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Welfare Reform

Volume 516: debated on Monday 11 October 2010

With permission, Mr Speaker, I should like to make a statement on welfare reform.

Let me start by welcoming the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) to his new post as shadow Secretary of State for Work and Pensions. We have already had a conversation in the last week. I extend that welcome to all members of his new shadow Front-Bench team.

The statement today is in three parts. First and foremost, today—as everyone in the House may well now know—we launched an approach to those on incapacity benefit under the work capability assessment, and it is necessary for the House to hear this directly from us so that Members can question me. Secondly, I want to use this opportunity to set out more detail on the new Work programme, which is very much related to the work capability assessment. Thirdly, the House has a right to know more about our plans for wider benefit reform as we look ahead to a White Paper and welfare reform Bill, although I would add the caveat that greater detail will be contained in that statement.

The economic backdrop is severe. We have the largest deficit in the G20 at £155 billion—the largest in peacetime history—with debt interest of £120 million a day, or £43 billion in 2010-11. Under the previous Government’s deficit reduction plan, which the Opposition now seem not to favour—although I might be wrong on that point—annual debt interest spending would have risen in only five years to almost £70 billion. Let me put that in context: that would have meant spending more on interest than we spent on policing, defence and transport combined. So, there is an urgent requirement to make these changes and reforms.

[Official Report, 11 November 2010, Vol. 518, c. 1-2MC.]We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million —have been claiming for an entire decade, and a system that has left Britain with the highest rate of jobless households in Europe. Those statistics reveal the human cost of leaving our welfare system unreformed, and with that comes an ever-increasing financial cost. The working age welfare budget rose by 40% in real terms from £63 billion in 1996-97 to £87 billion in 2009-10. A staggering £133 billion was spent on incapacity benefits in the past 10 years, and benefit spending is forecast to be more than £152 billion in 2010-11, which is about 10% of gross domestic product.

Today we spend £1 in every £3 on welfare in this country, yet youth unemployment is higher and inequality greater, and there are 800,000 more working age adults in poverty than there were in 1998-99. In that context, we also announced the reform of child benefit last week. I personally do not think that it is right, if we have to make changes and reductions, to tax the poorest to fund the receipt of child benefits by those with the highest levels of income. If we do this correctly, we can save about £1 billion, protect some 85% of families and secure fairness as we support people. I know that that is tough—we are in tough times—but I believe that it is fair, and that is the key. The important thing as we come through these spending reviews is that we should have a progressive change, not a regressive change.

At the same time, we announced procedures to set a cap on benefits for workless households to average earnings, which are about £26,000. However, we ought to set that in context. The cap will be net of income tax and national insurance, so if someone was working to receive that amount of money it would equate to gross earnings of some £35,000 a year—not a very narrow cap. Equally, we will exempt the disabled and those on working tax credit so that we encourage work incentives and do not penalise those who find it difficult to be in work. That is fair, and we will announce more details in the spending review, which means that I shall do my level best to answer some of the questions that I expect Members want to ask.

In the last week we have also announced a new enterprise allowance, which is there to help unemployed people who would like to try to set up their own business. We will be able to give them up to £2,000 in various forms, as well as the advice and mentoring of those who have started their own businesses. Today, the most important step is that we are launching two trials for those on the old-style incapacity benefit under the work capability assessment. The Minister of State, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is travelling to Aberdeen and Burnley today to see both those trials get under way. They are about giving many thousands of people the opportunity to move from the margins of society into mainstream employment. I remind the House that we inherited the programme, and that I supported it while we were in opposition. We have had to make a few changes, and we will make more as necessary.

Under the new system we will assess people on the basis of what they can do, not what they cannot, and thereby support people to meet their aspirations for work. We are determined to get it right, which is why we will learn from the trials and why we have set up an independent experts group to scrutinise the assessment. That group includes, for example, the chief executive of Mind, so as the programme is trialled we will listen to and deal with concerns about those who are mentally ill, such as those expressed on the radio today. Through those measures and through the Work programme, we are committed to supporting everyone who goes through the assessment.

