrase about idleness being an evil.
There is a difference between reporting a conversation on a doorstep in one’s constituency and using a line as the basis of a political strategy that seeks to punish those on low incomes while handing out a £3 billion tax cut to Britain’s richest citizens. I am simply not sure how the Minister, as a Liberal Democrat, can support that policy.
Steve Webb
It is good to hear from the true heir of Beveridge. The quotes describing the Labour party that I just read out were in party conference speeches and at a conference at the LSE—
“The party that said that idleness is an evil. The party of workers, not shirkers.”
Steve Webb
It is disgraceful, as my hon. Friend says.
The second question that has arisen is why the Bill is necessary. It has been suggested that the Bill is simply a political device, but that draws a veil over the fact that we are dealing with one of the biggest deficits in peacetime history. To listen to the Labour leadership, one would think that they took such matters seriously. The leader of the Labour party said on “The Andrew Marr Show”, in an interview, I think, with James Landale:
“So when it comes to the next Labour government, if I was saying to you, ‘I can absolutely promise to restore this cut or that cut’, you would say ‘Well, where is the money going to come for that?’...We are absolutely determined that Labour shows we would be fiscally credible in government.”
We have not heard a lot of that today. The shadow Chancellor has said:
“The public want to know that we are going to be ruthless and disciplined in how we go about public spending”.
In fact, we have heard speech after speech calling for the Bill to be scrapped but there has not been a hope of hearing where the money would come from.
The Bill and related measures save £3.6 billion. When I challenged the shadow Minister, the right hon. Member for East Ham (Stephen Timms), about where that money would come from, he said—I paraphrase—“We wouldn’t start from here.” I am afraid that the Opposition have to do rather better than that.
Steve Webb
I will not give way; I would like to respond to what has been said in the past four hours before taking further interventions.
A number of my hon. Friends asked perfectly reasonably about why we needed to set out in legislation exactly where we were going. We all want our constituents to continue to enjoy, for example, the low mortgage rates that are absolutely crucial to their standard of living. We all know that for those of our constituents in the position of owning their own homes, the mortgage is their biggest single outgoing by a long way. It is vital, therefore, that we keep interest rates under control.
Steve Webb
But that is kind of the point—not at the moment, because we have kept interest rates under control.
Why is that necessary? Let me share what the International Monetary Fund’s “World Economic Outlook” said as recently as October 2012:
“To anchor market expectations, policymakers need to specify adequately detailed medium-term plans for lowering debt ratios, which must be backed by binding legislation”.
That is the important point. Were we to go year by year, seeing how it went, we would not have the credibility of deficit reduction to which all of us who signed up to the coalition agreement are committed.
Likewise, the OECD’s economic outlook said:
“The government’s fiscal policy stance and strong institutions have secured the confidence of financial markets, as evidenced by the near record-low government bond yields.”
In other words, this is for a purpose—the purpose of tackling the vast, sprawling deficit. To give a sense of scale, my hon. Friend the Member for Argyll and Bute (Mr Reid) was absolutely right when he said that in the final year of the previous Labour Government, for every £3 raised in tax, £4 was spent. What did that add up to? We are talking about a Bill and related measures that will eventually save about £3 billion a year. Labour was borrowing £3 billion a week, so we would need, say, 50 of these Bills to tackle just one year of Labour borrowing. That is the scale of the situation. When Labour Members airily take the moral high ground and pretend that there is a free lunch to be had—that we do not have to do this or make all the other cuts, but that somehow the deficit will disappear—we need to remind people that these are Labour cuts tackling Labour’s deficit.
People should not just take my word for it regarding the need to include social security as part of deficit reduction. Clearly, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, this is not comfortable stuff, and it is not something that any of us take any pleasure in. However, the IFS has said this about why social security is part of the mix:
“When cutting public spending dramatically to help reduce an unsustainable budget deficit”—
that is the IFS’s language, not mine—
“it is almost inevitable that spending on benefits and tax credits—which account for 30% of the government’s total budget—will be targeted.”
Steve Webb
Not for the moment.
We have a target for 2015-16 of £10 billion of spending reductions. We have not yet found that £10 billion. Even with this Bill, we are on about £6 billion, and without the Bill and related measures we would be down to about £3 billion. The challenge for Opposition Members who have said that taking money away from benefits takes spending power out of the economy is that so do other forms of spending cuts. If the money comes not from benefits but from local government, that will be money out of the local economy; if it comes from infrastructure projects, that will be money out of the local economy. There is not a free way of finding money without any impact.
Let me deal first with amendment 12, tabled by the right hon. Member for East Ham. My hon. Friend the Member for Gloucester (Richard Graham) put it very well when he said of Labour that there is a vacuum where there should be a policy. That is a metaphor for the Labour party. In relation to a Bill that says that benefits and tax credits should go up by 1%, the amendment would take out the figure of 1%, so what would be left? Presumably, “Benefits should go up” but by how much? Perhaps by a fraction of 1%—we do not know. The amendment is incoherent; it would take something out and put nothing in its place. It would remove the heart of the Bill but gives no guidelines on whether the figure should be below inflation or above inflation, below earnings or above earnings.
Toby Perkins
As the right hon. Member for Wokingham (Mr Redwood) and the hon. Member for St Ives (Andrew George) said, the Chancellor sets a Budget every single year, and the benefit uprating will have to be relevant to whatever else has happened in the economy by taking into account inflation, wage inflation and so on. There is no need for this Bill now because we have a Budget every single year. Surely that is the central point.
Steve Webb
The hon. Gentleman was not listening. The point about establishing a long-term fiscal framework is that it has to be credible; if it could be changed every year, it would not be credible. The whole reason we are able to keep interest rates low—[Interruption.] The hon. Gentleman is saying, “Why not change it every Budget?”, but that would not be credible for the long term.
Toby Perkins
On a point of order, Mr Amess. The Minister is misquoting me, so let me clarify this. I said that if it was all about stability, why do we have a Budget every year instead of setting three-year budgets, which would reflect that fact?
The Temporary Chairman (Mr David Amess)
That is not a point of order—it is a point of debate.
Steve Webb
I will not for the moment, because my hon. Friend has joined our proceedings relatively recently. I should like to respond to the amendments that my hon. Friends and others have tabled, and I hope he understands that.
Amendment 7, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) and supported by the hon. Member for Banff and Buchan (Dr Whiteford), is in fantasy land, I am afraid. It not only rejects the savings in the Bill but would add additional savings on top by linking benefits to RPI. I have to give credit to the hon. Member for Brighton, Pavilion, because she knows how ludicrously expensive her amendment is and I am grateful to her for being frank about that. In a single year, it would cost £2.6 billion more than the current plan.
Steve Webb
Let me respond a little further. The hon. Lady said that we should choose RPI because, essentially, it is bigger on average. The point about correcting benefits for inflation is not just to find the biggest number possible, but to measure inflation properly and correct benefits accordingly. We could also have a separate debate about the adequacy of benefits, but to use a flawed inflation measure that even the Office for National Statistics, which constructs it, says does not meet international standards, is a crazy direction to take, even if the hon. Lady did not need to find £2.5 billion.
Caroline Lucas
The hon. Member for Banff and Buchan (Dr Whiteford) addressed the fact that RPI is not a perfect indicator, but it is better than what we have. On the question of paying for our proposal, this is about priorities. If the Government limited tax relief on pension contributions to £26,000, that would give them £33 billion. If they cracked down on tax evasion and tax avoidance, they could get more than £100 billion. It is about political choices: this Government want to target the poorest and we do not.
