Today in Britain, nearly one in five pensioners is living in poverty, and as I said earlier, more than 5 million people are on working-age benefits, and the country has one of the highest proportions of workless households in the European Union. Therefore, the case for radical welfare reform is clear. That is why this Government will establish a new Work programme and simplify our complex benefits system to provide greater support for the poorest.
At the same time, we are rising to the challenge of long-term demographic change in how we support an ageing society. It is more important than ever that we build strong foundations for the future of the basic state pension, which is why, for the first time, as the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) just said, this Government will introduce the triple guarantee for the basic state pension with immediate effect. That guarantee will restore the earnings link and ensure that any future uprating is set at the highest of earnings, prices or 2.5%. I am enormously proud that this coalition Government are doing that. Those are important first steps towards the reform of the whole system.
Last week, one of my constituents in Crewe told me how exasperated she had become after wading through the application form for her pension credit, because of the complexities within it and the never-ending series of phone calls that seemed to follow. With one in three pensioners who are entitled to claim pension credit still not doing so, in part owing to the major administrative barriers in their way, what does the Secretary of State propose to do to simplify the system, and to make it fairer and more transparent?
First, I say to my hon. Friend that one of the most important steps that we will be taking towards helping those pensioners is re-linking the basic state pension to earnings. That will hugely improve take-up, because that money will go to everybody and people will not be required to claim for it. The other thing that my hon. Friend the Minister will be doing is reviewing the complexity and looking for ways in which we can simplify the process and make it easier, so that the take-up for those who need it—this point is critical—is better. I can assure my hon. Friend that we will do that.
T2. Did the right hon. Gentleman have many constituents, including people from young families who do not have a lot of money and who need the extra money to get by, coming up to him during his general election campaign to tell him that they were worried about working tax credits? What will he do to ensure that the working tax credit is maintained and that the ravages of the cuts are taken care of for the people who need that cover more than anybody else. (1876)
The purpose of this Administration is not to penalise those in most need. We will do our level best to ensure that during these changes—and given the necessity of reducing the budget—we try to protect as many of those people as possible. Ultimately the best thing that we can do for them across the board is to simplify the benefit system so that the take-up is greater and ensure that going to work pays, with people retaining more of what they earn when they go to work than they do at the moment.
Our colleagues in the Treasury are establishing a commission to look at public sector pensions, and we have already had a meeting with our colleagues to try to ensure a fair deal both for the hard-working people who work in the public sector and for the taxpayers who are making a very large contribution to those pensions. It is important that the true cost is made transparent, which it clearly is not at present.
T5. At a time when unemployment is forecast to increase to 3 million, this so-called coalition Government have decided to cut 100,000 jobs from the future jobs fund, but will not replace them until next summer. Is that just another example of unemployment being a price worth paying for this Government? (1879)
I am afraid that the hon. Gentleman has not been listening. There will be tens of thousands of new jobs created under the future jobs fund in the months ahead. However, we have changed the priorities, because we believe that long-term, sustainable employment is better supported by a programme of extra apprenticeships than by a short-term job creation measure of the kind envisaged by the previous Government.
T4. Given the shocking number of young unemployed people in my constituency and in the country as a whole, I welcome the proposals for mentoring schemes, whereby young people spend time with the self-employed and other business people. Will those schemes be introduced quickly and efficiently, because they will be very important? (1878)
I agree with my hon. Friend. The use of mentoring, both to encourage young people into the workplace and to create a sense of belief in their ability to build their own businesses, will be central parts of the Work programme. We are working on the details as rapidly as we can, and I can give him an assurance that mentoring will be a central part of the way in which the Work programme works.
T9. The cuts to the future jobs fund are causing real concern in my constituency. From listening to Ministers this afternoon, I understand that the expectation is that these job losses will be replaced by a growing private sector. Can the Minister share with me the detailed analysis that the Government have undertaken that shows that these jobs will be created, when they will be created and that they will be created in the north-east? (1883)
The cuts to the future jobs fund are not cuts. We have stuck to the contracted jobs already in existence, which will run until next year. We are talking about the notional jobs that might have been created but were not contracted for, so we are dealing with a game of vague figures. The best thing that we can do for the hon. Lady’s constituents is to ensure that the cost of employing people does not rise, which was the plan of the previous Government in raising national insurance. Most of all, the 50,000 apprenticeships that we will create will provide long-term jobs for all her constituents.
T6. Will my hon. Friend be reviewing the rule on annuities? Many people with occupational pensions resent the fact that they have to invest 75% of their accumulated funds in that way and would prefer to put some in other places. (1880)
The coalition Government are sympathetic to the idea of giving people greater choice over annuities. We already have a commitment to scrapping the rule that forces people to annuitise at 75. We also want to look at how people can achieve better value for money from the annuities that they buy, and possibly also have earlier access to accrued pension funds. We take the view that it is their money, not the Government’s money.