We will ensure that those deemed unable to work continue to receive the support that they need, and that those deemed able to work are fully supported to do so. People who are found fit for work will move directly on to our new Work programme rather than have their jobseeker’s allowance stopped in the normal way. They will receive an integrated package of support, and in due course so will those who have been out of work for a longer period. It will provide personalised help based on individual needs, not on the benefit that somebody receives. Using the best of the private and voluntary sectors, that will help get people into work as quickly as possible.

The systems that I have described are what we call black-box systems, and I shall explain what that really means. Put simply, we will not lay down prescriptive criteria about how they should be run. We want those running them to do whatever is necessary to help people into work—that is the key. They will be operated on a payment-by-results system that ensures that providers do not simply go through the motions. They will receive their real money only for getting someone into work and ultimately keeping them there, and they will find rewards further up the chain as they do so. We have received more than 790 expressions of interest in joining the programme from providers, and in December we will invite bids for contracts, ready for national roll-out next year.

Finally, the work capability assessment and the Work programme are of course critical to getting more of the 5 million or 5.5 million people who are currently on benefits back into work, but they will not be enough. Underpinning that support must be a benefits system that incentivises work, and we have to ensure that work always pays. That is why the coalition Government aim to bring forward a White Paper soon and a welfare reform Bill in the new year.

The introduction of what I call the universal credit will restore fairness and simplicity to an overly complex, outdated and now wildly expensive benefits system that simply prevents people from getting back to work. As we get the benefits system working, we can get Britain working. The best way to get the deficit down, drive the recovery and get the economy moving is to ensure that more and more of the British people who can work do so. Welfare reform is critical, and I give a guarantee that people moving on to the universal credit will not be any worse off at any stage. In fact, they will be better off as they find work.

Everyone in the House should unite around, and try to achieve, the cause of moving people into work and creating a pathway out of poverty for the 5 million people on out-of-work benefits. I understand that the new leader of the Labour party has said that he will not be in opposition for opposition’s sake, so I hope that he and his shadow Cabinet colleagues will do the right thing and support us in delivering a welfare system that is fit for the 21st century. I commend these reforms to the House.

I thank the Secretary of State for his statement and for advance sight of it. I thank him also for his gracious welcome to myself and my team. Members of all parties will acknowledge and recognise the work that he has done both inside and outside Parliament over recent years on the crucial issues for which he now bears a heavy responsibility.

As befits a responsible Opposition, my team and I will work constructively with the Government when there is common ground between us, on issues such as increasing opportunities and support for people to get into work. However, I must also be clear that when the Government propose measures that we judge arbitrary and unfair, we will oppose them robustly.

The Secretary of State began his statement with a rehearsal of the case for reform. While, of course, I disagree with the rather partial and partisan account of the economic situation that he inherited, let me be clear about the fact that I recognise the need to continue the reform of the welfare system. I believe in a welfare state that ensures that there are more people in work and fewer in poverty. That empowers people and contributes to a fairer and more equal society.

Let me also acknowledge, on this first outing at the Dispatch Box, that conditionality does have a role to play, as we recognised in government, first, because we know that it works in helping people to turn around their lives and, secondly, because it is the foundation for ensuring the public support on which the welfare state is based. Accordingly, I will carefully scrutinise each of the Government’s specific proposals on the welfare system.

The Secretary of State spoke about his plan to remove child benefit from higher rate taxpayers and, from the Dispatch Box, described that change as “fair”. How does that change meet the fairness test when it will result in one family, with a collective household income of £80,000, getting child benefit and the family next door, with an income of £44,000, getting none? There have been a variety of claims as to what the threshold in fact is. Can he confirm at this time that the change will affect only parents earning more than £44,000?

Since the shambles of the announcement last week, the Prime Minister and others have suggested that marriage tax breaks might be introduced in the near future to compensate for the removal of child benefit. Does the Secretary of State accept that there is no coalition agreement to implement the Conservatives’ marriage tax allowance proposals, that to date such proposals have applied only to basic rate taxpayers, and that even if his coalition partners were to accept those proposals, they would cost more than the savings made from the child benefit reform he proposes?

On incapacity benefit reassessment, which the Secretary of State touched on, despite its omission from the briefing in this morning’s newspapers, I welcome his acknowledgement that he is continuing the previous Government’s proposals on the trialling and roll-out of the work capability assessment. I note that those proposals this morning appeared to be attached to a specific target of removing 500,000 people from benefits. If a system of assessment is to be truly fair and objective, will he clarify whether that figure is a hard target, merely an assumption or a headline-grabbing claim?