Steve Webb
If it were trivial to raise £100 billion from the filthy rich, I suspect that most Governments would have been there by now.
The most credible, coherent amendment in this group is amendment 10, which was moved by my hon. Friend the Member for St Ives (Andrew George). He was so nice about me that I was almost tempted to accept the amendment, but not quite. Let me explain the reasons why not.
The first relates to the specifics of the amendment, which links benefit increases in 2014-15 and 2015-16 to whatever amount average earnings grow by. Based on the forecasts—I accept that that is what they are—that would mean an above inflation increase in the second of those two years, because we think that average earnings in a couple of years’ time will be more than CPI, as is the case in many normal years. At a time when we all agree that money will be tight, my hon. Friend is suggesting that an above inflation benefit increase in the second of those two years should be a priority. I do not think that it should be. At a time when we will have to make other difficult decisions about saving, the first consequence of his amendment—I do not imagine that he meant this—would be to lock in what we expect to be an above inflation increase in benefits in 2015-16. I do not believe that that will be our priority at that point.
Had we been in Committee upstairs and the Bill had further stages to go through, my hon. Friend may well have said that this was a probing amendment and we could have had a chat about it, but if we were to agree to the amendment tonight it would become part of the Bill that will go to the other place. It is a serious amendment that would have an unintended consequence.
Secondly, this is not intended as a wrecking amendment, but it would have that effect. We estimate that it would wipe out virtually all the Bill’s savings. Although I understand that my hon. Friend shares my concern about the impact on people on low incomes, that money would have to be found somewhere else. I do not believe that there is a painless way of finding that money or that the social security budget would be exempted from finding it.
We have already had to do some very difficult things on welfare spending in the Parliament whereby we have targeted particular benefits and identified particular issues, and a relatively small number of people have faced large cash losses. This is a different approach. It is a gradual approach that will create much smaller losses, but for much larger numbers of people. At a time when we are trying to find savings from this budget, I believe that spreading the pain relatively thinly across a larger group, rather than focusing on a smaller one, is the way to go.
Andrew George
Leaving aside the wisdom or otherwise of committing ourselves to the Government’s proposed uprating level of 1% for 2015-16, my hon. Friend is right, according to the Government’s figures, that there is a funding gap of about £2.5 billion for 2015-16. He has to accept, however, that two fifths of cash benefits go to those with above average incomes. Indeed, a former constituent of mine has said how laughable it is that he now lives in Greece yet still receives a winter fuel allowance. Surely we can find savings that are less painful than those proposed.
Steve Webb
I can tell my hon. Friend that we have his ex-constituent in Greece in our sights. All I can say is that I hope he enjoyed his last payment. Joking aside, even if we took away all winter fuel payments to overseas pensioners, we would be talking about tens of millions of pounds, not savings on the scale that we need.
Greg Mulholland (Leeds North West) (LD)
As my hon. Friend has said, the Government have made a difficult decision to deal with the matter in the least unfair way. What has not been said in the debate is that the 1% uprating will not apply to all out-of-work or in-work benefits. Certain particularly vulnerable groups have been deliberately excluded. I hope he will reiterate that.
Steve Webb
My hon. Friend is absolutely right to remind the Committee of that. We have made our commitment to the triple lock on the state pension, which means that it will rise by an amount above inflation this April. We have passed cash on to the guarantee credit to ensure that the poorest pensioners get the full increase, protected the key disability benefits—disability living allowance and attendance allowance—and ensured that the support component of employment and support allowance is protected. We can be proud of achieving all those things despite the difficult financial situation.
Penny Mordaunt (Portsmouth North) (Con)
Is the Minister aware that in the city that I represent, which also happens to be the birthplace of Charles Dickens, 82,000 people will benefit from the tax cut in April and nearly 7,000 will have been lifted out of poverty altogether by the cumulative effect of tax cuts under the coalition? Is that not the best way of tackling poverty—to stop taking money off people in the first place?
Steve Webb
I am grateful to my hon. Friend for mentioning the position of low-paid workers. People on the minimum wage were mentioned in the debate, and we will have halved the tax bill of someone on the minimum wage. That is a real contribution to their standard of living.
I say to my hon. Friend the Member for St Ives that we cannot find the savings that we need by excluding the social security budget from them. The two biggest things that the Government spend money on are public sector pay, which has already been the subject of a separate measure, and social security benefits. The two together account for a vast swathe of public spending. When we need savings, we cannot ring-fence social security. What we can do, however, is try to do things gradually.
I want to explain why some of the figures for people’s losses that have been quoted are far greater than is truly the case. My hon. Friend mentioned someone who is in and out of work, and the typical time on jobseeker’s allowance is three months. My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) asked me to give some examples of cash figures. We are talking about an uprating of perhaps 80p a week or so below inflation in one year, so maybe £2.50 a week below inflation over a three-year period. For a typical person who is out of work for three months, which is the median spell on JSA, the difference will therefore be a tenner a month, or £30 to £40 over that three-month period. That £40 is a lot of money to someone who is unemployed, but the typical experience is that someone has three months of unemployment and then finds a job. We are about to cut people’s income tax bills by £600 a year, so that person might have, say, £3 a week less while unemployed, but the typical experience is for them to be unemployed for a relatively short period and then get a job, so they will benefit from all our other measures.
John Hemming
Does my hon. Friend agree that the Opposition’s policy of not having a policy runs the risk of putting up the interest rate on our Government debt? We owe more than £1 trillion, and 1% more on that would be more than £10 billion extra to find through either extra cuts or extra taxes.
Steve Webb
My hon. Friend is quite right. There is nothing progressive about vast borrowing, because then we are asking our children and grandchildren to pay for it.
There has been much discussion about percentages during the debate. Several Members have said that a small percentage of not very much is not very much—I think their argument was that the answer was a slightly bigger percentage of not very much. However, even a small percentage of a £200 billion bill for tax credits, pensions and benefits is a vast sum of money, which is why we have to take the difficult decisions we are talking about.
Sheila Gilmore
Is not the reality that we have already had all the welfare reforms, and the only reason we are debating this issue is because the Government’s policy has not worked? They have now had to find extra savings, and that is what the Bill is about.
Steve Webb
It is, I suppose, possible that had Labour won the last election the eurozone crisis might never have happened, and I grant it is possible that world commodity prices might not have gone up. It is possible that all sorts of things might have happened, but in the real world we live in a global economy. Of course things have been more difficult than we expected. That is why we must tackle the situation, not just borrow more money.
Let me offer my hon. Friend the Member for St Ives further reassurance about what will happens if inflation rises—an important issue raised by my hon. Friend the Member for Argyll and Bute. Our right hon. Friend the Secretary of State for Energy and Climate Change is actively seeking to ensure, for example, that low-income constituents get the best energy tariff they can, rather than what they currently pay. Evidence shows that the people most likely to shop around, switch and be online are not on the whole the most vulnerable customers, so we are ensuring that the most vulnerable customers, who may not take advantage of those lower tariffs, get access to them. I believe that will make a real difference.
More broadly, my hon. Friend the Member for St Ives asks what would happen if inflation ran away, but the Government would not sit idly by and watch—we have various measures available to us to respond to that. The OBR’s forecast for CPI is lower for 2015 than it is now. It is, of course, a forecast, but we will not simply let inflation rip. If we do not commit now to firm targets on where we are going, the OBR will not sign them off, they will not appear in our spending plans and the market will not believe us. If the market does not believe us, interest rates will go up as will the mortgages of our constituents who will have less spending power—where?—in the local economy, which is exactly where everybody has said they want to see demand. There is a knock-on effect from all those things, and the failure of the Labour party to suggest an alternative is shocking.
