I beg to move,
That the draft Social Security Benefits Up-rating Order 2008, which was laid before this House on 23rd January, be approved.
I am satisfied that the orders are compatible with the European convention on human rights.
This year’s uprating adds almost £4 billion to Government spending and reinforces our commitment to build an active welfare state and tackle poverty by helping those most in need. The uprating order will increase most national insurance benefits by the retail prices index, which was 3.9 per cent. in September 2007, and increase most income-related benefits by the Rossi index, which is the retail prices index excluding rent, mortgage interest, council tax and depreciation, which was 2.3 per cent. on the same date. The reason the latter is used is that housing-related costs are dealt with in other benefits.
I am grateful to the Minister for giving way so early in his speech. He has outlined how benefits will increase by 2.3 or 3.9 per cent. However, the Government say that public sector increases of above 2 per cent. will be inflationary—a bogus argument in my view—so can he explain why the increase in benefits will not also be inflationary? My view is that neither would be inflationary, but could he explain the distinction that the Government have made?
We have a primary aim of helping the poorest in our society and ensuring that they do not get poorer. They are the people on the lowest incomes. When inflation rises, it is important that we should seek at least to maintain—or, where we can, improve—the situation of the poorest. It is interesting that the hon. Gentleman says that, for him as a Conservative, it does not matter by how much people’s pay rises. I suspect that those on his Front Bench will take a different view.
I will not detain the House too long on this, Madam Deputy Speaker, but the reason the Government are refusing to increase public sector pay is that they are running out of money, owing to the state of the public finances. All I am saying is that it is bogus to argue that the reason is to do with inflation. The very fact that the Government are, rightly, prepared to increase benefits in line with the RPI demonstrates that the argument does not work.
I am afraid that it does not demonstrate that at all. If the hon. Gentleman takes the view that pay rises have no impact on inflation and that inflation does not matter, he is taking us back to the days of Thatcher, Major and roaring high inflation. That just shows that the Tories have learned nothing in the past 20 years.
Let me return to the orders before us. The Guaranteed Minimum Pensions Increase Order sets out the amount by which contracted-out defined-benefit pension schemes must increase members’ guaranteed minimum pensions that accrued between 1988 and 1997. Where the annual increase in the retail prices index exceeds 3 per cent., the guaranteed minimum pensions indexation requirement is capped at that level under primary legislation. This year’s order therefore provides for an increase of 3 per cent.
The order provides an extra £2.8 billion to pensioners. This underlines our commitment to today’s pensioners. In real terms, the Government have done more for older people than any Government before them. Today, for the first time in a period of sustained economic growth, pensioners are less likely to be living in poverty than the population as a whole. Today’s pensioners are, on average, £1,500 a year better off than they were under the last Conservative Government. We have focused on the poorest pensioners, and they are now £2,200 a year better off.
I am slightly puzzled by that assertion, because the number of pensioners going bankrupt has more than doubled in the past five years, from just 900 in 2002 to 7,900. How does that fit with the Minister’s assertion that pensioners are doing rather better than most?
The hon. Gentleman will be well aware that the figures that I have just given the House show the increase that pensioners have had. Many pensioners are on very low incomes, but they are not in the position that he has identified. I accept that some people on low incomes go bankrupt; housing and other issues can lead to that happening. However, we are talking about helping the poorest third of pensioners to improve their lot in our society and reducing the level of pensioner poverty in this country. I repeat that the poorest third of pensioners are now £2,200 a year better off. I do not think that there is any real doubt that that is the case.
We are spending £11 billion more this year than if we had merely continued the policies of the previous Conservative Government. As a result, pensioner poverty has reduced by over a third since 1997. That is a real achievement, of which Labour Members can be very proud. However, we must do more. We have been reducing pensioner poverty, and we treat that as a high priority, but our policies need to take more people out of poverty than we have done up to now.
The Minister is right to highlight the issue of pensioner poverty. One contributory factor is that between 1.1 million and 1.7 million pensioners do not claim the pension credit to which they are entitled. What is the Minister doing to raise the number of people claiming such benefits, given the complexity of the means-tested system that the Government have put in place?
The hon. Gentleman has raised an important point, and I shall come to that matter in a moment. It is one that has greatly concerned me, and I hope that I shall be able to provide him with some reassurance.
Pension credit ensures that no single pensioner need live on less than £119.05 a week. That will increase to £124.05 from April. However, I want to ensure that everyone receives the benefits to which they are entitled, which is the point that the hon. Gentleman has just made. Where we can make improvements further to simplify and increase uptake, we will.
In my uprating statement last December, I was able to outline an important package of measures further to simplify the state pension system. These changes will make the system less confusing, less intrusive and more transparent. In particular, they will automate council tax and housing benefit assessments, enabling thousands more pensioners to receive those important benefits with the minimum of fuss. And we will do more.
Yesterday I announced detailed plans to deal with exactly the issue that the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) has raised. We are seeking to increase the uptake of pension credit. We recognise that there are those who, for a variety of reasons, do not claim. Many just do not think that they will be eligible; others do not realise how easy it is to find out about their entitlement. Pensioners can currently claim up to five benefits from one telephone call. The amounts of money involved can be substantial, with average awards of pension credit of around £50 per week.
I will give way in a moment.
We are working jointly with Help the Aged, Age Concern, Citizens Advice and other partners to get this message across: “If you are entitled, this money is rightfully yours and we’re here to help you get it.” We will target the areas where take-up is low, using intermediaries and local channels and joining up with other organisations to create innovative communications strategies. For example, we are working with the Scottish Executive to extend pilots that will test methods for increasing take-up. In Birmingham, we will send out more than 500,000 targeted mailings and advertise through local radio, GPs’ surgeries, libraries and post offices. I will be writing to all Members of Parliament shortly to outline our plans and show how hon. Members can help. This will make pension credit even more accessible and get money to those who are most in need.
I am pleased to hear that the Minister will use intermediaries to help with take-up campaigns, but may I ask whether such campaigns will include, in addition to pension credit, attendance allowance, which can make a massive difference to spending power of between £30 and £60 a week? Will attendance allowance be included, and if the Department is working with intermediaries, will financial help be available for them to do that additional work?
Attendance allowance is not one of the five benefits that we are particularly targeting, but people can be referred to departmental centres where they can get advice and will be able to get attendance allowance. May I add that getting that allowance is now much easier than in the past, and we have sought to improve the speed at which people can get it? When applications need to be made, it is important to get on and make them quickly. Some recent family experience of trying to do that for a relative showed that it can indeed happen pretty quickly—and I do not believe that those involved knew that I was the responsible Minister!
At the request of Age Concern and Help the Aged—they are anxious to work with us in the run-up to October, when some of these changes will occur—we are changing the way in which benefits are accessed. We want to ensure that we get as many people as possible on to pension credit in particular. Up to October this year, pensioners will be able to receive up to one year’s backdated pension credit. That can amount to a lot of money for often very poor pensioners and it can help them to improve their standard of living. We have talked to the relevant agencies, which are very happy to work with us, so I shall not offer funding when we already have volunteers happy to do so.
I commend the Minister on the initiatives that he has just mentioned. He said that he was going to write to MPs, so may I give him an example of how MPs can work proactively with Age Concern? In January, I held a joint advice surgery with one of Age Concern’s advice workers, which was specifically targeted on senior citizens. It was extremely helpful to me and to the senior citizens and it enabled Age Concern to reach a different group from the people it usually reaches. We all thought that it was a great success and we intend to repeat it. Would my hon. and learned Friend consider referring to that example in his letter to MPs?
I am aware that the Government are very keen on targets and the Minister has already said that he is keen to target areas where uptake has been low. Does he have a target in mind for the level of uptake that he is aiming for?
Our basic aim is to get as many pensioners as we possibly can to take up the rights to which they are entitled. The money is there, so we are able to cover the costs. Getting pensioners to make a telephone call to one of the helplines is basically all it takes: we would like a 100 per cent. take-up if we could get it, but we do not have it at the moment. If we could get pensioners to make those telephone calls, it would be very helpful; people are waiting on the end of the line to receive them. The straight answer to the hon. Gentleman’s question is that in that sense there is no specific target percentage; the objective is to get everyone signed up.
The change that I announced last December should help us substantially in that regard. One of the problems we have faced is that pensioners often feel that they do not want to fill in the forms, they do not want other people to know their business or their private information and they perhaps do not like accepting charity. But one thing that pensioners certainly do not like doing is paying council tax. [Interruption.] Well, nobody likes paying tax, as Conservative Members are pointing out from a sedentary position. It is probably true that nobody likes paying taxes, but we need to pay them. However, after October we will change how we make available those access points to benefit.
Rather than a pensioner having to make a telephone call, receive a form, sign the form and send it on to the local authority to access some help with council tax, we are aiming to automate all that. The pensioner will make one telephone call and the Department will be able to do all the work. All the Department will then have to do is send a letter to the pensioner saying, “It is done.” It will also send a letter to the local authority, or probably an e-mail in this example, saying, “This now has to be put into payment.” Some of the various pensioner groups have been asking for that for a long time. It is what I announced last December, and we will bring it into effect in October. That will require evening up some benefits. We will pay for that by reducing the back payment of pension credit as from October to three months rather than a year. We are finding the funding for that, and as a result we hope to lift about 50,000 pensioners who are in poverty out of it.
Does the Minister agree that many pensioners who have never claimed benefits in their life see the pension credit and income support as handouts, and the basic pension as an entitlement? Should we not be working to ensure that the entitlement is increased and that those benefits that are seen as handouts are incorporated into the basic pension?
I have a lot of sympathy with that position, and if our resources were infinite we would be able to do that. We are trying to move towards the point at which we have to rely less on means-testing, but at the same time our objective has been to help the poorest pensioners first and to remove the scourge of pensioner poverty, remembering that, back in 1997, the poorest pensioners were relying on £69 a week. We have increased that amount substantially, and as from April it is going up to £124, which is a big, important change.
We are lifting pensioners out of poverty, but that has meant means-testing. I share some of the concerns about means-testing that were expressed by my hon. Friend the Member for Newport, West (Paul Flynn), but as resources are limited, it is a way to ensure that those resources are targeted on the poorest people. With all those caveats, I hope that he accepts that response.
I was interested to hear that, under the automated system, everything will be put in place by one telephone call. I am sure that that is laudable in respect of those who are eligible to claim those benefits, but, given the high profile case of a lady who made 200 telephone calls and swindled £20,000 of child benefit, I would hope that some checks and balances are being put in the system that the Minister has just announced to us, to ensure that people who are claiming those benefits are entitled to do so. Otherwise, if it really takes just one telephone call, we will have another scam in which the fraudster out there—I am not saying that any of my pensioners will be doing this—becomes used to milking the system.