I was also concerned to see reports in The Times today that those judged too sick or disabled to work could nevertheless have their benefits time limited to six months or a year. Will the Secretary of State confirm whether that is the case? If it is not, will he clarify what actual plans he has for reassessing those who are initially found to be unable to work?

The Secretary of State has also told us today that people found fit for work will move directly to the Work programme. His colleague the Employment Minister—the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling)—has previously told the House that the new single Work programme will not be introduced until the first half of 2011. How can that timetable be reconciled with the trials now under way, which were announced in Burnley and Aberdeen?

I welcome the comments made on the radio this morning by the Employment Minister, who said that he would be prepared to modify the test if it were not working properly. Indeed, I welcome the gracious acknowledgement of the Secretary of State’s confirmation of that point today. However, he concluded his statement by describing welfare reform as an historic opportunity. It is, none the less, an historic error to fail to realise that effective welfare reform requires economic recovery. He seems to be in denial of the fact that getting people back to work requires there to be jobs for them to take up.

That insight explains why the previous Government took measures to ensure that unemployment was kept at about half the level of that in previous recessions, that the unemployed were supported and that, at the same time, those who could move from benefits into work were doing so. In contrast, the Government’s own Office for Budget Responsibility revised forecast predictions that public sector jobs would be cut by 750,000 and that unemployment would increase to nearly 3 million people. Over the next few years, the Treasury’s own papers indicate half a million more jobs lost in the public sector, half a million jobs lost in the private sector and half a million fewer jobs and opportunities for the unemployed.

Labour Members will continue to make the case for backing our economy, fighting for jobs and standing up for fairness while reforming our welfare system.

I thank the shadow Secretary of State. May I answer a few of his particular questions? First, I thank him for his general support for the aims of what we are trying to do. I am sure that we will work together to achieve those. I think that is the best thing to do. I recognise fully that, of course, there are things that he will not agree with. That is reasonable, and it is exactly what I would say were I sitting in his place. In fact, I did exactly that some 10 years ago. How time goes on.

I also welcome the shadow Secretary of State’s acceptance of the need for conditionality in the system; we will need to discuss that with him further. There is absolutely a need for conditionality, which can properly be introduced only once we have created what I call the contract—that is, when we can genuinely say that we have improved the programmes to get people back to work, and have made the benefit system simpler, having made sure that there are no blocks to people going back to work. If we fulfil that bit of the contract, those out of work and looking for work need to fulfil their bit of the contract—they need to take the work when it is available. That is the key to conditionality.

The shadow Secretary of State asked about the level at which child benefit will be removed. It is simple—it will be removed at the higher-rate threshold. At the moment it is £43,875, but of course I cannot predict what it will be. It is a matter for the Chancellor; no one should read anything into what I said. It is not my job to set the rate, but the benefit will be removed at the higher-rate threshold.

The shadow Secretary of State went on to say that the change is not fair. He describes the tax system when he says it is not fair, although I am not sure what he is trying to describe. The reality is we think, fairly, that it is wrong for someone on lower income to have to pay tax so that someone on higher income can receive an element of benefit to look after their children. If he thinks that it is unfair to make the changes through the tax system, I would like to know what he did in the past 10 years to reform the tax system that he now thinks is unfair. The very same tax system actually penalises those who have one single high earner in the family as against a household with two lower earners who together could be earning £80,000, so he is condemning the tax system that he has given to us. We can only use the system that we have, but he may now think that that is unfair.

The measures will help enormously to meet what I call a progressive form of reduction in costs. I think that the process will be ultimately welcomed—it has been welcomed by the general public.

The shadow Secretary of State made the point that he did not think there were enough jobs. Of course, we could do with many more jobs. We have inherited an economy that has been stuttering. In the past month or so there have been just under 500,000 jobs in the jobcentres. Those are not static jobs. Those are jobs that are available—they rotate; some are taken and new ones come on. We know that in the informal economy there are many more jobs being taken. That is evidenced by the fact that some 280,000 people went into work in the past quarter, which is the highest number of people back to work since modern records began in ’89. The reality is that there are some jobs.