Let me respond to one or two other points raised during the debate. The hon. Member for Gateshead (Ian Mearns) made a point about percentages being meaningless, but as I have said, from a £200 billion budget those percentages make a great deal of difference. My right hon. Friend the Member for Wokingham made some powerful points. He said that we need to keep inflation down—I have given some examples of how we want to do that—and mentioned the need to get jobs going, which we agree with.
The Labour party seems to be saying that if we adopt its policies, somehow the jobs would flow, but what have we heard about that today? Funnily enough, we have heard almost nothing about the whizzo scheme that was so good when Labour tried it in office as a pilot that it never actually saw it through. Somehow the scheme is supposed to find £3.5 billion of savings, but that is fantasy land. It was a fig leaf rushed out over Christmas so that Labour had something to say because it realised it was on the wrong side of the argument.
There has been some discussion of child poverty and it is important to address that issue in the final few minutes of the debate. The Institute for Fiscal Studies has said that when looking at a Government’s impact on child poverty, we should look at their policies in the round. Clearly, the single biggest thing that we will do to tackle child poverty is the universal credit introduced by my right hon. Friend the Secretary of State for Work and Pensions. That is designed to make work pay and to take children and adults out of poverty. As soon as we are able to bring it in—starting later this year, which is a great achievement—we will start to see its impact.
I was asked for predictions about child poverty, but let me point out the paradox that we have published a set of figures that relate to this Government. Those figures show not a rise in child poverty but a fall of 300,000 according to the measure of child poverty that is the key target of the Child Poverty Act 2010. We have not gone round television studios saying, “Aren’t we great, we’ve got child poverty down?”, because the main reason child poverty fell was a recession that meant average incomes fell. It would have been absurd for us to trumpet a triumph on child poverty when children were apparently lifted out of poverty because incomes had fallen. That is perverse.
The hon. Member for Bishop Auckland (Helen Goodman) asked what the figures will be at the end of the Parliament. For a start, there has been a 300,000 improvement, for which we will not claim any credit, and the universal credit policy will help. Of course, taking money off benefits moves things in the other direction, but overall we are moving things in the right direction, not the wrong one.
Helen Goodman
As the Minister knows very well, my question was this: what are his figures on absolute poverty?
Steve Webb
The hon. Lady will know perfectly well that the Labour Government never forecast poverty rates. She was a Work and Pensions Minister with—if I remember rightly—responsibility for child poverty, and never once forecast poverty rates, but in opposition she suddenly believes that this Government should do so. We will publish the annual figures that show the effects of all our policies and the state of the economy. That is what the public want to see.
Another question that resonates with my hon. Friends in the Liberal Democrats is why we are taking money off poor people and giving it to rich people. That is a summary of what was said. I worked for the IFS for nine years and have the highest regard for it, but, to be clear, when the IFS does its numbers, it does not count almost all the taxes on the rich we have introduced—it cannot, because it uses household surveys, to which the rich do not, on the whole, reply at all, partly because they are too busy salting their money away in Swiss bank accounts. [Interruption.] Not any more—we have tackled Swiss bank accounts to the tune of several billion pounds. We have increased the main rate of capital gains tax to 28%, which is a substantial increase.
The Labour party focuses on the wages of millionaires as if millionaires are those who earn a £1 million wage. However, millionaires on the whole are folk who have capital gains and properties. They pay stamp duty. They try to avoid paying tax, but we have been cracking down on that, and there is a further clampdown on pension tax relief. The vast majority of those gains for the Government are not counted in the IFS figures. The overall impact is that we are taking far more from the rich than Labour ever would have done. I can therefore assure my right hon. and hon. Friends that this is not a question of taking money from the poor when we could take it from the rich. Even the Budget that reduced the higher rate of tax from 50% to 45% raised many times more in other measures. As we have heard during the course of the debate, the 45p rate, which Opposition Members tell us they find morally repugnant, is 5% more than the Labour Government levied in 13 years.
Amendment 12 would create a vacuum instead of a policy. It would give us no credibility in the financial markets and drive up interest rates when we want to keep them low. Amendment 7 would reinstate the RPI, which even the official statistician says is not up to international standards, and cost £2.5 billion a year compared with the Government’s plans. I have no doubt that amendment 10, in the name of my hon. Friend the Member for St Ives, is well-intended, but unfortunately it would tie the Government in to an above-inflation increase in 2015-16. The Liberal Democrats would not choose that as a priority, but I can assure him that the Bill, on top of the decisions the Government have made to prioritise the poor, will mean that benefits will rise in line with earnings over the period since the financial crisis. My hon. Friend wants that through his amendment, and that is what we will deliver through the Bill.
I therefore urge the Committee to reject the amendments and support the Bill.
Stephen Timms
We have had an interesting debate. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), the former leader of the Minister’s party—the Liberal Democrats—described the Bill as a device dreamed up by the Chancellor, which was recognised on both sides of the Committee during the debate. The Government are bearing down on the incomes of the least well-off people because of the failure of their policies. I urge the Committee to support amendment 12 and to reject clause 1.
Question put, That the amendment be made.
The Committee proceeded to a Division.
State Pension Reform
Steve Webb Excerpts(11 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Today I am publishing draft legislation which provides for a new flat-rate contributory state pension for future pensioners, as described in the White Paper, “The Single-Tier Pension: A Simple Foundation for Saving”, published on Monday 14 January 2013.
Fundamental reform of the state pension system is needed to provide the firm foundation necessary for people to plan and save for their retirement with confidence. These reforms will also address historic inequalities which remain in the state pension system. The Work and Pensions Select Committee has agreed to undertake pre-legislative scrutiny on these measures.
This draft legislation is being published in a draft Pensions Bill alongside other provisions which include the proposed change to the timetable for the increase in state pension age to 67 and a framework for regular, independent reviews of state pension age thereafter; the simplification of the current complex system of bereavement benefits through the introduction of the bereavement support payment; and measures to clarify existing private pensions legislation. The draft Pensions Bill will be available in the Vote Office later this morning and will be on the Department for Work and Pensions’ website shortly afterwards.
It is my intention to introduce the Pensions Bill to the House as soon as possible after consideration of the Work and Pensions Select Committee’s report and the addition of outstanding measures.
Impact assessments related to these measures, in addition to the previously announced consultation document on protected persons regulation and its related impact assessment, are also being published today and these will be available on the Department for Work and Pensions’ website.
Budgeting Loans
Steve Webb Excerpts(11 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
The Welfare Reform Act 2012 contains provisions for the abolition of the discretionary social fund scheme and the post of the social fund commissioner. The provisions about community care grants and crisis loans will be commenced on 1 April 2013 and the provisions about the social fund commissioner’s post will be commenced on 1 August 2013.
The budgeting loan scheme will however remain in place for claimants in receipt of existing legacy benefits until they migrate to universal credit.
There will be no change to how budgeting loans are to be delivered. In relation to requests for reviews, claimants who are dissatisfied with the outcome of an initial decision will still be able to ask for a review in the first instance by Jobcentre Plus.
The Independent Review Service which carries out second-tier reviews will be closed at the same time as the social fund commissioner’s post is abolished. Arrangements have therefore been put in place for the office of the independent case examiner to undertake a second-tier review for claimants who remain dissatisfied with their budgeting loan decision.
National Employment Savings Trust
Steve Webb Excerpts(11 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Later today the Government will publish a response to the consultation document “National Employment Savings Trust (NEST): Proposals for amendments to the NEST Order”.
In addition, the Government intend to lay the National Employment Savings Trust (Amendment) Order 2013 before Parliament later today. Subject to the approval of both Houses, this is scheduled to come into effect from 1 April 2013.