A few more checks are made, rather than just a telephone call. These days, we do not have to rely on a telephone call to make checks on people. We want to ensure that people are able to provide us with information about their various sources of income. Today, most pensioners rely not just on the basic state pension plus pension credit, but on a number of other sources, such as savings or a second pension, which many people have.
We must take it into account—this is a major part of the work done by the Pension Service—that checks must be carried out on the financial circumstances of individuals. When dealing with millions of people, there are always a few who try to milk the system and defraud it, so it is important that we put in place the appropriate checks. That is what we have done. Indeed, it has been done particularly successfully in recent years as we have targeted those who might seek to defraud the system. What we are doing will build on the hard work of the Pension Service.
We are sending mailshots to about half a million people in Birmingham in an attempt to persuade them to take up their entitlements. However, we have experienced problems with the take-up of, in particular, pension credit, although we have written to some of those who we think should be taking it up. Our information, limited as it is, suggests that people living in certain areas may well be on low incomes, but although we have sent them up to four mailshots a year, we are not achieving the take-up we would like, for the reasons that I gave earlier.
The hon. Gentleman suggests by means of signals that telephone calls might be appropriate. We rely on pensioners’ telephoning the hotline. Our objective is not to start making what would amount to unsolicited calls to pensioners, and I would be rather cautious about introducing such a procedure.
In 2007-08, to date, there have been over 200,000 successful new applications for pension credit, and we are on track to surpass the target of 235,000 for the year. This year 680,000 home visits to hard-to-reach customers have been conducted through partner organisations, offering pensioners an holistic service that takes account of all their needs, including benefit eligibility. I am confident that our record in combating pensioner poverty is good, and that the measures I have announced will help thousands more pensioners to move out of poverty.
We will also uprate benefits and allowances for the working-age population. The order provides for an extra £630 million for disabled people and carers, and an extra £420 million for those of working age. Child-related allowances paid in the income-related benefits will be increased in parallel with child tax credits. That is intended to ensure that families entitled to such benefits see the full value of increases in the tax credits. Next April, the allowance paid for a child who is dependent on the income-related benefits will increase by £5.14 a week to £52.59, a rise of almost 11 per cent. That shows our commitment to providing financial support for families on low and moderate incomes. Tax credits currently benefit nearly 6 million families and 10 million children.
As in previous years, the uprating provides an opportunity for us to deal with anomalies and make the system simpler. From next April, the single-person rate for income support and jobseeker's allowance will be the same for all 16 to 24-year-olds. For the relatively small number of 16 and 17-year-olds who claim, that amounts to an increase of £12.30, raising their weekly benefit from £35.65 to £47.95. The change will give extra help to a small number of vulnerable teenagers, as well as simplifying the benefit structure.
This year’s uprating strengthens our pledge for an active welfare state that gives people an opportunity to return to the labour market and contribute to our society, and provides the security of an essential safety net for those who fall on hard times; but we can never be complacent. Our welfare state must continue to foster independence by giving people the support that they need, not so that they can become dependent but precisely so that they do not. Our goal is a welfare state that gives a hand up rather than a handout, and a way out of worklessness, not worklessness as a way of life. Our goals are ambitious—we want to remove 1 million people from incapacity benefit, and to enable 300,000 more single parents and 1 million more older people to work—but we are building on a platform of strength and stability. We can talk with real confidence about what has been achieved in the last 10 years: more jobs, more skills, more opportunity and less poverty. Since 1997, we have had the longest period of sustained growth in a generation. The number of people in work is at a record level: 29.4 million. Since 1997, the number of people on benefits has fallen by 1 million. The new deal has helped more than 1.7 million people into work.
As my hon. Friend says, that is with a minimum wage in place for those on low incomes. He will remember that under previous Governments people were paid, quite legally, hourly wages in the region of £1.20. We are now dealing not only with poverty in terms of the welfare state, but with poverty issues where people are in work. [Interruption.] The hon. Member for Hemel Hempstead (Mike Penning) says from a sedentary position: “Comrade.” Well, I am pleased to see that he has now joined the ranks of other comrades—and it also appears that he has raised his fist.
I am pleased to hear that the hon. Gentleman is a member of a trade union, and by the sound of it, and on the evidence of his apparent fist-waving, he has not lost some of his background, so I suspect that those who sit on his party’s Front Bench had better watch their backs. [Interruption.]
Thank you, Madam Deputy Speaker.
We are dealing with some very serious issues. It is right that we exchange pleasantries and conduct our proceedings with good humour, but some of these issues are of great importance for some very poor people in our society, and we must get them right. That is why it is enormously important that the record shows that we have reduced child poverty by 600,000 since 1998. We should be proud of that. Such achievements have helped millions climb out of poverty, and they serve to contrast vividly with the poverty of thinking on the Opposition Benches—and the creation of millions of unemployed under previous Tory Governments.
My commitment today is that we will continue to build on the progress we have made to date, ensuring that we create in this country a welfare state that is rooted in social justice and provides a vital safety net. Those who can work should work, and we must put in place the mechanism to ensure that they do so; but those who genuinely cannot work must be provided with the help and safety net they need.
That is absolutely right. It is important that we continue to assist lone parents to move out of poverty and into work and to ensure that their children get a better future. That is one of the Department’s key objectives. Our aim of providing help to lone parents has involved putting in a lot of resources, but it has been successful to date and we need to improve further still our ability to help lone parents. We are reducing the age level at which we want lone parents to move into employment, because we want their children to have the benefit of having parents who have jobs and who are able to lift their future—to raise the eyes of their children so that they can see a future of hope and of jobs and of a route out of poverty.
Far more lone parents are in employment than was the case when this Government came into office, and we are ensuring that we get more lone parents into work. If the hon. Gentleman were to examine and compare our record with that of the previous Government, he would find that his party—I accept that he was not in Parliament at that stage—has something to be ashamed of whereas our party has something of which to be very proud. We will be even more pleased by the time of the next election because we will have helped even more lone parents into work.
The cost of uprating benefits for next year is nearly £4 billion, more than two thirds of which will go to pensioners. Together with the further measures to increase pension credit take-up that I announced recently, the money represents a substantial further investment in an active welfare state, social justice, reducing poverty and helping those in need. I commend these orders to the House.
The hon. and learned Gentleman is going over ground that we went over during questions on Monday. Of more material significance to this debate is whether the Government believe that they will hit their own target—a long period of silence will follow my saying that. I will come back to that point and give him another chance to intervene. Perhaps he will be able to tell us then whether the Government will hit their own targets.
I do not entirely share the hon. and learned Gentleman’s narrative. I am not sure that many of my constituents, particularly those who are saving for a pension, those who are part of a pension scheme or those who are in receipt of a pension would regard their finances with the same immense satisfaction as he seemed to feel about them. I shall say more about that in a moment.
Conservatives recognise that today’s debate is being held against a background of renewed impetus in the wider debate about how to help our fellow citizens who struggle to get by, particularly our pensioners. I am pleased that the hon. Member for South Swindon (Anne Snelgrove) implicitly paid tribute to the work that Conservatives have done, as did the hon. and learned Gentleman in his remarks about lone parents. I pay tribute to the groundbreaking work of my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) and his social justice commission. We regard this matter as being of the utmost priority. We want to help the workless to get back into work, where possible, and we want to find the best possible ways of enabling people to avoid poverty, including poverty later in life. We recognise the strong connection between worklessness and children growing up in poverty, and that it leads to fewer chances in life for those children.
I shall give way in a moment.
My next line was going to be the answer to a question put in an earlier intervention by my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), to that answer being that Britain has the highest proportion of children in workless families of anywhere in Europe. If either the hon. Member for Swindon or the hon. Member for West Bromwich, West (Mr. Bailey) wants to deny that, I give them the chance to do so.
When I became a councillor in Berkshire in 1993, I was concerned about the huge number of people—lone parents with children and others—who were on incapacity benefit in my constituency. Doctors were putting such people on incapacity benefit because the benefits system was so low. The hon. Gentleman’s Government tripled the number of people on incapacity benefits between 1979 and 1997—an appalling target was hit.
I was trying to set the scene for the details, and I shall come to those now. There is a provision for uprating incapacity benefits, so the salient answer to point made by the hon. Member for South Swindon is that it is likely, given the Government’s wretched record in getting people off long-term incapacity benefit, that many of the people she describes are still on that benefit. That is notwithstanding the fact that, overall—
Perhaps the hon. Lady will contain herself until I come to that part of my speech, bearing in mind your strictures, Madam Deputy Speaker. The Minister pulls a face, but he or one of his colleagues told me in a written answer last year that since 2000 the number of people who have been on incapacity benefit for five years or more has risen by 270,000. That is the problem with long-term incapacity benefit—
What is important is what the Government are doing now. I pay tribute to Jobcentre Plus in my constituency, which has signed up more than 100 employers to work with people on incapacity benefit. It is very important to get them off that benefit and the Government are the first to tackle that issue. The hon. Gentleman should recognise that, because his Government did nothing—
I shall now follow your strictures very seriously, Madam Deputy Speaker, and turn to the details of the order.
The Minister mentioned a global figure for the uprating of £4 million. I have to ask about that, given the way in which things have gone missing recently. The Government Actuary’s Department reported, on the basis of the draft uprating order, that the estimated increase in benefit payments in 2008-09 is £2,663 million, which is some £2.6 billion, not the £4 billion that the Minister mentioned. I have been guided by a helpful note from the Library. The Minister pulls a face again: if he wants to give me some better information on what the Government Actuary’s Department said on the basis of the draft, I should be happy to receive it, as well as an account of the seemingly missing £1.4 billion. I ask because, today especially, it is important to scrutinise every item of Government expenditure, including those that seem to get lost.
Whether measured by the retail prices index or the Rossi index, the indexation reflects greater inflationary pressure. We understand from the details of the explanatory memorandum that the benefits indexed by reference to the RPI will rise by 3.9 per cent., and that benefits subject to the Rossi index—RPI less housing costs—will rise by 2.3 per cent. In order to form a view of the order, it is important to compare that with the position in previous years. The indexation compared to RPI last year was 3.6 per cent., and it was 2.7 per cent. in the year before that. The recipients of those benefits are therefore subject to a rising inflationary pressure.
That rising trend is underlined by last week’s bleak economic assessment by the Governor of the Bank of England. The Minister pulls another face at the word “bleak”, but I suggest he pay heed to the Governor’s warning of a rise in inflation that is likely to be so steep that he will probably have to write another letter to the Chancellor of the Exchequer explaining why inflation has risen so far above its target. We have to bear that warning in mind because, as a result of those inflationary pressures, families face a genuine reduction in their standard of living, unless we make the necessary provision.