The shadow Secretary of State talked about growth. As he knows, over the period of the spending review, the independent Office for Budget Responsibility, the IFS—sorry, the IMF—and others have made forecasts; the IFS may yet make the same forecast as them. The IMF has forecast that growth levels will be between 2% and, in the medium term, 2.5% and that there will be a net increase in employment over that period. We can jostle over the figures, but I do not agree that there are no jobs available. As the economy begins to grow we will see even more jobs, but if we do not get people ready for those jobs, we will be in the same situation as he found himself in with 5.5 million people on out-of-work benefits doing nothing and languishing in households that had no work at all.

The shadow Secretary of State talked about the work capability assessment and he said that there were concerns. He is right. The figures that we were talking about were estimates of where we believe we could and should be. They are not hard targets. We cannot and will not set hard targets for a simple reason. As I explained earlier, this is a process. As we look at what happens in Aberdeen and Burnley, I hope—I am prepared to share this with him—that we will figure out whether there are things that we are doing right or wrong, so I am not saying that there are targets. It would be wrong to set targets.

As for the idea of reviewing the measures, the shadow Secretary of State said that he welcomed the Employment Minister’s views. We will modify all the measures as necessary. The key thing is that nearly 1 million people have sat on incapacity benefit without anyone seeing them over the past 10 years. We have to change that. The Labour Government started that programme; we must finish it. I hope that we will receive his support. The right hon. Gentleman commented on the way that we do these things. We will consult where necessary and make sure that the Opposition get the evidence that they require to decide whether to oppose our measures.

I conclude by saying to the right hon. Gentleman and all Opposition Members that we inherited a major deficit from him and his team. That deficit is the largest in the G20. If we do not get that down, the interest payments on the loans alone will dwarf everything we do. What we are doing in the spending review is looking for ways to do that. At the same time, it is important to make sure that when we act to reduce the deficit, we share the burden across the income scale and we do not achieve savings on the backs of the poorest in society. I am here to make sure that that does not happen. I hope I will have the right hon. Gentleman’s support in that when he sees how progressive the review turns out to be.

Order. A great many right hon. and hon. Members are seeking to catch my eye, and there is a well subscribed debate on the Second Reading of the Finance Bill to follow, as a consequence of which brevity in both questions and answers is of the essence.

As a Back-Bench MP, I receive child benefit. Prior to entering the House, I was even better paid and received child benefit. Was the Secretary of State as surprised as I was to learn that the new Leader of the Opposition would like to restore child benefit to people like me?

He may be after my hon. Friend’s vote, in which case we will have to do some quiet talking. It is a ludicrous position to take. We now have a Labour party in opposition which prefers to defend the very wealthiest, and a coalition that wants to defend the worst off.

Universal child benefit is the most effective benefit for reaching the poorest children, more effective than means-tested benefits which are designed for them. Can the Secretary of State enlarge on the implications of his comments last week that child benefit will, in due course, be subsumed into his new universal credit? Should I therefore assume that there is no prospect, regrettably, of a universal payment being reinstated when the economy recovers?

The hon. Lady is right that child benefit has been and will continue to be a very effective mechanism to get money to the poorest families. We are not eradicating the universal benefit in the case of child benefit. We are capping it off at the higher rate. The rest—[Interruption.] Well, 85% of the public will get their child benefit. The hon. Lady asked specifically about the universal credit. I did not say that it would subsume child benefit. I said that as we reform the benefit system, and as the PAYE system is reformed, we should be able to look at these things long after the spending review and look for ways of getting rid of anomalies. Right now, in the spending review, there are no plans to make any such changes. We will do exactly as I said. Child benefit will be removed from families where there is at least one earner above the threshold.

For years my right hon. Friend and I argued in opposition that marriage should not be discriminated against in the tax and benefits system, and in particular that mothers who chose to look after their children at home should not be discriminated against. Can my right hon. Friend assure me that he has not changed his view, and that through mechanisms such as transferable allowances he will ensure that women are entitled to make their own choices and are not influenced by the tax and benefits system?