The amending order will ensure that NEST’s statutory framework is updated to reflect current automatic enrolment requirements and to ensure that NEST continues to operate efficiently for the employers and members who use it.
I would like to thank the organisations who responded to the consultation. I will place a copy of the Government’s response in the Libraries of both Houses, which will also be available on the Department’s website: http://www.dwp.gov.uk/consultations/2012/
State Pension Reform
Steve Webb Excerpts(11 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
With permission, Mr Speaker, I would like to make a statement on state pension reform. I am pleased to announce that, as part of the coalition Government’s mid-term review, we shall be pressing ahead with our plans for a single, simple state pension, reassuring people that it pays to save, and making it easier for them to take responsibility for their own retirement planning.
Before I set out our plans for the future, I want to say a few words about the pensioners of today, who are and will always remain a priority for this Government. Within months of coming to power, we restored the earnings link with the basic state pension—something for which campaigners had been calling for 30 years. As a result, from April this year the basic state pension will reach its highest level as a percentage of average earnings for two decades. I should add that, on a freezing day such as this, the House will also welcome the fact that we have reversed the planned cuts in the cold weather payments, which are of so much value to poorer pensioners.
Last month was the 70th anniversary of the Beveridge report. The original idea from Beveridge was for a single, simple, decent state pension, paid at the end of a lifetime of national insurance contributions. We have drifted a very long way from that blueprint.
We now have two state pensions, entitlement to which arises under different terms, uprated according to different rules, with complex arrangements for people who are divorced or who become widowed. There are also special arrangements for married women that relate to a time when the prevailing wisdom was that men needed a pension and women needed a husband.
The state earnings-related pension scheme—often referred to as SERPS—is extraordinarily complex, with variable amounts paid out in retirement that no one is properly able to predict. This position is made even more complex by a system known as contracting out, whereby people in workplace pensions are able to opt out of the state second system.
The complexity in the current system means that, when it comes to telling people what they might get from the state, the Government have to write letters that include paragraphs such as this:
“At some time you chose to ‘contract out’ of the additional state pension by paying into an Occupational or Personal Pension. Because of this we make a contracted-out deduction (COD) from the maximum amount of additional state pension that we would otherwise pay you. We make changes every year to the additional state pension and the COD, but this may be at different rates. This means that your additional state pension could be different from the amount we have estimated and could actually be”
zero. This is nonsense.
Millions of people do not receive enough to live on from the two state pensions combined, so they rely on a third system of mass means-testing known as the pension credit. Those with small amounts of their own savings can find themselves little better off than others with no savings at all, and thousands more fail to claim the money they would otherwise be entitled to, some because they find it demeaning to do so. We can and must do better.
In 2011 we published our Green Paper, “A state pension for the 21st century”, and had more than 100 organisations and 1,600 individuals respond. There was a consensus that the state pension system needs to be simplified and strong support for the option of a single tier.
Today, the Government are publishing their plans so that the workers of today retire on a single, simple, decent pension, very much in line with the Beveridge model, but updated to fit with the modern age. This is a new pension system that reflects the fact that people are living longer and will be drawing their state pension at a later point in their lives, and that working patterns and family life have changed, with women much more likely to be working and becoming entitled through their own national insurance contributions. Working lives are more fragmented and people need to take more personal responsibility when it comes to planning and saving for their retirement.
Under our plans, someone who starts work under the new single-tier rules would become entitled to just one state pension set above the level of the basic means test. The full rate will be payable for 35 qualifying years of national insurance contributions. This reflects the fact that we are combining two pensions: a basic pension payable for 30 years and a state second pension based on national insurance contributions over a working life of up to 50 years.
Consistent with the current system, there will be credits for those who cannot pay national insurance because of caring responsibilities. Importantly, the new rules will be of particular benefit to many older women who have impaired pension records because they took time out to raise children during the 1980s and 1990s.
Every individual will qualify for a pension in their own right, with no complex rules about claiming pensions based on the NI record of a spouse. As the new single-tier pension will be set above the basic level of the means test, people who do the right thing by putting money aside during their working life will be far less likely to see it clawed back in retirement through the means-tested benefits system. This is particularly important in a world where millions of private sector workers are being automatically enrolled into workplace pensions, including many on lower incomes who will be saving for the first time.
The new system will be introduced in 2017 at the earliest. We need to let business know now that this is coming, but it needs time to adjust. When the new system is introduced, people will no longer become entitled to the state second pension, and so the whole complex system of contracting out will be abolished. Of course, national insurance contributions paid and that would, under the current system, have led to entitlement to a second state pension will be recognised. For example, when we introduce single tier, someone who retires in 2018 who has £160 in the current system will still get a pension of £160. Those workers who were previously contracted out will start to pay full national insurance contributions, like all other workers, but in return they will become entitled, potentially, to a pension at the single-tier level, rather than the much lower basic state pension today. For the vast majority of those people, the higher national insurance contributions that they pay will be more than offset by the higher state pension they receive.
The overall cost of the new system will be the same as that of the one it replaces. This is not a pensions giveaway for the next generation. A higher flat pension is affordable only because, in the long term, people will not become entitled to very large earnings-related pensions through the state system. In a world where everyone will be automatically enrolled into a workplace pension with a contribution from their employer, it no longer makes sense for the state to run its own separate earnings-related pension scheme. Higher earners are among those being automatically enrolled, with substantial employer contributions, so those who earn the most while they are working will continue to be the best off in retirement.
Later this week, we shall publish a draft Bill that will put our plans into law. I wrote to the Chair of the Work and Pensions Committee earlier today, asking whether her Committee will carry out pre-legislative scrutiny of our plans. I hope to receive a positive response to that request.
The White Paper also contains details of our plans for a more structured framework within which to consider future changes to the state pension age. However, I can confirm that there will be no further changes announced during the life of this Parliament. The plan is to review state pension age once every five years, starting in the next Parliament, based around the principle of maintaining a given proportion of adult life in receipt of state pension, as suggested by the Turner commission. Each review will be informed by analysis from the Government Actuary’s Department, with an independently led body reporting on wider factors that should be taken into account.
Our analysis shows that more than 10 million people who are at work today are not saving enough to generate the sort of income that they want to receive in retirement. The combination of a single, simple, decent state pension and the right to a workplace pension with a statutory minimum contribution from the employer will mean that, for the first time, there will be a firm foundation for retirement for the work force of today. I commend this statement to the House.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
I thank the Minister for advance sight of the statement, although it was not as advanced as that of some newspapers over the weekend. However, he did have the decency to brief me as our paths crossed in a TV studio this morning.
Today was not supposed to be about pensions at all but about the unveiling of the Government’s flagship child care proposals, which took centre stage at the coalition relaunch last week. Unfortunately, the latest bout of coalition unity did not last even a week. The Government cannot agree on child care, but the Prime Minister was desperate to have something to talk about this morning other than Europe, so—voila—we have the pensions White Paper.
In all seriousness and in respect of the Minister’s commitment to this proposal, we will take the White Paper very seriously. However, I sound a cautionary note. The Government have form on pensions. We remember when the Government laid the 2011 Pensions Bill before the House. The Minister told the House that it was fair to all, but neglected to mention a huge unfairness. I talk, of course, of the targeting of women in their later-50s, who found that the goalposts for their retirement had been moved again at short notice. It took Labour’s digging to reveal that injustice and a Labour campaign to win Government concessions. There is therefore every reason to look closely at the detail.