That has implications, of course, for the families who are subject to the uprating in this order. They can be vulnerable to the inflationary pressure described by the Governor of the Bank of England, especially as he specifically highlighted the higher level of energy and food prices, which form a higher proportion of the budgets of families on low incomes and pensioners. It would appear that inflation has now risen to a seven month high with a jump last month and that fuel inflation, in particular, is running at 19.3 per cent., which is the highest since records began to be kept in 1997. That is a very high level for fuel inflation.
Some estimates put the average household bill for gas and electricity close to £1,000. We also see alarming reports about the proportion of pensioner budgets that are spent on those items and on council tax, a subject of concern to many pensioners to which I shall return later. We certainly need to keep that well in mind. It is a source of anxiety for pensioners and those close to retirement. One survey from a reputable source recently showed, perhaps in contrast to the rosy picture painted by the Minister, that inflation movements are the biggest retirement worry for people nearing life after work.
I am listening to the hon. Gentleman with great interest. The issues he raises are obviously of some concern. Will he assure me that his party, in the unlikely event of it being in government, would be certain to guarantee matching this Government’s uprating under the proceeds of growth rules? On the basis of his argument, will he assure me that his party would put in extra to allay the concerns he has expressed?
It is always a mistake to give cast-iron assurances in politics. I am pleased that the hon. Gentleman has so much interest in the next Government, and can give him the cast-iron assurance that it is beyond peradventure that I will not be the Chancellor of the Exchequer in the next Conservative Government. I can assure him that ours will be a Government based on sound finance.
Through the order, we are seeing an increase in the council tax benefit received by pensioner households. We welcome any measures that will help pensioners to receive the council tax benefits to which they are entitled. However—the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) touched on this important point—almost 40 per cent. of pensioners who are entitled to council tax benefit do not claim it. Take-up of council tax benefit has fallen by 12 per cent. since 1997, which might interest the hon. Member for West Bromwich, West.
The take-up of housing benefit by pensioners has also fallen. The failure to take up benefits, subject to these orders, will have an impact on the lives of pensioners because seven out of 10 pensioners who are entitled to housing benefit but do not claim it are living in relative poverty. That is part of a wider problem of failure to take up benefits and entitlements among pensioner households. Part of the problem lies in the relationship between pensioners and means-tested benefits. The Minister touched on some of the reasons why pensioners do not take up means-tested benefits. Of course, questions relating to pensioners and means-tested benefits have long been recognised. We all know that many pensioners have a certain attitude towards means-tested benefits. As the hon. Member for Newport, West (Paul Flynn) mentioned, other pensioners find it complicated to claim means-tested benefits.
The Minister talked about the historical picture. As he was pleased to talk about the 1990s, perhaps he will remember the pledge given by our Prime Minister when he became shadow Chancellor of the Exchequer in 1994. He told the Labour party conference that year:
“I want the next Labour government to achieve what in 50 years of the welfare state has never yet been achieved, the elimination of the massive means testing now imposed on the elderly”.
Today, almost half of pensioners—45 per cent.—are subject to means-testing. Whether that is a massive number I shall leave it to others to judge, but it is beyond peradventure that means-testing is very much in evidence in the pension credit system set up by the Government. Once again, there is a serious problem of lack of take-up.
We could go round and round the individual changes and I would soon be out of order, Madam Deputy Speaker. However, I am happy to rest my case on the fact that the Conservative Government left in place a strong pension system—a strong system of pension provision—that was recognised at the time as the envy of Europe.
I am well aware of the fact that some people would rather talk about history than the present day. On low take-up of council tax benefit, I am sure that my hon. Friend agrees that areas such as Hertfordshire, and indeed St. Albans, had such a poor settlement that their council tax will inevitably rise, which will hit the very pensioners who do not claim the benefit and struggle to pay their bills.
Council tax benefit is a salient point in relation to the order. I have to tell the hon. Member for South Swindon that many pensioners are recognising the shortfall in their finances given what they have to pay for fuel and food, as well as the high council tax increases they will have to pay. The situation is difficult for many pensioners and I think she will find that few of them regard their finances with the same degree of satisfaction as Labour Members—[Interruption.]
I am aware of your strictures, Madam Deputy Speaker, so I shall be brief.
Many pensioners in my constituency and in many others—perhaps even the constituency of the hon. Member for South Swindon—wanted a general election last autumn to test these matters. The sooner the issues can be put to the test, the better. I am sure the hon. Lady wants the same thing.
I shall stay on the subject of pension credit because it is extremely important. I am not sure whether the Minister, in his fairly lengthy opening remarks, outlined the full extent of the problem of pension credit take-up. According to a written parliamentary answer of 19 October 2007, total pension credit take-up in 2005-06 was between only 60 and 69 per cent. by case load, and between 70 and 78 per cent. by expenditure. That meant that between 1.7 million and 1.74 million pensioners entitled to pension credit were not claiming it and that between £1.6 billion and £2.5 billion of pension credit was unclaimed.
Perhaps we can discuss that general subject on another occasion.
The important point in respect of the order is that up to 330,000 people were not claiming the guaranteed part of the credit—between 70 and 80 per cent. of the case load. That is extremely serious and we must surmise that many of those people are in a grave financial situation.
On the savings element of pension credit—the Minister pulls a face again; he will pull an even worse one when I tell him this—fewer than half of those entitled to it claim it. If he wants to gainsay that, I am happy for him to do so.
I hear what the hon. Gentleman says about the pension credit. If he listened to my speech, as I am sure he did, he will know that I have just announced that we are working with Help the Aged and Age Concern to increase the take-up of pension credit. In December, we announced proposals that will lift about 50,000 more pensioners out of poverty and get them registered for pension credit as well as for a series of other benefits.
It gives me no great pleasure to recollect that I was one of those who served on the Committee that considered the State Pension Credit Bill during its passage through the House in 2002. If I had said to Ministers then that six years later their system would be so complicated and that so little of the money would be getting through to pensioners that those Ministers would come back before the House to plead for help from various worthy and important interest groups, and even from Members of Parliament, they would have laughed me out of court. We were told at the time that it was a wonderful system that people would find easy to use.
Well, the serious problem is that there are 330,000 pensioners who do not have it today, and that is what we should be debating.
I noticed the words that the Minister used in his opening remarks. He said that he wanted to see more people claim pension credit, and that the Government “seek to increase pension credit take-up”. The fact is that the Government have missed their target of paying pension credit to 3 million households. They should have hit that target two years ago, but in 2005-06 some 2.65 million households were in receipt of the credit. It is against that background that we should view the statistic that today in Britain, notwithstanding the satisfaction that the hon. Member for Vale of Clwyd (Chris Ruane) and his colleagues feel about the matter, 2 million pensioners live in poverty.
The Conservatives join the Minister in the objective of improving the lives of those pensioners and getting through to them the entitlements that they should receive. The National Audit Office estimates that increasing the take-up of pension credit by 10 per cent. would lift an extra 100,000 pensioners out of poverty, while a similar increase in the rate of take-up of housing and council tax benefits would move 130,000 out of poverty. We share the general objective of moving those pensioners out of poverty—we want to see that happen—but the problem is that the Government’s present measures, including the uprating order, will not make it happen.
I remember the Government being warned when they introduced the pension credit that they were relying on a complex system. Indeed, at one point we were told that they seemed to be relying on the assumption that working people would not understand the system, as if they did they would choose not to save. To be fair, the Minister acknowledged today as well as in his statement on 5 December some of the problems with pension credit take-up.
As a general principle, we welcome any help that can be given to pensioners and others who struggle with the complexity of the system. Ministers have very fairly admitted, finally, that pensioners find the forms confusing, and the Government are trying to put in place a different system to help them. With that in mind, how does the Minister propose to monitor the effects of the changes that he described today and on previous occasions, particularly changes relating to the claiming of pension credit? What is his most recent estimate of take-up of pension credit, and what expectations do the Government have on that front? As a matter of interest, to put his good intentions to the test, what estimate of pension credit take-up has the Chancellor of the Exchequer used in his spending plans for the years to come? What is the Government’s estimate of pension credit take-up for those purposes?
I thank the hon. Gentleman for being so generous in giving way. He has rightly given the Minister a list of questions to answer, but if he is not happy with the way the Government are administering and allocating resources to pension credit, will he say how much additional funding his party would allocate to get it to the level he would be happy with?
I was hoping the hon. Gentleman might throw some light on what the Chancellor of the Exchequer believes the take-up will be. As I said, we believe the system should be as simple as possible. We warned the Government against the complexity that they put in place in 2002, which makes it so difficult for pensioners to claim these credits. We will help pensioners in any way we can, both as individual MPs and as the Opposition, but we will not take the blame for the complex system that the Government put in place, when we warned them against it.
The hon. Gentleman is rightly drawing attention to the complexity of the benefits system. It is astonishing, therefore, that the report to which he referred earlier from his party’s social justice commission did not make a single proposal about benefit simplification. It simply recommended that the whole issue of benefits should be dealt with in another report. Does he himself have any particular proposal on benefits that should be simplified?
I will happily supply the hon. Gentleman with a copy of our proposals in that regard. He knows that we have had debates on the Floor of the House, we have raised and highlighted the issue on many occasions, and we have been complaining for a long time about the complexity of the benefits system and the hundreds of different forms that pensioners have to fill in.
I turn to another aspect of complexity on which it would be useful to have the most up-to-date statistical summary from the Government—some of the issues relating to the order. We understand that the problems that Government Departments experienced last year in respect of data transfer—I am sure the Minister is familiar with those, as are other hon. Members—apparently led to a review by his Department’s Permanent Secretary of how data are transferred. As a result, a temporary suspension of the movement of data was introduced.
That has meant, among other things, that the Department’s quarterly statistical summary, which should have been published on 13 February, was not released. There may have been a statistician out there who was prevented from giving his or her ideal Valentine’s day gift on 13 February, but we need an up-to-date statistical picture of the work of the Department. Can the Minister say how long the review will last? Can he give us an assurance that the information that was not published on 13 February will eventually be published, and can he give us some indication when that is likely to be?
We know that there are many administrative problems affecting the Government in general and the Department in particular, but we would like to see statistics published as soon as possible, so that we will have an opportunity to monitor some of the aspects about which we have been asked many questions this afternoon by those on the Government Benches.
On the subject of administrative problems in the Department, I would be grateful if the Minister could throw some light on the extent of error in the Department’s benefit payments. The benefits uprating order is important in that respect. In a written answer to me on 17 September last year, the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), told me that the error in benefit payments had risen from a value of £1.1 million in 2000-01 to £1.9 million in 2005-06. It has risen for every year in that period. Can the Minister give us any more up-to-date figures on that? Can he explain the increase? Can he say how much is because of customer error and how much is down to official error, and what steps are being taken to reduce the loss?