I agree with my hon. Friend. I make a point of agreeing with him on many things. The changes to child benefit are exactly what they are—to help us to reduce the terrible deficit that we have and to save the poorest families in the land from suffering a terrible burden that they would have to bear in due course. As my right hon. Friend the Prime Minister made clear last week—these are not matters directly for me, but he and the Chancellor will bring forward measures in due course—the very best way to ensure that couples do not face that penalty is to ensure that they are not unfairly taxed from the outset. This is about child benefit, and we will support families who make the choices that they make.

When, in the mid-1970s, the decision was taken to merge the child tax allowance, which broadly benefited the wallet, with the family allowance, which broadly benefited the purse, the then Labour Government, after a bit of a kerfuffle, decided that it should become a child benefit for the mothers, for reasons which, I think, both sides of the House recognise. Does the Secretary of State realise the dismay of many people in all parts of the House and the public that he is now running a coach and horses through the principle that it is very often the mother who has to juggle the family budgets, that certainly in the south of England, salaries at the level at which he is withdrawing benefit are not extravagant, and that that is a blow to the concept that mothers are at the heart of our families in Britain?

I respect the right hon. Gentleman enormously, and he knows that, but I am afraid that he is living in a time warp. The reality is that we have walked into government to find facing us the single biggest deficit on record. This country is close to being broke, thanks to his Government and how they ran the economy. So, yes, in a perfect world we might have wanted to continue with everything as it was, but in reality we cannot afford to. We make such changes on the basis of ensuring that we do not make them on the backs of the poorest people. Had we done it any other way, he would have complained quite rightly, and I must say to him that, if he does not like the proposal, and it sounds like he does not, perhaps he or his Front-Bench colleagues will tell us where they think they are going to get the money from as an alternative.

I appreciate the Secretary of State’s commitment, through the work capability assessment, to include the chief executive of Mind on the independent panel, because it is recognised that some disabilities go into remission. Can he give any further reassurance that other disabilities, such as ME or MS, in which there are quite profound ups and downs and cycles, will be recognised in the new assessment?

I can give the undertaking to my hon. Friend that all those issues will be reviewed with that team. If there is an issue about that, and if it affects anybody, we will want to try to bind that into the whole assessment. The assessment’s objective is not to penalise people. The truth is that when we undertook the flow—putting people through a process that the Opposition undertook when in government—we learned a lot. We found that a large number of people who went through it have come out the better for going into work. No one ever saw them, cared about them or discussed anything with them, so we are trying to ensure that we give them help and support, not to penalise them.

Is it fair and reasonable to impose a fixed arbitrary limit on the total level of benefits that a family can receive, irrespective of the level of rents in inner-city areas, when that rent could well constitute 70% of the £500 per week ceiling? A family cannot possibly live on the remaining 30% alone.

The right hon. Gentleman refers to the benefit cap, as announced last week. I think that it is fair. It is fair for us to offer an explanation to the public, most of whom work for low incomes and pay their taxes. They do not want to see somebody on benefits disincentivised from work because of the very level of money that they receive. I repeat what I said in the statement: to net-out £26,000, somebody in employment would have to earn about £35,000. So, I do not think that the measure is effective, in the sense that we are bearing down too hard. It is fair.

On housing, over the next few years we will manage the process with the changes to housing benefit. After all, over the last five years of the right hon. Gentleman’s Government, housing benefit costs ballooned by £5 billion a year, and they were set to balloon to £20 billion a year. I have one last point for him: his Government had the lowest number of houses built at any time since the 1920s. I wonder whom he blames for local authorities having had to place people in those expensive houses.

For a generation, disability campaigners have pressed for more jobs for people with disabilities, yet the employment rate of those people has remained pitifully low. Does my right hon. Friend agree that what his pilots aim to achieve, taken with the universal credit, is a situation in which people with disabilities get a fair break and a chance of a job, and that if they have a fluctuating condition there is a benefit system that supports them?

Yes, I agree. That is exactly the point of all the changes that we are making, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) is bound with that to review all that we do for disabled people in order to ensure that we do not write them off at any stage but give them an opportunity to go to work, if they can. We will absolutely support those who are not able to go to work. It is their right, and we will ensure that that is the case.