The principle of a simplified state pension was laid down by the Turner commission and was supported by all parties. The Leader of the Opposition has reiterated our support for that principle. However, it is fair to note that Turner rejected an abrupt shift to a single-tier state pension, which is why the previous Labour Government adopted an evolutionary approach.
Even on my speed-reading of today’s White Paper, there will be heavy losers, steep cliff edges and significant costs if the proposal goes ahead as planned. For example, the briefing from the Government over the weekend was at pains to emphasise the women-friendly aspects of the measures. However, I want to ask the Minister directly about the 429,000 women born between 6 April 1952 and 6 July 1953. Is it the case that those 429,000 women will not qualify for the single-tier state pension, and yet men who were born between the same dates will?
Let me dig a little deeper. The Minister referred to existing pensioners. Is it the case that this proposal excludes all existing pensioners and all those who intend to retire before 2017? If so, what is his message to the 15 million or 16 million people, by my calculation, who will not be eligible for the new pension? How many pensioners does he estimate will remain on £107 a week rather than £144?
May I ask the Minister about the 1.4% national insurance tax rise on 6 million workers? As I understand it, the money raised by that tax hike will not be reinvested in the new state pension but will flow straight into Treasury coffers. If that is indeed the case, how much money will that tax grab raise, and why is the money not being reinvested in the new state pension?
More narrowly, will the de minimis 10 years of contributions be part of the process by which public sector workers and private sector defined-benefit contracted out workers will participate in the new pension? Specifically, will they need at least 10 years of contributions to the new state pension to get any pension whatever?
Gregg McClymont
The Minister shakes his head, which is important. I would appreciate it if he referred to the matter in his response.
We also seek clarification on what the abolition of the state second pension means for savers. Will the state second pension part of people’s accrued rights be uprated by CPI, not under the triple lock that will apply to the single state pension? That is an important question. Furthermore, how many savers currently pay into the state second pension, and how many of them will receive a lower state pension than they would have done without this reform? In other words, how many losers will there be among those who currently save in the state second pension?
The Government claim to have learned from the 2011 Pensions Bill. They say, and have briefed widely over the weekend and this morning, that the big winners in the new system will be stay-at-home mums. Some context is needed here. The Labour Government put female pensioners at the heart of their pensions policy. Most importantly, they massively reduced the number of years of contributions that both men and women needed to get a full state pension. It was reduced enormously to 30 years from 44 for men and 39 for women. The Government propose to put it back up to 35 years. What will be the impact of that five-year rise in contributions? Specifically, will it reduce the number of pensioners eligible for a full state pension, on Department for Work and Pensions estimates? That is an important question.
May I ask the Minister about the rising state pension age, which he mentioned towards the end of his statement? The Government seem to propose a new mechanism for increasing the state pension age. I have two questions about that. First, the difference in life expectancy between a manual worker and someone doing a non-manual job will play itself out both in the amounts saved in the new state pension and in the fact that non-manual workers will get it, on average, for much longer than manual workers. How will the system be made fair, given the difference in life expectancy, with a rising state pension age?
The second question is related to that. What if manual workers in particular cannot work for as long as any new mechanism sets out that they should when the state pension age is raised? If they cannot do hard, physical labour, how will that affect the Government’s claim that there will be a massive reduction in means-testing in the new system?
Those are only some of the questions that face us as we consider the detail of the White Paper. I suspect that the argument will not disappear overnight, because there is much detail to be considered. I hope that the Minister will give us some provisional answers on important matters that are affecting our constituents and his own.
Steve Webb
I thank the hon. Gentleman for what I would characterise as his broadly constructive response to my remarks. I welcomed his comment on the television this morning that
“the Labour party supports the principle of a flat-rate state pension”.
I welcome that because pensions are for the long term, and with two coalition parties united in support for this reform and support in principle from the official Opposition, we have a chance of stability in pensions policy, which would be good for all.
The hon. Gentleman says that the Government have form on pensions, and that is a fair cop: we restored the earnings link after 30 years, we ruled out 75p increases, and last year we introduced the biggest ever cash rise in pensions. He asked about women in their late 50s, many of whom are the very women who were penalised for time spent at home with their children. Although they got some protection on the basic pension, they did not get it on SERPS and the state second pension. The Government are putting that right for the very group of women about whom he asks.
The hon. Gentleman asked about women born in certain months, and the equivalent men. The changes are based on state pension age, and as he knows, that is different for men and women so the implications are also different. The April 2017 change is based on when people’s state pension age falls. He asked about people who “retire” but that is not really the right word—it is all to do with someone’s state pension age and whether it is before or after the change.
The hon. Gentleman asked how many pensioners are on £107. To be clear, someone who has worked in the public sector throughout their life—a teacher, for instance—would be on £107 because they contracted out of the other bit. In our system, from day one they would also be on £107 because we will take account of past periods of contracting out. Future service in the public sector at the full NI rate will add years to that £107. It is not a cliff edge; the exact day before or day after for those people is the same, but they can then work off that contracted-out deduction.
The hon. Gentleman asked about the national insurance rebate and—interestingly—suggested that we spend it on pensions. That is obviously a matter for a future Chancellor, but given that the public sector, the NHS and schools will pay significantly more national insurance, it would be interesting to know whether the hon. Gentleman’s position is that that money should go from the NHS and schools into higher state pensions. He asked about the 10-year de minimis. Let us be clear that we are not saying 10 years in the new system—the requirement is 10 qualifying years in someone’s lifetime. That is because there are backpackers who do a couple of years of bar work and 40 years later we are paying them a state pension for another 20 years. The sorts of people who would be excluded are those who come for a few years, do not really have any skin in the game and pay just a few years of national insurance. They will not get a pension—that is how we save money to spend on pensions.
On state second pension uprating, as I mentioned in my statement, for someone on £160, the first £144—at least earnings—will be triple locked in our White Paper and the balance will be linked to the CPI as SERPS is currently. The hon. Gentleman asked about people who pay into the state second pension, and except for about 5 million public sector workers and a couple of million private sector workers, everybody else pays into the state second pension. He said they were all losers—obviously they will not accrue S2P, but they will accrue a bigger flat-rate state pension.
The hon. Gentleman mentioned the April 2010 changes to qualifying years which he described as an “enormous” reduction. That is, therefore, also an enormous cliff edge of the sort he accuses the Government of making, and there were virtually no transitional arrangements for that. Someone who retired a day before that enormous cliff edge got nothing, whereas someone who retired the day after got the benefit of 30 years’ contribution. There are precedents for such things. When the contribution years were set to 30, women’s state pension age was still 60. In our world, and in the future, it will be 65, 66 or 67, and it is hard to see why in a working life of 50-odd years someone should get a pension for 30 years of contributions. We are merging a pension with a 30-year rule with another pension with a 50-year rule, and we have 35 as a sort of weighted average.
Finally, the hon. Gentleman asked about differences in life expectancy. I gently point out, however, that when the previous Government legislated for a pension age of 66, 67 and 68, they did precisely nothing about differences in life expectancy. We are recommending an independent panel to look at the issue and advise the Secretary of State.
Jane Ellison (Battersea) (Con)
I thank the Minister for his statement. Does he agree that the task of tackling complexity is vital and that this arrangement seeks to address those many older pensioners who do not seek means-tested top-ups because it is too complex and they are often to dignified to do it?
Steve Webb
My hon. Friend is right. In every interview I have done today, we have had to spend about 20 minutes explaining how the current system works before we deal with the change. I welcome the fact that consumer organisations such as Age UK, although it has questions about the details, has warmly welcomed the principles of our reform.
