Unemployed and Low-paid (Support) (Hansard, 14 November 1988)

§ 1. Mr. Michael
To ask the Secretary of State for Social Security what he estimates will be the combined effect of the various changes in Government support for unemployed and low-paid people, including the impact of the freeze on child benefit and all other relevant decisions; and what he estimates will be the net effect in cash terms and percentage terms on the weekly income of a couple with two children with (a) no earner in the family, (b) a single earner on £100 per week and (c) a single earner on £150 a week.

§ The Minister of State, Department of Social Security (Mr. Nicholas Scott)
Next April's uprating directs substantial extra help towards lower income families. All children's personal allowances in income support, family credit and housing benefit are being increased by 50p over and above the amount needed to maintain their real value. Higher children's allowances in family credit and housing benefit will maintain the cash gap and encourage people with families to work rather than be unemployed. However, it will not be possible to say what the overall effects on families will be until income tax rates and allowances, and changes in real earnings, are known in April.

§ Mr. Michael
In the light of that obscure reply, will the Minister consider the position of an unemployed family on moderate rent and rates, with two children aged 14 and 16 years? Does he agree that if the father moves from being unemployed to a job paying £100 a week he will be less than £7 better off in terms of money in his pocket, with the greatly increased costs attached to employment such as travel to work? If the man moves to employment that pays £150 a week, will the Minister accept that he will be only £8 a week better off as a result, with further losses in benefit? Does the Minister agree that there is a worsening poverty trap? The Chancellor of the Exchequer is throwing money at the rich, but he is doing nothing for the poor—[Interruption.]

§ Mr. Speaker
Order. The hon. Gentleman's long supplementary question is unfair on those who will follow him. I appeal to hon. Members to ask short questions.

§ Mr. Scott
A number of factors, not least the growth in earnings, could have a profound effect on the net position in which people find themselves next April. Assuming an uprating in line with inflation, my calculations for the hon. Gentleman's two examples are £10 and £20 respectively, not £7 and £8. The essential feature is that in both 729 instances the man would be better off by working. Under the system over which the Opposition presided, he could well have been worse off.

§ Mr. Jack
Does my hon. Friend agree that the proposed computerisation of social security offices will do much to ensure that benefit claimants receive the benefits to which they are entitled, and will deal with much of the criticism of the service that is offered by local offices?

§ Mr. Scott
We have already taken some important steps to improve the service that we deliver to the public from local offices. We are determined to continue with the improvement. We are introducing the largest computerisation programme that there has ever been in Western Europe. When that has been completed in 1991, I am sure that we shall be in an even better position than we are now.

§ Mr. Kirkwood
Does the Minister accept that the changes in April heralded an increased emphasis on targeting? Has he had a chance to study the report of the Citizens Advice Bureaux, in which it is stated that 82 per cent. of claimants were worse off after the April changes? Does that not cast doubt on the Government's policy of increasing the targeting of benefits?

§ Mr. Scott
I have the highest regard for much of the CAB's work, but I believe that the report was flawed in two important respects. The conculsions that were drawn from it were even more flawed. First, the work was carried out only one month after the new benefits were introduced in April 1987. Secondly, it would not be surprising if claimants were unsure about their entitlement under the new system, because it had been introduced so recently. The sample consisted of people who were sufficiently worried to go into the citizens advice bureaux. So it was not typical of the broad mass of income support recipients.

Mr. Robert G. Hughes
Is my hon. Friend able to make any comparison between this Government's record in that area and that of the Labour Government run by the then right hon. Member for Cardiff, South and Penarth?

§ Mr. Scott
The most important point is that our predecessors in the Department of Health and Social Security and the Government as a whole had the courage to tackle the ramshackle structure of supplementary benefits and associated benefits and to replace them with something that is simpler and easier for staff to administer and for claimants to understand and which removes the worst aspects of the poverty and unemployment traps.

§ Mr. Flynn
Following the Minister's non-answer to the question raised by my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), does he agree that recent changes have increased the size of the poverty trap, leaving millions of families floundering on low incomes with their escape route cut off? Does he agree also that someone may still lose more than £1 in income by earning an extra £1? Some families need to earn an extra £90 a week to increase their income by a mere £18. What does the Minister intend to do to help those families? What lifeline will he offer them when he has needlessly added the humiliation of poverty to those who already suffer the daily insult of low pay and unemployment?

§ Mr. Scott
I warmly welcome the hon. Member to his new responsibilities and look forward to crossing swords with him in the future. We have deliberately put an extra 730 £70 million into uprating to provide special help for low income families whether on income support or in work. As I said earlier, it is all very well to claim that we still suffer from some aspects of the poverty and unemployment traps as a result of the need to withdraw benefit as earnings increase. Not many people would disagree with that. However, the Labour party in government presided over a system in which gross imcomes could double before there was any net increase in take-home pay. We have abolished that.