I want to take the Secretary of State back to the point raised by my right hon. Friend the Member for Oldham West and Royton (Mr Meacher). The universal cap of £500 a week will have a devastating impact on people living in inner-London areas such as mine, where private sector rents—paid for by housing benefit—are exorbitant, to put it mildly. The cap will result in desperate poverty for those people who try to remain living where their children go to school and near their families and community. The effect will be one of social cleansing over a vast area of inner-city Britain. Is that what the Secretary of State really wants to achieve?

I have been doing the figures, actually. The hon. Gentleman should remember that the measure is not being brought in until towards the end of the Parliament in 2013. In the meantime, we have already instigated some changes to how housing benefit is paid. The hon. Gentleman knows as well as I do that in some parts of London there has been complicity among private landlords to push the rents up much higher than they should have done. That was because the Labour Government never sorted out housing benefit.

The reality is that we will manage the process. The numbers will be far smaller than the hon. Gentleman talks about. We will make sure that what we do as we go forward is give the taxpayer and those in receipt of benefit a fair deal. I do not think that a person needs £35,000 a year gross to live a reasonable life.

I thank the Secretary of State for his statement today. I do not think that anyone in the House is more able to deal with the welfare problem than him.

With hindsight, does my right hon. Friend think that it was a mistake to announce the change in child benefit policy in a television studio last week rather than waiting to announce it in the House today? Was a written statement given to the other place, which was sitting last week?

The Chancellor made a statement in a television studio, but he made a statement to the country and my hon. Friend at the same time. All I can say is that the policy has been discussed by me, the Prime Minister and the Chancellor. As far as I am concerned, come the spending review my hon. Friend will see even more details about other changes. There will be full statements on those as well.

Does the Secretary of State recognise that many of us represent places where the problem is a lack of work rather than a lack of work ethic? Is he hearing any concerns from the relevant Northern Ireland Ministers about some of the proposals on which he is still working? On the Work programme, the right hon. Gentleman has referred to the black box discretion that will be given to operators there. How will he ensure that there will be no black arts, in manipulating the statistics purely to gain payment by results and the other incentives that he says will be available further up the chain?

As the hon. Gentleman may know, I have already visited Northern Ireland to discuss these matters with his colleagues. There may be some differences of opinion about where we are going, but most of that is because they have not quite arrived at the detail of it. I think that by and large these proposals, particularly the universal credit, will in general benefit Northern Ireland dramatically. The numbers of unemployed there are very high and we need to get those numbers down and get Northern Ireland working again. That is important. We have had the discussions.

My question pertains to the upper limit of £26,000 on welfare payments. My right hon. Friend stated that that equated to a gross income of £36,000. Many in my constituency work long hours, sometimes putting in overtime, but bring in considerably less than that. I remind Labour Members that those people have housing costs to pay as well. Can we make sure that people understand that the £26,000 is very much an upper limit, and that we should not ever see the welfare equivalent of £36,000 gross income as the norm?

I made the point that we also have to balance taxpayers’ requirements alongside those of people on benefit. By the way, when seen in the context of the total number of people on benefits at the moment, the numbers that we are dealing with are much smaller than people make out.

Most of all, I should say that we will not be doing this for people on disability living allowance. Those in receipt of working tax credit, for example—those in work—will also not be caught. We are simply looking to those families who have become static and immobile. There is a disincentive against their going to work; the amount of money that they receive is such that they could never get it if they went to work. Therefore their incentive to work is non-existent. That is the benefits system that we inherited; that is the benefits system that we will change.

If the Secretary of State recognises that this period of uncertainty is very stressful for people on incapacity benefit, does he also recognise that drip-feeding information through the media is not the right way of giving people any confidence that the system is fair? In particular, I understand that 40% of people who were originally refused incapacity benefit had that overturned on appeal. What does he intend to do about that, because it is frankly unacceptable?

If the hon. Gentleman is worried about the drip, drip, drip on the 20th of this month, I should tell him that there will not be a drip at all; we will get it out all in one go, so he should steady himself for that. None the less, the issue generally will be resolved, and I promise him that if there are any direct questions, I will answer them. He should remember that the figure that he refers to is 40% of all those who appealed. In total, 5% of those who have migrated have had their appeals upheld.