Dame Anne Begg (Aberdeen South) (Lab)
I thank the Minister for his statement and for listening to the most recent report on pensions by the Work and Pensions Committee. When we looked at auto-enrolment, we said that a flat-rate state pension was important. On behalf of the Committee, I accept his invitation to conduct pre-legislative scrutiny.
The final outcome of the pension reform will, we hope, be a simple and easy-to-understand state pension, but already, from this afternoon’s exchange, it sounds as though getting there will be incredibly complicated. Will the Minister give us an idea of how long the transitional arrangements will be in place? I suspect that the Committee will spend a great deal of time analysing those arrangements to ensure that they are fair.
Steve Webb
I am grateful to the hon. Lady both for her Committee’s report calling for the state pension to be sorted out and for her willingness to undertake the scrutiny. We will work closely with, and support, her Committee in doing that. She is absolutely right: transition is the messy bit. With pension reform, it would be lovely to start with no history and a blank sheet of paper, but we cannot do that. The straight answer to her question, however, is that transition is particularly important for those closest to pension age, who will have a complex history and rights built up. For younger workers, it is straightforward: they will do the 35 years and get the £144. Transition is complicated and messy in the early years, but it quickly works its way through the system, and we have worked hard on the statements we will send to people. They will be clear and say, as it were, “Under the bonnet, the workings might be complicated, but you’ve got this so far. Do this many years, and you’ll get £144.”
Graham Evans (Weaver Vale) (Con)
Does the Minister agree that the current pensions system is not working and does not guarantee pensioners the financial security to which they are entitled? Will he confirm that the triple lock guarantee will still apply to the new single-tier pension, thus avoiding the 75p increase fiasco we saw under the last Labour Government?
Steve Webb
The current position is that we are obliged by law to uprate by at least earnings, and our policy is to go further and have the triple lock, as is mirrored in the White Paper. The legal position in the draft Bill will be at least for earnings uprating, but all our illustrative estimates in the White Paper are indeed based on the triple lock.
Mr Frank Field (Birkenhead) (Lab)
I congratulate the pensions Minister and the Secretary of State on delivering the White Paper against the restriction the Treasury imposed on them—that the reform be delivered at no extra cost. So that the House and the country can understand how successful they have been in driving a coach and horses through the restriction, might the Minister tell us the largest increase in contribution that any worker will face under his scheme?
Steve Webb
I enjoyed the right hon. Gentleman’s column in The Guardian today. He imagined that we would make this pension reform work by not making it contributory, but I hope that I have clarified for him that people will still need 35 years of contributions or credits to draw the pension. The straight answer to his question is that the rebate is 1.4% and applies to a band of earnings from the lower earnings limit of about £5,500 to the upper earnings limit of about £40,000. It is 1.4% of that band.
Greg Mulholland (Leeds North West) (LD)
I commend my hon. Friend for the biggest state pension reform for 50 years, but how will it tie in with the other big development, which is auto-enrolment in workplace pensions?
Steve Webb
I had the great pleasure of joining my right hon. Friend the Secretary of State at Asda this morning—when he caught up on a bit of his shopping—and meeting shop workers who had just been automatically enrolled by Asda. It was fascinating talking to them, because some were in the scheme already, but many were not. Those who had been auto-enrolled were going to stay in, and one said, “It’s not that much money. To be honest, I drink more than that in the pub over a month.” People are being brought into workplace pensions. We do not want them opening their newspapers and being told, “Don’t bother saving, because you’re just going to be means-tested.” We believe that we have dealt with that problem today, which will make auto-enrolment work as well as state pension reform.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The Institute for Fiscal Studies has said today that the proposals will mean
“a cut in pension entitlements for most people in the long run.”
I am also concerned that they touch on public sector pensions and other areas of devolved competence. Will the Minister ensure that his Department engages in constructive technical discussions with the Scottish Government on the transitional process?
Steve Webb
I have written to the devolved Assemblies and the Scottish Parliament about our announcement today. On the hon. Lady’s question about costings, let me say that for the next couple of decades or so we will be spending pretty much the same as now—it is within the same cost envelope—but we will be getting the bill down for younger workers by the middle of the century. It will not be down relative to today—the share of national income going on pensions will be substantially bigger than today—but it will not be rising quite as fast. We are ensuring that workers in their 20s will be automatically enrolled so that they have a savings culture as well as state pension.
Nigel Mills (Amber Valley) (Con)
I warmly welcome this announcement, and I think we will get to the right place. How long does the Minister expect that the current complex system will have to remain in place? Will we have to keep paying people pension credits for 40 years or more, or will there be a taper so that everybody will eventually receive the new pension?
Steve Webb
I am afraid that the taper is sometimes called the grim reaper. The process is that everybody who has already reached pension age by 2017 will have their rights under the current rules. I have every anticipation that those rights will be honoured for as long as people are in a position to draw them.
Graham Jones (Hyndburn) (Lab)
Could the Minister expand on people who have SERPS that sit with private pension companies? What will happen to those pensions? He says that some who have opted out into SERPS may not qualify for the single tier. How will he explain to people the relationship between those with SERPS who have a private pension and how they will qualify for the single tier? It sounds a little complex to me.
Steve Webb
At the moment, we have a two-tier work force: those who are paying full national insurance and drawing a basic pension and a SERPS pension; and those who pay a reduced national insurance, who just build up a basic pension. In the future it will be simpler: there will just be workers who pay national insurance and build up rights under the single tier. We have to honour the past and deal with its complexity, but going forward every year will be a year’s worth of single-tier pension—a thirty-fifth of £144 for everybody. Whether they were previously contracted in or contracted out, it will be the same for everybody.
Paul Uppal (Wolverhampton South West) (Con)
I welcome the statement. Out there in the real world my constituents are heartened by us in this place seeking to simplify an aspect of financial payment for once. In relation to young entrepreneurs and many of those who are self-employed, can the Minister assure me and the House that those who pay into the national insurance pot will, under the single-tier system, see full payment and full benefit from the contributions they make?
Steve Webb
I am grateful to my hon. Friend for mentioning the self-employed. At the moment, the self-employed build up rights under the basic pension—the £107—but not the equivalent of the £144. In our world, there are just people who pay national insurance, build up qualifying years and build up a pension. The self-employed are therefore potentially substantial beneficiaries of the new and simpler system.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Minister confirm that workers currently in the private sector who contracted out may also see, in addition to having to pay higher national insurance contributions, either higher contributions towards their private pension or a reduction in benefits?
Steve Webb
Yes, the hon. Lady is right. We have talked to the CBI, the National Association of Pension Funds and major pension employers. They are clear that they do not simply want to take the national insurance rise on the chin; they want the freedom to adjust their private sector pension scheme in response. However, we have calculated that, even allowing for that, the bulk of people who are within 20 to 25 years of pension age will still get more back, from the extra national insurance and any reduction in their private pension, through the enhanced state pension than they have lost.
James Morris (Halesowen and Rowley Regis) (Con)
Does the Minister agree that a modern pension system needs to reflect the changes in a modern work force, and that what he is announcing today will help self-employed people, and women who have not been able to work and have a variable contribution record?
Steve Webb
Yes, the new system is designed to treat people as people, rather than as dependants. It removes the distinction between employee and self-employed, contracted in and contracted out. Given that these boundaries are somewhat permeable—people might be self-employed one year and part time the next and so on—this will streamline the system and make it easier for people to build up the 35 years they need.
Mr Jim Cunningham (Coventry South) (Lab)
Somebody mentioned the 75p increase earlier. The reason for that was that the previous Conservative Government broke the link and then it was related to prices, so let us be clear about that. Secondly, the problem with pensions actually started when the previous Conservative Government, in terms of industry, gave incentives to people to opt out of SERPS and into private schemes—that is how we got ourselves into this mess today. How many people will lose out under these proposals?