A number of the payments specified in the schedules to the uprating order relate to children as, for example, in the case of payments for dependent children in income support, where there will be an increase from £47.45 to £52.59 each week. We need to see how those and other upratings in the order fit into the overall picture on child poverty. Some 2.8 million children now live in poverty before housing costs are taken into account, and 3.8 million do so after housing costs. It may interest Labour Members to know that the number of children living in poverty is on the increase: in 2006, it rose by 100,000 before housing costs and by 200,000 after housing costs.
This is the third time the hon. Gentleman has given way, and I thank him for that.
The hon. Gentleman is critical of what the Government have done about child poverty. May I remind him of the words of the shadow Minister with responsibility for family welfare, the hon. Member for Basingstoke (Mrs. Miller)? She said:
“As all speakers have acknowledged, aspects of child poverty have improved significantly.”—[Official Report, Westminster Hall, 6 March 2007; Vol. 457, c. 416WH.]
Furthermore, the hon. Member for Croydon, Central (Mr. Pelling) said:
“Good work is being done by the Government through Sure Start and other means to bring lone parents into economic activity.”—[Official Report, Westminster Hall, 6 March 2007; Vol. 457, c. 407WH.]
The party of the hon. Member for Hertsmere (Mr. Clappison) has recognised those things, but he has been very curmudgeonly in his assessment of what we are doing.
I was not being curmudgeonly, but simply citing a salutary statistic that will not be entirely answered by the sort of point just made by the hon. Gentleman. Despite everything that we have been told, child poverty is on the increase and the number rose by 100,000 before housing costs and 200,000 after them.
The hon. and learned Gentleman knows that the Government keep missing their targets in that regard, and they are not prepared to state that they will meet their targets. It was clear that in the past year, notwithstanding the Government’s targets, child poverty has risen. Against that background, we need to see how this uprating fits into the child poverty picture.
As I said, the Government missed their target last year. We apprehend from Monday’s Question Time that they are not on track to achieve their target of halving child poverty by 2010. The Minister evinced some interest in the issue in an early intervention on me. Now that he has had time to think about it, can he tell us where the Government are with regard to that target? If they are not going to achieve it by 2010—and we do not think that they are, given the background—when do they believe they will?
I am grateful to the hon. Gentleman, who has indeed been generous in giving way. He is making an important point about how the Government are way off meeting their child poverty target. The latest assessments suggest that the target will not be met until a number of decades beyond 2020. I thought the Conservative party was signed up to the objective of abolishing child poverty by 2020. Will the hon. Gentleman confirm that?
We have set out our objectives. The hon. Gentleman has actually been rather kind to the Government; I have been accused of attacking them. He has said that the target will not be met until decades to come, whereas I am simply asking when it will be met. The hon. Gentleman and I share an interest in the response.
I have given way a lot, and time is limited—[Interruption.] I am being criticised by the hon. Member for Vale of Clwyd, to whom I have given way already. If the hon. Member for West Bromwich, West still has a burning question later, I shall give way then. I want to raise several other important issues arising from the order.
I think the hon. Gentleman will be good enough to recognise that I have given way quite a bit, including to him.
I turn now to whether the operating changes relate to people and families living in poverty and severe poverty. According to a paper issued last year by the Institute for Fiscal Studies, relative poverty in the United Kingdom rose in 2005-06—an increase of 400,000 before housing costs and 600,000 after housing costs are taken into account. The institute says:
“The rise in relative poverty is a direct consequence of the relatively low growth in low incomes between 2004-05 and 2005-06.”
Will the Minister give us his view on that and tell us where these benefit upratings fit into the general picture? There are important questions about not only relative poverty but severe poverty—that is, people living on 40 per cent. of contemporary median income. Again according to the IFS, the risk of severe poverty increased between the years 1996-97 and 2005-06. Will the Minister tell us where these benefit upratings fit into the picture, and is he prepared to give us any forecast on severe poverty?
Strange as it may seem when one is talking about relative poverty and severe poverty, many of those in receipt of these benefit upratings will be subject to a fairly heavy burden of taxation—or what will be so for them. According to one survey, the poorest fifth of households pay a higher proportion of their income in taxes than any other group. Obviously, quite a lot of that will be accounted for by indirect taxation, but can the Minister give us any idea how many of those in receipt of these upratings are paying direct taxation—that is, income tax or national insurance contributions?
The underlying aim must be, wherever possible, to move people from the benefits system into work and to reduce the number of people subject to the upratings in the order. Let us take one example. Certain parts of the order increase payments to those in receipt of long-term incapacity benefits. I have already given the House the statistics on long-term incapacity benefits, which are striking. More than 55 per cent. of incapacity benefit claimants have been in receipt of incapacity benefits for more than five years and, under this Government, those on incapacity benefit for more than two years are more likely to die or retire than to get a job. There are also, strangely, several hundred thousand people under the age of 35 claiming incapacity benefit—500,000 altogether, including some who are very young. Will the Minister share with us any views he has on the incidence of long-term incapacity benefit claimants and draw the connection between getting at least some of those people off incapacity benefit and reducing the annual expenditure on benefits?
In considering by how much expenditure on uprating can be reduced in future, will the Minister take into account the evidence that many people in receipt of these benefits, including incapacity benefit and the benefits uprated under the order, want to work and are being let down by the system as currently constructed? In a written reply to me last July, the national statistician told me that more than 2 million of the economically inactive want a job. That figure must include many of those in receipt of the uprated benefits under the order. Taking into account all those on out-of-work benefits, we estimate that nearly 5 million people are on such benefits, including many subject to the order—such as 2.6 million people claiming incapacity benefit, which is being uprated, and 837,000 people on jobseeker’s allowance, which is likewise being uprated. Against that rather dismal background, can the Minister give us a sense of where he sees expenditure on these benefits going in future? Does he expect as much to be spent on these benefits in years to come because of the sheer number of people claiming?
I appreciate that the order is an annual exercise, but it is not a model of simplicity, and the explanatory memorandum is not exactly forthcoming. It tells us what is happening in a very broad sense but gives us little insight into the details in respect of individual benefits. For example, how easy is it for a pensioner to find out what effects article 6(10) has on his or her entitlements under the Social Security Contributions and Benefits Act 1992 or the Pension Schemes Act 1993? In an attempt to scrutinise Government proposals such as this, the Social Security Advisory Committee asked the Minister’s Department to provide what it called a complexity impact statement. It is salutary to read what the committee—the expert body charged with looking at the social security system and all such uprating orders—says in its most recent report. It says:
“We noted in our last report that these statements had told us little about either how the Department’s guidelines on simplification have been applied in each case or about the impact statements that have been made subsequently. We have found this lack of exposure of the process frustrating and on the basis of the limited information that has been offered to us, we have been unable to judge whether any substantial progress is being made”.
In short, these and other measures coming from the Department are too complicated for a complexity impact statement. If that is how the distinguished members of the Social Security Advisory Committee found things, what must they be like for the recipient who wants to find out more about their entitlements under orders such as this? To put it as the committee diplomatically did, there is a substantial barrier to full customer engagement. That is a good description of the way this Government so often operate.
This annual uprating debate is not the most striking example of the power of Parliament over the Executive. The order is not amendable, and unfortunately all we can do is take it or leave it. The Lib Dems were unwise to vote against it one year; they were then castigated for being against the increase in pensions. We should consider this situation. We would dearly like to suggest amendments to this order, which I shall come to later.
I and, I suspect, every Labour Member congratulate the Government on their achievements in this area during the past 10 years. I regularly hold public meetings with pensioners and with Age Concern to tell them what is going on and to increase the uptake. I would like to make one plea on uptake. There is real resentment among pensioners about taking handouts, which runs very deeply for certain generations who have worked all their lives and never taken a handout. They see the pension credit and income support as handouts; they accept the entitlement of the basic pension because they have paid for that. That is a serious problem and it is a persistent one. It used to be the case that about an extra half a million people needed to claim income support to bring them up to the minimum income guarantee level, but we now hear that 1.7 million do not claim pension credit.
I appeal to the Minister to find a better way to deal with the issue than the take-up campaign. We have had dozens of those in the past, and none of them has been very successful. Surely there must be some way the Department can delve into the records to identify those who are entitled to pension credit and more income support. It can then write to them and tell them, “There is a very large sum of money to which you are entitled, and it’s waiting for you.”
In an intervention, I suggested to the Minister the idea of telephoning certain groups of pensioners, but he was not as enthusiastic about that as he might have been. I wonder whether the hon. Member for Newport, West (Paul Flynn) would support a pilot project of telephoning the most needy pensioners to improve the uptake of these credits.
There must be a better way of doing it. I will take part in the campaigns that the Minister will lead. We have the communications alliance now, which gives a chance to publicise the meetings and get pensioners along, but we must find a better way than the simple uprating campaigns that have been only partially successful in the past.
This debate provides a chance to look at many of the defects in the system. We must consider the figures that are not uprated; this is a serious matter. We rightly concentrate on the benefits that will be increased, but some figures are not uprated annually at all. In particular, I refer to the capital limits for entitlement to means-tested benefit. The amount of capital that a pensioner can have without benefit entitlement being affected was fixed at £6,000 in 2001—a great deal more than it was in the past. Seven years later, it remains £6,000.
A constituent of mine, Mr. Cliff Knight, who is a doughty campaigner for pensioners and is a local historian, is finding that the ageing process comes with many companions and that he needs many services that he never previously required. The example is interesting and I want to go into detail about it. He was refused a grant to buy a stair lift. The means test for disabled facilities grants is based on the housing benefit rules. Although the weekly needs of a disabled pensioner are assessed at £186.55 for housing benefit purposes, increasing to £194 this April, the figure for calculating entitlement for a disabled facilities grant is £171.40, which was the housing benefit rate for 2005-06. Surprisingly, that makes a huge difference. The failure to increase the sum since 2005-06 makes a difference of £8,812 in the amount of grant payable. That is staggering. It means that many people, who are entirely deserving of the grants, are floated off them by the failure to uprate the amount in line with inflation. We must examine that—a large cohort of pensioners has been badly dealt with because of that problem.
There is plenty of good news from the Government. It has been gratifying to be a Labour Member in a successful period for pensions. Last year’s Pensions Act embodied two fundamental and welcome changes to entitlement to the basic state pension. First, the earnings link, which was severed in 1980, is to be restored so pensions will increase, as they did before then, at least in line with the increase in average earnings.
The second welcome change especially affects women. The number of years of contributions that is needed to qualify for the full rate of pension is currently 44 for men and 39 for women. That will now be reduced to 30 years for both sexes, thus putting right an old injustice.
However, the order reflects neither benefit because the change in the contribution conditions will not come into force until April 2010 and the earnings link will not be restored until at least 2012 and possibly not until 2014. In both cases, the delay is hard to defend, especially given the surplus in the national insurance fund. If current trends continue, we will be in the extraordinary position whereby the surplus in the national insurance fund will be enough by 2013 to fund a Northern Rock rescue, should such a calamity recur.