I congratulate the Secretary of State on the proposals for the universal credit, which will make it worth being in work. As well as trying to fit people to jobs, will he consider trying to fit jobs to people by using the Government’s contracting power to require that there be some jobs for the long-term unemployed and some jobs for people with disabilities?

There has been a huge increase in the number of people coming to my surgeries and saying that, having been on incapacity benefit, they have been reassessed as capable of working but on appeal that decision has been overturned. That applies to the vast majority of people, certainly in Derbyshire. Does the Secretary of State have figures available for the whole country? I hope so, because if he is planning on rolling this out nationwide, we need to ensure not only that people who are wrongly assessed as capable of working are not left destitute but that the tribunal system is prepared for the huge number of appeals coming its way.

Let me repeat the figures that I gave. Of all those who have been migrated through the system, about 5% have been successful in the sense that they have had their appeals upheld. There may be a slight change to that figure, because there is a backlog at the moment; we could probably make it up to 7% or 8%, but I do not think that it will get any higher than that. We should remember that all the people the hon. Lady is talking about represent the flow—that is, people who have not been in receipt of incapacity benefit until now but have been applying to come on to incapacity benefit and are being migrated through the process on to employment and support allowance or jobseeker’s allowance. The figure for those appeals is 5%, and that was part of the process that was started by the previous Government.

Many of us welcome the Secretary of State’s efforts to tackle the scourge of worklessness and to end the era in this country of indiscriminate and too often counter-productive welfare. On work capability assessment, he will know that these macro benefits are built on a series of individual assessments by a particular doctor on a particular day of a particular condition. May I press my right hon. Friend to take a personal interest to ensure that assessments of neurological disorders and mental health issues in particular are done fairly?

My hon. Friend raises a very important point. I can guarantee to him that we have already been doing that, but we will continue to do so. That is why the independent panel, which includes somebody from Mind, will review it. Mr Farmer has been tasked with reviewing that generally, as well. We will constantly keep this under review and ensure that that is the case. We do not want to use this to punish people; it is about helping people, not punishing them.

Given the large number of my constituents and many others who had problems with the work capability test under the previous system, can the Secretary of State assure us that he has already reviewed the test prior to rolling out the new pilots, rather than leaving it as it is and piloting yet again? What full report is there on the outcomes of the system thus far? In Scotland, the Scottish Association of Citizens Advice Bureaux published a report that was highly critical of the system that was in place. Although a lot of us agree with it in principle, we know that when it comes to individual people the situation is very different.

I guarantee that we have already reviewed the matter. Indeed, we inherited a review process, which the previous Government initiated. We will bind in the results of that—we are doing that at the moment. Having said that, we have subsequently set up the panel and asked somebody to investigate to ensure that we are covering all the necessary matters. The two pilots will help us understand better the way that the system works. I am not sure what else we can do at this stage. As I said to the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), we intend to use what we are discussing as a process—it is not an end point, but a process that allows us to get the best out of how we deal with those who have been on incapacity benefit and need our support and help to get back to work. I give that guarantee.

Is my right hon. Friend aware that many responsible employers, including those in my constituency, ask their staff to attend annual health assessments? Does he agree that it is fair and reasonable for those deemed not fit to work to attend similar assessments rather than wait 10 years on incapacity benefit without seeing a doctor?

My hon. Friend makes exactly the right point: for too long, Governments of both colours were content to see people parked on incapacity benefit. The subject should unite the House; the previous Government started the process and we want to complete it. It is no longer feasible for people to languish on incapacity benefit. My hon. Friend is right; in some cases, people have not been seen for six or seven years and in others, people self-referred and have never been seen by anybody to find out what is going on. It is high time we resolved that.

Will the Secretary of State please explain why a large swathe of Scotland is being used for the Con-Dem social experiment, especially when it involves some claimants travelling for up to 90 minutes to be interviewed? He will remember that the last time the Conservatives used Scotland as a testing ground was when they introduced the hated poll tax a year early. What safeguards and guarantees have the people of Scotland this time round?

I am not sure what the hon. Gentleman is moaning about. Two cities are in the pilot, one in England and one in Scotland—he forgot that. The cities are different in character—they have quite different populations in terms of income. The hon. Gentleman made the point that some people travel long distances, and it is important for us to understand the exact effect of that. Sometimes I wish that he was not quite so parochial.