Steve Webb
We are publishing later this week, along with the Bill, a detailed impact assessment of the changes over a series of decades. In the White Paper we have published today, the hon. Gentleman will see a chart that shows that, for I think at least 35 to 40 years, a majority of people affected by the changes will gain rather than lose.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate my hon. Friend on what the Government have achieved and seek clarification on two points. From which budget will the NHS and other public sector employers have to find the additional national insurance contributions? Are small employers in constituencies such as Thirsk and Malton being asked to increase national insurance contributions as well as contribute towards a private pension scheme?
Steve Webb
In answer to my hon. Friend’s first question, the NHS as an employer already pays the reduced rate of national insurance from its own resources; it will have an increased rate of national insurance. Obviously the Exchequer will have an increased revenue. It will be a matter for the Chancellor of the day to decide what to do with that increased revenue, but the NHS as an employer will pay more national insurance—that is a fact.
In answer to my hon. Friend’s question about small firms in her constituency, very few small firms run contracted-out defined-benefit pensions, so the only people paying increased national insurance will be those who are contracted out who run these special final salary schemes. We have allowed those schemes to adjust their rules to offset the cost if that is how they choose to proceed, but most small firms will not be affected.
Chris Leslie (Nottingham East) (Lab/Co-op)
Crucial to these proposals is the notion that parents who take time off work to bring up children—stay-at-home mums—will register for national insurance pension credit in order to get their cumulative 35-year tally of contributions. However, surely the Government are not saying that the only way to get these credits is to apply for child benefit, because from 7 January not everybody has been eligible for child benefit payments. That would be ridiculously complex and confusing, would it not?
Steve Webb
There are two groups of people. First, those who are currently receiving child benefit that will cease because of the changes for people with higher-earning spouses will continue to get credits under this system—they are in the child benefit system with a zero award. For people who have their first child under the new regime, we already put information in what is called the bounty pack—which new mothers get—to encourage them to claim child benefit, not least because even if their spouse is a high earner at the moment, that might not always be so, so they should always claim child benefit anyway, to ensure they get their credits.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
What impact will these changes have on private occupational pension rebates?
Steve Webb
The remaining contracted-out final salary pension schemes currently receive a 3.4% national insurance rebate. That will go, which will be a cost to those employers. We have talked to the pension funds, the CBI and so on. They have said that a fair response is to allow the schemes to reduce accrual rates—for example, to offset any additional cost—and that will be a provision in the pensions Bill that we publish later this week.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Minister just referred to women applying for child benefit, even though they might not be entitled to any award. Does he not think that we are potentially storing up a big problem for the future, in that many women will see no reason to register for a benefit to which they will not be entitled?
Steve Webb
Just to be clear, even if we were not doing any of this pensions stuff, although someone might be the partner of a high earner when their baby is born, people’s relationships change. It is therefore always advisable for them to claim their child benefit anyway—even if, in the end, they receive a zero award—which also sorts out the pension credits problem.
Sarah Newton (Truro and Falmouth) (Con)
Along with tens of thousands of other women in their 50s who took a career break to raise their children, I very much welcome these measures, but can the Minister explain to me and other women returning to work how they will interact with the auto-enrolment pension scheme?
Steve Webb
Where a mother spends time out of the labour market and then returns to work, her pension rights at the £144 rate will be fully protected. If those women are not in an auto-enrolment scheme, they are not contributing, the employer is not contributing and they are not building up rights under that scheme, but we are ensuring that there is a firmer foundation. If those women carry on receiving, for example, maternity pay during maternity leave, then pension contributions can be taken from maternity pay, which can keep their pension contributions going.
Paul Flynn (Newport West) (Lab)
Will the Minister emulate the splendid example of Barbara Castle in 1975, who secured all-party support for the introduction of SERPS? Will he also consider a reform whereby retirees who are fortunate enough still to be in work while receiving the basic pension should continue to pay national insurance? That would be fair, affordable and acceptable and would bring in between £2 billion and £3 billion a year.
Steve Webb
I would certainly warmly welcome all-party support. I have tried to approach the issue in as constructive a way as I can, because we want an element of stability in the pension system. I am not convinced that levying national insurance contribution on working pensioners is the way forward. Clearly, what we want is some flexibility in retirement. We want to get away from this cliff edge where people are either working or retired. We are interested in a model of phased retirement, partial drawing of pensions, deferring retirement and part-time work. As soon as we say, “You are either working or retired; you pay national insurance or you do not”, we get back to the cliff-edge model that we are trying to move away from.
Stephen Mosley (City of Chester) (Con)
I welcome this statement, which will reduce the complexity of the pensions system, reduce means-testing and reduce the uncertainty for future pensioners. Will the Minister say whether it will also reduce administration costs within the Department for Work and Pensions?
Steve Webb
It will indeed. To give a flavour of the scale, at the moment nearly half of all pensioners are entitled to some sort of means-tested benefit. That is an extraordinary and absurd situation. If I tell the hon. Gentleman that by the time the system is fully implemented, we will be down to one in 20 pensioners being entitled to pension credit, that provides an example of the scale of the change we are bringing in.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
In his statement, the Minister made much of the need for plain language, so will he confirm that under the proposals a significant number of women will not receive the new higher-rate single-tier pension in 2017, even though men born on the same date would receive it? Will he also confirm that that potentially affects some 430,000 women across the UK, including 39,000 in Scotland?
Steve Webb
I think I have already dealt with that point. Pension ages are changing, and they will not be the same for men and women until 2018. If we have a system based on pension age, it will be different for men and women by definition until they are equalised. It seems to me that the only way to run a system is to base it on people’s actual state pension age—rather than have an actual state pension age and then bring single tier in on a different day for a set of people born in different periods. That would introduce extra complexity, which we are trying to stop.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I welcome this statement, as the problems of complexity and inequality that have been identified are all too familiar to my constituents, and they have without doubt undermined this country’s savings culture. Will the Minister explain, however, how the new proposals would affect carers in my constituency? Can he guarantee that his commitment to simplicity would go all the way down to user level?
Steve Webb
I am grateful. Carers receive the carer’s allowance, and there are other sorts of carer’s credits. Carers will thus end up with credits for the full £144—or whatever the final rate ends up being—so this has the potential to be a significant benefit to them. The hon. Lady is absolutely right that it is all very well for us to talk about simplicity, but people need to experience simplicity. That is why the White Paper provides an example of a pension statement. It is a single piece of paper saying, “You have built this amount up; if you do this many more years, you will get the full pension.” Everybody will know the rate: it will be a standard figure, and much harder for future Governments to tinker with.
Andy Sawford (Corby) (Lab/Co-op)
I have been contacted by my constituent, Mrs Slater. She is a widow, aged 59. She tells me she was informed on her husband’s death that she would benefit from his working life and national insurance contributions. She is now concerned that a flat rate will mean that his hard work will no longer be counted when she retires. Will Mrs Slater will be better off or worse off under these proposals?
Steve Webb
I am grateful to the hon. Gentleman, because I understand the concern that any change creates for people. In 2017, I assure him, we will work out people’s pension rights under our new system— 35 years for the full £144, with deductions knocked off for past periods of contracting out—and if that figure amounts to less than the rights someone has already built up, they will start from the higher one. We will honour the past. People will not build up new rights under those sorts of arrangements, but those they already have will be honoured.