For many years, I used to get up early to table early-day motion 1, asking for the restoration of the earnings link. If we had restored it in 1997, it would have been affordable because the subsequent increases in inflation have been low. That should have happened—it would have been a great advantage to us.
Breaking the earnings link had a dramatic effect on the basic pension. Most of the damage was done under the Tories. The basic pension fell from 23.7 per cent. of average earnings in 1981 to 17 per cent. in 1997. That is sad, bearing in mind my comments about the value of the basic pension as something to which people feel they are entitled and are proud to take. Take-up is virtually universal. Sadly, the process has continued, with a further drop under the present Government from 17 to about 15.4 per cent. The valued pension is therefore being reduced all the time, thus increasing the amount people have to claim.
Single pensioners are now about £47 a week worse off than they would be if the link had never been broken. That is a large sum of money. Everyone— including all the Opposition parties, I believe—agrees that the link must now be restored. Do people understand what it means? Everyone, especially those on small incomes, fears that their income will not keep up with inflation. They are going to find themselves with a reducing power to spend. They want the link as it gives a great deal of security, and if it is not there they rightly object. The link is justified and will be hugely popular for the party that introduces it. However, pensioner organisations do not understand why they have to wait at least another four years until they have it. By 2012, the pension will be 14 per cent. of average earnings, and each year’s delay beyond that date will reduce it still further.
It is not just today’s pensioners who will suffer from the delay; it will also mean a permanent reduction in the value of the pension as a proportion of average earnings for generations to come and a permanent increase in the proportion of pensioners forced to rely on means-tested benefit. At the very least, the Government should now give a definite commitment to restore the link by 2012, leaving open the possibility of earlier action.
On contribution conditions, the second fundamental change embodied in the Pensions Act 2007 was the reduction in the number of years of contributions required for women eventually to qualify for a full or nearly full basic state pension. Those who stand to benefit most are those who, wisely or not, chose to pay the reduced married woman’s contribution and those who paid full contributions when they could but had substantial gaps in their contribution records for the years when they were bringing up children or caring for disabled members of their family.
However, until 1978 the years devoted to child care or other family responsibilities did not count towards the state pension. Barbara Castle introduced the home responsibilities protection, or HRP, the effect of which was that those years were to be left out of the pension calculation. That meant that a woman with, say, a 10-year gap in her contributions record during which she was caring for children or a disabled relative could still qualify for a full pension—an act that we all accepted as absolutely right. However, HRP did not start until 1978 and did not apply retrospectively. There are therefore still a large number of women over pension age whose child-rearing years occurred at least in part before 1978 and who still receive reduced pensions as a result.
To their credit, the Government have recognised that. The May 2006 pensions White Paper said:
“Women’s pension entitlements are, on average, catching up with men’s. But there remains a critical cohort of women over the age of about 45 now who did not fully benefit from HRP. They have significantly poorer contribution records—despite the fact that most of them will have made important and valuable contributions to society.”
The admirable solution proposed in the White Paper and embodied in last year’s Act was to reduce the number of contribution years needed for a full pension, but only for those reaching pension age in 2020 or later. However, most in the critical cohort referred to in the White Paper are already over pension age now. It is the older women who are worst affected, because more of their child-rearing days occurred before 1978, when HRP started.
A woman now aged 80 would have been 50 in 1978, so would probably derive little or no benefit from HRP, and will almost certainly receive a reduced pension as a result, yet the new and more generous rules will not apply to her. Moreover, it is plainly unfair that a woman born on 5 April 1950, and now aged 57, should receive a much smaller pension in April 2010 than a woman with the same contribution record who was born a day later. However, that is the effect of the change in the contribution conditions as it stands now.
As April 2010 approaches, people will become increasingly aware of the cliff edge that we will face at that time. It is difficult to believe that the Government will not be compelled by public opinion and the deep sense of injustice that will be felt to backdate the change, so that existing as well as future pensioners benefit from it. I urge the Minister and the Government to make a decision, rather than leaving it to the last moment, so that women already receiving reduced pensions can at least look forward to a better pension from 2010 onwards.
The national insurance fund is a fascinating subject with which I have bombarded Pensions Ministers in a number of Governments for rather a long time.
That would be a fine objective to aim for.
As the Minister said earlier, the Government have—for good, persuasive reasons—concentrated on those whom they perceive to be the poorest pensioners. The great problem is, however, that the people on whom they have concentrated are not the poorest pensioners. The poorest pensioners are not those who are claiming pension credit and income support to bring them up to at least the minimum income guarantee; the poorest pensioners of all are those who are not claiming the allowances to which they are entitled. They are the ones who need to be targeted now. We should be aiming to provide a universal benefit that is as popular as child benefit—which is taken up by 99 per cent. of those who are eligible—and has no stigma attached to it. Sadly, however, we are not getting nearer to achieving that goal; we are getting further away.
Any proposals for increases in benefits must take account of their affordability, as the Minister has rightly said. The cost of pensions and other contributory benefits falls on the national insurance scheme, and the Government Actuary’s report shows that, once again, the fund is in extremely good shape. It is expected to end this financial year with a balance of £46 billion. Because the fund has no borrowing powers, the Government Actuary recommends that the year-end balance should be enough to meet two months’ expenditure, but £46 billion is enough to meet eight months’ expenditure. By the end of next year, the balance is expected to reach £57 billion, which will be enough to cover nearly 10 months’ expenditure. The fund has been accumulating ever-increasing balances over the past 15 years, and this is set to continue. The Government Actuary’s projection shows the balance trebling by 2013 to £115 billion, the equivalent of more than 16 months’ expenditure. The process has continued under this Government. We started off with a balance of £500 million, and the amount has simply accumulated.
It is often suggested by campaigning bodies such as the splendid National Pensioners Convention that, instead of building up these massive surpluses, the money should be used to meet part of the cost of an improvement in the state pension. That is a very persuasive argument. There is a standard response, which I have seen in numerous letters from Ministers over the years. They say:
“The National Insurance Fund is run on a pay-as-you-go basis. When there is a surplus, it is invested in gilts. If the surplus was used to increase benefits, the Government would need to raise the equivalent through other means such as raising taxes.”
That is a key revelation. In other words, the Government are deliberately collecting more money in national insurance contributions than is needed to pay benefits, and using the surplus for purposes which, however worthy they might be, have nothing to do with national insurance.
This is a genuine stealth tax. I am sorry to have to use that term, as it has been vastly overused, and misused, by the Opposition. In the short term, this might be a convenient arrangement for the Government, but in the longer term, it can only undermine confidence in the whole national insurance system. Moreover, if national insurance contributions are regarded as just another form of taxation, the Government are open to the serious objection that the rich do not pay their fair share. They pay only 1 per cent. of their earnings over £670 a week, compared with the standard employee’s contribution of 11 per cent.
Personally, I pay nil per cent., because I am in the position, having passed retirement age, of not having to pay national insurance contributions. I have raised this matter with Chancellors in the past, and I would suggest to the Minister that, if the Government are looking for a way of raising money fairly painlessly, they could ask people who work after retirement age to continue to pay national insurance contributions. They can certainly afford to pay them, and there would be a great deal of justice if those fortunate enough to work after retirement age did so. That would raise £2 billion, and I believe that that is what should happen. At the moment, however, we have a situation that is leading to serious injustices in the system.
I come back to the fact that I look forward to saying with pride at the next election what a marvellous job the Government have done over the last 10 years. As the motto of one of the schools in my constituency says, “Nid da lle gellir gwell”—there is no good that cannot be improved upon. We have yet to reach perfection in the system, so I hope that the Minister will take account of what have hopefully been my many constructive suggestions.
It is a great pleasure to follow the hon. Member for Newport, West (Paul Flynn), who made a number of important points. The process for debating benefit upratings simply does not allow us to have a proper discussion of the adequacy or otherwise of benefits, to which the hon. Gentleman referred. It is important to improve parliamentary scrutiny so that we can properly address that issue, perhaps once every Parliament, and ensure that we do not lose sight of the genuine problems caused by the inadequacy of some of the benefits, as highlighted by the hon. Gentleman.
Liberal Democrat Members welcome the uprating statement. As the Minister said, it is a matter of great importance to every constituency that an additional sum in excess of £4 billion will be put into the benefits system as a result of the uprating. However, in common with the hon. Member for Hertsmere (Mr. Clappison), as I listened to the Minister’s opening remarks about the wider context, I felt that his analysis revealed a degree of complacency. The Minister was quite right to point to some improvements, but in view of the poverty statistics when the Conservatives left office and how bad the situation was then, we should regard some improvement as a bare minimum. Although there have been certain improvements, the situation is not as good as the Minister set out. In the interests of having an objective debate, it is also important to recognise where there is a desperate need for improvement. Nowhere is that more obvious than from a study of the poverty statistics, particularly those for child poverty, which is greatly affected by the benefits system.
We talk a lot about child poverty and pensioner poverty, but we do not give much air time to poverty among people of working age, which is a serious problem. How adequate the relevant benefits are in relieving that poverty is a genuinely important issue. Similarly, the Minister cited, as Ministers often do, the improved statistics on the numbers of people in employment, but what he did not say is that even with those increases, it is still the case that today’s employment rate is no higher than it was at the peak of the last economic cycle in 1990. For all the improvements in employment levels highlighted by the Minister, and the consequent reduction in the number of people on benefit, there is a still a huge way to go if we are to meet the target of increasing the employment rate to 80 per cent., for example.
The need to go further is particularly true in respect of some of the groups to which the uprating statement applies. I refer specifically to the number of people on incapacity benefit, which has remained stubbornly high—2.7 million when the Government came to office and about 2.6 million now. Despite that small drop in claimants, one of the greatest failures of welfare reform is the fact that we still have more than 2.5 million people in receipt of incapacity benefit despite all the evidence that a very large proportion of them would like to be able to work, if only the help and support were available to assist them in doing so. Likewise, the number of children living in workless households has remained stubbornly high—another matter to which I shall return.
Let me make some general points about the uprating statement. The first issue that needs to be highlighted is the complexity of the benefit system. Complexity is often pinpointed as an issue in the abstract sense, but it is also a very real and direct issue because the system’s complexities have a direct effect on people’s ability to get back into work. People often cannot judge whether they will be better off in work, and in some cases they may well not be. In going through the detail of the uprating statement, as I am sure hon. Members have, we find that more than 400 different rates, tapers, allowances and premiums are being either uprated or, in some cases, not uprated. In fact, to describe the statement as uprating is slightly misleading. In reality, it is a non-uprating statement, because more than 100 of those rates, tapers, allowances and premiums are not being uprated. Many have not been uprated for some years. In a welfare system in which people, depending on their needs and conditions, face about 450 different benefit options, it is little wonder that some find that system highly complex.