I paid a visit to my local jobcentre in Bromsgrove earlier this month, and I learned from the advisers that, in many cases, it takes them more than an hour to determine whether a jobseeker would be better or worse off by taking just six hours of employment in a week. Does my right hon. Friend agree that the introduction of the universal credit and the taper relief system will make a dramatic difference to job incentives for jobseekers, and also increase their life chances?

I am glad that my hon. Friend sees it like that, because that is exactly how I see it. Of course, the devil will be in the detail, but we want a process that is easy to understand for those who are trying to get back to work, so that they do not need a maths degree to figure out exactly how much money they will retain if they do seven, eight, nine, 15 or 20 hours’ work a week. We want it to be easy for them to understand that there is an incentive for every hour that they work, and for those in jobcentres to figure it out, so that they can give proper advice. We want incentives, not disincentives, to go back to work.

Will the Secretary of State give us some assurance about the future of the independent living fund? The Government trickled out the information that it was one of the quangos to be abolished. That report has caused my constituent, Mrs Seckerson, and her husband and carer, Barry Seckerson, real concern because if they lose that fund, her chance of living a meaningful life will be severely inhibited. Rather than leaving them fearful of the future, can the Secretary of State give them some sense of security today?

The ILF, which we inherited, had been underfunded and was consequently overspent—literally on the day we walked through the door of government. The hon. Gentleman might therefore want to take up the reasons for such bad mismanagement with his Front-Bench colleagues. However, we want to ensure that we deal with people in those circumstances fairly and reasonably. We are reviewing the whole process now and, as and when we complete the review, I shall ensure that the hon. Gentleman hears the details of it.

I and most of my unemployed constituents to whom I have spoken favour what my right hon. Friend has said. I am sure that many of them are pleased to have the chance to go back to work if they can find a job and, of course, benefit from the extra income. However, after speaking to many people, I am convinced that several people simply expect a whole lot of new schemes, about which they will find out in order to find ways of avoiding them and of continuing what they quite enjoy: a life on benefits, albeit on a low income. I would be interested to know my right hon. Friend’s views on that.

The vast majority of people who are on benefits are not seeking to stay on benefits for the rest of their lives. Most of them are seeking help to get off benefits and we want to provide that help. Most of all, I want to simplify the number of benefits so that people understand what they will receive and how, but to link that to a process of getting back to work. I repeat that those who genuinely cannot work, because they have disabilities that make it impossible, must receive the best support possible. That is the sign of a civilised society.

The Office for Budget Responsibility has projected a net increase of 700,000 EU migrant workers during this Parliament, and that point was confirmed by Treasury officials to the Treasury Committee. Does the Secretary of State agree—and as the previous Government found to their cost—that an employer is more likely to prefer a new, young EU migrant worker to someone who has been on benefits for 10 years?

The hon. Gentleman makes an interesting point. The only answer I can give is that during the past 10 years we have had between 4 million and 5 million people permanently parked on some form of out-of-work benefit. The reality is that it became easier and cheaper for most employers to employ people who were not on benefits than to go to the pool of people who were on benefits. I hope that our reforms will make work pay for those who are on benefits and thus release that pool of talent, so that demand can be met from here in the UK, and that only those who are really skilled and necessary will have to come from overseas.

My constituents will be horrified to hear from the Secretary of State that Britain has the highest rate of jobless households in Europe. Which country in Europe has the lowest rate, and what is it doing that we are not?

Perhaps I should not say this, but I think that it is Holland—I read that in a note. Some 20% of all households in this country have nobody in work, which is a staggeringly high number. We also have the highest number of children born to workless households. By and large, every other country is Europe is doing it better than we do—and that is the shame of the previous Government.

Has the Secretary of State considered the impact of the benefits cap on homelessness provision, including women’s refuges? What plans does he have for housing benefit for supported accommodation, where rents are understandably higher than in the private rented sector?

We are looking at all that. I have made available some £60 million for transitional funding for local authorities and others, and we will keep that under review. We do not want to penalise households, because it may not be their fault that they are living in homes that they simply would not be able to afford. We need to ensure that the changes are made, and I hope that we will also be able to drive down some of the rents. A lot of change is coming in the next two years, and I hope that much of it will be very progressive.