Mr Marcus Jones (Nuneaton) (Con)
I have been contacted by many of my constituents over the last few months who have been concerned about the investment that they have already made in SERPS and in the state second pension. Will the Minister confirm that contributions already made will be honoured and that pensions will not be rounded down as a result of this policy?
Steve Webb
Yes, I can give my hon. Friend the assurance that he seeks. If a pension document says, “You have already built up a pension of £160, £170 or whatever”, people will get at least that amount. Going forward, people will not be able to build up those sorts of pensions in the future, but when they have built them up already, we will recognise those contributions.
Mr William Bain (Glasgow North East) (Lab)
The 1.4% rise in employee national insurance contributions and the 3.4% rise in employer contributions appear to involve an initial windfall of about £6 billion a year for the Treasury. What guarantees will there be in the Bill that current members of public and private sector pension schemes do not lose out in real terms as a result of these changes?
Steve Webb
We have already given a guarantee that, having renegotiated the public sector pension schemes, we will make no further changes in rights under those schemes for 25 years. While we are changing the national insurance state pensions of public sector workers, we are not touching the public sector pension. Private sector workers may—indeed, probably will—find that their employer adjusts the private sector scheme in response, but, as I have said, even with that adjustment—even with the higher national insurance payment—the vast bulk of workers, certainly those within 20 to 25 years of pension age, will still be net beneficiaries.
Rehman Chishti (Gillingham and Rainham) (Con)
How will the new system affect those on low earnings?
Steve Webb
In the past, the state provided a flat basic pension and then an earnings-related second pension. By definition, low earners received low earnings-related pensions. What we propose is simply a flat pension, which means that low earners will, on average, tend to benefit.
Mark Durkan (Foyle) (SDLP)
As well as engaging with the devolved authorities as he has promised to do, will the Minister take time to proof his detailed proposals to ensure that no untoward difficulties arise for cross-border workers? I represent a border constituency, and I know that it is quite normal for people to work on a cross-border basis. Their jobs often move across the border. However, that can create a number of difficulties, including some relating to pensions. Will the Minister minimise those difficulties?
Steve Webb
The hon. Gentleman is right to raise the issue of cross-border workers, for which we have had to regulate in the automatic enrolment scheme. We are not aware of any specific issues that would arise from our proposals, because they are built on the national insurance contributory principle. They turn contributions into pensions in a different way, but the system is basically the same. However, if the hon. Gentleman becomes aware of any such issues and wishes to draw them to my attention, I shall be happy to look into them.
Margot James (Stourbridge) (Con)
I greatly welcome the simplification of the existing scheme, the introduction of a flat-rate state pension, and the credits for people who have undertaken caring responsibilities and women who have taken career breaks. My hon. Friend has corresponded with me about current pensioners and people who will retire before 2017. What more can he say to reassure my constituents who fall into those categories that they will not lose out terrifically to people on the new system?
Steve Webb
My hon. Friend has raised a crucial question. There is some anger and some suspicion that somehow we are throwing money at future pensioners and ignoring today’s, but I can give a categorical assurance that that is not what we are doing. The budget for the new system is the same as the current budget. It is important to note that we are not simply taking the basic pension of £107, sticking 30-odd quid on it, and ignoring all today’s pensioners. We are combining the basic pension, the state second pension and the savings credit into a single flat payment. It is not comparing like with like just to compare the current basic pension with the £144 pension; it is a much more complex process.
Mr Speaker
Order. I always listen intently to what the Minister says, but in a bid to make face-to-face contact with his hon. Friend the Member for Stourbridge (Margot James), he is standing sideways. Facing the Chair is always to be preferred.
Charlie Elphicke (Dover) (Con)
Does the Minister agree that pensions means-testing seriously undermined a culture of savings built up over many decades? Will he assure us that, following this reform, people will not be punished for making proper provision for their old age, as they were under the last Government?
Steve Webb
My hon. Friend is quite right. The nightmare scenario under automatic enrolment would be people opening their newspapers and reading, “Don’t bother to save small amounts of money; the Government will just claw it back.” We are confident that by sorting out the state pension we will not only deal with the position of people at the bottom of the pile, but will make auto-enrolment the success that we all want it to be.
Gavin Barwell (Croydon Central) (Con)
I congratulate the Minister, who has demonstrated his mastery of a highly complex subject. In particular, I warmly welcome the decision to reduce means-testing significantly. Under this Government—unlike the last one—those of my constituents who put small sums away for their retirement will not find themselves little better off than those who do not save.
Steve Webb
I am grateful to my hon. Friend for his generous comments. Just as my right hon. Friend the Secretary of State is trying to make work pay through the universal credit, we want to make savings pay through the single-tier pension. I believe that if we can do both those things, we shall have done a good and important job.
Jeremy Lefroy (Stafford) (Con)
I welcome the statement. At present, British citizens who work overseas can build up a contribution record by making voluntary contributions. Will that continue under the future system?
Steve Webb
We do envisage that there will be a system of voluntary contributions. We will have to examine issues such as the price for a year of voluntary contributions, because obviously the pension is bigger, but we envisage that the idea that someone can fill gaps will still be a part of the system.
Andrew Stephenson (Pendle) (Con)
I very much welcome today’s statement that a single-tier pension is going to apply to new pensioners after 2017. On Sunday, I met a constituent at my supermarket advice surgery in ASDA in Colne who is in receipt of the basic state pension and pension credit but is unsure whether, as part of wider reforms, pension credit would be replaced by the new universal credit and other pensioner benefits. Will the Minister give clarification on that point?
Steve Webb
There will be knock-on effects when the universal credit is introduced: because housing benefit will no longer be paid for people of working age, we will have to incorporate housing benefit for pensioners in the pension credit system. There will be knock-on changes, but we envisage, certainly for the foreseeable future, a continuing separate pension credit system.
Mr David Burrowes (Enfield, Southgate) (Con)
I, too, welcome the value these reforms will give to people who have taken time out to care for children and, in particular, for elderly relatives. Does this not send out a clear message that this Government are indeed on the side of families and value them in retirement?
Steve Webb
We do indeed believe that, as with a year of paid work paying national insurance, a year bringing up a young child or looking after an elderly or disabled person is an equally valuable contribution to society and should be recognised as such going forward.
Bob Stewart (Beckenham) (Con)
As I understand it, 750,000 women will be £9 a week better off under these pension reforms. Will a widow who married early, spent the vast majority of her life looking after the home and children and whose husband then died be better off under these reforms?
Steve Webb
As I said in reply to a question a moment ago, where someone has already become a widow and acquired prospective pension rights because someone has died, we will not take those away from them. In future, we want to make sure that every man and every woman builds up a pension in their own right, rather than depending on the contributions of a spouse. But where people have already got those entitlements, they will retain them.
Welfare Benefits Up-rating Bill
Steve Webb Excerpts(11 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Byrne
I look forward to coming to Stourbridge and helping to explain to the 6,500 people there who are on tax credits that their Member of Parliament thinks that the money they are getting is unsustainable. I happen to think that those 6,500 people, whom the hon. Lady has just dismissed, need every pound of the tax credits that Labour delivered when we were in office.
The Minister of State, Department for Work and Pensions (Steve Webb)
I should like to bring the right hon. Gentleman back to the Bill, and to tell him that when he votes against it tonight, £1.9 billion a year will go missing. Will he compare that £1.9 billion a year with the £3 billion a week that Labour was borrowing during its last year in office?
Mr Byrne
I would contrast that money with the £3 billion a year that the Chancellor is giving away to Britain’s richest citizens, in a tax cut that will kick in next year, at a time when the Government are cutting tax credits and when Britain’s working families are under pressure. How can the hon. Gentleman possibly justify that, either here or to his constituents?