Ours has been described as the most complicated welfare system in the world, and it is hard for many of our constituents to navigate their way around it. While I welcome the improvements that the Government are making in relation to pensioners being able to make one phone call to claim several benefits—the Minister referred to those—many people who are not pensioners have needs that are just as great and find the system almost impossible to navigate. I hope that the Government take more cognisance of the importance of the issue of complexity and do more to simplify the benefits system.
I put one proposal on the table, which Ministers have previously welcomed in general terms, as did the recent Freud review—the introduction of a single working age benefit. That significant simplification would make the landscape for people of working age much easier to understand and it would promote people getting back into work. Good intentions have been expressed on the issue from time to time, not least by the new Secretary of State during Question Time on Monday, but I hope that the Minister will say that we can achieve some progress in investigating it. I think that would bring great benefit to this country.
Likewise, in considering the range of different items that we are uprating today, it is important to realise that part of the complexity is created by the means-tested nature of those benefits. That is particularly true in relation to pensioners. I shall return to that matter.
The next general issue is one that the hon. Member for Newport, West highlighted. In some cases, the benefits that we are uprating are inadequate to meet the tasks that we set for them, and that is expressed nowhere more clearly than in the poverty statistics. The hon. Member for Hertsmere highlighted from the Conservative Front Bench the problems that we have with many of the poverty figures, such as the recent rises in child poverty and the recent rises in poverty among people of working age. The Minister made the point that things have got better since 1997. That is true, but the more recent statistics suggest that there has been a change in that trend. We await the next set of figures to see whether that is continued, but none of us should be complacent about it.
That applies, too, in the context of the rising inequality in British society. Let us consider the recent statistics on that front. The Gini coefficient, which is the recognised measure of inequality, is rising again. The Gini coefficient in the most recent year for which figures are available is the same as it was when the Government took office, so inequality is also a huge factor here. The latest figures suggest that child poverty is going up, and those for 2005-06 were 500,000 higher than the Government would have needed to meet their target for the previous year.
It is right to debate the question of child poverty: the targets are to halve child poverty by 2010 and to abolish it by 2020, but a great deal more needs to be done if those targets are to be met. I am happy to reiterate—I note that the hon. Member for Hertsmere did not explicitly do this—my party’s commitment to the goal of ending child poverty by 2020. I had hoped that that was a matter of cross-party agreement.
The Government are way off beam in terms of meeting their targets, so I hope that the Minister is listening to these points and will take them back to his colleagues. Those targets are important and I hope that Members in all parts of the House share in that.
It is interesting to note that the Department’s Harker review highlighted the fact that the important area to focus on in tackling child poverty is the impact on families—often two-parent families in which no one is working and people who might be receiving many of the benefits that we are dealing with today. There has been little progress on that front.
I think that in addition to our annual debates on uprating orders which, as has been pointed out, are not amendable, there should be a process allowing more general questions about the adequacy of the benefits system to be reviewed, perhaps once in each Parliament. There could perhaps be an independent review leading to a parliamentary debate. The Minister will say that there are enormous financial implications, and that is true, but none the less we need an opportunity to discuss those broader questions.
Much of what the Government are doing with the benefits system is rightly intended to get more people off benefits and into work. We share the objective, but it must be said that “mixed messages” does not begin to describe the range of signals that have been sent to people on benefit over the past few weeks in the pronouncements of various Ministers. On the one hand, it seems that people in social housing will have their houses taken away from them by the Housing Minister if they do not comply with the Government’s requirements. On the other, what the Prime Minister has said suggests that additional sums are likely to be payable to those who try to find their way into work. Most recently, it has been proposed that people should be obliged to work for four weeks when they have been on benefit for two years.
None of that has been mentioned today, but it suggests that, after 10 years of no success on the broader issues of welfare reform, the Government are anxious to give the public the impression that they are tough on those issues. I think their record shows that they should make much more effort to invest in the support that is needed to take people off benefits and return them to work. The macho talk that we are hearing is not particularly helpful, although I recognise that the benefits system should contain a degree of conditionality to deal with those who choose not to comply.
We need to understand the methods by which benefits are delivered to claimants, and to determine whether those methods are adequate. The Minister referred to take-up. I welcome some of the improvements that he has introduced, such as the telephone support available to those of pensionable age who want a wider assessment of all the benefits that they can claim, but it is notable that the trend in Government has been towards delivering services over the telephone and away from face-to-face contact. It may be difficult, if not impossible, to deal with many claimants over the telephone—particularly the most vulnerable, who will be claiming many of the benefits that we are discussing.
The social fund commissioner’s annual report, with which Members will be familiar, deals specifically with the delivery of social fund support over the telephone. Seven call centres were examined, and although one proved to be relatively successful—one call in five was answered—astonishingly, only seven calls in 400 were answered overall. If we want benefits to reach the people who claim them, that certainly needs to be improved. The Minister spoke of his wish to pursue pilots on take-up. I am sure that he has some good ideas, but I note in passing that although the Department paid for a couple of extra staff members for Highland council in my constituency to facilitate take-up, it withdrew the funding this year. Even that fairly small-scale assistance in one part of the country has now been removed.
The Government still have not told us whether they intend to replace the Post Office card account, which many claimants use to collect their benefits, with a product delivered by the Post Office. I hope that that will be clarified shortly. I also observe an uncomfortable straw in the wind: the Government have not provided for the new local housing allowance, which replaces housing benefit, to be collected through a post office card account.
The hon. Member for Hertsmere rightly draw attention to the amount of fraud and error in the benefits system. The Government have made progress in reducing fraud, but at the expense of a significant increase in both official and customer error. I would link the customer error directly to the complexity of the system.
One of the specific benefits we are dealing with today is the winter fuel payment. Outrageously, it is not being uprated. In 2003, its value was £200, as it still is in 2008.
I am grateful to the Minister, particularly if he is hinting that the next Budget might include changes to that payment. Many pensioners would appreciate that, as in 2003 the payment met 50 per cent. of the Government’s estimate of the average fuel bill, but in 2008 that proportion has fallen to only 27 per cent. I hope that all Members will welcome the campaign launched today by the Daily Mirror.
Order. The hon. Gentleman should confine his remarks to the orders before the House. He is now straying wide of the mark.
I am grateful for your guidance, Mr. Deputy Speaker. I was simply trying to highlight that the winter fuel payment is an important issue for pensioners, who are also in receipt of many of the other benefits that we are discussing today.
It is important that we work to get extra income to pensioners across the board. As has been said, the basic state pension should be uprated in line with earnings. The importance of that is highlighted by the fact that many of the costs that pensioners face—not least energy costs—are increasing dramatically. The fact that we have seen again today scandalous and excessive energy company price rises, which pensioners will pay out of their pension credit, their basic state pension and their winter fuel payment, makes the point—which I hope the Minister is taking on board—that the Government must reconsider the current amount of the winter fuel payment.
As has been said, pensioner poverty is an important issue. It would be churlish not to recognise that, over the past 10 years, there have been improvements in terms of tackling it, yet the take-up of benefits is still a major problem. The Government have introduced the pension credit, a means-tested system, to top up the basic state pension, but up to 1.7 million pensioners do not claim the pension credit to which they are entitled. Likewise, many pensioners are entitled to council tax benefit, which is also dealt with in the orders before us today. In the past 10 years, that benefit has increased by 87 per cent. yet it is claimed by only 53 per cent. of pensioners who are entitled to it.
Today’s uprating statement is a huge missed opportunity in terms of pensioner poverty in that it fails once again to announce the uprating of pensions in line with earnings. During the passage of the Pensions Act 2007, we argued that that should be introduced this year. It has not been. The Government have still not even said when they intend to do so; it might be in 2012, or it might not be until as late as 2015. As the hon. Member for Newport, West rightly observed, that means that the value of the basic state pension will fall still further behind average earnings. I have made the point before that that amounts to a serious erosion of pensioner incomes, particularly for those who do not claim pension credit because it is complex or because they find means-testing intrusive. Those are understandable reasons.
We should move towards having a much higher basic state pension. The objective should be a citizen’s pension, so that every pensioner has, on the basis of residency, a basic state pension that keeps them out of poverty. That is, I believe, an obligation of the state, and the citizen’s pension is the means to deliver it in such a way that we can ensure that it goes to every pensioner who needs that money.
It is also worth noting that the uprating of pensions applies only to some pensioners. It applies to pensioners in this country, of course, and to some British pensioners who have moved abroad, but it does not apply to many British pensioners who have moved abroad to live in certain countries, such as Canada, Australia and New Zealand. There is a genuine injustice in that, which the Government have recognised in previous debates but have done nothing to address. Again, the Minister needs to examine that issue.
We are dealing with a number of benefits, rates and so on relating directly to children. Worryingly, it is looking ever more difficult for the Government to meet their child poverty targets, because child poverty rose in the last year for which we have figures. That is appalling, particularly given that poverty has been entrenched in many families for generation after generation. I would like child benefit to be used much more directly to address that problem; indeed, we have put forward proposals for increasing child benefit so that more families with children can be helped out of poverty.
As for the tax credits system, although that system has benefited many families, it is equally true that 40 per cent. of families claiming tax credits have received overpayments or underpayments and a great deal of hardship has been caused, particularly by the overpayments. About 2 million families were overpaid tax credits in the last year for which we have figures, creating a financial rollercoaster and costs, and in many cases causing hardship. The system is supposed to help people in work who need their income supplemented to get them out of poverty. That is why moving to a system of fixed awards is the right way to go, as opposed to the present fluctuating system. I hope that the Minister will pass on my comments to his Treasury colleagues, who are responsible for the tax credits system although we are dealing with its uprating today, so that a degree of stability, which is vital for so many families, can be introduced into it.
Today’s uprating statement does little to address the high marginal deduction rates that many people still face. Although the number of people who, when they get into work, face marginal deduction rates equivalent to tax rates of more than 100 or 90 per cent. has been reduced, a substantial body of people in the middle face marginal deduction rates ranging from 60 to 80 per cent. That is unacceptable. If the Minister were to say that he wished to introduce an income tax rate for higher earners of 60, 70 or 80 per cent., there would rightly be howls of protest. When the tax credits system interacts with the benefits system—housing benefit, council tax benefit and so on—and people keep only 10, 15 or 20p of every extra pound they earn, that system should be seen as no more acceptable for people on low incomes than higher-rate income tax would be for people on high incomes.