T10. Has the Minister had any discussions with the Treasury regarding the pay-out for Equitable Life, bearing in mind that when they were in opposition, that crowd over there on the Government Benches hounded us week in and week out about a pay-out? Now can they deliver? (1884)
The hon. Gentleman will know that Sir John Chadwick will produce his report in July. I understand from discussions with the Treasury that a compensation package will be produced on the basis of that, and legislation to bring that forward was included in the Queen’s Speech.
T8. As Ministers are no doubt aware, the withdrawal rate of housing benefit and council tax benefit combined can be up to 85p in every pound earned, thereby contributing significantly to the poverty trap. Do the Government have any plans to review the withdrawal rate and the tapers? (1882)
My hon. Friend puts his finger on a crucial point. We both believe that work needs to pay, but one of the crucial problems at the moment is that as people improve themselves, work harder, train and do overtime, too much of that money is clawed back through the benefit tapers and tax rates that he has described. My right hon. and hon. Friends will be bringing forward quite radical proposals for benefit reform that are designed to tackle precisely the point that he has raised.
I know that this will surprise everyone, but I want to return to the future jobs fund and the answer that the Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling) gave earlier about not having received any representations on it. Has he at least made the effort to consult, for example, some of the voluntary and charitable sector organisations that represent young people and support them into work on the effect that cutting the future jobs fund will have on their work? If so, what have they said to him?
Yes, we have indeed spoken to those organisations, which will continue to create thousands of new jobs under the future jobs fund during the remainder of this year. However, there is general agreement, particularly among those who have been working with us on the Work programme, that we need apprenticeships, lower employment costs and sustainable long-term jobs in the private sector, not in the public sector—too many of the future jobs fund jobs are in the public sector. We need to create sustainable, long-term employment opportunities for young people and older people on benefits in this country.
Is the Minister aware of early-day motion 159, which is about jobcentres and foodbanks? Is he also aware that charities in my constituency, such as the excellent Harlow foodbank, have been stopped by Jobcentre Plus from giving out food vouchers to the unemployed because of regulations introduced by the previous Government? Does he agree that that is an example of Labour bureaucracy hurting the poor most, and will he take steps to reverse this policy as soon as possible?
I thank my hon. Friend for raising that issue. Foodbanks have an important role to play in our local communities. It is important that we ensure that people who might benefit from the services that they offer know that they are available, and we will certainly be reviewing whether it is possible to highlight the availability of local foodbanks through Jobcentre Plus.
Will the Minister say what help to get off benefits and into work will be available for young people between the future jobs fund ending, which he said would happen in a couple of months, and the Government’s new single Work programme, which he said would not be available until March 2011?
We will be maintaining all the existing programmes, and in particular the flexible new deal, right up until the start of the Work programme next year. The flexible new deal is by far the largest programme that the previous Government put in place to support young people and older people into employment. It is important to ensure that we maintain continuity of support right up to the point when the Work programme is ready to be launched.
The Minister will know that spending on welfare doubled under the previous Administration, yet the number of those living in poverty increased. Does he agree that what the previous Administration succeeded in doing was to create the most expensive poverty in history?
My hon. Friend is absolutely right. Record levels of spending on benefits have left us with 100,000 extra children living in poverty since 2004, and the gap between the richest and the poorest has grown wider than at any time since the 1960s. What we need to do is tackle the root causes of poverty to break that cycle of disadvantage, and not do what the previous Government did.
I would be happy to speak to the hon. Gentleman’s constituent with him, but I also guarantee to the hon. Gentleman that the role of carers in society will be one that we continue to support and value. The reality is that if we did not have that informal care in society, the state could never pick up the bill. We look to enhance and support that role, ensuring that carers are valued throughout what we do, and I should be happy to see the hon. Gentleman’s constituent, if he wishes.
The Secretary of State knows as well as anyone that what he calls notional jobs are nevertheless factored into the Government’s spending projections. Can he tell the House how long it will be before the proposed savings in the future jobs fund will be wiped out by the increased cost of keeping more young people on the dole?
With respect to the hon. Gentleman, he is playing a game of notional figures—[Interruption.] I know what it is like in opposition, and I must tell Labour Members that they must start to get real about the fact that they were in government three months ago and it was they who went on the spending spree. They would also have had to find savings. We need to use the savings that we have found for this year, and ensure that we do not have the job tax. There will also be a much better chance for longer-term jobs through the apprenticeship scheme, involving some 50,000 people. That is real decision making.
Self-evidently, if the providers who work for us under the Work programme are successful in getting someone into work, we will reward them on the basis that they provide post-employment mentoring and stay with the person to ensure that they stay in work—
One of the successes of the future jobs fund has been in the area of sports. I heard the Minister say earlier that he would stop future contracts, but full-time jobs in sport have been found at the end of the period, and I hope that he will look again at that decision.
Absolutely; I also expect sport to take advantage of some of the apprenticeship opportunities. There will be tens of thousands of further opportunities under the future jobs fund, as well as additional apprenticeships and further opportunities provided through the Work programme. We intend to do everything we can to ensure that, when this Government leave office, youth unemployment is lower than it is today—unlike the record of the Labour party in its 13 years in government.