One further pressing issue is missing from this statement, namely the way in which housing benefit works, particularly for young people under 25 who still face the scandalous single room rate. That rate means that people below that age receive a lower level of housing benefit. That causes hardship and difficulties, not least for young people starting out in life who have left home or who are trying to get out of care. It is important that the Government do not lose sight of that problem. Ministers have been repeatedly pressed to drop the single room rate, which children’s organisations, anti-poverty organisations and housing organisations, such as Shelter, protest against. If the Government are serious about dealing with poverty among young people, they must directly address that issue.
I obviously welcome the overall uprating of benefits. However, there are serious problems in our welfare system relating to adequacy, complexity and the incentives for people to get back into work—those incentives must be a crucial part of the welfare system. The Government have a very long way to go before they can claim to have met the aspirations that the Minister set out in his opening speech.
May I point out that I am the first Opposition Back Bencher to be able to speak in this debate? Only one other Labour Back Bencher has spoken, and nearly all the time for Back Benchers has gone, if we want to hear the Minister wind up, which I am sure we all do. I shall therefore be very brief.
The issue of the guaranteed minimum pensions and their uprating has hardly been mentioned. A great opportunity has been lost in recent pensions legislation to get rid of guaranteed minimum pensions altogether. They could have been taken out of the system if some creative thinking had been applied. As it is, they cost a lot of money in administration for those few employers who still have defined-benefit schemes and add an enormous amount to the cost. The failure to uprate them fully in line with RPI—the capping procedure—means that a further burden rests on the employers, and that is not what was originally intended. A thorough review of the way in which GMP works is long overdue.
There are other problems relating to the administration. For example, many schemes have found that the information coming from HM Revenue and Customs and the National Insurance Contributions Office has been either misleading or incorrect. That again causes problems for the employers who are running the schemes. It is an urgent problem that needs to be addressed.
At the moment we have a surplus of indices, which appears almost designed to confuse the general public who are entitled to benefits. We have RPI, the RPI minus X, the consumer prices index and the Rossi index, which is lower than all the others. Most people cannot understand them. Why is it that those who seek income-related benefits, such as jobseeker’s allowance, housing benefit and income support, should be discriminated against by the use of the Rossi index, which is lower than all the other indices? Does the Minister think that jobseekers do not have to pay rent, mortgage interest or council tax? Why are those items omitted from the index, when those people often have to pay them?
I shall not give way to the Minister—he can reply when he winds up shortly—because many of my hon. Friends also wish to speak.
It is bizarre that those who are most in need, who have lost their jobs or have not been able to get jobs, are subject to the lowest index. The Government have deliberately muddied the water with a plethora of indices designed to mislead the general public at a time when they need better and clearer information.
I thank my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) for being brief, because many of us have something to say about the uprating.
We all agree that benefits are supposed to support those in need and ensure a decent standard of living for those whose income falls short, but they were never meant to be a lifestyle choice or a refuge for scroungers or fraudsters. Unfortunately, as the hon. Member for Newport, West (Paul Flynn) said, many of those who do not claim benefits are those in the greatest need, so benefits are not going where they are supposed to go.
While we need to get rid of some of the flagrant abuses in the system, we also need the shake-up of the system that the Minister mentioned to ensure that genuine claimants do not lose out to benefit cheats. The Government know that they have to get a grip on the issue, because taxpayers too often read in the media about high profile cases of people making multiple fraudulent claims and seeing this country as a soft touch. Benefit fraud was nearly three and a half times as high in 2004 as it was in 1999, and was the second most commonly committed fraud offence in England and Wales after obtaining property by deception. The estimated loss to the Department for Work and Pensions in that period was just under £1 billion.
The uprating is fine, but not if all it does is provide more for fraudsters to target. As the judge said in the case I mentioned earlier, it was disturbing that alarm bells had not rung earlier. We need a better communication system not only to get benefits to where they are supposed to go, but to ensure that we are not losing out to fraudulent claimants who see us as a soft touch with few checks and balances in the system.
I am also surprised that it has not been mentioned that today’s uprating of benefits will also affect some EU claimants who have come into the country and claimed for children who do not live here. Many of my colleagues and people in the street find that somewhat bizarre. I look forward to the Minister’s explanation of whether we can put in place any measures to crack down on fraud and to ensure that only genuine payments are made through the system as regards any benefits that are paid outside our country’s shores. I have serious concerns that if the level of fraud in our country is not being cracked down on, the level of fraud outside this country might be even more enormous. I find it worrying that we are not putting in place the same checks as we are putting in place in this country when it comes to dealing with some 14,000 migrants who claim child benefit for children who do not live in this state, costing our taxpayers at least £250,000. That is a worrying situation.
Another issue that was not raised too frequently in the debate is fuel poverty. We have heard about the winter fuel payment, but that goes to the elderly and to pensioners. Fuel poverty affects many of my constituents—I have referred to this before—and 16 per cent. of homes in St. Albans find themselves in fuel poverty. Many of those families receive multiple benefits, so they will welcome the uprating. It is very worrying that the Government are missing their fuel poverty target. I know that the Energy Bill is in Committee, but we need to put in place better systems to ensure social tariffs and to direct benefits to alleviate fuel poverty for those families who suffer from it. Of course, many of those families have children, too.
Part of the problem has been communication about how benefits are claimed. I tried to introduce a private Member’s Bill not long after I came to the House to try to encourage people to take up benefits on behalf of those who are terminally ill. Indeed, the uptake of that benefit—the disability living allowance—is still woefully poor. I was assured that communication from the Government would improve. Unfortunately, I have not seen that improvement. I welcome the warm words about encouraging pensioners through a phone call or through other means to take up pensioner benefits, but I have heard the same encouraging words before about people who are diagnosed as terminally ill and are unaware of the benefits that they are entitled to claim. I hope that the Government will take on board the fact that people who need benefits at various stages in their life—particularly towards the end of their life—need clarity and simplicity in the system so that they get the benefits to which they are entitled. I do not feel that there has been any movement on that, and that is a shame.
In St. Albans, we have seen a rather good report about targeting people in order to stop fraud. Yet again, we fell down on the subject of communication about how to access benefits. That was also highlighted in a report by the Public Accounts Committee.
The uprating of benefits is extremely welcome in the case of those families who are truly deserving. I do not welcome the fact that fraudsters see the uprating as an extra few pounds in their pocket, nor the fact that they will not be stopped from claiming fraudulently. As the hon. Member for Newport, West said, we will not welcome it if the benefits are uprated and then sit idle and unclaimed by those who truly deserve to claim them. The Minister should put on his thinking cap and ensure that the benefits are not only uprated but made truly available to those who deserve to claim them.
I am grateful to be called to speak in this lively debate. I am delighted that I am the fourth Back Bencher to have the chance to say my piece.
I agree with my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) about the use of various indexes. We in the House find them very confusing indeed and we are meant to be the professionals. I know for certain that my constituents are completely baffled by the difference between the consumer prices index, the retail prices index and Rossi, which my hon. Friend mentioned—they probably think that Rossi is an Italian football player. We owe it to the public to be transparent when we talk about inflation. I do not think it is beyond the wit of man for the great brains in this place and the civil service to come up with just one index that accurately reflects the cost of living.
I want to touch on the subject of pensioners. I am delighted that they will have a much-needed increase in their pension, because they are often the people with the least disposable income and, indeed, the smallest income. However, I do not share the Government’s enthusiasm for what has been achieved over the past 10 years. In my constituency, like many others, pensioners struggle hard to make ends meet. Council tax seems to go up by about 5 per cent. year on year, and much of the increase is because councils have to deliver central Government initiatives that are either underfunded or completely unfunded. The cost of fuel for pensioners is going up at an extremely high rate, which is not adequately reflected in the allowances they receive to pay for their fuel, particularly in the winter months.
As a fellow Hertfordshire MP, my hon. Friend may have noticed the unfortunate sneering from the hon. Member for South Swindon (Anne Snelgrove) and some of her colleagues when we said that the small grants we receive in terms of funding allowances mean that we often have disproportionately large rises in council tax.
I do not want this to be a partisan debate, but my hon. Friend makes a good point. When she was discussing the plight of her constituents in St. Albans, there was some sneering from the Labour Benches. I point out to those Members that there are many thousands of Labour voters in St. Albans—indeed, it was a Labour seat until the last general election when my hon. Friend won it for the Conservatives. I was slightly annoyed by the sneering, which injected a rather sour tone into the debate, but I am sure those Labour Members are very sorry about it.
I return to heating and fuel for pensioners. I am not a great class warrior, but like my hon. Friend the Member for Hemel Hempstead (Mike Penning) I am a member of a trade union and I feel that there is a whiff of the Cedrics at British Gas. I was slightly concerned to hear that the company is making record profits when many pensioners are struggling to pay their bills. British Gas needs to have a long hard think about what it is doing. I am not against profit at all—profit is paid into pension funds—but I am really concerned that energy companies are making large sums of money off the back of some hard-pressed people in our communities. Pensioners are paying more for staple foods and the cost of bought-in care is increasing.
I shall touch briefly on incapacity benefit. I am delighted that people who are genuinely ill and unable to work will receive an uplift in their benefits. It is important that they have quality of life, although of course it will not be the same as if they were in work, but I hope that for many of them it is manageable. However, like many Members, I am concerned about the increase in the number of people in receipt of incapacity benefit. Being on benefit is no way to live if there is another option, so I hope that the Government are really committed to getting more people off incapacity benefit and back to work. Many people who have been out of work for a long period begin to doubt their ability to go back to the workplace; mental health issues creep in and there is loss of confidence. I hope that collectively, across the Chamber, we can come together to ensure that people who can work have the chance to do so.
I was pleased that there will be some adjustment to tax credits, but I am concerned that they are not necessarily the answer in the long term. All of us will have heard in our surgeries the harrowing cases of people in receipt of tax credits who are being pursued for back payments of between £4,000 and £7,000. One of the fundamental problems in this country is that people start paying tax on their income far too early. I have said it before in the Chamber, I say it now, and I will say it again.
It is incumbent on a civilised society to ensure that hard-working families whose earnings are at or near minimum wage level hold on to as much of their earnings as possible, rather than having their earnings taken off them by Government, through tax, and then laundered back to them in the form of tax credits. That robs people of their self-respect, and it is not the best way of helping those at the bottom of the income scale. Again, I am not seeking to make a partisan attack; that is just my fundamental belief, as a Member of Parliament and as a member of society. I hope that when our time comes and we are in government—as we will be, because we still live in a democracy—we will address the issue.
I represent Broxbourne, which is full of generous people who understand the need to look after the old, the infirm and those who are struggling between jobs, either because they are made unemployed through no fault of their own, or because they are having a difficult time. However, there is concern among all our constituents about the growth in the number of professional claimants—claimants who think that the state is there to support their way of life, and who think that they have no obligation to the state. When social security was created, the idea was that people paid into a fund that acted as a safety net, and could draw on it in their time of need. That is a noble, lasting, good idea. However, I am terribly concerned that a whole section of society think that they can draw on that fund, but have no obligation to support it or make any contribution towards it in their life.
If we are to retain long-term confidence in our system of social security, we need to make sure that it is seen to be fair—that those who have paid into it are at the head of the queue, and that it is there for them in their time of need. All of us will know of horrible cases in our constituencies in which people with successful lives, who may not have been earning a lot of money but who had stable jobs, a stable family life and a stable home, suddenly suffered a great tragedy or an illness. Those people’s lives can unravel incredibly quickly, and they find it difficult to access services and benefits. They struggle to keep themselves together. Sometimes they face losing their house or their children—they face all sorts of tragedies—yet on the other hand some people who have never done a stroke of work in their life, have never contributed to society in any reasonable way, seem to sail through everything, and have everything laid on for them. We must put hard-working people and families at the forefront of our benefits system.
The Daily Mail would have us believe that millions of immigrants are coming to this country and abusing our system. Of course there will be some—a minority—who do that. We must be mindful of that and we must not allow it to happen. However, I get annoyed when newspapers attack immigrant communities and fail to reflect the fact that there are many people born and bred in this country who abuse and cheat the system. Those people should be ashamed of themselves. I support any measures that ensure that people who do not have a right to access benefits do not get their hands on them.
This has been a useful, helpful debate, and many of the contributions that were made in the time available were important. It is fair to say that we Front Benchers took quite a bit of time in dealing with issues, as the hon. Member for Bournemouth, West (Sir John Butterfill) said, but we also took quite a few interventions. There is a trade-off: either Front Benchers take interventions—[Interruption.] Front Benchers are in unity, for once. Either we take interventions, and take up more time, or we do not take interventions and speak more briefly. If we do the latter, Members complain that we have not taken interventions, so we cannot win. The contributions that were made were important. If colleagues will bear with me, I will not take substantial interventions—well, I suppose I will if I am really pressed, but I would rather try to deal with the points made.
Our aim has been to deliver justice for those who are workless, for those who are disabled and for pensioners. I shall deal first with pensioners. We are spending £75 billion on pensioners this year. The sum is set to rise to £78 billion next year and £86 billion by 2012. Since 1997, pensioner incomes have risen across the board, with the poorest benefiting the most. The uprating order underlines our commitment to provide extra security in retirement.
Several Members referred to issues related to fuel poverty. We recognise that fuel costs can be a particular concern for older people. That is why we introduced the winter fuel payment. Since 1997, it has increased tenfold to £200, and to £300 for the over-80s. Alongside that, our Warm Front programme has provided grants and aid to over 1.6 million households. Better insulation can lead to savings of up to a third off winter fuel bills.
However, we have seen recent rises in fuel costs. I am concerned about the impact that these increases will have on vulnerable customers—not only pensioners, but others, too. I am working with my hon. Friend the Minister for Energy to see whether we can engage with the energy sector and reduce the risks for the most vulnerable. Some of the more vulnerable groups can get help from fuel companies, which have social tariffs and programmes for insulation and so on, enabling them to target those most in need. We want to work much more effectively on that.
Only last week I announced a campaign to ensure that pensioners who are entitled to grants from Warm Front take them up. We are sending letters to 250,000 of the most vulnerable pensioners, encouraging them to apply for grants for better insulation and energy efficiency measures.
For the pensioners of tomorrow, we are ensuring that everyone can save for a better retirement and we have made some historic changes to the state pension. The earnings link will come back, and we will achieve equality for women’s state pensions within a generation.
If the hon. Gentleman will bear with me, I am trying to deal with a large number of points rather quickly.
The hon. Member for Bournemouth, West mentioned the uprating of guaranteed minimum pensions. GMPs ceased to accrue from April 1997, but past rights still exist. The Pensions Act 2007 allowed schemes to convert those rights to normal scheme rights, and the aim is to commence that legislation from, we hope, April 2009.
My hon. Friend the Member for Newport, West (Paul Flynn) raised several issues. He is right to say that the disability facilities grant has not been uprated since December 2005, when we implemented the proposal to exclude children’s cases from means-testing. We are expecting to update the regulations shortly and we will also consider a packet of changes. The Government regard the DFG programme as an important means of helping more than 35,000 older and disabled people each year to continue to live independently. We have substantially increased funding for the programme from £57 million in 1997 to £146 million in 2008-09. Further steps will be announced shortly.
My hon. Friend also spoke about the national insurance fund. Increasing the basic state pension to the level of the guarantee credit would cost about £20 billion a year. By 2015, that would rise to about £80 billion a year, which would wipe out the balance in the national insurance fund in a matter of years.
My hon. Friend mentioned the capital disregard in relation to pension credit. He is right to say that there is an issue. We have focused on trying to help the poorest. We know that 80 per cent. of those eligible for pension credit have less than £6,000 in capital.
I could deal at great length with equality for women, which is a complex issue. I am aware that there have been problems with recording home responsibilities protection in the past. Urgent work is under way to identify those affected. Where we find errors, we are correcting them. The Pension Service has been in contact with nearly 500,000 people, mostly women, regarding payment of contributions for the years 1996-97 to 2001-02. We are also contacting male pensioners who have had particular problems because of the lack of HRP recording in the past. We are trying to make sure that we get the issue right.
My hon. Friend also mentioned the cliff edge; I will soon have to deal with that during discussion of the Pensions Bill. That will be a better time to deal with the detailed arguments on what I accept is an important issue.
Since 1997, pensioner poverty has reduced by more than a third to 17 per cent., through targeted support such as pension credit and about £11 billion of extra funding. We have lifted more than 1 million pensioners out of relative poverty after housing costs. Owing to the tax and benefit changes that we have introduced, pensioner households are on average £1,500 a year or £29 a week better off in 2007-08 than they would have been under the 1997 system. The poorest pensioner households are about £2,000 a year or £42 a week better off.
I turn to the working-age issues, a significant number of which have been raised. Our aspiration is for a fair and inclusive society that offers greater opportunity and independence for people. The uprating orders move us further towards that. They help tackle poverty and exclusion and ensure security in retirement. In the past 10 years, we have made great strides in dealing with poverty and creating greater opportunity. For the first time in this country, we can look forward with greater confidence to full employment, eradicating child poverty and delivering justice to pensioners.
Work is the best route out of poverty and today more people are in work than ever before: 29.4 million people, according to the latest figures—up 175,000 in the past three months. We have the second highest employment rate in the G7. Since 1997, employment has gone up by nearly 3 million; under the Conservative Government it was down by 3 million. Under Labour, employment has gone up in every region and country of the UK. It has gone up in the neighbourhoods and cities neglected by the Conservative party. It has gone up for disadvantaged groups: 300,000 more lone parents, 900,000 more disabled people, 1 million more from ethnic minorities and 1.5 million more older workers are in work. The number of job vacancies remains at 670,000.
I agree with the comments made by the hon. Member for Broxbourne (Mr. Walker) about migration. However, I say to him that although migrants have come to this country to work, there are still 670,000 vacancies, and those are jobs for workers in this country to apply for. There are people on incapacity benefit whom we want to go into those jobs. There is still a demand for employment in this country and we still have a strong economy. The hon. Gentleman made points about some of our media, who tend to make unfair comments that are not acceptable.
Several times, Conservative Members spoke of dealing with child poverty. A target is not a quota but a direction of travel and a measurement of whether we get there on schedule. That may be subject to events and circumstances, which may interfere, but a target tells people where we want to be. Let me be clear that we are sticking to our direction of travel. People know what our ideals, targets, direction and aims are.
Do the Tories have any aims, ideals, targets or direction on poverty? We know what their direction was from their record. Under the Conservatives, child poverty doubled and we had the highest child poverty rate in the industrial world. More than one in four children lived in poverty and the value of child benefit was cut in real terms. That was not the 1930s, but the Tory early 1990s and they have still not learned. They will not pledge to eradicate child poverty; for them, that is merely some vague aspiration. Their policies would push millions back into poverty.
We want to see those policies stopped and to see instead the creation of a fairer society. These orders are part of the process of creating that fairer society—helping pensioners, helping those who need work to find work, and helping those who need benefits to get them. They take us a step closer to providing opportunity to all, and I commend them to the House.
It being Six o’clock, Mr. Deputy Speaker proceeded forthwith to put the Question, pursuant to Order [6 February].
Question agreed to.
That the draft Social Security Benefits Up-rating Order 2008, which was laid before this House on 23rd January, be approved.
Mr. Deputy Speaker then proceeded to put the Question required to be put at that hour.
That the draft Guaranteed Minimum Pensions Increase Order 2008, which was laid before this House on 23rd January, be approved.—[Mr. Blizzard.]
BUSINESS OF THE HOUSE
Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day’s sitting, consideration of any Lords Amendments and Messages that may be received may be proceeded with, though opposed, until any hour.—[Mr. Blizzard.]
Question agreed to.
With the leave of the House, I will put motions 4 and 5 together.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),
Employment And Training
That the draft Industrial Training Levy (Construction Industry Training Board) Order 2008, which was laid before this House on 16th January, be approved.
That the draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2008, which was laid before this House on 16th January, be approved.—[Mr. Blizzard.]
Question agreed to.
On a point of order, Mr. Deputy Speaker. This afternoon, the other place has been considering in Committee the Banking (Special Provisions) Bill and is sending it back to us with at least eight amendments—possibly more, because I understand that more amendments have been tabled for the Report stage yet to be taken. This House has been allotted only one hour to consider those eight or more amendments, which in the other place were grouped in five separate groups. It is impossible for us properly to scrutinise that number of amendments, or even to vote on all of them, in the time allotted. Is there anything that this House can do to override, set aside or amend the business of the House motion that sets that time limit?
I have noted the hon. Gentleman’s concern, but these rules are laid down by the House and cannot be altered at this time. However, his remarks are on the record, as I am sure he would want them to be.
On a point of order, Mr. Deputy Speaker. I know that the Chair has certain powers to curtail the length of speeches. I wonder whether that power applies to the Lords amendments. Could the Chair impose very narrow time limits so that Members have the opportunity to speak on those amendments, including Front Benchers, and so that the House has time to debate them, or does that not apply to Lords amendments? Might we find that a Minister—I understand this is not just about defeats in the Lords, as there have also been Government amendments to the Bill—takes a lot of time, thereby not allowing a proper debate or even votes to take place in this House?
I understand the hon. Gentleman’s concern that as many Members as possible should be allowed to contribute. The best advice that I can give to the House is that everybody, Front Benchers and Back Benchers, should exercise some self-discipline.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),
That the draft Social Security (Contributions) (Re-rating) Order 2008, which was laid before the House on 23rd January, be approved.—[Mr. Blizzard.]
Question agreed to.
Sitting suspended, pursuant to Order [19 February].